EXHIBIT 2.03
STOCK OPTION AGREEMENT
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THIS STOCK OPTION AGREEMENT (the "Agreement") is entered into as of May 14,
2001, by and between SkyMall, Inc., a Nevada corporation (the "Grantor"), and
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Gemstar-TV Guide International, Inc., a Delaware corporation (the "Grantee").
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WHEREAS, Grantee and Grantor are entering into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), which provides,
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among other things, for the merger of Grantor into a subsidiary of Grantee;
WHEREAS, as a condition and inducement to Grantee's willingness to enter
into the Merger Agreement, Grantee has requested that Grantor grant to Grantee
an option to purchase up to 3,929,992 shares of Common Stock, par value $0.001
per share, of Grantor (the "Common Stock"), upon the terms and subject to the
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conditions hereof; and
WHEREAS, in order to induce Grantee to enter into the Merger Agreement,
Grantor is willing to grant Grantee the requested option.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
1. The Option. Subject to the terms and conditions set forth herein,
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Grantor hereby grants to Grantee an irrevocable option (the "Option") to
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purchase shares of Common Stock (the "Shares"), at a cash purchase price equal
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to $3.00 per Share (the "Purchase Price"), up to a maximum of 3,929,992 Shares
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of Common Stock (as may be adjusted as provided herein), for a total amount of
$11,789,976 (the "Total Purchase Price").
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2. Exercise.
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a. The Option may be exercised by Grantee, in whole or in part, at
any time, or from time to time, following the occurrence of a Triggering Event,
as defined herein, and prior to the termination of the Option in accordance with
the terms of this Agreement, to purchase Shares of Common Stock. In the event
Grantee wishes to exercise the Option, Grantee shall send a written notice to
Grantor (the "Exercise Notice") specifying (i) a date for the closing of such
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purchases (subject to the HSR Act (as defined below) and any applicable
regulatory approvals) not later than 20 business days and not earlier than 5
business days following the date such notice is given, and (ii) the number of
Shares of Common Stock for which the Option is being exercised. Grantor shall
give Grantee prompt written notice of any Triggering Event.
b. For purposes of this Agreement, a "Triggering Event" shall mean:
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i. at any time prior to termination of the Merger Agreement
pursuant to Section 9.1 thereof, (A) a Takeover Proposal (as defined in the
Merger Agreement) shall have been proposed by any person other than Grantee, or
any person other than Grantee shall have publicly announced an intention
(whether or not conditional) to propose a Takeover Proposal; and (B) thereafter
the Grantor stockholder approval contemplated by Section 7.1(c) of the Merger
Agreement is not obtained at the Grantor's meeting of stockholders; or
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ii. Grantee terminates the Merger Agreement pursuant to Section
9.1(f) or Grantor terminates the Merger Agreement pursuant to Section 9.1(g).
3. Adjustment. In the event of any change in the number of issued and
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outstanding shares of Common Stock by reason of any stock dividend, stock split,
split-up, merger, recapitalization, reorganization, conversion, extraordinary
dividends, distributions, exchange of shares or other change in the corporate or
capital structure of Grantor, the number and/or kind of Shares of Common Stock
subject to this Option and the purchase price per Share of Common Stock shall be
appropriately adjusted to restore Grantee to its rights hereunder, including its
right to purchase Shares representing 19.9% of the total number of shares of
capital stock of Grantor entitled to vote generally for the election of the
directors of Grantor which is issued and outstanding immediately after the
exercise of the Option at an aggregate purchase price equal to the Total
Purchase Price. In the event that any additional shares of Grantor's Common
Stock are issued after the date of this Agreement (other than pursuant to an
event described in the preceding sentence), the number of Shares of Common Stock
subject to this Option shall be increased by 19.9% of the number of the
additional shares of Grantor's Common Stock so issued (and such additional
Shares of Common Stock shall have a purchase price per Share equal to the
Purchase Price). Notwithstanding anything in this Agreement, the number of
Shares of Common Stock subject to this Option shall never exceed 19.9% of the
total number of outstanding shares of Grantor's Common Stock.
4. Conditions to Delivery of Shares. Grantor's obligation to deliver
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Shares of Common Stock upon exercise of the Option is subject only to the
following conditions:
a. No preliminary or permanent injunction or other order issued by
any federal or state court of competent jurisdiction in the United States
prohibiting the delivery of the Shares of Common Stock shall be in effect.
b. Any applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 0000 (xxx "XXX Xxx") shall have expired or been
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terminated.
c. Any other consent, approval, order, notification, or
authorization, the failure of which to obtain or make would make the issuance of
the Shares of Common Stock illegal, shall have been obtained or made and be in
full force and effect.
5. The Closing.
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a. Any closing hereunder shall take place on the date specified by
Grantee in its Exercise Notice, at 10:00 A.M., local time, at the offices of
Xxxxx Xxxxx L.L.P., New York, New York, or, if the conditions to closing have
not been satisfied, on the second business day following the satisfaction of
such conditions, or at such other time and place as the parties hereto may agree
(the "Closing Date"). On the Closing Date, Grantor will deliver to Grantee a
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certificate or certificates representing the Shares of Common Stock in the
denominations designated by Grantee in the Exercise Notice and Grantee will
purchase such Shares of Common Stock from Grantor at the price per Share equal
to the Purchase Price. Any payment made by Grantee to Grantor pursuant to this
Agreement shall be made by wire transfer of immediately available funds to a
bank account designated by Grantor. The certificates representing the
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Shares of Common Stock shall bear an appropriate legend relating to the fact
that such Shares of Common Stock have not been registered under the Securities
Act of 1933, as amended (the "Securities Act").
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b. If at the time of any issuance of Shares of Common Stock
hereunder the Grantor shall have issued any rights or other securities which are
attached to or otherwise associated with the Common Stock, then each such Share
also shall represent such rights or other securities with terms substantially
the same as, and at least as favorable to Grantee as, are provided under any
rights agreement or similar agreement of the Grantor then in effect.
c. Upon the delivery of the applicable Purchase Price at 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 Grantor may then be closed or that certificates representing
such Shares of Common Stock may not have been delivered to Grantee. Grantor
shall pay all expenses, and any and all taxes and other charges that may be
payable in connection with the preparation, issuance and delivery of stock
certificates under this Agreement in the name of Grantee.
6. Representations and Warranties of Grantor. Grantor represents and
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warrants to Grantee that (a) Grantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has the
requisite corporate power and authority to enter into and perform this
Agreement; (b) the execution and delivery of this Agreement by Grantor and the
consummation by it of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Grantor and this Agreement has been duly
executed and delivered by a duly authorized officer of Grantor and constitutes a
valid and binding obligation of Grantor, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity; (c) Grantor has taken all
necessary corporate action to authorize and reserve the Shares of Common Stock
issuable upon exercise of the Option and the Shares of Common Stock, when issued
and delivered by Grantor upon exercise of the Option and paid for by Grantee as
contemplated hereby, will be duly authorized, validly issued, fully paid and
non-assessable and free and clear of any lien, pledge, security interest, claim
or other encumbrance (other than those created by this Agreement) and not
subject to any preemptive rights; (d) the execution and delivery of this
Agreement by Grantor do not and, except as otherwise required by the HSR Act and
for such filings as are required by the National Association of Securities
Dealers, Inc., the consummation by it of the transactions contemplated hereby
will not require any approval by any of the Company's stockholders or the
consent, waiver, approval or authorization of or any filing with any person or
public authority and will not violate, result in a breach of or the acceleration
of any obligation under, or constitute a default under, any provision of
Grantor's certificate of incorporation or bylaws, or any material indenture,
mortgage, lien, lease, agreement, contract, instrument, order, law, rule,
regulation, judgment, ordinance, or decree, or restriction by which Grantor or
any of its subsidiaries or any of their respective properties or assets is
bound; (e) no "fair price," "moratorium," "control share acquisition,"
"interested shareholder" or other form of antitakeover statute or regulation,
including without limitation, Sections 78.411 to 78.444 of the General
Corporation Law of the State of Nevada, or similar provision contained in the
certificate of incorporation or bylaws of Grantor, is or shall be applicable to
any of the transactions contemplated by this Agreement, and
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the Board of Directors of the Company has taken all action to approve the
transactions contemplated hereby to the extent necessary to avoid any such
application; and (f) Grantor has taken all corporate action necessary so that
the grant and any subsequent exercise of the Option by Grantee or other exercise
by Grantee of any of its rights hereunder will not result in the separation or
exercisability of the rights under the Rights Agreement dated September 15, 1999
between the Company and the Continental Stock Transfer and Trust Company (the
"Right Agreement") or in any nullification of rights under the Rights Agreement
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held by Grantee or any of its affiliates or in Grantee being an Acquiring Person
(as defined in the Rights Agreement).
7. Representations And Warranties of Grantee. Grantee represents and
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warrants to Grantor that (a) the execution and delivery of this Agreement by
Grantee and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee
and this Agreement has been duly executed and delivered by a duly authorized
officer of Grantee and constitutes a valid and binding obligation of Grantee;
and (b) Grantee is acquiring the Option and, if and when it exercises the
Option, will be acquiring the Shares of Common Stock issuable upon the exercise
thereof for its own account and not with a view to distribution or resale in any
manner which would be in violation of the Securities Act.
8. Non-Avoidance and Further Assurances.
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a. Grantor agrees not to avoid or seek to avoid (whether by charter
amendment or through reorganization, consolidation, merger, issuance of rights,
dissolution or sale of assets, or by any other voluntary act) the observance or
performance of any of the covenants, agreements or conditions to be observed or
performed hereunder by Grantor and not to take any action which would cause any
of its representations or warranties not to be true in any material respect.
b. Grantor agrees, promptly after this date, to take all actions as
may from time to time be required (including (i) complying with all applicable
premerger notification, reporting and waiting period requirements under the HSR
Act and (ii) in the event that any other prior approval of or notice to any
regulatory authority is necessary under any applicable federal, state or local
law before the Option may be exercised, cooperating fully with Grantee in
preparing and processing the required applications or notices) in order to
permit Grantee to exercise the Option and purchase Shares of Common Stock
pursuant to such exercise.
9. Substitute Option.
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a. In the event that prior to the termination of this Option in
accordance with this Agreement, Grantor shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its subsidiaries, to merge into Grantor and Grantor shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
Shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other person or cash or any other property or the then
outstanding Shares of Common Stock shall after such merger represent less than
50% of the outstanding voting shares and voting share equivalents of the
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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 shall make
proper provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option which the Grantee reasonably believes to have
equivalent value and equivalent terms (the "Substitute Option"), at the election
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of Grantee, to acquire shares of either (x) the Acquiring Corporation (as
hereinafter defined) or (y) any person that controls the Acquiring Corporation.
For purposes of this Agreement, "Acquiring Corporation" shall mean (i) the
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continuing or surviving corporation of a consolidation or merger with Grantor
(if other than Grantor), (ii) Grantor in a merger in which Grantor is the
continuing or surviving corporation, and (iii) the transferee of all or
substantially all of Grantor's assets.
b. In no event shall the Substitute Option be exercisable for more
than 19.9% of the shares of the issuer of the Substitute Option. Grantor shall
not enter into any transaction described in subsection (a) of this Section
unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Grantor hereunder.
10. Exchange; Replacement. This Agreement and the Option are exchangeable,
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without expense, at the option of Grantee upon presentation and surrender of
this Agreement at the principal office of Grantor, for other Agreements
providing for Options of different denominations entitling Grantee to purchase
on the same terms and subject to the same conditions as set forth in this
Agreement in the aggregate the same number of Shares of Common Stock purchasable
at such time hereunder, subject to corresponding adjustments in the number of
Shares of Common Stock purchasable upon exercise so that the aggregate number of
such Shares of Common Stock under all Agreements issued in respect of this
Agreement shall not exceed 19.9% of the total number of outstanding Shares of
Common Stock (after giving effect to Shares of Common Stock issued or issuable
pursuant to the Option). Unless the context shall require otherwise, the terms
"Agreement" and "Option" as used in this Agreement include any Agreements and
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related options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon (i) receipt by Grantor of reasonably satisfactory evidence of
the loss, theft, destruction or mutilation of this Agreement, (ii) receipt by
Grantor of reasonably satisfactory indemnification in the case of loss, theft or
destruction and (iii) surrender and cancellation of this Agreement in the case
of mutilation, Grantor will execute and deliver a new Agreement of like tenor
and date. Any new Agreement executed and delivered shall constitute an
additional contractual obligation on the part of Grantor, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by any person other than Grantee.
11. Listing of Shares; Filings; Governmental Consents. When the Option
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becomes exercisable hereunder, Grantor will effect all necessary filings by
Grantor under the HSR Act and the applicable laws of each state and foreign
jurisdiction. Each of the parties hereto will use its reasonable best efforts to
obtain consents of all third parties and governmental authorities, if any,
necessary to the consummation of the transactions contemplated.
12. Registration Rights.
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a. In the event that Grantee shall desire to sell any of the Shares
of Common Stock within two years after the purchase of such Shares of Common
Stock pursuant hereto, and
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such sale requires, in the opinion of counsel to Grantee, which opinion shall be
reasonably satisfactory to Grantor and its counsel, registration of such Shares
of Common Stock under the Securities Act, Grantor will cooperate with Grantee
and any underwriters in registering such Shares of Common Stock for resale,
including, without limitation, promptly filing a registration statement which
complies with the requirements of applicable federal and state securities laws,
and entering into an underwriting agreement with such underwriters upon such
terms and conditions as are customarily contained in underwriting agreements
with respect to secondary distributions; provided that Grantor shall not be
required to have declared effective more than two registration statements
hereunder and shall be entitled to delay the filing or effectiveness of any
registration statement for up to 135 days if the offering would, in the judgment
of the Board of Directors of Grantor, require premature disclosure of any
material corporate development or material transaction involving Grantor or
interfere with any previously planned securities offering by Grantor.
b. If the Common Stock is registered pursuant to the provisions of
this Section, Grantor agrees (i) to furnish copies of the registration statement
and the prospectus relating to the Shares of Common Stock covered thereby in
such numbers as Grantee may from time to time reasonably request and (ii) if any
event shall occur as a result of which it becomes necessary to amend or
supplement any registration statement or prospectus, to prepare and file under
the applicable securities laws such amendments and supplements as may be
necessary to keep available for at least 90 days a prospectus covering the
Common Stock meeting the requirements of such securities laws, and to furnish
Grantee such numbers of copies of the registration statement and prospectus as
amended or supplemented as may reasonably be requested. Grantor shall bear the
cost of the registration, including, but not limited to, all registration and
filing fees, printing expenses, and fees and disbursements of counsel and
accountants for Grantor, except that Grantee shall pay the fees and
disbursements of its counsel, and the underwriting fees and selling commissions
applicable to the Shares of Common Stock sold by Grantee. Nothing in this
Agreement shall require Grantor to participate in any roadshows or smilar
marketing efforts for any underwritten offering of Shares.
c. Grantor shall indemnify and hold harmless (i) Grantee, its
affiliates and its officers and directors and each person who controls Grantee
within the meaning of the Securities Act or Exchange Act and (ii) each
underwriter and each person who controls any underwriter within the meaning of
the Securities Act or the Securities Exchange Act of 1934 as amended (the
"Exchange Act") (collectively, the "Underwriters") ((i) and (ii) being referred
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to as "Indemnified Parties") against any losses, claims, damages, liabilities or
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expenses, to which the Indemnified Parties may become subject, insofar as such
losses, claims, damages, liabilities (or actions in respect thereof) and
expenses arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained or incorporated by reference in any
registration statement or prospectus filed pursuant to this section, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that Grantor will not be liable in
any such case to the extent that any such loss, liability, claim, damage or
expense arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any such documents in reliance
upon and in conformity with written information furnished to Grantor by the
Indemnified Parties expressly for use or incorporation by reference therein.
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d. Grantee and the Underwriters shall indemnify and hold harmless
Grantor, its affiliates and its officers and directors and each person who
controls Grantee within the meaning of the Securities Act or Exchange Act
against any losses, claims, damages, liabilities or expenses to which Grantor,
its affiliates and its officers and directors may become subject, insofar as
such losses, claims, damages, liabilities (or actions in respect thereof) and
expenses arise out of or are based upon any untrue statement of any material
fact contained or incorporated by reference in any registration statement filed
pursuant to this section, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to Grantor by Grantee or the
Underwriters, as applicable, specifically for use or incorporation by reference
therein.
13. Expenses. Each party hereto shall pay its own expenses incurred in
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connection with this Agreement, except as otherwise specifically provided
herein.
14. Specific Performance. Grantor acknowledges that if Grantor fails to
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perform any of its obligations under this Agreement immediate and irreparable
harm or injury would be caused to Grantee for which money damages would not be
an adequate remedy. In such event, Grantor agrees that Grantee shall have the
right, in addition to any other rights it may have, to specific performance of
this Agreement.
15. Notice. All notices, requests, demands and other communications
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hereunder shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended or delivered
by registered or certified mail, return receipt requested, or if sent by
facsimile transmission, upon receipt of oral confirmation that such transmission
has been received, to the person at the address set forth below, or such other
address as may be designated in writing hereafter, in the same manner, by such
person:
If to Grantor: SkyMall, Inc.
0000 X. Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Fax: 000-000-0000
With a copy to: Xxxxxxxxx Xxxxxxx, LLP.
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
If to Grantee: Gemstar-TV Guide International, Inc.
000 Xxxxx Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
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Fax: 000-000-0000
With a copy to: Xxxxx Xxxxx L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
16. Parties in Interest. This Agreement shall inure to the benefit of and
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be binding upon the parties named herein and their respective successors and
assigns. Nothing in this Agreement, express or implied, is intended to confer
upon any person other than Grantor or Grantee, or their successors or assigns,
any rights or remedies under or by reason of this Agreement.
17. Entire Agreement; Amendments. This Agreement, together with the Merger
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Agreement and the other documents referred to therein, contains the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements and understandings, oral
or written, with respect to such transactions. This Agreement may not be
changed, amended or modified orally, but may be changed only by an agreement in
writing signed by the party against whom any waiver, change, amendment,
modification or discharge may be sought.
18. Assignment. No party to this Agreement may assign any of its rights or
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obligations under this Agreement without the prior written consent of the other
party hereto, except that Grantee may assign unilaterally any or all of its
rights and obligations hereunder to (i) any of its direct or indirect wholly
owned subsidiaries, or (ii) any person in the event any federal agency objects
to the exercise of the Option, in whole or in part, on grounds relating to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended; provided,
however, that no such assignment shall relieve Grantee of its obligations
hereunder if such transferee does not perform such obligations.
19. Headings. The section headings herein are for convenience only and
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shall not affect the construction of this Agreement.
20. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
21. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Delaware (without regard to principles
of conflicts of law).
22. Termination. The right to exercise the Option granted pursuant to this
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Agreement shall terminate at the earliest of (i) the Effective Time (as defined
in the Merger Agreement) and (ii) subject to Section 23, 180 days after the
Triggering Event (the "Termination Date"). All representations and warranties
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contained in this Agreement shall survive delivery of and payment for the Shares
of Common Stock.
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23. Extension of Exercise Periods. The 180-day period for exercise of
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certain rights under Section 22 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, (ii) to the extent necessary to
avoid liability under Section 16(b) of the Exchange Act by reason of such
exercise, and (iii) during any period in which Grantee is precluded from
exercising such rights due to an injunction or other legal restriction, plus, in
the case of clauses (i), (ii) and (iii), for an additional period of ten
business days following the obtaining of such approvals or the expiration of
such periods.
24. Severability. If any term, provision, covenant or restriction of this
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Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
[Intentionally Left Blank]
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IN WITNESS WHEREOF, Grantee and Grantor have caused this Agreement to be
duly executed and delivered on the day and year first above written.
SKYMALL, INC. GEMSTAR-TV GUIDE INTERNATIONAL, INC.
By: _______________________________ By: _____________________________
Name: Xxxxxx X. Xxxxxxx Name:
Title: Chief Executive Officer Title:
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