<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 14, 1999.
yesmail.com, inc.
(Exact name of registrant as specified in its charter)
DELAWARE 00026871 36-4020286
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
565 Lakeview Parkway, Suite 135
Vernon Hills, Illinois 60061
--------------------------------------
Address of principal executive offices
(847) 918-9292
--------------------------------------
Registrant's telephone number, including area code
-------------------------------------------------------------------------------
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 14, 1999, CMGI, Inc., a Delaware corporation ("CMGI"),
agreed to acquire yesmail.com, inc., a Delaware corporation ("yesmail"), through
a merger of Mars Acquisition, Inc., a Delaware corporation and a wholly owned
subsidiary of CMGI (the "Transitory Subsidiary") with and into yesmail, as a
result of which the stockholders of yesmail will become stockholders of CMGI.
Under the terms of the agreement, CMGI will issue .1252 shares of common stock
for every share of yesmail common stock held on the closing date of the
transaction. The close of the merger, expected in March 2000, is subject to
customary conditions, including formal approval by yesmail stockholders. A copy
of the Agreement and Plan of Merger and Reorganization, by and among CMGI,
yesmail and Transitory Subsidiary, dated December 14, 1999, is attached hereto
as Exhibit 2.1.
In connection with the merger, CMGI and yesmail also entered into a
Stock Option Agreement, whereby yesmail granted CMGI an option to purchase up to
4,044,400 shares of common stock at a cash purchase price equal to $25.76 per
share; provided, however, that the number of shares issuable to CMGI shall not
exceed 19.9% of the outstanding shares of yesmail common stock. The option may
be exercised by CMGI in the event that the merger is terminated under certain
circumstances. A copy of the Stock Option Agreement is attached hereto as
Exhibit 2.2.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) It is impracticable for the registrant to provide the required
financial statements for the business acquired at the time of
filing this report, but the registrant will file such required
financial statements, if required pursuant to this item and Rule
3-05(b) of Regulation S-X, by amendment to this report as soon as
practicable, but not later than sixty (60) days after this report
was required to be filed initially.
(c) Exhibits.
2.1 Agreement and Plan of Merger and Reorganization by and among CMGI,
Inc., Mars Acquisition, Inc. and yesmail.com, inc. dated December
14, 1999.
-2-
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
yesmail.com, inc.
/s/ David M. Tolmie
----------------------------------------
David M. Tolmie, Chief Executive Officer
Date: December 21, 1999
-3-
<PAGE> 4
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- ------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Merger and Reorganization by and among
CMGI, Inc., Mars Acquisition, Inc. and yesmail.com, inc.
dated December 14, 1999.
</TABLE>
-4-
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
by and among
CMGI, Inc.,
Mars Acquisition, Inc.
and
yesmail.com, inc.
Dated as of December 14, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I THE MERGER...................................................................................2
1.1 Effective Time of the Merger.................................................................2
1.2 Closing......................................................................................2
1.3 Effects of the Merger........................................................................2
1.4 Directors....................................................................................2
ARTICLE II CONVERSION OF SECURITIES....................................................................3
2.1 Conversion of Capital Stock..................................................................3
2.2 Exchange of Certificates.....................................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................7
3.1 Organization, Standing and Power; Subsidiaries...............................................7
3.2 Capitalization...............................................................................8
3.3 Authority; No Conflict; Required Filings and Consents........................................9
3.4 SEC Filings; Financial Statements...........................................................11
3.5 No Undisclosed Liabilities..................................................................11
3.6 Absence of Certain Changes or Events........................................................12
3.7 Taxes.......................................................................................12
3.8 Owned and Leased Real Properties............................................................13
3.9 Intellectual Property.......................................................................14
3.10 Agreements, Contracts and Commitments.......................................................15
3.11 Litigation..................................................................................15
3.12 Environmental Matters.......................................................................16
3.13 Employee Benefit Plans......................................................................17
3.14 Compliance With Laws........................................................................19
3.15 Permits.....................................................................................19
3.16 Registration Statement; Proxy Statement/Prospectus..........................................19
3.17 Labor Matters...............................................................................20
3.18 Insurance...................................................................................20
3.19 Business Activity Restrictions..............................................................20
3.20 Year 2000 Compliance........................................................................20
3.21 Assets......................................................................................21
3.22 Opinion of Financial Advisor................................................................22
3.23 Section 203 of the DGCL Not Applicable......................................................22
3.24 Tax Matters.................................................................................22
3.25 Transactions with Affiliates................................................................22
3.26 Brokers; Schedule of Fees and Expenses......................................................23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE TRANSITORY SUBSIDIARY..................23
4.1 Organization, Standing and Power............................................................23
4.2 Capitalization..............................................................................23
4.3 Authority; No Conflict; Required Filings and Consents.......................................24
4.4 SEC Filings; Financial Statements...........................................................25
4.5 Absence of Certain Changes or Events........................................................26
4.6 Tax Matters.................................................................................26
4.7 Registration Statement; Proxy Statement/Prospectus..........................................26
4.8 Litigation..................................................................................26
4.9 Operations of the Transitory Subsidiary.....................................................26
ARTICLE V CONDUCT OF BUSINESS.........................................................................26
5.1 Covenants of the Company....................................................................26
5.2 Cooperation.................................................................................29
</TABLE>
ii
<PAGE> 3
<TABLE>
<S> <C> <C>
5.3 Confidentiality.............................................................................30
ARTICLE VI ADDITIONAL AGREEMENTS......................................................................30
6.1 No Solicitation.............................................................................30
6.2 Proxy Statement/Prospectus; Registration Statement..........................................31
6.3 Nasdaq Quotation............................................................................32
6.4 Access to Information.......................................................................32
6.5 Stockholders Meeting........................................................................33
6.6 Legal Conditions to the Merger..............................................................34
6.7 Public Disclosure...........................................................................35
6.8 Tax-Free Reorganization.....................................................................35
6.9 Affiliate Agreements........................................................................35
6.10 Nasdaq National Market Listing..............................................................35
6.11 Company Stock Plans and the Company Warrants................................................36
6.12 Stockholder Litigation......................................................................37
6.13 Indemnification.............................................................................37
6.14 Termination of Company 401(k) Plan..........................................................38
ARTICLE VII CONDITIONS TO MERGER......................................................................38
7.1 Conditions to Each Party's Obligation To Effect the Merger..................................38
7.2 Additional Conditions to Obligations of the Buyer and the Transitory Subsidiary.............39
7.3 Additional Conditions to Obligations of the Company.........................................39
ARTICLE VIII TERMINATION AND AMENDMENT................................................................40
8.1 Termination.................................................................................40
8.2 Effect of Termination.......................................................................42
8.3 Fees and Expenses...........................................................................42
8.4 Amendment...................................................................................43
8.5 Extension; Waiver...........................................................................44
ARTICLE IX MISCELLANEOUS..............................................................................44
9.1 Nonsurvival of Representations and Warranties...............................................44
9.2 Notices.....................................................................................44
9.3 Entire Agreement............................................................................45
9.4 No Third Party Beneficiaries................................................................45
9.5 Assignment..................................................................................45
9.6 Severability................................................................................46
9.7 Counterparts and Signature..................................................................46
9.8 Interpretation..............................................................................46
9.9 Governing Law...............................................................................46
9.10 Remedies....................................................................................47
9.11 Waiver of Jury Trial........................................................................47
9.12 Forum.......................................................................................47
</TABLE>
EXHIBITS
Exhibit A Form of Company Stock Option Agreement
Exhibit B Form of Stockholder Agreement
Exhibit C Forms of Stockholder Lock-up Agreements
Exhibit D Form of Company Affiliate Agreement
iii
<PAGE> 4
TABLES OF DEFINED TERMS
<TABLE>
<CAPTION>
Cross Reference
Terms in Agreement
- ----- ---------------
<S> <C>
Acquisition Proposal Section 6.1(a)
Affiliate Section 6.9
Affiliate Agreement Section 6.9
Agreement Preamble
Alternative Transaction Section 8.3(e)
Antitrust Laws Section 6.6(b)
Antitrust Order Section 6.6(b)
Buyer Preamble
Buyer Balance Sheet Section 4.4(b)
Buyer Common Stock Section 2.1(c)
Buyer Disclosure Schedule Article IV
Buyer Material Adverse Effect Section 4.1
Buyer Preferred Stock Section 4.2
Buyer SEC Reports Section 4.4(a)
Certificates Section 2.2(b)
Closing Section 1.2
Closing Date Section 1.2
Code Preamble
Company Preamble
Company Balance Sheet Section 3.4(b)
Company Common Stock Section 2.1(b)
Company Disclosure Schedule Article III
Company Employee Plans Section 3.13(a)
Company Intellectual Property Rights Section 3.9(a)
Company Leases Section 3.8(b)
Company Material Adverse Effect Section 3.1
Company Material Contracts Section 3.10
Company Meeting Section 3.16
Company Permits Section 3.15
</TABLE>
iv
<PAGE> 5
<TABLE>
<S> <C>
Company Preferred Stock Section 3.2(a)
Company Products Section 3.20(b)
Company SEC Reports Section 3.4(a)
Company Stock Options Section 3.2(b)
Company Stock Option Agreement Preamble
Company Stock Plans Section 3.2(b)
Company Systems Section 3.20(b)
Company Voting Proposal Section 6.5(a)
Company Warrants Section 3.2(b)
Confidentiality Agreement Section 5.3
Constituent Corporations Section 1.3
DGCL Section 1.1
Effective Time Section 1.1
Employee Benefit Plans Section 3.13(a)
Environmental Law Section 3.12(b)
ERISA Affiliate Section 3.13(a)
ERISA Section 3.13(a)
Exchange Agent Section 2.2(a)
Exchange Fund Section 2.2(a)
Exchange Act Section 3.3(c)
Exchange Ratio Section 2.1(c)
Governmental Entity Section 3.3(c)
Hazardous Substance Section 3.12(c)
HSR Act Section 3.3(c)
Indemnified Parties Section 6.13
Liens Section 3.22
Lock-up Agreement Preamble
Merger Preamble
Outside Date Section 8.1(b)
Proxy Statement Section 3.16
Registration Statement Section 3.16
Rule 145 Section 6.10
</TABLE>
v
<PAGE> 6
<TABLE>
<S> <C>
SEC Section 3.3(c)
Securities Act Section 3.4(a)
Stockholder Agreements Preamble
Subsidiary Section 3.1
Superior Proposal Section 6.1(a)
Surviving Corporation Section 1.3
Tax Returns Section 3.7(a)
Taxes Section 3.7(a)
Third Party Section 8.3(e)
Transitory Subsidiary Preamble
Year 2000 Compliant Section 3.20
</TABLE>
vi
<PAGE> 7
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this
"Agreement"), dated as of December 14, 1999, is by and among CMGI, Inc., a
Delaware corporation (the "Buyer"), Mars Acquisition, Inc., a Delaware
corporation and a wholly owned subsidiary of Buyer (the "Transitory
Subsidiary"), and yesmail.com, inc., a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of the Buyer and the Company have
approved and declared advisable this Agreement and the Merger (as defined
below);
WHEREAS, the combination of the Buyer and the Company shall be effected
by the terms of this Agreement through a merger of the Transitory Subsidiary
into the Company, as a result of which the stockholders of the Company will
become stockholders of the Buyer (the "Merger");
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to the Buyer's willingness to enter into this
Agreement, the Company has entered into a Stock Option Agreement dated as of the
date of this Agreement and attached hereto as Exhibit A (the "Company Stock
Option Agreement"), pursuant to which the Company granted the Buyer an option to
purchase shares of common stock of the Company under certain circumstances;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to the Buyer's willingness to enter into this
Agreement, certain stockholders of the Company have entered into a Stockholder
Agreement dated as of the date of this Agreement in the form attached as Exhibit
B (the "Stockholder Agreement"), pursuant to which such stockholders have
agreed, inter alia, to give the Buyer a proxy to vote all of the shares of
capital stock of the Company that such stockholders own for certain limited
purposes;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to the Buyer's willingness to enter into this
Agreement, certain stockholders and employees of the Company have entered into
Stockholder Lock-Up Agreements in the forms attached hereto as Exhibits C-1, C-2
and C-3 (the "Lock-Up Agreements"), pursuant to which such parties have agreed
to certain restrictions relating to the disposition of Buyer Common Stock
following the Effective Time (as defined in Section 1.1); and
WHEREAS, for U.S. federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
Buyer, the Transitory Subsidiary and the Company agree as follows:
<PAGE> 8
ARTICLE I
THE MERGER
1.1 Effective Time of the Merger. Subject to the provisions of this
Agreement, prior to the Closing (as defined in Section 1.2), the Buyer shall
prepare, and on the Closing Date (as defined in Section 1.2) or as soon as
practicable thereafter the Buyer shall cause to be filed with the Secretary of
State of the State of Delaware, a certificate of merger (the "Certificate of
Merger") in such form as is required by, and executed by the Surviving
Corporation (as defined in Section 1.3) in accordance with, the relevant
provisions of the General Corporation Law of the State of Delaware ("DGCL") and
shall make all other filings or recordings required under the DGCL. The Merger
shall become effective upon the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware or at such later time as is
established by the Buyer and the Company and set forth in the Certificate of
Merger (the "Effective Time").
1.2 Closing. The closing of the Merger (the "Closing") shall take
place at 10:00 a.m., Boston time, on a date to be specified by the Buyer and the
Company (the "Closing Date"), which shall be no later than the second business
day after satisfaction or waiver of the conditions set forth in Article VII
(other than delivery of items to be delivered at the Closing and other than
satisfaction of those conditions that by their nature are to be satisfied at the
Closing, but subject to the delivery of such items and the satisfaction or
waiver of such conditions at the Closing), at the offices of Hale and Dorr LLP,
60 State Street, Boston, Massachusetts, unless another date, place or time is
agreed to in writing by the Buyer and the Company.
1.3 Effects of the Merger. At the Effective Time (i) the separate
existence of the Transitory Subsidiary shall cease and the Transitory Subsidiary
shall be merged with and into the Company (the Transitory Subsidiary and the
Company are sometimes referred to below as the "Constituent Corporations" and
the Company following the Merger is sometimes referred to below as the
"Surviving Corporation"), (ii) the Certificate of Incorporation of the Company
shall be amended so that Article FOURTH of such Certificate of Incorporation
reads in its entirety as follows: "The total number of shares of all classes of
stock which the Corporation shall have authority to issue is 1,000, all of which
shall consist of common stock, $.01 par value per share," and, as so amended,
such Certificate of Incorporation shall be the Certificate of Incorporation of
the Surviving Corporation, and (iii) the By-laws of the Transitory Subsidiary as
in effect immediately prior to the Effective Time shall be the By-laws of the
Surviving Corporation. The Merger shall have the effects set forth in Section
259 of the DGCL.
1.4 Directors. The directors of the Transitory Subsidiary immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation.
2
<PAGE> 9
ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
the capital stock of the Company or capital stock of the Transitory Subsidiary:
(a) Capital Stock of the Transitory Subsidiary. Each
issued and outstanding share of the capital stock of the Transitory Subsidiary
shall be converted into and become one fully paid and nonassessable share of
common stock, $.01 par value per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Buyer-Owned Stock.
All shares of common stock, $.0001 par value per share, of the Company ("Company
Common Stock") that are owned by the Company and any shares of Company Common
Stock owned by the Buyer or the Transitory Subsidiary shall be canceled and
shall cease to exist and no stock of the Buyer or other consideration shall be
delivered in exchange therefor.
(c) Exchange Ratio for Company Common Stock. Subject to
Section 2.2, each share of Company Common Stock (other than shares to be
canceled in accordance with Section 2.1(b)) issued and outstanding immediately
before the Effective Time shall be automatically converted into the right to
receive 0.1252 shares (the "Exchange Ratio ") of common stock, $.01 par value
per share, of the Buyer ("Buyer Common Stock"). As of the Effective Time, all
such shares of Company Common Stock shall no longer be outstanding and shall
automatically be canceled, and each holder of a certificate representing any
such shares of Company Common Stock shall cease to have any rights with respect
thereto, except the right to receive the shares of Buyer Common Stock and any
cash in lieu of fractional shares of Buyer Common Stock to be issued or paid in
consideration therefor upon surrender of such certificate in accordance with
Section 2.2, without interest.
(d) Adjustments to Exchange Ratio. The Exchange Ratio
shall be adjusted to reflect fully the effect of any reclassification, stock
split, reverse split, stock dividend (including any dividend or distribution of
securities convertible into Buyer Common Stock or Company Common Stock),
reorganization, recapitalization or other like change with respect to Buyer
Common Stock or Company Common Stock occurring after the date hereof and prior
to the Effective Time.
(e) Unvested Stock. At the Effective Time, any unvested
shares of Company Common Stock awarded to employees, directors or consultants
pursuant to any of the Company's plans or arrangements and outstanding
immediately prior to the Effective Time shall be converted to unvested shares of
Buyer Common Stock in accordance with the Exchange Ratio and shall remain
subject to the same terms, restrictions and vesting schedule (including
acceleration provisions) as in effect immediately prior to the Effective Time,
except as otherwise agreed by Buyer and the holder thereof. All outstanding
rights which the Company may hold immediately prior to the Effective Time to
repurchase unvested shares of Company Common Stock shall be assigned to the
Buyer in the Merger and shall thereafter be exercisable by Buyer
3
<PAGE> 10
upon the same terms and conditions in effect immediately prior to the Effective
Time, except that the shares purchasable pursuant to such rights and the
purchase price payable per share shall be adjusted to reflect the Exchange
Ratio. The Buyer shall take all steps necessary to cause the foregoing
provisions of this Section 2.1(e) to occur.
(f) Treatment of Company Options and Company Warrants.
Outstanding Company Stock Options and Company Warrants (in each case as defined
in Section 3.2(b)) shall be treated following the Effective Time in the manner
set forth in Section 6.11.
2.2 Exchange of Certificates. The procedures for exchanging
outstanding shares of Company Common Stock for Buyer Common Stock pursuant to
the Merger are as follows:
(a) Exchange Agent. As of the Effective Time, the Buyer
shall deposit with a bank or trust company designated by the Buyer (the
"Exchange Agent"), for the benefit of the holders of shares of the Company
Common Stock, for exchange in accordance with this Section 2.2, through the
Exchange Agent, (i) certificates representing the shares of Buyer Common Stock
(such shares of Buyer Common Stock, together with any dividends or distributions
with respect thereto, being hereinafter referred to as the "Exchange Fund")
issuable pursuant to Section 2.1 in exchange for outstanding shares of the
Company Common Stock, (ii) cash in an amount sufficient to make payments
required pursuant to Section 2.2(e), and (iii) any dividends or distributions to
which holders of Certificates (as defined below) may be entitled pursuant to
Section 2.2(c)
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, the Exchange Agent shall mail to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of the Company Common Stock (the
"Certificates") whose shares were converted pursuant to Section 2.1 into the
right to receive shares of Buyer Common Stock (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as the Buyer may
reasonably specify) and (ii) instructions for effecting the surrender of the
Certificates in exchange for certificates representing shares of Buyer Common
Stock (plus cash in lieu of fractional shares, if any, of Buyer Common Stock and
any dividends or distributions as provided below). Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by the Buyer, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of Buyer Common Stock which such holder has the right to receive pursuant
to the provisions of this Article II with respect to the shares of Company
Common Stock represented by such Certificate plus cash in lieu of fractional
shares pursuant to Section 2.2(e) and any dividends or distributions pursuant to
Section 2.2(c), and the Certificate so surrendered shall immediately be
canceled. In the event of a transfer of ownership of Company Common Stock which
is not registered in the transfer records of the Company, a certificate
representing the proper number of shares of Buyer Common Stock plus cash in lieu
of fractional shares pursuant to Section 2.2(e) and any dividends
4
<PAGE> 11
or distributions pursuant to Section 2.2(c) may be issued and paid to a person
other than the person in whose name the Certificate so surrender is registered,
if such Certificate is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the certificate representing shares of Buyer Common Stock plus cash in
lieu of fractional shares pursuant to Section 2.2(e) and any dividends or
distributions pursuant to Section 2.2(c) as contemplated by this Section 2.2.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Buyer Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate and no cash payment in
lieu of fractional shares shall be paid to any such holder pursuant to Section
2.2(e) until the holder of record of such Certificate shall surrender such
Certificate as contemplated by Section 2.2(b). Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
issued and paid to the record holder of the Certificate, (i) certificates
representing whole shares of Buyer Common Stock issued in exchange therefor,
without interest, (ii) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of Buyer Common Stock to which such holder
is entitled pursuant to Section 2.2(e) and the amount of dividends or other
distributions with a record date after the Effective Time previously paid with
respect to such whole shares of Buyer Common Stock, and (iii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Buyer Common Stock.
(d) No Further Ownership Rights in Company Common Stock.
All shares of Buyer Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash or other
distributions paid pursuant to Sections 2.2(c) or 2.2(e)) shall be deemed to
have been issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and from and after the Effective Time there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this Article
II.
(e) No Fractional Shares. No certificate or scrip
representing fractional shares of Buyer Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any other rights of a stockholder of
the Buyer. Notwithstanding any other provision of this Agreement, each holder of
shares of Company Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Buyer Common
Stock (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
such fractional part of a share of Buyer Common Stock multiplied by the average
of the last reported sales prices of the Buyer Common Stock on the Nasdaq
5
<PAGE> 12
National Market during the ten (10) consecutive trading days ending on and
including the last trading day prior to the Effective Time.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of the Certificates for
180 days after the Effective Time shall be delivered to the Buyer, upon demand,
and any holder of the Certificates who has not previously complied with this
Section 2.2 shall thereafter look only to the Buyer, for payment of its claim
for Buyer Common Stock, any cash in lieu of fractional shares of Buyer Common
Stock and any dividends or distributions with respect to Buyer Common Stock.
(g) No Liability. To the extent permitted by applicable
law, none of the Buyer, the Transitory Subsidiary, the Company, the Surviving
Corporation or the Exchange Agent shall be liable to any holder of shares of
Company Common Stock or Buyer Common Stock, as the case may be, for such shares
(or dividends or distributions with respect thereto) delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificate shall not have been surrendered prior to one year after the
Effective Time (or immediately prior to such earlier date on which any shares of
Buyer Common Stock, and any cash payable to the holder of such Certificate
pursuant to this Article II or any dividends or distributions payable to the
holder of such Certificate would otherwise escheat to or become the property of
any Governmental Entity (as defined in Section 3.3(c))), any such shares of
Buyer Common Stock or cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(h) Withholding Rights. Each of the Buyer and the
Surviving Corporation shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as it is required to deduct and
withhold with respect to the making of such payment under the Code, or any other
applicable provision of law. To the extent that amounts are so withheld by the
Surviving Corporation or the Buyer, as the case may be, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which such deduction
and withholding was made by the Surviving Corporation or the Buyer, as the case
may be.
(i) Lost Certificates. If 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 and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Buyer Common Stock and any cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of Buyer Common Stock
deliverable in respect thereof pursuant to this Agreement.
6
<PAGE> 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer and the Transitory
Subsidiary that the statements contained in this Article III are true and
correct, except as set forth herein or in the disclosure schedule delivered by
the Company to the Buyer on or before the date of this Agreement (the "Company
Disclosure Schedule").
3.1 Organization, Standing and Power; Subsidiaries.
(a) Each of the Company and its Subsidiaries (as defined
below) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, has all requisite
corporate power and authority to own, lease and operate its properties and
assets and to carry on its business as now being conducted and as proposed to be
conducted, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the failure to be so
qualified, individually or in the aggregate, would be reasonably likely to have
a material adverse effect on the business, properties, financial condition,
results of operations or prospects of the Company and its Subsidiaries, taken as
a whole, or to have a material adverse effect on the ability of the Company to
consummate the transactions contemplated by this Agreement, the Stockholder
Agreement or the Company Stock Option Agreement other than any effect (a)
resulting from or arising out of the public announcement of this Agreement or
any of the transactions contemplated hereby, (b) attributable to any legal
action or proceeding brought by or on behalf of stockholders of the Company
alleging that the Board of Directors of the Company breached its fiduciary
duties in connection with its approval of the Merger, this Agreement or the
transactions contemplated hereby, or (c) arising or resulting from general
industry, economic or stock market conditions that affect the Company in a
manner not disproportionate to the manner in which such conditions affect other
companies in the technology sector (a "Company Material Adverse Effect").
(b) Except as set forth in the Company SEC Reports (as
defined in Section 3.4) filed prior to the date of this Agreement, neither the
Company nor any of its Subsidiaries directly or indirectly owns any equity,
membership, partnership or similar interest in, or any interest convertible into
or exchangeable or exercisable for any equity, membership, partnership or
similar interest in, any corporation, partnership, joint venture, limited
liability company or other business association or entity, whether incorporated
or unincorporated. As used in this Agreement, the word "Subsidiary" means, with
respect to a party, any corporation, partnership, joint venture, limited
liability company or other business association or entity, whether incorporated
or unincorporated, of which (i) such party or any other Subsidiary of such party
is a general partner (excluding partnerships, the general partnership interests
of which held by such party and/or one or more of its Subsidiaries do not have a
majority of the voting interest in such partnership), (ii) such party and/or one
or more of its Subsidiaries holds voting power to elect a majority of the board
of directors or other governing body performing similar functions, or (iii) such
party and/or one or more of its Subsidiaries, directly or indirectly, owns or
controls more than 50% of the equity, membership, partnership or similar
interests.
7
<PAGE> 14
(c) The Company has delivered or made available to the
Buyer complete and accurate copies of the Certificate of Incorporation and
By-laws of the Company and of the charter, by-laws or other organizational
documents of each Subsidiary of the Company.
3.2 Capitalization.
(a) The authorized capital stock of the Company consists
of 60,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock, $.0001 par value per share ("Company Preferred Stock"). As of the close
of business on December 14, 1999, (i) 20,324,094 shares of Company Common Stock
were issued and outstanding, (ii) no shares of Company Common Stock were held in
the treasury of the Company or by Subsidiaries of the Company, and (iii) no
shares of the Company Preferred Stock were issued and outstanding.
(b) Section 3.2(b) of the Company Disclosure Schedule
lists the number of shares of Company Common Stock reserved for future issuance
pursuant to stock options granted and outstanding as of the date of this
Agreement and the plans (if any) under which such options were granted
(collectively, the "Company Stock Plans") and sets forth a complete and accurate
list of all holders of outstanding options to purchase shares of Company Common
Stock (such outstanding options, the "Company Stock Options"), indicating the
number of shares of Company Common Stock subject to each Company Stock Option,
and the exercise price, the date of grant, vesting schedule and the expiration
date thereof. Section 3.2 of the Company Disclosure Schedule shows the number of
shares of Company Common Stock reserved for future issuance pursuant to warrants
or other outstanding rights to purchase shares of Company Common Stock
outstanding as of the date of this Agreement (such outstanding warrants or other
rights, the "Company Warrants") and the agreement or other document under which
such Company Warrants were granted and sets forth a complete and accurate list
of all holders of Company Warrants indicating the number and type of shares of
Company Common Stock subject to each Company Warrant, and the exercise price,
the date of grant and the expiration date thereof. Except (x) as set forth in
this Section 3.2 and (y) as reserved for future grants under Company Stock
Plans, (i) there are no equity securities of any class of the Company or any of
its Subsidiaries, or any security exchangeable into or exercisable for such
equity securities, issued, reserved for issuance or outstanding and (ii) there
are no options, warrants, equity securities, calls, rights, commitments or
agreements of any character to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound obligating the
Company or any of its Subsidiaries to issue, transfer, deliver or sell, or cause
to be issued, transferred, delivered or sold, additional shares of capital stock
of the Company or any of its Subsidiaries or any security or rights convertible
into or exchangeable or exercisable for any such shares, or obligating the
Company or any of its Subsidiaries to grant, extend, accelerate the vesting of,
otherwise modify or amend or enter into any such option, warrant, equity
security, call, right, commitment or agreement. Neither the Company nor any of
its Subsidiaries has issued and outstanding any stock appreciation rights,
phantom stock, performance based rights or similar rights or obligations. To the
knowledge of the Company, other than the Stockholder Agreements, there are no
agreements or understandings with respect to the voting (including voting trusts
and proxies) or sale or transfer (including agreements imposing transfer
restrictions) of any shares of capital stock of the Company or any of its
Subsidiaries.
8
<PAGE> 15
(c) All outstanding shares of Company Common Stock are,
and all shares of Company Common Stock subject to issuance as specified above,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be, duly authorized, validly issued, fully paid
and nonassessable and not subject to or issued in violation of any purchase
option, call option, right of first refusal, preemptive right, subscription
right or any similar right under any provision of the DGCL, the Company's
Certificate of Incorporation or By-laws or any agreement to which the Company is
a party or is otherwise bound. There are no obligations, contingent or
otherwise, of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of the Company Common Stock or the capital stock of
the Company or any of its Subsidiaries or to provide funds to or make any
material investment (in the form of a loan, capital contribution or otherwise)
in the Company or any Subsidiary of the Company or any other entity, other than
guarantees of bank obligations of Subsidiaries of the Company entered into in
the ordinary course of business.
(d) All of the outstanding shares of capital stock of
each of the Company's Subsidiaries are duly authorized, validly issued, fully
paid, nonassessable and free of preemptive rights and all such shares (other
than directors' qualifying shares in the case of non-U.S. Subsidiaries, all of
which the Company has the power to cause to be transferred for no or nominal
consideration to the Buyer or the Buyer's designee) are owned, of record and
beneficially, by the Company or another Subsidiary of the Company free and clear
of all security interests, liens, claims, pledges, agreements, limitations in
the Company's voting rights, charges or other encumbrances of any nature.
(e) No consent of the holders of Company Stock Options is
required in connection with the conversion of such options contemplated by
Section 6.11.
3.3 Authority; No Conflict; Required Filings and Consents.
(a) The Company has all requisite corporate power and
authority to enter into this Agreement and the Company Stock Option Agreement
and to consummate the transactions contemplated by this Agreement and the
Company Stock Option Agreement. The execution and delivery of this Agreement and
the Company Stock Option Agreement and the consummation of the transactions
contemplated by this Agreement and the Company Stock Option Agreement by the
Company have been duly authorized by all necessary corporate action on the part
of the Company, subject only to the approval of the Merger by the Company's
stockholders under the DGCL. This Agreement and the Company Stock Option
Agreement have been duly executed and delivered by the Company and constitute
valid and binding obligations of the Company, enforceable in accordance with
their respective terms.
(b) The execution and delivery of this Agreement and the
Company Stock Option Agreement by the Company does not, and the consummation of
the transactions contemplated by this Agreement and the Company Stock Option
Agreement will not, (i) conflict with, or result in any violation or breach of,
any provision of the Certificate of Incorporation or By-laws of the Company or
the charter, by-laws, or other organizational document of any
9
<PAGE> 16
Subsidiary of the Company, (ii) conflict with, or result in any violation or
breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any material benefit) under, or require a consent or
waiver under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, license, contract or other agreement, instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound, or (iii)
subject to compliance with the requirements specified in clauses (i), (ii),
(iii), (iv) and (v) of Section 3.3(c), conflict with or violate any permit,
concession, franchise, license, judgment, injunction, order, decree, statute,
law, ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or any of its or their properties or assets, except in the case of
clauses (ii) and (iii) of this Section 3.3(b) for any such conflicts,
violations, breaches, defaults, terminations, cancellations, accelerations or
losses which, individually or in the aggregate, are not reasonably likely to
have a Company Material Adverse Effect.
(c) No consent, approval, license, permit, order or
authorization of, or, registration, declaration, notice or filing with, any
court, arbitrational tribunal, administrative agency or commission or other
governmental or regulatory authority or agency (a "Governmental Entity") is
required by or with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement and the Company
Stock Option Agreement by the Company or the consummation of the transactions
contemplated by this Agreement or the Company Stock Option Agreement, except for
(i) the filing of a pre-merger notification report under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing
of the Certificate of Merger with the Delaware Secretary of State, (iii) the
filing of the Proxy Statement (as defined in Section 3.16 below) with the
Securities and Exchange Commission (the "SEC") in accordance with the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (iv) the filing of such
reports or schedules under Section 13 of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby and (v)
such consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under applicable state securities laws except
where the failure to obtain any such consent, approval, order, authorization,
registration, declaration or filing would not have a Company Material Adverse
Effect.
(d) The affirmative vote of the holders of a majority of
the outstanding shares of Company Common Stock on the record date for the
Company Meeting (as defined below) is the only vote of the holders of any class
or series of the Company's capital stock or other securities necessary to adopt
this Agreement. There are no bonds, debentures, notes or other indebtedness of
the Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of the
Company may vote.
10
<PAGE> 17
3.4 SEC Filings; Financial Statements.
(a) The Company has filed and made available to the Buyer
all forms, reports and other documents required to be filed by the Company with
the SEC since its inception. All such required forms, reports and other
documents (including those that the Company may file after the date hereof until
the Closing) together with any amendments thereto are referred to herein as the
"Company SEC Reports." The Company SEC Reports (i) were or will be filed on a
timely basis, (ii) were or will be prepared in compliance in all material
respects with the applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such Company SEC
Reports, and (iii) did not or will not at the time they were or are filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in such Company SEC Reports or necessary in order to make
the statements in such Company SEC Reports, in the light of the circumstances
under which they were made, not misleading. No Subsidiary of the Company is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes and schedules) contained or to be
contained in the Company SEC Reports (i) complied or will comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (ii) were or will be
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by the SEC on Form 10-Q under the Exchange
Act) and (iii) fairly presented or will fairly present the consolidated
financial position of the Company and its Subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the periods
indicated, consistent with the books and records of the Company and its
Subsidiaries, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount. The unaudited balance sheet of the Company as
of September 30, 1999 is referred to herein as the "Company Balance Sheet."
3.5 No Undisclosed Liabilities. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement, and except for normal or
recurring liabilities incurred since the date of the Company Balance Sheet in
the ordinary course of business consistent with past practices, the Company and
its Subsidiaries do not have any liabilities, either accrued, contingent or
otherwise (whether or not required to be reflected in financial statements in
accordance with United States generally accepted accounting principles), and
whether due or to become due, which, individually or in the aggregate, are
reasonably likely to have a Company Material Adverse Effect.
3.6 Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, since the date of
the Company Balance Sheet, the Company and its Subsidiaries have conducted their
respective businesses only in the ordinary course and in a manner consistent
with past practice and, since such date, there has not been (i)
11
<PAGE> 18
any event, change or development in the business, properties, financial
condition, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole, which, individually or in the aggregate, has
had, or is reasonably likely to have, a Company Material Adverse Effect; or (ii)
except as disclosed pursuant to this Agreement (including the Company Disclosure
Schedule) any other action or event that would have required the consent of the
Buyer pursuant to Section 5.1 of this Agreement had such action or event
occurred after the date of this Agreement.
3.7 Taxes.
(a) The Company and each of its Subsidiaries has filed
all Tax Returns (as defined below) that it was required to file, and all such
Tax Returns were correct and complete except for any errors or omissions which
are not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect. The Company and each of its Subsidiaries has paid on a
timely basis all Taxes (as defined below) that are shown to be due on any such
Tax Returns. The unpaid Taxes of the Company and its Subsidiaries for Tax
periods through the date of the Company Balance Sheet do not exceed the accruals
and reserves for Taxes set forth on the Company Balance Sheet exclusive of any
accruals and reserves for "deferred taxes" or similar items that reflect timing
differences between Tax and financial accounting principles. All Taxes that the
Company or any of its Subsidiaries 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. For purposes of this Agreement, (i)
"Taxes" means all taxes, charges, fees, levies or other similar assessments or
liabilities, including income, gross receipts, ad valorem, premium, value-added,
excise, real property, personal property, sales, use, services, transfer,
withholding, employment, payroll and franchise 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 and (ii) "Tax Returns" means all reports, returns,
declarations, statements or other information required to be supplied to a
taxing authority in connection with Taxes.
(b) The Company has delivered to the Buyer correct and
complete copies of all federal income Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by the Company or any
of its Subsidiaries since inception. The federal income Tax Returns of the
Company and each of its Subsidiaries 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 3.7(b) of the Company
Disclosure Schedule. The Company has made available to the Buyer correct and
complete copies of all other Tax Returns of the Company and its Subsidiaries
together with all related examination reports and statements of deficiency for
all periods. No examination or audit of any Tax Return of the Company or any of
its Subsidiaries by any Governmental Entity is currently in progress or, to the
knowledge of the Company, threatened or contemplated. Neither the Company nor
any of its Subsidiaries has been informed by any Governmental Entity that the
Governmental Entity believes that the Company or any of its Subsidiaries was
required to file any Tax Return that was not filed. Neither the Company nor any
of its Subsidiaries has waived any statute of limitations
12
<PAGE> 19
with respect to Taxes or agreed to an extension of time with respect to a Tax
assessment or deficiency.
(c) Neither the Company nor any of its Subsidiaries: (i)
is a "consenting corporation" within the meaning of Section 341(f) of the Code,
and none of the assets of the Company or its 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 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 law in any jurisdiction), 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).
(d) None of the assets of the Company or any of its
Subsidiaries: (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.
(e) Neither the Company nor any of its Subsidiaries has
undergone, or will undergo as a result of the transactions contemplated by the
Agreement, a change in its method of accounting resulting in an adjustment to
its taxable income pursuant to Section 481(h) of the Code.
(f) Neither the Company nor any of its Subsidiaries (i)
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 its Subsidiaries are or were members
or (ii) is a party to or bound by any Tax indemnity, Tax sharing or Tax
allocation agreement.
3.8 Owned and Leased Real Properties.
(a) The Company does not own and has never owned any real
property.
(b) The Company has provided to the Buyer a complete and
accurate list of all real property leased by the Company or its Subsidiaries
(collectively "Company Leases") and the location of the premises. The Company is
not in default in any material respect under any of the Company Leases. Each of
the Company Leases is in full force and effect and will not cease to be in full
force and effect as a result of the transactions contemplated by this Agreement.
13
<PAGE> 20
3.9 Intellectual Property.
(a) The Company and its Subsidiaries exclusively own, or
are licensed or otherwise possess legally enforceable rights to use, without any
obligation to make any fixed or contingent payments, including any royalty
payments, all patents, trademarks, trade names, domain names, service marks and
copyrights, any applications for and registrations of such patents, trademarks,
trade names, domain names, service marks and copyrights, and all processes,
formulae, methods, schematics, technology, know-how, computer software programs
or applications and tangible or intangible proprietary information or material
that are used or necessary to conduct the business of the Company and its
Subsidiaries as currently conducted (the "Company Intellectual Property
Rights").
(b) The execution and delivery of this Agreement and
consummation of the Merger will not result in the breach of, or create on behalf
of any third party the right to terminate or modify, any material license,
sublicense or other agreement relating to the Company Intellectual Property
Rights, or any license, sublicense and other agreement as to which the Company
or any of its Subsidiaries is a party and pursuant to which the Company or any
of its Subsidiaries is authorized to use any third party patents, trademarks,
copyrights or trade secrets (the "Company Third Party Intellectual Property
Rights"), including software that is used in the manufacture of, incorporated
in, or forms a part of any product or service sold or expected to be sold by the
Company or any of its Subsidiaries.
(c) All patents, registered trademarks, service marks and
copyrights which are held by the Company or any of its Subsidiaries and which
are material to the business of the Company and its Subsidiaries, taken as a
whole, are valid and subsisting. The Company and its Subsidiaries have taken
reasonable measures to protect the proprietary nature of the Company
Intellectual Property Rights that are material to the business of the Company
and its Subsidiaries, taken as a whole, and to maintain in confidence all trade
secrets and confidential information owned or used by the Company or any of its
Subsidiaries and that are material to the business of the Company and its
Subsidiaries, taken as a whole. To the knowledge of the Company, no other person
or entity is infringing, violating or misappropriating any of the Company
Intellectual Property Rights. None of the activities or business previously or
currently conducted by the Company or any of the Subsidiaries infringes,
violates or constitutes a misappropriation of, any patents, trademarks, trade
names, service marks and copyrights, any applications for and registrations of
such patents, trademarks, trade names, service marks and copyrights, and all
processes, formulae, methods, schematics, technology, know-how, computer
software programs or applications and tangible or intangible proprietary
information or material of any other person or entity except for any
infringement, violation or misappropriation that would not have a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries has
received any complaint, claim or notice alleging any such infringement,
violation or misappropriation.
3.10 Agreements, Contracts and Commitments.
14
<PAGE> 21
(a) Section 3.10(a) of the Company Disclosure Schedule
sets forth a list of all contracts, agreements and commitments, written or oral
("Contracts"), of the following categories to which the Company or any of its
Subsidiaries is a party or by which any of them is bound ("Company Material
Contracts"):
(i) Contracts under which the Company or any
Subsidiary licenses any Company Intellectual Property Rights to a third party,
other than to customers in the ordinary course of business;
(ii) Contracts under which the Company or any
Subsidiary licenses any material item of intellectual property from a third
party;
(iii) Contracts with any Affiliate of the Company;
(iv) Contracts for the acquisition, sale or
disposition of any material assets of the Company or any of its Subsidiaries
outside the ordinary course of business;
(v) any Contract not disclosed in a Company SEC
Report that is a material contract (as defined in Item 601(b)(10) of Regulation
S-K of the SEC);
(vi) any Contract under which a third party would be
entitled to receive a license or any other right to intellectual property of the
Buyer or any of Buyer's affiliates (as defined in Rule 405 under the Securities
Act), other than the Surviving Corporation, following the Closing, and
(vii) any Contract that would require Buyer to
register any shares of Buyer Common Stock under the Securities Act after the
Closing.
(b) Each Company Material Contract has not expired by its
terms and is in full force and effect. Neither the Company nor any of its
Subsidiaries is in violation of or in default under (nor does there exist any
condition which, upon the passage of time or the giving of notice or both, would
cause such a violation of or default under) any Company Material Contract or any
other loan or credit agreement, note, bond, mortgage, indenture, lease, permit,
concession, franchise, license or other contract, arrangement or understanding
to which it is a party or by which it or any of its properties or assets is
bound, except for violations or defaults which, individually or in the
aggregate, have not resulted in, and are not reasonably likely to result in, a
Company Material Adverse Effect.
3.11 Litigation. Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement, there is no action, suit, proceeding,
claim, arbitration or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries which,
individually or in the aggregate, has had, or is reasonably likely to have, a
Company Material Adverse Effect. There are no judgments, orders or decrees
outstanding against the Company.
3.12 Environmental Matters.
15
<PAGE> 22
(a) Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement and except for such matters which,
individually or in the aggregate, have not had, and are not reasonably likely to
have a Company Material Adverse Effect: (i) the Company and each of its
Subsidiaries has complied with, and is not in violation of, any applicable
Environmental Laws (as defined in Section 3.12(b)); (ii) the properties
currently owned or operated by the Company and its Subsidiaries (including
soils, groundwater, surface water, buildings or other structures) are not
contaminated with any Hazardous Substances (as defined in Section 3.12(c));
(iii) the properties formerly owned or operated by the Company or any of its
Subsidiaries were not contaminated with Hazardous Substances prior to or during
the period of ownership or operation by the Company or any of its Subsidiaries;
(iv) neither the Company nor its Subsidiaries are subject to liability for any
Hazardous Substance disposal or contamination on the property of any third
party; (v) neither the Company nor any of its Subsidiaries have released any
Hazardous Substance to the environment; (vi) neither the Company nor any of its
Subsidiaries has received any notice, demand, letter, claim or request for
information alleging that the Company or any of its Subsidiaries may be in
violation of, liable under or have obligations under any Environmental Law;
(vii) neither the Company nor any of its Subsidiaries is subject to any orders,
decrees, injunctions or other arrangements with any Governmental Entity or is
subject to any indemnity or other agreement with any third party relating to
liability under any Environmental Law or relating to Hazardous Substances; and
(viii) there are no circumstances or conditions involving the Company or any of
its Subsidiaries that could reasonably be expected to result in any claims,
liability, obligations, investigations, costs or restrictions on the ownership,
use or transfer of any property of the Company or any of its Subsidiaries
pursuant to any Environmental Law.
(b) For purposes of this Agreement, "Environmental Law"
means any law, regulation, order, decree, permit, authorization, opinion, common
law or agency requirement of any jurisdiction relating to: (A) the protection,
investigation or restoration of the environment, human health and safety, or
natural resources, (B) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance or (C) noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property.
(c) For purposes of this Agreement, "Hazardous Substance"
means any substance that is: (A) listed, classified, regulated or which falls
within the definition of a "hazardous substance" or "hazardous material"
pursuant to any Environmental Law; (B) any petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing, polychlorinated
biphenyls, radioactive materials or radon; or (C) any other substance which is
the subject of regulatory action by any Governmental Entity pursuant to any
Environmental Law.
(d) Section 3.12(d) of the Company Disclosure Schedule
sets forth a complete and accurate 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 any of its Subsidiaries (whether conducted by or on behalf of the
Company or one of its Subsidiaries or a third party, and whether done at the
initiative of
16
<PAGE> 23
the Company or one of its Subsidiaries or directed by a Governmental Entity or
other third party) which were issued or conducted during the past five years and
of which the Company has possession. A complete and accurate copy of each such
document has been provided to the Buyer.
3.13 Employee Benefit Plans.
(a) Section 3.13(a) of the Company Disclosure Schedule
sets forth a complete and accurate list of all Employee Benefit Plans (as
defined below) maintained, or contributed to, by the Company, any Subsidiary of
the Company or any ERISA Affiliate (as defined below), or with respect to which
the Company or any Subsidiary has or may have any actual or contingent
liabilities (together, the "Company Employee Plans"). 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 plan, agreement or arrangement involving direct or
indirect compensation or fringe benefits, 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 post-retirement compensation; (ii)
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended;
and (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) With respect to each Company Employee Plan, the
Company has furnished to the Buyer, a complete and accurate copy of (i) such
Company Employee Plan (or a written summary of any unwritten plan), (ii) the
most recent annual report (Form 5500, 5500C or 5500R) filed with the IRS, if
any, required under ERISA or the Code, (iii) each trust agreement, group annuity
contract and summary plan description, if any, required under ERISA relating to
such Company Employee Plan and (iv) reports, if any, regarding the satisfaction
of the nondiscrimination requirements of Sections 401(a)(4), 401(k), 401(m) and
410(b) of the Code for the last plan year.
(c) Each Company Employee Plan has been administered in
all material respects in accordance with its terms and each of the Company, the
Company's Subsidiaries and their ERISA Affiliates has in all material respects
met its obligations with respect to such Company Employee Plan and has made all
required contributions thereto. With respect to the Company Employee Plans, no
event has occurred, and to the knowledge of the Company, there exists no
condition or set of circumstances in connection with which the Company or any of
its Subsidiaries could be subject to (i) any liability under ERISA, the Code or
any other applicable law which, individually or in the aggregate, is reasonably
likely to have a Company Material Adverse Effect; or (ii) any contractual
indemnification or contribution obligation protecting any fiduciary, insurer or
service provider with respect to any Company Employee Plan.
17
<PAGE> 24
(d) With respect to the Company Employee Plans, there are
no funded benefit obligations for which contributions have not been made or
properly accrued and there are no unfunded benefit obligations (other than
routine claims for benefits) which have not been accounted for by reserves, or
otherwise properly footnoted in accordance with United States generally accepted
accounting principles, on the financial statements of the Company.
(e) All the Company Employee Plans that are intended to
be qualified under Section 401(a) of the Code have received determination
letters from the Internal Revenue Service to the effect that such Company
Employee Plans are qualified and the plans and trusts related thereto are exempt
from federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code, no such determination letter has been revoked and revocation has not been
threatened, and no such Company Employee 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 adversely affect its
qualification or materially increase its cost.
(f) Neither the Company, any Subsidiary of the Company
nor any ERISA Affiliate has (i) ever maintained a Company Employee Plan which
was ever subject to Section 412 of the Code or Title IV of ERISA or (ii) ever
been obligated to contribute to, or otherwise has any liability with respect to,
a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA). No Company
Employee Plan is funded by, associated with or related to a "voluntary
employee's beneficiary association" within the meaning of Section 501(c)(9) of
the Code.
(g) Each Company Employee Plan is amendable and
terminable unilaterally by the Company at any time without any material
liability to the Company as a result thereof and no Company Employee Plan, plan
documentation or agreement, summary plan description or other written
communication distributed generally to employees by its terms prohibits the
Company from amending or terminating any such Company Employee Plan.
(h) Except as disclosed in Section 3.10(h) of the Company
Disclosure Schedule or the Company SEC Reports filed prior to the date of this
Agreement, neither the Company nor any of its Subsidiaries is a party to any (i)
agreement with any stockholders, director, executive officer or other key
employee of the Company or any of its Subsidiaries (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 of its Subsidiaries 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 of its Subsidiaries 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 of its
Subsidiaries, including any stock option plan, stock appreciation right plan,
restricted stock plan, stock purchase plan, severance benefit plan, or Company
Employee Plan, any of the benefits of which will be increased, or the
18
<PAGE> 25
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.
(i) Except as disclosed in Section 3.13(i) of the Company
Disclosure Schedule: (i) no claims (other than claims for benefits payable in
the normal operation of the Company Employee Plans) are outstanding with respect
to any Company Employee Plan; (ii) there are no pending nor, to the Company's
knowledge, threatened legal proceedings with respect to any Company Employee
Plan; and (iii) no Company Employee Plan is the subject of an examination by any
governmental authority or of any government-sponsored amnesty, voluntary
compliance or similar program.
3.14 Compliance With Laws. The Company and each of its Subsidiaries
has complied with, is not in violation of, and has not received any notice
alleging any violation with respect to, any applicable provisions of any
statute, law or regulation with respect to the conduct of its business, or the
ownership or operation of its properties or assets, except for failures to
comply or violations which, individually or in the aggregate, have not had, and
are not reasonably likely to have, a Company Material Adverse Effect.
3.15 Permits. The Company and each of its Subsidiaries have all
permits, licenses and franchises from Governmental Entities required to conduct
their businesses as now being conducted or as presently contemplated to be
conducted (the "Company Permits"), except for such permits, licenses and
franchises the absence of which, individually or in the aggregate, have not
resulted in, and are not reasonably likely to result in, a Company Material
Adverse Effect. The Company and its Subsidiaries are in compliance, in all
material respects, with the terms of the Company Permits.
3.16 Registration Statement; Proxy Statement/Prospectus. The
information to be supplied by the Company for inclusion in the registration
statement on Form S-4 pursuant to which shares of Buyer Common Stock issued in
connection with the Merger will be registered under the Securities Act (the
"Registration Statement"), shall not at the time the Registration Statement is
declared effective by the SEC contain any untrue statement of a material fact or
omit to state any material fact required to be stated in the Registration
Statement or necessary in order to make the statements in the Registration
Statement, in light of the circumstances under which they were made, not
misleading. The information to be supplied by the Company for inclusion in the
proxy statement/prospectus (the "Proxy Statement") to be sent to the
stockholders of the Company in connection with the meeting of the Company's
stockholders to consider this Agreement and the Merger (the "Company Meeting")
shall not, on the date the Proxy Statement is first mailed to stockholders of
the Company, at the time of the Company 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 made in the Proxy Statement not false or 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
Meeting which has become false or misleading. If at any time prior to the
Effective
19
<PAGE> 26
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 Registration Statement or a supplement to the Proxy Statement,
the Company shall promptly inform the Buyer.
3.17 Labor Matters. Neither the Company nor any of its Subsidiaries is
a party to or otherwise bound by any collective bargaining agreement, contract
or other agreement or understanding with a labor union or labor organization.
Neither the Company nor any of its Subsidiaries is the subject of any proceeding
asserting that the Company or any of its Subsidiaries has committed an unfair
labor practice or is seeking to compel it to bargain with any labor union or
labor organization, nor is there pending or, to the knowledge of the Company,
threatened, any labor strike, dispute, walkout, work stoppage, slow-down or
lockout involving the Company or any of its Subsidiaries.
3.18 Insurance. Each of the Company and its Subsidiaries maintains
insurance policies with reputable insurance carriers against all risks of a
character and in such amounts as are usually insured against by similarly
situated companies in the same or similar businesses.
3.19 Business Activity Restrictions. There is no non-competition or
other similar agreement, commitment, judgment, injunction or order to which the
Company or any Subsidiary of the Company is a party or subject to that has or
could reasonably be expected to have the effect of prohibiting or impairing the
conduct of the business by the Company in any material respect. The Company has
not entered into any agreement under which it is restricted in any material
respect from selling, licensing or otherwise distributing any of its technology
or products, or providing services to, customers or potential customers or any
class of customers, in any geographic area, during any period of time or any
segment of the market or line of business.
3.20 Year 2000 Compliance.
(a) The Company has conducted "year 2000" audits with
respect to (i) all of the Company's internal systems used in the business or
operations of the Company, including, without limitation, computer hardware
systems, software applications, firmware, equipment firmware and other embedded
systems, and (ii) the software, hardware, firmware and other technology which
constitute part of the products and services marketed or sold by the Company or
licensed by the Company to third parties. The Company has obtained "year 2000"
certificates with respect to all material third-party systems used in connection
with the business or operations of the Company.
(b) All of (i) the Company's material internal systems
used in the business or operations of the Company, including, without
limitation, computer hardware systems, software applications, firmware,
equipment containing embedded microchips and other embedded systems (the
"Company Systems"), and (ii) the software, hardware, firmware and other
technology which constitute part of the products and services marketed or sold
by the Company or licensed by the Company to third parties (the "Company
Products") are Year 2000 Compliant.
20
<PAGE> 27
(c) The Company has no knowledge of any failure to be
Year 2000 Compliant of any material third-party system used in connection with
the business or operations of the Company.
(d) 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) does not malfunction, cease to function or
provide invalid or incorrect results as a result of (x) the change of years from
1999 to 2000 or from 2000 to 2001, (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;
provided, in each case, that all applications, hardware and other systems used
in conjunction with such system or item which are not owned or licensed by the
Company correctly exchange date data with or provide data to such system or
item.
(e) The Company has not provided any guarantee or
warranty for any product sold or licensed, or service provided, by the Company
to the effect that such product or service (i) complies with or accounts for the
fact of the arrival of the year 2000, (ii) will not be adversely affected with
respect to functionality, interoperability, performance or volume capacity
(including, without limitation, the processing and reporting of data) by virtue
of the arrival of the year 2000 or (iii) is otherwise Year 2000 Compliant.
3.21 Assets. Each of the Company and its Subsidiaries owns or leases
all tangible assets necessary for the conduct of its businesses as presently
conducted and as presently proposed to be conducted. All of such tangible assets
which are owned, are owned free and clear of all mortgages, security interest,
pledges, liens and encumbrances ("Liens") except for (i) Liens which are
disclosed in the Company SEC Reports filed prior to the date of this Agreement
and (ii) other Liens which, individually and in the aggregate, do not materially
interfere with the ability of the Company or its Subsidiaries to conduct their
business as currently conducted and as presently proposed to be conducted and
have not resulted in, and are not reasonably likely to result in, a Company
Material Adverse Effect. The tangible assets of the Company and its
Subsidiaries, taken as a whole, are free from material defects, have been
maintained in
21
<PAGE> 28
accordance with normal industry practice, are in good operating condition and
repair (subject to normal wear and tear) and are suitable for the purpose for
which they are presently used.
3.22 Opinion of Financial Advisor. The financial advisor of the
Company, Deutsche Bank Securities, Inc., has delivered to the Company an opinion
dated the date of this Agreement to the effect, as of such date, that the
Exchange Ratio is fair to the holders of the Company Common Stock from a
financial point of view.
3.23 Section 203 of the DGCL Not Applicable. The Board of Directors of
the Company has taken all actions necessary so that the restrictions contained
in Section 203 of the DGCL applicable to a "business combination" (as defined in
Section 203) will not apply to the execution, delivery or performance of this
Agreement, the Company Stock Option Agreement, the Stockholder Agreements or the
consummation of the Merger or the other transactions contemplated by this
Agreement, the Company Stock Option Agreement or the Stockholder Agreements.
3.24 Tax Matters. To the Company's knowledge, after consulting with
its independent auditors, neither the Company nor any of its Affiliates has
taken or agreed to take any action which would prevent the Merger from
constituting a transaction qualifying as a reorganization under Section 368(a)
of the Code.
3.25 Transactions with Affiliates. Except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement, neither the Company nor
any of its Subsidiaries has entered into any transaction with any director,
officer or other affiliate of the Company or any of its Subsidiaries or any
transaction that would be subject to proxy statement disclosure pursuant to Item
404 of Regulation S-K.
3.26 Brokers; Schedule of Fees and Expenses.
(a) No agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with any of the transactions contemplated by this Agreement, except Deutsche
Bank Securities, Inc., whose fees and expense will be paid by the Company. The
Company has delivered to the Buyer a complete and accurate copy of all
agreements pursuant to which Deutsche Bank Securities, Inc., is entitled to any
fees and expenses in connection with any of the transactions contemplated by
this Agreement.
(b) Section 3.27(b) of the Company Disclosure Schedule
sets forth a complete and accurate list of the estimated fees and expenses
incurred and to be incurred by the Company and any of its Subsidiaries in
connection with this Agreement and the transactions contemplated by this
Agreement (including the fees and expenses of Deutsche Bank Securities, Inc.,
and of the Company's legal counsel and accountants).
22
<PAGE> 29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE
TRANSITORY SUBSIDIARY
The Buyer and the Transitory Subsidiary represent and warrant to the
Company that the statements contained in this Article IV are true and correct,
except as set forth herein or in the disclosure schedule delivered by the Buyer
to the Company on or before the date of this Agreement (the "Buyer Disclosure
Schedule").
4.1 Organization, Standing and Power. Each of the Buyer and the
Transitory Subsidiary and the Buyer's other Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as now being conducted and as proposed to be conducted, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the failure to be so qualified, individually or in
the aggregate, would be reasonably likely to have a material adverse effect on
the business, properties, financial condition, results of operations or
prospects of the Buyer and its Subsidiaries, taken as a whole, or to have a
material adverse effect on the ability of the Buyer to consummate the
transactions contemplated by this Agreement (a "Buyer Material Adverse Effect").
4.2 Capitalization. The authorized capital stock of the Buyer consists
of 400,000,000 shares of Buyer Common Stock and 5,000,000 shares of preferred
stock, $.01 par value per share (the "Buyer Preferred Stock"), of which (i) 250
shares are designated Series A Preferred Stock, (ii) 50,000 shares are
designated Series B Preferred Stock, (iii) 375,000 shares are designated Series
C Preferred Stock and (iv) 18,090.45 shares are designated Series D Preferred
Stock. As of the close of business on December 10, 1999, 122,970,601 shares of
Buyer Common Stock were issued and outstanding, and (i) no shares of Series A
Preferred Stock, (ii) 35,000 shares of Series B Preferred Stock (convertible
into an aggregate of 1,398,230 shares of Buyer Common Stock), (iii) 375,000
shares of Series C Preferred Stock (convertible into an aggregate of 3,925,674
shares of Buyer Common Stock), and (iv) no shares of Series D Preferred Stock
were issued and outstanding. All outstanding shares of Buyer Common Stock are,
and all shares of Buyer Common Stock subject to issuance as specified above,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be, duly authorized, validly issued, fully paid
and nonassessable. All of the shares of Buyer Common Stock issuable pursuant to
Section 2.1(c) in connection with the Merger, when issued in accordance with
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable.
4.3 Authority; No Conflict; Required Filings and Consents.
(a) Each of the Buyer and the Transitory Subsidiary has
all requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement by the Buyer and the Transitory Subsidiary have been duly
authorized by all necessary corporate action on the part of each of the Buyer
and the Transitory Subsidiary, including the approval of the Merger by the
23
<PAGE> 30
Buyer in its capacity as sole stockholder of the Transitory Subsidiary. This
Agreement has been duly executed and delivered by each of the Buyer and the
Transitory Subsidiary and constitutes the valid and binding obligation of each
of the Buyer and the Transitory Subsidiary, enforceable in accordance with its
terms.
(b) The execution and delivery of this Agreement by each
of the Buyer and the Transitory Subsidiary does not, and the consummation of the
transactions contemplated by this Agreement will not, (i) conflict with, or
result in any violation or breach of, any provision of the Certificate of
Incorporation or By-laws of the Buyer or the Transitory Subsidiary, (ii)
conflict with, or result in any violation or breach of, or constitute (with or
without notice or lapse of time, or both) a default (or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
material benefit) under, or require a consent or waiver under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract or other agreement, instrument or obligation to which the Buyer or any
of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, or (iii) subject to compliance with the
requirements specified in clause (i), (ii), (iii), (iv), (v) and (vi) of Section
4.3(c), conflict with or violate any permit, concession, franchise, license,
judgment, injunction, order, decree, statute, law, ordinance, rule or regulation
applicable to the Buyer or any of its Subsidiaries or any of its or their
properties or assets, except in the case of (ii) and (iii) for any such
conflicts, violations, breaches, defaults, terminations, cancellations or
accelerations which, individually or in the aggregate, are not reasonably likely
to have a Buyer Material Adverse Effect.
(c) No consent, approval, license, permit, order or
authorization of, or registration, declaration, notice or filing with, any
Governmental Entity is required by or with respect to the Buyer or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
the Buyer or the Transitory Subsidiary or the consummation of the transactions
contemplated by this Agreement, except for (i) the filing of a pre-merger
notification report under the HSR Act, (ii) the filing of the Certificate of
Merger with the Delaware Secretary of State, (iii) the filing of the
Registration Statement with the SEC in accordance with the Securities Act, (iv)
the filings of such reports or schedules under Section 13 of the Exchange Act as
may be required in connection with this Agreement and the transactions
contemplated hereby, (v) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities laws and (vi) the filing with the Nasdaq National Market of a
Notification Form for Listing of Additional Shares with respect to the Buyer
Common Stock issuable in connection with the Merger.
4.4 SEC Filings; Financial Statements.
(a) The Buyer has filed and made available to the Company
all forms, reports and other documents required to be filed by the Buyer with
the SEC since June 1, 1998. All such required forms, reports and other documents
(including those that the Buyer may file after the date hereof until the
Closing) are referred to herein as the "Buyer SEC Reports." The Buyer SEC
Reports (i) were or will be filed on a timely basis, (ii) were or will be
prepared in compliance in all material respects with the applicable requirements
of the Securities Act and the Exchange Act,
24
<PAGE> 31
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Buyer SEC Reports, and (iii) did not or will not at the time
they were or are filed contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such Buyer SEC Reports or
necessary in order to make the statements in such Buyer SEC Reports, in the
light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any related notes and schedules) contained or to be
contained in the Buyer SEC Reports (i) complied or will comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (ii) were or will be
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by the SEC on Form 10-Q under the Exchange
Act) and (iii) fairly presented or will fairly present the consolidated
financial position of the Buyer and its Subsidiaries as of the dates and the
consolidated results of its operations and cash flows for the periods indicated,
consistent with the books and records of the Buyer and its Subsidiaries, except
that the unaudited interim financial statements were or are subject to normal
and recurring year-end adjustments which were not or are not expected to be
material in amount. The audited balance sheet of the Buyer as of July 31, 1999
is referred to herein as the "Buyer Balance Sheet."
4.5 Absence of Certain Changes or Events. Except as disclosed in the
Buyer SEC Reports filed prior to the date of this Agreement, since the date of
the Buyer Balance Sheet, there has not been any event, change or development in
the business, properties, financial condition, results of operations or
prospects of the Buyer and its Subsidiaries, taken as a whole, which has had, or
is reasonably likely to have, a Buyer Material Adverse Effect.
4.6 Tax Matters. To the Buyer's knowledge, after consulting with its
independent auditors, neither the Buyer nor any of its Affiliates has taken or
agreed to take any action which would prevent the Merger from constituting a
transaction qualifying as a reorganization under Section 368(a) of the Code.
4.7 Registration Statement; Proxy Statement/Prospectus. The
information in the Registration Statement (except for information supplied by
the Company for inclusion in the Registration Statement, as to which the Buyer
makes no representation and which shall not constitute part of the Buyer SEC
Reports for purposes of this Agreement) shall not at the time the Registration
Statement is declared effective by the SEC contain any untrue statement of a
material fact or omit to state any material fact required to be stated in the
Registration Statement or necessary in order to make the statements in the
Registration Statement, in light of the circumstances under which they were
made, not misleading. If at any time prior to the Effective Time any event
relating to the Buyer or any of its Affiliates, officers or directors should be
discovered by the Buyer which should be set forth in an amendment to the
Registration Statement, the Buyer shall promptly inform the Company.
25
<PAGE> 32
4.8 Litigation. Except as disclosed in the Buyer SEC Reports filed
prior to the date of this Agreement, there is no action, suit, proceeding,
claim, arbitration or investigation pending or, to the knowledge of the Buyer,
threatened against or affecting the Buyer or any of its Subsidiaries which,
individually or in the aggregate, has had, or is reasonably likely to have, a
Buyer Material Adverse Effect. There are no material judgments, orders or
decrees outstanding against the Buyer.
4.9 Operations of the Transitory Subsidiary. The Transitory Subsidiary
has engaged in no business activities other than as contemplated by this
Agreement and has conducted its operations only as contemplated by this
Agreement.
ARTICLE V
CONDUCT OF BUSINESS
5.1 Covenants of the Company. Except as expressly provided herein or
as consented to in writing by the Buyer, from and after the date of this
Agreement until the earlier of the termination of this Agreement in accordance
with its terms or the Effective Time, the Company shall, and shall cause each of
its Subsidiaries to, act and carry on its business in the usual, regular and
ordinary course in substantially the same manner as previously conducted, and
use all reasonable efforts, consistent with past practices, to maintain and
preserve its and each Subsidiary's business organization, assets and properties,
keep available the services of its present officers and employees and preserve
its advantageous business relationships with customers, suppliers, distributors
and others having business dealings with it to the end that its goodwill and
ongoing business shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, from and after the date of this Agreement until the
earlier of the termination of this Agreement in accordance with its terms or the
Effective Time, the Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, do any of the following without the
prior written consent of the Buyer:
(a) (A) declare, set aside or pay any dividends on, or
make any other distributions (whether in cash, securities or other property) in
respect of, any of its capital stock (other than dividends and distributions by
a direct or indirect wholly owned subsidiary of the Company to its parent); (B)
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution of
shares of its capital stock; or (C) purchase, redeem or otherwise acquire any
shares of its capital stock or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities (other than
repurchases at cost from employees upon termination of their employment);
(b) issue, deliver, sell, grant, pledge or otherwise
dispose of or encumber any shares of its capital stock, any other voting
securities or any securities convertible into or exchangeable for, or any
rights, warrants or options to acquire, any such shares, voting securities or
convertible or exchangeable securities (other than the issuance of shares of
Company Common Stock upon the exercise of Company Options or Company Warrants
outstanding on the date of this Agreement in accordance with their present
terms), except for option grants to new employees in an aggregate amount not to
exceed 200,000 shares of Company Common Stock ("Permitted Options");
26
<PAGE> 33
(c) amend its certificate of incorporation, by-laws or
other comparable charter or organizational documents, except as expressly
provided by this Agreement;
(d) acquire (A) by merging or consolidating with, or by
purchasing a substantial portion of the assets or any stock of, or by any other
manner, any business or any corporation, partnership, joint venture, limited
liability company, association or other business organization or division
thereof or (B) any assets that are material, in the aggregate, to the Company
and the Subsidiaries, taken as a whole, except purchases of inventory in the
ordinary course of business consistent with past practice;
(e) except in the ordinary course of business consistent
with past practice, sell, lease, license, pledge, or otherwise dispose of or
encumber any properties or assets of the Company or of any of its Subsidiaries;
(f) whether or not in the ordinary course of business or
consistent with past practice, sell or dispose of any assets material to the
Company and its Subsidiaries, taken as a whole (including any accounts, leases,
contracts or intellectual property or any assets or the stock of any
Subsidiaries, but excluding the sale of products and services in the ordinary
course of business consistent with past practice);
(g) adopt or implement any stockholder rights plan;
(h) except as permitted by Section 6.1, enter into an
agreement with respect to any merger, consolidation, liquidation or business
combination, or any acquisition or disposition of all or substantially all of
the assets or securities of the Company or any of its Subsidiaries;
(i) (A) incur or suffer to exist any indebtedness for
borrowed money other than such indebtedness which existed as of November 30,
1999 as reflected on the Company Balance Sheet or guarantee any such
indebtedness of another person, (B) issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or any of
its Subsidiaries, guarantee any debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing, other than the incurrence of accounts payable in the
ordinary course of business, or (C) make any loans, advances (other than routine
advances to employees of the company in the ordinary course of business
consistent with past practice) or capital contributions to, or investment in,
any other person;
(j) make any capital expenditures or expenditures for
property, plant or equipment, except consistent with the capital budget shown on
Section 5.1(j) of the Company Disclosure Schedule;
(k) make any changes in accounting methods, principles or
practices, except insofar as may have been required by a change in United States
generally accepted accounting principles or, except as so required, change any
assumption underlying, or method of calculating, any bad debt, contingency or
other reserve;
27
<PAGE> 34
(l) (A) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the notes
thereto) of the Company included in the Company SEC Reports filed prior to the
date of this Agreement (to the extent so reflected or reserved against) or
incurred thereafter in the ordinary course of business consistent with past
practice, or (B) except as permitted under Section 6.1, waive any material
benefits of any confidentiality, standstill or similar agreements to which the
Company or any of its Subsidiaries is a party;
(m) except in the ordinary course of business, modify,
amend or terminate any material contract or agreement to which the Company or
any of its Subsidiaries is party, or knowingly waive, release or assign any
material rights or claims (including any write-off or other compromise of any
accounts receivable of the Company or any of its Subsidiaries);
(n) (A) except in the ordinary course of business
consistent with past practice, enter into any material contract or agreement or
(B) license any material intellectual property rights to or from any third
party;
(o) except as required to comply with applicable law or
agreements, plans or arrangements existing on the date hereof or as contemplated
by this Agreement or disclosed on Section 5.1(o) of the Company Disclosure
Schedule, (A) adopt, enter into, terminate or amend any employment, severance or
similar agreement or benefit plan for the benefit or welfare of any current or
former director, officer or employee or any collective bargaining agreement, (B)
increase in any material respect the compensation or fringe benefits of, or pay
any bonus to, any director, officer or key employee, (C) accelerate the payment,
right to payment or vesting of any compensation or benefits, including any
outstanding options or restricted stock awards, (D) pay any material benefit not
provided for as of the date of this Agreement under any benefit plan, (E) grant
any awards under any bonus, incentive, performance or other compensation plan or
arrangement or benefit plan (including the grant of stock options, stock
appreciation rights, stock based or stock related awards, performance units or
restricted stock, or the removal of existing restrictions in any benefit plans
or agreements or awards made thereunder) except for the grant of Permitted
Options, or (F) take any action other than in the ordinary course of business
consistent with past practice to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement, contract or
arrangement or benefit plan;
(p) make or rescind any Tax election, settle or compromise any
Tax liability or amend any Tax return;
(q) initiate, compromise or settle any material litigation or
arbitration proceeding;
(r) close any facility or office;
28
<PAGE> 35
(s) invest funds in debt securities or other instruments
maturing more than 90 days after the date of investment; or
(t) authorize any of, or commit or agree, in writing or
otherwise, to take any of, the foregoing actions or any action which would
materially impair or prevent the occurrence of any conditions of Article VII
hereof.
5.2 Cooperation. Subject to compliance with applicable law, from and
after the date of this Agreement and continuing until the earlier of the
termination of this Agreement in accordance with its terms or the Effective
Time, the Company and each of its Subsidiaries shall make its officers available
to confer on a regular and frequent basis with one or more representatives of
the Buyer to report on the general status of ongoing operations and shall
promptly provide the Buyer or its counsel with copies of all filings made by
such party with any Governmental Entity in connection with this Agreement, the
Merger and the transactions contemplated hereby.
5.3 Confidentiality. The parties acknowledge that the Buyer and the
Company have previously executed a Mutual Confidentiality Agreement, dated as of
December 3, 1999 (the "Confidentiality Agreement"), which Confidentiality
Agreement will continue in full force and effect in accordance with its terms,
except as expressly modified herein.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 No Solicitation.
(a) From and after the date of this Agreement until the
earlier of the termination of this Agreement in accordance with its terms or the
Effective Time, the Company and its Subsidiaries shall not, directly or
indirectly, through any officer, director, employee, financial advisor,
representative or agent (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets, tender offer, sale of shares of capital stock (excluding
sales pursuant to existing Company Stock Plans or pursuant to the Company
Warrants) or similar transaction involving the Company or any of its
Subsidiaries, other than the transactions contemplated by this Agreement (any of
the foregoing inquiries or proposals being referred to in this Agreement as an
"Acquisition Proposal"), (ii) engage in negotiations or discussions concerning,
or provide any information to any person or entity relating to, any Acquisition
Proposal, or (iii) agree to or recommend any Acquisition Proposal; provided,
however, that, if the Company has not breached this Section 6.1, nothing
contained in this Agreement shall prevent the Company or its Board of Directors,
prior to the adoption of this Agreement by the stockholders of the Company,
from:
(A) furnishing information to, or entering into
discussions or negotiations with, any person or entity in connection with an
unsolicited bona fide written
29
<PAGE> 36
Acquisition Proposal by such person or entity or recommending an unsolicited
bona fide written Acquisition Proposal to the stockholders of the Company, if
and only to the extent that
(1) the Board of Directors of the Company
believes in good faith (after consultation with its financial advisor) that such
Acquisition Proposal is reasonably capable of being completed on the terms
proposed and would, if consummated, result in a transaction more favorable than
the transaction contemplated by this Agreement (any such more favorable
Acquisition Proposal being referred to in this Agreement as a "Superior
Proposal") and the Company's Board of Directors determines in good faith after
consultation with outside legal counsel that such action is necessary for such
Board of Directors to fulfill its fiduciary duties,
(2) prior to furnishing such non-public
information to, or entering into discussions or negotiations with, such person
or entity, such Board of Directors receives from such person or entity an
executed confidentiality agreement with terms no less favorable to such party
than those contained in the Confidentiality Agreement, and
(3) prior to recommending a Superior
Proposal or terminating this Agreement in respect thereof, the Company shall
provide the Buyer with at least five business days' prior notice of its proposal
to do so, during which time the Buyer may make, and in such event the Company
shall consider, a counterproposal to such Superior Proposal, and the Company
shall itself and shall cause its financial and legal advisors to negotiate with
the Buyer with respect to the terms and conditions of such counterproposal; or
(B) complying with Rule 14d-9 and 14e-2 promulgated
under the Exchange Act with regard to an Acquisition Proposal; provided,
however, that neither the Company nor its Board of Directors shall, except as
permitted by paragraph (A) of this section, propose to approve or recommend an
Acquisition Proposal.
(b) The Company will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore of the nature described in Section 6.1(a) and will use reasonable
efforts to obtain the return of any confidential information furnished to any
such parties.
(c) The Company shall notify the Buyer immediately (but
in any event, within one (1) business day) after receipt by the Company (or its
advisors) of any Acquisition Proposal or any request for nonpublic information
in connection with an Acquisition Proposal or for access to the properties,
books or records of the Company by any person or entity that informs the Company
that it is considering making, or has made, an Acquisition Proposal. Such notice
shall be made orally and in writing and shall indicate in reasonable detail the
identity of the offer and the terms and conditions of such proposal, inquiry or
contact. The Company shall continue to keep the Buyer promptly informed of any
change in the status of any such discussions or negotiations and the terms being
discussed or negotiated.
(d) Nothing in this Section 6.1 shall (i) permit the
Company to terminate this Agreement (except as specifically provided in Section
8.1 hereof), or (ii) permit the Company to
30
<PAGE> 37
enter into any agreement with respect to an Acquisition Proposal during the term
of this Agreement (other than a confidentiality agreement of the type referred
to in Section 6.1(a) above).
(e) Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in this Section 6.1 by any director
or officer of the Company or any of its Subsidiaries or any investment banker,
financial advisor, attorney, accountant or other representative of the Company
or any of its Subsidiaries shall be deemed to be a breached of this Section 6.1
by the Company.
6.2 Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as practicable after the execution of
this Agreement, the Buyer and the Company shall prepare and the Company shall
file with the SEC the Proxy Statement, and the Buyer shall prepare and file with
the SEC the Registration Statement, in which the Proxy Statement will be
included as a prospectus, provided that the Buyer may delay the filing of the
Registration Statement until approval of the Proxy Statement by the SEC. The
Buyer and the Company shall use reasonable efforts to cause the Registration
Statement to become effective as soon after such filing as practicable. Each of
the Buyer and the Company will respond to any comments of the SEC and will use
its respective reasonable efforts to have the Proxy Statement cleared by the SEC
and the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filings and the Company will cause the Proxy
Statement and the prospectus contained within the Registration Statement to be
mailed to its stockholders at the earliest practicable time after both the Proxy
Statement is cleared by the SEC and the Registration Statement is declared
effective under the Securities Act. Each of the Buyer and the Company will
notify the other promptly upon the receipt of any comments from the SEC or its
staff or any other government officials and of any request by the SEC or its
staff or any other government officials for amendments or supplements to the
Registration Statement, the Proxy Statement or any filing pursuant to Section
6.2(b) or for additional information and will supply the other with copies of
all correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the Registration Statement, the Proxy Statement, the
Merger or any filing pursuant to Section 6.2(b). Each of the Buyer and the
Company will cause all documents that it is responsible for filing with the SEC
or other regulatory authorities under this Section 6.2 to comply in all material
respects with all applicable requirements of law and the rules and regulations
promulgated thereunder. Whenever any event occurs which is required to be set
forth in an amendment or supplement to the Proxy Statement, the Registration
Statement or any filing pursuant to Section 6.2(b), the Buyer or the Company, as
the case may be, will promptly inform the other of such occurrence and cooperate
in filing with the SEC or its staff or any other government officials, and/or
mailing to stockholders of the Company, such amendment or supplement.
(b) The Buyer and the Company shall make all necessary
filings with respect to the Merger under the Securities Act, the Exchange Act,
applicable state blue sky laws and the rules and regulations thereunder.
31
<PAGE> 38
6.3 Nasdaq Quotation. The Company agrees to continue the quotation of
the Company Common Stock on the Nasdaq National Market during the term of this
Agreement.
6.4 Access to Information. The Company shall (and shall cause each of
its Subsidiaries to) afford to the Buyer's officers, employees, accountants,
counsel and other representatives, reasonable access, during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments, personnel and records and, during such period,
the Company shall (and shall cause each of its Subsidiaries to) furnish promptly
to the Buyer (a) a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to the
requirements of federal or state securities laws and (b) all other information
concerning its business, properties, assets and personnel as the Buyer may
reasonably request. Unless otherwise required by law, the Buyer will hold any
such information which is nonpublic in confidence in accordance with the
Confidentiality Agreement. No information or knowledge obtained in any
investigation pursuant to this Section or otherwise shall affect or be deemed to
modify any representation or warranty contained in this Agreement or the
conditions to the obligations of the parties to consummate the Merger.
6.5 Stockholders Meeting.
(a) The Company, acting through its Board of Directors,
shall, subject to and according to applicable law and its Certificate of
Incorporation and By-laws, promptly and duly call, give notice of, convene and
hold as soon as practicable following the date on which the Registration
Statement becomes effective the Company Meeting for the purpose of voting to
approve and adopt this Agreement and the Merger (the "Company Voting Proposal").
The Board of Directors of the Company shall (i) recommend approval and adoption
of the Company Voting Proposal by the stockholders of the Company and include in
the Proxy Statement such recommendation and (ii) take all reasonable and lawful
action to solicit and obtain such approval; provided, however, that the Board of
Directors of the Company may withdraw such recommendation if (but only if) such
Board of Directors has received a Superior Proposal and after consultation with
its outside legal counsel determines that it is required, in order to fulfill
its fiduciary duties under applicable law, to recommend such Superior Proposal
to the stockholders of the Company and (iii) the Company has complied with the
provisions of Section 6.1.
(b) The Company shall call and hold the Company Meeting
for the purpose of voting upon the adoption of this Agreement and the Merger
whether its Board of Directors at any time subsequent to the date hereof
determines that this Agreement is no longer advisable and withdraws, or proposes
publicly to withdraw, its approval or recommendation of this Agreement or the
Merger, or approves or recommends, or proposes publicly to approve or recommend,
any Superior Proposal.
32
<PAGE> 39
6.6 Legal Conditions to the Merger.
(a) Subject to the terms hereof, the Company and the
Buyer shall each use its reasonable efforts to (i) take, or cause to be taken,
all actions, and do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective the transactions contemplated hereby as promptly as
practicable, (ii) obtain from any Governmental Entity or any other third party
any consents, licenses, permits, waivers, approvals, authorizations, or orders
required to be obtained or made by the Company or the Buyer or any of their
Subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
(iii) as promptly as practicable, make all necessary filings, and thereafter
make any other required submissions, with respect to this Agreement and the
Merger required under (A) the Securities Act and the Exchange Act, and any other
applicable federal or state securities laws, (B) the HSR Act and any related
governmental request thereunder, and (C) any other applicable law and (iv)
execute or deliver any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement. The Company and the Buyer shall cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the non-filing party and its advisors prior to filing and,
if requested, to accept all reasonable additions, deletions or changes suggested
in connection therewith. The Company and the Buyer shall use their respective
reasonable efforts to furnish to each other all information required for any
application or other filing to be made pursuant to the rules and regulations of
any applicable law (including all information required to be included in the
Proxy Statement and the Registration Statement) in connection with the
transactions contemplated by this Agreement.
(b) Subject to the terms hereof, the Buyer and the
Company agree, and shall cause each of their respective Subsidiaries, to
cooperate and to use their respective reasonable efforts to obtain any
government clearances or approvals required for Closing under the HSR Act, the
Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade
Commission Act, as amended, and any other federal, state or foreign law or,
regulation or decree designed to prohibit, restrict or regulate actions for the
purpose or effect of monopolization or restraint of trade (collectively
"Antitrust Laws"), to respond to any government requests for information under
any Antitrust Law, and to contest and resist any action, including any
legislative, administrative or judicial action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order (whether
temporary, preliminary or permanent) (an "Antitrust Order") that restricts,
prevents or prohibits the consummation of the Merger or any other transactions
contemplated by this Agreement under any Antitrust Law. The parties hereto will
consult and cooperate with one another, and consider in good faith the views of
one another, in connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted by or on
behalf of any party hereto in connection with proceedings under or relating to
any Antitrust Law. The Buyer shall be entitled to direct any proceedings or
negotiations with any Governmental Entity relating to any of the foregoing,
provided that it shall afford the Company a reasonable opportunity to
participate therein. Notwithstanding anything to the contrary in this Section,
neither the Buyer nor any of its Subsidiaries shall be required to (i) divest
any of their respective businesses, product lines or
33
<PAGE> 40
assets, or to take or agree to take any other action or agree to any limitation,
that could reasonably be expected to have a material adverse effect on the Buyer
or on the Buyer combined with the Company after the Effective Time or (ii) take
any action under this Section if the United States Department of Justice or the
United States Federal Trade Commission authorizes its staff to seek a
preliminary injunction or restraining order to enjoin consummation of the
Merger.
(c) Each of the Company and the Buyer shall give (or
shall cause their respective Subsidiaries to give) any notices to third parties,
and use, and cause their respective Subsidiaries to use, their reasonable
efforts to obtain any third party consents related to or required in connection
with the Merger that are (A) necessary to consummate the transactions
contemplated hereby, (B) disclosed or required to be disclosed in the Company
Disclosure Schedule or the Buyer Disclosure Schedule, as the case may be, or (C)
required to prevent a Company Material Adverse Effect or a Buyer Material
Adverse Effect from occurring prior to or after the Effective Time.
6.7 Public Disclosure. The Buyer and the Company shall each use its
reasonable efforts to consult with the other before issuing any press release or
otherwise making any public statement with respect to the Merger or this
Agreement and shall not issue any such press release or make any such public
statement prior to using such efforts, except as may be required by law.
6.8 Tax-Free Reorganization. The Buyer and the Company shall each use
its reasonable efforts to cause the Merger to be treated as a reorganization
within the meaning of Section 368(a) of the Code. The parties hereto hereby
adopt this Agreement as a plan of reorganization.
6.9 Affiliate Agreements. Upon the execution of this Agreement, the
Company will provide the Buyer with a list of those persons who are, in the
Company's reasonable judgment, "affiliates" of the Company, within the meaning
of Rule 145 (each such person who is an "affiliate" of the Company within the
meaning of Rule 145 is referred to as an "Affiliate") promulgated under the
Securities Act ("Rule 145"). The Company shall provide to the Buyer such
information and documents as the Buyer shall reasonably request for purposes of
reviewing such list and shall notify the Buyer in writing regarding any change
in the identity of its Affiliates prior to the Closing Date. The Company shall
use its reasonable efforts to deliver or cause to be delivered to the Buyer
prior to the mailing of the Proxy Statement from each of its Affiliates, an
executed Affiliate Agreement, in substantially the form appended hereto as
Exhibit D (the "Affiliate Agreement").
6.10 Nasdaq National Market Listing. The Buyer shall file with the
Nasdaq National Market a Notification Form for Listing of Additional Shares with
respect to the Buyer Common Stock issuable in connection with the Merger.
6.11 Company Stock Plans and the Company Warrants.
(a) At the Effective Time, each outstanding Company Stock
Option under Company Stock Plans, whether vested or unvested, shall be deemed to
constitute an option to
34
<PAGE> 41
acquire, on the same terms and conditions as were applicable under the Company
Stock Option immediately prior to the Effective Time, the same number of shares
of Buyer Common Stock as the holder of the Company Stock Option would have been
entitled to receive pursuant to the Merger had such holder exercised such option
in full immediately prior to the Effective Time (rounded down to the nearest
whole number), at a price per share (rounded up to the nearest whole cent) equal
to (y) the aggregate exercise price for the shares of Company Common Stock
purchasable pursuant to the Company Stock Option immediately prior to the
Effective Time divided by (z) the number of full shares of Buyer Common Stock
deemed purchasable pursuant to the Company Stock Option in accordance with the
foregoing.
(b) As soon as practicable after the Effective Time, the
Buyer shall deliver to the participants in the Company Stock Plans appropriate
notice setting forth such participants' rights pursuant thereto and the grants
pursuant to the Company Stock Plans shall continue in effect on the same terms
and conditions (subject to the adjustments required by this Section after giving
effect to the Merger).
(c) The Buyer shall take all corporate action necessary
for the assumption of the Company Stock Plans, including the reservation for
issuance of a sufficient number of shares of Buyer Common Stock for delivery
under the Company Stock Plans assumed in accordance with this Section. As soon
as practicable after the Effective Time, the Buyer shall file a registration
statement on Form S-8 (or any successor form) or another appropriate form with
respect to the shares of Buyer Common Stock subject to the Company Stock Options
and shall use its best efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
options remain outstanding. It is intended that the Company Stock Options
assumed by Buyer shall qualify following the Effective Time as incentive stock
options (as defined in Section 422 of the Code) to the extent the Company Stock
Options qualified as incentive stock options immediately prior to the Effective
Time and this Section 6.11 shall be construed consistent with such intent.
(d) The Board of Directors of the Company shall, prior to
or as of the Effective Time, take all necessary actions, pursuant to and in
accordance with the terms of Company Stock Plans and the instruments evidencing
the Company Stock Options, to provide for the conversion of the Company Stock
Options into options to acquire Buyer Common Stock in accordance with this
Section, and that no consent of the holders of the Company Stock Options is
required in connection with such conversion.
(e) At the Effective Time, by virtue of the Merger, each
Company Warrant outstanding immediately prior to the Effective Time shall be
automatically assumed by Buyer and converted into a warrant to acquire, on the
same terms and conditions as were applicable under such Company Warrant, the
same number of shares of Buyer Common Stock (rounded down to the nearest whole
share) as the holder of such Company Warrant would have been entitled to receive
pursuant to the Merger had such holder exercised such Company Warrant in full
immediately prior to the Effective Time, at a price per share (rounded up to the
nearest whole cent) of Buyer Common Stock equal to (A) the aggregate exercise
price for the shares of
35
<PAGE> 42
Company Common Stock otherwise purchasable pursuant to such Company Warrant
divided by (B) the aggregate number of shares of Buyer Common Stock deemed
purchasable pursuant to such Company Warrant (each, as so adjusted, an "Adjusted
Warrant"). Prior to the Effective Time, Buyer shall take all necessary actions
for the assumption of the Company Warrants and their conversion into Adjusted
Warrants, including the reservation, issuance and quotation of Buyer Common
Stock in a number at least equal to the number of shares of Buyer Common Stock
that will be subject to the Adjusted Warrants.
(f) The Company shall terminate its Employee Stock
Purchase Plan and the then current offering period thereunder prior to the
Effective Time so that no rights or options under such Plan can be issued or
exercised after the Effective Time.
6.12 Stockholder Litigation. Until the earlier of the termination of
this Agreement in accordance with its terms or the Effective Time, the Company
shall give the Buyer the opportunity to participate in the defense or settlement
of any stockholder litigation against the Company or its Board of Directors
relating to this Agreement or any of the transactions contemplated by this
Agreement, and shall not settle any such litigation without the Buyer's prior
written consent, which will not be unreasonably withheld or delayed.
6.13 Indemnification.
(a) From and after the Effective Time, the Buyer shall,
to the fullest extent permitted by law, cause the Surviving Corporation, for a
period of six years from the Effective Time, to honor all of the Company's
obligations to indemnify and hold harmless each present and former director and
officer of the Company (the "Indemnified Parties"), 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 extent that such
obligations to indemnify and hold harmless exist on the date of this Agreement.
(b) In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person in a single transaction or a series of
transactions, then, and in each such case, Buyer will either guaranty the
indemnification obligations referred to in this Section 6.13 or will make or
cause to be made proper provision so that the successors and assigns of the
Surviving Corporation assume the indemnification obligations described herein
for the benefit of the Indemnified Parties.
(c) The provisions of this Section 6.13 are (i) intended
to be for the benefit of, and will be enforceable by, each of the Indemnified
Parties and (ii) in addition to, and not in substitution for, any other rights
to indemnification or contribution that any such person may have by contract or
otherwise.
36
<PAGE> 43
6.14 Termination of Company 401(k) Plan. Prior to the Closing, the
Company shall terminate the Company 401(k) Plan, and shall not thereafter
establish or maintain another defined contribution plan without the consent of
the Buyer.
ARTICLE VII
CONDITIONS TO MERGER
7.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Company Voting Proposal
shall have been approved and adopted at the Company Meeting, at which a quorum
is present, by the affirmative vote of the holders of a majority of the shares
of the Company Common Stock outstanding on the record date for the Company
Meeting.
(b) HSR Act. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated.
(c) Governmental Approvals. Other than the filings
provided for by Section 1.1, all authorizations, consents, orders or approvals
of, or declarations or filings with, or expirations of waiting periods imposed
by, any Governmental Entity, the failure of which to file, obtain or occur is
reasonably likely to have a Buyer Material Adverse Effect or a Company Material
Adverse Effect shall have been filed, been obtained or occurred.
(d) Registration Statement. The Registration Statement
shall have become effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop order.
(e) No Injunctions. No Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
order, executive order, stay, decree, judgment or injunction (each an "Order")
or statute, rule or regulation which is in effect and which has the effect of
making the Merger illegal or otherwise prohibiting consummation of the Merger.
7.2 Additional Conditions to Obligations of the Buyer and the
Transitory Subsidiary. The obligations of the Buyer and the Transitory
Subsidiary to effect the Merger are subject to the satisfaction of each of the
following additional conditions, any of which may be waived in writing
exclusively by the Buyer and the Transitory Subsidiary:
(a) Representations and Warranties. The representations
and warranties of the Company set forth in this Agreement shall be true and
correct (i) as of the date of this Agreement (except to the extent such
representations and warranties are specifically made as of a particular date, in
which case such representations and warranties shall be true and correct as of
such date) and (ii) as of the Closing Date as though made on and as of the
Closing Date (except (x) to the extent such representations and warranties are
specifically made as of a particular date, in which
37
<PAGE> 44
case such representations and warranties shall be true and correct as of such
date, (y) for changes contemplated by this Agreement and (z) where the failures
to be true and correct (without regard to any materiality, Company Material
Adverse Effect or knowledge qualifications contained therein), individually or
in the aggregate, have not had, and are not reasonably likely to have, a Company
Material Adverse Effect); and the Buyer shall have received a certificate signed
on behalf of the Company by the chief executive officer and the chief financial
officer of the Company to such effect.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing Date; and
the Buyer shall have received a certificate signed on behalf of the Company by
the chief executive officer and the chief financial officer of the Company to
such effect.
(c) Tax Opinion. The Buyer shall have received a written
opinion from Hale and Dorr LLP, counsel to the Buyer, to the effect that the
Merger will be treated for federal income tax purposes as a tax-free
reorganization within the meaning of Section 368(a) of the Code; provided that
if Hale and Dorr LLP does not render such opinion, this condition shall
nonetheless be deemed satisfied if Wilson Sonsini Goodrich & Rosati, P.C.
renders such opinion to the Buyer (it being agreed that the Buyer and the
Company shall each provide reasonable cooperation, including making reasonable
representations, to Hale and Dorr LLP or Wilson Sonsini Goodrich & Rosati, P.C.
as the case may be, to enable them to render such opinion).
(d) Third Party Consents. The Company shall have obtained all
consents and approvals of third parties referred to in Section 7.2(d) of the
Company Disclosure Schedule.
(e) Resignations. The Buyer shall have received copies of
the resignations, effective as of the Effective Time, of each director of the
Company and its Subsidiaries.
7.3 Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is subject to the satisfaction of
each of the following additional conditions, any of which may be waived, in
writing, exclusively by the Company:
(a) Representations and Warranties. The representations
and warranties of the Buyer and the Transitory Subsidiary set forth in this
Agreement shall be true and correct (i) as of the date of this Agreement (except
to the extent such representations are specifically made as of a particular
date, in which case such representations and warranties shall be true and
correct as of such date) and (ii) as of the Closing Date as though made on and
as of the Closing Date (except (x) to the extent such representations and
warranties are specifically made as of a particular date, in which case such
representations and warranties shall be true and correct as of such date, (y)
for changes contemplated by this Agreement and (z) where the failures to be true
and correct (without regard to any materiality, Buyer Material Adverse Effect or
knowledge qualifications contained therein), individually or in the aggregate,
have not had, and are not reasonably likely to have, a Buyer Material Adverse
Effect); and the Company shall have received a certificate signed
38
<PAGE> 45
on behalf of the Buyer by the chief executive officer or the chief financial
officer of the Buyer to such effect.
(b) Performance of Obligations of the Buyer and the
Transitory Subsidiary. The Buyer and Sub shall have performed in all material
respects all obligations required to be performed by them under this Agreement
at or prior to the Closing Date, and the Company shall have received a
certificate signed on behalf of the Buyer by the chief executive officer or the
chief financial officer of the Buyer to such effect.
(c) Tax Opinion. The Company shall have received the
opinion of Wilson Sonsini Goodrich & Rosati, P.C., counsel to the Company, to
the effect that the Merger will be treated for federal income tax purposes as a
tax-free reorganization within the meaning of Section 368(a) of the Code;
provided that if Wilson Sonsini Goodrich & Rosati, P.C. does not render such
opinion, this condition shall nonetheless be deemed satisfied if Hale and Dorr
LLP renders such opinion to the Company (it being agreed that the Buyer and the
Company shall each provide reasonable cooperation, including making reasonable
representations, to Wilson Sonsini Goodrich & Rosati, P.C. or Hale and Dorr LLP,
as the case may be, to enable them to render such opinion).
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time (with respect to Sections 8.1(b) through 8.1(g), by written
notice by the terminating party to the other party), whether before or, subject
to the terms hereof, after adoption of this Agreement by the stockholders of the
Company or the stockholder of the Transitory Subsidiary:
(a) by mutual written consent of the Buyer, Transitory
Subsidiary and the Company; or
(b) by either the Buyer or the Company if the Merger
shall not have been consummated by June 30, 2000 (the "Outside Date") (provided
that the right to terminate this Agreement under this Section 8.1(b) shall not
be available to any party whose failure to fulfill any obligation under this
Agreement has been a principal cause of or resulted in the failure of the Merger
to occur on or before such date); or
(c) by either the Buyer or the Company if a Governmental
Entity of competent jurisdiction shall have issued a nonappealable final order,
decree or ruling or taken any other nonappealable final action, in each case
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger; or
(d) by either the Buyer or the Company if at the Company
Meeting (including any adjournment or postponement), the requisite vote of the
stockholders of the Company in favor of the Company Voting Proposal shall not
have been obtained (provided that the right to terminate this Agreement under
this Section 8.1(d) shall not be available to any party seeking
39
<PAGE> 46
termination who at the time is in breach of or has failed to fulfill its
obligations under this Agreement); or
(e) by the Buyer, if: (i) the Board of Directors of the
Company shall have failed to recommend approval of the Company Voting Proposal
in the Proxy Statement or shall have withdrawn or modified its recommendation of
the Company Voting Proposal; (ii) the Board of Directors of the Company shall
have approved or recommended to the stockholders of the Company an Alternative
Transaction (as defined in Section 8.3(e)); (iii) an Alternative Transaction
shall have been announced or otherwise publicly known and the Board of Directors
of the Company shall have (A) failed to recommend against acceptance of such
Alternative Transaction by its stockholders within ten (10) days of delivery of
a written request from the Buyer for such action or (B) failed to reconfirm its
approval and recommendation of this Agreement and the transactions contemplated
hereby within ten (10) days of delivery of a written request from the Buyer for
such action or (iv) a tender offer or exchange offer for 20% or more of the
outstanding shares of the Company Common Stock is commenced (other than by the
Buyer or an Affiliate of the Buyer) and the Board of Directors of the Company
recommends that the stockholders of the Company tender their shares in such
tender or exchange offer or, within ten (10) days after such tender or exchange
offer, fails to recommend against acceptance of such offer or takes no position
with respect to the acceptance thereof; or
(f) by either the Buyer or the Company, if there has been
a breach or failure to perform of any representation, warranty, covenant or
agreement on the part of the other party set forth in this Agreement, which
breach or failure to perform (i) causes the conditions set forth in Section
7.2(a) or 7.2(b) (in the case of termination by the Buyer) or Section 7.3(a) or
7.3(b) (in the case of termination by the Company) not to be satisfied, and (ii)
shall not have been cured within 20 days following receipt by the breaching
party or party failing to perform written notice of such breach from the other
party; or
(g) by the Company if (i) the Company after the date
hereof has received an unsolicited Acquisition Proposal that its Board of
Directors has determined after consultation with its financial advisor is a
Superior Proposal, (ii) the Company has complied with all of the provisions of
Section 6.1(a)(A), (iii) the Board of Directors of the Company has determined in
good faith after consultation with its outside legal counsel that termination of
this Agreement is necessary for such Board of Directors to fulfill with its
fiduciary duties under applicable law, and (iv) the Company, contemporaneously
with, and as a condition to, its termination of this Agreement, pays to Buyer
the fee and expenses provided for in Section 8.3.
8.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of the Buyer, the
Company, the Transitory Subsidiary or their respective officers, directors,
stockholders or Affiliates, except as set forth in Sections 3.26, 5.3, 8.3 and
Article IX; provided that any such termination shall not relieve any party from
liability for any willful breach of this Agreement (which includes without
limitation the making of any representation or warranty by a party in this
Agreement that the party knew was not true and accurate when made) and the
provisions of the Company Stock Option Agreement,
40
<PAGE> 47
Sections 3.26, 5.3, 8.3 and Article IX of this Agreement and the Confidentiality
Agreement shall remain in full force and effect and survive any termination of
this Agreement.
8.3 Fees and Expenses.
(a) Except as set forth in this Section 8.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such fees and expenses,
whether or not the Merger is consummated; provided however, that the Company and
the Buyer shall share equally all fees and expenses, other than attorneys' fees,
incurred with respect to the printing and filing of the Proxy Statement
(including any related preliminary materials) and the Registration Statement and
any amendments or supplements thereto.
(b) The Company shall pay the Buyer up to $500,000 as
reimbursement for expenses of the Buyer actually incurred relating to the
transactions contemplated by this Agreement prior to termination (including, but
not limited to, fees and expenses of the Buyer's counsel, accountants and
financial advisors, but excluding any discretionary fees paid to such financial
advisors), upon the termination of this Agreement by the Buyer pursuant to
Section 8.1(b) as a result of the failure to satisfy the condition set forth in
Section 7.2(a); or by the Buyer or the Company pursuant to Section 8.1(d) under
circumstances in which no fee is payable to Buyer under Section 8.3(c).
(c) The Company shall pay the Buyer a termination fee of
$20,000,000 upon the earliest to occur of the following events:
(i) the termination of this Agreement by the Buyer
pursuant to Section 8.1(e); or
(ii) the termination of this Agreement by the Buyer
pursuant to Section 8.1(f) as a result of a breach of the provisions of Section
6.1 or 6.5; or
(iii) the termination of this Agreement by the
Company pursuant to Section 8.1(g).
If the Buyer or the Company terminates this Agreement pursuant to
Section 8.1(d) and, at or prior to such termination a bona fide proposal for an
Alternative Transaction with respect to the Company shall have been publicly
announced, the Company shall pay to the Buyer, upon such termination, a
termination fee of $10,000,000. If such fee shall have become payable to the
Buyer pursuant to the preceding sentence and, within 12 months after such
termination, the Company shall enter into a definitive agreement with respect to
an Alternative Transaction or an Alternative Transaction involving the Company
shall be consummated, the Company shall pay to the Buyer an additional fee of
$10,000,000 upon the execution and delivery of such definitive agreement or
consummation, as the case may be.
41
<PAGE> 48
(d) If one party fails to promptly pay to the other any
expense reimbursement or fee due hereunder, the defaulting party shall pay the
costs and expenses (including legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee at the
publicly announced prime rate of Fleet Bank, N.A. plus five percent per annum,
compounded quarterly, from the date such expense reimbursement or fee was
required to be paid.
(e) As used in this Agreement, "Alternative Transaction"
means either (i) a transaction pursuant to which any person (or group of
persons) other than the Buyer or its affiliates (a "Third Party"), acquires more
than 20% of the outstanding shares of the Company Common Stock pursuant to a
tender offer or exchange offer or otherwise, (ii) a merger or other business
combination involving the Company pursuant to which any Third Party acquires
more than 20% of the outstanding shares of Company Common Stock or of the entity
surviving such merger or business combination, (iii) any other transaction
pursuant to which any Third Party acquires control of assets (including for this
purpose the outstanding equity securities of Subsidiaries of the Company, and
the entity surviving any merger or business combination including any of them)
of the Company having a fair market value equal to more than 20% of the fair
market value of all the assets of the Company immediately prior to such
transaction, or (iv) any public announcement by a Third Party of a proposal,
plan or intention to do any of the foregoing or any agreement to engage in any
of the foregoing; provided, however, that all references in this subsection (e)
to "20%" shall mean "50%" for purposes of the second paragraph of Section
8.3(c).
8.4 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the stockholders of the Company or the Transitory Subsidiary, but, after any
such approval, no amendment shall be made which by law requires further approval
by such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.5 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
42
<PAGE> 49
ARTICLE IX
MISCELLANEOUS
9.1 Nonsurvival of Representations and Warranties. The respective
representations and warranties of the Company, the Buyer and the Transitory
Subsidiary contained in this Agreement or in any instrument delivered pursuant
to this Agreement shall expire with, and be terminated and extinguished upon,
the Effective Time.
9.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed duly delivered (i) four business days after being
sent by registered or certified mail, return receipt requested, postage prepaid,
or (ii) one business day after being sent for next business day delivery, fees
prepaid, via a reputable nationwide overnight courier service, in each case to
the intended recipient as set forth below:
(a) if to the Buyer or Transitory Subsidiary, to
CMGI, Inc.
100 Brickstone Square
Andover, MA 01810
Attn: General Counsel
Telecopy: (978) 684-3814
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attn: Mark G. Borden, Esq.
Telecopy: (617) 526-5000
(b) if to the Company, to
yesmail.com, inc.
565 Lakeview Parkway
Suite 135
Vernon Hills, IL 60061
Attn: President
Telecopy: (847) 918-9296
with a copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
Attn: Jeffrey D. Saper, Esq.
Telecopy: (650) 493-6811
43
<PAGE> 50
Any party may give any notice or other communication hereunder using any other
means (including personal delivery, messenger service, telecopy, telex, ordinary
mail or electronic mail), but no such notice 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
and other communications hereunder are to be delivered by giving the other
parties notice in the manner herein set forth.
9.3 Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto and the documents and instruments referred to herein that are to
be delivered at the Closing) constitutes the entire agreement among the parties
hereto and supersedes any prior understandings, agreements or representations by
or among the parties hereto, or any of them, written or oral, with respect to
the subject matter hereof; provided that the Confidentiality Agreement shall
remain in effect in accordance with its terms.
9.4 No Third Party Beneficiaries. Except as provided in Section 6.13,
this Agreement is not intended, and shall not be deemed, to confer any rights or
remedies upon any person other than the parties hereto and their respective
successors and permitted assigns, to create any agreement of employment with any
person or to otherwise create any third-party beneficiary hereto.
9.5 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties hereto
without the prior written consent of the other parties, and any such assignment
without such prior written consent shall be null and void, except that the Buyer
and/or the Transitory Subsidiary may assign this Agreement to any direct or
indirect wholly owned Subsidiary of the Buyer without consent of the Company,
provided that the Buyer shall remain liable for all of its obligations under
this Agreement. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors and permitted assigns.
9.6 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 hereto that the court making such determination
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 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. In the event such court does
not exercise the power granted to it in the prior sentence, the parties hereto
agree to replace such invalid or unenforceable term or provision with a valid
and enforceable term or provision that will achieve, to the extent possible, the
economic, business and other purposes of such invalid or unenforceable term.
44
<PAGE> 51
9.7 Counterparts and 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 be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties hereto and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart. This Agreement may be executed and delivered by
facsimile transmission.
9.8 Interpretation. When reference is made in this Agreement to an
Article or a Section, such reference shall be to an Article or Section of this
Agreement, unless otherwise indicated. The table of contents, table of defined
terms and headings contained in this Agreement are for convenience of reference
only and shall not affect in any way the meaning or interpretation of this
Agreement. The language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any party. Whenever the
context may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa. 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. Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation".
9.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of laws
of any jurisdictions other than those of the State of Delaware.
9.10 Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof this being in addition to any other remedy to
which they are entitled at law or in equity.
9.11 Waiver of Jury Trial. EACH OF THE BUYER, THE TRANSITORY
SUBSIDIARY AND THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THE ACTIONS OF THE BUYER, THE TRANSITORY SUBSIDIARY OR
THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF
THIS AGREEMENT.
45
<PAGE> 52
9.12 Forum. Each of the parties hereto (i) consents to submit itself
to the personal jurisdiction of any Federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (ii) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court, and (iii) agrees that it will
not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Federal court sitting
in the State of Delaware or a Delaware state court.
[Signature Page to follow]
46
<PAGE> 53
IN WITNESS WHEREOF, the Buyer, the Transitory Subsidiary and the
Company have caused this Agreement to be signed by their respective officers
thereunto duly authorized as of the date first written above.
CMGI, INC.
By: /s/ ANDREW J. HAJDUCKY
------------------------------------
Title:
---------------------------------
MARS ACQUISITION, INC.
By: /s/ ANDREW J. HAJDUCKY
------------------------------------
Title:
---------------------------------
YESMAIL.COM, INC.
By: /s/ DAVID TOLMIE
------------------------------------
Title:
------------------------------------
[Signature Page to Agreement and Plan of Merger and Reorganization]
<PAGE> 54
Exhibit A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of December 14, 1999 (the
"Agreement"), between CMGI, Inc., a Delaware corporation (the "Grantee"), and
yesmail.com, inc., a Delaware corporation (the "Grantor").
WHEREAS, the Grantee, the Grantor and Mars Acquisition, Inc., a wholly
owned subsidiary of the Grantee ("Newco"), are entering into an Agreement and
Plan of Merger and Reorganization, dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, for the merger (the "Merger")
of Newco with and into the Grantor;
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, the Grantee has required that the Grantor grant to the Grantee an
option to purchase the shares of Common Stock of the Grantor (the "Common
Stock") covered hereby, upon the terms and subject to the conditions hereof; and
WHEREAS, in order to induce the Grantee to enter into the Merger
Agreement, the Grantor is willing to grant the Grantee the requested option.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
1. The Option; Exercise; Adjustments; Termination.
(a) Contemporaneously herewith the Grantee, Newco and the
Grantor are entering into the Merger Agreement. Subject to the other terms and
conditions set forth herein, the Grantor hereby grants to the Grantee an
irrevocable option (the "Option") to purchase up to 4,044,400 shares of Common
Stock (the "Shares") at a cash purchase price equal to $25.76 per Share (the
"Purchase Price"); provided, however, that the number of shares issuable to
Buyer pursuant hereto shall not exceed 19.9% of the outstanding shares of Common
Stock. The Option may be exercised by the Grantee, in whole or in part, at any
time, or from time to time, after the earliest of (i) the termination of the
Merger Agreement by Buyer under Section 8.1(e) of the Merger Agreement, (ii) the
termination of the Merger Agreement by Buyer under Section 8.1(f) of the Merger
Agreement as a result of a breach of Section 6.1 or 6.5 of the Merger Agreement,
or (iii) the termination of the Merger Agreement by the Company pursuant to
Section 8.1(g) of the Merger Agreement.
(b) In the event of any change in the number of issued and
outstanding shares of Common Stock by reason of any reclassification, stock
dividend, stock split, split-up, recapitalization, merger or other change in the
corporate or capital structure of the Grantor, the
<PAGE> 55
number of Shares subject to the Option and the purchase price per Share shall be
appropriately adjusted to restore the Grantee to its rights hereunder.
(c) In the event the Grantee wishes to exercise the Option,
the Grantee shall send a written notice to the Grantor (the "Exercise Notice")
specifying a date (subject to the requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act")) not later than
10 business days and not earlier than the next business day following the date
such notice is given for the closing of such purchase.
(d) The right to exercise the Option shall terminate at the
earliest of (i) the Effective Time (as defined in the Merger Agreement), (ii)
the termination of the Merger Agreement pursuant to circumstances under which
the Grantee is not entitled to receive a fee pursuant to Section 8.3 of the
Merger Agreement, (iii) the date on which Grantee realizes a Total Profit equal
to the Profit Limit (as such terms are defined in Section 8) and (iv) 90 days
after the date (the "Merger Termination Date") on which the Merger Agreement is
terminated (the date referred to in clause (iv) being hereinafter referred to as
the "Option Expiration Date"); provided that if the Option cannot be exercised
or the Shares cannot be delivered to Grantee upon such exercise because the
conditions set forth in Section 2(a) or Section 2(b) hereof have not yet been
satisfied, the Option Expiration Date shall be extended until 30 days after such
impediment to exercise has been removed.
2. Conditions to Delivery of Shares. The Grantor's obligation to
deliver Shares upon exercise of the Option is subject only to the conditions
that:
(a) No preliminary or permanent injunction or other order
issued by any federal or state court of competent jurisdiction in the United
States prohibiting the delivery of the Shares shall be in effect; and
(b) Any applicable waiting periods under the HSR Act shall
have expired or been terminated.
3. The Closing.
(a) Any closing hereunder shall take place on the date
specified by the Grantee in its Exercise Notice at 9:00 A.M., local time, at the
offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts, or, if the
conditions set forth in Section 2(a) or 2(b) have not then been satisfied, on
the second business day following the satisfaction of such conditions, or at
such other time and place as the parties hereto may agree (the "Closing Date").
On the Closing Date, the Grantor will deliver to the Grantee a certificate or
certificates, duly endorsed (or accompanied by duly executed stock powers),
representing the Shares in the denominations designated by the Grantee in its
Exercise Notice and the Grantee will purchase such Shares from the Grantor at
the price per Share equal to the Purchase Price. Any payment made by the Grantee
to the Grantor, or by the Grantor to the Grantee, pursuant to this Agreement
shall be made by certified or official bank check or by wire transfer of federal
funds to a bank designated by the party receiving such funds.
2
<PAGE> 56
(b) The certificates representing the Shares may bear an
appropriate legend relating to the fact that such Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities Act").
4. Representations and Warranties of the Grantor. The Grantor
represents and warrants to the Grantee that: (a) the Grantor is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to enter
into and perform this Agreement; (b) the execution and delivery of this
Agreement by the Grantor and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Board of Directors of the
Grantor and this Agreement has been duly executed and delivered by a duly
authorized officer of the Grantor and constitutes a valid and binding obligation
of the Grantor, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles; (c) the Grantor has taken all necessary corporate action to
authorize and reserve the Shares issuable upon exercise of the Option and the
Shares, when issued and delivered by the Grantor upon exercise of the Option,
will be duly authorized, validly issued, fully paid and non-assessable and free
of any lien, security interest or other adverse claim and free of any preemptive
rights; (d) except as otherwise required by the HSR Act, the execution and
delivery of this Agreement by the Grantor and the consummation by it of the
transactions contemplated hereby do not require the consent, waiver, approval or
authorization of or any filing with any person or public authority and will not
violate, require a consent or waiver under, result in a breach of or the
acceleration of any obligation under, or constitute a default under, any
provision of any certificate or articles of incorporation or by-law, indenture,
mortgage, lien, lease, agreement, contract, instrument, order, law, rule,
regulation, stock market rule, judgment, ordinance, decree or restriction by
which the Grantor or any of its subsidiaries or any of their respective
properties or assets is bound; and (e) no "fair price", "moratorium", "control
share acquisition" or other form of anti-takeover statute or regulation is or
shall be applicable to the acquisition of Shares pursuant to this Agreement.
5. Representations and Warranties of the Grantee. The Grantee
represents and warrants to the Grantor that: (a) the execution and delivery of
this Agreement by the Grantee and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Grantee and this Agreement has been duly executed and
delivered by a duly authorized officer of the Grantee and will constitute a
valid and binding obligation of Grantee; and (b) the Grantee is acquiring the
Option and, if and when it exercises the Option, will be acquiring the Shares
issuable upon the exercise thereof for its own account and not with a view to
distribution or resale in any manner which would be in violation of the
Securities Act.
6. Listing of Shares; HSR Act Filings; Governmental Consents. Subject
to applicable law and the rules and regulations of the Nasdaq National Market,
the Grantor shall (i) promptly file a notice to list the Shares on the Nasdaq
National Market and (ii) make, as promptly as practicable, all necessary filings
by the Grantor under the HSR Act and use its best efforts to obtain all
necessary approvals thereunder as promptly as practicable; provided,
3
<PAGE> 57
however, that if the Grantor is unable to effect such listing on the Nasdaq
National Market by the Closing Date, the Grantor will nevertheless be obligated
to deliver the Shares upon the Closing Date. Each of the parties hereto will use
its best efforts to obtain consents of all third parties and governmental
authorities, if any, necessary to the consummation of the transactions
contemplated.
7. Registration Rights.
(a) In the event that the Grantee shall desire to sell any of
the Shares within two years after the purchase of such Shares pursuant hereto,
and such sale requires, in the opinion of counsel to the Grantee, which opinion
shall be reasonably satisfactory to the Grantor and its counsel, registration of
such Shares under the Securities Act, the Grantor will cooperate with the
Grantee and any underwriters in registering such Shares for resale, including,
without limitation, promptly filing a registration statement which complies with
the requirements of applicable federal and state securities laws and entering
into an underwriting agreement with such underwriters upon such terms and
conditions as are customarily contained in underwriting agreements with respect
to secondary distributions; provided that the Grantor shall not be required to
have declared effective more than two registration statements hereunder and
shall be entitled to delay the filing or effectiveness of any registration
statement for up to 120 days if the offering would, in the judgment of the Board
of Directors of the Grantor, require premature disclosure of any material
corporate development or otherwise interfere with or adversely affect any
pending or proposed offering of securities of the Grantor or any other material
transaction involving the Grantor.
(b) If the Common Stock is registered pursuant to the
provisions of this Section 7, the Grantor agrees (i) to furnish copies of the
registration statement and the prospectus relating to the Shares covered thereby
in such numbers as the Grantee may from time to time reasonably request and (ii)
if any event shall occur as a result of which it becomes necessary to amend or
supplement any registration statement or prospectus, to prepare and file under
the applicable securities laws such amendments and supplements as may be
necessary to keep available for at least 90 days a prospectus covering the
Common Stock meeting the requirements of such securities laws, and to furnish to
the Grantee such numbers of copies of the registration statement and prospectus
as amended or supplemented as may reasonably be requested. The Grantor shall
bear the cost of the registration, including, but not limited to, all
registration and filing fees, printing expenses, and fees and disbursements of
counsel and accountants for the Grantor, except that the Grantee shall pay the
fees and disbursements of its counsel and the underwriting fees and selling
commissions applicable to the Shares sold by the Grantee. The Grantor shall
indemnify and hold harmless Grantee, its affiliates and its officers and
directors from and against any and all losses, claims, damages, liabilities and
expenses arising out of or based upon any statements contained in, omissions or
alleged omissions from, each registration statement filed pursuant to this
paragraph; provided, however, that this provision does not apply to any loss,
liability, claim, damage or expense to the extent it arises out of any statement
or omission made in reliance upon and in conformity with written information
furnished to the Grantor by the Grantee, its affiliates or its officers
expressly for use in any registration statement (or any amendment thereto) or
any preliminary prospectus filed pursuant to this paragraph. The
4
<PAGE> 58
Grantor shall also indemnify and hold harmless each underwriter and each person
who controls any underwriter within the meaning of either the Securities Act or
the Securities Exchange Act of 1934 against any and all losses, claims, damages,
liabilities and expenses arising out of or based upon any statements contained
in, omissions or alleged omissions from, each registration statement filed
pursuant to this paragraph; provided, however, that this provision does not
apply to any loss, liability, claim, damage or expense to the extent it arises
out of any statement or omission made in reliance upon and in conformity with
written information furnished to the Grantor by the underwriters expressly for
use in any registration statement (or any amendment thereto) or any preliminary
prospectus filed pursuant to this paragraph.
8. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement, in
no event shall the Grantee's Total Profit (as hereinafter defined) exceed $25
million (the "Profit Limit") and, if it otherwise would exceed such amount, the
Grantee, at its sole election, shall either (i) deliver to the Grantor for
cancellation Shares previously purchased by Grantee, (ii) pay cash to the
Grantor, (iii) receive a smaller termination fee under Section 8.3 of the Merger
Agreement or (iv) undertake any combination thereof, so that Grantee's Total
Profit shall not exceed the Profit Limit after taking into account the foregoing
actions.
(b) Notwithstanding any other provision of this Agreement, the
Option may not be exercised for a number of Shares as would, as of the date of
the Exercise Notice, result in a Notional Total Profit (as defined below) of
more than the Profit Limit and, if exercise of the Option otherwise would exceed
the Profit Limit, the Grantee, at its discretion, may increase the Purchase
Price for that number of Shares set forth in the Exercise Notice so that the
Notional Total Profit shall not exceed the Profit Limit; provided, that nothing
in this sentence shall restrict any exercise of the Option permitted hereby on
any subsequent date at the Purchase Price set forth in Section 1(a) hereof.
(c) As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount of cash
received by Grantee pursuant to Section 8.3(c) of the Merger Agreement, and (ii)
(x) the cash amounts (net of customary brokerage commissions paid in connection
with the transaction) received by Grantee pursuant to the sale of Shares (or any
other securities into which such Shares are converted or exchanged) to any
unaffiliated party, less (y) the Grantee's purchase price for such Shares.
(d) As used herein, the term "Notional Total Profit" with
respect to any number of Shares as to which Grantee may propose to exercise the
Option shall be the Total Profit determined as of the date of the Exercise
Notice assuming that the Option were exercised on such date for such number of
Shares and assuming that such Shares, together with all other Shares held by
Grantee and its affiliates as of such date, were sold for cash at the closing
market price for the Common Stock as of the close of business on the preceding
trading day (less customary brokerage commissions).
9. Put.
5
<PAGE> 59
(a) At any time prior to the Option Expiration Date (the
"Repurchase Period"), upon demand by the Grantee, the Grantee shall have the
right to sell to the Grantor (or any successor entity thereof), and Grantor (or
such successor entity), shall be obligated to repurchase from the Grantee (the
"Put"), all or any portion of the Option, to the extent not previously
exercised, at the price set forth in subparagraph (i) below, and/or all or any
portion of the Shares purchased by the Grantee pursuant thereto, at a price set
forth in subparagraph (ii) below:
(i) the difference between the "Market/Tender Offer
Price" for shares of Common Stock as of the date (the "Notice Date") notice of
exercise of the Put is given to the other party (defined as the greater of (A)
the price per share offered as of the Notice Date pursuant to any tender or
exchange offer or other Acquisition Proposal which was made prior to the Notice
Date and not terminated or withdrawn as of the Notice Date (the "Tender Price")
or (B) the average of the closing prices of shares of Common Stock on the Nasdaq
National Market for the ten (10) trading days immediately preceding the Notice
Date (the "Market Price")), and the Purchase Price multiplied by the number of
Shares purchasable pursuant to the Option (or portion thereof with respect to
which the Grantee is exercising its rights under this Section 9), but only if
the Market/Tender Offer Price is greater than the Purchase Price; and
(ii) the Purchase Price paid by the Grantee for the
Shares acquired pursuant to the Option plus the difference between the
Market/Tender Offer Price and the Purchase Price, but only if the Market/Tender
Offer Price is greater than the Purchase Price, multiplied by the number of
Shares so purchased.
(b) In the event Grantee exercises its rights under this
Section 9, the Grantor shall, within ten business days of the Notice Date, pay
the required amount (the "Repurchase Price") to the Grantee in immediately
available funds and the Grantee shall surrender to the Grantor the Option or the
certificates evidencing the Shares purchased by the Grantee pursuant thereto,
and the Grantee shall represent and warrant that it owns such shares and that
such shares are then free and clear of all liens, claims, charges and
encumbrances of any kind or nature whatsoever, other than any of the same
created by the Grantor or its affiliates.
(c) To the extent that the Grantor is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Option and/or Shares in full, the Grantor shall immediately so
notify the Grantee and thereafter deliver or cause to be delivered, from time to
time, to the Grantee the portion of the Repurchase Price that it is no longer
prohibited from delivering within five business days after the date on which the
Grantor is no longer so prohibited; provided that, if the Grantor at any time
after delivery of a notice of exercise of the Put pursuant to Section 9(a) is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Grantee the Repurchase Price in
full (and the Grantor hereby undertakes to use its best efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish such repurchase), the Grantee may
revoke its notice of the exercise of the Put whether in whole or to the extent
of the prohibition, whereupon, in the latter case, the Grantor shall promptly
(1)
6
<PAGE> 60
deliver to the Grantee that portion of the Repurchase Price that the Grantor is
not prohibited from delivering and (2) deliver to the Grantee as appropriate,
(A) a new Agreement evidencing the right of the Grantee to purchase that number
of shares of Common Stock obtained by multiplying the number of shares of Common
Stock for which the surrendered Agreement was exercisable at the time of
delivery of the notice of exercise of the Put by a fraction, the numerator of
which is the Repurchase Price less the portion of the Repurchase Price
previously delivered to the Grantee and the denominator of which is the
Repurchase Price, and/or (B), a certificate for the Shares the Grantor is then
so prohibited from repurchasing.
10. Expenses. Each party hereto shall pay its own expenses incurred in
connection with this Agreement, except as otherwise specifically provided
herein.
11. Specific Performance. The Grantor acknowledges that if the Grantor
fails to perform any of its obligations under this Agreement, immediate and
irreparable harm or injury would be caused to the Grantee for which money
damages would not be an adequate remedy. In such event, the Grantor agrees that
the Grantee shall have the right, in addition to any other rights it may have,
to specific performance of this Agreement. Accordingly, if the Grantee should
institute an action or proceeding seeking specific enforcement of the provisions
hereof, the Grantor hereby waives the claim or defense that the Grantee has an
adequate remedy at law and hereby agrees not to assert in any such action or
proceeding the claim or defense that such a remedy at law exists. The Grantor
further agrees to waive any requirements for the securing or posting of any bond
in connection with obtaining any such equitable relief.
12. Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended or delivered
by registered or certified mail, return receipt requested, or if sent by
facsimile transmission, upon receipt of oral confirmation that such transmission
has been received, to the person at the address set forth below, or such other
address as may be designated in writing hereafter, in the same manner, by such
person:
If to the Grantor:
yesmail.com, inc.
565 Lakeview Parkway
Suite 135
Vernon Hills, IL 60061
Attn: President
With a copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
Attn: Jeffrey D. Saper, Esq.
7
<PAGE> 61
If to the Grantee:
CMGI, Inc.
100 Brickstone Square
Andover, MA 01810
Attn: General Counsel
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attn: Mark G. Borden, Esq.
13. Parties in Interest. Nothing in this Agreement, express or implied,
is intended to confer upon any person other than the Grantor or the Grantee, or
their successors or assigns, any rights or remedies under or by reason of this
Agreement.
14. Entire Agreement; Amendments. This Agreement, together with the
Merger Agreement and the other documents referred to therein, contains the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. The terms of
this Agreement may be amended, modified or waived only by an agreement in
writing signed by the party against whom such amendment, modification or waiver
is sought to be enforced.
15. Assignment. No party to this Agreement may assign any of its rights
or obligations under this Agreement without the prior written consent of the
other party hereto, except that the Grantee may assign its rights and
obligations hereunder to any direct or indirect wholly-owned subsidiary of the
Grantee (provided that such assignment shall not relieve the Grantee of its
obligations hereunder if such transferee does not perform such obligations).
16. Headings. The section headings herein are for convenience only and
shall not affect the construction of this Agreement.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (regardless of the laws that
might otherwise govern under applicable Delaware principles of conflicts of
law).
8
<PAGE> 62
19. Survival. All representations and warranties contained in this
Agreement shall survive delivery of and payment for the Shares.
20. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
[Signature Page to follow]
9
<PAGE> 63
IN WITNESS WHEREOF, the Grantee and the Grantor have caused this
Agreement to be duly executed and delivered on the day and year first above
written.
YESMAIL.COM, INC.
By:
------------------------------------
Title:
CMGI, INC.
By:
------------------------------------
Title:
<PAGE> 64
Exhibit B
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of December 14, 1999 (this
"Agreement"), among the stockholders listed on the signature page(s) hereto
(collectively, "Stockholders" and each individually, a "Stockholder"),
yesmail.com, inc., a Delaware corporation (the "Company") and CMGI, Inc., a
Delaware corporation ("Acquiror"). Capitalized terms used and not otherwise
defined herein shall have the respective meanings assigned to them in the Merger
Agreement referred to below.
WHEREAS, as of the date hereof, the Stockholders collectively own of
record and beneficially shares of capital stock of the Company, as set forth on
Schedule I hereto (such shares, or any other voting or equity of securities of
the Company hereafter acquired by any Stockholder prior to the termination of
this Agreement, being referred to herein collectively as the "Shares");
WHEREAS, concurrently with the execution of this Agreement, Acquiror
and the Company are entering into an Agreement and Plan of Merger and
Reorganization, dated as of the date hereof (the "Merger Agreement"), pursuant
to which, upon the terms and subject to the conditions thereof, a subsidiary of
Buyer will be merged with and into the Company, and the Company will be the
surviving corporation (the "Merger"); and
WHEREAS, as a condition to the willingness of Acquiror to enter into
the Merger Agreement, Acquiror has required that the Stockholders agree, and in
order to induce Acquiror to enter into the Merger Agreement, the Stockholders
are willing to agree to vote in favor of adopting the Merger Agreement and
approving the Merger, upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereby agree, severally and not jointly, as follows:
Section 1. Voting of Shares.
(a) Each Stockholder covenants and agrees that until the termination of
this Agreement in accordance with the terms hereof, at the Company Meeting or
any other meeting of the stockholders of the Company, however called, and in any
action by written consent of the stockholders of the Company, such Stockholder
will vote, or cause to be voted, all of his, her or its respective Shares (a) in
favor of adoption of the Merger Agreement and approval of the Merger
contemplated by the Merger Agreement, as the Merger Agreement may be modified or
amended from time to time in a manner not adverse to the Stockholders, and (b)
against any other Alternative Transaction.
<PAGE> 65
(b) Each Stockholder hereby irrevocably grants to, and appoints,
Acquiror, and any individual designated in writing by it, and each of them
individually, as its proxy and attorney-in-fact (with full power of
substitution), for and in its name, place and stead, to vote his, her or its
Shares at any meeting of the stockholders of the Company called with respect to
any of the matters specified in, and in accordance and consistent with this
Section 1. Each Stockholder understands and acknowledges that Acquiror is
entering into the Merger Agreement in reliance upon the Stockholder's execution
and delivery of this Agreement. Each Stockholder hereby affirms that the
irrevocable proxy set forth in this Section 1(b) is given in connection with the
execution of the Merger Agreement, and that such irrevocable proxy is given to
secure the performance of the duties of such Stockholder under this Agreement.
Except as otherwise provided for herein, each Stockholder hereby (i) affirms
that the irrevocable proxy is coupled with an interest and may under no
circumstances be revoked, (ii) ratifies and confirms all that the proxies
appointed hereunder may lawfully do or cause to be done by virtue hereof and
(iii) affirms that such irrevocable proxy is executed and intended to be
irrevocable in accordance with the provisions of Section 212(e) of the Delaware
General Corporation Law. Notwithstanding any other provisions of this Agreement,
the irrevocable proxy granted hereunder shall automatically terminate upon the
termination of this Agreement.
Section 2. Transfer of Shares.
(a) Each Stockholder covenants and agrees that such Stockholder will
not directly or indirectly, (a) sell, assign, transfer (including by merger,
testamentary disposition, interspousal disposition pursuant to a domestic
relations proceeding or otherwise by operation of law), pledge, encumber or
otherwise dispose of any of the Shares, (b) deposit any of the Shares into a
voting trust or enter into a voting agreement or arrangement with respect to the
Shares or grant any proxy or power of attorney with respect thereto which is
inconsistent with this Agreement or (c) enter into any contract, option or other
arrangement or undertaking with respect to the direct or indirect sale,
assignment, transfer (including by merger, testamentary disposition,
interspousal disposition pursuant to a domestic relations proceeding or
otherwise by operation of law) or other disposition of any Shares.
Section 3. Representations and Warranties of the Stockholders. Each
Stockholder on its own behalf hereby severally represents and warrants to
Acquiror with respect to itself and its, his or her ownership of the Shares as
follows:
(a) Ownership of Shares. On the date hereof, the Shares are owned
beneficially by Stockholder or its nominee. Stockholder has sole voting power,
without restrictions, with respect to all of the Shares.
(b) Power, Binding Agreement. Stockholder has the legal capacity, power
and authority to enter into and perform all of its obligations, under this
Agreement. The execution, delivery and performance of this Agreement by
Stockholder will not violate any material agreement to which Stockholder is a
party, including, without limitation, any voting agreement, stockholders'
agreement, partnership agreement or voting trust. This Agreement has been duly
and validly executed and delivered by Stockholder and constitutes a valid and
binding obligation
<PAGE> 66
of Stockholder, enforceable against Stockholder in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity).
(c) No Conflicts. The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated hereby will not, conflict
with or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, any
provision of any loan or credit agreement, note, bond, mortgage, indenture,
lease, or other agreement, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Stockholder or any of its properties or assets, other than such conflicts,
violations or defaults or terminations, cancellations or accelerations which
individually or in the aggregate do not materially impair the ability of
Stockholder to perform its obligations hereunder.
Section 4. No Solicitation. Prior to the termination of this Agreement
in accordance with its terms, each Stockholder agrees, in its individual
capacity as a stockholder of the Company, that (i) it will not, nor will it
authorize or permit any of its employees, agents and representatives to,
directly or indirectly, (a) initiate, solicit or encourage any inquiries or the
making of any Acquisition Proposal (as defined in the Merger Agreement), (b)
enter into any agreement with respect to any Acquisition Proposal, or (c)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Acquisition Proposal, and (ii) it will notify
Acquiror as soon as possible if any such inquiries or proposals are received by,
any information or documents is requested from, or any negotiations or
discussions are sought to be initiated or continued with, it or any of its
affiliates in its individual capacity.
Section 5. Termination. This Agreement shall terminate upon the
earliest to occur of (i) the Effective Time (as such term is defined in the
Merger Agreement) or (ii) any termination of the Merger Agreement in accordance
with the terms thereof; provided that no such termination shall relieve any
party of liability for a willful breach hereof prior to termination.
Section 6. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 7. Fiduciary Duties. Each Stockholder is signing this Agreement
solely in such Stockholder's capacity as an owner of his, her or its respective
Shares, and nothing herein shall prohibit, prevent or preclude such Stockholder
from taking or not taking any action in his or her capacity as an officer or
director of the Company, to the extent permitted by the Merger Agreement.
<PAGE> 67
Section 8. Miscellaneous.
(a) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, both written and oral, between the parties with
respect thereto. This Agreement may not be amended, modified or rescinded except
by an instrument in writing signed by each of the parties hereto.
(b) If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law, or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in a mutually acceptable manner in order that the terms of this
Agreement remain as originally contemplated to the fullest extent possible.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to the principles of
conflicts of law thereof.
(d) This Agreement may be executed in counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same instrument.
[Signature Page to follow]
<PAGE> 68
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed individually or by its respective duly authorized officer
as of the date first written above.
CMGI, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
YESMAIL.COM.INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[Remainder of Page Intentionally Left Blank]
<PAGE> 69
STOCKHOLDERS:
------------------------------------
Signature
------------------------------------
Print Name
------------------------------------
Signature
------------------------------------
Print Name
------------------------------------
Signature
------------------------------------
Print Name
------------------------------------
Signature
------------------------------------
Print Name
------------------------------------
Signature
------------------------------------
Print Name
[Signature Page to Stockholder Agreement]
<PAGE> 70
Exhibit C-1
STOCKHOLDER LOCK-UP AGREEMENT
CMGI, Inc.
100 Brickstone Square
Andover, MA 01810
Attn: General Counsel
Ladies and Gentlemen:
Pursuant to the terms of an Agreement and Plan of Merger and
Reorganization dated as of December 14, 1999 (the "Agreement") between CMGI,
Inc., a Delaware corporation ("Acquiror"), a subsidiary of Acquiror and
yesmail.com, inc., a Delaware corporation (the "Company"), the undersigned will
receive shares of common stock, $.01 par value per share, of Acquiror (the
"Shares"), in exchange for shares of common stock of the Company owned by the
undersigned.
In order to induce Acquiror to enter into the Agreement, the
undersigned hereby agrees as follows:
1. Until the date that is five (5) months after the Closing (as defined
in the Agreement), the undersigned will not sell, offer to sell, contract to
sell, sell any option or contract for the sale or purchase of, lend, enter into
any swap or other arrangement that transfers to another any of the economic
consequences of ownership of, or otherwise dispose of (collectively, "transfer")
more than one-tenth (1/10) of the Shares in any one day. Notwithstanding the
foregoing, however, if the undersigned is a corporation, partnership or limited
liability company, the undersigned shall not be restricted from distributing any
or all of the Shares to its shareholders, partners or members and the subsequent
Transfers of Shares by such shareholders, partners or members.
2. The undersigned acknowledges that the Acquiror may impose stock
transfer restrictions on the Shares to enforce the provisions of this Agreement.
[Signature Page to follow]
<PAGE> 71
Very truly yours,
----------------------------------------
Name
By:
------------------------------------
Signature
Date:
----------------------------------
AGREED TO:
CMGI, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
[Signature Page to Stockholder Lock-Up Agreement]
<PAGE> 72
Exhibit C-2
EMPLOYEE LOCK-UP AGREEMENT
CMGI, Inc.
100 Brickstone Square
Andover, MA 01810
Ladies and Gentlemen:
Pursuant to the terms of an Agreement and Plan of Merger and
Reorganization dated as of December 14, 1999 (the "Agreement") between CMGI,
Inc., a Delaware corporation ("Acquiror"), a subsidiary of Acquiror and
yesmail.com, inc., a Delaware corporation (the "Company"), I will receive shares
of common stock, $.01 par value per share, of Acquiror (the "Shares"), in
exchange for shares of common stock of the Company owned by me.
In order to induce Acquiror to enter into the Agreement, I hereby agree
as follows:
1. I will not sell, offer to sell, contract to sell, sell any option or
contract for the sale or purchase of, lend, enter into any swap or other
arrangement that transfers to another any of the economic consequences of
ownership of, or otherwise dispose of (collectively, "Transfer"), any of the
Shares, except as follows: commencing on the day that is one day after the date
which is the six month anniversary of the Closing (as defined in the Agreement),
I may sell all of my Shares but no more than one-tenth (1/10) of the Shares, in
any one day.
2. I acknowledge that the Acquiror may impose stock transfer
restrictions on the Shares to enforce the provisions of this Agreement.
[Signature Page to follow]
<PAGE> 73
Very truly yours,
Name
----------------------------------------
By:
------------------------------------
Signature
Date:
----------------------------------
AGREED TO:
CMGI, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
[Signature Page to Employee Lock-Up Agreement]
<PAGE> 74
Exhibit C-3
EMPLOYEE LOCK-UP AGREEMENT
CMGI, Inc.
100 Brickstone Square
Andover, MA 01810
Ladies and Gentlemen:
Pursuant to the terms of an Agreement and Plan of Merger and
Reorganization dated as of December 14, 1999 (the "Agreement") by and among
CMGI, Inc., a Delaware corporation ("Acquiror"), a subsidiary of Acquiror and
yesmail.com, inc., a Delaware corporation (the "Company"), I will receive shares
of common stock, $.01 par value per share, of Acquiror (the "Shares"), in
exchange for shares of common stock of the Company owned by me.
In order to induce Acquiror to enter into the Agreement, I hereby agree
as follows:
1. I will not sell, offer to sell, contract to sell, sell any option or
contract for the sale or purchase of, lend, enter into any swap or other
arrangement that transfers to another any of the economic consequences of
ownership of, or otherwise dispose of (collectively, "Transfer"), any of the
Shares, except as follows: (i) I may transfer one-sixth (1/6) of the Shares
during the six month period commencing on the date of the Closing (as defined in
the Agreement), and (ii) commencing on the day that is one day after the date
which is the six month anniversary of the Closing, I may Transfer the remainder
of my shares, but no more than one-tenth (1/10) of the Shares on any one day.
2. I acknowledge that the Acquiror may impose stock transfer
restrictions on the Shares to enforce the provisions of this Agreement.
<PAGE> 75
Very truly yours,
Name
----------------------------------------
By:
------------------------------------
Signature
Date:
----------------------------------
AGREED TO:
CMGI, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE> 76
Exhibit D
FORM OF COMPANY AFFILIATE LETTER
CMGI, Inc.
100 Brickstone Square
Andover, MA 01810
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of yesmail.com, Inc., a Delaware corporation (the
"Company"), as the term "affiliate" is defined for purposes of paragraphs (c)
and (d) of Rule 145 of the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"). Pursuant to the terms of the
Agreement and Plan of Merger and Reorganization, dated as of December 14, 1999
(the "Agreement"), between CMGI, Inc., a Delaware corporation ("Acquiror"), a
subsidiary of Acquiror ("Sub") and the Company, Sub will be merged with and into
the Company (the "Merger") and the Company will be the surviving corporation.
As a result of the Merger, I may receive shares of common stock, par
value $.01 per share, of Acquiror (the "Acquiror Common Stock") in exchange for
shares owned by me of common stock of the Company ("Company Common Stock").
1. Compliance with the Act. I represent, warrant and covenant to
Acquiror that in the event I receive any Acquiror Common Stock as a result of
the Merger:
(a) I shall not make any sale, transfer or other disposition
of the Acquiror Common Stock in violation of the Act or the Rules and
Regulations.
(b) I have been advised that the issuance of Acquiror Common
Stock to me pursuant to the Merger will be registered with the Commission under
the Act on a Registration Statement on Form S-4. However, I have also been
advised that, since at the time the Merger is submitted for a vote of the
stockholders of the Company, I may be deemed to have been an affiliate of the
Company and the distribution by me of the Acquiror Common Stock has not been
registered under the Act, I may not sell, transfer or otherwise dispose of the
Acquiror Common Stock issued to me in the Merger unless (i) such sale, transfer
or other disposition as been registered under the Act, (ii) such sale, transfer
or disposition is made in conformity with Rule 145 promulgated by the Commission
under the Act, or (iii) in the opinion of counsel reasonably acceptable to
Acquiror, or pursuant to a "no action" letter obtained by the undersigned from
the staff of the Commission, such sale, transfer or other disposition is
otherwise exempt from registration under the Act.
<PAGE> 77
(c) I understand that Acquiror is under no obligation to
register the sale, transfer or disposition of the Acquiror Common Stock by me or
on my behalf under the Act.
(d) I also understand that stop transfer instructions will be
given to the Acquiror's transfer agent with respect to the Acquiror Common Stock
and that there will be placed on the Certificates for the Acquiror Common Stock
issued to me, or any substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT, DATED
DECEMBER ___, 1999 BETWEEN THE REGISTERED HOLDER HEREOF AND CMGI, INC.,
A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF CMGI,
INC."
(e) I also understand that unless the transfer by me of my
Acquiror Common Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Acquiror reserves the right to put
the following legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED
BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
It is understood and agreed that the legends set forth in paragraphs E
and F above shall be removed by delivery of substitute certificates without such
legend if such legend is not required for purposes of the Act or this Agreement.
It is understood and agreed that such legends and the stop orders
referred to above will be removed if (i) one year shall have elapsed from the
date the undersigned acquired the Acquiror Common Stock received in the Merger
and the provisions of Rule 145(d)(2) are then available to the undersigned, (ii)
two years shall have elapsed from the date the undersigned acquired Acquiror
Common Stock received in the Merger and the provisions of Rule 145(d)(3) are
then available to the undersigned, or (iii) Acquiror has received either an
opinion of counsel, which
<PAGE> 78
opinion and counsel shall be reasonably satisfactory to Acquiror, or a "no
action" letter obtained by the undersigned from the staff of the Commission, to
the effect that the restrictions imposed by Rule 145 under the Act no longer
apply to the undersigned.
2. Certain Tax Matters. The undersigned does not intend to take a
position on any federal or state income tax return that is inconsistent with the
treatment of the Merger as a tax-free reorganization for federal or state income
tax purposes.
[Signature Page to follow]
<PAGE> 79
Very truly yours,
----------------------------------------
Signature
----------------------------------------
Print Name
Accepted this ___ day of
December, 1999 by
CMGI, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
[Signature Page to Form of Company Affiliate Letter]
