CONTRIBUTION AGREEMENT
AGREEMENT, dated as of March 18, 1998, between CyberShop
International, Inc., a Delaware corporation (the "Company"), and each of the
parties whose names appear on Schedule A attached hereto and made a part hereof
("Schedule A") (hereinafter referred to individually as a "Member" and
collectively as the "Members").
W I T N E S S E T H:
WHEREAS, as of the date hereof, each Member owns Membership Interests
("Membership Interests") in CyberShop, L.L.C., a New Jersey limited liability
company (the "LLC");
WHEREAS, each Member has agreed to contribute all of its Membership
Interests (the "Contribution"), the number of which Membership Interests is set
forth next to such Member's name on Schedule A (the "Contributed Interests"), in
exchange for the number of shares of par value $.001 common stock of the Company
set forth next to such Member's name on Schedule A (the "Shares"); and
WHEREAS, upon the consummation of the Contribution, the LLC will
become a wholly-owned subsidiary of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
representations and covenants herein contained and for other good and valuable
consideration, the parties hereto agree as follows:
1. Subject to the terms and conditions hereof, the Company hereby
agrees to issue to
each Member and each Member hereby agrees to accept, in exchange for all of such
Member's Contributed Interests, the number of Shares set forth next to such
Member's name on Schedule A.
2. Upon execution and delivery of this Agreement: (a) each Member
shall deliver to the Company at the Company's offices located at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ the certificate(s) representing all of such Member's
Contributed Interests with such evidence of authority to transfer as shall be
necessary to transfer such Contributed Interests; and (b) the Company shall
deliver to each Member a certificate representing the number of Shares set forth
opposite such Member's name on Schedule A.
3. Each Member severally and not jointly or jointly and severally
represents and warrants to the Company as follows:
(a) Such Member is the sole owner of such Member's
Contributed Interests free and clear of any liens, claims, security interests,
and encumbrances of any kind or nature whatsoever and will have the complete
power to transfer and deliver the Contributed Interests to the Company, as
contemplated in Paragraph 2 of this Agreement, free and clear of all liens,
claims, security interests, and encumbrances.
(b) The execution, delivery and performance by such Member of
this Agreement are within the powers of such Member, have been duly authorized
and will not constitute or result in a breach or default under, violation of, or
conflict with, any law, statute, rule, regulation, ordinance, order, judgment,
injunction, decree, or other similar restriction, or any contract, agreement,
lease, mortgage, deed of trust, instrument, permit or other undertaking, to
which such Member is a party or by which such Member is bound, and, in respect
of Genesis Direct Inc. and Big Wave, NV, will not violate any provisions of its
articles of incorporation, by-laws or similar
2
instruments. The signature of such Member on this Agreement is genuine, and the
signatory has legal competence and capacity to execute the same, and in respect
of Genesis Direct Inc.; Big Wave, NV; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Grantor Retained
Annuity Trust; ▇▇▇▇ ▇. ▇▇▇▇▇▇, Grantor Retained Annuity Trust; Trustees of
General Electric Pension Trust; Porridge LLC (f.k.a. Porridge Partners II); and
Cairnton Partnership, the signatory has been duly authorized to execute the
same, and this Agreement constitutes a legal, valid and binding obligation of
such Member, enforceable in accordance with its terms.
(c) Such Member or such Member's representative has had full
and complete access to the officers and directors of the Company and to such
business, financial, or other information concerning the Company which such
Member or such Member's representative deemed necessary or appropriate to make a
determination to enter into this Agreement and to effect the Contribution.
(d) Such Member or such Member's representative has such
knowledge and experience in financial and business matters and is capable of
utilizing the information that is available to such Member or such Member's
representative concerning the Company to evaluate the merits and risks of an
investment in the Company and such Member is able to bear the economic risk of
such investment.
(e) Such Member has been advised that the Shares being issued
to such Member hereunder have not been registered under the Securities Act of
1933, as amended (the "Act"), nor has the Company agreed to so register any
Shares, except as provided in that certain Registration Rights Agreement dated
as of October 18, 1996, by and among the Trustees of General Electric Pension
Trust, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, Porridge LLC and CyberShop L.L.C. and
Amendment No. 1 dated as of June 3, 1997 thereto (the "Registration Rights
3
Agreement"), and, accordingly, such shares are restricted securities, as such
term is used in the Act, and such Member will not be able to sell or otherwise
dispose of the Shares, unless they are subsequently registered under the Act or
an exemption from the registration requirements thereunder is available.
(f) The Shares acquired by such Member hereunder are being
acquired for such Member's sole benefit and account, for purposes of investment
only and with no present intent to sell or view to distribute the same.
(g) Such Member acknowledges that the Contribution may
involve tax consequences. Such Member acknowledges that it must retain its own
professional advisors to evaluate the tax and other consequences of the
Contribution.
(h) Except as provided on Schedule B hereto, such Member
represents that it is not a "member" of the National Association of Securities
Dealers, Inc. (the "NASD") or a "person associated with a member" and that it
does not have any association or other affiliation, through share ownership or
otherwise, with a member of the NASD within the meaning of the NASD Conduct
Rules.
4. The Company represents and warrants to each Member as follows:
(a) It is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware.
(b) The Company has the corporate power and has taken all
necessary corporate action to execute, deliver and perform this Agreement and to
enable it to issue the Shares. The Shares to be issued by the Company hereunder
will be duly authorized and, upon issuance to each Member pursuant to this
Agreement, are duly and validly issued and outstanding, fully paid, and
4
non-assessable.
(c) The execution, delivery and performance by the Company of
this Agreement will not constitute or result in a breach or default under,
violation of, or conflict with, its Certificate of Incorporation or By-laws or
any contract, agreement, lease, mortgage, deed of trust, instrument, or permit
or other undertaking to which it is a party or by which it is bound, or any law,
statute, rule, regulation, ordinance, order, judgment, injunction, decree, or
other restriction.
5. The representations and warranties given by each Member and the
Company as set forth in Paragraphs 3 and 4 hereof shall survive the execution
hereof and the consummation of the transactions contemplated hereby.
6. Each Member severally and not jointly or jointly and severally
covenants to the Company that such Member shall not sell, transfer, or otherwise
dispose of any of the Shares issued to such Member hereunder (a) without
registration thereof under the Act (unless, in the opinion of counsel to such
Member, an exemption from such registration is available), or (b) in violation
of any law.
7. Each Member consents:
(a) that each certificate representing the Shares to be
issued to such Member hereunder will be impressed with the following legend
indicating that they are not registered under the Act and reciting that any
transfer is restricted:
"The securities represented by this certificate have been purchased
for investment and have not been registered under the Securities Act
of 1933, as amended, or any state securities laws, and may not be
pledged, transferred or otherwise disposed of unless registered under
the Act or unless an exemption from registration is available
thereof."
5
(b) that stop transfer instructions in respect of the Shares
will be issued to any transfer agent, transfer clerk, or other agent, at any
time acting for the Company;
(c) to the Contribution, in accordance with Article VI,
Section 1.5 (v) of the Third Amended and Restated Operating Agreement of the
LLC; and
(d) to the proposed initial public offering of the securities
of the Company, in accordance with Article VI, Section 1.5 (vii) of the Third
Amended and Restated Operating Agreement of the LLC, as described in the draft
of Registration Statement annexed hereto with such modifications thereto as the
Managing Member of the LLC may agree to upon advice from counsel.
8. The parties hereto confirm and agree that the common stock of the
Company received in exchange for the Membership Interests shall be deemed
"Registrable Securities" as that term is defined in Section 1(a) of that certain
Registration Rights Agreement.
9. This Agreement contains the entire understanding of the parties and
supersedes and merges all and any prior discussions, understandings and
agreements of any and every nature among them with respect to the subject matter
hereof, and may not be altered, amended, waived, terminated, or discharged in
any way whatsoever except by subsequent written agreement executed by the party
charged therewith. A waiver by any of the parties of any terms or conditions of
this Agreement, or of any breach thereof, shall not be deemed a waiver of such
term or condition for the future or of any other term or condition hereof, or of
any subsequent breach hereof.
10. The parties hereto, will, upon the reasonable request of another
party, execute and deliver any additional documents necessary or desirable to
complete the transactions described herein.
11. Subject to any restrictions on transfer, this Agreement shall
inure to the benefit of the
6
parties hereto and their successors and assigns.
12. The parties hereto agree that it is their intention that the
Contribution, as contemplated by this Agreement, falls within the scope of
Section 351 of the Internal Revenue Code of 1986, as amended.
13. This Agreement may be executed simultaneously in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CYBERSHOP INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman
MEMBERS:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
GENESIS DIRECT INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
THE ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ GRANTOR
RETAINED ANNUITY TRUST
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
THE ▇▇▇▇ ▇. ▇▇▇▇▇▇ GRANTOR
RETAINED ANNUITY TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
THE ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 1997 GRANTOR
RETAINED ANNUITY TRUST
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustee
TRUSTEES OF GENERAL ELECTRIC
PENSION TRUST
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Trustee
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
PORRIDGE LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: General Partner
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BIG WAVE, NV
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
CAIRNTON PARTNERSHIP
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director of Jasopt PTY
Limited, General Partners
of Cairnton Partnership
SCHEDULE A
MEMBERSHIP
INTERESTS OWNED SHARES TO BE
PRIOR TO THE ISSUED IN THE
NAME AND ADDRESS OF MEMBER CONTRIBUTION CONTRIBUTION
-------------------------- ------------ ------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 1,439,171 859,515
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ 1,439,172 859,515
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
The ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Grantor 874,746 522,424
Retained Annuity Trust
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
The ▇▇▇▇ ▇. ▇▇▇▇▇▇ Grantor 874,746 522,424
Retained Annuity Trust
c/o ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 166,048 99,169
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
The ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 1997 Grantor 133,952 80,000
Retained Annuity Trust
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Genesis Direct Inc. 100,000 59,723
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
8
MEMBERSHIP
INTERESTS OWNED SHARES TO BE
PRIOR TO THE ISSUED IN THE
NAME AND ADDRESS OF MEMBER CONTRIBUTION CONTRIBUTION
-------------------------- ------------ ------------
Trustees of General Electric 889,143 531,022
Pension Trust
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇▇
Porridge Partners II 83,392 49,804
c/o ▇▇▇▇▇▇-▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 69,575 41,552
Sage Securities
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇ 69,575 41,552
GE Capital ITS
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Big Wave NV 279,037 166,650
c/o Hecht and Company
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Cairnton Partnership 279,037 166,650
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ 1028
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Total 6,697,594 4,000,000
9
SCHEDULE B
Following is a list of registered broker-dealers affiliated with General
Electric Company ("GE"):
o GE INVESTMENT DISTRIBUTORS, INC. , ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, is a wholly-owned subsidiary of GE Financial Assurance Holdings
Inc., which in turn is a wholly-owned subsidiary of General Electric
Capital Corporation ("GECC"), which in turn is a wholly-owned subsidiary
of General Electric Capital Services, Inc. ("GECS"), which in turn is a
wholly-owned subsidiary of GE.
o GECC CAPITAL MARKETS GROUP, INC., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, a wholly-owned subsidiary of GECC, which in turn is a
wholly-owned subsidiary of GECS, which in turn is a wholly-owned
subsidiary of GE.
o CAPITAL BROKERAGE CORP., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, a
wholly-owned subsidiary of GNA Corporation ("GNA"), which in turn is a
wholly-owned subsidiary of GECC, which in turn is a wholly-owned
subsidiary of GECS, which in turn is a wholly-owned subsidiary of GE.
o GNA DISTRIBUTORS, INC., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
a wholly-owned subsidiary of GNA, which in turn is a wholly-owned
subsidiary of GECC, which in turn is a wholly-owned subsidiary of GECS,
which in turn is a wholly-owned subsidiary of GE.
o FORTH FINANCIAL SECURITIES CORPORATION, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, an indirect control affiliate of GNA, which in turn
is a wholly-owned subsidiary of GECC, which in turn is a wholly-owned
subsidiary of GECS, which in turn is a wholly-owned subsidiary of GE.
o PAINEWEBBER, INC. ("PW"), ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, a non-control affiliate of GE. GECS owns 100% of the common stock
of ▇▇▇▇▇▇, Peabody Group Inc., which in turn owns 100% of the common
stock of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Co. Incorporated, which in turn owns
approximately 22.4% of the issued and outstanding common stock of
PaineWebber Group Inc. ("PaineWebber") and Fixed Rate Preferred Stock in
the aggregate amount of $2,500,000. PaineWebber in turn owns 100% of the
common stock of PW.
o ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ASSET MANAGEMENT, INC., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, a wholly-owned subsidiary of PW, which in turn is a
non-control affiliate of GE.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
a wholly-owned subsidiary of ▇▇▇▇▇▇ Peabody Group, Inc., which in turn
is a wholly-owned subsidiary of GECS, which in turn is a wholly-owned
subsidiary of GE, was de-registered as broker-dealer, effective May 6,
1996.
10
