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Exhibit 99.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is entered into as of
the 11th of June, 2000 by and among Engage, Inc., a Delaware corporation
("Engage"), Engage Subsidiary, Inc., a Delaware corporation and a wholly-owned
subsidiary of Engage (the "Transitory Subsidiary"), and MediaBridge
Technologies, Inc., a Delaware corporation (the "Company""), and, with respect
to Article VI only, Standish H. O'Grady (the "Shareholder Representative").
Engage, Transitory Subsidiary, the Company and the Shareholder Representative
are referred to collectively herein as the "Parties."
This Agreement contemplates a merger of Transitory Subsidiary with and into
the Company, with the Company being the surviving corporation. The merger is
intended to qualify as a tax-free reorganization under Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
Now, therefore, in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows.
ARTICLE I
THE MERGER
1.1 The Merger. Upon and subject to the terms and conditions of this
Agreement, Transitory Subsidiary shall merge with and into the Company (with
such merger referred to herein as the "Merger") at the Effective Time (as
defined below). From and after the Effective Time, the separate corporate
existence of Transitory Subsidiary shall cease and the Company shall continue as
the surviving corporation in the Merger (the "Surviving Corporation"). The
"Effective Time" shall be the time at which the Surviving Corporation files the
Certificate of Merger (the "Certificate of Merger") in the form required by the
General Corporation Law of the State of Delaware (the "DGCL") in accordance with
Section 251 of the DGCL, with the Secretary of State of the State of Delaware.
The Merger shall have the effects set forth in Section 259 of the DGCL.
1.2 The Closing. The closing of the Merger (the "Closing") shall take place
at the offices of Hale and Dorr LLP in Boston, Massachusetts, on a date agreed
upon by Engage and the Company, which date (the "Closing Date") shall not,
without the written consent of Engage and the Company, be later than three
business days after the satisfaction or waiver of all conditions (excluding the
delivery of any documents to be delivered at the Closing by any of the Parties)
set forth in Article V hereof.
1.3 Actions at the Closing. At the Closing:
(a) the Company shall deliver to Engage and Transitory Subsidiary the
various certificates, instruments and documents referred to in Section 5.2;
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(b) Engage and Transitory Subsidiary shall deliver to the Company the
various certificates, instruments and documents referred to in Section 5.3;
(c) the Surviving Corporation shall file with the Secretary of State of the
State of Delaware the Certificate of Merger;
(d) Engage shall deliver a certificate for the Closing Shares (as defined
below) to EquiServe LP, Engage's transfer agent, or any other bank trust company
or other entity reasonably satisfactory to the Company, appointed by Engage to
act as the exchange agent (the "Exchange Agent") in accordance with Section 1.7;
and
(e) Engage, the Shareholder Representative and State Street Bank, N.A. (the
"Escrow Agent") shall execute and deliver the Escrow Agreement in the form
attached hereto as EXHIBIT 1.3 (the "Escrow Agreement"), with such changes as
may be reasonably requested by the Escrow Agent and consented to by both Engage
and the Shareholder Representative, which consents shall not be unreasonably
withheld, and Engage shall deliver to the Escrow Agent a certificate for the
Escrow Shares being placed in Escrow (as such terms are defined below) on the
Closing Date pursuant to Section 1.6.
1.4 Additional Action. The Surviving Corporation may, at any time after the
Effective Time, take any action, including executing and delivering any
document, in the name and on behalf of either the Company or Transitory
Subsidiary, in order to consummate the transactions contemplated by this
Agreement.
1.5 Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of any Party or the holder of any securities
of the Company, each share of capital stock of the Company outstanding
immediately prior to the Effective Time shall be converted into the right to
receive Engage Common Stock to the extent as provided in this Section:
(a) DEFINITIONS.
(i) The "Gross Merger Consideration" means Fourteen Million Five
Hundred Thousand (14,500,000) shares of Engage Common Stock, subject to
adjustment as provided in clauses (A), (B) and (C) below.
(A) If the Average Closing Price (as defined herein) is greater
than $24.14 but not greater than $30.00, the Gross Merger Consideration will be
equal to the number of shares of Engage Common Stock, rounded to the nearest
share, obtained by dividing (x) Three Hundred Fifty Million Dollars
($350,000,000) by (y) the Average Closing Price.
(B) If the Average Closing Price is greater than $30.00, the Gross
Merger Consideration will be equal to Eleven Million Six Hundred Sixty-six
Thousand Six Hundred Six-Seven (11,666,667) shares of Engage Common Stock.
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(C) The method of determining the Gross Merger Consideration shall
be equitably adjusted in the event of any stock split, stock dividend, reverse
stock split or similar event affecting the Engage Common Stock between the date
of this Agreement and the Effective Time.
(ii) The "Net Merger Consideration" means the Gross Merger
Consideration reduced by a number of shares of Engage Common Stock, rounded to
the nearest whole share, equal to the result obtained by dividing (x) the
aggregate amount of all fees and expenses incurred by the Company in connection
with this Agreement and the transactions contemplated hereby (including, without
limitation, all accounting, banking, legal and printing expenses and regulatory
filing fees), as allocated pursuant to Section 4.8 hereof, by (y) the Average
Closing Price.
(iii) The "Conversion Ratio" shall be the result obtained by
dividing (x) the number of shares constituting the Net Merger Consideration less
the Liquidation Preference Shares (as defined below) by (y) the number of shares
of Company Common Stock equal to the sum of (A) the total number of shares of
Company Common Stock outstanding immediately prior to the Effective Time, and
(B) the number of shares of Company Common Stock which would be issuable upon
conversion of all Company Preferred Stock, all Company Options and all Company
Warrants or any other like instruments or obligations to issue shares of Company
Common Stock, if any, outstanding immediately prior to the Effective Time.
(b) CONVERSION OF SERIES A PREFERRED STOCK, SERIES B PREFERRED STOCK AND
SERIES C PREFERRED STOCK. Each share of Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock issued and outstanding immediately
prior to the Effective Time (other than Dissenting Shares) shall be converted
into and represent the right to receive (i) the number of shares of Engage Stock
equal to the result obtained by dividing (x) the liquidation preference of such
share through and including the Closing Date, as set forth in the Company's
Certificate of Incorporation, by (y) the Average Closing Price and (ii) the
number of shares of Engage Common Stock determined by multiplying the Conversion
Ratio by one. The shares of Engage Common Stock allocated to the holders of
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
in accordance with clause (i) of the immediately preceding sentence plus the
shares allocated to the holders of Series D Preferred Stock in accordance with
Section 1.5(c) hereof are collectively referred to in this Agreement as the
"Liquidation Preference Shares." The shares of Engage Common Stock remaining
after deducting from the Net Merger Consideration the Liquidation Preference
Shares are collectively referred to in this Agreement as the "Common Equity
Shares."
(c) CONVERSION OF SERIES D PREFERRED STOCK. Any share of Series D Preferred
Stock issued and outstanding immediately prior to the Effective Time (other than
Dissenting Shares) shall be converted into and represent the right to receive
the number of shares of Engage Common Stock with an aggregate Average Closing
Price equal to the liquidation preference of such share, as adjusted, as set
forth in the Company's Certificate of Incorporation.
(d) CONVERSION OF COMPANY COMMON STOCK. Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than
Dissenting
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Shares) shall be converted into and represent the right to receive the number of
shares of Engage Common Stock determined by multiplying the Conversion Ratio by
one.
(e) CANCELLATION OF SHARES. Each share of Company Common Stock and Company
Preferred Stock held in the Company's treasury immediately prior to the
Effective Time shall be canceled and retired without payment of any
consideration therefor.
(f) CONVERSION OF TRANSITORY SUBSIDIARY STOCK. Each share of Transitory
Subsidiary Stock issued and outstanding immediately prior to the Effective Time
shall be converted into and thereafter evidence a share of Surviving Corporation
Common Stock. The Surviving Corporation Common Stock will have the same terms as
the Company Common Stock.
1.6 Escrow.
(a) At the Closing, there shall be withheld from the Company Shareholders
and deposited into escrow (the "Escrow") to be held and disposed of in
accordance with the terms of the Escrow Agreement an aggregate number of shares
of Engage Common Stock equal to ten percent (10%) of the Gross Merger
Consideration rounded to the nearest whole number.
(b) At the Closing, there shall be withheld from the amount of Common
Equity Shares distributed to a Company Shareholder at Closing a number of shares
of Engage Common Stock (collectively, the "Escrow Shares") equal to the product,
rounded to the nearest whole share, of (x) the number of Common Equity Shares
such holder would have otherwise received pursuant to Section 1.5 multiplied by
(y) ten percent (10%).
(c) At the Closing, Engage shall deliver to the Escrow Agent a certificate
(issued in the name of the Escrow Agent or its nominee) representing the Escrow
Shares for the purpose of securing the indemnification obligations of the
Company Shareholders set forth in this Agreement. The Escrow Shares shall be
held by the Escrow Agent under the Escrow Agreement pursuant to the terms
thereof. The Escrow Shares shall be held as a trust fund and shall not be
subject to any lien, attachment, trustee process or any other judicial process
of any creditor of any party, and shall be held and disbursed solely for the
purposes and in accordance with the terms of the Escrow Agreement and this
Agreement.
1.7 Exchange of Shares.
(a) Prior to the Effective Time, Engage shall appoint the Exchange Agent to
effect the exchange for the Closing Shares (as defined below) of certificates
that, immediately prior to the Effective Time, represented Company Shares
converted into shares of Engage Common Stock pursuant to Section 1.5 (including
any Company Shares referred to in the last sentence of Section 1.9(a)). For
purposes of this Agreement, the term "Closing Shares" means those Merger Shares,
other than the Escrow Shares, to which the Company Shareholders are entitled
upon completion of the Merger.
(b) On the Closing Date, Engage shall deliver to the Exchange Agent, in
trust for the benefit of holders of such certificates, a stock certificate
(issued in the name of the Exchange
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Agent or its nominee) representing the Closing Shares. As soon as practicable
after the Effective Time, Engage shall cause the Exchange Agent to send a notice
and a transmittal form to each holder of a certificate advising such holder of
the effectiveness of the Merger and the procedure for surrendering to the
Exchange Agent such certificate in exchange for the Closing Shares issuable
pursuant to Section 1.5. Each holder of a certificate, upon proper surrender
thereof to the Exchange Agent in accordance with the instructions in such
notice, shall be entitled to receive in exchange therefor (subject to any taxes
required to be withheld) the Closing Shares issuable pursuant to Section 1.5
plus cash in lieu of any fractional shares, as provided in Section 1.8 below.
Until properly surrendered, each such certificate shall be deemed for all
purposes to evidence only the right to receive a certificate for the Closing
Shares issuable pursuant to Section 1.5 and any Escrow Shares distributed to the
Company Shareholders pursuant to the terms of the Escrow Agreement. Holders of
certificates representing Company Common Stock shall not be entitled to receive
certificates for the Merger Shares to which they would otherwise be entitled
until such certificates are properly surrendered.
(c) If any Merger Shares are to be issued in the name of a person other
than the person in whose name the certificate surrendered in exchange therefor
is registered, it shall be a condition to the issuance of such Merger Shares
that (i) the certificate so surrendered shall be transferable, and shall be
properly assigned, endorsed or accompanied by appropriate stock powers, (ii)
such transfer shall otherwise be proper, and (iii) the person requesting such
transfer shall pay to the Exchange Agent any transfer or other taxes payable by
reason of the foregoing or establish to the satisfaction of the Exchange Agent
that such taxes have been paid or are not required to be paid. Notwithstanding
the foregoing, neither the Exchange Agent nor any Party shall be liable to a
holder of Company Shares for any Merger Shares issuable to such holder pursuant
to Section 1.5 that are properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(d) In the event any certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
certificate to be lost, stolen or destroyed, Engage shall issue in exchange for
such lost, stolen or destroyed certificate the Merger Shares issuable in
exchange therefor pursuant to Section 1.5. The Board of Directors of Engage may,
in its discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate to give Engage a bond in
such sum as it may direct as indemnity against any claim that may be made
against Engage with respect to the certificate alleged to have been lost, stolen
or destroyed.
(e) No dividends or other distributions that are payable to the holders of
record of Engage Common Stock as of a date on or after the Closing Date shall be
paid to the Company Shareholders (as defined below) entitled by reason of the
Merger to receive Merger Shares until such holders surrender their certificates
for certificates representing the Merger Shares. Upon such surrender, Engage
shall pay or deliver to the persons in whose name the certificates representing
such Closing Shares are issued any dividends or other distributions that are
payable to the holders of record of Engage Common Stock as of a date on or after
the Closing Date and which were paid or delivered between the Effective Time and
the time of such surrender; provided that no such person shall be entitled to
receive any interest on such dividends or other distributions.
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1.8 Fractional Shares. No certificates or scrip representing fractional
Merger Shares shall be issued to former Company Shareholders upon the surrender
for exchange of certificates, and such former Company Shareholders shall not be
entitled to any voting rights, rights to receive any dividends or distributions
or other rights as a stockholder of Engage with respect to any fractional Merger
Shares that would have otherwise been issued to such former Company
Shareholders. Each former Company Shareholder that would have been entitled to
receive a fractional Merger Share shall receive a cash payment equal to the
Average Closing Price of Engage Common Stock multiplied by the fraction of a
Merger Share that such former Company Shareholder would otherwise be entitled to
receive rounded to the nearest whole cent.
1.9 Dissenting Shares.
(a) For purposes of this Agreement, "Dissenting Shares" means (i) Company
Common Stock and/or Company Preferred Stock (collectively, the "Company Shares")
held as of the Effective Time by a Company Shareholder who has not voted such
Company Shares in favor of the adoption of this Agreement and the Merger and
with respect to which appraisal shall have been duly demanded and perfected in
accordance with Section 262 of the DGCL and not effectively withdrawn or
forfeited prior to the Effective Time. Dissenting Shares shall not be converted
into or represent the right to receive any portion of the Net Merger
Consideration, unless such Company Shareholder's right to appraisal shall have
ceased in accordance with Section 262 of the DGCL. If such Company Shareholder
has so forfeited or withdrawn his, her or its right to appraisal of Dissenting
Shares, then, (i) as of the occurrence of such event, such holder's Dissenting
Shares shall cease to be Dissenting Shares and shall be converted into and
represent the right to receive the Net Merger Consideration issuable in respect
of such Company Shares pursuant to Section 1.5, and (ii) promptly following the
occurrence of such event, Engage shall deliver to the Exchange Agent a
certificate representing the Closing Shares to which such holder is entitled
pursuant to Section 1.5 (which shares shall be considered Closing Shares for all
purposes of this Agreement) and shall deliver to the Escrow Agent a certificate
representing the remaining Common Equity Shares to which such holder is entitled
pursuant to Section 1.6 (which shares shall be considered Escrow Shares for all
purposes of this Agreement).
(b) The Company shall give Engage (i) prompt notice of any written demands
for appraisal of any Company Shares, withdrawals of such demands, and any other
instruments that relate to such demands received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the DGCL. The Company shall not, except with the prior
written consent of Engage, make any payment with respect to any demands for
appraisal of Company Shares or offer to settle or settle any such demands.
1.10 Company Options. Each option to purchase Company Common Stock issued
by the Company pursuant to its stock option plans or otherwise (a "Company
Option") which is not exercised prior to the Effective Time shall be canceled,
and Engage shall grant with respect to each an option to acquire shares of
Engage Common Stock (an "Engage Option") in accordance with the terms of
Engage's stock option plan, with the following terms:
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(a) The number of shares of Engage Common Stock for which the Engage Option
may be exercised shall be equal to the product of the number of shares of
Company Common Stock previously subject thereto and the Conversion Ratio,
rounded down to the nearest whole share; and
(b) The exercise price per share of Engage Common Stock for which the
Engage Option may be exercised shall be equal to the exercise price per share of
Company Common Stock previously subject thereto divided by the Conversion Ratio,
rounded up to the nearest whole cent;
(c) The vesting schedule shall be the same as that of the Company Option
for which the Engage Option is exchanged; and
(d) With respect to any Company Option held by a Consenting Option Holder
that qualifies as an incentive stock option within the meaning of Section 422(b)
of the Code, such Company Option shall be exchanged for an Engage Option that is
not so qualified under Section 422(b) of the Code.
1.11 Certificate of Incorporation and By-laws; Board of Directors;
Officers.
(a) The Certificate of Incorporation of the Surviving Corporation
immediately following the Effective Time shall be the same as the Certificate of
Incorporation of the Transitory Subsidiary immediately prior to the Effective
Time.
(b) The By-laws of the Surviving Corporation immediately following the
Effective Time shall be the same as the By-laws of the Transitory Subsidiary
immediately prior to the Effective Time.
(c) The Board of Directors of the Surviving Corporation immediately
following the Effective Time shall be the same as the Board of Directors of
Transitory Subsidiary immediately prior to the Effective Time.
(d) The officers of the Surviving Corporation immediately following the
Effective Time shall be the same as the officers of the Company immediately
prior to the Effective Time.
1.12 No Further Rights. From and after the Effective Time, no Company
Shares shall be deemed to be outstanding, and holders of certificates shall
cease to have any rights with respect thereto, except as provided herein or by
law.
1.13 Closing of Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed and no transfer of Company Shares shall
thereafter be made. If, after the Effective Time, certificates are presented to
Engage, the Surviving Corporation or the Exchange Agent, they shall be canceled
and exchanged for Merger Shares in accordance with Section 1.5, subject to
Section 1.10 and to applicable law in the case of Dissenting Shares.
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1.14 Effect of Adoption of Agreement and Approval of Merger. The adoption
of this Agreement and the approval of the Merger by the Company Shareholders
shall constitute approval of this Agreement, including the provisions of Article
VI hereof and the Escrow Agreement and of all of the arrangements relating
thereto, including, without limitation, the placement of the Escrow Shares into
Escrow and the appointment of the Shareholder Representative.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Engage that the statements contained
in this Article II are true and correct, except as set forth in the disclosure
schedule provided by the Company to Engage on the date hereof (the "Disclosure
Schedule"). The representations and warranties which follow are deemed to be
repeated on the Closing Date. The Disclosure Schedule shall be arranged in
paragraphs corresponding to the numbered and lettered Sections contained in this
Article II, and the disclosures in any paragraph of the Disclosure Schedule
shall not qualify any other Section in this Article II. For purposes of this
Article II, the phrase "to the knowledge of the Company" or any phrase of
similar import shall be deemed to refer to the actual knowledge of those
executive officers of the Company listed on EXHIBIT 2.0, as well as any other
knowledge which such executive officers would have possessed had they made
reasonable inquiry of appropriate employees and agents of the Company with
respect to the matter in question.
2.1 Organization, Qualification and Corporate Power. The Company is a
corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the State of Delaware. The Company is duly qualified
to conduct business and is in corporate and tax good standing under the laws of
each jurisdiction in which the nature of its businesses or the ownership or
leasing of its properties requires such qualification, except where the failure
to so qualify would not have a Company Material Adverse Effect (as defined
below). For purposes of this Agreement, "Company Material Adverse Effect" means
a material adverse effect on or a material adverse change in, or group of such
effects on or changes in the assets (including intangible properties), business,
condition (financial or otherwise), results of operations or regulatory status
of the Company and the Subsidiaries, taken as a whole (other than changes that
are the effect of economic factors affecting the economy as a whole or changes
that are the effect of factors generally affecting the specific markets in which
the Company and its Subsidiaries compete); provided, however, that a Company
Material Adverse Effect shall not include any adverse effect (other than a
breach, default or acceleration under any Contract to which the Company or one
of its Subsidiaries is a party otherwise having a material adverse effect)
attributable to the Merger or the announcement thereof or the transactions
contemplated thereby. Such jurisdictions are set forth on Section 2.1 to the
Disclosure Schedule. The Company has all requisite corporate power and authority
to carry on the businesses in which it is engaged and to own and use the
properties owned and used by it. The Company has furnished to Engage complete
and accurate copies of its Certificate of Incorporation and By-laws. The Company
is not in default under or in violation of any provision of its Certificate of
Incorporation or By-laws.
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2.2 Capitalization. As of the date of this Agreement, the authorized
capital stock of the Company consists of (a) 39,000,000 shares of Company Common
Stock, of which 3,546,324 shares were issued and outstanding, and no shares were
held in the treasury of the Company and (b) 18,000,000 shares of Company
Preferred Stock, of which: (i) 8,200,000 shares have been designated as Series A
Preferred Stock, of which 7,700,000 shares were issued and outstanding; (ii)
400,000 shares have been designated as Series B Preferred Stock, all of which
were issued and outstanding; (iii) 6,900,000 shares have been designated as
Series C Preferred Stock, of which 6,896,551 were issued and outstanding; (iv)
2,000,000 shares have been designated as Series D Preferred Stock, of which
1,116,978 shares were issued and outstanding. Section 2.2 of the Disclosure
Schedule sets forth a complete and accurate list as of the date of this
Agreement of (i) all shareholders of the Company, indicating the number and
class or series of Company Shares held by each shareholder and (for Company
Shares other than Company Common Stock) the number of shares of Company Common
Stock (if any) into which such Company Shares are convertible, (ii) all
outstanding Company Options and Warrants, indicating (A) the holder thereof, (B)
the number and class or series of shares of Company Shares subject to each
Company Option and Warrant and (for Company Shares other than Company Common
Stock) the number of shares of Company Common Stock (if any) into which such
Company Shares are convertible, (C) the exercise price, date of grant, vesting
schedule and expiration date for each Company Option or Warrant, and (D) any
terms regarding the acceleration of vesting, and (iii) all stock option plans
and other stock or equity-related plans of the Company. All of the issued and
outstanding Company Shares are, and all Company Common Stock that may be issued
upon exercise of Company Options or Warrants and conversion of Company Preferred
Stock will be (upon issuance in accordance with their terms), duly authorized,
validly issued, fully paid, nonassessable and free of all preemptive rights.
Other than the Company Options and Warrants listed in Section 2.2 of the
Disclosure Schedule, there are no outstanding or authorized options, warrants,
rights, agreements or commitments to which the Company is a party or which are
binding upon the Company providing for the issuance or redemption of any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock or similar rights with respect to the Company. Except as listed in
Section 2.2 of the Disclosure Schedule, there are no agreements to which the
Company is a party or by which it is bound with respect to the voting
(including, without limitation, voting trusts or proxies), registration under
the Securities Act, or sale or transfer (including, without limitation,
agreements relating to preemptive rights, rights of first refusal, cosale rights
or "dragalong" rights) of any securities of the Company. To the knowledge of the
Company, there are no agreements among other parties, to which the Company is
not a party and by which it is not bound, with respect to the voting (including
without limitation voting trusts or proxies) or sale or transfer (including,
without limitation, agreements relating to rights of first refusal, cosale
rights or "dragalong" rights) of any securities of the Company that will remain
in effect after the Effective Time. All of the issued and outstanding Company
Shares were issued in compliance with applicable federal and state securities
laws.
2.3 Authorization of Transaction. The Company has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery by the Company of this Agreement and,
subject to the adoption of this Agreement and the approval of the Merger by the
holders of a majority of (i) the Company Shares (with the holders of Company
Preferred Stock voting on an as converted basis with the holders of
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Company Common Stock), (ii) the Series A Preferred Stock, Series B Preferred
Stock and Series D Preferred Stock, voting together as a separate class, and
(iii) the Series C Preferred Stock, voting as a separate class, (together, the
"Requisite Shareholder Approval"), the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company. Without limiting the
generality of the foregoing, the Board of Directors of the Company, at a meeting
duly called and held, by the unanimous vote of all directors (i) adopted this
Agreement in accordance with the provisions of the DGCL, and (ii) directed that
this Agreement and the Merger be submitted to the shareholders of the Company
for their adoption and approval and resolved to recommend that the shareholders
of Company vote in favor of the adoption of this Agreement and the approval of
the Merger. This Agreement has been duly and validly executed and delivered by
the Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to creditors' rights generally, and general
principles of equity. The Company has delivered to Engage executed copies of the
Shareholder Support Agreement that represent agreements on behalf of holders of
a sufficient number of Company Shares to constitute the Requisite Shareholder
Approval.
2.4 Noncontravention. Subject to compliance with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws, including, if so desired by Engage, approval
and a hearing under Sections 25121 and 25142 of the California Corporations
Code, and the filing of the Certificate of Merger as required by the DGCL,
neither the execution and delivery by the Company of this Agreement, nor the
consummation by the Company of the transactions contemplated hereby, will (a)
conflict with or violate any provision of the Certificate of Incorporation or
By-laws of the Company or the charter, By-laws or other organizational document
of any Subsidiary (as defined below), (b) require on the part of the Company or
any Subsidiary any filing with, or any permit, authorization, consent or
approval of, any court, arbitrational tribunal, administrative agency or
commission or other governmental or regulatory authority or agency (a
"Governmental Entity") or other party, (c) conflict with, result in a breach of,
constitute (with or without due notice or lapse of time or both) a default
under, result in the acceleration of obligations under, create in any party the
right to terminate, modify or cancel, or require any notice, consent or waiver
under, any material contract or instrument, except where such conflict, breach,
default and the like have not had or could not reasonably be expected to have a
Company Material Adverse Effect, (d) result in the imposition of any Security
Interest (as defined below) upon any assets of the Company or any Subsidiary or
(e) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any Subsidiary or any of their properties or assets.
2.5 Subsidiaries.
(a) Section 2.5 of the Disclosure Schedule sets forth: (i) the name of each
corporation, partnership, joint venture or other entity in which the Company
has, directly or indirectly, an equity interest representing 50% or more of the
capital stock thereof or other equity interests therein (individually, a
"Subsidiary" and, collectively, the "Subsidiaries"); (ii) the
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number and type of outstanding equity securities of each Subsidiary and a list
of the holders thereof; (iii) the jurisdiction of organization of each
Subsidiary; (iv) the names of the officers and directors of each Subsidiary; and
(v) the jurisdictions in which each Subsidiary is qualified or holds licenses to
do business as a foreign corporation.
(b) Each Subsidiary is a corporation duly organized, validly existing and
in corporate and tax good standing under the laws of the jurisdiction of its
incorporation. Each Subsidiary is duly qualified to conduct business and is in
corporate and tax good standing under the laws of each jurisdiction in which the
nature of its businesses or the ownership or leasing of its properties requires
such qualification, except where the failure to be so qualified or in good
standing, individually or in the aggregate, has not had and would not reasonably
be expected to have a Company Material Adverse Effect. Each Subsidiary has all
requisite power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it. The Company has
delivered to Engage complete and accurate copies of the charter, By-laws or
other organizational documents of each Subsidiary. No Subsidiary is in default
under or in violation of any provision of its charter, By-laws or other
organizational documents. All of the issued and outstanding shares of capital
stock of each Subsidiary are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. All shares of each Subsidiary that
are held of record or owned beneficially by either the Company or any Subsidiary
are held or owned free and clear of any restrictions on transfer (other than
restrictions under the Securities Act and state securities laws), claims,
Security Interests, options, warrants, rights, contracts, calls, commitments,
equities and demands. There are no outstanding or authorized options, warrants,
rights, agreements or commitments to which the Company or any Subsidiary is a
party or which are binding on any of them providing for the issuance,
disposition or acquisition of any capital stock of any Subsidiary. There are no
outstanding stock appreciation, phantom stock or similar rights with respect to
any Subsidiary. There are no voting trusts, proxies or other agreements or
understandings with respect to the voting of any capital stock of any
Subsidiary.
(c) The Company does not control directly or indirectly or have any direct
or indirect equity participation or similar interest in any corporation,
partnership, limited liability company, joint venture, trust or other business
association which is not a Subsidiary.
2.6 Financial Statements. The Company has provided to Engage (a) the
audited consolidated (i) balance sheets as of January 31, 1999 and January 31,
2000 and (ii) statements of income, changes in shareholders' equity and cash
flows of the Company as of December 31, 1997, January 31, 1999 and January 31,
2000 and for each of the fiscal years ended December 31, 1997, January 31, 1999
and January 31, 2000; and (b) the unaudited consolidated balance sheet and
statements of income, changes in shareholders' equity and cash flows as of and
for the three months ended as of April 30, 2000 (such balance sheet is referred
to as the "Most Recent Balance Sheet" and the date thereof is the "Most Recent
Balance Sheet Date. The Most Recent Balance Sheet has been reviewed by the
Company's accountants. Such financial statements (collectively, the "Financial
Statements") have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods covered thereby, fairly present the financial condition, results of
operations and cash flows of the Company and the Subsidiaries as of the
respective dates thereof and for the periods referred to therein and are
consistent with the books and records of the
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Company and the Subsidiaries; provided, however, that the Financial Statements
referred to in clause (b) above are subject to normal recurring year-end
adjustments (which will not be material) and do not include footnotes. A true,
complete and correct description of the Company's policy regarding revenue
recognition is set forth on Section 2.6 of the Disclosure Schedule, complies in
all material respects with Staff Accounting Bulletin No. 101 - Revenue
Recognition in Financial Statements and has been reviewed and approved by the
Company's independent auditors.
2.7 Absence of Certain Changes. Since the Most Recent Balance Sheet Date,
(a) there has occurred no event or development which has had, or could
reasonably be expected to have in the future, a Company Material Adverse Effect,
and (b) neither the Company nor any Subsidiary has taken any of the actions set
forth in paragraphs (a) through (n) of Section 4.5.
2.8 Undisclosed Liabilities. None of the Company and its Subsidiaries has
any material liability (whether known or unknown, whether absolute or
contingent, whether liquidated or unliquidated and whether due or to become
due), except for (a) liabilities shown on the Most Recent Balance Sheet, (b)
liabilities which have arisen since the Most Recent Balance Sheet Date in the
Ordinary Course of Business and which are similar in nature and amount (as a
percentage of revenues) to the liabilities which arose during the comparable
period of time in the immediately preceding fiscal period and (c) contractual
and other liabilities incurred in the Ordinary Course of Business which are not
required by GAAP to be reflected on a balance sheet. For purposes of this
Section 2.8, "material" shall mean any liability equal to or greater than
$50,000. Notwithstanding the foregoing, the Company has no balance outstanding
under its credit facility with Fleet National Bank.
2.9 Tax Matters.
(a) For purposes of this Agreement, the following terms shall have the
following meanings:
(i) "Taxes" means all taxes, charges, fees, levies or other similar
assessments or liabilities, including without limitation income, gross receipts,
ad valorem, premium, value-added, excise, real property, personal property,
sales, use, transfer, withholding, employment, unemployment insurance, social
security, business license, business organization, environmental, workers
compensation, payroll, profits, license, lease, service, service use, severance,
stamp, occupation, windfall profits, customs, duties, franchise and other taxes
imposed by the United States of America or any state, local or foreign
government, or any agency thereof, or other political subdivision of the United
States or any such government, and any interest, fines, penalties, assessments
or additions to tax resulting from, attributable to or incurred in connection
with any tax or any contest or dispute thereof.
(ii) "Tax Returns" means all reports, returns, declarations,
statements or other information required to be supplied to a taxing authority in
connection with Taxes.
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(iii) "Affiliated Group" means a group of corporations with which the
Company or any Subsidiary has filed (or was required to file) consolidated,
combined, unitary or similar Tax Returns.
(b) Each of the Company and the Subsidiaries has filed on a timely basis
all Tax Returns that it was required to file, and all such Tax Returns were
complete and accurate in all material respects. Neither the Company nor any
Subsidiary is or has ever been a member of a group of corporations with which it
has filed (or been required to file) consolidated, combined or unitary Tax
Returns, other than a group of which only the Company and the Subsidiaries are
or were members. Each of the Company and the Subsidiaries has paid on a timely
basis all Taxes that were due and payable, except for any Taxes with respect to
which the failure to pay has not had and could not be expected to have a Company
Material Adverse Effect. The unpaid Taxes of the Company and the Subsidiaries
for tax periods through the Most Recent Balance Sheet Date do not exceed the
accruals and reserves for Taxes (excluding accruals and reserves for deferred
Taxes established to reflect timing differences between book and Tax income) set
forth on the Most Recent Balance Sheet. Neither the Company nor any Subsidiary
has any actual or potential liability for any Tax obligation of any taxpayer
(including without limitation any affiliated group of corporations or other
entities that included the Company or any Subsidiary during a prior period)
other than the Company and the Subsidiaries. All Taxes that the Company or any
Subsidiary is or was required by law to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental Entity, except for any Taxes with respect to which the failure to
withhold, collect or pay would not individually or in the aggregate, together
with any fines, interest, penalties or levies, exceed $50,000.
(c) The Company has delivered to Engage complete and accurate copies of all
federal income Tax Returns of the Company since December 31, 1996 and
examination reports and statements of deficiencies assessed against or agreed to
by the Company or any Subsidiary since December 31, 1995. The federal income Tax
Returns of the Company and each Subsidiary have been audited by the Internal
Revenue Service or are closed by the applicable statute of limitations for all
taxable years through the taxable year specified in Section 2.9(c) of the
Disclosure Schedule. The Company has delivered or made available to Engage
complete and accurate copies of all other Tax Returns of the Company and the
Subsidiaries together with all related examination reports and statements of
deficiency for all periods since December 31, 1995. No examination or audit of
any Tax Return of the Company or any Subsidiary by any Governmental Entity is
currently in progress or, to the knowledge of the Company, threatened or
contemplated. Neither the Company nor any Subsidiary has been informed by any
jurisdiction that the jurisdiction believes that the Company or Subsidiary was
required to file any Tax Return that was not filed. Neither the Company nor any
Subsidiary has waived any statute of limitations with respect to Taxes or agreed
to an extension of time with respect to a Tax assessment or deficiency.
(d) Neither the Company nor any Subsidiary: (i) is a "consenting
corporation" within the meaning of Section 341(f) of the Code and none of the
assets of the Company or the Subsidiaries are subject to an election under
Section 341(f) of the Code; (ii) has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(l)(A)(ii) of the Code; (iii) has
made any
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payments, is obligated to make any payments, or is a party to any agreement that
could obligate it to make any payments that may be treated as an "excess
parachute payment" under Section 280G of the Code; (iv) has any actual or
potential liability for any Taxes of any person (other than the Company and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of federal, state, local, or foreign law), or as a transferee or
successor, by contract, or otherwise; or (v) is or has been required to make a
basis reduction pursuant to Treasury Regulation Section 1.1502-20(b) or Treasury
Regulation Section 1.337(d)-2(b).
(e) None of the assets of the Company or any Subsidiary: (i) is property
that is required to be treated as being owned by any other person pursuant to
the provisions of former Section 168(f)(8) of the Code; (ii) is "tax-exempt use
property" within the meaning of Section 168(h) of the Code; or (iii) directly or
indirectly secures any debt the interest on which is tax exempt under Section
103(a) of the Code.
(f) Neither the Company nor any Subsidiary has undergone a change in its
method of accounting resulting in an adjustment to its taxable income pursuant
to Section 481 of the Code.
(g) There are no liens on any of the assets of the Company or the
Subsidiaries which arose in connection with any failure or asserted failure to
pay any Taxes, other than liens for current Taxes not yet due and payable.
2.10 Assets. Each of the Company and the Subsidiaries owns or leases all
tangible assets necessary for the conduct of its businesses as presently
conducted and as presently proposed to be conducted. Such tangible assets, taken
as a whole, are free from material defects, have been maintained in accordance
with normal industry practice, are in good operating condition and repair
(subject to normal wear and tear) and are suitable for the purposes for which
they presently are used. No asset of the Company or any Subsidiary (tangible or
intangible) is subject to any Security Interest, except as reflected in the
Financial Statements and except for liens for current taxes not yet due and
payable.
2.11 Owned Real Property. Neither the Company nor any Subsidiary owns any
real property.
2.12 Real Property Leases. Section 2.12 of the Disclosure Schedule lists
all real property leased or subleased to or by the Company or any Subsidiary and
lists the term of such lease and the rent payable thereunder. The Company has
delivered to Engage complete and accurate copies of the leases and subleases (as
amended to date) listed in Section 2.12 of the Disclosure Schedule. With respect
to each lease and sublease listed in Section 2.12 of the Disclosure Schedule:
(a) assuming the due execution and delivery thereof by each party
thereto other than the Company, the lease or sublease is in full force and
effect, legal, valid, binding and enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium or similar laws affecting or relating to creditors'
rights generally, and general principles of equity;
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(b) the lease or sublease will continue to be in full force and
effect, legal, valid, binding and enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium or similar laws affecting or relating to creditors'
rights generally, and general principles of equity, immediately following the
Closing in accordance with the terms thereof as in effect immediately prior to
the Closing;
(c) neither the Company nor any Subsidiary nor, to the knowledge of
the Company, any other party, is in breach or violation of, or default under,
any such lease or sublease, and no event has occurred, is pending or, to the
knowledge of the Company, is threatened, which, after the giving of notice, with
lapse of time, or otherwise, would constitute a breach or default by the Company
or any Subsidiary or, to the knowledge of the Company, any other party under
such lease or sublease where such breach interferes with the use or occupancy of
such property;
(d) neither the Company nor any Subsidiary has assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold
or subleasehold; and
(e) the Company is not aware of any Security Interest, easement,
covenant or other restriction applicable to the real property subject to such
lease, except for recorded easements, covenants and other restrictions which do
not materially interfere with the use or occupancy of such property.
2.13 Intellectual Property.
(a) Each of the Company and the Subsidiaries owns or has the right to use
all Intellectual Property (as defined below) necessary (i) to use, market and
distribute the products marketed, sold or licensed, and to provide the services
provided, by the Company to other parties (together, the "Customer
Deliverables") or (ii) to operate the Company's internal systems that are
material to the business or operations of the Company, including, without
limitation, computer hardware systems, software applications and embedded
systems (the "Internal Systems"; the Intellectual Property owned by or licensed
to the Company and incorporated in or underlying the Customer Deliverables or
the Internal Systems is referred to herein as the "Company Intellectual
Property"). Each item of Company Intellectual Property will be owned or
available for use by the Surviving Corporation immediately following the Closing
on substantially similar terms and conditions as it was immediately prior to the
Closing. The Company has taken all commercially reasonable measures to protect
the proprietary nature of each item of Company Intellectual Property. To the
knowledge of the Company, (a) no other person or entity has any rights to any of
the Company Intellectual Property owned by the Company (except pursuant to
agreements or licenses specified in Section 2.13(c) of the Disclosure Schedule),
and (b) no other person or entity is infringing, violating or misappropriating
any of the Company Intellectual Property. For purposes of this Agreement,
"Intellectual Property" means all (u) patents and patent applications, (v)
copyrights and registrations thereof, (w) computer software, data and
documentation, (x) trade secrets and confidential business information, whether
patentable or unpatentable and whether or not reduced to practice, know-how,
manufacturing and production processes and techniques, research and development
information, copyrightable works, financial, marketing
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and business data, pricing and cost information, business and marketing plans
and customer and supplier lists and information, (y) trademarks, service marks,
trade names, domain names and applications and registrations therefor, and (z)
other proprietary rights relating to any of the foregoing. Section 2.13(a) of
the Disclosure Schedule lists each patent, patent application, copyright
registration or application therefor, mask work registration or application
therefor, and trademark, service mark and domain name registration or
application therefor of the Company or any Subsidiary.
(b) To the knowledge of the Company, none of the Customer Deliverables, or
the marketing, distribution, provision or use thereof, infringes or violates, or
constitutes a misappropriation of, any Intellectual Property rights of any
person or entity. To the knowledge of the Company, none of the Internal Systems,
or the use thereof, infringes or violates, or constitutes a misappropriation of,
any Intellectual Property rights of any person or entity. To the knowledge of
the Company, Section 2.13(b) of the Disclosure Schedule lists any complaint,
claim or notice, or written threat thereof, received by the Company or any
Subsidiary alleging any such infringement, violation or misappropriation or
potential infringement, violation or misappropriation; and the Company has
provided to Engage complete and accurate copies of all written documentation in
the possession of the Company or any Subsidiary relating to any such complaint,
claim, notice or threat. The Company has provided to Engage complete and
accurate copies of all written documentation in the Company's possession
relating to claims or disputes known to the Company concerning any Company
Intellectual Property.
(c) Section 2.13(c) of the Disclosure Schedule identifies each license or
other agreement (or type of license or other agreement) pursuant to which the
Company or a Subsidiary has licensed, distributed or otherwise granted any
rights to any third party with respect to, any Company Intellectual Property,
other than nonexclusive end-user licenses entered into in the Ordinary Course of
Business pursuant to the Company's standard forms of license agreement.
(d) Section 2.13(d) of the Disclosure Schedule identifies each material
item of Company Intellectual Property that is owned by a party other than the
Company or a Subsidiary, and the license or agreement pursuant to which the
Company or a Subsidiary uses it (excluding off-the-shelf software programs
licensed by the Company pursuant to "shrink wrap" licenses).
(e) Neither the Company nor any Subsidiary has disclosed the source code
for any of the software owned by the Company or a Subsidiary (the "Software") or
other confidential information constituting, embodied in or pertaining to the
Software to any person or entity, except pursuant to the agreements listed in
Section 2.13(e) of the Disclosure Schedule, and the Company has taken all
commercially reasonable measures to prevent unauthorized disclosure of such
source code.
(f) All of the copyrightable materials (including Software) incorporated in
or bundled with the Customer Deliverables have been created by employees of the
Company or a Subsidiary within the scope of their employment by the Company or a
Subsidiary, by former employees of the Company or a Subsidiary within the scope
of their then-employment by the Company or a Subsidiary, or by independent
contractors of the Company or a Subsidiary who have executed
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agreements expressly assigning all right, title and interest in such
copyrightable materials to the Company or a Subsidiary. No portion of such
copyrightable materials was jointly developed with any third party.
(g) The Customer Deliverables and the Internal Systems owned by the Company
are free from significant defects or programming errors and conform in all
material respects to the written documentation and specifications therefor. To
the knowledge of the Company, the Customer Deliverables and the Internal Systems
not owned by the Company are free from significant defects or programming errors
and conform in all material respects to the written documentation and
specifications therefor.
(h) Neither the Company nor any Subsidiary is a party to any agreement that
grants to any third party any rights to any intellectual property of an
Affiliate of the Company (other than a Subsidiary).
2.14 Year 2000 Compliance.
(a) All of the Customer Deliverables currently being marketed, distributed
or licensed by the Company or a Subsidiary or which previously were marketed,
distributed or licensed by the Company or a Subsidiary, and all Internal
Systems, are Year 2000 Compliant.
(b) The Company has not provided any guaranty or warranty for any service
or product or the effect that such service or product is Year 2000 Compliant or
will not be adversely affected by virtue of the arrival of Year 2000, other than
standard warranties provided by the Company in the Ordinary Course of Business
pursuant to the Company's standard forms of license agreement.
(c) For purposes of this Agreement, "Year 2000 Compliant" means that the
applicable system or item:
(i) accurately receives, records, stores, provides, recognizes and
processes all date and time data from, during, into and between the twentieth
and twenty-first centuries, the years 1999 and 2000 and all leap years;
(ii) accurately performs all date-dependent calculations and
operations (including, without limitation, mathematical operations, sorting,
comparing and reporting) from, during, into and between the twentieth and
twenty-first centuries, the years 1999 and 2000 and all leap years; and
(iii) will not malfunction, cease to function or provide invalid or
incorrect results as a result of (x) the change of years from 1999 to 2000, (y)
date data, including date data which represents or references different
centuries, different dates during 1999 and 2000, or more than one century or (z)
the occurrence of any particular date; in each case without human intervention,
other than original data entry.
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2.15 Contracts.
(a) Section 2.15 of the Disclosure Schedule lists the following agreements
(written or oral) to which the Company or any Subsidiary is a party as of the
date of this Agreement:
(i) any agreement (or group of related agreements) for the lease of
personal property from or to third parties providing for lease payments in
excess of $75,000 per annum or having a remaining term longer than twelve
months;
(ii) any agreement (or group of related agreements) for the purchase
or sale of products or for the furnishing or receipt of services (A) which calls
for performance over a period of more than one year, (B) which involves more
than the sum of $5,000 per month, or (C) in which the Company or any Subsidiary
has granted "most favored nation" pricing provisions or exclusive marketing or
distribution rights relating to any products or territory or has agreed to
purchase a minimum quantity of goods or services or has agreed to purchase goods
or services exclusively from a certain party;
(iii) any agreement establishing a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it has
created, incurred, assumed or guaranteed (or may create, incur, assume or
guarantee) indebtedness (including capitalized lease obligations) involving more
than $25,000 or under which it has imposed (or may impose) a Security Interest
on any of its assets, tangible or intangible;
(v) any agreement containing a noncompetition, nonsolicitation or
similar covenant;
(vi) any employment or consulting agreement and any agreement or
arrangement relating to sales commissions;
(vii) other than Company Options and offer letters, any agreement
involving any officer, director or shareholder of the Company or any affiliate
(an "Affiliate"), as defined in Rule 12b-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), thereof;
(viii) any agreement under which the consequences of a default or
termination would reasonably be expected to have a Company Material Adverse
Effect;
(ix) any agreement which contains any provisions requiring the
Company or any Subsidiary to indemnify any other party thereto (excluding
indemnities contained in agreements for the purchase, sale or license of
products entered into in the Ordinary Course of Business); and
(x) any other agreement (or group of related agreements) either
involving more than $75,000 or not entered into in the Ordinary Course of
Business.
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(b) The Company has delivered to Engage a complete and
accurate copy of each agreement listed in Section 2.13 or Section 2.15 of the
Disclosure Schedule. With respect to each agreement so listed: (i) the agreement
is in full force and effect, legal, valid, binding and enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to creditors' rights generally, and general principles of equity; (ii)
the agreement will continue to be legal, valid, binding and enforceable against
the Company in accordance with its terms and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect immediately prior to the Closing; and (iii) neither the Company nor any
Subsidiary nor, to the knowledge of the Company, any other party, is in breach
or violation of, or default under, any such agreement, and no event has
occurred, is pending or, to the knowledge of the Company, is threatened, which,
after the giving of notice, with lapse of time, or otherwise, would constitute a
breach or default by the Company or any Subsidiary or, to the knowledge of the
Company, any other party under such contract where any such breach or default
individually or in the aggregate with any other such breach or default, has had
or could reasonably be expected to have a Company Material Adverse Effect.
(c) The Company has delivered to Engage a complete and
accurate copy of each Employee Agreement, Lock-Up Agreement and Shareholder
Support Agreement (each as defined herein) executed as of the date of this
Agreement, and a list of such executed agreements is set forth on Section
2.15(c) of the Disclosure Schedule. With respect to each agreement so listed:
(i) the agreement is in full force and effect, legal, valid, binding and
enforceable against the Company and the other party thereto in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to creditors'
rights generally, and general principles of equity, including, the application
of such principles to limitations on noncompetition restrictions; (ii) the
agreement will continue to be legal, valid, binding and enforceable against the
Company and the other party thereto in accordance with its terms and in full
force and effect immediately following the Closing in accordance with the terms
thereof as in effect immediately prior to the Closing; and (iii) neither the
Company nor any Subsidiary nor, to the knowledge of the Company, any other
party, is in breach or violation of, or default under, any such agreement, and
no event has occurred, is pending or, to the knowledge of the Company, is
threatened, which, after the giving of notice, with lapse of time, or otherwise,
would constitute a breach or default by the Company or any Subsidiary or, to the
knowledge of the Company, any other party under such contract.
2.16 Accounts Receivable. All accounts receivable of the Company and the
Subsidiaries reflected on the Most Recent Balance Sheet are valid receivables
subject to no known set-offs or counterclaims and are, in the best judgment of
the Company, current and collectible, net of the applicable reserve for bad
debts on the Most Recent Balance Sheet.
2.17 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company or any Subsidiary.
2.18 Insurance. Section 2.18 of the Disclosure Schedule lists each
insurance policy (including fire, theft, casualty, general liability, workers
compensation, business interruption,
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environmental, product liability and automobile insurance policies and bond and
surety arrangements) to which the Company or any Subsidiary is a party. Such
insurance policies are of the type and in amounts customarily carried by
organizations conducting businesses or owning assets similar to those of the
Company and the Subsidiaries. There is no material claim pending under any such
policy as to which coverage has been questioned, denied or disputed by the
underwriter of such policy. All premiums due and payable under all such policies
have been paid, neither the Company nor any Subsidiary may be liable for
retroactive premiums or similar payments, and the Company and the Subsidiaries
are otherwise in compliance in all material respects with the terms of such
policies. Each such policy will continue to be enforceable against the Company
and in full force and effect immediately following the Closing in accordance
with the terms thereof as in effect immediately prior to the Closing.
2.19 Litigation. There is no action, suit, proceeding, claim, arbitration
or investigation before any Governmental Entity or before any arbitrator (a
"Legal Proceeding") which is pending or, to the knowledge of the Company, has
been threatened against the Company or any Subsidiary which (a) seeks either
damages in excess of $10,000 or equitable relief, (b) has been brought by any
current or former employee of the Company or any Subsidiary, (c) in any manner
challenges or seeks to prevent, enjoin, alter or delay the transactions
contemplated by this Agreement, or (d) if determined adversely to the Company's
interests, could reasonably be expected to have a Company Material Adverse
Effect.
2.20 Employees.
(a) Section 2.20 of the Disclosure Schedule contains a list of all
employees of the Company and each Subsidiary, along with the position and the
annual rate of compensation of each such person paid more than $50,000 per
annum. Each such employee has entered into an Employee Confidential Information
and Inventions Agreement with the Company or a Subsidiary, a form of which has
previously been delivered to Engage. Section 2.20 of the Disclosure Schedule
contains a list of all employees of the Company or any Subsidiary who are a
party to a noncompetition agreement with the Company or any Subsidiary; forms of
such agreements have previously been delivered to Engage. To the knowledge of
the Company, no key employee or group of employees has any plans to terminate
employment with the Company or any Subsidiary. No employee of the Company is a
party to an Employee Confidential Information and Inventions Agreement or
noncompetition agreement with the Company which deviates from the form
agreements described above.
(b) Neither the Company nor any Subsidiary has committed any unfair labor
practice or is a party to or bound by any collective bargaining agreement, nor
has any of them experienced any strikes, grievances, claims of unfair labor
practices or other collective bargaining disputes. The Company has no knowledge
of any organizational effort made or threatened, either currently or within the
past two years, by or on behalf of any labor union with respect to employees of
the Company or any Subsidiary.
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2.21 Employee Benefits.
(a) For purposes of this Agreement, the following terms shall have the
following meanings:
(i) "Employee Benefit Plan" means any "employee pension benefit plan"
(as defined in Section 3(2) of ERISA), any "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA), and any other written or oral plan, agreement
or arrangement involving direct or indirect compensation, including without
limitation insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or postretirement
compensation.
(ii) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(iii) "ERISA Affiliate" means any entity which is, or at any
applicable time was, a member of (1) a controlled group of corporations (as
defined in Section 414(b) of the Code), (2) a group of trades or businesses
under common control (as defined in Section 414(c) of the Code), or (3) an
affiliated service group (as defined under Section 414(m) of the Code or the
regulations under Section 414(o) of the Code), any of which includes or included
the Company or a Subsidiary.
(b) Section 2.21(b) of the Disclosure Schedule contains a complete and
accurate list of all Employee Benefit Plans currently maintained, or contributed
to, by the Company, any Subsidiary or any ERISA Affiliate. Complete and accurate
copies of (i) all Employee Benefit Plans which have been reduced to writing,
(ii) all related trust agreements, insurance contracts and summary plan
descriptions, and (iii) all annual reports filed on IRS Form 5500, 5500C or
5500R and (for all funded plans) all plan financial statements for the last five
plan years for each Employee Benefit Plan, have been delivered to Engage. Each
Employee Benefit Plan has been administered in all material respects in
accordance with its terms and each of the Company, the Subsidiaries and the
ERISA Affiliates has in all material respects met its obligations with respect
to such Employee Benefit Plan and has made all required contributions thereto.
The Company, each Subsidiary, each ERISA Affiliate and each Employee Benefit
Plan are in compliance in all material respects with the currently applicable
provisions of ERISA and the Code and the regulations thereunder (including
without limitation Section 4980B of the Code, Subtitle K, Chapter 100 of the
Code and Sections 601 et seq. and Section 701 et seq. of ERISA). Without
limiting the scope of the immediately preceding sentence, each Employee Benefit
Plan that is or was intended to qualify for tax-advantaged status, including
without limitation all Employee Benefit Plans intended to qualify under Sections
125, 129, 401(a) or 501(a) of the Code, are and at all times have been so
qualified. All filings and reports as to each Employee Benefit Plan required to
have been submitted to the Internal Revenue Service or to the United States
Department of Labor have been duly submitted. Other than as disclosed in Section
2.21(b) of the Disclosure Schedule, the Company does not maintain any unwritten
Employee Benefit Plan which would result in an annual cost of more than $10,000.
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(c) There are no Legal Proceedings (except claims for benefits payable in
the normal operation of the Employee Benefit Plans and proceedings with respect
to qualified domestic relations orders) against or involving any Employee
Benefit Plan or asserting any rights or claims to benefits under any Employee
Benefit Plan that could give rise to a liability of $10,000 or greater to said
Employee Benefit Plan or the Company.
(d) All Employee Benefit Plans are in compliance in all material respects
with all applicable laws including, without limitation, ERISA and the Code as
well as all applicable regulations, rulings and orders. Without limiting the
foregoing, all the Employee Benefit Plans that are intended to be qualified
under Section 401(a) of the Code have either received determination letters from
the Internal Revenue Service to the effect that such Employee Benefit Plans are
qualified and the plans and the trusts related thereto are exempt from federal
income taxes under Sections 401(a) and 501(a), respectively, of the Code, or
applications for determination letters have been submitted within the time
period prescribed by the Internal Revenue Service or determination letters have
not been submitted for these Employee Benefit Plans as to which the Internal
Revenue Service remedial amendment period has not expired. No such determination
letter has been revoked and revocation has not been threatened, and no such
Employee Benefit Plan has been amended or operated since the date of its most
recent determination letter or application therefor in any respect, and no act
or omission has occurred, that would reasonably be expected to adversely affect
its qualification or materially increase its cost. Each Employee Benefit Plan
which is required to satisfy Section 401(k)(3) or Section 401(m)(2) of the Code
has been tested for compliance with, and satisfies the requirements of, Section
401(k)(3) and Section 401(m)(2) of the Code for each plan year ending prior to
the Merger Closing Date.
(e) Neither the Company, any Subsidiary, nor any ERISA Affiliate has ever
maintained an Employee Benefit Plan subject to Section 412 of the Code or Title
IV of ERISA.
(f) At no time has the Company, any Subsidiary or any ERISA Affiliate
contributed to or been obligated to contribute to any "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA).
(g) There are no unfunded obligations under any Employee Benefit Plan
providing benefits after termination of employment to any employee of the
Company or any Subsidiary (or to any beneficiary of any such employee),
including but not limited to retiree health coverage and deferred compensation,
but excluding continuation of health coverage required to be provided under
Section 4980B of the Code or other applicable law. The assets of each Employee
Benefit Plan which is funded are reported at their fair market value on the
books and records of such Employee Benefit Plan. The costs related to or arising
out of each Employee Benefit Plan which is unfunded are reported on the
Company's Most Recent Balance Sheet to the extent required by GAAP. There are no
material liabilities associated with any Employee Benefit Plan except as
reported on the Company's Most Recent Balance Sheet or on the books and records
of such Employee Benefit Plan.
(h) No act or omission has occurred and no condition exists with respect to
any Employee Benefit Plan maintained by the Company, any Subsidiary or any ERISA
Affiliate that
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would subject the Company, any Subsidiary or any ERISA Affiliate to (i) any
material fine, penalty, tax or liability of any kind imposed under ERISA (other
than liabilities or benefits accrued under an Employee Benefit Plan) or the Code
or (ii) any contractual indemnification or contribution obligation protecting
any fiduciary, insurer or service provider with respect to any Employee Benefit
Plan.
(i) No Employee Benefit Plan is funded by, associated with or related to a
"voluntary employees' beneficiary association" within the meaning of Section
501(c)(9) of the Code.
(j) Each Employee Benefit Plan is amendable and terminable unilaterally by
the Company at any time without liability to the Company as a result thereof and
no Employee Benefit Plan, plan documentation or agreement, summary plan
description or other written communication distributed generally to employees by
its terms prohibits or restricts the Company from amending or terminating any
such Employee Benefit Plan. The assets of each Employee Benefit Plan that is
funded may be converted to cash at any time without material reduction,
adjustment or other cost.
(k) Section 2.21(k) of the Disclosure Schedule lists each: (i) agreement
with any shareholder, director, executive officer, other key employee,
consultant or independent contractor of the Company or any Subsidiary including,
without limitation, such agreements (A) the benefits of which are contingent, or
the terms of which are materially altered, upon the occurrence of a transaction
involving the Company or any Subsidiary of the nature of any of the transactions
contemplated by this Agreement, (B) providing any term of employment or
compensation guarantee or (C) providing severance benefits or other benefits
after the termination of employment of such director, executive officer or key
employee; (ii) agreement, plan or arrangement under which any person may receive
payments from the Company or any Subsidiary that may be subject to the tax
imposed by Section 4999 of the Code or included in the determination of such
person's "parachute payment" under Section 280G of the Code; and (iii) agreement
or plan binding the Company or any Subsidiary, including, without limitation,
any stock option plan, stock appreciation right plan, restricted stock plan,
stock purchase plan, severance benefit plan or Employee Benefit Plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
2.22 Environmental Matters.
(a) Each of the Company and the Subsidiaries has complied with all
applicable Environmental Laws (as defined below). There is no pending or, to the
knowledge of the Company, threatened civil or criminal litigation, written
notice of violation, formal administrative proceeding, or investigation, inquiry
or information request by any Governmental Entity, relating to any Environmental
Law involving the Company or any Subsidiary. For purposes of this Agreement,
"Environmental Law" means any federal, state or local law, statute, rule or
regulation or the common law relating to the environment or occupational health
and safety, including without limitation any statute, regulation, administrative
decision or order pertaining to (i) treatment, storage, disposal, generation and
transportation of industrial, toxic or
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hazardous materials or substances or solid or hazardous waste; (ii) air, water
and noise pollution; (iii) groundwater and soil contamination; (iv) the release
or threatened release into the environment of industrial, toxic or hazardous
materials or substances, or solid or hazardous waste, including without
limitation emissions, discharges, injections, spills, escapes or dumping of
pollutants, contaminants or chemicals; (v) the protection of wild life, marine
life and wetlands, including without limitation all endangered and threatened
species; (vi) storage tanks, vessels, containers, abandoned or discarded
barrels, and other closed receptacles; (vii) health and safety of employees and
other persons; and (viii) manufacturing, processing, using, distributing,
treating, storing, disposing, transporting or handling of materials regulated
under any law as pollutants, contaminants, toxic or hazardous materials or
substances or oil or petroleum products or solid or hazardous waste. As used
above, the terms "release" and "environment" shall have the meaning set forth in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA").
(b) The Company is not aware of any releases of any Materials of
Environmental Concern (as defined below) into the environment at any parcel of
real property or any facility formerly or currently owned, operated or
controlled by the Company or a Subsidiary. With respect to any such releases of
Materials of Environmental Concern, the Company or such Subsidiary has given all
required notices to Governmental Entities (copies of which have been provided to
Engage). The Company is not aware of any releases of Materials of Environmental
Concern at parcels of real property or facilities other than those owned,
operated or controlled by the Company or a Subsidiary that could reasonably be
expected to have an impact on the real property or facilities owned, operated or
controlled by the Company or a Subsidiary. For purposes of this Agreement,
"Materials of Environmental Concern" means any chemicals, pollutants or
contaminants, hazardous substances (as such term is defined under CERCLA), solid
wastes and hazardous wastes (as such terms are defined under the Resource
Conservation and Recovery Act), toxic materials, oil or petroleum and petroleum
products or any other material subject to regulation under any Environmental
Law.
(c) Set forth in Section 2.22(c) of the Disclosure Schedule is a list of
all documents (whether in hard copy or electronic form) that contain any
environmental reports, investigations and audits relating to premises currently
or previously owned or operated by the Company or a Subsidiary (whether
conducted by or on behalf of the Company or a Subsidiary or a third party, and
whether done at the initiative of the Company or a Subsidiary or directed by a
Governmental Entity or other third party) which the Company has possession of or
access to. A complete and accurate copy of each such document has been provided
to Engage.
2.23 Legal Compliance. Each of the Company and the Subsidiaries, and the
conduct and operations of their respective businesses, are in compliance with
each applicable law (including rules and regulations thereunder) of any federal,
state, local or foreign government, or any Governmental Entity, except where
such failure has not had or could not reasonably be expected to have a Company
Material Adverse Effect. Without limiting the scope of the immediately preceding
sentence, neither the Company nor any of its Subsidiaries (a) has made any
contributions, payments or gifts of its property to or for the private use of
any governmental official, employee or agent where either the payment or the
purpose of such contribution, payments or gift is illegal under the laws of the
United States, any state thereof or any other
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jurisdiction (foreign or domestic); (b) has established or maintained any
unrecorded fund or asset for any purpose, or has made any false or artificial
entries on its books or records for any reason; (c) has made any payments to any
Person with the intention or understanding that any part of such payment was to
be used for any other purpose other than that described in the documents
supporting the payment; or (d) has made any contribution, or has reimbursed any
political gift or contribution made by any other Person, to candidates for
public office, whether Federal, state or local, where such contribution would be
in violation of applicable law.
2.24 Customers and Suppliers. Section 2.24 of the Disclosure Schedule sets
forth a list of (a) the largest twenty (20) customers of the Company during the
last full fiscal year or the interim period through the Most Recent Balance
Sheet Date and the amount of revenues accounted for by each such customer during
each such period and (b) each supplier that is the sole supplier of any
significant product to the Company or a Subsidiary. To the knowledge of the
Company, no such customer or supplier has indicated within the past year that it
will stop, or decrease the rate of, buying products or supplying products, as
applicable, to the Company or any Subsidiary.
2.25 Permits. Section 2.25 of the Disclosure Schedule sets forth a list of
all permits, licenses, registrations, certificates, orders or approvals from any
Governmental Entity (including without limitation those issued or required under
Environmental Laws and those relating to the occupancy or use of owned or leased
real property) ("Permits") issued to or held by the Company or any Subsidiary.
Such listed Permits are the only Permits that are required for the Company and
the Subsidiaries to conduct their respective businesses as presently conducted
or as proposed to be conducted. Each such Permit is in full force and effect
and, to the knowledge of the Company, no suspension or cancellation of such
Permit is threatened and there is no basis for believing that such Permit will
not be renewable upon expiration where such suspension or cancellation has had
or could reasonably be expected to have a Company Material Adverse Effect. Each
such Permit will continue in full force and effect immediately following the
Closing.
2.26 Certain Business Relationships With Affiliates. Except as disclosed on
Schedule 2.15, no Affiliate of the Company or of any Subsidiary (a) owns any
property or right, tangible or intangible, which is used in the business of the
Company or any Subsidiary, (b) has any claim or cause of action against the
Company or any Subsidiary, or (c) owes any money to, or is owed any money by,
the Company or any Subsidiary.
2.27 Brokers' Fees. Except as disclosed on Section 2.27 of the Disclosure
Schedule, neither the Company nor any Subsidiary has any liability or obligation
to pay any fee or commission to any broker, finder, agent or similar party with
respect to any of the transactions contemplated by this Agreement. The Company
has delivered to Engage a true and correct copy of the letter obtained from that
certain Company employee listed in Section 2.27 of the Disclosure Schedule
confirming that such employee is not entitled to any fee or commission from the
Company, Engage or any of their Affiliates with respect to any of the
transactions contemplated by this Agreement.
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2.28 Books and Records. The minute books and other similar records of the
Company and each Subsidiary contain complete and accurate records in all
material respects of all actions taken at any meetings of the Company's or such
Subsidiary's shareholders, Board of Directors or any committee thereof and of
all written consents executed in lieu of the holding of any such meeting. The
books and records of the Company and each Subsidiary accurately reflect in all
material respects the assets, liabilities, business, financial condition and
results of operations of the Company or such Subsidiary.
2.29 Information Statement and Proxy. The information concerning the
Company supplied by the Company for inclusion in the Information Statement to be
reviewed by the California Department of Corporations in connection with
proceedings under Sections 25121 and 25142 of the California Corporations Code
in reliance on Section 3(a)(10) of the Securities Act and sent to the Company
Shareholders (the "Information Statement") or the prospectus prepared as part of
the Form S-4 and sent to the Company Shareholders shall not, on the date that
the Information Statement or prospectus is first mailed to the Company
Shareholders, at the time of the Company's shareholders' meeting to consider
this Agreement and the Merger (the "Company Shareholders Meeting") and at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements included therein, in light of the circumstances under which
they were made, not misleading, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Company Shareholders Meeting which has become
false or misleading. If at any time prior to the Effective Time any event
relating to the Company or any of its affiliates, officers or directors should
be discovered by the Company which should be set forth in an amendment to the
Information Statement or a supplement to the prospectus, the Company shall
promptly inform Engage which shall file and distribute such amendment or
supplement.
2.30 Disclosure. No statement contained in the Disclosure Schedule or any
other document, certificate or other instrument delivered or to be delivered by
or on behalf of the Company pursuant to this Agreement, when taken together with
all the written documents, certificates and other instruments furnished or to be
furnished by or on behalf of the Company pursuant to this Agreement, contains or
shall contain any untrue statement of a material fact or omits or shall omit to
state any material fact required to be stated therein or necessary in order to
make such statements, in light of the circumstances under which they were made,
not misleading. The Company has delivered or made available to Engage or their
representatives true and complete copies of all documents which are referred to
in this Article II or in the Disclosure Schedule.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
ENGAGE AND TRANSITORY SUBSIDIARY
Engage and Transitory Subsidiary represent and warrant to the Company that
the statements contained in this Article III are true and correct, except as set
forth in the disclosure
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schedule provided by Engage to the Company on the date hereof (the "Engage
Disclosure Schedule"). The representations and warranties which follow are
deemed to be repeated on the Closing Date. The Engage Disclosure Schedule shall
be arranged in paragraphs corresponding to the numbered and lettered Sections
contained in this Article III, and the disclosures in any paragraph of the
Engage Disclosure Schedule shall not qualify any other Section in this Article
III. For purposes of this Article III, the phrase "to the knowledge of Engage"
or any phrase of similar import shall be deemed to refer to the actual knowledge
of those executive officers of Engage listed on EXHIBIT 3.0, as well as any
other knowledge which such executive officers would have possessed had they made
reasonable inquiry of appropriate employees and agents of the Company with
respect to the matter in question.
3.1 Organization, Qualification and Corporate Power. Engage is, and
Transitory Subsidiary will be as of the time it executes and delivers this
Agreement, a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation. Engage is duly qualified to
conduct business and is in corporate and tax good standing under the laws of
each jurisdiction in which the nature of its businesses or the ownership or
leasing of its properties requires such qualification, except where the failure
to be so qualified or in good standing would not have an Engage Material Adverse
Effect (as defined below). Engage has all requisite corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. Engage has furnished or made available to
the Company complete and accurate copies of its Certificate of Incorporation and
By-laws. Engage and Transitory Subsidiary are not in violation of any of the
provisions of their respective articles or certificates of incorporation,
By-laws or other charter documents. For purposes of this Agreement, "Engage
Material Adverse Effect" means a material adverse effect on or a material
adverse change in, or group of such effects on or changes in, the assets
(including intangible properties), business, condition (financial or otherwise),
results of operations or regulatory status of Engage and its subsidiaries, taken
as a whole, (other than changes that are the effect of economic factors
affecting the economy as a whole or changes that are the effect of factors
generally affecting the specific markets in which Engage competes); provided,
however, that an Engage Material Adverse Effect shall not include any adverse
effect (other than a breach, default or acceleration under any Contract to which
Engage is a party otherwise having a material adverse effect) attributable to
the Merger or the announcement thereof or the transactions contemplated thereby.
3.2 Capitalization. Transitory Subsidiary is authorized to issue 3,000
shares of Transitory Subsidiary Common Stock, of which 1,000 shares were issued
and outstanding as of the date of this Agreement. Engage is authorized to issue
350,000,000 shares of Engage Common Stock, of which 173,272,589 shares were
issued and outstanding as of May 31, 2000, and 5,000,000 shares of preferred
stock, $.01 par value per share, none of which are issued and outstanding. All
of the issued and outstanding shares of Engage Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of all preemptive rights. All
shares of Transitory Subsidiary that are owned by Engage are free and clear of
all security interests, liens, claims, pledges, agreements, limitations on
Engage's voting rights, charges or other encumbrances of any nature. All of the
Merger Shares will be, when issued in accordance with this Agreement, duly
authorized, validly issued, fully paid and nonassessable, and will not be
subject to any preemptive rights or rights of first refusal created by statute,
the charter documents
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of Engage or any agreement to which Engage is a party. As of the date of this
Agreement, except for benefit plans maintained by Engage, or as previously
publicly disclosed in the Engage Reports, a press release or otherwise, there
are outstanding no rights, warrants or options to purchase Engage Common Stock,
respectively.
3.3 Authorization of Transaction. Each of Engage and Transitory Subsidiary
has all requisite power and authority to execute and deliver this Agreement and
(in the case of Engage) the Escrow Agreement and to perform its obligations
hereunder and thereunder. The execution and delivery by Engage and Transitory
Subsidiary of this Agreement and (in the case of Engage) the Escrow Agreement
and the consummation by Engage and Transitory Subsidiary of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of Engage and Transitory Subsidiary,
respectively. This Agreement has been duly and validly executed and delivered by
Engage and Transitory Subsidiary and constitutes a valid and binding obligation
of Engage and Transitory Subsidiary, enforceable against them in accordance with
its terms.
3.4 Noncontravention. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state securities laws
including, if so desired by Engage, approval and a hearing under Sections 25121
and 25142 of the California Corporations Code, the Exchange Act, the HSR Act and
the filing of the Certificate of Merger as required by the DGCL, neither the
execution and delivery by Engage or Transitory Subsidiary of this Agreement or
(in the case of Engage) the Escrow Agreement, nor the consummation by Engage or
Transitory Subsidiary of the transactions contemplated hereby or thereby, will
(a) conflict with or violate any provision of the charter or By-laws of Engage
or Transitory Subsidiary, (b) require on the part of Engage or Transitory
Subsidiary any filing with, or permit, authorization, consent or approval of,
any Governmental Entity or other party, (c) conflict with, result in breach of,
constitute (with or without due notice or lapse of time or both) a default
under, result in the acceleration of obligations under, create in any party any
right to terminate, modify or cancel, or require any notice, consent or waiver
under, any contract or instrument to which Engage or Transitory Subsidiary is a
party or by which either is bound or to which any of their assets are subject,
except for (i) any conflict, breach, default, acceleration, termination,
modification or cancellation which would not adversely affect the consummation
of the transactions contemplated hereby or (ii) any notice, consent or waiver
the absence of which would not adversely affect the consummation of the
transactions contemplated hereby, or (d) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Engage or Transitory
Subsidiary or any of their properties or assets, except for any violation which
would not adversely affect the consummation of the transactions contemplated
herein.
3.5 Reports and Financial Statements. Engage has previously furnished or
made available to the Company complete and accurate copies, as amended or
supplemented, of: (a) Engage's Annual Report on Form 10-K for the fiscal year
ended July 31, 1999, as filed with the SEC; and (b) all other reports filed by
Engage under Section 13 or subsections (a) or (c) of Section 14 of the Exchange
Act with the SEC since July 31, 1999; (the reports listed in subsections (a) and
(b) are collectively referred to herein as the "Engage Reports"). The Engage
Reports constitute all of the documents required to be filed by Engage under
Section 13 or subsections (a) or (c) of Section 14 of the Exchange Act with the
SEC from July 31, 1999
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through the date of this Agreement. The Engage Reports complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder when filed. As of their respective dates, the Engage Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited financial statements and unaudited interim financial statements included
in the Engage Reports (i) complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto when filed, (ii) were prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby
(except as may be indicated therein or in the notes thereto, and in the case of
quarterly financial statements, as permitted by Form 10-Q under the Exchange
Act), (iii) fairly present the consolidated financial condition, results of
operations and cash flows of Engage as of the respective dates thereof and for
the periods referred to therein, and (iv) are consistent with the books and
records of Engage.
3.6 Absence of Material Adverse Change. Since April 30, 2000, there has
occurred no event or development which has had, or could reasonably be expected
to have in the future, an Engage Material Adverse Effect and Engage has not
agreed to take any action outside the ordinary course of business or that would
(if the action were taken immediately) constitute a breach of any of its
representations and warranties contained herein.
3.7 Litigation. Except as disclosed in the Engage Reports, as of the date
of this Agreement, there is no Legal Proceeding which is pending or, to Engage's
knowledge, threatened against Engage or any subsidiary of Engage which, if
determined adversely to Engage's interests, could reasonably be expected to have
an Engage Material Adverse Effect, or which in any manner challenges or seeks to
prevent, enjoin, alter or delay the transactions contemplated by this Agreement.
3.8 Interim Operations of Transitory Subsidiary. Transitory Subsidiary was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement and has engaged in no business activities other than as
contemplated by this Agreement.
3.9 Brokers' Fees. Neither Engage nor Transitory Subsidiary has any
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement.
3.10 Information Statement or Form S-4. The Information Statement to be
reviewed by the California Department of Corporations in reliance on Section
3(a)(10) of the Securities Act and sent to the Company Shareholders or the
prospectus prepared as part of the Form S-4 and sent to the Company Shareholders
shall not, at the time that the Information Statement (including any amendments
or supplements thereto) is approved by the California Department of Corporations
in connection with proceedings under Sections 25121 and 25142 of the California
Corporations Code, or the Form S-4 (including any amendments or supplements
thereto) is declared effective by the SEC, contain any untrue statement of
material fact or omit to state any material fact necessary in order to make the
statements included therein, in light of the circumstances under which they were
made, not misleading. The information concerning Engage
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and Transitory Subsidiary supplied by each such Party for inclusion in the
Information Statement or prospectus shall not, on the date that the Information
Statement or prospectus is first mailed to the Company Shareholders, at the time
of the Company Shareholders Meeting and at the Effective Time, contain any
statement which, at such time and in light of the circumstances under which it
shall be made, is false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements included
therein, in light of the circumstances under which they were made, not
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Shareholders Meeting which has become false or
misleading. If at any time prior to the Effective Time any event relating to
Engage or Transitory Subsidiary or any of their respective affiliates, officers
or directors should be discovered by Engage or Transitory Subsidiary which
should be set forth in an amendment to the Information Statement or a supplement
to the prospectus, Engage shall promptly inform the Company and file and
distribute such amendment or supplement. Notwithstanding the foregoing, Engage
makes no representation or warranty with respect to any information concerning
the Company contained in any of the foregoing documents which is supplied by the
Company.
3.11 Intellectual Property. Engage owns or has the right to use all
Intellectual Property necessary (i) to use, market and distribute the products
marketed, sold or licensed, and to provide the services provided, by Engage to
other parties (together, the "Engage Customer Deliverables") or (ii) to operate
Engage's internal systems that are material to the business or operations of
Engage, including, without limitation, computer hardware systems, software
applications and embedded systems (the "Engage Internal Systems"; the
Intellectual Property owned by or licensed to Engage and incorporated in or
underlying the Engage Customer Deliverables or the Engage Internal Systems is
referred to herein as the "Engage Intellectual Property"). Engage has taken all
commercially reasonable measures to protect the proprietary nature of each item
of Engage Intellectual Property.
ARTICLE IV
COVENANTS
4.1 Closing Efforts. Each of the Parties shall use its best efforts, to the
extent commercially reasonable ("Reasonable Best Efforts"), to take all actions
and to do all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement, including, without limitation,
using its Reasonable Best Efforts to ensure that (i) its representations and
warranties remain true and correct in all material respects through the Closing
Date and (ii) the conditions to the obligations of the other Parties to
consummate the Merger are satisfied.
4.2 Governmental and Third Party Notices and Consents.
(a) Each Party shall use its Reasonable Best Efforts to obtain, at its own
expense, all waivers, permits, consents, approvals or other authorizations from
Governmental Entities, and to effect all registrations, filings and notices with
or to Governmental Entities, as may be required for such Party to consummate the
transactions contemplated by this Agreement and to otherwise comply with all
applicable laws and regulations in connection with the consummation of the
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transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, each of the Parties shall promptly file any Notification and
Report Forms and related material that it may be required to file with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice under the HSR Act, shall use its best efforts to obtain an
early termination of the applicable waiting period, and shall make any further
filings or information submissions pursuant thereto that may be necessary,
proper or advisable; provided, however, that, notwithstanding anything to the
contrary in this Agreement, Engage shall not be obligated (A) to respond to
formal requests for additional information or documentary material pursuant to
16 C.F.R. 803.20 under the HSR Act except to the extent it elects to do so in
their sole discretion or (B) to sell or dispose of or hold separately (through a
trust or otherwise) any assets or businesses of Engage or its Affiliates. Filing
fees relating to any required filings under the HSR Act shall be paid in equal
parts by Engage and the Company.
(b) The Company shall use its Reasonable Best Efforts to obtain, at its
expense, all such waivers, consents or approvals from third parties, and to give
all such notices to third parties, as are required to be listed in Section 2.4
of the Disclosure Schedule.
4.3 Shareholder Approval.
(a) The Company shall use its best efforts to obtain, as promptly as
practicable, the Requisite Shareholder Approval, either at a special meeting of
shareholders or pursuant to a written shareholder consent, all in accordance
with the applicable requirements of the DGCL. In connection with such special
meeting of shareholders or written shareholder consent, the Company shall
provide to its shareholders a written proxy or information statement (the
"Disclosure Statement") which includes (A) a summary of the Merger and this
Agreement (which summary shall include a summary of the terms relating to the
indemnification obligations of the Company Shareholders, the escrow arrangements
and the authority of the Shareholder Representative, and a statement that the
adoption of this Agreement by the shareholders of the Company shall constitute
approval of such terms), (B) all of the information required by Section 3(a)(10)
of the Securities Act, if applicable, and (C) a statement that appraisal rights
are available for the Company Shares pursuant to the DGCL and a copy of Section
262 of the DGCL. Engage agrees to cooperate with the Company in the preparation
of the Disclosure Statement. The Company agrees not to distribute the Disclosure
Statement until Engage has had a reasonable opportunity to review and comment on
the Disclosure Statement and the Disclosure Statement has been approved by
Engage (which approval may not be unreasonably withheld or delayed). If the
Requisite Shareholder Approval is obtained without the solicitation of all
shareholders entitled to vote, the Company shall send, pursuant to Section 228
of the DGCL, a written notice to all shareholders of the Company at least ten
days prior to the Effective Time informing them that this Agreement and the
Merger were adopted and approved by the shareholders of the Company and that
appraisal rights are available for their Company Shares pursuant to Section 262
of the DGCL (which notice shall include a copy of Section 262 of the DGCL), and
shall promptly inform Engage of the date on which such notice was sent.
(b) The Company, acting through its Board of Directors, shall include in
the Disclosure Statement the unanimous recommendation of its Board of Directors
that the
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shareholders of the Company vote in favor of the adoption of this Agreement and
the approval of the Merger.
(c) The Company shall ensure that the Disclosure Statement does not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading (provided that the Company shall not
be responsible for the accuracy or completeness of any information furnished by
Engage or Transitory Subsidiary for inclusion in the Disclosure Statement).
(d) Engage and Transitory Subsidiary shall ensure that any information
furnished by such party to the Company for inclusion in the Disclosure Statement
does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
4.4 Ancillary Agreements; Audit. To the extent not obtained prior to the
date hereof, the Company shall use its Reasonable Best Efforts to obtain:
(i) from each Company Shareholder and each holder of Company Options
an executed lock-up agreement in the form attached hereto as EXHIBIT 4.4(I) (the
"Lock-Up Agreement"); provided, however, that the Company shall not be required
to seek to obtain an executed Lock-Up Agreement from any holder of Company
Common Stock who is not an employee and who does not own more than 3,000 shares
of Company Common Stock;
(ii) from each employee of the Company executed copies of each
Employee Agreement in the form attached hereto as EXHIBIT 4.4(II) (the "Employee
Agreement");
(iii) the termination of the Security Agreement made December 21, 1998
by the Company to Adobe Ventures II, L.P. and the Security Agreement made
October 19, 1999 between the Company and Adobe Ventures III, L.P. (together, the
"Adobe Security Agreements");
(iv) the consent of the requisite holders of Company Shares to
terminate the Second Amended and Restated Rights Agreement dated May 17, 2000
(the "Company Rights Agreement") by and among the Company and certain of the
Company Shareholders; and
(v) the approval of the requisite disinterested holders of Company
Shares to approve any payment that absent such approval might be treated as an
"excess parachute payment" under Section 280G of the Code, which approval shall
satisfy in all material respects the criteria set forth in Proposed Treasury
Regulation Section 1.280G-1, Q & A -7(a)-(e); and
(vi) the audited financial statements of the Company as of and for the
fiscal year ended January 31, 2000, including the signed report of Arthur
Andersen LLP with respect thereto.
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4.5 Operation of Business. Except as contemplated by this Agreement, during
the period from the date of this Agreement to the Effective Time, the Company
shall (and shall cause each Subsidiary to) conduct its operations in the
Ordinary Course of Business and in compliance with all applicable laws and
regulations and, to the extent consistent therewith, use its Reasonable Best
Efforts to preserve intact its current business organization, keep its physical
assets in good working condition, keep available the services of its current
officers and employees and preserve its relationships with customers, suppliers
and others having business dealings with it to the end that its goodwill and
ongoing business shall not be impaired in any material respect; provided,
however, that in any event, the Company shall adhere to operating parameters
that are mutually acceptable to Engage and the Company. Without limiting the
generality of the foregoing, prior to the Effective Time, the Company shall not
(and shall cause each Subsidiary not to), without the written consent of Engage:
(a) issue or sell, or redeem or repurchase, any stock or other securities
of the Company or any rights, warrants or options to acquire any such stock or
other securities (except pursuant to the conversion or exercise of convertible
securities or Company Options or Warrants outstanding on the date hereof), or
amend any of the terms of (including, without limitation, the vesting of) any
such convertible securities or Company Options or Warrants, except as expressly
contemplated by this Agreement; provided, however, that with Engage's consent,
which shall not be unreasonably withheld, delayed or conditioned, the Company
may grant to newly hired employees options to purchase Company Common Stock
under the Company Option Plans, provided such employees execute an Employee
Agreement, and provided, further, that in granting its consent, Engage may take
into consideration the relative amount of options an employee of similar rank or
responsibility of Engage customarily holds;
(b) split, combine or reclassify any shares of its capital stock; declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock;
(c) create, incur or assume any indebtedness (including obligations in
respect of capital leases) greater than $10,000 in any single transaction or
$100,000 in the aggregate, except as set forth on EXHIBIT 4.5(c); assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person or entity; or
make any loans, advances or capital contributions to, or investments in, any
other person or entity;
(d) enter into, adopt or amend any Employee Benefit Plan or any employment
or severance agreement or arrangement of the type described in Section 2.21(k);
or increase in any manner the compensation or fringe benefits of, or modify the
employment terms (including, without limitation, modifications of title) of, its
directors, officers or employees, generally or individually; or pay any bonus or
other benefit to its directors, officers or employees, other than those
arrangements to which the Company is obligated as of the date hereof; or change
any sales commission plans for current or future periods; or terminate any group
health plan that covers, as of the date of this Agreement, current or former
employees of the Company, any of its Subsidiaries or any ERISA Affiliate or
their beneficiaries; or pay any pension or retirement allowance to any Person
not required by an existing plan or agreement;
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(e) acquire, sell, lease, license or dispose of any assets or property
(including, without limitation, any shares or other equity interests in or
securities of any Subsidiary or any corporation, partnership, association or
other business organization or division thereof), other than purchases and sales
of assets in the Ordinary Course of Business;
(f) mortgage or pledge any of its property or assets or subject any such
property or assets to any Security Interest other than pursuant to existing
credit facilities or equipment leases in the Ordinary Course of Business;
(g) discharge or satisfy any Security Interest or pay any obligation or
liability other than in the Ordinary Course of Business;
(h) amend its charter, By-laws or other organizational documents;
(i) change in any material respect its accounting methods, principles or
practices, except insofar as may be required by a generally applicable change in
GAAP;
(j) enter into, amend, terminate, take or omit to take any action that
would constitute a violation of or default under, or waive any rights under, any
material contract or agreement;
(k) make or commit to make any capital expenditure in excess of $75,000 per
item or $250,000 in the aggregate, or such additional amounts which may be
approved by Engage, such approval not to be unreasonably withheld or delayed,
other than those purchase orders to which the Company is obligated to pay as of
the date hereof, except as described in EXHIBIT 4.5(C);
(l) make any amendment in any material respect to the Company's operating
budget for the year ending January 31, 2001, a copy of which is attached hereto
as EXHIBIT 4.5(L);
(m) institute or settle any Legal Proceeding;
(n) take any action or fail to take any action permitted by this Agreement
with the knowledge that such action or failure to take action would result in
(i) any of the representations and warranties of the Company set forth in this
Agreement becoming untrue or (ii) any of the conditions to the Merger set forth
in Article V not being satisfied; or
(o) agree in writing or otherwise to take any of the foregoing actions.
Further, prior to the Closing, without the prior written consent of Engage or as
otherwise expressly provided herein, the Company will not, and will not permit
any of its Subsidiaries, to enter into any Contract or take any other action
which, if entered into or taken prior to the date of this Agreement, would cause
any representation or warranty of the Company to be untrue in any respect or be
required to be disclosed on the Disclosure Schedule; or take any action that is
intended or may reasonably be expected to result in any of the conditions to the
Merger as set forth in Article V not being satisfied or in a violation of this
Agreement; or take or omit to be
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taken any action which reasonably could be expected to have a Company Material
Adverse Effect.
4.6 Access to Information.
(a) The Company shall (and shall cause each Subsidiary to) permit
representatives of Engage to have full access (at all reasonable times, and in a
manner so as not to interfere with the normal business operations of the Company
and the Subsidiaries), at Engage's sole expense, to all premises, properties,
financial and accounting records, contracts, other records and documents, and
personnel, of or pertaining to the Company and each Subsidiary.
(b) As soon as available but not later than thirty days after the end of
each month ending prior to the Closing Date, beginning with the end of June,
2000, the Company shall furnish to Engage an unaudited income statement for such
month and a balance sheet as of the end of such month, prepared on a basis
consistent with the Financial Statements. Such financial statements shall
present fairly the financial condition and results of operations of the Company
and the Subsidiaries on a consolidated basis as of the dates thereof and for the
periods covered thereby, and shall be consistent with the books and records of
the Company and the Subsidiaries.
4.7 Exclusivity.
(a) The Company shall not, and the Company shall require each of its
officers, directors, employees, representatives and agents not to, directly or
indirectly, (i) initiate, solicit, encourage or otherwise facilitate any
inquiry, proposal, offer or discussion with any party (other than Engage)
concerning any merger, reorganization, consolidation, recapitalization, business
combination, liquidation, dissolution, share exchange, sale of stock, sale of
material assets or similar business transaction involving the Company, any
Subsidiary or any division of the Company or any Subsidiary, (ii) furnish any
nonpublic information concerning the business, properties or assets of the
Company, any Subsidiary or any division of the Company to any party (other than
Engage) or (iii) engage in discussions or negotiations with any party (other
than Engage) concerning any such transaction.
(b) Promptly after the execution and delivery of this Agreement the Company
shall notify any party with which discussions or negotiations of the nature
described in paragraph (a) above were pending that the Company is terminating
such discussions or negotiations. If the Company receives any inquiry, proposal
or offer of the nature described in paragraph (a) above, the Company shall,
within one business day after such receipt, notify Engage of such inquiry,
proposal or offer, including the identity of the other party and the terms of
such inquiry, proposal or offer.
4.8 Expenses. Except as set forth in Section 4.2, Article VI and the Escrow
Agreement, each of the Parties shall bear its own costs and expenses (including,
without limitation, all legal, accounting and broker fees and expenses) incurred
in connection with this Agreement and the transactions contemplated hereby,
including, without limitation, fees and expenses associated with any consent or
approval of any Governmental Entity or other party that the Company is required
to obtain pursuant to this Agreement. Notwithstanding the foregoing,
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the Company shall be responsible for all out-of-pocket costs incurred in
connection with the preparation, filing (including the registration fee) and
printing and distribution of any Disclosure Statement or Form S-4. At the
Effective Time, the Company shall have reached a final settlement of and paid
all fees and expenses that the Company has incurred or is otherwise obligated to
pay in connection with this Agreement and the transactions contemplated hereby,
including without limitation the fees and expenses described on and limited by
EXHIBIT 4.8, all of which shall be deemed to by expenses for purposes of Section
1.5(a)(ii) of this Agreement.
4.9 Qualification of Merger Shares.
(a) Engage shall use its best efforts to file with the California
Department of Corporations an Application for Fairness Hearing and Qualification
by Permit to issue the Merger Shares pursuant to the exemption from registration
under the Securities Act contained in Section 3(a)(10) thereof and pursuant to a
permit issued under Section 25113 of the California Corporate Securities Law of
1968 (the "Section 3(a)(10) Applications"). In the event that Engage determines
that it is unable to file the Section 3(a)(10) Applications, such party may
prepare and file with the SEC a Registration Statement on Form S-4 (or similar
form) covering the Merger Shares (the "Form S-4") to register the Merger Shares
under the Securities Act. The Company agrees to cooperate with Engage in the
preparation of the Section 3(a)(10) Applications and/or the Form S-4.
(b) Each Party shall, promptly upon request, furnish each other Party with
all information as may be reasonably necessary or advisable in connection with
the Disclosure Statement or the Form S-4 or any other statement, filing, notice
or application made by or on behalf of Engage, the Company or any of their
respective subsidiaries to any Governmental Entity in connection with the
Disclosure Statement, the Form S-4 or any "Blue Sky" permits and approvals.
(c) The Company shall cause the Disclosure Statement or the proxy
statement--prospectus that is a part of the Form S-4 to be mailed to their
respective stockholders as promptly as practicable after the approval of the
Section 3(a)(10) Applications or the Form S-4 is declared effective under the
Securities Act.
(d) The Company shall use its Reasonable Best Efforts to cause to be
delivered to Engage letters from its independent auditors dated the date on
which the Disclosure Statement or the Form S-4 or last amendment thereto shall
become effective, and dated the Closing Date, and addressed to Engage and the
Company, with respect to the Company's consolidated financial position and the
results of operations, which letters shall be based on SAS 72 and certain
agreed-upon procedures, which procedures shall be consistent with applicable
professional standards for letters delivered by independent accountants in
connection with comparable transactions, and each in form and substance which is
reasonably satisfactory to Engage.
4.10 Listing of Merger Shares. Engage shall promptly file an Additional
Shares Notification form to list the Merger Shares on the Nasdaq National
Market.
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4.11 Exercise of Warrants. The Company shall use its Reasonable Best
Efforts to cause all of the Warrants to be validly exercised by the holders of
the Warrants or canceled prior to the Closing Date.
4.12 Treatment of the Merger for Income Tax Purposes; Tax Matters.
(a) Each of the Parties expect and intend that the Merger will qualify as a
"reorganization" within the meaning of Section 368(a)(1)(A) of the Code. Each of
the Parties hereby covenants and agrees (i) to file all Tax Returns in a manner
consistent in all respects with such expectations and intentions, and (ii) not
to voluntarily undertake any action outside of the Ordinary Course of Business
which would cause the Merger not to be treated as a reorganization within the
meaning of Section 368(a) of the Code.
(b) All tax sharing agreements or similar agreements with respect to or
involving the Company and the Subsidiaries shall be terminated as of the Closing
Date and, after the Closing Date, the Company and the Subsidiaries shall not be
bound thereby or have any liability thereunder.
(c) All transfer, documentary, sales, use, stamp, registration and other
such Taxes and fees (including penalties and interest) incurred in connection
with this Agreement, shall be paid by the Company Shareholders when due, and the
Company Shareholders will, at their own expense, file all necessary Tax Returns
and other documentation with respect to all such transfer, documentary, sales,
use, stamp, registration and other Taxes and fees, and, if required by
applicable law, Engage will, and will cause its Affiliates to, join in the
execution of any such Tax Returns and other documents.
4.13 Termination of Acceleration Provisions; Amendment for Cause and Good
Reason. Except as provided on EXHIBIT 4.13(A), the Company shall use its
Reasonable Best Efforts to terminate any and all arrangements or agreements that
would give rise to the acceleration of any employee benefits under any Company
Employee Benefit Plan solely by virtue of this Agreement and the transactions
contemplated hereby, it being acknowledged that the acceleration provisions in
the Company Option Plans, as modified in accordance with any Employee Agreement,
remain in full force and effect. Without limiting the foregoing, the Company
shall take such actions as are necessary to amend any Employee Benefit Plan
including the Company Option Plans, and the related instruments issued
thereunder, in a manner consistent with this Section 4.13. The Company shall
amend the Stock Option Plans to delete the definitions of "Cause" and "Good
Reason" as set forth therein and shall substitute in lieu thereof the
definitions for such terms as set forth on EXHIBIT 4.13(B).
4.14 Notice of Developments. Each Party shall promptly notify the other
Party of (i) any change or event having a Company Material Adverse Effect or an
Engage Material Adverse Effect, as applicable, on it or its ability to perform
its obligations under this Agreement or which it believes would or may be
reasonably likely to cause or constitute a material breach of any of its
representations, warranties or covenants contained herein or to preclude the
satisfaction of one or more of the conditions set forth in Article V and (ii)
any matter which, if existing, occurring or known at the date of this Agreement,
would have been required to be set forth or described in the
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Disclosure Schedule or the Engage Disclosure Schedule, as applicable, or which
is necessary to correct any information in Disclosure Schedule or the Engage
Disclosure Schedule, as applicable, which has been rendered inaccurate thereby;
provided, however, that any such disclosure shall not have any effect for the
purpose of determining the accuracy of any representation or warranty when made,
for determining satisfaction of the conditions set forth in Article V, or for
determining the compliance by the Company with any other provision of this
Agreement.
4.15 Certain Employee Agreements
Except as otherwise expressly provided in and contemplated by this
Agreement, Engage and the Surviving Corporation and its subsidiaries shall honor
in accordance with their terms all contracts, agreements and commitments of the
Company and its subsidiaries prior to the date hereof which apply to any current
or former employee or current or former director of the Company and which are
disclosed in the Disclosure Schedule; provided, THAT, the foregoing shall not
prevent Engage or the Surviving Corporation from administering and enforcing
such contracts, agreements and commitments in accordance with their terms,
including, without limitation, any reserved right to amend, modify, suspend,
revoke or terminate any such contract, agreement or commitment.
4.16 Employee Benefit Matters
(a) Engage agrees to provide the employees of the Company who remain
employed after the Closing Date (collectively, the "Transferred Company
Employees") with the types and levels of employee benefits maintained by Engage
for similarly situated employees of Engage. As soon as administratively
practicable after the Effective Time, Engage shall permit the Transferred
Company Employees to participate in Engage's group hospitalization, medical,
life and disability insurance plans, defined benefit pension plan, thrift plan,
severance plan and similar plans, on the same terms and conditions as applicable
to comparable employees of Engage (including the waiver of pre-existing
conditions, restrictions, exclusions or limitations), giving Transferred Company
Employees full credit for all "years of service," as that term is defined in
Section 411(a)(5) of the Code, with the Company and its Subsidiaries (to the
extent the Company gave effect) as if such service was with Engage, for purposes
of eligibility, vesting and calculation of benefits under vacation, severance
and other plans, but not for benefit accrual purposes under Engage defined
benefit pension plan.
(b) Notwithstanding anything to the contrary contained herein, Engage shall
have sole discretion with respect to the determination as to whether to
terminate, merge or continue any employee benefit plans and programs of the
Company to the extent permitted by and in accordance with the terms of such
plans and programs; provided, however, that Engage shall continue to maintain
the Company plans (other than stock based or incentive plans) until the
Transferred Company Employees are permitted to participate in Engage's
obligations, if any, under ERISA, as amended by the Consolidated Omnibus Budget
Reconciliation Act of 1985 and/or the Health Insurance Portability and
Accountability Act of 1996 with respect to the rights of Transferred Company
Employees and their qualified beneficiaries in connection with the group health
plan maintain by the Company as of the Effective Time.
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(c) Subject to this Section 4.16, the Company shall terminate each Employee
Benefit Plan designated by Engage for termination effective as of the Closing
Date and, if so requested by Engage, shall amend each such other Employee
Benefit Plan as may be designated by Engage for amendment to cease accrual of
additional benefits under such plan and/or to make such other amendments as
Engage may request, all such amendments to be effective as of the Closing Date.
4.17 Indemnification
(a) Engage shall not after the Effective Time, take any action to alter or
impair any exculpatory or indemnification provisions now existing in the
Certificate of Incorporation or By-laws of the Company and the applicable
charter documents of the subsidiaries for the benefit of any individual who
served as a director or officer of the Company or any of its subsidiaries at any
time prior to the Effective Time, except for any changes which may be required
to conform with changes in applicable law and any changes which do not affect
the application of such provisions to act or omissions of such individuals prior
to the Effective Time
(b) From and after the Effective Time, Engage agrees that it will, and will
cause the Surviving Corporation to, indemnify and hold harmless each present and
former director and officer of the Company and any of the subsidiaries (the
"Indemnified Executives") against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities or amounts paid in
settlement incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent permitted under applicable law (and Engage and the
Surviving Corporation shall also advance expenses as incurred to the fullest
extent permitted under applicable law, provided the Indemnified Executive to
whom expenses are advanced provides an undertaking to repay such advances if it
is ultimately determined that such Indemnified Executive is not entitled to
indemnification). Without limiting the scope of the foregoing, nothing contained
in this Agreement shall obligate Engage or the Surviving Corporation to
indemnify an Indemnified Executive with respect to his, her or its knowing
fraud, criminal activity or intentional breach of any covenant or agreement
contained in this Agreement or relating to a breach of any other agreement
between an Indemnified Executive and Engage or the Company or any Subsidiary.
(c) In the event Engage or any of its successors or assigns (i)
consolidates with or mergers into any other person or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all of its assets to
any person, then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of Engage assume the
obligations set forth in this Section 4.17.
(d) The provisions of this Section 4.17 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Executive and his or her heirs
and representatives, and nothing herein shall affect any indemnification rights
that any Indemnified Executive and his or
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her heirs and representatives may have under the By-laws of the Company or any
of its Subsidiaries, any contract or applicable law.
ARTICLE V
CONDITIONS TO CONSUMMATION OF MERGER
5.1 Conditions to Each Party's Obligations. The respective obligations of
each Party to consummate the Merger are subject to the satisfaction of the
following conditions:
(a) this Agreement and the Merger shall have received the Requisite
Shareholder Approval;
(b) all applicable waiting periods (and any extensions thereof) under the
HSR Act relating to the Merger shall have expired or otherwise been terminated;
(c) the California Department of Corporations shall have approved the
Section 3(a)(10) Applications and issued a permit qualifying the Merger Shares
pursuant to Section 25113 of the California Corporate Securities Law of 1968, as
amended, or the Form S-4 of Engage shall have been declared effective by the SEC
and there shall not be in effect any stop order suspending the effectiveness of
the permits or the Form S-4 or any proceedings seeking such a stop order;
(d) all authorizations, consents, orders or approvals of, or declarations
or filings with, and all expirations of waiting periods imposed by, any
governmental or regulatory authority or agency (all of the foregoing being
referred to as "Consents") which are necessary for the consummation of the
Merger, other than those specified in Section 5.1(b) and (c), shall have been
filed, occurred or been obtained (all such authorizations, orders, declarations,
approvals, filings and consents and the lapse of all such waiting periods being
referred to as the "Requisite Regulatory Approvals") and all such Requisite
Regulatory Approvals shall be in full force and effect; and
(e) no temporary restraining order, preliminary or permanent injunction, or
other order issued by any court of competent jurisdiction or other legal or
regulatory restraints or prohibition preventing the consummation of the Merger
or materially limiting or restricting Engage's conduct or operation of the
business of Engage or the Company after the Closing Date shall have been issued,
nor shall any proceedings brought by any Governmental Entity seeking any of the
foregoing be pending, nor shall there be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger which would affect the effectiveness of the Merger.
5.2 Conditions to Obligations of Engage and Transitory Subsidiary. The
obligation of each of Engage and Transitory Subsidiary to consummate the Merger
is subject to the satisfaction (or waiver by Engage) of the following additional
conditions:
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(a) the number of Dissenting Shares shall not exceed three percent (3%) of
the number of outstanding shares of Company Common Stock as of the Effective
Time (calculated after giving effect to the conversion into Company Common Stock
of all outstanding Company Preferred Stock);
(b) any and all permits, consents, waivers, clearances, approvals and
authorizations of all non-governmental and non-regulatory third parties which
are necessary in connection with the consummation of the transactions
contemplated by this Agreement and are required to be received or obtained by
the Company, shall have been obtained by the Company;
(c) the representations and warranties of the Company set forth in the
first sentence of Section 2.1 and in Section 2.3 and any representations and
warranties of the Company set forth in this Agreement that are qualified as to
materiality shall be true and correct in all respects, and all other
representations and warranties of the Company set forth in this Agreement shall
be true and correct in all material respects, in each case as of the date of
this Agreement and as of the Effective Time as though made as of the Effective
Time, except to the extent such representations and warranties are specifically
made as of a particular date or as of the date of this Agreement (in which case
such representations and warranties shall be true and correct as of such date);
(d) the Company shall have performed or complied in all material respects
with its agreements and covenants required to be performed or complied with
under this Agreement as of or prior to the Effective Time;
(e) the Company shall have delivered to Engage and Transitory Subsidiary a
certificate (the "Company Certificate") to the effect that each of the
conditions specified in clause (a) of Section 5.1 and clauses (a) through (d) of
this Section 5.2 is satisfied in all respects;
(f) Engage shall have received from Nutter, McClennen & Fish, LLP, in a
form reasonably satisfactory to Engage, an opinion to the effect that the Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, addressed to Engage and dated as of the
Closing Date, which opinion shall rely in part upon customary and reasonable
representation letters from each of Engage, Transitory Subsidiary and the
Company; provided, that if Nutter, McClennen & Fish, LLP does not render such
opinion, this condition shall nonetheless be deemed satisfied if Hale and Dorr
LLP renders such opinion to Engage;
(g) Engage shall have received copies of the resignations, effective as of
the Effective Time, of each director of the Company and the Subsidiaries (other
than any such resignations which Engage designates, by written notice to the
Company, as unnecessary);
(h) Engage shall have received such other certificates and instruments
(including, without limitation, certificates of good standing of the Company and
the Subsidiaries in their jurisdiction of organization and the various foreign
jurisdictions in which they are qualified, certified charter documents,
certificates as to the incumbency of officers and the adoption of authorizing
resolutions) as it shall reasonably request in connection with the Closing;
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(i) Engage shall have received an executed Lock-Up Agreement from (i) each
holder of Company Preferred Stock and (ii) the holders of shares of Company
Common Stock and Company Options representing at least 95% of the Company Common
Stock, assuming, for purposes of this clause, the full exercise of all Company
Options; provided, however, that the Company shall not be required to obtain an
executed Lock-Up Agreement from any holder of Company Common Stock who is not an
employee and who does not own more than 3,000 shares of Company Common Stock;
(j) Engage shall have received from each of the employees listed on EXHIBIT
5.2(J) and from at least 95% of the employees of the Company with an annual base
salary of $50,000 or greater, executed copies of each Employee Agreement and the
Lock-Up Agreement;
(k) none of the individuals set forth on EXHIBIT 5.2(J) shall have resigned
from the Company or indicated their intent to resign from the Company;
(l) the Escrow Agreement shall have been executed and delivered by the
parties thereto;
(m) all of the outstanding Warrants shall have been exercised or canceled
pursuant to the terms thereof, provided that, with respect to the Warrants
issued in connection with the Series C Preferred Stock financing (the "Series C
Warrants"), if the Closing takes place prior to January 31, 2001, Engage shall
have received a waiver from the holders of a majority of the Company Common
Stock underlying the Series C Warrants confirming that the Series C Warrants
will terminate without becoming exercisable upon completion of the Merger;
(n) except as set forth on EXHIBIT 4.13(A), the Company shall have
terminated any and all arrangements or agreements that would give rise to the
acceleration of any employee benefits under any Company Employee Benefit Plan
(including, without limitation, the vesting of any Company Options) solely by
virtue of this Agreement and the transactions contemplated hereby, and the
Company shall have received all necessary consents, approvals or agreements to
permit such termination;
(o) Engage shall have received a final statement of all fees and expenses
incurred or to be incurred by the Company or which the Company is otherwise
obligated to pay in connection with this Agreement and the transactions
contemplated hereby, the payment of such fees and expenses shall not have
exceeded the amounts set forth on EXHIBIT 4.8;
(p) the Company Rights Agreement and the Adobe Security Agreements shall
have been terminated, and Engage shall have received evidence reasonably
satisfactory to Engage to that effect;
(q) Engage shall have received the audited financial statements of the
Company as of and for the fiscal year ended January 31, 2000, including the
signed report of Arthur Andersen LLP with respect thereto;
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(r) the Company shall have amended the Stock Option Plans as provided in
Section 4.13 of this Agreement; and
(q) the requisite number of disinterested holders of Company Shares shall
have approved any payment that absent such approval might be treated as an
"excess parachute payment" under Section 280G of the Code, which approval shall
have satisfied in all material respects the criteria set forth in Proposed
Treasury Regulation Section 1.280G-1, Q & A -7(a)-(e).
5.3 Conditions to Obligations of the Company. The obligation of the Company
to consummate the Merger is subject to the satisfaction of the following
additional conditions:
(a) Engage shall have filed an Additional Shares Notification form with the
Nasdaq National Market concerning the Merger Shares;
(b) Engage shall have effected all of the registrations, filings and
notices referred to in Section 4.2 which are required on the part of Engage;
(c) the representations and warranties of Engage and Transitory Subsidiary
set forth in the first sentence of Section 3.1 and Section 3.3 and any
representations and warranties of Engage and Transitory Subsidiary set forth in
this Agreement that are qualified as to materiality shall be true and correct,
and all other representations and warranties of Engage and Transitory Subsidiary
set forth in this Agreement shall be true and correct in all material respects,
in each case as of the date of this Agreement and as of the Effective Time as
though made as of the Effective Time, except to the extent such representations
and warranties are specifically made as of a particular date or as of the date
of this Agreement (in which case such representations and warranties shall be
true and correct as of such date);
(d) each of Engage and Transitory Subsidiary shall have performed or
complied in all material respects with its agreements and covenants required to
be performed or complied with under this Agreement as of or prior to the
Effective Time;
(e) any and all permits, consents, waivers, clearances, approvals and
authorizations of all non-governmental and non-regulatory third parties which
are necessary in connection with the consummation of the transactions
contemplated by this Agreement and are required to be received or obtained by
Engage, shall have been obtained by Engage;
(f) Engage shall have delivered to the Company a certificate (the "Engage
Certificate") to the effect that each of the conditions specified in clauses (a)
through (d) of this Section 5.3 is satisfied in all respects;
(g) the Company shall have received from Hale and Dorr LLP an opinion, in a
form reasonably satisfactory to the Company, to the effect that the Merger will
be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, addressed to the Company and dated as of
the Closing Date, which opinion shall rely in part upon customary and reasonable
representation letters from each of Engage, Transitory
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Subsidiary and the Company; provided, that if Hale and Dorr LLP does not render
such opinion, this condition shall nonetheless be deemed satisfied if Nutter,
McClennen & Fish, LLP renders such opinion to the Company;
(h) the Company shall have received such other certificates and instruments
(including without limitation certificates of good standing of Engage and
Transitory Subsidiary in their jurisdiction of organization, certified charter
documents, certificates as to the incumbency of officers and the adoption of
authorizing resolutions) as it shall reasonably request in connection with the
Closing.
ARTICLE VI
INDEMNIFICATION
6.1 Survival of Representations and Warranties.
(a) Except as otherwise provided in this Agreement, all representations and
warranties contained in this Agreement and the Company Certificate shall (i)
survive the Closing and any investigation at any time made by or on behalf of an
Indemnified Party and (ii) expire on the first anniversary of the Closing Date.
(b) For the purposes of the indemnification provided under Section 6.3 of
this Agreement, (i) the representations and warranties set forth in Sections
2.1, 2.2 and 2.3 (and the portion of the Company Certificate relating thereto)
shall survive the Closing indefinitely, and (ii) the representations and
warranties set forth in Sections 2.9, 2.22 and 2.23 (and the portion of the
Company Certificate relating thereto) shall survive until the expiration of all
statutes of limitation applicable to the matters referred to therein.
(c) If an Indemnified Party (as defined below) delivers a Claim Notice (as
defined below) to the Shareholder Representative before expiration of a
representation or warranty, concerning either a breach of such representation or
warranty, or a notice that, as a result a legal proceeding instituted by or
written claim made by a third party, the Indemnified Party reasonably expects to
incur Damages as a result of a breach of such representation or warranty (an
"Expected Claim Notice"), then such representation or warranty shall survive
until, but only for purposes of, the resolution of the matter covered by such
notice.
6.2 Escrow Agreement. The Escrow Agreement is intended to secure, and be
the sole source of the indemnification obligations to Engage and its respective
directors, officers, employees and Affiliates (an "Indemnified Party" and,
collectively, the "Indemnified Parties") under Sections 6.3 and 6.4 of this
Agreement and will constitute and adjustment to the Net Merger Consideration. If
the Merger has occurred, any indemnification payment owed by the Company
Shareholders shall be payable in additional shares of Engage Common Stock with
the value of such shares being deemed to be equal to the Average Closing Price
of the Engage Common Stock.
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6.3 Sole Indemnification. Subject to the limitations set forth in this
Article VI, the Company Shareholders shall indemnify each of the Indemnified
Parties in respect of, and hold it harmless against, any and all debts,
obligations and other liabilities (whether absolute, accrued, contingent, fixed
or otherwise, or whether known or unknown, or due or to become due or
otherwise), monetary damages, fines, fees, penalties, interest obligations,
deficiencies, losses and expenses (including without limitation amounts paid in
settlement, interest, court costs, reasonable costs of third party
investigators, reasonable fees and expenses of attorneys, accountants, financial
advisors and other experts, and other reasonable expenses of litigation)
("Damages") incurred or suffered by the Surviving Corporation, Engage or any
Affiliate thereof resulting from, relating to or constituting:
(i) any misrepresentation, breach of warranty or failure to perform
any covenant or agreement of the Company contained in this Agreement or the
Company Certificate;
(ii) any of the matters set forth on EXHIBIT 6.3, which
indemnification shall be made without regard to the limitation in Section 6.5(a)
of this Agreement;
(iii) any failure of any Company Shareholder to have good, valid and
marketable title to the issued and outstanding Company Shares issued in the name
of such Company Shareholder, free and clear of all Security Interests that would
prohibit the exchange of Company Shares in the Merger, or would prevent Engage
from having good, valid and marketable title to the issued and outstanding
Company Shares;
(iv) any claim by a shareholder or former shareholder of the Company,
or any other person or entity, seeking to assert, or based upon, the following
causes of action that accrued prior to the Effective Time: (A) ownership or
rights to ownership of, or other adverse claim against, any shares of stock of
the Company; (B) any right of a shareholder (other than the right to receive the
Merger Shares pursuant to this Agreement or appraisal rights under the
applicable provisions of the DGCL), including any option, preemptive rights or
rights to notice or to vote; or (C) any right under the Certificate of
Incorporation or By-laws of the Company;
(v) any obligation of the Company or any Subsidiary relating to the
failure to pay Taxes; or
(vi) any fee or expense incurred by the Company or any Subsidiary in
connection with this Agreement and the transactions contemplated hereby
(including, without limitation, all accounting, banking, legal and printing
expenses and regulatory filing fees) that was not properly deducted from Gross
Merger Consideration pursuant to Section 1.5(a)(ii) of this Agreement, which
indemnification shall be made without regard to the limitation in Section 6.5(a)
of this Agreement.
6.4 [Reserved]
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6.5 Limitation
(a) Notwithstanding anything contained to the contrary in this Agreement,
except with respect to (a) knowing fraud, criminal activity or intentional
breach of any covenant or agreement contained in this Agreement or relating to a
breach of any ancillary agreement or any other agreement executed by the Company
or any Company Shareholder pursuant to this Agreement, and (b) the matters set
forth on EXHIBIT 6.3 or in Section 6.3(vi), the Company Shareholders shall be
liable under this Article VI only if the aggregate Damages exceeds Three Hundred
Fifty Thousand Dollars ($350,000), in which case, the Company Shareholders shall
be liable for the entire amount of such Damages, subject to the limitations set
forth in Sections 6.5(b) and (c).
(b) The indemnification of Engage and the Surviving Corporation by the
Company Shareholders shall be without personal liability of or personal recourse
against any Company Shareholder and the sole recourse of Engage and the
Surviving Corporation against any Company Shareholder shall be against the
Escrow.
(c) The provisions of this Article VI shall constitute the sole and
exclusive remedy of Engage and the Surviving Corporation with respect to any and
all claims for money damages arising under this Agreement. Notwithstanding
anything to the contrary contained in this Agreement, the limitations on the
liability of each Company Shareholder set forth in Section 6.5 relate to each
Company Shareholder solely in his, her or its capacity as a shareholder of the
Company and shall not be construed to limit his, her or its liability with
respect to any other capacity he, she or it may have or have had with the
Company.
6.6 Indemnification Claims.
(a) An Indemnified Party entitled, or seeking to assert rights, to
indemnification under this Article VI shall give written notification to the
Shareholder Representative of the commencement of any suit or proceeding
relating to a third party claim for which indemnification pursuant to this
Article VI may be sought. Such notification shall be given within twenty (20)
business days after receipt by the Indemnified Party of notice of such suit or
proceeding, and shall describe in reasonable detail (to the extent known by the
Indemnified Party) the facts constituting the basis for such suit or proceeding
and the amount of the claimed damages; provided, however, that no delay on the
part of the Indemnified Party in notifying the Shareholder Representative shall
relieve the indemnifying party of any liability or obligation hereunder except
to the extent of any damage or liability caused by or arising out of such
failure. Within twenty days after delivery of such notification, the Shareholder
Representative may, upon written notice thereof to the Indemnified Party, assume
control of the defense of such suit or proceeding with counsel reasonably
satisfactory to the Indemnified Party; provided that (i) the Shareholder
Representative may only assume control of such defense if (A) it acknowledges in
writing to the Indemnified Party that any damages, fines, costs or other
liabilities that may be assessed against the Indemnified Party in connection
with such suit or proceeding constitute Damages for which the Indemnified Party
shall be indemnified pursuant to this Article VI and (B) the ad damnum is less
than or equal to the amount of Damages for which indemnification is available
under this Article VI and (ii) the Shareholder Representative may not assume
control of
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the defense of a suit or proceeding, or any portion of a suit or proceeding,
involving criminal liability or in which equitable relief is sought against the
Indemnified Party. If the Shareholder Representative does not so assume control
of such defense, the Indemnified Party shall control such defense at the
indemnifying parties' expense. The party not controlling such defense (the
"Noncontrolling Party") may participate therein at its own expense; provided
that if the Shareholder Representative assumes control of such defense and the
Indemnified Party reasonably concludes that the Shareholder Representative and
the Indemnified Party have conflicting interests or different defenses available
with respect to such suit or proceeding, the reasonable fees and expenses of
counsel to the Indemnified Party shall be considered "Damages" for purposes of
this Agreement. The party controlling such defense (the "Controlling Party")
shall keep the Noncontrolling Party advised of the status of such suit or
proceeding and the defense thereof and shall consider in good faith
recommendations made by the Noncontrolling Party with respect thereto. The
Noncontrolling Party shall furnish the Controlling Party with such information
as it may have with respect to such suit or proceeding (including copies of any
summons, complaint or other pleading which may have been served on such party
and any written claim, demand, invoice, billing or other document evidencing or
asserting the same) and shall otherwise reasonably cooperate with and assist the
Controlling Party in the defense of such suit or proceeding. The Shareholder
Representative shall not agree to any settlement of, or the entry of any
judgment arising from, any such suit or proceeding without the prior written
consent of the Indemnified Party, which shall not be unreasonably withheld or
delayed; provided that the consent of the Indemnified Party shall not be
required if the Shareholder Representative agrees in writing to pay any amounts
payable pursuant to such settlement or judgment and such settlement or judgment
includes a complete release of the Indemnified Party from further liability and
has no other adverse effect on the Indemnified Party. The Indemnified Party
shall not agree to any settlement of, or the entry of any judgment arising from,
any such suit or proceeding without the prior written consent of the Shareholder
Representative, which shall not be unreasonably withheld or delayed.
(b) In order to seek indemnification under this Article VI, an Indemnified
Party shall give written notification (a "Claim Notice") to the Shareholder
Representative which contains (i) a description and the amount (the "Claimed
Amount") of any Damages incurred or reasonably expected to be incurred by the
Indemnified Party, (ii) a statement that the Indemnified Party is entitled to
indemnification under this Article VI for such Damages and a reasonable
explanation of the basis therefor, and (iii) a demand for payment (in the manner
provided in paragraph (c) below) in the amount of such Damages. If the
Indemnified Party is seeking to enforce such claim pursuant to the Escrow
Agreement, the Indemnified Party shall also provide a copy of the Claim Notice
to the Escrow Agent.
(c) Within twenty (20) business days after delivery of a Claim Notice, the
Shareholder Representative shall deliver to the Indemnified Party a written
response (the "Response") in which the Shareholder Representative shall: (i)
agree that the Indemnified Party is entitled to receive all of the Claimed
Amount (in which case the Response shall be accompanied by a payment by the
Shareholder Representative to the Indemnified Party of the Claimed Amount, by
check or by wire transfer; provided that if the Indemnified Party is seeking to
enforce such claim pursuant to the Escrow Agreement, the Shareholder
Representative and the Indemnified Party shall deliver to the Escrow Agent,
within three days following the delivery of
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the Response, a written notice executed by both parties instructing the Escrow
Agent to distribute to Engage such number of Escrow Shares as have an aggregate
Average Closing Price equal to the Claimed Amount), (ii) agree that the
Indemnified Party is entitled to receive part, but not all, of the Claimed
Amount (the "Agreed Amount") (in which case the Response shall be accompanied by
a payment to the Indemnified Party of the Agreed Amount, by check or by wire
transfer; provided that if the Indemnified Party is seeking to enforce such
claim pursuant to the Escrow Agreement, the Shareholder Representative and the
Indemnified Party shall deliver to the Escrow Agent, within three days following
the delivery of the Response, a written notice executed by both parties
instructing the Escrow Agent to distribute to Engage such number of Escrow
Shares as have an aggregate Average Closing Price equal to the Agreed Amount) or
(iii) dispute that the Indemnified Party is entitled to receive any of the
Claimed Amount. If the Shareholder Representative in the Response disputes its
liability for all or part of the Claimed Amount, the Shareholder Representative
and the Indemnified Party shall follow the procedures set forth in Section
6.6(d) for the resolution of such dispute (a "Dispute").
(d) During the 60-day period following the delivery of a Response that
reflects a Dispute, the Shareholder Representative and the Indemnified Party
shall use good faith efforts to resolve the Dispute. If the Dispute is not
resolved within such 60-day period, the Shareholder Representative and the
Indemnified Party shall submit the Dispute to arbitration as provided below.
Except with respect to an action seeking specific performance or another
equitable remedy, any dispute shall be settled by arbitration in accordance with
the commercial arbitration rules of the American Arbitration Association
("AAA"). The arbitration proceeding, including the rendering of an award shall
take place in Boston, Massachusetts and be administered by the AAA. The Parties
agree to act in good faith to mutually select an arbitrator. The decision of the
arbitrator shall be binding on the Parties or their successors and any judgment
rendered by such arbitrator may be enforced by any court of competent
jurisdiction. Each Party shall bear its own expenses in connection with such
arbitration unless otherwise ordered by the arbitrator. If the Indemnified Party
is seeking to enforce the claim that is the subject of the Dispute pursuant to
the Escrow Agreement, the Shareholder Representative and the Indemnified Party
shall deliver to the Escrow Agent, promptly following the resolution of the
Dispute (whether by mutual agreement, pursuant to arbitration, as a result of a
judicial decision or otherwise), a written notice executed by both parties
instructing the Escrow Agent as to what (if any) portion of the Escrow Shares
shall be distributed to Engage and/or the Company Shareholders (which notice
shall be consistent with the terms of the resolution of the Dispute).
(e) Notwithstanding the other provisions of this Section 6.6, if a third
party asserts (other than by means of a lawsuit) that an Indemnified Party is
liable to such third party for a monetary or other obligation which may
constitute or result in Damages for which such Indemnified Party may be entitled
to indemnification pursuant to this Article VI, and such Indemnified Party
reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) such Indemnified Party shall be entitled to satisfy such
obligation, without prior notice to or consent from the Shareholder
Representative, (ii) such Indemnified Party may subsequently make a claim for
indemnification in accordance with the provisions of this Article VI, and (iii)
such Indemnified Party shall be reimbursed, in accordance with the provisions of
this Article VI, for any such Damages for which it is entitled to
indemnification pursuant to this Article VI (subject to the right of the
Shareholder Representative to dispute the Indemnified
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Party's entitlement to indemnification, or the amount for which it is entitled
to indemnification, under the terms of this Article VI); provided, however, that
except with the consent of the Shareholder Representative, no settlement of any
such claim with third party claimants shall be determinative of the amount of
any claim against the Escrow Shares.
(f) The Shareholder Representative shall have full power and authority on
behalf of each indemnifying shareholder to take any and all actions on behalf
of, execute any and all instruments on behalf of, and execute or waive any and
all rights of, the Indemnifying Shareholders under this Article VI. The
Shareholder Representative shall have no liability to any beneficiary of the
Escrow or any Company Shareholder for any action taken or omitted as Shareholder
Representative pursuant to this Article VI.
(g) If the legal proceeding or written claim with respect to which an
Expected Claim Notice has been given is definitively withdrawn or resolved in
favor of the Indemnified Party, the Indemnified Party shall promptly so notify
the Shareholder Representative; and if the Indemnified Party has delivered a
copy of the Expected Claim Notice to the Escrow Agent and Escrow Shares have
been retained in Escrow after the Termination Date (as defined in the Escrow
Agreement) with respect to such Expected Claim Notice, the Shareholder
Representative and the Indemnified Party shall promptly deliver to the Escrow
Agent a written notice executed by both parties instructing the Escrow Agent to
distribute such retained Escrow Shares to the Indemnifying Shareholders in
accordance with the terms of the Escrow Agreement.
6.7 No Right of Contribution. No Company Shareholder shall have any right
of contribution against Engage, the Company, the Surviving Corporation or any of
Engage's Affiliates with respect to any breach by the Company of any of its
representations, warranties, covenants or agreements.
6.8 Shareholder Representative.
(a) The Shareholder Representative is hereby constituted and appointed as
agent for and on behalf of the Company Shareholders with respect to this Article
VI. The Shareholder Representative shall incur no liability to the Company
Shareholders with respect to any action taken or suffered by he, she or it in
reliance upon any note, direction, instruction, consent, statement or other
documents believed by he, she or it to be genuinely and duly authorized, nor for
other action or inaction except his, her or its own willful misconduct or gross
negligence. The Shareholder Representative may, in all questions arising under
this Agreement, rely on the advice of counsel and the Shareholder Representative
shall not be liable to the Company Shareholders for anything done, omitted or
suffered in good faith by the Shareholder Representative based on such advice.
(b) In the event of the death or permanent disability of the Shareholder
Representative, or its resignation as an Shareholder Representative, a successor
Shareholder Representative shall be elected by a majority vote of the Company
Shareholders, with each such Company Shareholder (or his, her or its successors
or assigns) to be given a vote equal to the number of votes represented by the
shares of stock of the Company held by such Indemnifying Shareholder immediately
prior to the Effective Time. Each successor Shareholder Representative
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shall have all of the power, authority, rights and privileges conferred by this
Agreement upon the original Shareholder Representative, and the term
"Shareholder Representative" as used herein shall be deemed to include successor
Shareholder Representative.
(c) The Shareholder Representative shall have full power and authority to
represent the Company Shareholders, and their successors, with respect to all
matters arising under this Article VI and all actions taken by any Shareholder
Representative hereunder shall be binding upon the Company Shareholders, and
their successors, as if expressly confirmed and ratified in writing by each of
them. Without limiting the generality of the foregoing, the Shareholder
Representative shall have full power and authority to interpret all of the terms
and provisions of this Article VI, to compromise any claims asserted hereunder
and to authorize any release of the Escrow Shares to be made with respect
thereto, on behalf of the Indemnifying Shareholders and their successors. All
actions to be taken by the Shareholder Representative hereunder shall be
evidenced by, and taken upon, the written direction of a majority thereof.
ARTICLE VII
TERMINATION
7.1 Termination of Agreement. The Parties may terminate this Agreement
prior to the Effective Time (whether before or after Requisite Shareholder
Approval), as provided below:
(a) the Parties may terminate this Agreement by mutual written consent;
(b) Engage may terminate this Agreement by giving written notice to the
Company in the event the Company is in breach of any representation, warranty or
covenant contained in this Agreement, and such breach, individually or in
combination with any other such breach, (i) would cause the conditions set forth
in clauses (c) or (d) of Section 5.2 not to be satisfied and (ii) is not cured
within 20 days following delivery by Engage to the Company of written notice of
such breach;
(c) the Company may terminate this Agreement by giving written notice to
Engage in the event Engage or Transitory Subsidiary is in breach of any
representation, warranty or covenant contained in this Agreement, and such
breach, individually or in combination with any other such breach, (i) would
cause the conditions set forth in clauses (c) or (d) of Section 5.3 not to be
satisfied and (ii) is not cured within 20 days following delivery by the Company
to Engage of written notice of such breach;
(d) any Party may terminate this Agreement by giving written notice to the
other Parties at any time after the Company Shareholders have voted on whether
to approve this Agreement and the Merger in the event this Agreement and the
Merger failed to receive the Requisite Shareholder Approval;
(e) Engage may terminate this Agreement by giving written notice to the
Company if the Closing shall not have occurred on or before October 31, 2000 in
the event that the Section 3(a)(10) Applications have been approved or November
30, 2000 if Engage were unable to
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receive approval of the Section 3(a)(10) Applications and filed Form S-4
thereafter, by reason of the failure of any condition precedent under Section
5.1 or 5.2 hereof (unless the failure results primarily from a breach by Engage
or Transitory Subsidiary of any representation, warranty or covenant contained
in this Agreement); or
(f) the Company may terminate this Agreement by giving written notice to
Engage and Transitory Subsidiary if the Closing shall not have occurred on or
before October 31, 2000 in the event that the Section 3(a)(10) Applications have
been approved or November 30, 2000 if Engage were unable to receive approval of
the Section 3(a)(10) Applications and filed Form S-4 thereafter, by reason of
the failure of any condition precedent under Section 5.1 or 5.3 hereof (unless
the failure results primarily from a breach by the Company of any
representation, warranty or covenant contained in this Agreement).
ARTICLE VIII
DEFINITIONS
8.1 DEFINITIONS.
"AAA" has the meaning set forth in Section 6.6(d).
"Adobe Security Agreements" has the meaning set forth in Section 4.4.
"Affiliate" has the meaning set forth in Section 2.15.
"Affiliated Group" has the meaning set forth in Section 2.9.
"Agreed Amount" has the meaning set forth in Section 6.6.
"Agreement" means this Agreement and Plan of Merger by and among the
Parties.
"Average Closing Price" means the average of the last reported sale price
of Engage Common Stock on the Nasdaq National Market for the fifteen consecutive
full trading days ending three days prior to the Closing Date.
"Cause" has the meaning set forth in Section 4.13.
"CERCLA" has the meaning set forth in Section 2.22.
"Certificate of Merger" has the meaning set forth in Section 1.1.
"Claim Notice" has the meaning set forth in Section 6.6.
"Claimed Amount" has the meaning set forth in Section 6.6.
"Closing" has the meaning set forth in Section 1.2.
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"Closing Date" has the meaning set forth in Section 1.2.
"Closing Shares" means those Merger Shares, other than the Escrow Shares,
to which the Company Shareholders are entitled upon completion of the Merger.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means MediaBridge Technologies, Inc., a Delaware corporation.
"Company Common Stock" means the common stock of the Company, par value
$0.001 per share.
"Company Material Adverse Effect" has the meaning set forth in Section 2.1.
"Company Option" has the meaning set forth in Section 1.10.
"Company Option Plans" mean the Company's 1994 Stock Option Plan and the
1997 Stock Option Plan.
"Company Shareholders" means the holders of record of shares of Company
Common Stock or any series of Company Preferred Stock immediately prior to the
Effective Time.
"Company Shareholders Meeting" has the meaning set forth in Section 2.29.
"Company Shares" has the meaning set forth in Section 1.9.
"Consenting Option Holder" means a holder of a Company Option that has
executed the Employee Agreement.
"Contract" means any loan or credit agreement, note, bond, indenture,
mortgage, deed of trust, lease, franchise, permit, authorization, license,
contract, instrument, benefit plan or practice or other agreement, arrangement,
obligation, instrument or commitment of any nature, whether written or oral.
"Controlling Party" has the meaning set forth in Section 6.6.
"Conversion Ratio" has the meaning set forth in Section 1.5.
"Customer Deliverables" has the meaning set forth in Section 2.13.
"Damages" has the meaning set forth in Section 6.3.
"DGCL" means the Delaware General Corporation Law as in effect at the
relevant time.
"Dispute" has the meaning set forth in Section 6.6.
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"Disclosure Statement" has the meaning set forth in Section 4.3.
"Employee Agreements" has the meaning set forth in Section 4.4.
"Employee Benefit Plan" has the meaning set forth in Section 2.21.
"Engage" means Engage, Inc., a Delaware corporation.
"Engage Certificate" has the meaning set forth in Section 5.3.
"Engage Disclosure Schedule" has the meaning set forth in Article III.
"Engage Material Adverse Effect" has the meaning set forth in Section 3.1.
"Engage Option" has the meaning set forth in Section 1.10.
"Escrow" has the meaning set forth in Section 1.6.
"Escrow Agent" has the meaning set forth in Section 1.3.
"Escrow Agreement" has the meaning set forth in Section 1.3.
"Escrow Shares" has the meaning set forth in Section 1.6.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Exchange Agent" has the meaning set forth in Section 1.3.
"Expected Claim Notice" has the meaning set forth in Section 6.1.
"Financial Statement" has the meaning set forth in Section 2.6.
"Form S-4" has the meaning set forth in Section 4.9.
"GAAP" has the meaning set forth in Section 2.6.
"Governmental Entity" has the meaning set forth in Section 2.4.
"Gross Merger Consideration" has the meaning set forth in Section 1.5.
"HSR Act" has the meaning set forth in Section 2.4.
"Information Statement" has the meaning set forth in Section 2.29.
"Indemnified Party" has the meaning set forth in Section 6.2.
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"Internal Systems" has the meaning set forth in Section 2.13.
"Intellectual Property" has the meaning set forth in Section 2.13.
"Legal Proceeding" has the meaning set forth in Section 2.19.
"Liquidation Preference Shares" has the meaning set forth in Section 1.5.
"Lock-Up Agreement" has the meaning set forth in Section 4.4.
"Merger" has the meaning set forth in Section 1.1.
"Merger Shares" means the shares of Engage Common Stock comprising the Net
Merger Consideration.
"Most Recent Balance Sheet" has the meaning set forth in Section 2.6.
"Net Merger Consideration" has the meaning set forth in Section 1.5.
"Noncontrolling Party" has the meaning set forth in Section 6.6.
"Ordinary Course of Business" means the ordinary course of the Company's
business, consistent with past custom and practice (including with respect to
frequency and amount).
"Parties" means Engage, the Company, Transitory Subsidiary and the
Shareholder Representative.
"Permits" has the meaning set forth in Section 2.25.
"Reasonable Best Efforts" has the meaning set forth in Section 4.1.
"Requisite Shareholder Approval" has the meaning set forth in Section 2.3.
"Requisite Regulatory Approvals" has the meaning set forth in Section 5.1.
"Response" has the meaning set forth in Section 6.6.
"SEC" means the United States Securities and Exchange Commission.
"Section 3(a)(10) Applications" has the meaning set forth in Section 4.9.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
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"Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge or other lien (whether arising by contract or by operation
of law), other than (i) mechanic's, materialmen's, and similar liens, (ii) liens
arising under worker's compensation, unemployment insurance, social security,
retirement, and similar legislation, and (iii) liens on goods in transit
incurred pursuant to documentary letters of credit, in each case arising in the
Ordinary Course of Business of the Company and not material to the Company.
"Series A Preferred Stock" means the Series A Preferred Stock of the
Company, par value $0.001 per share.
"Series B Preferred Stock" means the Series B Preferred Stock of the
Company, par value $0.001 per share.
"Series C Preferred Stock" means the Series C Preferred Stock of the
Company, par value $0.001 per share.
"Series C Warrants" has the meaning set forth in Section 5.2.
"Series D Preferred Stock" means the Series D Preferred Stock of the
Company, par value $0.001 per share.
"Shareholder Representative" means Standish H. O'Grady.
"Shareholder Support Agreement" means those certain agreements executed as
of the date hereof providing that each Company Shareholder that is a party to
such agreement agrees (i) to vote all Company Shares that are beneficially owned
by him, her or it in favor of the adoption of this Agreement and the approval of
the Merger, (ii) not to vote any Company Shares in favor of any other
acquisition (whether by way of merger, consolidation, share exchange, stock
purchase or asset purchase) of all or a majority of the outstanding capital
stock or assets of the Company, (iii) otherwise to use his, her or its
Reasonable Best Efforts to obtain the Requisite Shareholder Approval and (iv) to
join in the indemnification obligations of the Company Shareholders under
Article VI hereof.
"Software" has the meaning set forth in Section 2.13.
"Subsidiary" has the meaning set forth in Section 2.5.
"Surviving Corporation" has the meaning set forth in Section 1.1.
"Transitory Subsidiary" means Engage Subsidiary, Inc., a Delaware
corporation.
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ARTICLE IX
MISCELLANEOUS
9.1 Press Releases and Announcements. No Party shall issue any press
release or public announcement relating to the subject matter of this Agreement
without the prior written approval of the other Parties; provided, however, that
any Party may make any public disclosure it believes in good faith is required
by applicable law, regulation or stock market rule (in which case the disclosing
Party shall use Reasonable Best Efforts to advise the other Parties and provide
them with a copy of the proposed disclosure prior to making the disclosure).
9.2 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns; provided, that, (a) the provisions of Article
I concerning the issuance of the Merger Shares are intended for the benefit of
and shall be enforceable by the Company Shareholders and their heirs and
representatives, (b) the provisions of Section 1.10 are intended for the benefit
of and shall be enforceable by the holders of Company Options and their heirs
and representatives, (c) the provisions of Section 4.18 are intended for the
benefit of and shall be enforceable by the Indemnified Executives and their
heirs and representatives, and (d) the provisions of Sections 4.16 and 4.17 are
intended for the benefit of and shall be enforceable by the employees of the
Company and its Subsidiaries and their heirs and representatives.
9.3 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements or representations by or among the Parties,
written or oral, with respect to the subject matter hereof.
9.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Parties; provided that Transitory Subsidiary may assign its rights,
interests and obligations hereunder to an Affiliate of Engage.
9.5 Counterparts and Facsimile Signature. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. The delivery of a
signature page of this Agreement by one Party to the each of the other Parties
via facsimile transmission shall constitute the execution and delivery of this
Agreement by the transmitting Party.
9.6 Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.7 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly delivered four business
days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or one business day after it is sent for
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next business day delivery via a reputable nationwide overnight courier service,
in each case to the intended recipient as set forth below:
If to Engage or Transitory Subsidiary:
Engage, Inc.
100 Brickstone Square, 1st Floor
Andover, MA 01810
Attention: General Counsel
Telephone: (978) 684-3884
Telecopy: (978) 684-3877
With a copy to:
Nutter, McClennen & Fish, LLP
One International Place
Boston, MA 02110-2699
Attention: Constantine Alexander, Esquire
Michael K. Krebs, Esquire
Telephone: (617) 439-2000
Telecopy: (617) 310-9000
If to the Company:
MediaBridge Technologies, Inc.
100 Nagog Park
Acton, MA 01720-3428
Attention: Robert Angelo
Telephone: (978) 795-7000
Telecopy: (978) 795-7126
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: John A. Burgess, Esquire
Telephone: (617) 526-6000
Telecopy: (617) 526-5000
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If to the Shareholder Representative:
Standish H. O'Grady
c/o H & Q Venture Associates LLC
One Bush Street
San Francisco, CA 94104
Telephone: (415) 591-7701
Telecopy: (415) 399-4529
Any Party may give any notice, request, demand, claim or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
9.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Massachusetts, and to
the extent applicable, the DGCL, in each case, without giving effect to any
choice or conflict of law provision or rule (whether of the Commonwealth of
Massachusetts or any other jurisdiction) that would cause the application of
laws of any jurisdictions other than those of the State of Delaware.
9.9 Amendments and Waivers. The Parties may mutually amend any provision of
this Agreement at any time prior to the Closing Date; provided, however, that
any amendment effected subsequent to the Requisite Shareholder Approval shall be
subject to any restrictions contained in the DGCL. No amendment of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by Engage and the Company, and no amendment of any provision of Article VI of
this Agreement shall be valid unless the same shall also be by the Shareholder
Representative. No waiver of any right or remedy hereunder shall be valid unless
the same shall be in writing and signed by the Party giving such waiver. No
waiver by any Party with respect to any default, misrepresentation or breach of
warranty or covenant hereunder shall be deemed to extend to any prior or
subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
9.10 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to limit the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable
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and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as so
modified.
9.11 Construction.
(a) The language used in this Agreement shall be deemed to be the language
chosen by the Parties to express their mutual intent, and no rule of strict
construction shall be applied against any Party.
(b) Any reference to any federal, state, local or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
(c) The Company shall be deemed to have delivered documents or other
materials to Engage pursuant to this Agreement if the Company has delivered such
documents or materials to the authorized representatives of Engage.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
ENGAGE, INC.
By: /s/ Michael Baker
---------------------------
Its: V.P. and General Counsel
ENGAGE SUBSIDIARY, INC.
By: /s/ Michael Baker
---------------------------
Its: Secretary
MEDIABRIDGE TECHNOLOGIES, INC.
By: /s/ Robert F. Angelo
---------------------------
Its: CEO
SHAREHOLDER REPRESENTATIVE ACKNOWLEDGMENT
The undersigned is executing this Agreement solely for the purpose of
acknowledging its agreement to serve as Shareholder Representative pursuant to
the terms more fully set forth herein.
/s/ Standish H. O'Grady
---------------------------
Standish H. O'Grady
60
