\nARTICLE VIA – COVENANTS OF THE STOCKHOLDERS…………………………………….. 60
\n 6A.1 Restrictions on Transfer………………………………………… 60
\n 6A.2 Execution of All Operative Documents……………………………… 61
\n 6A.3 Agreement to Vote Shares………………………………………… 61
\n 6A.4 Limitation on Sales…………………………………………….. 61
\n 6A.5 Waiver of Dissenter’s Rights…………………………………….. 61
\n 6A.6 Taxes…………………………………………………………. 62<\/p>\nARTICLE VII – TERMINATION, AMENDMENT AND WAIVER…………………………………. 62
\n 7.1 Termination……………………………………………………. 62
\n 7.2 Effect of Termination…………………………………………… 63
\n 7.3 Amendment……………………………………………………… 63
\n 7.4 Waiver………………………………………………………… 63<\/p>\n
ARTICLE VIII – SURVIVAL AND INDEMNIFICATION…………………………………….. 64
\n 8.1 Survival………………………………………………………. 64
\n 8.2 Indemnification by the Stockholders………………………………. 64
\n 8.3 Indemnification by Amazon.com……………………………………. 64
\n 8.4 Threshold and Limitations; Adjustment of Merger Consideration……….. 65
\n 8.5 Procedure for Indemnification……………………………………. 66
\n 8.6 Remedies; Specific Performance…………………………………… 68<\/p>\n
ARTICLE IX – GENERAL…………………………………………………………. 68
\n 9.1 Tax Matters……………………………………………………. 68
\n 9.2 Expenses………………………………………………………. 69
\n 9.3 Notices……………………………………………………….. 69
\n 9.4 Severability…………………………………………………… 70
\n 9.5 Entire Agreement……………………………………………….. 71
\n 9.6 Assignment…………………………………………………….. 71
\n 9.7 Parties in Interest…………………………………………….. 71
\n 9.8 Governing Law………………………………………………….. 71
\n 9.9 Headings………………………………………………………. 71
\n 9.10 Counterparts…………………………………………………… 71
\n 9.11 Waiver of Jury Trial……………………………………………. 72
\n<\/c><\/s><\/table>\n
-v-<\/p>\n
7<\/p>\n
EXHIBITS<\/p>\n
1.3 – Certificate of Merger <\/p>\n
1.7.1 – Primary and Secondary Key Employees <\/p>\n
1.7.2(c) – Form of Escrow Agreement <\/p>\n
1.7.2(e) – Form of Notice of Assumption of Options <\/p>\n
1.7.3 – List of Central Employees<\/p>\n
1.7.4 – Letter of Transmittal <\/p>\n
2 – Company Disclosure Memorandum <\/p>\n
2A – Stockholder Disclosure Memorandum <\/p>\n
4.3 – Opinion of Counsel for the Company <\/p>\n
4.6 – List of Consents, Approvals and Notices <\/p>\n
4.8 – Real Property Tax Affidavit<\/p>\n
4.12 – Form of Confidentiality, Noncompetition and Invention
\n Assignment Agreement<\/p>\n
4.13 – Form of Affiliate Letter <\/p>\n
4.18(a) – Form of Stock Vesting Agreement (S. Leschly) <\/p>\n
4.18(b) – Form of Stock Vesting Agreement (S. Rao) <\/p>\n
4.22 – List of Domain Names to be Assigned <\/p>\n
5.3 – Opinion of Counsel for Amazon.com and the Purchaser<\/p>\n
-vi-<\/p>\n
8<\/p>\n
AGREEMENT AND PLAN OF MERGER This Agreement and Plan of Merger (this
\n“Agreement”) is made and entered into as of April 24, 1999, by and among
\nAmazon.com, Inc., a Delaware corporation (“Amazon.com”), Amazon.com Auctions,
\nInc., a Delaware corporation and wholly owned subsidiary of Amazon.com (the
\n“Purchaser”), e-Niche Incorporated, a Delaware corporation (the “Company”), and
\nall the stockholders of the Company (the “Stockholders”).<\/p>\n
RECITALS<\/p>\n
A. The Company, Amazon.com, the Stockholders and the Purchaser
\nbelieve it advisable and in their respective best interests to effect a merger
\nof the Company and the Purchaser pursuant to this Agreement (the “Merger”).<\/p>\n
B. The Board of Directors of the Company has approved this
\nAgreement and the Merger as required by applicable law.<\/p>\n
C. The Boards of Directors of Amazon.com and the Purchaser have
\napproved this Agreement and the Merger as required by applicable law.<\/p>\n
D. It is intended that the Merger will qualify as a reorganization
\nunder Section 368(a) of the Internal Revenue Code of 1986, as amended (the
\n“Code”).<\/p>\n
AGREEMENT<\/p>\n
In consideration of the terms hereof, the parties hereto agree as
\nfollows:<\/p>\n
ARTICLE I – THE MERGER<\/p>\n
1.1 THE MERGER<\/p>\n
Upon the terms and subject to the conditions hereof and in accordance
\nwith the Delaware General Corporation law (“Delaware Law”), (a) at the Effective
\nTime (as defined in Section 1.3 hereof) the separate existence of the Company
\nshall cease and the Company shall be merged with and into the Purchaser (the
\nPurchaser as the surviving corporation after the Merger is sometimes referred to
\nherein as the “Surviving Corporation”), and (b) from and after the Effective
\nTime, the Merger shall have all the effects of a merger under the laws of the
\nState of Delaware and other applicable law.<\/p>\n
-1-
\n 9<\/p>\n
1.2 THE CLOSING<\/p>\n
Subject to the satisfaction or waiver of the conditions set forth in
\nArticles IV and V and the termination provisions of Article VII, the closing of
\nthe Merger pursuant to this Agreement (the “Closing”) shall take place on the
\nlater of (a) May 14, 1999 and (b) the earliest practicable business day
\nfollowing the satisfaction or waiver of the conditions set forth in Articles IV
\nand V (the “Closing Date”) at 10:00 a.m. local time at the offices of Perkins
\nCoie LLP, 1201 Third Avenue, 48th Floor, Seattle, Washington, or such other
\ndate, time or location as Amazon.com and the Company shall agree.<\/p>\n
1.3 EFFECTIVE DATE AND TIME<\/p>\n
On the Closing Date and subject to the terms and conditions hereof, a
\ncertificate of merger complying with the applicable provisions of Delaware Law,
\nsubstantially in the form attached as Exhibit 1.3 (the “Certificate of Merger”),
\nshall be delivered for filing to the Secretary of State of the State of Delaware
\n(the “Delaware Secretary of State”). The Merger shall become effective on the
\ndate (the “Effective Date”) and at the time (the “Effective Time”) of filing of
\nthe Certificate of Merger with the Delaware Secretary of State or at such other
\ntime as may be specified in the Certificate of Merger as filed. If the Delaware
\nSecretary of State requires any changes in the Certificate of Merger as a
\ncondition to filing or to issuing its certificate to the effect that the Merger
\nis effective, Amazon.com, the Purchaser and the Company will execute any
\nnecessary revisions incorporating such changes, provided such changes are not
\ninconsistent with and do not result in any material change in the terms of this
\nAgreement.<\/p>\n
1.4 CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION<\/p>\n
At the Effective Time, the Certificate of Incorporation of the Purchaser
\nshall continue in effect as the Certificate of Incorporation of the Surviving
\nCorporation. Thereafter, the Certificate of Incorporation of the Surviving
\nCorporation may be amended in accordance with its terms and as provided by law.<\/p>\n
1.5 BYLAWS OF THE SURVIVING CORPORATION<\/p>\n
At the Effective Time, the Bylaws of the Purchaser shall continue in
\neffect as the Bylaws of the Surviving Corporation. Thereafter, the Bylaws may be
\namended or repealed in accordance with their terms and the Certificate of
\nIncorporation of the Surviving Corporation and as provided by law.<\/p>\n
-2-
\n 10<\/p>\n
1.6 DIRECTORS AND OFFICERS<\/p>\n
At the Effective Time, the directors of the Purchaser shall continue in
\noffice as the directors of the Surviving Corporation and the officers of the
\nPurchaser shall continue in office as the officers of the Surviving Corporation,
\nand such directors and officers shall hold office in accordance with and subject
\nto the Certificate of Incorporation and Bylaws of the Surviving Corporation.<\/p>\n
1.7 MERGER CONSIDERATION AND CONVERSION OF SHARES<\/p>\n
1.7.1 MERGER CONSIDERATION; CONVERSION OF COMPANY PREFERRED STOCK<\/p>\n
(a) For purposes of this Agreement, the term “Merger Consideration”
\nshall mean (i) the Closing Date Shares plus (ii) the Post-Closing Shares (as
\ndefined in Section 1.7.3(b) below). The term “Closing Date Shares” shall mean
\nthe number of shares of Amazon.com Common Stock, par value $0.01 per share
\n(“Amazon.com Common Stock”), determined by dividing the Base Amount (as defined
\nbelow) by the closing price of Amazon.com Common Stock as reported on the Nasdaq
\nNational Market on the second trading day immediately preceding the Closing Date
\n(the “Closing Price”). The term “Base Amount” shall mean $149,925,000 less the
\naggregate amount (the “Post-Closing Bonus Amount”) of all payments the Company
\nhas, prior to the Closing Date and in connection with the transactions
\ncontemplated hereby, committed to make to its officers and employees after the
\nClosing Date; provided, however, that such amount shall be reduced to
\n$124,925,000 less the Post-Closing Bonus Amount if, as of the Closing Date,
\neither (i) any of the individuals that are designated as “Primary Key Employees”
\non Exhibit 1.7.1 (the “Primary Key Employees”) or (ii) both of the individuals
\nthat are designated as “Secondary Key Employees” on Exhibit 1.7.1 (the
\n“Secondary Key Employees”) have not accepted the offer of employment as set
\nforth in Section 6.13; and, provided further, that such amount shall be reduced
\nto $99,925,000 less the Post-Closing Bonus Amount if, as of the Closing Date,
\neither (i) any two Primary Key Employees or (ii) any Primary Key Employee and
\nboth Secondary Key Employees have not accepted the offer of employment as set
\nforth in Section 6.13. At least five business days prior to the anticipated
\nClosing Date, the Company shall provide to Amazon.com a list of all payments
\nincluded in determining the Post-Closing Bonus Amount.<\/p>\n
(b) Immediately prior to the Effective Time, each Stockholder that
\nthen holds of record any shares of the Company’s Series A Preferred Stock, par
\nvalue $.01 per share (“Company Series A Stock”), or the Company’s Series C
\nPreferred Stock, par value $.01 per share (the “Company Series C Stock”), shall
\nbe deemed to have <\/p>\n
-3-
\n 11<\/p>\n
delivered written notice to the Company, as transfer agent, pursuant to Section
\n4(c)(i) of the Company’s Second Amended and Restated Certificate of
\nIncorporation (the “Company’s Certificate of Incorporation”) electing to convert
\nall of the shares of the Company Series A Stock and Company Series C Stock then
\nheld by such Stockholder into shares of the Company’s Common Stock, par value
\n$.01 per share (the “Company Common Stock”). Without any further action on the
\npart of any holder of Company Series A Stock or Company Series C Stock, each
\nshare of Company Series A Stock and Company Series C Stock outstanding
\nimmediately prior to the Effective Time shall be deemed to have been converted
\ninto one share of Company Common Stock (subject to any applicable adjustments
\nfrom the date hereof through the Closing Date in accordance with the Company’s
\nCertificate of Incorporation). The shares of Company Common Stock deemed to be
\nissued upon conversion of the Company Series A Stock and the Company Series C
\nStock are referred to herein as the “Common Conversion Shares.”<\/p>\n
1.7.2 EXCHANGE RATIO; ESCROW SHARES<\/p>\n
As of the Effective Time, by virtue of the Merger and without any action
\non the part of the holders thereof:<\/p>\n
(a) All shares of any class of capital stock of the Company
\nheld by the Company as treasury shares shall be canceled.<\/p>\n
(b) The share of Company Series B Preferred Stock, par value
\n$.01 per share (“Company Series B Stock”), to the extent then outstanding, shall
\nbe cancelled and the holder of such share shall be paid the amount of $75,000 as
\nset forth in Section A.2.(a) of Article IV of the Company’s Certificate of
\nIncorporation. Subject to Section 1.7.2(g), each issued and outstanding share of
\nCompany Common Stock, including each of the Common Conversion Shares, other than
\nDissenting Shares (as defined in Section 1.7.2(f)), shall be converted into the
\nright to receive from Amazon.com a number of fully paid and nonassessable shares
\nof Amazon.com Common Stock determined by dividing (i) the number of Closing Date
\nShares by (ii) the Fully Diluted Common Stock Number. The “Fully Diluted Common
\nStock Number” shall mean (x) the total number of shares of Company Common Stock
\nissued and outstanding immediately prior to the Effective Time (including the
\ntotal number of Common Conversion Shares) plus (y) the total number of shares of
\nCompany Common Stock issuable upon exercise of Options (as defined in Section
\n1.7.2(e) below) outstanding immediately prior to the Effective Time and
\nregardless of restrictions on exercise. The quotient as derived above shall be
\nreferred to herein as the “Exchange Ratio.” The number of shares of Amazon.com
\nCommon Stock to be issued to each Stockholder of the Company under this Section
\n1.7.2(b) shall be calculated by <\/p>\n
-4-
\n 12<\/p>\n
aggregating all shares of Company Common Stock (including Common Conversion
\nShares) held, or deemed to be held pursuant to Section 1.7.1(b), by such
\nStockholder, so that such number of shares of Amazon.com Common Stock to be
\nissued shall be equal to the aggregate number of shares of Company Common Stock
\n(including Common Conversation Shares) held, or deemed to be held pursuant to
\nSection 1.7.1(b), by such Stockholder multiplied by the Exchange Ratio, with
\ncash paid in lieu of any fractional share of Amazon.com Common Stock pursuant to
\nSection 1.7.5 hereof.<\/p>\n
(c) Notwithstanding the foregoing, that number of Closing
\nDate Shares equal to the quotient of $15,000,000 divided by the Closing Price
\n(the “Escrow Shares”) shall be deposited in escrow with ChaseMellon Shareholder
\nServices L.L.C. (“ChaseMellon” or the “Escrow Agent”), to be held and
\nadministered in accordance with an Escrow Agreement, in substantially the form
\nattached hereto as Exhibit 1.7.2(c) (the “Escrow Agreement”), such Escrow Shares
\nto be withheld and deducted, pro rata, from the Closing Date Shares otherwise
\nissuable to each Stockholder. Fractional shares of Amazon.com Common Stock shall
\nnot be deposited in escrow. In lieu thereof, each Stockholder shall round up
\nsuch fractional share to the nearest whole number and deposit into escrow a full
\nshare of Amazon.com Common Stock for such fractional share. The Escrow Shares
\nshall be held by the Escrow Agent in book entry form. Notwithstanding the escrow
\nof the Escrow Shares, dividends or other distributions declared and paid on such
\nshares shall continue to be paid by Amazon.com to the Stockholders and all
\nvoting rights with respect to such shares shall inure to the benefit of and be
\nenjoyed by such stockholders. Any securities received by the Escrow Agent in
\nrespect of any Escrow Shares held in escrow as a result of any stock split or
\ncombination of shares of Amazon.com Common Stock, payment of a stock dividend or
\nother stock distribution in or on shares of Amazon.com Common Stock, or change
\nof Amazon.com Common Stock into any other securities pursuant to or as a part of
\na merger, consolidation, acquisition of property or stock, separation,
\nreorganization or liquidation of Amazon.com, or otherwise, shall be held by the
\nEscrow Agent as, and shall be included within the definition of, Escrow Shares.
\nThe Escrow Shares shall be available to satisfy any indemnification obligations
\npursuant to Article VIII.<\/p>\n
(d) Each issued and outstanding share of capital stock of
\nthe Purchaser shall continue to remain outstanding as a share of capital stock
\nof the Surviving Corporation.<\/p>\n
(e) Each outstanding option to purchase shares of Company
\nCommon Stock issued pursuant to the Company’s Amended and Restated 1998 Stock
\nOption and <\/p>\n
-5-
\n 13<\/p>\n
Grant Plan (the “Company Plan”), whether or not vested or exercisable (each an
\n“Option”), shall be assumed by Amazon.com and shall constitute an option to
\nacquire, on the same vesting terms, and on substantially the same other terms
\nand conditions as were applicable under such assumed Option, that number of
\nshares of Amazon.com Common Stock equal to the product of the Exchange Ratio and
\nthe number of shares of Company Common Stock subject to such Option, at a price
\nper share (rounded to the nearest $0.01) equal to the aggregate exercise price
\nfor the shares of Company Common Stock subject to such Option divided by the
\nnumber of full shares of Amazon.com Common Stock deemed to be purchasable
\npursuant to such Option; provided, however, that (i) the number of shares of
\nAmazon.com Common Stock that may be purchased upon exercise of such Option shall
\nnot include any fractional shares, and Amazon.com shall pay to the holder
\nthereof as soon as practicable after the assumption thereof an amount of cash
\nequal to such fraction multiplied by the average of the high and low selling
\nprice of Amazon.com Common Stock as reported on the Nasdaq Stock Market on the
\nassumption date, and (ii) all Options shall be deemed to be nonqualified stock
\noptions. Amazon.com shall assume the obligations of the Company under the
\nCompany Plan and shall comply with the terms of such plan as they apply to the
\nOptions assumed as set forth above. At the Closing, Amazon.com shall provide
\nnotice, by delivery to the Stockholder Representative of notices in
\nsubstantially the form attached hereto as Exhibit 1.7.2(e), to each holder of an
\nassumed Option regarding the terms of such assumed Option.<\/p>\n
(f) Holders of shares of Company Common Stock who have
\ncomplied with all the requirements for perfecting dissenters’ rights, as
\nrequired under the Delaware Law, shall be entitled to their rights under
\nDelaware Law with respect to such shares (the “Dissenting Shares”).
\nNotwithstanding the foregoing, if any holder of Dissenting Shares shall
\neffectively withdraw or lose (through failure to perfect or otherwise) the right
\nto dissent, then, as of the later of the Effective Time and the occurrence of
\nsuch event, such holder’s shares shall automatically be converted into and
\nrepresent only the right to receive the shares of Amazon.com Common Stock to
\nwhich such holder is then entitled under this Agreement and Delaware Law,
\nwithout interest thereon and upon surrender of the certificate representing such
\nshares. Notwithstanding any provision of this Agreement to the contrary, any
\nDissenting Shares held by a Stockholder who has perfected dissenter’s rights for
\nsuch shares in accordance with Delaware Law shall not be converted into
\nAmazon.com Common Stock pursuant to this Section 1.7.2.<\/p>\n
(g) If, prior to the Effective Time, Amazon.com
\nrecapitalizes through a split-up of its outstanding shares of capital stock into
\na greater number, or a combination of its outstanding shares of capital stock
\ninto a lesser number, reorganizes, <\/p>\n
-6-
\n 14<\/p>\n
reclassifies or otherwise changes its outstanding shares of capital stock into
\nthe same or a different number of shares of other classes of capital stock, or
\ndeclares a dividend on its outstanding shares of capital stock payable in shares
\nor securities convertible into shares, the number of shares of Amazon.com Common
\nStock into which the shares of Company Common Stock (including Common Conversion
\nShares) are to be converted, and the number of shares of Amazon.com Common Stock
\nissuable upon the exercise of each assumed Option, will be adjusted
\nappropriately so as to maintain the proportionate interests of the holders of
\nthe Company Capital Stock (as defined in Section 1.7.4(a)) and Options and the
\nholders of shares of capital stock of Amazon.com.<\/p>\n
1.7.3 POST-CLOSING MERGER CONSIDERATION<\/p>\n
(a) Subject to the completion of the Merger and the obtaining of all
\nrelated authorizations or approvals required under the Hart-Scott-Rodino
\nAntitrust Improvements Act of 1976, as amended (the “HSR Act”), within five
\nbusiness days after the first anniversary of the Closing Date Amazon.com shall,
\non the terms set forth in this Section, issue additional shares of Amazon.com
\nCommon Stock to the Stockholders of the Company as of the Closing Date, as part
\nof the Merger Consideration, and make payments to certain individuals who hold
\nOptions as of the Closing Date. The date on which such shares are issued and
\nsuch payments are made is referred to herein as the “Post-Closing Issuance
\nDate.”<\/p>\n
(b) The number of shares of Amazon.com Common Stock to be issued
\npursuant to this Section 1.7.3 (the “Post-Closing Shares”) shall be determined
\nas follows:<\/p>\n
(i) in the event that the First Anniversary Percentage (as
\n defined below) is greater than or equal to 66.7%, Amazon.com shall issue
\n to the Stockholders an aggregate number of fully paid and nonassessable
\n shares of Amazon.com Common Stock equal to the product of (A) the
\n Outstanding Stock Percentage (as defined below) multiplied by (B) the
\n quotient of (1) $50,000,000 divided by (2) the closing sale price of
\n Amazon.com Common Stock as reported on the Nasdaq Stock Market on the
\n second trading day immediately preceding the Post-Closing Issuance Date
\n (the “Post-Closing Price”), and<\/p>\n
(ii) in the event that the First Anniversary Percentage is
\n less than 66.7%, Amazon.com shall issue to the Stockholders an aggregate
\n number of fully paid and nonassessable shares of Amazon.com Common Stock
\n equal to the product of (A) the Outstanding Stock Percentage <\/p>\n
-7-
\n 15<\/p>\n
multiplied by (B) the quotient of (1) the product of $50,000,000
\n multiplied by the First Anniversary Percentage divided by (2) the
\n Post-Closing Price.<\/p>\n
(c) No payments will be made to any holder of an Option (an
\n“Optionholder”) pursuant to this Section 1.7.3 unless such Optionholder
\ncommences employment with an Amazon.com Entity (as defined in Section 1.7.3(d))
\nwithin the time periods specified in Section 6.13 and either (x) continues to be
\nemployed by an Amazon.com Entity as of the first anniversary of the Closing Date
\nor (y) is no longer employed by an Amazon.com Entity as of the first anniversary
\nof the Closing Date as a result of the termination of such Optionholder’s
\nemployment with an Amazon.com Entity by an Amazon.com Entity without Cause (as
\ndefined below) or by reason of his or her death or Disability (as defined
\nbelow). Subject the other terms of this Section 1.7.3(c), the amount of any
\npayment under this Section 1.7.3 to an individual who holds an Option as of the
\nEffective Time shall be determined as follows:<\/p>\n
(i) in the event that the First Anniversary Percentage is
\n greater than or equal to 66.7%, Amazon.com shall, subject to the other
\n terms of this Section, pay to the Optionholder an amount equal to the
\n product of the Option Percentage (as defined below) for such
\n Optionholder multiplied by $50,000,000.<\/p>\n
(ii) in the event that the First Anniversary Percentage is
\n less than 66.7%, Amazon.com shall, subject to the other terms of this
\n Section, pay to the Optionholder an amount equal to the product of the
\n Option Percentage for such Optionholder multiplied by $50,000,000 and by
\n the First Anniversary Percentage.<\/p>\n
Notwithstanding the foregoing, to the extent any Optionholders are not entitled
\nto receive any payments (such forfeited payments being, collectively, the
\n“Forfeited Payments”) pursuant to this Section 1.7.3(c), the amount of the
\npayments made to the Optionholders entitled to receive payments pursuant to this
\nSection 1.7.3(c) shall be increased, on a pro rata basis (based on the number of
\nshares of Company Common Stock issuable upon exercise of Options held by each
\nsuch participating Optionholder immediately prior to the Effective Time,
\nregardless of restrictions on exercise), by the amount of the Forfeited
\nPayments.<\/p>\n
(d) The term “First Anniversary Percentage” shall mean the sum of
\nthe percentage values assigned to each of the individuals designated as “Central
\nEmployees” on Exhibit 1.7.3 attached hereto (the “Central Employees”) opposite
\nthe name of each such Central Employee on such Exhibit 1.7.3, who commences<\/p>\n
-8-
\n 16<\/p>\n
employment with Amazon.com or a wholly owned subsidiary of Amazon.com or a
\nsuccessor of Amazon.com (each an “Amazon.com Entity”) within the time periods
\nspecified in Section 6.13 and either (x) continues to be employed by an
\nAmazon.com Entity as of the first anniversary of the Closing Date or (y) is no
\nlonger employed by an Amazon.com Entity as of the first anniversary of the
\nClosing Date as a result of the termination of such Central Employee’s
\nemployment with an Amazon.com Entity by an Amazon.com Entity without Cause or by
\nreason of death or Disability.<\/p>\n
As used herein, the term “Cause” shall mean (i) any act of fraud or
\nembezzlement by an employee; (ii) any material breach by an employee of the
\nConfidentiality, Noncompetition and Invention Assignment Agreement entered into
\nwith Amazon.com; (iii) the conviction of a felony involving an act of
\ndishonesty, moral turpitude, deceit or fraud; (iv) any act of dishonesty or
\nmisconduct by an employee in connection with his or her responsibilities as an
\nemployee or otherwise which materially impairs Amazon.com’s business, good will
\nor reputation or which compromises the employee’s ability to represent
\nAmazon.com with the public; or (v) an employee’s willful and material failure to
\nperform his or her lawful duties as an employee of Amazon.com as determined by
\none or more senior executives of Amazon.com in good faith and the failure to
\n“cure” such misconduct within a period of 30 days following the employee’s
\nreceipt of written notice of such misconduct.<\/p>\n
The term “Disability” shall mean a certification by an independent
\nmedical doctor (selected by the Amazon.com’s health or disability insurer) that
\nthe employee has for either three months consecutive or four months
\nnon-consecutive, in any twelve-month period, been physically or mentally
\ndisabled or incapacitated in a manner which seriously interferes with his
\nability to perform his or her essential job responsibilities and such health
\ncondition has not been cured or treated in such a manner that the prognosis is
\nfor no further disability.<\/p>\n
The term “Outstanding Stock Percentage” shall mean a fraction, the
\nnumerator of which shall equal the number of shares of Company Common Stock
\noutstanding immediately prior to the Effective Time (including all Common
\nConversion Shares), and the denominator of which shall equal the Fully Diluted
\nCommon Stock Number.<\/p>\n
The term “Option Percentage” shall mean, with respect to each individual
\nthat holds Options immediately prior to the Effective Time, a fraction, the
\nnumerator of which equals the number of shares of Common Stock issuable upon the
\nexercise of the Options held by such individual immediately prior to the
\nEffective Time, regardless of restrictions on exercise, and the denominator of
\nwhich shall equal the Fully Diluted Common Stock Number.<\/p>\n
-9-
\n 17<\/p>\n
1.7.4 EXCHANGE OF CERTIFICATES<\/p>\n
(a) Provided that the Stockholder has delivered to ChaseMellon, as
\nexchange agent (the “Exchange Agent”), a letter of transmittal in the form set
\nforth as Exhibit 1.7.4 hereto (the “Letter of Transmittal”) together with
\ndocuments delivered as required therein, including certificates representing
\nshares of Company Common Stock or Company Preferred Stock (collectively,
\n“Company Capital Stock”) for cancellation, the Exchange Agent shall, on the
\nClosing Date, make available at its offices in Seattle, Washington, and each
\nStockholder of the Company will be entitled to receive, certificates
\nrepresenting the number of shares of Amazon.com Common Stock that such
\nStockholder is entitled to receive pursuant to Section 1.7.2 hereof; provided,
\nhowever, that the certificates representing the Escrow Shares shall (i) be
\nretained by the Escrow Agent in accordance with the provisions of the Escrow
\nAgreement, (ii) not be issued in certificated form and (iii) held by the Escrow
\nAgent in book entry form. In the event that any certificates representing shares
\nof Company Capital Stock shall have been lost, stolen or destroyed, upon the
\nmaking of an affidavit of that fact by the Stockholder claiming such certificate
\nto be lost, stolen or destroyed, Amazon.com shall issue in exchange for such
\nlost, stolen or destroyed certificate the shares of Amazon.com Common Stock that
\nsuch Stockholder is entitled to receive pursuant to Section 1.7.2 hereof;
\nprovided, however, that Amazon.com may in its discretion and as a condition
\nprecedent to the issuance thereof, require such Stockholder to provide
\nAmazon.com with an indemnity agreement against any claim that may be made
\nagainst Amazon.com with respect to the certificate alleged to have been lost,
\nstolen or destroyed. The shares of Amazon.com Common Stock that each Stockholder
\nof the Company shall be entitled to receive in connection with the Merger
\npursuant to Section 1.7.2 and the Escrow Shares shall be deemed to have been
\nissued at the Effective Time. If the Merger Consideration (or any portion
\nthereof) is to be delivered to any person other than the person in whose name
\nthe certificate or certificates representing shares of Company Capital Stock
\nsurrendered in exchange therefor is registered, it shall be a condition to such
\nexchange that the person requesting such exchange shall pay to Amazon.com any
\ntransfer or other taxes required by reason of the payment of the Merger
\nConsideration to a person other than the registered holder of the certificate or
\ncertificates so surrendered, or shall establish to the satisfaction of
\nAmazon.com that such tax has been paid or is not applicable. Notwithstanding
\nanything to the contrary, neither Amazon.com nor any other party hereto shall be
\nliable to a holder of shares of Company Capital Stock for any Merger
\nConsideration delivered to a public official pursuant to applicable law,
\nincluding, without limitation, abandoned property, escheat and similar laws.<\/p>\n
(b) Amazon.com or the Exchange Agent will be entitled to deduct and<\/p>\n
-10-
\n 18<\/p>\n
withhold from the Merger Consideration and the payments to be made pursuant to
\nSection 1.7.3(c) such amounts as Amazon.com or the Exchange Agent are required
\nto deduct and withhold with respect to the making of such payments under the
\nCode, or any provision of state, local or foreign tax law. To the extent that
\namounts are so withheld, such amounts will be treated for all purposes of this
\nAgreement as having been paid to the former holder of the Company Capital Stock
\nor, in the case of payments pursuant to Section 1.7.3(c), to the recipient
\nthereof, in respect of whom such deduction and withholding were made by
\nAmazon.com or the Exchange Agent.<\/p>\n
1.7.5 NO FRACTIONAL SHARES<\/p>\n
No certificates or scrip representing fractional shares of Amazon.com
\nCommon Stock shall be issued by virtue of the Merger, and no dividend, stock
\nsplit or other distribution with respect to Amazon.com Common Stock shall relate
\nto any such fractional interest, and any such fractional interests shall not
\nentitle the owner thereof to vote or to any rights of a security holder. In lieu
\nthereof, Amazon.com shall pay to the holder of shares of Company Capital Stock
\nwho would otherwise be entitled to a fraction of a share of Amazon.com Common
\nStock, as soon as practicable after the Effective Date (and in the same timely
\nmanner required for delivery of certificates of Amazon.com Common Stock provided
\nin Section 1.7.4) or the Post-Closing Issuance Date, as the case may be, an
\namount in cash equal to such fraction multiplied by (i) the Closing Price, with
\nrespect to any fractional shares constituting Closing Date Shares, or (ii) the
\nPost-Closing Price, with respect to any fractional shares constituting
\nPost-Closing Date Shares.<\/p>\n
1.7.6 NO FURTHER TRANSFERS<\/p>\n
After the Effective Time, there shall be no transfers of any shares of
\nCompany Capital Stock on the stock transfer books of the Surviving Corporation.
\nIf, after the Effective Time, certificates formerly representing shares of
\nCompany Capital Stock are presented to the Surviving Corporation, they shall be
\nforwarded to Amazon.com and be canceled and exchanged in accordance with this
\nSection 1.7, subject to applicable law in the case of Dissenting Shares.<\/p>\n
1.8 STOCKHOLDER REPRESENTATIVE<\/p>\n
Each Stockholder hereby irrevocably authorizes and appoints Stig Leschly
\n(the “Stockholder Representative”), as such Stockholder’s representative and
\ntrue and lawful attorney-in-fact and agent to act in such Stockholder’s name,
\nplace and stead as contemplated by Sections 6.10 and Articles V and VIII, and to
\nexecute in the name and on behalf of such Stockholder the Escrow Agreement and
\nany other agreement, <\/p>\n
-11-
\n 19<\/p>\n
certificate, instrument or document to be delivered by the Stockholders in
\nconnection with the Escrow Agreement. If the Stockholder Representative or any
\nsuccessor shall resign, die, or become unable to act as the Stockholder
\nRepresentative, a replacement shall promptly be appointed by a writing signed by
\nStockholders who initially received a majority of the Closing Date Shares;
\nprovided, however, that such newly appointed Stockholder Representative shall
\nhave been a member of the Board of Directors of the Company immediately prior to
\nthe Closing Date. Any such successor Stockholder Representative shall have the
\nsame powers and duties as if appointed as the original Stockholder
\nRepresentative hereunder. The Stockholder Representative or the Stockholders
\nshall promptly notify Amazon.com of the appointment of a successor Stockholder
\nRepresentative. The Stockholders (other than the Stockholder Representative)
\nshall, jointly and severally, indemnify the Stockholder Representative for, and
\nhold him harmless against, any loss, liability, claim or expense, including
\nreasonable attorney’s fees, arising out of or in connection with his duties as
\nStockholder Representative under this Agreement and the Escrow Agreement,
\nincluding the costs and expenses of defending himself against any such loss,
\nliability, claim or expense in connection herewith, unless such loss, liability,
\nclaim or expense shall have been determined by a court of competent jurisdiction
\nto be a result of the Stockholder Representative’s gross negligence or
\nintentional misconduct.<\/p>\n
1.9 AMENDMENT TO PROVIDE FOR ALTERNATIVE MERGER STRUCTURES<\/p>\n
If at any time prior to the Closing Date, Amazon.com elects to have the
\nCompany be the Surviving Corporation by means of the merger of the Purchaser or
\nany other wholly owned subsidiary of Amazon.com with and into the Company, or to
\nhave the Company merged with and into Amazon.com or any wholly owned subsidiary
\nof Amazon.com other than the Purchaser, the parties shall promptly enter into an
\namendment to this Agreement to so provide, so long as such action does not (i)
\nresult in a breach of a representation or warranty set forth in Article II
\nhereof or the inability to satisfy any of the conditions set forth in Articles
\nIV and V hereof, or (ii) disqualify the treatment of the Merger for tax purposes
\nas a reorganization within the meaning of Section 368(a) of the Code. Section
\n1.10(b) shall be amended as necessary to reflect any such change under this
\nSection 1.9. To the extent Amazon.com or a wholly owned subsidiary thereof other
\nthan Amazon.com Auctions, Inc. is a constituent corporation of the Merger,
\nAmazon.com or such other subsidiary shall be deemed to be the “Purchaser” as
\ndefined herein.<\/p>\n
1.10 TAX FREE REORGANIZATION<\/p>\n
(a) Except as otherwise required by the Internal Revenue Service (the
\n“IRS”) pursuant to a determination (as defined in Section 1313 of the Code) or
\notherwise, the <\/p>\n
-12-
\n 20<\/p>\n
parties shall not take a position on any tax returns inconsistent with the
\ntreatment of the Merger for tax purposes as a reorganization within the meaning
\nof Section 368(a) of the Code by reason of Section 368(a)(2)(D) of the Code, in
\nthe case of the merger of the Company with and into the Purchaser or any other
\nwholly owned subsidiary of Amazon.com with the Purchaser or such other
\nsubsidiary being the surviving corporation, by reason of Section 368(a)(2)(E) of
\nthe Code, in the case of any merger of the Purchaser or any other wholly owned
\nsubsidiary of Amazon.com with and into the Company with the Company being the
\nsurviving corporation, or by reason of Section 368(a) itself, in the case of the
\nmerger of the Company with and into Amazon.com.<\/p>\n
(b) Amazon.com represents, solely for tax purposes, now, and as of the
\nClosing Date, (i) that it presently intends to continue the Company’s historic
\nbusiness or use a significant portion of the Company’s business assets in
\nbusiness in a manner that satisfies the continuity of business enterprise
\nrequirement set forth in Treasury Regulation Section 1.368-1(d), and (ii) that
\nit has no present plan or intention following the Merger to issue additional
\nshares of the Surviving Corporation that would result in Parent losing control
\nof the Surviving Corporation. Neither such representation nor anything else
\ncontained herein shall constitute a representation, warranty or agreement with
\nrespect to any Tax consequences to the Company or its stockholders arising under
\nthis Agreement or as a result of the transactions contemplated hereby.<\/p>\n
(c) The Company represents, solely for tax purposes, that it has not
\ndisposed of or committed itself to dispose of, any assets on or before the
\nEffective Date that would prevent the Merger from meeting the requirement that
\n“substantially all of the assets” of the Company must be acquired in the Merger.
\nNeither such representation nor anything else contained herein shall constitute
\na representation or warranty with respect to any Tax consequences to Amazon.com
\nor the Purchaser arising under this Agreement or as a result of the transactions
\ncontemplated hereby.<\/p>\n
(d) Amazon.com agrees to cooperate with the Company in providing
\ninformation and certifications reasonably requested by the Company to obtain the
\nlegal opinion referred to in Section 5.9 of this Agreement.<\/p>\n
ARTICLE II – REPRESENTATIONS AND WARRANTIES OF THE COMPANY<\/p>\n
Except as is otherwise set forth with appropriate Section references in
\nthe Company Disclosure Memorandum attached as Exhibit 2 (the “Company Disclosure
\nMemorandum”), and in order to induce Amazon.com and the Purchaser to enter into<\/p>\n
-13-
\n 21<\/p>\n
and perform this Agreement and the other agreements and certificates that are
\nrequired to be executed pursuant to this Agreement (collectively, the “Operative
\nDocuments”), the Company represents and warrants to Amazon.com and the Purchaser
\nas of the date of this Agreement and as of the Closing as follows in this
\nArticle II. For purposes of this Article II, references to “knowledge” of the
\nCompany shall mean the actual knowledge of Stig Leschly, Paul Knutson, Sridhar
\nRao, Timothy Capron, Jordan Olin, or John Chase.<\/p>\n
2.1 ORGANIZATION<\/p>\n
The Company is a corporation duly organized, validly existing and in
\ngood standing under the laws of the State of Delaware. The Company has all
\nrequisite corporate power and authority to own, operate and lease its properties
\nand assets, to carry on its business as now conducted and as currently proposed
\nto be conducted, and to enter into and perform its obligations under this
\nAgreement and the other Operative Documents to which the Company is a party, and
\nto consummate the transactions contemplated hereby and thereby. The Company is
\nduly qualified and licensed as a foreign corporation to do business and is in
\ngood standing in each jurisdiction in which the character of the Company’s
\nproperties occupied, owned or held under lease or the nature of the business
\nconducted by the Company makes such qualification or licensing necessary, except
\nwhere the failure to be so qualified or in good standing would not have a
\nCompany Material Adverse Effect. For purposes of this Agreement, the term
\n“Company Material Adverse Effect” shall mean a material adverse effect on the
\nbusiness, operations, assets, liabilities, condition (financial or otherwise) or
\nprospects of the Company.<\/p>\n
2.2 ENFORCEABILITY<\/p>\n
The Company has all requisite corporate power and authority to execute,
\ndeliver and perform its obligations under this Agreement and each of the other
\nOperative Documents to which it is a party and each of the certificates,
\ninstruments and documents executed or delivered by it pursuant to the terms of
\nthis Agreement. Except for the consent of the Company’s Stockholders, all
\ncorporate action on the part of the Company necessary for the authorization,
\nexecution, delivery and performance of this Agreement and the other Operative
\nDocuments to which the Company is a party, the consummation of the Merger, and
\nthe performance of all the Company’s obligations under this Agreement and the
\nother Operative Documents to which the Company is a party has been taken. This
\nAgreement has been, and each of the other Operative Documents to which the<\/p>\n
-14-
\n 22<\/p>\n
Company is a party at the Closing will have been, duly executed and delivered by
\nthe Company, and this Agreement is, and, when executed and delivered by the
\nCompany, each of the other Operative Documents to which the Company is a party
\nwill be at the Closing, a legal, valid and binding obligation of the Company,
\nenforceable against the Company in accordance with its terms, except as to the
\neffect, if any, of (a) applicable bankruptcy and other similar laws affecting
\nthe rights of creditors generally, (b) rules of law governing specific
\nperformance, injunctive relief and other equitable remedies, and (c) the
\nenforceability of provisions requiring indemnification in connection with the
\noffering, issuance or sale of securities.<\/p>\n
2.3 CAPITALIZATION<\/p>\n
(a) The authorized capital stock of the Company consists of 7,604,083
\nshares of Company Common Stock and 4,204,083 shares of the Company’s Preferred
\nStock, par value $.01 per share (the “Company Preferred Stock”), of which
\n2,000,000 shares are designated as Series A Preferred Stock, one share is
\ndesignated as Series B Preferred Stock and 2,204,082 shares are designated as
\nSeries C Preferred Stock.<\/p>\n
(b) As of the date of this Agreement, the issued and outstanding capital
\nstock of the Company consists solely of 2,250,000 shares of Company Common
\nStock, 2,000,000 shares of Series A Preferred Stock, one share of Series B
\nPreferred Stock, and 2,204,082 shares of Series C Preferred Stock. All of such
\nshares are, and immediately prior to the Effective Time will be, held of record
\nand, to the knowledge of the Company, beneficially by the Stockholders of the
\nCompany as set forth on Schedule 2.3(b) to the Company Disclosure Memorandum.
\nSchedule 2.3(b) also separately indicates the number of shares of Company Common
\nStock into which the outstanding Company Preferred Stock is convertible. The
\noutstanding shares of Company Capital Stock as of the date hereof are, and
\nimmediately prior to the Effective Time all then outstanding shares of Company
\nCapital Stock will be, duly authorized and validly issued, fully paid and
\nnonassessable, and issued in compliance with all applicable federal and state
\nsecurities laws. To the knowledge of the Company, no Person (as defined in
\nSection 2.5 hereof) other than the Stockholders holds any interest in any of the
\noutstanding shares. True and correct copies of the stock records of the Company,
\nshowing all issuances and transfers of shares of capital stock of the Company
\nsince inception, have been provided to Amazon.com or its counsel.<\/p>\n
(c) As of the date of this Agreement, other than Options to purchase up
\nto 645,117 shares of Company Common Stock which have been granted under the
\nCompany Plan or other Stock Purchase Rights (as defined below) set forth on
\nSchedule 2.3(c) to the Disclosure Schedule, there are no outstanding rights of
\nfirst refusal or offer, co-sale rights, preemptive rights, Stock Purchase Rights
\nor other agreements, either directly or indirectly, for the purchase or
\nacquisition from<\/p>\n
-15-
\n 23<\/p>\n
the Company or, to the knowledge of the Company, any Stockholder of any shares
\nof Company Capital Stock or any securities convertible into or exchangeable for
\nshares of Company Capital Stock, and the Company is not committed to issue or
\ngrant any such rights, Stock Purchase Rights or other agreements. Set forth on
\nSchedule 2.3(c) to the Company Disclosure Memorandum is a spreadsheet accurately
\nreflecting the number of such Options and other Stock Purchase Rights
\noutstanding, the grant or issue dates, vesting schedules and exercise or
\nconversion prices thereof, and, in each case, the identities of the holders and
\nan indication of their relationships to the Company (if any exist other than as
\na security holder). The Company has delivered to Amazon.com true and correct
\ncopies of the Company Plan, the form of stock option agreements relating to
\nOptions granted thereunder, all other agreements with respect to Stock Purchase
\nRights, and all material deviations therefrom. Schedule 2.3(c) to the Disclosure
\nMemorandum also identifies all Options and Stock Purchase Rights that have been
\noffered in connection with any employee or consulting agreement, arrangement or
\nunderstanding but that, as of the date hereof, have not been issued or granted.
\nThe term “Stock Purchase Rights” shall mean all rights, warrants or options,
\nvested or unvested, to acquire Company Capital Stock, regardless of restrictions
\nor exercise, and securities (including, without limitation, the Company
\nPreferred Stock) and notes convertible or exchangeable at any time, into Company
\nCapital Stock, regardless of restrictions on conversion.<\/p>\n
(d) The Company is not a party or subject to any agreement or
\nunderstanding, and, to the knowledge of the Company, there is no agreement or
\nunderstanding between any Persons that affects or relates to the voting or
\ngiving of written consents with respect to any securities of the Company or the
\nvoting by any director of the Company. No Stockholder or any affiliate thereof
\nis indebted to the Company, and the Company is not indebted to any Stockholder
\nor any affiliate thereof. The Company is not under any contractual or other
\nobligation to register any of its presently outstanding securities or any of its
\nsecurities that may hereafter be issued.<\/p>\n
(e) Schedule 2.3(e) to the Company Disclosure Schedule describes all
\nrights granted in favor of the Company to repurchase or to receive upon
\nforfeiture any securities of the Company.<\/p>\n
(f) Except as described on Schedule 2.3(f) to the Company Disclosure
\nSchedule, all Options and Stock Purchase Rights have been granted or issued at
\nfair market value, as determined by the Company’s Board of Directors at the date
\nof grant or issuance.<\/p>\n
-16-
\n 24<\/p>\n
2.4 SUBSIDIARIES AND AFFILIATES<\/p>\n
Except as set forth in Schedule 2.4 to the Company Disclosure
\nMemorandum, (a) the Company does not own or control, and has not in the past
\nowned or controlled, directly or indirectly, any corporation, partnership,
\nlimited liability company or other business entity and (b) the Company does not
\nown, directly or indirectly, any ownership, equity, or voting interest in, or
\notherwise control, any corporation, partnership, joint venture or other entity,
\nand has no agreement or commitment to purchase any such interest.<\/p>\n
2.5 NO APPROVALS; NO CONFLICTS<\/p>\n
The execution, delivery and performance by the Company of this Agreement
\nand the other Operative Documents to which the Company is a party and the
\nconsummation of the transactions contemplated hereby and thereby will not (a)
\nconstitute a violation (with or without the giving of notice or lapse of time,
\nor both) of any provision of law or any judgment, decree, order, regulation or
\nrule of any court or other governmental authority applicable to the Company,
\nexcept for such violations which would not, both individually and in the
\naggregate, have a Company Adverse Material Effect, (b) require any consent,
\napproval or authorization of, or declaration, filing or registration with, any
\nperson, corporation, partnership, joint venture, association, organization,
\nother entity or governmental or regulatory authority (a “Person”), except (i)
\ncompliance with applicable securities laws, (ii) the filing of all documents
\nnecessary to consummate the Merger with the Delaware Secretary of State, (iii)
\nthe approval by the Stockholders of the transactions contemplated hereby, as
\nprovided under Delaware Law and the Certificate of Incorporation and Bylaws of
\nthe Company, (iv) the notification requirements of the HSR Act, and (v) such
\nconsents, approvals, authorizations, declarations, filings and registrations the
\nfailure of which to obtain or effect would not, both individually and in the
\naggregate, have a Company Material Adverse Effect, (c) result in a default (with
\nor without the giving of notice or lapse of time, or both) under, or
\nacceleration or termination of, or the creation in any party of the right to
\naccelerate, terminate, modify or cancel, any agreement, lease, note or other
\nrestriction, encumbrance, obligation or liability to which the Company is a
\nparty or by which it is bound or to which any assets of the Company are subject,
\nexcept for such defaults, accelerations, terminations, or creations of such
\nrights which would not, both individually and in the aggregate, have a Company
\nMaterial Adverse Effect, (d) result in the creation of any Encumbrance (as
\ndefined in Section 2.9(d)) upon any material assets of the Company or, to the
\nknowledge of the Company, upon any outstanding shares or other securities of the
\nCompany, (e) conflict with or result in a breach of or constitute a default
\nunder any provision of the Certificate of Incorporation <\/p>\n
-17-
\n 25<\/p>\n
or Bylaws of the Company, or (f) invalidate or adversely affect any permit,
\nlicense or authorization currently material to the conduct of the business of
\nthe Company.<\/p>\n
2.6 FINANCIAL STATEMENTS<\/p>\n
The Company has delivered to Amazon.com (a) unaudited balance sheets,
\nstatements of income and expense, statements of cash flow and statements of
\nstockholders’ equity of the Company as of or for the fiscal years ended December
\n31, 1997 and 1998, (b) an unaudited statement of income and expense, statement
\nof cash flow and statement of stockholders’ equity of the Company for the
\ntwo-month period ended February 28, 1999 and (c) an unaudited consolidated
\nbalance sheet as of March 31, 1999. All the foregoing financial statements are
\nherein referred to as the “Unaudited Financial Statements”; the Unaudited
\nFinancial Statements and the Audited Financial Statements (as defined in Section
\n6.17) are referred to herein, collectively, as the “Financial Statements”). The
\nunaudited balance sheet of the Company as of December 31, 1998 is herein
\nreferred to as the “Company Balance Sheet.” The Unaudited Financial Statements
\nhave been, and the Audited Financial Statements will be, prepared in accordance
\nwith generally accepted accounting principles in the United States (“GAAP”)
\n(except, with respect to the Unaudited Financial Statements, for normal year-end
\nadjustments and the absence of footnotes and other disclosures required solely
\nfor audited financial statements) on a basis consistent with prior accounting
\nperiods and fairly present or, in the case of the Audited Financial Statements,
\nwill present, in all material respects the financial position, results of
\noperations and changes in financial position of the Company as of the dates and
\nfor the periods indicated therein. The Company has no liabilities or obligations
\nof any nature (absolute, contingent or otherwise) that are not fully reflected
\nor reserved against in the Company Balance Sheet and that would be required
\nunder GAAP to be reflected or reserved, except (x) liabilities or obligations
\nincurred since the date of the Company Balance Sheet in the ordinary course of
\nbusiness and consistent with past practice that are not in excess of $50,000 in
\nthe aggregate or $20,000 individually and (y) as otherwise set forth on Schedule
\n2.6 to the Company Disclosure Memorandum. The Company maintains standard systems
\nof accounting that are adequate for its business. The Company is not a
\nguarantor, indemnitor, surety or other obligor of any indebtedness of any other
\nPerson. The Company’s practices with respect to capitalizing software
\ndevelopment costs, as reflected in the Financial Statements, are reasonable, in
\naccordance with industry standards and consistent with the advice of the
\nCompany’s independent accountants.<\/p>\n
2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS<\/p>\n
Except for transactions specifically contemplated in this Agreement or
\nas set <\/p>\n
-18-
\n 26<\/p>\n
forth on Schedule 2.7 to the Company Disclosure Memorandum, since the date of
\nthe Company Balance Sheet, neither the Company nor any of its officers or
\ndirectors in their representative capacities on behalf of the Company have:<\/p>\n
(a) taken any action or entered into or agreed to enter into any
\ntransaction, agreement or commitment other than in the ordinary course of
\nbusiness;<\/p>\n
(b) forgiven or canceled any indebtedness or waived any claims or
\nrights of material value (including, without limitation, any indebtedness owing
\nby any stockholder, officer, director, employee or affiliate of the Company);<\/p>\n
(c) granted, other than in the ordinary course of business and
\nconsistent with past practice, any increase in the compensation of directors,
\nofficers, employees or consultants (including any such increase pursuant to any
\nemployment agreement or bonus, pension, profit-sharing, lease payment or other
\nplan or commitment) or any increase in the compensation payable or to become
\npayable to any director, officer, employee or consultant;<\/p>\n
(d) suffered any change having a Company Material Adverse Effect;<\/p>\n
(e) borrowed or agreed to borrow any funds, incurred or become
\nsubject to, whether directly or by way of assumption or guarantee or otherwise,
\nany obligations or liabilities (absolute, accrued, contingent or otherwise)
\nindividually in excess of $20,000 or in excess of $50,000 in the aggregate,
\nexcept liabilities and obligations (i) that are incurred in the ordinary course
\nof business and consistent with past practice or (ii) that would not be required
\nto be reflected or reserved against in a balance sheet prepared in accordance
\nwith GAAP, or increased, or experienced any change in any assumptions underlying
\nor methods of calculating, any bad debt, contingency or other reserves;<\/p>\n
(f) paid, discharged or satisfied any material claims,
\nliabilities or obligations (absolute, accrued, contingent or otherwise) other
\nthan the payment, discharge or satisfaction in the ordinary course of business
\nand consistent with past practice of claims, liabilities and obligations
\nreflected or reserved against in the Company Balance Sheet or incurred in the
\nordinary course of business and consistent with past practice since the date of
\nthe Company Balance Sheet;<\/p>\n
(g) knowingly permitted or allowed any of its property or assets
\n(real, personal or mixed, tangible or intangible) to be subjected to any
\nmaterial mortgage, pledge, lien, security interest, encumbrance, restriction or
\ncharge which remains in existence on the date hereof, except in the ordinary
\ncourse of business and consistent <\/p>\n
-19-
\n 27<\/p>\n
with past practice;<\/p>\n
(h) purchased or sold, transferred or otherwise disposed of any
\nof its material properties or assets (real, personal or mixed, tangible or
\nintangible) other than as contemplated by this Agreement;<\/p>\n
(i) disposed of or permitted to lapse any rights to the use of
\nany trademark, trade name, patent or copyright, or disposed of or disclosed to
\nany Person without obtaining an appropriate confidentiality agreement from any
\nsuch Person any trade secret, formula, process or know-how not theretofore a
\nmatter of public knowledge, except for such dispositions, lapses and disclosures
\nwhich would not, both individually and in the aggregate, have a Company Material
\nAdverse Effect;<\/p>\n
(j) made any single capital expenditure or commitment in excess
\nof $20,000 for additions to property, plant, equipment or intangible capital
\nassets or made aggregate capital expenditures in excess of $50,000 for additions
\nto property, plant, equipment or intangible capital assets;<\/p>\n
(k) made any change in accounting methods or practices or
\ninternal control procedure;<\/p>\n
(l) issued any capital stock or other securities, or declared,
\npaid or set aside for payment any dividend or other distribution in respect of
\nits capital stock, or redeemed, purchased or otherwise acquired, directly or
\nindirectly, any shares of capital stock or other securities of the Company, or
\notherwise permitted the withdrawal by any of the holders of Company Capital
\nStock of any cash or other assets (real, personal or mixed, tangible or
\nintangible), in compensation, indebtedness or otherwise, other than payments of
\ncompensation in the ordinary course of business and consistent with past
\npractice;<\/p>\n
(m) paid, loaned or advanced any amount to, or sold, transferred
\nor leased any properties or assets (real, personal or mixed, tangible or
\nintangible) to any of the Company’s stockholders, officers, directors or
\nemployees or any affiliate of any of the Company’s stockholders, officers,
\ndirectors or employees, except normal compensation and expense allowances (for
\ntravel and other business-related expenses) paid to officers, directors, or
\nemployees of the Company; or<\/p>\n
(n) agreed, whether in writing or otherwise, to take any action
\ndescribed in this Section 2.7.<\/p>\n
-20-
\n 28<\/p>\n
2.8 TAXES<\/p>\n
(a) (i) All Tax Returns (as defined below) required to be filed by or on
\nbehalf of the Company have been filed on a timely basis with the appropriate
\ngovernmental authority in all jurisdictions in which such Tax Returns are
\nrequired to be filed, and all such Tax Returns were (at the time they were
\nfiled) true, correct and complete in all material respects; (ii) all Taxes (as
\ndefined below) of the Company (whether or not reflected on any Tax Return) have
\nbeen fully and timely paid on or before the due date for payment thereof; (iii)
\nno waivers of statutes of limitation have been given or requested with respect
\nto the Company in connection with any Tax Returns covering the Company with
\nrespect to any Taxes payable by it; (iv) no taxing authority in a jurisdiction
\nwhere the Company does not file Tax Returns has made a written claim, assertion,
\nor threat to the Company that the Company is or may be subject to taxation by
\nsuch jurisdiction; (v) the Company has duly and timely withheld from employee
\nsalaries, wages and other compensation and paid over to the appropriate
\ngovernmental authority all amounts required to be so withheld and paid over for
\nall periods under all applicable laws; (vi) there are no liens with respect to
\nTaxes on any of the Company’s property or assets other than liens for current
\nTaxes not yet payable; (vii) there are no Tax rulings, requests for rulings, or
\nclosing agreements relating to the Company which could affect the liability for
\nTaxes or the amount of taxable income of the Company for any period (or portion
\nof a period) after the date hereof; and (viii) any adjustment of Taxes of the
\nCompany made by the IRS in any examination which is required to be reported to
\nthe appropriate state, local or foreign taxing authorities has been reported,
\nand any additional Taxes due with respect thereto have been paid.<\/p>\n
(b) Neither the Company nor any other Person on behalf of the Company
\n(i) has filed a consent pursuant to Section 341(f) of the Code or agreed to have
\nSection 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
\n(as such term is defined in Section 341(f)(4) of the Code) owned by the Company;
\n(ii) has executed or entered into a closing agreement pursuant to Section 7121
\nof the Code or any predecessor provision thereof or any similar provision of
\nstate, local or foreign law; or (iii) has agreed to or is required to make any
\nadjustments pursuant to Section 481 (a) of the Code or any similar provision of
\nstate, local or foreign law by reason of a change in accounting method initiated
\nby the Company or has notice that a governmental authority has proposed in
\nwriting any such adjustment or change in accounting method.<\/p>\n
(c) There is no dispute or claim concerning any Tax liability of the
\nCompany claimed or raised by any authority in writing. Schedule 2.8 to the
\nCompany Disclosure <\/p>\n
-21-
\n 29<\/p>\n
Memorandum lists all Tax Returns filed with respect to the Company for taxable
\nperiods ended on or after the Company’s inception or the inception of any
\npredecessor that have been audited, and indicates those Tax Returns that
\ncurrently are the subject of audit. The Company has delivered to Amazon.com
\ncorrect and complete copies of all Tax Returns, examination reports and
\nstatements of deficiencies assessed against or agreed to by the Company since
\nthe Company’s inception.<\/p>\n
(d) The Company will not pay or incur any obligation to make any
\npayments in connection with or as a result of the transactions contemplated
\nhereby and is not a party to any agreement that under certain circumstances
\ncould obligate it to make any payments in connection with or as a result of the
\ntransactions contemplated hereby that will not be deductible under Section 280G
\nof the Code (or any similar provision of state, local or foreign law).<\/p>\n
(e) The Company has not been a United States real property holding
\ncorporation within the meaning of Section 897(c)(2) of the Code during the
\napplicable period specified in Section 897(c)(1)(A)(ii) of the Code.<\/p>\n
(f) The Company is not a party to any Tax allocation or sharing
\nagreement. The Company (i) has not been a member of a Tax Group (as defined
\nbelow) filing a consolidated income Tax Return under Section 1501 of the Code
\n(or any similar provision of state, local or foreign law) and (ii) does not have
\nany liability for Taxes of any Person under Treasury Regulations Section
\n1.1502-6 (or any similar provision of state, local or foreign law) as a
\ntransferee or successor by contract or otherwise.<\/p>\n
(g) The unpaid Taxes of the Company (i) did not, as of December 31,
\n1998, exceed the reserve for Tax liability set forth on the face (rather than
\nany reserve for deferred Taxes established to reflect timing differences between
\nbook and Tax income) of the Company Balance Sheet and (ii) do not exceed that
\nreserve as adjusted for the passage of time and operations in the ordinary
\ncourse of business through the Closing Date.<\/p>\n
(h) The Company Disclosure Memorandum sets forth the amount of any net
\noperating loss, net capital loss, net-unrealized built-in loss (as defined under
\nSection 382 of the Code), unused investment or other credit, unused foreign tax
\nor excess charitable contribution allocable to the Company. There is no
\nlimitation on utilization of any such net operating loss or tax item by the
\nPurchaser or Amazon.com under Section 382 of the Code (or any comparable
\nprovision of state, local or foreign law).<\/p>\n
(i) All Options that the Company has treated as incentive stock options<\/p>\n
-22-
\n 30<\/p>\n
under Section 421 of the Code meet the requirements of Section 422 of the Code.<\/p>\n
As used in this Agreement, the following terms shall have the following
\nmeanings:<\/p>\n
“Taxes” means all foreign, federal, state, county or local taxes,
\ncharges, fees, levies, imposts, duties, and other assessments, including, but
\nnot limited to, any income, alternative minimum or add-on tax, estimated, gross
\nincome, gross receipts, sales, use, transfer, transactions, intangibles, ad
\nvalorem, value-added, franchise, registration, title, license, capital, paid-up
\ncapital, profits, withholding, payroll, employment, excise, severance, stamp,
\noccupation, premium, real property, recording, personal property, federal
\nhighway use, commercial rent, environmental (including, but not limited to,
\ntaxes under Section 59A of the Code) or windfall profit tax, custom, duty or
\nother tax, governmental fee or other like assessment or charge of any kind
\nwhatsoever, together with any interest, penalties or additions to tax; and “Tax”
\nmeans any of the foregoing Taxes.<\/p>\n
“Tax Group” means any federal, state, local or foreign consolidated,
\naffiliated, combined, unitary or other similar group of which the Company is now
\nor was formerly a member.<\/p>\n
“Tax Returns” means any return, declaration, report, claim or refund,
\ninformation return, statement, or other similar document relating to Taxes,
\nincluding any schedule or attachment thereto, and including any amendment
\nthereof.<\/p>\n
2.9 PROPERTY<\/p>\n
(a) The Company owns no real property other than the leasehold interests
\ndescribed on Schedule 2.9(a) to the Company Disclosure Memorandum, which
\ncontains a complete and accurate list of all real property owned, leased or
\ncurrently being used by the Company (the “Real Property”). The Company has
\ndelivered to Amazon.com or its counsel true and complete copies of all written
\nleases, subleases, rental agreements, contracts of sale, tenancies or licenses
\nrelating to the Real Property and written summaries of the terms of any oral
\nleases, subleases, rental agreements, contracts of sale, tenancies or licenses
\nto which the Real Property is subject.<\/p>\n
(b) Schedule 2.9(b) to the Company Disclosure Memorandum contains a
\ncomplete and accurate list of each item of personal property having a net book
\nvalue in excess of $20,000 which is owned, leased, rented or used by the
\nCompany, as of the date hereof (the “Personal Property”); provided that such
\nlist need not describe the Technology or the IP Rights (as defined in Sections
\n2.14.2 and 2.14.5, respectively) <\/p>\n
-23-
\n 31<\/p>\n
listed on Schedule 2.14 to the Company Disclosure Memorandum. The Company has
\ndelivered to Amazon.com true and complete copies of all leases, subleases,
\nrental agreements, contracts of sale, tenancies or licenses to which the
\nPersonal Property is subject.<\/p>\n
(c) The Real Property and the Personal Property include all the
\nproperties and assets (whether real, personal or mixed, tangible or intangible)
\n(other than, in the case of the Personal Property, property rights with an
\nindividual value of less than $20,000 and the Technology and IP Rights)
\nreflected in the Company Balance Sheet (except for such properties or assets
\nsold since the date of the Company Balance Sheet in the ordinary course of
\nbusiness and consistent with past practice) and all the properties and assets
\npurchased or otherwise acquired by the Company since the date of the Company
\nBalance Sheet (other than, in the case of the Personal Property, property rights
\nwith an individual value of less than $20,000 and the Technology and the IP
\nRights). The Real Property and the Personal Property include all material
\nproperty used in the business of the Company, other than the Technology and IP
\nRights. The Company’s offices and other structures and its Personal Property are
\nof a quality consistent with industry standards, are in good operating condition
\nand repair, normal wear and tear excepted, are adequate for the uses to which
\nthey are being put, and comply in all material respects with applicable safety
\nand other laws and regulations.<\/p>\n
(d) The Company’s leasehold interest in each parcel of the Real Property
\nis free and clear of all liens, mortgages, pledges, deeds of trust, security
\ninterests, charges, encumbrances and other adverse claims or interests of any
\nkind (each, an “Encumbrance”), except for Encumbrances related to Taxes not yet
\ndue and payable. Each lease of any portion of the Real Property is valid,
\nbinding and enforceable in accordance with its terms against the Company and, to
\nthe Company’s knowledge, against each other party thereto (except as to the
\neffect, if any, of (i) applicable bankruptcy and other similar laws affecting
\nthe rights of creditors generally, (ii) rules of law governing specific
\nperformance, injunctive relief and other equitable remedies, and (iii) the
\nenforceability of provisions requiring indemnification in connection with the
\noffering, issuance or sale of securities), the Company has performed in all
\nmaterial respects all obligations imposed upon it thereunder, and neither the
\nCompany nor, to the Company’s knowledge, any other party thereto is in material
\ndefault thereunder, nor is there any event which with notice or lapse of time,
\nor both, would constitute a material default thereunder by the Company or, to
\nthe Company’s knowledge, by any other party. The Company has not granted any
\nlease, sublease, tenancy or license of, or entered into any rental agreement or
\ncontract of sale with respect to, any portion of the Real Property.<\/p>\n
-24-
\n 32<\/p>\n
(e) The Personal Property is free and clear of all Encumbrances, and,
\nother than leased Personal Property which is so noted on the list supplied
\npursuant to Section 2.9(b) hereof, the Company owns such Personal Property. Each
\nlease, license, rental agreement, contract of sale or other agreement to which
\nthe Personal Property is subject is valid, binding and enforceable in accordance
\nwith its terms against the Company and, to the Company’s knowledge, against each
\nother party thereto (except as to the effect, if any, of (i) applicable
\nbankruptcy and other similar laws affecting the rights of creditors generally,
\n(ii) rules of law governing specific performance, injunctive relief and other
\nequitable remedies, and (iii) the enforceability of provisions requiring
\nindemnification in connection with the offering, issuance or sale of
\nsecurities), the Company has performed in all material respects all obligations
\nimposed upon it thereunder, and neither the Company nor, to the Company’s
\nknowledge, any other party thereto is in material default thereunder, nor is
\nthere any event which with notice or lapse of time, or both, would constitute a
\nmaterial default by the Company or, to the Company’s knowledge, any other party
\nthereunder. The Company has not granted any lease, sublease, tenancy or license
\nof any portion of the Personal Property, except in the ordinary course of
\nbusiness.<\/p>\n
2.10 CONTRACTS<\/p>\n
Schedule 2.10 to the Company Disclosure Memorandum contains a complete
\nand accurate list (other than the IP Rights listed on Schedule 2.14 to the
\nCompany Disclosure Memorandum) of all contracts, agreements and understandings,
\noral or written, to which the Company is currently a party or by which the
\nCompany is currently bound providing for potential payments by or to the Company
\nin excess of $20,000, including, without limitation, security agreements,
\nlicense agreements, software development agreements, distribution agreements,
\njoint venture agreements, reseller agreements, credit agreements and instruments
\nrelating to the borrowing of money. All contracts set forth on Schedule 2.10 are
\nvalid, binding and enforceable in accordance with their terms against the
\nCompany and, to the Company’s knowledge, each other party thereto (except as to
\nthe effect, if any, of (a) applicable bankruptcy and other similar laws
\naffecting the rights of creditors generally, (b) rules of law governing specific
\nperformance, injunctive relief and other equitable remedies, and (c) the
\nenforceability of provisions requiring indemnification in connection with the
\noffering, issuance or sale of securities), and are in full force and effect. The
\nCompany has performed in all material respects all obligations imposed on it
\nunder the contracts set forth on Schedule 2.10 to the Company Disclosure
\nMemorandum, and neither the Company nor, to the Company’s knowledge, any other
\nparty thereto is in material default thereunder, nor is there any event which
\nwith notice or lapse of time, or both, would constitute a material default by
\nthe Company or, to the Company’s knowledge, <\/p>\n
-25-
\n 33<\/p>\n
any other party thereunder. True and complete copies of each such written
\ncontract (or written summaries of the terms of any such oral contract) have been
\ndelivered to Amazon.com by the Company. Except as set forth on Schedule 2.10,
\nthe Company has no<\/p>\n
(a) contracts with directors, officers, stockholders, employees,
\nagents, consultants, advisors, salespeople, sales representatives, distributors
\nor dealers that cannot be canceled by the Company within 30 days’ notice without
\nliability, penalty or premium, any agreement or arrangement providing for the
\npayment of any bonus or commission based on sales or earnings, or any
\ncompensation agreement or arrangement affecting or relating to former employees
\nof the Company;<\/p>\n
(b) employment agreement, whether express or implied, or any
\nother agreement for services that contains severance or termination pay
\nliabilities or obligations;<\/p>\n
(c) noncompetition agreement or other arrangement that would
\nprevent the Company from carrying on its business anywhere in the world;<\/p>\n
(d) notice that any party to a contract listed on Schedule 2.10
\nintends to cancel, terminate or refuse to renew such contract (if such contract
\nis renewable);<\/p>\n
(e) material dispute with any of its suppliers, customers,
\ndistributors, licensors or licensees;<\/p>\n
(f) product distribution agreement, development agreement, or
\nlicense agreement as licensor or licensee (except for standard nonexclusive
\nsoftware licenses granted to end-user customers in the ordinary course of
\nbusiness, the form of which has been provided to Amazon.com, or standard
\nlicenses purchased by the Company for off-the-shelf software);<\/p>\n
(g) joint venture contract or arrangement or any other agreement
\nthat involves a sharing of profits with other persons;<\/p>\n
(h) instrument evidencing indebtedness for borrowed money by way
\nof a direct loan, sale of debt securities, purchase money obligation,
\nconditional sale or guarantee, or otherwise, except for trade indebtedness
\nincurred in the ordinary course of business, and except as disclosed in the
\nFinancial Statements; and<\/p>\n
(i) agreements or commitments to provide indemnification.<\/p>\n
-26-
\n 34<\/p>\n
2.11 CLAIMS AND LEGAL PROCEEDINGS<\/p>\n
Except as set forth on Schedules 2.11 and 2.14 to the Company Disclosure
\nMemorandum, there are no claims, actions, suits, arbitrations, investigations or
\nproceedings pending or involving or, to the Company’s knowledge, threatened
\nagainst the Company before or by any court or governmental or nongovernmental
\ndepartment, commission, board, bureau, agency or instrumentality, or any other
\nPerson. There are no outstanding or unsatisfied judgments, orders, decrees or
\nstipulations to which the Company is a party. Schedule 2.11 sets forth a
\ndescription of any material disputes that have been settled or resolved by
\nlitigation or arbitration since the Company’s inception.<\/p>\n
2.12 LABOR AND EMPLOYMENT MATTERS<\/p>\n
There are no material labor disputes, employee grievances or
\ndisciplinary actions pending or, to the Company’s knowledge, threatened against
\nor involving the Company or, to the Company’s knowledge, any of its present or
\nformer employees. The Company has complied in all material respects with all
\nprovisions of law relating to employment and employment practices, terms and
\nconditions of employment, wages and hours. The Company is not engaged in any
\nunfair labor practice and has no liability for any arrears of wages or Taxes or
\npenalties for failure to comply with any such provisions of law. There is no
\nlabor strike, dispute, slowdown or stoppage pending or, to the Company’s
\nknowledge, threatened against or affecting the Company, and the Company has not
\nexperienced any work stoppage or other labor difficulty since its incorporation.
\nNo collective bargaining agreement is binding on the Company. The Company has no
\nknowledge of any organizational efforts presently being made or threatened by or
\non behalf of any labor union with respect to employees of the Company. Except as
\nset forth in Schedule 2.12 to the Company Disclosure Memorandum, each employee
\nand officer of and consultant to the Company has executed an Employee Agreement
\nRegarding Inventions, Confidentiality and Competitive Activities in the form
\nattached as Exhibit 2.12 to the Company Disclosure Memorandum (a “Nondisclosure
\nAgreement”) and, as of the Closing, each employee and officer of and each
\nconsultant to the Company who has not executed a Nondisclosure Agreement as of
\nthe date hereof shall have executed and delivered to the Company such an
\nagreement. To the Company’s knowledge, each Nondisclosure Agreement is, and as
\nof the Closing will be, a valid, binding and enforceable obligation of the
\nemployee, officer or consultant named therein. To the Company’s knowledge, no
\nemployee (or person performing similar functions) of the Company is in violation
\nof any such agreement or any employment agreement, noncompetition agreement,
\npatent disclosure agreement, invention assignment agreement, proprietary
\ninformation <\/p>\n
-27-
\n 35<\/p>\n
agreement or other contract or agreement relating to the relationship of such
\nemployee with the Company or any other party. Schedule 2.12 to the Company
\nDisclosure Memorandum sets forth a true and complete list of (a) the names and
\ncurrent compensation amounts of all directors and officers of the Company; (b)
\nthe names of and wage rates for all nonsalaried and nonofficer salaried
\nemployees of the Company by classification, and all union contracts (if any);
\n(c) all group insurance programs in effect for employees of the Company; and (d)
\nthe names and current compensation packages of all independent contractors and
\nconsultants of the Company. Except as set forth in Schedule 2.12 to the Company
\nDisclosure Memorandum, the Company is not in default with respect to any of its
\nobligations referred to in clause (b) above and has no, and will not incur any,
\nmaterial obligation or liability for severance or back pay owed through or by
\nvirtue of the Merger. Except as disclosed on Schedule 2.12, all employees of the
\nCompany are employed on an “at will” basis.<\/p>\n
2.13 EMPLOYEE BENEFIT PLANS<\/p>\n
2.13.1 EMPLOYEE BENEFIT PLAN LISTING<\/p>\n
Schedule 2.13.1 to the Company Disclosure Memorandum sets forth a true,
\naccurate and complete list and description of all retirement, pension, profit
\nsharing, deferred compensation, savings, bonus, incentive, cafeteria, flexible
\nbenefits, medical, dental, vision, hospitalization, life insurance, group
\ninsurance, medical expense reimbursement, dependent care assistance, tuition
\nreimbursement, disability, accident, sick pay, holiday, vacation, severance,
\nstock purchase, stock option, stock appreciation rights, fringe benefit and
\nother employee benefit plans, funds, policies, programs, contracts, arrangements
\nand payroll practices (including, but not limited to, all “employee benefit
\nplans,” as defined in Section 3(3) of the Employee Retirement Income Security
\nAct of 1974, as amended (“ERISA”)) and all employment, consulting and personal
\nservice contracts and agreements, whether formal or informal, whether written or
\nunwritten, and whether legally binding or not, (a) sponsored, maintained or
\ncontributed to by the Company, (b) covering or benefiting any current or former
\nofficer, employee, agent, director or independent contractor of the Company (or
\nany dependent or beneficiary of any such individual), or (c) with respect to
\nwhich the Company has (or could have) any obligation or liability (such plans,
\nfunds, policies, programs, contracts, arrangements and payroll practices are
\nhereinafter referred to collectively as “Employee Benefit Plans” and each
\nindividually as an “Employee Benefit Plan”). The Company does not have any
\nagreement, arrangement, commitment or obligation, whether formal or informal,
\nwhether written or unwritten and whether legally binding or not, to create (or
\ncontribute to) any additional employee benefit plan, fund, policy, program,
\ncontract, arrangement or payroll practice or to <\/p>\n
-28-
\n 36<\/p>\n
modify or amend any existing Employee Benefit Plan. There has been no amendment,
\nwritten interpretation or announcement (whether or not written) by the Company
\nrelating to, or change in participation or coverage under, any Employee Benefit
\nPlan that, either alone or together with other such items or events, could
\nmaterially increase the expense of maintaining the Employee Benefit Plans above
\nthe level of expense incurred with respect thereto for the most recent fiscal
\nyear included in the Financial Statements.<\/p>\n
2.13.2 DOCUMENTS PROVIDED<\/p>\n
The Company has delivered to Amazon.com true, correct and complete
\ncopies (or, in the case of unwritten Employee Benefit Plans, descriptions) of
\nall Employee Benefit Plans (and all amendments thereto), along with, to the
\nextent applicable to the particular Employee Benefit Plan, the following
\ninformation: (a) copies of the last three annual reports (Form 5500 series)
\nfiled with respect to such Employee Benefit Plan; (b) copies of the summary plan
\ndescriptions, summaries of material modifications and all material employee
\nmanuals or communications filed or distributed with respect to such Employee
\nBenefit Plan during the last three years; and (c) copies of all contracts (and
\nany amendments thereto) relating to such Employee Benefit Plan, including, but
\nnot limited to, service provider agreements, administrative service agreements,
\ninsurance contracts, annuity contracts, investment management agreements and
\nrecord-keeping agreements.<\/p>\n
2.13.3 COMPLIANCE<\/p>\n
With respect to each Employee Benefit Plan, (a) such Employee Benefit
\nPlan is, and at all times since its inception has been, maintained, administered
\nand operated in accordance with its terms and in compliance in all material
\nrespects with all applicable laws, statutes, orders, rules and regulations, and
\nall requirements prescribed thereby, including, but not limited to, ERISA and
\nthe Code; (b) all amendments and actions required to bring such Employee Benefit
\nPlan into conformity with the applicable provisions of ERISA, the Code and other
\napplicable laws and regulations have been made or taken within the time
\nprescribed by law, except to the extent that such amendments or actions are not
\nrequired by law to be made or taken until after the Closing Date; (c) the
\nCompany and, to the Company’s knowledge, each fiduciary of such Employee Benefit
\nPlan and all other Persons have, at all times, properly performed all
\nobligations, whether arising by operation of law or by contract, required to be
\nperformed by each of them in connection with such Employee Benefit Plan; (d) all
\nreturns, reports and other disclosures relating to such Employee Benefit Plan
\nrequired to be filed with any governmental entity or agency or furnished to any
\nparticipant or beneficiary have been properly completed or prepared and timely
\nfiled or <\/p>\n
-29-
\n 37<\/p>\n
furnished in accordance with applicable law; (e) neither the Company nor any
\nother fiduciary of such Employee Benefit Plan has engaged in any transaction or
\nacted or failed to act in a manner that violates the fiduciary requirements of
\nERISA or any other applicable law; and (f) no event has occurred or, to the
\nCompany’s knowledge, is threatened or about to occur that constitutes or could
\nconstitute a nonexempt prohibited transaction under Section 406 or 407 of ERISA
\nor under Section 4975 of the Code. Each Employee Benefit Plan that constitutes a
\n“group health plan,” as defined in Section 607(1) or 733(a)(1) of ERISA or
\nSection 4980B(g)(2) of the Code, has been maintained, administered and operated
\nat all times since its inception in compliance in all material respects with the
\nrequirements of Parts 6 and 7 of Subtitle B of Title I of ERISA, Section
\n4980B(f) of the Code, any regulations under such ERISA and Code sections and any
\nother applicable federal, state, local or foreign law regarding the provision or
\ncontinuation of health insurance coverage or other welfare benefits (within the
\nmeaning of Section 3(1) of ERISA). No event or omission has occurred, or is
\nreasonably expected by the Company to occur (including, but not limited to, any
\nof the transactions contemplated in or by this Agreement), with respect to any
\nEmployee Benefit Plan that has or could subject, directly or indirectly, the
\nCompany or any other Person to a tax under Chapter 43 of Subtitle D of the Code
\nor a penalty under Part 5 of Subtitle B of Title I of ERISA.<\/p>\n
2.13.4 CONTRIBUTIONS AND PREMIUM PAYMENTS<\/p>\n
All contributions, premiums and other payments due or required to be
\nmade to each Employee Benefit Plan under the terms of such Employee Benefit
\nPlan, ERISA, the Code or other applicable law have been timely paid, or, if not
\nyet due, have been properly recorded on the books of the Company.<\/p>\n
2.13.5 RELATED EMPLOYERS<\/p>\n
The Company is not, and has never been, a member of (a) a controlled
\ngroup of corporations, within the meaning of Section 414(b) of the Code, (b) a
\ngroup of trades or businesses under common control, within the meaning of
\nSection 414(c) of the Code, (c) an affiliated service group, within the meaning
\nof Section 414(m) of the Code, or (d) any other group of Persons treated as a
\nsingle employer under Section 414(o) of the Code.<\/p>\n
2.13.6 MULTIEMPLOYER AND TITLE IV PLANS<\/p>\n
The Company does not sponsor, maintain or contribute to, and has never
\nsponsored, maintained or contributed to (or been obligated to contribute to),
\nany multiemployer plan as defined in Section 3(37) or Section 4001(a)(3) of
\nERISA or <\/p>\n
-30-
\n 38<\/p>\n
414(f) of the Code, any multiple employer plan within the meaning of Section
\n4063 or 4064 of ERISA or Section 413(c) of the Code, or any employee benefit
\nplan, fund, program, contract or arrangement that is covered by or subject to
\nSection 408 or 412 of the Code, Section 302 of ERISA or Title IV of ERISA, or
\nany employee benefit plan, fund, program or arrangement that is intended to be
\nqualified under Section 401(a) of the Code.<\/p>\n
2.13.7 POST-TERMINATION WELFARE BENEFITS<\/p>\n
Neither the Company nor any Employee Benefit Plan provides or has any
\nobligation to provide (or contribute toward the cost of) health, severance or
\nany other welfare benefits (within the meaning of Section 3(1) of ERISA) with
\nrespect to any current or former officer, employee, agent, director or
\nindependent contractor of the Company or any other entity beyond such
\nindividual’s retirement or other termination of service, other than continuation
\ncoverage mandated by Sections 601 through 608 of ERISA or Section 4980B(f) of
\nthe Code.<\/p>\n
2.13.8 SUITS, CLAIMS AND INVESTIGATIONS<\/p>\n
There are no actions, suits or claims (other than routine claims for
\nbenefits) pending or, to the Company’s knowledge, threatened with respect to (or
\nagainst the assets of) any Employee Benefit Plan. No Employee Benefit Plan is
\ncurrently under investigation, audit or review, directly or indirectly, by the
\nIRS, the Department of Labor (the “DOL”) or any other governmental entity or
\nagency, and, to the Company’s knowledge, no such action is contemplated or under
\nconsideration by the IRS, the DOL or any other governmental entity or agency.<\/p>\n
2.13.9 PAYMENTS RESULTING FROM TRANSACTIONS<\/p>\n
Neither the execution and delivery of this Agreement or any of the other
\nOperative Documents nor the consummation of the transactions contemplated in (or
\nby) this Agreement or any of the other Operative Documents will (a) entitle any
\ncurrent or former officer, employee, agent, director or independent contractor
\nof the Company to severance pay, unemployment compensation or any other payment
\nfrom the Company or any other Person, or otherwise increase the amount of
\ncompensation due to any such individual, or (b) result in any benefit or right
\nbecoming established or increased, or accelerate the time of payment or vesting
\nof any benefit, under any Employee Benefit Plan, whether or not some other
\nsubsequent action or event would be required to trigger any of the items
\nspecified in (a) or (b) above.<\/p>\n
-31-<\/p>\n
39<\/p>\n
2.14 INTELLECTUAL PROPERTY<\/p>\n
2.14.1 GENERAL<\/p>\n
The Company owns or is licensed and has all rights in and to the
\nfollowing as required to conduct its business as now conducted and as proposed
\nto be conducted in any written materials furnished by the Company to Amazon.com,
\nexcept where the failure to own or have such rights would not have a Company
\nMaterial Adverse Effect: (a) all products, tools, computer programs,
\nspecifications, source code, object code, graphics, devices, techniques,
\nalgorithms, methods, processes, procedures, packaging, trade dress, formulae,
\ndrawings, designs, improvements, discoveries, concepts, user interfaces, “look
\nand feel,” software, development and other tools, content, inventions (whether
\nor not patentable or copyrightable and whether or not reduced to practice),
\ndesigns, logos, themes, know-how, concepts and other technology that are now,
\nduring the two years prior to the date of this Agreement have been or are
\ncurrently proposed in written materials furnished by the Company to Amazon.com
\nto be developed, produced, used, marketed or sold by the Company (collectively,
\nthe “Technology-Related Assets”); and (b) all intellectual property and other
\nproprietary rights in the Technology-Related Assets, including, without
\nlimitation, all trade names, trademarks, domain names, service marks, logos,
\nbrand names and other identifiers, trade secrets, copyrights, and domestic and
\nforeign letters patent, and the registrations, applications, renewals,
\nextensions and continuations (in whole or in part) thereof, all goodwill
\nassociated therewith, and all rights and causes of action for infringement,
\nmisappropriation, misuse, dilution or unfair trade practices associated
\ntherewith.<\/p>\n
2.14.2 COMPANY TECHNOLOGY<\/p>\n
Schedule 2.14.2 to the Company Disclosure Memorandum sets forth a list
\nof all products and tools developed, produced, used, marketed or sold by the
\nCompany during the two years prior to the date of this Agreement (collectively,
\nthe “Products”). Except for the Third Party Technologies (as defined in Section
\n2.14.3), the Company owns all right, title and interest in and to the following
\n(collectively, the “Technology”), free and clear of all Encumbrances: (a) the
\nProducts, together with any and all codes, techniques, software tools, formats,
\ndesigns, user interfaces, content and “look and feel” related thereto; (b) any
\nand all updates, enhancements, corrections, modifications, improvements and new
\nreleases related to the items set forth in clause (a) above; (c) any and all
\ntechnology and work in progress related to the items set forth in clauses (a)
\nand (b) above; and (d) all inventions, discoveries, processes, designs, trade
\nsecrets, know-how and other confidential or proprietary information related to
\nthe items set forth in clauses (a), (b) and (c) above. The Technology, excluding
\nthe Third Party Technologies, is sometimes referred to herein as the <\/p>\n
-32-
\n 40<\/p>\n
“Company Technology.”<\/p>\n
2.14.3 THIRD PARTY TECHNOLOGY<\/p>\n
Schedule 2.14.3 to the Company Disclosure Memorandum sets forth a list
\nthat is complete in all material respects of all Technology used in the
\nCompany’s business for which the Company does not own all right, title and
\ninterest (collectively, the “Third Party Technologies”), and all license
\nagreements or other contracts pursuant to which the Company has the right to use
\n(in the manner used by the Company, or intended or necessary for use with the
\nCompany Technology) the Third Party Technologies other than license agreements
\nincluded in shrink-wrapped software packages for software which is readily and
\ngenerally commercially available to Amazon.com (the “Third Party Licenses”),
\nindicating, with respect to each of the Third Party Technologies listed therein,
\nthe owner thereof and the Third Party License applicable thereto. The Company
\nhas the lawful right to use under the terms of the applicable Third Party
\nLicense (free of any material restriction not expressly set forth in the Third
\nParty Licenses) (a) all Third Party Technology that is incorporated in or used
\nin the development or production of the Company Technology, and (b) all other
\nThird Party Technology necessary for the conduct of the Company’s business as
\nnow conducted and as proposed to be conducted in any written materials furnished
\nby the Company to Amazon.com. All Third Party Licenses are valid, binding on the
\nCompany and in full force and effect, the Company and, to the Company’s
\nknowledge, each other party thereto have performed in all material respects
\ntheir obligations thereunder, and neither the Company nor, to the Company’s
\nknowledge, any other party thereto is in default thereunder, nor to the
\nCompany’s knowledge has there occurred any event or circumstance which with
\nnotice or lapse of time or both would constitute a default or event of default
\non the part of the Company or, to the Company’s knowledge, any other party
\nthereto or give to any other party thereto the right to terminate or modify any
\nThird Party License. The Company has not received notice that any party to any
\nThird Party License intends to cancel, terminate or refuse to renew (if
\nrenewable) such Third Party License or to exercise or decline to exercise any
\noption or right thereunder.<\/p>\n
2.14.4 TRADEMARKS<\/p>\n
Schedule 2.14.4 to the Company Disclosure Memorandum sets forth a list
\nof all trademarks, trade names, brand names, service marks, logos or other
\nidentifiers for the Products or otherwise used in a material way by the Company
\nin its business (the “Marks”). The Company has full legal and beneficial
\nownership, free and clear of any Encumbrances, of all rights conferred by use of
\nthe Marks in connection with the Products or otherwise in the Company’s business
\nand, as to those Marks that have been <\/p>\n
-33-
\n 41<\/p>\n
registered in the United States Patent and Trademark Office, by federal
\nregistration of the Marks.<\/p>\n
2.14.5 INTELLECTUAL PROPERTY RIGHTS<\/p>\n
Schedule 2.14.5 to the Company Disclosure Memorandum sets forth all
\npatents, patent applications, copyright registrations (and applications
\ntherefor) and trademark registrations (and applications therefor) (collectively,
\nthe “IP Registrations”) associated with the Company Technology and the Marks.
\nThe Company owns all right, title and interest, free and clear of any
\nEncumbrances, in and to the IP Registrations, together with any other rights in
\nor to any copyrights (registered or unregistered), rights in the Marks
\n(registered or unregistered), trade secret rights and other intellectual
\nproperty rights (including, without limitation, rights of enforcement) contained
\nor embodied in the Company Technology and the Marks (collectively, the “IP
\nRights”).<\/p>\n
2.14.6 MAINTENANCE OF RIGHTS<\/p>\n
Except as set forth on Schedule 2.14.6 to the Company Disclosure
\nMemorandum, the Company has not conducted its business, and has not used or
\nenforced (or, to its knowledge, failed to use or enforce) the IP Rights, in a
\nmanner that would result in the abandonment, cancellation or unenforceability of
\nany item of the IP Rights or the IP Registrations, and the Company has not taken
\n(or, to its knowledge, failed to take) any action that would result in the
\nforfeiture or relinquishment of any IP Rights or IP Registrations, in each case
\nwhere such abandonment, cancellation, unenforceability, forfeiture or
\nrelinquishment would have a Company Material Adverse Effect. Except as set forth
\nin Schedule 2.14.6, the Company has not granted to any third party any rights or
\npermissions to use any of the Technology or the IP Rights. To the best of the
\nCompany’s knowledge, except pursuant to reasonably prudent safeguards, (a) no
\nthird party has received any confidential information relating to the Technology
\nor the IP Rights, and (b) the Company is not under any contractual or other
\nobligation to disclose to any third party any Company Technology.<\/p>\n
2.14.7 THIRD PARTY INFRINGEMENT<\/p>\n
Except as set forth on Schedule 2.14.7 to the Company Disclosure
\nMemorandum, (a) the Company has not received any notice or claim (whether
\nwritten, oral or otherwise) challenging the Company’s ownership or rights in the
\nCompany Technology or the IP Rights or claiming that any other person or entity
\nhas any legal or beneficial ownership with respect thereto; (b) all the IP
\nRights are legally valid and enforceable without any material qualification,
\nlimitation or restriction on their use which would have a Company Material
\nAdverse Effect, and the Company has not <\/p>\n
-34-
\n 42<\/p>\n
received any notice or claim (whether written, oral or otherwise) challenging
\nthe validity or enforceability of any of the IP Rights; and (c) to the Company’s
\nknowledge, no other person or entity is infringing or misappropriating any part
\nof the IP Rights or otherwise making any unauthorized use of the Company
\nTechnology.<\/p>\n
2.14.8 INFRINGEMENT BY THE COMPANY<\/p>\n
Except as set forth on Schedule 2.14.8 to the Company Disclosure
\nMemorandum, (a) the use of any of the Company Technology in the Company’s
\nbusiness does not and will not infringe, violate or interfere with or constitute
\nan appropriation of any right, title or interest (including, without limitation,
\nany patent, copyright, trademark or trade secret right) held by any other person
\nor entity, and there have been no claims made with respect thereto; (b) the use
\nof any of the Marks and other IP Rights in the Company’s business will not
\ninfringe, violate or interfere with or constitute an appropriation of any right,
\ntitle or interest (including, without limitation, any patent, copyright,
\ntrademark or trade secret right) held by any other person or entity, and there
\nhave been no claims made with respect thereto; and (c) the Company has not
\nreceived any notice or claim (whether written, oral or otherwise) regarding any
\ninfringement, misappropriation, misuse, abuse or other interference with any
\nthird party intellectual property or proprietary rights (including, without
\nlimitation, infringement of any patent, copyright, trademark or trade secret
\nright of any third party) by the Company, the Technology or the Marks or other
\nIP Rights or claiming that any other entity has any claim of infringement with
\nrespect thereto.<\/p>\n
2.14.9 CONFIDENTIALITY<\/p>\n
Except as set forth on Schedule 2.14.9 to the Company Disclosure
\nMemorandum, (a) the Company has not disclosed any source code regarding the
\nTechnology to any person or entity other than an employee of the Company and
\nunder a written nondisclosure agreement; (b) the Company has at all times
\nmaintained and diligently enforced commercially reasonable procedures to protect
\nall confidential information relating to the Technology; (c) neither the Company
\nnor any escrow agent is under any contractual or other obligation to disclose
\nthe source code or any other proprietary information included in or relating to
\nthe Technology; and (d) the Company has not deposited any source code relating
\nto the Technology into any source code escrows or similar arrangements. If, as
\ndisclosed on Schedule 2.14.9, the Company has deposited any source code to the
\nTechnology into source code escrows or similar arrangements, no event has
\noccurred that has or could reasonably form the basis for a release of such
\nsource code from such escrows or arrangements.<\/p>\n
-35-
\n 43<\/p>\n
2.14.10 WARRANTY AGAINST DEFECTS<\/p>\n
Except as set forth in Schedule 2.14.10 to the Company Disclosure
\nMemorandum, the Technology is free from known material defects and substantially
\nconforms to the applicable specifications and documentation for such Technology.<\/p>\n
2.14.11 DOMAIN NAMES<\/p>\n
Schedule 2.14.11 to the Company Disclosure Memorandum sets forth a list
\nof all Internet domain names used by the Company in its business (collectively,
\nthe “Domain Names”). The Company has a valid registration and all material
\nrights (free of any material restriction) and freely transferable to the
\nSurviving Corporation) in and to the Domain Names, including, without
\nlimitation, all rights necessary to continue to conduct the Company’s business
\nas it is currently conducted.<\/p>\n
2.14.12 YEAR 2000<\/p>\n
The Company Technology (a) will accurately process date data (including,
\nbut not limited to, calculating, comparing and sequencing) from, into and
\nbetween the twentieth and twenty-first centuries, including, without limitation,
\nleap year calculations, without a decrease in the functionality of the Software,
\n(b) is designed to be used prior to, during and after the calendar year 2000,
\nand (c) will operate during each such time period without error relating to date
\ndata, specifically including any error relating to, or the product of, date data
\nwhich represents or references different centuries or more than one century
\n(“Y2K Compliant”). The foregoing will not apply to the extent any third party
\ncomponent that provides data for use by the Company Technology is not Y2K
\nCompliant unless and to the extent the failure of the Company Technology to
\nconform to the above warranty would have occurred regardless of the failure of
\nthe third party component to be Y2K Compliant.<\/p>\n
2.14.13 INDEMNIFICATION<\/p>\n
The Company has not entered into any agreement or offered to indemnify
\nany Person against any charge of infringement by the Technology or IP Rights, or
\nany other intellectual property or right. The Company has not entered into any
\nagreement granting any Person the right to bring any infringement action with
\nrespect to, or otherwise to enforce, any of the Technology or IP Rights.<\/p>\n
2.14.14 RESTRICTIONS ON INTELLECTUAL PROPERTY<\/p>\n
To the knowledge of the Company, none of the Company’s officers,
\nemployees, agents or representatives, during his or her term of employment or
\nengagement with <\/p>\n
-36-
\n 44<\/p>\n
the Company, has entered into any agreement regarding know-how, trade secrets,
\nassignment of rights in inventions, or prohibition or restriction of competition
\nor solicitation of customers, or any other similar restrictive agreement or
\ncovenant, whether written or oral, with any Person other than the Company.<\/p>\n
2.15 CORPORATE BOOKS AND RECORDS<\/p>\n
The Company has furnished to Amazon.com or its representatives for their
\nexamination true and complete copies of (a) the Certificate of Incorporation and
\nBylaws of the Company as currently in effect, including all amendments thereto,
\n(b) the minute books of the Company, and (c) the stock transfer books of the
\nCompany. Such stock transfer books accurately reflect all issuances and
\ntransfers of shares of capital stock of the Company since its inception.<\/p>\n
2.16 LICENSES, PERMITS, AUTHORIZATIONS, ETC.<\/p>\n
Except as identified on Schedules 2.1 and 2.5 to the Company Disclosure
\nMemorandum, the Company has received all currently required governmental
\napprovals, authorizations, consents, licenses, orders, registrations and permits
\nof all agencies, whether federal, state, local or foreign, the failure to obtain
\nof which would have a Company Material Adverse Effect. The Company has not
\nreceived any notifications of any asserted present failure by it to have
\nobtained any such governmental approval, authorization, consent, license, order,
\nregistration or permit, or past and unremedied failure to obtain such items.<\/p>\n
2.17 COMPLIANCE WITH LAWS<\/p>\n
Except as described on Schedule 2.17 to the Company Disclosure
\nMemorandum, the Company is in compliance with all federal, state, local and
\nforeign laws, rules, regulations, ordinances, decrees and orders applicable to
\nit, to its employees or to the Real Property and the Personal Property,
\nincluding, without limitation, all such laws, rules, regulations, ordinances,
\ndecrees and orders relating to intellectual property protection, antitrust
\nmatters, consumer protection, currency exchange, environmental protection, equal
\nemployment opportunity, health and occupational safety, pension and employee
\nbenefit matters, securities and investor protection matters, labor and
\nemployment matters and trading-with-the-enemy matters, except where the failure
\nof the Company to so comply would not have a Company Material Adverse Effect.
\nThe Company has not received any notification of any asserted present or past
\nunremedied failure by the Company to comply with any of such laws, rules,
\nregulations, ordinances, decrees or orders.<\/p>\n
-37-
\n 45<\/p>\n
2.18 INSURANCE<\/p>\n
The Company Disclosure Memorandum sets forth a true and correct list of
\nall insurance policies maintained by the Company. The Company maintains
\ncommercially reasonable levels of (a) insurance on its property (including
\nleased premises) that insures against loss or damage by fire or other casualty
\nand (b) insurance against liabilities, claims and risks of a nature and in such
\namounts as are normal and customary in the Company’s industry for companies of
\nsimilar size and financial condition. All insurance policies of the Company are
\nin full force and effect, all premiums with respect thereto covering all periods
\nup to and including the date this representation is made have been paid, and no
\nnotice of cancellation or termination has been received with respect to any such
\npolicy or binder. Such policies or binders are sufficient for compliance in all
\nmaterial respects with all requirements of law currently applicable to the
\nCompany and of all agreements to which the Company is a party, will remain in
\nfull force and effect through the respective expiration dates of such policies
\nor binders without the payment of additional premiums, and will not in any way
\nbe affected by, or terminate or lapse by reason of, the transactions
\ncontemplated by this Agreement. The Company has not been refused any insurance
\nwith respect to its assets or operations, nor has its coverage been limited, by
\nany insurance carrier to which it has applied for any such insurance or with
\nwhich it has carried insurance.<\/p>\n
2.19 BROKERS OR FINDERS<\/p>\n
The Company has not incurred, and will not incur, directly or
\nindirectly, as a result of any action taken by or on behalf of the Company, any
\nliability for brokerage or finders’ fees or agents’ commissions or any similar
\ncharges in connection with the Merger, this Agreement or any transaction
\ncontemplated hereby.<\/p>\n
2.20 ABSENCE OF QUESTIONABLE PAYMENTS<\/p>\n
Neither the Company nor any director, officer, agent, employee or other
\nPerson acting on behalf of the Company has used any Company funds for improper
\nor unlawful contributions, payments, gifts or entertainment, or made any
\nimproper or unlawful expenditures relating to political activity to domestic or
\nforeign government officials or others. The Company has reasonable financial
\ncontrols to prevent such improper or unlawful contributions, payments, gifts,
\nentertainment or expenditures. Neither the Company nor any current director,
\nofficer, agent, employee or other Person acting on behalf of the Company has
\naccepted or received any improper or unlawful contributions, payments, gifts or
\nexpenditures. The Company has at all times complied, and is in compliance, in
\nall material respects with the Foreign Corrupt Practices Act and all foreign
\nlaws and regulations relating to prevention of corrupt <\/p>\n
-38-
\n 46<\/p>\n
practices and similar matters.<\/p>\n
2.21 BANK ACCOUNTS<\/p>\n
Schedule 2.21 to the Company Disclosure Memorandum sets forth the names
\nand locations of all banks, trust companies, savings and loan associations and
\nother financial institutions at which the Company maintains safe deposit boxes
\nor accounts of any nature and the names of all Persons authorized to draw
\nthereon, make withdrawals therefrom or have access thereto.<\/p>\n
2.22 INSIDER INTERESTS<\/p>\n
Except as set forth on Schedule 2.22 to the Company Disclosure
\nMemorandum, no stockholder or officer or director of the Company has any
\ninterest (other than as a stockholder of the Company) (a) in any Real Property,
\nPersonal Property, Technology or IP Rights used in or pertaining to the business
\nof the Company, including, without limitation, inventions, patents, trademarks
\nor trade names, or (b) in any agreement, contract, arrangement or obligation
\nrelating to the Company, its present or prospective business or its operations.
\nExcept as set forth on Schedule 2.22, there are no agreements, understandings or
\nproposed transactions between the Company and any of its officers, directors,
\nstockholders, affiliates or any affiliate thereof. The Company and its officers
\nand directors have no interest, either directly or indirectly, in any entity,
\nincluding, without limitation, any corporation, partnership, joint venture,
\nproprietorship, firm, licensee, business or association (whether as an employee,
\nofficer, director, stockholder, agent, independent contractor, security holder,
\ncreditor, consultant or otherwise) that presently (i) provides any services,
\nproduces and\/or sells any products or product lines, or engages in any activity
\nthat is the same, similar to or competitive with any activity or business in
\nwhich the Company is now engaged or proposes to engage; (ii) is a supplier,
\ncustomer or creditor; or (iii) has any direct or indirect interest in any asset
\nor property, real or personal, tangible or intangible, of the Company or any
\nproperty, real or personal, tangible or intangible, that is necessary or
\ndesirable for the present or currently anticipated future conduct of the
\nCompany’s business.<\/p>\n
2.23 COMPLIANCE WITH ENVIRONMENTAL LAWS<\/p>\n
Neither the Company nor, to the Company’s knowledge, any other Person
\n(including, without limitation, any previous owner, lessee or sublessee) has
\ntreated, stored or disposed of any material amounts of petroleum products,
\nhazardous waste, hazardous substances, pollutants or contaminants on the Real
\nProperty, or any real property previously owned, leased, subleased or used by
\nthe Company in the operation <\/p>\n
-39-
\n 47<\/p>\n
of its business, in violation of any applicable foreign, federal, state or local
\nstatutes, regulations or ordinances, or common law, in each case as in existence
\nat or prior to the Closing. To the Company’s knowledge, there have been no
\nreleases of any material amounts of petroleum, petroleum products, hazardous
\nwaste, hazardous substances, pollutants or contaminants on, at or from any
\nassets or properties, including, without limitation, the Real Property, owned,
\nleased, subleased or used by the Company in the operation of its business during
\nthe time such assets or properties were owned, leased, subleased or used by the
\nCompany (or, to the Company’s knowledge, prior to such time), including, without
\nlimitation, any releases of any material amounts of petroleum, petroleum
\nproducts, hazardous waste, hazardous substances, pollutants or contaminants in
\nviolation of any law.<\/p>\n
2.24 FULL DISCLOSURE<\/p>\n
No information furnished by the Company to Amazon.com or its
\nrepresentatives in connection with this Agreement (including, but not limited
\nto, the Financial Statements and all information in the Company Disclosure
\nMemorandum and the other Exhibits hereto) or the other Operative Documents
\ncontains any untrue statement of a material fact or omits to state a material
\nfact necessary in order to make the statements so made or information so
\ndelivered not misleading.<\/p>\n
2.25 OPERATING DATA<\/p>\n
On or prior to the date hereof, the Company has delivered to Amazon.com
\ncertain of its operating data and certain performance data for each of its Web
\nSites (including, without limitation, the number of “hits,” “conversion” rates,
\nif applicable, average, download times per page, average system resource usage
\nper page, error rates and uptime\/availability) as set forth in Schedule 2.25 of
\nthe Company Disclosure Memorandum (the “Operations and Web Site Data”). The
\nOperations and Web Site Data accurately and fairly present the operations of and
\nother data related to the Company and the performance of its Web Sites and does
\nnot contain any material misstatements or omissions of material facts.<\/p>\n
ARTICLE IIA – REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS<\/p>\n
Except as is otherwise set forth with appropriate Section references in
\nthe Stockholder Company Disclosure Memorandum attached hereto as Exhibit 2A (the
\n“Stockholder Disclosure Memorandum”), and in order to induce Amazon.com and the
\nPurchaser to enter into and perform this Agreement and the other Operative
\nDocuments to be entered into as of the Closing among Amazon.com and the<\/p>\n
-40-
\n 48<\/p>\n
Stockholders, each Stockholder, individually and not jointly, represents and
\nwarrants to Amazon.com and the Purchaser as of the date of this Agreement and as
\nof the Closing as follows in this Article IIA:<\/p>\n
2A.1 SOPHISTICATION; ACCREDITATION<\/p>\n
Such Stockholder is (a) either alone or with the assistance of a
\nprofessional advisor, a sophisticated investor, able to fend for himself,
\nherself or itself in the transactions contemplated by this Agreement and the
\nother Operative Documents to which such Stockholder is a party and has such
\nknowledge and experience in financial and business matters that he, she or it is
\ncapable of evaluating the merits and risks of the prospective investment in
\nAmazon.com Common Stock, or (b) an “accredited investor” as defined in
\nRegulation D of the Securities Act of 1933, as amended (the “Securities Act”).
\nSchedule 2A.1 to the Stockholder Disclosure Memorandum lists all Stockholders
\nwho are accredited investors.<\/p>\n
2A.2 OWNERSHIP<\/p>\n
Such Stockholder owns beneficially and of record the Company Capital
\nStock, Options and other Stock Purchase Rights set forth on Schedules 2.3(b) and
\n2.3(c) of the Company Disclosure Memorandum, free and clear of any Encumbrance.<\/p>\n
2A.3 AMAZON.COM PROSPECTUS<\/p>\n
Such Stockholder has received and reviewed a copy of the prospectus
\ndated August 18, 1998 contained in Amazon.com’s shelf registration statement on
\nForm S-4.<\/p>\n
2A.4 ENFORCEABILITY; NO CONFLICTS<\/p>\n
(a) Such Stockholder has full power or capacity (as the case may be) and
\nauthority to execute this Agreement and the other Operative Documents to which
\nsuch Stockholder is a party, to make the representations, warranties and
\ncovenants herein and therein contained and to perform such Stockholder’s
\nobligations hereunder and thereunder.<\/p>\n
(b) This Agreement has been, and each of the other Operative Documents
\nto which such Stockholder is a party at the Closing will have been, duly
\nexecuted and delivered by such Stockholder, and this Agreement is, and, when
\nexecuted and delivered by such Stockholder, each of the other Operative
\nDocuments to which such Stockholder is a party at the Closing will be, the
\nlegal, valid and binding obligations of such Stockholder, enforceable in
\naccordance with their terms, except as to the effect, if any, of (i) applicable
\nbankruptcy and other similar laws affecting the rights of creditors <\/p>\n
-41-
\n 49<\/p>\n
generally, (ii) rules of law governing specific performance, injunctive relief
\nand other equitable remedies, and (iii) the enforceability of provisions
\nrequiring indemnification in connection with the offering, issuance or sale of
\nsecurities.<\/p>\n
(c) The execution, delivery and performance by such Stockholder of this
\nAgreement and the other Operative Documents to which he, she or it is a party,
\nthe consummation of the transactions contemplated hereby and thereby, and the
\nfulfillment of the terms hereof and thereof will not (i) constitute a violation
\n(with or without the giving of notice or lapse of time or both) of any provision
\nof any law applicable to the such Stockholder; (ii) require any consent,
\napproval or authorization of, or notice to, any Person that has not been
\nobtained or made, other than under the HSR Act; (iii) result in a default under,
\nan acceleration or termination of, or the creation in any party of the right to
\naccelerate, terminate, modify or cancel, any material agreement, lease, note or
\nother restriction, encumbrance, obligation or liability to which such
\nStockholder is a party or by which he, she or it is bound; or (iv) result in the
\ncreation or imposition of any Encumbrance on any of such Stockholder’s shares of
\nCompany Capital Stock.<\/p>\n
2A.5 CLAIMS AGAINST THE COMPANY<\/p>\n
Such Stockholder does not have any claims against the Company other than
\nany rights or claims arising with respect to such Stockholder’s ownership of
\nCompany Capital Stock.<\/p>\n
2A.6 BROKERS OR AGENTS<\/p>\n
Such Stockholder has not employed any broker or agent in connection with
\nthe transactions contemplated by this Agreement and agrees to indemnify
\nAmazon.com against all losses, damages or expenses relating to or arising out of
\nclaims for fees or commission of any broker or agent employed by such
\nStockholder.<\/p>\n
2A.7 HART-SCOTT-RODINO FILING<\/p>\n
Except as set forth in Section 2A.7 to the Stockholder Disclosure
\nMemorandum, each Stockholder is not subject to, or is exempt from, the
\njurisdictional elements of the HSR Act.<\/p>\n
2A.8 INVESTMENT FOR OWN ACCOUNT<\/p>\n
The Amazon.com Common Stock is being acquired by such Stockholder for
\ninvestment for his, her or its respective account, not as a nominee or agent;
\nsuch Stockholder has no present intention of selling, granting any participation
\nin or <\/p>\n
-42-
\n 50<\/p>\n
otherwise distributing any of the Amazon.com Common Stock in a manner contrary
\nto the Securities Act or to any applicable state securities or Blue Sky law, nor
\ndoes such Stockholder have any contract, undertaking, agreement or arrangement
\nwith any person or entity to sell, transfer or grant a participation to such
\nperson or entity with respect to any of the Amazon.com Common Stock.<\/p>\n
2A.9 RESIDENCY<\/p>\n
For purposes of the application of state securities laws, such
\nStockholder is a resident of the state as set forth on Schedule 2A.9 of the
\nStockholder Disclosure Memorandum.<\/p>\n
ARTICLE III – REPRESENTATIONS AND WARRANTIES OF AMAZON.COM AND THE PURCHASER<\/p>\n
In order to induce the Company to enter into and perform this Agreement
\nand the other Operative Documents, Amazon.com and the Purchaser jointly and
\nseverally represent and warrant to the Company as follows in this Article III:<\/p>\n
3.1 ORGANIZATION<\/p>\n
Amazon.com is a corporation duly organized, validly existing and in good
\nstanding under the laws of the State of Delaware. The Purchaser is a corporation
\nduly organized, validly existing and in good standing under the laws of the
\nState of Delaware. Each of Amazon.com and the Purchaser has all requisite
\ncorporate power and authority to own, operate and lease its respective
\nproperties and assets, to carry on its respective business as now conducted, and
\nas proposed to be conducted and to enter into and perform its obligations under
\nthis Agreement and the other Operative Documents to which Amazon.com or the
\nPurchaser is a party, and to consummate the transactions contemplated hereby and
\nthereby. Each of Amazon.com and the Purchaser is duly qualified and licensed as
\na foreign corporation to do business and is in good standing in each
\njurisdiction in which the character of properties occupied, owned or held under
\nlease by Amazon.com or the Purchaser, as applicable, or the nature of the
\nbusiness conducted by Amazon.com or the Purchaser, as applicable, makes such
\nqualification or licensing necessary, except where the failure to be so
\nqualified or in good standing would not have a material adverse effect on the
\nbusiness, operations, assets, liabilities, condition (financial or other) or
\nprospects of Amazon.com (an “Amazon.com Material Adverse Effect”). Each of
\nAmazon.com and the Purchaser has full corporate power and authority to execute,
\ndeliver and perform this Agreement and the other Operative Documents to which it
\nis a party, and to carry out the transactions contemplated hereby and thereby.
\nAll the issued and outstanding <\/p>\n
-43-
\n 51<\/p>\n
shares of capital stock of the Purchaser are held of record and beneficially by
\nAmazon.com.<\/p>\n
3.2 ENFORCEABILITY<\/p>\n
Amazon.com and the Purchaser each have all requisite corporate power and
\nauthority to execute, deliver and perform their obligations under this Agreement
\nand each of the other Operative Documents to which they are a party and each of
\nthe certificates, instruments and documents executed or delivered by them
\npursuant to the terms of this Agreement. All corporate action on the part of
\nAmazon.com and the Purchaser and their respective officers, directors and
\nstockholders necessary for the authorization, execution, delivery and
\nperformance of this Agreement and the other applicable Operative Documents to
\nwhich Amazon.com or the Purchaser is a party, the consummation of the Merger and
\nthe performance of all of their respective obligations under this Agreement and
\nthe other applicable Operative Documents to which Amazon.com or the Purchaser is
\na party has been taken or will be taken prior to the Effective Time. This
\nAgreement has been, and each of the other Operative Documents to which
\nAmazon.com is a party will have been at the Closing, duly executed and delivered
\nby Amazon.com, and this Agreement is, and, when executed and delivered by
\nAmazon.com, each of the other Operative Documents to which Amazon.com is a party
\nwill be at the Closing, a legal, valid and binding obligation of Amazon.com,
\nenforceable against Amazon.com in accordance with its terms, except as to the
\neffect, if any, of (a) applicable bankruptcy and other similar laws affecting
\nthe rights of creditors generally, (b) rules of law governing specific
\nperformance, injunctive relief and other equitable remedies, and (c) the
\nenforceability of provisions requiring indemnification in connection with the
\noffering, sale or issuance of securities. This Agreement has been, and each of
\nthe other Operative Documents to which the Purchaser is a party will have been
\nat the Closing, duly executed and delivered by the Purchaser, and this Agreement
\nis, and each of the other Operative Documents to which the Purchaser is a party
\nwill be at the Closing, a legal, valid and binding obligation of the Purchaser,
\nenforceable against the Purchaser in accordance with its terms, except as to the
\neffect, if any, of (i) applicable bankruptcy and other similar laws affecting
\nthe rights of creditors generally, (ii) rules of law governing specific
\nperformance, injunctive relief and other equitable remedies, and (iii) the
\nenforceability of provisions requiring indemnification in connection with the
\noffering, sale or issuance of securities.<\/p>\n
3.3 SECURITIES<\/p>\n
The Amazon.com Common Stock to be issued pursuant to this Agreement
\nincluding, without limitation, the Closing Date Shares, the Post-Closing Shares
\nand all <\/p>\n
-44-
\n 52<\/p>\n
shares issuable under Options to be assumed by Amazon.com, has been, or will be
\nprior to the Effective Time, duly reserved and authorized for issuance, and such
\nAmazon.com Common Stock, when issued and delivered to the Company’s stockholders
\npursuant to this Agreement, shall be validly issued, fully paid and
\nnonassessable and, assuming the accuracy of the representations and warranties
\ncontained in Article IIA, issued in compliance with applicable federal and state
\nsecurities laws.<\/p>\n
3.4 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS WITH INSTRUMENTS<\/p>\n
The execution, delivery and performance of this Agreement and the other
\nOperative Documents by the Purchaser and Amazon.com, as applicable, and the
\nconsummation by them of the transactions contemplated hereby and thereby will
\nnot (a) constitute a violation (with or without the giving of notice or lapse of
\ntime, or both) of any provision of law or any judgment, decree, order,
\nregulation or rule of any court or other governmental authority applicable to
\nAmazon.com or the Purchaser, except for such violations which would not, both
\nindividually and in the aggregate, have an Amazon.com Material Adverse Effect;
\n(b) require any consent, approval or authorization of, or declaration, filing or
\nregistration with, any Person, except (i) compliance with applicable securities
\nlaws, (ii) the filing of all documents necessary to consummate the Merger with
\nthe Delaware Secretary of State, (iii) the notification requirements of the HSR
\nAct and (iv) such consents, approvals, authorizations, declarations, filings and
\nregistrations the failure of which to obtain or effect would not, both
\nindividually and in the aggregate, have an Amazon.com Material Adverse Effect;
\n(c) result in a default (with or without the giving of notice or lapse of time,
\nor both) under, or acceleration or termination of, or the creation in any party
\nof the right to accelerate, terminate, modify or cancel, any agreement, lease,
\nnote or other restriction, encumbrance, obligation or liability to which
\nAmazon.com or the Purchaser is a party or by which it is bound or to which any
\nassets of Amazon.com or the Purchaser are subject, except for such defaults,
\naccelerations, terminations or creations of such rights which would not, both
\nindividually and in the aggregate, have an Amazon.com Material Adverse Effect;
\nor (d) conflict with or result in a breach of or constitute a default under any
\nprovision of the Certificate of Incorporation or Bylaws of Amazon.com or of the
\nPurchaser.<\/p>\n
3.5 CAPITALIZATION<\/p>\n
The authorized capital stock of Amazon.com consists of 300,000,000
\nshares of Amazon.com Common Stock, of which 161,371,398 shares were issued and
\noutstanding as of March 31, 1999, and 10,000,000 shares of preferred stock, par
\nvalue $0.01 per share, none of which is issued or outstanding. Such issued and
\noutstanding <\/p>\n
-45-
\n 53<\/p>\n
shares of Amazon.com Common Stock are validly issued, fully paid and
\nnonassessable.<\/p>\n
3.6 SEC DOCUMENTS<\/p>\n
Amazon.com has furnished the Stockholders with true and complete copies
\nof its Annual Report on Form 10-K for the fiscal year ended December 31, 1998,
\nall Forms 8-K filed after the date of such Form 10-K, and its Proxy Statement
\nrelating to its 1999 Annual Meeting of Stockholders (collectively, the “SEC
\nDocuments”). As of their respective filing dates, each of the SEC Documents
\ncomplied in all material respects with the requirements of the Securities
\nExchange Act of 1934, as amended (the “Exchange Act”), and the rules and
\nregulations of the Securities and Exchange Commission promulgated thereunder.<\/p>\n
3.7 ABSENCE OF CERTAIN CHANGES<\/p>\n
Since the December 31, 1998 financial statements included in the SEC
\nDocuments, there has not been any change which by itself or in conjunction with
\nall other such changes, has had or could reasonably be expected to have an
\nAmazon.com Material Adverse Effect, except as disclosed in the SEC Documents.<\/p>\n
3.8 FULL DISCLOSURE<\/p>\n
No information furnished by Amazon.com or the Purchaser to the Company,
\nthe Stockholders or their respective representatives in connection with this
\nAgreement or the other Operative Documents (including, without limitation, the
\ninformation contained in the SEC Documents, as the same may have been updated by
\nfilings by Amazon.com with the Securities and Exchange Commission after the date
\nhereof but prior to the Closing Date) contains any untrue statement of a
\nmaterial fact or omits to state a material fact necessary in order to make the
\nstatements so made or information so delivered not misleading.<\/p>\n
3.9 STOCKHOLDERS CONSENT<\/p>\n
No consent or approval of the stockholders of Amazon.com is required or
\nnecessary for Amazon.com to enter into this Agreement or the Operative Documents
\nto which it is a party or to consummate the transactions contemplated hereby and
\nthereby.<\/p>\n
3.10 BROKERS OR FINDERS<\/p>\n
Amazon.com has not incurred, and will not incur, directly or indirectly,
\nas a result of any action taken by or on behalf of Amazon.com, any liability for
\nbrokerage <\/p>\n
-46-
\n 54<\/p>\n
or finders’ fees or agents’ commissions or any similar changes in connection
\nwith the Merger, this Agreement, or any transaction contemplated hereby.<\/p>\n
ARTICLE IV – CONDITIONS PRECEDENT TO OBLIGATIONS OF AMAZON.COM AND THE
\n PURCHASER<\/p>\n
The obligations of Amazon.com and the Purchaser to perform and observe
\nthe covenants, agreements and conditions hereof to be performed and observed by
\nthem at or before the Closing shall be subject to the satisfaction of the
\nfollowing conditions, which may be expressly waived only in writing signed by
\nAmazon.com:<\/p>\n
4.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES<\/p>\n
The representations and warranties of the Company contained herein
\n(including, without limitation, applicable Exhibits or Schedules to the Company
\nDisclosure Memorandum) and in the other Operative Documents shall have been true
\nand correct when made and, except (a) for changes contemplated by this Agreement
\nand the other Operative Documents and (b) to the extent that such
\nrepresentations and warranties speak as of an earlier date, shall be true and
\ncorrect as of the Closing Date as though made on that date.<\/p>\n
4.2 PERFORMANCE OF AGREEMENTS<\/p>\n
The Company shall have performed in all material respects all
\nobligations and agreements and complied with all covenants contained in this
\nAgreement or any other Operative Document to be performed and complied with by
\nit at or prior to the Closing.<\/p>\n
4.3 OPINION OF COUNSEL FOR THE COMPANY<\/p>\n
Amazon.com shall have received the opinion letter of Goodwin, Procter & Hoar LLP, counsel for the Company, dated the Closing Date, substantially in the
\nform of Exhibit 4.3.<\/p>\n
4.4 COMPLIANCE CERTIFICATE<\/p>\n
Amazon.com shall have received a certificate of the President and the
\nChief Financial Officer of the Company, dated the Closing Date, in form and
\nsubstance satisfactory to Amazon.com, certifying that the conditions to the
\nobligations of Amazon.com and the Purchaser in Sections 4.1, 4.2, 4.5 and 4.6
\nhave been fulfilled.<\/p>\n
-47-
\n 55<\/p>\n
4.5 MATERIAL ADVERSE CHANGE<\/p>\n
Since the date of this Agreement and through the Closing, there shall
\nnot have occurred any Company Material Adverse Effect, except for such changes
\noccurring as a result of the execution or announcement of this Agreement.<\/p>\n
4.6 APPROVALS AND CONSENTS<\/p>\n
All transfers of permits or licenses and all approvals of or notices to
\npublic agencies, federal, state, local or foreign, the granting or delivery of
\nwhich is necessary for the consummation of the transactions contemplated hereby
\nand by the other Operative Documents, or for the continued operation of the
\nCompany as now operated, shall have been obtained, and all waiting periods
\nspecified by law shall have passed. All consents, approvals and notices set
\nforth on Exhibit 4.6 shall have been obtained or delivered.<\/p>\n
4.7 SECRETARY’S CERTIFICATE<\/p>\n
Amazon.com shall have received a certificate of the Secretary of the
\nCompany, in form and substance satisfactory to Amazon.com, as to the
\nauthenticity and effectiveness of the actions of the Board of Directors and
\nstockholders of the Company authorizing the Merger and the transactions
\ncontemplated by this Agreement and the other Operative Documents. Copies of the
\nCompany’s Certificate of Incorporation, certified by the Delaware Secretary of
\nState, and Bylaws, certified by the Secretary of the Company, shall be attached
\nto such certificate.<\/p>\n
4.8 NONFOREIGN AFFIDAVIT<\/p>\n
Amazon.com shall have received from the Company, pursuant to Section
\n1445 of the Code, a Foreign Investment in Real Property Tax Act Affidavit,
\nsubstantially in the form of Exhibit 4.8.<\/p>\n
4.9 COMPLIANCE WITH LAWS<\/p>\n
The consummation of the transactions contemplated by this Agreement and
\nthe other Operative Documents shall be legally permitted by all laws and
\nregulations to which Amazon.com, the Purchaser or the Company is subject.<\/p>\n
4.10 STOCKHOLDER APPROVAL<\/p>\n
The principal terms of this Agreement shall have been approved by the
\nCompany’s stockholders as required by the Company’s Certificate of Incorporation
\nand <\/p>\n
-48-
\n 56<\/p>\n
applicable law.<\/p>\n
4.11 LEGAL PROCEEDINGS<\/p>\n
No order of any court or administrative agency shall be in effect which
\nenjoins, restrains, conditions or prohibits consummation of the transactions
\ncontemplated by this Agreement or any other Operative Document, and no
\nlitigation, investigation or administrative proceeding shall be pending or
\nthreatened which would enjoin, restrain, condition or prevent consummation of
\nthe transactions contemplated by this Agreement or any other Operative Document.<\/p>\n
4.12 EMPLOYMENT AND NONCOMPETITION ARRANGEMENTS<\/p>\n
More than 66.7% of the Central Employees (determined on the basis of the
\npercentage values assigned to each Central Employee as set forth in Exhibit
\n1.7.3) shall have accepted the offer of employment pursuant to Section 6.13 and
\nshall have executed Amazon.com’s standard form of Confidentiality,
\nNoncompetition and Invention Assignment Agreement, in the form attached hereto
\nas Exhibit 4.12.<\/p>\n
4.13 AFFILIATE LETTERS<\/p>\n
The Company shall have delivered or caused to be delivered to Amazon.com
\nan Affiliate Letter substantially in the form of Exhibit 4.13 from each of those
\nPersons who were, on the record date for the stockholders’ meeting at which the
\nMerger was approved or on the effective date of any stockholder consent
\napproving the Merger, “affiliates” of the Company within the meaning of Rule 145
\nof the rules and regulations promulgated under the Securities Act.<\/p>\n
4.14 TERMINATION OF CERTAIN AGREEMENTS<\/p>\n
Any and all rights of refusal, co-sale rights and registration rights,
\nif any, for the benefit of the holders of Company Capital Stock or Stock
\nPurchase Rights of the Company shall have been terminated or shall terminate
\nupon consummation of the Merger.<\/p>\n
4.15 EXERCISE OF STOCK PURCHASE RIGHTS; CONVERSION OF CONVERTIBLE SECURITIES<\/p>\n
Any and all Stock Purchase Rights and any and all securities and notes
\nconvertible at any time into Company Common Stock, vested and unvested, and
\nregardless of restrictions on exercise or conversion, shall have been exercised
\nor converted (or, with respect to the Company Series A Stock and Company Series
\nC <\/p>\n
-49-
\n 57<\/p>\n
Stock, deemed to be converted pursuant to Section 1.7.1(b)), as the case may be,
\nfor shares of Company Common Stock prior to the Effective Time, except for the
\noutstanding share of the Company Series B Preferred Stock, which will be
\nconverted for cash as of the Effective Time pursuant to Section 1.7.2(b), and
\nfor Options assumed by Amazon.com pursuant to Section 1.7.2(e).<\/p>\n
4.16 NO DISSENTER RIGHTS EXERCISED GREATER THAN 5% OF STOCK<\/p>\n
No holders of Company Capital Stock shall have delivered to the Company
\nbefore the Effective Time timely written notice of such holder’s intent to
\ndemand payment for such shares in accordance with Delaware Law, unless such
\nholder shall have withdrawn or otherwise lost his, her or its right to such
\npayment as a dissenting stockholder. Holders of not more than 5% of the
\noutstanding shares of Company Common Stock shall have not voted in favor of the
\nMerger or not consented thereto in writing and shall have delivered before the
\nEffective Time timely written notice of such holders’ intent to demand payment
\nas dissenting stockholders for such shares in accordance with Delaware Law.<\/p>\n
4.17 TRANSMITTAL LETTERS<\/p>\n
All holders of the Company Capital Stock shall have executed Letters of
\nTransmittal in the form attached hereto as Exhibit 1.7.4.<\/p>\n
4.18 STOCK VESTING AGREEMENTS<\/p>\n
(a) Stig Leschly and Amazon.com shall have entered into a Stock Vesting
\nAgreement, substantially in the form attached hereto as Exhibit 4.18(a).<\/p>\n
(b) Sridhar Rao and Amazon.com shall have entered into a Stock Vesting
\nAgreement, substantially in the form attached hereto as Exhibit 4.18(b), and the
\nCompany, Stig Leschly and Sridhar Rao shall have terminated the Stock Purchase
\nand Stock Restriction Agreement, dated as of June 18, 1998, as amended, among
\nsuch parties.<\/p>\n
4.19 NONDISCLOSURE AGREEMENTS<\/p>\n
The Company shall have delivered to Amazon.com true and correct copies
\nof all Nondisclosure Agreements entered into by employees or officers of or
\nconsultants to the Company after the date hereof, and no such Nondisclosure
\nAgreement shall contain any exceptions to the terms thereof, including, without
\nlimitation, to the exclusive ownership by the Company of all Company-Related
\nInventions and Developments (as defined therein).<\/p>\n
-50-
\n 58<\/p>\n
4.20 PROSPECTUS DELIVERY REQUIREMENTS<\/p>\n
At least 20 business days shall have elapsed since the delivery to the
\nStockholders of the Prospectus dated August 13, 1998, which constitutes part of
\nthe Amazon.com’s Registration Statement on Form S-4, together with all materials
\nincorporated by reference therein prior to the date such materials were
\ndelivered to the Stockholders. Such 20 business day-period shall expire on May
\n14, 1999.<\/p>\n
4.21 ESCROW AGREEMENT<\/p>\n
The Escrow Agreement shall have been executed and delivered by the
\nStockholder Representative, on behalf of the Stockholders, and by the Escrow
\nAgent.<\/p>\n
4.22 ASSIGNMENT OF DOMAIN NAMES<\/p>\n
All rights, title and interest in and to all domain names listed on
\nExhibit 4.22 attached hereto shall have been assigned to Amazon.com.<\/p>\n
4.23 POST-CLOSING BONUS AMOUNT AGREEMENTS<\/p>\n
The Company shall have delivered to Amazon.com true and correct copies
\nof all agreements by which payments included in the Post-Closing Bonus Amount
\nwill be made.<\/p>\n
4.24 CONSENT TO ASSUMPTION OF OPTIONS<\/p>\n
All holders of Options that are outstanding immediately prior to the
\nEffective Time shall have consented to the assumption of the Options by
\nAmazon.com on the terms and in the manner set forth in Section 1.7.<\/p>\n
4.25 ROLL-UP<\/p>\n
If requested by Amazon.com reasonably in advance of the Effective Time,
\nthe Company shall have effected a roll-up of each of its subsidiaries, resulting
\nin the termination, dissolution and winding-up of all such subsidiaries.<\/p>\n
ARTICLE V – CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE
\n STOCKHOLDERS<\/p>\n
The obligations of the Company and the Stockholders to perform and
\nobserve the respective covenants, agreements and conditions hereof to be
\nperformed and observed by them at or before the Closing shall be subject to the
\nsatisfaction of the following conditions, which may be expressly waived only in
\nwriting signed by the <\/p>\n
-51-
\n 59<\/p>\n
Company and the Stockholder Representative, on behalf of the Stockholders.<\/p>\n
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES<\/p>\n
The representations and warranties of Amazon.com and the Purchaser
\ncontained herein and in the other Operative Documents shall have been true and
\ncorrect when made and, except for (a) changes contemplated by this Agreement and
\nthe other Operative Documents and (b) to the extent that such representations
\nand warranties speak as of an earlier date, shall be true and correct as of the
\nClosing Date as though made on that date.<\/p>\n
5.2 PERFORMANCE OF AGREEMENTS<\/p>\n
Amazon.com and the Purchaser shall have performed in all material
\nrespects all obligations and agreements and complied with all covenants
\ncontained in this Agreement or any other Operative Document to be performed and
\ncomplied with by them at or prior to the Closing.<\/p>\n
5.3 OPINION OF COUNSEL<\/p>\n
The Company shall have received the opinion letter of Perkins Coie LLP,
\ncounsel for Amazon.com and the Purchaser, dated the Closing Date, substantially
\nin the form of Exhibit 5.3.<\/p>\n
5.4 COMPLIANCE CERTIFICATE<\/p>\n
The Company shall have received a certificate of an officer of
\nAmazon.com, dated the Closing Date, substantially in form and substance
\nsatisfactory to the Company, certifying that the conditions to the obligations
\nof the Company in Sections 5.1, 5.2, 5.6 and 5.7 have been fulfilled.<\/p>\n
5.5 LEGAL PROCEEDINGS<\/p>\n
No order of any court or administrative agency shall be in effect which
\nenjoins, restrains, conditions or prohibits consummation of the transactions
\ncontemplated by this Agreement or any other Operative Document, and no
\nlitigation, investigation or administrative proceeding shall be pending or
\nthreatened which would enjoin, restrain, condition or prevent consummation of
\nthe transactions contemplated by this Agreement or any other Operative Document.<\/p>\n
-52-
\n 60<\/p>\n
5.6 MATERIAL ADVERSE CHANGE<\/p>\n
Since the date of this Agreement and through the Closing, there shall
\nnot have occurred any change or event that would have an Amazon.com Material
\nAdverse Effect, except for such changes occurring as a direct result of the
\nexecution or announcement of this Agreement. Changes in the trading prices of
\nAmazon.com Common Stock shall not be deemed to have an Amazon.com Material
\nAdverse Effect under this Agreement.<\/p>\n
5.7 APPROVALS AND CONSENTS<\/p>\n
All transfers of permits or licenses and all approvals of or notices to
\npublic agencies, federal, state, local or foreign (including, without
\nlimitation, all approvals required under the HSR Act), the granting or delivery
\nof which is necessary for the consummation of the transactions contemplated
\nhereby and by the other Operative Documents or for the continued operation of
\nthe Company as now operated, shall have been obtained, and all waiting periods
\nspecified by law shall have passed. All other consents, approvals and notices
\nreferred to in this Agreement shall have been obtained or delivered.<\/p>\n
5.8 COMPLIANCE WITH LAWS<\/p>\n
The consummation of the transactions contemplated by this Agreement and
\nthe other Operative Documents shall be legally permitted by all laws and
\nregulations to which Amazon.com, the Purchaser or the Company is subject.<\/p>\n
5.9 TAX OPINION<\/p>\n
The Company shall have received an opinion letter of Goodwin, Procter & Hoar, LLP, dated the Closing Date, to the effect that the Merger will be treated
\nas a reorganization within the meaning of Section 368(a) of the Code, which
\nopinion shall be based on customary representations of the Company and
\nAmazon.com, dated the Closing Date.<\/p>\n
5.10 SECRETARY’S CERTIFICATES<\/p>\n
The Company shall have received a certificate of the Secretary of
\nAmazon.com, in form and substance satisfactory to the Company, as to the
\nauthenticity and effectiveness of the actions of the Board of Directors of
\nAmazon.com authorizing the Merger and the transactions contemplated by this
\nAgreement and the other Operative Documents. Copies of Amazon.com’s Certificate
\nof Incorporation, certified by the Delaware Secretary of State, and Bylaws,
\ncertified by the Secretary of Amazon.com, <\/p>\n
-53-
\n 61<\/p>\n
shall be attached to such certificate. The Company shall have received a
\ncertificate of the Secretary of the Purchaser, in form and substance
\nsatisfactory to the Company, as to the authenticity and effectiveness of the
\nactions of the Board of Directors and stockholder of the Purchaser authorizing
\nthe Merger and the transactions contemplated by this Agreement and the other
\nOperative Documents. Copies of the Purchaser’s Certificate of Incorporation,
\ncertified by the Delaware Secretary of State, and Bylaws, certified by the
\nSecretary of the Purchaser, shall be attached to such certificate.<\/p>\n
5.11 BLUE SKY LAWS<\/p>\n
Amazon.com shall have received all state securities or blue sky permits
\nand other authorizations necessary to issue the Closing Date Shares pursuant to
\nthe Merger.<\/p>\n
5.12 ESCROW AGREEMENT<\/p>\n
The Escrow Agreement shall have been executed and delivered by
\nAmazon.com and the Escrow Agent.<\/p>\n
5.13 CONSENT TO ASSUMPTION OF OPTIONS<\/p>\n
All holders of Options that are outstanding immediately prior to the
\nEffective Time shall have consented to the assumption of the Options by
\nAmazon.com on the terms and in the manner set forth in Section 1.7.<\/p>\n
ARTICLE VI – COVENANTS<\/p>\n
Between the date of this Agreement and the Effective Time, or such later
\nperiod as set forth in Sections 6.5, 6.7, 6.8, 6.14 and 6.16, the parties
\ncovenant and agree as set forth in this Article VI.<\/p>\n
6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER<\/p>\n
Unless Amazon.com shall otherwise agree in writing, the business of the
\nCompany shall be conducted in and only in, and the Company shall not take any
\naction except in, the ordinary course of business and in a manner consistent
\nwith past practice and in accordance with applicable law; and the Company shall
\nuse its best efforts to preserve intact the business organization of the
\nCompany, to keep available the services of the current officers, employees and
\nconsultants of the Company and to preserve the current relationships of the
\nCompany with, and the goodwill of, customers, suppliers and other Persons with
\nwhich the Company has significant business relations. By way of amplification
\nand not limitation, except as otherwise contemplated by this Agreement, the
\nCompany shall not, between the date of this <\/p>\n
-54-
\n 62<\/p>\n
Agreement and the Effective Time, directly or indirectly do, or propose to do,
\nany of the following without the prior written consent of Amazon.com:<\/p>\n
(a) amend or otherwise change the Company’s Certificate of
\nIncorporation or Bylaws;<\/p>\n
(b) except for the issuance of shares of Company Capital Stock
\nupon the exercise or conversion of currently outstanding Stock Purchase Rights,
\nissue, sell, contract to issue or sell, pledge, dispose of, grant, encumber or
\nauthorize the issuance, sale, pledge, disposition, grant or Encumbrance of (i)
\nany assets of the Company, except in the ordinary course of business and in a
\nmanner consistent with past practice, (ii) any shares of capital stock of any
\nclass of the Company, or (iii) any options, warrants, convertible securities or
\nother rights of any kind to acquire any shares of such capital stock, or any
\nother ownership interest (including, without limitation, any phantom interest)
\nof the Company;<\/p>\n
(c) declare, set aside, make or pay any dividend or other
\ndistribution, payable in cash, stock or other securities, property or otherwise,
\nwith respect to any of its capital stock;<\/p>\n
(d) reclassify, combine, split, subdivide, redeem, purchase or
\notherwise acquire, directly or indirectly, any of its capital stock or other
\nsecurities;<\/p>\n
(e) (i) acquire (including, without limitation, by merger,
\nconsolidation, or acquisition of stock or assets) any corporation, partnership,
\nother business organization or division thereof or any material amount of
\nassets; (ii) incur any indebtedness for borrowed money or issue any debt
\nsecurities or assume, guarantee or endorse, or otherwise as an accommodation
\nbecome responsible for, any obligations of any Person, or make any loans or
\nadvances, except in the ordinary course of business and consistent with past
\npractice; (iii) enter into any contract or agreement other than in the ordinary
\ncourse of business, consistent with past practice; (iv) authorize any single
\ncapital expenditure which is in excess of $20,000 or capital expenditures which
\nare, in the aggregate, in excess of $50,000 for the Company taken as a whole;
\n(v) enter into any agreement in which the obligation of the Company exceeds
\n$10,000 or which shall not terminate or be subject to termination for
\nconvenience within 30 days following execution; (vi) license any Technology or
\nIP Rights; or (vii) enter into or amend any contract, agreement, commitment or
\narrangement with respect to any matter set forth in this subsection (e);<\/p>\n
(f) enter into or amend any employment, consulting or agency
\nagreement, or increase the compensation payable or to become payable to any of
\nits <\/p>\n
-55-
\n 63<\/p>\n
officers, employees, agents or consultants, or grant any severance or
\ntermination pay to, or enter into any employment or severance agreement with,
\nany director, officer or other employee of the Company, or establish, adopt,
\nenter into or amend any collective bargaining, bonus, profit sharing, thrift,
\ncompensation, stock option, restricted stock, pension, retirement, deferred
\ncompensation, employment, termination, severance, Employee Benefit Plan or other
\nplan, agreement, trust, fund, policy or arrangement for the benefit of any
\ndirector, officer or employee;<\/p>\n
(g) take any action, other than reasonable and usual actions in
\nthe ordinary course of business and consistent with past practice, with respect
\nto accounting methods, policies or procedures (including, without limitation,
\nprocedures with respect to the payment of accounts payable and collection of
\naccounts receivable);<\/p>\n
(h) make any Tax election or settle or compromise any Tax
\nliability;<\/p>\n
(i) pay, discharge or satisfy any claim, liability or obligation
\n(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
\nthe payment, discharge or satisfaction in the ordinary course of business and
\nconsistent with past practice;<\/p>\n
(j) take any action that would or is reasonably likely to result
\nin any of the representations or warranties of the Company set forth in this
\nAgreement being untrue in any material respect, or in any covenant of the
\nCompany set forth in this Agreement being breached, or in any of the conditions
\nto the Merger specified in Article IV hereof not being satisfied; or<\/p>\n
(k) agree to do any of the foregoing.<\/p>\n
6.2 ACCESS TO INFORMATION; CONFIDENTIALITY<\/p>\n
Subject to the terms of the Mutual Nondisclosure Agreement between
\nAmazon.com and the Company entered into as of April 12, 1999, from the date
\nhereof to the Effective Time, the Company shall, and shall cause the officers,
\ndirectors, employees and agents of the Company to, afford the officers,
\nemployees and agents of Amazon.com access at all reasonable times to the
\nofficers, employees, agents, properties, offices, plants and other facilities,
\nbooks and records of the Company and shall furnish Amazon.com with all
\nfinancial, operating and other data and information as Amazon.com, through its
\nofficers, employees or agents, may reasonably request. From the date hereof
\nuntil the Effective Time, the Company shall provide Amazon.com with monthly and
\nother financial statements of the Company as they become available internally at
\nthe Company, all of which financial statements shall <\/p>\n
-56-
\n 64<\/p>\n
fairly present the financial position and results of operations of the Company
\nas of the dates and for the periods therein specified. No investigation pursuant
\nto this Section 6.2 shall affect any representation or warranty in this
\nAgreement of any party hereto or any condition to the obligations of the parties
\nhereto. The parties shall continue to comply with and to perform their
\nrespective obligations under such Mutual Nondisclosure Agreement.<\/p>\n
6.3 NO ALTERNATIVE TRANSACTIONS<\/p>\n
Unless this Agreement shall have been terminated in accordance with its
\nterms, the Company shall not, directly or indirectly, through any officer,
\ndirector, agent or otherwise, solicit, initiate or encourage the submission of
\nany proposal or offer from any Person relating to any acquisition or purchase of
\nall or any material portion of the assets of, or any equity interest in, the
\nCompany or any business combination with the Company or participate in any
\nnegotiations regarding, or furnish to any other Person any information with
\nrespect to, or otherwise cooperate or negotiate in any way with, or assist or
\nparticipate in, facilitate or encourage, any effort or attempt by any other
\nPerson to do or seek any of the foregoing. The Company shall notify Amazon.com
\npromptly if any such proposal or offer, or any inquiry or contact with any
\nPerson with respect thereto, is made and shall, in any such notice to
\nAmazon.com, indicate in reasonable detail the identity of the Person making such
\nproposal, offer, inquiry or contact and the terms and conditions of such
\nproposal, offer, inquiry or contact. The Company agrees not to release any third
\nparty from, or waive any provision of, any confidentiality or standstill
\nagreement (e.g. agreement not to invest in or seek change of control of the
\nCompany) to which the Company is a party.<\/p>\n
6.4 NOTIFICATION OF CERTAIN MATTERS<\/p>\n
Each party shall give prompt notice to the other parties of (a) the
\noccurrence or nonoccurrence of any event which would be likely to cause any
\nrepresentation or warranty made by such party contained in this Agreement to be
\nuntrue or inaccurate in any material respect and (b) any material failure by
\nsuch party to comply with or satisfy any covenant, condition or agreement to be
\ncomplied with or satisfied by such party hereunder; provided, however, that the
\ndelivery of any notice pursuant to this Section 6.4 shall not limit or otherwise
\naffect the rights or remedies available to the parties hereunder.<\/p>\n
6.5 FURTHER ACTION; COMMERCIALLY REASONABLE EFFORTS<\/p>\n
Upon the terms and subject to the conditions hereof, each of the parties
\nhereto shall use commercially reasonable efforts to take, or cause to be taken,
\nall appropriate <\/p>\n
-57-
\n 65<\/p>\n
action, and to do, or cause to be done, all things necessary, proper or
\nadvisable under applicable laws and regulations to consummate and make effective
\nthe transactions contemplated hereby, including, without limitation, using its
\ncommercially reasonable efforts to obtain all waivers, licenses, permits,
\nconsents, approvals, authorizations, qualifications and orders of governmental
\nauthorities and of other Persons as are necessary for the consummation of the
\ntransactions contemplated hereby and to fulfill the conditions to the Merger. In
\ncase at any time after the Effective Time any further action is necessary or
\ndesirable to carry out the purposes of this Agreement or the other Operative
\nDocuments, each party to this Agreement shall use commercially reasonable
\nefforts to promptly take all such action. After the Closing, each party hereto,
\nat the request of the other parties, will take any further actions necessary or
\ndesirable to carry out the purposes of this Agreement or any other Operative
\nDocument, to vest in the Surviving Corporation full title to all properties,
\nassets and rights of the Company, and to effect the issuance of the Amazon.com
\nCommon Stock to the stockholders of the Company pursuant to the terms and
\nconditions hereof.<\/p>\n
6.6 STOCKHOLDER APPROVAL<\/p>\n
The Company will obtain either the approval at a special meeting of
\nstockholders or the written consent of the stockholders at the earliest
\npracticable date approving this Agreement, the other Operative Documents, the
\nMerger and related matters, which approval will be recommended by the Board of
\nDirectors of the Company.<\/p>\n
6.7 AMAZON.COM COMMON STOCK<\/p>\n
Amazon.com agrees to list on the Nasdaq National Market, on or prior to
\nthe Closing Date, the Closing Date Shares and those required to be reserved for
\nissuance upon exercise of Options assumed in connection with the Merger.
\nAmazon.com agrees to list on the Nasdaq National Market, on or prior to the
\nPost-Closing Issuance Date, the Post-Closing Shares.<\/p>\n
6.8 SECURITIES ACT COMPLIANCE<\/p>\n
Amazon.com represents and warrants that the issuance of (a) the Closing
\nDate Shares will have been registered on or prior to the Closing under the
\nSecurities Act, pursuant to a registration statement on Form S-4, which shall be
\neffective as of the Closing and (b) the Post-Closing Shares will have been
\nregistered on or prior to the Post-Closing Issuance Date under the Securities
\nAct, pursuant to a registration statement which shall be effective as of the
\nPost-Closing Issuance Date. As a result, the shares of Amazon.com Common Stock
\nissuable in the Merger will be freely <\/p>\n
-58-
\n 66<\/p>\n
tradable, without restriction under the Securities Act, other than those
\nrestrictions imposed on affiliates of the Company pursuant to Rule 145(d) under
\nthe Securities Act and those restrictions imposed on affiliates of Amazon.com
\npursuant to Rule 144 under the Securities Act. For so long as any shares of
\nAmazon.com Common Stock issued in connection with the Merger remain subject to
\nRule 145 of the Securities Act, Amazon.com agrees to use commercially reasonable
\nefforts to timely file all required reports under the Exchange Act, and
\notherwise satisfy the requirements of Rule 144(c) under the Securities Act.<\/p>\n
6.9 DISSENTING SHARES<\/p>\n
Prior to the Closing Date, the Company shall furnish Amazon.com with the
\nname and address of each stockholder of the Company who, prior to the Closing,
\nhas requested appraisal rights pursuant to Delaware Law and the number of
\nDissenting Shares owned by such stockholder.<\/p>\n
6.10 PUBLICITY<\/p>\n
No party to this Agreement shall make, or cause to be made, any press
\nrelease or public announcement or otherwise communicate with any news media in
\nrespect of this Agreement or the transactions contemplated hereby without the
\nprior written consent of Amazon.com, which consent shall not be unreasonably
\nwithheld (and Amazon.com, the Company and the Stockholder Representative, on
\nbehalf of the Stockholders, shall cooperate as to the timing and content of any
\nsuch press release, announcement or communication), except as such release,
\nannouncement or communication may be required by governmental authorities, a
\ncourt of competent jurisdiction or applicable law (including, without
\nlimitation, securities laws affecting Amazon.com’s public disclosure
\nobligations), in which case the party releasing the information shall use its
\nbest efforts to provide the information contained therein to Amazon.com, the
\nCompany and the Stockholder Representative in advance of its disclosure.<\/p>\n
6.11 OPTION GRANTS<\/p>\n
Promptly following the Effective Date, Amazon.com will act to grant
\nnonqualified stock options to certain employees of the Company at an exercise
\nprice per share equal to the Amazon.com Common Stock fair market value as
\ndetermined under the Amazon.com 1999 Stock Option Plan (the “Amazon.com 1999
\nPlan”) at the first date the plan administrator of the Amazon.com 1999 Plan acts
\nfollowing the Closing Date. Unless otherwise agreed by Amazon.com and the
\nCompany in writing, all such stock options granted by Amazon.com shall vest in
\naccordance with the <\/p>\n
-59-
\n 67<\/p>\n
standard vesting schedule under the Amazon.com 1999 Plan, except that the
\noptions granted to Stig Leschly shall vest 20% on the second anniversary of the
\nClosing Date, an additional 20% on the third anniversary of the Closing Date,
\nand an additional 5% at the end of each three-month period thereafter until
\nfully vested.<\/p>\n
6.12 OPTION SHARES; REGISTRATION<\/p>\n
Amazon.com shall take all corporate action necessary to reserve for
\nissuance a sufficient number of Amazon.com Common Stock for delivery upon
\nexercise of the Options assumed in accordance with Section 1.7.2. Amazon.com
\nshall file with respect to shares of Amazon.com Common Stock subject to such
\nOptions held by individuals who are employees of the Company as of the time the
\nregistration statement described below becomes effective, a registration
\nstatement on Form S-8 (or any successor form) to be effective no later than the
\nlater of (a) the first business day after the Closing Date and (b) the fourth
\nbusiness day after the date on which the Audited Financial Statements are
\ndelivered to the Company. Amazon.com shall use all commercially reasonable
\nefforts to maintain the effectiveness of such registration statement or
\nregistration statements (and maintain the current status of the prospectus or
\nprospectuses contained therein) for so long as such Options remain outstanding.
\nAs a result of such registration, the shares of Amazon.com Common Stock covered
\nby such registration statement that are issuable upon the exercise of such
\nOptions will be freely tradable, without restriction under the Securities Act,
\nother than any restrictions imposed on affiliates of the Company pursuant to
\nRule 145(d) under the Securities Act and those restrictions imposed on
\naffiliates of Amazon.com pursuant to Rule 144 under the Securities Act. For so
\nlong as any such shares of Amazon.com Common Stock remain subject to Rule 145 of
\nthe Securities Act, Amazon.com agrees to use commercially reasonable efforts to
\ntimely file all required reports under the Exchange Act, and otherwise satisfy
\nthe requirements of Rule 144(c) under the Securities Act.<\/p>\n
6.13 EMPLOYEE MATTERS<\/p>\n
Amazon.com shall offer, or cause to be offered, employment with itself
\nor any Amazon.com Entity to each Central Employee and, as Amazon.com may elect
\nin its sole discretion, to such other employees of the Company, such employment
\nto commence as soon as is practically possible but in any event primarily in
\nSeattle, Washington within two weeks after the Closing and fully in Seattle,
\nWashington within six weeks after the Closing. Central Employees and any other
\nemployees offered employment shall evidence acceptance of such employment offer
\nby executing Amazon.com’s standard form of Confidentiality, Noncompetition and
\nInventions Agreement, in the form attached hereto as Exhibit 4.12.<\/p>\n
-60-
\n 68<\/p>\n
At the Effective Time, each employee of the Company who is offered and
\naccepts employment with an Amazon.com Entity as set forth in this Section will
\nbe provided with employee benefit plans, programs and arrangements by such
\nAmazon.com Entity which in the aggregate are no less favorable to such employee
\nthan those generally provided from time to time by such Amazon.com Entity to
\nsimilarly situated employees.<\/p>\n
6.14 INDEMNIFICATION<\/p>\n
Amazon.com agrees that all rights to indemnification existing in favor,
\nand all limitations on the personal liability, of a director or officer of the
\nCompany provided for in the Company’s Certificate of Incorporation or Bylaws, as
\nin effect of the date hereof with respect to matters occurring prior to the
\nEffective Time, shall, subject to the terms thereof, (a) survive the Merger and
\n(b) continue in full force and effect for a period of not less than six years
\nfrom the Closing Date; provided, however, that all rights to indemnification in
\nrespect of any claim asserted or made within such period shall continue until
\nthe disposition of such claim.<\/p>\n
6.15 BLUE SKY LAWS<\/p>\n
Amazon.com shall take such steps as may be necessary to comply with the
\nsecurities and blue sky laws of all jurisdictions which are applicable to the
\nissuance of the Amazon.com Common Stock in connection with the Merger. The
\nCompany and the Stockholders shall use commercially reasonable efforts to assist
\nAmazon.com as may be necessary to comply with the securities and blue sky laws
\nof all jurisdictions which are applicable in connection with the issuance of
\nAmazon.com Common Stock in connection with the Merger.<\/p>\n
6.16 HART-SCOTT-RODINO FILINGS<\/p>\n
Amazon.com and the Stockholders agree to make (a) all filings required
\nunder the HSR Act in connection with the Merger (other than those filings
\nrequired with respect to the issuance of the Post-Closing Shares) within three
\nbusiness days after the date hereof and (b) any filings required under the HSR
\nAct with respect to the issuance of the Post-Closing Shares no less than 45 days
\nprior to the first anniversary of the Closing Date.<\/p>\n
6.17 AUDITED FINANCIAL STATEMENTS<\/p>\n
At least four business days prior to the Closing Date, the Company shall
\ndeliver to Amazon.com an audited balance sheet, an audited statement of income
\nand expenses, an audited statement of cash flow and an audited statement of
\nstockholders <\/p>\n
-61-
\n 69<\/p>\n
equity of the Company as of and for the fiscal year ended December 31, 1998.
\nThese audited financial statements shall not reflect any material adverse change
\nfrom the Unaudited Financial Statements as at and for the same periods.<\/p>\n
6.18 REPAYMENT OF INDEBTEDNESS, RELEASES OF LIENS<\/p>\n
Prior to the Effective Time, the Company shall use commercially
\nreasonable efforts to pay all amounts owing under the Loan and Security
\nAgreement dated October 9, 1998, as amended, between Silicon Valley Bank (“SVB”)
\nand the Company, and under any other lending agreements or arrangements with
\nSVB, and to cause SVB to release, prior to the Effective Time, all Encumbrances
\nin SVB’s favor with respect to any of the Company’s assets.<\/p>\n
6.19 OPTIONHOLDER CONSENTS<\/p>\n
The Company shall use commercially reasonable efforts to cause the
\nholders of Options to provide the consents thereof specified in Sections 4.24
\nand 5.13 prior to April 30, 1999.<\/p>\n
6.20 LINKSHARE AGREEMENT<\/p>\n
The Company shall use commercially reasonable efforts to amend and
\nterminate the LinkShare Network Membership Agreement For Merchants, dated March
\n16, 1999 (the “LinkShare Agreement”), between LinkShare Corporation and the
\nCompany, in such a manner that neither Amazon.com nor any of its affiliates will
\nbe subject to the provisions of Section 6.5 thereof after the termination of the
\nLinkShare Agreement, the consummation of the Merger or the Effective Date.<\/p>\n
6.21 LEASE TERMINATIONS<\/p>\n
The Company shall use commercially reasonable efforts to terminate,
\nprior to the Effective Time, the leases referred to on Schedule 2.9(a) to the
\nCompany Disclosure Memorandum.<\/p>\n
ARTICLE VIA – COVENANTS OF THE STOCKHOLDERS<\/p>\n
6A.1 RESTRICTIONS ON TRANSFER<\/p>\n
Each Stockholder will not sell, transfer, or otherwise dispose of, or
\nmake any offer or agreement relating to any of the foregoing with respect to,
\nany shares of Amazon.com Common Stock that the undersigned may acquire in
\nconnection with the Merger, except: (i) in a transaction permitted pursuant to
\nRule 145 under the Securities <\/p>\n
-62-
\n 70<\/p>\n
Act; (ii) in a transaction otherwise exempt from the registration requirements
\nof the Securities Act; or (iii) pursuant to a registration statement under the
\nSecurities Act.<\/p>\n
6A.2 EXECUTION OF ALL OPERATIVE DOCUMENTS<\/p>\n
Each Stockholder will execute at or prior to Closing each Operative
\nDocument to which it is a party.<\/p>\n
6A.3 AGREEMENT TO VOTE SHARES<\/p>\n
(a) Each Stockholder shall vote or cause to be voted, or execute a
\nwritten consent with respect to, his, her or its shares of Company Capital Stock
\n(i) in favor of adoption and approval of the this Agreement and all transactions
\nrelating hereto or contemplated hereby at every meeting of the stockholders of
\nthe Company at which such matters are considered and at every adjournment
\nthereof and in connection with every proposal to take action by written consent
\nwith respect thereto, and (ii) against any proposal by a party other than
\nAmazon.com or the Purchaser to merge or consolidate with the Company or any
\nsubsidiary of the Company or to sell all or substantially all the assets of the
\nCompany or any subsidiary of the Company at every meeting of the stockholders of
\nthe Company at which such matters are considered and at every adjournment
\nthereof and in connection with every proposal to take action by written consent
\nwith respect thereto.<\/p>\n
(b) Each Stockholder agrees that he, she or it will not, nor will such
\nStockholder permit any entity under such Stockholder’s control to, deposit any
\nshares of Company Capital Stock in a voting trust or subject the shares to any
\nagreement, arrangement or understanding with respect to the voting of the shares
\ninconsistent with this Agreement.<\/p>\n
6A.4 LIMITATION ON SALES<\/p>\n
During the term of this Agreement, each Stockholder agrees not to sell,
\nassign, transfer, pledge, encumber or otherwise dispose of any of his, her or
\nits shares of Company Capital Stock.<\/p>\n
6A.5 WAIVER OF DISSENTER’S RIGHTS<\/p>\n
Each Stockholder hereby irrevocably and unconditionally waives, and
\nagrees to cause to be waived and to prevent the exercise of, any rights of
\nappraisal, any dissenters’ rights and any similar rights relating to the Merger
\nthat such Stockholder may have by virtue of the ownership of any shares of
\nCompany Capital Stock.<\/p>\n
-63-
\n 71<\/p>\n
6A.6 TAXES<\/p>\n
Each Stockholder shall timely pay all transfer, documentary, sales, use,
\nstamp, registration and other Taxes arising from or relating to the transactions
\ncontemplated by this Agreement, to the extent they relate specifically to the
\nissuance of shares of Amazon.com Common Stock to such Stockholder, and such
\nStockholder shall, at his, her or its own expense, file all necessary Tax
\nReturns and other documentation with respect to all such transfer, documentary,
\nsales, use, stamp, registration, and other Taxes.<\/p>\n
ARTICLE VII – TERMINATION, AMENDMENT AND WAIVER<\/p>\n
7.1 TERMINATION<\/p>\n
This Agreement may be terminated and the Merger may be abandoned at any
\ntime prior to the Effective Time (notwithstanding any approval of this Agreement
\nby the stockholders of the Company):<\/p>\n
(a) by mutual written consent;<\/p>\n
(b) by either the Company or Amazon.com, if the Merger has not
\nbeen consummated by June 15, 1999; provided, however, that the right to
\nterminate this Agreement under this subsection (b) shall not be available to any
\nparty whose failure to fulfill or cause to be fulfilled any obligation under
\nthis Agreement has been the cause of, or resulted in, the failure of the
\nEffective Time to occur on or before such date;<\/p>\n
(c) by either the Company or Amazon.com, if there shall be any
\nlaw or regulation that makes consummation of the Merger illegal or if any
\njudgment, injunction, order or decree enjoining Amazon.com, the Purchaser or the
\nCompany from consummating the Merger is entered and such judgment, injunction,
\norder or decree shall become final and nonappealable; provided, however, that
\nthe party seeking to terminate this Agreement pursuant to this subsection (c)
\nshall have used all reasonable efforts to remove such judgment, injunction,
\norder or decree;<\/p>\n
(d) by the Company, in the event of a material breach by
\nAmazon.com of any representation, warranty or agreement contained herein which
\nhas not been cured or is not curable by June 15, 1999;<\/p>\n
(e) by Amazon.com, (i) in the event of a material breach by the
\nCompany or by the Stockholders of any representation, warranty or agreement
\ncontained herein which has not been cured or is not curable by June 15, 1999 or
\n(ii) in <\/p>\n
-64-
\n 72<\/p>\n
the event (A) Stig Leschly, (B) three or more Primary Key Employees other than
\nMr. Leschly or (C) two or more Primary Key Employees other than Mr. Leschly and
\nboth Secondary Key Employees shall not have accepted the offer of employment
\npursuant to Section 6.13 within 14 days of the date hereof (or if any such
\nacceptance is terminated by such Primary Key Employees or Secondary Key
\nEmployees prior to the Effective Time).<\/p>\n
7.2 EFFECT OF TERMINATION<\/p>\n
In the event of the termination of this Agreement pursuant to Section
\n7.1 hereof, there shall be no further obligation on the part of any party
\nhereto, except that nothing herein shall relieve any party from liability for
\nany willful breach hereof.<\/p>\n
7.3 AMENDMENT<\/p>\n
This Agreement may not be amended except by an instrument in writing
\nsigned by Amazon.com, the Purchaser, the Company and Stockholders holding an
\naggregate of at least 90% of the Company Common Stock (including Common
\nConversion Shares) then outstanding; provided, however, that after approval of
\nthis Agreement by the Stockholders, no amendment will be made which by
\napplicable law requires the further approval of the Company’s stockholders
\nwithout obtaining such further approval.<\/p>\n
7.4 WAIVER<\/p>\n
At any time prior to the Effective Time, Amazon.com may (a) extend the
\ntime for the performance of any obligation or other act of the Company or the
\nStockholders, (b) waive any inaccuracy in the representations and warranties of
\nthe Company or the Stockholders contained herein or in any document delivered
\npursuant hereto, or (c) waive compliance with any agreement of the Company or
\nthe Stockholders or any condition to the obligations of Amazon.com and the
\nPurchaser contained herein. At any time prior to the Effective Time, the Company
\nmay (a) extend the time for the performance of any obligation or other act of
\nAmazon.com or the Purchaser, (b) waive any inaccuracy in the representations and
\nwarranties of Amazon.com or the Purchaser contained herein or in any document
\ndelivered pursuant hereto, or (c) waive compliance with any agreement of
\nAmazon.com or the Purchaser or any condition to the obligations of the Company
\ncontained herein. Any such extension or waiver shall be valid only if set forth
\nin an instrument in writing signed by the party or parties to be bound thereby.<\/p>\n
-65-
\n 73<\/p>\n
ARTICLE VIII – SURVIVAL AND INDEMNIFICATION<\/p>\n
8.1 SURVIVAL<\/p>\n
All representations and warranties contained in this Agreement or in the
\nother Operative Documents or in any certificate delivered pursuant hereto or
\nthereto shall survive the Closing for a period of one year after the Effective
\nTime (the “Survival Period”), and shall not be deemed waived or otherwise
\naffected by any investigation made or any knowledge acquired with respect
\nthereto, or by any notice delivered pursuant to Section 6.4 hereof; provided,
\nhowever, that any claim based on fraud shall survive the Closing indefinitely.
\nThe covenants and agreements contained in this Agreement or in the other
\nOperative Documents shall survive the Closing and shall continue until all
\nobligations with respect thereto shall have been performed or satisfied or shall
\nhave been terminated in accordance with their terms.<\/p>\n
8.2 INDEMNIFICATION BY THE STOCKHOLDERS<\/p>\n
Subject to the limitations set forth in this Article VIII, from and
\nafter the Closing, each Stockholder shall indemnify and hold Amazon.com, its
\nofficers, directors and affiliates (as “affiliate” is defined in Rule 12b-2 of
\nthe Exchange Act) (the “Amazon.com Indemnified Parties”) harmless from and
\nagainst, and shall reimburse, on a net after-tax basis (after taking into
\naccount any Taxes imposed on the receipt of the reimbursement and any Tax
\nbenefits actually utilized in reducing its Taxes), the Amazon.com Indemnified
\nParties for, any and all losses, damages, debts, liabilities, obligations,
\njudgments, orders, awards, writs, injunctions, decrees, fines, penalties, Taxes,
\ncosts or expenses (including, but not limited to, any reasonable legal or
\naccounting fees or expenses and any Taxes or other costs or damages arising
\nunder, caused by or related to Section 280G of the Code or any comparable
\nprovision of state, local or foreign law) (“Losses”) arising out of (i) any
\ninaccuracy or misrepresentation in, or breach of, any representation or warranty
\nmade by the Company or such Stockholder in this Agreement or in any other
\nOperative Document; (ii) any failure by the Company or such Stockholder to
\nperform or comply, in whole or in part, with any covenant or agreement in this
\nAgreement or in any other Operative Document; or (iii) any liability for
\nwithholding Taxes imposed with respect to any Merger Consideration payable to
\nStockholders. If Amazon.com cannot utilize a Tax benefit generated by any
\nLosses, Amazon.com shall repay to the Stockholder Representative, on behalf of
\nthe Stockholders, an amount equal to such Tax benefit when and in the amount
\nutilized, but in no event greater than the amount paid by the Stockholders under
\nthis Section 8.2 with respect to such Losses.<\/p>\n
-66-
\n 74<\/p>\n
8.3 INDEMNIFICATION BY AMAZON.COM<\/p>\n
Subject to the limitations set forth in this Article VIII, from and
\nafter the Closing, Amazon.com shall indemnify and hold the Stockholders harmless
\nfrom and against, and shall reimburse the Stockholders for, any and all Losses
\narising out of (i) any inaccuracy or misrepresentation in, or breach of, any
\nrepresentation or warranty made by Amazon.com or the Purchaser in this Agreement
\nor in any other Operative Document; or (ii) any failure by Amazon.com or the
\nPurchaser to perform or comply, in whole or in part, with any covenant or
\nagreement in this Agreement or in any other Operative Document.<\/p>\n
8.4 THRESHOLD AND LIMITATIONS; ADJUSTMENT OF MERGER CONSIDERATION<\/p>\n
(a) No Amazon.com Indemnified Party or Stockholder shall be entitled to
\nreceive any indemnification payment with respect to any claims for
\nindemnification under this Article VIII (“Claims”) until the aggregate Losses
\nfor which the Amazon.com Indemnified Parties or the Stockholders, as the case
\nmay be, would otherwise be entitled to receive indemnification exceed $200,000
\n(the “Threshold”); provided, however, that once such aggregate Losses exceed the
\nThreshold, the Amazon.com Indemnified Parties or the Stockholders, as the case
\nmay be, shall be entitled to indemnification for the aggregate amount of all
\nLosses without regard to the Threshold; and, provided further, that the
\nAmazon.com Indemnified Parties and the Stockholders (collectively, the
\n“Indemnified Parties”) shall be entitled to indemnification for all Losses based
\nupon a claim of fraud without regard to the Threshold.<\/p>\n
(b) Except for Losses based upon a claim of fraud, the aggregate
\nliability of any Stockholder under this Article VIII shall be limited to such
\nStockholder’s Escrow Shares. For Losses based upon a claim of fraud, the
\naggregate liability of any Stockholder under this Article VIII shall be limited
\nto a dollar amount equal to the sum of (i) the product of the Closing Price
\nmultiplied by the number of Closing Date Shares such Stockholder receives in
\nconnection with the Merger, plus (ii) the product of the Post-Closing Price
\nmultiplied by the number of Post-Closing Shares such Stockholder receives in
\nconnection with the Merger. Except for Losses based on fraud, the Amazon.com
\nIndemnified Parties shall not be entitled to pursue any Claims against a
\nStockholder directly or personally and the sole recourse of the Amazon.com
\nIndemnified Parties shall be to make Claims against the Escrow Shares of such
\nStockholder in accordance with the terms of the Escrow Agreement. In the event
\nof any Claim based upon fraud by a Stockholder (but not based on fraud by the
\nCompany), the Amazon.com Indemnified Parties shall be entitled to pursue the
\nClaim only against such Stockholder and any other Stockholders participating in
\nthe fraud. In <\/p>\n
-67-
\n 75<\/p>\n
the event of any Claim based upon fraud by the Company, the Amazon.com
\nIndemnified Parties shall be entitled to pursue the Claim against all
\nStockholders.<\/p>\n
(c) An indemnifying party shall not be obligated to defend and hold
\nharmless an Indemnified Party, or otherwise be liable to such party, with
\nrespect to any claims made by the Indemnified Party after the expiration of the
\napplicable time period as set forth in Section 8.1 hereof. Notwithstanding the
\nforegoing, indemnity may be sought after the expiration of the Survival Period
\npursuant to this Article VIII if a Claim Notice (as defined in Section 8.5(a)
\nhereof) shall have been delivered to the Stockholder Representative, on behalf
\nof the Stockholders, or to Amazon.com, as the case may be, prior to the
\nexpiration of the Survival Period.<\/p>\n
(d) The indemnification obligations of the Stockholders under this
\nArticle VIII (including, without limitation, with respect to any Claim based on
\nfraud) shall be satisfied, first, by means of the release from escrow to the
\nAmazon.com Indemnified Parties of Escrow Shares in accordance with the
\nprovisions of the Escrow Agreement. The number of Escrow Shares to be released
\nfrom escrow to the Amazon.com Indemnified Parties in payment of any Claims shall
\nbe determined by dividing (x) the aggregate dollar amount of such Claims by (y)
\nthe Closing Price. The aggregate value of Claims paid by means of such release
\nof Escrow Shares shall be deemed to reduce the total Merger Consideration
\notherwise payable to the Stockholders pursuant to Section 1.7 of this Agreement.
\nAny such Claims shall be deemed to reduce the Escrow Shares, pro rata with
\nrespect to each Stockholder, as determined by reference to the number of Closing
\nDate Shares such Stockholder is entitled to receive in the Merger as compared to
\nall other Stockholders; provided, however, that any Claims paid with respect to
\nany Loss related to any representation, warranty, covenant or agreement of a
\nStockholder or based upon fraud by a Stockholder shall not result in a pro rata
\nreduction of the Escrow Shares but shall reduce only the Escrow Shares of such
\nStockholder.<\/p>\n
8.5 PROCEDURE FOR INDEMNIFICATION<\/p>\n
(a) An Indemnified Party shall give written notice (the “Claim Notice”)
\nof any Claim for indemnification under this Article VIII to the Stockholder
\nRepresentative, on behalf of the Stockholders, or to Amazon.com, as the case may
\nbe, reasonably promptly after the assertion against the Indemnified Party of any
\nclaim by a third party (a “Third Party Claim”) or, if such Claim is not in
\nrespect of a Third Party Claim, reasonably promptly after the discovery of facts
\nupon which the Indemnified Party intends to base a Claim for indemnification
\npursuant to this Article VIII; provided, however, that the failure or delay to
\nso notify the Stockholder Representative or Amazon.com, as the case may be,
\nshall not relieve the indemnifying party of any <\/p>\n
-68-
\n 76<\/p>\n
obligation or liability that the indemnifying party may have to the Indemnified
\nParty except to the extent that the indemnifying party demonstrates that his,
\nher or its ability to defend or resolve such Claim is adversely affected
\nthereby. Any such Claim Notice shall describe the facts and circumstances on
\nwhich the asserted Claim for indemnification is based and shall include the
\namount of the indemnifiable Losses (or, if such amount is not then determined, a
\ngood faith estimate thereof) and the basis for the determination of the amount
\nof such Losses.<\/p>\n
(b) (i) (A) Subject to the rights of or duties to any insurer or
\nother third party having potential liability therefor, the Stockholder
\nRepresentative, on behalf of the Stockholders, shall have the right, upon
\nwritten notice given by the Stockholder Representative to the Amazon.com
\nIndemnified Party within 30 days after receipt by the Stockholder Representative
\nof the notice from the Amazon.com Indemnified Party of any Third Party Claim, to
\nassume the defense or handling of such Third Party Claim, at the Stockholders’
\nsole expense, in which case the provisions of Section 8.5(b)(ii) hereof shall
\ngovern; provided, however, that, notwithstanding the foregoing, Amazon.com may
\nelect to assume the defense and handle any such Third Party Claim if it
\ndetermines in good faith that the resolution of such Third Party Claim could
\nresult in an adverse impact on the business, operations, assets, liabilities
\n(absolute, accrued, contingent or otherwise), condition (financial or otherwise)
\nor prospects of Amazon.com, in which case the provisions of Section 8.5(c)(ii)
\nhereof shall govern.<\/p>\n
(B) Subject to the rights of or duties to any insurer or
\nother third party having potential liability therefor, Amazon.com shall have the
\nright, upon written notice given by Amazon.com to the Stockholder Representative
\nwithin 30 days after receipt by Amazon.com of the notice from a Stockholder of
\nany Third Party Claim, to assume the defense or handling of such Third Party
\nClaim, at Amazon.com’s sole expense, in which case the provisions of Section
\n8.5(b)(ii) hereof shall govern<\/p>\n
(ii) The Stockholder Representative, on behalf of the
\nStockholders, or Amazon.com, as the case may be, shall select counsel reasonably
\nacceptable to the Indemnified Party in connection with conducting the defense or
\nhandling of such Third Party Claim, and the Stockholder Representative or
\nAmazon.com, as the case may be, shall defend or handle the same in consultation
\nwith the Indemnified Party and shall keep the Indemnified Party timely apprised
\nof the status of such Third Party Claim. Neither the Stockholder Representative
\nnor Amazon.com, as the case may be, shall, without the prior written consent of
\nthe Indemnified Party, agree to a settlement of any Third Party Claim, unless
\n(A) the settlement provides an unconditional release and discharge of the
\nIndemnified Party and the Indemnified Party is reasonably satisfied <\/p>\n
-69-
\n 77<\/p>\n
with such discharge and release and (B) with respect to any Claim by an
\nAmazon.com Indemnified Party, Amazon.com shall not have reasonably objected to
\nany such settlement on the ground that the circumstances surrounding the
\nsettlement could result in an adverse impact on the business, operations,
\nassets, liabilities (absolute, accrued, contingent or otherwise), condition
\n(financial or otherwise) or prospects of Amazon.com. The Indemnified Party shall
\ncooperate with the Stockholder Representative or Amazon.com, as the case may be,
\nand shall be entitled to participate in the defense or handling of such Third
\nParty Claim with its own counsel and at its own expense.<\/p>\n
(c) (i) (A) If (x) the Stockholder Representative does not give
\nwritten notice to the Amazon.com Indemnified Party pursuant to Section
\n8.5(b)(i)(A) within 30 days after receipt of the notice from the Amazon.com
\nIndemnified Party of any Third Party Claim of the Stockholder Representative’s
\nelection to assume the defense or handling of such Third Party Claim or (y)
\nAmazon.com elects to assume the defense and the handling of such Third Party
\nClaim pursuant to the proviso in Section 8.5(b)(i)(A), the provisions of Section
\n8.5(c)(ii) hereof shall govern.<\/p>\n
(B) If Amazon.com does not give written notice to the
\nStockholder Representative pursuant to Section 8.5(b)(i)(B) within 30 days after
\nreceipt of the notice from a Stockholder of any Third Party Claim of
\nAmazon.com’s election to assume the defense or handling of such Third Party
\nClaim, the provisions of Section 8.5(c)(ii) hereof shall govern.<\/p>\n
(ii) The Indemnified Party may, at the indemnifying party’s
\nexpense , select counsel reasonably acceptable to the indemnifying party in
\nconnection with conducting the defense or handling of such Third Party Claim and
\ndefend or handle such Third Party Claim in such manner as the Indemnified Party
\nmay deem appropriate and in consultation with the indemnified party; provided,
\nhowever, that the Indemnified Party shall keep the Stockholder Representative or
\nAmazon.com, as the case may be, timely apprised of the status of such Third
\nParty Claim and shall not settle such Third Party Claim without the prior
\nwritten consent of the Stockholder Representative or Amazon.com, as the case may
\nbe, which consent shall not be unreasonably withheld. If the Indemnified Party
\ndefends or handles such Third Party Claim, the indemnifying party shall
\ncooperate with the Indemnified Party and shall be entitled to participate in the
\ndefense or handling of such Third Party Claim with its own counsel and at its
\nown expense.<\/p>\n
8.6 REMEDIES; SPECIFIC PERFORMANCE<\/p>\n
Except as otherwise provided, the indemnification provisions of this<\/p>\n
-70-
\n 78<\/p>\n
Article VIII are the sole and exclusive remedy of any party to this Agreement
\nfor a breach of any representation, warranty or covenant contained herein.
\nNotwithstanding the preceding sentence, each of the parties acknowledges and
\nagrees that the other parties hereto would be damaged irreparably in the event
\nany of the provisions of this Agreement are not performed in accordance with
\ntheir specific terms or otherwise are breached. Accordingly, each of the parties
\nhereto agrees that the other parties hereto shall be entitled to an injunction
\nto prevent breaches of the provisions of this Agreement and to enforce
\nspecifically this Agreement and the terms and provisions hereof (including the
\nindemnification provisions hereof) in any competent court having jurisdiction
\nover the parties, in addition to any other remedy to which they may be entitled
\nat law or in equity.<\/p>\n
ARTICLE IX – GENERAL<\/p>\n
9.1 TAX MATTERS<\/p>\n
All of the parties hereto shall cooperate, as and to the extent
\nreasonably requested, in connection with the preparation of any Tax Return and
\nany audit, investigation, litigation or other action with respect to Taxes that
\nmay be instituted after the Closing.<\/p>\n
9.2 EXPENSES<\/p>\n
Regardless of whether the transactions contemplated by this Agreement
\nare consummated, each party shall pay its own fees and expenses (including,
\nwithout limitation, legal fees and expenses and filing fees under the HSR Act)
\nincident to the negotiation, preparation and execution of this Agreement and the
\nother Operative Documents; provided, however, that all fees and expenses
\nincurred by or on behalf of the Company in excess of $250,000 in connection with
\nthe transactions contemplated by this Agreement or the other Operative Documents
\nshall be the sole joint and several responsibility of the Stockholders; and,
\nprovided further, that, should any action be brought hereunder, the attorneys’
\nfees and expenses of the prevailing party shall be paid by the other party to
\nsuch action.<\/p>\n
9.3 NOTICES<\/p>\n
Any notice, request or demand desired or required to be given hereunder
\nshall be in writing given by personal delivery, confirmed facsimile
\ntransmission, or overnight courier service, in each case addressed as
\nrespectively set forth below or to such other address as any party shall have
\npreviously designated by such a notice. The effective date of any notice,
\nrequest or demand shall be the date of personal delivery, <\/p>\n
-71-
\n 79<\/p>\n
the date on which successful facsimile transmission is confirmed or the date
\nactually delivered by a reputable overnight courier service, as the case may be,
\nin each case properly addressed as provided herein and with all charges prepaid.<\/p>\n
TO AMAZON.COM OR THE PURCHASER:<\/p>\n
Amazon.com, Inc.
\n 1516 Second Avenue
\n Seattle, Washington 98101
\n Fax: (206) 834-7010
\n Attention: Legal<\/p>\n
with a copy to:<\/p>\n
Perkins Coie LLP
\n 1201 Third Avenue, 40th Floor
\n Seattle, Washington 98101-3099
\n Fax: (206) 583-8500
\n Attention: Scott L. Gelband<\/p>\n
TO THE COMPANY:<\/p>\n
e-Niche Incorporated
\n 875 Massachusetts Avenue, 6th Floor
\n Cambridge, Massachusetts 02139
\n Fax: (617) 491-7004
\n Attention: Stig Leschly<\/p>\n
with a copy to:<\/p>\n
Goodwin, Procter & Hoar LLP
\n Exchange Place
\n Boston, Massachusetts 02109-2881
\n Fax: (617) 523-1231
\n Attention: Kevin M. Dennis<\/p>\n
TO THE STOCKHOLDER REPRESENTATIVE:<\/p>\n
Stig Leschly
\n c\/o e-Niche Incorporated
\n 875 Massachusetts Avenue, 6th Floor
\n Cambridge, Massachusetts 02139<\/p>\n
-72-
\n 80<\/p>\n
Fax: (617) 491-7004<\/p>\n
with a copy to:<\/p>\n
Goodwin, Procter & Hoar LLP
\n Exchange Place
\n Boston, Massachusetts 02109-2881
\n Fax: (617) 523-1231
\n Attention: Kevin M. Dennis<\/p>\n
9.4 SEVERABILITY<\/p>\n
If any term or other provision of this Agreement is invalid, illegal or
\nincapable of being enforced by any rule of law, or public policy, all other
\nconditions and provisions of this Agreement shall nevertheless remain in full
\nforce and effect so long as the economic or legal substance of the transactions
\ncontemplated hereby is not affected in any manner adverse to any party. Upon
\nsuch determination that any term or other provision is invalid, illegal or
\nincapable of being enforced, the parties hereto shall negotiate in good faith to
\nmodify this Agreement so as to effect the original intent of the parties as
\nclosely as possible in a mutually acceptable manner in order that the
\ntransactions contemplated hereby be consummated as originally contemplated to
\nthe fullest extent possible.<\/p>\n
9.5 ENTIRE AGREEMENT<\/p>\n
This Agreement, the Mutual Nondisclosure Agreement and the other
\nOperative Documents constitute the entire agreement among the parties with
\nrespect to the subject matter hereof and thereof and supersede all prior
\nagreements and undertakings, both written and oral, among the parties, or any of
\nthem, with respect to the subject matter hereof and thereof.<\/p>\n
9.6 ASSIGNMENT<\/p>\n
This Agreement shall not be assigned prior to the Closing by operation
\nof law or otherwise; provided, however, that the Purchaser’s rights and
\nobligations may be assigned to and assumed by Amazon.com or by any other
\ncorporation wholly owned (directly or through intermediate wholly-owned
\nsubsidiaries) by Amazon.com.<\/p>\n
9.7 PARTIES IN INTEREST<\/p>\n
This Agreement shall be binding upon and inure solely to the benefit of
\nthe parties hereto and their respective successors, heirs, legal representatives
\nand permitted <\/p>\n
-73-
\n 81<\/p>\n
assigns, and nothing in this Agreement, express or implied, is intended to or
\nshall confer upon any other Person any right, benefit or remedy of any nature
\nwhatsoever under or by reason of this Agreement.<\/p>\n
9.8 GOVERNING LAW<\/p>\n
This Agreement shall be governed by, and construed in accordance with,
\nthe laws of the State of Delaware applicable to contracts executed in and to be
\nperformed in that state. All actions and proceedings arising out of or relating
\nto this Agreement shall be heard and determined in any Delaware state or federal
\ncourt.<\/p>\n
9.9 HEADINGS<\/p>\n
The descriptive headings contained in this Agreement are included for
\nconvenience of reference only and shall not affect in any way the meaning or
\ninterpretation of this Agreement.<\/p>\n
9.10 COUNTERPARTS<\/p>\n
This Agreement may be executed and delivered (including by facsimile
\ntransmission) in one or more counterparts, and by the different parties hereto
\nin separate counterparts, each of which when executed and delivered shall be
\ndeemed to be an original but all of which taken together shall constitute one
\nand the same agreement. To expedite the process of entering into this Agreement,
\nthe parties acknowledge that Transmitted Copies of this Agreement will be
\nequivalent to original documents until such time as original documents are
\ncompletely executed and delivered. “Transmitted Copies” will mean copies that
\nare reproduced or transmitted via photocopy, facsimile or other process of
\ncomplete and accurate reproduction and transmission.<\/p>\n
9.11 WAIVER OF JURY TRIAL<\/p>\n
Amazon.com, the Company, the Purchaser and each of the Stockholders
\nhereby irrevocably waives all right to trial by jury in any action, proceeding
\nor counterclaim (whether based on contract, tort or otherwise) arising out of or
\nrelating to this Agreement, the transactions contemplated hereby or the actions
\nof such parties in the negotiation, administration, performance and enforcement
\nhereof.<\/p>\n
[Remainder of this page intentionally left blank.]<\/p>\n
-74-
\n 82<\/p>\n
IN WITNESS WHEREOF, the parties hereto have entered into and signed this
\nAgreement and Plan of Merger as of the date and year first above written.<\/p>\n
AMAZON.COM, INC.<\/p>\n
By \/s\/ Randy Tinsley
\n ———————————-
\n Its Treasurer
\n ———————————-<\/p>\n
AMAZON.COM AUCTIONS, INC.<\/p>\n
By \/s\/ Randy Tinsley
\n ———————————-
\n Its Treasurer
\n ———————————-<\/p>\n
E-NICHE INCORPORATED<\/p>\n
By \/s\/ Stig Leschly
\n ———————————-
\n Its President & CEO
\n ———————————-<\/p>\n
STOCKHOLDERS:<\/p>\n
\/s\/ Stig Leschly
\n ————————————
\n Stig Leschly<\/p>\n
-S-1-
\n 83<\/p>\n
\/s\/ Sri Rao
\n ————————————————–
\n Sri Rao<\/p>\n
POLARIS VENTURE PARTNERS II, L.P.
\n By: Polaris Venture Management Co. II, L.L.C.
\n Its General Partner<\/p>\n
By \/s\/ John Gannon
\n ————————————————
\n Its
\n ————————————————<\/p>\n
POLARIS VENTURE PARTNERS FOUNDERS’ FUND II, L.P.
\n By: Polaris Venture Management Co. II, L.L.C.
\n Its General Partner<\/p>\n
By \/s\/ John Gannon
\n ————————————————
\n Its
\n ————————————————<\/p>\n
ACCEL VI L.P.
\n By: Accel VI Associates L.L.C.
\n Its General Partner<\/p>\n
By \/s\/ G. Carter Sednaoui
\n ————————————————
\n Its
\n ————————————————<\/p>\n
-S-2-
\n 84<\/p>\n
ACCEL INTERNET FUND II, L.P.
\n By: Accel Internet Fund II Associates L.L.C.
\n Its General Partner<\/p>\n
By \/s\/ G. Carter Sednaoui
\n ————————————————
\n Its
\n ————————————————<\/p>\n
ACCEL KEIRETSU VI L.P.
\n By: Accel Keiretsu VI Associates L.L.C.
\n Its General Partner<\/p>\n
By \/s\/ G. Carter Sednaoui
\n ————————————————
\n Its
\n ————————————————<\/p>\n
ACCEL INVESTORS ’98 L.P.<\/p>\n
By \/s\/ G. Carter Sednaoui
\n ————————————————
\n Its
\n ————————————————<\/p>\n
THE WASHINGTON POST COMPANY<\/p>\n
By \/s\/ John B. Morse, Jr.
\n ————————————————
\n Its
\n ————————————————<\/p>\n
\/s\/ Lotte Leschly
\n ————————————————–
\n Lotte Leschly<\/p>\n
-S-3-
\n 85<\/p>\n
\/s\/ George Conrades
\n ————————————————–
\n George Conrades<\/p>\n
\/s\/ Mitch Kapor
\n ————————————————–
\n Mitch Kapor<\/p>\n
\/s\/ Russell Carson
\n ————————————————–
\n Russell Carson<\/p>\n
\/s\/ Bill Sahlman
\n ————————————————–
\n Bill Sahlman<\/p>\n
\/s\/ Frank O’Connell
\n ————————————————–
\n Frank O’Connell<\/p>\n
\/s\/ Kosmo Kallierekos
\n ————————————————–
\n Kosmo Kallierekos<\/p>\n
\/s\/ Virginia M. Turezyn
\n ————————————————–
\n Virginia M. Turezyn<\/p>\n
\/s\/ Tom Cohen
\n ————————————————–
\n Tom Cohen<\/p>\n
-S-4-<\/p>\n
86
\n FIRST AMENDMENT
\n TO
\n AGREEMENT AND PLAN OF MERGER<\/p>\n
This First Amendment to Agreement and Plan of Merger (this “Amendment”) is
\nmade and entered into as of May 7, 1999, by and among Amazon.com, Inc., a
\nDelaware corporation (“Amazon.com”), Amazon.com Auctions, Inc., a Delaware
\ncorporation and wholly owned subsidiary of Amazon.com (the “Purchaser”), e-Niche
\nIncorporated, a Delaware corporation (the “Company”), and all the stockholders
\nof the Company (the “Stockholders”).<\/p>\n
RECITALS<\/p>\n
A. Amazon.com, the Purchaser, the Company and the Stockholders are all the
\nparties to the Agreement and Plan of Merger dated as of April 24, 1999 (the
\n“Agreement”), pursuant to which the parties have agreed that, on the terms and
\nsubject to the conditions of the Agreement, the Company shall be merged with and
\ninto the Purchaser, with the Purchaser being the surviving corporation.<\/p>\n
B. Amazon.com, the Purchaser, the Company and the Stockholders desire to
\namend the Agreement as set forth herein.<\/p>\n
C. Unless otherwise defined herein, capitalized terms used herein shall
\nhave the meanings assigned thereto in the Agreement.<\/p>\n
AGREEMENT<\/p>\n
NOW, THEREFORE, in consideration of the premises and other good and
\nvaluable consideration, the receipt and sufficiency of which are hereby
\nacknowledged, the parties hereto agree as follows:<\/p>\n
1. AMENDMENT OF AGREEMENT AND PLAN OF MERGER<\/p>\n
The parties hereby modify and amend the Agreement as follows:<\/p>\n
(a) By deleting the name “Stig Leschly” in Section 1.8 of the Agreement
\nand by substituting in lieu thereof the name “Jonathan A. Flint”.<\/p>\n
(b) By deleting the name of and the address information for the
\nStockholder Representative in Section 9.3 of the Agreement and by substituting
\nin lieu thereof the following:<\/p>\n
Page 1
\n 87<\/p>\n
“Jonathan A. Flint
\n c\/o Polaris Venture Partners
\n 1000 Winter Street, Suite 3350
\n Waltham, Massachusetts 02451-1215
\n Fax: (781) 290-0880”<\/p>\n
(c) By adding to the end of Section 2.4 of the Agreement the following
\nsentence:<\/p>\n
“If the subsidiary set forth in Schedule 2.4 to the Company
\n Disclosure Schedule were deemed to be the “Company” for purposes of
\n the representations and warranties in this Article II, such
\n representations and warranties would be true and correct in all
\n material respects with respect to such subsidiary, other than those
\n in Section 2.3 and in the first sentence of Section 2.1.”<\/p>\n
(d) By deleting the reference to “Amazon.com” in Section 4.22 of the
\nAgreement and by substituting in lieu thereof “the Company”.<\/p>\n
(e) By deleting Section 8.4(d) of the Agreement in its entirety and by
\nsubstituting in lieu thereof the following Section 8.4(d):<\/p>\n
” (d) The indemnification obligations of the Stockholders under this
\n Article VIII (including, without limitation, with respect to any
\n Claim based on fraud) shall be satisfied, first, by means of the
\n release from escrow to Amazon.com, on behalf of the Amazon.com
\n Indemnified Parties, of Escrow Shares in accordance with the
\n provisions of the Escrow Agreement. The number of Escrow Shares to
\n be released from escrow to Amazon.com in payment of any Claims shall
\n be determined by dividing (x) the aggregate dollar amount of such
\n Claims by (y) the Closing Price. The aggregate value of Claims paid
\n by means of such release of Escrow Shares shall be deemed to reduce
\n the total Merger Consideration otherwise payable to the Stockholders
\n pursuant to Section 1.7 of this Agreement. Any such Claims shall be
\n deemed to reduce the Escrow Shares, pro rata with respect to each
\n Stockholder, as determined by reference to the number of Closing
\n Date Shares such Stockholder is entitled to receive in the Merger as
\n compared to all other Stockholders; provided, however, that any
\n Claims paid with respect to any Loss related to any representation,
\n warranty, covenant or agreement of a Stockholder or based upon fraud
\n by a Stockholder shall not result in a pro rata<\/p>\n
Page 2
\n 88
\n reduction of the Escrow Shares but shall reduce only the Escrow
\n Shares of such Stockholder.”<\/p>\n
(f) By deleting Sections 8.5(a), (b) and (c) of the Agreement in their
\nentirety and by substituting in lieu thereof the following Sections 8.5(a), (b)
\nand (c):<\/p>\n
” (a) Amazon.com, on behalf of the Amazon.com Indemnified Parties,
\n and the Stockholder Representative, on behalf of the Stockholders,
\n shall give written notice (the “Claim Notice”) of any Claim for
\n indemnification under this Article VIII to the Stockholder
\n Representative or to Amazon.com, as the case may be, as well as to
\n the Escrow Agent reasonably promptly after the assertion against an
\n Indemnified Party of any claim by a third party (a “Third Party
\n Claim”) or, if such Claim is not in respect of a Third Party Claim,
\n reasonably promptly after the discovery of facts upon which the
\n Indemnified Party intends to base a Claim for indemnification
\n pursuant to this Article VIII; provided, however, that the failure
\n or delay to so notify the Stockholder Representative or Amazon.com,
\n as the case may be, or the Escrow Agent shall not relieve the
\n indemnifying party of any obligation or liability that the
\n indemnifying party may have to the Indemnified Party except to the
\n extent that the indemnifying party demonstrates that his, her or its
\n ability to defend or resolve such Claim is adversely affected
\n thereby. Any such Claim Notice shall describe the facts and
\n circumstances on which the asserted Claim for indemnification is
\n based and shall include the amount of the indemnifiable Losses (or,
\n if such amount is not then determined, a good faith estimate
\n thereof), the basis for the determination of the amount of such
\n Losses and, if the Claim is asserted against less than all of the
\n Stockholders, the identity of such Stockholders against whom the
\n Claim is asserted.<\/p>\n
(b) (i) (A) Subject to the rights of or duties to any insurer
\n or other third party having potential liability therefor, the
\n Stockholder Representative, on behalf of the Stockholders, shall
\n have the right, upon written notice given by the Stockholder
\n Representative to Amazon.com, on behalf of the Amazon.com
\n Indemnified Party, within 30 days after receipt by the Stockholder
\n Representative of the notice from Amazon.com of any Third Party
\n Claim, to assume the defense or handling of such Third Party Claim,
\n at the Stockholders’ sole expense, in which case the provisions of
\n Section 8.5(b)(ii) hereof shall govern; provided,<\/p>\n
Page 3
\n 89
\n however, that, notwithstanding the foregoing, Amazon.com may elect
\n to assume the defense and handle any such Third Party Claim if it
\n determines in good faith that the resolution of such Third Party
\n Claim could result in an adverse impact on the business, operations,
\n assets, liabilities (absolute, accrued, contingent or otherwise),
\n condition (financial or otherwise) or prospects of Amazon.com, in
\n which case the provisions of Section 8.5(c)(ii) hereof shall govern.<\/p>\n
(B) Subject to the rights of or duties to any
\n insurer or other third party having potential liability therefor,
\n Amazon.com shall have the right, upon written notice given by
\n Amazon.com to the Stockholder Representative within 30 days after
\n receipt by Amazon.com of the notice from a Stockholder of any Third
\n Party Claim, to assume the defense or handling of such Third Party
\n Claim, at Amazon.com’s sole expense, in which case the provisions of
\n Section 8.5(b)(ii) hereof shall govern.<\/p>\n
(ii) The Stockholder Representative, on behalf of the
\n Stockholders, or Amazon.com, as the case may be, shall select
\n counsel reasonably acceptable to the Indemnified Party in connection
\n with conducting the defense or handling of such Third Party Claim,
\n and the Stockholder Representative or Amazon.com, as the case may
\n be, shall defend or handle the same in consultation with the
\n Indemnified Party and shall keep the Indemnified Party timely
\n apprised of the status of such Third Party Claim. Neither the
\n Stockholder Representative nor Amazon.com, as the case may be,
\n shall, without the prior written consent of the Indemnified Party,
\n agree to a settlement of any Third Party Claim, unless (A) the
\n settlement provides an unconditional release and discharge of the
\n Indemnified Party and the Indemnified Party is reasonably satisfied
\n with such discharge and release and (B) with respect to any Claim by
\n or on behalf of an Amazon.com Indemnified Party, Amazon.com shall
\n not have reasonably objected to any such settlement on the ground
\n that the circumstances surrounding the settlement could result in an
\n adverse impact on the business, operations, assets, liabilities
\n (absolute, accrued, contingent or otherwise), condition (financial
\n or otherwise) or prospects of Amazon.com. The Indemnified Party
\n shall cooperate with the Stockholder Representative or Amazon.com,
\n as the case may be, and shall be entitled to<\/p>\n
Page 4
\n 90
\n participate in the defense or handling of such Third Party Claim
\n with its own counsel and at its own expense.<\/p>\n
(c) (i) (A) If (x) the Stockholder Representative does not
\n give written notice to Amazon.com pursuant to Section 8.5(b)(i)(A)
\n within 30 days after receipt of the notice from Amazon.com of any
\n Third Party Claim of the Stockholder Representative’s election to
\n assume the defense or handling of such Third Party Claim or (y)
\n Amazon.com elects to assume the defense and the handling of such
\n Third Party Claim pursuant to the proviso in Section 8.5(b)(i)(A),
\n the provisions of Section 8.5(c)(ii) hereof shall govern.<\/p>\n
(B) If Amazon.com does not give written notice to
\n the Stockholder Representative pursuant to Section 8.5(b)(i)(B)
\n within 30 days after receipt of the notice from a Stockholder of any
\n Third Party Claim of Amazon.com’s election to assume the defense or
\n handling of such Third Party Claim, the provisions of Section
\n 8.5(c)(ii) hereof shall govern.<\/p>\n
(ii) The Indemnified Party may, at the indemnifying
\n party’s expense , select counsel reasonably acceptable to the
\n indemnifying party in connection with conducting the defense or
\n handling of such Third Party Claim and defend or handle such Third
\n Party Claim in such manner as the Indemnified Party may deem
\n appropriate and in consultation with the indemnified party;
\n provided, however, that the Indemnified Party shall keep the
\n Stockholder Representative or Amazon.com, as the case may be, timely
\n apprised of the status of such Third Party Claim and shall not
\n settle such Third Party Claim without the prior written consent of
\n the Stockholder Representative or Amazon.com, as the case may be,
\n which consent shall not be unreasonably withheld. If the Indemnified
\n Party defends or handles such Third Party Claim, the indemnifying
\n party shall cooperate with the Indemnified Party and shall be
\n entitled to participate in the defense or handling of such Third
\n Party Claim with its own counsel and at its own expense.”<\/p>\n
(g) By replacing Schedule 2.8(i) to the Company Disclosure Schedule with
\nthe revised Schedule 2.8(i) attached hereto.<\/p>\n
(h) By replacing Exhibit 1.7.2(c) to the Agreement with the revised
\nExhibit 1.7.2(c) attached hereto.<\/p>\n
Page 5
\n 91<\/p>\n
2. EFFECT ON AGREEMENT AND PLAN OF MERGER<\/p>\n
Except as specifically amended and modified by this Amendment, the terms
\nand provisions of the Agreement remain unchanged and in full force and effect.
\nAll references in the Agreement or the other Operative Documents or otherwise to
\nthe Agreement shall hereinafter refer to the Agreement as amended by this
\nAmendment.<\/p>\n
3. MISCELLANEOUS<\/p>\n
(a) This Amendment shall be governed by, and construed in accordance with,
\nthe laws of the State of Delaware applicable to contracts executed in and to be
\nperformed in that state. All actions and proceedings arising out of or relating
\nto this Amendment shall be heard and determined in any Delaware state or federal
\ncourt.<\/p>\n
(b) The descriptive headings contained in this Amendment are included for
\nconvenience of reference only and shall not affect in any way the meaning or
\ninterpretation of this Amendment.<\/p>\n
(c) This Amendment may be executed and delivered (including by facsimile
\ntransmission) in one or more counterparts, and by the different parties hereto
\nin separate counterparts, each of which when executed and delivered shall be
\ndeemed to be an original but all of which taken together shall constitute one
\nand the same agreement. To expedite the process of entering into this Amendment,
\nthe parties acknowledge that Transmitted Copies of this Amendment will be
\nequivalent to original documents until such time as original documents are
\ncompletely executed and delivered.<\/p>\n
[Remainder of this page intentionally left blank.]<\/p>\n
Page 6
\n 92
\n IN WITNESS WHEREOF, the parties hereto have entered into and signed this
\nFirst Amendment to Agreement and Plan of Merger as of the date and year first
\nabove written.<\/p>\n
AMAZON.COM, INC.<\/p>\n
By \/s\/ Randy Tinsley
\n ———————————–
\n Its: Vice President and Treasurer<\/p>\n
AMAZON.COM AUCTIONS, INC.<\/p>\n
By \/s\/ Randy Tinsley
\n ———————————–
\n Its: Treasurer<\/p>\n
E-NICHE INCORPORATED<\/p>\n
By \/s\/ Stig Leschly
\n ———————————–
\n Its: CEO<\/p>\n
STOCKHOLDERS:<\/p>\n
\/s\/ Stig Leschly
\n —————————————-
\n Stig Leschly<\/p>\n
\/s\/ Sri Rao
\n —————————————-
\n Sri Rao<\/p>\n
Page S-1
\n 93<\/p>\n
POLARIS VENTURE PARTNERS II, L.P.<\/p>\n
By: Polaris Venture Management Co. II,
\n L.L.C.
\n Its General Partner<\/p>\n
By \/s\/ John Gannon
\n ———————————–
\n Its
\n ———————————–<\/p>\n
POLARIS VENTURE PARTNERS FOUNDERS’
\n FUND II, L.P.<\/p>\n
By: Polaris Venture Management Co. II,
\n L.L.C.
\n Its General Partner<\/p>\n
By \/s\/ John Gannon
\n ———————————–
\n Its
\n ———————————–<\/p>\n
ACCEL VI L.P.<\/p>\n
By: Accel VI Associates L.L.C.
\n Its General Partner<\/p>\n
By \/s\/ G. Carter Sednaoui
\n ———————————–
\n Its
\n ———————————–<\/p>\n
Page S-2
\n 94
\n ACCEL INTERNET FUND II, L.P.<\/p>\n
By: Accel Internet Fund II Associates
\n L.L.C.
\n Its General Partner<\/p>\n
By \/s\/ G. Carter Sednaoui
\n ———————————–
\n Its
\n ———————————–<\/p>\n
ACCEL KEIRETSU VI L.P.<\/p>\n
By: Accel Keiretsu VI Associates L.L.C.
\n Its General Partner<\/p>\n
By \/s\/ G. Carter Sednaoui
\n ———————————–
\n Its
\n ———————————–<\/p>\n
ACCEL INVESTORS ’98 L.P.<\/p>\n
By \/s\/ G. Carter Sednaoui
\n ———————————–
\n Its
\n ———————————–<\/p>\n
THE WASHINGTON POST COMPANY<\/p>\n
By \/s\/ John B. Morse, Jr.
\n ———————————–
\n Its
\n ———————————–<\/p>\n
\/s\/ Lotte Leschly
\n —————————————-
\n Lotte Leschly<\/p>\n
Page S-3
\n 95<\/p>\n
\/s\/ George Conrades
\n —————————————-
\n George Conrades<\/p>\n
\/s\/ Mitch Kapor
\n —————————————-
\n Mitch Kapor<\/p>\n
\/s\/ Russell Carson
\n —————————————-
\n Russell Carson<\/p>\n
\/s\/ Bill Sahlman
\n —————————————-
\n Bill Sahlman<\/p>\n
\/s\/ Frank O’Connell
\n —————————————-
\n Frank O’Connell<\/p>\n
\/s\/ Kosmo Kallierekos
\n —————————————-
\n Kosmo Kallierekos<\/p>\n
\/s\/ Virginia M. Turezyn
\n —————————————-
\n Virginia M. Turezyn<\/p>\n
\/s\/ Tom Cohen
\n —————————————-
\n Tom Cohen<\/p>\n
Page S-4
\n 96
\n SECOND AMENDMENT
\n TO
\n AGREEMENT AND PLAN OF MERGER<\/p>\n
This Second Amendment to Agreement and Plan of Merger (this “Amendment”)
\nis made and entered into as of May 12, 1999, by and among Amazon.com, Inc., a
\nDelaware corporation (“Amazon.com”), Amazon.com Auctions, Inc., a Delaware
\ncorporation and wholly owned subsidiary of Amazon.com (the “Purchaser”), e-Niche
\nIncorporated, a Delaware corporation (the “Company”), and all the stockholders
\nof the Company (the “Stockholders”).<\/p>\n
RECITALS<\/p>\n
A. Amazon.com, the Purchaser, the Company and the Stockholders are all the
\nparties to the Agreement and Plan of Merger dated as of April 24, 1999 (as
\namended pursuant to the First Amendment to Agreement and Plan of Merger dated as
\nof May 7, 1999, the “Agreement”), pursuant to which the parties have agreed
\nthat, on the terms and subject to the conditions of the Agreement, the Company
\nshall be merged with and into the Purchaser, with the Purchaser being the
\nsurviving corporation.<\/p>\n
B. Amazon.com, the Purchaser, the Company and the Stockholders desire to
\nfurther amend the Agreement as set forth herein.<\/p>\n
C. Unless otherwise defined herein, capitalized terms used herein shall
\nhave the meanings assigned thereto in the Agreement.<\/p>\n
AGREEMENT<\/p>\n
NOW, THEREFORE, in consideration of the premises and other good and
\nvaluable consideration, the receipt and sufficiency of which are hereby
\nacknowledged, the parties hereto agree as follows:<\/p>\n
1. AMENDMENT OF AGREEMENT AND PLAN OF MERGER<\/p>\n
The parties hereby further modify and amend the Agreement by adding to the
\nend of the introductory paragraph of Article II of the Agreement the following
\nsentence:<\/p>\n
“For purposes of Sections 2.1 (other than the first sentence
\n thereof), 2.5, 2.7, 2.9, 2.10, 2.11, 2.12, 2.13, 2.14, 2.16 and 2.17<\/p>\n
Page 1
\n 97
\n of this Article II, references to the “Company” shall refer to the
\n Company and its subsidiary set forth in Schedule 2.4 to the Company
\n Disclosure Schedule.”<\/p>\n
2. EFFECT ON AGREEMENT AND PLAN OF MERGER<\/p>\n
Except as specifically amended and modified by this Amendment, the terms
\nand provisions of the Agreement remain unchanged and in full force and effect.
\nAll references in the Agreement or the other Operative Documents or otherwise to
\nthe Agreement shall hereinafter refer to the Agreement as further amended by
\nthis Amendment.<\/p>\n
3. MISCELLANEOUS<\/p>\n
(a) This Amendment shall be governed by, and construed in accordance with,
\nthe laws of the State of Delaware applicable to contracts executed in and to be
\nperformed in that state. All actions and proceedings arising out of or relating
\nto this Amendment shall be heard and determined in any Delaware state or federal
\ncourt.<\/p>\n
(b) The descriptive headings contained in this Amendment are included for
\nconvenience of reference only and shall not affect in any way the meaning or
\ninterpretation of this Amendment.<\/p>\n
(c) This Amendment may be executed and delivered (including by facsimile
\ntransmission) in one or more counterparts, and by the different parties hereto
\nin separate counterparts, each of which when executed and delivered shall be
\ndeemed to be an original but all of which taken together shall constitute one
\nand the same agreement. To expedite the process of entering into this Amendment,
\nthe parties acknowledge that Transmitted Copies of this Amendment will be
\nequivalent to original documents until such time as original documents are
\ncompletely executed and delivered.<\/p>\n
[Remainder of this page intentionally left blank.]<\/p>\n
Page 2
\n 98
\n IN WITNESS WHEREOF, the parties hereto have entered into and signed this
\nSecond Amendment to Agreement and Plan of Merger as of the date and year first
\nabove written.<\/p>\n
AMAZON.COM, INC.<\/p>\n
By \/s\/ Randy Tinsley
\n ———————————–
\n Its: Vice President and Treasurer<\/p>\n
AMAZON.COM AUCTIONS, INC.<\/p>\n
By \/s\/ Randy Tinsley
\n ———————————–
\n Its: Treasurer<\/p>\n
E-NICHE INCORPORATED<\/p>\n
By \/s\/ Stig Leschly
\n ———————————–
\n Its CEO
\n ———————————–<\/p>\n
STOCKHOLDERS:
\n \/s\/ Stig Leschly
\n —————————————-<\/p>\n
Stig Leschly
\n \/s\/ Sri Rao
\n —————————————-
\n Sri Rao<\/p>\n
99<\/p>\n
POLARIS VENTURE PARTNERS II, L.P.<\/p>\n
By: Polaris Venture Management Co. II,
\n L.L.C.
\n Its General Partner<\/p>\n
By \/s\/ John Gannon
\n ———————————–
\n Its
\n ———————————–<\/p>\n
POLARIS VENTURE PARTNERS FOUNDERS’
\n FUND II, L.P.<\/p>\n
By: Polaris Venture Management Co. II,
\n L.L.C.
\n Its General Partner<\/p>\n
By \/s\/ John Gannon
\n ———————————–
\n Its
\n ———————————–<\/p>\n
ACCEL VI L.P.<\/p>\n
By: Accel VI Associates L.L.C.
\n Its General Partner<\/p>\n
By \/s\/ G. Carter Sednaoui
\n ———————————–
\n Its
\n ———————————–<\/p>\n
100<\/p>\n
ACCEL INTERNET FUND II, L.P.<\/p>\n
By: Accel Internet Fund II Associates
\n L.L.C.
\n Its General Partner<\/p>\n
By \/s\/ G. Carter Sednaoui
\n ———————————–
\n Its
\n ———————————–<\/p>\n
ACCEL KEIRETSU VI L.P.<\/p>\n
By: Accel Keiretsu VI Associates L.L.C.
\n Its General Partner<\/p>\n
By \/s\/ G. Carter Sednaoui
\n ———————————–
\n Its
\n ———————————–<\/p>\n
ACCEL INVESTORS ’98 L.P.<\/p>\n
By \/s\/ G. Carter Sednaoui
\n ———————————–
\n Its
\n ———————————–<\/p>\n
THE WASHINGTON POST COMPANY<\/p>\n
By \/s\/ John B. Morse, Jr.
\n ———————————–
\n Its
\n ———————————–<\/p>\n
\/s\/ Lotte Leschly
\n —————————————-
\n Lotte Leschly<\/p>\n
101<\/p>\n
\/s\/ George Conrades
\n —————————————-
\n George Conrades<\/p>\n
\/s\/ Mitch Kapor
\n —————————————-
\n Mitch Kapor<\/p>\n
\/s\/ Russell Carson
\n —————————————-
\n Russell Carson<\/p>\n
\/s\/ Bill Sahlman
\n —————————————-
\n Bill Sahlman<\/p>\n
\/s\/ Frank O’Connell
\n —————————————-
\n Frank O’Connell<\/p>\n
\/s\/ Kosmo Kallierekos
\n —————————————-
\n Kosmo Kallierekos<\/p>\n
\/s\/ Virginia M. Turezyn
\n —————————————-
\n Virginia M. Turezyn<\/p>\n
\/s\/ Tom Cohen
\n —————————————-
\n Tom Cohen<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6645],"corporate_contracts_industries":[9492],"corporate_contracts_types":[9622,9626],"class_list":["post-43005","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-amazoncom-inc","corporate_contracts_industries-retail__books","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43005","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43005"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43005"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43005"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43005"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}