1
EXHIBIT 99.2
AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
by and between
iVILLAGE INC.
and
HEARST COMMUNICATIONS, INC.
Dated as of February 22, 2001
2
TABLE OF CONTENTS
AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
Page
RECITALS:...................................................................................1
ARTICLE 1. ISSUANCE AND PURCHASE OF SECURITIES..............................................1
1.1 Purchase of Securities.........................................................1
1.2 Adjustment to Number of Shares and Amount of Purchase Price....................2
1.3 Closing Matters................................................................2
1.4 Legend.........................................................................3
ARTICLE 2. CONDITIONS TO CLOSING............................................................4
2.1 Conditions to Each Party's Obligations.........................................4
2.2 Conditions to Investor's Obligations...........................................4
2.3 Conditions to the Company's Obligations........................................5
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................6
3.1 Organization and Standing......................................................6
3.2 Authority for Agreement........................................................6
3.3 No Conflict....................................................................6
3.4 Required Filings and Consents..................................................7
3.5 Compliance.....................................................................7
3.6 Capitalization.................................................................7
3.7 Litigation.....................................................................8
3.8 Subsidiaries...................................................................8
3.9 Company Reports; Company Financial Statements..................................9
3.10 Absence of Certain Changes or Events...........................................9
3.11 Intellectual Property.........................................................10
3.12 Brokers.......................................................................11
3.13 Taxes.........................................................................11
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF INVESTOR......................................12
4.1 Corporate Status..............................................................12
4.2 Power and Authority...........................................................12
4.3 Non-Contravention.............................................................12
4.4 Consents and Approvals........................................................12
4.5 Investment Intent.............................................................13
-i-
3
TABLE OF CONTENTS
(continued)
Page
4.6 Accredited Investor Status....................................................13
4.7 Brokers and Finders...........................................................13
4.8 Acquisition of Voting Securities..............................................13
4.9 Access to Funds...............................................................14
4.10 Reliance on Company SEC Reports...............................................14
ARTICLE 5. CERTAIN COVENANTS...............................................................14
5.1 Other Approvals...............................................................14
5.2 Public Announcements..........................................................14
5.3 Further Assurances............................................................15
5.4 Cooperation...................................................................15
ARTICLE 6. RESTRICTIONS ON TRANSFER........................................................15
6.1 Restricted Securities.........................................................15
6.2 Additional Transfer Restrictions..............................................16
6.3 Compliance with Transfer Restrictions.........................................16
ARTICLE 7. TERMINATION.....................................................................16
7.1 Termination...................................................................16
7.2. Effect of Termination.........................................................16
ARTICLE 8. DEFINITIONS.....................................................................17
8.1 Defined Terms.................................................................17
8.2 Other Definitional Provisions.................................................22
ARTICLE 9. MISCELLANEOUS...................................................................22
9.1 Notices.......................................................................22
9.2 Expenses......................................................................23
9.3 Benefits; Assignment..........................................................23
9.4 Entire Agreement; Amendment and Waiver........................................23
9.5 Headings......................................................................24
9.6 Governing Law.................................................................24
9.7 Remedies......................................................................24
9.8 Severability..................................................................24
9.9 Counterparts..................................................................24
9.10 Specific Performance..........................................................24
9.11 Survival......................................................................24
ARTICLE 10. INDEMNIFICATION................................................................25
10.1 Indemnification of Investor...................................................25
10.2 Indemnification of the Company................................................25
-ii-
4
TABLE OF CONTENTS
(continued)
Page
10.3 Notice........................................................................25
10.4 Defense of Claims.............................................................25
ARTICLE 11. RIGHTS OFFERING................................................................26
11.1 Company's Agreement to Conduct Rights Offering................................26
11.2 Expenses of the Rights Offering...............................................26
11.3 Limitation on Rights Offering.................................................26
ARTICLE 12 ADDITIONAL INVESTOR PURCHASE OBLIGATIONS........................................26
-iii-
5
AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT
This AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT (this
"Agreement") is entered into as of February 22, 2001, by and between iVillage
Inc., a Delaware corporation (the "Company"), and Hearst Communications, Inc., a
Delaware corporation ("Investor"), and amends and restates in its entirety the
Securities Purchase Agreement dated as of February 5, 2001 by and between the
Company and Investor (the "Prior Agreement").
Unless the context otherwise requires, terms capitalized and not
otherwise defined in context have the meanings set forth or cross-referenced in
Article 8.
RECITALS:
WHEREAS, the Company, Xxxxx.xxx Networks, Inc., a Delaware corporation
("WNI"), and Stanhope Acquisition Sub LLC, a Delaware limited liability company
and wholly owned subsidiary of the Company, have entered into an Agreement and
Plan of Merger dated as of February 5, 2001;
WHEREAS, the Company and Investor desire to amend and restate the Prior
Agreement;
WHEREAS, the execution of this Agreement by Investor is a condition to
the obligation of the Company to effect the Merger;
WHEREAS, the Company desires to sell to Investor, and Investor desires
to purchase from the Company, shares of the Company's Common Stock, $0.01 par
value per share ("Common Stock"), and warrants to purchase Common Stock, on the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, in connection with the Merger, but subject to compliance with
applicable securities laws, the Company intends to offer to all stockholders of
WNI pursuant to a registered rights offering the opportunity to purchase their
pro rata portion (based on their ownership of WNI's outstanding shares) of the
Shares (as defined below) and the Warrant (as defined below) (the "Rights
Offering");
NOW, THEREFORE, in consideration of the recitals and the mutual
covenants of this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1.
ISSUANCE AND PURCHASE OF SECURITIES
6
1.1 Purchase of Securities. Upon the terms and subject to the
conditions set forth in this Agreement, the Company agrees to issue and sell to
Investor, and Investor agrees to purchase from the Company on the Closing Date,
9,324,000 shares of Common Stock (the "Shares") and a warrant, substantially in
the form of Exhibit A attached hereto (the "Warrant") exercisable for up to
2,100,000 shares of Common Stock (the "Warrant Shares"), for an aggregate
purchase price of $20.0 million (the "Purchase Price"). The number of Shares
will be adjusted appropriately to reflect any stock split or combination, stock
dividend or other adjustment to Common Stock occurring between the date hereof
and the Closing Date and, if applicable, will also be adjusted as provided in
Section 1.2 below. The Warrant shall have a per share exercise price of $0.01
(subject to adjustment as provided in the Warrant) and shall only be exercisable
during the period commencing on the Closing Date and ending on December 31, 2004
and only if the Average Closing Price of the Common Stock exceeds $3.75 per
share (adjusted for stock splits, stock dividends or other adjustments to Common
Stock) and the other conditions set forth in the Warrant have been satisfied. In
addition to the adjustments provided for in the Warrant, the number of Warrant
Shares will be adjusted appropriately to reflect any stock split or combination,
stock dividend or other adjustment to Common Stock occurring between the date
hereof and the Closing Date.
1.2 Adjustment to Number of Shares and Amount of Purchase Price.
(a) Notwithstanding the provisions of Section 1.1, the
number of Shares to be purchased by Investor pursuant to this Agreement and the
Purchase Price shall be increased if Investor is required to purchase, or elects
to purchase, additional shares of Common Stock pursuant to Article 12 of this
Agreement or the provisions of Schedule 7.2(g) of the Agreement and Plan of
Merger. In such event, then, for all purposes of this Agreement (other than as
provided by the proviso at the end of this sentence), such additional shares
shall be deemed to be "Shares" and the term "Purchase Price" shall include, and
be increased by, the amount of the additional investment made by Investor as
required or permitted by Article 12 of this Agreement or Schedule 7.2(g) of the
Agreement and Plan of Merger; provided, however, that notwithstanding the
foregoing the defined term "Rights Offering" shall not include any additional
Shares purchased by Investor pursuant to the provisions of Article 12 of this
Agreement or Schedule 7.2(g) of the Agreement and Plan of Merger.
(b) The number of Shares and the number of Warrant Shares
set forth in Section 1.1 assumes that none of WNI's stockholders participate in
the Rights Offering to be conducted by the Company in accordance with Article
11. In the event WNI stockholders do participate in the Rights Offering, (i) the
number of Shares and the number of Warrant Shares shall be reduced, on a
one-for-one basis, by the number of Shares and Warrant Shares purchased by WNI's
stockholders (other than Investor) in the Rights Offering and (ii) the Purchase
Price shall be reduced by the amount received by the Company from WNI's
stockholders (other than Investor) pursuant to the Rights Offering.
2
7
1.3 Closing Matters.
(a) Closing. Unless this Agreement has been
terminated in accordance with Article 7, and subject to the satisfaction or
waiver of the conditions set forth in Article 2, the closing of the Transaction
(the "Closing") will occur simultaneously with the closing of the Merger and the
transactions contemplated by the Agreement and Plan of Merger (the "Merger
Closing"). If the conditions set forth in Article 2 are not satisfied or waived
prior to the Merger Closing, then the Closing will occur as soon as practicable
after such conditions are so satisfied or waived, unless this Agreement is
terminated pursuant to Article 7. The Closing shall be held at 10:00 a.m., local
time, at the offices of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, located at 000 Xxxxx
Xxxxxx, Xxx Xxxx, XX 00000. At the Closing:
(i) Investor will pay, by wire transfer of
immediately available funds to an account designated in writing by
the Company, the Purchase Price;
(ii) each party will execute the Transaction
Documents;
(iii)each party will execute and deliver such
agreements or other documents as may be necessary to evidence the
satisfaction or, if applicable, the waiver of any conditions to
Closing set forth in Article 2;
(iv) the Company will deliver to Investor a copy of
its letter to the Transfer Agent, irrevocably instructing the
Transfer Agent to, within three Business Days from the Closing Date,
issue a certificate or certificates to Investor representing the
Shares and deliver the same to Investor at the address designated by
Investor;
(v) the Company will deliver the Warrant, duly
executed by the Company, to Investor; and
(vi) each party will execute and deliver to the
other:
(A) A certificate from its secretary or
assistant secretary, certifying as to (1) the incumbency of
any officer(s) signing this Agreement and the other
Transaction Documents and any other agreements, instruments or
documents executed and delivered by such party at the Closing,
(2) such party's charter documents and by-laws and (3) all
corporate resolutions or actions authorizing the execution,
delivery or performance of this Agreement and the other
Transaction Documents and any other agreements, instruments or
documents executed and delivered by such party at the Closing;
and
3
8
(B) The officer's certificate described in
Section 2.2(a), in the case of the Company, or Section 2.3(a),
in the case of Investor.
1.4 Legend. Each certificate representing any of the
Securities will bear the following legend, together with any and all other
legends as may be required under applicable law (and the Company may issue
appropriate corresponding stop transfer instructions to the Transfer Agent):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER ANY APPLICABLE STATE LAW AND MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR SUCH LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH A
REGISTRATION IS NOT REQUIRED UNDER THE ACT OR SUCH LAWS AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN AN
AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT, DATED AS OF
FEBRUARY 22, 2001, AND A STOCKHOLDER AGREEMENT, DATED AS OF [INSERT
DATE OF THE CLOSING], COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE COMPANY. ANY REGISTRATION OR TRANSFER OF
SUCH SECURITIES ON THE BOOKS OF THE COMPANY WILL BE SUBJECT TO
COMPLIANCE WITH SUCH RESTRICTIONS.
ARTICLE 2.
CONDITIONS TO CLOSING.
2.1 Conditions to Each Party's Obligations. The obligations
of each party to consummate the Transaction are subject to the satisfaction, on
or before the Closing Date, of each of the following conditions, any or all of
which may be waived in writing in whole or in part by the parties:
(a) No Order. The absence of any pending Order of any
Governmental Entity prohibiting, enjoining or otherwise restraining the
consummation of the Transaction or the performance of any party's obligations
hereunder or under any other agreement to be entered into by the parties in
connection with the consummation of the Transaction.
(b) Approvals. All necessary Authorizations will have been
obtained from the appropriate Governmental Entity.
(c) Merger. The Merger shall have become effective, as
provided by Section 2.2 of the Agreement and Plan of Merger.
4
9
2.2 Conditions to Investor's Obligations. Investor's obligation to
consummate the Transaction is subject to the satisfaction, on or before the
Closing Date, of each of the following conditions, any or all of which may be
waived in writing in whole or in part by Investor:
(a) Representations and Warranties True. The
representations and warranties of the Company in this Agreement will have been
true in all material respects when made and will be true in all material
respects at the time of the Closing with the same effect as though such
representations and warranties had been made at such time, except for (i)
changes resulting from the consummation of the Transaction, the sale of the
Securities or the Merger, (ii) changes or events that do not have a Material
Adverse Effect, and (iii) representations and warranties that speak as of a
specific date other than the Closing Date (which need be correct only as of
such other date). The Company will deliver an officer's certificate, dated the
Closing Date, confirming that the conditions set forth in this Section 2.2(a),
Section 2.2(b), Section 2.2(c) and Section 2.2(d) are, except as provided for
above, satisfied on the Closing Date.
(b) Increase in Size of Board of Directors. Subject to the
consummation of the Transaction, (i) the Company's Board of Directors shall have
been increased to ten (10) members and (ii) the Board appointments described in
Section 3.2(a) of the Stockholder Agreement shall have been made.
(c) Transaction Documents. The Company shall have executed
the Transaction Documents and delivered executed originals thereof to Investor.
(d) Performance. The Company shall have performed or
complied in all material respects with all agreements and conditions contained
herein required to be performed or complied with by it prior to or at the time
of the Closing.
(e) Opinion of Company Counsel. Investor shall have received
from Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, counsel for the Company, an opinion,
dated as of the Closing Date, substantially to the effect that (i) the Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, (ii) the Company has all necessary corporate
power and authority to execute and deliver this Agreement and the other
Transaction Documents, to perform its obligations hereunder and thereunder and
to consummate the Transaction, (iii) the execution, delivery and performance by
the Company of this Agreement and the other Transaction Documents, and the
consummation by the Company of the Transaction, have been duly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or the other Transaction
Documents or to consummate the Transaction, (iv) this Agreement has been duly
executed and delivered by the Company, and (v) upon issuance and sale to
Investor in accordance with the terms of this Agreement, the Shares will be, and
upon issuance to Investor of the Warrant Shares in accordance with the terms of
this Agreement and the Warrant, the Warrant Shares will be, duly authorized,
validly issued, fully paid and non-assessable.
5
10
2.3 Conditions to the Company's Obligations. The Company's
obligation to consummate the Transaction is subject to the satisfaction, on or
before the Closing Date, of each of the following conditions, any or all of
which may be waived in writing in whole or in part by the Company:
(a) Representations and Warranties True. The representations
and warranties of Investor in this Agreement will have been true in all material
respects when made and will be true in all material respects at the time of the
Closing with the same effect as though such representations and warranties had
been made at such time. Investor shall deliver a certificate of its officers or
other authorized representatives dated the Closing Date confirming that the
conditions set forth in this Section 2.3(a), Section 2.3(b), Section 2.3(c) and
Section 2.3(d) are satisfied on the Closing Date.
(b) Transaction Documents. Investor shall have executed the
Transaction Documents and delivered executed originals thereof to the Company.
(c) Rights Offering Expenses. Investor shall have reimbursed
the Company, to the extent required by Section 11.2, for all Rights Offering
Expenses incurred as of the Closing Date.
(d) Performance. Investor shall have performed or complied
in all material respects with all agreements and conditions contained herein
required to be performed or complied with by it prior to or at the time of the
Closing.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as disclosed in the Schedule of Exceptions attached to the Prior
Agreement (the "Schedule of Exceptions"), the Company hereby represents and
warrants to Investor that, as of the date of the Prior Agreement:
3.1 Organization and Standing. The Company (a) is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) has full corporate power and authority to
own, lease and operate its properties and assets and to conduct its business as
presently conducted and (c) is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed would not, individually or in the
aggregate, have a Material Adverse Effect. The Company has furnished or made
available to Investor true and complete copies of its Certificate of
Incorporation and Bylaws, each as amended to date. Such Certificate of
Incorporation and Bylaws are in full force and effect, and the Company is not in
violation of any provision therein.
6
11
3.2 Authority for Agreement. Except for receipt of the approval of
the Company's stockholders, the Company has all necessary corporate power and
authority to execute and deliver this Agreement and the other Transaction
Documents, to perform its obligations hereunder and thereunder and to consummate
the Transaction. The execution, delivery and performance by the Company of this
Agreement and the other Transaction Documents, and the consummation by the
Company of the Transaction, have been duly authorized by all necessary corporate
action and no other corporate proceedings on the part of the Company (other than
the receipt of stockholder approval) are necessary to authorize this Agreement
or the other Transaction Documents or to consummate the Transaction. This
Agreement has been duly executed and delivered by the Company and, assuming due
authorization, execution and delivery by Investor, constitutes a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms (except as enforcement thereof may be limited against
the Company by (i) bankruptcy, insolvency, reorganization, moratorium, and
similar laws, both state and federal, affecting the enforcement of creditors'
rights or remedies in general as from time to time in effect or (ii) the
exercise by courts of equitable powers).
3.3 No Conflict. The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company and the
other transactions contemplated by this Agreement will not, (i) conflict with or
violate the Company's Certificate of Incorporation or Bylaws, (ii) subject to
Section 3.4, conflict with or violate any Law applicable to the Company or by
which any material property or asset of the Company is bound or affected, or
(iii) result in a breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, give to others
any right of termination, amendment, acceleration or cancellation of, result in
triggering any payment or other obligations, or result in the creation of a lien
or other encumbrance on any material property or asset of the Company pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company is a
party or by which the Company or any property or asset of the Company is bound
or affected, except in the case of clauses (ii) and (iii) above for any such
conflicts, violations, breaches, defaults or other occurrences which could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
3.4 Required Filings and Consents. The execution and delivery of
this Agreement by the Company do not, and the performance of this Agreement by
the Company will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Entity, except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, or
state securities laws or "blue sky" laws and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, could not, individually or in the aggregate, have a Material
Adverse Effect.
3.5 Compliance. Except as disclosed in the Company Reports filed by
the Company with the SEC on or prior to the date of the Prior Agreement, as of
the date of the Prior Agreement, the businesses of the Company and its
Subsidiaries are not being conducted in violation of any law, ordinance,
regulation, judgment, order, decree, writ, injunction,
7
12
license or permit of any Governmental Entity, except for violations which have
not had, and could not reasonably be expected to have, individually or in the
aggregate a Material Adverse Effect. No investigation or review by any
Governmental Entity with respect to the Company or any of its Subsidiaries is
pending or, to the knowledge of the Company threatened, in each case other than
those the outcome of which have not had, and could not reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect.
3.6 Capitalization. The authorized capital stock of the Company
consists of 65,000,000 shares of Common Stock and 5,000,000 shares of the
Company's preferred stock. As of the date of the Prior Agreement, there were,
(i) 29,706,770 shares of Common Stock outstanding, all of which are validly
issued, fully paid and nonassessable and free of preemptive rights, (ii)
35,293,230 shares of Common Stock held in the treasury of the Company and (iii)
8,055,049 Company Stock Options outstanding pursuant to the Company's stock
plans (excluding Company Stock Options issued pursuant to the Family Point, Inc.
Stock Option Plan), each such option entitling the holder thereof to purchase
one share of Common Stock, and 1,597,056 shares of Common Stock are authorized
and reserved for future issuance pursuant to the exercise of such Company Stock
Options and (iv) no shares of the Company's preferred stock were issued and
outstanding. The Schedule of Exceptions sets forth the aggregate amount of the
outstanding Company Stock Options outstanding under each of the Company's Stock
Plans as of the date of the Prior Agreement. Except as set forth above or in the
Schedule of Exceptions, there are no options, warrants, convertible securities,
subscriptions, stock appreciation rights, phantom stock plans or stock
equivalents or other rights, agreements, arrangements or commitments (contingent
or otherwise) of any character issued or authorized by the Company relating to
the issued or unissued capital stock of the Company or obligating the Company to
issue or sell any shares of capital stock of, or options, warrants, convertible
securities, subscriptions or other equity interests in, the Company. All shares
of capital stock subject to issuance as aforesaid, upon issuance on the terms
and conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. Except as
set forth in the Schedule of Exceptions, as of the date of the Prior Agreement
there were no outstanding contractual obligations of the Company to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or to pay
any dividend or make any other distribution in respect thereof or to provide
funds to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Person in excess of $1,000,000. As of the date of the Prior
Agreement and except as contemplated by this Agreement and the Stockholder
Agreement, there were no voting trusts or other agreements or understandings to
which the Company is a party with respect to the voting of stock of the Company.
Upon issuance and sale to the Investor in accordance with the terms of this
Agreement, the Shares will be, and upon issuance to Investor of the Warrant
Shares in accordance with the terms of this Agreement and the Warrant, the
Warrant Shares will be, duly authorized, validly issued, fully paid and
non-assessable and free and clear of any lien, pledge, hypothecation, mortgage,
security interest, claim, lease, charge, option, right of first refusal,
easement, encroachment or other encumbrance of any kind (each a "Lien"), other
than Liens resulting from actions of Investor, except as provided in this
Agreement or the Stockholder Agreement.
8
13
3.7 Litigation. Except as set forth in the Schedule of Exceptions,
there is no claim, suit, action, proceeding or investigation pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or any of
its Subsidiaries which, either individually or in the aggregate, has had, or
could be reasonably expected to have, a Material Adverse Effect, nor is there
any judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator, outstanding against the Company or any of its Subsidiaries, either
individually or in the aggregate, which has had, or could be reasonably expected
to have, a Material Adverse Effect.
3.8 Subsidiaries.
(a) The Schedule of Exceptions sets forth the name and state
or jurisdiction of incorporation of each of its Subsidiaries. Each of such
Subsidiaries (i) is a corporation or other business entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has full corporate power and authority and all necessary
government approvals to own, lease and operate its properties and assets and to
conduct its business as presently conducted and (iii) is duly qualified or
licensed to do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing necessary
except where failure to be so qualified or licensed would not have, individually
or in the aggregate, a Material Adverse Effect. The Company has furnished or
made available to the Company true and complete copies of the certificate of
incorporation, bylaws or comparable organizational documents of each of its
Subsidiaries, each as amended to date. Such organizational documents are in full
force and effect, and no such Subsidiary is in violation of any provision
therein.
(b) The Company owns beneficially, directly or indirectly,
all of the issued and outstanding capital stock or other securities of each such
Subsidiary and, except as set forth in the Schedule of Exceptions, does not own
an equity interest in any other corporation, partnership or entity, other than
in such Subsidiaries. Each outstanding share of capital stock or other
securities of each such Subsidiary is duly authorized, validly issued, fully
paid and nonassessable (or the foreign equivalent for foreign Subsidiaries) and
each such share or other equity interest owned by the Company or one of its
Subsidiaries is free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on the
Company's or such other Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever.
3.9 Company Reports; Company Financial Statements.
(a) The Company has filed all Company Reports, each of which
has complied in all material respects with the applicable requirements of the
Securities Act, and the rules and regulations promulgated thereunder, or the
Exchange Act, and the rules and regulations promulgated thereunder, each as in
effect on the date so filed. None of the Company Reports (including any
financial statements or schedules included or incorporated by reference therein)
contained when filed any untrue statement of a material fact or omitted
9
14
or omits to state a material fact required to be stated or incorporated by
reference therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(b) All of the Company Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and fairly
present in all material respects the consolidated financial position of the
Company and its Subsidiaries at the respective dates thereof and the
consolidated results of its operations and changes in cash flows for the periods
indicated (subject, in the case of unaudited statements, to normal year-end
audit adjustments).
(c) Except as set forth in the Schedule of Exceptions, there
are no liabilities of the Company or any of its Subsidiaries of any kind
whatsoever, whether or not accrued and whether or not contingent or absolute,
that are material to the Company and its Subsidiaries, taken as a whole, other
than (i) liabilities disclosed or provided for in the consolidated balance sheet
of the Company and its Subsidiaries at September 30, 2000, including the notes
thereto, (ii) liabilities disclosed in the Company Reports, (iii) liabilities
incurred on behalf of the Company under this Agreement, the other Transaction
Documents, the Agreement and Plan of Merger and the contemplated Merger, and
(iv) liabilities incurred in the ordinary course of business consistent with
past practice since September 30, 2000, none of which are, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect.
(d) Except as set forth in the Schedule of Exceptions, the
Company has heretofore furnished or made available to Investor a complete and
correct copy of any amendments or modifications which have not yet been filed
with the SEC to agreements, documents or other instruments which previously had
been filed by the Company with the SEC as exhibits to the Company Reports
pursuant to the Securities Act and the rules and regulations promulgated
thereunder or the Exchange Act and the rules and regulations promulgated
thereunder.
3.10 Absence of Certain Changes or Events. Except as set forth in the
Schedule of Exceptions and the Company Reports and except for the transactions
contemplated by this Agreement, the other Transaction Documents and the
Agreement and Plan of Merger, since September 30, 2000, the Company and its
Subsidiaries have conducted their business only in the ordinary course and there
has not been (i) any change or event having, or that could reasonably be
expected to have, a Material Adverse Effect, (ii) any split, combination or
reclassification of any of the Company's outstanding capital stock or any
issuance or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of the Company's outstanding
capital stock, (iii) except insofar as may have been disclosed in the Company
Reports or required by a change in GAAP, any change in accounting methods,
principles or practices by the Company or any subsidiary, materially affecting
its assets, liabilities or business, or (iv) except insofar as may have been
reasonably disclosed in the Company Reports, any tax election that individually
or in the aggregate could reasonably be expected to have a Material Adverse
Effect.
10
15
3.11 Intellectual Property.
(a) The Schedule of Exceptions sets forth a true and correct
list of all Intellectual Property owned by the Company or its Subsidiaries that
is the subject of registration, issuance or an application for registration and
the jurisdictions where each is registered, issued or applied for and any such
registration, filing and issuance remains in full force and effect as of the
date of the Prior Agreement. The Company or a subsidiary of the Company is
listed in the records of the appropriate United States, state, or foreign
registry as the sole current owner of record for each application, issuance and
registration and has the exclusive right to file, prosecute and maintain all
applications and registrations with respect to the Intellectual Property that is
listed on the Schedule of Exceptions.
(b) The Company and its Subsidiaries have good and
marketable title to or possesses adequate licenses or other valid rights to use
all Intellectual Property (not just the Intellectual Property listed on the
Schedule of Exceptions), free and clear of all liens and has paid all
maintenance fees, renewals or expenses, if any, related to such Intellectual
Property. To the best knowledge of the Company and its Subsidiaries, neither the
use of such Intellectual Property nor the conduct of the Company and its
Subsidiaries in accordance with their businesses as presently conducted,
misappropriates, infringes upon or conflicts with any patent, copyright, trade
name, trade secret, trademark or other intellectual property rights of any third
party. Except as set forth on the Schedule of Exceptions, no party has filed a
claim against, or threatened to file a claim against, or has provided a notice
to, the Company or any of its Subsidiaries alleging that either the Company or
any of its Subsidiaries has violated, infringed on or otherwise improperly used
the intellectual property rights of such party and, to the best knowledge of the
Company and its Subsidiaries, neither the Company nor any of its Subsidiaries
has violated or infringed any patent, trademark, trade name, service xxxx,
service name, copyright, trade secret or other intellectual property held by
others. Except as set forth on the Schedule of Exceptions, the Company and its
Subsidiaries do not believe that any other entity has violated, infringed on or
otherwise improperly used any of the Intellectual Property owned by the Company
or any of its Subsidiaries and the Company and its Subsidiaries have not filed a
claim against, or threatened to file a claim against, and have not provided a
notice to, any third party alleging any such violation, infringement or improper
use of the Intellectual Property owned by the Company or any of its
Subsidiaries.
(c) Subject to any licenses and other agreements identified
in Section 3.11(c) of the Schedule of Exceptions, the Company and its
Subsidiaries have all right, title and interest in and to all intellectual
property rights in the Company Proprietary Software. The Company and its
Subsidiaries have developed the Company Proprietary Software through their own
efforts, and for their own account, or have obtained all rights thereto, and the
Company Proprietary Software is free and clear of all liens, except loans in the
ordinary course of business. The use of the Company Licensed Software and the
use of the Company Proprietary Software does not breach any terms of any license
or other contract between the Company or any of its Subsidiaries and any third
party that would have a Material Adverse Effect. Each of the Company and its
Subsidiaries is in compliance with the terms and conditions of all license
agreements in favor of the Company and its Subsidiaries relating to
11
16
the Company Licensed Software material to the operation of the business of the
Company and its Subsidiaries as presently conducted.
(d) To the knowledge of the Company and its Subsidiaries,
the Company Proprietary Software does not infringe any patent, copyright or
trade secret or any other intellectual property right of any third party in such
a manner that would have a Material Adverse Effect. The source code for the
Company Proprietary Software has been maintained in confidence, and has not been
disclosed to any persons or entities outside the Company and its Subsidiaries,
except such disclosure being made pursuant to appropriate confidentiality
provisions.
(e) The Company Proprietary Software was: (i) developed by
the employees of the Company and its Subsidiaries working within the scope of
their employment at the time of such development; (ii) developed by agents,
consultants, contractors or others who have executed appropriate instruments of
assignment or instruments of obligation to assign in favor of the Company or any
of its Subsidiaries as assignee that have conveyed or obligate such agents,
consultants and contractors to convey to the Company or such subsidiary
ownership of all of its intellectual property rights in the Company Proprietary
Software; or (iii) acquired by the Company or any of its Subsidiaries in
connection with acquisitions in which the Company or such subsidiary, where
appropriate in the nature of the overall transaction, obtained appropriate
representations, warranties and indemnities from the transferring party relating
to the title to such Company Proprietary Software. Neither the Company nor any
of its Subsidiaries has received notice from any third party claiming any right,
title or interest in the Company Proprietary Software.
(f) The Company and each of its Subsidiaries take reasonable
measures to protect the confidentiality of its trade secrets, including
requiring their employees and other parties having access thereto to execute
written non- disclosure agreements. To the knowledge of the Company and its
Subsidiaries, no trade secret of the Company or its Subsidiaries has been
disclosed or authorized to be disclosed to any third party other than pursuant
to a non-disclosure agreement. To the knowledge of the Company and its
Subsidiaries, no party to any non-disclosure agreement relating to its trade
secrets is in breach or default thereof.
(g) To the knowledge of the Company and its Subsidiaries, no
current or former partner, director, officer, or employee of the Company or any
of its Subsidiaries (or any of their respective predecessors in interest) will,
after giving effect to the transactions contemplated herein, directly own or
retain any rights to use any of the Intellectual Property owned or used by the
Company or any of its Subsidiaries.
3.12 Brokers. No broker, finder or investment banker (other than the
Company's financial advisor, Xxxxx & Company) is entitled to any brokerage,
finder's or other fee or commission in connection with this Agreement, the
Merger or the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. A complete and correct copy of
all agreements between the Company and
12
17
its financial advisor pursuant to which such firm would be entitled to any
payment relating to this Agreement, the Merger or the other transactions
contemplated by this Agreement or the Agreement and Plan of Merger will be
provided to Investor prior to the Closing.
3.13 Taxes.
(a) Except as set forth in the Schedule of Exceptions, each
of the Company and its Subsidiaries has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in all material
respects. All Taxes owed by any of the Company and its Subsidiaries have been
paid. Except as set forth in the Schedule of Exceptions, none of the Company and
its Subsidiaries currently is the beneficiary of any extension of time within
which to file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where the Company or any Subsidiary does not file Tax Returns that
it is or may be subject to taxation in that jurisdiction. There are no security
interests on any of the assets of any of the Company and its Subsidiaries that
arose in connection with any failure (or alleged failure) to pay any Tax.
(b) Each of the Company and its Subsidiaries has withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF INVESTOR.
Investor represents and warrants to the Company that:
4.1 Corporate Status. Investor is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate or other power and authority to enter into this
Agreement and the other Transaction Documents and to carry out the provisions of
this Agreement and the other Transaction Documents.
4.2 Power and Authority. Investor has the corporate power and
authority to execute and deliver, and to perform its obligations under, this
Agreement and the other Transaction Documents. Investor has taken all necessary
corporate action to authorize this Agreement and the other Transaction Documents
and their execution, delivery and performance. This Agreement has been, and as
of the Closing Date, the other Transaction Documents will have been, duly
executed and delivered by Investor and this Agreement constitutes, and the other
Transaction Documents will constitute upon their execution and delivery, valid
and binding agreements of Investor enforceable against Investor in accordance
with their respective terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
application that may affect the enforcement of creditors' rights generally and
by general equitable principles.
13
18
4.3 Non-Contravention.
(a) Investor is not in violation of any term of its charter,
bylaws or other organizational documents.
(b) The execution, delivery and performance of this
Agreement and the consummation of the Transaction in accordance with the terms
ereof will not violate or contravene any provision of applicable Law or the
charter or bylaws of Investor or any agreement or other instrument binding on
Investor, except as would not have a Material Adverse Effect.
4.4 Consents and Approvals.
(a) Investor has made, filed, given or obtained (i) all
Authorizations that, to the knowledge of Investor, are required to be made,
filed, given or obtained by Investor and any of its Subsidiaries or controlling
persons with, to or from any Governmental Entity in connection with the
Transaction and (ii) all consents, approvals and waivers required to be given
by, or obtained from, any other Persons to or by Investor and any of its
Subsidiaries in connection with the consummation of the Transaction, other than
those Authorizations, consents, approvals and waivers as to which the failure to
make, file, give or obtain, individually or in the aggregate, would not have a
Material Adverse Effect.
(b) Investor and each of its Subsidiaries has made, filed,
given or obtained all Authorizations and has been given or obtained all
consents, approvals or waivers necessary as of the date hereof for Investor to
perform its obligations under this Agreement and the other Transaction Documents
at or prior to the Closing, except as would not have a Material Adverse Effect.
4.5 Investment Intent. Investor is acquiring the Securities for its
own account and with no present intention of distributing or selling any of the
Securities in violation of the Securities Act or any applicable state securities
law. Investor will not sell or otherwise dispose of any of the Securities,
unless such sale or other disposition has been registered or is exempt from
registration under the Securities Act and has been registered or qualified or is
exempt from registration or qualification under applicable state securities
laws. Investor understands that the Securities to be acquired by Investor
hereunder have not been registered under the Securities Act by reason of their
contemplated issuance in transactions exempt from the registration and
prospectus delivery requirements of the Securities Act pursuant to Section 4(2)
thereof or Rule 506 of Regulation D promulgated under the Securities Act, and
that the reliance of the Company on this exemption is predicated in part on
these representations and warranties of Investor contained in this Article 4.
Investor acknowledges that a restrictive legend consistent with the foregoing
and with the provisions of Section 1.3 and Article 6 has been or will be placed
on each certificate representing any Securities, and related stop transfer
instructions will be noted in the transfer records of the Company and the
Transfer Agent.
14
19
4.6 Accredited Investor Status. Investor is an "accredited investor"
as such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act and, either alone or in connection with its financial advisors,
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the investment to be made by it
hereunder in the Securities.
4.7 Brokers and Finders. Neither Investor nor any of its
Subsidiaries or Affiliates has employed any investment banker, broker, finder,
consultant or intermediary in connection with this Agreement or the Transaction
that would be entitled to any investment banking, brokerage, finder's or similar
fee or commission in any way relating thereto or in connection therewith, other
than those (if any) that shall be the sole responsibility of and shall be paid
in full by the Investor or its Subsidiaries.
4.8 Acquisition of Voting Securities. Except as contemplated by this
Agreement or the other Transaction Documents, and other than by reason of
ownership of WNI shares of capital stock, neither Investor nor any of its
Subsidiaries or Affiliates has any "beneficial ownership" (as that term is
defined under Rule 13d-3 under the Exchange Act) of any securities of the
Company that are entitled to vote for the election of directors, nor are any of
them a party to any agreement or arrangement (a) that gives any of them or
entitles any of them to acquire "beneficial ownership" (as that term is defined
under Rule 13d-3 under the Exchange Act) of any securities of the Company that
are entitled to vote for the election of directors, or (b) with respect to
corporate governance matters concerning the Company or its Subsidiaries
(including, without limitation, the exercise or failure to exercise voting
rights with respect to any voting securities of the Company).
4.9 Access to Funds. Investor holds or has access to unrestricted
funds in amounts sufficient to permit Investor to pay the Company the Purchase
Price on the Closing Date and to perform its obligations under this Agreement
and the other Transaction Documents.
4.10 Reliance on Company SEC Reports. In making its investment
decision and related commitments relating to the acquisition of the Securities
hereunder, Investor hereby confirms that it has relied only on the
representations and warranties of the Company set forth herein and on the other
information contained or incorporated by reference in the Company Reports filed
on or prior to the date of the Prior Agreement, and specifically disclaims
reliance on any other information, whether or not provided or otherwise made
available by the Company or any authorized representative thereof, and including
without limitation any published reports, news stories or analyses relating to
the Company and/or its Subsidiaries or their respective businesses, assets,
liabilities or prospects.
15
20
ARTICLE 5.
CERTAIN COVENANTS.
5.1 Other Approvals.
(a) Prior to the Closing, each of the Company and Investor
will use commercially reasonable efforts to obtain all necessary Authorizations
as are required to be obtained under any federal or state law or regulations,
including applicable antitrust laws.
(b) Prior to the Closing, the Company and Investor each
agree to (and to cause their respective appropriate Subsidiaries and Affiliates
to) cooperate with the other in the preparation and filing of all forms,
notifications, reports and information, if any, required or reasonably deemed
advisable pursuant to any Requirement of Law or the rules of the NASDAQ-NMS in
connection with the Transaction and to use their respective commercially
reasonable efforts jointly to agree on a method to overcome any objections by
any Governmental Entity to the Transaction or any component thereof.
Notwithstanding the foregoing, nothing in this Section 5.1(b) shall require, or
be deemed to require, the parties hereto to agree to or effect any divestiture
(including divestitures of assets of the Company or the Investor) or take any
other action if, in the reasonable judgment of each party hereto, doing so
could, individually or in the aggregate, reasonably be expected to impair the
parties respective abilities to achieve the overall benefits expected, as of the
date hereof, to be realized from the consummation of the transactions
contemplated hereby.
5.2 Public Announcements. Except pursuant to any Requirement of Law,
the exercise of fiduciary duty, or the policies or rules of any stock exchange
(or the NASDAQ-NMS) on which the Company's securities are listed, prior to the
Closing Date, the form and content of all press releases or other public
communications of any sort relating to the subject matter of this Agreement, the
Transaction, the Merger or any other transaction to be entered into by either of
the parties in connection herewith, and the method of their release, or
publication thereof by either of the parties hereto or their respective
Affiliates, will be subject to the prior approval of each of the parties hereto,
which approval will not be unreasonably withheld or delayed. To the extent
reasonably requested by a party hereto, on and following the Closing Date, the
other party and its Subsidiaries and Affiliates will consult with and provide
reasonable cooperation to the other in connection with the issuance of further
press releases or other public documents describing the Transaction, other than
as would not have a Material Adverse Effect.
5.3 Further Assurances. Each party will execute and deliver such
additional instruments and other documents and will take such further actions as
may be necessary or appropriate to effectuate, carry out and comply with all of
the terms of this Agreement and the other Transaction Documents and the
transactions contemplated hereby and thereby. Without limiting the generality of
the preceding sentence, the Company and Investor will not (and will not permit
their Subsidiaries or Affiliates to) take any action or actions at or prior to
the Closing that would (a) cause any Authorization or any consent, approval or
waiver of any other Person that has been made, filed, given or obtained in
connection with the Transaction
16
21
to be withdrawn or terminated or to otherwise cease to be effective, or (b)
require any additional Authorization or any additional consent, approval or
waiver of any other Person to be made, filed, given or obtained in connection
with the Transaction.
5.4 Cooperation. The Company and Investor each agree to (and agree
to cause their Subsidiaries and Affiliates to) cooperate with the other to
consummate, as promptly as possible, the Transaction.
ARTICLE 6.
RESTRICTIONS ON TRANSFER.
6.1 Restricted Securities.
(a) Investor acknowledges and understands that the
Securities must be held indefinitely, and they may not be resold or otherwise
transferred, except in a transaction registered under the Securities Act or
applicable state law or otherwise exempt from such registration requirements.
Investor understands that the certificate(s) evidencing the Securities will be
imprinted with a legend in substantially the form set forth in Section 1.3
hereof that indicates that the transfer of the Securities is prohibited unless
(i) they are registered under the Securities Act or any applicable state law, or
(ii) the transfer is pursuant to an exemption from registration under the
Securities Act or such laws and the rules and regulations promulgated thereunder
and an opinion of counsel reasonably satisfactory to the Company is obtained to
the effect that the transaction is so exempt and in compliance with such laws,
rules and regulations.
(b) Investor further acknowledges that resale of the
Securities may be limited by applicable state law even where a registration
statement covering resale of the Securities has been declared effective under
the Securities Act. For example, certain states may limit resale of the
Securities to qualified institutions or in unsolicited qualified broker
transactions in the absence of qualification or another exemption in such state.
6.2 Additional Transfer Restrictions. Investor further acknowledges
that the Securities are subject to certain additional transfer restrictions set
forth in the Stockholder Agreement and any proposed transfer of the Securities
will be subject to compliance with such restrictions. Investor understands that
the certificate(s) evidencing the Securities will be imprinted with a legend in
substantially the form set forth in Section 1.3 hereof that indicates that the
transfer of the Securities is prohibited unless in compliance with such
restrictions.
6.3 Compliance with Transfer Restrictions. Investor will not (and
will cause any Affiliate not to) Transfer any of the Securities in violation of
any Law or the transfer restrictions referred to herein.
17
22
ARTICLE 7.
TERMINATION.
7.1 Termination. This Agreement may be terminated, and the
Transaction contemplated to occur at the Closing thereby abandoned, at any time
prior to the Closing as follows:
(a) By mutual written consent of Investor and the Company;
(b) By Investor, upon written notice to the Company, if any
of the conditions set forth in Section 2.2 have not been satisfied on
or before June 30, 2001 (or such later date as Investor and the
Company may agree in writing ), unless the satisfaction thereof has
been frustrated or made impossible by any act or failure to act by
Investor;
(c) By the Company, upon written notice to Investor, if any
of the conditions set forth in Section 2.3 have not been satisfied on
or before June 30, 2001 (or such later date as Investor and the
Company may agree in writing), unless the satisfaction thereof has
been frustrated or made impossible by any act or failure to act by the
Company;
(d) By either Investor or the Company, upon written notice
to the other, if any of the conditions set forth in Section 2.1 have
not been satisfied on or before June 30, 2001 (or such later date as
Investor and the Company may agree in writing), unless the satisfaction
thereof has been frustrated or made impossible by any act or failure to
act by the party seeking to terminate this Agreement;
(e) By Investor or the Company if any Governmental Entity
having competent jurisdiction has issued an Order permanently
restraining, enjoining or otherwise prohibiting any of such Transaction
and such Order has become final and nonappealable; or
(f) By Investor or the Company if the Agreement and Plan of
Merger is terminated in accordance with its terms.
7.2. Effect of Termination. Each party's right of termination under
Section 7.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 7.1, all
further obligations of the parties under this Agreement will terminate and,
except as provided in Section 11.2, each party will pay its own costs and
expenses in connection with this Agreement and the Transaction, and neither
party (or any of its officers, directors, employees, agents, representatives or
stockholders) will be liable to the other party for any costs, expenses, damages
or losses of anticipated profits hereunder or
18
23
relating to the Transaction; provided, however, that if this Agreement is
terminated by a party because of a material breach of this Agreement by the
other party or because one or more of the conditions to the terminating party's
obligations under this Agreement is not satisfied as a result of the other
party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
ARTICLE 8.
DEFINITIONS.
8.1 Defined Terms. As used in this Agreement, the following terms
have the following meanings:
"Affiliate" means, as to any Person, another Person that
directly or indirectly through one or more intermediaries, Controls, or
is Controlled by, or is under common Control with, such Person. For the
purposes of this definition, "Control" when used with respect to any
Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or membership
or partnership interests, by contract or otherwise; the terms
"Controlling" and "Controlled" have meanings correlative to the
foregoing; provided, that the Company and Investor will not be deemed to
be direct or indirect Affiliates of each other.
"Agreement" has the meaning set forth in the preamble.
"Agreement and Plan of Merger" means the Agreement and Plan of
Merger dated as of the date of the Prior Agreement and amended as of
February 22, 2001 by and among the Company, Stanhope Acquisition Sub LLC
and WNI.
"Appraisal Rights" means shares of WNI's common stock as to
which appraisal rights have been demanded, exercised or perfected in
accordance with Section 262 of the Delaware General Corporation Law in
connection with the Merger.
"Appraisal Rights Purchase Request" means a written notice
delivered to Investor pursuant to Article 12, which notice shall include
(i) a request by the Company that Investor purchase additional shares of
Common Stock and (ii) the number of shares of Common Stock that Investor
is obligated to purchase pursuant to Article 12.
19
24
"Authorization" means any consent, approval or authorization of,
expiration or termination of any waiting period requirement of, or
filing, registration, qualification, declaration or designation with or
by, any Governmental Entity.
"Average Closing Price" means (i) if at the applicable time the
Common Stock is listed on a national securities exchange or on the
over-the-counter market (including NASDAQ-NMS), then the average closing
price of the Common Stock on any fifteen (15) consecutive trading days
on which a share or shares of Common Stock were sold, or if no such
shares were sold on such day, then the average of the "bid" and "ask"
prices of the Common Stock on such day or (ii) if at the applicable time
the Common Stock is not listed on a national securities exchange or on
the over-the-counter market, then the fair market value of the Common
Stock as determined in good faith by the Board at the time of such
exercise.
"Beneficial Owner" with respect to any securities means that a
Person has "beneficial ownership" of such securities as determined
pursuant to Rule 13d-3 and Rule 13d-5 promulgated under the Exchange
Act.
"Business Day" means any day on which there is trading on the
New York Stock Exchange and the NASDAQ-NMS.
"Closing" has the meaning set forth in Section 1.3.
"Closing Date" means the actual date on which the Closing occurs
as provided in Section 1.3.
"Common Stock" has the meaning set forth in the preamble of this
Agreement.
"Company" has the meaning set forth in the preamble of this
Agreement.
"Company Financial Statements" shall mean all of the financial
statements included in the Company Reports (as defined below).
"Company Licensed Software" shall mean all software (other than
Company Proprietary Software) used by the Company and its Subsidiaries.
"Company Proprietary Software" shall mean all software owned by
the Company and its Subsidiaries.
20
25
"Company Reports" shall mean all forms, reports, statements and
all other documents required to be filed by the Company with the SEC
since March 18, 1999.
"Company Software" shall mean the Company Licensed Software
together with the Company Proprietary Software.
"Company Stock Option" shall mean each outstanding option to
purchase shares of Common Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Ratio" has the meaning given to such term in the
Agreement and Plan of Merger.
"GAAP" shall mean generally accepted accounting principles.
"Governmental Entity" shall mean any United States federal,
state or local or any foreign government or any court, administrative or
regulatory agency or commission or other governmental authority or
agency, domestic or foreign.
"Intellectual Property" shall mean all copyrights, trade names,
trademarks, service marks, patents, universal resource locators
("URLs"), Internet domain names, (and all applications or registrations
therefor), trade secrets, know-how, member lists for a Person's network
of websites, marketing plans, advertising and sponsorship strategy,
content on such Person's network of websites, internet tools,
proprietary processes, technology, rights of publicity and privacy
relating to the use of the names, likenesses, voices, signatures, and
which are used by such Person and its Subsidiaries or as to which such
Person or any of its Subsidiaries claim an ownership interest or as to
which such Person or any of its Subsidiaries is a licensee of licensor.
"Investor" has the meaning set forth in the preamble to this
Agreement.
"Law" means any domestic or foreign, federal, state or local,
law, statute, ordinance, rule or regulation.
" Loss" or "Losses" has the meaning set forth in Section 10.1.
"Magazine Content and Hosting Agreement" means Amendment Number
Two to the Amended and Restated Magazine Content License and Hosting
Agreement between the Company and Investor substantially in the form of
Exhibit B attached hereto.
21
26
"Material Adverse Effect" shall mean:
(a) with respect to the Company, any change, event
or effect shall have occurred or been threatened that, when taken
together with all other adverse changes, events or effects that have
occurred or been threatened, is or is reasonably likely to (i) be
materially adverse to the business, operations, properties, condition
(financial or otherwise), assets or liabilities (including contingent
liabilities) of the Company and its Subsidiaries taken as a whole or
(ii) prevent or materially delay the performance by the Company of any
of its obligations under this Agreement or the consummation of the
Merger or the other transactions contemplated by this Agreement, the
other Transaction Documents or the Agreement and Plan of Merger;
provided that none of the following alone shall be deemed, in and of
itself, to constitute a Material Adverse Effect: (a) a change in the
market price or trading volume of Common Stock; (b) a loss by the
Company of its suppliers, customers or employees that is directly and
principally related to the Company being a party to this Agreement or
(c) changes in general economic conditions or changes affecting the
industry in which the Company operates generally (as opposed to
Company-specific changes);
(b) with respect to Investor, any change, event or
effect shall have occurred or been threatened that, when taken together
with all other adverse changes, events or effects that have occurred or
been threatened, is or is reasonably likely to (i) be materially adverse
to the business, operations, properties, condition (financial or
otherwise), assets or liabilities (including contingent liabilities) of
Investor, its Affiliates and Subsidiaries taken as a whole or (ii)
prevent or materially delay the performance by the Investor of any of
its obligations under this Agreement or the consummation of the Merger
or the other transactions contemplated by this Agreement, the other
Transaction Documents or the Agreement and Plan of Merger.
"Merger" has the meaning set forth in the second recital to the
Agreement and Plan of Merger.
"NASDAQ-NMS" means the Nasdaq Stock Market National Market.
"Order" means any judgment, order, injunction, decree,
stipulation or award entered or rendered by any Governmental Entity.
"Person" shall mean any individual, corporation, partnership
(general or limited), limited liability company, limited liability
partnership, trust, joint venture, joint-stock company, syndicate,
association, entity, unincorporated organization or government or any
political subdivision agency or instrumentality thereof.
22
27
"Prior Agreement" has the meaning set forth in the first
paragraph of this Agreement.
"Purchase Price" has the meaning set forth in Section 1.1.
"Requirement of Law" means as to any Person, any Law, rule,
regulation, order, judgment, decree or determination of any arbitrator
or a court or other Governmental Entity, in each case applicable to or
binding upon such Person or any of its properties or to which such
Person or any of its property is subject.
"Rights Offering" has the meaning set forth in the preamble to
this Agreement.
"Rights Offering Expenses" has the meaning set forth in Section
11.2.
"Rights Offering Registration Statement" has the meaning set
forth in Section 11.1.
"Schedule of Exceptions" has the meaning set forth in Article 3.
"SEC" means the United States Securities and Exchange
Commission.
"Securities" means the Shares, the Warrant, the Warrant Shares
and any shares of capital stock issued as a dividend or other
distribution to holders of the Shares or the Warrant Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning set forth in Section 1.1.
"Stockholder Agreement" means the Stockholder Agreement,
substantially in the form attached hereto as Exhibit C, to be entered
into between Investor and the Company on the Closing Date.
"Subsidiary" means as to any Person, any other Person of which
at least 50% of the equity interests are owned, directly or indirectly
by such first Person.
"Tax" (and, with correlative meaning, "Taxes") means any
federal, state, local or foreign income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, premium,
withholding, alternative or added minimum, ad valorem, transfer or
excise tax, or any other tax, custom, duty, governmental fee or other
like assessment or charge of any kind whatsoever,
23
28
together with any interest or penalty or addition thereto, whether
disputed or not, imposed by any Governmental Entity.
"Tax Return" means any return, report or similar statement
required to be filed with respect to any Tax (including any attached
schedules), including any information return, claim for refund, amended
return or declaration of estimated Tax.
"Transaction" means the purchase and sale of the Shares and the
Warrant under this Agreement and the other transactions between the
parties contemplated by this Agreement and the other Transaction
Documents.
"Transaction Documents" means (i) this Agreement, (ii) the
Stockholder Agreement, (iii) the Warrant and (iv) the Magazine Content
and Hosting Agreement.
"Transfer" means any sale, exchange, pledge, disposition or
other transfer of the Securities or any interest in the Securities.
"Transfer Agent" means the transfer agent for the Common Stock.
"Voting Stock" means the Common Stock and any other securities
issued by the Company having the ordinary power to vote in the election
of directors of the Company (other than securities having such power
upon the happening of a contingency, unless such contingency has
occurred and is continuing).
"Warrant" has the meaning set forth in Section 1.1.
"Warrant Shares" has the meaning set forth in Section 1.1.
"WNI" has the meaning set forth in the preamble to this
Agreement.
8.2 Other Definitional Provisions.
(a) All terms defined in this Agreement have the defined
meanings when used in any certificate, report or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise
requires.
(b) Terms defined in the singular have a comparable meaning
when used in the plural, and vice versa.
(c) As used herein, the neuter gender also denotes the
masculine and feminine, and the masculine gender also denotes the neuter
and feminine, where the context so permits.
24
29
(d) The words "hereof," "herein" and "hereunder" and words
of similar import refer to this Agreement as a whole and not to any particular
provision of this Agreement.
(e) The words "include," "including" and "or" mean without
limitation by reason of enumeration.
(f) In addition to the terms defined in this Article 8,
certain other defined terms are defined elsewhere in this Agreement and,
whenever such terms are used in this Agreement, they shall have their
respective defined meanings.
ARTICLE 9.
MISCELLANEOUS.
9.1 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in Person, by overnight
courier or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses, or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 9.1:
If to the Company: iVillage Inc.
500 - 000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Executive Vice President-
Operations and Business Affairs
with a copy to: iVillage Inc.
500 - 000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
General Counsel
with a copy to: Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
Old Federal Reserve Bank Building
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx Xxxxx, Esq.
25
30
If to Investor: Hearst Communications, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxxxx
General Counsel
with a copy to: Xxxxxxxx Chance Xxxxxx & Xxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
9.2 Expenses. Each party will bear its own expenses, including the
fees and expenses of any attorneys, accountants, investment bankers, brokers,
finders or other intermediaries or other Persons engaged by Investor or the
Company, incurred in connection with this Agreement, the Transaction or any
other agreements provided for herein or entered into in connection herewith,
except as expressly provided otherwise in this Agreement or by any other written
agreement of the parties.
9.3 Benefits; Assignment. The provisions of this Agreement are
binding upon, and inure to the benefit of, Investor and the Company and their
respective successors and Persons acquiring any Securities by Transfer in
accordance with Article 6, to the extent provided therein. Nothing in this
Agreement, express or implied, is intended to confer upon any Person other than
Investor and the Company any rights, remedies or obligations under or by reason
of this Agreement. Except as specifically stated in Article 6, none of the
rights or obligations of the Company or Investor hereunder may be assigned to
any other Person under any circumstances.
9.4 Entire Agreement; Amendment and Waiver. This Agreement (which
includes the Schedules and Exhibits hereto), the other Transaction Documents,
the Agreement and Plan of Merger and any other agreements to which Investor
(including any Persons acquiring any Securities by Transfer in accordance with
Article 6, if relevant) and the Company is a party concerning the Transaction or
any of the Securities, constitute the entire agreement between Investor and the
Company with respect to the subject matter hereof and thereof and supersede all
prior agreements (including the Prior Agreement) and understandings, both
written and oral, between Investor and the Company with respect to the subject
matter hereof and thereof. This Agreement may not be amended, supplemented or
otherwise modified except by an instrument in writing signed by each of the
parties hereto, and none of the other agreements entered into between Investor
(including any Persons acquiring any Securities by Transfer in accordance with
Article 6, if relevant) and the Company in connection with this Agreement, the
Transaction or any of the Securities may be amended, supplemented or otherwise
modified except by an instrument in writing signed by the Company and each other
party thereto. No waiver by either party hereto of any of the provisions hereof
will be effective unless explicitly set forth in writing and executed by such
26
31
party. Any waiver by either party hereto of a breach of this Agreement will not
operate or be construed as a waiver of any subsequent breach.
9.5 Headings. The article, section and other headings in this
Agreement are for convenience of reference only and are not to affect its
meaning, interpretation or construction. When a reference is made in this
Agreement to Sections, subsections, Articles, Schedules or Exhibits, such
references shall be to a Section, subsection, Article, Schedule or Exhibit to
this Agreement unless otherwise indicated.
9.6 Governing Law. This Agreement will be governed by and construed
in accordance with the internal, substantive laws of the State of New York,
without giving effect to any conflicts of law principles of such state.
9.7 Remedies. All rights, powers and remedies provided under this
Agreement and the other Transaction Documents or otherwise available in respect
hereof at Law or in equity will be cumulative and not alternative, and the
exercise or beginning of the exercise of any thereof by any party does not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party.
9.8 Severability. In the event that any provision of this Agreement
is deemed invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions are not to be in any way be affected
or impaired thereby.
9.9 Counterparts. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original and all of which taken
together will constitute one and the same agreement, and it is not necessary in
making proof of this Agreement to produce or account for more than one such
counterpart.
9.10 Specific Performance. Each of the parties acknowledges and
agrees that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agrees that
the other party shall be entitled to seek an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
9.11 Survival. Any claim for losses or damages resulting from or
arising out of any inaccuracy or breach of any representation or warranty herein
must be asserted in writing before two (2) years after the Closing. All
covenants and agreements, to the extent remaining to be performed after the
Closing Date, will survive the Closing Date.
27
32
ARTICLE 10.
INDEMNIFICATION.
10.1 Indemnification of Investor. The Company will indemnify and hold
Investor harmless from any and all liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all court costs and
reasonable attorneys' fees (each a "Loss" and, collectively, "Losses"), that the
Investor may suffer or incur as a result of or relating to the inaccuracy in or
breach of any representation, warranty, covenant or agreement of the Company
contained in or made pursuant to this Agreement or the Transaction Documents
(other than the Magazine Content and Hosting Agreement).
10.2 Indemnification of the Company. Investor will indemnify and hold
the Company harmless from any and all Losses that the Company may suffer or
incur as a result of or relating to the inaccuracy in or breach of any
representation, warranty, covenant or agreement of the Investor contained in or
made pursuant to this Agreement or the Transaction Documents (other than the
Magazine Content and Hosting Agreement).
10.3 Notice. Any party entitled to receive indemnification under this
Article 10 (the "Indemnified Party"), agrees to give prompt written notice (a
"Claim Notice"), to the party required to provide such indemnification (the
"Indemnifying Party"), upon the occurrence of any indemnifiable Loss or the
assertion of any claim or the commencement of any action or proceeding in
respect of which such a Loss may reasonably be expected to occur (such a claim,
action or proceeding being referred to as a "Claim"), but the Indemnified
Party's failure to give such notice will not affect the obligations of the
Indemnifying Party under this Article 10 except to the extent that the
Indemnifying Party is prejudiced thereby.
10.4 Defense of Claims. The Indemnifying Party may elect to assume
and control the defense of any Claim, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of expenses
related thereto, if (a) the Indemnifying Party acknowledges its obligation to
indemnify the Indemnified Party for any Losses resulting from such Claim and
provides reasonable evidence to the Indemnified Party of its financial ability
to satisfy such obligation, and (b) the Claim does not seek to impose any
material liability or obligation on the Indemnified Party other than for money
damages. If such conditions are satisfied and the Indemnifying Party elects to
assume and control the defense of a Claim, then (i) the Indemnifying Party will
not be liable for any settlement of such Claim effected without its consent,
which consent will not be unreasonably withheld; (ii) the Indemnifying Party may
not settle such Claim without the consent of the Indemnified Party (not to be
unreasonably withheld) unless such settlement includes a full and unconditional
release of the Indemnified Party; and (iii) the Indemnified Party may employ
separate counsel and participate in the defense thereof, but the Indemnified
Party will be responsible for the fees and expenses of such counsel unless (A)
the Indemnifying Party has failed to assume the defense of such Claim or to
employ counsel with respect thereto or (B) a conflict of interest exists between
the interests of the Indemnified Party and the Indemnifying Party that requires
representation by separate counsel, in which case the fees and expenses of such
separate counsel will be paid by the Indemnifying Party. If such conditions are
not
28
33
satisfied, the Indemnified Party may assume and control the defense of the Claim
at the expense of the Indemnifying Party; provided that the Indemnified Party
may not settle any such Claim without the consent of the Indemnifying Party (not
to be unreasonably withheld) unless such settlement includes a full and
unconditional release of the Indemnifying Party; and further provided that the
Indemnifying Party may participate in such defense (at the Indemnifying Party's
expense).
ARTICLE 11.
RIGHTS OFFERING.
11.1 Company's Agreement to Conduct Rights Offering. The Company
agrees to prepare and file with the SEC a Registration Statement with respect to
the Rights Offering (the "Rights Offering Registration Statement"). The Company
will use its reasonable commercial efforts to file the Rights Offering
Registration Statement concurrently with the Registration Statement on Form S-4
to be filed with the SEC in connection with the Merger. The Rights Offering will
expire on or prior to the Closing Date and the closing of the Rights Offering
would occur concurrently with the closing of the transactions contemplated by
this Agreement and the Agreement and Plan of Merger.
11.2 Expenses of the Rights Offering. Investor covenants and agrees
with the Company that Investor will pay or cause to be paid as incurred the
following: (i) the reasonable fees, disbursements and expenses of the Company's
counsel and accountants incurred in connection with the Rights Offering and the
registration of the Rights Offering under the Securities Act and all other
expenses in connection with the preparation, printing and filing of the Rights
Offering Registration Statement, any related preliminary prospectus and the
related prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the WNI stockholders; (ii) the cost of printing
or producing any closing documents (including any compilations thereof) and any
other documents in connection with the Rights Offering and the purchase, sale
and delivery of the Shares and the Warrants pursuant to the Rights Offering;
(iii) all expenses in connection with the qualification of the securities
offering in the Rights Offering for offering and sale under state securities
laws, (iv) all fees and expenses in connection with listing the securities
subscribed for in the Rights Offering on the NASDAQ-NMS; (v) the filing fees
incident to, and the reasonable fees and disbursements of counsel for the
Company in connection with, securing any required review by the National
Association of Securities Dealers, Inc. of the terms of the Rights Offering;
(vi) the cost and charges of any transfer agent or registrar incurred as a
result of the Rights Offering; and (vii) all other reasonable costs and expenses
incident to the Rights Offering which are not otherwise specifically provided
for in this Section (all such costs and expenses in the preceding clauses (i)
through (vii) being referred to in this Agreement as the "Rights Offering
Expenses"); provided, however, that notwithstanding the foregoing the Company
agrees to pay the first one hundred thousand dollars ($100,000) of Rights
Offering Expenses.
29
34
11.3 Limitation on Rights Offering. The Company shall have no
obligation to complete the Rights Offering in the event that it would violate
any Law.
ARTICLE 12
ADDITIONAL INVESTOR PURCHASE OBLIGATIONS
If Appraisal Rights are demanded, exercised or perfected by any
WNI stockholder, and the shares of WNI common stock associated with such
Appraisal Rights exceed two percent (2.0%) of the shares of Xxxxx.xxx common
stock outstanding as of the record date of the Xxxxx.xxx special stockholder
meeting called for the purpose of approving the Merger (such shares in excess of
two percent (2.0%), the "Additional Appraisal Shares"), Investor shall, upon
receipt from the Company of an Appraisal Rights Purchase Request, purchase from
the Company, at a per share purchase price of $1.875, a number of shares of
Common Stock equal to the Additional Appraisal Shares multiplied by the Exchange
Ratio, rounded down to the nearest whole share.
30
35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the day and year first above written.
iVILLAGE INC.
By: /s/ Xxxxx Xxxxx
--------------------------------
Name: Xxxxx Xxxxx
Title: Executive Vice President of
Operations and Business Affairs
HEARST COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President
