Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
E-STAMP CORPORATION
AND
XXXXX0.XXX, INC.
Dated as of April 19, 2001
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TABLE OF CONTENTS
Page
ARTICLE I. THE MERGER AND THE PRIVATE PLACEMENT..................................................... 2
SECTION 1.01 The Merger........................................................................... 2
SECTION 1.02 Effective Time; Closing Date......................................................... 2
SECTION 1.03 Closing.............................................................................. 2
SECTION 1.04 Effect of the Merger................................................................. 2
SECTION 1.05 Certificate of Incorporation; By-laws................................................ 3
SECTION 1.06 Directors and Officers of the Surviving Corporation and E-Stamp following the Merger. 3
SECTION 1.07 Subsequent Actions................................................................... 3
SECTION 1.08 The Private Placement................................................................ 3
SECTION 1.09 Tax Consequences..................................................................... 6
ARTICLE II. CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES...................................... 6
SECTION 2.01 Conversion of Capital Stock......................................................... 6
SECTION 2.02 Exchange of Certificates............................................................ 7
SECTION 2.03 Learn2 Options...................................................................... 8
SECTION 2.04 Certain Adjustments.................................................................. 8
SECTION 2.05 Dissenting Shares.................................................................... 9
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF LEARN2............................................... 9
SECTION 3.01 Organization and Qualification....................................................... 9
SECTION 3.02 Subsidiaries......................................................................... 10
SECTION 3.03 Organizational Documents............................................................. 10
SECTION 3.04 Capitalization....................................................................... 10
SECTION 3.05 Authority; Binding Obligation........................................................ 11
SECTION 3.06 No Conflict; Required Filings and Consents........................................... 12
SECTION 3.07 SEC Filings; Financial Statements.................................................... 12
SECTION 3.08 Disclosure Documents................................................................. 13
SECTION 3.09 Assets............................................................................... 13
SECTION 3.10 Absence of Certain Developments...................................................... 14
SECTION 3.11 Litigation; Compliance with Law...................................................... 14
SECTION 3.12 Intellectual Property................................................................ 14
SECTION 3.13 Environmental Matters................................................................ 15
SECTION 3.14 Contracts; No Default................................................................ 15
SECTION 3.15 Labor Relations...................................................................... 16
SECTION 3.16 Pension and Benefit Plans............................................................ 16
SECTION 3.17 Taxes and Tax Matters................................................................ 18
SECTION 3.18 Insurance............................................................................ 19
SECTION 3.19 Arrangements With Related Parties.................................................... 19
SECTION 3.20 Board Recommendation................................................................. 19
SECTION 3.21 Broker's Fees........................................................................ 19
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF E-STAMP.............................................. 20
SECTION 4.01 Organization and Qualification....................................................... 20
SECTION 4.02 Subsidiaries......................................................................... 20
SECTION 4.03 Organizational Documents............................................................. 20
SECTION 4.04 Capitalization....................................................................... 21
SECTION 4.05 Authority; Binding Obligation........................................................ 22
SECTION 4.06 No Conflict; Required Filings and Consents........................................... 22
SECTION 4.07 SEC Filings; Financial Statements.................................................... 23
SECTION 4.08 Disclosure Documents................................................................. 24
SECTION 4.09 Assets............................................................................... 24
SECTION 4.10 Absence of Certain Developments...................................................... 24
SECTION 4.11 Litigation; Compliance with Law...................................................... 25
SECTION 4.12 Intellectual Property................................................................ 25
SECTION 4.13 Environmental Matters................................................................ 26
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SECTION 4.14 Contracts; No Default................................................................ 26
SECTION 4.15 Labor Relations...................................................................... 26
SECTION 4.16 Pension and Benefit Plans............................................................ 27
SECTION 4.17 Taxes and Tax Matters................................................................ 28
SECTION 4.18 Insurance............................................................................ 30
SECTION 4.19 Arrangements With Related Parties.................................................... 30
SECTION 4.20 Board Recommendation................................................................. 30
SECTION 4.21 Broker's Fees........................................................................ 30
ARTICLE V. COVENANTS................................................................................ 30
SECTION 5.01 Conduct of the Business of Learn2 Until Effective Time.............................. 30
SECTION 5.02 Conduct of the Business of E-Stamp Until Effective Time............................. 32
SECTION 5.03 Commercially Reasonable Efforts to Satisfy Conditions............................... 34
SECTION 5.04 No Solicitation by Learn2 of Competing Transactions................................. 34
SECTION 5.05 No Solicitation by E-Stamp of Competing Transactions................................ 36
SECTION 5.06 Registration Statement; Proxy Statement............................................. 37
SECTION 5.07 Stockholders Meetings............................................................... 38
SECTION 5.08 Quarterly Plan...................................................................... 39
SECTION 5.09 Access and Information.............................................................. 39
SECTION 5.10 Publicity........................................................................... 40
SECTION 5.11 Directors' and Officers' Insurance Indemnification.................................. 40
SECTION 5.12 Employee Benefit Matters............................................................ 40
SECTION 5.13 Transaction Expenses................................................................ 41
SECTION 5.14 Stockholder Litigation.............................................................. 42
SECTION 5.15 Affiliate Agreements................................................................ 42
SECTION 5.16 Redemption and Termination of Convertible Debenture................................. 42
SECTION 5.17 Termination of Letter Agreement..................................................... 42
SECTION 5.18 Lock-Up Agreements.................................................................. 42
ARTICLE VI. CONDITIONS.............................................................................. 43
SECTION 6.01 Conditions to Obligations of Each Party under this Agreement........................ 43
SECTION 6.02 Conditions to Obligations of E-Stamp................................................ 43
SECTION 6.03 Conditions to Obligations of Learn2................................................. 44
ARTICLE VII. TERMINATION, AMENDMENT AND WAIVER...................................................... 45
SECTION 7.01 Termination......................................................................... 45
SECTION 7.02 Effect of Termination............................................................... 46
SECTION 7.03 Fees and Expenses................................................................... 46
SECTION 7.04 Amendment........................................................................... 47
SECTION 7.05 Extension; Waiver................................................................... 47
ARTICLE VIII. GENERAL PROVISIONS.................................................................... 47
SECTION 8.01 Notices............................................................................. 47
SECTION 8.02 No Survival of Representations and Warranties....................................... 48
SECTION 8.03 Headings............................................................................ 48
SECTION 8.04 Severability........................................................................ 48
SECTION 8.05 Entire Agreement.................................................................... 49
SECTION 8.06 Assignment.......................................................................... 49
SECTION 8.07 Parties in Interest................................................................. 49
SECTION 8.08 Mutual Drafting..................................................................... 49
SECTION 8.09 Governing Law....................................................................... 49
SECTION 8.10 Counterparts........................................................................ 50
SECTION 8.11 Singular and Plural................................................................. 50
ARTICLE IX. DEFINITIONS............................................................................. 50
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of April 19, 2001 (this
"Agreement"), is entered into by and among E-Stamp Corporation, a corporation
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organized under the laws of the State of Delaware ("E-Stamp"), and Xxxxx0.xxx,
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Inc., a corporation organized under the laws of the State of Delaware ("Learn2")
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(E-Stamp and Learn2 are individually hereinafter referred to as a "Party" and
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collectively hereinafter referred to as the "Parties").
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WHEREAS, the Board of Directors of each of E-Stamp and Learn2 has approved
and deems it advisable and in the best interests of its respective stockholders
to consummate the acquisition of Learn2 by E-Stamp upon the terms and subject to
the conditions set forth herein (the "Acquisition"); and
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WHEREAS, in furtherance of the Acquisition, Learn2 proposes to offer and
sell to E-Stamp, in a transaction exempt from registration under the Securities
Act (as defined herein) (the "Private Placement"), the Convertible Note (as
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defined herein) in exchange for an aggregate cash amount of $2,000,000; and
WHEREAS, E-Stamp proposes to acquire all of the outstanding securities of
Learn2 not acquired pursuant to the Private Placement pursuant to a merger
between E-Stamp and Learn2 (the "Merger") in accordance with the Delaware
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General Corporation Law ("Delaware Law"); and
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WHEREAS, as a condition and inducement to E-Stamp entering into this
Agreement and incurring the obligations set forth herein, concurrently with the
execution and delivery of this Agreement, E-Stamp is entering into a voting
agreement with certain of the directors and officers of Learn2 who are Learn2
Stockholders (as defined herein) (the "E-Stamp Voting Agreement"); and
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WHEREAS, as a condition and inducement to Learn2 entering into this
Agreement and incurring the obligations set forth herein, concurrently with the
execution and delivery of this Agreement, Learn2 is entering into a voting
agreement with certain of the directors and officers of E-Stamp who are E-Stamp
Stockholders (as defined herein) (the "Learn2 Voting Agreement"); and
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WHEREAS, each of E-Stamp and Learn2 desire to make certain representations,
warranties, covenants and agreements in connection with the Private Placement
and the Merger; and
WHEREAS, E-Stamp and Learn2 intend that the Merger constitute a
"reorganization" within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended, and that this Agreement constitute a "plan of
reorganization" within the meaning of Treasury Regulation Section 1.368-2(g);
and
WHEREAS, certain terms used in this Agreement are defined in Article IX
hereof.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective representations, warranties, covenants and agreements set forth in
this Agreement, and intending to be legally bound hereby, the Parties agree as
follows.
ARTICLE I.
THE MERGER AND THE PRIVATE PLACEMENT
SECTION 1.01 The Merger.
Upon the terms and subject to the conditions set forth in Agreement, and in
accordance with Delaware Law, at the Effective Time (as defined in Section 1.02
of this Agreement) Learn2 shall be merged with and into E-Stamp, with E-Stamp
being the surviving corporation (hereinafter sometimes called "Surviving
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Corporation") in the Merger. Upon consummation of the Merger, the separate
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corporate existence of Learn2 shall cease, and the Surviving Corporation shall
continue to exist as a Delaware corporation.
SECTION 1.02 Effective Time; Closing Date.
Subject to the provisions of Section 1.03 of this Agreement, as promptly as
practicable after the satisfaction or, if permissible, waiver of all of the
conditions set forth in Article VI of this Agreement, the Parties shall cause
the Merger to be consummated by filing the Certificate of Merger, and any other
appropriate documents with the Delaware Secretary of State, in such form as
required by, and executed in accordance with the relevant provisions of,
Delaware Law (the date and time of such filing, or such later mutually agreed
date and time specified in the Certificate of Merger, being the "Effective
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Time").
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SECTION 1.03 Closing.
The closing of the Merger (the "Closing") shall take place at 10:00 a.m. on a
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date to be agreed upon by the Parties, and if such date is not agreed upon by
the Parties, the Closing shall occur on the second Business Day after
satisfaction or, if permissible, waiver of all of the conditions set forth in
Article VI of this Agreement, at the offices of Xxxxxxx Berlin Shereff Xxxxxxxx,
LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other place as is
agreed to by the Parties.
SECTION 1.04 Effect of the Merger.
Without limiting the generality of the foregoing, upon the Merger, all the
rights, privileges, immunities, powers and franchises of Learn2 and E-Stamp
shall vest in the Surviving Corporation and all restrictions, obligations,
duties, debts and liabilities of Learn2 and E-Stamp shall be the restrictions,
obligations, duties, debts and liabilities of the Surviving Corporation.
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SECTION 1.05 Certificate of Incorporation; By-laws.
Pursuant to the Merger and effective immediately following the Merger, (x) the
certificate of incorporation of E-Stamp, as in effect immediately prior to the
Effective Time, shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided by law and such certificate of
incorporation; provided, however that Section I of the certificate of
incorporation of E-Stamp shall be amended to read as follows: "The name of the
corporation is Xxxxx0.xxx, Inc.", and (y) the by-laws of E-Stamp, as in effect
immediately prior to the Effective Time, shall be the by-laws of the Surviving
Corporation until thereafter amended as provided by law, by such certificate of
incorporation or by such by-laws. The Merger shall have the effects specified
in Delaware Law.
SECTION 1.06 Directors and Officers of the Surviving Corporation and E-Stamp
following the Merger.
From and after the Effective Time of the Merger, the Board of Directors of E-
Stamp shall consist of nine directors, comprised of five designees of the Board
of Directors of E-Stamp and four designees of the Board of Directors of Learn2.
At the Effective Time of the Merger, Xxxxxx Xxxxx shall be the Chairman of the
Board, Xxxxxxx Xxxx shall be President and Chief Executive Officer and Xxxx
Xxxxx shall be a Vice President and Chief Financial Officer of E-Stamp. At the
Effective Time of the Merger, the Executive Committee of the Board of E-Stamp
shall consist of Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxx Xxxxx and Xxxxxxx Xxxx,
and Xxxxxx Xxxxxxx shall be the Chairman of the Executive Committee of the
Board.
SECTION 1.07 Subsequent Actions.
If at any time after the Effective Time the Surviving Corporation will 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 Learn2 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 Learn2, all such deeds, bills of sale, instruments of
conveyance, assignments and assurances and to take and do, in the name and on
behalf of each of such corporation 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 1.08 The Private Placement.
(a) The Private Placement. At the Convertible Note Closing (as defined
below), Learn2 shall issue and deliver to E-Stamp, and E-Stamp agrees to
purchase and accept from Learn2 the Convertible Note in exchange for $2,000,000.
The Parties intended that the Private Placement be a transaction exempt from
registration under the Securities Act.
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(b) Convertible Note Closing. Provided this Agreement shall not have been
terminated, the closing of the acquisition of the Convertible Note (the
"Convertible Note Closing") shall be held on April 23, 2001 (the "Convertible
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Note Closing Date"), as mutually determined by E-Stamp and Learn2, at the
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offices of Xxxxxxx Berlin Shereff Xxxxxxxx, LLP, The Chrysler Building, 000
Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. At the Convertible Note
Closing: (i) E-Stamp will deliver $2,000,000 by wire transfer of immediately
available funds pursuant to the wire instructions delivered by Learn2; (ii)
Learn2 shall issue and deliver to E-Stamp the Convertible Note with the legend
in Section 1.08(c)(vi); (iii) Learn2 shall deliver to E-Stamp a certificate
signed by an executive officer of Learn2 that the representations and warranties
of Learn2 set forth in Section 1.08(d) and Article III hereof are true in all
respects (in the case of any representation or warranty qualified as to
materiality) or in all material respects (in the case of any representation or
warranty not so qualified) at and as of the Convertible Note Closing Date; and
(iv) E-Stamp shall deliver to Learn2 a certificate signed by an executive
officer of E-Stamp that the representations and warranties of E-Stamp set forth
in Section 1.08(c) and Article IV hereof are true in all respects (in the case
of any representation or warranty qualified as to materiality) or in all
material respects (in the case of any representation or warranty not so
qualified) at and as of the Convertible Note Closing Date.
(c) E-Stamp Private Placement Representations and Warranties. With respect to
the Private Placement, E-Stamp hereby represents, warrants to and agrees with
Learn2 as follows:
(i) E-Stamp has sufficient knowledge and experience in financial and
business matters to be capable of evaluating the merits and risks of an
unregistered, investment such as an investment in Learn2 and has evaluated the
merits and risks of such an investment. E-Stamp is not relying on Learn2 with
respect to the tax, legal and economic considerations involved in this
investment or to its investment in Learn2. E-Stamp understands that the sale
and purchase of the Convertible Note, the Preferred Shares issuable on
conversion of the Convertible Note and the shares of common stock issuable upon
conversion of the Preferred Shares (collectively, the "Private Placement
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Securities") have not been approved or disapproved by the SEC or any other
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Governmental Entity.
(ii) E-Stamp has been afforded with an opportunity to ask questions of
and receive answers from representatives of Learn2 concerning information, to
which a reasonable investor would attach significance in making investment
decisions, so that as a reasonable investor E-Stamp has been able to make E-
Stamp's decision to purchase the Private Placement Securities.
(iii) E-Stamp acknowledges that neither Learn2 nor any person or entity
acting on its behalf has offered to sell any of the Private Placement Securities
to E-Stamp by means of any form of general solicitation or advertising,
including without limitation (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media, or
broadcast over television or radio, and (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
E-Stamp has not taken any action that would result in the Private Placement
being treated as a public offering and not a valid private offering under the
law.
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(iv) E-Stamp is an "accredited investor" within the meaning of Rule 501
of Regulation D promulgated under the Securities Act. E-Stamp hereby represents
and warrants that (i) it has not been formed for the purpose of purchasing the
Private Placement Securities, (ii) it is not an employee benefit plan that
permits employees to direct the investment of their account balances and (iii)
it is not an investment company as defined in the Investment Company Act of
1940, as amended (the "Investment Company Act"), and is not an entity that would
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be an investment company as defined in the Investment Company Act but for the
exception provided in Section 3(c)(1) or Section 3(c)(7) of the Investment
Company Act.
(v) E-Stamp is acquiring the Private Placement Securities solely for its
own account, for investment purposes only, and not with a view towards their
resale or distribution. E-Stamp will not sell or otherwise transfer the Private
Placement Securities, without registration under the Securities Act, or an
exemption therefrom and fully understands and agrees that E-Stamp must bear the
economic risk of E-Stamp's purchase of the Private Placement Securities for an
indefinite period of time because, among other reasons, the Private Placement
Securities have not been registered under the Securities Act or under the
securities laws of certain states and, therefore, cannot be resold, pledged,
assigned, transferred or otherwise disposed of unless the securities are
subsequently registered under the Securities Act and under the applicable
securities laws of such states or unless an exemption from such registration is
available in the opinion of counsel of Learn2. E-Stamp is aware that an
exemption from the registration requirements of the Securities Act pursuant to
Rule 144 promulgated thereunder is not presently available; that Learn2 has no
obligation to make available an exemption from the registration requirements
pursuant to such Rule 144 or a successor rule for resale of the Private
Placement Securities; and that even if an exemption under Rule 144 were
available, Rule 144 permits only routine sales of securities in limited amounts
in accordance with the terms and conditions of such Rule 144.
(vi) E-Stamp agrees to the placement of a legend on any certificate or
other document evidencing the Private Placement Securities (and a stop transfer
order may be placed with respect thereto) in the form provided below:
"THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS (THE "ACTS"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF WITHOUT A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE ACTS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
(d) Learn2 Private Placement Representations and Warranties. With respect to
the Private Placement, Learn2 hereby represents, warrants to and agrees with E-
Stamp as follows:
(i) Learn2 will have at the Convertible Note Closing Date all requisite
legal and corporate power to sell and issue the Convertible Note and to carry
out and perform its obligations under the terms of the Convertible Note.
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(ii) All corporate action on the part of Learn2, its directors and
stockholders necessary for the authorization, sale, issuance and delivery of the
Convertible Note and the performance of all of Learn2's obligations thereunder
has been taken or will be taken prior to the Convertible Note Closing. The
Convertible Note, when executed and delivered by Learn2, shall constitute valid
and binding obligations of Learn2 enforceable in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies. The Preferred Shares, when
issued in compliance with the provisions of the Convertible Note, will be
validly issued, fully paid and nonassessable, and will be free of any liens or
encumbrances, other than any liens or encumbrances created by or imposed upon E-
Stamp; provided, however, that the Preferred Shares will be subject to
restrictions on transfer under state and/or federal securities laws.
(iii) Learn2 is the owner of all of the Assets subject to the lien
securing the Convertible Note (the "Collateral"), no other Person has any right,
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title, claim or interest (by way of lien or otherwise) in, against or to the
Collateral and upon the filing of UCC-1 financing statements in the appropriate
filing offices, E-Stamp has a first priority perfected security interest in the
Collateral.
SECTION 1.09 Tax Consequences.
It is intended by the Parties hereto that the Merger shall constitute a
reorganization within the meaning of Section 368 of the Code and that E-Stamp
will continue the historic business of Learn2 following the Merger.
ARTICLE II.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01 Conversion of Capital Stock.
As of the Effective Time, by virtue of the Merger and without any further action
on the part of the Learn2 Stockholders or holders of any capital stock of E-
Stamp:
(a) Each Learn2 Share owned by Learn2 as treasury stock and each Learn2 Share
(including, without limitation, the Private Placement Securities) owned by E-
Stamp, or any wholly owned Subsidiary of E-Stamp (other than shares in trust
accounts, managed accounts, custodial accounts and the like that are
beneficially owned by third parties) shall be canceled and retired and shall
cease to exist, and no consideration shall be delivered in exchange therefor.
(b) Each issued and outstanding Learn2 Share (other than Learn2 Shares to be
canceled in accordance with Section 2.01(a) and, if applicable, other than any
Dissenting Shares) shall be converted into the right to receive the number of E-
Stamp Shares calculated pursuant to the Exchange Ratio, rounded to the nearest
whole share, transferred to the holder thereof, without interest thereon (the
"Merger Consideration"), upon surrender of the certificate formerly representing
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such Learn2 Share in the manner provided in Section 2.02. From and after the
Effective Time, all such converted Learn2 Shares shall no longer be outstanding
and shall be
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deemed to be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such Learn2 Shares shall cease to have any rights
with respect to such shares except the right to receive the Merger Consideration
therefor, without interest, upon the surrender of such certificate in accordance
with Section 2.02 or the right, if any, to receive payment from the Surviving
Corporation of the "fair value" of such Learn2 Shares as determined in
accordance with Section 262 of Delaware Law.
SECTION 2.02 Exchange of Certificates.
(a) E-Stamp shall designate a bank or trust company (which bank or trust
company shall be reasonably acceptable to Learn2) to act as exchange agent for
Learn2 Stockholders (the "Exchange Agent") in connection with the Merger to hold
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the E-Stamp Shares to which Learn2 Stockholders shall become entitled pursuant
to Section 2.01(b).
(b) As soon as reasonably practicable after the Effective Time, but in no
event later than five (5) Business Days after the Closing, E-Stamp shall cause
the Exchange Agent to mail to each holder of record of a Certificate or
Certificates, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions not inconsistent with this Agreement as
E-Stamp may specify, subject to reasonable approval by Learn2) and (ii)
instructions for use in effecting the surrender of Certificates in exchange for
payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by E-Stamp, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration for each Learn2 Share formerly represented by such
Certificate, and the Certificate so surrendered shall forthwith be canceled. If
delivery of the Merger Consideration is to be made to a Person other than the
Person in whose name the surrendered Certificate is registered, it shall be a
condition of 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 delivery shall have paid any transfer and other taxes required
by reason of the payment of the Merger Consideration to a Person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such tax either has been paid
or is not applicable. Until surrendered as contemplated by this Section 2.02,
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration for such Shares in
cash as contemplated by this Section 2.02.
(c) At the Effective Time, the stock transfer books of Learn2 shall be closed,
and thereafter there shall be no further registration of transfers of the Shares
on the records of Learn2. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Learn2 Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares, except as otherwise provided for herein or by applicable law.
(d) At any time following one year after the Effective Time, E-Stamp and the
Surviving Corporation shall be entitled to require the Exchange Agent to deliver
to it any E-Stamp Shares (including any earnings received with respect thereto)
that had been made available to the Exchange Agent and that have not been
disbursed to holders of Certificates, and thereafter such
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holders shall be entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) and only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Exchange Agent shall be liable to any
holder of a Certificate for the Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
SECTION 2.03 Learn2 Options.
(a) As of the Effective Time, each Learn2 Option shall be converted into an
option, warrant, convertible security or other right to acquire E-Stamp Shares
as provided in this Section 2.03. Following the Effective Time, each Learn2
Option shall continue to have, and shall be subject to, the terms and conditions
of each agreement pursuant to which such Learn2 Option was subject immediately
prior to the Effective Time (including, in the case of each Learn2 Option
granted under Learn2's Stock Option Plans, the terms and conditions of Learn2's
Stock Option Plans under which such Learn2 Option was granted), except that: (i)
each Learn2 Option (as converted pursuant to this Section 2.03) shall be
exercisable for that number of whole E-Stamp Shares equal to the product of (A)
the aggregate number of shares of Learn2 Shares for which such Learn2 Option was
exercisable at the Effective Time, multiplied by (B) the Exchange Ratio, rounded
down to the nearest whole share (provided that all references in such Learn2's
Stock Option Plans and the agreement under which such Learn2 Option was granted
to Learn2 shall be references to E-Stamp and references to Learn2 Shares shall
be references to E-Stamp Shares); and (ii) the exercise price per share of E-
Stamp Shares issuable pursuant to each Learn2 Option (as converted pursuant to
this Section 2.03) shall be equal to the exercise price per Learn2 Share under
such Learn2 Option at the Effective Time divided by the Exchange Ratio, rounded
up to the nearest whole cent.
(b) The assumption and substitution of Learn2 Options as provided herein shall
not give the holders of such Learn2 Options additional benefits or additional
(or accelerated) vesting rights that they did not have immediately prior to the
Effective Time or relieve the holders of such Learn2 Options from any
obligations or restrictions applicable to their Learn2 Options or the shares
obtainable upon exercise of the Learn2 Options. The adjustment provided herein
with respect to any Learn2 Options that are "incentive stock options" (as
defined in Section 422 of the Code) shall be and is intended to be, effected in
a manner that is consistent with continued treatment of such Learn2 Options as
"incentive stock options" under Section 424(a) of the Code. The duration and
other terms of the converted Learn2 Options provided for in this Section 2.03
shall be the same as the Learn2 Options except that all references to Learn2
shall be references to E-Stamp and references to the Learn2 Shares shall be
references to E-Stamp Shares. E-Stamp shall take all corporate action necessary
to reserve for issuance, at all times any converted Learn2 Options provided for
in this Section 2.03 are outstanding, a sufficient number of E-Stamp Shares for
delivery upon the exercise of such converted Learn2 Options.
SECTION 2.04 Certain Adjustments
If between the date hereof and the Effective Time, the outstanding Learn2 Shares
or E-Stamp Shares shall be changed into a different number of shares by reason
of any reclassification, recapitalization, split-up, combination or exchange of
shares, or any dividend payable in stock or
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other securities shall be declared thereon with a record date within such
period, the Exchange Ratio (and any other references herein to a price per E-
Stamp Share) shall be adjusted accordingly to provide the same economic effect
as contemplated by this Agreement prior to such reclassification,
recapitalization, split-up, combination, exchange or dividend.
SECTION 2.05 Dissenting Shares.
To the extent that any holder of Learn2 Shares is entitled to appraisal rights
under Delaware Law, then:
(a) Notwithstanding any provision of this Agreement to the contrary,
Dissenting Shares shall not be converted into or represent a right to receive
the Merger Consideration pursuant to Section 2.01, but the holder thereof shall
be entitled to only such rights as are granted by Delaware Law.
(b) Notwithstanding the provisions of Section 2.05(a), if any holder of Learn2
Shares who demands appraisal of his Learn2 Shares under Delaware Law effectively
withdraws or loses (through failure to perfect or otherwise) his right to
appraisal, then as of the Effective Time or the occurrence of such event,
whichever later occurs, such holder's Learn2 Shares shall automatically be
converted into and represent only the right to receive the Merger Consideration
as provided in Section 2.01(c), without interest, upon surrender of the
Certificate or Certificates representing such Shares pursuant to Section 2.02.
(c) Learn2 shall give E-Stamp (i) prompt notice of any written demands
received by Learn2 for appraisal or payment of the fair value of any Learn2
Shares, withdrawals of such demands, and any other instruments served on Learn2
pursuant to Delaware Law and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under Delaware Law. Except
with the prior written consent of E-Stamp, Learn2 shall not voluntarily make any
payment with respect to any demands for appraisal or settle or offer to settle
any such demands.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF LEARN2
Except as set forth in the Disclosure Letter delivered by Learn2 to E-Stamp
simultaneously with the execution of this Agreement (the "Learn2 Disclosure
-----------------
Letter"), which Learn2 Disclosure Letter shall be divided into sections
------
corresponding to the sections of this Article III, any exception set forth in
any such section only modifying the corresponding section of this Article III or
any other section of this Article III where the nature of such exception is
reasonably apparent from the face of such exception, Learn2 hereby represents,
warrants to and agrees with E-Stamp as follows:
SECTION 3.01 Organization and Qualification.
Learn2 is a corporation duly organized, validly existing and in good standing
under Delaware Law, and has the corporate power and authority to own, operate
and lease its Assets, to carry on
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its business as currently conducted, to execute and deliver this Agreement and
to carry out the transactions contemplated hereby. Learn2 is duly qualified to
conduct business as a foreign corporation and is in good standing in the states,
countries and territories, and in each jurisdiction where the nature of its
business or the ownership, operation or leasing of its Assets makes such
qualification necessary except where failure to so qualify would not have a
Learn2 Material Adverse Effect.
SECTION 3.02 Subsidiaries.
(a) Section 3.02 of Learn2 Disclosure Letter lists each Learn2 Subsidiary.
Section 3.02 of Learn2 Disclosure Letter sets forth (a) the authorized capital
stock or other equity interests of each Learn2 Subsidiary and (b) the percentage
of the issued and outstanding capital stock or other equity interests of each
Learn2 Subsidiary owned by Learn2. Each Learn2 Subsidiary is a corporation duly
organized, validly existing and in good standing under the Laws of its state or
jurisdiction of incorporation (as listed in Section 3.02 of Learn2 Disclosure
Letter), and has the requisite power and authority to own, operate and lease its
Assets and to carry on its business as currently conducted. Each Learn2
Subsidiary is duly qualified to conduct business as a foreign Person and is in
good standing in each jurisdiction where the nature of its business or the
ownership, operation or the leasing of its Assets makes such qualification
necessary except where failure to so qualify would not have a Learn2 Material
Adverse Effect.
(b) Except as set forth in Section 3.02 of Learn2 Disclosure Letter, Learn2
does not own, control or hold with the power to vote, directly or indirectly of
record, beneficially or otherwise, any capital stock or any equity or ownership
interest in any Person, except for less than five percent (5%) of any equity
security registered under the Exchange Act.
SECTION 3.03 Organizational Documents.
Neither Learn2 nor any Learn2 Subsidiary is in violation of any of the
provisions of its respective articles of incorporation or by-laws.
SECTION 3.04 Capitalization.
(a) The authorized capital stock of Learn2 consists of one hundred million
(100,000,000) Learn2 Shares and one hundred thousand (100,000) shares of
preferred stock, par value $0.01 per share, of Learn2 (the "Learn2 Preferred
----------------
Shares"). As of the close of business on April 11, 2001, (i) 52,881,618 Learn2
------
Shares are issued and outstanding; (ii) no Learn2 Shares are held in the
treasury of Learn2; (iii) no Learn2 Preferred Shares are issued and outstanding;
and (iv) an aggregate of 39,676,061 Learn2 Shares are reserved for issuance upon
exercise of outstanding Learn2 Options. Except as provided in the foregoing
sentence, Learn2 has no obligation to issue equity securities to any person.
All the outstanding shares of Learn2's capital stock are, and all Learn2 Shares
reserved for issuance as specified above, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be, duly authorized, validly issued, fully paid and nonassessable. None
of the outstanding shares of Learn2's capital stock have been issued in
violation of any federal or state securities Laws. Learn2 will deliver to E-
Stamp a complete and correct list, as of the close of business on April 11,
2001, of the number of Learn2 Shares subject to issuance upon exercise of
outstanding
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Learn2 Options (and the exercise prices thereof). Since April 11, 2001, there
have been no changes to the authorized capital stock of Learn2 or the number of
Learn2 Shares or Learn2 Preferred Shares outstanding except for issuances of
Learn2 Shares upon exercise of Learn2 Options outstanding as of such date and
reflected on the list delivered to E-Stamp described in the preceding sentence.
Since April 11, 2001, no options or rights of any kind to acquire any shares of
capital stock of Learn2 have been issued, granted or otherwise committed. Except
as set forth in Section 3.04 of the Learn2 Disclosure Letter, all of the
outstanding shares of capital stock of each Learn2 Subsidiary are duly
authorized, validly issued, fully paid and nonassessable, and all such shares
are owned by Learn2 or a Learn2 Subsidiary free and clear of all Liens. There
are no accrued and unpaid dividends with respect to any outstanding shares of
capital stock of Learn2.
(b) Except as set forth in Section 3.04 of the Learn2 Disclosure Letter,
there are no equity securities of any class of any Learn2 Subsidiary or any
security exchangeable into or exercisable for such equity securities, issued,
reserved for issuance or outstanding. Except as set forth in Section 3.04 if the
Learn2 Disclosure Letter, there are no options, warrants, calls, rights,
commitments or agreements of any character to which any Learn2 Subsidiary is a
party, or by which Learn2 or any Learn2 Subsidiary is bound, obligating Learn2
or any Learn2 Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of any Learn2 Subsidiary
or obligating any Learn2 Subsidiary to grant, extend or accelerate the vesting
of or enter into any such option, warrant, call, right, commitment or agreement.
There are no obligations, contingent or otherwise, of Learn2 or any Learn2
Subsidiary to repurchase, redeem or otherwise acquire any shares of capital
stock of Learn2 or any Learn2 Subsidiary or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
Learn2 Subsidiary or any other entity. Section 3.04 of the Learn2 Disclosure
Letter sets forth a complete schedule of all Learn2 Options held by the
directors and executive officers of Learn2, which schedule includes for each
such person, the number of Learn2 Shares for which such Learn2 Options are
exercisable, the exercise price of such Learn2 Options, the vesting schedule of
such Learn2 Options including the extent to which such Learn2 Option has vested
to the date of this Agreement and whether the vesting of such Learn2 Option will
be accelerated by reason of the transactions contemplated by this Agreement.
SECTION 3.05 Authority; Binding Obligation.
Learn2 has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Learn2 and the consummation by Learn2 of the
transactions contemplated by this Agreement have been duly and validly approved
by Learn2's Board of Directors. This Agreement has been duly executed and
delivered by Learn2 and constitutes a legal, valid and binding obligation of
Learn2 (assuming this Agreement has been duly executed and delivered by each of
E-Stamp and constitutes a legal, valid and binding obligation of E-Stamp),
enforceable in accordance with its terms, except as such enforceability may be
subject to (a) the effects of any applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar Laws affecting creditors'
rights generally and subject to the effects of general equitable principles
(whether considered in a proceeding in equity or at law); and (b) public policy
concerns (including without limitation, the ability of a court to refuse to
enforce unconscionable covenants, indemnification provisions or similar
provisions).
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SECTION 3.06 No Conflict; Required Filings and Consents.
(a) The execution, delivery and performance by Learn2 of this Agreement,
the fulfillment of and compliance with the terms and provisions hereof, and the
consummation by Learn2 of the transactions contemplated hereby (including the
Private Placement), do not and will not: (i) conflict with, or violate any
provision of, the certificate of incorporation or by-laws of Learn2; (ii)
subject to (A) obtaining the requisite approval and adoption of this Agreement
by each of the Learn2 Stockholders and the E-Stamp Stockholders, if required by
applicable Law, and (B) filing and recording of the Certificate of Merger as
required by Delaware Law, conflict with or violate any Law applicable to Learn2
or any Learn2 Subsidiary, or any of their Assets; (iii) conflict with, result in
any breach of, or constitute a default (or an event that with notice or lapse of
time or both would become a default) or result in the termination or
acceleration under any agreement to which Learn2 or any Learn2 Subsidiary is a
party or by which Learn2 or any Learn2 Subsidiary, or any of their Assets, may
be bound; or (iv) result in or require the creation or imposition of, or result
in the acceleration of, any indebtedness or any Lien of any nature upon, or with
respect to, Learn2 or any Learn2 Subsidiary or any of its Assets, except for (x)
any such conflict or violation described in clause (ii) above, (y) any such
conflict, breach or default described in clause (iii) above, or (z) any such
creation, imposition or acceleration described in clause (iv) above that would
not have a Learn2 Material Adverse Effect and that would not prevent Learn2 from
consummating the transactions described herein.
(b) The execution, delivery and performance by Learn2 of this Agreement,
the fulfillment of and compliance with the terms and provisions hereof, and the
consummation by Learn2 of the transactions contemplated hereby, do not and will
not require any consent, approval, authorization or permit of, or filing with or
notification to, any Person not party to this Agreement, except (i) as set forth
in Section 3.06 of the Learn2 Disclosure Letter, (ii) the filing and recording
of the Certificate of Merger as required by Delaware Law and (iii) where the
failure to obtain any consent, approval, authorization or permit or to make any
filing or notification otherwise required to be disclosed hereunder would not
have a Learn2 Material Adverse Effect.
SECTION 3.07 SEC Filings; Financial Statements.
(a) Learn2 has filed all forms, reports, statements and other documents
required to be filed with the SEC since January 1, 1999, and has heretofore
delivered to E-Stamp (to the extent not publicly available in XXXXX format on
the SEC's web site), in the form filed with the SEC since such date, together
with any amendments thereto, all of its (i) Annual Reports on Form 10-K, (ii)
Quarterly Reports on Form 10-Q, (iii) proxy statements relating to meetings of
stockholders (whether annual or special), (iv) reports on Form 8-K and (v) other
reports or registration statements filed by Learn2 (collectively, whether or not
required to be delivered to E-Stamp, the "Learn2 SEC Reports"). As of their
------------------
respective filing dates, Learn2 SEC Reports (i) complied as to form in all
material respects with the requirements of the Exchange Act and the Securities
Act, as applicable, 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 to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
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(b) The audited consolidated financial statements and unaudited interim
financial statements of Learn2 included in Learn2 SEC Reports (or incorporated
by reference therein), including all related notes and schedules (the "Learn2
------
Financial Statements"), complied in all material respects with applicable
--------------------
accounting requirements and with the published rules and regulations of the SEC
with respect thereto. The Learn2 Financial Statements present fairly in all
material respects the consolidated financial position of Learn2 and any Learn2
Subsidiary as at the respective dates thereof and the consolidated results of
operations and cash flows of Learn2 and any Learn2 Subsidiary for the periods
indicated, in accordance with GAAP applied on a consistent basis in all material
respects throughout the periods involved (except as may be noted therein) and
subject in the case of interim financial statements to normal year-end
adjustments and the absence of footnotes.
(c) To the knowledge of Learn2, there are no liabilities or obligations
(whether absolute or contingent, matured or unmatured) of Learn2 or any Learn2
Subsidiary that are not reflected, or reserved against, in the Learn2 Financial
Statements, except for those (i) that are set forth in Section 3.07 of the
Learn2 Disclosure Letter, (ii) that may have been incurred after December 31,
2000 in the Ordinary Course of Business or (iii) that would not have a Learn2
Material Adverse Effect.
SECTION 3.08 Disclosure Documents.
(a) Each document required to be filed by Learn2 with the SEC in connection
with the Merger (the "Learn2 Disclosure Documents") (i) 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 are made, not misleading, and (ii)
will, when filed, comply with the applicable requirements of the Exchange Act
and the rules and regulations of the SEC, except that no representation or
warranty is made hereby with respect to any information supplied by E-Stamp in
writing expressly for inclusion in Learn2 Disclosure Documents.
(b) The information with respect to Learn2 and/or any Learn2 Subsidiary
that Learn2 furnishes to E-Stamp in writing specifically for use in any E-Stamp
Disclosure Document will not, at the time of the filing thereof, at the time of
any distribution thereof and at the time of the consummation of the Merger,
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 the light of the circumstances under which they were made, not
misleading.
SECTION 3.09 Assets.
Learn2 and each Learn2 Subsidiary have good, valid and marketable title to, or a
valid leasehold interest in, all Assets respectively owned or leased by them,
including, without limitation, all material Assets reflected in the Learn2
Financial Statements and all material Assets acquired by Learn2 or by any Learn2
Subsidiary since December 31, 2000 (except for Assets reflected in the Learn2
Financial Statements or acquired since December 31, 2000 which have been sold or
otherwise disposed of in the Ordinary Course of Business), free and clear of all
Liens other than Liens reflected in the Learn2 Financial Statements, Permitted
Liens and other Liens that do not materially detract from the value or impair
the use of the Assets subject thereto. All material
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personal property of Learn2 and each Learn2 Subsidiary is in good operating
condition and repair, ordinary wear and tear excepted, and is suitable and
adequate for the uses for which it is intended or is being used.
SECTION 3.10 Absence of Certain Developments.
Since December 31, 2000, except as contemplated by this Agreement or as
disclosed in any Learn2 SEC Report filed since December 31, 2000, Learn2 and any
Learn2 Subsidiaries have conducted their businesses only in the Ordinary Course
of Business and, since such date, except as set forth in Section 3.10 of the
Learn2 Disclosure Letter, there has not been (a) any change in the business,
operations, properties, financial condition, assets or liabilities (including,
without limitation, contingent liabilities) of Learn2 or any Learn2 Subsidiary
having, individually or in the aggregate, a Learn2 Material Adverse Effect, (b)
any declaration, setting aside or payment of any dividend or distribution in
respect of the shares of its capital stock or any redemption, purchase or other
acquisition of any of its securities, or (c) any agreement by Learn2 or any
Learn2 Subsidiary to take any of the actions described in this Section 3.10
except as expressly contemplated by this Agreement.
SECTION 3.11 Litigation; Compliance with Law.
(a) Except as set forth in Learn2 SEC Reports and Section 3.11 of the
Learn2 Disclosure Letter, there are: (i) no claims, actions, suits,
investigations, or proceedings pending or, to Learn2's knowledge, threatened
against Learn2 or any of Learn2 Subsidiaries before any Governmental Entity or
arbitrator, that would be reasonably likely to have a Learn2 Material Adverse
Effect or that would prevent or enjoin, or delay in any material respect,
consummation of the Merger or the transactions contemplated hereby; and (ii) no
orders of any Governmental Entity or arbitrator outstanding against Learn2 or
any Learn2 Subsidiary that would reasonably be likely to have a Learn2 Material
Adverse Effect or that would prevent or enjoin, or delay in any material
respect, consummation of the Merger or the transactions contemplated hereby.
(b) Learn2 and each Learn2 Subsidiary have complied and are in compliance
in all material respects with all Laws applicable to Learn2 and each Learn2
Subsidiary and their respective businesses or Assets, the failure to comply with
which, individually or in the aggregate, would have a Learn2 Material Adverse
Effect. Learn2 and each Learn2 Subsidiary have obtained and hold all Licenses
(none of which has been materially modified or rescinded and all of which are in
full force and effect) from all Government Entities necessary in order to own,
use and maintain their respective Assets and to conduct their respective
businesses as presently conducted, where the failure to obtain and hold would
have a Learn2 Material Adverse Effect.
SECTION 3.12 Intellectual Property.
(a) Section 3.12 of the Learn2 Disclosure Letter sets forth a complete list
of all material registered patents, trademarks, trade names, service marks,
assumed names, copyrights and all applications therefor (collectively, the
"Industrial Property") owned, filed or licensed by Learn2 or any Learn2
-------------------
Subsidiary and, with respect to registered trademarks, all jurisdictions in
which such trademarks are registered.
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(b) As used in this Agreement, "Intellectual Property" shall mean
---------------------
Industrial Property and inventions, invention studies (whether patentable or
unpatentable), designs, copyrights, mask works, trade dress, secret formulae,
trade secrets, secret processes, computer programs and know-how. Except as set
forth in Section 3.12 of the Learn2 Disclosure Letter, (i) to Learn2's
knowledge, the consummation of the transactions contemplated by this Agreement
will not materially impair any right to use any of its Intellectual Property,
(ii) except as would not have a Learn2 Material Adverse Effect, all Intellectual
Property owned by Learn2 or any Learn2 Subsidiary is owned by Learn2 or such
Learn2 Subsidiary free and clear of all Liens, (iii) except as would not have a
Learn2 Material Adverse Effect, Learn2 and the Learn2 Subsidiaries own or have
the right to use all of the Intellectual Property used in the conduct of their
businesses, and (iv) no claims have been asserted of which Learn2 or any Learn2
Subsidiary has been given written notice by any person with respect to the
ownership or use by Learn2 or any Learn2 Subsidiary of the Intellectual
Property, except those claims (if any) which, if adversely determined, would not
have a Learn2 Material Adverse Effect.
SECTION 3.13 Environmental Matters.
Learn2 and each Learn2 Subsidiary are in compliance in all material respects
with all Environmental Laws known by Learn2 to be applicable to its Real
Property except where the failure to comply would not have a Learn2 Material
Adverse Effect. There are no pending or, to the knowledge of Learn2,
threatened, actions, suits, claims, legal proceedings or other proceedings based
on, and neither Learn2 nor any Learn2 Subsidiary has received any notice of any
complaint, order, directive, citation, notice of responsibility, notice of
potential responsibility, or information request from any Governmental Entity or
any other Person arising out of or attributable to: (i) the current or past
presence at any part of the real property owned or leased by Learn2 or any
Learn2 Subsidiary (the "Learn2 Real Property") of any Hazardous Material; (ii)
--------------------
the off-site disposal of any Hazardous Material originating on or from the
Learn2 Real Property; or (iii) any violation of Environmental Laws at any part
of the Learn2 Real Property or otherwise arising from Learn2's or any Learn2
Subsidiary's activities involving any Hazardous Material, which, individually or
in the aggregate, would have a Learn2 Material Adverse Effect. No Hazardous
Materials are present in, on, or under (or, to the knowledge of Learn2, in the
vicinity of) any properties owned, leased or used at any time (including both
land and improvements thereon) by Learn2 or any Learn2 Subsidiary so as to give
rise to any material liability or corrective or remedial obligation of Learn2 or
any Learn2 Subsidiary under any Environmental Laws. Learn2 has provided to E-
Stamp correct and complete copies of all reports, studies and other documents
relating to any of the foregoing.
SECTION 3.14 Contracts; No Default.
Except as set forth in Section 3.14 of Learn2 Disclosure Letter, each Contract
listed in the exhibit index to any of Learn2 SEC Filings (collectively, the
"Learn2 Contracts") is in full force and effect, constitutes a valid and binding
----------------
obligation of and is legally enforceable against Learn2 in accordance with its
terms and, to the knowledge of Learn2, is a valid, binding and enforceable
obligation of the other parties thereto, except as such enforceability may be
subject to the effects of any applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar Laws affecting creditors'
rights generally or subject to the effects of general equitable
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principles (whether considered in a proceeding in equity or at law). There has
not been (A) any failure by Learn2 or, to the knowledge of Learn2, any other
party to a Learn2 Contract to comply with all material provisions thereof which
default or failure to perform would have a Learn2 Material Adverse Effect or (B)
any default by Learn2 or, to the knowledge of Learn2, any other party under a
Learn2 Contract, which default or failure to perform would have a Learn2
Material Adverse Effect. Neither Learn2 nor any Learn2 Subsidiary is a guarantor
or otherwise liable for any liability or obligation (including indebtedness) of
any other Person other than any Learn2 Subsidiary.
SECTION 3.15 Labor Relations.
Except as set forth in Section 3.15 of Learn2 Disclosure Letter, there are no
collective bargaining or other labor union Agreements to which Learn2 or any
Learn2 Subsidiary is a party. There are, and for the past two (2) years have
been, no strikes, work stoppages, union organization efforts or lawsuits (other
than grievance proceedings) pending or, to the knowledge of Learn2, threatened
between Learn2 or any Learn2 Subsidiary and (a) any current or former employees
of Learn2 or any Learn2 Subsidiary except where such activity or lawsuits would
not have a Learn2 Material Adverse Effect or (b) any union or other collective
bargaining unit representing such employees. Learn2 and each Learn2 Subsidiary
have complied and are in compliance with all Laws relating to employment or the
workplace, including, without limitation, Laws relating to wages, hours,
collective bargaining, safety and health, work authorization, equal employment
opportunity, immigration, withholding, unemployment compensation, worker's
compensation, employee privacy and right to know, except where the failure so to
comply would not have a Learn2 Material Adverse Effect.
SECTION 3.16 Pension and Benefit Plans.
(a) Section 3.16 of the Learn2 Disclosure Letter sets forth a correct and
complete list of all the material employee benefit plans, agreements,
commitments, practices or arrangements of any type providing any employee
benefits (including, but not limited to, plans described in Section 3(3) of
ERISA) currently maintained, ever maintained, sponsored by, contributed to or
required to be contributed to by Learn2 or any Learn2 Subsidiary, or for the
benefit of any employee, former employee, consultant or independent contractor
(collectively, the "Benefit Plans").
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(b) With respect to each Benefit Plan, Learn2 has made available to E-Stamp
true and complete copies of: (i) any written plan texts and agreements; (ii)
the summary plan description currently in effect and all material modifications
thereto, if any; (iii) the three most recent annual return in the federal Form
5500 series, if applicable; (iv) the most recent annual and periodic accounting
of plan assets, if applicable; (v) the most recent determination opinion,
notification and/or advisory letter, if any, received from the United States
Internal Revenue Service; and (vi) the most recent actuarial valuation, if
applicable.
(c) With respect to each Benefit Plan: (i) each Benefit Plan intended to
qualify under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code has either received a favorable determination,
opinion, notification and/or advisory letter from the IRS with respect to each
such Benefit Plan as to its qualified status under the Code, including
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all amendments to the Code effected by the Tax Reform Act of 1986 and subsequent
legislation, or has remaining a period of time under applicable Treasury
regulations or IRS pronouncements in which to apply for such a letter and make
any amendments necessary to obtain a favorable determination as to the qualified
status of each such Benefit Plan; (ii) such Benefit Plan has been administered
and enforced in all material respects in accordance with its terms and all
applicable Laws; (iii) no breach of fiduciary duty or prohibited transaction
(within the meaning of Section 4975 of the Code or Section 406 of ERISA) has
occurred with respect to which Learn2, any Learn2 Subsidiary or such Benefit
Plan may be liable or otherwise damaged; (iv) no litigation or claim (other than
routine claims for benefits or overpayments of benefits), and no governmental
administrative proceeding, audit or investigation, is pending or, to the
knowledge of Learn2, threatened; (v) all contributions, premiums, and other
payment obligations and all liabilities for accrued but unfunded obligations for
benefits (using actuarial assumptions which are reasonable, both individually
and in the aggregate) have been accrued on the Learn2 Financial Statements in
accordance with GAAP (or thereafter on the financial records of Learn2) and all
contributions required to be made to such Benefit Plan by the terms of such
Benefit Plan or under applicable Law have been made on a timely basis; (vi)
Learn2 or each Learn2 Subsidiary, as the case may be, has expressly reserved in
itself the right to amend, modify or terminate such Benefit Plan, or any portion
of it, without material liability to itself; and (vii) no such Benefit Plan
requires Learn2 or any Learn2 Subsidiary to continue to employ any employee,
director or consultant.
(d) No Benefit Plan is a "multiemployer plan" (within the meaning of
Section 3(37) or Section 4001(a)(3) of ERISA) or a "multiple employer plan"
(within the meaning of Section 4064 of ERISA or Section 413(c) of the Code).
Neither Learn2 nor any Learn2 Subsidiaries has a current or potential liability
or obligation, whether direct or indirect, with respect to any multiemployer
plan or multiple employer plan. Neither Learn2 nor any Affiliate has any
material liabilities for an employee benefit plan other than a Benefit Plan.
Neither Learn2 nor any Affiliate has ever maintained, established, sponsored,
participated in, or contributed to, any pension plan which is subject to Title
IV of ERISA or Section 412 of the Code.
(e) In the case of each Benefit Plan which provides welfare benefits of the
type described in Section 3(1) of ERISA: (i) the reserves therefor on the
Learn2 Financial Statements are adequate to discharge when due the accrued,
unfunded liabilities for medical or death benefits with respect to current or
former employees, directors or consultants of Learn2 or any Learn2 Subsidiary
beyond their termination of employment (in addition to coverage mandated by
Sections 601-608 of ERISA and 4980B(f) of the Code); and (ii) each such plan
which provides medical or death benefits with respect to current or former
employees of Learn2 or any Learn2 Subsidiary has been administered in all
material respects in compliance with Sections 601-608 of ERISA and 4980B(f) of
the Code.
(f) Except as set forth in Section 3.16 of Learn2 Disclosure Letter, the
consummation of the transactions contemplated by this Agreement will not after
the Effective Time entitle any individual to severance pay or accelerate the
time of payment or vesting (other than as a result of a partial or full
termination of a tax-qualified plan), or increase the amount, of compensation
due to any individual, and no payment made or contemplated under any Benefit
Plan constitutes an "excess parachute payment" within the meaning of Section
280G of the Code.
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SECTION 3.17 Taxes and Tax Matters.
(a) Learn2 and each Learn2 Subsidiary have paid, or reserved in accordance
with GAAP, all Taxes due and payable by any of them for or with respect to all
periods up to and including the date hereof, except where such failure to pay or
reserve would not have a Learn2 Material Adverse Effect.
(b) There are no Liens on any of the Assets of Learn2 or any Learn2
Subsidiary that arose in connection with any failure (or alleged failure) to pay
any Tax except for Liens reflected on the Learn2 Financial Statements, Permitted
Liens or where such failure would not have a Learn2 Material Adverse Effect.
(c) Learn2 and each Learn2 Subsidiary have filed, or caused to be filed, on
a timely basis all material Learn2 Tax Returns that it was required to file.
(d) Learn2 and each Learn2 Subsidiary have withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor or stockholder, except where such
failure to withhold or pay would not have a Learn2 Material Adverse Effect.
(e) There is no dispute or claim concerning any liability for Taxes of
Learn2 or any Learn2 Subsidiary either (i) claimed or raised by any Governmental
Entity in writing or (ii) as to which Learn2 has knowledge based upon personal
contact with any agent of such Governmental Entity. Section 3.17 of Learn2
Disclosure Letter indicates those Learn2 Tax Returns that have been audited, and
indicates those Learn2 Tax Returns that currently are the subject of an audit.
(f) The unpaid Taxes of Learn2 and any Learn2 Subsidiary (i) did not, as of
the date of the most recent Learn2 Financial Statements prior to the date
hereof, exceed the reserve for Tax liabilities (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) and (ii) do not exceed that reserve as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of
Learn2 or any Learn2 Subsidiary in filing the Learn2 Tax Returns.
(g) None of Learn2 or any Learn2 Subsidiary has filed a consent under
Section 341(f) of the Code, concerning collapsible corporations. None of Learn2
or any Learn2 Subsidiary has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. None of
Learn2 or any Learn2 Subsidiary is a party to any Tax allocation or sharing
agreement. None of Learn2 or any Learn2 Subsidiary (A) has been a member of an
"affiliated group," as defined in Section 1504(a) of the Code, filing a
consolidated federal income Tax Return (other than a group the common parent of
which is or was Learn2) or (B) has any liability for the Taxes of any Person
(other than any member of the group the common parent of which is or was Learn2)
under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local, or
foreign Law), as a transferee or successor, by contract or otherwise.
(h) Neither Learn2 nor any Learn2 Subsidiary has constituted a
"distributing corporation" or a "controlled corporation" in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (x) in the
two years prior to the date of this Agreement
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or (y) in a distribution which could otherwise constitute part of a "plan" or
"Series of related transactions" (within the meaning of Section 355(e) of the
Code) in conjunction with the Merger.
SECTION 3.18 Insurance.
(a) Except as set forth in Section 3.18(a) of the Learn2 Disclosure Letter,
Learn2 and the Learn2 Subsidiaries maintain policies of fire and casualty,
liability and other forms of insurance in such amounts, with such deductibles
and retained amounts, and against such risks and losses, as are, in the
reasonable judgment of Learn2, reasonable for the conduct of their businesses
and their Assets.
(b) Section 3.18(b) of the Learn2 Disclosure Letter lists Learn2's director
and officer insurance policies and the premiums payable thereunder.
SECTION 3.19 Arrangements With Related Parties.
Except as set forth in Section 3.19 of Learn2 Disclosure Letter, no present or
former officer, director, stockholder or other Person known to Learn2 to be an
Affiliate of Learn2 or any Learn2 Subsidiary, nor any Person known to Learn2 to
be an Affiliate of such Person, is currently a party to any transaction or
agreement with Learn2 or any Learn2 Subsidiary, including any Contract providing
for any loans, advances, the employment of, furnishing of services by, rental of
its Assets from or to, or otherwise requiring payments to, any such Person.
SECTION 3.20 Board Recommendation.
(a) Learn2's Board of Directors, at a meeting duly called and held, has (i)
unanimously determined that each of this Agreement and the Merger are advisable
and in the best interests of Learn2 Stockholders, and (ii) resolved to recommend
that Learn2 Stockholders approve and adopt this Agreement and the Merger, and
none of the aforesaid actions by Learn2's Board of Directors has been amended,
rescinded or modified.
(b) The action taken by Learn2's Board of Directors constitutes approval of
the Merger and the related transactions by Learn2's Board of Directors
(including the Private Placement) under (i) the provisions of Section 203 of
Delaware Law and (ii) the certificate of incorporation of Learn2, as in effect
as of the date hereof and the Effective Date, such that the affirmative vote of
the majority of the outstanding Learn2 Shares is the only vote of the holders of
any class or series of Learn2's capital stock necessary to approve the Merger
and adopt this Agreement. No other vote of any class or series of Learn2's
capital stock is necessary to approve any of the transactions contemplated
hereunder, other than the Merger.
SECTION 3.21 Broker's Fees.
Except as set forth in Section 3.21 of Learn2 Disclosure Letter, neither Learn2
nor any Learn2 Subsidiary has any liability or obligation to pay any fees or
commissions to any broker, finder, or similar agent in connection with to the
transactions contemplated by this Agreement.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF E-STAMP
Except as set forth in the Disclosure Letter delivered by E-Stamp to Learn2
simultaneously with the execution of this Agreement (the "E-Stamp Disclosure
------------------
Letter"), which E-Stamp Disclosure Letter shall be divided into sections
------
corresponding to the sections of this Article IV, any exception set forth in any
such section only modifying the corresponding section of this Article IV or any
other section of this Article IV where the nature of such exception is
reasonably apparent from the face of such exception, E-Stamp hereby represents,
warrants to and agrees with Learn2 as follows:
SECTION 4.01 Organization and Qualification.
E-Stamp is a corporation duly organized, validly existing and in good standing
under Delaware Law and has the corporate power and authority to own, operate and
lease its Assets, to carry on its business as currently conducted, to execute
and deliver this Agreement and to carry out the transactions contemplated
hereby. E-Stamp is duly qualified to conduct business a foreign corporation and
is in good standing in the states, countries and territories, and in each
jurisdiction, where the nature of its business or the ownership, operation or
leasing of its Assets makes such qualification necessary except where failure to
so qualify would not have an E-Stamp Material Adverse Effect.
SECTION 4.02 Subsidiaries.
(a) Section 4.02 of the E-Stamp Disclosure Letter lists each E-Stamp
Subsidiary. Section 4.02 of the E-Stamp Disclosure Letter sets forth (a) the
authorized capital stock or other equity interests of each E-Stamp Subsidiary
and (b) the percentage of the issued and outstanding capital stock or other
equity interests of each E-Stamp Subsidiary owned by E-Stamp. Each E-Stamp
Subsidiary is a corporation duly organized, validly existing and in good
standing under the Laws of its state or jurisdiction of incorporation (as listed
in Section 4.02 of the E-Stamp Disclosure Letter), and has the requisite power
and authority to own, operate and lease its Assets and to carry on its business
as currently conducted. Each E-Stamp Subsidiary is duly qualified to conduct
business as a foreign Person and is in good standing in each jurisdiction where
the nature of its business or the ownership, operation or the leasing of its
Assets makes such qualification necessary except where failure to so qualify
would not have an E-Stamp Material Adverse Effect.
(b) Except as set forth in Section 4.02 of the E-Stamp Disclosure Letter,
E-Stamp does not own, control or hold with the power to vote, directly or
indirectly of record, beneficially or otherwise, any capital stock or any equity
or ownership interest in any Person, except for less than five percent (5%) of
any equity security registered under the Exchange Act.
SECTION 4.03 Organizational Documents.
Neither E-Stamp nor any E-Stamp Subsidiary is in violation of any of the
provisions of its respective articles of incorporation or by-laws.
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SECTION 4.04 Capitalization.
(a) The authorized capital stock of E-Stamp consists of two hundred million
(200,000,000) E-Stamp Shares and ten million (10,000,000) shares of preferred
stock, par value $0.001 per share, of E-Stamp (the "E-Stamp Preferred Shares").
------------------------
As of the close of business on April 9, 2001, (i) 38,150,637 E-Stamp Shares are
issued and outstanding; (ii) no E-Stamp Shares are held in the treasury of E-
Stamp; (iii) no E-Stamp Preferred Shares are issued and outstanding; and (iv) an
aggregate of 2,431,964 E-Stamp Shares are reserved for issuance upon exercise of
outstanding options, warrants and other securities convertible into E-Stamp
Shares (collectively, "E-Stamp Options"). Except as provided in the foregoing
---------------
sentence and for the E-Stamp Shares issuable in the Merger, E-Stamp has no
obligation to issue equity securities to any person. All the outstanding shares
of E-Stamp's capital stock are, and all E-Stamp Shares reserved for issuance as
specified above and all E-Stamp shares issuable pursuant to the Merger, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be, duly authorized, validly issued, fully paid
and nonassessable. None of the outstanding shares of E-Stamp's capital stock
have been issued in violation of any federal or state securities Laws. E-Stamp
will deliver to Learn2 a complete and correct list, as of the close of business
on April 9, 2001, of the number of E-Stamp Shares subject to issuance upon
exercise of outstanding E-Stamp Options (and the exercise prices thereof).
Since April 9, 2001, there have been no changes to the authorized capital stock
of E-Stamp or the number of E-Stamp Shares or E-Stamp Preferred Shares
outstanding except for issuances of E-Stamp Shares upon exercise of E-Stamp
Options outstanding as of such date and reflected on the list delivered to E-
Stamp described in the preceding sentence. Since April 9, 2001, no options or
rights of any kind to acquire any shares of capital stock of E-Stamp have been
issued, granted or otherwise committed. Except as set forth in Section 4.04 of
the E-Stamp Disclosure Letter, all of the outstanding shares of capital stock of
each E-Stamp Subsidiary are duly authorized, validly issued, fully paid and
nonassessable, and all such shares are owned by E-Stamp or an E-Stamp Subsidiary
free and clear of all Liens. There are no accrued and unpaid dividends with
respect to any outstanding shares of capital stock of E-Stamp.
(b) Except as set forth in Section 4.04 of the E-Stamp Disclosure Letter,
there are no equity securities of any class of any E-Stamp Subsidiary or any
security exchangeable into or exercisable for such equity securities, issued,
reserved for issuance or outstanding. Except as set forth in Section 4.04 of
the E-Stamp Disclosure Letter, there are no options, warrants, calls, rights,
commitments or agreements of any character to which any E-Stamp Subsidiary is a
party, or by which E-Stamp or any E-Stamp Subsidiary is bound, obligating E-
Stamp or any E-Stamp Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of any E-Stamp
Subsidiary or obligating E-Stamp or any E-Stamp Subsidiary to grant, extend or
accelerate the vesting of or enter into any such option, warrant, call, right,
commitment or agreement. There are no obligations, contingent or otherwise, of
E-Stamp or any E-Stamp Subsidiary to repurchase, redeem or otherwise acquire any
shares of capital stock of E-Stamp or any E-Stamp Subsidiary or to provide funds
to or make any investment (in the form of a loan, capital contribution or
otherwise) in any E-Stamp Subsidiary or any other entity. Section 4.04 of the
E-Stamp Disclosure Letter sets forth a complete schedule of all E-Stamp Options
held by the directors and executive officers of E-Stamp, which schedule includes
for each such person, the number of E-Stamp Shares for which such E-Stamp
Options are exercisable, the
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exercise price of such E-Stamp Options, the vesting schedule of such E-Stamp
Options including the extent to which such E-Stamp Option has vested to the date
of this Agreement and whether the vesting of such E-Stamp Option will be
accelerated by reason of the transactions contemplated by this Agreement.
SECTION 4.05 Authority; Binding Obligation.
E-Stamp has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery by E-Stamp of this Agreement and the consummation by E-Stamp of the
transactions contemplated by this Agreement, have been duly and validly approved
by E-Stamp's Board of Directors. This Agreement has been duly executed and
delivered by E-Stamp and constitutes a legal, valid and binding obligation of E-
Stamp (assuming this Agreement has been duly executed and delivered by Learn2
and constitutes a legal, valid and binding obligation of Learn2), enforceable in
accordance with its terms, except as such enforceability may be subject to (a)
the effects of any applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar Laws affecting creditors' rights generally
and subject to the effects of general equitable principles (whether considered
in a proceeding in equity or at law); and (b) public policy concerns (including
without limitation, the ability of a court to refuse to enforce unconscionable
covenants, indemnification provisions or similar provisions).
SECTION 4.06 No Conflict; Required Filings and Consents.
(a) The execution, delivery and performance by E-Stamp of this Agreement, the
fulfillment of and compliance with the respective terms and provisions hereof,
and the consummation by E-Stamp of the transactions contemplated hereby, do not
and will not: (i) conflict with, or violate any provision of, the certificate of
incorporation or the by-laws of E-Stamp; (ii) subject to (A) obtaining the
requisite approval and adoption of this Agreement by each of the Learn2
Stockholders and the E-Stamp Stockholders, if required by applicable Law and (B)
filing and recording of the Certificate of Merger as required by Delaware Law,
conflict with or violate any Law applicable to E-Stamp or any E-Stamp
Subsidiary, or any of their Assets; (iii) conflict with, result in any breach
of, or constitute a default (or an event that with notice or lapse of time or
both would become a default) or result in the termination or acceleration under
any agreement to which E-Stamp or any E-Stamp Subsidiary is a party or by which
E-Stamp or any E-Stamp Subsidiary, or any of their Assets, may be bound; or (iv)
result in or require the creation or imposition of, or result in the
acceleration of, any indebtedness or any Lien of any nature upon, or with
respect to, E-Stamp or any E-Stamp Subsidiary or any of its Assets, except for
(x) any such conflict or violation described in clause (ii) above, (y) any such
conflict, breach or default described in clause (iii) above, or (z) any such
creation, imposition or acceleration described in clause (iv) above that would
not have an E-Stamp Material Adverse Effect and that would not prevent E-Stamp
from consummating the transactions described herein.
(b) The execution, delivery and performance by E-Stamp of this Agreement, the
fulfillment of and compliance with the respective terms and provisions hereof,
and the consummation by each of E-Stamp of the transactions contemplated hereby,
do not and will not require any consent, approval, authorization or permit of,
or filing with or notification to, any
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Person not party to this Agreement, except (i) as set forth in Section 4.06 of
the Learn2 Disclosure Letter, (ii) the filing and recording of the Certificate
of Merger as required by Delaware Law and (iii) where the failure to obtain any
consent, approval, authorization or permit or to make any filing or notification
otherwise required to be disclosed hereunder would not have an E-Stamp Material
Adverse Effect.
SECTION 4.07 SEC Filings; Financial Statements.
(a) E-Stamp has filed all forms, reports, statements and other documents
required to be filed with the SEC since October 8, 1999, and has heretofore
delivered to Learn2 (to the extent not publicly available in XXXXX format on the
SEC's web site), in the form filed with the SEC since such date, together with
any amendments thereto, all of its (i) Annual Reports on Form 10-K, (ii)
Quarterly Reports on Form 10-Q, (iii) proxy statements relating to meetings of
stockholders (whether annual or special), (iv) reports on Form 8-K and (v) other
reports or registration statements filed by E-Stamp (collectively, whether or
not required to be delivered to Learn2, the "E-Stamp SEC Reports"). As of their
-------------------
respective filing dates, E-Stamp SEC Reports (i) complied as to form in all
material respects with the requirements of the Exchange Act and the Securities
Act, as applicable, 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 to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(b) The audited consolidated financial statements and unaudited interim
financial statements of E-Stamp included in E-Stamp SEC Reports (or incorporated
by reference therein), including all related notes and schedules (the "E-Stamp
-------
Financial Statements"), complied in all material respects with applicable
--------------------
accounting requirements and with the published rules and regulations of the SEC
with respect thereto. The E-Stamp Financial Statements present fairly in all
material respects the consolidated financial position of E-Stamp and any E-Stamp
Subsidiaries as at the respective dates thereof and the consolidated results of
operations and cash flows of E-Stamp and any E-Stamp Subsidiaries for the
periods indicated, in accordance with GAAP applied on a consistent basis in all
material respects throughout the periods involved (except as may be noted
therein) and subject in the case of interim financial statements to normal year-
end adjustments and the absence of footnotes.
(c) To the knowledge of E-Stamp, there are no liabilities or obligations
(whether absolute or contingent, matured or unmatured) of E-Stamp or any E-Stamp
Subsidiary that are not reflected, or reserved against, in the E-Stamp Financial
Statements, except for those (i) that are set forth in Section 4.07 of the E-
Stamp Disclosure Letter, (ii) that may have been incurred after December 31,
2000 in the Ordinary Course of Business or (iii) that would not have an E-Stamp
Material Adverse Effect.
(d) Set forth in Section 4.07 of the E-Stamp Disclosure Letter is the
determination of E-Stamp's cash balance, as of the date of this Agreement,
together with E-Stamp's quarterly plan (including expected expenditures) for the
next six (6) months.
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SECTION 4.08 Disclosure Documents.
(a) Each document required to be filed by E-Stamp with the SEC in connection
with the Merger (the "E-Stamp Disclosure Documents") (i) 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 are made, not misleading, and (ii)
will, when filed, comply with the applicable requirements of the Exchange Act
and the rules and regulations of the SEC, except that no representation or
warranty is made hereby with respect to any information supplied by Learn2 in
writing expressly for inclusion in E-Stamp Disclosure Documents.
(b) The information with respect to E-Stamp and/or any E-Stamp Subsidiary that
E-Stamp or any E-Stamp Subsidiary furnishes to Learn2 in writing specifically
for use in any Learn2 Disclosure Document will not, at the time of the filing
thereof, at the time of any distribution thereof and at the time of the
consummation of the Merger, 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 the light of the circumstances
under which they were made, not misleading.
SECTION 4.09 Assets.
E-Stamp and each E-Stamp Subsidiary have good, valid and marketable title to, or
a valid leasehold interest in, all Assets respectively owned or leased by them,
including, without limitation, all material Assets reflected in the E-Stamp
Financial Statements and all material Assets acquired by E-Stamp or by any E-
Stamp Subsidiary since December 31, 2000 (except for Assets reflected in the E-
Stamp Financial Statements or acquired since December 31, 2000 which have been
sold or otherwise disposed of in the Ordinary Course of Business), free and
clear of all Liens other than Liens reflected in the E-Stamp Financial
Statements, Permitted Liens and other Liens that do not materially detract from
the value or impair the use of the Assets subject thereto. All material
personal property of E-Stamp and each E-Stamp Subsidiary is in good operating
condition and repair, ordinary wear and tear excepted, and is suitable and
adequate for the uses for which it is intended or is being used.
SECTION 4.10 Absence of Certain Developments.
Since December 31, 2000, except as contemplated by this Agreement or as
disclosed in any E-Stamp SEC Report filed since December 31, 2000, E-Stamp and
any E-Stamp Subsidiaries have conducted their businesses only in the Ordinary
Course of Business and since such date, except as set forth in Section 4.10 of
the E-Stamp Disclosure Letter, there has not been (a) any change in the
business, operations, properties, financial condition, assets or liabilities
(including, without limitation, contingent liabilities) of E-Stamp or any E-
Stamp Subsidiary having, individually or in the aggregate, an E-Stamp Material
Adverse Effect, (b) any declaration, setting aside or payment of any dividend or
distribution in respect of the shares of its capital stock or any redemption,
purchase or other acquisition of any of its securities, or (c) any agreement by
E-Stamp or any E-Stamp Subsidiary to take any of the actions described in this
Section 4.10 except as expressly contemplated by this Agreement.
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SECTION 4.11 Litigation; Compliance with Law.
(a) Except as set forth in the E-Stamp SEC Reports and Section 4.11 of the E-
Stamp Disclosure Letter, there are: (i) no claims, actions, suits,
investigations, or proceedings pending or, to E-Stamp's knowledge, threatened
against E-Stamp or any E-Stamp Subsidiary before any Governmental Entity or
arbitrator, that would be reasonably likely to have an E-Stamp Material Adverse
Effect or that would prevent or enjoin, or delay in any material respect,
consummation of the Merger or the transactions contemplated hereby; and (ii) no
orders of any Governmental Entity or arbitrator outstanding against E-Stamp or
any E-Stamp Subsidiary that would reasonably be likely to have an E-Stamp
Material Adverse Effect or that would prevent or enjoin, or delay in any
material respect, consummation of the Merger or the transactions contemplated
hereby.
(b) E-Stamp and each E-Stamp Subsidiary have complied and are in compliance in
all material respects with all Laws applicable to E-Stamp and each E-Stamp
Subsidiary and their respective businesses or Assets, the failure to comply with
which, individually or in the aggregate, would have an E-Stamp Material Adverse
Effect. E-Stamp and each E-Stamp Subsidiary have obtained and hold all Licenses
(none of which has been materially modified or rescinded and all of which are in
full force and effect) from all Government Entities necessary in order to own,
use and maintain their respective Assets and to conduct their respective
businesses as presently conducted, where the failure to obtain and hold would
have an E-Stamp Material Adverse Effect.
SECTION 4.12 Intellectual Property.
(a) Section 4.12 of the E-Stamp Disclosure Letter sets forth a complete list
of all material registered patents, trademarks, trade names, service marks,
assumed names, copyrights and all applications therefor (collectively, the
"Industrial Property") owned, filed or licensed by E-Stamp or any E-Stamp
-------------------
Subsidiary and, with respect to registered trademarks, all jurisdictions in
which such trademarks are registered.
(b) As used in this Agreement, "Intellectual Property" shall mean Industrial
---------------------
Property and inventions, invention studies (whether patentable or unpatentable),
designs, copyrights, mask works, trade dress, secret formulae, trade secrets,
secret processes, computer programs and know-how. Except as set forth in
Section 4.12 of the E-Stamp Disclosure Letter, (i) to E-Stamp's knowledge, the
consummation of the transactions contemplated by this Agreement will not
materially impair any right to use any of its Intellectual Property, (ii) except
as would not have an E-Stamp Material Adverse Effect, all Intellectual Property
owned by E-Stamp or any E-Stamp Subsidiary is owned by E-Stamp or such E-Stamp
Subsidiary free and clear of all Liens, (iii) except as would not have an E-
Stamp Material Adverse Effect, E-Stamp and the E-Stamp Subsidiaries own or have
the right to use all of the Intellectual Property used in the conduct of their
businesses, and (iv) no claims have been asserted of which E-Stamp or any E-
Stamp Subsidiary has been given written notice by any person with respect to the
ownership or use by E-Stamp or any E-Stamp Subsidiary of the Intellectual
Property, except those claims (if any) which, if adversely determined, would not
have an E-Stamp Material Adverse Effect.
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SECTION 4.13 Environmental Matters.
E-Stamp and each E-Stamp Subsidiary are in compliance in all material respects
with all Environmental Laws known by E-Stamp to be applicable to its Real
Property except where the failure to comply would not have an E-Stamp Material
Adverse Effect. There are no pending or, to the knowledge of E-Stamp,
threatened, actions, suits, claims, legal proceedings or other proceedings based
on, and neither E-Stamp nor any E-Stamp Subsidiary has received any notice of
any complaint, order, directive, citation, notice of responsibility, notice of
potential responsibility, or information request from any Governmental Entity or
any other Person arising out of or attributable to: (i) the current or past
presence at any part of the real property owned or leased by E-Stamp or any E-
Stamp Subsidiary (the "E-Stamp Real Property") of any Hazardous Material; (ii)
---------------------
the off-site disposal of any Hazardous Material originating on or from the E-
Stamp Real Property; or (iii) any violation of Environmental Laws at any part of
the E-Stamp Real Property or otherwise arising from E-Stamp's or any E-Stamp
Subsidiary's activities involving any Hazardous Material, which, individually or
in the aggregate, would have an E-Stamp Material Adverse Effect. No Hazardous
Materials are present in, on, or under (or, to the knowledge of E-Stamp, in the
vicinity of) any properties owned, leased or used at any time (including both
land and improvements thereon) by E-Stamp or any E-Stamp Subsidiary so as to
give rise to any material liability or corrective or remedial obligation of E-
Stamp or any E-Stamp Subsidiary under any Environmental Laws. E-Stamp has
provided to Learn2 correct and complete copies of all reports, studies and other
documents relating to any of the foregoing.
SECTION 4.14 Contracts; No Default.
Except as set forth in Section 4.14 of the E-Stamp Disclosure Letter, each
Contract listed in the exhibit index to any of E-Stamp SEC Filings
(collectively, the "E-Stamp Contracts") is in full force and effect, constitutes
-----------------
a valid and binding obligation of and is legally enforceable against E-Stamp in
accordance with its terms and, to the knowledge of E-Stamp, is a valid, binding
and enforceable obligation of the other parties thereto, except as such
enforceability may be subject to the effects of any applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar Laws
affecting creditors' rights generally or subject to the effects of general
equitable principles (whether considered in a proceeding in equity or at law).
There has not been (A) any failure by E-Stamp or, to the knowledge of E-Stamp,
any other party to an E-Stamp Contract to comply with all material provisions
thereof which default or failure to perform would have an E-Stamp Material
Adverse Effect or (B) any default by E-Stamp or, to the knowledge of E-Stamp,
any other party under an E-Stamp Contract, which default or failure to perform
would have an E-Stamp Material Adverse Effect. Neither E-Stamp nor any E-Stamp
Subsidiary is a guarantor or otherwise liable for any liability or obligation
(including indebtedness) of any other Person other than any E-Stamp Subsidiary.
SECTION 4.15 Labor Relations.
Except as set forth in Section 4.15 of the E-Stamp Disclosure Letter, there are
no collective bargaining or other labor union Agreements to which E-Stamp or any
E-Stamp Subsidiary is a party. There are, and for the past two (2) years have
been, no strikes, work stoppages, union organization efforts or lawsuits (other
than grievance proceedings) pending or, to the knowledge of E-Stamp, threatened
between E-Stamp or any E-Stamp Subsidiary and (a) any current or
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former employees of E-Stamp or any E-Stamp Subsidiary except where such activity
or lawsuits would not have an E-Stamp Material Adverse Effect or (b) any union
or other collective bargaining unit representing such employees. E-Stamp and
each E-Stamp Subsidiary have complied and are in compliance with all Laws
relating to employment or the workplace, including, without limitation, Laws
relating to wages, hours, collective bargaining, safety and health, work
authorization, equal employment opportunity, immigration, withholding,
unemployment compensation, worker's compensation, employee privacy and right to
know, except where the failure so to comply would not have an E-Stamp Material
Adverse Effect.
SECTION 4.16 Pension and Benefit Plans.
(a) Section 4.16 of the E-Stamp Disclosure Letter sets forth a correct and
complete list of all the material employee benefit plans, agreements,
commitments, practices or arrangements of any type providing any employee
benefits (including, but not limited to, plans described in Section 3(3) of
ERISA) currently maintained, ever maintained, sponsored by, contributed to, or
required to be contributed to by E-Stamp or any E-Stamp Subsidiary, or for the
benefit of any employee, former employee, consultant or independent contractor
(collectively, the "E-Stamp Benefit Plans").
---------------------
(b) With respect to each E-Stamp Benefit Plan, E-Stamp has made available
to E-Stamp true and complete copies of: (i) any written plan texts and
agreements; (ii) the summary plan description currently in effect and all
material modifications thereto, if any; (iii) the three most recent annual
return in the federal Form 5500 series, if applicable; (iv) the most recent
annual and periodic accounting of plan assets, if applicable; (v) the most
recent determination opinion, notification and/or advisory letter, if any,
received from the United States Internal Revenue Service; and (vi) the most
recent actuarial valuation, if applicable.
(c) With respect to each E-Stamp Benefit Plan: (ii) each E-Stamp Benefit
Plan intended to qualify under Section 401(a) of the Code and each trust
intended to qualify under Section 501(a) of the Code has either received a
favorable determination, opinion, notification and/or advisory letter from the
IRS with respect to each such E-Stamp Benefit Plan as to its qualified status
under the Code, including all amendments to the Code effected by the Tax Reform
Act of 1986 and subsequent legislation, or has remaining a period of time under
applicable Treasury regulations or IRS pronouncements in which to apply for such
a letter and make any amendments necessary to obtain a favorable determination
as to the qualified status of each such Benefit Plan; (i) if intended to qualify
under Section 401(a) of the Code, such E-Stamp Benefit Plan so qualifies, and
its trust, if applicable, is exempt from taxation under Section 501(a) of the
Code; (ii) such E-Stamp Benefit Plan has been administered and enforced in all
material respects in accordance with its terms and all applicable Laws; (iii) no
breach of fiduciary duty or prohibited transaction (within the meaning of
Section 4975 of the Code or Section 406 of ERISA) has occurred with respect to
which E-Stamp, any E-Stamp Subsidiary or such E-Stamp Benefit Plan may be liable
or otherwise damaged; (iv) no litigation or claim (other than routine claims for
benefits or overpayments of benefits), and no governmental administrative
proceeding, audit or investigation, is pending or, to the knowledge of E-Stamp,
threatened; (v) all contributions, premiums, and other payment obligations and
all liabilities for accrued but unfunded obligations for benefits (using
actuarial assumptions which are reasonable, both individually and in the
aggregate) have been accrued on the E-Stamp Financial Statements
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in accordance with GAAP (or thereafter on the financial records of E-Stamp) and
all contributions required to be made to such E-Stamp Benefit Plan by the terms
of such E-Stamp Benefit Plan or under applicable Law have been made on a timely
basis; (vi) E-Stamp or each E-Stamp Subsidiary, as the case may be, has
expressly reserved in itself the right to amend, modify or terminate such E-
Stamp Benefit Plan, or any portion of it, without material liability to itself;
and (vii) no such E-Stamp Benefit Plan requires E-Stamp or any E-Stamp
Subsidiary to continue to employ any employee, director or consultant.
(d) No E-Stamp Benefit Plan is a "multiemployer plan" (within the meaning of
Section 3(37) or Section 4001(a)(3) of ERISA) or a "multiple employer plan"
(within the meaning of Section 4064 of ERISA or Section 413(c) of the Code).
Neither E-Stamp nor any E-Stamp Subsidiaries has a current or potential
liability or obligation, whether direct or indirect, with respect to any
multiemployer plan or multiple employer plan. Neither E-Stamp nor any Affiliate
has any material liabilities for an employee benefit plan other than a Benefit
Plan. Neither E-Stamp nor any Affiliate has ever maintained, sponsored,
participated in, or contributed to, any pension plan which is subject to Title
IV or ERISA or Section 412 of the Code.
(e) In the case of each E-Stamp Benefit Plan which provides welfare benefits
of the type described in Section 3(1) of ERISA: (i) the reserves therefor on
the E-Stamp Financial Statements are adequate to discharge when due the accrued,
unfunded liabilities for medical or death benefits with respect to current or
former employees, directors or consultants of E-Stamp or any E-Stamp Subsidiary
beyond their termination of employment (in addition to coverage mandated by
Sections 601-608 of ERISA and 4980B(f) of the Code); and (ii) each such plan
which provides medical or death benefits with respect to current or former
employees of E-Stamp or any E-Stamp Subsidiary has been administered in all
material respects in compliance with Sections 601-608 of ERISA and 4980B(f) of
the Code.
(f) Except as set forth in Section 4.16 of the E-Stamp Disclosure Letter, the
consummation of the transactions contemplated by this Agreement will not after
the Effective Time entitle any individual to severance pay or accelerate the
time of payment or vesting (other than as a result of partial or full
termination of a tax-qualified plan), or increase the amount, of compensation
due to any individual, and no payment made or contemplated under any E-Stamp
Benefit Plan constitutes an "excess parachute payment" within the meaning of
Section 280G of the Code.
SECTION 4.17 Taxes and Tax Matters.
(a) E-Stamp and each E-Stamp Subsidiary have paid, or reserved in accordance
with GAAP, all Taxes due and payable by any of them for or with respect to all
periods up to and including the date hereof, except where such failure to pay or
reserve would not have an E-Stamp Material Adverse Effect.
(b) There are no Liens on any of the Assets of E-Stamp or any E-Stamp
Subsidiary that arose in connection with any failure (or alleged failure) to pay
any Tax except for Liens reflected on the E-Stamp Financial Statements,
Permitted Liens or where such failure would not have an E-Stamp Material Adverse
Effect.
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(c) E-Stamp and each E-Stamp Subsidiary have filed, or caused to be filed, on
a timely basis all material E-Stamp Tax Returns that it was required to file.
E-Stamp and each E-Stamp Subsidiary have withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor or stockholder, except where such failure to
withhold or pay would not have an E-Stamp Material Adverse Effect.
(d) There is no dispute or claim concerning any liability for Taxes of E-Stamp
or any E-Stamp Subsidiary either (i) claimed or raised by any Governmental
Entity in writing or (ii) as to which E-Stamp has knowledge based upon personal
contact with any agent of such Governmental Entity. Section 4.17 of the E-Stamp
Disclosure Letter indicates those E-Stamp Tax Returns that have been audited,
and indicates those E-Stamp Tax Returns that currently are the subject of an
audit.
(e) The unpaid Taxes of E-Stamp and any E-Stamp Subsidiary (i) did not, as of
the date of the most recent E-Stamp Financial Statements prior to the date
hereof, exceed the reserve for Tax liabilities (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) and (ii) do not exceed that reserve as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of E-
Stamp or any E-Stamp Subsidiary in filing the E-Stamp Tax Returns.
(f) None of E-Stamp or any E-Stamp Subsidiary has filed a consent under
Section 341(f) of the Code, concerning collapsible corporations. None of E-
Stamp or any E-Stamp Subsidiary has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. None of E-
Stamp or any E-Stamp Subsidiary is a party to any Tax allocation or sharing
agreement. None of E-Stamp or any E-Stamp Subsidiary (A) has been a member of
an "affiliated group," as defined in Section 1504(a) of the Code, filing a
consolidated federal income Tax Return (other than a group the common parent of
which is or was E-Stamp) or (B) has any liability for the Taxes of any Person
(other than any member of the group the common parent of which is or was E-
Stamp) under Treas. Reg. Section 1.1502-6 (or any similar provision of state,
local, or foreign Law), as a transferee or successor, by contract or otherwise.
(g) Neither E-Stamp nor any E-Stamp Subsidiary has constituted a
"distributing corporation" or a "controlled corporation" in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (x) in the
two years prior to the date of this Agreement or (y) in a distribution which
could otherwise constitute part of a "plan" or "Series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Merger.
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SECTION 4.18 Insurance.
Except as set forth in Section 4.18 of the E-Stamp Disclosure Letter, E-Stamp
and the E-Stamp Subsidiaries maintain policies of fire and casualty, liability
and other forms of insurance in such amounts, with such deductibles and retained
amounts, and against such risks and losses, as are, in the reasonable judgment
of E-Stamp, reasonable for the conduct of their businesses and their Assets.
SECTION 4.19 Arrangements With Related Parties.
Except as set forth in Section 4.19 of the E-Stamp Disclosure Letter, no present
or former officer, director, stockholder or other Person known to E-Stamp to be
an Affiliate of E-Stamp or any E-Stamp Subsidiary, nor any Person known to E-
Stamp to be an Affiliate of such Person, is currently a party to any transaction
or agreement with E-Stamp or any E-Stamp Subsidiary, including any Contract
providing for any loans, advances, the employment of, furnishing of services by,
rental of its Assets from or to, or otherwise requiring payments to, any such
Person.
SECTION 4.20 Board Recommendation.
(a) E-Stamp's Board of Directors, at a meeting duly called and held, has (i)
unanimously determined that each of this Agreement and the Merger are advisable
and in the best interests of E-Stamp Stockholders, and (ii) resolved to
recommend that the E-Stamp Stockholders approve and adopt this Agreement and
none of the aforesaid actions by E-Stamp's Board of Directors has been amended,
rescinded or modified.
(b) The action taken by E-Stamp's Board of Directors constitutes approval of
the Merger and the related transactions by E-Stamp's Board of Directors under
(a) the provisions of Section 203 of Delaware Law and (b) the certificate of
incorporation of E-Stamp, as in effect as of the date hereof and the Effective
Date, such that the affirmative vote of the majority of the outstanding E-Stamp
Shares is the only vote of the holders of any class or series of E-Stamp's
capital stock necessary to approve the Merger and adopt this Agreement. No
other vote of any class or series of E-Stamp's capital stock is necessary to
approve any of the transactions contemplated hereunder, other than the Merger.
SECTION 4.21 Broker's Fees.
Except as set forth in Section 4.21 of E-Stamp Disclosure Letter, neither E-
Stamp nor any E-Stamp Subsidiary has any liability or obligation to pay any fees
or commissions to any broker, finder or similar agent in connection with the
transactions contemplated by this Agreement.
ARTICLE V.
COVENANTS
SECTION 5.01 Conduct of the Business of Learn2 Until Effective Time.
Learn2 hereby covenants and agrees that, from the date of this Agreement until
the Effective Time, unless otherwise expressly required by this Agreement or
consented to in writing by X-
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Xxxxx, Xxxxx0 will, and will cause each Learn2 Subsidiary to, carry on their
respective businesses only in the Ordinary Course of Business, use reasonable
commercial efforts to preserve intact their business organizations and Assets,
maintain their rights and franchises, retain the services of their officers and
employees and maintain their relationships with customers, suppliers and others
having business dealings with them, and use reasonable commercial efforts to
keep in full force and effect liability insurance and bonds comparable in amount
and scope of coverage to that currently maintained. Except as set forth on
Section 5.01 of Learn2 Disclosure Letter, consented to in writing by E-Stamp or
otherwise expressly required by this Agreement, without limiting the generality
of the foregoing, neither Learn2 nor any Learn2 Subsidiary will:
(a) (i) increase in any manner the compensation or fringe benefits of, or
pay any bonus to, any employee, officer or director other than in the Ordinary
Course of Business; (ii) establish, adopt, enter into or amend any Benefit Plan
or other arrangement, except as may be required to comply with applicable Law;
or (ii) promote or fire any employee, director or officer, other than in the
Ordinary Course of Business;
(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock;
(c) (i) redeem, purchase or otherwise acquire any shares of capital stock
of Learn2 or any Learn2 Subsidiary or any securities or obligations convertible
into or exchangeable for any shares of capital stock of Learn2 or any Learn2
Subsidiary, or any options, warrants or conversion or other rights to acquire
any shares of capital stock of Learn2 or any Learn2 Subsidiary or any such
securities or obligations, or any other securities thereof; (ii) effect any
reorganization, recapitalization, merger or share exchange; or (iii) split,
combine or reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock;
(d) issue, deliver, award, grant or sell, or authorize the issuance,
delivery, award, grant or sale (including the grant of any limitations in voting
rights or other Liens) of, any shares of any class of its capital stock
(including shares held in treasury but excluding shares issuable upon the
exercise of options or warrants outstanding on the date hereof in accordance
with their terms as of the date hereof), any securities convertible into or
exercisable or exchangeable for any such shares, or any rights, options or
warrants to acquire, any such shares, or amend or otherwise modify the terms of
any such rights, options or warrants the effect of which shall be to make such
terms more favorable to the holders thereof;
(e) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the Assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof (other than purchases in the Ordinary
Course of Business);
(f) sell, lease, exchange, mortgage, pledge, transfer or otherwise subject
to any Lien or dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise subject to any Lien or dispose of, any of its Assets,
except in the Ordinary Course of Business;
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(g) propose or adopt any amendments to its certificate of incorporation,
by-laws or other comparable charter or organizational documents;
(h) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of Learn2 or any Learn2 Subsidiary,
guarantee any debt securities of another Person, enter into any "keep well" or
other agreement to maintain any financial statement condition of another Person
or enter into any agreement having the economic effect of any of the foregoing,
except for borrowings not exceeding $2 million in the aggregate incurred in the
Ordinary Course of Business;
(i) make or change any material Tax election or any change in any method of
accounting or accounting practice or policy other than those required by
generally accepted accounting principles;
(j) take any action or fail to take any action other than in the Ordinary
Course of Business that would result in a Learn2 Material Adverse Effect or that
would adversely affect the ability of Learn2 or any Learn2 Subsidiary prior to
the Effective Time to obtain consents of third parties or approvals of
Government Entities required to consummate the transactions contemplated in this
Agreement; or
(k) authorize, or commit or agree to do any of the foregoing.
SECTION 5.02 Conduct of the Business of E-Stamp Until Effective Time
E-Stamp hereby covenants and agrees that, from the date of this Agreement until
the Effective Time, unless otherwise required contemplated by this Agreement or
consented to in writing by Learn2, E-Stamp will, and will cause each E-Stamp
Subsidiary to, carry on their respective businesses only in the Ordinary Course
of Business, use reasonable commercial efforts to preserve intact their business
organizations and Assets, maintain their rights and franchises, retain the
services of their officers and employees and maintain their relationships with
customers, suppliers and others having business dealings with them, and use
reasonable commercial efforts to keep in full force and effect liability
insurance and bonds comparable in amount and scope of coverage to that currently
maintained. Except as set forth on Section 5.02 of the E-Stamp Disclosure
Letter, consented to in writing by Learn2 or otherwise expressly required by
this Agreement, without limiting the generality of the foregoing, neither E-
Stamp nor any E-Stamp Subsidiary will:
(a) (i) increase in any manner the compensation or fringe benefits of, or
pay any bonus to, any employee, officer or director other than in the Ordinary
Course of Business; (ii) establish, adopt, enter into or amend any Benefit Plan
or other arrangement, except as may be required to comply with applicable Law;
or (ii) promote or fire any employee, director or officer, other than in the
Ordinary Course of Business;
(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock;
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(c) (i) redeem, purchase or otherwise acquire any shares of capital stock
of E-Stamp or any E-Stamp Subsidiary or any securities or obligations
convertible into or exchangeable for any shares of capital stock of E-Stamp or
any E-Stamp Subsidiary, or any options, warrants or conversion or other rights
to acquire any shares of capital stock of E-Stamp or any E-Stamp Subsidiary or
any such securities or obligations, or any other securities thereof; (ii) effect
any reorganization, recapitalization, merger or share exchange; or (iii) split,
combine or reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock;
(d) issue, deliver, award, grant or sell, or authorize the issuance,
delivery, award, grant or sale (including the grant of any limitations in voting
rights or other Liens) of, any shares of any class of its capital stock
(including shares held in treasury but excluding shares issuable upon the
exercise of options or warrants outstanding on the date hereof in accordance
with their terms as of the date hereof), any securities convertible into or
exercisable or exchangeable for any such shares, or any rights, options or
warrants to acquire, any such shares, or amend or otherwise modify the terms of
any such rights, options or warrants the effect of which shall be to make such
terms more favorable to the holders thereof;
(e) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the Assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof (other than purchases in the Ordinary
Course of Business);
(f) sell, lease, exchange, mortgage, pledge, transfer or otherwise subject
to any Lien or dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise subject to any Lien or dispose of, any of its Assets, for
materially less than the value of each such Asset as set forth in Section 4.07
of the E-Stamp Disclosure Letter (an "Asset Disposition");
-----------------
(g) propose or adopt any amendments to its certificate of incorporation,
by-laws or other comparable charter or organizational documents;
(h) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of E-Stamp or any E-Stamp
Subsidiary, guarantee any debt securities of another Person, enter into any
"keep well" or other agreement to maintain any financial statement condition of
another Person or enter into any agreement having the economic effect of any of
the foregoing, except for borrowings not exceeding $2 million in the aggregate
incurred in the Ordinary Course of Business;
(i) make or change any material Tax election or any change in any method of
accounting or accounting practice or policy other than those required by
generally accepted accounting principles;
(j) take any action or fail to take any action other than in the Ordinary
Course of Business that would result in an E-Stamp Material Adverse Effect or
that would adversely affect the ability of E-Stamp or any E-Stamp Subsidiary
prior to the Effective Time to obtain consents
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of third parties or approvals of Government Entities required to consummate the
transactions contemplated in this Agreement; or
(k) authorize, or commit or agree to do any of the foregoing.
SECTION 5.03 Commercially Reasonable Efforts to Satisfy Conditions.
(a) Prior to the Closing, upon the terms and subject to the conditions of
this Agreement, each of E-Stamp and Learn2 agree to use their respective
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable (subject
to any applicable laws) to consummate and make effective the Merger and related
transactions as promptly as practicable including, but not limited to, (i) the
preparation and filing of all forms, registrations and notices required to be
filed to consummate the Merger and related transactions and the taking of such
actions as are necessary to obtain any requisite approvals, consents, orders,
exemptions or waivers by any third party or Governmental Entity, and (ii) the
satisfaction of the other parties' conditions to Closing. In addition, no party
hereto shall take any action after the date hereof that would reasonably be
expected to materially delay the obtaining of, or result in not obtaining, any
permission, approval or consent from any Governmental Entity necessary to be
obtained prior to Closing.
(b) Prior to the Closing, each party shall promptly consult with the other
parties hereto with respect to, provide any necessary information with respect
to, and provide the other parties (or their respective counsel) with copies of,
all filings made by such party with any Governmental Entity or another
information supplied by such party to a Governmental Entity in connection with
this Agreement, the Merger and the related transactions. Each party hereto
shall promptly inform the other of any communication from any Governmental
Entity regarding any of the transactions contemplated herein. If any party
hereto or Affiliate thereof receives a request for additional information or
documentary material from any such Governmental Entity with respect to any of
transactions contemplated herein, then such party shall endeavor in good faith
to make, or cause to be made, as soon as reasonably practicable and after
consultation with the other parties, an appropriate response in compliance with
such request.
SECTION 5.04 No Solicitation by Learn2 of Competing Transactions.
(a) Neither Learn2 nor any Learn2 Subsidiary or Affiliate of Learn2 shall
(and Learn2 shall cause the officers, directors, employees, representatives and
agents of Learn2, each Learn2 Subsidiary and each Affiliate of Learn2,
including, but not limited to, investment bankers, attorneys and accountants,
not to), (i) directly or indirectly, encourage, solicit or facilitate any
inquiries or proposals that constitute, or could reasonably be expected to lead
to, an Acquisition Proposal relating to Learn2 or (ii) participate in or
initiate discussions or negotiations concerning, or provide any information to,
any Person or group (other than E-Stamp, any of its Affiliates or
representatives) relating to, an Acquisition Proposal relating to Learn2;
provided, however, that if, at any time prior to the Effective Time, Learn2's
Board of Directors determines in good faith, after consultation with counsel,
that it is necessary to do so in order to comply with its fiduciary duties to
Learn2 Stockholders under applicable Law, Learn2 may, in response to a Superior
Proposal relating to Learn2 that was not solicited by it or that did not
otherwise result from a breach of this Section 5.04(a), and subject to providing
prior written notice of its decision
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to take such action to E-Stamp and compliance with Section 5.04(c), (x) furnish
information with respect to Learn2 and any Learn2 Subsidiary to any Person
making a Superior Proposal relating to Learn2 pursuant to a confidentiality
agreement containing terms no less favorable to Learn2 than the Confidentiality
Agreement and (y) participate in discussions or negotiations regarding such
Superior Proposal.
(b) Except as set forth below in this subsection (b), neither Learn2's
Board of Directors nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to E-Stamp, the approval or
recommendation by Learn2's Board of Directors or any committee thereof of this
Agreement or the Merger, (ii) approve or recommend or propose to approve or
recommend, any Acquisition Proposal relating to Learn2 or (iii) enter into a
letter of intent, agreement in principle, acquisition agreement or any other
agreement with respect to any Acquisition Proposal. Notwithstanding the
foregoing, prior to the Effective Time, in response to a Superior Proposal
relating to Learn2 that was not solicited by Learn2 and that did not otherwise
result from a breach of Section 5.04(a), Learn2's Board of Directors may
(subject to this sentence and the provisions of Section 7.01 and Section 7.03)
take any action specified in subparagraphs (i), (ii) or (iii) of this Section
5.04(b) but only after the second Business Day following E-Stamp's receipt of
written notice from Learn2 advising E-Stamp that Learn2's Board of Directors has
received a Superior Proposal relating to Learn2 that it intends to accept,
specifying the material terms and conditions of such Superior Proposal, and
identifying the Person making such Superior Proposal.
(c) Learn2 agrees that as of the date hereof, it, Learn2 Subsidiaries and
Affiliates (and their respective officers, directors, employees, representatives
and agents) shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Person (other than E-Stamp or
its representatives) conducted heretofore with respect to any Acquisition
Proposal. Learn2 shall notify E-Stamp promptly (and in any event within one
day) after receipt by Learn2 (or its advisors) of any Acquisition Proposal
relating to Learn2 or any request for nonpublic information in connection with
an Acquisition Proposal relating to Learn2 or for access to the properties,
books or records of Learn2 or any Learn2 Subsidiary by any Person that informs
Learn2 that it is considering making, or has made, an Acquisition Proposal
relating to Learn2. Such notice to E-Stamp shall be made orally and in writing
and shall indicate in reasonable detail the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact. Learn2 shall keep E-
Stamp informed of all material developments and the status of any Acquisition
Proposal relating to Learn2, any negotiations or discussions with respect to any
such Acquisition Proposal or any request for nonpublic information in connection
with any Acquisition Proposal relating to Learn2 or for access to the
properties, books or records of Learn2 or any Learn2 Subsidiary by any Person
that is considering making, or has made, an Acquisition Proposal relating to
Learn2.
(d) Nothing contained in this Section 5.04 or any other provision hereof
shall prohibit Learn2 or Learn2's Board of Directors from (i) withdrawing or
modifying its recommendation of this Agreement or the Merger, (ii) taking and
disclosing to Learn2 Stockholders a position with respect to a tender or
exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act, or (iii) making such disclosure to Learn2 Stockholders
as, in the good faith judgment of Learn2's Board of Directors, if it determines
in good faith, after consultation with outside legal counsel, that the failure
to withdraw or modify its
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recommendation would be inconsistent with its fiduciary duties, or to take a
position permitted by Rule 14e-2(a)(2) or (3) under the Exchange Act in order to
comply with Rule 14d-9 or Rule 14e-2 under the Exchange Act (provided that any
such withdrawal or modification shall not change the approval of the Board of
Directors for purposes of causing any Section 203 of the Delaware General
Corporation Law or any other takeover statute to be inapplicable to the
transactions contemplated by this Agreement), but only after the second Business
Day following E-Stamp's receipt of written notice from Learn2 of its intent to
take any action permitted by this sentence, with the intent of permitting E-
Stamp to agree to a modification of the terms and conditions of this Agreement
so that the transactions contemplated hereby may be effected.
SECTION 5.05 No Solicitation by E-Stamp of Competing Transactions.
(a) Neither E-Stamp nor any E-Stamp Subsidiary or Affiliate of E-Stamp
shall (and E-Stamp shall cause the officers, directors, employees,
representatives and agents of E-Stamp, each E-Stamp Subsidiary and each
Affiliate of E-Stamp, including, but not limited to, investment bankers,
attorneys and accountants, not to), (i) directly or indirectly, encourage,
solicit or facilitate any inquiries or proposals that constitute, or could
reasonably be expected to lead to, an Acquisition Proposal relating to E-Stamp
or (ii) participate in or initiate discussions or negotiations concerning, or
provide any information to, any Person or group (other than Learn2, any of its
Affiliates or representatives) relating to, an Acquisition Proposal relating to
E-Stamp; provided, however, that if, at any time prior to the Effective Time, E-
Stamp's Board of Directors determines in good faith, after consultation with
counsel, that it is necessary to do so in order to comply with its fiduciary
duties to E-Stamp Stockholders under applicable Law, E-Stamp may, in response to
a Superior Proposal relating to E-Stamp that was not solicited by it or that did
not otherwise result from a breach of this Section 5.05(a), and subject to
providing prior written notice of its decision to take such action to Learn2 and
compliance with Section 5.05(c), (x) furnish information with respect to E-Stamp
and any E-Stamp Subsidiary to any Person making a Superior Proposal relating to
E-Stamp pursuant to a confidentiality agreement containing terms no less
favorable to E-Stamp than the Confidentiality Agreement and (y) participate in
discussions or negotiations regarding such Superior Proposal.
(b) Except as set forth below in this subsection (b), neither E-Stamp's
Board of Directors nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Learn2, the approval or
recommendation by E-Stamp's Board of Directors or any committee thereof of this
Agreement or the Merger, (ii) approve or recommend or propose to approve or
recommend, any Acquisition Proposal relating to E-Stamp or (iii) enter into a
letter of intent, agreement in principle, acquisition agreement or any other
agreement with respect to any Acquisition Proposal. Notwithstanding the
foregoing, prior to the Effective Time, in response to a Superior Proposal
relating to E-Stamp that was not solicited by E-Stamp and that did not otherwise
result from a breach of Section 5.05(a), E-Stamp's Board of Directors may
(subject to this sentence and the provisions of Section 7.01 and Section 7.03)
take any action specified in subparagraphs (i), (ii) or (iii) of this Section
5.05(b) but only after the second Business Day following Learn2's receipt of
written notice from E-Stamp advising Learn2 that E-Stamp's Board of Directors
has received a Superior Proposal relating to E-Stamp that it intends to accept,
specifying the material terms and conditions of such Superior Proposal, and
identifying the Person making such Superior Proposal.
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(c) E-Stamp agrees that as of the date hereof, it, E-Stamp Subsidiaries and
Affiliates (and their respective officers, directors, employees, representatives
and agents) shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Person (other than Learn2 or
its representatives) conducted heretofore with respect to any Acquisition
Proposal. E-Stamp shall notify Learn2 promptly (and in any event within one
day) after receipt by E-Stamp (or its advisors) of any Acquisition Proposal
relating to E-Stamp or any request for nonpublic information in connection with
an Acquisition Proposal relating to E-Stamp or for access to the properties,
books or records of E-Stamp or any E-Stamp Subsidiary by any Person that informs
E-Stamp that it is considering making, or has made, an Acquisition Proposal
relating to E-Stamp. Such notice to Learn2 shall be made orally and in writing
and shall indicate in reasonable detail the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact. E-Stamp shall keep
Learn2 informed of all material developments and the status of any Acquisition
Proposal relating to E-Stamp, any negotiations or discussions with respect to
any such Acquisition Proposal or any request for nonpublic information in
connection with any Acquisition Proposal relating to E-Stamp or for access to
the properties, books or records of E-Stamp or any E-Stamp Subsidiary by any
Person that is considering making, or has made, an Acquisition Proposal relating
to E-Stamp.
(d) Nothing contained in this Section 5.05 or any other provision hereof
shall prohibit E-Stamp or E-Stamp's Board of Directors from (i) withdrawing or
modifying its recommendation of this Agreement or the Merger, (ii) taking and
disclosing to E-Stamp Stockholders a position with respect to a tender or
exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act, or (iii) making such disclosure to E-Stamp Stockholders
as, in the good faith judgment of E-Stamp's Board of Directors, if it determines
in good faith, after consultation with outside legal counsel, that the failure
to withdraw or modify its recommendation would be inconsistent with its
fiduciary duties, or to take a position permitted by Rule 14e-2(a)(2) or (3)
under the Exchange Act in order to comply with Rule 14d-9 or Rule 14e-2 under
the Exchange Act (provided that any such withdrawal or modification shall not
change the approval of the Board of Directors for purposes of causing any
Section 203 of the Delaware General Corporation Law or any other takeover
statute to be inapplicable to the transactions contemplated by this Agreement),
but only after the second Business Day following Learn2's receipt of written
notice from E-Stamp of its intent to take any action permitted by this sentence,
with the intent of permitting Learn2 to agree to a modification of the terms and
conditions of this Agreement so that the transactions contemplated hereby may be
effected.
SECTION 5.06 Registration Statement; Proxy Statement
(a) E-Stamp and Learn2 agree that as promptly as practicable following the
date of this Agreement they shall jointly prepare and file a registration
statement on Form S-4 (the "Registration Statement") including a joint proxy
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statement/prospectus (the "Proxy Statement") with the SEC. Each Party shall use
---------------
commercially reasonable efforts to cause the Proxy Statement to be mailed to its
stockholders at the earliest practicable date following such filing. In
connection with the foregoing, Learn2 shall furnish to E-Stamp (and be
responsible for) all information related to it as is required to be included in
the Registration Statement. If at any time prior to the Effective Time any
event with respect to Learn2 or any Learn2 Subsidiary or with respect to other
information supplied by Learn2 for inclusion in the Registration Statement shall
occur which is required to be described in an amendment of, or a supplement to,
the
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Registration Statement, Learn2 shall provide written notice thereof to E-Stamp
and such event shall be so described, and such amendment or supplement shall be
promptly filed with the SEC and, as required by law, disseminated. If, at any
time prior to the Effective Time any event with respect to E-Stamp or any of the
E-Stamp Subsidiary or with respect to other information supplied by E-Stamp for
inclusion in the Registration Statement shall occur, which is required to be
described in an amendment of, or a supplement to, the Registration Statement, E-
Stamp shall provide written notice thereof to E-Stamp, such event shall be so
described, and such amendment or supplement shall be promptly filed with the SEC
and, as required by law, disseminated. No filing of, or amendment or supplement
to, the Registration Statement will be made by either E-Stamp or Learn2 without
the other Party's prior consent (which shall not be unreasonably withheld,
delayed or conditioned) and without providing the other party the opportunity to
review and comment thereon. E-Stamp shall advise Learn2, promptly after it
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of E-Stamp Shares issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional information.
SECTION 5.07 Stockholders Meetings.
(a) As soon as practicable following the effectiveness of the Registration
Statement, Learn2, acting through Learn2's Board of Directors, shall, in
accordance with applicable Law:
(i) duly call, give notice of, convene and hold a special meeting of
the Learn2 Stockholders (the "Learn2 Stockholders' Meeting") for the purpose of
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considering and taking action upon the approval of (x) the Merger and the
adoption of this Agreement, and (y) the issuance of the RGC Shares (as defined
in Section 5.16) to RGC International Investors, LDC ("RGC");
---
(ii) use its reasonable efforts to solicit from Learn2 Stockholders
proxies in favor of the Merger and take all other action necessary to secure any
vote or consent of Learn2 Stockholders required by the certificate of
incorporation of Learn2 and Delaware Law, or other applicable Law, to effect the
Merger and to approve the issuance of the RGC Shares.
E-Stamp shall vote, or cause to be voted, in favor of the approval of the Merger
and the approval and adoption of this Agreement: all Learn2 Shares owned by E-
Stamp or any E-Stamp Subsidiary. Learn2's obligation to call, give notice of,
convene and hold the Learn2 Stockholders' Meeting in accordance with this
Section 5.07(a) shall not be limited or otherwise affected by the commencement,
disclosure, announcement or submission to Learn2 of any Acquisition Proposal,
Learn2's withdrawal or modification, or proposed withdrawal or modification, of
its position with respect to the Merger, or approval or recommendation, or
proposed approval or recommendation of, any Acquisition Proposal relating to
Learn2, or entering into any agreement with respect to any Acquisition Proposal
relating to Learn2.
(b) As soon as practicable following the effectiveness of the Registration
Statement, E-Stamp, acting through E-Stamp's Board of Directors, shall, in
accordance with applicable Law:
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(i) duly call, give notice of, convene and hold a special meeting of
the E-Stamp Stockholders (the "E-Stamp Stockholders' Meeting") as promptly as
-----------------------------
practicable following the date hereof for the purpose of considering and taking
action upon the approval of (x) the Merger and the adoption of this Agreement,
(y) the election of directors of E-Stamp effective upon the Effective Time as
contemplated by Section 1.06(b) above, and (z) the change of E-Stamp's corporate
name to "Xxxxx0.xxx, Inc." (the "Name Change"); and
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(ii) use its reasonable efforts to solicit from E-Stamp Stockholders
proxies in favor of the Merger and take all other action necessary to secure any
vote or consent of E-Stamp Stockholders required by the certificate of
incorporation of E-Stamp and Delaware Law, or other applicable Law, to effect
the Merger and to approve the Name Change.
Learn2 shall vote, or cause to be voted, in favor of the approval of the Merger
and the approval and adoption of this Agreement: all E-Stamp Shares owned by
Learn2 or any Learn2 Subsidiary. E-Stamp's obligation to call, give notice of,
convene and hold the E-Stamp Stockholders' Meeting in accordance with this
Section 5.07(b) shall not be limited or otherwise affected by the commencement,
disclosure, announcement or submission to E-Stamp of any Acquisition Proposal,
E-Stamp's withdrawal or modification, or proposed withdrawal or modification, of
its position with respect to the Merger, or approval or recommendation, or
proposed approval or recommendation of, any Acquisition Proposal relating to E-
Stamp, or entering into any agreement with respect to any Acquisition Proposal
relating to E-Stamp.
SECTION 5.08 Quarterly Plan.
(a) E-Stamp shall promptly notify, and consult with, Learn2 in the event
that either E-Stamp's actual expenditures, or the valuation of E-Stamp's Assets,
vary, or are reasonably expected to vary, in any material amount, from E-Stamp's
expected expenditures or valuations set forth in Section 4.07 of the E-Stamp
Disclosure Letter. E-Stamp shall not make any expenditures other than those set
forth in its Quarterly Plan as set forth in Section 4.07 of the E-Stamp
Disclosure Letter, or an Asset Disposition, without Learn2's prior written
approval (which shall not be unreasonably withheld or delayed).
(b) No later than three (3) weeks following the end of each month, E-Stamp
shall provide Learn2 with its unaudited monthly financial statements and provide
all reasonably requested computations and workpapers related thereto.
SECTION 5.09 Access and Information.
For so long as this Agreement is in effect, and subject to applicable Laws, each
Party shall, and shall cause each of their respective Subsidiaries to, (a)
afford to the other Party and its officers, employees, accountants, consultants,
legal counsel and other representatives reasonable access during normal business
hours, subject to reasonable advance notice, to all of their respective
properties, Contracts, books, records and personnel and (b) furnish promptly to
the other Party (i) a copy of each Contract filed with, or received from any
Governmental Entity and (ii) all other information concerning their respective
businesses, operations, Assets, liabilities and personnel as such other Party
may reasonably request.
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SECTION 5.10 Publicity.
E-Stamp and Learn2 shall consult with each other before issuing any press
release or making any public statement with respect to this Agreement or the
Merger and shall not issue any such press release or make any such public
statement without the prior consent of the other party, which shall not be
unreasonably withheld, conditioned or delayed; provided, however, that a party
may, without the prior consent of the other party, issue such press release or
make such public statement as may upon the advice of counsel be required by law
or the rules and regulations of a national securities exchange or the Nasdaq
Stock Market if it has used all reasonable efforts to consult with the other
party prior thereto.
SECTION 5.11 Directors' and Officers' Insurance Indemnification.
(a) For six years after the Effective Time, E-Stamp shall indemnify, defend
and hold harmless each current and former officer or director of Learn2 or any
Learn2 Subsidiary against all losses, claims, damages, liabilities, costs, fees
and expenses, including reasonable fees and disbursements of counsel and
judgments, fines, losses, claims, liabilities and amounts paid in settlement
(provided that any such settlement is effected with the written consent of E-
Stamp or the Surviving Corporation, which consent shall not be unreasonably
withheld) arising out of actions or omissions occurring at or prior to the
Effective Time to the full extent required under applicable Delaware Law, the
terms of the certificate of incorporation or by-laws of Learn2, as in effect at
the date hereof; provided, that, in the event any claim or claims are asserted
or made within such six-year period, all rights to indemnification in respect of
any such claim or claims shall continue until disposition of any and all such
claims.
(b) E-Stamp or the Surviving Corporation shall maintain Learn2's existing
officers' and directors' liability insurance for a period of not less than six
years after the Effective Date; provided, that E-Stamp may substitute therefor
policies of substantially equivalent coverage and amounts containing terms no
less favorable to the former directors or officers of Learn2 to which such
insurance applies; provided, further, that in no event shall E-Stamp or the
Surviving Corporation be required to pay aggregate premiums for insurance under
this Section 5.12(b) in excess of 200% of the aggregate premiums paid by Learn2
in 2000 on an annualized basis for such purpose; and provided, further, that if
E-Stamp or the Surviving Corporation is unable to obtain the amount of insurance
required by this Section 5.12(b) for such aggregate premium, E-Stamp or the
Surviving Corporation shall obtain as much insurance as can be obtained for an
annual premium not in excess of 200% of the aggregate premiums paid by Learn2 in
2000 on an annualized basis for such purpose.
SECTION 5.12 Employee Benefit Matters.
(a) For a period of one year after the Effective Time, E-Stamp shall
maintain, or cause to be maintained, employee benefit plans and arrangements
which in the aggregate will provide retirement, health, welfare and insurance
benefits that are comparable to the retirement, health, welfare and insurance
benefits provided to those employees of Learn2 immediately prior to the
Effective Time, other than with respect to perquisites and fringe benefits not
offered to similarly situated employees of E-Stamp.
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(b) With respect to any employee benefit plan, program or policy of E-Stamp
or any Subsidiary that is made available to employees of Learn2 or Learn2
Subsidiary: (i) service with Learn2 and Learn2 Subsidiaries by any such employee
as reflected on Learn2 or Learn2 Subsidiary's records or the comparable plan
records, at the election of E-Stamp, prior to the Effective Time shall be
credited for eligibility, participation and vesting purposes under such plan,
program or policy (but not for purposes of accrual of benefits), subject to
appropriate break-in-service rules; provided, however that the applicable
insurance carrier, third party provider or the like agrees to do so; and (ii)
with respect to any welfare benefit plans to which such employee may become
eligible, E-Stamp shall cause such plans to provide for the year 2000 credit for
any co-payments or deductibles and maximum out-of-pocket payments by such
employees and waive all pre-existing condition exclusions and waiting periods,
other than limitations or waiting periods that had not been satisfied, under any
welfare benefit plans maintained by Learn2 and any Learn2 Subsidiary prior to
the Effective Time; provided, however that the applicable insurance carrier,
third party provider or the like agrees to do so. E-Stamp shall recognize
vacation days previously accrued and reserved for by Learn2 immediately prior to
the Effective Time.
(c) Effective as of the day immediately preceding the Effective Time,
Learn2 and each Learn2 Subsidiary and their Affiliates, as applicable, shall
each terminate any and all group severance, separation or salary continuation
plans, programs or arrangements, and any and all plans intended to include a
Code Section 401(k) arrangement (unless E-Stamp provides written notice to
Learn2 that such 401(k) plans shall not be terminated) (collectively, "Learn2
------
Plans"). Unless E-Stamp provides such written notice to Learn2, no later than
-----
three (3) business days prior to the Effective Time, Learn2 shall provide E-
Stamp with evidence that such Learn2 Plans have been terminated (effective as of
the day immediately preceding the Effective Time) pursuant to resolutions of
Learn2's Board of Directors and/or Learn2 Subsidiary's Board of Directors, as
applicable. The form and substance of such resolutions shall be subject to
review and approval of E-Stamp. Learn2 and Learn2 Subsidiary also shall take
such other actions in furtherance of terminating each such Learn2 Plan as E-
Stamp may reasonably require.
(d) Notwithstanding any disclosure set forth in the Learn2 Disclosure
Letter, Learn2 hereby covenants and agrees that, from the date of this Agreement
until the Effective Time, unless otherwise consented to in writing by E-Stamp,
Learn2 shall not implement or effect the vesting of the repricing of any Learn2
Options that have been repriced. Learn2 and E-Stamp agree that, promptly
following the date of this Agreement, they each shall use commercially
reasonable efforts to jointly prepare a plan setting forth the Parties' mutual
agreement with respect to the implementation and terms of any such vesting with
respect to any Learn2 Options.
SECTION 5.13 Transaction Expenses.
Except as provided in Section 7.03 of this Agreement, each Party to this
Agreement (or the Surviving Corporation, after the Merger) shall bear its own
expenses in connection herewith, including, without limitation, the fees of each
Party's respective legal counsel, financial advisors, accountants, brokers,
finders or investment bankers.
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SECTION 5.14 Stockholder Litigation.
Each of Learn2, on the one hand, and E-Stamp, on the other hand, shall give the
other the reasonable opportunity to participate in the defense of any
stockholder litigation against Learn2, or E-Stamp, as applicable, and its
directors, relating to the transactions contemplated hereby.
SECTION 5.15 Affiliate Agreements.
Section 5.15 of the Learn2 Disclosure Letter set forth those persons who, in
Learn2's reasonable judgment are, or may be deemed to be, "affiliates" of Learn2
within the meaning of Rule 145 promulgated under the Securities Act. Learn2
shall deliver or cause to be delivered to E-Stamp, concurrently with the
execution of this Agreement, from each of such persons an executed Rule 145
Affiliate Agreement in the form attached hereto as Annex A.
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SECTION 5.16 Redemption and Termination of Convertible Debenture.
Learn2 shall deliver or cause to be delivered to E-Stamp, concurrently with the
execution of this Agreement, a written agreement between Learn2 and RGC in the
form attached hereto as Annex B (the "RGC Redemption and Termination
------- ------------------------------
Agreement"), that shall provide for the redemption and termination of that
---------
certain Convertible Debenture dated March 10, 2000 in the aggregate principal
amount of $10,000,000.00 (the "RGC Convertible Debenture") issued by Learn2 to
-------------------------
RGC, pursuant to the terms set forth in the RGC Redemption and Termination
Agreement.
SECTION 5.17 Termination of Letter Agreement.
Learn2 shall deliver or cause to be delivered to E-Stamp, concurrently with the
execution of this Agreement, evidence of its termination of that certain letter
agreement dated March 8, 2001 between Learn2 and Commonwealth Associates, L.P.,
which termination shall be in form and substance reasonably satisfactory to E-
Stamp and shall provide that Learn2 has no remaining obligations or liabilities
under such letter agreement.
SECTION 5.18 Lock-Up Agreements.
Each of E-Stamp and Learn2 shall use its best efforts to deliver or cause to be
delivered to the other Party as promptly as practicable following the date of
this Agreement, but in any event no later than the date of mailing of the Proxy
Statement to the Stockholders of Learn2 and E-Stamp, from each of its directors
and executive officers who shall be serving in such capacities immediately
following the Effective Time of the Merger, a lock-up agreement pursuant to
which such person shall agree to subject the E-Stamp Shares beneficially owned
by such person to the same contractual trading restrictions to which the E-Stamp
Shares issued to RGC in the Merger are subject by virtue of the RGC Redemption
and Termination Agreement.
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ARTICLE VI.
CONDITIONS
SECTION 6.01 Conditions to Obligations of Each Party under this Agreement.
The respective obligations of each Party to effect the Merger and the other
transactions contemplated herein shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions, any or all of which may
be waived by agreement of E-Stamp and Learn2, in whole or in part, to the extent
permitted by applicable Law:
(a) Stockholder Approval. This Agreement shall have been duly approved and
--------------------
adopted and the Merger duly approved by the requisite vote under Delaware Law
and the certificate incorporation and bylaws of Learn2 or E-Stamp, as
applicable, by the Learn2 Stockholders and the E-Stamp Stockholders.
(b) Effectiveness of Registration Statement. The Registration statement
---------------------------------------
shall have been declared effective by the SEC under the Securities Act and no
stop order suspending the effectiveness of such Registration Statement shall
have been issued by the SEC and no proceedings for that purpose shall have been
initiated or, to the knowledge of E-Stamp or Learn2, threatened by the SEC.
(c) No Order. No Governmental Entity shall have enacted, issued,
--------
promulgated, enforced or entered any Law, in any case which is in effect and
which prevents or prohibits consummation of the Merger; provided, however, that
the Parties shall use their commercially reasonable efforts to cause any such
Law to be vacated or lifted.
SECTION 6.02 Conditions to Obligations of E-Stamp.
The obligation of E-Stamp to consummate the transactions contemplated hereby
shall be subject to the fulfillment on or prior to the Closing Date of the
following conditions, any or all of which may be waived by E-Stamp, in whole or
in part, to the extent permitted by applicable Law:
(a) Representations and Warranties. The representations and warranties of
------------------------------
Learn2 contained herein shall be true in all respects (in the case of any
representation or warranty qualified as to materiality) or in all material
respects (in the case of any representation or warranty not so qualified) at and
as of the date hereof and on and as of the Closing Date with the same effect as
though made on and as of the Closing Date, except (i) in each case, or in the
aggregate, other than with respect to the representation set forth in Section
3.04, as does not constitute a Learn2 Material Adverse Effect, (ii) for changes
contemplated by this Agreement, and (iii) for those representations and
warranties which address matters only of a certain date (which representations
shall have been true and correct (subject to any qualifications set forth in the
preceding clause (i)) as of such particular date), and E-Stamp shall have
received a certificate signed by an executive officer of Learn2 to such effect.
(b) Performance of Obligations. Learn2 shall have performed or complied in
--------------------------
all material respects with all conditions, agreements, obligations and covenants
required to be performed or
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complied with prior to the Closing by Learn2 under this Agreement and E-Stamp
shall have received a certificate signed by an executive officer of Learn2 to
such effect.
(c) Learn2 Material Adverse Effect. Since the date of this Agreement,
------------------------------
there shall not have occurred a Learn2 Material Adverse Effect (or any
development that, insofar as reasonably can be foreseen, is reasonably likely to
result in any Learn2 Material Adverse Effect) not disclosed in the Learn2
Disclosure Letter as of the date hereof.
(d) Redemption and Termination of RGC Convertible Debenture. The issuance
-------------------------------------------------------
of the RGC Shares shall have been duly approved by the Learn2 Stockholders,
Learn2 shall have issued the RGC Shares to RGC, the RGC Convertible Debenture
shall have been redeemed in accordance with the terms of the RGC Redemption and
Termination Agreement, and E-Stamp shall have received evidence of all the
foregoing in form and substance reasonably satisfactory to E-Stamp.
SECTION 6.03 Conditions to Obligations of Learn2.
The obligation of Learn2 to consummate the transactions contemplated hereby
shall be subject to the fulfillment, on or prior to the Closing Date, of the
following conditions, any or all of which may be waived by Learn2, in whole or
in part, to the extent permitted by applicable Law:
(a) Representations and Warranties. The representations and warranties of
------------------------------
E-Stamp contained herein shall be true in all respects (in the case of any
representation or warranty qualified as to materiality) or in all material
respects (in the case of any representation or warranty not so qualified) at and
as of the date hereof and on and as of the Closing Date with the same effect as
though made at and as of the Closing Date, except (i) in each case, or in the
aggregate, other than with respect to the representation set forth in Section
4.04, as does not constitute an E-Stamp Material Adverse Effect, (ii) for
changes contemplated by this Agreement, and (iii) for those representations and
warranties which address matters only of a certain date (which representations
shall have been true and correct (subject to any qualifications set forth in the
preceding clause (i)) as of such particular date) and Learn2 shall have received
a certificate of an executive officer of E-Stamp to such effect.
(b) Performance of Obligations. E-Stamp shall have performed or complied in
--------------------------
all material respects with all conditions, agreements, obligations and covenants
required to be performed or complied with prior to the Closing by E-Stamp under
this Agreement and Learn2 shall have received a certificate of an executive
officer of E-Stamp to such effect.
(c) E-Stamp Material Adverse Effect. Since the date of this Agreement,
-------------------------------
there shall not have occurred an E-Stamp Material Adverse Effect (or any
development that, insofar as reasonably can be foreseen, is reasonably likely to
result in any E-Stamp Material Adverse Effect) not disclosed in the E-Stamp
Disclosure Letter as of the date hereof.
(d) Net Cash as of Closing Date. The Net Cash as of the Closing Date shall
---------------------------
be at least $13,000,000; provided that the Closing occurs on or before July 30,
2001. The foregoing minimum Net Cash condition will be subject to a monthly
$750,000 reduction (the "Monthly Adjustment Amount") applied daily on a pro rata
-------------------------
basis to the extent that the Closing occurs after
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July 30, 2001; provided, that in the event that E-Stamp terminates, assigns or
sublets the E-Stamp Real Estate Lease, the Monthly Adjustment Amount for periods
following the date of such termination, assignment or sublease, as applicable,
will be reduced from $750,000 to $450,000.
(e) Limitation on Dissent. Learn2 Stockholders holding in the aggregate
---------------------
less than ten percent (10%) of the outstanding Learn2 Shares shall have
exercised or given notice of their intent to exercise appraisal or dissenters'
rights in accordance with applicable law.
ARTICLE VII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01 Termination.
This Agreement may be terminated at any time (except where otherwise indicated)
prior to the Effective Time:
(a) by mutual written consent of E-Stamp and Learn2;
(b) By either of Learn2 or E-Stamp:
(i) If the Merger shall not have been consummated by September
30, 2001 for any reason; provided however, that the right to terminate this
Agreement pursuant to this Section 7.01(b)(i) shall not be available to any
party whose action or failure to act has been a principal cause of or resulted
in the failure of the Merger to occur on or before such date and such action or
failure constitutes a breach of this Agreement;
(ii) if (A) the E-Stamp Stockholder approval contemplated by
Section 5.07(b) shall not have been received by reason of the failure to obtain
the required vote at a meeting of E-Stamp Stockholders duly convened therefor or
at any adjournment thereof, or (B) the Learn2 Stockholder approval contemplated
by Section 5.07(a) shall not have been received by reason of the failure to
obtain the required vote at a meeting of Learn2 Stockholders duly convened
therefore or at any adjournment thereof; or
(iii) if any Governmental Entity shall have issued a Law, which
permanently restrains, enjoins or otherwise prohibits the Merger and such Law
shall have become final and non-appealable.
(c) By Learn2:
(i) if E-Stamp fails to consummate the Private Placement pursuant
to Section 1.08 of this Agreement;
(ii) if, prior to the exchange of Learn2 Shares by E-Stamp
pursuant to the Merger, E-Stamp's Board of Directors shall have withdrawn,
modified or changed in a manner adverse to Learn2 its approval or recommendation
of this Agreement or the Merger or shall have recommended an Acquisition
Proposal relating to E-Stamp or shall have executed an agreement
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in principle or definitive agreement relating to an Acquisition Proposal
relating to E-Stamp with a Person other than Learn2 or its Affiliates; or
(iii) if E-Stamp shall have breached in any material respect any of
its representations, warranties, covenants or other agreements contained in this
Agreement, in either case such that the conditions set forth in Section 6.03(a)
or Section 6.03(b) would not be satisfied as of the time of such breach, which
breach cannot be or has not been cured within 15 days after the giving of
written notice by Learn2 to E-Stamp.
(d) By E-Stamp:
(i) if, prior to the exchange of Learn2 Shares by E-Stamp
pursuant to the Merger, Learn2's Board of Directors shall have withdrawn,
modified or changed in a manner adverse to E-Stamp its approval or
recommendation of this Agreement or the Merger or shall have recommended an
Acquisition Proposal relating to Learn2 or shall have executed an agreement in
principle or definitive agreement relating to an Acquisition Proposal relating
to Learn2 with a Person other than E-Stamp or its Affiliates; or
(ii) if, prior to the exchange of Learn2 Shares pursuant to the
Merger, Learn2 shall have breached any representation, warranty, covenant or
other agreement contained in this Agreement, in either case such that the
conditions set forth in Section 6.02(a) or Section 6.02(b) would not be
satisfied as of the time of such breach which breach cannot be or has not been
cured within 15 days after the giving of written notice by E-Stamp to Learn2.
SECTION 7.02 Effect of Termination.
In the event of the termination or abandonment of the transactions contemplated
hereunder by any party hereto pursuant to the terms of this Agreement, written
notice thereof shall forthwith be given to the other party or parties specifying
the provision hereof pursuant to which such termination or abandonment is made,
and there shall be no liability on the part of E-Stamp, or Learn2 except (A) for
fraud or for willful breach of this Agreement prior to such termination or
abandonment, (B) as set forth in this Section 7.02, 7.03 and Article VIII
(General Provisions), each of which shall survive the termination of this
Agreement, and (C) that the provisions of the Confidentiality Agreement will
continue in full force and effect.
SECTION 7.03 Fees and Expenses.
(a) All fees and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expenses whether or not the Merger is consummated; provided, however, that
Learn2 and E-Stamp shall share equally all fees and expenses, other than
attorneys' and accountants' fees and expenses, incurred in relation to the
printing and filing with the SEC of the Proxy Statement/Prospectus (including
any preliminary materials related thereto) and the Registration Statement
(including financial statements and exhibits) and any amendments or supplements
thereto.
(b) If this Agreement is terminated by Learn2 pursuant to Section
7.01(b)(ii)(A) or Section 7.01(c)(ii), E-Stamp shall pay to Learn2 in
immediately available funds, within one (1) business day after demand by Learn2,
the amount of $500,000.00.
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(c) If this Agreement is terminated by E-Stamp pursuant to Section
7.01(b)(ii)(B) or Section 7.01(d)(i), Learn2 shall pay to E-Stamp in immediately
available funds, within one (1) business day after demand by E-Stamp, the amount
of $500,000.00.
(d) E-Stamp and Learn2 each acknowledge that the agreements contained in
this Section 7.03 are an integral part of the transactions contemplated by this
Agreement and constitute liquidated damages and not a penalty, and that, without
these agreements, neither E-Stamp nor Learn2 would enter into this Agreement;
accordingly, if either Party fails to pay in a timely manner the amounts due
pursuant to Section 7.03(b) or 7.03(c), as applicable, and, in order to obtain
such payment, the other Party makes a claim that result in a judgment against
the non-paying Party for the amounts set forth in Section 7.03(b) or 7.03(c), as
applicable, the non-paying Party shall pay to the other Party its reasonable
costs and expenses (including reasonable attorneys' fees and expenses) in
connection with such suit, together with interest on the amounts set forth in
Section 7.03(b) or 7.03(c), as applicable, at the prime rate of X.X. Xxxxxx
Chases in effect on the date such payment was required to be made. Payment of
the fees described in Section 7.03(b) and Section 7.03(c) shall not be in lieu
of damages incurred in the event of breach of this Agreement.
SECTION 7.04 Amendment.
Subject to applicable Law, this Agreement may be amended by the Parties at any
time prior to the Effective Time. This Agreement may not be amended except by
an instrument in writing signed by the Parties.
SECTION 7.05 Extension; Waiver.
At any time prior to the Effective Time, the Parties may (a) extend the time for
the performance of any of the obligations or other acts of the other Parties,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any Agreements, documents, certificates or other instruments
delivered pursuant hereto and (c) waive compliance with any of the Agreements or
conditions contained in this Agreement. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the Party or Parties to
be bound thereby. The failure of any Party to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
ARTICLE VIII.
GENERAL PROVISIONS
SECTION 8.01 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 as of the date
delivered, mailed or transmitted if delivered personally, mailed by registered
or certified mail (postage prepaid, return receipt requested) or sent by
overnight courier (providing proof of delivery) to the Parties at the following
addresses or sent by electronic transmission to the following facsimile numbers
(or at such other address or facsimile number for a Party as shall be specified
by like notice):
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(a) to E-Stamp:
E-Stamp Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
With a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: N. Xxxxxxx Xxxxxxxx, Esq.
(b) If to Learn2:
Xxxxx0.xxx, Inc.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: President and Chief Executive Officer
With a copy (which shall not constitute notice) to:
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx Xxxxx, Esq.
SECTION 8.02 No Survival of Representations and Warranties.
The representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time.
SECTION 8.03 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 8.04 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
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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
materially adverse to any Party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties 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 extent possible.
SECTION 8.05 Entire Agreement.
This Agreement, together with the Confidentiality Agreement, the Convertible
Note and the RGC Redemption and Termination Agreement, constitute the entire
agreement of the Parties and supersede all prior agreements and undertakings,
both written and oral, among the Parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided herein, are
not intended to confer upon any other Person any rights or remedies hereunder.
SECTION 8.06 Assignment.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the Parties hereto (whether by operation of Law or
otherwise) without the prior written consent of the other Parties; provided,
however, that E-Stamp shall have the right to assign this Agreement without the
prior written consent of Learn2 to a direct or indirect wholly-owned E-Stamp
Subsidiary, but no such assignment shall relieve E-Stamp of its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the Parties and their
respective successors and assigns.
SECTION 8.07 Parties in Interest.
This Agreement shall be binding upon and inure solely to the benefit of each
Party, and nothing in this Agreement, express or implied, other than the right
to receive the Merger Consideration pursuant to Article II of this Agreement, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
SECTION 8.08 Mutual Drafting.
Each Party has participated in the drafting of this Agreement, which each Party
acknowledges is the result of extensive negotiations between the Parties.
Consequently, this Agreement shall be interpreted without reference to any rule
or precept of law that states that any ambiguity in a document be construed
against the drafter.
SECTION 8.09 Governing Law.
This Agreement shall be governed by, and construed in accordance with, the Laws
of the State of Delaware, regardless of the Laws that might otherwise govern
under applicable principles of conflicts of law.
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SECTION 8.10 Counterparts.
This Agreement may be executed and delivered in one or more counterparts, and by
the different Parties in separate counterparts, each of which when executed and
delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
SECTION 8.11 Singular and Plural.
Any reference in this Agreement to the singular includes a reference to the
plural and vice versa.
ARTICLE IX.
DEFINITIONS
For purposes of this Agreement, the following terms, and the singular and
plural thereof, shall have the meanings set forth below:
"Acquisition Proposal" means any proposal or offer to acquire, directly or
--------------------
indirectly, 15% or more of the assets of a Person and its Subsidiaries, taken as
a whole, or of the capital stock of a Person, whether by sale of Assets, tender
offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transactions involving
such Person or its Subsidiaries, division or operating or principal business
unit.
"Affiliate" means: (a) with respect to an individual, any member of such
---------
individual's family residing in the same household; (b) with respect to an
entity, any officer or director of such entity; and (c) with respect to a
Person, any Person which directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with such
Person or entity.
"Agreement" is defined in the Preamble to this Agreement and shall include
---------
the Annexes and Exhibits to this Agreement, the Learn2 Disclosure Letter and the
E-Stamp Disclosure Letter.
"Acquisition" is defined in the Preamble to this Agreement.
-----------
"Assets" means assets of every kind and everything that is or may be
------
available for the payment of liabilities (whether inchoate, tangible or
intangible), including, without limitation, cash and cash equivalents,
receivables and real and personal property.
"Asset Disposition" is defined in Section 5.02 (f) of this Agreement.
-----------------
"Benefit Plan" is defined in Section 3.16 of this Agreement.
------------
"Business Day" means a day other than a Saturday, a Sunday or any other day
------------
on which commercial banks in the City of New York are authorized or obligated to
be closed.
"Certificate" means a certificate that immediately prior to the Effective
-----------
Time represented Learn2 Shares which were converted pursuant to Section 2.01
into the right to receive the Merger Consideration.
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"Certificate of Merger" means the certificate of merger, in such form as
---------------------
required by, and executed in accordance with the relevant provisions of,
Delaware Law in order to effect the Merger.
"Closing" is defined in Section 1.03 of this Agreement.
-------
"Closing Date" means the date of the Closing.
------------
"Code" means the United States Internal Revenue Code of 1986, as amended,
----
and all regulations promulgated pursuant thereto or in connection therewith.
"Confidentiality Agreement" means the Confidentiality Agreement, dated
-------------------------
March 19, 2001 among the Parties.
"Contract" means any agreement between or among two or more Persons with
--------
respect to their relative rights and/or obligations or with respect to a thing
done or to be done, including, without limitation, agreements denominated as
contracts, leases, promissory notes, covenants, easements, rights of way,
commitments, arrangements and understandings.
"Convertible Note" means the promissory note to be issued by Learn2 to E-
----------------
Stamp, in the form attached hereto as Annex C.
-------
"Delaware Law" is defined in the Preamble to this Agreement.
------------
"Effective Time" is defined in Section 1.02 of this Agreement.
--------------
"Environmental Laws" means any federal, state or local Law relating to
------------------
public health or safety, or pollution, damage to or protection of the
environment including, without limitation, Laws relating to emissions,
discharges, releases or threatened release of Hazardous Materials into the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, generation,
disposal, transport or handling of any Hazardous Material.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and all regulations promulgated pursuant thereto or in connection
therewith.
"E-Stamp" is defined in the Preamble to this Agreement.
-------
"E-Stamp Benefit Plan" is defined in Section 4.16 of this Agreement.
--------------------
"E-Stamp Contract" is defined in Section 4.14 of this Agreement.
----------------
"E-Stamp Disclosure Letter" is defined in the preamble of Article IV of
-------------------------
this Agreement.
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"E-Stamp Disclosure Documents" is defined in Section 4.08 of this Agreement
----------------------------
and includes the Offering Documents.
"E-Stamp Financial Statements" is defined in Section 4.07(b) of this
----------------------------
Agreement.
"E-Stamp Material Adverse Effect" means any event, change or effect that,
-------------------------------
individually or when taken together with any related events, would be materially
adverse to the business or operations or capitalization of E-Stamp and any E-
Stamp Subsidiary, taken as a whole (other than the following in and of
themselves, either alone or in combination: (i) any event, change or effect
occurring as a result of (A) general economic or financial conditions or (B)
conditions affecting E-Stamp's industry as a whole, (ii) any change or effect
resulting from any termination of a customer or supplier relationship that is
directly attributable to the announcement of this Agreement or the Merger or the
transactions contemplated in connection therewith, (iii) a change in the market
price or trading volume of the E-Stamp Shares, and (iv) any delisting of the E-
Stamp Shares from the Nasdaq Stock Market).
"E-Stamp Option" is defined in Section 4.04 of this Agreement.
--------------
"E-Stamp Real Estate Lease" means that certain Office Lease Agreement dated
-------------------------
February 25, 2000 between E-Stamp and EOP-Shoreline Technology Park, LLC.
"E-Stamp Real Property" is defined in Section 4.13 of this Agreement.
---------------------
"E-Stamp Shares" means shares of common stock, par value $0.001 per share,
--------------
of E-Stamp.
"E-Stamp Stockholders" means the holders of E-Stamp Shares.
--------------------
"E-Stamp Stockholders' Meeting" is defined in Section 5.07(b) of this
-----------------------------
Agreement.
"E-Stamp Subsidiary" means any Subsidiary of E-Stamp.
------------------
"E-Stamp Tax Return" means all Tax Returns required to be filed by E-Stamp
------------------
or any E-Stamp Subsidiary.
"E-Stamp Total Outstanding Shares" means all E-Stamp Shares outstanding
--------------------------------
immediately prior to the Effective Time plus all E-Stamp Shares issuable upon
exercise of and conversion of all E-Stamp Options that have exercise prices
equal to or less than the arithmetic average of the closing price of E-Stamp
Common Stock on the each of the five (5) consecutive trading days ending on the
day immediately preceding the date of the E-Stamp Stockholders' Meeting and are
vested (or will become vested as a result of the E-Stamp Stockholders' Meeting,
approval of the Merger by the E-Stamp Stockholders and/or consummation of the
Merger) as of the Closing Date (excluding all E-Stamp Shares held by Learn2 or
issuable to Learn2 upon exercise of and conversion of any E-Stamp Options).
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"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations promulgated thereunder.
"Exchange Agent" is defined in Section 2.02(a) of this Agreement.
--------------
"Exchange Ratio" means the quotient obtained by dividing (x) the number
--------------
equal to 99.5% of the E-Stamp Total Outstanding Shares by (y) the Learn2 Total
Outstanding Shares.
"GAAP" means United States generally accepted accounting principles
----
consistently applied in accordance with past practices.
"Governmental Entities" (including the term "Governmental") means any
---------------------
governmental, quasi-governmental or regulatory authority, whether domestic or
foreign.
"Hazardous Material" means (i) any "hazardous substance" as now defined
------------------
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. (S)9601(14); (ii) any "pollutant or contaminant" as defined in
42 U.S.C. (S)9601(33); (iii) any material now defined as "hazardous waste"
pursuant to 40 C.F.R. Part 261; (iv) any petroleum, including crude oil and any
fraction thereof; (v) natural synthetic gas usable for fuel; (vi) any "hazardous
chemical" as defined pursuant to 29 C.F.R. Part 1910; and (vii) any asbestos,
polychlorinated biphenyl ("PCB"), radium, or isomer of dioxin, or any material
or thing containing or composed of such substance or substances.
"knowledge" will be deemed to be present with respect to a Party and each
---------
Subsidiary of that Party when the matter in question is known, or upon
reasonable investigation, should have been known, to the officer, director or
employee primarily responsible for the matter in question.
"Laws" means all foreign, federal, state and local statutes, laws,
----
ordinances, regulations, rules, resolutions, orders, writs, injunctions,
judgments and decrees applicable to the specified Person and to the businesses
and Assets thereof (including, without limitation, Laws relating to the
protection of classified information; the sale, leasing, ownership or management
of real property; employment practices, terms and conditions, and wages and
hours; building standards, land use and zoning; safety, health and fire
prevention; and environmental protection, including Environmental Laws).
"Learn2" is defined in the Preamble to this Agreement.
------
"Learn2 Contracts" is defined in Section 3.14 of this Agreement.
----------------
"Learn2 Disclosure Letter" is defined in the preamble of Article III of
------------------------
this Agreement.
"Learn2 Financial Statements" is defined in Section 3.07(b) of this
---------------------------
Agreement.
"Learn2 Material Adverse Effect" means any event, change or effect that,
------------------------------
individually or when taken together with any related events, would be materially
adverse to the business or operations or capitalization of Learn2 and any
Company Subsidiaries, taken as a whole (other
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than the following in and of themselves, either alone or in combination: (i) any
event, change or effect occurring as a result of (A) general economic or
financial conditions or (B) conditions affecting Learn2's industry as a whole,
(ii) any change or effect resulting from any termination of a customer or
supplier relationship that is directly attributable to the announcement of this
Agreement or the Merger or the transactions contemplated in connection
therewith, (iii) a change in the market price or trading volume of the Learn2
Shares, and (iv) any delisting of the Learn2 Shares from the Nasdaq Stock
Market).
"Learn2 Option" means any outstanding option, warrant, convertible security
-------------
(including without limitation the RGC Convertible Debenture) or other right to
acquire (upon purchase, exchange, conversion or otherwise) Learn2 Shares.
"Learn2 Real Property" is defined in Section 3.13 of this Agreement.
--------------------
"Learn2 SEC Reports" is defined in Section 3.07(a) of this Agreement.
------------------
"Learn2 Shares" means (i) the common stock, par value $0.01 per share, of
-------------
Learn2, (ii) the preferred stock, par value $0.01 per share, of Learn2, and
(iii) any other capital stock of Learn2.
"Learn2 Stockholders' Meeting" is defined in Section 5.07(a) of this
----------------------------
Agreement.
"Learn2's Stock Option Plans" means Learn2's 2000 Non-Employee Directors'
---------------------------
Stock Option Plan, 1999 Stock Option Plan, Amended and Restated Incentive Stock
Option Plan and Employee Stock Purchase Plan.
"Learn2 Stockholders" means the holders of Learn2 Shares.
-------------------
"Learn2 Subsidiary" means any Subsidiary of Learn2.
-----------------
"Learn2 Tax Returns" means all Tax Returns required to be filed by Learn2
------------------
or any Company Subsidiary.
"Learn2 Total Outstanding Shares" means all Learn2 Shares outstanding
-------------------------------
immediately prior to the Effective Time (including the RGC Shares), plus all
Learn2 Shares issuable upon exercise of and conversion of all Learn2 Options
(excluding the RGC Convertible Debenture) that have exercise prices equal to or
less than the arithmetic average of the closing price of Learn2 Common Stock on
each of the five (5) consecutive trading days ending on the day immediately
preceding the date of the Learn2 Stockholders' Meeting and are vested (or will
become vested as a result of the Learn2 Stockholders' Meeting, approval of the
Merger by the Learn2 Stockholders and/or consummation of the Merger) as of the
Closing Date (excluding all Learn2 Shares held by E-Stamp or issuable to E-Stamp
upon exercise of and conversion of any Learn2 Options, including the Private
Placement Securities).
"License" means any franchise, authorization, license, permit, easement,
-------
variance, exemption, certificate or approval of any Governmental Entity.
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"Lien" means any mortgage, lien, pledge, security interest, deed of trust,
----
encroachment, reservation, order, decree, judgment, charge or claim of any kind.
"Merger" is defined in the Preamble to this Agreement.
------
"Merger Consideration" is defined in Section 2.01(c) of this Agreement.
--------------------
"Net Cash" means (A) (i) cash and cash equivalents, (ii) accounts
--------
receivable, less allowance for doubtful accounts, (iii) prepaid expenses and
deposits, (iv) notes receivable for a relocation loan from a specified employee
not to exceed $200,000, (v) sales price for assets under binding purchase and
sale agreements, (vi) fair market value of saleable assets at such fair market
value as may be agreed upon by E-Stamp and Learn2 or, if the Parties are unable
to agree, determined by appraisal, (vii) insurance proceeds payable to E-Stamp,
and (viii) principal and accrued interest under the Convertible Note plus, to
the extent that any of the principal and accrued interest under the Convertible
Note has been converted into Learn2 preferred stock, the per share redemption
price of such Learn2 preferred stock multiplied by the aggregate number of
shares of Learn2 preferred stock issued to E-Stamp, or, if such Learn2 preferred
stock has been converted into Learn2 common stock, the conversion price
multiplied by the number of shares of Learn2 common stock issued to E-Stamp on
conversion, less (B) (i) accounts payable, and (ii) accrued liabilities. In the
----
event that E-Stamp has terminated, assigned or sublet the E-Stamp Real Estate
Lease, or has entered into a binding agreement to such effect, prior to or at
the Closing, the "prepaid expenses and deposits" referred to in the preceding
clause (A)(iii) shall be deemed to include E-Stamp's $1,200,000 security deposit
under the E-Stamp Real Estate Lease (the "Security Deposit"). In the event that
----------------
E-Stamp has not terminated, assigned or sublet the E-Stamp Real Estate Lease,
nor entered into any binding agreement to such effect, prior to the Closing, the
Security Deposit shall be excluded from the "prepaid expenses and deposits"
referred to in the preceding clause (A)(iii) and Net Cash shall be deemed to be
---
reduced by $800,000. Notwithstanding the foregoing, to the extent that E-Stamp
enters into an arrangement with the landlord with respect to the E-Stamp Real
Estate Lease not specifically contemplated in the foregoing paragraph, the
foregoing adjustments to Net Cash that relate to the E-Stamp Real Estate Lease
shall be adjusted as mutually agreed upon by the Parties in their reasonable
judgment so as to arrive at an equitable adjustment to Net Cash that fairly
reflects such arrangement. All determinations relating to the amount of Net
Cash shall be made in accordance with GAAP, unless otherwise specifically
provided for in this paragraph.
"Offering Documents" means the Registration Statement and the Proxy
------------------
Statement.
"Ordinary Course of Business" means ordinary course of business of a Person
---------------------------
and its Subsidiaries consistent with their past practices.
"Party" and "Parties" are defined in the Preamble to this Agreement.
----- -------
"Permitted Liens" means (i) easements, rights of way, minor irregularities
---------------
of title, (ii) liens for Taxes not yet due and payable or for Taxes being
contested in good faith and for which adequate reserves have been maintained in
accordance with GAAP, (iii) landlord, warehouse and materialmen's liens and (iv)
other Liens similar to clauses (i), (ii) and (iii); provided, however,
-55-
that any or all of the foregoing do not materially affect the utility or value
of the Assets or other matters to which they relate.
"Person" means an individual, corporation, partnership, limited liability
------
company, joint venture, trust, unincorporated organization or other entity, or a
Governmental Entity.
"Private Placement Securities" is defined in Section 1.08 of this
----------------------------
Agreement.
"Proxy Statement" means the proxy or information statement to be filed, if
---------------
necessary, by E-Stamp and Learn2 with the SEC pursuant to Sections 5.06 and
5.07, together with all amendments and supplements thereto and including the
exhibits thereto.
"Registration Statement" is defined in Section 5.06 of this Agreement
----------------------
"RGC" is defined in Section 5.07(a) of this Agreement.
---
"RGC Convertible Debenture" is defined in Section 5.16 of this Agreement.
-------------------------
"RGC Redemption and Termination Agreement" is defined in Section 5.16 of
----------------------------------------
this Agreement.
"RGC Shares" means the Learn2 Shares issuable to RGC pursuant to the terms
----------
of the RGC Redemption and Termination Agreement.
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Series E Preferred Shares" or "Preferred Shares" means shares of Series E
------------------------- ----------------
preferred stock, par value $0.01 per share, of Learn2, to be designated by
Learn2's Board of Directors promptly following execution of this Agreement, and
with the rights and privileges set forth in the Certificate of Designations
attached as Annex D hereto.
-------
"Subsidiary" means a corporation, partnership, joint venture or other
----------
entity of which any Person owns, directly or indirectly, at least fifty percent
(50%) of the outstanding securities or other interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body or otherwise exercise control of such entity.
"Superior Proposal" means any proposal or offer made by a third party to
-----------------
acquire, directly or indirectly, including pursuant to a sale of Assets, tender
offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the capital stock of a Person then outstanding or all
or substantially all the Assets of a Person and otherwise on terms which such
Person's Board of Directors determines in good faith judgment (after
consultation with such Person's financial advisor), to be
-56-
more favorable to its stockholders than the Merger and which is not subject to
the receipt of any necessary financing or which, in the good faith judgment of
such Person's Board of Directors, is reasonably capable of being obtained by
such third party.
"Surviving Corporation" is defined in Section 1.01 of this Agreement.
---------------------
"Taxes" (including the terms "Tax" and "Taxing") means all federal, state,
----- --- ------
local and foreign taxes (including, without limitation, income, profit,
franchise, sales, use, real property, personal property, ad valorem, excise,
employment, social security and wage withholding taxes) and installments of
estimated taxes, assessments, deficiencies, levies, imports, duties, License
fees, registration fees, withholdings, or other similar charges of every kind,
character or description imposed by any Governmental Entity, and any interest,
penalties or additions to tax imposed thereon or in connection therewith.
"Tax Returns" means all federal, state, local, foreign and other applicable
-----------
returns, declarations, reports and information statements with respect to Taxes
required to be filed with the United States Internal Revenue Service, and its
successors, or any other Governmental Entity or Tax authority or agency,
including, without limitation, consolidated, combined and unitary Tax returns.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have executed and delivered, or have caused
this Agreement to be duly executed and delivered, as of the date first set forth
herein above.
E-STAMP CORPORATION
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive Officer
XXXXX0.XXX, INC.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman of the Board
[Agreement and Plan of Merger by and among E-Stamp Corporation and Xxxxx0.xxx,
Inc.]
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