EXHIBIT 99.1
STOCK OPTION AGREEMENT
(XXXXX.XXX, INC. SHARES)
STOCK OPTION AGREEMENT
(XXXXX.XXX, INC. SHARES)
THIS STOCK OPTION AGREEMENT (this "AGREEMENT"), dated August 8,
2000, between Xxxxx.xxx, Inc., a Delaware corporation ("Issuer"), and
Xxxxxxxx.xxx, Inc., a Delaware corporation ("Grantee").
WITNESSETH:
WHEREAS, Grantee and Issuer have entered into an Agreement and
Plan of Merger, dated as of August 8, 2000 (the "Merger Agreement"), which
provides, among other things, for the merger of Merger Sub with and into
Grantee with Grantee continuing as the surviving corporation upon the terms
and subject to the conditions set forth in the Merger Agreement
(capitalized terms used herein without definition shall have the respective
meanings specified in the Merger Agreement); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to grant Grantee
the Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. GRANT OF OPTION.
Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject
to the terms hereof, sixteen million five hundred
sixteen thousand four hundred ninety-five (16,516,495)
shares of fully paid and nonassessable common stock of
the Issuer, par value $.001 per share ("Common Stock"),
equal to and in no event exceeding nineteen and
nine-tenths percent (19.9%) of the shares of Common
Stock outstanding as of July 31, 2000 the date hereof,
at a purchase price of $78.0625 per share of Common
Stock as adjusted in accordance with the provisions of
Section 6 of this Agreement (such price, as adjusted if
applicable, the "Option Price").
2. EXERCISE OF OPTION.
(a) Grantee may exercise the Option, in whole or part, and from
time to time, if, but only if, a Triggering Event (as hereinafter defined)
shall have occurred prior to the occurrence of an Option Termination Event
(as hereinafter defined), provided that Grantee shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2)
on or prior to the last date of the six (6)-month period following such
Triggering Event (the "Option Expiration Date").
(b) The term "Option Termination Event" shall mean the first
day after the earliest to occur of the following dates: (i) the date on
which the Effective Time of the Merger occurs; (ii) the last date of the
twelve (12) month period beginning on the date of termination of the Merger
Agreement pursuant to Section 7.1(b)(ii); provided, that such termination
has given rise to the right of Grantee to receive payment of Xxxxxxxx.xxx
Expenses pursuant to Section 7.2(b)(1) of the Merger Agreement; provided,
that subsequent to such termination, if an event occurs that gives rise to
the obligation of Issuer to pay the Termination Fee pursuant to Section
7.2(b)(2) of the Merger Agreement, then the last date of the six (6) month
period beginning on the date of actual payment of the Termination Fee by
Issuer to Grantee pursuant to Section 7.2(b)(2) of the Merger Agreement;
(iii) the date of termination of the Merger Agreement by either party
pursuant to the provisions of any section of the Merger Agreement other
than Sections 7.1(b)(ii) (other than as provided in clause (ii) above);
provided, that such termination occurs prior to the occurrence of a
Triggering Event; and (iv) the last date of the six (6) month period
beginning on the date of the first occurrence of a Triggering Event;
provided, however, that if the Option cannot be exercised as of any such
date by reason of any applicable judgment, decree, law, regulation or order
(each, an "Impediment"), or by reason of the waiting period under the HSR
Act, then the Option Termination Event shall be delayed until the date
which is thirty (30) days after such Impediment has been removed or such
waiting period has expired.
(c) TRIGGERING EVENT. The term "Triggering Event" shall mean
any termination of the Merger Agreement which entitles Grantee to receive
payment of the Termination Fee from Issuer pursuant to Section 7.2 of the
Merger Agreement.
(d) NOTICE OF TRIGGERING EVENT. Issuer shall notify Grantee
promptly in writing of the occurrence of any Triggering Event, and in any
event within twenty-four (24) hours, it being understood that the giving of
such notice by Issuer shall not be a condition to the right of Grantee to
exercise the Option or for a Triggering Event to have occurred.
(e) NOTICE OF EXERCISE; CLOSING. In the event Grantee is
entitled to and wishes to exercise the Option, it shall send to Issuer a
written notice (the date of which being herein referred to as the "Notice
Date") specifying (i) the total number of shares it will purchase pursuant
to such exercise and (ii) a place and date which shall be a business day
not earlier than three (3) business days nor later than sixty (60) business
days from the Notice Date for the closing of such purchase (the "Closing
Date"); provided, that if the closing of the purchase and sale pursuant to
the Option (the "Closing") cannot be consummated, in the reasonable opinion
of Grantee, by reason of any applicable judgment, decree, order, law or
regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and provided further, without
limiting the foregoing, that if, in the reasonable opinion of Grantee,
prior notification to or approval of any regulatory agency is required in
connection with such purchase, Grantee shall promptly file the required
notice or application for approval and shall expeditiously process the same
and the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which any required notification periods
have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of
the Option shall be deemed to occur on the Closing Date relating thereto.
(f) PURCHASE PRICE. At the Closing referred to in subsection
(e) of this Section 2, Grantee shall pay to Issuer the aggregate purchase
price for the shares of Common Stock purchased pursuant to the exercise of
the Option in immediately available funds by wire transfer to a bank
account designated by Issuer, provided that failure or refusal of Issuer to
designate such a bank account shall not preclude Grantee from exercising
the Option.
(g) ISSUANCE OF COMMON STOCK. At such Closing, simultaneously
with the delivery of immediately available funds as provided in subsection
(f) of this Section 2, Issuer shall deliver to Grantee a certificate or
certificates representing the number of shares of Common Stock purchased by
the Grantee and, if the Option should be exercised in part only, a new
Option evidencing the rights of Grantee thereof to purchase the balance of
the shares purchasable hereunder, and the Grantee shall deliver to Issuer
this Agreement and a letter agreeing that Grantee will not offer to sell or
otherwise dispose of such shares in violation of applicable law or the
provisions of this Agreement.
(h) LEGEND. Certificates for Common Stock delivered at a
Closing hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"THE TRANSFER AND VOTING OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO CERTAIN PROVISIONS OF AN AGREEMENT
BETWEEN THE REGISTERED HOLDER HEREOF AND ISSUER AND TO RESALE
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF ISSUER AND WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY ISSUER OF A WRITTEN REQUEST
THEREFOR."
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act of 1933, as amended (the
"Securities Act"), in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have
delivered to Issuer a copy of a letter from the staff of the SEC, or an
opinion of counsel, in form and substance reasonably satisfactory to
Issuer, to the effect that such legend is not required for purposes of the
Securities Act; (ii) the reference to the provisions of this Agreement in
the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in
compliance with the provisions of this Agreement and under circumstances
that do not require the retention of such reference; and (iii) the legend
shall be removed in its entirety if the conditions in the preceding clauses
(i) and (ii) and both satisfied. In addition, such certificates shall bear
any other legend as may be required by law.
(i) RECORD HOLDER; EXPENSES. Upon the Closing, Grantee shall be
deemed to be the holder of record of the shares of Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to Grantee or the Issuer
shall have failed or refused to designate the bank account described in
subsection (f) of this Section 2. Issuer shall pay all expenses, and any
and all United States federal, state and local taxes and other charges that
may be payable in connection with the preparation, issuance and delivery of
stock certificates under this Section 2 in the name of Grantee or its
assignee, transferee or designee.
3. CONDITIONS TO DELIVERY OF OPTION SHARES. The obligation
of Issuer to deliver Option Shares upon any exercise of
the Option is subject to the satisfaction of the
following conditions:
(a) All waiting periods, if any, under the HSR Act applicable
to the issuance of Option Shares hereunder shall have expired or been
terminated; and
(b) There shall be no preliminary or permanent injunction or
other order issued by any court of competent jurisdiction preventing or
prohibiting such exercise of the Option or the delivery of the Option
Shares in respect of such exercise.
4. RESERVATION OF SHARES. Issuer agrees: (i) that it shall
at all times maintain, free from preemptive rights,
sufficient authorized but unissued or treasury shares of
Common Stock (and other securities issuable pursuant to
Section 6) so that the Option may be exercised without
additional authorization of Common Stock (or such other
securities) after giving effect to all other options,
warrants, convertible securities and other rights to
purchase Common Stock (or such other securities); (ii)
that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act avoid or
seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or
performed hereunder by Issuer; (iii) promptly to take all
action as may from time to time be required (including
without limitation complying with all premerger
notification, reporting and waiting periods in the HSR
Act and the rules and regulations thereunder) in order to
permit Grantee to exercise the Option and the Issuer duly
and effectively to issue shares of Common Stock pursuant
hereto; and (iv) promptly to take all action provided
herein to protect the rights of Grantee against dilution.
5. LOST OPTIONS. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the
case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and
date.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. The number of
shares of Common Stock purchasable upon the exercise of
the Option shall be subject to adjustment from time to
time as provided in this Section 6.
(a) In the event that any additional shares of Common Stock are
issued or otherwise become outstanding after the date hereof (other than by
reason of subsection (b) of this Section 6), the number of shares of Common
Stock subject to the Option shall be increased so that, after such issuance
of additional shares, such number of shares then remaining subject to the
Option, together with shares theretofore issued pursuant to the Option,
equals nineteen and nine-tenths percent (19.9%) of the number of such
shares of Common Stock then issued and outstanding.
(b) In the event of any change in Common Stock by reason of
stock dividends, other dividends on the Common Stock payable in securities
or other property (other than regular cash dividends), stock splits,
merger, recapitalization, combinations, subdivisions, conversions,
exchanges of shares or other similar transactions, then the type and number
of shares of Common Stock purchasable upon exercise hereof shall be
appropriately adjusted, and proper provision will be made in the agreements
governing such transaction so that Grantee shall receive upon exercise of
the Option and payment of the aggregate Option Price hereunder the number
and class of shares or other securities or property that Grantee would have
received in respect of Common Stock if the Option had been exercised in
full immediately prior to such event, or the record date therefor, as
applicable.
(c) Whenever the number of shares of outstanding Common Stock
changes after the date hereof as a result of the events described in clause
(b) hereof (but not the events described in clause (a) hereof), the Option
Price shall be adjusted by multiplying the Option Price by a fraction the
numerator of which shall be equal to the aggregate number of shares of
Common Stock purchasable prior to the adjustment and the denominator of
which shall be equal to the aggregate number of shares of Common Stock
purchasable immediately after the adjustment.
(d) No adjustment made in accordance with this Section 6 shall
constitute or be deemed a waiver of any breach of any of Issuer's
representations, warranties, covenants, agreements or obligations contained
in the Merger Agreement.
(e) If the Issuer satisfies a portion of its obligation to pay
Grantee a termination fee as permitted by Section 7.2 of the Merger
Agreement by issuing to Grantee shares of Common Stock (the "Termination
Fee Shares"), then the number of shares of Common Stock subject to the
Option (including those Option Shares which may have already been
exercised) will be adjusted so that the sum of the number of shares of
Common Stock subject to the Option and the number of Termination Fee Shares
equals nineteen and nine-tenths percent (19.9%) of the number of shares of
Common Stock then issued and outstanding, without giving effect to any
Option Shares or Termination Fee Shares.
7. REGISTRATION RIGHTS.
(a) As used in this Agreement, "Registrable Securities" means
each of the Option Shares issued to Grantee hereunder and any other
securities issued in exchange for, or issued as dividends or otherwise on
or in respect of, any of such Option Shares.
(b) At any time or from time to time within three (3) years of
the first Closing, Grantee may make a written request to Issuer for
registration under and in accordance with the provisions of the Securities
Act with respect to all or any part of the Registrable Securities (a
"Demand Registration"). A Demand Registration may be, at the option of
Grantee, a shelf registration or a registration involving an underwritten
offering. As soon as reasonably practicable after Grantee's request for a
Demand Registration, Issuer shall file one or more registration statements
on any appropriate form with respect to all of the Registrable Securities
requested to be so registered; provided that Issuer will not be required to
file any such registration statement during any period of time (not to
exceed sixty (60) days after such request in the case of clause (i) below
or ninety (90) days in the case of clauses (ii) or (iii) below) when (i)
Issuer is in possession of material non-public information which it
reasonably believes would be detrimental to be disclosed at such time, (ii)
Issuer is required under the Securities Act to include audited financial
statements for any period in such registration statement that are not yet
available for inclusion therein, or (iii) Issuer determines, in its
reasonable judgment, that such registration would interfere with any
financing, acquisition or other material transaction involving Issuer or
any of its affiliates. Issuer shall use its best efforts to have the Demand
Registration declared effective as soon as reasonably practicable after
such filing and to keep the Demand Registration continuously effective for
a period of at least sixty (60) days following the date on which the Demand
Registration is declared effective, in the case of an underwritten
offering, or at least one hundred twenty (120) days following the date on
which the Demand Registration is declared effective, in the case of a shelf
registration; provided that, if for any reason the effectiveness of any
Demand Registration is suspended, the required period of effectiveness
shall be extended by the aggregate number of days of each such suspension;
and provided, further, that the effectiveness of any Demand Registration
may be terminated if and when all of the Registrable Securities covered
thereby shall have been sold. Grantee shall be entitled to two (2) Demand
Registrations: provided, that only requests relating to a registration
statement that has become effective under the Securities Act shall be
counted for purposes of determining the number of Demand Registrations
made. If any Demand Registration involves an underwritten offering, (i)
Issuer shall have the right to select the managing underwriter, which shall
be reasonably acceptable to Grantee and (ii) Issuer shall enter into an
underwriting agreement in customary form.
(c) If at any time within two (2) years of the first Closing,
Issuer proposes to file a registration statement under the Securities Act
with respect to any shares of any class of its equity securities to be sold
for the account of Issuer (other than a registration statement on Form S-4
or Form S-8 or any successor form), and the registration form to be used
may be used for the registration of Registrable Securities, then Issuer
shall in each case give written notice of such proposed filing to Grantee
at least twenty (20) days before the anticipated filing date, and Grantee
shall have the right to include in such registration such number of
Registrable Securities as Grantee may request (such request to be made by
written notice to Issuer within fifteen (15) days following Grantee's
receipt from Issuer of such notice of proposed filing) (an "Incidental
Registration"). Issuer shall use its commercially reasonable efforts to
cause the managing underwriter of any proposed underwritten offering to
permit Grantee to include in such offering all Registrable Securities
requested by Grantee to be included in the registration for such offering
on the same terms and conditions as any similar securities of Issuer
included therein. Notwithstanding the foregoing, if the managing
underwriter of such offering advises Grantee that, in the reasonable
opinion of such underwriter, the amount of Registrable Securities which
Grantee requests to be included in such offering would materially and
adversely affect the success of such offering, then the amount of
Registrable Securities to be offered shall be reduced to the extent
necessary to reduce the total amount of securities to be included in such
offering to the amount recommended by such underwriter; provided that if
the amount of Registrable Securities shall be so reduced, Issuer shall
include in such offering (i) first all shares proposed to be included
therein by the Issuer and (ii) second the shares requested to be included
therein by Grantee pro rata with the shares intended to be included therein
by any other stockholder of the Issuer. Participation by Grantee in any
Incidental registration shall not affect the obligation of the Company to
effect Demand Registrations under this Section 4.1. The issuer may withdraw
any registration under the Securities Act that gives rise to an Incidental
Registration without consent of Grantee.
(d) In the event that Registrable Securities are included in a
"piggyback" registration statement pursuant to Section 7(c) hereof, Grantee
agrees not to effect any public sale or distribution of the issue being
registered or a similar security of Issuer, or any securities convertible
into or exchangeable or exercisable for such securities, including a sale
pursuant to Rule 144 under the Securities Act, during the ten (10) business
days prior to, and during the ninety (90)-day period beginning on, the
effective date of such registration statement (except as part of such
registration), if and to the extent timely notified in writing by Issuer,
in the case of a non-underwritten public offering, or by the managing
underwriter, in the case of an underwritten public offering. In the event
that Grantee requests a Demand Registration or if Registrable Securities
are included in a "piggyback" registration pursuant to Section 7(c) hereof,
Issuer agrees not to effect any public sale or distribution of the issue
being registered or a similar security of Issuer, or any securities
convertible into or exchangeable or exercisable for such securities, during
the period from such request until ninety (90) days after the effective
date of such registration statement (except as part of such registration or
pursuant to a registration of securities on Form S-4 or Form S-8 or any
successor form).
(e) Notwithstanding anything to the contrary contained herein,
in the event that Grantee requests a Demand Registration or a "piggyback"
registration of Registrable Securities pursuant to Section 7(b) or 7(c)
hereof, respectively, Issuer shall have the right to purchase all, but not
less than all, of the Registrable Securities requested to be so registered,
upon the terms and subject to the conditions set forth in this Section
7(e). If Issuer wishes to exercise such purchase right, then within two (2)
business days following receipt of a request for a Demand Registration or a
"piggyback" registration, Issuer shall send a written notice (a "Repurchase
Notice") to Grantee specifying that Issuer wishes to exercise such purchase
right, a date for the closing of such purchase, which shall not be more
than five (5) business days after delivery of such Repurchase Notice, and a
place for the closing of such purchase (a "Repurchase Closing"). Upon
delivery of a Repurchase Notice subject to applicable Delaware law, a
binding agreement shall be deemed to exist between Grantee and Issuer
providing for the purchase by Issuer of the Registrable Securities
requested to be registered by Grantee, upon the terms and subject to the
conditions set forth in this Section 7(e). The purchase price per share or
other unit of Registrable Securities (the "Repurchase Price") shall equal
the average per share or per unit closing price as quoted on the Nasdaq (or
if not then quoted thereon, on such other exchange or quotation system on
which the Registrable Securities are quoted) for the period of five (5)
trading days ending on the trading day immediately prior to the day on
which Grantee requests a Demand Registration or a "piggyback" registration
of the Registrable Securities which Issuer subsequently elects to purchase.
Grantee's obligation to deliver any Registrable Securities at a Repurchase
Closing shall be subject to the condition that, at such Repurchase Closing,
Issuer shall have delivered to Grantee a certificate signed on behalf of
Issuer by Issuer's chief executive officer and chief financial officer,
which certificate shall be satisfactory in form and substance to Grantee,
to the effect that the purchase by Issuer of such Registrable Securities
(i) is permitted under applicable Delaware corporate law and under the
fraudulent conveyance provisions of the federal bankruptcy code and (ii)
does not violate any material agreement to which Issuer or any of its
subsidiaries is a party or by which any of their properties or assets is
bound. At any Repurchase Closing, Issuer shall pay to Grantee the aggregate
Repurchase Price for the Registrable Securities being purchased by wire
transfer of immediately available funds or by delivering to Grantee a
certified or bank check payable to or on the order of Grantee in an amount
equal to such aggregate Repurchase Price, and Grantee will surrender to
Issuer a certificate or certificates evidencing such Registrable
Securities. A purchase of Registrable Securities by Issuer pursuant to this
Section 7(e) shall be considered a Demand Registration for purposes of
Section 7(b) hereof.
(f) The registrations effected under this Section 7 shall be
effected at Issuer's expense except for underwriting commissions allocable
to the Registrable Securities. Issuer shall indemnify and hold harmless
Grantee, its affiliates and controlling persons and their respective
officers, directors, agents and representatives from and against any and
all losses, claims, damages, liabilities and expenses (including, without
limitation, all out-of-pocket expenses, investigation expenses, expenses
incurred with respect to any judgment and fees and disbursements of counsel
and accountants) arising out of or based upon any statements contained in,
or omissions or alleged omissions from, each registration statement (and
related prospectus) filed pursuant to this Section 7; provided, however,
that Issuer shall not be liable in any such case to Grantee or any
affiliate or controlling person of Grantee or any of their respective
officers, directors, agents or representatives to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or omission
or alleged omission made in such registration statement or prospectus in
reliance upon, and in conformity with, written information furnished to
Issuer specifically for use in the preparation thereof by Grantee such
affiliate, controlling person, officer, director, agent or representative,
as the case may be.
8. REPURCHASE OF OPTION AND OPTION SHARES.
(a) At the request of and upon notice by Grantee (the "Put
Notice") at any time during the period during which the Option is
exercisable pursuant to Section 2 (the "Purchase Period"), the Issuer (or
any successor entity thereof) will purchase from Grantee all or any portion
of the Option, to the extent not previously exercised, at the price set
forth in subparagraph (i) below, and all or any portion of the Option
Shares, if any, acquired by Grantee pursuant thereto, at the price set
forth in subparagraph (ii) below:
(i) the difference between the "Market/Tender Offer Price"
for the Common Stock as of the date Grantee gives notice of its intent to
exercise its rights under this Section 7(a) (defined as the higher of (A)
the highest price per share offered as of such date pursuant to any
Acquisition Proposal which was made prior to such date and (B) the average
closing sale price of Common Stock then on the Nasdaq National Market
during the five (5) trading days ending on the trading day immediately
preceding such date) and the Exercise Price, multiplied by the number of
Common Stock purchasable pursuant to the Option, but only if the
Market/Tender Offer Price is greater than the Exercise Price. For purposes
of determining the highest price offered pursuant to any Acquisition
Proposal which involves consideration other than cash, the value of such
consideration will be equal to the higher of (x) if securities of the same
class of the proponent as such considerations are traded on any national
securities exchange or by any registered securities association, a value
based on the closing sale price or asked price for such securities on their
principal trading market on such date and (y) the value ascribed to such
consideration by the proponent of such Acquisition Proposal, or if no such
value is ascribed, a value determined in good faith by the Board of
Directors of the Issuer.
(ii) The Market/Tender Offer Price multiplied by the
number of shares of Common Stock so purchased.
9. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. Issuer
hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to authorize this Agreement
or to consummate the transactions so contemplated. This Agreement has been
duly and validly executed and delivered by Issuer. This Agreement is the
valid and legally binding obligation of Issuer, enforceable against Issuer
in accordance with its terms.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the
date hereof through the termination of this Agreement in accordance with
its terms will have reserved for issuance upon the exercise of the Option,
that number of shares of Common Stock equal to the maximum number of shares
of Common Stock at any time and from time to time issuable hereunder, and
all such shares, upon issuance pursuant hereto, will be duly authorized,
validly issued, fully paid, nonassessable, and will be delivered free and
clear of all claims, liens, encumbrance and security interests and not
subject to any preemptive rights.
(c) The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not (i)
conflict with, or result in any violation or breach of any provision of the
Certificate of Incorporation, as amended to date, or Bylaws, as amended to
date, of Issuer, (ii) result in any violation or breach of, or constitute
(with or without notice or lapse of time, or both) a default (or give rise
to a right of termination, cancellation or acceleration of any obligation
or loss of any benefit) under any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which the Issuer or any of its Subsidiaries is
a party or by which any of them or any of their properties or assets may be
bound, or (iii) conflict or violate any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Issuer or any of its Subsidiaries or any of its or
their properties or assets, except in the case of (ii) and (iii) for any
such violations, breaches, defaults, terminations, cancellations,
accelerations or conflicts which could not, individually or in the
aggregate, have a material adverse effect (as defined in the Merger
Agreement) on Issuer and its Subsidiaries, taken as a whole, or impair the
ability of Issuer to consummate the transactions contemplated by this
Agreement.
(d) The Issuer has taken, and will in the future take, all
steps necessary to irrevocably exempt the transactions contemplated by this
Agreement from any applicable state takeover law and from any applicable
charter or contractual provision containing change of control or
anti-takeover provisions.
10. REPRESENTATIONS AND WARRANTIES OF THE GRANTEE. Grantee
hereby represents and warrants to Issuer as follows:
(a) Grantee has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Grantee and no other corporate
proceedings on the part of Grantee are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement
has been duly and validly executed and delivered by Grantee. This Agreement
is the valid and legally binding obligation of Grantee, enforceable against
Grantee in accordance with its terms.
(b) The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not (i)
conflict with, or result in any violation or breach of any provision of the
Certificate of Incorporation, as amended to date, or Bylaws, as amended to
date, of Grantee, (ii) result in any violation or breach of, or constitute
(with or without notice or lapse of time, or both) a default (or give rise
to a right of termination, cancellation or acceleration of any obligation
or loss of any benefit) under any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which the Grantee or any of its Subsidiaries is
a party or by which any of them or any of their properties or assets may be
bound, or (iii) conflict or violate any permit, concession, franchise,
license, judgment, order, degree, statute, law, ordinance, rule or
regulation applicable to Grantee or any of its Subsidiaries or any of its
or their properties or assets, except in the case of (ii) and (iii) for any
such violations, breaches, defaults, terminations, cancellations,
accelerations or conflicts which could not, individually or in the
aggregate, have a material adverse effect (as defined in the Merger
Agreement) on Grantee and its Subsidiaries, taken as a whole, or impair the
ability of Grantee to consummate the transactions contemplated by this
Agreement.
(c) The Grantee has taken, and will in the future take, all
steps necessary to irrevocably exempt the transactions contemplated by this
Agreement from any applicable state takeover law and from any applicable
charter or contractual provision containing change of control or
anti-takeover provisions.
11. GRANTEE COMPLIANCE. Grantee shall acquire the Option
Shares for investment purposes only and not with a view
to any distribution thereof in violation of the
Securities Act, and shall not sell any Option Shares
purchased pursuant to this Agreement except in compliance
with the Securities Act.
12. ASSIGNMENT OF OPTION BY GRANTEE. Neither of the parties
hereto may assign any of its rights or obligations under
this Option Agreement or the Option created hereunder to
any other person, without the express written consent of
the other party.
13. LIMITATION OF GRANTEE PROFIT.
(a) Notwithstanding any other provision of this Agreement, in
no event shall the Grantee's Total Profit (as hereinafter defined) exceed
Two Hundred Thirty Million Four Hundred Fifty-Four Thousand Five Hundred
Forty-Five dollars ($230,454,545.00) (the "Profit Cap") and, if it
otherwise would exceed such amount, the Grantee, at its sole election,
shall either (i) reduce the number of shares of Common Stock subject to
this Option, (ii) deliver to the Issuer for cancellation Option Shares
previously purchased by, or Termination Fee Shares (or other securities
into which such Termination Fee Shares are converted or exchanged) to
Grantee (valued, for the purposes of this Section 12(a) at the average
closing sales price per share of Common Stock (or if there is no sale on
such date then the average between the closing bid and ask prices on any
such day) as reported by the Nasdaq National Market for the five (5)
consecutive trading days preceding the day on which the Grantee's Total
Profit exceeds the Profit Cap, (iii) pay cash to the Issuer, (iv) reduce
the number of Termination Fee Shares to be paid by the Grantee or (v) any
combination thereof, so that Grantee's actually realized Total Profit shall
not exceed the Profit Cap after taking into account the foregoing actions.
(b) As used herein, the term "Total Profit" shall mean the
amount (before taxes) of the following: (a) the aggregate amount of (i) (x)
the net cash amounts received by Grantee pursuant to the sale of Option
Shares or Termination Fee Shares (or any other securities into which such
Option Shares or Termination Fee Shares are converted or exchanged) to any
unaffiliated party or to Issuer pursuant to this Agreement, less (y) the
Grantee's purchase price of such Option Shares or other securities, (ii)
any amounts received by Grantee on the transfer of the Option (or any
portion thereof), if permitted hereunder, and (iii) the amount received by
Grantee pursuant to Section 7.2 of the Merger Agreement; minus (b) the
amount of cash theretofore paid to the Issuer pursuant to this Section 12
plus the value of the Option Shares or Termination Fee Shares or other
securities theretofore delivered to the Issuer for cancellation pursuant to
this Section 12.
(c) Notwithstanding any other provision of this Agreement,
nothing in this Agreement shall affect the ability of Grantee to receive
nor relieve Issuer's obligation to pay a fee pursuant to Section 7.2 of the
Merger Agreement; provided that if Total Profit received by Grantee would
exceed the Profit Cap following the receipt of such fee, Grantee shall be
obligated to comply with the terms of Section 12(a) within five (5) days of
the later of (i) the date of receipt of such fee and (ii) the date of
receipt of the net cash by Grantee pursuant to the sale of Option Shares or
Termination Fee Shares (or, any other securities into which such Option
Shares or Termination Fee Shares are converted or exchanged) pursuant to
this Agreement.
(d) Notwithstanding any other provision of this Agreement, the
Option may not be exercised for a number of Option Shares that would, as of
the Notice Date, result in a Notional Total Profit (as defined below) of
more than the Profit Cap; provided; however, that Grantee may indicate in
its notice of exercise that Grantee is taking any of the actions described
in subsection (a) hereof so as to reduce the Notional Total Profit to not
more than the Profit Cap and preserve its rights to exercise the Option for
the resulting number of Option Shares. "Notional Total Profit" shall mean,
with respect to any number of Option Shares as to which the Grantee may
propose to exercise the Option, the Total Profit determined as of the
Notice Date assuming that the Option was exercised on such date for such
number of Option Shares and assuming such Option Shares, together with all
other Option Shares held by the Grantee and its affiliates as of such date,
were sold for cash at the closing sales price for Common Stock as of the
close of business on the preceding trading day.
(e) For purposes of Section 11(a) and clause (iii) of Section
11(b), the value of any Option Shares delivered by Grantee to the Issuer
shall be the average closing sales price per share of Common Stock (or if
there is no sale on such date then the average between the closing bid and
ask prices on any such day) as reported by the Nasdaq National Market for
the five (5) consecutive trading days preceding the day the Grantee's Total
Profit exceeds the Profit Cap.
14. APPLICATION FOR REGULATORY APPROVAL. Each of Grantee and
Issuer will use its commercially reasonable efforts to
make all filings with, and to obtain consents of, all
third parties and governmental authorities necessary to
the consummation of the transactions contemplated by this
Agreement, including without limitation making
application to list the shares of Common Stock issuable
hereunder on the Nasdaq National Market upon official
notice of issuance.
15. SPECIFIC PERFORMANCE. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of
this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by
either party hereto through injunctive or other equitable
relief.
16. SEPARABILITY OF PROVISIONS. If any term, provision,
covenant or restriction contained in this Agreement is
held by a court or a federal or state regulatory agency
of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and
covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no
way be affected, impaired or invalidated.
17. NOTICES. All notices, claims, demands and other
communications hereunder shall be deemed to have been
duly given or made when delivered in person, by overnight
courier or by facsimile at the respective addresses of
the parties set forth in the Merger Agreement.
18. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws
thereof.
19. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which will be deemed to be an
original, but all of which shall constitute one and the
same agreement.
20. EXPENSES. Except as otherwise expressly provided herein
or in the Merger Agreement, each of the parties hereto
shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of
its own financial consultants, investment bankers,
accountants and counsel.
21. ENTIRE AGREEMENT. Except as otherwise expressly provided
herein or in the Merger Agreement, this Agreement
contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with
respect thereof, written or oral. The terms and
conditions of this Agreement shall inure to the benefit
of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in
this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties hereto, and
their respective successors except as assigns, any
rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided
herein. Any provision of this Agreement may be waived
only in writing at any time by the party that is entitled
to the benefits of such provision. This Agreement may not
be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement
executed by the parties hereto.
22. FURTHER ASSURANCES. In the event of any exercise of the
Option by Grantee, Issuer and Grantee shall execute and
deliver all other documents and instruments and take all
other action that may be reasonably necessary in order to
consummate the transactions provided for by such
exercise. Nothing contained in this Agreement shall be
deemed to authorize Issuer or Grantee to breach any
provision of the Merger Agreement.
23. HEADINGS. The headings contained in this Agreement are
for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
XXXXXXXX.XXX, INC.
By: /s/ Xxxx X. XxxXxxxxxx
_____________________________________
Name: Xxxx X. XxxXxxxxxx
Title: CEO
XXXXX.XXX, INC.
By: /s/ Xxxxx Xxxxxxxx
_____________________________________
Name: Xxxxx Xxxxxxxx
Title: Chief Executive Officer
