EXHIBIT 99.1
STOCK OPTION AGREEMENT (this
"Agreement"), dated as of February 1, 1999,
between MOVIEFONE, INC., a Delaware
corporation (the "Company"), and AMERICA
ONLINE, INC., a Delaware corporation
("Grantee").
WHEREAS, the Company, Grantee and MF Acquisition Corporation, a
Delaware corporation and a newly formed wholly owned direct subsidiary of
Grantee ("Newco"), have contemporaneously with the execution of this
Agreement entered into an Agreement and Plan of Merger dated as of February
1, 1999 (the "Merger Agreement") which provides, among other things, that
Newco shall be merged with and into the Company pursuant to the terms and
conditions thereof; and
WHEREAS, as an essential condition and inducement to Grantee's
entering into the Merger Agreement and in consideration therefor, the
Company has agreed to grant Grantee the Option (as hereinafter defined);
WHEREAS, capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Merger
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein and in the Merger
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, the parties hereby agree as follows:
1. GRANT OF OPTION. The Company hereby grants to Grantee an
irrevocable option (the "Option") to purchase, subject to the terms hereof,
up to 6,186,762 shares (such shares being referred to herein as the "Option
Shares") of fully paid and nonassessable Class A Common Stock, par value
$0.01 per share, of the Company ("Class A Company Common Stock"), which
number of shares the Company hereby represents and warrants is the number
of shares of Class A Common Stock that has voting power equal to
approximately fifteen percent (15%) of the voting power of the shares of
Class A Company Common Stock and Class B Common Stock, par value $0.01 per
share, of the Company ("Class B Company Common Stock" and, together with
Class A Company Common Stock, "Company Common Stock") issued and
outstanding (before giving effect to the exercise of the Option) as of the
date hereof, at a purchase price of $29.25 per share, as adjusted in
accordance with the provisions of Section 8 of this Agreement (such price,
as adjusted if applicable, the "Option Price"). In addition, Grantee may
elect to purchase Option Shares issuable and pay some or all of the total
Option Price payable upon an exercise of this Option by surrendering a
portion of the Option with respect to such number of Option Shares as is
determined by dividing the (i) total Option Price payable in respect of the
number of Option Shares being purchased in such manner by (ii) the excess
of the Fair Market Value, as determined below, per share of Class A Company
Common Stock as of the Option Closing Date (as defined below) over the per
share Option Price. The Fair Market Value per share of Class A Company
Common Stock shall be (i) if the Class A Company Common Stock is listed on
the Nasdaq National Market, national securities exchange or other
nationally recognized exchange or trading system as of the Option Closing
Date, the last reported sale price per share of Class A Company Common
Stock thereon on the Option Closing Date, or if no such price is reported
on such date, such price on the next preceding business day for which such
price is reported, or (ii) if the Class A Company Common Stock is not
listed on the Nasdaq National Market, national securities exchange or other
nationally recognized exchange or trading system as of the Option Closing
Date, the amount determined in good faith by the Board of Directors of the
Company to represent the value per share the Class A Common Stock would
have if publicly traded on a nationally recognized exchange or trading
system (assuming the absence of unusual market conditions and no premium
for control or discount for minority interests, illiquidity or restrictions
on transfer).
2. (a) EXERCISE OF OPTION. 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 Section
2(e) hereof) on or prior to the last date of the one (1) year period
following such Triggering Event (the "Option Expiration Date"). The right
to exercise the Option shall terminate upon the first to occur of the
Option Expiration Date or an Option Termination Event.
(b) TRIGGERING EVENTS. The term "Triggering Event" shall mean
the occurrence of the earliest date, if any, upon or after termination of
the Merger Agreement on which Grantee shall have the unconditional right to
receive the Termination Fee pursuant to Section 8.3(b) of the Merger
Agreement.
(c) OPTION TERMINATION EVENTS. The term "Option Termination
Event" shall mean any of the following events:
(i) the Effective Time; or
(ii) the termination of the Merger Agreement other than
under circumstances which constitute (or upon satisfaction of the condition
to payment of the Termination Fee set forth in Section 8.3(b)(ii)(y) of the
Merger Agreement would constitute) a Triggering Event under this Agreement;
or
(iii) the occurrence of the date which is eighteen (18)
months after termination of the Merger Agreement under circumstances which,
if the condition to payment of the Termination Fee set forth Section
8.3(b)(ii)(y) of the Merger Agreement were satisfied, would constitute a
Triggering Event under this Agreement unless such a Triggering Event
resulting from the satisfaction of such conditions has occurred prior to
such date.
Notwithstanding the termination of the Option, Grantee shall be entitled to
purchase those Option Shares with respect to which it may have exercised
the Option in accordance with the terms hereof prior to the termination of
the Option, and the termination of the Option will not affect any rights
hereunder which by their terms do not terminate or expire prior to or at
such termination.
(d) NOTICE OF TRIGGERING EVENT. The Company shall notify
Grantee in writing as promptly as practicable following its becoming aware
of the occurrence of any Triggering Event, it being understood that the
giving of such notice by the Company shall not be a condition to the right
of Grantee to exercise the Option or for a Triggering Event to have
occurred and that the failure to give such notification shall not itself be
deemed to be a breach of this Agreement for purposes of Section
8.1(e)(viii) of the Merger Agreement.
(e) NOTICE OF EXERCISE; CLOSING. In the event that Grantee is
entitled to and desires to exercise the Option, it shall send to the
Company a written notice (such notice being herein referred to as an
"Exercise Notice" and the date of issuance of an Exercise Notice being
herein referred to as the "Notice Date") indicating that Grantor is
exercising the Option and specifying (i) the total number of Option Shares
that it will purchase pursuant to such exercise, (ii) whether the Option
Price will be paid in cash or by surrender of a portion of the Option and
(iii) a place and date not earlier than three (3) Business Days and not
later than ten (10) Business Days from the Notice Date for the closing of
such purchase (the "Option Closing Date"); provided, that if the closing of
the purchase and sale pursuant to the Option (the "Option Closing") cannot
be consummated, by reason of any applicable Order, the period of time that
otherwise would run pursuant to this Section 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, the
Company or Grantee, as the case may be, 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.
(f) PURCHASE PRICE. At the Option Closing, if the Option Price
will be paid in cash, Grantee shall pay to the Company the aggregate Option
Price in immediately available funds by wire transfer to a bank account
designated by the Company; provided that the failure by Grantee to effect
such a wire transfer because of a failure or refusal of the Company to
designate such a bank account shall not relieve the Company of its
obligations under Section 2(g) at the Option Closing.
(g) ISSUANCE OF OPTION SHARES. At the Option Closing,
simultaneously with the delivery of immediately available funds as provided
in Section 2(f) hereof if the Option Price will be paid in cash and
surrender of this Agreement to the Company, the Company shall deliver to
Grantee a certificate or certificates representing the number of Option
Shares purchased by Grantee and, if the Option shall have been exercised in
part only and the entire remaining portion of the Option shall not have
been surrendered to pay the Option Price, a new agreement in the form of
this Agreement evidencing the rights of Grantee to purchase the balance of
the Option Shares purchasable hereunder. If at the time of issuance of any
Option Shares pursuant to an exercise of all or part of the Option
hereunder, the Company shall have issued any rights or other securities
which are attached to or otherwise associated with the Class A Company
Common Stock, then each Option Share issued pursuant to such exercise shall
also represent such rights or other securities with terms substantially the
same as and at least as favorable to Grantee as are provided under any
stockholder rights agreement or similar agreement of the Company then in
effect.
(h) LEGEND. Certificates for Option Shares delivered at an
Option Closing may be endorsed with a restrictive legend that shall read
substantially as follows:
The transfer of the shares represented by this certificate is
subject to resale restrictions arising under the Securities Act
of 1933, as amended.
It is understood and agreed that the reference to the resale restrictions
of 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 the Company a copy of a letter from the staff of the SEC, or
an opinion of counsel, reasonably satisfactory to the Company, to the
effect that such legend is not required for purposes of the Securities Act.
(i) RECORD GRANTEE; EXPENSES. Upon the delivery by Grantee to
the Company of the Exercise Notice and the tender of the applicable Option
Price in immediately available funds or the requisite portion of the
Option, Grantee shall be deemed to be the holder of record of the Option
Shares issuable upon such exercise, notwithstanding that the stock transfer
books of the Company may then be closed, that certificates representing
such Option Shares may not then have been actually delivered to Grantee or
the Company may have failed or refused to designate the bank account
described in Section 2(f). The Company shall pay all expenses that may be
payable in connection with the preparation, issuance and delivery of stock
certificates under this Section 2 in the name of Grantee. Grantee shall
pay all expenses that may be payable in connection with the issuance and
delivery of stock certificates or a substitute option agreement in the name
of any assignee, transferee or designee of Grantee and any filing fees and
other expenses arising from compliance by Grantee pursuant to the HSR Act.
(j) CONSENTS. The obligation of the Company to issue Option
Shares to Grantee hereunder is subject to the conditions that (i) any
waiting period under the HSR Act applicable to the issuance of the Option
Shares hereunder shall have expired or been terminated; (ii) all material
consents, approvals, orders or authorizations of, or registrations,
declarations or filings with, any Federal, state or local administrative
agency or commission or other Federal, state or local governmental
authority or instrumentality, if any, required in connection with the
issuance of the Option Shares hereunder shall have been obtained or made,
as the case may be; and (iii) no preliminary or permanent injunction or
other order by any court of competent jurisdiction prohibiting or otherwise
restraining such issuance shall be in effect. It is understood and agreed
that at any time during which the Option is exercisable, each party will
use its reasonable efforts to satisfy all such conditions to closing, so
that an Option Closing may take place as promptly as practicable; provided
that neither the Company nor Grantee nor any subsidiary or affiliate
thereof will be required to agree to any divestiture by itself or any of
its affiliates of shares of capital stock or of any business, assets or
property, or the imposition of any material limitation on the ability of
any of them to conduct their businesses or to own or exercise control of
such assets, properties and stock.
3. EVALUATION OF INVESTMENTS. Grantee, by reason of its knowledge
and experience in financial and business matters, believes itself capable
of evaluating the merits and risks of an investment in the Option and the
securities to be purchased pursuant to this Agreement (collectively the
"Option Securities"). The Company, by reason of its knowledge and
experience in financial and business matters, believes itself capable of
evaluating the merits and risks of an investment in any Grantee Common
Stock.
4. DOCUMENTS DELIVERED. Grantee acknowledges receipt of copies of
the following documents:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
(b) The Company's Proxy Statement for the 1998 annual meeting of
the Company's stockholders;
(c) The Company's Quarterly Reports on Form 10-Q filed since
December 31, 1997; and
(d) Current Reports on Form 8-K filed since December 31, 1997.
5. INVESTMENT INTENT. Grantee represents and warrants that it is
entering into this Agreement and is acquiring and/or will acquire the
Option Securities for its own account and not with a view to resale or
distribution of all or any part of the Option Securities in violation of
applicable Law. The Company represents that, if it obtains any securities
of Grantee pursuant to this Agreement, it will acquire them for its own
account and not with a view to resale or distribution of any such
securities.
6. RESERVATION OF SHARES. The Company agrees (i) that it shall at
all times maintain, free from preemptive rights, sufficient authorized but
unissued or treasury shares of Class A Company Common Stock (or Other
Option Securities) issuable pursuant to this Agreement so that the Option
may be exercised without additional authorization of Class A Company Common
Stock (or Other Option Securities) after giving effect to all other
options, warrants, convertible securities and other rights to purchase
Class A Company Common Stock (or Other Option 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 to
be observed or performed hereunder by the Company; and (iii) promptly to
take all action as may from time to time be required in order to permit
Grantee to exercise the Option and the Company to duly and effectively
issue shares of Class A Company Common Stock (or Other Option Securities)
pursuant hereto.
7. DIVISION OF OPTION; LOST OPTIONS. This Agreement (and the Option
granted hereby) are exchangeable, without expense, at the option of
Grantee, upon presentation and surrender of this Agreement at the principal
office of the Company, for other agreements providing for Options of
different denominations entitling the holder thereof to purchase, on the
same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of Option Shares (or Other Option Securities)
purchasable hereunder. Upon receipt by the Company 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, the Company will execute and deliver a new
agreement of like tenor and date.
8. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. The number of Option
Shares purchasable upon the exercise of the Option shall be subject to
adjustment from time to time as provided in this Section 8.
(a) ADDITIONAL SHARES ADJUSTMENT. Excluding issuances
contemplated by Section 8(b), in the event that any additional shares of
Company Common Stock are issued, the number of shares of Class A Company
Common Stock subject to the Option will be adjusted so that, immediately
after such issuance and giving effect thereto, such number constitutes the
same percentage of the number of shares of Company Common Stock issued and
outstanding as the number of shares of Class A Common Stock subject to the
Option immediately prior to such issuance constitutes as a percentage of
the number of shares of Company Common Stock issued and outstanding
immediately prior to such issuance.
(b) TRANSACTION ADJUSTMENT. In the event of any change in Class
A Company Common Stock by reason of stock dividends, splits, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of
shares or other similar transactions, then the Option Shares purchasable
upon exercise hereof shall be appropriately adjusted 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 (any
such shares or other securities referred to herein as "Other Option
Securities") or property (including cash) that Grantee would have owned or
been entitled to receive after the happening of any of the events described
above if the Option had been exercised immediately prior to such event, or
the record date therefor, as applicable.
(c) OPTION PRICE ADJUSTMENT. Whenever the number of shares of
Option Shares subject to this Option are adjusted pursuant to Section 8(a)
or (b), the Option Price shall be appropriately adjusted, if applicable, by
multiplying the Option Price by a fraction, the numerator of which shall be
equal to the aggregate number of Option Shares purchasable under the Option
prior to the adjustment and the denominator of which shall be equal to the
aggregate number of Option Shares purchasable under the Option immediately
after the adjustment.
(d) SUBSTITUTE OPTION. In the event that the Company enters
into an agreement (i) to consolidate with or merge into any Person, other
than Grantee or one of its subsidiaries, and the Company will not be the
continuing or surviving corporation in such consolidation or merger, (ii)
to permit any Person, other than Grantee or one of its subsidiaries, to
merge into the Company and the Company will be the continuing or surviving
corporation, but in connection with such merger, the shares of Company
Common Stock outstanding immediately prior to the consummation of such
merger will be changed into or exchanged for stock or other securities of
the Company or any other Person or cash or any other property, or the
shares of Company Common Stock outstanding immediately prior to the
consummation of such merger will, after such merger, represent less than
50% of the outstanding voting securities of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any
Person, other than Grantee or one of its subsidiaries, then, and in each
such case, the agreement governing such transaction will make proper
provision so that the Option will, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option with identical terms
appropriately adjusted to acquire the number and class of shares or other
securities or property that Grantee would have received in respect of Class
A Company Common Stock if the Option had been exercised immediately prior
to such consolidation, merger, sale, or transfer, or the record date
therefor, as applicable, otherwise be adjusted as appropriate.
9. REGISTRATION RIGHTS. The Company will, if requested by Grantee
at any time and from time to time within three (3) years after a Triggering
Event (the "Registration Period"), as expeditiously as possible prepare and
file up to two (2) registration statements under the Securities Act if such
registration is necessary in order to permit the sale or other disposition
of Option Shares that have been acquired by or are issuable to Grantee upon
exercise of the Option ("Registrable Securities") in accordance with the
method of sale or other disposition contemplated by Grantee, including a
"shelf" registration statement under Rule 415 under the Securities Act or
any successor provision, and the Company will use its best efforts to
qualify such Option Shares under any applicable Blue Sky Law. The Company
will use its best efforts to cause each such registration statement to
become effective, to obtain all consents or waivers of other parties which
are required therefor and to keep such registration statement effective for
such period not in excess of nine (9) months from the day such registration
statement first becomes effective as may be reasonably necessary to allow
Grantee to effect such sale or other disposition. The obligations of the
Company hereunder to file a registration statement and to maintain its
effectiveness may be suspended for one or more periods of time not
exceeding ninety (90) days in the aggregate if the Board of Directors of
the Company shall have determined in good faith that the filing of such
registration or the maintenance of its effectiveness would require
disclosure of nonpublic information that would materially and adversely
affect the Company or would be in any way prohibited by law. The expenses
associated with the preparation and filing of any such registration
statement pursuant to this Section 9 and any sale covered thereby
(including any fees related to blue sky qualifications and filing fees in
respect of the SEC or the National Association of Securities Dealers, Inc.)
("Registration Expenses") will be for the account of the Company except for
underwriting discounts or commissions or brokers' fees in respect of Option
Shares to be sold by Grantee and the fees and disbursements of Grantee's
counsel. Grantee will provide all information reasonably requested by the
Company for inclusion in any registration statement to be filed hereunder.
If during the Registration Period the Company shall propose to register
under the Securities Act the offering, sale and delivery of Company Common
Stock for cash for its own account or for any other stockholder of the
Company pursuant to a firm commitment underwriting, it will, in addition to
the Company's other obligations under this Section 9, allow Grantee the
right to participate in such registration provided that Grantee
participates in the underwriting; provided, further, that, if the managing
underwriter of such offering advises the Company in writing that in its
opinion the number of shares of Company Common Stock (or other securities)
requested to be included in such registration exceeds the number which it
would be in the best interests of the Company to sell in such offering, the
Company will, after fully including therein all shares of Class A Company
Common Stock to be sold by the Company, include the shares of Class A
Company Common Stock requested to be included therein by Grantee pro rata
(based on the number of shares of Company Common Stock intended to be
included therein) with the shares of Company Common Stock intended to be
included therein by Persons other than the Company and Persons to whom the
Company owes a contractual obligation not to make such a reduction. In
connection with any offering, sale and delivery of Company Common Stock
pursuant to a registration statement effected pursuant to this Section 9,
the Company and Grantee will provide each other and each underwriter of the
offering with customary representations, warranties and covenants,
including covenants of indemnification and contribution. For purposes of
determining whether two requests have been made under this Section 9, only
requests relating to a registration statement that has become effective
under the Securities Act will be counted. The registration rights granted
under this Section 9 are subject to and are limited by any registration
rights previously granted by the Company and Grantee acknowledges the
registration rights granted under this Section 9 shall be construed subject
to any such limitations.
10. REPURCHASE OF OPTION AND OPTION SHARES.
(a) REPURCHASE OFFER. Upon the occurrence of any Repurchase
Event (as defined herein), the Company shall (i) deliver an offer (an
"Option Repurchase Offer") to repurchase the Option from Grantee at a price
(the "Option Repurchase Price") equal to the amount by which (A) the
Competing Transaction Price (as defined below) exceeds (B) the Option
Price, multiplied by the maximum number of Option Shares for which the
Option may then be exercised by Grantee, and (ii) deliver an offer (an
"Option Share Repurchase Offer") to repurchase any Option Shares held by
Grantee at a price (the "Option Share Repurchase Price") equal to the
Competing Transaction Price multiplied by the number of Option Shares then
held by Grantee, each of which offers shall not be revoked, and may be
accepted by Grantee upon delivery of a written notice to the Company, at
any time prior to the first to occur of the Option Expiration Date and the
Option Termination Date. Any such notice shall specify a date on which the
repurchase of the Option and/or Option Shares shall occur not earlier than
three (3) Business Days and not later than ten (10) Business Days after the
date on which such notice is delivered. The term "Competing Transaction
Price" shall mean, as of any date for the determination thereof, the price
per share of Class A Company Common Stock paid to the holders thereof upon
the consummation of a Competing Transaction or, in the event of a Competing
Transaction by way of a sale of assets of the Company, the Fair Market
Value of a share of Class A Company Common Stock determined as of the
fourth trading day following the announcement of such sale. For purposes
of this Agreement, "Competing Transaction" shall mean any of the following
(other than the Merger): (i) any merger, consolidation, recapitalization,
liquidation or other direct or indirect business combination, involving the
Company or any Material Subsidiary or the issuance or acquisition of shares
of capital stock or other equity securities of the Company or any Material
Subsidiary representing 50% or more (by voting power) of the outstanding
capital stock of the Company or such Material Subsidiary (except for the
issuance of shares of Company Common Stock pursuant to employee stock
options granted under the Plan and outstanding on the date of this
Agreement or the issuance of the Option to Parent) or (ii) any tender or
exchange offer after consummation of which, any Person, together with all
Affiliates thereof, beneficially owns shares of capital stock or other
equity securities of the Company or any Material Subsidiary representing
50% or more (by voting power) of the outstanding capital stock of the
Company or such Material Subsidiary, or (iii) the acquisition, license,
purchase or other disposition of a substantial portion of the technology,
business or assets of the Company or any Material Subsidiary. If the
consideration paid or received in the Competing Transaction shall be other
than in cash, the per share value of such consideration (on a fully diluted
basis) shall be determined by a nationally recognized investment banking
firm selected by Grantee and reasonably acceptable to the Company, which
determination shall be conclusive for all purposes of this Agreement.
(b) REPURCHASE REQUEST. Upon the occurrence of a Repurchase
Event and whether or not the Company shall have made an Option Repurchase
Offer or Option Share Repurchase Offer under Section 10(a), at the request
(the date of such request being the "Option Repurchase Request Date") of
Grantee delivered prior to the Option Termination Date, the Company (i)
shall repurchase the Option from Grantee at the Option Repurchase Price and
(ii) shall repurchase such number of the Option Shares (to the extent
clearly identifiable as such) from Grantee as Grantee shall designate at
the Option Share Repurchase Price.
(c) REPURCHASE PROCEDURES. Grantee may (i) accept the
Company's Option Repurchase Offer or Option Share Repurchase Offer under
Section 10(a) or (ii) exercise its right to require the Company to
repurchase the Option or any Option Shares, as the case may be, pursuant to
Section 10(b) by a written notice or notices stating that Grantee elects to
accept such offer or to require the Company to repurchase the Option or the
Option Shares in accordance with the provisions of this Section 10. As
promptly as practicable, and in any event within five (5) Business Days,
after the surrender to the Company of this Agreement or Certificates for
Option Shares, as applicable, following receipt of a notice under this
Section 10(c), the Company shall deliver or cause to be delivered to
Grantee the Option Repurchase Price or the Option Share Repurchase Price,
as the case may be.
(d) REGULATORY APPROVALS. The Company hereby undertakes to use
its reasonable efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in
order to accomplish any repurchase contemplated by this Section 10.
Nonetheless, to the extent that the Company is prohibited under applicable
Law from repurchasing the Option or any Option Shares in full, the Company
shall immediately so notify Grantee and thereafter deliver or cause to be
delivered, from time to time, to Grantee, the portion of the Option
Repurchase Price and the Option Share Repurchase Price, respectively, that
it is required to deliver pursuant hereto and that it is no longer
prohibited from delivering, within five (5) Business Days after the date on
which the Company is no longer so prohibited; provided, however, that if
the Company at any time after delivery of a notice of repurchase pursuant
to Section 10(b) hereof is prohibited under applicable Law, from delivering
to Grantee the Option Repurchase Price or the Option Share Repurchase
Price, respectively, in full, Grantee may revoke its notice of repurchase
of the Option or the Option Shares, respectively, either in whole or in
part whereupon, in the case of a revocation in part, the Company shall
promptly (i) deliver to Grantee that portion of the Option Repurchase Price
or the Option Share Repurchase Price that the Company is not prohibited
from delivering after taking into account any such revocation and (ii)
deliver, as appropriate, to Grantee either (A) a new agreement evidencing
the right of Grantee to purchase that number of shares of Class A Company
Common Stock equal to the number of shares of Class A Company Common Stock
purchasable immediately prior to the delivery of the notice of repurchase
less the number of shares of Class A Company Common Stock covered by the
portion of the Option repurchased or (B) a certificate for the number of
Option Shares covered by the revocation. If an Option Termination Event
shall have occurred prior to the date of the notice by the Company
described in the second sentence of this Section 10(d), or shall be
scheduled to occur at any time after an Option Repurchase Request Date or
valid acceptance of the Company's Option Repurchase Offer but before the
expiration of a period ending on the thirtieth day after such notice date,
Grantee shall nonetheless have the right to exercise the Option until the
expiration of such thirty (30) day period.
(e) DEFINITION. The term "Repurchase Event" shall mean the
occurrence of any Triggering Event followed by the consummation of a
Competing Transaction.
(f) REPRESENTATIONS. In connection with any purchase and sale
of the Option or the Option Shares pursuant to this Section 10, Grantee
will be required to represent and warrant to the Company that such Person
is the owner of the Option and/or Option Shares being purchased, free and
clear of all adverse claims and that such Person will deliver good title to
such Option and/or Option Shares to the Company, free and clear of all
adverse claims, upon consummation of any purchase and sale pursuant to this
Section 10.
11. EXTENSION OF TIME FOR REGULATORY APPROVALS. The periods related
to exercise of the Option and the other rights of Grantee hereunder shall
be extended (i) to the extent necessary to obtain all regulatory approvals
for the exercise of such rights, and for the expiration of all statutory
waiting periods and (ii) to the extent necessary to avoid liability under
Section 10(b) of the Exchange Act by reason of such exercise.
12. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Grantee as follows:
(a) AUTHORITY, ETC.. The Company 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 the Company
and no other corporate proceedings on the part of the Company are necessary
to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and
delivered by the Company and constitutes the legal valid and binding
obligation of the Company, enforceable against the Company in accordance
with the terms hereof.
(b) CORPORATE ACTION. The Company 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 Class A Company Common Stock equal
to the maximum number of shares of Class A Company Common Stock at any such
time and from time to time issuable hereunder, and all such shares of Class
A Company Common Stock, upon issuance pursuant hereto, will be duly
authorized, validly issued, fully paid, nonassessable, and will be
delivered free and clear of all Liens created by the Company and not
subject to any preemptive rights.
(c) NO CONFLICT. The execution and delivery by the Company of
this Agreement do not, and the consummation of the transactions
contemplated hereby and the performance by the Company of its obligations
hereunder will not, conflict with or result in any violation pursuant to
any provisions of the certificate of incorporation or bylaws of the Company
or any Subsidiary of the Company, or of any loan or credit agreement, note,
mortgage, indenture, lease, plan or other agreement, contractual
obligation, instrument, permit, concession, franchise or license applicable
to the Company or any Subsidiary of the Company or their respective
properties or assets, except for any such conflict or violation that would
not, either individually or in the aggregate, have or be a Material Adverse
Effect.
(d) ANTI-TAKEOVER STATUTES. The provisions of Section 203 of
the General Corporation Law of the State of Delaware will not, prior to the
termination of this Agreement, apply to this Agreement or the transactions
contemplated hereby and thereby. The Company has taken, and will in the
future take, all steps necessary to irrevocably exempt the transactions
contemplated by this Agreement from any other applicable state takeover law
and from any applicable charter provision containing change of control or
anti-takeover provisions.
13. ASSIGNMENT. The Company may not assign any of its rights or
obligations under this Agreement to any other Person, without the express
written consent of Grantee. Grantee may not assign any of its rights or
obligations under this Agreement to any other Person, except that Grantee
may assign its rights hereunder to any Affiliate of Grantee and may assign
its rights hereunder to any Person after the occurrence of a Triggering
Event.
14. LISTING. If Class A Company Common Stock or any other securities
to be acquired upon exercise of the Option are then listed on The Nasdaq
National Market (or any other national securities exchange or national
securities quotation system), Issuer, upon the request of Grantee, will
promptly file an application to list the shares of Class A Company Common
Stock or Other Option Securities to be acquired upon exercise of the Option
on The Nasdaq National Market (and any such other national securities
exchange or national securities quotation system) and will use reasonable
efforts to obtain approval of such listing as promptly as practicable.
15. APPLICATION FOR REGULATORY APPROVAL. Each of Grantee and the
Company will use its 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 Class A Company Common Stock issuable hereunder on the Nasdaq
National Market of The Nasdaq Stock Market, Inc. upon official notice of
issuance; provided that neither the Company nor Grantee nor any subsidiary
or affiliate thereof will be required to agree to any divestiture by itself
or any of its affiliates of shares of capital stock or of any business,
assets or property, or the imposition of any material limitation on the
ability of any of them to conduct their businesses or to own or exercise
control of such assets, properties and stock.
16. 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.
17. SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. 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 to the fullest extent possible.
18. NOTICES. All notices, claims, demands and other communications
hereunder shall be deemed to have been duly given or made when delivered in
person, by registered or certified mail (postage prepaid, return receipt
requested), by overnight courier or by facsimile at the respective
addresses of the parties set forth in the Merger Agreement.
19. 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.
20. 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.
21. 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.
22. 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
thereto, 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,
express or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and permitted 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.
23. FURTHER ASSURANCES. In the event of any exercise of the Option
by Grantee, the Company and Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary to the fullest extent permitted by Law in order to consummate the
transactions provided for by such exercise. Nothing contained in this
Agreement shall be deemed to authorize the Company or Grantee to breach any
provision of the Merger Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Stock Option Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
MOVIEFONE, INC.
By:_______________________________________
Name:
Title:
AMERICA ONLINE, INC.
By:_______________________________________
Name:
Title:
