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EXHIBIT 99.1
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EGREETINGS NETWORK, INC.,
AMERICANGREETINGS.COM, INC. AND
AMERICAN PIE ACQUISITION CORP.
AGREEMENT AND PLAN OF MERGER
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DATED AS OF FEBRUARY 5, 2001
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TABLE OF CONTENTS
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ARTICLE I THE TENDER OFFER...........................................................................2
Section 1.1 The Offer.............................................................................2
Section 1.2 Company Action........................................................................3
Section 1.3 Directors.............................................................................4
ARTICLE II THE MERGER.................................................................................5
Section 2.1 The Merger............................................................................5
Section 2.2 Effective Time........................................................................6
Section 2.3 Effect of the Merger; Closing.........................................................6
Section 2.4 Subsequent Actions....................................................................6
Section 2.5 Certificate of Incorporation; By-Laws; Directors and Officers.........................6
Section 2.6 Conversion of Securities..............................................................7
Section 2.7 Dissenting Shares.....................................................................7
Section 2.8 Surrender of Shares; Stock Transfer Books.............................................8
Section 2.9 Stock Plans...........................................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND MERGER SUB............................11
Section 3.1 Corporate Organization...............................................................11
Section 3.2 Authority Relative to this Agreement.................................................11
Section 3.3 No Conflict; Required Filings and Consents...........................................12
Section 3.4 Financing Arrangements...............................................................12
Section 3.5 No Prior Activities..................................................................13
Section 3.6 Brokers..............................................................................13
Section 3.7 Offer Documents; Proxy Statement.....................................................13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................14
Section 4.1 Organization and Qualification; Subsidiaries.........................................14
Section 4.2 Capitalization.......................................................................15
Section 4.3 Authority Relative to this Agreement.................................................15
Section 4.4 No Conflict; Required Filings and Consents...........................................16
Section 4.5 SEC Filings; Financial Statements....................................................16
Section 4.6 Compliance with Liquidation Plan.....................................................17
Section 4.7 Litigation...........................................................................17
Section 4.8 Employee Benefit Plans...............................................................17
Section 4.9 Offer Documents; Proxy Statement.....................................................19
Section 4.10 Brokers..............................................................................20
Section 4.11 Compliance; Permits..................................................................20
Section 4.12 Taxes................................................................................21
Section 4.13 Intellectual Property................................................................22
Section 4.14 Contracts............................................................................23
Section 4.15 Environmental Matters................................................................23
Section 4.16 Required Vote of Company Stockholders................................................24
Section 4.17 Opinion of Financial Advisor.........................................................24
Section 4.18 Affiliate Transactions...............................................................24
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ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER....................................................24
Section 5.1 Conduct of Business Pending the Merger...............................................24
Section 5.2 No Shopping..........................................................................26
ARTICLE VI ADDITIONAL AGREEMENTS.....................................................................28
Section 6.1 Proxy Statement......................................................................28
Section 6.2 Meeting of Stockholders of the Company...............................................28
Section 6.3 Additional Agreements................................................................29
Section 6.4 Notification of Certain Matters......................................................30
Section 6.5 Access to Information................................................................30
Section 6.6 Public Announcements.................................................................30
Section 6.7 Agreement to Defend and Indemnify....................................................31
Section 6.9 Transfer Taxes.......................................................................32
Section 6.10 Financial Statements; Financing......................................................32
ARTICLE VII CONDITIONS OF MERGER......................................................................32
Section 7.1 Conditions to Obligations of Each Party to Effect the Merger.........................32
Section 7.2 Conditions to Obligations of Purchaser and Merger Sub to Effect the Merger...........33
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER.........................................................33
Section 8.1 Termination..........................................................................33
Section 8.2 Effect of Termination................................................................35
ARTICLE IX GENERAL PROVISIONS........................................................................36
Section 9.1 Non-Survival of Representations, Warranties and Agreements...........................36
Section 9.2 Notices..............................................................................36
Section 9.3 Expenses.............................................................................37
Section 9.4 Certain Definitions..................................................................38
Section 9.5 Headings.............................................................................38
Section 9.6 Severability.........................................................................38
Section 9.7 Entire Agreement; No Third-Party Beneficiaries.......................................38
Section 9.8 Assignment...........................................................................38
Section 9.9 Governing Law........................................................................39
Section 9.10 Amendment............................................................................39
Section 9.11 Waiver...............................................................................39
Section 9.12 Counterparts.........................................................................39
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TABLE OF DEFINITIONS
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1996 Option.........................................9
1999 Option........................................10
1999 Plans.........................................10
Acquisition Agreement..............................26
Acquisition Transaction............................27
affiliate..........................................37
Agreement...........................................1
Audited Financials.................................32
Board of Directors..................................1
Board Representation Date..........................26
Business Day........................................6
Certificate of Merger...............................6
Certificate(s)......................................8
Closing.............................................6
Closing Date........................................6
Company.............................................1
Company Common Stock...............................15
Company Material Adverse Effect....................14
Company Preferred Stock............................15
Company Stockholders' Meeting......................19
Competition Laws...................................12
Confidentiality Agreement...........................4
control............................................37
CSFB................................................3
Delaware Law........................................1
Disclosure Schedule................................14
Dissenting Shares...................................8
Effective Time......................................6
Employee Plans.....................................17
Environmental Claim................................23
Environmental Laws.................................23
ERISA..............................................17
ERISA Affiliate....................................18
Exchange Act........................................2
Expenses...........................................35
Expiration Date.....................................2
GAAP...............................................17
Hazardous Substance................................23
HSR Act............................................12
Increased Liabilities.............................I-2
Indemnified Parties................................31
Independent Directors...............................5
Intellectual Property..............................22
Merger..............................................1
Merger Consideration................................7
Merger Drop Dead Date..............................33
Merger Sub..........................................1
Minimum Condition.................................I-1
Offer...............................................1
Offer Documents.....................................3
Offer Drop Dead Date...............................33
Offer to Purchase...................................3
Option Plans.......................................11
Options............................................11
Parent.............................................12
Paying Agent........................................8
Payment Fund........................................8
Per Share Amount....................................1
Permits............................................20
Person.............................................38
Proxy Statement....................................19
Purchaser...........................................1
Purchaser Information..............................13
Purchaser Material Adverse Effect..................12
Purchaser Representatives..........................30
Release............................................24
Right..............................................10
Schedule 13E-3.....................................14
Schedule 14D-9......................................3
Schedule TO.........................................3
SEC.................................................2
SEC Reports........................................16
Securities Act.....................................16
Shares..............................................1
Stockholders........................................1
Subsidiary.........................................14
Superior Proposal..................................27
Surviving Corporation...............................6
Tax Return.........................................21
Taxes..............................................21
Tender and Voting Agreement.........................1
Transfer Taxes.....................................32
Unaudited Financials...............................17
Warrant Agreements.................................10
Warrants...........................................10
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 5, 2001 (this
"AGREEMENT"), among Egreetings Network, Inc., a Delaware corporation (the
"COMPANY"), AmericanGreetings.com, Inc. a Delaware corporation (the
"Purchaser"), and American Pie Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of the Purchaser ("MERGER SUB").
W I T N E S S E T H
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WHEREAS, the Boards of Directors of the Company and the Purchaser have
each determined that it is advisable and in the best interests of their
respective stockholders for the Purchaser to acquire the Company upon the terms
and subject to the conditions set forth herein;
WHEREAS, in furtherance thereof, it is proposed that Merger Sub will
make a cash tender offer (the "Offer") to purchase all of the issued and
outstanding shares of common stock, par value $.001 per share, of the Company
(the "SHARES"), for $.85 per Share, or such higher price as may be paid in the
Offer (the "PER SHARE AMOUNT"), net to the seller in cash;
WHEREAS, also in furtherance thereof, the Boards of Directors of the
Company, the Purchaser and Merger Sub have each approved and declared advisable
this Agreement, which provides for the Offer and the merger (the "MERGER") of
Merger Sub with and into the Company following the Offer in accordance with the
General Corporation Law of the State of Delaware ("DELAWARE LAW") and upon the
terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company (the "BOARD OF
DIRECTORS") has unanimously resolved to recommend this Agreement and acceptance
of the Offer and the Merger to the holders of Shares and has determined that the
consideration to be paid for each Share in the Offer and the Merger is fair to
the holders of such Shares and to recommend that the holders of such Shares
accept the Offer and adopt this Agreement; and
WHEREAS, in order to induce Purchaser and Merger Sub to enter into this
Agreement, concurrently with the execution and delivery hereof, Purchaser,
Merger Sub, the Company and certain of the Company's stockholders
("STOCKHOLDERS") (who together beneficially own approximately 27% of the
outstanding Shares), are entering into a Tender and Voting Agreement dated the
date hereof (the "TENDER AND VOTING AGREEMENT").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company, the Purchaser and Merger Sub hereby agree as follows:
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ARTICLE I
THE TENDER OFFER
Section 1.1 THE OFFER.
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(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1 hereof and none of the events set forth in Annex I
hereto and incorporated herein by reference shall have occurred and be
continuing, the Purchaser or Merger Sub shall commence (within the meaning of
Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT")), the Offer as promptly as practicable, but in any event within six
business days, after the date of this Agreement, and, subject to the conditions
of the Offer, shall use all reasonable efforts to consummate the Offer. As
promptly as practicable on the later of (i) the earliest date as of which Merger
Sub is permitted under applicable law to accept for payment and pay for Shares
tendered pursuant to the Offer and (ii) the earliest date as of which each of
the conditions set forth in Annex I shall have been satisfied or waived, Merger
Sub shall accept for payment, purchase and pay for all shares tendered pursuant
to the Offer. The obligation of the Purchaser to consummate the Offer and to
accept for payment any Shares tendered pursuant thereto shall be subject to the
satisfaction of only those conditions set forth in Annex I. The Purchaser
expressly reserves the right to waive any such condition or to increase the Per
Share Amount. The Per Share Amount shall be net to the seller in cash, subject
to reduction only for any applicable Federal back-up withholding or stock
transfer taxes payable by the seller. The Company agrees that no Shares held by
the Company will be tendered pursuant to the Offer.
(b) Notwithstanding anything to the contrary contained in this
Agreement, without the prior written consent of the Company, the Purchaser shall
not (i) decrease the Per Share Amount or change the form of consideration
payable in the Offer, (ii) decrease the number of Shares sought pursuant to the
Offer, (iii) amend or waive satisfaction of the Minimum Condition (as defined in
Annex I) or (iv) impose additional conditions to the Offer or amend any other
term of the Offer in any manner adverse to the holders of Shares; PROVIDED
HOWEVER, that if on the initial expiration date of the Offer, which shall be the
twentieth business day following commencement of the Offer (together with any
extensions thereof, if any, the "EXPIRATION DATE"), all conditions to the Offer
shall not have been satisfied or waived, the Purchaser may, in its discretion,
or shall, to the extent requested by the Company, extend the Expiration Date up
to an additional five business days (or such longer time as Purchaser and the
Company may mutually agree) to the extent necessary to permit such condition to
be satisfied. In addition, Purchaser may extend the Offer (x) if and to the
extent required by the applicable rules and regulations of the Securities and
Exchange Commission (the "SEC") or (y) after the acceptance of Shares thereunder
for a further period of time by means of a subsequent offering period under Rule
14d-11 promulgated under the Exchange Act of not more twenty business days to
meet the objective (which is not a condition to the Offer) that there be validly
tendered, in accordance with the terms of the Offer, prior to the Expiration
Date and not withdrawn a number of Shares, which together with Shares then owned
by Purchaser, Merger Sub or any other subsidiary of Purchaser, represents at
least 90% of the number of Shares outstanding on a fully diluted basis (assuming
the exercise of all outstanding Options that are vested or will become vested
upon consummation of the Offer and all outstanding Warrants). The Purchaser
shall, on the terms and subject to the prior satisfaction or waiver of the
conditions of the Offer, accept for payment and purchase, as soon as permitted
under the terms of the Offer, all Shares validly tendered and not withdrawn
prior to the expiration of the Offer.
(c) The Offer shall be made by means of an offer to purchase (the
"OFFER TO PURCHASE") having only the conditions set forth in Annex I hereto and
incorporated herein by reference. As soon as practicable on the date the Offer
is commenced, the Purchaser shall file with the SEC a Tender Offer Statement on
Schedule TO (together with all amendments and supplements thereto, the "SCHEDULE
TO") with respect to the Offer that will comply in all material respects with
the provisions of, and satisfy in all material respects the requirements of,
such Schedule TO and all applicable Federal securities laws, and will contain
(including as an exhibit) or incorporate by reference the Offer to Purchase and
forms of the related letter of transmittal and summary advertisement (which
documents, together with any supplements or amendments thereto, and any other
SEC schedule or form which is filed in connection with the Offer and related
transactions, are referred to collectively herein as the "OFFER Documents").
Each of the Purchaser, Merger Sub and the Company agrees promptly to correct any
information
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provided by it for use in the Schedule TO or the Offer Documents if and to the
extent that it shall have become false or misleading in any material respect and
to supplement the information provided by it specifically for use in the
Schedule TO or the Offer Documents to include any information that shall become
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, and the Purchaser further agrees to
take all steps necessary to cause the Schedule TO, as so corrected or
supplemented, to be filed with the SEC and the Offer Documents, as so corrected
or supplemented, to be disseminated to holders of Shares, in each case as and to
the extent required by applicable Federal securities laws. Purchaser and Merger
Sub shall promptly provide the Company and its counsel with a copy of any
comments received by Purchaser or Merger Sub or their counsel from the SEC or
its staff with respect to the Offer Documents. The Company and its counsel shall
be given a reasonable opportunity to review and comment on any Offer Documents
before they are filed with the SEC.
Section 1.2 COMPANY ACTION.
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(a) The Company hereby approves of and consents to the Offer and
represents and warrants that (i) the Board of Directors, at a meeting duly
called and held on February 4, 2001, at which a majority of the Directors were
present, unanimously and duly approved and declared advisable this Agreement and
the transactions contemplated hereby, including the Offer and the Merger,
recommended that the stockholders of the Company accept the Offer, tender their
Shares pursuant to the Offer and adopt this Agreement, and determined that this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, are fair to and in the best interests of the stockholders of the Company
and (ii) Credit Suisse First Boston Corporation ("CSFB"), the Company's
financial advisor, has rendered an opinion to the Board of Directors, dated the
date of this Agreement, to the effect that, as of such date, the Per Share
Amount is fair from a financial point of view to the holders of Shares (other
than Purchaser and its affiliates).
(b) The Company shall file with the SEC, simultaneously with the filing
by the Purchaser of the Schedule TO with respect to the Offer, a Tender Offer
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "SCHEDULE 14D-9") that will comply in all
material respects with the provisions of all applicable Federal securities laws.
The Company will provide such Schedule 14D-9 to the Merger Sub for inclusion in
the mailing of the Offer Documents to the stockholders of the Company, and
Merger Sub shall give reasonable notice to the Company of when it intends to
mail. Subject to Section 5.2(b), the Schedule 14D-9 and the Offer Documents
shall contain the recommendations of the Board of Directors described in Section
1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if and
to the extent that it shall become false or misleading in any material respect
(and each of the Purchaser and Merger Sub, with respect to written information
supplied by it specifically for use in the Schedule 14D-9, shall promptly notify
the Company of any required corrections of such information and cooperate with
the Company with respect to correcting such information) and to supplement the
information contained in the Schedule 14D-9 to include any information that
shall become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the Company shall
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and disseminated to the Company's stockholders to the extent
required by applicable Federal securities laws. The Purchaser and its counsel
shall be given a reasonable opportunity to review and comment on the Schedule
14D-9 before it is filed with the SEC.
(c) In connection with the Offer, the Company shall promptly upon
execution of this Agreement furnish, or cause its transfer agent to furnish, the
Purchaser with mailing labels containing the names and addresses of all record
holders of Shares and security position listings of Shares held in stock
depositories, each as of a recent date, and shall promptly furnish, or cause its
transfer agent to furnish, the Purchaser with such additional information,
including updated lists of stockholders, mailing labels and security position
listings, and such other information and assistance as the Purchaser or its
agents may reasonably request for the purpose of communicating the Offer to the
record and beneficial holders of Shares. All information furnished in accordance
with this Section 1.2(c) shall be held in confidence by Purchaser and Merger Sub
in accordance with the requirements of the letter agreement, dated the date of
this Agreement, between Purchaser and the Company (the "Confidentiality
Agreement"), and shall be
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used by Purchaser and Merger Sub only in connection with the Offer and Merger
and shall be promptly returned by Purchaser upon any termination of this
Agreement.
Section 1.3 DIRECTORS.
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(a) Promptly upon the purchase by the Purchaser of any Shares pursuant
to the Offer, if the Minimum Condition has been met, and from time to time
thereafter as Shares are acquired by the Purchaser, the Purchaser shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board of Directors as will give the Purchaser, subject to
compliance with Section 14(f) of the Exchange Act, representation on the Board
of Directors equal to at least that number of directors which equals the product
of the total number of directors on the Board of Directors (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the percentage that
the aggregate number of Shares beneficially owned by the Purchaser or any
affiliate of the Purchaser (including for purposes of this Section 1.3 such
Shares as are accepted for payment pursuant to the Offer, but excluding Shares
held by the Company) bears to the number of Shares outstanding. At such times,
if requested by the Purchaser, the Company will also cause each committee of the
Board of Directors to include persons designated by the Purchaser constituting
the same percentage of each such committee as the Purchaser's designees are of
the Board of Directors. The Company shall, upon request by the Purchaser, use
its reasonable efforts to increase the size of the Board of Directors or secure
the resignations of such number of directors as is necessary to enable the
Purchaser designees to be elected to the Board of Directors in accordance with
the terms of this Section 1.3 and shall cause the Purchaser's designees to be so
elected; PROVIDED, HOWEVER, that, in the event that the Purchaser's designees
are appointed or elected to the Board of Directors, until the Effective Time,
the Board of Directors shall have at least one director who is a director on the
date hereof and who is not a designee, stockholder, affiliate or associate
(within the meaning of the Federal securities laws) of the Purchaser (one or
more of such directors, the "INDEPENDENT DIRECTORS"); PROVIDED FURTHER, that if
no Independent Directors remain, the other directors shall designate one person
to fill one of the vacancies who shall not be a designee, shareholder, affiliate
or associate of the Purchaser, and such person shall be deemed to be an
Independent Director for purposes of this Agreement.
(b) Subject to applicable law, the Company shall promptly take all
action necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.3 and shall include in the Schedule 14D-9 mailed to stockholders promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if the Purchaser has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.3. The Purchaser will promptly supply the
Company and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1.
(c) Notwithstanding anything in this Agreement to the contrary,
following the election or appointment of Purchaser's designees pursuant to
Section 1.3(a) and prior to the Effective Time, in addition to any vote required
by applicable law, the affirmative vote of a majority of the Independent
Directors shall be required to (i) amend or terminate this Agreement on behalf
of the Company, (ii) amend the Company's certificate of incorporation or bylaws,
(iii) exercise or waive any of the Company's rights or remedies hereunder, (iv)
extend the time for performance of the Purchaser's obligations hereunder or (v)
take any other action by the Company in connection with this Agreement required
to be taken by the Board of Directors, including, without limitation, any
amendment or withdrawal by the Company's Board of Directors of its
recommendation of the Merger or this Agreement. The authorization of any such
matter by a majority of the Independent Directors shall constitute the
authorization of such matter by the Board of Directors of the Company, and no
other action on the part of the Company or any other director of the Company
shall be required to authorize such matter.
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ARTICLE II
THE MERGER
Section 2.1 THE MERGER. At the Effective Time and subject to and upon
the terms and conditions of this Agreement and Delaware Law, Merger Sub shall be
merged with and into the Company, the separate corporate existence of Merger Sub
shall cease, and the Company shall continue as the surviving corporation. The
Company as the surviving corporation after the Merger hereinafter sometimes is
referred to as the "SURVIVING CORPORATION."
Section 2.2 EFFECTIVE TIME. On or as promptly as practicable after the
Closing Date, the parties hereto shall cause the Merger to be consummated by
filing a Certificate of Merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, Delaware Law (the time of such
filing being the "EFFECTIVE TIME").
Section 2.3 EFFECT OF THE MERGER; CLOSING. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation. The
closing of the Merger (the "CLOSING") shall take place at a time and on a date
(the "CLOSING DATE") to be specified by the parties, which shall be as soon as
practicable, but in any event no later than the third Business Day after
satisfaction or waiver of the latest to occur of the conditions precedent set
forth in Article VII, at the offices of Jones, Day, Reavis & Pogue, North Point,
901 Lakeside Avenue, Cleveland, Ohio, unless another time, date or location is
agreed to in writing by the parties. "BUSINESS DAY" means any day other than
Saturday, Sunday or a federal holiday.
Section 2.4 SUBSEQUENT ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or Merger Sub acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of either the Company or Merger Sub, all such
deeds, bills of sale, assignments and assurances and to take and do, in the name
and on behalf of each of such corporations or otherwise, all such other actions
and things as may be necessary or desirable to vest, perfect or confirm any and
all right, title and interest in, to and under such rights, properties or assets
in the Surviving Corporation or otherwise to carry out this Agreement.
Section 2.5 CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND
OFFICERS.
(a) At the Effective Time, the Certificate of Incorporation of the
Company, as in effect immediately before the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation and shall be amended
to read in its entirety as set forth on Exhibit A to this Agreement (as the same
may be further amended from time to time in the form mutually agreed between
Purchaser and the Company) until thereafter amended as provided by law and such
Certificate of Incorporation.
(b) The By-Laws of Merger Sub, as in effect immediately before the
Effective Time and in the form provided to the Company, shall be the By-Laws of
the Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation and such By-Laws.
(c) The directors of Merger Sub immediately before the Effective Time
will be the initial directors of the Surviving Corporation, and the officers of
Merger Sub immediately before the Effective Time will be the initial officers of
the Surviving Corporation, in each case until their successors are elected or
appointed and qualified. If, at the Effective Time, a vacancy shall exist on the
board of directors of the Surviving Corporation or in any office of the
Surviving Corporation, such vacancy may thereafter be filled in the manner
provided by law.
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Section 2.6 CONVERSION OF SECURITIES. At the Effective Time, by virtue
of the Merger and without any action on the part of Merger Sub, the Company or
the holder of any capital stock of the Company or Merger Sub:
(a) Each Share issued and outstanding immediately before the Effective
Time (other than any Shares to be canceled pursuant to Section 2.6(b) and any
Dissenting Shares) shall be converted into the right to receive the Per Share
Amount in cash payable to the holder thereof, without interest (the "Merger
Consideration"), upon surrender of the certificate which immediately prior to
the Effective Time represented such Share in the manner provided in Section 2.8.
All such Shares, when so converted as provided herein, shall automatically be
canceled and extinguished and will no longer be outstanding and will
automatically be canceled and retired and will cease to exist, and each holder
of a certificate which immediately prior to the Effective Time represented such
Share will cease to have any rights with respect thereto except as otherwise
provided herein and by law and shall only represent the right to receive the Per
Share Amount therefor upon the surrender of such certificate in accordance with
Section 2.8. Any payment made pursuant to this Section 2.6(a) will be made net
of applicable withholding taxes to the extent such withholding is required by
law.
(b) Each Share issued and outstanding immediately before the Effective
Time and held in the treasury of the Company or owned by Purchaser, Merger Sub
or any other subsidiary of Purchaser shall be automatically canceled and will
cease to exist and no payment or other consideration shall be made with respect
thereto.
(c) Each share of common stock, par value $.0l per share, of Merger Sub
issued and outstanding immediately before the Effective Time shall thereafter
represent one validly issued, fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
Section 2.7 DISSENTING SHARES.
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(a) Notwithstanding any provision of this Agreement to the contrary,
any Shares that are issued and outstanding immediately prior to the Effective
Time and which are held by a holder who has not voted in favor of the Merger or
consented in writing who have demanded appraisal of the Shares owned by such
holder in accordance with Delaware Law (including but not limited to ss.262
thereof) and as of the Effective Time has neither effectively withdrawn nor lost
the right to such appraisal ("DISSENTING SHARES"), shall not be converted into
or represent the right to receive cash pursuant to Section 2.6, and the holder
thereof shall be entitled to only such rights as are granted by Delaware Law.
(b) Notwithstanding the provisions of Section 2.7(a), if any holder of
Dissenting Shares shall fail to perfect or effectively withdraw or lose (through
failure to perfect or otherwise) the right to appraisal, then such holder's
Shares shall be treated as if they had been automatically converted as of the
Effective Time into and represent only the right to receive cash as provided in
Section 2.6(a), without interest thereon.
(c) The Company shall give the Purchaser (i) prompt notice of any
written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands, and any other instruments served pursuant to
Delaware Law received by the Company and (ii) the opportunity to participate in
all negotiations and proceedings with respect to demands for appraisal under
Delaware Law. The Company shall not voluntarily make any payment with respect to
any demands for appraisal and shall not, except with the prior written consent
of the Purchaser, which shall not be unreasonably withheld, settle or offer to
settle any such demands.
Section 2.8 SURRENDER OF SHARES; STOCK TRANSFER BOOKS.
-----------------------------------------
(a) Before the Effective Time, the Purchaser shall designate a bank or
trust company reasonably acceptable to the Company to act as agent for the
holders of Shares (the "PAYING AGENT") to receive the funds necessary to make
the payments contemplated by Section 2.6. When and as needed, the Purchaser
shall deposit, or cause to be deposited, in trust with the Paying Agent for the
benefit of holders of Shares the aggregate consideration in immediately
available funds (the "PAYMENT FUND")to which such holders shall be entitled at
the Effective
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Time pursuant to Section 2.6. The Paying Agent shall, pursuant to irrevocable
instructions, pay the Payment Fund to such holders.
(b) The Purchaser agrees that promptly after the Effective Time it
shall cause the distribution to holders of record of Shares as of the Effective
Time of appropriate materials to facilitate such surrender in a form mutually
acceptable to Purchaser and the Company. Each holder of a certificate or
certificates which immediately before the Effective Time represented Shares (the
"CERTIFICATE(S)") may thereafter surrender such Certificate or Certificates to
the Paying Agent, as agent for such holder. Upon the surrender of Certificates
for cancellation, together with such materials, the Purchaser shall cause the
Paying Agent to pay the holder of such Certificates in exchange therefor, cash
in an amount equal to the Per Share Amount multiplied by the number of Shares
formerly represented by such Certificate. Until so surrendered, each such
Certificate (other than Certificates representing Dissenting Shares and
Certificates representing Shares held by the Purchaser, Merger Sub or any
subsidiary of Purchaser or in the treasury of the Company) shall represent
solely the right to receive the aggregate Per Share Amount relating thereto.
(c) If payment of cash in respect of canceled Shares is to be made to a
Person other than the Person in whose name a surrendered Certificate is
registered, it shall be a condition to such payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the Person requesting such payment shall have paid any
transfer and other taxes required by reason of such payment in a name other than
that of the registered holder of the Certificate or instrument surrendered or
shall have established to the satisfaction of the Purchaser or the Paying Agent
that such tax either has been paid or is not payable.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall not be any further registration of transfers of
any shares of capital stock thereafter on the records of the Company. If, at or
after the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged for cash as provided in
Section 2.6(a). No interest shall accrue or be paid on any cash payable upon the
surrender of a Certificate or Certificates which immediately before the
Effective Time represented issued and outstanding Shares.
(e) Promptly following the date which is one year after the Effective
Time, the Paying Agent shall deliver to the Purchaser all cash, Certificates and
other documents in its possession relating to the transactions contemplated
hereby, and the Paying Agent's duties shall terminate. Thereafter, each holder
of a Certificate (other than Certificates representing Dissenting Shares and
Certificates representing Shares held by the Purchaser, Merger Sub or any other
subsidiary of Purchaser or in the treasury of the Company) may surrender such
Certificate to the Purchaser or the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in
consideration thereof the aggregate Per Share Amount relating thereto, without
any interest or dividends thereon.
(f) The Per Share Amount paid in the Merger shall be net to the holder
of Shares in cash, subject to reduction only for any applicable federal back-up
withholding.
(g) In the event any Certificate has been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Per Share Amount
deliverable in respect thereof as determined in accordance with Section 2.6 if
the Person to whom the Per Share Amount is paid shall, as a condition precedent
to the payment thereof, give the Surviving Corporation a bond in such sum as the
Surviving Corporation may reasonably direct or otherwise indemnify the Surviving
Corporation in a manner reasonably satisfactory to it against any claim that may
be made against the Surviving Corporation with respect to the Certificate
claimed to have been lost, stolen or destroyed.
Section 2.9 STOCK PLANS.
-----------
(a) 1996 STOCK OPTION PLAN. The Company shall take all actions
necessary (which shall include, but are not limited to, satisfying the
requirements of Rule 16b-3(e) which is promulgated under Section 16 of the
Exchange Act, without incurring any liability in connection
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therewith) to provide that, immediately prior to the Effective Time, each vested
stock option that is then outstanding under the Company's 1996 Stock Option Plan
(a "1996 Option) shall be exercisable by the optionholder in accordance with the
terms (as in effect as of the date of this Agreement) of the Company's 1996
Stock Option Plan and the stock option agreement by which such 1996 Option is
evidenced; and any 1996 Option not exercised prior to the Effective Time and all
unvested stock options outstanding under the 1996 Stock Option Plan shall be
cancelled. Each Share acquired pursuant to the terms of this Section 2.9(a)
shall be subject to the terms of Section 2.6 at the Effective Time if such Share
shall not have been tendered into the Offer.
(b) 1999 EQUITY INCENTIVE PLAN AND 1999 NON-EMPLOYEE DIRECTORS' STOCK
OPTION PLAN. The Company shall take all actions necessary (which shall include,
but are not limited to, satisfying the requirements of Rule 16b-3(e) which is
promulgated under Section 16 of the Exchange Act, without incurring any
liability in connection therewith) to provide that, immediately prior to the
Effective Time, each stock option, whether vested or unvested, that is then
outstanding under the Company's 1999 Equity Incentive Plan or under the 1999
Non-Employee Directors' Stock Option Plan (collectively, the "1999 Plans") and
that is held by an optionholder whose Continuous Service (as defined in the 1999
Plans) with the Company has not then terminated (a "1999 Option"), shall be
exercisable by the optionholder in accordance with the terms (as in effect as of
the date of this Agreement) of the 1999 Plans and the stock option agreement by
which such 1999 Option is evidenced. Any 1999 Option and any other stock options
outstanding under the 1999 Plans (including, without limitation, options held by
persons whose Continuous Service with the Company has terminated) not exercised
prior to the Effective Time will terminate unexercised in accordance with its
terms. Each Share acquired pursuant to the terms of this Section 2.9(b) shall be
subject to the terms of Section 2.6 at the Effective Time if such Share shall
not have been tendered into the Offer.
(c) 1999 EMPLOYEE STOCK PURCHASE PLAN. The Company shall take all
actions necessary (which shall include, but are not limited to, satisfying the
requirements of Rule 16b-3(e) which is promulgated under Section 16 of the
Exchange Act, without incurring any liability in connection therewith) to
provide that, immediately prior to the Effective Time, each right to purchase
Shares that is then outstanding under the Company's 1999 Employee Stock Purchase
Plan (a "Right") shall be exercisable by the holder of such Right and each
holder's accumulated payroll deductions (exclusive of any accumulated interest
which cannot be applied toward the purchase of Shares under the terms of the
offering) shall be used to exercise the Right in accordance with the terms (as
in effect as of the date of this Agreement) of the 1999 Employee Stock Purchase
Plan and the offering under which the Right was granted. Immediately after such
Rights are exercised, any ongoing offering under the 1999 Employee Stock
Purchase Plan shall terminate. Any Right not exercised prior to the Effective
Time and all unvested Rights outstanding under the 1999 Employee Stock Purchase
Plan shall be cancelled. Each Share acquired pursuant to the terms of this
Section 2.9(c) shall be subject to the terms of Section 2.6 at the Effective
Time if such Share shall not have been tendered into the Offer.
(d) WARRANTS. The Company shall use its reasonable best efforts (which
include, but are not limited to, satisfying the requirements of Rule 16b-3(e)
which is promulgated under Section 16 of the Exchange Act, without incurring any
liability in connection therewith) to provide that, immediately prior to the
Effective Time, each then outstanding warrant to purchase Shares (the
"WARRANTS") granted under any of the warrant agreements referred to in Section
4.2(a) of the Disclosure Schedule or the SEC Reports (collectively, the "WARRANT
AGREEMENTS"), whether or not then exercisable or vested, shall be acquired by
the Company for cancellation in consideration of payment to the holders of such
Warrants of an amount in respect thereof equal to the product of (A) the excess,
if any, of the Per Share Amount over the per share exercise price thereof and
(B) the number of Shares subject thereto (such payment to be net of applicable
withholding taxes). The Company shall use its reasonable best efforts to obtain
any consents required of holders of Warrants to effect the foregoing.
(e) Except as provided herein or as otherwise agreed to by the parties,
(i) the Company shall cause the Company's 1996 Stock Option Plan, the 1999 Plans
and the Company's 1999 Employee Stock Purchase Plan (collectively, the "OPTION
PLANS") to terminate as of the Effective Time, (ii) the Company shall ensure
that following the Expiration Date no person, including any holder of a 1996
Option, a 1999 Option or a Right (collectively, the "OPTIONS") or any
participant in the Option Plans, shall have any right to acquire any equity
securities of the
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Company, the Surviving Corporation or any subsidiary thereof and (iii) the
Company shall use its reasonable best efforts to cause the Warrant Agreements to
terminate as of the Effective Time and ensure that following the Effective Time
no holder of Warrants shall have the right to acquire any equity securities of
the Company, the Surviving Corporation or any subsidiary thereof .
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER AND MERGER SUB
The Purchaser and Merger Sub represent and warrant to the Company as
follows:
Section 3.1 CORPORATE ORGANIZATION. Each of the Purchaser and Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has the corporate power and
authority and any necessary governmental authority to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted. Merger Sub is a wholly owned subsidiary
of Purchaser.
Section 3.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of the Purchaser
and Merger Sub has the necessary corporate power and authority to enter into
this Agreement and, subject to the filing of the Certificate of Merger as
required by Delaware Law, to carry out each of their obligations hereunder. The
execution and delivery of this Agreement by the Purchaser and Merger Sub and the
consummation by the Purchaser and Merger Sub of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Purchaser and Merger Sub and, subject to the filing of the Certificate of
Merger as required by Delaware Law, no other corporate proceeding is necessary
for the execution and delivery of this Agreement by the Purchaser or Merger Sub,
the performance by the Purchaser or Merger Sub of their respective obligations
hereunder and the consummation by the Purchaser or Merger Sub of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Purchaser and Merger Sub and, assuming due authorization,
execution and delivery of this Agreement by the Company, constitutes a legal,
valid and binding obligation of each such corporation, enforceable against each
of them in accordance with its terms, except that (i) the enforceability hereof
may be subject to applicable bankruptcy, insolvency or other similar laws, now
or hereinafter in effect, affecting creditors' rights generally, and (ii) the
general principles of equity (regardless of whether enforceability is considered
at a proceeding at law or in equity).
Section 3.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
------------------------------------------
(a) The execution and delivery of this Agreement by the Purchaser and
Merger Sub do not, and the consummation by Purchaser and Merger Sub of the
transactions contemplated hereby will not, (i) conflict with or violate any law,
regulation, court order, judgment or decree applicable to the Purchaser or
Merger Sub or by which any of their property is bound, (ii) violate or conflict
with the organizational documents of either the Purchaser or Merger Sub, or
(iii) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination or cancellation of, or result in the creation of a
lien or encumbrance on any of the property or assets of the Purchaser or Merger
Sub pursuant to, any material contract, instrument, permit, license or franchise
to which the Purchaser or Merger Sub is a party or by which the Purchaser or
Merger Sub or any of their property is bound, except in the case of clauses (i)
and (iii) for conflicts, violations, breaches or defaults that individually and
in the aggregate would not have or result in a material adverse effect on the
business, results of operations or financial condition of Purchaser and its
Subsidiaries, taken as a whole, or be reasonably expected to prevent or
materially impair or delay the consummation by Purchaser or Merger Sub of the
transactions contemplated hereby (each a "Purchaser Material Adverse Effect").
(b) Except for applicable requirements, if any, of the Exchange Act and
the Bylaws of the National Association of Securities Dealers, Inc., under
Competition Laws, and filing of the Certificate of Merger as required by
Delaware Law, neither the Purchaser nor Merger Sub is required to submit any
notice, report or other filing with any governmental authority, domestic or
foreign, in connection with the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby, the
failure of which to submit would
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have a Purchaser Material Adverse Effect. No vote of Purchaser's stockholders is
necessary to approve this Agreement or the consummation of the transactions
contemplated hereby. Purchaser, as the sole stockholder of Merger Sub, has voted
or consented in writing to the adoption of this Agreement. No waiver, consent,
approval or authorization of any governmental or regulatory authority, domestic
or foreign, is required to be obtained or made by either the Purchaser or Merger
Sub in connection with its execution, delivery or performance of this Agreement
the failure of which to obtain or make would have a Purchaser Material Adverse
Effect. "Competition Laws" means statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization, lessening of competition or restraint of trade, and includes
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT") and, to the extent applicable, equivalent laws of the European Union or
the Member States thereof, Canada and any other country in which the Company or
its Subsidiaries has operations or derives revenue.
Section 3.4 FINANCING ARRANGEMENTS. The Purchaser has and will make
available to Merger Sub, sufficient cash, available lines of credit or other
sources of immediately available funds necessary to purchase all of the Shares
outstanding on a fully diluted basis and to pay all related fees and expenses
pursuant to the Offer. The Purchaser has received a line of credit from American
Greetings Corporation, an Ohio corporation and an indirect parent corporation of
Purchaser ("Parent"), in amount of at least $24 million. Evidence of such line
of credit has been delivered to the Company, and the line of credit has not been
amended or revoked. Parent and Purchaser have agreed that the line of credit
will remain outstanding in a sufficient amount for Purchaser or Merger Sub to
purchase the Shares pursuant to the Offer and pay the Merger Consideration;
PROVIDED, HOWEVER, that following the purchase of and payment for Shares
pursuant to the Offer, such line of credit may be terminated when the amount
necessary to pay the Merger Consideration for any remaining Shares not purchased
in the Offer is less than $2 million.
Section 3.5 NO PRIOR ACTIVITIES. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby,
Merger Sub has not incurred any obligations or liabilities, and has not engaged
in any business or activities of any type or kind whatsoever or entered into any
agreements or arrangements with any Person or entity.
Section 3.6 BROKERS. Except for William Blair & Company, 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
based upon arrangements made by and on behalf of the Purchaser or Merger Sub.
Section 3.7 OFFER DOCUMENTS; PROXY STATEMENT.
--------------------------------
(a) None of the information supplied by the Purchaser, Merger Sub,
their respective officers, directors, representatives, agents or employees (the
"PURCHASER INFORMATION"), for inclusion in the Proxy Statement, or in any
amendments thereof or supplements thereto, will, on the date the Proxy Statement
is first mailed to stockholders of the Company or at the time of the Company
Stockholders' Meeting, contain any statement which, at such time and in light of
the circumstances under which it will be made, will be false or misleading with
respect to any material fact, or will omit to state any material fact necessary
in order to make the statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Company Stockholders' Meeting which has become
false or misleading. Neither the Offer Documents nor any of the written
information relating to Purchaser or Merger Sub or their affiliates provided by
or on behalf of Purchaser or Merger Sub specifically for inclusion in the
Schedule 14D-9 will, at the respective times the Offer Documents and the
Schedule 14D-9 or any amendments thereof or supplements thereto are filed with
the SEC or first published, sent or given to the Company's stockholders, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Notwithstanding the foregoing, the
Purchaser and Merger Sub do not make any representation or warranty with respect
to any written information that has been supplied by the Company or its
accountants, counsel or other authorized representatives
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specifically for use in any of the foregoing documents. The Offer Documents and
any amendments or supplements thereto will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder on the date filed with the SEC and the date first published, sent or
given to the stockholders of the Company.
(b) If required, the Rule 13e-3 Transaction Statement on Schedule 13E-3 to be
filed with the SEC under the Exchange Act and/or mailed to the stockholders of
the Company in connection with the Offer and the Merger (including any amendment
or supplement thereto, the "SCHEDULE 13E-3") (i) will not, at the date such
Schedule 13E-3 is filed with the SEC and/or mailed to the stockholders of the
Company contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (ii) will comply in all material respects with the provisions
of the Exchange Act and the rules and regulations thereunder; except that no
representation is made by Purchaser or Merger Sub with respect to statements
made in the Schedule 13E-3 based on written information supplied by the Company
specifically for inclusion therein.
ARTICLE IV .
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Disclosure Schedule to this Agreement (the
"DISCLOSURE SCHEDULE") or in the SEC Reports filed prior to the date of this
Agreement, the Company hereby represents and warrants to the Purchaser and the
Merger Sub as follows:
Section 4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The Company
(i) is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the corporate power and authority and
any necessary governmental authority to own, operate or lease the properties
that it purports to own, operate or lease and to carry on its business as it is
now being conducted, and (ii) is duly qualified as a foreign corporation to do
business, and is in good standing, in each other jurisdiction where the
character of its properties owned, operated or leased or the nature of its
activities makes such qualification necessary, except in the case of clause (ii)
for failures which, when taken together with all other such failures, would not
have a Company Material Adverse Effect. Section 4.1 of the Disclosure Schedule
lists each of the Company's Subsidiaries and their respective jurisdictions of
incorporation or organization. The term "SUBSIDIARY" means any corporation or
other legal entity of which the Company (either alone or through or together
with any other Subsidiary) owns, directly or indirectly, more than 50% of the
stock or other equity interests the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation or other legal entity. The term "COMPANY MATERIAL ADVERSE EFFECT"
means any change in or effect on the business of the Company that is or can be
reasonably expected to be materially adverse to the business, assets, properties
(including intangible properties), condition (financial or otherwise), results
of operations, liabilities or regulatory status of the Company and the
Subsidiaries taken as a whole, excluding any change in or effect on the business
of the Company that relates to (a) the implementation of the liquidation plan as
disclosed to the Purchaser (including, without limitation, employee
terminations, contract terminations and settlements in connection therewith,
cost-cutting measures and assets dispositions), (b) this Agreement or the
transactions contemplated hereby or the announcement or pendency of such
transactions (including, without limitation, unexpected employee attrition, or
the loss, cancellation, amendment or modification of any content provider
agreement), (c) the delisting of the Company from the Nasdaq National Market,
(d) the economy or securities markets of the United States or any other region
in general and (e) the Internet industry in general and provided, that any
decline in the Company's stock price shall not be deemed to be a Company
Material Adverse Effect. The Company has previously delivered to Purchaser a
complete and correct copy of each of its Certificate of Incorporation and
By-Laws, as currently in effect.
Section 4.2 CAPITALIZATION.
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(a) The authorized capital stock of the Company consists of 75,000,000
shares of common stock, $.001 par value (the "COMPANY COMMON STOCK"), and
5,000,000 shares of preferred stock, $.001 par value (the "COMPANY PREFERRED
STOCK"). As of the close of business on January 29, 2001, (i) 33,007,900 shares
of Company Common Stock were issued and
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outstanding, all of which were duly authorized, validly issued, fully paid and
nonassessable, (ii) no shares of Company Common Stock were held in the treasury
of the Company, (iii) no shares of Company Preferred Stock were issued or
outstanding and (iv) 9,436,250 shares of Company Common Stock were reserved for
issuance under the Company's employee stock option plans listed on Schedule
4.2(a) of the Disclosure Schedule in the amounts stated in such schedule. Except
as disclosed in the SEC Reports or on Schedule 4.2(a) of the Disclosure
Schedule, there are no existing (i) options, warrants, calls, preemptive rights,
subscriptions or other rights, convertible securities, agreements or commitments
of any character obligating the Company or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock or other equity interest in, the
Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, (ii) contractual obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any capital stock of the Company or any Subsidiary of the Company or
(iii) voting trusts or similar agreements to which the Company or any of its
Subsidiaries is a party with respect to the voting of the capital stock of the
Company or any of its Subsidiaries.
(b) The Company does not own any shares of capital stock or other
securities of, or interest in, any other Person, nor is it obligated to make any
capital contribution to or other investment in any other Person.
Section 4.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has the
necessary corporate power and authority to enter into this Agreement and,
subject to obtaining any necessary stockholder vote required by Delaware Law and
the filing of a Certificate of Merger as required by Delaware Law, to carry out
its obligations hereunder. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Company and, subject to, if required, any necessary stockholder vote
required by Delaware Law and the filing of the Certificate of Merger as required
by Delaware Law, no other corporate proceeding is necessary for the execution
and delivery of this Agreement by the Company, the performance by the Company of
its obligations hereunder and the consummation by the Company of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery of this Agreement by Purchaser and Merger Sub, constitutes a legal,
valid and binding obligation of the Company, enforceable against it in
accordance with its terms, except that (i) the enforceability hereof may be
subject to applicable bankruptcy, insolvency or other similar laws, now or
hereinafter in effect, affecting creditors' rights generally, and (ii) the
general principles of equity (regardless of whether enforceability is considered
at a proceeding at law or in equity).
Section 4.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
------------------------------------------
(a) The execution and delivery of this Agreement by the Company do not, and the
consummation by the Company of the transactions contemplated hereby will not,
(i) conflict with or violate any law, regulation, court order, judgment or
decree applicable to the Company or by which its property is bound, (ii) violate
or conflict with the Certificate of Incorporation or By-Laws of the Company, or
(iii) result in any breach of or constitute a default (or an event which with
notice or lapse of time of both would become a default) under, or give to others
any rights of termination or cancellation of, or result in the creation of a
lien or encumbrance on any of the properties or assets of the Company pursuant
to, any material contract, instrument, permit, license or franchise to which the
Company is a party or by which the Company or its property is bound, except in
the case of clauses (i) and (iii) for conflicts, violations, breaches or
defaults which, individually or in the aggregate, would not have a Company
Material Adverse Effect.
(b) Except for applicable requirements, if any, of the Exchange Act and the
Bylaws of the National Association of Securities Dealers, Inc., under
Competition Laws, and filing of the Certificate of Merger as required by
Delaware Law, "takeover" or "blue sky" laws of various states, the Company is
not required to submit any notice, report or other filing with any governmental
authority, domestic or foreign, in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby the failure of which to submit would have a Company Material
Adverse Effect. No waiver, consent, approval or authorization of any
governmental or regulatory authority, domestic or foreign, is required to be
obtained or made by the Company in connection with its execution, delivery or
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performance of this Agreement the failure of which to obtain or make would have
a Company Material Adverse Effect.
Section 4.5 SEC FILINGS; FINANCIAL STATEMENTS.
---------------------------------
(a) The Company has filed all forms, reports and documents required to
be filed with the SEC since December 16, 1999, and has heretofore delivered or
made available to the Purchaser, in the form filed with the SEC, its (i) Annual
Report on Form 10-K for the fiscal year ended December 31, 1999, (ii) Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2000 and June 30, 2000 and
September 30, 2000, (iii) all proxy statements relating to the Company's
meetings of stockholders (whether annual or special) held since December 16,
1999 and (iv) all other forms, reports or registration statements (other than
reports on Form 10-Q not referred to in clause (ii) above and registration
statements on Form S-8) filed by the Company with the SEC pursuant to the
Exchange Act and the Securities Act of 1933 (the "SECURITIES ACT"), as the case
may be, since December 16, 1999 (collectively, whether filed before, on or after
the date hereof, the "SEC REPORTS"). The SEC Reports (i) were prepared in all
material respects in accordance with the requirements of the Exchange Act and
the Securities Act, as the case may be, and the applicable rules and regulations
of the SEC thereunder and (ii) did not at the time they were filed contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) The Company has prepared and delivered to Purchaser unaudited
financial statements for the Company's fiscal year ended December 31, 2000 (the
"UNAUDITED FINANCIALS").
(c) The consolidated financial statements contained in the SEC Reports
and the Unaudited Financials were prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q) and fairly
presented, in all material respects, the consolidated financial position of the
Company and its Subsidiaries as at the respective dates thereof and the
consolidated results of operations and changes in financial position of the
Company and its Subsidiaries for the periods indicated, except that the
unaudited interim financial statements contained in the SEC Reports and the
Unaudited Financials may not contain footnotes and were or are subject to normal
and recurring year-end adjustments which should not be materially adverse to the
Company and its Subsidiaries taken as a whole.
(d) Except (i) as reflected or reserved against in the consolidated
financial statements contained in the December 31, 2000 Unaudited Financials ,
(ii) liabilities that have been incurred since December 31, 2000 in the ordinary
course of business and (iii) liabilities incurred in connection with this
Agreement and the transactions contemplated hereby neither the Company nor any
of its Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which in the aggregate would have a
Company Material Adverse Effect or which would be required to be set forth in
consolidated financial statements in accordance with GAAP.
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Section 4.6 COMPLIANCE WITH LIQUIDATION PLAN. Since December 31, 2000,
except as contemplated by this Agreement or requested or approved by Purchaser,
in all material respects, the Company has conducted its operations in, and the
Company has not taken any action except in, accordance with the liquidation plan
for the Company presented to Purchaser.
Section 4.7 LITIGATION. Except as disclosed in the SEC Reports filed
prior to the date hereof, there are no claims, actions, suits, proceedings or
investigations of any nature pending or, to the knowledge of the Company,
threatened against the Company, or any properties or rights of the Company,
before any court, administrative, governmental or regulatory authority or body,
domestic or foreign which would have or result in, individually or in the
aggregate, a Company Material Adverse Effect. As of the date hereof, the Company
is not subject to any order, judgment, injunction or decree.
Section 4.8 EMPLOYEE BENEFIT PLANS.
----------------------
(a) Schedule 4.8(a) of the Disclosure Schedule sets forth a list of all
material employee welfare benefit plans (as defined in Section 3(l) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), employee
pension benefit plans (as defined in Section 3(2) of ERISA) and all other bonus,
stock option, stock purchase, benefit, profit sharing, savings, retirement,
disability, insurance, incentive, deferred compensation and other similar fringe
or employee benefit plans, programs or arrangements for the benefit of, or
relating to, any employee of, or independent contractor or consultant to, the
Company or its Subsidiaries (together, the "EMPLOYEE PLANS") and any employment
severance or termination agreement. The Company has made or will make available
to the Purchaser true and complete copies of all Employee Plans, as in effect,
together with all amendments thereto which will become effective at a later
date, as well as the latest IRS determination letters obtained with respect to
any Employee Plan intended to be qualified under Section 401(a) or 501(a) of
Code. True and complete copies of the (i) most recent annual actuarial valuation
report, if any, (ii) last filed Form 5500 together with Schedule A and/or B
thereto, if any, (iii) summary plan description (as defined in ERISA), if any,
and all modifications thereto communicated to employees, (iv) most recent annual
and periodic accounting of related plan assets, if any, and (v) such other
materials with respect to the Employee Plans reasonably requested by Purchaser
in each case, relating to the Employee Plans, have been or will be delivered to
the Purchaser and are, or will be, correct in all material respects.
(b) Except to the extent that any of the following, either alone or in
the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect: (i) neither the Company nor, to the Company's knowledge, any of
its directors, officers, employees or agents has, with respect to any Employee
Plan, engaged in or been a party to any "prohibited transaction", as such term
is defined in Section 4975 of the Code or Section 406 of ERISA, which could
result in the imposition of either a penalty assessed pursuant to Section 502(i)
of ERISA or a tax imposed by Section 4975 of the Code, in each case applicable
to the Company or any Employee Plan; (ii) all Employee Plans are and have been
at all times in compliance in all respects with the currently applicable
requirements prescribed by all statutes, orders, or governmental rules or
regulations currently in effect with respect to such Employee Plans, including,
but not limited to, ERISA and the Code (except for such requirements that are
not required to be adopted as of the effective date of the applicable
requirement) and, to the knowledge of the Company, there are no pending or
threatened claims, lawsuits or arbitrations (other than routine claims for
benefits), relating to any of the Employee Plans, which have been asserted or
instituted against the Company, any Employee Plan or the assets of any trust for
any Employee Plan, nor, to the knowledge of the Company, is there any basis for
one; (iii) each Employee Plan intended to be qualified under Section 401(a) of
the Code, is so qualified, and has heretofore been determined by the IRS to be
so qualified; (iv) neither the Company nor any trade or business which, together
with the Company, is treated as a single employer under Section 414(t) of the
Code (an "ERISA AFFILIATE") has, or at any time has had, an obligation to
contribute to a "defined benefit plan" as defined in Section 3(35) of ERISA, a
pension plan subject to the funding standards of Section 302 of ERISA or Section
412 of the Code, a "multiemployer plan" within the meaning of Section 3(37) or
4001(a)(13) of ERISA or Section 414(f) of the Code or a "multiple employer plan"
within the meaning of Section 210(a) of ERISA or Section 413(c) of the Code; (v)
with respect to each group health plan benefiting any current or former employee
of the Company, or any ERISA Affiliate, that is subject to Section 4980B of the
Code, the Company
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and any ERISA Affiliate, have complied with (A) the continuation coverage
requirements of Section 4980B of the Code and Part 6 of Subtitle B of Title I of
ERISA and (B) the Health Insurance Portability and Accountability Act of 1996;
(vi) all (A) insurance premiums required to be paid with respect to, (B)
benefits, expenses, and other amounts due and payable under, and (C)
contributions, transfers, or payments required to be made to, any Employee Plan
prior to the Effective Time will have been paid, made or accrued on or before
the Effective Time; (vii) with respect to any insurance policy providing funding
for benefits under any Employee Plan, (A) there is no liability of the Company
or any of its Subsidiaries, in the nature of a retroactive rate adjustment, loss
sharing arrangement, or other actual or contingent liability, nor would there be
any such liability if such insurance policy was terminated on the date hereof,
and (B) no insurance company issuing any such policy is in receivership,
conservatorship, liquidation or similar proceeding and, to the knowledge of the
Company, no such proceedings with respect to any insurer are imminent; (viii) no
Employee Plan provides benefits, including, without limitation, death or medical
benefits, beyond termination of service or retirement other than (A) coverage
mandated by law, (B) death or retirement benefits under any qualified Employee
Plan, or (C) deferred compensation benefits reflected on the books of the
Company; (ix) except as disclosed in Schedule 4.8(b), the execution and
performance of this Agreement will not (A) constitute a stated triggering event
under any Employee Plan that will result in any payment (whether of severance
pay or otherwise) becoming due from the Company or any of the Company's
Subsidiaries to any officer, employee, or former employee (or dependents of such
employee), or (B) accelerate the time of payment or vesting, or increase the
amount of compensation due to any employee, officer or director of the Company;
(x) except as disclosed in Schedule 4.8(b), any amount that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement by any employee, officer or
director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employment, severance or termination agreement, other
compensation arrangement or Employee Plan currently in effect would not be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code); (xi) except as disclosed in Schedule 4.8(b),
the disallowance of a deduction under Section 162(m) of the Code for employee
remuneration will not apply to any amount paid or payable by the Company or any
affiliate of the Company under any contract, Employee Plan, program, arrangement
or understanding currently in effect; (xii) neither the Company nor any ERISA
Affiliate has any current or future liability with respect to any "employee
benefit plans" (within the meaning of Section 3(3) of ERISA), other than the
Employee Plans, previously maintained or contributed to by the Company, any
ERISA Affiliate or any predecessor to either thereof, or to which the Company,
any ERISA Affiliate, or any such predecessor previously had an obligation to
contribute.
Section 4.9 OFFER DOCUMENTS; PROXY STATEMENT.
--------------------------------
(a) If required, the proxy statement or information statement to be
sent to the stockholders of the Company in connection with the meeting of the
Company's stockholders to consider the adoption of the Agreement (the "COMPANY
STOCKHOLDERS' MEETING"), as appropriate (such proxy statement or information
statement, as amended or supplemented, is herein referred to as the "PROXY
STATEMENT"), at the date mailed to the stockholders of the Company and at the
time of the Company Stockholders Meeting (i) will comply in all material
respects with the applicable requirements of the Exchange Act and the rules and
regulations thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Schedule 14D-9
will comply in all material respects with the Exchange Act and the rules and
regulations thereunder on the date filed with the SEC and the date first
published, sent or given to the stockholders of the Company. Neither the
Schedule 14D-9 nor any of the written information relating to the Company or its
affiliates provided by or on behalf of the Company specifically for inclusion in
the Schedule TO or the Offer Documents will, at the respective times the
Schedule 14D-9, the Schedule TO and the Offer Documents or any amendments or
supplements thereto are filed with the SEC and are first published, sent or
given to stockholders of the Company, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. No representation or
warranty is made by the Company with respect to any
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information supplied by the Purchaser or Merger Sub specifically for inclusion
in the Proxy Statement or the Schedule 14D-9.
(b) None of the information provided by the Company specifically for
use in any Schedule 13E-3 will at the time the Schedule 13E-3 or any amendments
thereto are so filed and/or mailed, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
Section 4.10 BROKERS. Except for CSFB, no broker, finder or investment
banker is entitled to any brokerage, finder's, financial advisor's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of the Company. The Company has
heretofore furnished to the Purchaser true and complete information concerning
the financial arrangements between the Company and CSFB pursuant to which such
firm would be entitled to any payment as a result of the transactions
contemplated hereunder.
Section 4.11 COMPLIANCE; PERMITS.
-------------------
(a) Except as disclosed in the SEC Reports filed prior to the date
hereof, the business of the Company is not being conducted in default or
violation of any term, condition or provision of (i) its Certificate of
Incorporation or By-Laws, or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease or other instrument or agreement of any kind to which the
Company is a party or by which the Company or any of its properties or assets
may be bound, or (iii) any Federal, state, local or foreign statute, law,
ordinance, rule, regulation, judgment, decree, order, concession, grant,
franchise, permit or license or other governmental authorization or approval
applicable to the Company, except, with respect to the foregoing clauses (ii)
and (iii), defaults or violations that would not, individually or in the
aggregate, have a Company Material Adverse Effect. Neither the Company nor any
of its Subsidiaries has received any notice, or has knowledge of any claim,
alleging any such violation, except for such violations that individually and in
the aggregate would not have or result in a Company Material Adverse Effect.
(b) The Company and its Subsidiaries hold all licenses, permits,
variances, consents, authorizations, waivers, grants, franchises, concessions,
exemptions, orders, registrations and approvals of any governmental authority,
domestic or foreign, or other Persons necessary for the ownership, leasing,
operation, occupancy and use of their respective property and assets and the
conduct of their respective businesses as currently conducted ("PERMITS"),
except where the failure to hold such Permits individually and in the aggregate
would not have or result in a Company Material Adverse Effect.
Section 4.12 TAXES.
-----
(a) Except as would not, either individually or in the aggregate, have
a Company Material Adverse Effect, (i) the Company has timely filed with the
appropriate governmental authorities all Tax Returns (as hereinafter defined)
required to be filed by or with respect to the Company, (ii) all Taxes (as
hereinafter defined) shown to be due on such Tax Returns, all Taxes required to
be paid on an estimated or installment basis, and all Taxes required to be
withheld with respect to the Company have been timely paid or, if applicable,
withheld and paid to the appropriate taxing authority in the manner provided by
law, (iii) the reserve for Taxes set forth on the consolidated balance sheet of
the Company and its Subsidiaries as of September 30, 2000, is adequate for the
payment of all Taxes through the date thereof and no Taxes have been incurred
after September 30, 2000 which were not incurred in the ordinary course of
business, (iv) no Federal, state, local or foreign audits, administrative
proceedings or court proceedings are pending with regard to any Taxes or Tax
Returns of the Company and there are no outstanding deficiencies or assessments
asserted or proposed, and (v) there are no outstanding agreements, consents or
waivers extending the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against the Company, and the Company is
not a party to any agreement providing for the allocation or sharing of Taxes.
(b) The Company has not filed a consent to the application of Section
341(f) of the Code.
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(c) The Company is not and has not been a United States real property
holding company (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(ii) of the Code.
(d) No indebtedness of the Company is "corporate acquisition
indebtedness" within the meaning of Section 279(b) of the Code.
(e) The Company has not been a member of an affiliated group filing
consolidated or combined Tax Returns other than a federal income tax group the
common parent of which is the Company.
(f) For purposes of this Agreement, "TAXES" means all taxes, charges,
fees, levies or other assessments imposed by any United States Federal, state,
or local taxing authority or by any non-U.S. taxing authority, including but not
limited to, income, gross receipts, excise, property, sales, use, transfer,
payroll, license, ad valorem, value added, withholding, social security,
national insurance (or other similar contributions or payments), franchise,
estimated, severance, stamp, and other taxes (including any interest, fines,
penalties or additions attributable to or imposed on or with respect to any such
taxes, charges, fees, levies or other assessments).
(g) For purposes of this Agreement, "TAX RETURN" means any return,
report, information return or other document (including any related or
supporting information and, where applicable, profit and loss accounts and
balance sheets) with respect to Taxes.
Section 4.13 INTELLECTUAL PROPERTY.
---------------------
(a) The Company has previously provided a true and complete list of all
(i) trademark and service mark registrations and applications, (ii) copyright
registrations and applications, (v) Internet domain names used or held for use
by the Company in connection with the business of the Company and (iv) all
material licenses related to the foregoing.
(b) The term "INTELLECTUAL PROPERTY" shall mean (i) trademarks and
service marks (registered or unregistered) and trade names, and all goodwill
associated therewith; (ii) patents, patentable inventions, discoveries,
improvements, ideas, know-how, processes and computer programs, software and
databases (including source code); (iii) trade secrets and the right to limit
the use or disclosure thereof; (iv) copyrights in all works, including software
programs and mask works; and (v) domain names.
(c) The Company owns or has the valid right to use all Intellectual
Property used by it in connection with its business, except where the failure to
own or have the valid right to use such Intellectual Property would not have a
Company Material Adverse Effect.
(d) To the Company's knowledge, (i) there are no conflicts with or
infringements by any third party of any Intellectual Property used by the
Company in connection with its business, except for conflicts or infringements
which would not have a Company Material Adverse Effect, and (ii) the conduct of
the business of the Company as currently conducted does not infringe any
Intellectual Property of any third party, which infringement would have a
Company Material Adverse Effect. There is no claim, suit, action or proceeding
pending or, to the Company's knowledge, threatened against the Company (i)
alleging any such infringement with any third party's Intellectual Property, or
(ii) challenging the ownership, use, validity or enforceability of the
Intellectual Property used by the Company in connection with its business,
except for claims, suits, actions or proceedings which would not have a Company
Material Adverse Effect.
(e) The Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Intellectual Property used by the Company in connection with its business,
except for breaches which would not have a Company Material Adverse Effect.
(f) With respect to any Websites used by the Company in connection with
its business, the Company has taken all commercially reasonable steps to (i)
obtain the required Universal Resource Locator under each of the domain names
included in the Intellectual Property used by
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the Company in connection with its business and (ii) maintain adequate computer
resources to ensure at least 87% uptime based on metrics provided by Keynote
Systems, Inc.
Section 4.14 CONTRACTS. Each contract or agreement to which the Company or any
of its Subsidiaries is a party or by which any of them is bound and which is
required to be filed as an exhibit to the Company's annual report on Form 10-K
for the year ended December 31, 1999 is in full force and effect, and neither
the Company nor any of its Subsidiaries, nor, to the actual knowledge of the
Company, any other Person, is in breach of, or default under, any such contract
or agreement, and no event has occurred that with notice or passage of time or
both would constitute such a breach or default thereunder by the Company or any
of its Subsidiaries, or, to the actual knowledge of the Company, any other
Person, except for such failures to be in full force and effect and such
breaches and defaults as individually and in the aggregate would not have or
result in a Company Material Adverse Effect.
Section 4.15 ENVIRONMENTAL MATTERS.
---------------------
(a) Except for those noncompliance matters that have been and are
resolved or that would not have or result in a Company Material Adverse Effect,
the Company and its Subsidiaries are in compliance with all applicable
Environmental Laws (as hereinafter defined).
(b) Except as disclosed in the SEC Reports filed prior to the date
hereof or as disclosed on Schedule 4.15(b) of the Disclosure Schedule, there are
no Environmental Claims (as hereinafter defined) pending or, to the actual
knowledge of the Company, threatened, against the Company or any of its
Subsidiaries that individually or in the aggregate would have or result in a
Company Material Adverse Effect.
(c) As used in this Agreement:
(i) the term "ENVIRONMENTAL CLAIM" means any written claim,
demand, suit, action, proceeding, investigation or notice to the
Company or any of its Subsidiaries by any Person or entity alleging any
potential liability (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response costs,
natural resource damages, or penalties) arising out of, based on, or
resulting from the presence, or Release into the environment, of any
Hazardous Substance (as hereinafter defined) at any location, whether
or not owned, leased, operated or used by the Company or its
Subsidiaries;
(ii) the term "ENVIRONMENTAL LAWS" means all Laws relating to
emissions, discharges, Releases or threatened Releases of Hazardous
Substances, or otherwise relating to the manufacture, generation,
processing, distribution, use, sale, treatment, receipt, storage,
disposal, transport or handling of Hazardous Substances, including the
Comprehensive Environmental Response, Compensation and Liability Act
and the Resource Conservation and Recovery Act, and (2) the
Occupational Safety and Health Act;
(iii) the term "HAZARDOUS SUBSTANCE" means (1) chemicals,
pollutants, contaminants, hazardous wastes, toxic substances, and oil
and petroleum products, (2) any substance that is or contains friable
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum or petroleum-derived substances or wastes, radon gas or
related materials, (3) any substance that requires removal or
remediation under any Environmental Law, or is defined, listed or
identified as a "hazardous waste" or "hazardous substance" thereunder,
or (4) any substance that is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous; in each case in clauses (1)-(4) above which is regulated
under any Environmental Law; and
(iv) the term "RELEASE" means any releasing, disposing,
discharging, injecting, spilling, leaking, pumping, dumping, emitting,
escaping, emptying, migration, transporting, placing and the like,
including into or upon, any land, soil, surface water, ground water or
air, or otherwise entering into the environment.
Section 4.16 REQUIRED VOTE OF COMPANY STOCKHOLDERS. The affirmative
vote of the holders of a majority of the outstanding Shares entitled to vote
hereon, if required by Delaware
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Law, is the only vote of any class of capital stock of the Company required by
Delaware Law or the Certificate of Incorporation or the By-Laws of the Company
to adopt this Agreement.
Section 4.17 OPINION OF FINANCIAL ADVISOR. CSFB has rendered an opinion
to the Board of Directors of the Company, dated the date of this Agreement, to
the effect that, as of such date, the Per Share Amount is fair from a financial
point of view to the holders of Shares (other than Purchaser and its
affiliates).
Section 4.18 AFFILIATE TRANSACTIONS. Except as set forth in the SEC
Reports filed prior to the date of this Agreement or as specifically
contemplated by this Agreement, there are no agreements, contracts, transfers of
assets or liabilities or other commitments or transactions, whether or not
entered into in the ordinary course of business, that would be required to be
reported by the Company pursuant to Item 404 of Regulation S-K promulgated by
the SEC.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 CONDUCT OF BUSINESS PENDING THE MERGER. The Company
covenants and agrees that, between the date of this Agreement and the Effective
Time or earlier termination of this Agreement, except as set forth in the
Disclosure Schedule or as specifically contemplated by this Agreement or unless
the Purchaser shall otherwise consent:
(a) the Company will use its reasonable efforts to preserve
substantially intact and continue operating the "egreetings.com" Website; and in
all material respects the business of the Company shall be conducted in, and the
Company shall not take any action except in, accordance with the liquidation
plan for the Company presented to Purchaser;
(b) the Company will not amend its Certificate of Incorporation or
By-Laws;
(c) the Company will not declare, set aside or pay any dividend or
other distribution payable in cash, stock or property with respect to its
capital stock; and neither the Company nor any of its Subsidiaries will (i)
issue, sell, transfer, pledge, dispose of or encumber any additional shares of,
or securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of any
class of the Company or any of its Subsidiaries, other than issuances of Shares
pursuant to securities, options, warrants, calls, commitments or rights existing
at the date hereof and previously disclosed to the Purchaser in writing
(including as disclosed in the SEC Reports); (ii) incur any long-term
indebtedness (whether evidenced by a note or other instrument, pursuant to a
financing lease, sale-leaseback transaction, or otherwise) or incur short-term
indebtedness; (iii) redeem, purchase or otherwise acquire directly or indirectly
any of its capital stock or other securities; or (iv) enter into, amend,
terminate, cancel, renew or fail to use reasonable efforts to renew in any
material respect any material contract, including, without limitation, any
insurance policies;
(d) neither the Company nor any of its Subsidiaries will (i) grant any
increase in the compensation or benefits payable or to become payable by the
Company or any of its Subsidiaries to any employee; (ii) adopt, enter into,
amend or otherwise increase, or accelerate the payment or vesting of the
amounts, benefits or rights payable or accrued or to become payable or accrued
under any bonus, incentive compensation, deferred compensation, severance,
termination, change in control, retention, hospitalization or other medical,
life, disability, insurance or other welfare, profit sharing, stock option,
stock appreciation right, restricted stock or other equity based, pension,
retirement or other employee compensation or benefit plan, program agreement or
arrangement; or (iii) enter into or amend in any material respect any employment
or collective bargaining agreement or, except in accordance with the existing
written policies of the Company or existing contracts or agreements, grant any
severance or termination pay to any officer, director or employee of the Company
or any of its Subsidiaries;
(e) neither the Company nor its Subsidiaries will change the accounting
principles used by it unless required by GAAP (or, if applicable with respect to
Subsidiaries, foreign generally accepted accounting principles);
(f) neither the Company nor any of its Subsidiaries shall acquire by
merging or consolidating with, by purchasing an equity interest in or a portion
of the assets of, or by any
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other manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire any assets of
any other Person;
(g) neither the Company nor any of its Subsidiaries shall sell, lease,
exchange, transfer or otherwise dispose of, or agree to sell, lease, exchange,
transfer or otherwise dispose of, any of its assets listed on the Company's
fixed asset ledger;
(h) neither the Company nor any of its Subsidiaries shall release any
third party from its obligations (i) under any existing standstill agreement or
arrangement relating to a proposed Acquisition Transaction, unless the Board
determines in good faith, after consultation with its outside legal counsel,
that the failure to do so would create a reasonable possibility of a breach of
the fiduciary duties of the Board of Directors under applicable law, or (ii)
otherwise under any confidentiality or other similar agreement;
(i) the Company and its Subsidiaries shall not mortgage, pledge,
hypothecate, grant any security interest in, or otherwise subject to any other
lien on any of its properties or assets;
(j) neither the Company nor its Subsidiaries shall compromise, settle,
grant any waiver or release relating to or otherwise adjust any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), including any litigation, other than those claims,
liabilities or obligations consented to by, and set forth on a schedule
delivered to, Purchaser by the fifth business day after the date of this
Agreement; and
(k) neither the Company nor any of its Subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing.
Section 5.2 NO SHOPPING.
-----------
(a) The Company will not, directly or indirectly, and it will use its
reasonable best efforts to cause every officer, director, agent, financial
adviser, attorney, accountant or other representative not to, solicit, initiate
or knowingly encourage submission of proposals or offers from any Person
relating to, or that could reasonably be expected to lead to, an Acquisition
Transaction or participate in any negotiations or discussions regarding, or
furnish to any other Person any information with respect to, or otherwise
knowingly cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other Person to do or seek an
Acquisition Transaction; PROVIDED, HOWEVER, that, prior to the earlier of (x) if
Purchaser shall have requested the Company to cause Purchaser's nominees to
constitute a majority of the Board of Directors pursuant to Section 1.3 of this
Agreement, the purchase of and payment for Shares by Purchaser pursuant to the
Offer, or (y) the Effective Time (the earlier of such events, the "Board
Representation Date"), the Company may, in response to an unsolicited written
proposal with respect to an Acquisition Transaction from a third party, make
such inquiries of the party making such proposal as may be necessary to inform
itself of the proposed terms and details of the proposal, and if the Board of
Directors determines, in its good faith, reasonable judgment, after consultation
with its financial advisor, that such proposal is a Superior Proposal, furnish
information to, and negotiate, explore or otherwise engage in substantive
discussions with such third party, but only if the Board of Directors
determines, in good faith, reasonable judgment after consultation with its
outside legal counsel, that failing to take such action would create a
reasonable possibility of a breach of the fiduciary duties of the Board of
Directors under applicable law.
(b) Except as expressly permitted by this Section 5.2(b), neither the
Board of Directors nor any committee thereof may (i) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Purchaser or
Merger Sub, the approval or recommendation by the Board of Directors or such
committee of the Offer, the Merger or this Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any Acquisition Transaction, or
(iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement related to any
Acquisition Transaction (each, an "ACQUISITION AGREEMENT"). Notwithstanding
anything to the contrary contained in this Agreement, if, prior to the Board
Representation Date, the Board of Directors determines, in its good faith,
reasonable judgment, after consultation with outside counsel, that failure to do
any of the actions set forth in clauses (i), (ii) or (iii) above would create a
reasonable possibility of a breach of the fiduciary duties of the Board of
Directors under applicable law, the
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Board of Directors may (1) withdraw or modify its approval or recommendation of
the Offer, the Merger or this Agreement, or (2) in response to an unsolicited
Acquisition Transaction proposal, if the Board of Directors also determines in
its good faith, reasonable judgment, after consultation with its financial
advisor, that such proposal is a Superior Proposal, (A) approve or recommend an
Acquisition Transaction and/or (B) subject to the Company having terminated this
Agreement pursuant to Section 8.1(h) and having paid to Purchaser the fees
described in Section 8.2(b), enter into an Acquisition Agreement; PROVIDED,
HOWEVER, that prior to terminating this Agreement and entering into such
Acquisition Agreement, the Company shall give Purchaser at least five business
day's notice of its intention to do so and, if Purchaser agrees to match the
terms of such proposal for an Acquisition Transaction, notwithstanding the
foregoing provisions of this Section 5.2(b), the Company may not terminate this
Agreement pursuant to Section 8.1(h) and may not enter into such Acquisition
Agreement.
(c) The Company will (i) immediately (and in any event, no later than
one business day after receipt) advise Purchaser in writing of the receipt of
request for information or any inquiries or proposals relating to an Acquisition
Transaction and any actions taken pursuant to Section 5.2(a), specifying the
material terms and conditions of such proposed Acquisition Transaction and (ii)
keep Purchaser informed of the status of any such request or proposed
Acquisition Transaction. If any such inquiry or proposal is in writing, the
Company shall promptly deliver to Purchaser a copy of such inquiry or proposal.
(d) For purposes of this Agreement, (i) "ACQUISITION TRANSACTION" means
(other than the transactions contemplated by this Agreement) (x) a merger,
consolidation or other business combination, share exchange, sale of shares of
capital stock, tender offer or exchange offer or similar transaction involving
the Company in which holders of a majority of the Company's voting securities
prior to such transaction own less than a majority of the voting securities of
the surviving entity after such transaction, (y) acquisition in any manner,
directly or indirectly, of at least a majority of the voting securities of the
Company, including any single or multi-step transaction or series of related
transactions which is structured to permit a third party to acquire beneficial
ownership of at least a majority of the voting securities of the Company, or (z)
the acquisition in any manner, directly or indirectly, of any material portion
of the business or assets of the Company and (ii) "SUPERIOR PROPOSAL" means a
proposed Acquisition Transaction involving at least two-thirds of the shares of
capital stock of the Company or substantially all of the assets of the Company
that the Board of Directors determines, after consulting with the Company's
financial advisors, to be more favorable to the Company's stockholders than the
Merger; PROVIDED, HOWEVER, than a proposed Acquisition Transaction will not be
deemed to be a Superior Proposal unless it involves consideration per Share that
exceeds the Per Share Amount.
(e) Nothing contained in this Section 5.2 or elsewhere in this
Agreement prohibits the Company or its Board of Directors from complying with
Rule 14d-9 or 14e-2 under the Exchange Act or from furnishing a copy or excerpts
of this Agreement to any third party that makes a proposal for an Acquisition
Transaction or any inquiry that could lead to a proposal for an Acquisition
Transaction.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 PROXY STATEMENT.
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(a) If (i) required by applicable law in order to consummate the
Merger, as promptly as practicable after the purchase of and payment for Shares
by Purchaser pursuant to the Offer, or (ii) any of the conditions set forth in
paragraph (a) of Annex I to this Agreement exists or there shall be instituted
or pending any action or proceeding before any governmental, regulatory or
administrative agency or commission of competent jurisdiction seeking any
injunction, order, decree, judgment or ruling having any of the effects set
forth in paragraph (a) of Annex I to this Agreement, and such condition or such
injunction, order, decree, judgment or ruling is reasonably likely to be avoided
by obtaining a vote of the Company's stockholders to authorize the Merger
without first completing the Offer, as promptly as practicable after the request
of Purchaser, or the determination of the Company, to do so, the Company shall
prepare and file with the SEC, and shall use all reasonable efforts to have
cleared by the SEC, and promptly thereafter shall mail to its stockholders, the
Proxy Statement.
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(b) Subject to Section 5.2(b), the Proxy Statement shall contain the
recommendation of the Board of Directors that stockholders of the Company adopt
this Agreement. The Company agrees not to mail the Proxy Statement to its
stockholders until Purchaser confirms that the information provided by Purchaser
continues to be accurate. If at any time prior to the Company Stockholders
Meeting any event or circumstance relating to the Company or any of its
Subsidiaries or affiliates, or its or their respective officers or directors,
should be discovered by the Company that is required to be set forth in a
supplement to the Proxy Statement, the Company shall promptly inform Purchaser
and Merger Sub, so supplement the Proxy Statement and mail such supplement to
its stockholders.
(c) If required, the Company, Purchaser and Merger Sub shall cooperate
with one another in the preparation and filing of the Schedule 13E-3 and shall
use all reasonable efforts to promptly obtain and furnish the information
required to be included in the Schedule 13E-3 and to respond promptly to any
comments or requests made by the SEC with respect to the Schedule 13E-3. Each
party hereto shall promptly notify the other parties of the receipt of comments
of, or any requests by, the SEC with respect to the Schedule 13E-3, and shall
promptly supply the other parties with copies of all correspondence between such
party (or its representatives) and the SEC (or its staff) relating thereto. The
Company, Purchaser and Merger Sub each agrees to correct any information
provided by it for use in the Schedule 13E-3 which shall have become, or is
false or misleading.
Section 6.2 MEETING OF STOCKHOLDERS OF THE COMPANY.
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(a) If (i) required by applicable law in order to consummate the
Merger, as promptly as practicable after the purchase of and payment for Shares
by Purchaser pursuant to the Offer, or (ii) any of the conditions set forth in
paragraph (a) of Annex I to this Agreement exists or there shall be instituted
or pending any action or proceeding before any governmental, regulatory or
administrative agency or commission of competent jurisdiction seeking any
injunction, order, decree, judgment or ruling having any of the effects set
forth in paragraph (a) of Annex I to this Agreement, and such condition or such
injunction, order, decree, judgment or ruling is reasonably likely to be avoided
by obtaining a vote of the Company's stockholders to authorize the Merger
without first completing the Offer, as promptly as practicable after the request
of Purchaser, or the determination of the Company, to do so, the Company shall
promptly take all action necessary in accordance with Delaware Law and its
Certificate of Incorporation and By-Laws to convene the Company Stockholders
Meeting. Subject to Section 5.2(b), the Company shall use its reasonable best
efforts to solicit from stockholders of the Company proxies in favor of adoption
of this Agreement and secure any vote or consent of stockholders required by
Delaware Law to effect the Merger. The Purchaser agrees that it shall vote, or
cause to be voted, in favor of the adoption of this Agreement all Shares
directly or indirectly owned of record or beneficially owned by it or the Merger
Sub.
(b) If the Company convenes the Company Stockholders Meeting as a
result of the conditions set forth in Section 6.2(a)(ii) hereof, (i) Merger Sub
shall terminate the Offer, (ii) any obligation of the parties to this Agreement
set forth in Article I hereof shall cease, (iii) in addition to the conditions
set forth Article VII hereof (other than the condition set forth in Section
7.1(a) hereof, which shall no longer be applicable), the conditions to the Offer
set forth in Annex I hereto, other than the Minimum Condition and paragraph (d)
thereto, shall become conditions to the Merger and (iv) any right or obligation
of any party to this Agreement that is governed by reference to the time prior
to the purchase of and payment for the Shares pursuant to the Offer shall
instead be governed by reference to the time prior to the Effective Time, except
for those rights and obligations set forth in Section 5.2 hereof, which shall be
governed by reference to the time prior to adoption of this Agreement by the
stockholders of the Company.
(c) Notwithstanding Section 6.2(a) hereof or any other provision of
this Agreement, in the event that Purchaser or Merger Sub owns at least 90% of
the outstanding Shares following the expiration of the Offer, the Company shall
not be required to convene the Company Stockholders Meeting or mail the Proxy
Statement, and the parties hereto will, at the request of Purchaser or Merger
Sub and subject to Article VII, take all necessary and appropriate action to
cause the Merger to become effective in accordance with Section 253 of Delaware
Law without a meeting of stockholders of the Company as soon as practicable
after the acceptance for payment and purchase of Shares by Purchaser pursuant to
the Offer.
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Section 6.3 ADDITIONAL AGREEMENTS. Except as mutually agreed to by
Purchaser and the Company, the Company, the Purchaser and Merger Sub will each
comply in all material respects with all applicable laws and with all applicable
rules and regulations of any governmental authority in connection with its
execution, delivery and performance of this Agreement and the transactions
contemplated hereby. Each of the parties hereto agrees to use all reasonable
efforts to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and to use all
reasonable efforts to take, or cause to be taken, all other actions and to do,
or cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement. The parties shall cooperate in responding to
inquiries from, and making presentations to, regulatory authorities.
Section 6.4 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to the Purchaser, and the Purchaser shall give prompt notice to
the Company, of (i) the occurrence or non-occurrence of any event whose
occurrence or non-occurrence would be likely to cause either (A) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time or (B) any condition set forth in Annex I to be unsatisfied in
any material respect at any time from the date hereof to the date the Purchaser
purchases Shares pursuant to the Offer and (ii) any material failure of the
Company, the Purchaser or Merger Sub, as the case may be, or any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section 6.4
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
Section 6.5 ACCESS TO INFORMATION.
---------------------
(a) From the date hereof to the Effective Time subject to applicable
antitrust laws and regulations relating to the exchange of information, the
Company shall, and shall cause each of its subsidiaries, its officers,
directors, employees, auditors and agents to, afford the Purchaser
Representatives reasonable access at all reasonable times to its officers,
employees, agents, properties, offices and other facilities and to all books and
records, and shall furnish the Purchaser and Merger Sub with all financial,
operating and other data and information as the Purchaser or Merger Sub, through
the Purchaser Representatives, may reasonably request.
(b) The Purchaser and Merger Sub will, and will cause their affiliates
and each of their respective officers, directors, employees, financial advisors,
agents and other authorized representatives (the "PURCHASER REPRESENTATIVES")
to, hold in strict confidence all data and information obtained by them from the
Company (unless such information is or becomes publicly available without the
fault of any of the Purchaser Representatives or public disclosure of such
information is required by law in the opinion of outside counsel to the
Purchaser) and shall insure that the Purchaser Representatives do not disclose
such information to others without the prior written consent of the Company.
Notwithstanding anything herein to the contrary, the terms of the
Confidentiality Agreement executed by the Purchaser shall remain in full force
and effect.
(c) In the event of the termination of this Agreement, the Purchaser
shall, and shall cause its affiliates to, return promptly every document
furnished to them by the Company or any of its representatives in connection
with the transactions contemplated hereby and any copies thereof which may have
been made, and shall cause the Purchaser Representatives to whom such documents
were furnished promptly to return such documents and any copies thereof any of
them may have made, other than documents filed with the SEC or otherwise
publicly available.
Section 6.6 PUBLIC ANNOUNCEMENTS. The Purchaser and the Company shall
obtain the prior approval of each other before issuing any press release or
otherwise making any public statements with respect to the Offer or the Merger
and shall not issue any such press release or make any such public statement
before such approval, except as may be required by applicable fiduciary duties,
law or applicable stock exchange rules and after consultation with the other
party if reasonably possible.
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Section 6.7 AGREEMENT TO DEFEND AND INDEMNIFY.
---------------------------------
(a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions with respect to indemnification and
exculpation from liability set forth in the Company's Certificate of
Incorporation and By-Laws and shall not be amended, repealed or otherwise
modified for a period of six years after the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who as of the date
hereof were directors, officers, employees, fiduciary, agents of the Company or
otherwise entitled to indemnification under the Certificate of Incorporation,
By-Laws or indemnification agreements (the "INDEMNIFIED PARTIES"). From and
after the date the Purchaser purchases Shares pursuant to the Offer, the
Purchaser will cause the Company or the Surviving Corporation, to (i) fulfill
and honor in all respects the obligations of the Company pursuant to any
indemnification agreements and any indemnification provision and any exculpation
provision set forth in the Company's Certificate of Incorporation and By-Laws
and (ii) and Purchaser shall to the fullest extent permitted under Delaware Law,
indemnify, defend and hold harmless, each Indemnified Party against any costs or
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation, including without
limitation liabilities arising out of the transactions contemplated by this
Agreement, to the extent that it was based on the fact that such Indemnified
Party is or was a director, officer or employee of the Company (regardless of
whether such liabilities arise out of actions or omissions or alleged actions or
omissions occurring at or prior to the Effective Time) and in the event of any
such claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) the Company or the Surviving Corporation, as
applicable, shall pay the reasonable fees and expenses of counsel selected by
the Indemnified Parties, which counsel shall be reasonably satisfactory to the
Company or the Surviving Corporation, promptly as statements therefor are
received and (ii) the Company and the Surviving Corporation will cooperate in
the defense of any such matter; PROVIDED, HOWEVER, that neither the Company nor
the Surviving Corporation shall be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld); and
FURTHER, PROVIDED, that neither the Company nor the Surviving Corporation shall
be obliged pursuant to this Section 6.7 to pay the fees and disbursements of
more than one counsel for all Indemnified Parties in any single action except to
the extent that, in the opinion of counsel for the Indemnified Parties, two or
more of such Indemnified Parties have conflicting interests in the outcome of
such action. For six years after the Effective Time, the Surviving Corporation
shall be required to maintain or obtain officers' and directors' liability
insurance covering the Indemnified Parties who are currently covered by the
Company's officers and directors liability insurance policy on terms not less
favorable than those in effect on the date hereof in terms of coverage and
amounts; PROVIDED, HOWEVER, that the Surviving Corporation will not be required
to expend in any year an amount in excess of 200% of the annual aggregate
premiums currently paid by the Company for such insurance; and provided,
further, that if the annual premiums of such insurance coverage exceed such
amount, the Surviving Corporation will be obligated to obtain a policy with the
best coverage available, in the reasonable judgment of its Board of Directors,
for a cost not exceeding such amount. This Section 6.7 shall survive the
consummation of the Merger. The Purchaser shall cause Surviving Corporation to
reimburse all expenses, including reasonable attorney's fees and expenses,
incurred by any person to enforce the obligations of the Purchaser and the
Surviving Corporation under this Section 6.7. Notwithstanding Section 9.7
hereof, this Section 6.7 is intended to be for the benefit of and to grant third
party rights to Indemnified Parties whether or not parties to this Agreement,
and each of the Indemnified Parties shall be entitled to enforce the covenants
contained herein.
(b) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
Person, then and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this Section 6.7.
Section 6.8 TRANSFER TAXES. The Purchaser and the Company shall
cooperate in the preparation, execution and filing of all returns, applications
or other documents regarding any real property transfer, stamp, recording,
documentary or other taxes and any other fees and similar taxes which become
payable in connection with the Merger (collectively, "TRANSFER
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TAXES"). From and after the Effective Date, the Purchaser shall pay or cause to
be paid, without deduction or withholding from any amounts payable to the
holders of Shares, all Transfer Taxes.
Section 6.9 FINANCIAL STATEMENTS; FINANCING. As promptly as practicable
after the date hereof, the Company shall provide to the Purchaser audited
financial statements (including accompanying notes) for the Company's fiscal
year ended December 31, 2000 (the "AUDITED FINANCIALS").
ARTICLE VII
CONDITIONS OF MERGER
Section 7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions (any or all of which may be waived by the parties hereto in
writing, in whole or in part, to the extent permitted by applicable law):
(a) OFFER. The Purchaser shall have made, or caused to be made, the
Offer and shall have purchased, or caused to be purchased, the Shares pursuant
to the Offer; PROVIDED, HOWEVER, that this condition shall be deemed to have
been satisfied with respect to the obligation of the Purchaser and Merger Sub to
effect the Merger if the Purchaser fails to accept for payment or pay for Shares
pursuant to the Offer in violation of the terms of the Offer or of this
Agreement.
(b) STOCKHOLDER APPROVAL. This Agreement shall have been adopted by the
requisite vote of the stockholders of the Company, if required by Delaware Law.
(c) NO CHALLENGE. No statute, rule, regulation, judgment, writ, decree,
order or injunction (whether temporary, preliminary or permanent) shall have
been promulgated, enacted, entered or enforced, and no other action shall have
been taken, by any government or governmental, administrative or regulatory
authority or by any court of competent jurisdiction, that in any of the
foregoing cases has the effect of making illegal or directly or indirectly
restraining, prohibiting or restricting the consummation of the Merger.
Section 7.2 CONDITIONS TO OBLIGATIONS OF PURCHASER AND MERGER SUB TO
EFFECT THE MERGER. The obligations of Purchaser and Merger Sub to effect the
Merger shall be further subject to the satisfaction or waiver of the following
condition prior to the Board Representation Date: the Company shall have
performed in all material respects all obligations and complied in all material
respects with all agreements and covenants of the Company required to be
performed or complied with by it under this Agreement, including, without
limitation, its obligations under Section 5.1 hereof.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 TERMINATION. This Agreement may be terminated at any time
before the Effective Time, whether before or after the adoption of this
Agreement by the stockholders of the Company:
(a) By mutual written consent of the Purchaser and the Company by
action of their respective Board of Directors (subject to Section 1.3);
(b) By either the Purchaser or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a final and nonapplicable order, decree or ruling or taken any
other action (which order, decree or ruling the parties hereto shall use their
best efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, unless
such order, decree or ruling can be complied with by taking the actions set
forth in Sections 6.1 and 6.2 hereof;
(c) By either the Purchaser or the Company if the Offer has not been
consummated within 60 days of the date of this Agreement (the "OFFER DROP DEAD
DATE"); PROVIDED, HOWEVER, that no party may terminate this Agreement pursuant
to this paragraph (c) if such party's failure to fulfill any of its obligations
under this Agreement shall have been the reason that the
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consummation of the Offer shall not have occurred on or before said date;
PROVIDED, FURTHER, that if, in accordance with Section 6.1(a), the Company is
required to file with the SEC and mail to its stockholders the Proxy Statement
in connection with holding the Company Stockholders Meeting, the Purchaser or
the Company may terminate this Agreement pursuant to this paragraph (c) only if
the Effective Time shall not have occurred on or before the day that is 120 days
from the date of this Agreement (the "MERGER DROP DEAD DATE") (unless otherwise
extended by the mutual agreement of Purchaser and the Company); PROVIDED,
FURTHER, that if, at the Merger Drop Dead Date, either party does not agree to
extend the Merger Drop Dead Date upon the written request of the other party to
do so, the party not agreeing to the extension shall pay to the party requesting
the extension a termination fee as provided by Section 8.2(d) hereof if the
party requesting the extension is actively attempting to clear the Proxy
Statement with the SEC for mailing to stockholders of the Company or the Proxy
Statement has been mailed and such requesting party's failure to fulfill any of
its obligations under this Agreement shall not have been the reason that the
Effective Time shall not have occurred on or before the Merger Drop Dead Date;
PROVIDED, FURTHER, that the termination described in the immediately preceding
proviso shall not be effective unless and until the terminating party shall have
paid to the requesting party the fee described in Section 8.2(d) hereof;
(d) By the Company, at any time prior to the purchase of and payment
for Shares by Purchaser pursuant to the Offer, if it shall not be in material
breach of its covenants or agreements hereunder, if (i) there shall be a
material breach of any of the Purchaser's or Merger Sub's representations,
warranties or covenants hereunder, which breach shall not have been cured within
ten days of the receipt of written notice thereof by Purchaser from the Company
or (ii) there shall have been a material breach on the part of Purchaser or
Merger Sub of any of their respective covenants or agreements hereunder, which
breach shall not have been cured within ten days of the receipt of written
notice thereof by Purchaser from the Company;
(e) By the Purchaser, at any time prior to the purchase of and payment
for Shares by Purchaser pursuant to the Offer, if it shall not be in material
breach of its covenants or agreements hereunder, if (i) there shall be a
material breach of any of the Company's representations, warranties or covenants
hereunder, which breach shall not have been cured within ten days of the receipt
of written notice thereof by the Company from Purchaser or (ii) there shall have
been a material breach on the part of the Company of any of its covenants or
agreements hereunder, which breach shall not have been cured within ten days of
the receipt of written notice thereof by the Company from Purchaser;
(f) By the Purchaser, at any time prior to the Board Representation
Date, if (i) the Board of Directors shall have withdrawn, modified or changed
its recommendation or approval in respect of this Agreement, the Offer or the
Merger, (ii) the Board of Directors shall have recommended any proposal other
than by the Purchaser in respect of an Acquisition Transaction or (iii) the
Company shall have entered into an Acquisition Agreement in response to an
unsolicited Superior Proposal pursuant to, and in compliance with, Section
5.2(b);
(g) By either the Purchaser or the Company if the Offer (as it may have
been extended) expires or is terminated or withdrawn pursuant to its terms
without any Shares being purchased thereunder by the Purchaser as a result of
the occurrence of any of the events set forth in Annex I; PROVIDED, HOWEVER,
that the right to terminate this Agreement pursuant to this paragraph (g) shall
not be available (i) to either the Purchaser or the Company if the Company shall
have convened the Company Stockholders Meeting because any party to this
Agreement shall have exercised in rights pursuant to Section 6.2(a)(ii) hereof
or (ii) to the Purchaser if Purchaser's failure to fulfill any obligation under
this Agreement has resulted in the occurrence of any of the events set forth in
Annex I or if Purchaser's termination or withdrawal of the Offer constitutes a
breach of this Agreement; PROVIDED, FURTHER, that the termination described in
this Section 8.1(g) shall not be effective unless and until the Company shall
have paid to the Purchaser the fee described in Section 8.2(b) hereof, if
payable pursuant to such provision;
(h) By the Company in order to enter into an Acquisition Agreement
pursuant to, and in compliance with, Section 5.2(b); or
(i) By the Company if neither Purchaser nor Merger Sub shall have
commenced the Offer within ten business days after the date of this Agreement.
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Section 8.2 EFFECT OF TERMINATION.
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(a) In the event of termination of this Agreement as provided in
Section 8.1 hereof, this Agreement shall forthwith become void and there shall
be no liability on the part of the Purchaser, Merger Sub or the Company, except
(i) as set forth in Sections 6.5 (b) and (c), 8.2(b) and 9.3 hereof and (ii)
nothing herein shall relieve any party from liability for any breach of this
Agreement.
(b) (i) If this Agreement is terminated at such time that this
Agreement is terminable pursuant to Section 8.1(e), then (A) the Company shall
promptly (but not later than two business days after receipt of notice from
Purchaser) pay to Purchaser an amount equal to the Purchaser's actual and
reasonably documented Expenses, not to exceed $1,120,000 in cash; PROVIDED,
HOWEVER, that, if this Agreement is terminated by Purchaser as a result of a
willful breach by the Company, Purchaser may pursue any remedies available to it
at law or in equity and shall, in addition to its Expenses, be entitled to
recover such additional amounts as Purchaser may be entitled to receive at law
or in equity; and (B) if (x) at the time of the Company's willful breach of this
Agreement, there shall have been a third-party offer or proposal with respect to
an Acquisition Transaction which at the time of such termination shall not have
been rejected by the Company and the Board of Directors or withdrawn by the
third party, and (y) within one year of any termination by the Purchaser, the
Company becomes a subsidiary of such offeror or a subsidiary of an affiliate of
such offeror or accepts a written offer to consummate or consummates an
Acquisition Transaction with such offeror or an affiliate thereof, then the
Company, upon the signing of a definitive agreement relating to such an
Acquisition Transaction, or, if no such agreement is signed then at the closing
(and as a condition to the closing) of the Company becoming such a subsidiary or
of such Acquisition Transaction, will pay to the Purchaser a termination fee
equal to $1,120,000 in cash less any amounts paid to Purchaser for Expenses
pursuant to Section 8.2(b)(i)(A); PROVIDED, -------- however, that in no event
shall the termination fee provided for in Section 8.2(b)(ii) be payable if the
termination fee referred to in this Section 8.2(b)(i)(B) has been paid.
(ii) If (A) the Purchaser shall have terminated this Agreement
pursuant to Section 8.1(f) or (B) the Company shall have terminated
this Agreement pursuant to Section 8.1(h), then in any such case the
Company shall promptly, but in no event later than two business days
after the date of such termination or event, pay the Purchaser a
termination fee of $1,120,000 in cash, which amount shall be payable by
wire transfer to such account as the Purchaser may designate in writing
to the Company.
(iii) This Section 8.2(b) will survive any termination of this
Agreement. The term "Expenses" means all out-of-pocket fees, costs and
other expenses actually incurred or assumed by Purchaser or Merger Sub
or incurred on their behalf in connection with this Agreement or any of
the transactions contemplated hereby, including but not limited to in
connection with the negotiation, preparation, execution and performance
of this Agreement, the structuring and financing of the Merger and the
other transactions contemplated hereby, and all fees and expenses of
counsel, accountants and experts to Purchaser or Merger Sub. No fee or
expense reimbursement shall be paid pursuant to this Section 8.2(b) if
the Purchaser shall be in material breach of its obligations hereunder.
(c) If this Agreement is terminated by the Company pursuant to Section
8.1(d), then Purchaser shall promptly (but not later than two business days
after receipt of notice from the Company) pay to the Company an amount equal to
the Company's actual and reasonably documented Expenses not to exceed $1,120,000
in cash; provided, HOWEVER, that, if this Agreement is terminated by the Company
as a result of a willful breach by Purchaser or Merger Sub, the Company may
pursue any remedies available to it at law or in equity and shall, in addition
to its Expenses, be entitled to recover such additional amounts as the Company
may be entitled to receive at law or in equity. No expense reimbursement shall
be paid pursuant to this Section 8.2(c) if the Company shall be in material
breach of its obligations hereunder. This Section 8.2(c) will survive any
termination of this Agreement.
(d) If this Agreement is terminated by either party pursuant to Section
8.1(c) and the terminating party has refused to extend the Merger Drop Dead Date
despite the written request of
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the other party to do so, then the terminating party shall, as a condition to
terminating this Agreement pursuant to Section 8.1(c), pay to the other party a
termination fee of $1,120,000 in cash if the party requesting the extension is
actively attempting to clear the Proxy Statement with the SEC for mailing to
stockholders of the Company or the Proxy Statement has been mailed and such
requesting party's failure to fulfill any of its obligations under this
Agreement shall not have been the reason that the Effective Time shall not have
occurred on or before the Merger Drop Dead Date. This Section 8.2(d) will
survive any termination of this Agreement.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
The representations, warranties and agreements in this Agreement shall terminate
at the Effective Time or the termination of this Agreement pursuant to Section
8.1, as the case may be, except that the agreements set forth in Article II and
Section 6.7 shall survive the Effective Time indefinitely and those set forth in
Sections 6.5(b), 6.5(c), 8.2(b) and 9.3 shall survive termination indefinitely.
Section 9.2 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made (i) as of the date delivered or sent by facsimile if delivered
personally or by facsimile, and (ii) on the third business day after deposit in
the U.S. mail, if mailed by registered or certified mail (postage prepaid,
return receipt requested), in each case to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice, except that notices of changes of address shall be effective upon
receipt):
(a) if to the Purchaser or the Merger Sub:
AmericanGreetings.com, Inc.
Three American Road
Cleveland, Ohio 44144
Attention: Tammy L. Martin, Esq.
Facsimile: (216) 889-5531
With a copy to each of:
American Greetings Corporation
One American Road
Cleveland, Ohio 44144
Attention: Jon Groetzinger, Jr., Esq.
Facsimile: (216) 252-7300
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, OH 44114
Attention: Lyle G. Ganske, Esq.
Facsimile: (216) 579-0212
(b) if to the Company:
Egreetings Network, Inc.
149 New Montgomery Street
San Francisco, CA 94105
Attention: Kirsten Mellor
Facsimile: (415) 375-4665
With a copy to:
Cooley Godward LLP
One Maritime Plaza, 20th Floor
San Francisco, CA 94111
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Attention: Kenneth L. Guernsey
Facsimile: (415) 951-3699
Section 9.3 EXPENSES. Except as expressly set forth in Section 8.2(b),
all fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees,
costs and expenses.
Section 9.4 CERTAIN DEFINITIONS. For purposes of this Agreement, the
term:
(a) "AFFILIATE" of a Person means a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned Person;
(b) "CONTROL" (including the terms "controlled by" and "under common
control with") means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of stock, as trustee or executor, by contract or credit
arrangement or otherwise; and
(c) "PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or any unincorporated organization.
Section 9.5 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.6 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the maximum extent
possible.
Section 9.7 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement and the Tender and Voting Agreement constitute the entire agreement
and supersede any and all other prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the subject matter
hereof; provided that the Confidentiality Agreement shall not be superseded and
shall remain in full force and effect. Except as otherwise expressly provided
herein, this Agreement is not intended to confer upon any other Person any
rights or remedies hereunder.
Section 9.8 ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise, except that the Purchaser and Merger Sub may
assign all or any of their rights hereunder to any affiliate of the Purchaser;
PROVIDED, HOWEVER, that no such assignment shall relieve the assigning party of
its obligations hereunder; PROVIDED, FURTHER, that the representations and
warranties of Purchaser and Merger Sub in Section 3.4 hereof will be deemed to
apply to such assignee, and such assignment will not be effective unless such
representations and warranties are true as applied to such assignee. This
Agreement shall be binding upon, and shall be enforceable by and inure to the
benefit of the parties hereto and their respective successors and assigns.
Section 9.9 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed entirely within that State.
Section 9.10 AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by the Purchaser and by action taken by the Company's
Board of Directors and Merger Sub's Board of Directors at any time before the
Effective Time notwithstanding the adoption of this Agreement by the
stockholders of the Company; PROVIDED, HOWEVER, that, after the adoption of this
Agreement by the stockholders of the Company, no amendment may be made which
would reduce the amount or change the type of consideration into which each
Share
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will be converted upon consummation of the Merger or alter or change any of the
terms or conditions of this Agreement if such alteration or change would
adversely affect the holders of Shares. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto.
Section 9.11 WAIVER. At any time before the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only as against such party and only if
set forth in an instrument in writing signed by such party. Any such waiver
shall constitute a waiver only with respect to the specific matter described in
such writing and shall in no way impair the rights of the party granting such
waiver in any other respect or at any other time. Neither the waiver by any of
the parties hereto of a breach of or a default under any of the provisions of
this Agreement, nor the failure by any of the parties, on one or more occasions,
to enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies herein provided are cumulative and
none is exclusive of any other, or of any rights or remedies that any party may
otherwise have at law or in equity.
Section 9.12 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
shall constitute one and the same agreement.
[The rest of this page intentionally left blank.]
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IN WITNESS WHEREOF, the Purchaser, Merger Sub and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
EGREETINGS NETWORK, INC.
By: /s/ Andrew Moley
--------------------------------------------
Name: Andrew Moley
Title: Chief Executive Officer and President
AMERICANGREETINGS.COM, INC.
By: /s/ Josef A. Mandelbaum
--------------------------------------------
Name: Josef A. Mandelbaum
Title: Chief Executive Officer
AMERICAN PIE ACQUISITION CORP.
By: /s/ Josef A. Mandelbaum
--------------------------------------------
Name: Josef A. Mandelbaum
Title: President
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ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other provision of the
Offer, the Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-1(c)
promulgated under the Exchange Act (relating to the Purchaser's obligation to
pay for or return tendered Shares promptly after termination or withdrawal of
the Offer), pay for, and (subject to any such rules or regulations and the terms
hereof) may delay the acceptance for payment of any tendered Shares and (except
as provided in this Agreement) amend or terminate the Offer as to any Shares not
then paid for (A) unless the following conditions shall have been satisfied: (i)
there shall be validly tendered and not withdrawn prior to the expiration of the
Offer a number of shares of Company Common Stock which, together with the shares
of Company Common Stock then owned by Purchaser, Merger Sub, or any other
subsidiary of Purchaser represents at least a majority of the number of Shares
outstanding on a fully diluted basis (assuming the exercise of all outstanding
Options that are vested or will become vested upon consummation of the Offer and
all outstanding Warrants) (the "MINIMUM CONDITION") and (ii) any applicable
waiting period under any applicable Competition Law shall have expired or been
terminated prior to the expiration of the Offer or (B) if at any time after the
date of this Agreement and before the acceptance of the Shares for payment, any
of the following conditions exists and is continuing and has not resulted
directly or indirectly from the breach by Purchaser or Merger Sub of any of its
obligations under the Agreement:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission of competent jurisdiction or a
statute, rule, regulation, executive order or other action shall have been
promulgated, enacted, taken or threatened by a governmental authority or a
governmental, regulatory or administrative agency or commission of competent
jurisdiction which in any such case (i) restrains or prohibits the making or
consummation of the Offer or the consummation of the Merger, (ii) prohibits or
restricts the ownership or operation by the Purchaser (or any of its affiliates
or subsidiaries) of any material portion of its or the Company's business or
assets, or compels the Purchaser (or any of its affiliates or subsidiaries) to
dispose of or hold separate any material portion of its or the Company's
business or assets, (iii) imposes material limitations on the ability of the
Purchaser effectively to acquire or to hold or to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote the
Shares purchased by the Purchaser on all matters properly presented to the
stockholders of the Company, (iv) imposes any material limitations on the
ability of the Purchaser or any of its affiliates or subsidiaries effectively to
control in any material respect the business and operations of the Company or
(v) which otherwise would have a Company Material Adverse Effect;
(b) this Agreement shall have been terminated by the Company or the
Purchaser in accordance with its terms;
(c) (i) any representation or warranty made by the Company in this
Agreement shall not have been true and correct in all material respects when
made, or any representation or warranty made by the Company in this Agreement
(other than those contained in Sections 4.5 and 4.17 hereof) shall have ceased
to be true and correct in all material respects as of the Expiration Date (as
defined in the Offer Documents) as if made as of such date and the breach shall
not have been cured in all material respects, (ii) as of the Expiration Date the
Company shall not in all material respects have performed any obligation or
agreement and complied with its material covenants to be performed and complied
with by it under this Agreement and the breach shall not have been cured in all
material respects, or (iii) the Increased Liabilities of the Company, less any
increase in net tangible assets (excluding increases in accumulated
depreciation) of the Company since December 31, 2000 (as reflected in Unaudited
Financials) not reflected in the plan of liquidation of the Company as modified
by Purchaser, exceed $1 million, where the term "Increased Liabilities" means
the sum of (x) the excess, if any, of the liabilities of the Company set forth
on the Audited Financials over the liabilities of the Company set forth on the
Unaudited Financials, (y) additional liabilities incurred by the Company since
December 31, 2000, that should have been but were not recorded on the December
31, 2000 balance sheet prepared in accordance with GAAP, and (z) liabilities not
reflected in the plan of liquidation of the Company as modified by Purchaser and
in accordance with the terms of this Agreement; PROVIDED HOWEVER, that Increased
Liabilities shall specifically not include for the period after December 31,
2000: (1) liabilities incurred in connection with the transactions
I-1
37
contemplated by this Agreement (other than out of pocket expenses to be
reimbursed to CSFB that were not incurred in connection with transactions
contemplated by this Agreement, and other than additional liabilities arising in
connection with the Company's compliance with Worker Adjustment and Retraining
Act but not reflected in the liquidation plan as modified by Purchaser, (2)
liabilities paid or accrued in connection with the preparation of the Audited
Financials, net of adjustments to amounts already paid, (3) liabilities incurred
in connection with the termination of real estate leases, (4) the first $500,000
of liabilities incurred in connection with the termination of any contract of
the Company other than real estate leases, and (5) liabilities incurred with
prior written approval of Purchaser); or
(d) there shall have occurred (i) any suspension or limitation of
trading in securities generally on the New York Stock Exchange (not including
any suspension or limitation of trading in any particular security as a result
of computerized trading limits or any intraday suspension due to "circuit
breakers") or (ii) any banking moratorium declared by the U.S. Federal or New
York authorities or any suspension of payments in respect of banks in the United
States.
The foregoing conditions are for the sole benefit of the Purchaser and
may be asserted by the Purchaser and may be waived by the Purchaser in whole or
in part at any time and from time to time, in each case, in the exercise of the
good faith judgment of the Purchaser and subject to the terms of this Agreement.
The failure by the Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
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EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
OF
EGREETINGS NETWORK, INC.
FIRST: The name of the corporation (the "Corporation") is Egreetings
Network, Inc.
SECOND: The address of the Corporation's registered office in the State
of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle,
Delaware 19801. The name of the Corporation's registered agent at such address
is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares which the Corporation shall have
authority to issue is one thousand (1,000) shares of Common Stock, par value of
$.01 per share.
FIFTH: A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, except for liability (1) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (2) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) under Section 174 of the Delaware General
Corporation Law, or (4) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law is amended
after approval by the stockholders of this Article to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director shall be eliminated or limited to the fullest extent
39
permitted by the Delaware General Corporation Law as so amended. Any repeal or
modification of this Article FIFTH shall be prospective and shall not affect the
rights under this Article FIFTH in effect at the time of the alleged occurrence
of any act or omission to act giving rise to liability or indemnification.
SIXTH: Each person who is or was or had agreed to become a director or
officer of the Corporation, or each such person who is or was serving or who had
agreed to serve at the request of the Board of Directors or an officer of the
Corporation as an employee or agent of the Corporation or as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise (including the heirs, executors, administrators or
estate of such person), shall be indemnified by the Corporation to the full
extent permitted by the General Corporation Law of the State of Delaware or any
other applicable laws as presently or hereafter in effect. Without limiting the
generality or the effect of the foregoing, the Corporation may enter into one or
more agreements with any person which provide for indemnification greater or
different than that provided in this Article. Any repeal or modification of this
Article Seventh shall not adversely affect any right or protection existing
hereunder immediately prior to such repeal or modification.
SEVENTH: In furtherance and not in limitation of the rights, powers,
privileges, and discretionary authority granted or conferred by the General
Corporation Law of the State of Delaware or other statutes or laws of the State
of Delaware, the Board of Directors is expressly authorized to make, alter,
amend or repeal the by-laws of the Corporation, without any action on the part
of the stockholders, but the stockholders may make additional by-laws and may
alter, amend or repeal any by-law whether adopted by them or otherwise. The
Corporation may in its
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by-laws confer powers upon its Board of Directors in addition to the foregoing
and in addition to the powers and authorities expressly conferred upon the Board
of Directors by applicable law.
EIGHTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, except as provided in the
following sentence of the Article EIGHTH, and all rights conferred upon the
stockholders herein are granted subject to this reservation. Notwithstanding any
other provisions of this Certificate of Incorporation or any provision of law
which might otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of the voting
stock of the Corporation required by law or this Certificate of Incorporation,
the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all of the then-outstanding shares of the
voting stock of the Corporation, voting together as a single class, shall be
required to alter, amend or repeal FIFTH and EIGHTH.
NINTH: The name and mailing address of the sole incorporator is A.S.
Gardner, The Corporation Trust Company, 1209 Orange Street, City of Wilmington,
County of New Castle, Delaware 19801.
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