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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 11, 2000.
REGISTRATION NO.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES
EXCHANGE ACT OF 1934
WORLDWIDE WEB NETWORX CORPORATION
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 541519 58-2280078
(State of Incorporation) (Primary Standard (I.R.S. Employer
Industrial Identification No.)
Classification Code Number)
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521 FELLOWSHIP ROAD, SUITE 130
MOUNT LAUREL, NEW JERSEY 08054
(856) 914-3100
(Address and telephone number of principal executive offices
and principal place of business)
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COPIES OF COMMUNICATIONS TO:
ALLAN M. COHEN, GENERAL COUNSEL
WORLDWIDE WEB NETWORX CORPORATION
521 FELLOWSHIP ROAD, SUITE 130
MOUNT LAUREL, NEW JERSEY 08054
(856) 914-3100
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Not applicable
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, $0.001 par value per share
(Title of Class)
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ITEM 1. BUSINESS
WORLDWIDE WEB NETWORX CORPORATION
GENERAL
WorldWide Web NetworX Corporation is currently engaged in the development of
Internet-based business-to-business companies. Typically, we enter into
relationships, including joint ventures, strategic relationships and
acquisitions, with off-line companies that have established distribution
channels and fulfillment capability and we provide these companies with
e-commerce technology, consulting, marketing and business development services.
By providing these services, our goal is to expand the markets, services and
products and improve the efficiencies of these businesses. We are continually
searching for new opportunities to forge relationships with companies which we
believe would benefit from our business strategy.
We currently own majority interests in three companies:
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COMPANY OUR INTEREST
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The Intrac Group, Ltd....................................... 100%
NAI Direct, Inc............................................. 64%
ATM Service, Ltd............................................ 52%
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We also own strategic equity interests in:
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COMPANY OUR INTEREST
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WWWX-Jencom, LLC............................................ 50%
InterCommerce China, LLC.................................... 33%
Entrade Inc................................................. 12%
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In addition, we have minority interests of 5% or less in
asseTrade.com, Inc., Vision Technologies, Inc., VideoNet Corporation and One
World Direct, Inc.
HISTORY
WorldWide Web NetworX Corporation was originally incorporated in Idaho in
July 1979 under the name "Gold Cache, Inc." We subsequently changed our name to
"InstraCorp" in August 1988. In July 1996, we changed our domicile to Delaware
by merging into a newly incorporated Delaware corporation named "Instra Corp."
On September 3, 1996, we filed a disclosure statement pursuant to
Rule 15c2-11 of the Securities Exchange Act of 1934 with the National
Association of Securities Dealers, Inc. for the purpose of including our common
stock, $0.001 par value per share, for trading on the OTC Bulletin Board, a
quotation service for securities which are not listed or traded on a national
securities exchange. Our common stock is listed on the OTC Bulletin Board under
the symbol "WWWX".
After a period of relatively little operating activity, we entered a new
line of business in May 1998, when we acquired Keiretsu Corporation, a
privately-held Nevada corporation incorporated on September 26, 1997. The
stockholders of Keiretsu exchanged all of their Keiretsu shares for shares of
our common stock. Our then current management resigned, the management of
Keiretsu became our new officers and directors, and we changed our name to
"WorldWide Web NetworX Corporation".
OUR COMPANIES AND STRATEGIC RELATIONSHIPS
The following is a description of our subsidiaries and the companies with
which we have strategic relationships or minority interests. For each of the
following companies we discuss, to the extent they are applicable, the history
of the company, joint venture partners, traditional lines of business, corporate
governance provisions and significant agreements.
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ATM SERVICE, LTD. AND THE INTRAC GROUP, LTD.
Presently, ATM Service, Ltd. and The Intrac Group, Ltd. are primarily
off-line businesses that assist companies to optimize their return on excess
assets, closeouts, discontinued merchandise, excess plant capacity and
production time. ATM and Intrac also assist customers seeking new markets, new
outlets and new profit opportunities for their goods and services.
ATM and Intrac are in the process of utilizing the Internet to facilitate
their business-to-business transactions. ATM Service, Ltd. owns and operates
ATMcenter.com and its related web sites, which are designed to assist
businesses, in the United States and around the world, market large volumes of
products and services over the Internet. Our strategy is to migrate many of the
transactions involved in these two traditional wholesale inventory and asset
marketing businesses to ATMcenter.com's e-commerce platform.
HISTORY
In December 1998, we formed ATM Service, Ltd. with Warren Rothstein, who is
currently the interim Chairman, President and Chief Executive Officer of
WorldWide Web NetworX Corporation in addition to being the Chairman of ATM
Service, Ltd. and The Intrac Group, Ltd. In connection with the formation of ATM
Service, Ltd., Warren Rothstein received 4,000,000 shares of our common stock
that are subject to forfeiture. See "Our Stock Issuance Agreement with Warren
Rothstein."
In July 1999, we acquired The Intrac Group, a privately held international
marketing and asset management organization. The Intrac Group became our
wholly-owned subsidiary through a merger with our wholly-owned acquisition
corporation, Intrac Acquisition Corporation, which later changed its name to The
Intrac Group, Ltd. We acquired The Intrac Group from Intrac's two stockholders,
Thomas Settineri and Gary Levi, in exchange for (1) 1,000,000 shares of our
common stock, (2) $1,500,000 in cash, (3) 24% of ATM Service, Ltd.'s outstanding
stock and (4) the assumption of certain liabilities. We also agreed to provide
The Intrac Group, Ltd. with $1,000,000 for working capital.
In connection with our acquisition of The Intrac Group, Thomas Settineri
became President and Chief Executive Officer of both ATM Service, Ltd. and The
Intrac Group, Ltd. and Gary Levi became Chief Operating Officer of both ATM
Service, Ltd. and The Intrac Group, Ltd. Warren Rothstein remained as Chairman
of ATM Service, Ltd. and became Chairman of The Intrac Group, Ltd., thereby
making the management team for both companies identical. In addition, Thomas
Settineri became a director of WorldWide Web NetworX Corporation on
September 23, 1999.
ATM and Intrac have agreed in principle to allocate certain responsibilities
to each company: ATM will manage the two companies' direct and indirect
marketing staff, operate and develop ATMcenter.com and its related web sites,
and be responsible for the recovery and sale of the merchandise acquired, while
Intrac will provide the trade credits, described below, and fulfill the
utilization of the trade credits for the two companies' customers.
ATM SERVICE, LTD. AND THE INTRAC GROUP, LTD.'S TRADITIONAL, OFF-LINE
BUSINESSES
ATM and Intrac maintain an international sales and marketing staff. This
marketing staff consists of subject matter experts who identify potential
transactions and find buyers for the assets and services ATM and Intrac market.
The members of the sales and marketing team are professionals that are generally
compensated for their efforts on transactions in which they have participated on
our behalf. Typically, when a sales representative has located a new marketing
or business opportunity, ATM and Intrac evaluate the opportunity. If they pursue
an opportunity, ATM and Intrac will negotiate with the potential customer to
structure a transaction to achieve the marketing, financial and strategic
objectives of the customer.
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ATM and Intrac offer the following services:
LIQUIDATION: In a simple liquidation, ATM buys the assets of a customer for
cash. This method offers the customer the lowest form of recovery for
under-performing assets as the price ATM pays for the assets is usually below
what it cost the customer to acquire or produce the assets. ATM's sales and
marketing staff typically sells the assets at a price greater than the price ATM
paid for the assets to a buyer ATM has identified before actually purchasing the
assets.
ASSET MANAGEMENT: In an asset management transaction, ATM acts as an agent
and remarkets a customer's assets for cash and receives a percentage of the sale
as a commission. This method generally provides a greater recovery for customers
than a liquidation because ATM is generally able to sell the assets at higher
prices by selling them selectively and over time rather than selling the whole
lot immediately.
COST RECOVERY: In a cost recovery transaction, ATM buys the customer's
assets for cash and trade credits (a non-monetary form of currency which are
discussed in more detail below) at a price that is equal to the customer's cost
to acquire or produce the assets. A cost recovery transaction is more complex
than the previous two transactions and has various aspects that are negotiated
at the inception and during the transaction.
The following list outlines the initial steps in a typical cost recovery
transaction:
- The first step of a cost recovery transaction starts like a liquidation:
ATM's sales and marketing team buys the assets from the customer and then
sells the assets for cash.
- ATM pays a negotiated portion of the cash received to the customer and ATM
keeps the balance of the cash. The cash payment made to the customer is
the entire cash portion of the purchase price paid for the cost recovery
transaction.
- Along with the cash payment, Intrac issues the customer trade credits to
make up the balance of the purchase price.
The following example demonstrates a reason a company may enter into a cost
recovery transaction:
A company has inventory in its warehouse that it can not use or market
at the prices it expected and needs to dispose of this inventory. A
liquidation sale for cash would only bring 20% of the book value of the
inventory. However, in a cost recovery transaction, ATM acquires the
inventory for the company's full book value using a combination of cash and
trade credits. The cash portion of the purchase price is slightly less than
20% of the book value and the trade credits make up the rest. The customer
benefits from this transaction by avoiding the loss associated with a
liquidation sale, by receiving a portion in cash from the sale and a portion
in trade credits that can be used for goods and services it needs for its
operations that it will be able to purchase in the future from Intrac using,
typically, some combination of cash and trade credits.
At this point, the customer will have received cash and trade credits equal
to its desired recovery for the assets or services. The trade credits may be
used for, or in connection with, future purchases as described below.
TRADE CREDITS
The trade credits issued by Intrac represent the right to buy assets or
services from Intrac and in most cases may only be used if some portion of cash
is also paid for the assets or services. A customer can use its trade credits to
purchase media, merchandise or any business services that the customer would
normally purchase on an all-cash basis. Trade credits typically expire within
two or more years after they are issued by Intrac. Many customers negotiate with
Intrac to obtain trade credits that
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represent the ability to purchase media, because they have a predetermined media
budget and plan for each fiscal year. The advertising and media services Intrac
can obtain include radio, television, print, Internet, and outdoor advertising,
such as billboards and bus stop shelters. Intrac also provides a wide range of
non-media trade credits which can include virtually any other asset or business
service a customer normally purchases on an all-cash basis.
The following is an example of a non-media use of trade credits:
A customer that normally pays $300,000 each year for courier services
may request that its trade credits be used for courier services. ATM and
Intrac may negotiate to provide the customer with its courier service needs
for the year under the following terms: the customer may use $100,000 of its
trade credits for future courier service. In the following year, the company
would pay Intrac $200,000 in cash for such services and use the trade
credits to pay the balance.
The following is an example of a media use of trade credits:
A customer that normally pays $1,000,000 for various types of
advertising may request that its trade credits be used for media buys. When
the customer decides to use its trade credits, the customer provides Intrac
with its media plan for a specified period of time. The media plan includes
times of day, audiences, markets and other specifics. Intrac then approaches
media providers and negotiates the acquisition of the media required by the
customer. Intrac submits an advertising media plan to its customer, based on
the strategic objectives and goals of the customer, including the ratio for
the trade credits to be used as well as the availability of the media that
fits the customer's plan. For example, the customer may be able to use one
dollar of its trade credits for every three dollars of media the customer
buys from Intrac for cash. With that ratio, the customer would pay $750,000
in cash and redeem $250,000 of trade credits for its $1,000,000 media
purchase.
Intrac utilizes its buying and trading expertise to obtain and provide the
services, assets, or media the customer requests. Intrac can profit from these
transactions because it typically provides the service or media at a cost that
is less than the amount of cash a customer must use in connection with its use
of trade credits. In the courier services example, the amount of cash Intrac
received is $200,000. Intrac would be able to acquire the courier services for
cash, or a combination of cash and trade credits, for an actual cash cost of
less than $200,000. In the media provision example, Intrac would be able to
acquire the media for cash, or a combination of cash and trade credits, where
the actual cash cost is less than $750,000.
The following is an actual example of a such a transaction:
Intrac developed a five year reciprocal trade program between an oil
company and a car rental company. The oil company had lubricant it desired
to sell and the car rental company required a steady supply of lubricant for
its rental fleet. The oil company agreed to sell to Intrac, for resale to
the car rental company, lubricant at fixed purchase prices, subject to
annual negotiation, for a five year period. Intrac purchased the lubricant
for a combination of cash and trade credits and sold the oil to the car
rental company for cash. The oil company utilized the trade credits to
purchase advertising media and special events marketing from Intrac for a
purchase price of 30% trade credits and the remainder in cash.
In connection with each of the services described above, ATM and Intrac may
take care, custody, and control of any type of inventory or asset at warehouse
facilities and manage the disposition process including shipping, handling,
billing, collecting, and remitting to customers the proceeds of the sales made
on their behalf.
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ATMCENTER.COM
ATM Service, Ltd. plans to develop ATMcenter.com and its related web sites
into a global network of wholesale business-to-business web sites branded
ATMcenter.com. Through the ATMcenter.com web sites, ATM Service, Ltd. plans to
assist manufacturers, retailers and industrial companies to promote their
products to buyers around the world and dispose of under-performing inventory or
other assets. ATMcenter.com can direct customers' products to pre-approved,
pre-profiled creditworthy buyers and provide the option to bid on, buy, sell and
negotiate for products and services. Simultaneously, ATMcenter.com can provide
buyers with multiple pricing options, which reflect discounts based on demand,
supply and quantities purchased. In January 1999, ATM Service, Ltd. began
listing inventories for sale on ATMcenter.com.
The ATMcenter.com web site will not completely automate ATM and Intrac's
transactions. For example, in cost recovery transactions, ATM and Intrac will
continue to negotiate directly with customers for the use of trade credits. ATM
and Intrac are still early in the process of introducing their existing
customers and contacts to the ATMcenter.com web site. ATM and Intrac currently
refer their existing customers and new customers to the ATMcenter.com web site
to view the merchandise listed on the site. To date, ATM and Intrac have not
received any revenues from transactions consummated on the ATMcenter.com web
site. However, we expect that once our customers and contacts become accustomed
to using the Internet and our web sites as a means of buying and selling their
assets and services, ATMcenter.com and its related web sites will provide
customers with a more liquid and efficient market for assets and services and
therefore a higher recovery for their assets.
Through the ATMcenter.com web site, ATM plans to offer e-commerce services
that will include multiple pricing and shipping options, account supervision,
customer support and buyer financing with established credit terms. ATM and
Intrac also plan to offer Intranet services that will enable customers to
transfer or purchase and sell assets and services among their various locations
or with their suppliers and customers.
INTERNATIONAL MARKETS
We believe that there is significant demand and opportunity for ATM and
Intrac's services outside the United States. Many companies in emerging markets
have limited access to information, resources and capital and will be able,
through ATMcenter.com, to make their products available to, and will have access
to the products of, many major manufacturers and retailers domestically and in
other countries. ATMcenter.com has or is establishing numerous regional and
country portals under the ATMcenter.com brand. Each of these portals links the
ATMcenter.com name together with the applicable region or country. We expect
that each regional and country portal will permit buyers and sellers within a
region or country to trade among themselves, and allow parties outside that
region or country to buy or sell products in that region or country.
In some countries, ATMcenter.com directly markets its services, while in
others, ATMcenter.com has appointed, or plans to appoint, representatives. In
most cases, we plan to give ATMcenter.com's representatives the exclusive right
to market ATMcenter.com's services within their territory. ATM will seek
representatives that are established companies in their respective regions. ATM
plans to require representatives to pay fees for the right to represent
ATMcenter.com in their region depending on the size of their territory.
Representatives will share in the transaction fees and membership fees that ATM
receives from companies within their territory that participate in
ATMcenter.com. Representatives may
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appoint sub-representatives within their territory. Currently, ATM
Service, Ltd. has agreements with the following companies:
MEXICO: CORPORACION GALVEZ Y ASOCIADOS, S.A. DE C.V. (COGASA)
ATM has entered into an agreement with Cogasa, a privately held Mexican
company, to act as our exclusive distributor in Mexico to sell and promote the
e-commerce and Internet services provided by ATM in Mexico. ATM and Cogasa will
share in the revenues derived from annual membership fees and transaction fees
earned from the products of the members that are marketed and sold through the
Mexico.ATMcenter.com web site. To date, ATM has not received any membership fee
or revenues from Cogasa or the Mexico.ATMcenter.com web site and we cannot
assure you that we will receive any such fee or revenues.
KOREA: KOREAN GINSENG PRODUCTS CO. LTD.
ATM has entered into an agreement with Korean Ginseng Products Co. Ltd., a
publicly traded Korean company, to act as our exclusive distributor in Korea to
sell and promote the e-commerce and Internet services provided by ATM in Korea.
Korean Ginseng Products has agreed to pay a fee in the form of products and will
share in the revenues derived from annual membership fees and transaction fees
earned from the products of the members that are marketed and sold through the
Korea.ATMcenter.com web site. To date, neither ATM nor Intrac have received any
membership fee or revenues from Korean Ginseng Products Co. Ltd. or the
Korea.ATMcenter.com web site and we cannot assure you that we will receive any
such fees or revenues.
FUNDACION PRIMERO MEXICO
Fundacion Primero Mexico is a foundation for the development of social and
welfare programs for the citizens of Mexico. We entered into an agreement on
March 25, 1999 with the Fundacion to act as the exclusive on- and off-line
remarketer of the Fundacion's donated assets from Mexican corporations for an
initial 24 month term which term automatically extends year to year after that
until either party notifies the other in writing of its cancellation. These
assets may include consumer products and services, commodities, real estate,
industrial equipment, vehicles, construction services, building
equipment/materials, or any other assets. We may have to issue a performance
bond to guarantee our obligations under our agreement with the Fundacion.
ATM's on- and off-line responsibilities are defined in an Operating Manual
that has been mutually agreed upon by the organizations involved. Our agreement
with the Fundacion requires that we remarket donations on-line for each donating
company. In return, we will provide acceptable products and services that the
Fundacion requires for the people of Mexico. To date neither ATM nor Intrac have
received any revenues from the Fundacion Primero relationship or our related web
sites and we cannot assure you that we will receive any such revenues.
ATMCENTER.COM WEB SITE AND SOFTWARE
We use software that we have licensed from entrade.com, Inc., a subsidiary
of Entrade Inc., to operate ATMcenter.com and its related web sites. Under the
license agreement with entrade.com we will be obligated to pay commissions to
entrade.com for member fees and transactions executed using the entrade.com
software. This license agreement and the fees are described in more detail in
"Business--Entrade Inc."
OUR STOCK ISSUANCE AGREEMENT WITH WARREN ROTHSTEIN.
In connection with the formation of ATM Service, Ltd., Warren Rothstein
received 4,000,000 shares of our common stock which are subject to forfeiture.
In each fiscal quarter, commencing with
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the fiscal quarter ended March 31, 1999, if Mr. Rothstein provides qualifying
listings of merchandise for ATM Service, Ltd. of $1,250,000 or more, 200,000 of
his shares will no longer be subject to forfeiture, continuing until none of
Mr. Rothstein's 4,000,000 shares are subject to forfeiture. If Mr. Rothstein
does not provide sufficient listings during any quarter, he will forfeit 200,000
of his shares. To date, 1,000,000 shares have been released from the forfeiture
restriction.
CORPORATE GOVERNANCE
We own 52% of ATM Service, Ltd. and 100% of The Intrac Group, Ltd. The
boards of directors and executive officers of the two companies are identical.
- ATM SHAREHOLDERS AGREEMENT
The relationship between WorldWide Web NetworX Corporation, ATM
Service, Ltd. and ATM's individual shareholders is governed by a shareholders
agreement among WorldWide Web NetworX Corporation, Warren Rothstein, Thomas
Settineri and Gary Levi. Rothstein, Settineri and Levi collectively own 48% of
ATM Service, Ltd.'s capital stock, subject to the closing of a stock purchase
agreement dated January 26, 2000 among Rothstein, Settineri, Levi and
Entrade Inc. Upon the closing of that transaction, Rothstein, Settineri, and
Levi would collectively own 33% of ATM's capital stock and Entrade Inc. would
own 15% of ATM's capital stock. The transaction is subject to satisfaction of
certain conditions, including the execution of an amended ATM Service, Ltd.
Shareholders Agreement and the approval of the Entrade Inc. shareholders. The
current shareholders agreement provides for a five-member ATM Service, Ltd.
board of directors consisting of two directors appointed by WorldWide Web
NetworX Corporation, and one director appointed by each of Rothstein, Settineri
and Levi. Certain significant corporate actions require the approval of at least
one of the directors appointed by WorldWide Web NetworX Corporation. WorldWide
NetworX Corporation has not yet appointed its directors. Under the shareholders
agreement proposed to be executed upon the closing of the proposed Entrade Inc.
purchase of ATM Service, Ltd. stock, Entrade Inc. would have the right to
appoint one director and Gary Levi would no longer have that right.
In addition, the ATM shareholders agreement provides as follows:
TRANSFERS OF ATM SERVICE, LTD. SHARES: Without the unanimous consent of the
ATM Service, Ltd. board of directors, no stockholder may encumber its shares or
transfer its shares except for transfers to certain family members or upon death
or in accordance with the terms of the agreement. The individual stockholders
have the right to put a portion of their shares to ATM Service, Ltd. upon death.
The stockholders have a right of first refusal and tag-along rights on any sale
of stock by a stockholder that constitutes more than 50% of the outstanding
stock of ATM Service, Ltd. The board of directors may compel a stockholder to
sell and cooperate with the sale of ATM Service, Ltd. to a third party.
FUNDING: WorldWide Web NetworX Corporation loaned $3.5 million to fund ATM
Service, Ltd.'s operations with interest payable at the minimum rate permissible
under the Internal Revenue Code, $1 million of which ATM has loaned to Intrac.
The principal and interest accrued are due upon the earlier of 10 years, an
initial public offering of ATM Service, Ltd. or the receipt of $15 million in
financing for ATM Service, Ltd.
- INTRAC MERGER AGREEMENT
Certain provisions that govern the management of The Intrac Group, Ltd. are
set forth in the merger agreement we entered into with The Intrac Group and
Messrs. Settineri and Levi in connection with our acquisition of The Intrac
Group. In that agreement, WorldWide Web NetworX Corporation agreed to appoint a
board of directors and executive officers currently identical to those of ATM
Service, Ltd. and certain significant corporate actions require the approval of
at least one of the outside directors of The Intrac Group, Ltd.
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NAI DIRECT, INC.
On September 23, 1999, we entered into a joint venture with New America
Network, Inc. to form NAIdirect.com, a web site that will permit corporate,
governmental and institutional users, as well as local business operators and
private investors, to buy, sell, or lease commercial real estate on-line. New
America Network, Inc., operating under the brands New America International and
NAI, is a global partnership of real estate service providers that provides
brokerage, financial and investment services, property/facilities management and
strategic advisory services to the office, industrial and retail sectors.
NAI Direct, Inc. will operate NAIdirect.com. The NAIdirect.com web site will
target the global commercial property market by facilitating the initiation and
management of transactions using a single-source global real estate service
delivery model and NAI Direct's proprietary technologies. We expect
NAIdirect.com to be operational during the first quarter of 2000. New America
Network, Inc. has agreed to place all of its commercial real estate listings on
NAIdirect.com and will encourage all NAI member brokers to place all of their
local commercial real estate listings on NAIdirect.com. NAIdirect.com will have
different portals for global and local real estate users, as well as those who
intend to finance or invest in real estate. The site will offer a highly
researched database so that brokers and owners can instantly access potential
tenants, investors or lenders by delivering information to them electronically.
It will also be designed to offer large investment properties via privately
negotiated sales or auction. We anticipate that the joint venture will receive
revenue from a variety of sources which will include but not be limited to
membership and advertising fees, auction services and transaction fees.
Our ownership in NAIdirect.com is held through two subsidiaries: Real
Quest, Inc. and NAI Direct, Inc. In exchange for an 80% ownership interest in
Real Quest, Inc., we issued to New America Network, Inc. 750,000 shares of our
common stock and delivered an additional 750,000 shares in escrow to be
transferred to New America Network, Inc. upon NAI Direct earning cumulative
revenue of $2,000,000 within 24 months of the launch of the NAI direct.com web
site. We have also provided $1,000,000 for working capital for NAI Direct, Inc.
in the form of a loan which may be drawn upon with approval from the President
of NAI Direct and the Chief Financial Officer of WorldWide Web NetworX
Corporation. The loan bears interest at the minimum rate permissible under the
Internal Revenue Code. The principal and interest on the loan are due at the
earlier of 10 years from the date of issuance or the occurrence of certain
significant financing events. In addition, we have agreed to provide up to
$4,000,000 in working capital within 18 months of September 23, 1999 in the form
of a loan or otherwise. Furthermore, we will contribute Internet and e-commerce
and asset management software to NAI Direct and will customize such technology
for use with commercial real estate transactions.
CORPORATE GOVERNANCE
We own 80% of Real Quest, Inc. and New America Network, Inc. owns 20%. Real
Quest, in turn, owns 80% of NAI Direct, Inc., subject to future dilution. The
remaining 20% of NAI Direct, Inc. is owned by the executive officers of NAI
Direct and New America Network, Inc. including Gerald Finn, the Chief Executive
Officer of New America Network, Inc., and Jeffrey Finn, the President and Chief
Operating Officer of New America Network, Inc.
REAL QUEST, INC. SHAREHOLDERS AGREEMENT
The Real Quest shareholders agreement between WorldWide Web NetworX
Corporation, New America Network, Inc., and Real Quest, Inc., provides for a
board of directors consisting of five members. New America Network, Inc. will
select two directors and WorldWide Web NetworX Corporation will select two
directors. The fifth director will be jointly selected by New America
Network, Inc. and WorldWide Web NetworX Corporation. Certain corporate actions
require the
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approval of the board of directors and certain corporate actions require
approval of at least three quarters of the board of directors of NAI Direct.
NAI DIRECT SHAREHOLDERS AGREEMENT
The terms of this shareholders agreement among Real Quest, Inc., NAI Direct,
Gerald Finn, Jeffrey Finn and the other individual shareholders are
substantially similar to the Real Quest shareholders agreement. The NAI Direct
shareholders agreement provides for the same method of selecting the board of
directors and provides for Gerald Finn and Jeffrey Finn to hold the same
offices. The NAI Direct shareholders agreement also provides for the following:
18 MONTH LOCK-UP: For the period of 18 months from September 23, 1999, none
of the parties may sell any portion of their equity interests in NAI Direct
without the written consent of the other parties, except for transfers to
certain family members and other shareholders who are employees of NAI Direct.
RIGHTS OF FIRST REFUSAL: In the event a shareholder of NAI direct receives
an offer to purchase his or her NAI Direct shares, the shareholder must first
offer the shares to NAI Direct on the same terms and if NAI Direct does not
accept the offer, certain of the remaining shareholders of NAI Direct will have
the right to purchase the shares on the same terms.
TAG-ALONG RIGHTS: If Real Quest receives an offer for all of the shares of
NAI Direct, Real Quest must give notice of such offer to the shareholders of NAI
Direct and permit them to include their shares of NAI Direct, on a pro rata
basis, in the proposed sale on the same terms.
REPURCHASE OF EMPLOYEE'S SHARES: NAI Direct has the right, within 30 days
following the last of day of employment, to purchase the shares of any employee
who owns less than 2% of NAI Direct at October 31, 1999 for $.10 per share if
the repurchase occurs before October 1, 2002 and $.15 if the repurchase occurs
between October 1, 2002 and September 30, 2004. If NAI Direct does not exercise
its right, the shareholders who owned more than 2% of NAI Direct at October 31,
1999 may exercise such right.
DEFAULT UNDER REAL QUEST SHAREHOLDERS AGREEMENT: If there is a default and
termination under the Real Quest shareholders agreement, NAI Direct will
purchase all of the shareholders' shares at par value and all shareholders of
NAI Direct agree to sell their shares at par value to NAI Direct.
TWO-YEAR NON-COMPETE: Each of the parties has agreed that for a period of
two years after ceasing to be a shareholder of NAI Direct, such party will not
become an owner, employee or consultant of, or otherwise connected with, any
business that competes with NAI Direct.
WWWX-JENCOM, LLC AND INTERCOMMERCE CHINA, LLC
WWWX-JENCOM, LLC
In February 1999, we entered into an acquisition agreement to purchase video
technology and other assets developed by JenCom Digital Technologies, LLC. In
March 1999, we formed WWWX-Jencom, LLC with JenCom Digital and contributed the
purchased assets to WWWX-Jencom to establish a joint venture for the
commercialization of JenCom Digital's technology products. Our investment with
JenCom Digital was a condition to the Stock Purchase Agreement between us and
D.H. Blair Investment Banking Corp., which served as placement agent in
connection with a series of our private placements. We own 50% of WWWX-Jencom,
LLC. See "Item 7. Certain Relationships and Related Transactions--D.H. Blair and
JenCom Digital."
Under our acquisition agreement with JenCom Digital, we issued 2,000,000
shares of our common stock to JenCom Digital in exchange for the video
technology and other assets developed by JenCom
9
<PAGE>
Digital that we contributed to WWWX-Jencom, LLC. We had also agreed to issue an
additional 3,000,000 shares of our common stock to JenCom Digital if the video
technology and other assets met goals set forth in the acquisition agreement. In
addition, under the terms of the acquisition agreement, in March 1999, we loaned
$900,000 to JenCom Digital, free of any interest. JenCom Digital assigned this
loan to WWWX-Jencom. The loan is to be repaid at the earliest of (1) ten years
from March 15, 1999, (2) a third-party investment in WWWX-Jencom, LLC of
$10,000,000 or (3) the sale of any asset by WWWX-Jencom, LLC having proceeds
exceeding $5,000,000.
RENEGOTIATION OF THE WWWX-JENCOM, LLC OPERATING AGREEMENT
Under the previous operating agreement for WWWX-Jencom, Henry Kauftheil, the
President of JenCom Digital, was appointed to act as sole manager of
WWWX-Jencom. Mr. Kauftheil was granted broad powers under the operating
agreement to run the affairs of WWWX-Jencom without consulting us. In
December 1999, we executed an agreement with JenCom Digital, its parent
International Commerce Exchange Systems, Inc. and others in which JenCom Digital
agreed to enter into a new operating agreement which would provide that JenCom
Digital share management control of WWWX-Jencom with us. In consideration of
this agreement we agreed to file a registration statement for JenCom Digital's
2,000,000 shares of our common stock before May 17, 2000. This agreement also
terminated JenCom Digital's right to receive the additional 3,000,000 shares of
our common stock on obtaining the performance criteria listed above. Instead,
International Commerce Exchange Systems received 1,500,000 shares of our common
stock upon the execution and delivery of the operating agreement for
InterCommerce China, LLC, described below, and is entitled to receive an
additional 1,500,000 shares of our common stock if InterCommerce China becomes a
public company and has either a market capitalization of $50,000,000 or a third
party investment of $5,000,000.
In January 2000, we executed an Amended and Restated Operating Agreement of
WWWX-Jencom, LLC with JenCom Digital that provides that WWWX-Jencom, LLC will be
managed jointly by our designee, who initially is Warren Rothstein, and Henry
Kauftheil.
JENCOM PRODUCTS
WWWX-Jencom, LLC owns four technology products, three of which are in
varying stages of development. The JenCom Digital technology products are being
developed in the State of Israel and we do not have any involvement with their
development or production. According to JenCom Digital, development of one
product is complete. Two patent applications have been filed with respect to the
technologies. Because of our recent lack of management control under the
WWWX-Jencom, LLC operating agreement, we are unsure as to our economic interest
in, and the status and marketability of, these technologies.
INTERCOMMERCE CHINA, LLC
In connection with our agreement with JenCom Digital described above, we
agreed with International Commerce Exchange Systems, Inc., Henry Kauftheil,
InterCommerce China, LLC, a joint venture between JenCom Digital and other
parties, for which Warren Rothstein had agreed to act as the sole distributor of
goods, that WorldWide Web NetworX Corporation would be issued 33.33% of
InterCommerce China's equity and Mr. Rothstein shall serve as one of the three
directors of InterCommerce China.
In January 2000, we entered into an Amended and Restated Operating Agreement
of InterCommerce China, LLC with International Commerce Exchange Systems, Inc.,
Lester Wolff International Investment, Ltd., Henry Kauftheil, Peter Zhenxiang Lu
and Uncas Holdings Limited Partnership. We have a 33.33% interest in
InterCommerce China, LLC. Henry Kauftheil will manage
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<PAGE>
InterCommerce China, LLC, subject to the approval of 70% of the members for
major decisions that are set forth in the agreement.
In January 2000, ATM Service, Ltd. entered into a Distribution and Operating
Agreement with InterCommerce China, LLC that irrevocably appoints ATM
Service, Ltd. as exclusive agent to distribute and sell, for a ten-year term,
the merchandise that InterCommerce China, LLC is entitled to redistribute from
China under any agreements with China Product TradeNet Center, a Chinese
government agency responsible for managing overstocked inventory in
Chinese-owned factories throughout China. ATM Service, Ltd. will receive a
transaction fee and a service fee based on the sales proceeds as calculated in
the agreement.
ENTRADE INC.
On February 23, 1999, we entered into a merger agreement with Artra Group
Incorporated, a publicly-traded New York Stock Exchange listed company, in which
we agreed to sell our Entrade Inc. subsidiary to Artra. We completed the sale on
September 23, 1999. The transaction resulted in Entrade Inc. surviving as the
parent of Artra and succeeding to Artra's New York Stock Exchange listing under
the symbol ETA. As a result of the transaction, on September 23, 1999, we owned
1.8 million shares, or approximately 15%, of Entrade Inc.'s common stock and
received $1.3 million in cash following the execution of the merger agreement.
Additionally, we received $1.3 million in funding for the operations of Entrade
from Artra for the period from February 28, 1999, through September 23, 1999.
Since that time, the percentage of our ownership interest in Entrade has been
diluted because Entrade Inc. has issued stock to other investors. See "Item 7.
Certain Relationships and Related Transactions."
entrade.com, Inc., a subsidiary of Entrade Inc., is a business-to-business
e-commerce solutions provider, which owns proprietary e-commerce and online
auction technologies. It licenses and utilizes these technologies to create
online business communities and virtual distribution centers for the purchase
and sale of corporate assets including inventories, products and services.
ENTRADE.COM SOFTWARE
ATM Service, Ltd. has a non-exclusive license to sublicense and to use
entrade.com's proprietary software as the operating system underlying the
ATMcenter.com web sites. The license is terminable by entrade.com, Inc. only
upon a material breach of the license agreement by ATM Service, Ltd. or in the
event of a bankruptcy or dissolution of ATM Service, Ltd. ATM Service, Ltd.
issued $1,500,000 of trade credits as consideration for the license. The trade
credits can be utilized for goods and services and will be reduced
dollar-for-dollar as fees are earned in accordance with the schedule below on
transactions entered into with entrade.com's involvement. In addition, fees will
continue to be paid for as long as the companies continue to do business
together.
<TABLE>
<CAPTION>
REVENUE SOURCE TYPE ENTRADE
- -------------- ---- --------
<S> <C> <C>
Master License Sales (Overseas) Fixed Fee 50%
Sub License Sales (Overseas) Fixed Fee 50%
Sub License Sales (Domestic) Fixed Fee 50%
Subscription Agreements Variable 30%
Transaction Fees Fixed Fee 30%
Subscription Renewals Variable 30%
On Line Product Remarketing Sales Marginal Profit 10%
Countertrade Redistribution Sales Marginal Profit 50%
</TABLE>
11
<PAGE>
ENTRADE.COM
In connection with our sale of Entrade Inc., our then Chairman, President
and Chief Executive Officer, Robert Kohn, was required to enter into an
employment agreement with Artra Group Incorporated, that was subsequently
assigned to entrade.com. At the closing of the sale on September 23, 1999, Artra
required Mr. Kohn to resign all of his positions with us. Mr. Kohn continued to
serve as President and Chief Executive Officer of entrade.com. Warren Rothstein,
has replaced Mr. Kohn as our interim Chairman, President and Chief Executive
Officer. See "Item 7. Certain Relationships and Related Transactions."
VISION TECHNOLOGIES, INC.
We entered into a term sheet dated March 19, 1999 with Vision
Technologies, Inc., to acquire Vision for stock and cash. We advanced $650,000
in cash to Vision on March 23, 1999. JenCom Digital Technologies, LLC
contributed $350,000 to Vision on behalf of WWWX-Jencom, LLC on April 28, 1999.
On July 12, 1999, we agreed with Vision to amend the term sheet so that we would
make an investment in Vision rather than acquire the whole company. We advanced
an additional $200,000 to Vision that day. The term sheet terminated on
August 26, 1999. As a result of the termination, Vision had the option to either
return to us, within 180 days, the cash we advanced to Vision or to convert that
amount into Vision common stock at a conversion rate specified in the term sheet
at an unspecified date. To date Vision has not yet produced or sold products. We
can not assure you that Vision will be able to continue to operate if it does
not secure additional funding. See "Item 7. Certain Relationships and Related
Transactions." See "Item 2. Financial Information--Management's Discussion and
Analysis of Financial Condition and Results of Operation."
VIDEONET CORPORATION
In July 1999, we advanced $100,000 to VideoNet Corporation, a company that
is developing video conferencing technology. Our investment was secured by a 12%
$100,000 convertible note. In November 1999, we agreed to convert the note and
the accrued interest into shares of convertible preferred stock representing
approximately 2.4% of the equity of VideoNet.
ONE WORLD DIRECT, INC.
We own 450,000 shares, or approximately 5%, of One World Direct, Inc., a
Nevada corporation doing business as One World Networks Integrated Technologies.
One World Direct has a beta version of its web site, 1world1people.com, which it
plans to use as a gateway for consumers to purchase products, find current
information on a variety of subjects and interact directly with celebrities.
ASSETRADE.COM, INC.
In April 1999, in connection with our acquisition of assets from Admiral
Asset Group, we acquired shares of asseTrade.com, that currently represent
approximately 1.2% of asseTrade.com, Inc. asseTrade.com provides traditional
off-line asset recovery, disposal and marketing with Internet-based asset
recovery, inventory management and on-line auctions for large industrial and
commercial organizations. See "Business--Admiral Asset Group" and "Item 7.
Certain Relationships and Related Transactions--Robert Kohn Related--Party
Transactions."
ADMIRAL ASSET GROUP
In April 1999, we acquired certain assets of Admiral Asset Group, Inc.
including all of the non-voting common stock of asseTrade.com, Inc. in exchange
for 750,000 shares of our common stock and the assumption of certain
liabilities. Admiral Asset Group is a transaction finder that may bring
transactions to us, ATM Service, Ltd., The Intrac Group, Ltd. or NAI
Direct, Inc.
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GOVERNMENT REGULATIONS AND LEGAL UNCERTAINTIES
FOREIGN LAWS AND REGULATIONS
Because we have relationships with ATMcenter.com agents in Mexico, China,
Colombia and Korea and plan on entering into similar relationships with
representatives in other countries, and InterCommerce China has relationships in
China, we may be subject to the laws of those jurisdictions. In addition, we
transact business with parties in numerous foreign countries and, therefore, our
business could be affected by the laws and the court systems of multiple
jurisdictions. We may become subject to claims in foreign jurisdictions for
violations of their laws or the laws in these jurisdictions may change or new
laws may be enacted in the future that would be adverse to our business.
INTERNET REGULATION
We operate in an environment of tremendous uncertainty as to potential
government regulation of the Internet. We believe that we are not currently
subject to direct regulation of on-line commerce, other than regulations
applicable to businesses generally. However, the Internet has rapidly emerged as
a commerce medium, and governmental agencies have not yet been able to adapt all
existing regulations to the Internet environment. Laws and regulations may be
introduced and court decisions reached that affect the Internet or other online
services, covering issues such as user pricing, user privacy, freedom of
expression, access charges, content and quality of products and services,
advertising, intellectual property rights and information security. Any future
regulation may have a negative impact on our business by restricting our method
of operation or imposing additional costs. As a company with Internet related
businesses, it is unclear in which jurisdictions we or the companies in which we
own interests are actually conducting business. Our failure to qualify to do
business in a jurisdiction that requires us to do so could subject us to fines
or penalties and could result in our inability to enforce contracts in that
jurisdiction.
TAXES
ATM Service, Ltd. and The Intrac Group, Ltd. do not collect or pay sales or
other similar taxes for assets or services purchased or for trade credits issued
or redeemed. We may be obligated to collect or pay such taxes in the future. The
imposition of sales, use, value-added or similar taxes could diminish our
competitiveness and harm our business.
INVESTMENT COMPANY ISSUES
We believe that we are actively engaged in the business of
business-to-business e-commerce through our subsidiaries and companies that we
are considered to "control." Under the Investment Company Act of 1940, as
amended, we are presumed to control a company if we own more than 25% of that
company's voting securities. We currently own 1.8 million shares, or
approximately 12%, of Entrade Inc. The price of Entrade Inc. stock has more than
doubled since it began trading on September 23, 1999 and our 1.8 million shares
have recently had a market value of approximately $63.8 million on January 31,
2000. We may be required to register as an investment company if more than 45%
of our total assets consist of, and more than 45% of our income/loss and revenue
over the last four quarters is derived from ownership interests in companies we
do not primarily control. Because we own neither a majority nor a controlling
interest in Entrade Inc., we could fail both of the 45% tests, and be deemed an
investment company under the Investment Company Act. In that event, we would
have to register unless the SEC issued an order finding that we were primarily
engaged in a non-investment business. Because we own only 12% of Entrade, and
our percentage ownership could decline, the SEC may not issue such an order. It
is not feasible for us to register as an investment company because the
Investment Company Act regulations are inconsistent with our strategy of
actively managing, operating and promoting collaboration among our companies
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<PAGE>
In order to avoid investment company status, we may be obligated to dispose
of our Entrade Inc. stock sooner than we otherwise would at prices which could
be lower than they otherwise might be or we may be forced to forego an
opportunity to purchase an investment security that would be important to our
core operating strategy. If we are deemed an investment company, we would be in
violation of the Investment Company Act and we would have to either comply with
the Investment Company Act or we could be ordered to cease selling our
securities and could be subject to civil and criminal actions for doing so. In
addition, our contracts would be voidable and a court could appoint a receiver
to take control of us and liquidate our business.
COMPETITION
ENTRADE INC.
We sold Entrade Inc. to Artra Group Incorporated in September 1999. For a
description of that transaction, see "Business-Entrade Inc." Entrade Inc. owns
or has equity interests in a group of business-to-business Internet companies
including entrade.com, utiliparts.com, asseTrade.com, printeralliance.com, and
pricecontainer.com. Entrade has also recently acquired all of the capital stock
of Public Liquidations Systems, Inc. and Asset Liquidation Group, Inc., which
engage in business under the name Nationwide Auction Systems. Entrade's strategy
is similar to ours in that it plans to invest in and migrate the traditional
off-line business transactions of its businesses onto the Internet and it
operates businesses that buy and resell non-performing and other assets. Entrade
principally makes investment in such companies by exchanging licenses in its
transaction technologies for equity interests. In addition, Entrade's strategy
encompasses e-commerce sales, marketing, and procurement applications.
We actively encourage the companies that we have equity interests in to work
together and develop relationships among each other. While we believe that
WorldWide Web NetworX Corporation benefits from such relationships, we recognize
that we may compete with certain of the companies that we have equity interests
in, principally Entrade Inc. and its subsidiaries and affiliated companies. As a
competitor, Entrade has unusual access to and knowledge of our business
including the following:
- Robert Kohn, our former Chief Executive Officer and President is Chief
Executive Officer and President of entrade.com and a member of the board
of directors of Entrade Inc.;
- A number of our former employees, who were members of our technical and
administrative staff, are now employees of entrade.com;
- We rely on and are obligated to pay license fees to entrade.com for the
use of its proprietary software which we use to run ATMcenter.com and its
related web sites. We sold this software to Artra Group Incorporated in
September of 1999 as part of the sale of Entrade;
- We rely on the technical staff at entrade.com to maintain and upgrade all
of our computer systems and software and our web sites. As a result of
entrade.com's provision of technical support, entrade.com has unlimited
access to all our information systems and therefore all the files and
documents that are on our computer systems. We have no written agreement
for the provision of these services and they may be terminated without
notice;
- We rely on entrade.com to provide us with certain administrative functions
including reception and facilities management. We also share our phone
system with entrade.com; and
- We also currently share undivided office space with entrade.com which
promotes communication between entrade.com employees and WorldWide Web
NetworX Corporation employees. entrade.com, Inc. pays WorldWide Web
NetworX Corporation the portion of lease amount applicable to its space.
We plan to separate the offices of WorldWide Web NetworX Corporation and
entrade.com, as well as maintain separate computer and phone systems.
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<PAGE>
For more information regarding the transactions that caused this shift of
personnel and assets from WorldWide Web NetworX Corporation to Entrade Inc., see
"Item 7. Certain Relationships and Related Transactions."
COMPETITION FACING THE COMPANIES IN WHICH WE OWN INTERESTS
Competition for Internet products and services is intense. As the market for
business-to-business e-commerce grows, we expect that competition will intensify
as traditional business competitors move to the Internet and Internet
competitors expand their businesses and market reach.
In addition, some of the companies in which we own interests compete to
attract and retain buyers and sellers. Several companies offer competitive
solutions that compete with one or more of the companies in which we own
interests. We expect that additional companies will offer competing solutions on
a stand-alone or combined basis in the future. Furthermore, our competitors may
develop Internet products or services that are superior to, or have greater
market acceptance than, the solutions offered by the companies in which we own
interests. If the companies in which we own interests are unable to compete
successfully against their competitors, our subsidiaries may fail.
Many of our competitors have greater brand recognition and greater
financial, marketing and other resources than the companies in which we own
interests. This may place the companies in which we own interests at a
disadvantage in responding to their competitors' pricing strategies,
technological advances, advertising campaigns, strategic partnerships and other
initiatives.
There are a number of companies that compete with ATM Service, Ltd. and The
Intrac Group, Ltd. in the asset remarketing business. The competition in this
industry for transactions is intense and we expect competition to increase as
traditional competitors take advantage of the Internet and e-commerce by
launching web sites to advertise their products and services and communicate
with potential customers. In addition, there are numerous companies that have
established and, we expect, are establishing auction sites on the Internet to
buy and sell products and merchandise. By expanding their markets, these
companies could compete directly with ATM Service, Ltd. and The Intrac
Group, Ltd.
COMPETITION IN ATTRACTING COMPANIES
We face competition from other capital providers including publicly-traded
Internet companies, venture capital companies and large corporations. Many of
these competitors have greater financial resources and brand name recognition
than we do. These competitors may limit our opportunity to acquire interests in
new companies. If we cannot acquire interests in attractive companies, our
strategy to acquire or enter into strategic relationships with companies may not
succeed.
COMPETITION WITH COMPANIES IN WHICH WE OWN INTERESTS
We may compete with the companies in which we own interests for
Internet-related opportunities. We may also compete with the companies in which
we own interests to acquire interests in business-to-business e-commerce
companies, and the companies in which we own interests may compete with each
other for acquisitions or other business-to-business e-commerce opportunities.
The companies in which we own interests, therefore, may seek to acquire
companies that we would find attractive. While we may join with the companies in
which we own interests on future acquisitions, we have no current contractual
obligations to do so. We do not have any contracts or other understandings with
the companies in which we own interests that would govern the resolution of
these potential conflicts. Such competition may deter companies from entering
into strategic relationships with us and may limit our business opportunities.
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<PAGE>
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
ATM Service, Ltd. licenses from entrade.com the software it uses to run the
ATMcenter.com web site. The license is perpetual and non-exclusive and is
described more fully in the section "Business--Entrade Inc." In addition, our
subsidiaries have copyrights with respect to software applications, web sites
and other materials. These materials may constitute an important part of our
subsidiaries' assets and competitive strengths. Federal law generally protects
such copyrights for 90 years from the creation of the underlying material.
EMPLOYEES
As of January 31, 2000,
- WorldWide Web NetworX Corporation had 8 full time employees.
- ATM Service, Ltd. had a staff of 13 full-time employees and utilized the
services of an additional 11 persons who are employees of D&W Enterprises,
a company owned by Warren Rothstein. ATM Service, Ltd. reimburses D&W
Enterprises for the services of the additional 11 persons. See "Item 7.
Certain Relationships and Related Transactions."
- The Intrac Group, Ltd. had no full-time employees.
- WWWX-Jencom, LLC had no full-time employees; all employees are paid by
JenCom Digital Technologies, LLC.
- NAI Direct, Inc. had 12 full-time employees.
We consider our relationships with our employees to be good. None of our
employees are covered by collective bargaining agreements.
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<PAGE>
ITEM 2. FINANCIAL INFORMATION.
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below for each of the two
years ended September 30, 1999 and 1998, and as of September 30, 1999 and 1998,
have been derived from our audited financial statements. The financial data as
of September 30, 1997, and for the year then ended, is that of Instra Corp., a
predecessor company, and has been derived from its audited financial statements.
The Company has not included financial data for periods prior to September 30,
1997, as the prior operations are not meaningful. When you read this financial
data, it is important that you also read the historical financial statements and
related notes included in this registration statement, as well as the section of
this registration statement entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations." These historical results are not
necessarily indicative of future results.
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
------------------------------
1999 1998 1997
-------- -------- --------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................................................... $ 1,339 $ 50 $ --
Loss from operations........................................ (13,948) (139) (166)
Gain on sale of subsidiary.................................. 25,426 -- --
Net income (loss)........................................... 1,440 (219) (165)
Net income (loss) per share:
Basic....................................................... .07 (.03) (.02)
Diluted..................................................... .07 (.03) (.02)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
------------------------------
1999 1998 1997
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 6,234 $792 1
Short-term investments...................................... 29,475 -- --
Total assets................................................ 47,511 986 25
Convertible debentures...................................... 815 -- --
Total stockholders' equity.................................. 34,650 923 25
</TABLE>
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS.
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR AUDITED
CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES THERETO INCLUDED ELSEWHERE
IN THIS REGISTRATION STATEMENT.
PLAN OF OPERATIONS
We currently intend to pursue the following plan of operations during the
next twelve months:
INCREASE REVENUES BY DEVELOPING OUR OPERATING COMPANIES. ATM Service, Ltd.
and The Intrac Group, Ltd. will continue to develop their customer bases through
the efforts of their present sales and marketing team. ATM Service, Ltd. will
also look to develop emerging markets through its own efforts or through
representatives. We will continue to develop NAIdirect.com through our ownership
in Real Quest, Inc. NAIdirect.com is presently developing its transactional web
site and intends to have revenues from the site in the next twelve months.
MONITOR AND REPORT ON OUR EQUITY INTEREST INVESTMENTS. We intend to hire
additional staff to monitor, report on and help develop companies in which we
have interests. This will allow us to help expand markets, services and products
and improve efficiencies in these businesses. It will also allow us to
constantly monitor our investments, giving us vital information for future
additional investments in those businesses.
SEEK OUT NEW INVESTMENT OPPORTUNITIES. We intend to seek out new investment
opportunities through our affiliated companies and be active in the business,
venture capital and Internet communities, using our cash, stock and/or Internet
expertise as our capital contributions to create joint ventures.
Our actual operating and financial results and actual plan of operations may
differ materially from the stated plan of operations. Factors which may cause a
change from our actual results or actual plan of operations vary but include,
without limitation, decisions of our board of directors not to pursue the stated
plan of operations based on its reassessment of the plan, changes in the
Internet business, the wholesaling and asset recovery business and general
economic conditions.
GENERAL
We had declining and comparatively small operations until May 18, 1998 when
we entered a new line of business by acquiring Keiretsu Corporation. See "Item
1. Business--History." Over the past three fiscal years, we have had
$1.4 million in revenues from operations. Administrative costs incurred to date
have been expended in connection with software development, marketing expenses,
and operating expenses. Operating expenses have also included general and
administrative expenses related to all of our activities.
EFFECT OF VARIOUS ACCOUNTING METHODS ON OUR RESULTS OF OPERATIONS
The various interests that we acquire in the companies in which we own
interests are accounted for under one of three methods: consolidation, equity
method and cost method. The applicable accounting method is generally determined
based on our voting interest in a company in which we own an interest.
CONSOLIDATION. Companies in which we directly or indirectly own more than
50% of the outstanding voting securities and exercise control are generally
accounted for under the consolidation
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method of accounting. Under this method, a company's results of operations are
reflected within our Consolidated Statements of Operations. Participation of
other company stockholders in the earnings or losses of a consolidated company
is reflected in the caption "Minority interest" in our Consolidated Statements
of Operations. Minority interest adjusts our consolidated results of operations
to reflect only our share of the earnings or losses of the consolidated company.
ATM Service, Ltd., and The Intrac Group, Ltd. were our only consolidated
companies through September 30, 1999. ATM Service, Ltd. was recorded using the
equity method from December 1998 through July 23, 1999, when we acquired a
controlling interest. From that date through September 30, 1999, we have
consolidated ATM Service, Ltd. and included the detail of its results of
operations in our consolidated results of operations.
EQUITY METHOD. Companies whose results we do not consolidate, but over whom
we exercise significant influence, are accounted for under the equity method of
accounting. Whether or not we exercise significant influence with respect to a
company depends on an evaluation of several factors including, among others,
representation on the company's board of directors and ownership level, which is
generally a 20% to 50% interest in the voting securities of the company,
including voting rights associated with our holdings in common, preferred and
other convertible instruments in the company. Under the equity method of
accounting, the detail of a company's results of operations are not reflected
within our Consolidated Statements of Operations; however, our share of the
earnings or losses of the company is reflected in the caption "Equity (income)
loss" in the Consolidated Statements of Operations. During the fiscal year ended
September 30, 1999, we accounted for three companies under the equity method of
accounting, WWWX-Jencom, LLC, Real Quest, Inc. and ATM Service, Ltd., as
described in the previous paragraph.
The net effect of a company's results of operations on our net results of
operations is generally the same under either the consolidation method of
accounting or the equity method of accounting, as under both of these methods
only our share of the earnings or losses of a company is reflected in our net
results of operations in the Consolidated Statements of Operations.
COST METHOD. Companies not accounted for under the consolidation or the
equity method of accounting are accounted for under the cost method of
accounting at cost. Under this method, our share of the earnings or losses of
these companies is not included in our Consolidated Statements of Operations. As
of September 30, 1999 we accounted for six companies under the cost method of
accounting.
EFFECT OF VARIOUS ACCOUNTING METHODS ON THE PRESENTATION OF OUR FINANCIAL
STATEMENTS
The presentation of our financial statements may differ from period to
period primarily due to whether or not we apply the consolidation method of
accounting, the equity method of accounting or the cost method of accounting.
RESULTS OF OPERATIONS--THREE YEAR PERIOD ENDED SEPTEMBER 30, 1999
REVENUES
Revenues were $1.3 million for the year ended September 30, 1999 and $50,000
for the year ended September 30, 1998. There were no revenues for the year ended
September 30, 1997. The increase in revenue was primarily due to the
acquisitions of interests in ATM Service, Ltd. and The Intrac Group, Ltd.
Included in revenues for the year ended September 30, 1999, were $426,000 of
consulting revenue from entrade.com which we sold in September 1999.
We principally derive our revenue by providing inventory liquidation and
asset recovery services and from the purchase and resale of advertising media,
merchandise or business services through our
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<PAGE>
consolidated companies, ATM Service, Ltd. and The Intrac Group, Ltd., throughout
North America. We plan to expand our operations throughout the world.
We will contract with a customer to sell for the customer large blocks of
assets or inventory under asset management, liquidation, or cost recovery
agreements. In an asset management agreement, we act as an agent, remarket the
assets for cash, and receive a percentage of the sale as a commission.
Under both liquidation and cost-recovery agreements, we take title to the
assets and assume the risk of loss. We are not required, by either type of
agreement, to make any cash payments to the customer for the assets purchased
until such time as we sell the assets. These payments pertain to the portion of
assets actually sold. Our ultimate cost is a contracted percent of the amount we
sell the inventory for, which is uncertain until a sale occurs. Accordingly, we
do not record inventory for any assets purchased under these agreements.
The transactions conducted under asset management and cost recovery
agreements can also be settled, in part, in trade credits to purchase
advertising media, merchandise, or business services. Trade credits issued to
customers represent the difference between the contracted value of the inventory
as negotiated with the customer and the cash paid to the customer upon the sale
of the inventory. Trade credits are not redeemable by customers for cash. The
contracted value of the inventory is mutually agreed upon by us and the customer
at the time an agreement is reached and is usually in excess of the cash
liquidation value. We are not required to remit cash or any other form of
payment other than trade credits for the difference between the contracted value
and the cash paid for the inventory. Certain liquidation and cost recovery
agreements are transacted exclusively in trade credits.
Revenues associated with asset management and cost recovery services are
typically recognized when the inventory sold is shipped. However, if the
transactions involve the issuance of trade credits, we will defer a portion of
the revenue attributable to cash received under asset management and cost-
recovery agreements to reflect the outstanding commitment applicable to the
future redemption of the trade credits.
We issue two types of trade credits, "combination trade credits" and
"straight trade credits." Under a combination trade credit arrangement, the
customer purchases goods and services from us in exchange for trade credits and
cash. The ratio of cash to combination trade credits that make up the total
purchase price to be used in purchases from us are determined on a
transaction-by-transaction basis. The obligation to redeem combination trade
credits represents a best efforts obligation to us. The combination trade
credits have neither any recordable obligation nor do they represent any fixed
or determinable liability. Accordingly, no liability is recorded when
combination trade credits are issued.
To redeem combination trade credits, a customer must contact us and request
that we provide advertising media, merchandise or business services. We will
attempt to purchase the requested product for cash or a combination of cash and
trade credits. We have no liability or obligation to the customer if we are
unable to obtain any of the items requested that are not already within our
inventory or that we cannot reasonably obtain. Our inventory of services is
minimal at September 30, 1999. When we redeem combination trade credits, we
recognize revenue equal to the cash received from the customer for the goods and
services plus, if applicable, the pro rata portion of the deferred revenue
relating to the liquidation of the assets that gave rise to the trade credits.
Cost of revenue is recognized for the cash we paid for the goods and services.
Straight trade credits are issued to purchase goods and services from us
without the requirement to pay us a portion of the purchase price in cash.
Straight trade credits are issued to purchase pre-negotiated types of goods and
services, which have readily estimable costs. We record deferred revenue for
straight trade credits approximating the estimated cost to purchase future goods
and services plus a normal profit margin. When we redeem straight trade credits,
we recognize revenue equal to the pro
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<PAGE>
rata portion of the deferred revenue relating to straight trade credits. Cost of
revenue is recognized for the cash we paid for the goods and services.
Revenue from asset management, liquidation and cost-recovery services was
$576,000 for the year ended September 30, 1999 and deferred revenue was $470,000
at September 30, 1999.
Unredeemed Combination trade credits totaled $8,017,000 at September 30,
1999. The customer must redeem the trade credits within specified periods
ranging from 2 to 5 years. Trade credits expiring in the next four years are as
follows: $2,259,000 in 2000, $1,445,000 in 2001, $1,270,000 in 2002, and
$3,043,000 in 2003.
We also generated revenue by providing consulting services during the year
ended September 30, 1999. Consulting revenues are recognized in the period in
which the consulting services are performed. Consulting revenues were $659,000
for the year ended September 30, 1999, of which $426,000 was attributable to
Entrade which was sold in September 1999.
COST OF REVENUE
Cost of revenue consists of goods, freight, and warehousing of inventory
held for sale. Cost of revenue was $792,000 for the year ended September 30,
1999 and $36,000 for the year ended September 30, 1998. There was no cost of
revenues for the year ended September 30, 1997. The increase in cost of revenue
was primarily due to the increase in revenues due to the acquisitions of
Entrade, ATM Service, Ltd. and The Intrac Group, Ltd.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses consist primarily of payroll and related
costs, professional fees, consulting fees, facilities cost and marketing
expenses. General and administrative expenses were $5.3 million, $140,000 and
$166,000 for the years ended September 30, 1999, 1998 and 1997, respectively.
The increase was primarily due to an increase in the operations of Entrade, and
the acquisitions of Entrade, ATM Service, Ltd. and The Intrac Group, Ltd. As the
number of our employees grew to support our operations and those of our
subsidiary companies, our general and administrative costs increased.
The increases from 1998 to 1999, excluding $1.6 million attributable to the
operations of entrade.com which was sold in September 1999, were primarily due
to increases in payroll and related costs of $2.1 million, professional fees of
$524,000, consulting fees of $372,000, software development expense of $366,000,
travel and entertainment expense $227,000 and rent of $118,000. The decrease
from 1997 to 1998 was primarily due to a decrease in project costs offset by an
increase in consulting expenses of $396,000.
We expect selling, general, and administrative expenses to increase due to
the consolidated companies being included in our consolidated statement of
operations for the entire year and the expansion of support necessary for the
increase in our growth and the growth of our consolidated subsidiaries to
implement our plan of operations.
DEPRECIATION AND AMORTIZATION
Amortization expense consists of amortization of goodwill and other
intangible assets. Depreciation expense consists of depreciation of furniture,
fixtures, machinery and computer equipment. Depreciation and amortization was
$597,000 and $13,000 for the years ended September 30, 1999 and 1998,
respectively. The increase in depreciation and amortization was primarily due to
goodwill amortization of $109,000 relating to The Intrac Group acquisition, and
$430,000 relating to Entrade, which was sold in September 1999.
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<PAGE>
We expect depreciation and amortization to increase in the future due to the
amortization for the acquisitions of The Intrac Group made in 1999 and possible
acquisitions in the future. Goodwill relates to the acquisition of Intrac and
represents 7.36% of the Company's total assets at September 30, 1999. Management
has estimated the useful lives assigned to the goodwill for Intrac based on its
estimated future cash flows. Management believes that there is no pervasive
evidence that any material portion of goodwill will dissipate over a shorter
period based on the expected future cash flows of Intrac.
WRITE-OFF OF PURCHASED RESEARCH AND DEVELOPMENT
In March 1999, we acquired certain assets of JenCom Digital
Technologies, Inc. The total cost of the acquisition was $3 million through the
issuance of 2 million shares of Common Stock. In conjunction with the
acquisition of these assets, we recorded a charge to operations of $3 million
for in-process research and development at the time of the acquisition,
representing the fair value of products under development that had not reached
technological feasibility at the time of the acquisition. We transferred our
ownership interest in these assets to our 50% owned joint venture WWWX-Jencom,
LLC.
The in-process technology acquired was four significant research and
development projects which the WWWX-Jencom continues to develop. The
technologies acquired are VuCam, a remote-control real-time streaming video
software; True Sound, a sound compression format; School Network Application, an
interactive web-based system designed to facilitate involvement in school
activities and the flow of school-related information; and Power Broker, a
communications and trading management program.
To date, only one of the projects has been fully developed, Power Broker,
which was completed late in 1999, however, there have been no sales of Power
Broker to date. Because of our recent lack of control under the WWWX-Jencom, LLC
operating agreement over WWWX-Jencom, LLC, we are unsure of the remaining
development project and marketing expenses.
The nature of the efforts required to develop the acquired in-process
technology into commercially viable products principally relates to the
completion of all planning, designing, and testing activities that are necessary
to establish that the product or service can be produced to meet its design
requirements, including functions, features, and technical performance
requirements. Future developments in technology, changes in other products and
service offerings, or other developments may cause us to alter or abandon these
plans.
WRITE-OFF OF INTANGIBLES
We evaluate impairment of our intangible and long-lived assets in accordance
with Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. In
making such determination, management compares the estimated future cash flow
performance, on an undiscounted basis, of the underlying operations or assets as
compared with their carrying value to determine the extent of any impairment
charge.
During 1999, we determined that the ATM Center System technology did not
meet ATM Service, Ltd.'s current business model and decided that it would no
longer use this technology to support its operations. We believe we may be able
to license this technology to other users in the future, however, we have not
determined whether there is a current market for this technology. Therefore, we
determined that their was no value to the technology and recorded a charge to
operations for the unamortized value of the technology of $5.6 million. In
September 1999, ATM Service, Ltd. entered into a license agreement with
entrade.com to use the Entrade Transaction Software to run ATMcenter.com.
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<PAGE>
LOSS FROM OPERATIONS
During the year ended September 30, 1999, we incurred a loss from operations
of $13.9 million compared with $139,000 and $166,000 in the years ended
September 30, 1998 and 1997, respectively. The increased loss is primarily the
result of increased operations and the inclusion of our consolidated
subsidiaries.
GAIN ON SALE OF SUBSIDIARY
In September 1999, we completed the sale of Entrade to Artra Group resulting
in a gain of $25.4 million. We received cash of $1.3 million and 1.8 million
shares of Entrade common stock, valued at $29.5 million. Additionally, we
received $1.3 million in funding for operations of Entrade from Artra for the
period February 28, 1999 through September 23, 1999.
IMPAIRMENT OF ADVANCES TO COMPANIES
We continually evaluate the carrying value of our ownership interests in
each of the companies in which we own interests for possible impairment based on
achievement of business plan objectives and milestones, the value of each
ownership interest in each company relative to carrying value, the financial
condition and prospects of each company, and other relevant factors.
At September 30, 1999, we evaluated the carrying value of our ownership
interest in Vision Technologies, Inc. Based on our review of Vision's business
plan and the lack of sufficient capital, we have recorded a 100% valuation
allowance of $1.0 million representing the cash advances of $850,000 and our 50%
ownership of the $350,000 in advances made by WWWX-Jencom.
INTEREST EXPENSE
Interest expense represents interest on our convertible debt and capital
lease obligations. Interest expense was $392,000 and $90,000 for the years ended
September 30, 1999 and 1998, respectively.
EQUITY INCOME (LOSS)
Equity income (loss) represents our share of the earnings or losses of our
companies accounted for under the equity method. Equity income (loss) includes
$417,000 of goodwill amortization relating to the amount by which our carrying
value exceeded our share of the underlying net assets of ATM Service, Ltd. and
$800,000 of stock compensation earned by Warren Rothstein our President and CEO
for services rendered to ATM Service, Ltd. The operations of ATM Service, Ltd.
are included in our consolidated operations from July 23, 1999, the date which
we acquired a controlling interest, through September 30, 1999. Additionally,
equity loss includes our share of the loss from WWWX-Jencom of $361,000. The
losses from WWWX-Jencom are expected to continue which would further reduce our
investment in WWWX-Jencom.
AMORTIZATION OF DEBT COSTS
Deferred finance costs consist of expenses related to the issuance of the
convertible debt agreements entered into in March 1999. Amortization of debt
issuance costs were $155,000 for the years ended September 30, 1999. There was
no amortization of debt costs in the years ended September 30, 1998 or 1997.
INTEREST INCOME
Interest income represents interest on our cash and cash equivalents, which
are primarily invested in money market accounts. Interest income was $56,000,
$10,000 and $1,000 for the years ended September 30, 1999, 1998 and 1997,
respectively.
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<PAGE>
INCOME TAX EXPENSE
Income tax expense for the year ended September 30, 1999 of $6.9 million
principally results from deferred income taxes of $8.8 million related to the
gain on the sale of Entrade offset by a valuation allowance of $2.9 million with
respect to deferred tax assets of a subsidiary not consolidated for income tax
purposes for which realization is uncertain.
NET INCOME (LOSS)
For the year ended September 30, 1999, we had net income of $1,440,000
compared to net losses of $219,000 and $166,800 for the years ended
September 30, 1998 and 1997, respectively. The increase in income resulted
primarily from the gain on sale of subsidiary which was reduced by increased
losses from operations.
LIQUIDITY AND CAPITAL RESOURCES
During the three years ended September 30, 1999, we have funded our
operations with a combination of cash proceeds from the sale of our common
stock, convertible debentures and our Entrade Inc. subsidiary. Since inception,
we have raised approximately $12.9 million from the sale of our common stock and
approximately $1.5 million from the sale of our convertible debentures. Proceeds
from the sale of Entrade Inc. stock generated cash proceeds of approximately
$2.6 million.
Cash used in operations increased to approximately $3.4 million in 1999
compared to $95,000 in 1998, as a result of our increased operating expenses
which were only partially offset by increased net revenues and a decrease in
accounts receivable.
Cash used in investing activities increased to approximately $4.1 million in
1999 compared to $145,000 in 1998, as a result of acquisitions of ownership
interests in companies of $3.0 million, advances to companies of $2.9 million,
and acquisitions of technology of $750,000, offset by proceeds from the sale of
a portion of our Entrade Inc. subsidiary of $2.6 million. Our acquisitions of
ownership interests in companies consisted of $1.1 million for BarterOne (which
subsequently became Entrade Inc.), $1.5 million for our wholly-owned subsidiary,
The Intrac Group, Ltd. and $675,000 for a cost-basis investment in One World
Direct partially offset by cash acquired. Our advances to companies included
$900,000 advanced to WWWX-Jencom, LLC of which $350,000 was advanced to Vision
Technologies, $850,000 advanced directly to Vision Technologies, and $100,000
advanced to VideoNet. Our acquisition of technology was for the ATM Center
System, a proprietary system for online electronic trading and banking from a
company in which Robert Kohn, our former Chairman, Chief Executive Officer,
President and principal shareholder had, at the time he held such positions, an
ownership interest. We purchased $206,000 of property and equipment for our
operations.
Consolidated working capital increased to $23.9 million at September 30,
1999, compared to $778,000 at September 30, 1998. The increase was primarily due
to the net proceeds from the equity and debentures we sold in 1999 and the cash
and stock proceeds we received from the sale of our Entrade Inc. stock, offset
by the cash used in operations, our acquisitions of ownership interests in and
advances to companies and our acquisition of technology. Our ability to sell our
shares of Entrade is subject to a one-year restriction, which expires in
September 2000, after which our ability to sell may be limited by market
considerations. Excluding our marketable securities, we would have a working
capital deficit at September 30, 1999, of $5.6 million.
Our operations are not capital intensive and we have not incurred
significant capital expenditures through September 30, 1999 and do not
anticipate significant capital expenditures in fiscal 2000. There were no
material capital asset purchase commitments at September 30, 1999.
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We have committed to directly provide up to $1,000,000 of funding to our
affiliated company, NAI Direct, Inc., to fund its operations and to loan or
otherwise obtain $4,000,000 of additional funding for NAI Direct before
March 2001.
Our 6% cumulative convertible debentures are due in March 2000. If the
holders of the Convertible Debentures do not convert to common stock, we will
have to pay $990,000 plus interest and related costs to the holders in
March 2000.
We believe that cash and cash equivalents on hand at September 30, 1999,
will be adequate to fund our current operating needs and those of our
consolidated subsidiaries at current levels at least through the end of fiscal
year 2000. In order to implement our growth strategy of making additional
investments in or advances to our companies, we will need additional cash
resulting from either the proceeds of loans against our Entrade Inc. stock, the
sale of a portion or all of our Entrade Inc. stock or from future equity
offerings. We cannot be sure that we will be able to borrow against our
Entrade Inc. stock, sell our Entrade Inc. stock at a desirable price or be able
to obtain the additional equity funding at an acceptable valuation or at all.
Further, if we sell a portion of our Entrade Inc. stock we would be subject to
income taxes based on the value of the Entrade Inc. stock at the time of the
sale. If we cannot raise the additional funding, we may be forced to curtail our
planned growth strategy and reserve our cash resources to fund our ongoing
operations.
COST OF YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products were coded
to accept only two-digit entries in date code fields. Both before and after the
year 2000, these date code fields will need to accept four-digit entries to
enable the computer systems and software products to distinguish twenty-first
century dates from twentieth century dates. Any of our computer programs or
hardware that have date-sensitive software or embedded computer chips which have
not been upgraded to be compliant with the requirements of the year 2000
changeover may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operations, including among other things, a temporary inability
to properly process transactions internally or in conjunction with external
computer systems on which we depend to provide our customers with our product
and services. Although we have not suffered from any of these types of events to
date, we may do so in the future.
OUR GENERAL READINESS
The year 2000 requirements affect the computers, software and other
equipment that we use, operate or maintain for our operations. Substantially all
of our software was developed after awareness of these issues became wide spread
in the software industry, such that our software was designed with reference to
preventing year 2000 related difficulties from arising. Nonetheless, we have
adopted an internal policy to ensure that our product remains year 2000
compliant. To the best of our knowledge, none of our internal systems or
equipment which are necessary for the conduct of our business has any defects,
errors or deficiencies relating to the year 2000 which are not capable of being
remedied.
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<PAGE>
COST OF OUR YEAR 2000 EFFORTS
We have incurred no direct expenses since our inception in connection with
this process, and do not expect to incur any significant additional expenditures
in this regard.
MOST LIKELY CONSEQUENCES OF YEAR 2000 PROBLEMS
We believe that it is not possible to determine with complete certainty that
all year 2000 related problems affecting us have been identified or corrected.
The number of devices and systems that could be affected and the interactions
among these devices and systems are numerous. We believe that there exists the
potential for a significant number of operational inconveniences and
inefficiencies, and possible disputes and claims related to products or services
used or provided by us.
CONTINGENCY PLANS
We have taken measures to ensure that our internal systems and equipment are
year 2000 compliant for both hardware and software. All of our operating systems
on all critical servers have been upgraded, and all individual computers and
tools have been verified as year 2000 compliant. We perform a daily back-up of
all critical information. In the event of a failure, we estimate that the
information technology infrastructure necessary to run our internal business
operations could be restored.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS.
We currently hold corporate equity securities of Entrade Inc., and money
market instruments. These investments are denominated in U.S. dollars.
Investments in corporate equity instruments carry a degree of risk. Holdings of
the equity securities of Entrade Inc. are subject to market risk and the value
of our holdings may continue to fluctuate. Since September 30, 1999, the value
of our Entrade stock has fluctuated from a low of $25.4 million to a high of
$100.3 million on January 13, 2000. The value of our Entrade stock was
$63.8 million at close of trading January 31, 2000. Historically, our investment
income has not been material to our financial results, and we do not expect that
changes in interest rates will have a material impact on the results of
operations.
We also have issued fixed-rate debt, which is convertible into our common
stock at a pre-determined conversion price. Convertible debt has characteristics
that give rise to both interest rate risk and market risk because the fair value
of the convertible security is affected by both the current interest rate
environment and the underlying price of our common stock. For the year ended
September 30, 1999, our convertible debt, on an if-converted basis, was
dilutive, however it had no impact on our diluted net income per share. In
future periods, the debt may be converted, or the if-converted method may be
dilutive and diluted net income per share would be reduced. See Note 6 to the
financial statements for additional information with respect to our convertible
debt.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This registration statement contains forward-looking statements that are
subject to a number of risks and uncertainties, many of which are beyond our
control, which may include statements about our:
- plans for and ability to hire additional personnel, including a full time
Chief Executive Officer;
- separating our office space and administrative and technology services
from entrade.com, Inc.
- business strategy, including transacting business on our web sites and
developing the companies in which we own interests;
- expectations for future expansion both in the U.S. and internationally;
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<PAGE>
- anticipated growth in revenue;
- uncertainty regarding our future operating results;
- anticipated sources of funds to fund our operations; and
- plans, objectives, expectations and intentions contained in this
registration statement that are not historical facts.
All statements, other than statements of historical included in this
registration statement, regarding our strategy, future operations, financial
position, estimated revenues or losses, projected costs, prospects, plans and
objectives of management are forward-looking statements. When used in this
registration statement, the words "will", "believe", anticipate", "intend",
estimate", "expect", "project" and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements contain
such identifying words. All forward-looking statements speak only as of the date
of this registration statement. You should not place undue reliance on these
forward-looking statements. Although we believe that our plans, intentions and
expectations reflected in or suggested by the forward-looking statements we make
in this registration statement are reasonable, we can give no assurance that
theses plans, intentions or expectations will be achieved.
ITEM 3. PROPERTIES.
Our corporate headquarters are located at 521 Fellowship Road, Suite 130,
Mount Laurel, New Jersey. Our lease commenced on July 19, 1999 with a term of
61 months. Our monthly rent over the term of the lease ranges from approximately
$11,000 to $26,000.
ATM Service, Ltd. has a lease for offices at 220 White Plains Road,
Tarrytown, NY. The lease commenced on October 1, 1999 for a term of five years.
The monthly rent over the term of the lease ranges from approximately $12,900 to
$17,300.
The Intrac Group, Ltd. has a lease for offices at 424 Madison Avenue, New
York, NY. The Intrac Group, Ltd.'s lease commenced on October 1, 1997 with a
term of five years. The monthly rent over the term of the lease ranges from
approximately $8,000 to $9,300.
NAI Direct, Inc. rents office space from New America Network, Inc. on a
month to month basis, for $5,000 per month, while it looks for permanent office
space in central New Jersey.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to us with respect
to beneficial ownership of our common stock as of December 31, 1999:
- each person known by us to beneficially own 5% or more of our outstanding
common stock;
- each of our directors and executive officers; and
- each executive officer named in the summary compensation table.
Beneficial ownership is determined in accordance with the rules of the SEC.
In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of common stock subject to options
held by that person that are currently exercisable or exercisable within
60 days of December 31, 1999 are deemed outstanding. Percentage of beneficial
ownership is based upon 39,265,591 shares of common stock outstanding at
December 31, 1999. To our knowledge,
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except as set forth in the footnotes to this table, each person named in the
table has sole voting and investment power with respect to the shares set forth
opposite such person's name.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
BENEFICIALLY OWNED BENEFICIALLY OWNED
------------------ ------------------
<S> <C> <C>
OFFICERS AND DIRECTORS
Warren Rothstein(1)......................... 4,000,000(2) 10.18%
Thomas A. Settineri(3)...................... 750,000 1.91%
Gary K. Levi(3)............................. 250,000 (4)
William F. Weld(5).......................... -- --
Allan M. Cohen(6)........................... -- --
Michael E. Norton(6)........................ -- --
All directors and executive officers as a
group (7 persons)......................... 5,000,000 12.73%
FIVE PERCENT STOCKHOLDERS
Robert D. Kohn.............................. 4,340,000(7) 11.05%
D.H. Blair Investment....................... 2,222,967(8) 5.66%
Banking Corp.
44 Wall Street
New York, NY 10005
JenCom Digital Technologies, LLC............ 2,000,000 5.09%
220 West 19(th) Street
12th Floor
New York, NY 10011
</TABLE>
- ------------------------
(1) c/o ATM Service, Ltd., 220 White Plains Road, Tarrytown, NY 10591.
(2) 3,000,000 of Warren Rothstein's shares of common stock are subject to
forfeiture provisions under a stock issuance agreement.
(3) c/o The Intrac Group, Ltd., 424 Madison Avenue, New York, NY 10017.
(4) Less than 1%.
(5) c/o McDermott, Will & Emery, 50 Rockefeller Plaza, New York, NY 10020.
(6) c/o WorldWide Web NetworX Corporation, 521 Fellowship Road, Suite 130, Mt.
Laurel, NJ 08054.
(7) Does not include an aggregate of 2,741,666 shares owned by Mr. Kohn's adult
children.
(8) Includes warrants exercisable for 222,967 shares of common stock. Does not
include warrants exercisable for 150,000 shares of common stock held by
Engex, Inc., a closed-end mutual fund whose investment advisor is an
affiliate of D.H. Blair; warrants exercisable for 255,000 shares of common
stock held by officers and employees of D.H. Blair; or shares to which D.H.
Blair may have a claim that it is entitled to relating to our failure to
file a registration statement covering the 2,000,000 shares of common stock
that D.H. Blair purchased in March 1999.
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ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
MANAGEMENT
Our directors and executive officers are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- --------------------------------------------
<S> <C> <C>
Warren Rothstein............... 52 Chairman of the Board, Interim President and
Chief Executive Officer
John T. Banigan................ 50 Senior Vice President--Affiliate Development
Michael E. Norton.............. 49 Vice President--Finance, Chief Financial
Officer and Director
Allan M. Cohen................. 29 Vice President, General Counsel, Secretary
and Director
William F. Weld................ 54 Director
Thomas A. Settineri............ 54 Director
Gerald C. Finn................. 69 Director
</TABLE>
WARREN ROTHSTEIN has been our interim Chairman, President and Chief
Executive Officer since September 1999. Mr. Rothstein will resign his positions
as Chairman, and Chief Executive Officer of WorldWide Web NetworX Corporation as
soon as a suitable candidate is found to replace him and assume on a permanent
basis the offices which he now holds. Warren Rothstein has been President,
Chairman and a Director of ATM Service, Ltd. since February 10, 1999. Since
December of 1983, Mr. Rothstein served as Chief Executive Officer of D & W
Enterprises Inc., a wholesale remarketing company.
JOHN T. BANIGAN has been our Senior Vice President--Affiliate Development
since January 2000. From 1996 to 1999, Mr. Banigan served as a management
consultant in Financial Services Consulting for KPMG Peat Marwick LLP. From 1992
to 1996, Mr. Banigan was a Managing Director of BG Capital
Corporation/Buckingham Partners L.P., a merchant banking boutique. From 1989 to
1992, Mr. Banigan served as Senior Vice President of The Hongkong and Shanghai
Banking Corporation. From 1986 to 1989, Mr. Banigan was a Managing Director of
B.A.I.I. (Asia) Limited, the Asian-based merchant banking arm of Banque Arabe et
Internationale D'Invetissement. From 1972 to 1986, Mr. Banigan served in various
functions for Chemical Banking Corporation including as senior corporate officer
for the China Region based in Hong Kong and Country Manager for Mexico resident
in Mexico City. Mr. Banigan received his bachelor's degree in international
economics from the School of Foreign Service at Georgetown University.
MICHAEL E. NORTON has been our Vice President--Finance and Chief Financial
Officer since April 1999 and a Director since June 23, 1999. From October 1996
until March 1999, Mr. Norton was controller for CDnow, Inc., a publicly-traded
Internet company. From August 1988 until January 1996, Mr. Norton was supervisor
of corporate accounting at Ingersoll-Rand. Mr. Norton received his bachelor of
arts degree in math from Rutgers University and is a Certified Management
Accountant and Certified Financial Manager. Mr. Norton is a member of the
Institute of Management Accountants and the American Production and Inventors
Control Society.
ALLAN M. COHEN has been our Vice President and General Counsel since
June 1, 1999 and Secretary and a Director since June 23, 1999. Mr. Cohen has
also served as general counsel and secretary of ATM Service, Ltd. since
July 23, 1999. From 1997 to June 1999, Mr. Cohen was an
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associate attorney in the New York office of the law firm of McDermott, Will &
Emery in the corporate department. From 1994 until 1997, Mr. Cohen was a student
at the University of Virginia School of Law. From 1992 to 1994, Mr. Cohen was a
member of the audit staff in the Washington, D.C. office of Arthur Andersen &
Co. Mr. Cohen received his bachelor of science degree in accounting from the
Pennsylvania State University in 1992 and his juris doctor degree from the
University of Virginia School of Law in 1997. Mr. Cohen is a Certified Public
Accountant and is admitted to practice law in the State of New York.
WILLIAM F. WELD has been one of our Directors since December 1999. Since
1997, Mr. Weld has been a partner in the New York and Boston offices, of the law
firm of McDermott Will & Emery and is currently partner-in-charge of its New
York office. In 1991, Mr. Weld was elected as the governor of the Commonwealth
of Massachusetts and served for six years. From 1988 to 1990, Mr. Weld was a
senior partner at Hale & Dorr LLP, a Boston law firm. From 1986 to 1988,
Mr. Weld served as assistant U.S. attorney general in charge of the criminal
division of the United States Department of Justice. From 1981 to 1986,
Mr. Weld was the United States Attorney for Massachusetts. Mr. Weld received his
bachelor's degree from Harvard College, a diploma in international economics
from Oxford University and his juris doctor degree from Harvard Law School.
Mr. Weld serves as a director of Affiliated Managers Group, Inc., a New York
Stock Exchange listed company.
THOMAS A. SETTINERI has served as one of our Directors and has been
President and Chief Executive Officer of ATM Service, Ltd. since July 23, 1999.
Since 1991, Mr. Settineri has been Chairman and Chief Executive Officer of The
Intrac Group. From 1974 to 1991, Mr. Settineri was President and Chief Operating
Officer of The Mediators, Inc., a privately held New York based company, which
was involved in marketing solutions and asset management programs for its
customers. Mr. Settineri received his bachelor of arts degree in economics from
Cornell University in 1969.
GERALD C. FINN has served as one of our Directors since February 2000 and
has been President and Chief Executive officer of NAI Direct, Inc. since its
founding in September 1999. Mr. Finn is the principal founder of New America
Network, Inc. and served as New America Network, Inc.'s President from its
inception in 1974 through 1995. From 1995 to the present, Mr. Finn has been
Chief Executive Officer of New America Network, Inc., and in 1990 he was elected
Chairman of the Board, a position he currently holds. Mr. Finn attended Rutgers
University and is a licensed real estate broker in New Jersey, New York,
Pennsylvania and Florida.
BOARD OF DIRECTORS
We currently have six Directors. All Directors currently hold office until
the next annual meeting of stockholders or until their successors have been
elected and qualified. The Board of Directors is searching for and intends to
appoint two additional outside directors to the current Board of Directors.
Under the terms of the Agency Agreement between WorldWide Web NetworX
Corporation and D.H. Blair Investment Banking Corp., dated May 26, 1999, D.H.
Blair was given the right to appoint one of our outside Directors but has not
exercised that right. As a condition to Mr. Weld's appointment to our board of
directors, we increased the amount of coverage under our director and officer
liability insurance to $10 million.
COMMITTEES OF THE BOARD OF DIRECTORS
We have established two standing committees of our Board of Directors: an
Audit Committee and a Compensation Committee. The basic functions of these
committees are summarized below.
AUDIT COMMITTEE. The audit committee, which currently consists of
Mr. Weld, will recommend the appointment of our independent public accountants,
review and approve the scope of the annual audit and review the results thereof
with our independent accountants. The audit committee also will assist the Board
in fulfilling its fiduciary responsibilities relating to accounting and
reporting policies,
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<PAGE>
practices and procedures, and review the continuing effectiveness of our
business ethics and conflicts of interest policies.
COMPENSATION COMMITTEE. The compensation committee, which currently
consists of Mr. Weld, will recommend to the Board the salaries, bonuses and
stock awards received by our executive officers. The compensation committee is
also responsible for administering our 1999 Equity Compensation Plan. The
compensation committee will determine the recipients of awards, sets the
exercise price of shares granted, and determines the terms, provisions and
conditions of rights granted.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the establishment of the compensation committee, the Board of
Directors set the compensation of our officers including those executive
officers on the Board. Several members of the Board had a personal interest in a
number of transactions in which we have engaged which are described in the
section titled "Item 7. Certain Relationships and Related Transactions."
DIRECTOR COMPENSATION
Directors who are also our employees or employees of our subsidiaries
receive no additional compensation for their services as Directors. Directors
who are not our employees will not receive a fee for attendance at meetings of
the Board of Directors, but they will be reimbursed for their out-of-pocket
expenses in connection with their activities as Directors. Our outside Directors
may be granted options under our 1999 Equity Compensation Plan as consideration
for their services.
ITEM 6. EXECUTIVE COMPENSATION.
The table below summarizes information concerning the total compensation for
the fiscal year ended September 30, 1999 for our current and former Chief
Executive Officer. None of our other executive officers received compensation in
excess of $100,000 during the year ended September 30, 1999.
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM-
COMPENSATION
------------
COMPENSATION AWARD SECURITIES
------------------ UNDERLYING
NAME SALARY OPTIONS (#) OTHER COMPENSATION
- ---- ------------------ ------------ ------------------
<S> <C> <C> <C>
Robert D. Kohn............................... $98,000(1) 0 $2,475
Warren Rothstein............................. $76,480(2) 0 $6,294
</TABLE>
- ------------------------
(1) This salary paid to Mr. Kohn was the actual amount paid by our then
wholly-owned subsidiary, entrade.com.
(2) This salary paid to Mr. Rothstein was the actual amount paid by our
52%-owned subsidiary, ATM Service, Ltd.
1999 EQUITY COMPENSATION PLAN
Our 1999 Equity Compensation Plan was adopted by the Board of Directors in
July 1999. The purpose of our 1999 Equity Compensation Plan is to attract and
retain the best available personnel for positions of substantial responsibility,
to provide an additional incentive to our employees, directors and consultants
and to promote the success of our business. Our 1999 Equity Compensation Plan
provides for the issuance to our employees, non-employee directors and eligible
advisors and consultants shares of common stock pursuant to the grant of
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code, non-qualified stock options and restricted stock. At our next
annual meeting, we plan to submit the Plan to our stockholders for approval. If
the Plan is not approved by our stockholders, we will still be able to issue
non-qualified options but not incentive options and any incentive options
granted before our next annual meeting will be converted into non-qualified
options.
A total of 3,860,000 shares of our common stock have been reserved for
issuance under our 1999 Equity Compensation Plan. The Plan is administered by
the compensation committee of our Board of Directors that currently consists of
Mr. Weld. We plan to expand the Board of Directors to add two additional
independent directors who will join Mr. Weld on the committee. Subject to the
provisions of the Plan, the committee has the authority to determine to whom
stock options and restricted stock awards are granted and the terms of any such
grant, including the number of shares subject to, the exercise price and vesting
provisions of, the award. The option price per share of the common stock under
the Plan will be determined by the compensation committee at the time of each
grant, provided, however, that the exercise price per share of any incentive
stock option may not be less than the fair market value of our common stock at
the time of the grant of such option. In addition, if any person possessing more
than 10% of the voting power of all classes of our outstanding capital stock is
granted incentive stock options, the exercise price per share must equal at
least 110% of the fair market value of our common stock on the grant date and
the term of the option may not exceed five years. Payment for the exercise of an
option may be made by cash, check or any other instrument as the compensation
committee may accept, including at the discretion of the compensation committee
unrestricted shares of our common stock. If we undergo a change of control, all
outstanding options and restricted stock will become fully vested unless the
compensation committee determines otherwise. In a change of control situation,
the compensation committee may require that an option holder surrender his or
her stock options in exchange for a number of shares of our common stock with a
value equal to the excess of the fair market value of the surrendered stock over
the option price of such stock.
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EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
On July 7, 1999, we entered into an amendment to a Shareholders Agreement
with Warren Rothstein and ATM Service, Ltd. originally dated December 1, 1998 in
which Mr. Rothstein agreed that all business transactions that he contemplated
and entered into until June 1, 2005, would be done for and on behalf of ATM
Service, Ltd.
On July 23, 1999, ATM Service, Ltd. and The Intrac Group, Ltd. each entered
into a ten-year employment agreement with Thomas A. Settineri. Under these
agreements, ATM and Intrac, each agreed to employ Mr. Settineri as their
President and Chief Executive Officer and jointly pay him an annual salary of
$400,000. Mr. Settineri may not compete with us or our subsidiaries while
employed by us. In addition, if Mr. Settineri's employment is terminated before
July 23, 2004 by Mr. Settineri without good reason, or by ATM or Intrac for
cause, or without cause but with a mutually agreed upon severance package,
Mr. Settineri is restricted from competing in any way with us or our
subsidiaries until July 23, 2004.
On July 23, 1999, ATM Service, Ltd. and The Intrac Group, Ltd. each entered
into a ten-year employment agreement with Gary K. Levi. Under these agreements,
ATM and Intrac, each agreed to employ Mr. Levi as their Chief Operating Officer
and jointly pay him an annual salary of $200,000. Mr. Levi may not compete with
us or our subsidiaries while employed by us. In addition, if Mr. Levi's
employment is terminated before July 23, 2004 by Mr. Levi without good reason,
or by ATM or Intrac for cause, or without cause but with a mutually agreed upon
severance package, Mr. Levi is restricted from competing in any way with us or
our subsidiaries until July 23, 2004.
On September 23, 1999, NAI Direct, Inc. entered into a three-year employment
agreement with Gerald C. Finn. Under this agreement, NAI Direct agreed to employ
Mr. Finn as its Chief Executive Officer at an annual salary of $150,000.
Mr. Finn may not compete with us or our subsidiaries while employed by us. In
addition, if Mr. Finn's employment is terminated before the end of the
three-year term, by NAI Direct for cause or by Mr. Finn without good reason,
Mr. Finn may not compete directly with us or our subsidiaries for a period of
two years following the date of such termination. If Mr. Finn terminates his
employment with us for good reason, we must provide him with severance pay in a
lump sum amount equal to the greater of (1) 50% of his then annual salary or
(2) the salary Mr. Finn would have received during the remaining term of the
agreement.
On September 23, 1999, NAI Direct, Inc. entered into a three-year employment
agreement with Jeffrey Finn. Under this agreement, NAI Direct agreed to employ
Mr. Finn as its President at an annual salary of $135,000. Mr. Finn may not
compete with us or our subsidiaries while employed by us. In addition, if
Mr. Finn's employment is terminated before the end of the three-year term, by
NAI Direct for cause or by Mr. Finn without good reason, Mr. Finn may not
compete directly with us or our subsidiaries for a period of two years following
the date of such termination. If Mr. Finn terminates his employment with us for
good reason, we must provide him with severance pay in a lump sum amount equal
to the greater of (1) 50% of his then annual salary or (2) the salary Mr. Finn
would have received during the remaining term of the agreement.
On January 14, 2000, we entered into a three-year agreement with John T.
Banigan under which he will serve as a Senior Vice President of WorldWide Web
NetworX Corporation. Mr. Banigan's compensation includes an annual salary of
$185,000, a signing bonus of $15,000, an annual bonus of at least $15,000 and
250,000 options to purchase our common stock vesting over a period of four
years. Mr. Banigan agreed not to compete with us during his employment and for
one year after his termination or the expiration of the employment agreement.
In October 1999, we agreed in principal and in February 2000 we entered into
a one-year agreement with Robert D. Kohn under which he will act as a finder
and/or financial consultant for us. Mr. Kohn will receive $60,000 annually as a
non-refundable draw against future finder's fees. We will
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also pay Mr. Kohn a finder's fee for any introductions he makes for us that
result in a transaction in which either our securities are purchased by the
party introduced to us by Mr. Kohn or in which we acquire the securities of the
introduced party. Mr. Kohn's finder's fee will be equal to a percentage of the
consideration paid in the facilitated transaction, ranging from 5% for the first
$1,000,000 to 1% of any consideration in excess of $7,000,000.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
ROBERT KOHN RELATED-PARTY TRANSACTIONS
This section describes a number of transactions in which WorldWide Web
NetworX Corporation or one of its subsidiaries was a party and in which Robert
Kohn had a direct or indirect material interest.
ROBERT KOHN'S POSITIONS
Robert Kohn held the following positions, relationships and ownership
interests during the periods indicated:
- Director of WorldWide Web NetworX Corporation from May 8, 1998 to
September 23, 1999 and President and Chief Executive Officer of WorldWide
Web NetworX Corporation from May 18, 1998 to September 23, 1999;
- The holder of more than 5% of the common stock of WorldWide Web NetworX
Corporation from May 1998 to the present;
- A strategic planner of business development for marketing and sales of
PECO Energy Company from February 1996 to March 1, 1999;
- The President of BarterOne, LLC, from its formation to its dissolution;
- The owner of an option to acquire a 4.5% membership interest in BarterOne,
LLC which was granted to Mr. Kohn by PECO Energy Company in exchange for
certain salary and other compensation concessions;
- A 33 1/3% owner of Positive Asset Remarketing, Inc. with a right to
receive 50% of its interest in asseTrade.com, Inc.;
- An employee of Artra Group Incorporated from February 23, 1999 to
September 23 1999, at which time his employment agreement was assigned to
Entrade Inc;
- A holder of options exercisable for 1,000,000 shares of Entrade Inc.
common stock at a price of $2.75 per share;
- President and Chief Executive Officer of asseTrade.com, Inc. from
December 1998 to the present; and
- Brother to Marlene Goss, a principal of EduNEXT.
OTHER PARTIES
The other parties involved in the transactions described in this section
include the following entities:
- PECO Energy Company: an electric and natural gas service provider in
southeastern Pennsylvania.
- Energy Trading Company: a wholly owned subsidiary of PECO Energy.
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- BarterOne, LLC: a limited liability company which was incorporated in
Delaware in 1997 as a joint venture between Energy Trading Company and
Global Trade Group to serve as PECO Energy's Internet development unit.
BarterOne did business as entrade.com and was dissolved in 1999.
- Positive Asset Remarketing, Inc.: a company providing asset recovery
services to global customers.
- entrade.com, Inc.: a subsidiary of Entrade Inc. which we sold to Artra
Group Incorporated in a transaction which closed on September 23, 1999.
- assetTrade.com, Inc.: a provider of traditional off-line asset recovery,
disposal and marketing with Internet-based asset recovery, inventory
management and on-line auctions for large industrial and commercial
organizations.
TRANSACTIONS BEFORE THE SALE OF ENTRADE
WORLDWIDE WEB NETWORX CORPORATION PURCHASED 51% OF BARTERONE FROM ENERGY
TRADING COMPANY
In December 1998, we acquired from Energy Trading Company, its 51%
membership interest in BarterOne, LLC for consideration of $480,000 and 416,666
shares of our common stock. As a result of the September 23, 1999 closing of our
sale of Entrade Inc. to Artra, and pursuant to an adjustment in the valuation of
Entrade, PECO Energy Company returned its certificate representing 416,666 of
our shares and we issued to PECO a certificate representing 73,450 of our
shares. To enable us to acquire the 51% membership interest of Energy Trading
Company in BarterOne, Mr. Kohn returned his option to purchase 4.5% of
BarterOne. As consideration for the return of this option, we agreed to issue to
Mr. Kohn 475,000 shares of our common stock.
WORLDWIDE WEB NETWORX CORPORATION LICENSED MARS SOFTWARE TO BARTERONE
In December 1998, we entered into an oral license agreement with BarterOne,
LLC, in which we granted an exclusive, perpetual and royalty-free license for
the use of the MARS System computer software, an Internet based e-commerce
application, to BarterOne. The agreement memorializing the license was executed
in May 1999 with entrade.com which received all of BarterOne's rights under the
license.
We transferred all of the assets of BarterOne, including the license for the
MARS System, to Entrade Inc. as part of our sale of Entrade Inc. to Artra Group
Incorporated in September 1999. Entrade Inc. subsequently transferred those
assets to its subsidiary entrade.com.
WORLDWIDE WEB NETWORX CORPORATION PURCHASED ORBIT SYSTEM AND ASSETRADE.COM
INTEREST FROM POSITIVE ASSET REMARKETING
In January 1999, we purchased, for 3,500,000 shares of our common stock,
assets from Positive Asset Remarketing including all the rights of Positive
Asset Remarketing under a license from BarterOne to the ORBIT System Software
and 25% of asseTrade.com, Inc.'s common stock
WORLDWIDE WEB NETWORX CORPORATION PURCHASED ATM SOFTWARE/METHODOLOGIES FROM
POSITIVE ASSET REMARKETING.
In February 1999, we purchased, for 3,500,000 shares of our common stock and
$750,000, all of Positive Asset Remarketing's rights to the ATM System which
included proprietary banking and trade operations that establish on-line
electronic trading and commerce functions.
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WORLDWIDE WEB NETWORX CORPORATION SALE OF ENTRADE INC. TO ARTRA GROUP
INCORPORATED
In February 1999, we entered into a merger agreement with Artra for the sale
of our Entrade Inc. subsidiary. Our Entrade subsidiary contained the following
assets:
- our 25% interest in the Class A voting shares of assetTrade.com, Inc.;
- our 100% membership interest in BarterOne, LLC;
- a non-customized version of the ORBIT System;
- a new entrade.com transaction software that was developed by entrade.com;
and
- other assets of our subsidiary Entrade Inc.
In connection with this transaction, we received the following
consideration:
- $800,000 in cash;
- a $500,000 promissory note which has since been paid;
- 1,800,000 shares of the outstanding equity securities of Entrade Inc; and
- $1,302,000 in funding of Entrade's operations from the date of the merger
agreement through its consummation.
In connection with the sale of our Entrade subsidiary to Artra, on
February 23, 1999, the following person entered into agreements with Artra or an
entity affiliated with Artra:
- Robert D. Kohn entered into a three-year employment agreement with Artra,
at an annual salary of $165,000. He also received an option to purchase
1,000,000 shares of Artra stock at an exercise price of $2.75 per share.
Mr. Kohn also agreed during the term of the employment agreement and for
an additional period of one year after termination or expiration, unless
terminated because of a change in business purpose, that neither he nor
any corporation or entity in which he may be interested will at anytime
engage in any competitive business or solicit, hire or contract for
services or employ any of the executives of Artra.
- Robert D. Kohn entered into a non-competition agreement with the new
Entrade or its successor for a four-year term after the closing of the
sale of Entrade to Artra.
- Robert D. Kohn entered into a non-qualified stock option agreement whereby
Artra granted Mr. Kohn an option to purchase any part or all of 1,000,000
shares of Artra's common stock at an exercise price of $2.75 per share
subject to vesting as follows: one-third on December 1, 1999, one-third on
February 18, 2000 and one-third on February 18, 2001.
TRANSACTIONS AFTER THE SALE OF ENTRADE
NEW ENTRADE.COM SOFTWARE LICENSE
In September 1999, our subsidiary, ATM Service, Ltd., licensed from
entrade.com, Inc. the new entrade.com software which we had sold in connection
with our sale of our Entrade subsidiary. ATM Service, Ltd. agreed to pay a
one-time licensing fee equal to $1,500,000 in trade credits to entrade.com in
September and agreed to make royalty payments equal to a percentage of all
revenues from transactions generated by using the licensed software. The royalty
payment percentage varies from 10% to 50% depending on the type of transaction.
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EMPLOYEE DEPARTURES
In addition, the following people terminated their employment with us to
take positions with Entrade Inc. as a result of our sale of the Entrade
subsidiary:
- Alex Polkhovsky--a senior developer who played a major role in developing
the MARS system online auction software and ORBIT system software;
- Luc Morgan--a managing project engineer whose duties included the
procurement, implementation and deployment of high end web servers for
ORBIT applications and supervising implementation, debugging and
development of ORBIT software; and
- George Losse--a senior graphics designer.
EDUNEXT
We entered into an agreement with Marlene A. Goss, and Fern Entrekin dated
as of June 13, 1998. Ms. Goss is the sister of Robert Kohn. Ms. Goss and
Ms. Entrekin developed an educational program to provide solutions to schools to
build learning communities. The agreement contemplated the formation of a
subsidiary of WorldWide Web NetworX Corporation, to be named EduNEXT, and the
development of related web sites. We agreed to acquire the educational program
in exchange for the following:
- $50,000 of our stock, at $2.50 per share, to be paid as follows: 10,000
shares to be delivered upon the execution of the agreement and an
additional 10,000 shares to be delivered one year from the execution of
the agreement; and
- $53,500 in working capital with $15,000 to be paid immediately upon
execution of the agreement and weekly payments totaling $38,500 for the
remainder of the $53,500.
As of December 31, 1999, we had issued 20,000 shares under this agreement
and paid $31,500 to Ms. Goss.
VISION TECHNOLOGIES
In April and August 1999, we invested $850,000 directly and $350,000 through
WWWX-Jencom, LLC in Vision Technologies, Inc. At the time of the investments,
Mr. Bjorn Koritz, our then Vice President, General Counsel, Secretary and a
Director, was a Director of Vision, its General Counsel and a holder of 10% of
Vision's common stock.
D.H. BLAIR AND JENCOM
As a condition to a stock purchase agreement with D.H. Blair Investment
Banking Corp. dated March 4, 1999 to purchase 2 million shares of our common
stock, D.H. Blair required that we invest in and execute a definitive agreement
with JenCom Digital Technologies, LLC to acquire a 50% interest in certain
assets of JenCom which resulted in our current ownership interest in
WWWX-Jencom, LLC. Affiliates of D.H. Blair own interests in International
Commerce Exchange Systems, Inc., an indirect parent of JenCom Digital
Technologies, LLC, and a member of InterCommerce China, LLC.
D&W ENTERPRISES
Thirteen employees of D&W Enterprises, Inc., a company owned by Warren
Rothstein, work exclusively for ATM Service, Ltd. These employees are
compensated by D&W and D&W is reimbursed by ATM Service, Ltd. During the year
ended September 30, 1999, we paid $183,000 for these services.
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INTERCOMMERCE CHINA, LLC
Pursuant to the operating agreement of InterCommerce China, LLC, eight
individuals, including Warren Rothstein and Allan M. Cohen, each have the option
to purchase a 0.625% interest in InterCommerce China. The option becomes
exercisable upon the public issuance of any class of securities of InterCommerce
China, at an exercise price equal to 30% of the fair market value of the option
interest as of the date of the operating agreement.
ITEM 8. LEGAL PROCEEDINGS.
We are not a party to any material legal proceedings.
ITEM 9. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
Our common stock is quoted on the OTC Bulletin Board under the symbol
"WWWX". The following table sets forth the highest and lowest bid prices for our
common stock for each fiscal quarter during the last two years and subsequent
interim periods as reported by the National Quotation Bureau.
At December 31, 1999, there were 1,039 record holders of our common stock.
The prices set forth below represent interdealer quotations, without retail
markup, markdown or commission and may not be reflective of actual transactions.
<TABLE>
<CAPTION>
FISCAL 1998 HIGH BID LOW BID
- ----------- ---------- -----------
<S> <C> <C>
First Quarter...............................................
Second Quarter..............................................
Third Quarter............................................... 3 1 1/4
Fourth Quarter.............................................. 2 3/8 11/16
<CAPTION>
FISCAL 1999
- -----------
First Quarter. 5/16 1 21/64
<S> <C> <C>
Second Quarter.............................................. 9 3/8 17/32
Third Quarter............................................... 9 1/4 3 3/16
Fourth Quarter.............................................. 4 5/8 2 9/16
<CAPTION>
FISCAL 2000
- -----------
First Quarter. 1/2 7 1/8 2
<S> <C> <C>
</TABLE>
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
We sold the following securities within the past three years and prior to
the date of filing of this registration statement.
In September 1999, we issued 1,500,000 shares of our common stock to New
America Network, Inc. for an 80% interest in Real Quest, Inc. of which 750,000
shares were delivered to an escrow agent to be transferred to New America
Network, Inc. upon the attainment of certain revenue goals by NAIdirect.com. We
valued the 750,000 shares that we delivered to New America Network, Inc. at
$1,125,000.
In September 1999, pursuant to a private placement under Rule 506, we issued
912,669 shares of our common stock to 25 accredited investors for an aggregate
purchase price of approximately $1,369,064. For acting as our placement agent,
we paid D.H. Blair $180,534 in fees and expenses, and we issued warrants
exercisable at a price of $1.80 per share for 91,267 shares of our common stock
to D.H. Blair.
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In August 1999, pursuant to a private placement under Rule 506, we issued
1,435,000 shares of our common stock to 23 accredited investors for an aggregate
purchase price of approximately $2,152,500. For acting as our placement agent,
we paid D.H. Blair $282,354 in fees and expenses, and we issued warrants
exercisable at a price of $1.80 per share for 143,500 shares of our common stock
to D.H. Blair as partial payment of its fee for acting as agent in the private
placement of 1,435,000 shares of our common stock to D.H. Blair.
In July 1999, pursuant to a private placement under Rule 506, we issued
5,057,000 shares of our common stock to 61 accredited investors for an aggregate
purchase price of approximately $7,585,502. For acting as our placement agent,
we paid D.H. Blair $1,011,089 in fees and expenses, and we issued warrants
exercisable at a price of $1.80 per share for 505,700 shares of our common stock
to D.H. Blair.
In July 1999, we issued warrants exercisable at a price of $1.80 per share
for 200,000 shares of our common stock to D.H. Blair as partial payment of its
fee for acting as agent in the private placement and relating to D.H. Blair's
purchase of 2,000,000 shares of our restricted common stock in March 1999.
In July 1999, we issued 750,000 shares of our common stock, valued at
$1,125,000, to Thomas Settineri for his interest in The Intrac Group and other
consideration.
In July 1999, we issued 250,000 shares of our common stock, valued at
$375,000, to Gary Levi for his interest in The Intrac Group and other
consideration.
In April 1999, we agreed to issue 750,000 shares of our common stock, valued
at $1,125,000, to Kathryn Berman, as payment for certain assets of Admiral Asset
Group.
In April 1999, we agreed to issue 150,000 shares of our common stock to
Michelle Kramish Kain for certain legal services.
In April 1999, we agreed to issue 10,000 shares of our common stock to
George Losse for consulting services.
In April 1999, we agreed to issue 100,000 shares of our restricted common
stock to Alexander, Wescott & Co. in settlement of potential claims.
In April 1999, we issued warrants exercisable at a price of $2.25 for
100,000 shares of our common stock, valued at $128,000, to Ralph Isham for
certain consulting services.
In April 1999, we issued warrants exercisable at a price of $2.25 for
100,000 shares of our common stock, valued at $128,000, to Arnold Kling for
certain consulting services.
In March 1999, pursuant to Rule 506, we issued Series A 6% Convertible
Debentures to 16 investors for an aggregate purchase price of $989,500.
In March 1999, we issued 2,000,000 shares of our common stock to D.H. Blair
for an aggregate purchase price of $3,000,000. For acting as our placement
agent, we paid D.H. Blair $390,000 in fees and expenses.
In February 1999, we agreed to issue 2,000,000 shares of our common stock,
valued at $3,000,000, to JenCom Digital Technologies, LLC, for certain assets
and a 50% interest in WWWX-Jencom, LLC.
In February 1999, we issued 3,500,000 shares of our common stock, valued at
$5,250,000 to 31 persons, who were the designees of the principals of Positive
Asset Remarketing, Inc., for certain assets, including the ATM Center System,
relating to our software.
In January 1999, we agreed to issue 1,500,000 shares of our common stock,
valued at $1,500,000, to five individuals for the acquisition of a 49% interest
in BarterOne.
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<PAGE>
In January 1999, we agreed to issue 3,500,000 shares of our common stock,
valued at $3,500,000, to 33 persons, who were the designees of the principals of
Positive Asset Remarketing, Inc., for certain assets including 25% of
asseTrade.com, Inc.
In January 1999, we agreed to issue 50,000 shares of our common stock to
Alex Polkhovsky for consulting services.
In December 1998, we agreed to issue 475,000 shares of our restricted common
stock to Gary Lerman, pursuant to an agreement with Energy Trading Company, for
his 4.5% interest in Barter One, LLC.
In December 1998, we issued 416,666 shares of our common stock to Energy
Trading Company for its 51% interest in BarterOne. 343,216 of these shares were
later returned to us and cancelled pursuant to our agreement with Energy Trading
Company.
In connection with the December 1998 agreement with Energy Trading Company,
we issued 475,000 shares of our common stock to Jessica Kohn, Mr. Kohn's
daughter, at the direction of Mr. Kohn in consideration for Mr. Kohn's option to
acquire a 4.5% interest in Barter One LLC.
Pursuant to an agreement in December 1998, we issued 4,000,000 shares of our
common stock to Warren Rothstein for his interest in ATM Service and other
consideration.
In November 1998, we agreed to issue 98,950 shares of our common stock to
Alexander, Wescott & Co., Inc. as payment of its fee for acting as agent in the
private placement of our Series A 6% Convertible Debentures.
In July 1998, we entered into an agreement for services and the EduNext
program, pursuant to which we issued 20,000 shares of our restricted common
stock to Marlene Goss for services and a software license.
In July 1998, we issued an aggregate of 502,500 shares of our common stock
pursuant to Rule 504 and an aggregate of 502,500 shares of our common stock
pursuant to Rule 506, to nine accredited investors in connection with the
Company's assumption of an aggregate of $502,500 principal amount Series A 12%
Cumulative Convertible Promissory Notes of Keiretsu Corporation (which
corporation we acquired in May of 1998) and the conversion of said Promissory
Notes.
In July 1998, pursuant to Rule 504, we issued 398,500 shares of our common
stock to 41 persons for an aggregate purchase price of $398,500.
Pursuant to a consulting agreement in May 1998 and pursuant to Rule 504, we
agreed to issue 990,000 shares of our common stock to Stratcomm Media Ltd. for
an aggregate purchase price of $99,000; and we agreed to issue 125,000 shares of
our common stock to Stratcomm Media Ltd. for services rendered.
In May 1998, we issued 6,000,000 shares of our common stock to the ten
shareholders of Keiretsu Corporation in exchange for all of their shares of
common stock in Keiretsu.
From August 1999 to date, pursuant to Rule 701, we have granted a total of
1,585,000 options to our employees and a director, under our 1999 Equity
Compensation Plan, which options may be exercised at prices ranging from $2.30
to $5.65.
Unless otherwise indicated, the sales set forth above are claimed to be
exempt from registration with the Securities and Exchange Commission pursuant to
Section 4(2) of the Securities Act of 1933, as amended, as transactions by an
issuer not involving any public offering, because (i) we sold those securities
to financially sophisticated individuals who at the time of purchase were fully
aware of our activities, as well as our business and financial condition,
(ii) there was no advertising for or general solicitation of investors, and
(iii) when these securities were acquired for investment purposes, investors
40
<PAGE>
understood the ramifications of their investment. All certificates representing
the shares issued by us as set forth herein which are currently outstanding,
except for those shares sold pursuant to Rule 504, have been properly legended.
Alexander, Wescott & Co., the placement agent for the 6% convertible
debentures, received a commission equal to $129,000 in cash and 98,950 shares of
our common stock. We issued an additional 100,000 share of our common stock to
Alexander, Wescott & Co. as a settlement for any outstanding claims.
D.H. Blair Investment Banking Corp., the placement agent for each of the
offerings that took place on September 22, 1999 for 912,669 shares of our common
stock, August 25, 1999 for 1,435,000 shares of our common stock, July 23, 1999
for 5,057,000 shares of our common stock, and March 4, 1999 for 2,000,000 shares
of our common stock received a commission equal to 10% of the gross proceeds for
each of the offerings, a nonaccountable expense allowance equal to 3% of the
gross proceeds for each of the offerings and warrants to purchase a total of
940,467 shares of our common stock. We also entered into an agreement with D.H.
Blair which gives D.H. Blair the right to a fee if we enter into a merger,
acquisition, joint venture, debt or lease placement or similar on or off-balance
sheet corporate finance transaction, product or technology licensing
arrangements, research and development sponsorships or products or service sales
with an entity that was introduced to us by D.H. Blair. D.H. Blair also received
registration rights with respect to the 2,000,000 shares of our common stock it
owns and the 940,467 shares of our common stock into which the warrants are
convertible at $1.80 per share. In addition, D.H. Blair has the right to appoint
a director to our board of directors.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
GENERAL
Our certificate of incorporation authorizes 100,000,000 shares, $.001 par
value per share, of common stock and 10,000,000 shares, $.01 par value per
share, of preferred stock. As of December 31, 1999, we had 39,265,591 shares of
common stock issued and outstanding, assuming no exercise of certain warrants
and conversion of certain debentures as described below. No shares of preferred
stock are issued and outstanding.
The following summary of the terms and provisions of our capital stock is
not complete, and you should read our certificate of incorporation and bylaws,
copies of which have been filed as exhibits to this registration statement.
COMMON STOCK
VOTING. Our common stock is entitled to one vote per share on all matters
submitted to a vote of the stockholders, including the election of directors.
Except as otherwise required by law or provided in any resolution adopted by the
board of directors with respect to any series of preferred stock, the holders of
our common stock will possess all voting power. Generally, all matters to be
voted on by stockholders must be approved by a majority (or, in the case of
election of directors, by a plurality) of the votes entitled to be cast by all
shares of our common stock that are present in person or represented by proxy,
subject to any voting rights granted to holders of any preferred stock. Except
as otherwise provided by law, and subject to any voting rights granted holders
of any preferred stock, amendments to our certificate of incorporation generally
must be approved by a majority of the votes entitled to be cast by all
outstanding shares of our common stock. Our certificate of incorporation does
not provide for cumulative voting in the election of directors.
DIVIDENDS. Subject to any preferential rights of any outstanding series of
preferred stock created by the board of directors from time to time, the holders
of shares of our common stock will be entitled to cash dividends as may be
declared from time to time by the board of directors.
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<PAGE>
LIQUIDATION. Subject to any preferential rights of any outstanding series
of preferred stock created from time to time by the board of directors, upon our
liquidation, dissolution or winding up, the holders of shares of our common
stock will be entitled to receive pro rata all of our assets available for
distribution to such holders.
PREFERRED STOCK
Our board of directors is authorized to issue preferred stock in series from
time to time with such designations, rights, preferences and limitations as our
board of directors may declare by resolution. The rights, preferences and
limitations of separate series' of preferred stock may differ with respect to
such matters as may be determined by the board of directors, including, without
limitation, the rate of dividends, method and nature of payment of dividends,
terms of redemption, amounts payable on liquidation, sinking fund provisions (if
any), conversion rights (if any) and voting rights. The potential exists,
therefore, that additional shares of preferred stock might be issued which would
grant dividend preferences and liquidation preferences to preferred stockholders
over common stockholders. Unless the nature of a particular transaction and
applicable statute require such approval, the board of directors has the
authority to issue shares of preferred stock without stockholder approval. The
issuance of preferred stock may have the effect of delaying or preventing a
change in control without any further action by stockholders.
REGISTRATION RIGHTS
The following parties have the right to demand that we register our
securities that they hold:
- HOLDERS OF SERIES A 6% CUMULATIVE CONVERTIBLE DEBENTURES: We were
obligated to file a registration statement under the Securities Act of
1933 to register the shares of our common stock underlying the debentures
by May 3, 1999. We have not fulfilled this obligation and, as a result, a
penalty may be accruing equal to 2% of the face value of the debentures to
each debenture holder for each month the filing of the registration
statement has been and continues to be delayed past May 3, 1999. We may
also be subject to an additional 2% penalty for each month the
registration statement is not effective beginning 90 days following the
date we file the registration statement with the Securities and Exchange
Commission. The debentures are convertible into shares of our common stock
from the effective date of a registration statement registering the resale
of the shares issuable upon conversion until 120 days after the filing of
such registration statement.
- STOCKHOLDERS FROM D.H. BLAIR PRIVATE PLACEMENT OFFERINGS: We agreed with
the holders of 7,404,667 shares of our common stock obtained in a series
of three private placement transactions on July 23, 1999, August 25, 1999
and September 23, 1999, to file a registration statement by May 23, 2000
and use our best efforts to have the registration statement declared
effective by July 23, 2000. This right is limited to one registration
statement. In addition, all the holders of such shares have piggy-back
registration rights for two registration statements.
- D.H. BLAIR AND TRANSFEREES: We agreed with D.H. Blair, the holder of
2,000,000 shares of our common stock and warrants convertible into 940,467
shares of our common stock at $1.80 per share, to file a registration
statement by October 4, 1999 covering the 2,000,000 shares. D.H. Blair has
transferred 717,500 of the 940,467 warrants and the registration rights
were transferred to each transferee. We have not filed the registration
statement and, as a result, D.H. Blair may have a claim that it is
entitled to (1) 200,000 shares for each month the effectiveness of the
registration statement is delayed beyond October 4, 1999 plus (2) such
number of shares equal to (A) $3,000,000 multiplied by (B) the quotient of
(x) the closing bid price on the seven month anniversary of the closing
less the closing bid price of the common stock on the date such
registration statement is declared effective divided by (y) $1.50. We also
agreed, commencing on
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December 4, 1999, to (1) make and keep public information available as
such term is defined under Rule 144 and (2) to file with the SEC all
reports required under the Securities Exchange Act of 1934. In addition,
with respect to the warrants, until March 4, 2002, upon giving us twenty
days notice, D.H. Blair and its transferees have the right to demand that
all or a part of their shares be registered. This right is limited to two
registration statements. We must give 30 days written notice of our
intention to file a registration statement to D.H. Blair and its
transferees and must, upon request, include such shares as D.H. Blair and
its transferees designate in this registration statement. This right is
limited to two registration statements. There is no requirement that the
warrant holders exercise any warrant, at any time other than "during the
exercise period" to have the underlying shares registered, which could
result in our having to maintain the effectiveness of the registration
statement throughout the exercise period.
- CONSULTANTS: We issued to each of Ralph Isham and Arnold Kling, as
consideration for consulting services provided to us by GTI Venture
Partners LLC, a warrant for 100,000 shares of our common stock exercisable
until April 1, 2003 at an exercise price of $2.25 per share. During the
exercise period of the warrants, Messrs. Isham and Kling each have
unlimited piggy-back regulation rights to include their shares in any
registrations statements on Form S-1 or SB-2 which register for resale any
of our securities.
- JENCOM DIGITAL TECHNOLOGIES, LLC: We have agreed with JenCom as the
holder of 2,000,000 shares of our common stock to file a registration
statement to register JenCom's shares by May 17, 2000.
- WARREN ROTHSTEIN, THOMAS SETTINERI AND GARY LEVI: We issued 4,000,000
shares of our common stock to Warren Rothstein in connection with our
joint venture, ATM Service, Ltd. and 1,000,000 shares of our common stock
to Thomas Settineri and Gary Levi in connection with our acquisition of
The Intrac Group. Messrs. Rothstein, Settineri and Levi have unlimited
piggy-back registration rights with respect to their shares.
Mr. Rothstein agreed to waive his registration rights with respect to the
next registration statement we file.
- GOLDPLATE HOLDINGS: We issued, to Alexander, Wescott & Co., as
consideration for its services as our placement agent for an offering of
our Series A 6% Convertible Debentures and as a settlement for any claims,
198,950 shares of our common stock with unlimited piggy-back registration
rights. Alexander, Wescott & Co. subsequently transferred these shares to
Goldplate Holdings.
- MICHELLE KRAMISH KAIN: We issued to Michelle Kramish Kain 150,000 shares
of common stock for which she has unlimited piggy-back registration
rights.
- NEW AMERICA NETWORK, INC.: We issued 750,000 shares of our common stock
to New American Network, Inc., in connection with our joint venture, NAI
Direct, Inc. We issued an additional 750,000 shares, currently held
escrow, which will be delivered to New America Network upon the attainment
of certain performance goals by NAIdirect.com. New American Network, Inc.
has unlimited piggy-back registration rights for any registration
statements filed after January 1, 2000.
DEBENTURES
We currently have outstanding $989,500 in face amount Series A 6% Cumulative
Convertible Debentures which we issued, through a private placement, on
March 22, 1999. We may voluntarily prepay the debentures prior to their maturity
date but subsequent to the expiration of the right of the holders to convert.
The debentures, which mature on March 22, 2000, bear interest at the accrued
rate of 6% per annum. The debenture holders have the right to convert their
debentures into shares of our common stock from the effective date of a
registration statement registering the resale of the shares
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<PAGE>
issuable upon conversion until 120 days after the filing of such registration
statement. The right to convert will expire if not exercised during that period.
The number of shares of our common stock into which the principal amount of
the debentures and any accrued but unpaid interest may be converted shall be
determined by adding the face amount of the debenture plus any accrued but
unpaid interest, then dividing that aggregate amount by the lesser of a
thirty-five percent discount from the five day average closing bid price per
share of our common stock quoted on the OTC Bulletin Board immediately preceding
the business day on which we receive written notice via facsimile of the
holder's intent to convert the debenture, or the five day average closing bid
price of our common stock immediately preceding the closing date of the
debenture offering. The price at which the principal and interest (if any) are
converted into shares of common stock shall not be less than $.25 per share and
not more than $1.50 per share.
CONSULTING WARRANTS
As compensation for consulting services from GTI Venture Partners LLC, we
issued to each of Ralph Isham and Arnold Kling 100,000 warrants. Each such
warrant entitles Mr. Isham and Mr. Kling to purchase one share of common stock
at an exercise price of $2.25 per share (subject to adjustment for stock splits,
combinations and reclassifications) at any time for a period of four years from
April 2, 1999. We may call and redeem these warrants at $.01 per warrant upon
10 days prior written notice in the event of a reorganization, sale, merger,
conveyance, combination, etc. as defined in the warrants but only if the value
of the common stock following the occurrence thereof equals or exceeds $10.00
per share. The warrants have certain piggy-back registration rights and the
shares issuable upon exercise of the warrants are being registered in this
registration statement. The warrants do not confer upon the holders thereof any
voting, dividend or other rights as stockholders.
D.H. BLAIR WARRANTS
As part of its compensation for acting as placement agent in connection with
our private placement offering in May through September, 1999, our placement
agent, D.H. Blair Investment Banking Corp. received warrants for acting as
placement agent and certain other warrants in connection with D.H. Blair's
purchase of 2,000,000 shares of common stock in March 1999. These warrants
entitle D.H. Blair to purchase 940,467 shares of our common stock at a purchase
price of $1.80 per share. Subsequent to their issuance, D.H. Blair transferred
717,500 of these warrants. The warrants earned in each closing are exercisable
for three-year periods from the closing dates.
The warrants provide for an adjustment of the exercise price and the number
and type of securities issuable upon the exercise thereof upon the occurrence of
certain events, including the payment of any stock dividend, stock split, stock
combination or similar transaction or, with certain exceptions, the issuance of
shares at below market price or the exercise price.
TRANSFER AGENT
The transfer agent for our common stock is American Stock Transfer and Trust
Company located at 40 Wall Street, New York, NY 10005; telephone number
(212) 936-5100.
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ITEM 12. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Our bylaws provide that we will indemnify our directors and officers and
other corporate agents to the fullest extent authorized by Delaware law. We
believe that indemnification under our bylaws covers at least negligence and
gross negligence on the part of the indemnified parties. Our bylaws also permit
us to secure insurance on behalf of any officer, director, employee or other
agent for any liability arising out of his or her actions in such capacity
regardless of whether the bylaws would permit such indemnification. At present,
we have officers' and directors' insurance liability for our directors with an
annual aggregate coverage limit of ten million dollars.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Financial Statements and Supplementary Data required by this Item are
filed as part of this Form 10. See Index to Financial Statement Information at
page F-1 of this Form 10.
ITEM 14. CHANGES IN ACCOUNTANTS.
In August 1999, we selected Ernst & Young LLP as our principal independent
auditors to replace Richard A. Eisner & Company LLP. In connection with the
audit for the fiscal year ended September 30, 1998, there were no disagreements
with Richard A. Eisner & Company LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure, which,
if not resolved to the satisfaction of Richard A. Eisner & Company LLP, would
have caused them to make reference to the matter in their report. The report of
Richard A. Eisner & Company LLP on our financial statement for the fiscal year
ended September 30, 1998 did not contain any adverse opinion or disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope or
accounting principles.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS
The information required by this item is contained in the "Index to
Financial Statements" on Page F-1 of this Form 10 registration statement and
such information is incorporated herein by reference.
(B) EXHIBITS
The following exhibits are being filed as a part of this Form 10
registration statement:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------------- -----------
<C> <S>
3.1 Certificate of Incorporation, as amended.
3.2 Bylaws.
4.1 Specimen Common Stock Certificate.
4.2 Form of 6% Cumulative Convertible Debenture of WorldWide Web
NetworX Corporation.
4.3 Warrant to Purchase 100,000 shares of common stock of
WorldWide Web NetworX Corporation, dated April 2, 1999,
issued to Ralph H. Isham.
4.4 Warrant to Purchase 100,000 shares of common stock of
WorldWide Web NetworX Corporation, dated April 2, 1999,
issued to Arnold P. Kling.
4.5 Form of Warrant to Purchase Common Stock of WorldWide Web
NetworX Corporation issued to D.H. Blair Banking
Corporation.
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------------- -----------
<C> <S>
10.1. Agreement and Plan of Reorganization, dated as of May 20,
1998, between Instra Corp., Keiretsu Corporation and the
stockholder of Keiretsu Corporation.
10.2. Agency Agreement, dated November 24, 1998, between
Alexander, Wescott & Co., Inc. and WorldWide Web NetworX
Corporation.
10.3. Stock Issuance Agreement, dated as of December 1, 1998,
between Warren Rothstein and WorldWide Web NetworX
Corporation.
10.4. BarterOne Membership Interest Sale Agreement, dated as of
December 16, 1998, between Energy Trading Company and
WorldWide Web NetworX Corporation.
10.5. Acquisition Agreement, dated as of January 29, 1999, between
Global Trade Group, Ltd., and WorldWide Web NetworX
Corporation.
10.6. Acquisition Agreement, dated as of January 29, 1999, between
Positive Asset Remarketing, Inc., and WorldWide Web NetworX
Corporation.
10.7. Agreement, dated as of February 16, 1999, among Energy
Trading Company, WorldWide Web NetworX Corporation, and NA
Acquisition Corp.
10.8. Agreement and Plan of Merger, dated as of February 23, 1999,
among Artra Group Incorporated, WorldWide Web NetworX
Corporation, NA Acquisition Corp., and WWWX Merger
Subsidiary, Inc.
10.9. Acquisition Agreement, dated as of February 24, 1999 between
Positive Asset Remarketing, Inc. and WorldWide Web NetworX
Corporation.
10.10. Form of Subscription Agreement between WorldWide Web NetworX
Corporation and Subscribers of 6% Cumulative Convertible
Debenture of WorldWide Web NetworX Corporation.
10.11. Acquisition Agreement, dated as of February 25, 1999,
between JenCom Digital Technologies, LLC and WorldWide Web
NetworX.
10.12. Stock Purchase Agreement, dated March 4, 1999, between D.H.
Blair Investment Banking Corp. and WorldWide Web NetworX
Corporation.
10.13. Consulting Agreement, dated as of April 2, 1999, between
Ralph H. Isham and WorldWide Web NetworX Corporation.
10.14. Consulting Agreement, dated as of April 2, 1999, between
Arnold P. Kling and WorldWide Web NetworX Corporation.
10.15. Acquisition Agreement, dated as of April 7, 1999, between
Admiral Asset Group, Inc., and WorldWide Web NetworX
Corporation.
10.16. Agreement, dated April 16, 1999, between Alexander, Wescott
& Co., Inc., and WorldWide Web NetworX Corporation.
10.17. Amendment, dated as of April 28, 1999, to the Acquisition
Agreement between JenCom Digital Technologies, LLC, and
WorldWide Web NetworX Corporation.
10.18. Amendment to Agreement and Plan of Merger, dated as of April
30, 1999, among Artra Group Incorporated, WorldWide Web
NetworX Corporation, NA Acquisition Corp., and WWWX Merger
Subsidiary, Inc.
10.19. Agency Agreement, dated as of May 26, 1999, between D.H.
Blair Investment Banking Corp. and WorldWide Web NetworX
Corporation.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------------- -----------
<C> <S>
10.20. Form of Subscription Agreement between WorldWide Web NetworX
Corporation and Subscribers of a private placement of WWWX
common stock.
10.21. First Amendment to Stock Issuance Agreement, dated as of
July 9, 1999, between Warren Rothstein and WorldWide Web
NetworX Corporation.
10.22. Agreement and Plan of Merger, dated as of July 9, 1999,
among WorldWide Web NetworX Corporation, Intrac Acquisition
Corporation, and The Intrac Group.
10.23. Employment Agreement, dated July 23, 1999, between ATM
Service, Ltd. and Thomas Settineri.
10.24. Employment Agreement, dated July 23, 1999, between Intrac
Acquisition Corporation and Thomas Settineri.
10.25. Employment Agreement, dated July 23, 1999, between ATM
Service, Ltd. and Gary Levi.
10.26. Employment Agreement, dated July 23, 1999, between Intrac
Acquisition Corporation and Gary Levi.
10.27. Post-Closing Agreement, dated July 23, 1999, among WorldWide
Web NetworX Corporation, Intrac Acquisition Corporation, The
Intrac Group, Thomas Settineri, and Gary Levi.
10.28. Merger and Acquisition Agreement letter, dated as of July
23, 1999, between WorldWide Web NetworX Corporation and D.H.
Blair Investment Banking Corp.
10.29. 1999 Equity Compensation Plan.
10.30. Software License Agreement between ATM Service, Ltd. and
entrade.com, Inc. dated September 1999.
10.31. Share Exchange Agreement, dated as of September 23, 1999,
between New America Network, Inc. and WorldWide Web NetworX
Corporation.
10.32. NAI Direct, Inc. Shareholders' Agreement, dated September
23, 1999, between Real Quest, Inc., Gerald C. Finn, Jeffrey
Finn and NAI Direct, Inc.
10.33. Real Quest, Inc. Shareholders' Agreement, dated September
23, 1999, between WorldWide Web NetworX Corporation and New
America Network, Inc.
10.34. Employment Agreement, dated September 23, 1999, between NAI
Direct, Inc. and Jeffrey Finn.
10.35. Employment Agreement, dated September 23, 1999, between NAI
Direct, Inc. and Gerald C. Finn.
10.36. Escrow Agreement, dated September 23, 1999, between
WorldWide Web NetworX Corporation, New America Network, Inc.
and Weinstein, Goss, Schleifer, Eisenberg, Winkler,
Rothweiler & Ostroff.
10.37. Agreement dated December 22, 1999, among WorldWide Web
NetworX Corporation, International Commerce Exchange
Systems, Inc., JenCom Digital Technologies, Ltd. and Henry
Kauftheil.
10.38. Amended and Restated Operating Agreement of WWWX-JenCom,
LLC, dated as of January 7, 2000, between WorldWide Web
NetworX Corporation and JenCom Digital Technologies, LLC.
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------------- -----------
<C> <S>
10.39. Amended and Restated Operating Agreement of InterCommerce
China, LLC, dated as of January 7, 2000, among WorldWide Web
NetworX Corporation, International Commerce Exchange
Systems, Inc., Lester Wolff International Investment, Ltd.,
Henry Kauftheil, Peter Zhenxiang Lu, and Uncas Holdings
Limited Partnership.
10.40. Distribution and Operating Agreement, dated as of January 7,
2000, between ATM Service, Ltd., and Intercommerce China,
LLC.
10.41. Employment Agreement, dated as of January 14, 2000, between
WorldWide Web NetworX Corporation and John T. Banigan.
10.42. Shareholders Agreement dated as of February 7, 2000, among
Warren Rothstein, Gary Levi, Thomas Settineri, WorldWide Web
NetworX Corporation, and ATM Service, Ltd.
*16.1 Letters regarding change in certifying accountant.
21.1 Subsidiaries of the Registrant.
27.1 Financial Data Schedule
</TABLE>
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Act of 1934,
the registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, there unto duly authorized on February 11, 2000
<TABLE>
<S> <C> <C>
WORLDWIDE WEB NETWORX CORPORATION
By: /s/ WARREN ROTHSTEIN
------------------------------------------
Warren Rothstein, President and Chief
Executive Officer
</TABLE>
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
WORLDWIDE WEB NETWORX, CORPORATION
Reports of Independent Auditors............................. F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statements of Stockholders' Equity............. F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
INSTRA CORP., A PREDECESSOR COMPANY
Independent Auditors Report................................. F-27
Balance Sheet............................................... F-28
Statement of Operations..................................... F-29
Statement of Shareholders' Equity and Accumulated Deficit... F-30
Statement of Cash Flows..................................... F-31
Notes to Financial Statements............................... F-33
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
WorldWide Web NetworX Corporation
We have audited the accompanying consolidated balance sheet of WorldWide Web
NetworX Corporation as of September 30, 1999, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of WorldWide Web
NetworX Corporation as of September 30, 1999, and the results of its operations
and its cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
January 17, 2000
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
WorldWide Web NetworX Corporation
Cherry Hill, New Jersey
We have audited the accompanying consolidated balance sheet of WorldWide Web
NetworX Corporation and subsidiary as of September 30, 1998, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present fairly, in
all material respects, the consolidated financial position of WorldWide Web
NetworX Corporation and subsidiary as of September 30, 1998, and the results of
their operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
Richard A. Eisner & Company, LLP
New York, New York
April 13, 1999
F-3
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30
-------------------
1999 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 6,234 $ 792
Short-term investments.................................... 29,475 --
Accounts receivable (net of allowance for doubtful
accounts of $19 in 1999)................................ 858 49
Prepaid expenses.......................................... 143 --
------- ------
Total current assets........................................ 36,710 841
Property and equipment, net................................. 295 27
Ownership interests and advances to Affiliated Companies.... 5,129 --
Intangible assets (net of accumulated amortization of $109
in 1999).................................................. 3,499 --
Deferred financing costs (net of accumulated amortization of
$155 in 1999)............................................. 139 --
Other assets................................................ 49 118
Deferred income taxes....................................... 1,690 --
------- ------
Total assets................................................ $47,511 $ 986
======= ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses.......................................... $ 1,530 $ 23
Accounts payable.......................................... 1,627 40
Current portion of capital lease obligation............... 37 --
Convertible debentures (net of discount of $175 in
1999)................................................... 815 --
Deferred income taxes..................................... 8,813
------- ------
Total current liabilities................................... 12,822 63
Capital lease obligation, net of current portion............ 39 --
Stockholders' equity:
Preferred stock--authorized 10,000,000 shares, $.01 par
value, none issued...................................... -- --
Common stock--authorized 100,000,000 shares, $.001 par
value; 38,455,569 and 10,618,500 shares issued and
outstanding in 1999 and 1998, respectively.............. 39 11
Additional paid-in capital................................ 36,790 1,136
Retained earnings (deficit)............................... 1,221 (219)
Unearned stock compensation............................... (3,400) --
Subscription receivable................................... -- (5)
------- ------
Total stockholders' equity.................................. 34,650 923
------- ------
Total liabilities and stockholders' equity.................. $47,511 $ 986
======= ======
</TABLE>
See accompanying notes.
F-4
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
------------------------
1999 1998
----------- ----------
<S> <C> <C>
Net revenues................................................ $ 1,339 $ 50
Operating expenses:
Cost of revenue........................................... 792 36
Selling, general and administrative....................... 5,279 140
Depreciation and amortization............................. 597 13
Writeoff of purchased research and development............ 3,036 --
Writeoff of intangible asset.............................. 5,583 --
----------- ----------
Loss from operations........................................ (13,948) (139)
Other income (expenses):
Gain on sale of subsidiary................................ 25,426 --
Impairment of advances to Affiliated Companies............ (1,106) --
Interest expense.......................................... (392) (90)
Amortization of debt issuance costs....................... (155)
Interest income........................................... 56 10
Equity income (loss)...................................... (1,578) --
----------- ----------
Income (loss) before income taxes........................... 8,303 (219)
Income tax expense.......................................... 6,863 --
----------- ----------
Net income (loss)........................................... $ 1,440 $ (219)
=========== ==========
Net income (loss) per share:
Basic..................................................... $ 0.07 $ (0.03)
Diluted................................................... $ 0.07 $ (0.03)
=========== ==========
Weighted average shares outstanding:
Basic..................................................... 21,906,553 8,602,000
Diluted................................................... 22,418,294 8,602,000
=========== ==========
</TABLE>
See accompanying notes.
F-5
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1999 AND 1998
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
ADDITIONAL RETAINED UNEARNED TOTAL
COMMON STOCK PAID-IN EARNINGS SUBSCRIPTION STOCK STOCKHOLDERS'
SHARES AMOUNT CAPITAL (DEFICIT) RECEIVABLE COMPENSATION EQUITY
---------- -------- ---------- --------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at October 1, 1997......... 6,000,000 $ 6 $ 54 $ -- $(5) $ -- $ 55
Issuance of common stock for:
Recapitalization with Instra..... 2,100,000 2 (2) -- -- -- --
Sale of convertible notes........ 502,500 1 250 -- -- 251
Conversion of debt............... 502,500 1 341 -- -- 342
Cash, net of issuance costs of
$16............................ 1,381,000 1 473 -- -- 474
Services rendered................ 132,500 -- 20 -- -- 20
Net loss........................... -- -- -- (219) -- -- (219)
---------- --- ------- ------ --- ------- -------
Balance at September 30, 1998...... 10,618,500 11 1,136 (219) (5) -- 923
Issuance of common stock for:
Services rendered................ 4,408,950 4 4,609 -- (4,000) 613
Acquisition of ownership
interests in Affiliated
Companies...................... 10,523,450 11 12,762 -- -- 12,773
Purchase of technology........... 3,500,000 4 5,246 -- -- 5,250
Cash, net of issuance costs of
$1,864......................... 9,404,669 9 12,234 -- -- 12,243
Beneficial conversion feature on
convertible debt................. -- -- 347 -- -- 347
Warrants issued in connection with
services rendered................ -- -- 256 -- -- 256
Stock compensation................. -- -- 200 -- 600 800
Receipt of subscription
receivable....................... 5 5
Net income......................... -- -- -- 1,440 -- 1,440
---------- --- ------- ------ --- ------- -------
Balance at September 30, 1999...... 38,455,569 $39 $36,790 $1,221 $-- $(3,400) $34,650
========== === ======= ====== === ======= =======
</TABLE>
F-6
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30
-------------------
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)........................................... $ 1,440 $(219)
Adjustments to reconcile net income (loss) to net cash used
in operating activities:
Purchased research and development........................ 3,036 --
Write-off of intangible asset............................. 5,583 --
Stock compensation........................................ 869 20
Depreciation.............................................. 14 3
Amortization.............................................. 583 10
Deferred income taxes..................................... 6,863 --
Gain on sale of subsidiary................................ (25,426) --
Amortization of debt issuance costs....................... 155 --
Amortization of debt discount............................. 175 80
Equity loss............................................... 1,578 --
Impairment of advance to Affiliated Companies............. 1,106 --
Changes in operating assets and liabilities net of
acquisitions:
Accounts receivable..................................... 1,008 (49)
Accounts payable........................................ (600) 20
Accrued expenses........................................ 395 40
Prepaid expenses........................................ (143) --
------- -----
Net cash used in operating activities....................... (3,364) (95)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of ownership interests in Affiliated Companies,
net of cash acquired...................................... (2,985) --
Advances to Affiliated Companies............................ (2,850) --
Acquisition of technology................................... (750) --
Proceeds from sale of subsidiary............................ 2,602 --
Purchase of property and equipment.......................... (206) (30)
Decrease (increase) in other assets......................... 70 (115)
------- -----
Net cash used in investing activities....................... (4,119) (145)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of convertible debentures............ 990 503
Debt issuance costs incurred................................ (129) --
Payments on line of credit.................................. (179) --
Net proceeds from issuance of common stock.................. 12,243 484
------- -----
Net cash provided by financing activities................... 12,925 987
------- -----
Net increase in cash and cash equivalents................... 5,442 747
Cash and cash equivalents at beginning of year.............. 792 45
------- -----
Cash and cash equivalents at end of year.................... $ 6,234 $ 792
======= =====
NONCASH TRANSACTIONS
Capital lease obligation incurred........................... $ 76 $ --
Exchange of convertible notes for common stock.............. -- 342
Receipt of stock for sale of subsidiary..................... 29,475 --
ISSUANCE OF COMMON STOCK FOR:
Acquisition of ownership interests in Affiliated
Companies................................................. 12,773 --
Acquisition of technology................................... 5,250 --
Services rendered........................................... 1,669 20
</TABLE>
See accompanying notes.
F-7
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
1. ORGANIZATION AND BUSINESS
WorldWide Web NetworX Corporation (the "Company") is a holding company
engaged in business-to-business, or "B2B" e-commerce through a network of
companies. The Company defines e-commerce as conducting or facilitating business
transactions over the Internet. As of September 30, 1999, the Company owned
interests in nine companies, which are referred to in these financial statements
as "Affiliated Companies." The Company enters into relationships, including
joint ventures, strategic relationships and acquisitions, with off-line
companies that have established distribution channels and fulfillment capability
and provides e-commerce technology, consulting, marketing and business
development services to the Companies. The Company's goal is to expand the
markets, services and products and to improve the efficiencies of these
businesses.
In May 1998, Instra Corp. ("Instra"), a publicly traded Delaware corporation
with minimal business operations exchanged 6,000,000 shares of Instra common
stock for all the outstanding shares of Keiretsu Corporation ("Keiretsu").
Keiretsu was incorporated in Nevada on September 26, 1997 and did not commence
operations until after the share exchange. Instra had 25,219,990 shares of
common stock outstanding prior to the share exchange. As a condition of the
share exchange, 14,719,990 shares of Instra common stock were canceled and the
remaining outstanding shares were reduced to 2,100,000 at the rate of one share
for each five shares outstanding as a result of a reverse stock split. As a
result of the transaction, Keiretsu became a wholly owned subsidiary of Instra
and the former Keiretsu stockholders became the owners of 74.1% of the
outstanding Instra common stock. The transaction was treated as a
recapitalization to which retroactive effect has been given in the accompanying
financial statements. In conjunction with the merger, Instra changed its name to
WorldWide Web NetworX Corporation.
2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company,
its wholly owned subsidiary, The Intrac Group, Ltd. and its majority owned and
controlled subsidiary, ATM Service, Ltd. The various interests that the Company
acquires in its Affiliated Companies are accounted for under three methods:
consolidation, equity method and cost method. The applicable accounting method
is generally determined based on the Company's voting interest in an Affiliated
Company.
CONSOLIDATION
Affiliated Companies in which the Company directly or indirectly owns more
than 50% of the outstanding voting securities are generally accounted for under
the consolidation method of accounting. Under this method, an Affiliated
Company's results of operations are reflected within the Company's
F-8
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
statement of operations. All significant intercompany accounts and transactions
are eliminated. Participation of other Affiliated Company shareholders in the
earnings or losses of a consolidated Affiliated Company is reflected in the
caption "Minority interest" in the Company's statement of operations. Minority
interest adjusts the Company's consolidated results of operations to reflect
only the Company's share of the earnings or losses of the consolidated
Affiliated Company.
EQUITY METHOD
Affiliated Companies whose results are not consolidated, but over whom the
Company exercises significant influence, are accounted for under the equity
method of accounting. Whether or not the Company exercises significant influence
with respect to an Affiliated Company depends on an evaluation of several
factors including, among others, representation on the Affiliated Company's
Board of Directors and ownership level, which is generally a 20% to 50% interest
in the voting securities of the Affiliated Company, including voting rights
associated with the Company's holdings in common, preferred and other
convertible instruments in the Affiliated Company. Under the equity method of
accounting, an Affiliated Company's results of operations are not included in
detail within the Company's statement of operations; however, the Company's
share of the earnings or losses of the Affiliated Company is reflected in the
caption "Equity income (loss)" in the statement of operations.
The amount by which the Company's carrying value exceeds its share of the
underlying net assets of Affiliated Companies accounted for under the
consolidation or equity method of accounting is recorded as goodwill and is
amortized on a straight-line basis over its estimated useful life. Goodwill
amortization adjusts the Company's share of the Affiliated Company's earnings or
losses.
COST METHOD
Affiliated Companies not accounted for under the consolidation or the equity
method of accounting are accounted for under the cost method of accounting.
Under this method, the Company's share of the earnings or losses of such
companies is not included in the consolidated statement of operations. However,
cost-method impairment charges are recognized in the consolidated statement of
operations and deducted from the carrying value in the consolidated balance
sheet, while the new cost basis is not increased if circumstances suggest that
the value of the Affiliated Company has subsequently recovered.
The Company records its ownership interest in debt securities of Affiliated
Companies accounted for under the cost method at cost. The Company records its
ownership interest in equity securities of Affiliated Companies accounted for
under the cost method at cost, unless these securities have readily determinable
fair values based on quoted market prices, in which case these interests would
be recorded at fair value. In addition to the Company's investments in voting
and non-voting equity and debt securities, it periodically makes advances to its
Affiliated Companies in the form of promissory notes which are accounted for in
accordance with SFAS No. 114.
The Company continually evaluates the carrying value of its ownership
interests in and advances to each of its Affiliated Companies for possible
impairment based on achievement of business plan objectives and milestones, the
value of each ownership interest in the Affiliated Company relative to carrying
value, the financial condition and prospects of the Affiliated Company, and
other relevant
F-9
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
factors. The business plan objectives and milestones the Company considers
include, among others, those related to financial performance such as
achievement of planned financial results or completion of capital raising
activities, and those that are not primarily financial in nature such as the
launching of a web site or the hiring of key employees. The fair value of the
Company's ownership interests in and advances to privately held Affiliated
Companies is generally determined based on the value at which independent third
parties have or have committed to invest in its Affiliated Companies.
REVENUE RECOGNITION
The Company principally derives its revenue by providing inventory
liquidation and asset recovery services and from the purchase and resale of
advertising media, merchandise or business services through its consolidated
Affiliated Companies, ATM Service, Ltd. ("ATM Ltd.") and The Intrac Group, Ltd.
("Intrac") throughout North America. The Company plans to expand its operations
throughout the world.
The Company will contract with a customer to sell for the customer large
blocks of assets or inventory under asset management, liquidation, or cost
recovery agreements. In an asset management agreement, the Company acts as an
agent, remarkets the assets for cash, and receives a percentage of the sale as a
commission.
Under both liquidation and cost-recovery agreements, the Company takes title
to the assets and assumes the risk of loss. The Company is not required, by
either type of agreement, to make any cash payments to the vendor for the assets
purchased until such time as the Company sells the assets. These payments
pertain to the portion of assets actually sold. The ultimate cost to the Company
is a contracted percent of the amount the Company sells the inventory for, which
is uncertain until a sale occurs. Accordingly, the Company does not record
inventory for any assets purchased under these agreements.
The transactions conducted under asset management and cost recovery
agreements can also be settled, in part, in credits to purchase advertising
media, merchandise, or business services ("trade credits"). Trade credits issued
to customers represent the difference between the contracted value of the
inventory as negotiated with the customer and the cash paid to the customer upon
the sale of the inventory. Trade credits are not redeemable by customers for
cash. The contracted value of the inventory is mutually agreed upon by the
Company and the customer at the time an agreement is reached and is usually in
excess of the cash liquidation value. The Company is not required to remit cash
or any other form of payment other than trade credits for the difference between
the contracted value and the cash paid for the inventory. Certain liquidation
and cost recovery agreements are transacted exclusively in trade credits.
Revenues associated with asset management and cost recovery services are
typically recognized when the inventory sold is shipped. However, if the
transactions involve the issuance of trade credits, the Company will defer a
portion of the revenue attributable to cash received under asset management and
cost-recovery agreements to reflect the outstanding commitment applicable to the
future redemption of the trade credits.
The Company issues two types of trade credits, "combination trade credits"
and "straight trade credits." Under a combination trade credit arrangement, the
customer purchases goods and services
F-10
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
from the Company in exchange for trade credits and cash. The ratio of cash to
combination trade credits that make up the total purchase price to be used in
purchases from the Company is determined on a transaction-by-transaction basis.
The obligation to redeem combination trade credits represents a best efforts
obligation of the Company. The combination trade credits have neither any
recordable obligation nor do they represent any fixed or determinable liability.
Accordingly, no liability is recorded when combination trade credits are issued.
To redeem combination trade credits, a customer must contact the Company and
request that the Company provide advertising media, merchandise or business
services. The Company will attempt to purchase the requested product for cash or
a combination of cash and trade credits. The Company has no liability or
obligation to the customer if it is unable to obtain any of the items requested
that are not already within the inventory of the Company or that it cannot
reasonably obtain. The Company's inventory of services is minimal at
September 30, 1999. When the Company redeems combination trade credits, it
recognizes revenue equal to the cash received from the customer for the goods
and services plus, if applicable, the pro rata portion of the deferred revenue
relating to the liquidation of the assets that gave rise to the trade credits.
Straight trade credits are issued to purchase goods and services from the
Company without the requirement to pay a portion of the purchase price in cash.
Straight trade credits are issued to purchase pre-negotiated types of goods and
services, which have readily estimable costs. The Company records deferred
revenue for straight trade credits approximating the estimated cost to purchase
future goods and services plus a normal margin. Cost of revenue is recognized
for the cash paid by the Company for the goods and services. When the Company
redeems straight trade credits, it recognizes revenue equal to the pro rata
portion of the deferred revenue relating to straight trade credits. Cost of
revenue is recognized for the cash paid by the Company for the goods and
services.
Revenue from asset management, liquidation and cost-recovery services was
$576,000 for the year ended September 30, 1999 and deferred revenue was $470,000
at September 30, 1999.
Unredeemed Combination trade credits totaled $8,017,000 at September 30,
1999. The vendor must redeem the trade credits within specified periods ranging
from 2 to 5 years. Trade credits redeemable for the next four years are as
follows: $2,259,000 in 2000, $1,445,000 in 2001, $1,270,000 in 2002, and
$3,043,000 in 2003.
The Company also generated revenue by providing consulting services during
the year ended September 30, 1999. Consulting revenues are recognized in the
period in which the consulting services are performed. Consulting revenues were
$659,000 for the year ended September 30, 1999, of which $426,000 was
attributable to Entrade which was sold in September 1999 (Note 9).
CASH EQUIVALENTS
The Company considers as cash equivalents all highly liquid investments with
a maturity of three months or less when purchased.
F-11
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SHORT-TERM INVESTMENTS
The Company classifies its short-term investments as available for sale.
Such investments are recorded at fair value based on quoted market prices, with
unrealized gains and losses, which are considered to be temporary, recorded as
other comprehensive income or loss until realized. The cost of short-term
investments sold is based on the average cost method. Accumulated other
comprehensive income related to these investments is immaterial at
September 30, 1999.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the related assets which
average from three to five years.
INTANGIBLE ASSETS
Intangible assets consist of goodwill and technology attributable to
businesses acquired. Goodwill represents the excess of the cost of businesses
acquired over the fair value of the related net assets at the date of
acquisition. Intangible assets are amortized using the straight-line method over
their expected useful lives of 3 to 5 years.
LONG-LIVED ASSETS
The Company evaluates impairment of its intangible and other long-lived
assets in accordance with Statement of Financial Accounting Standards No. 121,
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO
BE DISPOSED OF. In making such determination, management compares the estimated
future cash flows, on an undiscounted basis, of the underlying operations or
assets with their carrying value to determine the extent of any impairment
charge.
DEFERRED FINANCING COSTS
Deferred financing costs are amortized based on the interest method over the
term of the associated debt agreement.
NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is calculated by dividing net income
(loss) by the weighted average number of common shares outstanding for the
period. Diluted net income (loss) per share reflects the potential dilution of
securities by including other common stock equivalents, including stock options,
convertible debt, and warrants to purchase common stock in the weighted average
number of common shares outstanding for a period, if dilutive. Contingently
issuable shares are included in diluted net income per share, if dilutive, based
on the number of shares, if any, that would be issuable under the terms of the
arrangement if the end of the reporting period were the end of the contingency
period.
F-12
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to a
concentration of credit risk consist principally of accounts receivable. The
Company's customer base is mainly in the United States. The Company does not
require collateral or other security to support credit sales, but provides an
allowance for bad debts based on historical experience and specifically
identified risks.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has the following financial instruments: cash and cash
equivalents, short-term investments, accounts receivable, accounts payable,
convertible notes, and accrued expenses. The carrying value of these financial
instruments approximates their fair value.
ACCOUNTING FOR STOCK-BASED COMPENSATION
The Company has adopted Statement of Financial Accounting Standards
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION (SFAS No. 123). The provisions
of SFAS No. 123 allow companies to either expense the estimated fair value of
stock options or to continue to follow the intrinsic value method set forth in
APB Opinion 25, "Accounting for Stock Issued to Employees" (APB 25) but disclose
the pro forma effects on net income or loss as if the fair value been expensed.
The Company has elected to continue to apply APB 25 in accounting for its stock
option plan, and accordingly, recognizes compensation expense for the difference
between the fair value of the underlying common stock and the grant price of the
option at the date of grant.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES (SFAS No. 133), which requires that companies recognize
all derivatives as either assets or liabilities in the balance sheet at fair
value. Under SFAS No. 133, accounting for changes in fair value of a derivative
depends on its intended use and designation. SFAS No. 133, is effective for
fiscal years beginning after June 15, 2000. The Company has not yet determined
the impact of this pronouncement or when it will adopt it.
F-13
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. SHORT-TERM INVESTMENTS
Short-term investments at September 30, 1999 consisted of 1,800,000 shares
of common stock of Entrade Inc. received as consideration for the sale of a
subsidiary to Artra (Note 9). These shares are restricted as to sale until
September 23, 2000, however, the shares may be pledged as collateral by the
Company. The quoted market value of the Entrade Inc. shares held by the Company
has fluctuated since September 30, 1999, from $25,400,000 to $100,300,000
through January 17, 2000.
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (amounts in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30
-------------------
1999 1998
-------- --------
<S> <C> <C>
Office equipment............................................ $100 $21
Office furniture............................................ 117 9
Equipment under capital lease............................... 76 --
Leasehold improvements...................................... 19 --
---- ---
312 30
Accumulated depreciation.................................... (17) (3)
---- ---
Total property and equipment................................ $295 $27
==== ===
</TABLE>
5. ACQUISITIONS OF OWNERSHIP INTERESTS IN AFFILIATED COMPANIES
ENTRADE INC.
Between December 1998 and February 1999, the Company acquired all of the
outstanding equity interests of BarterOne, LLC ("BarterOne"), a Delaware limited
liability company. The Company issued 2,523,450 shares of its common stock and
paid cash of $1,056,000 to purchase BarterOne. The Company's CEO and principal
stockholder at the date of the transaction, Robert D. Kohn, received 475,000
shares of the Company's Common Stock for his ownership interest in BarterOne.
BarterOne held certain worldwide perpetual licensing rights to the ORBIT system
software (Online Reciprocal Business and Inventory Transaction System), an
electronic commerce system to be used as a transaction tool over the Internet,
and was engaged in the business of developing and marketing online asset
management and remarketing programs to major corporations. The Company accounted
for this acquisition under the purchase method of accounting. The Company valued
the shares issued at $2,523,450, resulting in a total purchase price, including
cash and other expenses, of $3,580,000, all of which was allocated to cost in
excess of assets acquired. The goodwill was being amortized over a five-year
period. Goodwill amortization of $430,000 is included in the statement of
operations.
In January 1999, the Company acquired from Positive Asset Remarketing, Inc.
("PAR") 25% of the outstanding Class A voting stock of asseTrade.com, Inc.,
("asseTrade") in exchange for 3,500,000 shares of the Company's common stock.
asseTrade was a privately held entity which entered into a software license
agreement with BarterOne and is engaged in the business of developing and
marketing online asset disposition and auction services to major corporations.
The Company's CEO and principal stockholder at the time of the transaction,
Robert D. Kohn, held a 33.33% ownership interest in PAR. Subsequent to the
acquisition, the Company transferred the assets of BarterOne and the asseTrade
stock to NA Acquisition Corp. ("NAAC"), a 90%-owned subsidiary. Prior to the
consummation of the merger, NAAC changed its name to Entrade Inc. ("Entrade").
The remaining 10% of Entrade was
F-14
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. ACQUISITIONS OF OWNERSHIP INTERESTS IN AFFILIATED COMPANIES (CONTINUED)
held by a former BarterOne shareholder, which is a wholly-owned subsidiary of
PECO Energy Company.
In September 1999, the Company consummated the sale of Entrade to another
company (Note 9).
ATM SERVICE, LTD.
In December 1998, the Company entered into an agreement with Warren
Rothstein (who in September 1999, became interim President and CEO and Chairman
of the Board of Directors of the Company) and formed a joint venture, ATM
Service, Ltd. ("ATM Ltd."), owned equally by the Company and Warren Rothstein.
Warren Rothstein obtained his interest in the joint venture in exchange for
agreeing to manage ATM Ltd. and sourcing goods and services for ATM Ltd. to sell
through its web site. The joint venture was formed to provide inventory
liquidation and other forms of asset recovery services primarily by e-commerce
over the Internet.
The Company committed to issue 5,000,000 shares (subsequently reduced to the
issuance of 4,000,000 shares) of common stock to Warren Rothstein for services
to be rendered to ATM Ltd. over a 6-year period The agreement provides that the
shares issued will be subject to forfeiture to the extent of 200,000 shares in
each quarter that Warren Rothstein fails to provide listings of merchandise with
a retail value of $1,250,000 for sale on ATM Ltd.'s web site. The shares have
voting and dividend rights, but may not be transferred except in accordance with
the agreement. The Company recorded deferred compensation of $5,000,000 at the
date of the agreement for the shares issued, which was reduced to $4,000,000 in
July 1999, as a result of the amendment discussed below. As the shares are
earned, the Company will record a charge to expense for the then-fair value of
such shares. Through September 30, 1999, the restriction on 600,000 of these
shares has been released and the Company recorded a charge of $800,000 which is
included in equity loss because the Company had a 50% interest in ATM Ltd when
the restriction on the shares was released.
In February 1999, the Company acquired from Positive Asset Remarketing
("PAR"), the ATM Center System, a proprietary system for online electronic
trading and banking, which it contributed to ATM Ltd. The Company issued
3,500,000 shares of its common stock valued at $5,250,000 and cash of $750,000
to PAR. In addition, the Company agreed to fund the costs of maintaining,
operating and updating the web site until ATM Ltd. was funded to the
satisfaction of Warren Rothstein and the Company, after which the Company would
be reimbursed for such costs by ATM Ltd. The Company's then-CEO and principal
stockholder, Robert D. Kohn, as a shareholder of PAR, received 1,166,667 shares
of the Company's common stock and $250,000 of the proceeds from the sale of the
system to the Company. The Company recorded the transfer of the technology at
its carrying value of $6 million and recorded an investment in ATM Ltd. The
Company was accounting for its investment under the equity method and as such,
was amortizing the amount by which its carrying value exceeded its share of the
underlying net assets of ATM Ltd. over a three-year period. Amortization expense
of $417,000 was recorded and included in Equity loss in the Company's statement
of operations for the year ended September 30, 1999, with a corresponding
decrease in the investment.
In connection with the acquisition of The Intrac Group in July 1999, the
agreement with Warren Rothstein was amended and the Company received 26% of
Warren Rothstein's holdings in ATM Ltd., and reduced the number of contingent
shares issuable to Warren Rothstein to 4,000,000. The Company then issued 24% of
its interest in ATM Ltd. to the former shareholders of Intrac resulting in the
Company owning a 52% interest in ATM Ltd. (See acquisition of Intrac below.) The
Company is accounting for the acquisition of the controlling interest in
ATM Ltd. under the purchase method of
F-15
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. ACQUISITIONS OF OWNERSHIP INTERESTS IN AFFILIATED COMPANIES (CONTINUED)
accounting. The purchase price has been allocated to assets and liabilities
based on estimated fair values at the date of acquisition. The Company valued
its net investment in ATM Ltd. at the carrying value of its equity investment at
the date of acquisition as there were no significant operations of the Company
from the date of its original equity investment through the date of its
acquisition of a controlling interest. The detail of the results of operations
of ATM Ltd. have been included in the Company's statement of operations since
July 23, 1999, when the Company acquired a controlling interest.
In September 1999, the Company determined that it would not use the ATM
Center System technology and the Company licensed new technology from
entrade.com, a subsidiary of Entrade Inc. While the Company intends to sell or
license the ATM Center System technology to others, no customers have yet been
identified and no marketing efforts have commenced. Accordingly, the unamortized
balance of the technology of $5,583,000 was written off at September 30, 1999.
THE INTRAC GROUP, LTD.
On July 23, 1999, the Company acquired all the outstanding shares of capital
stock of The Intrac Group ("Intrac") in exchange for 1,000,000 shares of the
Company's common stock, $1,500,000 in cash, a 24% interest in ATM Ltd., and the
assumption of certain liabilities. The results of operations of Intrac have been
included in the Company's statement of operations since July 23, 1999.
The Company is accounting for this acquisition under the purchase method of
accounting. The purchase price has been allocated to assets and liabilities
based on estimated fair values at the date of acquisition. The Company valued
the 1,000,000 shares of its common stock at $1,500,000, resulting in a total
purchase price of Intrac of $3,000,000, including the cash and other costs. The
Company has allocated the purchase price and determined that the costs in excess
of assets acquired is $3,608,000. The goodwill is being amortized over a
five-year period. Goodwill amortization of $109,000 is included in the statement
of operations for the year ended September 30, 1999.
The following unaudited proforma financial information presents the combined
results of operations as if the Intrac acquisition had occurred on October 1,
1998 and October 1, 1997, respectively, after giving effect to certain
adjustments including goodwill amortization and income taxes. The unaudited
proforma information does not necessarily reflect the results of operations that
would have occurred had the Company and Intrac been a single entity during such
periods.
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30
-------------------
1999 1998
-------- --------
<S> <C> <C>
Revenue..................................................... $6,014 $2,909
Proforma net income......................................... 843 (596)
Proforma diluted net income per share....................... .04 (.06)
</TABLE>
REAL QUEST, INC./NAI DIRECT, INC.
On September 23, 1999, the Company acquired 80% of the common stock of Real
Quest, Inc. ("Real Quest") from New America Network, Inc. in exchange for
750,000 shares of its common stock. Real Quest's only asset is its 80% ownership
of NAI Direct, Inc. ("NAI Direct"). NAI Direct plans to conduct operations
through its web site that will permit users to buy, sell, or lease commercial
real estate on-line. There were no significant operations of NAI Direct at the
date of the acquisition. The Company also delivered an additional 750,000 shares
to an escrow agent, to be released to New
F-16
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. ACQUISITIONS OF OWNERSHIP INTERESTS IN AFFILIATED COMPANIES (CONTINUED)
America Network, Inc., if NAI Direct attains revenues of $2 million within the
24-month period following the launch of its web site. The Company valued the
750,000 shares of its common stock at $1,125,000. No value has been assigned to
the contingent shares as the contingency has not yet been resolved. The Company
is accounting for its investment in Real Quest using the equity method because,
under the terms of the Stockholders Agreement, the Company does not control the
operations of Real Quest or NAI Direct. The Company will amortize the amount by
which its carrying value exceeded its share of the underlying assets of Real
Quest over a three year period. The Company also advanced NAI Direct $1,000,000
to fund operations which are included in the Company's equity investment.
Additionally, the Company has agreed to provide up to $4,000,000 in working
capital to NAI Direct within 18 months of September 30, 1999 in the form of a
loan or otherwise.
ADMIRAL ASSET GROUP
On April 7, 1999, the Company acquired certain assets of Admiral Asset
Group, Inc. ("Admiral"), a privately held company, including its ownership
interest in asseTrade.com in exchange for 750,000 shares of its common stock and
the assumption of certain liabilities. The Company valued the 750,000 shares of
its common stock at $1,125,000. The Company has allocated the entire purchase
price of $1,605,000 to the ownership interest in asseTrade.com because the other
assets acquired were inconsequential.
WWWX-JENCOM, LLC
In February 1999, the Company entered into an agreement with JenCom Digital
Technologies, LLC ("JenCom") whereby the Company acquired, for 2,000,000 shares
of common stock of the Company, four of JenCom's proprietary Internet software
technologies ("the JenCom Assets"). The 2,000,000 shares issued were valued at
$3,000,000. The Company then assigned the JenCom Assets to WWWX-Jencom, LLC
("WJC"), a limited liability company which is owned 50% by JenCom and 50% by the
Company. WJC was formed to further develop and market the Internet technology
products acquired from JenCom. The purchased assets represent research and
development in process and were not technologically feasible at the acquisition
date and have been written off as purchased research and development in the
statement of operations.
During 1999, the Company also loaned $900,000 to WJC. The interest free loan
is repayable upon the earliest to occur of the following: 1) 10 years from
March 15, 1999, 2) a third-party investment into WJC of $10,000,000 or 3) the
sale of any asset of WJC that generates gross proceeds of $5,000,000 or more.
Out of the proceeds of the loan, $350,000 was advanced from WJC to Vision
Technology, Inc. (see below).
The Company is accounting for its investment in WJC under the equity method.
The Company has included its share of the net losses of WJC as Equity loss in
the statement of operations, with a corresponding reduction of its investment in
WJC at September 30, 1999. Subsequent to September 30, 1999, the Company agreed
to file a registration statement before May 17, 2000 for the 2,000,000 shares
issued to JenCom.
VIDEONET CORP.
In July 1999, the Company advanced $100,000 to VideoNet Corp. ("VideoNet"),
evidenced by a 12%, $100,000 convertible note. Subsequent to September 30, 1999,
the note and the accrued interest were converted into convertible preferred
stock of VideoNet, representing approximately 2.4% of the
F-17
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. ACQUISITIONS OF OWNERSHIP INTERESTS IN AFFILIATED COMPANIES (CONTINUED)
outstanding capital stock of VideoNet. VideoNet is a privately held company that
is developing video conferencing services through proprietary technology. The
Company is accounting for this investment under the cost method.
ONE WORLD DIRECT, INC.
In March 1999, the Company paid $675,000 for approximately 450,000 shares,
representing approximately 5% of the outstanding shares, of One World
Direct, Inc., a privately held company that is an e-commerce-based virtual
community of celebrity-branded web sites and products. The Company is accounting
for this investment under the cost method.
VISION TECHNOLOGIES, INC.
In March 1999, the Company agreed in principle to acquire Vision
Technologies, Inc. ("Vision") for cash and stock. Vision is a privately held
company that is developing high-performance digital video imaging technologies.
In July 1999, the agreement was amended so the Company would make an investment
in Vision rather than acquire it. The Company advanced $850,000 in cash to
Vision. Additionally, $350,000 was advanced by WJC. In August 1999, the term
sheet was terminated, and Vision has the option to either return the cash to the
Company within 180 days or convert that amount into shares of Vision common
stock representing 4% of Vision.
The Company has evaluated the carrying value of its ownership interest in
Vision. Based on its review of Vision's business plan and the lack of sufficient
capital, the Company has recorded a 100% valuation allowance of $1,025,000
representing the cash advances of $850,000 and its 50% ownership of the advances
made by WJC.
The following summarizes the Company's ownership interests in and advances
to Affiliated Companies accounted for under the equity method and cost method of
accounting. The ownership interests are classified according to applicable
accounting methods at September 30, 1999. Cost basis represents the Company's
original acquisition cost and advances less any impairment charges recorded by
the Company. (in thousands)
<TABLE>
<CAPTION>
TOTAL
VALUATION COST CARRYING
INVESTMENT ADVANCES ALLOWANCE BASIS VALUE
---------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Equity method:
WJC........................ $ -- $ 900 $ (175) $ 725 $ 364
Real Quest................. 1,385 1,000 -- 2,385 2,385
------ ------ ------- ------ ------
1,385 1,900 (175) 3,110 2,749
Cost Method:
VideoNet................... -- 100 -- 100 100
One World Direct........... 675 -- -- 675 675
Vision..................... -- 850 (850) -- --
AsseTrade.................. 1,605 -- -- 1,605 1,605
Other...................... 81 -- (81) -- --
------ ------ ------- ------ ------
2,361 950 (931) 2,380 2,380
------ ------ ------- ------ ------
Total...................... $3,746 $2,850 $(1,106) $5,490 $5,129
====== ====== ======= ====== ======
</TABLE>
F-18
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. ACQUISITIONS OF OWNERSHIP INTERESTS IN AFFILIATED COMPANIES (CONTINUED)
The Company also has an investment in Entrade Inc. which it accounts for
under the cost method and is included in short-term investments (Note 3).
6. CUMULATIVE CONVERTIBLE DEBENTURES
In April 1998, Keiretsu sold $502,500 of Series A 12% Cumulative Convertible
Promissory Notes, which debt was assumed by WWWX in May 1998 when it merged with
Keiretsu, and 502,500 shares of restricted common stock for a total of $502,500.
The issuance of the Notes resulted in a debt discount of $251,000. During the
period from July through August 1998, the notes were converted into 502,500
shares of common stock of WWWX and the unamortized debt discount was included in
stockholders' equity.
In March 1999, the Company sold, through a private placement, $990,000 of
Series A 6% Cumulative Convertible Debentures ("Debentures") due and payable
12 months from the issue date. The debenture holders have the right to convert
into shares of common stock of the Company after the earlier of 1) the effective
date of a registration statement to be filed by the Company registering the
resale of the shares or 2) 120 days after the filing of such registration
statement. The right to convert expires if not so exercised. The conversion
price is the lesser of 1) a 35% discount to the five-day average closing bid
price preceding the conversion date, as defined or 2) the five-day average
closing bid price of the common stock immediately preceding the closing date of
the debenture offering. The conversion price is not less than $.25 per share and
not more than $1.50 per share. The Company recorded a debt discount of $347,000
related to the beneficial conversion feature, which is being amortized over the
one-year term of the debentures agreement.
The placement agent received cash of $129,000 and 98,950 shares of the
Company's common stock valued at $149,000 for the offering of the debentures.
The amounts paid to the placement agent were recorded as debt issuance costs and
are being amortized over the term of the debt agreement.
The Debentures provide for penalties if a registration statement to register
the shares to be issued upon conversion is not filed within 60 days of the sale
of the Debentures and declared effective within 90 days from the date of filing
due to the failure of the Company to exercise reasonable diligence. Management
believes it has exercised reasonable diligence, however, a registration
statement has not been filed.
F-19
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's net deferred income taxes are as follows:
<TABLE>
<CAPTION>
1999 1998
-------- ---------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Loss in unconsolidated subsidiary........................... 2,865
Purchased research and development and other intangibles.... 1,174 $ --
Other reserves.............................................. 548 --
NOL carryforward............................................ 716 82
------- ---------
Deferred tax assets......................................... 5,303 82
Less valuation allowance.................................... (2,865) (82)
------- ---------
Total deferred tax assets................................... 2,438 --
Deferred tax liabilities:
Deferred gain on sale of subsidiary......................... (8,902) --
Other....................................................... (659)
------- ---------
Total deferred tax liabilities.............................. (9,561) --
------- ---------
Total net deferred taxes.................................... $(7,123) $ --
======= =========
</TABLE>
At September 30, 1999, a valuation allowance equal to the net deferred tax
asset of a subsidiary not consolidated for tax purposes has been recorded on the
basis of uncertainty with respect to the ultimate realization by the
unconsolidated subsidiary. At September 30, 1998, a full valuation allowance was
recorded as realization was uncertain. At September 30, 1999, the Company has
available net operating loss carryforwards of approximately $2,430,000 which
expire in the years 2012 to 2019 for federal purposes and 2004 and 2006 for
state purposes. The timing and manner in which the Company will utilize net
operating loss carryforwards in any year, or in total, may be limited by
Section 382 of the Internal Revenue Code.
A reconciliation of income tax expense to amounts computed using federal
statutory rates is as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Income tax expense (benefit) computed at federal statutory
rate (35%)................................................ $2,906 $(82)
Goodwill amortization....................................... 19
State income taxes, net..................................... 515
Nondeductible transaction costs............................. 176
Other....................................................... 464
Increase in valuation allowance............................. 2,783 82
------ ----
Income tax expense (benefit)................................ $6,863 $ --
====== ====
</TABLE>
F-20
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. INCOME TAXES (CONTINUED)
Included in income tax expense for the year ended September 30, 1999 are
deferred federal and state income taxes of $6,070,000 and $793,000,
respectively. There are no current income taxes for the years ended
September 30, 1999 and 1998.
8. STOCKHOLDERS' EQUITY
SALE OF COMMON STOCK
During 1998, the Company issued 1,513,500 shares of its common stock for
cash of $474,000, net of issuance costs, and for services rendered resulting in
expense of $20,000 for the value of the shares.
In March 1999, an investment bank purchased 2,000,000 shares of the
Company's common stock for $3,000,000. The investment bank received $390,000 in
commissions and expenses for this sale and warrants to purchase 200,000 shares
of common stock at $1.80 per share. The warrants expire on July 23, 2002.
Pursuant to a stock purchase agreement, the shares sold were to be registered
through the filing of a registration statement by October 4, 1999 or the Company
may be subject to a penalty of additional shares until a registration statement
covering such shares is declared effective. A registration statement has not yet
been filed and based on the trading price of the Company's common stock on
January 17, 2000, the Company may be subject to a penalty of up to 2,800,000
shares.
In May 1999, the Company entered into an agreement with the same investment
bank to sell shares of the Company's common stock in a private placement. The
offering closed on September 22, 1999 and the Company issued 7,404,669 shares of
common stock for an aggregate purchase price of $11,107,003. The investment bank
received $1,470,000 in cash commissions for the placement of the stock and
warrants to purchase 740,467 shares of the Company's common stock at $1.80 per
share. The warrants expire on various dates from July 31, 2002 to September 22,
2002.
During fiscal 1999, the Company also issued 310,000 shares of common stock
for services rendered. The issuance of the shares resulted in expense of
$464,000, which is included in the statement of operations.
During fiscal 1999, the Company issued warrants to purchase 200,000 shares
of its common stock for services rendered. The warrants are exercisable at $2.25
per share and expire on April 2, 2003. The issuance of warrants resulted in
expense of $256,000, which is included in the statement of operations.
COMMON STOCK OPTIONS
The Company has an equity compensation plan whereby the Company may grant
either incentive or nonqualified stock options to purchase shares of the
Company's common stock or restricted shares of the Company's common stock.
Twenty-five percent of the options are exercisable on the first anniversary of
the date of the participant's hire date. The additional amounts become
exercisable at varying rates from 6.25% on the last day of each quarter
thereafter. The Company has reserved 3,860,000 shares of its common stock to be
issued under the plan.
The incentive stock options may be granted at not less than the fair market
value of the shares at the date of grant, and the nonqualified stock options are
to be granted at no less than eighty-five percent of the fair market value of
the shares at the date of grant. The fair market value of the Company's common
stock is determined by the Board of Directors based on the trading price of the
Company's stock at the date of grant. Under APB No. 25, if the exercise price of
the Company's
F-21
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. STOCKHOLDERS' EQUITY (CONTINUED)
employee stock options equals or exceeds the fair value of the underlying stock
on the date of grant, no compensation expense is recognized. On September 23,
1999, 280,000 unvested options issued to employees of Entrade were cancelled
upon the consummation of the sale of Entrade. (Note 9)
The following table summarizes information about stock options outstanding
at September 30, 1999:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
WEIGHTED REMAINING
PER SHARE NUMBER OF AVERAGE PER CONTRACTUAL LIFE
PRICES SHARES SHARE PRICE (YEARS)
- --------------------- --------- ----------- ----------------
<S> <C> <C> <C>
$2.69 915,000 $2.69 9.9
===== ======= ===== ===
</TABLE>
No options were exercisable at September 30, 1999.
FASB No. 123 requires pro forma information regarding net income as if the
Company had accounted for its employee stock options under the fair value method
of that Statement. The fair value for these options was estimated at the date of
grant using the Black-Scholes method with the following assumptions for all
periods presented: risk-free interest rate of 6%, dividend yield of 0%, average
expected life of the option of 4 years, and volatility of 215%.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information is as follows (in thousands except per share data):
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30
1999
------------
<S> <C>
Net income:
As reported................................................. $1,440
SFAS No. 123 pro forma...................................... 1,394
Diluted net income (loss) per share:
As reported................................................. 0.07
SFAS No. 123 pro forma...................................... 0.06
</TABLE>
The weighted average fair value of options granted during the year ended
September 30, 1999 for which the estimated fair value of the stock equaled the
exercise price is $3.26 per share.
F-22
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. STOCKHOLDERS' EQUITY (CONTINUED)
STOCK OPTION ACTIVITY
A summary of stock option activity follows:
<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE
SHARES EXERCISE PRICE
--------- --------------
<S> <C> <C>
Outstanding at October 1, 1998....................... -- $ --
Granted.............................................. 1,210,000 2.69
Exercised............................................ -- --
Canceled............................................. (295,000) --
--------- -----
Outstanding at September 30, 1999.................... 915,000 $2.69
========= =====
</TABLE>
During 1999, the Company issued 45,000 shares of restricted stock.
SHARES RESERVED FOR FUTURE ISSUANCE
At September 30, 1999, the Company has reserved the following shares of
common stock for issuance:
<TABLE>
<S> <C>
Convertible debt............................................ 660,000
Common stock options outstanding............................ 915,000
Common stock options available for grant.................... 2,900,000
Common stock warrants....................................... 1,140,467
Contingent common stock
Acquisitions................................................ 750,000
Registration penalty........................................ 2,800,000
---------
9,210,467
=========
</TABLE>
F-23
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. SALE OF AFFILIATED COMPANY
In February 1999, the Company agreed to sell to Artra Group Incorporated
("Artra"), a publicly traded company, its 90%-owned Entrade subsidiary whose
assets the Company acquired in December 1998 (Note 5). Concurrently, Entrade and
Artra entered into a loan agreement whereby Artra agreed to lend up to
$2,000,000 to Entrade. The shareholders of Artra approved the acquisition on
September 23, 1999 and completed a reverse merger of Artra into a wholly owned
subsidiary of Entrade. In the merger, Artra shareholders exchanged their Artra
shares for Entrade common shares, trading under the Entrade name. As
consideration for the sale of Entrade, the Company received 1,800,000 shares of
Entrade's common stock, and $1,300,000 in cash. Additionally, the Company
received $1,302,000 of funding from Artra for the operations of Entrade from
February 23, 1999 through September 23, 1999. The sale of Entrade resulted in a
gain of $25,426,000, which is included in the statement of operations. The
1,800,000 shares of Entrade Inc. stock represented 15% of the combined company
at the date of the transaction and have been recorded as short-term investments
(Note 3).
As part of the Artra agreement, the Company's then Chairman, President, and
CEO, Robert D. Kohn, entered into an employment agreement with entrade.com
effective February 23, 1999 for a period of three years and as a result was
required to resign all positions with the Company on September 23, 1999.
The operations of Entrade have been included in the consolidated operations
of the Company from December 1998 through September 23, 1999.
10. COMMITMENTS AND CONTINGENCIES
The Company has operating leases covering certain office space and office
equipment. At September 30, 1999 future minimum lease payments on these
noncancelable operating leases having initial or remaining terms of more than
one year are $198,000 for 2000, $197,000 for 2001, $140,000 for 2002, $142,000
for 2003, and $133,000 for 2004. Rent expense was $83,000 and $6,000 for the
years ended September 30, 1999 and 1998 respectively.
The Company also leases equipment under capital leases. Future minimum lease
payments on capital leases, net of imputed interest of $11,000, are $37,000 for
2000 and $39,000 for 2001.
In September 1999, ATM Ltd., licensed from entrade.com, Inc., a subsidiary
of Entrade Inc., software which the Company sold in connection with its sale of
Entrade. ATM Ltd. agreed to pay a one-time licensing fee equal to $1,500,000 to
entrade.com through the issuance of combination trade credits. The Company
ascribed no value to this transaction as combination trade credits represent a
best efforts obligation and have neither any recordable value nor represent any
fixed or determinable liability. The Company also agreed to pay continuing
royalty payments equal to a percentage of all revenues from transactions
generated by using the licensed software in which entrade.com is involved. The
royalty payment percentage varies from 10% to 50% depending on the type of
transaction.
F-24
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. NET INCOME (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted net
income (loss) per share (in thousands except per share data):
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30
------------------------
1999 1998
----------- ----------
<S> <C> <C>
Net income (loss)................................... $ 1,440 $ (219)
Effect of dilutive securities:
Convertible debentures.......................... 32 --
----------- ----------
Adjusted net income (loss).......................... 1,472 (219)
=========== ==========
Weighted average number of common shares............ 21,906,553 8,602,000
Effect of dilutive securities:
Stock options................................... 27,736
Convertible debentures.......................... 359,836
Warrants........................................ 124,169
----------- ----------
Adjusted weighted average shares and assumed
conversions....................................... 22,418,294 8,602,000
=========== ==========
Earnings (loss) per share:
Basic........................................... $ 0.07 $ (0.03)
Diluted......................................... $ 0.07 $ (0.03)
</TABLE>
Due to their antidilutive effect, dilutive securities were excluded from the
computation of diluted net income (loss) per share for the year ended
September 30, 1998.
The 750,000 contingently issuable shares related to the Real Quest
investment and 3,400,000 shares contingently issuable to Warren Rothstein were
not included in the earnings per share calculation because the conditions
related to the contingencies were not satisfied at September 30, 1999.
Subsequent to September 30, 1999, the Company issued an additional 50,000
shares of common stock and warrants to purchase 500,000 shares of common stock
in settlement of accrued expenses for services rendered in 1999.
12. RELATED PARTY TRANSACTIONS
The Company provides various services including rental space and bookkeeping
for certain Affiliated Companies. Total services provided during the year ended
September 30, 1999, were $184,000 of which $38,000 is outstanding at
September 30, 1999.
The Company used the services of D&W Enterprises to manage its ATM Ltd.
operations. D&W Enterprises is 100%-owned by Warren Rothstein, the Company's
current CEO and Chairman. During the year ended September 30, 1999, the Company
paid $183,000 for the services rendered.
13. SUBSEQUENT EVENTS
In October 1999, the Company agreed to enter into a one-year agreement with
the Company's former President, CEO and Chairman, Robert D. Kohn, under which he
will act as a finder and/or financial consultant and will receive $60,000
annually for his consulting services as a non-refundable
F-25
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. SUBSEQUENT EVENTS (CONTINUED)
draw against future finder's fees for any introductions that result in a
transaction that is consummated. The finder's fee will be equal to a percentage
of the consideration paid in the facilitated transaction, ranging from 5% for
the first $1,000,000 to 1% of any consideration in excess of $7,000,000.
Subsequent to September 30, 1999, the Company obtained a 33.33% interest in
InterCommerce China, LLC ("ICC"). The Company issued 1,500,000 shares of its
stock to JenCom Digital Technologies in exchange for the ownership interest.
Additionally, the Company agreed to issue an additional 1,500,000 shares upon
ICC's merger or conversion or consolidation into a publicly traded entity in a
transaction which involves $5,000,000 invested in ICC or a $50,000,000 ICC
market capitalization within a period of four years. ATM Ltd. has also entered
into a ten-year exclusive operating agreement to distribute and sell all
merchandise, equipment, goods, and other products that ICC receives, sells or
distributes from or to the Peoples Republic of China under agreements with the
China Product TradeNet Center, a Chinese government agency responsible for
managing overstocked inventory in Chinese state-owned factories throughout
China.
F-26
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Instra Corp.
We have audited the accompanying balance sheet of Instra Corp. as of
September 30, 1997 and the related statements of operations, shareholders'
equity and accumulated deficit and cash flows for the year ended September 30,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Instra Corp. as
September 30, 1997, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
April 22, 1998
Smith, Ortiz, Gomez, and Buzzi
F-27
<PAGE>
INSTRA CORP.
BALANCE SHEET
SEPTEMBER 30, 1997
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash...................................................... $ 518
--------
Total current assets.................................... 518
Note receivable........................................... 18,000
Accrued interest receivable............................... 1,067
Other receivable.......................................... 5,000
--------
Total assets............................................ $ 24,585
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 3,205
Other liabilities......................................... 2,944
--------
Total current liabilities............................... 6,149
--------
Shareholders' equity:
Common stock, authorized 100,000,000 shares with a par
value of $0.001 per share; 25,219,988 shares issued and
outstanding............................................. 25,220
Amount paid in excess of par value........................ 844,705
Accumulated deficit....................................... (851,489)
--------
18,436
--------
$ 24,585
========
</TABLE>
See accompanying notes to financial statements and independent auditors' report.
F-28
<PAGE>
INSTRA CORP.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<S> <C>
Miscellaneous income........................................ $ 1,824
-----------
Expenses:
Printing.................................................. 689
Travel.................................................... 3,562
Consulting................................................ 24,889
Accounting................................................ 5,250
Legal..................................................... 2,250
Telephone................................................. 1,202
Project cost.............................................. 128,517
-----------
166,359
-----------
Operating income (loss)................................. (164,535)
Other income (expense)...................................... --
-----------
Income (loss) before taxes.............................. (164,535)
Income tax expense (benefit)................................ --
-----------
Net income (loss)....................................... $ (164,535)
===========
Net loss per share.......................................... $ (.01)
===========
Weighted average shares outstanding......................... 25,168,488
</TABLE>
See accompanying notes to financial statements and independent auditors' report.
F-29
<PAGE>
INSTRA CORP.
STATEMENT OF SHAREHOLDERS' EQUITY AND ACCUMULATED DEFICIT
FOR THE YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
AMOUNT IN
NUMBER OF EXCESS OF ACCUMULATED
SHARES PAR VALUE PAR VALUE DEFICIT
----------- --------- --------- -----------
<S> <C> <C> <C> <C>
Balance at September 30, 1996.................... 25,116,988 $25,117 $659,433 $(686,954)
Sale of shares................................... 90,000 90 161,910 --
Sale of shares................................... 13,000 13 23,362 --
Net loss for the year ended September 30, 1997... -- -- -- (164,535)
----------- ------- -------- ---------
Balance at September 30, 1997.................... 25,219,988 $25,220 $844,705 $(851,489)
=========== ======= ======== =========
</TABLE>
See accompanying notes to financial statements and independent auditors' report.
F-30
<PAGE>
INSTRA CORP.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income (loss)......................................... $(164,535)
Adjustments to reconcile net loss to net cash flows from
operating activities:
Changes in assets and liabilities:
Accounts payable.......................................... 1,987
---------
Cash used by operating activities........................... (162,548)
---------
Cash flows from financing activities:
Sale of shares of common stock............................ 185,375
Note receivable and accrued interest...................... (19,067)
Other receivables......................................... (3,442)
---------
Cash provided by financing activities....................... 162,866
---------
Net increase in cash and cash equivalents................... 318
Cash and cash equivalents, at beginning of year............. 200
---------
Cash and cash equivalents, at end of year................... $ 518
=========
</TABLE>
See accompanying notes to financial statements and independent auditors' report.
F-31
<PAGE>
INSTRA CORP.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
1. SUMMARY OF ORGANIZATION AND BUSINESS ACTIVITY AND HISTORY
(A) ORGANIZATION
Gold Cache, Inc. (the name was changed to InstraCorp, see below) was
incorporated under the laws of the state of Idaho on July 30, 1979, for the
purpose of engaging in mining activities. The stated capital was $60,000 with an
authorized 6,000,000 shares of stock having a par value of $0.01 per share.
On September 18, 1980, the Articles of Incorporation were amended to
increase the stated capital to $80,000 with an authorized 8,000,000 shares
having a par value of $0.01 per share.
The Articles of Incorporation were amended on January 21, 1983 to increase
the stated capital to $160,000 having an authorized 16,000,000 shares with a par
value of $0.01 per share. The business purpose of the Company was changed to
"the transaction of any lawful business for which corporations may be
incorporated under the Idaho Business Corporation Act".
On August 19, 1988, the Articles of Incorporation were amended to change the
name to InstraCorp. The capitalization of the Company was changed to 16,000,000
authorized shares with no par value. One share of the new no par value stock
shall be issued for 20 shares of the old $0.01 par value stock, resulting in a
reverse split of the outstanding shares.
On May 9, 1996, the Company amended its Articles of Incorporation to change
the capitalization of the authorized shares to 100,000,000 shares with a par
value of $0.001 from 16,000,000 shares with no par value and to the name Instra
Corp.
At September 30, 1997, the Company was an active corporation and remains
incorporated in the State of Delaware. See note 2.
(B) BASIS OF PRESENTATION
Assets and liabilities and revenues and expenses are recognized on the
accrual basis of accounting.
(C) ORGANIZATION COSTS
Organizational costs were charged to expense in the period incurred.
(D) INCOME TAXES
Income tax carryforwards are accounted for in accordance with Financial
Accounting Standards Board statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" (SFAS 109), see Note 3.
(E) CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, cash and cash equivalents
consist of cash in bank.
F-32
<PAGE>
INSTRA CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1997
2. CAPITAL STRUCTURE
At a meeting of the shareholders held on May 9, 1996 the following changes
were approved:
1) The authorized capital from 16,000,000 shares having no par value to
100,000,000 shares with a par value of $0.001 per share (total $100,000).
The financial statements of the Company, have been restated to reflect
the change in authorized capital.
2) The domicile from Idaho to Delaware. On July 18, 1996 the change of
domicile was completed.
3) Its name from InstraCorp to Instra Corp.
During the year ended September 30, 1997 the Company sold 90,000 and 13,000
shares of its common stock.
3. INCOME TAXES
The Company has adopted SFAS 109 for the year ended September 30, 1997, see
Note 1 subsection (3). SFAS 109 required that the Company utilize an asset and
liability approach for financial accounting and reporting for income taxes. The
primary objectives of accounting for income taxes under SFAS 109 are to
recognize the amount of tax payable for the current period and also to recognize
the amount of deferred tax liability or asset based on management's assessment
of the tax consequences of events that have been reflected in the Company's
financial statements or tax returns. The adoption of SFAS 109 has no effect on
the Company's financial statements because the Company has not had any
determinable income.
4. LICENSING AGREEMENT AND STOCK SALES
On November 20, 1996 and again on January 27, 1997, the Company entered into
an Exclusive License Agreement(s) and subsequent agreements with a
non-affiliated Liechtenstein corporation for the worldwide rights to an
electrical device called the Needle Impulse Generator. As part of terms of the
Agreement the Company issued 51,000,000 shares to the Liechtenstein corporation
and the principal shareholders returned to the Company 17,865,000 shares of its
common stock for cancellation, at no cost. Also, on January 22, 1997, the
Company entered into a best-efforts agreement with a non-affiliated Switzerland
corporation for the sale of up to 8,000,000 shares of its common stock at
various prices under the terms of a Reg S Memorandum for a total of up to
$48,000,000. The Company issued 90,000 shares and 13,000 shares of its common
stock sold under the best-efforts agreement respectively in fiscal 1997 which
have been reflected in the Statement of Shareholders' Equity and Accumulated
Deficit. On June 16, 1997, the agreement for sale of shares under the Reg S
Memorandum was terminated. On April 28, 1998 the Exclusive License Agreement was
rescinded by both parties to be effective as of December 31, 1997 and the
51,000,000 shares issued therefore were returned to the Company for
cancellation. In addition, the Company re-issued to the principal shareholder
the 17,865,000 shares which had previously been canceled. The effect of issuing,
canceling and re-issuing the shares is not reflected in the financial
statements. In connection with these transactions the Company incurred costs
associated with the further development of the technology in the amount of
$128,517 that were charged off as project costs in the respective Statements of
Operations.
F-33
<PAGE>
INSTRA CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1997
5. SUBSEQUENT EVENT
In May 1998 the Company merged with an entity incorporated in Nevada, known
as Keiretsu Corporation ("Keiretsu") As a result of the merger, the Company
cancelled 14,719,990 of the 25,219,988 shares that were outstanding at the time.
The remaining outstanding shares were reduced to 2,100,000 at the rate of one
share for each five shares outstanding as a result of a reverse stock split. The
stockholders of Keiretsu exchanged all their shares for 6,000,000 shares of the
Company. As a result of this transaction, Keiretsu became a wholly owned
subsidiary of the Company and the former Keiretsu stockholders became the owners
of 74.1% of the outstanding stock of the Company. In conjunction with the
transaction, the Company changed its name to WorldWide Web Network Corporation
("WWWX"). Subsequent to the merger, WWWX raised money by selling notes and
restricted common stock and became an e-commerce company.
F-34
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------------------- -----------
<C> <S>
3.1 Certificate of Incorporation, as amended.
3.2 Bylaws.
4.1 Specimen Common Stock Certificate.
4.2 Form of 6% Cumulative Convertible Debenture of WorldWide Web
NetworX Corporation.
4.3 Warrant to Purchase 100,000 shares of common stock of
WorldWide Web NetworX Corporation, dated April 2, 1999,
issued to Ralph H. Isham.
4.4 Warrant to Purchase 100,000 shares of common stock of
WorldWide Web NetworX Corporation, dated April 2, 1999,
issued to Arnold P. Kling.
4.5 Form of Warrant to Purchase Common Stock of WorldWide Web
NetworX Corporation issued to D.H. Blair Banking
Corporation.
10.1. Agreement and Plan of Reorganization, dated as of May 20,
1998, between Instra Corp., Keiretsu Corporation and the
stockholder of Keiretsu Corporation.
10.2. Agency Agreement, dated November 24, 1998, between
Alexander, Wescott & Co., Inc. and WorldWide Web NetworX
Corporation.
10.3. Stock Issuance Agreement, dated as of December 1, 1998,
between Warren Rothstein and WorldWide Web NetworX
Corporation.
10.4. BarterOne Membership Interest Sale Agreement, dated as of
December 16, 1998, between Energy Trading Company and
WorldWide Web NetworX Corporation.
10.5. Acquisition Agreement, dated as of January 29, 1999, between
Global Trade Group, Ltd., and WorldWide Web NetworX
Corporation.
10.6. Acquisition Agreement, dated as of January 29, 1999, between
Positive Asset Remarketing, Inc., and WorldWide Web NetworX
Corporation.
10.7. Agreement, dated as of February 16, 1999, among Energy
Trading Company, WorldWide Web NetworX Corporation, and NA
Acquisition Corp.
10.8. Agreement and Plan of Merger, dated as of February 23, 1999,
among Artra Group Incorporated, WorldWide Web NetworX
Corporation, NA Acquisition Corp., and WWWX Merger
Subsidiary, Inc.
10.9. Acquisition Agreement, dated as of February 24, 1999 between
Positive Asset Remarketing, Inc. and WorldWide Web NetworX
Corporation.
10.10. Form of Subscription Agreement between WorldWide Web NetworX
Corporation and Subscribers of 6% Cumulative Convertible
Debenture of WorldWide Web NetworX Corporation.
10.11. Acquisition Agreement, dated as of February 25, 1999,
between JenCom Digital Technologies, LLC and WorldWide Web
NetworX.
10.12. Stock Purchase Agreement, dated March 4, 1999, between D.H.
Blair Investment Banking Corp. and WorldWide Web NetworX
Corporation.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------------------- -----------
<C> <S>
10.13. Consulting Agreement, dated as of April 2, 1999, between
Ralph H. Isham and WorldWide Web NetworX Corporation.
10.14. Consulting Agreement, dated as of April 2, 1999, between
Arnold P. Kling and WorldWide Web NetworX Corporation.
10.15. Acquisition Agreement, dated as of April 7, 1999, between
Admiral Asset Group, Inc., and WorldWide Web NetworX
Corporation.
10.16. Agreement, dated April 16, 1999, between Alexander, Wescott
& Co., Inc., and WorldWide Web NetworX Corporation.
10.17. Amendment, dated as of April 28, 1999, to the Acquisition
Agreement between JenCom Digital Technologies, LLC, and
WorldWide Web NetworX Corporation.
10.18. Amendment to Agreement and Plan of Merger, dated as of April
30, 1999, among Artra Group Incorporated, WorldWide Web
NetworX Corporation, NA Acquisition Corp., and WWWX Merger
Subsidiary, Inc.
10.19. Agency Agreement, dated as of May 26, 1999, between D.H.
Blair Investment Banking Corp. and WorldWide Web NetworX
Corporation.
10.20. Form of Subscription Agreement between WorldWide Web NetworX
Corporation and Subscribers of a private placement of WWWX
common stock.
10.21. First Amendment to Stock Issuance Agreement, dated as of
July 9, 1999, between Warren Rothstein and WorldWide Web
NetworX Corporation.
10.22. Agreement and Plan of Merger, dated as of July 9, 1999,
among WorldWide Web NetworX Corporation, Intrac Acquisition
Corporation, and The Intrac Group.
10.23. Employment Agreement, dated July 23, 1999, between ATM
Service, Ltd. and Thomas Settineri.
10.24. Employment Agreement, dated July 23, 1999, between Intrac
Acquisition Corporation and Thomas Settineri.
10.25. Employment Agreement, dated July 23, 1999, between ATM
Service, Ltd. and Gary Levi.
10.26. Employment Agreement, dated July 23, 1999, between Intrac
Acquisition Corporation and Gary Levi.
10.27. Post-Closing Agreement, dated July 23, 1999, among WorldWide
Web NetworX Corporation, Intrac Acquisition Corporation, The
Intrac Group, Thomas Settineri, and Gary Levi.
10.28. Merger and Acquisition Agreement letter, dated as of July
23, 1999, between WorldWide Web NetworX Corporation and D.H.
Blair Investment Banking Corp.
10.29. 1999 Equity Compensation Plan.
10.30. Software License Agreement between ATM Service, Ltd. and
entrade.com, Inc. dated September 1999.
10.31. Share Exchange Agreement, dated as of September 23, 1999,
between New America Network, Inc. and WorldWide Web NetworX
Corporation.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------------------- -----------
<C> <S>
10.32. NAI Direct, Inc. Shareholders' Agreement, dated September
23, 1999, between Real Quest, Inc., Gerald C. Finn, Jeffrey
Finn and NAI Direct, Inc.
10.33. Real Quest, Inc. Shareholders' Agreement, dated September
23, 1999, between WorldWide Web NetworX Corporation and New
America Network, Inc.
10.34. Employment Agreement, dated September 23, 1999, between NAI
Direct, Inc. and Jeffrey Finn.
10.35. Employment Agreement, dated September 23, 1999, between NAI
Direct, Inc. and Gerald C. Finn.
10.36. Escrow Agreement, dated September 23, 1999, between
WorldWide Web NetworX Corporation, New America Network, Inc.
and Weinstein, Goss, Schleifer, Eisenberg, Winkler,
Rothweiler & Ostroff.
10.37. Agreement dated December 22, 1999, among WorldWide Web
NetworX Corporation, International Commerce Exchange
Systems, Inc., JenCom Digital Technologies, Ltd. and Henry
Kauftheil.
10.38. Amended and Restated Operating Agreement of WWWX-JenCom,
LLC, dated as of January 7, 2000, between WorldWide Web
NetworX Corporation and JenCom Digital Technologies, LLC.
10.39. Amended and Restated Operating Agreement of InterCommerce
China, LLC, dated as of January 7, 2000, among WorldWide Web
NetworX Corporation, International Commerce Exchange
Systems, Inc., Lester Wolff International Investment, Ltd.,
Henry Kauftheil, Peter Zhenxiang Lu, and Uncas Holdings
Limited Partnership.
10.40. Distribution and Operating Agreement, dated as of January 7,
2000, between ATM Service, Ltd., and Intercommerce China,
LLC.
10.41. Employment Agreement, dated as of January 14, 2000, between
WorldWide Web NetworX Corporation and John T. Banigan.
*10.42. Shareholders Agreement dated as of February 7, 2000, among
Warren Rothstein, Gary Levi, Thomas Settineri, WorldWide Web
NetworX Corporation, and ATM Service, Ltd.
*16.1 Letters regarding change in certifying accountant.
21.1 Subsidiaries of the Registrant.
27.1 Financial Data Schedule
</TABLE>
- ------------------------
* To be filed by amendment
<PAGE>
Exhibit 3.1
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
WORLDWIDE WEB NETWORX CORPORATION
WorldWide Web NetworX Corporation (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation, by the unanimous
written consent of its members and filed with the minutes of the Corporation,
adopted a resolution proposing and declaring advisable the following amendment
to the Certificate of Incorporation of the Corporation:
RESOLVED, that the Corporation shall amend its Certificate of
Incorporation, by deleting the first full paragraph of Section 6 in its entirety
and inserting in its place the following:
6. SHARES. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is
110,000,000 shares, of which:
(a) 100,000,000 shares shall be designated as Common Stock,
having a par value of $.001 per share (the "Common
Stock"); and
(b) 10,000,000 shares shall be designated as "blank check"
Preferred Stock, having a par value of $.01 per share,
to be issued with such rights, designations,
preferences and other terms and conditions as may be
determined by the corporations Board of Directors, from
time to time and at any time, in their sole discretion,
without any further action by the shareholders of the
corporation..
All other provisions of Section 6 of the Corporation's Certificate of
Incorporation, as amended shall remain unchanged and in full force and effect.
SECOND: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Section 242 and 228 of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Michael E. Norton, its Vice-President and Chief Financial Officer, and
Michelle Kain, its Assistant Secretary, this 21st day of May, 1999.
WorldWide Web NetworX corporation
By: //S// Michael E Norton
--------------------------------------
Michael E. Norton, Vice President and
Chief Financial Officer
(SEAL)
ATTEST:
By: //S// MICHELLE KAIN
-------------------
Michelle Kain, Assistant Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
INSTRA CORP.
Instra Corp., a corporation organized an existing under and by virtue
of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
1. That the Board of Directors of said corporation, by unanimous written
consent, adopted resolutions declaring it advisable and in the best interest of
the Company to amend Article I of the Certificate of Incorporation to read as
follows: "The name of the corporation is WorldWide Web NetworX Corporation."
2. That said amendment has been consented to and authorized by the holders
of a majority of the issued and outstanding stock entitled to vote at a meeting
of the shareholders by written consent given in accordance with the provisions
of Section 228 of the General Corporation Law of the State of Delaware.
3. That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Section 242 and 228 of the General Corporation Law of
the State of Delaware.
4. That effective at the close of business on May 18, 1998, the outstanding
shares of common stock of the Company were reverse split at the rate of one
share for each five (1:5) shares outstanding held by shareholders at the
effective time of the reverse split.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by its president this 19th day of May 1998.
//S// R G Southwick
-------------------
Richard G. Southwick, President
<PAGE>
CERTIFICATE OF MERGER
OF
INSTRACORP, AN IDAHO CORPORATION
INTO
INSTRA CORP., A DELAWARE CORPORATION
INSTRA CORP., a corporation organized and existing under the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
NAME STATE OF INCORPORATION
---- ----------------------
INSTRA CORP. Delaware
INSTRACORP Idaho
SECOND: That a Change of Domicile Agreement of Merger between the
parties to the merger has been approved, adopted, certified,
executed, and acknowledged by each of the constituent
corporations in accordance with the requirements of section
252 of the General Corporation Law of the State of Delaware.
THIRD: That the name of the surviving corporation of the merger is
INSTRA CORP., a Delaware corporation.
FOURTH: That the Certificate of Incorporation of INSTRA CORP.,
a Delaware corporation, which is surviving the merger, will
be the Certificate of Incorporation of the surviving
corporation.
FIFTH: That the Change of Domicile Agreement of Merger is on file
at the principal place of business of the surviving
corporation, the address of which is 1084 North Hughes,
Centerville, Utah 84014.
SIXTH: That a copy of the Change of Domicile Agreement of Merger
will be furnished on request and without cost to any
shareholder of any constituent corporation.
<PAGE>
SEVENTH: That the authorized capital stock of each foreign
corporation which is a party to the merger is as follows:
<TABLE>
<CAPTION>
Number
of Par Value
CORPORATION CLASS SHARES PER SHARE
----------- ----- ------ ---------
<S> <C> <C> <C> <C>
INSTRACORP
An Idaho Corporation Common 100,000,000 $0.001
</TABLE>
EIGHTH: That this Certificate of Merger shall be effective as of
5:00 PM Eastern Daylight Time on Wednesday, July 17, 1996.
IN WITNESS WHEREOF, said INSTRA CORP., a Delaware corporation, has
caused this Certificate of Merger to be signed by Richard G. Southwick, its
President, and attested by L. Mark Pratt, its Secretary, this 17th day of July,
1996.
INSTRA CORP.
A Delaware Corporation
By //S// R G SOUTHWICK
-------------------
Richard G. Southwick
President
ATTEST:
By //S// L MARK PRATT
------------------
L. Mark Pratt, Secretary
krege/hs
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Certificate of Incorporation
Of
INSTRA CORP.
1. CORPORATE NAME. The name of the corporation is: INSTRA CORP.
2. REGISTERED OFFICE AND REGISTERED AGENT. The address of the registered
office of the corporation in the State of Delaware is Corporation Trust
Center, 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
3. PURPOSES. The nature of the business of this Corporation or the purposes to
be conducted or promoted is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of
Delaware.
4. DURATION OF THE CORPORATION. The term for which this corporation shall
exist shall be per petual.
5. DIRECTOR(S). The board of directors of the corporation shall consist of not
less than three (3) nor more than five (5) members as the shareholders may
from time to time direct. The number of directors constituting the initial
board of directors of the corporation shall be three (3) and the names and
mailing addresses of the persons who are to serve as directors until the
first meeting of the shareholders or until their respective successors are
elected and qualify are:
Richard G. Southwick 1084 North Hughes
Centerville, Utah 84014
Marvin W. Farmer S 320 Rivercrest Road
Post Falls, Idaho 83854
L. Mark Pratt 2859 Whitehall Drive
West Valley City, Utah 84119
6. SHARES. The total number of shares of stock which the corporation shall
have authority to issue is one hundred million (100,000,000) shares of
common stock having a par value of one-tenth of one cent ($0.001) each
amounting in the aggregate to one hundred thousand dollars ($100,000.00).
Such shares shall be non-assessable.
<PAGE>
7. NO PREEMPTIVE RIGHTS. The authorized or treasury shares of the corporation
may be issued at such time, upon such terms and conditions, and for such
consideration as the board of directors of the corporation shall determine;
and the shareholders shall have no preemptive rights to acquire unissued or
treasury shares of the corporation.
8. BYLAWS. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, alter, or
repeal the bylaws of the corporation. Elections of directors need not be by
written ballot unless the bylaws of the corporation shall so provide.
Meetings of shareholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the corporation may be
kept (subject to any provision contained in the statues) outside the State
of Delaware at such place or places as may be designated from time to time
by the board of directors or in the bylaws of the corporation.
9. RESERVATION OF RIGHT TO CHANGE CERTIFICATE OF INCORPORATION. The
corporation reserves the right to amend, alter, change, or repeal any
provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon
shareholders herein are granted subject to this reservation.
10. INCORPORATOR(S). The name and mailing address of the sole incorporator is
as follows:
Krege B. Christensen 4010 Lares Way
Salt Lake City, Utah 84124
The undersigned, Krege B. Christensen, being the sole incorporator
hereinbefore named, for the purpose of forming a corporation pursuant to the
General Corporation law of the State of Delaware, does make this Certificate,
hereby declaring and certifying that this is the act and deed of the undersigned
and that the facts stated are true, and accordingly has hereunto set his hand on
or as of July 17, 1996.
//S// K Christensen
-------------------
Krege B. Christensen
krege/hs
<PAGE>
<PAGE>
Exhibit 3.2
BYLAWS
WORLDWIDE WEB NETWORX CORPORATION,
A DELAWARE CORPORATION
ARTICLE I - OFFICES
Section 1. The registered office of the corporation in the State of
Delaware shall be at c/o The Corporation Guarantee & Trust Company, CT Center,
1209 Orange Street, City of Wilmington, County of New Castle, Delaware.
The registered agent in charge thereof shall be The Corporation
Guarantee & Trust Company.
Section 2. The corporation may also have offices at such other places
as the Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II - SEAL
Section 1. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware".
ARTICLE III - STOCKHOLDERS' MEETINGS
Section 1. Meetings of stockholders shall be held at the registered
office of the corporation in this state or at such place, either within or
without this state, as may be selected from time to time by the Board of
Directors.
Section 2. ANNUAL MEETINGS: The annual meeting of the stockholders
shall be held on the third Monday of January in each year if not a legal
holiday, and if a legal holiday, then on the next secular day following at 10:00
o'clock, A.M., when they shall elect a Board of Directors and transact such
other business as may properly be brought before the meeting.
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If the annual meeting for election of directors is not held on the date
designated therefor, the directors shall cause the meeting to be held as soon
thereafter as convenient.
Section 3. ELECTION OF DIRECTORS: Elections of the directors of the
corporation shall be by written ballot.
Section 4. SPECIAL MEETINGS: Special meetings of the stock-holders may
be called at any time by the President, or the Board of Directors, or
stockholders entitled to cast at least one-fifth of the votes which all
stockholders are entitled to cast at the particular meeting. At any time, upon
written request of any person or persons who have duly called a special meeting,
it shall be the duty of the Secretary to fix the date of the meeting, to be held
not more than sixty days after receipt of the request, and to give due notice
thereof. If the Secretary shall neglect or refuse to fix the date of the meeting
and give notice thereof, the person or persons calling the meeting may do so.
Business transacted at all special meetings shall be confined to the
objects stated in the call and matters germane thereto, unless all stockholder
entitled to vote are present and consent.
Written notice of a special meeting of stockholders stating the time
and place and object thereof, shall be given to each stockholder entitled to
vote thereat at least two days before such meeting, unless a greater period of
notice is required by statute or otherwise in a particular case.
Section 5. QUORUM: A majority of the outstanding shares of the
corporation entitled to vote, represented in person or
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by proxy, shall constitute a quorum at a meeting of stockholders. If less than a
majority of the outstanding shares entitled to vote is represented at a meeting,
a majority of the shares so represented may adjourn the meeting from time to
time without further notice. At such adjourned meeting at which a quorum shall
be present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The stockholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
Section 6. PROXIES: Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally. All
proxies shall be filed with the Secretary of the meeting before being voted
upon.
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Section 7. NOTICE OF MEETINGS: Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called.
Unless otherwise provided by law, written notice of any meeting shall
be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting.
Section 8. CONSENT IN LIEU OF MEETINGS: Any action required to be taken
at any annual or special meeting of stockholders of the corporation, or any
action which may be taken at any annual special meeting of such stockholders,
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Seventy-two (72)
hours notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
Section 9. LIST OF STOCKHOLDERS: The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least ten days before
every meeting of stock-
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holders, a complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. No share of
stock upon which any installment is due and unpaid shall be voted at any
meeting. The list shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least ten days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
ARTICLE IV - DIRECTORS
Section 1. The business and affairs of this corporation shall be
managed by its Board of Directors, no less than 3 in number. The directors need
not be residents of this state or stockholders in the corporation. They shall be
elected by the stockholders at the annual meeting of stockholders of the
corporation, and each director shall be elected for the term of one year, and
until his successor shall be elected and shall qualify or until his earlier
resignation or removal.
Section 2. REGULAR MEETINGS: Regular meetings of the Board shall be
held without notice on the second Monday of
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January at the registered office of the corporation, or at such other time and
place as shall be determine by the Board.
Section 3. SPECIAL MEETINGS: Special meetings of the Board may be
called by the President on three days written notice to each director, either
personally or by mail or by fax; special meetings shall be called by the
President or Secretary in like manner and on like notice on the written request
of a majority of the directors in office.
Section 4. QUORUM: A majority of the total number of directors shall
constitute a quorum for the transaction of business.
Section 5. CONSENT IN LIEU OF MEETING: Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
The Board of Directors may hold its meetings, and have an office or offices,
outside of this state.
Section 6. CONFERENCE TELEPHONE. One or more directors may participate
in a meeting of the Board, of a committee of the Board or of the stockholders,
by means of conference telephone or similar communication equipment by means of
which all persons participating in the meeting can hear each other;
participation in this manner shall constitute presence in person at such
meeting.
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Section 7. COMPENSATION. Non-employee Directors may receive an option
to acquire stock of the corporation as determined by the Board. Directors as
such, shall not receive any stated salary for their services, but by resolution
of the Board, a fixed sum and expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the Board PROVIDED, that
nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
Section 8. REMOVAL: Any director or the entire Board of Directors may
be removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors, except that when cumulative
voting is permitted, if less than the entire Board is to be removed, no director
may be removed without cause if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the entire
Board of Directors, or, if there be classes of directors, at an election of the
class of directors of which he is a part.
ARTICLE V - OFFICERS
Section 1. The executive officers of the corporation shall be chosen by
the directors and shall be a President, Secretary and Treasurer. The Board of
Directors may also choose a Chairman, one or more Vice Presidents and such other
officers as it shall deem necessary. Any number of offices may be held by the
same person.
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Section 2. SALARIES: Salaries of all officers and agents of the
corporation shall be fixed by the Board of Directors.
Section 3. TERM OF OFFICE: The officers of the corporation shall
hold office at the pleasure of the Board of Directors. Any officer or agent
elected or appointed by the Board may be removed by the Board of Directors
whenever in its judgment the best interest of the corporation will be served
thereby.
Section 4. PRESIDENT: The President shall preside at all meetings of
the stockholders and directors; he shall have general and active management of
the business of the corporation, shall see that all orders and resolutions of
the board are carried into effect, subject, however, to the right of the
directors to delegate any specific powers, except such as may be by statute
exclusively conferred on the President, to any other officer or officers of the
corporation. He shall execute bonds, mortgages and other contracts requiring a
seal, under the seal of the corporation. He shall be EX-OFFICIO a member of all
committees, and shall have the general power and duties of supervision and
management usually vested in the office of President of a corporation. In
addition, the corporation may hire a chief executive officer who may perform
some of the functions of the President as determined by the Board.
Section 5. SECRETARY. The Secretary shall attend all sessions of the
Board and all meetings of the stockholders
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and act as clerk thereof, and record all the votes of the corporation and the
minutes of all its transactions in a book to be kept for that purpose, and shall
perform like duties for all committees of the Board of Directors when required.
He shall give, or cause to be given, notice of all meetings of the stockholders
and of the Board of Directors, and shall perform such other duties as may be
prescribed by the Board of Directors or President, and under whose supervision
he shall be. He shall keep in safe custody the corporate seal of the
corporation, and when authorized by the Board, affix the same to any instrument
requiring it.
Section 6. TREASURER: The Treasurer shall have custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation, and shall keep the moneys
of the corporation in a separate account to the credit of the corporation. He
shall disburse the funds of the corporation as may be ordered by the Board,
taking proper vouchers for such disbursements, and shall render to the President
and directors, at the regular meetings of the Board, or whenever they may
require it, an account of all his transactions as Treasurer and of the financial
condition of the corporation.
ARTICLE VI - VACANCIES
Section 1. Any vacancy occurring in any office of the corporation by
death, resignation, removal or otherwise, shall be filled by the Board of
Directors. Vacancies and newly created directorships resulting from any increase
in
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the authorized number of directors may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director. If
at any time, by reason of death or resignation or other cause, the corporation
should have no directors in office, then any officer or any stockholder or an
executor, administrator, trustee or guardian of a stockholder, or other
fiduciary entrusted with like responsibility for the person or estate of a
stockholder, may call a special meeting of stockholders in accordance with the
provisions of these By-Laws.
Section 2. RESIGNATIONS EFFECTIVE AT FUTURE DATE: When one or more
directors shall resign from the Board, effective at a future date, a majority of
the directors then in office, including those who have so resigned, shall have
power to fill such vacancy or vacancies, the vote thereon to take effect when
such resignation or resignations shall become effective.
ARTICLE VII - CORPORATION RECORDS.
Section 1. Any stockholder of record, in person or by attorney or other
agent, shall, upon written demand under oath stating the purpose thereof, have
the right during the usual hours for business to inspect for any proper purpose
the corporation's stock ledger, a list of its stockholders, and its other books
and records, and to make copies or extracts therefrom. A proper purpose shall
mean a purpose reasonably related to such person's interest as a stockholder. In
every instance where an attorney or other
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agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorized the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in this state or at its principal place of business.
ARTICLE VIII - STOCK CERTIFICATES, DIVIDENDS, ETC.
Section 1. The stock certificates of the corporation shall be numbered
and registered in the share ledger and transfer books of the corporation as they
are issued. They shall bear the corporate seal and shall be signed by the
President and Secretary.
Section 2. TRANSFERS: Transfers of shares shall be made on the books of
the corporation upon surrender of the certificates therefor, endorsed by the
person named in the certificate or by attorney, lawfully constituted in writing.
No transfer shall be made which is inconsistent with law.
Section 3. LOST CERTIFICATE: The corporation may issue a new
certificate of stock in the place of any certificate theretofore signed by it,
alleged to have been lost, stolen or destroyed, and the corporation may require
the owner of the lost, stolen or destroyed certificate, or his legal
representative to give the corporation a bond sufficient to indemnify it against
any claim that may be made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certificate.
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Section 4. RECORD DATE: In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action.
If no record date is fixed:
(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close
of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held.
(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when
no prior action by the Board of Directors is necessary, shall be the
day on which the fist written consent is expressed.
(c) The record date for determining stockholders for any other
purpose shall be at the close of business
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on the day on which the Board of Directors adopts the resolution
relating thereto.
(d) A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
Section 5. DIVIDENDS: The Board of Directors may declare and pay
dividends upon the outstanding shares of the corporation, from time to time and
to such extent as they deem advisable, in the manner and upon the terms and
conditions provided by statute and the Certificate of Incorporation.
Section 6. RESERVES: Before payment of any dividend there may be set
aside out of the net profits of the corporation such sum or sums as the
directors, from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interests of the
corporation, and the directors may abolish any such reserve in the manner in
which it was created.
ARTICLE IX - MISCELLANEOUS PROVISIONS
Section 1. CHECKS: All checks or demands for money and notes of the
corporation shall be signed by such
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officer of officers as the Board of Directors may from time to time designate.
Section 2. FISCAL YEAR: The fiscal year shall begin on the first day of
October.
Section 3. NOTICE: Whenever written notice is required to be given to
any person, it may be given to such person, either personally or by sending a
copy thereof through the mail, or by facsimile, charges prepaid, to his address
appearing on the books of the corporation, or supplied by him to the corporation
for the purpose of notice. If the notice is sent by mail or by facsimile, it
shall be deemed by have been given to the person entitled thereto when deposited
in the United States mail or when sent by facsimile transmission to such person.
Such notice shall specify the place, day and hour of the meeting and, in the
case of a special meeting of stockholders, the general nature of the business to
be transacted.
Section 4. WAIVER OF NOTICE: Whenever any written notice is required by
statute, or by the Certificate or the By-Laws of this corporation a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Except in the case of a special meeting of
stockholders, neither the business to be transacted at nor the purpose of the
meeting need be specified in the
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waiver of notice of such meeting. Attendance of a person either in person or by
proxy, at any meeting shall constitute a waiver of notice of such meeting.
Attendance of a person either in person or by proxy, at any meeting shall
constitute a waiver of notice of such meeting, except where a person attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting was not lawfully called or convened.
Section 5. DISALLOWED COMPENSATION: Any payments made to an officer or
employee of the corporation such as a salary, commission, bonus, interest, rent,
travel or entertainment expense incurred by him, which shall be disallowed in
whole or in part as a deductible expense by the Internal Revenue Service, shall
be reimbursed by such officer or employee to the corporation to the full extent
of such disallowance. It shall be the duty of the directors, as a Board, to
enforce payment of each such amount disallowed. In lieu of payment by the
officer or employee, subject to the determination of the directors,
proportionate amounts may be withheld from his future compensation payments
until the amount owed to the corporation has been recovered.
Section 6. RESIGNATIONS Any director or other officer may resign at an
time, such resignation to be in writing and to take effect from the time of its
receipt
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by the corporation, unless some time be fixed in the resignation and then from
that date. The acceptance of a resignation shall not be required to make it
effective.
ARTICLE X - ANNUAL STATEMENT
Section 1. The President and the Board of Directors shall present at
each annual meeting a full and complete statement of the business and affairs of
the corporation for the preceding year. Such statement shall be prepared and
presented in whatever manner the Board of Directors shall deem advisable and
need not be verified by a Certified Public Accountant.
ARTICLE XI - INDEMNIFICATION AND INSURANCE
Section 1. (a) RIGHT TO INDEMNIFICATION: Each person who was or is made
a party or is threatened to be made a party or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer,
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving
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as a director, officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
paragraph (b) hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred in
this Section shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition: provided, however, that, if the
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Delaware General Corporation Law requires, the payment of such expenses incurred
by a director or officer in his or her capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such person
while a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of a proceeding,
shall be made only upon delivery to the corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified under this Section or otherwise. The Corporation may, by action of
its Board of Directors, provide indemnification to employees and agents of the
Corporation with the same scope and effect as the foregoing indemnification of
directors and officers.
(b) RIGHT OF CLAIMANT TO BRING SUIT: If a claim under paragraph (a) of
this Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a
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claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation law for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard or conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard or conduct.
(c) Notwithstanding any limitation to the contrary contained in
sub-paragraphs (a) and (b) of this section, the corporation shall, to the
fullest extent permitted by Section 145 of the General Corporation Law of the
State of Delaware, as the same may be amended and
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supplemented, indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the expenses,
liabilities or other maters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-Law, agreement,
vote of stockholders or disinterested Directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(d) INSURANCE: The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
ARTICLE XII - AMENDMENTS
Section 1. These By-Laws may be amended or repealed either by (a) the
vote of stockholders entitled to cast at least a majority of the votes which all
stockholders are
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entitled to cast thereon, at any regular or special meeting of the stockholders,
duly convened after notice to the stockholders of that purpose or (b) the vote
of a majority of the Board of Directors.
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Exhibit 4.1
Incorporated under the laws of the State of Delaware
WorldWide Web NetworX Corporation
Total Authorized Issue 110,000,000 Shares
100,000,000 Shares $.001 Par Value 10,000,000 Shares $.01 Par Value
Common Stock Preferred Stock
SPECIMEN
This is to certify that _______________________________________ is the owner of
_______________________________________________________________________________
Fully Paid and Non-Assessable Shares of Common Stock of
WorldWide Web NetworX Corporation
transferable only on the books of the Corporation by the holder thereof in
person or by a duly authorized Attorney upon surrender of this Certificate
properly endorsed. Witness, the seal of the Corporation and the signatures of
its duly authorized officers
Dated
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Secretary President
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Exhibit 4.2
EXHIBIT "B"
WORLDWIDE WEB NETWORX CORPORATION
SERIES A 6% CUMULATIVE CONVERTIBLE
DEBENTURE
NEITHER THIS DEBENTURE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS DEBENTURE HAS BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
OTHER STATE. THIS DEBENTURE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE OFFERED FOR SALE, SOLD,
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED NOR WILL ANY
ASSIGNEE OR TRANSFEREE HEREOF BE RECOGNIZED BY THE CORPORATION AS HAVING
ANY INTEREST IN SUCH DEBENTURE WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
FOR SUCH DEBENTURE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION
THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS.
[NAME]______________________ Mt. Laurel, NJ
$___________________________ ______ , 1999
FOR VALUE RECEIVED, WORLDWIDE WEB NETWORX CORPORATION, a corporation
organized and existing under the laws of the State of Delaware (the "Company"),
hereby promises to pay to ____________________________ (together with any
subsequent holder or holders of this Debenture, the "Lender") or registered
assigns, the principal sum of _______________________________________ NO/100
($______) with interest to commence accruing from the date of this Series A 6%
Cumulative Convertible Debenture (the "Debenture") on the unpaid principal
balance from time to time outstanding until due and payable on or before twelve
(12) months from the date of this Debenture (the "Maturity Date"), at the rate
provided in Section 1.(a) hereof. Each holder of this Debenture, by acceptance
hereof, agrees to and shall be bound by the provisions of this Debenture.
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1. PAYMENT TERMS OF DEBENTURE.
(a) PAYMENT OF PRINCIPAL AND INTEREST. This Debenture shall bear
interest on the outstanding principal balance hereof at the rate of six percent
(6%) per annum (computed on the basis of a 360-day year of twelve 30-day
months). Unless previously converted in accordance with Section 2 hereof,
principal and interest shall be payable on the Maturity Date, unless the
Maturity Date is not a banking day in New York City in which case the Maturity
Date for the payment of the principal and interest shall be the next such
banking day. All payments of principal and interest hereunder shall be made by
the Company in lawful money of the United States of America of immediately
available funds. Both the payment of principal and interest hereunder shall be
delivered at the address of the Lender on the books of the Company, or such
other place as the holder hereof shall designate to the Company in writing.
(b) VOLUNTARY PREPAYMENT. The Company may at any time prepay this
Debenture (a "Voluntary Prepayment"), prior to the Maturity Date in whole or in
part from time to time after issuance but not prior to the Conversion Date (as
defined herein) as set forth in Section 2 hereof, without premium or penalty,
upon not less than thirty (30) but not more than sixty (60) days' prior written
notice to the holder hereof. Each such notice shall specify the prepayment date
(the "Prepayment Date") and the amount to be prepaid. All Voluntary Prepayments
shall be applied first to accrued but unpaid interest and second to the payment
of principal on this Debenture.
If less than all of the Debentures in this Series, if any, are to be
repaid, the Company will repay all of the Debentures in this Series on a pro
rata basis. If any Debenture is to be repaid in part only, a new Debenture or
Debentures in principal amount equal to the unrepaid principal portion thereof
will be issued.
The Company's prepayment rights are subject to the Lender's right to
convert this Debenture into shares of common stock, $.001 par value per share,
(the "Shares") of the Company in accordance with Section 2.
2. CONVERSION.
(a) RIGHT TO CONVERT. The Lender shall have the right to convert (the
"Conversion Right") the principal amount and all accrued and unpaid interest of
this Debenture into Shares after the earlier of (i) the effective date of the
registration statement to be filed by the Company registering the resale of the
Shares, or (ii) 120 days after the filing of such registration statement by the
Company. If the Lender does not exercise his Conversion Right by 5:00 p.m. New
York City time on the earlier of (i) or (ii), his Conversion Right shall
terminate.
(b) CONVERSION OF DEBENTURE INTO SHARES. Subject to and in compliance
with the provisions of this Section 2, all of the outstanding principal hereon
may, at the option of the Lender, be converted as set forth in subparagraph (a)
of this Section 2. Any accrued but unpaid interest shall be added to the
principal amount of the Debenture upon conversion. The number of Shares the
Lender shall be entitled to receive upon conversion shall be determined by
adding the principal
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amount of the Debenture plus any accrued but unpaid interest and dividing that
aggregate amount by the lesser of (i) a thirty-five percent (35%) discount from
the five (5) day average closing bid price per share of the Company's common
stock (the "Common Stock") quoted on the over-the-counter bulletin board
("OTC:BB") immediately preceding the business day on which the Company receives
written notice via facsimile of the Lender's intent to convert the Debenture
(the "Conversion Date"), or (ii) the five (5) day average closing bid price of
the Common Stock immediately preceding the later of the date that (y) the
closing on an aggregate amount of $2,500,000.00 Debentures, or (z) the closing
on the over-allotment option for an additional $500,000.00 of Debentures. The
price at which the principal and interest, if any, are converted into Shares in
accordance with this subparagraph (b) is the "Conversion Price". Notwithstanding
the foregoing, the Conversion Price shall not be less than $.25 per Share and
not more than $1.50 per Share.
The Company's delivery to the Lender of the fixed number of
Shares (rounded up in the case of a fractional Share) into which the Debenture
is convertible shall be deemed to satisfy the Company's obligation to pay the
principal amount of the Debenture and all accrued interest that has not
previously been paid. No fractions of shares or scrip representing fractions of
shares will be issued on conversion, but instead of any fractional interest, the
Company shall round up to the nearest Share.
(c) CONVERSION PROCEDURE. To exercise the Conversion Right, the Lender
shall surrender this Debenture to the Company at its principal office for notice
during regular business hours, after having first or simultaneously given
written notice via facsimile to the Company at such principal office on a
business day that such holder elects to convert this Debenture in the form
attached hereto as Exhibit A. Such notice shall also state the name or names
(with address or addresses) in which the certificate or certificates for Shares
issuable upon such conversion shall be issued. This Debenture, when surrendered
for conversion, shall be accompanied by proper assignment thereof to the Company
or in blank. The date when such written notice and this Debenture is received by
the Company as set forth in the subparagraph (c) shall be the "Conversion Date".
As promptly as practicable after the Conversion Date, but in no event more than
five (5) business thereafter, the Company shall issue and deliver to the Lender,
or such other as the notice states, a certificate or certificates as such holder
may request for the number of full Shares issuable upon the conversion of this
Debenture. Such conversion shall be deemed to have been effected immediately
prior to the close of business on the Conversion Date, and at such time the
rights of the Lender as holder of this Debenture shall cease and the person or
persons in whose name or names any certificate or certificates for Shares shall
be issuable upon such conversion shall be deemed to have become the holder or
holders of record of Shares represented thereby.
3. ADJUSTMENT OF CONVERSION PRICE IN EVENT OF AN EXTRAORDINARY COMMON
STOCK EVENT.
(a) Upon the happening of an Extraordinary Common Stock Event occurring
after the date hereof (as hereinafter defined), the Conversion Price shall,
simultaneously with the happening of such Extraordinary Common Stock Event, be
adjusted by dividing the then effective Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock of all
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classes outstanding immediately after such Extraordinary Common Stock Event
(including as outstanding all Shares issuable upon conversion of this Debenture
or other outstanding securities convertible into Common Stock) and the
denominator of which shall be the number of shares of Common Stock of all
classes outstanding immediately prior to such Extraordinary Common Stock Event
(including as outstanding all Shares issuable upon conversion of this Debenture
or other outstanding securities convertible into Common Stock), and the quotient
so obtained shall thereafter be the Adjusted Conversion Price. The Adjusted
Conversion Price shall be readjusted in the same manner upon the happening of
any successive Extraordinary Common Stock Event or Events. "Extraordinary Common
Stock Event" shall mean (i) the issuance of additional shares of the Common
Stock as the result of any dividend or other distribution on outstanding Common
Stock, (ii) subdivision of outstanding shares of Common Stock of any class into
a greater number of shares of the Common Stock, or (iii) combination of
outstanding shares of the Common Stock of any class into a smaller number of
shares of the Common Stock.
(b) OTHER DIVIDENDS. In the event the Company shall make or issue, or
fix a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in securities of the Company
other than shares of Common Stock, then and in each such event lawful and
adequate provision shall be made so that the Lender shall receive upon
conversion thereof in addition to the number of shares of Common Stock
receivable thereupon, the amount and type of securities of the Company which
they would have received had this Debenture been converted into Shares on the
date of such event and had they thereafter, during the period from the date of
such event to and including the Conversion Date (as that term is hereafter
defined), retained such securities receivable by them as aforesaid during such
period, giving application to all adjustments called for during such period
under this Section 3 with respect to the rights of the Lender.
(c) RECLASSIFICATION. If the Shares issuable upon the conversion of
this Debenture shall be changed into the same or different number of shares of
any class or classes of stock, whether by reclassification or otherwise (other
than a subdivision or combination of shares or stock dividend provided for
above, or a reorganization, merger, consolidation or sale of assets provided for
elsewhere in this Section 3, then and in each such event the Lender shall have
the right thereafter to convert this Debenture into the kind and amount of
shares of stock and other securities and property receivable upon such
reorganization, reclassification or other change, by holders of the number of
Shares into which this Debenture might have been converted immediately prior to
such reorganization, reclassification or change, all subject to further
adjustment as provided herein.
(d) REORGANIZATION: SALE OR MERGER. If at any time or from time to time
there shall be a capital reorganization of the Common Stock (other than a
subdivision, combination, reclassification or exchange of shares provided for
elsewhere in this Section 3) or a merger or consolidation of the Company or the
sale, transfer, lease, or other disposition of all or substantially all assets
and properties (a "Sale or Merger") of the Company shall be effected in such a
way that the holders of Common Stock shall be entitled to receive stock,
securities or property with respect to or in exchange for Common Stock, then,
with respect to this Debenture if not converted into Shares in accordance with
the terms hereof immediately prior to the completion of such reorganization or
Sale
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or Merger, as a part of and as a condition to the effectiveness of such
reorganization or Sale or Merger, lawful and adequate provision shall be made so
that (i) if the Company is not the surviving corporation, this Debenture shall
be converted into debentures of the surviving corporation having equivalent
terms and provisions and (ii) in lieu of being able to convert into Shares of
the successor corporation the Lender shall thereafter be entitled to receive
upon conversion of this Debenture (including any principal amount of debentures
issued upon conversion of this Debentures) the number of shares of stock or
other securities or property of the Company or of the successor corporation
resulting from such reorganization or Sale or Merger to which a holder of the
number of Shares deliverable upon conversion of this Debenture immediately prior
to such reorganization or Sale or Merger would have been entitled to receive. In
any such case, appropriate provisions shall be made with respect to the rights
of the Lender (including any principal amount of additional debentures issued
upon conversion of this Debenture) after the reorganization of Sale or Merger to
the end that the provisions of this Section 3 (including without limitation
provisions for adjustment of the Conversion Price and the number of Shares
purchasable upon conversion of this Debenture or such additional debentures)
shall thereafter be applicable, as nearly as may be, with respect to any shares
of stock, securities or assets to be deliverable thereafter upon the conversion
of this Debenture or such additional debentures. Notwithstanding anything in
this Debenture to the contrary, the transaction between the Company and Artra
Group Incorporated shall not be deemed an Extraordinary Event which would
trigger any adjustment as may be described in this Section 3.
(e) NOTICE OF ADJUSTMENT. In each case of an adjustment or readjustment
of the Conversion Price, the Company will furnish to the Debenture holder,
within 30 days after any such adjustment or readjustment, a certificate,
prepared by the chief financial officer of the Company, showing such adjustment
or readjustment, and stating the facts upon which such adjustment or
readjustment is based.
4. RESERVATION OF COMMON STOCK. The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the conversion of this Debenture into
Shares, such number of its shares as shall from time to time be sufficient to
effect the conversion of this Debenture, and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of the aggregate principal amount of this Debenture and any
accrued but unpaid interest hereon then outstanding, the Company shall take such
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose.
5. EVENTS OF DEFAULT AND ACCELERATION. If any of the following events
shall occur and be continuing for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be effected by
operation of law or otherwise):
(a) the Company defaults in the payment of the principal of this
Debenture and such default continues for a period of fifteen (15) business days
after the date such payment was due; or
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(b) the Company defaults in any material respect in the performance or
observance of any other covenant, agreement, term or condition contained herein
other than a notice provision and such default shall not have been remedied
within thirty (30) days after the date written notice thereof shall have been
received by the Company from the holder, or
(c) the Company defaults in any material respect in the performance or
observance of any notice provision contained herein;
(d) the Company or any of its subsidiaries shall be involved in
financial difficulties as evidenced:
(i) by its commencement of a voluntary case under Title 11 of
the United States Code as from time to time in effect, or by its authorizing, by
appropriate proceedings of its board of directors or other governing body, the
commencement of such a voluntary case;
(ii) by its filing an answer or other pleading admitting or
failing to deny the material allegations of a petition filed against it
commencing an involuntary case under said Title 11, or seeking, consenting to or
acquiescing in the relief therein provided, or by its failing to controvert
timely the material allegations of any such petition;
(iii) by the entry of an order for relief against it in any
involuntary case commenced under said Title 11 which remains undischarged or
unstayed for more than sixty (60) days;
(iv) by its seeking relief as an Indebtedness or under any
applicable law, other than said Title 11, of any jurisdiction relating to the
insolvency, liquidation or reorganization of Indebtors or to the modification or
alteration of the rights of creditors, or by its consenting to or acquiescing in
such relief;
(v) by entry of an order by a court of competent jurisdiction
(A) finding it to be bankrupt or insolvent or (B) ordering or approving its
liquidation, reorganization or any modification or alteration of the rights of
its creditors which remains undischarged or unstayed for more than sixty (60)
days;
(vi) by the entry of an order by a court of competent
jurisdiction assuming custody of, or appointing a receiver or other custodian
for, all or a substantial part of its property which remains undischarged or
unstayed for more than sixty (60) days; or
(vii) by its making an assignment for the benefit of, or
entering into an agreement with, its creditors, or appointing or consenting to
the appointment of a receiver or other custodian for all or a substantial part
of its property;
then the holder may, by written notice to the Company, declare the Company to be
in default hereunder (an "Event of Default") and may exercise any right, power
or remedy permitted to such holder by law, including, without limitation:
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(i) the right to declare the entire principal amount of this
Debenture and accrued interest thereon, if any, due and payable;
(ii) the right to commence any proceeding against the Company
in furtherance of the foregoing.
6. NOTICES OF RECORD DATE. In the event (i) the Company establishes a
record date to determine the holders of any class of securities who are entitled
to receive any dividend or other distribution, or (ii) there occurs any capital
reorganization of the Company, any reclassification or recapitalization of the
capital stock of the Company, any Sale or Merger or any voluntary or involuntary
dissolution, liquidation or winding up of the Company, the Company shall mail to
the holder of this Debenture at least ten (10) days prior to the record date
specified therein, a notice specifying (a) the date of such record date for the
purpose of such dividend or distribution and a description of such dividend or
distribution, (b) the date on which any such reorganization, reclassification,
Sale or Merger, dissolution, liquidation or winding up is expected to become
effective, and (c) the time, if any, that is to be fixed, as to when the holders
of record of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, Sale or Merger,
dissolution, liquidation or winding up.
In addition, the Company shall, within 30 days after the occurrence of
any default (the term "default" to include the events specified above without
grace or notice) known to it, give to the holder of this Debenture notice of
such default; provided that, except in the case of a default in the payment of
principal of, or interest on this Debenture, the Company shall be protected in
withholding of such notice if it in good faith determines that the withholding
of such notice is in the interest of the Debenture holder.
7. REGISTRATION AND TRANSFER. This Debenture is transferable only on
the register maintained by the Company. The holder of this Debenture agrees
that, prior to the sale or transfer of this Debenture, such holder shall
surrender said Debenture to the Company in exchange for a new Debenture to be
registered in the name of the proposed transferee in the principal amount equal
to the unpaid balance of principal of the Debenture surrendered and otherwise
having the same terms and provisions of the Debenture surrendered. The holder of
this Debenture consents and agrees that the last holder of such Debenture as
registered on the books of the Company may be treated by the Company and all
other person(s) dealing with such Debenture as the absolute owner thereof for
any purposes and as the person entitled to receive all payments of interest,
principal and premium, if any, with respect to such Debenture and as the person
entitled to exercise the rights represented by such Debenture, any notice to the
contrary notwithstanding, unless and until such holder seeks to transfer
registered ownership of such Debenture on the books of the Company and such
transfer is effected.
8. COMPLIANCE WITH USURY LAWS. All agreements between the Company and
the Lender are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the Indebtedness
evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the
Lender for the use, forbearance or detention of the Indebtedness evidenced
hereby exceed the maximum permissible under applicable law. As used
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herein, the term "applicable law" shall mean the law in effect as of the date
hereof; provided, however, that in the event there is a change in the law which
results in a higher permissible rate of interest, then this Debenture shall be
governed by such new law as of its effective date. If, from any circumstance
whatsoever, fulfillment of any provision hereof at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then the obligation not be fulfilled shall automatically be
reduced to the limit of such validity, and if from any circumstances the Lender
should ever receive as interest an amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall be applied to the
reduction of the principal balance evidenced hereby and not to the payment of
interest. This provision shall control every other provision of all agreements
between the Company and the Lender.
9. GOVERNING LAW AND VENUE. This Debenture shall have the effect of an
instrument executed under seal and shall be governed by and construed in
accordance with the laws of the State of New York. Venue for any and all actions
arising from or in connection with this Debenture shall be in the state and
federal courts of New York County, New York.
10. OTHER. No recourse for the payment of the principal of, premium, if
any, or interest on this Debenture, or for any claim based hereon or otherwise
in respect hereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Debenture or any indenture supplemental thereto,
or in any note, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
person, either directly or through the Company, whether by virtue of any
constitution, statute or rule of law or by the issue hereof, expressly waived
and released.
IN WITNESS WHEREOF, the Company has caused this Debenture to be
executed under seal by its duly authorized officer as of the date set forth
above.
WORLDWIDE WEB
NETWORX CORPORATION
Robert D. Kohn, President & CEO
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EXHIBIT A
WorldWide Web NetworX Corporation
3000 Atrium Was, Suite 202
Mt. Laurel, NJ 08054
(609) 627-6893 (fax)
Re: Conversion of Debenture
Gentlemen:
The undersigned owner of this Debenture hereby irrevocably exercises
the option to convert the entire principal amount of this Debenture and any
accrued bu unpaid interest hereon, into Shares in accordance with the terms of
this Debenture, and directs that the Shares issuable and deliverable upon the
conversion be issued in the name and delivered to the undersigned unless a
different name has been indicated below. If Shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay any transfer
taxes payable with respect thereto.
Date:
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(Signature)
FILL IN FOR REGISTRATION OF SHARES
- -------------------------- ---------------------------------------------------
(Printed Name) (Social Security Number or other identifying number)
- -------------------------- ---------------------------------------------------
(Printed Name) (Social Security Number or other identifying number)
- --------------------------
(Street Address) (Street Address)
- --------------------------
(City, State, and Zip Code)
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Exhibit 4.3
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE COMMON STOCK ISSUABLE UPON
EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES OR BLUE SKY LAWS OF ANY
STATE AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO
RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES OR BLUE SKY LAWS OR IF AN
EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION IS APPLICABLE.
WORLDWIDE WEB NETWORX CORPORATION
Incorporated Under the Laws of the State of Delaware
Warrant # 001 100,000 Common Stock
Purchase Warrants
CERTIFICATE FOR COMMON STOCK
PURCHASE WARRANTS
1. WARRANT. This Warrant Certificate certifies that Ralph H. Isham, or his
registered assigns (the "Registered Holder"), is the registered owner of the
above indicated number of Warrants expiring on the Expiration Date, as
hereinafter defined. One (1) Warrant entitles the Registered Holder to purchase
one (1) share of the Common Stock, $.001 par value (a "Share"), of WorldWide Web
NetworX Corporation, a Delaware corporation (the "Company"), from the Company at
a purchase price of Two Dollars and 25/100 ($2.25) (the "Exercise Price") at any
time during the Exercise Period, as hereinafter defined, upon surrender of this
Warrant Certificate with the exercise form hereon duly completed and executed
and accompanied by payment of the Exercise Price at the principal office of the
Company.
Upon due presentment for transfer or exchange of this Warrant Certificate
at the principal office of the Company, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued in exchange for this Warrant Certificate, subject to
the limitations provided herein, upon payment of any tax or governmental charge
imposed in connection with such transfer. Subject to the terms hereof, the
Company shall deliver Warrant Certificates in required whole number
denominations to Registered Holders in connection with any transfer or exchange
permitted hereunder.
2. RESTRICTIVE LEGEND. Each Warrant Certificate and each certificate
representing Shares issued upon exercise of a Warrant, unless such Shares are
then registered under the Securities Act of 1933, as amended (the "Act"), shall
bear a legend in substantially the following form:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
OR BLUE SKY LAWS OF ANY STATE AND MAY BE OFFERED AND SOLD ONLY IF
REGISTERED AND QUALIFIED PURSUANT TO RELEVANT PROVISIONS OF FEDERAL AND
STATE SECURITIES OR BLUE SKY LAWS OR IF AN EXEMPTION FROM SUCH REGISTRATION
OR QUALIFICATION IS APPLICABLE."
The Shares issuable upon exercise of the Warrants shall have `piggy-back"
registration rights and shall be included in any registration statement on Form
S-1, SB-2 or other appropriate form filed by the Company during the Exercise
period, as defined herein, with the Securities and Exchange Commission which
registers for resale any of the Company's securities. The Company shall give the
Registered Holder(s) appropriate notice of such registration and shall comply
with the Registered Holder(s) election to register. The Company shall bear the
expenses of registering the Shares.
3. Exercise. Subject to the terms hereof, the Warrants, evidenced by this
Warrant Certificate, may be exercised at the Exercise Price in whole or in part
at any time during the period (the "Exercise Period") commencing on the date
hereof and terminating at the close of business on that day (the "Expiration
Date") which is April 2, 2003. The Exercise Period may also be extended by the
Company's Board of Directors in its sole discretion.
A Warrant shall be deemed to have been exercised immediately prior to the
close of business on the date (the "Exercise Date") of the surrender to the
Company at its principal office of this Warrant Certificate with the exercise
form attached hereto executed by the Registered Holder and accompanied by
payment to the Company, in cash or by official bank or certified check, of an
amount equal to the aggregate Exercise Price, in lawful money of the United
States of America.
The person entitled to receive the Shares issuable upon exercise of a
Warrant or Warrants ("Warrant Shares") shall be treated for all purposes as the
holder of such Warrant Shares as of the close of business on the Exercise Date.
The Company shall not be obligated to issue any fractional share interests in
Warrant Shares issuable or deliverable on the exercise of any Warrant or scrip
or cash with respect thereto, and such right to a fractional share shall be of
no value whatsoever. If more than one Warrant shall be exercised at one time by
the same Registered Holder, the number of full Shares which shall be issuable on
exercise thereof shall be computed on the basis of the aggregate number of full
shares issuable on such exercise.
Promptly, and in any event within ten (10) business days after the Exercise
Date, the Company shall cause to be issued and delivered to the person or
persons entitled to receive the same, a certificate or certificates for the
number of Warrant Shares deliverable on such exercise.
The Company may deem and treat the Registered Holder of the Warrants at any
time as the absolute owner thereof for all purposes, and the Company shall not
be affected by any notice
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to the contrary. The Warrants shall not entitle the Registered Holder thereof to
any of the rights of shareholders or to any dividend declared on the Shares
unless the Registered Holder shall have exercised the Warrants and thereby
purchased the Warrant Shares prior to the record date for the determination of
holders of Shares entitled to such dividend or other right.
4. RESERVATION OF SHARES AND PAYMENT OF TAXES. The Company covenants that
it will at all times reserve and have available from its authorized Common Stock
such number of Shares as shall then be issuable on the exercise of outstanding
Warrants. The Company covenants that all Warrant Shares which shall be so
issuable shall be duly and validly issued, fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the issue thereof.
The Registered Holder shall pay all documentary stamp or similar taxes and
other government charges that may be imposed with respect to the issuance,
transfer or delivery of any Warrant Shares on exercise of the Warrants. In the
event the Warrant Shares are to be delivered in a name other than the name of
the Registered Holder of the Warrant Certificate, no such delivery shall be made
unless the person requesting the same has paid the amount of any such taxes or
charges incident thereto.
5. REGISTRATION OF TRANSFER. The Warrant Certificates may be transferred in
whole or in part, provided any such transfer complies with all applicable
federal and state securities laws and, if requested by the Company, the
Registered Holder delivers to the Company an opinion of counsel to that effect,
in form and substance reasonably acceptable to the Company. Warrant Certificates
to be transferred shall be surrendered to the Company at its principal office.
The Company shall execute, issue and deliver in exchange therefor the Warrant
Certificate or Certificates which the Registered Holder making the transfer
shall be entitled to receive.
The Company shall keep transfer books at its principal office which shall
register Warrant Certificates and the transfer thereof. On due presentment of
any Warrant Certificate for registration of transfer at such office, the Company
shall execute, issue and deliver to the transferee or transferees a new Warrant
Certificate or Certificates representing an equal aggregate number of Warrants.
All Warrant Certificates presented for registration of transfer or exercise
shall be duly endorsed or be accompanied by a written instrument or instruments
of transfer in form satisfactory to the Company. The Company may require payment
of a sum sufficient to cover any tax or other government charge that may be
imposed in connection therewith.
All Warrant Certificates so surrendered, or surrendered for exercise, or
for exchange in the case of mutilated Warrant Certificates, shall be promptly
canceled by the Company and thereafter retained by the Company until the
Expiration Date. Prior to due presentment for registration of transfer thereof,
the Company may treat the Registered Holder of any Warrant Certificate as the
absolute owner thereof (notwithstanding any notations of ownership or writing
thereon made by anyone other than the Company), and the Company shall not be
affected by any notice to the contrary.
3
<PAGE>
6. LOSS OR MUTILATION. On receipt by the Company of evidence satisfactory
as to the ownership of and the loss, theft, destruction or mutilation of this
Warrant Certificate, the Company shall execute and deliver, in lieu thereof, a
new Warrant Certificate representing an equal aggregate number of Warrants. In
the case of loss, theft or destruction of any Warrant Certificate, the
individual requesting issuance of a new Warrant Certificate shall be required to
indemnify the Company in an amount satisfactory to the Company. In the event a
Warrant Certificate is mutilated, such Certificate shall be surrendered and
canceled by the Company prior to delivery of a new Warrant Certificate.
Applicants for a new Warrant Certificate shall also comply with such other
regulations and pay such other reasonable charges as the Company may prescribe.
7. ADJUSTMENT OF SHARES. The number and kind of securities issuable upon
exercise of a Warrant shall be subject to adjustment from time to time upon the
happening of certain events, as follows:
(a) STOCK SPLITS, STOCK COMBINATIONS AND CERTAIN STOCK DIVIDENDS. If
the Company shall at any time subdivide or combine its outstanding Shares,
or declare a dividend in Shares or other securities of the Company
convertible into or exchangeable for Shares, a Warrant shall, after such
subdivision or combination or after the record date for such dividend, be
exercisable for that number of Shares and other securities of the Company
that the Registered Holder would have owned immediately after such event
with respect to the Shares and other securities for which a Warrant may
have been exercised immediately before such event had the Warrant been
exercised immediately before such event. Any adjustment under this Section
7 (a) shall become effective at the close of business on the date the
subdivision, combination or dividend becomes effective.
(b) ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER. In case of
any reorganization of the Company (or any other corporation the stock or
other securities of which are at the time receivable upon exercise of a
Warrant) or in case the Company (or any such other corporation) shall merge
into or with or consolidate with another corporation or convey all or
substantially all of its assets to another corporation or enter into a
business combination of any form as a result of which the Shares or other
securities receivable upon exercise of a Warrant are converted into other
stock or securities of the same or another corporation, then and in each
such case, the Registered Holder of a Warrant, upon exercise of the
purchase right at any time after the consummation of such reorganization,
consolidation, merger, conveyance or combination (in each case, a "Sale
Transaction"), shall be entitled to receive, in lieu of the Shares or other
securities to which such Registered Holder would have been entitled had he
exercised the purchase right immediately prior thereto, such stock and
securities which such Registered Holder would have owned immediately after
such event with respect to the Shares and other securities for which a
Warrant may have been exercised immediately before such event had the
Warrant been exercised immediately prior to such event; provided, however,
that in the event of a Sale Transaction, the Company shall have the right
and option on ten (10) days prior written notice to the Registered Holder
to call, redeem and acquire all Warrants which remain outstanding and
unexercised as of the date fixed for redemption
4
<PAGE>
by Company in such notice at a price of $.01 per Warrant , but only if the
value of the Common Stock of the Company following the occurrence of the
Sale Transaction will equal or exceed $10.00 per share.
In each case of an adjustment in the Shares or other securities
receivable upon the exercise of a Warrant, the Company shall promptly notify
the Registered Holder of such adjustment. Such notice shall set forth the
facts upon which such adjustment is based.
8. REDUCTION IN EXERCISE PRICE AT COMPANY'S OPTION. The Company's Board of
Directors may, in its sole discretion, reduce the Exercise Price of the Warrants
in effect at any time either for the life of the Warrants or any shorter period
of time determined by the Company's Board of Directors. The Company shall
promptly notify the Registered Holder(s) of any such reduction in the Exercise
Price.
9. NOTICES. All notices, demands, elections, or requests (however
characterized or described) required or authorized hereunder shall be deemed
given sufficiently if in writing and sent by registered or certified mail,
return receipt requested and postage prepaid, by a nationally recognized
overnight courier, delivery charges prepaid, or by facsimile or telegram as
follows:
To the Company: 3000 Atrium Way, Suite 202
Mt. Laurel, NJ 08054
Attention: Robert D. Kohn, CEO
To the Registered
Holder: 1215 Fifth Avenue, #12B
New York, NY 10029
or at such other address as each party shall designate to the other in writing.
10. GENERAL PROVISIONS. This Warrant Certificate shall be construed and
enforced in accordance with, and governed by, the laws of the State of
Delaware and venue for any proceeding arising from or in connection herewith
shall be in the state and federal courts of Delaware, without regard to the
principles of conflicts of law. Except as otherwise expressly stated herein,
time is of the essence in performing hereunder. The headings of this Warrant
Certificate are for convenience in reference only and shall not limit or
otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed as of the 2nd day of April, 1999.
WORLDWIDE WEB NETWORX CORPORATION
5
<PAGE>
By: //s// Robert D. Kohn
--------------------
Robert D. Kohn, CEO
6
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
Appendix A
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT
TEN ENT - as tenants by the entireties CUSTODIAN
-----------------
JT TEN - as joint tenants with right (Cust) (Minor)
of survivorship and not as under Uniform Gifts
tenants in common to Minors Act
-------
(State)
Additional abbreviations may also be used though not in the above list.
FORM OF ASSIGNMENT
7
<PAGE>
(To be Executed by the Registered Holder if he
Desires to Assign Warrants Evidenced by the
Within Warrant Certificate)
FOR VALUE RECEIVED_________________ hereby sells, assigns and transfers
unto (_____) Warrants, evidenced by the within Warrant Certificate, and does
hereby irrevocably constitute and appoint___________ Attorney to transfer the
said Warrants evidenced by the within Warrant Certificate on the books of the
Company, with full power of substitution.
Dated:
---------------
Signature
Notice: The above signature must correspond with the name as written upon the
face of the Warrant Certificate in every particular, without alteration
or enlargement or any change whatsoever.
STATE OF________________ )
) ss
COUNTY OF_______ _______ )
On this_____day of______,____, before me personally appeared_______________
__________________, personally known to me or proved to me to be, on the basis
of satisfactory evidence, to be the person that executed this instrument.
-----------------------------
Notary Public
8
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be Executed by the Holder if he Desires to Exercise
Warrants Evidenced by the Warrant Certificate)
To WorldWide Web NetworX Corporation:
The undersigned hereby irrevocably elects to exercise__________ ________
(______) Warrants, evidenced by the within Warrant Certificate for, and to
purchase thereunder, (___) full shares of Common Stock issuable upon exercise of
said Warrants and delivery of $ and any applicable taxes.
The undersigned requests that certificates for such shares be issued in the
name of:
(Please print name and address)
(Social Security or Tax Identification Number)
If said number of Warrants shall not be all the Warrants evidenced by the
within Warrant Certificate, the undersigned requests that a new Warrant
Certificate evidencing the Warrants not so exercised by issued in the name of
and delivered to:
(Please print name and address)
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
Dated: _______ Signature:
9
<PAGE>
NOTICE: The above signature must correspond with the name as written upon the
face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever, or if signed by any
other person the Form of Assignment hereon must be duly executed and if
the certificate representing the shares or any Warrant Certificate
representing Warrants not exercised is to be registered in a name other
than that in which the within Warrant Certificate is registered, the
signature of the holder hereof must be guaranteed.
STATE OF _________________)
) ss
COUNTY OF_________________)
On this ____day of_________,______ before me personally appeared __________
__________________, personally known to me or proved to me to be, on the basis
of satisfactory evidence, to be the person who executed this instrument.
-----------------------------
Notary Public
10
<PAGE>
Exhibit 4.4
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE COMMON STOCK ISSUABLE UPON
EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES OR BLUE SKY LAWS OF ANY
STATE AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO
RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES OR BLUE SKY LAWS OR IF AN
EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION IS APPLICABLE.
WORLDWIDE WEB NETWORX CORPORATION
Incorporated Under the Laws of the State of Delaware
Warrant #002 100,000 Common Stock
Purchase Warrants
CERTIFICATE FOR COMMON STOCK
PURCHASE WARRANTS
1. WARRANT. This Warrant Certificate certifies that Arnold P. Kling, or
his registered assigns (the "Registered Holder"), is the registered owner of the
above indicated number of Warrants expiring on the Expiration Date, as
hereinafter defined. One (1) Warrant entitles the Registered Holder to purchase
one (1) share of the Common Stock, $.001 par value (a "Share"), of WorldWide Web
NetworX Corporation, a Delaware corporation (the "Company"), from the Company at
a purchase price of Two Dollars and 25/100 ($2.25) (the "Exercise Price") at any
time during the Exercise Period, as hereinafter defined, upon surrender of this
Warrant Certificate with the exercise form hereon duly completed and executed
and accompanied by payment of the Exercise Price at the principal office of the
Company.
Upon due presentment for transfer or exchange of this Warrant
Certificate at the principal office of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued in exchange for this Warrant Certificate, subject to
the limitations provided herein, upon payment of any tax or governmental charge
imposed in connection with such transfer. Subject to the terms hereof, the
Company shall deliver Warrant Certificates in required whole number
denominations to Registered Holders in connection with any transfer or exchange
permitted hereunder.
2. RESTRICTIVE LEGEND. Each Warrant Certificate and each certificate
representing Shares issued upon exercise of a Warrant, unless such Shares are
then registered under the Securities Act of 1933, as amended (the "Act"), shall
bear a legend in substantially the following form:
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<PAGE>
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES OR
BLUE SKY LAWS OF ANY STATE AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND
QUALIFIED PURSUANT TO RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES OR
BLUE SKY LAWS OR IF AN EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION IS
APPLICABLE."
The Shares issuable upon exercise of the Warrants shall have
"piggy-back" registration rights and shall be included in any registration
statement on Form S-1, SB-2 or other appropriate form filed by the Company
during the Exercise Period, as defined herein, with the Securities and Exchange
Commission which registers for resale any of the Company's securities. The
Company shall give the Registered Holder(s) appropriate notice of such
registration and shall comply with the Registered Holder(s) election to
register. The Company shall bear the expenses of registering the Shares.
3. EXERCISE. Subject to the terms hereof, the Warrants, evidenced by
this Warrant Certificate, may be exercised at the Exercise Price in whole or in
part at any time during the period (the "Exercise Period") commencing on the
date hereof and terminating at the close of business on that day (the
"Expiration Date") which is April 2, 2003. The Exercise Period may also be
extended by the Company's Board of Directors in its sole discretion.
A Warrant shall be deemed to have been exercised immediately prior to
the close of business on the date (the "Exercise Date") of the surrender to the
Company at its principal office of this Warrant Certificate with the exercise
form attached hereto executed by the Registered Holder and accompanied by
payment to the Company, in cash or by official bank or certified check, of an
amount equal to the aggregate Exercise Price, in lawful money of the United
States of America.
The person entitled to receive the Shares issuable upon exercise of a
Warrant or Warrants ("Warrant Shares") shall be treated for all purposes as the
holder of such Warrant Shares as of the close of business on the Exercise Date.
The Company shall not be obligated to issue any fractional share interests in
Warrant Shares issuable or deliverable on the exercise of any Warrant or scrip
or cash with respect thereto, and such right to a fractional share shall be of
no value whatsoever. If more than one Warrant shall be exercised at one time by
the same Registered Holder, the number of full Shares which shall be issuable on
exercise thereof shall be computed on the basis of the aggregate number of full
shares issuable on such exercise.
Promptly, and in any event within ten (10) business days after the
Exercise Date, the Company shall cause to be issued and delivered to the person
or persons entitled to receive the same, a certificate or certificates for the
number of Warrant Shares deliverable on such exercise.
The Company may deem and treat the Registered Holder of the Warrants at
any time as the absolute owner thereof for all purposes, and the Company shall
not be affected by any notice to the contrary. The Warrants shall not entitle
the Registered Holder thereof to any of the rights of shareholders or to any
dividend declared on the Shares unless the Registered Holder shall
2
<PAGE>
have exercised the Warrants and thereby purchased the Warrant Shares prior to
the record date for the determination of holders of Shares entitled to such
dividend or other right.
4. RESERVATION OF SHARES AND PAYMENT OF TAXES. The Company covenants
that it will at all times reserve and have available from its authorized Common
Stock such number of Shares as shall then be issuable on the exercise of
outstanding Warrants. The Company covenants that all Warrant Shares which shall
be so issuable shall be duly and validly issued, fully paid and nonassessable,
and free from all taxes, liens and charges with respect to the issue thereof.
The Registered Holder shall pay all documentary stamp or similar taxes
and other government charges that may be imposed with respect to the issuance,
transfer or delivery of any Warrant Shares on exercise of the Warrants. In the
event the Warrant Shares are to be delivered in a name other than the name of
the Registered Holder of the Warrant Certificate, no such delivery shall be made
unless the person requesting the same has paid the amount of any such taxes or
charges incident thereto.
5. REGISTRATION OF TRANSFER. The Warrant Certificates may be
transferred in whole or in part, provided any such transfer complies with all
applicable federal and state securities laws and, if requested by the Company,
the Registered Holder delivers to the Company an opinion of counsel to that
effect, in form and substance reasonably acceptable to the Company. Warrant
Certificates to be transferred shall be surrendered to the Company at its
principal office. The Company shall execute, issue and deliver in exchange
therefor the Warrant Certificate or Certificates which the Registered Holder
making the transfer shall be entitled to receive.
The Company shall keep transfer books at its principal office which
shall register Warrant Certificates and the transfer thereof. On due presentment
of any Warrant Certificate for registration of transfer at such office, the
Company shall execute, issue and deliver to the transferee or transferees a new
Warrant Certificate or Certificates representing an equal aggregate number of
Warrants. All Warrant Certificates presented for registration of transfer or
exercise shall be duly endorsed or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company. The Company may
require payment of a sum sufficient to cover any tax or other government charge
that may be imposed in connection therewith.
All Warrant Certificates so surrendered, or surrendered for exercise,
or for exchange in the case of mutilated Warrant Certificates, shall be promptly
canceled by the Company and thereafter retained by the Company until the
Expiration Date. Prior to due presentment for registration of transfer thereof,
the Company may treat the Registered Holder of any Warrant Certificate as the
absolute owner thereof (notwithstanding any notations of ownership or writing
thereon made by anyone other than the Company), and the Company shall not be
affected by any notice to the contrary.
6. LOSS OR MUTILATION. On receipt by the Company of evidence
satisfactory as to the ownership of and the loss, theft, destruction or
mutilation of this Warrant Certificate, the Company shall execute and deliver,
in lieu thereof, a new Warrant Certificate representing an
3
<PAGE>
equal aggregate number of Warrants. In the case of loss, theft or destruction of
any Warrant Certificate, the individual requesting issuance of a new Warrant
Certificate shall be required to indemnify the Company in an amount satisfactory
to the Company. In the event a Warrant Certificate is mutilated, such
Certificate shall be surrendered and canceled by the Company prior to delivery
of a new Warrant Certificate. Applicants for a new Warrant Certificate shall
also comply with such other regulations and pay such other reasonable charges as
the Company may prescribe.
7. ADJUSTMENT OF SHARES. The number and kind of securities
issuable upon exercise of a Warrant shall be subject to adjustment from time
to time upon the happening ofcertain events, as follows:
(a) STOCK SPLITS, STOCK COMBINATIONS AND CERTAIN STOCK
DIVIDENDS. If the Company shall at any time subdivide or combine its
outstanding Shares, or declare a dividend in Shares or other securities
of the Company convertible into or exchangeable for Shares, a Warrant
shall, after such subdivision or combination or after the record date
for such dividend, be exercisable for that number of Shares and other
securities of the Company that the Registered Holder would have owned
immediately after such event with respect to the Shares and other
securities for which a Warrant may have been exercised immediately
before such event had the Warrant been exercised immediately before
such event. Any adjustment under this Section 7 (a) shall become
effective at the close of business on the date the subdivision,
combination or dividend becomes effective.
(b) ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER. In
case of any reorganization of the Company (or any other corporation the
stock or other securities of which are at the time receivable upon
exercise of a Warrant) or in case the Company (or any such other
corporation) shall merge into or with or consolidate with another
corporation or convey all or substantially all of its assets to another
corporation or enter into a business combination of any form as a
result of which the Shares or other securities receivable upon exercise
of a Warrant are converted into other stock or securities of the same
or another corporation, then and in each such case, the Registered
Holder of a Warrant, upon exercise of the purchase right at any time
after the consummation of such reorganization, consolidation, merger,
conveyance or combination (in each case, a "Sale Transaction"), shall
be entitled to receive, in lieu of the Shares or other securities to
which such Registered Holder would have been entitled had he exercised
the purchase right immediately prior thereto, such stock and securities
which such Registered Holder would have owned immediately after such
event with respect to the Shares and other securities for which a
Warrant may have been exercised immediately before such event had the
Warrant been exercised immediately prior to such event; provided,
however, that in the event of a Sale Transaction, the Company shall
have the right and option on ten (10) days prior written notice to the
Registered Holder to call, redeem and acquire all Warrants which remain
outstanding and unexercised as of the date fixed for redemption by
Company in such notice at a price of $.01 per Warrant , but only if the
value of the Common Stock of the Company following the occurrence of
the Sale Transaction will equal or exceed $10.00 per share.
4
<PAGE>
In each case of an adjustment in the Shares or other securities
receivable upon the exercise of a Warrant, the Company shall promptly notify the
Registered Holder of such adjustment. Such notice shall set forth the facts upon
which such adjustment is based.
8. REDUCTION IN EXERCISE PRICE AT COMPANY'S OPTION. The Company's Board
of Directors may, in its sole discretion, reduce the Exercise Price of the
Warrants in effect at any time either for the life of the Warrants or any
shorter period of time determined by the Company's Board of Directors. The
Company shall promptly notify the Registered Holder(s) of any such reduction in
the Exercise Price.
9. NOTICES. All notices, demands, elections, or requests (however
characterized or described) required or authorized hereunder shall be deemed
given sufficiently if in writing and sent by registered or certified mail,
return receipt requested and postage prepaid, by a nationally recognized
overnight courier, delivery charges prepaid, or by facsimile or telegram as
follows:
To the Company: 3000 Atrium Way, Suite 202
Mt. Laurel, NJ 08054
Attention: Robert D. Kohn, CEO
To the Registered
Holder: 444 East 86th Street, PHF
New York, NY 10028
or at such other address as each party shall designate to the other in writing.
10. GENERAL PROVISIONS. This Warrant Certificate shall be construed and
enforced in accordance with, and governed by, the laws of the State of Delaware
and venue for any proceeding arising from or in connection herewith shall be in
the state and federal courts of Delaware, without
regard to the principles of conflicts of law. Except as otherwise expressly
stated herein, time is of the essence in performing hereunder. The headings of
this Warrant Certificate are for convenience in reference only and shall not
limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed as of the 2nd day of April, 1999.
WORLDWIDE WEB NETWORX CORPORATION
By //S// Robert D. Kohn
--------------------
Robert D. Kohn, CEO
5
<PAGE>
WORLDWIDE WEB NETWORX CORPORATION
Appendix A
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT
TEN ENT - as tenants by the entireties CUSTODIAN
-----------------
JT TEN - as joint tenants with right (Cust) (Minor)
of survivorship and not as under Uniform Gifts
tenants in common to Minors Act
(State)
Additional abbreviations may also be used though not in the above list.
6
<PAGE>
FORM OF ASSIGNMENT
(To be Executed by the Registered Holder if he
Desires to Assign Warrants Evidenced by the
Within Warrant Certificate)
FOR VALUE RECEIVED_________________ hereby sells, assigns and transfers
unto _____________________ (____) Warrants, evidenced by the within Warrant
Certificate, and does hereby irrevocably constitute and appoint
____________________ Attorney to transfer the said Warrants evidenced by the
within Warrant Certificate on the books of the Company, with full power of
substitution.
Dated:___________
Signature
Notice: The above signature must correspond with the name as written
upon the face of the Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever.
STATE OF_______________)
) ss
COUNTY OF______________)
On this_____day of______,____, before me personally appeared___________
____________________, personally known to me or proved to me to be, on the basis
of satisfactory evidence, to be the person that executed this instrument.
---------------------------
Notary Public
7
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be Executed by the Holder if he Desires to Exercise
Warrants Evidenced by the Warrant Certificate)
To WorldWide Web NetworX Corporation:
The undersigned hereby irrevocably elects to exercise ________(______)
Warrants, evidenced by the within Warrant Certificate for, and to purchase
thereunder, _____________________ (___) full shares of Common Stock issuable
upon exercise of said Warrants and delivery of $ and any applicable taxes.
The undersigned requests that certificates for such shares be issued in the
name of:
(Please print name and address)
(Social Security or Tax Identification Number)
If said number of Warrants shall not be all the Warrants evidenced by
the within Warrant Certificate, the undersigned requests that a new Warrant
Certificate evidencing the Warrants not so exercised by issued in the name of
and delivered to:
(Please print name and address)
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
8
<PAGE>
Dated:________________ Signature:
NOTICE: The above signature must correspond with the name as written
upon the face of the within Warrant Certificate in every
particular, without alteration or enlargement or any change
whatsoever, or if signed by any other person the Form of
Assignment hereon must be duly executed and if the certificate
representing the shares or any Warrant Certificate
representing Warrants not exercised is to be registered in a
name other than that in which the within Warrant Certificate
is registered, the signature of the holder hereof must be
guaranteed.
STATE OF ________________)
)ss
COUNTY OF________________)
On this ____day of_________,______ before me personally appeared ______
_______________________, personally known to me or proved to me to be, on the
basis of satisfactory evidence, to be the person who executed this instrument.
---------------------------
Notary Public
9
<PAGE>
EXHIBIT 4.5
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") SHALL HAVE BECOME EFFECTIVE WITH RESPECT
THERETO OR (ii) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE SECURITIES
ACT IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS SUCH
TRANSFER IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND SHALL
BE ENDORSED UPON ANY WARRANT ISSUED IN EXCHANGE FOR THIS WARRANT OR ANY SHARES
OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT.
WARRANT TO PURCHASE COMMON STOCK
OF
WORLDWIDE WEB NETWORX CORPORATION
No. AW _____
This is to Certify That, FOR VALUE RECEIVED, D. H. Blair Investment
Banking Corp., or assigns ("Holder"), is entitled to purchase, subject to the
provisions of this Warrant, from WorldWide Web NewtworX Corporation, a Delaware
corporation ("Company"), ___________ (________) fully paid, validly issued and
nonassessable shares of common stock, $.001 par value, of the Company ("Common
Stock") at a price of $1.80 per share at any time or from time to time during
the period from ______, 1999 until ________, 2002 (the "Exercise Period"),
subject to adjustment as set forth herein. The number of shares of Common Stock
to be received upon the exercise of this Warrant and the price to be paid for
each share of Common Stock may be adjusted from time to time as hereinafter set
forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Shares" and the exercise price of a share of Common Stock in effect at any time
and as adjusted from time to time is hereinafter sometimes referred to as the
"Exercise Price". This Warrant was originally issued pursuant to an agency
agreement ("Agency Agreement") between the Company and D. H. Blair Investment
Banking Corp. ("Blair"), in connection with a private offering of the Company's
securities through Blair pursuant to the terms of a Confidential Private
Placement Offering Memorandum dated May 26, 1999, as supplemented (the
"Memorandum").
(a) EXERCISE OF WARRANT; CANCELLATION OF WARRANT.
(1) This Warrant may be exercised in whole or in part at any
time or from time to time during the Exercise Period; provided, however, that
(i) if either such day is a day on which banking institutions in the State of
New York are authorized by law to close, then on the next succeeding day which
shall not be such a day, and (ii) in the event of any merger, consolidation or
sale of substantially all the assets of the Company as an entirety, resulting in
any distribution to the Company's stockholders, prior to the expiration of the
Exercise Period, the Holder shall have the right to exercise this Warrant
commencing at such time through the expiration of the Exercise Period into the
kind and amount of shares of stock and other securities and property (including
cash) receivable by a holder of the number of shares of Common Stock into which
this Warrant might have been exercisable immediately prior thereto. This Warrant
may be exercised by presentation and surrender hereof to the Company at its
principal office with the Purchase Form annexed hereto duly executed and
accompanied by payment of the Exercise
<PAGE>
Price for the number of Warrant Shares specified in such form. As soon as
practicable after each such exercise of the warrants, but not later than seven
(7) days following the receipt of good and available funds, the Company shall
issue and deliver to the Holder a certificate or certificate for the Warrant
Shares issuable upon such exercise, registered in the name of the Holder or its
designee. If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the rights of the Holder thereof to purchase the balance of
the Warrant Shares purchasable thereunder. Upon receipt by the Company of this
Warrant at its office in proper form for exercise, the Holder shall be deemed to
be the holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of the Company shall
then be closed or that certificates representing such shares of Common Stock
shall not then be physically delivered to the Holder.
(2) At any time during the Exercise Period, the Holder may, at
its option, choose to exercise this Warrant on a cashless basis by exchanging
this Warrant, in whole or in part (a "Warrant Exchange"), into the number of
Warrant Shares determined in accordance with this Section (a)(2), by
surrendering this Warrant at the principal office of the Company or at the
office of its stock transfer agent, accompanied by a notice stating such
Holder's intent to effect such exchange, the number of Warrant Shares to be
exchanged and the date on which the Holder requests that such Warrant Exchange
occur (the "Notice of Exchange"). The Warrant Exchange shall take place on the
date specified in the Notice of Exchange or, if later, the date the Notice of
Exchange is received by the Company (the "Exchange Date"). Certificates for the
shares issuable upon such Warrant Exchange and, if applicable, a new warrant of
like tenor evidencing the balance of the shares remaining subject to this
Warrant, shall be issued as of the Exchange Date and delivered to the Holder
within seven (7) days following the Exchange Date. In connection with any
Warrant Exchange, this Warrant shall represent the right to subscribe for and
acquire the number of Warrant Shares equal to (i) the number of Warrant Shares
specified by the Holder in its Notice of Exchange (the "Total Number") less (ii)
the number of Warrant Shares equal to the quotient obtained by dividing (A) the
product of the Total Number and the existing Exercise Price by (B) the current
market value of a share of Common Stock. Current market value shall have the
meaning set forth Section (c) below, except that for purposes hereof, the date
of exercise, as used in such Section (c), shall mean the Exchange Date.
(b) RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall be required for issuance and delivery upon exercise of
the Warrants.
(c) FRACTIONAL SHARES. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of a share, determined as follows:
(1) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such exchange or listed
for trading on the Nasdaq National Market, the current market value shall be the
last reported sale price of the Common Stock on such exchange or market on the
last business day prior to the date of exercise of this
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<PAGE>
Warrant or if no such sale is made on such day, the average of the closing bid
and asked prices for such day on such exchange or market; or
(2) If the Common Stock is not so listed or admitted to
unlisted trading privileges, but is traded on the Nasdaq SmallCap Market, the
current market value shall be the average of the closing bid and asked prices
for such day on such market and if the Common Stock is not so traded, the
current market value shall be the mean of the last reported bid and asked prices
reported by the NASD Electronic Bulletin Board on the last business day prior to
the date of the exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so reported, the
current market value shall be an amount, not less than book value thereof as at
the end of the most recent fiscal year of the Company ending prior to the date
of the exercise of the Warrant, determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. Upon surrender of this Warrant to the Company at
its principal office or at the office of its stock transfer agent, if any, with
the Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Warrant in the name of the assignee named in such instrument of assignment and
this Warrant shall promptly be canceled. This Warrant may be divided or combined
with other warrants which carry the same rights upon presentation hereof at the
principal office of the Company or at the office of its stock transfer agent, if
any, together with a written notice specifying the names and denominations in
which new Warrants are to be issued and signed by the Holder hereof. The term
"Warrant" as used herein includes any Warrants into which this Warrant may be
divided or exchanged. Upon receipt by the Company of evidence satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like tenor and date. Any such new Warrant
executed and delivered shall constitute an additional contractual obligation on
the part of the Company, whether or not this Warrant so lost, stolen, destroyed,
or mutilated shall be at any time enforceable by anyone.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
(f) ANTI-DILUTION PROVISIONS. Subject to the provisions of Section l
hereof, the Exercise Price in effect at any time and the number and kind of
securities purchasable upon
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<PAGE>
the exercise of the Warrants shall be subject to adjustment from time to time
upon the happening of certain events as follows:
(1) In case the Company shall hereafter (i) declare a dividend
or make a distribution on its outstanding shares of Common
Stock in shares of Common Stock, (ii) subdivide or reclassify
its outstanding shares of Common Stock into a greater number
of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of the record date for
such dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be adjusted
so that it shall equal the price determined by multiplying the
Exercise Price by a fraction, the denominator of which shall
be the number of shares of Common Stock outstanding after
giving effect to such action, and the numerator of which shall
be the number of shares of Common Stock outstanding
immediately prior to such action. Such adjustment shall be
made successively whenever any event listed above shall occur.
(2) In case the Company shall fix a record date for the
issuance of rights or warrants to all holders of its Common
Stock entitling them to subscribe for or purchase shares of
Common Stock (or securities convertible into Common Stock) at
a price (the "Subscription Price") (or having a conversion
price per share) less than the current market price of the
Common Stock (as defined in Subsection (8) below) on the
record date mentioned below, or less than the Exercise Price
on such record date the Exercise Price shall be adjusted so
that the same shall equal the lower of (i) the price
determined by multiplying the Exercise Price in effect
immediately prior to the date of such issuance by a fraction,
the numerator of which shall be the sum of the number of
shares of Common Stock outstanding on the record date
mentioned below and the number of additional shares of Common
Stock which the aggregate offering price of the total number
of shares of Common Stock so offered (or the aggregate
conversion price of the convertible securities so offered)
would purchase at such current market price per share of the
Common Stock, and the denominator of which shall be the sum of
the number of shares of Common Stock outstanding on such
record date and the number of additional shares of Common
Stock offered for subscription or purchase (or into which the
convertible securities so offered are convertible) or (ii) in
the event the Subscription Price is equal to or higher than
the current market price but is less than the Exercise Price,
the price determined by multiplying the Exercise Price in
effect immediately prior to the date of issuance by a
fraction, the numerator of which shall be the sum of the
number of shares outstanding on the record date mentioned
below and the number of additional shares of Common Stock
which the aggregate offering price of the total number of
shares of Common Stock so offered (or the aggregate conversion
price of the convertible securities so offered) would purchase
at the Exercise Price in effect immediately prior to the date
of such issuance, and the denominator of which shall be the
sum of the number of shares of Common Stock outstanding on the
record date mentioned below and the number of additional
shares of Common Stock offered for subscription or
4
<PAGE>
purchase (or into which the convertible securities so
offered are convertible). Such adjustment shall be made
successively whenever such rights or warrants are issued and
shall become effective immediately after the record date for
the determination of shareholders entitled to receive such
rights or warrants; and to the extent that shares of Common
Stock are not delivered (or securities convertible into
Common Stock are not delivered) after the expiration of such
rights or warrants the Exercise Price shall be readjusted to
the Exercise Price which would then be in effect had the
adjustments made upon the issuance of such rights or
warrants been made upon the basis of delivery of only the
number of shares of Common Stock (or securities convertible
into Common Stock) actually delivered.
(3) In case the Company shall hereafter distribute to
the holders of its Common Stock evidences of its indebtedness
or assets (excluding cash dividends or distributions and
dividends or distributions referred to in Subsection (1) above
or any equity securities held for investment for the purpose
of avoiding the provisions of the Investment Company Act of
1940) or subscription rights or warrants (excluding those
referred to in Subsection (2) above), then in each such case
the Exercise Price in effect thereafter shall be determined by
multiplying the Exercise Price in effect immediately prior
thereto by a fraction, the numerator of which shall be the
total number of shares of Common Stock outstanding multiplied
by the current market price per share of Common Stock (as
defined in Subsection (8) below), less the fair market value
(as determined by the Company's Board of Directors) of said
assets or evidences of indebtedness so distributed or of such
rights or warrants, and the denominator of which shall be the
total number of shares of Common Stock outstanding multiplied
by such current market price per share of Common Stock. Such
adjustment shall be made successively whenever such a record
date is fixed. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately
after the record date for the determination of shareholders
entitled to receive such distribution.
(4) In case the Company shall hereafter issue shares
of its Common Stock (excluding shares issued (a) in any of the
transactions described in Subsection (1) above, (b) upon
exercise of options granted to the Company's officers,
directors and employees under a plan or plans adopted by the
Company's Board of Directors and approved by its shareholders,
if such shares would otherwise be included in this Subsection
(4), (but only to the extent that the aggregate number of
shares excluded hereby and issued after the date hereof, shall
not exceed 15% of the Company's Common Stock outstanding at
the time of any issuance), (c) upon exercise of options,
warrants and convertible debentures outstanding as of the
final closing of the Private Placement, or conversion of the
Notes or the Warrants, (d) to shareholders of any corporation
which merges into the Company in proportion to their stock
holdings of such corporation immediately prior to such merger,
upon such merger, (e) issued in a private placement through
Blair, as placement agent, or upon exercise or conversion of
any securities issued in or in connection with such a private
placement (including
5
<PAGE>
agent, consulting or advisory warrants), (f) shares issued
(to other than an affiliate of the Company or an affiliate
of any officer, director or principal shareholder of the
Company) in connection with the acquisition of a business or
technology or the establishment of a joint venture for the
purpose of expanding the Company's business, (g) issued in a
bona fide underwritten public offering, with respect to the
transaction giving rise to such rights), or (h) shares
issued in connection with any transaction described in or
contemplated by the Memorandum, for a consideration per
share (the "Offering Price") less than the current market
price per share (as defined in Subsection (8) below) on the
date the Company fixes the offering price of such additional
shares or less than the Exercise Price, the Exercise Price
shall be adjusted immediately thereafter so that it shall
equal the lower of (i) the price determined by multiplying
the Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of the
number of shares of Common Stock outstanding immediately
prior to the issuance of such additional shares and the
number of shares of Common Stock which the aggregate
consideration received (determined as provided in Subsection
(7) below) for the issuance of such additional shares would
purchase at such current market price per share of Common
Stock, and the denominator of which shall be the number of
shares of Common Stock outstanding immediately after the
issuance of such additional shares or (ii) in the event the
Offering Price is equal to or higher than the current market
price per share but less than the Exercise Price, the price
determined by multiplying the Exercise Price in effect
immediately prior to the date of issuance by a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to the issuance of such
additional shares and the number of shares of Common Stock
which the aggregate consideration received (determined as
provided in subsection (7) below) for the issuance of such
additional shares would purchase at the Exercise Price in
effect immediately prior to the date of such issuance, and
the denominator of which shall be the number of shares of
Common Stock outstanding immediately after the issuance of
such additional shares. Such adjustment shall be made
successively whenever such an issuance is made.
(5) In case the Company shall hereafter issue any
securities convertible into or exchangeable for its Common
Stock (excluding securities issued in transactions described
in Subsections (2) and (3) above) for a consideration per
share of Common Stock (the "Conversion Price") initially
deliverable upon conversion or exchange of such securities
(determined as provided in Subsection (7) below) less than the
current market price per share (as defined in Subsection (8)
below) in effect immediately prior to the issuance of such
securities convertible into or exchangeable for its Common
Stock, or less than the Exercise Price, the Exercise Price
shall be adjusted immediately thereafter so that it shall
equal the lower of (i) the price determined by multiplying the
Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of the
number of shares of Common Stock outstanding immediately prior
to the issuance of such securities and the number of shares of
Common Stock which the aggregate consideration received
(determined as
6
<PAGE>
provided in Subsection (7) below) for such securities would
purchase at such current market price per share of Common
Stock, and the denominator of which shall be the sum of the
number of shares of Common Stock outstanding immediately
prior to such issuance and the maximum number of shares of
Common Stock of the Company deliverable upon conversion of
or in exchange for such securities at the initial conversion
or exchange price or rate or (ii) in the event the
Conversion Price is equal to or higher than the current
market price per share but less than the Exercise Price, the
price determined by multiplying the Exercise Price in effect
immediately prior to the date of issuance by a fraction, the
numerator of which shall be the sum of the number of shares
outstanding immediately prior to the issuance of such
securities and the number of shares of Common Stock which
the aggregate consideration received (determined as provided
in subsection (7) below) for such securities would purchase
at the Exercise Price in effect immediately prior to the
date of such issuance, and the denominator of which shall be
the sum of the number of shares of Common Stock outstanding
immediately prior to the issuance of such securities and the
maximum number of shares of Common Stock of the Company
deliverable upon conversion of or in exchange for such
securities at the initial conversion or exchange price or
rate. Such adjustment shall be made successively whenever
such an issuance is made.
(6) Whenever the Exercise Price payable upon exercise
of each Warrant is adjusted pursuant to Subsections (1), (2),
(3), (4) and (5) above, the number of Shares purchasable upon
exercise of this Warrant shall simultaneously be adjusted by
multiplying the number of Shares initially issuable upon
exercise of this Warrant by the Exercise Price in effect on
the date hereof and dividing the product so obtained by the
Exercise Price, as adjusted.
(7) For purposes of any computation respecting
consideration received pursuant to Subsections (4) and (5)
above, the following shall apply:
(A) in the case of the issuance of shares of
Common Stock for cash, the consideration shall be the
amount of such cash, provided that in no case shall
any deduction be made for any commissions, discounts
or other expenses incurred by the Company for any
underwriting of the issue or otherwise in connection
therewith;
(B) in the case of the issuance of shares of
Common Stock for a consideration in whole or in part
other than cash, the consideration other than cash
shall be deemed to be the fair market value thereof
as determined in good faith by the Board of Directors
of the Company (irrespective of the accounting
treatment thereof), whose determination shall be
conclusive; and
(C) in the case of the issuance of
securities convertible into or exchangeable for
shares of Common Stock, the aggregate consideration
7
<PAGE>
received therefor shall be deemed to be the
consideration received by the Company for the
issuance of such securities plus the additional
minimum consideration, if any, to be received by the
Company upon the conversion or exchange thereof (the
consideration in each case to be determined in the
same manner as provided in clauses (A) and (B) of
this Subsection (7)).
(8) For the purpose of any computation under
Subsections (2), (3), (4) and (5) above, the current market
price per share of Common Stock at any date shall be
determined in the manner set forth in Section (c) hereof
except that the current market price per share shall be deemed
to be the higher of (i) the average of the prices for 30
consecutive business days before such date or (ii) the price
on the business day immediately preceding such date.
(9) No adjustment in the Exercise Price shall be
required unless such adjustment would require an increase or
decrease of at least five cents ($0.05) in such price;
provided, however, that any adjustments which by reason of
this Subsection (9) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment required to be made hereunder. All calculations
under this Section (f) shall be made to the nearest cent or to
the nearest one-hundredth of a share, as the case may be.
Anything in this Section (f) to the contrary notwithstanding,
the Company shall be entitled, but shall not be required, to
make such changes in the Exercise Price, in addition to those
required by this Section (f), as it shall determine, in its
sole discretion, to be advisable in order that any dividend or
distribution in shares of Common Stock, or any subdivision,
reclassification or combination of Common Stock, hereafter
made by the Company shall not result in any Federal Income tax
liability to the holders of Common Stock or securities
convertible into Common Stock (including Warrants).
(10) Whenever the Exercise Price is adjusted, as
herein provided, the Company shall promptly but no later than
10 days after any request for such an adjustment by the
Holder, cause a notice setting forth the adjusted Exercise
Price and adjusted number of Shares issuable upon exercise of
each Warrant, and, if requested, information describing the
transactions giving rise to such adjustments, to be mailed to
the Holders at their last addresses appearing in the Warrant
Register, and shall cause a certified copy thereof to be
mailed to its transfer agent, if any. The Company may retain a
firm of independent certified public accountants selected by
the Board of Directors (who may be the regular accountants
employed by the Company) to make any computation required by
this Section (f), and a certificate signed by such firm shall
be conclusive evidence of the correctness of such adjustment.
(11) In the event that at any time, as a result of an
adjustment made pursuant to Subsection (1) above, the Holder
of this Warrant thereafter shall become entitled to receive
any shares of the Company, other than Common Stock, thereafter
the number of such other shares so receivable upon exercise of
this
8
<PAGE>
Warrant shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Common Stock contained in
Subsections (1) to (9), inclusive above.
(12) Irrespective of any adjustments in the Exercise
Price or the number or kind of shares purchasable upon
exercise of this Warrant, Warrants theretofore or thereafter
issued may continue to express the same price and number and
kind of shares as are stated in the similar Warrants initially
issuable pursuant to this Agreement.
(13) Notwithstanding anything else in this Section
(f), no issuance will give rise to an anti-dilution adjustment
under more than one Subsection (1) to (9) inclusive of this
Section (f).
(g) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (i) if the Company shall pay any dividend or make any distribution
upon the Common Stock or (ii) if the Company shall offer to the holders of
Common Stock for subscription or purchase by them any share of any class or any
other rights or (iii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, a notice containing a brief
description of the proposed action and stating the date on which (x) a record is
to be taken for the purpose of such dividend, distribution or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any is
to be fixed, as of which the holders of Common Stock or other securities shall
receive cash or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up so that if the Holder determines to exercise this Warrant, such
exercise shall be retroactive to the date specified in (x) or (y) in this
paragraph (g).
(i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
in which merger the Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon exercise of this
Warrant) or in case of any sale, lease or conveyance to another corporation of
the property of the Company as an entirety, the Company shall, as a condition
precedent to such transaction, cause effective provisions to be made so that the
Holder shall have the right thereafter by exercising this Warrant at any time
prior to the expiration of the Warrant, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
which might have been purchased upon exercise of this Warrant immediately prior
to such reclassification, change, consolidation, merger, sale or
9
<PAGE>
conveyance. Any such provision shall include provision for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Warrant. The foregoing provisions of this Section (i) shall
similarly apply to successive reclassifications, capital reorganizations and
changes of shares of Common Stock and to successive consolidations, mergers,
sales or conveyances. In the event that in connection with any such capital
reorganization or reclassification, consolidation, merger, sale or conveyance,
additional shares of Common Stock shall be issued in exchange, conversion,
substitution or payment, in whole or in part, for a security of the Company
other than Common Stock, any such issue shall be treated as an issue of Common
Stock covered by the provisions of Subsection (1) of Section (f) hereof.
(j) REGISTRATION UNDER THE SECURITIES ACT OF 1933.
(1) The Company hereby agrees with the holders of the Warrants
and the Warrant Shares or their transferees (collectively, the
"Holders") that at any time during the four-year period commencing one
year after the initial closing of the Private Placement upon notice by
either Blair or Holders beneficially owning at least 50% of the
Warrants and Warrant Shares, it will within 20 days of receipt of such
notice prepare and file with the Securities and Exchange Commission
("SEC") a registration statement under the Securities Act of 1933, as
amended (the "Act") covering the resale of the Warrant Shares and use
its best efforts to cause such registration statement to become
effective as soon as practicable thereafter. The obligation of the
Company under this Section j(1) shall be limited to two registration
statements.
(2) If the Company shall determine to proceed with the actual
preparation and filing of a registration statement under the Act in
connection with the proposed offer and sale of any of its securities by
it or any of its security holders (other than a registration statement
on Form S-4, S-8 or other limited purpose form), then the Company will
give 30 days prior written notice of its determination to all record
holders of the Warrants and Warrant Shares. Upon the written request
from any Holder, the Company will, except as herein provided, cause all
such Warrant Shares to be included in such registration statement, all
to the extent requisite to permit the sale or other disposition by the
prospective seller or sellers of the Warrant Shares to be so
registered; provided, further, that nothing herein shall prevent the
Company from, at any time, abandoning or delaying any registration. If
any registration pursuant to this Section j(2) shall be underwritten in
whole or in part, the Company may require that the Warrant Shares
requested for inclusion by the Holders be included in the underwriting
on the same terms and conditions any other securities included in such
registration statement otherwise being sold through the underwriters.
If the managing underwriter of such public offering advises in writing
that the inclusion of all the Warrant Shares would reduce the number of
shares to be offered by the Company or interfere with the successful
marketing of the shares of stock offered by the Company, the number of
Warrant Shares otherwise to be included in the underwritten public
offering may be reduced pro rata (by number of shares) among the
Holders thereof requesting such registration or excluded in their
entirety if so required by the underwriter. To the extent only a
portion of the Warrant Shares requested are included in the
underwritten public offering, those Warrant Shares which are thus
excluded from the underwritten public offering shall be withheld from
the
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<PAGE>
market by the Holders thereof for such period, not to exceed 90 days,
as the managing underwriter reasonably determines is necessary in
order to effect the underwritten public offering.
The obligation of the Company under this Section j(2) is limited to two
registration statements.
The Holder may, at its option, request the registration of the Warrant
Shares in a registration statement made by the Company as contemplated
by Section j(1) or j(2) prior to the acquisition of the Warrant Shares
upon exercise of the Warrants and even though the holder has not given
notice of exercise of the Warrants. The Holder may thereafter at its
option, exercise the Warrants at any time or from time to time
subsequent to the effectiveness under the Act of the registration
statement in which the Warrant Shares were included.
(3) The Company will, until such time as the Warrant Shares
may be sold under Rule 144 without volume limitation:
(A) prepare and file with the SEC such amendments to
such registration statement and supplements to the prospectus
contained therein as may be necessary to keep such
registration statement effective;
(B) furnish to the Holders participating in such
registration and to the underwriters of the securities being
registered such reasonable number of copies of the
registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering
of such securities;
(C) use its best efforts to register or qualify the
securities covered by such registration statement under such
state securities or blue sky laws of such jurisdictions as the
Holders may reasonably request in writing within 20 days
following the original filing of such registration statement,
except that the Company shall not for any purpose be required
to execute a general consent to service of process or to
qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified or subject itself
to taxation in any such jurisdiction;
(D) notify the Holders, promptly after it shall
receive notice thereof, of the time when such registration
statement has become effective or a supplement to any
prospectus forming a part of such registration statement has
been filed;
(E) notify the Holders promptly of any request by the
SEC for the amending or supplementing of such registration
statement or prospectus or for additional information;
11
<PAGE>
(F) prepare and file with the SEC, promptly upon the
request of any Holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of
counsel for such Holders (and concurred in by counsel for the
Company), is required under the Act or the rules and
regulations thereunder in connection with the distribution of
Common Stock by such Holders;
(G) prepare and promptly file with the SEC and
promptly notify such Holders of the filing of such amendment
or supplement to such registration statement or prospectus as
may be necessary to correct any statements or omissions if, at
the time when a prospectus relating to such securities is
required to be delivered under the Act, any event shall have
occurred as the result of which any such prospectus or any
other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading; and
(H) advise the Holders, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of
any stop order by the SEC suspending the effectiveness of such
registration statement or the initiation or threatening of any
proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued.
The Company may require each Holder of Warrant Shares as to which any
registration is being effected to furnish to the Company such information
regarding the distribution of such Warrant Shares as the Company may from time
to time reasonably request in writing.
(4) All fees, costs and expenses of and incidental to the
first registration only pursuant to Section j(1) and each registration
under Section j(2) shall be borne by the Company, provided, however,
that the Holders shall bear their pro rata share of the underwriting
discount and commissions and transfer taxes. The fees, costs and
expenses of registration to be borne by the Company as provided above
shall include, without limitation, all registration, filing, and NASD
fees, printing expenses, fees and disbursements of counsel and
accountants for the Company, and all legal fees and disbursements and
other expenses of complying with state securities or blue sky laws of
any jurisdictions in which the securities to be offered are to be
registered and qualified (except as provided above). Fees and
disbursements of counsel and accountants for the Holders and any other
expenses incurred by the Holders not expressly included above shall be
borne by the Holders. Further, all fees, costs and expenses of and
incidental to the second registration pursuant to Section j(1) shall be
borne by the Holders.
(5) The Company will indemnify and hold harmless each Holder
of Warrant Shares which are included in a registration statement
pursuant to the provisions of Section (j)(1) or j(2) hereof, its
directors and officers, and any underwriter (as defined in the Act) for
such Holder and each person, if any, who controls such Holder or such
underwriter within the meaning of the Act, from and against, and will
reimburse such
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Holder and each such underwriter and controlling person with respect
to, any and all loss, damage, liability, cost and expense to which
such Holder or any such underwriter or controlling person may become
subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or
alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading;
provided, however, that the Company will not be liable in any such
case to the extent that any such loss, damage, liability, cost or
expenses arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity
with information furnished by such Holder, such underwriter or such
controlling person in writing specifically for use in the preparation
thereof.
(6) Each Holder of Warrant Shares included in a registration
pursuant to the provisions of Section (j)(1) or j(2) hereof will
indemnify and hold harmless the Company, its directors and officers,
any controlling person and any underwriter from and against, and will
reimburse the Company, its directors and officers, any controlling
person and any underwriter with respect to, any and all loss, damage,
liability, cost or expense to which the Company or any controlling
person and/or any underwriter may become subject under the Act or
otherwise, insofar as such losses, damages, liabilities, costs or
expenses are caused by any untrue statement or alleged untrue statement
of any material fact contained in such registration statement, any
prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon
and in strict conformity with written information furnished by or on
behalf of such Holder specifically for use in the preparation thereof.
(7) Promptly after receipt by an indemnified party pursuant to
the provisions of Sections (j)(5) or j(6) of notice of the commencement
of any action involving the subject matter of the foregoing indemnity
provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said
Sections (j)(5) or j(6), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than hereunder. In case such action is
brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party shall have
the right to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified
party, provided, however, if counsel for the indemnifying party
concludes that a single counsel cannot under applicable legal and
ethical considerations, represent both the indemnifying party and the
indemnified party, the indemnified party or parties have the
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right to select separate counsel to participate in the defense of such
action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party pursuant to the provisions of said
Sections (j)(5) or j(6) for any legal or other expense subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless (i) the
indemnified party shall have employed counsel in accordance with the
provisions of the preceding sentence, (ii) the indemnifying party
shall not have employed counsel satisfactory to the indemnified party
to represent the indemnified party within a reasonable time after the
notice of the commencement of the action or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party.
WORLDWIDE WEB NETWORX CORPORATION
By: //s// Robert D. Kohn
---------------------
Robert Kohn, Chief Executive Officer
By: //s// Michael E. Norton
------------------------
Michael E. Norton, Chief Financial Officer
Dated: _____________, 1999
<PAGE>
PURCHASE FORM
Dated _____________
The undersigned hereby irrevocably elects to exercise the
within Warrant to the extent of purchasing________shares of Common Stock and
hereby makes payment of________in payment of the actual exercise price thereof.
_____
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name________________________________________
(Please typewrite or print in block letters)
Address_____________________________________
Signature___________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED,__________________hereby sells, assigns and
transfers unto
Name________________________________________
(Please typewrite or print in block letters)
Address_____________________________________
the right to purchase Common Stock represented by this Warrant to the extent
of______ shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint____________Attorney, to transfer the same on
the books of the Company with full power of substitution in the premises.
Date___________________
Signature______________
<PAGE>
<PAGE>
EXHIBIT 10.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement (hereinafter the "Agreement") is entered into effective
as of this 20TH day of May, 1998, by and among Instra Corp., a Delaware
(hereinafter "Instra"); Keiretsu Corporation, a Nevada corporation (hereinafter
"Keiretsu"), and the stockholders of Keiretsu (hereinafter the "Keiretsu
Stockholders"), the present owners of all the outstanding shares of common stock
of Keiretsu.
RECITALS:
WHEREAS, the Keiretsu Stockholders own all of the issued and
outstanding shares of common stock of Keiretsu which comprises 6,000,000 shares
( the "Keiretsu Shares"). Instra desires to acquire all of the outstanding
Keiretsu Shares solely in exchange for restricted common stock of Instra, making
Keiretsu a wholly-owned subsidiary of Instra; and
WHEREAS, the Keiretsu Stockholders (as set forth on the attached
Exhibit "A") desire to acquire common stock of Instra in exchange for the
Keiretsu Shares, as more fully set forth herein.
NOW, THEREFORE, for the mutual consideration set out herein, and other
good and valuable consideration, the receipt and legal sufficiency of which is
hereby acknowledged, the parties agree as follows:
AGREEMENT
1. SHARE EXCHANGE. The Keiretsu Stockholders are the present owners of
all of the issued and outstanding Keiretsu Shares. It is hereby agreed that all
of the Keiretsu Shares shall be acquired by Instra in exchange solely for shares
of Instra restricted common stock (the "Instra Shares"). All references in this
Agreement to the Instra Shares to be issued to the Keiretsu Stockholders shall
give effect to the one 1 for 5 post reverse split of Instra common stock..
2. DELIVERY OF SHARES. Instra and the Keiretsu Stockholders agree that
on the Closing Date or at the Closing as hereinafter defined, all outstanding
Keiretsu Shares shall be delivered to Instra in exchange for Instra Shares.
(a) The Instra Shares will, on the Closing Date or at the
Closing, be delivered to the Keiretsu Stockholders in exchange for their
Keiretsu Shares on the basis of one (1) post reverse split Instra Share for each
one(1) Keiretsu Share.
(b) At Closing, Instra shall, subject to the conditions set
forth herein, issue 6,000,000 post reverse split Instra Shares based upon a
reverse split approved by the Board of Directors of Instra immediately preceding
the share exchange described herein on a 1 for 5 share basis to the Keiretsu
Stockholders in accordance with Exhibit "A". Such Instra Shares shall bear the
following or similar restrictive legend :
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The shares of common stock represented by this certificate
have not been registered under the Securities Act of 1933, as
amended (the "Act") and may not be offered, sold, assigned,
pledged, hypothecated or otherwise transferred unless (1) they
are registered under the Act or (2) the holder has delivered
to the issuer an opinion of counsel, which opinion shall be
satisfactory to the issuer, to the effect that there is an
available exemption from registration under the Act and any
applicable state securities laws or that registration is
otherwise not required.
(c) Unless otherwise agreed by Instra and the Keiretsu
Stockholders, this transaction shall close only in the event Instra is able to
acquire all of the outstanding Keiretsu Shares.
3. OUTSTANDING SECURITIES. As of the Closing Date each of the following
shall occur:
(a) Each one(1) Keiretsu Share issued and outstanding
immediately prior to the Closing Date shall be exchanged for one (1) Instra
Share. Thereafter, all such Keiretsu Shares shall be deemed to be owned by
Instra. The holder of such certificates previously evidencing the Keiretsu
Shares outstanding immediately prior to the Closing Date shall cease to have any
rights with respect to such Keiretsu Shares except as otherwise provided herein
or by law.
(b) One shareholder of Instra will return 14,719,988 shares of
Instra common stock to Instra's treasury for cancellation.
(c) The 25,219,988 pre-split (2,100,000 post-cancellation and
post-split) shares of Instra common stock previously issued and outstanding
prior to the Closing will remain outstanding.
4. POST-ACQUISITION EVENTS. Upon Closing, the following shall be
accomplished:
(a) The resignation of the existing Instra officers and
directors and the appointment of new officers and directors as described in
Section 11.(f) hereof.
(b) Instra shall immediately file an amendment to its Articles
of Incorporation changing its name to WorldWide Web NetworX Corporation.
5. OTHER MATTERS.
(a) Prior to Closing, there shall be no stock dividend, stock
split (except the 1 for 5 reverse stock split described herein),
recapitalization, or exchange of shares with respect to or rights issued in
respect of, Instra's capital stock after the date hereof and there shall be no
dividends paid on Instra's capital stock.
(b) Instra shall have received all requisite majority
stockholder approval of the matters set forth herein.
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<PAGE>
6. SURRENDER AND ISSUANCE OF SECURITIES. On or as soon as practicable
after the Closing Date:
(a) The Keiretsu Stockholders shall surrender for cancellation
certificates representing their Keiretsu Shares, against delivery of
certificates representing the Instra Shares for which their Keiretsu Shares are
to be exchanged at Closing.
7. REPRESENTATIONS OF THE KEIRETSU STOCKHOLDERS. The Keiretsu
Stockholders hereby represent and warrant effective this date and the Closing
Date as follows:
(a) Except as may be set forth in Exhibit "A" attached hereto
and made a part hereof, the Keiretsu Shares are free from claims, liens, or
other encumbrances, and the Keiretsu Stockholders have good title and the
unqualified right to transfer and dispose of such Keiretsu Shares.
(b) The Keiretsu Stockholders, are the sole registered holders
of the issued and outstanding Keiretsu Shares as set forth in Exhibit "A";
(c) The Keiretsu Stockholders have no present intent to sell
or dispose of the Instra Shares and are under no binding obligation, formal
commitment, or existing plan to sell or otherwise dispose of the Instra Shares.
8. REPRESENTATIONS REGARDING KEIRETSU. Keiretsu hereby represents and
warrants to the best of its knowledge and belief as follows, which warranties
and representations shall also be true as of the Closing Date:
(a) Except as noted on Exhibit "A", the Keiretsu Stockholders
listed on the attached Exhibit "A" are the sole owners of record and
beneficially own all of the issued and outstanding Keiretsu Shares. Keiretsu has
advised Instra that Keiretsu conducted an offering of its securities in late
1997 pursuant to Rule 504 of Regulation D of the Securities Act of 1933, as
amended, and received subscriptions and payment for stock pursuant thereto, but
did not accept said subscriptions and is returning all funds to subscribers.
(b) Keiretsu has no outstanding or authorized capital shares,
warrants, options or convertible securities other than as described in Exhibit
"A", attached hereto.
(c) Since September 30, 1997 there have not been any material
adverse changes in the financial position of Keiretsu except changes arising in
the ordinary course of business, which changes will in no event materially and
adversely affect the financial position of Keiretsu.
(d) Keiretsu is not a party to any material litigation or any
governmental investigation or proceeding.
(e) Keiretsu is in good standing in its jurisdiction of
incorporation.
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<PAGE>
(f) Keiretsu has (or, by the Closing Date, will have filed)
all material tax, governmental and/or related forms and reports (or extensions
thereof) due or required to be filed and/or has (or will have) paid or made
adequate provisions for all taxes or assessments which have become due as of the
Closing Date.
(g) Keiretsu has not breached, and there is no pending or
threatened claim that Keiretsu has breached any of the terms or conditions of
any agreements, contracts or commitments to which it is a party or its
properties is bound. Keiretsu has previously given Instra copies or access
thereto of all material contracts, commitments and/or agreements to which
Keiretsu is a party including all relationships or dealings with related parties
or affiliates. The execution and performance hereof will not violate any
provision of applicable law or any agreement to which Keiretsu is a party or by
which it or its properties is bound.
(h) Keiretsu has no subsidiary corporations.
(i) Keiretsu has made its corporate financial records, minute
books, and other corporate documents and records available for review to present
management of Instra prior to the Closing Date, during reasonable business hours
and on reasonable notice.
(j) The performance of this Agreement does not materially
violate or breach any material agreement or contract to which Keiretsu is a
party.
(k) All information regarding Keiretsu which has been provided
to Instra is true and accurate in all material respects.
9. REPRESENTATION REGARDING INSTRA. Instra, to the best of its
knowledge and belief, hereby represents and warrants as follows, each of which
representations and warranties shall continue to be true as of the Closing Date:
(a) As of the Closing Date, the Instra Shares, to be issued
and delivered to all of the holders of Keiretsu Shares hereunder will, when so
issued and delivered, constitute, duly authorized, validly and legally issued
Instra Shares, fully-paid and nonassessable.
(b) Instra has the corporate power to enter into this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by the board of directors of Instra. The execution and
performance of this Agreement will not constitute a breach of any material
agreement, indenture, mortgage, license or other instrument or document to which
Instra is a party and will not violate any judgment, decree, order, writ, or
applicable rule, statute, or regulation. The execution and performance of this
Agreement will not violate or conflict with any provision of the certificate of
incorporation or by-laws of Instra.
(d) Instra has delivered to Keiretsu a true and complete copy
of its (i) audited financial statements for the fiscal year ended December 31,
1997 and its unaudited financial statements for the quarterly period ended March
31, 1998; (ii) Articles of Incorporation, as amended;
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<PAGE>
(iii) Bylaws; (iv) state and federal tax returns for no less than the last three
years; (v) shareholder list dated May 4, 1998 prepared by its transfer agent;
(vi) copies of all Board and shareholder minutes and consents; and (vii) the
Disclosure Statement dated September 3, 1996 filed in accordance with Rule
15c2-11. As of their respective dates, to the best knowledge and belief of
Instra, such documents did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstance under which they are
made, not misleading. The audited financial statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis (except as may be indicated therein or in the notes thereto) and fairly
present the financial position of Instra as of the dates thereof and the results
of its operations and changes in financial position for the periods then ended.
Instra has no subsidiaries as of the date hereof.
(e) Since March 31, 1998, there have not been any material
adverse changes in the financial condition of Instra.
(f) Instra is not a party to or the subject of any pending
litigation, claims, or governmental investigation or proceeding not reflected in
the Instra Financial Statements or otherwise disclosed herein, and there are no
lawsuits, claims, assessments, investigations, or similar matters, to the best
knowledge of Instra, threatened or contemplated against or affecting Instra or
its properties.
(g) Instra is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; and presently
has and at Closing shall have the corporate power to own its property and to
carry on its business as then being conducted and shall be duly qualified to do
business in any jurisdiction where so required except where the failure to so
qualify would have no material negative impact.
(h) Instra has filed all federal, state, county and local
income, excise, property and other tax, governmental and/or related returns,
forms, or reports, which are due or required to be filed by it prior to the date
hereof and has paid or made adequate provision in the Instra Financial
Statements for the payment of all taxes, fees, or assessments which have or may
become due pursuant to such returns or pursuant to any assessments received.
Instra is not delinquent or obligated for any tax, penalty, interest,
delinquency or charge.
(i) Instra's authorized capital stock shall, at Closing,
consist of:(i)100,000,000 shares of common stock, $.001 par value, of which not
more than 2,100,000 post-split shares will be issued and outstanding. All
outstanding shares of capital stock of Instra are validly issued, fully paid and
nonassessable. There are no existing options, calls, warrants, preemptive rights
or commitments of any character relating to the issued or unissued capital stock
or other securities of Instra.
(j) Instra has (and at the Closing will have) disclosed in
writing all events, conditions and facts materially affecting its business,
financial condition or results of operations.
(k) The corporate financial records, minute books, and other
documents and records of Instra have been made available to the Keiretsu
Stockholders prior to the Closing.
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<PAGE>
(l) Instra has not breached, and there is no pending or
threatened claim that Instra has breached any of the terms or conditions of any
agreements, contracts or commitments to which it is a party or by which it or
its properties is bound. The execution and performance hereof will not violate
any provisions of applicable law or any agreement to which Instra is subject.
Instra hereby represents that it is not a party to any material contract or
commitment other than appointment documents with its transfer agent, and that it
has disclosed to the Keiretsu Stockholders all relationships or dealings with
related parties or affiliates.
(m) The Instra common stock is currently quoted under the
trading symbol "INSC" on the OTC Bulletin Board and there are no stop orders in
effect with respect thereto.
(n) All information regarding Instra which is set forth herein
or has otherwise been provided by Instra to Keiretsu and the Keiretsu
Stockholders is true and accurate in all material respects.
10. CLOSING. The Closing of the transactions contemplated
herein shall take place on such date (the "Closing" or "Closing Date") as
mutually determined by the parties hereto when all conditions precedent have
been met and all required documents have been delivered, which Closing is
expected to be on or about May 18, 1998, but not later than May 22, 1998, unless
extended by mutual consent of all parties hereto.
11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE KEIRETSU
STOCKHOLDERS. All obligations of the Keiretsu Stockholders under this Agreement
are subject to the fulfillment, prior to or as of the Closing and/or the
Effective Date, as indicated below, of each of the following conditions:
(a) The representations and warranties regarding Instra
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof shall be true in all material respects at and as of the
Closing as though such representations and warranties were made at and as of
such time.
(b) Instra shall have performed and complied, in all material
respects, with all covenants, agreements, and conditions set forth herein, and
shall have executed and delivered all documents required by this Agreement to be
performed or complied with or executed and delivered by it prior to or at the
Closing.
(c) On or before the Closing, the board of directors of Instra
shall have approved in accordance with applicable corporation law the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein.
(d) On or before the Closing Date, Instra shall have delivered
certified copies of resolutions of the board of directors and shareholders of
Instra approving and authorizing the execution, delivery and performance of this
Agreement and authorizing all of the necessary and
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<PAGE>
proper action to enable Instra to comply with the terms of this Agreement
including the election of Keiretsu's nominees to the board of directors of
Instra and all matters outlined herein.
(e) A majority of Instra's stockholders shall have duly
approved all applicable matters described in this Agreement in accordance with
applicable law.
(f) At Closing, the existing officers and directors of Instra
shall have resigned in writing from all positions as directors and officers of
Instra upon the election and appointment of the Keiretsu nominees.
(g) At the Closing, all instruments and documents delivered to
the Keiretsu Stockholders pursuant to the provisions hereof shall be reasonably
satisfactory to legal counsel for Keiretsu.
(h) At the Closing, upon consummation of the transactions,
Instra shall have the authorized capital as described in Section 9.(i) hereof.
(i) The Instra Shares to be issued to the Keiretsu
Stockholders at Closing will be validly issued, nonassessable and fully-paid
under applicable corporation law and will be issued in compliance with all
federal, state and applicable securities laws.
(j) At the Closing, Instra shall have delivered to the
Keiretsu Stockholders an opinion of its counsel dated as of the Closing to the
effect that:
(i) Instra is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of
incorporation;
(ii) Instra has authorized the execution, delivery
and performance of this Agreement by all necessary corporate action, and
subject to certain limitations, the Agreement is a valid and binding obligation
of Instra enforceable in accordance with its terms.
(iii) The Instra Shares to be issued pursuant to
Section 2 hereof, when issued, will be duly and validly issued, fully-paid and
nonassessable; and
(iv) Instra has the corporate power to execute,
deliver and perform under this Agreement.
12. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF INSTRA. All obligations
of Instra under this Agreement are subject to the fulfillment, prior to or at
the Closing, of each of the following conditions:
(a) The representations and warranties regarding the Keiretsu
Stockholders and Keiretsu contained in this Agreement or in any certificate or
document delivered pursuant to the provisions hereof shall be true in all
material respects at and as of the Closing as though such representations and
warranties were made at and as of such time.
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(b) The Keiretsu Stockholders shall have performed and
complied with, in all material respects, all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by them
prior to or at the Closing;
(c) The Keiretsu Stockholders shall deliver a letter commonly
known as an "Investment Letter," in substantially the form attached hereto and
made a part hereof as Exhibit "B", acknowledging that the Instra Shares are
being acquired for investment purposes.
13. INDEMNIFICATION. For a period of two years from the Closing Instra
agrees to indemnify and hold harmless the Keiretsu Stockholders and Keiretsu,
and the Keiretsu Stockholders and Keiretsu agree to indemnify and hold harmless
Instra at all times after the date of this Agreement against and in respect of
any liability, damage or deficiency, all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses including attorney's fees incident of
any of the forgoing, resulting from any material misrepresentations made by an
indemnifying party to an indemnified party, an indemnifying party's material
breach of covenant or warranty or an indemnifying party's nonfulfillment of any
agreement hereunder, or from any material misrepresentation in or omission from
any certificate furnished or to be furnished hereunder.
14. NATURE AND SURVIVAL OF REPRESENTATIONS. All representations,
warranties and covenants made by any party in this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby for two
years from the Closing. All of the parties hereto are executing and carrying out
the provisions of this Agreement in reliance solely on the representations,
warranties and covenants and agreements contained in this Agreement and not upon
any investigation upon which it might have made or any representation, warranty,
agreement, promise or information, written or oral, made by the other party or
any other person other than as specifically set forth herein.
15. DOCUMENTS AT CLOSING. At the Closing, the following documents shall
be delivered:
(a) The Keiretsu Stockholders will deliver, or will cause to
be delivered, to Instra the following:
(i) a certificate executed by Keiretsu to the effect
that to the best of its knowledge and belief all representations and
warranties made regarding Keiretsu under this Agreement are true and correct as
of the Closing, the same as though originally given to Instra on said date;
(ii) certificate from the jurisdiction of
incorporation of Keiretsu dated at or about the Closing to the effect that
Keiretsu is in good standing under the laws of said jurisdiction;
(iii) Investment Letter in the form attached hereto
as Exhibit "B" executed by the Keiretsu Stockholders;
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(iv) corporate resolutions of Keiretsu authorizing
the transactions described in this Agreement;
(v) such other instruments, documents and
certificates, if any, as are required to be delivered pursuant to the provisions
of this Agreement;
(vi) all other items, the delivery of which is a
condition precedent to the obligations of Instra, as set forth herein; and
(b) Instra will deliver or cause to be delivered to the
Keiretsu Stockholders:
(i) stock certificates representing those securities
of Instra to be issued as a part of the exchange as described in Sections 2 and
6 hereof;
(ii) a certificate of the President and Secretary of
Instra, to the effect that all representations and warranties of Instra made
under this Agreement are true and correct as of the Closing, the same as though
originally given to the Keiretsu Stockholders on said date;
(iii) certified copies of resolutions adopted by
Instra's board of directors and Instra's stockholders authorizing the
transactions described herein and all related matters;
(iv) certificates from the jurisdiction of
incorporation of Instra dated at or about the Closing Date that said corporation
is in good standing under the laws of said jurisdiction;
(v) opinion of Instra's counsel as described in
Section 11.(j) above;
(vi) such other instruments and documents as are
required to be delivered pursuant to the provisions of this Agreement;
(vii) resignation of all of the officers and
directors of Instra; and
(viii) all other items, the delivery of which is a
condition precedent to the obligations of the Keiretsu Stockholders, as set
forth in Section 11 hereof.
16. FINDER'S FEES. Instra represents and warrants to the Keiretsu
Stockholders and Keiretsu, and the Keiretsu Stockholders and Keiretsu represent
and warrant to Instra, that none of them, or any party acting on their behalf,
has incurred any liabilities, either express or implied, to any "broker" or
"finder" or similar person in connection with this Agreement or any of the
transactions contemplated hereby. In this regard, Instra on the one hand, and
the Keiretsu Stockholders and Keiretsu, jointly and severally, on the other
hand, will indemnify and hold the other harmless from any claim, loss, cost or
expense whatsoever (including reasonable fees and disbursements of counsel) from
or relating to any such express or implied liability.
17. MISCELLANEOUS.
9
<PAGE>
(a) FURTHER ASSURANCES. At any time, and from time to time,
after the Closing Date, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to confirm or
perfect title to any property transferred hereunder or otherwise to carry out
the intent and purposes of this Agreement.
(b) WAIVER. Any failure on the part of any party hereto to
comply with any of its obligations, agreements or conditions hereunder may be
waived in writing by the party to whom such compliance is owed.
(c) TERMINATION. All obligations hereunder may be terminated
at the discretion of either Instra's or Keiretsu's board of directors if (i) the
closing conditions specified in Sections 11 and 12 are not met by May 22, 1998,
unless extended, or (ii) any of the representations and warranties made herein
have been materially breached.
(d) AMENDMENT. This Agreement may be amended only in writing
as agreed to by all the parties hereto.
(e) NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered in
person or sent by prepaid first class registered or certified mail, return
receipt requested, as follows:
IF TO INSTRA: 1084 North Hughes
Centerville, UT 84014
WITH A COPY TO: Ronald N.Vance, Esq.
57 West, 200 South
Suite 310
Salt Lake City, UT 84101
IF TO KEIRETSU AND THE
KEIRETSU STOCKHOLDERS: 33 Country Walk Drive
Cherry Hill, NJ 08003
WITH A COPY TO: Michelle Kramish Kain, Esq.
750 Southeast Third Avenue, Suite 100
Fort Lauderdale, FL 33316
(f) HEADINGS. The section and subsection headings in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
10
<PAGE>
(g) COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
(h) BINDING EFFECT. This Agreement shall be binding upon the
parties hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
(i) ENTIRE AGREEMENT. This Agreement and the attached Exhibits
constitute the entire agreement of the parties covering everything agreed upon
or understood with respect to the subject matter hereof. There are no oral
promises, conditions, representations, understandings, interpretations or terms
of any kind as conditions or inducements to the execution hereof.
(j) TIME. Time is of the essence.
(k) SEVERABILITY. If any part of this Agreement is deemed to
be unenforceable the balance of the Agreement shall remain in full force and
effect.
(l) RESPONSIBILITY AND COSTS. All fees, expenses and
out-of-pocket costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred by the
parties hereto shall be borne solely and entirely by the party that has incurred
such costs and expenses unless such party has agreed otherwise with any such
person.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
STOCKHOLDERS OF KEIRETSU INSTRA CORP.
CORPORATION
//S// ROBERT D. KOHN //S// RICHARD G. SOUTHWICK
- ------------------------------------ -------------------------------
Robert D. Kohn Richard G. Southwick, President
//S// KEITH KOHN KEIRETSU CORPORATION
- ------------------------------------
Keith Kohn By: //S// ROBERT D. KOHN
---------------------------
//S// JEFFREY KOHN Robert D. Kohn, CEO
- ------------------------------------
Jeffrey Kohn
//S// BJORN KORITZ
- ------------------------------------
Bjorn Koritz
//S// FERN KOHN //S// LUKE MORGAN
- ------------------------------------ --------------------------------
Fern Kohn ITF Jessica Kohn ###-##-#### Luke Morgan
//S// ROBERT JAFFE //S// AMRAMOL FAMILY TRUST
- ------------------------------------ --------------------------------
Robert Jaffe Amramol Family Trust ###-##-####
//S// LUKE MORGAN
- ------------------------------------
Luke Morgan
11
<PAGE>
//S// BARBARA HYRA
----------------------------------
Barbara Hyra
//S// ANTOINETTE THOMAS
- ------------------------------------
Antoinette Thomas
12
<PAGE>
EXHIBIT "A"
Keiretsu Stockholders:
<TABLE>
<CAPTION>
NUMBER OF KEIRETSU NUMBER OF POST-SPLIT
NAME SHARES VICUNA SHARES
---- ------------------ --------------------
<S> <C> <C>
Robert D. Kohn 4,340,000 4,340,0000
Keith Kohn 500,000 500,000
Fern Kohn ITF
Jessica Kohn 500,000 500,000
Jeffrey Kohn 500,000 500,000
Bjorn Koritz 100,000 100,000
Robert Jaffe 17,500 17,500
Amramol Family
Trust 20,500 20,500
Luke Morgan 20,000 20,000
Barbara Hyra 1,000 1,000
Antoinette Thomas 1,000 1,000
</TABLE>
There are no claims, liens or other encumbrances on the Keiretsu Shares.
13
<PAGE>
EXHIBIT "B"
INVESTMENT LETTER
TO THE BOARD OF DIRECTORS OF INSTRA CORP.
The undersigned hereby represents to Instra Corp. (the "Corporation"),
that (1) the shares of the Corporation's common stock (the "Securities") which
are being acquired by the undersigned are being acquired for his own account and
for investment and not with a view to the public resale or distribution thereof;
(2) the undersigned will not sell, transfer or otherwise dispose of the
securities except in compliance with the Securities Act of 1933, as amended (the
"Act"); and (3) the undersigned is aware that the Securities are "restricted
securities" as that term is defined in Rule 144 or the General Rules and
Regulations under the Act.
The undersigned hereby agrees and acknowledges that he will not sell
the Securities outside of the United States in any manner which will allow the
Securities to become nonrestricted except upon registration in the United
States.
The undersigned further acknowledges that he or she has had an
opportunity to ask questions of and receive answers from duly designated
representatives of the Corporation concerning the terms and conditions pursuant
to which the Securities are being acquired. The undersigned acknowledges that he
has been afforded an opportunity to examine such documents and other information
which he or she has requested for the purpose of verifying the information set
forth in said documents.
The undersigned acknowledges and understands that the Securities are
unregistered and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
The undersigned further acknowledges that he is fully aware of the
applicable limitations on the resale of the Securities. These restrictions for
the most part are set forth in Rule 144. The Rule permits sales of "restricted
securities" upon compliance with the requirements of such Rule. If the Rule is
available to the undersigned, the undersigned may make only routine sales of
securities, in limited amounts, in accordance with the terms and conditions of
that Rule.
Any and all certificates representing the Securities, and any and all
Securities issued in replacement thereof or in exchange therefor, shall bear the
following legend, which the undersigned has read and understands:
13
<PAGE>
The Securities represented by this Certificate have not been registered
under the Securities Act of 1933 (the "Act") and are "restricted
securities" as that term is defined in Rule 144 under the Act. The
Securities may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act or
pursuant to an exemption from registration under the Act, the
availability of which is be established to the satisfaction of the
Corporation.
The undersigned further agrees that the Corporation shall have the
right to issue stop-transfer instructions to its transfer agent and acknowledges
that the Corporation has informed the undersigned of its intention to issue such
instructions.
Very truly yours,
_________________________
Date: _____________, 1998
14
<PAGE>
EXHIBIT 10.2
November 24, 1998
Alexander, Wescott Co., Inc.
65 Wall Street, 21st Floor
New York, New York 10005
RE: AGENCY AGREEMENT
Gentlemen:
WorldWide Web NetworX Corp. ("WWWX"), formed under the laws of
the State of Delaware (the "Company"), desires to offer and sell in an offering
(the "Offering") to be made through Alexander Wescott & Co., Inc. "(AWC"), and
pursuant to exemptions from the registration provisions of the Securities Act of
1933, as amended (the "Securities Act"), as set forth below, shares (the
"Shares") of the Company's Convertible 6% Preferred A Stock, (the "Preferred
Stock").
The Shares are to be sold at the prices and in the amounts set
forth in Section 2 below. The Offering will be limited to maximum gross proceeds
of $2,500,000.00 with a minimum of $1,000,000 to be sold by March 15, 1999. It
is understood that the Offering will be conducted on a "best efforts" basis with
AWC acting as exclusive agent for the Company, and which offering shall be
conducted under the following terms and conditions:
SECTION 1. TYPE OF OFFERING: EXEMPTIONS.
The Offering will be conducted as a private placement offering
exempt from the registration requirements of the Securities Act, pursuant to the
provisions of Regulation D, of the Securities and Exchange Commission ("SEC").
The Shares will be offered and sold only to those persons or entities who
qualify as an accredited investor ("Accredited Investor") as such term is
defined in Rule 501 of Regulation D. Investors will be required to subscribe for
the Shares by executing the appropriate subscription agreement (the
"Subscription Agreement") in the forms set forth as an exhibit hereto, as the
same may be supplemented or amended from time to time by agreement between the
parties.
SECTION 2. APPOINTMENT: BASIC TERMS.
<PAGE>
On the basis of the representations, warranties and covenants
herein contained, but subject to the terms and conditions herein set forth:
(a) AWC is hereby appointed as the exclusive placement agent for the
Company during the period herein specified for the purpose of finding
subscribers for the Shares.
(b) The Offering shall commence on the date hereof, and shall continue
until March 15, 1999 (the "Offering Period").
(c) Subject to the performance by the Company of all of its obligations to
be performed hereunder and to the completeness and accuracy of all
material representations and warranties of the Company, AWC agrees, on
the terms and conditions herein set forth, to use its best efforts
during the Offering Period to find subscribers for the Shares. AWCs
agency hereunder is coupled with an interest, is not terminable by the
Company prior to March 15, 1999 without AWC's consent, and shall
continue until the termination of the Offering Period, except as may be
otherwise provided herein. AWC shall have the right to appoint one or
more additional agents and/or selected dealers (who shall be members of
the National Association of Securities Dealers, Inc.) to assist in
finding subscribers for the Shares, and any such additional agents or
selected dealers may rely upon the representations and warranties and
covenants of the Company set forth in this Agreement.
(d) The price of the Shares to be sold to each Purchaser (as hereinafter
defined) in the Offering shall be $1,000.00 per share.
(e) Funds received from subscribers in the Offering shall be deposited in
an account to be entitled Chase Manhattan Bank New York a/c
#910-2-758829, Escrow Incoming Wire Account Further Credit: WorldWide
Web NetworX Corp.; Attn: Vicki Caldas.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to AWC, for AWC's benefit
and for the benefit of purchasers of the Shares (the "Purchasers") that, except
as otherwise set forth in the offering materials (copies of which shall be
provided to each Purchaser):
(a) The Shares to be sold in the Offering will be, when
issued, delivered and paid for in accordance with the
terms of the Offering, duly and validly issued, fully
paid and non-
<PAGE>
assessable; all presently outstanding shares of
Common Stock of the Company have been duly
authorized, validly issued and are fully paid and
non-assessable; the holders of the shares of
Preferred Stock offered herein are not and will not
be subject to personal liability by reason of being
such holders; the shares of Preferred Stock being
sold in the Offering are not being issued in
violation of the preemptive rights of any of the
Company's security holders, and there are no
outstanding options, warrants or rights or other
agreements outstanding or in existence entitling any
person to purchase or otherwise acquire, or any
outstanding securities convertible or exchangeable
into, any capital stock or other securities of the
Company; all action required to be taken by the
Company to authorize the issuance and sale of the 6%
Convertible Preferred A Shares to qualified
subscribers has been or, prior to the sale thereof,
will have been taken.
(b) The capitalization of the Company, including the
outstanding shares of the Company's capital stock and
any warrants, options or other rights to subscribe to
or purchase shares of capital stock is as represented
to purchasers of the Shares.
(c) The Company is duly incorporated, validly existing
and in good standing as a corporation under the laws
of its jurisdiction of incorporation.
(d) The Company is duly qualified to do business as a
foreign corporation and is in good standing in each
jurisdiction in which its activities or its ownership
or leasing of property requires such qualification.
(e) This Agreement has been duly and validly authorized
and executed and delivered by and on behalf of the
Company and constitutes a valid and binding agreement
of the Company enforceable against the Company in
accordance with its terms, subject to any applicable
bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights
generally and the enforceability of the indemnity
provisions contained in Section 10 or the
contribution provisions contained in Section 11 of
this Agreement.
<PAGE>
(f) The Company is not in violation of (i) any term or
provision of its charter or by-laws or (ii) any
material term or provision of any indenture,
mortgage, deed of trust, note, agreement, or other
material agreement or instrument to which the Company
is a party or by which it is or may be bound or to
which any of its material assets, property or
business is or may be subject, or (iii) any material
term of any significant indebtedness, or (iv) of any
statute or (v) any material judgment, decree, order,
rule or regulation applicable to the Company of any
court, regulatory body or administrative agency or
other federal, state or other governmental body,
domestic or foreign, having jurisdiction over it or
its material assets, property or business, which
violation or violations, either in any case or in the
aggregate, might result in any material adverse
change, financial or otherwise, in the assets,
properties, condition, business, earnings or
prospects of the Company; and the execution and
delivery by the Company of this Agreement, the
consummation by the Company of the transactions
herein contemplated, and the compliance by the
Company with the term of this Agreement will not
result in any such violation or violations. All
material licenses, approvals or permits from the
federal or any state, local or foreign government or
agency thereof having jurisdiction over the Company
reasonably required for the conduct of the business
or operations of the Company have been obtained and
are outstanding; and there are no proceedings pending
or to the Company's knowledge threatened, seeking to
cancel, terminate or limit such licenses, approvals
or permits.
(g) There are no actions, investigations, statutes, rules
or regulations or other proceedings of any nature in
effect or pending or to the Company's knowledge
threatened, as the case may be, which, either in any
case or in the aggregate, if decided adversely, might
result in any material adverse change, financial or
otherwise, in the assets, properties, condition,
business, earnings or prospects of the Company or
which question the validity of the capital stock of
the Company, this Agreement or any action taken or to
be taken by the Company pursuant to or in connection
with this Agreement.
(h) The Company has not incurred any liability for any
finder's fees or similar payments in connection with
the transactions
<PAGE>
herein contemplated.
(i) The unaudited financial statements provided to AWC
present fairly the financial position of the Company
as of the respective dates thereof and the results of
operations and cash flows for the respective periods
covered thereby and are all, except for the lack of
footnotes in the unaudited financial statements, in
conformity with generally accepted accounting
principles applied on a consistent basis throughout
the entire period involved. Since the dates of the
unaudited financial statements, there has been no
material adverse change, financial or otherwise, in
the assets, properties, condition, business, earnings
or prospects of the Company.
(j) The Company has filed each federal, state, local and
foreign tax return which is required to be filed, or
has requested an extension therefor and has paid or
otherwise provided for all taxes shown on such return
and all related assessments to the extent that the
same have become due.
(k) All information contained in the written material
concerning the Company which has been or is being
provided by the Company to AWC or to subscribers to
the Offering and all information from the Company
which is included in the Subscription Agreement
(collectively, the "Offering Materials") is accurate
and complete and does not contain any untrue
statement of a material fact or omit to state a
material fact necessary in order to make the
statements therein, in light of the circumstances
under which they were made, not misleading.
(l) The Company has not made and will not make, any
offers or sales of the Company's capital stock or any
warrants, options or other rights to subscribe to or
purchase shares of the Company's common stock in
contravention of the requirements for this Offering
to qualify for an exemption from the registration
requirements of the Securities Act, pursuant to the
provisions of Regulation D, of the SEC.
(m) The representations and warranties made in this
Agreement shall be deemed repeated, and shall be
true, at the time of any closing provided for in this
Agreement.
<PAGE>
SECTION 4. CLOSING.
A minimum of $1,000,000 of Shares is required to be sold under
this Agreement by March 15, 1999. A closing ("Closing") for the sale of Shares
subscribed for in the Offering may be held on one or more occasions prior to the
end of the Offering Period, provided the minimum in gross proceeds is reached.
At each such Closing, payment of the proceeds of the Offering shall be made by
certified or bank check(s) or by wire transfer to the order of the Company,
against delivery of certificates for shares of Preferred Stock constituting the
Shares sold, for transmittal to the purchasers of the Shares. AWC may deduct
AWC's commissions, expense allowance and any other amounts payable to AWC by the
Company from the net proceeds deliverable to the Company.
SECTION 5. COVENANTS OF THE COMPANY.
The Company covenants with AWC that:
(a) From the commencement of the Offering Period through
any Closing pursuant to Section 4 hereof, any
Offering Materials will not contain any untrue
statement of a material fact or omit to state a
material fact necessary in order to make the
statements therein in light of the circumstances
under which they were made, not misleading.
(b) Either directly or through AWC, the Company shall
offer to each subscriber, at a reasonable time prior
to his purchase of Shares, the opportunity to ask
questions and receive answers concerning the terms
and conditions of the Offering and to obtain any
additional information, which the Company possesses
or can acquire without unreasonable effort or
expense.
(c) During the Offering Period, the parties hereto will
keep each other generally informed of offers for sale
and solicitations of offers to buy Shares being made.
(d) The Company shall use its best efforts, through
counsel performing services on behalf of the Company
in connection with the Offering, to qualify and
register, or perfect the - exemption of the Shares
for offer and sale under the state or foreign
securities laws of the jurisdictions in which offers
and
<PAGE>
sales are proposed to be made, and shall assist AWC
and such counsel in connection with the foregoing.
(e) The Company shall, in a timely manner and as
required, prepare and file a Form D and any required
amendments thereto with the SEC pursuant to
Regulation D. The Company will take all steps
necessary to ensure that any and all reports which
may be required to be filed with the SEC under
federal securities laws are timely filed by the
Company.
(f) For the period of time that Placement Agent's clients
are holders of stock of the Company and not to exceed
two (2) years, the Company will provide AWC with
copies of any stock reports of the Company's stock
transfer agent if so requested, but only while AWC's
customers continue to hold stock in the Company.
(g) The Company understands that its accounting firm is
acceptable to AWC.
(h) For the period of time that Placement Agent's clients
are holders of stock of the Company and not to exceed
two (2) years, for a period of two (2) years after
the Closing, the Company will furnish AWC with
copies of its annual and quarterly financial
statement and reports to shareholders. In
addition, during the Offering and for a period of
two (2) years after the Closing, the Company will
provide AWC with all information and documentation
with respect to the Company's business and
financial condition, as reasonably requested by
AWC, and will provide to AWC during the Offering
regular access to the Company's officers,
directors, auditors and counsel to discuss any
aspect of the Company's business. This paragraph
shall cease to be operative if, at any time, AWC
ceases to have customers who hold shares in the
Company.
(i) Unless AWC shall otherwise agree in writing, the
Company will not issue any securities during the
period from the date of this Agreement until the
expiration of the Offering Period, except for
securities issued pursuant to this Agreement.
(j) The Company will reserve and set side, out of its
authorized capital stock, the number of shares of
Warrant Shares (as
<PAGE>
hereinafter described) issuable upon exercise of the
warrants issuable to AWC under this Agreement, if
any. Such shares, when issued, paid for and delivered
upon exercise of such warrants, will be duly and
validly issued, fully paid and non-assessable, and
will not violate any preemptive rights of Company
shareholders.
(k) The Company will keep confidential the identity of
AWC's clients and customers, except as may be
otherwise required by law. The Company will not
solicit such persons directly for the sale of
securities or for other financing proposals without
the express written consent of AWC, which consent may
be given on the condition that the Company agrees to
compensate AWC on terms comparable to those set forth
in this Agreement for any sales made to such persons.
SECTION 6. AWC'S COVENANTS.
AWC covenants with the Company that:
(a) In offering the Shares, AWC will deliver to each
potential subscriber contacted by it, prior to
accepting any subscription from such subscriber, the
appropriate form of Subscription Agreement together
with a subscriber questionnaire (included in the
Offering Materials).
(b) AWC will make offers to sell Shares to, or solicit
offers to subscribe for any Shares from, persons in
only those jurisdictions where the Offering and the
Shares have been qualified or where it has been
determined that an exemption from such qualification
is, or may reasonably be anticipated to be available,
under applicable securities statutes. AWC will accept
subscriptions only from persons whom AWC reasonably
believes to be Accredited Investors.
(c) AWC shall maintain a record of all information
obtained by AWC indicating that subscribers for
Shares sold through AWC meet the criteria referred to
in subsection (b) above. At the Closing, AWC shall
have no reason to believe that the information with
respect to, and the representations of, each
purchaser of Shares set forth in the appropriate
Subscription Agreement are not accurate.
<PAGE>
SECTION 7. COMPENSATION.
It is the Placement Agent's intent, immediately prior to the
commencement of the Proposed Offering, to enter into a Placement Agreement (the
"Placement Agreement") with the Company, which shall contain such terms and
conditions as are customarily contained in agreements of such character and,
among other things, provide for the following:
(a) The Company shall pay to the Placement Agent a commission
of ten percent (10%) of the gross proceeds of the Proposed offering, which shall
be payable to the Placement Agent at the initial Closing and each subsequent
closing with respect to the amounts raised as of such closing date;
(b) In order to reimburse the Placement Agent for those costs,
fees and expenses customarily incurred by a placement agent in connection with
the offering process, the Company will pay to the Placement Agent a three
percent (3%) of the gross proceeds of the amounts raised, non-accountable
expense allowance at closing and each subsequent closing with respect to the
amounts raised as of such closing dates.
(c) In addition to the foregoing, the Company shall bear all
fees, disbursements and expenses in connection with the Proposed Offering,
including, without limitation, the Company's legal and accounting fees and
disbursements;
(d) The Placement Agent shall require the Company and
Subscriber and its principal officers and its directors to provide certain
warranties and representations against shorting or hedging of the Company's
stock satisfactory to the Placement Agent.
(e) In addition to the compensation set forth herein, the
Company shall issue to Placement Agent 100,000 shares of Common Stock with
restrictive legend on a pro rata basis for every $1,000,000 in gross proceeds
raised by the Placement Agent.
SECTION 8. CONDITIONS OF AWC'S OBLIGATIONS..
AWC's obligation to offer and sell the Shares is subject to
the accuracy of and compliance with the representations and warranties of the
Company made in Section 3 hereof, to the performance by the Company of its
obligations under this Agreement and to the following further conditions:
<PAGE>
(a) At the Closing AWC shall receive a certificate signed
by the Chief Executive Officer and Chief Financial
Officer of the Company to the effect that each has
examined this Agreement and that, at all times from
the commencement of the Offering to any Closing, the
Company's representations set forth in this Agreement
and in the Offering Materials did not contain an
untrue statement of a material fact or omit to state
a material fact necessary in order to make the
statements therein, in light of the circumstances
under which they were made, not misleading with the
same effect as though expressly made at such Closing,
and that the Company has complied in all respects
with its covenants set forth in Section 5 above.
(b) At such Closing, AWCs counsel shall have been
furnished with such documents as AWC or they may
reasonably require in order to evidence the accuracy
or completeness of each of the representations or
warranties and the compliance with each of the
covenants or satisfaction of any of the conditions
herein contained; and all actions taken by the
Company in connection with the sale of the Shares as
herein contemplated shall be satisfactory in form and
substance to AWC and AWCs counsel.
(c) At such Closing, AWC shall receive an opinion from
counsel to the Company, in form and substance
satisfactory to AWC's counsel, with respect to the
matters set forth in Section 3 and 5 above.
(d) As soon as practicable after the date hereof and
immediately prior to such Closing and with respect to
any sale of Shares pursuant to a private placement
under Regulation D, AWC shall receive a blue sky
survey or memorandum and a supplement thereto
addressed to AWC and the Company as prepared by
counsel satisfactory to AWC and relating to the
securities laws of certain jurisdictions designated
by the Company and AWC, indicating the conditions
under which offers and sale of the Shares may be made
in the Offering in compliance with such securities
laws and advising that the appropriate action, if
any, was taken in each such jurisdiction.
(e) The representations and warranties of the Company set
forth in Section 3 hereof shall be true and correct
as of the Closing, and the Company shall have
complied with all applicable terms and conditions of
this Agreement.
<PAGE>
(f) The Company will, prior to the completion of the
initial closing of the Offering, cause each officer,
director and/or stockholder of the Company who holds
200,000 or more shares of Common Stock (either
individually or together with members of his or
family or together with any affiliate) to enter into
a "lock-up" agreement under which each such person
agrees not to sell, assign or transfer any shares of
Common Stock for a minimum period of six (6) months
from the final closing of the Offering, without the
prior written consent of AWC.
(g) If any of the conditions specified in this Section 8
shall not have been fulfilled when and as required by
this Agreement, then this Agreement and all of AWC's
obligations hereunder may be canceled by AWC by
notifying the Company of such cancellation in writing
at any time at or prior to the subject Closing, and
any such cancellation shall be without liability of
any party to any other party except as may otherwise
be provided in this Agreement.
SECTION 9. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company hereunder are subject to the
accuracy of and compliance with AWC's representations and warranties and any
other firm that participates in the Offering, to the performance by AWC of AWCs
obligations hereunder, and to the following further conditions:
(a) At the Closing, the Company shall receive a
certificate from AWC as to the number and identity of
persons from whom subscriptions for Shares shall have
been received and accepted, which certificate shall
further be to the effect that:
(i) Executed Subscription Agreements
have been received and accepted
only from persons who, to the best
of AWC's knowledge and belief meet
the requirements for subscribers
referred to in Section 6(b) hereof
and are acting for themselves and
not on behalf of any other person;
and
(ii) AWC has complied with all
applicable broker-dealer
registration requirements with
respect to the Offering (but no
reference need be made as to other
agents or dealers involved in the
Offering).
<PAGE>
(b) If any of the conditions specified in this Section 9
shall not have been fulfilled when and as required by
this Agreement, then this Agreement may be canceled
by the Company by notifying AWC of such cancellation
in writing at any time at or prior to the subject
Closing.
SECTION 10. INDEMNIFICATION,
(a) The Company agrees to indemnify and hold harmless AWC, each of
AWC's officers, directors, representatives, employees and each person, if any,
who controls AWC, against any and all loss, liability, claim, damage and expense
whatsoever (including, but not limited to, any and all expenses whatsoever,
including attorney fees, reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever) arising out of (i) any untrue or alleged untrue statement of a
material fact contained in the Offering Materials or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, unless such untrue statement or information was made in reliance
upon and in conformity with information furnished to the Company by AWC in
writing expressly for use in the Offering Materials and (ii) any
misrepresentation with respect to, or any violation of, the representations and
warranties of the Company set forth in this Agreement, whether arising, in any
instance, under the Securities Act or otherwise. In no case shall the Company be
liable under this indemnity agreement with respect to any claim made against AWC
or any persons named above unless the Company shall be notified in writing of
the nature of the claim within thirty (30) days after AWC's receipt of written
notice thereof, but failure to so notify the Company shall not relieve it from
any liability which it may have otherwise than on account of this indemnity
agreement. The Company shall be entitled to participate in the defense of such
action at its own expense upon receipt of such notice, and to assume the
defense, which defense shall be conducted by counsel chosen by it and reasonably
satisfactory to AWC or the person or persons, defendant or defendants named in
the action; AWC or such persons or defendants shall bear the fees and expenses
of any additional counsel thereafter retained by AWC or them, respectively. The
Company agrees to notify AWC within twenty (20) days of the receipt of written
notice of the assertion of any claim against it in connection with the sale of
the Shares.
b) AWC agrees to indemnify and hold harmless the Company, each of its
officers, directors and employees and each person, if any, who controls the
<PAGE>
Company, to the same extent as provided in subsection (a) of the foregoing
indemnity to AWC from the Company, but only with respect to statements in or
omissions from the Offering Materials made in reliance upon and in conformity
with written information furnished to the Company by AWC expressly for use in
the Offering Materials. In no event shall the assistance in the drafting of all
or any portion of the Offering Materials and any exhibits thereto by AWC's
counsel constitute the furnishing of such information. In case any action shall
be brought against the Company or any person so indemnified, based upon the
Offering Materials and in respect of which indemnity may be sought against AWC,
AWC shall have the rights and duties given to the Company, and the Company and
each person so indemnified shall have the rights and duties given to AWC, by the
provisions of subsection (a) of this Section 10.
SECTION 11. CONTRIBUTION.
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 10 hereof
is for any reason held to be unavailable to AWC, the Company and AWC, at AWC's
election, shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by said indemnity agreement incurred by
the Company or AWC, or both, in such proportions that AWC shall be responsible
for that portion represented by the percentage that the selling commissions paid
to AWC bear to the gross offering price of the total Shares sold and the Company
shall be responsible for the balance; provided, however, that no person guilty
of fraudulent misrepresentation (within the meaning of "Section 11(f) of the
Securities Act) or negligent or wilful failure to perform its obligations under
the Act or under this Agreement shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation or negligent or
wilful failure. For purposes of this Section 11, each person, if any, who
controls AWC within the meaning of Section 15 of the Securities Act shall have
the same rights to contribution as AWC, and the Company and each officer of the
Company and each person, if any, who controls the Company shall have the same
rights to contribution as the Company.
SECTION 12. REGISTRATION RIGHTS FOR AGENT'S RESTRICTED STOCK.
The Company shall include in any registration, at its own expense, all
of the restricted Common Stock paid AWC as compensation as set forth herein in
Section 7(e).
SECTION 13. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY.
<PAGE>
All representations, warranties and agreements contained in this
Agreement or contained in certificates submitted pursuant hereto shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of AWC or by or on behalf of the Company, and shall survive any
Closing.
SECTION 14. NOTICES.
All notices required or permitted under this Agreement shall be in
writing and shall be sent by certified or registered first class mail, return
receipt requested, or shall be personally delivered, or sent by an overnight
delivery service such as Federal Express, or shall be transmitted by telefax
(provided such telefax message is confirmed by telephone acknowledgment of
receipt or by sending via other authorized means a confirmation copy of such
notice) addressed to the parties as follows, or at such other address as a party
shall specify in compliance with this Section 14:
To the Company: WorldWide Web NetworX Corp.
23 Rolling Wood Drive
Voorhees, NJ 08043
To AWC: Alexander, Wescott & Co., Inc.
63 Wall Street, 21st Floor
New York, NY 10005
Attention: President
SECTION 15. PARTIES.
This Agreement shall inure to the benefit of and be binding upon AWC
and the Company and on the Company's and AWC's successors, this Agreement and
the conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of the parties hereto and their respective successors and
assigns and for the benefit of no other person. This Agreement may not be
assigned without the written consent of both parties.
SECTION 16. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of New York,
without regard to choice of law provisions, except with respect to any matter
<PAGE>
governed by applicable federal securities laws. The parties agree that any
dispute under this Agreement will be resolved in a federal or state court
located in the County, City and State of New York, and will submit to the
jurisdiction of such court for such purpose.
SECTION 17. MERGER.
This Agreement shall include and merge all of the terms and conditions
set forth in that one certain letter of intent dated November 19, 1998 and to
the extent a conflict between the two documents exists, the Agency Agreement
shall control.
SECTION 18. WAIVER.
Any party hereto may waive compliance by the other with any of the
terms, provisions and conditions set forth herein; provided, however, that any
such waiver shall be in writing specifically setting forth those provisions
waived thereby. No such waiver shall be deemed to constitute or imply waiver of
any other term, provision or condition of this agreement.
SECTION 19. ENTIRE AGREEMENT.
This Agreement contains the entire agreement between the parties
hereto and is intended to supersede any and all prior agreements between the
parties hereto relating to the same subject matter. This Agreement may be
executed in multiple counterparts which shall be deemed one instrument.
If the foregoing is in accordance with AWC's understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, together with all counterparts, will become a binding agreement in
accordance with its terms.
Sincerely,
WorldWide Web NetworX Corp.
By: //s// ROBERT D. KOHN
------------------------
President
Confirmed, accepted and agreed to as
<PAGE>
of the date first above written:
ALEXANDER WESCOTT & CO., INC.
By: //s// CARL WALSTON
------------------------
President
<PAGE>
- ------------------------------------------------------------------------------
For EDGAR filing, language that will be added is preceded by a "<*>" and
followed by a "</*>". Language that will be eliminated is preceded by a "<#>"
and followed by a "</#>".
- ------------------------------------------------------------------------------
EXHIBIT 10.3
STOCK ISSUANCE AGREEMENT
THIS STOCK ISSUANCE AGREEMENT (the "Agreement"), dated as
of December 1, 1998, by and between WARREN ROTHSTEIN, an
individual residing in the State of New York, with a
place of business at 220 White Plains Road, Tarrytown,
New York (hereafter referred to as "Rothstein") and
WORLDWIDE WEB NETWORX CORPORATION, a corporation
organized under the laws of Delaware with its principal
place of business at 3000 Atrium Way, Suite 202, Mt.
Laurel, New Jersey 08054 (hereafter referred to as
"WWWX").
W I T N E S S E T H :
WHEREAS, pursuant to the terms and conditions of
a Shareholders Agreement, dated as of even date herewith,
by and among Rothstein, WWX and ATM Services Ltd. ("ATM")
(the "Shareholders Agreement"), WWWX is required to issue
to Rothstein 5,000,000 shares of WWWX's Common Stock (as
hereinafter defined).
NOW, THEREFORE, in consideration of the mutual
promises and representations, warranties, covenants and
agreements set forth herein, the parties hereto hereby
agree as follows:
ARTICLE I
ISSUANCE OF SHARES; RESTRICTIONS AND REGISTRATION RIGHTS
SECTION 1.1 ISSUANCE OF SHARES. (a) On the terms
and subject to the conditions set forth in this
Agreement, WWWX will issue 5,000,000 shares of WWWX's INITIALS [RK]
common stock, par value .001 per share (the "Common [WR]
Stock") to Rothstein. The shares of Common Stock acquired
by Rothstein pursuant to the Shareholders Agreement and
issued to Rothstein pursuant to this Agreement are
referred to herein as the "Shares." Subject to the
restrictions set forth herein, Rothstein shall have all
rights as a shareholder of WWWX with respect to the
Shares, including the right to vote the Shares and the
right to receive any and all dividends and other
distributions declared by and paid by WWWX with respect
to its Common Stock.
(b) (i) The number of Shares issued to Rothstein
shall be subject to adjustment during the Restricted
Period (as hereinafter defined) as follows:
(A) In case WWWX shall, after the date
hereof, (1) pay a stock dividend or make a distribution
in shares of its capital stock (whether shares of its
Common Stock or of capital stock of any other class), (2)
subdivide its outstanding shares of Common Stock, (3)
combine its outstanding shares of Common Stock into a
smaller number of shares, or (4) issue by
reclassification of its shares of Common Stock any shares
of capital stock of WWWX, the number of Shares still
owned by Rothstein immediately prior to such action shall
be adjusted so that Rothstein shall be entitled to
receive an equivalent number of shares of Common Stock of
WWWX which he would have owned immediately following such
action. Any adjustment made pursuant to this subsection
(A) shall become effective immediately after the record
date in the case of a dividend or distribution and shall
become effective immediately after the effective date in INITIALS [RK]
the case of a subdivision, combination or [WR]
reclassification.
<PAGE>
(B) Whenever the number of Shares is
adjusted as provided in Section 1.1(b) (i) (A) herein,
WWWX will promptly mail to Rothstein a certificate of
WWWX's Treasurer or Chief Financial Officer setting forth
the number of Shares as so adjusted and a brief statement
of facts accounting for such adjustment.
SECTION 1.2 LEGEND. The Shares to be delivered
by WWWX shall be subject to certain restrictions on
transfer and each certificate representing the Shares
shall contain the following legend:
"THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, ASSIGNED OR
TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT, AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT, IN THE CIRCUMSTANCES, REQUIRED, OR EVIDENCE
SATISFACTORY TO THE COMPANY THAT THE SHARES HAVE BEEN
SOLD IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER SAID
ACT."
SECTION 1.3 TRANSFER RESTRICTIONS.
(a) (i) The term "Restricted Period" means a
period starting on the date of this Agreement and ending
six years and six months after the date of this
Agreement, unless the Restricted Period is accelerated as
described below. It is the intent of the parties that the
Restricted Period shall be waived as to a portion of the
Shares each year as discussed in Section 1.3(a) (iii)
below.
(ii) During the Restricted Period and except as
otherwise specifically provided for herein, none of the
Shares shall be sold, exchanged, transferred, pledged,
hypothecated, or otherwise disposed of by Rothstein
unless Rothstein shall have first, by written notice to
WWWX, have offered the shares to WWWX for repurchase at a
price equal to the amount that was paid therefore, with
appropriate adjustments for any change in the number of
Shares owned by Rothstein.
(iii) During the Restricted Period except as
otherwise specifically provided for herein, the
restrictions set forth in Section 1.3(a) (ii) above on
the Shares shall either be removed by WWWX, or such
Shares shall be FORFEITED by Rothstein and returned to
WWWX as set forth in the following circumstances:
In each fiscal quarter of each year of the
first six (6) years of the operation of ATM, Rothstein INITIALS [RK]
shall provide listings on the Corporation's web-site for [WR]
the sale of merchandise which merchandise shall have a
retail value in an amount not less than One Million Two
Hundred Fifty Thousand Dollars ($1,250,000.00) In each
fiscal quarter that Rothstein provides the required
listings, ALL FORFEITURE provisions contained in this
Agreement on 200,000 of the Shares will be automatically
waived by WWWX and Rothstein shall be free to sell,
exchange, transfer, pledge or otherwise dispose of those
200,000 Shares. In the event that merchandise listings of
$1,250,000 are not provided by Rothstein for any fiscal
quarter, then 200,000 of the Shares shall be forfeited
back to WWWX. In each of the first two fiscal quarters of
the seventh fiscal year of ATM, Rothstein shall be
required to provide goods with a retail value of not less
than $1,000,000.00 to obtain the removal of restrictions
on the remaining 200,000 of the Shares (100,000 per
fiscal quarter) or suffer the loss of those Shares.
(b) The restrictions set forth in Section
1.3(a) hereof will lapse and be of no further force or
effect under the following circumstances:
(i) as to such Shares in accordance
with the time(s) and number(s) of Shares as to which the
Restricted Period expires, but no later than six years an
six months after date of issuance; or
2
<PAGE>
(ii) as to any shares which WWWX will
fail to purchase when they are offered to WWWX, as
described in Section 1.3 (a) (ii), upon WWWX's failure to
repurchase said shares within thirty (30) days after the
date of offer;
(iii) upon a sale by Rothstein or WWWX
of their ownership interest in ATM or a sale by ATM of
all or substantially of its assets; or
(iv) as otherwise agreed to by WWWX.
SECTION 1.4 TRANSFERS DURING LIFE AND UPON DEATH
OF ROTHSTEIN. Nothing in this Agreement will preclude the
transfer of the Shares, by Rothstein (i) as a pledge,
collateral for a loan or as security for the performance
of an obligation to an entity in which Rothstein has a
controlling interest, or (ii) on Rothstein's death, to
Rothstein's legal representatives or estate, nor preclude
such representatives from transferring any of the Shares
to the person(s) entitled thereto by will or the laws of
descent and distribution, provided, however, that any
Shares so transferred during the lifetime of Rothstein or
upon his demise as to which such restriction shave not
lapsed will remain subject to all restrictions and
obligations imposed upon the Shares by this Agreement.
SECTION 1.5 REGISTRATION RIGHTS.
(A) "PIGGYBACK" REGISTRATION RIGHTS.
INITIALS [RK]
At any time after the date hereof, WWWX [WR]
shall, at least thirty (30) days prior to the filing of
any registration statement under the Securities Act
(other than a registration statement on Form S-8 or Form
S-4 or any successor forms) RELATING TO THE PUBLIC
OFFERING of its Common Stock BY WWWX OR ANY OF ITS
SECURITY HOLDERS, give written notice of such proposed
filing and of the proposed date thereof to Rothstein, and
if, on or before the twentieth (20th) day following the
date on which such notice is given, WWWX shall receive a
written request from Rothstein requesting that WWWX
include among the securities covered by such registration
statement some or all of the Shares, WWWX shall, subject
to Section 1.5 (b) hereof, include such Shares in such
registration statement, if filed, so as to permit such
Shares to be sold or disposed of in the manner and on the
terms of the offering thereof set forth in such request.
(B) TERMS AND CONDITIONS OF REGISTRATION. Except
as otherwise provided herein, in connection with any
registration statement filed pursuant to Section 1.5(a)
herein, the following provisions shall apply:
(i) If such registration statement
shall be filed pursuant to Section 1.5(a) hereof and if
the managing underwriter advises WWWX in writing that the
inclusion in such registration of some or all of the
Shares sought to be registered by Rothstein creates a
substantial risk that the proceeds or price per share
that will be derived from such registration will be
reduced or that the number of shares to be registered at
the insistence of Rothstein, plus the number of shares of
Common Stock sought to be registered by WWWX and any
other stockholders of WWWX is too large a number to be
reasonably sold, then, in such event, the number of
shares sought to be registered for WWWX and the other
stockholders of WWWX having registration rights, as
applicable, shall be reduced, PRO RATA in proportion to
the number of shares sought to be registered to the
number of shares recommended be sold by the managing
underwriter. In no event will any securities to be sold
by WWWX be excluded from such registration by reason of
any underwriters' cut-backs unless WWWX has agreed
thereto with the underwriter.
INITIALS [RK]
[WR]
3
<PAGE>
(ii) WWWX shall provide a transfer
agent and registrar (which may be the same entity) for
the Shares, not later than the effective date of such
registration.
(iii) All expenses in connection with
the preparation and filing of a registration statement
filed pursuant to Section 1.5(a) shall be borne solely by
WWWX, except for any transfer taxes payable with respect
to the disposition of such Shares, and any underwriting
discounts and selling commissions applicable solely to
such sales of Shares, which shall be paid by Rothstein of
the Shares being registered.
(iv) WWWX shall use its best efforts to
cause all of the shares covered by such registration
statement to be listed on [NASDAQ] or on such other
securities exchange as such shares may then be listed, on
which similar shares are listed for trading, if the
listing of such registered shares is permitted by such
exchange.
(v) Following the effective date of
such registration statement, WWWX shall, upon the request
of Rothstein, forthwith supply such number of
prospectuses (including exhibits thereto and preliminary
prospectuses and amendments and supplements thereto)
meeting the requirements of the Securities Act and such
other documents as are referred to in the prospectus as
shall be reasonably requested by Rothstein to permit
Rothstein to make a public distribution of his Shares.
(vi) WWWX shall use its best efforts to
register the Shares covered by any such registration
statements filed pursuant to Section 1.5(a) under such
securities or Blue Sky laws in addition to those in which
WWWX would otherwise sell shares, as Rothstein shall
request, except that neither WWWX nor Rothstein shall for
any such purpose be required to execute a general consent
to service of process or to qualify to do business as a
foreign corporation in any jurisdiction where it is not
so qualified. The fees and expenses incurred in
connection with such registration shall be borne by WWWX.
(vii) Rothstein shall cooperate fully
with WWWX and provide WWWX with all information
reasonably requested by WWWX for inclusion in the
registration statement or as necessary to comply with the
Securities Act. WWWX shall cooperate fully with any
underwriters selected by Rothstein and counsel to such
underwriters, and shall provide reasonable and customary
access to WWWX's books and records (upon receipt from
such underwriters of customary confidentiality
agreements) in order to facilitate such underwriters
review and examination of WWWX in connection with such
underwriting.
(viii) WWWX shall notify Rothstein, at
any time after effectiveness when a prospectus relating
thereto is required to be delivered under the Securities
Act of the happening of any event as a result of which
the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of
circumstances then existing (and upon receipt of such
notice and until a supplemented or amended prospectus as
set forth below is available, Rothstein shall not offer
or sell any securities covered by such registration
statement and shall return all copies of such prospectus
to WWWX if requested to do so by it), and at the request
of Rothstein prepare and furnish Rothstein as promptly as
practicable, but in any event within 90 days, a
reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that,
as thereafter delivered to Rothstein of such shares, such
prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required INITIALS [RK]
to be stated therein or necessary to make the statements [WR]
therein not misleading in light of the circumstances then
existing.
(ix) WWWX will use its best efforts to
comply with the reporting requirements of Sections 13 and
15 (d) of the Exchange Act, to the extent it shall be
required to do so pursuant to such sections,
4
<PAGE>
and at all times while so required shall use its best
efforts to comply with all other public information
reporting requirements of the Commission (including
reporting requirements which serve as a condition to
utilization of Rule 144 promulgated by the Commission
under the Securities Act) from time to time in affect and
relating to the availability of an exemption from the
Securities Act for the sale of any of WWWX's Common Stock
held by Rothstein. WWWX will also cooperate with
Rothstein in supplying such information and documentation
as may be necessary for Rothstein to complete and file
any information reporting forms presently or hereafter
required by the Commission as a condition to the
availability of an exemption from the Securities Act for
the sale of any of WWWX's Common Stock held by Rothstein.
(C) INDEMNIFICATION.
(i) In the event of the registration of
any Shares of WWWX under the Securities Act pursuant to
the provisions of Section 1.5(a), WWWX agrees to
indemnify and hold harmless Rothstein, each underwriter,
broker or dealer, if any, and their respective directors,
officers and employees, of such Shares, and each other
person, if any, who controls the Shares (or a permitted
assignee thereof), such underwriter, broker or dealer
within the meaning of the Securities Act, from and
against any and all losses, claims, damages or
liabilities (or actions in respect thereof), joint or
several, to which Rothstein (and as applicable) its
directors, officers or employees, or such underwriter,
broker or dealer or controlling person may become subject
under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any
material fact contained in any registration statement
under which such Shares were registered under the
Securities Act, any preliminary prospectus or final
prospectus relating to such Shares, or any amendment or
supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation
by WWWX of any rule or regulation under the Securities
Act applicable to WWWX or relating to any action or
inaction required by WWWX in connection with any such
registration and will reimburse Rothstein, each such
underwriter, broker or dealer and controlling person, and
their respective directors, officers or employees, for
any legal or other expenses reasonably incurred by
Rothstein or such underwriter, broker or dealer or
controlling person in connection with investigating or
defending any such loss, claim, damage, liability or
action; provided, however, that WWWX will not be liable
in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission
or alleged omission made in such registration statement,
such preliminary prospectus, such final prospectus or
such amendment or supplement thereto in reliance upon and INITIALS [RK]
in conformity with written information furnished to WWWX [WR]
by Rothstein, or such underwriter, broker, dealer or
controlling person for use in the preparation thereof.
Such indemnity shall remain in full effect irrespective
of any investigation by any person indemnified above.
(ii) In the event of the registration
of any Shares under the Securities Act for sale pursuant
to the provisions of this Agreement, Rothstein agrees to
indemnify and hold harmless WWWX, its directors, officers
and employees, from and against any losses, claims,
damages or liabilities, joint or several to which WWWX,
its directors, officers or employees, may become subject
under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any
material fact contained in any registration statement
under which such Shares were registered under the
Securities Act, any preliminary prospectus or final
prospectus relating to such Shares, or any amendment or
supplement thereto, or arise out of or are based upon
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make
the statements therein not misleading, which untrue
statement or alleged untrue statement or omission or
alleged omission was made therein in reliance upon and in
conformity with written information furnished to WWWX by
Rothstein for use in the preparation thereof. Such
indemnity shall remain in full effect irrespective of any
investigation by any person indemnified above.
5
<PAGE>
(iii) Promptly after receipt by a
person entitled to indemnification under this Section
1.5(c) (for purposes of this Section 1.5(c), an
"Indemnified Party") of notice of the commencement of any
action or claim relating to any registration statement
filed under Section 1.5(a) or as to which indemnity may
be sought hereunder, such Indemnified Party will, if a
claim for indemnification hereunder in respect thereof is INITIALS [RK]
to be made against any other party hereto (for purposes [WR]
of this Section 1.5(c), an "Indemnifying Party"), give
written notice to such Indemnifying Party of the
commencement of such action or claim, but the failure to
so notify the Indemnifying Party will not relieve it from
any liability which it may have to any Indemnifying Party
otherwise than pursuant to the provisions of this Section
1.5(c) and shall also not relieve the Indemnifying Party
of its obligations under this Section 1.5(c), except to
the extent that the Indemnifying Party is damaged solely
as a result of the failure to give timely notice. In case
any such action is brought against an Indemnified Party,
and it notifies an Indemnifying Party of the commencement
thereof, the Indemnifying Party will be entitled (at its
own expense) to participate in and, to the extent that it
may wish, jointly with any other Indemnifying Party
similarly notified, to assume the defense with counsel
satisfactory to such Indemnified Party, of such action
and/or to settle such action and, after notice from the
Indemnifying Party to such Indemnified Party of its
election so to assume the defense thereof, the
Indemnifying Party will not be liable to such Indemnified
Party for any legal or other expenses subsequently
incurred by such Indemnified Party in connection with the
defense thereof, other than the reasonable cost of
investigation; provided, however, that no Indemnifying
Party and no Indemnified Party shall enter into any
settlement agreement which would impose any liability on
such other party or parties without the prior written
consent of such other party or parties.
(D) CONTRIBUTION. If the indemnification
provided for in Section 1.5 (c) hereof is unavailable to
the Indemnified Party
In no event shall the obligation of any
Indemnifying Party to contribute under this Section 1.5
(e) exceed the amount that such Indemnifying Party would
have been obligated to pay by way of indemnification if
the indemnification provided for under Section 1.5(c)
hereof had been available under the circumstances.
The amount paid or payable by an
Indemnified Party as a result of the losses, claims,
damages and liabilities referred to in the next preceding
paragraph shall be deemed to include, subject to the
limitation set forth above, any legal or other expenses
incurred by such Indemnified Party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 1.5(d), no
Purchaser or underwriter shall be required to contribute
of the amount by which (i) in the case of Rothstein, the
net proceeds received by Rothstein from the sale of
Shares or (ii) in the case of an underwriter, the total
price at which the Shares purchased by it and distributed
to the public were offered to the public exceeds, in any
such case, the amount of any damages that Rothstein or
underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
(E) SURVIVAL. The indemnity and
contribution agreements contained in this Section 1.5
shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement or
any underwriting agreement, (ii) any investigation made
by or on behalf of any Indemnified Party or by or on
behalf of WWWX and (iii) the consummation of the sale or INITIALS [RK]
successive resales of the Shares. [WR]
(F) FUTURE REGISTRATION RIGHTS. Until
such time as the Registration has been declared effective
by the Commission, WWWX shall not grant to any third
party any registration rights equal to or more favorable
than those contained in this Section 1.5; provided,
however, that the foregoing
6
<PAGE>
prohibition shall not prevent WWWX from granting to
a third party specific registration rights that are equal
to those contained in this Section 1.5, as long as all of
the registration rights granted to such third party,
taken as a whole, are less favorable to the third party
than those granted to Rothstein herein. In the event that
the Registration shall fail to remain effective (or a
stop order shall be entered with respect thereto) while
any of the Shares remain unsold, the provisions of this
Section 1.5 (f) shall become applicable once again.
ARTICLE II
RIGHT OF FIRST REFUSAL/ PREEMPTIVE RIGHTS
SECTION 2.1 ROTHSTEIN'S OPTION TO PURCHASE STOCK.
If WWWX proposes to sell <#>[illegible]</#>,
or otherwise transfer ("Dispose Of"), other than pursuant
to the terms of a plan of merger or an acquisition of the
assets or the issued and outstanding capital stock of any
third party, any shares of its Common Stock it shall first
give a notice (the "Notice") to Rothstein of such proposed
disposition. <#>(No notice of any disposition shall be valid
unless WWWX shall have received prior to the date of the
notice [illegible] to conditions of the proposed sale).</#>
The Notice shall specify the number of shares (the "Offered
Shares") WWWX intends to Dispose Of, <#>([illegible] sooner
and the person to whom WWWX proposes to dispose of the
Offered Shares,)</#> and indicate the price, terms, and
conditions of the proposed disposition. Rothstein shall
have the irrevocable and exclusive first option, but not
the obligation, to purchase all or a part of the Offered
Shares,
(a) in the case of a proposed sale of
the Offered Shares, at the price and upon any
terms and conditions equal to those offered by
the prospective purchaser <#>(as evidenced by a
copy of the offer to purchase which shares
accompany the Notice)</#>, and
(b) in the case of any proposed
disposition other than a sale of the Offered
Shares, at a price per share equal to the Market
Value of the Shares, determined by the average
closing price of the Common Stock [SUCH] exchange
as the Common Stock may then be listed) for the
ten (10) consecutive trading day period ending
three (3) trading days prior to the date
Rothstein receives the Notice, INITIALS [RK]
[WR]
with payment to be made on the 90th day following the
date the Notice is given to Rothstein, provided Rothstein
gives notice of its election to purchase to WWWX within
30 days after Rothstein receives the Notice. The purchase
price for each share bought from WWWX, shall be paid in
cash or by certified or cashier's bank check.
<#>Notwithstanding the [illegible], Rothstein shall have
the option to pay for such shares in lieu of cash by
issuing a promissory note bearing interest at the [illegible]
rate, maturing in 5 years from the date of issue to and have
such other terms and conditions of maturity acceptable to
Rothstein and WWWX.</#>
SECTION 2.2 EFFECT OF AN ELECTION.
If Rothstein elects to purchase the
Offered Shares, Rothstein shall be obligated to purchase
from WWWX, and WWWX shall be obligated to sell to
Rothstein the number of Offered Shares stated therein, at
the price and on the terms and conditions determined
pursuant to Section 2.1.
SECTION 2.3 CONSEQUENCES IF ALL STOCK IS NOT TO
BE PURCHASED.
If WWWX gives Notice and Rothstein does
not elect, pursuant to Section 2.2, to purchase all of
the Offered Shares, WWWX may elect:
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<PAGE>
(a) To sell to Rothstein if he
has elected to purchase part of the
Offered Shares, the aggregate number of
such shares which Rothstein has elected
to purchase at the price and on the
terms and conditions determined pursuant
to Section 2.1, and at any time or times
after Rothstein has failed to elect to
purchase all of the Offered Shares but
before the [180th day] succeeding
the giving of the Notice
(the "Disposition Period"), WWWX
may Dispose Of all the remaining Offered
Shares to the person or persons, at a
price, and on any other terms and
conditions specified in the Notice, and
any shares not so Disposed Of by WWWX
during the Disposition Period may not
thereafter be Disposed Of, except in
compliance with the terms and conditions
of this Agreement;
(b) At any time or times during
the Disposition Period, to Dispose Of
all the Offered Shares to the person or
persons, at the price, and on any other
terms and conditions specified in the
Notice, and any shares not so Disposed Of
by WWWX during the Disposition Period may
not thereafter be Disposed of, except in
compliance with the terms and conditions
of this Agreement; or INITIALS [RK]
[WR]
(c) To withdraw the Notice, and
thereafter such shares of Common Stock
may not be Disposed Of, except in
compliance with the terms and conditions
of this Agreement.
SECTION 2.5 PREEMPTIVE RIGHTS.
Rothstein shall be entitled to purchase
such number of additional shares of
Common Stock of WWWX as the Board of
Directors of WWWX may propose to issue
from time to time, on the same terms and
conditions as shares of Common Stock are
proposed to be issued to third parties
[UNDER ANY PRIVATE SALE OF COMMON STOCK
BY WWWX], such that Rothstein may
maintain his pro rata interest in the
Common Stock of the Company on a fully
diluted basis.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WWWX
WWWX hereby represents and warrants to
Rothstein as follows:
SECTION 3.1 CORPORATE EXISTENCE AND POWER. WWWX
is a corporation duly incorporated, validly existing and INITIALS [RK]
in good standing under the laws of the State of Delaware [WR]
and has all corporate power required to carry on its
business as now conducted. WWWX is duly qualified to do
business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities
makes such qualification necessary, except for those
jurisdictions where the failure to be so qualified would
not, individually or in the aggregate, have a Material
Adverse Effect on WWWX. For purposes of this Agreement,
the term "Material Adverse Effect" means, with respect to
any person or entity, a material adverse effect on the
condition (financial or otherwise), business, properties,
assets, liabilities (including contingent liabilities),
results of operations or current prospects of WWWX or its
Subsidiaries (as defined below). True and complete copies
of WWWX's Articles of Incorporation, as amended, and
Bylaws, as amended (collectively, the "Articles and
Bylaws") have previously been provided to Rothstein. For
purposes of this Agreement, the term "Subsidiary" means,
with respect to any entity, any corporation or other
organization of which securities or other ownership
interests having ordinary voting power to elect a
majority of the board of directors or other persons
performing similar functions are directly or indirectly
owned by such entity or of which such entity is a partner
or is, directly or indirectly, the beneficial owner of
50% or more of any class of equity securities or
equivalent profit participation interest. INITIALS [RK]
[WR]
8
<PAGE>
SECTION 3.2 CORPORATE AUTHORIZATION. The
execution, delivery and performance by WWWX of this
Agreement, and the consummation of the transactions
contemplated hereby (including, but not limited to, the
sale, issuance and delivery of the Shares and the
subsequent issuance of additional Shares as payment of
the dividends on the Shares, when, if and as declared by
the Board of Directors of WWWX), have been duly
authorized and no additional corporate action is required
for the approval of this Agreement. This Agreement
constitutes the legal, valid and binding agreement of
WWWX enforceable against it in accordance with its terms,
except as may be limited by bankruptcy, reorganization,
insolvency, moratorium and similar laws of general
application relating to or affecting the enforcement of
rights of creditors and except that enforceability of its
obligations hereunder are subject to general principles
of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 3.3 NON-CONTRAVENTION. The execution,
delivery and performance by WWWX of this Agreement, and
the consummation by WWWX of this Agreement, and the
consummation by WWWX of the transactions contemplated
hereby do not and will not (a) contravene or conflict
with the Articles and Bylaws of WWWX; (b) contravene or
conflict with or constitute a violation of any provision
of any law, regulation, judgment, injunction, order or
decree binding upon or applicable to WWWX, (c) constitute
a default under or give rise to a right of termination,
cancellation or acceleration or loss of any benefit under
any material agreement, contract or other instrument
binding upon WWWX or under any material license,
franchise, permit or other similar authorization held by
WWWX; or (d) result in the creation or imposition of any
Lien (as defined below) on any material asset of WWWX.
For purposes of this Agreement, the term "Lien" means,
with respect to any asset, any mortgage, lien, pledge,
charge, security interest, claim or encumbrance of any
kind in respect of such asset.
SECTION 3.4 PREEMPTIVE RIGHTS. None of the
shareholders of WWWX possess any preemptive rights in
respect of the Shares.
INITIALS [RK]
[WR]
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<PAGE>
INITIALS [RK]
SECTION 3.5 CAPITALIZATION. The authorized [WR]
capital stock of WWWX consists of (i) 100 million shares
of Common Stock, par value $.001 per share, of which 10.8
million shares are issued and outstanding. No other
shares of capital stock have been authorized or issued.
All shares of WWWX's outstanding capital stock have been
duly authorized, are validly issued and outstanding, and
are fully paid and nonassessable and the Shares, when
issued to Rothstein, will be duly authorized, validly
issued, fully paid and nonassessable.
SECTION 3.6 FINANCIAL STATEMENTS. WWWX has
delivered to Rothstein true and correct copies of the
balance sheet of WWWX and the statement of income and
statement of cash flows of WWWX for the fiscal year ended
December 31, 1997 and for the nine (9) month period ended
September 30, 1998 (including the notes related thereto)
(all of the foregoing collectively referred to as the
"Financial Statements"). The Financial Statements: (a)
have been prepared in accordance with the books of
account and records of WWWX; (b) fairly present, in all
material respects, WWWX's financial condition and the
results of its operations at the dates and for the
periods specified in those statements; and (c) have been
prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied with prior
periods, except for changes noted therein. Since
September 30, 1998:
(a) There has occurred no event that has
resulted in a material adverse effect on the
business, financial condition, assets, results of
operation or prospects of WWWX and the value of its
properties.
(b) WWWX has not authorized, declared,
paid, or effected any dividend or liquidating or
other distribution in respect of its capital
stock or any direct or indirect redemption,
purchase, or other acquisition of any such stock.
(c) The operations and business of WWWX
have been conducted only in the ordinary course
and consistent with past practices.
(d) WWWX has not suffered an
extraordinary loss (whether or not covered by
insurance) or waived any right of substantial
value.
(e) WWWX has not paid or incurred any tax,
other liability, or expense resulting from the
preparation of, or the transactions contemplated
by, this Agreement, it being understood that WWWX
shall have paid or will pay all such taxes
(including stock transfer taxes resulting from
this Agreement or the transactions contemplated
hereby), liabilities, and expenses.
INITIALS [RK]
[WR]
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<PAGE>
SECTION 3.7 ABSENCE OF UNDISCLOSED LIABILITIES
Other than as disclosed on the balance
sheet including the notes thereto (the "Last Balance
Sheet") as of September 30, 1998 (the "Last Balance Sheet
Date") included in the Financial Statements, WWWX has no
material direct or contingent liabilities, commitments or
obligation which are required to be reflected or reserved
against in WWWX's balance sheet (or disclosed in a
footnote thereto) or deducted from gross revenues in an
income statement in accordance with generally accepted
accounting principles, other than liabilities,
commitments or obligations incurred since October 31,
1998 in the ordinary course of business consistent with
past practices, and to the knowledge of WWWX there is no
basis for assertion against WWWX of any such liability,
commitment or obligation.
SECTION 3.8 LITIGATION AND CLAIMS
There is no litigation, arbitration,
claim, governmental or other proceeding (formal or
informal), or investigation pending, or to the knowledge
of WWWX, threatened with respect to WWWX or involving any
of its business, properties, or assets which, singly or
in the aggregate, could reasonably have a material
adverse effect on the business, financial condition,
assets, results of operation or prospects of WWWX and the
value of its properties. WWWX is not affected by any
present or to the knowledge of WWWX, threatened strike or
other labor disturbance nor to the knowledge of WWWX is
any employee of WWWX represented by a union as bargaining
agent.
SECTION 3.9 COMPLETENESS OF DISCLOSURE
No representation or warranty by WWWX
in this Agreement contains any untrue statement of
material fact or omits to state a material fact necessary
in order to make the statements contained herein not
misleading or omits to state a material fact necessary in
order to provide a prospective purchaser of the Shares
with full and proper information as to the business,
financial condition, assets, results of operation or
prospects of WWWX and the value of its properties.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 FURTHER ASSURANCES. Each party
agrees to cooperate fully with the other parties and to
execute such further instruments, documents and
agreements and to give such further written assurances as
may be reasonably requested by any other party to better
evidence and reflect the transactions described herein
and contemplated hereby and to carry into effect the
intents and purposes of this Agreement
SECTION 4.2 FEES AND EXPENSES. Notwithstanding
anything to the contrary contained herein, the expenses
of the Registration shall be borne entirely by WWWX.
SECTION 4.3 NOTICES. Whenever any party hereto
desires or is required to give any notice, demand, or
request with respect to this Agreement, each such
communication shall be in writing and shall be effective
only if it is delivered by personal service or mailed,
United States registered or certified mail, postage
prepaid, return receipt requested (and shall be deemed to
have been received three (3) days after deposit into the
United States mail), or sent by prepaid overnight INITIALS [RK]
courier, facsimile or confirmed telecopier, addressed as [WR]
follows:
If to Rothstein:
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<PAGE>
220 White Plains Road
Tarrytown, New York 10591
Fax No.: (914) 631-9000
With a copy in each case to:
Kane Kessler, P.C.
1350 Avenue of the Americas
26th Floor
New York, New York 10019
Attention: Jeffrey A. Oppenheim, Esq.
Fax No.: (212) 245-3009
If to WWWX:
3000 Atrium Way-Suite 202
Mt. Laurel, NJ 08054
Attention: Robert Kohn, President
Fax No.: ( )
With a copy in each case to:
Unless otherwise stated above such communications shall
be effective when they are received by the addressee
thereof in conformity with this Section. Any party may
change its address for such communications by giving
notice thereof to the other parties in conformity with
this Section.
SECTION 4.4 GOVERNING LAW AND JURISDICTION.
4.4.1 This agreement shall be construed in all
respects under the laws of the State of New York, without
reference to its conflicts of law provisions.
4.4.2 WWWX and Rothstein hereby agree to submit to the
exclusive jurisdiction of the courts located in the State
of New York and hereby waive any objection based on venue
or forum non conveniens with respect to any action
instituted therein, and agree that any dispute concerning
the conduct of any party in connection with this
agreement or otherwise shall be heard only in the federal
courts described above.
4.4.3 WWWX and Rothstein each hereby waive
personal service of any and all process upon it and
consent that all such service of process may be made by
hand delivery or mail to WWWX and Rothstein at the
addresses set forth in, and in accordance with, Section
4.3 of this Agreement. Each of WWWX and Rothstein hereby INITIALS [RK]
consent to service of process as aforesaid. [WR]
SECTION 4.5 BINDING UPON SUCCESSORS AND ASSIGNS.
This Agreement is personal to each of the parties and may
not be assigned without the written consent of the other
parties; provided, however, that Rothstein shall be
permitted to assign his rights under this Agreement as
set forth in Section 1.4 of this Agreement.
SECTION 4.6 SEVERABILITY. If any provision of
this Agreement, or the application thereof, shall for any
reason or to any extent be invalid or unenforceable, the
remainder of this Agreement and
12
<PAGE>
application of such provision to other persons or
circumstances shall continue in full force and effect and
in no way be affected, impaired or invalidated.
SECTION 4.7 ENTIRE AGREEMENT.This Agreement
contains every obligation and understanding between the
parties relating to the subject matter hereof and merges
all prior discussions, negotiations and agreements, if
any, between them, and none of the parties shall be bound
by any conditions, definitions, understandings,
warranties or representations other than as expressly
provided or referred to herein.
SECTION 4.8 AMENDMENT AND WAIVERS. Any term or
provision of this Agreement may be amended, and the
observance of any term of this Agreement may be waived
(either generally or in a particular instance and either
retroactively or prospectively) only by a writing signed
by all parties hereto. The waiver by a party of any
breach hereof or default in the performance hereof shall
not be deemed to constitute a waiver of any other default
or any succeeding breach or default. This Agreement may
not be amended or supplemented by any party hereto except
pursuant to a written amendment executed by all parties.
SECTION 4.9 NO WAIVER. The failure of any party
to enforce any of the provisions hereof shall not be
construed to be a waiver of the right of such party
thereafter to enforce such provisions.
SECTION 4.10 COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which
shall be an original as against any party whose signature
appears thereon and all of which together shall
constitute one and the same instrument. This Agreement
shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as
signatories.
SECTION 4.11 NO THIRD PARTY BENEFICIARY. Nothing
expressed or implied in this Agreement is intended, or
shall be construed, to confer upon or give any person
other than the parties hereto and their respective heirs,
personal representatives, legal representatives, INITIALS [RK]
successors and permitted assigns, any rights or remedies [WR]
under or by reason of this Agreement.
In WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the
date first above written.
//S// W ROTHSTEIN
-----------------------------------
WARREN ROTHSTEIN
WORLDWIDE WEB NETWORX CORPORATION
By: //S// ROBERT D. KOHN
-------------------------------
Name: Robert D. Kohn
Title: President
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<PAGE>
EXHIBIT 10.4
BARTERONE MEMBERSHIP INTEREST SALE AGREEMENT
This BarterOne Membership Interest Sale Agreement ("Agreement") dated
and effective as of DECEMBER 16, 1998 (the "Effective Date"), by and between
Energy Trading Company, a PECO Energy Company subsidiary and a Delaware
corporation with offices at 2301 Market Street, Philadelphia, PA 19103 ("ETCO"
or "Seller") and World Wide Web NetworX Corporation, a Delaware corporation with
offices at 3000 Atrium Way, Suite 202, Mt. Laurel, NJ 08054 ("WWWX" or
"Purchaser") (collectively, the "Parties").
BACKGROUND
A. WHEREAS, Seller is a principal member and majority owner of BarterOne, LLC
("BarterOne") a Delaware limited liability company established with Global Trade
Group ("GTG") which owns, among other things, the rights to a worldwide,
perpetual license to the ORBIT System technology; and
B. WHEREAS, WWWX is a developer of Internet related products and services and is
represented by Robert Kohn ("Kohn") the majority shareholder in WWWX; and
C. WHEREAS Kohn is also a current employee of PECO Energy Company ("PECO
Energy") assigned to manage BarterOne's operations and is currently an actual or
potential Member of BarterOne depending on the interpretation or occurrence of
certain events; and
D. WHEREAS the Parties desire that WWWX purchase the Seller's 51% membership
interest in BarterOne and satisfy any and all obligations Seller may have to
Gary Lerman with respect to this transaction; and
E. WHEREAS this transaction has been approved by GTG as evidenced by GTG's
consent attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties intending to be legally bound, agree as
follows:
1. PURCHASE AND SALE. Subject to the terms and conditions of this Agreement, on
the Closing Date, as defined herein, Seller will sell to WWWX and WWWX will
purchase all of Seller's 51% Member Ownership Interest in BarterOne ("ETCO's
Interest").
2. PAYMENTS. In consideration for the Member Ownership Interest, WWWX (A) shall
satisfy any obligations Seller may have to Gary Lerman resulting from his sale
of ETCO's Interest in BarterOne, and provide to Seller upon Closing Lerman's
consent and waiver of all future claims against Seller, and (B) shall pay Seller
the following payments:
2.1. NONREFUNDABLE DEPOSITS PAID BY KOHN:
2.1.1 $250,000.00 payable by certified or cashier's check upon
execution hereof; and
2.1.2 Shares of WorldWide Web Networx Corporation ("WWWX")
common stock delivered upon the execution hereof equal to
1.2 times $250,000.00 as of the quoted price per share
(the average between the bid and ask) at the close of
trading the day prior to execution of this Agreement.
2.2 AT CLOSING:
2.2.1 WWWX shall pay to ETCO $230,000.00 payable by certified
or cashier's check; and a certain unencumbered equity
interest in NEWCO, a company owning the undivided assets
of BarterOne, depending on the amount of third party
funding received by NEWCO in exchange for NEWCO ownership,
as described in 2.2.2. Funding is defined as any of the
following individual or combined sources of capital:
equity, or
INITIALS [RAS]
[RDK]
<PAGE>
funding guaranteed to be dispersed to NEWCO over a period
not to exceed three years. Funding guarantees will be
acceptable only (A) if supported with an irrevolcable
letter of credit equal to the amount of the funding
guaranteed, or (B) if supported in the form of an
irrevocable corporate guarantee of a corporation whose net
worth, as certified by an independent auditor, is equal to
at least ten (10) times the amount of the corporate
guarantee. ETCO's ownership interest shall be reduced as
set forth below as and when NEWCO receives funding.
2.2.2 ETCO shall be given the following ownership in NEWCO:
(i) if $ 0.00 funding, ETCO receives 33.33% of
NEWCO;
(ii) if $1,000,000 in funding, ETCO receives12.5% of
NEWCO;
(iii) if $2,000,000 in funding, ETCO receives10.0% of
NEWCO;
(iv) if $3,000,000 in funding, ETCO receives 7.5% of
NEWCO;
(v) if $4,000,000 in funding, ETCO receives 5.0% of
NEWCO;
2.2.3 If the shares of WWWX transferred to ETCO pursuant to
2.1.2 has a market value less than $250,000.00 as of the
market close the day before Closing, (based on the average
of the bid and ask quoted price), Purchaser shall transfer
additional shares of WWWX to ETCO so that, at Closing, as
determined from the prior day's market close, the value of
WWWX stock owned by ETCO equals $250,000.00.
2.2.4 If the shares of WWWX transferred to ETCO pursuant to
2.1.2 has a market value greater than $250,000.00 as of
the market close the day before Closing, (based on the
average of the bid and ask quoted price) then the Seller
shall transfer shares in WWWX equal to the difference
between the total value of shares of WWWX held and
$250,000.00, back to WWWX, so that, at Closing, the value
of WWWX stock owned by ETCO equals $250,000.00.
2.3. FORFEITURE OF DEPOSITS. If Purchaser fails to make the Payments
described in 2.2 above for any reason except a material breach of
this Agreement by Seller, the Payments made pursuant to 2.1 shall
be forfeited to Seller as liquidated damages.
2.4. ON-GOING BUDGET Upon execution hereof, WWWX will fund all
expenditures made by Robert Kohn and Gary Lerman on behalf of
BarterOne. Energy Trading Company will continue to provide its
employees, Robert Kohn and Gary Lerman, who shall remain subject
to the PECO Code of Conduct, with office accommodations until
funding or March 1, 1999, whichever comes first.
2.5. FUTURE ETCO OBLIGATIONS ETCO shall have no further obligation to
contribute further funding or capital to BarterOne.
2.6. FUTURE ETCO RIGHTS. ETCO shall retain and continue to have any and
all rights available to an owner of a minority membership interest
in BarterOne and/or NEWCO, and WWWX. ETCO shall be subject to a
pari passu dilution of its 5% NEWCO interest, along with the other
shareholders, for funding Actually Received by NEWCO in excess of
$4,000,000.
3. TITLE. At Closing, provided that Purchaser has paid all Payments described in
section 2 hereof, Seller shall transfer to Purchaser ETCO's Interest free and
clear of all liens an encumbrances.
4. CLOSING. Closing shall occur on or before March 1, 1999, at Purchaser's
option and upon providing Seller 5 days prior written notice. Closing shall
occur at Seller's offices, 2301 Market Street, Philadelphia PA.
5. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants:
5.1 ORGANIZATION AND STANDING OF SELLER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware, has all requisite power and authority
INITIALS [RAS]
[RDK]
2
<PAGE>
to own an interest in BarterOne and to carry on the business of
Seller as presently conducted. Seller is in good standing and
qualified to do business in the Commonwealth of Pennsylvania.
5.2 AUTHORITY OF SELLER. Seller has all necessary corporate power and
authority to make, execute, deliver and consummate this Agreement,
and has taken all necessary actions required to be taken to
authorize Seller to execute and deliver this Agreement and to
perform its obligations, undertakings and agreements to be
observed and performed hereunder. This Agreement has been duly
executed and delivered by Seller and is valid and binding
agreement of Seller, and enforceable against Seller in accordance
with its terms.
5.3 TITLE TO ASSETS. Seller has, and on the Closing Date, will have,
good, indefeasible and marketable title in an to ETCO's Interest,
and will transfer and convey the interest to Purchaser free and
clear of any mortgages, pledges, liens, claims, security
interests, charges, options, restrictions, rights of first offer
or encumbrances of any nature whatsoever.
5.4 CONSENTS. No consent or approval of any person or entity is
required in connection with the transfer of ETCO's Interest.
5.5 LITIGATION AND COMPLIANCE WITH LAWS. Seller is not engaged in or a
party to or threatened with any legal action, suit, investigation
or other proceeding arising with respect to ETCO's Interest by or
before any Court, arbitration or administrative agency, and Seller
does not know of any basis for any such action, investigation or
proceeding. There are no outstanding orders, rulings, decrees,
judgments or stipulations relating to or arising in connections
with ETCO's Interest to which Seller is a party or by which Seller
is bound, by or with any court, arbitrator or administrative
agency. Seller has complied with the requirements of all federal
state and local laws, regulations, judgments, injunctions,
decrees, court orders and administrative orders regarding such
assets, including, without limitation, in compliance with the
requirements of all federal, state and local laws, regulations and
administrative orders.
5.6 NO VIOLATION. Neither the execution and delivery of this Agreement
by Seller and the performance by Seller hereunder, nor the
consummation of the transactions contemplated hereby, will
violate, conflict with, result in the breach of or accelerate the
performance required by any of the terms, conditions or provisions
of the Articles of Incorporation or By-laws of Seller, or any
covenant, agreement or understanding to which Seller is a party or
any order, ruling, decree, judgment, arbitration award or
stipulation to which Seller is subject, or constitute a default
thereunder or result in the creation or imposition of any lien,
charge or encumbrance thereunder upon any of the Assets, or allow
any person or entity to accelerate any debt secured by any Asset,
or allow any person or entity to interfere with Purchaser's full
use and enjoyment of any of the Assets.
5.7 DISCLOSURE. No representations or warranties made by Seller in
this Agreement and no statements made by Seller in any
certificate, schedule, exhibit or other writing delivered by
Seller or referred to in or pursuant to this Agreement contain, or
at the date of its delivery will contain, any untrue statement of
material fact or omit or will omit any statement of a material
fact necessary to make complete, accurate and not misleading every
representation, warranty and statement of Seller set forth in this
Agreement or any such certificate, schedule, exhibit or other
writing.
6. REPRESENTATIONS AND WARRANTIES OF WWWX AND KOHN WWWX and Kohn represent and
warrant to Seller:
6.1 ORGANIZATION AND STANDING OF PURCHASER. Purchaser is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware, has all requisite power and
authority to own, lease and operate its business as presently
conducted. Purchaser is in good standing and qualified to do
business in the State of New Jersey.
6.2 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on directly by
Purchaser and Seller without the intervention of any broker or
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finder. Purchaser has not engaged, consented to, or authorized any
broker, investment banker or third party to act on its behalf
directly or indirectly, as a broker or finder in connection with
the transactions contemplated by this Agreement. Purchaser agrees
to hold Seller harmless from and against all claims by third
parties based upon a relationship or alleged relationship with
Purchaser for brokerage or finders' fees or commissions in
connection with the execution of this Agreement or the
consummation of the transactions contemplated hereby.
6.3 AUTHORITY OF PURCHASER. Purchaser has all necessary power and
authority to make, execute, deliver and consummate this Agreement
and has taken all necessary actions required to be taken to
execute and deliver this Agreement and to perform all of its
obligations, undertakings and agreements to be observed and
performed by it hereunder. This Agreement has been duly executed
and delivered by Purchaser and is a valid and binding agreement of
Purchaser.
6.4 NO VIOLATION. Neither the execution and delivery of this Agreement
by Purchaser and the performance by Purchaser hereunder, nor the
consummation of the transactions contemplated hereby, will
violate, conflict with, result in the breach of or accelerate the
performance required by any of the terms, conditions or provisions
of the Articles of Incorporation or By-laws of Purchaser, or any
covenant, agreement or understanding to which Purchaser is a party
or any order, ruling, decree, judgment, arbitration award or
stipulation to which Purchaser is subject.
6.5 FULL DISCLOSURE. At the direction of ETCO and GTG, Robert Kohn has
been actively pursuing the funding of BarterOne for an extended
period of time. Robert Kohn has disclosed, either in writing, any
major offer to buy and/or purchase the assets of BarterOne, or to
fund or otherwise support the operations of BarterOne from
identified third parties. Robert Kohn has been in direct and
indirect contact with numerous other brokers, funders, financial
institutions, corporations, and individuals, among others,
regarding the funding and/or purchase of BarterOne. As of the
Effective Date, Robert Kohn is continuing to pursue funding
arrangements with the following:
6.5.1 Trinity American Financial (Abe Salaman);
6.5.2 Wareforce;
6.5.3 Ices/DH Blair;
6.5.4 Golenberg, Guren, Swerdlow;
6.5.5 Chapman, Spira;
6.5.6 Al Cohen;
6.5.7 Henry Butcher & Co.
6.5.8 ARTRA Group Inc.
6.5.9 Textron Corporation
7. DUE DILIGENCE. WWWX has relied solely upon his own judgment, and not upon
any representation of any kind by Seller or anyone else. Purchaser is aware
of BarterOne's financial condition, operations, assets and obligations
through its due diligence and through its relationship with Kohn.
7.1 WWWX has performed the due diligence procedures it has deemed
necessary to complete this transaction, and has received all
requested documents and information from ETCO. WWWX has reviewed,
among other things, the software license and development
agreements for the Orbit system.
7.2 Purchaser has reviewed and understands the benefits and
obligations which shall be applicable to Purchaser upon Closing as
described in the BarterOne Operating Agreement and the
Restructuring Agreement thereto.
8. CONDITIONS TO WWWX'S OBLIGATIONS. All obligations of WWWX to close under
this Agreement are subject to the following conditions (which may be waived
only at WWWX's option) existing on the Closing Date or such other date as
the context may required:
8.1 REPRESENTATIONS AND WARRANTIES. Each of Seller's representations
and warranties in this Agreement shall be true on the Closing Date
as though such representations and warranties
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were made and each such exhibit and schedule were delivered at and
as of the Closing Date, and there shall have been delivered to
WWWX a certificate to that effect, dated the Closing Date, signed
by a duly authorized officer of Seller.
8.2 PERFORMANCE. Seller shall have performed and complied with all
covenants, agreements and conditions required by this Agreement to
be performed or complied with all covenants, agreements and
conditions required by this Agreement to be performed or complied
with by it prior to or at the Closing.
8.3 LIENS AND ENCUMBRANCES. As of the Closing Date of ETCO's Interest
shall be free and clear of all liens, security interests,
encumbrances, charges or restrictions, except as specifically
permitted herein.
8.4 LITIGATION. No suit or proceeding challenging the transaction
provided for under this Agreement shall have been overtly
threatened or commenced.
8.5 CORPORATE ACTION. All corporate and shareholder action necessary
for Seller to consummate the transactions and contemplated
hereunder shall have been properly taken
9. CONDITIONS TO SELLER'S OBLIGATIONS. All obligations of Seller to close under
this Agreement are subject to the fulfillment as of the Closing Date of each of
the following conditions (which may be waived only at Seller's option) existing
on the Closing Date or such other date as the context may required:
9.1 REPRESENTATIONS AND WARRANTIES. Each of WWWX's and Kohn's
representations and warranties in this Agreement shall be true at
the Closing Date as though said representations and warranties
were made at and as of the Closing Date.
9.2 PERFORMANCE. WWWX shall have complied with and performed all
covenants and conditions of this Agreement required to be
performed and complied with by it on or before the Closing Date.
9.3 LITIGATION. No suit or proceeding challenging the transaction
provided for under this Agreement shall be overtly threatened or
commenced.
9.4 APPROVAL AND RELEASE OF OBLIGATIONS. All Members of BarterOne have
approved this sale and each executes a respective mutual release
of obligations, liabilities.
9.5 SEVERANCE AGREEMENTS. Robert Kohn and Gary Lerman, CEO of
BarterOne, execute the severance agreements with PECO Energy
attached hereto as Exhibit "B".
10. EXPENSES. Each Party hereto shall pay all of its expenses, in connection
with the authorization, preparation, execution and performance of this
Agreement, including, without limitation all fees and expenses of agents,
representatives, counsel, accountants, consultants, brokers and finders.
11. GENERAL.
11.1.SEVERABILITY. In the event that any provision or part of this
Agreement is held invalid or unenforceable by a court or other
tribunal or competent jurisdiction, then the same shall be deemed
severed and separate from the other provisions of this Agreement
which shall remain in full force and effect. To the extent
enforcement is limited, then the provision or provisions so
affected shall be deemed to have been modified to reflect the
limitation in the enforcement.
11.2.GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Pennsylvania,
as if executed and to be performed wholly within the Commonwealth
of Pennsylvania. All actions, legal or otherwise, instituted by
the Parties under this Agreement must be filed in a federal or
state court located in Pennsylvania.
11.3. ENTIRE AGREEMENT. This Agreement is the entire agreement and
understanding between the Parties with respect to the covered
subject matter and supersedes all prior and
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contemporaneous agreements, understandings, representations and
warranties, whether oral or written.
11.4.SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained herein or arising out of this Agreement
or otherwise in connection herewith (individually and
collectively, the "Representations") shall survive the Closing for
a period of three (3) years.
11.5.EXECUTION OF COUNTERPARTS. For the convenience of the parties,
this Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which
together shall constitute one and the same document.
11.6.NOTICES. All notices which are required or may be given pursuant
to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if delivered personally, or by
certified mail, postage prepaid as follows:
If to Purchaser: World Wide Web NetworX Corporation
3000 Atrium Way, Suite 202
Mt. Laurel, NJ 08054
Attention: Robert Kohn
If to Seller: Energy Trading Company
2301 Market Street
Philadelphia, PA 19103
Attention: Robert A. Shinn
with a copy to:
PECO Energy Company
2301 Market Street, S23-1
Philadelphia, PA 19103
Attention: Ronald Zack
11.7 ASSIGNMENT, SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the parties hereto, their heirs, personal
representatives, successors and assigns.
11.8 APPLICABLE LAWS. This Agreement shall be construed and governed by
the internal laws, and not the law of conflicts, of the
Commonwealth of Pennsylvania.
12. TERMINATION
12.1 This Agreement may be terminated prior to Closing at any time:
12.1.1 By the mutual written agreement of Purchaser and Seller;
12.1.2 If (A) Seller breaches any of its representations,
warranties or covenants hereunder, or (B) any material element of
Seller's performance hereunder fails, and (C) Purchaser so
notifies Seller in writing and Seller fails to cure such default
within a period of 10 days;
12.1.3 if (A) Purchaser breaches any of its representations,
warranties or covenants hereunder, or (B) any material element of
Purchaser's performance hereunder fails, and (C) Seller so
notifies Purchaser in writing and Purchaser fails to cure such
default within a period of 10 days.
12.2 If terminated pursuant to 12.1.1 or 12.1.2, all payments (stock
and cash) previously made by WWWX and ETCO shall be returned as
WWWX's sole remedy.
13. CONFIDENTIALITY.
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13.1 Each party agrees that this transaction and any and all
information learned or obtained by it from the other shall be
confidential and agrees not to disclose any such information to
any person whatsoever other than as is necessary for the purpose
of effecting the transaction contemplated by this Agreement;
provided, however, that Seller may, at its election, disclose such
transaction to Seller's employees in the manner and at the time
selected by Seller. Disclosure of this Agreement by WWWX or Kohn
for purposes of funding is not a violation of this clause.
13.2 Upon execution hereof, Seller and Purchaser shall disseminate the
mutually agreeable press release attached hereto as Exhibit C.
14. BEST EFFORTS. Each of the parties covenants to use its best efforts to cause
the satisfaction of all conditions to Closing to be performed by it or satisfied
on its part prior to Closing.
15. MODIFICATION. This Agreement may be amended, modified and supplemented only
by written agreement of the parties hereto.
16. WAIVER. Any failure of Seller or Purchaser to comply with any obligation,
covenant, agreement, or condition herein may be expressly waived in writing by
Purchaser in the case of any such failure by Seller or by Seller in the case of
any such failure by Purchaser, but such waiver or failure to insist upon strict
compliance shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the day and year first above written.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the
date first written above.
ENERGY TRADING COMPANY WORLD WIDE WEB NEWORX,
CORPORATION
By: //s// Robert A. Shinn By: //s// Robert Kohn
-------------------------- -------------------------
Name: Robert A. Shinn
--------------------------
Title: Vice President Title: President
-------------------------- -------------------------
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EXHIBIT 10.5
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (this "AGREEMENT") is dated as of January
29, 1999, by and between GLOBAL TRADE GROUP, LTD., a Wyoming corporation ("GTG")
and its undersigned shareholders (each a "SHAREHOLDER" and, collectively, the
"SHAREHOLDERS"), and WORLD WIDE WEB NETWORX CORPORATION, a Delaware corporation
("WWWX").
RECITALS
A. GTG holds a 49% membership interest ("GTG'S MEMBERSHIP INTEREST") in
BarterOne, LLC, a Delaware limited liability company ("BARTERONE").
B. Energy Trading Company, a Delaware corporation wholly owned by PECO
Energy Company ("ETCO"), holds the remaining 51% membership interest in
BarterOne ("ETCO'S MEMBERSHIP INTEREST"). WWWX has entered into an agreement
with ETCO (the "ETCO AGREEMENT") to purchase ETCO's Membership Interest, and
intends to acquire ETCO's Membership Interest simultaneously with the closing
hereunder.
C. BarterOne holds certain worldwide, perpetual licensing rights to the
ORBIT System Software (On-Line Reciprocal Business and Inventory Transaction
System), an electronic commerce system to be used as a transaction tool over the
internet ("ORBIT"), and is engaged in the business of developing and marketing
on-line asset management and remarketing programs to major corporations (the
"BUSINESS"). GTG holds certain additional assets and rights used or useful in
the conduct of the Business, including certain development rights related to
ORBIT (the "GTG ASSETS").
D. GTG desires to transfer the GTG Assets and GTG's Membership Interest
(collectively, the "PURCHASED ASSETS") to WWWX, and WWWX desires to acquire the
Purchased Assets, on the terms and subject to the conditions set forth herein.
Upon consummation of the transactions contemplated by this Agreement and the
ETCO Agreement, it is the intent of the parties that WWWX shall have acquired
all of the rights and assets necessary or useful to the conduct of the Business.
E. The Shareholders collectively own all of the issued and outstanding
shares of the capital stock of GTG, and WWWX desires that the Shareholders enter
into certain agreements as a condition precedent to the closing hereunder.
NOW THEREFORE, in consideration of the mutual covenants herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties agree
as follows:
SECTION 1. PURCHASE AND SALE
1.1 AGREEMENT TO SELL. At the Closing (hereinafter defined), GTG shall
sell, grant, convey, transfer, assign and deliver to WWWX, upon the terms and
subject to the conditions of this Agreement, free and clear of all liens,
encumbrances and charges of any kind, (except hereinafter
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expressly provided), GTG's Membership Interest and the GTG Assets. As used
herein, the "GTG Assets" shall include all of GTG's right, title and interest in
and to assets of any kind, character and description used or useful in or
necessary to the conduct of the Business or otherwise owned by GTG and used in
or for the benefit of the Business, whether tangible, intangible, real, personal
or mixed, wherever located, including but not limited to the assets set forth in
Schedule 1.1 hereto and all equipment, inventories, accounts receivable, trade
secrets, customer lists, goodwill, intellectual property, contracts, books and
records, telephone numbers, licenses, permits, software, hardware and disks,
data files (whether on disks or other media), logos, trademarks, tradenames,
marketing materials, technology, and technical know-how.
1.2 AGREEMENT TO PURCHASE. At the Closing, WWWX shall acquire from GTG,
upon the terms and subject to the conditions of this Agreement and in reliance
upon the representations and warranties of GTG and the Shareholders in this
Agreement and in the Exhibits and Schedules hereto, the Purchased Assets and, as
consideration therefor, shall pay to GTG the Purchase Price (hereinafter
defined).
SECTION 2. PURCHASE PRICE; NO ASSUMPTION OF LIABILITIES
2.1 PURCHASE PRICE. The purchase price for the Purchased Assets and the
Non-Competition Agreement set forth below (the "PURCHASE PRICE") shall be as
follows:
(a) $576,224.13 shall be paid in immediately available funds at the
Closing, it being acknowledged by GTG that WWWX has prior to the date hereof
deposited with GTG $215,586.00 in cash, which amount shall be applied as a
credit against the Purchase Price; and
(b) as further consideration, WWWX shall issue and deliver to GTG One
Million Five Hundred Thousand (1,500,000) fully paid and non-assessable shares
of the common stock of WWWX (the "WWWX Stock"), which shares are being issued in
a private placement subject to all applicable Federal and State securities laws,
regulations and restrictions, and shall bear a legend to that effect.
2.2 NO ASSUMPTION OF LIABILITIES. WWWX is not assuming or agreeing to
pay or discharge any of the liabilities and obligations of GTG, whether or not
associated with or arising out of the Business, and nothing in this Agreement or
otherwise shall be construed to the contrary. All such liabilities and
obligations, whether known or unknown, direct or contingent, in litigation or
threatened or not yet asserted with respect to any aspect of the Business or
otherwise are and shall remain the responsibility of GTG. Without limiting the
generality of the foregoing, GTG shall remain specifically responsible for (a)
any liabilities with respect to any Taxes (as defined herein), (b) any
obligation for any employee grievance pending at the Closing Date or accruing
prior to the Closing Date, (c) any obligations with respect to any litigation
accruing or arising prior to the Closing Date, and (d) any obligations for trade
accounts payable owed on the Closing Date. Further, in no event shall WWWX
assume or incur any liability or obligation with respect to any Taxes payable by
GTG incident to or arising as a consequence of the consummation by GTG of this
Agreement or any cost or expense incurred by GTG incident to or arising as a
consequence of such consummation of the
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negotiations in connection with this Agreement.
SECTION 3. CLOSING; TRANSFER PROCEDURES
3.1 CLOSING. The closing of the sale and purchase of the Purchased
Assets (the "CLOSING") shall be held at 10 a.m., local time, on February 5, 1999
(the "CLOSING DATE") at the offices of WWWX, or on such other date and at such
other time or place as the parties may agree in writing.
3.2 TRANSFER OF THE PURCHASED ASSETS. At the Closing, GTG shall deliver
to WWWX such bills of sale, endorsements, assignments and instruments of
conveyance and transfer, in form and substance reasonably satisfactory to WWWX,
as shall be reasonably required to vest in WWWX all of GTG's right, title and
interest in and to the Purchased Assets free and clear of all liens and
encumbrances as provided in Section 3.4.
3.3. PURCHASE PRICE. At the Closing, WWWX shall deliver to GTG the cash
portion of the Purchase Price and shall issue and deliver to GTG the WWWX Stock,
all in accordance with Section 2 hereof.
3.4 RELEASE OF LIENS. At or prior to the Closing, GTG shall deliver all
necessary releases of liens and Uniform Commercial Code termination statements
in forms reasonably acceptable to counsel for WWWX so that GTG's title to the
Purchased Assets is free and clear of all liens and encumbrances or as of the
Closing will be.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF GTG AND THE SHAREHOLDERS
GTG and the Shareholders hereby jointly and severally represent and
warrant to WWWX, intending for WWWX to rely hereon, as follows:
4.1 ORGANIZATION AND GOOD STANDING. GTG is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Wyoming, and BarterOne is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware. GTG owns
GTG's Membership Interest in BarterOne free and clear of any liens, encumbrances
or other rights of third parties. GTG's Membership Interest and ETCO's
Membership Interest together constitute 100% of the membership interests in
BarterOne, and there are no outstanding options or rights to purchase or
otherwise acquire any interest in BarterOne of any kind or character, or any
rights or interests convertible into or exchangeable for, or otherwise entitling
anyone to acquire any such interest. Attached hereto as Exhibit "A" is a true
and complete copy of the Operating Agreement for BarterOne, together with all
amendments thereto or modifications thereof (the "OPERATING AGREEMENT"). The
Operating Agreement is in full force and effect and unmodified except as
specifically set forth in Exhibit A, GTG has performed all of its obligations to
be performed thereunder, and neither GTG nor any of the Shareholders has any
knowledge of any default or claimed or alleged default, or state of facts which
with notice or lapse of time or both, would
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constitute a default, in any obligation of GTG or of any other party to be
performed thereunder.
4.2 FINANCIAL CONDITION. GTG has delivered to WWWX (a) BarterOne's
management prepared balance sheet dated December 22, 1998, and (b) BarterOne's
1997 Tax Returns (collectively, the "FINANCIALS"). The Financials and the
schedules to this Agreement collectively represent true and complete lists of
the assets and liabilities of GTG and BarterOne on the date hereof and as
anticipated to exist at the Closing, and together present fairly the financial
condition, results of operations, business, properties, assets, liabilities and
future prospects of BarterOne and the Business as of the dates thereof and for
the periods indicated therein. There has been no material adverse change in the
financial condition or future prospects of BarterOne or the Business, and no
fact is known to GTG or the Shareholders which materially adversely affects or
in the future may materially adversely affect the financial condition or future
prospects of BarterOne or the Business.
4.3 TITLE TO BARTERONE ASSETS. BarterOne owns outright, and has good
marketable title to, all of its assets, including without limitation the ORBIT
software and all related technical information and other intellectual property
rights necessary to the conduct of the Business (collectively, the
"TECHNOLOGY"), free and clear of all liens, pledges, mortgages, security
interests, conditional sales contracts or other encumbrances or conflicting
claims of any nature whatsoever, except for possible claims of Avenir Internet
Solutions, Inc. ("AVENIR") under agreements with BarterOne ("AVENIR Claims"), as
hereinafter more particularly addressed, and except for those further matters
(if any) set forth on Schedule 4.3 attached hereto and incorporated herein. In
particular, and not in limitation of the foregoing:
(a) the Technology does not and will not contain any "backdoor" or
concealed access or any "software locks" or any similar devices which, upon the
occurrence of a certain event, the passage of a certain amount of time, or the
taking of any action (or the failure to take any action) by or on behalf of GTG
or others, will cause the Technology to be destroyed, erased, damaged or
otherwise made inoperable;
(b) the Technology is owned by BarterOne exclusively without infringing
upon, or misusing, misappropriating or otherwise acting adversely to, the right
or the claimed right of any person or entity under or with respect to the
Technology or any part thereof;
(c) BarterOne has not received any notice of any claim of infringement
or violation of any third party's copyrights, patents, trade secrets,
trademarks or other proprietary rights relating to the Technology nor, to the
knowledge of GTG and the Shareholders, does any basis for any such claim or
right or interest in the Technology or otherwise adverse to BarterOne's
unqualified right to exclusively own and fully utilize the Technology exist;
(d) there are no pending or threatened suits, legal proceedings, claims
or governmental investigations against or with respect to the Technology or any
component thereof;
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(e) except as set forth on Schedule 4.3, there are no licenses,
assignments, instruments of transfer, pledges, encumbrances or agreements that
are currently outstanding or in effect whereby any interest in or to the
Technology has been licensed, assigned, transferred, pledged or otherwise
conveyed to any person or entity;
(f) BarterOne's rights to the Technology are not being infringed upon
or misused or misappropriated by any person or entity;
(g) to the knowledge of GTG and the Shareholders, neither the use and
development of the Technology, nor the offer for sale, sale and use of services
related to the Technology, infringes or will infringe upon any intellectual
property right of any third party anywhere in the world;
(h) there are no outstanding agreements, confinements or encumbrances
inconsistent with the provisions of this Agreement, whether made or entered into
by the GTG or BarterOne or otherwise;
(i) to the knowledge of GTG and the Shareholders, no information
relating to the Technology has been disclosed in a manner as to become available
to the public;
(j) the Technology will perform in substantial conformity with its
specifications as identified in any and all documentation provided to WWWX; and
(k) to the knowledge of GTG and the Shareholders, the Technology is and
will be free from defects in operation or otherwise relating to the year 2000,
date data century recognition calculations that accommodate same century and
multi-century formulas and date values, and century correct date data interface
values will accurately process date and time data (including but not limited to,
calculation, comparing and sequencing) from, into and between the twentieth and
twenty-first centuries, and the years 1999 and 2000 and leap year calculation,
and when used in combination with other information technology, will accurately
process date and time data if the other information technology exchanges date
and time data with it;
(l) BarterOne owns the entire worldwide right, title, and interest in
and to all intellectual property rights in the Technology, including without
limitation all copyrights in all computer programs and/or other works of
authorship included in the Technology, all patent rights in and to any and all
inventions included in the Technology, such patent rights including without
limitation all patents and patent applications directed to such inventions and
the right to file patent applications directed to such inventions, and all
rights in the nature of trade secrets in the Technology; and
(m) with respect to the Avenir Claims, (i) the ORBIT software can be
rewritten or reconfigured to substitute an alternative "platform" for the
software developed by Avenir, which substitution will have the effect of
removing from the ORBIT software any technology developed by Avenir, thereby
extinguishing any Avenir Claims, (ii) the ORBIT software, thus reconfigured,
will function at least as well as the ORBIT software as presently configured,
and (iii) the aforesaid reconfiguration can be completed within ninety (90) days
following the Closing Date at a cost of less
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than $50,000.
4.4 TITLE TO GTG ASSETS. GTG owns outright, and has good and marketable
title to, all of the GTG Assets free and clear of all liens, pledges,
mortgages, security interests, conditional sales contracts or other encumbrances
or conflicting claims of any nature whatsoever, except as set forth on Schedule
4.4 attached hereto and incorporated herein, all of which GTG shall remove at or
prior to the Closing.
4.5 TAX MATTERS. Except as set forth on Schedule 4.5 attached hereto
and incorporated herein, GTG and BarterOne have filed or caused to be filed all
Tax Returns (as defined herein) through the taxable year ended December 31, 1998
which are due and required to be filed and have paid or caused to be paid all
Taxes due through the date hereof and any assessment of Taxes received, except
Taxes or assessments that are being contested in good faith and have been
adequately reserved against. GTG and BarterOne have received no notice of, and
to the knowledge of GTG and the Shareholders, there is no pending or threatened
proceeding or claim by any governmental agency for assessment or collection of
Taxes from GTG or BarterOne. All such Tax Returns have been prepared on the same
basis as that of previous years and in accordance with all applicable laws,
regulations and requirements, and accurately reflect the taxable income (or
other measure of Tax) of GTG and BarterOne. GTG and BarterOne have satisfied all
Federal, state, local and foreign withholding tax requirements including but not
limited to income, social security and employment tax. There are no liens for
Taxes on any of the Purchased Assets. No transaction contemplated by this
Agreement is subject to withholding under Section 1445 of the Internal Revenue
Code of 1986, as amended (the "Code"). As used herein, "Tax" or "Taxes" means
any federal, state, local and foreign income, payroll, withholding, excise,
sales, use, personal property, use and occupancy, business and occupation,
mercantile, real estate, gross receipts, license, employment, severance, stamp,
premium, windfall profits, social security (or similar unemployment),
disability, transfer, registration, value added, alternative, or add-on minimum,
estimated, or capital stock and franchise and other tax of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or not,
and "Tax Returns" means all returns, reports, forms, declarations, claims for
refunds or other information required to be filed or supplied to any person
including a taxing authority in connection with Taxes (including without
limitation information returns and declarations of estimated Tax) (Any reference
to "filed" or "file" with respect to Taxes shall also be deemed to include
"supplied" or "supply").
4.6 LITIGATION. Except as disclosed in Schedule 4.6 attached hereto and
incorporated herein:
(a) there is no dispute, claim, actions, suit, proceeding, arbitration
or governmental investigation, either administrative or judicial, pending, or to
the knowledge of GTG and the Shareholders threatened, against GTG, BarterOne,
the Business or the Purchased Assets; and
(b) neither GTG or BarterOne is in default with respect to any order,
writ, injunction or decree of any court or governmental department, commission,
board, bureau, agency or instrumentality, which involves the possibility of any
judgment or liability which may result in any
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material adverse change in the financial condition of GTG, BarterOne, the
Business or the Purchased Assets.
4.7 ABSENCE OF UNDISCLOSED LIABILITIES. Neither GTG nor BarterOne has
any liabilities or obligations accrued, absolute, contingent or otherwise,
except as disclosed in the Financials or in this Agreement or the Exhibits or
Schedules hereto or as incurred, consistent with past business practice, in the
normal and ordinary course of the Business, and none of which is material and
adverse. For purposes of this Agreement, material means any matter which could
exceed $5,000.
4.8 MATERIAL CONTRACTS. Schedule 4.8 contains a true and correct list
of each contract, agreement, commitment or obligation (a) with respect to
BarterOne or the Business, which involves the payment to or from BarterOne of
amounts in excess of $5,000 per year, (b) any license, franchise or distribution
agreement, which involves payments to or from BarterOne in excess of $5,000 per
year, and (c) any lease of tangible personal property, which involves payments
to or from BarterOne in excess of $5,000 per year (the "BARTERONE MATERIAL
CONTRACTS"). Each of the BarterOne Material Contracts constitutes a legal, valid
and binding obligation of the parties thereto, is in full force and effect and
will continue in full force and effect following the consummation of the
transactions contemplated herein and hereby, in each case without breaching the
terms thereof or resulting in the forfeiture or impairment of any rights
thereunder and without the consent, approval or act of, or the making of any
filing with, any other party (except as set forth in Schedule 4.8). BarterOne is
not in, or to its knowledge alleged to be in, breach or default under, nor is
there or is there alleged to be any basis for termination of, any BarterOne
Material Contract and, to the best knowledge of GTG and the Shareholders, no
other party to any BarterOne Material Contract has breached or defaulted
thereunder, and no event has occurred and no condition or state of facts exists
which, with the passage of time or the giving of notice or both, would
constitute such a default or breach by BarterOne or, to the best of the
knowledge of GTG and the Shareholders, by any such other party. BarterOne is not
currently renegotiating any BarterOne Material Contract and is not paying
liquidated damages in lieu of the performance thereunder.
4.9 INTANGIBLE ASSETS. Schedule 4.9 sets forth a list of (a) all
patents, copyrights, trade names, trademarks, service marks and name (registered
or unregistered), and applications and registrations therefor, (b) all research,
development and commercially practiced processes, trade secrets, know-how,
inventions, and engineering and other technical information, (c) all computer
programs, software and data bases owned by or licensed to BarterOne, (d) all
information, drawings, specifications, designs, plans, financial, marketing and
business data and plans, other proprietary, confidential or intellectual
information or property and all copies and embodiments thereof in whatever form
or medium and (e) all customer and membership lists of BarterOne (collectively
"INTANGIBLE ASSETS") as well as a list of all registrations thereof and pending
applications therefor. Each of the Intangible Assets listed on such schedule as
being owned by BarterOne is owned by BarterOne free and clear of any and all
liens and encumbrances and, to the knowledge of GTG and the Shareholders, no
other person or entity has any claim of ownership with respect thereto.
BarterOne has adequate licenses or other valid rights to use all of the
Intangible Assets which it does not own and which are material to the conduct of
the Business. To the knowledge of GTG and the
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Shareholders, BarterOne's use of the Intangible Assets does not conflict with,
infringe upon, violate or interfere with any intellectual property rights of any
other person or entity, nor is any other person or entity infringing upon,
violating or interfering with any intellectual property rights of BarterOne.
4.10 COMPLIANCE WITH LAWS. GTG and BarterOne have complied with and are
not in default under, or in violation of, any law, ordinance, rule, regulation
or order (including, without limitation, any environmental, safety, employee
benefit, health or price or wage control law, ordinance, rule, regulation or
order) applicable to the Business which materially adversely affect or, so far
as GTG or the Shareholders can now foresee, may in the future materially
adversely affect, the Business or the Purchased Assets.
4.11 AUTHORIZATION. The execution and delivery of this Agreement, and
the sale, transfer and other actions contemplated hereby have been duly
authorized, including, with respect to GTG, by all necessary action of its Board
of Directors and the Shareholders, and neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated herein by
GTG or the Shareholders constitutes a violation or breach of applicable law or
any contract or instrument to which GTG or any of the Shareholders is a party or
by which it or they are bound, or any order, writ, injunction, decree or
judgment applicable to it or them, or constitutes a default (or would but for
the giving of notice or lapse of time or both, constitute a default) under any
contract or instrument to which GTG or any Shareholder is a party or by which it
or they are bound, or conflicts with or violates any provision of the Operating
Agreement or the Articles of Incorporation or By-Laws of GTG. Without limiting
the generality of the foregoing provisions, the execution and delivery by GTG
and the Shareholders of this Agreement and the consummation of the transactions
contemplated hereby will not (i) result in a violation or default or give to any
other person any rights, including rights of termination, cancellation or
acceleration under any applicable law, rule or regulation, any agreement,
instrument or policy to which GTG or the Shareholders is a party or may be
bound, (ii) result in any judgment, order, injunction, decree or ruling of any
court or governmental authority to which GTG and/or any of the Shareholders is a
party or subject or (iii) require any authorization, consent, approval,
exemption or other action by any court or administrative or governmental body
which has not been obtained or any notice to or filing with any court or
administrative or governmental body which has not been given or done. This
Agreement has been duly executed and delivered by GTG and the Shareholders and
constitutes the legal, valid and binding obligation of GTG and the Shareholders
enforceable in accordance with its terms.
4.12 CONSENTS. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any person,
entity or governmental body is required on the part of BarterOne, GTG or any of
the Shareholders in connection with the execution and delivery by GTG or the
Shareholders of this Agreement, or the compliance by GTG or any of the
Shareholders with any of the provisions hereof.
4.13 INVESTMENT REPRESENTATIONS.
(a) the shares of WWWX Stock being acquired by GTG are intended to be
and are being acquired solely for GTG's account without a view to the current
distribution or resale thereof, and
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GTG does not have any contract, undertaking, agreement or arrangement to sell or
otherwise transfer or dispose of any of such shares in any manner to any person
or entity;
(b) GTG will not sell, transfer or otherwise dispose of any of the
shares of WWWX Stock being acquired by GTG, in any manner, unless at the time of
such transfer: (i) a registration under the Securities Act of 1933, as amended
(the "SECURITIES ACT") and under all other applicable securities laws is in
effect with respect to the shares of the WWWX Stock to be sold, transferred or
disposed of, and GTG complies with all of the requirements of the Securities Act
and such other applicable securities laws with respect to the proposed
transaction; or (ii) GTG has obtained and has provided to WWWX satisfactory
evidence that the proposed sale, transfer or disposition does not require
registration under the Securities Act or such other applicable securities
laws;
(c) the shares of WWWX Stock being acquired by GTG have not been
issued by WWWX pursuant to a registration under the Securities Act, and GTG must
therefore hold such shares indefinitely unless a subsequent registration or
exemption therefrom is available and is obtained. No federal or state agency has
approved or disapproved the shares of WWWX Stock being acquired by GTG for
investment or any other purpose. All of the shares of WWWX Stock being acquired
by GTG have been issued and sold to GTG in reliance upon a specific exemption
from the registration requirements of the Securities Act which depends, in part,
upon the accuracy of GTG's representations, warranties and agreements set forth
in this Agreement; and
(d) GTG is an "accredited investor," as such term is defined in
Regulation D under the Securities Act.
4.14 DISCLOSURE. No representation or warranty by GTG or the
Shareholders in this Agreement or in any other Exhibit, Schedule, list,
certificate or document delivered pursuant to this Agreement, contains or will
contain at Closing any untrue statement of material fact or omits or will omit
to state any material fact necessary to make any statement herein the therein
not misleading.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF WWWX
WWWX hereby represents and warrants to GTG, intending for GTG to rely
hereon, as follows:
5.1 ORGANIZATION AND GOOD STANDING. WWWX is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
5.2 AUTHORIZATION. The execution and delivery of this Agreement and
other actions contemplated hereby have been duly authorized by all necessary
action of the Board of Directors and shareholders of WWWX, and neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein by WWWX constitutes a violation or breach of
applicable law or any contract or instrument to which WWWX is a party or is
bound, or any order, writ, injunction, decree or judgment applicable to it, or
constitutes a default (or would but for the giving of notice or lapse of time or
both, constitute a default) under any contract or instrument to
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which WWWX is a party or by which it is bound, or conflicts with or violates any
provision of the Articles of Incorporation or By-laws of WWWX. Without limiting
the generality of the foregoing provisions, the execution and delivery by WWWX
of this Agreement and the consummation of the transactions contemplated hereby
will not (i) result in a violation or default or give to any other person any
rights, including rights of termination, cancellation or acceleration under any
applicable law, rule or regulation, any agreement, instrument or policy to which
WWWX is a party or may be bound, (ii) result in any judgment, order, injunction,
decree or ruling of any court or governmental authority to which it is a party
or subject or (iii) require any authorization, consent, approval, exemption or
other action by any court or administrative or governmental body which has not
been obtained or any notice to a filing with any court or administrative or
governmental body which has not been given or done. This Agreement has been
duly executed and delivered by WWWX and constitutes the legal, valid and
binding obligation of WWWX enforceable in accordance with its terms.
5.3 CONSENTS. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any person,
entity or governmental body is required on the part of WWWX in connection with
the execution and delivery by WWWX of this Agreement, or the compliance by WWWX
with any of the provisions hereof.
5.4 DISCLOSURE. No representation or warranty by WWWX in this
Agreement or in any other Exhibit, Schedule, list, certificate or document
delivered pursuant to this Agreement, contains or will contain at Closing any
untrue statement of material fact or omits or will omit to state any material
fact necessary to make any statement herein and therein not misleading.
SECTION 6. CONDUCT PENDING THE CLOSING
GTG and the Shareholders hereby covenant and agree that, pending the
Closing and except as otherwise approved in advance in writing by WWWX:
6.1 CONDUCT OF BUSINESS. GTG shall carry on and cause BarterOne to
carry on the Business diligently and substantially in the same manner as
heretofore and refrain from any action that would result in the breach of any of
the representations, warranties or covenants of GTG or the Shareholders
hereunder.
6.2 ACCESS. WWWX and its authorized representatives shall have full
access during normal business hours upon prior arrangement with GTG to all
properties, books, records, contracts and documents of GTG or BarterOne relating
to the Business, and GTG shall furnish or cause to be furnished to WWWX and its
authorized representatives all information with respect to the Purchased Assets
and Business as they may reasonably request.
6.3 CONTRACTS AND COMMITMENTS. GTG shall not permit BarterOne to enter
into any contract, commitment or transaction relating in any way to the
Business, except in accordance with the ordinary course of business.
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6.4 SALE OF CAPITAL ASSETS. GTG will not and will not permit BarterOne
to sell or dispose of, or agree to sell or dispose of, any of the Purchased
Assets, except in accordance with the ordinary course of business.
6.5 LIABILITIES. GTG will not, and will not permit BarterOne to,
create any indebtedness or any other fixed or contingent liability relating
in any way to the Business or the Purchased Assets, including, without
limitation, liability as a guarantor or otherwise with respect to the
obligations of others except for accounts payable in the ordinary course of
business consistent with past practices.
6.6 INSURANCE. All present insurance insuring GTG, BarterOne, their
respective employees, the Business or the Purchased Assets wherever located,
will be maintained by GTG and BarterOne in all respects.
6.7 PRESERVATION OF ORGANIZATION AND EMPLOYEES. GTG will use its best
efforts to preserve the Business intact, to keep available its key employees (if
any), and to preserve the present relationships of GTG and BarterOne with
suppliers, customers, banks and others having business relations with them.
BarterOne will not change its present relationship with its employees or the
compensation payable or to become payable to any of them until the Closing Date.
6.8 NO DEFAULT. GTG shall not do any act or omit to do any act, or
permit any act or omission to act, which will cause a material breach of any
material contract, commitment or obligation by which it or BarterOne is bound.
6.9 AUTHORIZATION FROM OTHERS. Prior to the Closing Date, GTG shall
have obtained all authorizations, waivers, consents and permits of others
required to permit the consummation by GTG of the transactions contemplated by
this Agreement or to remove any breach or threatened breach of any
representation, warranty or agreement of GTG herein.
SECTION 7. CONDITIONS PRECEDENT TO WWWX'S OBLIGATIONS
All obligations of WWWX under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions
unless otherwise waived in writing by WWWX:
7.1 REPRESENTATIONS AND WARRANTIES. GTG's and the Shareholder's
representations and warranties contained in this Agreement or in any list,
certificate or document delivered pursuant to the provisions hereof shall be
true at and as of the time of Closing.
7.2 PERFORMANCE OF AGREEMENTS. GTG and the Shareholders shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it or them prior to or at the
Closing, including without limitation GTG's obligation to deliver the Purchased
Assets free and clear of liens and encumbrances in accordance with Section 3.4
hereof and the covenants set forth in Section 6 hereof.
7.3 ADVERSE CHANGE. There shall not have been a material adverse
change, occurrence or
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casualty, financial or otherwise, in GTG or BarterOne or to the Business or the
Purchased Assets, whether covered by insurance or not.
7.4 CLOSING DELIVERIES. GTG shall have delivered the documents and
other items described in Section 3 hereof.
7.5 NO LITIGATION. There shall not be any pending or, to the knowledge
of GTG, threatened action, proceeding or investigation by or before any court,
arbitrator, governmental body or agency which shall seek to restrain, prohibit
or invalidate the transactions contemplated hereby or which, if adversely
determined, would result in a breach of a representation, warranty or covenant
of any party herein.
7.6 DUE DILIGENCE. Prior to Closing, WWWX shall have the right to
conduct a due diligence investigation, audit and financial review of the
Business and all of the Purchased Assets and liabilities in order that WWWX, in
its sole discretion, may confirm its understanding and valuation of the Business
and the Purchased Assets and verifying, among other things, no undisclosed
liabilities or potential liabilities of GTG or BarterOne. Such due diligence
shall include, without limitation, all operational, legal, contractual,
litigation, employment, purchasing, marketing, accounting, financial, tax and
other aspects of the Business. If such investigation is not satisfactory to
WWWX, for any reason, WWWX may terminate this Agreement and shall have no
further obligation hereunder. WWWX's conduct of its due diligence shall not in
any way relieve GTG or the Shareholders of their obligations and liabilities
contained in this Agreement including, without limitation, the accuracy of the
representations and warranties of GTG and the Shareholders set forth in this
Agreement.
SECTION 8. CONDITIONS PRECEDENT TO GTG'S AND THE SHAREHOLDERS'
OBLIGATIONS
All obligations of GTG and the Shareholders under this Agreement are
subject to the fulfillment, prior to or at the Closing, of each of the following
conditions unless otherwise waived in writing by GTG:
8.1 REPRESENTATIONS AND WARRANTIES. WWWX's representations and
warranties contained in this Agreement shall be true at and as of the time of
Closing.
8.2 PERFORMANCE OF AGREEMENTS. WWWX shall have performed and complied
with all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
8.3 CLOSING DELIVERIES. WWWX shall have paid the Purchase Price for the
Purchased Assets.
8.4 NO LITIGATION. There shall not be any pending or threatened
action, proceeding or investigation by or before any court, arbitrator,
governmental body or agency which shall seek to restrain, prohibit or invalidate
the transactions contemplated hereby or which, if adversely determined,
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would result in a breach of a representation, warranty or covenant of any party
herein.
SECTION 9. FEES AND EXPENSES
9.1 REPRESENTATION AND INDEMNITY WITH RESPECT TO BROKERS. Each party
hereby represents and warrants to the other that it has not engaged or dealt
with any broker or other person who may be entitled to any brokerage fee or
commission in respect of the execution of this Agreement or the consummation of
the transactions contemplated hereby. Without limiting the generality of the
foregoing, each of the parties hereto shall indemnify and hold the other
harmless against any claim, loss, liability or expense which may be asserted
against such other party as a result of such first mentioned party's dealings,
arrangements or agreements with any such broker or person.
9.2 EXPENSES OF THE TRANSACTION. Each party hereto shall pay its own
expenses incidental to the preparation of this Agreement and the consummation of
the transactions contemplated hereby.
9.3 SALES, TRANSFER AND DOCUMENTARY STAMPS. WWWX shall be responsible
for payment of all sales, transfer and documentary taxes or stamps, if any, due
as a result of the transfer of the Purchased Assets hereunder.
SECTION 10. INDEMNIFICATION
10.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties, covenants and agreements made by any party in this
Agreement or in any certificate delivered pursuant hereto shall survive the
Closing.
10.2 INDEMNIFICATION BY GTG AND THE SHAREHOLDERS. GTG and the
Shareholders shall jointly and severally defend, indemnify and hold WWWX
harmless from and against (a) any and all liabilities and obligations of, or
claims against, GTG or BarterOne arising or accruing prior to the Closing,
including without limitation the Avenir Claims, and (b) all actual or potential
claims, demands, liabilities, damages, losses and out-of-pocket expenses
including reasonable attorneys' fees whether or not reduced to judgment, order
or award, caused by or arising out of (i) the breach of any covenant or
agreement of GTG or any of the Shareholders in this Agreement or in any
certificate delivered by it or them pursuant hereto, or (ii) the failure of any
representations or warranties made by GTG or any the Shareholders in this
Agreement or in any certificate delivered by it or them pursuant hereto to have
been true and correct when made and on and as of the Closing Date.
10.3 INDEMNIFICATION BY WWWX. WWWX shall defend, indemnify and hold
GTG and the Shareholders harmless from and against all actual or potential
claims, demands, liabilities, damages, losses and out-of-pocket expenses
including reasonable attorneys' fees whether or not reduced to judgment, order
or award, caused by or arising out of (a) the breach of any covenant or
agreement of WWWX in this Agreement or in any certificate delivered by them
pursuant hereto, or (b) the failure of any representations or warranties made by
WWWX in this Agreement or in any certificate delivered by them pursuant hereto
to have been true and correct when made and on and as of the Closing Date.
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10.4 NOTICE OF INDEMNIFICATION. In the event any legal proceeding
shall be threatened or instituted or any claim or demand shall be asserted by
any person or entity in respect of which payment may be sought by one party
hereto from another party under the provisions of this Section 10, the party
seeking indemnification (the "INDEMNITEE") shall promptly cause written notice
of the assertion of any such claim of which it has knowledge which is covered by
this indemnity to be forwarded to the other party (the "INDEMNITOR"); provided,
however, that failure of the Indemnitee to give the Indemnitor notice as
provided in this Section shall not relieve the Indemnitor of its obligations
hereunder except to the extent that the Indemnitor shall have been prejudiced by
such failure. Any notice of a claim by reason of any of the representations,
warranties or covenants contained in this Agreement shall state in reasonable
detail the representations, warranty or covenant with respect to which the claim
is made, the facts giving rise to an alleged basis for the claim, and the amount
of the liability asserted against the Indemnitor by reason of the claim.
10.5 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS. Except as
otherwise provided herein, in the event of the initiation of any legal
proceeding against an Indemnitee by a third party, the Indemnitor shall be
entitled to assume the defense thereof, at the Indemnitor's sole expense. If the
Indemnitor assumes the defense of any legal proceeding, it will not settle the
legal proceeding, it will not settle the legal proceeding without the prior
written consent of the Indemnitee (which shall not be unreasonably withheld or
delayed). The Indemnitee shall cooperate in all reasonable respects with the
Indemnitor and its attorneys in the investigations, trial and defense of any
legal proceeding and any appeal arising therefrom (including the filing in the
Indemnitee's name of appropriate cross claims and counterclaims). The Indemnitee
may, at its own cost, participate in any investigation, trial and defense of
such legal proceeding controlled by the Indemnitor and any appeal arising
therefrom. If after receipt of a written notice pursuant to Section 10.4 hereof,
the Indemnitor does not undertake to defend any such legal proceeding, the
Indemnitee may, but shall have no obligation to, contest or defend against any
legal proceeding and the Indemnitor shall be bound by the result obtained with
respect thereto by the Indemnitee (including, without limitation, the settlement
thereof without the consent of the Indemnitor). If there are one or more legal
defenses available to the Indemnitee that conflict with those available to the
Indemnitor, the Indemnitee shall have the right, at the expense of the
Indemnitor, to assume the defense of the legal proceeding; provided, however,
that in any event the Indemnitee may not settle such legal proceeding without
the consent of the Indemnitor, which consent shall not be unreasonably
withheld or delayed. As used herein, a "legal proceeding" includes any
judicial, administrative or arbitral action, suit, proceeding (public or
private), claim or governmental proceeding.
10.6 PAYMENT OF INDEMNIFICATION AMOUNTS. Amount payable by the
Indemnitor to the Indemnitee in respect of any claims hereunder shall be payable
by the Indemnitor as incurred by the Indemnitee.
10.7 RIGHT OF WWWX SUCCESSORS TO ENFORCE. GTG and the Shareholders
agree that the provisions of this Section 10 shall inure to the benefit of, and
may be enforced by, any successor to the interests of WWWX (by assignment,
merger, operation of law or otherwise, and regardless of whether such successor
acquires such interests directly from WWWX), holding all or any part of the
Purchased
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Assets ("WWWX SUCCESSOR"), to the same extent as if the representations,
warranties, covenants and agreements of GTG and the Shareholders contained in
this Agreement had been made directly to such WWWX Successor. GTG and the
Shareholders further agree that they shall execute and deliver to any WWWX
Successor such further agreements, instruments or other documents as may be
reasonably required to affirm the obligations of GTG and the Shareholders and
the rights of such WWWX Successor hereunder.
SECTION 11. POST-CLOSING MATTERS; NON-COMPETITION AGREEMENT
11.1 FURTHER ASSURANCES. At the request of WWWX or any WWWX Successor
from time to time, GTG and the Shareholders shall, without further cost to WWWX
or such WWWX Successor, at any time and from time to time, promptly do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, to WWWX or such WWWX Successor, as the case may be, all such further
acts, transfers, assignments, deeds, powers and assurances of title, and
additional papers and instruments, and will do or cause to be done all acts or
things as often as may be proper or necessary or advisable for better assuring,
conveying, transferring and assigning the Purchased Assets (including, without
limitation, the Technology), and effectively to carry out the intent hereof, and
to vest in WWWX or, as applicable, any WWWX Successor, the entire right, title
and interest in and to all of the Purchased Assets. Without limiting the
generality of the foregoing, GTG and the Shareholders each agrees to furnish to
WWWX or any WWWX Successor, all data, formulae, models, programs, software,
notes, documents and all other information regarding the Technology in their
possessions, necessary or useful for WWWX or such WWWX Successor to develop the
Technology, to utilize the Technology and to enable its attorneys to evaluate
and properly protect the Technology.
11.2 RESPONSIBILITY FOR LITIGATION. GTG shall be responsible for all
present or future litigation and claims for injury and related expenses arising
out of the conduct of the Business up to the time of Closing, including without
limitation, any litigation disclosed on Schedule 4.6 hereto and any litigation
arising out of the Avenir Claims.
11.3 TRADE SECRETS/NON-COMPETITION AGREEMENT.
a. GTG and the Shareholders shall not at any time after the Closing use
for its or their own benefit, or divulge to any other person, firm or
corporation, any confidential information or trade secrets relating in any way
to the Business, and at the Closing, GTG and the Shareholders shall deliver to
WWWX all lists of customers, books, records, trade secrets, intellectual
property and all other property constituting confidential information belonging
to GTG and related to the Business. For the purposes hereof, the term
"CONFIDENTIAL INFORMATION" means any and all information related to the
Technology, customer and marketing relationships, and business and financial
information of the Business.
b. As a material inducement to WWWX to enter into this Agreement, in
consideration of the Purchase Price paid hereunder, and for other good and valid
consideration, the receipt and
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sufficiency of which is hereby acknowledged, as well as in recognition of the
fact that the value of the Purchased Assets would be diminished substantially if
GTG or the Shareholders were to engage in any business or activities in
competition with the Business, GTG and the Shareholders covenant and agree that,
except as required in the performance of their duties set forth in this
Agreement or in any other written agreement with WWWX or any WWWX Successor,
each will not for a period of four (4) years after the Closing Date engage
directly or indirectly, whether individually or in partnership or in
conjunction with any other person, firm, association, syndicate or
corporation, as principal, agent, shareholder, employee, consultant or in any
other manner whatsoever, in any business activity competitive with the
Business.
c. GTG and the Shareholders agree that any violation of any of the
covenants in this Section would cause substantial and irreparable injury to WWWX
or any WWWX Successor, whereupon GTG and/or the Shareholders may be enjoined
from any breach or threatened breach thereof in addition to, but not in
limitation of, any of the rights or remedies to which WWWX or any such WWWX
Successor is or may be entitled to at law or in equity or under this Agreement.
d. GTG and the Shareholders agree that the limitations set forth above
are reasonable in time and geographic scope, and if any provision hereof is held
invalid or unenforceable, the remainder shall nevertheless remain in full force
and effect. In particular, GTG and the Shareholders agree that if any court of
competent jurisdiction shall determine that the duration or geographical limit
of the foregoing non-competition covenant is invalid, unenforceable or
unreasonable, it is the intention of GTG, the Shareholders, and WWWX that it
shall not be terminated thereby but shall be deemed to have been amended to
the extent required to render it valid and enforceable, such amendment to
apply only with respect to the jurisdiction of the court making such
adjudication.
11.4 RIGHT OF WWWX SUCCESSORS TO ENFORCE. GTG and the Shareholders
agree that the provisions of this Section 11 shall inure to the benefit of, and
may be enforced by, any WWWX Successor, to the same extent as if the
representations, warranties, covenants and agreements of GTG and the
Shareholders contained herein had been made directly to such WWWX Successor, and
with the further understanding and agreement that the term "Business" as used
herein shall include the Business as conducted by any such WWWX Successor. GTG
and the Shareholders further agree that they shall execute and deliver to any
WWWX Successor such further agreements, instruments or other documents as may be
reasonably required to affirm the obligations of GTG and the Shareholders and
the rights of such WWWX Successor hereunder.
SECTION 12. MISCELLANEOUS
12.1 GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the Commonwealth of Pennsylvania.
The parties hereto agree that jurisdiction shall be proper in the courts of the
Commonwealth of Pennsylvania and consent to jurisdiction and venue therein.
12.2 ASSIGNMENT. This Agreement shall not be assignable by any party
without the prior written approval of the other party. Notwithstanding the
foregoing, WWWX may, without the consent
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of GTG or the Shareholders, assign its rights under Sections 10 and 11 hereof to
any WWWX Successor as provided therein, it being the intent of the parties that
any such WWWX Successor shall be a third party beneficiary of such rights. To
the extent assignable, this Agreement shall be binding upon, and inure to the
benefit of, WWWX, GTG, the Shareholders and their respective heirs, personal
representatives, successors and assigns.
12.3 HEADINGS FOR REFERENCE ONLY. The section and paragraph headings in
this Agreement are for convenience of reference only and shall not be deemed to
modify or limit the provisions of this Agreement.
12.4 NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered by confirmed fax,
personally, or by recognized overnight courier, or four days after being mailed
by registered mail, return receipt requested, to a party at the following
address (or to such other address as such party may have specified by notice
given to the other party pursuant to this provision):
If to WWWX: World Wide Web NetworX Corporation
3000 Atrium Way, Suite 202
Mt. Laurel, NJ 08054
Attention : Robert D. Kohn
Fax no. (609) 273-6913
If to GTG : Global Trade Group, Ltd.
or the Shareholders: Post Office Box 415
Sharon, MA 02067
Attention: Benjamin R. Kafka
Fax no. (508) 660-7755
12.5 ENTIRE AGREEMENT AND AMENDMENT. This document and the Exhibits and
Schedules hereto contain the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and supersede all prior or
contemporaneous agreements, understandings, representations and warranties
between the parties any may not be amended except by written instrument executed
by the parties hereto.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the first above written.
ATTEST: WORLDWIDE WEB NETWORX CORPORATION
By: //s// By: //Robert D. Kohn//
------------------------ ----------------------------------
ATTEST: [WWWX SUBSIDIARY]
By: //s// By: //Robert D. Kohn//
------------------------ ----------------------------------
ATTEST: GLOBAL TRADE GROUP, LTD.
By: //MKAFKA// By: //BENJAMIN R. KAFKA// 1/29/99
------------------------ ----------------------------------
WITNESS: SHAREHOLDERS:
//IRENE E. MCGRATH// //BENJAMIN R. KAFKA// 1/29/99
- ---------------------------- --------------------------------------
Benjamin R. Kafka
//BENJAMIN R. KAFKA// //MARK LM QUINN//
- ---------------------------- --------------------------------------
Mark LM Quinn
//SARA HOLM// //RAYMOND BASTARACHE//
- ---------------------------- --------------------------------------
Sara Holm Raymond Bastarache
//BENJAMIN R. KAFKA// //ALFRED H. KAFKA//
- ---------------------------- --------------------------------------
Alfred H. Kafka
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EXHIBIT 10.6
ACCQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (this "AGREEMENT") is dated as of January
29, 1999, by and between POSITIVE ASSET REMARKETING, INC., a Massachusetts
corporation ("PAR") and its undersigned shareholders (each a "SHAREHOLDER" and,
collectively, the "SHAREHOLDERS"), and WORLD WIDE WEB NETWORX CORPORATION, a
Delaware corporation ("WWWX").
RECITALS
A. PAR holds certain rights under a Memorandum of Understanding dated
October 26, 1998 (the "MOU") by and among B.D.F., LLC an affiliate of Michael
Fox International, Inc. (together, "FOX"), Henry Butcher USA, Inc. ("BUTCHER"),
and PAR, to a 50% membership interest ("PAR'S MEMBERSHIPS INTEREST") in
AsseTrade.com, a to-be-formed Delaware limited liability company ("ASSETRADE").
As of the date of this Agreement, AsseTrade has been created as AsseTrade.com,
Inc., a Delaware corporation, with the intent that is shall be re-created as a
limited liability company as soon as feasible following the closing under this
Agreement. As used herein, "Par's Membership Interest" shall include PAR's
rights under the MOU to 50% of any capital stock issued by AsseTrade.com, Inc.,
and any such capital stock that may have been issued to PAR prior to the date
hereof.
B. Under the terms of the MOU, Butcher-Fox, LLC, a Maryland limited
liability company owned by Butcher and Fox ("BUTCHER-FOX"), holds or will hold
the remaining 50% membership interest in AsseTrade ("BUTCHER-FOX'S MEMBERSHIP
INTEREST").
C. AsseTrade expects to hold certain worldwide, perpetual licensing
rights to the ORBIT System Software (On-line Reciprocal Business and Inventory
Transaction System), an electronic commerce system to be used as a transaction
tool for auction sales conducted over the internet ("ORBIT"), pursuant to a
Software License Agreement to be entered into with BarterOne, LLC (the "ORBIT
LICENSE"), and intends to engage in the business of developing and marketing
on-line auction services to major corporation (the "BUSINESS"). PAR holds
certain additional assets and right used or useful in the conduct of the
Business, including certain rights related to ORBIT (the "PAR ASSETS").
D. PAR desires to transfer the PAR Assets and one-half of PAR's
Membership Interest (collectively, the "PURCHASED ASSETS") to WWWX, and WWWX
desires to acquire the Purchased Assets, on the terms and subject to the
conditions set forth herein.
E. The Shareholders collectively own all of the issued and outstanding
shares of the capital stock of PAR, and WWWX desires that the Shareholders enter
into certain agreements with WWWX as a condition precedent to the closing
hereunder.
NOW THEREFORE, in consideration of the mutual covenants herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties agree
as follows:
<PAGE>
SECTION 1. PURCHASE AND SALE
1.1 AGREEMENT TO SELL. At the Closing (hereinafter defined), PAR shall
sell, grant, convey, transfer, assign and deliver to WWWX, upon the terms and
subject to the conditions of this Agreement, free and clear of all liens,
encumbrances and charges of any kind, one-half of PAR's Membership Interest
(i.e., a 25% membership interest in AsseTrade or 25% of the issued and
outstanding capital stock of AsseTrade.com, Inc.) and the PAR Assets. As used
herein, the "PAR Assets" shall include all of PAR's right, title and interest in
and to assets (other than PAR's Membership Interest) of any kind, character and
description, whether tangible, intangible, real, personal or mixed, wherever
located, including but not limited to the assets set forth in Schedule 1.1
hereto and all equipment, inventories, accounts receivable, trade secrets,
customer lists, goodwill, intellectual property, contracts, books and records,
telephone numbers, licenses, permits, software, hardware and disks, data filed
(whether on disks or other media), logos, trademarks, tradenames, marketing
materials, technology, and technical know-how.
1.2 AGREEMENT TO PURCHASE. At the Closing, WWWX shall acquire from PAR,
upon the terms and subject to the conditions of this Agreement and in reliance
upon the representations and warranties of PAR and the Shareholders in this
Agreement and in the Exhibits and Schedules hereto, the Purchased Assets and, as
consideration therefore, shall pay to PAR the Purchase Price (hereinafter
defined).
SECTION 2. PURCHASE PRICE; NO ASSUMPTION OF LIABILITIES
2.1 PURCHASE PRICE. In consideration for the Purchased Assets and the
Non-Competition Agreement set forth below (the "PURCHASE PRICE"), WWWX shall
issue and deliver to PART Three Million Five Hundred Thousand (3,500,000) fully
paid and non-assessable shares of the common stock of WWWX (the "WWWX Stock"),
which shares are being issued in a private placement subject to all applicable
Federal and State securities laws, regulations and restrictions, and shall bear
a legend to that effect.
2.2 NO ASSUMPTION OF LIABILITIES. WWWX is not assuming or agreeing to
pay or discharge any of the liabilities and obligations of PAR, whether or not
associated with or arising out of the Business, and nothing in this Agreement or
otherwise shall be construed to the contrary. All such liabilities and
obligations, whether known or unknown, direct or contingent, in litigation or
threatened or not yet asserted with respect to any aspect of the Business or
otherwise are and shall remain the responsibility of PAR. Without limiting the
generality of the foregoing, PAR shall remain specifically responsible for (a)
any liabilities with respect to any Taxes (as herein defined), (b) any
obligation for any employee grievance pending at the Closing Date or accruing
prior to the Closing Date, (c) any obligations for trade accounts payable owed
on the Closing Date. Further, in no event shall WWWX assume or incur any
liability or obligation with respect to any Taxes payable by PAR incident to or
arising as a consequence of the consummation by PAR of this Agreement or any
cost or expense incurred by PAR incident to or arising as a consequence of such
consummation of the negotiations in connection with this Agreement.
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SECTION 3. CLOSING; TRANSFER PROCEDURES
3.1 CLOSING. The closing of the sale and purchase of the Purchased
Assets (the "CLOSING") shall be held at 10 a.m., local time, on February 5, 1999
(the "CLOSING DATE") at the offices of WWWX, or on such other date and at such
other time or place as the parties may agree in writing.
3.2 TRANSFER OF THE PURCHASED ASSETS. At the Closing, PAR shall deliver
to WWWX such bills of sale, endorsements, stock certificates, assignments and
instruments of conveyance and transfer, in form and substance reasonably
satisfactory to WWWX, as shall be reasonably required to vest in WWWX all of
PAR's right, title and interest in and to the Purchased Assets free and clear of
all liens and encumbrances as provided in Section 3.4.
3.3. PURCHASE PRICE. At the Closing, WWWX shall deliver to PAR the WWWX
Stock, in accordance with Section 2 hereof.
3.4 RELEASE OF LIENS. At or prior to the Closing, PAR shall deliver all
necessary releases of liens and Uniform Commercial Code termination statements
in forms reasonably acceptable to counsel for WWWX so that PAR's title to the
Purchased Assets is free and clear of all liens and encumbrances or as of the
Closing will be.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PAR AND THE SHAREHOLDERS
PAR and the Shareholders hereby jointly and severally represent and
warrant to WWWX, intending for WWWX to rely hereon, as follows:
4.1 ORGANIZATION AND GOOD STANDING. PAR is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. AsseTrade is a corporation, and following the
Closing will be re-created as a limited liability company, duly organized,
validly existing and in good standing under the laws of the Sate of Delaware.
PAR owns PAR's Membership Interest free and clear of any liens, encumbrances or
other rights of third parties. PAR's Membership Interest and Butcher-Fox's
Membership Interest together constitute 100% of the interests in AsseTrade, and
there are no outstanding options or rights to purchase or otherwise acquire any
interest in AsseTrade of any kind or character, or any rights or interests
convertible into or exchangeable for, or otherwise entitling anyone to acquire
any such interest. Attached hereto as Exhibit "A" is a true and complete copy of
the MOU and the Certificate of Incorporation and By-Laws of AsseTrade, together
with any and all amendments thereto or modifications thereof (the "ASSETRADE
DOCUMENTS"). The AsseTrade Documents are in full force and effect and unmodified
except as specifically set forth in Exhibit A, PAR has performed all of its
obligations to be performed thereunder, and neither PAR nor any of the
Shareholders has any knowledge of any default or claimed or alleged default, or
state of facts which with notice or lapse of time or both, would constitute a
default, in any obligation of PAR or of any other party to be performed
thereunder.
4.2 FINANCIAL CONDITION. PAR has delivered to WWWX a business plan with
financial
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projections for the Business (the "FINANCIALS"). The Financials and the
schedules to this Agreement collectively represent true and complete lists of
the assets and liabilities of PAR and AsseTrade on the date hereof and as
anticipated to exist at the Closing, and together present fairly the financial
condition, results or operations, business, properties, assets, liabilities and
future prospects of AsseTrade and the Business as of the dates thereof and for
the periods indicated therein, there has been no material adverse change in the
financial condition or future prospects of AsseTrade or the Business, and no
fact is known to PAR or the Shareholders which materially adversely affects or
in the future may materially adversely affect the financial condition or future
prospects of AsseTrade or the Business.
4.3 TITLE TO ASSETRADE ASSETS. AsseTrade owns or will at the Closing
own outright, and has good and marketable title to, all of its assets, including
without limitation the ORBIT software and all related technical information and
other intellectual property rights necessary to the conduct of the Business
(collectively, the "TECHNOLOGY"), free and clear of all liens, pledges,
mortgages, security interest, conditional sales contracts or other encumbrances
or conflicting claims of any nature whatsoever, except as set forth on Schedule
4.3 attached hereto and incorporated herein. In particular, and not in
limitation of the foregoing:
(a) the Technology does not and will not contain any "backdoor" or
concealed access or any "software locks" or any similar devices which, upon the
occurrence of a certain event, the passage of a certain amount of time, or the
taking of any action (or the failure to take any action) by or on behalf of PAR
or others, will cause the Technology to be destroyed, erased, damaged or
otherwise made inoperable;
(b) the Technology is or will as of the Closing be owned by AsseTrade
exclusively without infringing upon, or misusing, misappropriating or otherwise
acting adversely to, the right or the claimed right of any person or entity
under or with respect to the Technology or any part thereof,
(c) AsseTrade has not received any notice of any claim of infringement
or violation of any third party's copyrights, patents, trade secretes,
trademarks or other proprietary rights relating to the Technology nor, to the
knowledge of PAR and the Shareholders, does any basis for any such claim or
right or interest in the Technology or otherwise adverse to AsseTrade's
unqualified right to exclusively own and fully utilize the Technology exist;
(d) there are no pending or threatened suits, legal proceedings, claims
or governmental investigations against or with respect to the Technology or any
component thereof;
(e) except as set forth on Schedule 4.3, there are no licenses,
assignments, instruments of transfer, pledges, encumbrances or agreements that
are currently outstanding or in effect whereby any interest in or to the
Technology has been licensed, assigned, transferred, pledged or otherwise
conveyed to any person or entity;
(f) AsseTrade's rights to the Technology are not being infringed upon
or misused or
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misappropriated by any person or entity;
(g) to the knowledge of PAR and the Shareholders, neither the use and
development of the Technology, nor the offer for sale, sale and use of services
related to the Technology, infringes or will infringe upon any intellectual
property right of any third party anywhere in the world;
(h) there are no outstanding agreements, confinements or encumbrances
inconsistent with the provisions of this Agreement, whether made or entered into
by the PAR or AsseTrade or otherwise;
(i) to the knowledge of PAR and the Shareholders, no information
relating to the Technology has been disclosed in a manner as to become available
to the public;
(j) the Technology will perform in substantial conformity with its
specifications as identified in any and all documentation provided to WWWX; and
(k) to the knowledge of PAR and the Shareholders, the Technology is and
will be free from defects in operation or otherwise relating to the year 2000,
date data century recognition calculations that accommodate same century and
multi-century formulas and date values, and century correct date data interface
values will accurately process date and time data (including but not limited to,
calculation, comparing and sequencing) from, into and between the twentieth and
twenty-first centuries, and the years 1999 and 2000 and leap year calculation,
and when used in combination with other information technology, will accurately
process data if the other information technology exchanges date and time data
with it; and
(l) AsseTrade owns or will at the Closing own the entire worldwide
right, title, and interest in and to all intellectual property rights in the
Technology, including without limitation all copyrights in all computer programs
and/or other works of authorship included in the Technology, all patent rights
in and to any and all inventions included in the Technology, such patent rights
including without limitation all patents and patent applications directed to
such inventions and the right to file patent applications directed to such
inventions, and all rights in the nature of trade secrets in the Technology.
4.4 TITLE TO PAR ASSETS. PAR owns outright, and has good and marketable
title to, all of the PAR Assets free and clear of all clients, pledges,
mortgages, security interests, conditional sales contracts or other encumbrances
or conflicting claims of any nature whatsoever, except as set forth on Schedule
4.4 attached hereto and incorporated herein, all of which PAR shall remove at
or prior to the Closing.
4.5 TAX MATTERS. Except as set forth on Schedule 4.5 attached hereto
and incorporated herein, PAR and AsseTrade have filed or caused to be filed all
Tax Returns (as defined herein) through the taxable year ended December 31, 1998
which are due and required to be filed and have paid or caused to be paid all
Taxes due through the date hereof and any assessment of Taxes received, except
Taxes or assessments that are being contested in good faith and have been
adequately reserved
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against. PAR and AsseTrade have received no notice of, and to the knowledge of
PAR and the Shareholders, there is no pending or threatened proceeding or claim
by any governmental agency for assessment or collection of Taxes from PAR or
AsseTrade. All such Tax Returns have been prepared on the same basis as that of
previous years and in accordance with all applicable laws, regulations and
requirements, and accurately reflect the taxable income (or other measure of
Tax) or PAR and AsseTrade. PAR and AsseTrade have satisfied all Federal, state,
local and foreign withholding tax requirements including but not limited to
income, social security and employment tax. There are no liens for Taxes on any
of the Purchased Assets. No transaction contemplated by this Agreement is
subject to withholding under Section 1445 of the Internal Revenue Code of 1986,
as amended (the "Code"). As used herein, "Tax" or "Taxes" means any federal,
state, local and foreign income, payroll, withholding, excise, sales, use,
personal property, use and occupancy, business and occupation, mercantile, real
estate, gross receipts, license, employment, severance, stamp, premium, windfall
profits, social security (or similar unemployment), disability, transfer,
registration, value added, alternative, or add-on minimum, estimated, or capital
stock and franchise and other tax of any kind whatsoever, including any
interest, penalty or addition thereto, whether disputed or not, and "Tax
Returns" means all returns, reports, forms, declarations, claims for refunds or
other information required to be filed or supplied to any person including a
taxing authority in connection with Taxes (including without limitation
information returns and declarations, claims for refunds or other information
required to be filed or supplied to any person including a taxing authority in
connection with Taxes (including without limitation information returns and
declarations of estimated Tax) *Any reference to "filed" or "file" with respect
to Taxes shall also be deemed to include "supplied" or "supply").
4.6 LITIGATION. Except as disclosed in Schedule 4.6 attached hereto and
incorporated herein:
(a) there is no dispute, claim, actions, suit, proceeding, arbitration
or governmental investigation, either administrative or judicial, pending, or to
the knowledge of PAR and the Shareholders threatened, against PAR, AsseTrade,
the Business or the Purchased Assets; and
(b) neither PAR or AsseTrade is in default with respect to any order,
writ, injunction or decree of any court or governmental department, commission,
board, bureau, agency or instrumentality, which involves the possibility of any
judgment or liability which may result in any material adverse change in the
financial condition of PAR, AsseTrade, the Business or the Purchased Assets.
4.7 ABSENCE OF UNDISCLOSED LIABILITIES. Neither PAR nor AsseTrade has
any liabilities or obligations accrued, absolute, contingent or otherwise,
except as disclosed in the Financials or in this Agreement or the Exhibits or
Schedules hereto or as incurred, consistent with past business practice, in the
normal and ordinary course of the Business, and none of which is material and
adverse. For purposes of this Agreement, material means any matter which could
exceed $5,000.
4.8 MATERIAL CONTRACTS. Schedule 4.8 contains a true and correct list
of each contract, agreement, commitment or obligation (a) with respect to
AsseTrade or the Business, which involves the payment to or from AsseTrade of
amounts in excess of $5,000 per year, (b) any license, franchise or distribution
agreement, which involves payments to or from AsseTrade in excess of $5,000 per
year, and (c) any lease of tangible personal property, which involves payments
to or from AsseTrade in
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excess of $5,000 per year (the "ASSETRADE MATERIAL CONTRACTS"). Each of the
AsseTrade Material Contracts constitutes a legal, valid and binding obligation
of the parties thereto, is in full force and effect and will continue in full
force and effect following the consummation of the transactions contemplated
herein and hereby, in each case without breaching the terms thereof or resulting
in the forfeiture or impairment of any rights thereunder and without the
consent, approval or act of, or the making of any filing with, any other party
(except as set forth in Schedule 4.8). AsseTrade is not in, or to its knowledge
alleged to be in, breach or default under, nor is there or is there alleged to
be any basis for termination of , any AsseTrade Material Contract and, to the
best knowledge of PAR and the Shareholders, no other party to any AsseTrade
Material Contract has breached or defaulted thereunder, and no event has
occurred and no condition or state of facts exists which, with the passage of
time or the giving of notice or both, would constitute such a default or breach
by AsseTrade or, to the best of the knowledge of PAR and the Shareholders, by
any such other party. AsseTrade Material Contract and is not paying liquidated
damages in lieu of the performance thereunder.
4.9 INTANGIBLE ASSETS. Schedule 4.9 sets forth a list of (a) all
patents, copyrights, trade names, trademarks, service marks and name (registered
or unregistered), and applications and registrations therefor, (b) all research,
development and commercially practiced processes, trade secrets, know-how,
inventions, and engineering and other technical information, -C- all computer
programs, software and data bases owned by or licensed to AsseTrade, (d) all
information, drawings, specifications, designs, plans, financial, marketing and
business data and plans, other proprietary, confidential or intellectual
information or property and all copies and embodiments thereof in whatever form
or medium and (e) all customer and membership lists of AsseTrade (collectively
"INTANGIBLE ASSETS") as well as a list of all registrations thereof and pending
applications therefor. Each of the Intangible assets listed on such schedule as
being owned by AsseTrade free and clear of any and all liens and encumbrances
and, to the knowledge of PAR and the Shareholders, no other person or entity has
any claim of ownership with respect thereto. AsseTrade has adequate licenses or
other valid rights to use all of the Intangible Assets which it does not own and
which are material to the conduct of the Business. To the knowledge of PAR and
the Shareholders, AsseTrade's use of the Intangible Assets does not conflict
with, infringe upon, violate or interfere with any intellectual property rights
of any other person or entity, nor is any other person or entity infringing
upon, violating or interfering with any intellectual property rights of
AsseTrade.
4.10 COMPLIANCE WITH LAWS. PAR and AsseTrade have complied with and are
not in default under, or in violation of, any law, ordinance, rule, regulation
or order (including, without limitation, any environmental, safety, employee
benefit, health or price or wage control law, ordinance, rule regulation or
order) applicable to the Business which materially adversely affect or, so far
as PAR or the Shareholders can now foresee, may in the future materially
adversely affect, the Business or the Purchased Assets.
4.11 AUTHORIZATION. The execution and delivery of this Agreement, and
the sale, transfer and other actions contemplated hereby have been duly
authorized, including, with respect to PAR, by all necessary action of its Board
of Directors and the Shareholders, and neither the execution and
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delivery of this Agreement nor the consummation of the transactions contemplated
herein by PAR or the Shareholders constitutes a violation or breach of
applicable law or any contract or instrument to which PAR or any of the
Shareholders is a party or by which it or they are bound, or any order, writ,
injunction, decree or judgment applicable to it or them, or constitutes a
default (or would but for the giving of notice or lapse of time or both,
constitute a default) under any contract or instrument to which PAR or any
Shareholder is a party or by which it or they are bound, or conflicts with or
violates any provision of the AsseTrade Documents or the Articles of
Incorporation or By-Laws of PAR. Without limiting the generality of the
foregoing provisions, the execution and delivery by PAR and the Shareholders of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) result in a violation or default or give to any other person any rights,
including rights of termination, cancellation or acceleration under any
applicable law, rule or regulation, any agreement, instrument or policy to which
PAR or the Shareholders is a party or may be bound, (ii) result in any judgment,
order, injunction, decree or ruling of any court or governmental authority to
which PAR and/or any of the Shareholders is a party or subject or (iii) require
any authorization, consent, approval, exemption or other action by any court or
administrative or governmental body which has not been obtained or any notice to
or filing with any court or administrative or governmental body which has not
been given or done. This Agreement has been duly executed and delivered by PAR
and the Shareholders and constitutes the legal, valid and binding obligation of
PAR and the Shareholders enforceable in accordance with its terms.
4.12 CONSENTS. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any person,
entity or governmental body is required on the part of AsseTrade, PAR or any of
the Shareholders in connection with the execution and delivery by PAR or the
Shareholders of this Agreement, or the compliance by PAR or any of the
Shareholders with any of the provisions hereof.
4.13 INVESTMENT REPRESENTATIONS.
(a) the shares of WWWX Stock being acquired by PAR are intended to be
and are being acquired solely for PAR's account without a view to the current
distribution or resale thereof, and PAR does not have any contract, undertaking,
agreement or arrangement to sell or otherwise transfer or dispose of any of such
shares in any manner to any person or entity;
(b) PAR will not sell, transfer or otherwise dispose of any of the
shares of WWWX Stock being acquired by PAR, in any manner, unless at the time of
such transfer: (i) a registration under the Securities Act of 1933, as amended
(the "SECURITIES ACT") and under all other applicable securities laws is in
effect with respect to the shares of the WWWX Stock to be sold, transferred or
disposed of, and PAR complies with all of the requirements of the Securities Act
and such other applicable securities laws with respect to the proposed sale,
transfer or disposition does not require registration under the Securities Act
or such other applicable securities laws;
(c) the shares of WWWX Stock being acquired by PAR have not been
issued by WWWX pursuant to a registration under the Securities Act, and PAR must
therefore hold such shares
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indefinitely unless a subsequent registration or exemption therefrom is
available and is obtained. No federal or state agency has approved or
disapproved the shares of WWWX Stock being acquired by PAR for investment or any
other purpose. All of the shares of WWWX Stock being acquired by PAR have been
issued and sold to PAR in reliance upon a specific exemption from the
registration requirements of the Securities Act which depends, in part, upon the
accuracy of PAR's representations, warranties and agreements set forth in this
Agreement; and
(d) PAR is an "accredited investor," as such term is defined in
Regulation D under the Securities Act.
4.14 DISCLOSURE. No representation or warranty by PAR or the
Shareholders in this Agreement or in any other Exhibit, Schedule, list,
certificate or document delivered pursuant to this Agreement, contains or will
contain at Closing any untrue statement of material fact or omits or will omit
to state any material fact necessary to make any statement herein the therein
not misleading.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF WWWX
WWWX hereby represents and warrants to PAR, intending for PAR to rely
hereon, as follows:
5.1 ORGANIZATION AND GOOD STANDING. WWWX is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
5.2 AUTHORIZATION. The execution and delivery of this Agreement and
other actions contemplated hereby have been duly authorized by all necessary
action of the Boards of Director and shareholders of WWWX, and neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein by WWWX constitutes a violation or breach of
applicable law or any contract or instrument to which WWWX is a party or is
bound, or any order, writ, injunction, decree or judgment applicable to it, or
constitutes a default (or would but for the giving of notice or lapse of time or
both, constitute a default) under any contract or instrument to which WWWX is a
party or by which it is bound, or conflicts with or violates any provision of
the Articles of Incorporation or By-laws of WWWX. Without limiting the
generality of the foregoing provisions, the execution and delivery by WWWX of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) result in a violation or default or give to any other person any rights,
including rights of termination, cancellation or acceleration under any
applicable law, rule or regulation, any agreement, instrument or policy to which
WWWX is a party or may be bound, (ii) result in any judgment, order, injunction,
decree or ruling of any court or governmental authority to which it is a party
or subject or (iii) require any authorization, consent, approval, exemption or
other action by any court or administrative or governmental body which has not
been given or done. This Agreement has been duly executed and delivered by WWWX
and constitutes the legal, valid and binding obligation of WWWX enforceable in
accordance with its terms.
5.3 CONSENTS. No consent, waiver, approval, order, permit or
authorization of, or
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declaration or filing with, or notification to, any person, entity or
governmental body is required on the part of WWWX in connection with the
execution and delivery by WWWX of this Agreement, or the compliance by WWWX with
any of the provisions hereof.
5.4 DISCLOSURE. No representation or warranty by WWWX in this
Agreement or in any other Exhibit, Schedule, list, certificate or document
delivered pursuant to this Agreement, contains or will contain at Closing any
untrue statement of material fact or omits or will omit to state any material
fact necessary to make any statement herein and therein not misleading.
SECTION 6. CONDUCT PENDING THE CLOSING
PAR and the Shareholders hereby covenant and agree that, pending the
Closing and except as otherwise approved in advance in writing by WWWX:
6.1 CONDUCT OF BUSINESS. PAR shall carry on and cause AsseTrade to
carry on the Business diligently and substantially in the same manner as
heretofore and refrain from any action that would result in the breach of any of
the representations, warranties or covenants of PAR or the Shareholders
hereunder.
6.2 ACCESS. WWWX and its authorized representatives shall have full
access during normal business hours upon prior arrangement with PAR to all
properties, books, records, contracts and documents of PAR or AsseTrade relating
to the Business, and PAR shall furnish or cause to be furnished to WWWX and its
authorized representatives all information with respect to the Purchased Assets
and Business as they may reasonably request.
6.3 CONTRACTS AND COMMITMENTS. PAR shall not permit AsseTrade to enter
into any contract, commitment or transaction relating in any way to the
Business, except in accordance with the ordinary course of business.
6.4 SALE OF CAPITAL ASSETS. PAR will not and will not permit AsseTrade
to sell or dispose of, or agree to sell or dispose of, any of the Purchased
Assets, except in accordance with the ordinary course of business.
6.5 LIABILITIES. PAR will not, and will not permit AsseTrade to,
create any indebtedness or any other fixed or contingent liability in any way to
the Business or the Purchased Assets, including, without limitation, liability
as a guarantor or otherwise with respect to the obligations of others except for
accounts payable in the ordinary course of business consistent with past
practices.
6.6 INSURANCE. All present insurance insuring PAR, AsseTrade, their
respective employees, the Business or the Purchased Assets wherever located,
will be maintained by PAR and AsseTrade in all respects.
6.7 PRESERVATION OF ORGANIZATION AND EMPLOYEES. PAR will use its best
efforts to preserve the Business intact, to keep available its key employees (if
any), and to preserve the present
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relationships of PAR and AsseTrade with suppliers, customers, banks and others
having business relations with them.
6.8 NO DEFAULT. PAR shall not do any act or omit to do any act, or
permit any act or omission to act, which will cause a material breach of any
material contract, commitment or obligation by which it or AsseTrade is bound.
6.9 AUTHORIZATION FROM OTHERS. Prior to the Closing Date, PAR shall
have obtained all authorizations, waivers, consents and permits of others
required to permit the consummation by PAR of the transactions contemplated by
this Agreement or to remove any breach or threatened breach of any
representation, warranty or agreement of PAR herein.
SECTION 7. CONDITIONS PRECEDENT TO WWWX'S OBLIGATIONS
All obligations of WWWX under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions
unless otherwise waived in writing by WWWX:
7.1 REPRESENTATIONS AND WARRANTIES. Par's and the Shareholder's
representations and warranties contained in this Agreement or in any list,
certificate or document delivered pursuant to the provisions hereof shall be
true at and as of the time of Closing.
7.2 PERFORMANCE OF AGREEMENTS. PAR and the Shareholders shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it or them prior to or at the
Closing, including without limitation PAR's obligation to deliver the Purchased
Assets free and clear of liens and encumbrances in accordance with Section 3.4
hereof and the covenants set forth in Section 6 hereof.
7.3 ORBIT AGREEMENT AND AGREEMENT WITH BUTCHER-FOX. AsseTrade shall
have entered into the ORBIT Agreement, which shall give AsseTrade all necessary
rights to the Technology and shall otherwise be satisfactory in form and
substance to WWWX. In addition, AsseTrade shall have entered into an agreement
with Butcher-Fox, Butcher and Fox, satisfactory in form and substance to WWWX,
pursuant to which Butcher-Fox, Butcher and Fox each agree that (a) they will
refer all of their respective auction sales involving electronic commerce to
AsseTrade (so that AsseTrade will be the auction company handling such sales),
(b) that they will not share in the commissions generated by any such referrals,
other than through their interest in AsseTrade, and (c) that they will not
establish or otherwise participate in any business involving auctions through
electronic commerce, other than AsseTrade.
7.4 ADVERSE CHANGE. There shall not have been a material adverse
change, occurrence or casualty, financial or otherwise, in PAR or AsseTrade or
to the Business or the Purchased Assets, whether covered by insurance or not.
7.5 CLOSING DELIVERIES. PAR shall have delivered the documents and
other items described in Section 3 hereof.
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7.6 NO LITIGATION. There shall not be any pending or, to the knowledge
of PAR, threatened action, proceeding or investigation by or before any court,
arbitrator, governmental body or agency which shall seek to restrain, prohibit
or invalidate the transactions contemplated hereby or which, if adversely
determined, would result in a breach of a representation, warranty or covenant
of any party herein.
7.7 DUE DILIGENCE. Prior to Closing, WWWX shall have the right to
conduct a due diligence investigation, audit and financial review of the
Business and all of the Purchased Assets and liabilities in order that WWWX, in
its sole discretion, may confirm its understanding and valuation of the Business
and the Purchased Assets and verifying, among other things, no undisclosed
liabilities or potential liabilities of PAR or AsseTrade. Such due diligence
shall include, without limitation, all operational, legal, contractual,
litigation, employment, purchasing, marketing, accounting, financial, tax and
other aspects of the Business. If such investigation is not satisfactory to
WWWX, for any reason, WWWX may terminate this Agreement and shall have no
further obligation hereunder. WWWX's conduct of its due diligence shall not in
any way relieve PAR or the Shareholders of their obligations and liabilities
contained in this Agreement including, without limitation, the accuracy of the
representations and warranties of PAR and the Shareholders set forth in this
Agreement.
SECTION 8. CONDITIONS PRECEDENT TO PAR'S AND THE SHAREHOLDERS'
OBLIGATIONS
All obligations of PAR and the Shareholders under this Agreement are
subject to the fulfillment, prior to or at the Closing, of each of the following
conditions unless otherwise waived in writing by PAR:
8.1 REPRESENTATIONS AND WARRANTIES. WWWX's representations and
warranties contained in this Agreement shall be true at and as of the time of
Closing.
8.2 PERFORMANCE OF AGREEMENTS. WWWX shall have performed and complied
with all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
8.3 CLOSING DELIVERIES. WWWX shall have delivered the WWWX Stock to PAR
in exchange for the Purchased Assets.
8.4 NO LITIGATION. There shall not be any pending or threatened
action, proceeding or investigation by or before any court, arbitrator,
governmental body or agency which shall seek to restrain, prohibit or invalidate
the transactions contemplated hereby or which, if adversely determined, would
result in a breach of a representation, warranty or covenant of any party
herein.
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SECTION 9. FEES AND EXPENSES
9.1 REPRESENTATION AND INDEMNITY WITH RESPECT TO BROKERS. Each party
hereby represents and warrants to the other that it has not engaged or dealt
with any broker or other person who may be entitled to any brokerage fee or
commission in respect of the execution of this Agreement or the consummation of
the transactions contemplated hereby. Without limiting the generality of the
foregoing, each of the parties hereto shall indemnify and hold the other
harmless against any claim, loss, liability or expense which may be asserted
against such other party as a result of such first mentioned party's dealings,
arrangements or agreements with any such broker or person.
9.2 EXPENSES OF THE TRANSACTION. Each party hereto shall pay its own
expenses incidental to the preparation of this Agreement and the consummation of
the transactions contemplated hereby.
9.3 SALES, TRANSFER AND DOCUMENTARY STAMPS. Each party hereto shall
pay its own expenses incidental to the preparation of this Agreement and the
consummation of the transactions contemplated hereby.
SECTION 10. INDEMNIFICATION
10.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties, covenants and agreements made by any party in this
Agreement or in any certificate delivered pursuant hereto shall survive the
Closing.
10.2 INDEMNIFICATION BY PAR AND THE SHAREHOLDERS. PAR and the
Shareholders shall jointly and severally defend, indemnify and hold WWWX
harmless from and against (a) any and all liabilities and obligations of, or
claims against, PAR or AsseTrade arising or accruing prior to the Closing and
(b) all actual or potential claims, demands, liabilities, damages, losses and
out-of-pocket expenses including reasonable attorneys' fees whether or not
reduced to judgment, order or award, caused by or arising out of (i) the breach
of any covenant or agreement of PAR or any of the Shareholders in this Agreement
or in any certificate delivered by it or them pursuant hereto, or (ii) the
failure of any representations or warranties made by PAR or any the Shareholders
in this Agreement or in any certificate delivered by it or them pursuant hereto
to have been true and correct when made and on and as of the Closing Date.
10.3 INDEMNIFICATION BY WWWX. WWWX shall defend, indemnify and hold
PAR and the Shareholders harmless from and against all actual or potential
claims, demands, liabilities, damages, losses and out-of-pocket expenses
including reasonable attorneys' fees whether or not reduced to judgment, order
or award, caused by or arising out of (a) the breach of any covenant or
agreement of WWWX in this Agreement or in any certificate delivered by its
pursuant hereto, or (b) the failure of any representations or warranties made by
WWWX in this Agreement or in any certificate delivered by its pursuant hereto to
have been true and correct when made an on and as of the Closing Date.
10.4 NOTICE OF INDEMNIFICATION. In the event any legal proceeding shall
be threatened or
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instituted or any claim or demand shall be asserted by any person or entity in
respect of which payment may be sought by one party hereto from another party
under the provisions of this Section 10, the party seeking indemnification (the
"INDEMNITEE") shall promptly cause written notice of the assertion of any such
claim of which it has knowledge which is covered by this indemnity to be
forwarded to the other party (the "INDEMNITOR"); provided, however, that failure
of the Indemnitee to give the Indemnitor notice as provided in this Section
shall not relieve the Indemnitor of its obligations hereunder except to the
extent that the Indemnitor shall have been prejudiced by such failure. Any
notice of a claim by reason of any of the representations, warranties or
covenants contained in this Agreement shall state in reasonable detail the
representations, warranty or covenant with respect to which the claim is made,
the facts giving rise to an alleged basis for the claim, and the amount of the
liability asserted against the Indemnitor by reason of the claim.
10.5 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS. Except as
otherwise provided herein, in the event of the initiation of any legal
proceeding against an Indemnitee by a third party, the Indemnitor shall be
entitled to assume the defense thereof, at the Indemnitor's sole expense. If the
Indemnitor assumes the defense of any legal proceeding, it will not settle the
legal proceeding, it will not settle the legal proceeding without the prior
written consent of the Indemnitee (which shall not be unreasonably withheld or
delayed). The Indemnitee shall cooperate in all reasonable respects with the
Indemnitor and its attorneys in the investigations, trial and defense of any
legal proceeding and any appeal arising therefrom (including the filing in the
Indemnitee's name of appropriate cross claims and counterclaims). The Indemnitee
may, at its own cost, participate in any investigation, trial and defense of
such legal proceeding controlled by the Indemnitor and any appeal arising
therefrom. If after receipt of a written notice pursuant to Section 10.4 hereof,
the Indemnitor does not undertake to defend any such legal proceeding, the
Indemnitee may, but shall have no obligation to, contest or defend against any
legal proceeding and the Indemnitor shall be bound by the result obtained with
respect thereto by the Indemnitee (including, without limitation, the settlement
thereof without the consent of the Indemnitor). If there are one or more legal
defenses available to the Indemnitee that conflict with those available to the
Indemnitor, the Indemnitee shall have the right, at the expense of the
Indemnitor, to assume the defense of the legal proceeding without the consent of
the Indemnitor, which consent shall not be unreasonably withheld or delayed. As
used herein, a "legal proceeding" includes any judicial, administrative or
arbitral action, suit, proceeding (public or private), claim or governmental
proceeding.
10.6 PAYMENT OF INDEMNIFICATION AMOUNTS. Amount payable by the
Indemnitor to the Indemnitee in respect of any claims hereunder shall be payable
by the Indemnitor as incurred by the Indemnitee.
10.7 RIGHT OF WWWX SUCCESSORS TO ENFORCE. PAR and the Shareholders
agree that the provisions of this Section 10 shall inure to the benefit of, and
may be enforced by, any successor to the interests of WWWX (by assignment,
merger, operation of law or otherwise, and regardless of whether such successor
acquires such interests directly from WWWX), holding all or any part of the
Purchased Assets ("WWWX SUCCESSOR"), to the same extent as if the
representations, warranties, covenants and
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agreements of PAR and the Shareholders contained in this Agreement had been made
directly to such WWWX Successor. PAR and the Shareholders further agree that
they shall execute and deliver to any WWWX Successor such further agreements,
instruments or other documents as may be reasonably required to affirm the
obligations of PAR and the Shareholders and the rights of such WWWX Successor
hereunder.
SECTION 11. POST-CLOSING MATTERS; NON-COMPETITION AGREEMENT
11.1 FURTHER ASSURANCES. At the request of WWWX or any WWWX Successor
from time to time, PAR and the Shareholders shall without further cost to WWWX
or such WWWX Successor, at any time and from time to time, promptly do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, to WWWX or such WWWX Successor, as the case may be, all such further
acts, transfers, assignments, deeds, powers and assurances of title, and
additional papers and instruments, and will do or cause to be done all acts or
things as often as may be proper or necessary or advisable for better assuring,
conveying, transferring and assigning the Purchased Assets (including, without
limitation, the Technology), and effectively to carry out the intent hereof, and
to vest in WWWX or, as applicable, any WWWX Successor, the entire right, title
and interest in and to all of the Purchased Assets. Without limiting the
generality of the foregoing, PAR and the Shareholders each agrees to furnish to
WWWX or any WWWX Successor, all data, formulae, models, programs, software,
notes, documents and all other information regarding the Technology in their
possessions, necessary or useful for WWWX or such WWWX Successor to develop the
Technology, to utilize the Technology and to enable its attorneys to evaluate
and properly protect the Technology.
11.2 RESPONSIBILITY FOR LITIGATION. PAR shall be responsible for all
present or future litigation and claims for injury and related expenses arising
out of the conduct of the Business up to the time of Closing, including without
limitation, any litigation disclosed on Schedule 4.5 hereto.
11.3 TRADE SECRETS/NON-COMPETITION AGREEMENT.
a. PAR and the Shareholders shall not at any time after the Closing use
for its or their own benefit, or divulge to any other person, firm or
corporation, any confidential information or trade secrets relating in any way
to the Business, and at the Closing, PAR and the Shareholders shall deliver to
WWWX all lists of customers, books, records, trade secrets, intellectual
property and all other property constituting confidential information belonging
to PAR and related to the Business. For the purposes hereof, the term
"CONFIDENTIAL INFORMATION" means any and all information related to the
Technology, customer and marketing relationships, and business and financial
information of the Business.
b. As a material inducement to WWWX to enter into this Agreement, in
consideration of the Purchase Price paid hereunder, and for other good and valid
consideration, the receipt and sufficiency of which is hereby acknowledged, as
well as in recognition of the fact that the value of the Purchased Assets would
be diminished substantially if PAR or the Shareholders were to engage in any
business or activities in competition with the Business, PAR and the
Shareholders covenant and
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<PAGE>
agree that, except as required in the performance of their duties set forth in
this agreement or any other written agreement with WWWX or any WWWX Successor,
each will not for a period of four (4) years after the Closing Date engage
directly or indirectly, whether individually or in partnership or in conjunction
with any other person, firm, association, syndicate or corporation, as
principal, agent, shareholder, employee, consultant or in any other manner
whatsoever, in any business activity competitive with the Business.
c. PAR and the Shareholders agree that any violation of any of the
covenants in this Section would cause substantial and irreparable injury to WWWX
or any WWWX Successor, whereupon PAR and/or the Shareholders may be enjoined
from any breach or threatened breach thereof in addition to, but not in
limitation of, any of the rights or remedies to which WWWX or any such WWWX
Successor is or may be entitled to at law or in equity or under this Agreement.
d. PAR and the Shareholders agree that the limitations set forth above
are reasonable in time and geographic scope, and if any provision hereof is held
invalid or unenforceable, the remainder shall nevertheless remain in full force
and effect. In particular, PAR and the Shareholders agree that if any court of
competent jurisdiction shall determine that the duration or geographical limit
of the foregoing non-competition covenant is invalid, unreasonable or
unenforceable, it is the intention of PAR, the Shareholders and WWWX that it
shall not be terminated thereby but shall be deemed to have been amended to the
extent required to render it valid and enforceable, such amendment to apply only
with respect to the jurisdiction of the court making such adjudication.
11.4 RE-CREATION OF ASSETRADE AS A LIMITED LIABILITY COMPANY. Promptly
following the Closing, PAR and the Shareholders shall take all action
(including, with respect to PAR, voting its shares of AsseTrade.com, Inc. in
favor of such action) reasonably required to cause AsseTrade to be re-created as
a limited liability company under the terms of an operating agreement that
incorporates substantially all of the provisions of the MOU and is otherwise
reasonably satisfactory in form and substance to WWWX.
11.5 RIGHT OF WWWX SUCCESSORS TO ENFORCE. PAR and the Shareholders
agree that the provisions of this Section 11 shall inure to the benefit of, and
may be enforced by, any WWWX Successor, to the same extent as if the
representations, warranties, covenants and agreements of PAR and the
Shareholders contained herein had been made directly to such WWWX Successor, and
with the further understanding and agreement that the term "Business" as used
herein shall include the Business as conducted by any such WWWX Successor. PAR
and the Shareholders further agree that they shall execute and deliver to any
WWWX Successor such further agreements, instruments or other documents as may be
reasonably required to affirm the obligations of PAR and the Shareholders and
the rights of such WWWX Successor hereunder.
SECTION 12. MISCELLANEOUS
12.1 GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the Commonwealth of Pennsylvania.
The parties hereto agree that jurisdiction shall be proper in the courts of the
Commonwealth of Pennsylvania and consent to
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jurisdiction and venue therein.
12.2 ASSIGNMENT. This Agreement shall not be assignable by any party
without the prior written approval of the other party. Notwithstanding the
foregoing, WWWX may, without the consent of PAR or the Shareholders, assign its
rights under Sections 10 and 11 hereof to any WWWX Successor as provided
therein, it being the intent of the parties that any such WWWX Successor shall
be a third party beneficiary of such rights. To the extent assignable, this
Agreement shall be binding upon, and inure to the benefit of, WWWX, PAR, the
Shareholders and their respective heirs, personal representatives, successors
and assigns.
12.3 HEADINGS FOR REFERENCE ONLY. The section and paragraph headings in
this Agreement are for convenience of reference only and shall not be deemed to
modify or limit the provisions of this Agreement.
12.4 NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered by confirmed fax,
personally, or by recognized overnight courier, or four days after being mailed
by registered mail, return receipt requested, to a party at the following
address (or to such other party may have specified by notice given to the other
party pursuant to this provision):
If to WWWX: World Wide Web NetworX Corporation
3000 Atrium Way, Suite 202
Mt. Laurel, NJ 08054
Attention : Robert D. Kohn
Fax no. (609) 273-6913
If to PAR : Positive Asset Remarketing, Inc.
Post Office Box 415
Sharon, MA 02067
Attention: Benjamin R. Kafka
Fax no. (508) 660-7755
12.5 ENTIRE AGREEMENT AND AMENDMENT. This document and the Exhibits and
Schedules hereto contain the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and supersede all prior or
contemporaneous agreements, understandings, representations and warranties
between the parties any may not be amended except by written instrument executed
by the parties hereto.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the first above written.
ATTEST: WORLDWIDE WEB NETWORX CORPORATION
By: //s// By: //Robert D. Kohn//
------------------------- ----------------------------------
ATTEST: [WWWX SUBSIDIARY]
By: //s// By: //Robert D. Kohn//
------------------------- ----------------------------------
ATTEST: POSITIVE ASSET REMARKETING, INC.
By: //MKafka// By: //Benjamin R. Kafka//
------------------------- ----------------------------------
WITNESS: SHAREHOLDERS:
//Irene W. McGrath// //Benjamin R. Kafka//
- ---------------------------- -------------------------------------
Benjamin R. Kafka
//Benjamin R. Kafka// //Mark LM Quinn//
- ---------------------------- -------------------------------------
Mark LM Quinn
//Sara Holm// //Raymond Bastarache//
- ---------------------------- -------------------------------------
Sara Holm Raymond Bastarache
//Benjamin R. Kafka// //Alfred H. Kafka//
- ---------------------------- -------------------------------------
Alfred H. Kafka
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EXHIBIT 10.7
AGREEMENT
THIS AGREEMENT (this "Agreement") is dated as of February 16, 1999, by
and among ENERGY TRADING COMPANY, a PECO Energy company subsidiary and a
Delaware corporation ("ETCO"), WORLDWIDE WEB NETWORX CORPORATION, a Delaware
corporation ("WWWX"), and NA ACQUISITION CORP., a Pennsylvania corporation
("NAAC"). Each of ETCO, WWWX and NAAC are sometimes referred to herein
individually as a "PARTY" and, together, as the "PARTIES."
RECITALS
A. WWWX and ETCO are parties to that certain BarterOne Membership
Interest Sale Agreement (the "BARTERONE SALE AGREEMENT") dated December 16,
1998, pursuant to which ETCO has agreed to transfer to WWWX, and WWWX has agreed
to acquire from ETCO, ETCO's 51% membership interest in BarterOne, LLC, d/b/a
entrade.com, a Delaware limited liability company ("BARTERONE"), subject to
ETCO's right to an unencumbered equity interest in a new company ("ETCO'S
RETAINED INTEREST") to be formed by WWWX to hold all of the assets of BarterOne
(the "BARTERONE ASSETS"). Reference is made to Sections 2.2.1 and 2.2.2 of the
BarterOne Sale Agreement for a full statement of the terms and conditions of
ETCO's Retained Interest.
B. WWWX and NAAC intend to enter into an Acquisition Agreement dated or
about the date of this Agreement(the "WWWX/NAAC AGREEMENT"), substantially in
the form attached hereto as Exhibit "A" (with only such modifications therein as
do not have a material adverse effect on ETCO's rights hereunder or on ETCO's
interest in NAAC), pursuant to which, inter alia, WWWX will agree to transfer to
NAAC, and NAAC will agree to acquire from WWWX, all of the BarterOne Assets.
C. WWWX and ETCO are closing under the BarterOne Sale Agreement
concurrently with the execution of this Agreement, and in connection therewith,
the Parties wish to provide for the issue to ETCO of shares of the commmon stock
of NAAC, in substitution for ETCO's Retained Interest.
D. WWWX and NAAC are presently negotiating with Artra Group
Incorporated, a publicly traded Pennsylvania corporation ("ARTRA"), to effect a
merger (the "PROPOSED MERGER"), and the Parties wish to further provide for
certain changes in the capital structure of NAAC if the Proposed Merger is not
consummated.
NOW THEREFORE, in consideration of the mutual covenants herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties agree
as follows:
SECTION 1. CLOSING UNDER BARTERONE SALE AGREEMENT
1.1 PRIOR PAYMENTS BY WWWX. Prior to the date hereof, ETCO has received
from WWWX $250,000 in cash and 416,666 shares of the common stock of WWWX
(together, the
<PAGE>
"INITIAL PAYMENT"), in accordance with Section 2.1 of the BarterOne Sale
Agreement.
1.2 PAYMENT AT CLOSING. By its execution of this Agreement, ETCO
acknowledges receipt from WWWX of the Initial Payment, plus an additional
payment of $230,000 in cash ("FINAL CASH PAYMENT"), as required by Section 2.2.1
of the BarterOne Sale Agreement.
1.3 TRANSFER. Subject only to its receipt of the Final Cash Payment and
the issue of ETCO's NAAC Shares in accordance with Section 2.2 hereof, ETCO
hereby grants, conveys, transfers, assigns and delivers to NAAC all of its
right, title and interest in and to ETCO's fifty-one percent (51%) membership
interest in BarterOne, free and clear of all liens, encumbrances and charges of
any kind.
SECTION 2. CLOSING UNDER WWWX/NAAC AGREEMENT
2.1 ACQUISITION CLOSING. The Parties acknowledge and agree that, within
two weeks following the execution and delivery of this Agreement, WWWX shall
dissolve BarterOne, and transfer all of the BarterOne Assets to NAAC in
accordance with the terms and conditions of the WWWX/NAAC Agreement (the
"ACQUISITION CLOSING"). The Parties further acknowledge that NAAC intends to
thereafter transfer the BarterOne Assets into a wholly owned operating company
to be called "entrade.com, Inc." ("ENTRADE"). Neither WWWX nor ETCO shall have
any direct ownership interest in entrade.
2.2 ISSUE OF NAAC STOCK TO ETCO. Concurrently with the Acquisition
Closing, NAAC shall issue and deliver to ETCO Two Hundred Thousand (200,000)
fully paid and non-assessable shares of the common stock of NAAC ("ETCO'S NAAC
SHARES"), which shares are being issued in a private placement subject to all
applicable Federal and State securities laws, regulations and restrictions, and
shall bear a legend to that effect. NAAC shall have no more than 2,000,000
shares of its capital stock issued and outstanding prior to the Proposed Merger.
This issue to ETCO of ETCO's NAAC Shares, together with the other agreements set
forth herein, shall be in substitution for ETCO's Retained Interest, and shall
satisfy in full WWWX's obligations under Sections 2.2.1 and 2.2.2 of the
BarterOne Sale Agreement (subject to Section 3.4 hereof).
2.3 NO ASSUMPTION OF LIABILITIES. NAAC is not hereby assuming any of
the liabilities or obligations of either ETCO or WWWX under the BarterOne Sale
Agreement or otherwise.
SECTION 3. CLOSING OF THE PROPOSED MERGER
3.1 TERMS OF THE PROPOSED MERGER. The Proposed Merger shall by its
terms require that Artra and NAAC shall use all reasonable efforts to cause
ETCO's NAAC Shares to be registered for resale in accordance with filings made
with the Securities and Exchange Commission ("SEC"), and shall further require
that, prior to or concurrently with the closing of the transactions contemplated
thereby (the "MERGER CLOSING"), Artra shall have guaranteed funding of at least
$4,000,000 for the working capital needs of entrade. The Proposed Merger shall
by its terms provide that all shares of Artra common stock shall be converted
into shares of NAAC common stock on a one for one basis.
<PAGE>
3.2 CONSUMMATION OF PROPOSED MERGER. Each of the Parties shall
cooperate together to cause the Proposed Merger to occur in accordance with the
foregoing provisions of this Section 3 and pursuant to an Agreement and Plan of
Merger substantially in the form attached hereto as Exhibit "B" (with only such
modifications therein as do not have a material adverse effect on ETCO's rights
hereunder or on ETCO's interest in NAAC). Without limiting the generality of the
foregoing, each of ETCO and WWWX shall vote their shares of NAAC common stock to
approve the Proposed Merger. In order to facilitate such approval, the execution
and delivery of this Agreement by ETCO and WWWX may be deemed the unanimous
consent of the shareholders of NAAC approving the Proposed Merger as described
herein.
3.3 MERGER CLOSING. Concurrently with the Merger Closing:
(a) NAAC shall make a cash payment to ETCO in the amount of $100,000;
and
(b) ETCO shall surrender to WWWX the 416,666 shares of WWWX common
stock received by ETCO as part of the Initial Payment, and WWWX shall issue to
ETCO in substitution thereof 73,450 shares of WWWX common stock, subject to
ETCO's right to an audit to affirm that WWWX's calculation of the number of
shares to be issued to ETCO hereunder conforms with the provisions of Section
2.2.4 of the BarterOne Sale Agreement.
3.4 FAILURE OF PROPOSED MERGER. If for any reason the Proposed
Merger is not consummated on or before September 30, 1999, then upon written
notice thereof from ETCO to NAAC, NAAC shall promptly issue to ETCO
sufficient additional shares of its common stock so that ETCO shall
thereafter hold a 33 1/3% interest in all of the issued and outstanding
capital stock of NAAC. In such event, WWWX and NAAC shall take all necessary
action to amend the Articles of Incorporation and By-Laws of NAAC as
necessary so that ETCO shall have all of the same protections as a minority
shareholder of NAAC as were accorded to Global Trade Group, Ltd. under the
terms of the Operating Agreement for BarterOne, as the same was amended prior
to the date hereof, and any dilution of ownership of NAAC shall be on a PARI
PASSU basis.
SECTION 4. REPRESENTATIONS, WARRANTEIS AND COVENANTS
4.1 AUTHORITY. Each of the Parties represents and warrants to the
others that (a) it has the full power and legal right to execute and deliver
this Agreement and to perform its obligations under this Agreement; (b) the
execution, delivery and performance of this Agreement have been authorized by
all necessary action, corporate or otherwise, and do not violate any provisions
of its charter or by-laws or any contractual obligations or requirements of law
binding on it; and (c) this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
4.2 WWWX. WWWX represents and warrants to ETCO and NAAC that all of the
obligations of BarterOne have been satisfied in full on or before the date of
this Agreement, and reaffirms to ETCO that all of its representations and
warranties contained in the BarterOne Sale Agreement are true and correct as of
the date hereof.
<PAGE>
SECTION 5. MISCELLANEOUS
5.1 GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the Commonwealth of Pennsylvania.
5.2 ENTIRE AGREEMENT AND AMENDMENT. This document contains the entire
agreement among the Parties with respect to the transactions contemplated hereby
and supersedes all prior or contemporaneous agreements, understandings,
representations and warranties between the Parties, including without limitation
the BarterOne Sale Agreement, and may not be amended except by written
instrument executed by the Parties.
5.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have caused this Agreement to
be executed by their duly appointed officers as of the date first above written.
ENERGY TRADING COMPANY
By: //s// ROBERT A. SHIN
--------------------------
Title: Vice President
NA ACQUISITION CORP.
By: //s// ROBERT D. KOHN
--------------------------
Title: President
WORLDWIDE WEB NETWORX CORPORATION
By: //s// ROBERT KOHN
--------------------------
Title: President
<PAGE>
EXHIBIT 10.8
AGREEMENT AND PLAN OF MERGER
AMONG
ARTRA GROUP INCORPORATED,
WORLDWIDE WEB NETWORX CORPORATION,
NA ACQUISITION CORP.
AND
WWWX MERGER SUBSIDIARY, INC.
DATED AS OF FEBRUARY 23, 1999
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TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
ARTICLE 1 - THE MERGER......................................................................................2
1.1 The Merger......................................................................................2
1.2 Effective Time..................................................................................2
1.3 The Closing.....................................................................................2
1.4 Directors.......................................................................................3
1.5 Officers........................................................................................3
1.6 Options and Other Rights to Purchase Artra Common Stock.........................................3
1.7 Dissenters Rights...............................................................................3
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF WWWX,..........................................................
THE ACQUISITION CORP. AND THE MERGER SUB..........................................................................4
2.1 Existence; Good Standing; Corporate Authority...................................................4
2.2 Authorization, Validity and Effect of Agreements................................................5
2.3 Capitalization..................................................................................5
2.4 Subsidiaries....................................................................................5
2.5 Other Interests.................................................................................6
2.6 Financial Condition.............................................................................6
2.7 Title to Properties.............................................................................6
2.8 Absence of Undisclosed Liabilities..............................................................7
2.9 Material Contracts..............................................................................7
2.10 Intangible Assets...............................................................................7
2.11 No Conflict; Required Filings and Consents......................................................9
2.12 Litigation......................................................................................9
2.13 Taxes..........................................................................................10
2.14 Employee Benefit Plans.........................................................................10
2.15 Labor Matters..................................................................................11
2.16 Insurance......................................................................................11
2.17 No Brokers.....................................................................................11
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF ARTRA........................................................11
3.1 Existence; Good Standing; Corporate Authority..................................................12
3.2 Authorization, Validity and Effect of Agreements...............................................12
3.3 Capitalization.................................................................................12
3.4 Subsidiaries...................................................................................13
3.5 Other Interests................................................................................13
3.6 No Conflict; Required Filings and Consents.....................................................13
3.7 SEC Documents..................................................................................14
3.8 Title to Properties............................................................................15
3.9 Absence of Undisclosed Liabilities.............................................................15
3.10 Material Contracts.............................................................................15
3.11 Litigation.....................................................................................16
3.12 Absence of Certain Changes.....................................................................16
</TABLE>
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<TABLE>
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3.13 Taxes..........................................................................................16
3.14 Employee Benefit Plans.........................................................................17
3.15 Labor Matters..................................................................................17
3.16 Insurance......................................................................................17
3.17 No Brokers.....................................................................................18
ARTICLE 4 - COVENANTS......................................................................................18
4.1 Alternative Proposals..........................................................................18
4.2 Interim Operations.............................................................................19
4.3 Meetings of Stockholders.......................................................................20
4.4 Filings, Other Action..........................................................................21
4.5 Inspection of Records..........................................................................21
4.6 Publicity......................................................................................21
4.7 Registration Statements........................................................................22
4.8 Listing Application. ..........................................................................23
4.9 Further Action.................................................................................23
4.10 Affiliate Letters..............................................................................23
4.11 Expenses.......................................................................................24
4.12 Takeover Statute...............................................................................24
4.13 Conveyance Taxes...............................................................................24
4.14 Entrade Funding................................................................................24
4.15 Section 351 Qualification......................................................................24
4.16 "Lock-Up" Provisions...........................................................................24
ARTICLE 5 - CONDITIONS.....................................................................................25
5.1 Conditions to Each Party's Obligation to Effect the Merger.....................................25
5.2 Conditions to Obligation of WWWX, the Acquisition Corp.
and the Merger Sub to Effect the Merger........................................................26
5.3 Conditions to Obligation of Artra to Effect the Merger.........................................27
ARTICLE 6 - TERMINATION....................................................................................28
6.1 Termination by Mutual Consent..................................................................28
6.2 Termination by Either Artra or WWWX............................................................28
6.3 Termination by WWWX............................................................................28
6.4 Termination by Artra...........................................................................29
6.5 Effect of Termination and Abandonment..........................................................29
6.6 Extension, Waiver..............................................................................30
ARTICLE 7 - SURVIVAL OF REPRESENTATIONS AND..................................................................
WARRANTIES, INDEMNIFICATION......................................................................................30
7.1 Survival of Representations and Warranties.....................................................30
7.2 Indemnification................................................................................30
7.3 Procedure for Claims...........................................................................30
</TABLE>
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7.4 Third Party Claims.............................................................................31
ARTICLE 8 - GENERAL PROVISIONS.............................................................................31
8.1 Notices........................................................................................31
8.2 Assignment; Binding Effect.....................................................................32
8.3 Entire Agreement...............................................................................32
8.4 Amendment......................................................................................32
8.5 Governing Law..................................................................................32
8.6 Counterparts...................................................................................33
8.7 Headings.......................................................................................33
8.8 Interpretation.................................................................................33
8.9 Waivers........................................................................................33
8.10 Incorporation..................................................................................33
8.11 Severability...................................................................................33
8.12 Enforcement of Agreement.......................................................................33
8.13 Subsidiaries...................................................................................34
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of February
23, 1999 among Artra Group Incorporated ("Artra"), a Pennsylvania corporation;
WorldWide Web NetworX Corporation ("WWWX"), a Delaware corporation; NA
Acquisition Corp. (the "Acquisition Corp."), a Pennsylvania corporation and a
wholly owned subsidiary of WWWX; and WWWX Merger Subsidiary, Inc. (the "Merger
Sub"), a Pennsylvania corporation and a wholly owned subsidiary of the
Acquisition Corp.
RECITALS:
The Boards of Directors of Artra and WWWX have approved and deem it
advisable and in the best interests of their respective companies and
shareholders to consummate the merger (the "Merger") described in this
Agreement. Pursuant to the Merger, the Merger Sub will merge into Artra, which
will result in Artra becoming a wholly owned subsidiary of the Acquisition
Corp., and the outstanding shares of Common Stock and Preferred Stock of Artra
will be converted into shares of Common Stock of the Acquisition Corp. on a
share-for-share basis.
For federal income tax purposes, it is intended that the Merger qualify
as an exchange under the provisions of Section 351 of the United States Internal
Revenue Code of 1986, as amended (the "Code").
On February 23, 1999, the Acquisition Corp. acquired from WWWX all of
the assets formerly held by BarterOne, LLC ("BarterOne"), a Delaware limited
liability company acquired by WWWX and dissolved prior to the date hereof (the
"BarterOne Assets"), and 25% of the outstanding shares of Class A voting common
stock of AsseTrade.com, Inc. ("AsseTrade"), a Delaware corporation. Also on the
date hereof, the Acquisition Corp. is acquiring certain retained interests of
Energy Trading Company ("ETCO"), a Delaware corporation, arising out of the sale
of its membership interest in BarterOne to WWWX. Concurrently with the execution
and delivery of this Agreement, and in order to induce WWWX and the Acquisition
Corp. to enter into this Agreement, Artra is entering into a Loan Agreement (the
"Loan Agreement") with the Acquisition Corp. Pursuant to the Loan Agreement,
Artra will lend the Acquisition Corp. up to $2,000,000 to purchase the BarterOne
Assets and the AsseTrade interests, and to finance the working capital needs of
its business operations related to the BarterOne Assets (referred to herein as
"Entrade").
NOW, THEREFORE, in consideration of the foregoing, and the
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto, intending to be legally bound, hereby agree as
follows:
<PAGE>
ARTICLE 1
THE MERGER
1.1 THE MERGER. Pursuant to the Plan of Merger in the form of Exhibit A
hereto (the "Plan of Merger"), at the Effective Time, the Merger Sub shall be
merged with and into Artra (the "Merger") in accordance with the applicable
provisions of the laws of the Commonwealth of Pennsylvania. Artra shall be the
surviving corporation in the Merger and shall continue its corporate existence
under the laws of the Commonwealth of Pennsylvania. As a result of the Merger,
Artra shall become a wholly owned subsidiary of the Acquisition Corp. At the
Effective Time: (a) each outstanding share of Common Stock, no par value, of
Artra ("Artra Common Stock") shall be converted into one share of Common Stock,
no par value, of the Acquisition Corp. ("Acquisition Corp. Common Stock"); (b)
each outstanding share of Series A Preferred Stock, $1,000 par value, of Artra
("Artra Preferred Stock") shall be converted into 329 shares of Acquisition
Corp. Common Stock; (c) each share of Artra Common Stock held as treasury stock
shall be canceled; and (d) each outstanding share of Common Stock, $.01 par
value, of the Merger Sub shall be canceled. Upon such conversion, all
outstanding shares of Artra Common Stock and Artra Preferred Stock shall be
canceled and cease to exist, each certificate theretofore representing any
shares of Artra Common Stock shall, without any action on the part of the holder
thereof, be deemed to represent an equivalent number of shares of Acquisition
Corp. Common Stock and each certificate theretofore representing any shares of
Artra Preferred Stock shall, without any action on the part of the holder
thereof, be deemed to represent 329 shares of Acquisition Corp. Common Stock for
each share of Artra Preferred Stock. No fractional shares of Acquisition Corp.
Common Stock and no scrip or certificates therefor will be issued in connection
with the Merger. Any former holder of Artra Common Stock or Artra Preferred
Stock who would otherwise be entitled to receive a fraction of a share of
Acquisition Corp. Common Stock shall receive, in lieu thereof, a check for cash
in an amount equal to such fraction of a share multiplied by the closing price
of Acquisition Corp. Common Stock on the New York Stock Exchange ("NYSE") (or
other applicable exchange as hereinafter provided) on the first day Acquisition
Corp. Common Stock is traded after the Effective Time (hereinafter defined).
1.2 EFFECTIVE TIME. The term "Effective Time" shall mean the time and
date which is (A) the date and time of the filing of the articles of merger
relating to the Merger with the Secretary of the Commonwealth of Pennsylvania
(or such other date and time as may be specified in such certificate as may be
permitted by law) or (B) such other time and date as Artra and WWWX may agree.
1.3 THE CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the transactions described in this Agreement (the "Closing")
shall take place (a) at the offices of Duane, Morris & Heckscher LLP, One
Liberty Place, 1650 Market Street, Philadelphia, Pennsylvania 19103-7396, at
10:00 a.m., local time, on the first business day following the day on which the
last to be fulfilled or waived of the conditions set forth in Article 5 shall be
fulfilled or waived in accordance herewith or (b) at such other time, date or
place as Artra and WWWX may agree. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
2
<PAGE>
1.4 DIRECTORS. The directors of Artra immediately prior to the
Effective Time shall resign as directors of Artra and shall become the directors
of the Acquisition Corp. as of the Effective Time and until their successors are
duly appointed or elected in accordance with applicable law. For as long as
WWWX's percentage ownership of Acquisition Corp. Common Stock calculated on a
fully diluted basis is at least 5%, Acquisition Corp. shall use its best efforts
to cause the designee nominated by WWWX and mutually acceptable to WWWX and the
Board of Directors of Acquisition Corp., who shall initially be Robert D. Kohn,
to be elected to the Board of Directors of Acquisition Corp.
1.5 OFFICERS. The officers of Artra immediately prior to the Effective
Time shall resign as officers of Artra and shall become the officers of the
Acquisition Corp. as of the Effective Time and until their successors are duly
appointed in accordance with applicable law.
1.6 OPTIONS AND OTHER RIGHTS TO PURCHASE ARTRA COMMON STOCK. At the
Effective Time, each outstanding option, warrant or right to purchase shares of
Artra Common Stock (an "Artra Option") shall be assumed in such manner that it
is converted into an option, warrant or right to purchase shares of Acquisition
Corp. Common Stock (an "Acquisition Corp. Option"). Each such Acquisition Corp.
Option shall be exercisable upon the same terms and conditions as then are
applicable to such Artra Option. It is the intention of the parties that, to the
extent that any such Artra Option constituted an "incentive stock option"
(within the meaning of Section 422 of the Code) immediately prior to the
Effective Time, such option continue to qualify as an incentive stock option to
the maximum extent permitted by Section 422 of the Code, and that the assumption
of the Artra Options provided by this Section 1.6 satisfy the conditions of
Section 424(a) of the Code. At the Effective Time, the Acquisition Corp. shall
assume all rights and obligations of Artra under Artra's stock option plans as
in effect at the Effective Time and shall continue such plans in accordance with
their terms.
1.7 DISSENTERS RIGHTS.
(1) The holders of shares of Artra Common Stock shall not be
entitled to appraisal rights under the Pennsylvania Business Corporation Law
(the "PBCL").
(2) Notwithstanding anything in this Agreement to the
contrary, any shares of Artra Preferred Stock that are issued and outstanding as
of the Effective Time and that are held by a shareholder who has exercised and
has not failed to perfect or effectively withdrawn or lost his right (to the
extent such right is available by law) to demand and to receive the "fair value"
of such shares (the "Dissenting Shares") under the PBCL shall not be converted
into shares of Acquisition Corp. Common Stock unless and until the holder shall
have failed to perfect, or shall have effectively withdrawn or lost his right to
dissent from the Merger under the PBCL and to receive such consideration as may
be determined to be due with respect to such Dissenting Shares pursuant to and
subject to the requirements of the PBCL. If any such holder shall have so failed
to perfect or have effectively withdrawn or lost such right, each share of such
holder's Artra Preferred Stock shall
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<PAGE>
thereupon be deemed to have been converted into and to have become, as of the
Effective Time, 329 shares of Acquisition Corp. Common Stock. Artra shall give
the Acquisition Corp. (i) prompt notice of any notice or demand for appraisal or
payment for shares of Artra Preferred Stock received by Artra and (ii) the
opportunity to participate in and direct all negotiations and proceedings with
respect to any such demands or notices. Any payment required to be made to an
Artra Preferred Stockholder shall be an obligation of Artra.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF WWWX,
THE ACQUISITION CORP. AND THE MERGER SUB
Except as set forth in the disclosure letter delivered to Artra at or
prior to the execution hereof (the "Acquisition Corp. Disclosure Letter"), WWWX,
the Acquisition Corp. and the Merger Sub jointly and severally represent and
warrant to Artra as of the date of this Agreement as follows:
2.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of WWWX, the
Acquisition Corp. and the Merger Sub, and each of their respective Subsidiaries,
is a corporation or limited liability company duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of WWWX, the Acquisition Corp. and the
Merger Sub, and each of their respective Subsidiaries, is duly licensed or
qualified to do business as a foreign corporation and is in good standing under
the laws of any other state of the United States in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such qualification necessary, except where the failure to be so qualified
or to be in good standing would not have a material adverse effect on the
business, results of operations or financial condition of the Acquisition Corp.
and its Subsidiaries (a "WWWX Material Adverse Effect"). Each of WWWX, the
Acquisition Corp. and the Merger Sub, and each of their respective Subsidiaries,
has all requisite corporate power and authority to own, operate and lease its
properties and carry on its business as now conducted. The copies of the
Articles or Certificates of Incorporation and Bylaws, Operating Agreements
and/or other applicable governing documents of WWWX, the Acquisition Corp., the
Merger Sub, and each of their respective Subsidiaries, previously made available
to Artra, are true and correct and have not been modified or amended except as
set forth therein.
2.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Each of WWWX, the
Acquisition Corp. and the Merger Sub has the requisite corporate power and
authority to execute and deliver this Agreement and all agreements and documents
to be executed by it as described herein. Subject only to the approval of this
Agreement and the transactions described herein by the holders of WWWX voting
securities, the consummation by WWWX, the Acquisition Corp. and the Merger Sub
of the transactions described herein has been duly authorized by all requisite
corporate action. This Agreement constitutes, and all agreements and documents
described herein (when executed and delivered pursuant hereto for value
received) will constitute, the valid and binding obligations of WWWX, the
Acquisition Corp. and the Merger Sub enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
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<PAGE>
2.3 CAPITALIZATION. The authorized capital stock of WWWX consists of
100,000,000 shares of Common Stock, $.001 par value, of which 11,035,186 shares
are issued and outstanding. The authorized capital stock of the Acquisition
Corp. consists of 40,000,000 shares of Acquisition Corp. Common Stock, no par
value, of which 2,000,000 shares are issued and outstanding, and 4,000,000
shares of Preferred Stock, $1,000 par value, of which no shares are outstanding.
The authorized capital stock of the Merger Sub consists of 1000 shares of Common
Stock, of which 100 shares are issued and outstanding. Neither the Acquisition
Corp. nor the Merger Sub has any outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the shareholders of the Acquisition Corp. or the Merger Sub on any matter. All
issued and outstanding shares of Acquisition Corp. Common Stock are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights, and are owned of record and beneficially by WWWX. All issued and
outstanding shares of Common Stock of the Merger Sub are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights and are
owned of record and beneficially by the Acquisition Corp. Except as set forth in
the Acquisition Corp. Disclosure Letter, there are not at the date of this
Agreement any existing options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligate the
Acquisition Corp. or any of its Subsidiaries to issue, transfer or sell any
shares of their respective capital stock or membership interests.
2.4 SUBSIDIARIES. Except as set forth in the Acquisition Corp.
Disclosure Letter, the Acquisition Corp. owns directly or indirectly all of the
outstanding shares of capital stock (or other ownership interests having by
their terms ordinary voting power to elect a majority of directors or others
performing similar functions with respect to such Acquisition Corp. Subsidiary)
of each of the Acquisition Corp.'s Subsidiaries, free and clear of all liens,
pledges, security interests, claims or other encumbrances other than liens
imposed by local law which are not material. Each of the outstanding shares of
capital stock or other equity interest of each of the Acquisition Corp.'s
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable.
The following information for each Subsidiary of the Acquisition Corp. has been
previously provided to Artra: (i) its name and jurisdiction of incorporation or
organization; (ii) its authorized capital stock or total equity capital; and
(iii) the number of issued and outstanding shares of capital stock or total
equity capital.
2.5 OTHER INTERESTS. Except for interests in the Acquisition Corp.
Subsidiaries, neither the Acquisition Corp. nor any Acquisition Corp. Subsidiary
owns directly or indirectly any interest or investment (whether equity or debt)
in any corporation, partnership, joint venture, business, trust or entity (other
than non-controlling investments in the ordinary course of business and
corporate partnering, development, cooperative marketing and similar
undertakings or arrangements entered into in the ordinary course of business).
2.6 FINANCIAL CONDITION. Set forth in the Acquisition Corp. Disclosure
Letter are true and complete lists of the assets and liabilities of the
Acquisition Corp. on the date hereof and as anticipated to exist at the
Effective Time of the Merger. The Entrade Business Plan and AsseTrade
5
<PAGE>
Business Plan delivered to Artra together present fairly the financial
condition, results of operations, business, properties, assets, liabilities and
future prospects of the Acquisition Corp. and the Acquisition Corp. Subsidiaries
as of the dates thereof and for the periods indicated therein, there has been no
material adverse change in the financial condition or future prospects of the
Acquisition Corp. or the Acquisition Corp. Subsidiaries as reflected therein,
and no fact is known to WWWX or the Acquisition Corp. that materially adversely
affects or in the future may materially adversely affect the financial condition
or future prospects of the Acquisition Corp. or any Acquisition Corp.
Subsidiary.
2.7 TITLE TO PROPERTIES. Except as set forth in the Acquisition Corp.
Disclosure Letter, the Acquisition Corp. and each of the Acquisition Corp.
Subsidiaries owns outright, and has good and marketable title to, all of its
assets, including without limitation all computer software and related technical
information and other intellectual property rights necessary to conduct the
Entrade business, free and clear of all liens, pledges, mortgages, security
interests, conditional sales contracts or other encumbrances or conflicting
claims of any nature whatsoever. None of such assets are subject to restrictions
with respect to the transferability thereof and the Acquisition Corp.'s title
thereto will not be affected in any way by the transactions described in the
Agreement. WWWX has complete and unrestricted power and right to sell such
assets to the Acquisition Corp. Neither the Acquisition Corp. nor any of its
Subsidiaries owns any real property or any interest in real property.
2.8 ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Acquisition Corp.
nor any Acquisition Corp. Subsidiary has any material liabilities, obligations
or guaranties accrued, absolute, contingent or otherwise, except as disclosed in
the Acquisition Corp. Disclosure Letter.
2.9 MATERIAL CONTRACTS. The Acquisition Corp. Disclosure Letter
contains a true and correct list of each contract, agreement, commitment or
obligation (a) which involves or may involve the payment to or from the
Acquisition Corp. or any Acquisition Corp. Subsidiary of amounts in excess of
$100,000 per year, (b) any license, franchise or distribution agreement, which
involves or may involve payments to or from the Acquisition Corp. or any
Acquisition Corp. Subsidiary in excess of $100,000 per year, (c) any lease of
tangible personal property, which involves or may involve payments to or from
the Acquisition Corp. or any Acquisition Corp. Subsidiary in excess of $100,000
per year and (d) any contract between the Acquisition Corp. or any of its
Subsidiaries and any affiliate of WWWX, the Acquisition Corp. or any of their
Subsidiaries (collectively the "Acquisition Corp. Material Contracts"). Each of
the Acquisition Corp. Material Contracts constitutes a valid and binding
obligation of the parties thereto, is in full force and effect and will continue
in full force and effect following the consummation of the transactions
described herein and thereby, in each case without breaching the terms thereof
or resulting in the forfeiture or impairment of any rights thereunder and
without the consent, approval or act of, or the making of any filing with, any
other party (except as set forth in the Acquisition Corp. Disclosure Letter).
Neither the Acquisition Corp. nor any Acquisition Corp. Subsidiary is in, or to
the knowledge of WWWX or the Acquisition Corp. alleged to be in, breach or
default under, nor is there or is there alleged to be any basis for termination
of, any Acquisition Corp. Material Contract and, to the knowledge of WWWX and
the Acquisition Corp., no other party to any Acquisition Corp. Material Contract
has breached or
6
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defaulted thereunder, and no event has occurred and no condition or state of
facts exists which, with the passage of time or the giving of notice or both,
would constitute such a default or breach by the Acquisition Corp., any
Acquisition Corp. Subsidiary or, to the knowledge of WWWX and the Acquisition
Corp., by any such other party. Neither the Acquisition Corp. nor any
Acquisition Corp. Subsidiary is currently renegotiating any Acquisition Corp.
Material Contract or paying liquidated damages in lieu of the performance
thereunder.
2.10 INTANGIBLE ASSETS. The Acquisition Corp. Disclosure Letter sets
forth a list of (a) all patents, copyrights, trade names, trademarks, service
marks and names (registered or unregistered), and applications and registrations
therefor, (b) all research, development and commercially practiced processes,
trade secrets, know-how, inventions, and engineering and other technical
information, (c) all computer programs, software and data bases, (d) all
information, drawings, specifications, designs, plans, financial, marketing and
business data and plans, other proprietary, confidential or intellectual
information or property and all copies and embodiments thereof in whatever form
or medium and (e) all customer and membership lists owned by or licensed to the
Acquisition Corp. or any Acquisition Corp. Subsidiary (items (a) through (e) are
defined, collectively, as "Intangible Assets") as well as a list of all
registrations thereof and pending applications therefor. Each of the Intangible
Assets owned by the Acquisition Corp. or any Acquisition Corp. Subsidiary is
owned free and clear of any and all liens and encumbrances and, to the knowledge
of WWWX and the Acquisition Corp., no other Person or entity has any claim of
ownership with respect thereto. The Acquisition Corp. and each Acquisition Corp.
Subsidiary has adequate licenses or other valid rights to use all of the
Intangible Assets that it does not own and that are material to the conduct of
its business as currently proposed. To the knowledge of WWWX and the Acquisition
Corp., the use of the Intangible Assets by the Acquisition Corp. or any
Acquisition Corp. Subsidiary does not and will not conflict with, infringe upon,
violate or interfere with any intellectual property rights or claimed
intellectual property rights of any other Person or entity, nor, to the
knowledge of WWWX and the Acquisition Corp., is any other Person or entity
infringing upon, violating or interfering with any intellectual property rights
or claimed intellectual property rights of the Acquisition Corp. or any
Acquisition Corp. Subsidiary. Neither WWWX, the Acquisition Corp. nor any
Acquisition Corp. Subsidiary has received notice of any claim of infringement or
violation of any third party's copyrights, patents, trade secrets, trademarks or
other proprietary rights relating to the Intangible Assets nor, to the knowledge
of WWWX or the Acquisition Corp., is there any basis for any such claim of right
or interest in the Intangible Assets or otherwise adverse to the Acquisition
Corp.'s or any Acquisition Corp. Subsidiary's unqualified right to exclusively
own and fully utilize any of the Intangible Assets. To the knowledge of WWWX and
the Acquisition Corp., there are no pending or threatened suits, legal
proceedings, claims or governmental investigations against or with respect to
any of the Intangible Assets or any component thereof. Each of the Intangible
Assets will perform in substantial conformity with its specifications as
identified in any and all documentation provided to Artra. To the knowledge of
WWWX and the Acquisition Corp., the Intangible Assets do not and will not
contain any "backdoor" or concealed access or any "software locks" or any
similar devices which, upon the occurrence of a certain event, the passage of a
certain amount of time, or the taking of any action (or the failure to take any
action) by or on behalf of any Person or entity, will cause any of the
Intangible Assets to be destroyed, erased, damaged or otherwise made inoperable.
To the knowledge
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of WWWX and the Acquisition Corp., the Intangible Assets are and will be free
from defects in operation or otherwise relating to the year 2000, date data
century recognition calculations that accommodate same century and multi-century
formulas and date values, and century correct date data interface values, and
will accurately process date and time data (including but not limited to,
calculation, comparing and sequencing) from, into and between the twentieth and
twenty-first centuries, and the years 1999 and 2000 and leap year calculation,
and, to the knowledge of WWWX and the Acquisition Corp., when used in
combination with other information technology, will accurately process date and
time data if the other information technology exchanges date and time data with
it.
2.11 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by WWWX, the
Acquisition Corp. and the Merger Sub do not, and the consummation by WWWX, the
Acquisition Corp. and the Merger Sub of the transactions described herein will
not, (i) conflict with or violate the certificate of incorporation or by-laws or
equivalent organizational documents of WWWX, the Acquisition Corp., the Merger
Sub or any of their Subsidiaries, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to WWWX, the Acquisition Corp.,
the Merger Sub or any of their Subsidiaries or by which any property or asset of
WWWX, the Acquisition Corp., the Merger Sub or any of their Subsidiaries is
bound or affected, or (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, result in the loss of a material benefit under, or give to others any
right of purchase or sale, or any right of termination, amendment, acceleration,
increased payments or cancellation of, or result in the creation of a lien or
other encumbrance on any property or asset of WWWX, the Acquisition Corp., the
Merger Sub or any of their Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which WWWX, the Acquisition Corp., the Merger Sub or
any of their Subsidiaries is a party or by which WWWX, the Acquisition Corp.,
the Merger Sub or any of their Subsidiaries or any property or asset of WWWX,
the Acquisition Corp., the Merger Sub or any of their Subsidiaries is bound or
affected, , in each case except for any such defaults or violations that would
not, individually or in the aggregate, have a WWWX Material Adverse Effect.
WWWX, the Acquisition Corp., the Merger Sub and their Subsidiaries have obtained
all licenses, permits and other authorizations and have taken all actions
required by applicable law or governmental regulations in connection with their
business as now conducted, except where the failure to obtain any such item or
to take any such action would not have, individually or in the aggregate, a WWWX
Material Adverse Effect.
(b) The execution and delivery of this Agreement by WWWX, the
Acquisition Corp. and/or the Merger Sub do not, and the performance of this
Agreement and the consummation by WWWX, the Acquisition Corp. and/or the Merger
Sub of the transactions described herein will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign (each a "Governmental
Entity"), except for (i) applicable requirements, if any, of theSecurities Act
of 1933 (the "Securities Act"), the Exchange Act of 1934 (the "Exchange Act"),
state securities laws and state takeover laws, (ii) filing of
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appropriate merger documentation as Pennsylvania law shall require, and (iii)
applicable requirements of the Code and state and local tax laws.
2.12 LITIGATION. There are no actions, suits or proceedings pending
against WWWX, the Acquisition Corp., the Merger Sub or any of their Subsidiaries
or, to the knowledge of WWWX or the Acquisition Corp., threatened against WWWX,
the Acquisition Corp., the Merger Sub or any of their Subsidiaries, at law or in
equity, or before or by any federal or state commission, board, bureau, agency
or instrumentality, that are likely to have a WWWX Material Adverse Effect.
2.13 TAXES.
(a) Except as set forth in the Acquisition Corp. Disclosure
Letter, each of WWWX, the Acquisition Corp., the Merger Sub and each of their
Subsidiaries has filed all material tax returns and reports required to be filed
by it, or requests for extensions to file such returns or reports have been
timely filed and granted and have not expired, and all tax returns and reports
are complete and accurate in all respects, except to the extent that such
failures to file, have extensions granted that remain in effect, or be complete
and accurate in all respects, as applicable, individually or in the aggregate,
would not have a WWWX Material Adverse Effect. WWWX, the Acquisition Corp., the
Merger Sub and each of their Subsidiaries has paid (or WWWX or the Acquisition
Corp. has paid on its behalf) all taxes shown as due on such tax returns and
reports, and no deficiencies for any taxes have been proposed, asserted or
assessed against WWWX, the Acquisition Corp., the Merger Sub or any of their
Subsidiaries that are not adequately reserved for, except for inadequately
reserved taxes and inadequately reserved deficiencies that would not,
individually or in the aggregate, have a WWWX Material Adverse Effect. No
requests for waivers of the time to assess any taxes against WWWX, the
Acquisition Corp., the Merger Sub or any of their Subsidiaries have been granted
or are pending.
(b) Neither WWWX, the Acquisition Corp., the Merger Sub or any
of their Subsidiaries has knowingly taken any action or has any knowledge of any
fact or circumstance that is reasonably likely to prevent the Merger from
qualifying as an exchange governed by Section 351 of the Code.
(c) As used in this Section 2.13, "taxes" shall include all
federal, state, local and foreign income, franchise, property, sales, use,
excise and other taxes, including obligations for withholding taxes from
payments due or made to any other Person or entity and any interest, penalties
or additions to tax.
2.14 EMPLOYEE BENEFIT PLANS. Except as described in the Acquisition
Corp. Disclosure Letter: (i) all employee benefit plans or programs maintained
for the benefit of the current or former employees or directors of WWWX, the
Acquisition Corp., the Merger Sub or any of their Subsidiaries that are
sponsored, maintained or contributed to by WWWX, the Acquisition Corp., the
Merger Sub or any of their Subsidiaries (if any), or with respect to which WWWX,
the Acquisition Corp., the Merger Sub or any of their Subsidiaries has any
liability, including without limitation any such plan
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that is an "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), are in compliance with all
applicable requirements of law, including ERISA and the Code, and (ii) neither
WWWX, the Acquisition Corp., the Merger Sub nor any of their Subsidiaries has
any liabilities or obligations with respect to any such employee benefit plans
or programs, whether accrued, contingent or otherwise, nor to the knowledge of
WWWX or the Acquisition Corp. are any such liabilities or obligations expected
to be incurred. The execution of, and performance of the transactions described
in, this Agreement will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any benefit plan,
policy, arrangement or agreement or any trust or loan that will or may result in
any payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation to
fund benefits with respect to any employee. The only severance agreements or
severance policies applicable to WWWX, the Acquisition Corp., the Merger Sub or
any of their Subsidiaries are the agreements and policies specifically referred
to in the Acquisition Corp. Disclosure Letter.
2.15 LABOR MATTERS. There is no labor strike, labor dispute, work
slowdown, stoppage or lockout actually pending, or to the knowledge of WWWX or
the Acquisition Corp., threatened against or affecting WWWX, the Acquisition
Corp., the Merger Sub or any of their Subsidiaries. There is no unfair labor
practice or labor arbitration proceeding pending or, to the knowledge of WWWX or
the Acquisition Corp., threatened against WWWX, the Acquisition Corp., the
Merger Sub or any of their Subsidiaries relating to their business.
2.16 INSURANCE. The Acquisition Corp. Disclosure Letter contains a
complete and accurate list and description of all policies of fire, liability,
product liability and other forms of insurance presently in effect insuring the
Acquired Corp., its Subsidiaries and their respective assets.
2.17 NO BROKERS. Neither WWWX, the Acquisition Corp. nor the Merger Sub
has entered into any contract, arrangement or understanding with any person or
firm which may result in the obligation of WWWX, the Acquisition Corp., Artra or
the Merger Sub to pay any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions described herein. Neither
WWWX, the Acquisition Corp. nor the Merger Sub is aware of any claim for payment
of any finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions described herein.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF ARTRA
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to WWWX (the "Artra Disclosure Letter") or in the Artra
Reports (as defined below), Artra represents and warrants to WWWX, the
Acquisition Corp. and the Merger Sub as of the date of this Agreement as
follows:
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3.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Artra is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation. Artra is duly licensed or qualified
to do business as a foreign corporation and is in good standing under the laws
of any other state of the United States in which the character of the properties
owned or leased by it or in which the transaction of its business makes such
qualification necessary, except where the failure to be so qualified or to be in
good standing would not have a material adverse effect on the business, results
of operations or financial condition of Artra and its Subsidiaries taken as a
whole (an "Artra Material Adverse Effect"). Artra has all requisite corporate
power and authority to own, operate and lease its properties and carry on its
business as now conducted. Each of the Subsidiaries of Artra is a corporation or
partnership duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has the corporate or
partnership power and authority to own its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing in each jurisdiction in which the ownership of its property
or the conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be in good standing
would not have an Artra Material Adverse Effect. The copies of the Articles of
Incorporation and Bylaws of Artra previously made available to WWWX are true and
correct, and have not been modified or amended except as set forth therein.
3.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Artra has the
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents described herein. Subject only to the approval
of this Agreement and the transactions described herein by the holders of Artra
Common Stock, the consummation by Artra of the transactions described herein has
been duly authorized by all requisite corporate action. This Agreement
constitutes, and all agreements and documents described herein (when executed
and delivered pursuant hereto for value received) will constitute, the valid and
legally binding obligations of Artra, enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
3.3 CAPITALIZATION. The authorized capital stock of Artra consists of
20,000,000 shares of Artra Common Stock and 2,000,000 shares of Artra Preferred
Stock. As of February 17, 1999, there were 7,975,206 shares of Artra Common
Stock and 1,849.34 shares of Artra Preferred Stock issued and outstanding, plus
494,017 shares of Artra Common Stock held in Artra's treasury. Since such date,
no additional shares of capital stock of Artra have been issued, except pursuant
to Artra's 1995 stock option and 1996 disinterested director stock option plan
(the "Artra Option Stock Plans"). Except as set forth in the Artra Disclosure
Letter, Artra does not have any outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of Artra on any matter. All such issued and outstanding shares
of Artra Common Stock and Artra Preferred Stock are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. Except as
described in this Agreement and as set forth in the Artra Disclosure Letter,
there are not at
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the date of this Agreement any existing options, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or commitments that obligate
Artra or any of its Subsidiaries to issue, transfer or sell any shares of
capital stock of Artra or any of its Subsidiaries (other than under the Artra
Option Plans).
3.4 SUBSIDIARIES. Except as set forth in the Artra Disclosure Letter,
Artra owns directly or indirectly each of the outstanding shares of capital
stock of each of its Subsidiaries (or other ownership interests having by their
terms ordinary voting power to elect a majority of directors or others
performing similar functions with respect to such Subsidiary). Each of the
outstanding shares of capital stock of each of such Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and is owned, directly
or indirectly, by Artra, free and clear of all liens, pledges, security
interests, claims or other encumbrances other than liens imposed by local law
which are not material. The following information for each such Subsidiary has
been previously made available to WWWX, if requested and if applicable: (i) its
name and jurisdiction of incorporation or organization; (ii) its authorized
capital stock or share capital; and (iii) the number of issued and outstanding
shares of capital stock or share capital.
3.5 OTHER INTERESTS. Except as set forth in the Artra Disclosure Letter
and for interests in the Artra Subsidiaries, neither Artra nor any Artra
Subsidiary owns directly or indirectly any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture, business, trust
or entity (other than (i) passive investments in securities in the ordinary
course of business and corporate partnering, development, cooperative marketing
and similar undertakings and arrangements entered into in the ordinary course of
business and (ii) other investments of less than $1,000,000).
3.6 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in the Artra Disclosure Letter: the
execution and delivery of this Agreement by Artra does not, and the consummation
by Artra of the transactions described herein will not, (i) conflict with or
violate its articles of incorporation or by-laws, (ii) conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to Artra or any
Artra Subsidiary or by which any property or asset of Artra or any Artra
Subsidiary is bound or affected, or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, result in the loss of a material benefit under, or give to
others any right of purchase or sale, or any right of termination, amendment,
acceleration, increased payments or cancellation of, or result in the creation
of a lien or other encumbrance on any property or asset of Artra or any Artra
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Artra or any Artra Subsidiary is a party or by which Artra or any Artra
Subsidiary or any property or asset of Artra or any Artra Subsidiary is bound or
affected, , in each case except for any such conflicts, defaults or violations
that would not, individually or in the aggregate, have an Artra Material Adverse
Effect. Artra and its Subsidiaries have obtained all licenses, permits and other
authorizations and have taken all actions required by applicable law or
governmental regulations in connection with their business
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as now conducted, except where the failure to obtain any such item or to take
any such action would not have, individually or in the aggregate, an Artra
Material Adverse Effect.
(b) The execution and delivery of this Agreement by Artra do
not, and the performance of this Agreement and the consummation by Artra of the
transactions described herein will not require any consent, approval,
authorization or permit of, or filing with or notification to any Governmental
Entity, except for (i) applicable requirements, if any, of the Securities Act,
the Exchange Act, state securities laws and state takeover laws, and the NYSE,
(ii) filing of appropriate merger documentation as Pennsylvania law shall
require, and (iii) applicable requirements of the Code and state and local tax
laws.
3.7 SEC DOCUMENTS.
(a) Artra has filed all forms, reports and documents required
to be filed by it with the Securities and Exchange Commission (the "SEC") since
December 31, 1996 (collectively, the "Artra Reports"). As of their respective
dates, the Artra Reports, and any such reports, forms and other documents filed
by Artra with the SEC after the date of this Agreement (i) complied, or will
comply, as to form in all material respects with the applicable requirements of
the Securities Act, the Exchange Act, and the rules and regulations thereunder
and (ii) did not, or will not, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading. The representation in clause (ii) of the
preceding sentence shall not apply to any misstatement or omission in any Artra
Report filed prior to the date of this Agreement that was superseded by a
subsequent Artra Report filed prior to the date of this Agreement that
specifically corrected such misstatement or omission in the applicable Artra
Report.
(b) Each of the consolidated balance sheets included in or
incorporated by reference into the Artra Reports (including the related notes
and schedules) fairly presents the consolidated financial position of Artra and
its Subsidiaries as of its date, and each of the consolidated statements of
income, retained earnings and cash flows included in or incorporated by
reference into the Artra Reports (including any related notes and schedules)
fairly presents the results of operations, retained earnings or cash flows, as
the case may be, of Artra and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments that would not be material in amount or effect), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein. Neither Artra nor
any of its Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on, or reserved against in, a balance sheet of Artra or in the
notes thereto, prepared in accordance with generally accepted accounting
principles consistently applied, except for (i) liabilities and obligations that
were reserved on or reflected in (including the notes to), the consolidated
balance sheet of Artra as of December 31, 1998, (ii) liabilities arising in the
ordinary course of business since December 31, 1998, and (iii) liabilities or
obligations which would not, individually or in the aggregate, have an Artra
Material Adverse Effect.
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3.8 TITLE TO PROPERTIES. Except as set forth in the Artra Disclosure
Letter, Artra and each of the Artra Subsidiaries owns outright, and has good and
marketable title to, all of its assets, free and clear of all liens, pledges,
mortgages, security interests, conditional sales contracts or other encumbrances
or conflicting claims of any nature whatsoever. None of such assets are subject
to restrictions with respect to the transferability thereof and Artra's title
thereto will not be affected in any way by the transactions described in the
Agreement. Neither Artra nor any of its Subsidiaries owns any real property or
any interest in real property.
3.9 ABSENCE OF UNDISCLOSED LIABILITIES. Neither Artra nor any Artra
Subsidiary has any liabilities, obligations or guaranties accrued, absolute,
contingent or otherwise, except as disclosed in the Artra Disclosure Letter or
the Artra Reports, none of which is material and adverse.
3.10 MATERIAL CONTRACTS. The Artra Disclosure Letter contains a true
and correct list of each contract, agreement, commitment or obligation (a) which
involves or may involve the payment to or from Artra or any Artra Subsidiary of
amounts in excess of $100,000 per year, (b) any license, franchise or
distribution agreement, which involves or may involve payments to or from Artra
or any Artra Subsidiary in excess of $100,000 per year, (c) any lease of
tangible personal property, which involves or may involve payments to or from
Artra or any Artra Subsidiary in excess of $100,000 per year and (d) any
contract between Artra or any of its Subsidiaries and any affiliate of Artra or
any of the Artra Subsidiaries (collectively the "Artra Material Contracts").
Each of the Artra Material Contracts constitutes a valid and binding obligation
of the parties thereto, is in full force and effect and will continue in full
force and effect following the consummation of the transactions described herein
and thereby, in each case without breaching the terms thereof or resulting in
the forfeiture or impairment of any rights thereunder and without the consent,
approval or act of, or the making of any filing with, any other party (except as
set forth in the Artra Disclosure Letter). Neither Artra nor any Artra
Subsidiary is in, or to the knowledge of Artra alleged to be in, breach or
default under, nor is there or is there alleged to be any basis for termination
of, any Artra Material Contract and, to the knowledge of Artra, no other party
to any Artra Material Contract has breached or defaulted thereunder, and no
event has occurred and no condition or state of facts exists which, with the
passage of time or the giving of notice or both, would constitute such a default
or breach by Artra, any Artra Subsidiary or, to the knowledge of Artra, by any
such other party. Neither Artra nor any Artra Subsidiary is currently
renegotiating any Artra Material Contract or paying liquidated damages in lieu
of the performance thereunder.
3.11 LITIGATION. Except as set forth in the Artra Disclosure Letter,
there are no actions, suits or proceedings pending against Artra or any Artra
Subsidiaries or, to the knowledge of Artra, threatened against Artra or the
Artra Subsidiaries, at law or in equity, or before or by any federal or state
commission, board, bureau, agency or instrumentality, that are reasonably likely
to have an Artra Material Adverse Effect.
3.12 ABSENCE OF CERTAIN CHANGES. Except as specifically described in
this Agreement or set forth in the Artra Disclosure Letter, since December 31,
1998, there has not been any: (i) Artra
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Material Adverse Effect; (ii) declaration, setting aside or payment of any
dividend or other distribution with respect to Artra's capital stock (other than
regular quarterly cash dividends including any increase thereof consistent with
past practice); (iii) material change in Artra's financial condition, or (iv)
material change in Artra's accounting principles, practices or methods.
3.13 TAXES.
(a) Each of Artra and its Subsidiaries has filed all material
tax returns and reports required to be filed by it, or requests for extensions
to file such returns or reports have been timely filed and granted and have not
expired, and all tax returns and reports are complete and accurate in all
respects, except to the extent that such failures to file, have extensions
granted that remain in effect or be complete and accurate in all respects, as
applicable, individually or in the aggregate, would not have an Artra Material
Adverse Effect. Artra and each of the Artra Subsidiaries has paid (or Artra has
paid on its behalf) all taxes shown as due on such tax returns and reports. The
most recent financial statements contained in the Artra Reports reflect an
adequate reserve for all taxes payable by Artra and its Subsidiaries for all
taxable periods and portions thereof accrued through the date of such financial
statements, and no deficiencies for any taxes have been proposed, asserted or
assessed against Artra and its Subsidiaries that are not adequately reserved
for, except for inadequately reserved taxes and inadequately reserved
deficiencies that would not, individually or in the aggregate, have an Artra
Material Adverse Effect. No requests for waivers of the time to assess any taxes
against Artra or any Artra Subsidiary have been granted or are pending, except
for requests with respect to such taxes that have been adequately reserved for
in the most recent financial statements contained in the Artra Reports, or, to
the extent not adequately reserved, the assessment of which would not,
individually or in the aggregate, have an Artra Material Adverse Effect.
(b) As used in this Section 3.13, "taxes" shall include all
federal, state, local and foreign income, franchise, property, sales, use,
excise and other taxes, including obligations for withholding taxes from
payments due or made to any other Person or entity and any interest, penalties
or additions to tax.
3.14 EMPLOYEE BENEFIT PLANS. Except as described in the Artra
Disclosure Letter: (i) all employee benefit plans or programs maintained for the
benefit of the current or former employees or directors of Artra or any of its
Subsidiaries that are sponsored, maintained or contributed to by Artra or any of
its Subsidiaries, or with respect to which Artra or any of its Subsidiaries has
any liability, including without limitation any such plan that is an "employee
benefit plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), are in compliance with all applicable
requirements of law, including ERISA and the Code, and (ii) neither Artra nor
any of its Subsidiaries has any liabilities or obligations with respect to any
such employee benefit plans or programs, whether accrued, contingent or
otherwise, nor to the knowledge of Artra are any such liabilities or obligations
expected to be incurred. The execution of, and performance of the transactions
described in this Agreement will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any benefit plan,
policy, arrangement or agreement or any trust or loan that will or may result in
any payment (whether of severance pay or
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otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any
employee. The only severance agreements or severance policies applicable to
Artra or any of its Subsidiaries are the agreements and policies specifically
referred to in the Artra Disclosure Letter.
3.15 LABOR MATTERS. There is no labor strike, labor dispute, work
slowdown, stoppage or lockout actually pending, or to the knowledge of Artra,
threatened against or affecting Artra or any of its Subsidiaries. There is no
unfair labor practice or labor arbitration proceeding pending or, to the
knowledge of Artra, threatened against Artra or any of its Subsidiaries relating
to their business.
3.16 INSURANCE. The Artra. Disclosure Letter contains a complete and
accurate list and description of all policies of fire, liability, product
liability and other forms of insurance presently in effect insuring Artra, its
Subsidiaries and their respective assets.
3.17 NO BROKERS. Artra has not entered into any contract, arrangement
or understanding with any person or firm that may result in the obligation of
Artra, the Acquisition Corp., WWWX or the Merger Sub to pay any finder's fee,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
described herein except as set forth in the Artra Disclosure Letter. Other than
the foregoing arrangements, Artra is not aware of any claim for payment of any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions described herein.
ARTICLE 4
COVENANTS
4.1 ALTERNATIVE PROPOSALS. Prior to the Effective Time, each of WWWX
and the Acquisition Corp. agrees (a) that neither it nor any of its Subsidiaries
shall, nor shall it or any of its Subsidiaries permit their respective officers,
directors, employees, agents and representatives (including, without limitation,
any investment banker, attorney or accountant retained by it or any of its
Subsidiaries) to, initiate, solicit or encourage, directly or indirectly, any
inquiries or the making or implementation of any proposal or offer (including,
without limitation, any proposal or offer to its shareholders) with respect to a
merger, acquisition, consolidation or similar transaction involving, and
purchase of (i) all or any significant portion of the assets of the Acquisition
Corp. or of any Subsidiary of the Acquisition Corp., (ii) any of the outstanding
shares of Acquisition Corp. Common Stock or Preferred Stock or (iii) any of the
outstanding shares of the capital stock or other equity interest of any
Subsidiary of the Acquisition Corp. (any such proposal or offer being
hereinafter referred to as an "Alternative Proposal") or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Alternative Proposal
(excluding the Merger described in this Agreement), or otherwise facilitate any
effort or attempt to make or implement an Alternative Proposal; and (b) that it
will notify Artra immediately if any such inquiries or proposals are received
by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, it;
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provided, however, that nothing contained in this Section 4.1 shall prohibit the
Board of Directors of WWWX from furnishing information to or entering into
discussions or negotiations with, any person or entity that makes an unsolicited
bona fide Alternative Proposal, if, and only to the extent that, (i) the Board
of Directors of WWWX, determines in good faith that such action is required for
the Board of Directors to comply with its fiduciary duties to shareholders
imposed by law, (ii) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity, WWWX provides written
notice to Artra to the effect that it is furnishing information to, or entering
into discussions or negotiations with, such person or entity, and (iii) WWWX
keeps Artra informed of the status and all material information with respect to
any such discussions or negotiations. Nothing in this Section 4.1 shall (x)
permit WWWX or Artra to terminate this Agreement (except as specifically
provided in Article 6 hereof), (y) permit WWWX or the Acquisition Corp. to enter
into any agreement with respect to an Alternative Proposal for as long as this
Agreement remains in effect (it being agreed that for as long as this Agreement
remains in effect, neither WWWX nor the Acquisition Corp. shall enter into any
agreement with any person that provides for, or in any way facilitates, an
Alternative Proposal (other than a confidentiality agreement in customary
form)), or (z) affect any other obligation of WWWX, the Acquisition Corp. or the
Merger Sub under this Agreement.
4.2 INTERIM OPERATIONS.
(a) Prior to the Effective Time, except as may be set forth in
the Acquisition Corp. Disclosure Letter or as described in any other provision
of this Agreement, unless Artra has consented in writing thereto, WWWX: (i)
shall, and shall cause the Acquisition Corp. and each of its Subsidiaries to
conduct their respective operations according to their usual, regular and
ordinary course; (ii) shall use its reasonable efforts, and shall cause the
Acquisition Corp. and each of its Subsidiaries to use its reasonable efforts, to
preserve intact their assets and business organizations and goodwill, keep
available the services of their respective officers and employees and maintain
satisfactory relationships with those persons having business relationships with
them; (iii) shall not amend the Articles of Incorporation or Bylaws or
comparable governing instruments of the Acquisition Corp. or any of its
Subsidiaries; (iv) shall promptly notify Artra of any material breach of any
representation or warranty contained herein or any WWWX Material Adverse Effect;
(v) shall promptly deliver to Artra true and correct copies of all monthly
financial statements of WWWX, the Acquisition Corp. and each of its Subsidiaries
promptly after the end of each month; (vi) shall not permit the Acquisition
Corp. or any of its Subsidiaries to (x) issue any shares of its capital stock,
effect any stock split or otherwise change its capitalization as it existed on
the date hereof, (y) grant, confer or award any option, warrant, conversion
right or other right to acquire any shares of its capital stock or grant, confer
or award any bonuses or other forms of cash incentives to any officer, director
or key employee except consistent with past practice or (z) increase any
compensation under any employment agreement with any of its present or future
officers, directors or employees, except for normal increases consistent with
past practice, grant any severance or termination pay to, or enter into any
employment or severance agreement with any officer or director or amend any such
agreement in any material respect, adopt any new employee benefit plan
(including any stock option, stock benefit or stock purchase plan) or amend any
existing employee benefit plan in any material
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respect; (vii) shall not permit the Acquisition Corp. or any of its
Subsidiaries, to (x) declare, set aside or pay any dividend or make any other
distribution or payment with respect to any shares of the Acquisition Corp.'s
capital stock or other ownership interests or (y) directly or indirectly redeem,
purchase or otherwise acquire any shares of its capital stock or capital stock
of any of its Subsidiaries, or make any commitment for any such action; (viii)
shall not permit the Acquisition Corp. or any of its Subsidiaries to, sell,
lease or otherwise dispose of any of its assets (including capital stock of
Subsidiaries) except in the ordinary course of business, or to acquire any
business or assets; (ix) shall not, and shall not permit the Acquisition Corp.
or any of its Subsidiaries to incur any material amount of indebtedness for
borrowed money or make any loans, advances or capital contributions to, or
investments in, any other person other than pursuant to the Loan Agreement, or
issue or sell any debt securities, other than borrowings under existing lines of
credit in the ordinary course of business; (x) shall not permit the Acquisition
Corp. or any of its Subsidiaries to, authorize or make capital expenditures
except as described in the Loan Agreement; (xi) shall not permit the Acquisition
Corp. or any of its Subsidiaries to mortgage or otherwise encumber or subject to
any lien any of their properties or assets except as would not be reasonably
likely to have an Acquisition Corp. Material Adverse Effect; (xii) shall not,
and shall not permit the Acquisition Corp. or any of its Subsidiaries to, make
any change to its accounting (including tax accounting) methods, principles or
practices, except as may be required by generally accepted accounting principles
and except, in the case of tax accounting methods, principles or practices, in
the ordinary course of business of the Acquisition Corp. or any of its
Subsidiaries; and (xiii) shall not permit the Acquisition Corp. or any of its
Subsidiaries to enter into any joint venture, production or marketing
arrangements without consulting with Artra prior thereto.
(b) Prior to the Effective Time, except as set forth in the
Artra Disclosure Letter or as described in this Agreement, unless WWWX has
consented in writing thereto, Artra: (i) shall not issue any shares of its
capital stock (other than pursuant to any Artra Stock Option Plans) or effect
any stock split of its capital stock; (ii) shall promptly notify the Acquisition
Corp. of any breach of any representation or warranty contained herein or any
Artra Material Adverse Effect; and (iii) shall promptly deliver to WWWX true and
correct copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Agreement.
4.3 MEETINGS OF STOCKHOLDERS. Each of Artra, WWWX and the Acquisition
Corp. shall take all action necessary in accordance with applicable law and its
Articles or Certificate of Incorporation and Bylaws to convene a meeting of its
shareholders as promptly as practicable to consider and vote upon the approval
of this Agreement, the Plan of Merger and the Merger. The Board of Directors of
each of Artra, WWWX and the Acquisition Corp. shall recommend such approval, and
Artra, WWWX and the Acquisition Corp. shall each take all lawful action to
solicit such approval, including, without limitation, to the extent applicable
to each, timely mailing the Proxy Statement/Prospectus (as defined in Section
4.7); provided, however, that such recommendation or solicitation is subject to
any action (including any withdrawal or change of its recommendation) taken by,
or upon authority of, the Board of Directors of Artra, WWWX or the Acquisition
Corp., as the case may be, in the exercise of its good faith judgment as to its
fiduciary duties to its shareholders imposed by law. As used herein, the
"approval" of the WWWX
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shareholders shall mean the approval by at least a majority in interest of all
disinterested WWWX shareholders of record entitled to vote at a duly convened
meeting, unless a greater number is otherwise required by law. "Disinterested
WWWX shareholders" shall mean all shareholders of record other than Robert D.
Kohn and any person or entity directly or indirectly, through one or more
intermediaries, controlled by Robert D. Kohn, and any entity under common
control with any such entity controlled by Robert D. Kohn.
4.4 FILINGS, OTHER ACTION. Subject to the terms and conditions herein
provided, Artra and WWWX shall: (a) use all reasonable efforts to cooperate with
one another in (i) determining which filings are required to be made prior to
the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from,
governmental or regulatory authorities of the United States, the several states
and foreign jurisdictions in connection with the execution and delivery of this
Agreement and the consummation of the transactions described herein and (ii)
timely making all such filings and timely seeking all such consents, approvals,
permits or authorizations; and (b) use all reasonable efforts to take, or cause
to be taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions described in this Agreement. If, at any time after the Effective
Time, any further action is necessary or desirable to carry out the purpose of
this Agreement, the proper officers and directors of the Artra, WWWX and the
Acquisition Corp. shall take all such necessary action.
4.5 INSPECTION OF RECORDS. From the date hereof to the Effective Time,
each of Artra and WWWX shall: (i) allow all designated officers, attorneys,
accountants and other representatives of the other reasonable access at all
reasonable times to the offices, records and files, correspondence, audits and
properties, as well as to all information relating to commitments, contracts,
titles and financial position, or otherwise pertaining to the business and
affairs, of Artra and WWWX and their respective Subsidiaries, as the case may
be, (ii) furnish to the other, the other's counsel, financial advisors, auditors
and other authorized representatives such financial and operating data and other
information as such persons may reasonably request and (iii) instruct their
respective employees, counsel and financial advisors to cooperate with the
investigation of the respective businesses of each.
4.6 PUBLICITY. The initial press release relating to this Agreement
shall be a joint press release approved by both parties and thereafter Artra and
WWWX shall, subject to their respective legal obligations (including
requirements of stock exchanges and other similar regulatory bodies), consult
with each other, and use reasonable efforts to agree upon the text of any press
release, before issuing any such press release or otherwise making public
statements with respect to the transactions described herein and in making any
filings with any federal or state governmental or regulatory agency or with any
national securities exchange with respect thereto.
4.7 REGISTRATION STATEMENTS. Artra and WWWX shall cooperate and
promptly prepare and the Acquisition Corp. shall file with the SEC as soon as
practicable a Registration Statement on
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Form S-4 (the "Form S-4") under the Securities Act, with respect to the
Acquisition Corp. Common Stock issuable in the Merger, which shall also serve as
the proxy statement with respect to the meeting of the shareholders of Artra and
WWWX in connection with the Merger (the "Proxy Statement/Prospectus"). In
addition, Artra and WWWX shall cooperate and promptly prepare a Registration
Statement or Form S-1 (the "Form S-1") under the Securities Act, or such other
form as may be permitted under applicable SEC regulations, with respect to the
reoffer and resale of shares of Acquisition Corp. Common Stock presently held by
WWWX and ETCO. The respective parties will cause the Proxy Statement/Prospectus,
the Form S-4 and the Form S-1 to comply as to form in all material respects with
the applicable provisions of the Securities Act, the Exchange Act and the rules
and regulations thereunder. The Acquisition Corp. shall use all reasonable
efforts, and WWWX and Artra shall cooperate with the Acquisition Corp., to have
the Form S-4 and the Form S-1 declared effective by the SEC as promptly as
practicable, to keep the Form S-4 and the Form S-1 effective as long as is
necessary to consummate the Merger and to keep the Form S-1 effective until the
earlier of the date the shares are sold or the date such shares may be sold
pursuant to Rule 144 or similar provision under the Securities Act. The
Acquisition Corp. shall, as promptly as practicable, provide copies of any
written comments received from the SEC with respect to the Form S-4 or the Form
S-1 to Artra and WWWX and advise Artra and WWWX of any verbal comments with
respect to the Form S-4 or the Form S-1 received from the SEC. The Acquisition
Corp. shall use its best efforts to obtain, prior to the effective date of the
Form S-4 or the Form S-1, all necessary state securities law or "blue sky"
permits or approvals required to carry out the transactions described in this
Agreement. The Acquisition Corp. agrees that the Proxy Statement/Prospectus and
each amendment or supplement thereto at the time of mailing thereof and at the
time of the meetings of shareholders of Artra and WWWX, or, in the case of the
Form S-4 or the Form S-1 and each amendment or supplement thereto, at the time
it is filed or becomes effective, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the foregoing
shall not apply to the extent that any such untrue statement of a material fact
or omission to state a material fact was made by the Acquisition Corp. in
reliance upon and in conformity with written information concerning Artra
furnished to the Acquisition Corp. by Artra specifically for use in the Proxy
Statement/Prospectus or the Form S-1 or any amendment or supplement thereto.
Artra agrees that the written information concerning it provided by it for
inclusion in the Proxy Statement/Prospectus and each amendment or supplement
thereto, at the time of mailing thereof and at the time of the meeting of
shareholders of Artra, or, in the case of written information concerning Artra
provided by it for inclusion in the Form S-4 or the Form S-1 or any amendment or
supplement thereto, at the time it is filed or becomes effective, will not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. No
amendment or supplement to the Proxy Statement/ Prospectus or the Form S-4 or
the Form S-1 will be made by the Acquisition Corp., WWWX or Artra without the
approval of the other parties. The Acquisition Corp. will advise Artra and WWWX
promptly of the times when the Form S-4 and the Form S-1 have become effective
or any supplement or amendment has been filed, the issuance of any stop order,
the suspension of the qualification of the Acquisition Corp. Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or any request
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by the SEC for amendment of the Proxy Statement/Prospectus, the Form S-4 or the
Form S-1 or comments thereon and responses thereto or requests by the SEC for
additional information.
4.8 LISTING APPLICATION. The Acquisition Corp. shall promptly prepare
and submit to the NYSE a listing application covering the shares of Acquisition
Corp. Common Stock issuable in the Merger, and shall use reasonable efforts to
obtain, prior to the Effective Time, approval for such listing of such Acquired
Corp. Common Stock, subject to official notice of issuance. If the shares of the
Acquisition Corp. Common Stock issuable in the Merger are not approved for
listing on the NYSE prior to the Effective Time, Artra shall prepare and file an
application with the National Association of Securities Dealers, Inc. to list
the shares of the Acquisition Corp. Common Stock on the National Association of
Securities Dealers Automated Quotation Service National Market System
("NASDAQ/NMS"), and shall use all reasonable efforts to obtain, prior to the
Effective Time, approval for such listing of such Acquisition Corp. Common Stock
on the NASDAQ/NMS.
4.9 FURTHER ACTION. Each party hereto shall, subject to the fulfillment
at or before the Effective Time of each of the conditions of performance set
forth herein or the waiver thereof, perform such further acts and execute such
documents as may be reasonably required to effect the Merger.
4.10 AFFILIATE LETTERS. At least 30 days prior to the Closing Date,
Artra shall deliver to the Acquisition Corp. a list of names and addresses of
those persons who were, in Artra's reasonable judgment, at the record date for
its shareholders' meeting to approve the Merger, "affiliates" (each such person,
an "Affiliate") of Artra within the meaning of Rule 145 of the rules and
regulations promulgated under the Securities Act. Artra shall use all reasonable
efforts to deliver or cause to be delivered to the Acquisition Corp., prior to
the Closing Date, from each of the Affiliates of Artra identified in the
foregoing list, an Affiliate Letter in form and substance reasonably
satisfactory to the Acquisition Corp. The Acquisition Corp. shall be entitled to
place legends as specified in such Affiliate Letters on the certificates
evidencing any Acquisition Corp. Common Stock to be received by such Affiliates
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the Acquisition Corp. Common Stock,
consistent with the terms of such Affiliate Letters.
4.11 EXPENSES. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
described herein shall be paid by the party incurring such expenses except as
expressly provided herein and except that (a) the filing fee in connection with
the filing of the Form S-4 or Proxy Statement/Prospectus with the SEC and (b)
the expenses incurred in connection with printing and mailing the Form S-4 and
the Proxy Statement/Prospectus, shall be borne by Artra.
4.12 TAKEOVER STATUTE. If any "fair price", "moratorium", "control
share acquisition" or other form of antitakeover statute or regulation shall
become applicable to the transactions described herein, the Acquisition Corp.
and the members of the Board of Directors of the Acquisition Corp. shall grant
such approvals and take such actions as are reasonably necessary so that the
transactions
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described herein may be consummated as promptly as practicable on the terms
described herein and thereby and otherwise act to eliminate or minimize the
effects of such statute or regulation on the transactions described herein and
thereby.
4.13 CONVEYANCE TAXES. Artra and WWWX shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions described in this Agreement that are required
or permitted to be filed on or before the Effective Time.
4.14 ENTRADE FUNDING. From and after the Effective Time, Artra shall
commit to provide the Acquisition Corp. with guaranteed funding for the working
capital needs of Entrade, in an amount equal to at least $4,000,000, with credit
for all working capital contributions to Entrade funded by the loans from Artra
made pursuant to the terms of the Loan Agreement, as the same may be amended
from time to time.
4.15 SECTION 351 QUALIFICATION. None of the parties hereto nor any of
their respective Subsidiaries shall knowingly take any action that may
jeopardize the qualification of the Merger as an exchange governed by Section
351 of the Code.
4.16 "LOCK-UP" PROVISIONS. WWWX agrees that, except as set forth
herein, commencing on the date hereof and continuing until the first anniversary
of the Effective Time, it shall not: (a) directly or indirectly assign,
transfer, offer, sell, agree to sell, make any short sale, pledge, hypothecate
or otherwise dispose (collectively, a "Disposition") of any shares of
Acquisition Corp. Common Stock owned by WWWX on the date hereof ("WWWX Stock"),
or (b) engage in any hedging or other transactions with respect to its WWWX
Stock that may have a material impact on the market price of its WWWX Stock, or
that is designed to result in a Disposition of its WWWX Stock, even if such WWWX
Stock would be disposed of by someone other than WWWX, including, without
limitation, any short sale (whether or not against the box) or any purchase,
sale, or grant of any right (including, without limitation, any put or call
option) with respect to any of its WWWX Stock or with respect to any security
(other than a broad-based market basket or index) that includes, relates to or
derives any significant part of its value from its WWWX Stock. Notwithstanding
the foregoing, from and after the Effective Time, WWWX shall be entitled to (a)
make bona fide pledges of its WWWX Stock to an institutional lender or
nationally recognized brokerage house, and any such pledgee shall have the right
to liquidate such shares in the exercise of any remedies available to it under
its loan arrangements with WWWX, without regard to the restrictions set forth
herein, and (b) make a one-time distribution of up to 25% of its WWWX Stock to
the shareholders of WWWX, pro rata in accordance with their respective stock
interests in WWWX as determined by the WWWX Board of Directors.
ARTICLE 5
CONDITIONS
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5.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the transactions described herein shall
have been approved in the manner required by applicable law or by the applicable
regulations of any stock exchange or other regulatory body, as the case may be,
by the holders of the issued and outstanding shares of capital stock of Artra
and WWWX.
(b) None of the parties hereto shall be subject to any order
or injunction of a court of competent jurisdiction that prohibits the
consummation of the transactions described in this Agreement. In the event any
such order or injunction shall have been issued, each party agrees to use its
reasonable efforts to have any such injunction lifted.
(c) The Form S-4 shall have become effective and shall be
effective at the Effective Time, and no stop order suspending effectiveness of
the Form S-4 shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, or, to the knowledge of the Acquisition Corp,
threatened, and all necessary approvals under state securities laws relating to
the issuance or trading of the Acquisition Corp. Common Stock and Preferred
Stock to be issued to the Artra shareholders in connection with the Merger shall
have been received.
(d) All consents, authorizations, orders and approvals of (or
filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made, except for
filings in connection with the Merger and any other documents required to be
filed after the Effective Time and except where, in the opinion of Artra or
WWWX, as the case may be, the failure to have obtained or made any such consent,
authorization, order, approval, filing or registration would not have a material
adverse effect on the business, results of operations or financial condition of
Artra and the Acquisition Corp. (and their respective Subsidiaries), taken as a
whole, following the Effective Time.
(e) The Acquisition Corp. Common Stock to be issued to the
Artra shareholders in connection with the Merger shall have been approved for
listing on the NYSE, subject only to official notice of issuance, or if such
listing has not been approved, the Acquisition Corp. shall have applied for and
be diligently pursuing listing on the NASDAQ/NMS.
(f) The Employment Agreements between Artra and Robert D.
Kohn, Benjamin Kafka, Mark Quinn and Gary Lerman shall have been assigned by
Artra to, and amended by, the Acquisition Corp.
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(g) The Board of Directors of the Acquisition Corp. shall have
been elected in accordance with Section 1.4 hereof, and the Articles of
Incorporation and By-Laws of the Acquisition Corp. shall have been amended to
the extent required to cause them to be in compliance with any then applicable
provision or requirement of the PBCL or the NYSE (or, if applicable, the
NASDAQ/NMS).
5.2 CONDITIONS TO OBLIGATION OF WWWX, THE ACQUISITION CORP. AND THE
MERGER SUB TO EFFECT THE Merger. The obligation of WWWX and the Acquisition
Corp. to effect the Merger shall be subject to the fulfillment at or prior to
the Closing Date of the following conditions:
(a) Artra shall have performed in all material respects its
agreements contained in this Agreement and the Loan Agreement required to be
performed on or prior to the Closing Date, the representations and warranties of
Artra contained in this Agreement and in any document delivered in connection
herewith shall be true and correct as of the Closing Date, except (i) for
changes specifically permitted by this Agreement and (ii) that those
representations and warranties that address matters only as of a particular date
shall remain true and correct as of such date, and WWWX and the Acquisition
Corp. shall have received a certificate of the President or a Vice President of
Artra, dated the Closing Date, certifying to such effect.
(b) From the date of this Agreement through the Effective
Time, there shall not have occurred any change in the financial condition,
business or operations of Artra and its Subsidiaries, taken as a whole, that
would have or would be reasonably likely to have an Artra Material Adverse
Effect.
5.3 CONDITIONS TO OBLIGATION OF ARTRA TO EFFECT THE MERGER. The
obligation of Artra to effect the Merger shall be subject to the fulfillment at
or prior to the Closing Date of the following conditions:
(a) Each of WWWX, the Acquisition Corp. and the Merger Sub
shall have performed in all material respects its respective agreements
contained in this Agreement required to be performed on or prior to the Closing
Date, the representations and warranties of WWWX, the Acquisition Corp. and the
Merger Sub contained in this Agreement and in any document delivered in
connection herewith shall be true and correct as of the Closing Date, except (i)
for changes specifically permitted by this Agreement and (ii) that those
representations and warranties that address matters only as of a particular date
shall remain true and correct as of such date, and Artra shall have received a
certificate of the President or a Vice President of WWWX, the Acquisition Corp.
and the Merger Sub, dated the Closing Date, certifying to such effect.
(b) From the date of this Agreement through the Effective
Time, there shall not have occurred any change in the financial condition,
business or operations of the Acquisition Corp. or any of its Subsidiaries that
would have or would be reasonably likely to have an Acquisition Corp. Material
Adverse Effect.
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(c) Artra and the Acquisition Corp. shall have received
written affirmations from Global Trade Group, Ltd. ("GTG") and all of the
shareholders of GTG ("GTG Shareholders") that their representations, warranties,
covenants, and indemnifications set forth in the Acquisition Agreement dated
January 29, 1999 between GTG, the GTG Shareholders and WWWX, shall inure to the
benefit of and be enforceable by Artra and the Acquisition Corp. as if
originally given to Artra and the Acquisition Corp.
(d) Artra and the Acquisition Corp. shall have received
written affirmations from Positive Asset Remarketing, Inc. ("PAR") and all of
the shareholders of PAR ("PAR Shareholders") that their representations,
warranties, covenants, and indemnifications set forth in the Acquisition
Agreement dated January 29, 1999 between PAR, the PAR Shareholders and WWWX,
shall inure to the benefit of and be enforceable by Artra and the Acquisition
Corp. as if originally given to Artra and the Acquisition Corp.
(e) The Acquisition Corp. shall have caused AsseTrade to be
converted into or re-created as a Delaware limited liability company, in
accordance with the terms and conditions of an operating agreement that are
reasonably satisfactory to Artra.
(f) That certain Non-Competition Agreement of even date
herewith, by and between the Acquisition Corp. and Robert D. Kohn, shall be in
effect at the time of the Closing, without modification or amendment, and there
shall have been no default thereunder.
ARTICLE 6
TERMINATION
6.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval of this Agreement by the shareholders of Artra or WWWX, by
the mutual consent of Artra and WWWX.
6.2 TERMINATION BY EITHER ARTRA OR WWWX. This Agreement may be
terminated and the Merger may be abandoned by action of the Board of Directors
of Artra if (a) the Merger shall not have been consummated by September 30,
1999, or (b) the approval of either Artra's shareholders or WWWX's shareholders
as required by Section 4.3 shall not have been obtained at a meeting duly
convened therefor or at any adjournment thereof, or (c) a United States federal
or state court of competent jurisdiction or United States federal or state
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions described in
this Agreement and such order, decree, ruling or other action shall have become
final and non-appealable; provided, that the party seeking to terminate this
Agreement pursuant to this clause (c) shall have used all reasonable efforts to
remove such injunction, order or decree; and provided, in the case of a
termination pursuant to clause (a) above, that the terminating party shall not
have breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the failure to consummate
the Merger by September 30, 1999.
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6.3 TERMINATION BY WWWX. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by the shareholders of WWWX referred to in Section 4.3, by action
of the Board of Directors of WWWX, if (a) in the exercise of its good faith
judgment as to fiduciary duties to its shareholders imposed by law, the Board of
Directors of WWWX determines that such termination is required, including by
reason of an Alternative Proposal being made; provided that WWWX shall notify
Artra promptly of WWWX's intention to terminate this Agreement or enter into a
definitive agreement with respect to any Alternative Proposal, but in no event
shall such notice be given less than 48 hours prior to the public announcement
of WWWX's termination of this Agreement, or (b) there has been a breach by Artra
of any representation or warranty contained in this Agreement that would have or
would be reasonably likely to have an Artra Material Adverse Effect, or (c)
there has been a material breach of any of the material covenants or agreements
set forth in this Agreement on the part of Artra, which breach is not curable
or, if curable, is not cured within 30 days after written notice of such breach
is given by WWWX to Artra, or (d) the Board of Directors of Artra shall have
withdrawn or modified in a manner materially adverse to WWWX its approval or
recommendation of this Agreement or the Merger.
6.4 TERMINATION BY ARTRA. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by the shareholders of Artra referred to in Section 4.3, by action
of the Board of Directors of Artra, if (a) the Board of Directors of WWWX shall
have withdrawn or modified in a manner materially adverse to Artra its approval
or recommendation of this Agreement or the Merger, or (b) there has been a
breach by WWWX or the Acquisition Corp. of any representation or warranty
contained in this Agreement that would have or would be reasonably likely to
have an Acquisition Corp. Material Adverse Effect, or (c) there has been a
material breach of any of the material covenants or agreements set forth in this
Agreement on the part of WWWX, the Acquisition Corp. or the Merger Sub, which
breach is not curable or, if curable, is not cured within 30 days after written
notice of such breach is given by Artra to WWWX.
6.5 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this Article 6,
all obligations of the parties hereto shall terminate, except the obligations of
the parties pursuant to Section 4.11 and except for the provisions of Sections
8.2, 8.3, 8.5, 8.7, 8.8, 8.11, 8.12 and 8.13. In the event of the termination of
this Agreement solely pursuant to clause (b) of Section 6.2 because the
requisite approval of Artra's shareholders shall not have been obtained, all
obligations of WWWX and the Acquisition Corp. to repay the amounts loaned to
either or both of them by Artra under the Loan Agreement shall terminate and the
loans made by Artra to WWWX and to the Acquisition Corp. under the Loan
Agreement shall be forgiven as a "break-up" fee to WWWX and the Acquisition
Corp. equal to the aggregate amount of the Loan as defined in the Loan
Agreement. In the event of the termination of this Agreement solely pursuant to
clause (b) of Section 6.2 because the requisite approval of WWWX's shareholders
shall not have been obtained, WWWX and Acquisition Corp. shall be jointly and
severally obligated to pay Artra a "break-up" fee of $2,000,000, payable in cash
on the
26
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date of such termination, in addition to their obligation to repay the Loan in
full. The parties acknowledge and agree that the foregoing "break-up" fees
represent reasonable estimates of their respective costs and expenses incurred
or to be incurred in connection with the transactions described in this
Agreement. Moreover, in the event of termination of this Agreement pursuant to
Section 6.3 or 6.4, nothing herein shall prejudice the ability of the
non-breaching party from seeking damages from any other party for any willful
breach of this Agreement, including without limitation, reasonable attorneys'
fees and the right to pursue any remedy at law or in equity.
6.6 EXTENSION, WAIVER. At any time prior to the Effective Time, any
party hereto, by action taken by its Board of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES, INDEMNIFICATION
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, covenants, stipulations, certifications, indemnities and agreements
contained herein or in any document delivered pursuant hereto shall survive the
consummation of the transactions described in this Agreement.
7.2 INDEMNIFICATION.
(a) WWWX, the Acquisition Corp. and the Merger Sub shall
defend, indemnify and hold Artra harmless from and against any and all claims,
liabilities, damages, losses, deficiencies and expenses, including reasonable
attorneys' fees and expenses and costs of suit (individually a "Loss" and
collectively "Losses") arising out of any and all inaccurate representations and
warranties and out of any and all breaches of covenants, agreements and
certifications made by or on behalf of WWWX, the Acquisition Corp. and/or the
Merger Sub in this Agreement or in any document delivered by any of them
hereunder, or arising out of or resulting from any occurrence with respect to
the Acquisition Corp. or any of its Subsidiaries or assets prior to the Closing
Date and not disclosed herein.
(b) Artra shall defend, indemnify and hold WWWX, the
Acquisition Corp. and the Merger Sub harmless from and against any and all
Losses arising out of any and all inaccurate representations and warranties and
out of any and all breaches of covenants and agreements and certifications made
by or on behalf of Artra in this Agreement or in any document delivered by Artra
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hereunder, or arising out of or resulting from any occurrence with respect to
Artra or any of its Subsidiaries or assets prior to the Closing Date and not
disclosed herein.
7.3 PROCEDURE FOR CLAIMS. A party seeking indemnification under this
Article 7 (an "Indemnified Party") shall give notice of the claim for losses and
a brief explanation of the basis thereof to the party alleged to be responsible
for indemnification hereunder (an "Indemnitor"). The Indemnitor shall promptly
pay the Indemnified Party any amount due under this Article 7. The Indemnified
Party may pursue whatever legal remedies may be available for recovery of the
losses claimed from any Indemnitor.
7.4 THIRD PARTY CLAIMS. An Indemnified Party shall give any indemnitor
prompt notice of the institution by a third party of any actions, suits or other
administrative or judicial proceedings if the Indemnified Party would be
entitled to claim indemnification under this Article 7 in connection with any
such action, suit or other proceeding. After such notice, any Indemnitor may, or
if so requested by the Indemnified Party, any Indemnitor shall, participate in
any such action, suit or other proceeding or assume the defense thereof, with
counsel satisfactory to the Indemnified Party; provided, however, that the
Indemnified Party shall have the right to participate at its own expense in the
defense of any such action, suit or other proceeding; and provided, further,
that the Indemnitor shall not consent to the entry of any judgment or enter into
any settlement, except with the written consent of the Indemnified Party, that
(a) fails to include as an unconditional term thereof the giving by the claimant
or plaintiff to the Indemnified Party of a release from all liability in respect
of any such action, suit or other proceeding or (b) grants the claimant or
plaintiff any injunctive relief against the Indemnified Party. Any failure to
give prompt notice under this Section 7.4 shall not bar an Indemnified Party's
right to claim indemnification under this Article 7, except to the extent that
an Indemnified Party shall have been harmed by such failure.
ARTICLE 8
GENERAL PROVISIONS
8.1 NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
If to Artra: ......... If to WWWX, the Acquisition
Corp. or the Merger Sub:
Artra Group Incorporated... WorldWide Web NetworX Corporation
500 Central Avenue......... 300 Atrium Way, Suite 202
Northfield, IL 60093...... Mt. Laurel, NJ 08054
Attention: Peter R. Harvey, Attention: Robert D. Kohn, President
President and COO (609) 627-6893
(847) 441-6959
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With copies to: ......... With copies to:
Duane, Morris & Heckscher LLP Michelle Kramish Kain, Esquire
One Liberty Place ......... 750 Southeast Third Avenue
Philadelphia, PA 19103-7396 Ft. Lauderdale, FL 33316-1153
Attention: Sheldon M. Bonovitz, (954) 768-0158
Esquire
(215) 979-1020
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
8.2 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
8.3 ENTIRE AGREEMENT. This Agreement, the Plan of Merger, the
Acquisition Corp. Disclosure Letter, and the Artra Disclosure Letter constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings among the parties with
respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
8.4 AMENDMENT. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the Merger by the
shareholders of Artra and WWWX, but after any such shareholder approval, no
amendment shall be made which by law requires the further approval of
shareholders without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without regard to
its rules of conflict of laws.
8.6 COUNTERPARTS. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
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<PAGE>
8.7 HEADINGS. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
8.8 INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
8.9 WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
8.10 INCORPORATION. The Acquisition Corp. Disclosure Letter, the Artra
Disclosure Letter, and the Plan of Merger referred to herein are hereby
incorporated herein and made a part hereof for all purposes as if fully set
forth herein.
8.11 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
8.12 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court located in the
Commonwealth of Pennsylvania, this being in addition to any other remedy to
which they are entitled at law or in equity.
8.13 SUBSIDIARIES. As used in this Agreement, the word "Subsidiary"
when used with respect to any party means any corporation or other organization,
whether incorporated or unincorporated, of which such party directly or
indirectly owns or controls at least one-half of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization, or any organization of which such party is a
general partner or manager.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
ARTRA GROUP INCORPORATED
By://s// PETER R. HARVEY
Title: PRESIDENT
WORLDWIDE WEB NETWORX
CORPORATION
By://s// ROBERT D. KOHN
Title: PRESIDENT
NA ACQUISITION CORP.
By://s// ROBERT D. KOHN
Title: PRESIDENT
WWWX MERGER SUBSIDIARY, INC.
By://s// ROBERT D. KOHN
Title: PRESIDENT
31
<PAGE>
<PAGE>
Exhibit 10.9
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (this "AGREEMENT") is dated as of February
24, 1999, by and between POSITIVE ASSET REMARKETING, INC., a Massachusetts
corporation ("PAR") and WORLD WIDE WEB NETWORX CORPORATION, a Delaware
corporation ("WWWX").
RECITALS
A. PAR holds certain rights to proprietary information including a
proprietary banking and trade operation that establishes definitive on-line
electronic trading and banking functions utilizing cash, trade credits and/or a
combination of cash and trade credits as methods OF payment (THE ATM CENTER), as
well as proven methodologies for the utilization of the on-line electronic
trading and banking functions in both a general commercial application over the
Internet and within a closed corporate environment over an Intranet.
B. PAR desires to transfer 100% of its interest in the ATM Center to
WWWX, and WWWX desires to acquire the ATM Center, on the terms and SUBJECT TO
the conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants herein and for
other good and valuable consideration, the receipt and sufficiency OF which is
hereby acknowledged, and intending to be legally bound hereby, the parties agree
as follows:
SECTION 1. PURCHASE AND SALE
1.1 AGREEMENT TO SELL. At the Closing (hereinafter defined), PAR shall
sell, grant, convey, transfer, assign and deliver to WWWX, upon the terms and
subject to the conditions of this Agreement, free and clear of all liens,
encumbrances and charges of any kind, 100% of Par's interest in the ATM Center.
As used herein, the "ATM Center" shall include all of Par's right, title and
interest in and to the ATM Center, whether tangible, intangible, real, personal
or mixed, wherever located, including but not limited to diagrams, flow charts,
conceptual and methodological presentations, trade secrets, customer lists,
goodwill, intellectual property, contracts, books and records, telephone
numbers, licenses, permits, software, hardware and disks, data files (whether on
disks or other media), logos, trademarks, trade-names, marketing know-how and
materials, technology and technical know-how.
1.2 AGREEMENT TO PURCHASE. At the Closing, WWWX shall acquire from PAR,
upon the terms and subject to the conditions of this Agreement and in reliance
upon the representations and warranties of PAR in this Agreement and in any
Exhibits and Schedules attached hereto, the ATM Center and, as consideration
therefor, shall pay to PAR the Purchase Price (hereinafter defined).
<PAGE>
SECTION 2. PURCHASE PRICE; NO ASSUMPTION OF LIABILITIES
2.1 PURCHASE PRICE. In consideration for the ATM Center and the
Non-Competition Agreement set forth below (the "PURCHASE PRICE"), WWWX shall
issue and deliver to PAR the sum of Seven Hundred and Fifty Thousand Dollars
($750,000.00) and Three Million Five Hundred Thousand (3,500,000) fully paid and
non-assessable shares of the common stock of WWWX (the "WWWX Stock"), which
shares are being issued in a private placement subject to all applicable Federal
and State securities laws, regulations and restrictions, and shall bear a legend
to that effect.
2.2 NO ASSUMPTION OF LIABILITIES. WWWX is not assuming or agreeing to
pay or discharge any of the liabilities and obligations of PAR, whether or not
associated with or arising out of the Business, and nothing in this Agreement or
otherwise shall be construed to the contrary. All such liabilities and
obligations whether known or unknown, direct or contingent, in litigation or
threatened or not yet asserted with respect to any aspect of the Business or
otherwise are and shall remain the responsibility of PAR. Without limiting the
generality of the foregoing, PAR shall remain specifically responsible for (a)
any liabilities with respect to any Taxes (as herein defined), (b) any
obligation for my employee grievance pending at the Closing Date or accruing
prior to the Closing Date, (c) my obligation with respect to any litigation
accruing or arising prior to the Closing Date, and (d) any obligations for trade
accounts payable owed on the Closing Date. Further, in no event shall WWWX
assume or incur any liability or obligation with respect to any Taxes payable by
PAR incident to or arising as a consequence of the consummation by PAR of this
Agreement or any cost or expense incurred by PAR incident to or arising as a
consequence of such consummation of the negotiations in connection with this
Agreement.
SECTION 3. CLOSING; TRANSFER PROCEDURES
3.1 CLOSING. The closing of the sale and purchase of the ATM Center
(the "CLOSING") shall be held at 10 a.m., local time, on February 29, 1999 (the
"CLOSING DATE") at the offices of WWWX, or on such other date and at such other
time or place as the parties may agree in writing.
3.2 TRANSFER OF THE PURCHASED ASSETS. At the Closing, PAR shall deliver
to WWWX such bills of sale, endorsements, stock certificates, assignments and
instruments of conveyance and transfer, in form and substance reasonably
satisfactory to WWWX, as shall be reasonably required to vest in WWWX all of
PAR's right, title and interest in and to the ATM Center free and clear of all
liens and encumbrances as provided in Section 3.4.
3.3 PURCHASE PRICE. At the Closing, WWWX shall deliver to PAR the WWWX
Stock, in accordance with Section 2 hereof
3.4 RELEASE OF LIENS. At or prior to the Closing, PAR shall deliver all
necessary releases of liens and Uniform Commercial Code termination statements
in forms reasonably acceptable to counsel for WWWX so that PAR's title to the
ATM Center is free and clear of all liens and encumbrances or as of the Closing
will be.
<PAGE>
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PAR AND THE SHAREHOLDERS
PAR hereby represents and warrants to WWWX, intending for WWWX to rely
hereon, as follows
4.1 ORGANIZATION AND GOOD STANDING. PAR is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. PAR owns the ATM Center free and clear of any
liens, encumbrances or other rights of third parties. PAR has no knowledge of
any default or claimed or alleged default, or state of facts which with notice
or lapse of time or both, would constitute a default, in any obligation of PAR
or of any other party to be performed thereunder.
4.2 FINANCIAL CONDITION. PAR has delivered to WWWX an overall business
plan with financial projections for the ATM Center business (the "PLAN"). The
Plan represents line and complete lists of the assets and liabilities of PAR
pertaining to the ATM Center, on the date hereof and as anticipated to exist at
the Closing, and together present fairly the financial condition, results of
operations, business, properties, assets, liabilities and future prospects of
the ATM Center Business as of the dates thereof and for the periods indicated
therein, there has been no material adverse change in the financial condition or
future prospects of the ATM Center Business, and no fact is now known to PAR
which materially adversely affects or in the future may materially adversely
affect the financial condition or future prospects of the ATM Center Business.
4.3 TITLE TO THE ATM CENTER. PAR owns outright, and has good and
marketable title to, all of its assets, including without limitation the ATM
Center and all related technical information and other intellectual property
rights necessary to the conduct of the ATM Center Business (collectively, the
"TECHNOLOGY"), free and clear of all liens, pledges, mortgages, security
interests, conditional sales contracts or other encumbrances or conflicting
claims of any nature whatsoever. In particular, and not in limitation of the
foregoing:
(a) PAR has not received my notice of any claim of
infringement or violation of any third party's copyrights, patents, trade
secrets, trademarks or other proprietary tights relating to the ATM Center nor,
to the knowledge of PAR, does any basis for any such claim of right or interest
in the ATM Center or otherwise adverse to par's unqualified right to exclusively
own and fully utilize the ATM Center exist;
(b) there are no pending or threatened suits, legal
proceedings, claims or governmental investigations against or with respect to
the ATM Center or my component thereof;
(c) there are no licenses, assignments, instruments of
transfer, pledges, encumbrances or agreements that are currently outstanding or
in effect whereby any interest in or to the ATM Center has been licensed,
assigned, transferred, pledged or otherwise conveyed to any person or entity;
<PAGE>
(d) to the knowledge of PAR, neither the use and development
of the ATM Center, nor the offer for sale, sale and use of services related to
the ATM Center, infringes or will infringe upon any intellectual property right
of my third party anywhere in the world;
(e) there are no outstanding agreements, confinements or
encumbrances inconsistent with the provisions of this Agreement, whether made or
entered into by the PAR or otherwise;
(f) to the knowledge of PAR, no information relating to the
ATM Center has been disclosed in a manner as to become available to the public;
(g) PAR owns the entire worldwide right, title, and
interest in and to all intellectual property tights in the ATM Center
Business, including without limitation all potential copyrights in all
commercial business flow and methodology programs and/or other works of
authorship included in the ATM Center, all potential patent rights in and to
any and all inventions included in the ATM Center, such patent rights
including without limitation all patents and patent applications directed to
such inventions and the right to file patent applications directed to such
inventions, and all rights in the nature of trade secrets in the ATM Center
Business.
4.4 TAX MATTERS. PAR has filed or caused to be filed all Tax Returns
(as defined herein) through the taxable year ended December 31, 1998 which are
due and required to be filed and have paid or caused to be paid all Taxes due
through the date hereof and any assessment of Taxes removed, except Taxes or
assessments that are being contested in good faith and have been adequately
reserved against. PAR has received no notice of, and to the knowledge of PAR
there is no pending or threatened proceeding or claim by any governmental agency
for assessment or collection of Taxes from PAR. All such Tax Returns have been
prepared on the same basis as that of previous years and in accordance with all
applicable laws, regulations and requirements, and accurately reflect the
taxable income (or other measure of Tax) of PAR. PAR has satisfied all Federal,
state, local and foreign withholding tax requirements including but not limited
to income, social security and employment tax. There are no liens for Taxes on
the ATM Center Business. No transaction contemplated by this Agreement is
subject to withholding under Section 1445 of the Internal Revenue Code of 1986,
as amended (the "Code"). As used herein, "Tax" or "Taxes" means any federal,
state, local and foreign income, payroll, withholding, excise, sales, use,
personal property, use and occupancy, business and occupation, mercantile, real
estate, gross receipts, license, employment, severance, stamp, premium, windfall
profits, social security (or similar unemployment), disability, transfer,
registration, value added, alternative, or add-on minimum, estimated, or capital
stock and franchise and other tax of any kind whatsoever, including any
interest, penalty or addition thereto, whether disputed or not, and "Tax
Returns" means all returns, reports, forms, declarations, claims for refunds or
other information required to be filed or supplied to any person including a
taxing authority in connection with Taxes (including, without limitation,
information returns and declarations of estimated Tax). (Any reference to
"filed" or "file" with respect to Taxes shall also be deemed to include
"supplied" or "supply.")
4.5 LITIGATION. Except as may be disclosed in Schedules attached hereto
and incorporated herein:
<PAGE>
(a) there is no dispute, claim, action, suit, proceeding,
arbitration or governmental investigation, either administrative or judicial,
pending, or to the knowledge of PAR threatened, against PAR, or the ATM Center
Business; and
(b) PAR is not in default with respect to any order, writ,
injunction or decree of any court or governmental department, commission, board,
bureau, agency or instrumentality, which involves the possibility of any
judgment or liability which may result in any material adverse change in the
financial condition of PAR.
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. PAR has no liabilities or
obligations accrued, absolute, contingent or otherwise, except as disclosed in
the Financials or in this Agreement or any Exhibits or Schedules hereto or as
incurred, consistent with past business practice, in the normal and ordinary
course of the Business, and none of which is material and adverse. For purposes
of this Agreement, material means any matter which could exceed $5,000.
4.7 MATERIAL CONTRACTS. PAR represents and WWWX acknowledges that there
are no existing contracts, agreements, commitments or obligations (a) with
respect to the ATM Center Business, which involves the payment to or from PAR of
amounts in excess of $5,000 per year, (b) any license, franchise or distribution
agreement, which involves payments to or from PAR in excess of $5,000 per year,
and (c) any lease of tangible personal property, which involves payments to or
from PAR in excess of $5,000 per year,
4.8 INTANGIBLE ASSETS. Schedule I sets forth a list of (a) all patents,
copyrights, trade names, trademarks, service marks and names (registered or
unregistered), and applications and registrations therefor, (b) all research,
development and commercially practiced processes, trade secrets, know-how,
inventions, and engineering and other technical information, (c) all computer
programs, software and data bases owned by or licensed to the ATM Center
Business, (d) all information, drawings, specifications, designs, plans,
financial, marketing and business data and plans, other proprietary,
confidential or intellectual information or property and all copies and
embodiments thereof in whatever form or medium and (e) all customer and
membership lists of the ATM Center Business (collectively, "INTANGIBLE ASSETS")
as well as a list of all registrations thereof and pending applications
therefor. Each of the Intangible Assets listed on such schedule as being owned
by PAR is owned by PAR free and clear of any and all liens and encumbrances and,
to the knowledge of PAR no other person or entity has any claim of ownership
with respect thereto.
4.9 COMPLIANCE WITH LAWS. PAR has complied with and is not in default
under, or in violation of, any law, ordinance, rate, regulation or order
(including, without limitation, any environmental, safety, employee benefit,
health or price or wage control law, ordinance, role, regulation or order)
applicable to the Business which materially adversely affect or, so far m PAR
can now foresee, may in the future materially adversely affect, the ATM Center
Business.
4.10 AUTHORIZATION. The execution and delivery of this Agreement, and
the sale, transfer and other actions contemplated hereby have been duly
authorized, including, with respect to PAR, by all necessary action of its Board
of Directors, and neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein by PAR constitutes a
violation or breach of applicable law or any contract or instrument to which PAR
is
<PAGE>
a party or by which it or they are bound, or any order, writ, injunction,
decree or judgment applicable to it or them, or constitutes a default (or
would but for the giving of notice or lapse of time or both, constitute a
default) under my contract or instrument to which PAR is a party or by which
it is bound, or conflicts with or violates my provision of the Articles of
Incorporation or By-Laws of PAR. Without limiting the generality of the
foregoing provisions, the execution and delivery by PAR of this Agreement and
the consummation of the transactions contemplated hereby will not (i) result
in a violation or default or give to any other person any rights, including
rights of termination, cancellation of acceleration under any applicable law,
role or regulation, any agreement, instrument or policy to which PAR is a
party or may be bound, (ii) result in my judgment, order, injunction, decree
or ruling of any court or governmental authority to which PAR is a party or
subject or (iii) require any authorization, consent, approval, exemption or
other action by any court or administrative or governmental body which has
not been obtained or any notice to or filing with any court or administrative
or governmental body which has not been given or done. This Agreement has
been duly executed and delivered by PAR and constitutes the legal, valid and
binding obligation of PAR enforceable in accordance with its terms.
4.11 CONSENTS. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any person,
entity or governmental body is required on the part of PAR or any of the
Shareholders in connection with the execution and delivery by PAR of this
Agreement, or the compliance by PAR with any of the provisions hereof
4.12 INVESTMENT REPRESENTATIONS.
(a) the shares of WWWX Stock being acquired by PAR are
intended to be and are being acquired solely for PAR's account without a view to
the current distribution or resale thereof, and PAR does not have any contract,
undertaking, agreement or arrangement to sell or otherwise transfer or dispose
of any of such shares in any manner to any person or entity not involved in the
Company;
(b) PAR will not sell, transfer or otherwise dispose of any of
the shares of WWWX Stock being acquired by PAR, in any manner, unless at the
time of such transfer: (i) a registration under the Securities Act of 1933, as
amended (the "Securities Act") and under all other applicable securities laws is
in effect with respect to the shares of the WWWX Stock to be sold, transferred
or disposed of, and PAR complies with all of the requirements of the Securities
Act and such other applicable securities laws with respect to the proposed
transaction; or (ii) PAR has obtained and has provided to WWWX satisfactory
evidence that the proposed sale, transfer or disposition does not require
registration under the Securities Act or such other applicable securities laws;
(c) the shares of WWWX Stock being acquired by PAR have not
been issued by WWWX pursuant to a registration under the Securities Act, and PAR
must therefore hold such shares indefinitely unless a subsequent registration or
exemption therefrom is available and is obtained. No federal or state agency has
approved or disapproved the shares of WWWX Stock being acquired by PAR for
investment or any other purpose. All of the shares of WWWX Stock being acquired
by PAR have been issued and sold to PAR in reliance upon a specific exemption
from the registration requirements of the Securities Act which depends, in part,
upon the accuracy of PAK's representations, warranties and agreements set forth
in this Agreement; and
(d) PAR is an "accredited investor," as such term is defined
in Regulation D under the Securities Act.
4.13 DISCLOSURE. No representation or warranty by PAR in this Agreement
or in any other Exhibit, Schedule, list, certificate or document delivered
pursuant to this Agreement, contains or will contain at Closing my untrue
statement of material fact or omits or will omit to state any material fact
necessary to make any statement herein and therein not misleading.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF WWWX
WWWX hereby represents and warrants to PAR, intending for PAR to rely
hereon, as follows:
5.1 ORGANIZATION AND GOOD STANDING. WWWX is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
5.2 AUTHORIZATION. The execution and delivery of this Agreement and
other actions contemplated hereby have been duly authorized by all necessary
action of the Boards of Director and shareholders of WWWX, and neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein by WWWX constitutes a violation or breach of
applicable law or any contract or instrument to which WWWX is a party or is
bound, or any order, writ, injunction, decree or judgment applicable to it, or
constitutes a default (or would but for the giving of notice or lapse of time or
both, constitute a default) under any contract or instrument to which WWWX is a
party or by which it is bound, or conflicts with or violates any provision of
the Articles of Incorporation or By-Laws of WWWX. Without limiting the
generality of the foregoing provisions, the execution and delivery by WWWX of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) result in a violation or default or give to any other person any rights,
including rights of termination, cancellation or acceleration under any
applicable law, rule or regulation, any agreement, instrument or policy to which
WWWX is a party or may be bound, (ii) result in any judgment, order, injunction,
decree or ruling of any court or governmental authority to which it is a party
or subject or (iii) require any authorization, consent, approval, exemption or
other action by any court or administrative or governmental body which has not
been obtained or any notice to or filing with my court or administrative or
governmental body which has not been given or done. This Agreement has been duly
executed and delivered by WWWX and constitutes the legal, valid and binding
obligation of WWWX enforceable in accordance with its terms.
5.3 CONSENTS. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any person,
entity or governmental body is required on the part of WWWX in connection with
the execution and delivery by WWWX of this Agreement, or the compliance by WWWX
with any of the provisions hereof.
5.4 DISCLOSURE. No representation or warranty by WWWX in this Agreement
or in any other Exhibit, Schedule, fist, certificate or document delivered
pursuant to this Agreement, contains or will contain at Closing any untrue
statement of material fact or omits or will omit to state any material fact
necessary to make any statement herein and therein not misleading.
<PAGE>
SECTION 6. CONDUCT PENDING THE CLOSING
PAR hereby covenants and agrees that, pending the Closing and except as
otherwise approved in advance in writing by WWWX:
6.1 CONDUCT of BUSINESS. PAR shall carry on and cause the ATM Center
Business to carry on the development of its business diligently and
substantially in the same manner as heretofore and refrain from any action that
would result in the breach of any of the representations, warranties or
covenants of PAR hereunder.
6.2 ACCESS. WWWX and its authorized representatives shall have full
access during normal business hours upon prior arrangement with PAR to all
properties, books, records, contracts and documents of PAR relating to the ATM
Center business, and PAR shall furnish or cause to be furnished to WWWX and its
authorized representatives all information with respect to the Purchased Assets
and ATM Center business as they may reasonably request.
6.3 CONTRACTS AND COMMITMENTS. PAR shall not enter into my contract,
commitment or transaction relating in any way to the ATM Center business, except
in accordance with the ordinary course of business.
6.4 SALE OF CAPITAL ASSETS. PAR will not sell or dispose of, or agree
to sell or dispose of, any of the Purchased Assets, except in accordance with
the ordinary course of business.
6.5 LIABILITIES. PAR will not create any indebtedness or any other
fixed or contingent liability relating in any way to the Business or the
Purchased Assets, including, without limitation, liability as a guarantor or
otherwise with respect to the obligations of others except for accounts payable
in the ordinary course of business consistent with past practices.
6.6 INSURANCE. Any present insurance insuring PAR, their respective
employees or the ATM Center business wherever located, will be maintained by PAR
in all respects.
6.7 PRESERVATION OF ORGANIZATION AND EMPLOYEES. PAR will use its best
efforts to preserve the Business intact, to keep available its key employees (if
any), and to preserve the present relationships of PAR with my suppliers,
customers, banks and others having business relations with them.
6.8 NO DEFAULT. PAR shall not do any act or omit to do any act, or
permit any act or omission to act, which will cause a material breach of any
material contract, commitment or obligation by which it is bound regarding the
ATM Center Business.
6.9 AUTHORIZATION FROM OTHERS. Prior to the Closing Date, PAR shall
have obtained all authorizations, waivers, consents and permits of others
required to permit the consummation by PAR of the transactions contemplated by
this Agreement or to remove any breach or threatened breach of any
representation, warranty or agreement of PAR herein.
<PAGE>
SECTION 7. CONDITIONS PRECEDENT TO WWWX'S OBLIGATIONS
All obligations of WWWX under this Agreement is subject to the
fulfillment, prior to or at the Closing, of each of the following conditions
unless otherwise waived in writing by WWWX:
7.1 REPRESENTATIONS AND WARRANTIES. PAR's representations and
warranties contained in this Agreement or in any list, certificate or document
delivered pursuant to the provisions hereof shall be true at and as of the time
of Closing.
7.2 PERFORMANCE OF AGREEMENTS. PAR shall have performed and complied
with all agreements and conditions required by this Agreement to be performed or
complied with by it or them prior to or at the Closing, including without
limitation PAR's obligation to deliver the Purchased Assets free and clear of
liens and encumbrances in accordance with Section 3.4 hereof and the covenants
set forth in Section 6 hereof.
7.3 ADVERSE CHANGE. There shall not have been a material adverse
change, occurrence or casualty, financial or otherwise, in PAR or the Purchased
Assets, whether covered by insurance or not.
7.4 CLOSING DELIVERIES. PAR shall have delivered the documents and
other items described in Section 3 hereof.
7.5 NO LITIGATION. There shall not be any pending or, to the knowledge
of PAR, threatened action, proceeding or investigation by or before any court,
arbitrator, governmental body or agency which shall seek to restrain, prohibit
or invalidate the transactions contemplated hereby or which, if adversely
determined, would result in a breach of a representation, warranty or covenant
of any party herein.
7.6 DUE DILIGENCE. Prior to Closing, WWWX shall have the right to
conduct a due diligence investigation, audit and financial review of the ATM
Center Business and all of the Purchased Assets and liabilities in order that
WWWX, in its sole discretion, may confine its understanding and valuation of the
Business and the Purchased Assets and verifying, among other things, no
undisclosed liabilities or potential liabilities of PAR. Such due diligence
shall include, without limitation, all operational, legal, contractual,
litigation, employment, purchasing, marketing, accounting, financial, tax and
other aspects of the Business. If such investigation is not satisfactory to
WWWX, for any reason, WWWX may terminate this Agreement and shall have no
further obligation hereunder. WWWX'S conduct of its due diligence shall not in
any way relieve PAR of its obligations and liabilities contained in this
Agreement including without limitation, the accuracy of the representations and
warranties of PAR set forth in this Agreement.
SECTION 8. CONDITIONS PRECEDENT TO PAR'S OBLIGATIONS
All obligations of PAR under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions
unless otherwise waived in writing by PAR.
<PAGE>
8.1 REPRESENTATIONS AND WARRANTIES. WWWX's representations and
warranties contained in this Agreement shall be true at and as of the time of
Closing.
8.2 PERFORMANCE OF AGREEMENTS. WWWX shall have performed and complied
with all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
8.3 CLOSING DELIVERIES. WWWX shall have delivered the WWWX Stock to PAR
in exchange for the Purchased Assets.
8.4 NO LITIGATION. There shall not be any pending or threatened action,
proceeding or investigation by or before any court, arbitrator, governmental
body or agency which shall seek to restrain, prohibit or invalidate the
transactions contemplated hereby or which, if adversely determined, would result
in a breach of a representation, warranty or covenant of any party herein.
SECTION 9. FEES AND EXPENSES
9.1 REPRESENTATION AND INDEMNITY WITH RESPECT TO BROKERS. Each party
hereby represents and warrants to the other that it has not engaged or dealt
with any broker or other person who may be entitled to any brokerage fee or
commission in respect of the execution of this Agreement or the consummation of
the transactions contemplated hereby. Without limiting the generality of the
foregoing, each of the parties hereto shall indemnify and hold the other
blameless against any claim, loss, liability or expense which may be asserted
against such other party as a result of such first mentioned party's dealings,
arrangements or agreements with any such broker or person.
9.2 EXPENSES OF THE TRANSACTION. Each party hereto shall pay its own
expenses incidental to the preparation of this Agreement and the consummation of
the transactions contemplated hereby.
9.3 SALES TRANSFER AND DOCUMENTARY STAMPS. WWWX shall be responsible
for payment of all sales, transfer and documentary taxes or stamps, if any, due
as a result of the transfer of the Purchased Assets hereunder.
SECTION 10. INDEMNIFICATION
10.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties, covenants and agreements made by any party in this
Agreement or in any certificate delivered pursuant hereto shall survive the
Closing.
10.2 INDEMNIFICATION BY PAR. PAR shall defend, indemnify and hold
WWWX harmless from and against (a) my and all liabilities and obligations of,
or claims against, PAR arising or accruing prior to the Closing and (b) all
actual or potential claims, demands, liabilities, damages, losses and
out-of-pocket expenses including reasonable attorneys' fees whether or not
reduced to judgment, order or award, caused by or arising out of (i) the
breach of any covenant or agreement of PAR in this Agreement or in any
certificate delivered by it or them pursuant hereto, or (ii) the failure of
any representations or warranties made by PAR in this Agreement or in any
<PAGE>
certificate delivered by it or them pursuant hereto to have been true and
correct when made and on and as of the Closing Date.
10.3 INDEMNIFICATION BY WWWX. WWWX shall defend, indemnify and hold PAR
harmless from and against all actual or potential claim, demands, liabilities,
damages, losses and out-of-pocket expenses including reasonable attorneys' fees
whether or not reduced to judgment, order or award, caused by or arising out of
(a) the breach of any covenant or agreement of WWWX in this Agreement or in any
certificate delivered by it pursuant hereto, or (b) the failure of any
representations or warranties made by WWWX in this Agreement or in any
certificate delivered by its pursuant hereto to have been true and correct when
made and on and as of the Closing Date.
10.4 NOTICE OF INDEMNIFICATION. In the event any legal proceeding shall
be threatened or instituted or any claim or demand shall be asserted by any
person or entity in respect of which payment may be sought by one party hereto
from another party under the provisions of this Section 10, the party seeking
indemnification (the "INDEMNITEE") shall promptly cause written notice assertion
of the of any such claim of which it has knowledge which is covered by this
indemnity to be forwarded to the other party (the "INDEMNITOR"); provided,
however, that failure of the Indemnitee to give the Indemnitor notice as
provided in this Section shall not relieve the Indemnitor of its obligations
hereunder except to the extent that the Indemnitor shall have been prejudiced by
such failure. Any notice of a claim by reason of any of the representations,
warranties or covenants contained in this Agreement shall state in reasonable
detail the representation, warranty or covenant with respect to which the claim
is made, the facts giving rise to an alleged basis for the claim, and the amount
of the liability asserted against the Indemnitor by reason of the claim.
10.5 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS. Except as
otherwise provided herein, in the event of the initiation of any legal
proceeding against an Indemnitee by a third party, the Indemnitor shall be
entitled to assume the defense thereof, at the Indemnitor's sole expense. If the
Indemnitor assumes the defense of any legal proceeding, it will not settle the
legal proceeding without the prior written consent of the Indemnitee (which
shall not be unreasonably withheld or delayed). The Indemnitee shall cooperate
in all reasonable respects with the Indemnitor and its attorneys in the
investigation, trial and defense of any legal proceeding and my appeal arising
therefrom (including the filing in the Indemnitee's name of appropriate cross
claims and counterclaims). The Indemnitee may, at its own cost, participate in
any investigation, trial and defense of such legal proceeding controlled by the
Indemnitor and any appeal arising therefrom. If after receipt of a written
notice pursuant to Section 10.4 hereof, the Indemnitor does not undertake to
defend any such legal proceeding, the Indemnitee may, but shall have no
obligation to, contest or defend against any legal proceeding and the Indemnitor
shall be bound by the result obtained with respect thereto by the Indemnitee
(including, without limitation, the settlement thereof without the consent of
the Indemnitor). If there are one or more legal defenses available to the
Indemnitee that conflict with those available to the Indemnitor, the Indemnitee
shall have the right, at the expense of the Indemnitor, to assume the defense of
the legal proceeding; provided, however, that in any event the Indemnitee may
not settle such legal proceeding without the consent of the Indemnitor, which
consent shall not be unreasonably withheld or delayed. As used herein, a "legal
proceeding" includes any judicial, administrative or arbitral action, suit,
proceeding (public or private), claim or governmental proceeding.
<PAGE>
10.6 PAYMENT OF INDEMNIFICATION AMOUNTS. Amounts payable by the
Indernnitor to the Indimnitee in respect of any claims hereunder shall be
payable by the Indemnitor as incurred by the Indemnitee.
10.7 RIGHT OF WWWX SUCCESSORS TO ENFORCE. PAR agrees that the
provisions of this Section 10 shall inure to the benefit of, and may be enforced
by, my successor to the interests of WWWX (by assignment, merger, operation of
law or otherwise, and regardless of whether such successor acquires such
interests directly from WWWX), holding all or any part of the Purchased Assets
("WWWX SUCCESSOR"), to the same extent as if the representations, warranties,
covenants and agreements of PAR contained in this Agreement had been made
directly to such WWWX Successor. PAR further agree that they shall execute and
deliver to my WWWX Successor such further agreements, instruments or other
documents as may be reasonably required to affirm the obligations of PAR and the
rights of such WWWX Successor hereunder.
SECTION 11. POST-CLOSING MATTERS; NON-COMPETITION AGREEMENT
11.1 FURTHER ASSURANCES: At the request of WWWX or any WWWX Successor
from time to time, PAR shall without further cost to WWWX or such WWWX
Successor, at any time and from time to time, promptly do, execute, acknowledge
and deliver, or cause to be done, executed, acknowledged and delivered, to WWWX
or such WWWX Successor, as the case may be, all such further acts, transfers,
assignments, deeds, powers and assurances of title, and additional papers and
instruments, and all do or muse to be done all acts or things as often as may be
proper or necessary or advisable for better assuring, conveying, transferring
and assigning the Purchased Assets (including, without limitation, the
technology), and effectively to carry out the intent hereof, and to vest in WWWX
or, as applicable, any WWWX Successor, the entire fight, title and interest in
and to all of the Purchased Assets. Without limiting the generality of the
foregoing, PAR agrees to furnish to WWWX or my WWWX Successor, all data,
formulae, models, programs, software, notes, documents and all other information
regarding the ATM Center Business in their possession, necessary or useful for
WWWX or such WWWX Successor to develop the ATM Center Business, to utilize the
Technology and to enable its attorneys to evaluate and properly protect the
Technology.
11.2 RESPONSIBILITY FOR LITIGATION. PAR shall be responsible for all
present or future litigation and claims for injury and related expenses arising
out of the conduct of the Business up to the time of Closing, including without
limitation, any litigation disclosed on Schedule 4.5 hereto.
11.3 TRADE SECRETS/NON-COMPETITION AGREEMENT.
(a) PAR shall not at any time after the Closing use for its or
their own benefit, or divulge to any other person, firm or corporation, my
confidential information or trade Secrets relating in any way to the Business,
and at the Closing, PAR shall deliver to WWWX all lists of customers, books,
records, trade secrets, intellectual property and all other property
constituting confidential information belonging to PAR and related to the ATM
Center Business. For the purposes hereof, the term "CONFIDENTIAL INFORMATION"
means any and all information related to
<PAGE>
the ATM Center Business, customer and marketing relationships, and business and
financial information of the Business.
(b) As a material inducement to WWWX to enter into this
Agreement, in consideration of the Purchase Price paid hereunder, and for other
good and valid consideration, the receipt and sufficiency of which is hereby
acknowledged, as well as in recognition of the fact that the value of the
Purchased Assets would be diminished substantially if PAR was to engage in any
business or activities in competition with the Business, PAR covenants and
agrees that, except as required in the performance of their duties set forth in
this Agreement or any other written agreement with WWWX or my WWWX Successor,
each will not for a period of one (1) year after the Closing Date engage
directly or indirectly, whether individually or in partnership or in conjunction
with any other person, firm, association, syndicate or corporation, as
principal, agent, shareholder, employee, consultant or in any other manner
whatsoever, in my business activity competitive with the ATM Center Business.
(c) PAR agrees that any violation of any of the covenants in
this Section would cause substantial and irreparable injury to WWWX or any WWWX
Successor, whereupon PAR may be enjoined from my breach or threatened breach
thereof in addition to, but not in limitation of any of the fights or remedies
to which WWWX or any such WWWX Successor is or may be entitled to at law or in
equity or under this Agreement
(d) PAR agrees that the limitations set forth above are
reasonable in time and geographic scope, and if any provision hereof is held
invalid or unenforceable, the remainder shall nevertheless remain in full force
and effect. In particular, PAR agrees that if any court of competent
jurisdiction shall determine that the duration or geographical limit of the
foregoing non-competition covenant is invalid, unreasonable or unenforceable, it
is the intention of PAR and WWWX that it shall not be terminated thereby but
shall be deemed to have been mended to the extent required to render it valid
and enforceable, such amendment to apply only with respect to the jurisdiction
of the court making such adjudication.
11.4 RIGHT OF WWWX SUCCESSORS TO ENFORCE. PAR agrees that the
provisions of this Section I shall inure to the benefit of, and may be enforced
by, any WWWX Successor, to the same extent as if the representations,
warranties, covenants and agreements of PAR contained herein had been made
directly to such WWWX Successor, and with the further understanding and
agreement that the term "Business" as used herein shall include the Business as
conducted by any Such WWWX Successor. PAR further agrees that they shall execute
and deliver to any WWWX Successor such further agreements, instruments or other
documents as may be reasonably required to affirm the obligations of PAR and the
tights of such WWWX Successor hereunder.
SECTION 12. MISCELLANEOUS
12.1 GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the Commonwealth of Massachusetts.
The parties hereto agree that jurisdiction shall be proper in the courts of the
Commonwealth of Massachusetts and consent to jurisdiction and venue therein.
<PAGE>
12.2 ASSIGNMENT. This Agreement shall not be assignable by any party
without the prior written approval of the other party. Notwithstanding the
foregoing, WWWX may, without the consent of PAR, assign its rights under
Sections 10 and 11 hereof to any WWWX Successor as provided therein, it being
the intent of the parties that my such WWWX Successor shall be a third party
beneficiary of such rights. To the extent assignable, this Agreement shall be
binding upon, and inure to the benefit of, WWWX PAR, and their respective heirs,
personal representatives, successors and assigns.
12.3 HEADINGS FOR REFERENCE ONLY. The section and paragraph headings in
this Agreement are for convenience of reference only and shall not be deemed to
modify or limit the provisions of this Agreement.
12.4 NOTICES. All notices and other communications under this Agreement
shall be in and shall be deemed given when delivered by confirmed fax,
personally, or by recognized overnight courier, or four days after being mailed
by registered mail, return receipt requested, to a party at the following
address (or to such other address as such party may have specified by notice
given to the other party pursuant to this provision):
If to WWWX: World Wide Web NetworX Corporation
3000 Atrium Way, Suite 202
Mt. Laurel, NJ 09054
Attention Robert D. Kohn
Fax no: (609) 273-6913
If to PAR: Positive Asset Remaketing, Inc.
Post Office Box 415
Sharon, MA 02067
Attention: Benjamin R. Kafka
Fax no. (508) 660-7755
12.5 ENTIRE AGREEMENT AND AMENDMENT. This document and the Exhibits and
Schedules hereto contain the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and supersede all prior or
contemporaneous agreements, understandings, representations and warranties
between the parties and may not be amended except by written instrument executed
by the parties hereto.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
ATTEST: WORLD WIDE WEB NETWORX CORPORATION
By: By:
----------------------------- -------------------------------
Title: Title:
ATTEST: POSITIVE ASSET REMARKETING, INC.
By: By:
----------------------------- -------------------------------
Title: Title:
<PAGE>
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A ATM Center Business Documents
SCHEDULE 1 Intangible Assets
<PAGE>
Exhibit 10.10
EXHIBIT "D"
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (the "Agreement"), effective this _____ day
of February, 1999, between WORLDWIDE WEB NETWORX CORP., a corporation
incorporated under the laws of the State of Delaware (the "Company"), and
__________________________ (the "Subscriber").
R E C I T A L S
A. The Company desires to provide financing for itself by selling to
accredited investors, the Company's 6% Cumulative Convertible Debentures at
$1,000.00 per Debenture (the "Debenture"), a minimum of $1,000,000.00 of
Debentures up to a maximum of $2,500,000.00, unless the Company's Placement
Agent determines, in its discretion, to exercise an over-allotment option of up
to an additional $500,00.00 of Debentures (the "OA Option");
B. The offer shall terminate on the earlier to occur of the sale of all
Debentures or March 15, 1999, unless extended by mutual consent of the Company
and the Placement Agent.
C. Purchase of the Debentures involves significant investment risks.
The Debentures are being offered only to accredited investors as such term is
defined under Regulation D promulgated under the Securities Act of 1933, as
amended (the "Securities Act").
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
1. PURCHASE OF DEBENTURES.
The Company agrees to sell to the Subscriber, and the
Subscriber agrees to purchase from the Company, subject to the terms and
conditions hereinafter set forth in this Agreement, that amount of Debentures
for the aggregate purchase price set forth in the signature page hereof (the
"Purchase Price").
2. PAYMENT OF PURCHASE PRICE.
<PAGE>
Concurrently with the delivery of this Agreement, the
Subscriber has delivered a check or made a wire transfer in the amount set forth
in the signature page hereof in payment of the Purchase Price for the
Debentures. Checks shall be made payable, or wired funds shall be sent, to Chase
Manhattan Bank, New York, AC#910-2-758829, Escrow Incoming Wire Account, Further
Credit: Worldwide Web NetworX Corp., Attn: Vicki Caldas.
3. CONDITIONS TO OFFER.
The offer of the Debentures hereby is made subject to the
following conditions: (i) that the Company shall have the right to accept or
reject this subscription in whole or in part, for any reason whatsoever,
notwithstanding tender of payment, upon the Company's belief that the financial
ability of the Subscriber is insufficient to bear the economic risks of this
investment in accordance with Regulation D promulgated under the Securities Act;
(ii) that the Company shall have no obligation to accept any subscription for
any Debentures; and (iii) that the Subscriber agrees to comply with the terms of
this Agreement and the Confidential Term Sheet with Exhibits dated February 23,
1999, as may be amended and supplemented (the "Term Sheet"), which is being
delivered to the Subscriber together with this Agreement, and to execute and
deliver any and all further documents necessary to become a Debenture holder.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Subscriber as
follows:
(a) The Debentures will be, when issued, delivered and paid
for in accordance with this Agreement, duly and validly issued and constitute
valid and binding obligations of the Company, and all corporate action required
to be taken by the Company prior to the issuance and sale of the Debentures to
qualified subscribers has been or, prior to the sale thereof, will have been
taken.
(b) The authorized capital stock of the Company consists of
100,000,000 shares of common stock, par value $.001 per share (the "Common
Stock"), of which approximately 11,035,186 shares are issued and outstanding as
of February 23, 1999, and additional shares of Common Stock in the approximate
amount of 21,750,000 shares will be issued by the Company to certain persons and
entities pursuant to existing agreements between the Company and such persons
and entities, exclusive of the shares of Common Stock to be issued upon the
conversion of the Debentures offered
<PAGE>
hereby (the "Shares") and to the Placement Agent in accordance with its agency
agreement with the Company.
(c) The Company is duly incorporated, validly existing and in
good standing as a corporation under the laws of the State of Delaware.
(d) All information from the Company which is included in this
Agreement is accurate and complete as of the date hereof and does not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
5. Representations and Warranties of the Subscriber.
The Subscriber hereby represents, warrants and acknowledges to
the Company as follows:
(a) The Subscriber has read this Agreement and the Term Sheet
and understands that there are risk factors to be considered in connection with
an investment in the Company, certain but not all of which are described in this
Agreement and in the Term Sheet, including but not limited to (i) limited
operating history, no material operations and insignificant revenues to date;
(ii) no assurances of the success of the Company's businesses in the market
place or of any profitability, (iii) no ability of Debenture holders to effect a
change in the Company's Board of Directors; (iv) no audited financial
statements: (v) possible failure of the Company's shareholders to approve
certain transactions with Artra Group Incorporated, which will require the
payment to Artra of a "break-up" fee of $3,400,000, but if approved, Robert D.
Kohn, currently the President of the Company, will resign as an officer of the
Company and be employed by Artra and/or a subsidiary thereof; (vi) possible
inability to repay any outstanding obligations including the Debentures if not
converted; (vii) no escrow of proceeds except as described in the Term Sheet;
(viii) need for additional capital which may include the immediate commencement
of another private placement offering of the Company's securities which may
result in further dilution to holders who convert their Debentures with no
assurances that any such offering or any significant additional capital which
may be required by the Company will be available, or if available, on terms
satisfactory to the Company; (ix) potential conflicts of interest between
members of management and the Company with no policy established for conflict
resolution; reliance upon management to resolve conflicts; (x) significant
dilution to investors who convert their Debentures upon such conversion due to
outstanding obligations of the Company to issue additional shares of
<PAGE>
Common Stock which are currently estimated at approximately 21,750,000 shares;
and (xi) no assurance that the Registration Statement, as defined herein, will
be declared effective by the Securities and Exchange Commission ("SEC").
(b) The Subscriber and its advisors, if any, has had an
opportunity to ask questions of, and receive answers from the officers and/or
directors of the Company acting on its behalf concerning the terms and
conditions of the offering and to obtain additional information, to the
extent that the Company possesses such information or can acquire it without
unreasonable effort or expense, necessary to verify the accuracy of the
information furnished; and has availed itself of such opportunity to the
extent it considers appropriate in order to permit it to evaluate the merits
and risks of an investment in the Company. The Subscriber and its advisors
shall have the right to rely on the Company's representations and warranties
contained in Section 3 herein; however, the Subscriber acknowledged that, in
making the decision to purchase the Debentures, it has relied solely upon
independent investigations made by it and not upon any representations made
by the Company with respect to the Company or the Debentures other than those
representations expressly set forth in Section 3 herein.
(c) The Subscriber understands that no United States or
other governmental or state agency has passed on or made any recommendation
or endorsement of the Debentures or on the merits thereof.
(d) The Subscriber understands and acknowledges that
the Debentures are being offered and sold in reliance upon specific
exemptions from the registration requirements of Federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Subscriber's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Subscriber set forth herein in
order to determine the availability of such exemptions and the eligibility of
the Subscriber to acquire the Debentures.
(e) The Subscriber is acquiring the Debentures pursuant to
this Agreement and the Term Sheet for its own account and, if required by any
applicable state securities law, for investment
<PAGE>
purposes only and with no view to the distribution thereof, within the
meaning of such law.
(f) The Subscriber realizes that the Debentures are
speculative, illiquid and involve a high degree of risk, including the risks
of receiving no return on the investment and of losing its entire investment
in the Company.
(g) The Subscriber is able to bear the economic risk of
its investment in the Debentures, including the total loss of such investment.
(h) The Subscriber believes that subscribing for the
Debentures pursuant to the terms of this Agreement is an appropriate and
suitable investment for the Subscriber.
(i) The Subscriber is experienced and knowledgeable in
financial and business matters, and is capable of evaluating the merits and
risks of purchasing the Debentures of the Company.
(j) If the Subscriber is a corporation, partnership, trust or
other entity, (i) it is authorized and qualified to become a Debenture holder,
and authorized to make its investment in the Company; (ii) it has not been
formed for the purpose of acquiring an interest in the Company; (iii) it has not
been in existence less than 90 days prior to the date hereof; and (iv) the
person signing this Agreement on behalf of such entity has been duly authorized
by such entity to do so.
(k) The Subscriber is a resident of the State of
________________.
(l) The Subscriber is an "accredited investor" as defined in
Rule 501 of Regulation D under the Securities Act and (check all that apply):
____ (i) A natural person whose individual net worth
(assets less liabilities), or joint net worth with his or her
spouse, exceeds $1,000,000.
____ (ii) A natural person whose individual income
was in excess of $200,000, or whose joint income with his or
her spouse was in excess of $300,000, each of the two most
recent years, and who has a reasonable expectation of reaching
the same income level for the current year.
<PAGE>
____ (iii) A bank, insurance company, registered
investment company, business development company, small
business investment company or employee benefit plan.
____ (iv) A savings and loan association, credit
union, or similar financial institution or a registered broker
or dealer.
_____ (v) A private business development company.
_____ (vi) An organization described in Section
501(c)(3) of the Internal Revenue Code with assets in excess
of $5,000,000.
____ (vii) A corporation, Massachusetts or similar
business trust, or partnership with assets in excess of
$5,000,000.
____ (viii) A trust with assets in excess of
$5,000,000.
____ (ix) A director or an executive officer of the
Company.
____ (x) An entity in which all of the equity owners
are accredited investors.
____ (xi) A self-directed IRA, Keogh, or similar plan
of which the individual directing the investments qualifies as
an "accredited investor" under one or more of item (i)-(x),
above. Also check the items (s) [(i)-(x)] that applies.
The Company reserves the right to request additional
information from the Subscriber to verify the information represented by the
Subscriber herein.
6. INVESTMENT PURPOSE IN ACQUIRING THE DEBENTURES.
The Subscriber acknowledges that the Debentures have not been
registered under the Securities Act, or applicable state securities laws, and
that such Debentures will be issued to the Subscriber in reliance on exemptions
from the registration requirements of the Securities Act and applicable state
securities laws, based in part on the Subscriber's representations and
undertakings contained herein, including the Subscriber's investment intent and
further understands that it is purchasing the Debentures without being furnished
any offering literature other than this Agreement and the Term Sheet. The
Subscriber has no present intention to divide his participation with others or
to resell or otherwise dispose of all or any part of the Debentures.
<PAGE>
7. COMPLIANCE WITH SECURITIES ACT.
The Subscriber agrees that if the Debentures or the Shares
issuable upon conversion thereof are to be sold or transferred by the Subscriber
in the future, the Subscriber will sell or distribute them pursuant to the
requirements of the Securities Act and applicable state securities laws. The
Subscriber agrees that the Subscriber will not transfer any part of the
Debentures and/or the Shares without (i) obtaining an opinion of counsel
satisfactory in form and substance to counsel for the Company to the effect that
such transfer is exempt from the registration requirements under the Securities
Act and applicable state securities laws or (ii) under the required registration
as described herein.
8. RESTRICTIVE LEGEND.
Subscriber agrees that the Company may place a restrictive
legend on the documents representing the Debentures and on the Shares containing
substantially the following language:
THE DEBENTURES [SHARES] REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT FOR DISTRIBUTION, AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
DEBENTURES [SHARES] MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT THERETO UNDER SUCH ACT UNLESS SOLD
PURSUANT TO RULE 144 OF SUCH ACT OR UNLESS THE SALE IS OTHERWISE EXEMPT
FROM REGISTRATION. THE COMPANY MAY REQUEST A WRITTEN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REIGSTRATION IS NOT
REQUIRED IN CONNECTION WITH SUCH SALE, PLEDGE OR HYPOTHECATION, OR
OTHER TRANSFER. THIS CERTIFICATE MUST BE SURRENDERED COMPANY OR ITS
TRANSFER AGENT AS A CONDITION PRECEDENT TO THE SALE, PLEDGE
HYPOTHECATION OR ANY OTHER TRANSFER OF ANY INTEREST IN ANY OF THE
DEBENTURES [SHARES] REPRESENTED BY THIS CERTIFICATE.
9. STOP TRANSFER ORDER.
<PAGE>
The Subscriber agrees that the Company may place a stop
transfer order with its registrar and stock transfer agent (if any) covering all
certificates representing the Debentures and the Shares.
10. KNOWLEDGE OF RESTRICTIONS UPON TRANSFER OF THE SECURITIES.
The Subscriber understands that the Securities are not freely
transferable and may in fact be prohibited from sale for an extended period of
time and that, as a consequence thereof, the undersigned must bear the economic
risk of investment in the Securities for an indefinite period of time and may
have extremely limited opportunities to dispose of the Securities.
11. REGISTRATION AND OTHER RIGHTS WITH REGARD TO THE SHARES.
(a) Each Debenture holder who wishes to convert its Debenture
into Shares shall deliver its original Debenture to the Company at its principal
office on a business day having first or simultaneously given written notice via
facsimile to the Company at such principal office on a business day, in the form
attached as Exhibit A to the Debenture, that such holder elects to convert the
Debenture, all in accordance with the terms of the Debenture.
(b) The Debenture shall be convertible into Shares, at any
time commencing on the earlier of (i) the effective date of the registration
statement covering the Shares; or (ii) one hundred twenty (120) days after the
filing of the registration statement covering the Shares.
(c) The principal amount of the Debentures and any accrued but
unpaid interest thereon is convertible into Shares. The number of Shares to be
received by the Debenture holder shall be determined as set forth in the Term
Sheet and the Debenture issued to the Subscriber.
(d) The Company shall file a registration statement
(the "Registration Statement") covering the resale of all shares of Common Stock
outstanding at the time of such filing, including the Shares (collectively the
"Registrable Securities") no later than sixty (60) days after the Closing Date.
The Company shall use its reasonable best efforts to have the Registration
Statement declared effective within
<PAGE>
ninety (90) days after the filing of the registration statement. If the
Registration Statement is not filed within 60 days and/or declared effective
within 90 days from the date of filing due to the failure of the Company to
exercise reasonable diligence, then the Company shall pay each Debenture holder
2% of the face amount of the Debenture in cash as liquidated damages for each
calendar month delayed (if less than one full calendar month then the liquidated
damage shall be prorated over the number of days delayed). The liquidated damage
provision applies both to the filing of the Registration Statement and the
effective date thereof so that a 2% penalty may be due for late filing and
another 2% penalty due for late effectiveness.
If the Registration Statement also includes other securities of the
Company which are being sold in an underwritten offering, then the Subscriber
shall, unless otherwise agreed by the Company, offer and sell the Shares
included in such Registration Statement using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other securities included in such underwritten offering.
(e) In connection with the filing of the Registration
Statement pursuant to this Section 11, the Company shall:
(i) notify the Subscriber as to the filing and status thereof
prior to the effective date of said Registration
Statement;
(ii) notify such Subscriber promptly after it shall have
received notice of the time when the Registration
Statement becomes effective or any supplement to any
prospectus forming a part of the Registration Statement
has been filed;
(iii) prepare and file without expense to such Subscriber any
necessary amendment or supplement to such Registration
Statement or prospectus as may be necessary to comply with
the Securities Act or advisable in connection with the
proposed distribution of the Shares by such Subscriber;
(iv) take all reasonable steps to qualify the Shares for sale
under the securities or blue sky laws of the state of such
Subscriber's residence as provided in this Agreement and
to register or obtain the approval of any federal or state
authority which may reasonably be
<PAGE>
required in connection with the proposed distribution,
except, in each case, in jurisdictions in which the
Company must either qualify to do business or file a
general consent to service of process as a condition of
the qualification of such securities;
(v) notify the Subscriber of any stop order suspending the
effectiveness of the Registration Statement and use its
reasonable best efforts to remove such stop order;
(vi) undertake to keep such registration statement and
prospectus effective for a period of twelve months after
its effective date; and
(vii) furnish to such Subscriber as soon as available, a copy of
each preliminary or final prospectus prepared pursuant to
the foregoing provisions of this section, all in such
quantities as such Subscriber may from time to time
reasonably request.
(f) The Company agrees to pay all costs incurred in connection
with the Registration Statement to be filed pursuant to Section 11 including,
without limitation to the fees and expenses of counsel for the Company, the fees
and expenses of its accountants, and all other costs and expenses incident to
the preparation, printing and filing under the Securities Act of such
Registration Statement, each prospectus and all amendments and supplements
thereto, the costs incurred in connection with the qualification of the Shares
in the Subscriber's state of residence and the costs of supplying a reasonable
number of copies of each preliminary prospectus, final prospectus and any
supplements or amendments thereto to such Subscriber.
(g) The Company part and each Subscriber shall enter into an
appropriate cross-indemnity agreement whereby the Company shall indemnify and
hold harmless the Subscriber against any losses, claims, damages or liabilities
(or actions in respect thereof) arising out of or based upon any untrue
statement or alleged untrue statement of any material fact contained in such
Registration Statement, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading unless such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity with
written information furnished or required to be
<PAGE>
furnished to the Company by any such Subscriber, and each such Subscriber shall
indemnify and hold harmless the Company, each of its directors and officers who
have signed the Registration Statement and each person, if any, who controls the
Company, within the meaning of the Securities Act, and the Company's agents and
representatives against any losses, claims, damages or liabilities (or actions
in respect thereof) arising out of or based upon any untrue statement or alleged
untrue statement of any material fact, contained in such Registration statement,
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make statements therein not misleading, if the
statement or omission was made in reliance upon and in conformity with written
information furnished or required to be furnished by such Subscriber expressly
for use in such Registration Statement.
(h) For a period of one (1) year after the effective date of
the registration statement filed pursuant to this Section 11, the Company at its
expense will file such post-effective amendments as may be necessary to make
available for use a prospectus meeting the requirements of the Securities Act.
The Company will cause copies of such prospectus to be delivered to any person
selling the shares of Common Stock as may be required by the Securities Act and
the rules and regulations of the SEC.
12. INDEMNIFICATION.
The Subscriber understands that the Debentures are being
offered without registration under the Securities Act and in reliance upon the
exemptions for transactions by an issuer not involving a public offering, and
upon the provisions of Regulation D promulgated under the Securities Act; that
the availability of such exemption is, in part, dependent upon the truthfulness
and accuracy of the representation made by the Subscriber herein; that the
Company will rely on such representations in accepting any subscription for
Debentures of the Company and that the Company may take such steps as it
considers reasonable to verify the accuracy and truthfulness of such
representations in advance of accepting or rejecting the Subscriber's
subscription. The Subscriber agrees to indemnify and hold the Company harmless
against any damage, loss, expense or cost, including reasonable attorneys' fees,
sustained or incurred as a result of any misstatement or omission on the part of
the Subscriber.
<PAGE>
13. RESCISSION RIGHTS FOR FLORIDA SUBSCRIBERS
The Subscriber acknowledges that it is aware that the
securities offered hereby have not been registered under the Florida Securities
and Investor Protection Act by reason of an exemption pursuant to Section
517.061(11) thereof. Unless the securities are registered, they may not be
re-offered for sale or resold in the State of Florida except as a security, or
in a transaction exempt under said Act.
The Subscriber has been advised that sales made pursuant to
Section 517.061(11) of the Florida Securities and Investor Protection Act to
five (5) or more purchasers in such state are voidable by the subscriber either
within three (3) days after the first tender of consideration is made by the
subscriber or within three (3) days after the availability of that privilege is
communicated to the subscriber, whichever occurs later.
14. RIGHT OF WITHDRAWAL FOR PENNSYLVANIA INVESTORS.
SECTION 207(M). "EACH PERSON WHO ACCEPTS AN OFFER TO PURCHASE
SECURITIES EXEMPTED FROM REGISTRATION BY SECTION 203 (D), DIRECTLY FROM THE
ISSUER OR AFFILIATE OF THE ISSUER, SHALL HAVE THE RIGHT TO WITHDRAW HIS
ACCEPTANCE WITHOUT INCURRING ANY LIABILITY TO THE SELLER, UNDERWRITER (IF ANY)
OR ANY OTHER PERSON WITHIN TWO BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE
ISSUER OF HIS WRITTEN BINDING CONTRACT OF PURCHASE, OR, IN THE CASE OF A
TRANSACTION IN WHICH THERE IS NO BINDING CONTRACT OF PURCHASE, WITHIN TWO
BUSINESS DAYS AFTER HE MAKES THE INITIAL PAYMENT FOR THE SECURITIES BEING
OFFERED.
15. AGREEMENT OF PENNSYLVANIA INVESTORS NOT TO SELL.
The undersigned Pennsylvania investor hereby acknowledges and
agrees that as a condition of the availability of the exemption of Section 203
(d) of the Act, he will not sell the securities purchased hereby within 12
months after the date of purchase, except in accordance with Regulation 204.001.
16. REVOCATION.
The Subscriber agrees that it shall not cancel, terminate, or
revoke this Agreement or any agreement of the Subscriber made hereunder, and
that this Agreement shall survive the death or disability of the Subscriber.
<PAGE>
17. TERMINATION OF AGREEMENT.
The Subscriber acknowledges having been advised by the Company
that the Company may elect to terminate the offering of the Debentures for any
reason prior to its receipt and acceptance of all proceeds from the sale of all
Debentures offered hereby, including the OA Option. If the Company elects to
cancel this Agreement, provided that it returns to the Subscriber, without
interest thereon and deduction therefrom, all sums paid by the Subscriber, the
offer of the Debentures hereby shall be null and void and of no force and
effect, and no party shall have any rights against any other party hereunder.
18. REPRESENTATIONS TO SURVIVE DELIVERY
The representations, warranties and agreements of the Company
and of the Subscriber contained in this Agreement will remain operative and in
full force and effect and will survive the payment of the Purchase Price
pursuant to Section 2 above and the delivery of the Debentures.
19. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties hereto with respect to the transactions described
in this Agreement and supersedes all prior arrangements or understandings with
respect thereto.
(b) BINDING EFFECT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto, and their
respective heirs, legal representatives, successors and assigns.
(c) THIRD PARTY RIGHTS. Notwithstanding any other provision of
this Agreement, this Agreement shall not create benefits on behalf of any third
party, and this Agreement shall be effective only as between the parties hereto
and their respective successors, heirs, and permitted assigns.
(d) DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
(e) NOTICES. Any notice hereunder to or upon either party
hereto shall be deemed to have been duly given for all purposes if (a) in
writing and sent by (i) messenger or an overnight courier service against
receipt, or (ii)
<PAGE>
certified or registered mail, postage paid, return receipt requested, or (b)
sent by telegram, telescope, telex or similar electronic means, provided that a
written copy thereof is sent on the same day by postage paid first class mail,
to such party at the following address:
To Subscriber: at its address set forth on the
signature page hereof
To the Company at: 3000 Atrium Way, Suite 202
Mt. Laurel, NJ 08054
Attn : Robert D. Kohn, President
or such other address as either party hereto may at any time, or from time to
time, direct by notice given to the other party in accordance with this Section.
(f) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance, with the laws of the State of New York and of the
United States of America, without regard to choice of law provisions.
(g) REMEDIES. In the event of any actual or prospective breach
or default by either party hereto, the other party shall be entitled to
equitable relief, including remedies in the nature of rescission, injunction and
specific performance. All remedies hereunder are cumulative and not exclusive,
and nothing herein shall be deemed to prohibit or limit either party from
pursing any other remedy or relief available at law or in equity for such actual
or prospective breach or default, including the recovery of damages.
(h) DISPUTES AND JURISDICTION. Disputes arising under this
Agreement shall be resolved in a federal or state court of general jurisdiction
sitting in the County and State of New York. Each of the parties hereto hereby
irrevocably consents and submits to the jurisdiction of such court.
(i) SEVERABILITY. The provisions hereof are severable and in
the event that any provision of this Agreement shall be determined to be invalid
or unenforceable in any respect by a court of competent jurisdiction, the
remaining provisions hereof shall not be affected, but shall, subject to the
discretion of such court, remain in full force and effect, and any invalid or
unenforceable provision shall be deemed, without further action on the party of
the parties hereto, amended and limited to the extent necessary to render the
same valid and enforceable.
<PAGE>
(j) ASSIGNMENT, ETC. This Agreement may not be assigned
without the prior written consent of the parties, and any purported assignment
without such consent shall be void and without effect. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement is not intended, and shall not
be deemed, to create or confer any right or interest for the benefit of any
person not a party hereto.
(k) AMENDMENT. Except as otherwise provided herein, no
amendment of this Agreement shall be valid or effective, unless in writing and
signing by or on behalf of the parties hereto.
(l) WAIVER. No course of dealing or omission or delay on the
part of either party hereto in asserting or exercising any right hereunder shall
constitute or operate as a waiver of any such right. No waiver of any provision
hereof shall be effective, unless in writing and signed by or on behalf of the
party to be charged therewith. No waiver shall be deemed a continuing waiver or
waiver in respect of any other or subsequent breach or default, unless expressly
so stated in writing.
(m) FURTHER ASSURANCES. Each party hereto covenants and agrees
promptly to execute, deliver, file or record such agreements, instruments,
certificates and other documents and to perform such other and further acts as
the other party hereto may reasonably request or as may otherwise be necessary
or proper to consummate and perfect the transactions contemplated hereby.
(n) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original and which together shall
constitute one and the same agreement.
# of Debentures Purchased
- -------------------- -----------------------------------
Subscriber Name (Please Print)
<PAGE>
-----------------------------------
Total Purchase Price
- ------------------
-----------------------------------------
Subscriber Signature
-----------------------------------------
Subscriber Signature (if more than one)
-----------------------------------------
Address
-----------------------------------------
City State Zip Code
THE COMPANY HEREBY ACCEPTS THE SUBSCRIPTION EVIDENCED BY THIS SUBSCRIPTION
AGREEMENT AND QUESTIONNAIRE:
By:
-------------------------------
Name:
----------------------
Title:
----------------------
Dated:
-----------------
SUBSCRIBER INFORMATION
- --------------------------------------------------------------------------------
(Please print name(s) in which the Debentures are to be issued)
- --------------------------------------------------------------------------------
Taxpayer I.D. or Social Taxpayer I.D. or Social
Security No. Security No. (If more than one investor)
- --------------------------------------------------------------------------------
Street Address
<PAGE>
- --------------------------------------------------------------------------------
City State Zip Code
- --------------------------------------------------------------------------------
Telephone Number (include area code)
- --------------------------------------------------------------------------------
Occupation
Check One:
_________ Individual Ownership ___________ Tenants in Common
_________ Joint Tenants (JTWROS) ___________ Corporation
_________ Partnership ___________ Trust
_________ Other
<PAGE>
CERTIFICATE OF SIGNATORY
(To be completed if Debentures are being subscribed for by an Entity)
I, _____________________________, am the _____________________
of ______________________________ (the "Entity").
I certify that I am empowered and duly authorized by the Entity to
execute and carry out the terms of the Subscription Agreement and Subscriber
Information and to purchase and hold the Debentures, and certify further that
such Subscription Agreement and Subscriber Information Form has been duly and
validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this ___ day of
___________, 1999.
------------------------------
(Signature)
------------------------------
(Title)
------------------------------
(Please Print Name)
<PAGE>
EXHIBIT 10.11
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (this "AGREEMENT") is dated as of February
25th, 1999 by and between JENCOM DIGITAL TECHNOLOGIES, LLC, a Delaware Limited
Liability Company ("JDT") and WORLDWIDE WEB NETWORX CORPORATION, a Delaware
corporation ("WWWX OR PURCHASER").
RECITALS
A. JDT has developed, among other things, certain Internet software for
camera movement and adjustment from a remote location; SNAPP; Power Broker and
True Sound (further described in Exhibit A and"Assets", as further defined on
schedule 1.1 below), and has been engaged among other things, in the business
("Business") of developing and marketing these Internet softwares.
B. Purchaser desires to acquire a 50% membership interest in the Assets
and Business, which for ease of reference herein shall be collectively referred
to as the "Assets", on the terms and subject to the conditions set forth herein.
Upon consummation of the transactions described by this Agreement,
it is the intent of the parties that Purchaser shall have acquired all of the
right, title and interest in and to 50% of all of the Assets including its pro
rata share in the use and sale of the Assets.
C. Upon signing of this Agreement, an individual or entity identified
by JDT shall pay to WWWX three million ($3,000,000) dollars for 2,000,000
restricted shares of WWWX common stock, and WWWX agrees to use its best efforts
to register these shares so that six months after date of delivery these shares
are no longer restricted. Of the $3 million received by WWWX, it will contribute
$900,000 to JDT (which will be responsible for the development and marketing of
the Assets) within five (5) days of the date hereof for the further development
of the Assets.
<PAGE>
D. D.H. Blair Investment Group Corp. agrees to use its best efforts to
arrange for the investment of $9 million (Nine Million Dollars) for 6 million
restricted shares of the common stock of WWWX at a price of $1.50 per share
within a 3 to 4 week period after closing of the transactions described in this
Agreement, on the same terms and conditions as the original 2,000,000 shares
described in the preceding paragraph C.
NOW, THEREFORE, in consideration of the mutual covenants herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties agree
as follows:
SECTION 1. PURCHASE AND SALE
1.1 AGREEMENT TO SELL. JDT shall sell, grant, convey, transfer, assign
and deliver to Purchaser, upon the terms and subject to the conditions of the
Agreement, a 50% membership interest in the Assets described in Schedule 1.1
hereto, free and clear of all liens, encumbrances and charges of any kind. As
used herein, the " Assets" shall include all of JDT's right, title and interest
in an to the Assets, whether tangible, intangible, real, personal or mixed,
wherever located, and all equipment, inventories, accounts receivable, trade
secrets, customer lists, goodwill, intellectual property, contracts, books and
records, telephone numbers, licenses, permits, software, hardware and disks,
data files (whether on disks or other media), logos, trademarks, tradenames,
marketing materials, technology and technical know-how relating thereto.
1.2 PURCHASE AND SALE. At the Closing, JDT shall deliver a Bill of Sale
for the membership interest and Assets, and WWWX shall deliver the Purchase
Price as defined herein.
<PAGE>
SECTION 2. PURCHASE PRICE; NO ASSUMPTION OF LIABILITIES
2.1 PURCHASE PRICE. The purchase price for the Assets set forth below
(the "Purchase Price") shall be as follows:
(a) WWWX shall issue and deliver to JDT two million (2,000,000)
restricted, fully paid and non-assessable shares of the common stock of WWWX
(the "WWWX Stock"), which shares are being issued in accordance with all
applicable Federal and State securities laws, regulations and restrictions, and
shall bear a restrictive legend restricting their transferability in accordance
with the terms.
(b) As additional consideration hereunder, WWWX shall issue three
million (3,000,000) additional restricted shares of WWWX common stock to JDT
immediately upon the earliest to occur of: (i) a bona fide, independent,
mutually agreeable qualified third party valuation of $30,000,000 for the
Assets, or (ii) the Assets produce an aggregate of $2,000,000 profit before
taxes during an 18 month period or (iii) a US Patent issued in the next 12
months for the ICUC product.
2.2 NO ASSUMPTION OF LIABILITIES. WWWX is not assuming or agreeing to
pay or discharge any of the liabilities and obligations of JDT in existence
prior to the date hereof, whether or not associated with or arising out of the
Business, and nothing in this Agreement or otherwise shall be construed to the
contrary. All such liabilities and obligations, whether known or unknown, direct
or contingent, in litigation or threatened or not yet asserted with respect to
any aspect of the Business or otherwise are an shall remain the responsibility
of JDT. Without limiting the generality of the foregoing, JDT shall remain
specifically responsible for (a) any liabilities with respect to any federal,
state, local or foreign income, franchise or other tax, fine, interest and/or
penalty accrued prior to the date hereof, (b) any obligation for any employee
grievance pending at the Closing Date, the date of execution of the Agreement,
or accruing prior to the Closing Date, (c) any obligation with respect to any
litigation accruing or arising prior to the Closing Date, and (d) any
obligations for trade accounts payable owed on the Closing Date. Further, in no
event shall WWWX or Purchaser assume or incur any liability or obligation with
respect to any income or
<PAGE>
other tax payable by JDT incident to or arising as a consequence of the
consummation by JDT of this Agreement or any cost or expense incurred by JDT
incident to or arising as a consequence of such consummation of the negotiations
in connection with this Agreement.
SECTION 3. CLOSING; TRANSFER PROCEDURES
3.1 CLOSING. The closing of the sale and purchase of the Assets (the
"CLOSING") shall be held at 5:00pm, local time, on the date hereof, which is,
February 26, 1999 (the "CLOSING DATE"), or on such other date and at such other
time or place as the parties may agree in writing.
3.2 TRANSFER OF THE ASSETS. At the Closing, JDT shall deliver to WWWX
such bills of sale, endorsements, assignments and instruments of conveyance and
transfer, in form and substance reasonably satisfactory to WWWX, as shall be
reasonably required to vest in Purchaser all of JDT's right, title and interest
in and to the Assets free and clear of all liens and encumbrances as provided in
Section 3.4.
3.3 PURCHASE PRICE. At or within five (5) business days after the
Closing. WWWX shall issue and deliver to JDT the WWWX Stock, in accordance with
Section 2 hereof.
3.4 NO RELEASE OF LIENS NECESSARY. JDT represents and warrants that
there are no liens on the Assets and that accordingly, no release of lien is
necessary.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF JDT
JDT hereby represents and warrants to WWWX, intending for WWWX to rely
hereon, as follows:
4.1 ORGANIZATION AND GOOD STANDING. JDT is a Limited Liability Company
duly
<PAGE>
organized, validly existing and in good standing under the laws of the State of
Delaware. There are no outstanding options or rights to purchase or otherwise
acquire any interest in JDT of any kink or character, or any rights or interests
convertible into or exchangeable for, or otherwise entitling anyone to acquire
any such interest JTD has the authority to execute, deliver and perform by all
requisite corporate actions the transaction described herein.
4.2 TITLE TO JDT ASSETS. JDT owns, and has good marketable title to, or
has valid licenses to manufacture, use, and sell all of the Assets, including
without limitation its software and all related technical information and other
intellectual property rights necessary to the conduct of the Business
(collectively, the "TECHNOLOGY"), free and clear of all liens, pledges,
mortgages, security interests, conditional sales contracts or other encumbrances
or conflicting claims of any nature whatsoever. In particular, and not in
limitation of the foregoing:
(a) the Technology does not and will not contain any "backdoor" or
concealed access or any "software locks" or any similar devices which, upon the
occurrence of a certain event, the passage of a certain amount of time, or the
taking of any action (or the failure to take any action) by or on behalf of JDT
or others, will cause the Technology to be destroyed, erased, damaged or
otherwise made inoperable;
(b) the Technology is owned by JDT exclusively and to JTD's best
knowledge, without infringing upon, or misusing, misappropriating or otherwise
acting adversely to, the right or the claimed right of any person or entity
under or with respect to the Technology or any part thereof;
(c) JDT has not received any notice of any claim of infringement or
violation of any third party's copyrights, patents, trade secrets, trademarks or
other proprietary rights relating to the Technology nor, to the knowledge of
JDT, does any basis for any such claim of right or interest in the Technology or
otherwise adverse to JDT's unqualified right to exclusively own and fully
utilize the Technology exist;
(d) There are no pending, to JDT's knowledge, or threatened suits,
legal proceedings,
<PAGE>
claims or governmental investigations against or with respect to the Technology
or any component thereof;
(e) there are no licenses, assignments, instruments of transfer,
pledges, encumbrances or agreements that are currently outstanding or in effect
whereby any interest in or to the Technology has been licensed, assigned,
transferred, pledged or otherwise conveyed to any person or entity;
(f) to JDT's best knowledge, neither the use and development of the
Technology, nor the offer for sale, sale and use of services related to the
Technology, infringes or will infringe upon any intellectual property right of
any third party anywhere in the world;
(g) to JDT's best knowledge, neither the use and development of the
Technology, nor the offer for sale, sale and use of services related to the
Technology, infringes or will infringe upon any intellectual property right of
any third party anywhere in the world;
(h) there are no outstanding agreements, contracts, understandings,
confinements or encumbrances, whether oral or written, inconsistent with the
provisions of this Agreement, whether made or entered into by JDT or otherwise;
(i) to JDT's best knowledge, no information relating to the Technology
has been disclosed in a manner as to become available to the public;
(j) the Technology will perform in substantial conformity with its
specifications as identified in any and all documentation
provided to WWWX and Purchaser; and
(k) to the knowledge of JDT the Technology is and will be free from
defects in operation or otherwise relating to the year 2000, date data values,
and century correct date data interface values, and all such information
technology and computer software will accurately process date and time data
(including but no limited to, calculation, comparing and sequencing) from, into
and between the twentieth and twenty-first centuries, and the years 1999 and
2000 and
<PAGE>
leap year calculation, and when used in combination with other information
technology, will accurately process date and time data if the other information
technology exchanges dated and time data with it.
4.3 TAX MATTERS. JDT has received no notice of, and to its knowledge,
there is no, pending or to its knowledge threatened proceeding or claim by any
governmental agency for assessment or collection of taxes from JDT.
4.4 LITIGATION :
(a) There is no dispute, claim, action, suit, proceeding, arbitration
or governmental investigation, either administrative or judicial, pending, or to
the knowledge JDT threatened, against JDT, the Business or the Assets; and
(b) JDT is not in default with respect to any order, writ, injunction
or decree of any court or governmental department, commission, board, bureau,
agency or instrumentality, which involves the possibility of any judgment or
liability which may result in any material adverse change in the financial
condition of JDT, the Business or the Assets.
4.5 BUSINESS PLAN. JDT has delivered to WWWX copies of the ICUC
Business Plan. JDT reps and warranties that, to the best of its knowledge, the
information is accurate, and correct with no material omissions.
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. To its knowledge JDT has no
material liabilities or obligations accrued, absolute, contingent or otherwise,
except as consistent with past business practice, or in the normal and ordinary
course of the Business. For purposes of this Agreement, material means any one
matter which could exceed $50,000.
4.7 INTANGIBLE ASSETS. Schedule 4.7 sets forth a list of (a) all
patents, copyrights,
<PAGE>
trade names, trademarks, service marks and names (registered or unregistered),
and applications and registrations therefore, (b) all research, development and
commercially practiced processes, trade secrets, know-how, inventions, and
engineering and other technical information, (c) all computer programs, software
and data bases owned by or licensed to JDT, (d) all information, drawings,
specifications, designs, plans, financial, marketing and business data and
plans, other proprietary, confidential or intellectual information or property
and all copies and embodiments thereof in whatever form or medium and (e) all
customer and membership lists of JDT (collectively, "INTANGIBLE ASSETS") as well
as a list of all registrations thereof and pending applications therefore. Each
of the Intangible Assets listed on such schedule as being owned by JDT is owned
by JDT free and clear of any and all liens and encumbrances and, to the
knowledge of JDT, no other person or entity has any claim of ownership with
respect thereto. JDT has adequate licenses or other valid rights to use all of
the Intangible Assets which it does not own and which are material to the
conduct of the Business. To its best knowledge, JDT's use of the Intangible
Assets does not conflict with, infringe upon, violate or interfere with any
intellectual property rights of any other person or entity, nor is any other
person or entity infringing upon, violating or interfering with any intellectual
property rights of JDT.
4.8 COMPLIANCE WITH LAWS. JDT has complied with and is not in default
under, or in violation of, any law, ordinance, rule, regulation or order
(including, without limitation, any environmental, safety, employee benefit,
health or price or wage control law, ordinance, rule, regulation or order)
applicable to the Business, or the assets, which materially adversely affect,
the Business or the Assets.
4.9 AUTHORIZATION. The execution and delivery of this Agreement, and
the sale, transfer and other actions described herein have been duly authorized,
by all necessary action of JDT's Board of Directors, and neither the execution
and delivery of this Agreement nor the consummation of the transactions
described in the Agreement by JDT constitutes a violation or breach of
applicable law or any contract or instrument to which JDT is a party or by which
it is bound, or any order, writ, injunction, decree or judgment applicable or
them, or constitutes a default (or would but for the giving of notice or lapse
of time or both, constitute a default) under any contract or instrument to which
JDT is a party or by which it is bound. Without limiting
<PAGE>
the generality of the foregoing provisions, the execution and delivery by JDT of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) result in a violation or default or give to any other person any rights,
including rights of termination, cancellation or acceleration under any
applicable law, rule or regulation, any agreement, instrument or policy to which
JDT is a party or may be bound, (ii) result in any judgment, order, injunction,
decree or ruling of any court of governmental authority to which JDT is a party
or subject or (iii) require any authorization, consent, approval, exemption or
other action by any court or administrative or governmental body which has not
been obtained or any notice to or filing with any court or administrative or
governmental body which has not been given or done. This Agreement has been duly
executed and delivered by JDT and constitutes the legal, valid and binding
obligation of JDT enforceable in accordance with its terms.
4.10 CONSENTS. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any person,
entity or governmental body is required on the part of, JDT in connection with
the execution and delivery by JDT of this Agreement, or the compliance by JDT
with any of the provisions hereof.
4.11 INVESTMENT REPRESENTATIONS.
(a) the shares of WorldWide Web NetworX, "WWWX" Stock being acquired by
JDT are intended to be and are being acquired solely for JDT's account without a
view to the current distribution or resale thereof, and JDT does not have any
contract, undertaking, agreement or arrangement to sell or otherwise transfer or
dispose of any of such shares in any manner to any person or entity;
(b) JDT will not sell, transfer or otherwise dispose of any of the
shares of WWWX Stock being acquired by JDT, in any manner, unless at the time of
such transfer: (i) a registration under the Securities Act of 1933, as amended
(the "SECURITIES ACT") and under all other applicable securities laws is in
effect with respect to the shares of the WWWX Stock to be sold, transferred or
disposed of, and JDT complies with all of the requirements of the Securities Act
and such other applicable securities laws with respect to the proposed
transaction; or (ii) JDT has obtained and has
<PAGE>
provided to WWWX satisfactory evidence that the proposed sale, transfer or
disposition does not require registration under the Securities Act or such other
applicable securities laws;
(c) the shares of WWWX Stock being acquired by JDT have not been issued
by WWWX pursuant to a registration under the Securities Act. No federal or state
agency has approved or disapproved the shares of WWWX Stock being acquired by
JDT for investment or any other purpose. All of the shares of WWWX Stock being
acquired by JDT have been issued and sold to JDT in reliance upon a specific
exemption from the registration requirements of the Securities Act which
depends, in part, upon the accuracy of JDT representations, warranties and
agreements set forth in this Agreement; and
4.12 DISCLOSURE. No representation or warranty by JDT in this Agreement
or in any other Exhibit, Schedule, list, certificate or document delivered
pursuant to this Agreement, contains or will contain at Closing any untrue
statement of material fact or omits or will omit to state any material fact
necessary to make any statement herein and therein not misleading.
SECTION 4A. PATENTS AND INTELLECTUAL PROPERTY AND RIGHTS
JDT agrees to give full aid and cooperation with respect to the
preparation, filing, prosecution, and issuance of patent(s) and patentable
rights in countries selected by WWWX as well as matters relating to intellectual
property rights of said Assets.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF WWWX
WWWX hereby represents and warrants to JDT, intending for JDT to rely
hereon, as follows:
<PAGE>
5.1 ORGANIZATIONAL AND GOOD STANDING. WWWX is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
5.2 AUTHORIZATION. The execution and delivery of this Agreement and
other actions described herein have been duly authorized by all necessary action
of the Board of Directors and shareholders of WWWX, and neither the execution
and delivery of this Agreement nor the consummation of the transactions
described herein by WWWX constitutes a material violation or breach of
applicable law or any contract or instrument to which WWWX is a party or by
which it is bound, or any order, writ, injunction, decree or judgment applicable
to WWWX, or constitutes a default (or would but for the giving of notice or
lapse of time or both, constitute a default) under any material contract or
instrument to which WWWX is a party or by which it is bound, or conflicts with
or violates any provision of the Articles of Incorporation or by-laws of WWWX.
Without limiting the generality of the foregoing provisions, the execution and
delivery by WWWX of this Agreement and the consummation of the transactions
described herein will not (i) result in a violation or default or give to any
other person any rights, including rights of termination, cancellation or
acceleration under any applicable law, rule or regulation, any material
agreement, instrument or policy to which WWWX is a party or may be bound, (ii)
result in any judgment, order, injunction, decree or ruling of any court of
governmental authority to which either is a party or subject or (iii) require
any authorization, consent, approval, exemption or other action by any court or
administrative or governmental body which has not been obtained or any notice to
or filing with any court or administrative or governmental body which has not
been given or done. This Agreement has been duly executed and delivered by WWWX
and constitutes the legal, valid and binding obligation of WWWX enforceable in
accordance with its terms.
5.3 POTENTIAL SALE OF SUBSIDIARY TO A NYSE COMPANY. WWWX is in
negotiation to sell one of its subsidiaries to a New York Stock Exchange
Company. There can be no assurance that this negotiation will result in a
completed transaction. But, if this transaction concludes, then WWWX will
receive stock from the transaction. WWWX anticipates declaring a dividend in
connection herewith whereby the WWWX shareholders as of the date of closing of
that transaction will receive shares in the NYSE Company in proportion to their
WWWX share holding.
<PAGE>
5.4 CONSENTS. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any person,
entity or governmental body is required on the part of WWWX in connection with
the execution and delivery by of this Agreement, or the compliance by WWWX with
any of the provisions hereof.
5.5 DISCLOSURE. No representation or warranty by WWWX in this Agreement
or in any other Exhibit, Schedule, list, certificate or document delivered
pursuant to this Agreement, contains or will contain at Closing any untrue
statement of material fact or omits or will omit to state any material fact
necessary to make any statement herein and therein not misleading.
SECTION 6. FEES AND EXPENSES
6.1 EXPENSES OF THE TRANSACTION. Each party hereto shall pay its own
expenses incidental to the preparation of this Agreement and the consummation of
the transactions described herein.
SECTION 7. POST-CLOSING MATTERS.
7.1 FURTHER ASSURANCES. At the request of either party hereto, at any
time and from time to time the other party shall, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, as the case
may be, all such further acts, transfers, assignments, deeds, powers and
assurances of title, and additional papers and instruments, and will do or cause
to be done all acts or things as often as may be proper or necessary or
advisable for better assuring, conveying, transferring and assigning the Assets
(including, without limitation, the Technology), and effectively to carry out
the intent hereof, and to vest in WWWX the entire right, title and interest in
and to all of the Assets. Without limiting the generality of the foregoing, JDT
agrees to furnish to Purchaser, or its successors and assigns, all data,
formulae, models, programs, software, notes, documents and all other information
regarding the Technology, to utilize the Technology and to enable its attorneys
to evaluate and properly protect the Technology.
<PAGE>
7.2 RESPONSIBILITY FOR LITIGATION. JDT shall be responsible for all
present or future litigation and claims for injury and related expenses arising
out of the conduct of the Business and the Assets up to the time of Closing.
7.3 TRADE SECRETS. JDT shall not at any time after the Closing use for
its own benefit, or divulge to any other person, firm or corporation, any
confidential information or trade secrets relating in any way to the Business,
for the purposes hereof, the term "CONFIDENTIAL INFORMATION" means any and all
information related to the Technology, customer and marketing relationships, and
business and financial information of the Business.
SECTION 8. MISCELLANEOUS
8.1 GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware.
8.2 ASSIGNMENT. This Agreement shall not be assignable by any party
without the prior written approval of the other party which shall not be
unreasonably withheld. To the extent assignable, this Agreement shall be binding
upon, and inure to the benefit of, WWWX, JDT and their respective heirs,
personal representatives, successors and assigns.
8.3 HEADINGS FOR REFERENCE ONLY. The section and paragraph headings in
this Agreement are for convenience of reference only and shall not be deemed to
modify or limit the provisions of this Agreement.
8.4 NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered by confirmed fax,
personally, or by recognized overnight courier, or four days after being mailed
by registered mail, return receipt requested, to a party at the following
address (or to such other address as such party may have specified by notice
given to the other pursuant to this provision):
<PAGE>
If to WWWX: WorldWide Web NetworX Corporation
3000 Atrium Way, Suite 202
Mt. Laurel, NJ 08054
Attention: Robert D. Kohn
Fax no. (609) 627-6893
If to JDT: c/o Jencom Digital Technologies, LLC
220 West 19th Street
New York, NJ 10011
Attn: Henry Kauftheil
8.5 ENTIRE AGREEMENT AND AMENDMENT. This document and the Exhibits and
Schedules hereto contain the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and supersede all prior or
contemporaneous agreements, understandings, representations and warranties
between the parties and may not be amended except by written instrument executed
by the parties hereto.
8.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
FACSMILIE SIGNATURES SHALL BE ACCEPTED AS ORIGINALS
ATTEST: WORLDWIDE WEB NETWORX CORPORATION
By: By: //s// ROBERT KOHN
----------------------- --------------------------
Title: Title: President
ATTEST: JENCOM DIGITAL TECHNOLOGIES, LLC
By: MANAGER By: //s// KENRY KAUFTHEIL
---------------------- ---------------------------
Title: Henry Kauftheil, Manager
<PAGE>
SCHEDULE 1.1
The business and assets of ICUC as described in the attached business plan are
the only business and assets being sold hereunder including those described in
Exhibit A.
All business and assets as described on Exhibit A
<PAGE>
SCHEDULE 4.7
None.
<PAGE>
EXHIBIT A
SNAPP
SNAPP is a user-friendly system that builds an extended educational facility,
enabling educators, students, and parents to continuously participate in a
variety of school activities both curricular and extracurricular in an
interactive multimedia environment. The SNAPP application is designed to give
each school the flexibility to build and update a complete interactive school
Website utilizing leading edge web technologies. Sections such as school news,
calendar, sports, clubs, student and faculty members (including photographs)
come together within one source - all free of charge to the school. Specialty
plug-ins includes a multimedia yearbook, fund raising programs, and a school
CD-ROM creator.
POWER BROKER
Effectively competing in the institutional broker market requires the
appropriate tools to manage trading communities and business processes. JenCom
Digital Technologies new software program, POWER BROKER, meets this need. POWER
BROKER provides fund managers with the tools necessary to establish
cross-department (research, sales and trading) business functions that lead to
effective order execution as well as accurate forecasting and fund performance
tracking.
In addition, the software precision provides bankers with client-level detail,
inclusive of prompting for portfolio performance and coupon maturity dates. This
allows the banker to more effectively manage and service individual accounts.
POWER BROKER provides companies with fully customizable environments and runs
on, but is not limited to, the Oracle database, which has been chosen by
industry leaders to be the next-generation database system software for the
banking industry. POWER BROKER is a leading edge communications and trading
system that produces immediate increases in efficiency and productivity.
<PAGE>
EXHIBIT A
ICUC
This business and assets of ICUC as descried in the attached business plan
TRUE SOUND
TRUE SOUND is an innovative sound compression system designed to accommodate the
sensitivity of the human ear, thus, providing the TRUE SOUND. Currently, audio
compression and transference technology does not have the functionality to
compress sound waves over the Internet or in other forms of multimedia without
deleting a portion of the sound quality (i.e. bass, treble, etc.). TRUE SOUND
utilizes a new advanced mathematical model for sound compression. Targeted at
software developers, audio studios, live Internet broadcasting as well as sound
libraries, TRUE SOUND offers the highest level of quality available to meet the
market need.
<PAGE>
BILL OF SALE
JenCom Digital Technologies, LLC, a Delaware limited liability company, does
hereby forever sell, transfer, convey and assign a 50% membership interest in
all of its right, title and interest in and to the assets set forth on Schedule
"A: attached hereto for the consideration set forth in the Acquisition Agreement
being executed and delivered simultaneously herewith.
JenCom Digital Technologies, LLC
By: //s//HENRY KAUFTHEIL
----------------------------
Henry Kauftheil, Manager
<PAGE>
Exhibit 10.12
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement") made as of this 4th day of
March 1999 between WorldWide Web NetworX Corporation, a Delaware corporation
with its principal offices at 3000 Atrium Way, Mt. Laurel, New Jersey 08054-3911
(the "Company") and D.H. Blair Investment Banking Corp. ("Blair"), a Delaware
corporation whose address is 44 Wall Street, 2nd Floor, New York, New York
10005, or its designee (the "Subscriber").
WHEREAS, the Company desires to sell 2,000,000 shares (the "Shares") of
the Company's common stock, $.001 par value (the "Common Stock") on the terms
and conditions hereinafter set forth and the Subscriber desires to purchase the
Shares;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
1. SUBSCRIPTION FOR SHARES
1.1 Subject to the terms and conditions hereinafter
set forth, the Subscriberhereby subscribes for and agrees to purchase from the
Company the Shares at a purchase price of $1.50 per Share (the "Purchase Price")
for an aggregate Purchase Price of $3,000,000. The closing of the purchase of
the Shares (the "Closing") is subject, among other conditions described in
Section 4, to the prior receipt (or waiver) by the Subscriber of the Company's
December 31, 1998 unaudited balance sheet (the "Balance Sheet"), which Balance
Sheet is subject to adjustment and, as so adjusted shall, at the Closing,
indicate that there is no material adverse change in the financial position and
results of operations of the Company from that reflected in such Balance Sheet,
except as set forth on Schedule 1.1 hereto. The Closing shall take place as soon
as possible after receipt (or waiver) by Subscriber of the financial statements
described above. At the Closing, the Company shall deliver to the Subscriber a
certificate representing 2,000,000 Shares against payment of the Purchase Price
therefor by check or wire transfer made payable to the order of the Company.
2. REPRESENTATIONS BY AND COVENANTS OF THE SUBSCRIBER
2.1 The Subscriber represents that it is an
"accredited investor" as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended (the "Act"), and that
it is able to bear the economic risk ofan investment in the Shares, including
the total loss of such investment.
2.2 The Subscriber acknowledges that it has prior
investment experience, including investment in non-listed and non-registered
securities, and that it recognizes the highly speculative nature of this
investment.
<PAGE>
2.3 The Subscriber represents that the Shares are
being purchased for its own account, for investment purposes only and with no
view to distribution or resale to others.
2.4 The Subscriber understands that the Shares have
not been registered under Act or applicable state securities laws by reason of a
claimed exemption under the provisions of the Act which depends, in part, upon
its representations, warranties and covenants contained in this Agreement and
its investment intention and further understands that it is not being furnished
with any offering documents other than this Agreement.
2.5 The Subscriber understand and hereby acknowledges
that the Company is under no obligation to register the Shares under the Act,
with the exception of certain registration rights set forth herein. the
Subscriber consents that the Company may, if it desires, permit the transfer of
the Shares out of its name only when its request for transfer is accompanied by
an opinion of counsel reasonably satisfactory in form and substance to the
Company that neither the sale nor the proposed transfer results in a violation
of the Act or any applicable state "blue sky" laws.
2.6 The Subscriber consents to the placement of a
restrictive legend on any certificate evidencing the Shares stating that they
have not been registered under the Act and setting forth or referring to the
restrictions on transferability and sale thereof.
2.7 The Subscriber represents and warrants that this
Agreement has been duly and validly authorized, executed and delivered by all
required corporate action and constitutes the legal, valid and binding
obligation of the Subscriber enforceable against the Subscriber in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws, affecting creditors'
rights generally.
3. REPRESENTATIONS BY THE COMPANY
The Company represents and warrants to the Subscriber that as of the
date hereof and as of the Closing:
3.1 The Company is a corporation duly organized,
existing and in good
standing under the laws of the State of Delaware and has the corporate power to
conduct its business.
3.2 The execution, delivery and performance of this
Agreement by the Company has been approved by the Board of Directors of the
Company and all other actions required to authorize and effect the offer and
sale of the Shares have been taken and approved. This Agreement constitutes the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms except as such enforcement may be limited
by
<PAGE>
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally.
3.3 The Shares have been duly and validly authorized
and, when issued and paid for in accordance with the terms hereof, will be duly
and validly issued, fully paid and nonassessible.
3.4 There are 11,035,186 Shares of Common Stock
issued and outstanding on a fully-diluted basis, and there will be approximately
35,000,000 Shares of Common Stock issued and outstanding based on existing
contractual obligations of the Company, including the 2,000,000 Shares to be
issued to Subscriber pursuant hereto but excluding (i) the "Purchase Shares" (as
such term is defined in the letter of intent (the "LOI") referenced in Section
4.5 hereof.) and (ii) shares issuable upon conversion of the "Convertible Debt"
(as such term is defined in the LOI).
3.5 Except as set forth on Schedule 3.5 hereto, the
Company has filed all tax returns (or obtained extensions of time to file such
returns), federal, state, and local, and all related information required to be
filed prior to the date hereof, and at the Closing, will have filed all tax
returns (or obtained extension f time to file such returns), federal, state, and
local, and all related information required to be filed prior to the Closing.
3.6 The Company has, and at the Closing will have,
good and marketable title to all of the assets reflected in the Balance Sheet,
in the amounts and categories set forth therein, which have not been disposed of
in the ordinary and regular course of its business since December 31, 1998, and
all assets acquired by the Company since December 31, 1998 free and clear of all
mortgages, pledges, liens, security interests, conditional sale agreements,
charges encumbrances and restrictions of every kind and nature, except as set
forth on Schedule 3.6 hereto.
3.7 Except as set forth on Schedule 3.7 hereto, since
the date of the Balance Sheet, (i) the Company has not issued any stock, bonds,
notes or other corporate securities, (ii) the Company has conducted its business
in the ordinary and regular course thereof, (iii) there has not been any
material adverse change in the business of the Company, or in the condition,
financial or otherwise, of the Company, or in the assets or liabilities of the
Company as reflected in the Balance Sheet, or any damage, destruction or loss,
whether or not covered by insurance, which has materially affected the business
or assets of the Company or which is substantial in amount, or any material
change in the nature or condition, other than financial, of the business of the
Company, or any event, condition or state of facts of any character whatsoever
the occurrence of which materially and adversely affected, or, to the knowledge
of the Company, threatens materially and adversely to affect, the results of
operations or the business or financial condition of the Company, (iv) the
Company has not declared, made, set aside or paid any dividends or distributions
or payments on, or any redemption of, any shares of its capital stock, or made
any commitments therefor, (v) the Company has not made any loans to any
individuals,
<PAGE>
firms, corporations or other entities, or (vi) except in the ordinary and
regular course of its business, the Company has not incurred any liabilities or
obligations, or purchased or otherwise acquired, mortgaged, pledged or subjected
to any lien, charge or other encumbrance, sold or transferred, any of its
assets, tangible or intangible, or canceled any debts or claims, or suffered any
extraordinary losses, or waived any rights of value, or entered into any other
transaction. The Company agrees that from the date hereof to the Closing its
business will be operated in the regular and ordinary course and the Company
will not take any action enumerated in clauses (i), (ii), and (iv) through (vi)
alone without the prior written consent of the Subscriber.
3.8 The Company has obtained all licenses, permits
and other governmental authorizations necessary to the conduct of its business;
such licenses, permits and other governmental authorizations obtained are in
full force and effect; and the Company is in all material respects complying
therewith.
3.9 The Company knows of no pending or threatened
legal or governmental proceedings to which the Company is a party which could,
individually or in the aggregate, materially adversely affect the business,
property, financial condition, operations or prospects, financial or otherwise,
of the Company.
3.10 The Company is not in violation of or default
under, nor will the execution and delivery of this Agreement, the issuance of
the Shares, and the incurrence of the obligations herein set forth and the
consummation of the transactions herein described, result in a violation of, or
constitute a default under, the certificate of incorporation or by-laws, in the
performance or observance of any obligations, agreement, covenant or condition
contained in any bond, debenture, note or other evidence of indebtedness or in
any contract, indenture, mortgage, loan agreement, lease, joint venture or other
agreement or instrument to which the Company is a party or by which it or any of
its properties may be bound or in violation of any order, rule, regulation,
writ, injunction, or decree of any government, governmental instrumentality or
court, domestic or foreign.
3.11 All information from the Company included in, or
delivered pursuant to, this Agreement is accurate and complete and does not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained herein, in light of the
circumstances under which they were made not misleading.
4. CONDITIONS OF SUBSCRIBER'S OBLIGATIONS AT CLOSING
The obligations of the Subscriber under Section 1 of this Agreement are
subject to the fulfillment, or the waiver by Subscriber, on or before the
Closing of each of the following conditions:
<PAGE>
4.1 The representations and warranties of the Company
contained in Section 3 shall be true on and as of the Closing with the same
effect as though such representations and warranties had been made on and as of
the Closing.
4.2 The Company shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by the Company on or before the
Closing, including, but not limited to, furnishing the Financial Statements
referred to in Section 1.1 of this Agreement.
4.3 The Company shall have obtained all
authorizations, approvals, waivers or permits, if any, necessary or appropriate
for consummation of the transactions contemplated by the Agreement.
4.4 The Subscriber shall have received the Balance
Sheet, which Balance Sheet is subject to adjustment and, as so adjusted, shall,
at the Closing, indicate there is no material adverse change in the financial
position and results of operations of the Company from that reflected in the
Balance Sheet, except as set forth on Schedule 1.1 hereof.
4.5 The Subscriber shall have received an opinion of
counsel to the Company reasonably acceptable to the Subscriber to the effect of
the representations set forth in Sections 3.1, 3.2, 3.3 and 3.10 hereof.
4.6 The Company shall have executed a letter of
intent (the "LOI" with Blair providing, INTER ALIA, for Blair to use its best
efforts to raise a minimum of $2.0 million and a maximum of 21.0 million for the
company through a private placement of Common Stock at a price of $1.50 per
share, in the form annexed hereto as Annex A.
4.7 The Company shall have executed a definitive
agreement with JenCom Digital Technologies, LLC ("JenCom") for the acquisition
of a 50% interest in certain of the business and assets of JenCom for shares of
the Company's Common Stock in the form annexed hereto as Annex B.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING
The obligations of the Company to the Subscriber under this Agreement
are subject to the fulfillment on or before the Closing of each of the following
conditions by the Subscriber.
5.1 The representations and warranties of the
Subscriber contained in Section 2 shall be true on and as of the Closing with
the same effect as though such representations and warranties has been made on
and as of the Closing.
5.2 The Subscriber shall have performed and complied
with all agreements and conditions contained in this Agreement that are required
to be performed or
<PAGE>
complied with by the Subscriber on or before the Closing.
5.3 The Subscriber shall have executed the LOI.
6. REGISTRATION RIGHTS
6.1 REQUIRED REGISTRATION. The Company hereby agrees
with the Subscriber or its transferees (collectively, the "Holders") to prepare
and file with the Securities and Exchange commission (the "SEC") within three
months after the Closing Date a registration statement under the Act covering
the resale of the Shares and to use its best efforts to cause such registration
statement to become effective as soon as practicable thereafter.
The Company shall pay the expenses described in Section 6.4 for the
registration statement filed pursuant to this Section 6.1, except for
underwriting discounts and commissions and legal fees of counsel to the Holders,
which shall be borne by the Holders.
In the event that the registration statement shall not have been
declared effective by the SEC within seven (7) months after the Closing, the
Company shall issue to Holders, for no additional consideration, shares of its
Common Stock in an aggregate amount equal to the sum of (i) 200,000 shares of
Common Stock for each month, pro rated for any part thereof, that the
effectiveness of the registration statement has been delayed plus (ii) such
number of shares as equals (A) $3,000,000 multiplied by (B) the quotient of (x)
the closing bid price on the seven month anniversary of the Closing (or if such
date is not a business day, the next business day) less the closing bid price of
the Common Stock on the date such registration statement is ultimately declared
effective by the SEC (but such difference shall not be less than zero), divided
by (y) $1.50.
6.2 COMPANY REGISTRATION. If (but without any
obligation to do so) the Company proposes to register (including for this
purpose a registration effected by the Company for shareholders other than the
Holders) any of its stock or other securities under the Act in connection with
the public offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to participants in a
company stock plan or a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Shares), the Company shall, at
such time, give each Holder written notice of such registration at least thirty
(30) days prior to filing any registration statement. Upon the written request
of each Holder given within twenty (20) days after provision of such notice by
the Company in accordance with Section 7.1, the Company shall cause to be
registered under the Act all of the Shares that each such Holder has requested
to be registered. The Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 6.2 prior to the effectiveness
of such registration whether or not any Holder has elected to include securities
in such registration, without any liability to the Company. The Company shall
pay all expenses described in Section 6.4 for any registration filed
<PAGE>
prior pursuant to this Section 6.2, except for underwriting discounts and
commissions and legal fees of counsel to the Holders, which shall be borne by
the Holders.
6.3 REGISTRATION PROCEDURES. Whenever required under
Section 6.1 or 6.2 to effect the registration of any Shares under the Act, the
Company will:
(a) prepare and file with the SEC a
registration statement with respect to such Shares, and use its best efforts to
cause such registration statement to become and remain effective until the
Shares are freely salable without the volume limitations of Rule 144;
(b) prepare and file with the SEC such
amendments to such registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration statement
effective until the Shares are freely salable without the volume limitations of
Rule 144;
(c) furnish to the Holders participating in
such registration and to the underwriters of the Shares being registered, if
any, such reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters may
reasonably request in order tofacilitate the public offering of such Shares;
(d) use its best efforts to register or
qualify the securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as such participating Holders
may reasonably request in writing within twenty (20) days following the original
filing of such registration statement, except that the Company shall not for any
purpose be required to execute a general consent to service of process or to
qualify to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified;
(e) notify the Holders participating in such
registration, promptly after it shall receive notice thereof, of the time when
such registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
(f) notify Blair promptly of any request by
the SEC for the amending or supplementing of such registration statement or
prospectus or for
additional information;
(g) prepare and file with the SEC, promptly
upon the request of the Holders, any amendments or supplements to such
registration statement or
prospectus which, in the opinion of counsel for the Holders is required under
the Act or the rules and regulations thereunder in connection with the
distribution of the Shares by the Holders;
(h) prepare and promptly file with the SEC
and promptly notify the Holders of the filing of such amendment or supplement to
such registration statement or
<PAGE>
prospectus as may be necessary to correct any statements or omissions if, at the
time when a prospectus relating to such securities is required to be delivered
under the Act, any event shall have occurred as the result of which any such
prospectus or any other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances in which they
were made, not misleading; and
(i) advise the Holders, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the SEC suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for that purpose and promptly
use its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued.
6.4 EXPENSES.
(a) With respect to the registration
required pursuant to Section 6.1 and 6.2 hereof, all fees, costs and expenses of
and incidental to such registration and public offering (as specified in
paragraph (b) below) in connection therewith shall be borne by the Company,
provided, however, that any Holders participating in such registration shall
bear their pro rata share of the underwriting discount and commissions and
transfer taxes and the fees and disbursements of counsel for such Holders, if
any.
(b) The fees, costs and expenses of
registration to be borne by the Company as provided in paragraph (a) above shall
include, without limitation, all registration, filing, and NASD fees, printing
expenses, fees and disbursements of counsel and accounts for the Company, and
all legal fees and disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which the securities to be
offered are to be registered and qualified (except as provided in 6.4(a) above).
All fees and disbursements of counsel for the selling Holders shall be borne by
the selling Holders.
6.5 INDEMNIFICATION.
(a) The Company will indemnify and hold harmless each
Holder of Shares which are included in a registration statement pursuant to the
provisions of Section 6.1 or 6.2 hereof, its directors, officers and agents, and
any underwriter (as defined in the Act) for such Holder and each person, if any,
who controls such Holder or such underwriter within the meaning of the Act, from
and against, and will reimburse such Holder, its officers, directors and agents
and each such underwriter and controlling person with respect to, any and all
loss, damage, liability, cost and expense to which such Holder or any such
underwriter or controlling person may become subject under the Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the omission
<PAGE>
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, damage, liability, cost or expense is caused by, arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to have the statements therein, in light of the circumstances in which
they were made, not misleading which are made in reliance upon or in conformity
with written information furnished by or on behalf of such Holder, its directors
or officers, such underwriter or such controlling person specifically for use in
the preparation thereof.
(b) Each Holder or Shares included in a
registration pursuant to the provisions of Section 6.1 or 6.2 hereof will
indemnify and hold harmless the Company, its directors, officers and agents, any
controlling person and any underwriter from and against, and will reimburse the
Company, its directors, officers and agents, any controlling person and any
underwriter with respect to, any and all loss, damage, liability, cost or
expense to which the Company or any controlling person and/or any underwriter
may become subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was so
made in reliance upon and in strict conformity with written information
furnished by or on behalf of such Holder, underwriter or controlling person
specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified
party pursuant to the provisions of paragraph (a) or (b) of this Section 6.5 of
notice of the commencement of any action involving the subject matter of the
foregoing indemnity provisions such indemnified party will, if a claim thereof
is to be made against the indemnifying party pursuant to the provisions of said
paragraph (a) or (b), promptly notify the indemnifying party of the commencement
thereof; but the omission to so notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
hereunder. In case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party;
provided, however, if the defendants in any action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or in addition to those available
to the indemnified party, or if there is a conflict or interest which would
prevent counsel for the indemnifying party from also representing the
indemnified party, the indemnified party or parties have the right to
<PAGE>
select separate counsel to participate in the defense of such action on behalf
of such indemnified party or parties. After notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of said paragraph (a) or (b) for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless (i) the indemnified
party shall have employed counsel in accordance with the provisions of the
preceding sentence, (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after the notice of the commencement of the
action or (ii) the indemnifying party has authorized the employment of counsel
for the indemnified party who is reasonably satisfactory to the indemnified
party at the expense of the indemnifying party.
6.6 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934
With a view to making available to the Holders the benefits of
Rule 144 promulgated under the Act and any other rule or regulation of the SEC
that may at any time permit a Holder to sell securities of the Company to the
public without registration, the Company agrees, commencing nine (9) months from
the Closing to:
(a) make and keep public information
available, as those terms are understood and defined in SEC Rule 144, at all
times;
(b) file with the SEC in a timely manner
all reports and other documents required of the Company under the Act and the
Securities Exchange Act of 1934, as amended (the "1934 Act"); and
(c) furnish to any Holder, so long as the
Holder owns any Shares and upon written request by such Holder (i) a written
statement by the Company that it has complied with the reporting requirements of
SEC Rule 144, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing any Holder of
any rule or regulation of the SEC which permits the selling of the Shares
without registration.
7. MISCELLANEOUS
7.1 Any notice or other communication given hereunder
shall be deemed sufficient if in writing and sent by (i) registered or certified
mail, return receipt requested, or (ii) a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt,
addressed to the Company, at its registered office, at 3000 Atrium Way, Mt.
Laurel, New Jersey 08054-3911 - Attention: President or to the Subscriber at 44
Wall Street, 2nd Floor, New York, New York 10005 Attention: J. Morton Davis.
Notices shall be deemed to have been given three (3) business days after having
been sent by registered or
<PAGE>
certified mail or one (1) business day after deposit with a nationally
recognized courier as aforesaid.
7.2 This Agreement shall not be changed, modified or
amended except by a writing signed by the parties to be charged, and this
Agreement may not be discharged except by performance in accordance with its
terms or by a writing signed by the party to be charged.
7.3 This Agreement shall be binding upon and inure to
the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter thereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.
7.4 Notwithstanding the place where this Agreement
may be executed by any of the parties hereto, the parties expressly agree that
all the terms and provisions hereof shall be construed in accordance with and
governed by the laws of the State of New York. The parties hereby agree that any
dispute which may arise between them arising out of or in connection with this
Agreement shall be adjudicated before a court located in New York City and they
hereby submit to the exclusive jurisdiction of the courts of the State of New
York located in New York, New York and of the federal courts in the Southern
District of New York with respect to any action or legal proceeding commenced by
any party, and irrevocably waive any objection they now or hereafter may have
respecting the venue of any such action or proceeding brought in such a court or
respecting the fact that such court is an inconvenient forum, relating to or
arising out of this Agreement or any acts or omissions relating to the sale of
the Shares hereunder, and consent to the service of process in any such action
or legal proceeding by means of registered or certified mail, return receipt
requested, in care of the address set forth below or such other address as the
undersigned shall furnish in writing to the other.
7.5 The representations, warranties and agreements of
the Company and of the Subscriber in this Agreement will remain operative and in
full force and effect and will survive the payment of the Purchase Price and the
delivery of the Shares pursuant to Section 1 hereof.
7.6 This Agreement may be executed in counterparts.
7.7 The holding of any provision of this Agreement to
be invalid or unenforceable by a court of competent jurisdiction shall not
affect any other provision of this Agreement, which shall remain in full force
and effect.
7.8 It is agreed that a waiver by either party of a
breach of any provision of this Agreement shall not operate, or be construed, as
a waiver of any subsequent
<PAGE>
breach by that same party. No waiver of any provision hereof shall be effective
unless in writing and signed by or on behalf of the party to be charged
therewith.
7.9 The parties agree to execute and deliver all such
further documents, agreements and instruments and take such other and further
action as may be necessary or appropriate to carry out the purposes and
intent of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first written above.
D.H. BLAIR INVESTMENT BANKING CORP.
By: //S// J. MORTON DAVIS
-------------------------------------
J. Morton Davis
Chairman
WORLDWIDE WEB NETWORX CORPORATION
By: //S// ROBERT KOHN
-------------------------------------
Robert Kohn
President & Chief Executive Officer
<PAGE>
STOCK PURCHASE AGREEMENT
SCHEDULE 1.1
(a) The Company has issued an additional 497,186 shares of Common Stock
since the date of the Balance Sheet and has contractual obligations to
issue approximately 22,700,000 additional shares as set forth in
subparagraph (d) of Schedule 3.6, excluding (i) 2,000,000 shares to be
issued to Blair pursuant to the Stock Purchase Agreement; (ii) shares
to be issued upon conversion of an aggregate of $3,000,000 in face
amount Series A 6% Cumulative Convertible Debentures (the "Convertible
Debt") which, if not converted in accordance with their terms, will
require repayment together with all accrued, unpaid interest thereon by
the Company by their Maturity Date; and (iii) the shares to be issued
to JenCom Digital Technologies LLC.
(b) Pursuant to an Agreement and Plan of Merger dated February 23, 1999
(the "Agreement") among the Company, Artra Group Incorporated
("Artra"), NA Acquisition Corp. ("NAAC") and WWWX Merger Subsidiary,
Inc., certain of the Company's assets were transferred to NAAC, its
wholly owned subsidiary, pursuant to an Acquisition Agreement dated
February 23, 1999. These assets include the membership interest in
entrade.com (which also includes certain software license agreements
relating to the ORBIT-Registered Trademark- System Software and
intangible assets) and its ownership of 25% of the Class A voting stock
of AsseTrade.com, Inc. (reflected as Global Trade Group Stock on the
Balance sheet). These assets are now directly owned by NAAC. If the
transactions described in the Agreement are not approved by the
shareholders of WWWX, WWWX will be required to repay Artra $1,400,000
and a "break-up" fee of $2,000,000.
(c) All assets owned by NAAC are subject to a first priority lien in favor
of Artra pursuant to the terms of a Loan Agreement and a Security
Agreement, both dated February 23, 1999, between NAAC and Artra. The
Company has guaranteed the repayment of the loan to NAAC pursuant to a
Guaranty dated February 23, 1999.
<PAGE>
STOCK PURCHASE AGREEMENT
SCHEDULE 3.5
The Company has not filed tax returns for Keiretsu Corporation, a
wholly owned subsidiary of the Company, for the 1997 tax year.
<PAGE>
STOCK PURCHASE AGREEMENT
SCHEDULE 3.6
(a) Pursuant to an Agreement and Plan of Merger dated February 23, 1999 (the
"Agreement") among the Company, Artra Group Incorporated ("Atra"), NA
Acquisition Corp. ("NAAC") and WWWX Merger Subsidiary, Inc., certain of the
Company's assets were transferred to NAAC, its wholly owned subsidiary, pursuant
to an Acquisition Agreement dated February 23, 1999. These assets include the
membership interest in entrade.com (which also includes certain software license
agreements relating to the ORBIT-Registered Trademark- System Software and
intangible assets) and its ownership of 25% of the Class A voting stock of
AsseTrade.com, Inc. (reflected as Global Trade Group Stock on the Balance
Sheet). These assets are now directly owned by NAAC. If the transactions
described in the Agreement are not approved by the shareholders of WWWX, WWWX
will be required to repay Artra $1,400,000 and a $2,000,000 "break-up" fee.
(b) All assets owned by NAAC are subject to a first priority lien in favor of
Artra pursuant to the terms of a Loan Agreement and a Security Agreement, both
dated February 23, 1999, between NAAC and Artra. The Company has guaranteed the
repayment of the loan to NAAC pursuant to a Guaranty dated February 23, 1999.
(c) The Company currently has outstanding approximately $50,000 in credit card
debt.
(e) The Company is obligated to issue, pursuant to existing contracts and
agreements, up to an aggregate of approximately 22,700,000 shares of its Common
Stock, excluding (i) 2,000,000 shares to be issued to Blair pursuant to the
Stock Purchase Agreement; (ii) shares to be issued upon conversion of the
Convertible Debt; and (iii) shares to be issued to JenCom Digital Technologies,
LLC, which are not reflected on the Balance Sheet. These 22,700,000 additional
shares are to be issued as follows:
<TABLE>
<CAPTION>
NAME/REASON NUMBER OF SHARES
<S> <C>
Global Trade Group/WWWX purchase
of GTG 49% interest in entrade.com, Inc. 3,500,000
Positive Asset Remarketing/WWWX
purchase of 25% of asseTrade.com, Inc.
voting stock 1,500,000
Global Trade Group/WWWX
purchase of ATM System from 3,500,000
</TABLE>
GTG
<PAGE>
SCHEDULE 3.6 (CONTINUED)
<TABLE>
<S> <C>
Rothstein/ATM Services Ltd.
Joint Venture with WWWX
for asset recovery services 5,000,000
ForEx Plus/Acquisition of foreign
currency exchange Internet business 5,000,000
Keystone Investment Management/
insurance products 50% LLC Internet Joint
Venture (2,000,000 shares Keystone
(KIMG:OTC:BB)to WWWX) 2,000,000
Admiral Assets(consulting services) 750,000
Software Sub-Contractors(on-line
auction related and other software) 500,000
Robert Kohn for 4.5% interest
in entrade.com* 475,000
Gary Lerman for 4.5% interest
in entrade.com* 475,000
----------
22,700,000
</TABLE>
* To be issued in connection with relinquishment of interest to WWWX.
The final amount to be determined but shall not be less than 250,000
nor greater than 475,000 shares based upon the number of shares and
cash received by PECO for a 5% interest.
<PAGE>
STOCK PURCHASE AGREEMENT
SCHEDULE 3.7
(i) The Company has issued an additional 497,186 shares of Common Stock
since the date of the Balance Sheet and has contractual obligations to
issue approximately 22,700,000 additional shares as set forth in
subparagraph (d) of Schedule 3.6, excluding (i) 2,000,000 shares to be
issued to Blair pursuant to the Stock Purchase Agreement; (ii) shares
to be issued upon conversion of an aggregate of $3,000,000 in face
amount Series A 6% Cumulative Convertible Debentures (the "Convertible
Debt") which, if not converted in accordance with their terms, will
require repayment together with all accrued, unpaid interest thereon by
the Company by their Maturity Date; and (iii) the shares to be issued
to JenCom Digital Technologies LLC.
(iii) Pursuant to an Agreement and Plan of Merger dated February 23, 1999
(the "Agreement") among the Company, Artra Group Incorporated
("Artra"), NA Acquisition Corp. ("NAAC") and WWWX Merger Subsidiary,
Inc., certain of the Company's assets were transferred to NAAC, its
wholly owned subsidiary, pursuant to an Acquisition Agreement dated
February 23, 1999. These assets include the membership interest in
entrade.com (which also includes certain software license agreements
relating to the ORBIT-Registered Trademark- System Software and
intangible assets) and its ownership of 25% of the Class A voting stock
of AsseTrade.com, Inc. (reflected as Global Trade Group Stock on the
Balance sheet). These assets are now directly owned by NAAC. If the
transactions described in the Agreement are not approved by the
shareholders of WWWX, WWWX will be required to repay Artra $1,400,000
and a "break-up" fee of $2,000,000.
All assets owned by NAAC are subject to a first priority lien in favor
of Artra pursuant to the terms of a Loan Agreement and a Security
Agreement, both dated February 23, 1999, between NAAC and Artra. The
Company has guaranteed the repayment of the loan to NAAC pursuant to a
Guaranty dated February 23, 1999.
(vi) See (iii) above.
<PAGE>
EXHIBIT 10.13
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is entered into this 2nd day of April, 1999, by
and between WorldWide Web NetworX Corporation, a Delaware corporation (the
"Company"), and Ralph H. Isham (the Consultant").
W I T N E S S E T H:
WHEREAS, each of the parties desires to enter into this Consulting
Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Commencing as of the date hereof and continuing through December 31,
1999 (the "Consulting Period"), the Consultant shall consult with the Company in
an advisory capacity when reasonably requested to do so by the Company in
connection with the Company's business and affairs, including potential
acquisition candidates; provided that the consultations shall be performed in
the place or places and at the time or times and in the manner that shall be
reasonably acceptable to the Consultant. The Consultant shall consult with the
Company on a non-exclusive basis and shall provide advice to the Company in
connection with such financial and other matters as may from time to time be
brought to the Consultant's attention by the Company.
2. (a) As compensation for the performance by the Consultant of the
consulting services hereunder during the Consulting Period, the Company shall
issue to the Consultant a warrant, in the form attached hereto as Exhibit A, to
purchase 100,000 shares of the Company's restricted common stock, $.001 par
value (the "Shares") exercisable for a period of four (4) years from the date of
this Agreement (the "Exercise Period") at an exercise price of $2.25 per share.
1
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(b) The Shares shall have "piggy-back" registration rights and shall be
included in any registration statement on Form S-1, SB-2 or other appropriate
form filed by the Company during the Exercise Period with the Securities and
Exchange Commission which registers for resale any of the Company's securities.
The Company shall give the Consultant appropriate notice of such registration
and shall comply with the Consultant's election to register. The Company shall
bear the expenses of registering the Shares.
3. (a) Neither the Consultant nor the Company may at any time assign this
Agreement nor any right or interest hereunder. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
(b) Any notice, request, instruction or other documentation required or
permitted to be given hereunder shall be sufficient if in writing and hand
delivered or sent by United States Certified Mail, return Receipt Requested, to
the parties at their respective addresses as follows:
If to the Company: WorldWide Web NetworX Corporation
3000 Atrium Way, Suite 20
Mt. Lawrence, NJ 08054
If to the Consultant: Ralph H. Isham
1215 Fifth Avenue, Apt. 12B
New York, NY 10029
(c) This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and any and all prior negotiations,
agreements or understandings relating thereto, written or oral, are superseded
hereby. This Agreement may not be changed, modified, extended, renewed or
supplemented and no provision hereof may be waived, except by an instrument in
writing signed by the party against whom enforcement of any change,
modification, extension, renewal, supplement or waiver is sought.
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(d) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. The invalidity of any portion of this
Agreement shall not affect the enforceability of the remaining portions of this
Agreement or any part thereof, all of which are inserted herein conditionally on
their being valid in law. In the event that any portion or portions contained
herein shall be invalid, this Agreement shall be construed so as to make such
portion or portions valid or, if such construction is not legally possible, as
if such invalid portion or portions had not bee inserted.
(e) Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver or
relinquishment of any of such terms, covenants or conditions, nor shall any
waiver of relinquishment of any right or power hereunder at any one time or more
times be deemed a waiver or relinquishment of such right or power at any other
time or times.
IN WITNESS WHEREOF, the parties hereto have duly executed this Consulting
Agreement as of the day and year first above written
WorldWide Web NetworX Corporation,
a Delaware corporation
By: //S// Robert D. Kohn
------------------------
Robert D. Kohn,
Chief Executive Officer
//S// Ralph H. Isham
-------------------------
Ralph H. Isham
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EXHIBIT 10.14
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is entered into this 2nd day of April, 1999,
by and between WorldWide Web NetworX Corporation, a Delaware corporation (the
"Company"), and Arnold P. Kling (the Consultant").
W I T N E S S E T H:
WHEREAS, each of the parties desires to enter into this Consulting
Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Commencing as of the date hereof and continuing through December 31,
1999 (the "Consulting Period"), the Consultant shall consult with the Company in
an advisory capacity when reasonably requested to do so by the Company in
connection with the Company's business and affairs, including potential
acquisition candidates; provided that the consultations shall be performed in
the place or places and at the time or times and in the manner that shall be
reasonably acceptable to the Consultant. The Consultant shall consult with the
Company on a non-exclusive basis and shall provide advice to the Company in
connection with such financial and other matters as may from time to time be
brought to the Consultant's attention by the Company.
2. (a) As compensation for the performance by the Consultant of the
consulting services hereunder during the Consulting Period, the Company shall
issue to the Consultant a warrant, in the form attached hereto as Exhibit A, to
purchase 100,000 shares of the Company's restricted common stock, $.001 par
value (the "Shares") exercisable for a period of four (4) years from the date of
this Agreement (the "Exercise Period") at an exercise price of $2.25 per share.
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(b) The Shares shall have "piggy-back" registration rights and
shall be included in any registration statement on Form S-1, SB-2 or other
appropriate form filed by the Company during the Exercise Period with the
Securities and Exchange Commission which registers for resale any of the
Company's securities. The Company shall give the Consultant appropriate notice
of such registration and shall comply with the Consultant's election to
register. The Company shall bear the expenses of registering the Shares.
3. (a) Neither the Consultant nor the Company may at any time assign
this Agreement nor any right or interest hereunder. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
(b) Any notice, request, instruction or other documentation
required or permitted to be given hereunder shall be sufficient if in writing
and hand delivered or sent by United States Certified Mail, return Receipt
Requested, to the parties at their respective addresses as follows:
If to the Company: WorldWide Web NetworX Corporation
3000 Atrium Way, Suite 202
Mt. Lawrence, NJ 08054
If to the Consultant: Arnold P. Kling
444 East 86th Street, PHF
New York, NY 10028
(c) This Agreement contains the entire agreement of the
parties with respect to the subject matter hereof and any and all prior
negotiations, agreements or understandings relating thereto, written or oral,
are superseded hereby. This Agreement may not be changed, modified, extended,
renewed or supplemented and no provision hereof may be waived, except by an
instrument in writing signed by the party against whom enforcement of any
change, modification, extension, renewal, supplement or waiver is sought.
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(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. The invalidity of any portion
of this Agreement shall not affect the enforceability of the remaining portions
of this Agreement or any part thereof, all of which are inserted herein
conditionally on their being valid in law. In the event that any portion or
portions contained herein shall be invalid, this Agreement shall be construed so
as to make such portion or portions valid or, if such construction is not
legally possible, as if such invalid portion or portions had not bee inserted.
(e) Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver or
relinquishment of any of such terms, covenants or conditions, nor shall any
waiver of relinquishment of any right or power hereunder at any one time or more
times be deemed a waiver or relinquishment of such right or power at any other
time or times.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Consulting Agreement as of the day and year first above written
WordWide WebNetworX Corporation
a Delaware corporation
By: /s/ Robert D. Kohn
-----------------------------------
Robert D. Kohn,
Chief Executive Officer
By: /s/ Arnold P. Kling
-----------------------------------
Arnold P. Kling
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EXHIBIT 10.15
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (this "AGREEMENT") is dated as of APRIL 7,
1999, by and between ADMIRAL ASSET GROUP, INC., a New Jersey corporation
("AAG"), and WORLDWIDE WEB NETWORX CORPORATION, a Delaware corporation ("WWWX").
RECITALS
A. AAG holds certain rights under a Memorandum of Understanding dated
October 26, 1998 (the "MOU") by and among B.D.F., LLC, an affiliate of Michael
Fox International, Inc. (together, "FOX"), Henry Butcher USA, Inc. ("BUTCHER"),
and Positive Asset Remarketing, Inc. ("PAR") which grants AAG a One Hundred
Percent (100%) membership interest ("AAG'S MEMBERSHIP INTEREST") in the Class B
common, non-voting stock of asseTrade.com, a Delaware corporation ("ASSETRADE")
which is equal, as of the date of this Agreement, to a total of Two Percent (2%)
of the equity of asseTrade
B. AAG holds certain additional assets and rights to various
participations, commissions and fees in other businesses as identified and
described herein (the "AAG ASSETS").
C. AAG desires to transfer the AAG Assets and all of AAG's Membership
Interest (collectively, the "PURCHASED ASSETS") to WWWX, and WWWX desires to
acquire the Purchased Assets, on the terms and subject to the conditions set
forth herein.
NOW THEREFORE, in consideration of the mutual covenants herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties agree
as follows:
SECTION 1. PURCHASE AND SALE
1.1 AGREEMENT TO SELL. At the Closing (hereinafter defined), AAG shall
sell, grant, convey, transfer, assign and deliver to WWWX, upon the terms and
subject to the conditions of this Agreement, free and clear of all liens,
encumbrances and charges of any kind, all of AAG's Membership Interest and the
AAG Assets. As used herein, the "AAG Assets" shall include all of AAG's right,
title and interest in and to assets of any kind, character and description,
whether tangible, intangible, real, personal or mixed, wherever located,
including but not limited all equipment, inventories, accounts receivable, trade
secrets, customer lists, goodwill, intellectual property, contracts, books and
records, telephone numbers, licenses, permits, software, hardware and disks,
data files (whether on disks or other media), logos, trademarks, tradenames,
marketing materials, technology and technical know-how.
1.2 AGREEMENT TO PURCHASE. At the Closing, WWWX shall acquire from AAG,
upon the
<PAGE>
terms and subject to the conditions of this Agreement and in reliance upon the
representations and warranties of AAG in this Agreement and in the Exhibits and
Schedules hereto, the Purchased Assets and, as consideration therefor, shall pay
to AAG the Purchase Price (hereinafter defined).
SECTION 2. PURCHASE PRICE; NO ASSUMPTION OF LIABILITIES
2.1 PURCHASE PRICE. In consideration for the Purchased Assets and the
Non-Competition Agreement set forth below (the "PURCHASE PRICE"), WWWX shall
issue and deliver to AAG Seven Hundred and Fifty Thousand (750,000) fully paid
and non-assessable restricted shares of the common stock of WWWX (the "WWWX
Stock"), which shares are being issued in a private placement subject to all
applicable Federal and State securities laws, regulations and restrictions, and
shall bear a legend to that effect. WWWX also agrees to fund the working capital
needs of AAG per the mutually agreed upon Operating Budget as identified in
Schedule A, attached hereto and made a part hereof. WWWX will also agree to
employ the President of AAG per the terms and conditions of a separate
employment agreement.
2.2 NO ASSUMPTION OF LIABILITIES. WWWX is not assuming or agreeing to
pay or discharge any of the liabilities and obligations of AAG, whether or not
associated with or arising out of the Business, and nothing in this Agreement or
otherwise shall be construed to the contrary. All such liabilities and
obligations, whether known or unknown, direct or contingent, in litigation or
threatened or not yet asserted with respect to any aspect of the Business or
otherwise are and shall remain the responsibility of AAG. Without limiting the
generality of the foregoing, AAG shall remain specifically responsible for (a)
any liabilities with respect to any Taxes (as herein defined), (b) any
obligation for any employee grievance pending at the Closing Date or accruing
prior to the Closing Date, (c) any obligation with respect to any litigation
accruing or arising prior to the Closing Date, and (d) any obligations for trade
accounts payable owed on the Closing Date. Further, in no event shall WWWX
assume or incur any liability or obligation with respect to any Taxes payable by
AAG incident to or arising as a consequence of the consummation by AAG of this
Agreement or any cost or expense incurred by AAG incident to or arising as a
consequence of such consummation of the negotiations in connection with this
Agreement.
SECTION 3. CLOSING; TRANSFER PROCEDURES
3.1 CLOSING. The closing of the sale and purchase of the Purchased
Assets (the "CLOSING") shall be held at 10 a.m., local time, on April 7, 1999
(the "CLOSING DATE") at the offices of WWWX, or on such other date and at such
other time or place as the parties may agree in writing.
3.2 TRANSFER OF THE PURCHASED ASSETS. At the Closing, AAG shall deliver
to WWWX such bills of sale, endorsements, stock certificates, assignments and
instruments of conveyance and transfer, in form and substance reasonably
satisfactory to WWWX, as shall be reasonably required to vest in WWWX all of
AAG's right, title and interest in and to the Purchased Assets free and clear of
all liens and encumbrances as provided in Section 3.4.
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3.3 PURCHASE PRICE. At the Closing, WWWX shall deliver to AAG the WWWX
Stock, in accordance with Section 2 hereof.
3.4 RELEASE OF LIENS. At or prior to the Closing, AAG shall deliver all
necessary releases of liens and Uniform Commercial Code termination statements
in forms reasonably acceptable to counsel for WWWX so that AAG's title to the
Purchased Assets is free and clear of all liens and encumbrances or as of the
Closing will be.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF AAG AND THE SHAREHOLDERS
AAG hereby represents and warrants to WWWX, intending for WWWX to rely
hereon, as follows:
4.1 ORGANIZATION AND GOOD STANDING. AAG is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey. AsseTrade is a corporation, validly existing and in good standing
under the laws of the State of Delaware. AAG owns AAG's Membership Interest free
and clear of any liens, encumbrances or other rights of third parties and there
are no outstanding options or rights to purchase or otherwise acquire any
interest in the Class B common stock of asseTrade of any kind or character, or
any rights or interests convertible into or exchangeable for, or otherwise
entitling anyone to acquire any such interest. The Class B common stock of
asseTrade is in full force and effect and unmodified . AAG has performed all of
its obligations to be performed thereunder, and AAG has any knowledge of any
default or claimed or alleged default, or state of facts which with notice or
lapse of time or both, would constitute a default, in any obligation of AAG or
of any other party to be performed thereunder.
4.2 FINANCIAL CONDITION. AAG has delivered to WWWX a business plan with
financial projections for the Business (the "FINANCIALS"). The Financials and
the schedules to this Agreement collectively represent true and complete lists
of the assets and liabilities of AAG on the date hereof and as anticipated to
exist at the Closing, and together present fairly the financial condition,
results of operations, business, properties, assets, liabilities and future
prospects of AAG and the Business as of the dates thereof and for the periods
indicated therein, there has been no material adverse change in the financial
condition or future prospects of AAG or the Business, and no fact is known to
AAG which materially adversely affects or in the future may materially adversely
affect the financial condition or future prospects of AAG or the Business.
4.3 TITLE TO AAG ASSETS. AAG owns outright, and has good and marketable
title to, all of the AAG Assets free and clear of all liens, pledges, mortgages,
security interests, conditional sales contracts or other encumbrances or
conflicting claims of any nature .
4.5 TAX MATTERS. AAG has filed or caused to be filed all Tax Returns
(as defined herein) through the taxable year ended December 31, 1998 which are
due and required to be filed and have
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paid or caused to be paid all Taxes due through the date hereof and any
assessment of Taxes received, except Taxes or assessments that are being
contested in good faith and have been adequately reserved against. AAG has
received no notice of, and to the knowledge of, there is no pending or
threatened proceeding or claim by any governmental agency for assessment or
collection of Taxes from AAG. All such Tax Returns have been prepared on the
same basis as that of previous years and in accordance with all applicable laws,
regulations and requirements, and accurately reflect the taxable income (or
other measure of Tax) of AAG. AAG has satisfied all Federal, state, local and
foreign withholding tax requirements including but not limited to income, social
security and employment tax. There are no liens for Taxes on any of the
Purchased Assets. No transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Internal Revenue Code of 1986, as amended
(the "Code"). As used herein, "Tax" or "Taxes" means any federal, state, local
and foreign income, payroll, withholding, excise, sales, use, personal property,
use and occupancy, business and occupation, mercantile, real estate, gross
receipts, license, employment, severance, stamp, premium, windfall profits,
social security (or similar unemployment), disability, transfer, registration,
value added, alternative, or add-on minimum, estimated, or capital stock and
franchise and other tax of any kind whatsoever, including any interest, penalty
or addition thereto, whether disputed or not, and "Tax Returns" means all
returns, reports, forms, declarations, claims for refunds or other information
required to be filed or supplied to any person including a taxing authority in
connection with Taxes (including without limitation information returns and
declarations of estimated Tax) (Any reference to "filed" or "file" with respect
to Taxes shall also be deemed to include "supplied" or "supply").
4.6 LITIGATION. Except as may be disclosed in any Schedule attached
hereto and incorporated herein:
(a) there is no dispute, claim, action, suit, proceeding, arbitration
or governmental investigation, either administrative or judicial, pending, or to
the knowledge of AAG threatened, against AAG, the Business or the Purchased
Assets; and
(b) AAG is not in default with respect to any order, writ, injunction
or decree of any court or governmental department, commission, board, bureau,
agency or instrumentality, which involves the possibility of any judgment or
liability which may result in any material adverse change in the financial
condition of AAG, the Business or the Purchased Assets.
4.7. ABSENCE OF UNDISCLOSED LIABILITIES. AAG has no liabilities or
obligations accrued, absolute, contingent or otherwise, except as disclosed in
the Financials or in this Agreement or the Exhibits or Schedules hereto or as
incurred, consistent with past business practice, in the normal and ordinary
course of the Business, and none of which is material and adverse. For purposes
of this Agreement, material means any matter which could exceed $5,000.
4.8 COMPLIANCE WITH LAWS. AAG has complied with and is not in default
under, or in violation of, any law, ordinance, rule, regulation or order
(including, without limitation, any environmental, safety, employee benefit,
health or price or wage control law, ordinance, rule,
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regulation or order) applicable to the Business which materially adversely
affect or, so far as AAG can now foresee, may in the future materially adversely
affect, the Business or the Purchased Assets.
4.9 AUTHORIZATION. The execution and delivery of this Agreement, and
the sale, transfer and other actions contemplated hereby have been duly
authorized, including, with respect to AAG, by all necessary action of its Board
of Directors and neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein by AAG constitutes a
violation or breach of applicable law or any contract or instrument to which AAG
is a party or by which it is bound, or any order, writ, injunction, decree or
judgment applicable to it, or constitutes a default (or would but for the giving
of notice or lapse of time or both, constitute a default) under any contract or
instrument to which AAG is a party or by which it or they are bound, or
conflicts with or violates any provision of the Articles of Incorporation or
By-Laws of AAG. Without limiting the generality of the foregoing provisions, the
execution and delivery by AAG of this Agreement and the consummation of the
transactions contemplated hereby will not (i) result in a violation or default
or give to any other person any rights, including rights of termination,
cancellation or acceleration under any applicable law, rule or regulation, any
agreement, instrument or policy to which AAG is a party or may be bound, (ii)
result in any judgment, order, injunction, decree or ruling of any court or
governmental authority to which AAG is a party or subject or (iii) require any
authorization, consent, approval, exemption or other action by any court or
administrative or governmental body which has not been obtained or any notice to
or filing with any court or administrative or governmental body which has not
been given or done. This Agreement has been duly executed and delivered by AAG
and constitutes the legal, valid and binding obligation of AAG enforceable in
accordance with its terms.
4.10 CONSENTS. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any person,
entity or governmental body is required on the part of AsseTrade or AAG in
connection with the execution and delivery by AAG of this Agreement, or the
compliance by AAG with any of the provisions hereof.
4.11 INVESTMENT REPRESENTATIONS.
(a) the shares of WWWX Stock being acquired by AAG are intended to be
and are being acquired solely for AAG's account without a view to the current
distribution or resale thereof, and AAG does not have any contract, undertaking,
agreement or arrangement to sell or otherwise transfer or dispose of any of such
shares in any manner to any person or entity;
(b) AAG will not sell, transfer or otherwise dispose of any of the
shares of WWWX Stock being acquired by AAG, in any manner, unless at the time of
such transfer: (i) a registration under the Securities Act of 1933, as amended
(the "SECURITIES ACT") and under all other applicable securities laws is in
effect with respect to the shares of the WWWX Stock to be sold, transferred or
disposed of, and AAG complies with all of the requirements of the Securities Act
and such other applicable securities laws with respect to the proposed
transaction; or (ii) AAG has obtained and has provided to WWWX satisfactory
evidence that the proposed sale, transfer or disposition does not
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require registration under the Securities Act or such other applicable
securities laws;
(c) the shares of WWWX Stock being acquired by AAG have not been issued
by WWWX pursuant to a registration under the Securities Act, and AAG must
therefore hold such shares indefinitely unless a subsequent registration or
exemption therefrom is available and is obtained. No federal or state agency has
approved or disapproved the shares of WWWX Stock being acquired by AAG for
investment or any other purpose. All of the shares of WWWX Stock being acquired
by AAG have been issued and sold to AAG in reliance upon a specific exemption
from the registration requirements of the Securities Act which depends, in part,
upon the accuracy of AAG's representations, warranties and agreements set forth
in this Agreement; and
(d) AAG is an "accredited investor," as such term is defined in
Regulation D under the Securities Act.
4.12 DISCLOSURE. No representation or warranty by AAG in this Agreement
or in any other Exhibit, Schedule, list, certificate or document delivered
pursuant to this Agreement, contains or will contain at Closing any untrue
statement of material fact or omits or will omit to state any material fact
necessary to make any statement herein and therein not misleading.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF WWWX
WWWX hereby represents and warrants to AAG, intending for AAG to rely
hereon, as follows:
5.1 ORGANIZATION AND GOOD STANDING. WWWX is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
5.2 AUTHORIZATION. The execution and delivery of this Agreement and
other actions contemplated hereby have been duly authorized by all necessary
action of the Boards of Director and shareholders of WWWX, and neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein by WWWX constitutes a violation or breach of
applicable law or any contract or instrument to which WWWX is a party or is
bound, or any order, writ, injunction, decree or judgment applicable to it, or
constitutes a default (or would but for the giving of notice or lapse of time or
both, constitute a default) under any contract or instrument to which WWWX is a
party or by which it is bound, or conflicts with or violates any provision of
the Articles of Incorporation or By-Laws of WWWX. Without limiting the
generality of the foregoing provisions, the execution and delivery by WWWX of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) result in a violation or default or give to any other person any rights,
including rights of termination, cancellation or acceleration under any
applicable law, rule or regulation, any agreement, instrument or policy to which
WWWX is a party or may be bound, (ii) result in any judgment, order, injunction,
decree or ruling of any court or governmental authority to which it is a party
or subject or (iii) require any authorization, consent, approval, exemption or
other action by any court or administrative or governmental body which has not
been
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obtained or any notice to or filing with any court or administrative or
governmental body which has not been given or done. This Agreement has been duly
executed and delivered by WWWX and constitutes the legal, valid and binding
obligation of WWWX enforceable in accordance with its terms.
5.3 CONSENTS. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any person,
entity or governmental body is required on the part of WWWX in connection with
the execution and delivery by WWWX of this Agreement, or the compliance by WWWX
with any of the provisions hereof.
5.4 DISCLOSURE. No representation or warranty by WWWX in this Agreement
or in any other Exhibit, Schedule, list, certificate or document delivered
pursuant to this Agreement, contains or will contain at Closing any untrue
statement of material fact or omits or will omit to state any material fact
necessary to make any statement herein and therein not misleading.
SECTION 6. CONDUCT PENDING THE CLOSING
AAG hereby covenants and agrees that, pending the Closing and except as
otherwise approved in advance in writing by WWWX:
6.1 CONDUCT OF BUSINESS. AAG shall carry on the Business diligently and
substantially in the same manner as heretofore and refrain from any action that
would result in the breach of any of the representations, warranties or
covenants of AAG hereunder.
6.2 ACCESS. WWWX and its authorized representatives shall have full
access during normal business hours upon prior arrangement with AAG to all
properties, books, records, contracts and documents of AAG or relating to the
Business, and AAG shall furnish or cause to be furnished to WWWX and its
authorized representatives all information with respect to the Purchased Assets
and Business as they may reasonably request.
6.3 SALE OF CAPITAL ASSETS. AAG will not sell or dispose of, or agree
to sell or dispose of, any of the Purchased Assets, except in accordance with
the ordinary course of business.
6.4 LIABILITIES. AAG will not create any indebtedness or any other
fixed or contingent liability relating in any way to the Business or the
Purchased Assets, including, without limitation, liability as a guarantor or
otherwise with respect to the obligations of others except for accounts payable
in the ordinary course of business consistent with past practices.
6.5 INSURANCE. All present insurance insuring AAG, its employees, the
Business or the Purchased Assets wherever located, will be maintained by AAG in
all respects.
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6.6 PRESERVATION OF ORGANIZATION AND EMPLOYEES. AAG will use its best
efforts to preserve the Business intact, to keep available its key employees (if
any), and to preserve the present relationships of AAG with suppliers,
customers, banks and others having business relations with them.
6.7 NO DEFAULT. AAG shall not do any act or omit to do any act, or
permit any act or omission to act, which will cause a material breach of any
material contract, commitment or obligation by which it is bound.
6.8 AUTHORIZATION FROM OTHERS. Prior to the Closing Date, AAG shall
have obtained all authorizations, waivers, consents and permits of others
required to permit the consummation by AAG of the transactions contemplated by
this Agreement or to remove any breach or threatened breach of any
representation, warranty or agreement of AAG herein.
SECTION 7. CONDITIONS PRECEDENT TO WWWX'S OBLIGATIONS
All obligations of WWWX under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions
unless otherwise waived in writing by WWWX:
7.1 REPRESENTATIONS AND WARRANTIES. AAG's representations and
warranties contained in this Agreement or in any list, certificate or document
delivered pursuant to the provisions hereof shall be true at and as of the time
of Closing.
7.2 PERFORMANCE OF AGREEMENTS. AAG shall have performed and complied
with all agreements and conditions required by this Agreement to be performed or
complied by it prior to or at the Closing, including without limitation AAG's
obligation to deliver the Purchased Assets free and clear of liens and
encumbrances in accordance with Section 3.4 hereof and the covenants set forth
in Section 6 hereof.
7.3 ADVERSE CHANGE. There shall not have been a material adverse
change, occurrence or casualty, financial or otherwise, in AAG or AsseTrade or
to the Business or the Purchased Assets, whether covered by insurance or not.
7.4 CLOSING DELIVERIES. AAG shall have delivered the documents and
other items described in Section 3 hereof.
7.5 NO LITIGATION. There shall not be any pending or, to the knowledge
of AAG, threatened action, proceeding or investigation by or before any court,
arbitrator, governmental body or agency which shall seek to restrain, prohibit
or invalidate the transactions contemplated hereby or which, if adversely
determined, would result in a breach of a representation, warranty or covenant
of any party herein.
7.6 DUE DILIGENCE. Prior to Closing, WWWX shall have the right to
conduct a due
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diligence investigation, audit and financial review of the Business and all of
the Purchased Assets and liabilities in order that WWWX, in its sole discretion,
may confirm its understanding and valuation of the Business and the Purchased
Assets and verifying, among other things, no undisclosed liabilities or
potential liabilities of AAG. Such due diligence shall include, without
limitation, all operational, legal, contractual, litigation, employment,
purchasing, marketing, accounting, financial, tax and other aspects of the
Business. If such investigation is not satisfactory to WWWX, for any reason,
WWWX may terminate this Agreement and shall have no further obligation
hereunder. WWWX's conduct of its due diligence shall not in any way relieve AAG
of its obligations and liabilities contained in this Agreement including,
without limitation, the accuracy of the representations and warranties of AAG
set forth in this Agreement.
SECTION 8. CONDITIONS PRECEDENT TO AAG'S OBLIGATIONS
All obligations of AAG under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions
unless otherwise waived in writing by AAG:
8.1 REPRESENTATIONS AND WARRANTIES. WWWX's representations and
warranties contained in this Agreement shall be true at and as of the time of
Closing.
8.2 PERFORMANCE OF AGREEMENTS. WWWX shall have performed and complied
with all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
8.3 CLOSING DELIVERIES. WWWX shall have delivered the WWWX Stock to AAG
in exchange for the Purchased Assets.
8.4 NO LITIGATION. There shall not be any pending or threatened action,
proceeding or investigation by or before any court, arbitrator, governmental
body or agency which shall seek to restrain, prohibit or invalidate the
transactions contemplated hereby or which, if adversely determined, would result
in a breach of a representation, warranty or covenant of any party herein.
SECTION 9. FEES AND EXPENSES
9.1 REPRESENTATION AND INDEMNITY WITH RESPECT TO BROKERS. Each party
hereby represents and warrants to the other that it has not engaged or dealt
with any broker or other person who may be entitled to any brokerage fee or
commission in respect of the execution of this Agreement or the consummation of
the transactions contemplated hereby. Without limiting the generality of the
foregoing, each of the parties hereto shall indemnify and hold the other
harmless against any claim, loss, liability or expense which may be asserted
against such other party as a result of such first mentioned party's dealings,
arrangements or agreements with any such broker or person.
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9.2 EXPENSES OF THE TRANSACTION. Each party hereto shall pay its own
expenses incidental to the preparation of this Agreement and the consummation of
the transactions contemplated hereby.
9.3 SALES, TRANSFER AND DOCUMENTARY STAMPS. WWWX shall be responsible
for payment of all sales, transfer and documentary taxes or stamps, if any, due
as a result of the transfer of the Purchased Assets hereunder.
SECTION 10. INDEMNIFICATION
10.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties, covenants and agreements made by any party in this
Agreement or in any certificate delivered pursuant hereto shall survive the
Closing.
10.2 INDEMNIFICATION BY AAG. AAG shall defend, indemnify and hold WWWX
harmless from and against (a) any and all liabilities and obligations of, or
claims against, AAG arising or accruing prior to the Closing and (b) all actual
or potential claims, demands, liabilities, damages, losses and out-of-pocket
expenses including reasonable attorneys' fees whether or not reduced to
judgment, order or award, caused by or arising out of (i) the breach of any
covenant or agreement of AAG in this Agreement or in any certificate delivered
by it or them pursuant hereto, or (ii) the failure of any representations or
warranties made by AAG in this Agreement or in any certificate delivered by it
or them pursuant hereto to have been true and correct when made and on and as of
the Closing Date.
10.3 INDEMNIFICATION BY WWWX. WWWX shall defend, indemnify and hold AAG
harmless from and against all actual or potential claims, demands, liabilities,
damages, losses and out-of-pocket expenses including reasonable attorneys' fees
whether or not reduced to judgment, order or award, caused by or arising out of
(a) the breach of any covenant or agreement of WWWX in this Agreement or in any
certificate delivered by its pursuant hereto, or (b) the failure of any
representations or warranties made by WWWX in this Agreement or in any
certificate delivered by its pursuant hereto to have been true and correct when
made and on and as of the Closing Date.
10.4 NOTICE OF INDEMNIFICATION. In the event any legal proceeding shall
be threatened or instituted or any claim or demand shall be asserted by any
person or entity in respect of which payment may be sought by one party hereto
from another party under the provisions of this Section 10, the party seeking
indemnification (the "INDEMNITEE") shall promptly cause written notice of the
assertion of any such claim of which it has knowledge which is covered by this
indemnity to be forwarded to the other party (the "INDEMNITOR"); provided,
however, that failure of the Indemnitee to give the Indemnitor notice as
provided in this Section shall not relieve the Indemnitor of its obligations
hereunder except to the extent that the Indemnitor shall have been prejudiced by
such failure. Any notice of a claim by reason of any of the representations,
warranties or covenants contained in this Agreement shall state in reasonable
detail the representation, warranty or covenant with respect to which the claim
is made, the facts giving rise to an alleged basis for the claim, and the amount
of the liability asserted against the Indemnitor by reason of the claim.
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10.5 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS. Except as
otherwise provided herein, in the event of the initiation of any legal
proceeding against an Indemnitee by a third party, the Indemnitor shall be
entitled to assume the defense thereof, at the Indemnitor's sole expense. If the
Indemnitor assumes the defense of any legal proceeding, it will not settle the
legal proceeding without the prior written consent of the Indemnitee (which
shall not be unreasonably withheld or delayed). The Indemnitee shall cooperate
in all reasonable respects with the Indemnitor and its attorneys in the
investigation, trial and defense of any legal proceeding and any appeal arising
therefrom (including the filing in the Indemnitee's name of appropriate cross
claims and counterclaims). The Indemnitee may, at its own cost, participate in
any investigation, trial and defense of such legal proceeding controlled by the
Indemnitor and any appeal arising therefrom. If after receipt of a written
notice pursuant to Section 10.4 hereof, the Indemnitor does not undertake to
defend any such legal proceeding, the Indemnitee may, but shall have no
obligation to, contest or defend against any legal proceeding and the Indemnitor
shall be bound by the result obtained with respect thereto by the Indemnitee
(including, without limitation, the settlement thereof without the consent of
the Indemnitor). If there are one or more legal defenses available to the
Indemnitee that conflict with those available to the Indemnitor, the Indemnitee
shall have the right, at the expense of the Indemnitor, to assume the defense of
the legal proceeding; provided, however, that in any event the Indemnitee may
not settle such legal proceeding without the consent of the Indemnitor, which
consent shall not be unreasonably withheld or delayed. As used herein, a "legal
proceeding" includes any judicial, administrative or arbitral action, suit,
proceeding (public or private), claim or governmental proceeding.
10.6 PAYMENT OF INDEMNIFICATION AMOUNTS. Amounts payable by the
Indemnitor to the Indemnitee in respect of any claims hereunder shall be payable
by the Indemnitor as incurred by the Indemnitee.
10.7 RIGHT OF WWWX SUCCESSORS TO ENFORCE. AAG agrees that the
provisions of this Section 10 shall inure to the benefit of, and may be enforced
by, any successor to the interests of WWWX (by assignment, merger, operation of
law or otherwise, and regardless of whether such successor acquires such
interests directly from WWWX), holding all or any part of the Purchased Assets
("WWWX SUCCESSOR"), to the same extent as if the representations, warranties,
covenants and agreements of AAG contained in this Agreement had been made
directly to such WWWX Successor. AAG further agrees that it shall execute and
deliver to any WWWX Successor such further agreements, instruments or other
documents as may be reasonably required to affirm the obligations of AAG and the
rights of such WWWX Successor hereunder.
SECTION 11. POST-CLOSING MATTERS; NON-COMPETITION AGREEMENT
11.1 FURTHER ASSURANCES. At the request of WWWX or any WWWX Successor
from time to time, AAG shall without further cost to WWWX or such WWWX
Successor, at any time and from time to time, promptly do, execute, acknowledge
and deliver, or cause to be done, executed, acknowledged and delivered, to WWWX
or such WWWX Successor, as the case may be, all such further acts, transfers,
assignments, deeds, powers and assurances of title, and additional papers and
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instruments, and will do or cause to be done all acts or things as often as may
be proper or necessary or advisable for better assuring, conveying, transferring
and assigning the Purchased Assets and effectively to carry out the intent
hereof, and to vest in WWWX or, as applicable, any WWWX Successor, the entire
right, title and interest in and to all of the Purchased Assets.
11.2 RESPONSIBILITY FOR LITIGATION. AAG shall be responsible for all
present or future litigation and claims for injury and related expenses arising
out of the conduct of the Business up to the time of Closing.
11.3 TRADE SECRETS/NON-COMPETITION AGREEMENT.
a. AAG shall not at any time after the Closing use for its or their own
benefit, or divulge to any other person, firm or corporation, any confidential
information or trade secrets relating in any way to the Business, and at the
Closing, AAG shall deliver to WWWX all lists of customers, books, records, trade
secrets, intellectual property and all other property constituting confidential
information belonging to AAG and related to the Business. For the purposes
hereof, the term "CONFIDENTIAL INFORMATION" means any and all information
related to the customers, buyers, sellers and marketing relationships, and
business and financial information of the Business.
b. As a material inducement to WWWX to enter into this Agreement, in
consideration of the Purchase Price paid hereunder, and for other good and valid
consideration, the receipt and sufficiency of which is hereby acknowledged, as
well as in recognition of the fact that the value of the Purchased Assets would
be diminished substantially if AAG were to engage in any business or activities
in competition with the Business, AAG covenants and agrees that, except as
required in the performance of their duties set forth in this Agreement or any
other written agreement with WWWX or any WWWX Successor, it will not for a
period of two (2) years after the Closing Date engage directly or indirectly,
whether individually or in partnership or in conjunction with any other person,
firm, association, syndicate or corporation, as principal, agent, shareholder,
employee, consultant or in any other manner whatsoever, in any business activity
competitive with the Business.
c. AAG agrees that any violation of any of the covenants in this
Section would cause substantial and irreparable injury to WWWX or any WWWX
Successor, whereupon AAG may be enjoined from any breach or threatened breach
thereof in addition to, but not in limitation of, any of the rights or remedies
to which WWWX or any such WWWX Successor is or may be entitled to at law or in
equity or under this Agreement.
d. AAG agrees that the limitations set forth above are reasonable in
time and geographic scope, and if any provision hereof is held invalid or
unenforceable, the remainder shall nevertheless remain in full force and effect.
In particular, AAG and the Shareholders agree that if any court of competent
jurisdiction shall determine that the duration or geographical limit of the
foregoing non-competition covenant is invalid, unreasonable or unenforceable, it
is the intention of AAG and WWWX that it shall not be terminated thereby but
shall be deemed to have been amended to the
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extent required to render it valid and enforceable, such amendment to apply only
with respect to the jurisdiction of the court making such adjudication.
11.4 RIGHT OF WWWX SUCCESSORS TO ENFORCE. AAG and the Shareholders
agree that the provisions of this Section 11 shall inure to the benefit of, and
may be enforced by, any WWWX Successor, to the same extent as if the
representations, warranties, covenants and agreements of AAG had been made
directly to such WWWX Successor, and with the further understanding and
agreement that the term "Business" as used herein shall include the Business as
conducted by any such WWWX Successor. AAG further agrees that it shall execute
and deliver to any WWWX Successor such further agreements, instruments or other
documents as may be reasonably required to affirm the obligations of AAG and the
rights of such WWWX Successor hereunder.
SECTION 12. MISCELLANEOUS
12.1 GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New Jersey. The
parties hereto agree that jurisdiction shall be proper in the courts of the
State of New Jersey and consent to jurisdiction and venue therein.
12.2 ASSIGNMENT. This Agreement shall not be assignable by any party
without the prior written approval of the other party. Notwithstanding the
foregoing, WWWX may, without the consent of AAG or the Shareholders, assign its
rights under Sections 10 and 11 hereof to any WWWX Successor as provided
therein, it being the intent of the parties that any such WWWX Successor shall
be a third party beneficiary of such rights. To the extent assignable, this
Agreement shall be binding upon, and inure to the benefit of, WWWX, AAG, and
their respective heirs, personal representatives, successors and assigns.
12.3 HEADINGS FOR REFERENCE ONLY. The section and paragraph headings in
this Agreement are for convenience of reference only and shall not be deemed to
modify or limit the provisions of this Agreement.
12.4 NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered by confirmed fax,
personally, or by recognized overnight courier, or four days after being mailed
by registered mail, return receipt requested, to a party at the following
address (or to such other address as such party may have specified by notice
given to the other party pursuant to this provision):
If to WWWX: World Wide Web NetworX Corporation
3000 Atrium Way, Suite 202
Mt. Laurel, NJ 08054
Attention: Robert D. Kohn
Fax no. (609) 273-6913
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If to AAG: Admiral Asset Group, Inc.
572 Route 130
Hightstown, NJ 08520
Attention: Kathryn Berman
Fax no. (609) 448-8126
12.5 ENTIRE AGREEMENT AND AMENDMENT. This document and the Exhibits and
Schedules hereto contain the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and supersede all prior or
contemporaneous agreements, understandings, representations and warranties
between the parties and may not be amended except by written instrument executed
by the parties hereto.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
ATTEST: WORLD WIDE WEB NETWORX CORPORATION
By: By//s// ROBERT D. KOHN
---------------------- --------------------------------
Title: Title: President
ATTEST: ADMIRAL ASSET GROUP, INC.
By: By://s// KATHRYN BERMAN
---------------------- --------------------------------
Title: Title: President
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LIST OF EXHIBITS AND SCHEDULES
SCHEDULE A Admiral Asset Operating Budget
Draft 3/14/99
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Exhibit 10.16
AGREEMENT
WorldWide Web NetworX Corporation ("WWWX") and Alexander, Wescott &
Co., Inc. ("AW") have entered into this Agreement dated April 16, 1999.
WHEREAS, WWWX and AW are parties to an agency agreement dated on or
about December 16, 1998 (the "Agency Agreement"), relating to the private
placement offering of securities of WWWX by.
WHEREAS, both WWWX and AW wish to resolve any and all disputes and
claims now existing or which may arise in the future in connection with the
Agency Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. As full and complete settlement of any and all claims AW may have now
or in the future against WWWX, its subsidiaries, officers, directors,
employees, and agents, WWWX agrees to issue to AW a total of 100,000
shares of its restricted common stock (the "Shares"). The Shares shall
be registered by WWWX upon the same terms and conditions as all shares
to be issued to AW pursuant to the terms of the Agency Agreement.
2. The Shares are in addition to the 98,950 shares of restricted common
stock to be issued to AW as part of AW's compensation pursuant to the
terms of the Agency Agreement.
3. The parties agree that the issuance of the Shares to AW will release
WWWX, its subsidiaries, officers, directors, employees and agents from
any and all further claims of and obligations to AW under the terms of
the Agency Agreement, except as to the registration rights described in
the Agency Agreement.
4. The parties agree that the execution, delivery, and performance of this
Agreement shall have been approved by all necessary corporate action of
the respective parties and further agree that the parties shall execute
and deliver any and all documents which are reasonably necessary to
consummate the terms of this Agreement.
5. This Agreement shall be governed and construed in accordance with the
laws of the state of New York without giving effect to conflicts of
law.
IN WITNESS WHEREOF, the parties have signed this Agreement on the date
written above.
WorldWide Web NetworX Corporation Alexander, Wescott & Co., Inc.
By: //s// Robert D. Kohn By: //s// Rich Bach
------------------------------ ------------------------------
Robert D. Kohn, CEO Rick Bach, Chairman
<PAGE>
Exhibit 10.17
AMENDMENT TO THE FEBRUARY 26, 1999 AGREEMENT WHERE
APPLICABLE
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (this "AGREEMENT") is dated as of April 28,
1999, by and between JENCOM DIGITAL TECHNOLOGIES, LLC, a Delaware company
("JenCom"), and WORLDWIDE WEB NETWORX CORPORATION, a Delaware corporation
("WWWX").
RECITALS
A. JenCom holds certain assets as described herein (the "JENCOM
ASSETS") as per Schedule A.
B. JenCom desires to sell the JenCom Assets (the "PURCHASED ASSETS") to
WWWX, and WWWX desires to acquire the Purchased Assets, on the terms and subject
to the conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties agree
as follows:
SECTION 1. PURCHASE AND SALE
1.1 AGREEMENT TO SELL. At the Closing (hereinafter defined), JenCom
shall sell, grant, convey, transfer, assign and deliver to WWWX, upon the terms
and subject to the conditions of this Agreement, free and clear of all liens,
encumbrances and charges of any kind, all of the JenCom Assets. As used herein,
the "JenCom Assets" shall include all of JenCom's right, title and interest in
and to the assets set forth in Schedule A hereto and any inventories, accounts
receivable, trade secrets, customer lists, goodwill, intellectual property,
contracts, books and records, telephone numbers, licenses, permits, software,
hardware and disks, data files (whether on disks or other media), logos,
trademarks, tradenames, marketing materials, technology and technical know-how
relating to the Purchased Assets only.
1.2 AGREEMENT TO PURCHASE. At the Closing, WWWX shall acquire from
JenCom, upon the terms and subject to the conditions of this Agreement and in
reliance upon the representations and warranties of JenCom in this Agreement and
in the Exhibits and Schedules hereto, the Purchased Assets and, as consideration
therefor, shall pay to JenCom the Purchase Price (hereinafter defined).
SECTION 2. PURCHASE PRICE; NO ASSUMPTION OF LIABILITIES
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2.1 PURCHASE PRICE. In consideration for the Purchased Assets and the
Non-Competition Agreement set forth below (the "PURCHASE PRICE"), WWWX shall
simultaneously herewith cause to be issued and deliver to JenCom Two Million
(2,000,000) fully paid and non-assessable restricted shares of the common stock
of WWWX (the "WWWX Stock"), which shares are being issued in a private placement
subject to all applicable Federal and State securities laws, regulations and
restrictions, and shall bear a legend to that effect.
WWWX covenants and agrees that, as a condition to closing hereunder, it is
simultaneously herewith contributing the Purchased Assets to WWWX-JenCom, LLC, a
newly-formed Delaware limited liability company which will be owned 50% by
JenCom and 50% by WWWX (the "LLC"). It is understood that WWWX had loaned to
JenCom $900,000.00 as a ten-year interest free loan and that said loan has been
transferred to the books of the LLC. The $900,000 will accordingly be recorded
as an interest free members' loan which will be further used by the Manager of
the LLC in connection with the operations and development of the LLC. The loan
is to be repaid at the earliest of the following: (1) ten years from March 15,
1999, or (2) an investment into the LLC of a minimum of $10,000,000, or (3) the
sale of any asset exceeding $5,000,000.
2.2 PERFORMANCE BONUS. As additional consideration, WWWX shall issue
Three Million (3,000,000) additional restricted shares of WWWX common stock
("WWWX PERFORMANCE STOCK") to JenCom immediately upon the earliest to occur of
(i) a bona fide, independent, mutually agreeable qualified third party valuation
of $30,000,000 for the JenCom Assets, or (ii) the JenCom Assets produce an
aggregate of $2,000,000 profit before taxes by December 31, 2000 , or (iii) a
US Patent issued by June 1, 2000 for the ICUC product. If none of the
performance events occur, no WWWX Performance Stock will be issued.
2.3 NO ASSUMPTION OF LIABILITIES. WWWX is not assuming or agreeing to
pay or discharge any of the liabilities and obligations of JenCom, whether or
not associated with or arising out of the JenCom Assets to the date hereof, and
nothing in this Agreement or otherwise shall be construed to the contrary. All
such liabilities and obligations, whether known or unknown, direct or
contingent, in litigation or threatened or not yet asserted with respect to any
aspect of the JenCom Assets to the date hereof are and shall remain the
responsibility of JenCom. Without limiting the generality of the foregoing,
JenCom shall remain specifically responsible for (a) any liabilities with
respect to any Taxes (as herein defined), (b) any obligation for any employee
grievance pending at the Closing Date or accruing prior to the Closing Date, (c)
any obligation with respect to any litigation accruing or arising prior to the
Closing Date, and (d) any obligations for trade accounts payable owed on the
Closing Date. Further, in no event shall WWWX assume or incur any liability or
obligation with respect to any Taxes payable by JenCom incident to or arising as
a consequence of the consummation by JenCom of this Agreement or any cost or
expense incurred by JenCom incident to or arising as a consequence of such
consummation of the negotiations in connection with this Agreement.
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SECTION 3. CLOSING; TRANSFER PROCEDURES
3.1 CLOSING. The closing of the sale and purchase of the Purchased
Assets (the "CLOSING") shall be held at 10 a.m., local time, on April 28, 1999
(the "CLOSING DATE") at the offices of WWWX, or on such other date and at such
other time or place as the parties may agree in writing.
3.2 TRANSFER OF THE PURCHASED ASSETS. At the Closing, JenCom shall
deliver to WWWX such bills of sale, endorsements, stock certificates,
assignments and instruments of conveyance and transfer, in form and substance
reasonably satisfactory to WWWX, as shall be reasonably required to vest in WWWX
all of JenCom's right, title and interest in and to the Purchased Assets free
and clear of all liens and encumbrances as provided in Section 3.4. The form of
Bill of Sale is attached hereto as Schedule 3.2.
3.3 PURCHASE PRICE. At the Closing, WWWX shall deliver to JenCom the
WWWX Stock, in accordance with Section 2 hereof.
3.4 RELEASE OF LIENS. JenCom represents and warrants that there are no
liens on the Purchased Assets and that, accordingly, no release of lien is
necessary.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF JENCOM
JenCom hereby represents and warrants to WWWX, intending for WWWX to
rely hereon, as follows:
4.1 ORGANIZATION AND GOOD STANDING. JenCom is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware.
4.2 BUSINESS PLAN. Within thirty (30) days of the Closing, JenCom will
deliver a business plan ("Business Plan") for the Business. The Business Plan
will represent, to the knowledge of JenCom, the present condition of the
Business, and present, to JenCom's knowledge, the future prospects of the
Business for the periods indicated therein. There has been no material adverse
change in the condition or future prospects of the Business, and no fact is
known to JenCom which materially adversely affects or in the future may
materially adversely affect the financial condition or future prospects of the
Business.
4.3 TITLE TO JENCOM ASSETS. JenCom owns outright, and has good and
marketable title to, all of the JenCom Assets free and clear of all liens,
pledges, mortgages, security interests, conditional sales contracts or other
encumbrances or conflicting claims of any nature.
4.4 TAX MATTERS. JenCom has filed or caused to be filed all Tax Returns
(as defined herein) through the taxable year ended December 31, 1998 if due or
required to be filed and have paid or caused to be paid all Taxes due through
the date hereof and any assessment of Taxes
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received, except Taxes or assessments that are being contested in good faith and
have been adequately reserved against. JenCom has received no notice of, and to
the knowledge of JenCom, there is no pending or threatened proceeding or claim
by any governmental agency for assessment or collection of Taxes from JenCom.
All such Tax Returns have been prepared on the same basis as that of previous
years and in accordance with all applicable laws, regulations and requirements,
and accurately reflect the taxable income (or other measure of Tax) of JenCom.
JenCom has satisfied all Federal, state, local and foreign withholding tax
requirements including but not limited to income, social security and employment
tax. There are no liens for Taxes on any of the Purchased Assets. No transaction
contemplated by this Agreement is subject to withholding under Section 1445 of
the Internal Revenue Code of 1986, as amended (the "Code"). As used herein,
"Tax" or "Taxes" means any federal, state, local and foreign income, payroll,
withholding, excise, sales, use, personal property, use and occupancy, business
and occupation, mercantile, real estate, gross receipts, license, employment,
severance, stamp, premium, windfall profits, social security (or similar
unemployment), disability, transfer, registration, value added, alternative, or
add-on minimum, estimated, or capital stock and franchise and other tax of any
kind whatsoever, including any interest, penalty or addition thereto, whether
disputed or not, and "Tax Returns" means all returns, reports, forms,
declarations, claims for refunds or other information required to be filed or
supplied to any person including a taxing authority in connection with Taxes
(including without limitation information returns and declarations of estimated
Tax) (Any reference to "filed" or "file" with respect to Taxes shall also be
deemed to include "supplied" or "supply").
4.5 LITIGATION. Except as may be disclosed in any Schedule attached
hereto and incorporated herein:
(a) there is no dispute, claim, action, suit, proceeding, arbitration
or governmental investigation, either administrative or judicial, pending, or to
the knowledge of JenCom threatened, against JenCom, the Business or the
Purchased Assets; and
(b) JenCom is not in default with respect to any order, writ,
injunction or decree of any court or governmental department, commission, board,
bureau, agency or instrumentality, which involves the possibility of any
judgment or liability which may result in any material adverse change in the
financial condition of JenCom, the Business or the Purchased Assets.
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. JenCom has no knowledge of
liabilities or obligations accrued, absolute, contingent or otherwise relating
to the Purchased Assets, except those incurred in the normal and ordinary course
of the Business, and none of which is material and adverse.
4.7 MATERIAL CONTRACTS. As used herein, the term "JenCom Material
Contract" means any agreement which involves payments to or from JenCom relating
to the JenCom Assets or the Business in excess of $10,000.00 per year. Each of
the JenCom Material Contracts constitutes a legal, valid and binding obligation
of the parties thereto, is in full force and effect and will continue in full
force and effect following the consummation of the transactions contemplated
herein and
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hereby, in each case without breaching the terms thereof or resulting in the
forfeiture or impairment of any rights thereunder and without the consent,
approval or act of, or the making of any filing with, any other party. JenCom is
not in, or to its knowledge alleged to be in, breach or default under, nor is
there or is there alleged to be any basis for termination of, any JenCom
Material Contract and, to the best knowledge of JenCom, no other party to any
JenCom Material Contract has breached or defaulted thereunder, and no event has
occurred and no condition or state of facts exists which, with the passage of
time or the giving of notice or both, would constitute such a default or breach
by JenCom or, to the best of the knowledge of JenCom, by any such other party.
JenCom is not currently renegotiating any JenCom Material Contract and is not
paying liquidated damages in lieu of the performance thereunder.
4.8 INTANGIBLE ASSETS. The Business Plan described in Section 4.2 will
set forth a list of (a) all patents, copyrights, trade names, trademarks,
service marks and names (registered or unregistered), and applications and
registrations therefor, (b) all research, development and commercially practiced
processes, trade secrets, know-how, inventions, and engineering and other
technical information, (c) all computer programs, software and data bases owned
by or licensed relating to the JenCom Assets, (d) all information, drawings,
specifications, designs, plans, financial, marketing and business data and
plans, other proprietary, confidential or intellectual information or property
and all copies and embodiments thereof in whatever form or medium and (e) all
customer and membership lists relating to the JenCom Assets (collectively,
"INTANGIBLE ASSETS") as well as a list of all registrations thereof and pending
applications therefor. Each of the Intangible Assets listed on such schedule as
being owned by JenCom is owned by JenCom free and clear of any and all liens and
encumbrances and, to the knowledge of JenCom, no other person or entity has any
claim of ownership with respect thereto. JenCom has adequate licenses or other
valid rights to use all of the Intangible Assets which it does not own and which
are material to the conduct of the Business. To the knowledge of JenCom, its use
of the Intangible Assets does not conflict with, infringe upon, violate or
interfere with any intellectual property rights of any other person or entity,
nor is any other person or entity infringing upon, violating or interfering with
any intellectual property rights of JenCom. JenCom will assign all patent,
copyright, and trademark registrations related to the JenCom Assets to
WWWX-JenCom, LLC, at closing.
4.9 COMPLIANCE WITH LAWS. JenCom has complied with and is not in
default under, or in violation of, any law, ordinance, rule, regulation or order
(including, without limitation, any environmental, safety, employee benefit,
health or price or wage control law, ordinance, rule, regulation or order)
applicable to the Business which materially adversely affect or, so far as
JenCom can now foresee, may in the future materially adversely affect, the
Business or the Purchased Assets.
4.10 AUTHORIZATION. The execution and delivery of this Agreement, and
the sale, transfer and other actions contemplated hereby have been duly
authorized, including, with respect to JenCom, by all necessary action of its
Manager and neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein by JenCom constitutes a
violation or breach of applicable law or any contract or instrument to which
JenCom is a party or by which it is bound, or any order, writ, injunction,
decree or judgment applicable to it, or constitutes
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a default (or would but for the giving of notice or lapse of time or both,
constitute a default) under any contract or instrument to which JenCom is a
party or by which it or they are bound, or conflicts with or violates any
provision of the Articles of Organization of JenCom. Without limiting the
generality of the foregoing provisions, the execution and delivery by JenCom of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) result in a violation or default or give to any other person any rights,
including rights of termination, cancellation or acceleration under any
applicable law, rule or regulation, any agreement, instrument or policy to which
JenCom is a party or may be bound, (ii) result in any judgment, order,
injunction, decree or ruling of any court or governmental authority to which
JenCom is a party or subject or (iii) require any authorization, consent,
approval, exemption or other action by any court or administrative or
governmental body which has not been obtained or any notice to or filing with
any court or administrative or governmental body which has not been given or
done. This Agreement has been duly executed and delivered by JenCom and
constitutes the legal, valid and binding obligation of JenCom enforceable in
accordance with its terms.
4.11 CONSENTS. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any person,
entity or governmental body is required on the part of JenCom in connection with
the execution and delivery by JenCom of this Agreement, or the compliance by
JenCom with any of the provisions hereof.
4.12 INVESTMENT REPRESENTATIONS.
(a) JenCom will not sell, transfer or otherwise dispose of any of the
shares of WWWX Stock being acquired by JenCom, in any manner, unless at the time
of such transfer: (i) a registration under the Securities Act of 1933, as
amended (the "SECURITIES ACT") and under all other applicable securities laws is
in effect with respect to the shares of the WWWX Stock to be sold, transferred
or disposed of, and JenCom complies with all of the requirements of the
Securities Act and such other applicable securities laws with respect to the
proposed transaction; or (ii) JenCom has obtained and has provided to WWWX
satisfactory evidence that the proposed sale, transfer or disposition does not
require registration under the Securities Act or such other applicable
securities laws;
(b) The shares of WWWX Stock being acquired by JenCom have not been
issued by WWWX pursuant to a registration under the Securities Act, and JenCom
must therefore hold such shares indefinitely unless a subsequent registration or
exemption therefrom is available and is obtained. No federal or state agency has
approved or disapproved the shares of WWWX Stock being acquired by JenCom for
investment or any other purpose. All of the shares of WWWX Stock being acquired
by JenCom have been issued and sold to JenCom in reliance upon a specific
exemption from the registration requirements of the Securities Act which
depends, in part, upon the accuracy of JenCom's representations, warranties and
agreements set forth in this Agreement.
4.13 DISCLOSURE. No representation or warranty by JenCom in this
Agreement or in any other Exhibit, Schedule, list, certificate or document
delivered pursuant to this Agreement, contains or will contain at Closing any
untrue statement of material fact or omits or will omit to state any
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material fact necessary to make any statement herein and therein not misleading.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF WWWX
WWWX hereby represents and warrants to JenCom, intending for JenCom to
rely hereon, as follows:
5.1 ORGANIZATION AND GOOD STANDING. WWWX is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
5.2 AUTHORIZATION. The execution and delivery of this Agreement and
other actions contemplated hereby have been duly authorized by all necessary
action of the Boards of Director and shareholders of WWWX, and neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein by WWWX constitutes a violation or breach of
applicable law or any contract or instrument to which WWWX is a party or is
bound, or any order, writ, injunction, decree or judgment applicable to it, or
constitutes a default (or would but for the giving of notice or lapse of time or
both, constitute a default) under any contract or instrument to which WWWX is a
party or by which it is bound, or conflicts with or violates any provision of
the Articles of Incorporation or By-Laws of WWWX. Without limiting the
generality of the foregoing provisions, the execution and delivery by WWWX of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) result in a violation or default or give to any other person any rights,
including rights of termination, cancellation or acceleration under any
applicable law, rule or regulation, any agreement, instrument or policy to which
WWWX is a party or may be bound, (ii) result in any judgment, order, injunction,
decree or ruling of any court or governmental authority to which it is a party
or subject or (iii) require any authorization, consent, approval, exemption or
other action by any court or administrative or governmental body which has not
been obtained or any notice to or filing with any court or administrative or
governmental body which has not been given or done. This Agreement has been duly
executed and delivered by WWWX and constitutes the legal, valid and binding
obligation of WWWX enforceable in accordance with its terms.
5.3 CONSENTS. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any person,
entity or governmental body is required on the part of WWWX in connection with
the execution and delivery by WWWX of this Agreement, or the compliance by WWWX
with any of the provisions hereof.
5.4 DISCLOSURE. No representation or warranty by WWWX in this Agreement
or in any other Exhibit, Schedule, list, certificate or document delivered
pursuant to this Agreement, contains or will contain at Closing any untrue
statement of material fact or omits or will omit to state any material fact
necessary to make any statement herein and therein not misleading.
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SECTION 6. FEES AND EXPENSES
6.1 EXPENSES OF THE TRANSACTION. Each party hereto shall pay its own
expenses incidental to the preparation of this Agreement and the consummation of
the transactions contemplated hereby.
6.2 SALES, TRANSFER AND DOCUMENTARY STAMPS. WWWX shall be responsible
for payment of all sales, transfer and documentary taxes or stamps, if any, due
as a result of the transfer of the Purchased Assets hereunder.
SECTION 7. INDEMNIFICATION
7.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties, covenants and agreements made by any party in this
Agreement or in any certificate delivered pursuant hereto shall survive the
Closing for a period of one (1) year. Any claim that involves allegations of
fraud will be covered under the applicable legal statute of limitations or the
one year period as noted, whichever is longer.
7.2 INDEMNIFICATION BY JENCOM. JenCom shall defend, indemnify and hold
WWWX harmless from and against (a) any and all liabilities and obligations of,
or claims against, JenCom arising or accruing prior to the Closing and (b) all
actual or potential claims, demands, liabilities, damages, losses and
out-of-pocket expenses including reasonable attorneys' fees whether or not
reduced to judgment, order or award, caused by or arising out of (i) the breach
of any covenant or agreement of JenCom in this Agreement or in any certificate
delivered by it or them pursuant hereto, or (ii) the failure of any
representations or warranties made by JenCom in this Agreement or in any
certificate delivered by it or them pursuant hereto to have been true and
correct when made and on and as of the Closing Date.
7.3 INDEMNIFICATION BY WWWX. WWWX shall defend, indemnify and hold
JenCom harmless from and against all actual or potential claims, demands,
liabilities, damages, losses and out-of-pocket expenses including reasonable
attorneys' fees whether or not reduced to judgment, order or award, caused by or
arising out of (a) the breach of any covenant or agreement of WWWX in this
Agreement or in any certificate delivered by its pursuant hereto, or (b) the
failure of any representations or warranties made by WWWX in this Agreement or
in any certificate delivered by its pursuant hereto to have been true and
correct when made and on and as of the Closing Date.
7.4 NOTICE OF INDEMNIFICATION. In the event any legal proceeding shall
be threatened or instituted or any claim or demand shall be asserted by any
person or entity in respect of which payment may be sought by one party hereto
from another party under the provisions of this Section 7, the party seeking
indemnification (the "INDEMNITEE") shall promptly cause written notice of the
assertion of any such claim of which it has knowledge which is covered by this
indemnity to be forwarded to the other party (the "INDEMNITOR"); provided,
however, that failure of the Indemnitee
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to give the Indemnitor notice as provided in this Section shall not relieve the
Indemnitor of its obligations hereunder except to the extent that the Indemnitor
shall have been prejudiced by such failure. Any notice of a claim by reason of
any of the representations, warranties or covenants contained in this Agreement
shall state in reasonable detail the representation, warranty or covenant with
respect to which the claim is made, the facts giving rise to an alleged basis
for the claim, and the amount of the liability asserted against the Indemnitor
by reason of the claim.
7.5 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS. Except as
otherwise provided herein, in the event of the initiation of any legal
proceeding against an Indemnitee by a third party, the Indemnitor shall be
entitled to assume the defense thereof, at the Indemnitor's sole expense. If the
Indemnitor assumes the defense of any legal proceeding, it will not settle the
legal proceeding without the prior written consent of the Indemnitee (which
shall not be unreasonably withheld or delayed). The Indemnitee shall cooperate
in all reasonable respects with the Indemnitor and its attorneys in the
investigation, trial and defense of any legal proceeding and any appeal arising
therefrom (including the filing in the Indemnitee's name of appropriate cross
claims and counterclaims). The Indemnitee may, at its own cost, participate in
any investigation, trial and defense of such legal proceeding controlled by the
Indemnitor and any appeal arising therefrom. If after receipt of a written
notice pursuant to Section 9.4 hereof, the Indemnitor does not undertake to
defend any such legal proceeding, the Indemnitee may, but shall have no
obligation to, contest or defend against any legal proceeding and the Indemnitor
shall be bound by the result obtained with respect thereto by the Indemnitee
(including, without limitation, the settlement thereof without the consent of
the Indemnitor). If there are one or more legal defenses available to the
Indemnitee that conflict with those available to the Indemnitor, the Indemnitee
shall have the right, at the expense of the Indemnitor, to assume the defense of
the legal proceeding; provided, however, that in any event the Indemnitee may
not settle such legal proceeding without the consent of the Indemnitor, which
consent shall not be unreasonably withheld or delayed. As used herein, a "legal
proceeding" includes any judicial, administrative or arbitral action, suit,
proceeding (public or private), claim or governmental proceeding.
7.6 PAYMENT OF INDEMNIFICATION AMOUNTS. Amounts payable by the
Indemnitor to the Indemnitee in respect of any claims hereunder shall be payable
by the Indemnitor as incurred by the Indemnitee.
7.7 RIGHT OF WWWX AND JENCOM SUCCESSORS TO ENFORCE. JenCom and WWWX
agree that the provisions of this Section 7 shall inure to the benefit of, and
may be enforced by, any successor to the interests of JenCom or WWWX (by
assignment, merger, operation of law or otherwise, and regardless of whether
such successor acquires such interests directly from WWWX or JenCom), holding
all or any part of the Purchased Assets ("SUCCESSORS"), to the same extent as if
the representations, warranties, covenants and agreements of JenCom contained in
this Agreement had been made directly to such WWWX or JenCom Successor. WWWX and
JenCom further agree that it shall execute and deliver to any WWWX or JenCom
Successor such further agreements, instruments or other documents as may be
reasonably required to affirm the obligations of JenCom and the rights of such
WWWX Successor hereunder.
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SECTION 8. POST-CLOSING MATTERS; NON-COMPETITION AGREEMENT
8.1 FURTHER ASSURANCES. At the request of WWWX and JenCom or any WWWX
or JenCom Successor from time to time, JenCom shall without further cost to WWWX
or such WWWX Successor, at any time and from time to time, promptly do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, to WWWX, JenCom or such WWWX Successor or JenCom Successor, as the
case may be, all such further acts, transfers, assignments, deeds, powers and
assurances of title, and additional papers and instruments, and will do or cause
to be done all acts or things as often as may be proper or necessary or
advisable for better assuring, conveying, transferring and assigning the
Purchased Assets and effectively to carry out the intent hereof, and to vest in
the LLC (hereinafter defined) the entire right, title and interest in and to all
of the Purchased Assets.
8.2 RESPONSIBILITY FOR LITIGATION. JenCom shall be responsible for all
present or future litigation and claims for injury and related expenses arising
out of the conduct of the Business up to the time of Closing, including without
limitation, any litigation disclosed on Schedule 4.5 hereto.
8.3 TRADE SECRETS/NON-COMPETITION AGREEMENT WITH WWWX-JENCOM, LLC (THE
"LLC").
a. JenCom and WWWX shall not at any time after the Closing use for its
or their own benefit, or divulge to any other person, firm or corporation, any
confidential information or trade secrets relating in any way to the Business or
the JenCom Assets, and at the Closing, JenCom shall deliver to the LLC all lists
of customers, books, records, trade secrets, intellectual property and all other
property constituting confidential information belonging to JenCom or WWWX and
related to the Business. For the purposes hereof, the term "CONFIDENTIAL
INFORMATION" means any and all information related to the customers, buyers,
sellers and marketing relationships, and business and financial information of
the Business.
b. As a material inducement to WWWX to enter into this Agreement, in
consideration of the Purchase Price paid hereunder, and for other good and valid
consideration, the receipt and sufficiency of which is hereby acknowledged, as
well as in recognition of the fact that the value of the Purchased Assets would
be diminished substantially if JenCom were to engage in any business or
activities in direct competition with the Business, JenCom covenants and agrees
that, except as required in the performance of its duties set forth in this
Agreement or any other written agreement with WWWX or any WWWX Successor, it
will not for a period of two (2) years after the Closing Date engage directly or
indirectly, whether individually or in partnership or in conjunction with any
other person, firm, association, syndicate or corporation, as principal, agent,
shareholder, employee, consultant or in any other manner whatsoever, in any
business activity competitive with the Business or the LLC.
c. JenCom and its Members agree that any violation of any of the
covenants in this
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Section would cause substantial and irreparable injury to WWWX or any WWWX
Successor, whereupon JenCom may be enjoined from any breach or threatened breach
thereof in addition to, but not in limitation of, any of the rights or remedies
to which WWWX or any such WWWX Successor is or may be entitled to at law or in
equity or under this Agreement.
d. JenCom and its Members agree that the limitations set forth above
are reasonable in time and geographic scope, and if any provision hereof is held
invalid or unenforceable, the remainder shall nevertheless remain in full force
and effect. In particular, JenCom agrees that if any court of competent
jurisdiction shall determine that the duration or geographical limit of the
foregoing non-competition covenant is invalid, unreasonable or unenforceable, it
is the intention of JenCom and WWWX that it shall not be terminated thereby but
shall be deemed to have been amended to the extent required to render it valid
and enforceable, such amendment to apply only with respect to the jurisdiction
of the court making such adjudication.
8.4 RIGHT OF WWWX SUCCESSORS TO ENFORCE. JenCom agrees that the
provisions of this Section 11 shall inure to the benefit of, and may be enforced
by, any WWWX Successor, to the same extent as if the representations,
warranties, covenants and agreements of JenCom had been made directly to such
WWWX Successor. JenCom further agrees that it shall execute and deliver to any
WWWX Successor such further agreements, instruments or other documents as may be
reasonably required to affirm the obligations of JenCom and the rights of such
WWWX Successor hereunder.
SECTION 9. MISCELLANEOUS
9.1 GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware. The parties
hereto agree that jurisdiction shall be proper in the courts of the State of
Delaware and consent to jurisdiction and venue therein.
9.2 ASSIGNMENT. This Agreement shall not be assignable by any party
without the prior written approval of the other party. Notwithstanding the
foregoing, WWWX may, without the consent of JenCom, assign its rights under
Sections 10 and 11 hereof to any WWWX Successor as provided therein, it being
the intent of the parties that any such WWWX Successor shall be a third party
beneficiary of such rights. To the extent assignable, this Agreement shall be
binding upon, and inure to the benefit of, WWWX, JenCom, and their respective
heirs, personal representatives, successors and assigns.
9.3 HEADINGS FOR REFERENCE ONLY. The section and paragraph headings in
this Agreement are for convenience of reference only and shall not be deemed to
modify or limit the provisions of this Agreement.
9.4 NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered by
confirmed fax, personally, or by recognized overnight courier, or
four days after being mailed by registered mail, return receipt
requested, to a party at the following address (or to such other
address
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as such party may have specified by notice given to the other party
pursuant to this provision):
If to WWWX: World Wide Web NetworX Corporation
3000 Atrium Way, Suite 202
Mt. Laurel, NJ 08054
Attention: Robert D. Kohn
Fax no. (609) 489-3495
If to JenCom: JenCom Digital Technologies, LLC
c/o ICES Enterprises, Inc.
220 West 19th Street
New York, NY 10011
Attention: Henry Kauftheil
Fax no. (212) 294-5891
9.5 ENTIRE AGREEMENT AND AMENDMENT. This document and the Exhibits and
Schedules hereto contain the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and supersede all prior or
contemporaneous agreements, understandings, representations and warranties
between the parties and may not be amended except by written instrument executed
by the parties hereto.
9.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
ATTEST: WORLDWIDE WEB NETWORX CORPORATION
By: By://s// ROBERT D. KOHN
------------------------ ------------------------------
Title: Title: President
ATTEST: JENCOM DIGITAL TECHNOLOGIES, LLC
By: By://s// HENRY KAUFTHEIL
------------------------ ------------------------------
Title: Title: Manager
13
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LIST OF EXHIBITS AND SCHEDULES
SCHEDULES
A. JenCom Assets, including intangible assets
Draft 4/20/99
<PAGE>
SCHEDULE A
NETWORK APPLICATION - SNAPP
SNAPP is a user-friendly system that builds an extended educational facility,
enabling educators, students, and parents to continuously participate in a
variety of school activities both curricular and extracurricular in an
interactive multimedia environment. The SNAPP application is designed to give
each school the flexibility to build and update a complete interactive school
Website utilizing leading edge web technologies. Sections such as school news,
calendar, sports, clubs, student and faculty members (including photographs)
come together within one source - all free of charge to the school. Specialty
plug-ins include a multimedia yearbook, fund-raising programs, and a school
CD-ROM creator.
POWER BROKER
Effectively competing in the institutional broker market requires the
appropriate tools to manage trading communities and business processes. JenCom
Digital Technologies new software program, Power Broker, meets this need. Power
Broker provides fund managers with the tools necessary to establish
cross-department (research, sales and trading) business functions that lead to
effective order execution as well as accurate forecasting and fund performance
tracking.
In addition, the software precision provides bankers with client-level detail,
inclusive of prompting for portfolio performance and coupon maturity date. This
allows the bank to more effectively manage and service individual accounts.
Power Broker provides companies with fully customizable environments and runs
on, but is not limited to, the Oracle database, which has been chosen by
industry leaders to be the next-generation database system software for the
banking industry. Power Broker is a leading edge communications and trading
system that products immediate increases in efficiency and productivity.
ICUC
ICUC is a remote control, streaming video technology solution utilizing the
Internet to enable a user to have a monitored view of a predetermined site in
real time and from a remote location. Typical uses include security and distance
management and live event broadcast. ICUC implements standard video player
technology without additional video plug-ins and introduces end use control of a
digital camera.
TRUE SOUND
True Sound is an innovative media compression system designed to accommodate the
sensitivity of the human eye and ear and utilizes a new advanced mathematical
model for compression. Currently, audio compression and transference technology
does not have the functionality to compress sound waves over the Internet or in
other forms of multimedia without deleting a portion of the sound quality (i.e.
bass, treble, etc.). True Sound utilizes a new advanced mathematical model for
sound compression. Targeted at software developers, audio studios, live Internet
broadcasting as well as sound libraries, True Sound offers the highest level of
quality available to meet the market need.
<PAGE>
BILL OF SALE
JenCom Digital Technologies, LLC, a Delaware limited liability company, does
hereby forever sell, transfer, convey and assign to Worldwide Web NetworX
Corporation the assets set forth in Schedule "A attached hereto for the
consideration and in accordance with the terms set forth in the Acquisition
Agreement being executed and delivered simultaneously herewith.
JenCom Digital Technologies, LLC
By://s// HENRY KAUFTHEIL
-----------------------------
Henry Kauftheil, Manager
<PAGE>
Exhibit 10.18
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "Amendment") dated
as of April 30, 1999 is made by and among Artra Group Incorporated ("Artra"), a
Pennsylvania corporation; WorldWide Web NetworX Corporation ("WWWX"), a Delaware
corporation; NA Acquisition Corp. (the "Acquisition Corp."), a Pennsylvania
corporation and a wholly owned subsidiary of WWWX; and WWWX Merger Subsidiary,
Inc. (the "Merger Sub"), a Pennsylvania corporation and a wholly owned
subsidiary of the Acquisition Corp.
BACKGROUND
A. The parties to this Amendment entered into that certain Agreement
and Plan of Merger dated as of February 23, 1999 (the "Merger Agreement"),
pursuant to which Merger Sub will be merged with and into Artra, subject to the
terms and conditions thereof (the "Merger").
B. The Merger Agreement provides that each party's obligation to effect
the Merger is subject to, INTER ALIA, the approval by the holders of the issued
and outstanding shares of capital stock of WWWX (the "WWWX Shareholders"), and
further provides that the Board of Directors of WWWX must take all necessary
action to convene a meeting of the WWWX Shareholders to consider and vote upon
approval of the Merger Agreement.
C. Following the execution and delivery of the Merger Agreement,
Delaware counsel for WWWX issued its written opinion to WWWX, that no vote or
other approval of the WWWX Shareholders is required under Delaware law in
connection with the Merger Agreement. The parties wish to amend the Merger
Agreement to delete any provisions therein requiring approval of the Merger or
the Merger Agreement by the WWWX Shareholders, and to make such other changes
therein as are consistent with such amendment. Capitalized terms used but not
defined herein shall have the meanings given to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
1. AMENDMENT. The Merger Agreement is hereby amended as follows:
(a) Section 4.3 of the Merger Agreement is amended to delete
therefrom all references to the convening of a meeting of the WWWX Shareholders
to consider and vote upon approval of the Merger Agreement, and all references
to actions of the Board of Directors of WWWX to recommend and solicit such
approval.
(b) Section 5.1(a) of the Merger Agreement is amended to
delete therefrom the reference to approval by the WWWX Shareholders as a
condition to the obligations of the parties to effect the Merger.
<PAGE>
(c) Section 6.5 of the Merger Agreement is amended to provide
that the $2,000,000 "break-up" fee payable to Artra as set forth in Section 6.5
shall be payable to Artra only in the event that the representations and
warranties of WWWX, the Acquisition Corp. and the Merger Sub in the first
sentence of Section 2 of this Amendment should be determined by WWWX or a court
of competent jurisdiction to be untrue, and the Merger Agreement is thereafter
terminated solely because any required approval of WWWX's shareholders shall not
have been obtained.
(d) The Merger Agreement is further amended to make such
additional changes in the provisions thereof as are necessary to make them
consistent with the foregoing amendments.
2. REPRESENTATIONS AND WARRANTIES. WWWX, the Acquisition Corp.
and the Merger Sub jointly and severally represent and warrant to Artra that no
vote or other approval of the WWWX Shareholders is required under applicable
law, or under WWWX's certificate or articles of incorporation or by-laws, in
connection with the Merger Agreement.
In addition to the foregoing, each of the parties hereby
represents and warrants to the others as follows:
(a) It has the power to execute and deliver this Amendment and
has taken all necessary action to authorize the execution and delivery of this
Amendment and the performance of the Merger Agreement as amended hereby;
(b) The execution and delivery of this Amendment and the
performance of the Merger Agreement as amended hereby will not violate any
provision of any applicable law or regulation or of any writ or decree of any
court or governmental instrumentality, or its certificate or articles of
incorporation, by-laws, or other similar organizational documents.
3. REAFFIRMATION. Except as amended hereby, all of the terms,
covenants and conditions of the Merger Agreement are ratified, reaffirmed and
confirmed and shall continue in full force and effect as therein written.
4. BINDING EFFECT This Amendment shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns.
5. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in
any number of counterparts and by the different parties on separate
counterparts. Each such counterpart shall be deemed to be an original, but all
such counterparts shall together constitute one and the same agreement. A
facsimile of an executed copy of this Amendment shall have the same force and
effect as an original executed copy.
- 2 -
<PAGE>
6. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the internal laws of the Commonwealth of
Pennsylvania without reference to conflict of law principles.
IN WITNESS WHEREOF, the parties have executed this Amendment on the day
and year first above written.
ARTRA GROUP INCORPORATED
By: ______________________________
Title:
WORLDWIDE WEB NETWORX
CORPORATION
By: ______________________________
Title:
NA ACQUISITION CORP.
By: ______________________________
Title :
WWWX MERGER SUBSIDIARY, INC.
By: ______________________________
Title:
- 3 -
<PAGE>
Exhibit 10.19
WORLDWIDE WEB NETWORX CORPORATION
AGENCY AGREEMENT
D. H. Blair Investment Banking Corp.
44 Wall Street
New York, New York 10005
As of May 26, 1999
Gentlemen:
WorldWide Web NetworX Corporation, a Delaware corporation (the
"Company"), proposes to offer for sale to "accredited investors", in a private
placement, units ("Units"), each Unit consisting of 66,667 shares (the "Shares")
of the Company's common stock, $.001 par value. Such offering and sale are
referred to herein as the "Offering." A minimum of 60 Units ("Minimum Offering")
and a maximum of 240 Units ("Maximum Offering") will be sold in the Offering at
$100,000 per Unit. The Units will be offered pursuant to those terms and
conditions acceptable to you as reflected in the Confidential Private Placement
Offering Memorandum dated May 26, 1999 (the "Memorandum"). Of the Units, 60 will
be offered on a "best efforts - all-or-none" basis and the remaining 180 Units
will be offered on a "best efforts" basis. The Maximum Offering may be increased
by up to 20 Units at the discretion of the Company and the Placement Agent (as
defined below) in the event of over-subscription (the "Over-Allotment Option").
The Units are being offered pursuant to the Memorandum and related documents in
accordance with Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act") and Regulation D promulgated thereunder.
D. H. Blair Investment Banking Corp. is sometimes referred to herein as
the "Placement Agent." The Memorandum (including the exhibits thereto), as it
may be amended from time to time, and the form of proposed subscription
agreement between the Company and each subscriber (the "Subscription Agreement")
and the exhibits which are part of the Memorandum and/or Subscription Agreement
are collectively referred to herein as the "Offering Documents."
The Company will prepare and deliver to the Placement Agent a
reasonable number of copies of the Offering Documents in form and substance
satisfactory to counsel to the Placement Agent.
Each prospective investor subscribing to purchase Units ("Subscriber")
will be required to deliver, among other things, a Subscription Agreement and a
confidential purchaser questionnaire ("Questionnaire") in the form to be
provided to offerees. Capitalized terms used
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herein, unless otherwise defined or unless the context otherwise indicates,
shall have the same meanings provided in the Offering Documents.
1. APPOINTMENT OF PLACEMENT AGENT.
1.1 You are hereby appointed exclusive Placement Agent of the
Company (subject to your right to have Selected Dealers, as defined in Section
1(c) hereof, participate in the Offering) during the Offering Period herein
specified for the purposes of assisting the Company in finding qualified
Subscribers pursuant to the offering (the "Offering") described in the Offering
Documents. The Offering Period shall commence on the day the Offering Documents
reasonably acceptable to Blair and its counsel are first made available to you
by the Company for delivery in connection with the offering for sale of the
Units and shall continue until the earlier to occur of (i) the sale of all of
the Maximum Offering or (ii) August 25, 1999 (the "Termination Date").
Notwithstanding the foregoing, if the first closing for the Minimum Offering
(the "Initial Closing") does not occur on or prior to June 28, 1999 (the
"Benchmark Date"), the Company shall have the right to terminate this Agreement.
The Benchmark Date and the Termination Date may be extended for up to 45 days by
the mutual consent of the Company and Blair. If the Minimum Offering is not sold
by the Benchmark Date, the Offering will be terminated and all funds received
from Subscribers will be returned, without interest and without any deduction.
1.2 Subject to the performance by the Company of all of its
obligations to be performed under this Agreement and to the completeness and
accuracy of all representations and warranties of the Company contained in this
Agreement, D. H. Blair Investment Banking Corp. hereby accepts such agency and
agrees to use its best efforts to assist the Company in finding qualified
subscribers pursuant to the Offering described in the Offering Documents. It is
understood that the Placement Agent has no commitment to sell the Units. Your
agency hereunder is not terminable by the Company except as set forth herein.
1.3 You may engage other persons, selected by you in your
discretion, that are members in good standing of the National Association of
Securities Dealers, Inc., ("NASD") and that have executed a Selected Dealers
Agreement substantially in the form attached hereto as Schedule A, to assist you
in the Offering (each such person being hereinafter referred to as a "Selected
Dealer") and you may allow such persons such part of the compensation and
payment of expenses payable to you hereunder as you shall determine. Each
Selected Dealer shall be required to agree in writing to comply with the
provisions of, and to make the representations, warranties and covenants
contained in, this Section 1.
1.4 Subscriptions for Units shall be evidenced by the
execution by Subscribers of a Subscription Agreement. No Subscription Agreement
shall be effective unless and until it is accepted by the Company. Until each
closing of the Offering, all subscription funds received shall be held as
described in the Subscription Agreement. The Placement Agent shall not have
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any obligation to independently verify the accuracy or completeness of any
information contained in any Subscription Agreement or the authenticity,
sufficiency, or validity of any check delivered by any prospective investor in
payment for Units.
1.5 The Placement Agent and its affiliates may purchase Units
sold in the Offering.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Placement Agent and each Selected Dealer, if any,
as follows:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has all requisite corporate power and
corporate authority to own and operate its properties and assets, to carry on
its business as now conducted and as proposed to be conducted, to enter into
this Agreement, to sell the Shares and to carry out the other transactions
described herein and in the Memorandum. The Company is qualified to transact
business in each jurisdiction in which the failure to qualify would have a
material adverse effect on its business or properties, taken as a whole. Each
entity which is either majority-owned or controlled by the Company is duly
organized, validly existing and in good standing under the laws of its state of
domicile. Each such entity has all requisite power and authority to own and
operate its properties and assets, to carry on its business as now conducted and
as proposed to be conducted, and to carry out the other transactions described
herein and in the Memorandum. Each such entity is qualified to transact business
in each jurisdiction in which the failure to qualify would have a material
adverse effect on its business or properties, taken as a whole. The Company has
delivered to the Placement Agent true, correct and complete copies of the
Company's Certificate of Incorporation, as amended, and the By-Laws in effect on
the date hereof (collectively, the "Charter Documents").
2.2 CAPITALIZATION AND VOTING RIGHTS.
(a) As of the date hereof, the authorized capital stock of the
Company is 100,000,000 Shares, $.001 par value and 10,000,000 shares of
preferred stock, $.01 par value (the "Preferred Stock". On the date of the
Initial Closing (the "Initial Closing Date"), the Company will have no shares of
Preferred Stock outstanding and no more than 35,000,000 Shares outstanding on a
fully-diluted basis, exclusive of (i) shares issuable upon conversion of
$3,000,000 of the Company's Series A 6% Cumulative Convertible Debentures (the
"Convertible Debentures"), (ii) shares (the "JenCom Shares") to be issued in
connection with the acquisition of a 50% interest in JenCom Digital
Technologies, LLC (the "JenCom Acquisition") and (iii) up to an additional
13,000,000 shares of Common Stock which may be issued or the Company may agree
to issue in connection with acquisitions, mergers or other major corporate
transactions.
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(b) Except as set forth in Schedule 2.2(b) of Exhibit A to
this Agreement, there are: (i) no outstanding options, warrants, rights
(including conversion or preemptive rights) or agreements pursuant to which the
Company is or may become obligated to issue, sell or repurchase any securities
of the Company; (ii) no restrictions on the transfer of the Company's capital
stock imposed by the Charter Documents or any agreement to which the Company is
a party, any order of any court or any governmental agency to which the Company
is subject, or any statute other than those imposed by relevant state and
federal securities laws; (iii) no cumulative voting or preemptive rights for any
of the Company's capital stock; (iv) no registration rights under the Securities
Act with respect to the Company's capital stock; (v) no antidilution adjustment
provisions or similar rights with respect to the outstanding securities of the
Company will be triggered by the issuance of the securities contemplated hereby;
(vi) no voting trusts or agreements, shareholders agreements, pledge agreements,
buy-sell, rights of first offer, negotiation or refusal or proxies or similar
arrangements relating to any securities of the Company to which the Company is a
party and (vii) to the Company's knowledge and belief, no options or other
rights to purchase securities from its shareholders granted by such
shareholders.
2.3 OWNERSHIP OF SECURITIES. Except as set forth in Schedule
2.3 of Exhibit A to this Agreement, the Company has never owned nor does it
presently own or control, directly or indirectly, any other corporation,
association, or other business entity and has never owned or controlled and does
not currently own or control, directly or indirectly, any capital stock or other
ownership interest, directly or indirectly, in any corporation, association,
partnership, trust, joint venture or other entity.
2.4 AUTHORIZATION.
(a) All corporate action on the part of the Company and its
Board of Directors necessary for the authorization, execution and delivery of
this Agreement, the Offering Documents, the Escrow Agreement, the Blair Warrant,
the Agent's Warrants and the M/A Agreement (all as defined herein) and the
performance of all obligations of the Company hereunder and thereunder and the
authorization, issuance and delivery of the Shares to be sold hereunder, has
been taken or will be taken prior to the Closing.
(b) The issuance, sale and delivery by the Company of the
shares of Common Stock issuable upon exercise of the Blair Warrant and the
Agent's Warrants (the "Reserved Shares") have been duly authorized by all
requisite corporate action of the Company, and the Reserved Shares have been
duly reserved for issuance upon exercise of the Blair Warrant and the Agent's
Warrants.
(c) This Agreement constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors rights). The
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execution, delivery and performance of this Agreement, the Offering Documents,
the Escrow Agreement, the Blair Warrant, the Agent's Warrants and the M/A
Agreement and compliance with the provisions hereof and thereof by the Company,
will not:
(i) violate any provision of applicable law, statute,
ordinance, rule or regulation or any ruling, writ, injunction,
order, judgment or decree of any court, administrative agency
or other governmental body, the violation of which would have
a material adverse impact on the business, properties or
financial condition of the Company taken as a whole (a
"Material Adverse Effect").
(ii) conflict with or result in any breach of any of the
material terms, conditions or provisions of, or constitute
(with due notice or lapse of time, or both) a default (or give
rise to any right of termination, cancellation or
acceleration) under (i) any material agreement, document,
instrument, contract, understanding, arrangement, note,
indenture, mortgage or lease to which the Company is a party
or under which the Company or any of its assets is bound or
affected; or (ii) the Charter Documents.
(iii) result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of
the Company.
2.5 VALID ISSUANCE OF SHARES.
(a) When issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, the Shares will be validly
issued and outstanding, fully paid and nonassessable and not subject to any
preemptive rights, rights of first refusal or other similar rights imposed by
the Company.
(b) The outstanding shares of capital stock of the Company are
all duly authorized and validly issued, fully paid and nonassessable, and were
issued in compliance with all applicable federal and state securities laws.
(c) When issued, sold and delivered in accordance with the
terms of the Blair Warrant and the Agent's Warrants for the consideration
expressed therein, the Reserved Shares will be validly issued and outstanding,
fully paid and nonassessable and not subject to any preemptive rights, rights of
first refusal or other similar rights imposed by the Company.
2.6 LIABILITIES. Except as set forth in the Balance Sheet (as
defined in Section 2.14 hereof) or in Schedule 2.6 of Exhibit A to this
Agreement, the Company has not incurred any unpaid indebtedness for money
borrowed or any other liabilities, contingent or otherwise, except in the
ordinary course of business.
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2.7 GOVERNMENTAL CONSENTS. Except as set forth in Schedule 2.7
of Exhibit A to this Agreement, no consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions described in
the Agreement, except for registration or qualification, or taking such action
to secure exemption from such registration or qualification, of the Shares under
applicable state or federal securities laws, which actions shall be taken, by
and at the expense of the Company, on a timely basis as may be required.
2.8 LITIGATION. Except as set forth in Schedule 2.8 of Exhibit
A to this Agreement, there is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, currently threatened against the Company
which questions the validity of this Agreement or the right of the Company to
enter into it, or to consummate the transactions described herein, or which
reasonably would be expected to have, either individually or in the aggregate, a
Material Adverse Effect, or result in any change in the current equity ownership
of the Company, nor is the Company aware that there is any basis for the
foregoing. To the Company's knowledge, there are no legal actions or
investigations pending or threatened involving the employment by or with the
Company of any of the Company's current or former employees, their use in
connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers or alleging a violation of any
federal, state or local statute or common law relationship with the Company. The
Company is not a party to any order, writ, injunction, judgment or decree of any
court.
2.9 EMPLOYEES AND CONSULTANTS. Set forth on Schedule 2.9 of
Exhibit A to this Agreement are the five most highly compensated individuals
currently employed by and anticipated to be employed by the Company. Except as
set forth in Schedule 2.9 of Exhibit A to this Agreement:
(a) To the Company's knowledge, none of its employees is
obligated under any contract (including licenses, covenants or contracts of any
nature) or other agreement, or subject to any judgment, decree or order of any
court or administrative agency, that would interfere with the use of his best
efforts to promote the interests of the Company or that would conflict with the
Company's business as proposed to be conducted. Neither the execution nor
delivery of this Agreement, nor the carrying on of the Company's business by the
employees of the Company, nor the conduct of the Company's business as proposed,
will, to the Company's knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any material
contract, covenant or instrument under which any of such employees is now
obligated.
(b) Each employee of, or consultant to, the Company, who has
or is proposed to have access to confidential or proprietary information of the
Company, is or will be prior to
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the Initial Closing, a signatory to, and is bound by, an agreement with the
Company relating to noncompetition, nondisclosure, proprietary information and
assignment of patent, copyright and other intellectual property rights.
(c) To the Company's knowledge, no employee of, or consultant
to, the Company is in violation of any term of any employment contract, patent
disclosure agreement or any other contract or agreement including, but not
limited to, those matters relating to (i) the relationship of any such employee
with the Company or to any other party as a result of the nature of the
Company's business as currently conducted, or (ii) unfair competition, trade
secrets or proprietary information.
2.10 PATENTS AND TRADEMARKS. Except as set forth in Schedule
2.10 of Exhibit A to this Agreement, there are no outstanding options, licenses,
or agreements of any kind relating to the Company's patents, service marks,
trademarks, copyrights, trade secrets, proprietary rights or other intellectual
property (hereinafter collectively the "Intellectual Property"); nor is the
Company bound by or a party to any options, licenses or agreements of any kind
with respect to the Intellectual Property of any other person or entity. The
Company has not received any written communications alleging that the Company
has violated or, by conducting its business as proposed, would violate any of
the Intellectual Property of any other person or entity. To the Company's
knowledge, all of its Intellectual Property was validly obtained and free from
any impediments, including but not limited to patent invalidity or
unenforceability.
2.11 COMPLIANCE WITH OTHER INSTRUMENTS. Except as set forth in
Schedule 2.11 of Exhibit A to this Agreement, the Company is not in violation of
or default under its Charter Documents or any indenture, mortgage, contract,
material purchase order or other agreement or instrument to which the Company is
a party or by which it or its property is bound or affected.
2.12 AGREEMENTS; ACTION.
(a) Except as set forth in Schedule 2.12 of Exhibit A to this
Agreement or in the Memorandum, there are no agreements, understandings,
transactions or proposed transactions between the Company and any of its
officers, directors, or affiliates, or any affiliate thereof of a nature
required to be disclosed pursuant to the provisions of Regulation S-K
promulgated under the Securities Act, and none of any such individuals or
entities has any interest in any party to any such agreement, understanding,
transaction or proposed transaction.
(b) Except as set forth in Schedule 2.12 of Exhibit A to this
Agreement, the Company has not (i) declared or paid any dividends, or authorized
or made any distribution upon or with respect to any class or series of its
capital stock, (ii) made any loans or advances to any person, other than
ordinary advances to employees for travel expenses, or (iii) sold, exchanged or
otherwise disposed of any of its assets or rights, other than in the ordinary
course of business.
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(c) The Company has not admitted in writing its inability to
pay its debts generally as they become due, filed or consented to the filing
against it of a petition in bankruptcy or a petition to take advantage of any
insolvency act, made an assignment for the benefit of creditors, consented to
the appointment of a receiver for itself or for the whole or any substantial
part of its property, or had a petition in bankruptcy filed against it, been
adjudicated a bankrupt, or filed a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other laws of the United
States or any other jurisdiction.
(d) Except as set forth in Schedule 2.12 of Exhibit A to this
Agreement, to the Company's knowledge, the Company is in compliance with all
obligations, agreements and conditions contained in any evidence of indebtedness
or any loan agreement or other contract or agreement (whether or not relating to
indebtedness) to which the Company is a party or is subject (collectively, the
"Obligations"), the lack of compliance with which could afford to any person the
right to (i) accelerate any indebtedness or (ii) terminate any right or
agreement of the Company, the termination of which would have a Material Adverse
Effect. To the Company's knowledge and belief, all other parties to such
Obligations are in compliance with the terms and conditions of such Obligations.
2.13 TITLE TO PROPERTY AND ASSETS. Except as set forth in
Schedule 2.13 of Exhibit A to this Agreement, the Company has good and
marketable title to all properties and assets, owned by it, free and clear of
all liens, charges, encumbrances or restrictions, except such as are not
materially significant or important in relation to the Company's business; all
of the material leases and subleases under which the Company is the lessor or
sublessor of properties or assets or under which the Company holds properties or
assets as lessee or sublessee are in full force and effect, and the Company is
not in default in any material respect with respect to any of the terms or
provisions of any of such leases or subleases, and no material claim has been
asserted by anyone adverse to rights of the Company as lessor, sublessor, lessee
or sublessee under any of the leases or subleases mentioned above, or affecting
or questioning the right of the Company to continued possession of the leased or
subleased premises or assets under any such lease or sublease. The Company owns
or leases all such properties as are necessary to its operations as now
conducted and to be conducted, as presently planned.
2.14 FINANCIAL INFORMATION. The Company has delivered to the
Placement Agent an audited balance sheet as of September 30, 1998 and an
unaudited balance sheet as of March 31, 1999 (collectively, the "Balance
Sheet"). Since the date of the Balance Sheet, the Company has conducted its
business in the ordinary course, and there has not been any material adverse
change in the financial condition or operations of the Company. Except as set
forth in the Balance Sheet and in the material agreements listed in Schedule
2.14 of Exhibit A to this Agreement, the Company has no material liabilities,
contingent or otherwise. Except for the guaranty of the Company in favor of
Artra Group Incorporated ("Artra") dated February 23, 1999, the Company is not a
guarantor or indemnitor of any indebtedness of any other person, firm or
corporation. The Company maintains and consistently applies and will continue to
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maintain and consistently apply a standard system of accounting established and
administered in accordance with generally accepted accounting principles.
2.15 TAX RETURNS, PAYMENTS AND ELECTIONS. Except as set forth
on Schedule 2.15 of Exhibit A to this Agreement, the Company has filed all tax
returns and reports as required by law, including without limitation, all
federal, state and local income, excise or franchise tax returns, payroll tax
returns and other tax returns or reports required to be filed by it. These
returns and reports are true and correct in all material respects. The Company
has paid or made provision for the payment of all accrued and unpaid taxes and
other charges to which the Company is subject and which are not currently due
and payable. The federal income tax returns of the Company have never been
audited by the Internal Revenue Service, and the Company has not agreed to an
extension of the statute of limitations with respect to any of its tax years.
Neither the Internal Revenue Service nor any other taxing authority is now
asserting, nor is threatening to assert, against the Company any deficiency or
claim for additional taxes or interest thereon or penalties in connection
therewith; nor does such deficiency or claim or basis for such deficiency or
claim exist. Except as set forth in Schedule 2.15 of Exhibit A to this
Agreement, the Company has not made any elections pursuant to the Code (other
than elections which relate solely to methods of accounting, depreciation or
amortization) which would have a Material Adverse Effect.
2.16 SECURITIES LAWS.
(a) The Offering Documents conform in all material respects
with the requirements of Regulation D promulgated under the Securities Act and
with the requirements of all other published rules and regulations of the
Securities and Exchange Commission (the "Commission") currently in effect
relating to "private offerings" to "accredited investors" of the type described
by the Company.
(b) The Offering Documents will not contain an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading. If at any time prior to the completion of the
Offering or other termination of this Agreement any event shall occur as a
result of which it might become necessary to amend or supplement the Offering
Documents so that they do not include any untrue statement of any material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances then existing, not misleading, the
Company will promptly notify you and will supply you with amendments or
supplements correcting such statement or omission. The Company will also provide
the Placement Agent for delivery to all offerees and purchasers and their
representatives, if any, any information, documents and instruments which
counsel to the Placement Agent deems reasonably necessary to comply with
applicable state and federal law.
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(c) To its knowledge, neither the Company nor anyone acting on
its behalf has offered securities of the Company for sale to, or solicited any
offers to buy the same from, or sold securities of the Company to, any person or
organization, in any case so as to subject the Company, its promoter, directors
or officers to any liability under the Securities Act, the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or any state securities or "blue
sky" law (collectively, the "Securities Laws"), or any other applicable laws.
2.17 LICENSES AND OTHER RIGHTS; COMPLIANCE WITH LAWS. The
Company has all material franchises, permits, licenses and other rights and
privileges necessary to permit it to own its properties and to conduct its
business as presently conducted and is in compliance in all material respects
thereunder. The Company is in compliance in all material respects with all laws
and governmental rules and regulations applicable to its business, properties
and assets, and to the products and services sold by it, including, without
limitation, all such rules, laws and regulations relating to fair employment
practices, occupational safety and health and public safety, except where the
failure to comply would not have a Material Adverse Effect.
2.18 RELIANCE. The Company understands that the foregoing
representations and warranties shall be deemed material and to have been relied
upon by the Placement Agent. No representation or warranty by the Company in
this Agreement, and no written statement contained in any document, certificate
or other writing delivered by the Company to the Placement Agent contains any
untrue statement of material fact or omits to state any material fact necessary
to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading.
2.19 EXEMPTION FROM REGISTRATION. Assuming (i) the accuracy of
the information provided by the respective Subscribers in the Subscription
Documents and (ii) that the Placement Agent has complied in all material
respects with the provisions of Regulation D promulgated under the Securities
Act, the offer and sale of the Units pursuant to the terms of this Agreement are
exempt from the registration requirements of the Securities Act and the rules
and regulations promulgated thereunder (the "Regulations"). The Company is not
disqualified from the exemption under Regulation D by virtue of the
disqualifications contained in Rule 505(b)(2)(iii) or Rule 507 promulgated
thereunder.
2.20 BROKERS. Neither the Company nor any of its officers,
directors, employees or stockholders has employed any broker or finder in
connection with the transactions described in this Agreement other than the
Placement Agent.
2.21 TITLE TO SECURITIES. When the Shares comprising the Units
shall have been delivered to the purchasers and payment shall have been made
therefor, the several purchasers shall have good and marketable title to the
Shares free and clear of all liens, encumbrances and claims whatsoever (with the
exception of claims arising through the acts or omissions of the
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purchasers and except as arising from applicable Federal and state securities
laws), and the Company shall have paid all taxes, if any, in respect of the
original issuance thereof.
2.22 RIGHT OF FIRST REFUSAL. No person, firm or other business
entity is a party to any agreement, contract or understanding, written or oral
entitling such party to a right of first refusal with respect to future
financings by the Company.
2.23 INDEBTEDNESS. Except for (i) the Convertible Debentures,
(ii) up to $1,400,000 of debt which may be incurred in connection with the sale
of one of the Company's subsidiaries to a New York Stock Exchange company (the
"Sale Debt"), (iii) trade payables in the ordinary course, including equipment
leases and Company insurance premiums (collectively, the "Trade Payables"), and
(iv) a $2,000,000 contingent liability (the "Break-Up Fee") which may be owed to
Artra, the Company shall not have any outstanding indebtedness on the Initial
Closing Date.
3. CLOSING; PLACEMENT AND FEES.
3.1 CLOSING. Provided the Minimum Offering shall have been
subscribed for and funds representing the sale thereof shall have cleared within
30 days of the date the memorandum is delivered to the Placement Agent, the
Initial Closing shall take place at the offices of the Placement Agent, 44 Wall
Street, New York, New York within five business days following the Termination
Date (which date (the "Closing Date") may be accelerated or adjourned by
agreement between the Company and the Placement Agent). At the Initial Closing,
payment for the Units issued and sold by the Company shall be made against
delivery of the Shares comprising such Units in accordance with paragraph 4.14
hereof. In addition, subsequent closings (if applicable) may be scheduled at the
discretion of the Company and Placement Agent, each of which shall be deemed a
"Closing" hereunder.
3.2 CONDITIONS TO PLACEMENT AGENT'S OBLIGATIONS. The
obligations of the Placement Agent hereunder will be subject to the accuracy of
the representations and warranties of the Company herein contained as of the
date hereof and as of each Closing Date, to the performance by the Company of
its obligations hereunder and to the following additional conditions:
(a) DUE QUALIFICATION OR EXEMPTION. (A) The Offering described
in this Agreement will become qualified or be exempt from qualification under
the securities laws of the several states pursuant to paragraph 4.4 below not
later than the Initial Closing Date, and (B) at the Initial Closing Date no stop
order suspending the sale of the Units shall have been issued, and no proceeding
for that purpose shall have been initiated or threatened;
(b) NO MATERIAL MISSTATEMENTS. Neither the Blue Sky
qualification materials nor the Memorandum, nor any supplement thereto, will
contain an untrue statement of a material
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fact, or omit to state a material fact which is required to be stated therein,
or is necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(c) COMPLIANCE WITH AGREEMENTS. The Company will have complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to each Closing;
(d) CORPORATE ACTION. The Company will have taken all
necessary corporate action, including, without limitation, obtaining the
approval of the Company's Board of Directors, for the execution and delivery of
this Agreement, the performance by the Company of its obligations hereunder and
the offering described herein;
(e) OPINION OF COUNSEL. The Placement Agent shall receive the
opinion of Michelle Kramish Kain, P.A., dated the Closing(s), substantially to
the effect that:
(i) each of the Company and each Subsidiary is validly
existing and in good standing under the laws of the state of
its incorporation, has all requisite corporate power and
authority necessary to own or hold its respective properties
and conduct its business, and the Company is duly qualified or
licensed to do business as a foreign corporation and is in
good standing in each jurisdiction in which the ownership or
leasing of its properties or conduct of its business requires
such qualification, except where the failure to so qualify or
be licensed would not have a Material Adverse Effect;
(ii) The execution, delivery and performance of each of this
Agreement, the Blair Warrant, the Agent's Warrants, the Escrow
Agreement, the M/A Agreement and the Subscription Agreements
has been duly and validly authorized, executed and delivered
by the Company, and is a valid and binding obligation of the
Company, enforceable against it in accordance with its terms,
subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the rights
of creditors generally and to general equitable principles;
(iii) the authorized, issued and outstanding capital stock of
the Company as of the date hereof (before giving effect to the
transactions described in this Agreement) is as set forth in
the Offering Documents. To such counsel's knowledge, there are
no outstanding warrants, options, agreements, convertible
securities, preemptive rights or other commitments pursuant to
which the Company is, or may become, obligated to issue any
shares of its capital stock or other securities of the Company
other than as set forth in the Memorandum. All of the issued
shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and
nonassessable and to such counsel's knowledge have not been
issued in violation of the preemptive rights of any
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securityholder of the Company. The offers and sales of such
outstanding securities were either registered under the
Securities Act and applicable state securities laws or exempt
from such registration requirements. The Shares, the Blair
Warrant and the Agent's Warrants have been duly and validly
authorized and issued, the Reserved Shares have been duly and
validly authorized and reserved for issuance upon exercise of
the Blair Warrant and the Agent's Warrants, and the Shares are
fully paid and nonassessable;
(iv) assuming (i) the accuracy of the information provided by
the Subscribers in the Subscription Documents and (ii) that
the Placement Agent has complied with the requirements of the
provisions of Regulation D promulgated under the Securities
Act and the issuance and sale of the Units is exempt from
registration under the Securities Act and Regulation D
promulgated thereunder;
(v) neither the execution and delivery of this Agreement, the
Subscription Agreements, the Escrow Agreement, the M/A
Agreement, the Blair Warrant or the Agent's Warrants, nor
compliance with the terms hereof or thereof, nor the
consummation of the transactions herein or therein described,
nor the issuance of the Shares or the Agent's Warrants, has,
nor will, conflict with, result in a violation of, or
constitute a default under the Charter Documents of the
Company, or any material contract, instrument or document
known to such counsel to which the Company is a party, or by
which it or any of its properties is bound or violate any
applicable law, rule, regulation, judgment, order or decree
known to such counsel of any governmental agency or court
having jurisdiction over the Company or any of its properties
or business;
(vi) there are no claims, actions, suits, investigations or
proceedings before or by any arbitrator, court, governmental
authority or instrumentality pending or, to such counsel's
knowledge, threatened against or affecting the Company or
involving the properties of the Company which might have a
Material Adverse Effect or which might materially adversely
affect the transactions or other acts described in this
Agreement or the validity or enforceability of this Agreement,
except as set forth in the Offering Documents; and
(vii) such counsel has participated in the preparation of the
Offering Documents and nothing has come to the attention of
such counsel to cause them to have reason to believe that the
Offering Documents contained any untrue statement of a
material fact required to be stated therein or omitted to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading
(except for the financial statements, notes thereto and other
financial information and statistical data contained therein,
as to which such counsel need express no opinion).
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(f) OFFICERS' CERTIFICATE. The Placement Agent shall receive a
certificate of the Company, signed by the Chief Executive Officer and Chief
Financial Officer or Secretary thereof, that the representations and warranties
contained in Section 2 hereof are true and accurate in all material respects at
such Closing with the same effect as though expressly made at such Closing.
(g) ESCROW AGREEMENT. On or prior to the Initial Closing Date,
the Placement Agent shall receive a copy of a duly executed escrow agreement in
the form previously delivered to you regarding the deposit of funds pending the
Closing(s) with a bank or trust company acceptable to the Placement Agent (the
"Escrow Agreement").
(h) LOCK-UP AGREEMENTS. On or prior to the Initial Closing
Date, the Placement Agent shall receive agreements from each executive officer
and director of the Company and all shareholders beneficially owning in excess
of 5% of the issued and outstanding Common Stock of the Company other than PECO
Energy Company, Henry Butcher & Co. and the Placement Agent as to the 2,000,000
shares previously purchased by the Placement Agent as of the Initial Closing
Date and as of the effective date of the registration statement referred to
below to the effect that such stockholder shall not sell, assign or transfer any
of their securities of the Company for the period from the date of this
Agreement until the later of (i) seven months after the date of the final
closing of the Offering (the "Final Closing Date") or (ii) 30 days after the
effective date of a registration statement covering the resale of the Shares
without the prior written consent of the Placement Agent.
(i) CHARTER AMENDMENT. On or prior to the Initial Closing
Date, the Company shall have obtained shareholder approval of and filed an
amendment to its Certificate of Incorporation authorizing 5,000,000 shares of
"blank-check" preferred stock. The Company shall not issue any shares of
preferred stock prior to the Final Closing Date without the prior written
consent of the Placement Agent, which consent shall not be unreasonably
withheld.
(j) M/A AGREEMENT. On or prior to the Initial Closing Date,
the Placement Agent shall receive a copy of a duly executed agreement in the
form previously delivered to you regarding the payment of a finder's fee to the
Placement Agent in the event of the completion of certain transactions (the "M/A
Agreement").
(k) INDEPENDENT DIRECTORS. On or prior to the Initial Closing
Date, the Company's Board of Directors shall have at least two non-affiliated
members.
(l) INSURANCE. On or prior to the Initial Closing Date, the
Company shall have in place property and casualty insurance in amounts
standard for the industry.
(m) BLAIR INVESTMENT FEES. On or prior to the Initial Closing
Date, the Placement Agent shall have received the following fees due in
connection with its $3,000,000
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equity investment in the Company completed in March 1999: (i) a $300,000
placement fee; (ii) a $90,000 non-accountable expense allowance; and (iii)
three-year warrants (the "Blair Warrants") to purchase 200,000 shares of Common
Stock at an exercise price of $1.80 per share which are substantially identical
to the Agent's Warrants.
(n) GOOD STANDING CERTIFICATES. The Placement Agent shall
receive certificates of good standing from the jurisdiction of incorporation and
each jurisdiction in which a qualification to do business is required, dated as
of a recent date, for the Company.
3.3 PLACEMENT FEE AND EXPENSES. Simultaneously with payment
for and delivery of the Units at each Closing, the Company shall at such Closing
pay to the Placement Agent (i) a commission equal to 10% of the aggregate
purchase price of the Units sold; and (ii) a non-accountable expense allowance
equal to 3% of the aggregate purchase price of the Units sold. At the Initial
Closing, the Company will reimburse the Placement Agent for up to $25,000 of
legal fees incurred by the Placement Agent. The Company shall also pay all
expenses in connection with the qualification of the Units under the securities
or Blue Sky laws of the states which the Placement Agent shall designate,
including legal fees and filing fees. The Company will, at the Initial Closing,
issue to you or your designees (which may include any Selected Dealer or any
officer of the Placement Agent or a Selected Dealer) (i) three-year warrants
(the "Agent's Warrants" to purchase the number of shares of Common Stock equal
to 10% of the Shares sold in the Offering (including any exercise of the
Over-Allotment Option) at an exercise price of $1.80 per share. The Agent's
Warrants shall contain customary anti-dilution protection and demand and
piggy-back registration rights as set forth in the Letter of Intent dated March
4, 1999 (the "LOI").
3.4 BRING-DOWN OPINIONS AND CERTIFICATES. If there is more
than one Closing, then at each such Closing there shall be delivered to the
Placement Agent updated opinions and certificates as described in (e) and (f) of
Section 3.2 above, respectively.
3.5 NO ADVERSE CHANGES. There shall not have occurred, at any
time prior to the Initial Closing or, if applicable, any additional Closing, (i)
any domestic or international event, act or occurrence which has materially
disrupted, or in the Placement Agent's opinion will in the immediate future
materially disrupt, the securities markets; (ii) a general suspension of, or a
general limitation on prices for, trading in securities on the New York Stock
Exchange or the American Stock Exchange or in the over-the-counter market; (iii)
any outbreak of major hostilities or other national or international calamity;
(iv) any banking moratorium declared by a state or federal authority; (v) any
moratorium declared in foreign exchange trading by major international banks or
other persons; (vi) any material interruption in the mail service or other means
of communication within the United States; (vii) any material adverse change in
the business, properties, assets, results of operations, or financial condition
of the Company; or (viii) any change in the market for securities in general or
in political, financial, or economic
15
<PAGE>
conditions which, in the Placement Agent's reasonable judgment, makes it
inadvisable to proceed with the offering, sale, and delivery of the Units.
4. COVENANTS OF THE COMPANY.
4.1 USE OF PROCEEDS; DEPOSIT OF FUNDS. The net proceeds of the
Offering will be used by the Company substantially as set forth in the
Memorandum. Other than as specifically set forth in the Memorandum, the Company
shall not use any of the proceeds from the Offering to repay any indebtedness of
the Company, including but not limited to indebtedness to any current executive
officers, directors or principal stockholders of the Company, other than for
repayment of the Convertible Debentures, Trade Payables, the Sale Debt and the
Break-Up Fee. Pending utilization, the net proceeds will be invested in
short-term, investment grade, interest bearing investments, certificates of
deposit or guaranteed United States government obligations.
4.2 EXPENSES OF OFFERING. The Company shall be responsible
for, and shall bear all expenses directly incurred in connection with, the
proposed Offering including, but not limited to, legal fees of the Company's
counsel relating to the costs of preparing the Offering Documents and all
amendments, supplements and exhibits thereto; preparing and delivering all
Placement Agent and selling documents, including, but not limited to, the Agency
Agreement with the Placement Agent and the blue sky memorandum; Share
certificates; blue sky fees, filing fees and the fees and disbursements of
counsel in connection with blue sky matters (the "Company Expenses"). Such
expenses shall not include the cost of the Placement Agent's mailing, telephone,
telegraph, travel, due diligence meetings, or other similar expenses (the
"Placement Agent expenses").
If the Offering is not completed because the Company prevents it or
because of a breach by the Company of any material covenants, representation or
warranty contained in this Agreement or in paragraphs 4, 7 and 18 of the LOI,
the Company shall pay the Placement Agent $630,000. If the Private Placement is
not completed because the Placement Agent prevents it (except if such prevention
is based upon a breach by the Company of any material covenant, representation
or warranty contained herein or in paragraphs 4, 7 and 18 of the LOI), the
Company shall not be liable for the Placement Agent expenses. In either event
the Company shall remain liable for the Company Expenses. The Placement Agent
shall have no liability to the Company for any reason should the Placement Agent
choose not to proceed with the Offering described herein.
4.3 NOTIFICATION. The Company shall notify the Placement Agent
immediately, and in writing, (A) when any event shall have occurred during the
period commencing on the date hereof and ending on the later of the last Closing
or the Termination Date as a result of which the Offering Documents would
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make
16
<PAGE>
the statements therein not misleading, and (B) of the receipt of any
notification with respect to the modification, rescission, withdrawal or
suspension of the qualification or registration of the Units, or of any
exemption from such registration or qualification, in any jurisdiction. The
Company will use its best efforts to prevent the issuance of any such
modification, rescission, withdrawal or suspension and, if any such
modification, rescission, withdrawal or suspension is issued and you so request,
to use its best efforts to obtain the lifting thereof as promptly as possible.
4.4 BLUE SKY. The Company will use its best efforts to qualify
or register the Units for offering and sale under, or establish an exemption
from such qualification or registration under, the securities or "blue sky" laws
of such jurisdictions as you may reasonably request; provided however, that the
Company will not be obligated to qualify as a dealer in securities in any
jurisdiction in which it is not so qualified. Neither the Company nor the
Placement Agent will offer nor will the Company consummate any sale of Units in
any jurisdiction in which it is not so qualified or in any manner in which such
sale may not be lawfully made.
4.5 FORM D FILING. Counsel to the Placement Agent on behalf of
the Company shall file five copies of a Notice of Sales of Securities on Form D
with the Commission no later than 15 days after the first sale of the Units. The
Company shall file promptly such amendments to such Notices on Form D as shall
become necessary and shall also comply with any filing requirement imposed by
the laws of any state or jurisdiction in which offers and sales are made. The
Company shall furnish the Placement Agent with copies of all such filings.
4.6 PRESS RELEASES, ETC. The Company shall not, during the
period commencing on the date hereof and ending on the later of the Final
Closing Date and the Termination Date, issue any press release or other
communication, or hold any press conference with respect to the Company, its
financial condition, results of operations, business, properties, assets, or
liabilities, or the Offering, without the prior consent of the Placement Agent,
which consent shall not be unreasonably withheld.
4.7 KEY-MAN INSURANCE. Prior to the Initial Closing Date, the
Company shall have obtained a "key-man" life insurance policy in the amount of
at least $1,000,000 on the lives of each of Robert Kohn and Michael Norton,
which amount shall be increased to $2,000,000 for Robert Kohn upon satisfactory
completion of a physical examination. Such policies will be kept in effect for
the longer of (i) three years from the Initial Closing Date or (ii) the terms of
their respective employment agreements.
4.8 EXECUTIVE COMPENSATION. If Robert Kohn remains an
executive Officer of the Company, he shall be entitled to receive a base annual
salary of $300,000 and a bonus not to exceed $150,000 during the 12-month period
following the Final Closing Date. The cash and
17
<PAGE>
noncash compensation of each of the other current executive officers of the
Company shall not increase more than 20% during the 12-month period from March
4, 1999. If during such period the Company retains additional executive
officers, the compensation of such individuals shall be reasonably acceptable to
the Placement Agent.
4.9 BOARD DESIGNEE. During the three-year period following the
Initial Closing Date, the Placement Agent shall have the right, at its option,
to appoint one designee to the Company's Board of Directors.
4.10 RESTRICTIONS ON ISSUANCE OF SECURITIES. From the date of
this Agreement until the Termination Date, the Company will not, without the
prior written consent of the Placement Agent, issue additional shares of Common
Stock or grant any warrants, options or other securities of the Company other
than pursuant to agreements in existence on the date hereof, except for up to an
additional 13,000,000 shares of Common Stock which may be issued or the Company
may agree to issue in connection with acquisitions, mergers or other major
corporate transactions effected prior to the Initial Closing Date. During the
three-year period following the Final Closing Date, the Company will not issue
any securities pursuant to Regulation S of the Securities Act.
4.11 ACCOUNTING FIRM. During the three-year period following
the Final Closing Date, the Company shall not effect a change in its accounting
firm, other than to a "big five" accounting firm, without the prior written
consent of the Chairman or President of the Placement Agent, which consent shall
not be unreasonably withheld
4.12 REGISTRATION UNDER THE SECURITIES ACT. The Company shall
file a registration statement to register the Shares for resale under the
Securities Act on or prior to the 10 month anniversary of the Initial Closing
Date and use its best efforts to have such registration statement declared
effective within one year after the Initial Closing Date on the terms and
conditions contained in the Subscription Agreements.
4.13 EMPLOYEE OPTIONS. During the period ending 18 months
after the Initial Closing Date, the Company shall not, without the prior written
consent of the Placement Agent, grant any options to employees having an
exercise price less than fair market value on the date of grant.
4.14 TRANSMITTAL LETTERS. Within five business days after each
Closing, the Placement Agent shall receive copies of all letters from the
Company to the investors transmitting the Shares and shall receive a letter from
the Company confirming transmittal of the Shares to the investors.
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<PAGE>
5. INDEMNIFICATION.
5.1 The Company agrees to indemnify and hold harmless the
Placement Agent and each Selected Dealer, if any, and their respective
shareholders, directors, officers, agents and controlling persons (an
"Indemnified Party") against any and all loss, liability, claim, damage and
expense whatsoever (and all actions in respect thereof), and to reimburse the
Placement Agent for reasonable legal fees and related expenses as incurred
(including, but not limited to the costs of investigating, preparing or
defending any such action or claim whether or not in connection with litigation
in which the Placement Agent is a party and the costs of giving testimony or
furnishing documents in response to a subpoena or otherwise), arising out of any
untrue statement or alleged untrue statement of a material fact contained in the
Offering Documents or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
5.2 The Company agrees to indemnify and hold harmless an
Indemnified Party to the same extent as the foregoing indemnity, against any and
all loss, liability, claim, damage and expense whatsoever directly arising out
of the exercise by any person of any right under the Securities Act or the
Exchange Act or the securities or Blue Sky laws of any state on account of
violations of the representations, warranties or agreements set forth in Section
2 hereof.
5.3 Promptly after receipt by a person entitled to
indemnification pursuant to the foregoing subsection (a) or (b) (an "indemnified
party") under this Section of notice of the commencement of any action, the
indemnified party will, if a claim in respect thereof is to be made against the
Company under this Section, notify in writing the Company of the commencement
thereof; but the omission so to notify the Company will not relieve it from any
liability which it may have to the indemnified party otherwise than under this
Section except to the extent the defense of the claim is prejudiced. In case any
such action is brought against an indemnified party, and it notifies the Company
of the commencement thereof, the Company will be entitled to participate in,
and, to the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, subject to the provisions
herein stated, with counsel reasonably satisfactory to the indemnified party,
and after notice from the Company to the indemnified party of its election so to
assume the defense thereof, the Company will not be liable to the indemnified
party under this Section for any legal or other expenses subsequently incurred
by the indemnified party in connection with the defense thereof other than
reasonable costs of investigation (provided the Company has been advised in
writing that such investigation is being undertaken). The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the Company if the Company has assumed the
defense of the action with counsel reasonably satisfactory to the indemnified
party; provided that the fees and expenses of such counsel shall be at the
expense of the Company if (i) the employment of such counsel has been
specifically authorized in writing by the Company
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or (ii) the named parties to any such action (including any impleaded parties)
include both the indemnified party or parties and the Company and, in the
judgment of counsel for the indemnified party, it is advisable for the
indemnified party or parties to be represented by separate counsel (in which
case the Company shall not have the right to assume the defense of such action
on behalf of the indemnified party or parties), it being understood, however,
that the Company shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys for the
indemnified party or parties. No settlement of any action against an indemnified
party shall be made unless such indemnified party is fully and completely
released in connection therewith.
6. CONTRIBUTION.
To provide for just and equitable contribution, if
(i) an indemnified party makes a claim for indemnification pursuant to
Section (5) but it is found in a final judicial determination, not subject to
further appeal, that such indemnification may not be enforced in such case, even
though this Agreement expressly provides for indemnification in such case, or
(ii) any indemnified or indemnifying party seeks contribution under the
Securities Act, the Exchange Act, or otherwise, then the Company (including for
this purpose any contribution made by or on behalf of any officer, director,
employee or agent for the Company, or any controlling person of the Company), on
the one hand, and the Placement Agent and any Selected Dealers (including for
this purpose any contribution by or on behalf of an indemnified party), on the
other hand, shall contribute to the losses, liabilities, claims, damages, and
expenses whatsoever to which any of them may be subject, in such proportions as
are appropriate to reflect the relative benefits received by the Company, on the
one hand, and the Placement Agent and the Selected Dealers, on the other hand;
provided, however, that if applicable law does not permit such allocation, then
other relevant equitable considerations such as the relative fault of the
Company and the Placement Agent and the Selected Dealers in connection with the
facts which resulted in such losses, liabilities, claims, damages, and expenses
shall also be considered. In no case shall the Placement Agent or a Selected
Dealer be responsible for a portion of the contribution obligation in excess of
the compensation received by it pursuant to Section 3 hereof or the Selected
Dealer Agreement, as the case may be. No person guilty of a fraudulent
misrepresentation shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section 6,
each person, if any, who controls the Placement Agent or a Selected Dealer
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act and each officer, director, stockholder, employee and agent of the
Placement Agent or a Selected Dealer, shall have the same rights to contribution
as the Placement Agent or the Selected Dealer, and each person, if any who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act and each officer, director, employee and agent
of the Company, shall have the same rights to contribution as the Company,
subject in each case to the provisions of this Section 6. Anything
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<PAGE>
in this Section 6 to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 6 is intended to supersede any right
to contribution under the Securities Act, the Exchange Act, or otherwise.
7. MISCELLANEOUS.
7.1 SURVIVAL. Any termination of the Offering without
consummation thereof shall be without obligation on the part of any party except
that the indemnification provided in Section 5 hereof and the contribution
provided in Section 6 hereof shall survive any termination and shall survive the
Closing for a period of two years.
7.2 REPRESENTATIONS, WARRANTIES AND COVENANTS TO SURVIVE
DELIVERY. The respective representations, warranties, indemnities, agreements,
covenants and other statements of the Company as of the date hereof shall
survive execution of this Agreement and delivery of the Units and the
termination of this Agreement but only to the extent that there has been a sale
of any Units.
7.3 NO OTHER BENEFICIARIES. This Agreement is intended for the
sole and exclusive benefit of the parties hereto and their respective successors
and controlling persons, and no other person, firm or corporation shall have any
third-party beneficiary or other rights hereunder.
7.4 GOVERNING LAW; RESOLUTION OF DISPUTES. This Agreement
shall be governed by and construed under the laws of the State of New York
(without regard to the conflict of law principles thereof). The Placement Agent
and the Company will attempt to settle any claim or controversy arising out of
this Agreement through consultation and negotiation in good faith and a spirit
of mutual cooperation. Should such attempts fail, then the dispute will be
mediated by a mutually acceptable mediator to be chosen by the Placement Agent
and the Company within 15 days after written notice from either party demanding
mediation. Neither party may unreasonably withhold consent to the selection of a
mediator, and the parties will share the costs of the mediation equally. Any
dispute which the parties cannot resolve through negotiation or mediation within
six months of the date of the initial demand for it by one of the parties may
then be submitted to the courts for resolution. Each of the parties irrevocably
submits, in such event, to the exclusive jurisdiction of (a) the Supreme Court
of the State of New York, and (b) the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby.
Each of the parties agrees to commence any action, suit or proceeding relating
hereto in the United States District Court for the Southern District of New York
or if such suit, action or other proceeding may not be brought in such court for
jurisdictional purposes, in the Supreme Court of the State of New York. The use
of mediation will not be construed under the doctrine of laches, waiver or
estoppel to affect adversely the rights of either party.
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7.5 COUNTERPARTS. This Agreement may be signed in counterparts
with the same effect as if both parties had signed one and the same instrument.
7.6 NOTICES. Any communications specifically required
hereunder to be in writing, if sent to the Placement Agent, will be sent by
overnight courier providing a receipt of delivery or by certified or registered
mail to it at D. H.. Blair Investment Banking Corp. 44 Wall Street, New York,
New York, Att: Jonathan Turkel, Esq., with a copy to Bachner, Tally, Polevoy &
Misher LLP, 380 Madison Avenue, New York, New York 10017, Att: Fran Stoller,
Esq. and if sent to the Company, will be sent by overnight courier providing a
receipt of delivery or by certified or registered mail to it at 12 Springdale
Road, Building 11, Cherry Hill, NJ 08003, Att: Robert Kohn, with a copy to
Michelle Kramish Kain, Esq.,750 SE Third Avenue, Suite 100, Fort Lauderdale,
Florida 33316.
7.7 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties with respect to the matters herein referred and
supersedes all prior agreements and understandings, written and oral, between
the parties with respect to the subject matter hereof. Neither this Agreement
nor any term hereof may be changed, waived or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver or termination is sought.
If you find the foregoing is in accordance with our
understanding, kindly sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
us.
Very truly yours,
WORLDWIDE WEB NETWORX CORPORATION
By: //s// Robert D. Kohn
---------------------------------------
Robert D. Kohn, Chief Executive Officer
Agreed:
D. H. BLAIR INVESTMENT BANKING CORP.
By: //s// Martin A. Bell
---------------------------
Name:
Title:
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EXHIBIT A
SCHEDULE 2.2(B)
The following sets forth:
(i) outstanding options, warrants, rights (including conversion or
preemptive rights) or agreements to issue, sell or repurchase any
securities:
(a) Common Stock Purchase Warrants No. 001 for 100,000 shares
issued to Ralph H. Isham dated April 2, 1999, as disclosed in
the Offering Documents.
(b) Common Stock Purchase Warrants No. 001 for 100,000 shares
issued to Arnold P. Kling dated April 2, 1999, as disclosed in
the Offering Documents.
(c) $989,500 face amount Series A 6% Cumulative Convertible
Debentures dated March 22, 1999, as disclosed in the Offering
Documents.
(d) Issuance of 475,000 shares of Common Stock to Gary Lerman, as
disclosed in the Offering Documents.
(e) Issuance of 135,000 shares of Common Stock to Vision
Technologies,Inc. pursuant to the Term Sheet dated July 12,
1999, as disclosed in the Offering Documents.
(f) Issuance of 2,000,000 shares of Common Stock to KIMG, as
disclosed in the Offering Documents.
(g) Issuance of 4,000,000 shares of Common Stock to Warren
Rothstein, as disclosed in the Offering Documents.
(h) Issuance of 1,000,000 shares of Common Stock to Intrac
shareholders pursuant to the Merger Agreement dated as of July
9, 1999, as disclosed in the Offering Documents.
(i) Issuance of 500,000 shares of Common Stock to New America
International, as disclosed in the Offering Documents.
(ii) restrictions on transfer
(iii) cumulative voting or preemptive rights:
The Company's bylaws currently provide for cumulative voting for the
election of directors.
<PAGE>
(iv) registration rights:
(a) Holders of Debentures (amount to be determined on conversion);
(b) D.H. Blair Investment Banking Corp. (2,000,000 shares);
(c) Michelle Kramish Kain (150,000 shares);
(d) Ralph Isham and Arnold Kling (collectively 200,000 shares);
(e) Warren Rothstein (4,000,000 shares).
(v) anti-dilution adjustment:
None
(vi) voting trust, shareholders agreements, pledge agreements, buy-sell,
rights of first offer, proxies;
(a) Shareholders Agreement among the Company, Warren Rothstein and
ATM Service, Ltd. dated December1, 1998
(vii) options or other rights to purchase securities from its shareholders
granted by such shareholders:
(a) Investment Agreement dated as of July 9, 1999 between A. E.
Group and Robert D. Kohn.
<PAGE>
EXHIBIT A
SCHEDULE 2.3
(i) SUBSIDIARIES OF THE COMPANY:
(a) Keiretsu Corporation, a Nevada corporation
(b) Entrade, Inc., a Pennsylvania corporation
(c) Intrac Acquisition Corp., a Delaware corporation
(d) EduNext, a division of WorldWide Web Networx
(e) Admiral Asset Group, Inc. a New Jersey corporation
(f) Admiral Mountain Laurel Corporation, a Pennsylvania
corporation
(g) Entrade.com, Inc., a Pennsylvania corporation
(h) Utiliparts.com, a division of Entrade.com, Inc.
(ii) OWNERSHIP IN CORPORATIONS, JOINT VENTURES OR OTHER ENTITY:
(a) Keystone Investment Management Group, Inc.
(b) Entrade, Inc.
(c) JenCom Digital Technologies
(d) Assetrade.com, Inc.
(e) ATM Service, Ltd.
(f) Admiral Asset Group, Inc.
(i) EduNext
(j) Admiral Mountain Laurel Corporation
<PAGE>
EXHIBIT A
SCHEDULE 2.6
Unpaid indebtedness:
(a) $989,500 in face amount Series A 6% Cumulative Convertible Debentures
<PAGE>
EXHIBIT A
SCHEDULE 2.7
GOVERNMENTAL CONSENTS
None
<PAGE>
EXHIBIT A
SCHEDULE 2.8
LITIGATION
None
<PAGE>
EXHIBIT A
SCHEDULE 2.9
FIVE MOST HIGHLY COMPENSATED EMPLOYEES
<TABLE>
<S> <C> <C>
1. Robert D. Kohn CEO $165,000
2. Michael Norton VP, CFO $100,000
3. Allan Cohen VP, General Counsel $100,000
4. Laura Kohn VP $ 75,000
5. George Perla Controller $ 58,000
</TABLE>
(a) Robert D. Kohn, the Company's President and Chief Executive
Officer, is a party to an employment agreement with Artra Group Incorporated, as
more fully described in the Offering Documents.
<PAGE>
EXHIBIT A
SCHEDULE 2.10
The Company is bound by or a party to options, licenses or
agreements with respect to the Intellectual Property of the following
pursuant to the terms of the following agreements:
(a) Agreement between the Company and JenCom Digital Technologies
dated February 25, 1999 as amended April 28, 1999
(b) Intrac Agreement and Plan of Merger dated July 21, 1999
(c) Vision Technologies Corporation WorldWide Web Networx
Corporation Term Sheet as of July 12, 1999
(d) Operating Agreement of Keystone WorldWide Networx, L.L.C.
dated as of April 5, 1999
(e) License Agreement between Keiretsu Corporation and Marlene K.
Goss dated January 15, 1998
(f) Memorandum of Terms for Joint Venture Between WorldWide Web
Networx and NAI dated July 6, 1999
<PAGE>
EXHIBIT A
SCHEDULE 2.12
(i) As disclosed in the Offering Documents, the Company has
declared a contingent right to receive, on a pro-rata basis to
the Company's shareholders of record as of April 7, 1999, 25%
of the shares of Common Stock that the Company is to receive
of Artra Group Incorporated ("Artra") in the event that the
merger with Artra is consummated
(ii) As disclosed in the Offering Documents, the Company has made
the following loans and advances:
(a) $900,000 to JenCom Digital Technologies
(b) $1,200,000 to Vision Technologies, Inc.
(iii) As disclosed in the Offering Documents, the Company entered
into a Merger Agreement dated February 23, 1999 and certain
related agreements which, if consummated will result in the
Company reducing its interest in Entrade, Inc., the Company's
wholly owned subsidiary to approximately 15%.
(d) As disclosed in the Offering Documents, the Company is obligated to
register the shares of Common Stock issuable upon the conversion of the
Debentures. In the event that such shares are not registered in
accordance with the terms of the Debentures, the Company may be
obligated to pay a penalty fee, the amount of which would not have a
Material Adverse Effect.
<PAGE>
EXHIBIT A
SCHEDULE 2.13
No matters to be disclosed on this Schedule.
<PAGE>
EXHIBIT A
SCHEDULE 2.14
MATERIAL AGREEMENTS:
(a) Merger Agreement and all agreements related thereto among the Company,
Artra Group Incorporated, N.A. Acquisition Corp. (n/k/a Entrade, Inc.)
dated on or about February 23, 1999.
(b) Agreement between the Company and JenCom Digital Technologies dated
February 25, 1999 as Amended April 28, 1999
(c) Memorandum of Terms for Shareholders Agreement for ATM Service, Ltd.
dated July 9, 1999
(d) Stock Issuance Agreement dated as of December 1, 1998 between Warren
Rothstein and WorldWide Web Networx Corporation, amended by First
Amendment to Stock Issuance Agreement dated as of July 9, 1999
(e) Intrac Agreement and Plan of Merger dated July 21, 1999
(f) Vision Technologies Corporation WorldWide Web Networx Corporation Term
Sheet as of July 12, 1999
(g) Operating Agreement of Keystone WorldWide Networx, L.L.C. dated as of
April 5, 1999
(h) Memorandum of Terms for Joint Venture Between WorldWide Web Networx and
NAI dated July 6, 1999
<PAGE>
EXHIBIT A
SCHEDULE 2.15
<TABLE>
<S> <C> <C>
Keiretsu Federal 1997, 1998 New Jersey 1997, 1998
WorldWide Web Networx Federal 1998 New Jersey 1998
</TABLE>
<PAGE>
Exhibit 10.20
WORLDWIDE WEB NETWORX CORPORATION
SUBSCRIPTION AGREEMENT made as of this ____ day of ________, 1999
between WorldWide Web NetworX Corporation, a Delaware corporation with its
principal offices at 12 Springdale Road, Building 11, Cherry Hill, New Jersey
08003 (the "Company") and the undersigned (the "Subscriber").
WHEREAS, the Company desires to issue a minimum of 60 (the "Minimum
Offering") and a maximum of 240 (the "Maximum Offering") units in a private
placement, each Unit consisting of 66,667 shares (the "Shares") of the Company's
common stock, $.001 par value (the "Common Stock") on the terms and conditions
set forth herein and in the Confidential Private Placement Offering Memorandum
dated May 26, 1999 (the "Memorandum") and the Subscriber desires to acquire that
number of Units set forth on the signature page hereof;
WHEREAS, the Maximum Offering may be increased by up to 20 additional
Units to cover over-subscriptions;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
I. SUBSCRIPTION FOR UNITS AND REPRESENTATIONS BY AND COVENANTS OF
SUBSCRIBER
1.1 Subject to the terms and conditions hereinafter set forth,
the Subscriber hereby subscribes for and agrees to purchase from the Company
such number of Units as is set forth upon the signature page hereof at a price
equal to $100,000 per Unit, and the Company agrees to sell such Units to the
Subscriber for said purchase price subject to the Company's right to sell to the
Subscriber such lesser number of Units as it may, in its sole discretion, deem
necessary or desirable. The purchase price is payable by certified or bank check
made payable to "American Stock Transfer & Trust Company as escrow agent for
WorldWide Web NetworX", or by wire transfer of funds, contemporaneously with the
execution and delivery of this Subscription Agreement. The certificates for the
Shares will be delivered by the Company within 10 days following the
consummation of this offering as set forth in Article III hereof. The Subscriber
understands however, that this purchase of Units is contingent upon the Company
making sales of a minimum of 60 Units for a purchase price of $6,000,000 prior
to the Termination Date as defined in Article III hereof.
1.2 The Subscriber recognizes that the purchase of Units
involves a high degree of risk in that (i) the Company requires substantial
funds in addition to the proceeds of this private placement; (ii) an investment
in the Company is highly speculative and only investors who can afford the loss
of their entire investment should consider investing in the Company and the
Units; (iii) he may not be able to liquidate his investment; (iv)
transferability of the Shares is extremely limited; and (v) an investor could
sustain the loss of his entire investment, as well as other risk factors, as
more fully set forth herein and in the Memorandum.
<PAGE>
1.3 The Subscriber represents that he is an
"accredited investor" as such term in defined in Rule 501 of Regulation D
promulgated under the United States Securities Act of 1933, as amended (the
"Act"), as indicated by his responses to the Investor Questionnaire, and that he
is able to bear the economic risk of an investment in the Units.
1.4 The Subscriber acknowledges that he has prior
investment experience, including investment in non-listed and non-registered
securities, or he has employed the services of an investment advisor, attorney
or accountant to read all of the documents furnished or made available by the
Company both to him and to all other prospective investors in the Units and to
evaluate the merits and risks of such an investment on his behalf, and that he
recognizes the highly speculative nature of this investment.
1.5 The Subscriber acknowledges receipt and careful
review of the Memorandum and the attachments thereto (the "Offering Documents")
and hereby represents that he has been furnished by the Company during the
course of this transaction with all information regarding the Company which he
had requested or desired to know; that all documents which could be reasonably
provided have been made available for his inspection and review; that he has
been afforded the opportunity to ask questions of and receive answers from duly
authorized officers or other representatives of the Company concerning the terms
and conditions of the offering, and any additional information which he had
requested.
1.6 The Subscriber acknowledges that this offering of
Units may involve tax consequences and that the contents of the Offering
Documents do not contain tax advice or information. The Subscriber acknowledges
that he must retain his own professional advisors to evaluate the tax and other
consequences of an investment in the Units.
1.7 The Subscriber acknowledges that this offering of
Units has not been reviewed by the United States Securities and Exchange
Commission ("SEC") because of the Company's representations that this is
intended to be a non-public offering pursuant to Sections 4(2) or 3(b) of the
Act. The Subscriber represents that the Shares comprising his Units are being
purchased for his own account, for investment and not for distribution or resale
to others. The Subscriber agrees that he will not sell or otherwise transfer
such securities unless they are registered under the Act or unless an exemption
from such registration is available.
1.8 The Subscriber understands that the Shares
comprising the Units have not been registered under Act by reason of a claimed
exemption under the provisions of the Act which depends, in part, upon his
investment intention. In this connection, the Subscriber understands that it is
the position of the SEC that the statutory basis for such exemption would not be
present if his representation merely meant that his present intention was to
hold such securities for a short period, such as the capital gains period of tax
statutes, for a deferred sale, for a market rise, assuming that a market
develops, or for any other fixed period. The Subscriber realizes that, in the
view of the SEC, a purchase now with an intent to resell would represent a
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<PAGE>
purchase with an intent inconsistent with his representation to the Company, and
the SEC might regard such a sale or disposition as a deferred sale to which such
exemptions are not available.
1.9 The Subscriber understands that there is only a
limited public market for any of the Company's securities. The Subscriber
understands that even if a liquid public market develops for the Company's
Common Stock, Rule 144 (the "Rule") promulgated under the Act requires, among
other conditions, a one year holding period prior to the resale (in limited
amounts) of securities acquired in a non-public offering without having to
satisfy the registration requirements under the Act. The Subscriber understands
that the Company makes no representation or warranty regarding its fulfillment
in the future of any reporting requirements under the Securities Exchange Act of
1934, as amended, or its dissemination to the public of any current financial or
other information concerning the Company, as is required by the Rule as one of
the conditions of its availability. The Subscriber understands and hereby
acknowledges that the Company is under no obligation to register the securities
comprising the Units under the Act, with the exception of certain registration
rights set forth in Article IV herein. The Subscriber consents that the Company
may, if it desires, permit the transfer of the Shares out of his name only when
his request for transfer is accompanied by an opinion of counsel reasonably
satisfactory to the Company that neither the sale nor the proposed transfer
results in a violation of the Act or any applicable state "blue sky" laws
(collectively "Securities Laws") and subject to the provisions of Section 1.10
hereof. The Subscriber agrees to hold the Company and its directors, officers
and controlling persons and their respective heirs, representatives, successors
and assigns harmless and to indemnify them against all liabilities, costs and
expenses incurred by them as a result of any misrepresentation made by him
contained herein or in the Investor Questionnaire or any sale or distribution by
the undersigned Subscriber in violation of any Securities Laws.
1.10 The Subscriber agrees not to publicly sell,
transfer or assign the Shares, without the prior written consent of the Company
and the Placement Agent, for a period of one year from the Initial Closing and
thereafter to sell their Shares only in the following amounts on a cumulative
basis: !80 days after the first anniversary of the Initial Closing--one third of
their holdings; Between 180 days and 360 days after the first anniversary of the
Initial Closing-- one third of their holdings; Commencing the 361st day after
the first anniversary of the Initial Closing-- one third of their holdings.
1.11 The Subscriber consents to the placement of a
legend on any certificate or other document evidencing the Shares stating that
they have not been registered under the Act and setting forth or referring to
the restrictions on transferability and sale thereof.
1.12 The Subscriber understands that the Company will
review this Subscription Agreement and the Investor Questionnaire and is hereby
given authority by the undersigned to call his bank or place of employment or
otherwise review the financial standing of the Subscriber; and it is further
agreed that the Company reserves the unrestricted right to reject or limit any
subscription and to close the offer at any time.
3
<PAGE>
1.13 The Subscriber hereby represents that the
address of Subscriber furnished by him at the end of this Subscription Agreement
is the undersigned's principal residence if he is an individual or its principal
business address if it is a corporation or other entity.
1.14 The Subscriber acknowledges that if he is a
Registered Representative of a National Association of Securities Dealers, Inc.
("NASD") member firm, he must give such firm the notice required by the NASD
Conduct Rules, or any applicable successor rules of the NASD receipt of which
must be acknowledged by such firm on the signature page hereof.
1.15 The Subscriber hereby represents that, except as
set forth in the Offering Documents, no representations or warranties have been
made to the Subscriber by the Company or any agent, employee or affiliate of the
Company and in entering into this transaction, the Subscriber is not relying on
any information, other than that contained in the Offering Documents and the
results of independent investigation by the Subscriber.
1.16 The Subscriber agrees that he will sell the
Shares pursuant to a registration statement (i) only for the purposes of raising
funds or diversifying his portfolio and (ii) only to or through broker dealers,
from time to time in transactions on the Nasdaq Stock Market or on the
Electronic Bulletin Board, in negotiated transactions or otherwise in compliance
with applicable laws.
1.17 If the undersigned Subscriber is a partnership,
corporation, trust or other entity, such partnership, corporation, trust or
other entity further represents and warrants that: (i) it was not formed for the
purpose of investing in the Company; (ii) it is authorized and otherwise duly
qualified to purchase and hold the Units; and (iii) that this Subscription
Agreement has been duly and validly authorized, executed and delivered
constitutes the legal, binding and enforceable obligation of the undersigned.
II. REPRESENTATIONS BY THE COMPANY
The Company represents and warrants to the Subscriber
that prior to the consummation of this offering and at the Closing Date:
(a) The Company is a corporation duly organized,
existing and in good standing under the laws of the State of Delaware and has
the corporate power to conduct the business which it conducts and proposes to
conduct.
(b) The execution, delivery and performance of this
Subscription Agreement by the Company will have been duly approved by the Board
of Directors of the Company and all other actions required to authorize and
effect the offer and sale of the Units and the securities contained therein will
have been duly taken and approved.
4
<PAGE>
(c) The Shares comprising the Units have been duly
and validly authorized and when issued and paid for in accordance with the terms
hereof, will be valid and binding obligations of the Company enforceable in
accordance with their respective terms.
(d) The Company has obtained, or is in the process of
obtaining, all licenses, permits and other governmental authorizations necessary
to the conduct of its business; such licenses, permits and other governmental
authorizations obtained are in full force and effect; and the Company is in all
material respects complying therewith.
(e) The Company knows of no pending or threatened
legal or governmental proceedings to which the Company is a party which could
materially adversely affect the business, property, financial condition or
operations of the Company.
(f) The Company is not in violation of or default
under, nor will the execution and delivery of this Subscription Agreement, the
issuance of the Shares, and the incurrence of the obligations herein and therein
set forth and the consummation of the transactions herein or therein described,
result in a violation of, or constitute a default under, the certificate of
incorporation or by-laws, in the performance or observance of any material
obligations, agreement, covenant or condition contained in any bond, debenture,
note or other evidence of indebtedness or in any material contract, indenture,
mortgage, loan agreement, lease, joint venture or other agreement or instrument
to which the Company is a party or by which it or any of its properties may be
bound or in violation of any material order, rule, regulation, writ, injunction,
or decree of any government, governmental instrumentality or court, domestic or
foreign.
(g) The financial information contained in the
Memorandum presents fairly the financial condition of the Company as of the date
and for the periods indicated.
III. TERMS OF SUBSCRIPTION
3.1 The subscription period will begin as of May 26,
1999 and will terminate at 11:59 PM Eastern daylight time as to the sale of the
first 20 Units on June 28, 1999. If the first 60 Units are sold by June 28,
1999, then the Offering as to the remaining 180 Units will continue until
August 25, 1999, unless extended by the Company and the Placement Agent for up
to an additional 45 days (the "Termination Date"). Of the Units, 60 will be
offered on a "best efforts-all or none" basis and the remaining 180 Units will
be offered on a "best efforts" basis as more particularly set forth in the
Memorandum. The minimum subscription per subscriber shall be one Unit
($100,000), provided, however, that fractional Units may be accepted at the
discretion of the Placement Agent and the Company.
3.2 Placement of the Units will be made by D. H.
Blair Investment Banking Corp., as Placement Agent, which will receive (i) a
placement fee in the amount of 10% of the purchase price of the Units placed;
(ii) a non-accountable expense allowance of 3% of the
5
<PAGE>
purchase price of the Units; (iii) reimbursement of up to $25,000 of legal fees;
(iv) warrants to purchase at $1.80 per share the number of shares equal to 10%
of the Shares sold in the offering; and (v) other compensation as summarized in
the Memorandum.
3.3 Pending the sale of the first 60 Units, all funds
paid hereunder shall be deposited by the Company in escrow with American Stock
Transfer & Trust Company, 40 Wall Street, New York, New York. If the Company
shall not have obtained subscriptions (including this subscription) for
purchases of 60 Units for an aggregate purchase price of $2,000,000 on or before
June 28, 1999, then this subscription shall be void and all funds paid hereunder
by the Subscriber, without interest, shall be promptly returned to the
Subscriber, subject to paragraph 3.5 hereof. If 60 Units are sold at or prior to
June 28, 1999, then all subscription proceeds shall be paid over to the Company
at an initial closing to be held within ten days thereafter (the "Initial
Closing Date"). In such event, placements of additional Units may continue until
the Termination Date, with subsequent releases of funds to be at the mutual
consent of the Company and the Placement Agent.
3.4 The Subscriber hereby authorizes and directs the
Company to deliver the securities to be issued to such Subscriber pursuant to
this Subscription Agreement either (a) to the residential or business address
indicated in the Investor Questionnaire or (b) directly to the Placement Agent.
(If the Subscriber does not desire the securities to be delivered to the
Placement Agent, the Subscriber should delete Subsection (b) of this Section
3.4.)
3.5 The Subscriber hereby authorizes and directs the
Company to return any funds for unaccepted subscriptions to the same account
from which the funds were drawn.
3.6 The Subscriber acknowledges that at such time, if
ever, as any of the Securities are registered, sales of such Securities will be
subject to state securities laws, including those of states which may require
any securities sold therein to be sold through a registered broker-dealer or in
reliance upon an exemption from registration.
3.8 If the Subscriber is not a United States person,
such Subscriber hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Securities or any use of this Agreement, including (i) the
legal requirements within its jurisdiction for the purchase of the Securities,
(ii) any foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained, and (iv) the income
tax and other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale or transfer of the Securities. Such Subscriber's
subscription and payment for, and his or her continued beneficial ownership of
the Securities, will not violate any applicable securities or other laws of the
Subscriber's jurisdiction.
IV. REGISTRATION RIGHTS
6
<PAGE>
4.1 REQUIRED REGISTRATION. The Company hereby agrees
with the holders of the Shares or their transferees (collectively, the
"Holders") to prepare and file with the SEC within 10 months after the Initial
Closing Date a registration statement under the Act covering the resale of the
Shares and to use its best efforts to cause such registration statement to
become effective no later than one year after the Initial Closing Date.
The obligation of the Company under this Section 4.1 shall be limited
to one registration statement. The Company shall pay the expenses described in
Section 4.4 for the registration statement filed pursuant to this Section 4.1,
except for underwriting discounts and commissions and legal fees of the Holders,
which shall be borne by the Holders.
4.2 "PIGGYBACK" REGISTRATION RIGHTS. Except for the
registration statement to be filed by the Company immediately after the
Termination Date to register shares other than those Shares sold in this
Offering, if the Company shall determine to proceed with the actual preparation
and filing of a registration statement under the Act in connection with the
proposed offer and sale of any of its securities by it or any of its security
holders (other than a registration statement on Form S-4, S-8 or other limited
purpose form), then the Company will give written notice of its determination to
all record holders of the Shares. Upon the written request from any Holder, the
Company will, except as herein provided, cause all such Shares to be included in
such registration statement, all to the extent requisite to permit the sale or
other disposition by the prospective seller or sellers of the Shares to be so
registered; provided, further, that nothing herein shall prevent the Company
from, at any time, abandoning or delaying any registration. If any registration
pursuant to this Section 4.2 shall be underwritten in whole or in part, the
Company may require that the Shares requested for inclusion pursuant to this
Section 4.2 be included in the underwriting on the same terms and conditions as
the securities otherwise being sold through the underwriters. If in the good
faith judgment of the managing underwriter of such public offering, the
inclusion of the Shares requested for inclusion pursuant to this Section 4.2
together with any other shares which have similar piggyback registration rights
(such shares and the Shares being collectively referred to as the "Requested
Stock") would reduce the number of shares to be offered by the Company or
interfere with the successful marketing of the shares of stock offered by the
Company, the number of shares of Requested Stock otherwise to be included in the
registration statement may be reduced pro rata (by number of shares) among the
holders thereof requesting such registration or excluded in their entirety if so
required by the underwriter. To the extent only a portion of the Requested Stock
is included in the registration statement, those shares of Requested Stock which
are thus excluded from the underwritten public offering shall be withheld from
the market by the holders thereof for a period, not to exceed 120 days, which
the managing underwriter reasonably determines is necessary in order to effect
the underwritten public offering.
The obligation of the Company under this Section 4.2 shall be limited
to two registration statements and shall not apply if the Shares are then freely
salable without volume limitations under Rule 144(k) of the Act. The Company
shall pay the expenses described in Section 4.4 for
7
<PAGE>
the registration statement filed pursuant to this Section 4.2, except for
underwriting discounts and commissions and legal fees of the Holders, which
shall be borne by the Holders.
4.3 REGISTRATION PROCEDURES. If and whenever the
Company is required by the provisions of Section 4.1 or 4.2 to effect the
registration of Shares under the Act, the Company will:
(a) prepare and file with the SEC a registration
statement with respect to such securities, and use its best efforts to cause
such registration statement to become and remain effective until the Shares are
freely salable without the volume limitations of Rule 144;
(b) prepare and file with the SEC such amendments
to such registration statement and supplements to the prospectus contained
therein as may be necessary to keep such registration statement effective until
the Shares are freely salable without the volume limitations of Rule 144;
(c) furnish to the Holders participating in such
registration and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities;
(d) use its best efforts to register or qualify
the securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as such participating Holders
may reasonably request in writing within 20 days following the original filing
of such registration statement, except that the Company shall not for any
purpose be required to execute a general consent to service of process or to
qualify to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified;
(e) notify the Holders participating in such
registration, promptly after it shall receive notice thereof, of the time when
such registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
(f) notify the Placement Agent promptly of any
request by the SEC for the amending or supplementing of such registration
statement or prospectus or for additional information;
(g) prepare and file with the SEC, promptly upon
the request of any such Holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel for such
Holders (and concurred in by counsel for the Company), is required under the Act
or the rules and regulations thereunder in connection with the distribution of
the Shares by such Holders;
8
<PAGE>
(h) prepare and promptly file with the SEC and
promptly notify such Holders of the filing of such amendment or supplement to
such registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Act, any event shall have
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances in which they were made, not misleading; and
(i) advise such Holders, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the SEC suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued.
4.4 EXPENSES.
(a) With respect to the registration required
pursuant to Section 4.1 or 4.2 hereof, all fees, costs and expenses of and
incidental to such registration, inclusion and public offering (as specified in
paragraph (b) below) in connection therewith shall be borne by the Company,
provided, however, that Holders participating in such registration shall bear
their pro rata share of the underwriting discount and commissions and transfer
taxes.
(b) The fees, costs and expenses of registration
to be borne by the Company as provided in paragraph (a) above shall include,
without limitation, all registration, filing, and NASD fees, printing expenses,
fees and disbursements of counsel and accountants for the Company, and all legal
fees and disbursements and other expenses of complying with state securities or
blue sky laws of any jurisdictions in which the securities to be offered are to
be registered and qualified (except as provided in 4.4(a) above). Fees and
disbursements of counsel and accountants for the participating Holders and any
other expenses incurred by the participating Holders not expressly included
above shall be borne by the such Holders.
4.5 INDEMNIFICATION.
(a) The Company will indemnify and hold harmless
each Holder of Shares which are included in a registration statement pursuant to
the provisions of Section 4.1 or 4.2 hereof, its directors and officers, and any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or such underwriter within the meaning of the Act, from and
against, and will reimburse such Holder and each such underwriter and
controlling person with respect to, any and all loss, damage, liability, cost
and expense to which such holder or any such underwriter or controlling person
may become subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
any
9
<PAGE>
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, damage, liability, cost or expenses arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by or on
behalf of such Holder, its directors and officers, such underwriter or such
controlling person in writing specifically for use in the preparation thereof.
(b) Each Holder of Shares included in a
registration pursuant to the provisions of Section 4.1 or 4.2 hereof will
indemnify and hold harmless the Company, its directors and officers, any
controlling person and any underwriter from and against, and will reimburse the
Company, its directors and officers, any controlling person and any underwriter
with respect to, any and all loss, damage, liability, cost or expense to which
the Company or any controlling person and/or any underwriter may become subject
under the Act or otherwise, insofar as such losses, damages, liabilities, costs
or expenses are caused by any untrue statement or alleged untrue statement of
any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, in each case
to the extent that such untrue statement or alleged untrue statement or omission
or alleged omission was so made in conformity with written information furnished
by or on behalf of such Holder specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified
party pursuant to the provisions of paragraph (a) or (b) of this Section 4.5 of
notice of the commencement of any action involving the subject matter of the
foregoing indemnity provisions such indemnified party will, if a claim thereof
is to be made against the indemnifying party pursuant to the provisions of said
paragraph (a) or (b), promptly notify the indemnifying party of the commencement
thereof; but the omission to so notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
hereunder. In case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party,
provided, however, if the defendants in any action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or in addition to those available
to the indemnified party, or if there is a conflict of interest which would
prevent counsel for the indemnifying party from also representing the
indemnified party, the indemnified party or parties have the right to select
separate counsel to participate in the defense of such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its
10
<PAGE>
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party pursuant to the provisions of said paragraph
(a) or (b) for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation, unless (i) the indemnified party shall have employed
counsel in accordance with the provisions of the preceding sentence, (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after the notice of the commencement of the action or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.
V. MISCELLANEOUS
5.1 Any notice or other communication given hereunder
shall be deemed sufficient if in writing and sent by registered or certified
mail, return receipt requested, addressed to the Company, at its registered
office, 12 Springdale Road, Building 11, Cherry Hill, NJ 08003, Attention:
President and to the Subscriber at his address indicated on the last page of
this Subscription Agreement. Notices shall be deemed to have been given on the
date of mailing, except notices of change of address, which shall be deemed to
have been given when received.
5.2 This Subscription Agreement shall not be changed,
modified or amended except by a writing signed by the parties to be charged, and
this Subscription Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
5.3 This Subscription Agreement shall be binding upon
and inure to the benefit of the parties hereto and to their respective heirs,
legal representatives, successors and assigns. This Subscription Agreement sets
forth the entire agreement and understanding between the parties as to the
subject matter thereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
5.4 Notwithstanding the place where this Subscription
Agreement may be executed by any of the parties hereto, the parties expressly
agree that all the terms and provisions hereof shall be construed in accordance
with and governed by the laws of the State of New York. The parties hereby agree
that any dispute which may arise between them arising out of or in connection
with this Subscription Agreement shall be adjudicated before a court located in
New York City and they hereby submit to the exclusive jurisdiction of the courts
of the State of New York located in New York, New York and of the federal courts
in the Southern District of New York with respect to any action or legal
proceeding commenced by any party, and irrevocably waive any objection they now
or hereafter may have respecting the venue of any such action or proceeding
brought in such a court or respecting the fact that such court is an
inconvenient forum, relating to or arising out of this Subscription Agreement or
any acts or omissions relating to the sale of the securities hereunder, and
consent to the service of process in any such action or legal proceeding by
means of registered or certified mail, return receipt
11
<PAGE>
requested, in care of the address set forth below or such other address as the
undersigned shall furnish in writing to the other.
5.5 This Subscription Agreement may be executed in
counterparts. Upon the execution and delivery of this Subscription Agreement by
the Subscriber, this Subscription Agreement shall become a binding obligation of
the Subscriber with respect to the purchase of Units as herein provided;
subject, however, to the right hereby reserved to the Company to enter into the
same agreements with other subscribers and to add and/or to delete other persons
as subscribers.
5.6 The holding of any provision of this Subscription
Agreement to be invalid or unenforceable by a court of competent jurisdiction
shall not affect any other provision of this Subscription Agreement, which shall
remain in full force and effect.
5.7 It is agreed that a waiver by either party of a
breach of any provision of this Subscription Agreement shall not operate, or be
construed, as a waiver of any subsequent breach by that same party.
5.8 The parties agree to execute and deliver all such
further documents, agreements and instruments and take such other and further
action as may be necessary or appropriate to carry out the purposes and intent
of this Subscription Agreement.
5.9 The Company agrees not to disclose the names,
addresses or any other information about the Subscribers, except as required by
law, provided, that the Company may provide information relating to the
Subscriber as required in any registration statement under the Act with respect
to the Shares.
VI. BLUE SKY LEGENDS
CONNECTICUT
The undersigned acknowledges that the Securities have
not been registered under the Connecticut Uniform Securities Act, as amended
(the "Act") and are subject to restrictions on transferability and sale of
securities as set forth herein. The undersigned hereby agrees that such
Securities will not be transferred or sold without registration under the Act or
exemption therefrom.
MAINE
These securities are being sold pursuant to an
exemption from registration with the bank superintendent of the State of Maine
under Section 10502(2)(r) of Title 32 of the Maine revised statutes. These
securities may be deemed restricted securities and as such the
12
<PAGE>
holder may not be able to resell the securities unless pursuant to registration
under state or federal securities laws or unless an exemption under such laws
exists.
MISSOURI
The undersigned acknowledges that the Securities have
not been registered under the Missouri Uniform Securities Act, as amended (the
"Act") and are subject to restrictions on transferability and sale of securities
as set forth herein. The undersigned hereby acknowledges that such Securities
may be disposed of ONLY through a licensed broker-dealer. It is a felony to sell
securities in violation of the Missouri Securities Act.
TEXAS
The undersigned hereby acknowledges that the
Securities cannot be sold unless they are subsequently registered under the
Securities Act of 1933, as amended, and the Texas Securities Act, or an
exemption from registration is available. The undersigned further acknowledges
that because the Securities are not readily transferable, he must bear the
economic risk of his investment for an indefinite period of time.
13
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Subscription Agreement as of the day and year first written above.
- ------------------------------ ------------------------------------
Signature of Subscriber Signature of Co-Subscriber
- ------------------------------ ------------------------------------
Name of Subscriber Name of Co-Subscriber
[please print]
- ------------------------------ ------------------------------------
Address of Subscriber Address of Co-Subscriber
- ------------------------------ ------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Subscriber Identification Number of
Co-Subscriber
- -----------------------------
Subscriber's Account Number
at D. H. Blair Investment Banking Corp.
- ------------------------------
Number of Units Subscribed For
*IF SUBSCRIBER IS A REGISTERED REPRESENTATIVE
WITH AN NASD MEMBER FIRM, HAVE THE FOLLOWING
ACKNOWLEDGEMENT SIGNED BY THE APPROPRIATE PARTY:
The undersigned NASD member firm
acknowledges receipt of the notice
required by Rule 3050 of the NASD Subscription Accepted:
Conduct Rules.
WORLDWIDE WEB NETWORX
CORPORATION
- ------------------------------
Name of NASD Member Firm By: ______________________________
Robert Kohn, President
By ______________________________
Authorized Officer
<PAGE>
Exhibit 10.21
FIRST AMENDMENT TO STOCK ISSUANCE AGREEMENT
THIS FIRST AMENDMENT TO STOCK ISSUANCE AGREEMENT (this "AMENDMENT"),
dated as of July 9, 1999, between WARREN ROTHSTEIN ("ROTHSTEIN") and WORLDWIDE
WEB NETWORX CORPORATION, a Delaware corporation ("WWWX").
BACKGROUND
The parties have entered into a Stock Issuance Agreement, dated
December 1, 1998 governing the terms and conditions under which WWWX is to issue
shares of its common stock to Rothstein (the "STOCK ISSUANCE AGREEMENT";
capitalized terms used but not defined herein have the respective meanings set
forth in the Stock Issuance Agreement).
Simultaneous with the execution of this Amendment, (a) WWWX is entering
into an Agreement to acquire The Intrac Group, a Nevada corporation and (b)
WWWX, Rothstein, and the shareholders of The Intrac Group are entering into a
Term Sheet for a Shareholders Agreement for ATM Service, Ltd. (collectively the
"INTRAC TRANSACTIONS")
In connection with the Intrac Transactions, the parties wish to amend
the Stock Issuance Agreement.
AGREEMENT
In consideration of the premises and agreements contained in this
Amendment, the parties to this Amendment agree as follows:
SECTION 1. AMENDMENTS TO STOCK ISSUANCE AGREEMENT. Effective as of the
date of this Amendment, the Stock Issuance Agreement is hereby amended as
follows:
(a) Section 1.1(a) is amended by replacing "5,000,000" in such section
with "4,000,000".
(b) Section 1.1(b) is deleted in its entirety.
(c) Section 1.5 is deleted in its entirety. INITIALS [MN] [WR]
(d) Section 2.1 is deleted in its entirety and replaced with
"Reserved".
(e) Sections 2.2, 2.3, 2.4, and 2.5 are deleted in their entirety.
SECTION 2. ISSUANCE OF SHARE CERTIFICATE. On the closing of the Intrac
Transactions, WWWX will issue a share certificate representing 4,000,000 shares
of common stock in the name of Warren Rothstein.
<PAGE>
SECTION 3. REFERENCE TO AND EFFECT ON THE STOCK ISSUANCE AGREEMENT. (a)
Effective as of the date of this Amendment, each reference in the Stock Issuance
Agreement to "this Agreement", "hereunder", "hereof", and "herein", or words of
like import referring to in the Stock Issuance Agreement shall mean and be a
reference to the Stock Issuance Agreement as amended by this Amendment.
(b) Except as specifically amended in this Amendment, the Stock
Issuance Agreement shall remain in full force and effect and is hereby ratified
and confirmed.
(c) The execution, delivery, and effectiveness of this Amendment is
limited as precisely as written and, except as expressly provided in this
Amendment, may not be deemed to be a consent to any waiver or modification of
any other term or condition of the Stock Issuance Agreement or any of the
instruments or documents referred to in the Stock Issuance Agreement.
SECTION 4. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ALL
RESPECTS UNDER THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAWS PROVISIONS.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
INITIALS [WR]
[MN]
<PAGE>
IN WITNESS WHEREOF, each of the parties to this Amendment have executed this
Amendment as of the date first written above.
//s// W. Rothstein
--------------------------------
WARREN ROTHSTEIN
WORLDWIDE WEB NETWORX
CORPORATION
By //s// Michael E. Norton
--------------------------------
Name: Michael E. Norton
Title: Vice President and Chief Financial Officer
<PAGE>
Exhibit 10.22
[EXECUTION COPY]
AGREEMENT AND PLAN OF MERGER
Dated as of July 9, 1999
among
WORLDWIDE WEB NETWORX CORPORATION,
INTRAC ACQUISITION CORPORATION,
THE INTRAC GROUP
and
THE SELLERS SIGNATORY HERETO
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NUMBER
<S> <C>
ARTICLE I DEFINITIONS............................................................................................1
1.1 DEFINED TERMS.......................................................................................1
ARTICLE II THE MERGER, THE SURVIVING CORPORATION; CONVERSION OF SHARES...........................................9
2.1 THE MERGER..........................................................................................9
2.2 THE SURVIVING CORPORATION..........................................................................10
2.3 CONVERSION OF SHARES...............................................................................10
2.4 CLOSING OF TRANSFER BOOKS..........................................................................11
ARTICLE III MERGER AND CLOSING..................................................................................11
3.1 CLOSING............................................................................................11
3.2. MERGER CONSIDERATION...............................................................................12
3.3 WORKING CAPITAL CONTRIBUTION.......................................................................12
3.4 FURTHER ASSURANCES; POST-CLOSING COOPERATION.......................................................12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS
AND INTRAC
4.1 AUTHORITY ........................................................................................13
4.2 ORGANIZATION OF INTRAC.............................................................................13
4.3 CAPITALIZATION AND OWNERSHIP.......................................................................13
4.4 TITLE TO SHARES....................................................................................14
4.5 SUBSIDIARIES.......................................................................................14
4.6 NO CONFLICTS.......................................................................................14
4.7 GOVERNMENTAL APPROVALS AND FILINGS.................................................................15
4.8 BOOKS AND RECORDS..................................................................................15
4.9 FINANCIAL STATEMENTS...............................................................................15
4.10 ABSENCE OF CHANGES.................................................................................15
4.11 UNDISCLOSED LIABILITIES............................................................................17
4.12 TAXES..............................................................................................18
4.13 COMPLIANCE WITH LAWS AND ORDERS....................................................................19
4.14 BENEFIT PLANS; ERISA...............................................................................19
4.15 REAL PROPERTY......................................................................................19
4.16 TANGIBLE PERSONAL PROPERTY: INVESTMENT ASSETS.....................................................19
4.17 INTELLECTUAL PROPERTY RIGHTS.......................................................................19
4.18 CONTRACTS..........................................................................................19
4.19 LITIGATION AND CLAIMS..............................................................................21
4.20 LICENSES...........................................................................................21
4.21 INSURANCE..........................................................................................21
4.22 ENVIRONMENTAL MATTERS..............................................................................21
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
4.23 PRODUCT WARRANTY...................................................................................21
4.24 BROKERS............................................................................................21
4.25 PRODUCT WARRANTY...................................................................................22
4.26 AFFILIATE TRANSACTIONS.............................................................................22
4.27 EMPLOYEES: LABOR RELATIONS.........................................................................22
4.28 ENVIRONMENTAL MATTERS .............................................................................22
4.29 BANK AND BROKERAGE ACCOUNTS........................................................................22
4.30 DISCLOSURE.........................................................................................23
ARTICLE V REPRESENTATIONS AND WARRANTIES OF WWWX AND ACQUISITION SUB............................................23
5.1 ORGANIZATION.......................................................................................23
5.2 AUTHORITY..........................................................................................23
5.3 NO CONFLICTS.......................................................................................23
5.4 GOVERNMENTAL APPROVALS AND FILINGS.................................................................24
5.5 PURCHASE FOR INVESTMENT............................................................................24
5.6 BROKERS............................................................................................24
5.7 WWWX SHARES........................................................................................24
5.8 BUSINESS...........................................................................................25
5.9 COMPLETION OF DUE............................................................................ 25
ARTICLE VI COVENANTS OF INTRAC AND THE SELLERS..................................................................25
6.1 REGULATORY AND OTHER APPROVALS.....................................................................25
6.2 INVESTIGATION BY WWWX AND ACQUISITION SUB..........................................................26
6.3 CONDUCT OF BUSINESS................................................................................26
6.4 EMPLOYEE MATTERS...................................................................................27
6.5 CERTAIN RESTRICTIONS...............................................................................27
6.6 AFFILIATE TRANSACTIONS.............................................................................28
6.7 BOOKS AND RECORDS..................................................................................28
6.8 NOTICE AND CURE....................................................................................29
6.9 FULFILLMENT OF CONDITIONS..........................................................................29
6.10 COMPOSITION OF BOARD OF DIRECTORS..............................................................Page #
ARTICLE VII COVENANTS OF WWWX AND ACQUISITION SUB...............................................................29
7.1 REGULATORY AND OTHER APPROVALS.....................................................................29
7.2 NOTICE AND CURE....................................................................................30
7.3 FULFILLMENT OF CONDITIONS..........................................................................30
7.4 BUSINESS...........................................................................................30
7.5 COMPLETION OF DUE DILIGENCE........................................................................31
7.6 MANAGEMENT OF ACQUISITION SUB.....................................................................31
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF WWWX AND ACQUISITION SUB..............................................31
8.1 REPRESENTATIONS AND WARRANTIES.....................................................................31
8.2 PERFORMANCE........................................................................................31
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
8.3 SELLERS' CERTIFICATE; OFFICERS' CERTIFICATES.......................................................31
8.4 ORDERS AND LAWS....................................................................................32
8.5 REGULATORY CONSENTS AND APPROVALS..................................................................32
8.6 THIRD PARTY CONSENTS...............................................................................32
8.7. PROCEEDINGS........................................................................................32
8.8 OPINIONS OF COUNSEL................................................................................33
8.9 OTHER TRANSACTION DOCUMENTS........................................................................33
ARTICLE IX CONDITIONS TO OBLIGATIONS OF SELLERS AND INTRAC......................................................33
9.1 REPRESENTATIONS AND WARRANTIES.....................................................................33
9.2 PERFORMANCE........................................................................................34
9.3 OFFICERS' CERTIFICATES.............................................................................33
9.4 ORDERS AND LAWS....................................................................................34
9.5 REGULATORY CONSENTS AND APPROVALS..................................................................34
9.6 THIRD PARTY CONSENTS...............................................................................34
9.7 OPINION OF COUNSEL.................................................................................35
9.8 PROCEEDINGS........................................................................................35
9.9 OTHER TRANSACTION DOCUMENTS........................................................................35
9.10 TAX FREE EXCHANGE..................................................................................35
ARTICLE X TAX MATTERS AND POST-CLOSING TAXES....................................................................35
10.1 TRANSFER TAXES.....................................................................................35
10.2 TAX COOPERATION....................................................................................35
ARTICLE XI SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS....................................36
11.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS..................................36
ARTICLE XII INDEMNIFICATION.....................................................................................36
12.1 INDEMNIFICATION....................................................................................36
12.2 METHOD OF ASSERTING CLAIMS.........................................................................37
ARTICLE XIII TERMINATION........................................................................................40
13.1 TERMINATION........................................................................................40
13.2 EFFECT OF TERMINATION..............................................................................41
ARTICLE XIV MISCELLANEOUS.......................................................................................41
14.1 NOTICES............................................................................................41
14.2 RESTRICTIVE COVENANTS..............................................................................42
14.3 COVENANTS AGAINST COMPETITION......................................................................42
14.4 ENTIRE AGREEMENT...................................................................................45
14.5 EXPENSES...........................................................................................45
14.6 PUBLIC ANNOUNCEMENTS...............................................................................46
14.7 WAIVER.............................................................................................46
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
14.8 AMENDMENT..........................................................................................46
14.9 NO THIRD PARTY BENEFICIARY.........................................................................46
14.10 NO ASSIGNMENT: BINDING EFFECT. ....................................................................46
14.11 HEADINGS...........................................................................................47
14.12 INVALID PROVISIONS.................................................................................47
14.13 GOVERNING LAW ....................................................................................47
14.14 COUNTERPARTS........................................................................................4
</TABLE>
EXHIBITS
EXHIBIT A Form of Employment Agreement
EXHIBIT B Memorandum of Terms for Shareholders Agreement for ATM Service,
Ltd.
EXHIBIT C Terms for the Management of Acquisition Sub
SCHEDULES
SCHEDULE 3.2 Shareholders
SCHEDULE 4.10 Material Changes
SCHEDULE 4.17 Intellectual Property Rights
SCHEDULE 4.18 Contracts
SCHEDULE 4.19 Litigation and Claims
SCHEDULE 4.20 Licenses
SCHEDULE 4.21 Insurance
SCHEDULE 4.27 Officers, Directors and Employees
SCHEDULE 14.1 Notification Addresses
v
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 9, 1999, among WORLDWIDE
WEB NETWORX CORPORATION, a Delaware corporation ("WWWX"), INTRAC ACQUISITION
CORPORATION, a Delaware corporation ("ACQUISITION SUB"), THE INTRAC GROUP, a
Nevada corporation ("INTRAC"), and the individual Sellers signatory hereto (the
"SELLERS").
BACKGROUND
A. Intrac is an international marketing and financial services
organization engaged in the development of marketing solutions
and asset management programs for clients (the "BUSINESS").
B. Sellers own all of the issued and outstanding shares of Common
Stock of Intrac.
C. Intrac, Sellers, WWWX, and Acquisition Sub have agreed to
merge Intrac into Acquisition Sub and, simultaneously
therewith, Sellers shall exchange their shares of Common Stock
for the Merger Consideration, on the terms and conditions set
forth in this Agreement.
D. Subsequent to the execution and delivery of this Agreement,
WWWX and Acquisition Sub intend to continue at least one
historic business line of Intrac, or to use at least a
significant portion of Intrac's historic business assets in a
business, in each case for a period of at least 1 year
following the Closing Date, within the meaning of Treasury
Regulation Section 1.368-1(d).
E. It is the intention of the parties hereto that the Merger
shall, for federal income tax purposes, qualify as a
reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, as amended.
AGREEMENT
In consideration of the Background, which is incorporated by reference, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be bound legally, agree as
follows:
ARTICLE I
DEFINITIONS
DEFINED TERMS
(a) DEFINED TERMS. As used in this Agreement, the following
defined terms have the meanings indicated below:
(i) "ACQUISITION PROPOSAL" means any proposal for a
merger or other business combination to which Intrac
is a party or the direct or indirect acquisition of
<PAGE>
any equity interest in, or a substantial portion of
the assets of, Intrac, other than the transactions
contemplated by this Agreement.
(ii) "ACQUISITION SUB" means Intrac Acquisition
Corporation, a Delaware corporation.
(iii) "ACTIONS OR PROCEEDINGS" means any action, suit,
proceeding, arbitration or Governmental or Regulatory
Authority investigation or audit.
(iv) "AFFILIATE" means any Person that directly, or
indirectly through one or more intermediaries,
controls, or is controlled by, or is under common
control with, the Person specified. For purposes of
this definition, control of a Person means the power,
direct or indirect, to direct or cause the direction
of the management and policies of such Person,
whether by Contract or otherwise, and, in any event
and without limitation of the foregoing, any Person
owning ten percent (10%) or more of the voting
securities of another Person shall be deemed to
control that Person.
(v) "AGREEMENT" means this Agreement and Plan of Merger
and the Exhibits and Schedules hereto and the
certificates delivered in accordance with SECTIONS
8.3 and 9.3, as the same shall be amended, modified
or supplemented from time to time.
(vi) "AMENDED AND RESTATED ATM SERVICE, LTD. SHAREHOLDERS
AGREEMENT" means the shareholders agreement to be
entered into among the Sellers, Warren Rothstein, and
WWWX, relating to ATM Service, Ltd. and containing
the essential terms that appear in the Memorandum of
Terms for Shareholders Agreement for ATM Service,
Ltd. attached to this Agreement as EXHIBIT B.
(vii) "ANNUAL FINANCIAL STATEMENT DATE" means December 31,
1998.
(viii) "ANNUAL FINANCIAL STATEMENTS" means the Financial
Statements for Intrac's fiscal year ended December
31, 1998, delivered to WWWX and Acquisition Sub
pursuant to SECTION 4.9.
(ix) "ARTICLES OF MERGER" has the meaning ascribed to it
in SECTION 2.1 (b).
(x) "ASSETS AND PROPERTIES" of any Person means all
assets and properties of every kind, nature,
character and description (whether real, personal or
mixed, whether tangible or intangible, whether
absolute, accrued, contingent, fixed or otherwise and
wherever situated), including the goodwill related
thereto, operated, owned or leased by such Person,
including, without limitation, cash, cash
equivalents, Investment Assets, accounts and notes
receivable, chattel paper, documents, instruments,
general intangibles, real estate, equipment,
inventory, goods and Intellectual Property.
2
<PAGE>
(xi) "ATM" means ATM Service, Ltd., a Delaware
corporation.
(xii) "BENEFIT PLAN" means any employee benefit plan
established by Intrac, or any predecessor or
Affiliate of Intrac, existing at the Closing Date or
prior thereto, to which Intrac contributes or has
contributed, or under which any employee, former
employee or director of Intrac or any beneficiary
thereof is covered, is eligible for coverage or has
benefit rights.
(xiii) "BOOKS AND RECORDS" means all files, documents,
instruments, papers, books and records relating to
the Business or Condition of Intrac including,
without limitation, financial statements, Tax Returns
and related work papers and letters from accountants,
budgets, pricing guidelines, ledgers, journals,
deeds, title policies, minute books, stock
certificates and books, stock transfer ledgers,
Contracts, Licenses, customer lists, computer files
and programs, retrieval programs, operating data and
plans and environmental studies and plans.
(xiv) "BUSINESS DAY" means a day other than Saturday,
Sunday or any day on which banks located in the State
of New York are authorized or obligated to close.
(xv) "BUSINESS OR CONDITION OF INTRAC" means the business,
condition (financial or otherwise), results of
operations, Assets and Properties of Intrac taken as
a whole.
(xvi) "CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as
amended, and the rules and regulations promulgated
thereunder.
(xvii) "CERTIFICATE OF MERGER" has the meaning ascribed to
it in SECTION 2.1 (B).
(xviii) "CLAIM NOTICE" means written notification pursuant to
SECTION 12.2 (A) of a Third Party Claim as to which
indemnity under SECTION 12.1 is sought by an
Indemnified Party, enclosing a copy of all papers
served, if any, and specifying the nature of and
basis for such Third Party Claim and for the
Indemnified Party's claim against the Indemnifying
Party under SECTION 12.1, together with the amount
or, if not then reasonably determinable, the
estimated amount, determined in good faith, of the
Loss arising from such Third Party Claim.
(xix) "CLOSING" means the closing of the transactions
contemplated by SECTION 3.1.
(xx) "CLOSING DATE" means (a) July 23, 1999 or (b) such
other date as WWWX, Acquisition Sub, Intrac, and
Sellers mutually agree upon in writing.
(xxi) "CODE" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated
thereunder.
3
<PAGE>
(xxii) "COMMON STOCK" means the common stock, no par value,
of Intrac.
(xxiii) "CONTRACT" means any agreement, lease, license,
evidence of Indebtedness, mortgage, indenture,
security agreement or other contract (whether written
or oral).
(xxiv) "CONSTITUENT CORPORATIONS" means, collectively,
Acquisition Sub and Intrac.
(xxv) "DGCL" means the Delaware General Corporation Law, as
amended, modified or supplemented from time to time.
(xxvi) "DISPUTE PERIOD" means the period ending thirty (30)
days following receipt by an Indemnifying Party of
either a Claim Notice or an Indemnity Notice.
(xxvii) "DISSENTING SHARES" has the meaning ascribed to it in
SECTION 2.3 (D) hereof.
(xxviii) "EFFECTIVE TIME" has the meaning set forth in SECTION
2.1 (B) hereof.
(xxix) "EMPLOYMENT AGREEMENTS" means the Employment
Agreements to be entered into between each of
Acquisition Sub and ATM and each Seller each
substantially in the form of EXHIBIT A.
(xxx) "ENVIRONMENTAL LAW" means any Law or Order relating
to the regulation or protection of human health,
safety or the environment or to emissions,
discharges, releases or threatened releases of
pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient
air, soil, surface water, ground water, wetlands,
land or subsurface strata), or otherwise relating to
the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling
of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes. (xxxi)
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and the rules and
regulations promulgated thereunder.
(xxxii) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, and the rules and regulations
promulgated thereunder.
(xxxiii) "FINANCIAL STATEMENTS" means the financial statements
of Intrac delivered to Acquisition Sub pursuant to
SECTION 4.9 (A).
(xxxiv) "GAAP" means United States generally accepted
accounting principles, consistently applied.
(xxxv) "GOVERNMENTAL OR REGULATORY AUTHORITY" means any
court, tribunal, arbitrator, authority, agency,
commission, official or other instrumentality of the
United States, any foreign country or any domestic or
foreign state, county, city or other political
subdivision.
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(xxxvi) "INDEBTEDNESS" of any Person means all obligations of
such Person (i) for borrowed money, (ii) evidenced by
notes, bonds, debentures or similar instruments,
(iii) for the deferred purchase price of goods or
services (other than trade payables or accruals
incurred in the ordinary course of business), (iv)
under capital leases and (v) in the nature of
guarantees of the obligations described in CLAUSES
(I) through (IV) above of any other Person.
(xxxvii) "INDEMNIFIED PARTY" means any Person claiming
indemnification under any provision of ARTICLE XIII.
(xxxviii) "INDEMNIFYING PARTY" means any Person against whom a
claim for indemnification is being asserted under any
provision of ARTICLE XII.
(xxxix) "INDEMNITY NOTICE" means written notification
pursuant to SECTION 12.2 (b) of a claim for indemnity
under ARTICLE XII by an Indemnified Party, specifying
the nature of and basis for such claim, together with
the amount or, if not then reasonably determinable,
the estimated amount, determined in good faith, of
the Loss arising from such claim.
(xl) "INTELLECTUAL PROPERTY" means all patents and patent
rights, trademarks and trademark rights, trade names
and trade name rights, service marks and service mark
rights, service names and service name rights, brand
names, inventions, processes, formulae, copyrights
and copyright rights, trade dress, business and
product names, logos, slogans, trade secrets,
industrial models, processes, designs, methodologies,
computer programs (including all source codes) and
related documentation, technical information,
manufacturing, engineering and technical drawings,
know-how and all pending applications for and
registrations of patents, trademarks, service marks
and copyrights.
(xli) "INTERIM FINANCIAL STATEMENT DATE" means the last day
of the most recent fiscal period of Intrac for which
Financial Statements are delivered to Acquisition Sub
pursuant to SECTION 4.9 (b).
(xlii) "INTERIM FINANCIAL STATEMENTS" means the Financial
Statements for the most recent fiscal period of the
Intrac delivered to Acquisition Sub pursuant to
SECTION 4.9 (b).
(xliii) "INTRAC" means The Intrac Group, a Nevada
corporation, and its successors and assigns.
(xliv) "INVESTMENT ASSETS" means all debentures, notes and
other evidences of Indebtedness, stocks, securities
(including rights to purchase and securities
convertible into or exchangeable for other
securities), interests in joint ventures and general
and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or
beneficially by Intrac or any Subsidiary and issued
by any Person other than Intrac or any Subsidiary
(other than trade receivables generated in the
ordinary course of business of Intrac).
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(xlv) "IRS" means the United States Internal Revenue
Service.
(xlvi) "KNOWLEDGE OF SELLERS" or "KNOWN TO SELLERS" means
the actual knowledge of Sellers and/or any officer,
director, or manager or supervisory employee of
Intrac.
(xlvii) "LAWS" means all laws, statutes, rules, regulations,
and other pronouncements having the effect of law of
the United States, any foreign country or any
domestic or foreign state, county, city or other
political subdivision or of any Governmental or
Regulatory Authority.
(xlviii) "LIABILITIES" means all Indebtedness, obligations,
and other liabilities of a Person (whether absolute,
accrued, contingent, fixed or otherwise, or whether
due or to become due).
(xlix) "LICENSES" means all licenses, permits, certificates
of authority, authorizations, approvals,
registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory
Authority.
(l) "LIENS" means any mortgage, pledge, assessment,
security interest, lease, lien, adverse claim, levy,
charge or other encumbrance of any kind, or any
conditional sale Contract, title retention Contract
or other Contract to give any of the foregoing.
(li) "LOSS" means any and all actual damages, fines, fees,
liabilities, penalties, deficiencies, losses and
expenses (including without limitation interest,
court costs, reasonable fees of attorneys,
accountants and other experts or other proceedings or
of any claim, default or assessment) and specifically
excluding any and all consequential, punitive, and
similar damages, fines, fees, liabilities, penalties,
deficiencies, and losses.
(lii) "MERGER" means the merger of Intrac with and into
Acquisition Sub, as more fully described in SECTION
2.1 hereof.
(liii) "MERGER CONSIDERATION" has the meaning ascribed to it
in SECTION 3.2.
(liv) "NRS" means the Nevada Revised Statutes, as amended
and supplemented.
(lv) "OPTION" with respect to any Person means any
security, right, subscription, warrant, option,
"phantom" stock right or other Contract that gives
the right to (i) purchase or otherwise receive or be
issued any shares of capital stock of such Person or
any security of any kind convertible into or
exchangeable or exercisable for any shares of capital
stock of such Person or (ii) receive or exercise any
benefits or rights similar to any rights enjoyed by
or accruing to the holder of shares of capital stock
of such Person, including any rights to participate
in the equity or income of such Person or to
participate in or direct the election of any
directors or officers of such Person or the manner in
which any shares of capital stock of such Person are
voted.
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(lvi) "ORDER" means any writ, judgment, decree, injunction
or similar order of any Governmental or Regulatory
Authority (in each such case whether preliminary or
final).
(lvii) "PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA.
(lviii) "PERMITTED LIEN" means (i) any Lien for Taxes not yet
due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves
have been established in accordance with GAAP, (ii)
any statutory Lien arising in the ordinary course of
business by operation of Law with respect to a
Liability that is not yet due or delinquent and (iii)
any minor imperfection of title or similar Lien which
individually or in the aggregate with other such
Liens does not impair the value of the property
subject to such Lien or the use of such property in
the conduct of the business of Intrac.
(lix) "PERSON" means any natural person, corporation,
limited liability company, general partnership,
limited partnership, proprietorship, other business
organization, trust, union, association or
Governmental or Regulatory Authority.
(lx) "REPRESENTATIVES" has the meaning ascribed to it in
SECTION 6.2.
(lxi) "RESOLUTION PERIOD" means the period ending thirty
(30) days following receipt by an Indemnified Party
of a written notice from an Indemnifying Party
stating that it disputes all or any portion of a
claim set forth in a Claim Notice or an Indemnity
Notice.
(lxii) "SELLERS" means the Persons signatory hereto which
own the Common Stock, and the heirs, executors,
administrators and personal representatives of each
of them.
(lxiii) "SELLER INDEMNIFIED PARTIES" means Sellers and the
officers, directors, employees, and agents of the
Sellers.
(lxiv) "SHARES" means the shares of Common Stock set forth
on the attached SCHEDULE 3.2 representing all of the
issued and outstanding capital stock of Intrac and
all of the Common Stock owned by each of the Sellers.
(lxv) "SUBSIDIARY" means any Person in which Intrac,
directly or indirectly through Acquisition
Subsidiaries or otherwise, beneficially owns more
than fifty percent (50%) of either the equity
interests in, or the voting control of, such Person.
(lxvi) "SURVIVING CORPORATION" has the meaning ascribed to
it in SECTION 2.1(a).
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(lxvii) "TAX RETURNS" means a report, return or other
information (including any amendments) required to be
supplied to a governmental entity by Intrac with
respect to Taxes including, where permitted or
required, combined or consolidated returns for any
group of entities that includes Intrac.
(lxviii) "TAXES" means mean any federal, state, county, local
or foreign taxes, charges, fees, levies, other
assessments, or withholding taxes or charges imposed
by any governmental entity, and includes any interest
and penalties (civil or criminal) on or additions to
any taxes and any expenses incurred in connection
with the determination, settlement or litigation of
any Tax liability.
(lxix) "TRANSACTION DOCUMENTS" means this Agreement, the
Employment Agreements, the Amended and Restated ATM
Service, Ltd. Shareholders Agreement and the other
agreements and documents delivered herewith and
therewith.
(lxx) "THIRD PARTY CLAIM" has the meaning ascribed to it in
SECTION 12.2(a).
(lxxi) "TRANSFER TAXES" has the meaning ascribed to it in
SECTION 10.1.
(lxxii) "WWWX" means WorldWide Web NetworX Corporation, a
Delaware corporation, and its successors and assigns.
(lxxiii) "WWWX SHARES" has the meaning ascribed to it in
SECTION 3.2(b)
(lxxiv) "WWWX INDEMNIFIED PARTIES" means WWWX, Acquisition
Sub, and the respective officers, directors,
employees, and agents of each of them.
(b) CONSTRUCTION OF CERTAIN TERMS AND PHRASES. Unless the context of
this Agreement otherwise requires, (i) words of one gender include
the other gender; (ii) words using the singular or plural number
also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar
words refer to this entire Agreement; (iv) the terms "Article" or
"Section" refer to the specified Article or Section of this
Agreement; and (v) the phrases "ordinary course of business" and
"ordinary course of business consistent with past practice" refer
to the business and practice of Intrac or a Subsidiary. Whenever
this Agreement refers to a number of days, such number shall refer
to calendar days unless Business Days are specified. All
accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP.
ARTICLE II
THE MERGER, THE SURVIVING CORPORATION; CONVERSION OF SHARES
2.1 THE MERGER.
(a) PROCEDURES OF MERGER.
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i. At the Effective Time and subject to the terms and
conditions of this Agreement, Intrac shall be merged
into Acquisition Sub and the separate existence of
Intrac shall thereupon cease, in accordance with the
applicable provisions of the DGCL and the NRS.
ii. Acquisition Sub will be the surviving corporation in
the Merger (sometimes referred to herein as the
"SURVIVING CORPORATION") and will continue to be
governed by the laws of the State of Delaware, and
the separate corporate existence of Acquisition Sub
and all of its rights, privileges, immunities and
franchises, public or private, and all its duties and
liabilities as a corporation organized under the
DGCL, will continue unaffected by the Merger.
iii. The Merger will have the effects specified by the
DGCL and the NRS.
(b) EFFECTIVE TIME.
As soon as practicable following fulfillment or waiver of the
conditions specified in ARTICLES VIII and IX hereof, and
provided that this Agreement has not been terminated or
abandoned pursuant to ARTICLE XIII hereof, the Constituent
Corporations shall cause a Certificate of Merger (the
"CERTIFICATE OF MERGER") to be filed with the office of the
Secretary of State of the State of Delaware as provided in
Section 252 of the DGCL and will cause the Merger Agreement
together with a duly executed Certificate of Approval of
Merger, certificates of the officers of WWWX and the
Constituent Corporations and tax clearance certificates to be
filed with the office of the Secretary of State of the State
of Delaware, as required by the DGCL. The Constituent
Corporations will also cause Articles of Merger (the "ARTICLES
OF MERGER") to be filed with the Secretary of State of the
State" of Nevada pursuant to NRS 92A.200. Subject to and in
accordance with the laws of the States of Delaware and Nevada,
the Merger will become effective at the date and time the
Certificate of Merger is filed with the office of the
Secretary of State of the State of Delaware and the Articles
of Merger are filed with the Secretary of State of the State
of Nevada or such later time or date as may be specified in
the Certificate of Merger and the Articles of Merger (the
"EFFECTIVE TIME"). Each of the parties will use its best
efforts to cause the merger to be consummated as soon as
practicable following the fulfillment or waiver of the
conditions specified in ARTICLES VIII and IX hereof.
2.2 THE SURVIVING CORPORATION.
(a) CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of Acquisition Sub as in effect
immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving
Corporation after the Effective Time.
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(b) BY-LAWS. The By-Laws of Acquisition Sub as in effect
immediately prior to the Effective Time shall be the
By-Laws of the Surviving Corporation after the
Effective Time.
(c) BOARD OF DIRECTORS. From and after the Effective
Time, the Board of Directors of Acquisition Sub shall
be the Board of Directors of the Surviving
Corporation.
2.3 CONVERSION OF SHARES.
(a) CONVERSION OF SHARES OF INTRAC IN THE MERGER.
Pursuant to this Agreement, at the Effective Time, by
virtue of the Merger and without any action on the
part of any holder of Common Stock, each share of
Common Stock, other than Dissenting Shares, shall,
subject to SUBSECTION (d) below (in addition to the
other Merger Consideration) be converted into, and
become exchangeable for, the WWWX Shares.
(b) STATUS OF ACQUISITION SUB SHARES. At the Effective
Time, by virtue of the Merger and without any action
on the part of any holder of any capital stock of
Acquisition Sub, each issued and outstanding share of
common stock of Acquisition Sub shall continue
unchanged and remain outstanding as a share of common
stock of the Surviving Corporation.
(c) EXCHANGE OF INTRAC CAPITAL STOCK CERTIFICATES.
i. On the Closing Date, WWWX shall make
available to the Sellers the certificates
representing the WWWX Shares required to
effect the exchange referred to in this
SECTION 2.3 below. WWWX Shares into which
the Common Stock shall be converted in the
Merger shall be deemed to have been issued
at the Effective Time.
ii. From and after the Effective Time, each
holder of a certificate which immediately
prior to the Effective Time represented the
outstanding Common Stock other than shares
with respect to which dissenters' rights, if
any, are granted by reason of the Merger
under the NRS, shall be entitled to receive
in exchange therefor, upon surrender
thereof, the amount of the Merger
Consideration for which such holder's Common
Stock was converted subject to the
provisions of this Agreement.
(d) DISSENTING SHARES. Notwithstanding anything to the
contrary contained in this Agreement, holders of the
Common Stock with respect to which dissenters'
rights, if any, are granted by reason of the Merger
under the NRS and who do not vote in favor of the
Merger and otherwise comply with the NRS ("DISSENTING
SHARES"), shall not be entitled to Merger
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Consideration pursuant to SUBSECTION (a) above,
unless and until the holder thereof shall have failed
to perfect or shall have effectively withdrawn or
lost such holder's dissenters' rights under the NRS,
such holder's target Dissenting Shares shall
thereupon be deemed to have been converted into and
to have become exchangeable for, as of the Effective
Time, the right to receive the Merger Consideration.
2.4 CLOSING OF TRANSFER BOOKS.
From and after the Effective Time, the stock transfer books of Intrac
shall be closed and no transfer of the Shares shall thereafter be made.
If, after the Effective Time, certificates representing the Shares
shall be presented to WWWX, they shall be cancelled and exchanged for
the Merger Consideration in accordance with the procedures set forth in
this ARTICLE II .
ARTICLE III
MERGER AND CLOSING
3.1 CLOSING.
(a) The Closing shall take place at the offices of WWWX, or at
such other place as the parties may mutually agree, at 10:00
A.M. local time, on the Closing Date.
(b) At the Closing, in exchange for the Merger Consideration,
Sellers will sell, assign and transfer to Acquisition Sub all
of Sellers' right, title and interest in and to the Shares by
delivering to Acquisition Sub certificates representing the
Shares, in genuine and unaltered form, duly endorsed in blank
or accompanied by duly executed stock powers endorsed in
blank, with requisite stock transfer tax stamps, if any,
attached. At the Closing, Sellers, Acquisition Sub, WWWX and
Intrac shall also deliver the opinions and other agreements,
documents, instruments and certificates to be delivered under
ARTICLES VIII and IX.
3.2 MERGER CONSIDERATION.
The consideration for the Shares shall be the following (the "MERGER
CONSIDERATION"), payable by Acquisition Sub and/or WWWX to Sellers in
the manner set forth below.
(a) $1,500,000 in immediately available funds, wired to the
account(s) specified by the Sellers on the Closing Date;
(b) 1,000,000 shares of WWWX common stock (the "WWWX SHARES"),
evidenced by a certificate(s) delivered on the Closing Date;
and
(c) 240 shares of common stock of ATM Service, Ltd., representing
24% of the total issued and outstanding shares of capital
stock of ATM, on a fully diluted basis, evidenced by a
certificate(s) delivered on the Closing Date.
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The Merger Consideration will be allocated to the Sellers as set forth on the
attached SCHEDULE 3.2
3.3 WORKING CAPITAL CONTRIBUTION
WWWX will make an additional capital contribution to ATM in the
amount of $1,000,000 in consideration for ATM'S agreement to lend
Acquisition Sub up to $1,000,000 for working capital. Acquisition
Sub will either cause the release of Thomas Settineri's personal
guarantee of Intrac's existing line of credit or payoff said line on
the Closing Date.
3.4 FURTHER ASSURANCES; POST-CLOSING COOPERATION.
(a) At any time or from time to time after the Closing, the
parties shall execute and deliver such other documents and
instruments, provide such materials and information and take
such other actions any other party may reasonably request to
more effectively accomplish the consummation of the
transactions contemplated hereunder.
(b) Following the Closing, each party will afford each other
party, its counsel and its accountants, during normal business
hours, reasonable access to the books, records and other data
relating to the Business or Condition of Intrac in its
possession with respect to periods prior to the Closing and
the right to make copies and extracts therefrom, to the extent
that such access may be reasonably required by the requesting
party in connection with (i) the preparation of Tax Returns,
(ii) the determination or enforcement of rights and
obligations under this Agreement, (iii) compliance with the
requirements of any Governmental or Regulatory Authority, (iv)
the determination or enforcement of the rights and obligations
of any party to this Agreement or any of the Transaction
Documents or (v) in connection with any actual or threatened
Action or Proceeding. Further, each party agrees for a period
extending 7 years after the Closing Date not to destroy or
otherwise dispose of any such books, records and other data
unless such party first offers in writing to surrender such
books, records and other data to the other party and such
other party shall not agree in writing to take possession
thereof during the 20 day period after such offer is made.
(c) If, properly to prepare its Tax Returns, other documents or
reports required to be filed with Governmental Regulatory
Authorities or its financial statements or to fulfill its
obligations hereunder, it is necessary that a party be
furnished with additional information, documents or records
relating to the Business or Condition of Intrac not referred
to in SUBSECTION (b) above, and such information, documents or
records are in the possession or control of the other party,
such other party shall use its best efforts to furnish or make
available such information, documents or records (or copies
thereof) at the recipient's request, cost and expense.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS AND INTRAC
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Sellers and Intrac hereby jointly and severally represent and warrant to WWWX
and Acquisition Sub as follows:
4.1 AUTHORITY. Intrac and each Seller have all necessary authority to
execute and deliver this Agreement and the Transaction Documents, and
to perform their obligations hereunder and thereunder. This Agreement
has been duly and validly executed and delivered by Intrac and each
Seller and constitutes and, upon the execution and delivery by Intrac
and each Seller of the Transaction Documents, the Transaction
Documents, will constitute the legal, valid and binding obligations of
Intrac and each Seller, enforceable against Intrac and each Seller in
accordance with their terms.
4.2 ORGANIZATION OF INTRAC. Intrac is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada,
and has full corporate power and authority to conduct its business as
and to the extent now conducted, to own, use and lease its Assets and
Properties and to execute and deliver this Agreement and the
Transaction Documents to which it is a party, and to perform its
obligations hereunder and thereunder. Intrac is duly qualified,
licensed or admitted to do business and is in good standing in those
jurisdictions in which it is required to maintain good standing unless
failure to do so would not result in a material adverse effect to
Intrac and the Sellers.
4.3 The authorized capital stock of Intrac consists of 100 shares of common
stock, no par value, of which all 100 shares are issued and
outstanding. The Sellers are the record and beneficial owners of all
the Shares. All of such issued and outstanding shares of Intrac stock
have been duly authorized, validly issued, are fully paid and
nonassessable, were not issued in violation of the terms of any
agreement or other understanding binding upon Intrac or any other
Person and were issued in compliance with all applicable federal and
state securities or "blue-sky" laws and regulations. There are no
outstanding securities, options, warrants, rights, agreements, calls,
subscription commitments, demands, or understandings of any character
whatsoever, fixed or contingent, that directly or indirectly (i) call
for the issuance, sale or other disposition of any capital stock and
there are no securities convertible into or exchangeable for the stock
of Intrac or (ii) obligate the Sellers to grant, offer or enter into
any of the foregoing or (iii) relate to the voting or control of any
capital stock of Intrac.
4.4 (a) All Intrac stock is owned free and clear of all liens, and (b) the
sale and delivery of the Shares pursuant to this Agreement will vest in
Acquisition Sub legal and beneficial title to the Shares free and clear
of any lien.
4.5 SUBSIDIARIES. Intrac does not have any Subsidiaries and does not own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest in, any
Person.
4.6 NO CONFLICTS. The execution and delivery by Intrac and the Sellers of
this Agreement does not, and the execution and delivery by Intrac and
each Seller of the Transaction Documents to which they are a party, the
performance by Intrac and each Seller of their
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obligations under this Agreement and the Transaction Documents and the
consummation of the transactions contemplated hereby and thereby will
not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of
incorporation or by-laws (or other comparable corporate
charter documents) of Intrac;
(b) conflict with or result in a violation or breach of any term
or provision of any Law or Order applicable to Intrac and the
Sellers , or any of their respective Assets and Properties; or
(c) (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a
default under, (iii) require Intrac and the Sellers to obtain
any consent, approval or action of, make any filing with or
give any notice to any Person as a result or under the terms
of, (iv) result in or give to any Person any right of
termination, cancellation, acceleration or modification in or
with respect to, (v) result in or give to any Person any
additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (vi) result in
the creation or imposition of any Lien upon Intrac or any
Seller or any of their respective Assets and Properties under,
any Contract or License to which Intrac or any Seller is a
party or by which any of their respective Assets and
Properties are bound, or (vii) conflict with, or constitute,
or result in any breach, default or violation of (or an event
which might, with or without the passage of time or the giving
of notice or both, constitute or result in any such a breach,
default or violation) any of the terms, conditions, or
provisions of any indenture, mortgage, loan, or credit
agreement, or any other instrument, contract, agreement or
commitment to which Intrac or any Seller is a party, or by
which any of them or any of the Acquisition Assets may be
bound or affected, or any judgment or order of any
Governmental Authority, or any law, rule, or regulation.
4.7 GOVERNMENTAL APPROVALS AND FILINGS. No consent, approval or action of,
filing with, or notice to any Governmental or Regulatory Authority on
the part of Intrac or any Seller is required in connection with the
execution, delivery and performance of this Agreement or any of the
Transaction Documents to which it is a party or the consummation of the
transactions contemplated hereby or thereby.
4.8 BOOKS AND RECORDS. The minute books and other similar records of Intrac
contain a true and complete record, in all material respects, of all
action taken at all meetings and by all written consents in lieu of
meetings of the stockholders, the board of directors and committees of
the board of directors of Intrac, and the stock transfer and other
similar records of Intrac accurately reflect all record transfers prior
to the execution of this Agreement in the capital stock of Intrac.
4.9 FINANCIAL STATEMENTS. Prior to the Closing, Intrac and the Sellers
shall have delivered to WWWX and Acquisition Sub true and complete
copies of the following financial statements:
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(a) the balance sheets of Intrac as of December 31, 1998, December
31, 1997, and December 31, 1996, and the related statements of
operations, stockholders equity, and cash flows for the fiscal
years then ended;
(b) the balance sheet of Intrac as of April 30, 1999, and the
related statement of operations, stockholders' equity and cash
flows for the portion of the fiscal year then ended.
Except as set forth in the notes thereto, the financial statements in
(a) above (i) were prepared in accordance with GAAP, (ii) fairly
present the financial condition and results of operations of Intrac in
all material respects as of the respective dates thereof and for the
respective periods covered thereby, and (iii) were compiled from the
Books and Records of Intrac regularly maintained by management and used
to prepare the financial statements of Intrac in accordance with the
principles stated therein. Intrac has maintained its Books and Records
in a manner sufficient to permit the preparation of financial
statements in accordance with GAAP and that fairly present the
financial condition and results of operations of Intrac in all material
respects as of the respective dates thereof and for the respective
periods covered thereby.
4.10 ABSENCE OF CHANGES. Except (1) as disclosed or presented in the Interim
Financial Statements and (2) for the execution and delivery of this
Agreement and the transactions to take place pursuant hereto on or
prior to the Closing Date, since the Annual Financial Statement Date,
there has not been any material adverse change, or any event or
development which, individually or together with other such events,
could reasonably be expected to result in a material adverse change, in
the Business or Condition of Intrac. Without limiting the foregoing,
other than in the ordinary course of business, except as set forth on
SCHEDULE 4.10, there has not occurred between the Annual Financial
Statement Date and the date hereof:
(a) any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of Intrac,
or any direct or indirect redemption, purchase or other
acquisition of any such capital stock of or any Option with
respect to Intrac;
(b) any authorization, issuance, sale or other disposition by
Intrac or any Seller of any shares of capital stock of or
Option with respect to Intrac or any modification or amendment
of any right of any holder of any outstanding shares of
capital stock of or option with respect to Intrac;
(c) (i) incurrences by Intrac of Indebtedness in an aggregate
principal amount exceeding $50,000 (net of any amounts
discharged during such period), or (ii) any voluntary
purchase, cancellation, prepayment or complete or partial
discharge in advance of a scheduled payment date with respect
to, or waiver of any right of Intrac under, any Indebtedness
of or owing to Intrac;
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(d) any material change in (i) any pricing, investment,
accounting, financial reporting, inventory, credit, allowance
or Tax practice or policy of Intrac, or (ii) any method of
calculating any bad debt, contingency or other reserve of
Intrac for accounting, financial reporting or Tax purposes, or
any change in the fiscal year of Intrac;
(e) any write-off or write-down of or any determination to write
off or write down any of the Assets and Properties of Intrac
in, an aggregate amount exceeding $25,000;
(f) any acquisition or disposition of, or incurrence of a Lien
(other than a Permitted Lien) on, any Assets and Properties of
Intrac or either Seller which affects the Shares;
(g) any (i) amendment of the certificate of incorporation or
by-laws (or other comparable corporate charter documents of
Intrac, (ii) recapitalization, reorganization, liquidation or
dissolution of Intrac or (iii) merger or other business
combination involving Intrac and any other Person;
(h) other than in the ordinary course of business, capital
expenditures or commitments for additions to property, plant
or equipment of Intrac constituting capital assets in an
aggregate amount exceeding $50,000;
(i) any commencement or termination by Intrac of any line of
business;
(j) any transaction by Intrac with any officer, director or
Affiliate other than on an arm's-length basis, other than
pursuant to any Contract in effect on the Annual Financial
Statement Date;
(k) any termination or amendment to or suspension or termination
of, or receipt by either Seller or Intrac of any notice of
breach or default of any material lease, contract or other
agreement to which Intrac is a party or from which Intrac,
directly or indirectly, derives rights;
(l) any payment, discharge or satisfaction of any liability or
obligation (whether accrued, absolute, contingent or
otherwise) by Intrac, other than the payment, discharge or
satisfaction, in the ordinary course of business consistent
with past practice, of liabilities or obligations shown or
reflected on the Financial Statements or incurred in the
ordinary course of business since the Financial Statement
Date;
(m) any material adverse change or any threat of any material
adverse change in Intrac's relations with, or any loss or
threat of loss of, suppliers or customers which, individually
or in the aggregate, has been or is likely to be materially
adverse;
(n) any creation, incurrence, assumption or guarantee by Intrac of
any material obligation or liability (whether absolute,
accrued, contingent or otherwise and whether due or to become
due), except in the ordinary course of business consistent
with past practice, or any creation, incurrence, assumption or
guarantee by Intrac of
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any material indebtedness for money borrowed; any disposition
of or failure to keep in effect any rights in, to or for the
use of any patent, trademark, service mark, trade name or
copyright, or any disclosure to any person not an employee or
other disposal of any trade secret, process or know-how;
(o) any other material transaction, agreement or event outside the
ordinary course of any Intrac's business or inconsistent with
past practice; or
(p) any entering into of a Contract or making of a commitment to
do or engage in any of the foregoing after the date hereof.
4.11 UNDISCLOSED LIABILITIES. Except as reflected or reserved against in the
balance sheet included in the Annual Financial Statements or in the
notes thereto or in the Interim Financial Statements, there are no
Liabilities against, relating to or affecting Intrac or its Assets and
Properties, other than Liabilities (a) incurred in the ordinary course
of business consistent with past practice since the Annual Financial
Statement Date or (b) which, individually or in the aggregate, are not
material to the Business or Condition of Intrac. There are no
attachments, executions, assignments for the benefit of creditors or
any other debtor relief pending or threatened.
4.12 TAXES.
(a) Intrac has filed, or will file on or before the Closing, all
Tax Returns required to be filed by applicable law. All Tax
Returns were true, complete and correct in all material
respects and filed on a timely basis. Intrac has paid all
Taxes that are due, or claimed or asserted by any taxing
authority to be due, from Intrac for the periods covered by
the Tax Returns.
(b) Intrac has established on its books and records reserves
adequate to pay all Taxes not yet due and payable.
(c) There are no tax liens upon the assets of Intrac or any Seller
except Liens for Taxes not yet due.
(d) Intrac has not requested any extension of time within which to
file any Tax Return which remains in effect.
(e) (i) Intrac has not entered into any agreements with any taxing
authority extending the statute of limitations for the
assessment of Taxes, (ii) there have been no audits and there
are no ongoing audits or administrative proceedings with
respect to any Taxes of Intrac or any Seller, and (iii) no
deficiency for any Taxes has been suggested, proposed,
asserted or assessed against Intrac or any Seller that has not
been resolved and paid in full.
(f) No audits or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes or
Tax Returns of Intrac.
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(g) Intrac and the Sellers have not received any written ruling of
a taxing authority relating to Taxes or entered into any
written and legally binding agreement with any taxing
authority relating to Taxes.
(h) Intrac has made available to WWWX and Acquisition Sub complete
and accurate copies of all Tax Returns and associated work
papers filed by or on behalf of Intrac for all taxable periods
ending on or prior to the date of this Agreement.
(i) Intrac is not party or subject to, or bound by, any agreements
relating to the allocation or sharing of Taxes.
(j) All transactions that could give rise to an understatement of
federal income tax (within the meaning of Code section 6661
for Tax Returns filed on or before December 31, 1989, and
within the meaning of Code section 6662 for tax returns
filed after December 31, 1989) by Intrac have been
adequately disclosed on Intrac 's Tax Returns in accordance
with Code section 6661(b)(2)(B) for Tax Returns filed on or
prior to December 31, 1989, and in accordance with Code
section 6662(d)(2)(B) for Tax Returns filed after December
31, 1989.
4.13 COMPLIANCE WITH LAWS AND ORDERS. Intrac is not and has not at any time
since its formation been, and has not received any notice that it is or
has at any time since its formation been, in violation of or in default
under, in any material respect, any Law or Order applicable to Intrac
or any of its Assets and Properties.
4.14 BENEFIT PLANS; ERISA. Intrac does not now maintain, nor has it ever
maintained, sponsored or contributed to, any plan that is subject to
ERISA.
4.15 REAL PROPERTY. Intrac does not own any real property.
4.16 TANGIBLE PERSONAL PROPERTY; INVESTMENT ASSETS.
(a) Intrac is in possession and has good title to, or has valid
leasehold interests in or valid rights under Contract to use,
all tangible personal property used in or reasonably necessary
for the conduct of its business, including all tangible
personal property reflected on the balance sheet included in
the Annual Financial Statements and tangible personal property
acquired since the Annual Financial Statement Date other than
property disposed of since such date in the ordinary course of
business consistent with past practice. All such tangible
personal property is free and clear of all Liens, and is in
good working order and condition, ordinary wear and tear
excepted, and its use complies in all material respects with
all applicable Laws.
(b) Intrac owns no Investment Assets.
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4.17 INTELLECTUAL PROPERTY RIGHTS. Intrac has interests in or uses only the
Intellectual Property disclosed in the attached SCHEDULE 4.17, each of
which Intrac either has all right, title and interest in or a valid and
binding right under Contract to use. No other Intellectual Property is
used in the conduct of the business of Intrac. Neither Intrac nor any
Seller has received notice that Intrac is infringing any Intellectual
Property of any other Person, no claim is pending or has been made to
such effect that has not been resolved and, to the knowledge of Intrac
and the sellers, Intrac is not infringing any Intellectual Property of
any other Person and no person is infringing any Intellectual Property
of Intrac.
4.18 CONTRACTS.
(a) All material Contracts to which Intrac is a party are
described on the attached SCHEDULE 4.18.
(b) Except as set forth in SCHEDULE 4.18 or another Schedule to
this Agreement (with appropriate cross-references), there are
no contracts, agreements, arrangements, commitments,
instruments, plans or leases, oral or written (collectively,
the "CONTRACTS") to which Intrac is a party or by which it is
bound, meeting any of the following descriptions:
i. any Contract for consulting or other services
obligating any Intrac to payments of more than
$50,000 annually or having a duration in excess of 1
year;
ii. any Contract relating to the management of Intrac;
iii. any Contract evidencing or related to indebtedness,
obligations or liability for borrowed money, or
liability for the deferred purchase price of
property, in excess of $50,000 (excluding trade
payables incurred in the ordinary course of business
consistent with past practice), or any Contract of
guaranty, indemnification or other similar commitment
relating to the obligations or liabilities of any
other Person;
iv. any Contract involving a sharing of profits, joint
venture or partnership;
v. any Contract relating to sales agency, brokerage,
distribution or similar matters;
vi. any Contract containing covenants limiting the
freedom of Intrac or any Seller to compete in any
line of business or in any area or with any Person;
vii. any Contract relating to orders for future purchase
or delivery of goods or retention of services which
is material to Intrac or which has an aggregate
future liability of greater than $50,000; or
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viii. any other Contract relating to the Business, except
Contracts excluded by an express exception from the
descriptions set forth in Subparagraphs (i) through
(vii) above and except such Contracts which are
terminable on less than 30 days' notice without
penalty or payment or involving expenditures of less
than $50,000 in the aggregate.
(c) CONTRACT COMPLIANCE. The Contracts listed on SCHEDULE 4.18 are
all of the Contracts which are material to the Business.
Copies of all such Contracts have been provided to WWWX and
Acquisition Sub and are true, correct and complete and have
been subject to no amendment, extension or modification,
except such as are described in SCHEDULE 4.18. Each Contract
referred to in SCHEDULE 4.18 is valid and binding as to Intrac
and, to Intrac's and the Sellers' best knowledge, as to any
other party and, with respect to such Contracts, there is no
material default by Intrac or, to Intrac's and the Sellers'
best knowledge, by any other party, and no event which, with
notice or the passage of time or both, would constitute such a
default by Intrac, or, to Intrac's and the Sellers' best
knowledge, by any other party. Upon consummation of the
transactions contemplated hereby, Intrac will continue to be
entitled to the full economic, legal and other benefits of the
Contracts on their present terms. No party has any right to
cancel, terminate or modify any of the Contracts by reason of
the transactions contemplated under this Agreement.
4.19 LITIGATION AND CLAIMS. Except as set forth on SCHEDULE 4.19, there is
no Claim pending or, to the best of Intrac's or the Sellers' knowledge,
threatened (or, to the best knowledge of Intrac or the Sellers, no
state of facts exist which reasonably could be expected to lead to any
such Claim) by, against or affecting or in any way relating to Intrac,
or affecting the Common Stock or the Sellers' rights thereto, at law or
in equity, before any Governmental Authority or any arbitrator. There
are presently no outstanding judgments, decrees, or orders of any
Governmental Authority or any arbitrator against or affecting Intrac or
any Acquisition Asset or affecting the stock. Nothing listed on
SCHEDULE _4.19 could reasonably be expected to have a material adverse
effect on Intrac.
4.20 LICENSES. Except as set forth on SCHEDULE 4.20, Intrac does not require
any Licenses to operate its business, other than normal business
licenses and permits.
4.21 INSURANCE. A list of all insurance polices of Intrac is attached as
SCHEDULE 4.21.
4.22 ENVIRONMENTAL MATTERS. Intrac is not in material violation of any
federal, state or local Environmental Laws applicable to it or its
properties, or any material limitations, restrictions, conditions,
standards, obligations or timetables contained in any Environmental Law
or any regulation, code, plan, order, decree, notice or demand letter
issued, entered, promulgated or approved thereunder. No notice or
action alleging such violation is pending or, to Intrac's knowledge,
threatened, and, to Intrac 's knowledge, no past or present condition
or practice of Intrac would prevent continued compliance with
applicable environmental permits or give rise to any common law or
statutory liability or otherwise form the basis of any claim, action or
proceeding with respect to Intrac
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involving any pollutant or hazardous or toxic material or waste. To
Seller's and Intrac's knowledge, Intrac has no liability, present or
past, under CERCLA, including, without limitation, as the result of
their ownership or operation of any "facility" as defined in CERCLA, or
their arrangement for, disposal, treatment or transport of "hazardous
substances," also as defined in CERCLA.
4.23 POWER OF ATTORNEY. Intrac and the Sellers do not have any powers of
attorney or comparable delegations of authority outstanding.
4.24 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Intrac
directly with WWWX, Acquisition Sub and ATM without the intervention of
any Person on behalf of Intrac or the Sellers in such manner as to give
rise to any valid claim by any Person against WWWX, Acquisition Sub,
ATM, Intrac or any Subsidiary for a finder's fee, brokerage commission
or similar payment.
4.25 PRODUCT WARRANTY. Neither Intrac nor Any Seller has received a notice
from any of the customers of Intrac that the products and services,
leased or delivered by Intrac fail to conform in any material respect
with the contractual commitments and all express and implied
warranties. Neither Intrac nor the Sellers have any material liability
(and there is no reasonable basis for any present or future action,
suit, proceeding, hearing investigation, charge, complaint, claim or
demand against it giving rise to any such liability) for replacement or
repair thereof or other damages in connection therewith in excess of
the past custom, practice and experience.
4.26 AFFILIATE TRANSACTIONS.
There are no intercompany Liabilities between Intrac, on the one hand,
and Sellers or Affiliates (other than Intrac) of Sellers, on the other;
(a) neither Sellers nor any such Affiliate provides or causes to
be provided any material assets, services or facilities to
Intrac; and
(b) Intrac does not provide or cause to be provided any material
assets, services or facilities to Sellers or any such
Affiliate. Each of the Liabilities and transactions was
incurred or engaged in, as the case may be, on an arm's-length
basis. Since the Annual Financial Statement Date, all
settlements of intercompany Liabilities of Intrac, on the one
hand, and Sellers or any such Affiliate, on the other, have
been made, and all allocations of intercompany expenses have
been paid or reserved, in the ordinary course of business
consistent with past practice.
4.27 EMPLOYEES; LABOR RELATIONS.
SCHEDULE 4.27 contains a list of the name of each officer, director and
employee of Intrac at the date hereof, together with each such person's
position or function. Intrac and the Sellers have not received any
information that would lead it to believe that a material number of
such persons will cease to be employees, or will refuse offers of
employment from Acquisition Sub or ATM, because of the consummation of
the transactions
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contemplated by this Agreement. Since its inception Intrac has complied
in all material respects with all applicable Laws relating to the
employment of labor, including, without limitation those relating to
wages, hours and collective bargaining.
4.28 BANK AND BROKERAGE ACCOUNTS.
Other than a banking relationship with The Chase Manhattan Bank and
Fleet Bank, Intrac does not maintain any relationship with any bank,
trust company, securities broker or other financial institution.
4.29 The Agreement between The Intrac Group and Fundacion Primero Mexico
A.C., dated as of March 25, 1999, is in full force and effect and is
enforceable by its terms.
4.30 DISCLOSURE.
No representation or warranty contained in this Agreement, and no
statement contained in any Schedule or in any certificate furnished to
WWWX and Acquisition Sub pursuant to any provision of this Agreement,
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make statements made, in the light
of the circumstances under which they were made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF WWWX AND ACQUISITION SUB
WWWX and Acquisition Sub hereby represent and warrant to Intrac and the Sellers
as follows:
5.1 ORGANIZATION.
Each of WWWX and Acquisition Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and each has full corporate power and authority to execute and
deliver this Agreement and the Transaction Documents to which it is a
party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.
5.2 AUTHORITY.
The execution and delivery by WWWX and Acquisition Sub of this
Agreement and the Transaction Documents to which each is a party, and
the performance by each of its obligations hereunder and thereunder,
have been duly and validly authorized by the members or other
applicable governing body of such person. This Agreement has been duly
and validly executed and delivered by WWWX and Acquisition Sub and
constitutes, and upon the execution and delivery by WWWX and
Acquisition Sub of the Transaction Documents to which it is a party,
the Transaction Documents will constitute, legal, valid and binding
obligations of WWWX and Acquisition Sub enforceable against each of
them in accordance with their terms.
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5.3 NO CONFLICTS.
The execution and delivery by WWWX and Acquisition Sub of this
Agreement do not, and the execution and delivery by each of them of the
Transaction Documents to which it is a party, the performance by each
of them of its obligations under this Agreement and such Transaction
Documents and the consummation of the transactions contemplated hereby
and thereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the articles of
organization and operating agreement of each of them;
(b) conflict with or result in a violation or breach of any term
or provision of any Law or Order applicable to either of them
or any of its Assets and Properties; or
(c) (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a
default under, (iii) require either of them to obtain any
consent, approval or action of, make any filing with or give
any notice to any Person as a result or under the terms of, or
(iv) result in the creation or imposition of any Lien upon
either of them or any of its Assets or Properties under, any
Contract or License to which either of them is a party or by
which any of its Assets and Properties is bound.
5.4 GOVERNMENTAL APPROVALS AND FILINGS.
No consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority on the part of WWWX or Acquisition
Sub is required in connection with the execution, delivery and
performance of this Agreement or the Transaction Documents to which it
is a party or the consummation of the transactions contemplated hereby
or thereby.
5.5 PURCHASE FOR INVESTMENT.
WWWX and Acquisition Sub each warrants and represents that it has, and
as of the Effective Time of the Merger will have, no present plan,
intention or arrangement to sell, transfer or otherwise dispose of all
or any part of the business or assets of Intrac, and WWWX and
Acquisition Sub each agrees that Acquisition Sub will continue at least
one significant historic business line of Intrac, or use at least a
significant portion of the Intrac's historic business assets in a
business, for a period of at least one (1) year following the Closing
Date (the "POST-MERGER CONTINUITY Period"), in each case within the
meaning of Reg. section 1.368-1 (d), except that Acquisition Sub may
transfer Intrac's historic business assets during the Post-Merger
Continuity Period to a corporation that is a member of Acquisition
Sub's "qualified group," within the meaning of Reg. section 1.368-1(d)
(4) (ii).
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5.6 BROKERS.
All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by WWWX and Acquisition Sub
directly with Sellers and Intrac without the intervention of any Person
on behalf of WWWX and Acquisition Sub in such manner as to give rise to
any valid claim by any Person against Sellers or Intrac for a finder's
fee, brokerage commission or similar payment.
5.7 WWWX SHARES.
When issued and delivered to the Sellers in accordance with the terms
of this Agreement, the WWWX Shares will be duly authorized, validly
issued, fully paid and non-assessable.
5.8 BUSINESS.
WWWX and Acquisition Sub intend to have the Surviving Corporation
continue at least one significant, historic business line of Intrac, or
to use at least a significant portion of Intrac's historic business
assets in a business, in each case for a period of at least 1 year
following the Closing Date, within the meaning of Treasury Regulation
Section 1.368-1(d).
5.9 COMPLETION OF DUE DILIGENCE.
WWWX and Acquisition Sub agree to complete their due diligence review
of Intrac no later than July 23, 1999.
ARTICLE VI
COVENANTS OF INTRAC AND THE SELLERS
Intrac and the Sellers covenant and agree with WWWX and Acquisition Sub that, at
all times from and after the date hereof until the Closing and, with respect to
any covenant or agreement by its terms to be performed in whole or in part after
the Closing, for the period specified therein or, if no period is specified
therein, indefinitely, Sellers will comply with all covenants and provisions of
this ARTICLE VI, except to the extent WWWX and Acquisition Sub may otherwise
consent in writing.
6.1 REGULATORY AND OTHER APPROVALS.
Sellers and Intrac will as promptly as practicable to:
(a) take all commercially reasonable steps necessary or desirable
to obtain all consents, approvals or actions of, make all
filings with and give all notices to Governmental or
Regulatory Authorities or any other Person required of Sellers
or Intrac to consummate the transactions contemplated hereby
and by the Transaction Documents;
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(b) provide such other information and communications to such
Governmental or Regulatory Authorities or other Persons as
WWWX and Acquisition Sub or such Governmental or Regulatory
Authorities or other Persons may reasonably request in
connection therewith; and
(c) cooperate with WWWX and Acquisition Sub in connection with the
performance of its obligations under SECTIONS 7.1 AND 7.5.
Sellers will provide prompt notification to WWWX and
Acquisition Sub when any such consent, approval, action,
filing or notice referred to in Subsection (a) above is
obtained, taken, made or given, as applicable.
6.2 INVESTIGATION BY WWWX AND ACQUISITION SUB.
Sellers will, and will cause Intrac to,
(a) provide each of WWWX and Acquisition Sub and its officers,
directors, employees, agents, counsel, accountants, financial
advisors and consultants (together "REPRESENTATIVES") with
reasonable access, upon reasonable prior notice and during
such hours as shall least disrupt the operation of Intrac, to
all officers, employees, agents and accountants of Intrac and
its Assets and Properties and Books and Records, and
(b) furnish WWWX and Acquisition Sub and such other Persons with
all such information and data (including without limitation
copies of Contracts, Benefit Plans and other Books and
Records) concerning the business and operations of Intrac as
WWWX and Acquisition Sub or any of such other Persons
reasonably may request in connection with such investigation.
6.3 CONDUCT OF BUSINESS.
Sellers will cause Intrac to conduct business only in the ordinary
course consistent with past practice. Without limiting the generality
of the foregoing, Sellers will:
(a) cause Intrac to use commercially reasonable efforts to (i)
preserve intact the present business organization and
reputation of Intrac, (ii) keep available (subject to
dismissals and retirements in the ordinary course of business
consistent with past practice) the services of the present
officers, employees and consultants of Intrac, (iii) maintain
the Assets and Properties of Intrac in good working order and
condition, ordinary wear and tear excepted, (iv) maintain the
goodwill of customers, suppliers, lenders and other Persons to
whom Intrac sells goods or provides services or with whom
Intrac otherwise has significant business relationships, and
(v) continue all current sales, marketing and promotional
activities relating to the business and operations of Intrac;
(b) except to the extent required by applicable laws (i) cause the
Books and Records to be maintained in the usual, regular and
ordinary manner, (ii) not permit any material change in (A)
any pricing, investment, accounting, financial reporting,
inventory, credit, allowance or Tax practice or policy of
Intrac, or (B) any method
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of calculating any bad debt, contingency or other reserve of
Intrac for accounting, financial reporting or Tax purposes,
and (iii) not permit any change in the fiscal year of Intrac;
and
(c) cause Intrac to comply, in all material respects, with all
Laws and Orders applicable to the business and operations of
Intrac, and promptly following receipt thereof to give
Acquisition Sub copies of any notice received from any
Governmental or Regulatory Authority or other Person alleging
any violation of any such Law or Order.
6.4 EMPLOYEE MATTERS.
Except as may be required by Law, Sellers will refrain, and will cause
Intrac to refrain, from directly or indirectly:
(a) making any representation or promise, oral or written, to any
officer, employee or consultant of Intrac concerning any
Benefit Plan, except for statements as to the rights or
accrued benefits of any officer, employee or consultant under
the terms of any Benefit Plan;
(b) entering into any written employment agreement or making any
increase n the salary, wages or other compensation of any
officer, employee or consultant of Intrac;
(c) adopting, entering into or becoming bound by any Benefit Plan,
employment-related Contract or collective bargaining
agreement, or amending, modifying or terminating (partially or
completely) any Benefit Plan, employment-related Contract or
collective bargaining agreement, except to the extent required
by applicable Law; or
(d) establishing or modifying any (i) targets, goals, pools or
similar provisions in respect of any fiscal year under any
Benefit Plan, employment-related Contract or other employee
compensation arrangement or (ii) salary ranges, increase
guidelines or similar provisions in respect of any Benefit
Plan, written employment-related Contract or other written
employee compensation arrangement.
6.5 CERTAIN RESTRICTIONS.
Other than in the ordinary course of business, Sellers will cause
Intrac to refrain from:
(a) amending its certificate of incorporation or by-laws or taking
any action with respect to any such amendment or any
recapitalization, reorganization, liquidation or dissolution
of any such corporation;
(b) authorizing, issuing, selling or otherwise disposing of any
shares of capital stock of or any Option with respect to
Intrac, or modifying or amending any right of any holder of
outstanding shares of capital stock of or Option with respect
to Intrac;
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(c) declaring, setting aside or paying any dividend or other
distribution in respect of the capital stock of Intrac, or
directly or indirectly redeeming, purchasing or otherwise
acquiring any capital stock of or any Option with respect to
Intrac (except as set forth on SCHEDULE 4.10);
(d) disposing of, or incurring any Lien (other than a Permitted
Lien) on, any Assets and Properties;
(e) (i) entering into, amending, modifying, terminating (partially
or completely), granting any waiver under or giving any
consent with respect to (A) any material Contract or (B) any
material License or (ii) granting any irrevocable powers of
attorney;
(f) violating, breaching or defaulting under in any material
respect, or taking or failing to take any action that (with or
without notice or lapse of time or both) would constitute a
material violation or breach of, or default under, any term or
provision of any License held or used by Intrac or any
Contract to which Intrac is a party or by which any of its
Assets and Properties is bound;
(g) (i) incurring Indebtedness in an aggregate principal amount
exceeding $100,000 net of any amounts of Indebtedness
discharged during such period, or (ii) voluntarily purchasing,
canceling, prepaying or otherwise providing for a complete or
partial discharge in advance of a scheduled payment date with
respect to, or waiving any rights of Intrac under, any
Indebtedness of or owing to Intrac;
(h) making capital expenditures or commitments for additions to
property, plant or equipment constituting capital assets in an
aggregate amount exceeding $150,000;
(i) making any change in the lines of business in which it
participates or is engaged;
(j) writing off or writing down any of its Assets and Properties;
or
(k) entering into any Contract to do or engage in any of the
foregoing.
6.6 AFFILIATE TRANSACTIONS.
Prior to the Closing, Intrac will not enter into any Contract or amend
or modify any existing Contract, and will not engage in any transaction
outside the ordinary course of business consistent with past practice
or not on an arm's-length basis with Sellers or any such Affiliate.
6.7 BOOKS AND RECORDS.
On the Closing Date, Sellers will deliver or make available to WWWX and
Acquisition Sub all of the Books and Records, and if at any time after
the Closing Sellers discover in their possession or under their control
any other Books and Records, they will forthwith deliver such Books and
Records to Acquisition Sub.
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6.8 ACQUISITION PROPOSALS.
From the date hereof through the Closing, none of the Sellers, Intrac,
or any of their Affiliates, nor any of their officers, directors,
employees, representatives, or agents, shall, directly or indirectly,
solicit, initiate, or participate in any way in discussions or
negotiations with, or provide any information or assistance to, any
Person or group of Persons (other than WWWX or Acquisition Sub)
concerning any acquisition of an equity interest in, or any merger or
consolidation with, or any acquisition of a substantial portion of the
assets of Intrac other than in the ordinary course of business and as
specifically permitted pursuant to this Agreement (each, an
"Acquisition Proposal"), or assist or participate in, facilitate, or
encourage any effort or attempt by any other Person to do or seek to do
any of the foregoing. Since June 1, 1999, none of the conduct
prohibited by this sentence has occurred. Intrac shall promptly
communicate to WWWX and Acquisition Sub the terms of any Acquisition
Proposal which any of them or any such other Person may receive.
6.9 NOTICE AND CURE.
Sellers will notify WWWX and Acquisition Sub in writing of, and
contemporaneously will provide WWWX and Acquisition Sub with true and
complete copies of any and all information or documents relating to,
and will use all commercially reasonable efforts to cure before the
Closing, any event, transaction or circumstance, as soon as practicable
after it becomes known to Sellers, occurring after the date of this
Agreement that causes or will cause any covenant or agreement of
Sellers under this Agreement to be breached or that renders or will
render untrue any representation or warranty of Sellers contained in
this Agreement as if the same were made on or as of the date of such
event, transaction or circumstance.
6.10 FULFILLMENT OF CONDITIONS.
Sellers will execute and deliver at the Closing each of the Transaction
Documents that Sellers are required hereby to execute and deliver as a
condition to the Closing, will take all commercially reasonable steps
necessary or desirable and proceed diligently and in good faith to
satisfy each condition to the obligations of WWWX and Acquisition Sub
contained in this Agreement and will not, and will not permit Intrac
to, take or fail to take any action that could reasonably be expected
to result in the nonfulfillment of any such condition.
ARTICLE VII
COVENANTS OF WWWX AND ACQUISITION SUB
Each of WWWX and Acquisition Sub covenants and agrees with Intrac and Sellers
that, at all times from and after the date hereof until the Closing and, with
respect to any covenant or agreement by its terms to be performed in whole or in
part after the Closing, for the period specified therein or, if no period is
specified therein, indefinitely, WWWX and Acquisition Sub will comply with all
covenants and provisions of this ARTICLE VII, except to the extent Sellers may
otherwise consent in writing.
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7.1 REGULATORY AND OTHER APPROVALS.
Each of WWWX and Acquisition Sub will as promptly as practicable (a)
take all commercially reasonable steps necessary or desirable to obtain
all consents, approvals or actions of, make all filings with and give
all notices to Governmental or Regulatory Authorities or any other
Person required of WWWX and Acquisition Sub to consummate the
transactions contemplated hereby and by the Transaction Documents, (b)
provide such other information and communications to such Governmental
or Regulatory Authorities or other Persons as Sellers or such
Governmental or Regulatory Authorities or other Persons may reasonably
request in connection therewith, and (c) cooperate with Sellers and
Intrac in connection with the performance of their obligations under
Sections 6.1 AND 6.2. Each of WWWX and Acquisition Sub will provide
prompt notification to Intrac and the Sellers when any such consent,
approval, action, filing or notice referred to in CLAUSE (A) above is
obtained, taken, made or given, as applicable.
7.2 NOTICE AND CURE.
Each of WWWX and Acquisition Sub will notify Sellers in writing of, and
contemporaneously will provide Sellers with true and complete copies of
any and all information or documents relating to, and will use all
commercially reasonable efforts to cure before the Closing, any event,
transaction or circumstance, as soon as practicable after it becomes
known to WWWX and Acquisition Sub, occurring after the date of this
Agreement that causes or will cause any covenant or agreement of WWWX
and Acquisition Sub under this Agreement to be breached or that renders
or will render untrue any representation or warranty of WWWX and
Acquisition Sub contained in this Agreement as if the same were made on
or as of the date of such event, transaction or circumstance.
7.3 FULFILLMENT OF CONDITIONS.
Each of WWWX and Acquisition Sub will execute and deliver at the
Closing each of the Transaction Documents that WWWX and Acquisition Sub
is hereby required to execute and deliver as a condition to the
Closing, will take all commercially reasonable steps necessary or
desirable and proceed diligently and in good faith to satisfy each
condition to the obligations of Sellers contained in this Agreement and
will not take or fail to take any action that could reasonably be
expected to result in the nonfulfillment of any such condition.
7.4 BUSINESS.
Acquisition Sub will continue at least one significant business line of
Intrac, or at least a significant portion of Intrac's historic business
assets in a business, in each case for a period of at least 1 year
following the Closing Date, within the meaning of Treasury Regulation
Section 1.368-1(d).
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7.5 COMPLETION OF DUE DILIGENCE.
WWWX and Acquisition Sub agree to complete their due diligence review
of Intrac no later than July 23, 1999.
7.6 MANAGEMENT OF ACQUISITION SUB.
Acquisition Sub will be managed in accordance with the terms set forth
in the attached Exhibit C.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF WWWX AND ACQUISITION SUB
The obligations of WWWX and Acquisition Sub hereunder to purchase the Shares are
subject to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by WWWX and
Acquisition Sub in their sole discretion):
8.1 REPRESENTATIONS AND WARRANTIES.
Each of the representations and warranties made by Sellers and Intrac
in this Agreement (other than those made as of a specified date earlier
than the Closing Date) shall be true and correct in all material
respects on and as of the Closing Date as though such representation or
warranty was made on and as of the Closing Date, and any representation
or warranty made as of a specified date earlier than the Closing Date
shall have been true and correct in all material respects on and as of
such earlier date.
8.2 PERFORMANCE.
Sellers and Intrac shall have performed and complied with, in all
material respects, each agreement, covenant and obligation required by
this Agreement to be so performed or complied with by Sellers and
Intrac at or before the Closing.
8.3 SELLERS' CERTIFICATE; OFFICERS' CERTIFICATES.
Sellers shall have delivered to WWWX and Acquisition Sub a certificate,
dated the Closing Date and executed by Sellers stating that their
representations and warranties contained in this Agreement are true and
correct as of the Closing Date and that all of their covenants and
conditions contained in this Agreement have been met or waived, in a
form reasonably satisfactory to WWWX and Acquisition Sub. Intrac shall
have delivered to WWWX and Acquisition Sub a certificate, dated the
Closing Date and executed in the name and on behalf of Intrac by an
authorized officer of Intrac stating that Intrac's representations and
warranties contained in this Agreement are true and correct as of the
Closing Date and that all of its covenants and conditions contained in
this Agreement have been met or waived, in a form reasonably
satisfactory to WWWX and Acquisition Sub, and a certificate, dated the
Closing Date and executed by the Secretary of Intrac attaching Intrac's
organizational documents, resolutions, incumbency certificate and
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certifying as to the due authorization of the transactions contemplated
by this Agreement, in a form reasonably satisfactory to WWWX and
Acquisition Sub.
8.4 ORDERS AND LAWS.
There shall not be in effect on the Closing Date any Order or Law
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement
or any of the Transaction Documents or which could reasonably be
expected to otherwise result in a material diminution of the benefits
of the transactions contemplated by this Agreement or any of the
Transaction Documents to WWWX and Acquisition Sub, and there shall not
be pending or threatened on the Closing Date any Action or Proceeding
in, before or by any Governmental or Regulatory Authority which could
reasonably be expected to result in the issuance of any such Order or
the enactment, promulgation or deemed applicability to WWWX,
Acquisition Sub, Intrac, or the transactions contemplated by this
Agreement or any of the Transaction Documents of any such Law.
8.5 REGULATORY CONSENTS AND APPROVALS.
All consents, approvals and actions of, filings with and notices to any
Governmental or Regulatory Authority necessary to permit WWWX, Intrac,
Acquisition Sub and Sellers to perform their obligations under this
Agreement and the Transaction Documents and to consummate the
transactions contemplated hereby and thereby (a) shall have been duly
obtained, made or given, (b) shall be in form and substance reasonably
satisfactory to WWWX and Acquisition Sub, (c) shall not be subject to
the satisfaction of any condition that has not been satisfied or
waived, and (d) shall be in full force and effect, and all terminations
or expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement and the Transaction Documents shall have
occurred.
8.6 THIRD PARTY CONSENTS.
At or prior to Closing, all consents (or in lieu thereof waivers) to
the performance by WWWX, Intrac, Acquisition Sub and Sellers of their
obligations under this Agreement and the Transaction Documents or to
the consummation of the transactions contemplated hereby and thereby as
are required under any Contract to which WWWX, Acquisition Sub, Sellers
or Intrac is a party or by which any of their respective Assets and
Properties are bound (a) shall have been obtained, (b) shall be in form
and substance reasonably satisfactory to WWWX, Acquisition Sub, Seller
or Intrac, as the case may be, (c) shall not be subject to the
satisfaction of any condition that has not been satisfied or waived,
and (d) shall be in full force and effect, except where the failure to
obtain any such consent (or in lieu thereof waiver) could not
reasonably be expected, individually or in the aggregate with other
such failures, to materially adversely affect WWWX or Acquisition Sub
or the Business or Condition of Intrac or otherwise result in a
material diminution of the benefits of the transactions contemplated by
this Agreement and the Transaction Documents to WWWX and Acquisition
Sub.
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8.7 PROCEEDINGS.
All proceedings to be taken on the part of Sellers and Intrac in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to WWWX and Acquisition Sub, and WWWX and Acquisition Sub
shall have received copies of all such documents and other evidences as
WWWX and Acquisition Sub may reasonably request in order to establish
the consummation of such transactions and the taking of all proceedings
in connection therewith.
8.8 OPINION OF COUNSEL.
WWWX and Acquisition Sub shall have received an opinion of counsel to
Sellers and Intrac, dated the Closing Date, in a form reasonably
satisfactory to WWWX and Acquisition Sub.
8.9 OTHER TRANSACTION DOCUMENTS.
WWWX, Acquisition Sub, Sellers and Intrac, as the case may be, shall
have executed and delivered the Employment Agreements and the Amended
and Restated ATM Service, Ltd. Shareholders Agreement.
8.10 COMPLETION OF DUE DILIGENCE.
WWWX and Acquisition Sub shall have completed their due diligence
review of Intrac and the transactions contemplated by this Agreement to
their satisfaction.
8.11 SCHEDULES.
Intrac and Sellers shall have attached and/or amended the schedules to
this Agreement.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF SELLERS AND INTRAC
The obligations of Sellers hereunder to sell the Shares are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by Sellers in their sole
discretion):
9.1 REPRESENTATIONS AND WARRANTIES.
Each of the representations and warranties made by WWWX and Acquisition
Sub in this Agreement (other than those made as of a specified date
earlier than the Closing Date) shall be true and correct in all
material respects on and as of the Closing Date as though such
representation or warranty was made on and as of the Closing Date, and
any
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representation or warranty made as of a specified date earlier than the
Closing Date shall have been true and correct in all material respects
on and as of such earlier date.
9.2 PERFORMANCE.
WWWX and Acquisition Sub shall have performed and complied with, in all
material respects, each agreement, covenant and obligation required by
this Agreement to be so performed or complied with by WWWX and
Acquisition Sub at or before the Closing.
9.3 OFFICERS' CERTIFICATES.
Each of WWWX and Acquisition Sub shall have delivered to Sellers a
certificate, dated the Closing Date and executed in the name and on
behalf of each of WWWX and Acquisition Sub by an authorized officer of
each of WWWX and Acquisition Sub stating that each of their
representations and warranties contained in this Agreement are true and
correct as of the Closing Date and that all of its covenants and
conditions contained in this Agreement have been met or waived, in a
form reasonably satisfactory to Sellers and Intrac, and a certificate,
dated the Closing Date and executed by the Secretary of each of WWWX
and Acquisition Sub attaching each of their organizational documents,
resolutions, incumbency certificate and certifying as to the due
authorization by each of the transactions contemplated by this
Agreement, in a form reasonably satisfactory to Sellers and Intrac.
9.4 ORDERS AND LAWS.
There shall not be in effect on the Closing Date any Order or Law
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement
or any of the Transaction Documents.
9.5 REGULATORY CONSENTS AND APPROVALS.
All consents, approvals and actions of, filings with and notices to any
Governmental or Regulatory Authority necessary to permit Sellers and
Acquisition Sub to perform their obligations under this Agreement and
the Transaction Documents and to consummate the transactions
contemplated hereby and thereby (a) shall have been duly obtained, made
or given, (b) shall be in form and substance reasonably satisfactory to
Sellers, (c) shall not be subject to the satisfaction of any condition
that has not been satisfied or waived, and (d) shall be in full force
and effect, and all terminations or expirations of waiting periods
imposed by any Governmental or Regulatory Authority necessary for the
consummation of the transactions contemplated by this Agreement and the
Transaction Documents shall have occurred.
THIRD PARTY CONSENTS.
All consents (or in lieu thereof waivers) to the performance by
Sellers, WWWX and Acquisition Sub of their obligations hereunder and to
the consummation of the transactions contemplated hereby as are
required hereunder (a) shall have been obtained, (b) shall be in form
and substance reasonably satisfactory to Sellers, (c) shall not be
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subject to the satisfaction of any condition that has not been
satisfied or waived, and (d) shall be in full force and affect.
9.7 OPINION OF COUNSEL.
Sellers shall have received an opinion of counsel to WWWX and
Acquisition Sub, dated the Closing Date, and in a form reasonably
satisfactory to Sellers and Intrac.
9.8 PROCEEDINGS.
All proceedings to be taken on the part of WWWX and Acquisition Sub in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Sellers, and Sellers shall have received copies of all
such documents and other evidences as Sellers may reasonably request in
order to establish the consummation of such transactions and the taking
of all proceedings in connection therewith.
9.9 OTHER TRANSACTION DOCUMENTS.
WWWX, Acquisition Sub, Sellers and Intrac, as the case may be, shall
have executed and delivered the Employment Agreements and the Amended
and Restated ATM Service, Ltd. Shareholders Agreement.
9.10 TAX FREE EXCHANGE.
Sellers and Intrac shall have received reasonable evidence that the
transactions evidenced by this Agreement, including, without
limitation, the Merger, shall be accorded tax free exchange status
under Section 368(a) of the Internal Revenue Code, as amended.
ARTICLE X
TAX MATTERS AND POST-CLOSING TAXES
10.1 TRANSFER TAXES.
WWWX and Acquisition Sub shall pay all sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar
taxes and fees (collectively, "TRANSFER TAXES") arising out of or in
connection with the transactions effected pursuant to this Agreement,
and shall indemnify, defend, and hold harmless Sellers and Intrac with
respect to such Transfer Taxes. WWWX and Acquisition Sub shall timely
file all necessary documentation and Tax Returns with respect to such
Transfer Taxes and shall provide reasonable evidence no later than the
Closing Date that any such Transfer Taxes have been provided for.
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10.2 TAX COOPERATION.
After the date hereof, Sellers, WWWX, Acquisition Sub and Intrac will
cooperate in the preparation of all Tax Returns and will provide to
each other (or cause to be provided) any records and other information
requested, and will provide access to, and the cooperation of their
respective auditors, and will cooperate with each other in connection
with any Tax investigation, audit or other processing.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS
11.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
The representations, warranties, covenants and agreements of Sellers,
WWWX, Acquisition Sub and Intrac contained in this Agreement will
survive the Closing: (a) until the expiration of the applicable
statutes of limitation with respect to matters covered by SECTION 4.3;
and (b) for 18 months after the Closing Date in the case of all other
representations and warranties and any covenant or agreement to be
performed in whole or in part on or prior to the Closing; and (c) with
respect to each other covenant or agreement contained in this
Agreement, until 60 days following the last date on which such covenant
or agreement is to be performed or, if no such date is specified, the
date that is two years after the Closing Date, PROVIDED, HOWEVER, that
any representation, warranty, covenant or agreement that would
otherwise terminate in accordance with clauses (a), (b) or (c) above
will continue to survive if a Claim Notice or Indemnity Notice (as
applicable) shall have been timely given under ARTICLE XII on or prior
to such termination date, until the related claim for indemnification
has been satisfied or otherwise resolved as provided in ARTICLE XII.
ARTICLE XII
INDEMNIFICATION
12.1 INDEMNIFICATION.
(a) Subject to the other SECTIONS of this ARTICLE XII, Sellers
shall, severally (pro rata based upon the allocation of the
Merger Consideration to Sellers as set forth on SCHEDULE 3.2),
and not jointly, indemnify the WWWX Indemnified Parties in
respect of, and hold each of them harmless from and against,
any and all Losses suffered, incurred or sustained by any of
them or to which any of them becomes subject, resulting from,
arising out of or relating to any material breach of any
representation or warranty in this Agreement, in any Schedule
or certificate delivered in connection with this Agreement and
the other documents and agreements delivered in connection
with this Agreement or any nonfulfillment of or failure to
perform any material covenant or agreement on the part of
Sellers contained in this Agreement.
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(b) Subject to the other Sections of this ARTICLE XII, WWWX and
Acquisition Sub shall jointly and severally indemnify the
Seller Indemnified Parties in respect of, and hold each of
them harmless from and against, any and all Losses suffered,
incurred or sustained by any of them or to which any of them
becomes subject, resulting from, arising out of or relating to
any breach of any material representation or warranty of WWWX
or Acquisition Sub in this Agreement, in any Schedule or
Certificate delivered in connection with this Agreement and
the other documents and agreements delivered in connection
with this Agreement or any nonfulfillment of or failure to
perform any material covenant or agreement on the part of WWWX
or Acquisition Sub contained in this Agreement, including
without limitation the breach of any warranty, representation
and/or covenant of WWWX and/or Acquisition Sub contained in
this Agreement which causes the Merger not to qualify as a tax
free reorganization under Section 368 of the Code for which
Losses shall include any and all income taxes, interest and
penalties which become due and payable as a result of Sellers'
recognition of capital gain in connection with the WWWX Shares
received by the Sellers as a part of the Merger Consideration,
as well as any and all damages, costs and expenses, including
reasonable attorneys' fees suffered, sustained or incurred by
the Sellers as a result thereof or in connection therewith.
(c) Notwithstanding Subsections (a) and (b) above, the WWWX
Indemnified Parties shall not be entitled to indemnification
under this ARTICLE XII until such parties' Losses in the
aggregate are equal to an amount in excess of $100,000, and
only then for those amounts in excess of $100,000.
12.2 METHOD OF ASSERTING CLAIMS.
All claims for indemnification by any Indemnified Party will be
asserted and resolved as follows:
(a) In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under Section 12.1 is
asserted against or sought to be collected from such
Indemnified Party by a third party (a "THIRD PARTY CLAIM"),
the Indemnified Party shall deliver a Claim Notice with
reasonable promptness to the Indemnifying Party. If the
Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives
notice of such Third Party Claim, the Indemnifying Party will
not be obligated to indemnify the Indemnified Party with
respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been irreparably
prejudiced by such failure of the Indemnified Party. The
Indemnifying Party will notify the Indemnified Party as soon
as practicable within the Dispute Period whether the
Indemnifying Party disputes its liability to the
Indemnified Party under Section 12.1 and whether the
Indemnifying Party desires, at its sole cost and expense,
to defend the Indemnified Party against such Third Party
Claim.
i. If the Indemnifying Party notifies the Indemnified
Party within the Dispute Period that the Indemnifying
Party desires to defend the Indemnified Party
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with respect to the Third Party Claim pursuant to
this 12.2(a), then the Indemnifying Party will have
the right to defend, with counsel reasonably
satisfactory to the Indemnified Party, at the sole
cost and expense of the Indemnifying Party, such
Third Party Claim by all appropriate proceedings,
which proceedings will be vigorously and diligently
prosecuted by the Indemnifying Party to a final
conclusion or will be settled at the discretion of
the Indemnifying Party (but only with the consent of
the Indemnified Party, which consent will not be
unreasonably withheld, in the case of any settlement
that provides for any relief other than the payment
of monetary damages as to which the Indemnified Party
will be indemnified in full). The Indemnifying Party
will be deemed to have waived its right to dispute
its liability to the Indemnified Party under Section
12.1 with respect to any Third Party Claim as to
which it elects to control the defense. The
Indemnifying Party will have full control of such
defense and proceedings, including (except as
provided in the immediately preceding sentence) any
settlement thereof; PROVIDED, HOWEVER, that the
Indemnified Party may, at the sole cost and expense
of the Indemnified Party, at any time prior to the
Indemnifying Party's delivery of the notice referred
to in the first sentence of this clause (i), file any
motion, answer or other pleadings or take any other
action that the Indemnified Party reasonably believes
to be necessary or appropriate to protect its
interests; and PROVIDED FURTHER, that if requested by
the Indemnifying Party, the Indemnified Party will,
at the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the
Indemnifying Party in contesting any Third Party
Claim that the Indemnifying Party elects to contest.
The Indemnified Party may retain separate counsel to
represent it in, but not control, any defense or
settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this clause (i), and
the Indemnified Party will bear its own costs and
expenses with respect to such separate counsel,
except as provided in the preceding sentence and
except that the Indemnifying Party will pay the costs
and expenses of such separate counsel if (x) in the
Indemnified Party's good faith judgment, it is
advisable, based on advice of counsel, for the
Indemnified Party to be represented by separate
counsel because a conflict or potential conflict
exists between the Indemnifying Party and the
Indemnified Party which makes representation of both
parties inappropriate under applicable standards of
professional conduct or (y) the named parties to such
Third Party Claim include both the Indemnifying Party
and the Indemnified Party and the Indemnified Party
determines in good faith, based on advice of counsel,
that defenses are available to it that are
unavailable to the Indemnifying Party.
Notwithstanding the foregoing, the Indemnified Party
may retain or take over the control of the defense or
settlement of any Third Party Claim the defense of
which the Indemnifying Party has elected to control
if the Indemnified Party irrevocably waives its right
to indemnity under Section 12.1 with respect to such
Third Party Claim.
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ii. If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Third Party
Claim pursuant to Section 12.2(a), or if the
indemnifying Party gives such notice but fails to
prosecute vigorously and diligently or settle the
Third Party Claim, then the Indemnified Party will
have the right to defend, at the sole cost and
expense of the Indemnifying Party, the Third Party
Claim by all appropriate proceedings, which
proceedings will be prosecuted by the Indemnified
Party in good faith or will be settled at the
discretion of the Indemnified Party (with the consent
of the Indemnifying Party, which consent will not be
unreasonably withheld). The Indemnified Party will
have full control of such defense and proceedings,
including (except as provided in the immediately
preceding sentence) any settlement thereof; PROVIDED,
HOWEVER, that if requested by the Indemnified Party,
the Indemnifying Party will, at the sole cost and
expense of the Indemnifying Party, provide reasonable
cooperation to the Indemnified Party and its counsel
in contesting any Third Party Claim which the
Indemnified Party is contesting. Notwithstanding the
foregoing provisions of this clause (ii), if the
Indemnifying Party has notified the Indemnified Party
within the Dispute Period that the Indemnifying Party
disputes its liability hereunder to the Indemnified
Party with respect to such Third Party Claim and if
such dispute is resolved in favor of the Indemnifying
Party in the manner provided in clause (iii) below,
the Indemnifying Party will not be required to bear
the costs and expenses of the Indemnified Party's
defense pursuant to this clause (ii) or of the
Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified
Party will reimburse the Indemnifying Party in full
for all reasonable costs and expenses incurred by the
Indemnifying Party in connection with such
litigation. The Indemnifying Party may retain
separate counsel to represent it in, but not control,
any defense or settlement controlled by the
Indemnified Party pursuant to this clause (ii), and
the Indemnifying Party will bear its own costs and
expenses with respect to such participation.
iii. If the Indemnifying Party notifies the Indemnified
Party that it does not dispute its liability to the
Indemnified Party with respect to the Third Party
Claim under Section 12.1, the Loss arising from such
Third Party Claim will be conclusively deemed a
liability of the Indemnifying Party under Section
12.1 and the Indemnifying shall pay the amount of
such Loss to the Indemnified Party within 10 days of
demand therefor following the final determination
thereof. If the Indemnifying Party disputes its
liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will
proceed in good faith to negotiate a resolution of
such dispute, and if not resolved through
negotiations within the Resolution Period, such
dispute shall be resolved by litigation in a court of
competent jurisdiction.
(b) In the event any Indemnified Party should have a claim under
Section 12.1 against any Indemnifying Party that does not
involve a Third Party Claim, the Indemnified
Party shall deliver an Indemnity Notice with reasonable
promptness to the
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Indemnifying Party. The failure by any Indemnified Party to
give the Indemnity Notice shall not impair such party's rights
hereunder except to the extent that an Indemnifying Party
demonstrates that it has been irreparably prejudiced thereby.
If the Indemnifying Party notifies the Indemnified Party that
it does not dispute the claim described in such Indemnity
Notice, the Loss arising from the claim specified in such
Indemnity Notice will be conclusively deemed a liability of
the Indemnifying Party under Section 12.1 and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified
Party within 10 days of demand therefor following the final
determination thereof. If the Indemnifying Party disputes its
liability with respect to such claim, the Indemnifying Party
and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved
through negotiations within the Resolution Period, such
dispute shall be resolved by litigation in a court of
competent jurisdiction.
(c) The indemnification remedies provided in this Agreement shall
be exclusive of any other remedies that may be available to
the Parties. For purposes of the indemnification provisions
hereunder, WWWX and Acquisition Sub shall each have the right
of setoff with respect to each Seller's shareholdings in WWWX
or ATM. Such right of setoff must be exercised at the
respective fair market value of respective shares and may only
be exercised 10 days after a demand for indemnification has
been unfulfilled.
ARTICLE XIII
TERMINATION
13.1 TERMINATION.
This Agreement may be terminated, and the transactions contemplated
hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement of
Sellers, WWWX, Acquisition Sub and Intrac;
(b) at any time before the Closing, by Sellers and Intrac, on the
one hand, or WWWX and Acquisition Sub, on the other hand, (i)
in the event of a material breach hereof by the
non-terminating party if such non-terminating party fails to
cure such breach within five (5) Business Days following
notification thereof by the terminating party or (ii) upon
notification of the non-terminating party by the terminating
party that the satisfaction of any condition to the
terminating party's obligations under this Agreement becomes
impossible or impracticable with the use of commercially
reasonable efforts if the failure of such condition to be
satisfied is not caused by a breach hereof by the terminating
party; or
(c) at any time after August 31, 1999 by Sellers and Intrac, on
the one hand or WWWX and Acquisition Sub, on the other hand,
upon notification of the non-terminating party by the
terminating party if the Closing shall not have occurred
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<PAGE>
on or before such date and such failure to consummate is not
caused by a breach of this Agreement by the terminating party.
13.2 EFFECT OF TERMINATION.
If this Agreement is validly terminated pursuant to SECTION 13.1, this
Agreement will forthwith become null and void, and there will be no
liability or obligation on the part of Sellers, Intrac, WWWX or
Acquisition Sub (or any of their respective officers, directors,
employees, agents or other representatives or Affiliates), except as
provided in the next succeeding sentence and except that the provisions
with respect to expenses in SECTION 14.5, shall continue to apply
following any such termination. Notwithstanding any other provision in
this Agreement to the contrary, upon termination of this Agreement
pursuant to SECTION 13.1 (B) OR (C), Sellers and Intrac will remain
liable to WWWX and Acquisition Sub for any willful breach of this
Agreement by Sellers existing at the time of such termination, WWWX and
Acquisition Sub will remain liable to Sellers and Intrac for any
willful breach of this Agreement by WWWX and Acquisition Sub existing
at the time of such termination, and Sellers and Intrac or WWWX and
Acquisition Sub may seek such remedies, including damages and fees of
attorneys, against the other with respect to any such breach as are
provided in this Agreement or as are otherwise available at Law or in
equity.
ARTICLE XIV
MISCELLANEOUS
14.1 NOTICES.
All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission (receipt of which is confirmed
by an officer of the receiving party) or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile
numbers:
(a) If to WWWX or Acquisition Sub, to:
16 Springdale Road, Bldg 11
Cherry Hill, NJ 08003
Facsimile No.: 609. 627.6893
Attn: Mr. Robert D. Kohn, President and CEO
With a copy to:
Weinstein, Goss, Schleifer, Eisenberg, Winkler, Rothweiler &
Ostroff, P.C.
1634 Spruce Street
Philadelphia, PA
Facsimile No.: 215-546-0118
Attn: Michael M. Goss, Esq.
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(b) If to Intrac or the Sellers, to:
424 Madison Avenue
New York, NY 10017
With a copy to:
Astor, Weiss, Kaplan & Rosenblum, LLP
The Bellevue, Sixth Floor
Broad Street at Walnut
Philadelphia, PA 19102
Facsimile No.: 215-790-0509
Attn: G. David Rosenblum, Esq.
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section 14.1 be
deemed given upon delivery, (ii) if delivered by facsimile transmission
to the facsimile number as provided in this Section 14.1, be deemed
given upon receipt of confirmation by an officer of the receiving
party, and (iii) if delivered by mail in the manner described above to
the address as provided in this Section 14.1, be deemed given upon
receipt (in each case regardless of whether such notice, request or
other communication is received by any other Person to whom a copy of
such notice, request or other communication is to be delivered pursuant
to this Section 14.1. Any party from time to time may change its
address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the
other parties hereto.
14.2 COVENANTS AGAINST COMPETITION. Intrac and the Sellers acknowledge that
WWWX and Acquisition Sub would not purchase the Shares but for the
agreements and covenants of the Sellers (the "COVENANTORS").
Accordingly, each of the Covenantors, jointly and severally, covenants
and agrees as follows:
(a) COVENANT NOT TO COMPETE. Such Covenantors shall not at any
time for a period of 5 years after Closing (the "RESTRICTED
PERIOD") have any ownership interest (of record or beneficial)
in, or have any interest as an employee, salesman, consultant,
officer or director in, or otherwise aid or assist in any
manner, (i) any firm, corporation, partnership, proprietorship
or other business that engages in a business which is similar
to the Business of Intrac so long as WWWX, Acquisition Sub or
ATM (collectively the "WWWX PARTIES") or any successor in
interest to the Business remains actively engaged in the
Business; provided, however, that any such Covenantors may
own, directly or indirectly, solely as an investment, stock in
a corporation sold on a securities exchange if such
Covenantors (i) are not a controlling person of, or a member
of a group which controls, such Person or (ii) does not,
directly or indirectly own one percent or more of any class of
securities of such Person.
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<PAGE>
I. SOLICITATION OF BUSINESS. During the Restricted
Period, such Covenantors shall not solicit or accept
or assist any other person to solicit or accept any
business which is the same or substantially similar
to the Business (other than for the WWWX Parties)
from any present or past customer of the Business; or
request or advise any present or future customer of
the Business to withdraw, curtail or cancel its
business dealings with the WWWX Parties or any
successor to the WWWX Parties; or commit any other
act or assist others to commit any other act which
might injure the Business. For purposes of this
SECTION 14.2, present or past customer means a
customer that has transacted business with
Acquisition Sub, Intrac or WWWX, or any of their
affiliates or subsidiaries within the previous two
years.
II. EMPLOYEES. During the Restricted Period, such
Covenantors shall not directly or indirectly (i)
solicit or encourage any employee of the Business to
leave the employment of the WWWX Parties or (ii) hire
any employee who has left the employment of the WWWX
Parties or any successor to the WWWX Parties if such
hiring is proposed to occur within one year after the
termination of such employee's employment with the
WWWX Parties or any successor to the WWWX Parties;
III. CONSULTANTS. During the Restricted Period, such
Covenantors shall not directly or indirectly solicit
or encourage any consultant then under contract with
the WWWX Parties to cease work with such entity.
IV. CONFIDENTIAL INFORMATION. From and after the Closing
Date, such Covenantors shall keep secret and retain
in strictest confidence, and shall not use for the
benefit of such Covenantors or any Person other than
the WWWX Parties all confidential matters and trade
secrets known to them relating to the Business,
including, without limitation, customer lists,
pricing policies, operational methods, marketing
plans or strategies, product development techniques
or plans, business acquisition plans, new personnel
acquisition plans, the software, technical processes,
designs and design projects, invention and research
projects and other business affairs relating to the
Business learned by the Covenantors heretofore or
hereafter, and shall not disclose them to anyone
outside of the WWWX Parties and any successors to the
WWWX Parties except upon the WWWX Parties' express
written consent.
V. RIGHTS AND REMEDIES UPON BREACH. If any Covenantor
breaches, or threatens to commit a breach of any of
the provisions of the restrictive covenants contained
in this Section, the WWWX Parties shall have the
following rights and remedies, each of which rights
and remedies shall be in addition to, and not in lieu
of, any other rights and remedies available to the
WWWX Parties at law or in equity;
42
<PAGE>
VI. SPECIFIC PERFORMANCE. The WWWX Parties shall have the
right to seek to have the covenants specifically
enforced by any court having equity jurisdiction, all
without the need to prove any amount of actual
damage, it being acknowledged and agreed that any
such breach or threatened breach will cause
irreparable injury to the WWWX Parties and that
monetary damages will not provide an adequate remedy
to the WWWX Parties; and
VII. ACCOUNTING AND INDEMNIFICATION. The right and remedy
to require such Covenantors (i) to account for and
pay over to the WWWX Parties all compensation,
profits, monies, accruals, increments or other
benefits derived by such Covenantors or any
associated party deriving such benefits as a result
of any such breach of the covenants; and (ii) to
indemnify the WWWX Parties against any other losses,
damages, including special and consequential damages,
costs and expenses, including actual attorneys fees
and court costs, which may be incurred by them and
which result from or arise out of any such breach or
threatened breach of the covenants.
(b) SEVERABILITY OF COVENANTS. If any court determines that any of
the covenants, or any part thereof, is invalid or
unenforceable, the remainder of the covenants shall not
thereby be affected and shall be given full effect, without
regard to the invalid portions. If any court determines that
any of the covenants, or any part thereof, is unenforceable
because of the duration of such provision or the area covered
thereby, such court shall have the power to reduce the
duration or area of such provision and, in its reduced form,
such provision shall then be enforceable and shall be
enforced. Such Convenantors hereby waive any and all right to
attack the validity of the covenants on the grounds of the
breadth of their geographic scope or the length of their term.
(c) ENFORCEABILITY IN JURISDICTION. The Covenantors and the WWWX
Parties intend to and do hereby confer jurisdiction to enforce
the covenants upon the courts of any jurisdiction within the
geographical scope of such covenants and in which the WWWX
Parties are conducting the Business. If the courts of any one
or more of such jurisdictions hold the covenants wholly
unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of the Covenantors and the WWWX
Parties that such determination not bar or in any way affect
the right of the WWWX Parties to the relief provided above in
the courts of any other jurisdiction within the geographical
scope of such covenants, as to breaches of such covenants in
such other respective jurisdictions, such covenants as they
relate to each jurisdiction being, for this purpose, severable
into diverse and independent covenants.
(d) DEFINITIVE NON-COMPETITION AGREEMENT; INVENTION AND
CONFIDENTIALITY AGREEMENT. To give full effect to the
provisions of this Section, such Covenantors shall deliver to
the WWWX Parties at the Closing a definitive Non-Competition
Agreement containing, among other things, specific
descriptions of the types of
43
<PAGE>
business activities and the geographic areas to be covered by
the covenants, and otherwise in a form provided by the WWWX
Parties. Furthermore, such Covenantors shall also deliver to
the WWWX Parties at the Closing a definitive Employee
Invention and Confidentiality Agreement, whereby such
Covenantor, among other things, (i) agrees to hold in
strictest confidence all confidential proprietary information
and trade secrets of the Business which are in his possession
or known to him and (ii) agrees that all inventions (the
software) conceived by him while engaged as an employee or
independent contractor of the WWWX Parties are the exclusive
property of the WWWX Parties. Notwithstanding the foregoing,
however, neither the failure of such Covenantors to deliver
either of such agreements nor the failure of the WWWX Parties
to require the same shall otherwise affect the enforceability
of the covenants. Notwithstanding anything contained herein to
the contrary, the restrictive covenants contained in this
Section 14.2 shall not apply to a Seller in the event of a
material breach of this Agreement by any of the WWWX Parties
or in the event that Acquisition Sub or ATM terminates the
employment agreement with such Seller without cause (as
defined therein) or in the event that such Seller terminates
said employment agreement as a result of a material breach
which is not cured within the cure period provided therein.
14.3 SCHEDULES.
Any schedules referenced in this Agreement that are not attached to and
made a part of this Agreement at the time of execution of this
Agreement shall be added prior to Closing, and when added shall be made
a part of this Agreement.
14.4 ENTIRE AGREEMENT.
This Agreement and the Transaction Documents supersede all prior
discussions and agreements between the parties with respect to the
subject matter hereof and thereof, and contain the sole and entire
agreement between the parties hereto with respect to the subject matter
hereof and thereof.
14.5 EXPENSES.
Except as otherwise expressly provided in this Agreement, whether or
not the transactions contemplated hereby are consummated, each of WWWX
and Acquisition Sub will pay its own costs and expenses, and Intrac and
Sellers will pay their own costs and expenses in connection with the
negotiation, execution and closing of this Agreement and the
Transaction Documents and the transactions contemplated hereby and
thereby.
14.6 PUBLIC ANNOUNCEMENTS.
At all times at or before the Closing, Sellers, Intrac, WWWX and
Acquisition Sub will not issue or make any reports, statements or
releases to the public with respect to this Agreement or the
transactions contemplated hereby without the consent of the others,
which consent shall not be unreasonably withheld. If any party is
unable to obtain the
44
<PAGE>
approval of its public report, statement or release from the other
parties and such report, statement or release is, in the opinion of
legal counsel to such party, required by Law in order to discharge such
party's disclosure obligations, then such party may make or issue the
legally required report, statement or release and promptly furnish the
other parties with a copy thereof. Sellers, WWWX and Acquisition Sub
will also obtain the other party's prior approval of WWWX of any press
release to be issued immediately following the Closing announcing the
consummation of the transactions contemplated by this Agreement.
14.7 WAIVER.
Any term or condition of this Agreement may be waived at any time by
the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition.
No waiver by any party of any term or condition of this Agreement, in
any one or more instances, shall be deemed to be or construed as a
waiver of the same or any other term or condition of this Agreement on
any future occasion. All remedies, either under this Agreement or by
Law or otherwise afforded, will be cumulative and not alternative.
14.8 AMENDMENT.
This Agreement may be amended, supplemented or modified only by a
written instrument duly executed by or on behalf of each party hereto.
14.9 NO THIRD PARTY BENEFICIARY.
The terms and provisions of this Agreement are intended solely for the
benefit of each party hereto and their respective heirs, executors,
administrators, personal representatives, successors or permitted
assigns, and it is not the intention of the parties to confer
third-party beneficiary rights upon any other Person other than any
Person entitled to indemnity under ARTICLE XII.
14.10 NO ASSIGNMENT; BINDING EFFECT.
Neither this Agreement nor any right, interest or obligation hereunder
may be assigned by any party hereto without the prior written consent
of all other parties hereto and any attempt to do so will be void,
except (a) for assignments and transfers by operation of Law and (b)
that WWWX and Acquisition Sub may assign any or all of its rights,
interests and obligations hereunder to a wholly-owned subsidiary,
provided that any such subsidiary agrees in writing to be bound by all
of the terms, conditions and provisions contained herein, and provided
that WWWX and Acquisition Sub shall remain fully liable for the
satisfaction of the obligations of such subsidiary. Subject to the
preceding sentence, this Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their
respective successors and assigns.
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<PAGE>
14.11 HEADINGS.
The headings used in this Agreement have been inserted for convenience
of reference only and do not define or limit the provisions hereof.
INVALID PROVISIONS.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future Law, and if the rights or
obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as
if such illegal, invalid or unenforceable provision had never comprised
a part hereof, and (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance
herefrom.
GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to a Contract executed and
performed in such state, without giving effect to the conflicts of laws
principles thereof.
COUNTERPARTS.
This Agreement may be executed in any number of counterparts (including
by way of facsimile), each of which will be deemed an original, but all
of which together will constitute one and the same instrument.
THE NEXT PAGE IS THE SIGNATURE PAGE
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<PAGE>
The parties have executed this Agreement on the date first above written.
WWWX:
WORLDWIDE WEB NETWORX CORPORATION
By /s/ ROBERT D. KOHN
---------------------------------
Name: Robert D. Kohn
Title: President and Chief
Executive Officer
ACQUISITION SUB:
INTRAC ACQUISITION CORPORATION
By /s/ ROBERT D. KOHN
---------------------------------
Name: Robert D. Kohn
Title: President
INTRAC:
THE INTRAC GROUP
By /s/ THOMAS A SETTINERI
---------------------------------
Name: Thomas A. Settineri
Title: Chairman and Chief
Executive Officer
By /s/ GARY K. LEVI
---------------------------------
Name: Gary K. Levi
Title: President and Chief
Operating Officer
SELLERS:
/s/ THOMAS A. SETTINERI
------------------------------------
Thomas A. Settineri
/s/ GARY K. LEVI
------------------------------------
Gary K. Levi
<PAGE>
Exhibit 10.23
EMPLOYMENT AGREEMENT
This Agreement executed this 23rd day of July, 1999 by and
between ATM SERVICE, LTD., a New York corporation ("ATM") and THOMAS SETTINERI
("Employee").
The parties, each intending to be legally bound, hereby agree as
follows:
1. POSITION. ATM employs Employee in the position of Chief Executive
Officer pursuant to the terms of this Agreement. Employee will perform such
services in this capacity as may from time to time be reasonably requested by
ATM.
2. TERM. This Agreement shall commence on the Effective Date, as
defined in the Agreement and Plan of Merger among WorldWide Web NetworX
Corporation ("WWWX"), Intrac Acquisition Corporation, The Intrac Group, a
company in which Employee was a principal shareholder, and the Sellers signatory
thereto, which includes Employee (the "Merger Agreement") and shall except as
provided in paragraph 9, remain in effect for a period of ten (10) years
thereafter. After this ten (10) year term, the Agreement shall automatically
renew from year to year unless either party gives written notice to the other at
least ninety (90) days prior to the expiration of the then current term that he
or it is not renewing.
3. COMPENSATION AND BENEFITS. For all services rendered by Employee
under this Agreement, ATM shall compensate Employee as follows:
(a) Employee shall have an annual salary (the "Base Salary") of
$400,000, that will be paid jointly by ATM and Intrac
Acquisition Corporation, a Delaware corporation ("IAC"). ATM
will pay Employee, on an quarterly basis, the difference
between the amount of the Base Salary and the portion
thereof paid by IAC.
(b) Employee shall be entitled to receive such other benefits as
are contained in Schedule "A".
(c) The Base Salary shall be subject to annual review, and
Employee shall be entitled to such increase as is determined
by the Board of Directors of ATM. Notwithstanding anything
contained herein to the contrary, the Base Salary shall be
increased pro rata to any increase in salary received by
Warren Rothstein. As an example, if Warren Rothstein's Base
Salary is $75,000 and Employee's Base Salary is $50,000,
Employee shall be entitled to 66.67% of any increase
received by Rothstein. Employee's entitlement to any stock
options and bonuses or other additional compensation shall
likewise be pro rata with that of any stock options or
bonuses or other additional compensation granted or awarded
to Warren Rothstein.
4. DUTIES. The duties of Employee are as contained in the attached
Schedule "B". Those duties shall be performed in such manner so as to uphold the
reputation of ATM in the business
<PAGE>
community. Those duties may be reasonably extended or curtailed from time to
time, at the discretion of the Board of Directors of ATM.
5. TIME AND ATTENTION DEVOTED TO DUTIES. Employee shall devote his
entire time and attention to the business of ATM and Intrac Acquisition
Corporation He shall not, during the term of this Agreement, be engaged in any
other business activity which interferes with his ability to perform the duties
assigned to him by ATM and/or Intrac Acquisition Corporation, whether or not
such business activity is pursued for gain, profit or other pecuniary advantage.
This shall not be construed as preventing Employee from investing his assets in
such form or manner as will not require any services on the part of Employee in
the operation of the affairs of the companies in which such investments are
made, subject to the qualification that Employee may not invest in a company
which is competitive in any manner whatsoever with ATM, its parents,
subsidiaries or affiliates (except for investments constituting less than one
percent (l%) of a publicly owned company).
6. NONDISCLOSURE AND RESTRICTIVE COVENANTS. Employee acknowledges that
his duties will necessarily result in his becoming familiar with the business,
software, patents and copyrights, methods and operations, client and customer
lists, client and customer information, manufacturing processes, product
specifications, vendors, trading patterns, financial goals, and other
proprietary and confidential information of ATM and WWWX, a publicly traded
corporation (the "Confidential Information"). Therefore, Employee acknowledges
and agrees that the following nondisclosure provisions and restrictive covenants
shall apply to the Confidential Information. The rights hereunder shall inure to
the benefit of ATM and WWWX, each of whom shall have the right to enforce the
terms of paragraphs 6 through 8 of this Agreement. For the purposes of
paragraphs 6 through 8 of this Agreement, the term "ATM" or "WWWX" shall include
each of their affiliated companies. The terms contained in paragraphs 6 through
8 shall survive the termination or expiration of this Agreement. Therefore,
Employee agrees:
(a) Employee will not, at any time during his employment by
ATM, or at anytime thereafter, unless terminated by ATM
without cause or by Employee for cause pursuant to
sub-paragraph 9(c), without the written approval of ATM
or its duly constituted officers, use for his benefit or
the benefit of third parties reveal, divulge, or make
known to any person, firm or corporation, the Confidential
Information or any portions thereof.
(b) Employee agrees to return to ATM and WWWX upon request or
immediately upon the termination of his employment by ATM,
any and all written information, materials, equipment and
software which constitutes, contains or relates in any way
to the Confidential Information or trade secrets of ATM or
WWWX including, but not limited to, any copies of such
information.
(c) Unless Employee's employment hereunder is terminated by ATM
without cause or by Employee for cause, or in the event of a
material breach by any of the WWWX Parties under the Merger
Agreement, Employee will not for a period equal to the later
of the length of employment under this Agreement or
<PAGE>
five (5) years after Closing (as defined in the Merger
Agreement) (the time period in this Section 6(c) being the
"Non-Compete Term") compete in any way with ATM or WWWX,
directly or indirectly, whether as an employee, officer,
director, agent, security holder, creditor, consultant or
otherwise. During the Non-Compete Term, Employee will not
consult with or have an interest in any business, firm,
person, partnership, corporation or other entity which
engages in the same or substantially similar business to
that of WWWX or ATM worldwide , it being acknowledged that
the business of WWWX and ATM is global in nature. A business
shall be deemed similar or competitive to WWWX or ATM if it
conducts one or more business activities substantially
similar to that conducted by WWWX or ATM. During the
Non-Compete Term, Employee will not provide services or
products to any individual or entity which competes with ATM
or WWWX.
(d) Nothwithstanding if Employee is terminated without cause and
receives a mutually agreed upon severance package, Employee
shall be bound to all covenants contained herein for the
time periods contained above.
7. RIGHT TO ENGAGE IN EMPLOYEE'S PROFESSION. Paragraph 6 is not
intended to restrict Employee in the exercise of his training and skills,
provided that the exercise of such training and skills does not involve
competing with ATM or WWWX in violation of the provisions of this Agreement.
8. REMEDIES IN ADDITION TO ANY OTHER REMEDIES PROVIDED BY LAW. Employee
agrees that the breach of any of the covenants contained in paragraph 6 may
result in irreparable damage to ATM and WWWX and, in addition to any other
remedies provided in this Agreement or at law, ATM and WWWX shall have the right
to petition a court of competent jurisdiction to enjoin Employee from violating
such covenants.
9. EARLIER TERMINATION
(a) Notwithstanding the termination provision of paragraph 2,
this Agreement may be terminated at any time by ATM upon the
occurrence of any of the following:
(i) Employee's inability to perform substantially all
of the duties assigned, through death or total
disability in excess of sixty (60) consecutive days
or total disability in excess of ninety (90) days in
any twelve (12) month period.
(ii) Any act of dishonesty or disloyalty by Employee
involving or materially affecting ATM.
(iii)Employee's Material Breach of the
confidentiality provisions of this Agreement.
<PAGE>
(iv) Any other material breach of this Agreement by
Employee.
(v) The termination of the business of ATM, the sale
of substantially all of the assets of ATM or a merger
or consolidation in which ATM is not the surviving
entity.
(b) ATM may further terminate this Agreement in the event of the
failure of Employee to substantially perform the duties
assigned to him by ATM providing ATM shall provide thirty
(30) days written notice to Employee of his failure to
perform his duties with an opportunity to cure within said
thirty (30) day period.
(c) Employee may terminate this Agreement in the event of ATM's
material breach of this Agreement or in the event of a
material breach of the Merger Agreement by any of the WWWX
parties, providing Employee shall provide thirty (30) days
written notice to ATM of its breach with an opportunity to
cure within said thirty (30) day period.
(d) In the event that Employee terminates this Agreement for any
reason other than (1) a material breach by ATM hereunder or
by any of the WWWX Parties under the Merger Agreement or (2)
for reasons contained in sub-paragraph 9(a)(i) above, prior
to the expiration of the first five (5) years of the term,
then for each such month or portion thereof prior to the
expiration of such five-year period, Employee shall pay to
ATM the sum of Eighteen Thousand Seven Hundred Fifty
($18,750.00) Dollars at the date of Termination. As an
example, if this Agreement terminates after thirty-six (36)
months, Employee shall pay to ATM Four Hundred Fifty
Thousand ($450,000.00) Dollars. This sum was determined by
way of calculation of ATM's actual damages, in that Employee
received certain benefits upon the merger of Intrac into
WWWX and those benefits were dependent upon at least five
(5) years of service of Employee at ATM.
10. REPRESENTATIONS OF EMPLOYEES
(a) Employee represents that to the best of his knowledge he is
not the subject of any pending or threatened claim which
involves any criminal or governmental proceedings, or
allegations of misfeasance, and that he has not been charged
nor threatened to be charged by any governmental or
administrative body with violation of law except for minor
traffic violations and similar charges.
(b) Employee represents and warrants that he is not prohibited
from acting in any capacity for ATM by virtue of the
operation of any non-competition or similar agreement with
any prior employer, or by any applicable statutes,
regulations or ordinances or any other applicable law or by
the rules and regulations of the
<PAGE>
US Securities and Exchange Commission or any national
securities exchange, and that his acting in the capacity for
ATM that is contemplated by the parties hereto and by virtue
of his position with ATM described in Section 1 hereof will
not subject ATM to claims or materially impair the license
status of ATM or its affiliates or any entity operated by
ATM or its affiliates.
11. DEFENSE OF CLAIMS. Employee agrees that during the Term, and at all
reasonable times thereafter, he will cooperate with ATM in the defense of any
claim that may be made against ATM or any affiliates, to the extent that such
claims may relate to services performed by Employee for ATM or its affiliates.
In connection with such claim, ATM will reimburse Employee for all of his
reasonable out-of-pocket expenses associated and, to the extent reasonably
practicable, to provide Employee with notice at least ten (10) days prior to the
date on which any travel is required, and (ii) if Employee is no longer employed
by ATM, to compensate Employee at a reasonable rate for his time.
12. NOTIFICATION OF AGREEMENT. Employee shall notify any future or
prospective employers, partners or persons with a similar business relationship
to Employee ("Future Employers") about the terms of this Agreement for any
period for which the covenants contained above pertains. Employee does hereby
authorize ATM to notify any Future Employers about the terms of this Agreement
upon discovery by ATM that Employee is being considered for employment,
partnership or similar business relationship (or has entered into such a
relationship) with a Future Employer in order to ensure Employee's observance
and compliance herewith.
13. INJUNCTION AND OTHER RELIEF. Both parties hereto recognize that the
services to be rendered under this Agreement by Employee are special, unique and
of extraordinary character, and that in the event of the breach by Employee of
any of the terms and conditions of this Agreement to be performed by him, or in
the event Employee performs services for any person, firm or corporation in
violation of Sections 6-8, or if Employee shall breach the provisions of this
Agreement with respect to Confidential Information, then ATM shall be entitled,
if it so elects, in addition to all other remedies available to it under this
Agreement or at law or in equity, to affirmative injunctive or other equitable
relief.
14. STIPULATION. Employee hereby specifically acknowledges, agrees,
stipulates and represents to ATM that:
(a) Employee has received adequate and sufficient consideration
for entering into this Agreement including the
above-referenced compensation;
(b) the execution and delivery of this Agreement and the
performance hereunder do not and shall not constitute a
violation of any covenants of non-competition, trade
secrecy, or confidentiality to which Employee is a party;
(c) the covenants of Employee contained in this Agreement are in
consideration of the promise of ATM to provide Confidential
Information
<PAGE>
(including trade secrets) to Employee and are necessary to
protect ATM interests in such Confidential Information, as
well as ATM's business good will and other business
interests;
(d) ATM may suffer great loss and irreparable harm if Employee
competes directly or indirectly with ATM;
(e) the temporal, geographic and other restrictions contained in
this Agreement are in all respects reasonable and necessary
to protect the business good will, Confidential Information,
trade secrets, prospects and other business interest of ATM;
and
(f) the enforcement of this Agreement will not work an undue or
unfair hardship on Employee or otherwise be oppressive to
him.
15. SEVERABILITY. In the event that any of the provisions of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such invalidity or unenforceability shall not affect the remainder
of this Agreement and same shall be construed as if such invalid or
unenforceable provisions had never been a part hereof. If a court of competent
jurisdiction determines that the length of time, geographical restrictions or
any other restriction, or portion thereof, set forth in this Agreement is overly
restrictive and unenforceable, the parties agree that the court shall reduce or
modify such restrictions to those which it deems reasonable and enforceable
under the circumstances, and as so reduced or modified, the parties hereto agree
that the restrictions of this Agreement shall remain in full force and effect.
16. ENTIRE AGREEMENT. This document constitutes the entire agreement
between ATM and Employee regarding the subject matter hereof and there are no
oral agreements or undertakings affecting this instrument; any future
modifications, in order to be binding upon the parties, must be reduced to
writing and executed by both parties to this Agreement.
17. NO WAIVER. Either party's failure to strictly enforce any provision
of this Agreement shall not be construed as a waiver or as excusing either party
from future performance.
18. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of the heirs, executors, administrators, successors and assigns of the
respective parties, but in no event may Employee assign to any other party
Employee's duties or obligations under this Agreement.
19. NEW YORK JURISDICTION AND LAW. THIS AGREEMENT HAS BEEN MADE AND
EXECUTED IN THE STATE OF NEW YORK AND THE PARTIES CONSENT TO THE JURISDICTION OF
THE NEW YORK COURTS AND THE APPLICATION OF DELAWARE LAW TO ANY CONTROVERSY
HEREUNDER. THE PARTIES AGREE TO WAIVE A JURY TRIAL IN ANY PROCEEDING BROUGHT TO
ENFORCE ANY OF THE TERMS OF THIS AGREEMENT.
<PAGE>
20. HEADINGS. Paragraph headings herein shall have absolutely no legal
significance and are used solely for convenience of reference.
21. ACKNOWLEDGMENT. Employee acknowledges that notwithstanding the date
of Employee's execution and delivery of this Agreement, Employee was made aware
of and consented to the covenants, conditions and agreements of this Agreement
that he is receiving additional consideration for the same, including, but not
limited to, the employment arrangement contained in this Agreement.
22. NOTICES. All notices which either party is required or may desire
to give to the other under or in conjunction with is Agreement shall be in
writing and shall be given by addressing the same to such other party at the
address set forth below, and by depositing the same so addressed, certified
mail, postage prepaid, return receipt requested, or by overnight mail or by
reputable courier service, or by delivering the same personally to such other
party.
If to Employer:
ATM Services, Ltd.
12 Springdale Road, Building 11
Cherry Hill, NJ 08003
Attn: Chairman
with a copy to: Allan M. Cohen, Esq.
If to Employee:
Thomas Settineri
1 Claridge Drive, PH 14
Verona, NJ 07044
with a copy to:
Astor, Weiss, Kaplan & Rosenblum, LLP
The Bellevue, Sixth Floor
Broad Street at Walnut
Philadelphia, PA 19102
Facsimile No.: 215-790-0509
Attn: G. David Rosenblum, Esq.
Any notice mailed should be deemed to have been given three (3) United
States Post Office delivery days following the date of mailing. Overnight mail
or courier services shall be deemed to have been given on the next business day
following the date of mailing. Any notice delivered in person shall be deemed
effective upon delivery. Either party may change the address for the service of
notice upon it by written notice given to the other in the manner herein
provided for the giving of notice.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands.
ATM SERVICE, LTD.
By: //S// Michael Norton
--------------------
Name: Michael Norton
Title: Authorized representative
//S// Tom Settineri
-------------------
THOMAS SETTINERI
<PAGE>
Exhibit 10.24
EMPLOYMENT AGREEMENT
This Agreement executed this 23rd day of July, 1999 by and between
INTRAC ACQUISITION CORPORATION, a Delaware corporation ("IAC") and THOMAS
SETTINERI ("Employee").
The parties, each intending to be legally bound, hereby agree as follows:
1. POSITION. IAC employs Employee in the position of Chief Executive
Officer pursuant to the terms of this Agreement. Employee will perform such
services in this capacity as may from time to time be reasonably requested by
IAC.
2. TERM. This Agreement shall commence on the Effective Date, as defined in
the Agreement and Plan of Merger among WorldWide Web NetworX Corporation
("WWWX"), Intrac Acquisition Corporation, The Intrac Group, a company in which
Employee was a principal shareholder, and the Sellers signatory thereto, which
includes Employee (the "Merger Agreement") and shall except as provided in
paragraph 9, remain in effect for a period of ten (10) years thereafter. After
this ten (10) year term, the Agreement shall automatically renew from year to
year unless either party gives written notice to the other at least ninety (90)
days prior to the expiration of the then current term that he or it is not
renewing.
3. COMPENSATION AND BENEFITS. For all services rendered by Employee under
this Agreement, IAC shall compensate Employee as follows:
(a) Employee shall have an annual salary (the "Base Salary") of
$400,000, that will be paid jointly by IAC and ATM Service, Ltd.,
a New York corporation ("ATM"). IAC will pay Employee, on an
quarterly basis, the difference between the amount of the Base
Salary and the portion thereof paid by ATM.
(b) Employee shall be entitled to receive such other benefits as are
contained in Schedule "A".
(c) The Base Salary shall be subject to annual review, and Employee
shall be entitled to such increase as is determined by the Board
of Directors of IAC. Notwithstanding anything contained herein to
the contrary, the Base Salary shall be increased pro rata to any
increase in salary received by Warren Rothstein. As an example,
if Warren Rothstein's Base Salary is $75,000 and Employee's Base
Salary is $50,000, Employee shall be entitled to 66.67% of any
increase received by Rothstein. Employee's entitlement to any
stock options and bonuses or other additional compensation shall
likewise be pro rata with that of any stock options or bonuses or
other additional compensation granted or awarded to Warren
Rothstein.
4. DUTIES. The duties of Employee are as contained in the attached Schedule
"B". Those duties shall be performed in such manner so as to uphold the
reputation of IAC in the business
<PAGE>
community. Those duties may be reasonably extended or curtailed from time to
time, at the discretion of the Board of Directors of IAC.
5. TIME AND ATTENTION DEVOTED TO DUTIES. Employee shall devote his entire
time and attention to the business of IAC and ATM. He shall not, during the term
of this Agreement, be engaged in any other business activity which interferes
with his ability to perform the duties assigned to him by IAC and/or ATM,
whether or not such business activity is pursued for gain, profit or other
pecuniary advantage. This shall not be construed as preventing Employee from
investing his assets in such form or manner as will not require any services on
the part of Employee in the operation of the affairs of the companies in which
such investments are made, subject to the qualification that Employee may not
invest in a company which is competitive in any manner whatsoever with IAC, its
parents, subsidiaries or affiliates (except for investments constituting less
than one percent (l%) of a publicly owned company).
6. NONDISCLOSURE AND RESTRICTIVE COVENANTS. Employee acknowledges that his
duties will necessarily result in his becoming familiar with the business,
software, patents and copyrights, methods and operations, client and customer
lists, client and customer information, manufacturing processes, product
specifications, vendors, trading patterns, financial goals, and other
proprietary and confidential information of IAC and WWWX, a publicly traded
corporation (the "Confidential Information"). Therefore, Employee acknowledges
and agrees that the following nondisclosure provisions and restrictive covenants
shall apply to the Confidential Information. The rights hereunder shall inure to
the benefit of IAC and WWWX, each of whom shall have the right to enforce the
terms of paragraphs 6 through 8 of this Agreement. For the purposes of
paragraphs 6 through 8 of this Agreement, the term "IAC" or "WWWX" shall include
each of their affiliated companies. The terms contained in paragraphs 6 through
8 shall survive the termination or expiration of this Agreement. Therefore,
Employee agrees:
(a) Employee will not, at any time during his employment by IAC, or
at anytime thereafter, unless terminated by IAC without cause or
by Employee for cause pursuant to sub-paragraph 9(c), without the
written approval of IAC or its duly constituted officers, use for
his benefit or the benefit of third parties reveal, divulge, or
make known to any person, firm or corporation, the Confidential
Information or any portions thereof.
(b) Employee agrees to return to IAC and WWWX upon request or
immediately upon the termination of his employment by IAC, any
and all written information, materials, equipment and software
which constitutes, contains or relates in any way to the
Confidential Information or trade secrets of IAC or WWWX
including, but not limited to, any copies of such information.
(c) Unless Employee's employment hereunder is terminated by IAC
without cause or by Employee for cause, or in the event of a
material breach by any of the WWWX Parties under the Merger
Agreement, Employee will not for a period equal to the later of
the length of employment under this Agreement or five (5) years
after Closing (as defined in the Merger Agreement) (the time
period in this Section 6(c) being the "Non-Compete Term") compete
in any
<PAGE>
way with IAC or WWWX, directly or indirectly, whether as an
employee, officer, director, agent, security holder, creditor,
consultant or otherwise. During the Non-Compete Term, Employee
will not consult with or have an interest in any business, firm,
person, partnership, corporation or other entity which engages in
the same or substantially similar business to that of WWWX or IAC
worldwide , it being acknowledged that the business of WWWX and
IAC is global in nature. A business shall be deemed similar or
competitive to WWWX or IAC if it conducts one or more business
activities substantially similar to that conducted by WWWX or
IAC. During the Non-Compete Term, Employee will not provide
services or products to any individual or entity which competes
with IAC or WWWX.
(d) Nothwithstanding if Employee is terminated without cause and
receives a mutually agreed upon severance package, Employee shall
be bound to all covenants contained herein for the time periods
contained above.
7. RIGHT TO ENGAGE IN EMPLOYEE'S PROFESSION. Paragraph 6 is not intended to
restrict Employee in the exercise of his training and skills, provided that the
exercise of such training and skills does not involve competing with IAC or WWWX
in violation of the provisions of this Agreement.
8. REMEDIES IN ADDITION TO ANY OTHER REMEDIES PROVIDED BY LAW. Employee
agrees that the breach of any of the covenants contained in paragraph 6 may
result in irreparable damage to IAC and WWWX and, in addition to any other
remedies provided in this Agreement or at law, IAC and WWWX shall have the right
to petition a court of competent jurisdiction to enjoin Employee from violating
such covenants.
9. EARLIER TERMINATION.
(a) Notwithstanding the termination provision of paragraph 2, this
Agreement may be terminated at any time by IAC upon the
occurrence of any of the following:
(i) Employee's inability to perform substantially all of the
duties assigned, through death or total disability in excess
of sixty (60) consecutive days or total disability in excess
of ninety (90) days in any twelve (12) month period.
(ii) Any act of dishonesty or disloyalty by Employee
involving or materially affecting IAC.
(iii)Employee's Material Breach of the confidentiality
provisions of this Agreement.
(iv) Any other material breach of this Agreement by
Employee.
<PAGE>
(v) The termination of the business of IAC, the sale of
substantially all of the assets of IAC or a merger or
consolidation in which IAC is not the surviving entity.
(b) IAC may further terminate this Agreement in the event of the
failure of Employee to substantially perform the duties
assigned to him by IAC providing IAC shall provide thirty
(30) days written notice to Employee of his failure to
perform his duties with an opportunity to cure within said
thirty (30) day period.
(c) Employee may terminate this Agreement in the event of IAC's
material breach of this Agreement or in the event of a
material breach of the Merger Agreement by any of the WWWX
parties, providing Employee shall provide thirty (30) days
written notice to IAC of its breach with an opportunity to
cure within said thirty (30) day period.
(d) In the event that Employee terminates this Agreement for any
reason other than (1) a material breach by IAC hereunder or
by any of the WWWX Parties under the Merger Agreement or (2)
for reasons contained in sub-paragraph 9(a)(i) above, prior
to the expiration of the first five (5) years of the term,
then for each such month or portion thereof prior to the
expiration of such five-year period, Employee shall pay to
IAC the sum of Eighteen Thousand Seven Hundred Fifty
($18,750.00) Dollars at the date of Termination. As an
example, if this Agreement terminates after thirty-six (36)
months, Employee shall pay to IAC Four Hundred Fifty
Thousand ($450,000.00) Dollars. This sum was determined by
way of calculation of IAC's actual damages, in that Employee
received certain benefits upon the merger of Intrac into
WWWX and those benefits were dependent upon at least five
(5) years of service of Employee at IAC.
10. REPRESENTATIONS OF EMPLOYEE
(a) Employee represents that to the best of his knowledge he is
not the subject of any pending or threatened claim which
involves any criminal or governmental proceedings, or
allegations of misfeasance, and that he has not been charged
nor threatened to be charged by any governmental or
administrative body with violation of law except for minor
traffic violations and similar charges.
(b) Employee represents and warrants that he is not prohibited
from acting in any capacity for IAC by virtue of the
operation of any non-competition or similar agreement with
any prior employer, or by any applicable statutes,
regulations or ordinances or any other applicable law or by
the rules and regulations of the US Securities and Exchange
Commission or any national securities exchange, and that his
acting in the capacity for IAC that is contemplated by the
parties
<PAGE>
hereto and by virtue of his position with IAC described in
Section 1 hereof will not subject IAC to claims or
materially impair the license status of IAC or its
affiliates or any entity operated by IAC or its affiliates.
11. DEFENSE OF CLAIMS. Employee agrees that during the Term, and at all
reasonable times thereafter, he will cooperate with IAC in the defense of any
claim that may be made against IAC or any affiliates, to the extent that such
claims may relate to services performed by Employee for IAC or its affiliates.
In connection with such claim, IAC will reimburse Employee for all of his
reasonable out-of-pocket expenses associated and, to the extent reasonably
practicable, to provide Employee with notice at least ten (10) days prior to the
date on which any travel is required, and (ii) if Employee is no longer employed
by IAC, to compensate Employee at a reasonable rate for his time.
12. NOTIFICATION OF AGREEMENT. Employee shall notify any future or
prospective employers, partners or persons with a similar business relationship
to Employee ("Future Employers") about the terms of this Agreement for any
period for which the covenants contained above pertains. Employee does hereby
authorize IAC to notify any Future Employers about the terms of this Agreement
upon discovery by IAC that Employee is being considered for employment,
partnership or similar business relationship (or has entered into such a
relationship) with a Future Employer in order to ensure Employee's observance
and compliance herewith.
13. INJUNCTION AND OTHER RELIEF. Both parties hereto recognize that the
services to be rendered under this Agreement by Employee are special, unique and
of extraordinary character, and that in the event of the breach by Employee of
any of the terms and conditions of this Agreement to be performed by him, or in
the event Employee performs services for any person, firm or corporation in
violation of Sections 6-8, or if Employee shall breach the provisions of this
Agreement with respect to Confidential Information, then IAC shall be entitled,
if it so elects, in addition to all other remedies available to it under this
Agreement or at law or in equity, to affirmative injunctive or other equitable
relief.
14. STIPULATION. Employee hereby specifically acknowledges, agrees,
stipulates and represents to IAC that:
(a) Employee has received adequate and sufficient consideration for
entering into this Agreement including the above-referenced
compensation;
(b) the execution and delivery of this Agreement and the performance
hereunder do not and shall not constitute a violation of any
covenants of non-competition, trade secrecy, or confidentiality
to which Employee is a party;
(c) the covenants of Employee contained in this Agreement are in
consideration of the promise of IAC to provide Confidential
Information (including trade secrets) to Employee and are
necessary to protect IAC
<PAGE>
interests in such Confidential Information, as well as IAC's
business good will and other business interests;
(d) IAC may suffer great loss and irreparable harm if Employee
competes directly or indirectly with IAC;
(e) the temporal, geographic and other restrictions contained in this
Agreement are in all respects reasonable and necessary to protect
the business good will, Confidential Information, trade secrets,
prospects and other business interest of IAC; and
(f) the enforcement of this Agreement will not work an undue or
unfair hardship on Employee or otherwise be oppressive to him.
15. SEVERABILITY. In the event that any of the provisions of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
such invalidity or unenforceability shall not affect the remainder of this
Agreement and same shall be construed as if such invalid or unenforceable
provisions had never been a part hereof. If a court of competent jurisdiction
determines that the length of time, geographical restrictions or any other
restriction, or portion thereof, set forth in this Agreement is overly
restrictive and unenforceable, the parties agree that the court shall reduce or
modify such restrictions to those which it deems reasonable and enforceable
under the circumstances, and as so reduced or modified, the parties hereto agree
that the restrictions of this Agreement shall remain in full force and effect.
16. ENTIRE AGREEMENT. This document constitutes the entire agreement
between IAC and Employee regarding the subject matter hereof and there are no
oral agreements or undertakings affecting this instrument; any future
modifications, in order to be binding upon the parties, must be reduced to
writing and executed by both parties to this Agreement.
17. NO WAIVER. Either party's failure to strictly enforce any provision of
this Agreement shall not be construed as a waiver or as excusing either party
from future performance.
18. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
the heirs, executors, administrators, successors and assigns of the respective
parties, but in no event may Employee assign to any other party Employee's
duties or obligations under this Agreement.
19. NEW YORK JURISDICTION AND LAW. THIS AGREEMENT HAS BEEN MADE AND
EXECUTED IN THE STATE OF NEW YORK AND THE PARTIES CONSENT TO THE JURISDICTION OF
THE NEW YORK COURTS AND THE APPLICATION OF DELAWARE LAW TO ANY CONTROVERSY
HEREUNDER. THE PARTIES AGREE TO WAIVE A JURY TRIAL IN ANY PROCEEDING BROUGHT TO
ENFORCE ANY OF THE TERMS OF THIS AGREEMENT.
<PAGE>
20. HEADINGS. Paragraph headings herein shall have absolutely no legal
significance and are used solely for convenience of reference.
21. ACKNOWLEDGMENT. Employee acknowledges that notwithstanding the date of
Employee's execution and delivery of this Agreement, Employee was made aware of
and consented to the covenants, conditions and agreements of this Agreement that
he is receiving additional consideration for the same, including, but not
limited to, the employment arrangement contained in this Agreement.
22. NOTICES. All notices which either party is required or may desire to
give to the other under or in conjunction with is Agreement shall be in writing
and shall be given by addressing the same to such other party at the address set
forth below, and by depositing the same so addressed, certified mail, postage
prepaid, return receipt requested, or by overnight mail or by reputable courier
service, or by delivering the same personally to such other party.
If to Employer:
ATM Services, Ltd.
12 Springdale Road, Building 11
Cherry Hill, NJ 08003
Attn: Chairman
with a copy to: Allan M. Cohen, Esq.
If to Employee:
Thomas Settineri
1 Claridge Drive, PH 14
Verona, NJ 07044
with a copy to:
Astor, Weiss, Kaplan & Rosenblum, LLP
The Bellevue, Sixth Floor
Broad Street at Walnut
Philadelphia, PA 19102
Facsimile No.: 215-790-0509
Attn: G. David Rosenblum, Esq.
Any notice mailed should be deemed to have been given three (3) United
States Post Office delivery days following the date of mailing. Overnight mail
or courier services shall be deemed to have been given on the next business day
following the date of mailing. Any notice delivered in person shall be deemed
effective upon delivery. Either party may change the address for the service of
notice upon it by written notice given to the other in the manner herein
provided for the giving of notice.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands.
INTRAC ACQUISITION CORPORATION
By: //s// Michael Norton
--------------------
Name: Michael Norton
Title: Authorized representative
//s// Tom Settineri
-------------------
THOMAS SETTINERI
<PAGE>
Exhibit 10.25
EMPLOYMENT AGREEMENT
This Agreement executed this 23rd day of July, 1999 by and
between ATM SERVICE, LTD., a New York corporation ("ATM") and GARY LEVI
("Employee").
The parties, each intending to be legally bound, hereby agree as
follows:
1. POSITION. ATM employs Employee in the position of Chief Operating
Officer pursuant to the terms of this Agreement. Employee will perform such
services in this capacity as may from time to time be reasonably requested by
ATM.
2. TERM. This Agreement shall commence on the Effective Date, as
defined in the Agreement and Plan of Merger among WorldWide Web NetworX
Corporation ("WWWX"), Intrac Acquisition Corporation, The Intrac Group, a
company in which Employee was a principal shareholder, and the Sellers signatory
thereto, which includes Employee (the "Merger Agreement") and shall except as
provided in paragraph 9, remain in effect for a period of ten (10) years
thereafter. After this ten (10) year term, the Agreement shall automatically
renew from year to year unless either party gives written notice to the other at
least ninety (90) days prior to the expiration of the then current term that he
or it is not renewing.
3. COMPENSATION AND BENEFITS. For all services rendered by Employee
under this Agreement, ATM shall compensate Employee as follows:
(a) Employee shall have an annual salary (the "Base Salary")
of $200,000, that will be paid jointly by ATM and Intrac
Acquisition Corporation, a Delaware corporation ("IAC").
ATM will pay Employee, on an quarterly basis, the
difference between the amount of the Base Salary and the
portion thereof paid by IAC.
(b) Employee shall be entitled to receive such other benefits
as are contained in Schedule "A".
(c) The Base Salary shall be subject to annual review, and
Employee shall be entitled to such increase as is
determined by the Board of Directors of ATM.
Notwithstanding anything contained herein to the contrary,
the Base Salary shall be increased pro rata to any
increase in salary received by Warren Rothstein. As an
example, if Warren Rothstein's Base Salary is $75,000 and
Employee's Base Salary is $50,000, Employee shall be
entitled to 66.67% of any increase received by Rothstein.
Employee's entitlement to any stock options and bonuses or
other additional compensation shall likewise be pro rata
with that of any stock options or bonuses or other
additional compensation granted or awarded to Warren
Rothstein.
4. DUTIES. The duties of Employee are as contained in the attached
Schedule "B". Those duties shall be performed in such manner so as to uphold the
reputation of ATM in the business
1
<PAGE>
community. Those duties may be reasonably extended or curtailed from time to
time, at the discretion of the Board of Directors of ATM.
5. TIME AND ATTENTION DEVOTED TO DUTIES. Employee shall devote his
entire time and attention to the business of ATM and Intrac Acquisition
Corporation He shall not, during the term of this Agreement, be engaged in any
other business activity which interferes with his ability to perform the duties
assigned to him by ATM and/or Intrac Acquisition Corporation, whether or not
such business activity is pursued for gain, profit or other pecuniary advantage.
This shall not be construed as preventing Employee from investing his assets in
such form or manner as will not require any services on the part of Employee in
the operation of the affairs of the companies in which such investments are
made, subject to the qualification that Employee may not invest in a company
which is competitive in any manner whatsoever with ATM, its parents,
subsidiaries or affiliates (except for investments constituting less than one
percent (l%) of a publicly owned company).
6. NONDISCLOSURE AND RESTRICTIVE COVENANTS. Employee acknowledges that
his duties will necessarily result in his becoming familiar with the business,
software, patents and copyrights, methods and operations, client and customer
lists, client and customer information, manufacturing processes, product
specifications, vendors, trading patterns, financial goals, and other
proprietary and confidential information of ATM and WWWX, a publicly traded
corporation (the "Confidential Information"). Therefore, Employee acknowledges
and agrees that the following nondisclosure provisions and restrictive covenants
shall apply to the Confidential Information. The rights hereunder shall inure to
the benefit of ATM and WWWX, each of whom shall have the right to enforce the
terms of paragraphs 6 through 8 of this Agreement. For the purposes of
paragraphs 6 through 8 of this Agreement, the term "ATM" or "WWWX" shall include
each of their affiliated companies. The terms contained in paragraphs 6 through
8 shall survive the termination or expiration of this Agreement. Therefore,
Employee agrees:
(a) Employee will not, at any time during his employment by ATM,
or at anytime thereafter, unless terminated by ATM without
cause or by Employee for cause pursuant to sub-paragraph
9(c), without the written approval of ATM or its duly
constituted officers, use for his benefit or the benefit of
third parties reveal, divulge, or make known to any person,
firm or corporation, the Confidential Information or any
portions thereof.
(b) Employee agrees to return to ATM and WWWX upon request or
immediately upon the termination of his employment by ATM,
any and all written information, materials, equipment and
software which constitutes, contains or relates in any way
to the Confidential Information or trade secrets of ATM or
WWWX including, but not limited to, any copies of such
information.
(c) Unless Employee's employment hereunder is terminated by ATM
without cause or by Employee for cause, or in the event of a
material breach by any of the WWWX Parties under the Merger
Agreement, Employee will not for a period equal to the later
of the length of employment under this Agreement or
2
<PAGE>
five (5) years after Closing (as defined in the Merger
Agreement) (the time period in this Section 6(c) being the
"Non-Compete Term") compete in any way with ATM or WWWX,
directly or indirectly, whether as an employee, officer,
director, agent, security holder, creditor, consultant or
otherwise. During the Non-Compete Term, Employee will not
consult with or have an interest in any business, firm,
person, partnership, corporation or other entity which
engages in the same or substantially similar business to
that of WWWX or ATM worldwide , it being acknowledged that
the business of WWWX and ATM is global in nature. A business
shall be deemed similar or competitive to WWWX or ATM if it
conducts one or more business activities substantially
similar to that conducted by WWWX or ATM. During the
Non-Compete Term, Employee will not provide services or
products to any individual or entity which competes with ATM
or WWWX.
(d) Nothwithstanding if Employee is terminated without cause and
receives a mutually agreed upon severance package, Employee
shall be bound to all covenants contained herein for the
time periods contained above.
7. RIGHT TO ENGAGE IN EMPLOYEE'S PROFESSION. Paragraph 6 is not
intended to restrict Employee in the exercise of his training and skills,
provided that the exercise of such training and skills does not involve
competing with ATM or WWWX in violation of the provisions of this Agreement.
8. REMEDIES IN ADDITION TO ANY OTHER REMEDIES PROVIDED BY LAW. Employee
agrees that the breach of any of the covenants contained in paragraph 6 may
result in irreparable damage to ATM and WWWX and, in addition to any other
remedies provided in this Agreement or at law, ATM and WWWX shall have the right
to petition a court of competent jurisdiction to enjoin Employee from violating
such covenants.
9. EARLIER TERMINATION.
(a) Notwithstanding the termination provision of paragraph 2,
this Agreement may be terminated at any time by ATM upon the
occurrence of any of the following:
(i) Employee's inability to perform substantially all of the
duties assigned, through death or total disability in excess
of sixty (60) consecutive days or total disability in excess
of ninety (90) days in any twelve (12) month period.
(ii) Any act of dishonesty or disloyalty by Employee
involving or materially affecting ATM.
(iii)Employee's Material Breach of the confidentiality
provisions of this Agreement.
3
<PAGE>
(iv) Any other material breach of this Agreement by
Employee.
(v) The termination of the business of ATM, the sale of
substantially all of the assets of ATM or a merger or
consolidation in which ATM is not the surviving entity.
(b) ATM may further terminate this Agreement in the event of the
failure of Employee to substantially perform the duties
assigned to him by ATM providing ATM shall provide thirty
(30) days written notice to Employee of his failure to
perform his duties with an opportunity to cure within said
thirty (30) day period.
(c) Employee may terminate this Agreement in the event of ATM's
material breach of this Agreement or in the event of a
material breach of the Merger Agreement by any of the WWWX
parties, providing Employee shall provide thirty (30) days
written notice to ATM of its breach with an opportunity to
cure within said thirty (30) day period.
(d) In the event that Employee terminates this Agreement for any
reason other than (1) a material breach by ATM hereunder or
by any of the WWWX Parties under the Merger Agreement or (2)
for reasons contained in sub-paragraph 9(a)(i) above, prior
to the expiration of the first five (5) years of the term,
then for each such month or portion thereof prior to the
expiration of such five-year period, Employee shall pay to
ATM the sum of Six Thousand Two Hundred Fifty ($6,250.00)
Dollars at the date of Termination. As an example, if this
Agreement terminates after thirty-six (36) months, Employee
shall pay to ATM One Hundred Fifty Thousand ($150,000.00)
Dollars. This sum was determined by way of calculation of
ATM's actual damages, in that Employee received certain
benefits upon the merger of Intrac into WWWX and those
benefits were dependent upon at least five (5) years of
service of Employee at ATM.
10. REPRESENTATION OF EMPLOYEE
(a) Employee represents that to the best of his knowledge he is
not the subject of any pending or threatened claim which
involves any criminal or governmental proceedings, or
allegations of misfeasance, and that he has not been charged
nor threatened to be charged by any governmental or
administrative body with violation of law except for minor
traffic violations and similar charges.
(b) Employee represents and warrants that he is not prohibited
from acting in any capacity for ATM by virtue of the
operation of any non-competition or similar agreement with
any prior employer, or by any applicable statutes,
regulations or ordinances or any other applicable law or by
the rules and regulations of the
4
<PAGE>
US Securities and Exchange Commission or any national
securities exchange, and that his acting in the capacity for
ATM that is contemplated by the parties hereto and by virtue
of his position with ATM described in Section 1 hereof will
not subject ATM to claims or materially impair the license
status of ATM or its affiliates or any entity operated by
ATM or its affiliates.
11. DEFENSE OF CLAIMS. Employee agrees that during the Term, and at all
reasonable times thereafter, he will cooperate with ATM in the defense of any
claim that may be made against ATM or any affiliates, to the extent that such
claims may relate to services performed by Employee for ATM or its affiliates.
In connection with such claim, ATM will reimburse Employee for all of his
reasonable out-of-pocket expenses associated and, to the extent reasonably
practicable, to provide Employee with notice at least ten (10) days prior to the
date on which any travel is required, and (ii) if Employee is no longer employed
by ATM, to compensate Employee at a reasonable rate for his time.
12. NOTIFICATION OF AGREEMENT. Employee shall notify any future or
prospective employers, partners or persons with a similar business relationship
to Employee ("Future Employers") about the terms of this Agreement for any
period for which the covenants contained above pertains. Employee does hereby
authorize ATM to notify any Future Employers about the terms of this Agreement
upon discovery by ATM that Employee is being considered for employment,
partnership or similar business relationship (or has entered into such a
relationship) with a Future Employer in order to ensure Employee's observance
and compliance herewith.
13. INJUNCTION AND OTHER RELIEF. Both parties hereto recognize that the
services to be rendered under this Agreement by Employee are special, unique and
of extraordinary character, and that in the event of the breach by Employee of
any of the terms and conditions of this Agreement to be performed by him, or in
the event Employee performs services for any person, firm or corporation in
violation of Sections 6-8, or if Employee shall breach the provisions of this
Agreement with respect to Confidential Information, then ATM shall be entitled,
if it so elects, in addition to all other remedies available to it under this
Agreement or at law or in equity, to affirmative injunctive or other equitable
relief.
14. STIPULATION. Employee hereby specifically acknowledges, agrees,
stipulates and represents to ATM that:
(a) Employee has received adequate and sufficient consideration
for entering into this Agreement including the
above-referenced compensation;
(b) the execution and delivery of this Agreement and the
performance hereunder do not and shall not constitute a
violation of any covenants of non-competition, trade
secrecy, or confidentiality to which Employee is a party;
(c) the covenants of Employee contained in this Agreement are in
consideration of the promise of ATM to provide Confidential
Information
5
<PAGE>
(including trade secrets) to Employee and are necessary to
protect ATM interests in such Confidential Information, as
well as ATM's business good will and other business
interests;
(d) ATM may suffer great loss and irreparable harm if Employee
competes directly or indirectly with ATM;
(e) the temporal, geographic and other restrictions contained in
this Agreement are in all respects reasonable and necessary
to protect the business good will, Confidential Information,
trade secrets, prospects and other business interest of ATM;
and
(f) the enforcement of this Agreement will not work an undue or
unfair hardship on Employee or otherwise be oppressive to
him.
15. SEVERABILITY. In the event that any of the provisions of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such invalidity or unenforceability shall not affect the remainder
of this Agreement and same shall be construed as if such invalid or
unenforceable provisions had never been a part hereof. If a court of competent
jurisdiction determines that the length of time, geographical restrictions or
any other restriction, or portion thereof, set forth in this Agreement is overly
restrictive and unenforceable, the parties agree that the court shall reduce or
modify such restrictions to those which it deems reasonable and enforceable
under the circumstances, and as so reduced or modified, the parties hereto agree
that the restrictions of this Agreement shall remain in full force and effect.
16. ENTIRE AGREEMENT. This document constitutes the entire agreement
between ATM and Employee regarding the subject matter hereof and there are no
oral agreements or undertakings affecting this instrument; any future
modifications, in order to be binding upon the parties, must be reduced to
writing and executed by both parties to this Agreement.
17. NO WAIVER. Either party's failure to strictly enforce any provision
of this Agreement shall not be construed as a waiver or as excusing either party
from future performance.
18. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of the heirs, executors, administrators, successors and assigns of the
respective parties, but in no event may Employee assign to any other party
Employee's duties or obligations under this Agreement.
19. NEW YORK JURISDICTION AND LAW. THIS AGREEMENT HAS BEEN MADE AND
EXECUTED IN THE STATE OF NEW YORK AND THE PARTIES CONSENT TO THE JURISDICTION OF
THE NEW YORK COURTS AND THE APPLICATION OF DELAWARE LAW TO ANY CONTROVERSY
HEREUNDER. THE PARTIES AGREE TO WAIVE A JURY TRIAL IN ANY PROCEEDING BROUGHT TO
ENFORCE ANY OF THE TERMS OF THIS AGREEMENT.
6
<PAGE>
20. HEADINGS. Paragraph headings herein shall have absolutely no legal
significance and are used solely for convenience of reference.
21. ACKNOWLEDGMENT. Employee acknowledges that notwithstanding the date
of Employee's execution and delivery of this Agreement, Employee was made aware
of and consented to the covenants, conditions and agreements of this Agreement
that he is receiving additional consideration for the same, including, but not
limited to, the employment arrangement contained in this Agreement.
22. NOTICES. All notices which either party is required or may desire
to give to the other under or in conjunction with is Agreement shall be in
writing and shall be given by addressing the same to such other party at the
address set forth below, and by depositing the same so addressed, certified
mail, postage prepaid, return receipt requested, or by overnight mail or by
reputable courier service, or by delivering the same personally to such other
party.
If to Employer:
ATM Services, Ltd.
12 Springdale Road, Building 11
Cherry Hill, NJ 08003
Attn: Chairman
with a copy to: Allan M. Cohen, Esq.
If to Employee:
Gary Levi
144 Soundview Drive
Port Washington, NY 11050
with a copy to:
Astor, Weiss, Kaplan & Rosenblum, LLP
The Bellevue, Sixth Floor
Broad Street at Walnut
Philadelphia, PA 19102
Facsimile No.: 215-790-0509
Attn: G. David Rosenblum, Esq.
Any notice mailed should be deemed to have been given three (3) United
States Post Office delivery days following the date of mailing. Overnight mail
or courier services shall be deemed to have been given on the next business day
following the date of mailing. Any notice delivered in person shall be deemed
effective upon delivery. Either party may change the address for the service of
notice upon it by written notice given to the other in the manner herein
provided for the giving of notice.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands.
ATM SERVICE, LTD.
By: //S// MICHAEL NORTON
-----------------------
Name:
Title:
//S// GARY LEVI
--------------------------
GARY LEVI
<PAGE>
<PAGE>
Exhibit 10.26
EMPLOYMENT AGREEMENT
--------------------
This Agreement executed this 23rd day of July, 1999 by and
between INTRAC ACQUISITION CORPORATION, a Delaware corporation ("IAC") and GARY
LEVI ("Employee").
The parties, each intending to be legally bound, hereby agree as
follows:
1. POSITION. IAC employs Employee in the position of Chief Executive
Officer pursuant to the terms of this Agreement. Employee will perform such
services in this capacity as may from time to time be reasonably requested by
IAC.
2. TERM. This Agreement shall commence on the Effective Date, as
defined in the Agreement and Plan of Merger among WorldWide Web NetworX
Corporation ("WWWX"), Intrac Acquisition Corporation, The Intrac Group, a
company in which Employee was a principal shareholder, and the Sellers signatory
thereto, which includes Employee (the "Merger Agreement") and shall except as
provided in paragraph 9, remain in effect for a period of ten (10) years
thereafter. After this ten (10) year term, the Agreement shall automatically
renew from year to year unless either party gives written notice to the other at
least ninety (90) days prior to the expiration of the then current term that he
or it is not renewing.
3. COMPENSATION AND BENEFITS. For all services rendered by Employee
under this Agreement, IAC shall compensate Employee as follows:
(a) Employee shall have an annual salary (the "Base Salary") of
$200,000, that will be paid jointly by IAC and ATM Service,
Ltd., a New York corporation ("ATM"). IAC will pay Employee,
on an quarterly basis, the difference between the amount of
the Base Salary and the portion thereof paid by ATM.
(b) Employee shall be entitled to receive such other benefits as
are contained in Schedule "A".
(c) The Base Salary shall be subject to annual review, and
Employee shall be entitled to such increase as is determined
by the Board of Directors of IAC. Notwithstanding anything
contained herein to the contrary, the Base Salary shall be
increased pro rata to any increase in salary received by
Warren Rothstein. As an example, if Warren Rothstein's Base
Salary is $75,000 and Employee's Base Salary is $50,000,
Employee shall be entitled to 66.67% of any increase
received by Rothstein. Employee's entitlement to any stock
options and bonuses or other additional compensation shall
likewise be pro rata with that of any stock options or
bonuses or other additional compensation granted or awarded
to Warren Rothstein.
4. DUTIES. The duties of Employee are as contained in the attached
Schedule "B". Those duties shall be performed in such manner so as to uphold the
reputation of IAC in the business
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community. Those duties may be reasonably extended or curtailed from time to
time, at the discretion of the Board of Directors of IAC.
5. TIME AND ATTENTION DEVOTED TO DUTIES. Employee shall devote his
entire time and attention to the business of IAC and ATM. He shall not, during
the term of this Agreement, be engaged in any other business activity which
interferes with his ability to perform the duties assigned to him by IAC and/or
ATM, whether or not such business activity is pursued for gain, profit or other
pecuniary advantage. This shall not be construed as preventing Employee from
investing his assets in such form or manner as will not require any services on
the part of Employee in the operation of the affairs of the companies in which
such investments are made, subject to the qualification that Employee may not
invest in a company which is competitive in any manner whatsoever with IAC, its
parents, subsidiaries or affiliates (except for investments constituting less
than one percent (l%) of a publicly owned company).
6. NONDISCLOSURE AND RESTRICTIVE COVENANTS. Employee acknowledges that his
duties will necessarily result in his becoming familiar with the business,
software, patents and copyrights, methods and operations, client and customer
lists, client and customer information, manufacturing processes, product
specifications, vendors, trading patterns, financial goals, and other
proprietary and confidential information of IAC and WWWX, a publicly traded
corporation (the "Confidential Information"). Therefore, Employee acknowledges
and agrees that the following nondisclosure provisions and restrictive covenants
shall apply to the Confidential Information. The rights hereunder shall inure to
the benefit of IAC and WWWX, each of whom shall have the right to enforce the
terms of paragraphs 6 through 8 of this Agreement. For the purposes of
paragraphs 6 through 8 of this Agreement, the term "IAC" or "WWWX" shall include
each of their affiliated companies. The terms contained in paragraphs 6 through
8 shall survive the termination or expiration of this Agreement. Therefore,
Employee agrees:
(a) Employee will not, at any time during his employment by IAC, or
at anytime thereafter, unless terminated by IAC without cause or
by Employee for cause pursuant to sub-paragraph 9(c), without the
written approval of IAC or its duly constituted officers, use for
his benefit or the benefit of third parties reveal, divulge, or
make known to any person, firm or corporation, the Confidential
Information or any portions thereof.
(b) Employee agrees to return to IAC and WWWX upon request or
immediately upon the termination of his employment by IAC, any
and all written information, materials, equipment and software
which constitutes, contains or relates in any way to the
Confidential Information or trade secrets of IAC or WWWX
including, but not limited to, any copies of such information.
(c) Unless Employee's employment hereunder is terminated by IAC
without cause or by Employee for cause, or in the event of a
material breach by any of the WWWX Parties under the Merger
Agreement, Employee will not for a period equal to the later of
the length of employment under this Agreement or five (5) years
after Closing (as defined in the Merger Agreement) (the time
period in this Section 6(c) being the "Non-Compete Term") compete
in any
2
<PAGE>
way with IAC or WWWX, directly or indirectly, whether as an
employee, officer, director, agent, security holder, creditor,
consultant or otherwise. During the Non-Compete Term, Employee
will not consult with or have an interest in any business, firm,
person, partnership, corporation or other entity which engages in
the same or substantially similar business to that of WWWX or IAC
worldwide , it being acknowledged that the business of WWWX and
IAC is global in nature. A business shall be deemed similar or
competitive to WWWX or IAC if it conducts one or more business
activities substantially similar to that conducted by WWWX or
IAC. During the Non-Compete Term, Employee will not provide
services or products to any individual or entity which competes
with IAC or WWWX.
(d) Nothwithstanding if Employee is terminated without cause and
receives a mutually agreed upon severance package, Employee shall
be bound to all covenants contained herein for the time periods
contained above.
7. RIGHT TO ENGAGE IN EMPLOYEE'S PROFESSION. Paragraph 6 is not
intended to restrict Employee in the exercise of his training and skills,
provided that the exercise of such training and skills does not involve
competing with IAC or WWWX in violation of the provisions of this Agreement.
8. REMEDIES IN ADDITION TO ANY OTHER REMEDIES PROVIDED BY LAW. Employee
agrees that the breach of any of the covenants contained in paragraph 6 may
result in irreparable damage to IAC and WWWX and, in addition to any other
remedies provided in this Agreement or at law, IAC and WWWX shall have the right
to petition a court of competent jurisdiction to enjoin Employee from violating
such covenants.
9. EARLIER TERMINATION.
(a) Notwithstanding the termination provision of paragraph 2, this
Agreement may be terminated at any time by IAC upon the
occurrence of any of the following:
(i) Employee's inability to perform substantially all of
the duties assigned, through death or total disability
in excess of sixty (60) consecutive days or total
disability in excess of ninety (90) days in any twelve
(12) month period.
(ii) Any act of dishonesty or disloyalty by Employee
involving or materially affecting IAC.
(iii)Employee's Material Breach of the confidentiality
provisions of this Agreement.
(iv) Any other material breach of this Agreement by
Employee.
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<PAGE>
(v) The termination of the business of IAC, the sale of
substantially all of the assets of IAC or a merger or
consolidation in which IAC is not the surviving entity.
(b) IAC may further terminate this Agreement in the event of the
failure of Employee to substantially perform the duties
assigned to him by IAC providing IAC shall provide thirty
(30) days written notice to Employee of his failure to
perform his duties with an opportunity to cure within said
thirty (30) day period.
(c) Employee may terminate this Agreement in the event of IAC's
material breach of this Agreement or in the event of a
material breach of the Merger Agreement by any of the WWWX
parties, providing Employee shall provide thirty (30) days
written notice to IAC of its breach with an opportunity to
cure within said thirty (30) day period.
(d) In the event that Employee terminates this Agreement for any
reason other than (1) a material breach by IAC hereunder or
by any of the WWWX Parties under the Merger Agreement or (2)
for reasons contained in sub-paragraph 9(a)(i) above, prior
to the expiration of the first five (5) years of the term,
then for each such month or portion thereof prior to the
expiration of such five-year period, Employee shall pay to
IAC the sum of Eighteen Thousand Seven Hundred Fifty
($6,250.00) Dollars at the date of Termination. As an
example, if this Agreement terminates after thirty-six (36)
months, Employee shall pay to IAC One Hundred Fifty Thousand
($150,000.00) Dollars. This sum was determined by way of
calculation of IAC's actual damages, in that Employee
received certain benefits upon the merger of Intrac into
WWWX and those benefits were dependent upon at least five
(5) years of service of Employee at IAC.
10. REPRESENTATIONS OF EMPLOYEE
(a) Employee represents that to the best of his knowledge he is
not the subject of any pending or threatened claim which
involves any criminal or governmental proceedings, or
allegations of misfeasance, and that he has not been charged
nor threatened to be charged by any governmental or
administrative body with violation of law except for minor
traffic violations and similar charges.
(b) Employee represents and warrants that he is not prohibited
from acting in any capacity for IAC by virtue of the
operation of any non-competition or similar agreement with
any prior employer, or by any applicable statutes,
regulations or ordinances or any other applicable law or by
the rules and regulations of the US Securities and Exchange
Commission or any national securities exchange, and that his
acting in the capacity for IAC that is contemplated by the
parties
4
<PAGE>
hereto and by virtue of his position with IAC described in
Section 1 hereof will not subject IAC to claims or
materially impair the license status of IAC or its
affiliates or any entity operated by IAC or its affiliates.
11. DEFENSE OF CLAIMS. Employee agrees that during the Term, and at all
reasonable times thereafter, he will cooperate with IAC in the defense of any
claim that may be made against IAC or any affiliates, to the extent that such
claims may relate to services performed by Employee for IAC or its affiliates.
In connection with such claim, IAC will reimburse Employee for all of his
reasonable out-of-pocket expenses associated and, to the extent reasonably
practicable, to provide Employee with notice at least ten (10) days prior to the
date on which any travel is required, and (ii) if Employee is no longer employed
by IAC, to compensate Employee at a reasonable rate for his time.
12. NOTIFICATION OF AGREEMENT. Employee shall notify any future or
prospective employers, partners or persons with a similar business relationship
to Employee ("Future Employers") about the terms of this Agreement for any
period for which the covenants contained above pertains. Employee does hereby
authorize IAC to notify any Future Employers about the terms of this Agreement
upon discovery by IAC that Employee is being considered for employment,
partnership or similar business relationship (or has entered into such a
relationship) with a Future Employer in order to ensure Employee's observance
and compliance herewith.
13. INJUNCTION AND OTHER RELIEF. Both parties hereto recognize that the
services to be rendered under this Agreement by Employee are special, unique and
of extraordinary character, and that in the event of the breach by Employee of
any of the terms and conditions of this Agreement to be performed by him, or in
the event Employee performs services for any person, firm or corporation in
violation of Sections 6-8, or if Employee shall breach the provisions of this
Agreement with respect to Confidential Information, then IAC shall be entitled,
if it so elects, in addition to all other remedies available to it under this
Agreement or at law or in equity, to affirmative injunctive or other equitable
relief.
14. STIPULATION. Employee hereby specifically acknowledges, agrees,
stipulates and represents to IAC that:
(a) Employee has received adequate and sufficient consideration
for entering into this Agreement including the
above-referenced compensation;
(b) the execution and delivery of this Agreement and the
performance hereunder do not and shall not constitute a
violation of any covenants of non-competition, trade
secrecy, or confidentiality to which Employee is a party;
(c) the covenants of Employee contained in this Agreement are in
consideration of the promise of IAC to provide Confidential
Information (including trade secrets) to Employee and are
necessary to protect IAC
5
<PAGE>
interests in such Confidential Information, as well as IAC's
business good will and other business interests;
(d) IAC may suffer great loss and irreparable harm if Employee
competes directly or indirectly with IAC;
(e) the temporal, geographic and other restrictions contained in
this Agreement are in all respects reasonable and necessary
to protect the business good will, Confidential Information,
trade secrets, prospects and other business interest of IAC;
and
(f) the enforcement of this Agreement will not work an undue or
unfair hardship on Employee or otherwise be oppressive to
him.
15. SEVERABILITY. In the event that any of the provisions of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such invalidity or unenforceability shall not affect the remainder
of this Agreement and same shall be construed as if such invalid or
unenforceable provisions had never been a part hereof. If a court of competent
jurisdiction determines that the length of time, geographical restrictions or
any other restriction, or portion thereof, set forth in this Agreement is overly
restrictive and unenforceable, the parties agree that the court shall reduce or
modify such restrictions to those which it deems reasonable and enforceable
under the circumstances, and as so reduced or modified, the parties hereto agree
that the restrictions of this Agreement shall remain in full force and effect.
16. ENTIRE AGREEMENT. This document constitutes the entire agreement
between IAC and Employee regarding the subject matter hereof and there are no
oral agreements or undertakings affecting this instrument; any future
modifications, in order to be binding upon the parties, must be reduced to
writing and executed by both parties to this Agreement.
17. NO WAIVER. Either party's failure to strictly enforce any provision
of this Agreement shall not be construed as a waiver or as excusing either party
from future performance.
18. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of the heirs, executors, administrators, successors and assigns of the
respective parties, but in no event may Employee assign to any other party
Employee's duties or obligations under this Agreement.
19. NEW YORK JURISDICTION AND LAW. THIS AGREEMENT HAS BEEN MADE AND
EXECUTED IN THE STATE OF NEW YORK AND THE PARTIES CONSENT TO THE JURISDICTION OF
THE NEW YORK COURTS AND THE APPLICATION OF DELAWARE LAW TO ANY CONTROVERSY
HEREUNDER. THE PARTIES AGREE TO WAIVE A JURY TRIAL IN ANY PROCEEDING BROUGHT TO
ENFORCE ANY OF THE TERMS OF THIS AGREEMENT.
6
<PAGE>
20. HEADINGS. Paragraph headings herein shall have absolutely no legal
significance and are used solely for convenience of reference.
21. ACKNOWLEDGMENT. Employee acknowledges that notwithstanding the date
of Employee's execution and delivery of this Agreement, Employee was made aware
of and consented to the covenants, conditions and agreements of this Agreement
that he is receiving additional consideration for the same, including, but not
limited to, the employment arrangement contained in this Agreement.
22. NOTICES. All notices which either party is required or may desire
to give to the other under or in conjunction with is Agreement shall be in
writing and shall be given by addressing the same to such other party at the
address set forth below, and by depositing the same so addressed, certified
mail, postage prepaid, return receipt requested, or by overnight mail or by
reputable courier service, or by delivering the same personally to such other
party.
If to Employer:
ATM Services, Ltd.
12 Springdale Road, Building 11
Cherry Hill, NJ 08003
Attn: Chairman
with a copy to: Allan M. Cohen, Esq.
If to Employee:
Gary Levi
144 Soundview Drive
Port Washington, NY 11050
with a copy to:
Astor, Weiss, Kaplan & Rosenblum, LLP
The Bellevue, Sixth Floor
Broad Street at Walnut
Philadelphia, PA 19102
Facsimile No.: 215-790-0509
Attn: G. David Rosenblum, Esq.
Any notice mailed should be deemed to have been given three (3) United
States Post Office delivery days following the date of mailing. Overnight mail
or courier services shall be deemed to have been given on the next business day
following the date of mailing. Any notice delivered in person shall be deemed
effective upon delivery. Either party may change the address for the service of
notice upon it by written notice given to the other in the manner herein
provided for the giving of notice.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands.
INTRAC ACQUISITION CORPORATION
By: //S// Michael Norton
----------------------
Name: Michael Norton
Title: Authorized representative
//S// Gary Levi
---------------------------
GARI LEVI
8
<PAGE>
<PAGE>
Exhibit 10.27
POST-CLOSING AGREEMENT
This Post-Closing Agreement is made and entered into, this 23rd day of
July, 1999, by and among WORLDWIDE WEB NETWORX CORPORATION ("WWWX"), INTRAC
ACQUISITION CORPORATION ("IAC"), THE INTRAC GROUP ("Intrac"), THOMAS SETTINERI
(`Settineri") and GARY LEVI ("Levi", and WWWX, IAC, Intrac, Settineri and Levi
are sometimes hereafter referred to collectively as the "Parties").
WHEREAS, the Parties entered into that certain Agreement and Plan of
Merger, dated as of July 9, 1999 (the "Merger Agreement", and all capitalized
terms used herein and not otherwise defined herein shall have the same meaning
given to such terms in the Merger Agreement"); and
WHEREAS, the Closing took place this date; and
WHEREAS, the parties desire to enter into this Agreement, in connection
with the Closing, concerning the Merger Consideration and certain other
agreements by and among the parties.
NOW, THEREFORE, the parties hereto agree as follows, intending to be
legally bound hereby:
1. Within seven (7) days from the date of this Agreement:
a The Amended and Restated ATM Shareholders Agreement will be
prepared and signed by the Parties and Warren Rothstein; and
b. WWWX will cause 240 shares of the common stock of ATM to be
issued and delivered to Settineri and Levi, pursuant to Section 3.2(c)
of the Merger Agreement, as follows:
Settineri 180 shares
Levi 60 shares
2. Within three (3) days from the date of this Agreement, Settineri and
Levi will be elected as directors of both ATM and IAC and to the following
offices of both ATM and IAC:
INITIALS [MN]
Settineri President & Chief Executive Officer [TS]
Levi Secretary, Treasurer & Chief Operating Officer [GL]
<PAGE>
3. This will confirm that WWWX has, this date:
a. wired the total sum of $1,500,000 to Settineri and Levi in
accordance with their respective wiring instructions, pursuant to
Section 3.2(a) of the Merger Agreement, as follows:
Settineri $1,125,000
Levi $ 375,000
b. wired the sum of $1,000,000 to the account of IAC at PNC Bank
(Account No. 801 321 0791 pursuant to Section 3.3 of the Merger
Agreement; and
c, issued a letter of instructions to its transfer agent directing
the issuance and delivery of shares of its common stock to Settineri
and Levi, pursuant to Section 3.2 (b) of the Merger Agreement, as
follows:
Settineri 750,000 shares
Levi 250,000 shares
IN WITNESS WHEREOF, the parties have caused this Post-Closing Agreement to
be executed as of the date first above written.
//s// THOMAS SETTINERI
----------------------------------------
Thomas Settineri
//s// GARY LEVI//
---------------------------------------
Gary Levi
INTRAC ACQUISITION CORPORATION
By: //s// MICHAEL E. NORTON
------------------------------------
Name: Michael E. Norton
Title: Authorized Representative
WWWX WORLDWIDE WEB NETORX
CORPORATION
By: //s// MICHAEL E. NORTON
-----------------------------------
Name: Michael E. Norton
Title: Vice President - Finance and Chief
Financial Officer
<PAGE>
Exhibit 10.28
July 23, 1999
WorldWide Web NetworX Corporation
12 Springdale Road, Building 11
Cherry Hill, NJ 08003
Gentlemen:
You have agreed that D. H. Blair Investment Banking Corp.
("Blair") may act as a finder or financial consultant for you in various
transactions in which WorldWide Web NetworX Corporation (the "Company") may be
involved, such as mergers, acquisitions, joint ventures, debt or lease placement
and similar or other on or off balance sheet corporate finance transactions,
product or technology licensing arrangements, research and development
sponsorships or product or service sales. The Company hereby agrees that in the
event that Blair or an agent, representative or other designee of Blair
identified in writing to the Company shall first introduce to the Company
another party or entity, and that as a result of such introduction, a
transaction in the nature described above is consummated (a "Consummated
Transaction"), then the Company shall pay to Blair a finder's fee as follows:
a. 7% of the first $1,000,000 of the consideration paid in such
transaction;
b. 6% of the second $1,000,000 of the consideration paid in such
transaction;
c. 5% of the next $5,000,000 of the consideration paid in such
transaction;
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d. 4% of the consideration in excess of $7,000,000 and up to
$8,000,000;
e. 3% of the consideration in excess of $8,000,000 and up to
$9,000,000; and
f. 2 1/2% of any consideration in excess of $9,000,000.
The fee due Blair shall be paid by the Company in cash at the closing of
the Consummated Transaction, without regard to whether the Consummated
Transaction involves payment in cash, in stock, or a combination of stock and
cash, or is made on an installment basis. By way of example, if the Consummated
Transaction involved securities of the acquiring entity (whether securities of
the Company, if the Company is the acquiring party, or securities of another
entity, if the Company is the selling party) having a value of $8,000,000, the
cash consideration to be paid by the Company to Blair at closing shall be
$420,000. The consideration paid in the Consummated Transaction shall include,
for purposes of calculating Blair's fee hereunder, assumption of liabilities by,
and any payments or distributions of cash or other assets made to the Company or
to the principals of the Company prior to, simultaneously with or subsequent to
the Consummated Transaction if such payments or distributions are made in
contemplation of or in connection with the Consummated Transaction.
Notwithstanding the foregoing, in the event the Consummated Transaction involves
continuing payments to the Company such as product sales to a customer
introduced to the Company by Blair or royalties based on sales (a "Continuing
Transaction"), the fee due Blair shall be calculated as a royalty on net sales
or royalty payment received by the Company in connection with the Continuing
Transaction.
In the event that for any reason the Company shall fail to pay to Blair all
or any portion of the finder's fee payable hereunder when due, interest shall
accrue and be payable on the unpaid cash balance due hereunder from the date
when first due through and including the date when actually collected by Blair,
at a rate equal to two percent above the prime rate of Citibank, N.A., in New
York, New York, computed on a daily basis and adjusted as announced from time to
time.
This agreement shall be effective on the date hereof and shall expire on
the third anniversary of the date hereof; provided, however, that the obligation
of the Company to pay fees in connection with a Continuing Transaction shall
survive termination of this agreement.
Notwithstanding anything herein to the contrary, if the Company shall,
within 180 days immediately following the termination of the three year period
provided above, conclude a Consummated Transaction (which shall be deemed to
include the right to receive a payment in connection with a Continuing
Transaction) with any party introduced to the Company by Blair or its agent,
representative or other designee prior to the termination of said three year
period, the Company shall also pay Blair the fee determined above.
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The Company represents and warrants to Blair that Blair's engagement hereunder
has been duly authorized and approved by the Board of Directors of the Company
and this letter agreement has been duly executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the Company.
This agreement has been executed and delivered in the State of New York and
shall be governed by the laws of such state, without giving effect to the
conflicts of laws rules thereunder. The Company hereby submits and consents to
the jurisdiction of the state or federal courts of New York in connection with
any action arising under this agreement.
This agreement shall be binding upon, and enforceable against, the
successors and assigns of each of the undersigned.
Please sign this letter at the place indicated below, whereupon it will
constitute our mutually binding agreement with respect to the matters contained
herein.
Very truly your,
D. H. BLAIR INVESTMENT BANKING CORP.
By:________________________________________
Name:
Title:
Agreed to and accepted:
WORLDWIDE WEB NETWORX CORPORATION
By: //s// ROBERT D. KOHN
---------------------------
Name: Robert D. Kohn
Title: Chief Executive Officer
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The Company represents and warrants to Blair that Blair's engagement
hereunder has been duly authorized and approved by the Board of Directors of the
Company and this letter agreement has been duly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the Company.
This agreement has been executed and delivered in the State of New York and
shall be governed by the laws of such state, without giving effect to the
conflicts of laws rules thereunder. The Company hereby submits and consents to
the jurisdiction of the state or federal courts of New York in connection with
any action arising under this agreement.
This agreement shall be binding upon, and enforceable against, the
successors and assigns of each of the undersigned.
Please sign this letter at the place indicated below, whereupon it will
constitute our mutually binding agreement with respect to the matters contained
herein.
Very truly yours,
D. H. BLAIR INVESTMENT BANKING CORP.
By: //s// MARTIN A. BELL
--------------------------------------
Name:
Title:
Agreed to and accepted:
WORLDWIDE WEB NETWORX CORPORATION
By: //s// ROBERT KOHN
----------------------------
Name: Robert Kohn
Title: Chief Executive Officer
<PAGE>
Exhibit 10.29
WORLDWIDE WEB NETWORX CORPORATION
1999 EQUITY COMPENSATION PLAN
The purpose of the WorldWide Web NetworX Corporation 1999 Equity
Compensation Plan (the "Plan") is to provide (i) designated employees of
WorldWide Web NetworX Corporation (the "Company") and its subsidiaries, (ii)
certain consultants and advisors who perform services for the Company or its
subsidiaries and (iii) non-employee members of the Board of Directors of the
Company (the "Board") with the opportunity to receive grants of incentive stock
options, nonqualified stock options and restricted stock. The Company believes
that the Plan will encourage the participants to contribute materially to the
growth of the Company, thereby benefitting the Company's shareholders, and will
align the economic interests of the participants with those of the shareholders.
1. ADMINISTRATION
(a) COMMITTEE. The Plan shall be administered and interpreted by the
Board or by a committee appointed by the Board. After an initial public offering
of the Company's stock as described in Section 18(b) (a "Public Offering"), the
Plan shall be administered by a committee, which may consist of "outside
directors" as defined under section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code"), and related Treasury regulations and "non-employee
directors" as defined under Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). However, the Board may ratify or approve
any grants as it deems appropriate. If a committee administers the Plan,
references in the Plan to the "Board," as they relate to Plan administration,
shall be deemed to refer to the committee.
(b) BOARD AUTHORITY. The Board shall have the sole authority to (i)
determine the individuals to whom grants shall be made under the Plan, (ii)
determine the type, size and terms of the grants to be made to each such
individual, (iii) determine the time when the grants will be made and the
duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability, (iv) amend
the terms of any previously issued grant, and (v) deal with any other matters
arising under the Plan.
(c) BOARD DETERMINATIONS. The Board shall have full power and authority
to administer and interpret the Plan, to make factual determinations and to
adopt or amend such rules, regulations, agreements and instruments for
implementing the Plan and for the conduct of its business as it deems necessary
or advisable, in its sole discretion. The Board's interpretations of the Plan
and all determinations made by the Board pursuant to the powers vested in it
hereunder shall be conclusive and binding on all persons having any interest in
the Plan or in any awards granted hereunder. All powers of the Board shall be
executed in its sole discretion, in the best interest of the Company, not as a
fiduciary, and in keeping with the objectives of the Plan and need not be
uniform as to similarly situated individuals.
2. GRANTS
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Awards under the Plan may consist of grants of incentive stock options
as described in Section 5 ("Incentive Stock Options"), nonqualified stock
options as described in Section 5 ("Nonqualified Stock Options") (Incentive
Stock Options and Nonqualified Stock Options are collectively referred to as
"Options") and restricted stock as described in Section 6 ("Restricted Stock")
(hereinafter collectively referred to as "Grants"). All Grants shall be subject
to the terms and conditions set forth herein and to such other terms and
conditions consistent with this Plan as the Board deems appropriate and as are
specified in writing by the Board to the individual in a grant instrument or an
amendment to the grant instrument (the "Grant Instrument"). The Board shall
approve the form and provisions of each Grant Instrument. Grants under a
particular Section of the Plan need not be uniform as among the grantees.
3. SHARES SUBJECT TO THE PLAN
(a) SHARES AUTHORIZED. Subject to adjustment as described below, the
aggregate number of shares of common stock of the Company ("Company Stock") that
may be issued or transferred under the Plan is 3,860,000 shares. After a Public
Offering, the maximum aggregate number of shares of Company Stock that shall be
subject to Grants made under the Plan to any individual during any calendar year
shall be 1,200,000 shares, subject to adjustment as described below. The shares
may be authorized but unissued shares of Company Stock or reacquired shares of
Company Stock, including shares purchased by the Company on the open market for
purposes of the Plan. If and to the extent Options granted under the Plan
terminate, expire, or are canceled, forfeited, exchanged or surrendered without
having been exercised or if any shares of Restricted Stock are forfeited, the
shares subject to such Grants shall again be available for purposes of the Plan.
If shares of Company Stock are used to pay the exercise price of an Option, only
the net number of shares received by the grantee pursuant to such exercise shall
be considered to have been issued or transferred under the Plan with respect to
such Option, and the remaining number of shares subject to the Option shall
again be available for purposes of the Plan.
(b) ADJUSTMENTS. If there is any change in the number or kind of shares
of Company Stock outstanding (i) by reason of a stock dividend, spinoff,
recapitalization, stock split, or combination or exchange of shares, (ii) by
reason of a merger, reorganization or consolidation in which the Company is the
surviving corporation, (iii) by reason of a reclassification or change in par
value, or (iv) by reason of any other extraordinary or unusual event affecting
the outstanding Company Stock as a class without the Company's receipt of
consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company's payment of an
extraordinary dividend or distribution, the maximum number of shares of Company
Stock available for Grants, the maximum number of shares of Company Stock that
any individual participating in the Plan may be granted in any year, the number
of shares covered by outstanding Grants, the kind of shares issued under the
Plan, and the price per share of such Grants may be appropriately adjusted by
the Board to reflect any increase or decrease in the number of, or change in the
kind or value of, issued shares of Company Stock to preclude, to the extent
practicable, the enlargement or dilution of rights and benefits under such
Grants; provided, however, that any fractional shares resulting from such
adjustment shall be eliminated. Any adjustments determined by the Board shall be
final, binding and conclusive.
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4. ELIGIBILITY FOR PARTICIPATION
(a) ELIGIBLE PERSONS. All employees of the Company and its subsidiaries
("Employees"), including Employees who are officers or members of the Board, and
members of the Board who are not Employees ("Non-Employee Directors") shall be
eligible to participate in the Plan. Consultants and advisors who perform
services for the Company or any of its subsidiaries ("Key Advisors") shall be
eligible to participate in the Plan if the Key Advisors render bona fide
services to the Company or its subsidiaries, the services are not in connection
with the offer and sale of securities in a capital-raising transaction, and the
Key Advisors do not directly or indirectly promote or maintain a market for the
Company's securities.
(b) SELECTION OF GRANTEES. The Board shall select the Employees,
Non-Employee Directors and Key Advisors to receive Grants and shall determine
the number of shares of Company Stock subject to a particular Grant in such
manner as the Board determines. Employees, Key Advisors and Non-Employee
Directors who receive Grants under this Plan shall hereinafter be referred to as
"Grantees".
5. GRANTING OF OPTIONS
(a) NUMBER OF SHARES. The Board shall determine the number of
shares of Company Stock that will be subject to each Grant of Options to
Employees, Non-Employee Directors and Key Advisors.
(b) TYPE OF OPTION AND PRICE.
(i) The Board may grant Incentive Stock Options that are
intended to qualify as "incentive stock options" within the meaning of section
422 of the Code or Nonqualified Stock Options that are not intended so to
qualify or any combination of Incentive Stock Options and Nonqualified Stock
Options, all in accordance with the terms and conditions set forth herein.
Incentive Stock Options may be granted only to Employees. Nonqualified Stock
Options may be granted to Employees, Non-Employee Directors and Key Advisors.
(ii) The purchase price (the "Exercise Price") of Company
Stock subject to an Option shall be determined by the Board and may be equal to,
greater than, or less than the Fair Market Value (as defined below) of a share
of Company Stock on the date the Option is granted; provided, however, that (x)
the Exercise Price of an Incentive Stock Option shall be equal to, or greater
than, the Fair Market Value of a share of Company Stock on the date the
Incentive Stock Option is granted and (y) an Incentive Stock Option may not be
granted to an Employee who, at the time of grant, owns stock possessing more
than ten percent of the total combined voting power of all classes of stock of
the Company or any parent or subsidiary of the Company, unless
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the Exercise Price per share is not less than 110% of the Fair Market Value of
Company Stock on the date of grant.
(iii) If the Company Stock is publicly traded, then the Fair
Market Value per share shall be determined as follows: (x) if the principal
trading market for the Company Stock is a national securities exchange or the
Nasdaq National Market, the last reported sale price thereof on the relevant
date or (if there were no trades on that date) the latest preceding date upon
which a sale was reported, or (y) if the Company Stock is not principally traded
on such exchange or market, the mean between the last reported "bid" and "asked"
prices of Company Stock on the relevant date, as reported on Nasdaq or, if not
so reported, as reported by the National Daily Quotation Bureau, Inc. or as
reported in a customary financial reporting service, as applicable and as the
Board determines. If the Company Stock is not publicly traded or, if publicly
traded, is not subject to reported transactions or "bid" or "asked" quotations
as set forth above, the Fair Market Value per share shall be as determined by
the Board.
(c) OPTION TERM. The Board shall determine the term of each Option. The
term of any Option shall not exceed ten years from the date of grant. However,
an Incentive Stock Option that is granted to an Employee who, at the time of
grant, owns stock possessing more than ten percent of the total combined voting
power of all classes of stock of the Company, or any parent or subsidiary of the
Company, may not have a term that exceeds five years from the date of grant.
(d) EXERCISABILITY OF OPTIONS. Options shall become exercisable in
accordance with such terms and conditions, consistent with the Plan, as may be
determined by the Board and specified in the Grant Instrument. The Board may
accelerate the exercisability of any or all outstanding Options at any time for
any reason.
(e) TERMINATION OF EMPLOYMENT, DISABILITY OR DEATH.
(i) Except as provided below, an Option may only be exercised
while the Grantee is employed by, or providing service to, the Company as an
Employee, Key Advisor or member of the Board. In the event that a Grantee ceases
to be employed by, or provide service to, the Company for any reason other than
Disability, death, or termination for Cause, any Option which is otherwise
exercisable by the Grantee shall terminate unless exercised within 90 days after
the date on which the Grantee ceases to be employed by, or provide service to,
the Company (or within such other period of time as may be specified by the
Board), but in any event no later than the date of expiration of the Option
term. Except as otherwise provided by the Board, any of the Grantee's Options
that are not otherwise exercisable as of the date on which the Grantee ceases to
be employed by, or provide service to, the Company shall terminate as of such
date.
(ii) In the event the Grantee ceases to be employed by, or
provide service to, the Company on account of a termination for Cause by the
Company, any Option held by the Grantee shall terminate as of the date the
Grantee ceases to be employed by, or provide service
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to, the Company. In addition, notwithstanding any other provisions of this
Section 5, if the Board determines that the Grantee has engaged in conduct that
constitutes Cause at any time while the Grantee is employed by, or providing
service to, the Company or after the Grantee's termination of employment or
service, any Option held by the Grantee shall immediately terminate, and the
Grantee shall automatically forfeit all shares underlying any exercised portion
of an Option for which the Company has not yet delivered the share certificates,
upon refund by the Company of the Exercise Price paid by the Grantee for such
shares. Upon any exercise of an Option, the Company may withhold delivery of
share certificates pending resolution of an inquiry that could lead to a finding
resulting in a forfeiture.
(iii) In the event the Grantee ceases to be employed by, or
provide service to, the Company because the Grantee is Disabled, any Option
which is otherwise exercisable by the Grantee shall terminate unless exercised
within one year after the date on which the Grantee ceases to be employed by, or
provide service to, the Company (or within such other period of time as may be
specified by the Board), but in any event no later than the date of expiration
of the Option term. Except as otherwise provided by the Board, any of the
Grantee's Options which are not otherwise exercisable as of the date on which
the Grantee ceases to be employed by, or provide service to, the Company shall
terminate as of such date.
(iv) If the Grantee dies while employed by, or providing
service to, the Company or within 90 days after the date on which the Grantee
ceases to be employed or provide service on account of a termination specified
in Section 5(e)(i) above (or within such other period of time as may be
specified by the Board), any Option that is otherwise exercisable by the Grantee
shall terminate unless exercised within one year after the date on which the
Grantee ceases to be employed by, or provide service to, the Company (or within
such other period of time as may be specified by the Board), but in any event no
later than the date of expiration of the Option term. Except as otherwise
provided by the Board, any of the Grantee's Options that are not otherwise
exercisable as of the date on which the Grantee ceases to be employed by, or
provide service to, the Company shall terminate as of such date.
(v) For purposes of this Section 5(e) and Section 6:
(A) The term "Company" shall mean the Company and its parent
and subsidiary corporations.
(B) "Employed by, or provide service to, the Company" shall
mean employment or service as an Employee, Key Advisor or member of the
Board (so that, for purposes of exercising Options and satisfying
conditions with respect to Restricted Stock, a Grantee shall not be
considered to have terminated employment or service until the Grantee
ceases to be an Employee, Key Advisor and member of the Board), unless
the Board determines otherwise.
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(C) "Disability" shall mean a Grantee's becoming disabled
within the meaning of section 22(e)(3) of the Code.
(D) "Cause" shall mean, except to the extent specified
otherwise by the Board, a finding by the Board that the Grantee (i) has
breached his or her employment or service contract with the Company,
(ii) has engaged in disloyalty to the Company, including, without
limitation, fraud, embezzlement, theft, commission of a felony or
proven dishonesty in the course of his or her employment or service,
(iii) has disclosed trade secrets or confidential information of the
Company to persons not entitled to receive such information or (iv) has
engaged in such other behavior detrimental to the interests of the
Company as the Board determines.
(f) EXERCISE OF OPTIONS. A Grantee may exercise an Option that has
become exercisable, in whole or in part, by delivering a notice of exercise to
the Company with payment of the Exercise Price. The Grantee shall pay the
Exercise Price for an Option as specified by the Board (x) in cash, (y) with the
approval of the Board, by delivering shares of Company Stock owned by the
Grantee (including Company Stock acquired in connection with the exercise of an
Option, subject to such restrictions as the Board deems appropriate) and having
a Fair Market Value on the date of exercise equal to the Exercise Price or by
attestation (on a form prescribed by the Board) to ownership of shares of
Company Stock having a Fair Market Value on the date of exercise equal to the
Exercise Price, or (z) by such other method as the Board may approve, including
after a Public Offering payment through a broker in accordance with procedures
permitted by Regulation T of the Federal Reserve Board. The Board may authorize
loans by the Company to Grantees in connection with the exercise of an Option,
upon such terms and conditions as the Board, in its sole discretion, deems
appropriate. Shares of Company Stock used to exercise an Option shall have been
held by the Grantee for the requisite period of time to avoid adverse accounting
consequences to the Company with respect to the Option. The Grantee shall pay
the Exercise Price and the amount of any withholding tax due (pursuant to
Section 7) at the time of exercise.
(g) LIMITS ON INCENTIVE STOCK OPTIONS. Each Incentive Stock Option
shall provide that, if the aggregate Fair Market Value of the stock on the date
of the grant with respect to which Incentive Stock Options are exercisable for
the first time by a Grantee during any calendar year, under the Plan or any
other stock option plan of the Company or a parent or subsidiary, exceeds
$100,000, then the Option, as to the excess, shall be treated as a Nonqualified
Stock Option. An Incentive Stock Option shall not be granted to any person who
is not an Employee of the Company or a parent or subsidiary (within the meaning
of section 424(f) of the Code).
6. RESTRICTED STOCK GRANTS
The Board may issue or transfer shares of Company Stock to an Employee,
Non-Employee Director or Key Advisor under a Grant of Restricted Stock, upon
such terms as the Board deems appropriate. The following provisions are
applicable to Restricted Stock:
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(a) GENERAL REQUIREMENTS. Shares of Company Stock issued or transferred
pursuant to Restricted Stock Grants may be issued or transferred for
consideration or for no consideration, and subject to restrictions or no
restrictions, as determined by the Board. The Board may establish conditions
under which restrictions on shares of Restricted Stock shall lapse over a period
of time or according to such other criteria as the Board deems appropriate. The
period of time during which the Restricted Stock will remain subject to
restrictions will be designated in the Grant Instrument as the "Restriction
Period."
(b) NUMBER OF SHARES. The Board shall determine the number of shares of
Company Stock to be issued or transferred pursuant to a Restricted Stock Grant
and the restrictions applicable to such shares.
(c) REQUIREMENT OF EMPLOYMENT OR SERVICE. If the Grantee ceases to be
employed by, or provide service to, the Company (as defined in Section 5(e))
during a period designated in the Grant Instrument as the Restriction Period, or
if other specified conditions are not met, the Restricted Stock Grant shall
terminate as to all shares covered by the Grant as to which the restrictions
have not lapsed, and those shares of Company Stock must be immediately returned
to the Company. The Board may, however, provide for complete or partial
exceptions to this requirement as it deems appropriate.
(d) RESTRICTIONS ON TRANSFER AND LEGEND ON STOCK CERTIFICATE. During
the Restriction Period, a Grantee may not sell, assign, transfer, pledge or
otherwise dispose of the shares of Restricted Stock except to a Successor
Grantee under Section 8(a). Each certificate for a share of Restricted Stock
shall contain a legend giving appropriate notice of the restrictions in the
Grant. The Grantee shall be entitled to have the legend removed from the stock
certificate covering the shares subject to restrictions when all restrictions on
such shares have lapsed. The Board may determine that the Company will not issue
certificates for shares of Restricted Stock until all restrictions on such
shares have lapsed, or that the Company will retain possession of certificates
for shares of Restricted Stock until all restrictions on such shares have
lapsed.
(e) RIGHT TO VOTE AND TO RECEIVE DIVIDENDS. During the Restriction
Period, the Grantee shall have the right to vote shares of Restricted Stock and
to receive any dividends or other distributions paid on such shares, subject to
any restrictions deemed appropriate by the Board.
(f) LAPSE OF RESTRICTIONS. All restrictions imposed on Restricted Stock
shall lapse upon the expiration of the applicable Restriction Period and the
satisfaction of all conditions imposed by the Board. The Board may determine, as
to any or all Restricted Stock Grants, that the restrictions shall lapse without
regard to any Restriction Period.
7. WITHHOLDING OF TAXES
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(a) REQUIRED WITHHOLDING. All Grants under the Plan shall be subject to
applicable federal (including FICA), state and local tax withholding
requirements. The Company may require that the Grantee or other person receiving
or exercising Grants pay to the Company the amount of any federal, state or
local taxes that the Company is required to withhold with respect to such
Grants, or the Company may deduct from other wages paid by the Company the
amount of any withholding taxes due with respect to such Grants.
(b) ELECTION TO WITHHOLD SHARES. If the Board so permits, a Grantee may
elect to satisfy the Company's income tax withholding obligation with respect to
a Grant by having shares withheld up to an amount that does not exceed the
Grantee's minimum applicable withholding tax rate for federal (including FICA),
state and local tax liabilities. The election must be in a form and manner
prescribed by the Board and may be subject to the prior approval of the Board.
8. TRANSFERABILITY OF GRANTS
(a) NONTRANSFERABILITY OF GRANTS. Except as provided below, only the
Grantee may exercise rights under a Grant during the Grantee's lifetime. A
Grantee may not transfer those rights except by will or by the laws of descent
and distribution or, with respect to Grants other than Incentive Stock Options,
if permitted in any specific case by the Board, pursuant to a domestic relations
order (as defined under the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the regulations thereunder). When a Grantee
dies, the personal representative or other person entitled to succeed to the
rights of the Grantee ("Successor Grantee") may exercise such rights. A
Successor Grantee must furnish proof satisfactory to the Company of his or her
right to receive the Grant under the Grantee's will or under the applicable laws
of descent and distribution.
(b) TRANSFER OF NONQUALIFIED STOCK OPTIONS. Notwithstanding the
foregoing, the Board may provide, in a Grant Instrument, that a Grantee may
transfer Nonqualified Stock Options to family members, or one or more trusts or
other entities for the benefit of or owned by family members, consistent with
applicable securities laws, according to such terms as the Board may determine;
provided that the Grantee receives no consideration for the transfer of an
Option and the transferred Option shall continue to be subject to the same terms
and conditions as were applicable to the Option immediately before the transfer.
9. RIGHT OF FIRST REFUSAL; REPURCHASE RIGHT
(a) OFFER. Prior to a Public Offering, if at any time an individual
desires to sell, encumber, or otherwise dispose of shares of Company Stock that
were distributed to him or her under this Plan and that are transferable, the
individual may do so only pursuant to a BONA FIDE written offer, and the
individual shall first offer the shares to the Company by giving the Company
written notice disclosing: (a) the name of the proposed transferee of the
Company
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Stock; (b) the certificate number and number of shares of Company Stock
proposed to be transferred or encumbered; (c) the proposed price; (d) all other
terms of the proposed transfer; and (e) a written copy of the proposed offer.
Within 60 days after receipt of such notice, the Company shall have the option
to purchase all or part of such Company Stock at the then current Fair Market
Value (as defined in Section 5(b)) and may pay such price in installments over a
period not to exceed four years, at the discretion of the Board.
(b) SALE. In the event the Company (or a shareholder, as described
below) does not exercise the option to purchase Company Stock, as provided
above, the individual shall have the right to sell, encumber, or otherwise
dispose of the shares of Company Stock described in subsection (a) at the price
and on the terms of the transfer set forth in the written notice to the Company,
provided such transfer is effected within 15 days after the expiration of the
option period. If the transfer is not effected within such period, the Company
must again be given an option to purchase, as provided above.
(c) ASSIGNMENT OF RIGHTS. The Board, in its sole discretion, may waive
the Company's right of first refusal and repurchase right under this Section 9.
If the Company's right of first refusal or repurchase right is so waived, the
Board may, in its sole discretion, assign such right to the remaining
shareholders of the Company in the same proportion that each shareholder's stock
ownership bears to the stock ownership of all the shareholders of the Company,
as determined by the Board. To the extent that a shareholder has been given such
right and does not purchase his or her allotment, the other shareholders shall
have the right to purchase such allotment on the same basis.
(d) PURCHASE BY THE COMPANY. Prior to a Public Offering, if a Grantee
ceases to be employed by, or provide service to, the Company, the Company shall
have the right to purchase all or part of any Company Stock distributed to him
or her under this Plan at its then current Fair Market Value (as defined in
Section 5(b)) (or at such other price as may be established in the Grant
Instrument); provided, however, that such repurchase shall be made in accordance
with applicable accounting rules to avoid adverse accounting treatment.
(e) PUBLIC OFFERING. On and after a Public Offering, the Company shall
have no further right to purchase shares of Company Stock under this Section 9.
(f) SHAREHOLDER'S AGREEMENT. Notwithstanding the provisions of this
Section 9, if the Board requires that a Grantee execute a shareholder's
agreement with respect to any Company Stock distributed pursuant to this Plan,
the provisions of this Section 9 shall not apply to such Company Stock.
10. CHANGE OF CONTROL OF THE COMPANY
As used herein, a "Change of Control" shall be deemed to have occurred
if:
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<PAGE>
(a) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) (other than persons who are shareholders on the effective date
of the Plan) becomes a "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
more than 50% of the voting power of the then outstanding securities of the
Company; provided that a Change of Control shall not be deemed to occur as a
result of a change of ownership resulting from the death of a shareholder, and a
Change of Control shall not be deemed to occur as a result of a transaction in
which the Company becomes a subsidiary of another corporation and in which the
shareholders of the Company, immediately prior to the transaction, will
beneficially own, immediately after the transaction, shares entitling such
shareholders to more than 50% of all votes to which all shareholders of the
parent corporation would be entitled in the election of directors (without
consideration of the rights of any class of stock to elect directors by a
separate class vote); or
(b) The shareholders of the Company approve (or, if shareholder
approval is not required, the Board approves) an agreement providing for (i) the
merger or consolidation of the Company with another corporation where the
shareholders of the Company, immediately prior to the merger or consolidation,
will not beneficially own, immediately after the merger or consolidation, shares
entitling such shareholders to more than 50% of all votes to which all
shareholders of the surviving corporation would be entitled in the election of
directors (without consideration of the rights of any class of stock to elect
directors by a separate class vote), (ii) the sale or other disposition of all
or substantially all of the assets of the Company, or (iii) a liquidation or
dissolution of the Company.
11. CONSEQUENCES OF A CHANGE OF CONTROL
(a) NOTICE AND ACCELERATION. Upon a Change of Control, unless the Board
determines otherwise, (i) the Company shall provide each Grantee with
outstanding Grants written notice of such Change of Control, (ii) all
outstanding Options shall automatically accelerate and become fully exercisable
and (iii) the restrictions and conditions on all outstanding Restricted Stock
shall immediately lapse.
(b) ASSUMPTION OF GRANTS. Upon a Change of Control where the Company is
not the surviving corporation (or survives only as a subsidiary of another
corporation), unless the Board determines otherwise, all outstanding Options
that are not exercised shall be assumed by, or replaced with comparable options
by, the surviving corporation.
(c) OTHER ALTERNATIVES. Notwithstanding the foregoing, subject to
subsection (d) below, in the event of a Change of Control, the Board may take
one or both of the following actions: the Board may (i) require that Grantees
surrender their outstanding Options in exchange for a payment by the Company, in
cash or Company Stock as determined by the Board, in an amount equal to the
amount by which the then Fair Market Value of the shares of Company Stock
subject to the Grantee's unexercised Options exceeds the Exercise Price of the
Options, or
-10-
<PAGE>
(ii) after giving Grantees an opportunity to exercise their
outstanding Options, terminate any or all unexercised Options at such time as
the Board deems appropriate. Such surrender or termination shall take place as
of the date of the Change of Control or such other date as the Board may
specify.
(d) LIMITATIONS. Notwithstanding anything in the Plan to the contrary,
in the event of a Change of Control, the Board shall not have the right to take
any actions described in the Plan (including without limitation actions
described in Subsection (c) above) that would make the Change of Control
ineligible for pooling of interests accounting treatment or that would make the
Change of Control ineligible for desired tax treatment if, in the absence of
such right, the Change of Control would qualify for such treatment and the
Company intends to use such treatment with respect to the Change of Control.
12. REQUIREMENTS FOR ISSUANCE OR TRANSFER OF SHARES
(a) SHAREHOLDER'S AGREEMENT. The Board may require that a Grantee
execute a shareholder's agreement, with such terms as the Board deems
appropriate, with respect to any Company Stock issued or distributed pursuant to
this Plan.
(b) LIMITATIONS ON ISSUANCE OR TRANSFER OF SHARES. No Company Stock
shall be issued or transferred in connection with any Grant hereunder unless and
until all legal requirements applicable to the issuance or transfer of such
Company Stock have been complied with to the satisfaction of the Board. The
Board shall have the right to condition any Grant made to any Grantee hereunder
on such Grantee's undertaking in writing to comply with such restrictions on his
or her subsequent disposition of such shares of Company Stock as the Board shall
deem necessary or advisable, and certificates representing such shares may be
legended to reflect any such restrictions. Certificates representing shares of
Company Stock issued or transferred under the Plan will be subject to such
stop-transfer orders and other restrictions as may be required by applicable
laws, regulations and interpretations, including any requirement that a legend
be placed thereon.
(c) LOCK-UP PERIOD. If so requested by the Company or any
representative of the underwriters (the "Managing Underwriter") in connection
with any registration of the offering of any securities of the Company under the
Securities Act of 1933, as amended (the "Securities Act"), a Grantee (including
any successor or assigns) shall not sell or otherwise transfer any shares or
other securities of the Company during the 180-day period following the
effective date of a registration statement of the Company filed under the
Securities Act (or such other period as may be requested in writing by the
Managing Underwriter and agreed to in writing by the Company) (the "Market
Standoff Period"). Such restriction shall apply only to the first registration
statement of the Company to become effective under the Securities Act that
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period.
-11-
<PAGE>
13. AMENDMENT AND TERMINATION OF THE PLAN
(a) AMENDMENT. The Board may amend or terminate the Plan at any time;
provided, however, that the Board shall not amend the Plan without shareholder
approval if such approval is required in order for Incentive Stock Options
granted or to be granted under the Plan to meet the requirements of section 422
of the Code or, after a Public Offering, such approval is required in order to
exempt compensation under the Plan from the deduction limit under section 162(m)
of the Code.
(b) TERMINATION OF PLAN. The Plan shall terminate on the day
immediately preceding the tenth anniversary of its effective date, unless the
Plan is terminated earlier by the Board or is extended by the Board with the
approval of the shareholders.
(c) TERMINATION AND AMENDMENT OF OUTSTANDING GRANTS. A termination or
amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee unless the Grantee consents or unless the Board
acts under Section 19(b). The termination of the Plan shall not impair the power
and authority of the Board with respect to an outstanding Grant. Whether or not
the Plan has terminated, an outstanding Grant may be terminated or amended under
Section 19(b) or may be amended by agreement of the Company and the Grantee
consistent with the Plan.
(d) GOVERNING DOCUMENT. The Plan shall be the controlling document. No
other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.
14. FUNDING OF THE PLAN
This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.
15. RIGHTS OF PARTICIPANTS
Nothing in this Plan shall entitle any Employee, Key Advisor,
Non-Employee Director or other person to any claim or right to be granted a
Grant under this Plan. Neither this Plan nor any action taken hereunder shall be
construed as giving any individual any rights to be retained by or in the employ
of the Company or any other employment rights.
16. NO FRACTIONAL SHARES
- -12-
<PAGE>
No fractional shares of Company Stock shall be issued or delivered
pursuant to the Plan or any Grant. The Board shall determine whether cash, other
awards or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.
17. HEADINGS
Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control.
18. EFFECTIVE DATE OF THE PLAN.
(a) EFFECTIVE DATE. Subject to approval by the Company's
shareholders, the Plan shall be effective on August 12, 1999.
(b) PUBLIC OFFERING. The provisions of the Plan that refer to a Public
Offering, or that refer to, or are applicable to persons subject to, section 16
of the Exchange Act or section 162(m) of the Code, shall be effective, if at
all, upon the initial registration of the Company Stock under section 12(g) of
the Exchange Act, and shall remain effective thereafter for so long as such
stock is so registered.
19. MISCELLANEOUS
(a) GRANTS IN CONNECTION WITH CORPORATE TRANSACTIONS AND OTHERWISE.
Nothing contained in this Plan shall be construed to (i) limit the right of the
Board to make Grants under this Plan in connection with the acquisition, by
purchase, lease, merger, consolidation or otherwise, of the business or assets
of any corporation, firm or association, including Grants to employees thereof
who become Employees of the Company, or for other proper corporate purposes, or
(ii) limit the right of the Company to grant stock options or make other awards
outside of this Plan. Without limiting the foregoing, the Board may make a Grant
to an employee of another corporation who becomes an Employee by reason of a
corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company or any of its subsidiaries
in substitution for a stock option or restricted stock grant made by such
corporation. The terms and conditions of the substitute grants may vary from the
terms and conditions required by the Plan and from those of the substituted
stock incentives. The Board shall prescribe the provisions of the substitute
grants.
(b) COMPLIANCE WITH LAW. The Plan, the exercise of Options and the
obligations of the Company to issue or transfer shares of Company Stock under
Grants shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to section 16 of the Exchange Act, after a Public Offering it is the
intent of the Company that the Plan and all transactions under the Plan comply
with all applicable provisions of Rule 16b-3 or its successors under the
Exchange Act. In addition, it is
-13-
<PAGE>
the intent of the Company that the Plan and applicable Grants under the Plan
comply with the applicable provisions of section 162(m) of the Code, after a
Public Offering, and section 422 of the Code. To the extent that any legal
requirement of section 16 of the Exchange Act or section 162(m) or 422 of the
Code as set forth in the Plan ceases to be required under section 16 of the
Exchange Act or section 162(m) or 422 of the Code, that Plan provision shall
cease to apply. The Board may revoke any Grant if it is contrary to law or
modify a Grant to bring it into compliance with any valid and mandatory
government regulation. The Board may also adopt rules regarding the withholding
of taxes on payments to Grantees. The Board may, in its sole discretion, agree
to limit its authority under this Section.
(c) GOVERNING LAW. The validity, construction, interpretation and
effect of the Plan and Grant Instruments issued under the Plan shall be governed
and construed by and determined in accordance with the laws of the State of
Delaware, without giving effect to the conflict of laws provisions thereof.
-14-
<PAGE>
ISO GRANT FORM
[FORM]
WORLDWIDE WEB NETWORX CORPORATION
1999 EQUITY COMPENSATION PLAN
INCENTIVE STOCK OPTION GRANT
This STOCK OPTION GRANT, dated as of _______________, (the "Date of
Grant"), is delivered by WorldWide Web NetworX Corporation, (the "Company") to
_________________ (the "Grantee").
RECITALS
A. The WorldWide Web NetworX Corporation 1999 Equity Compensation Plan
(the "Plan") provides for the grant of options to purchase shares of common
stock of the Company. The Board of Directors of the Company (the "Board") has
decided to make a stock option grant as an inducement for the Grantee to promote
the best interests of the Company and its shareholders. A copy of the Plan is
attached.
B. The Board is authorized to appoint a committee to administer the
Plan. If a committee is appointed, all references in this Agreement to the
"Board" shall be deemed to refer to the committee.
NOW, THEREFORE, the parties to this Agreement, intending to be legally
bound hereby, agree as follows:
1. GRANT OF OPTION.
(a) Subject to the terms and conditions set forth in this Agreement and
in the Plan, the Company hereby grants to the Grantee an option (the "Option")
to purchase _____ shares of common stock of the Company ("Shares") at an
exercise price of $_____ per Share. The Option shall become exercisable
according to Paragraph 2 below.
(b) The Option is designated as an incentive stock option, under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
However, as described in Paragraph 5 below, under certain circumstances the
Option may not qualify as an incentive stock option.
2. EXERCISABILITY OF OPTION. The Option shall become exercisable on the
following dates, if the Grantee is employed by the Company (as defined in the
Plan) or entrade.com, Inc. so long as the Board determines that its relationship
to entrade.com, Inc. is such that it is in the continued best interests of the
Company, on the applicable date:
<PAGE>
DATE SHARES FOR WHICH THE OPTION IS EXERCISABLE
__________________ 25%
The first day of each third month after the previous date on which
a percentage of the Option became exercisable
6 1/4%
The exercisability of the Option is cumulative but shall not exceed 100%.
3. TERM OF OPTION.
(a) The Option shall have a term of ten years from the Date of Grant
and shall terminate at the expiration of that period, unless it is terminated at
an earlier date pursuant to the provisions of this Agreement or the Plan.
(b) The Option shall automatically terminate upon the happening of the
first of the following events:
(i) The expiration of the 90-day period after the Grantee
ceases to be employed by, or provide service to, the Company, if the
termination is for any reason other than Disability (as defined in the
Plan), death or Cause (as defined in the Plan).
(ii) The expiration of the one-year period after the Grantee
ceases to be employed by, or provide service to, the Company on account
of the Grantee's Disability.
(iii) The expiration of the one-year period after the Grantee
ceases to be employed by, or provide service to, the Company, if the
Grantee dies while employed by, or providing service to, the Company or
within 90 days after the Grantee ceases to be so employed or provide
services on account of a termination described in subparagraph (i)
above.
(iv) The date on which the Grantee ceases to be employed by,
or provide service to, the Company for Cause. In addition,
notwithstanding the prior provisions of this Paragraph 3, if the
Grantee engages in conduct that constitutes Cause after the Grantee's
employment or service terminates, the Option shall immediately
terminate.
Notwithstanding the foregoing, in no event may the Option be exercised after the
date that is ten years from the Date of Grant. Any portion of the Option that is
not exercisable at the time the
2
<PAGE>
Grantee ceases to be employed by, or provide service to, the Company shall
immediately terminate.
4. EXERCISE PROCEDURES.
(a) Subject to the provisions of Paragraphs 2 and 3 above, the Grantee
may exercise part or all of the exercisable Option by giving the Board written
notice of intent to exercise in the manner provided in this Agreement,
specifying the number of Shares as to which the Option is to be exercised. On
the delivery date, the Grantee shall pay the exercise price (i) in cash, (ii)
with the approval of the Board, by delivering Shares of the Company which shall
be valued at their fair market value on the date of delivery, or (iii) by such
other method as the Board may approve, including payment through a broker in
accordance with procedures permitted by Regulation T of the Federal Reserve
Board. The Board may impose from time to time such limitations as it deems
appropriate on the use of Shares of the Company to exercise the Option.
(b) The obligation of the Company to deliver Shares upon exercise of
the Option shall be subject to all applicable laws, rules, and regulations and
such approvals by governmental agencies as may be deemed appropriate by the
Board, including such actions as Company counsel shall deem necessary or
appropriate to comply with relevant securities laws and regulations. The Company
may require that the Grantee (or other person exercising the Option after the
Grantee's death) represent that the Grantee is purchasing Shares for the
Grantee's own account and not with a view to or for sale in connection with any
distribution of the Shares, or such other representation as the Board deems
appropriate. All obligations of the Company under this Agreement shall be
subject to the rights of the Company as set forth in the Plan to withhold
amounts required to be withheld for any taxes, if applicable. Subject to Board
approval, the Grantee may elect to satisfy any income tax withholding obligation
of the Company with respect to the Option by having Shares withheld up to an
amount that does not exceed the applicable withholding tax rate for federal
(including FICA), state and local tax liabilities.
5. DESIGNATION AS INCENTIVE STOCK OPTION.
(a) This Option is designated an incentive stock option under Section
422 of the Code. However, in order for an option to be an incentive stock option
under the Code, the option plan must be approved by the shareholders within 12
months before or after the date the plan is adopted. If the shareholders of the
Company fail to approve the adoption of the Plan within one year after the Board
adopted the Plan, or if the Internal Revenue Service otherwise determines that
the Option does not meet the requirements of an incentive stock option, the
Option will not be taxed as an incentive stock option.
(b) In addition, if the aggregate fair market value of the stock on the
date of the grant with respect to which incentive stock options are exercisable
for the first time by the Grantee during any calendar year, under the Plan or
any other stock option plan of the Company or a
3
<PAGE>
parent or subsidiary, exceeds $100,000, then the Option, as to the excess, shall
be treated as a nonqualified stock option that does not meet the requirements of
Section 422. If and to the extent that the Option fails to qualify as an
incentive stock option under the Code, the Option shall remain outstanding
according to its terms as a nonqualified stock option.
(c) The Grantee understands that favorable incentive stock option tax
treatment is available only if the Option is exercised while the Grantee is an
employee of the Company or a parent or subsidiary or within a time specified in
the Code after the Grantee ceases to be an employee.
(d) The Company makes no representation with respect to whether or not
the Option will qualify as an incentive stock option. The Grantee should
consult with his or her tax adviser regarding the tax consequences of the
Option.
6. CHANGE OF CONTROL. The provisions of the Plan applicable to a Change of
Control shall apply to the Option, and, in the event of a Change of Control, the
Board may take such actions as it deems appropriate pursuant to the Plan.
7. RIGHT OF FIRST REFUSAL; REPURCHASE RIGHT; SHAREHOLDER'S AGREEMENT. As a
condition of receiving this Option, the Grantee hereby agrees that all Shares
issued under the Plan shall be subject to a right of first refusal and
repurchase right as described in the Plan, and the Board may require that the
Grantee (or other person exercising the Option) execute a shareholder's
agreement, in such form as the Board determines, with respect to all Shares
issued upon the exercise of the Option before a public offering of the Company's
stock.
8. RESTRICTIONS ON EXERCISE. Only the Grantee may exercise the Option during the
Grantee's lifetime. After the Grantee's death, the Option shall be exercisable
(subject to the limitations specified in the Plan) solely by the legal
representatives of the Grantee, or by the person who acquires the right to
exercise the Option by will or by the laws of descent and distribution, to the
extent that the Option is exercisable pursuant to this Agreement.
9. GRANT SUBJECT TO PLAN PROVISIONS. This grant is made pursuant to the Plan,
the terms of which are incorporated herein by reference, and in all respects
shall be interpreted in accordance with the Plan. The grant and exercise of the
Option are subject to the provisions of the Plan and to interpretations,
regulations and determinations concerning the Plan established from time to time
by the Board in accordance with the provisions of the Plan, including, but not
limited to, provisions pertaining to (i) rights and obligations with respect to
withholding taxes, (ii) the registration, qualification or listing of the
Shares, (iii) changes in capitalization of the Company and (iv) other
requirements of applicable law. The Board shall have the authority to interpret
and construe the Option pursuant to the terms of the Plan, and its decisions
shall be conclusive as to any questions arising hereunder.
4
<PAGE>
10. NO EMPLOYMENT OR OTHER RIGHTS. The grant of the Option shall not confer upon
the Grantee any right to be retained by or in the employ or service of the
Company and shall not interfere in any way with the right of the Company to
terminate the Grantee's employment or service at any time. The right of the
Company to terminate at will the Grantee's employment or service at any time for
any reason is specifically reserved.
11. NO SHAREHOLDER RIGHTS. Neither the Grantee, nor any person entitled to
exercise the Grantee's rights in the event of the Grantee's death, shall have
any of the rights and privileges of a shareholder with respect to the Shares
subject to the Option, until certificates for Shares have been issued upon the
exercise of the Option.
12. ASSIGNMENT AND TRANSFERS. The rights and interests of the Grantee under this
Agreement may not be sold, assigned, encumbered or otherwise transferred except,
in the event of the death of the Grantee, by will or by the laws of descent and
distribution. In the event of any attempt by the Grantee to alienate, assign,
pledge, hypothecate, or otherwise dispose of the Option or any right hereunder,
except as provided for in this Agreement, or in the event of the levy or any
attachment, execution or similar process upon the rights or interests hereby
conferred, the Company may terminate the Option by notice to the Grantee, and
the Option and all rights hereunder shall thereupon become null and void. The
rights and protections of the Company hereunder shall extend to any successors
or assigns of the Company and to the Company's parents, subsidiaries, and
affiliates. This Agreement may be assigned by the Company without the Grantee's
consent.
13. APPLICABLE LAW. The validity, construction, interpretation and effect of
this instrument shall be governed by and construed in accordance with the laws
of the State of Delaware, without giving effect to the conflicts of laws
provisions thereof.
14. NOTICE. Any notice to the Company provided for in this instrument shall be
addressed to the Company in care of the President at 521 Fellowship Road, Suite
130, Mount Laurel, 08054, and any notice to the Grantee shall be addressed to
such Grantee at the current address shown on the payroll of the Company, or to
such other address as the Grantee may designate to the Company in writing. Any
notice shall be delivered by hand, sent by telecopy or enclosed in a properly
sealed envelope addressed as stated above, registered and deposited, postage
prepaid, in a post office regularly maintained by the United States Postal
Service.
IN WITNESS WHEREOF, the Company has caused its duly authorized officers
to execute and attest this Agreement, and the Grantee has executed this
Agreement, effective as of the Date of Grant.
5
<PAGE>
Attest: WORLDWIDE WEB NETWORX CORPORATION
___________________________ By:____________________________
Name: Michael E. Norton
Title: Chief Financial Officer
Accepted:_______________________
Grantee
6
<PAGE>
NQSO GRANT FORM
[FORM]
WORLDWIDE WEB NETWORX CORPORATION
1999 EQUITY COMPENSATION PLAN
NONQUALIFIED STOCK OPTION GRANT
This STOCK OPTION GRANT, dated as of _______________, (the "Date of
Grant"), is delivered by WorldWide Web NetworX Corporation, (the "Company") to
_________________ (the "Grantee").
RECITALS
A. The WorldWide Web NetworX Corporation 1999 Equity Compensation Plan
(the "Plan") provides for the grant of options to purchase shares of common
stock of the Company. The Board of Directors of the Company (the "Board") has
decided to make a stock option grant as an inducement for the Grantee to promote
the best interests of the Company and its shareholders. A copy of the Plan is
attached.
B. The Board is authorized to appoint a committee to administer the
Plan. If a committee is appointed, all references in this Agreement to the
"Board" shall be deemed to refer to the committee.
NOW, THEREFORE, the parties to this Agreement, intending to be legally
bound hereby, agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth in this
Agreement and in the Plan, the Company hereby grants to the Grantee a
nonqualified stock option (the "Option") to purchase _____ shares of common
stock of the Company ("Shares") at an exercise price of $_____ per Share. The
Option shall become exercisable according to Paragraph 2 below.
2. EXERCISABILITY OF OPTION. The Option shall become exercisable on the
following dates, if the Grantee is employed by the Company (as defined in the
Plan) or entrade.com, Inc. so long as the Board determines that its relationship
to entrade.com, Inc. is such that it is in the continued best interests of the
Company, on the applicable date:
<PAGE>
DATE SHARES FOR WHICH THE OPTION IS EXERCISABLE
__________________ 25%
The first day of each third month
after the previous date on which
a percentage of the Option became
exercisable
6 1/4%
The exercisability of the Option is cumulative but shall not exceed 100%.
3. TERM OF OPTION.
(a) The Option shall have a term of ten years from the Date of Grant
and shall terminate at the expiration of that period, unless it is terminated at
an earlier date pursuant to the provisions of this Agreement or the Plan.
(b) The Option shall automatically terminate upon the happening of the
first of the following events:
(i) The expiration of the 90-day period after the Grantee
ceases to be employed by, or provide service to, the Company, if the
termination is for any reason other than Disability (as defined in the
Plan), death or Cause (as defined in the Plan).
(ii) The expiration of the one-year period after the Grantee
ceases to be employed by, or provide service to, the Company on account
of the Grantee's Disability.
(iii) The expiration of the one-year period after the Grantee
ceases to be employed by, or provide service to, the Company, if the
Grantee dies while employed by, or providing service to, the Company or
within 90 days after the Grantee ceases to be so employed or provide
such services on account of a termination described in subparagraph (i)
above.
(iv) The date on which the Grantee ceases to be employed by,
or provide service to, the Company for Cause. In addition,
notwithstanding the prior provisions of this Paragraph 3, if the
Grantee engages in conduct that constitutes Cause after the Grantee's
employment or service terminates, the Option shall immediately
terminate.
Notwithstanding the foregoing, in no event may the Option be exercised after the
date that is ten years from the Date of Grant. Any portion of the Option that is
not exercisable at the time the
2
<PAGE>
Grantee ceases to be employed by, or provide service to, the Company shall
immediately terminate.
4. EXERCISE PROCEDURES.
(a) Subject to the provisions of Paragraphs 2 and 3 above, the Grantee
may exercise part or all of the exercisable Option by giving the Board written
notice of intent to exercise in the manner provided in this Agreement,
specifying the number of Shares as to which the Option is to be exercised. On
the delivery date, the Grantee shall pay the exercise price (i) in cash, (ii)
with the approval of the Board, by delivering Shares of the Company which shall
be valued at their fair market value on the date of delivery, or (iii) by such
other method as the Board may approve, including, after a public offering of the
Company's stock, payment through a broker in accordance with procedures
permitted by Regulation T of the Federal Reserve Board. The Board may impose
from time to time such limitations as it deems appropriate on the use of Shares
of the Company to exercise the Option.
(b) The obligation of the Company to deliver Shares upon exercise of
the Option shall be subject to all applicable laws, rules, and regulations and
such approvals by governmental agencies as may be deemed appropriate by the
Board, including such actions as Company counsel shall deem necessary or
appropriate to comply with relevant securities laws and regulations. The Company
may require that the Grantee (or other person exercising the Option after the
Grantee's death) represent that the Grantee is purchasing Shares for the
Grantee's own account and not with a view to or for sale in connection with any
distribution of the Shares, or such other representation as the Board deems
appropriate. All obligations of the Company under this Agreement shall be
subject to the rights of the Company as set forth in the Plan to withhold
amounts required to be withheld for any taxes, if applicable. Subject to Board
approval, the Grantee may elect to satisfy any income tax withholding obligation
of the Company with respect to the Option by having Shares withheld up to an
amount that does not exceed the minimum applicable withholding tax rate for
federal (including FICA), state and local tax liabilities.
5. CHANGE OF CONTROL. The provisions of the Plan applicable to a Change of
Control shall apply to the Option, and, in the event of a Change of Control, the
Board may take such actions as it deems appropriate pursuant to the Plan.
6. RIGHT OF FIRST REFUSAL; REPURCHASE RIGHT; SHAREHOLDER'S AGREEMENT. As a
condition of receiving this Option, the Grantee hereby agrees that all Shares
issued under the Plan shall be subject to a right of first refusal and
repurchase right as described in the Plan, and the Board may require that the
Grantee (or other person exercising the Option) execute a shareholder's
agreement, in such form as the Board determines, with respect to all Shares
issued upon the exercise of the Option before a public offering of the Company's
stock.
3
<PAGE>
7. RESTRICTIONS ON EXERCISE. Only the Grantee may exercise the Option during the
Grantee's lifetime and, after the Grantee's death, the Option shall be
exercisable (subject to the limitations specified in the Plan) solely by the
legal representatives of the Grantee, or by the person who acquires the right to
exercise the Option by will or by the laws of descent and distribution, to the
extent that the Option is exercisable pursuant to this Agreement.
8. GRANT SUBJECT TO PLAN PROVISIONS. This grant is made pursuant to the Plan,
the terms of which are incorporated herein by reference, and in all respects
shall be interpreted in accordance with the Plan. The grant and exercise of the
Option are subject to the provisions of the Plan and to interpretations,
regulations and determinations concerning the Plan established from time to time
by the Board in accordance with the provisions of the Plan, including, but not
limited to, provisions pertaining to (i) rights and obligations with respect to
withholding taxes, (ii) the registration, qualification or listing of the
Shares, (iii) changes in capitalization of the Company and (iv) other
requirements of applicable law. The Board shall have the authority to interpret
and construe the Option pursuant to the terms of the Plan, and its decisions
shall be conclusive as to any questions arising hereunder.
9. NO EMPLOYMENT OR OTHER RIGHTS. The grant of the Option shall not confer upon
the Grantee any right to be retained by or in the employ or service of the
Company and shall not interfere in any way with the right of the Company to
terminate the Grantee's employment or service at any time. The right of the
Company to terminate at will the Grantee's employment or service at any time for
any reason is specifically reserved.
10. NO SHAREHOLDER RIGHTS. Neither the Grantee, nor any person entitled to
exercise the Grantee's rights in the event of the Grantee's death, shall have
any of the rights and privileges of a shareholder with respect to the Shares
subject to the Option, until certificates for Shares have been issued upon the
exercise of the Option.
11. ASSIGNMENT AND TRANSFERS. The rights and interests of the Grantee under this
Agreement may not be sold, assigned, encumbered or otherwise transferred except,
in the event of the death of the Grantee, by will or by the laws of descent and
distribution. In the event of any attempt by the Grantee to alienate, assign,
pledge, hypothecate, or otherwise dispose of the Option or any right hereunder,
except as provided for in this Agreement, or in the event of the levy or any
attachment, execution or similar process upon the rights or interests hereby
conferred, the Company may terminate the Option by notice to the Grantee, and
the Option and all rights hereunder shall thereupon become null and void. The
rights and protections of the Company hereunder shall extend to any successors
or assigns of the Company and to the Company's parents, subsidiaries, and
affiliates. This Agreement may be assigned by the Company without the Grantee's
consent.
12. APPLICABLE LAW. The validity, construction, interpretation and effect of
this instrument shall be governed by and construed in accordance with the laws
of the State of Delaware, without giving effect to the conflicts of laws
provisions thereof.
13. NOTICE. Any notice to the Company provided for in this instrument shall be
addressed to the Company in care of the President at 521 Fellowship Road, Suite
130, Mount Laurel, NJ
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08054, and any notice to the Grantee shall be addressed to
such Grantee at the current address shown on the payroll of the Company, or to
such other address as the Grantee may designate to the Company in writing. Any
notice shall be delivered by hand, sent by telecopy or enclosed in a properly
sealed envelope addressed as stated above, registered and deposited, postage
prepaid, in a post office regularly maintained by the United States Postal
Service.
IN WITNESS WHEREOF, the Company has caused its duly authorized officers
to execute and attest this Agreement, and the Grantee has executed this
Agreement, effective as of the Date of Grant.
WORLDWIDE WEB NETWORX CORPORATION.
Attest:
By:________________________________
Name: Michael E. Norton
Title: Chief Financial Officer
Accepted:__________________________
Grantee
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WORLDWIDE WEB NETWORX CORPORATION
1999 EQUITY COMPENSATION PLAN
RESTRICTED STOCK GRANT
This RESTRICTED STOCK GRANT, dated as of ____________________________
(the "Date of Grant"), is delivered by WorldWide Web NetworX Corporation (the
"Company"), to _____________________________________________________________
(the "Grantee").
RECITALS
A. The WorldWide Web NetworX Corporation 1999 Equity Compensation Plan (the
"Plan") provides for the grant of restricted stock in accordance with the terms
and conditions of the Plan. The Board of Directors of the Company (the "Board")
has decided to make a restricted stock grant as an inducement for the Grantee to
promote the best interests of the Company and its shareholders. A copy of the
Plan is attached.
B. The Board is authorized to appoint a committee to administer the Plan. If a
committee is appointed, all references in this Agreement to the "Board" shall be
deemed to refer to the committee.
NOW, THEREFORE, the parties to this agreement, intending to be legally
bound hereby, agree as follows:
1. RESTRICTED STOCK GRANT. The Company hereby grants the Grantee _______ shares
of common stock of the Company, subject to the restrictions set forth below and
in the Plan ("Restricted Stock") [and acknowledges payment by the Grantee of
$_______ ($____ per share) for the Restricted Stock]. Shares of Restricted Stock
may not be transferred by the Grantee or subjected to any security interest
until the shares have become vested pursuant to this Agreement and the Plan.
2. VESTING OF RESTRICTED STOCK.
(a). The shares of Restricted Stock shall become vested, and the
restrictions described in Section 2(b) and Section 3 shall lapse, according to
the following vesting schedule, if the Grantee continues to be employed by, or
provide service to, of the Company (as defined in the Plan) from the Date of
Grant until the vesting date:
VESTING DATE VESTED SHARES
------------------------------ ------------------------------
------------------------------ ------------------------------
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------------------------------ ------------------------------
------------------------------ ------------------------------
The vesting of the Restricted Stock shall be cumulative.
(b). If the Grantee's employment or service with the Company terminates
for any reason before the Restricted Stock is fully vested, the shares of
Restricted Stock that are not then vested shall be forfeited and must be
immediately returned to the Company, [and the Company shall pay to the Grantee,
as consideration for the return of the non-vested shares, $____ per share for
each returned share].
3. NONASSIGNABILITY OF RIGHTS. During the period before the shares of Restricted
Stock vest (the "Restriction Period"), the non-vested Restricted Stock may not
be assigned, transferred, pledged or otherwise disposed of by the Grantee. Any
attempt to assign, transfer, pledge or otherwise dispose of the shares contrary
to the provisions hereof, and the levy of any execution, attachment or similar
process upon the shares, shall be null and void and without effect.
4. ISSUANCE OF CERTIFICATES.
(a). Stock certificates representing the Restricted Stock may be issued
by the Company and held in escrow by the Company until the Restricted Stock
vests, or the Company may hold non-certificated shares until the Restricted
Stock vests. During the Restriction Period, the Grantee shall receive any cash
dividends with respect to the shares of Restricted Stock, may vote the shares of
Restricted Stock and may participate in any distribution pursuant to a plan of
dissolution or complete liquidation of the Company. In the event of a dividend
or distribution payable in stock or other property or a reclassification, split
up or similar event during the Restriction Period, the shares or other property
issued or declared with respect to the non-vested shares of Restricted Stock
shall be subject to the same terms and conditions relating to vesting as the
shares to which they relate.
(b). When the Grantee obtains a vested right to shares of Restricted
Stock, a certificate representing the vested shares shall be issued to the
Grantee, free of the restrictions under Sections 2 and 3 of this Agreement.
5. CHANGE OF CONTROL. The provisions of the Plan applicable to a Change of
Control shall apply to the Restricted Stock, and, in the event of a Change of
Control, the Board may take such actions as it deems appropriate pursuant to the
Plan.
6. RIGHT OF FIRST REFUSAL; REPURCHASE RIGHT; SHAREHOLDER'S AGREEMENT. As a
condition of receiving this grant, the Grantee hereby agrees that, after the
restrictions described in Sections 2 and 3 of this Agreement lapse with respect
to all or part of the shares, the shares that are no longer subject to such
restrictions shall be subject to a right of first refusal and repurchase right
as described in the Plan, and the Board may require that the Grantee execute a
shareholder's agreement, in such form as the Board determines, with respect to
the shares issued under the Plan.
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7. GRANT SUBJECT TO PLAN PROVISIONS. This grant is made pursuant to the Plan,
the terms of which are incorporated herein by reference, and in all respects
shall be interpreted in accordance with the Plan. The grant is subject to the
provisions of the Plan and to interpretations, regulations and determinations
concerning the Plan established from time to time by the Board in accordance
with the provisions of the Plan, including, but not limited to, provisions
pertaining to (i) rights and obligations with respect to withholding taxes, (ii)
the registration, qualification or listing of the shares, (iii) changes in
capitalization of the Company, and (iv) other requirements of applicable law.
The Board shall have the authority to interpret and construe the grant pursuant
to the terms of the Plan, and its decisions shall be conclusive as to any
questions arising hereunder.
8. WITHHOLDING. The Grantee shall be required to pay to the Company, or make
other arrangements satisfactory to the Company (including the withholding of
shares) to provide for the payment of, any income and other payroll withholding
taxes that the Company is required to withhold with respect to the grant or
vesting of the Restricted Stock.
9. OTHER RESTRICTIONS ON SALE OR TRANSFER OF SHARES.
(a). The Grantee is acquiring the shares underlying this grant solely
for investment purposes, with no present intention of distributing or reselling
any of the shares or any interest therein. The Grantee acknowledges that the
shares have not been registered under the Securities Act of 1933, as amended
(the "Securities Act").
(b). The Grantee is aware of the applicable limitations under the
Securities Act and under the Plan relating to a subsequent sale, transfer,
pledge or other assignment or encumbrance of the shares. The Grantee further
acknowledges that the shares must be held indefinitely unless they are
subsequently registered under the Securities Act and applicable state securities
laws or an exemption from such registration is available.
(c). The Grantee will not sell, transfer, pledge, donate, assign,
mortgage, hypothecate or otherwise encumber the shares underlying this grant
unless the shares are registered under the Securities Act or the Company is
given an opinion of counsel reasonably acceptable to the Company that such
registration is not required under the Securities Act.
(d). The Grantee realizes that there is no public market for the shares
underlying this grant, that no market may ever develop for them, and that they
have not been approved or disapproved by the Securities and Exchange Commission
or any governmental agency.
10. NO EMPLOYMENT OR OTHER RIGHTS. This grant shall not confer upon the Grantee
any right to be retained by or in the employ or service of the Company and shall
not interfere in any way with the right of the Company to terminate the
Grantee's employment or service at any time. The
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right of the Company to terminate at will the Grantee's employment or service at
any time for any reason is specifically reserved.
11. ASSIGNMENT BY COMPANY. The rights and protections of the Company hereunder
shall extend to any successors or assigns of the Company and to the Company's
parents, subsidiaries, and affiliates. This Agreement may be assigned by the
Company without the Grantee's consent.
12. APPLICABLE LAW. The validity, construction, interpretation and effect of
this instrument shall be governed by and construed in accordance with the laws
of the State of Delaware, without giving effect to the conflicts of laws
provisions thereof.
13. NOTICE. Any notice to the Company provided for in this instrument shall be
addressed to the Company in care of the President at 521 Fellowship Road, Suite
130, Mount Laurel, New Jersey 08054, and any notice to the Grantee shall be
addressed to such Grantee at the current address shown on the payroll of the
Company, or to such other address as the Grantee may designate to the Company in
writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in
a properly sealed envelope addressed as stated above, registered and deposited,
postage prepaid, in a post office regularly maintained by the United States
Postal Service.
IN WITNESS WHEREOF, the Company has caused its duly authorized officers
to execute and attest this instrument, and the Grantee has placed his or her
signature hereon, effective as of the Date of Grant.
WORLDWIDE WEB NETWORX CORPORATION
Attest:
By:______________________________
Name:____________________________
Title:___________________________
I hereby accept the grant of Restricted Stock described in this
Agreement. I have read the WorldWide Web NetworX Corporation 1999 Equity
Compensation Plan and agree to be bound by the terms of the Plan and this
Agreement.
Grantee:_________________________
Date:____________________________
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<PAGE>
Exhibit 10.30
SOFTWARE LICENSE AGREEMENT
This Agreement made effective as of this ______ day of August, 1999, by and
between ATMCENTER.COM, INC., a corporation established pursuant to the laws of
the state of New York and having a principal place of business at 220 White
Plains Road, Tarrytown, NY 10591 (hereinafter the "Licensee") and ENTRADE.COM,
INC., a company established under the laws of the state of Pennsylvania and
having a principal place of business at 521 Fellowship Road, Suite 130, Mt.
Laurel, NJ 08054 (hereinafter the "Licensor") Hereinafter the Licensee and the
Licensor are together referred to from time to time as the "Parties".
WHEREAS the Licensor has developed and owns certain confidential and proprietary
know-how and technology known as the entrade transaction software an on-line
business to business e-commerce software and which offers a multiple payment
software application providing the capability to market goods and services over
the Internet using multiple forms of payment including on-line open bid payment
modules and fully customized commercial applications, trade related marketing,
sales and financial methodologies and other commercial marketing programs as
well as a diverse network of contacts and clients, and
WHEREAS the Licensee is engaged in the business of consulting to the retail,
wholesale and manufacturing marketplace for the timely disposition of distressed
inventories and other assets as well as, for its own account, purchasing
close-out and liquidation merchandise and re-marketing goods and services for
either cash or a blended (cash and trade combined) transaction payment
mechanism, and is involved in various other commercial endeavors, and
WHEREAS the Licensor possesses certain confidential and proprietary know-how and
technology relating to the Licensed Software, associated technologies and
commercial, marketing and sales methodologies, and
WHEREAS the Licensee desires to license the Licensed Software in order to, among
other things, use it for specific applications involving on-line business to
business activities, all on the terms and subject to the conditions set forth
herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained and for other good and valuable consideration (the
receipt, adequacy and sufficiency of which are hereby acknowledged by the
Parties by their execution hereof), the Parties hereby covenant and agree as
follows:
ARTICLE 1 - INTERPRETATION
1.1 DEFINITIONS
In this Agreement and the Schedules (if any) annexed hereto, unless there is
something in the subject matter or context inconsistent herewith, the following
expressions shall have the respective meanings indicated below:
<PAGE>
"AGREEMENT" - means this agreement entitled "Software License Agreement" and all
of the Schedules (if any) annexed hereto.
"CODE" means the computer programming code. Except as otherwise specified, Code
shall include both Object Code and Source Code.
"INVENTORY/ASSET" means products, raw and finished goods, directly or indirectly
belonging to any entity and/or employed or utilized in connection with any
entity's business activities, and either purchased by the Licensee to be
re-marketed, and/or consigned by a third party to the Licensee and/or otherwise
contractually conveyed to the Licensee to re-market on behalf of a third party.
"DOCUMENTATION" means written materials (and machine-readable text subject to
display and printout) which relate to and describe Code.
"IMPROVEMENTS" means upgrades (including subsequent versions), enhancements, or
other releases, alterations, modifications or customizations, of software, Code
or related technology, including Documentation, with respect to the Licensed
Software.
"KNOW-HOW" means inventions (whether patentable or not), improvements,
techniques, devices, data and other information (including, but not limited to
computer source code, flow charts, opinions, drawings, blueprints and
engineering and test specifications). Know-How shall also include user manuals
and other Documentation for computer programs as updated periodically.
"OBJECT CODE" means Code that is intended to be directly executable by a
computer after suitable processing but without the intervening steps of
compilation or assembly.
"SOURCE CODE" means Code, other than Object Code, and related source code
documentation, comments and procedural code, such as job control language, which
may be printed out or displayed in human readable form.
1.2 ENTIRE AGREEMENT - This Agreement including any and all Schedules (if any)
attached hereto constitutes the entire agreement between the Parties pertaining
to the subject matter hereof and supersedes all prior agreements,
understandings, representations, proposals and/or other communications in
respect of the licensing of the Licensed Software, whether oral or written. No
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by each of the Parties. The terms of this Agreement shall
prevail over any conflicting, additional or other terms contained in any
purchase order or other written, electronic or oral communication between the
Parties.
1.3 GOVERNING LAW - This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania and the Parties
consent and agree to the jurisdiction of the courts of such state.
1.4 NUMBER AND GENDER - Words importing the singular include the plural and vice
versa and words importing gender include both genders.
1.5 HEADINGS - The Article and Section headings contained herein are included
solely for convenience, are not intended to be full or accurate descriptions of
the
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<PAGE>
contents thereof and shall not be considered part of this Agreement or to affect
the interpretation hereof.
1.6 CURRENCY - Unless otherwise indicated, all dollar amounts referred to in
this Agreement are in United States Dollars.
ARTICLE 2 - GRANT OF LICENSE
2.1 GRANT OF LICENSE - Subject to the terms and conditions of this Agreement,
the Licensor hereby grants to the Licensee and the Licensee hereby accepts from
the Licensor, a non exclusive license to use the Licensed Software and component
parts thereof for an Internet based e-commerce platform for the on-line
re-marketing of Inventory/Assets, as well as the inclusive license rights to
utilize the system on a worldwide basis, provided that such use is solely in
conjunction with use of the Licensed Software for the purposes herein identified
and described in this Section 2.1. The Parties further agree that,
(a) The Licensee, in concurrence with Licensor, shall
have the right to develop and make future Improvements to the
Licensed Software for specific custom applications. The
Licensor will have no liability or obligation towards the
funding of any Improvements to the Licensed Software.
(b) The Licensee shall provide all its own support,
maintenance and hosting of the Licensed Software, unless
otherwise agreed to by the Parties in writing.
2.2 IMPROVEMENTS; SOURCE CODE - The license to the Licensed Software granted
pursuant to Section 2.1 above includes access to any and all Improvements as
well as the right to alter and/or modify the Licensed Software, and the Licensor
shall promptly notify the Licensee of any and all available Improvements
developed by or on behalf of the Licensor. The Parties agree that the Licensor
will at all times keep possession of all Source Codes for the Licensed Software.
Upon request from the Licensee and for the purposes of customizing, enhancing,
altering or modifying the Licensed Software, the Licensor shall develop a
customization plan with timeline and pricing for all applicable development work
and promptly deliver to the Licensee its proposal.
2.3 RESTRICTION ON USE -The Licensee may make copies of the Licensed Software
for use on any number of central processing units of the Licensee and the
Licensee's clients and the Licensee may make copies for back up or archive
purposes. Licensee may make as many copies of the Licensor's manuals or similar
materials related to the Licensed Software as Licensee desires.
2.4 ASSIGNMENT/SUBLICENSE OF LICENSE
(i) The Licensee shall have the right to sublicense the Licensed
Software on a nonexclusive basis for use by the clients or
customers of the Licensee in the normal course of the
Licensee's business, provided that such use is solely in
conjunction with use of the Licensed Software for the purposes
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<PAGE>
herein identified and described in Section 2.1.. The Licensor
agrees to cooperate with the Licensee in marketing and selling
sublicenses to identified clients or customers of the
Licensee. The Licensee agrees to compensate the Licensor per
Section 3 below.
(iii) Except as provided in paragraphs (i) of this Section 2.4, the
Licensee shall not have the right to assign, transfer or
convey, directly or indirectly, by sub-license or otherwise,
this Agreement or any of the rights and/or obligations of
either party hereunder without the prior written consent of
the other party.
ARTICLE 3 - FEES
3.1 Upon execution of this Agreement and acceptance by Licensee of the Licensed
Software under the terms and conditions stated herein, Licensee shall pay to the
Licensor the amounts in such manner as set forth in Schedule A, attached hereto
and made a part hereof. //WR//
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
4.1 Subject to Article 6 hereof, the Licensee acknowledges that the Licensed
Software being provided by the Licensor hereunder, and any Improvements made by
the Licensor or Documentation provided by the Licensor with respect thereto, are
the sole and exclusive property of the Licensor and that the Licensee acquires
no right, title or interest therein.
4.2 The Licensor represents and warrants to the Licensee that: (i) the Licensor
is the sole and exclusive owner of all right, title and interest in and to the
Licensed Software and has sufficient rights to license the Licensed Software to
the Licensee as contemplated in this Agreement; (ii) the Licensor has the right
to enter into this Agreement and grant the rights granted hereunder and there
are no outstanding agreements or understandings of any kind binding upon the
Licensor that are inconsistent with this Agreement or the rights granted
hereunder; (iii) the Licensed Software does not and will not contain any
"backdoor" or concealed access or any "software locks" or any similar devices
which, upon the occurrence of a certain event, the passage of a certain amount
of time, or the taking of any action (or the failure to take action) by or on
behalf of the Licensor, will cause the Licensed Software to be destroyed,
erased, damaged or otherwise made inoperable; (iv) to its best knowledge, the
Licensed Software does not infringe upon or violate the copyrights, patents,
trade secrets, trademarks or other proprietary rights of any third party; (v)
there are no pending or threatened suits, legal proceedings, claims or
governmental investigations against or with respect to the Licensor relating to
the Licensed Software or any component part thereof; (vi) the Licensor has not
received any notice and no notice is threatened or expected of any claim of
infringement or violation of any third party's copyrights, patents, trade
secrets, trademarks or other proprietary rights; (vii) the Licensed Software
will perform in substantial conformity with its specifications as set forth in
the Documentation, which shall not mean that it shall be error-free but may be
subject to simple de-bugging; (viii) the version of the Licensed Software
delivered on the date hereof is the most current and best version of such
software in existence on the date
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hereof; (ix) any Licensor Improvements will be developed solely by full time
employees of the Licensor acting within the scope of their employment or by
independent contractors who have transferred to the Licensor by written
agreement their ownership rights in the Improvements or who have granted the
Licensor a right to sub-license the Licensor Improvements.
4.3 The Licensee represents to the Licensor that the Licensee has the right to
enter into this Agreement and fulfill its duties and obligations hereunder and
there are no outstanding agreements of any kind binding upon the Licensee that
are inconsistent with this Agreement.
4.4 The Licensor hereby agrees to indemnify, defend and hold harmless the
Licensee and its permitted assigns and sub-licensees, and their respective
directors, officers, employees and agents, at the Licensor's sole cost and
expense, from and against any and all losses, expenses, claims, actions,
proceedings, damages or liabilities arising out of, relating to or based upon
any infringement or violation, or alleged infringement or violation, of any
copyright, patent, trademark or other proprietary right of any third party,
arising out of or related to the use by the Licensee or its permitted assigns or
sub-licensees of the Licensed Software or any component part thereof. The
Licensor agrees to pay and all obligations, liabilities, costs and damages of
the Licensee and its permitted assigns and sub-licensees, including, without
limitation, reasonable attorney's fees, which are attributable to any such
claim, action or proceeding if the Licensee or its permitted assigns or
sub-licensees, having actual knowledge thereof, promptly notifies the Licensor
in writing of any such claim, action or proceeding and gives the Licensor sole
control of the defense or settlement of such claim, action or proceeding and
provides Licensor with reasonable non-economic assistance in the defense of any
such claim, action or proceeding. If the Licensed Software or any component part
thereof is held to constitute an infringement or violation of any third party's
proprietary rights and the Licensee's or its permitted assigns' or
sub-licensees' use thereof is or may reasonably be expected to be enjoined, then
the Licensor shall, at the Licensor's option and sole expense, either secure for
the Licensee or its permitted assigns or sub-licensees, as the case may be, the
right to continue to use the Licensed Software and any component part thereof,
or replace or modify same to make them non-infringing.
ARTICLE 5 - CONFIDENTIALITY
5.1 The Licensee acknowledges that the Licensed Software is confidential and
considered as trade secret of the Licensor. The Licensee agrees to maintain the
confidentiality of and not to release, disclose or divulge the Licensed Software
or any part thereof to any person without the prior written consent of the
Licensor; provided that the Licensee shall not be obligated to maintain in
confidence that information which:
(i) can be demonstrated by reasonably documented proof to have
been in the possession of the Licensee prior to receipt
thereof from the Licensor or to have been developed in the
course of work entirely independent of any disclosure made
hereunder or the subject matter of this Agreement,
(ii) is or becomes part of the public domain other than through
breach of this Agreement or through the fault of the Licensor;
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<PAGE>
(iii) is necessarily disclosed in any products sold or shipped by
either of the Parties;
(iv) is or becomes available to the Licensee from a source other
than the Licensor which source has no obligation to the
Licensor in respect thereof; or
(v) is made available by the Licensor in written form to a third
party on an unrestricted basis.
The Licensee shall instruct its employees who have access to the Licensed
Software to comply with the provisions of this Article 4 and the Licensee shall
take at least the same steps to prevent disclosure and misuse of the Licensed
Software as it takes with respect to its own confidential information.
ARTICLE 6 - TERM AND TERMINATION
6.1 This Agreement shall remain in full force and effect until terminated as
hereinafter provided. This Agreement may be terminated by the Licensor in the
event that the Licensee shall be in material breach of any provisions hereof and
shall fail to remedy such material breach within thirty (30) days after
receiving written notice thereof from the Licensor; provided, however, that,
notwithstanding the foregoing, this Agreement may not be terminated by the
Licensor if, with respect to a material breach which is incapable of cure during
such 30 day period, after such 30 day period, the Licensee is continuing to be
diligently and in good faith seeking to cure such failure, but in any event such
attempt to cure shall not exceed a six (6) month period, commencing upon the
date of receipt by the Licensee of the Licensor's notice of material breach. All
rights and licenses granted under or pursuant to this Agreement by the Licensor
to the Licensee are, and shall otherwise be deemed to be, for purposes of 11
U.S.C. 365, licenses of "intellectual property" as defined under 11 U.S.C.
101(56). If a judgment is entered into against the Licensee in regards to any
bankruptcy proceedings, for its own account, under the Bankruptcy Code, or
should the Licensee dissolve and/or wind up its business and affairs, this
Agreement shall terminate . The Parties further agree that, in the event of a
commencement of a bankruptcy proceeding by or against the Licensor under the
Bankruptcy Code, the Licensee shall be entitled to a complete duplicate of (or
complete access to, as appropriate) the Licensed Software and any such
intellectual property and all embodiments of the Licensed Software and such
intellectual property, and same, if not already in its possession, shall be
promptly delivered to the Licensee (i) upon any such commencement of a
bankruptcy proceeding, upon written request therefor by the Licensee, unless the
Licensor elects to continue to perform all of its obligations under this
Agreement, or (ii) if not delivered under (i) above, upon the rejection of this
Agreement by or on behalf of the Licensor upon written request therefor by the
Licensee.
6.2 Upon dissolution of or the entry of a judgment in regards to any bankruptcy
proceeding against the Licensee, all rights to the Licensed Software and all
copies of the Licensed Software that are in the Licensee's possession, will
revert back to and be returned to the Licensor.
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ARTICLE 7 - DISCLAIMER OF WARRANTIES/LIMITATION OF LIABILITY
7.1 DISCLAIMER OF WARRANTIES - OTHER THAN AS SET FORTH IN ARTICLE 3 HEREOF, THE
LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES OR CONDITIONS OF ANY KIND
CONCERNING THE LICENSED SOFTWARE OR ITS USE, FUNCTION OR OWNERSHIP AND SHALL NOT
BE LIABLE IN ANY MANNER FOR ANY REPRESENTATION OR WARRANTY OR CONDITION OF ANY
KIND WHETHER EXPRESS OR IMPLIED OR COLLATERAL OR WHETHER ARISING BY OPERATION OF
LAW OR OTHERWISE INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABLE
QUALITY OR FITNESS FOR A PARTICULAR PURPOSE OR THAT THE LICENSED SOFTWARE WILL
BE ERROR FREE.
7.2 LIMITATION OF LIABILITY - LICENSOR SHALL NOT HAVE ANY LIABILITY OF ANY KIND
FOR INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY
BREACH OF THIS AGREEMENT EVEN IF LICENSOR HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES, EXCEPT AS OTHERWISE PROVIDED IN ARTICLE 3 HEREOF.
ARTICLE 8 - OTHER PROVISIONS
8.1 BINDING EFFECT -This Agreement is binding upon and shall inure to the
benefit of the Parties and their respective permitted successors and assigns.
8.2 SURVIVAL - All representations, warranties, and indemnifications, and
obligations which expressly by their nature survive termination of this
Agreement, shall survive any termination of this Agreement and shall continue in
full force and effect subsequent to and notwithstanding such termination.
8.3 NOTICE - Any notice given hereunder shall be in writing and given by
personal delivery or sent by registered or certified mail, postage prepaid and
addressed to the Parties at the addresses shown on the first page hereof. Any
notice so given shall be deemed to have been received on the date on which it
was delivered or if sent by mail, on the third business day next following the
mailing thereof. In the event of actual or threatened sustained disruption of
postal service, notice shall not be sent by mail. Either party may change its
address hereunder by giving written notice of such change to the other party in
the manner provided above.
8.4 COUNTERPARTS - This Agreement may be executed in counterparts and shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the Parties.
8.5 INDEPENDENT CONTRACTOR - The Parties to this Agreement are each an
independent contractor as to the other and shall not be considered or deemed to
be an agent, employee, joint venturer or partner of the other except as
otherwise expressly agreed to in a writing signed by the Parties . Neither party
shall have authority to contract for or bind the other in any manner and shall
not represent itself as an agent of the other or as otherwise authorized to act
for or on behalf of the other.
7
<PAGE>
IN WITNESS whereof the Parties have duly executed this
Agreement as of the date first written above.
ATMCENTER.COM, INC. ENTRADE.COM, INC.
By: //S// WARREN ROTHSTEIN By: //S// ROBERT D. KOHN
-------------------------- ------------------------------
Name: WARREN
---------------------------
Name: ROTHSTEIN
-----------------------
Title: CHAIRMAN Title: PRES. C.E.O.
----------------------- ---------------------------
8
<PAGE>
SCHEDULE "A" //WR//
FEES /PAYMENT
The Parties agree that upon execution of this Agreement, Licensee will pay to
Licensor the sum of $1,500,000.00 payable in the form of a trade credit to be
redeemed through an exchange of product or "cash savings" from products and
services and as listed in the attached Schedule "B" and defined in the "Schedule
C" attached hereto. Additionally, Licensor shall attribute any commissions, fees
or any monies otherwise earned from its participation in any ATM related
transactions pursuant to the License Agreement so as to satisfy the $1,500,000
obligation created by the agreement. Notwithstanding the satisfaction of the
obligation the earning potential of entrade.com with respect to its association
with ATM through this agreement or otherwise shall continue for as long as the
companies continue to do business with each together. Licensee hereby agrees to
have its accounting firm issue to Licensor and/or Licensor's identified legal
and financial representatives documentation advising Licensor of the validity of
said trade credits so that Licensor can account for this transaction.
Licensee agrees that within thirty (30) days after the end of each calendar
month during the term of this Agreement, Licensee shall pay to Licensor the
following royalty schedule on any and all transactions generated using the
License Software on Licensee's websites, including and all fees earned from
sublicenses granted to Licensee's clients and customers:
<TABLE>
<CAPTION>
REVENUE SOURCE TYPE ENTRADE
<S> <C> <C>
MASTER LICENSE SALES (OVERSEAS) FIXED FEE 50%
SUB LICENSE SALES (OVERSEAS) FIXED FEE 50%
SUB LICENSE SALES (DOMESTIC) FIXED FEE 50%
SUBSCRIPTION AGREEMENTS VARIABLE 30%
TRANSACTION FEES FIXED FEE 30%
SUBSCRIPTION RENEWALS VARIABLE 30%
ON LINE PRODUCT REMARKETING SALES MARGINAL PROFIT 10%
COUNTERTRADE REDISTRIBUTION SALES MARGINAL PROFIT 50%
</TABLE>
All percentages are paid on Licensee's Sublicense Fees, Gross Transaction Fees,
Registration Fees and any other Fees (the Fees) earned through the use of the
Licensed Software and calculated from the gross value of the fees earned,
excluding any and all applicable taxes which will be net of any direct expenses
related to the transaction such as cost of money, warehousing of products and
the related expenses thereof and third party commissions, if any.
All amounts payable to shall be accompanied with a complete and accurate
statement of the Fees received during the period for which such payment is made
(the "Statement"). The Statement shall be certified as complete and accurate by
Licensee. The receipt and acceptance
9
<PAGE>
of payment from Licensee by Licensor shall in no way prevent Licensor from
questioning the completeness or accuracy of such Statements.
During the Term of this Agreement, Licensee agrees to keep and maintain accurate
books and records of Gross Transactions Fees. In the event Licensor wishes to
question the completeness or accuracy of any Statement furnished by Licensee,
Licensor shall have the right to request that Licensee's independent auditors
provide an audited statement thereof with respect to the Statement in question.
In the event that any such audit reveals an underpayment by Licensee, Licensee
shall immediately remit payment to the Licensor in the amount of such
underpayment plus interest calculated at the rate of two percent (2 %) per month
calculated from the date such payment(s) were actually due until the date when
such payment is, in fact, actually made. Further, in the event that any such
underpayment is greater that $5,000.00 for any calendar year, Licensee shall
further bear the cost and expenses of such audit, but in all other cases
Licensor will bear such costs and expenses.
During the term of this Agreement, Licensor agrees to cooperate with Licensee in
the marketing and sales of sublicenses to the Licensed Software to Licensee's
clients and customers identified that are identified to Licensor in writing.
Licensor agrees to make available to Licensee all applicable marketing
information as may be required by Licensee. If required, Licensor agrees to
customize select marketing information, brochures, presentations, CD ROMS, etc.
and Licensee hereby agrees to reimburse Licensor for all costs associated with
same. Licensor agrees to make available to Licensee applicable personnel as may
be required by Licensee to assist it in marketing the Licensed Software to its
clients and customers. Licensee hereby agrees to pay for all costs associated
with Licensor's personnel travel and other expenses relating to any sub-license
sales and marketing efforts.
10
<PAGE>
"SCHEDULE B" //WR//
GENERAL INVENTORY
*ADVERTISING (AT ALL TIMES) COMPUTERS
RADIO COMPLETE PRINTING SERVICES
T.V. OFFICE EQUIPMENT
CABLE T.V. NETWORKS OFFICER FURNITURE
OUT OF HOME - BILLBOARDS OFFICE MACHINES
PRINT MEDIA OFFICE SUPPLIES
SALES CONVENTIONS INCENTIVE TRAVEL
& MEETINGS
ALL PRINTING SERVICES
HOTELS (AS AVAILABLE) AIRLINES (AS AVAILABLE)
WAREHOUSING AND DISTRIBUTION MERCHANDISE FOR
SERVICES PROMOTIONS
TELECOMMUNICATIONS (ALL FORMS)
*AVAILABILITY
<TABLE>
<CAPTION>
TELEVISION RADIO PRINT OUT OF HOME
<S> <C> <C> <C>
SPOT SPOT MAGAZINES BILLBOARDS
SYNDICATION NETWORK NATIONAL TRANSIT
CABLE SYNDICATION REGIONAL CINEMA
COUPON PACKAGES AIRPORT
</TABLE>
11
<PAGE>
"SCHEDULE C"
ATM will make payment of the License solely by furnishing to you goods, services
and media on a full exchange or cash savings basis. Should any such merchandise,
services, or media desired by you not be contained in the general inventory of
ATM, then ATM will use its best efforts to provide those items required by you
and offer them to you at a price equivalent to your normal cost or at mutually
acceptable values or to provide these items to you at a cost less than normal
cost paid by you. If at a lower cost the difference between such lower cost and
your normal cost or the value of the item furnished to you by ATM (as the term
"value" is hereinafter defined) shall be applied in payment of any sum due by
ATM to you. Upon delivery of any item to you or credits therefore, you will pay
ATM such lower cost for the item delivered and the difference between such cost
and the value of the item shall be applied in payment to you for the License
acquired by ATM hereunder.
The term "value" for any other merchandise, services and media requested by you
and furnished by ATM under this Agreement, is herein defined as follows: a) for
media on a full exchange basis the term "value" shall refer to the standard rate
card charge at the time of use hereunder, and b) for any other merchandise or
services that ATM may acquire for you, the term "value" shall be the lowest
price (after cash discounts) at which you could reasonably purchase such item
and which you would regularly pay for any such merchandise or services through
your normal channels.
The following conditions and undertakings shall apply to the merchandise,
services and media which ATM may furnish and make available to you hereunder in
order to make payment for the License acquired by ATM from you:
You may require such merchandise, services or media in whole or in part from
time to time until you shall have received full payment for any obligation due
from ATM to you hereunder. However, since we have no control over your desire
and/or ability to use any such credits there shall be no time limit either for
the period within which you may order such merchandise, services and/or media
from ATM and to the period within which ATM shall be entitled to make full
payment for any compensation due you by ATM hereunder. It is expressly intended
and understood that any payment due by ATM to you shall be remitted solely by
the means herein set forth for the period of time required to accomplish this
result and that ATM shall not be required to remit any other form of payment or
cash to you except as expressly and otherwise agreed herein, in payment of any
obligation due by ATM to you hereunder.
ATM shall offer you merchandise, services and media in its inventory or as may
become available to ATM. Under no circumstances will ATM be in default hereunder
if ATM fails to obtain any merchandise, services or media which is not then
within the current inventory of ATM. In turn, you shall be required to accept
only that merchandise, services and/or media ordered by you from ATM.
ATM will remit offers to you from time to time as additional items of
merchandise, services and/or media become available to ATM and will also supply
such information concerning availability to you at reasonable intervals.
All merchandise, services and/or media supplied by ATM are subject to prior
sale. Merchandise, services and/or media furnished to you by ATM may be subject
to
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<PAGE>
conditions affecting the use, sale or disposition of such items, which shall be
binding upon you, provided that ATM advises you of such conditions at the time
that any such item is, in fact, offered to you or ordered by you.
You may furnish ATM with various lists of merchandise and services that you are
purchasing, including: (1) your specifications; (2) your present costs; (3) the
manufacturers and suppliers from which any such merchandise and services are
obtained or obtainable by you. ATM may deal with such manufacturers and
suppliers on your behalf within such limits as you may prescribe and as it may
believe appropriate in its efforts to obtain such merchandise and services
required by you. Nothing herein, however, shall authorize ATM to act as your
agent except as you may expressly authorize in writing. You may, from time to
time, state your media requirements to ATM and, at your request, ATM will
consult with you fully with regard to any such media requirements of your
company in furtherance of its efforts to obtain media required by you. ATM will
make reasonable bona fide efforts to obtain any such items required by you but
shall only be obligated to supply you with items contained in its then current
inventory.
13
<PAGE>
Exhibit 10.31
[EXECUTION COPY]
================================================================================
--------------------------------------------------------
SHARE EXCHANGE AGREEMENT
--------------------------------------------------------
BETWEEN
NEW AMERICA NETWORK, INC.
and
WORLDWIDE WEB NETWORX CORPORATON
Dated as of September 23, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I. EXCHANGE OF SHARES...................................................................................1
Section 1.01. Exchange of the Shares for the WWWX Stock.................................................1
Section 1.02 Closing...................................................................................2
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF NAI................................................................2
Section 2.01. Making of Representations and Warranties.................................................2
Section 2.02. Organization and Corporate Power of NAI..................................................2
Section 2.03. Organization and Corporate Power of RQ...................................................2
Section 2.04. Corporate Records of RQ..................................................................3
Section 2.05. Authorization and Non-Contravention......................................................3
Section 2.06. Capitalization of RQ.....................................................................3
Section 2.07. Subsidiaries; Investments................................................................4
Section 2.08. Prior Transactions.......................................................................4
Section 2.09. Financial Statements: Projections........................................................4
Section 2.10. Absence of Undisclosed Liabilities.......................................................4
Section 2.11. Absence of Certain Developments..........................................................4
Section 2.12. Books and Records........................................................................4
Section 2.13. Tax Matters..............................................................................5
Section 2.14. Certain Contracts and Arrangements.......................................................5
Section 2.15. Litigation...............................................................................5
Section 2.16. Permits; Compliance with Laws............................................................5
Section 2.17. Labor and Employment Issues..............................................................6
Section 2.18. Knowledge and Experience.................................................................6
Section 2.19. Opportunity to Ask Questions.............................................................6
Section 2.20. Investment Intent........................................................................6
Section 2.21. Unregistered Securities Legend...........................................................6
Section 2.22. Investment Banking; Brokerage Fees.......................................................7
Section 2.23. Expenses.................................................................................7
Section 2.24. Investment Company.......................................................................7
Section 2.25. Additional Stock.........................................................................7
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 2.26 Title to Shares..........................................................................7
Section 2.27 Disclosure...............................................................................7
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF WWWX.............................................................7
Section 3.01. Making of Representations and Warranties.................................................7
Section 3.02. Organization and Good Standing...........................................................7
Section 3.03. Authorization and Non-Contravention......................................................8
Section 3.04. Prior Transactions.......................................................................8
Section 3.05. Knowledge and Experience.................................................................8
Section 3.06. Opportunity to Ask Questions.............................................................8
Section 3.07. Investment Intent........................................................................9
Section 3.08. Unregistered Securities Legend...........................................................9
Section 3.09 Investment Banking; Brokerage Fees.......................................................9
Section 3.10 Prohibited Transactions..................................................................9
Section 3.11 Investment Company.......................................................................9
Section 3.12 Capitalization of WWWX...................................................................9
Section 3.13 Absence of Certain Developments.........................................................10
Section 3.14 Tax Matters.............................................................................10
Section 3.15 Litigation..............................................................................10
Section 3.16 Disclosure..............................................................................10
Section 3.17 No Securities Law Violations............................................................11
ARTICLE IV. CONDITIONS.........................................................................................11
Section 4.01. Conditions to the Obligations of the Parties............................................11
Section 4.02. Conditions to the Obligations of WWWX...................................................11
Section 4.03. Conditions to the Obligations of NAI....................................................12
ARTICLE V. TAG-ALONG BENEFITS..................................................................................13
Section 5.01 Rights; Procedure.......................................................................13
Section 5.02 WWWX Right to Withdraw Registration Statement...........................................13
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE VI. SURVIVAL; INDEMNIFICATION..........................................................................13
Section 6.01 Survival of Representations, Warranties, Etc.............................................13
Section 6.02. Indemnification.........................................................................13
ARTICLE VII. MISCELLANEOUS.....................................................................................14
Section 7.01. Law Governing...........................................................................14
Section 7.02. Notices.................................................................................14
Section 7.03. Entire Agreement........................................................................15
Section 7.04. Successors and Assigns..................................................................15
Section 7.05. Captions and Gender.....................................................................15
Section 7.06. Execution in Counterparts...............................................................15
Section 7.07. Certain Remedies; Severability..........................................................15
Section 7.08 Amendments, Waivers.....................................................................16
Section 7.09 Further Assurances......................................................................16
Section 7.10 Press Releases..........................................................................16
ARTICLE VIII. CONFIDENTIALITY..................................................................................16
Section 8.01. Defined.................................................................................16
Section 8.02. Identification as Confidential..........................................................16
Section 8.03 Maintain Confidentiality................................................................16
Section 8.04 Unauthorized Disclosure.................................................................17
Section 8.05 Exceptions..............................................................................17
Section 8.06 Termination.............................................................................17
Section 8.07 Equitable Remedies......................................................................17
</TABLE>
<PAGE>
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (this "AGREEMENT") is made as of this
23rd day of September, 1999, by and between NEW AMERICA NETWORK, INC., a
Delaware corporation ("NAI") and WORLDWIDE WEB NETWORX CORPORATION, a Delaware
corporation ("WWWX"). WWWX and NAI are sometimes referred to herein individually
as a "PARTY" and collectively as the "PARTIES".
BACKGROUND
NAI and WWWX have agreed to exchange shares of stock at the closing (as
defined below) as follows: NAI will transfer 80 shares of the common stock of
Real Quest, Inc., a New Jersey corporation and wholly-owned subsidiary of NAI
("RQ"), which on the Closing Date (as defined below) will represent 80% of the
issued and outstanding equity interest in RQ (the "RQ SHARES") to WWWX in
consideration for WWWX's transfer of 1,500,000 shares of WWWX common stock (the
"WWWX STOCK") to NAI in accordance with the terms and provisions hereof. It is
the intent of the Parties that this exchange qualify as a tax free
reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986,
as amended (the "CODE"), and all of the provisions hereof are to be construed
consistently with that intent.
Simultaneously with the execution of this Agreement, the Parties and RQ
have entered into a Real Quest, Inc. Shareholders' Agreement, (the "RQ
SHAREHOLDERS' AGREEMENT"), and RQ and the other shareholders of NAI Direct,
Inc., a Delaware corporation ("NAI DIRECT"), have entered into an NAI Direct
Shareholders' Agreement (the "NAI DIRECT SHAREHOLDERS' AGREEMENT"). Any terms
used in this Agreement and not otherwise defined herein have the respective
meanings ascribed to them in the RQ Shareholders' Agreement or the NAI Direct
Shareholders' Agreement.
AGREEMENT
NOW, THEREFORE, the Parties hereby agree as follows:
ARTICLE I. EXCHANGE OF SHARES.
Section 1.01. EXCHANGE OF THE SHARES FOR THE WWWX STOCK. subject to the
terms and conditions of this Agreement and in reliance on the representations
and warranties herein set forth, WWWX agrees to issue to NAI the WWWX Stock, and
NAI agrees to transfer to WWWX, at the Closing (as defined in SECTION 1.02), the
RQ Shares.
(a) WWWX will issue and deliver 750,000 shares of the WWWX
Stock to NAI at closing; and
(b) WWWX will issue 750,000 shares of the WWWX Stock to NAI to
be held in escrow according to the terms of the Escrow Agreement
attached hereto as EXHIBIT 1.01 to be released and delivered to NAI
upon the meeting of the Revenue Goal as set out in the RQ Shareholders'
Agreement.
1
<PAGE>
Section 1.02. CLOSING. The exchange and delivery of the RQ Shares, and
the issuance and delivery of the WWWX Stock (the "CLOSING") shall take place at
the offices of WWWX, 521 Fellowship Road, Suite 130, Mount Laurel, NJ, subject
to the satisfaction or waiver of all of the conditions to Closing set forth in
this Agreement. The date the Closing occurs is referred to herein as the
"CLOSING DATE." At the Closing, NAI shall deliver to WWWX the RQ Shares, in
WWWX's name, and WWWX shall deliver the WWWX Stock as described in Section
1.01(a) and (b), registered in NAI's name or the name of NAI's nominee(s).
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF NAI.
Section 2.01. MAKING OF REPRESENTATIONS AND WARRANTIES. As a material
inducement to WWWX to enter into this Agreement and consummate the transactions
contemplated hereby, NAI hereby makes to WWWX the representations and warranties
contained in this ARTICLE II. Such representations and warranties are subject to
the qualifications and exceptions, if any, set forth in the disclosure schedule
delivered to WWWX pursuant to this Agreement (the "DISCLOSURE SCHEDULE"). The
Representations and Warranties of this ARTICLE II shall apply to any and all
agreements that are contemplated by this Agreement and that are entered into by
WWWX and any affiliates of NAI.
Section 2.02. ORGANIZATION AND CORPORATE POWER OF NAI. NAI is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Delaware, and is duly qualified or registered to do business as
a foreign corporation in each jurisdiction in which the failure to be so
qualified or registered would have a Material Adverse Effect. As used in this
Agreement, the term "MATERIAL ADVERSE EFFECT" means any change or effect that is
materially adverse to the properties, assets, business, financial condition,
prospects or results of operations of the entity designated. NAI has all
required corporate power and authority to enter into and perform this Agreement
and the agreements contemplated hereby to which NAI is a party (such agreements,
together with this Agreement being sometimes hereinafter referred to as, the
"TRANSACTION DOCUMENTS") and to carry out the transactions contemplated hereby
and thereby, including without limitation the exchange of the RQ Shares.
Section 2.03. ORGANIZATION AND CORPORATE POWER OF RQ. RQ is a
corporation duly organized, validly existing and in good standing under the laws
of the state of New Jersey, and is duly qualified or registered to do business
as a foreign corporation in each jurisdiction in which the failure to be so
qualified or registered would have a Material Adverse Effect. As of the Closing
Date, RQ has all required corporate power and authority to carry on its business
as presently conducted, to enter into and perform the agreements contemplated by
this Agreement and to carry out the transactions contemplated hereby and
thereby, including without limitation the issuance of the RQ Shares. The copies
of the Certificate of Incorporation and By-laws of RQ, as amended to date, which
have been furnished to WWWX by RQ, are correct and complete at the date hereof
(the "CERTIFICATE OF INCORPORATION" and the "BY-LAWS," respectively). RQ is not
in violation of any term of its Certificate of Incorporation or By-laws. RQ is
not in violation of any term of any agreement, instrument, judgment, decree,
order, statute, rule or government regulation applicable to RQ or to which RQ is
a party.
2
<PAGE>
Section 2.04. CORPORATE RECORDS OF RQ. The corporate record books of RQ
accurately reflect all material corporate actions taken by its shareholders and
board of directors (the "RQ BOARD") and committees. The copies of the corporate
records of RQ, as made available to WWWX for review, are true and complete
copies of the originals of such documents.
Section 2.05. AUTHORIZATION AND NON-CONTRAVENTION. As of the Closing
Date, this Agreement and the other Transaction Documents are valid and binding
obligations of NAI and RQ enforceable in accordance with their terms, subject to
the laws of general application relating to bankruptcy, insolvency and the
relief of debtors and rules and laws governing specific performance, injunctive
relief and other equitable remedies. The execution, delivery and performance of
this Agreement, all other Transaction Documents and all agreements, documents
and instruments contemplated hereby or thereby and the issuance of the RQ
Shares, have been duly authorized by all necessary corporate or other action on
the part of NAI or RQ. The execution, delivery and performance of this Agreement
and the other Transaction Documents and the issuance of the RQ Shares, will not
(i) violate, conflict with or result in a default under any material contract or
obligation to which RQ or NAI is a party or by which it or its assets are bound,
or any provision of the certificate of incorporation or by-laws of RQ or NAI, or
cause the creation of any encumbrance upon any of the material assets of an RQ
or NAI; (ii) violate or result in a violation of, or constitute a default
(whether after the giving of notice, lapse of time or both) under, any provision
of any law, regulation or rule, or any order of, or any restriction imposed by,
any court or other governmental agency applicable to RQ or NAI; (iii) require
from RQ or NAI any notice to, declaration or filing with, or consent or approval
of any governmental authority or other third party; or (iv) accelerate any
obligation under, or give rise to a right of termination of, any material
agreement, permit, license or authorization to which RQ or NAI is a party or by
which it is bound.
Section 2.06. CAPITALIZATION OF RQ. As of the Closing, and after giving
effect to the transactions contemplated hereby, the authorized capital stock of
RQ will consist only of 2,000,000 shares of common stock, par value $.0l per
share, of RQ ("COMMON STOCK") of which 100 Shares will be issued and
outstanding. The outstanding shares of Common Stock are held beneficially and of
record by the persons identified in SECTION 2.06 of the Disclosure Schedule in
the amounts indicated thereon. Neither RQ nor NAI has issued or agreed to issue,
and is not obligated to issue, nor are there, any outstanding warrants, options
or other rights to purchase or acquire any shares of RQ's capital stock, nor any
outstanding securities convertible into such shares or any warrants, options or
other rights to acquire any such convertible securities. As of the Closing, and
after giving effect to the transactions contemplated hereby, all of the
outstanding shares of capital stock of RQ will have been duly and validly
authorized and issued and will be fully paid and nonassessable and will have
been offered, issued, sold and delivered in compliance with applicable federal
and state securities laws and not subject to any preemptive rights. There are no
preemptive rights, rights of first refusal, put or call rights or obligations or
anti-dilution rights with respect to the issuance, sale or redemption of any of
RQ's capital stock. There are no rights to have RQ's Common Stock registered for
sale to the public in connection with the laws of any jurisdiction, and there
are no agreements, other than this Agreement and the RQ Shareholders' Agreement,
relating to the voting of RQ's voting securities or restrictions on the transfer
of RQ's capital stock.
3
<PAGE>
Section 2.07. SUBSIDIARIES; INVESTMENTS. Other than NAI Direct when
formed, RQ does not have any subsidiaries. RQ does not own or have any direct or
indirect interest in or Control over any corporation, partnership, joint venture
or other entity of any kind. The term "CONTROL" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. As used in this Agreement, the term
"PERSON" shall mean an individual, a corporation, an association, a partnership,
an estate, a trust or any other entity or organization.
Section 2.08. PRIOR TRANSACTIONS. Except as included in Section 2.08 of
the Disclosure Schedule, neither RQ nor NAI is party to, or otherwise obligated
in any manner under, any agreement, arrangement or understanding regarding
acquisitions, mergers, consolidations, asset sales, joint ventures or similar
transactions with an internet company or with regard to internet operations.
Section 2.09. FINANCIAL STATEMENTS: PROJECTIONS. Included in Section
2.09 of the Disclosure Schedule are the following financial statements of RQ,
all of which statements (including the footnotes and schedules thereto) fairly
present in all material respects the financial condition of RQ as of the dates
of such statements and the results of its operations and its cash flows for the
periods covered thereby: (a) an unaudited balance sheet as at August 31, 1999
and the related statements of income, retained earnings and cash flow for the
year then ended, in each case certified by the Chief Financial Officer of NAI.
The unaudited balance sheet as of August 31, 1999 is hereafter referred to as
the "MOST RECENT BALANCE SHEET". Nothing has come to the attention of the
management of NAI since such respective dates which would indicate that such
financial statements were not true and correct in all material respects as of
the date thereof. The financial statements of RQ, all of which have been made
available to WWWX, were previously consolidated with those of NAI, and are
complete and correct in all material respects and have been prepared in
accordance with standard practices for closely held privately owned companies.
Section 2.10. ABSENCE OF UNDISCLOSED LIABILITIES. RQ does not have any
liabilities of any nature, whether accrued, absolute, contingent or otherwise,
asserted or unasserted, known or unknown (including without limitation,
liabilities as guarantor or otherwise with respect to obligations of others, or
liabilities for taxes due or then accrued or to become due or contingent or
potential liabilities relating to activities of RQ or the conduct of its
business prior to the date hereof or the Closing, as the case may be, regardless
of whether claims in respect thereof had been asserted as of such date), except
liabilities incurred as a result of or arising out of the transactions
contemplated under this Agreement.
Section 2.11. ABSENCE OF CERTAIN DEVELOPMENTS. Since the date of the
Most Recent Balance Sheet, RQ has conducted its business only in the ordinary
course consistent with past practice and, except as set forth in Section 2.11 of
the Disclosure Schedule, there has not been any event or development that has
had or is likely to have a Material Adverse Effect on RQ.
Section 2.12. BOOKS AND RECORDS. The books of account, minute books,
stock record books, and other records of NAI and RQ, all of which have been made
available to WWWWX, are complete and correct in all material respects and have
been maintained in accordance with standard practices for closely held privately
owned companies. The minute books of NAI and
4
<PAGE>
RQ contain records that are accurate in all material respects of all meetings
and other corporate action held of their respective shareholders and boards of
directors (including committees of their respective boards of directors.) At the
Closing, all of such books and records will be in the possession of WWWX.
Section 2.13. TAX MATTERS. RQ has at all times since inception
qualified and presently qualifies as an entity taxable as a "C" corporation as
defined in Section 1361 of the Code. RQ has filed all federal, state, local and
foreign tax returns required to be filed by it through the date hereof, and has
paid or caused to be paid all federal, state, local, foreign and other taxes,
including without limitation income taxes, estimated taxes, excise taxes, sales
taxes, use taxes, gross receipts taxes, franchise taxes, employment and
payroll-related taxes, withholding taxes, stamp taxes, transfer taxes and
property taxes, whether or not measured in whole or in part by net income
(collectively, "TAXES"), required to be paid by RQ through the date hereof
whether disputed or not, except Taxes which have not yet accrued or otherwise
become due, for which adequate provision has been made in the pertinent
financial statements referred to in Section 2.10 above or which the failure to
pay would not have a Material Adverse Effect on RQ. The provisions for Taxes on
the Most Recent Balance Sheet are sufficient as of its date for the payment of
all accrued and unpaid Taxes of any nature of RQ, and any applicable Taxes owing
by RQ to any jurisdiction, whether or not assessed or disputed. All Taxes and
other assessments and levies which RQ is required to withhold or collect have
been withheld and collected and have been paid over to the proper governmental
authorities. Neither the Internal Revenue Service (the "IRS") nor any other
governmental authority is now asserting or threatening to assert against RQ any
deficiency or claim for additional Taxes. There has not been any audit of any
tax return filed by RQ. No waiver or agreement by RQ is in force for the
extension of time for the assessment or payment of any Taxes. At all times prior
to Closing, RQ and NAI have been consolidated for federal tax purposes.
Section 2.14. CERTAIN CONTRACTS AND ARRANGEMENTS. Except as set forth
in Section 2.14 of the Disclosure Schedule (with true and correct copies
delivered to WWWX), RQ is not a party or subject to or bound by any contract or
agreement that is material to RQ.
Section 2.15. LITIGATION. There is no litigation, claim, complaint,
action, suit or governmental or administrative proceeding or investigation
pending or threatened against RQ or affecting RQ's properties or assets, or, as
to matters related to RQ, against any officer, director, shareholder or key
employee of RQ, nor has there occurred any event nor does there exist any
condition on the basis of which any such claim may be asserted.
Section 2.16. PERMITS; COMPLIANCE WITH LAWS. As of the Closing Date RQ
will have all necessary franchises, authorizations, approvals, orders, consents,
licenses, certificates, permits, registrations, qualifications or other rights
and privileges (collectively "PERMITS") necessary to permit it to own its
property and to conduct its business as it is presently conducted and all such
Permits are valid and in full force and effect, except where the failure to
obtain such Permit would not have a Material Adverse Effect. No Permit is
subject to termination as a result of the execution of this Agreement or the
other Transaction Documents or the consummation of the transactions contemplated
hereby or thereby. RQ is now, and has heretofore been, in compliance with all
applicable statutes, ordinances, orders, rules and regulations promulgated by
any federal,
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state, municipal or other governmental authority which apply to the conduct of
its business, except for any such non-compliance or violation that, individually
or in the aggregate, would not have a Material Adverse Effect.
Section 2.17. LABOR AND EMPLOYMENT ISSUES. As of the date hereof, RQ
has no liability to employees or related to any employee benefit plan.
Section 2.18. KNOWLEDGE AND EXPERIENCE. NAI represents that it is an
"accredited investor" as such term is defined in RULE 501 under the Securities
Act of 1933, as amended (the "SECURITIES ACT") or that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the investment in the WWWX Stock contemplated by this
Agreement and making an informed investment decision with respect thereto. NAI
understands, agrees and acknowledges that except and until a registration
statement is filed with respect to the WWWX Stock, the WWWX Stock has not been
and is not being registered under the Securities Act or under the "blue sky"
laws of any jurisdiction and that WWWX, in issuing the WWWX Stock, is relying
upon, among other things, the representations of NAI contained in this ARTICLE
II.
Section 2.19. OPPORTUNITY TO ASK QUESTIONS. NAI represents that it has
had the opportunity to conduct a due diligence review of WWWX, including the
opportunity to ask questions and receive answers concerning the terms and
conditions of the WWWX Stock issued hereunder, as well as the opportunity to
obtain additional information necessary to verify the accuracy of information
furnished in connection with the WWWX Stock issued hereunder which NAI possesses
or can acquire without unreasonable effort or expense. Notwithstanding the
foregoing, NAI has relied upon the representations and warranties of WWWX set
forth in this Agreement, and this SECTION 2.19 shall not be interpreted to limit
that reliance.
Section 2.20. INVESTMENT INTENT. NAI is acquiring the WWWX Stock for
its own account, for investment, and not with a present view to, or for resale
in connection with, any "distribution" thereof within the meaning of the
Securities Act. NAI was not formed or organized for the purpose of acquiring the
WWWX Stock.
Section 2.21. UNREGISTERED SECURITIES LEGEND. NAI understands that,
because the WWWX Stock has not been registered under the Securities Act, it
cannot dispose of any or all of the WWWX Stock unless such securities are
subsequently registered under the Securities Act or exemptions from such
registration are available. NAI understands that each instrument or certificate
representing the WWWX Stock issuable hereunder will bear the following
restrictive legend or one substantially similar thereto:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the `Act') or any
applicable state securities law. These shares may not be sold,
transferred or assigned in the absence of an effective
registration statement for these shares under the Act or an
opinion of the Corporation's counsel that registration is not
required under the Act."
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Section 2.22. INVESTMENT BANKING; BROKERAGE FEES. Neither NAI nor RQ
has incurred or become liable for any broker's or finder's fee, banking fees or
similar compensation, relating to or in connection with the transactions
contemplated by this Agreement.
Section 2.23. EXPENSES. NAI and RQ have paid all of their own expenses
incurred in connection with this transaction.
Section 2.24. INVESTMENT COMPANY. Neither NAI nor RQ is an Investment
Company as defined in Sections 368(a)(2)(F)(iii) and (iv) of the Code.
Section 2.25. ADDITIONAL STOCK; REACQUISITION. RQ has no plan or
intention to issue additional shares of its stock. NAI has no plan or intention
to reacquire any of the RQ Shares.
Section 2.26. TITLE TO SHARES.
(a) all of the capital stock of RQ is owned by NAI free and
clear of all Liens, and
(b) the sale and delivery of the RQ Shares to WWWX pursuant to
this Agreement will vest in WWWX legal and beneficial title to the RQ Shares
free and clear of any Lien.
For purposes of this SECTION 2.26, "Lien" means any mortgage, pledge,
hypothecation, assignment, deposit arrangement, charge, encumbrance, lien
(statutory or other), or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever.
Section 2.27. DISCLOSURE. None of the representations and warranties of
NAI and none of the materials provided to WWWX in connection with this Agreement
contain or will contain any untrue statement of a material fact or omit or will
omit or misstate a material fact necessary in order to make the statements
contained herein and therein not misleading. NAI knows no fact which resulted,
or which, in its reasonable judgment, will result in a material change in the
business, operations or assets of RQ or NAI which is not set forth in this
Agreement.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF WWWX.
Section 3.01. MAKING OF REPRESENTATIONS AND WARRANTIES. As a material
inducement to NAI to enter into this Agreement and consummate the transactions
contemplated hereby, WWWX hereby makes to NAI the representations and warranties
contained in this ARTICLE III. Such representations and warranties are subject
to the qualifications and exceptions, if any, set forth in the disclosure
schedule delivered to NAI pursuant to this Agreement (the "DISCLOSURE
SCHEDULE"). The Representations and Warranties of this ARTICLE III shall apply
to any and all agreements that are contemplated by this Agreement and that are
entered into by WWWX and NAI and/or any affiliates of NAI.
Section 3.02. ORGANIZATION AND GOOD STANDING. WWWX is duly organized,
validly existing and in good standing under the laws of Delaware, and is duly
qualified or registered to do business as a foreign corporation in each
jurisdiction in which the failure to be so qualified or registered would have a
Material Adverse Effect . WWWX has all required corporate power and
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authority to carry on its business as presently conducted, to enter into and
perform this Agreement and the agreements contemplated hereby to which WWWX is a
party and to carry out the transactions contemplated hereby and thereby,
including the exchange of the WWWX Stock. WWWX is not in violation of any term
of its certificate of incorporation or by-laws. WWWX is not in violation of any
term of any agreement, instrument, judgment, decree, order, statute, rule or
government regulation applicable to WWWX or to which WWWX is a party.
Section 3.03. AUTHORIZATION AND NON-CONTRAVENTION. This Agreement and
all documents executed by WWWX pursuant hereto are valid and binding obligations
of WWWX, enforceable in accordance with their terms, subject to the laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules and laws governing specific performance, injunctive relief and other
equitable remedies. The execution, delivery and performance of this Agreement
and all agreements, documents and instruments contemplated hereby and the
issuance of the WWWX Stock have been duly authorized by all necessary corporate
or other action of WWWX. The execution by WWWX of this Agreement and the
performance of any transaction contemplated hereby and the issuance of the WWWX
Stock will not (i) violate, conflict with or result in a default under any
material contract or obligation to which WWWX is a party or by which it or its
assets are bound, or any provision of the organizational documents of WWWX, or
cause the creation of any encumbrance upon any of the material assets of WWWX;
(ii) violate or result in a violation of, or constitute a default (whether after
the giving of notice, lapse of time or both) under, any provision of any law,
regulation or rule, or any order of, or any restriction imposed by, any court or
other governmental agency applicable to WWWX; (iii) require from WWWX any notice
to, declaration or filing with, or consent or approval of any governmental
authority or other third party; or (iv) accelerate any obligation under, or give
rise to a right of termination of, any material agreement, permit, license or
authorization to which WWWX is a party or by which WWWX is bound.
Section 3.04. PRIOR TRANSACTIONS. Except has included in SECTION 3.04
of the Disclosure Schedule, WWWX is not party to, or otherwise obligated in any
manner under, any agreement, arrangement or understanding regarding
acquisitions, mergers, consolidations, asset sales, joint ventures or similar
transactions with any company engaged in commercial real estate business
activities or with regard to a commercial real estate web site.
Section 3.05. KNOWLEDGE AND EXPERIENCE. WWWX represents that it has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the investment contemplated by
this Agreement and making an informed investment decision with respect thereto.
WWWX represents that it is an "accredited investor" as such term is defined in
Rule 501 under the Securities Act. WWWX understands, agrees and acknowledges
that the RQ Shares have not been and are not being registered under the
Securities Act or under the "blue sky" laws of any jurisdiction and that NAI, in
transferring the RQ Shares to WWWX, is relying upon, among other things, the
representations of WWWX contained in this ARTICLE III.
Section 3.06. OPPORTUNITY TO ASK QUESTIONS. WWWX represents that it has
had the opportunity to conduct a due diligence review of RQ, including the
opportunity to ask questions and receive answers concerning the terms and
conditions of the offering of securities purchased hereunder, as well as the
opportunity to obtain additional information necessary to verify the
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accuracy of information furnished in connection with such offering which RQ
possesses or can acquire without unreasonable effort or expense. Notwithstanding
the foregoing, WWWX has relied upon the representations and warranties of NAI
and RQ set forth in this Agreement, and this SECTION 3.06 shall not be
interpreted to limit that reliance.
Section 3.07. INVESTMENT INTENT. WWWX is acquiring the RQ Shares for
its own account, for investment, and not with a present view to, or for resale
in connection with, any "distribution" thereof within the meaning of the
Securities Act. WWWX was not formed or organized for the purpose of acquiring
the RQ Shares.
Section 3.08. UNREGISTERED SECURITIES LEGEND. WWWX understands that,
because the RQ Shares have not been registered under the Securities Act, it
cannot dispose of any or all of the RQ Shares unless such securities are
subsequently registered under the Securities Act or exemptions from such
registration are available. WWWX understands that each instrument or certificate
representing the RQ Shares issuable hereunder will bear the following
restrictive legend or one substantially similar thereto:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the `ACT') or any
applicable state securities law. These shares may not be sold,
transferred or assigned in the absence of an effective
registration statement for these shares under the Act or an
opinion of the Corporation's counsel that registration is not
required under the Act."
Section 3.09. INVESTMENT BANKING; BROKERAGE FEES. WWWX has not incurred
nor has it become liable for any broker's or finder's fee, banking fees or
similar compensation relating to or in connection with the transactions
contemplated hereby.
Section 3.10. PROHIBITED TRANSACTIONS. WWWX has no plan or intention to
liquidate RQ; to merge RQ into another corporation; to cause RQ to sell or
otherwise dispose of any of its assets, except for dispositions made in the
ordinary course of business; or to sell or otherwise dispose of any of the RQ
Shares. WWWX has no plan or intention to reacquire any of the WWWX Stock.
Section 3.11. INVESTMENT COMPANY. WWWX is not an investment company as
defined in Sections 368(a)(2)(F)(iii) and 368(a)(2)(F)(iv) of the Code.
Section 3.12. CAPITALIZATION OF WWWX. As of the Closing, and after
giving effect to the transactions contemplated hereby, the authorized capital
stock of WWWX will consist only of 100,000,000 shares of common stock, par value
$.00l per share, of WWWX of which 36,651,137 shares will be issued and
outstanding and 10,000,000 shares of preferred stock, par value $.0l per share,
of WWWX of which no shares will be issued and outstanding. Except as listed in
SECTION 3.12 of the Disclosure Schedule, WWWX has neither issued nor agreed to
issue, and is not obligated to issue, nor are there, any outstanding warrants,
options or other rights to purchase or acquire any shares of its capital stock,
nor any outstanding securities convertible into such shares or any warrants,
options or other rights to acquire any such convertible securities. As of the
Closing, and after giving effect to the transactions contemplated hereby, all of
the
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WWWX Stock will have been duly and validly authorized and issued and will be
fully paid and nonassessable and will have been delivered in compliance with
applicable federal and state securities laws and not subject to any preemptive
rights. Except as listed in Section 3.12 of the Disclosure Schedule, there are
no pre-emptive rights, rights of first refusal, put or call rights or
obligations or anti-dilution rights with respect to the issuance, sale or
redemption of any of WWWX's capital stock. Except as listed in Section 3.12 of
the Disclosure Schedule, there are no rights to have WWWX's common stock
registered for sale to the public in connection with the laws of any
jurisdiction, and there are no agreements relating to the voting of WWWX's
voting securities or restrictions on the transfer of WWWX's common stock.
Section 3.13. ABSENCE OF CERTAIN DEVELOPMENTS. Since the date of the
WWWX balance sheet provided to NAI, WWWX has conducted its business only in the
ordinary course consistent with past practice and, except as set forth in
Section 3.13 of the Disclosure Schedule, there has not been any event or
development that has had or is likely to have a Material Adverse Effect on WWWX.
Section 3.14. TAX MATTERS. WWWX has filed all federal, state, local and
foreign tax returns required to be filed by it through the date hereof, and has
paid or caused to be paid all federal, state, local, foreign and other taxes,
including without limitation income taxes, estimated taxes, excise taxes, sales
taxes, use taxes, gross receipts taxes, franchise taxes, employment and
payroll-related taxes, withholding taxes, stamp taxes, transfer taxes and
property taxes, whether or not measured in whole or in part by net income
(collectively, "WWWX TAXES"), required to be paid by WWWX through the date
hereof whether disputed or not, except WWWX Taxes which have not yet accrued or
otherwise become due, for which adequate provision has been made in the
pertinent financial statements or which the failure to pay would not have a
Material Adverse Effect on WWWX. The provisions for WWWX Taxes on the financial
statements of WWWX are sufficient as of its date for the payment of all accrued
and unpaid WWWX Taxes of any nature of WWWX, and any applicable WWWX Taxes owing
by WWWX to any jurisdiction, whether or not assessed or disputed. All WWWX Taxes
and other assessments and levies which WWWX is required to withhold or collect
have been withheld and collected and have been paid over to the proper
governmental authorities. Neither the IRS nor any other governmental authority
is now asserting or threatening to assert against WWWX any deficiency or claim
for additional WWWX Taxes. There has not been any audit of any tax return filed
by WWWX. No waiver or agreement by WWWX is in force for the extension of time
for the assessment or payment of any WWWX Taxes.
Section 3.15. LITIGATION. Except as listed in Section 3.15 of the
Disclosure Schedule, there is no litigation, claim, complaint, action, suit or
governmental or administrative proceeding or investigation pending or threatened
against WWWX or affecting WWWX's properties or assets, or, as to matters related
to WWWX, against any officer, director, shareholder or key employee of WWWX, nor
has there occurred any event nor does there exist any condition on the basis of
which any such claim may be asserted.
Section 3.16. DISCLOSURE. None of the representations and warranties of
WWWX and none of the materials provided to NAI in connection with this Agreement
contain or will contain any untrue statement of a material fact or omit or will
omit or misstate a material fact necessary in order to make the statements
contained herein and therein not misleading. WWWX knows no
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fact which resulted, or which, in its reasonable judgment, will result in a
material change in the business, operations or assets of WWWX which is not set
forth in this Agreement.
Section 3.17. NO SECURITES LAW VIOLATIONS. To its knowledge, neither
WWWX nor anyone acting on its behalf has offered securities of WWWX for sale to,
or solicited any offers to the buy the same from, or sold securities of WWWX to,
any person or organization, in any case so as to subject WWWX, its promoter,
directors or officers to any liability under the Securities Act or any state
securities or "blue sky" law, or any other applicable laws.
ARTICLE IV. CONDITIONS.
Section 4.01. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES. The
obligation of WWWX and NAI to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, prior to or at the Closing, of the
following conditions precedent:
(a) NO ACTIONS OR PROCEEDINGS. No action or proceeding by or
before any court, administrative body or governmental agency shall have been
instituted or threatened which seeks to enjoin, restrain or prohibit, or might
result in damages in respect of, this Agreement or any other Transaction
Document or the complete consummation of the transactions contemplated by this
Agreement or any other Transaction Document, and which would in the reasonable
judgment of WWWX or NAI make it inadvisable to consummate such transactions. No
law or regulation shall be in effect and no court order shall have been entered
in any action or proceeding instituted by any party which enjoins, restrains or
prohibits this Agreement or any other Transaction Document or the complete
consummation of the transactions contemplated by this Agreement or any other
Transaction Document.
(b) NAI DIRECT SHAREHOLDERS AGREEMENT. The NAI Direct
Shareholders' Agreement must have been duly executed and delivered by the
parties thereto.
(c) RQ SHAREHOLDERS AGREEMENT. The RQ Shareholders' Agreement
must have been duly executed and delivered by the parties thereto.
(d) EMPLOYMENT AGREEMENTS. The Employment Agreements between
(i) Gerald C. Finn and NAI Direct and (ii) Jeffrey Finn and NAI Direct must have
been duly executed and delivered by the parties thereto.
(e) ESCROW AGREEMENT. The Escrow Agreement must have been duly
executed and delivered by the parties thereto.
(f) FORMATION OF NAI DIRECT. NAI Direct must have been formed
as a Delaware corporation consistent with the terms of the Shareholders
Agreement
Section 4.02. CONDITIONS TO THE OBLIGATIONS OF WWWX. The obligation of
WWWX to consummate the transactions contemplated by this Agreement are subject
to the fulfillment, prior to or at the Closing, of the following conditions
precedent:
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(a) REPRESENTATIONS, WARRANTIES; COVENANTS Each of the
representations and warranties of NAI made pursuant to this Agreement and any
other Transaction Document shall be true and correct in all material respects on
and as of the Closing Date (it being understood that representations and
warranties made "as of the date hereof" shall also be deemed to have been made
as of the Closing Date); NAI shall, on or before the Closing Date, have
performed and satisfied all of its agreements set forth herein or therein which
by the terms hereof or thereof are to be performed and satisfied on or before
the Closing Date, including without limitation, delivery of the RQ Shares, and
NAI shall have delivered to WWWX a certificate signed by it and dated as of the
Closing Date certifying to the foregoing effect.
(b) NAI SECRETARY'S CERTIFICATE. WWWX has received a
certificate of the secretary of NAI, attaching (a) the certificate of
incorporation of NAI, (b) the bylaws of NAI, (c) resolutions of the board of
directors of NAI authorizing the transactions contemplated by this Agreement and
the other Transaction Documents (d) an incumbency certificate of NAI, (e) a good
standing certificate for NAI from the Secretary of the State of Delaware and (f)
a New Jersey State foreign qualification certificate.
(c) RQ SECRETARY'S CERTIFICATE. WWWX has received a
certificate of the secretary of RQ, attaching (i) the certificate of
incorporation of RQ, (b) the bylaws of RQ, (c) resolutions of the board of
directors of RQ authorizing the transactions contemplated by this Agreement and
the other Transaction Documents, (d) an incumbency certificate of RQ, and(e) a
good standing certificate for RQ from the Secretary of the State of New Jersey.
(d) DUE DILIGENCE. WWWX shall have completed, to its
reasonable satisfaction, the due diligence of RQ on or before September 14,
1999.
Section 4.03. CONDITIONS TO THE OBLIGATIONS OF NAI. The obligations of
NAI to consummate the transactions contemplated by this Agreement are subject to
the fulfillment, prior to or at the Closing, of the following conditions
precedent:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the
representations and warranties of WWWX contained in this Agreement shall be true
and correct in all material respects on and as of the Closing Date, with the
same effect as though made on and as of the Closing Date (it being understood
that representations and warranties made "as of the date hereof" shall also be
deemed to have been made as of the Closing Date); WWWX shall, on or before the
Closing Date, have performed and satisfied all of its agreements set forth
herein which by the terms hereof are to be performed and satisfied by WWWX on or
before the Closing Date; and WWWX has delivered to NAI a certificate signed on
its behalf and dated as of the Closing Date certifying to the foregoing effect.
(a) (b) WWWX SECRETARY'S CERTIFICATE. NAI has received a
certificate of the secretary of WWWX, attaching (i) the certificate of
incorporation of WWWX , (b) the bylaws of WWWX, (c) resolutions of the board of
directors of WWWX authorizing the transactions contemplated by this Agreement
and the other Transaction Documents, (d) an incumbency certificate of WWWX, (e)
a good standing certificate for WWWX from the Secretary of the State of Delaware
and (f) such foreign qualification certificates as are necessary for WWWX to
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conduct its business as now conducted and as contemplated to be conducted after
the Closing Date.
ARTICLE V. NAI PIGGYBACK REGISTRATION RIGHTS.
Section 5.01. RIGHTS; PROCEDURE. If WWWX proposes to file a
registration statement or statements under the Securities Act (a "REGISTRATION
STATEMENT") for the public sale of equity of WWWX (other than in connection with
a merger or pursuant to Form S-4, Form S-8 or comparable registration statement)
and if any person other than those identified in Section 5.01 of the Disclosure
Schedule has the rights to register its shares of WWWX under such registration
statement; WWWX will give written notice by registered mail, at least 30 days
prior to the filing of each such Registration Statement, to NAI of its intention
to do so. If NAI notifies WWWX within 10 business days after receipt of any such
notice of its desire to sell the WWWX Stock (the "PIGGYBACK SHARES") in such
proposed Registration Statement, WWWX will afford NAI the opportunity to have
any Piggyback Shares owned by NAI registered under such Registration Statement
at no cost to NAI except for any incremental underwriter's commission incurred
in connection with the Piggyback Shares; PROVIDED, HOWEVER, that in the case of
an underwritten offering, if the managing underwriter notifies NAI or WWWX that
the inclusion in the Registration Statement of any portion of the Piggyback
Shares would have an adverse effect on such underwritten offering, then the
managing underwriter may limit the number of Piggyback Shares to be included in
such Registration Statement only to the extent necessary to avoid such adverse
effect (an "UNDERWRITER'S CUTBACK"). Such limit will apply pro rata among
selling shareholders other than those identified in Section 5.01 of the
Disclosure Schedule based upon the number of Piggyback Shares such selling
shareholders have requested to be so included. Notwithstanding the provisions of
this Section, NAI waives its right to have the WWWX Stock registered on any
WWWX's Registration Statement filed on or before January 1, 2000.
Section 5.02. WWWX RIGHT TO WITHDRAW REGISTRATION STATEMENT.
Notwithstanding the provisions of Section 5.01, WWWX shall have the right at any
time after it shall have given written notice pursuant to this Section
(irrespective of whether a written request for inclusion of any such Piggyback
Shares shall have been made) to elect not to file any such proposed Registration
Statement or to withdraw the same after the filing but prior to the effective
date thereof.
ARTICLE VI. SURVIVAL; INDEMNIFICATION.
Section 6.01. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC. All
representations, warranties, agreements and obligations of either party herein,
in any Transaction Document, in the Disclosure Schedule or in any certificate
delivered by any party incident to the transactions contemplated hereby or
thereby are material and may be relied upon by the other party and shall survive
the Closing for a period of one (1) year from the Closing Date regardless of any
investigation by or knowledge of the parties and shall not merge into the
performance of any obligation by any party hereto, all as subject to the
provisions of this ARTICLE VI.
Section 6.02. INDEMNIFICATION. Each party agrees to indemnify and hold
harmless the other party, its officers, directors, employees and agents
(individually, an "INDEMNIFIED PARTY"
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and collectively, the "INDEMNIFIED PARTIES") from and against and in respect of
all losses, liabilities, obligations, damages, deficiencies, actions, suits,
proceedings, demands, assessments, orders, judgments, fines, penalties, costs
and expenses (including the reasonable fees, disbursements and expenses of
attorneys, accountants and consultants) of any kind or nature whatsoever
(whether or not arising out of third-party claims and including all amounts paid
in investigation, defense or settlement of the foregoing) sustained, suffered or
incurred by or made against any Indemnified Party (a "LOSS" or "LOSSES") arising
out of, based upon or in connection with:
(a) any breach of any representation or warranty made in this
Agreement or any other Transaction Document or in any schedule, exhibit,
certificate, financial statement or any other Transaction Document, agreement or
other instrument delivered under or in connection with this Agreement, or by
reason of any claim, action or proceeding asserted or instituted arising out of
any matter or thing covered by any such representations or warranties; and
(b) any breach of any other agreement made in this Agreement
or any other Transaction Document or in any schedule, exhibit, certificate,
financial statement, agreement or other instrument delivered under or in
connection with this Agreement or any other Transaction Document, or by reason
of any claim, action or proceeding asserted or instituted arising out of any
matter or thing covered by any such covenant or agreement.
ARTICLE VII. MISCELLANEOUS.
Section 7.01. LAW GOVERNING. THIS AGREEMENT SHALL BE CONSTRUED UNDER
AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARDS TO ITS
CONFLICTS OF LAW PRINCIPLES.
Section 7.02. NOTICES. Any notice, request, demand or other
communication required or permitted hereunder shall be in writing and will be
deemed to have been given upon receipt, or if delivered or sent by facsimile
transmission, upon confirmation of transmission, or if sent by overnight
courier, the second day after deposit, or if by certified or registered mail,
return receipt requested, postage prepaid, 3 days after deposit in the United
States mail, as follows:
TO WWWX: WorldWide Web NetworX Corporation
521 Fellowship Road, Suite 130
Mount Laurel, New Jersey 08045
Attn: President and CEO
Fax Number: (856) 914-0745
with a copy to: Allan M. Cohen, Esq.
General Counsel
Fax Number: (856) 914-0842
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TO NAI: New America Network, Inc.
P.O. Box 950
572 US Route 130
Hightstown, NJ 08520
Attn: Gerald C. Finn, Chairman and CEO
Fax Number: (609) 448-8126
with a copy to: Edward J. Finn, Esq.
General Counsel
Fax Number: (410) 884-4072
or to such other address of which any party may notify the other parties as
provided above.
Section 7.03. ENTIRE AGREEMENT. This Agreement and the agreements
specifically referenced in this Agreement herewith constitute the entire
agreement between the parties and incorporate all prior discussions,
negotiations and agreements.
Section 7.04. SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement may not be assigned by either party without the prior
written consent of the other party. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective successors, heirs,
permitted assigns and legal representatives.
Section 7.05. CAPTIONS AND GENDER. The captions in this Agreement are
for convenience only and shall not affect the construction or interpretation of
any term or provision hereof. The use in this Agreement of the masculine pronoun
in reference to a party hereto shall be deemed to include the feminine or neuter
pronoun, as the context may require.
Section 7.06. EXECUTION IN COUNTERPARTS. For the convenience of the
Parties and to facilitate execution, this Agreement may be executed in two
counterparts, each of which shall be deemed an original, but together which
shall constitute one and the same document.
Section 7.07. CERTAIN REMEDIES; SEVERABILITY. It is specifically
understood and agreed that any breach of this Agreement by either of the Parties
hereto will result in irreparable injury to the other that the remedy at law
alone will be an inadequate remedy for such breach and that in addition to any
other remedy it may have, the aggrieved Party shall be entitled to enforce the
specific performance of this Agreement by the breaching Party and to seek both
temporary and permanent injunctive relief, without the necessity of proving
actual damages, but without limitation of its rights to recover such damages. In
case any of the provisions contained in this Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any respect, any such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had been limited or modified (consistent with
its general intent) to the extent necessary to make it valid, legal and
enforceable, or if it shall not be possible to so limit or modify such invalid,
illegal or unenforceable provision or part of a provision, this Agreement shall
be
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construed as if such invalid, illegal or unenforceable provision or part of a
provision had never been contained in this Agreement.
Section 7.08. AMENDMENTS, WAIVERS. This Agreement may not be amended or
modified except by a writing duly and validly executed by the Parties hereto.
Either party hereto may waive any covenant or condition intended for its benefit
in its discretion, but delay on the part of any Party in exercising any right,
power or privilege hereunder shall not operate as a waiver thereof, nor shall an
waiver on the part of either party of any such right, power or privilege,
preclude any further exercise thereof or the exercise of any other such right,
power or privilege.
Section 7.09. FURTHER ASSURANCES. In addition to the actions, contracts
and other agreements and documents specifically required to be taken or
delivered pursuant to this Agreement, each of the Parties hereto shall execute
such contracts and other agreements and documents and other papers and take such
further actions as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby.
Section 7.10. PRESS RELEASES. Neither Party shall make any public
statements or issue any press release concerning this agreement, the transaction
contemplated herein, or the other agreements executed simultaneously herewith
without the review and consent of the other.
ARTICLE VIII. CONFIDENTIALITY.
Section 8.01. DEFINED. As used in this ARTICLE 8, "CONFIDENTIAL
INFORMATION" shall mean any and all technical and non-technical information
provided by either Party to the other, including but not limited to (a) patent
and patent applications, (b) trade secret, and (c) proprietary information
ideas, media, techniques, sketches, drawings, works of authorship, models,
inventions, know-how, processes, apparatuses, equipment, algorithms, software
programs, software source documents, and formulae related to the current,
future, and proposed products and services of each of the Parties, and
including, without limitation, their respective information concerning research,
experimental work, development, design details and specifications, engineering,
financial information, procurements requirements, purchasing, manufacturing,
customer lists, investor, employees, business and contractual relationships,
business forecasts, sales and merchandising, marketing plans and information the
disclosing Party provides regarding third parties.
Section 8.02. IDENTIFICATION AS CONFIDENTIAL. If the Confidential
Information is embodied in tangible materials (including without limitation,
software, hardware, drawings, graphs, charts, disks, tapes, prototypes and
samples), it shall be labeled as "Confidential" or bear a similar legend. If the
Confidential Information is disclosed orally or visually, it shall be identified
as confidential at the time of disclosure and may (but is not required to) be
confirmed in a writing to the receiving Party within 10 days of such disclosure.
Section 8.03. MAINTAIN CONFIDENTIALITY. Each Party agrees that at all
times and notwithstanding any termination or expiration of this Agreement it
will hold in strict confidence and not disclose to any third party Confidential
Information of the other, except as approved in writing by the other Party to
this Agreement, and will use the Confidential Information for no purpose other
than evaluating or pursuing a business relationship with the other Party to this
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Agreement. Each Party shall only permit access to Confidential Information of
the other Party to those of its employees or authorized representatives having a
need to know and who have signed confidentiality agreements or are otherwise
bound by confidentiality obligations at least as restrictive as those contained
herein.
Section 8.04. UNAUTHORIZED DISCLOSURE. Each Party shall immediately
notify the other upon discovery of any loss or unauthorized disclosure of the
Confidential Information of the other Party.
Section 8.05. EXCEPTIONS. Each Party's obligations under this agreement
with respect to any portion of the other Party's Confidential Information shall
terminate when the Party to whom Confidential Information was disclosed (the
"Recipient") can document that: (a) it was in the public domain at the time it
was communicated to the Recipient by the other Party; (b) it entered the public
domain subsequent to the time it was communicated to the Recipient by the other
Party through no fault of the Recipient; (c) it was in the Recipient's
possession free of any obligation of confidence at the time it was communicated
to the Recipient by the other Party; (d) it was rightfully communicated to the
Recipient free of any obligation of confidence subsequent to the time it was
communicated to the Recipient by the other Party; (e) it was developed by
employees or agents of the Recipient independently of and without reference to
any information communicated to the Recipient by the other Party; (f) it was
communicated by the other Party to an unaffiliated third party free of any
obligation of confidence; or (g) the communication was in response to a valid
order by a court or other governmental body, was otherwise required by law, or
was necessary to establish the rights of either Party under this Agreement.
Section 8.06. TERMINATION. The obligations of the Parties under this
ARTICLE 8 shall terminate 2 years after the date of this Agreement or upon the
date of the termination of the RQ Shareholders' Agreement, if earlier. The
Recipient's obligations under this ARTICLE 8 shall be binding upon the
Recipient's heirs, successors and assigns.
Section 8.07 EQUITABLE REMEDIES. Each Party acknowledges that its
breach of the provisions of this ARTICLE 8 will cause irreparable damage and
hereby agrees that the other Party shall be entitled to seek injunctive relief
under this Agreement, as well as such further relief as may be granted by a
court of competent jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed a date set forth above.
NEW AMERICA NETWORK, INC.
By: //S// GERALD C. FINN
---------------------------
Name: Gerald C. Finn
Title: Chairman and CEO
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WORLDWIDE WEB NETWORX
CORPORATION
By: //S// ROBERT D. KOHN
----------------------------
Name: Robert D. Kohn
Title: President and CEO
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Exhibit 10.32
[EXECUTION COPY]
NAI DIRECT, INC. SHAREHOLDERS' AGREEMENT
Shareholders' Agreement made this 23rd day of September, 1999, by and
among Real Quest, Inc., a New Jersey corporation ("RQ"), Gerald C. Finn, Jeffrey
Finn, any other individual identified as a Shareholder on the signature pages
hereto (each a "SHAREHOLDER", and collectively the "SHAREHOLDERS"), and NAI
Direct, Inc., a Delaware corporation ("NAI DIRECT").
BACKGROUND
NAI Direct is engaged or to be engaged in the business of developing,
owning and operating a commercial real estate internet web site. RQ owns 80% of
the common stock in NAI Direct. The Shareholders own, or have a contractual
right to obtain, common stock in NAI Direct. RQ and Shareholders are sometimes
referred to herein collectively as the "PARTIES".
New America Network, Inc. ("NAI") is a Delaware Corporation engaged in
the business of providing commercial real estate services. WorldWide Web
NetworX, Inc. ("WWWX") is a Delaware Corporation engaged in the business of
developing internet applications. Simultaneously with the execution of this
Agreement, NAI and WWWX have entered into a Share Exchange Agreement pursuant to
which WWWX is acquiring 80% of the outstanding equity interest in RQ from NAI in
exchange for 1,500,000 shares of WWWX common stock, a Real Quest, Inc.
Shareholders' Agreement (the "REAL QUEST SHAREHOLDERS' AGREEMENT") and various
other related documents.
1. OWNERSHIP OF SHARES
1.1 NAI Direct will issue to RQ common stock representing no less than 80%
of the equity interest in NAI Direct; NAI Direct will issue to
officers and/or employees of NAI Direct, or others, common stock
representing an aggregate of up to 20% of the equity interest in NAI
Direct.
Notwithstanding the provisions of SECTION 6.6, NAI Direct may grant,
sell or offer to sell shares of its common stock or rights to purchase
shares of its common stock to such employees or others as designated
by the Compensation Committee of the Board of Directors in an
aggregate amount, including the shares held by the Shareholders listed
above, not to exceed 20% of the equity interest in NAI Direct. The
initial members of the Compensation Committee of the Board of
Directors will be Gerald C. Finn and Jeffrey Finn.
1.2 The shareholders of NAI Direct may be diluted by future equity
investors at the discretion of NAI Direct's then current Board of
Directors.
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2. TRANSFER OF SHARES
2.1 Except as provided herein, for a period of 18 months from the date of
this Agreement, no Party to this Agreement may sell any portion of its
equity interest in NAI Direct without the written consent of the other
Parties.
2.2 Any Shareholder may transfer shares to any spouse or issue of a
Shareholder or a trust, corporation, limited liability company or
partnership controlled by, or for the benefit of, such Shareholder or
any spouse or issue of a Shareholder, subject to SECTION 7.8; PROVIDED
THAT the transferee will be subject to all the terms and conditions of
this Agreement in the same manner and to the same extent as the
transferring Shareholder had the transfer not occurred. By means of
example only, and of no limiting effect, if a Shareholder who had
transferred shares under this SECTION 2.2 subsequently leaves the
employ of NAI or NAI Direct, the repurchase rights set forth in
SECTIONS 3.1 AND 3.2 shall be applicable to the transferred shares.
2.3 In the event any Shareholder (a "SELLING SHAREHOLDER") receives a bona
fide offer to purchase his or her shares from an independent third
party, Selling Shareholder shall give NAI Direct notice of such an
offer and provide NAI Direct a copy thereof. NAI Direct shall have the
option to elect within 10 days following such notice to purchase
Selling Shareholder's shares under the same terms and conditions as
the offer. In the event NAI Direct does not exercise its option to
purchase, it shall give all other Shareholders notice of the offer,
and the other Shareholders who are officers or employees of NAI Direct
shall have the option to purchase Selling Shareholder's shares under
the same terms and conditions as the offer, such option to be
exercised within 10 days following the expiration of NAI Direct's
option period. If Selling Shareholder's shares are purchased by more
than one Shareholder, they may be divided among the purchasers as the
purchasers may agree, or absent any agreement to the contrary, in
proportion to each purchaser's respective interest in NAI Direct prior
to such purchase from Selling Shareholder.
2.4 In the event RQ receives an offer for all or substantially all of its
shares in NAI Direct, RQ shall give prompt notice to Shareholders of
such offer and the terms thereof, and shall provide Shareholders with
a copy of any such offer. Each Shareholder shall have the option to
give notice (a "TAG-ALONG NOTICE"), not later than 10 days prior to
the closing of the sale by RQ pursuant to which the Shareholders, or
any of them, may require RQ to give notice to the purchaser that as
part of the same transaction and as a condition thereto, the
Shareholders' shares shall be purchased for the same consideration and
otherwise on the same terms and conditions upon which RQ will sell its
shares to purchaser. If the purchaser does not wish to purchase a
greater interest in NAI Direct than contained in its offer to RQ, then
such purchaser must purchase such interest on a
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pro rata basis in relation to each Shareholder's interest in NAI
Direct from RQ and the Shareholders sending a Tag-Along Notice. In the
event purchaser does not purchase the Shareholders' shares as
identified in the Tag-Along Notice(s) in accordance with this SECTION
2.4, any purported sale by RQ of its NAI Direct shares shall be
voidable at the sole option of the Shareholder(s) sending a Tag-Along
Notice.
2.5 Nothing contained herein shall prevent a Shareholder from selling or
otherwise transferring shares to another Shareholder who is an officer
or employee of NAI Direct, free and clear of the restrictions set
forth in this ARTICLE 2, but subject to the provisions of SECTION 7.9.
3. REPURCHASE OF SHARES BY NAI DIRECT
3.1 In the event a Group B Shareholder is no longer employed by NAI or NAI
Direct, NAI Direct shall have the option for 30 days following the
Group B Shareholder's last day of employment by NAI or NAI Direct to
elect to repurchase the Group B Shareholder's shares for $.10 per
share if the repurchase occurs before October 1, 2002, or for $.15 per
share if the repurchase occurs between October 1, 2002 and September
30, 2004. The option granted by this SECTION 3.1 will not apply after
September 30, 2004. "GROUP A SHAREHOLDERS" are all shareholders other
than RQ who own 2% or more of the equity interest in NAI Direct as of
October 31, 1999. All shareholders other than RQ who are not Group A
Shareholders are "GROUP B SHAREHOLDERS".
3.2 In the event NAI Direct does not exercise its option to repurchase the
shares pursuant to SECTION 3.1, the Group A Shareholder(s) who remain
employee(s) of NAI Direct shall have an option to purchase the shares
at the price per share set forth in SECTION 3.1, provided that any
shares so purchased shall be purchased subject to the terms of this
Shareholders' Agreement. If the shares are purchased by more than one
person, they may be divided among such purchasers as the purchasers
may agree, or absent any agreement to the contrary, in proportion to
each purchaser's respective interest in NAI Direct prior to such
purchase.
3.3 If there is a default and subsequent termination under the Real Quest
Shareholders' Agreement, the Board of Directors of NAI Direct will
authorize NAI Direct to repurchase all Shareholders' shares at par
value and all Shareholders hereby agree to tender their shares to NAI
Direct for that amount.
3.4 In the event of the death of any Shareholder, upon the request of the
deceased Shareholder's estate or personal representative, NAI Direct
shall repurchase the deceased Shareholder's shares from the
Shareholder's estate at their fair market value as determined in the
reasonable discretion of the Board of Directors of NAI Direct within
90 days of such Shareholder's death, unless the provisions of SECTION
3.7 apply, NAI Direct shall not be required to repurchase a deceased
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Shareholder's shares if doing so would, in the reasonable judgement of
the Board of Directors, jeopardize the financial integrity or
successful operation of NAI Direct. However, NAI Direct shall, in any
case, purchase such shares necessary to provide the deceased
Shareholder's estate sufficient funds to pay any estate tax associated
with the deceased Shareholder's shares. The amount of the purchase
price of either all of the deceased Shareholder's shares or the
portion purchased to pay estate tax is called the "BUYOUT PRICE".
3.5 NAI Direct may purchase life insurance on its officers and employees
in amounts sufficient to provide for the repurchase called for by this
ARTICLE 3 or in lesser amount as may be reasonably commercially
available. If NAI Direct does carry key employee or other life
insurance on any officer or employee, the proceeds of such insurance
shall be used first for the repurchase called for by this ARTICLE 3.
3.6 NAI Direct shall pay to the decedent's estate proceeds received from
any life insurance policy on the life of the decedent in payment of
the Buyout Price. The total amount of any insurance proceeds to be
paid to the decedent's estate pursuant to this SECTION 3.6 shall not
exceed the Buyout Price for such shares.
(a) In the event that the proceeds of life insurance policies
shall be insufficient to pay the Buyout Price for such shares, NAI
Direct shall deliver to the legal representative of the decedent a
Note in the amount of the Buyout Price less any proceeds of life
insurance policies paid pursuant to subparagraph (a) and other cash
payment by NAI Direct, and payable to the decedent's estate in equal
consecutive monthly installments over as short a period as the Board
of Directors may reasonably determine.
(b) The term "NOTE" shall mean a negotiable promissory note in
the principal amount of the Buyout Price les any amount paid in cash.
The principal amount payable will bear interest at the minimum rate
necessary to avoid the imputation of interest under the Internal
Revenue Code of 1986, as amended, and any regulations thereunder. The
Note shall be paid in equal consecutive monthly installments of
principal and interest during the term of the Note, beginning no later
than 30 days after the date of repurchase. The Note shall provide that
the unpaid balance of the Note shall become due and payable
immediately in the event of (a) the sale of all or substantially all
of the assets of NAI Direct; (b) the dissolution or liquidation of NAI
Direct; (c) the filing of a petition in bankruptcy or an assignment
for the benefit of creditors with respect to NAI Direct, or the
appointment of a receiver, custodian, or other trustee or fiduciary to
take charge of all or any part of the assets of NAI Direct; and (d)
the sale by the remaining shareholders of more than 50% of the shares
which they own collectively as of the date of death to any person or
entity other than NAI Direct. The Note shall further provide that in
the event of a default thereunder, the entire unpaid amount shall be
due and payable at the election of the holder of the Note on 10 days
prior written notice, unless such default is cured within such 10 day
period. NAI Direct may prepay any portion of the amount remaining on
the Note at any time prior to
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the maturity of the Note, without penalty. Upon payment, the Note
shall be returned to NAI Direct marked "Paid in Full" by the payee.
3.7 In the event of the death of any Shareholder and there is a
recognized, publicly-traded market for the Shareholder's shares in
which the deceased Shareholder's shares may be sold, NAI Direct will
have the right but no obligation, within 90 days of Shareholder's
death, to repurchase any portion of the deceased Shareholder's shares
at the market price. If NAI Direct does not elect to repurchase the
deceased Shareholder's shares or any portion thereof, the shares may
be sold in the public market, free of any restrictions under this
Agreement.
4. PROPRIETARY INFORMATION
4.1 The Parties to this Agreement have been or may be exposed to patents,
software, trade secrets, financial information, vendor and supplier
lists, personnel policies, methods of doing business, and other
confidential business information (the "PROPRIETARY INFORMATION").
Each Party agrees to keep such Proprietary Information confidential.
Each Party agrees not to use or disclose such Proprietary Information,
except in furtherance of the business of WWWX, NAI, RQ or NAI Direct.
The Parties acknowledge that improper disclosure of use will cause NAI
Direct or the other Shareholder(s) irreparable harm, and that the
appropriate Parties are entitled to injunctive relief for any breach,
as well as an action for monetary damages for any loss.
5. RESTRICTIVE COVENANT
5.1 During the term of this Agreement and for a period of 2 years after a
Party ceases to be a Shareholder such Party agrees to refrain from
becoming a Shareholder in, or consultant, employee, officer, director,
owner, or partner of, or in any other manner becoming connected with,
a business that competes with the business of NAI Direct. Nothing
contained herein shall prevent any Party from engaging or
participating in any internet based commercial real estate enterprise
so long as such enterprise does not compete with NAI Direct in any of
its principal activities
5.2 This covenant may be assigned by a Party to any entity in which the
stock and/or assets of NAI Direct are transferred or to which there is
a merger of NAI Direct or to any other successor corporation.
5.3 The Parties acknowledge that a violation of this covenant will cause
NAI Direct and the other Parties irreparable harm, and that NAI Direct
is entitled to injunctive relief for any breach, as well as an action
for monetary damages for any loss.
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5.4 In the event of a violation of the terms of ARTICLES 4 OR 5 of this
Agreement, the violating parties shall be liable to the damaged party
for reasonable attorneys fees, expert fees and court costs.
6. MANAGEMENT OF NAI DIRECT
6.1 The Board of Directors of NAI Direct will consist of five Directors,
with two Directors to be designated by NAI and two Directors to be
designated by WWWX. The fifth Director will be selected by agreement
of NAI and WWWX and will serve until his or her successor is elected
and qualified.
6.2 The Board of Directors of NAI Direct shall meet no less frequently
than every two months or as may be determined by the Board or
reflected in NAI Direct's By-laws.
6.3 Gerald C. Finn will be the initial Chief Executive Officer of NAI
Direct; Jeffrey Finn will be the initial President of NAI Direct.
Other initial officers will be elected by the Board of Directors of
NAI Direct.
6.4 Except as otherwise contemplated by or discussed in this Agreement,
the following actions by NAI Direct will require approval of the Board
of Directors of NAI Direct:
(1) Amend, alter or repeal any of the provisions of the Certificate
of Incorporation or the By-Laws of NAI Direct;
(2) Authorize or create, or increase the number of authorized shares
of any stock of any class, or any security convertible into stock
of a class;
(3) Adopt and implement any strategic and operating plans that
materially change the business of NAI Direct or that involve the
entry of NAI Direct into a business not currently conducted by
NAI Direct, except as contemplated by this Agreement;
(4) Make or commit any capital expenditures of amounts exceeding in
the aggregate 20% of NAI Direct's net worth;
(5) Reorganize, recapitalize, register its stock under the U.S.
Federal securities laws, enter, offer or sell, convey, or
otherwise dispose of or encumber all or substantially all of its
property or business or
(6) merge into or consolidate with any other corporation (other than
a wholly owned subsidiary corporation) or effect any transaction
or series of related transactions in which more than 50% of the
voting power of NAI Direct is disposed of;
(7) Redeem, purchase or otherwise acquire, directly or indirectly any
shares of NAI Direct's capital stock or any option, warrant or
other
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right to purchase or acquire any such shares except as provided
in ARTICLE 2 OR 3;
(8) Grant or issue any stock options or other convertible securities
at below fair market value on the date of grant except as
provided in SECTION 1.1;
(9) Declare or pay any dividend or other distribution (whether in
cash, stock or other property) with respect to NAI Direct's
capital stock;
(10) Except in the ordinary course of NAI Direct's business,
voluntarily sell, transfer, surrender, abandon or dispose of any
of its assets or property rights (tangible or intangible) valued
in excess of $250,000;
(11) Except in the ordinary course of NAI Direct's business, grant or
make any mortgage or pledge or subject NAI Direct or any of its
properties or assets to any lien, charge or encumbrance of any
kind, except liens for taxes not currently due;
(12) Create, incur, or assume any liability or indebtedness in an
aggregate amount exceeding 20% of NAI Direct's net worth;
(13) Guaranty the obligation of any third party;
(14) Grant any increase in the compensation payable or to become
payable to directors or officers (including, without limitation,
any such increase pursuant to any bonus, pension, profit-sharing,
incentive option or other plan or commitment) that is 20% greater
than the prior year;
(15) Alter the manner of keeping its books, accounts or records, or
change in any manner the accounting practices therein reflected;
(16) Enter into any commitment or transaction other than in the
ordinary course of business valued in excess of $250,000;
Approval of any of the actions listed in items 1, 2, 3, 5, 6, 7, 9, 10,
or 14 will require the approval of at least 3/4 of the Directors of NAI
Direct.
Due to the relationship of NAI Direct with NAI and WWWX, NAI and WWWX
each are entitled to reasonable access to all books and records of NAI
Direct.
7. MISCELLANEOUS
7.1 RESTRICTION ON NAI DIRECT SHARES. The certificates of stock of NAI
Direct issued to the Parties shall bear the following endorsement:
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"The shares of stock represented by this certificate are
subject to all of the terms of a shareholders agreement dated
the 23rd day of September 1999 , a copy of which is on file at
the office of the Corporation.
The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the `ACT') or
any applicable state securities law. These shares may not be
sold, transferred or assigned in the absence of an effective
registration statement for these shares under the Act or an
opinion of the Corporation's counsel that registration is
not required under the Act."
7.2 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF DELAWARE. THE PARTIES AGREE TO WAIVE
A JURY TRIAL IN ANY PROCEEDING BROUGHT TO ENFORCE ANY TERMS OF THIS
AGREEMENT.
7.3 SURVIVAL. Nothing contained in this SECTION 7.3 shall affect or impair
any rights or obligations arising prior to the time of termination of
this Agreement or which may arise by an event causing the termination
of this Agreement. The covenants contained in ARTICLES 4 AND 5 above
shall survive the termination of this Agreement for 2 years.
7.4 NOTICE. Any notice or other communication shall be in writing and
shall be deemed effective:
(1) Upon personal delivery, if delivered by hand and followed by
notice by mail of facsimile transmission;
(2) Three (3) days after deposit in the United States mail by
certified or registered mail, return receipt requested, postage
prepaid;
(3) The date of delivery by Federal Express or other nationally
recognized courier service and shall be addressed to such Party's
address shown on such Party's signature page.
7.5 AMENDMENT. This agreement may only be amended by an instrument in
writing signed by the RQ and the Shareholders holding not less than
75% of the remaining shares.
7.6 SEVERABILITY. If any provision of this Agreement or the application
thereof to any person or circumstances shall for any reason or to any
extent be invalid or unenforceable, the remainder of this Agreement
and the application of that provision to other persons or
circumstances shall not be affected, but rather, shall be enforced to
the extent permitted by law.
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7.7 ENTIRE AGREEMENT. This agreement constitutes the entire agreement
between the Parties with respect to the subject matter hereof and
incorporates all prior discussions, negotiations and agreements.
7.8 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this
Agreement may not be assigned by any Shareholder without the prior
written consent of NAI Direct or RQ. This Agreement shall be binding
upon and inured to the benefit of the parties hereto, their respective
successors, heirs, permitted assigns and legal representatives. In the
event of a transfer of the shares of stock in accordance with this
Agreement, the transferring Shareholder acknowledges that the transfer
shall not be effective until such time as the purchasing party
acknowledges that it shall be bound by the terms and conditions of
this Agreement.
7.9 CONDITIONS OF SALE. In the event of a transfer of shares in accordance
with this Agreement, the selling Shareholder acknowledges that the
transfer shall not be effective until such time as the purchasing
party acknowledges that it shall be bound by the terms and conditions
of this Agreement.
7.10 EXECUTION BY SHAREHOLDERS. Agreement to be Bound. Each Shareholder
that executes and delivers to RQ and NAI Direct a signature page to
this Agreement after the date hereof and is identified as a
Shareholder on such signature page, which signature page shall be
dated its date of execution, shall (i) be deemed to be a Shareholder
for all purposes hereof as of the date such Shareholder executes and
delivers such signature page, and (ii) be deemed to have agreed to be
bound by all of the terms and provisions of this Agreement.
7.11 COUNTERPARTS. This Shareholders' Agreement may be executed in
counterparts, all of which taken together shall constitute one and the
same Shareholders' Agreement.
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IN WITNESS WHEREOF, the Parties hereto have set their hands as of the date first
above written.
REAL QUEST, INC.
BY: ___________________________
Name: Jeffrey Finn
Title: President and COO
NOTICE ADDRESS:
P. O. Box 950
572 US Route 130
Hightstown, NJ 08520
NAI DIRECT, INC.
BY: ____________________________
Name: Gerald C. Finn
Title: Chief Executive Officer
NOTICE ADDRESS:
P. O. Box 950
572 US Route 130
Hightstown, NJ 08520
SHAREHOLDERS:
BY: __________________________
Name: Gerald C. Finn
NOTICE ADDRESS:
P. O. Box 950
572 US Route 130
Hightstown, NJ 08520
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BY: __________________________
Name: Jeffrey Finn
NOTICE ADDRESS:
P. O. Box 950
572 US Route 130
Hightstown, NJ 08520
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EXHIBIT 10.33
[EXECUTION COPY]
REAL QUEST, INC. SHAREHOLDERS' AGREEMENT
Shareholders' Agreement made this 23rd day of September, 1999, by and
among WORLDWIDE WEB NETWORX CORPORATION, a Delaware corporation ("WWWX"), and
NEW AMERICA NETWORK, INC., a Delaware corporation ("NAI"), and REAL QUEST, INC.,
a New Jersey corporation ("RQ").
BACKGROUND
WWWX engages in the business of providing internet technology. NAI is
engaged in the business of providing commercial real estate services. NAI's
wholly-owned subsidiary, RQ, is engaged in the business of developing and
providing commercial real estate management and transaction tracking software.
The parties desire to enter into this Agreement governing the operations of RQ
and its subsidiary NAI Direct, Inc., a Delaware corporation ("NAI DIRECT") in
order to create vertical and horizontal internet portals for the commercial real
estate industry. RQ is sometimes referred to herein as the "COMPANY ". WWWX and
NAI are sometimes referred to herein collectively as the "PARTIES".
Simultaneously, with the execution of this Agreement, NAI and WWWX have
entered into a Share Exchange Agreement (the "EXCHANGE AGREEMENT") pursuant to
which WWWX is acquiring 80% of the outstanding equity interest in RQ from NAI in
exchange for 1,500,000 shares of WWWX Common Stock and RQ and the other
shareholders of NAI Direct, Inc. have entered into the NAI Direct, Inc.
Shareholders' Agreement. Upon closing under this Agreement and the Exchange
Agreement, WWWX and NAI will be the sole shareholders of RQ.
1. ORGANIZATION
1.1 The Parties agree to take such steps as are reasonably
necessary to cause RQ to change its domicile from the State of
New Jersey to the State of Delaware.
1.2 The Parties will cause RQ to form NAI Direct as a Delaware
corporation. Attached hereto as EXHIBIT 1.2 are copies of the
Articles of Incorporation and Bylaws of NAI Direct.
1.3 The corporate records of the Company, including financial
records, shall be kept in its offices.
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2. OWNERSHIP
2.1 Pursuant to the exchange of stock called for in the Exchange
Agreement, NAI will transfer 80% of the equity interest of RQ
to WWWX, and NAI will retain 20% of the equity interest of RQ.
2.2 RQ will initially own 80% of the equity interest in NAI
Direct; 20% of the equity interest in NAI Direct will
initially be available to NAI Direct for sale or delivery to
its officers, employees or others pursuant to the terms of the
NAI Direct Shareholders' Agreement, which may include current
officers, directors and employees of NAI or WWWX.
2.3 Subject to the terms hereof, including without limitation,
SECTION 3.3, the Parties may be diluted by future equity
investors at the discretion of RQ's then current Board of
Directors.
3. RESPONSIBILITIES
3.1 WWWX will provide or license internet e-commerce and asset
management software as listed on SCHEDULE 3.1 (the
"TECHNOLOGY"), or comparable technology, to NAI Direct in NAI
Direct's discretion. In addition, WWWX will use reasonable
efforts to develop or customize the Technology for application
to commercial real estate to be used by NAI Direct. A copy of
the form of License Agreement (the "WWWX LICENSE AGREEMENT")
is attached hereto as EXHIBIT 3.1.
3.2 WWWX will loan $1,000,000 to NAI Direct as required to meet
its working capital needs beginning on the Closing Date (as
defined in the Exchange Agreement.) At the time of Closing,
such funding will be deposited in a separate account in the
name of WWWX to be used only for NAI Direct. Disbursements
from that account, pursuant to the Loan Agreement, will be
made to NAI Direct on the authority of the President or CEO of
NAI Direct, or their designee, and the CFO of WWWX or his
designee. Such authority will be granted as long as the
subject disbursement is in accordance with the budgets adopted
by the Board of Directors of NAI Direct or is necessary for
actual expenses of NAI Direct which may vary not more than 20%
monthly and year-to-date from budgets approved by the Board of
Directors, without the additional approval by the Board of
Directors. A copy of the Loan Agreement (the "LOAN AGREEMENT")
is attached hereto as EXHIBIT 3.2.
3.3 In addition to its obligations under SECTION 3.2, within 18
months of the Closing Date, WWWX will provide or obtain
funding as required to meet NAI Direct's working capital needs
in a total amount equal to $4,000,000 in the form of a loan on
commercially reasonable terms, or otherwise
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provided that NAI's equity interest may not be diluted until
after there has been an equity investment of at least
$5,000,000 in NAI Direct.
3.4 NAI will license software to NAI Direct as listed on SCHEDULE
3.4 (the "NAI LICENSED SOFTWARE") for which NAI Direct will
pay a monthly royalty fee in an amount equal to 5% of NAI
Direct's gross revenue for the preceding month. A copy of the
form of License Agreement (the "NAI LICENSE AGREEMENT") is
attached hereto as EXHIBIT 3.4.
3.5 Beginning on the Launch, NAI will place all of its member
listings, i.e., commercial real estate listings currently
available or that may become available to NAI Member Brokers
through NAI's Member Website, on NAI Direct's web site(s) and
will encourage all NAI Member Brokers to place all of their
local commercial real estate listings on NAI Direct's web
site(s). NAI's commitment to NAI Direct are contained in the
form of the agreement in EXHIBIT 3.4. For purposes of this
SECTION 3.5, "Launch" means that date on which NAI Direct's
Board of Directors has determined that NAI Direct's website
has achieved the level of functionality to meet the minimum
technical specifications for operation and is currently
available to the public.
3.6 All internet commercial real estate software developed by any
of the Parties shall be the property of NAI Direct or
exclusively licensed to NAI Direct when developed without
additional cost to NAI Direct. All improvements by the Parties
to the internet commercial real estate software or commercial
real estate software purchased shall be the property of NAI
Direct or exclusively licensed to NAI Direct without
additional cost to NAI Direct. Any other use of such software
must be pursuant to an arms-length license agreement with NAI
Direct.
4. MANAGEMENT OF REAL QUEST
4.1 The Board of Directors of RQ will consist of five Directors,
with two Directors to be designated by NAI and two Directors
to be designated by WWWX. The fifth Director will be selected
by agreement of NAI and WWWX and will serve until his or her
successor is elected and qualified.
4.2 The Parties agree to cause RQ to adopt By-laws in the form
attached as EXHIBIT 4.2.
4.3 The Board of Directors of RQ shall meet no less frequently
than every two months or as may be determined by the Board or
reflected in RQ's By-laws.
4.4 Gerald C. Finn will be the initial Chief Executive Officer of
RQ; Jeffrey Finn will be the initial President of RQ. Other
initial officers will be elected by the Board of Directors of
RQ.
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4.5 Employment agreements (the "EMPLOYMENT AGREEMENTS") shall be
executed between each of Gerald C. Finn and Jeffrey Finn
(collectively the "KEY EMPLOYEES") and NAI Direct in the form
of EXHIBIT 4.5.
4.6 Except as otherwise contemplated by or discussed in this
Agreement, the following actions by RQ will require approval
of the Board of Directors of RQ:
(1) Amend, alter or repeal any of the provisions of the
Certificate of Incorporation or the By-Laws of RQ;
(2) Authorize or create, or increase the number of
authorized shares of any stock of any class, or any
security convertible into stock of a class;
(3) Adopt and implement any strategic and operating plans
that materially change the business of RQ or that
involve the entry of RQ into a business not currently
conducted by RQ, except as contemplated by this
Agreement;
(4) Make or commit any capital expenditures of amounts
exceeding in the aggregate 20% of RQ's net worth;
(5) Reorganize, recapitalize, register its stock under
the U.S. Federal securities laws, enter, offer or
sell, convey, or otherwise dispose of or encumber all
or substantially all of its property or business or
merge into or consolidate with any other corporation
(other than a wholly owned subsidiary corporation) or
effect any transaction or series of related
transactions in which more than 50% of the voting
power of RQ is disposed of;
(6) Redeem, purchase or otherwise acquire, directly or
indirectly any shares of RQ's capital stock or any
option, warrant or other right to purchase or acquire
any such shares;
(7) Grant or issue any stock options or other convertible
securities at below fair market value on the date of
grant;
(8) Declare or pay any dividend or other distribution
(whether in cash, stock or other property) with
respect to RQ's capital stock;
(9) Except in the ordinary course of RQ's business,
voluntarily sell, transfer, surrender, abandon or
dispose of any of its assets or property rights
(tangible or intangible) valued in excess of
$250,000;
(10) Except in the ordinary course of RQ's business, grant
or make any mortgage or pledge or subject RQ or any
of its properties or assets to any lien, charge or
encumbrance of any kind, except liens for taxes not
currently due;
(11) Create, incur, or assume any liability or
indebtedness in an aggregate amount exceeding 20% of
RQ's net worth;
(12) Guaranty the obligation of any third party;
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(13) Grant any increase in the compensation payable or to
become payable to directors or officers (including,
without limitation, any such increase pursuant to any
bonus, pension, profit-sharing, incentive option or
other plan or commitment) that is 20% greater than
the prior year;
(14) Alter the manner of keeping its books, accounts or
records, or change in any manner the accounting
practices therein reflected;
(15) Enter into any commitment or transaction other than
in the ordinary course of business valued in excess
of $250,000;
(16) Amend or agree to any amendment of the NAI Direct
Shareholders' Agreement.
Approval of any of the actions listed in items 1, 2, 3, 5, 6,
7, 9, 10, 14, or 16 will require the approval of at least
3/4 of the Directors of RQ.
5. REVENUE GOAL
5.1 In the event that NAI Direct has not received cumulative gross
revenues of at least $2,000,000 within 24 months of the
Launch, (the "REVENUE GOAL"), the Escrow Agreement shall be
terminated and the WWWX shares held in escrow shall be
returned to WWWX. If the Revenue Goal is achieved, the Escrow
Agreement shall be terminated and the WWWX shares held in
escrow shall be distributed to NAI.
6. LOCK-UP
6.1 Until a date that is 18 months from the Closing Date, neither
Party may sell, transfer, assign or in any way encumber any
portion of its equity interest in RQ without the written
consent of the other.
6.2 In the event any shareholder receives a bona fide offer to
purchase its RQ shares from an independent third party, such
shareholder shall give the other shareholder notice of such an
offer and provide a copy thereof. Such other shareholder shall
have the option to elect within 10 days following such notice
to purchase such shareholder's shares under the same terms and
conditions as the offer.
6.3 In the event WWWX receives an offer for all or substantially
all of its shares in RQ, WWWX shall give prompt notice to NAI
of such offer and the terms thereof, and shall provide NAI
with a copy of any such offer. NAI shall have the option to
give notice (a "TAG-ALONG NOTICE") not later than 10 days
prior to the closing of the sale by WWWX, pursuant to which
NAI may require WWWX to give notice to the purchaser that as
part of the same transaction and as a condition thereto, NAI's
shares shall be purchased for the same consideration and
otherwise on the same terms and conditions upon which WWWX
will sell its shares to purchaser. If the
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purchaser does not wish to purchase a greater interest in RQ
than contained in its offer to WWWX, then such purchaser must
purchase such interest on a pro rata basis in relation to each
shareholder's interest in RQ from WWWX and NAI. In the event
purchaser does not purchase NAI's shares as identified in the
Tag-Along Notice in accordance with this SECTION 6.3, the sale
by WWWX of its shares shall be voidable at the sole option of
NAI.
7. PROPRIETARY INFORMATION
7.1 The Parties to this Agreement have been or may be exposed to
patents, software, trade secrets, financial information,
vendor and supplier lists, personnel policies, methods of
doing business, and other confidential business information
(the "PROPRIETARY INFORMATION"). Each Party agrees to keep
such Proprietary Information confidential. Each Party agrees
not to use or disclose such Proprietary Information, except in
furtherance of the business of RQ or NAI Direct. The Parties
acknowledge that improper disclosure of use will cause the
other Party irreparable harm, and that the appropriate Party
is entitled to injunctive relief for any breach, as well as an
action for monetary damages for any loss.
8. RESTRICTIVE COVENANT
8.1 During the term of this Agreement and for a period of two (2)
years after a Party ceases to be a shareholder in RQ such
Party agrees to refrain from becoming a shareholder in,
consultant, employee, officer, director, owner, partner or in
any other manner, becoming connected with, a business that is
competitive with the internet-based commercial real estate
business of RQ or NAI Direct, except that neither Party shall
be barred by this provision from continuing its current
business activities. Nothing contained herein shall prevent
either Party from engaging or participating in any internet
based commercial real estate enterprise so long as such
enterprise does not compete with RQ or NAI Direct in any of
its principal activities. In particular, the parties recognize
that NAI listings currently appear on loopNet.com, a
commercial real estate listing service and the appearance of
NAI listings on loopNet.com shall not be construed to be
violative of the restrictive covenant in this SECTION 8.1.
This covenant shall terminate upon the dissolution of RQ.
8.2 The Parties acknowledge that a violation of this covenant will
cause RQ and/or NAI Direct irreparable harm, and that RQ or
NAI Direct is entitled to injunctive relief for any breach, as
well as an action for monetary damages for any loss.
8.3 In the event of a violation of the terms of ARTICLE 7 OR 8 of
this Agreement, the violating parties shall be liable to the
damaged party for reasonable attorneys fees, expert fees and
court costs.
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9. DEFAULT
9.1 The following events shall constitute a default hereunder:
9.1.1 The failure of either Party to meet its obligations
as set out in ARTICLE 3 hereof, provided that the
other Party, RQ or NAI Direct shall have given
written notice of such default and the defaulting
party may cure such default within 30 days of the
delivery of notice;
9.1.2 Any material breach by WWWX of
(a) the WWWX License Agreement or
(b) the Loan Agreement
9.1.3 Any material breach by NAI of
(a) the NAI License Agreement or
(b) the NAI Agreement
9.1.4 Any action by WWWX which causes or constitutes Good
Reason (as such terms are defined in the Employment
Agreements) for either Key Employee to terminate
either Employment Agreement.
9.2 In the event of a default as defined above, and the defaulting
party shall have failed to cure the default within 30 days of
the delivery of notice to the defaulting party, in lieu of any
other remedies at law or in equity, the non-defaulting Party
may terminate this Agreement pursuant to this ARTICLE 9 and
neither Party will be bound further by the terms of ARTICLES 7
AND 8 hereof.
9.3 In the event of a default by WWWX under SECTION 9.1.1 or a
default under SECTION 9.1.2 OR 9.1.4 and the passage of the
time required by SECTION 9.2, following the payment by RQ and
NAI Direct of all debts to creditors other than the Parties,
RQ and NAI Direct will be dissolved and
(a) all assets other than those listed in SECTION 9.3(B),
including but not limited to all cash, accounts
receivable, furniture, fixtures, equipment, computer
hardware, and tangible property of RQ and NAI Direct
shall be distributed to WWWX;
(b) all computer software, trade names, trade marks,
copyrights, and other intellectual property of RQ and
NAI Direct, including but not limited to the names
"Real Quest" and "NAI Direct", shall be distributed
to and become the property of NAI;
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(c) the WWWX License Agreement and the NAI License
Agreement shall be terminated, and each Party shall
retain its right to use the property licensed to NAI
Direct, except that if NAI chooses to continue the
operations of NAI Direct, the WWWX License shall
continue in full force and effect at no charge to NAI
Direct or NAI for a period of 6 months from the
dissolution, after which time NAI Direct or NAI will
pay a license fee of not more than $50,000 per annum
for a non-exclusive license of the Technology if it
elects to continue the License Agreement.
(d) The Escrow Agreement shall be terminated and the WWWX
shares held in escrow shall be distributed to NAI.
9.4 In the event of a default by NAI under SECTION 9.1.1 or a
default under SECTION 9.1.4 and the passage of the time
required by SECTION 9.2, following the payment by RQ and NAI
Direct of all debts to creditors other than Parties, RQ and
NAI Direct will be dissolved and
(a) all assets other than those listed in SECTION 9.4(B),
including but not limited to all cash, cash
equivalents, accounts receivable, furniture,
fixtures, equipment, computer hardware, and tangible
property of RQ and NAI Direct shall be distributed to
WWWX;
(b) all computer software, trade names, trademarks,
copyrights and other intellectual property of RQ and
NAI Direct that was contributed by NAI, including but
not limited to the names "Real Quest" and "NAI
Direct" shall be distributed to and become the
property of NAI;
(c) the WWWX License Agreement and the NAI License
Agreement shall be terminated, and each Party shall
retain its right to use the property licensed to NAI
Direct;
(d) the Escrow Agreement shall be terminated and the WWWX
shares held in escrow shall be returned to WWWX.
10. CHANGE IN CONTROL
10.1 In the event of a proposed change in control, acquisition or
merger of WWWX in a transaction or series of transactions
where 34% or more of the voting securities of WWWX is obtained
by a third party or third parties acting in concert, NAI shall
have the right (a) to repurchase WWWX or the surviving
company's RQ shares, as the case may be, or (b) to put its
equity interest in RQ to WWWX or the surviving company, as the
case may be, at their fair market value and WWWX shall
purchase such shares at their fair market value. If NAI
exercises its right to put pursuant to (b) of the previous
sentence, WWWX or the surviving company, as the case may be,
may elect to purchase NAI's equity interest
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with either cash or its publicly-traded, unrestricted stock,
or a combination thereof.
If NAI exercises its rights under this SECTION 10.1, neither
Party will be bound by the provisions of SECTIONS 7 AND 8.
11. MISCELLANEOUS
11.1 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF DELAWARE . THE
PARTIES AGREE TO WAIVE A JURY TRIAL IN ANY PROCEEDING BROUGHT
TO ENFORCE ANY OF THE TERMS OF THIS AGREEMENT.
11.2 TERM. The term of this agreement shall remain in effect until
the earlier of:
1. The consent of both parties;
2. The occurrence of a default and termination pursuant
to ARTICLE 9; or
3. The exercise by NAI of its rights under ARTICLE 10.
11.3. SURVIVAL. Nothing contained in this section shall affect or
impair any rights or obligations arising prior to the time of
termination of this Agreement or which may arise by an event
causing the termination of this Agreement. The covenants
contained in PARAGRAPHS 7 AND 8 above shall, except as
provided in ARTICLES 9 AND 10, survive the termination of this
Agreement.
11.4. NOTICE. Any notice or other communication shall be in writing
and shall be deemed effective:
(1) Upon personal delivery, if delivered by hand and
followed by notice by mail of facsimile transmission;
(2) Three (3) days after deposit in the United States
mail by certified or registered mail, return receipt
requested, postage prepaid;
(3) The date of delivery by Federal Express or other
nationally recognized courier service.
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TO WWWX: WorldWide Web NetworX Corporation
521 Fellowship Road, Suite 130
Mount Laurel, New Jersey 08045
Attn: President and CEO
Fax Number: (856) 914-0745
with a copy to: Allan M. Cohen, Esq.
General Counsel
Fax Number: (856) 914-0842
TO NAI: New America Network, Inc.
P.O. Box 950
572 US Route 130
Hightstown, NJ 08520
Attn: Gerald C. Finn, Chairman and CEO
Fax Number: (609) 448-8126
with a copy to: Edward J. Finn, Esq.
General Counsel
Fax Number: (410) 884-4072
TO RQ: Real Quest, Inc.
P.O. Box 950
572 US Route 130
Hightstown, NJ 08520
with a copy to: Edward J. Finn, Esq.
General Counsel
Fax Number: (410) 884-4072
or to such other address of which any party may notify the other parties as
provided above.
11.5 AMENDMENT. This agreement may only be amended by an instrument
in writing signed by the Parties.
11.6 SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstances shall for
any reason or to any extent, be invalid or unenforceable, the
remainder of this Agreement and the application of that
provision to other persons or circumstances shall not be
affected, but rather, shall be enforced to the extent
permitted by law.
11.7 ENTIRE AGREEMENT. This Agreement and the agreements
specifically referenced in this Agreement constitute the
entire agreement between the Parties and incorporate all prior
discussions, negotiations and agreements.
11.8 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement may not be assigned by either Party without the
prior written consent of the other Party. This Agreement shall
be binding upon and
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inured to the benefit of the parties hereto, their respective
successors, heirs, permitted assigns and legal
representatives. In the event of a transfer of the shares of
stock in accordance with this Agreement, the selling
shareholder acknowledges that the transfer shall not be
effective until such time as the purchasing party acknowledges
that it shall be bound by the terms and conditions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the date first
above written.
WORLDWIDE WEB NETWORX CORPORATION
BY: //S// ROBERT D. KOHN
------------------------------
Name: Robert D. Kohn
Title: President and CEO
NEW AMERICA NETWORK, INC.
BY: //S// GERALD C. FINN
-------------------------------
Name: Gerald C. Finn
Title: Chairman and CEO
REAL QUEST, INC.
BY: //S// GERALD C. FINN
------------------------------
Name: Gerald C. Finn
Title: President
<PAGE>
Exhibit 10.34
EMPLOYMENT AGREEMENT
This Agreement executed this 23rd day of September, 1999 by and between
NAI Direct, Inc., a Delaware corporation ("NAI Direct") and Jeffrey Finn
("Employee").
The parties, each intending to be legally bound, hereby agree as follows:
1. POSITION. NAI Direct employs Employee in the position of Chief Executive
Officer pursuant to the terms of this Agreement. Employee will perform such
services in this capacity as may from time to time be reasonably requested by
NAI Direct.
2. TERM. This Agreement shall commence on the Closing Date, as defined in
the Share Exchange Agreement (the "Exchange Agreement") between WorldWide Web
NetworX Corporation, a Delaware corporation ("WWWX") and New America Network,
Inc., a Delaware corporation ("NAI") and shall except as provided in paragraph
9, remain in effect for a period of 3 years thereafter. After this 3 year term,
the Agreement shall automatically renew from year to year unless either party
gives written notice to the other at least ninety (90) days prior to the
expiration of the then current term that he or it is not renewing.
3. COMPENSATION AND BENEFITS. For all services rendered by Employee under
this Agreement, NAI Direct shall compensate Employee as follows:
(a) NAI Direct shall pay to Employee an annual salary (the "Base
Salary") of $135,000.00, payable in accordance with the payroll
policies of NAI Direct, subject to normal withholdings. The Base
Salary shall be paid at regular intervals as is paid to other NAI
Direct employees.
(b) The Base Salary shall be subject to annual review, and Employee
shall be entitled to such increase as is determined by the Board
of Directors of NAI Direct.
(c) Employee shall be entitled to participate in all employee pension
and welfare benefit plans and programs made available to the
senior-level executives of NAI Direct or to its employees
generally, as such plans or programs may be in effect from time
to time, including, without limitation, pension, profit sharing,
savings and other retirement plans or programs, medical, dental,
hospitalization, short-term and long-term disability and life
insurance plans, accidental death and dismemberment protection,
travel accident insurance, and any other pension or retirement
plans or programs and any other employee welfare benefit plans or
programs that may be sponsored by NAI Direct from time to time,
including any plans that supplement the above-listed types of
plans or programs, whether funded or unfunded.
(d) Employee is authorized to incur reasonable expenses in carrying
out his duties and responsibilities under this Agreement and NAI
Direct shall promptly
1
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reimburse him for all business expenses incurred in connection
with carrying out the business of NAI Direct.
4. DUTIES. The duties of Employee are as contained in the attached Schedule
"A". Those duties shall be performed in such manner so as to uphold the
reputation of NAI Direct in the business community. Those duties may be
reasonably extended or curtailed from time to time, at the discretion of the
Board of Directors of NAI Direct.
5. TIME AND ATTENTION DEVOTED TO DUTIES. Employee shall devote his entire
time and attention to the business of NAI Direct and NAI. He shall not, during
the term of this Agreement, be engaged in any other business activity which
interferes with his ability to perform the duties assigned to him by NAI Direct,
whether or not such business activity is pursued for gain, profit or other
pecuniary advantage. This shall not be construed as preventing Employee from
investing his assets in such form or manner as will not require any services on
the part of Employee in the operation of the affairs of the companies in which
such investments are made, subject to the qualification that Employee may not
invest in a company which is competitive in any manner whatsoever with NAI
Direct, NAI or WWWX (except for investments constituting less than one percent
(l%) of a publicly owned company).
6. NONDISCLOSURE AND RESTRICTIVE COVENANTS. Employee acknowledges that his
duties will necessarily result in his becoming familiar with the business,
software, patents and copyrights, methods and operations, client and customer
lists, client and customer information, manufacturing processes, product
specifications, vendors, trading patterns, financial goals, and other
proprietary and confidential information of NAI Direct, NAI and WWWX, a publicly
traded corporation (the "Confidential Information"). Therefore, Employee
acknowledges and agrees that the following nondisclosure provisions and
restrictive covenants shall apply to the Confidential Information. The rights
hereunder shall inure to the benefit of NAI Direct, NAI and WWWX, each of whom
shall have the right to enforce the terms of paragraphs 6 through 8 of this
Agreement. For the purposes of paragraphs 6 through 8 of this Agreement, the
term "NAI Direct", "NAI" or "WWWX" shall include each of their affiliated
companies. The terms contained in paragraphs 6 through 8 shall survive the
termination or expiration of this Agreement. Therefore, Employee agrees:
(a) Employee will not, at any time during his employment by NAI
Direct, or at anytime thereafter, unless terminated by NAI
Direct without cause or by Employee for cause pursuant to
sub-paragraph 9(c), without the written approval of NAI
Direct or its duly constituted officers, use for his benefit
or the benefit of third parties reveal, divulge, or make
known to any person, firm or corporation, the Confidential
Information or any portions thereof.
(b) Employee agrees to return to NAI Direct, NAI or WWWX, as
appropriate, upon request or immediately upon the
termination of his employment by NAI Direct, any and all
written information, materials, equipment and software which
constitutes, contains or relates in any way to the
Confidential Information or trade secrets of NAI Direct, NAI
or WWWX including, but
2
<PAGE>
not limited to, any copies of such information and any
notes, memoranda or other documents, in any media which
include, reflect or incorporate all or any part of the
Confidential Information.
(c) Unless Employee's employment hereunder is terminated by NAI
Direct (i) without cause, (ii) by Employee pursuant to
SUBPARAGRAPH 9(c), (iii) in the event of a material breach
by WWWX under the Exchange Agreement, (iv) pursuant to
SECTION 9 (a) (v), or (v) pursuant to SECTION 9 (d),
Employee will not for a period ending 2 years after the
termination of employment pursuant to this Agreement (the
time period in this SECTION 6(c) being the "NON-COMPETE
TERM") compete directly with NAI Direct, NAI or WWWX,
whether as an employee, officer, director, agent, security
holder, creditor, consultant or otherwise. During the
Non-Compete Term, Employee will not consult with or have an
interest in any business, firm, person, partnership,
corporation or other entity which engages in the same or
substantially similar business to that of WWWX, NAI or NAI
Direct worldwide, it being acknowledged that the business of
WWWX, NAI and NAI Direct is global in nature. For the
purpose of this paragraph, a business shall be deemed
similar or competitive to WWWX, NAI or NAI Direct if it
conducts an internet-based commercial real estate business.
During the Non-Compete Term, Employee will not provide
services or products to any individual or entity which
competes with NAI Direct, NAI or WWWX.
(d) REASONABLENESS OF RESTRICTIONS. Employee and NAI Direct
recognize that, as a result of the globalization of
e-commerce markets through advances in telecommunications
and the internet, NAI Direct's market is not susceptible to
geographic definitions. Consequently, and given the nature
of the position Employee will hold with NAI Direct, the
nature of NAI Direct's and the business and their commitment
to expanding and leveraging of their business activities and
Employee's involvement in these activities, Employee and NAI
Direct agree that the restrictions contained in this SECTION
6 upon the activities of Employee are geographically
unlimited and reasonable as such.
7. RIGHT TO ENGAGE IN EMPLOYEE'S PROFESSION. SECTION 6 is not intended to
restrict Employee in the exercise of his training and skills, provided that the
exercise of such training and skills does not involve competing with NAI Direct
or WWWX in violation of the provisions of this Agreement. In particular, it is
recognized that Employee is an officer and employee of NAI and will continue in
that position. Nothing contained in this Agreement is intended to prevent
Employee from fully performing his role as an employee of NAI.
8. REMEDIES IN ADDITION TO ANY OTHER REMEDIES PROVIDED BY LAW. Employee
agrees that the breach of any of the covenants contained in paragraph 6 may
result in irreparable damage to NAI Direct, NAI and WWWX and, in addition to any
other remedies provided in this Agreement or at law, NAI Direct, NAI and WWWX
shall have the right to petition a court of competent jurisdiction to enjoin
Employee from violating such covenants.
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9. EARLIER TERMINATION.
(a) Notwithstanding the termination provision of paragraph 2, this
Agreement may be terminated at any time by NAI Direct upon the
occurrence of any of the following:
(i) Employee's inability to perform substantially all of
the duties assigned, through death or total disability
in excess of 60 consecutive days or total disability
in excess of 90 days in any 12 month period.
(ii) Any act of dishonesty or disloyalty by Employee
involving or materially affecting NAI Direct.
(iii) Employee's material breach of the confidentiality
provisions of this Agreement.
(iv) Any other material breach of this Agreement by
Employee.
(v) The termination of the business of NAI Direct, the
sale of substantially all of the assets of NAI Direct
or a merger or consolidation in which NAI Direct is
not the surviving entity.
(b) NAI Direct may further terminate this Agreement in the event of
the failure of Employee to substantially perform the duties
assigned to him by NAI Direct providing NAI Direct shall provide
30 days written notice to Employee of his failure to perform his
duties with an opportunity to cure within said 30 day period.
(c) Employee may terminate Employee's employment hereunder for Good
Reason (as defined below), and if the Agreement is so terminated,
then NAI Direct shall pay to Employee, within thirty (30) days of
the date of such termination, the Base Salary through such date
of termination and, in lieu of any further compensation and
benefits for the balance of the Agreement's term, severance pay
in a lump sum amount equal to the greater of (1) 50% of the then
current Base Salary or (2) the remaining Base Salary for the
remainder of the Agreement's term.
(i) For purposes of this Agreement, "Good Reason" shall
mean the occurrence, without Employee's express written
consent, of any of the following circumstances, unless,
in the case of clauses (2), (5) or (6), such
circumstances are fully corrected prior to the date of
termination specified in a notice of termination given
by Employee to NAI Direct in respect thereof (which
date of termination shall be specified in such notice
and shall not be less than thirty (30) nor more than
sixty (60)
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days following delivery of such notice):
(1) Employee's removal from his position as Chief
Executive Officer, or a significant diminution
in the nature or status of Employee's
responsibilities;
(2) Employee being assigned to any duties
inconsistent with Employee's status as an
executive of NAI Direct holding the position
of Chief Executive Officer;
(3) A reduction by NAI Direct in Employee's Base
Salary;
(4) The relocation of Employee's office in which
Employee was located to a location more than
50 miles therefrom or NAI Direct requiring
Employee to be based anywhere other than the
executive office in which Employee was
located, except for required travel on NAI
Direct business to an extent substantially
consistent with Employee's present business
travel obligations;
(5) The failure by NAI Direct to continue in
effect any option, equity or bonus plan in
which Employee participated, unless an
equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made
in such plan, or the failure by NAI Direct to
continue Employee's participation therein on
the same basis, both in terms of the amount of
benefits provided and the level of Employee'
participation relative to other participants;
or
(6) The taking of any action by NAI Direct which
would directly or indirectly materially reduce
or deprive Employee of any material fringe
benefit enjoyed by Employee under NAI Direct's
employee benefit and welfare plans, including
the pension, life insurance, medical, health
and accident, disability, deferred
compensation and savings plans in which
Employee participated.
(d) In the event that the Real Quest, Inc. Shareholders' Agreement
among NAI, WWWX and Real Quest, Inc. is terminated, either party
may terminate this Agreement.
10. REPRESENTATIONS OF EMPLOYEE
(a) Employee represents that to the best of his knowledge he is not
the subject of any pending or threatened claim which involves any
criminal or governmental
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proceedings, or allegations of misfeasance, and that he has not
been charged nor threatened to be charged by any governmental or
administrative body with violation of law except for minor
traffic violations and similar charges.
(b) Except with respect to NAI, Employee represents and warrants that
he is not prohibited from acting in any capacity for NAI Direct
by virtue of the operation of any non-competition or similar
agreement with any prior employer, or by any applicable statutes,
regulations or ordinances or any other applicable law or by the
rules and regulations of the US Securities and Exchange
Commission or any national securities exchange, and that his
acting in the capacity for NAI Direct that is contemplated by the
parties hereto and by virtue of his position with NAI Direct
described in Section 1 hereof will not subject NAI Direct to
claims or materially impair the license status of NAI Direct or
its affiliates or any entity operated by NAI Direct or its
affiliates.
11. DEFENSE OF CLAIMS. Employee agrees that during the Term, and at all
reasonable times thereafter, he will cooperate with NAI Direct in the defense of
any claim that may be made against NAI Direct or any affiliates, to the extent
that such claims may relate to services performed by Employee for NAI Direct or
its affiliates. In connection with such claim, NAI Direct will reimburse
Employee for all of his reasonable out-of-pocket expenses associated and, to the
extent reasonably practicable, to provide Employee with notice at least ten (10)
days prior to the date on which any travel is required, and (ii) if Employee is
no longer employed by NAI Direct, to compensate Employee at a reasonable rate
for his time.
12. NOTIFICATION OF AGREEMENT. Employee shall notify any future or
prospective employers, partners or persons with a similar business relationship
to Employee ("Future Employers") about the terms of this Agreement for any
period for which the covenants contained above pertains. Employee does hereby
authorize NAI Direct to notify any Future Employers about the terms of this
Agreement upon discovery by NAI Direct that Employee is being considered for
employment, partnership or similar business relationship (or has entered into
such a relationship) with a Future Employer in order to ensure Employee's
observance and compliance herewith.
13. INJUNCTION AND OTHER RELIEF. Both parties hereto recognize that the
services to be rendered under this Agreement by Employee are special, unique and
of extraordinary character, and that in the event of the breach by Employee of
any of the terms and conditions of this Agreement to be performed by him, or in
the event Employee performs services for any person, firm or corporation in
violation of Sections 6-8, or if Employee shall breach the provisions of this
Agreement with respect to Confidential Information, then NAI Direct shall be
entitled, if it so elects, in addition to all other remedies available to it
under this Agreement or at law or in equity, to affirmative injunctive or other
equitable relief.
14. STIPULATION. Employee hereby specifically acknowledges, agrees,
stipulates and represents to NAI Direct that:
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(a) Employee has received adequate and sufficient consideration for
entering into this Agreement including the above-referenced
compensation;
(b) except with respect to NAI, the execution and delivery of this
Agreement and the performance hereunder do not and shall not
constitute a violation of any covenants of non-competition, trade
secrecy, or confidentiality to which Employee is a party;
(c) the covenants of Employee contained in this Agreement are in
consideration of the promise of NAI Direct to provide
Confidential Information (including trade secrets) to Employee
and are necessary to protect NAI Direct interests in such
Confidential Information, as well as NAI Direct's business good
will and other business interests;
(d) NAI Direct may suffer great loss and irreparable harm if Employee
competes directly or indirectly with NAI Direct;
(e) the temporal, geographic and other restrictions contained in this
Agreement are in all respects reasonable and necessary to protect
the business good will, Confidential Information, trade secrets,
prospects and other business interest of NAI Direct; and
(f) the enforcement of this Agreement will not work an undue or
unfair hardship on Employee or otherwise be oppressive to him.
15. SEVERABILITY. In the event that any of the provisions of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
such invalidity or unenforceability shall not affect the remainder of this
Agreement and same shall be construed as if such invalid or unenforceable
provisions had never been a part hereof. If a court of competent jurisdiction
determines that the length of time, geographical restrictions or any other
restriction, or portion thereof, set forth in this Agreement is overly
restrictive and unenforceable, the parties agree that the court shall reduce or
modify such restrictions to those which it deems reasonable and enforceable
under the circumstances, and as so reduced or modified, the parties hereto agree
that the restrictions of this Agreement shall remain in full force and effect.
16. ENTIRE AGREEMENT. This document constitutes the entire agreement
between NAI Direct and Employee regarding the subject matter hereof and there
are no oral agreements or undertakings affecting this instrument; any future
modifications, in order to be binding upon the parties, must be reduced to
writing and executed by both parties to this Agreement.
17. NO WAIVER. Either party's failure to strictly enforce any provision of
this Agreement shall not be construed as a waiver or as excusing either party
from future performance.
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18. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of the heirs, executors, administrators, successors and assigns of the
respective parties, but in no event may Employee assign to any other party
Employee's duties or obligations under this Agreement.
19. NEW JERSEY LAW. THIS AGREEMENT SHALL BE CONSTRUED UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW JERSEY. THE PARTIES AGREE TO WAIVE A JURY
TRIAL IN ANY PROCEEDING BROUGHT TO ENFORCE ANY OF THE TERMS OF THIS AGREEMENT.
20. HEADINGS. Paragraph headings herein shall have absolutely no legal
significance and are used solely for convenience of reference.
21. NOTICES. All notices which either party is required or may desire to
give to the other under or in conjunction with is Agreement shall be in writing
and shall be given by addressing the same to such other party at the address set
forth below, and by depositing the same so addressed, certified mail, postage
prepaid, return receipt requested, or by overnight mail or by reputable courier
service, or by delivering the same personally to such other party.
IF TO EMPLOYER:
NAI Direct
P. O. Box 950
572 US Route 130
Hightstown, NJ 08520
Attention: GENERAL COUNSEL
IF TO EMPLOYEE:
Jeffrey Finn
P.O. Box 950
572 US Route 130
Hightstown, NJ 08520
Any notice mailed should be deemed to have been given three (3) United
States Post Office delivery days following the date of mailing. Overnight mail
or courier services shall be deemed to have been given on the next business day
following the date of mailing. Any notice delivered in person shall be deemed
effective upon delivery. Either party may change the address for the service of
notice upon it by written notice given to the other in the manner herein
provided for the giving of notice.
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IN WITNESS WHEREOF, the parties hereto have set their hands.
NAI DIRECT, INC.
By: //S// GERALD C. FINN
---------------------
Name:
Title:
//S// JEFFREY FINN
-------------------
Jeffrey Finn
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SCHEDULE A
POSITION RESPONSIBILITIES
As President and Chief Operating Officer of NAI Direct, Employee will have
the following duties and responsibilities:
- Exercising the executive powers of NAI Direct, subject to
the direction of the Chief Executive Officer
- Hiring and firing of employees
- In consultation with the Chief Executive Officer, setting
compensation for all employees
- Attending and participating in meetings of the Executive
Committee of NAI Direct
- Implementing NAI Direct's policies as adopted by the Board
of Directors
- Representing NAI Direct in dealings with third parties, as
directed by the Board of Directors
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EXHIBIT 10.35
EMPLOYMENT AGREEMENT
This Agreement executed this 23rd day of September, 1999 by
and between NAI Direct, Inc., a Delaware corporation ("NAI Direct") and Gerald
C. Finn ("Employee").
The parties, each intending to be legally bound, hereby agree as
follows:
1. POSITION. NAI Direct employs Employee in the position of Chief
Executive Officer pursuant to the terms of this Agreement. Employee will perform
such services in this capacity as may from time to time be reasonably requested
by NAI Direct.
2. TERM. This Agreement shall commence on the Closing Date, as defined
in the Share Exchange Agreement (the "Exchange Agreement") between WorldWide Web
NetworX Corporation, a Delaware corporation ("WWWX") and New America Network,
Inc., a Delaware corporation ("NAI") and shall except as provided in paragraph
9, remain in effect for a period of 3 years thereafter. After this 3 year term,
the Agreement shall automatically renew from year to year unless either party
gives written notice to the other at least ninety (90) days prior to the
expiration of the then current term that he or it is not renewing.
3. COMPENSATION AND BENEFITS. For all services rendered by Employee
under this Agreement, NAI Direct shall compensate Employee as follows:
(a) NAI Direct shall pay to Employee an annual salary (the "Base
Salary") of $150,000.00, payable in accordance with the
payroll policies of NAI Direct, subject to normal
withholdings. The Base Salary shall be paid at regular
intervals as is paid to other NAI Direct employees.
(b) The Base Salary shall be subject to annual review, and
Employee shall be entitled to such increase as is determined
by the Board of Directors of NAI Direct.
(c) Employee shall be entitled to participate in all employee
pension and welfare benefit plans and programs made available
to the senior-level executives of NAI Direct or to its
employees generally, as such plans or programs may be in
effect from time to time, including, without limitation,
pension, profit sharing, savings and other retirement plans or
programs, medical, dental, hospitalization, short-term and
long-term disability and life insurance plans, accidental
death and dismemberment protection, travel accident insurance,
and any other pension or retirement plans or programs and any
other employee welfare benefit plans or programs that may be
sponsored by NAI Direct from time to time, including any plans
that supplement the above-listed types of plans or programs,
whether funded or unfunded.
(d) Employee is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this
Agreement and NAI Direct shall promptly
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reimburse him for all business expenses incurred in connection
with carrying out the business of NAI Direct.
4. DUTIES. The duties of Employee are as contained in the attached
Schedule "A". Those duties shall be performed in such manner so as to uphold the
reputation of NAI Direct in the business community. Those duties may be
reasonably extended or curtailed from time to time, at the discretion of the
Board of Directors of NAI Direct.
5. TIME AND ATTENTION DEVOTED TO DUTIES. Employee shall devote his
entire time and attention to the business of NAI Direct and NAI. He shall not,
during the term of this Agreement, be engaged in any other business activity
which interferes with his ability to perform the duties assigned to him by NAI
Direct, whether or not such business activity is pursued for gain, profit or
other pecuniary advantage. This shall not be construed as preventing Employee
from investing his assets in such form or manner as will not require any
services on the part of Employee in the operation of the affairs of the
companies in which such investments are made, subject to the qualification that
Employee may not invest in a company which is competitive in any manner
whatsoever with NAI Direct, NAI or WWWX (except for investments constituting
less than one percent (l%) of a publicly owned company).
6. NONDISCLOSURE AND RESTRICTIVE COVENANTS. Employee acknowledges that
his duties will necessarily result in his becoming familiar with the business,
software, patents and copyrights, methods and operations, client and customer
lists, client and customer information, manufacturing processes, product
specifications, vendors, trading patterns, financial goals, and other
proprietary and confidential information of NAI Direct, NAI and WWWX, a publicly
traded corporation (the "Confidential Information"). Therefore, Employee
acknowledges and agrees that the following nondisclosure provisions and
restrictive covenants shall apply to the Confidential Information. The rights
hereunder shall inure to the benefit of NAI Direct, NAI and WWWX, each of whom
shall have the right to enforce the terms of paragraphs 6 through 8 of this
Agreement. For the purposes of paragraphs 6 through 8 of this Agreement, the
term "NAI Direct", "NAI" or "WWWX" shall include each of their affiliated
companies. The terms contained in paragraphs 6 through 8 shall survive the
termination or expiration of this Agreement. Therefore, Employee agrees:
(a) Employee will not, at any time during his employment by NAI
Direct, or at anytime thereafter, unless terminated by NAI
Direct without cause or by Employee for cause pursuant to
sub-paragraph 9(c), without the written approval of NAI Direct
or its duly constituted officers, use for his benefit or the
benefit of third parties reveal, divulge, or make known to any
person, firm or corporation, the Confidential Information or
any portions thereof.
(b) Employee agrees to return to NAI Direct, NAI or WWWX, as
appropriate, upon request or immediately upon the termination
of his employment by NAI Direct, any and all written
information, materials, equipment and software which
constitutes, contains or relates in any way to the
Confidential Information or trade secrets of NAI Direct, NAI
or WWWX including, but
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not limited to, any copies of such information and any notes,
memoranda or other documents, in any media which include,
reflect or incorporate all or any part of the Confidential
Information.
(c) Unless Employee's employment hereunder is terminated by NAI
Direct (i) without cause, (ii) by Employee pursuant to
SUBPARAGRAPH 9(C), (iii) in the event of a material breach by
WWWX under the Exchange Agreement, (iv) pursuant to SECTION 9
(A) (V), or (v) pursuant to SECTION 9 (D), Employee will not
for a period ending 2 years after the termination of
employment pursuant to this Agreement (the time period in this
SECTION 6(C) being the "NON-COMPETE TERM") compete directly
with NAI Direct, NAI or WWWX, whether as an employee, officer,
director, agent, security holder, creditor, consultant or
otherwise. During the Non-Compete Term, Employee will not
consult with or have an interest in any business, firm,
person, partnership, corporation or other entity which engages
in the same or substantially similar business to that of WWWX,
NAI or NAI Direct worldwide, it being acknowledged that the
business of WWWX, NAI and NAI Direct is global in nature. For
the purpose of this paragraph, a business shall be deemed
similar or competitive to WWWX, NAI or NAI Direct if it
conducts an internet-based commercial real estate business.
During the Non-Compete Term, Employee will not provide
services or products to any individual or entity which
competes with NAI Direct, NAI or WWWX.
(D) REASONABLENESS OF RESTRICTIONS. Employee and NAI Direct
recognize that, as a result of the globalization of e-commerce
markets through advances in telecommunicatins and the
internet, NAI Direct's market is not susceptible to geographic
definitions. Consequently, and given the nature of the
position Employee will hold with NAI Direct, the nature of NAI
Direct's and the business and their commitment to expanding
and leveraging of their business activities and Employee's
involvement in these activities, Employee and NAI Direct agree
that the restrictions contained in this SECTION 6 upon the
activities of Employee are geographically unlimited and
reasonable as such.
7. RIGHT TO ENGAGE IN EMPLOYEE'S PROFESSION. SECTION 6 is not intended
to restrict Employee in the exercise of his training and skills, provided that
the exercise of such training and skills does not involve competing with NAI
Direct or WWWX in violation of the provisions of this Agreement. In particular,
it is recognized that Employee is an officer and employee of NAI and will
continue in that position. Nothing contained in this Agreement is intended to
prevent Employee from fully performing his role as an employee of NAI.
8. REMEDIES IN ADDITION TO ANY OTHER REMEDIES PROVIDED BY LAW. Employee
agrees that the breach of any of the covenants contained in paragraph 6 may
result in irreparable damage to NAI Direct, NAI and WWWX and, in addition to any
other remedies provided in this Agreement or at law, NAI Direct, NAI and WWWX
shall have the right to petition a court of competent jurisdiction to enjoin
Employee from violating such covenants.
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9. EARLIER TERMINATION.
(a) Notwithstanding the termination provision of paragraph 2, this
Agreement may be terminated at any time by NAI Direct upon the
occurrence of any of the following:
(i) Employee's inability to perform substantially all of
the duties assigned, through death or total
disability in excess of 60 consecutive days or total
disability in excess of 90 days in any 12 month
period.
(ii) Any act of dishonesty or disloyalty by Employee
involving or materially affecting NAI Direct.
(iii) Employee's material breach of the confidentiality
provisions of this Agreement.
(iv) Any other material breach of this Agreement by
Employee.
(v) The termination of the business of NAI Direct, the
sale of substantially all of the assets of NAI Direct
or a merger or consolidation in which NAI Direct is
not the surviving entity.
(b) NAI Direct may further terminate this Agreement in the event
of the failure of Employee to substantially perform the duties
assigned to him by NAI Direct providing NAI Direct shall
provide 30 days written notice to Employee of his failure to
perform his duties with an opportunity to cure within said 30
day period.
(c) Employee may terminate Employee's employment hereunder for
Good Reason (as defined below), and if the Agreement is so
terminated, then NAI Direct shall pay to Employee, within
thirty (30) days of the date of such termination, the Base
Salary through such date of termination and, in lieu of any
further compensation and benefits for the balance of the
Agreement's term, severance pay in a lump sum amount equal to
the greater of (1) 50% of the then current Base Salary or (2)
the remaining Base Salary for the remainder of the Agreement's
term.
(i) For purposes of this Agreement, "Good Reason" shall
mean the occurrence, without Employee's express
written consent, of any of the following
circumstances, unless, in the case of clauses (2),
(5) or (6), such circumstances are fully corrected
prior to the date of termination specified in a
notice of termination given by Employee to NAI Direct
in respect thereof (which date of termination shall
be specified in such notice and shall not be less
than thirty (30) nor more than sixty (60)
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days following delivery of such notice):
(1) Employee's removal from his position as
Chief Executive Officer, or a significant
diminution in the nature or status of
Employee's responsibilities;
(2) Employee being assigned to any duties
inconsistent with Employee's status as an
executive of NAI Direct holding the position
of Chief Executive Officer;
(3) A reduction by NAI Direct in Employee's Base
Salary;
(4) The relocation of Employee's office in which
Employee was located to a location more than
50 miles therefrom or NAI Direct requiring
Employee to be based anywhere other than the
executive office in which Employee was
located, except for required travel on NAI
Direct business to an extent substantially
consistent with Employee's present business
travel obligations;
(5) The failure by NAI Direct to continue in
effect any option, equity or bonus plan in
which Employee participated, unless an
equitable arrangement (embodied in an
ongoing substitute or alternative plan) has
been made in such plan, or the failure by
NAI Direct to continue Employee's
participation therein on the same basis,
both in terms of the amount of benefits
provided and the level of Employee's
participation relative to other
participants; or
(6) The taking of any action by NAI Direct which
would directly or indirectly materially
reduce or deprive Employee of any material
fringe benefit enjoyed by Employee under NAI
Direct's employee benefit and welfare plans,
including the pension, life insurance,
medical, health and accident, disability,
deferred compensation and savings plans in
which Employee participated.
(d) In the event that the Real Quest, Inc. Shareholders'
Agreement among NAI, WWWX and Real Quest, Inc. is
terminated, either party may terminate this
Agreement.
10. REPRESENTATIONS OF EMPLOYEE
(a) Employee represents that to the best of his knowledge
he is not the subject of any pending or threatened
claim which involves any criminal or governmental
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proceedings, or allegations of misfeasance, and that
he has not been charged nor threatened to be charged
by any governmental or administrative body with
violation of law except for minor traffic violations
and similar charges.
(b) Except with respect to NAI, Employee represents and
warrants that he is not prohibited from acting in any
capacity for NAI Direct by virtue of the operation of
any non-competition or similar agreement with any
prior employer, or by any applicable statutes,
regulations or ordinances or any other applicable law
or by the rules and regulations of the US Securities
and Exchange Commission or any national securities
exchange, and that his acting in the capacity for NAI
Direct that is contemplated by the parties hereto and
by virtue of his position with NAI Direct described
in Section 1 hereof will not subject NAI Direct to
claims or materially impair the license status of NAI
Direct or its affiliates or any entity operated by
NAI Direct or its affiliates.
11. DEFENSE OF CLAIMS. Employee agrees that during the Term, and at all
reasonable times thereafter, he will cooperate with NAI Direct in the defense of
any claim that may be made against NAI Direct or any affiliates, to the extent
that such claims may relate to services performed by Employee for NAI Direct or
its affiliates. In connection with such claim, NAI Direct will reimburse
Employee for all of his reasonable out-of-pocket expenses associated and, to the
extent reasonably practicable, to provide Employee with notice at least ten (10)
days prior to the date on which any travel is required, and (ii) if Employee is
no longer employed by NAI Direct, to compensate Employee at a reasonable rate
for his time.
12. NOTIFICATION OF AGREEMENT. Employee shall notify any future or
prospective employers, partners or persons with a similar business relationship
to Employee ("Future Employers") about the terms of this Agreement for any
period for which the covenants contained above pertains. Employee does hereby
authorize NAI Direct to notify any Future Employers about the terms of this
Agreement upon discovery by NAI Direct that Employee is being considered for
employment, partnership or similar business relationship (or has entered into
such a relationship) with a Future Employer in order to ensure Employee's
observance and compliance herewith.
13. INJUNCTION AND OTHER RELIEF. Both parties hereto recognize that the
services to be rendered under this Agreement by Employee are special, unique and
of extraordinary character, and that in the event of the breach by Employee of
any of the terms and conditions of this Agreement to be performed by him, or in
the event Employee performs services for any person, firm or corporation in
violation of Sections 6-8, or if Employee shall breach the provisions of this
Agreement with respect to Confidential Information, then NAI Direct shall be
entitled, if it so elects, in addition to all other remedies available to it
under this Agreement or at law or in equity, to affirmative injunctive or other
equitable relief.
14. STIPULATION. Employee hereby specifically acknowledges, agrees,
stipulates and represents to NAI Direct that:
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(a) Employee has received adequate and sufficient
consideration for entering into this Agreement
including the above-referenced compensation;
(b) except with respect to NAI, the execution and
delivery of this Agreement and the performance
hereunder do not and shall not constitute a violation
of any covenants of non-competition, trade secrecy,
or confidentiality to which Employee is a party;
(c) the covenants of Employee contained in this Agreement
are in consideration of the promise of NAI Direct to
provide Confidential Information (including trade
secrets) to Employee and are necessary to protect NAI
Direct interests in such Confidential Information, as
well as NAI Direct's business good will and other
business interests;
(d) NAI Direct may suffer great loss and irreparable harm
if Employee competes directly or indirectly with NAI
Direct;
(e) the temporal, geographic and other restrictions
contained in this Agreement are in all respects
reasonable and necessary to protect the business good
will, Confidential Information, trade secrets,
prospects and other business interest of NAI Direct;
and
(f) the enforcement of this Agreement will not work an
undue or unfair hardship on Employee or otherwise be
oppressive to him.
15. SEVERABILITY. In the event that any of the provisions of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such invalidity or unenforceability shall not affect the remainder
of this Agreement and same shall be construed as if such invalid or
unenforceable provisions had never been a part hereof. If a court of competent
jurisdiction determines that the length of time, geographical restrictions or
any other restriction, or portion thereof, set forth in this Agreement is overly
restrictive and unenforceable, the parties agree that the court shall reduce or
modify such restrictions to those which it deems reasonable and enforceable
under the circumstances, and as so reduced or modified, the parties hereto agree
that the restrictions of this Agreement shall remain in full force and effect.
16. ENTIRE AGREEMENT. This document constitutes the entire agreement
between NAI Direct and Employee regarding the subject matter hereof and there
are no oral agreements or undertakings affecting this instrument; any future
modifications, in order to be binding upon the parties, must be reduced to
writing and executed by both parties to this Agreement.
17. NO WAIVER. Either party's failure to strictly enforce any provision
of this Agreement shall not be construed as a waiver or as excusing either party
from future performance.
7
<PAGE>
18. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of the heirs, executors, administrators, successors and assigns of the
respective parties, but in no event may Employee assign to any other party
Employee's duties or obligations under this Agreement.
19. NEW JERSEY LAW. THIS AGREEMENT SHALL BE CONSTRUED UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW JERSEY. THE PARTIES AGREE TO
WAIVE A JURY TRIAL IN ANY PROCEEDING BROUGHT TO ENFORCE ANY OF THE TERMS OF THIS
AGREEMENT.
20. HEADINGS. Paragraph headings herein shall have absolutely no legal
significance and are used solely for convenience of reference.
21. NOTICES. All notices which either party is required or may desire
to give to the other under or in conjunction with is Agreement shall be in
writing and shall be given by addressing the same to such other party at the
address set forth below, and by depositing the same so addressed, certified
mail, postage prepaid, return receipt requested, or by overnight mail or by
reputable courier service, or by delivering the same personally to such other
party.
IF TO EMPLOYER:
NAI Direct
P. O. Box 950
572 US Route 130
Hightstown, NJ 08520
Attention: GENERAL COUNSEL
IF TO EMPLOYEE:
Gerald C. Finn
P.O. Box 950
572 US Route 130
Hightstown, NJ 08520
Any notice mailed should be deemed to have been given three (3) United
States Post Office delivery days following the date of mailing. Overnight mail
or courier services shall be deemed to have been given on the next business day
following the date of mailing. Any notice delivered in person shall be deemed
effective upon delivery. Either party may change the address for the service of
notice upon it by written notice given to the other in the manner herein
provided for the giving of notice.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands.
NAI DIRECT, INC.
By: //S// JEFFREY M. FINN
-------------------------------
Name: Jeffrey M. Finn
Title: President & COO
//S// GERALD C. FINN
-------------------------------
Gerald C. Finn
9
<PAGE>
SCHEDULE A
POSITION RESPONSIBILITIES
As Chief Executive Officer of NAI Direct, Employee will have the
following duties and responsibilities:
o Exercising the executive powers of NAI Direct
o Hiring and firing of all employees
o Setting compensation for all employees
o Presiding over meetings of the Executive Committee of NAI
Direct
o Implementing NAI Direct's policies as adopted by the Board of
Directors
o Serving as an ex-officio member of the Board of Directors
10
<PAGE>
Exhibit 10.36
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of September 23, 1999 (this "AGREEMENT") among
the WORLDWIDE WEB NETWORX CORPORATION, a Delaware corporation ("WWWX"), NEW
AMERICA NETWORK, INC., a Delaware corporation ("NAI"), and WEINSTEIN, GOSS,
SCHLEIFER, EISENBERG, WINKLER, ROTHWEILER & OSTROFF, Attorneys at Law ("ESCROW
AGENT").
WITNESSETH
WHEREAS, simultaneously with execution and delivery of this Agreement, WWWX
and NAI have entered into a Share Exchange Agreement (the "EXCHANGE AGREEMENT")
and WWWX, NAI and Real Quest, Inc., a New Jersey Corporation ("RQ"), have
entered into a Real Quest, Inc. Shareholders' Agreement (the "RQ SHAREHOLDERS'
AGREEMENT");
WHEREAS, pursuant to the Exchange Agreement, WWWX agreed to place 750,000
shares of WWWX common stock (the "ESCROWED STOCK")with the Escrow Agent to be
distributed in accordance with the provisions of this Agreement;
NOW, THEREFORE, parties agree as follows:
SECTION 1. PLACEMENT OF ESCROWED STOCK WITH THE ESCROW AGENT.
(a) DELIVERY OF THE ESCROWED STOCK. Simultaneously with the execution
of this Agreement, WWWX is delivering (or will immediately thereafter undertake
to) deliver a share certificate representing the Escrowed Stock in the name of
NAI to the Escrow Agent to be held in escrow pursuant to the terms and
conditions of this Agreement, and the Escrow Agent is accepting the Escrowed
Stock for deposit in escrow pursuant to the terms and conditions of this
Agreement. All interest, income and earnings on the Escrow Amount are
hereinafter referred as the "ESCROW INTEREST".
(b) DIVIDENDS AND DISTRIBUTIONS. The Escrow Agent will hold the
Escrowed Stock for the benefit and on behalf of WWWX and NAI. Any dividends or
distributions made by WWWX with respect to the Escrowed Stock during the period
of time that the Escrowed Stock is held by the Escrow Agent will be distributed
to NAI. The Escrowed Stock shall be under the sole dominion and control of the
Escrow Agent and may be disbursed from the Escrow Account only in accordance
with the terms of this Agreement.
(c) VOTING TRUST. During the period that the Escrowed Stock is held in
escrow by the Escrow Agent, NAI will be entitled, for and in its name, to vote
and otherwise act with respect to the Escrowed Stock, at all annual, special,
and other meetings of stockholders (or by
<PAGE>
written consent in lieu of those meetings) and at any other times that the
Escrowed Stock is required to be, or may be voted or acted upon.
SECTION 2. DISTRIBUTION OF THE ESCROWED STOCK. The Escrow Agent shall
continue to hold the Escrowed Stock in escrow until the Escrow Agent's receipt
of written instruction ("INSTRUCTIONS") signed by either (i) the accounting firm
appointed by NAI Direct, Inc., a Delaware corporation, as its independent
auditor (the "AUDITOR") certifying as to whether or not the Revenue Goal (as
defined in the Exchange Agreement) has been met and instructing the Escrow Agent
to distribute the Escrowed Stock to either WWWX or NAI or (ii) both of WWWX and
NAI, stating either that RQ Shareholders' Agreement has been terminated and to
which party the Escrowed Stock should be delivered. The Escrow Agent irrevocably
(i) undertakes to act in accordance with the terms set forth in this Agreement
and (ii) waives any and all rights of set-off, counterclaim or deduction
whatsoever against or from the Escrowed Stock, except with respect to the fees
and expenses referred to in SECTION 3(F), as to which, the Escrow Agent is
hereby granted a lien on the Escrowed Stock in order to secure the timely
payment of such fees and expenses.
SECTION 3. THE ESCROW AGENT. The acceptance by the Escrow Agent of its
duties under this Escrow Agreement is subject to the following terms and
conditions, which all parties to this Escrow Agreement hereby agree shall govern
and control with respect to the rights, duties and liabilities of the Escrow
Agent:
(a) PROTECTION OF THE ESCROW AGENT. The Escrow Agent shall be liable as
a depository only and shall not be responsible or accountable for the
correctness of any information set forth in any statements delivered to it, nor
shall it be required in any event to verify the correctness of any such
statements and it shall not be responsible for verifying compliance by either
WWWX or NAI with any agreement, including, but not limited to, the Exchange
Agreement and the RQ Shareholders' Agreement, among such parties relating to the
release of the Escrowed Stock. The Escrow Agent shall be entitled to rely,
without any investigation whatsoever, upon the communication received from WWWX,
NAI or the Auditor. The Escrow Agent shall be entitled to deem the signatories
of any communication submitted to it hereunder as being those purported to be
authorized to sign such communication on behalf of such party and shall be
entitled to rely on the genuineness of the signatures of such signatories
without inquiry and without substantiating evidence of any kind.
(b) DUTIES. The duties of the Escrow Agent are only such as are herein
specifically provided.
(c) ESCROW AGENT'S COUNSEL. The Escrow Agent may consult with, and
obtain advice from, legal counsel in the event of any dispute or question as to
the construction of any of the provisions hereof or its duties hereunder, and it
shall incur no liability and shall be fully protected in acting in good faith in
accordance with the advice of such counsel.
(d) OTHER AGREEMENTS. Other than this Escrow Agreement, the Escrow
Agent is not a party to or otherwise bound by any understanding, document or
agreement (including, but not limited to the Exchange Agreement or the RQ
Shareholders' Agreement) of any kind relating
<PAGE>
to the subject matter of this Escrow Agreement.
(e) COLLECTION. The Escrow Agent, shall have no obligation whatsoever
to take any measures to collect the Escrowed Stock if the Escrowed Stock is not
delivered to it.
(f) ESCROW AGENT FEES. As compensation for the services of the Escrow
Agent to be performed hereunder, the Escrow Agent is hereby receiving a fee of
$1,500 payable upon the execution of this Agreement. In addition, the Escrow
Agent shall be entitled to reimbursement, within 30 days of presentation of
appropriate documented invoices, from WWWX of the Escrow Agent's reasonable
out-of-pocket expenses incurred in the performance of his duties hereunder. NAI
agrees to reimburse WWWX for 50% of any amounts paid by WWWX to the Escrow Agent
as reimbursement of expenses. The Escrow Agent shall pre-advise WWWX and NAI
prior to incurring any such expenses.
SECTION 4. INDEMNIFICATION OF ESCROW AGENT. WWWX and NAI agree to indemnify
the Escrow Agent from, and to hold it harmless against, any and all losses,
liabilities, claims, damages, actions, suits, costs and expenses incurred
without gross negligence or bad faith on the part of the Escrow Agent, arising
out of or in connection with its entering into this Agreement and carrying out
its duties hereunder, including the costs and expenses (including reasonable
counsel fees and expenses) of defending itself against any claim or liability.
All amounts payable pursuant to this SECTION 4 shall be either (a) shared
equally by WWWX and NAI, so long as neither WWWX or NAI is the party iniating
the subject action, (b) the non-initiating party of the subject action if the
Escrow Agent is found to have acted improperly or (c) the initiating party of
the subject action if the Escrow Agent is found to have acted properly.
SECTION 5. RESIGNATION OF ESCROW AGENT. The Escrow Agent shall have the
right, in its discretion, to resign and be discharged from its duties and
obligations hereunder at any time by giving at least 30 days' prior written
notice of such resignation to WWWX and NAI. In such event, WWWX and NAI will act
in good faith to promptly select another entity, which will be appointed as
successor Escrow Agent, and will enter into an agreement with such other
institution in substantially the form of this Escrow Agreement. The Escrow Agent
shall continue to serve until its successor accepts the terms of this Escrow
Agreement by written notice thereof to each of WWWX and NAI and receives the
Escrowed Stock. WWWX and NAI shall have the right at any time upon unanimous
consent to substitute a new Escrow Agent by giving notice thereof to the Escrow
Agent then acting, and the Escrow Agent shall deliver the Escrowed Stock to the
successor Escrow Agent at the written direction of WWWX and NAI.
SECTION 6. TERMINATION. This Escrow Agreement shall terminate, and Escrow
Agent shall be released from all claims of any sort arising under this
Agreement, upon the final disbursement of the Escrowed Stock in accordance with
the provisions of this Escrow Agreement. This SECTION 6 shall survive
termination of this Agreement.
SECTION 7. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been given or
made if in writing and delivered personally, by registered or certified mail or
by courier or messenger, or sent by facsimile (with confirmation received) to
the parties at the following addresses:
<PAGE>
(a) If to WWWX, to:
WorldWide Web NetworX Corporation
521 Fellowship Road, Suite 130
Mount Laurel, NJ 08054
Attn.: President and CEO
Fax: 856-914-0745
with a copy to:
Attn.: Allan M. Cohen, Esq.
General Counsel
Fax: 856-914-0842
(b) If to NAI, to:
New America Network, Inc.
P.O. Box 950
572 US Route 130
Hightstown, NJ 08520
Attn: Gerald C. Finn, Chairman and CEO
Fax Number: (609) 448-8126
with a copy to: Edward J. Finn, Esq.
General Counsel
Fax Number: (410) 884-4072
(c) If to the Escrow Agent, to:
WEINSTEIN, GOSS, SCHLEIFER, EISENBERG, WINKLER,
ROTHWEILER & OSTROFF
1634 Spruce Street
Philadelphia, PA 19103-6719
Attn.: Michael M. Goss
Fax: 215-546-0118
or to such other persons or at such other addresses as shall be furnished by any
party by like notice to the other parties, and such notice, or communication
shall be deemed to have been given or made as of the date so delivered. No
change in any of such addresses or facsimile numbers shall be effective insofar
as notices under this Section are concerned unless such changed address shall
have been given to each other party hereto as provided in this Section.
SECTION 8. SETTLEMENT OF DISPUTES. If any dispute arises under this Escrow
Agreement with respect to the delivery, ownership or right of possession of any
of the Escrowed Stock, or the duties of the Escrow Agent hereunder, or as to any
other matter arising out of or
<PAGE>
relating to this Agreement, such dispute shall be settled either by mutual
agreement of WWWX and NAI (evidenced by appropriate instructions in writing to
the Escrow Agent, signed by WWWX and NAI and satisfactory in all respects to the
Escrow Agent and its counsel) or by a final order, decree or judgment of a court
of competent jurisdiction in the United States of America (the time for appeal
having expired and no appeal having been perfected), all costs and expenses of
which (including reasonable attorneys' fees) shall be borne by the party against
which the dispute is settled. The Escrow Agent shall be under no duty whatsoever
to institute or defend any such proceedings.
SECTION 9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF DELAWARE. THE PARTIES AGREE TO
WAIVE A JURY TRIAL IN ANY PROCEEDING BROUGHT TO ENFORCE ANY OF THE TERMS OF THIS
AGREEMENT.
SECTION 10. WAIVERS AND AMENDMENTS. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any other or subsequent breach, whether or not similar. This Agreement
may be amended, modified or supplemented, and any terms hereof may be waived
only by a written instrument executed by the parties hereto.
SECTION 11. SEVERABILITY. The terms of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of this Agreement or of
any other term or provision hereof.
SECTION 12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
SECTION 13. SUCCESSORS AND ASSIGNS; NO THIRD PARTY BENEFICIARIES. This
Agreement shall inure to the benefit of, and be binding upon, the parties hereto
and their respective successors and assigns. Nothing in this Agreement shall
confer upon any person or entity not a party to this Agreement, or the legal
representatives of such person or entity, any rights or remedies of any nature
or kind whatsoever under or by reason of this Agreement.
SECTION 14. JOINT AND SEVERAL LIABILITY. WWWX and NAI shall be jointly and
severally liable for all amounts payable to the Escrow Agent hereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
WORLDWIDE WEB NEWORX CORPORATION
By:
Name: Robert D. Kohn
Title: President and CEO
NEW AMERICA NETWORK, INC.
By:
Name: Gerald C. Finn
Title: Chairman and CEO
WEINSTEIN, GOSS, SCHLEIFER, EISENBERG, WINKLER,
ROTHWEILER & OSTROFF,
in its capacity as Escrow Agent
By:
Name: Michael M. Goss
Title: Partner
<PAGE>
Exhibit 10.37
AGREEMENT
This Agreement, dated as of December 22, 1999 by and between WorldWide
Web NetworX Corporation ("WWWX"), Warren Rothstein ("Rothstein"), International
Commerce Exchange Systems, Inc. ("ICES"), Henry Kauftheil ("Kauftheil"), Jencom
Digital Technologies, LLC ("Jencom") and InterCommerce China, LLC ("ICC").
WITNESSETH:
WHEREAS, ICES has a substantial direct or indirect equity interest in JDT and
ICC;
WHEREAS, WWWX, ICC, Jencom and JDT have negotiated and/or consummated various
proposed agreements and actual agreements,; and
WHEREAS, ICES and WWWX desire to modify all of their previous agreements, oral
or written, as specifically provided herein.
NOW THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereby agree as follows:
1. 1. INTERCOMMERCE CHINA, LLC (ICC). ICES and Kauftheil agree to enter
into a new Operating Agreement relating to ICC. Under the terms of the
new Operating Agreement which shall be substantially similar to the
proposed Amended and Restated Operating Agreement of WWWX-Jencom, LLC,
a copy of which is initialed and attached hereto except that Henry
Kauftheil shall be sole manager, and (a)WWWX or its designee shall be
issued 33.33% of the equity of ICC on a fully diluted basis, and all
other ICC members shall collectively own 66.67%of the ICC equity, and
(b) Rothstein shall (initially) serve, as WWWX's appointee on the
board of directors of ICC (which shall have no more than 3 directors).
Additionally, ATMCenter, an affiliate of WWWX, shall enter into a ten
(10) year exclusive distribution agreement with ICC, pursuant to which
it will distribute all goods available to ICC under any agreements
between ICC and China Product Trade Net Center ("CPTNC") . ICC
acknowledges and agrees that the ATMCenter distribution agreement will
authorize and empower Rothstein and/or his designee to be the asset
manager responsible for all decisions relating to product acquisition
and disposition. ATM's e-commerce systems will be utilized as the
exclusive distribution system for all CPTNC transactions, for: (a) a
fee which shall be equal to 50% of distributable profits after
deductions of operating expenses (payroll, travel, product sales, it
being understood that Peter Lu shall be the responsibility of ATM as
an employee only); (b) a transaction fee equal to ten (10%) percent of
gross profits from such transaction. No party hereto will compete with
the business of ICC relating to the CPTNC or its successor. All
parties will work together to develop ICC so that it may successfully
conclude an initial public offering or other acceptable capital
raising as promptly as possible. It is understood that all the parties
hereto may conduct any business of any kind
<PAGE>
anywhere in the world, including China, except as expressly limited
hereby to CPTNC.
2. JENCOM DIGITAL TECHNOLOGIES, LLC (JDT). JDT agrees to modify the terms
of the WWWX-Jencom, LLC ("WJC") Operating Agreement to provide that:
(i) Kauftheil (the Manager of JDT) shall no longer be the sole manager
of WJC, and (ii) that WJC shall be co-managed by Kauftheil and a WWWX
designee, initially Rothstein. JDT agrees to reasonably cooperate with
WWWX in connection with its proposed public registration of WWWX
shares currently held by WWWX shareholders, and provide the documents
set forth on Exhibit A hereto. In consideration for the foregoing,
WWWX shall forthwith register in such Registration Statement (which
will be filed before May 17, 2000) all of the 2,000,000 shares
previously issued to JDT on February 28, 1999, in the names of JDT's
designees, if legally allowable. WWWX will use its reasonable efforts
to have the Registration Statement declared effective as promptly as
practicable thereafter, and will register no other shareholder's
shares prior thereto.
3. SHARE CONSIDERATION. In consideration of the terms set forth in
Paragraphs 1,2 and 4 hereof, and in lieu of the 3 million contingent
shares of WWWX otherwise issuable pursuant to the Acquisition
Agreement dated February 28, 1999 as amended between JDT and WWWX (the
"Acquisition Agreement"), the parties hereby agree as follows: (a)
WWWX shall issue to JDT 1,500,000 unregistered shares of WWWX common
stock upon execution of the Operating Agreement of ICC described in
Paragraph 1 above; and (b) upon ICC's merger or other conversion or
consolidation into a publicly traded entity in a transaction which
involves $5 million invested in ICC or a $50 million ICC valuation
market cap (a "Public Transaction") within a period of four (4) years
commencing from the date hereof, WWWX shall issue to ICES 1.5 million
restricted shares of its common stock simultaneously with consummation
of the Public Transaction.
4. FINAL SETTLEMENT AND RELEASE. All previous agreements are specifically
modified or terminated, as the case may be, in accordance with the
terms set forth herein. This agreement sets forth the full and final
settlement of the parties as to any claims, disputes, rights or causes
of action (collectively "Claims") of any kind or nature whatsoever, in
law or in equity arising out of or in connection with any previous
agreements of the parties, and/or the business, conduct or affairs of
ICC or WJC to the day hereof. This agreement has been duly and validly
authorized by each of the parties hereto, and constitutes the valid
and binding obligation of each such party. Each party will take all
such further action as is necessary to promptly implement its
agreements contained herein, and each party hereby releases and
discharges the other party from any Claims from the beginning of the
world through the date hereof. This Agreement may only be amended in
writing, signed by all affected parties, and may not be amended
orally, or by action or inaction.
2
<PAGE>
5. SPECIAL COVENANT. JDT and WJC covenant and agree to promptly provide
to WWWX the information set forth on Exhibit A, provided that neither
JDT or WJC shall be required to generate any new documentation not
currently in their possession. On a going forward basis, JDT will
cooperate with WWWX in its new role as joint manager of WJC, and both
parties agree to work towards establishment and implementation of a
WJC business plan.
6. NO WAIVER. Any waiver of any term hereof must be in writing and shall
be specifically limited to the subject matter of the waiver. This
agreement is binding upon, and shall to the benefit of, the parties
hereto and their respective successors.
WORLDWIDE WEB NETWORX
CORPORATION
BY://s// Warren Rothstein
-------------------------------
WARREN ROTHSTEIN,
ACTING CEO
//S// Warren Rothstein
----------------------------------
WARREN ROTHSTEIN, INDIVIDUALLY
INTERNATIONAL COMMERCE EXCHANGE
SYSTEMS, INC.
BY://s// Henry Kauftheil
-------------------------------
HENRY KAUFTHEIL, MANAGER
//s// Henry Kauftheil
----------------------------------
HENRY KAUFTHEIL, INDIVIDUALLY
JENCOM DIGITAL TECHNOLOGIES, LLC
BY://s// Henry Kauftheil
-------------------------------
HENRY KAUFTHEIL, MANAGER
INTERCOMMERCE CHINA, LLC
BY://s// Henry Kaufheil
-------------------------------
HENRY KAUFTHEIL, MANAGER
3
<PAGE>
Exhibit 10.38
EXECUTION COPY
CONFIDENTIAL
----------------------------------------------
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
WWWX-JENCOM, LLC
-------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I FORMATION OF LIMITED LIABILITY COMPANY GENERAL
PROVISIONS............................................................................1
Section 1.1 Formation.............................................................................1
Section 1.2 Name..................................................................................1
Section 1.3 Purpose...............................................................................1
Section 1.4 Offices...............................................................................2
Section 1.5 Nature of Partners' Interests, Non-Partition..........................................2
Section 1.6 Duration of Company...................................................................2
Section 1.7 Further Assurances....................................................................2
Section 1.8 Classification for Tax Purposes.......................................................2
ARTICLE II MEMBERS, MEMBERSHIP INTERESTS AND CAPITAL CONTRIBUTIONS; LOANS........................3
Section 2.1 Membership and Participation Percentages..............................................3
Section 2.2 WWWX Assignment.......................................................................3
Section 2.3 Capital Accounts......................................................................3
Section 2.4 Use of Capital Contributions and Loans................................................3
Section 2.5 Additional Capital Contributions / Members' Loans.....................................3
Section 2.6 Operating Deficits....................................................................4
Section 2.7 Permitted Outside Activities..........................................................4
Section 2.8 Liability of Members..................................................................4
ARTICLE III MEETINGS OF MEMBERS...................................................................5
Section 3.1 Annual Meetings; Special Meetings.....................................................5
Section 3.2 Place of Meetings.....................................................................5
Section 3.3 Notice of Meetings....................................................................5
Section 3.4 Quorum of and Action by Members.......................................................5
Section 3.5 Voting by Members.....................................................................6
Section 3.6 Action Without a Meeting; Telephone Meetings..........................................6
ARTICLE IV MANAGEMENT............................................................................6
Section 4.1 Management............................................................................6
Section 4.2 Liability: Indemnification of the Manager.............................................8
Section 4.3 Interested Manager and Officers.......................................................8
Section 4.4 Manager's Compensation and Reimbursement..............................................9
Section 4.5 Time Devoted to Company...............................................................9
Section 4.6 Records and Reports...................................................................9
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 4.7 Fiscal Year...........................................................................9
Section 4.8 Reports..............................................................................10
Section 4.9 Required Filings.....................................................................10
Section 4.10 Inspection of Records................................................................10
Section 4.11 Annual Budget........................................................................11
Section 4.12 Liability of Manager.................................................................11
ARTICLE V OFFICERS.............................................................................11
Section 5.1 Officers.............................................................................11
Section 5.2 Compensation.........................................................................11
Section 5.3 Term of Office; Removal; Filling of Vacancies........................................11
Section 5.4 Chairman.............................................................................12
Section 5.5 President............................................................................12
Section 5.6 Vice Presidents......................................................................12
Section 5.7 Secretary............................................................................12
Section 5.8 Assistant Secretary..................................................................12
Section 5.9 Treasurer............................................................................12
Section 5.10 Additional Powers and Duties.........................................................12
ARTICLE VI ACCOUNTING AND TAX MATTERS; REPORTS; BANKING.........................................13
Section 6.1 Books and Records; Capital Accounts..................................................13
Section 6.2 Returns Tax..........................................................................13
Section 6.3 Tax Matters Person...................................................................13
Section 6.4 Tax Elections........................................................................13
Section 6.5 Bank Accounts; Investment of Company Funds...........................................13
ARTICLE VII TRANSFER OF COMPANY INTERESTS, WITHDRAWAL OF
MEMBERS, BUY/SELL PROVISIONS.........................................................14
Section 7.1 Assignment and Transfer..............................................................14
Section 7.2 Expenses.............................................................................15
Section 7.3 Withdrawal of Members................................................................15
Section 7.4 Death, Legal Incapacity, Dissolution or Bankruptcy of a Member.......................15
Section 7.5 Status of Interests Transferred......................................................16
ARTICLE VIII DISSOLUTION AND TERMINATION..........................................................16
Section 8.1 Dissolution..........................................................................16
Section 8.2 Appointment of Liquidating Member....................................................17
Section 8.3 Distributions and Other Matters......................................................17
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 8.4 Distributions of Property............................................................17
Section 8.5 Action During Liquidation: Statements of Account.....................................18
ARTICLE IX REPRESENTATIONS, WARRANTIES AND COVENANTS............................................18
Section 9.1 Representations and Warranties.......................................................18
ARTICLE X AMENDMENTS...........................................................................22
Section 10.1 Amendments...........................................................................22
ARTICLE XI MISCELLANEOUS........................................................................22
Section 11.1 Manner of Giving Notice..............................................................22
Section 11.2 Waiver of Notice.....................................................................22
Section 11.3 No Company Seal......................................................................22
Section 11.4 Public Announcements.................................................................22
</TABLE>
iii
<PAGE>
AMENDED AND RESTATED
OPERATING AGREEMENT OF
WWWX-JENCOM, L.L.C.
A DELAWARE LIMITED LIABILITY COMPANY
This Amended and Restated Limited Liability Company Agreement (this
"AGREEMENT") of WWWX-JENCOM, L.L.C. (the "COMPANY"), a limited liability company
organized pursuant to the Delaware Limited Liability Company Law of 1994 (as
amended, the "ACT"), made as of the 7th day of January, 2000, is entered into by
and between WorldWide Web NetworX Corporation ("WWWX"), a Delaware corporation,
and JenCom Digital Technologies, LLC ("JENCOM"), a Delaware limited liability
company and amends and restates in its entirety the Limited Liability Company
Agreement of WWWX - JenCom, L.L.C. dated as of April 28, 1999 (the "PRIOR
AGREEMENT").
ARTICLE I
FORMATION OF LIMITED LIABILITY COMPANY GENERAL PROVISIONS
SECTION 1.1 FORMATION
WWWX and JENCOM have heretofore formed and shall operate a limited
liability company under the Act and in accordance with the terms of this
Agreement and the Company's Articles of Organization. The Company shall exist
under and be governed by, and this Agreement shall be construed in accordance
with, the laws of the State of Delaware. WWWX and JENCOM have caused to be filed
with the Secretary of State of Delaware the Certificate of Formation of the
Company.
SECTION 1.2 NAME
The name of the Company shall be WWWX-Jencom, L.L.C., and all business of
the Company shall be conducted in such name or in such operational names as
determined, from time to time by the Manager.
SECTION 1.3 PURPOSE
WWWX and JENCOM desire to form and operate the Company pursuant to this
Agreement and other related documents and instruments, as a limited liability
company under Delaware law (hereinafter the "Company"). The purpose and
character of the business of the Company shall be to develop products and
services utilizing modern technology and to carry on any other lawful business,
purpose or activity which the Members may unanimously from time to
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time determine. The Company shall have all of the powers provided for a limited
liability company under the Act.
SECTION 1.4 OFFICES
The principal place of business of the Company shall be 220 West 19th
Street, New York, NY, 10011, or such other principal place of business as the
Manager may from time to time determine. The Company may have, in addition to
such office, such other offices and places of business at such locations, both
within and without the State of Delaware, as the Manager may from time to time
determine or the business and affairs of the Company may require.
SECTION 1.5 NATURE OF PARTNERS' INTERESTS, NON-PARTITION
The interests of the Members in the Company shall be personal property for
all purposes. All property owned by the Company, whether real or personal,
tangible or intangible, shall be owned by the Company as an entity, and no
Member individually shall have any ownership of such property. Except as
otherwise stated and provided herein, no Member shall be entitled to seek
partition of any Company property.
SECTION 1.6 DURATION OF COMPANY
The term of the Company commenced upon the filing of the Certificate of
Formation with the Secretary of State of the State of Delaware and shall
continue in existence and be perpetual unless terminated pursuant to any
provisions of this Agreement or as otherwise provided by law.
SECTION 1.7 FURTHER ASSURANCES
The parties hereto will execute whatever certificates and documents, and
will file, record and publish such certificates and documents, which are
required to form and operate a limited liability company under the Act.
SECTION 1.8 CLASSIFICATION FOR TAX PURPOSES
The Members hereby acknowledge their intention that the Company be
classified, for federal and state income tax purposes, as a partnership and not
as an association taxable as a corporation, pursuant to Section 7701(a)(2) of
the Code, and agree that the provisions of this Agreement shall be construed in
a manner to give full effect to such intent.
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ARTICLE II
MEMBERS, MEMBERSHIP INTERESTS AND CAPITAL CONTRIBUTIONS; LOANS
SECTION 2.1 MEMBERSHIP AND PARTICIPATION PERCENTAGES
The names, addresses and membership interest of each of the Members is as
follows:
NAMES AND ADDRESSES PARTICIPATION PERCENTAGE
WorldWide Web NetworX Corporation 50%
521 Fellowship Road
Suite 130
Mt. Laurel, NJ 08054
JenCom Digital Technologies, LLC 50%
18 West 18th Street
New York, NY 10011
SECTION 2.2 WWWX ASSIGNMENT
Simultaneously with the execution and delivery of the Prior Agreement, WWWX
assigned, transferred, delivered and conveyed to the Company all of its right,
title and interest in and to the "Purchased Assets" purchased by WWWX from
JenCom on the date of the execution and delivery of the Prior Agreement.
SECTION 2.3 CAPITAL ACCOUNTS
The Company shall establish and maintain a Capital Account for each Member
in accordance with GAAP.
SECTION 2.4 USE OF CAPITAL CONTRIBUTIONS AND LOANS
The Capital Contributions of the Members, all proceeds of Company
borrowings, and any Additional Capital Contributions and Members' Loans made
pursuant to this Agreement shall be used and applied for any Company purpose as
determined by the Members.
SECTION 2.5 ADDITIONAL CAPITAL CONTRIBUTIONS / MEMBERS' LOANS
(A) Unless agreed to by all the Members, no Member shall be required to
make any Capital Contributions or Members' Loans to the Company. It is
understood that WWWX had loaned to JenCom in connection with the Purchased
Assets a $900,000.00 ten-year interest free loan and that said loan has been
transferred to the Company. The loan is to be repaid at the earliest of the
following: (1) ten years from March 15, 1999, or (2) an investment into the
Company of a minimum of $10,000,000, or (3) the sale of any asset by the Company
exceeding $5,000,000. The $900,000 will be recorded as an interest free members'
loan which will be
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further used by the Manager in connection with the operations and development of
the Company as a member loan.
(B) At any time and from time to time after the date hereof, any Member may
(but shall not be obligated to) make Additional Capital Contributions or
Members' Loans to the Company, if the Members unanimously approve in advance
each such Additional Capital Contribution and Members' Loans.
(C) If any Member advances any funds to the Company after the date of this
Agreement (except in the case of Additional Capital Contributions) with the
approval of all the Members, such advances will be treated as Members' Loans,
will not increase such Members membership interest, and the amount thereof will
be a debt due from the Company to such Member, to be repaid with interest
thereon accruing at the fluctuating prime rate of interest published from time
to time by The Wall Street Journal (or, if The Wall Street Journal is no longer
published, the prime rate published in a publication of national circulation
selected by the Manager) plus two percent (2%), or as otherwise unanimously
approved by the Members.
SECTION 2.6 OPERATING DEFICITS
In the event that the Manager determines that the Company requires
additional funds to meet operating expenses or required capital improvements, or
for any other proper Company purpose (in any such case, an "Operating Deficit'),
the Manager may, with the prior unanimous consent of the Members, either (1)
request that the Members, pro rata in accordance with their then respective
Participation Percentages, advance funds in the amount so required, but in no
event will the Members be obligated to make such an advance or (2) obtain loans
on such terms as the Members approve unanimously, (3) if loans are not available
on terms satisfactory to the Members, unanimously, obtain additional equity
participation in the Company by the admission of additional Members and the pro
rata reduction of the existing Members' membership interests, or (4) take such
other actions, and explore and pursue such other financing options as the
Members may unanimously deem appropriate under the circumstances.
SECTION 2.7 PERMITTED OUTSIDE ACTIVITIES.
JENCOM and WWWX acknowledge that (a) the business of the Company may
involve business dealings with other businesses in which JENCOM, WWWX or their
affiliates have an interest, (b) JENCOM and WWWX and their affiliates may
maintain such other interests and activities, and (c) the Company, JENCOM and
WWWX each waives any rights it might otherwise have to share or participate in
such other interests or activities of JENCOM and WWWX or their affiliates.
SECTION 2.8 LIABILITY OF MEMBERS
No Member shall be liable for the debts, liabilities, contracts or other
obligations of the Company except to the extent of any unpaid capital
contributions it has agreed to make to the Company and its share of the assets
(including undistributed revenues) of the Company; no Member shall be required
to make any loans or capital contributions to the Company, except as
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may be agreed between a Member and the Company, with approval of all of the
Members. The Company shall indemnify and hold harmless each Member in the event
and Member (a) becomes liable, notwithstanding the preceding sentence, for any
debt, liability, contract or other obligation of the Company except to the
extent expressly provided in the preceding sentence or (b) is directly or
indirectly required to make any payments with respect thereto.
ARTICLE III
MEETINGS OF MEMBERS
SECTION 3.1 ANNUAL MEETINGS; SPECIAL MEETINGS
An annual meeting of the Members, commencing with the year 1999, shall be
held within four months following the end of the fiscal year of the Company. At
such meeting, the Members shall transact such business as may properly be
brought before the meeting. Special meetings of the Members, for any purpose or
purposes, unless otherwise prescribed by statute, may be called by any Member.
Only business within the purpose or purposes described in the notice of special
meeting of Members may be conducted at the meeting unless the Members otherwise
agree.
SECTION 3.2 PLACE OF MEETINGS
Meetings of Members shall be held at such places, within or without the
State of Delaware, as may from time to time be fixed by the Manager or as shall
be specified or fixed in the respective notices or waivers of notice thereof.
SECTION 3.3 NOTICE OF MEETINGS
Written or printed notice stating the place, day and hour of each meeting
of the Members and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than five nor more than
45 days before the date of the meeting, either personally or by mail, telegram,
express courier or telefax or similar communication, by or at the direction of
the person(s) calling the meeting, to each Member entitled to vote at the
meeting.
SECTION 3.4 QUORUM OF AND ACTION BY MEMBERS
A majority of the membership interests of the Members, represented in
person or by proxy, shall be requisite to and shall constitute a quorum at each
meeting of Members for the transaction of business, except as otherwise provided
by the Act. With respect to any matter, the majority vote of the Members shall
be required to constitute the act of the Members except as otherwise required
under the terms of this Agreement. The Members represented in person or by proxy
at a meeting of Members at which a quorum is not present may adjourn the meeting
until such time and to such place as may be determined by a majority vote of the
Members represented in person or by proxy at that meeting. At any such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted that might have been transacted at the meeting as originally
convened.
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SECTION 3.5 VOTING BY MEMBERS
A Member shall be entitled to a number of votes equal to the product of
such Member's membership interest (expressed as a percentage of 1.0) multiplied
times 100, on each matter submitted to a vote at a meeting of Members or
otherwise. For example, a 33.33% membership interest is entitled to 33.33 votes.
At any meeting of the Members, every Member having the right to vote shall be
entitled to vote either in person or by proxy executed in writing by such
Member. A telegram, telex, cablegram or similar transmission by the Member, or a
photographic, photostatic, facsimile or similar reproduction of a writing
executed by the Member, shall be treated as an execution in writing for purposes
of this Section 3.5. No proxy shall be valid after eleven months from the date
of its execution unless otherwise provided in the proxy. Each proxy shall be
revocable unless the proxy form conspicuously states that the proxy is
irrevocable and the proxy is coupled with an interest. Each proxy shall be
delivered to the Manager prior to or at the time of the meeting.
SECTION 3.6 ACTION WITHOUT A MEETING; TELEPHONE MEETINGS
Any action required by the Act to be taken at any annual or special meeting
of Members, or any action which may be taken at any annual or special meeting of
Members, may be taken without a meeting, without prior notice, and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by all of the Members. A telegram, telex, cablegram or similar
transmission by a Member, or a photographic, photostatic, facsimile or similar
reproduction of a writing signed by a Member, shall be regarded as signed by the
Member for purposes of this Section 3.6. Subject to the provisions of applicable
law and this Agreement regarding notice of meetings, Members may participate in
and hold a meeting by using conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a telephone meeting pursuant to this Section
3.6 shall constitute presence in person at such meeting, except when a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting was not lawfully
called or convened.
ARTICLE IV
MANAGEMENT
SECTION 4.1 MANAGEMENT
The day to day business and affairs of the Company shall be managed,
subject to the terms and conditions set forth herein, by jointly by a designee
of WWWX, initially Warren Rothstein and a designee of JENCOM, initially Henry
Kauftheil (collectively, the "Manager"); provided that the Manager shall have no
authority, without the prior approval of all Members to make the following major
decisions (each being a "Major Decision"):
(a) amendment of the Certificate of Formation of the Company;
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(b) amendment of this Agreement;
(c) amendment of the Annual Work Plan and Budget of the Company to be
submitted for the Members' approval;
(d) approval of a transfer of a Members interest or admission of a
Member;
(e) agreement to continue the business of the Company after an event
of dissolution specified in Section VIII;
(f) creation, incurrence, assumption, or guarantee of any
indebtedness for money borrowed, or an increase of the amount of
any indebtedness outstanding under any loan agreement, mortgage,
or other borrowing arrangement, in either case in excess of the
amounts approved in the Annual work Plan and Budget;
(g) assigning, transferring, pledging, compromising or releasing of
any of the claims of or debts due the Company except upon payment
in full, or arbitrating or consenting to the arbitration of any
of the disputes or controversies of the Company;
(h) any action which would cause the Company to become a surety,
guarantor or accommodation party to any obligation;
(i) any action which would cause the Company to grant a security
interest to any third party in any of the Company's assets;
(j) making, executing, or delivering any assignment for the benefit
of creditors or taking any action on behalf of the Company with
respect to any bankruptcy decisions, including, without
limitation, initiating any bankruptcy or insolvency proceedings,
or liquidating, dissolving or winding up the Company;
(k) acquiring or agreeing to acquire any equity interest in any
entity or any of such entity's assets or approval of a merger,
consolidation or other reorganization of the Company, including,
without limitation, entering into an operating agreement to form
an separate legal entity in which the Company will have an equity
interest and whose other equity participants may include
providers of various systems of Electronic Business, product data
base management, other information technology and investment
recovery operations;
(l) making of, or entry into, any obligation on behalf of the Company
for a commitment, or making of any capital expenditure, in excess
of the amounts approved in the Annual Work Plan and Budget;
(m) lending funds belonging to the Company to any Member or any third
party or extend to any person, firm or corporation, credit on
behalf of the Company, except for the extension of credit in the
ordinary course of the Company's business to
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trade debtors in excess of the amounts approved in the Annual
Work Plan and Budget;
(n) making, execution or delivery of any contract or other
transaction with the officers of the Company or other related
party of the Company, including compensation of management;
(o) authorizing or approving a fundamental change in the business of
the Company, including a sale of all or substantially all of its
assets;
(p) approving any other matter in which the approval of the Members
is expressly required by this Agreement or by the Act; or
(q) entering into an agreement to do or effect any of the foregoing.
SECTION 4.2 LIABILITY: INDEMNIFICATION OF THE MANAGER
The Company shall indemnify, defend and hold harmless each Member, each of
their officers, directors, employee and agents, the Manager and each of its
officers, directors, employees and agents and such other officers appointed by
the Manager, and any other Person acting as an agent of the Company to whom the
Manager shall specifically and in writing have conferred rights hereunder (each,
an "Indemnified Person"), against any loss, expense, damage, claim, liability,
obligation, judgment or injury suffered or sustained by such Indemnified Person
by reason of any act, omission or alleged act or omission by such Indemnified
Person, arising out of such Indemnified Person's activities on behalf of the
Company or in furtherance of the interests of the Company, including, without
limitation, any judgment, award, settlement, reasonable attorneys' fees and
other costs or expenses incurred in connection with the defense of any actual or
threatened actions, proceedings or claims, all costs of which shall be charged
to and paid by the Company as incurred; provided, however, that the acts,
omissions or alleged acts or omissions upon which such actual or threatened
actions, proceedings or claims are based were performed or omitted in good faith
and within the scope of such Person's authority hereunder, and were not
fraudulent, in bad faith or a result of wanton and willful misconduct or gross
negligence by such Indemnified Person.
SECTION 4.3 INTERESTED MANAGER AND OFFICERS
No transaction between the Company and one or more of its Members, the
Manager or officers, or between the Company and any other business entity in
which one or more of its Members, the Manager or officers have an interest shall
be void or voidable solely for this reason, or solely because the Manager or
officer is present at or participates in the meeting of the Manager which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose, if (a) the material facts as to the transaction are
disclosed or are known to the Members entitled to vote thereon, and the contract
or transaction is specifically approved in good faith by vote of the
disinterested Members; and (b) the transaction is fair as to the Company as of
the time it is authorized, approved or ratified by the Manager or the Members.
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SECTION 4.4 MANAGER'S COMPENSATION AND REIMBURSEMENT
The compensation, if any, of the Manager shall be fixed from time to time
by all of the Members. The reimbursement, if any, of the Manager for reasonable
expenses incurred in managing the Company may be allowed from time to time by
the Manager.
SECTION 4.5 TIME DEVOTED TO COMPANY
The Manager shall devote such time to Company business as the Manager deems
necessary to manage and supervise Company business and affairs in an efficient
manner; but nothing in this Agreement shall preclude the employment of any
agent, third party or affiliate to manage or provide other services with respect
to the Company's assets or business as the Members shall determine.
SECTION 4.6 RECORDS AND REPORTS.
The Manager, at the expense of the Company, shall keep or cause to be kept
adequate books of account and records (which books and records are to be the
property of the Company), setting forth a true and accurate account of the
business and affairs of the Company. The books of account of the Company will be
kept on the accrual basis method of accounting for financial accounting
reporting and federal income tax purposes and maintained in accordance with
GAAP. Such books and records are to be kept at the principal place of business
of the Company and are to include:
(a) Information regarding the status of the business and financial
condition of the Company.
(b) A copy of the Company's federal, state and local income tax
returns for each year.
(c) A current list of the name and last known business, residence or
mailing address of each Member and its Members interests.
(d) A copy of this Agreement and the Certificate of Formation and all
amendments to both.
(e) Information regarding the amount of cash and a description and
statement of the agreed value of any other property or services contributed
by each Member and which each Member has agreed to contribute in the
future, and the date on which each became a Member.
SECTION 4.7 FISCAL YEAR
The fiscal year of the Company will be the calendar year for financial
reporting and federal income tax purposes.
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SECTION 4.8 REPORTS
Unless other determined by the Members, the Manager shall cause to be
prepared and delivered to the Members:
(a) Within 30 days after the end of each quarterly period of each
fiscal year of the Company, an operating report for such quarterly period;
(b) Within 30 days after the end of each of the first three quarterly
periods of each fiscal year of the Company, an unaudited balance sheet and
related unaudited statement of income and retained earnings (or changes in
Member capital) and of cash flow for such quarterly period and for the
portion of the fiscal year through the end of such fiscal quarter, setting
forth in each case in comparative form the figures for the previous period;
(c) Within 60 days after the end of each fiscal year of the Company, a
regular annual audit of the Company's financial records by the Company's
independent auditors, including an audited balance sheet of the Company as
of the end of such fiscal year and a related audited statement of income,
retained earnings (or changes in member capital) and of cash flow (and
capital proceeds, if any) for such fiscal year, putting forth in each case
in comparative form the figures for the previous fiscal year; and
(d) At such time or times requested, such other or additional reports
as may be reasonably requested by a Member.
SECTION 4.9 REQUIRED FILINGS
The Manager shall cause the Company to file, at the Company's expense, on
or before the dates the same may be due, giving effect to extensions obtained,
all reports, returns and applications which may be required under the Act or any
other governmental or quasi-governmental body having jurisdiction. The Manager
shall furnish copies of all such reports, returns and applications to the
Members, such furnishing to occur not less than three business days prior to
filing except in the case of reports that are routine and non-substantive. All
reports, returns and applications which may be required by any taxing authority
will be handled by the Manager, pursuant to the provisions of Section 6.2.
Copies of all accounts, reports and other filings pertaining to the Company
furnished by a Member or the Company to any regulatory authority are to be
available to all Members upon request. Copies of all reports and notices
pertaining to the Company furnished by the accountants for the Company are to
also be available to all Members upon request.
SECTION 4.10 INSPECTION OF RECORDS
The books and records of the Company will be open to inspection,
examination and audit and available for copying by each Member at all reasonable
times with reasonable prior notice. Any Member exercising its right to inspect,
examine, audit or copy all or any portion of such books and records will bear
all direct out-of-pocket expenses incurred by both that Member and the Company
in connection with the same.
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SECTION 4.11 ANNUAL BUDGET
By not later than October 31 of each year, the Manager will prepare and
present to the Members an Annual Workplan and Budget for the succeeding fiscal
year for the Member's review and unanimous approval. If such Annual Workplan and
Budget is not approved, the Annual Workplan and Budget then in effect shall
continue in effect, adjusted by the percentage change in the Consumer Price
Index from the previous year, until a new Annual Workplan and Budget is
approved.
SECTION 4.12 LIABILITY OF MANAGER
The Manager shall not be liable for the debts, liabilities, contracts or
other obligations of the Company; provided, however, that the Manager shall be
liable for any debts, liabilities, contracts or other obligations of the Company
incurred or agreed to by such Manager without authorization and in violation of
Section 4.1 of this Agreement.
ARTICLE V
OFFICERS
SECTION 5.1 OFFICERS
The Manager may designate one or more individuals (who may or may not be
the Manager) to serve as officers of the Company. The Company shall have such
officers as the Manager may from time to time determine, which officers may (but
need not) include a Chairman, a President, one or more Vice Presidents (and in
case of each such Vice President, with such descriptive title, if any, as the
Manager shall deem appropriate), a Secretary, an Assistant Secretary and a
Treasurer. Any two or more offices may be held by the same person.
SECTION 5.2 COMPENSATION
The compensation, if any, of all officers of the Company shall be fixed
from time to time by the Members acting unanimously.
SECTION 5.3 TERM OF OFFICE; REMOVAL; FILLING OF VACANCIES
Each officer of the Company shall hold office until his successor is chosen
and qualified in his stead or until his earlier death, resignation, retirement
disqualification or removal from office. Any officer designated by the Manager
may be removed at any time by the Manager whenever in his judgment the best
interests of the Company will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Designation of an officer shall not of itself create contract rights. If the
office of any officer becomes vacant for any reason, the vacancy may be filled
by the Manager.
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SECTION 5.4 CHAIRMAN
The Chairman, if one is designated by the Manager, shall preside at
meetings of the Manager and the Members. He shall assist the Manager in the
formulation of policies of the Company, and shall be available to other officers
for consultation and advice.
SECTION 5.5 PRESIDENT
The President, if one is designated by the Manager, shall be the chief
executive officer of the Company and shall have general supervision of the
affairs of the Company.
SECTION 5.6 VICE PRESIDENTS
Each Vice President that is designated by the Manager shall generally
assist the President and shall have such powers and perform such duties and
services as shall from time to time be prescribed or delegated to him by the
President or the Manager.
SECTION 5.7 SECRETARY
The Secretary, if one is designated by the Manager, shall keep and account
for the records of the Company.
SECTION 5.8 ASSISTANT SECRETARY
The Assistant Secretary, if one is designated by the Manager, shall
generally assist the Secretary.
SECTION 5.9 TREASURER
The Treasurer, if one is designated by the Manager, shall be the chief
accounting and financial officer of the Company and shall have active control of
and shall be responsible for all matters pertaining to the accounts and finances
of the Company.
SECTION 5.10 ADDITIONAL POWERS AND DUTIES
In addition to the foregoing especially enumerated duties, services and
powers, the several officers of the Company shall perform such other duties and
services and exercise such further powers as may be provided by statute, the
Certificate of Formation or this Agreement, or as the Manager may from time to
time determine or as may be assigned to them by any competent superior officer.
In addition to the designation of officers and the enumeration of their
respective duties, services and powers, the Manager may grant powers of
attorneys to individuals to act as agent for or on behalf of the Company, to do
any act which would be binding on the Company, to incur any expenditures on
behalf of or for the Company, or to execute, deliver and perform any agreements,
acts, transactions or other matters on behalf of the Company. Such powers of
attorney may be revoked or modified as deemed necessary by the Manager.
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ARTICLE VI
ACCOUNTING AND TAX MATTERS; REPORTS; BANKING
SECTION 6.1 BOOKS AND RECORDS; CAPITAL ACCOUNTS
An individual capital account shall be established and maintained by the
Company for each Member in accordance with the applicable provisions of the Code
and the Treasury Regulations, including Section 1.704-1(b)(2)(iv). The Manager,
after notice to the Members, is authorized to modify the manner in which the
capital accounts are maintained if the Manager determines that such
modification (a) is required or prudent to comply with the Treasury
Regulations and (b) is not likely to have a material effect on the amounts
distributable to any Member upon the dissolution of the Company.
SECTION 6.2 RETURNS TAX
The Manager shall prepare or cause to be prepared and timely file all
federal, state and local income and other tax returns and reports as may be
required as a result of the business of the Company.
SECTION 6.3 TAX MATTERS PERSON
JENCOM shall be the initial tax matters person ("TMP") under Section 6231
of the Code. A TMP may be removed, and a successor TMP be selected, by the
majority vote of the Members. The TMP shall not take any actions (including
without limitation extending the statute of limitations, filing a request for
administrative adjustment filing suit concerning any Company tax matter, or
entering into a settlement agreement relating to any Company tax matter), or
execute or file any statements or forms, on behalf of the Company unless and
until the TMP is authorized to do so by the majority vote of the Members.
SECTION 6.4 TAX ELECTIONS
The manager shall make or cause to be made such accounting and tax
elections as directed by the unanimous vote of the Members.
SECTION 6.5 BANK ACCOUNTS; INVESTMENT OF COMPANY FUNDS
The Manager shall cause one or more accounts to be maintained in the name
of the Company in one or more banks, which accounts shall be used for the
payment of expenditures incurred in connection with the business of the Company
and in which shall be deposited any and all receipts of the Company. All such
accounts shall be and remain the property of the Company and shall be received,
held and disbursed for the purposes specified in this Agreement. There shall not
be deposited in any of such accounts any funds other than funds belonging to the
Company, and no other funds shall in any way be commingled with such funds. The
Manager
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may invest the Company funds in accordance with written investment guidelines
established from time to time by the Manager approved by all the Members.
ARTICLE VII
TRANSFER OF COMPANY INTERESTS, WITHDRAWAL OF MEMBERS, BUY/SELL PROVISIONS
SECTION 7.1 ASSIGNMENT AND TRANSFER
A. No membership interest or other interest of a Member in the Company may
be transferred or assigned (including any collateral assignment or pledge of any
interest in the Company), in whole or in part, by such Member, and no transferee
or assignee thereof may be admitted as a substituted Member of the Company,
unless and until, in each instance:
1. A duly executed and acknowledged instrument of assignment, setting
forth the intention of the assignor that the assignee become a
substituted Member in its place, is delivered to the remaining Member,
2. The assignor and assignee execute and acknowledge such other
instruments (if any) as the remaining Member reasonably may deem
necessary or desirable to effect such admission, which shall include
the written acceptance and adoption by the assignee of the provisions
of this Agreement and may include the assumption of any unperformed
obligation of the assignor provided that such assignor shall not
thereby be released from any of its unperformed obligations that arose
on or prior to the date of the assignment, specifically including,
without limitation, its obligations hereunder to make Capital
Contributions required prior to the date of the assignment on the
terms herein provided;
3. The written consent of the other Member of the Company, which consent
may not be unreasonably witheld, shall have been obtained;
4. Such interest shall first be offered to the remaining Member for a
period of thirty (30) days at a price (the "OFFER PURCHASE PRICE")
equal to that intended to be offered by the selling Member to third
parties. If the remaining Member elects to exercise the right of first
offer granted hereby, it must make an offer on the entire interest
intended to be offered by the selling Member. If the selling Member
has not received a written offer from the remaining Member on terms
satisfactory to it within such thirty (30) day period, it shall then
be free, subject to the provisions of this Article VII, to sell the
interest offered to the remaining Member on the terms of the offer. If
the selling Member fails to so dispose of its interest within one
hundred eighty (180) days from its right to do so, the first offer
procedure established by this Section 7.1 shall be reinstated. In the
event a Member elects to exercise the right of first offer granted
hereby, the price shall be payable in the manner and on the terms of
the third party offer;
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B. Notwithstanding anything to the contrary contained in this Article VII,
JENCOM may from time to time transfer its interest in the Company, or any part
thereof, to an Affiliate or from such Affiliate back to JENCOM without the
consent of any other Member that might otherwise be required; provided, however,
that no such transferee shall be admitted as substitute Member in the Company
unless and until JENCOM complies with the notice and documentation requirements
of Section 7.1 A (1,2,3). Notwithstanding any such transfer, JENCOM shall remain
obligated for all of its obligations hereunder arising both before and after
such transfer, and shall, as a condition of the transfer, expressly confirm its
obligations to the remaining Members at the time of the transfer.
C. Notwithstanding anything to the contrary contained in this Article VII,
WWWX may from time to time transfer its interest in the Company, or any part
thereof, to any entity which is owned or controlled by it or from such entity
back to WWWX without the consent of any other Member that might otherwise be
required; provided, however, that no such transferee shall be admitted as
substitute Member in the Company unless and until WWWX complies with the notice
and documentation requirements of Section 7.1 A(1,2,3), and the consent required
is obtained. Notwithstanding any such transfer, WWWX shall remain obligated for
all of its obligations hereunder arising both before and after such transfer,
and shall, as a condition of the transfer, expressly confirm its obligations to
the remaining Member at the time of the transfer.
SECTION 7.2 EXPENSES
Expenses of the Company or of any non-transferring Member occasioned by
transfers of interests held by Members shall be reimbursed to the Company or
such Member, as the case may be, by the transferring Member. Expenses of the
transferring Member and taxes incurred by any non-transferring Member are not
included within the foregoing reimbursement.
SECTION 7.3 WITHDRAWAL OF MEMBERS
No Member may voluntarily withdraw or retire from the Company except upon
the assignment of its entire interest in the Company (if and as permitted by
this Article VII) or upon the surrender, abandonment or other voiding of its
interest pursuant to the next succeeding sentence hereof. Any Member may, by at
least thirty (30) days prior written notice delivered to the remaining Member,
renounce its interest in all current and future profits, losses and
distributions of the Company, and abandon to the Company its capital
contributions; provided, however, that any such surrender, abandonment or other
voiding shall not in any case affect the withdrawing Members obligations
hereunder, including specifically, but without limitation, each Members
respective obligations under Article III hereof to continue to make Additional
Capital Contributions or Members' Loans as and to the extent called for or
otherwise required thereunder.
SECTION 7.4 DEATH, LEGAL INCAPACITY, DISSOLUTION OR BANKRUPTCY OF A MEMBER
Upon the death, legal incapacity, dissolution or bankruptcy of a Member,
subject to the terms, conditions and rights provided for under Section VI I
hereof, its successor or assign will have all the rights of the Member for the
purpose of settling or managing its estate, and such
Page 15 of 28
<PAGE>
power as the deceased, incapacitated, dissolved or bankrupt Member possessed to
constitute a successor as an assignee of its interest in the Company and to join
with such assignee in making application to substitute such assignee as a
substituted member.
SECTION 7.5 STATUS OF INTERESTS TRANSFERRED
In any transfer, assignment or conveyance (or retransfer, reassignment or
reconveyance) of any Participation Percentage herein by a Member to the other
Member or other Person in a manner specifically permitted by the express terms
of this Agreement or by operation of law, the transferee or assignee shall
succeed to the same share of profits and losses of the Company and the same
Participation Percentages, distribution priorities and ownership rights as were
incident to the interest so transferred, assigned or conveyed.
ARTICLE VIII
DISSOLUTION AND TERMINATION
SECTION 8.1 DISSOLUTION
A. The Company will be dissolved:
1. upon the withdrawal, removal, bankruptcy or dissolution of a
Member, as provided herein or otherwise by the Act, unless the
remaining Member(s) unanimously agree to continue the business of
the Company (if more than one Member remains) within ninety (90)
days after the occurrence of such event or if otherwise agreed to
by the Members;
2. provided however, that the Company shall not terminate until its
affairs have been wound up and its assets distributed as provided
herein or as otherwise provided herein.
B. As used in Section VIII hereof, the term bankruptcy shall mean (i) the
commencement of a Member of a voluntary case under any Chapter of the Bankruptcy
Code (Title 11 of the United States Code), as now or hereafter in effect, or the
taking by a Member of any equivalent or similar action by the filing of a
petition or otherwise under any other federal or state law in effect at the time
relating to bankruptcy or insolvency, (ii) the filing of a petition against a
Member under any Chapter of the Bankruptcy Code (Title 11 of the United States
Code), as now or hereafter in effect, or the filing of a petition seeking any
equivalent or similar relief against a Member under any other federal or state
law in effect as of the time relating to bankruptcy or insolvency, and in either
case the failure by such Member to secure the discharge of any other such
petition within sixty (60) consecutive days from the date of filing, (iii) the
making by a Member of a general assignment for the benefit of his, its or any of
their creditors, (iv) the appointment of a receiver, trustee, custodian or
similar officer for a Member or for the property of a Member and the failure by
such Member to secure the discharge of such receiver, trustee, custodian or
similar officer within sixty (60) consecutive days from the date of
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<PAGE>
appointment, or (v) the admission in writing by a Member of any inability to pay
debts generally as they become due.
SECTION 8.2 APPOINTMENT OF LIQUIDATING MEMBER
Upon the dissolution of the Company, if the Company's business is not
continued pursuant to this Section VIII, subject in any event top the rights of
any Member under Section VII hereof, the Manager or its designee shall liquidate
the assets and wind up the affairs of the Company on the terms hereinafter set
forth.
SECTION 8.3 DISTRIBUTIONS AND OTHER MATTERS
Promptly upon the dissolution of the Company, if the Company's business is
not continued pursuant to Section VIl hereof, and in any event subject to the
rights of any Member under Section VII hereof, the Manager will cause the assets
of the Company to be liquidated. After proper adjustment to the Capital Accounts
pursuant to Section III (giving effect to all contributions, distributions, and
allocations for all taxable years, including the taxable year during which such
liquidation occurs), the proceeds of the liquidation of the Company shall be
applied and distributed in the following order: (i) to the discharge of all of
the Company's debts and liabilities (whether by payment or the making of
reasonable provision for payment thereto, other than those to any of the
Members, including expenses of liquidation, (ii) to the setting up of any
reserves which the liquidator may deem reasonably necessary for any contingent
liabilities or obligations of the Company, (iii) to the payment and discharge of
any debts and liabilities of the Company to any of the Members, and (iv) to the
Members to the extent of their positive Capital Accounts.
SECTION 8.4 DISTRIBUTIONS OF PROPERTY
A. Upon liquidation, the Members may demand or receive property other than
cash in return for their respective contributions, loans or advances or upon
dissolution as provided herein, but only upon the written approval of the
Manager.
B. In the event that property is distributed (or deemed distributed
pursuant to the provisions of Code Section 708) by the Company to a Member, the
following special rules shall apply:
1. the Capital Accounts of the Members shall be adjusted as provided in
Treasury Regulations Section 1.704-1(b)(2)(iv)(e) to reflect the
manner in which the unrealized income, gain, loss and deduction
inherent in such property (that has not already been reflected in the
Members' Capital Accounts) would be allocated to such Member if there
were a taxable disposition of such property for its fair market value
on the date of distribution; and
2. the Capital Account of the Member who is receiving the distribution of
property from the Company shall be charged with the fair market value
of the property at the time of distribution (net of liabilities
secured by such distributed property that
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<PAGE>
such Member is considered to assume or take subject to under Code
section 752).
SECTION 8.5 ACTION DURING LIQUIDATION: STATEMENTS OF ACCOUNT
A. A reasonable time shall be allowed for the winding up of the affairs of
the Company in order to minimize any losses otherwise attendant upon such a
winding up. The Manager shall make final distributions in liquidation of the
Company in the manner set forth above before the later of (1) the end of the
taxable year in which the date of the liquidation of the Company occurs, or (ii)
90 days after the date of the liquidation of the Company. For this purpose, the
date of the liquidation of the company shall be the date on which the Company
has ceased to be a going concern (within the meaning of Treasury Regulation
Section 1.704-1 (b)(2)(ii)(g).
B. During the period of liquidation, the Manager, as trustee for the
benefit of all Members as tenants in common, will take any and all action
necessary or appropriate to complete such liquidation and distribution as
provided in this Article, having for such purpose all of the powers enumerated
in Article IV of this Agreement necessary or appropriate to accomplish the same.
C. The Manager will prepare or cause to be prepared a final statement of
the accounts of the Company as of the date of termination, and, as promptly as
possible thereafter, a copy thereof will be furnished to each Member. Such
statement will set forth the actual or contemplated application and distribution
of the assets of the Company. Upon completion of distribution as required
hereby, a further statement for the period of liquidation will be so prepared by
the Manager and furnished to each Member.
ARTICLE IX
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 9.1 REPRESENTATIONS AND WARRANTIES.
A. WWWX represents and warrants to JENCOM, and its successors and assigns
as follows:
1. WWWX is a publicly traded (OTC:BB) company, duly organized, validity
existing and in good standing under the laws of the State of Delaware.
2. This Agreement has been duly and validly executed and delivered by
WWWX and constitutes its legal, valid and binding obligation,
enforceable in accordance with the terms hereof, and no authorization,
consent, approval, license, exemption or other action by, and no
registration, qualification, designation, declaration or filing with,
any governmental body or agency is or will be necessary or advisable
in connection with the execution and delivery by WWWX of this
Agreement.
Page 18 of 28
<PAGE>
3. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor the
performance of or compliance with the terms and conditions hereof,
will conflict with or result in a breach of or default under any
agreement or instrument to which WWWX, is a party or by which it or
its properties (now owned or hereafter acquired) may be subject or
bound.
4. There is no pending or (to their knowledge after due inquiry)
threatened proceeding by or before any court or governmental agency
against or affecting WWWX or any of its stockholders which, if
adversely decided, would have an adverse affect on the business,
operations or conditions, financial or otherwise, of the Company, or
on the ability of WWWX to perform its obligations hereunder or
otherwise contemplated hereby, and no proceeding is pending or
threatened against WWWX under any Federal or State bankruptcy or
insolvency law.
5. WWWX has filed all federal, state, local and foreign income,
franchise, real and personal property, and other tax returns,
estimates and statements which were required to be filed, has paid all
taxes (whether income, sales, use, property, unemployment, social
security, import duties, export duties and/or other) as shown on said
returns, estimates and statements, and has made appropriate provision
for the payment of all such taxes where returns, estimates and
statements are not yet required to be filed. All said tax returns and
statements correctly set forth and report the entire liability of WWWX
for such taxes.
6. WWWX has no knowledge of any intention of any of its key employees to
sever employment arrangements with WWWX, and has no knowledge of any
plan or intention of any of its principal customers to cancel
presently existing contracts or other material business arrangements
or relationship with WWWX, or to take any other action which would
adversely affect the business, operation or anticipated earnings of
WWWX.
7. There are no controversies pending or threatened between WWWX and any
of its employees and WWWX has not taken or failed to take any action,
which would provide a reasonable basis for any such controversy. WWWX
has complied with all laws relating to the employment of labor,
including any provisions thereof relating to wages, hours, collective
bargaining and the payment of social security and similar taxes, and
WWWX is not liable for any arrears of wages or any taxes or penalties
for failure to comply with any of the foregoing. WWWX has no knowledge
of any organizational efforts presently being made or threatened by or
on behalf of any labor union in respect of WWWX or its employees.
8. The JenCom Assets contributed by WWWX to the Company include and
constitute the identified assets in the acquisition agreement.
Page 19 of 28
<PAGE>
9. WWWX has and expects to continue to have the authority and resources
to fully consummate in a timely fashion the transactions contemplated
by this Agreement and the other documents, instruments and agreements
to be executed by and between WWWX and the Company concurrent with the
execution and delivery of this Agreement.
10. None of the information and documents furnished by WWWX or its
representatives to the Company or any other Member of the Company in
connection with the execution and delivery of this Agreement is false
or misleading in any material respect or contains any material
misstatement of fact or omits to state a material fact required to be
stated to make the statements therein not misleading. WWWX has
disclosed to the Company and each of the other Members of the Company
all information known to WWWX which is material and relevant to the
execution and delivery of this Agreement and the formation of the
Company as contemplated hereby.
B. JENCOM represents and warrants to WWWX, and its successors and assigns
as follows:
1. JENCOM is a Company, duly organized, validity existing and in good
standing under the laws of the State of Delaware.
2. This Agreement has been duly and validly executed and delivered by
JENCOM and constitutes its legal, valid and binding obligation,
enforceable in accordance with the terms hereof, and no authorization,
consent, approval, license, exemption or other action by, and no
registration, qualification, designation, declaration or filing with,
any governmental body or agency is or will be necessary or advisable
in connection with the execution and delivery by JENCOM of this
Agreement.
3. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor the
performance of or compliance with the terms and conditions hereof,
will conflict with or result in a breach of or default under any
agreement or instrument to which JENCOM, is a party or by which it or
its properties (now owned or hereafter acquired) may be subject or
bound.
4. There is no pending or (to their knowledge after due inquiry)
threatened proceeding by or before any court or governmental agency
against or affecting JENCOM or any of its stockholders which, if
adversely decided, would have an adverse affect on the business,
operations or conditions, financial or otherwise, of JENCOM, or on the
ability of JENCOM to perform its obligations hereunder or otherwise
contemplated hereby, and no proceeding is pending or threatened
against JENCOM under any Federal or State bankruptcy or insolvency
law.
5. JENCOM has filed all federal, state, local and foreign income,
franchise, real and personal property, and other tax returns,
estimates and statements which were
Page 20 of 28
<PAGE>
required to be filed, has paid all taxes (whether income, sales, use,
property, unemployment, social security, import duties, export duties
and/or other) as shown on said returns, estimates and statements, and
has made appropriate provision for the payment of all such taxes where
returns, estimates and statements are not yet required to be filed.
All said tax returns and statements correctly set forth and report the
entire liability of JENCOM for such taxes.
6. JENCOM has no knowledge of any intention of any of its key employees
to sever employment arrangements with JENCOM, and has no knowledge of
any plan or intention of any of its principal customers to cancel
presently existing contracts or other material business arrangements
or relationship with JENCOM, or to take any other action which would
adversely affect the business, operation or anticipated earnings of
JENCOM.
7. There are no controversies pending or threatened between JENCOM and
any of its employees and JENCOM has not taken or failed to take any
action, which would provide a reasonable basis for any such
controversy. JENCOM has complied with all laws relating to the
employment of labor, including any provisions thereof relating to
wages, hours, collective bargaining and the payment of social security
and similar taxes, and JENCOM is not liable for any arrears of wages
or any taxes or penalties for failure to comply with any of the
foregoing. JENCOM has no knowledge of any organizational efforts
presently being made or threatened by or on behalf of any labor union
in respect of JENCOM or its employees.
8. The JenCom Assets contributed by WWWX to the Company include and
constitute the identified assets in the acquisition agreement.
9. JENCOM has and expects to continue to have the authority and resources
to fully consummate in a timely fashion the transactions contemplated
by this Agreement and the other documents, instruments and agreements
to be executed by and between JENCOM and the Company concurrent with
the execution and delivery of this Agreement.
10. None of the information and documents furnished by JENCOM or its
representatives to the Company or any other Member of the Company in
connection with the execution and delivery of this Agreement is false
or misleading in any material respect or contains any material
misstatement of fact or omits to state a material fact required to be
stated to make the statements therein not misleading. JENCOM has
disclosed to the Company and each of the other Members of the Company
all information known to JENCOM which is material and relevant to the
execution and delivery of this Agreement and the formation of the
Company as contemplated hereby.
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<PAGE>
ARTICLE X
AMENDMENTS
SECTION 10.1 AMENDMENTS
The power to adopt, alter, amend or repeal this Agreement is vested solely
in the Members. This Agreement may be altered, amended or repealed, or a new
limited liability company agreement may be adopted, only by the unanimous vote
or consent of the Members. The Manager may not adopt, alter, amend or repeal any
provision of this Agreement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 MANNER OF GIVING NOTICE
Except as otherwise expressly provided in this Agreement, all notices,
demands, requests, or other communications required or permitted to be given
pursuant to this Agreement shall be in writing and shall be given either (a) in
person upon an executive officer, (b) by mail, certified or registered, return
receipt requested, postage prepaid, (c) by prepaid telegram, telex, cable,
telecopy, or similar means (with signed confirmed copy to follow by mail in the
same manner as prescribed by clause (b) above) or (d) by expedited delivery
service (charges prepaid) with proof of delivery. For purposes of the foregoing,
any notice required or permitted to be given shall be deemed to be delivered and
given on the date actually delivered to the address specified in this Article
II.
SECTION 11.2 WAIVER OF NOTICE
Whenever any notice is required to be given to any Member or the Manager of
the Company under the provisions of the Act, the Certificate of Organization or
this Agreement, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
SECTION 11.3 NO COMPANY SEAL
The Company shall not have a Company seal, and no agreement, instrument or
other document executed on behalf of the Company that would otherwise be valid
and binding on the Company shall be invalid or not binding on the Company solely
because no Company seal is affixed thereto.
SECTION 11.4 PUBLIC ANNOUNCEMENTS.
Except as otherwise required by law, each Member shall consult with the
other Members prior to issuing any public announcement, statement or other
disclosure with respect to the Company, such Member's participation therein and
the transactions contemplated by this
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<PAGE>
Agreement and shall not issue any such announcement, statement or disclosure
without the consent of all Members.
Page 23 of 28
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
day and year first above written.
WORLDWIDE WEB NETWORX CORPORATION
BY: //s// WARREN ROTHSTEIN
------------------------------
TITLE: Chairman
---------------------------
JENCOM DIGITAL TECHNOLOGIES, LLC
BY: //s// HENRY KAUFTHEIL
------------------------------
TITLE: Manager
---------------------------
<PAGE>
Exhibit 10.39
EXECUTION COPY
CONFIDENTIAL
----------------------------------------------
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
INTERCOMMERCE CHINA, LLC
-------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I FORMATION OF LIMITED LIABILITY COMPANY
GENERAL PROVISIONS....................................................................1
Section 1.1 Formation.............................................................................1
Section 1.2 Name..................................................................................1
Section 1.3 Purpose...............................................................................1
Section 1.4 Offices...............................................................................2
Section 1.5 Nature of Partners' Interests, Non-Partition..........................................2
Section 1.6 Duration of Company...................................................................2
Section 1.7 Further Assurances....................................................................2
Section 1.8 Classification for Tax Purposes.......................................................2
ARTICLE II MEMBERS, MEMBERSHIP INTERESTS AND CAPITAL .............................................
CONTRIBUTIONS; LOANS..................................................................3
Section 2.1 Membership and Participation Percentages..............................................3
Section 2.2 Capital Accounts......................................................................4
Section 2.3 Use of Capital Contributions and Loans................................................4
Section 2.4 Additional Capital Contributions / Members' Loans.....................................4
Section 2.5 Operating Deficits....................................................................4
Section 2.6 Permitted Outside Activities..........................................................5
Section 2.7 Liability of Members..................................................................5
Section 2.8 Option to Acquire Membership Interests................................................5
ARTICLE III MEETINGS OF MEMBERS...................................................................6
Section 3.1 Annual Meetings; Special Meetings.....................................................6
Section 3.2 Place of Meetings.....................................................................6
Section 3.3 Notice of Meetings....................................................................6
Section 3.4 Quorum of and Action by Members.......................................................6
Section 3.5 Voting by Members.....................................................................6
Section 3.6 Action Without a Meeting; Telephone Meetings..........................................7
ARTICLE IV MANAGEMENT............................................................................7
Section 4.1 Management............................................................................7
Section 4.2 Liability: Indemnification of the Manager.............................................9
Section 4.3 Interested Manager and Officers.......................................................9
Section 4.4 Manager's Compensation and Reimbursement..............................................9
Section 4.5 Time Devoted to Company...............................................................9
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 4.6 Records and Reports..................................................................10
Section 4.7 Fiscal Year..........................................................................10
Section 4.8 Reports..............................................................................10
Section 4.9 Required Filings.....................................................................11
Section 4.10 Inspection of Records................................................................11
Section 4.11 Annual Budget........................................................................11
Section 4.12 Liability of Manager.................................................................12
Section 4.13 Distribution and Operating Agreement.................................................12
Section 4.14 Consulting Agreement.................................................................12
ARTICLE V OFFICERS.............................................................................13
Section 5.1 Officers.............................................................................13
Section 5.2 Compensation.........................................................................13
Section 5.3 Term of Office; Removal; Filling of Vacancies........................................13
Section 5.4 Chairman.............................................................................13
Section 5.5 President............................................................................13
Section 5.6 Vice Presidents......................................................................13
Section 5.7 Secretary............................................................................14
Section 5.8 Assistant Secretary..................................................................14
Section 5.9 Treasurer............................................................................14
Section 5.10 Additional Powers and Duties.........................................................14
ARTICLE VI ACCOUNTING AND TAX MATTERS; REPORTS; BANKING.........................................14
Section 6.1 Books and Records; Capital Accounts..................................................14
Section 6.2 Returns Tax..........................................................................15
Section 6.3 Tax Matters Person...................................................................15
Section 6.4 Tax Elections........................................................................15
Section 6.5 Bank Accounts; Investment of Company Funds...........................................15
ARTICLE VII TRANSFER OF COMPANY INTERESTS, WITHDRAWAL OF
MEMBERS, BUY/SELL PROVISIONS.........................................................15
Section 7.1 Assignment and Transfer..............................................................15
Section 7.2 Expenses.............................................................................16
Section 7.3 Withdrawal of Members................................................................17
Section 7.4 Death, Legal Incapacity, Dissolution or Bankruptcy of a Member.......................17
Section 7.5 Status of Interests Transferred......................................................17
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE VIII DISSOLUTION AND TERMINATION..........................................................17
Section 8.1 Dissolution..........................................................................17
Section 8.2 Appointment of Liquidating Member....................................................18
Section 8.3 Distributions and Other Matters......................................................18
Section 8.4 Distributions of Property............................................................19
Section 8.5 Action During Liquidation: Statements of Account.....................................19
ARTICLE IX REPRESENTATIONS, WARRANTIES AND COVENANTS............................................20
Section 9.1 Representations and Warranties.......................................................20
ARTICLE X NON-COMPETITION......................................................................21
Section 10.1 Non-Competition......................................................................21
ARTICLE XI AMENDMENTS...........................................................................21
Section 11.1 Amendments...........................................................................21
ARTICLE XII MISCELLANEOUS........................................................................21
Section 12.1 Manner of Giving Notice..............................................................21
Section 12.2 Waiver of Notice.....................................................................21
Section 12.3 No Company Seal......................................................................22
Section 12.4 Public Announcements.................................................................22
</TABLE>
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<PAGE>
AMENDED AND RESTATED
OPERATING AGREEMENT OF
INTERCOMMERCE CHINA, LLC
A DELAWARE LIMITED LIABILITY COMPANY
This Amended and Restated Limited Liability Company Agreement (this
"AGREEMENT") of InterCommerce China, LLC (the "COMPANY"), a limited liability
company organized pursuant to the Delaware Limited Liability Company Law of 1994
(as amended, the "ACT"), made as of the 7th day of January, 2000, is entered
into by and between WorldWide Web NetworX Corporation ("WWWX"), a Delaware
corporation, International Commerce Exchange Systems, Inc. ("ICES") a Delaware
corporation, Lester Wolff International Investment, Ltd. ("LWI"), a New York
corporation, Henry Kauftheil ("HK"), Peter Zhenxiang Lu ("PZL") and Uncas
Holdings Limited Partnership ("UNCAS") a Nevada limited partnership, and amends
and restates in its entirety the Limited Liability Company Agreement of the
Company dated as of February 9, 1999 (the "PRIOR AGREEMENT").
ARTICLE I
FORMATION OF LIMITED LIABILITY COMPANY GENERAL PROVISIONS
SECTION 1.1 FORMATION
ICES, LWI and HK have heretofore formed and now together with WWWX, PZL
and UNCAS shall operate a limited liability company under the Act and in
accordance with the terms of this Agreement and the Company's Articles of
Organization. The Company shall exist under and be governed by, and this
Agreement shall be construed in accordance with, the laws of the State of
Delaware. The parties have caused to be filed with the Secretary of State of
Delaware the Certificate of Formation of the Company.
SECTION 1.2 NAME
The name of the Company shall be Inter Commerce China, LLC, and all
business of the Company shall be conducted in such name or in such operational
names as determined, from time to time by the Manager.
SECTION 1.3 PURPOSE
The parties desire to form and operate the Company pursuant to this
Agreement and other related documents and instruments, as a limited liability
company under Delaware law. The purpose and character of the business of the
Company shall be to develop products and services utilizing modern technology
and to carry on any other lawful business, purpose or activity which the
Required Members may from time to time determine. "Required Members" shall mean,
as of any date, Members which, in the aggregate, are entitled to cast not less
than 70 votes as
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<PAGE>
determined in accordance with Section 3.5 hereof. The Company shall have all of
the powers provided for a limited liability company under the Act.
SECTION 1.4 OFFICES
The principal place of business of the Company shall be 18 West 18th
Street, New York, NY, 10011, or such other principal place of business as the
Manager may from time to time determine. The Company may have, in addition to
such office, such other offices and places of business at such locations, both
within and without the State of Delaware, as the Manager may from time to time
determine or the business and affairs of the Company may require.
SECTION 1.5 NATURE OF PARTNERS' INTERESTS, NON-PARTITION
The interests of the Members in the Company shall be personal property
for all purposes. All property owned by the Company, whether real or personal,
tangible or intangible, shall be owned by the Company as an entity, and no
Member individually shall have any ownership of such property. Except as
otherwise stated and provided herein, no Member shall be entitled to seek
partition of any Company property.
SECTION 1.6 DURATION OF COMPANY
The term of the Company commenced upon the filing of the Certificate of
Formation with the Secretary of State of the State of Delaware and shall
continue in existence and be perpetual unless terminated pursuant to any
provisions of this Agreement or as otherwise provided by law.
SECTION 1.7 FURTHER ASSURANCES
The parties hereto will execute whatever certificates and documents,
and will file, record and publish such certificates and documents, which are
required to form and operate a limited liability company under the Act.
SECTION 1.8 CLASSIFICATION FOR TAX PURPOSES
The Members hereby acknowledge their intention that the Company be
classified, for federal and state income tax purposes, as a partnership and not
as an association taxable as a corporation, pursuant to Section 7701(a)(2) of
the Code, and agree that the provisions of this Agreement shall be construed in
a manner to give full effect to such intent.
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<PAGE>
ARTICLE II
MEMBERS, MEMBERSHIP INTERESTS AND CAPITAL CONTRIBUTIONS; LOANS
SECTION 2.1 MEMBERSHIP AND PARTICIPATION PERCENTAGES
The names, addresses and membership interest of each of the Members is
as follows:
<TABLE>
<CAPTION>
Names and Addresses Participation Percentage
- ------------------- ------------------------
<S> <C>
International Commerce Exchange Systems, Inc. 31.61%
18 West 18th Street
New York, NY 10011
WorldWide Web NetworX Corporation 33.33%
521 Fellowship Road
Suite 130
Mt. Laurel, NJ 08054
Lester Wolff International Investment, Ltd. 24.17%
5 North Drive
Great Neck, NY 11021
Henry Kauftheil 5.89%
18 West 18th Street
New York, NY 10011
Peter Zhenxiang Lu 4.50%
c/o American Nature International Inc.
104 East 40th Street
Suite 906
New York, New York 10016
Uncas Holding Limited Partnership 0.50%
c/o Frank D. Scharf, General Partner
167 Uncas Point Road
Guilford, CT 06437
</TABLE>
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SECTION 2.2 CAPITAL ACCOUNTS
The Company shall establish and maintain a Capital Account for each
Member in accordance with GAAP.
SECTION 2.3 USE OF CAPITAL CONTRIBUTIONS AND LOANS
The Capital Contributions of the Members, all proceeds of Company
borrowings, and any Additional Capital Contributions and Members' Loans made
pursuant to this Agreement shall be used and applied for any Company purpose as
determined by the Required Members.
SECTION 2.4 ADDITIONAL CAPITAL CONTRIBUTIONS / MEMBERS' LOANS
(A) Unless agreed to by all the Members, no Member shall be required to
make any Capital Contributions or Members' Loans to the Company.
(B) At any time and from time to time after the date hereof, any Member
may (but shall not be obligated to) make Additional Capital Contributions or
Members' Loans to the Company, if the Required Members approve in advance each
such Additional Capital Contribution and Members' Loans.
(C) If any Member advances any funds to the Company after the date of
this Agreement (except in the case of Additional Capital Contributions) with the
approval of the Required Members, such advances will be treated as Members'
Loans, will not increase such Members membership interest, and the amount
thereof will be a debt due from the Company to such Member, to be repaid with
interest thereon accruing at the fluctuating prime rate of interest published
from time to time by The Wall Street Journal (or, if The Wall Street Journal is
no longer published, the prime rate published in a publication of national
circulation selected by the Manager) plus two percent (2%), or as otherwise
unanimously approved by the Members.
SECTION 2.5 OPERATING DEFICITS
In the event that the Manager determines that the Company requires
additional funds to meet operating expenses or required capital improvements, or
for any other proper Company purpose (in any such case, an "OPERATING DEFICIT"),
the Manager may either (1) request that the Members, pro rata in accordance with
their then respective Participation Percentages, advance funds in the amount so
required, but in no event will the Members be obligated to make such an advance,
(2) with the prior consent of the Required Members, obtain loans on such terms
as the Members approve, (3) if loans are not available on terms satisfactory to
the Required Members, obtain additional equity participation in the Company by
the admission of additional Members and the pro rata reduction of the existing
Members' membership interests, or (4) take such other actions, and explore and
pursue such other financing options as the Required Members may deem appropriate
under the circumstances.
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SECTION 2.6 PERMITTED OUTSIDE ACTIVITIES.
The parties acknowledge that (a) the business of the Company may
involve business dealings with other businesses in which the parties or their
affiliates have an interest, (b) such parties and their affiliates may maintain
such other interests and activities, and (c) the Company, each party each waives
any rights it might otherwise have to share or participate in such other
interests or activities of each other party or their affiliates. For the
purposes of this Agreement, "affiliate" has the meaning set forth in Rule 12b-2
of the General Rule & Regulations under the Securities Exchange Act of 1934, as
amended.
SECTION 2.7 LIABILITY OF MEMBERS
No Member shall be liable for the debts, liabilities, contracts or
other obligations of the Company except to the extent of any unpaid capital
contributions it has agreed to make to the Company and its share of the assets
(including undistributed revenues) of the Company; no Member shall be required
to make any loans or capital contributions to the Company, except as may be
agreed between a Member and the Company, with approval of the Members as herein
required. The Company shall indemnify and hold harmless each Member in the event
such Member (a) becomes liable, notwithstanding the preceding sentence, for any
debt, liability, contract or other obligation of the Company except to the
extent expressly provided in the preceding sentence or (b) is directly or
indirectly required to make any payments with respect thereto.
SECTION 2.8 OPTION TO ACQUIRE MEMBERSHIP INTERESTS.
Each of the following persons has the right to purchase (the "OPTION")
a 0.625% interest in the Company (the "OPTION INTEREST"):
Jeffrey Neeman
Jacob Gold
Todd Hoffman
Mordechai Gelber
Warren Rothstein
Allan M. Cohen
Fang Yang
Marc Gingras
The Option may be exercised upon 30 days' prior written notice on or after the
first date of any filing by the Company, or any successor with the Securities
and Exchange Commission in connection with the public issuance of any class of
securities of the Company or any successor. The purchase price of each Option
Interest shall be thirty percent (30%) of the fair market value of the Option
Interest, as determined by the Required Members in their reasonable judgment, as
of the date of this Agreement, payable upon issuance of the Option Interest and
the issuance of the Option Interest shall be subject to the execution and
delivery of such documents or instruments as the Required Members may reasonably
request. The Option shall expire January 1, 2003.
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ARTICLE III
MEETINGS OF MEMBERS
SECTION 3.1 ANNUAL MEETINGS; SPECIAL MEETINGS
An annual meeting of the Members, commencing with the year 1999, shall
be held within four months following the end of the fiscal year of the Company.
At such meeting, the Members shall transact such business as may properly be
brought before the meeting. Special meetings of the Members, for any purpose or
purposes, unless otherwise prescribed by statute, may be called by any Member.
Only business within the purpose or purposes described in the notice of special
meeting of Members may be conducted at the meeting unless the Members otherwise
agree.
SECTION 3.2 PLACE OF MEETINGS
Meetings of Members shall be held at such places, within or without the
State of Delaware, as may from time to time be fixed by the Manager or as shall
be specified or fixed in the respective notices or waivers of notice thereof.
SECTION 3.3 NOTICE OF MEETINGS
Written or printed notice stating the place, day and hour of each
meeting of the Members and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than five
nor more than 45 days before the date of the meeting, either personally or by
mail, telegram, express courier or telefax or similar communication, by or at
the direction of the person(s) calling the meeting, to each Member entitled to
vote at the meeting.
SECTION 3.4 QUORUM OF AND ACTION BY MEMBERS
Seventy percent of the membership interests of the Members, represented
in person or by proxy, shall be requisite to and shall constitute a quorum at
each meeting of Members for the transaction of business, except as otherwise
provided by the Act. With respect to any matter, the vote of the Required
Members shall be required to constitute the act of the Members except as
otherwise required under the terms of this Agreement. The Members represented in
person or by proxy at a meeting of Members at which a quorum is not present may
adjourn the meeting until such time and to such place as may be determined by a
vote of the Required Members represented in person or by proxy at that meeting.
At any such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted that might have been transacted at the meeting as
originally convened.
SECTION 3.5 VOTING BY MEMBERS
A Member shall be entitled to a number of votes equal to the product of
such Member's membership interest (expressed as a percentage of 1.0) multiplied
times 100, on each matter
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submitted to a vote at a meeting of Members or otherwise. For example, a 33.33%
membership interest is entitled to 33.33 votes. At any meeting of the Members,
every Member having the right to vote shall be entitled to vote either in person
or by proxy executed in writing by such Member. A telegram, telex, cablegram or
similar transmission by the Member, or a photographic, photostatic, facsimile or
similar reproduction of a writing executed by the Member, shall be treated as an
execution in writing for purposes of this Section 3.5. No proxy shall be valid
after eleven months from the date of its execution unless otherwise provided in
the proxy. Each proxy shall be revocable unless the proxy form conspicuously
states that the proxy is irrevocable and the proxy is coupled with an interest.
Each proxy shall be delivered to the Manager prior to or at the time of the
meeting.
SECTION 3.6 ACTION WITHOUT A MEETING; TELEPHONE MEETINGS
Any action required by the Act to be taken at any annual or special
meeting of Members, or any action which may be taken at any annual or special
meeting of Members, may be taken without a meeting, without prior notice, and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by all of the Members. A telegram, telex, cablegram or
similar transmission by a Member, or a photographic, photostatic, facsimile or
similar reproduction of a writing signed by a Member, shall be regarded as
signed by the Member for purposes of this Section 3.6. Subject to the provisions
of applicable law and this Agreement regarding notice of meetings, Members may
participate in and hold a meeting by using conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a telephone meeting pursuant
to this Section 3.6 shall constitute presence in person at such meeting, except
when a person participates in the meeting for the express purpose of objecting
to the transaction of any business on the ground that the meeting was not
lawfully called or convened.
ARTICLE IV
MANAGEMENT
SECTION 4.1 MANAGEMENT
The day to day business and affairs of the Company shall be managed,
subject to the terms and conditions set forth herein, by Henry Kauftheil (the
"MANAGER"); provided that the Manager shall have no authority, without the prior
approval of the Required Members to make the following major decisions (each
being a "MAJOR DECISION"):
(a) amendment of the Certificate of Formation of the Company;
(b) amendment of this Agreement;
(c) amendment of the Annual Work Plan and Budget of the Company to
be submitted for the Members' approval;
(d) approval of a transfer of a Members interest or admission of a
Member;
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(e) agreement to continue the business of the Company after an
event of dissolution specified in Section VIII;
(f) creation, incurrence, assumption, or guarantee of any
indebtedness for money borrowed, or an increase of the amount
of any indebtedness outstanding under any loan agreement,
mortgage, or other borrowing arrangement, in either case in
excess of the amounts approved in the Annual Work Plan and
Budget;
(g) assigning, transferring, pledging, compromising or releasing
of any of the claims of or debts due the Company except upon
payment in full, or arbitrating or consenting to the
arbitration of any of the disputes or controversies of the
Company;
(h) any action which would cause the Company to become a surety,
guarantor or accommodation party to any obligation;
(i) any action which would cause the Company to grant a security
interest to any third party in any of the Company's assets;
(j) making, executing, or delivering any assignment for the
benefit of creditors or taking any action on behalf of the
Company with respect to any bankruptcy decisions, including,
without limitation, initiating any bankruptcy or insolvency
proceedings, or liquidating, dissolving or winding up the
Company;
(k) acquiring or agreeing to acquire any equity interest in any
entity or any of such entity's assets or approval of a merger,
consolidation or other reorganization of the Company;
(l) making of, or entry into, any obligation on behalf of the
Company for a commitment, or making of any capital
expenditure, in excess of the amounts approved in the Annual
Work Plan and Budget;
(m) lending funds belonging to the Company to any Member or any
third party or extend to any person, firm or corporation,
credit on behalf of the Company, except for the extension of
credit in the ordinary course of the Company's business to
trade debtors in excess of the amounts approved in the Annual
Work Plan and Budget;
(n) making, execution or delivery of any contract or other
transaction with the officers of the Company or other related
party of the Company, including compensation of management;
(o) authorizing or approving a fundamental change in the business
of the Company, including a sale of all or substantially all
of its assets;
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(p) approving any other matter in which the approval of the
Members is expressly required by this Agreement or by the Act;
or
(q) entering into an agreement to do or effect any of the
foregoing.
SECTION 4.2 LIABILITY: INDEMNIFICATION OF THE MANAGER
The Company shall indemnify, defend and hold harmless each Member, each
of their officers, directors, employee and agents, the Manager and each of its
officers, directors, employees and agents and such other officers appointed by
the Manager, and any other Person acting as an agent of the Company to whom the
Manager shall specifically and in writing have conferred rights hereunder (each,
an "INDEMNIFIED PERSON"), against any loss, expense, damage, claim, liability,
obligation, judgment or injury suffered or sustained by such Indemnified Person
by reason of any act, omission or alleged act or omission by such Indemnified
Person, arising out of such Indemnified Person's activities on behalf of the
Company or in furtherance of the interests of the Company, including, without
limitation, any judgment, award, settlement, reasonable attorneys' fees and
other costs or expenses incurred in connection with the defense of any actual or
threatened actions, proceedings or claims, all costs of which shall be charged
to and paid by the Company as incurred; provided, however, that the acts,
omissions or alleged acts or omissions upon which such actual or threatened
actions, proceedings or claims are based were performed or omitted in good faith
and within the scope of such Person's authority hereunder, and were not
fraudulent, in bad faith or a result of wanton and willful misconduct or gross
negligence by such Indemnified Person.
SECTION 4.3 INTERESTED MANAGER AND OFFICERS
No transaction between the Company and one or more of its Members, the
Manager or officers, or between the Company and any other business entity in
which one or more of its Members, the Manager or officers have an interest shall
be void or voidable solely for this reason, or solely because the Manager or
officer is present at or participates in the meeting of the Manager which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose, if (a) the material facts as to the transaction are
disclosed or are known to the Members entitled to vote thereon, and the contract
or transaction is specifically approved in good faith by vote of the
disinterested Members; and (b) the transaction is fair as to the Company as of
the time it is authorized, approved or ratified by the Manager or the Members.
SECTION 4.4 MANAGER'S COMPENSATION AND REIMBURSEMENT
The compensation, if any, of the Manager shall be fixed from time to
time by the Required Members. The reimbursement, if any, of the Manager for
reasonable expenses incurred in managing the Company may be allowed from time to
time by the Manager.
SECTION 4.5 TIME DEVOTED TO COMPANY
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The Manager shall devote such time to Company business as the Manager
deems necessary to manage and supervise Company business and affairs in an
efficient manner; but nothing in this Agreement shall preclude the employment of
any agent, third party or affiliate to manage or provide other services with
respect to the Company's assets or business as the Members shall determine.
SECTION 4.6 RECORDS AND REPORTS.
The Manager, at the expense of the Company, shall keep or cause to be
kept adequate books of account and records (which books and records are to be
the property of the Company), setting forth a true and accurate account of the
business and affairs of the Company. The books of account of the Company will be
kept on the accrual basis method of accounting for financial accounting
reporting and federal income tax purposes and maintained in accordance with
GAAP. Such books and records are to be kept at the principal place of business
of the Company and are to include:
(a) Information regarding the status of the business and
financial condition of the Company.
(b) A copy of the Company's federal, state and local income
tax returns for each year.
(c) A current list of the name and last known business,
residence or mailing address of each Member and its Members interests.
(d) A copy of this Agreement and the Certificate of Formation
and all amendments to both.
(e) Information regarding the amount of cash and a description
and statement of the agreed value of any other property or services contributed
by each Member and which each Member has agreed to contribute in the future, and
the date on which each became a Member.
SECTION 4.7 FISCAL YEAR
The fiscal year of the Company will be the calendar year for financial
reporting and federal income tax purposes.
SECTION 4.8 REPORTS
Unless other determined by the Required Members, the Manager shall
cause to be prepared and delivered to the Members:
(a) Within 30 days after the end of each quarterly period of
each fiscal year of the Company, an operating report for such quarterly period;
(b) Within 30 days after the end of each of the first three
quarterly periods of each fiscal year of the Company, an unaudited balance sheet
and related unaudited statement of
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income and retained earnings (or changes in Member capital) and of cash flow for
such quarterly period and for the portion of the fiscal year through the end of
such fiscal quarter, setting forth in each case in comparative form the figures
for the previous period;
(c) Within 60 days after the end of each fiscal year of the
Company, a regular annual audit of the Company's financial records by the
Company's independent auditors, including an audited balance sheet of the
Company as of the end of such fiscal year and a related audited statement of
income, retained earnings (or changes in member capital) and of cash flow (and
capital proceeds, if any) for such fiscal year, putting forth in each case in
comparative form the figures for the previous fiscal year; and
(d) At such time or times requested, such other or additional
reports as may be reasonably requested by a Member.
SECTION 4.9 REQUIRED FILINGS
The Manager shall cause the Company to file, at the Company's
expense, on or before the dates the same may be due, giving effect to extensions
obtained, all reports, returns and applications which may be required under the
Act or any other governmental or quasi-governmental body having jurisdiction.
The Manager shall furnish copies of all such reports, returns and applications
to the Members, such furnishing to occur not less than three business days prior
to filing except in the case of reports that are routine and non-substantive.
All reports, returns and applications which may be required by any taxing
authority will be handled by the Manager, pursuant to the provisions of Section
6.2. Copies of all accounts, reports and other filings pertaining to the Company
furnished by a Member or the Company to any regulatory authority are to be
available to all Members upon request. Copies of all reports and notices
pertaining to the Company furnished by the accountants for the Company are to
also be available to all Members upon request.
SECTION 4.10 INSPECTION OF RECORDS
The books and records of the Company will be open to
inspection, examination and audit and available for copying by each Member at
all reasonable times with reasonable prior notice. Any Member exercising its
right to inspect, examine, audit or copy all or any portion of such books and
records will bear all direct out-of-pocket expenses incurred by both that Member
and the Company in connection with the same.
SECTION 4.11 ANNUAL BUDGET
By not later than October 31 of each year, the Manager will
prepare and present to the Members an Annual Workplan and Budget for the
succeeding fiscal year for the Member's review and unanimous approval. If such
Annual Workplan and Budget is not approved, the Annual Workplan and Budget then
in effect shall continue in effect, adjusted by the percentage change in the
Consumer Price Index from the previous year, until a new Annual Workplan and
Budget is approved.
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SECTION 4.12 LIABILITY OF MANAGER
The Manager shall not be liable for the debts, liabilities, contracts
or other obligations of the Company; provided, however, that the Manager shall
be liable for any debts, liabilities, contracts or other obligations of the
Company incurred or agreed to by such Manager without authorization and in
violation of Section 4.1 of this Agreement.
SECTION 4.13 DISTRIBUTION AND OPERATING AGREEMENT
Contemporaneously with the execution and delivery of this Agreement,
the Company shall execute and deliver the Distribution and Operating Agreement
(the "OPERATING Agreement") with ATM in the form set forth in Exhibit A hereto.
The Company shall not exercise any right to terminate the Operating Agreement,
under the terms thereof or otherwise, without written approval of the Required
Members.
SECTION 4.14 OTHER AGREEMENTS.
Contemporaneously with the execution and delivery of this
Agreement, the Company shall execute and deliver the Consulting Agreement with
LWI or its designee, substantially in the form of Exhibit B hereto. The parties
hereto acknowledge and agree to the terms and conditions of the agreement
between the Company and PZL set forth as Exhibit C hereto as modified by the
letter agreement between the Company and PZL also set forth in Exhibit C hereto.
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ARTICLE V
OFFICERS
SECTION 5.1 OFFICERS
The Manager may designate one or more individuals (who may or may not
be the Manager) to serve as officers of the Company. The Company shall have such
officers as the Manager may from time to time determine, which officers may (but
need not) include a Chairman, a President, one or more Vice Presidents (and in
case of each such Vice President, with such descriptive title, if any, as the
Manager shall deem appropriate), a Secretary, an Assistant Secretary and a
Treasurer. Any two or more offices may be held by the same person.
SECTION 5.2 COMPENSATION
The compensation, if any, of all officers of the Company shall be fixed
from time to time by the Required Members.
SECTION 5.3 TERM OF OFFICE; REMOVAL; FILLING OF VACANCIES
Each officer of the Company shall hold office until his successor is
chosen and qualified in his stead or until his earlier death, resignation,
retirement disqualification or removal from office. Any officer designated by
the Manager may be removed at any time by the Manager whenever in his judgment
the best interests of the Company will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Designation of an officer shall not of itself create contract rights.
If the office of any officer becomes vacant for any reason, the vacancy may be
filled by the Manager.
SECTION 5.4 CHAIRMAN
The Chairman, if one is designated by the Manager, shall preside at
meetings of the Manager and the Members. He shall assist the Manager in the
formulation of policies of the Company, and shall be available to other officers
for consultation and advice.
SECTION 5.5 PRESIDENT
The President, if one is designated by the Manager, shall be the chief
executive officer of the Company and shall have general supervision of the
affairs of the Company.
SECTION 5.6 VICE PRESIDENTS
Each Vice President that is designated by the Manager shall generally
assist the President and shall have such powers and perform such duties and
services as shall from time to time be prescribed or delegated to him by the
President or the Manager.
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SECTION 5.7 SECRETARY
The Secretary, if one is designated by the Manager, shall keep and
account for the records of the Company.
SECTION 5.8 ASSISTANT SECRETARY
The Assistant Secretary, if one is designated by the Manager, shall
generally assist the Secretary.
SECTION 5.9 TREASURER
The Treasurer, if one is designated by the Manager, shall be the chief
accounting and financial officer of the Company and shall have active control of
and shall be responsible for all matters pertaining to the accounts and finances
of the Company.
SECTION 5.10 ADDITIONAL POWERS AND DUTIES
In addition to the foregoing especially enumerated duties, services and
powers, the several officers of the Company shall perform such other duties and
services and exercise such further powers as may be provided by statute, the
Certificate of Formation or this Agreement, or as the Manager may from time to
time determine or as may be assigned to them by any competent superior officer.
In addition to the designation of officers and the enumeration of their
respective duties, services and powers, the Manager may grant powers of
attorneys to individuals to act as agent for or on behalf of the Company, to do
any act which would be binding on the Company, to incur any expenditures on
behalf of or for the Company, or to execute, deliver and perform any agreements,
acts, transactions or other matters on behalf of the Company. Such powers of
attorney may be revoked or modified as deemed necessary by the Manager.
ARTICLE VI
ACCOUNTING AND TAX MATTERS; REPORTS; BANKING
SECTION 6.1 BOOKS AND RECORDS; CAPITAL ACCOUNTS
An individual capital account shall be established and maintained by
the Company for each Member in accordance with the applicable provisions of the
Code and the Treasury Regulations, including ? 1.704-1(b)(2)(iv). The Manager,
after notice to the Members, is authorized to modify the manner in which the
capital accounts are maintained if the Manager determines that such modification
(a) is required or prudent to comply with the Treasury Regulations and (b) is
not likely to have a material effect on the amounts distributable to any Member
upon the dissolution of the Company.
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SECTION 6.2 RETURNS TAX
The Manager shall prepare or cause to be prepared and timely file all
federal, state and local income and other tax returns and reports as may be
required as a result of the business of the Company.
SECTION 6.3 TAX MATTERS PERSON
HK shall be the initial tax matters person ("TMP") under Section 6231
of the Code. A TMP may be removed, and a successor TMP be selected, by the vote
of the Required Members. The TMP shall not take any actions (including without
limitation extending the statute of limitations, filing a request for
administrative adjustment filing suit concerning any Company tax matter, or
entering into a settlement agreement relating to any Company tax matter), or
execute or file any statements or forms, on behalf of the Company unless and
until the TMP is authorized to do so by the vote of the Required Members.
SECTION 6.4 TAX ELECTIONS
The Manager shall make or cause to be made such accounting and tax
elections as directed by the vote of the Required Members.
SECTION 6.5 BANK ACCOUNTS; INVESTMENT OF COMPANY FUNDS
The Manager shall cause one or more accounts to be maintained in the
name of the Company in one or more banks, which accounts shall be used for the
payment of expenditures incurred in connection with the business of the Company
and in which shall be deposited any and all receipts of the Company. All such
accounts shall be and remain the property of the Company and shall be received,
held and disbursed for the purposes specified in this Agreement. There shall not
be deposited in any of such accounts any funds other than funds belonging to the
Company, and no other funds shall in any way be commingled with such funds. The
Manager may invest the Company funds in accordance with written investment
guidelines established from time to time by the Manager approved by the Required
Members. Pursuant to the Operating Agreement, ATM will control such accounts of
the Company as ATM determines are necessary to manage the transactions
contemplated by the Operating Agreement.
ARTICLE VII
TRANSFER OF COMPANY INTERESTS, WITHDRAWAL OF MEMBERS, BUY/SELL PROVISIONS
SECTION 7.1 ASSIGNMENT AND TRANSFER
A. No membership interest or other interest of a Member in the Company
may be transferred or assigned (including any collateral assignment or pledge of
any interest in the
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Company), in whole or in part, by such Member, and no transferee or assignee
thereof may be admitted as a substituted Member of the Company, unless and
until, in each instance:
1. A duly executed and acknowledged instrument of assignment,
setting forth the intention of the assignor that the assignee
become a substituted Member in its place, is delivered to the
remaining Members,
2. The assignor and assignee execute and acknowledge such other
instruments (if any) as the remaining Members reasonably may
deem necessary or desirable to effect such admission, which
shall include the written acceptance and adoption by the
assignee of the provisions of this Agreement and may include
the assumption of any unperformed obligation of the assignor
provided that such assignor shall not thereby be released from
any of its unperformed obligations that arose on or prior to
the date of the assignment, specifically including, without
limitation, its obligations hereunder to make Capital
Contributions required prior to the date of the assignment on
the terms herein provided;
3. The written consent of the other Members of the Company, which
consent may not be unreasonably withheld, shall have been
obtained;
4. Such interest shall first be offered to the remaining Members
for a period of thirty (30) days at a price (the "OFFER
PURCHASE PRICE") equal to that intended to be offered by the
selling Member to third parties. If any of the remaining
Members elects to exercise the right of first offer granted
hereby, it must make an offer on the entire interest intended
to be offered by the selling Member. If the selling Member has
not received a written offer from the remaining Members on
terms satisfactory to it within such thirty (30) day period,
it shall then be free, subject to the provisions of this
Article VII, to sell the interest offered to the remaining
Members on the terms of the offer. If the selling Member fails
to so dispose of its interest within one hundred eighty (180)
days from its right to do so, the first offer procedure
established by this Section 7.1 shall be reinstated. In the
event a Member elects to exercise the right of first offer
granted hereby, the price shall be payable in the manner and
on the terms of the third party offer;
B. Notwithstanding anything to the contrary contained in this Article
VII, any party may from time to time transfer its interest in the Company, or
any part thereof, to an Affiliate or from such Affiliate back to such party
without the consent of any other Member that might otherwise be required;
provided, however, that no such transferee shall be admitted as substitute
Member in the Company unless and until such party complies with the notice and
documentation requirements of Section 7.1 A (1,2,3). Notwithstanding any such
transfer, the transferring party shall remain obligated for all of its
obligations hereunder arising both before and after such transfer, and shall, as
a condition of the transfer, expressly confirm its obligations to the remaining
Members at the time of the transfer.
SECTION 7.2 EXPENSES
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Expenses of the Company or of any non-transferring Member occasioned by
transfers of interests held by Members shall be reimbursed to the Company or
such Member, as the case may be, by the transferring Member. Expenses of the
transferring Member and taxes incurred by any non-transferring Member are not
included within the foregoing reimbursement.
SECTION 7.3 WITHDRAWAL OF MEMBERS
No Member may voluntarily withdraw or retire from the Company except
upon the assignment of its entire interest in the Company (if and as permitted
by this Article VII) or upon the surrender, abandonment or other voiding of its
interest pursuant to the next succeeding sentence hereof. Any Member may, by at
least thirty (30) days prior written notice delivered to the remaining Member,
renounce its interest in all current and future profits, losses and
distributions of the Company, and abandon to the Company its capital
contributions; provided, however, that any such surrender, abandonment or other
voiding shall not in any case affect the withdrawing Members obligations
hereunder, including specifically, but without limitation, each Members
respective obligations under Article III hereof to continue to make Additional
Capital Contributions or Members' Loans as and to the extent called for or
otherwise required thereunder.
SECTION 7.4 DEATH, LEGAL INCAPACITY, DISSOLUTION OR BANKRUPTCY OF A MEMBER
Upon the death, legal incapacity, dissolution or bankruptcy of a
Member, subject to the terms, conditions and rights provided for under Section
VI I hereof, its successor or assign will have all the rights of the Member for
the purpose of settling or managing its estate, and such power as the deceased,
incapacitated, dissolved or bankrupt Member possessed to constitute a successor
as an assignee of its interest in the Company and to join with such assignee in
making application to substitute such assignee as a substituted member.
SECTION 7.5 STATUS OF INTERESTS TRANSFERRED
In any transfer, assignment or conveyance (or retransfer, reassignment
or reconveyance) of any Participation Percentage herein by a Member to the other
Member or other Person in a manner specifically permitted by the express terms
of this Agreement or by operation of law, the transferee or assignee shall
succeed to the same share of profits and losses of the Company and the same
Participation Percentages, distribution priorities and ownership rights as were
incident to the interest so transferred, assigned or conveyed.
ARTICLE VIII
DISSOLUTION AND TERMINATION
SECTION 8.1 DISSOLUTION
A. The Company will be dissolved:
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<PAGE>
1. upon the withdrawal, removal, bankruptcy or dissolution of a
Member, as provided herein or otherwise by the Act, unless the
remaining Member(s) unanimously agree to continue the business
of the Company (if more than one Member remains) within ninety
(90) days after the occurrence of such event or if otherwise
agreed to by the Members;
2. provided however, that the Company shall not terminate until
its affairs have been wound up and its assets distributed as
provided herein or as otherwise provided herein.
B. As used in Section VIII hereof, the term bankruptcy shall mean (i)
the commencement of a Member of a voluntary case under any Chapter of the
Bankruptcy Code (Title 11 of the United States Code), as now or hereafter in
effect, or the taking by a Member of any equivalent or similar action by the
filing of a petition or otherwise under any other federal or state law in effect
at the time relating to bankruptcy or insolvency, (ii) the filing of a petition
against a Member under any Chapter of the Bankruptcy Code (Title 11 of the
United States Code), as now or hereafter in effect, or the filing of a petition
seeking any equivalent or similar relief against a Member under any other
federal or state law in effect as of the time relating to bankruptcy or
insolvency, and in either case the failure by such Member to secure the
discharge of any other such petition within sixty (60) consecutive days from the
date of filing, (iii) the making by a Member of a general assignment for the
benefit of his, its or any of their creditors, (iv) the appointment of a
receiver, trustee, custodian or similar officer for a Member or for the property
of a Member and the failure by such Member to secure the discharge of such
receiver, trustee, custodian or similar officer within sixty (60) consecutive
days from the date of appointment, or (v) the admission in writing by a Member
of any inability to pay debts generally as they become due.
SECTION 8.2 APPOINTMENT OF LIQUIDATING MEMBER
Upon the dissolution of the Company, if the Company's business is not
continued pursuant to this Section VIII, subject in any event top the rights of
any Member under Section VII hereof, the Manager or its designee shall liquidate
the assets and wind up the affairs of the Company on the terms hereinafter set
forth.
SECTION 8.3 DISTRIBUTIONS AND OTHER MATTERS
Promptly upon the dissolution of the Company, if the Company's business
is not continued pursuant to Section VII hereof, and in any event subject to the
rights of any Member under Section VII hereof, the Manager will cause the assets
of the Company to be liquidated. After proper adjustment to the Capital Accounts
pursuant to Section III (giving effect to all contributions, distributions, and
allocations for all taxable years, including the taxable year during which such
liquidation occurs), the proceeds of the liquidation of the Company shall be
applied and distributed in the following order: (i) to the discharge of all of
the Company's debts and liabilities (whether by payment or the making of
reasonable provision for payment thereto, other than those to any of the
Members, including expenses of liquidation, (ii) to the setting up of any
reserves which the liquidator may deem reasonably necessary for any contingent
liabilities or
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<PAGE>
obligations of the Company, (iii) to the payment and discharge of any debts and
liabilities of the Company to any of the Members, and (iv) to the Members to the
extent of their positive Capital Accounts.
SECTION 8.4 DISTRIBUTIONS OF PROPERTY
A. Upon liquidation, the Members may demand or receive property other
than cash in return for their respective contributions, loans or advances or
upon dissolution as provided herein, but only upon the written approval of the
Manager.
B. In the event that property is distributed (or deemed distributed
pursuant to the provisions of Code Section 708) by the Company to a Member, the
following special rules shall apply:
1. the Capital Accounts of the Members shall be adjusted as
provided in Treasury Regulations Section 1.704-1(b)(2)(iv)(e)
to reflect the manner in which the unrealized income, gain,
loss and deduction inherent in such property (that has not
already been reflected in the Members' Capital Accounts) would
be allocated to such Member if there were a taxable
disposition of such property for its fair market value on the
date of distribution; and
2. the Capital Account of the Member who is receiving the
distribution of property from the Company shall be charged
with the fair market value of the property at the time of
distribution (net of liabilities secured by such distributed
property that such Member is considered to assume or take
subject to under Code section 752).
SECTION 8.5 ACTION DURING LIQUIDATION: STATEMENTS OF ACCOUNT
A. A reasonable time shall be allowed for the winding up of the affairs
of the Company in order to minimize any losses otherwise attendant upon such a
winding up. The Manager shall make final distributions in liquidation of the
Company in the manner set forth above before the later of (1) the end of the
taxable year in which the date of the liquidation of the Company occurs, or (ii)
90 days after the date of the liquidation of the Company. For this purpose, the
date of the liquidation of the company shall be the date on which the Company
has ceased to be a going concern (within the meaning of Treasury Regulation
Section 1.704-1 (b)(2)(ii)(g).
B. During the period of liquidation, the Manager, as trustee for the
benefit of all Members as tenants in common, will take any and all action
necessary or appropriate to complete such liquidation and distribution as
provided in this Article, having for such purpose all of the powers enumerated
in Article IV of this Agreement necessary or appropriate to accomplish the same.
C. The Manager will prepare or cause to be prepared a final statement
of the accounts of the Company as of the date of termination, and, as promptly
as possible thereafter, a copy thereof will be furnished to each Member. Such
statement will set forth the actual or
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<PAGE>
contemplated application and distribution of the assets of the Company. Upon
completion of distribution as required hereby, a further statement for the
period of liquidation will be so prepared by the Manager and furnished to each
Member.
ARTICLE IX
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 9.1 REPRESENTATIONS AND WARRANTIES.
Each party represents and warrants to each other party, and its
successors and assigns as follows:
1. This Agreement has been duly and validly executed and delivered by it
and constitutes its legal, valid and binding obligation, enforceable in
accordance with the terms hereof, and no authorization, consent,
approval, license, exemption or other action by, and no registration,
qualification, designation, declaration or filing with, any
governmental body or agency is or will be necessary or advisable in
connection with the execution and delivery by it of this Agreement.
2. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor the
performance of or compliance with the terms and conditions hereof, will
conflict with or result in a breach of or default under any agreement
or instrument to which it is a party or by which it or its properties
(now owned or hereafter acquired) may be subject or bound.
3. There is no pending or (to their knowledge after due inquiry)
threatened proceeding by or before any court or governmental agency
against or affecting it or any of its stockholders or partners (if
applicable) which, if adversely decided, would have an adverse affect
on the business, operations or conditions, financial or otherwise, of
the Company, or on the ability of it to perform its obligations
hereunder or otherwise contemplated hereby, and no proceeding is
pending or threatened against it under any Federal or State bankruptcy
or insolvency law.
4. It has and expects to continue to have the authority and resources to
fully consummate in a timely fashion the transactions contemplated by
this Agreement and the other documents, instruments and agreements to
be executed by and between it and the Company concurrent with the
execution and delivery of this Agreement.
5. None of the information and documents furnished by it or its
representatives to the Company or any other Member of the Company in
connection with the execution and delivery of this Agreement is false
or misleading in any material respect or contains any material
misstatement of fact or omits to state a material fact required to be
stated to make the statements therein not misleading. It has disclosed
to the Company and each of the other Members of the Company all
information known to it which is material and
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<PAGE>
relevant to the execution and delivery of this Agreement and the
formation of the Company as contemplated hereby.
ARTICLE X
NON-COMPETITION
SECTION 10.1 NON-COMPETITION
Notwithstanding any provision of this Agreement to the contrary, no
Member shall be prohibited or otherwise limited by its membership in the
Company, or participation in the transactions contemplated hereby, from
competing, or participating in any entity that may compete, with, directly or
indirectly, the business of the Company; provided, however, that no Member will
compete for the Company's business with the China Product TradeNet Center or its
successors.
ARTICLE XI
AMENDMENTS
SECTION 11.1 AMENDMENTS
The power to adopt, alter, amend or repeal this Agreement is vested
solely in the Members. This Agreement may be altered, amended or repealed, or a
new limited liability company agreement may be adopted, only by the unanimous
vote or consent of the Members. The Manager may not adopt, alter, amend or
repeal any provision of this Agreement.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 MANNER OF GIVING NOTICE
Except as otherwise expressly provided in this Agreement, all notices,
demands, requests, or other communications required or permitted to be given
pursuant to this Agreement shall be in writing and shall be given either (a) in
person upon an executive officer, (b) by mail, certified or registered, return
receipt requested, postage prepaid, (c) by prepaid telegram, telex, cable,
telecopy, or similar means (with signed confirmed copy to follow by mail in the
same manner as prescribed by clause (b) above) or (d) by expedited delivery
service (charges prepaid) with proof of delivery. For purposes of the foregoing,
any notice required or permitted to be given shall be deemed to be delivered and
given on the date actually delivered to the address specified in this
Article II.
SECTION 12.2 WAIVER OF NOTICE
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<PAGE>
Whenever any notice is required to be given to any Member or the
Manager of the Company under the provisions of the Act, the Certificate of
Organization or this Agreement, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
SECTION 12.3 NO COMPANY SEAL
The Company shall not have a Company seal, and no agreement, instrument
or other document executed on behalf of the Company that would otherwise be
valid and binding on the Company shall be invalid or not binding on the Company
solely because no Company seal is affixed thereto.
SECTION 12.4 PUBLIC ANNOUNCEMENTS.
Except as otherwise required by law, each Member shall consult with the
other Members prior to issuing any public announcement, statement or other
disclosure with respect to the Company, such Member's participation therein and
the transactions contemplated by this Agreement and shall not issue any such
announcement, statement or disclosure without the consent of the Required
Members.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the day and year first above written.
WORLDWIDE WEB NETWORX CORPORATION
BY: //s// Warren Rothstein
-------------------------------
TITLE: Chairman
----------------------------
INTERNATIONAL COMMERCE EXCHANGE SYSTEMS, INC.
BY: //s// Henry Kauftheil
-------------------------------
TITLE: Chairman
----------------------------
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<PAGE>
LESTER WOLFF INTERNATIONAL INVESTMENT, LTD.
BY: //s// Lester L. Wolff
-------------------------------
TITLE: Pres
----------------------------
//s// Henry Kauftheil
- ----------------------------------
HENRY KAUFTHEIL
//S// Peter Lu Zhenxiang
- ----------------------------------
PETER ZHENXIANG LU
UNCAS HOLDINGS LIMITED PARTNERSHIP
BY: //S// FRANK D. SCHARF
-------------------------------
TITLE: //S// GENERAL PARTNER
----------------------------
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<PAGE>
Exhibit 10.40
EXECUTION COPY
DISTRIBUTION AND OPERATING AGREEMENT
THIS DISTRIBUTION AND OPERATING AGREEMENT (this "AGREEMENT") is dated
as of January 7, 2000, between ATM SERVICE, LTD., a New York corporation
("ATM"), and INTERCOMMERCE CHINA, LLC, a Delaware limited liability company
("ICC").
RECITALS
A. ICC is party to certain agreements and relationships with the China
Product TradeNet Center, a Chinese government agency responsible for managing
overstocked inventory in Chinese state-owned factories throughout China
("CPTNC").
B. ATM is in the business of assisting entities optimize their return
on current products, excess assets, excess plant capacity and production time,
and discontinued and obsolete merchandise of all kinds. ATM utilizes its website
ATMCenter.com has a comprehensive e-commerce solution together with proprietary
Internet software and traditional off-line asset recovery talent and techniques
to allow its clients achieve the above.
C. ATM is a subsidiary of WorldWide Web NetworX Corporation, a member
of ICC.
NOW THEREFORE, in consideration of the mutual covenants herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties agree
as follows:
SECTION 1. SERVICES TO BE PROVIDED BY ATM
1.1 APPOINTMENT AS AGENT. Subject to Section 6 hereof, ICC hereby
irrevocably appoints ATM as its exclusive agent to distribute and sell Products
during the Term and ATM hereby accepts such appointment. ATM is authorized to
act on behalf of ICC for all purposes relating to the distribution and sale of
Products, including without limitation, (a) being responsible for all decisions
relating to the distribution and sale of Products, (b) maintaining such bank
accounts as it deems necessary, (c) obtaining such short-term credit as it deems
necessary, and (d) acting on behalf of ICC for all other purposes relating to
the distribution and sale of Products except as ATM may require ICC to act in
connection therewith.
1.2 SERVICES. (a) ICC hereby grants ATM the exclusive right during the
Term to distribute and sell all the merchandise, equipment, goods, and other
products (collectively, "PRODUCTS") that ICC or its affiliates, may from time to
time receive, sell, or distribute from or to the Republic of China under any
agreements with CPTNC ("CPTNC AGREEMENTS"), and (b) ICC agrees that
ATMCenter.com is the exclusive e-commerce enabler for the distribution and sale
of Products during the Term. Subject to its availability on commercially
reasonable terms, ATM agrees to maintain product liability insurance in
commercially reasonable amounts. ICC has
<PAGE>
heretofore provided to ATM true and complete copies of all CPTNC Agreements in
effect on the date of this Agreement and will provide promptly upon execution
true and complete copies of each CPTNC Agreement hereafter entered into during
the Term. ATM and ICC acknowledge and agree that the proposed transaction
between ATM and CPTNC outlined in the term sheet attached hereto as Exhibit A
shall for all purposes of this Agreement be deemed a CPTNC Agreement.
1.3. STANDARD OF PERFORMANCE. ATM shall distribute and sell Products in
accordance with applicable industry standards and applicable laws and
regulations, and shall maintain in full force and effect all material licenses
and other permits necessary for the performance of ATM's obligations hereunder
and shall use commercially reasonable efforts to maximize the proceeds of sales
of Products distributed and sold hereunder.
SECTION 2. BUDGETS, FEES, AND EXPENSES
2.1 ATM EXPENSES. ATM will deduct its operating expenses from any
Available Proceeds (as defined below) of sales of Products. ATM's expenses will
include, but not be limited to, the following: direct and allocated salaries,
travel costs and applicable overhead allocations related to the distribution and
sale of Products (collectively, "ATM EXPENSES").
2.2 FEES. In consideration for performing its obligations hereunder,
ATM will receive (collectively, "FEES"): First, (a) a transaction fee equal to
10% of gross profits calculated as the difference between (x) proceeds from
sales of Products ("SALES PROCEEDS")and (y) the sum of (i) the purchase price of
Products sold payable to CPTNC under the applicable CPTNC Agreement; (ii)
expenses relating to the receipt, distribution and delivery of Products sold,
including, without limitation, shipping, warehousing, insurance premiums,
financing costs and third-party commissions, if any, ("DISTRIBUTION EXPENSES";
the difference between Sales Proceeds and the sum of the Purchase Price and
Distribution Expenses being hereinafter referred to as "NET PROCEEDS") and (iii)
any amounts payable to CPTNC out of Net Proceeds (the difference between Net
Proceeds and the amount described in clause (iii) is referred to as "AVAILABLE
PROCEEDS") and then (b) a service fee equal to 50% of Distributable Profits. For
purposes of this Agreement, "DISTRIBUTABLE PROFITS" means the difference between
(x) Available Proceeds and (y) ATM Expenses.
2.3 OPERATING BUDGET. ICC will fund an agreed upon annual budget
("OPERATING BUDGET") to be maintained in an account to be used by ATM in
accordance with such Operating Budget. Variations from the Operating Budget in
excess of acceptable variances set forth therein must be approved by ICC.
SECTION 3. PROCEDURES; REPORTING
3.1 PRODUCT TRANSACTIONS. From time to time as ICC obtains Products or
CPTNC has Products available to ICC, ICC or CPTNC, as applicable will notify ATM
of the details of such Products. Such details shall include written descriptions
of such Products in sufficient detail and quantities so that ATM may assess the
potential market for such Products. ATM will thereafter inform ICC or CPTNC, as
applicable, whether it is willing to distribute or sell such Products and
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<PAGE>
provide reasonable and customary instructions for shipping, inventories, and
other necessary details, including without limitation, payment terms. If ATM
declines to distribute and sell any Products pursuant to this Section 3.1
("DECLINED PRODUCTS"), ICC shall be permitted to make other arrangements with
any person for the distribution and sale of such Declined Products.
3.2 FREE OF ENCUMBRANCES. ICC represents and warrants to ATM that at
the time of delivery of any Products to ATM, all Products provided to ATM will
be free and clear from any liens, security interests, or other encumbrances
created by ICC and that ATM's right to the sale and distribution of such
Products is not restricted, limited, or qualified in any way by any agreement to
which ICC is a party or by which it may be bound.
3.3 REPORTING. ATM will provide monthly reports reasonably satisfactory
to CPTNC and ICC detailing Products held in inventory by ATM pursuant to this
Agreement, sales of Products pursuant to this Agreement, Expenses relating to
sales of Products pursuant to this Agreement, and amounts that may be due.
3.4 REMITTANCES TO ICC. ATM shall remit the proceeds from sales of
Products under this Agreement less Expenses and Fees to ICC and CPTNC within 10
days after delivery of the monthly reports described in Section 3.3.
3.5 INSPECTION AND AUDIT RIGHTS. ICC, during normal business hours and
with reasonable notice, may (i) inspect any and all Products held by ATM
pursuant to this Agreement and (ii) with or without the assistance of outside
consultants, inspect, examine, or audit the books and records of ATM relating to
the transactions contemplated by this Agreement. ICC shall bear the costs of any
such inspection, examination, or audit of Products, books, or records if the
results thereof demonstrate ATM's compliance with its obligations hereunder by
at least 90% ("MATERIAL COMPLIANCE"). If the results of such inspection,
examination or audit demonstrate that ATM has not achieved Material Compliance
with its obligations hereunder, ATM shall bear the costs thereof.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF ICC
ICC hereby represents and warrants to ATM as follows:
4.1 ORGANIZATION AND GOOD STANDING. ICC is a limited liability company
duly organized, validly existing, and in good standing under the laws of the
State of Delaware.
4.2 LITIGATION.
(a) there is no dispute, claim, action, suit, proceeding,
arbitration, or governmental investigation, either administrative or judicial,
pending, or to the knowledge of ICC threatened, against ICC or CPTNC or their
affiliates, officers, directors, members, or agents in connection with the
business of ICC, the matters covered by this Agreement, or questioning the
validity of this Agreement, or any CPTNC Agreement; and
3
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(b) ICC is not in default with respect to any order, writ,
injunction, or decree of any court or governmental department, commission,
board, bureau, agency, or instrumentality, which involves the possibility of any
judgment or liability which may result in any material adverse effect on the
parties to or matters covered by this Agreement.
4.3 COMPLIANCE WITH LAWS. ICC has complied with and is not in default
under, or in violation of, any law, ordinance, rule, regulation, or order
(including, without limitation, any environmental, safety, employee benefit,
health, or price or wage control law, ordinance, rule, regulation, or order)
applicable to the matters covered by this Agreement which materially adversely
affect or, so far as ICC can now foresee, may in the future materially adversely
affect, the matters covered by this Agreement.
4.4 AUTHORIZATION; NON-CONTRAVENTION. The execution and delivery of
this Agreement, and the actions contemplated hereby have been duly authorized,
including, with respect to ICC, by all necessary action of its Manager and
Members and neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein by ICC constitutes a
violation or breach of applicable law or any contract or instrument to which ICC
is a party or by which it is bound, or any order, writ, injunction, decree, or
judgment applicable to it, or constitutes a default (or would but for the giving
of notice or lapse of time or both, constitute a default) under any contract or
instrument to which ICC is a party or by which it or they are bound, or
conflicts with or violates any provision of the Articles of Organization of ICC.
Without limiting the generality of the foregoing provisions, the execution and
delivery by ICC of this Agreement and the consummation of the transactions
contemplated hereby will not (i) result in a violation or default or give to any
other person any rights, including rights of termination, cancellation, or
acceleration under any applicable law, rule, or regulation, any agreement,
instrument, or policy to which ICC is a party or may be bound, (ii) result in
any judgment, order, injunction, decree, or ruling of any court or governmental
authority to which ICC is a party or subject, or (iii) require any
authorization, consent, approval, exemption, or other action by any court or
administrative or governmental body which has not been obtained or any notice to
or filing with any court or administrative or governmental body which has not
been given or done. This Agreement has been duly executed and delivered by ICC
and constitutes the legal, valid and binding obligation of ICC enforceable in
accordance with its terms.
4.5 CONSENTS. No consent, waiver, approval, order, permit, or
authorization of, or declaration or filing with, or notification to, any person,
entity, or governmental body is required on the part of ICC in connection with
the execution and delivery by ICC of this Agreement, or the compliance by ICC
with any of the provisions hereof.
4.6 DISCLOSURE. No representation or warranty by ICC in this Agreement
or in any other Exhibit, Schedule, list, certificate, or document delivered
pursuant to this Agreement, contains or will contain any untrue statement of
material fact or omits or will omit to state any material fact necessary to make
any statement herein and therein not misleading.
4.7 FOREIGN CORRUPT PRACTICES ACT. Neither ICC nor any of its
affiliates has engaged in any conduct with respect to the transactions
contemplated by this Agreement that would constitute a violation of any
provision of The United States Foreign Corrupt Practices Act
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("FCPA") or any other applicable national, federal, state, provincial, and local
laws, ordinances and regulations of similar scope or purpose of the United
States of America, the Republic of China, and any other country in which
activities related to the transactions contemplated by this Agreement are being
carried out.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF ATM
ATM hereby represents and warrants to ICC as follows:
5.1 ORGANIZATION AND GOOD STANDING. ATM is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
New York.
5.2 LITIGATION.
(a) there is no dispute, claim, action, suit, proceeding,
arbitration, or governmental investigation, either administrative or judicial,
pending, or to the knowledge of ATM threatened, against ATM or its affiliates,
officers, directors, or agents in connection with the matters covered by this
Agreement, or questioning the validity of this Agreement; and
(b) ATM is not in default with respect to any order, writ,
injunction, or decree of any court or governmental department, commission,
board, bureau, agency, or instrumentality, which involves the possibility of any
judgment or liability which may result in any material adverse effect on the
parties to or matters covered by this Agreement.
5.3 COMPLIANCE WITH LAWS. ATM has complied with and is not in default
under, or in violation of, any law, ordinance, rule, regulation, or order
(including, without limitation, any environmental, safety, employee benefit,
health, or price or wage control law, ordinance, rule, regulation, or order)
applicable to the matters covered by this Agreement which materially adversely
affect or, so far as ATM can now foresee, may in the future materially adversely
affect, the matters covered by this Agreement.
5.4 AUTHORIZATION. The execution and delivery of this Agreement and
other actions contemplated hereby have been duly authorized by all necessary
action of the Boards of Director and shareholders of ATM, and neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein by ATM constitutes a violation or breach of
applicable law or any contract or instrument to which ATM is a party or is
bound, or any order, writ, injunction, decree, or judgment applicable to it, or
constitutes a default (or would but for the giving of notice or lapse of time or
both, constitute a default) under any contract or instrument to which ATM is a
party or by which it is bound, or conflicts with or violates any provision of
the Articles of Incorporation or By-Laws of ATM. Without limiting the generality
of the foregoing provisions, the execution and delivery by ATM of this Agreement
and the consummation of the transactions contemplated hereby will not (i) result
in a violation or default or give to any other person any rights, including
rights of termination, cancellation or acceleration under any applicable law,
rule, or regulation, any agreement, instrument, or policy to which ATM is a
party or may be bound, (ii) result in any judgment, order, injunction, decree,
or ruling of any court or governmental authority to which it is a party or
subject or (iii) require
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<PAGE>
any authorization, consent, approval, exemption, or other action by any court or
administrative or governmental body which has not been obtained or any notice to
or filing with any court or administrative or governmental body which has not
been given or done. This Agreement has been duly executed and delivered by ATM
and constitutes the legal, valid, and binding obligation of ATM enforceable in
accordance with its terms.
5.5 CONSENTS. No consent, waiver, approval, order, permit, or
authorization of, or declaration or filing with, or notification to, any person,
entity or governmental body is required on the part of ATM in connection with
the execution and delivery by ATM of this Agreement, or the compliance by ATM
with any of the provisions hereof.
5.6 DISCLOSURE. No representation or warranty by ATM in this Agreement
or in any other Exhibit, Schedule, list, certificate or document delivered
pursuant to this Agreement, contains or will contain any untrue statement of
material fact or omits or will omit to state any material fact necessary to make
any statement herein and therein not misleading.
5.7 FOREIGN CORRUPT PRACTICES ACT. Neither ATM nor any of its
affiliates has engaged in any conduct with respect to the transactions
contemplated by this Agreement that would constitute a violation of any
provision of FCPA or any other applicable national, federal, state, provincial,
and local laws, ordinances and regulations of similar scope or purpose of the
United States of America, the Republic of China, and any other country in which
activities related to the transactions contemplated by this Agreement are being
carried out.
SECTION 6. TERM AND TERMINATION
6.1 TERM. The "TERM" of this Agreement shall be from the date first
written above and continuing for a period of 10 years, unless earlier terminated
in accordance with Section 6.2 hereof.
6.2 TERMINATION UPON DEFAULT. Each party ("PERFORMING PARTY") may
terminate this Agreement upon 30 days' prior written notice to the other party
("NON-PERFORMING PARTY") if:
(a) any representation or warranty of the Non-Performing Party
was untrue or incorrect in any material respect at the time made or deemed made
hereunder;
(b) the Non Performing Party has committed a material breach
of its obligations under this Agreement and fails to cure such breach with 30
days after receipt of written notice from the Performing Party or, if such
breach is not reasonably curable within such 30 day period, the Non-Performing
Party fails to commence a cure of such breach within such 30 day period and to
pursue diligently such cure until completion; or
(c) a petition is filed or a proceeding is otherwise commenced
by the Non-Performing Party for its liquidation, reorganization or other
arrangement under any provision of any bankruptcy or similar law or code; or
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(d) an involuntary petition is filed or other involuntary
proceeding is commenced against the Non-Performing Party seeking it liquidation,
reorganization or other arrangement under any provision of any bankruptcy or
similar law or code and such involuntary petition or proceeding is not dismissed
within 90 days.
Termination of this Agreement pursuant to this Section 6.2 shall not
affect or limit the Performing Party's right to seek other remedies otherwise
available to it at law or in equity as a result of the Non-Performing Party's
breach of this Agreement.
6.3. OTHER TERMINATION RIGHTS. Either party may terminate this
Agreement upon 30 days' prior written notice (or such shorter notice or without
notice so may be required by law) if the performance by either party of any
material obligation hereunder is finally determined or mutually agreed to be
unlawful as a result of the enactment after the date of this Agreement of any
federal, state, local or foreign law, rule or regulation. Termination of this
Agreement pursuant to this Section 6.3 shall be the sole and exclusive remedy of
the parties (other than with respect to lawful obligations arising prior to the
date of any such termination) and no party shall have any further ability or
liability to the other party hereunder from and after the date of such
termination
SECTION 7. INDEMNIFICATION
7.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties, covenants and agreements made by any party in this
Agreement or in any certificate delivered pursuant hereto shall survive for a
period of 1 year after the end of the Term.
7.2 INDEMNIFICATION. Each party shall defend, indemnify and hold the
other party harmless from and against all actual or potential claims, demands,
liabilities, damages, losses and out-of-pocket expenses including reasonable
attorneys' fees whether or not reduced to judgment, order, or award, caused by
or arising out of (i) the breach of any covenant or agreement of it in this
Agreement or in any certificate delivered by it or them pursuant hereto, or (ii)
the failure of any representations or warranties made by it in this Agreement or
in any certificate delivered by it or them pursuant hereto to have been true and
correct when made and on and as of the date of delivery of any documents
pursuant to this Agreement.
7.3 NOTICE OF INDEMNIFICATION. In the event any legal proceeding shall
be threatened or instituted or any claim or demand shall be asserted by any
person or entity in respect of which payment may be sought by one party hereto
from another party under the provisions of this Section 7, the party seeking
indemnification (the "INDEMNITEE") shall promptly cause written notice of the
assertion of any such claim of which it has knowledge which is covered by this
indemnity to be forwarded to the other party (the "INDEMNITOR"); provided,
however, that failure of the Indemnitee to give the Indemnitor notice as
provided in this Section shall not relieve the Indemnitor of its obligations
hereunder except to the extent that the Indemnitor shall have been prejudiced by
such failure. Any notice of a claim by reason of any of the representations,
warranties or covenants contained in this Agreement shall state in reasonable
detail the representation, warranty or covenant with respect to which the claim
is made, the facts giving
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rise to an alleged basis for the claim, and the amount of the liability asserted
against the Indemnitor by reason of the claim.
7.5 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS. Except as
otherwise provided herein, in the event of the initiation of any legal
proceeding against an Indemnitee by a third party, the Indemnitor shall be
entitled to assume the defense thereof, at the Indemnitor's sole expense. If the
Indemnitor assumes the defense of any legal proceeding, it will not settle the
legal proceeding without the prior written consent of the Indemnitee (which
shall not be unreasonably withheld or delayed). The Indemnitee shall cooperate
in all reasonable respects with the Indemnitor and its attorneys in the
investigation, trial, and defense of any legal proceeding and any appeal arising
therefrom (including the filing in the Indemnitee's name of appropriate cross
claims and counterclaims). The Indemnitee may, at its own cost, participate in
any investigation, trial, and defense of such legal proceeding controlled by the
Indemnitor and any appeal arising therefrom. If after receipt of a written
notice pursuant to Section 9.4 hereof, the Indemnitor does not undertake to
defend any such legal proceeding, the Indemnitee may, but shall have no
obligation to, contest or defend against any legal proceeding and the Indemnitor
shall be bound by the result obtained with respect thereto by the Indemnitee
(including, without limitation, the settlement thereof without the consent of
the Indemnitor). If there are one or more legal defenses available to the
Indemnitee that conflict with those available to the Indemnitor, the Indemnitee
shall have the right, at the expense of the Indemnitor, to assume the defense of
the legal proceeding; provided, however, that in any event the Indemnitee may
not settle such legal proceeding without the consent of the Indemnitor, which
consent shall not be unreasonably withheld or delayed. As used herein, a "legal
proceeding" includes any judicial, administrative, or arbitral action, suit,
proceeding (public or private), claim, or governmental proceeding.
7.6 PAYMENT OF INDEMNIFICATION AMOUNTS. Amounts payable by the
Indemnitor to the Indemnitee in respect of any claims hereunder shall be payable
by the Indemnitor as incurred by the Indemnitee.
7.7 RIGHT OF SUCCESSORS TO ENFORCE. The parties agree that the
provisions of this Section 7 shall inure to the benefit of, and may be enforced
by, any successor to the interests of the respective party (by assignment,
merger, operation of law, or otherwise, and regardless of whether such successor
acquires such interests directly from the respective party) ("SUCCESSORS"), to
the same extent as if the representations, warranties, covenants, and agreements
contained in this Agreement had been made directly to such Successor. The
parties further agree that each shall execute and deliver to any Successor such
further agreements, instruments or other documents as may be reasonably required
to affirm the obligations of and the rights of such Successor hereunder.
SECTION 8. COMPETITION; CONFIDENTIALITY
8.1 TRADE SECRETS/NON-COMPETITION.
(a) Each of the parties, and their affiliates, officers,
directors, members, or agents shall not at any time use for its or their own
benefit, or divulge to any other person, firm or corporation, any Confidential
Information or trade secrets relating in any way to the other
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party's business. For the purposes hereof, the term "CONFIDENTIAL INFORMATION"
means any and all information related to the customers, buyers, sellers, and
marketing relationships, and business and financial information of the
respective business.
(b) ATM covenants and agrees that, except as required in the
performance of duties set forth in this Agreement or any other written agreement
between the parties hereto, it will not compete for ICC's business with CPTNC,
but may take actions as may be necessary to enhance the CPTNC/ICC/ATM
relationship for the benefit of the members and with respect to this venture,
specifically. Except as expressly set forth in the immediately preceding
sentence, no party shall be prohibited or otherwise limited by this Agreement
from competing, or participating in any entity that may compete, with, directly
or indirectly, the business of the other party.
(c) The parties agree that any violation of any of the
covenants in this Section would cause substantial and irreparable injury to the
other party, whereupon the violating party may be enjoined from any breach or
threatened breach thereof in addition to, but not in limitation of, any of the
rights or remedies to which the injured party is or may be entitled to at law or
in equity or under this Agreement.
(d) The parties agree that the limitations set forth above are
reasonable in time and geographic scope, and if any provision hereof is held
invalid or unenforceable, the remainder shall nevertheless remain in full force
and effect. In particular, the parties agree that if any court of competent
jurisdiction shall determine that the duration or geographical limit of the
foregoing non-competition covenant is invalid, unreasonable or unenforceable, it
is the intention of the parties that it shall not be terminated thereby but
shall be deemed to have been amended to the extent required to render it valid
and enforceable, such amendment to apply only with respect to the jurisdiction
of the court making such adjudication.
(e) Except as otherwise required by law, each party shall
consult with the other party prior to issuing any public announcement, statement
or other disclosure with respect to this Agreement or the transactions
contemplated hereby and shall not issue any such announcement, statement or
other disclosure without the prior written consent of the other party.
SECTION 9. MISCELLANEOUS
9.1 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES. THE PARTIES HERETO AGREE THAT
JURISDICTION SHALL BE PROPER IN THE COURTS OF THE STATE OF NEW YORK AND CONSENT
TO JURISDICTION AND VENUE THEREIN.
9.2 ASSIGNMENT. This Agreement shall not be assignable by any party
without the prior written approval of the other party. To the extent applicable,
this Agreement shall be binding upon, and inure to the benefit of, the parties,
and their respective heirs, personal representatives, successors and assigns.
9
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9.3 HEADINGS FOR REFERENCE ONLY. The section and paragraph headings in
this Agreement are for convenience of reference only and shall not be deemed to
modify or limit the provisions of this Agreement.
9.4 NOTICES. All notices and other communications under this Agreement shall be
in writing and shall be deemed given when delivered by confirmed fax,
personally, or by recognized overnight courier, or four days after being mailed
by registered mail, return receipt requested, to a party at the following
address (or to such other address as such party may have specified by notice
given to the other party pursuant to this provision):
If to ATM: ATM Service, Ltd.
220 White Plains Road
Tarrytown, NY 10591
Attention: Warren Rothstein
Fax no. (914) 631-6500
If to ICC: InterCommerce China, LLC
c/o ICES Enterprises, Inc.
18 West 18th Street
New York, NY 10010
Attention: Henry Kauftheil
Fax no. (212) 647-8900
9.5 ENTIRE AGREEMENT AND AMENDMENT. This document and the Exhibits and
Schedules hereto contain the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and supersede all prior or
contemporaneous agreements, understandings, representations and warranties
between the parties and may not be amended except by written instrument executed
by the parties hereto.
9.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.7 TRANSACTION CURRENCY. Unless the transaction otherwise
necessitates, all calculations made hereunder will be made in U.S. Dollars and
all payments hereunder will be in U.S. Dollars.
9.8. ARBITRATION. Any dispute between the parties hereunder will, upon
the written request of either party, be submitted to arbitration in accordance
with the rules of commercial arbitration of the American Arbitration Association
("AAA"). Arbitration will take place in New York, New York and will be conducted
in the English language before one arbitrator chosen by the AAA. Fees of the
arbitrator and the costs and expenses of the proceeding will be assessed as
determined by the arbitrator. The decision of the arbitrator shall be final and
binding upon the
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parties. Each party will continue to perform diligently its obligations under
this Agreement during the pendency of any disputes or arbitration proceedings.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
ATM SERVICE, LTD.
By: //S// WARREN ROTHSTEIN
-------------------------------
Name: Warren Rothstein
Title: Chairman
INTERCOMMERCE CHINA, LLC
By: //S// HENRY KAUFTHEIL
-------------------------------
Name: Henry Kauftheil
Title: Manager
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Exhibit 10.41
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated effective as of January 14, 2000 between
WorldWide Web NetworX Corporation, a Delaware corporation (the "COMPANY"), and
John T. Banigan (the "EXECUTIVE"), an individual residing at 125 Greenley Road,
New Canaan, Connecticut 06840.
RECITAL:
The parties hereto desire to enter into this Agreement to provide for
the employment of the Executive by the Company and for certain other matters in
connection with such employment, all as set forth more fully in this Agreement.
NOW, THEREFORE, in consideration of the premises and covenants set
forth herein, and intending to be legally bound hereby, the parties to this
Agreement hereby agree as follows:
1. DUTIES. The Company agrees that the Executive shall be employed by
the Company as its Senior Vice President - Partner Company Development, and the
Executive agrees to be so employed, to devote his best efforts and substantially
all of his business time to advance the interests of the Company and to perform
such executive, managerial, administrative and other duties as are from time to
time assigned to him by the President and Chief Executive Officer of the Company
and are consistent with his position as a senior executive of the Company.
2. TERM. Subject to SECTIONS 4 AND 5, the initial term of the
Executive's employment hereunder shall commence on the date of this Agreement
and shall continue for a term of 3 years, until January __, 2003 ("EXPIRATION
DATE"). If either party elects not to renew this Agreement following the
Expiration Date, or if the parties are otherwise unable to agree to mutually
acceptable terms for a renewal period within 180 days prior to the Expiration
Date, then (subject to the provisions of SECTION 16) this Agreement shall
terminate effective as of the Expiration Date.
3. COMPENSATION.
(A) SALARY. During the term of his employment under this
Agreement, the Executive shall be paid an annual salary at the initial rate of
not less than $185,000 (the "BASE SALARY"). The Base Salary may be increased
from time to time by the Board of Directors of the Company (the "BOARD") in its
sole and absolute discretion. The Board shall review the Base Salary at least
annually at the end of each fiscal year of the Company. The Base Salary shall be
paid in accordance with the Company's regular payroll practices.
(B) BONUSES. Executive shall receive a signing bonus equal to
$15,000, less applicable payroll deductions, payable at the time of the
execution and delivery of this Agreement. At the end of each fiscal year of the
Company that ends during the term of this
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Agreement and at such other times as the Board determines, the Board shall
consider the award of a performance bonus to the Executive for such fiscal year.
The award of any bonus shall be in the sole discretion of the Board, EXCEPT that
Executive shall be entitled to receive a bonus of at least $15,000 in each
calendar year during the term of this Agreement.
(C) FRINGE BENEFITS. The Executive shall be entitled to
participate in all insurance, vacation and other fringe benefit programs of the
Company to the extent and on the same terms and conditions as are accorded to
other officers and key executives of the Company from time to time.
(D) REIMBURSEMENT OF EXPENSES. The Executive shall be
reimbursed for all normal items of travel, entertainment and miscellaneous
business expenses reasonably incurred by him on behalf of the Company, provided
that such expenses are documented and submitted in accordance with the
reimbursement policies of the Company as in effect from time to time.
(E) STOCK OPTIONS. The Executive and the Company have entered
into a Stock Option Grant Agreement, pursuant to which the Executive has been
granted certain options to purchase 250,000 shares of the Common Stock of the
Company, on the terms and subject to the conditions set forth therein, EXCEPT
that should a Change in Control (as defined below) occur, unless the Company
vests such options in a shorter period of time, any options to purchase
securities of the Company that were not previously vested will immediately vest
pursuant to the following schedule:
<TABLE>
<CAPTION>
LENGTH EMPLOYED % OF OPTIONS VESTING
<S> <C>
0-3 months 0
3-9 months 40%
9-15 months 60%
15-21 months 80%
more than 21 months 100%
</TABLE>
(the sum of options vesting may not exceed 100% of options
granted)
(F) ENTIRE COMPENSATION. The compensation provided for in this
Agreement shall constitute full payment for the services to be rendered by the
Executive to the Company hereunder.
4. DEATH OR TOTAL DISABILITY OF THE EXECUTIVE.
(A) DEATH. In the event of the death of the Executive during
the term of this Agreement, this Agreement shall terminate effective as of the
date of the Executive's death, and the Company shall not have any further
obligation or liability under this Agreement except that the Company shall: (i)
pay to the Executive's estate any portion of the Executive's Base Salary for the
period up to the Executive's date of death that has been earned but remains
unpaid; (ii) pay to the Executive's estate any benefits that have accrued to the
Executive under the terms of the benefit plans of the Company in which he is a
participant, which benefits shall be paid in
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accordance with the terms of those plans; and (iii) vest any options to purchase
securities of the Company that were not previously vested pursuant to the
schedule in SECTION 3(e).
(B) TOTAL DISABILITY. In the event of the Total Disability (as
that term is hereinafter defined) of the Executive, for (i) a period of 180
consecutive days or (ii) for any 180 days within a period of 360 consecutive
days, at any time during the term of this Agreement, the Company shall have the
right to terminate the Executive's employment hereunder by giving the Executive
30 days' written notice thereof, and, upon expiration of such 30-day period, the
Company shall not have any further obligation or liability under this Agreement
except that the Company shall: (i) pay to the Executive any portion of the
Executive's Base Salary for the period up to the date of termination that has
been earned but remains unpaid; (ii) pay to the Executive any benefits that have
accrued to the Executive under the terms of the benefit plans of the Company in
which he is a participant, which benefits shall be paid in accordance with the
terms of those plans; and (iii) vest any options to purchase securities of the
Company that were not previously vested pursuant to the schedule in SECTION
3(e). The term "TOTAL DISABILITY," when used herein, shall mean a mental or
physical condition that in the reasonable opinion of the Board renders the
Executive unable or incompetent to carry out the essential functions of the job
responsibilities he held or the tasks that he was assigned at the time the
disability was incurred.
5. TERMINATION.
(A) TERMINATION BY THE COMPANY FOR CAUSE. The Company may
discharge the Executive and thereby terminate his employment hereunder upon
written notice to the Executive for any of the following reasons: (i) material
violation of any policy regarding substance abuse as may be promulgated by the
Company from time to time; (ii) the willful failure to substantially perform the
duties or responsibilities of his position as those may be delegated or assigned
to the Executive by the President and CEO or by the Board; (iii) any material
breach of any covenant or agreement contained in SECTIONS 6 OR 7 of this
Agreement; (iv) engaging in intentional conduct that causes material damage to
the Company or its business reputation; (v) conviction (by trial or guilty plea)
or a plea of non-contest, NOLO CONTENDERE or similar plea to a felony (or
misdemeanor which the Company determines to have or could have a material
adverse effect on the Company or its reputation) which has become
non-appealable; (vi) adjudication as an incompetent; or (vii) misappropriation
of any funds or property of the Company materially affecting the Company, theft,
embezzlement or fraud; provided, however, that with respect only to subsections
(i) and (ii) above, the Company shall not discharge the Executive for cause
unless the Executive fails, refuses or for any reason does not cure such
violation to the reasonable satisfaction of the Company within 30 days following
written notice from the Company that there exists a reason for discharge for
cause. In the event that the Company shall discharge the Executive pursuant to
this SECTION 5(a), the Company shall not have any further obligation or
liability under this Agreement, except that the Company shall pay to the
Executive: (i) any portion of the Executive's Base Salary for the period up to
the date of termination that has been earned but remains unpaid; and (ii) any
benefits that have accrued to the Executive under the terms of the benefit plans
of the Company in which he is a participant, which benefits shall be paid in
accordance with the terms of those plans.
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(b) OTHER TERMINATION BY THE COMPANY. The Company may
discharge the Executive and thereby terminate his employment hereunder at any
time upon 10 business days' prior written notice for any reason other than one
specified in SECTION 5(a). If the Company shall terminate the employment of the
Executive for any reason other than one specified in SECTION 5(a), the Executive
shall be entitled to: (i) be paid any portion of the Executive's Base Salary for
the period up to the date of termination that has been earned but remains
unpaid; (ii) be paid a severance payment equal to an amount equal to the
Executive's Base Salary for a period of 6 months, if and only if Executive has
been employed be the Company for a period greater than 6 months; (iii) be paid
any benefits that have accrued to the Executive under the terms of any benefit
plans of the Company in which he is a participant, which benefits shall be paid
in accordance with the terms of those plans; and (iv) have any options to
purchase securities of the Company that were not previously vested vest pursuant
to the schedule in SECTION 3(e).
(b) TERMINATION BY THE EXECUTIVE. The Executive may terminate
his employment hereunder at any time upon 10 business days' prior written notice
for Good Reason (as defined below). If the Agreement is so terminated, the
Executive shall be entitled to: (i) be paid any portion of the Executive's Base
Salary for the period up to the date of termination that has been earned but
remains unpaid; (ii) be paid a severance payment equal to an amount equal to the
Executive's Base Salary for a period of 6 months, if and only if Executive has
been employed be the Company for a period greater than 6 months; (iii) be paid
any benefits that have accrued to the Executive under the terms of any benefit
plans of the Company in which he is a participant, which benefits shall be paid
in accordance with the terms of those plans; and (iv) have any options to
purchase securities of the Company that were not previously vested vest pursuant
to the schedule in SECTION 3(e). For purposes of this Agreement, "GOOD REASON"
means, without the Executive's express written consent, any of the following
circumstances:
(A) Executive's removal from his position as Senior
Vice President, or a significant diminution in the nature or status of
Executive's responsibilities;
(B) Executive being assigned to any duties
inconsistent with Executive's status as an executive of the Company holding the
position of Senior Vice President;
(C) A reduction by the Company in Executive's Base
Salary or benefits;
(D) A Change in Control occurs; for purposes of this
SECTION 5(c)(D), a "CHANGE IN CONTROL" means any one of the following: (I) an
acquisition of 50% or more of the combined voting power of all of the Company's
securities, (II) a merger where, following the transaction, the Company's
stockholders own 50% or less of the voting securities of the surviving or
resulting entity, (III) the liquidation or sale of substantially all of the
assets of the Company, or (IV) the individuals who currently form a majority of
the Board cease to be a majority of the Board, unless the new directors are
nominated for election by the current Board or their nominated successors.
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6. NON-DISCLOSURE AND NON-COMPETITION.
(a) NON-DISCLOSURE. The Executive acknowledges that in the
course of performing services for the Company, the Executive may have had access
to confidential and proprietary information and records, data and other trade
secrets of the Company ("CONFIDENTIAL INFORMATION"). Confidential Information
shall include, without limitation, the following types of information or
material, both existing and contemplated, regarding the Company, or its
subsidiary or affiliated companies: corporate information, including plans,
strategies, policies, resolutions, and any litigation or negotiations; marketing
information, including strategies, methods, customers, prospects, or market
research data; financial information, including cost and performance data, debt
arrangement, equity structure, investors, and holdings; operational and
scientific information, including trade secrets and technical information; and
personnel information, including personnel lists, resumes, personnel data,
organizational structure, compensation structure, and performance evaluations..
The Executive agrees that, during his employment by the Company hereunder and
after the termination or expiration of the Executive's employment hereunder, to
keep the Confidential Information secret and confidential; not to publish,
disclose or divulge the Confidential Information to any other party; not to use
any of the Confidential Information for the Executive's own benefit or to the
detriment of the Company without the prior written consent of the Company,
whether or not such Confidential Information was discovered or developed by the
Executive. The Executive also agrees not to divulge, publish or use any
proprietary and/or confidential information of others that the Company is
obligated to maintain in confidence for the relevant time period of the
Company's obligation. Notwithstanding the foregoing, the provisions of this
SECTION 6(a) will not apply when the Confidential Information (i) is publicly
disclosed other than by the Executive or (ii) is the subject of a valid order of
a court or administrative agency.
(b) NON-COMPETITION. The Executive agrees that, during his
employment by the Company hereunder and for an additional period of 1 year after
the termination or expiration of the Executive's employment hereunder, neither
the Executive nor any corporation or other entity in which the Executive may be
interested as a partner, trustee, director, officer, executive, employee, agent,
shareholder, lender of money or guarantor, or for which he performs services in
any capacity (including as a consultant or independent contractor) shall at any
time during such period (i) be engaged, directly or indirectly, in any
Competitive Business (as that term is hereinafter defined) or (ii) solicit,
hire, contract for services or otherwise employ, directly or indirectly, any of
the executives of the Company. Nothing herein contained shall be deemed to
prevent the Executive from investing in or acquiring one per cent or less of any
class of securities of any company if such class of securities is listed on a
national securities exchange or is quoted on the Nasdaq Stock Market. For
purposes of this SECTION 6(b), the term "COMPETITIVE BUSINESS" shall mean any
business that engages in the development of businesses that conduct
business-to-business transactions via an electronic commerce system, or which
engages in any other activities that are competitive with the business of the
Company at the time of termination or expiration of this Agreement. If the
Executive violates any provision of this SECTION 6(b), the 1 year restrictive
period set forth herein shall be extended for the duration of any such
violation, so that the Company enjoys the full term of such restrictive period.
Notwithstanding the foregoing, the Company acknowledges and agrees that the
provisions of this SECTION 6(b) shall
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not apply if the Executive's employment is terminated under the provisions of
SECTIONS 5(b) OR 5(c).
7. COMPANY DOCUMENTATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all documentation, disks, programs,
data, records, drawings, manuals, reports, sketches, blueprints, letters, notes,
notebooks and all other writings, electronic data, graphics and tangible
information and materials of a secret, confidential or proprietary information
nature relating to the Company or the Company's business that are in the
possession or under the control of the Executive.
8. INJUNCTIVE RELIEF. The Executive acknowledges that his compliance
with the agreements in SECTIONS 6 AND 7 is necessary to protect the good will
and other proprietary interests of the Company and that he is one of the
principal executives of the Company and conversant with its affairs, its trade
secrets and other proprietary information. The Executive acknowledges that a
breach of any of his agreements in SECTIONS 6 AND 7 hereof will result in
irreparable and continuing damage to the Company for which there will be no
adequate remedy at law; and the Executive agrees that in the event of any breach
of the aforesaid agreements, the Company and its successors and assigns shall be
entitled to injunctive relief and to such other and further relief as may be
proper.
9. SUPERSEDES OTHER AGREEMENTS. This Agreement supersedes and is in
lieu of any and all other employment arrangements between the Executive and the
Company.
10. AMENDMENTS. Any amendment to this Agreement shall be made in
writing and signed by the parties hereto.
11. ENFORCEABILITY. If any provision of this Agreement shall be invalid
or unenforceable, in whole or in part, then such provision shall be deemed to be
modified or restricted to the extent and in the manner necessary to render the
same valid and enforceable, or shall be deemed excised from this Agreement, as
the case may require, and this Agreement shall be construed and enforced to the
maximum extent permitted by law as if such provision had been originally
incorporated herein as so modified or restricted or as if such provision had not
been originally incorporated herein, as the case may be.
12. CONSTRUCTION. This Agreement shall be construed and interpreted in
accordance with the internal laws of the State of New Jersey.
13. ASSIGNMENT.
(A) BY THE COMPANY. The rights and obligations of the Company
under this Agreement shall inure to the benefit of, and shall be binding upon,
the successors and assigns of the Company. The Company shall require each and
every successor (whether direct or indirect, by asset or stock purchase, share
exchange, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be
required to perform it if no such
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succession had taken place. As used in this Agreement, "the Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as provided above that executes and delivers the agreement provided for
in this SECTION 13(a) or that otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law. Notwithstanding the provisions
of this Section 13(a), if the Company and the Executive agree to the employment
of the Executive by an affiliate or subsidiary of the Company, then this
Agreement may be assigned by the Company to such affiliate or subsidiary.
(B) BY THE EXECUTIVE. This Agreement and the obligations
created hereunder may not be assigned by the Executive, but all rights of the
Executive hereunder shall inure to the benefit of and be enforceable by his
heirs, devisees, legatees, executors, administrators and personal
representatives.
14. NOTICES. All notices required or permitted to be given hereunder
shall be in writing and shall be deemed to have been given when mailed by
certified mail, return receipt requested, or delivered by a national overnight
delivery service addressed to the intended recipient as follows:
If to the Company: WorldWide Web NetworX Corporation
521 Fellowship Road, Suite 130
Mount Laurel, NJ 08054
Attention: President and CEO
Fax: 856-914-0842
If to the Executive: John T. Banigan
125 Greenley Road
New Canaan, CT 06840
Fax: 203-972-9033
Any party may from time to time change its address for the purpose of notices to
that party by a similar notice specifying a new address, but no such change
shall be deemed to have been given until it is actually received by the party
sought to be charged with its contents.
15. WAIVERS. No claim or right arising out of a breach or default under
this Agreement shall be discharged in whole or in part by a waiver of that claim
or right unless the waiver is supported by consideration and is in writing and
executed by the aggrieved party hereto or his or its duly authorized agent. A
waiver by any party hereto of a breach or default by the other party hereto of
any provision of this Agreement shall not be deemed a waiver of future
compliance therewith, and such provisions shall remain in full force and effect.
16. SURVIVAL OF COVENANTS. The provisions of SECTIONS 6, 7 AND 8 hereof
shall survive any termination or expiration of this Agreement. Furthermore, any
provision of this Agreement which provides a benefit to the Executive and which
by the express terms hereof does not terminate upon the termination of the
Executive's employment shall remain binding upon the Company until such time as
such benefits are paid in full to the Executive or his successors.
-7-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of the date first above written.
WORLDWIDE WEB NETWORX CORPORATION
By://S// WARREN ROTHSTEIN
-------------------------------------
Name: Warren Rothstein
Title: President and CEO
//S// JOHN T. BANIGAN
----------------------------------------
John T. Banigan
-8-
<PAGE>
Exhibit 21
SUBSIDIARIES OF WORLDWIDE WEB NETWORX CORPORATION
ATM Service, Ltd.(1) - 52%
Keiretsu Corporation (2) - 100%
Real Quest, Inc. (3) - 80%
NAI Direct, Inc. (4) - 80% owned by Real Quest, Inc.
The Intrac Group, Ltd. (4) - 100%
(1) New York corporation
(2) Nevada corporation
(3) New Jersey corporation
(4) Delaware corporation
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND THE CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001064525
<NAME> WORLDWIDE WEB NETWORK
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> SEP-30-1999 SEP-30-1998
<PERIOD-START> OCT-01-1998 OCT-01-1997
<PERIOD-END> SEP-30-1999 SEP-30-1998
<CASH> 6234 792
<SECURITIES> 29,475 0
<RECEIVABLES> 858 49
<ALLOWANCES> 19 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 36,710 841
<PP&E> 312 30
<DEPRECIATION> 17 3
<TOTAL-ASSETS> 47,511 986
<CURRENT-LIABILITIES> 12,822 63
<BONDS> 0 0
0 0
0 0
<COMMON> 39 11
<OTHER-SE> 34,611 912
<TOTAL-LIABILITY-AND-EQUITY> 47,511 986
<SALES> 1,339 50
<TOTAL-REVENUES> 1,339 50
<CGS> 792 36
<TOTAL-COSTS> 6,668 189
<OTHER-EXPENSES> 11,458 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 392 90
<INCOME-PRETAX> 8,303 (219)
<INCOME-TAX> 6,863 0
<INCOME-CONTINUING> 1,440 (219)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,440 (219)
<EPS-BASIC> .07 (.03)
<EPS-DILUTED> .07 (.03)
</TABLE>
