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OMB Number 3235-0145
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
INFORMATION TO BE INCLUDED IN STATEMENTS FILED
PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED
PURSUANT TO RULE 13d-2(a)
(Amendment No. __)*
Aden Enterprises, Inc.
(Name of Issuer)
Common Stock, no par value per share
(Title of Class of Securities)
006852-20-6
(CUSIP Number)
Thomas G. Woolston
8408 Washington Avenue
Alexandria, VA 22309
(703) 619-0221
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
With a copy to:
Neil R.E. Carr, Esq., De Martino Finkelstein Rosen & Virga
1818 N Street NW, Suite 400, Washington, D.C. 20036
(202) 659-0494
February 24, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box [_].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. 006852-20-6 PAGE 2 OF 9
________________________________________________________________________________
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
MercExchange, LLC
IRS ID. No.: 52-2061850
________________________________________________________________________________
2. Check the Appropriate Box If a Member of a Group (See Instructions)
(a) [_]
(b) [X]
________________________________________________________________________________
3. SEC Use Only
________________________________________________________________________________
4. Source of Funds (See Instructions)
OO
________________________________________________________________________________
5. Check If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
________________________________________________________________________________
6. Citizenship or Place of Organization
Commonwealth of Virginia, United States of America
________________________________________________________________________________
7. Sole Voting Power
NUMBER OF 58,000,000
SHARES _________________________________________________________________
BENEFICIALLY 8. Shared Voting Power
OWNED BY 0
EACH _________________________________________________________________
REPORTING 9. Sole Dispositive Power
PERSON 58,000,000
WITH _________________________________________________________________
10. Shared Dispositive Power
0
________________________________________________________________________________
11. Aggregate Amount Beneficially Owned by Each Reporting Person
58,000,000 Shares
________________________________________________________________________________
12. Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [_]
________________________________________________________________________________
13. Percent of Class Represented by Amount in Row (11)
25.04% of Common Stock
________________________________________________________________________________
14. Type of Reporting Person (See Instructions)
CO
________________________________________________________________________________
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CUSIP NO. 006852-20-6 PAGE 3 OF 9
________________________________________________________________________________
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Thomas G. Woolston
________________________________________________________________________________
2. Check the Appropriate Box If a Member of a Group (See Instructions)
(a) [_]
(b) [X]
________________________________________________________________________________
3. SEC Use Only
________________________________________________________________________________
4. Source of Funds (See Instructions)
OO
________________________________________________________________________________
5. Check If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
________________________________________________________________________________
6. Citizenship or Place of Organization
Thomas G. Woolston - United States of America
________________________________________________________________________________
7. Sole Voting Power
NUMBER OF 58,000,000
SHARES _________________________________________________________________
BENEFICIALLY 8. Shared Voting Power
OWNED BY 0
EACH _________________________________________________________________
REPORTING 9. Sole Dispositive Power
PERSON 58,000,000
WITH _________________________________________________________________
10. Shared Dispositive Power
0
________________________________________________________________________________
11. Aggregate Amount Beneficially Owned by Each Reporting Person
58,000,000 Shares
________________________________________________________________________________
12. Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [_]
________________________________________________________________________________
13. Percent of Class Represented by Amount in Row (11)
25.04% of Common Stock
________________________________________________________________________________
14. Type of Reporting Person (See Instructions)
IN
________________________________________________________________________________
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CUSIP NO. 006852-20-6 PAGE 4 OF 9
ITEM 1. SECURITY AND ISSUER.
The title of the class of securities to which this filing relates is
common stock, no par value (the "Common Stock"), of Aden Enterprises, Inc., a
California corporation (the "Company"). The Company's principal executive office
is located at 13314 I Street, Omaha, Nebraska 68137.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is being filed jointly by MercExhange, LLC, a Virginia
limited liability company ("MercExchange"), and Thomas G. Woolston, an
individual. Mr. Woolston is the managing member of MercExhange and owns and
controls a majority of its membership interests. MercExchange and Mr. Woolston
shall be collectively referred to as the "Reporting Person." MercExchange's
principal business address is 110 S. West Street, Alexandria, Virginia 22314.
Mr. Woolston's principal business address is 8408 Washington Avenue, Alexandria,
Virginia 22309. MercExchange is in the business of owning and developing patent
applications for, among other things, the internet market. Mr. Woolston is a
self-employed attorney.
During the last five years, the Reporting Person has not been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors).
During the last five years, the Reporting Persons has not been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
resulting in his being subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, Federal
or state securities laws or finding any violation with respect to such laws.
MercExchange is a limited liability company organized in the Commonwealth of
Virginia. Mr. Woolston is a United States citizen.
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CUSIP NO. 006852-20-6 PAGE 5 OF 9
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On February 24, 2000, MercExchange acquired 58,000,000 shares of Common
Stock of the Company (the "Shares") upon the transfer to the Company of all of
the outstanding shares of common stock of MercTravel, Inc. ("MercTravel"), a
then wholly-owned subsidiary of MercExchange. The exchange transaction was
effected pursuant to the terms of an Exchange Agreement, dated January 24, 2000,
between the Company and MercExchange. Pursuant to a Transfer Agreement, dated
January 7, 2000, between MercExchange and MercTravel, MercExchange had granted
to MercTravel an exclusive license to utilize MercExchange's patents in the
internet online travel sector. The acquired shares represent approximately
25.04% of the number of total outstanding shares of the Company. The membership
interests of MercExchange are majority owned by Mr. Woolston. Also, Mr. Woolston
is the managing member of MercExchange. Accordingly, Mr. Woolston may be deemed
to control MercExchange. The Shares received by MercExchange were issued in
reliance upon an exemption from the registration requirements of the Securities
Act of 1933, as amended ("1933 Act"), contained in Section 4(2) thereof.
In addition, pursuant to the terms of a Capital Contribution Agreement,
dated October 30, 1999, between the Company and MercExchange, the Company
purchased a 10% ownership interest in MercExchange in consideration of the
issuance of two promissory notes in the aggregate principal amount of
$4,000,000. MercExchange also granted to the Company a two year option to
purchase an additional 5% of MercExchange for $3,000,000. As of the date hereof,
the Company has not exercised the foregoing option.
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CUSIP NO. 006852-20-6 PAGE 6 OF 9
Furthermore, pursuant to the terms of an Option Agreement, dated
January 7, 2000, MercExchange granted to the Company an option to acquire a
non-exclusive license to certain pending and issued patents that it owns in
connection with the use and operation of the internet market and auctions. The
Company paid MercExchange the sum of $35,000 as partial consideration for such
option and agreed to pay MercExchange an annual payment of the greater of (1)
the first $50,000 of any of gross transactions collected or earned from any
third party or (2) a 1.5% continuing royalty of gross transactions generated by
each vertical market sector. As of the date of filing hereof, the Company has
exercised the option to acquire a non-exclusive license with respect to the
internet operations of a majority-owned subsidiary of the Company called
Leftbid.com, Inc., a Nevada corporation, and with respect to the internet
operations of a majority-owned subsidiary called Navlet.com, Inc., a Nevada
corporation.
ITEM 4. PURPOSE OF TRANSACTION.
The immediate purpose of the acquisition by MercExchange was to
transfer to the Company all of the outstanding common stock of MercTravel, a
wholly-owned subsidiary of MercExchange. MercExchange had previously licensed to
MercTravel certain patents in the internet travel market. The transfer was
effected pursuant to the terms of an Exchange Agreement, dated January 24, 2000,
by and between the Company and MercExchange. In connection therewith and
pursuant to the terms of a Registration Rights Agreement between the Company and
MercExchange, the Company granted to MercExchange certain piggy-back and demand
registration rights.
The Reporting Person intends to continually assess the market for the
Common Stock as well as the Company's financial position and operations. The
Reporting Person does not have any plans to acquire additional shares of Common
Stock at the present time, but may acquire additional shares in the future.
Depending upon a continuing assessment and upon future developments, the
Reporting Person may determine, from time to time, or at any time, to sell or
otherwise dispose of some or all of the shares of Common Stock owned by the
Reporting Person, subject to compliance with the Securities Act of 1933 and
applicable state law. In making any such determination, the Reporting Person
will consider its goals and objectives, other business opportunities available
to it, as well as general stock market conditions.
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CUSIP NO. 006852-20-6 PAGE 7 OF 9
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) and (b). MercExchange and Mr. Woolston, by virtue of his
relationship to MercExchange, each may be deemed to be the beneficial owner of
the 58,000,000 shares or 25.04% of the total outstanding shares of Common Stock
of the Company (based upon the number of shares of the Company's Common Stock
represented by the Company to be outstanding in its Form 10-Q for the quarter
ended January 31, 2000). All of the Shares were acquired by MercExchange,
effective February 24, 2000, upon the sale to the Company of all of the common
stock of MercTravel, Inc., a then wholly-owned subsidiary of MercExchange. Mr.
Woolston is the managing member of MercExchange and owns and controls a majority
of the membership interests in MercExchange, a Virginia limited liability
company. Accordingly, Mr. Woolston would have the power to direct the voting and
disposition of any shares of the Company's Common Stock acquired by
MercExchange, and as such Mr. Woolston may be deemed, under Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, to beneficially own any shares of
Common Stock which MercExchange may be deemed to own.
(c) None.
(d) None.
(e) Not applicable.
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CUSIP NO. 006852-20-6 PAGE 8 OF 9
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Except as set forth in this Schedule 13D, to the best of the knowledge
of the Reporting Person, there are no other contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named in
Item 2 and between such persons and any person with respect to any securities of
the Company, including but not limited to: transfer or voting of any of the
securities of the Company or of its subsidiaries, finder's fees, joint ventures,
loan or option arrangements, puts or calls, guarantees or profits, division of
profits or loss, or the giving or withholding of proxies or a pledge or
contingency the occurrence of which would give another person voting power over
the securities of the Company.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 -- Joint Filing Agreement, dated May 23, 2000.
Exhibit 2 -- Exchange Agreement, dated January 24, 2000, by and between the
Company and MercExchange, LLC.
Exhibit 3 -- Registration Rights Agreement between the Company and
MercExchange, LLC.
Exhibit 4 -- Transfer Agreement, dated January 7, 2000, by and between
MercExchange, LLC and MercTravel, Inc.
Exhibit 5 -- Option Agreement, dated January 7, 2000, between the Company
and MercExchange, LLC.
Exhibit 6 -- Capital Contribution and Sale Agreement, dated October 30,
2000, between the Company and MercExchange, LLC.
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CUSIP NO. 006852-20-6 PAGE 9 OF 9
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
MERCEXCHANGE, L.L.C.
Dated: May 23, 2000 By: /s/ Thomas G. Woolston
--------------------------
Thomas G. Woolston
Its: Managing Member
THOMAS G. WOOLSTON
Dated: May 23, 2000 Signed: /s/ Thomas G. Woolston
--------------------------
EXHIBIT 1
JOINT FILING AGREEMENT
----------------------
JOINT FILING AGREEMENT, dated as of May 23, 2000, by and between Thomas
G. Woolston and MercExchange, L.L.C., a Virginia limited liability company.
WHEREAS, each of the parties hereto beneficially owns shares (the
"Shares") of common stock of Aden Enterprises, Inc., a California corporation
(the "Company").
NOW, THEREFORE, the parties hereto agree as follows:
1. The parties hereto shall prepare a simple statement containing the
information required by Schedule 13D with respect to their respective interests
in the Shares (the "Schedule 13D") and any necessary amendments thereto, and for
the completeness and accuracy of the information concerning him or it contained
therein, but shall not be responsible for the completeness and accuracy of the
information concerning any other party contained therein, except to the extent
that he or it knows or has reason to believe that such information is
inaccurate.
2. Mr. Thomas G. Woolston shall be designated as the person authorized
to receive notices and communications with respect to the Schedule 13D and any
amendments thereto.
3. This Agreement may be executed in counterparts, each of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
THOMAS G. WOOLSTON
Signed: /s/ Thomas G. Woolston
----------------------------
MERCEXCHANGE, L.L.C.
By: /s/ Thomas G. Woolston
----------------------------
Thomas G. Woolston
Its: Managing Member
EXHIBIT 2
EXCHANGE AGREEMENT
------------------
THIS EXCHANGE AGREEMENT (this "Agreement") is made and entered into as
of the 24th day of January, 2000, by and between Aden Enterprises, Inc., a
California corporation, with its principal place of business at 13314 I Street,
Omaha, NE 68137 ("Aden"), and MercExchange, LLC, a Virginia limited liability
company, with its principal place of business at 114 N. Alfred Street,
Alexandria, VA 22314 ("MercExchange").
WHEREAS, MercTravel, Incorporated, a Delaware corporation
("MercTravel"), is a wholly owned subsidiary of MercExchange; and
WHEREAS, Aden desires to acquire all of the issued and outstanding
shares of common stock of MercTravel on the terms and conditions hereinafter set
forth; and
WHEREAS, the parties desire that the transactions contemplated by this
Agreement constitute an exchange of property as provided in Section 351 of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants set forth herein, the parties agree as follows:
1. Representations of MercExchange.
a. To the knowledge of MercExchange, the authorized capital stock
of MercTravel consists of 1,000 shares of common stock, par
value $.01 per share, of which 1,000 shares are issued and
outstanding. MercExchange is the sole shareholder. There are
no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require
such corporation to issue, sell or otherwise cause to become
outstanding any of its capital stock. There are no outstanding
or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to such
corporation. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the
capital stock of such corporation.
b. To the knowledge of MercExchange, MercTravel is a corporation
duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and
operate its properties and to carry on its businesses as now
being conducted, and is duly qualified to do business as a
foreign corporation, if required, and is in good standing in
each jurisdiction in which the ownership or leasing of its
properties or the conduct of its business require such
qualification, except where the failure to be so qualified
would not have a material adverse effect on the assets,
business, results of operations or conditions (financial or
otherwise) of each of such corporation. MercTravel has
previously delivered to Aden true, complete and correct copies
of its charter and by-laws, as currently in effect.
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c. To the knowledge of MercExchange, MercTravel has no
subsidiaries, or any direct or indirect interest, whether by
way of stock ownership or otherwise, in any corporation, firm,
association or business enterprise.
d. To the knowledge of MercExchange, MercTravel owns and
possesses, or is duly licensed in respect of, all licenses,
trademarks, trademark rights, applications for trademarks,
trade names, trade name rights, processes, and formulas,
necessary for the operation of its business, with no known
material conflict with the rights of others, and the same are
subject to no liens, encumbrances, claims, or charges.
e. As of the date of this Agreement, to the knowledge of
MercExchange, there are no actions, suits, or proceedings
pending or, to the knowledge of MercExchange, threatened,
against MercTravel, at law or in equity, or before or by any
federal, state, municipal, or other governmental agency or
instrumentality, domestic or foreign, except for those
actions, suits, or proceedings which would not have a material
and adverse effect on the financial condition of MercTravel.
MercTravel is not in default with respect of any order or
decree of any court or of any such governmental agency or
instrumentality.
f. Neither the execution and delivery of this Agreement nor the
consummation of the transactions herein contemplated, will
conflict with or result in the breach of, or accelerate the
performance required by, any terms of any agreement to which
either of MercTravel or MercExchange are now a party, or
constitute a default thereunder, or result in the creation of
any lien, charge, or encumbrance upon any of the properties or
assets of MercTravel.
g. To the knowledge of MercExchange, MercTravel is not a party to
any agreement or instrument subject to any charter or other
corporate restriction materially and adversely effecting the
business, property, or assets, operations or condition
(financial or otherwise) of such corporation.
h. To the knowledge of MercExchange, MercTravel and MercExchange
have timely filed all tax returns and reports required to be
filed by each, including without limitation all federal,
state, local and foreign tax returns, and all such tax returns
and reports are true, complete and correct in all material
respects. MercTravel has paid in full or made adequate
provision by the establishment of reserves for all such taxes
and other charges which have become due or have been asserted
in writing by any taxing authority to be due, relating to each
such corporation, including, if such corporation was an S
Corporation prior to the consummation of the transactions
contemplated by this Agreement, taxes and other charges
attributable to the S Corporation election by each such
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corporation, and has withheld with respect to their employees
all federal and state income taxes, FICA, FUTA and any other
taxes or charges required to be withheld except for those
taxes or other charges the failure of which to pay or withhold
would not have a material and adverse effect on the financial
condition of MercTravel. To the knowledge of MercExchange,
there is no tax deficiency proposed or threatened against
MercTravel. To the knowledge of MercExchange, MercTravel has
made all payments of estimated taxes, if any, when due in
amounts sufficient to avoid the imposition of any penalty
except where such penalty would not have a material and
adverse effect on the financial condition of MercTravel. There
are no outstanding agreements, waivers, or arrangements
extending the statutory period of limitation applicable to any
claim for, or the period for the collection or assessment of,
taxes due from or with respect to MercTravel for any taxable
period, and no power of attorney granted by or with respect to
MercTravel relating to taxes is currently in force. No closing
agreement pursuant to Section 7121 of the Internal Revenue
Code of 1986, as amended, (or any predecessor provision) or
any similar provision of any state, local, or foreign law has
been entered into by or with respect to MercTravel that could
materially and negatively effect the future liability for
taxes of MercTravel. No audit or other proceeding by any
governmental authority has formally commenced and no written
notification has been given that such an audit or other
proceeding is pending or threatened with respect to any taxes
due from or with respect to MercTravel that could materially
and negatively affect the future liability for taxes of
MercTravel. No unpaid assessment of tax has been proposed in
writing against MercTravel other than assessment of a type
that arise on a recurring basis in the ordinary course of
business.
i. To the knowledge of MercExchange, MercTravel has no direct or
indirect indebtedness, liability, claim, loss, damage,
deficiency, obligation or responsibility, accrued, absolute,
contingent or otherwise ("Liabilities"), which would be
required by generally accepted accounting principles to be
disclosed in their respective financial statements (including,
without limitation, in the notes thereto), other than
liabilities fully and adequately reflected or reserved against
their respective balance sheet, prepared in accordance with
generally accepted accounting principles. To the knowledge of
MercExchange, since December 13, 1999, MercTravel has incurred
no liabilities which would be required by generally accepted
accounting principles to be disclosed in its financial
statements (including, without limitation, in the notes
thereto), other than Liabilities incurred since December 13,
1999 in the ordinary course of business.
j. To the knowledge of MercExchange, MercTravel is in compliance
in all material respects with all applicable laws (including,
but not limited to, rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of all federal, state or local governments, or any
agency or instrumentality of the foregoing, domestic or
foreign, in respect of the conduct of its business and
ownership or leasing of its properties, except where the
failure to so comply would not have a material adverse effect
on the assets, business, results of operations or condition
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(financial or otherwise) of such corporation. To the knowledge
of MercExchange, MercTravel has all licenses, permits, orders
or approvals of all federal, state or local governmental
bodies, quasi-governmental bodies or authorities, domestic or
foreign, which are material to, or necessary for, the conduct
of the operations of such corporation. To the knowledge of
MercExchange, no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has
been filed or commenced against MercTravel alleging any
failure so to comply, except where the failure to so comply
would not have a material and adverse effect on the assets,
business, results of operations or condition (financial or
otherwise) of such corporation.
k. Since December 13, 1999, there has not been any material
adverse change in the business, financial condition,
operations, results of operations, or future prospects of
MercTravel.
l. MercTravel has good and marketable title to, or a valid
leasehold interest in, the properties and assets used by it,
located on its premises, or shown in its balance sheet, or
acquired after the date thereof, free and clear of all liens,
claims, encumbrances, charges, and assessments, except for
properties and assets disposed of in the ordinary course of
business since December 13, 1999.
m. MercExchange further represents and warrants that:
i. The Aden Shares (as defined below) are being acquired
for investment for MercExchange's own account, not as a
nominee or agent, and not with a view to the resale or
distribution of any part thereof, and MercExchange has
no present intention of selling, granting any
participation in, or otherwise distributing the same.
MercExchange does not have any contract, undertaking,
agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any
third person, with respect to any of the Aden Shares.
ii. MercExchange believes it has received all information it
considers necessary or appropriate for deciding whether
to purchase the Aden Shares. MercExchange has had an
opportunity to ask questions and receive answers from
Aden regarding the terms and conditions of the offering
of the Aden Shares.
iii. MercExchange has previously invested in companies in the
development stage, can bear the economic risks of the
investment and has such knowledge and experience in
financial or business matters that it is capable of
evaluating the merits and risks of its investment in the
Aden Shares.
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iv. MercExchange is an accredited investor as defined in
Rule 501(a) of Regulation D, as amended, of the
Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended.
v. MercExchange understands that the Aden Shares it is
purchasing pursuant to this Agreement are characterized
as "restricted securities" under the federal securities
laws inasmuch as they are being acquired from Aden in a
transaction not involving a public offering and that
under such laws and applicable regulations the Aden
Shares may be resold without registration under the
Securities Act only in certain limited circumstances. In
this connection, MercExchange is familiar with SEC Rule
144, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
vi. MercExchange will not dispose of any of the Aden Shares
(other than pursuant to SEC Rules 144 or 144A or any
similar or analogous rule or rules) unless and until (A)
MercExchange shall have notified Aden of the proposed
disposition and the circumstances surrounding the
proposed disposition and, if reasonably requested by
Aden, MercExchange shall have furnished Aden with an
opinion of counsel reasonably satisfactory in form and
substance to Aden to the effect that such disposition
will not require registration under the Securities Act;
or (B) there is in effect a registration statement under
the Securities Act covering the proposed disposition and
the proposed disposition is made in accordance with such
registration statement.
vii. The certificates evidencing the Aden Shares may bear the
restrictive legends set forth below, except that such
certificates shall not bear the legends set forth below
if: (x) the transfer was made in compliance with Rule
144; (y) there is in effect a registration statement
under the Securities Act covering the proposed
disposition and the proposed disposition is made in
accordance with such registration statement; or (z) if
the opinion of counsel, if any, delivered pursuant to
this Section is to the effect that such legend is not
required in order to establish compliance with any
provisions of the Securities Act:
(A) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("ACT"). THE SECURITIES MAY NOT BE TRANSFERRED
UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN
EFFECT AS TO SUCH TRANSFER OR SUCH TRANSFER IS MADE
PURSUANT TO RULES 144 OR 144A OF THE ACT OR AN EXEMPTION
TO THE REGISTRATION REQUIREMENTS OF THE ACT."
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(B) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE CORPORATION RECEIVES AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING
THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF SAID ACT."
(C) Any legend required by the laws of any applicable
state or other jurisdiction governing the Aden Shares.
2. Exchange of Stock.
a. On the Closing Date, as hereinafter fixed, MercExchange shall
deliver to Aden certificates representing all of the issued
and outstanding shares of common stock of MercTravel, as the
same shall be constituted on the Closing Date, duly endorsed
in blank by the owner of record, or accompanied by duly
executed stock powers in blank, and accompanied by requisite
revenue stamps evidencing the payment of the transfer tax, if
any.
b. On the Closing Date, as hereinafter fixed, Aden shall deliver
to MercExchange fifty-eight million (58,000,000) shares of
restricted common stock in Aden Enterprises, Inc. (the "Aden
Shares").
3. Closing. The consummation of the transactions contemplated herein
(the "Closing") shall take place at the offices of Erickson &
Sederstrom, P.C. at 10330 Regency Parkway Drive, Omaha, Nebraska
68114, at 10:00 a.m. (local time) on February 25, 2000 (the "Closing
Date"), or at such other time and place as the parties may agree.
4. Indemnity for Damages. MercExchange shall indemnify, fully defend
and save and hold harmless Aden at all times from and against all
demands, claims, actions, causes of action, assessments, losses,
damages, liabilities, costs and expenses, including, without
limitation, interest, penalties and reasonable attorneys' fees and
expenses, but net of any tax savings and insurance proceeds actually
received by the indemnitee as a result of the matter giving rise to
the indemnification, asserted against, resulting to, imposed upon or
incurred by Aden, by reason of or resulting from any inaccurate
representation made by MercExchange in this Agreement, breach of any
of the warranties made by MercExchange in this Agreement and breach
or default in performance by MercExchange of any of the covenants
which it is to perform hereunder.
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<PAGE>
5. Conditions to Obligations of Aden. The obligations of Aden hereunder
are, except as may be waived in writing by Aden, subject to the
conditions that:
a. Certificates representing 100% of the issued and outstanding
shares of common stock of MercTravel, as such stock shall then
be constituted, shall be tendered for exchange at the Closing
by MercExchange.
b. The representations contained in Sections 1 and 7 hereof shall
be true on and as of the Closing Date with the same effect as
though such representations had been made on and as of the
Closing Date, and there shall be delivered to Aden at the
Closing, if requested, a certificate, in form and substance
satisfactory to Aden and its counsel, duly signed by
MercExchange to that effect.
6. Conditions to Obligations of MercExchange. The obligation of
MercExchange hereunder to deliver to Aden shares of common stock of
MercTravel is, except as may be waived in writing by MercExchange,
subject to the conditions that:
a. Aden is a duly organized and existing corporation in good
standing under the laws of the State of California;
b. A certificate or certificates representing the Aden Shares are
delivered to MercExchange according to the provisions of
Section 2;
c. A duly executed Registration Rights Agreement in substantially
the form of Exhibit "A" hereto is delivered at the Closing;
and
d. This Agreement has been duly executed and delivered by Aden,
and constitutes the legal, valid, and binding obligation of
Aden, enforceable in accordance with its terms.
7. Survival of Representations. The representations and warranties of
the parties hereto shall survive the making of this agreement, any
examination on behalf of such parties, and the Closing hereunder.
Any waiver of any term or condition of this agreement shall not
operate as a waiver of any other breach of such term or condition,
or of any other term or condition, nor shall any failure to enforce
any provision hereof operate as a waiver of such provision or of any
other provision hereof.
8. Notices. All communications hereunder shall be in writing and
delivered or mailed to Aden, Aden Enterprises, Inc., Attn: Michael
Luther, and to MercExchange, MercExchange, LLC, Attn: Thomas
Woolston, or at such other address as each party may specify in
writing.
9. Broker. Aden and MercExchange represent to each other that no broker
has been employed in connection with any transaction or transactions
involved in this Agreement.
10. Entire Agreement. This Agreement constitutes the entire contract
between the parties hereto and no party shall be liable or bound to
another in any manner by any warranties, representations or
guarantees except as specifically set forth herein.
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11. Modification. This Agreement may not be changed or modified except
by an agreement in writing by Aden and by MercExchange or by any
person authorized to act on their behalf.
12. Benefit. The terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective legal
representatives, successors, and assigns of the parties hereto.
13. Governing Law. This Agreement is made pursuant to and shall be
construed under the laws of the State of Nebraska, without regard to
any applicable conflicts of law provisions.
14. Counterparts. This Agreement may be executed and endorsed in one or
more counterparts, and each of such counter parts shall, for all
purposes, be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF the parties hereto have duly caused this Agreement
to be executed as of the day and year first above written.
Aden: MercExchange:
By: /s/ Michael S. Luther By: /s/ Thomas Woolston
----------------------------- -------------------
8
EXHIBIT 3
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT is made as of ___, 2000, by and
between Aden Enterprises, Inc., a California corporation (the "Company") and
MercExchange, LLC, a Virginia limited liability company (the "Shareholder").
WHEREAS, the Company and the Shareholder are parties to that certain
Exchange Agreement, dated January 24, 2000 (the "Exchange Agreement"); and
WHEREAS, the issuance of Company's Common Stock to the Shareholder in
the Exchange Agreement is conditioned upon the registration rights being
extended to the Shareholder;
NOW THEREFORE, in consideration of the foregoing, the parties agree as
follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall
have the following respective meanings:
"Closing Date" shall mean the date of execution of this Agreement and
the Exchange Agreement by the Company and the Shareholder.
"Commission" shall mean the Securities and Exchange Commission of the
United States or any other U.S. federal agency at the time administering the
Securities Act.
"Common Stock" shall mean shares of the Company's Common Stock.
"Holder" shall mean any person holding Registrable Securities.
"Other Holders" shall mean persons other than Holders who, by virtue of
agreements with the Company, are entitled to include their securities in certain
registrations hereunder.
"Registrable Securities" means (i) the Common Stock issued pursuant to
the Exchange Agreement and (ii) any shares of Common Stock issued or issuable in
respect of such Common Stock upon any stock split, stock dividend,
recapitalization, or similar event; provided that none of such shares of Common
Stock are, at the time of Holders' exercise of any rights hereunder, subject to
a repurchase option in favor of Company. Shares of Common Stock shall only be
treated as Registrable Securities if they have not been (A) sold to or through a
broker or dealer or underwriter in a public distribution or a public securities
transaction or (B) sold or, in the opinion of counsel to the Company, are
available for sale in a single transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale.
<PAGE>
The terms "register, "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise
stated below, incurred by the Company in complying with Sections 2 and 3 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company (but not fees and disbursements of special counsel for Holders, if any,
that is not also counsel for the Company), Blue Sky fees and expenses and the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company which shall
be paid in any event by the Company).
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder, or any similar United
States federal statute.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
Holders.
2. COMPANY REGISTRATION.
(a) Notice of Registration. If at any time or from time to time
the Company shall determine to register any of its securities,
either for its own account or the account of a security holder
or holders, other than (i) a registration relating solely to
employee benefit plans, (ii) a registration relating solely to
a Commission Rule 145 transaction, or (iii) a registration on
any registration form that does not permit secondary sales,
the Company will:
(i) promptly give to each Holder written notice thereof,
and
(ii) include in such registration (and any related
qualification under Blue Sky laws or other
compliance), and in any underwriting-involved
therein, all the Registrable Securities specified in
a written request or requests, made within twenty
(20) days after receipt of such written notice from
the Company, by any Holder,
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a
part of the written notice given pursuant to Section 2(a)(i).
In such event the right of any Holder to registration pursuant
to this Section 2 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of
Registrable Securities in the underwriting to the extent
provided herein. All Holders proposing to distribute their
securities through such underwriting shall, together with the
Company and Other Holders, if any, enter into an underwriting
agreement in customary form with the managing underwriter
selected for such underwriting by the Company. Notwithstanding
any other provision of this Section 2, if the managing
underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, the
managing underwriter may limit the Registrable Securities and
other securities to be included in such registration. The
Company shall so advise all Holders and Other Holders and the
number of shares that may be included in the registration and
underwriting by all Holders and Other Holders shall be
allocated among them, as nearly as practicable, first, to the
Company (or, if applicable, to the holders for whose account
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<PAGE>
the Company is registering the securities), second, among the
Other Holders of securities in proportion to the respective
amounts of securities proposed to be included in the
registration by such Other Holders, and, third, among the
Holders in proportion to the number of Registrable Securities
proposed to be included in such registration by such Holders.
If any Holder or Other Holder disapproves of the terms of any
such underwriting, such person may elect to withdraw therefrom
by written notice to the Company and the managing underwriter.
Any securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
(c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by
it under this Section 2 prior to the effectiveness of such
registration whether or not any Holder or has elected to
include Registrable Securities in such registration.
3. REGISTRATION ON FORM S-3.
(a) Request for Registration. If any Holder or Holders request
that the Company file a registration statement on Form S-3 (or
any successor form to Form S-3) for a public offering of
shares of the Registrable Securities the reasonably
anticipated aggregate price to the public of which would
exceed $500,000, and the Company is a registrant entitled to
use Form S-3 to register the Registrable Securities for such
an offering, the Company shall use its best efforts to cause
such Registrable Securities to be registered for the offering
on such form and to cause such Registrable Securities to be
qualified in such jurisdictions as the Holder or Holders may
reasonably request. The substantive provisions of Section 2(b)
shall be applicable to each registration initiated under this
Section 3.
(b) Limitations. Notwithstanding the foregoing, the Company shall
not be obligated to take any action pursuant to this Section
3:(i) in any particular jurisdiction in which the Company
would be required to execute a general consent to service of
process in effecting such registration, qualification or
compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the
Securities Act; (ii) if the Company, within ten (10) days of
the receipt of the request of the initiating Holders, gives
notice of its bona fide intention to effect the filing of a
registration statement with the Commission within thirty (30)
days of receipt of such request (other than with respect to a
registration statement relating to a Rule 145 transaction, an
offering solely to employees or any other registration which
is not appropriate for the registration of Registrable
Securities); (iii) during the period starting with the date
thirty (30) days prior to the Company's estimated date of
filing of, and ending on the date six (6) months immediately
following, the effective date of any registration statement
pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with
respect to an employee benefit plan), provided that the
Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become
effective; (iv) if the Company shall furnish to such Holder a
certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors it
would be seriously detrimental to the Company or its
shareholders for registration statements to be filed in the
near future, then the Company's obligation to use its best
efforts to file a registration statement shall be deferred for
a period not to exceed sixty (60) days from the receipt the
request to file such registration by such Holder, provided,
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<PAGE>
however, that the Company shall not utilize this right more
than once in any twelve (12) month period; (v) if in a given
twelve-month period, the Company has effected one (1) such
registration in such period; or (vi) after the Company has
effected two (2) registration statements pursuant to this
Section 3.
4. EXPENSES OF REGISTRATION.
(a) Registration Expenses. The Company shall bear all Registration
Expenses incurred in connection with all registrations
pursuant to Section 2 and Section 3.
(b) Selling Expenses. Unless otherwise stated, all Selling
Expenses relating to securities registered on behalf of the
Holders and Other Holders shall be borne by the Holders and
Other Holders pro rata on the basis of the number of shares so
registered.
5. REGISTRATION PROCEDURES. In the case of each registration, qualification or
compliance effected by the Company pursuant to this Agreement, the Company will:
(a) keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the
completion thereof;
(b) prepare and file with the Commission a registration statement
and any amendments thereto with respect to such securities and
use its best efforts to cause such registration statement to
become and remain effective for at least one hundred twenty
(120) days or until the distribution described in the
Registration Statement has been completed; and
(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.
6. INDEMNIFICATION.
(a) By Company. The Company will indemnify each Holder with
respect to which registration, qualification or compliance has
been effected pursuant to this Agreement, and each
underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities
Act, against all expenses, claims, losses, damages or
liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to
4
<PAGE>
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, or any
violation or alleged violation by the Company of the
Securities Act, or the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or any rule or regulation
promulgated under the Securities Act or the 1934 Act
applicable to the Company in connection with any such
registration, qualification or compliance, and the Company
will reimburse each such Holder, each such underwriter and
each person who controls any such underwriter, for any legal
and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Company will
not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity
with written information furnished to the Company by an
instrument duly executed by such Holder, controlling person or
underwriter and stated to be specifically for use therein. If
the Holders are represented by counsel other than counsel for
the Company, the Company will not be obligated under this
Section 6(a) to reimburse legal fees and expenses of more than
one separate counsel for Holders.
(b) By Holders. Each Holder will, if Registrable Securities held
by such Holder are included in the securities as to which such
registration, qualification or compliance is being effected,
indemnify the Company, each of its directors and officers,
each underwriter, if any, of the Company's securities covered
by such a registration statement, each person who controls the
Company or such underwriter within the meaning of Section 15
of the Securities Act, and each other such Holder, against all
claims, losses, damages and liabilities (or actions in respect
thereof arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
such registration statement, prospectus, offering circular or
other document, 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, and
will reimburse the Company, such Holders for any legal or any
other expenses reasonably incurred by them in connection with
investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to
the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written
information furnished to the Company by an instrument duly
executed by such Holder and stated to be specifically for use
therein. Notwithstanding the foregoing, the liability of each
Holder under this subsection (b) shall be limited in an amount
equal to the public offering price of the shares sold by such
Holder, unless such registration liability arises out of or is
based on willful conduct by such Holder.
(c) Procedures. Each party entitled to indemnification under this
Section 6 (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense
of any such claim or any litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall
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<PAGE>
conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may
participate in such defense at such party's expense, and
provided further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement
unless the failure to give such notice is materially
prejudicial to an Indemnifying Party's ability to defend such
action and provided further that the Indemnifying Party shall
not assume the defense for matters as to which there is a
conflict of interest or separate and different defenses. No
Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect
to such claim or litigation.
7. INFORMATION BY HOLDER. Holders including any Registrable Securities in any
registration shall furnish to the Company such information regarding such
Holders as shall be necessary to enable the Company to comply with the
provisions hereof in connection with any registration, qualification or
compliance referred to in this Agreement.
8. RESTRICTIONS ON TRANSFERABILITY; RESTRICTIVE LEGEND.
(a) Each Holder agrees not make any disposition of all or any
portion of the Registrable Securities unless and until the
transferee has agreed in writing for the benefit of the
Company to be by bound by this Section 8.
(b) Each certificate representing Registrable Securities shall be
stamped or otherwise imprinted with a legend substantially in
the following form, in addition to any legend that may now or
hereafter be required by the California Department of
Corporations or any other state securities law or regulation:
"THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
CERTAIN RESTRICTIONS ON SALE, TRANSFER, AND HYPOTHECATION AS
SET FORTH IN A REGISTRATION RIGHTS AGREEMENT BETWEEN THE
ISSUER CORPORATION AND THE REGISTERED HOLDER, OR SUCH HOLDER'S
PREDECESSOR IN INTEREST. COPIES OF SUCH AGREEMENT ARE ON FILE
AT THE PRINCIPAL OFFICE OF THE ISSUER CORPORATION AND WILL BE
FURNISHED UPON REQUEST TO SUCH REGISTERED HOLDER."
9. MISCELLANEOUS.
(a) Governing Law. This Agreement will be governed by and
construed under the laws of Nebraska as applied to agreements
among Nebraska residents entered into and to be performed
entirely within Nebraska.
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<PAGE>
(b) Amendments and Waivers. Any term 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 with the written
consent of the Company and the Holders of a majority of the
Registrable Securities, voting as a class. Any amendment or
waiver effected in accordance with this paragraph will be
binding upon each holder of any securities purchased under
this Agreement at the time outstanding (including securities
into which such securities are convertible), each future
holder of all such securities and the Company.
(c) Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent
jurisdiction to be illegally invalid, unenforceable or void,
this Agreement shall continue in full force and effect without
said provision. In such event, the parties shall negotiate, in
good faith, a legal, valid and binding substitute provision
which most nearly effects the intent of the parties in
entering into this Agreement.
(d) Notices. All notices to Holders will be mailed by registered
or certified mail to the addresses maintained in the Company's
records for such Holders. Notices will be effective three (3)
days after deposit in the U.S. Mail.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but
all of which together will constitute one and the same
instrument.
(f) Titles, Subtitles and Table of Contents. The titles, subtitles
and table of contents used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
ADEN ENTERPRISES, INC. MERCEXCHANGE, L.L.C.
By: /S/ By: /S/
------------------------------- ---------------------------
7
EXHIBIT 4
TRANSFER AGREEMENT
BY AND BETWEEN
MERCTRAVEL, INCORPORATED AND
MERCEXCHANGE, LLC
THIS AGREEMENT TO TRANSFER PATENT RIGHTS FOR THE ONLINE TRAVEL SECTOR,
(hereinafter the "Agreement") is entered into this 7th day of January, 2000 by
and between MercTravel, Incorporated, a Delaware corporation ("MercTravel"),
having a principal place of business at 114 N. Alfred Street, Alexandria, VA
22314 and MercExchange, LLC, ("MercExchange") a limited liability company under
Delaware law, having a principal place of business at 114 N. Alfred Street,
Alexandria, VA 22314.
RECITALS
WHEREAS, MercTravel is embarking on the development and industry
initiative to build and deploy Internet Markets and Auctions that employ the
pending and issued Subject Patents; and
WHEREAS, MercTravel agrees that patent protection provides an important
commercial advantage and agrees to consult and confer with MercExchange to
assure a tight nexus between the commercial embodiments of the aforesaid
Internet Markets and Auctions and the claims of the pending and issued Subject
Patents; and
WHEREAS, MercExchange desires to transfer rights in its pending and
issued Subject Patents for the online travel services industry sector subject to
the terms and conditions as set forth herein;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants contained herein, the parties hereby agree as follows:
ARTICLE I
TRANSFER OF RIGHTS IN THE ONLINE TRAVEL SECTOR
1.1 Transfer. MercExchange hereby grants to MercTravel, during the term of this
Agreement, an exclusive License Grant to make, use and sell the inventions as
disclosed and claimed in the pending and issued Subject Patents within the field
of use of the Online Travel Sector.
1.2 Nexus. MercTravel shall use best efforts to develop Internet Markets and
Auctions that employ the pending and issued Subject Patents for use in the
Online Travel Sector. MercTravel shall confer with MercExchange to assure a
tight nexus between the commercial embodiment of the aforesaid Internet Markets
and Auctions with the claims of the pending and issued Subject Patents.
1.3 Legal Fees. MercTravel shall pay all reasonable legal and administrative
fees associated with the continuing prosecution and maintenance of the Subject
Patents before the U.S. Patent and Trademark Office. MercTravel shall also pay
all legal, administrative and filing fees associated with any Interference
Proceeding before the U.S. Patent and Trademark Office and any related
litigation in Federal or State Court. The parties shall confer on strategies
concerning the prosecution, enforcement and exploitation of the Subject Patents.
<PAGE>
1.4 Stock. MercTravel hereby grants 1,000 shares of MercTravel, which is 100% of
its issued and outstanding shares, to MercExchange.
ARTICLE II
NON-MONETARY REMUNERATION
If the Subject Patents are licensed to third parties and MercExchange
receives non-monetary remuneration for any said license, including but not
limited to, web easements, discounted or free advertisement and linking
agreements, then MercTravel shall purchase in cash or equity said non-monetary
remunerative benefit from MercExchange at one-third the fair market value for
said non-monetary remunerate benefit within 60 days of the written offer of said
non-monetary remuneration from MercExchange to MercTravel.
ARTICLE III
ENFORCEMENT
3.1 Right to Enforce Within The Online Travel Sector. MercExchange hereby
assigns a non-exclusive right to MercTravel to enforce the Subject Patents, in
its own name, and at its own expense, in the Online Travel Sector. MercExchange
agrees to cooperate and join in said enforcement action if deemed a necessary
party and enter into all further agreements necessary to enforce the Subject
Patents. MercTravel shall reimburse MercExchange for expenses incurred by
MercExchange under this section. Nothing in this Article shall confer any rights
on MercTravel that prevents MercExchange from enforcing or continuing to enforce
the Subject Patents in the name of MercExchange. If any right granted in this
Article is construed so as to prevent MercExchange from enforcing the subject
Patents in the name of MercExchange against any third party then this Article
shall be null and void.
ARTICLE IV
DEFINITIONS
4.1 Definitions. For the purpose of this Agreement only, the following terms
shall have the meanings indicated:
4.1.1 The term "Subject Patents" means the following patents, patent
applications and all continuing patent applications that seek priority
therefrom:
A. U.S. Patent Application No. 08/427,820, Entitled:
"Consignment Nodes"
B. U.S. Patent Application No. 08/554,704, Now U.S. Patent No.
5,845,265, Entitled: "Consignment Nodes"
C. U.S. Patent Application No. 09/203,286 (Petition for
Interference with U.S. Patent No. 5,794,207) Entitled:
"Consignment Nodes"
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<PAGE>
D. U.S. Patent Application No. 09/166,779, Entitled: "Method
and Apparatus for Facilitate Internet Commerce with Binding
Offers to Sell and Binding Counter-Offers to Buy in an
Electronic Market"
E. U.S. Patent Application No. 09/253,014, Entitled: "Method
and Apparatus for Facilitating Electronic Commerce Through
Internet Auctions"
F. U.S. Patent Application No. 09/253,021, Entitled: "Method
and Apparatus for Facilitating Internet Commerce Through
Inter-networked Markets and Auctions"
G. U.S. Patent Application No. 09/253,015, Entitled: "Methods
and Apparatus for Automatically Distributing Internet
Advertising"
H. U.S. Patent Application No. 09/253,057, Entitled: "Method
and Apparatus for Facilitating Electronic Commerce Through
Two-Tiered Electronic Markets and Auctions"
I. U.S. Patent Application No. 09/264,573, Entitled: "Method
and Apparatus for Using Search Agents to Search Plurality of
Markets for Items"
4.1.2 The term "Online Travel Sector" means the right to make and use
the inventions as claimed and disclosed in the Subject Patents relating to the
Internet Market and Auctions in the travel service industry, including without
limitation, car rental, hotel booking, airline tickets, cruise, rail and travel
packages.
4.1.3 The term "License Grant" means the transfer of patent rights
including the right to make and use and sub-license the inventions as claimed
and disclosed in the Subject Patents, subject to this Agreement, in the Online
Travel Sector.
4.1.4 The "Term" of this Agreement, unless earlier terminated as
provided under this Agreement, shall remain in full force and effect until the
last claim of any patent included in the Subject Patents expires.
ARTICLE V
OTHER PROVISIONS
5.1 Termination for Cause. If MercTravel shall materially breach any of its
obligations pursuant to this Agreement and shall fail to adequately correct such
breach within two (2) months from the effective date of the first written notice
to MercTravel, MercExchange may terminate License Grant pursuant to this Article
by written notice. The termination shall immediately cause the License Grant to
revert to MercExchange with no further step or action at law or equity required
by MercExchange
5.2 No Joint Venture. The relationship between the parties shall be limited to
the performance of their respective obligations as set forth in this Agreement.
Nothing in this Agreement shall be construed to create a partnership or joint
venture between the parties or to authorize either party to act as general agent
for the other party, or to permit either party to bind or otherwise bind the
other party. No party shall be liable for any of the actions, omissions, or
indebtedness of the other party.
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5.3 Assignability. Except as otherwise provided herein, the rights granted by
each party to the other in this Agreement are personal to each party and may not
be assigned or otherwise transferred by one party without the prior written
consent of the other party. In the event of the sale and dissolution of
MercTravel or of all the outstanding shares of MercTravel, the acquiring party
shall take all rights, duties and obligations of this Agreement. The acquiring
party shall have no further rights to sell or assign this Agreement without the
prior written consent of MercExchange.
5.4 No Implied License. Nothing contained in this Agreement shall be construed
as granting by implication, estoppel or otherwise, any licenses, warranties
(implied in fact or law) or rights other than those expressly granted herein, or
creating any obligation other than those expressly granted herein.
5.5 No Warranty. Nothing in this Agreement shall be construed as a warranty or
representation by MercExchange as to the validity or scope of the Subject
Patents or that the exercise of the license rights under the Subject Patents
will not infringe upon the rights of any Third Party.
5.6 No Indemnification. MercExchange does not indemnify, warrant or otherwise
guarantee or hold harmless MercTravel from enforcement and/or legal action
brought by any Third Party. MercExchange make no warranties that any products
made under this Agreement are materially fit for their purpose or comport with
any other provision of the Uniform Commercial Code.
5.7 Notification. The parties shall notify each other in writing at the
following address which may be amended from time to time upon written
notification:
MercExchange:
Thomas G. Woolston
Managing Member
MercExchange, LLC
114 N. Alfred Street
Alexandria, VA 22314
MercTravel:
Thomas G. Woolston
President
MercTravel, Incorporated
114 N. Alfred Street
Alexandria, VA 22314
5.8 Controlling Law. This Agreement shall be construed and enforced in
accordance with, and shall be governed by the laws of the Commonwealth of
Virginia without giving effect to the provision, policies, or principles thereof
relating to choice or conflict of laws.
4
<PAGE>
5.9 Severability. Any provision of this Agreement that is illegal, invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such illegality, invalidity or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
5.10 Waiver. The failure of any party to enforce any of the provisions of this
Agreement, or of any rights with respect thereto, shall not be considered a
waiver thereof or in any way affect the validity of this Agreement. The failure
by any party hereto to enforce any of said provisions, rights or elections shall
not prejudice said party from later enforcing or exercising the same or any
other provisions, rights, of elections which it may have under this Agreement.
5.11 Integration. This Agreement contains the entire and only understanding
between the parties with respect to the subject matter hereof, and supersedes
all prior agreement and understandings, whether oral or written, with respect
thereto. No modification or wavier of this Agreement or any of its provisions
shall be binding unless in writing and signed by a duly authorized
representative of each of the parties hereto.
5.12 Bankruptcy or liquidation. The License Grant hereunder shall immediately
revert to MercExchange if MercTravel seeks protection under Bankruptcy laws or
is subject to liquidation under the laws of the United States.
5.13 Headings. Headings and section titles are for organization purposes only
and shall have no effect on the interpretation of this Agreement.
5.14 Legal Fees. All fees payable hereunder, such as legal fees for continuing
patent prosecution, shall be tendered by MercTravel within thirty (30) days of
receipt of notice from MercExchange.
5.15 Remedy for Breach. If MercTravel materially breaches any condition of this
Agreement and does not cure said breach within two (2) months notice of material
breach, then the License Grant of patent rights to the online travel sector
granted hereunder shall immediately become null and void and shall immediately
revert to MercExchange, or its lawful successor in interest.
5.16 This Agreement shall be binding to all parties and may be executed in part
by facsimile.
This Agreement is entered into the date and year first above written.
MERCTRAVEL, INCORPORATED
By: /s/ Thomas G. Woolston
-----------------------------------
Thomas G. Woolston
President & Chief Executive Officer
MERCEXCHANGE, L.L.C.
By: /s/ Thomas G. Woolston
-----------------------------------
Thomas G. Woolston
Managing Member
5
EXHIBIT 5
OPTION AGREEMENT
BY AND BETWEEN
ADEN ENTERPRISES, INC. AND
MERCEXCHANGE, LLC
THIS OPTION AGREEMENT, (hereinafter the "Agreement") is entered into
this 7th day of January, 2000 by and between Aden Enterprises, Inc., a
California corporation ("Aden" or the "Company"), having a principal place of
business at 13314 I Street, Omaha, Nebraska 68137 and MercExchange, LLC,
("MercExchange") a limited liability company under Delaware law, with a
principal place of business at 114 N. Alfred Street, Alexandria, VA 22314.
RECITALS
WHEREAS, Aden is embarking on a major development and industry
initiative to build and deploy Internet Markets and Auctions that employ the
pending and issued Subject Patents; and
WHEREAS, Aden agrees that patent protection provides an important
commercial advantage and agrees to consult and confer with MercExchange to
assure a tight nexus between the commercial embodiments of the aforesaid
Internet Markets and Auctions and the claims of the pending and issued Subject
Patents;
WHEREAS, MercExchange desires to license the pending and issued Subject
Patents subject to the terms and conditions as set forth herein;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants contained herein, the parties hereby agree as follows:
ARTICLE I
VERTICAL SECTOR LICENSE OPTION
1.1 In partial consideration of the license option granted herein, Aden agrees
to pay MercExchange the sum of $35,000 within five (5) days of the execution of
this agreement, receipt of which is hereby acknowledged.
1.2 The parties anticipate application of the aforesaid Internet Markets and
Auctions for a variety of Vertical Sectors. The parties hereby mutually agree to
the following terms and conditions regarding these Vertical Sectors.
1.3 MercExchange hereby grants an option to the Company to a non-exclusive
license for the pending and issued Subject Patents to Vertical Sectors. For each
Vertical Sector, the Company shall pay MercExchange an annual payment of the
greater of (1) the first $50,000 of any of the Gross Transactions collected or
earned by the Company from any third party or (2) a 1.5% (one point five
percent) continuing royalty of Gross Transactions generated by each Vertical
Sector.
<PAGE>
1.4 In the event of a joint venture, marketing agreement, acquisition or any
other business combination between the Company and a third party, the Company
and MercExchange shall negotiate an equity position for MercExchange in said
venture or business combination, and in no event shall this equity position be
less that 15% (fifteen percent) on a fully diluted basis of said venture for
MercExchange.
1.5 Aden shall use best efforts to develop Internet Markets and Auctions that
employ the pending and issued Subject Patents for use in each Vertical Sector.
Aden shall confer with MercExchange to assure a tight nexus between the
commercial embodiment of the aforesaid Internet Markets and Auctions with the
claims of the pending and issued Subject Patents.
ARTICLE II
PAYMENT AND ROYALTY REPORTS
2.1 Within forty-five days (45) following the end of each Fiscal Quarter,
beginning with the first Fiscal Quarter in which Company commences activity in
any Vertical Sector, the Company shall send to MercExchange reports of the Gross
Transactions conducted by Aden, in the preceding Fiscal Quarter, showing their
respective descriptions or other descriptive characteristics, including total
quantities for transaction, and the sale price of any products or goods sold
hereunder.
2.2 Each report shall be accompanied by the required payment in U.S. Dollars.
For the Purpose of calculating the royalties payable hereunder, respective
currencies for the Gross Transactions shall be converted to U.S. Dollars at the
rate of exchange quoted in The Wall Street Journal in force on the last working
day of the period for which payment of royalty is being made.
2.3 The Company shall maintain complete and accurate records of the Gross
Transactions conducted under this Agreement, showing their respective
descriptions or other descriptive characteristics, including model numbers, if
any, quantities, and calculations of unit royalties dues and payable thereon.
These records shall be maintained for a period of at least three (3) years
subsequent to Company's latest quarterly royalty report. Periodically during the
term of this Agreement and subsequent to the expiration or termination of this
Agreement for any reason, upon 30 days prior written notice to Company and upon
execution of a Confidentiality Agreement in Company's favor, MercExchange's
independent duly appointed Certified Public Accountant may inspect Company's
records which pertain to Gross Transactions during regular business hours for
the purpose of verifying the completeness and accuracy of all reports to
MercExchange. Such inspection shall occur no more frequently than once any
Contract Year. If said audit determines that there has been a shortfall in
royalties paid to MercExchange in excess of three percent (3%) of the amount
actually due for the period under audit, then Company shall reimburse
MercExchange for the reasonable expenses actually incurred by it for the audit.
ARTICLE III
NON-MONETARY REMUNERATION
If the Subject Patents are Licensed to third parties and MercExchange
receives non-monetary remuneration for said License, including but not limited
to, web easements, discounted or free advertisement and any linking agreements,
then Aden shall purchase in cash or equity said non-monetary remunerative
benefit from MercExchange at one-third the fair market value for said
non-monetary remunerate benefit within 60 days of the written offer of said
non-monetary remuneration from MercExchange to Aden.
2
<PAGE>
ARTICLE IV
ENFORCEMENT
4.1 Right to Enforce Subject Patents. MercExchange retains the sole right to
enforce and control the enforcement of the Subject Patents against third
parties. The Company agrees to cooperate and join in said enforcement action if
deemed a necessary party.
4.2 Non-Monetary Recovery. In any enforcement proceeding to which MercExchange
enjoins a third party, Aden and MercExchange shall mutually determine the value
of said injunction to Aden or the aforesaid business combination. Aden shall pay
MercExchange 25% of the value of said injunction, in cash or equity to
MercExchange.
ARTICLE V
DEFINITIONS
5.1 Definitions. For the purpose of this Agreement only, the following terms
shall have the meanings indicated:
5.1.1 The term "Subject Patents" means the following patents, patent
applications and all continuing patent applications that seek priority
therefrom:
A. U.S. Patent Application No. 08/427,820, Entitled:
"Consignment Nodes"
B. U.S. Patent Application No. 08/554,704, Now U.S. Patent No.
5,845,265, Entitled: "Consignment Nodes"
C. U.S. Patent Application No. 09/203,286 (Petition for
Interference with U.S. Patent No. 5,794,207) Entitled:
"Consignment Nodes"
D. U.S. Patent Application No. 09/166,779, Entitled: "Method
and Apparatus for Facilitate Internet Commerce with Binding
Offers to Sell and Binding Counter-Offers to Buy in an
Electronic Market"
E. U.S. Patent Application No. 09/253,014, Entitled: "Method
and Apparatus for Facilitating Electronic Commerce Through
Internet Auctions"
F. U.S. Patent Application No. 09/253,021, Entitled: "Method
and Apparatus for Facilitating Internet Commerce Through
Inter-networked Markets and Auctions"
G. U.S. Patent Application No. 09/253,015, Entitled: "Methods
and Apparatus for Automatically Distributing Internet
Advertising"
H. U.S. Patent Application No. 09/253,057, Entitled: "Method
and Apparatus for Facilitating Electronic Commerce Through
Two-Tiered Electronic Markets and Auctions"
3
<PAGE>
I. U.S. Patent Application No. 09/264,573, Entitled: "Method
and Apparatus for Using Search Agents to Search Plurality of
Markets for Items"
5.1.2 The term "Vertical Sector" means industry and service
classifications of customary usage and categories of commerce as defined by the
United States Department of Commerce eight digit SIC codes.
5.1.3 The term "Gross Transactions" means the gross transactional
revenues collected or earned by the Company for the operation of said Internet
Markets and Auctions in any and all Vertical Sectors. The transactional revenues
for transactions under this Agreement, for the purpose of calculating this
amount, shall be based on the actual amount charged, exclusive of any freight,
handling, duties, commissions, clearance network costs and taxes.
5.1.4 The term "Fiscal Quarter" means any period of three consecutive
months beginning on January 1, April 1, July 1, or October 1 in any year.
5.1.5 The term "Contract Year" shall means the first full twelve-month
period of four consecutive fiscal quarters, beginning May 1 and ending April 30
and each like period thereafter during the term of this Agreement.
5.1.6 The "Term" of this Agreement, unless earlier terminated as
provided under this Agreement, shall remain in full force and effect until the
last claim of any patent included in the Subject Patents expires.
ARTICLE VI
OTHER PROVISIONS
6.1 Termination for Cause. If Aden shall materially breach any of its
obligations pursuant to this Agreement and shall fail to adequately correct such
breach within two (2) months from the effective date of the first written notice
to Aden, MercExchange may terminate this Agreement pursuant to this Article by
written notice.
6.2 No Joint Venture. The relationship between the parties shall be limited to
performance of their respective obligations as set forth in this Agreement.
Nothing in this Agreement shall be construed to create a partnership or joint
venture between the parties or to authorize either party to act as general agent
for the other party, or to permit either party to bind or otherwise bind the
other party. No party shall be liable for any of the actions, omissions, or
indebtedness of the other party.
6.3 Assignability. Except as otherwise provided herein, the rights and licenses
granted by each party to the other in this Agreement are personal to each party
and may not be assigned, sub-licensed or otherwise transferred by one party
without the prior written consent of the other party.
6.4 No Implied License. Nothing contained in this Agreement shall be construed
as granting by implication, estoppel or otherwise, any licenses, warranties
(implied in fact or law) or rights other than those expressly granted herein, or
creating any obligation other than those expressly granted herein.
4
<PAGE>
6.5 No Warranty. Nothing in this Agreement shall be construed as a warranty or
representation by MercExchange as to the validity or scope of the Subject
Patents or that the exercise of the license rights under the Subject Patents
will not infringe upon the rights of any Third Party.
6.6 No Indemnification. MercExchange does not indemnify, warrant or otherwise
guarantee or hold harmless Aden from enforcement and/or legal action brought by
any Third Party. MercExchange make no warranties that any products made under
this Agreement are materially fit for their purpose or comport with any other
provision of the Uniform Commercial Code.
6.7 Notification. The parties shall notify each other in writing at the
following address which may be amended from time to time upon written
notification:
MercExchange:
Thomas G. Woolston
Managing Member
MercExchange, LLC
114 N. Alfred Street
Alexandria, VA 22314
Aden:
Michael S. Luther
Aden Enterprises, Inc.
13314 I Street
Omaha, NE 68137
6.8 Controlling Law. This Agreement shall be construed and enforced in
accordance with, and shall be governed by the laws of the Commonwealth of
Virginia without giving effect to the provision, policies, or principles thereof
relating to choice or conflict of laws.
6.9 Severability. Any provision of this Agreement that is illegal, invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such illegality, invalidity or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
6.10 Waiver. The failure of any party to enforce any of the provision of this
Agreement, or of any rights with respect thereto, shall not be considered a
waiver thereof or in any way affect the validity of this Agreement. The failure
by any party hereto to enforce any of said provisions, rights or elections shall
not prejudice said party from later enforcing or exercising the same or any
other provisions, rights, of elections which it may have under this Agreement.
6.11 Integration. This Agreement contains the entire and only understanding
between the parties with respect to the subject matter hereof, and supersedes
all prior agreement and understandings, whether oral or written, with respect
thereto. No modification or wavier of this Agreement or any of its provisions
shall be binding unless in writing and signed by a duly authorized
representative of each of the parties hereto.
5
<PAGE>
6.12 Bankruptcy or liquidation. The license options granted hereunder shall
immediately revert to MercExchange if the Company seeks protection under the
Bankruptcy laws or is subject to liquidation under the laws of the United
States.
6.13 Non-refundable. All funds, payments and distributions made to MercExchange
hereunder are non-refundable.
6.14 Headings. Headings and section titles are for organizational purposes only
and shall have no effect on the interpretation of this Agreement.
6.15 Remedy for Breach. If the Company materially breaches any condition of this
Agreement and does not cure said breach within two (2) months notice of material
breach, then all licenses granted hereunder shall immediately become null and
void and these licenses, shall immediately revert to MercExchange, or its lawful
successor in interest.
6.16 This Agreement shall be binding to all parties and may be executed in part
by facsimile.
6
<PAGE>
This Agreement is entered into the date and year first above written.
ADEN ENTERPRISES, INC.
By: /s/ Michael S. Luther
-----------------------------------
Michael S. Luther
President & Chief Executive Officer
MERCEXCHANGE, L.L.C.
By: /s/ Thomas G. Woolston
-----------------------------------
Thomas G. Woolston
Managing Member
7
EXHIBIT 6
CAPITAL CONTRIBUTION AND SALE AGREEMENT
BY AND BETWEEN
ADEN ENTERPRISES, INC. AND
MERCEXCHANGE, LLC
THIS SALE AGREEMENT, (hereinafter the "Agreement") is effective on 30th
day of October, 1999 by and between Aden Enterprises, Inc., a California
corporation ("Aden" or the "Company"), having a principal place of business at
13314 I Street, Omaha, Nebraska 68137 and MercExchange, LLC, ("MercExchange"), a
limited liability company under Delaware law, with a principal place of business
at 114 N. Alfred Street, Alexandria, VA 22314.
RECITALS
WHEREAS, MercExchange seeks capital contribution and Aden desires to
purchase a percentage of the membership units of MercExchange subject to the
terms and conditions as set forth herein;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants contained herein, the parties hereby agree as follows:
ARTICLE I
AGREEMENT
Aden hereby purchases 10% (ten percent) ownership of MercExchange in
consideration of two notes in a total amount of $4 million ($4,000,000), said
notes payable by wire transfer wherein the first note in the amount of $1
million ($1,000,000) shall be due and paid within thirty (30) days of the
effective date of this Agreement, and the second note in the amount of $3
million ($3,000,000) shall be due and paid within one hundred twenty (120) days
of the effective date of this Agreement. MercExchange hereby also grants an
option to Aden to purchase an additional 5% of MercExchange for $3 million
($3,000,000) within two years of the effective date of this Agreement.
ARTICLE II
OTHER PROVISIONS
2.1 Termination for Cause. If Aden shall materially breach any of its
obligations pursuant to this Agreement and shall fail to adequately correct such
breach within two (2) months from the effective date of the first written notice
to Aden, MercExchange may terminate this Agreement pursuant to this Article by
written notice. The termination of the agreement shall immediately cause the
membership interest and option in MercExchange to revert to MercExchange with no
further step or action at law or equity required by MercExchange.
2.2 No Joint Venture. The relationship between the parties shall be limited to
the performance of their respective obligations as set forth in this Agreement.
Nothing in this Agreement shall be construed to create a partnership or joint
venture between the parties or to authorize either party to act as general agent
for the other party, or to permit either party to bind or otherwise bind the
other party. No party shall be liable for any of the actions, omissions, or
indebtedness of the other party.
<PAGE>
2.3 Assignability. Except as otherwise provided herein, the rights granted by
each party to the other in this Agreement are personal to each party and may not
be assigned, sub-licensed or otherwise transferred by one party without the
prior written consent of the other party.
2.4 No Implied License. Nothing contained in this Agreement shall be construed
as granting by implication, estoppel or otherwise, any licenses, warranties
(implied in fact or law) or rights other than those expressly granted herein, or
creating any obligation other than those expressly granted herein.
2.5 No Indemnification. MercExchange does not indemnify, warrant or otherwise
guarantee or hold harmless Aden from enforcement and/or legal action brought by
any Third Party.
2.6 Notification. The parties shall notify each other in writing at the
following address which may be amended from time to time upon written
notification:
MercExchange:
Thomas G. Woolston
Managing Member
MercExchange, LLC
114 N. Alfred Street
Alexandria, VA 22314
Aden:
Michael S. Luther
Aden Enterprises, Inc.
13314 I Street
Omaha, NE 68137
2.7 Controlling Law. This Agreement shall be construed and enforced in
accordance with, and shall be governed by the laws of the Commonwealth of
Virginia without giving effect to the provision, policies, or principles thereof
relating to choice or conflict of laws.
2.8 Severability. Any provision of this Agreement that is illegal, invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such illegality, invalidity or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
2.9 Waiver. The failure of any party to enforce any of the provision of this
Agreement, or of any rights with respect thereto, shall not be considered a
waiver thereof or in any way affect the validity of this Agreement. The failure
by any party hereto to enforce any of said provisions, rights or elections shall
not prejudice said party from later enforcing or exercising the same or any
other provisions, rights, of elections which it may have under this Agreement.
2
<PAGE>
2.10 Integration. This Agreement contains the entire and only understanding
between the parties with respect to the subject matter hereof, and supersedes
all prior agreement and understandings, whether oral or written, with respect
thereto. No modification or wavier of this Agreement or any of its provisions
shall be binding unless in writing and signed by a duly authorized
representative of each of the parties hereto.
2.11 Bankruptcy or liquidation. The membership interest and option granted
hereunder shall immediately revert to MercExchange if the Company seeks
protection under the Bankruptcy laws or is subject to liquidation under the laws
of the United States.
2.12 Non-refundable. Any payments made hereunder by Aden to MercExchange are
non-refundable.
2.13 Headings. Headings and section titles are for organization purposes only
and shall have no effect on the interpretation of this Agreement.
2.14 Remedy for Breach. If the Company materially breaches any condition of this
Agreement and does not cure said breach within 60 days of notice of material
breach, then all membership units and option in MercExchange shall immediately
revert to MercExchange, or its lawful successor in interest.
2.15 Counterparts. This Agreement shall be binding to all parties and may be
executed in part by facsimile.
3
<PAGE>
This Agreement is entered into the date and year first above written.
ADEN ENTERPRISES, INC.
By: /s/ Michael S. Luther
-----------------------------------
Michael S. Luther
President & Chief Executive Officer
MERCEXCHANGE, L.L.C.
By: /s/ Thomas G. Woolston
-----------------------------------
Thomas G. Woolston
Managing Member
4
