\n 1.3 – Certificate of Merger
\n 1.7.1 – Form of Escrow Agreement
\n 1.9(A) – Amazon.com and Purchaser Tax Certificate
\n 1.9(B) – Company Tax Certificate
\n 2 – Disclosure Memorandum
\n 2(A) – Form of Investor Rights Agreement
\n 4.3 – Form of Opinion of Counsel for the Company
\n 4.4 Form of Opinion of Patent Counsel for the Company
\n 4.9 – Foreign Investment in Real Property Tax Act Affidavit
\n 4.14 – Form of Confidentiality, Noncompetition and Invention
\n Assignment Agreement
\n 4.16 – Form of Affiliate Letter
\n 5.3 – Form of Opinion of Counsel for Amazon.com and the
\n Purchaser
\n 5.12 – Form of Option Letter
\n<\/c><\/s><\/table>\n -vii-<\/p>\n
9
\n AGREEMENT AND PLAN OF MERGER<\/p>\n
This Agreement and Plan of Merger (this “Agreement”) is made and entered
\ninto as of August 3, 1998, by and among Amazon.com, Inc., a Delaware corporation
\n(“Amazon.com”), AJ Acquisition, Inc., a Delaware corporation and wholly owned
\nsubsidiary of Amazon.com (the “Purchaser”), and Junglee Corp., a Delaware
\ncorporation (the “Company”).<\/p>\n
RECITALS<\/p>\n
A. The Company, Amazon.com and the Purchaser believe it advisable and in
\ntheir respective best interests to effect a merger of the Company and the
\nPurchaser pursuant to this Agreement (the “Merger”).<\/p>\n
B. The Board of Directors of the Company has approved this Agreement and
\nthe Merger as required by applicable law.<\/p>\n
C. The Boards of Directors of the Purchaser and the sole stockholder of
\nthe Purchaser have approved this Agreement and the Merger as required by
\napplicable law.<\/p>\n
D. It is intended that the Merger will qualify as a reorganization under
\nSection 368(a) of the Internal Revenue Code of 1986, as amended (the “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, (a) at the
\nEffective Time (as defined in Section 1.3 hereof) the separate existence of the
\nPurchaser shall cease and the Purchaser shall be merged with and into the
\nCompany (the Company is sometimes referred to herein as the “Surviving
\nCorporation”), and (b) from and after the Effective Time, the Merger shall have
\nall the effects of a merger under the laws of the State of Delaware and other
\napplicable law.<\/p>\n
-1-<\/p>\n
10
\n1.2 THE CLOSING<\/p>\n
Subject to the satisfaction or waiver of the conditions set forth in
\nArticles IV and V, the closing of the Merger pursuant to this Agreement (the
\n“Closing”) shall take place on the earliest practicable business day (the
\n“Closing Date”) at 10:00 a.m. local time at the offices of Perkins Coie LLP,
\n1201 Third Avenue, 46th Floor, Seattle, Washington, or such other date, time or
\nlocation 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 (the “Certificate of Merger”) complying with the
\napplicable provisions of the Delaware General Corporation Law (“Delaware Law”),
\nsubstantially in the form attached hereto as Exhibit 1.3, and in such form and
\nexecuted in such manner as required by Delaware Law, shall be delivered for
\nfiling to the Secretary of State of the State of Delaware (the “Delaware
\nSecretary of State”). The Merger shall become effective on the date (the
\n“Effective Date”) and at the time (the “Effective Time”) of filing of the
\nCertificate of Merger or at such other time as may be specified in the
\nCertificate of Merger as filed. If the Delaware Secretary of State requires any
\nchanges in the Certificate of Merger as a condition to filing or to issuing its
\ncertificate to the effect that the Merger is effective, Amazon.com, the
\nPurchaser and the Company will execute any necessary revisions incorporating
\nsuch changes, provided such changes are not inconsistent with and do not result
\nin any material change in the terms of this Agreement.<\/p>\n
1.4 CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION<\/p>\n
At the Effective Time, the Certificate of Incorporation of the
\nPurchaser, as in effect immediately prior to the Effective Time, shall be the
\nCertificate of Incorporation of the Surviving Corporation. Thereafter, the
\nCertificate of Incorporation of the Surviving Corporation may be amended in
\naccordance with its terms and as provided by law; provided, however, that
\nArticle I thereof shall be amended to read as follows: “The name of this
\ncorporation is Junglee Corp..”<\/p>\n
1.5 BYLAWS OF THE SURVIVING CORPORATION<\/p>\n
At the Effective Time, the Bylaws of the Purchaser as in effect
\nimmediately prior to the Effective Time shall be the Bylaws of the Surviving
\nCorporation. Thereafter, the Bylaws may be amended or repealed in accordance
\nwith their terms and the Certificate of Incorporation of the Surviving
\nCorporation and as provided by law.<\/p>\n
-2-<\/p>\n
11
\n1.6 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 CONVERSION OF SHARES<\/p>\n
1.7.1 EXCHANGE RATIO<\/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 held
\nby the Company as treasury shares shall be canceled.<\/p>\n
(b) Each issued and outstanding share of common stock of the
\nCompany, par value $0.001 per share (the “Company Common Stock”), including each
\nshare of Company Common Stock issued upon conversion of each issued and
\noutstanding share of the Company’s Series A Preferred Stock, par value $0.001
\nper share (the “Company Series A Stock”), Series B Preferred Stock, $0.001 par
\nvalue per share (the “Company Series B Stock”), and Series C Preferred Stock,
\npar value $0.001 per share (the “Company Series C Stock” and, together with the
\nCompany Common Stock, Company Series A Stock and Company Series B Stock, the
\n“Company Capital Stock”), other than shares of Company Capital Stock, if any,
\nfor which dissenters’ rights have been or will be perfected in compliance with
\napplicable law, shall be converted into the right to receive from Amazon.com a
\nnumber of shares of Amazon.com common stock, par value $.01 per share
\n(“Amazon.com Common Stock”), determined by dividing (i) 1,891,568 by (ii) the
\ntotal number of shares of Company Capital Stock outstanding immediately prior to
\nthe Effective Time on a fully diluted basis, assuming for this purpose that all
\noutstanding options (“Options”) to purchase shares of Company Capital Stock have
\nbeen validly exercised prior to the Effective Time, regardless of any vesting
\nlimitations, other restrictions on exercisability or repurchase rights, and
\nissuable upon such exercise have been validly issued (such shares of Amazon.com
\nCommon Stock being referred to herein as the “Merger Consideration” or the
\n“Securities” and the quotient so derived being referred to herein as the
\n“Exchange Ratio”). The number of Securities to be issued to each stockholder of
\nthe Company under this Section 1.7(b) shall be calculated by aggregating all
\nshares of Company Capital Stock held by each such stockholder, so that such
\nnumber of Securities to be issued shall be equal to the number of shares of<\/p>\n
-3-<\/p>\n
12
\nCompany Capital Stock held by such stockholder multiplied by the Exchange Ratio,
\nwith cash paid in lieu of any fractional share of Amazon.com Common Stock
\npursuant to Section 1.7.3 hereof.<\/p>\n
(c) Notwithstanding the foregoing, 190,000 shares of Amazon.com
\nCommon Stock issued as part of the Merger Consideration (the “Escrow Shares”)
\nshall be deposited in escrow with ChaseMellon Shareholder Services L.L.C.
\n(“ChaseMellon” or the “Escrow Agent”), to be held and administered in accordance
\nwith an Escrow Agreement in substantially the form attached hereto as Exhibit
\n1.7.1 (the “Escrow Agreement”), such Escrow Shares to be withheld and deducted,
\npro rata, from the shares of Amazon.com Common Stock otherwise issuable to each
\nholder of Company Capital Stock at the Effective Time. Notwithstanding the
\nescrow of the Escrow Shares, dividends or other distributions declared and paid
\non such shares shall continue to be paid by Amazon.com to the stockholders and
\nall voting rights with respect to such shares shall inure to the benefit of and
\nbe enjoyed 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.<\/p>\n
(d) Each issued and outstanding share of capital stock of the
\nPurchaser shall be converted into one share of common stock of the Surviving
\nCorporation.<\/p>\n
(e) Each outstanding Option to purchase shares of Company Common
\nStock issued pursuant to the Company’s 1996 Stock Plan and 1998 Equity Incentive
\nPlan (the “Company Option Plans”), whether or not vested or exercisable, shall
\nbe assumed by Amazon.com and shall constitute an option to acquire, on the same
\nterms and conditions as were applicable under such assumed Option, that number
\nof shares of Amazon.com Common Stock equal to the product of the Exchange Ratio
\nand the number of shares of Company Common Stock subject to such Option, at a
\nprice per share (rounded to the nearest $0.001) equal to the aggregate exercise
\nprice for the shares of Company Common Stock subject to such Option divided by
\nthe number of full shares of Amazon.com Common Stock deemed to be purchasable
\npursuant to such Option; provided, however, that (i) subject to the provisions
\nof clause (ii) below, the number of shares of Amazon.com Common Stock that may
\nbe purchased upon exercise of such Option shall not include any fractional
\nshares, and, upon the last such exercise of such Option, Amazon.com shall pay to
\nthe holder thereof an amount of <\/p>\n
-4-<\/p>\n
13
\ncash equal to such fraction multiplied by the closing price of Amazon.com Common
\nStock as reported on the Nasdaq National Market on the date of such exercise,
\nand (ii) in the case of any Option to which Section 421 of the Code applies by
\nreason of its qualification under Section 422 of the Code, the option price, the
\nnumber of shares purchasable pursuant to such Option and the terms and
\nconditions of exercise of such Option shall be determined in order to comply
\nwith Section 424 of the Code. Amazon.com shall assume the obligations of the
\nCompany under the Company Option Plans and shall comply with the terms of the
\nCompany Option Plans as they apply to the Options assumed as set forth above.
\nAmazon.com shall use its best efforts to cause the shares of Amazon.com Common
\nStock that are issuable upon exercise of the Options assumed in accordance with
\nthis Section 1.7.1 to be registered under the Securities Act of 1933, as amended
\n(the “Securities Act”), on Form S-8 (“Form S-8”) within 30 days following the
\nClosing Date.<\/p>\n
(f) Holders of shares of Company Capital Stock who have complied
\nwith all the requirements for perfecting dissenters’ rights, as set forth in the
\nDelaware Law and in Chapter 13 of the California Corporations Code (the
\n“California Code”) by virtue of Section 2115 of the California Code, shall be
\nentitled to their rights under the Delaware Law and the California Code with
\nrespect to such shares (the “Dissenting Shares”).<\/p>\n
(g) If, prior to the Effective Time, Amazon.com recapitalizes
\nthrough a split-up of its outstanding shares of capital stock into a greater
\nnumber, or a combination of its outstanding shares of capital stock into a
\nlesser number, reorganizes, reclassifies or otherwise changes its outstanding
\nshares of capital stock into the same or a different number of shares of other
\nclasses of capital stock, or declares a dividend on its outstanding shares of
\ncapital stock payable in shares or securities convertible into shares, the
\nnumber of shares of Amazon.com Common Stock into which the shares of Company
\nCapital Stock are to be converted, and the number of shares of Amazon.com Common
\nStock issuable 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 and Options and the holders of shares of capital stock
\nof Amazon.com.<\/p>\n
1.7.2 EXCHANGE OF CERTIFICATES<\/p>\n
As soon as practicable after the Effective Date, ChaseMellon, as
\nexchange agent, shall make available, and each stockholder of the Company will
\nbe entitled to receive, upon surrender to ChaseMellon of one or more
\ncertificates representing shares of Company Capital Stock for cancellation and a
\nletter of transmittal in customary form, certificates representing the number of
\nshares of Amazon.com Common Stock that such stockholder is entitled to receive
\npursuant to Section 1.7.1 hereof; provided, <\/p>\n
-5-<\/p>\n
14
\nhowever, that the certificates representing the Escrow Shares shall be retained
\nby ChaseMellon in accordance with the Escrow Agreement. In the event that any
\ncertificates representing shares of Company Capital Stock shall have been lost,
\nstolen or destroyed, upon the making of an affidavit of that fact by the
\nstockholder of the Company claiming such certificate to be lost, stolen or
\ndestroyed, Amazon.com shall issue in exchange for such lost, stolen or destroyed
\ncertificate the shares of Amazon.com Common Stock that such stockholder is
\nentitled to receive pursuant to Section 1.7.1 hereof; provided, however, that
\nAmazon.com may in its discretion and as a condition precedent to the issuance
\nthereof, require such stockholder to provide Amazon.com with an indemnity
\nagreement against any claim that may be made against Amazon.com with respect to
\nthe certificate alleged to have been lost, stolen or destroyed. The shares of
\nAmazon.com Common Stock that each stockholder of the Company shall be entitled
\nto receive pursuant to the Merger shall be deemed to have been issued at the
\nEffective Time. No interest shall accrue on the Merger Consideration. If the
\nMerger Consideration (or any portion thereof) is to be delivered to any person
\nother than the person in whose name the certificate or certificates representing
\nshares of Company Capital Stock surrendered in exchange therefor is registered,
\nit shall be a condition to such exchange that the person requesting such
\nexchange shall pay to Amazon.com any transfer or other taxes required by reason
\nof the payment of the Merger Consideration to a person other than the registered
\nholder of the certificate or certificates so surrendered, or shall establish to
\nthe satisfaction of Amazon.com that such tax has been paid or is not applicable.
\nNotwithstanding the foregoing, neither Amazon.com nor any other party hereto
\nshall be liable to a holder of shares of Company Capital Stock for any Merger
\nConsideration delivered to a public official pursuant to applicable abandoned
\nproperty, escheat and similar laws.<\/p>\n
1.7.3 NO FRACTIONAL SHARES<\/p>\n
No certificates or scrip representing fractional shares of Amazon.com
\nCommon Stock shall be issued upon the surrender for exchange of certificates
\nrepresenting Company Capital Stock pursuant to the Merger, and no dividend,
\nstock split or other distribution with respect to Amazon.com Common Stock shall
\nrelate to any such fractional interest, and any such fractional interests shall
\nnot entitle the owner thereof to vote or to any rights of a security holder. In
\nlieu of each such fractional share, Amazon.com shall pay to the holder thereof,
\nas soon as practicable after the Effective Date, an amount in cash equal to such
\nfraction multiplied by the closing price of Amazon.com Common Stock as reported
\non the Nasdaq National Market on the trading day prior to the Closing Date.<\/p>\n
-6-<\/p>\n
15
\n 1.7.4 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
By approving the Merger at a special meeting of stockholders or by
\nwritten consent of the stockholders, each stockholder of the Company shall have
\nirrevocably authorized and appointed Rakesh Mathur (the “Stockholder
\nRepresentative”), with full power of substitution and resubstitution, as his,
\nher or its representative and true and lawful attorney-in-fact and agent to act
\nwith the powers set forth in the Investor Rights Agreement (as defined in the
\npreamble to Article II hereof) in his, her or its name, place and stead and to
\nexecute in the name and on behalf of such stockholder the Escrow Agreement and
\nany other agreement, certificate, instrument or document to be delivered by the
\nstockholders in connection with the Escrow Agreement.<\/p>\n
1.9 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, or by applicable law, the parties shall not take a position on any
\ntax returns inconsistent with the treatment of the Merger for tax purposes as a
\nreorganization within the meaning of Section 368(a)(1)(A) of the Code by reason
\nof Section 368(a)(2)(E) of the Code.<\/p>\n
(b) In addition, Amazon.com represents, solely for tax purposes, now,
\nand as of the Closing Date, that it presently intends to continue the Company’s
\nhistoric business or use a significant portion of the Company’s business assets
\nin business in a manner that satisfies the continuity of business enterprise
\nrequirement set forth in Treasury Regulation Section 1.368-1(d). At the Closing,
\nofficers of Amazon.com and Purchaser shall execute and deliver an officers’
\ncertificate substantially in the form of Exhibit 1.9(A) (the “Amazon.com and
\nPurchaser Tax Certificate”) and officers of Junglee shall execute and deliver an
\nofficer’s certificate substantially in the form of Exhibit 1.9(B) (the “Company
\nTax Certificate”).<\/p>\n
-7-<\/p>\n
16
\n ARTICLE II – REPRESENTATIONS AND WARRANTIES OF
\n THE COMPANY<\/p>\n
Except as is otherwise set forth in the Disclosure Memorandum attached
\nhereto as Exhibit 2 (the “Disclosure Memorandum”), and in order to induce
\nAmazon.com and the Purchaser to enter into and perform this Agreement, the
\nEscrow Agreement and the Investor Rights Agreements substantially in the form
\nattached hereto as Exhibit 2(A) (the “Investor Rights Agreement”) to be entered
\ninto as of the Closing among Amazon.com and each of the stockholders of the
\nCompany, and the other agreements and certificates that are required to be
\nexecuted pursuant to this Agreement (collectively, the “Operative Documents”),
\nthe Company represents and warrants to Amazon.com and the Purchaser as of the
\ndate of this Agreement and as of the Closing as follows in this Article II:<\/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 necessary, except where the
\nfailure to be so qualified or in good standing would not have a material adverse
\neffect on the Company’s business, properties or prospects (a “Company Material
\nAdverse Effect”).<\/p>\n
2.2 ENFORCEABILITY<\/p>\n
The Company has full corporate power and authority to execute, deliver
\nand perform its obligations under this Agreement and each of the other Operative
\nDocuments to which it is a party and each of the certificates, instruments and
\ndocuments executed or delivered by it pursuant to the terms of this Agreement.
\nAll corporate action on the part of the Company and its officers, directors and
\nstockholders necessary for the authorization, execution, delivery and
\nperformance of this Agreement and the other Operative Documents to which the
\nCompany is a party, the consummation of the Merger, and the performance of all
\nthe Company’s obligations under this Agreement and the other Operative Documents
\nto which the Company is a party has been taken or will be taken as of or prior
\nto the Effective Time. This <\/p>\n
-8-<\/p>\n
17
\nAgreement has been, and each of the other Operative Documents to which the
\nCompany is a party at the Closing will have been, duly executed and delivered by
\nthe Company, and this Agreement is, and each of the other Operative Documents to
\nwhich the Company is a party will be at the Closing, a legal, valid and binding
\nobligation of the Company, enforceable against the Company in accordance with
\nits terms, except as to the effect, if any, of (a) applicable bankruptcy and
\nother similar laws affecting the rights of creditors generally, (b) rules of law
\ngoverning specific performance, injunctive relief and other equitable remedies,
\nand (c) the enforceability of provisions requiring indemnification in connection
\nwith the offering, issuance or sale of securities.<\/p>\n
2.3 CAPITALIZATION<\/p>\n
(a) The authorized capital stock of the Company consists of 15,000,000
\nshares of Company Common Stock and 5,150,000 shares of preferred stock, par
\nvalue $0.001 per share, of which 1,150,000 shares are designated as Company
\nSeries A Stock, 2,000,000 shares are designated as Company Series B Stock and
\n2,000,000 shares are designated as Company Series C Stock.<\/p>\n
(b) As of the date of this Agreement, the issued and outstanding capital
\nstock of the Company consists solely of 7,511,249 shares of Company Common
\nStock, 1,150,000 shares of Company Series A Stock, 1,949,726 shares of Company
\nSeries B Stock and 1,016,787 shares of Company Series C Stock (the “Outstanding
\nShares”), which are and as of the Closing will be held of record and, to the
\nknowledge of the Company, beneficially by the stockholders of the Company as set
\nforth on Schedule 2.3(b) to the Disclosure Memorandum. The Outstanding Shares
\nare, and immediately prior to the Closing will be, duly authorized and validly
\nissued, fully paid and nonassessable, and issued in compliance with all
\napplicable federal, state and foreign securities laws. To the knowledge of the
\nCompany, no Person (as defined in Section 2.5 hereof) other than the
\nstockholders of the Company holds any interest in any of the Outstanding Shares.
\nTrue and correct copies of the stock records of the Company, showing all
\nissuances and transfers of shares of capital stock of the Company since
\ninception, have been provided to Amazon.com.<\/p>\n
(c) As of the date of this Agreement, other than (i) Options to purchase
\nup to 2,313,330 shares of Company Common Stock which have been granted under the
\nCompany Option Plans and (ii) warrants to purchase up to 38,676 shares of
\nCompany Series C Stock (the “Warrants”), there are no outstanding rights of
\nfirst refusal or offer, preemptive rights, options, warrants, conversion rights
\nor other agreements, either directly or indirectly, for the purchase or
\nacquisition from the Company or any stockholder of any shares of Company Capital
\nStock or any securities convertible into or exchangeable for shares of Company
\nCapital Stock. Set forth on Schedule 2.3(c) to <\/p>\n
-9-<\/p>\n
18
\nthe Disclosure Memorandum is a spreadsheet accurately reflecting the number of
\nsuch Options and Warrants outstanding, the grant dates, vesting schedules and
\nexercise prices thereof, the principal terms of Convertible Notes, and, in each
\ncase, the identities of the holders and an indication of their relationships to
\nthe Company. The Company has delivered to Amazon.com true and correct copies of
\nthe Company Option Plans, the form of stock option agreements relating to
\nOptions granted thereunder, all Warrant certificates, all Convertible Notes and
\nall material deviations therefrom.<\/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 of the Company or any
\naffiliate thereof is indebted to the Company, and the Company is not indebted to
\nany stockholder of the Company or any affiliate thereof. The Company is not
\nunder any contractual or other obligation to register any of its presently
\noutstanding securities or any of its securities that may hereafter be issued.<\/p>\n
2.4 SUBSIDIARIES AND AFFILIATES<\/p>\n
The Company does not own or control, and has not in the past owned or
\ncontrolled, directly or indirectly, any corporation, partnership, limited
\nliability company or other business entity. The Company does not own, directly
\nor indirectly, any ownership, equity, or voting interest in, or otherwise
\ncontrol, any corporation, partnership, joint venture or other entity, and has no
\nagreement 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, (b)
\nrequire any consent, approval or authorization of, or declaration, filing or
\nregistration with, any person, corporation, partnership, joint venture,
\nassociation, organization, other entity or governmental or regulatory authority
\n(a “Person”), except (i) compliance with applicable securities laws, (ii) the
\nfiling of all documents necessary to consummate the Merger with the Delaware
\nSecretary of State, and (iii) the approval by the stockholders of the Company of
\nthe transactions contemplated hereby, as provided under applicable <\/p>\n
-10-<\/p>\n
19
\nlaw and the Certificate of Incorporation and Bylaws of the Company (all such
\nconsents, approvals and authorizations to be duly obtained by the Company at or
\nprior to the Closing), (c) result in a default (with or without the giving of
\nnotice or lapse of time, or both) under, or acceleration or termination of, or
\nthe creation in any party of the right to accelerate, terminate, modify or
\ncancel, any agreement, lease, note or other restriction, encumbrance, obligation
\nor liability to which the Company is a party or by which it is bound or to which
\nany assets of the Company are subject, (d) result in the creation of any
\nEncumbrance (as defined in Section 2.9(d)) upon any material assets of the
\nCompany or, to the knowledge of the Company, upon any Outstanding Shares or
\nother securities of the Company, (e) conflict with or result in a breach of or
\nconstitute a default under any provision of the Restated Certificate of
\nIncorporation or Bylaws of the Company, or (f) invalidate or adversely affect
\nany permit, license or authorization currently required for the conduct of the
\nbusiness of the Company.<\/p>\n
2.6 FINANCIAL STATEMENTS<\/p>\n
The Company has delivered to Amazon.com (a) audited 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 1996 and
\n1997 and (b) an unaudited balance sheet, statement of income and expense,
\nstatement of cash flow and statement of stockholders’ equity of the Company as
\nof and for the six-month period ended June 30, 1998. All the foregoing financial
\nstatements are herein referred to as the “Financial Statements.” The balance
\nsheet of the Company as of June 30, 1998 is herein referred to as the “Company
\nBalance Sheet.” The Financial Statements have been prepared in conformity with
\ngenerally accepted accounting principles in the United States (“GAAP”) on a
\nbasis consistent with prior accounting periods and fairly present the financial
\nposition, results of operations and changes in financial position of the Company
\nas of the dates and for the periods indicated (except, solely with respect to
\nthe unaudited Financial Statements, as to footnotes and normal period-end
\nadjustments). The Company has no liabilities or obligations of any nature
\n(absolute, contingent or otherwise) that are not fully reflected or reserved
\nagainst in the Company Balance Sheet and that would be required under GAAP to be
\nreflected or reserved, except liabilities or obligations incurred since the date
\nof the Company Balance Sheet in the ordinary course of business and consistent
\nwith past practice that are not in excess of $50,000 in the aggregate or $20,000
\nindividually. The Company maintains standard systems of accounting that are
\nadequate for its business. The Company is not a guarantor, indemnitor, surety or
\nother obligor of any indebtedness of any other Person. The Company’s practices
\nwith respect to capitalizing software development costs, as reflected in the
\nFinancial Statements, are reasonable, in accordance with industry standards and
\nconsistent with the advice of the Company’s independent accountants.<\/p>\n
-11-<\/p>\n
20
\n2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS<\/p>\n
Except for transactions specifically contemplated in this Agreement,
\nsince the date of the Company Balance Sheet, neither the Company nor any of its
\nofficers or directors in their representative capacities on behalf of the
\nCompany 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) in
\nexcess of $25,000, except liabilities and obligations (i) that are incurred in
\nthe ordinary course of business and consistent with past practice or (ii) that
\nwould not be required to be reflected or reserved against in a balance sheet
\nprepared in accordance with GAAP, or increased, or experienced any change in any
\nassumptions underlying or methods of calculating, any bad debt, contingency or
\nother 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, or prepaid any obligation having a fixed maturity of
\nmore than 90 days from the date such obligation was issued or incurred;<\/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
\nmortgage, pledge, <\/p>\n
-12-<\/p>\n
21
\nlien, security interest, encumbrance, restriction or charge, except in the
\nordinary course of business and consistent 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);<\/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;<\/p>\n
(j) made any single capital expenditure or commitment in excess
\nof $25,000 for additions to property, plant, equipment or intangible capital
\nassets or made aggregate capital expenditures in excess of $25,000 for additions
\nto property, plant, equipment or intangible capital assets;<\/p>\n
(k) made any change in any method of accounting or accounting
\npractice or internal 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 compensation paid to officers and employees at
\nrates not exceeding the rates of compensation paid during the fiscal year last
\nended; or<\/p>\n
(n) agreed, whether in writing or otherwise, to take any action
\ndescribed in this Section 2.7.<\/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<\/p>\n
-13-<\/p>\n
22
\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; (iii) no waivers of statutes of limitation have been
\ngiven or requested with respect to the Company in connection with any Tax
\nReturns covering the Company with respect to any Taxes payable by it; and (iv)
\nthe Company has duly and timely withheld from employee salaries, wages and other
\ncompensation and paid over to the appropriate governmental authority all amounts
\nrequired to be so withheld and paid over for all periods under all applicable
\nlaws. There are no liens with respect to Taxes on any of the Company’s property
\nor assets other than liens for current Taxes not yet payable.<\/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 any such
\nadjustment or change in accounting method.<\/p>\n
(c) There is no dispute or claim concerning any Tax liability of the
\nCompany either (i) claimed or raised by any authority in writing or (ii) as to
\nwhich any of the directors and officers (and employees responsible for Tax
\nmatters) of the Company have knowledge based on personal contact with any agent
\nof such authority. Schedule 2.8 to the Disclosure Memorandum lists all Tax
\nReturns filed with respect to the Company for taxable periods ended on or after
\nthe Company’s inception that have been audited, and indicates those Tax Returns
\nthat currently 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 has not made any payments, is not obligated to make any
\npayments and is not a party to any agreement that under certain circumstances
\ncould obligate it to make any payments that will not be deductible under Section
\n280G of the Code (or any similar provision of state, local or foreign law).<\/p>\n
-14-<\/p>\n
23
\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)(2)(i) 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 June 30, 1998,
\nexceed the reserve for Tax liability set forth on the face (rather than any
\nreserve 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 through the Closing Date in
\naccordance with the past custom and practice of the Company in filing Tax
\nReturns.<\/p>\n
(h) There has been no ownership change, as defined in Section 382(g) of
\nthe Code (or any comparable provision of state, local or foreign law), with
\nrespect to the Company during or after any taxable period in which Company
\nincurred a net operating loss. The Disclosure Memorandum sets forth the amount
\nof any net operating loss, net capital loss, net-unrealized built-in loss (as
\ndefined under Section 382 of the Code), unused investment or other credit,
\nunused foreign tax or excess charitable contribution allocable to the Company.<\/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 59(a) 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.<\/p>\n
-15-<\/p>\n
24
\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 Disclosure Memorandum, which contains a
\ncomplete and accurate list of all real property of the Company which is leased,
\nrented or used by the Company (the “Real Property”). The Company has delivered
\nto Amazon.com true and complete copies of all written leases, subleases, rental
\nagreements, contracts of sale, tenancies or licenses relating to the Real
\nProperty and written summaries of the terms of any oral leases, subleases,
\nrental agreements, contracts of sale, tenancies or licenses to which the Real
\nProperty is subject.<\/p>\n
(b) Schedule 2.9(b) to the Disclosure Memorandum contains a complete and
\naccurate list of each item of personal property having a value in excess of
\n$2,000 which is owned, leased, rented or used by the Company (the “Personal
\nProperty”); provided that such list need not describe the Technology or the IP
\nRights (as defined in Sections 2.14.2 and 2.14.5, respectively), listed on
\nSchedule 2.14 to the Disclosure Memorandum. The Company has delivered to
\nAmazon.com true and complete copies of all leases, subleases, rental agreements,
\ncontracts of sale, tenancies or licenses to which the Personal Property is
\nsubject.<\/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 $2,000 and the Technology and IP Rights) reflected
\nin the Company Balance Sheet (except for such properties or assets sold since
\nthe date of the Company Balance Sheet in the ordinary course of business and
\nconsistent with past practice) and all the properties and assets purchased by
\nthe Company since the date of the Company Balance Sheet (other than, in the case
\nof the Personal Property, property rights with an individual value of less than
\n$2,000 and the Technology and the IP Rights). The Real Property and the Personal
\nProperty include all material property used in the business of the Company,
\nother than the Technology and IP Rights. The Company’s offices and other
\nstructures and its Personal Property are of a quality consistent with industry
\nstandards, are in good operating condition and repair, normal wear and tear
\nexcepted, <\/p>\n
-16-<\/p>\n
25
\nare adequate for the uses to which they are being put, and comply in all
\nmaterial respects with applicable safety and 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”). Each lease of any portion of the Real Property is
\nvalid, binding and enforceable in accordance with its terms against the parties
\nthereto and, to the Company’s knowledge, any other Person with an interest in
\nsuch Real Property, the Company has performed in all material respects all
\nobligations imposed upon it thereunder, and neither the Company nor, to the
\nCompany’s knowledge, any other party thereto is in default thereunder, nor is
\nthere any event which with notice or lapse of time, or both, would constitute a
\ndefault thereunder. The Company has not granted any lease, sublease, tenancy or
\nlicense of, or entered into any rental agreement or contract of sale with
\nrespect to, any portion of the Real Property.<\/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 parties thereto, 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 default
\nthereunder, nor is there any event which with notice or lapse of time, or both,
\nwould constitute a default by the Company or, to the Company’s knowledge, any
\nother party thereunder. The Company has not granted any lease, sublease, tenancy
\nor license of any portion of the Personal Property, except in the ordinary
\ncourse of business.<\/p>\n
2.10 CONTRACTS<\/p>\n
Schedule 2.10 to the Disclosure Memorandum contains a complete and
\naccurate list (other than the IP Rights listed on Schedule 2.14 to the
\nDisclosure Memorandum) of all contracts, agreements and understandings, oral or
\nwritten, to which the Company is currently a party or by which the Company is
\ncurrently bound providing for potential payments by or to the Company in excess
\nof $25,000, including, without limitation, security agreements, license
\nagreements, software development agreements, distribution agreements, joint
\nventure 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 each party
\nthereto, except as to the effect, if any, of (a) applicable bankruptcy and other
\nsimilar laws affecting the rights of creditors generally, (b) rules of law<\/p>\n
-17-<\/p>\n
26
\ngoverning specific performance, injunctive relief and other equitable remedies,
\nand (c) the enforceability of provisions requiring indemnification in connection
\nwith the offering, issuance or sale of securities, and are in full force and
\neffect, the Company has performed in all material respects all obligations
\nimposed on it 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 is there any event which with notice or lapse of time, or
\nboth, would constitute a default by the Company or, to the Company’s knowledge,
\nany 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
\nheretofore delivered to Amazon.com. Except as set forth on Schedule 2.10, the
\nCompany has no<\/p>\n
(a) contracts with directors, officers, stockholders, employees,
\nagents, consultants, advisors, salesmen, sales representatives, distributors or
\ndealers that are not, except as provided by law to the contrary without regard
\nto the express terms of such contract, cancelable by it within 30 days’ notice
\nwithout liability, penalty or premium, any agreement or arrangement providing
\nfor the payment 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 any severance or termination pay
\nliabilities or obligations;<\/p>\n
(c) noncompetition agreement or other restriction from carrying
\non 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, OEM resellers, 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 licenses
\npurchased 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; and<\/p>\n
-18-<\/p>\n
27
\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.<\/p>\n
2.11 CLAIMS AND LEGAL PROCEEDINGS<\/p>\n
Except as set forth on Schedules 2.11 and 2.14 to the 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. Except as set forth on Schedules 2.11 and 2.14, to the Company’s
\nknowledge, there is no valid basis for any claim, action, suit, arbitration,
\nproceeding or investigation before or by any Person which could reasonably be
\nexpected to have a Company Material Adverse Effect. There are no outstanding or
\nunsatisfied judgments, orders, decrees or stipulations to which the Company is a
\nparty. Schedule 2.11 sets forth a description of any material disputes that have
\nbeen settled or resolved by litigation or arbitration since the Company’s
\ninception.<\/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 any of its present or former employees. The Company
\nhas complied with all provisions of law relating to employment and employment
\npractices, terms and conditions of employment, wages and hours. The Company is
\nnot engaged in any unfair labor practice and has no liability for any arrears of
\nwages or Taxes or penalties for failure to comply with any such provisions of
\nlaw. There is no labor strike, dispute, slowdown or stoppage pending or, to the
\nCompany’s knowledge, threatened against or affecting the Company, and the
\nCompany has not experienced any work stoppage or other labor difficulty since
\nits incorporation. No collective bargaining agreement is binding on the Company.
\nThe Company has no knowledge of any organizational efforts presently being made
\nor threatened by or on behalf of any labor union with respect to employees of
\nthe Company. Each employee, officer and consultant of the Company has executed a
\nnondisclosure agreement in the form provided to Amazon.com. To the Company’s
\nknowledge, no employee (or person performing similar functions) of the Company
\nis in violation of any such agreement or any employment agreement,
\nnoncompetition agreement, patent disclosure agreement, invention assignment
\nagreement, proprietary information agreement or other contract or agreement
\nrelating to the relationship of such employee with the Company or any other
\nparty. Schedule 2.12 to the Disclosure Memorandum sets forth a true and <\/p>\n
-19-<\/p>\n
28
\ncomplete list of (a) the names and current compensation amounts of all directors
\nand officers of the Company; (b) the wage rates for nonsalaried and nonofficer
\nsalaried employees of the Company by classification, and all labor union
\ncontracts (if any); (c) all group insurance programs in effect for employees of
\nthe Company; and (d) the names and current compensation packages of all
\nindependent contractors and consultants of the Company. The Company is not in
\ndefault with respect to any of its obligations referred to in clause (b) above
\nand has no material obligation or liability for severance or back pay owed
\nthrough or by virtue of the Closing. Except as disclosed on Schedule 2.12, all
\nemployees of the Company 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 Disclosure Memorandum sets forth a true, accurate
\nand complete list and description of all retirement, pension, profit sharing,
\ndeferred compensation, savings, bonus, incentive, cafeteria, flexible benefits,
\nmedical, dental, vision, hospitalization, life insurance, group insurance,
\nmedical expense reimbursement, dependent care assistance, tuition reimbursement,
\ndisability, accident, sick pay, holiday, vacation, severance, stock purchase,
\nstock option, stock appreciation rights, fringe benefit and other employee
\nbenefit plans, funds, policies, programs, contracts, arrangements and payroll
\npractices (including, but not limited to, all “employee benefit plans,” as
\ndefined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
\nas amended (“ERISA”)) and all employment, consulting and personal service
\ncontracts 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 actual or potential obligation or
\nliability (such plans, funds, policies, programs, contracts, arrangements and
\npayroll practices are hereinafter referred to collectively as “Employee Benefit
\nPlans” and each individually as an “Employee Benefit Plan”). The Company does
\nnot have any agreement, arrangement, commitment or obligation, whether formal or
\ninformal, whether written or unwritten and whether legally binding or not, to
\ncreate (or contribute to) any additional employee benefit plan, fund, policy,
\nprogram, contract, arrangement or payroll practice or to modify or amend any
\nexisting Employee Benefit Plan. There has been no amendment, written
\ninterpretation or announcement (whether or not written) by the Company relating
\nto, or change in participation or coverage under, any Employee Benefit Plan
\nthat, either alone or together with other such items or events, could increase
\nthe expense of maintaining the Employee Benefit Plans above the level of expense<\/p>\n
-20-<\/p>\n
29
\nincurred with respect thereto for the most recent fiscal year included in the
\nFinancial 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, each fiduciary of such Employee Benefit Plan and all other Persons
\nhave, at all times, properly performed all obligations, whether arising by
\noperation of law or by contract, required to be performed by each of them in
\nconnection with such Employee Benefit Plan; (d) all returns, reports and other
\ndisclosures relating to such Employee Benefit Plan required to be filed with any
\ngovernmental entity or agency or furnished to any participant or beneficiary
\nhave been properly completed or prepared and timely filed or furnished in
\naccordance with applicable law; (e) neither the Company nor any other fiduciary
\nof such Employee Benefit Plan has engaged in any transaction or acted or failed
\nto act in a manner that violates the fiduciary requirements of ERISA or any
\nother applicable law; and (f) no event has occurred or is threatened or about to
\noccur that constitutes or could constitute a nonexempt prohibited transaction
\nunder Section 406 or 407 of ERISA or under Section 4975 of the Code. Each
\nEmployee Benefit Plan that constitutes a <\/p>\n
-21-<\/p>\n
30
\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 with (and the Company has never
\nviolated any of) the requirements of Parts 6 and 7 of Subtitle B of Title I of
\nERISA, Section 4980B(f) of the Code, any regulations under such ERISA and Code
\nsections and any other applicable federal, state, local or foreign law regarding
\nthe provision or continuation of health insurance coverage or other welfare
\nbenefits (within the meaning of Section 3(1) of ERISA). Each Employee Benefit
\nPlan that is intended to be qualified under Section 401(a) of the Code is, and
\nat all times since its inception has been, so qualified and its related trust or
\nannuity contract is, and at all times since its inception has been, exempt from
\ntaxation under Section 501(a) of the Code, and each such Employee Benefit Plan
\n(and its related trust(s) and\/or annuity contract(s)) is the subject of an
\nunrevoked favorable determination letter from the IRS to that effect. Nothing
\nhas occurred since the most recent favorable determination letter issued with
\nrespect to each such Employee Benefit Plan, and no circumstances exist or are
\nreasonably expected by the Company to occur, that could cause the Company (or
\nsuch Employee Benefit Plan) to lose its ability to rely on such determination
\nletter or could cause the IRS to revoke such determination letter. No event or
\nomission has occurred, or is reasonably expected by the Company to occur
\n(including, but not limited to, any of the transactions contemplated in or by
\nthis Agreement), with respect to any Employee Benefit Plan that has or could
\nsubject, directly or indirectly, the Company or any other Person to a tax under
\nChapter 43 of Subtitle D of the Code or a penalty under Part 5 of Subtitle B of
\nTitle 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
-22-<\/p>\n
31
\n 2.13.6 MULTIEMPLOYER AND TITLE IV PLANS<\/p>\n
The Company does not maintain or contribute to, and has never maintained
\nor contributed to (or been obligated to contribute to), any multiemployer plan
\nas defined in Section-3(37) or Section 4001(a)(3) of ERISA or 414(f) of the
\nCode, any multiple employer plan within the meaning of Section 4063 or 4064 of
\nERISA or Section 413(c) of the Code, or any employee benefit plan, fund,
\nprogram, contract or arrangement that is subject to Section 412 of the Code,
\nSection 302 of ERISA or Title IV of ERISA.<\/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, nor is there a basis for any
\nsuch action, suit or claim. No Employee Benefit Plan is currently under
\ninvestigation, audit or review, directly or indirectly, by the IRS, the
\nDepartment of Labor (the “DOL”) or any other governmental entity or agency, and,
\nto 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 <\/p>\n
-23-<\/p>\n
32
\nEmployee Benefit Plan, whether or not some other subsequent action or event
\nwould be required to trigger any of the items specified in, (a) or (b) above.<\/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:
\n(a) all products, tools, computer programs, specifications, source code, object
\ncode, graphics, devices, techniques, algorithms, methods, processes, procedures,
\npackaging, trade dress, formulae, drawings, designs, improvements, discoveries,
\nconcepts, user interfaces, “look and feel,” software, development and other
\ntools, content, inventions (whether or not patentable or copyrightable and
\nwhether or not reduced to practice), designs, logos, themes, know-how, concepts
\nand other technology that are now, during the two years prior to the date of
\nthis Agreement have been or are currently proposed in written materials
\nfurnished by the Company to Amazon.com to be developed, produced, used, marketed
\nor sold by the Company (collectively, the “Technology-Related Assets”); and (b)
\nall intellectual property and other proprietary rights in the Technology-Related
\nAssets, including, without limitation, all trade names, trademarks, domain
\nnames, service marks, logos, brand names and other identifiers, trade secrets,
\ncopyrights, and domestic and foreign letters patent, and the registrations,
\napplications, renewals, extensions and continuations (in whole or in part)
\nthereof, all goodwill associated therewith, and all rights and causes of action
\nfor infringement, misappropriation, misuse, dilution or unfair trade practices
\nassociated therewith.<\/p>\n
2.14.2 TECHNOLOGY<\/p>\n
Schedule 2.14.2 to the Disclosure Memorandum sets forth a list of all
\nproducts and tools developed, produced, used, marketed or sold by the Company
\nduring the two years prior to the date of this Agreement, together with all
\nprior versions, predecessors or precursors to such products or tools
\n(collectively, the “Products”). Except for the Third Party Technologies (as
\ndefined in Section 2.14.3), the Company owns all right, title and interest in
\nand to the following (collectively, the “Technology”), free and clear of all
\nEncumbrances: (a) the Products, together with any and all codes, techniques,
\nsoftware tools, formats, designs, user interfaces, content and “look and feel”
\nrelated thereto; (b) any and all updates, enhancements, corrections,
\nmodifications, improvements and new releases related to the items set forth in
\nclause (a) above; (c) any and all technology and work in progress related to the
\nitems set forth in clauses (a) and (b) above; and (d) all inventions,
\ndiscoveries, processes, designs, trade secrets, know-how and other confidential
\nor proprietary information related to the <\/p>\n
-24-<\/p>\n
33
\nitems set forth in clauses (a), (b) and (c) above. The Technology, excluding the
\nThird Party Technologies, is sometimes referred to herein as the “Company
\nTechnology.”<\/p>\n
2.14.3 THIRD PARTY TECHNOLOGY<\/p>\n
Schedule 2.14.3 to the Disclosure Memorandum sets forth a list of all
\nTechnology used in the Company’s business for which the Company does not own all
\nright, title and interest (collectively, the “Third Party Technologies”), and
\nall license agreements or other contracts pursuant to which the Company has the
\nright to use (in the manner used by the Company, or intended or necessary for
\nuse with the Company Technology) the Third Party Technologies (the “Third Party
\nLicenses”), indicating, with respect to each of the Third Party Technologies
\nlisted therein, the owner thereof and the Third Party License applicable
\nthereto. The Company has the lawful right to use (free of any material
\nrestriction not expressly set forth in the Third Party Licenses) (a) all Third
\nParty Technology that is incorporated in or used in the development or
\nproduction of the Company Technology, and (b) all other Third Party Technology
\nnecessary for the conduct of the Company’s business as now conducted and as
\nproposed to be conducted in any written materials furnished by the Company to
\nAmazon.com. All Third Party Licenses are valid, binding and in full force and
\neffect, the Company and, to the Company’s knowledge, each other party thereto
\nhave performed in all material respects their obligations thereunder, and
\nneither the Company nor, to the Company’s knowledge, any other party thereto is
\nin default thereunder, nor to the Company’s knowledge has there occurred any
\nevent or circumstance which with notice or lapse of time or both would
\nconstitute a default or event of default on the part of the Company or, to the
\nCompany’s knowledge, any other party thereto or give to any other party thereto
\nthe right to terminate or modify any Third Party License. The Company has not
\nreceived notice that any party to any Third Party License intends to cancel,
\nterminate or refuse to renew (if renewable) such Third Party License or to
\nexercise or decline to exercise any option or right thereunder.<\/p>\n
2.14.4 TRADEMARKS<\/p>\n
Schedule 2.14.4 to the Disclosure Memorandum sets forth a list of all
\ntrademarks, trade names, brand names, service marks, logos or other identifiers
\nfor the Products or otherwise used by the Company in its business (the “Marks”).
\nThe Company has full legal and beneficial ownership, free and clear of any
\nEncumbrances, of all rights conferred by use of the Marks in connection with the
\nProducts or otherwise in the Company’s business and, as to those Marks that have
\nbeen registered in the United States Patent and Trademark Office, by federal
\nregistration of the Marks.<\/p>\n
-25-<\/p>\n
34
\n 2.14.5 INTELLECTUAL PROPERTY RIGHTS<\/p>\n
Schedule 2.14.5 to the Disclosure Memorandum sets forth all patents,
\npatent applications, copyright registrations (and applications therefor) and
\ntrademark registrations (and applications therefor) (collectively, the “IP
\nRegistrations”) associated with the Company Technology and the Marks. The
\nCompany owns all right, title and interest, free and clear of any Encumbrances,
\nin and to the IP Registrations, together with any other rights in or to any
\ncopyrights (registered or unregistered), rights in the Marks (registered or
\nunregistered), trade secret rights and other intellectual property rights
\n(including, without limitation, rights of enforcement) contained or embodied in
\nthe Company Technology and the Marks (collectively, the “IP Rights”).<\/p>\n
2.14.6 MAINTENANCE OF RIGHTS<\/p>\n
Except as set forth on Schedule 2.14.6 to the Disclosure Memorandum, the
\nCompany has not conducted its business, and has not used or enforced (or, to its
\nknowledge, failed to use or enforce) the IP Rights, in a manner that would
\nresult in the abandonment, cancellation or unenforceability of any item of the
\nIP Rights or the IP Registrations, and the Company has not taken (or, to its
\nknowledge, failed to take) any action that would result in the forfeiture or
\nrelinquishment of any IP Rights or IP Registrations, in each case where such
\nabandonment, cancellation, unenforceability, forfeiture or relinquishment would
\nhave a Company Material Adverse Effect. Except as set forth in Schedule 2.14.6,
\nthe Company has not granted to any third party any rights or permissions to use
\nany of the Technology or the IP Rights. To the best of the Company’s knowledge,
\nexcept pursuant to reasonably prudent safeguards, (a) no third party has
\nreceived any confidential information relating to the Technology or the IP
\nRights, and (b) the Company is not under any contractual or other obligation to
\ndisclose 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 Disclosure Memorandum, (a)
\nthe Company has not received any notice or claim (whether written, oral or
\notherwise) challenging the Company’s ownership or rights in the Company
\nTechnology or the IP Rights or claiming that any other person or entity has any
\nlegal or beneficial ownership with respect thereto; (b) all the IP Rights are
\nlegally valid and enforceable without any material qualification, limitation or
\nrestriction on their use, and the Company has not received any notice or claim
\n(whether written, oral or otherwise) challenging the validity or enforceability
\nof any of the IP Rights; and (c) to the Company’s knowledge, no other person or
\nentity is infringing or misappropriating any part of the IP Rights or otherwise
\nmaking any unauthorized use of the Company Technology.<\/p>\n
-26-<\/p>\n
35
\n 2.14.8 INFRINGEMENT BY THE COMPANY<\/p>\n
Except as set forth on Schedule 2.14.8 to the Disclosure Memorandum, (a)
\nthe use of any of the Technology in the Company’s business does not and will not
\ninfringe, violate or interfere with or constitute an appropriation of any right,
\ntitle or interest (including, without limitation, any patent, copyright or trade
\nsecret right) held by any other person or entity, and there have been no claims
\nmade with respect thereto; (b) the use of any of the Marks and other IP Rights
\nin the Company’s business will not infringe, violate or interfere with or
\nconstitute an appropriation of any right, title or interest (including, without
\nlimitation, any patent, copyright, trademark or trade secret right) held by any
\nother person or entity, and there have been no claims made with respect thereto;
\nand (c) the Company has not received any notice or claim (whether written, oral
\nor otherwise) regarding any infringement, misappropriation, misuse, abuse or
\nother interference with any third party intellectual property or proprietary
\nrights (including, without limitation, infringement of any patent, copyright,
\ntrademark or trade secret right of any third party) by the Company, the
\nTechnology or the Marks or other IP Rights or claiming that any other entity has
\nany claim of infringement with respect thereto.<\/p>\n
2.14.9 CONFIDENTIALITY<\/p>\n
Except as set forth on Schedule 2.14.9 to the Disclosure Memorandum, (a)
\nthe Company has not disclosed any source code regarding the Technology to any
\nperson or entity other than an employee of the Company and under a written
\nnondisclosure agreement; (b) the Company has at all times maintained and
\ndiligently enforced commercially reasonable procedures to protect all
\nconfidential information relating to the Technology; (c) neither the Company nor
\nany escrow agent is under any contractual or other obligation to disclose the
\nsource code or any other proprietary information included in or relating to the
\nTechnology; and (d) the Company has not deposited any source code relating to
\nthe 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
2.14.10 WARRANTY AGAINST DEFECTS<\/p>\n
Except as set forth in Schedule 2.14.10 to the Disclosure Memorandum,
\nthe Technology is free from known material defects and substantially conforms to
\nthe applicable specifications, documentation and samples of such Technology.<\/p>\n
-27-<\/p>\n
36
\n 2.14.11 DOMAIN NAMES<\/p>\n
Schedule 2.14.11 sets forth a list of all Internet domain names used by
\nthe Company in its business (collectively, the “Domain Names”). The Company has,
\nand after the Closing the Surviving Corporation will have, a valid registration
\nand all material rights (free of any material restriction) in and to the Domain
\nNames, including, without limitation, all rights necessary to continue to
\nconduct the Company’s business as it is currently conducted.<\/p>\n
2.14.12 YEAR 2000<\/p>\n
Each hardware, software and firmware product used by the Company in its
\nbusiness (collectively, the “Software”) will accurately process date data
\n(including, but not limited to, calculating, comparing and sequencing) from,
\ninto and between the twentieth and twenty-first centuries, including, without
\nlimitation, leap year calculations, without a decrease in the functionality of
\nthe Software. The Software is designed to be used prior to, during and after the
\ncalendar year 2000 A.D. and will operate during each such time period without
\nerror relating to date data, specifically including any error relating to, or
\nthe product of, date data which represents or references different centuries or
\nmore than one century. Without limiting the generality of the foregoing, the
\nSoftware (a) will not abnormally end or provide invalid or incorrect results as
\na result of date data, specifically including date data which represents or
\nreferences different centuries or more than one century; (b) has been designed
\nto ensure year 2000 compatibility, including, but not limited to, date data
\ncentury recognition, calculations which accommodate same century and
\nmulti-century formulas and date values, and date data interface values that
\nreflect the century; and (c) includes “Year 2000 Capabilities,” meaning that the
\nSoftware (i) will manage and manipulate data involving dates, including single
\ncentury formulas and multicentury formulas, and will not cause an abnormally
\nending scenario within the application or generate incorrect values or invalid
\nresults involving such dates; (ii) provides that all date-related user interface
\nfunctionalities and data fields include the indication of century; and (iii)
\nprovides that all date-related data interface functionalities include the
\nindication of century.<\/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 Restated Certificate of
\nIncorporation and Bylaws of the Company as currently in effect, including all
\namendments thereto, (b) the minute books of the Company, and (c) the stock
\ntransfer books of the Company. Such minutes reflect all meetings of the
\nCompany’s stockholders, Board of Directors and any committees thereof since the
\nCompany’s inception, and such minutes <\/p>\n
-28-<\/p>\n
37
\naccurately reflect in all material respects the events of and actions taken at
\nsuch meetings. 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 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 Disclosure Memorandum, the
\nCompany is in compliance with all federal, state, local and foreign laws, rules,
\nregulations, ordinances, decrees and orders applicable to it, to its employees
\nor to the Real Property and the Personal Property, including, without
\nlimitation, all such laws, rules, regulations, ordinances, decrees and orders
\nrelating to intellectual property protection, antitrust matters, consumer
\nprotection, currency exchange, environmental protection, equal employment
\nopportunity, health and occupational safety, pension and employee benefit
\nmatters, securities and investor protection matters, labor and employment
\nmatters and trading-with-the-enemy matters, except where the failure of the
\nCompany to so comply would not have a Company Material Adverse Effect. The
\nCompany has not received any notification of any asserted present or past
\nunremedied failure by the Company to comply with any of such laws, rules,
\nordinances, decrees or orders.<\/p>\n
2.18 INSURANCE<\/p>\n
The Company maintains commercially reasonable levels of (a) insurance on
\nits property (including leased premises) that insures against loss or damage by
\nfire or other casualty and (b) insurance against liabilities, claims and risks
\nof a nature and in such amounts as are normal and customary in the Company’s
\nindustry for companies of similar size and financial condition. All insurance
\npolicies of the Company are in full force and effect, all premiums with respect
\nthereto covering all periods up to and including the date this representation is
\nmade have been paid, and no notice of cancellation or termination has been
\nreceived with respect to any such policy or binder. Such policies or binders are
\nsufficient for compliance with all requirements of <\/p>\n
-29-<\/p>\n
38
\nlaw currently applicable to the Company and of all agreements to which the
\nCompany is a party, will remain in full force and effect through the respective
\nexpiration dates of such policies or binders without the payment of additional
\npremiums, and will not in any way be affected by, or terminate or lapse by
\nreason of, the transactions contemplated by this Agreement. The Company has not
\nbeen refused any insurance with respect to its assets or operations, nor has its
\ncoverage been limited, by any insurance carrier to which it has applied for any
\nsuch insurance or with which it has carried insurance.<\/p>\n
2.19 BROKERS OR FINDERS<\/p>\n
Except as set forth on Schedule 2.19 to the Disclosure Memorandum, the
\nCompany has not incurred, and will not incur, directly or indirectly, as a
\nresult of any action taken by or on behalf of the Company, any liability for
\nbrokerage or finders’ fees or agents’ commissions or any similar charges in
\nconnection with the Merger, this Agreement or any transaction contemplated
\nhereby.<\/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 respects with the Foreign Corrupt Practices Act and all foreign laws and
\nregulations relating to prevention of corrupt practices and similar matters.<\/p>\n
2.21 BANK ACCOUNTS<\/p>\n
Schedule 2.21 to the Disclosure Memorandum sets forth the names and
\nlocations of all banks, trust companies, savings and loan associations and other
\nfinancial institutions at which the Company maintains safe deposit boxes or
\naccounts of any nature and the names of all Persons authorized to draw thereon,
\nmake withdrawals therefrom or have access thereto.<\/p>\n
-30-<\/p>\n
39
\n2.22 INSIDER INTERESTS<\/p>\n
Except as set forth on Schedule 2.22 to the Disclosure Memorandum, no
\nstockholder or officer or director of the Company has any interest (other than
\nas a stockholder of the Company) (a) in any Real Property, Personal Property,
\nTechnology or IP Rights used in or directly pertaining to the business of the
\nCompany, including, without limitation, inventions, patents, trademarks or trade
\nnames, or (b) in any agreement, contract, arrangement or obligation relating to
\nthe Company, its present or prospective business or its operations. Except as
\nset forth on Schedule 2.22, there are no agreements, understandings or proposed
\ntransactions 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 of its business, in violation of any applicable
\nforeign, federal, state or local statutes, regulations or ordinances, or common
\nlaw, in each case as in existence at or prior to the Closing. To the Company’s
\nknowledge, there have been no releases of any material amounts of petroleum,
\npetroleum products, hazardous waste, hazardous substances, pollutants or
\ncontaminants on, at or from any assets or properties, including, without
\nlimitation, the Real Property, owned, leased, subleased or used by the Company
\nin the operation of its business during the time such assets or properties were
\nowned, leased, subleased or used by the Company (or, to the Company’s knowledge,
\nprior to such time), including, without limitation, any releases of any material
\namounts of petroleum, petroleum products, hazardous waste, hazardous substances,
\npollutants or contaminants in violation of any law.<\/p>\n
-31-<\/p>\n
40
\n2.24 INFORMATION SUPPLIED BY THE COMPANY<\/p>\n
None of the information supplied or to be supplied by the Company for
\ninclusion in the information statement to be delivered to its stockholders in
\nconnection with any written consent by or meeting of such stockholders
\n(collectively, “Stockholder Materials”), at the date such information was
\nsupplied prior to the time the Company’s stockholders were requested to approve
\nthe Merger, contained or will contain any untrue statement of a material fact or
\nomits or will omit to state any material fact required to be stated therein or
\nnecessary in order to make the statements therein, in light of the circumstances
\nunder which they are made, not materially misleading; provided, however, that
\nthe Company makes no representations or warranties regarding information
\nfurnished by or related to Amazon.com or the Purchaser.<\/p>\n
2.25 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 Disclosure Memorandum
\nand the other Exhibits hereto) or the other Operative Documents contains any
\nuntrue statement of a material fact or omits to state a material fact necessary
\nin order to make the statements so made or information so delivered not
\nmisleading.<\/p>\n
2.26 HART-SCOTT-RODINO<\/p>\n
Rakesh Mathur, Anand Rajaraman, Venkatesh Harinarayan and Ashish Gupta
\n(the “Founders”) and the Company, respectively, are each their own ultimate
\nparent entity as defined under the rules and regulations promulgated under the
\nHart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
\n“Hart-Scott-Rodino Act”). Neither the Company nor any Founder is a $10 million
\nperson as defined thereunder. The Washington Post Company is the only
\nstockholder of the Company whose acquisition of Amazon.com Common Stock would
\ntrigger the jurisdictional tests of the Hart-Scott-Rodino Act. The Washington
\nPost Company has advised the Company that they lack the necessary investment
\nintent and that their purchase of Amazon.com Common Stock as part of the Merger
\nis exempt under 16 C.F.R. 802.9.<\/p>\n
ARTICLE III – REPRESENTATIONS AND WARRANTIES OF
\n 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
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41
\n3.1 ORGANIZATION<\/p>\n
Each of Amazon.com and the Purchaser is a corporation duly organized,
\nvalidly existing and in good standing under the laws of the State of Delaware.
\nEach of Amazon.com and the Purchaser has all requisite corporate power and
\nauthority to own, operate and lease its respective properties and assets, to
\ncarry on its respective business as now conducted and as proposed to be
\nconducted and to enter into and perform its obligations under this Agreement and
\nthe other applicable Operative Documents to which Amazon.com or the Purchaser is
\na party, and to consummate the transactions contemplated hereby and thereby.
\nEach of Amazon.com and the Purchaser is duly qualified and licensed as a foreign
\ncorporation to do business and is in good standing in each jurisdiction in which
\nthe character of properties occupied, owned or held under lease by Amazon.com or
\nPurchaser, as applicable, or the nature of the business conducted by Amazon.com
\nor Purchaser, as applicable, makes such qualification necessary, except where
\nthe failure to be so qualified or in good standing would not have a material
\nadverse effect on the business, properties or prospects of Amazon.com (an
\n“Amazon.com Material Adverse Effect”). Each of Amazon.com and the Purchaser has
\nfull corporate power and authority to execute, deliver and perform this
\nAgreement and the other Operative Documents to which it is a party, and to carry
\nout the transactions contemplated hereby and thereby. All the issued and
\noutstanding shares of capital stock of the Purchaser are held of record by
\nAmazon.com.<\/p>\n
3.2 ENFORCEABILITY<\/p>\n
Amazon.com and the Purchaser each have full 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 each of the other Operative Documents
\nto which Amazon.com is a party will be at the Closing, a legal, valid and
\nbinding obligation of Amazon.com, enforceable against Amazon.com in accordance
\nwith its terms, except as to the effect, if any, of (a) applicable bankruptcy
\nand other similar laws affecting the rights of creditors generally, (b) rules of
\nlaw governing <\/p>\n
-33-<\/p>\n
42
\nspecific performance, injunctive relief and other equitable remedies, and (c)
\nthe enforceability of provisions requiring indemnification in connection with
\nthe offering, issuance or sale of securities. This Agreement has been, and each
\nof the other Operative Documents to which the Purchaser is a party will have
\nbeen at the Closing, duly executed and delivered by the Purchaser, and this
\nAgreement is, and each of the other Operative Documents to which the Purchaser
\nis a party will be at the Closing, a legal, valid and binding obligation of the
\nPurchaser, enforceable against the Purchaser in accordance with its terms,
\nexcept as to the effect, if any, of (i) applicable bankruptcy and other similar
\nlaws affecting the rights of creditors generally, (ii) rules of law governing
\nspecific performance, injunctive relief and other equitable remedies, and (iii)
\nthe enforceability of provisions requiring indemnification in connection with
\nthe offering issuance or sale of securities.<\/p>\n
3.3 SECURITIES<\/p>\n
The Securities to be issued pursuant to this Agreement have been duly
\nauthorized for issuance, and such Securities, when issued and delivered to the
\nCompany’s stockholders pursuant to this Agreement, shall be validly issued,
\nfully paid and nonassessable.<\/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 applicable to Amazon.com or the
\nPurchaser; (b) require any consent, approval or authorization of any Person,
\nexcept compliance with applicable securities laws, the filing of all documents
\nnecessary to consummate the Merger with the Delaware Secretary of State (all
\nsuch consents, approvals or authorizations to be duly obtained at or prior to
\nthe Closing); (c) result in a default (with or without the giving of notice or
\nlapse of time, or both) under, or acceleration or termination of, or the
\ncreation in any party of the right to accelerate, terminate, modify or cancel,
\nany agreement, lease, note or other restriction, encumbrance, obligation or
\nliability to which Amazon.com or the Purchaser is a party or by which it is
\nbound or to which any assets of Amazon.com or the Purchaser are subject, or (d)
\nconflict 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 the
\nPurchaser.<\/p>\n
-34-<\/p>\n
43
\n3.5 CAPITALIZATION<\/p>\n
The authorized capital stock of Amazon.com consists of 300,000,000
\nshares of Amazon.com Common Stock of which 49,756,203 shares were issued and
\noutstanding as of July 24, 1998 and 10,000,000 shares of preferred stock, par
\nvalue $0.01 per share, none of which are issued and outstanding. Such issued and
\noutstanding 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 ending December 31, 1997
\n(the “Form 10-K”), its Quarterly Report on Form 10-Q for the fiscal quarter
\nending March 31, 1998, all Form 8-Ks filed after the date of the Form 10-K, and
\nits Proxy Statement relating to its 1998 Annual Meeting of Stockholders on May
\n28, 1998 (collectively, the “SEC Documents”). As of their respective filing
\ndates, each of the SEC Documents complied in all material respects with the
\nrequirements of the Securities Exchange Act of 1934, as amended (the “Exchange
\nAct”), and the rules and regulations of the Securities and Exchange Commission
\npromulgated thereunder.<\/p>\n
3.7 ABSENCE OF CERTAIN CHANGES<\/p>\n
Since the March 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 to
\nthe date of this Agreement.<\/p>\n
3.8 INFORMATION SUPPLIED BY AMAZON.COM<\/p>\n
None of the information supplied or to be supplied by Amazon.com for
\ninclusion in the Stockholder Materials, including the SEC Documents, at the date
\nsuch information was supplied prior to the time the stockholders of the Company
\nwere requested to approve the Merger at either a special meeting of stockholders
\nor by executing a written consent, contained or will contain any untrue
\nstatement of a material fact or omits or will omit to state any material fact
\nrequired to be stated therein or necessary in order to make the statements
\ntherein, in light of the circumstances under which they are made, not materially
\nmisleading; provided, however, that Amazon.com makes no representations or
\nwarranties regarding information furnished by or related to the Company.<\/p>\n
-35-<\/p>\n
44
\n3.9 FULL DISCLOSURE<\/p>\n
No information furnished by Amazon.com or the Purchaser to the Company
\nor its representatives in connection with this Agreement or the other Operative
\nDocuments contains any untrue statement of a material fact or omits to state a
\nmaterial fact necessary in order to make the statements so made or information
\nso delivered not misleading.<\/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 applicable Exhibits or Schedules to the Disclosure Memorandum) and in
\nthe other Operative Documents shall have been true and correct in all material
\nrespects 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 in all material respects as of the Closing Date as though made on that
\ndate.<\/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
\nthem 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 Fenwick & West LLP,
\ncounsel for the Company, dated the Closing Date, substantially in the form
\nattached hereto as Exhibit 4.3.<\/p>\n
4.4 OPINION OF PATENT COUNSEL FOR THE COMPANY<\/p>\n
Amazon.com shall have received the opinion letter, dated the Closing
\nDate, of Townsend and Townsend and Crew LLP, patent counsel for the Company, in
\nform <\/p>\n
-36-<\/p>\n
45
\nreasonably satisfactory to Amazon.com, with respect to those matters identified
\nand set forth on Exhibit 4.4 hereto. In addition, copies of all assignments of
\npatents necessary to vest in the Company the rights described in the patents
\nshall have been delivered to Amazon.com.<\/p>\n
4.5 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 and 4.6 thereof
\nhave been fulfilled.<\/p>\n
4.6 MATERIAL ADVERSE CHANGE<\/p>\n
Since the date of this Agreement and through the Closing, there shall
\nnot have occurred any change in the business, properties or prospects of the
\nCompany that would have a Company Material Adverse Effect, except for such
\nchanges occurring as a result of the execution or announcement of this
\nAgreement.<\/p>\n
4.7 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, the granting or delivery of
\nwhich is necessary for the consummation of the transactions contemplated hereby,
\nor for the continued operation of the Company, shall have been obtained, and all
\nwaiting periods specified by law shall have passed. All other consents,
\napprovals and notices referred to in this Agreement shall have been obtained or
\ndelivered.<\/p>\n
4.8 PROCEEDINGS AND DOCUMENTS; SECRETARY’S CERTIFICATE<\/p>\n
All corporate and other proceedings in connection with the transactions
\ncontemplated hereby and by the other Operative Documents, and all documents and
\ninstruments incident to such transactions, shall have been approved by
\nAmazon.com’s counsel, and Amazon.com shall have received a certificate of the
\nSecretary of the Company, in form and substance satisfactory to Amazon.com, as
\nto the authenticity and effectiveness of the actions of the Board of Directors
\nand stockholders of the Company authorizing the Merger and the transactions
\ncontemplated by this Agreement and the other Operative Documents.<\/p>\n
-37-<\/p>\n
46
\n4.9 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 attached hereto as Exhibit 4.9.<\/p>\n
4.10 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 or the Company is subject.<\/p>\n
4.11 STOCKHOLDER APPROVAL<\/p>\n
The principal terms of this Agreement shall have been approved by the
\nholders of not less than 90% of each class of Company Capital Stock.<\/p>\n
4.12 LEGAL PROCEEDINGS<\/p>\n
No order of any court or administrative agency shall be in effect which
\nenjoins, restrains, conditions or prohibits consummation of this Agreement or
\nany other Operative Document, and no litigation, investigation or administrative
\nproceeding shall be pending or threatened which would enjoin, restrain,
\ncondition or prevent consummation of this Agreement or any other Operative
\nDocument.<\/p>\n
4.13 ESCROW AGREEMENT<\/p>\n
A representative of the Company’s stockholders, on behalf of the
\nCompany’s stockholders, shall have executed and delivered the Escrow Agreement.<\/p>\n
4.14 EMPLOYMENT AND NONCOMPETITION ARRANGEMENTS<\/p>\n
Each of the Founders shall have accepted an oral offer of employment
\nwith Amazon.com and the Founders shall have executed the Amazon.com standard
\nform of Confidentiality, Noncompetition and Invention Assignment Agreement
\nsubstantially in the form attached hereto as Exhibit 4.14.<\/p>\n
4.15 INVESTOR RIGHTS AGREEMENT<\/p>\n
The holders of not less than 90% of each class of Company Capital Stock
\nshall have executed the Investor Rights Agreement.<\/p>\n
-38-<\/p>\n
47
\n4.16 AFFILIATE LETTERS<\/p>\n
The Company shall have delivered or caused to be delivered to Amazon.com
\nan Affiliate Letter substantially in the form attached hereto as Exhibit 4.16
\nfrom each of those Persons who were, on the date on which the requisite number
\nof consents has been obtained to approve the Merger, “affiliates” of the Company
\nwithin the meaning of Rule 145 of the rules and regulations promulgated under
\nthe Securities Act.<\/p>\n
4.17 TERMINATION OF CERTAIN AGREEMENTS<\/p>\n
Any and all rights of refusal, co-sale rights and registration rights
\n(other than pursuant hereto) for the benefit of the holders of Company Capital
\nStock, if any, set forth in the Disclosure Memorandum shall have been
\nterminated.<\/p>\n
4.18 EXERCISE OF WARRANTS<\/p>\n
Any and all Warrants shall have been exercised or converted, as the case
\nmay be, for shares of Company Capital Stock immediately prior to the Effective
\nTime.<\/p>\n
4.19 REPURCHASE AGREEMENTS<\/p>\n
Each of the Founders shall have amended the vesting provisions of their
\nrespective repurchase agreements with the Company with respect to such person’s
\nshares of Company Common Stock to (a) eliminate accelerated vesting in the event
\nof a move more than 30 miles from the Company’s headquarters, (b) extend vesting
\nfor an additional one-year period and (c) provide for accelerated vesting in the
\nevent of termination without cause.<\/p>\n
4.20 OTHER APPROVALS<\/p>\n
The Company shall have delivered or caused to be delivered to Amazon.com
\nappropriate confidentiality, nondisclosure, and assignment of inventions
\nagreements, in form reasonably satisfactory to Amazon.com from (a) Microland
\nLimited and (b) Dallan Quass. In addition, the Company shall have repaid in full
\nany amounts owing to Silicon Valley Bank and terminated any and all agreements
\nwith same.<\/p>\n
ARTICLE V – CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY<\/p>\n
The obligations of the Company to perform and observe the covenants,
\nagreements and conditions hereof to be performed and observed by them at or
\nbefore the Closing shall be subject to the satisfaction of the following
\nconditions, which may be expressly waived only in writing signed by the Company.<\/p>\n
-39-<\/p>\n
48
\n5.1 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 all obligations and
\nagreements and complied with all covenants contained in this Agreement or any
\nother Operative Document to be performed and complied with by them at or prior
\nto 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 attached hereto as 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 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 this Agreement or
\nany other Operative Document, and no litigation, investigation or administrative
\nproceeding shall be pending or threatened which would enjoin, restrain,
\ncondition or prevent consummation of this Agreement or any other Operative
\nDocument.<\/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 in the business, properties or prospects of
\nAmazon.com that would have an Amazon.com Material Adverse Effect, except for
\nsuch changes occurring as a direct result of the execution or announcement of
\nthis Agreement. <\/p>\n
-40-<\/p>\n
49
\nChanges in the trading prices of Amazon.com Common Stock shall not be deemed to
\nhave an Amazon.com Material Adverse 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, the granting or delivery of
\nwhich is necessary for the consummation of the transactions contemplated hereby
\nor for the continued operation of the Company, shall have been obtained, and all
\nwaiting periods specified by law shall have passed. All other consents,
\napprovals and notices referred to in this Agreement shall have been obtained or
\ndelivered.<\/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 or the Company is subject.<\/p>\n
5.9 STOCKHOLDER APPROVALS<\/p>\n
The principal terms of this Agreement shall have been approved by the
\nholders of not less than 90% of each class of Company Capital Stock.<\/p>\n
5.10 ESCROW AGREEMENT<\/p>\n
Amazon.com and the Escrow Agent shall have executed the Escrow
\nAgreement.<\/p>\n
5.11 INVESTOR RIGHTS AGREEMENT<\/p>\n
Amazon.com shall have executed the Investor Rights Agreement.<\/p>\n
5.12 OPTION LETTERS<\/p>\n
Amazon.com shall have executed an option letter with each of the
\nFounders substantially in the form attached hereto as Exhibits 5.12.<\/p>\n
ARTICLE VI – COVENANTS<\/p>\n
Between the date of this Agreement and the Effective Time, the parties
\ncovenant and agree as set forth in this Article VI.<\/p>\n
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50
\n6.1 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 Agreement and the Effective Time,
\ndirectly or indirectly do, or propose to do, any of the following without the
\nprior written consent of Amazon.com:<\/p>\n
(a) amend or otherwise change its Restated 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 Options, Warrants,
\nCompany Series A Stock, Company Series B Stock, Company Series C Stock or
\nConvertible Notes, issue, sell, contract to issue or sell, pledge, dispose of,
\ngrant, encumber or authorize the issuance, sale, pledge, disposition, grant or
\nEncumbrance of (i) any shares of capital stock of any class of the Company, or
\nany options, warrants, convertible securities or other rights of any kind to
\nacquire any shares of such capital stock, or any other ownership interest
\n(including, without limitation, any phantom interest) of the Company, or (ii)
\nany assets of the Company, except in the ordinary course of business and in a
\nmanner consistent with past practice;<\/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, the obligations of any Person, or make any loans or
\nadvances, except in the ordinary <\/p>\n
-42-<\/p>\n
51
\ncourse of business and consistent with past practice; (iii) enter into any
\ncontract or agreement other than in the ordinary course of business, consistent
\nwith past practice; (iv) authorize any single capital expenditure which is in
\nexcess of $25,000 or capital expenditures which are, in the aggregate, in excess
\nof $100,000 for the Company taken as a whole; (v) enter into any agreement in
\nwhich the obligation of the Company exceeds $25,000 or which shall not terminate
\nor be subject to termination for convenience within 180 days following
\nexecution; (vi) license any Technology or IP Rights other than in the ordinary
\ncourse of business, consistent with past practice; or (vii) enter into or amend
\nany contract, agreement, commitment or arrangement with respect to any matter
\nset 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 its
\nofficers, 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, benefit or other plan,
\nagreement, trust, fund, policy or arrangement for the benefit of any director,
\nofficer 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 federal,
\nstate, local or foreign income tax liability;<\/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 and 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
-43-<\/p>\n
52
\n6.2 ACCESS TO INFORMATION; CONFIDENTIALITY<\/p>\n
From the date hereof to the Effective Time, the Company shall, and shall
\ncause the officers, directors, employees and agents of the Company to, afford
\nthe officers, employees and agents of Amazon.com access at all reasonable times
\nto the officers, employees, agents, properties, offices, plants and other
\nfacilities, books and records of the Company and shall furnish Amazon.com with
\nall financial, operating and other data and information as Amazon.com, through
\nits officers, 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 fairly present the
\nfinancial position and results of operations of the Company as of the dates and
\nfor the periods therein specified. No investigation pursuant to this Section 6.2
\nshall affect any representation or warranty in this Agreement of any party
\nhereto or any condition to the obligations of the parties hereto. The parties
\nshall continue to comply with and to perform their respective obligations under
\nthe Mutual Nondisclosure Agreement between Amazon.com and the Company entered
\ninto as of July 16, 1998, other than with respect to Section 9 thereof.<\/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 (other than in the ordinary course of business) any material portion of
\nthe assets of, or any equity interest in, the Company or any business
\ncombination with the Company or participate in any negotiations regarding, or
\nfurnish to any other Person any information with respect to, or otherwise
\ncooperate or negotiate in any way with, or assist or participate in, facilitate
\nor encourage, any effort or attempt by any other Person to do or seek any of the
\nforegoing. The Company shall notify Amazon.com promptly if any such proposal or
\noffer, or any inquiry or contact with any Person with respect thereto, is made
\nand shall, in any such notice to Amazon.com, indicate in reasonable detail the
\nidentity of the Person making such proposal, offer, inquiry or contact and the
\nterms and conditions of such proposal, offer, inquiry or contact. The Company
\nagrees not to release any third party from, or waive any provision of, any
\nconfidentiality or standstill agreement 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 <\/p>\n
-44-<\/p>\n
53
\nwarranty made by such party contained in this Agreement to be untrue or
\ninaccurate in any material respect and (b) any material failure by such party to
\ncomply with or satisfy any covenant, condition or agreement to be complied with
\nor satisfied by it hereunder; provided, however, that the delivery of any notice
\npursuant to this Section 6.4 shall not limit or otherwise affect the remedies
\navailable to the parties hereunder.<\/p>\n
6.5 FURTHER ACTION; REASONABLE BEST EFFORTS<\/p>\n
Upon the terms and subject to the conditions hereof, each of the parties
\nhereto shall use its best efforts to take, or cause to be taken, all appropriate
\naction, 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
\nbest efforts to obtain all waivers, licenses, permits, consents, approvals,
\nauthorizations, qualifications and orders of governmental authorities and
\nparties to contracts with the Company as are necessary for the consummation of
\nthe transactions contemplated hereby and to fulfill the conditions to the
\nMerger. In case at any time after the Effective Time any further action is
\nnecessary or desirable to carry out the purposes of this Agreement, each party
\nto this Agreement shall use its best efforts to take all such action. After the
\nClosing Date, each party hereto, at the request of and without any further cost
\nor expense to 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 seek the approval at a special meeting of stockholders
\nor the written consent of the stockholders of the Company 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 and management of the Company.<\/p>\n
6.7 PROXY STATEMENT<\/p>\n
The Company will send the Stockholder Materials to the stockholders of
\nthe Company, in a timely manner, for the purposes of considering approval of the
\nMerger, either at a special meeting of stockholders or by their executing a
\nwritten consent. The Company and Amazon.com each will promptly provide all
\ninformation relating to its respective business or operations necessary for
\ninclusion in the Stockholder Materials <\/p>\n
-45-<\/p>\n
54
\nto satisfy all requirements of applicable state and federal securities laws. The
\nCompany and Amazon.com each shall be solely responsible for any statement,
\ninformation or omission in the Stockholder Materials relating to it or its
\naffiliates based on written information furnished by it. The Company and
\nAmazon.com will not provide or publish to the stockholders of the Company any
\nmaterial concerning them or their affiliates that violates the Securities Act or
\nthe Exchange Act with respect to the transactions contemplated hereby.<\/p>\n
6.8 LISTING APPLICATION<\/p>\n
Amazon.com shall promptly prepare and submit to the Nasdaq National
\nMarket a listing application covering the shares of Amazon.com Common Stock
\nissuable in the Merger, and shall use its best efforts to obtain, prior to the
\nEffective Time, approval for the listing of such shares of Amazon.com Common
\nStock, subject to official notice of issuance.<\/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 or the California Code
\n(the “Dissenting Stockholder”) and the number of Dissenting Shares owned by such
\nDissenting Stockholder.<\/p>\n
6.10 PUBLICITY<\/p>\n
No party hereto shall issue any press release or otherwise make any
\nstatements to any third party with respect to this Agreement or the transactions
\ncontemplated hereby until the issuance by Amazon.com and the Company of a joint
\npress release announcing the transactions contemplated hereby which shall be
\nprepared by them cooperatively.<\/p>\n
6.11 CONVERSION OF STANDARDIZED EMPLOYEE BENEFIT PLANS<\/p>\n
The Company shall convert any “standardized” prototype Employee Benefit
\nPlan that is intended to be qualified under Section 401(a) of the Code to a
\n“non-standardized” prototype plan, with terms that are substantially similar to
\nthose of the predecessor “standardized” prototype Employee Benefit Plan,
\neffective as of the date prior to Closing.<\/p>\n
-46-<\/p>\n
55
\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 written consent of both Amazon.com and the Company;<\/p>\n
(b) by either the Company or Amazon.com, if the Merger has not
\nbeen consummated by September 30, 1998; provided, however, that the right to
\nterminate this Agreement under this subsection (b) shall not be available to any
\nparty whose failure to fulfill any obligation under this Agreement has been the
\ncause of, or resulted in, the failure of the Effective Time to occur on or
\nbefore 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 September 30, 1998; or<\/p>\n
(e) by Amazon.com, in the event of a material breach by the
\nCompany of any representation, warranty or agreement contained herein which has
\nnot been cured or is not curable by September 30, 1998.<\/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 be amended by the parties hereto at any time before
\nor after approval of the Company’s stockholders; but after such approval,
\nhowever, no <\/p>\n
-47-<\/p>\n
56
\namendment will be made which by applicable law requires the further approval of
\nthe Company’s stockholders without obtaining such further approval.<\/p>\n
7.4 WAIVER<\/p>\n
At any time prior to the Effective Time, any party hereto may (a) extend
\nthe time for the performance of any obligation or other act of any other party
\nhereto, (b) waive any inaccuracy in the representations and warranties contained
\nherein or in any document delivered pursuant hereto, or (c) waive compliance
\nwith any agreement or condition contained herein. Any such extension or waiver
\nshall be valid only if set forth in an instrument in writing signed by the party
\nor parties to be bound thereby.<\/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, and shall not be
\ndeemed waived or otherwise affected by any investigation made or any knowledge
\nacquired with respect thereto, or by any notice delivered pursuant to Section
\n6.4 hereof; provided, however, that any claim based on fraud shall survive the
\nClosing indefinitely. The covenants and agreements contained in this Agreement
\nor in the other Operative Documents shall survive the Closing and shall continue
\nuntil all obligations with respect thereto shall have been performed or
\nsatisfied or shall have been terminated in accordance with their terms.<\/p>\n
8.2 INDEMNIFICATION BY THE COMPANY AND HOLDERS OF COMPANY CAPITAL STOCK<\/p>\n
(a) Subject to the limitations set forth in this Article VIII, up to and
\nuntil the Closing, the Company shall indemnify and hold Amazon.com and its
\nofficers, directors and affiliates (the “Amazon.com Indemnified Parties”)
\nharmless from and against, and shall reimburse 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 in, or misrepresentation or breach of, any representation or warranty
\nmade by the Company in this Agreement or in any other Operative Document or in
\nany certificate delivered pursuant hereto or thereto and (ii) any failure by the
\nCompany to <\/p>\n
-48-<\/p>\n
57
\nperform or comply, in whole or in part, with any covenant or agreement in this
\nAgreement or in any other Operative Document.<\/p>\n
(b) Subject to the limitations set forth in this Article VIII, from and
\nafter the Closing, the holders of Company Capital Stock immediately prior to the
\nEffective Time shall indemnify and hold the Amazon.com Indemnified Parties
\nharmless from and against, and shall reimburse the Amazon.com Indemnified
\nParties for, any and all Losses arising out of (i) any inaccuracy in, or
\nmisrepresentation or breach of, any representation or warranty made by the
\nCompany in this Agreement or in any other Operative Document or in any
\ncertificate delivered pursuant hereto or thereto and (ii) any failure by the
\nCompany 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
8.3 INDEMNIFICATION BY AMAZON.COM<\/p>\n
Amazon.com shall indemnify and hold the Company and its officers,
\ndirectors and affiliates and the holders of Company Capital Stock (the “Company
\nIndemnified Parties” and, together with the Amazon.com Indemnified Parties, the
\n“Indemnified Parties”) harmless from and against, and shall reimburse the
\nCompany Indemnified Parties for, any and all Losses arising out of or in
\nconnection with (a) any inaccuracy in, or misrepresentation or breach of any
\nrepresentation or warranty made by Amazon.com or the Purchaser in this Agreement
\nor in any other Operative Document or in any certificate delivered pursuant
\nhereto or thereto and (b) any failure by Amazon.com or the Purchaser to perform
\nor comply, in whole or in part, with any covenant or agreement in this Agreement
\nor in any other Operative Document.<\/p>\n
8.4 THRESHOLD AND LIMITATIONS<\/p>\n
(a) No Indemnified Party shall be entitled to receive any
\nindemnification payment with respect to any claims for indemnification under
\nthis Article VIII (“Claims”) until the aggregate Losses for which such
\nIndemnified Parties would be otherwise entitled to receive indemnification
\nexceed $100,000 (the “Threshold”); provided, however, that once such aggregate
\nLosses exceed the Threshold, such Indemnified Parties shall be entitled to
\nindemnification for the aggregate amount of all Losses without regard to the
\nThreshold.<\/p>\n
(b) Except for liability based on a claim of fraud, the aggregate
\nliability for Losses incurred by any and all indemnified parties (i) for any
\nholders of Company Capital Stock immediately prior to the Effective Time shall
\nbe limited to such holder’s Escrow Shares and (ii) for any other Indemnified
\nParty shall be limited to a dollar amount equal to the product obtained by
\nmultiplying the Escrow Shares by the average of the closing prices of Amazon.com
\nCommon Stock as reported on the Nasdaq <\/p>\n
-49-<\/p>\n
58
\nNational Market for the three consecutive trading days immediately preceding the
\nClosing Date.<\/p>\n
(c) In seeking indemnification for Losses under Section 8.2 hereof, the
\nAmazon.com Indemnified Parties shall first exercise their remedies with respect
\nto the Escrow Shares. Except for liability based on a claim of fraud; (i) no
\nholder of Company Capital Stock immediately prior to the Effective Time shall
\nhave any liability to an Amazon.com Indemnified Party under this Agreement,
\nexcept to the extent of such holder’s Escrow Shares deposited under the Escrow
\nAgreement, and (ii) the remedies set forth in this Article VIII shall be the
\nexclusive remedies of Amazon.com and the other Amazon.com Indemnified Parties
\nagainst any such holder.<\/p>\n
(d) 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.<\/p>\n
(e) The amount of any payment pursuant to a Claim under this Article
\nVIII shall be adjusted to reflect the net tax effect of such Claim and any
\nresulting payments received under this Article VIII (including payments under
\nthis Section 8.4(e)) by the Indemnified Party, and shall further be reduced to
\nreflect any net insurance proceeds received by the Indemnified Party that arise
\nout of the Claim for which indemnification is sought.<\/p>\n
8.5 PROCEDURE FOR INDEMNIFICATION<\/p>\n
(a) An Indemnified Party shall notify the indemnifying party in writing
\nreasonably promptly after the assertion against the Indemnified Party of any
\nclaim by a third party (a “Third Party Claim”) in respect of which the
\nIndemnified Party intends to base a Claim for indemnification hereunder, but the
\nfailure or delay to so notify the indemnifying party shall not relieve it of any
\nobligation or liability that it may have to the Indemnified Party except to the
\nextent that the indemnifying party demonstrates that its ability to defend or
\nresolve such Third Party Claim is adversely affected thereby.<\/p>\n
(b) (i) Subject to the rights of or duties to any insurer or other third
\nparty having potential liability therefor, the indemnifying party shall have the
\nright, upon written notice given to the Indemnified Party within 30 days after
\nreceipt of the notice from the Indemnified Party of any Third Party Claim, to
\nassume the defense or handling of such Third Party Claim, at the indemnifying
\nparty’s sole expense, in which case the provisions of Section 8.5(b)(ii) hereof
\nshall govern.<\/p>\n
-50-<\/p>\n
59
\n (ii) The indemnifying party shall select counsel reasonably
\nacceptable to the Indemnified Party in connection with conducting the defense or
\nhandling of such Third Party Claim, and the indemnifying party shall defend or
\nhandle the same in consultation with the Indemnified Party and shall keep the
\nIndemnified Party timely apprised of the status of such Third Party Claim. The
\nindemnifying party shall not, without the prior written consent of the
\nIndemnified Party, agree to a settlement of any Third Party Claim, unless (A)
\nthe settlement provides an unconditional release and discharge of the
\nIndemnified Party and the Indemnified Party is reasonably satisfied with such
\ndischarge and release and (B) the Indemnified Party shall not have reasonably
\nobjected to any such settlement on the ground that the circumstances surrounding
\nthe settlement could result in an adverse impact on the business, properties or
\nprospects of the Indemnified Party. The Indemnified Party shall cooperate with
\nthe indemnifying party and shall be entitled to participate in the defense or
\nhandling of such Third Party Claim with its own counsel and at its own expense.<\/p>\n
(c) (i) If the indemnifying party does not give written notice to the
\nIndemnified Party within 30 days after receipt of the notice from the
\nIndemnified Party of any Third Party Claim of the indemnifying party’s election
\nto assume the defense or handling of such Third Party Claim, the provisions of
\nSection 8.5(c)(ii) hereof shall govern.<\/p>\n
(ii) The Indemnified Party may, at the indemnifying party’s
\nexpense (which shall be paid from time to time by the indemnifying party as such
\nexpenses are incurred by the Indemnified Party), select counsel in connection
\nwith conducting the defense or handling of such Third Party Claim and defend or
\nhandle such Third Party Claim in such manner as it may deem appropriate;
\nprovided, however, that the Indemnified Party shall keep the indemnifying party
\ntimely apprised of the status of such Third Party Claim and shall not settle
\nsuch Third Party Claim without the prior written consent of the indemnifying
\nparty, which consent shall not be unreasonably withheld. If the Indemnified
\nParty defends 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
(d) If the Indemnified Party intends to seek indemnification hereunder,
\nother than for a Third Party Claim, then it shall notify the indemnifying party
\nin writing 90 days after its discovery of facts upon which it intends to base
\nits Claim for indemnification hereunder, but the failure or delay to so notify
\nthe indemnifying party shall not relieve the indemnifying party of any
\nobligation or liability that the indemnifying party may have to the Indemnified
\nParty except to the extent that the indemnifying party demonstrates that the
\nindemnifying party’s ability to defend or resolve such Claim is adversely
\naffected thereby.<\/p>\n
-51-<\/p>\n
60
\n (e) The Indemnified Party may notify the indemnifying party of a Claim
\neven though the amount thereof plus the amount of other Claims previously
\nnotified by the Indemnified Party aggregate less than the Threshold.<\/p>\n
(f) At the Closing, the Escrow Shares shall be deposited in the escrow
\naccount to satisfy potential claims by the Amazon.com Indemnified Parties under
\nthis Article VIII.<\/p>\n
8.6 REMEDIES<\/p>\n
Except as otherwise provided, the indemnification provisions of this
\nArticle 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
(a) Amazon.com, the Purchaser and the Company shall cooperate, as and to
\nthe extent reasonably requested, in connection with the preparation and filing
\nof Tax Returns pursuant to this Section 9.1 and any audit, investigation,
\nlitigation or other action with respect to Taxes that may be instituted after
\nthe Closing. Amazon.com, the Purchaser and the Company shall use commercially
\nreasonable efforts to retain all books and records with respect to Tax matters
\npertinent to the Company relating to any Tax period beginning before the Closing
\nDate until the expiration of the applicable statute of limitations (and, to the
\nextent notified by Amazon.com, the Purchaser or the Company, any extensions
\nthereof) and shall provide any such records to the other party as may be
\nreasonably requested.<\/p>\n
(b) Except as otherwise contained in Section 1.9(b) or the Amazon.com
\nand Purchaser Tax Certificates, neither Amazon.com nor the Purchaser makes any
\nrepresentation or warranty with respect to, and expressly disclaims any
\nresponsibility for, any Tax consequences to the Company or its stockholders
\narising out of the <\/p>\n
-52-<\/p>\n
61
\nstructure or terms of this Agreement (including, without limitation, the
\nqualification or failure of the purchase and sale of the shares to qualify as a
\nreorganization under Section 368 of the Code), or the negotiation or
\nconsummation hereof. The Company and its stockholders have consulted with its,
\nhis or her own tax advisor in such matters and is solely responsible for any
\nsuch Tax consequences.<\/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 incident to the
\nnegotiation, preparation and execution of this Agreement and the other Operative
\nDocuments (including legal and accounting fees and expenses); provided, however,
\nthat, should any action be brought hereunder, the attorneys’ fees and expenses
\nof the prevailing party shall be paid by the other party to such action; and
\nprovided, further, that the professional fees incurred by the Company in excess
\nof $250,000 of legal and accounting fees shall be paid by the stockholders of
\nthe Company.<\/p>\n
9.3 NOTICES<\/p>\n
Any notice or demand desired or required to be given hereunder shall be
\nin writing given by personal delivery, certified or registered mail, confirmed
\nfacsimile transmission, 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 or
\nrequest shall be the date of personal delivery, four days after the date of
\nmailing by certified or registered mail, the date on which successful facsimile
\ntransmission is confirmed or the date undertaken for delivery by a reputable
\novernight courier service, as the case may be, in each case properly addressed
\nas provided herein and with all charges prepaid.<\/p>\n
TO AMAZON.COM OR THE PURCHASER:<\/p>\n
Amazon.com, Inc.
\n Fourth Floor, 1515 Second Avenue
\n Seattle, Washington 98101
\n Fax: (206) 694-2082
\n Attention: Randy J. Tinsley, Treasurer<\/p>\n
with a copy to:<\/p>\n
Perkins Coie LLP
\n 1201 Third Avenue, 40th Floor
\n Seattle, Washington 98101-3099<\/p>\n
-53-<\/p>\n
62
\n Fax: (206) 583-8500
\n Attention: Scott L. Gelband<\/p>\n
TO THE COMPANY:<\/p>\n
Junglee Corp.
\n 1309 S. Mary Ave.
\n Sunnyvalle, California 94087
\n Fax: (408) 522-9470
\n Attention: Rakesh Mathur<\/p>\n
with a copy to:<\/p>\n
Fenwick & West LLP
\n Two Palo Alto Square
\n Palo Alto, California 94306
\n Fax: (650) 494-1417
\n Attention: Mark C. Stevens<\/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 by operation of law or otherwise.<\/p>\n
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63
\n9.7 PARTIES IN INTEREST<\/p>\n
This Agreement shall be binding upon and inure solely to the benefit of
\neach party hereto, and nothing in this Agreement, express or implied, is
\nintended to or shall confer upon any other Person any right, benefit or remedy
\nof any nature whatsoever 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 thereof.<\/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 and the Purchaser hereby irrevocably waives all
\nright to trial by jury in any action, proceeding or counterclaim (whether based
\non contract, tort or otherwise) arising out of or relating to this Agreement or
\nthe actions of such parties in the negotiation, administration, performance and
\nenforcement thereof.<\/p>\n
-55-<\/p>\n
64
\n IN WITNESS WHEREOF, the parties hereto have entered into and signed this
\nAgreement as of the date and year first above written.<\/p>\n
AMAZON.COM, INC.<\/p>\n
By Jeffrey P. Bezos
\n __________________________________
\n Its Chief Executive Officer
\n _________________________________<\/p>\n
AJ ACQUISITION, INC.<\/p>\n
By Randy Tinsley
\n __________________________________
\n Its Treasurer
\n _________________________________<\/p>\n
JUNGLEE CORP.<\/p>\n
Kavitark R. Shriram
\n By__________________________________
\n President
\n Its_________________________________<\/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-43006","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\/43006","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=43006"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43006"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43006"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43006"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}