ASSET PURCHASE AGREEMENT
DATED AS OF JUNE 11, 1998
BY AND BETWEEN
XOOM, INC.,
AND
REVOLUTIONARY SOFTWARE, INC.
TABLE OF CONTENTS
PAGE
ARTICLE I. Definitions 1
1.1 Defined Terms.................................. 1
ARTICLE II. Purchase and Sale of Software Assets............... 2
2.1 Transfer of Software Assets.................... 2
2.2 Purchase Price/ Payment Procedure.............. 3
2.3 Price Protection............................... 3
2.4 Termination of Payment Obligations............. 4
ARTICLE III. Closing........................................... 4
3.1 Closing........................................ 4
3.2 Deliveries..................................... 4
3.3 Conditions to Closing.......................... 5
ARTICLE IV. Representations and Warranties of Seller........... 5
4.1 Organization................................... 5
4.2 Authorization.................................. 5
4.3 Brokers........................................ 6
4.4 Litigation, Proceedings and Applicable Law..... 6
4.5 No Conflict or Violation....................... 6
4.6 Intellectual Property.......................... 6
4.7 Assets Generally............................... 8
4.8 Products....................................... 8
4.9 Receipt of Shares Entirely For Own Account..... 8
4.10 Disclosure of Information...................... 8
ARTICLE V. Representations and Warranties of Buyer............. 9
5.1 Organization of Buyer.......................... 9
5.2 Authorization.................................. 9
5.3 Brokers........................................ 9
5.4 Consents and Approvals......................... 9
ARTICLE VI. Certain Covenants.................................. 10
6.1 Covenants of Both Parties...................... 10
6.2 Seller's Covenants............................. 10
ARTICLE VII. INDEMNIFICATION................................... 10
7.1 Indemnification by the Seller.................. 10
7.2 Indemnification by Buyer....................... 11
7.3 Notification of Claims......................... 11
7.4 Resolution of Claims........................... 11
7.5 Arbitration.................................... 12
7.6 Indemnification Threshold...................... 12
i
ARTICLE VIII. RESTRICTIONS ON XOOM COMMON SHARES............... 12
8.1 Right of First Refusal/Transfer Restrictions... 12
8.2 Lock-Up Agreement.............................. 14
ARTICLE IX. Miscellaneous...................................... 15
9.1 Survival of Representations and Warranties..... 15
9.2 Setoff......................................... 15
9.3 Noncompetition................................. 15
9.4 Press Releases and Public Announcements........ 15
9.5 Assignment..................................... 15
9.6 Notices........................................ 15
9.7 Choice of Law.................................. 16
9.8 Entire Agreement; Amendments and Waivers....... 16
9.9 Multiple Counterparts.......................... 16
9.10 Titles......................................... 16
ii
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered into
---------
as of June 11, 1998 by and between Revolutionary Software, Inc., a California
corporation ("Seller"), and XOOM, Inc., a Delaware corporation ("Buyer").
------ -----
RECITALS
--------
1. A division of Seller's business relates to the development and
licensing of a web-based e-mail software system known as "Sitemail" (together
--------
with related source code, documentation and related Intellectual Property (as
defined in Section 1.1) relating to Sitemail (collectively, the "Software
--------
Assets").
2. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, the Software Assets, pursuant to the terms and subject to the conditions
set forth herein.
AGREEMENT
---------
NOW THEREFORE, Seller and Buyer agree as follows:
ARTICLE I.
DEFINITIONS
1.1 DEFINED TERMS. As used herein, the terms below shall have the following
meanings:
"Action" shall mean any action, claim, suit, arbitration, inquiry,
------
subpoena, discovery request, proceeding or investigation, or threat thereof, by
or before any court or grand jury, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
"Affiliate" shall mean, with respect to any Person, any other Person
---------
directly or indirectly controlling, controlled by or under common control with
such Person and any member, general partner, director, officer or employee of
such Person. For purposes of this definition of Affiliate, "control" shall mean
-------
the power of one or more Persons to direct the affairs of the Person controlled
by reason of ownership of voting stock, contract or otherwise.
"Damages" shall mean any and all costs, losses, damages, liabilities,
-------
demands, claims, suits, actions, judgments, causes of action, assessments or
expenses, including interest, penalties, fines and attorneys' fees incident
thereto, incurred in connection with any claim for indemnification arising out
of this Agreement, and any and all amounts paid in settlement of any such claim.
"Intellectual Property" shall mean all copyrights, copyright
---------------------
registrations, proprietary processes, trade secrets, license rights,
specifications, technical manuals and data,
1
drawings, inventions, designs, patents, patent applications, mask works,
tradenames, trademarks, service marks, product information and data, know-how
and development work-in-progress, customer lists, software, business
correspondence and marketing plans and other intellectual or intangible property
that comprise or are necessary to the use of the Software Assets, whether
pending, applied for or issued, whether filed in the United States or in other
countries, including, without limitation, all associated goodwill; all things
authored, discovered, developed, made, perfected, improved, designed,
engineered, acquired, produced, conceived or first reduced to practice by Seller
or any of its employees or agents that are embodied in, derived from or relate
to the Software Assets, in any stage of development, including, without
limitation, modifications, enhancements, designs, concepts, techniques, methods,
ideas, flow charts, coding sheets, notes and all other information relating to
the Software Assets.
"Knowledge" shall mean an individual shall be deemed to have
---------
"Knowledge" of a particular fact or other matter if such individual is actually
aware of such fact or other matter or if a prudent individual could be expected
to discover or otherwise become aware of such fact or other matter in the course
of conducting a diligent and comprehensive investigation concerning the truth
or existence of such fact or other matter. Seller shall be deemed to have
"Knowledge" of a particular fact or other matter if any officer or other
representative of Seller has Knowledge of such fact or other matter.
"Person" shall mean any person or entity, whether an individual,
------
trustee, corporation, general partnership, limited partnership, trust,
unincorporated organization, limited liability company, business association,
firm, joint venture, or governmental agency or authority.
"Software Assets" shall have the meaning stated in the Recitals to
---------------
this Agreement.
"Taxes" shall mean all taxes, however denominated, including any
-----
interest, penalties or other additions to tax that may become payable in respect
thereof, (i) imposed by any federal, territorial, state, local or foreign
government or any agency or political subdivision of any such government, for
which Buyer could become liable as successor to or transferee of the Software
Assets or which could become a charge against or lien on the Software Assets,
which taxes shall include, without limiting the generality of the foregoing, all
sales and use taxes, ad valorem taxes, excise taxes, business license taxes,
occupation taxes, real and personal property taxes, stamp taxes, environmental
taxes, real property gains taxes, transfer taxes, payroll and employee
withholding taxes, unemployment insurance contributions, social security taxes
and other governmental charges, and other obligations of the same or of a
similar nature to any of the foregoing, which are required to be paid, withheld
or collected, or (ii) any liability for amounts referred to in (i) as a result
of any obligations to indemnify another person.
ARTICLE II.
PURCHASE AND SALE OF SOFTWARE ASSETS
2.1 TRANSFER OF SOFTWARE ASSETS. Pursuant to the terms and subject to the
conditions of this Agreement, in exchange for the consideration set forth in
Section 2.2 below, at the
2
Closing, Seller shall sell, assign and deliver to Buyer, and Buyer shall
purchase from Seller, the Software Assets.
2.2 PURCHASE PRICE/ PAYMENT PROCEDURE. As consideration for the Software
Assets, Buyer shall tender Seller the consideration set forth below:
(a) 192,077 shares of Buyer's common stock ("Shares"), evidenced by a
duly executed stock certificate to be delivered to Seller at the Closing.
(b) An amount equal to $275,000, payable as follows:
(i) $12,500 at the Closing; and
(ii) the outstanding balance of $262,500 in twenty-five equal and
consecutive monthly payments of $10,500 each, with simple interest at
the annual rate of 5%, payable pursuant to a promissory note (the
"Note") in substantially the form of Exhibit A hereto, and secured by
-----
a security interest in the Software Assets.
(c) During the twenty-four months beginning with the first full month
after the Closing, an amount equal to five percent (5%) of the gross revenues
(less sales commissions, cost of goods, royalties paid to third parties,
credits, returns and applicable taxes) (not including taxes based on XOOM's
income)) from electronic commerce, banner advertising and bounty generated and
actually received from web-based e-mail subscribers ordering services or
merchandise through Best/Hway Earthlink and/or Netcom (the "GBT Sitemail
------------
Revenues").
--------
(d) Up to an additional 103,824 Shares ("Earnout Shares") in two
--------------
separate issuances of 51,912 Earnout Shares each, contingent upon Seller's
timely achieving either or both of the targets set forth on Exhibit B hereto
(the "Earnout Targets) in its capacity as a Consultant to Buyer, provided,
--------
however, that regardless of whether Seller has met such Earnout Targets, Seller
shall be entitled to issuance of all 103,824 Earnout Shares upon the closing of
any Transaction (as defined in Section 2.3) (except for 2.3(i)), unless Seller
and Buyer mutually agree that consummation of such Transaction will not cause it
to be materially more difficult or impossible to meet the Earnout Targets in
Exhibit B. Each 51,912 portion of the Earnout Shares may be independently earned
and shall be severable from the other portion.
2.3 PRICE PROTECTION.
If, from the date of the Closing until the date on which Xoom has completed
an initial public offering ("IPO") of its securities (i) XOOM obtains additional
---
equity financing (ii) XOOM enters into an agreement for the sale of all or
substantially all of the assets of XOOM, (iii) there is a sale by shareholders
of XOOM of more than fifty percent (50%) of the outstanding voting stock of XOOM
("XOOM Stock"), or (iv) XOOM effects a merger with or into another entity where
----------
it is not the survivor (other than a merger solely for the purpose of changing
the state of incorporation or effecting a recapitalization of XOOM) and
shareholders of XOOM prior to such merger own less than 50% of the outstanding
voting securities of the survivor, (any of subsections (i), (ii) (iii), (iv) or
(v), a "Transaction"), and the valuation of XOOM for purposes of any such
-----------
Transaction is less than $25 million, the Seller shall be entitled
3
to receive, rounded down to the nearest whole number of shares, an additional
number of shares of XOOM Stock calculated as (A) (i) $426,411 divided by (ii)
the per share valuation of XOOM's common shares in the Transaction or IPO, minus
-----
(B) the aggregate number of shares of XOOM Stock issued or issuable to the
Seller under this Agreement other than pursuant to this Section 2.3. For any
Transaction, such additional Xoom Stock shall be deemed issued to the Seller
immediately prior to the closing thereof. XOOM's obligations under this Section
2.3 shall terminate upon the completion of an IPO or a Transaction, other than a
Transaction pursuant to subsection (i). The price protection formula in this
Section 2.3 shall also apply to the Earnout Shares issued pursuant to Section
2.2(d).
2.4 TERMINATION OF PAYMENT OBLIGATIONS. The obligations of Buyer pursuant
to Section 2.2(d) shall immediately terminate if the Consulting Agreement
between Buyer and Seller is terminated (i) by Seller, at Seller's request, or
(ii) by Buyer for "cause," prior to the Term Date (as such terms are defined
therein).
ARTICLE III.
CLOSING
3.1 CLOSING. The closing of the transactions contemplated herein (the
"Closing") shall be held at 1:00 p.m. California time at the offices of
-------
Morrison & Foerster LLP, 425 Market Street, San Francisco, CA, 94105, on June
__, 1998, or at such other time and place as the parties may agree (the "Closing
-------
Date") provided that all of the Closing conditions set forth in Section 3.3
----
hereof shall have occurred.
3.2 DELIVERIES. Together with an executed counterpart of this Agreement,
the following items shall be delivered by the parties at the Closing:
(a) BY BUYER. Buyer shall deliver:
--------
(iii) a check payable to Seller in the amount of $12,500;
(iv) a certificate evidencing the Shares;
(v) the duly executed Note described in Section 2.2(b)(ii);
(vi) an executed Security Agreement in substantially the form of
Exhibit C hereto; and
---------
(vii) the Consulting Agreement described in Section 6.1(a) executed by
Buyer.
(b) BY SELLER. Seller shall deliver to Buyer:
---------
(viii) one or more Bills of Sale, in form and substance satisfactory to
Buyer and sufficient to convey the Software Assets to Buyer;
4
(ix) such electronic and paper copies and representations of the
Intellectual Property as may in Buyer's reasonable judgment be
necessary to convey the Intellectual Property to Buyer;
(x) the Consulting Agreement described in Section 6.1(a) executed by
Seller;
(xi) an Assignment of Seller's rights in the copyright registration
application pending before the Patent and Trademark Office; and
(xii) such other documents and instruments as are reasonably necessary to
consummate the transactions contemplated hereby.
3.3 CONDITIONS TO CLOSING. Buyer and Seller shall not be obligated to
consummate the Closing and the transactions contemplated hereby and may
terminate this Agreement without incurring any liability unless (i) Seller has
delivered the items specified in Section 3.2(b), and (ii) a closing under that
Agreement and Plan of Merger between Buyer, XOOM GBT Merger Corp. and Robert
Kohler has occurred or will occur concurrently with the Closing hereunder.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that:
4.1 ORGANIZATION. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of California and has full
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted. Seller is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for failures to be so qualified or licensed and in
good standing that would not, individually or in the aggregate, affect the
Software Assets in a materially adverse manner.
4.2 AUTHORIZATION. Seller has all necessary corporate power and authority
and has taken all corporate action necessary to enter into this Agreement, to
consummate the transactions contemplated hereby and to perform its obligations
hereunder. This Agreement has been duly executed and delivered by Seller and is
a valid and binding obligation of Seller, enforceable against it in accordance
with its respective terms subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting the rights of creditors generally and limitations imposed by equitable
principles, whether considered in a proceeding at law or in equity, and the
discretion of the court before which any proceeding therefor may be brought.
4.3 BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been conducted without the intervention of
any person or entity acting on behalf of Seller in such a manner as to give rise
to any valid claim against Buyer for any
5
broker's or finder's commission, fee or similar compensation and Seller shall
indemnify Buyer and hold it harmless from any liability or expense arising from
any claim for brokerage commissions, finder's fees or other similar compensation
based on any agreement, arrangement or understanding made by or on behalf of
Seller.
4.4 LITIGATION, PROCEEDINGS AND APPLICABLE LAW. There are no Actions,
suits, investigations or proceedings, at law or in equity or before or by any
governmental authority or instrumentality or before any arbitrator of any kind,
pending or, to Seller's Knowledge, threatened (a) against Seller which, if
determined adversely against Seller, would have a material adverse effect on
Seller's or Buyer's ability to use the Intellectual Property in the manner in
which it is now being used by Seller or (b) seeking to delay or enjoin the
consummation of the transactions contemplated hereby. To the Knowledge of
Seller, there are no outstanding orders, decrees or stipulations issued by any
federal, state, local or foreign, judicial or administrative authority in any
proceeding to which Seller is or was a party relating to the Software Assets.
4.5 NO CONFLICT OR VIOLATION. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby or
thereby will result in (i) a violation of or a conflict with any provision of
the Articles of Incorporation or Bylaws of Seller, (ii) a material breach or
termination of, or a material default under, any term or provision of any
contract to which Seller is a party or an event which, with notice, lapse of
time, or both, would result in any such material breach, such termination or
such material default, or (iii) a material violation by Seller of any Legal
Requirement or an event which, with notice, lapse of time or both, would result
in such a material violation.
4.6 INTELLECTUAL PROPERTY. Seller owns all rights to the Software Assets
without any conflict or infringement of the intellectual property rights of
others. All source code included within the Intellectual Property constitutes a
trade secret of Seller and is not part of the public knowledge or literature,
and Seller has taken reasonable action to protect such source code as a trade
secret. In addition, Seller has taken reasonable steps (including, without
limitation, entering into Confidentiality Agreements with all officers and
employees of and consultants involved in Seller's business) to maintain the
secrecy and confidentiality of and its proprietary rights in, all Intellectual
Property.
(b) Schedule 4.6(b) lists (i) all patents and patent applications and
---------------
all registered copyrights, trade names, trademarks, service marks and other
company, product or service identifiers included in the Intellectual Property,
and specifies the jurisdictions in which each of the foregoing has been
registered, including the respective registration numbers, and/or any
application for any such registration has been filed; (ii) all licenses,
sublicenses and other agreements as to which Seller is a party and pursuant to
which Seller or any other Person is authorized to use any Intellectual Property;
and (iii) all licenses under which Seller is or may be obligated to make royalty
or other payments. Copies of all licenses, sublicenses and other agreements
identified pursuant to clauses (ii) and (iii) above have been delivered by
Seller to Buyer.
(c) Seller is not in violation in any material respect of any license,
sublicense or agreement described in Schedule 4.6(b). As a result of the
---------------
execution and delivery of this
6
Agreement or the performance of Seller's obligations hereunder, neither Seller
nor Buyer shall be in violation in any material respect of any license,
sublicense or agreement described in such schedule.
(d) Seller is the sole owner of all necessary right, title and
interest in and to (free and clear of any liens, encumbrances or security
interests) all non-public domain Intellectual Property necessary to fully
exploit the Software Assets and has full rights to the use, sale, license or
disposal thereof. Except as expressly set forth in Schedule 4.6(b), no other
---------------
Person has any rights with respect to any of the Intellectual Property, nor is
any consent or approval of any third party needed to fully utilize and exploit
the Software Assets as presently configured.
(e) No claims with respect to the Intellectual Property have been
asserted to Seller, or, to Seller's Knowledge, are threatened by any person, and
Seller knows of no claims (i) to the effect that Seller infringes any copyright,
patent, trade secret, or other intellectual property right of any third party or
violates any license or agreement with any third party, (ii) contesting the
right of Seller to use, sell, license or dispose of any Intellectual Property,
or (iii) challenging the ownership, validity or effectiveness of any of the
Intellectual Property.
(f) To the Knowledge of Seller, all trademarks, service marks, and
other company, product or service identifiers held by Seller are valid and
subsisting worldwide.
(g) To the Knowledge of Seller, and except as expressly set forth in
Schedule 4.6(b), there has not been and there is not now any unauthorized use,
infringement or misappropriation of any of the Intellectual Property by any
third party. Seller has not been sued or, to Seller's Knowledge, charged as a
defendant in any claim, suit, action or proceeding that involves a claim of
infringement of any patents, trademarks, service marks, copyrights or other
intellectual property rights that comprise the Software Assets. Seller does not
have any infringement liability with respect to any patent, trademark, service
mark, copyright or other intellectual property right of any third party insofar
as the Software Assets are concerned.
(h) No Intellectual Property is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting in any material manner
the licensing thereof by Seller. Seller has not entered into any agreement to
indemnify any other person against any charge of infringement of any
Intellectual Property, except in the ordinary course of business. Seller has not
entered into any agreement granting any third party the right to bring
infringement actions with respect to, or otherwise to enforce rights with
respect to, any Intellectual Property. Seller has the exclusive right to file,
prosecute and maintain all applications and registrations with respect to the
Intellectual Property developed or owned by Seller.
(i) Except as set forth in Schedule 4.6(b), no person has a license to
---------------
use or the right to acquire a license to use any future version of any product
based on the Intellectual Property or any product based on the Intellectual
Property that is under development, and no agreement to which Seller is a party
will restrict Buyer from charging customers for any such new version or product.
7
4.7 ASSETS GENERALLY. Seller holds good and marketable title, license to
or leasehold interest in all of the Software Assets and has the complete and
unrestricted power and the unqualified right to sell, assign and deliver the
Software Assets to Buyer. Upon consummation of the transactions contemplated by
this Agreement, Buyer will acquire good and marketable title, license or
leasehold interest to the Software Assets free and clear of any encumbrances and
there exists no restriction on the use or transfer of the Software Assets. No
Person other than Seller has any right or interest in the Software Assets,
including the right to grant interests in the Software Assets to third parties.
4.8 PRODUCTS. The Software Assets operate in compliance with Seller's
specifications for such products.
4.9 RECEIPT OF SHARES ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with Seller in reliance upon Seller's representation, which by Seller's
execution of this Agreement Seller hereby confirms, that the shares being issued
to Seller hereunder are being acquired for investment for Seller's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that Seller has no present intention of selling, granting
any participation in, or otherwise distributing the same. By executing this
Agreement, Seller further represents that it does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Shares.
4.10 DISCLOSURE OF INFORMATION. Seller believes that it has received all
the information necessary or appropriate for deciding whether to receive the
Shares as part of the consideration for the Software Assets. Seller further
represents that its officers and agents have had an opportunity to ask questions
and receive answers from Buyer regarding the terms and conditions pertaining to
the Shares and the business, properties, prospects and financial conditions of
Buyer. Seller has arrived at an independent view concerning the value of Buyer,
recognizes that the transactions in which Seller is acquiring the Shares is
occurring in an arms' length transaction and is not relying upon any statements
by Buyer as to the value of Buyer or the Shares.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1 ORGANIZATION OF BUYER. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has full corporate
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted.
5.2 AUTHORIZATION. Buyer has all necessary corporate power and authority
and has taken all corporate action necessary to enter into this Agreement to
consummate the transactions contemplated hereby and thereby and to perform its
obligations hereunder. This Agreement and
8
has been duly executed and delivered by Buyer and is a valid and binding
obligation of Buyer, enforceable against it in accordance with its terms subject
to the effect of applicable bankruptcy, insolvency, reorganization, moratorium,
and other similar laws relating to or affecting the rights of creditors
generally and limitations imposed by equitable principles, whether considered in
a proceeding at law or in equity, and the discretion of the court before which
any proceeding therefor may be brought.
5.3 BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been conducted without the intervention of
any person or entity acting on behalf of Buyer in such a manner as to give rise
to any valid claim against Seller for any broker's or finder's commission, fee
or similar compensation.
5.4 CONSENTS AND APPROVALS. No consent, waiver, approval or authorization
of or by, or declaration, filing or registration with, any governmental or
regulatory authority is required to be made or obtained by Buyer in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.
ARTICLE VI.
CERTAIN COVENANTS
6.1 COVENANTS OF BOTH PARTIES. Buyer, on the one hand, and Seller, on the
other hand, each covenant to the other that:
(a) CONSULTING AGREEMENT. Buyer and Seller shall enter into a
--------------------
Consulting Agreement substantially in the form of Exhibit D hereto for services
to be provided by Seller commencing immediately after the Closing.
(b) FURTHER ASSURANCES. Each party will cooperate in good faith with
------------------
the other and will take all appropriate action and execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the transactions contemplated hereunder. From and
after the execution hereof, Seller will promptly refer all inquiries with
respect to the ownership of the Software Assets to Buyer and execute such
documents as Buyer may reasonably request from time to time to evidence transfer
of the Software Assets to Buyer.
6.2 SELLER'S COVENANTS. Seller covenants to Buyer that:
(a) COOPERATION AND TRANSITION ASSISTANCE. Seller shall use its best
-------------------------------------
efforts to facilitate the transition of customers, customer support services,
and development, marketing and sales functions related to the Software Assets to
Buyer, and shall direct any new inquiries regarding the Software Assets to Buyer
or its assignee.
(b) DOCUMENTATION. Seller shall provide Buyer with full and complete
-------------
documentation, both written and computer generated, relating to the business
that Seller has
9
conducted using the Software Assets, including all correspondence and files
relating to their development.
ARTICLE VII.
INDEMNIFICATION
7.1 INDEMNIFICATION BY THE SELLER. In the event Seller (i) breaches or is
deemed to have breached any of the representations and warranties contained in
Article IV herein, or (ii) fails to perform or comply with any of the covenants
and agreements set forth in this Agreement, Seller shall hold harmless,
indemnify and defend Buyer, and each of its directors, officers, shareholders,
attorneys, representatives and agents, from and against any Damages incurred or
paid by Buyer to the extent such Damages arise or result from a breach by Seller
of any such representations or warranties or a violation of any covenant in this
Agreement.
7.2 INDEMNIFICATION BY BUYER. In the event Buyer (i) breaches or is deemed
to have breached any of the representations and warranties contained in Article
V herein or (ii) fails to perform or comply with any of the covenants and
agreements set forth in this Agreement, then Buyer shall hold harmless,
indemnify and defend Seller from and against any Damages incurred or paid by the
Seller to the extent such Damages arise or result from a breach by Buyer of any
such representations and warranties or a violation of any covenant in this
Agreement.
7.3 NOTIFICATION OF CLAIMS. If any party or parties (the "Indemnified
-----------
Party") reasonably believes that it is entitled to indemnification hereunder,
------
or otherwise receives notice of the assertion or commencement of any third-party
claim, action, or proceeding (a "Third-Party Claim"), with respect to which
-----------------
such other party or parties (the "Indemnifying Party") is obligated to provide
------------------
indemnification pursuant to Section 7.1 or 7.2 above, the Indemnified Party
shall promptly give the Indemnifying Party written notice of such claim for
Indemnification (an "Indemnity Claim"). Any claim for indemnification under this
----------------
Section 7 must be brought prior to the expiration of the survival period for the
representation and warranty as set forth in Section 9.1. The delivery of such
notice of Indemnity Claim ("Claim Notice") shall be a condition precedent to any
------------
liability of the Indemnifying Party for indemnification hereunder. The
Indemnifying Party shall have twenty (20) days from the receipt of a Claim
Notice (the "Notice Period") to notify the Indemnified Party of whether or not
------ ------
the Indemnifying Party disputes its liability to the Indemnified Party with
respect to such Indemnity Claim.
7.4 RESOLUTION OF CLAIMS. With respect to any Indemnity Claim involving a
Third-Party Claim, following prompt notification of the Indemnifying Party, the
Indemnified Party shall proceed with the defense of such Third-Party Claim.
During such defense proceedings, the Indemnified Party shall keep the
Indemnifying Party informed of all material developments and events relating to
the proceedings. The Indemnifying Party shall have a right to be present at the
negotiation, defense and settlement of such Third-Party Claim. The Indemnified
Party shall not agree to any settlement of the Third-Party Claim without the
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld. Following entry of judgment or settlement with respect to the Third-
Party Claim, any dispute as to the liability of the Indemnifying Party with
respect to the Indemnity Claim shall be resolved as provided in Section 7.5.
10
(b) With respect to any Indemnity Claim not involving a Third-Party
Claim, if the Indemnifying Party disputes its liability within the Notice
Period, the liability of the Indemnifying Party shall be resolved in accordance
with Section 7.5.
(c) In the event that an Indemnified Party makes an Indemnity Claim in
accordance with Section 7.3 and the Indemnifying Party does not dispute its
liability within the Notice Period, the amount of such Indemnity Claim shall be
conclusively deemed a liability of the Indemnifying Party.
7.5 ARBITRATION. All disputes under this Agreement shall be settled by
arbitration in Santa Cruz, California before a single arbitrator pursuant to the
commercial law rules of the American Arbitration Association. Arbitration may be
commenced at any time by any party hereto giving written notice to each other
party to a dispute that such dispute has been referred to arbitration under this
Section 7.5. The arbitrator shall be selected by the joint agreement of the
Indemnifying Party and Indemnified Party, but if they do not so agree within 20
days after the date of the notice referred to above, the selection shall be made
pursuant to the rules from the panels of arbitrators maintained by such
Association. Any award rendered by the arbitrator shall be conclusive and
binding upon the parties hereto; provided, however, that any such award shall be
-------- -------
accompanied by a written opinion of the arbitrator giving the reasons for the
award. This provision for arbitration shall be specifically enforceable by the
parties and the decision of the arbitrator in accordance herewith shall be final
and binding without right of appeal. Each party shall pay its own expenses of
arbitration and the expenses of the arbitrator shall be equally shared;
provided, however, that if in the opinion of the arbitrator any claim for
-------- -------
indemnification or any defense or objection thereto was unreasonable, the
arbitrator may assess, as part of his award, all or any part of the arbitration
expenses of the other party (including reasonable attorneys' fees) and of the
arbitrator against the party raising such unreasonable claim, defense or
objection. To the extent that arbitration may not be legally permitted hereunder
and the parties to any dispute hereunder may not at the time of such dispute
mutually agree to submit such dispute to arbitration, any party may commence a
civil action in a court of appropriate jurisdiction to solve disputes hereunder.
Nothing contained in this Section 7.5 shall prevent the parties from settling
any dispute by mutual agreement at any time.
7.6 INDEMNIFICATION THRESHOLD. Notwithstanding anything to the contrary
herein, in no event shall any party be liable to any other party under any
warranty, representation, indemnity or covenant made by such party in this
Agreement until the aggregate amount of Damages thereunder against such party
exceeds ten thousand dollars ($10,000) (the "Threshold"), at which point such
---------
party shall be liable for the full amount of liability for such claims below and
above the threshold.
ARTICLE VIII.
RESTRICTIONS ON XOOM COMMON SHARES
The Shares issued to Buyer pursuant to this Agreement shall be subject to
the following restrictions:
11
8.1 RIGHT OF FIRST REFUSAL/TRANSFER RESTRICTIONS.
(a) Restrictions on Transfer. Seller may not sell or engage in any
------------------------
transaction which will result in a change in the beneficial or record ownership
of any Shares issued to or held by Seller, including without limitation a
voluntary or involuntary sale, assignment, transfer, pledge, hypothecation,
encumbrance, disposal, loan, gift, attachment or levy (a "Transfer"), except as
--------
provided in this Article VIII, and any such Transfer of Shares or attempted
Transfer of Shares in contravention of this Agreement shall be void and
ineffective for any purpose and shall not confer on any transferee or purported
transferee any rights whatsoever.
(b) Right of First Refusal.
----------------------
(i) If, prior to an initial public offering of Buyer's securities
or a merger or sale of Buyer, Seller proposes to Transfer (or is required by
operation of law or other involuntary transfer) any or all of the Shares
standing in Seller's, Seller shall first offer such Shares to the Company in
accordance with the following provisions:
(A) Seller shall deliver a written notice (a "Notice") to
------
Buyer stating (1) Seller's bona fide intention to Transfer such Shares, (2)
the name and address of the proposed transferee, (3) the number of Shares
to be transferred, and (4) the purchase price per Share and terms of
payment for which Seller proposes to Transfer such Shares.
(B) Within 60 days after receipt of the Notice, Buyer or its
designee shall have the first right to purchase or obtain such Shares, upon
the price and terms of payment designated in the Notice. If the Notice
provides for the payment of non-cash consideration, Buyer at its option may
pay the consideration in cash equal to Buyer's good faith estimate of the
present fair market value of the non-cash consideration offered.
(C) If Buyer or its designee elects not to purchase or obtain
all of the Shares designated in the Notice, then Seller may Transfer the
Shares referred to in the Notice to the proposed transferee, providing such
Transfer (1) is completed within 30 days after the expiration of Buyer's
right to purchase or obtain such Shares, (2) is made at the price and terms
designated in the Notice, and (3) the proposed transferee agrees to be
bound by the terms and provisions of this Article VIII and to become a
party to an agreement containing such provisions immediately upon receipt
of such Shares. If such Shares are not so transferred, Seller must give
notice in accordance with this paragraph prior to any other or subsequent
Transfer of such Shares.
(ii) Notwithstanding Section 8.1(a), Seller may Transfer Shares:
(A) to either or both of Seller's shareholders as of the date hereof (a
"Shareholder"), (B) to a Shareholder's spouse, child, grandchild,
-----------
parent, brother, or sister ("Immediate Family"), or to a trust established for
------------------
the benefit of a member or members of a Shareholder's Immediate Family, (C) to
an Affiliate or (D) to the estate of any of the foregoing by gift, will or
intestate succession; provided that Seller notifies Buyer of such Transfer not
less than 10 nor more than 90 days prior to the Transfer and that the proposed
transferee agrees to be bound by the terms and provisions
12
of this Agreement and to become a party to this Agreement immediately upon the
receipt of such Shares.
(c) No Transfer to Competitors. Seller may not Transfer any Shares
to a competitor of Buyer, or to any stockholder, partner or other beneficial
holder of an equity ownership interest in a competitor, other than pursuant to a
merger, combination, or other transaction approved by the Board of Directors of
Buyer.
(d) Legends on Stock Certificates. Each certificate representing
-----------------------------
shares issued pursuant to this Agreement shall be endorsed with the following
legends:
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AN
AGREEMENT BETWEEN XOOM, INC. (THE "COMPANY"0 AND THE HOLDER, PROVIDING FOR,
AMONG OTHER MATTERS, THE COMPANY'S RIGHT OF FIRST REFUSAL TO PURCHASE THE
SECURITIES REPRESENTED BY THIS CERTIFICATE. A COPY OF USCH AGREEMENT IS ON
FILE AT THE PRINCIPAL BUSINESS OFFICE OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH SECURITIES,
THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR ITS SUCCESSOR RULE UNDER
THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT EXEMPTIONS FROM SUCH REGISTRATION AND FROM THE PROVISIONS OF
ANY APPLICABLE STATE "BLUE SKY" LAWS ARE AVAILABLE.
Under no circumstances shall any Transfer of any Shares subject hereto be
valid until the proposed transferee thereof shall have executed and become a
party to the agreement described in Section 8.1(b)(i)(C) and thereby shall have
become subject to all of the provisions of this Article VIII; and
notwithstanding any other provisions of this Agreement, no such Transfer of any
kind shall in any event result in the non-applicability of the provisions hereof
at any time to any of the Shares subject hereto. Seller understands and
acknowledges that Buyer need not register a transfer of Shares, and may instruct
its transfer agent not to register a transfer of Shares, unless the conditions
specified in the foregoing legend are satisfied.
(e) Acknowledgments. Seller acknowledges that other stockholders
---------------
of the Company may have restrictions on their stockholdings different than the
terms contained herein.
8.2 LOCK-UP AGREEMENT. Seller, if requested by an underwriter of Shares or
other securities of Buyer, shall not sell or otherwise transfer or dispose of
any Shares held by Seller during the 180-day period following the effective date
of a registration statement of Buyer filed under the Act or such shorter period
of time as the underwriter shall require, provided that all officers and
directors of Buyer who hold common stock (or other securities) of Buyer enter
into similar agreements. If requested by the underwriter, Seller will reaffirm
the agreement set forth in this Section 8.2 in a separate writing in a form
satisfactory to such underwriter. Buyer may impose stop-transfer instructions
with respect to such Shares subject to the foregoing restriction until the end
of said period.
13
ARTICLE IX.
MISCELLANEOUS
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties and indemnities included or provided for in this Agreement or in any
agreement, schedule or certificate or other document or instrument delivered
pursuant to this Agreement will survive the Closing Date for a period of twenty-
four months. No claim may be made by any party hereto unless written notice of
the claim is given within that twenty-four month period; provided, however, that
the foregoing limitation period will not apply to a breach of any
representation, warranty or covenant known to any party before the Closing Date.
9.2 SETOFF. Buyer may set off any amount that may be owed to it by Seller
under this Agreement against any amount otherwise payable to Seller by Buyer,
but any such setoff shall in no manner limit Seller's liability, if any, to
Buyer.
9.3 NONCOMPETITION. Seller shall not, at any time within the 3-year period
immediately following the Closing Date, directly or indirectly engage in any
activities involving the development, marketing or licensing of any web-based e-
mail system similar to Sitemail that are the same as, similar to or competitive
with the activities of Buyer. This provision shall be of no further effect in
the event of a breach by Buyer of its obligations under Sections 2.2.(b) (ii),
2.2(c) and 2.2(d).
9.4 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Prior to the Closing Date,
neither Buyer nor Seller (nor their respective shareholders, officers and
directors) shall issue any press release or make any public announcement
concerning the matters set forth in this Agreement (other than as required by
applicable disclosure rules or regulations) without the consent of the other
party. Buyer and Seller will cooperate to jointly prepare and issue any press
release which may be issued to announce the closing of the transactions
contemplated by this Agreement.
9.5 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. Buyer
may, without need for any consent or notice to Seller, assign all of its rights
and obligations under this Agreement to any Affiliate of Buyer, and such
assignment shall release Buyer of all of its liabilities and obligations to
Seller, provided such liabilities and obligations are fully assumed by Buyer's
assignee.
9.6 NOTICES. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by either party to the other
shall be in writing and delivered by telecopy or other facsimile (with receipt
acknowledged), delivered personally or mailed by certified mail, postage
prepaid, return receipt requested (such mailed notice to be effective on the
date such receipt is acknowledged or refused), to the addresses of the parties
appearing on the signature page of this agreement or to such other place and
with such other copies as either party may designate as to itself by written
notice to the other.
14
9.7 CHOICE OF LAW. This Agreement shall be governed under and construed in
accordance with the laws of the State of California without regard to its choice
of law principles. For purposes of any dispute or controversy arising under this
Agreement or the transactions contemplated hereby, the parties mutually consent
to the exclusive jurisdiction of the courts of the State of California and the
federal district court, Northern District of California.
9.8 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, together
with all exhibits and schedules hereto, constitute the entire agreement among
the parties pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
9.9 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Facsimile signature pages
shall be considered originals.
9.10 TITLES. The titles, captions or headings of the Articles and Sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their respective behalf, by their respective officers thereunto
duly authorized, in multiple originals, all as of the day and year first above
written.
Asset Purchase Agreement - Xoom Inc. and Revolutionary Software Inc.
Was this helpful?