VOTING AND FIRST OFFER AGREEMENT
VOTING AND FIRST OFFER AGREEMENT, dated as of January 24, 2000 (this
"Agreement"), between Xxx Xxxxxxxx (the "Principal Stockholder") and USANi Sub
LLC, a Delaware limited liability company ("Parent").
WHEREAS, Xxxxxxxxxx.xxx Inc., a California corporation (the "Company"),
and Parent propose to enter into an Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), which provides for, among other
things, the merger of the Company (the "Merger") with a wholly owned subsidiary
of a newly formed Delaware corporation ("Newco") and the concurrent contribution
by Parent to Newco of all of the outstanding limited liability interests of
Internet Shopping Network LLC, a Delaware limited liability company ("ISN");
WHEREAS, the Principal Stockholder is the owner of one or more of the
following securities: (a) shares of common stock of the Company, no par value
("Company Common Stock") and (b) options to acquire Company Common Stock; and
WHEREAS, in order to induce Parent to enter into the Merger Agreement,
the Principal Stockholder has agreed to enter into this Agreement with respect
to all the shares of Company Common Stock now owned, whether beneficially or of
record, and which may hereafter be acquired by the Principal Stockholder and any
shares of Company Common Stock over which the Principal Stockholder has
investment power or voting power, each within the meaning of Rule 13d-3(a) of
the Securities Exchange Act of 1934, as amended (the "Shares"), and all options
to acquire Shares now owned and which may hereafter be acquired (the "Options").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE 1
Section 1.1 Voting Agreement. The Principal Stockholder hereby agrees
that during the Restricted Period (as defined below) at any meeting of the
stockholders of the Company, however called, and in any action by consent of the
stockholders of the Company, the Principal Stockholder shall vote his Shares or
shall cause his Shares to be voted: (a) in favor of the Merger, the Merger
Agreement (as amended from time to time) and the transactions contemplated by
the Merger Agreement (the "Proposed Transactions") and (b) against any proposal
(other than in respect of the Proposed Transaction) for any: (i) merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar
2
transaction involving the Company or any other material corporate transaction,
the consummation of which could reasonably be expected to impede, interfere
with, prevent or materially delay the Proposed Transactions; (ii) a sale, lease,
exchange, transfer or other disposition of 20% or more of the assets of the
Company in a single transaction or series of transactions; or (iii) the
acquisition by any person or "group" (as defined in Section 13(d) of the
Exchange Act) other than Parent or its affiliates (herein, a "third party"), of
"beneficial ownership" of 15% or more of the Company's voting stock whether by
tender offer or exchange offer or otherwise and including a self tender offer,
merger, sale of assets or other business combination between the Company and any
person or entity or any other action or agreement that would result in a breach
of any covenant, representation or warranty or any other obligation or agreement
of the Company under the Merger Agreement or which could result in any of the
conditions to the Company's obligations under the Merger Agreement not being
fulfilled. For purposes of this Agreement, the term "Restricted Period" shall
mean the time during which the Merger Agreement remains in effect and for 12
months thereafter.
Section 1.2 Acknowledgment. The Principal Stockholder acknowledges
receipt and review of a copy of the Merger Agreement.
Section 1.3 Waiver of Dissenters' Rights. The Principal Stockholder
hereby irrevocably and forever waives any rights the Principal Stockholder may
have, as a result of the Merger, to demand payment for any Shares beneficially
owned by the Principal Stockholder pursuant to Section 1300 et. seq. of
California Law or to otherwise qualify as a "dissenting shareholder" as such
term is used in such sections of California Law.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE PRINCIPAL STOCKHOLDER
The Principal Stockholder hereby represents and warrants to Parent as
follows:
Section 2.1 Authority Relative to This Agreement. The Principal
Stockholder has all necessary power and authority to execute and deliver this
Agreement, to perform his obligations hereunder and to consummate the
transactions contemplated hereby and no other proceedings on the part of the
Principal Stockholder are necessary to authorize this Agreement or to consummate
such transactions. This Agreement has been duly and validly executed and
delivered by the Principal Stockholder and, assuming the due authorization,
execution and delivery by Parent,
3
constitutes a legal, valid and binding obligation of the Principal Stockholder,
enforceable against the Principal Stockholder in accordance with its terms.
Section 2.2 No Conflict. (a) The execution and delivery of this
Agreement by the Principal Stockholder do not, and the performance of this
Agreement by the Principal Stockholder will not, (i) conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to the Principal
Stockholder or by which the Shares or the Options are bound or affected or (ii)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a Lien (as defined below) on any of the Shares or the Options
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Principal Stockholder is a party or by which the Principal Stockholder or the
Shares or the Options are bound or affected, except for any such conflicts,
violations, breaches, defaults or other occurrences which would not prevent or
delay the performance by the Principal Stockholder of his obligations under this
Agreement.
(b) The execution and delivery of this Agreement by the
Principal Stockholder do not, and the performance of this Agreement by the
Principal Stockholder will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any court or arbitrator or any
governmental body, agency or official except for applicable requirements, if
any, of the Securities Exchange Act of 1934, as amended, and except where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or delay the performance
by the Principal Stockholder of his obligations under this Agreement.
Section 2.3 Title to the Shares. As of the date hereof, the Principal
Stockholder is the record and beneficial owner of, or has voting power or
investment power over, the Shares, and is the record and beneficial owner of the
Options, listed on Schedule 1. Such Shares and Options are all the securities of
the Company owned, either of record or beneficially, by the Principal
Stockholder or in which the Principal Stockholder has voting or investment power
and the Principal Stockholder owns no other rights or interests exercisable for
or convertible into any securities of the Company. Except as identified on
Schedule 2, all of the Shares and Options referred to above are owned free and
clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreement, limitations on the Principal Stockholder's voting
rights, charges and other encumbrances of any nature whatsoever (collectively,
"Liens") except, with respect to the Options, the Company Option Plan and any
agreements executed pursuant thereto pursuant to which such Options were issued.
The Principal Stockholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to the Shares.
4
ARTICLE 3
COVENANTS OF THE PRINCIPAL STOCKHOLDER
Section 3.1 No Inconsistent Agreement. The Principal Stockholder hereby
covenants and agrees that he shall not enter into any agreement or grant a proxy
or power of attorney with respect to the Shares or Options which is inconsistent
with this Agreement.
Section 3.2 Transfer Restriction.
(a) The Principal Stockholder hereby covenants and agrees that
he shall not sell, give, assign, hypothecate, pledge, encumber, grant a security
interest in or otherwise dispose of, whether by operation of law or by agreement
or otherwise (each a "Transfer"), from the date hereof until the termination of
the Merger Agreement, any Shares or Options, or any right, title or interest
therein or thereto.
(b) Notwithstanding the foregoing, the Principal Stockholder
may Transfer any Shares or Options, or any right, title or interest therein or
thereto, to any trust which is established, and which remains, solely for the
benefit of the Principal Stockholder or his spouse, siblings, children or
grandchildren (a "Trust"), provided, that, prior to such Transfer, the Trust
shall execute and deliver an agreement by which it shall become a party to and
be bound by the applicable terms and provisions of this Agreement, in form and
substance reasonably satisfactory to Parent.
(c) Notwithstanding the foregoing, if Parent permits any
stockholder that is a party to an agreement containing restrictions on transfer
of the type contained herein (the "Transferring Stockholder") to Transfer any
Shares, Options or warrants to purchase Company Common Stock (the "Warrants")
after the date hereof and prior to the termination of the Merger Agreement,
which Transfer would otherwise be prohibited by such agreement, then Parent
shall permit the Principal Stockholder, upon his request, to Transfer a number
of Shares or Options equal to the product of (i) the number of Shares, Options
or Warrants Transferred by the Transferring Stockholder divided by the number of
Shares, Options or Warrants owned by the Transferring Stockholder as of the date
of such Transfer, and (ii) the number of Shares or Options owned by the
Principal Stockholder as of the date of such Transfer, in each case, treating
all Options and Warrants as Shares on an as- converted basis (without giving
effect to restrictions or limitations on the exercise of such Options or
Warrants).
Section 3.3 Right of First Offer. The Principal Stockholder hereby
covenants and agrees that, following the termination of the Merger Agreement and
5
during the remainder of the Restricted Period, the Principal Stockholder shall
not Transfer any Shares or Options except pursuant to the following provisions:
(a) Offering Notice. If the Principal Stockholder wishes to
Transfer (other than pursuant to the Merger) all or any portion of his Shares or
Options to any person or entity (a "Third Party Purchaser"), the Principal
Stockholder shall first offer such Shares or Options to Parent, by sending
written notice (an "Offering Notice") to Parent, which shall state (i) the
number of Shares or Options proposed to be transferred (the "Offered
Securities"); (ii) whether such sale (with respect to Shares only) will be
effected in an open market transaction that complies with Rule 144(f) of the
Securities Act of 1933 (a "Public Sale") or otherwise (a "Private Sale"), (iii)
the proposed purchase price for the Offered Securities, which price must be in
cash and, with respect to a Public Sale, may not be at a per share price in
excess of the closing price of shares of Company Common Stock on the NASDAQ for
the trading day immediately prior to the date on which the Offering Notice is
given (the "Offer Price"); and (iv) with respect to a Private Sale, the terms
and conditions of such sale, which terms and conditions must be customary and
reasonable for a transaction of such type. Upon delivery of the Offering Notice,
such offer shall be irrevocable unless and until the rights of first offer
provided for herein shall have been waived or shall have expired;
(b) Parent Option. For a period of five days after the giving
of the Offering Notice pursuant to Section 3.3(a) (the "Option Period"), Parent
shall have the right (the "Option") but not the obligation to purchase all (but
not less than all) of the Offered Securities at a purchase price equal to the
Offer Price and, with respect to a Private Sale, upon the terms and conditions
set forth in the Offering Notice. The right of Parent to purchase any or all of
the Offered Securities under this Section 3.3(b) shall be exercisable by
delivering written notice of the exercise thereof (the "Acceptance"), prior to
the expiration of the Option Period, to the Principal Stockholder, which notice
shall state the number of Offered Securities proposed to be purchased by Parent.
The failure of Parent to respond within the Option Period shall be deemed to be
a waiver of the Option; provided that Parent may waive its rights under this
Section 3.3(b) prior to the expiration of the Option Period by giving written
notice to the Principal Stockholder (the date any such written waiver is
received by the Principal Stockholder or, if no notice is given, the last date
of the Option Period is referred to as the "Waiver Date");
(c) Closing. The closing of the purchase of Offered Securities
subscribed for by Parent under Section 3.3(b) shall be held at the executive
offices of Parent at 11:00 a.m., local time, on the later of (i) the 10th day
after the Acceptance pursuant to Section 3.3(b) and (ii) two days following the
date on which all governmental or regulatory approvals (including the expiration
of any waiting periods under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act)
with respect to such transaction, if any, have been obtained or at such other
time and place as the parties to
6
the transaction may agree. At such closing, the Principal Stockholder shall
deliver certificates representing the Offered Securities, duly endorsed for
transfer and accompanied by all requisite transfer taxes, if any, and such
Offered Securities shall be free and clear of any Liens (other than those
arising hereunder) and the Principal Stockholder shall so represent and warrant,
and shall further represent and warrant that he is the sole beneficial and
record owner of such Offered Securities. Parent shall deliver at the closing
payment in full in immediately available funds for the Offered Securities
purchased. In connection with such sale the parties to the transaction shall
execute such additional documents and take all reasonable steps as are otherwise
necessary or appropriate to effectuate such transaction; and
(d) Sale to a Third Party Purchaser. If Parent does not elect
to purchase all of the Offered Securities under Section 3.3(b), the Principal
Stockholder may sell all, but not less than all, of the Offered Securities that
Parent elected not to purchase (i) with respect to a Private Sale to a Third
Party Purchaser on terms and conditions no less favorable to the Principal
Stockholder than those set forth in the Offering Notice; provided, however, that
such sale is bona fide and not undertaken for the purpose of avoiding the
Principal Stockholder's obligations hereunder and made pursuant to a contract
entered into within 10 days after the Waiver Date and (ii) with respect to a
Public Sale, such sale is effected within five days following the Waiver Date at
the market price in effect at the time of such sale. If such sale is not
consummated within five days after the Waiver Date with respect to a Public Sale
or 45 days after the Waiver Date with respect to a Private Sale, then the
restrictions provided for herein shall again become effective, and no transfer
of such Offered Securities may be made thereafter by the Principal Stockholder
without again offering the same to Parent in accordance with this Section 3.3.
Section 3.4 Security Interests. Within 30 days following the date of
this Agreement, the Principal Stockholder hereby agrees to release all of the
security interests he holds (either in his own name or jointly with another
party) in the assets of the Company and file appropriate documentation of such
release, in form and substance reasonably satisfactory to Parent, with the
United States Patent and Trademark Office.
Section 3.5 Stockholders Agreement. Prior to the Closing of the Merger,
the Principal Stockholder hereby agrees to execute the Stockholders Agreement,
substantially in the form attached as Exhibit A to the Merger Agreement.
7
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 4.1 Authority Relative to this Agreement. Parent has full
right, power and authority to enter into and perform this Agreement and this
Agreement has been duly authorized, executed and delivered by Parent and is a
valid and binding agreement of Parent and enforceable against Parent in
accordance with its terms.
Section 4.2 No Conflict. (a) The execution and delivery of this
Agreement by Parent do not, and the performance of this Agreement by Parent will
not, conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Parent.
(b) The execution and delivery of this Agreement by Parent do
not, and the performance of this Agreement by Parent will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any court or arbitrator or any governmental body, agency or official except
for applicable requirements, if any, of the Securities Exchange Act of 1934, as
amended, and except where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay the performance by Parent of its obligations under this
Agreement.
ARTICLE 5
MISCELLANEOUS
Section 5.1 Termination. This Agreement shall terminate upon the
earliest to occur of (i) the Closing, (ii) the 12-month anniversary following
termination of the Merger Agreement and (iii) the termination of the Merger
Agreement by Parent pursuant to Section 7.1(c) of such Agreement; provided that
the representations and warranties contained herein shall survive the
termination hereof.
Section 5.2 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
Section 5.3 Definitions. Unless otherwise defined herein, all
capitalized terms shall have the definitions assigned to such terms in the
Merger Agreement.
8
Section 5.4 Entire Agreement. This Agreement constitutes the entire
agreement among Parent and the Principal Stockholder with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
Section 5.5 Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
Section 5.6 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by applicable law
in a mutually acceptable manner in order that the terms of this Agreement remain
as originally contemplated.
Section 5.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law.
Section 5.8 Jurisdiction. Each party to this Agreement hereby
irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement or any agreements or transactions contemplated hereby
shall be brought in the courts of the State of New York and hereby expressly
submits to the personal jurisdiction and venue of such courts for the purposes
thereof and expressly waives any claim of improper venue and any claim that such
courts are an inconvenient forum.
9
IN WITNESS WHEREOF, Parent and the Principal Stockholder have caused
this Agreement to be duly executed as of the date first above written.
USANi Sub LLC
By: /s/ Xxxx Xxxxxxxxxxxx
-------------------------
Name: Xxxx Xxxxxxxxxxxx
Title: Vice President
/s/ Xxx Xxxxxxxx
-----------------------
Xxx Xxxxxxxx
Schedule 1
Number of Shares
owned beneficially Number of
or of record (1) Options owned
------------- -------------
139,952 75,000
1,136,955 (2)
-------------------------
1/ Other than Shares issuable upon exercise of Options, which are listed
- in the next column.
2/ Shares owned jointly with Xxxxx Xxxxxxxx.
-
Schedule 2
Liens
-----
None.
