<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED
PURSUANT TO RULE 13D-1(a) AND AMENDMENTS
THERETO FILED PURSUANT TO RULE 13d-2(a)
Under the Securities Exchange Act of 1934
(Amendment No. ____)/1/
yesmail.com, inc.
----------------------------------------
(Name of Issuer)
Common Stock, par value $.0001 per share
----------------------------------------
(Title of Class of Securities)
98583Q101
-------------------------
(CUSIP Number)
William Williams, II, Esq., General Counsel
CMGI, Inc.
100 Brickstone Square, Andover, Massachusetts 01810
(978) 684-3880
--------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
December 14, 1999
-------------------------------------------------------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box.[_]
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
/1/ The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 98583Q101 PAGE 2 OF 10 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CMGI, Inc. 04-2921333
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
N/A (b) [_]
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
N/A
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 4,044,400 19.9%
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
7,754,722 38.2%
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 4,044,400 19.9%
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
N/A
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,799,122
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[_]
N/A
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
58.1%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Neither the filing of this Schedule 13D nor any of its contents shall be
deemed to constitute an admission by CMGI, Inc. that it is the beneficial owner
of any of the Common Stock referred to herein for purposes of Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "Act"), or for any other
purpose, and such beneficial ownership is expressly disclaimed.
<PAGE>
CUSIP NO. 98583Q101 Page 3 of 10 pages
---------
Item 1. SECURITY AND ISSUER.
-------------------
This statement on Schedule 13D relates to the Common Stock of
yesmail.com, inc., a Delaware corporation ("YesMail" or "Issuer").
The principal executive offices of YesMail are located at 565 Lakeview
Parkway, Suite 135, Vernon Hills, Illinois 60061.
ITEM 2. IDENTITY AND BACKGROUND.
-----------------------
The name of the corporation filing this statement is CMGI, Inc., a
Delaware corporation ("CMGI"). CMGI's principal business is developing
and operating Internet and direct marketing companies and funding
synergistic Internet companies through its affiliated venture funds.
The address of the principal executive offices of CMGI is 100
Brickstone Square, Andover, Massachusetts 01810. Set forth on Schedule
A is the name, residence or business address, present principal
occupation or employment and the name, principal business and address
of any corporation or other organization in which such employment is
conducted and citizenship of each of CMGI's directors and executive
officers, as of the date hereof.
Neither CMGI nor, to CMGI's best knowledge, any person named on
Schedule A hereto is required to disclose legal proceedings pursuant to
Items 2(d) or 2(e).
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
-------------------------------------------------
Pursuant to an Agreement and Plan of Merger and Reorganization, dated
as of December 14, 1999 (the "Merger Agreement"), among CMGI, Mars
Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary
of CMGI ("Merger Sub"), and YesMail and, subject to the conditions set
forth therein (including approval by stockholders of YesMail), Merger
Sub will merge with and into YesMail and YesMail will become a wholly
owned subsidiary of CMGI (such events constituting the "Merger"). Once
the Merger is consummated, Merger Sub will cease to exist as a
corporation and all of the business, assets, liabilities and
obligations of Merger Sub will be merged into YesMail with YesMail
remaining as the surviving corporation (the "Surviving Corporation").
As a result of the Merger, each outstanding share of YesMail Common
Stock, other than YesMail treasury shares and shares owned by CMGI,
will be converted into the right to receive 0.1252 of a share (the
"Exchange Ratio") of CMGI Common Stock, and each outstanding YesMail
option and warrant to purchase YesMail Common Stock will be assumed by
CMGI, subject to the same terms and conditions as were applicable prior
to the Merger, and will become an option or warrant, as the case may
be, to purchase that number of shares of CMGI Common Stock as is equal
(subject to rounding) to the number of shares of YesMail Common Stock
that was subject to such option or warrant immediately prior to the
Merger, multiplied by the Exchange Ratio. The exercise price of each
assumed option and warrant will be equal to the quotient determined by
dividing the aggregate exercise price for the shares of YesMail Common
Stock purchasable pursuant to the YesMail option or warrant immediately
prior to the effective time of the Merger by the number of full shares
of CMGI Common Stock deemed purchasable pursuant to such option or
warrant in accordance with the foregoing,
<PAGE>
CUSIP NO. 98583Q101 13D Page 4 of 10 pages
---------
rounded up to the nearest whole cent. The foregoing summary of the
Merger is qualified in its entirety by reference to the copy of the
Merger Agreement included as Exhibit 1 to this Schedule 13D and
incorporated herein in its entirety by this reference.
In connection with the Merger Agreement, CMGI and the Issuer entered
into a Stock Option Agreement, dated as of December 14, 1999 (the
"Option Agreement"). The Option Agreement grants CMGI the right, under
certain circumstances, to purchase up to 4,044,400 shares of YesMail
Common Stock at a price of $25.76 per share (subject to adjustment);
provided, however, that the number of shares issuable to CMGI pursuant
to the Option Agreement shall not exceed 19.9% of the outstanding
shares of YesMail Common Stock (the "Option"). The foregoing summary of
the Option Agreement and the Option is qualified in its entirety by
reference to the copy of the Option Agreement included as Exhibit 2 to
this Schedule 13D and incorporated herein in its entirety by this
reference.
ITEM 4. PURPOSE OF TRANSACTION.
----------------------
The purpose of the acquisition of securities of YesMail is to expand
the direct marketing capabilities of CMGI.
(a)-(b) As described in Item 3 above, this statement relates to the
Merger of Merger Sub with and into YesMail in a statutory merger
pursuant to the Delaware General Corporation Law statute and to the
transactions contemplated by the Option Agreement. At the effective
time of the Merger, the separate existence of Merger Sub will cease to
exist and YesMail will continue as the Surviving Corporation and as a
wholly owned subsidiary of CMGI. Holders of outstanding YesMail Common
Stock will receive, in exchange for each share of YesMail Common Stock
held by them, 0.1252 shares of CMGI Common Stock. CMGI will assume the
outstanding YesMail options and warrants.
As an inducement to CMGI to enter into the Merger Agreement, each of
the individuals and the entities set forth on Schedule B, each a
stockholder of YesMail (collectively, the "Stockholders"), has executed
a Stockholder Agreement, dated as of December 14, 1999, with CMGI (the
"Stockholder Agreement"), and, by doing so, has irrevocably appointed
CMGI as such stockholder's lawful attorney and proxy. Such proxy gives
CMGI the limited right to vote each of the 7,754,722 shares of YesMail
Common Stock beneficially owned by the Stockholders in all matters
related to the Merger. The shared voting power with the Stockholders
relates to the same 7,754,722 shares of Issuer Common Stock (the
"Shares"). The foregoing summary of the Stockholder Agreement is
qualified in its entirety by reference to the copy of the Stockholder
Agreement included as Exhibit 3 to this Schedule 13D and incorporated
herein in its entirety by this reference.
In exercising its right to vote the Shares as lawful attorney and proxy
of the Stockholders, CMGI (or any nominee of CMGI) will be limited, at
every YesMail stockholders meeting and every written consent in lieu of
such meeting, to vote the shares in favor of approval of the Merger and
the Merger Agreement. The Stockholders may vote the Shares on all other
matters. The Stockholder Agreement terminates upon the earlier to occur
of (i) such date and time as the Merger shall become effective and
<PAGE>
CUSIP NO. 98583Q101 13D Page 5 of 10 pages
---------
(ii) the date of termination of the Merger Agreement, each in
accordance with the terms and provisions of the Merger Agreement.
(c) Not applicable.
(d) It is anticipated that, upon consummation of the Merger, the
directors of Merger Sub immediately prior to the Merger 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.
(e) Other than as a result of the Merger described in Item 3 above,
not applicable.
(f) Not applicable.
(g) Upon consummation of the Merger, the Certificate of Incorporation
of YesMail, as in effect immediately prior to the Merger, shall be the
Certificate of Incorporation of the Surviving Corporation until
thereafter amended as provided by the Delaware General Corporation Law
statute and such Certificate of Incorporation; provided, however, that
Article IV of the Certificate of Incorporation of the Surviving
Corporation shall be amended to read 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." Upon consummation of the Merger, the
By-laws of Merger Sub, as in effect immediately prior to the Merger
shall be the By-laws of the Surviving Corporation until thereafter
amended; provided, however, that the name of the corporation set forth
in the By-laws shall be changed to the name of the Issuer. In addition,
each of the Merger Agreement and the Option Agreement may have the
effect of impeding the acquisition of control of Issuer by any person
other than CMGI.
(h)-(i) If the Merger is consummated as planned, the YesMail Common
Stock will be deregistered under the Act and delisted from the Nasdaq
National Market.
(j) Other than as described above, CMGI currently has no plan or
proposals which relate to, or may result in, any of the matters listed
in Item 4(a)-(i) of Schedule 13D (although CMGI reserves the right to
develop such plans).
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
------------------------------------
(a)-(b) As a result of the Stockholder Agreement, CMGI may be deemed to
be the beneficial owner of at least 11,799,122 shares of Issuer Common
Stock. Such Issuer Common Stock constitutes approximately 58.1% of the
issued and outstanding shares of Issuer Common Stock. Schedule B sets
forth the applicable information required by Item 2 with respect to
each of the Stockholders with whom the power to vote is shared.
(c)-(e) Not applicable.
<PAGE>
CUSIP NO. 98583Q101 13D Page 6 of 10 pages
---------
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
---------------------------------------------------------------------
TO SECURITIES OF THE ISSUER.
---------------------------
Other than the Merger Agreement, the Option Agreement and the
Stockholder Agreement, to the best knowledge of CMGI, there are no
contracts, arrangements, understandings or relationships (legal or
otherwise) among the persons or entities listed in Item 2 and between
such person or entity and any person or entity with respect to any
securities of YesMail, including but not limited to transfer of voting
of any of the securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits
or loss, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
--------------------------------
The following documents are filed as exhibits:
1. Agreement and Plan of Merger and Reorganization, dated as of
December 14, 1999, by and among CMGI, Merger Sub and YesMail.
2. Stock Option Agreement, dated as of December 14, 1999, by and
between CMGI and YesMail.
3. Stockholder Agreement, dated as of December 14, 1999, by and
among CMGI and each of the Stockholders.
<PAGE>
CUSIP NO. 98583Q101 13D Page 7 of 10 pages
---------
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
hereby certify that the information set forth in this statement is true,
complete and correct.
DATED: December 23, 1999
CMGI, INC.
By: /s/ Andrew J. Hajducky III
-------------------------------
Andrew J. Hajducky III
Title: Executive Vice President, Chief
Financial Officer and Treasurer
<PAGE>
CUSIP NO. 98583Q101 13D Page 8 of 10 pages
---------
Schedule A
----------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
NAME BUSINESS ADDRESS
---- ----------------
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
EXECUTIVE OFFICERS OF CMGI
- -------------------------------------------------------------------------------------------------------------------------
David Andonian 100 Brickstone Square
President, Corporate Business Development & Operations Andover, MA 01810
- -------------------------------------------------------------------------------------------------------------------------
Andrew J. Hajducky III 100 Brickstone Square
Executive Vice President, Chief Financial Officer and Treasurer Andover, MA 01810
- -------------------------------------------------------------------------------------------------------------------------
Hans G. Hawrysz 100 Brickstone Square
President, Strategic Planning Andover, MA 01810
- -------------------------------------------------------------------------------------------------------------------------
Paul L. Schaut 100 Brickstone Square
President, Chief Executive Officer, Engage Technologies, Inc. Andover, MA 01810
(a subsidiary of CMGI)
- -------------------------------------------------------------------------------------------------------------------------
Richard F. Torre 100 Brickstone Square
President, Chief Executive Officer, SalesLink Corporation Andover, MA 01810
(a subsidiary of CMGI)
- -------------------------------------------------------------------------------------------------------------------------
David S. Wetherell 100 Brickstone Square
Chairman of the Board, President, Chief Executive Officer and Andover, MA 01810
Secretary
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
DIRECTORS OF CMGI
(PRESENT PRINCIPAL OCCUPATION)
- -------------------------------------------------------------------------------------------------------------------------
William H. Berkman The Associated Group
(Principal, The Associated Group) 650 Madison Avenue
New York, NY 10022
- -------------------------------------------------------------------------------------------------------------------------
Craig D. Goldman Cyber Consulting Services Corp.
(Chief Operating Officer, Cyber Consulting Services Corp.) 1058 Ramapo Valley Road
Mahwah, NJ 07430
- -------------------------------------------------------------------------------------------------------------------------
Avram Miller The Avram Miller Company
(Chief Executive Officer, The Avram Miller Company) 505 Montgomery Street
San Francisco, CA 94111
- -------------------------------------------------------------------------------------------------------------------------
Robert J. Ranalli 2923 Indigo Bush Way
Naples, FL 34105
- -------------------------------------------------------------------------------------------------------------------------
William D. Strecker Compaq Computer Corporation
(Senior Vice President of Technology and Corporate MS-110806
Development, Chief Technical Officer, Compaq Computer 20555 State Highway 249
Corporation) Houston, TX 77070-2649
- -------------------------------------------------------------------------------------------------------------------------
David S. Wetherell See Above
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Citizenship of the above named persons: USA
<PAGE>
CUSIP NO. 98583Q101 13D Page 9 of 10 pages
---------
Schedule B
----------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
STOCKHOLDER NO. OF SHARES
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Manley Partners, L.P. 618,169
Address and Contact:
Kevin R. Manley, General Partner
565 Lakeview Parkway
Suite 135
Vernon Hills, IL 60061
Principal Business: Investment Fund
Place of Organization: Delaware
- -------------------------------------------------------------------------------------------------------------------------
Kevin R. Manley
565 Lakeview Parkway
Suite 135
Vernon Hills, IL 60061
Present Principal Occupation: Manager, Special Projects, of yesmail.com, inc.
Citizenship: USA 1,534,609
- -------------------------------------------------------------------------------------------------------------------------
Michael Santer 551,250
Residence or Business Address:
732 Rosewood Drive
Palo Alto, CA 94303
Present Principal Occupation: Venture Capital
Citizenship: USA
- -------------------------------------------------------------------------------------------------------------------------
Speer Partners, L.P. 346,875
Address and Contact:
Keith Speer, General Partner
565 Lakeview Parkway
Suite 135
Vernon Hills, IL 60061
Principal Business: Investment Fund
Place of Organization: Delaware
- -------------------------------------------------------------------------------------------------------------------------
Keith Speer
Residence or Business Address:
565 Lakeview Parkway
Suite 135
Vernon Hills, IL 60061
Present Principal Occupation: Operations Manager, of yesmail.com, inc.
Citizenship: USA 1,092,708
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CUSIP NO. 98583Q101 13D Page 10 of 10 pages
---------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
J N Weiss Partners, L.P. 356,250
Address and Contact:
John N. Weiss, General Partner
565 Lakeview Parkway
Suite 135
Vernon Hills, IL 60061
Principal Business: Investment Fund
Place of Organization: Delaware
- -------------------------------------------------------------------------------------------------------------------------
John N. Weiss
Residential or Business Address:
565 Lakeview Parkway
Suite 135
Vernon Hills, IL 60061
Present Principal Occupation: Director of Sales/Training, of yesmail.com, inc.
Citizenship: USA 1,102,083
- -------------------------------------------------------------------------------------------------------------------------
Wruk Partners, L.P. 1,463,889
Address and Contact:
Kenneth D. Wruk, General Partner
565 Lakeview Parkway
Suite 135
Vernon Hills, IL 60061
Principal Business: Investment Fund
Place of Organization: Delaware
- -------------------------------------------------------------------------------------------------------------------------
Kenneth D. Wruk
Residential or Business Address:
565 Lakeview Parkway
Suite 135
Vernon Hills, IL 60061
Present Principal Occupation: Vice President, Strategic Alliances, of yesmail.com, inc.
Citizenship: USA 688,889
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 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>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <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............................................................................. 3
---------
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........................................................................ 9
--------------
3.3 Authority; No Conflict; Required Filings and Consents................................. 10
-----------------------------------------------------
3.4 SEC Filings; Financial Statements..................................................... 12
---------------------------------
3.5 No Undisclosed Liabilities............................................................ 13
--------------------------
3.6 Absence of Certain Changes or Events.................................................. 13
------------------------------------
3.7 Taxes................................................................................. 13
-----
3.8 Owned and Leased Real Properties...................................................... 15
--------------------------------
3.9 Intellectual Property................................................................. 15
---------------------
3.10 Agreements, Contracts and Commitments................................................. 16
-------------------------------------
3.11 Litigation............................................................................ 17
----------
3.12 Environmental Matters................................................................. 17
---------------------
3.13 Employee Benefit Plans................................................................ 19
----------------------
3.14 Compliance With Laws.................................................................. 21
--------------------
3.15 Permits............................................................................... 21
-------
3.16 Registration Statement; Proxy Statement/Prospectus.................................... 21
--------------------------------------------------
3.17 Labor Matters......................................................................... 22
-------------
3.18 Insurance............................................................................. 22
---------
3.19 Business Activity Restrictions........................................................ 22
------------------------------
3.20 Year 2000 Compliance.................................................................. 23
--------------------
3.21 Assets................................................................................ 24
------
3.22 Opinion of Financial Advisor.......................................................... 24
----------------------------
3.23 Section 203 of the DGCL Not Applicable................................................ 24
--------------------------------------
3.24 Tax Matters........................................................................... 24
-----------
3.25 Transactions with Affiliates.......................................................... 25
----------------------------
3.26 Brokers; Schedule of Fees and Expenses................................................ 25
--------------------------------------
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE TRANSITORY
SUBSIDIARY........................................................................................ 25
4.1 Organization, Standing and Power...................................................... 25
--------------------------------
4.2 Capitalization........................................................................ 26
--------------
4.3 Authority; No Conflict; Required Filings and Consents................................. 26
-----------------------------------------------------
4.4 SEC Filings; Financial Statements..................................................... 27
---------------------------------
4.5 Absence of Certain Changes or Events.................................................. 28
------------------------------------
4.6 Tax Matters........................................................................... 28
-----------
4.7 Registration Statement; Proxy Statement/Prospectus.................................... 28
--------------------------------------------------
4.8 Litigation............................................................................ 29
----------
4.9 Operations of the Transitory Subsidiary............................................... 29
---------------------------------------
ARTICLE V CONDUCT OF BUSINESS.................................................................... 29
5.1 Covenants of the Company.............................................................. 29
------------------------
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
5.2 Cooperation............................................................................ 32
-----------
5.3 Confidentiality........................................................................ 32
---------------
ARTICLE VI ADDITIONAL AGREEMENTS.................................................................. 33
6.1 No Solicitation........................................................................ 33
---------------
6.2 Proxy Statement/Prospectus; Registration Statement..................................... 35
--------------------------------------------------
6.3 Nasdaq Quotation....................................................................... 35
----------------
6.4 Access to Information.................................................................. 36
---------------------
6.5 Stockholders Meeting................................................................... 36
--------------------
6.6 Legal Conditions to the Merger......................................................... 37
------------------------------
6.7 Public Disclosure...................................................................... 38
-----------------
6.8 Tax-Free Reorganization................................................................ 38
-----------------------
6.9 Affiliate Agreements................................................................... 38
--------------------
6.10 Nasdaq National Market Listing......................................................... 39
------------------------------
6.11 Company Stock Plans and the Company Warrants........................................... 39
--------------------------------------------
6.12 Stockholder Litigation................................................................. 40
----------------------
6.13 Indemnification........................................................................ 40
---------------
6.14 Termination of Company 401(k) Plan..................................................... 41
----------------------------------
ARTICLE VII CONDITIONS TO MERGER.................................................................. 41
7.1 Conditions to Each Party's Obligation To Effect the Merger............................. 41
---------------------------------------------------------
7.2 Additional Conditions to Obligations of the Buyer and the Transitory Subsidiary........ 42
-------------------------------------------------------------------------------
7.3 Additional Conditions to Obligations of the Company.................................... 43
--------------------------------------------------
ARTICLE VIII TERMINATION AND AMENDMENT............................................................ 44
8.1 Termination............................................................................ 44
-----------
8.2 Effect of Termination.................................................................. 45
---------------------
8.3 Fees and Expenses...................................................................... 46
-----------------
8.4 Amendment.............................................................................. 47
---------
8.5 Extension; Waiver...................................................................... 47
-----------------
ARTICLE IX MISCELLANEOUS.......................................................................... 48
9.1 Nonsurvival of Representations and Warranties.......................................... 48
---------------------------------------------
9.2 Notices................................................................................ 48
-------
9.3 Entire Agreement....................................................................... 49
----------------
9.4 No Third Party Beneficiaries........................................................... 49
----------------------------
9.5 Assignment............................................................................. 49
----------
9.6 Severability........................................................................... 50
------------
9.7 Counterparts and Signature............................................................. 50
--------------------------
9.8 Interpretation......................................................................... 50
--------------
9.9 Governing Law.......................................................................... 51
-------------
9.10 Remedies............................................................................... 51
--------
9.11 Waiver of Jury Trial................................................................... 51
--------------------
9.12 Forum.................................................................................. 51
-----
</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>
TABLES OF DEFINED TERMS
Cross Reference
Terms in Agreement
- ----- --------------
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
iv
<PAGE>
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
iv
<PAGE>
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
vi
<PAGE>
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").
<PAGE>
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:
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.
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<PAGE>
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.
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.
3
<PAGE>
(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 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
4
<PAGE>
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 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.
5
<PAGE>
(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 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
6
<PAGE>
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.
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
7
<PAGE>
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.
(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
8
<PAGE>
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.
(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
9
<PAGE>
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,
10
<PAGE>
by-laws, or other organizational document of any 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.
11
<PAGE>
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.
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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) 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
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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 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.
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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.
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
15
<PAGE>
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.
-------------------------------------
(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.
16
<PAGE>
(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.
---------------------
(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,
17
<PAGE>
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 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.
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<PAGE>
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.
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<PAGE>
(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
20
<PAGE>
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 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
21
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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 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.
22
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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.
(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
23
<PAGE>
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 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.
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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).
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").
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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 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
26
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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, 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
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<PAGE>
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.
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.
28
<PAGE>
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");
(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
29
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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;
30
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(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;
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(q) initiate, compromise or settle any material litigation or
arbitration proceeding;
(r) close any facility or office;
(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.
32
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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 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
33
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(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 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.
--------------------------------------------------
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(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.
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,
35
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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.
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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
37
<PAGE>
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 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").
- ---------
38
<PAGE>
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 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,
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<PAGE>
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 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
40
<PAGE>
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.
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.
41
<PAGE>
(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 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
42
<PAGE>
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 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
43
<PAGE>
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 termination who
at the time is in breach of or has failed to fulfill its obligations under this
Agreement); or
44
<PAGE>
(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
45
<PAGE>
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, 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
46
<PAGE>
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.
(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
47
<PAGE>
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.
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
48
<PAGE>
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
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
49
<PAGE>
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.
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,
50
<PAGE>
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.
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]
51
<PAGE>
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 III
--------------------------
Executive Vice President, CFO and Treasurer
Title:
-----------------------
MARS ACQUISITION, INC.
By: /s/ Andrew J. Hajducky III
--------------------------
Title: Vice President and Treasurer
----------------------------
yesmail.com, inc.
By: /s/ David M. Tolmie
--------------------------
Title: CEO
----------------------
[Signature Page to Agreement and Plan of Merger and Reorganization]
52
<PAGE>
Exhibit 2
---------
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,
<PAGE>
split-up, recapitalization, merger or other change in the corporate or capital
structure of the Grantor, the 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
2
<PAGE>
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.
(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
3
<PAGE>
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, 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
4
<PAGE>
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
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
5
<PAGE>
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.
---
(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
6
<PAGE>
(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) 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
7
<PAGE>
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.
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.
8
<PAGE>
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).
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>
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: /s/ David M. Tolmie
---------------------------------
Title: CEO
--------------------------
CMGI, INC.
By: /s/ Andrew J. Hajducky III
---------------------------------
Title: Executive Vice President,
CFO and Treasurer
[Signature Page to Stock Option Agreement]
<PAGE>
Exhibit 3
---------
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
<PAGE>
in a manner not adverse to the Stockholders, and (b) against any other
Alternative Transaction.
(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.
2
<PAGE>
(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 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;
3
<PAGE>
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.
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]
4
<PAGE>
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: /s/ Andrew J.Hajducky III
------------------------------------
Name: Andrew J. Hajducky III
----------------------------------
Title: Executive Vice President, CFO and Treasurer
--------------------------------------------
yesmail.com.inc.
By: /s/ Kenneth D. Wruk
------------------------------------
Name: Kenneth D. Wruk
----------------------------------
Title: Chairman
---------------------------------
[Remainder of Page Intentionally Left Blank]
[Signature Page to Stockholder Agreement]
5
<PAGE>
STOCKHOLDERS:
/s/ John Weiss
----------------------------------
Signature
John Weiss, individually
----------------------------------
Print Name
/s/ J N Weiss Partners, L.P.
----------------------------------
Signature
By: John Weiss, its general partner
----------------------------------
Print Name
/s/ Kevin Manley
----------------------------------
Signature
Kevin Manley
----------------------------------
Print Name
/s/ Manley Partners, L.P.
----------------------------------
Signature
By: Kevin Manley, General Partner
----------------------------------
Print Name
6
<PAGE>
STOCKHOLDERS:
/s/ Kenneth D. Wruk
----------------------------------
Signature
Kenneth D. Wruk
----------------------------------
Print Name
/s/ Wruk Partners, L.P.
----------------------------------
Signature
By: /s/ Ken Wruk
Its: General Partner
7
<PAGE>
STOCKHOLDERS:
/s/ Keith E. Speer
---------------------------------
Signature
Keith E. Speer, individually
---------------------------------
Print Name
/s/ Speer Partners, L.P.
---------------------------------
Signature
By: /s/ Keith Speer
Its: General Partner
---------------------------------
Print Name
7
<PAGE>
STOCKHOLDERS:
/s/ Michael A. Santer
----------------------------------
Signature
Michael A. Santer
----------------------------------
Print Name
9
