STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT, dated as of June 19, 2000, is made and
entered into by and among Engage, Inc., a Delaware corporation (the "Company"),
CMGI, Inc., a Delaware corporation ("CMGI"), and CPQ Holdings, Inc., a Delaware
corporation ("CPQ," and together with CMGI, the "Purchasers"). The Company and
the Purchasers are collectively referred to as the "Parties."
WHEREAS, the Company desires to issue and sell, and the Purchasers desire
to purchase, shares of Company common stock, $.01 par value per share (the
"Common Stock");
NOW THEREFORE, in consideration of the representations, warranties and
covenants herein contained, and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Company and the
Purchasers agree as follows:
1. Sale of Shares. Subject to the terms and conditions of this Agreement,
at the Closing (as defined in Section 2 hereof) each Purchaser agrees, severally
and not jointly, to purchase, and the Company agrees to sell and issue to that
Purchaser, that number of shares of Common Stock set forth on Schedule A to this
Agreement opposite such Purchaser's name at a purchase price of $15.0125 per
share (the "Purchase Price"). As used in this Agreement, the term "Shares"
means the shares of Common Stock sold pursuant to this Agreement.
2. The Closing.
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2.1 Closing. The closing (the "Closing") of the sale and purchase of
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the Shares under this Agreement will take place at the offices of Xxxxxx,
XxXxxxxxx & Fish, LLP, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx at 10:00
a.m on Thursday, June 22, 2000, or at such other time, date and place as are
mutually agreeable to the Company and the Purchasers. The date of the Closing is
hereinafter referred to as the "Closing Date."
2.2 Delivery of Shares; Payment of Purchase Price. At the Closing, the
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Company will deliver to each Purchaser a certificate registered in the name of
that Purchaser for the number of Shares set forth on Schedule A opposite such
Purchaser's name, against payment by that Purchaser to the Company by wire
transfer of an amount equal to the product of (x) the Purchase Price and (y) the
number of Shares set forth on Schedule A opposite such Purchaser's name.
3. Representations of the Company. The Company represents and warrants
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to each Purchaser that the statements contained in this Section 3 are true and
correct, except as set forth in the disclosure schedule provided by the Company
to each Purchaser on the date hereof (the "Disclosure Schedule"). The
representations and warranties that follow will be deemed to be repeated on the
Closing Date. The Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered sections contained in this Section 3,
and the disclosures in any paragraph of the Disclosure Schedule shall not
qualify any other section. For purposes of this Section 3, the phrase "to the
knowledge of the Company" or any phrase of similar import shall be deemed to
refer to the actual knowledge of those executive officers of the Company listed
on Schedule B to this Agreement after due inquiry of appropriate personnel and
advisors.
3.1 Organization, Qualification and Corporate Power. The Company is
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duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company is duly qualified to conduct business and is in
corporate and tax good standing under the laws of each jurisdiction in which the
nature of its businesses or the ownership or leasing of its properties requires
such qualification, except where the failure to be so qualified or in good
standing could not reasonably be expected to have a Company Material Adverse
Effect (as defined below). The Company has all requisite corporate power and
authority to (i) enter into and to perform this Agreement in accordance with its
terms and (ii) carry on its businesses as currently conducted or as proposed to
be conducted and to own and use the properties owned and used by it. As used in
this Agreement, "Company Material Adverse Effect" means a material adverse
effect on or a material adverse change in, or group of such effects on or
changes in, the assets, liabilities, business, condition (financial or
otherwise), results of operations or prospects of the Company and its
subsidiaries, taken as a whole.
3.2 Capitalization. The authorized capital stock of the Company
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consists of (a) 350,000,000 shares of Common Stock, of which 173,272,589 shares
were issued and outstanding as of June 6, 2000, and (b) 5,000,000 shares of
Preferred Stock, $.01 par value per share, of which no shares are issued or
outstanding. All of the issued and outstanding shares of Common Stock are duly
authorized, validly issued, fully paid, nonassessable and free of all preemptive
rights. Options to purchase 24,881,608 shares of Common Stock were outstanding
as of April 30, 2000.
3.3 Issuance of Shares.
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(a) The issuance, sale and delivery of the Shares in accordance with
this Agreement have been duly authorized by all necessary corporate action on
the part of the Company. The Shares when so issued, sold and delivered against
payment therefor in accordance with the provisions of this Agreement, will be
duly and validly issued, fully paid and nonassessable, and will be free of any
lien or encumbrance, provided however, that the Shares may be subject to
restrictions on transfer under state or federal securities laws as set forth
herein or as otherwise required by such laws at the time a transfer is proposed.
The sale of the Shares is not, and the issuance of the Shares will not be,
subject to any preemptive right or right of first refusal that has not been
properly waived or complied with.
(b) Assuming the correctness of the representations made by each
Purchaser in Section 4, no change in applicable law and no unlawful distribution
of the Shares
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by any Purchaser or other Person (as defined below), the issuance of the Shares
will comply with applicable exemptions from (A) the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and (B) the registration and qualification requirements of all applicable
securities laws of the states of the United States. Neither the Company nor any
authorized agent acting on its behalf will take any action hereafter that would
cause the loss of such exemptions. As used in this Agreement, the term "Person"
means any natural person, corporation, limited liability company, general or
limited partnership, limited liability partnership, joint venture, joint stock
company, trust, unincorporated organization, association, sole proprietorship,
governmental body, or agency or political subdivision of any government.
3.4 Validity and Noncontravention. Each of this Agreement, the CMGI
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Investor Rights Agreement (as defined herein) and the CPQ Investor Rights
Agreement (as defined herein) has been duly and validly executed and delivered
by the Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to creditors' rights generally, and general
principles of equity. Subject to compliance with the applicable requirements of
the Securities Act and any applicable state securities laws, and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), neither the execution and
delivery by the Company of this Agreement, nor the consummation by the Company
of the transactions contemplated hereby or thereby, will (a) conflict with or
violate any provision of the charter or by-laws of the Company, (b) require on
the part of the Company or any of its subsidiaries any filing with, or permit,
authorization, consent or approval of, any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency (a "Governmental Entity"), (c) conflict with, result in
breach of, constitute (with or without due notice or lapse of time or both) a
default under, result in the acceleration of obligations under, create in any
party any right to terminate, modify or cancel, or require any notice, consent
or waiver under, any contract or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound or to
which any of its or their assets are subject, or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or any
of its properties or assets.
3.5 Reports and Financial Statements. The Company has previously
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furnished or made available to each Purchaser complete and accurate copies, as
amended or supplemented, and all reports and other documents filed by the
Company with the Securities Exchange Commission (the "SEC") pursuant to the
Exchange Act (collectively, the "Company SEC Filings"). The Company SEC Filings
constitute all of the documents required to be filed by the Company under the
Exchange Act with the SEC through the date of this Agreement. The Company SEC
Filings complied as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations thereunder when filed. As of
their respective dates, the Company SEC Filings did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light
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of the circumstances under which they were made, not misleading. The audited
financial statements and unaudited interim financial statements of the Company
included in the Company SEC Filings (i) complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto when filed, (ii) were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated therein or in the notes thereto, and
in the case of quarterly financial statements, as permitted by Form 10-Q under
the Exchange Act), (iii) fairly present the consolidated financial condition,
results of operations and cash flows of the Company as of the respective dates
thereof and for the periods referred to therein, and (iv) are consistent with
the books and records of the Company.
3.6 Absence of Company Material Adverse Change. Since April 30,
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2000, no event or development has occurred which has had, or could reasonably be
expected to have in the future, a Company Material Adverse Effect, except as
disclosed in Section 3.6 of the Disclosure Schedule.
3.7 Litigation. Except as disclosed in the Company SEC Filings,
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there is no Legal Proceeding which is pending or has been, to the knowledge of
the Company, threatened against the Company or any subsidiary of the Company
which (a) could reasonably be expected to have a Company Material Adverse Effect
or (b) in any manner challenges or seeks to prevent, enjoin, alter or delay the
transactions contemplated by this Agreement. As used in this Agreement, the
term "Legal Proceedings" means any action, suit, proceeding, claim, arbitration
or investigation before any Government Entity or before any arbitrator.
3.8 Conduct of Business. Since April 30, 2000, the business and
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operations of the Company and each of its subsidiaries have been conducted in
the ordinary course consistent with past practice, except as disclosed in
Section 3.8 of the Disclosure Schedule.
3.9 Invention Assignment and Confidentiality Agreement. Each
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employee and consultant or independent contractor of the Company or any of its
subsidiaries whose duties principally include the development of products or
Intellectual Property (as defined blow), and each former employee and consultant
or independent contractor whose duties principally included the development of
products or Intellectual Property, has entered into and executed an invention
assignment and confidentiality agreement or an employment or consulting
agreement containing terms with respect to invention assignments and
confidentiality. No current employee, officer or consultant of the Company has
excluded works or inventions made prior to his or her employment with the
Company from his or her assignment of inventions pursuant to such employee,
officer or consultant's agreement regarding confidential information and
invention assignment, except where such exclusion could not reasonably be
expected to have a Company Material Adverse Effect. The Company has taken
reasonable security measures to maintain the confidentiality of the Company's
proprietary information.
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3.10 Intellectual Property.
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(a) Ownership or Right to Use. The Company or one of its subsidiaries
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has sole title to and owns, or is licensed or otherwise possesses legally
enforceable rights to use, or reasonably expects that it will be able to obtain
licenses or legally enforceable rights to use, all patents or patent
applications, software, know-how, registered or unregistered trademarks and
service marks and any applications therefor, registered or unregistered
copyrights and trade names and any applications therefor, trade secrets or other
confidential or proprietary information ("Intellectual Property") necessary to
enable the Company and its subsidiaries to carry on their respective businesses
as currently conducted or as proposed to be conducted, except where the failure
to own or have rights to use such Intellectual Property could not reasonably be
expected to have a Company Material Adverse Effect.
(b) Licenses; Other Agreements. Except as disclosed in Schedule
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3.10(b) of the Disclosure Schedule, neither the Company nor any of its
subsidiaries is currently subject (whether as licensor or licensee) to any
exclusive licenses (whether such exclusivity is temporary or permanent) to any
material portion of the Intellectual Property utilized by the Company or any of
its subsidiaries. There is not outstanding any license or agreement of any kind
relating to the license by the Company of any Intellectual Property owned by the
Company or any of its subsidiaries, except for agreements with customers of the
Company or any such subsidiary entered into in the ordinary course of business.
Neither the Company nor any of its subsidiaries is obligated to pay any
royalties or other payments to third parties with respect to the marketing,
sale, distribution, manufacture, license or use of any Intellectual Property
(other than off-the-shelf commercial applications), except as it may be so
obligated in the ordinary course of its business.
(c) No Infringement. To the Company's knowledge, neither the Company
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nor any of its subsidiaries has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
right of a third party, and the Company and its subsidiaries have not received
any charge, complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that the
Company or any of its subsidiaries must license or refrain from using any
intellectual property rights of any third party) which, if the subject of any
unfavorable decision, ruling or finding would, individually or in the aggregate,
be reasonably likely to have a Company Material Adverse Effect.
3.11 Registration Rights. Except as provided in the CMGI
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Investor Rights Agreement (as defined in Section 5.3 hereof) or disclosed in
Schedule 3.11 of the Disclosure Schedule, the Company has not granted or agreed
to grant to any Person any right (including piggyback registration rights), to
have any securities of the Company registered with the SEC or registered or
qualified with any other Governmental Entity.
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3.12 Title to Property and Assets. The properties and assets
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owned by the Company and each of its subsidiaries are owned by the Company or
such subsidiary free and clear of all mortgages, deeds of trust, liens, charges,
encumbrances and security interests, except for statutory liens for the payment
of current taxes that are not yet delinquent and liens, encumbrances and
security interests that arise in the ordinary course of business and could not
reasonably be expected to have a Company Material Adverse Effect. With respect
to the property and assets it leases, each of the Company and its subsidiaries
is in compliance with such leases, except for any such noncompliance that,
individually or in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect.
3.13 Tax Matters.
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(a) To the Company's knowledge, there have been no examinations or
audits of any of the Company's tax returns or reports by any Governmental Entity
having jurisdiction over the Company. To the Company's knowledge, each of the
Company and its subsidiaries has filed all federal, state, county and local tax
returns required to have been filed by them and paid all taxes shown to be due
on such returns. There are in effect no waivers of applicable statutes of
limitations with respect to taxes for any year.
(b) The Company has not elected pursuant to the Internal Revenue Code
of 1986, as amended (the "Code"), to be treated as an "S" corporation or a
collapsible corporation pursuant to Section 1362(a) or Section 341(f) of the
Code, respectively, nor to the Company's knowledge has it made any other
elections pursuant to the Code (other than elections which relate solely to
matters of accounting, depreciation or amortization) which would have a Company
Material Adverse Effect.
3.14 ERISA. The Company does not sponsor or participate in any
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employee benefit plan subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), except for any employee benefit plan that CMGI
sponsors or in which CMGI participates or except as disclosed on Section 3.14 of
the Disclosure Schedule. The Company is not required to contribute to any
"multi-employer plan" as defined in ERISA, Section 3(37), nor has the Company
ever contributed to or withdrawn from such a multi-employer plan.
3.15 Employment Matters. There are no complaints pending or, to the
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Company's knowledge, threatened before any Governmental Entity alleging unfair
labor practices or unlawful discrimination or, to the Company's knowledge, is
there any basis for any such claim. There are no existing or, to the Company's
knowledge, threatened labor strikes, disputes, grievances, controversies or
other labor troubles affecting the Company which could reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. The
Company is not a party to any collective bargaining agreement
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with any labor union.
3.16 Brokers. Except for the fee payable by the Company to Xxxxxxxxx
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& Co., LLC with respect to shares of Common Stock purchased by Purchasers other
than CMGI, no broker, finder, or investment banker is entitled to any brokerage,
finder's, or other fee or commission in connection with the transactions
contemplated by this Agreement. The Company will indemnify and save each
Purchaser harmless from and against any and all claims, liabilities or
obligations with respect to brokerage or finders' fees or commissions, or
consulting fees in connection with the transactions contemplated by this
Agreement asserted by any Person on the basis of any agreement, arrangement,
statement or representation alleged to have been made by the Company.
3.17 Compliance. The Company is not in violation of any applicable
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statute, rule, regulation, order or restriction of any domestic or foreign
government or any instrumentality or agency thereof in respect of the conduct of
its business or the ownership of its properties which violation would have a
Company Material Adverse Effect. The Company has all franchises, permits,
licenses and any similar authority necessary for the conduct of its business as
presently conducted, the lack of which would have a Company Material Adverse
Effect, and believes that it can obtain, without undue burden or expense, any
similar authority for the conduct of its business as proposed to be conducted.
3.18 Environmental. The Company, the operation of its business and
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any real property that the Company owns or has owned, leases or has leased or
otherwise occupies or uses or has occupied or used (the "Premises") are, to the
Company's knowledge, in compliance with all applicable Environmental Laws (as
defined below) and orders or directives of any governmental authorities having
jurisdiction under such Environmental Laws, except where the failure to comply
could not reasonably be expected to have a Company Material Adverse Effect. The
Company has not received any citation, directive, letter or other communication,
written or oral, or any notice of any proceeding, claim or lawsuit, from any
person arising out of the ownership or occupation of the Premises, or the
conduct of its operations, and the Company is not aware of any basis therefor.
To the Company's knowledge, no material expenditures are or will be required in
order to comply with any Environmental Laws. For purposes of this Agreement, the
term "Environmental Laws" shall mean any Federal, state, local or foreign law,
ordinance, rule, regulation, permit and authorization pertaining to the
protection of human health or the environment.
4. Representations of the Purchasers. Each Purchaser, severally and not
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jointly, represents and warrants to the Company as follows:
4.1 Investment. The Purchaser is acquiring the Shares for its own
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account for investment and not with a view to, or for sale in connection with,
any distribution thereof, nor with any present intention of distributing or
selling the same. The Purchaser is an "accredited investor" as defined in Rule
501(a) under the Securities Act.
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4.2 Incorporation, Authority, Validity and Noncontravention. The
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Purchaser is duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation. The Purchaser has full power and
authority to enter into and to perform this Agreement in accordance with its
terms. This Agreement has been duly and validly executed and delivered by the
Purchaser and constitutes a valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to creditors' rights generally, and general
principles of equity. Subject to compliance with the applicable requirements of
the Securities Act and any applicable state securities laws, and the Exchange
Act, neither the execution and delivery by the Purchaser of this Agreement, nor
the consummation by the Purchaser of the transactions contemplated hereby or
thereby, will (a) conflict with or violate any provision of the charter or by-
laws of the Purchaser, (b) require on the part of the Purchaser any filing with,
or permit, authorization, consent or approval of, any Governmental Entity, (c)
conflict with, result in breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the acceleration of
obligations under, create in any party any right to terminate, modify or cancel,
or require any notice, consent or waiver under, any contract or instrument to
which the Purchaser is a party or by which it is bound or to which any of its
assets are subject, except for (i) any conflict, breach, default, acceleration,
termination, modification or cancellation which would not have a Purchaser
Material Adverse Effect or adversely affect the consummation of the transactions
contemplated hereby or (ii) any notice, consent or waiver the absence of which
would not have a Purchaser Material Adverse Effect or adversely affect the
consummation of the transactions contemplated hereby, or (d) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the
Purchaser or any of its properties or assets. As used in this Agreement,
"Purchaser Material Adverse Effect" means a material adverse effect on or a
material adverse change in, or group of such effects on or changes in, the
assets, liabilities, business, condition (financial or otherwise), results of
operations or prospects of the Purchaser and its subsidiaries, taken as a whole,
excluding any material adverse effect (a) demonstrably shown to have been
proximately caused by the public announcement of this Agreement or any of the
transactions contemplated thereby, (b) attributable to any legal proceeding
brought by or on behalf of stockholders of the Purchaser alleging that the Board
of Directors of the Purchaser breached its fiduciary duties in connection with
its approval of this Agreement and the transaction contemplated hereby, or (c)
arising or resulting from general industry, economic or stock market conditions
that affect the Purchaser (or the markets in which the Purchaser competes) in a
manner not disproportionate to the manner in which such conditions affect other
companies in the industries or markets in which the Purchaser competes.
4.3 Experience. The Purchaser has carefully reviewed the
representations concerning the Company contained in this Agreement, and has made
detailed inquiry concerning the Company, its business and its personnel; the
officers of the Company have made available to the Purchaser any and all written
information which he, she or it has requested and have answered to such
Purchaser's satisfaction all inquiries made by such Purchaser; and such
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Purchaser has sufficient knowledge and experience in finance and business that
he, she or it is capable of evaluating the risks and merits of his, her or its
investment in the Company and such Purchaser is able financially to bear the
risks thereof.
4.4 Brokers. The Purchaser (i) has not retained a finder or broker
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in connection with the transactions contemplated by this Agreement, and (ii)
will indemnify and save the Company harmless from and against any and all
claims, liabilities or obligations with respect to brokerage or finders' fees or
commissions, or consulting fees in connection with the transactions contemplated
by this Agreement asserted by any Person on the basis of any agreement,
arrangement, statement or representation alleged to have been made by such
indemnifying party.
5. Conditions to the Obligations of the Purchasers. The obligation of
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each Purchaser to purchase Shares at a Closing is subject to the fulfillment, or
the waiver by the Purchaser, of each of the following conditions on or before
the Closing:
5.1 Accuracy of Representations and Warranties. Each representation
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and warranty contained in Section 3 shall be true on and as of the respective
Closing Date with the same effect as though such representation and warranty had
been made on and as of that date.
5.2 Performance. The Company shall have performed and complied with
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all agreements and conditions contained in this Agreement required to be
performed or complied with by the Company prior to or at the Closing.
5.3 Investor Rights Agreements. The Company and CMGI shall have
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executed an Investor Rights Agreement Amendment No. 1 in the form attached as
Exhibit 5.3-1 establishing that the Shares purchased by CMGI shall be subject to
that certain Investor Rights Agreement, dated as of July 23, 1999, between the
Company and CMGI (the "CMGI Investor Rights Agreement"). The Company and CPQ
Holdings, Inc. ("CPQ") shall have executed the Amended & Restated Investor
Rights Agreement in the form attached as Exhibit 5.3-2 (the "CPQ Investor Rights
Agreement").
5.4 Legal Opinion. Each Purchaser shall have received from Xxxxxx,
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XxXxxxxxx & Fish, LLP an opinion, the substance of which is set forth in Exhibit
5.4 attached hereto.
5.5 Other Matters. All corporate and other proceedings in connection
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with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to each Purchaser, and each Purchaser shall have received all
such counterpart originals or certified or other copies of such documents as it
may reasonably request.
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6. Condition to the Obligations of the Company. The obligations of
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the Company under Section 1 of this Agreement are subject to fulfillment of the
following condition on or before the Closing:
6.1 Accuracy of Representations and Warranties. The representations
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and warranties of each Purchaser contained in Section 4 shall be true on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of that date.
7. Affirmative Covenants of the Company.
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7.1 Financial Statements. The Company shall deliver to each
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Purchaser:
(a) within 90 days after the end of each fiscal year of the Company,
an audited balance sheet of the Company as at the end of such year and audited
statements of income and of cash flows of the Company for such year, certified
by certified public accountants of established national reputation selected by
the Company, and prepared in accordance with GAAP; and
(b) within 45 days after the end of each fiscal quarter of the Company
(other than the fourth quarter), an unaudited balance sheet of the Company as at
the end of such quarter, and unaudited statements of income and of cash flows of
the Company for such fiscal quarter and for the current fiscal year to the end
of such fiscal quarter.
7.2 Filing of Reports. The Company will, for so long as it has
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securities registered pursuant to Section 12 of the Exchange Act or has
securities registered pursuant to the Securities Act, make timely filing of such
reports as are required to be filed by it with the SEC.
8. Transfer of Shares.
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8.1 Restricted Shares. "Restricted Shares" means (i) the Shares, and
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(ii) any other shares of capital stock of the Company issued in respect of such
shares (as a result of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events); provided, however, that shares of Common
Stock which are Restricted Shares shall cease to be Restricted Shares (x) upon
any sale pursuant to Section 4(1) of the Securities Act or Rule 144 under the
Securities Act or (y) at such time as they become eligible for sale under Rule
144(k) under the Securities Act.
8.2 Requirements for Transfer.
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(a) Restricted Shares shall not be sold or transferred unless either
(i) they first shall have been registered under the Securities Act, or (ii) the
Company first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the
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effect that such sale or transfer is exempt from the registration requirements
of the Securities Act.
(b) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for (i) a transfer by a Purchaser to a wholly owned
subsidiary or Affiliate (as defined herein) of that Purchaser or (ii) a transfer
made in accordance with Rule 144 under the Securities Act. In the event that
any Shares are transferred pursuant to clause (i) in the preceding sentence, all
rights granted to such transferring Purchaser relating to such Shares
(including, without limitation, any rights granted pursuant to the CMGI Investor
Rights Agreement or the CPQ Investor Rights Agreement) shall be automatically
transferred to the transferree in connection therewith.
8.3 Legend. Each certificate representing Restricted Shares shall
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bear a legend substantially in the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be offered,
sold or otherwise transferred, pledged or hypothecated unless and
until such shares are registered under such Securities Act or an
opinion of counsel satisfactory to the Company is obtained to the
effect that such registration is not required."
The Company shall remove from the certificates representing any Restricted
Shares, at the request of the holder thereof, at such time as they become
eligible for resale pursuant to Rule 144(k) under the Securities Act or sold
pursuant to an effective registration statement under the Securities Act.
9. Indemnification.
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9.1 Agreement to Indemnify.
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(a) Company Indemnity. Each Purchaser, its Affiliates and Associates
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(each as defined in Section 9.3), and each officer, director, stockholder,
employer, representative and agent of any of the foregoing (collectively, the
"Purchaser Indemnitees"), shall each be indemnified by the Company and held
harmless to the extent set forth in this Section 9 with respect to any and all
Damages (as defined in Section 9.5) reasonably incurred by any Purchaser
Indemnitee as a proximate result of any inaccuracy or misrepresentation in, or
breach of, any representation, warranty, covenant or agreement made by the
Company in this Agreement (including any exhibits, schedules or disclosure
schedules hereto).
(b) Purchaser Indemnity. The Company, its respective Affiliates and
-------------------
Associates, and each officer, director, stockholder, employer, representative
and agent of any of the foregoing (collectively, the "Company Indemnitees"),
shall each be indemnified and held harmless to the extent set forth in this
Section 9 by each Purchaser, severally and not
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jointly, in respect of any and all Damages reasonably incurred by any Company
Indemnitee as a proximate result of any inaccuracy or misrepresentation in, or
breach of, any representation, warranty, covenant or agreement made by that
Purchaser in this Agreement (including any exhibits, schedules or disclosure
schedules hereto).
(c) Equitable Relief. Nothing set forth in this Section 9 shall be
----------------
deemed to prohibit or limit the right of any Purchaser Indemnitee or Company
Indemnitee (an "Indemnitee") at any time before, at or after the Closing, to
seek injunctive or other equitable relief for the failure of any "Indemnifying
Party" (which, for purposes hereof, in the case of an Purchaser Indemnitee,
means the Company and, in the case of a Company Indemnitee, means the respective
Purchaser) to perform or comply with any covenant or agreement contained herein.
9.2 Survival. All representations and warranties of each Purchaser
---------
and the Company contained herein and all claims of any Indemnitee in respect of
any inaccuracy, misrepresentation or breach shall survive the Closing until the
first anniversary of the Closing Date, regardless of whether the applicable
statute of limitations, including extensions thereof, may expire; provided,
however, notwithstanding the foregoing, the representations and warranties of
the Company contained in Section 3.3 shall survive the Closing until such time
as the applicable statute of limitations expires. All covenants and agreements
of each Purchaser and the Company contained in this Agreement shall survive the
Closing in perpetuity (except to the extent any such covenant or agreement shall
terminate or expire by its terms). All claims of any Indemnitee in respect of
any breach of such covenants or agreements shall survive the Closing until the
expiration of one year following the non-breaching party's obtaining actual
knowledge of such breach; provided that the covenant or agreement has not
terminated or expired by its terms prior to the date the claim is made.
9.3 Claims for Indemnification. If any Indemnitee shall believe
--------------------------
that such Indemnitee is entitled to indemnification pursuant to this Section 9
in respect of any Damages, such Indemnitee shall give the appropriate
Indemnifying Party prompt written notice thereof. Any such notice shall set
forth in reasonable detail and to the extent then known the basis for such claim
for indemnification. The failure of such Indemnitee to give notice of any claim
for indemnification promptly shall not adversely affect such Indemnitee's right
to indemnity hereunder except to the extent that such failure adversely affects
the right of the Indemnifying Party to assert any reasonable defense to such
claim. Each such claim for indemnity shall expressly state that the
Indemnifying Party shall have only the 20 Business Day period referred to below
in this Section 9.3 to dispute or deny such claim. As used in this Agreement,
the term "Business Day" means each Monday, Tuesday, Wednesday, Thursday or
Friday that banks in Boston, Massachusetts are not required by law to be closed.
The Indemnifying Party shall have 20 Business Days following its receipt of such
notice either (i) to acquiesce in such claim by giving such Indemnitee written
notice of such acquiescence or (ii) to object to the
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claim by giving such Indemnitee written notice of the objection. If the
Indemnifying Party does not object thereto within such 20 Business Day period,
such Indemnitee shall be entitled to be indemnified for all Damages reasonably
and proximately incurred by such Indemnitee in respect of such claim. If the
Indemnifying Party objects to such claim in a timely manner, the senior
management of the Company and the relevant Purchaser or Purchasers shall meet to
attempt to resolve such dispute. If the dispute cannot be resolved by senior
management of the Company and Purchaser, either party may make a written demand
for formal dispute resolution and specify therein the scope of the dispute.
Within 30 days after such written notification, the Parties agree to meet for
one day with an impartial mediator and consider dispute resolution alternatives
other than litigation. If an alternative method of dispute resolution is not
agreed upon within 30 days after the one-day mediation, either party may begin
litigation proceedings. Nothing in this Section 9.3 shall be deemed to require
arbitration.
9.4 Defense of Claims. In connection with any claim that may give
-----------------
rise to indemnity under this Section 9 resulting from or arising out of any
claim or Proceeding (as defined in Section 9.5 below) against any Indemnitee by
a Person that is not a party hereto, the Indemnifying Party may (unless such
Indemnitee elects not to seek indemnity hereunder for such claim) but shall not
be obligated to, upon written notice to the relevant Indemnitee, assume the
defense of any such claim or Proceeding if the Indemnifying Party with respect
to such claim or Proceeding acknowledges to the Indemnitee the Indemnitee's
right to indemnify pursuant hereto the extent provided herein (as such claim may
have been modified through written agreement of the Parties) and provides
assurances, reasonably satisfactory to such Indemnitee, that the Indemnifying
Party shall be financially able to satisfy such claim to the extent provided
herein if such claim or Proceeding is decided adversely; provided, however, that
nothing set forth herein shall be deemed to require the Indemnifying Party to
waive any cross-claims or counterclaims for Damages the Indemnifying Party may
have against the Indemnitee. The Indemnitee shall be entitled to retain
separate counsel, reasonably acceptable to the Indemnifying Party, if the
Indemnitee shall determine, upon the written advice of counsel, that an actual
or potential conflict of interest exists between the Indemnifying Party and the
Indemnitee in connection with such claim or Proceeding. The Indemnifying Party
shall be obligated to pay the reasonable fees and expenses of such separate
counsel to the extent the Indemnitee is entitled to indemnification by the
Indemnifying Party with respect to such claim or Proceeding under this Section
9.4. If the Indemnifying Party assumes the defense of any such claim or
Proceeding, the Indemnifying Party shall select counsel reasonably acceptable to
such Indemnitee to conduct the defense of such claim or Proceeding, shall take
all steps necessary in the defense or settlement thereof and shall at all times
diligently and promptly pursue the resolution thereof. If the Indemnifying
Party shall have assumed the defense of any claim or Proceeding in accordance
with this Section 9.4, the Indemnifying Party shall be authorized to consent to
a settlement of, or the entry of any judgment arising from, any such claim or
Proceeding; provided, however, that the Indemnifying Party shall pay or cause to
be
13
paid all amounts arising out of such settlement or judgment concurrently with
the effectiveness thereof; provided, further, that the Indemnifying Party shall
not be authorized to encumber any of the assets of any Indemnitee or to agree to
any restriction that would apply to any Indemnitee or to its conduct of business
without the prior written consent of the Indemnitee; and provided, further, that
a condition to any such settlement shall be a complete release of such
Indemnitee and its Affiliates, directors, officers, employees an agents with
respect to such claim, including any reasonably foreseeable collateral
consequences thereof. Such Indemnitee shall be entitled to participate in (but
not control) the defense of any such action, with its own counsel and at its own
expense. Each Indemnitee shall, and shall cause each of its Affiliates,
directors, officers, employees and agents to, cooperate fully with the
Indemnifying Party in the defense of any claim or Proceeding being defended by
the Indemnifying Party pursuant to this Section 9.4. If the Indemnifying Party
does not assume the defense of any claim or Proceeding resulting therefrom in
accordance with the terms of this Section 9.4, such Indemnitee may defend
against such claim or Proceeding in such manner as it may deem appropriate,
including settling such claim or Proceeding after giving notice of the same to
the Indemnifying Party, on such terms as such Indemnitee may deem appropriate.
If any Indemnifying Party seeks to question the manner in which such Indemnitee
defended such claim or Proceeding or the amount or nature of any such
settlement, such Indemnifying Party shall have the burden to prove by a
preponderance of the evidence that such Indemnitee did not defend such claim or
Proceeding in a reasonably prudent manner.
9.5 Certain Definitions. As used in this Section 9, or any other
-------------------
Section where such definition is expressly referenced: (i) "Affiliate" means,
with respect to any Person, any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with such other Person;
(ii) "Associate" means, when used to indicate a relationship with any Person,
(A) any other Person of which such first Person is an officer, director or
partner or is, directly or indirectly, the beneficial owner of 10% or more of
any class of equity securities, membership interests or other comparable
ownership interests issued by such other Person, (B) any trust or other estate
in which such first Person has a 10% or more beneficial interest or as to which
such first Person serves as trustee or in a similar fiduciary capacity, (C) if
such first Person is an individual, any relative or spouse of such first Person
who has the same home as such first Person, or (D) any other Person who is a
director or officer of such first Person; (iii) "Damages" means all demands,
claims, actions or causes of action, assessments, losses (including, without
limitation, any diminution in value of the Shares held by the Indemnified Party,
if any), damages, costs, expenses, liabilities, judgments, awards, fines,
response costs, sanctions, taxes, penalties, charges and amounts paid in
settlement, including reasonable out-of-pocket costs, fees and expenses
(including reasonable costs, fees and expenses of attorneys, accountants and
other agents of, or other parties retained by, such party); and (iv)
"Proceeding" means any action, suit, hearing, arbitration, audit, proceeding
(public or private) or investigation that is brought or initiated by or against
any Governmental Entity or any other Person.
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10. Miscellaneous.
-------------
10.1 Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of the Company and each Purchaser and their
respective successors and permitted assigns.
10.2 Severability. The invalidity or unenforceability of any
------------
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
10.3 Specific Performance. In addition to any and all other
--------------------
remedies that may be available at law in the event of any breach of this
Agreement, each Purchaser shall be entitled to specific performance of the
agreements and obligations of the Company hereunder and to such other injunctive
or other equitable relief as may be granted by a court of competent
jurisdiction.
10.4 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of Delaware (without
reference to the conflicts of law provisions thereof).
10.5 Notices. All notices, requests, consents, and other
-------
communications under this Agreement shall be in writing and shall be deemed
delivered (i) two Business Days after being sent by registered or certified
mail, return receipt requested, postage prepaid or (ii) one Business Day after
being sent via a reputable nationwide overnight courier service guaranteeing
next Business Day delivery, in each case to the intended recipient as set forth
below:
If to the Company, at 000 Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx
00000, Attention: President, or at such other address or addresses as may have
been furnished in writing by the Company to the Purchasers, with a copy to each
of Xxxx X. Xxxxxx, Esq., Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000-0000 and Xxxxxxxxxxx Xxxxxxxxx, Esq., Xxxxxx, XxXxxxxxx &
Fish, LLP, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, XX 00000-0000;
If to CMGI, at the 000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx, XX
00000, Attn: General Counsel, with a copy to Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP, Xxx Xxxxxx Xxxxxx, Xxxxxx, XX 00000-0000, Attn: Xxxxx Xxxxxxxx, Esq.
If to CPQ, c/o Compaq Computer Corporation, at 00000 Xxxxx Xxxxxxx
000, Xxxxxxx, Xxxxx 00000-0000, Attn: General Counsel (Office of the Corporate
Secretary).
Any Party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is
15
actually received by the Party for whom it is intended. Any Party may change the
address to which notices, requests, consents or other communications hereunder
are to be delivered by giving the other parties notice in the manner set forth
in this Section.
10.6 Complete Agreement. This Agreement, the CMGI Investor
------------------
Rights Agreement and the CPQ Investor Rights Agreement constitute the entire
agreement and understanding of the Parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter.
10.7 Amendments and Waivers. Except as otherwise expressly set
----------------------
forth in this Agreement, any term of this Agreement may be amended or terminated
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Purchaser to be bound by such amendment,
termination or waiver.
10.8 Counterparts; Facsimile Signatures. This Agreement may be
----------------------------------
executed in any number of counterparts, each of which shall be deemed to be an
original, and all of which shall constitute one and the same document. The
delivery of a signature page of this Agreement by one Party to the each of the
other Parties via facsimile transmission shall constitute the execution and
delivery of this Agreement by the transmitting Party.
10.9 Section Headings. The section headings are for the
----------------
convenience of the Parties and in no way alter, modify, amend, limit, or
restrict the contractual obligations of the Parties.
10.10 Legal Fees and Expenses. Each of the Parties to this
-----------------------
Agreement will bear its own legal fees and other expenses with respect to the
transaction contemplated by this Agreement, except that the Company shall
promptly reimburse CMGI upon request for up to $10,000 of legal fees and other
expenses reasonably incurred by CMGI with respect to the negotiation of the
agreement and the purchase of the Shares.
10.11 Press Releases and Announcements. No Party will issue any
--------------------------------
press release or public announcement relating to the subject matter of this
Agreement and naming any Purchaser without the prior written approval of that
Purchaser; provided, however, that any Party may, after notice to any named
Party, make any public disclosure it believes in good faith is required by
applicable law, regulation or stock market rule (in which case, the disclosing
Party shall use all commercially reasonable efforts to advise any Party (or
Affiliates thereof) named therein prior to making such disclosure and cooperate
in the drafting of such disclosure).
[Signature Pages to Follow]
16
Executed as of the date first written above.
THE COMPANY:
ENGAGE, INC.
By: /s/ Xxxxxxx X. Royal
---------------------------------
Name: Xxxxxxx X. Royal
----------------------------
Title: Chief Financial Officer
---------------------------
THE PURCHASERS:
CMGI, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
----------------------------
Title: Vice President, Finance
-------------------------
CPQ HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxx, Xx.
---------------------------------
Name: Xxxxx X. Xxxxxx, Xx.
----------------------------
Title: President
---------------------------
17
