Exhibit 10.2
INTER-COMPANY AGREEMENT
THIS INTER-COMPANY AGREEMENT (the "Agreement") is made and entered into as
of September 23, 1999 between CMGI Inc., a Delaware corporation ("CMGI"), and
Engage Technologies, Inc., a Delaware corporation and a majority-owned
subsidiary of CMGI ("Engage").
WHEREAS, pursuant to that Agreement and Plan of Merger and Contribution
(the "Merger Agreement") entered into as of September 23, 1999 by and among
CMGI, Engage, AK Acquisition Corp., a California corporation and a wholly-owned
subsidiary of CMGI ("Transitory Subsidiary"), AdKnowledge Inc., a California
corporation (the "Company"), and Xxxxx Xxxxxxx, Xxxx Xxxxxx and Xxxxx Xxxxxxx
(collectively, the "Shareholder Representative"), CMGI and Engage contemplate:
First, a merger of Transitory Subsidiary with and into the Company
(the "Merger"), with the Company being the surviving corporation (the
"Surviving Corporation"). In the Merger, (i) all the shareholders of the
Company holding shares of Company Preferred Stock (as defined in the Merger
Agreement) will receive (A) an aggregate of approximately $170,000,000 of
shares of the common stock, $.01 par value par share, of CMGI ("CMGI Common
Stock") and (B) shares of a new class of common stock of Surviving
Corporation, $.01 par value per share ("Surviving Corporation Common
Stock"), in exchange therefor, (ii) all the shareholders of the Company
holding shares of the Company's common stock ("Company Common Stock") will
receive shares of Surviving Corporation Common Stock in exchange therefor
(the Surviving Corporation Common Stock issued under (i) and (ii) shall
aggregate approximately 12% of the issued and outstanding Surviving
Corporation Common Stock), and (iii) CMGI will receive Surviving
Corporation Common Stock in exchange for the common stock, $.01 par value
per share, of Transitory Subsidiary ("Transitory Subsidiary Stock"), in an
aggregate amount equal to approximately 88% of the issued and outstanding
Surviving Corporation Common Stock. The Merger is intended to qualify as a
tax-free reorganization under Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code").
Second, all the shareholders of the Surviving Corporation (including
CMGI) will contribute their Surviving Corporation Common Stock to Engage in
exchange for an aggregate of approximately $193,000,000 of Engage's common
stock, $.01 par value per share ("Engage Common Stock"), in a transaction
intended to qualify as a transaction under Section 351 of the Code (the
"Contribution").
Third, Engage will consummate a California short-form merger between
the Surviving Corporation and a wholly-owned subsidiary of Engage ("Engage
Sub"), pursuant to which Engage Sub will merge with and into the Surviving
Corporation, with the Surviving Corporation being the surviving corporation
in such merger and the remaining holders of Surviving Corporation Common
Stock will receive Engage Common Stock in exchange therefor;
WHEREAS, CMGI will hold over 80% of the capital stock of Engage after
consummation of the transactions contemplated by the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth and other good and valuable consideration, the
parties hereto hereby agree as follows:
1. Merger Agreement Transactions.
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(a) Contribution. CMGI hereby agrees, at the Contribution Closing,
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to contribute to Engage, and Engage hereby agrees to accept from CMGI, all
shares of Surviving Corporation Common Stock held by CMGI on the terms and
conditions outlined in the Merger Agreement.
(b) Merger Dissenting Shares. In the event CMGI is required to pay
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any cash payments or other property to Company Shareholders arising from the
exercise of their dissenters' rights in connection with the Merger ("Appraisal
Payments"), Engage shall immediately reimburse CMGI in cash or other property,
as the case may be, for any and all such Appraisal Payments.
(c) Returned Escrow Shares. In the event that Escrow Shares are
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released from the Escrow and delivered to CMGI pursuant to the terms of the
Merger Agreement and the Escrow Agreement (the "Returned Escrow Shares"), CMGI
shall pay to Engage in cash or other property as mutually agreed upon by the
parties a sum equal to the value of the Returned Escrow Shares, valued as
provided in Section 5 of the Escrow Agreement.
(d) Loan.
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(i) In the event that CMGI makes the Loan to the Company
pursuant to the terms of Section 5.14 of the Merger Agreement, Engage shall
immediately upon the request of CMGI reimburse CMGI for the amount of the Loan.
Thereupon, (A) CMGI shall assign all of its rights under the promissory note
evidencing the Loan to Engage, and (B) CMGI shall assign to Engage all of CMGI's
rights under any agreements or documents evidencing its perfected first priority
security interest in the Company Intellectual Property or the warrants granted
to CMGI to purchase a total of four percent (4%) of the Total Outstanding
Company Common Stock at an exercise price of $.01 per share granted pursuant to
such Section 5.14.
(ii) In the event that CMGI makes the Loan to the Company
pursuant to the terms of Section 5.14 of the Merger Agreement and Engage
reimburses CMGI for the amount of the Loan pursuant to subsection (i) above and
the Company terminates the Merger Agreement as provided in such Section 5.14
pursuant to Section 10.1(c) (insofar as it relates to CMGI or the Transitory
Subsidiary), 10.1(e) or 10.1(g) (insofar as it relates to CMGI or the Transitory
Subsidiary), and the Company's obligation to repay the Loan is forgiven as
liquidated damages as provided for therein, promptly following such termination,
CMGI shall reimburse Engage for the amount of the Loan.
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(e) Reimbursement of Advances. In the event that CMGI advances
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funds or other property to the Company prior to the Contribution Closing Date,
Engage shall reimburse CMGI for the amount of such advances immediately
following the Contribution Closing.
(f) No Remedy. Engage agrees and acknowledges that it shall have
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no remedies under Article VIII of the Merger Agreement against CMGI or the
Transitory Subsidiary for any indemnification claim which it may have under such
Article VIII and that it shall not seek to assert any right to indemnification
under such Article VIII against CMGI or the Transitory Subsidiary.
(g) Responsibility for Representations. As between CMGI and
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Engage, any liability arising from a breach of any representation in Article IV
of the Merger Agreement relating to CMGI shall be the responsibility of CMGI and
any liability arising from a breach of any representation in Article IV relating
to Engage shall be the responsibility of Engage.
(h) Responsibility for Covenants. As between CMGI and Engage, any
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liability arising from a breach of any covenant in Article V of the Merger
Agreement relating to CMGI shall be the responsibility of CMGI and any liability
arising from a breach of any covenant in Article V relating to Engage shall be
the responsibility of Engage.
2. Miscellaneous.
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(a) No Third Party Beneficiaries. The purpose of this Agreement is
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to provide for the equitable adjustment of amounts due Engage and CMGI with
respect to the acquisition of the Company by Engage as set forth above and shall
not under any circumstances be deemed to create any rights in, or confer any
benefits upon, any third party or parties (including, without limitation, the
former Company Shareholders) in any respect. Nothing herein shall be construed
as waiving or affecting any respective rights of the parties hereto with respect
to any amounts held in the Escrow or with respect to any indemnification
obligations or otherwise.
(b) Entire Agreement. This Agreement and the Merger Agreement and
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the documents referred to herein and therein constitute the entire agreement
among CMGI and Engage and supersedes any prior understandings, agreements or
representations by or among the parties, written or oral, with respect to the
subject matter hereof.
(c) Succession and Assignment. This Agreement shall be binding
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upon and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party may assign either this Agreement or
any of its rights, interests or obligations hereunder without the prior written
approval of the other party.
(d) Counterparts and Facsimile Signature. This Agreement may be
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executed in two or more counterparts, each of which shall be deemed an original
but all of
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which together shall constitute one and the same instrument. This Agreement may
be executed by facsimile signature.
(e) Headings. The section headings contained in this Agreement are
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inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices, requests, demands, claims, and other
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communications hereunder shall be in writing and shall be delivered as provided
in the Merger Agreement.
(g) Governing Law. This Agreement shall be governed by and
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construed in accordance with the internal laws of the Commonwealth of
Massachusetts without giving effect to any choice or conflict of law provision
or rule (whether of the Commonwealth of Massachusetts or any other jurisdiction)
that would cause the application of laws of any jurisdictions other than those
of the Commonwealth of Massachusetts.
(h) Amendments and Waivers. The parties may mutually amend any
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provision of this Agreement at any time. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by both
of the parties. No waiver of any right or remedy hereunder shall be valid unless
the same shall be in writing and signed by the party giving such waiver. No
waiver by any party with respect to any default, misrepresentation or breach of
warranty or covenant hereunder shall be deemed to extend to any prior or
subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
(i) Severability. Any term or provision of this Agreement that is
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invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to limit the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable 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.
(j) Construction. The language used in this Agreement shall be
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deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party. 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.
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(k) Capitalized terms. Capitalized terms used herein which are
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defined in the Merger Agreement have the same meanings herein as therein, except
to the extent that such meanings are amended hereby.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CMGI, INC.
By: /s/ Xxxxxx X. Xxxxxxxx III
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Name: Xxxxxx X. Xxxxxxxx III
Title: Chief Financial Officer
ENGAGE TECHNOLOGIES, INC.
By: /s/ Xxxxxxx Royal
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Name: Xxxxxxx Royal
Title: Chief Financial Officer
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