AMENDMENT NO. 3 TO THE
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AMENDMENT NO. 3 (this "AMENDMENT") to the AGREEMENT AND PLAN OF
MERGER AND REORGANIZATION, dated as of July 30, 1998, among HOLLYWOOD
ENTERTAINMENT CORPORATION, a corporation organized and existing under the
laws of the State of Oregon ("PARENT"), R ACQUISITION, INC., a corporation
organized and existing under the laws of the State of Delaware and a direct
wholly owned subsidiary of Parent ("MERGER SUB"), and XXXX.XXX, INC., a
corporation organized and existing under the laws of the State of Delaware
(the "COMPANY"), as amended September 3, 1998 and September 14, 1998 (the
"MERGER AGREEMENT," capitalized terms used but not otherwise defined herein
are used herein as therein defined), is made as of this 30th day of
September, 1998, by and among Parent, Merger Sub and the Company.
W I T N E S S E T H:
WHEREAS, Parent, Merger Sub and the Company desire to amend the Merger
Agreement as provided herein.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreement set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
SECTION 1. AMENDMENTS TO MERGER AGREEMENT. The Merger Agreement is
hereby amended as follows:
(a) The initial clause of Section 3.06(a) is hereby amended and
restated in its entirety to read as follows:
"At the Effective Time, each option granted by the Company to
purchase shares of Company Common Stock (each, a "Company Stock
Option") and Series C Warrant which is outstanding and unexercised,
and unvested as of September 15, 1998 in the case of Company Stock
Options, immediately prior to the Effective Time shall be assumed
by Parent and converted into an option or warrant to purchase
shares of Parent Common Stock in such number and at such exercise
price as provided below and otherwise having the same terms and
conditions as in effect immediately prior to the Effective Time
(except to the extent that such terms, conditions and restrictions
may be altered in accordance with their terms as a result of the
Merger):"
(b) The first sentence of Section 7.06 (a) is hereby amended and
restated in its entirety to read as follows:
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"At the Effective Time, Parent shall assume, by virtue of this
Agreement and without any further action on the part of the
Company, all of the Company's obligations with respect to each
outstanding Company Stock Option which was unvested as of September
15, 1998."
(c) Section 9.01(b) is hereby amended and restated in its entirety as
follows:
"(b) by either Parent or the Company, if the Effective Time
shall not have occurred on or before October 1, 1998; provided,
however, that the right to terminate this Agreement under this
Section 9.01(b) shall not be available to any party whose failure
to fulfill an obligation under this Agreement has been the cause of
the failure of the Merger to occur on or before such date;"
(d) Section 10.02(a) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
"SECTION 10.02. INDEMNIFICATION BY THE HOLDERS.
(a) Parent and its Affiliates, officers, directors,
employees, agents, successors and assigns (each an "Indemnified
Party") shall be indemnified and held harmless, jointly and
severally, by each holder (a "Holder") of Company Capital Stock
receiving Merger Consideration for any and all Liabilities, losses,
damages, claims, costs (including business interruption costs) and
expenses, interest, awards, judgments and penalties (including,
without limitation, attorneys' and consultants' fees and expenses)
actually suffered or incurred by them (including, without
limitation, any Action brought or otherwise initiated by any of
them) (hereinafter a "Loss"), (y) arising out of or resulting from
(i) the breach of any representation or warranty made by the
Company contained in the Acquisition Documents and (ii) any breach
of any representation or warranty by the Company regarding Taxes
and any Taxes owed by the Company, any Predecessor Company or
equity holder therein related to periods or acts prior to the
Effective Time and (z) resulting from either a settlement approved
in accordance with Section 10.02(b) or a non-appealable finding by
a court of law of a violation of Law by the Company arising from
the alleged actions in the lawsuit MTS, Incorporated x. Xxx'x
Electronics, Inc. and Xxxx.xxx, Inc., case No. 98AS04414, Superior
Court of the State of California in the County of Sacramento (the
"MTS Matter").
(e) Section 10.02(b) of the Merger Agreement is hereby amended by
adding the following sentence immediately following the last sentence
of Section 10.02(b):
"If the MTS Matter is settled by Parent, the obligations and
Liabilities of the Holders to indemnify an Indemnified Party for a
Loss resulting from the MTS Matter as provided in Section
10.02(a)(z) are subject to the written consent of the Holders'
Representative to such a settlement, which consent shall not be
unreasonably withheld, provided, however, that the Holders'
Representative will
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not be required to consent to any portion of a settlement which
admits a violation of Law except as it may determine in its sole
discretion."
SECTION 2. Representations and Warranties.
(a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Parent and Merger Sub that: (i) the
Company has all necessary corporate power and authority to execute and
deliver this Amendment, to perform its obligations under the Merger
Agreement as amended hereby and to consummate the transactions contemplated
hereby; (ii) the execution and delivery of this Amendment by the Company
and the consummation by the Company of the transactions contemplated by the
Merger Agreement as amended hereby have been duly and validly authorized by
all necessary corporate action; (iii) this Amendment has been duly executed
and delivered by the Company and, assuming the due authorization, execution
and delivery by Parent and Merger Sub, constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms.
(b) REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent
and Merger Sub hereby jointly and severally represent and warrant to the
Company that: (i) Parent and Merger Sub have all necessary corporate power
and authority to execute and deliver this Amendment, to perform their
respective obligations under the Merger Agreement as amended hereby and to
consummate the transactions contemplated hereby; (ii) the execution and
delivery of this Amendment by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated by the Merger
Agreement as amended hereby have been duly and validly authorized by all
necessary corporate action; (iii) this Amendment has been duly executed and
delivered by Parent and Merger Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes the legal, valid and
binding obligation of Parent and Merger Sub, enforceable against Parent and
Merger Sub in accordance with its terms.
SECTION 3. EFFECT ON MERGER AGREEMENT. Except as otherwise
specifically provided herein, the Merger Agreement shall not be amended but
shall remain in full force and effect.
SECTION 4. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE
(WITHOUT REFERENCE TO CONTRACT OF LAW PRINCIPLES OTHER THAN THOSE DIRECTING
DELAWARE LAW).
SECTION 5. COUNTERPARTS. This Amendment may be signed in one or more
counterparts, each of which shall be an original but all of which, taken
together, shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
HOLLYWOOD ENTERTAINMENT CORPORATION
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President and
General Counsel
R ACQUISITION, INC.
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Secretary
XXXX.XXX, INC.
By:
-----------------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Chief Executive Officer
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