EXHIBIT 2.2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of September 20, 1999 (the
"Agreement"), between CMGI, Inc., a Delaware corporation (the "Grantee"), and
AdForce, Inc., a Delaware corporation (the "Grantor").
WHEREAS, the Grantee, the Grantor and Artichoke Corp., a wholly owned
subsidiary of the Grantee ("Newco"), are entering into an Agreement and Plan
of Merger, dated as of the date hereof (the "Merger Agreement"), which
provides, among other things, for the merger (the "Merger") of Newco with and
into the Grantor;
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, the Grantee has requested that the Grantor grant to the Grantee an
option to purchase the shares of Common Stock of the Grantor (the "Common
Stock") covered hereby, upon the terms and subject to the conditions hereof;
and
WHEREAS, in order to induce the Grantee to enter into the Merger
Agreement, the Grantor is willing to grant the 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; EXERCISE; ADJUSTMENTS; TERMINATION.
(a) Contemporaneously herewith the Grantee, Newco and the Grantor
are entering into the Merger Agreement. Subject to the other terms and
conditions set forth herein, the Grantor hereby grants to the Grantee an
irrevocable option (the "Option") to purchase up to 3,978,761 shares of
Common Stock (the "Shares") at a cash purchase price equal to $20.96 per
Share (the "Purchase Price"); PROVIDED, HOWEVER, that the number of shares
issuable to Buyer pursuant hereto shall not exceed 19.9% of the outstanding
shares of Common Stock. The Option may be exercised by the Grantee, in whole
or in part, at any time, or from time to time, after the earlier of (i)
termination of the Merger Agreement by Buyer under Section 8.1(e) or Section
8.1(f) of the Merger Agreement, or (ii) immediately prior to the occurrence
of any event causing the termination fee to become payable to Buyer pursuant
to Section 8.3(c)(iii) of the Merger Agreement, PROVIDED that, in the case of
this clause (ii), an Alternative Transaction involving the Company has been
proposed or consummated prior to the Company Meeting.
(b) In the event of any change in the number of issued and
outstanding shares of Common Stock by reason of any stock dividend, stock
split, reverse stock split, split-up, recapitalization, merger or other
change in the corporate or capital structure of the Grantor, the number of
Shares subject to the Option and the purchase price per Share shall be
appropriately adjusted.
(c) In the event the Grantee wishes to exercise the Option, the
Grantee shall send a written notice to the Grantor (the "Exercise Notice")
specifying a date (subject to the requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act")) not later
than 10 business days and not earlier than the third business day following
the date such notice is given for the closing of such purchase.
(d) The right to exercise the Option shall terminate at the
earliest of (i) the Effective Time (as defined in the Merger Agreement), (ii)
the termination of the Merger Agreement pursuant to circumstances under which
the Grantee is not entitled to receive the termination fee pursuant to
Section 8.3 of the Merger Agreement, (iii) the date on which Grantee realizes
a Total Profit equal to the Profit Limit (as such terms are defined in
Section
8) and (iv) 90 days after the date (the "Merger Termination Date") on
which the Merger Agreement is terminated (the date referred to in clause (iv)
being hereinafter referred to as the "Option Expiration Date"); PROVIDED
THAT if the Option cannot be exercised or the Shares cannot be delivered to
Grantee upon such exercise because the conditions set forth in Section 2(a)
or Section 2(b) hereof have not yet been satisfied, the Option Expiration
Date shall be extended until 15 days after such impediment to exercise has
been removed so long as Grantee is using reasonable best efforts to remove
the impediment.
2. CONDITIONS TO DELIVERY OF SHARES. The Grantor's obligation to
deliver Shares upon exercise of the Option is subject only to the conditions
that:
(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 shall be in effect; and
(b) Any applicable waiting periods under the HSR Act shall have
expired or been terminated.
3. THE CLOSING.
(a) Any closing hereunder shall take place on the date specified
by the Grantee in its Exercise Notice at 9:00 A.M., local time, at the
offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts, or, if
the conditions set forth in Section 2(a) or 2(b) have not then 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, the Grantor will deliver to the
Grantee a certificate or certificates, duly endorsed (or accompanied by duly
executed stock powers), representing the Shares in the denominations
designated by the Grantee in its Exercise Notice and the Grantee will
purchase such Shares from the Grantor at the price per Share equal to the
Purchase Price. Any payment made by the Grantee to the Grantor, or by the
Grantor to the Grantee, pursuant to this Agreement shall be made by certified
or official bank check or by wire transfer of federal funds to a bank
designated by the party receiving such funds.
(b) The certificates representing the Shares may bear an
appropriate legend relating to the fact that such Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities
Act").
4. REPRESENTATIONS AND WARRANTIES OF THE GRANTOR. The Grantor
represents and warrants to the Grantee that: (a) the Grantor is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to enter into and perform this Agreement; (b) the execution and
delivery of this Agreement by the Grantor and the consummation by it of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of the Grantor and this Agreement has been duly executed and
delivered by a duly authorized officer of the Grantor and constitutes a valid
and binding obligation of the 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 equity principles; (c) the
Grantor has taken all necessary corporate action to authorize and reserve the
Shares issuable upon exercise of the Option and the Shares, when issued and
delivered by the Grantor upon exercise of the Option, will be duly
authorized, validly issued, fully paid and non-assessable and free of any
lien, security interest or other adverse claim and free of any preemptive
rights; (d) except as otherwise required by the HSR Act, the execution and
delivery of this Agreement by the Grantor and the consummation by it of the
transactions contemplated hereby do not require the consent, waiver, approval
or authorization of or any filing with any person or public authority and
will not violate, require a consent or waiver under, result in a breach of or
the acceleration of any obligation under, or constitute a default under, any
provision of any charter or by-law, indenture, mortgage, lien, lease,
agreement, contract, instrument, order, law, rule, regulation, stock market
rule, judgment, ordinance, decree or restriction by which the Grantor or any
of its subsidiaries or any of their respective
properties or assets is bound; and (e) no "fair price", "moratorium",
"control share acquisition" or other form of anti-takeover statute or
regulation is or shall be applicable to the acquisition of Shares pursuant to
this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE GRANTEE. The Grantee
represents and warrants to the Grantor that: (a) the execution and delivery
of this Agreement by the Grantee and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Grantee and this Agreement has been duly
executed and delivered by a duly authorized officer of the Grantee and will
constitute a valid and binding obligation of Grantee; and (b) the Grantee is
acquiring the Option and, if and when it exercises the Option, will be
acquiring the Shares 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; and (c) the Grantor is an "accredited
investor" as such term is defined in the Securities Act.
6. LISTING OF SHARES; HSR ACT FILINGS; GOVERNMENTAL CONSENTS. Subject
to applicable law and the rules and regulations of the Nasdaq National
Market, the Grantor shall (i) promptly file a notice to list the Shares on
the Nasdaq National Market and (ii) make, as promptly as practicable, all
necessary filings by the Grantor under the HSR Act and use its reasonable
best efforts to obtain all necessary approvals thereunder as promptly as
practicable; provided, however, that if the Grantor is unable to effect such
listing on the Nasdaq National Market by the Closing Date, the Grantor will
nevertheless be obligated to deliver the Shares upon the Closing Date. 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.
7. REGISTRATION RIGHTS.
(a) In the event that the Grantee shall desire to sell any of the
Shares within two years after the purchase of such Shares pursuant hereto,
and such sale requires, in the opinion of counsel to the Grantee, which
opinion shall be reasonably satisfactory to the Grantor and its counsel,
registration of such Shares under the Securities Act, the Grantor will
cooperate with the Grantee and any underwriters in registering such Shares
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 the 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 120 days if
the offering would, in the judgment of the Board of Directors of the Grantor,
require premature disclosure of any material corporate development or
otherwise interfere with or adversely affect any pending or proposed offering
of securities of the Grantor or any other material transaction involving the
Grantor.
(b) If the Common Stock is registered pursuant to the provisions
of this Section 7, the Grantor agrees (i) to furnish copies of the
registration statement and the prospectus relating to the Shares covered
thereby in such numbers as the 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 to the Grantee such numbers of copies of the
registration statement and prospectus as amended or supplemented as may
reasonably be requested. The 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 the Grantor, except that the Grantee shall pay the fees and
disbursements of its counsel and the underwriting fees and selling
commissions applicable to the Shares sold by the Grantee. The Grantor shall
indemnify and hold harmless Grantee, its affiliates and its officers and
directors from and against any and all losses,
claims, damages, liabilities and expenses arising out of or based upon any
statements contained in, omissions or alleged omissions from, each
registration statement filed pursuant to this paragraph; PROVIDED, HOWEVER,
that this provision does not apply to any loss, liability, claim, damage or
expense to the extent it arises out of any statement or omission made in
reliance upon and in conformity with written information furnished to the
Grantor by the Grantee, its affiliates or its officers expressly for use in
any registration statement (or any amendment thereto) or any preliminary
prospectus filed pursuant to this paragraph. The Grantor shall also
indemnify and hold harmless each underwriter and each person who controls any
underwriter within the meaning of either the Securities Act or the Securities
Exchange Act of 1934 against any and all losses, claims, damages, liabilities
and expenses arising out of or based upon any statements contained in,
omissions or alleged omissions from, each registration statement filed
pursuant to this paragraph; PROVIDED, HOWEVER, that this provision does not
apply to any loss, liability, claim, damage or expense to the extent it
arises out of any statement or omission made in reliance upon and in
conformity with written information furnished to the Grantor by the
underwriters expressly for use in any registration statement (or any
amendment thereto) or any preliminary prospectus filed pursuant to this
paragraph. The Grantee shall indemnify and hold harmless Grantor, its
affiliates and its officers and directors, and each underwriter and each
person who controls any underwriter within the meaning of either the
Securities Act or the Securities Act of 1934, from and against any and all
losses, claims, damages, liabilities and expenses arising out of or based
upon any statement contained in, omissions or alleged omissions from, each
registration statement filed pursuant to this paragraph to the extent that
such statement or omission is made in reliance upon and in conformity with
written information furnished to the Grantor by the Grantee, its affiliates
or its officers expressly for use in such registration statement.
8. PROFIT LIMITATION.
(a) Notwithstanding any other provision of this Agreement, in no
event shall the Grantee's Total Profit (as hereinafter defined) exceed $30
million (the "Profit Limit") and, if it otherwise would exceed such amount,
the Grantee, at its sole election, shall either (i) deliver to the Grantor
for cancellation Shares previously purchased by Grantee, (ii) pay cash to the
Grantor, (iii) receive a smaller termination fee under Section 8.3 of the
Merger Agreement, (iv) limit the number of Shares purchased hereunder, or (v)
undertake any combination thereof, so that Grantee's Total Profit shall not
exceed the Profit Limit after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, the
Option may not be exercised for a number of Shares as would, as of the date
of the Exercise Notice, result in a Notional Total Profit (as defined below)
of more than the Profit Limit and, if exercise of the Option otherwise would
exceed the Profit Limit, the Grantee, at its discretion, may increase the
Purchase Price for that number of Shares set forth in the Exercise Notice so
that the Notional Total Profit shall not exceed the Profit Limit; PROVIDED,
that nothing in this sentence shall restrict any exercise of the Option
permitted hereby on any subsequent date at the Purchase Price set forth in
Section 1(a) hereof.
(c) As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount of cash
received by Grantee pursuant to Section 8.3(c) of the Merger Agreement, and
(ii) (x) the cash amounts (net of customary brokerage commissions paid in
connection with the transaction) received by Grantee pursuant to the sale of
Shares (or any other securities into which such Shares are converted or
exchanged) to any unaffiliated party, less (y) the Grantee's purchase price
for such Shares.
(d) As used herein, the term "Notional Total Profit" with respect
to any number of Shares as to which Grantee may propose to exercise the
Option shall be the Total Profit determined as of the date of the Exercise
Notice assuming that the Option were exercised on such date for such number
of Shares and assuming that such Shares, together with all other Shares held
by Grantee and its affiliates as of such date, were sold for cash at the
closing market price for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions).
9. EXPENSES. Each party hereto shall pay its own expenses incurred in
connection with this Agreement, except as otherwise specifically provided
herein.
10. SPECIFIC PERFORMANCE. The Grantor acknowledges that if the Grantor
fails to perform any of its obligations under this Agreement, immediate and
irreparable harm or injury would be caused to the Grantee for which money
damages would not be an adequate remedy. In such event, the Grantor agrees
that the Grantee shall have the right, in addition to any other rights it may
have, to specific performance of this Agreement. Accordingly, if the Grantee
should institute an action or proceeding seeking specific enforcement of the
provisions hereof, the Grantor hereby waives the claim or defense that the
Grantee has an adequate remedy at law and hereby agrees not to assert in any
such action or proceeding the claim or defense that such a remedy at law
exists. The Grantor further agrees to waive any requirements for the
securing or posting of any bond in connection with obtaining any such
equitable relief.
11. NOTICE. All notices, requests, demands and other communications
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 the Grantor:
AdForce, Inc.
10590 North Tantau Avenue
Cupertino, CA 95014
Attn: Chief Executive Officer
Attn: General Counsel
Telecopy: (408) 873-3693
With a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attn: Gordon K. Davidson, Esq.
Mark A. Leahy, Esq.
Telecopy: (650) 494-1417
If to the Grantee:
CMGI, Inc.
100 Brickstone Square
Andover, MA 01810-1428
Attn: General Counsel
Telecopy: (978) 684-3814
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attn: Mark G. Borden, Esq.
Telecopy: (617) 526-5000
12. PARTIES IN INTEREST. Nothing in this Agreement, express or
implied, is intended to confer upon any person other than the Grantor or the
Grantee, or their successors or assigns, any rights or remedies under or by
reason of this Agreement.
13. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with the
Merger 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. The
terms of this Agreement may be amended, modified or waived only by an
agreement in writing signed by the party against whom such amendment,
modification or waiver is sought to be enforced.
14. ASSIGNMENT. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent
of the other party hereto, except that the Grantee may assign its rights and
obligations hereunder to any direct or indirect wholly-owned subsidiary of
the Grantee (provided that such assignment shall not relieve the Grantee of
its obligations hereunder if such transferee does not perform such
obligations).
15. HEADINGS. The section headings herein are for convenience only and
shall not affect the construction of this Agreement.
16. COUNTERPARTS. This Agreement may be executed in any number of
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.
17. 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 Delaware principles of conflicts
of law).
18. SURVIVAL. All representations and warranties contained in this
Agreement shall survive delivery of and payment for the Shares.
19. SEVERABILITY. If any term, provision, covenant or restriction of
this 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.
20. REPRESENTATIONS. All references to the "Agreement" in Sections
3.1(a), 3.3 and 9.3 of the Merger Agreement shall be deemed to include also
this Stock Option Agreement.
21. TERMINATION. Notwithstanding anything to the contrary herein, this
Agreement shall terminate in its entirety if AOL executes and delivers to
Grantee the Stockholder Agreement (as defined in the Merger Agreement) prior
to 5:00 p.m. (E.S.T.) on September 22, 1999. If this Agreement does not
terminate on or before 5:00 p.m. (E.S.T.) on September 22, 1999, pursuant to
the preceding sentence, then notwithstanding anything to the contrary in the
Merger Agreement, no Topping Fee (as defined in the Merger Agreement) shall
under any circumstance be payable to Grantee pursuant to Section 8.3(c) of
the Merger Agreement.
[Signature Page to Follow]
IN WITNESS WHEREOF, the Grantee and the Grantor have caused this Agreement
to be duly executed and delivered on the day and year first above written.
ADFORCE, INC.
By: Charles W. Berger
Title: Chairman and C.E.O.
CMGI, INC.
By: Andrew J. Hajducky, III
Title: Chief Financial Officer
& Executive Vice President