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