EXHIBIT 10.1
Dated September 22, 1999
Pacific Century CyberWorks Limited
and
CMGI, Inc.
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT is made on the 22nd day of September 1999
BETWEEN:
(1) Pacific Century CyberWorks Limited, a company incorporated in Hong Kong
with registered number 69030 whose registered office is at 00/X, Xxxxxxxx
Xxxxx, Xxxxxxxx Plaza, 3 Garden Road, Central, Hong Kong ("PCCW"); and
(2) CMGI, Inc., a company incorporated in Delaware, the United States of
America whose principal office is at 000 Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxx,
Xxxxxxx, Xxxxxxxxxxxxx ("CMGI").
WHEREAS:
(A) PCCW is a public company incorporated in Hong Kong. The issued ordinary
shares of HK$0.05 in the capital of PCCW are listed on the Stock Exchange
(as hereinafter defined).
(B) CMGI is a public company incorporated in Delaware. The issued shares of
common stock, par value $.01 per share, of CMGI are listed on Nasdaq (as
hereinafter defined).
(C) PCCW and CMGI have mutually agreed that CMGI shall issue and sell to PCCW
the CMGI Shares (as hereinafter defined) and PCCW shall allot and issue to
CMGI the PCCW Shares (as hereinafter defined) upon the terms and subject to
the conditions set out in this Agreement.
NOW IT IS HEREBY AGREED as follows:
1. Interpretation
--------------
1.1 In this Agreement where the context so admits the following words and
expressions shall have the following meanings:
"Business Day" a day on which banks are generally open for business in
Hong Kong and New York City;
"CMGI Shares" 4,057,971 new shares of common stock, par value
US$0.01, of CMGI;
"CMGI Warranties" the representations, warranties and undertakings
under Clause 7;
"CMGI's Solicitors" CMS Xxxxxxx XxXxxxx, 0xx Xxxxx, Xxxxx Xxx, Xxxxx
Xxxxxx, 00 Xxxxxxxxx, Xxxx Xxxx.
"Companies Ordinance" the Companies Ordinance (Chapter 32 of the Laws of
Hong Kong);
"Completion" completion of the transaction contemplated herein
pursuant to Clause 5;
"Completion Date" the third Business Day after the date of the later
of the notices to be given by PCCW or CMGI pursuant
to Clause 4.4 (or such later date as to which the
Parties may agree in writing);
"Conditions" the conditions set out in Clause 4.1;
"CT" The Corporation Trust Company, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000.
"Hong Kong" the Hong Kong Special Administrative Region of the
People's Republic of China;
"Listing Rules" at any given time, the Rules Governing the Listing
of Securities on the Stock Exchange in the form in
force at that time;
"Long Stop Date" November 30, 1999 or such later date as to which the
Parties may agree writing;
"Nasdaq" The Nasdaq National Market;
"Parties" named parties to this Agreement, and "Party" means
either of them;
"PCCW Shares" 448,347,107 new ordinary shares of HK$.05 each in
the capital of PCCW, credited as fully paid;
"PCCW Warranties" the representations, warranties and undertakings
under Clause 8;
"PCCW's Solicitors" Xxxxx & XxXxxxxx, 14th Floor, Xxxxxxxxx House, 00
Xxxxxxxx Xxxx, Xxxx Xxxx;
"PCGH" Pacific Century Group Holdings Limited, a
corporation organized under the laws of the Cayman
Islands;
"PCRD" Pacific Century Regional Developments Limited, a
corporation organized under the laws of Singapore;
and
"Stock Exchange" The Stock Exchange of Hong Kong Limited.
1.2 A reference to any given Clause is to the clause of this Agreement with the
corresponding numerical or other designation.
1.3 The expressions "CMGI" and "PCCW" shall, where the context permits, include
their respective successors and permitted assigns.
2. Allotment, Issuance and Subscription of Shares
----------------------------------------------
Subject to satisfaction of the Conditions, on Completion, (a) PCCW agrees
to purchase, and CMGI agrees to sell and issue to PCCW, the CMGI Shares,
and (b) CMGI agrees to subscribe and PCCW agrees to allot and issue, the
PCCW Shares.
3. Consideration
-------------
The total stated consideration for the CMGI Shares shall be US$350,000,000
(three hundred and fifty million United States dollars) to be satisfied by
the allotment and issuance to CMGI of the PCCW Shares as provided in this
Agreement.
4. Conditions
----------
4.1 Completion shall be conditional on the fulfillment of each of the following
conditions:
(a) the Listing Committee of the Stock Exchange having granted (either
unconditionally or subject only to conditions to which neither PCCW
nor CMGI reasonably objects) listing of and permission to deal in the
PCCW Shares;
(b) the PCCW Warranties having remained true and accurate and not
misleading at all times up to and as at Completion (except to the
extent that a PCCW Warranty was by its terms made as of a specific
date, in which case Completion shall be conditional on such PCCW
Warranty having been true at such date);
(c) the performance of, or compliance with, all agreements, obligations
and conditions contained in this Agreement that are required to be
performed or complied with by PCCW and all the approvals and consents
necessary to complete the share exchange described herein (including
any consents of governmental or regulatory authorities and any
requisite approvals from the shareholders of PCCW and PCRD, if
applicable, with respect to the allotment and issuance of the PCCW
Shares by PCCW and the purchase of the CMGI Shares by PCCW) having
been obtained by PCCW;
(d) the delivery by PCCW to CMGI of a certificate executed by an executive
officer of PCCW, dated the Completion Date, to the effect that the
Conditions specified in Clauses 4.1 (b) and (c) have been satisfied;
(e) the CMGI Shares having been approved for listing on Nasdaq;
(f) the CMGI Warranties having remained true and accurate and not
misleading at all times up to and as at Completion (except to the
extent that a CMGI Warranty was by its terms made as of a specific
date, in which case Completion shall be conditional on such CMGI
Warranty having been true at such date);
(g) the performance of, or compliance with, all agreements, obligations
and conditions contained in this Agreement that are required to be
performed or complied with by CMGI and all the approvals and consents
necessary to complete the share exchange described herein (including
any consents of governmental or regulatory authorities) having been
obtained by CMGI;
(h) the delivery by CMGI to PCCW of a certificate executed by an executive
officer of CMGI, dated the Completion Date, to the effect that the
Conditions specified in Clauses 4.1 (f) and (g) have been satisfied;
and
(i) the expiration or early termination of the waiting period under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), if applicable.
4.2 PCCW may waive all or any of the Conditions set out in Clauses 4.1(f) to
(h) at any time by notice in writing to CMGI.
4.3 CMGI may waive all or any of the Conditions set out in Clauses 4.1(b) to
(d) at any time by notice in writing to PCCW.
4.4 PCCW shall inform CMGI of the fulfillment of all the Conditions set out in
Clauses 4.1(a), (c) and (i) within one (1) Business Day of the fulfillment of
the last of such Conditions, and CMGI shall inform PCCW of the fulfillment of
all the Conditions set out in Clauses 4.1(e), (g) and (i) within one (1)
Business Day of the fulfillment of the last of such Conditions.
4.5 This Agreement may be terminated by written consent of both Parties, or if
any of the Conditions set out in Clause 4.1 is not fulfilled (or waived by PCCW
in accordance with Clause 4.2 or waived by CMGI in accordance with Clause 4.3)
on or before 12:00 noon on the Long Stop Date. In the event of a termination,
this Agreement (except for Clauses 9, 10, and 11 and this Clause 4) will
terminate and become null and void and the Parties hereto will be released from
all their respective obligations hereunder (except for Clauses 9, 10, and 11 and
this Clause 4), except for the liabilities for any antecedent breaches hereof.
5. Completion
----------
5.1 Completion shall take place at the offices of PCCW's Solicitors or such
other place as the Parties may agree on or before the Completion Date.
5.2 Subject to Clause 4, completion of this Agreement shall take place at 12:00
noon on the Completion Date at which:
(a) CMGI shall:
(i) issue and sell all the CMGI Shares to PCCW (or such other persons
as PCCW may nominate) credited as fully paid; and
(ii) deliver or caused to be delivered to PCCW:
(aa) certified copies of Board resolutions of the CMGI Board of
Directors approving and authorizing the execution and
completion of this Agreement and the issuance and sale of
the CMGI Shares to PCCW (or such other persons as PCCW may
nominate);
(ab) duly issued stock certificate(s) in the name of PCCW (or
such other persons as PCCW may nominate) in respect of the
CMGI Shares;
(ac) a receipt for the PCCW Shares received by CMGI at
Completion; and
(ad) all other documents required to be delivered by CMGI at or
prior to Completion.
(b) PCCW shall:
(i) allot and issue the PCCW Shares to CMGI (or such other persons as
CMGI may nominate) credited as fully paid; and
(ii) deliver or caused to be delivered to CMGI:
(aa) certified copies of resolutions of the PCCW Board of
Directors approving and authorizing the execution and
completion of this Agreement and the allotment and issuance
of the PCCW Shares to CMGI (or such other persons as CMGI
may nominate);
(ab) certified copies of the resolutions or written approval of
the shareholders of PCCW and PCRD, if applicable,
approving the allotment and issuance of the PCCW Shares to
CMGI (or such other persons as CMGI may nominate);
(ac) duly issued share certificates in the name of CMGI (or such
other persons as CMGI may nominate) in respect of the PCCW
Shares;
(ad) a receipt for the CMGI Shares received by PCCW at
Completion; and
(ae) all other documents required to be delivered by PCCW at or
prior to Completion.
6. Further Obligations of the Parties
----------------------------------
6.1 Each of the Parties shall use its reasonable best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other Party in doing, all things necessary, proper or
advisable to consummate, as promptly as possible, the transactions
contemplated by this Agreement, including, without limitation, that:
(a) CMGI shall use its reasonable best efforts to assist PCCW in all its
negotiations and exchanges of correspondence in relation to the
transactions referred to herein with the Stock Exchange and other
relevant authorities in Hong Kong;
(b) CMGI shall use its reasonable best efforts to provide PCCW with such
information as the Stock Exchange may require for the purpose of
obtaining their clearance of any announcement or circular required in
connection with this Agreement;
(c) PCCW shall use its reasonable best efforts to prepare all necessary
documentation and to convene all necessary meetings of shareholders
(with recommendations in favor as appropriate) in connection with
obtaining the approval of shareholders to the allotment and issuance
of the PCCW Shares and the purchase of the CMGI Shares by PCCW in
accordance with all necessary Hong Kong legal and Stock Exchange
requirements;
(d) PCCW shall use its reasonable best efforts to obtain at its own cost
the admission by the Stock Exchange of the PCCW Shares to the Official
List of the Stock Exchange; and
(e) PCCW shall cause this Agreement to be duly delivered to the Registrar
of Companies for registration pursuant to Section 45 of the Companies
Ordinance.
6.2 Each Party hereby agrees that, for a period of three years after the
Completion Date, it will not, and will cause each of its affiliates not to,
directly or indirectly, except as expressly requested by the other Party,
(a) solicit, seek or offer to effect, or actually effect, negotiate with,
or make or participate in any statement or proposal, whether written or
oral, either alone or in concert with others, to the Board of Directors of
the other Party, to any director or officer of the other Party or to any
stockholder of the other Party or make or participate in any public
announcement or proposal or offer whatsoever (including, but not limited to
any "solicitation" of "proxies" as such terms are defined or used in
Regulation 14A of the Exchange Act) with respect to, (i) any form of
business combination or similar transaction, including without limitation,
a merger, tender or exchange offer, purchase of stock or assets or
liquidation of the other Party's assets, (ii) any form of restructuring or
similar transaction with respect to such Party, (iii) any proposal to seek
representation on the Board of Directors of the other Party or otherwise to
seek control of the Board of Directors of the other Party, (b) purchase any
securities that would result in the increase of its level of beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended) of securities of the other Party in excess of the number
of shares beneficially owned by such Party as of the Completion Date (such
number of shares, as adjusted for stock splits, stock dividends, and
similar events, the "Beneficial Ownership Threshold") or any rights to
acquire any securities in excess of the Beneficial Ownership Threshold, (c)
request the other Party to waive, amend or terminate the provisions of this
paragraph, or (d) instigate, encourage, or assist any third party to do any
of the foregoing.
6.3 Each Party shall, for so long as it maintains beneficial ownership of
securities of the other Party in excess of 75% of such Party's Beneficial
Ownership Threshold, have the right to appoint a representative, reasonably
acceptable to the other Party, to attend all meetings of the other Party's Board
of Directors, whether in person, by telephonic conference or otherwise, which
representative shall have the right to observe and participate in discussions
and activities of the other Party's Board of Directors, except that the
representative shall not have any right to vote as a member of
the other Party's Board of Directors. Such representative shall be entitled to
receive the same notice of meetings and materials or information relating to
meetings as are provided to all members of the Board of Directors. Each Party
shall be entitled to recuse the other Party's representative from portions of
any of the meetings of such Party's Board of Directors and to redact portions of
Board of Directors materials delivered to the other Party's representative (i)
where and to the extent that a majority of such Party's Board of Directors
(without the other Party's representative present) determines a conflict of
interest between such Party and the other Party is present (but not where the
conflict is a conflict that is present for stockholders generally) and (ii) if,
in the opinion of such Party's counsel, attendance at such meeting or access to
such information could adversely effect the attorney-client privilege between
such Party and its counsel. So long as Xx. Xxxxx Xxxxxx is a member of the Board
of Directors of PCCW, PCCW's obligations under this Clause shall be deemed to be
satisfied. Nothing in this Agreement shall obligate Xx. Xxxxxx, in his capacity
as a Representative of CMGI on the Board of Directors of PCCW, to act in a
manner that he considers to be inconsistent with his duty as a member of the
Board of Directors of PCCW to preserve the confidentiality of corporate
information.
6.4 For so long as any Party beneficially owns securities of the other Party in
an amount equal to its Beneficial Ownership Threshold, such Party shall have the
right to discuss the affairs, finances and accounts of the other Party or any of
its subsidiaries with its Chief Executive Officer, and to review such
information as is reasonably requested, including any information required for
the timely preparation of financial statements; provided, however, that the
other Party shall not be obligated under this Clause with respect to information
which the Board of Directors of the other Party determines in good faith is
confidential and should not, therefore, be disclosed or is required to be
withheld in order to comply with the requirements of any regulatory authority or
applicable law.
6.5 Each Party agrees that for a period of three years after receipt of the
information (a) all information received by it pursuant to Clause 6.4 and (b)
any other information that is disclosed by the other Party to it and is
identified by the other Party as being confidential or proprietary, shall be
considered confidential information. Each Party further agrees that it shall
hold all such confidential information in confidence and shall not disclose any
such confidential information to any third party except as required by law,
regulation (including the Listing Rules) or applicable process, provided that to
the extent possible the other Party shall have been provided with reasonable
notice and the opportunity to seek a protective order to the extent possible
prior to such disclosure, other than its counsel or accountants nor shall it use
such confidential information for any purpose other than its investment in the
other Party; provided, however, that the foregoing obligation to hold in
confidence and not to dis-
close confidential information shall not apply to any information that (1) was
known to the public prior to disclosure by the other Party, (2) becomes known to
the public through no fault of such Party, (3) is disclosed to such Party on a
non-confidential basis by a third party having a legal right to make such
disclosure or (4) is independently developed by such Party.
6.6 Each Party agrees that for a period of three years after the Completion
Date, it will not, directly or indirectly, solicit for employment or hire any
officer, director or employee of the other Party or any of its subsidiaries or
divisions with whom such Party has had contact or who became known to it in
connection with its consideration of the transaction contemplated hereby, except
that such Party shall not be precluded from hiring any such employee who (i)
initiates discussions regarding such employment without any direct or indirect
solicitation by such Party, or (ii) has been terminated by the other Party or
its subsidiaries prior to commencement of employment discussions with such
Party. A solicitation shall not be deemed a breach of this Agreement if (a) the
personnel who perform such solicitation have no access to or knowledge of any
proprietary or confidential information of the other Party or of this Agreement
and (b) none of the soliciting Party's personnel who have access to or knowledge
of any proprietary or confidential information of the other Party or of this
Agreement have actual knowledge of such solicitation. The term "solicit for
employment" shall not be deemed to include general solicitations of employment
not specifically directed towards employees of a Party.
6.7 Each of CMGI and PCCW shall not sell, dispose of or otherwise transfer any
of the PCCW Shares or the CMGI Shares, as the case may be, for a period of three
years from the Completion Date unless (a) the sale, disposition or transfer is
made to an entity that is a wholly-owned subsidiary, direct or indirect, of such
Party and such entity has signed an agreement acceding to the obligations of the
initial Parties to this Agreement, or (b) prior written consent has been
obtained from the other Party. In the event a Party effects a sale, disposition
or transfer to an entity pursuant to subclause (a) of the preceding sentence
and, subsequent thereto, the entity ceases to be a wholly-owned subsidiary of
such Party, all necessary steps shall be taken to transfer as soon as
practicable the PCCW Shares or CMGI Shares, as the case may be, held by the
entity to such Party or to an entity that is a wholly-owned subsidiary of such
Party.
6.8 From and after the Completion Date, PCCW shall promptly provide CMGI with
any information reasonably requested by CMGI to enable CMGI or any of its
affiliates to prepare its tax returns (including the making of any elections)
and make any determinations with respect to taxes.
6.9 Each of CMGI and PCCW shall use its best efforts within 30 days after the
date hereof or as soon as practicable thereafter, to file or cause to be filed,
and share equally the filing fee for, the notification and report forms required
under the HSR Act, if any are required, and to make promptly any required
submissions under the HSR Act, including any response to any request for
additional information, with respect to the transactions contemplated by this
Agreement.
7. Representations, Warranties and Undertakings of CMGI
----------------------------------------------------
7.1 CMGI hereby represents, warrants and undertakes to PCCW (to the intent that
the provisions of this Clause shall continue to have full force and effect
notwithstanding Completion) as follows:
(a) Organization, Good Standing and Qualification. CMGI is a corporation
duly organized, validly existing and in good standing under the laws
of Delaware. CMGI has all requisite corporate power and authority to
own and operate its properties and assets, to execute and deliver this
Agreement, to issue, sell and deliver the CMGI Shares, to carry out
the provisions of this Agreement and to carry on its business as
presently conducted and as presently proposed to be conducted. CMGI is
duly qualified and is authorized to do business and is in good
standing as a foreign corporation in all jurisdictions in which the
nature of its activities and of its properties (both owned and leased)
makes such qualification necessary, except for those jurisdictions in
which failure to do so could not have, individually or in the
aggregate, a Material Adverse Effect (as defined herein) on CMGI. For
purposes of this Agreement, with respect to either Party, a "Material
Adverse Effect" shall mean a material adverse effect on the business,
assets, financial condition or operations of the Party and its
subsidiaries, taken as a whole.
(b) Subsidiaries. Set forth on Schedule 1 hereto, is a list of all
entities in which CMGI beneficially owns, directly or indirectly, 50%
or more of the outstanding stock or other equity interests
(collectively, the "CMGI Subsidiaries") as of September 22, 1999. Each
CMGI Subsidiary has been duly organized and is validly existing under
the laws of its jurisdiction of organization, is not in liquidation or
receivership, and has the power and authority (corporate or other) to
own its properties and conduct its business as described in the SEC
Documents (as defined below); and each CMGI Subsidiary is duly
qualified to do business as a foreign corporation in all other
jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification, other than where the failure to be so qualified
would not individually or in the aggregate have a Material Adverse
Effect on CMGI. All of the issued and outstanding capital stock of
each CMGI Subsidiary has been duly authorized and validly issued and
is fully paid and nonassessable; and the capital stock or equity
interests of each CMGI Subsidiary owned by CMGI, directly or through
subsidiaries, is owned free from liens, encumbrances and defects other
than as set forth in the SEC Documents or which would not have a
Material Adverse Effect on CMGI.
(c) Validly Issued Shares. When issued in compliance with the provisions
of this Agreement, the CMGI Shares will be validly issued, fully paid
and nonassessable, will rank pari passu in all respects with all
existing issued common stock, par value $0.01 (the "Common Stock"), of
CMGI and will be free of any restrictions, limits, claims, liens or
other encumbrances; provided, however, that the CMGI Shares may be
subject to restrictions on transfer under state and/or federal
securities laws as set forth herein or as otherwise required by such
laws at the time a transfer is proposed.
(d) Authorization; Binding Obligations. All actions on the part of CMGI
and its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the
performance of all obligations of CMGI hereunder and the
authorization, sale, issuance and delivery of the CMGI Shares pursuant
hereto have been taken or will be taken prior to Completion, including
any actions required to comply with the HSR Act, if applicable. This
Agreement has been duly executed and delivered by CMGI, and (assuming
the due authorization, execution and delivery hereof by PCCW) this
Agreement is a valid and binding obligation of CMGI enforceable in
accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights and (b)
general principles of equity that restrict the availability of
equitable remedies. The sale of the CMGI Shares is not subject to any
preemptive or similar rights or rights of first refusal that have not
been properly waived or complied with.
(e) Capitalization. The authorized capital stock of CMGI consists of
400,000,000 shares of Common Stock and 5,000,000 shares of pre-
ferred stock, $.01 par value per share (the "Preferred Stock"), of
which (i) 250 shares have been designated Series A Convertible
Preferred Stock, (ii) 50,000 shares have been designated Series B
Convertible Preferred Stock, (iii) 375,000 shares have been designated
as Series C Convertible Preferred Stock and (iv) 18,090.45 shares have
been designated as Series D Preferred Stock. As of the close of
business on September 20, 1999, 116,177,788 shares of 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 1,384,538 shares of Common Stock), (iii) 375,000
shares of Series C Preferred Stock (convertible into an aggregate of
3,925,674 shares of Common Stock), and (iv) 18,090.45 shares of Series
D Preferred Stock (convertible into an aggregate of 1,809,045 shares
of Common Stock) were issued and outstanding. All outstanding shares
of Common Stock are, and all shares of Common Stock subject to
issuance upon conversion of outstanding shares of Preferred Stock will
be, upon issuance, duly authorized, validly issued, fully paid and
nonassessable. Except as disclosed to PCCW, as set forth above or as
described or expressly contemplated by the SEC Documents (as defined
herein), as of September 20, 1999 there were no outstanding rights
(including without limitation, preemptive rights) warrants or options
to acquire, or instruments convertible into or exchangeable for, any
material number of shares of common stock or any other class of shares
or equity interest in CMGI or any of its subsidiaries, or any
contract, commitment, agreement, understanding or arrangement of any
kind relating to the issuance of any material number of shares of
common stock of CMGI or any subsidiary, any such convertible or
exchangeable securities or any such rights, warrants or options.
(f) Consents and Approvals; No Violations. Except for the filings,
permits, authorizations, consents and approvals as may be required
under federal and/or state securities laws, applicable stock exchange
regulations and, if applicable, the HSR Act none of the execution,
delivery or performance of this Agreement by CMGI, the consummation by
CMGI of the transactions contemplated hereby or compliance by CMGI
with any of the provisions hereof will (a) conflict with or result in
any breach of any provision of the certificate of incorporation or by-
laws of CMGI, (b) require any filing with, or permit, authorization,
consent or approval of, any governmental entity, (c) result in a
violation or breach of, or constitute (with or without due notice or
lapse of
time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which CMGI or
any of its material subsidiaries is a party or by which any of them or
any of their respective properties or assets may be bound, or (d)
violate any order, writ, injunction, decree, statute, rule or
regulation applicable to CMGI, any of its material subsidiaries or any
of their properties or assets, excluding from the foregoing clauses
(b), (c) and (d) such violations, breaches or defaults which would
not, individually or in the aggregate, have a material adverse effect
on CMGI's ability to consummate the transactions.
(g) SEC Documents. CMGI has furnished or made available to PCCW, prior to
the date hereof, copies of its Annual Report on Form 10-K for the
fiscal year ended July 31, 1998 ("Form 10-K"), its Quarterly Reports
on Form 10-Q for the fiscal quarters ended October 31, 1998, January
31, 1999 and April 30, 1999 (the "Form 10-Qs"), the Current Reports on
Form 8-K filed since July 31, 1998 (the "Form 8-Ks"), and all other
registration statements, reports and proxy statements filed by CMGI
with the Securities and Exchange Commission ("SEC") on or after July
31, 1998 (the Form 10-K, the Form 10-Qs, the Form 8-Ks and such
registration statements, reports and proxy statements, are
collectively referred to herein as the "SEC Documents"). Each of the
SEC Documents, as of its respective date (or if amended or superseded
by a filing prior to the date of this Agreement, then on the date of
such filing), did not, and each of the registration statements,
reports and proxy statements filed by CMGI with the SEC after the date
hereof and prior to the Completion will not, as of the date thereof
(or if amended or superseded by a filing prior to the date of the
Completion, then on the date of such filing), contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading. CMGI is
not a party to any material contract, agreement or other arrangement
which was required to have been filed as an exhibit to the SEC
Documents that is not so filed.
(h) Financial Statements. CMGI has furnished or made available to PCCW
copies of its audited financial statements (the "Audited Financial
Statements") for the fiscal year ended July 31, 1998, and its
unaudited financial statements for the nine-month period ended April
30,
1999 (the "Balance Sheet Date"). Since the Balance Sheet Date, CMGI
has duly filed with the SEC all registration statements, reports and
proxy statements required to be filed by it under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the
Securities Act of 1933, as amended (the "Securities Act"). The audited
and unaudited consolidated financial statements of CMGI included in
the SEC Documents filed prior to the date hereof fairly present, in
conformity with United States generally accepted accounting principles
("GAAP") (except as permitted by Form 10-Q) applied on a consistent
basis (except as may be indicated in the notes thereto), the
consolidated financial position of CMGI and its consolidated
subsidiaries as at the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject to
normal year end audit adjustments in the case of unaudited interim
financial statements).
(i) Absence of Certain Changes. Since the Balance Sheet Date and other
than in the ordinary course, there has not been: (i) any declaration,
setting aside or payment of any dividend or other distribution of the
assets of CMGI with respect to any shares of capital stock of CMGI or
any repurchase, redemption or other acquisition by CMGI or any CMGI
Subsidiary of a material number of the outstanding shares of CMGI's
capital stock; (ii) any damage, destruction or loss, whether or not
covered by insurance, except for such occurrences that have not
resulted, and are not expected to result in a Material Adverse Effect
on CMGI; (iii) any waiver by CMGI or any CMGI Subsidiary of a valuable
right or of a material debt owed to it, except for such waivers that
have not resulted and are not expected to result, in a Material
Adverse Effect on CMGI; (iv) any material change or amendment to, or
any waiver of any material rights under a material contract or
arrangement by which CMGI or any CMGI Subsidiary or any of their,
respective, assets or properties is bound or subject, except for
changes, amendments, or waivers that are expressly provided for or
disclosed in this Agreement or that have not resulted, and are not
expected to result, in a Material Adverse Effect on CMGI; (v) any
material change by CMGI in its accounting principles, methods or
practices or in the manner it keeps its accounting books and records,
except any such change required by a change in GAAP; or (vi) any other
event or condition of any character, except for such events and
conditions described in the SEC Documents or that have not resulted,
and
are not expected to result, either individually or collectively, in a
Material Adverse Effect on CMGI.
(j) Approval for Listing. On or prior to Completion, the CMGI Shares shall
have been approved for listing on the Nasdaq.
(k) Legends. CMGI agrees that the certificates for the PCCW Shares shall
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO RESTRICTIONS ON TRANSFER
CONTAINED IN THE SHARE EXCHANGE AGREEMENT
DATED SEPTEMBER 22, 1999, BETWEEN THE
COMPANY AND CMGI, INC., A COPY OF WHICH IS
ON FILE WITH THE COMPANY.
8. Representations, Warranties and Undertakings of PCCW
----------------------------------------------------
8.1 PCCW hereby represents, warrants and undertakes to CMGI (to the intent
that the provisions of this Clause shall continue to have full force and
effect notwithstanding Completion) that:
(a) Organization, Good Standing and Qualification. PCCW is a corporation
duly organized and validly existing under the laws of Hong Kong and is
not in liquidation or receivership. PCCW has all requisite corporate
power and authority to own and operate its properties and assets, to
execute and deliver this Agreement, to allot and issue the PCCW Shares
subject to the terms and conditions of this Agreement, to carry out
the provisions of this Agreement and to carry on its business as
presently conducted and as presently proposed to be conducted. The
memorandum of association and articles of association of PCCW comply
with the requirements of applicable Hong Kong law and are in full
force and effect. PCCW is duly qualified and is authorized to do
business and is in good standing as a foreign corporation in all
jurisdictions in which the nature of its activities and of its
properties (both owned and leased) makes such qualification necessary,
except for those jurisdictions in which failure to do so could not
have a Material Adverse Effect on PCCW.
(b) Subsidiaries. Set forth on Schedule 2 hereto, is a list of all entities in
which PCCW beneficially owns, directly or indirectly, 50% or more of the
outstanding stock or other equity interests (collectively, the "PCCW
Subsidiaries") as of September 22, 1999. Each subsidiary of PCCW has been
duly incorporated and is validly existing under the laws of the
jurisdiction of its incorporation, is not in liquidation or receivership,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Offering Document (as defined
herein); and each subsidiary of PCCW is duly qualified to do business as a
foreign corporation in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification other than where the failure to be so qualified would not
individually or in the aggregate have a Material Adverse Effect on PCCW;
all of the issued and outstanding capital stock of each subsidiary of PCCW
has been duly authorized and validly issued and credited as fully paid; and
the capital stock of each subsidiary owned by PCCW, directly or through
subsidiaries, is owned free from liens, encumbrances and defects other than
as set forth in the Offering Document or which would not have a Material
Adverse Effect on PCCW.
(c) Validly Issued Shares. When issued in compliance with the provisions of
this Agreement, the PCCW Shares will be validly issued and credited as
fully paid, will rank pari passu in all respects with all existing issued
ordinary shares of PCCW and will be free of any restrictions, limits,
claims, liens or other encumbrances; provided, however, that the PCCW
Shares may be subject to restrictions on transfer under Hong Kong
securities laws or Stock Exchange regulations as set forth herein or as
otherwise required by such laws at the time a transfer is proposed.
(d) Authorization; Binding Obligations. All actions on the part of PCCW and
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the performance of all
obligations of PCCW hereunder and the authorization, allotment and issuance
and delivery of the PCCW Shares pursuant hereto has been taken or will be
taken prior to Completion, including any actions required to comply with
the HSR Act, if applicable. This Agreement has been duly executed and
delivered by PCCW, and (assuming the due authorization, execution and
delivery hereof by CMGI) this
Agreement is a valid and binding obligation of PCCW enforceable in
accordance with its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights and (b) general principles of
equity that restrict the availability of equitable remedies. The issuance
of the PCCW Shares is not subject to any preemptive or similar rights or
rights of first refusal that have not been properly waived or complied
with.
(e) Capitalization. The issued share capital of PCCW as of the date of the
Offering Document is as set forth in the Offering Document under the
headings "Capitalization" and "Description of Ordinary Shares". The shares
constituting the issued share capital of PCCW have been duly authorized and
validly issued, are credited as fully paid and are not subject to
preemptive or similar rights. As of the date of the Offering Circular and
except (i) as described or expressly contemplated by the Offering Document
(including footnotes to the financial statements and tables contained
therein) and (ii) 207,904,000 ordinary shares issuable upon the exercise of
options granted to employees pursuant to PCCW's share option scheme,
referred to in the Offering Document, there are no outstanding rights
(including without limitation, preemptive rights) warrants or options to
acquire, or instruments convertible into or exchangeable for, any material
number of ordinary shares or any other class of shares or equity interest
in PCCW or any of its subsidiaries, or any contract, commitment, agreement,
understanding or arrangement of any kind relating to the issuance of any
material number of shares of PCCW or any subsidiary, any such convertible
or exchangeable securities or any such rights, warrants or options.
(f) Consents and Approvals; No Violations. Except for the filings, permits,
authorizations, consents and approvals as may be required under the HSR
Act, if applicable, and applicable Stock Exchange regulations and Section
45 of the Companies Ordinance, including without limitation the requisite
approval by the shareholders of PCCW and PCRD, if applicable, of the
transactions contemplated hereby, none of the execution, delivery or
performance of this Agreement by PCCW, the consummation by PCCW of the
transactions contemplated hereby or compliance by PCCW with any of the
provisions hereof will (a) conflict with or result in any breach of any
provision of the certificate of incorporation or memorandum and articles of
association of
PCCW, (b) require any filing with, or permit, authorization, consent or
approval of, any governmental entity, (c) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which PCCW or any of its material
subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound, or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to PCCW, any of
its material subsidiaries or any of their properties or assets, excluding
from the foregoing clauses (b), (c) and (d) such violations, breaches or
defaults which would not, individually or in the aggregate, have a material
adverse effect on PCCW's ability to consummate the transactions. PCRD, a
shareholder of PCCW holding at least a majority of the outstanding ordinary
shares of PCCW and PCGH, a shareholder of PCRD holding, indirectly, at
least a majority of the outstanding ordinary shares of PCRD, have agreed to
enter into an irrevocable undertaking substantially in the form attached
hereto as Exhibit B, pursuant to which they undertake to vote in favor of
the transactions contemplated hereby, such vote being sufficient to ensure
the approval of those transactions.
(g) The Offering Documents. The Preliminary Offering Circular, at September
15, 1999 (the "Offering Document"), a copy of which has been provided to
CMGI by PCCW, did not as of the date thereof contain any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(h) Financial Statements. The historical consolidated financial statements
included in the Offering Document present fairly the financial positions of
Pacific Convergence Corporation Ltd. ("PCC") and PCCW Properties Limited
("PCCW Properties") and their subsidiaries, have been prepared in
conformity with the generally accepted accounting principles in Hong Kong
applied on a consistent basis and fairly present the combined financial
condition and results of operations of PCC and PCCW at the dates and for
the periods presented; and the assumptions used in preparing the pro forma
financial statements included in the Offering Document provide a reasonable
basis for presenting the significant effects directly attributable to the
trans-
actions or events described therein, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma columns therein
reflect the proper application of those adjustments to the corresponding
historical or pro forma financial statement amounts.
(i) Absence of Certain Changes. Since the date of the Offering Document and
other than in connection with acquisitions in the ordinary course of
business, neither PCCW nor any of its subsidiaries has (i) entered into or
assumed any material contract, (ii) incurred, assumed or acquired any
material liability (including contingent liability) or other obligation or
(iii) acquired or disposed of or agreed to acquire or dispose of any
business or any other material asset that are not described in the Offering
Document. Except as disclosed in the Offering Document and other than in
connection with acquisitions in the ordinary course of business, in the
case of PCC, since March 31, 1999, and in the case of PCCW Properties,
since August 3, 1999, there has not been any change that would have a
material adverse effect on the business, assets, financial condition or
operations of PCC and its subsidiary taken as a whole, or of PCCW
Properties and its subsidiaries, taken as a whole, and, except as disclosed
in or contemplated by the Offering Document, there has been no dividend or
distribution of any kind declared, paid or made by PCCW on any class of its
capital stock.
(j) Hong Kong Withholding Taxes. Except as disclosed in the Offering Document,
under current laws and regulations of Hong Kong and any political subdivision
thereof, all dividends and other distributions declared and payable on the PCCW
Shares may be paid by PCCW to the holder thereof in Hong Kong dollars that may
be converted into foreign currency and freely transferred out of Hong Kong and
all such payments made to holders thereof who are non-residents of Hong Kong
will not be subject to income, withholding or other taxes under laws and
regulations of Hong Kong or any political subdivision or taxing authority
thereof or therein and will otherwise be free and clear of any other tax, duty,
withholding or deduction in Hong Kong or any political subdivision or taxing
authority thereof or therein and without the necessity of obtaining any
governmental authorization in Hong Kong or any political subdivision or taxing
authority thereof or therein.
(k) No Liability. Upon issuance of the PCCW Shares to CMGI, CMGI shall not be
subject to any liability in respect of any liability of PCCW by virtue only of
its holding of any such PCCW Shares.
(l) Approval for Listing. On or prior to Completion, the PCCW Shares shall have
been approved for listing on the Stock Exchange.
(m) Purchase for Own Account. The CMGI Shares are being acquired for investment
for PCCW's own account, not as a nominee or agent, and not with a view to the
public resale or distribution thereof within the meaning of the Securities Act,
and PCCW has no present intention of selling, granting any participation in, or
otherwise distributing the same. PCCW also represents that it has not been
formed for the specific purpose of acquiring the CMGI Shares.
(n) Investment Experience. PCCW understands that the purchase of the CMGI
Shares involves substantial risk. PCCW has experience as an investor in
securities of companies and acknowledges that it is able to fend for itself, can
bear the economic risk of its investment in the CMGI Shares and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of this investment in the CMGI Shares and
protecting its own interests in connection with this investment.
(o) Accredited Investor Status. PCCW is an "accredited investor" within the
meaning of Regulation D promulgated under the Securities Act.
(p) Restricted Securities. PCCW hereby acknowledges and agrees with CMGI that
the CMGI Shares have not been registered under the Securities Act and may not be
offered or sold except pursuant to registration statement or to an exemption
from the registration requirements of the Securities Act, PCCW further agrees
that it has not entered and will not enter into any contractual arrangement with
respect to the distribution or delivery of the CMGI Shares, other than (i)
pursuant to a Registration Rights Agreement to be entered into by the Parties
substantially on the terms set forth in Exhibit A hereto, (ii) pursuant to Rule
144 under the Securities Act or (iii) pursuant to any transaction that does not
require registration under the Securities Act. PCCW is familiar with Rule 144
under the Securities Act, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
(q) Legends. PCCW agrees that the certificates for the CMGI Shares shall bear
the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR WITH ANY STATE
SECURITIES COMMISSION, AND MAY NOT BE
TRANSFERRED OR DISPOSED OF BY THE HOLDER
IN THE ABSENCE OF A REGISTRATION STATEMENT
WHICH IS EFFECTIVE UNDER THE SECURITIES
ACT OF 1933 AND APPLICABLE STATE LAWS AND
RULES, OR, UNLESS, IMMEDIATELY PRIOR TO
THE TIME SET FOR TRANSFER, SUCH TRANSFER
MAY BE EFFECTED WITHOUT VIOLATION OF THE
SECURITIES ACT OF 1933 AND OTHER
APPLICABLE STATE LAWS AND RULES. THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON TRANSFER
CONTAINED IN THE SHARE EXCHANGE AGREEMENT
DATED SEPTEMBER 22, 1999, BETWEEN THE
COMPANY AND PACIFIC CENTURY CYBERWORKS
LIMITED, A COPY OF WHICH IS ON FILE WITH
THE COMPANY.
In addition, PCCW agrees that in the event CMGI reasonably believes
that PCCW has failed to comply with the terms of this Agreement or the
requirements of the Securities Act, CMGI may place stop transfer
orders with its transfer agents with respect to such certificates.
The appropriate portion of the legend and the stop transfer orders
will be removed promptly upon delivery to CMGI of such satisfactory
evidence as reasonably may be required by CMGI, that such legend or
stop orders are not required to ensure compliance with the Securities
Act.
9. Restriction on Announcements and Disclosure
-------------------------------------------
9.1 Subject as provided in Clause 9.2, neither Party shall make any public
announcement in relation to the transactions contemplated hereby without having
consulted with the other Party.
9.2 This Clause shall not apply to any announcement required to be made
pursuant to the Listing Rules as to the contents of which the Party making the
same shall have consulted with the other Party and obtained approval from the
Stock Exchange as may be required.
10. Miscellaneous
-------------
10.1 Each Party shall pay its own costs and expenses incurred in connection
with the preparation, negotiation and settlement of this Agreement.
10.2 All fees and duties (if any) relating to the issue of the CMGI Shares
shall be borne by CMGI. Capital duty and all other fees and duties (if any)
relating to the issue of the PCCW Shares shall be borne by PCCW.
10.3 Any notice, demand or other communication given or made under this
Agreement shall be in writing and delivered or sent to the relevant Party at its
address or facsimile number set out below (or such other address or facsimile
number as the addressee has by five (5) days' prior written notice specified to
the other Party):
To CMGI: CMGI, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile no.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx, II
With copies to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile no.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
and CMS Xxxxxxx XxXxxxx
0/xx/ Xxxxx, Xxxxx Xxx
Xxxxx Xxxxxx
00 Xxxxxxxxx
Xxxx Xxxx
Facsimile no.: (000) 0000-0000
Attention: Xxxxxx X. Xxxxx
To PCCW: Pacific Century CyberWorks Limited
38/F, Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxx
0 Xxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Facsimile no.: (000) 0000-0000
Attention: Chief Financial Officer
With copies to: Xxxxx & XxXxxxxx
00/xx/ Xxxxx, Xxxxxxxxxx Xxxxx
00 Xxxxxxxx Xxxx
Xxxx Xxxx
Facsimile no.: (000) 0000-0000
Attention: Xxxxxxxxxxx Xxxxxx
and Winnie Xxx Xxxxxxxx
000 Xxxxxxx Xxxx
Xxxxxx XX00 0XX
Facsimile no: 00-000-000-0000
Any notice, demand or other communication so addressed to the relevant
Party shall be deemed to have been delivered: (a) if given or made by
letter, when actually delivered to the relevant address; and (b) if given
or made by facsimile, when transmitted, subject to machine-printed
confirmation of receipt being received by the sender.
10.4 Each Party undertakes to the other Party to execute or procure to be
executed all such documents and to do or procure to be done all such other
acts and things as may be reasonable and necessary to give both Parties the
full benefit of this Agreement.
10.5 This Agreement shall be binding on and inure solely to the benefit of CMGI
and PCCW and their respective successors and assigns. Neither Party shall
assign any of its rights hereunder without the prior consent of the other
Party, which consent shall not be unreasonably withheld.
10.6 The exercise of or failure to exercise any right or remedy of any breach of
this Agreement shall not, except as provided herein, constitute a waiver by
such Party of any other right or remedy it may have in respect of that
breach.
10.7 Any right or remedy conferred by this Agreement on any Party for breach of
this Agreement by the other Party (including without limitation the breach
of any representations and warranties) shall be in addition and without
prejudice to all other rights and remedies available to it in respect of
that breach.
10.8 Any provision of this Agreement which is capable of being performed after
Completion but which has not been fully and completely performed at or
before Completion and all representations and warranties and other
undertakings contained in or entered into pursuant to this Agreement shall
remain in full force and effect notwithstanding Completion.
10.9 This Agreement constitutes the entire agreement between the Parties with
respect to its subject matter (neither Party having relied on any
representation or warranty made by the other Party which is not contained
in this Agreement) and no variation of this Agreement shall be effective
unless made in writing and signed by all of the Parties.
10.10 This Agreement supersedes all and any previous agreements, arrangements or
understanding between the Parties relating to the matters referred to in
this Agreement and all such previous agreements, arrangements or
understanding (if any) shall cease to have any effect from the date
hereof.
10.11 If at any time any provision of this Agreement is or becomes illegal, void
or unenforceable in any respect, the remaining provisions hereof shall in
no way be affected or impaired thereby.
11. Governing Law and Jurisdiction
------------------------------
This Agreement shall be governed by and construed in accordance with the
laws of Hong Kong and each Party hereby irrevocably submits to the non-
exclusive jurisdiction of the courts of Hong Kong and the federal and
state courts of the State of Delaware, United States of America as regards
any claim or matter arising under this Agreement. CMGI hereby irrevocably
appoints CMGI's Solicitors as its agent to receive and acknowledge on its
behalf service of any writ, summons, order, judgment or other notice of
legal process in Hong Kong arising out of or in connection with this
Agreement. If for any reason CMGI's Solicitors (or their successors) no
longer serve as agent of CMGI for this purpose, CMGI shall promptly
appoint a successor agent satisfactory to PCCW, notify PCCW of the change
and deliver to PCCW a copy of the new process agent's acceptance of
appointment provided that until PCCW receives such notification, it shall
be entitled to treat the agent named
above (or their said successors) as CMGI's agent for the purposes of this
Clause. CMGI agrees that any such legal process shall be sufficiently
served on it if delivered to the relevant agent for service at its address
for the time being in Hong Kong whether or not such agent gives notice
thereof to it. PCCW hereby agrees to irrevocably appoint CT to receive on
its behalf service of process in respect of any suit, action or proceeding
in any Delaware State or Federal court sitting in Delaware arising out of
or in connection with this Agreement and agrees to pay all fees charged by
CT for representation as registered agent. If for any reason CT (or its
successor) no longer serves as agent of PCCW for this purpose, PCCW shall
promptly appoint a successor agent satisfactory to CMGI, notify CMGI of the
change and deliver to CMGI copy of the new process agent's acceptance of
appointment provided that until CMGI receives such notification, it shall
be entitled to treat the agent named above (or its said successors) as
PCCW's agent for the purposes of this Clause. PCCW agrees that any such
legal process shall be sufficiently served on it if delivered to the
relevant agent for service at its address for the time being in Delaware
whether or not such agent gives notice thereof to it.
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.
SIGNED by )
)
)
/s/ Xxxxxxx Xx )
--------------------------------
Name: Xxxxxxx Xx )
Title: Chief Executive Officer )
for and on behalf of )
Pacific Century )
CyberWorks Limited )
in the presence of: )
)
)
/s/ Xxxxx Xxxxxxxx )
--------------------------------
SIGNED by )
)
)
/s/ Xxxxx X. Xxxxxxxxx )
--------------------------------
Name: Xxxxx X. Xxxxxxxxx )
Title: Chief Executive Officer )
for and on behalf of )
CMGI, Inc. )
in the presence of: )
)
)
/s/ [illegible] )
--------------------------------