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EXHIBIT 2.2
THE SECURITIES REPRESENTED BY THIS OPTION AGREEMENT, AS WELL AS THE SECURITIES
ISSUABLE UPON ANY EXERCISE OF THIS OPTION AGREEMENT, HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED UNLESS SO
REGISTERED AND QUALIFIED OR UNLESS EXEMPTIONS FROM SUCH REGISTRATION AND
QUALIFICATION ARE AVAILABLE AND IDENTIFIED TO THE ISSUER TO ITS REASONABLE
SATISFACTION.
OPTION AGREEMENT
THIS OPTION AGREEMENT is entered into as of July 31, 1997 by and between
DATAWORKS CORPORATION a California corporation ("Parent"), and INTERACTIVE
GROUP, INC., a Delaware corporation ("Interactive").
RECITALS
A. Parent, DATAWORKS ACQUISITION SUB, INC., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), and Interactive, are entering
into an Agreement and Plan of Merger and Reorganization of even date herewith
(as amended from time to time, the "Reorganization Agreement"; capitalized terms
used but not otherwise defined in this Option Agreement have the meanings
assigned to such terms in the Reorganization Agreement), which provides (subject
to the conditions set forth therein) for the merger of Merger Sub into
Interactive (the "Merger").
B. As a condition to the willingness of Parent and Merger Sub to enter into
the Reorganization Agreement, Parent and Merger Sub have required that
Interactive agree, and in order to induce Parent and Merger Sub to enter into
the Reorganization Agreement Interactive has agreed, to enter into this Option
Agreement.
AGREEMENT
The parties to this Option Agreement, intending to be legally bound, agree
as follows:
SECTION 1. GRANT OF OPTIONS. Interactive hereby grants Parent an irrevocable
option (the "Stock Option") to purchase up to 344,531 shares of common stock,
$.001 par value per share, of Interactive (the "Subject Shares"), in the manner
set forth below, at a price of $7.50 per share, subject to adjustment as
provided in Section 6 (the "Exercise
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Price"), payable in cash (immediately available funds) in the manner set forth
below, or by net issue exercise as contemplated in Section 5 hereof.
1.1 EXERCISE OF OPTION.
(a) Parent may exercise the Stock Option with respect to any of the
Subject Shares in whole or in part, at any time or from time to time, following
the occurrence of a Purchase Event (as defined in Section 1.1(b)) and prior to
the Termination Date (as defined in Section 1.1(c)). Parent's right to purchase
the Subject Shares with respect to which it has exercised the Stock Option shall
not terminate on the Termination Date; accordingly, if Parent exercises the
Stock Option on or prior to the Termination Date with respect to any Subject
Shares, then Parent shall be entitled to purchase such Subject Shares in
accordance with the provisions of this Option Agreement after the Termination
Date.
(b) For purposes of this Option Agreement, a "Purchase Event" shall be
deemed to have occurred upon a termination of the Reorganization Agreement
pursuant to which Interactive is required to pay Parent a fee of $1,500,000 as
set forth in clause (ii) of Section 8.3(d) of the Reorganization Agreement (any
such event, a "Termination").
(c) For purposes of this Option Agreement, "Termination Date" shall
mean 120 days after a Termination; provided, however, that if the Stock Option
cannot be exercised prior to the end of such 120-day period by reason of any
applicable judgment, decree, order, Legal Requirement or other legal impediment,
then the Termination Date shall be extended until the date 30 days after the
date on which such impediment is removed.
1.2 CLOSINGS. In the event Parent wishes to exercise the Stock Option with
respect to any Subject Shares, Parent shall send to Interactive a written notice
(the date of which being herein referred to as the "Notice Date") specifying (a)
the number of Subject Shares Parent will purchase, (b) the place at which such
Subject Shares are to be purchased, and (c) the date on which such Subject
Shares are to be purchased, which shall not be earlier than one business day nor
later than 30 business days after the Notice Date. The closing of the purchase
of such Subject Shares (the "Closing") shall take place at the executive offices
of Interactive and on the date specified in such written notice (the "Closing
Date"); provided, however, that: (i) if such purchase cannot be consummated by
reason of any applicable judgment, decree, order, Legal Requirement or other
legal impediment, the Closing Date may be extended by Parent to a date not more
than 30 days after the date on which such impediment is removed; and (ii) if
prior notification to or approval of any Governmental Body is required in
connection with such purchase, Interactive shall promptly cause to be filed the
required notice or application for approval and shall expeditiously process the
same (and Interactive shall cooperate with Parent in
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the filing of any such notice or application required to be filed by Parent and
the obtaining of any such approval required to be obtained by Parent), and the
Closing Date may be extended by Parent to a date not more than 30 days after the
later of (A) the date on which any required notification or waiting period has
expired or been validly terminated, or (B) the date on which any required
approval has been obtained.
1.3 PAYMENT AND DELIVERY OF CERTIFICATES. On each Closing Date, (i) Parent
will deliver to Interactive the Exercise Price payable for the Subject Shares
being issued and sold by Interactive to Parent at the Closing and (ii)
Interactive shall issue and deliver to Parent a certificate representing such
Subject Shares.
SECTION 2. REPRESENTATION AND WARRANTIES OF INTERACTIVE. Interactive represents
and warrants to Parent that (a) Interactive is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power and authority to enter into this Option Agreement
and to carry out its obligations hereunder, (b) the execution and delivery of
this Option Agreement by Interactive and the consummation by Interactive of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Interactive and no other corporate proceedings
on the part of Interactive are necessary to authorize this Option Agreement or
any of the transactions contemplated hereby, (c) this Option Agreement has been
duly executed and delivered by Interactive and constitutes a valid and binding
obligation of Interactive, and, assuming this Option Agreement constitutes a
valid and binding obligation of Parent, is enforceable against Interactive in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles, (d)
Interactive has taken all necessary corporate action to authorize and reserve
for issuance and to permit it to issue, upon exercise of the Stock Option, and
at all times from the date hereof through the expiration of the Stock Option
will have so reserved 344,531 unissued shares of its common stock, all of which,
upon their issuance and delivery in accordance with the terms of this Option
Agreement, will be validly issued, fully paid and nonassessable, (e) upon
delivery of such shares of Interactive common stock to Parent upon exercise of
the Stock Option, Parent will acquire valid title to all of such shares, free
and clear of any and all Encumbrances of any nature whatsoever (except for
restrictions under applicable federal and state securities laws), (f) the
execution and delivery of this Option Agreement by Interactive does not, and the
performance of this Option Agreement by Interactive will not (i) violate the
certificate of incorporation or bylaws of Interactive, (ii) conflict with or
violate any statute, rule, regulation, order, judgment or decree applicable to
Interactive or by which it or any of its assets or properties is bound or
affected, or (iii) result in any breach or violation of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give rise to any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any lien on any of the property
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or assets of Interactive pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, or other instrument or obligation to which
Interactive or properties is bound or affected (except, in the case of clauses
(ii) or (iii) above, for violations, breaches or defaults which would not,
individually or in the aggregate have a Material Adverse Effect on Interactive),
and (g) the execution and delivery of this Option Agreement by Interactive does
not, and the performance of this Option Agreement by Interactive will not, with
respect to Interactive, require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority
except for pre-merger notification requirements, if applicable, of the HSR Act.
SECTION 3. REPRESENTATION AND WARRANTIES OF PARENT. Parent represents and
warrants to Interactive that (a) Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and has
the corporate power and authority to enter into this Option Agreement and to
carry out its obligations hereunder, (b) the execution and delivery of this
Option Agreement by Parent and the consummation by Parent of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and no other corporate proceedings on the part of Parent
are necessary to authorize this Option Agreement or any of the transactions
contemplated hereby, (c) this Option Agreement has been duly executed and
delivered by Parent and constitutes a valid and binding obligation of Parent,
and, assuming this Option Agreement constitutes a valid and binding obligation
of Interactive, is enforceable against Parent in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles, and (d) any Subject Shares
acquired upon exercise of the Stock Option will be, and the Stock Option is
being, acquired by Parent for its own account and not with a view to the
distribution or resale thereof in any manner which would be in violation of
applicable United States securities laws. Parent acknowledges the provisions of
the legend set forth on the top of the first page of this Option Agreement and
covenants to abide by its terms.
SECTION 4. CERTAIN REPURCHASES.
4.1 CASH PUT PRICE. At any time during which (i) the Stock Option is
exercisable pursuant to Section 1 and (ii) a letter of intent or definitive
agreement with respect to a Superior Offer has been entered into by Interactive
and has not been terminated (a "Cash Put Deal"), then Parent shall have the
right to require Interactive (or any successor entity thereof) to repurchase
from Parent the Stock Option, or any portion thereof, for a price equal to (A)
the amount by which the "Market/Offer Price" for shares of Interactive common
stock (as of the date Parent gives notice of its intent to exercise its rights
under this Section 4, which in such event shall be the "Notice Date") exceeds
the
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Exercise Price multiplied by (B) the number of Subject Shares then purchasable
pursuant to the Stock Option (or such portion thereof with respect to which
Parent is exercising its rights under this Section 4). "Market/Offer Price"
means the higher of the following:
(X) the per share price called for by the Cash Put Deal; or
(Y) the average of the closing sale prices, on a per share basis, of
Interactive common stock for the 10 trading days immediately preceding the
Notice Date (the "Average Price").
4.2 PAYMENT AND REDELIVERY OF OPTION. In the event that Parent exercises
its rights under Section 4.1, then promptly upon the consummation of the Cash
Put Deal, Interactive (or any successor entity) shall pay the required amount to
Parent in cash (whether or not consummation occurs prior to the Termination
Date). In the event that the Cash Put Deal is terminated prior to consummation
(and Interactive makes a public announcement thereof), then Interactive shall
pay the required amount to Parent in shares of Interactive common stock (valued,
for this purpose, at the Average Price) within 10 business days of the public
announcement of such termination. In either event, at the time of payment Parent
shall surrender to Interactive the Stock Option, and Parent shall warrant that
it owns the Stock Option free and clear of all Encumbrances of any kind or
nature whatsoever.
SECTION 5. NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, at any time prior to the Termination Date, if the Average Price (using
the date of calculation as the "Notice Date") exceeds the Exercise Price then
Parent may elect to exercise the Stock Option (or any unused portion thereof)
pursuant to this Section 5 and receive the number of Subject Shares equal to "X"
where:
X = Y (A-B)
-------
A
Y = the number of Subject Shares subject to the
portion of the Stock Option being exercised
A = the Average Price (using the date of calculation
as the Notice Date)
B = the Exercise Price (as adjusted to the date of
such calculation)
SECTION 6. REGISTRATION RIGHTS. In the event that Parent shall desire to sell
any of the Subject Shares purchased pursuant to the Stock Option within 2 years
after such purchase, and such sale requires in the opinion of counsel to Parent,
which opinion shall
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be reasonably satisfactory to Interactive and its counsel, registration of such
shares under the Securities Act of 1933, Parent may, by written notice (the
"Registration Notice") to Interactive, request Interactive to register under the
Securities Act all or any part of the shares purchased pursuant to the Stock
Option ("Registrable Securities"). Interactive (and/or any person designated by
Interactive) shall thereupon have the option, exercisable by written notice
delivered to the Parent within 10 business days after the receipt of the
Registration Notice, irrevocably to agree to purchase all or any part of the
Registrable Securities for cash at a price (the "Option Price") equal to the
product of (i) the number of Registrable Securities and (ii) the average of the
closing sale prices of shares of Interactive common stock on the Nasdaq National
Market for the 10 trading days immediately preceding receipt by Interactive of
the Registration Notice. Any such purchase of Registrable Securities by
Interactive or its designee hereunder shall take place at a closing to be held
at the principal executive offices of Interactive or its counsel at any
reasonable date and time designated by Interactive or its designee in such
notice within 20 business days after delivery of such notice. Any payment for
the shares to be purchased shall be made by delivery at the time of such closing
of the Option Price in immediately available funds.
If Interactive does not elect to exercise its option pursuant to this
Section 5 with respect to all Registrable Securities designated in the
Registration Notice, it shall use its best efforts to effect, as promptly as
practicable, the registration under the Securities Act of the unpurchased
Registrable Securities; provided, however, that (i) Parent shall not be entitled
to more than one effective registration statement hereunder and (ii) Interactive
will not be required to file any such registration statement during any period
of time (not to exceed 90 days after such request in the case of clause (B)
below or 120 days in the case of clauses (A) and (C) below) when (A) Interactive
is in possession of material non-public information which it reasonably believes
would be detrimental to be disclosed at such time and, in the judgment of the
Board of Directors of Interactive, such information would have to be disclosed
if a registration statement were filed at that time; (B) the Registration is
required under the Securities Act to include audited financial statements for
any period in such registration statement and such financial statements are not
yet available for inclusion in such registration statement; or (C) Interactive
determines, in its reasonable judgment, that such registration would interfere
with any financing, acquisition or other material transaction involving
Interactive or any of its affiliates. Interactive shall use its commercially
reasonable efforts to cause all Registrable Securities registered pursuant to
this Section 5 to be qualified for sale under the securities or blue-sky laws of
such jurisdictions as Parent may reasonably require and shall continue such
registration or qualification in effect in such jurisdiction; provided, however
that Interactive shall not be required to qualify to do business in, or consent
to general service of process in, any jurisdiction by reason of this provision.
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The registration rights set forth in this Section 5 are subject to the
condition that Parent shall provide Interactive with such information with
respect to Parent's Registrable Securities, the plans for the distribution
thereof, and such other information with respect to Parent as, in the reasonable
judgment of counsel for Interactive, is necessary to enable Interactive to
include in such registration statement all material facts required to be
disclosed with respect to a registration thereunder.
A registration effected under this Section 5 shall be effected at
Interactive's expense, except for underwriting discounts and commissions and the
fees and expenses of counsel to Parent, and Interactive shall provide to the
underwriters, if any, such documentation (including certificates, opinion of
counsel and "comfort" letters from auditors) as are customary in connection with
underwritten public offerings as such underwriters may reasonably require. In
connection with any such registration, the parties agree (i) to indemnify each
other and the underwriters, if any, in the customary manner and (ii) if
applicable, to enter into an underwriting agreement in form and substance
customary to transactions of this type with the Manager and the other
underwriters participating in such offering.
SECTION 7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of any change
in Interactive common stock by reason of stock dividends, stock splits, mergers
(other than the Merger), recapitalizations, combinations, exchange of shares or
the like, the type and number of shares or securities subject to the Stock
Option, and the Exercise Price per share, shall be adjusted appropriately.
SECTION 8. RESTRICTIVE LEGENDS. Each certificate representing Subject Shares
issued to Parent hereunder shall initially be endorsed with a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE.
SECTION 9. MISCELLANEOUS
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements made by Interactive in this Option
Agreement shall survive any Termination and shall survive any exercise of the
Stock Option and any acquisition by Parent of any Subject Shares.
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9.2 INDEMNIFICATION. Without in any way limiting any of the rights or
remedies otherwise available to either party, each party shall hold harmless and
indemnify the other from and against any damages suffered or incurred by the
other and that arise from any breach of any representation, warranty, covenant
or obligation of the indemnifying party contained herein.
9.3 EXPENSES. Except as otherwise provided herein, all costs and expenses
incurred in connection with the transactions contemplated by this Option
Agreement shall be paid by the party incurring such costs and expenses.
9.4 NOTICES. All notices or other communications under this Option
Agreement shall be in writing and shall be given by delivery in person or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows (or such other address for a party as shall be specified in
a notice given in accordance with this Section 8.4) and shall be deemed to have
been given upon delivery in person or four days after deposit in the U.S. mail:
If to Interactive:
Interactive, Inc.
0000 Xxxxxx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile No: (000) 000-0000
With a copy to:
Pillsbury Madison & Sutro LLP
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000-0000
Attention: T. Xxxxxxx Xxxx, Esq.
Facsimile No.: (000) 000-0000
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If to Parent or Merger Sub:
DataWorks Corporation
0000 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Facsimile No: (000) 000-0000
With a copy to:
Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxx, XX 00000-0000
Attention: Xxxxxxxxx X. Xxxx, Esq.
Facsimile No.: (000) 000-0000
9.5 SEVERABILITY. Any term or provision of this Option Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Option Agreement or affecting the validity or enforceability of any of the terms
or provisions of this Option Agreement in any other jurisdiction. If any
provision of this Option Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
9.6 ENTIRE AGREEMENT. This Option Agreement and any documents delivered by
the parties in connection herewith constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect thereto. No
addition to or modification of any provision of this Option Agreement shall be
binding upon any party hereto unless made in writing and signed by all parties
hereto.
9.7 ASSIGNMENT, BINDING EFFECT. This Option Agreement shall be assignable
only to the extent not violative of applicable securities laws. This Option
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Option Agreement to the contrary, nothing in this Option
Agreement, expressed or implied, is intended to confer on any Person other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Option
Agreement.
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9.8 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Option Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Option Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which they are entitled at law or in equity.
9.9 GOVERNING LAW. This Option Agreement shall be governed in all respects
by the laws of the State of Delaware, as applied to contracts entered into and
to be performed entirely within the State of Delaware.
9.10 HEADINGS. Headings of the Sections of this Option Agreement are for
the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
9.11 COUNTERPARTS. This Option Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
IN WITNESS WHEREOF, Parent and Interactive have caused this Option
Agreement to be executed, as of the date first written above.
DATAWORKS CORPORATION
By:
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Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
INTERACTIVE GROUP, INC.
By:
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Xxxxxx X. Xxxxxx
Chief Executive Officer
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