EXHIBIT 10.32
AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
by and between
iVILLAGE INC.
and
HEARST COMMUNICATIONS, INC.
Dated as of February 22, 2001
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AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
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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
4.6 Accredited Investor Status......................................................................13
4.7 Brokers and Finders.............................................................................13
4.8 Acquisition of Voting Securities................................................................13
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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
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
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11.2 Expenses of the Rights Offering.................................................................26
11.3 Limitation on Rights Offering...................................................................26
ARTICLE 12 ADDITIONAL INVESTOR PURCHASE OBLIGATIONS.............................................................26
4
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, ▇▇▇▇▇.▇▇▇ 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
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.
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 ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, located at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇. 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
(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.
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 ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇▇, 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.
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.
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, 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.
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 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.
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 ▇▇▇▇,
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 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, ▇▇▇▇▇ & 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 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.
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 hereof 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.
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.
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 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.
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 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.
"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.
"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.
"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.
"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, 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.
(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 - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Executive Vice President-
Operations and Business Affairs
with a copy to: iVillage Inc.
500 - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
General Counsel
with a copy to: ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
Old Federal Reserve Bank Building
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
If to Investor: Hearst Communications, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
General Counsel
with a copy to: ▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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 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.
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 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.
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 ▇▇▇▇▇.▇▇▇ common
stock outstanding as of the record date of the ▇▇▇▇▇.▇▇▇ 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.
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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Title: Executive Vice President - Operations
-------------------------------------
and Business Affairs
-------------------------------------
HEARST COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: Vice President
-------------------------------------
EXHIBIT A
FORM OF WARRANT
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 A SECURITIES PURCHASE
AGREEMENT, DATED AS OF FEBRUARY 5, 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.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK OF
iVILLAGE INC.
(Void after December 31, 2004)
Warrant No. ---------- 2,100,000 Shares of Common Stock
iVILLAGE INC.
1. Issuance. This Warrant is issued to HEARST COMMUNICATIONS,
INC., a Delaware corporation ("Investor"), by iVILLAGE INC., a Delaware
corporation (hereinafter with its successors called the "Company").
2. Purchase Price; Number of Shares. The registered holder of
this Warrant (the "Holder"), commencing on the date hereof but subject to the
terms of this Warrant, is entitled upon surrender of this Warrant with the
subscription form annexed hereto as Attachment A duly executed, at the principal
office of the Company, to purchase from the Company up to 2,100,000 fully paid
and nonassessable shares (the "Shares") of Common Stock, $0.01 par value per
share, of the Company (the "Common Stock") at a price per share (the "Purchase
Price") of $0.01 at any time or from time to time up to and including 5:00 p.m.
(New York Time) on December 31, 2004, provided, however, that the Holder shall
have no right to exercise this Warrant unless at the time of
exercise the Average Closing Price (as defined below) of the Common Stock
exceeds $3.75 (as adjusted for stock splits, stock dividends or other
adjustments to Common Stock). Upon receipt of written notice from the Company
that the Average Closing Price condition specified above has been satisfied, the
Holder shall have thirty (30) days, and only thirty (30) days, to exercise this
Warrant; provided, however, that in no event shall this Warrant be exercisable
after the Expiration Date. The person or persons in whose name or names any
certificate representing shares of Common Stock is issued hereunder shall be
deemed to have become the holder of record of the shares represented thereby as
at the close of business on the date this Warrant is exercised, whether or not
the transfer books of the Company shall be closed.
For purposes of this Warrant, "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 The Nasdaq
Stock Market), 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.
3. Payment of Purchase Price. The Purchase Price may be paid
(i) in cash or by certified check or wire transfer or (ii) pursuant to a "Net
Issue Election" as provided in Section 4.
4. Net Issue Election. The Holder may elect to receive,
without the payment by the Holder of any additional consideration, shares of
Common Stock equal to the value of this Warrant by the surrender of this Warrant
to the Company, with the net issue election notice set forth in Attachment A
annexed hereto duly executed, at the principal office of the Company. Thereupon,
the Company shall issue to the Holder such number of fully paid and
nonassessable shares of Common Stock as is computed using the following formula:
Y(A-B)
X = ------
A
where:
X = the number of shares of Common Stock to be issued
to the Holder pursuant to this Section 4.
Y = the number of shares of Common Stock covered by
this Warrant at the time the net issue election is made
pursuant to this Section 4.
A = the fair market value of one share of Common Stock,
determined as follows: (i) if at such time the Common Stock
is listed on a national securities exchange or on the
over-the-counter market, then the closing price of the
Common Stock on the business day immediately prior to the
date of exercise or, if no sale of the Common Stock was made
on such day, the first business day immediately preceding
such day upon which a sale was made, or (ii) if at such time
the Common Stock is not listed on a national securities
exchange or on the over-the-counter
2
market, then as determined in good faith by the Board at the
time the net issue election is made pursuant to this Section
4.
B = the Purchase Price in effect under this Warrant at
the time the net issue election is made pursuant to this
Section 4.
5. Fractional Shares. No fractional shares shall be issued
upon exercise of this Warrant. The Company shall, in lieu of issuing any
fractional share, pay the holder entitled to such fraction a sum in cash equal
to such fraction multiplied by the then effective Purchase Price.
6. Exercise; Expiration Date. Subject to the provisions of
Section 2, this Warrant may be exercised in whole or in part at any time
commencing on the date hereof and ending at 5:00 p.m., New York time, on
December 31, 2004 (the "Expiration Date") and shall be void thereafter.
7. Reserved Shares; Valid Issuance. The Company covenants that
it will at all times from and after the date hereof reserve and keep available
such number of its authorized shares of Common Stock of the Company, free from
all preemptive or similar rights therein, as will be sufficient to permit the
exercise of this Warrant in full. The Company further covenants that such shares
as may be issued pursuant to such exercise will, upon issuance, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof.
8. Stock Splits and Dividends. If after the date hereof the
Company shall subdivide the Common Stock, by stock split or otherwise, or
combine the Common Stock, or issue additional shares of Common Stock in payment
of a stock dividend on the Common Stock, the number of shares of Common Stock
issuable on the exercise of this Warrant shall forthwith be proportionately
increased in the case of a subdivision or stock dividend, or proportionately
decreased in the case of a combination, and the Purchase Price shall forthwith
be proportionately decreased in the case of a subdivision or stock dividend, or
proportionately increased in the case of a combination.
9. Mergers and Reclassifications. If after the date hereof the
Company shall enter into any Reorganization (as hereinafter defined), then, as a
condition of such Reorganization, lawful provisions shall be made, and duly
executed documents evidencing the same from the Company or its successor shall
be delivered to the Holder, so that the Holder shall thereafter have the right
to purchase, at a total price not to exceed that payable upon the exercise of
this Warrant in full, the kind and amount of shares of stock and other
securities and property receivable upon such Reorganization by a holder of the
number of shares of Common Stock which might have been purchased by the Holder
immediately prior to such Reorganization, and in any such case appropriate
provisions shall be made with respect to the rights and interests of the Holder
to the end that the provisions hereof (including without limitation, provisions
for the adjustment of the Purchase Price and the number of shares issuable
hereunder) shall thereafter be applicable in relation to any shares of stock or
other securities and property thereafter deliverable upon exercise hereof. For
the purposes of this Section 9, the term "Reorganization" shall include without
limitation any reclassification, capital reorganization or change of the Common
Stock (other than as a result of a subdivision, combination or stock dividend
provided for in Section 8 hereof), or any consolidation of the Company with, or
merger of the Company into, another corporation or other business organization
(other than a merger in which the Company is the surviving corporation and which
does not result in any reclassification or change of the outstanding Common
Stock), or any sale or
3
conveyance to another corporation or other business organization of all or
substantially all of the assets of the Company.
10. Certain Events; Limitations on Adjustments. If any change
in the outstanding Common Stock of the Company or any other event occurs as to
which the provisions of Section 8 or Section 9 are not strictly applicable or if
strictly applicable would not fairly protect the purchase rights of the Holder
of the Warrant in accordance with such provisions, then the Board of Directors
of the Company shall make an adjustment in the number and class of shares
available under the Warrant, the Purchase Price or the application of such
provisions, so as to protect such purchase rights as aforesaid. The adjustment
shall be such as will give the Holder of the Warrant upon exercise for the same
aggregate Purchase Price the total number, class and kind of shares as he would
have owned had the Warrant been exercised prior to the event and had he
continued to hold such shares until after the event requiring adjustment.
Notwithstanding the foregoing, no adjustment shall be required unless such
adjustment would require an increase or decrease of at least $0.05 in the
Purchase Price then subject to adjustment and in no event shall the Purchase
Price be reduced below the then-current par value of the Common Stock. Any
adjustments that are not made by reason of this Section 10 shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 10 shall be made to the nearest cent.
11. Certificate of Adjustment. Whenever the Purchase Price is
adjusted, as herein provided, the Company shall promptly deliver to the Holder a
certificate of the Company's chief financial officer setting forth the Purchase
Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment.
12. Issue Tax. The issuance of certificates for the Shares
upon the exercise of the Warrant shall be made without charge to the Holder of
the Warrant for any issue tax (other than any applicable income taxes) in
respect thereof; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the then
Holder of the Warrant being exercised.
13. Notices of Record Date, Etc. In the event of:
(1) any taking by the Company of a record of the
holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive
any dividend or other distribution, or any right to
subscribe for, purchase, sell or otherwise acquire or
dispose of any shares of stock of any class or any other
securities or property, or to receive any other right;
(2) any reclassification of the capital stock of the
Company, capital reorganization of the Company,
consolidation or merger involving the Company, or sale or
conveyance of all or substantially all of its assets; or
(3) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
4
then and in each such event the Company will provide or cause to be provided to
the Holder a written notice thereof. Such notice shall be provided at least ten
(10) business days prior to the date specified in such notice on which any such
action is to be taken.
14. No Voting or Dividend Rights; Limitation of Liability.
Nothing contained in this Warrant shall be construed as conferring upon the
Holder hereof the right to vote or to receive notice as a stockholder of the
Company or any other matters or any rights whatsoever as a stockholder of the
Company. No dividends or interest shall be payable or accrued in respect of this
Warrant or the interest represented hereby or the shares purchasable hereunder
until, and only to the extent that, this Warrant shall have been exercised. No
provisions hereof, in the absence of affirmative action by the Holder to
purchase Shares, and no mere enumeration herein of the rights or privileges of
the Holder hereof, shall give rise to any liability of such Holder for the
Purchase Price or as a stockholder of the Company, whether such liability is
asserted by the Company or by its creditors.
15. Amendment. The terms of this Warrant may be amended,
modified or waived only with the written consent of the Holder and the Company.
16. Notices, Etc.
(a) Any notice or written communication required or permitted
to be given to the Holder may be given by United States mail, by overnight
courier or by facsimile transmission at the address most recently provided by
the Holder to the Company or by hand, and shall be deemed received upon the
earlier to occur of (i) receipt, (ii) if sent by overnight courier, then on the
day after which the same has been delivered to such courier for overnight
delivery, or (iii) if sent by United States mail, seventy-two (72) hours after
the same has been deposited in a regularly maintained receptacle for the deposit
of the United States mail.
(b) In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and denomination
and deliver the same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of an affidavit of the Holder or other
evidence reasonably satisfactory to the Company of the loss, theft or
destruction of such Warrant.
17. No Impairment. The Company will not, by amendment of its
certificate of incorporation or through any reclassification, capital
reorganization, consolidation, merger, sale or conveyance of assets,
dissolution, liquidation, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance of performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder.
18. Descriptive Headings and Governing Law. The descriptive
headings of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The provisions
and terms of this Warrant shall be governed by and construed in accordance with
the internal laws of the State of New York.
5
19. Successors and Assigns. This Warrant shall be binding upon
the Company's successors and assigns and shall inure to the benefit of the
Holder's successors and legal representatives.
Dated:
------------, 2001 iVILLAGE INC.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Attachment A
SUBSCRIPTION FORM
Date:
-----------------
iVillage Inc.
▇▇▇-▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Ladies and Gentlemen:
The undersigned hereby elects:
/ / to exercise the warrant issued to it by iVillage Inc. (the
"Company") and dated ________________, 2001 (the "Warrant") to purchase
____________________________ shares of the Common Stock of the Company
(the "Shares") purchasable thereunder at a purchase price of $0.01 per
Share or an aggregate purchase price of $__________ (the "Purchase
Price"). Pursuant to the terms of the Warrant the undersigned has
delivered the Purchase Price herewith in full in cash or by certified
check or wire transfer; or
/ / to surrender the right to purchase Shares pursuant to this Warrant
and to receive in lieu thereof Shares pursuant to the provisions of
Section 4 of the Warrant.
The undersigned also makes the representations set forth on Attachment
B attached to the Warrant.
The certificate(s) for such shares shall be issued in the name of the
undersigned or as otherwise indicated below:
Very truly yours,
--------------------------------------------------
(name of holder)
By:
-------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
1
Attachment B
THIS AGREEMENT MUST BE COMPLETED, SIGNED AND RETURNED TO iVILLAGE INC. ALONG
WITH THE SUBSCRIPTION FORM (ATTACHMENT A TO THE WARRANT) BEFORE THE SHARES
ISSUABLE UPON EXERCISE OF THE WARRANT CERTIFICATE DATED __________________, 2001
WILL BE ISSUED.
[Date]
iVillage Inc.
▇▇▇-▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
The undersigned, ___________________ ("Purchaser"), intends to acquire
up to ______________ shares of the Common Stock (the "Shares") of iVillage Inc.
(the "Company") from the Company pursuant to the exercise of a certain Warrant
to purchase Shares held by Purchaser. The Shares will be issued to Purchaser in
a transaction not involving a public offering and pursuant to an exemption from
registration under the Securities Act of 1933, as amended (the "1933 Act"), and
applicable state securities laws. In connection with such purchase and in order
to comply with the exemptions from registration relied upon by the Company,
Purchaser represents, warrants and agrees as follows:
1. Purchaser is acquiring the Shares for its own account, to
hold for investment, and Purchaser shall not make any sale, transfer or other
disposition of the Shares in violation of the 1933 Act or the General Rules and
Regulations promulgated thereunder by the Securities and Exchange Commission
(the "SEC") or in violation of any applicable state securities law;
2. Purchaser has been advised that the Shares have not been
registered under the 1933 Act or state securities laws on the ground that this
transaction is exempt from registration, and that reliance by the Company on
such exemptions is predicated in part on Purchaser's representations set forth
in this letter;
3. Purchaser has been informed that under the 1933 Act, the
Shares must be held indefinitely unless it is subsequently registered under the
1933 Act or unless an exemption from such registration (such as Rule 144) is
available with respect to any proposed transfer or disposition by Purchaser of
the Shares;
4. The Company may refuse to permit Purchaser to sell,
transfer or dispose of the Shares (except as permitted under Rule 144) unless
there is in effect a registration statement under the 1933 Act and any
applicable state securities laws covering such transfer, or unless Purchaser
furnishes an opinion of counsel reasonably satisfactory to counsel for the
Company, to the effect that such registration is not required;
5. Purchaser acknowledges that it is able to fend for itself,
can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Shares.
Purchaser represents and warrants that it is an "accredited investor" within the
meaning of Rule 501 of Regulation D of the 1933 Act.
Purchaser also understands and agrees that there will be
placed on the certificate(s) for the Shares, or any substitutions therefor,
legends stating in substance:
"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 a
Securities Purchase Agreement, dated as of February 5, 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 of transfer of such securities on
the books of the Company will be subject to compliance with such
restrictions."
Any legend required pursuant to applicable state securities
laws.
Purchaser has carefully read this letter and has discussed its
requirements and other applicable limitations upon Purchaser's resale of the
Shares with Purchaser's counsel.
Very truly yours,
--------------------------------------------------
(name of holder)
By:
-------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
3
EXHIBIT B
AMENDMENT NUMBER TWO TO AMENDED AND RESTATED MAGAZINE
CONTENT LICENSE AND HOSTING AGREEMENT
This Amendment to the Amended and Restated Magazine Content License and Hosting
Agreement of effective date January 27, 1999 (the "Magazine Agreement") between
▇▇▇▇▇.▇▇▇ Networks, Inc., a Delaware corporation (successor-in-interest to
▇▇▇▇▇.▇▇▇, LLC, a Delaware Limited Liability Company) ("▇▇▇▇▇.▇▇▇"), and Hearst
Communications, Inc. ("Hearst"), a Delaware corporation, is entered into between
iVillage Inc. (collectively including its subsidiaries, "iVillage"), a Delaware
corporation as successor in interest to ▇▇▇▇▇.▇▇▇, and Hearst effective as of
this ____ day of __________, 2001.
Recitals
Whereas, pursuant to an Agreement and Plan of Merger ▇▇▇▇▇.▇▇▇
and iVillage have effected a merger, effective as of this ___ day of _________,
2001 with the resulting corporation to be known as iVillage;
Whereas, iVillage and Hearst mutually desire for iVillage to
assume the obligations and receive the benefits that had been afforded to
▇▇▇▇▇.▇▇▇ pursuant to the Magazine Agreement, subject to the terms and
conditions of this Amendment to that Magazine Agreement;
Now, Therefore, in consideration of the mutual covenants and
representations set forth herein, the parties hereby agree as follows:
Amendment
1. Definitions. Capitalized terms herein not otherwise defined herein shall have
the meanings set forth in the Magazine Agreement, except all references to
▇▇▇▇▇.▇▇▇, LLC in the Magazine Agreement shall be construed to refer to
iVillage. For the avoidance of doubt, the term "Network" refers to the network
of Web sites operated by iVillage, which Network includes the web sites formerly
operated by ▇▇▇▇▇.▇▇▇ and the Magazine Sites.
Section 1.12 of the Magazine Agreement is hereby deleted and replaced with the
following:
"Net Advertising Revenue" means the gross revenue received by iVillage from the
sale of Advertisements on the (a) Magazine Sites, (b) any page of the Network
that primarily contains Proprietary Content (other than teasers), and (c) any
other page of the Network on which any article or feature that is Proprietary
Content (other than teasers) is reproduced or duplicated substantially in its
entirety, less agency fees (which shall not exceed fifteen percent (15%) of
gross revenue from the sale of Advertisements), commissions (which shall not
exceed eight percent (8%) of gross revenue from the sale of Advertisements,
credits due to cancellations and provisions for bad debt. In no event
shall Net Advertising Revenue for any period be less than the product of (A)
gross advertising revenue recognized from the sale of all advertising on the
Magazine Sites multiplied by (B) (i) the result of dividing the total number of
advertisements served (impressions -specifically including banners, buttons,
text ads, newsletters, cost per click and cost per acquisition) on the Magazine
Sites by the total number of advertisements served (impressions - specifically
including banners, buttons, text ads, newsletters, cost per click and cost per
acquisition) on the Network.
Section 1.13 of the Magazine Agreement is hereby amended to include the
following:
The term "Network" as provided for in this Agreement shall not include any
iVillage web site, which is not hosted in the United States and which does not
have a United States domain name (no foreign country code Top Level Domains).
2. Linking and Distribution. Section 2.2 of the Magazine Agreement is hereby
amended so as to include the following:
The parties agree that the homepage referred to herein is the opening screen
viewed by the user upon initial entry to the Network via the URL ▇▇▇▇▇▇▇▇.▇▇▇.
Additionally and notwithstanding anything to the contrary provided for in
Section 2 of the Magazine Agreement, the parties agree that the linking and
distribution provided to Hearst by iVillage for the Magazine Sites shall be
substantially similar to the placement currently enjoyed by Hearst at
▇▇▇▇▇.▇▇▇'s home page as detailed in the ▇▇▇▇▇.▇▇▇ screen shots of the ▇▇▇▇▇.▇▇▇
homepage and a sample of one Magazine Site's initial page directly linking off
the ▇▇▇▇▇.▇▇▇ home page, attached hereto and incorporated by this reference.
Notwithstanding anything to the contrary provided for in this Amendment or the
Magazine Agreement, but subject to Section 2.9 of the Magazine Agreement as
amended by this Amendment, iVillage shall have complete editorial control over
the Network (exclusive of the Magazine Sites), specifically including but not
limited to its offers, services, products and the size and location of its
advertising inventory. iVillage reserves the right to suspend, modify or
discontinue any part (exclusive of the Magazine Sites) of the Network in its
sole discretion.
3. Exclusivity Obligations. Section 2.9 of the Magazine Agreement is hereby
deleted and replaced with the following:
iVillage hereby agrees that during the term of this Agreement it will not,
without the prior written consent of Hearst, (a) enter into any agreement to
include as part of the Network any magazine site (meaning a U.S. edition of a
web site that is maintained as an on-line adjunct to a magazine or associated
with the magazine of a third party), if such magazine site may reasonably be
construed to be competitive with any of the Magazines or Magazine Sites or if
such third party magazine site is branded throughout by the branding of a
magazine that may reasonably be construed as competitive to the Magazines; (b)
display on the Magazine Sites advertising or other promotional materials from
magazines of third parties that may reasonably be construed to be competitive
with any of the Magazines; or (c) display on the same web page of the iVillage
Network the
2
brands, logo, Marks or Proprietary Content of any of the Magazines with the
brands, logo or Content of any magazine that may reasonably be construed to be
competitive with any of the Magazines, in such a way that it appears that the
brands, logos, Marks or Proprietary Content of any Magazine are co-branded or
otherwise affiliated with the brands or logos or Content of any such competitive
magazines. Subject to the restrictions set forth in subparts (a)-(c), above,
nothing herein shall be construed to limit iVillage from (d) creating and
distributing its own email newsletters and print publications branded with marks
owned or licensed by iVillage; (e) accepting paid or barter advertising or
sponsorship from a competitive Magazine (provided with respect to sponsorship
opportunities either currently existing or developed during the Term received
from competitors of the Magazines or Magazine sites, iVillage shall use
reasonably diligent efforts to offer Hearst a period of five business days to
match such offer, and with respect to sponsorship opportunities that iVillage
seeks to develop during the term on areas of the Network containing Content
suitable for sponsorship by the Magazines or their advertisers, iVillage will
use reasonably diligent efforts to offer Hearst a right of first negotiation for
a period of five business days to acquire such sponsorship rights on mutually
acceptable terms); (f) obtaining content for integration within the iVillage
Network from third parties including print publications from non- Hearst related
publications that are competitive with the Magazines, or (g) from entering into
any other business or contractual relationship or arrangement with any other
entity including, without limitation, for a co-branded page or area within a
site with a magazine that is competitive with one of the Magazines provided such
co-branded page or area is not directly linked to or part of any Magazine Site,
and so long as such relationship or arrangement is not in violation of subparts
(a), (b) or (c), above.
4. Production Services. Section 3.4(b) of the Magazine Agreement is hereby
deleted and replaced with the following:
Effective as of the date of this Amendment and continuing until the third
anniversary date hereof, Hearst hereby agrees to purchase from iVillage and
iVillage agrees to provide to Hearst, Production Services in the minimum
guaranteed amount of five million dollars ($5,000,000) in each consecutive
twelve month period (the "Production Commitment"), which services include the
creation of Original Site Content and Third Party Work in a manner which is
consistent with the quality, performance and cost standards set forth in Exhibit
B as provided by ▇▇▇▇▇.▇▇▇ prior to the effective date of this Amendment and as
enhanced by the amendments to Exhibit B set forth herein, in order that the
Magazine Sites provided for in Exhibit B shall continue to operate in a
substantially similar manner as existed prior to the effective date of this
Amendment and as enhanced by the amendments to Exhibit B set forth herein. To
the extent that in any consecutive twelve month period Hearst requests that
modifications be made to the Magazine Sites outlined in Exhibit B and as
enhanced by the amendments to Exhibit B set forth herein, which would materially
modify or change the Magazine Sites from the manner in which each looks and
functions during the period prior to the effective date of this Amendment and as
enhanced by the amendments to Exhibit B set forth herein, and such material
modifications or changes result in the amount of Production Services performed
by iVillage exceeding in any consecutive twelve (12) month period throughout the
Term, the
3
sum of five million dollars ($5,000,000) those costs shall be billed to Hearst
in addition to the Production Commitment of five million dollars. These
Production Services may be performed for the Magazine Sites that are the subject
of this Agreement, or for other sites associated with other units, divisions or
affiliates of Hearst (the "Hearst Sites"). The precise Production Services to be
performed with respect to each Magazine Site and Hearst Site shall be determined
by mutual agreement of the parties as soon as reasonably practicable following
the mutual execution of this Amendment and shall be consistent with the quality,
performance and cost standards provided by ▇▇▇▇▇.▇▇▇ prior to the effective date
of this Amendment and as enhanced by the amendments to Exhibit B set forth
herein. Until Hearst specifies otherwise, the Production Services shall be
performed for the Magazine Sites specified at Exhibit B. A written work order,
signed by both parties, shall be issued with respect to all Production Services
to be rendered. The quality, performance and cost standards set forth herein
with respect to the Magazine Sites shall also apply to any Hearst Sites for
which iVillage performs Production Services. Any Original Site Content will be a
work made for hire for Hearst as a contribution to a collective work in
accordance with 17 USC Sec 101 et. seq. To the extent any Original Site Content
may not constitute a work made for hire, iVillage hereby grants and assigns
exclusively to Hearst all right, title and interest in and to such Content for
the term of copyright. iVillage will use diligent efforts to secure ownership
rights to Third Party Work for Hearst. In the event iVillage is not able to
secure ownership of Content from any third party for Hearst, it will consult
with Hearst and based on Hearst's direction, will either refrain from securing
any Content from that third party or will use commercially reasonable efforts to
license such rights to that Content in Hearst's favor as Hearst may approve. In
the event that Hearst Content or Magazine Content is edited or abridged by
iVillage for posting to a Magazine Site, such edited or abridged version shall
nonetheless be considered Hearst Content or Magazine Content, as applicable.
In that event Hearst fails to expend the Production Commitment in either of the
two consecutive twelve month periods following the first anniversary date of
this Amendment, it will provide iVillage with notice of same 90 days prior to
the end of each twelve (12) month period, so that the parties can create
mutually approved optimization plans for the implementation of the Advertising
Commitment, and : (i) the amount of the Advertising Commitment set forth herein
at Section 7 applicable to that twelve month period shall be increased by the
amount of forty cents ($.40) for each dollar less than the Production Commitment
that Hearst has failed to expend; and (ii) the amount of Guaranteed Advertising
Royalty as set forth in this Amendment applicable to that twelve month period
shall be reduced pro rata (i.e., if Hearst expends 5% less than the Production
Commitment in any twelve month period the Guaranteed Advertising Royalty shall
be reduced by 5% for that twelve month period). For avoidance of doubt, this
opportunity to convert any unexpended portion of the Production Commitment to an
increase in the Advertising Commitment shall not be available to Hearst for the
twelve-month period following the effective date of this Amendment.
5. Guaranteed Advertising Royalty. Section 6.1 of the Magazine Agreement is
hereby amended so as to add the following:
4
iVillage guarantees that the Royalty payable to Hearst hereunder will be no less
than one million one hundred thousand dollars ($1,100,000) in the twelve month
period following the effective date of this Amendment and no less than one
million four hundred thousand dollars ($1,400,000) during each consecutive
twelve month period thereafter throughout the Initial Term (the foregoing
amounts referred to as the "Guaranteed Advertising Royalty"). The Guaranteed
Advertising Royalty is subject to reduction in the event Hearst fails to expend
the Production Commitment as set forth at Section 4 herein above. Within sixty
(60) days following the conclusion of each three month period following the
Effective Date hereof (each a "Quarter"), iVillage will pay to Hearst the
greater of one-quarter of the Guaranteed Advertising Royalty or the actual
earned Royalty pursuant to Section 6 of the Magazine Agreement (unless the total
amount of the Guaranteed Advance Royalty owed in that twelve month period has
been paid in which case iVillage would only be required to pay the actual earned
Royalty for such Quarter). If at the completion of the fourth Quarter, the total
fees due to Hearst do not exceed the Guaranteed Advertising Royalty, then the
fees paid to Hearst for the fourth Quarter will equal the difference between
Guaranteed Advertising Royalty and the fees paid to date for that twelve month
period.
6. Merchandising Advertisements. Section 6.4 shall be amended to include the
following:
Hearst must obtain prior written consent from iVillage, which consent shall not
be unreasonably withheld, prior to contacting third parties for the purpose of
attempting to sell advertising space on the iVillage Network to third parties.
7. Advertising Commitment. A new Section 6.1B is hereby added to the Magazine
Agreement as follows:
Effective as of the date of this Amendment and continuing until the third
anniversary date hereof, Hearst agrees to expend at least two million dollars
($2,000,000) in each consecutive twelve month period in advertising purchases to
promote any property or services of Hearst or any entity in which Hearst has an
interest ("Hearst Ads") on the Network ("Advertising Commitment"). The
Advertising Commitment is inclusive of the amounts payable by Hearst under
Section 6.1A of the Magazine Agreement. The Advertising Commitment is subject to
increase in the event Hearst fails to expend the Production Commitment as set
forth in this Amendment. Hearst Ads will be purchased at the lowest CPM rate
afforded by iVillage within a thirty day period before or after each
advertisement placement is effectuated, exclusive of agency fees, for comparable
advertising placed in comparable locations throughout iVillage by affiliates,
partners, or any third party, and shall be given prominent placement throughout
the Network comparable to that given to other advertisers making a similar
purchasing commitment. Notwithstanding the provisions of Section 6.1 of the
Magazine Agreement, no Royalty shall be payable by iVillage to Hearst with
respect to the Advertising Commitment.
8. Termination. A new Section 16.7A is hereby added to the Magazine Agreement as
follows:
5
This Agreement may be terminated by either party immediately upon written notice
if the other party (a) becomes the subject of any proceeding relating to
insolvency, receivership or liquidation; (b) files a petition in bankruptcy; or
has filed against it a petition in bankruptcy which is not discharged within
thirty (30) days thereof; (c) makes an assignment for the benefit of its
creditors; (d) or admits in writing its inability to pay debts as they become
due. The payment obligations set forth in this Amendment and the Magazine
Agreement (to the extent not modified by this Amendment), which have been earned
or accrued as of date of termination shall nonetheless remain payable.
A new Section 16.7B is hereby added to the Magazine Agreement as follows:
Hearst hereby consents to the assumption by iVillage of the Amended and Restated
Magazine Content License and Hosting Agreement, as that Agreement is amended by
Amendment Number Two to Amended and Restated Magazine Content License and
Hosting Agreement.
9. Exhibit A. Exhibit A of the Magazine Agreement is hereby amended to include
the following:
From time to time upon reasonable request by Hearst, iVillage will provide
information detailing the performance of the Hosting Services provided
hereunder. iVillage agrees to provide user tracking reports with respect to the
Magazine Sites in such format as provided to other third parties by iVillage and
including such information as Hearst may from time to time reasonably request.
iVillage will receive credit for all traffic, specifically including page views,
related to the Magazine Sites and Hearst will use commercially reasonable
efforts to cooperate with iVillage to provide any third party traffic reporting
and monitoring company (i.e., Media Metrics, ▇▇▇▇▇▇▇, Net Rating, PC Data) with
such documentation as may be required to ensure the credit of traffic to
iVillage.
10. Exhibit B. Exhibit B of the Magazine Agreement is hereby amended to include
the following:
iVillage will, to the extent not already in place, undertake to install a
content management system (being a system that brings structure to web
development by enabling content creators to create and publish content to the
web from their computer workstations, using both database and file format
content and allowing content creators to schedule, automate or distribute
content across multiple platforms, and allowing non-technical personnel to
contribute content to the web through templates) in a form mutually reasonably
acceptable to Hearst and iVillage, for use in connection with the Magazine
Sites. iVillage commits that all tools, processes and systems used in connection
with the Magazine Sites shall at all times be substantially consistent with or
superior to those provided to the Magazine Sites prior to the effective date of
this Amendment.
Exhibit B is also amended to include the following:
6
DESTINATION SPECIAL INTEREST REVENUE FOCUSED
SITE SITE SITE
------------------ ----------------------- -----------------------
Monthly Content $5,000 $3,000 $0
Acquisition Budget
PRODUCT PLAN
Homepage Update 2x/week 1x/week 1x/month (using archive
of existing content)
Newsletter 4x/month 2-4x/month -
CONTENT:
Daily o Tip o Tip o Tip
(these would be rotated
from an archive)
Weekly o Update of half
the subchannel TOCs
o Expert columns
o Expert columns updated (1-2)
updated (3-5)
o Poll (1)
o Polls (max of 2)
Monthly o Update of half o Update of the
the subchannel TOCs subchannel TOCs
o Horoscopes o Horoscopes
(if applicable) (if applicable) o On Sale Now page
o On Sale Now page o On Sale Now page o 1 feature,
o 10-20 o 6-10 features, repurposed from the
7
features, not to not to exceed magazine's current
exceed 80 pp.* 40 pp.* issue
o Hoc/last-minute
requests (surveys,
features) : 1 per o Ad Hoc/email
month maximum requests: 2/month
o Ad Hoc/ email
requests: 4/month
As Needed o Update of the
subchannel TOCs (for
seasonality, etc.)
Permanently Highlighted o Signature
on Homepage interactive tool(s)
* a flash piece equals approximately 5 regular flat features
11. Term Section 13.1 of the Magazine Agreement is hereby deleted and replaced
with the following:
This Agreement shall be effective from and after the effective date of this
Amendment for a period of three years, namely to _____________, 2004 (the
"Initial Term"). Following the Initial Term, this Agreement shall automatically
renew for three consecutive terms of six (6) years each (each, a "Renewal
Term"); provided that prior to the commencement of each Renewal Term the parties
shall reach agreement as to any modifications to be made to the royalties,
production and hosting fees or commissions to be paid hereunder. In the event
the parties do not reach such agreement, the applicable Renewal Term shall,
nevertheless, commence on a month-to-month basis under the then-existing terms
of the Agreement until such time as the parties agree to any new terms or either
party provides the other with no less than ninety (90) days notice of
termination of this Agreement.
12. Payment: Section 7.4 of the Magazine Agreement is hereby deleted and
replaced with the following:
8
All payments due to iVillage from Hearst pursuant to Sections 4 and 7 shall be
paid on a monthly basis, within thirty (30) days after the last day of each
calendar month.
13. Successors and Assigns; Change in Control: Section 16.7 of the Magazine
Agreement is hereby amended to add at the end of the section the following:
The reference in this Section 16.7 to ▇▇▇▇▇.▇▇▇, LLC shall be modified to
"either party" and the reference to Hearst shall be modified to "the other
party". Subparagraphs (iv) and (v) of that Section 16.7 are deleted.
14. Exhibit C is hereby amended to include the following in section I:
iVillage Inc Marks.
to be provided over the term of the Magazine Agreement.
15. Ratification. Except as expressly set forth herein, the Magazine Agreement
is hereby ratified and remains in full force and effect.
In Witness Whereof, each of the parties have executed this
Amendment as of the date first written above.
iVillage Inc.,
as successor-in-interest to ▇▇▇▇▇.▇▇▇ Networks, Inc.
By:
---------------------------
Title:
---------------------------
Hearst Communications, Inc.
By:
---------------------------
Title:
---------------------------
9
EXHIBIT C
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT (this "Agreement") is entered into
as of __________, 2001 by and between --------- iVillage Inc., a Delaware
corporation (the "Company"), and Hearst Communications, Inc., a Delaware
corporation ------- ("Purchaser"). -----------
RECITALS
WHEREAS, the Company and Purchaser are parties to that certain
Amended and Restated Securities Purchase Agreement, dated as of February 22,
2001 (the "Securities Purchase Agreement"), which, among other things, provides
for the sale by the Company and the purchase by Purchaser of up to 9,324,000
shares (subject to adjustment as provided in Section 1.2 of the Securities
Purchase Agreement) of the Company's common stock (as adjusted, the "Purchase
Shares") and a warrant to purchase up to an additional 2,100,000 shares of the
Company's common stock (the "Warrant" and, upon exercise, the "Warrant Shares"
and, each together with the Purchase Shares, the "Investment Shares"); and
WHEREAS, the Investor Group (as hereinafter defined) acquired
_____ shares of the Company's common stock in exchange for certain shares of
▇▇▇▇▇.▇▇▇ Networks, Inc. common stock (the "Merger Shares") pursuant to an
Agreement and Plan of Merger, dated as of February 5, 2001 and amended as of
February 22, 2001, by and among Purchaser, the Company and a wholly-owned
subsidiary of the Company (as amended, the "Agreement and Plan of Merger"); and
WHEREAS, the Investment Shares and the Merger Shares
constitute all of the Voting Securities (as defined hereafter) owned by the
Investor Group as of the date hereof.
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises contained in this Agreement, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions
For the purposes of this Agreement, the following words and
phrases shall have the following meanings:
(a) "13D Group" means any group of persons formed for the
purpose of acquiring, holding, voting or disposing of Voting Securities which
would be required under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder, to file a
statement on Schedule 13D with the Securities and Exchange Commission as a
"person" within the meaning of Section 13(d)(3) of the Exchange Act if such
group beneficially owned sufficient securities to require such a filing under
the Exchange Act.
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(b) "20% Share Issuance" means the issuance of Voting
Securities in a single transaction or a series of related transactions which
represent greater than twenty percent (20%) but less than forty percent (40%) of
the number of Voting Securities outstanding immediately after such transaction
or series of related transactions.
(c) "40% Share Issuance" means the issuance of Voting
Securities in a single transaction or a series of related transactions which
represent forty percent (40%) or more of the number of Voting Securities
outstanding immediately after such transaction or series of related
transactions.
(d) "Affiliate" shall have the meaning set forth in Rule 12b-2
under the Exchange Act and shall also include any person acting on behalf of any
person or its affiliate.
(e) "Board" means the Board of Directors of the Company.
(f) "Consenting Vote" means (i) the unanimous written consent
of the Board or (ii) the approval of the Board at any properly noticed Board
meeting at which a quorum is present which approval shall include all of the
non-Investor Group Designees present at the meeting.
(g) "Independent Director" means any person, as of the date of
his or her appointment or election to the Board, that is not and has not been
during the three years preceding the date of such appointment or election (i) an
Investor Group Designee, or (ii) an employee of the Company or any of its
subsidiaries.
(h) "Initial Equity Stake" means the number of shares of
iVillage securities represented by the Investment Shares and the Merger Shares.
(i) "Investor Group" means Purchaser and its Affiliates.
(j) "Investor Group Designee" means any person representing,
employed by, designated as nominee by or otherwise affiliated with any member of
the Investor Group.
(k) "Investor Group Interest" means, as of the date of
determination, the total number of (i) the outstanding Voting Securities owned
by the Investor Group and (ii) any outstanding convertible securities, options,
warrants or other rights owned by the Investor Group which are, or with the
passage of time or satisfaction of any conditions could be, convertible into or
exchangeable or exercisable for securities entitled to vote for the election of
directors treating such convertible securities, options, warrants or other
rights on an as converted basis.
(l) "Maximum Interest" means, as of the date of determination,
the total number of shares resulting from the product of the Threshold
Percentage and the sum of (i) the total outstanding Voting Securities and (ii)
the Warrant Shares owned by the Investor Group.
(m) "Minimum Interest" means, as of the date of determination,
ten percent (10%) of the outstanding Voting Securities.
(n) "Non-Investor Group Designees" means all directors on the
Board as of the time of the determination, other than Investor Group Designees.
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(o) "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.
(p) "Restricted Block" means, at the time of determination,
the number of Voting Securities held by the Investor Group in excess of the
Unrestricted Block.
(q) "Threshold Percentage" means ______% [This percentage will
be calculated as of the closing date of the merger by dividing the Investor
Group Interest on such date (including the Investment Shares and the Warrant
Shares) by the sum of (i) the total number of outstanding Voting Securities on
such date and (ii) the Warrant Shares owned by the Investor Group.]
(r) "Transfer" means (i) to sell, exchange, pledge or
otherwise transfer any interest in, and (ii) a sale, exchange, pledge or other
transfer of any interest in, Voting Securities.
(s) "Unrestricted Block" means, at the time of determination,
the number of Voting Securities held by the Investor Group which represents the
Unrestricted Percentage of the total outstanding Voting Securities of the
Company.
(t) "Unrestricted Percentage" means __%. [This percentage will
be calculated as of the closing date of the merger by adding 25% and the
percentage of the outstanding shares of iVillage common stock represented by any
additional shares of iVillage common stock required to be purchased by Hearst
Communications pursuant to Article 12 of the Stock Purchase Agreement.]
(u) "Voting Security" means, as of the date of determination,
the Common Stock of the Company and any other security generally entitled to
vote for the election of directors.
1.2 Other Defined Terms. In addition to the terms defined in
Section 1.1, 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 II
PURCHASE RESTRICTIONS
2.1 Standstill Obligations.
(a) Limitation. At any time following the date of this
Agreement, without a prior Consenting Vote, no member of the Investor Group
shall, directly or indirectly, (i) acquire any Voting Securities (except by way
of (A) stock splits, stock dividends or other distributions or offerings made
available to holders of Voting Securities generally, or (B) stock options,
warrants or other rights to purchase Voting Securities approved by Consenting
Vote), or (ii) (other than in connection with an actual sale of such securities)
exercise any stock options, warrants or other rights to purchase Voting
Securities if the effect of such acquisition or exercise would be to increase
the Investor Group Interest to more than the Maximum Interest.
(b) Recapitalizations, Etc. Notwithstanding Section 2.1(a), no
member of the Investor Group shall be obligated to dispose of any Voting
Securities (or be prohibited from exercising the Warrant) if the Investor Group
Interest exceeds (or would, as a result of
3
exercise of the Warrant, exceed) the Maximum Interest as a result of (i) a
recapitalization of the Company, (ii) a repurchase of Voting Securities or (iii)
any other action taken by the Company or its Affiliates other than the Investor
Group.
(c) Participation. Without a prior Consenting Vote, the
Investor Group will not (i) solicit proxies in respect of any Voting Securities,
(ii) become a "participant" or "participant in a solicitation", as those terms
are defined in Rule 14a-11 under the Exchange Act, in opposition to a
solicitation by the Company, (iii) form or join any group (other than a group
composed solely of the Investor Group) for the purpose of voting, purchasing or
disposing of Voting Securities, (iv) initiate, propose or otherwise solicit
stockholders for any matter at any time, or induce or attempt to induce any
other person (including the Company) to initiate any stockholder proposal or
tender offer for shares of the Company, or for the purpose of convening a
stockholders' meeting of the Company, (v) take any action by written consent in
lieu of a meeting, or (vi) deposit any Voting Securities in a voting trust or
subject them to a voting agreement or other arrangement of similar effect,
except as contemplated by this Agreement; provided, however, that the Investor
Group shall not be deemed to be a "participant" or to have become engaged in a
solicitation hereunder solely by reason of (I) the membership of an Investor
Group Designee on the Board, (II) the voting of the Investor Group's Voting
Securities in any election of such representative of the Investor Group to the
Board, or (III) the solicitation of proxies by the Company in connection with
any annual meeting of the stockholders of the Company.
2.2 Purchaser Reporting Obligations.
(a) [Intentionally omitted].
2.3 Company Repurchase Rights; Disposition Obligation. In the
event that any acquisition of Voting Securities by the Investor Group should
cause the Investor Group Interest to exceed the Maximum Interest:
(a) The Company or its designee shall have the right, but
shall not be required, to purchase from the Investor Group, and the Investor
Group shall have the obligation to sell, such number of Voting Securities owned
by the Investor Group as is necessary to reduce the Investor Group Interest to
the Maximum Interest. The exercise of such right by the Company shall require a
Consenting Vote. Any Voting Securities purchased by the Company pursuant to this
Section shall be purchased for cash at a price per share equal to the lowest of:
(i) the average cost per share to the Investor Group of
the Voting Securities being purchased (it being conclusively
presumed that the Voting Securities last acquired which
exceeded the Maximum Interest are the Voting Securities
being purchased);
(ii) the average of the closing price for the Company's
Common Stock on a national stock exchange or automated
quotation system for the ten (10) consecutive trading days
preceding the date on which the Company or its designee
gives written notice to Purchaser of its intent to exercise
its option under this Section; or
(iii) the closing price for the Company's Common Stock
on a national stock exchange or automated quotation system
on the last trading day preceding the date on which the
Company or its designee gives written notice to Purchaser of
its intent to exercise its
4
option under this Section. This right is exercisable by the
Company's delivery of written notice to Purchaser, within
thirty (30) days after the Company first learns of such
violation, specifying the number of Voting Securities to be
purchased, the date on which said purchase shall occur
(which date shall be not more than thirty (30) days after
the date on which such notice was delivered to Purchaser)
and the place designated for such transaction to take place.
(b) The Company shall have the right, but shall not be
required, to require the Investor Group, and the Investor Group shall have the
obligation to sell or transfer as soon as practicable and in compliance with all
applicable securities laws, such number of Voting Securities owned by the
Investor Group as is necessary to reduce the Investor Group Interest to the
Maximum Interest so as to not be in violation of Section 2.1(a). This right is
exercisable by the Company's delivery of written notice to Purchaser, within
thirty (30) days after the Company first learns of such violation. In the event
the Company exercises such right, the sale or transfer of such number of Voting
Securities owned by the Investor Group necessary to reduce the Investor Group
Interest to the Maximum Interest shall be effected only in ordinary brokerage
transactions, or in private block trades approved by Consenting Vote, provided,
however, that (i) the selling member of the Investor Group shall inform the
Company of such sale or transfer of Voting Securities, prior to effecting it,
and (ii) Purchaser will use its reasonable efforts to effect or to cause the
sale or transfer in a manner which will effect the broadest possible
distribution with no sales or transfers to any one person or group within the
meaning of the Exchange Act in excess of one percent (1%) of the
then-outstanding Voting Securities. The exercise of such right by the Company
shall require a Consenting Vote.
The rights contained in this Section 2.3 shall not be deemed
to be the exclusive remedies for acquisition of Voting Securities resulting in
the Investor Group Interest exceeding the Maximum Interest in violation of
Section 2.1(a), nor shall such right be deemed to prejudice, or to operate as a
waiver of, any remedy contained in Section 6.1, or any other remedy to which the
Company may be entitled at law or in equity.
ARTICLE III
VOTING OBLIGATIONS
3.1 Voting Obligations. For so long as the Investor Group
holds a Minimum Interest:
(a) Quorum Obligation. Purchaser agrees, as a stockholder, and
shall cause each member of the Investor Group to so agree, to be present in
person or to be represented by proxy at all stockholder meetings of the Company
so that all Restricted Block Voting Securities owned by the Investor Group may
be counted for the purpose of determining the presence of a quorum at such
meetings with respect to those matters as to which Purchaser agrees to vote its
shares in Section 3.1(b).
(b) Voting of Shares. Purchaser, as a stockholder, may vote
the Unrestricted Block in its sole discretion. Purchaser agrees, as a
stockholder, and shall cause each member of the Investor Group to so agree, to
vote or cause to be voted the Restricted Block in the manner recommended to
stockholders by Consenting Vote on any vote submitted to the stockholders for
vote or action by written consent including, without limitation, any stockholder
rights plan approved by Consenting Vote.
5
3.2 Board Representation. In consideration of the Purchaser's
agreement to acquire the Purchase Shares (as defined in the Securities Purchase
Agreement), the Company agrees as follows:
(a) Appointment and Nomination. Upon the Closing (as defined
in the Securities Purchase Agreement), the Company's Board will be fixed at ten
(10) persons and the Company will cause the following appointments to be made:
(i) Three (3) Investor Group Designees shall be
appointed to the Board, with each such Investor Group
Designee appointed to a separate class of directors.
(ii) One (1) Investor Group Designee appointed to the
Board pursuant to Section 3.2(a)(i) shall be appointed to
the Company's nominating committee.
(iii) One (1) Investor Group Designee appointed to the
Board pursuant to Section 3.2(a)(i) shall be appointed to
the Company's compensation committee.
(iv) Five (5) Independent Directors shall be appointed
to the Board.
Thereafter, during the term of this Agreement and for so long as the Investor
Group holds at least a Minimum Interest and subject to Sections 3.2(b) and 3.3,
(i) the Company's nominating committee shall recommend to the Board that the
Investor Group Designees be included in the slate of nominees recommended by the
Board to the stockholders for election as directors at each annual meeting of
stockholders for which an election is held for such class of directors, (ii) the
total size of the Board shall be fixed at ten (10) persons, (iii) one (1)
Investor Group Designee appointed to the Board pursuant to Section 3.2(a) or
3.2(b) shall be appointed to each of the Company's nominating committee (which
committee shall be set at three (3) members consisting of the Company's Chief
Executive Officer, an Investor Group Designee, and an Independent Director
appointed by the Company's Chief Executive Officer) and compensation committee
and (iv) in connection with each annual meeting, the Company's nominating
committee shall recommend to the Board a slate of nominees which, if elected at
such annual meeting, would conform with the requirements of the composition of
the Board to be in effect upon the Closing, and the Board shall recommend such
slate to the stockholders. In the event that any of such Investor Group
Designees shall cease to serve as a director for any reason, the vacancy
resulting thereby shall be filled according to the procedures described in the
previous sentence.
(b) Board Nominees. During the Term of this Agreement and for
so long as the Investor Group holds a Minimum Interest, the Investor Group may
recommend to the Company's nominating committee and the Company's nominating
committee shall recommend to the Board, the number of Investor Group Designees
determined in the manner described below. Such Investor Group Designees shall be
included in the slate of nominees recommended by the Board to the stockholders
for election as directors at each annual meeting of stockholders for which an
election is held for such class of directors.
(i) For so long as the Investor Group owns at least eighty
percent (80%) of the Initial Equity Stake, the Investor Group may recommend
three (3) Investor Group Designees, each to be recommended and nominated upon
the expiration of the term of each Investor Group Designee appointed pursuant to
Section 3.2(a)(i) or elected subsequent to nomination under this
6
Section 3.2(b). If, at any time during the Term of this Agreement, the Investor
Group shall hold at least sixty-six percent (66%) but less than eighty percent
(80%) of the Initial Equity Stake, immediately upon such occurrence the Investor
Group shall cause all the Investor Group Designees serving on the Board in
excess of the number of Investor Group Designees described in Section 3.2(b)(ii)
to resign from the Board, effective as of the date of such occurrence. In the
event that more than one Investor Group Designee shall be required to resign
pursuant to this Section, the order of resignation shall proceed beginning with
the most recently elected or appointed Investor Group Designee and proceeding to
the next most recently elected or appointed Investor Group Designee;
(ii) For so long as the Investor Group owns at least sixty-six
percent (66%) but less than eighty percent (80%) of the Initial Equity Stake,
the Investor Group may name two (2) Investor Group Designees, each to be
recommended and nominated upon the expiration of the term of each Investor Group
Designee appointed pursuant to Section 3.2(a)(i) or elected subsequent to
nomination under this Section 3.2(b). If, at any time during the Term of this
Agreement, the Investor Group shall hold at least a Minimum Interest but less
than sixty-six percent (66%) of the Initial Equity Stake, immediately upon such
occurrence the Investor Group shall cause all the Investor Group Designees
serving on the Board in excess of the number of Investor Group Designees
described in Section 3.2(b)(iii) to resign from the Board, effective as of the
date of such occurrence. In the event that more than one Investor Group Designee
shall be required to resign pursuant to this Section, the order of resignation
shall proceed beginning with the most recently elected or appointed Investor
Group Designee and proceeding to the next most recently elected or appointed
Investor Group Designee;
(iii) If the Investor Group owns less than sixty-six percent
(66%) of the Initial Equity Stake, the Investor Group may name one (1) Investor
Group Designee.
(c) Termination of Representation. If, at any time during the
Term of this Agreement, the Investor Group shall hold Voting Securities
representing less than a Minimum Interest, immediately upon such occurrence the
Investor Group shall cause all Investor Group Designees serving on the Board to
resign from the Board, effective as of the date of such occurrence.
(d) Revival. If, at any time during the Term of this
Agreement, the number of Voting Securities held by the Investor Group shall
increase in excess of any of the percentages indicated in Section
3.2(b)(i)-(iii) (but in no event in excess of the Maximum Interest), the
Investor Group may name such additional Investor Group Designees as may be
provided by Sections 3.2(b)(i)-(iii). Each additional Investor Group Designees
shall be included in the slate of nominees recommended by the Board to the
stockholders for election as directors at the next annual meeting of
stockholders.
3.3 Board Expansion Following Certain Subsequent Share
Issuances.
(a) Promptly after the occurrence of a 20% Share Issuance, and
upon the request of the Company, Purchaser agrees, and shall cause each member
of the Investor Group and each Investor Group Designee to agree, to cooperate
with the Company and to take all action reasonably necessary to increase the
size of the Board to eleven (11) and to fill the vacancy resulting therefrom
with an Independent Director approved by a Consenting Vote.
7
(b) Promptly after the occurrence of a 40% Share Issuance, and
upon the request of the Company, Purchaser agrees, and shall cause each member
of the Investor Group and each Investor Group Designee to agree, to cooperate
with the Company and to take all action reasonably necessary to increase the
size of the Board to twelve (12) and to fill the two (2) vacancies resulting
therefrom with Independent Directors approved by a Consenting Vote.
ARTICLE IV
TRANSFER RESTRICTIONS
4.1 Restrictions on Transfer. For so long as the Investor
Group shall own Voting Securities representing at least the Minimum Interest,
Purchaser shall not Transfer any Voting Securities, except certain permitted
transactions made in accordance with Sections 4.2 and 4.3 or Transfers made to
members of the Investor Group, provided, that any proposed transferee that is a
member of the Investor Group must, as a condition to such Transfer, agree to be
bound by the restrictions of this Article 4, and, provided further, that if
Purchaser ceases to own, directly or indirectly, securities representing at
least 80% of the aggregate voting power of all voting securities issued by any
such member of the Investor Group or if Purchaser ceases to control, directly or
indirectly, the management or policies of any such member of the Investor Group
(whether through ownership of securities, partnership or membership interests,
by contract or otherwise), then in either such case, any Transfers to such
member of the Investor Group will automatically and without further action be
rescinded and nullified and the member of the Investor Group will be stripped of
any ownership or voting rights relating to any Voting Securities and will be
irrevocably obligated promptly to Transfer any and all Voting Securities held by
it to Purchaser unless such transfer would be permitted pursuant to Section 4.3.
4.2 Consent Required for Certain Transfers. Except in the case
of Transfers to Investor Group members as permitted by Section 4.1 or in the
case of Transfers permitted by Section 4.3, Purchaser must obtain a Consenting
Vote to any proposed Transfer of any Voting Securities by Purchaser or any
Investor Group member. The Company may refuse to grant or may withhold its
consent to any such proposed Transfer of Voting Securities in its sole and
absolute discretion, and also in its sole and absolute discretion may condition
its consent to any such proposed Transfer of Voting Securities on agreements of
either or both the Purchaser and the proposed transferee, including (by way of
example and not limitation), an agreement of the proposed transferee to be bound
by any or all of the restrictions set forth in this Agreement or of the
Purchaser to be jointly and severally liable with the proposed transferee for
any breach or violation of this Agreement by such proposed transferee.
4.3 Permitted Transactions. The provisions of Sections 4.1 and
4.2 of this Agreement shall not pertain or apply to:
(a) Any pledge of any Voting Securities made by a member of
the Investor Group pursuant to a bona fide loan transaction which creates a mere
security interest;
(b) Any repurchase of any Voting Securities by the Company;
(c) Any bona fide gift of any Voting Securities by a member of
the Investor Group;
8
(d) Any sale or transfer by the Investor Group of Voting
Securities to a transferee which transfer shall not cause the transferee to hold
a Minimum Interest or more after giving effect to such transfer;
(e) Any sale or transfer of any Voting Securities pursuant to
a tender offer or exchange approved by Consenting Vote; and
(f) Any sale or transfer of any Voting Securities in
connection with a merger or consolidation in which the Company is acquired, or
the sale of all or substantially all of the Company's assets which, in either
case, is approved by Consenting Vote;
provided, however, in each case (other than Sections 4.3(b), 4.3(d), 4.3(e) and
4.3(f)), that (i) the transferring member of the Investor Group shall inform the
Company of such pledge, transfer or gift of Shares, at least five (5) days prior
to effecting it, and (ii) the pledgee, transferee or donee shall furnish the
Company and the Investor Group with a written agreement to be bound by and
comply with all applicable provisions of this Agreement.
ARTICLE V
TERM AND TERMINATION
5.1 Term. Unless earlier terminated as hereinafter provided,
this Agreement shall terminate on the earlier of (i) the fifth anniversary date
of this Agreement and (ii) the date of any merger or consolidation pursuant to
which the Company is not the surviving corporation.
5.2 Termination. This Agreement may only be terminated before
the expiration of its term by mutual written consent of the Company and the
Purchaser. In the event of termination of this Agreement, the Investor Group
shall cause all the Investor Group Designees serving on the Board to resign from
the Board, effective as of the date of such termination. The resulting vacancies
on the Board shall be filled in accordance with the procedures set forth in the
Company's Bylaws.
ARTICLE VI
MISCELLANEOUS
6.1 Equitable Relief. The parties acknowledge and agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, it is agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which they may be entitled in
law or in equity.
6.2 Waiver. The failure of either party to assert a right
hereunder or to insist upon compliance with any term or condition of this
Agreement shall not constitute a waiver of that right or excuse a similar
subsequent failure to perform any such term or condition by the other party.
9
None of the terms, covenants and conditions of this Agreement can be waived
except by the written consent of the party waiving compliance.
6.3 Amendments and Waivers. Any term of this Agreement may be
amended or waived only with the written consent of the parties or their
respective successors and assigns. Any amendment or waiver effected in
accordance with this Section 6.3 shall be binding upon the parties and their
respective successors and assigns.
6.4 Assignment. This Agreement may not be assigned by either
party without the prior written consent of the other.
6.5 Governing Law; Jurisdiction. This Agreement and all acts
and transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of New York, without giving effect to principles of conflicts of
law. Each of the parties to this Agreement consents to the exclusive
jurisdiction and venue of the courts of the state and federal courts of the
County of New York, New York.
6.6 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
6.7 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.8 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 6.8:
If to the Company:
iVillage Inc.
500 - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Executive Vice President-
Operations and Business Affairs
with a copy to: iVillage Inc.
500 - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
General Counsel
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
Old Federal Reserve Bank Building
10
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
If to Purchaser:
Hearst Communications, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
General Counsel
with a copy to: ▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
6.9 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith, in order to maintain the economic
position enjoyed by each party as close as possible to that under the provision
rendered unenforceable. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.
6.10 Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
6.11 Entire Agreement. This Agreement is the product of both
of the parties hereto, and constitutes the entire agreement between such parties
pertaining to the subject matter hereof, and merges all prior negotiations and
drafts of the parties with regard to the transactions contemplated herein. Any
and all other written or oral agreements existing between the parties hereto
regarding such transactions are expressly canceled.
6.12 Survival. The provisions of Section 5.2 and Article VI
shall survive the termination of this Agreement forever. This Agreement shall
apply, without further act or formality, with any necessary changes to any new
class, series or numbers of securities to which any Voting Securities owned by
the Investor Group may be changed by virtue of any reorganization or
recapitalization of the Company or after a consolidation, subdivision or other
change in the capital stock of the Company, in each case, approved by Consenting
Vote.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.
iVILLAGE INC.
By:
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Name:
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Title:
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HEARST COMMUNICATIONS, INC.
By:
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Name:
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Title:
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