EXHIBIT 3
STOCK OPTION AGREEMENT
(XXXXXXXX.XXX, INC. SHARES)
STOCK OPTION AGREEMENT
(XXXXXXXX.XXX, INC. SHARES)
THIS STOCK OPTION AGREEMENT (this "AGREEMENT"), dated August 8, 2000,
between Xxxxxxxx.xxx, Inc., a Delaware corporation ("Issuer"), and Xxxxx.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 Issuer with
Issuer 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
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unconditional, irrevocable option (the "Option") to purchase, subject to the
terms hereof, nine million seven hundred twenty-four thousand four hundred sixty
(9,724,460) 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 the date hereof, at a purchase price of $125.7197 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.
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(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)(iii); provided, that such
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termination has given rise to the right of Grantee to receive payment of
Xxxxxxxx.xxx Expenses pursuant to Section 7.2(c)(1) of the Merger Agreement;
provided, that subsequent to such termination, if an event occurs that gives
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rise to the obligation of Issuer to pay the Termination Fee pursuant to Section
7.2(c)(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(c)(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)(iii) (other than as provided in clause (ii) above); provided, that such
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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
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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
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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
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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
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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
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(e) of this Section 2, Grantee shall pay to Issuer the aggregate purchase price
for the shares of
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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
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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
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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
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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.
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3. CONDITIONS TO DELIVERY OF OPTION SHARES. The obligation of Issuer
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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
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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
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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
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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,
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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.
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(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
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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.
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(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
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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
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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.
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(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.
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(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
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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.
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10. REPRESENTATIONS AND WARRANTIES OF THE GRANTEE. Grantee hereby
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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
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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
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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.
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(a) Notwithstanding any other provision of this Agreement, in
no event shall the Grantee's Total Profit (as hereinafter defined) exceed Two
Hundred Thirty
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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.
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(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
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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
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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
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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
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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.
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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: _________________________________
Name:
Title:
XXXXX.XXX, INC.
By: _________________________________
Name:
Title:
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