Exhibit 2.1
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER, dated as of January
12, 2001 (this "FIRST AMENDMENT"), among xXXxX*s Corp., a Delaware corporation
formerly known as iTurf Inc. ("ITURF"), XxxXxxxx.xxx Inc. (formerly known as
iTurf Caveman Acquisition Corporation), a Massachusetts corporation and a wholly
owned subsidiary of iTurf (the "MERGER SUB"), and the former stockholders of
XxxXxxxx.xxx, Inc. (a Massachusetts corporation which was merged with and into
Merger Sub) listed on the signature page(s) to this First Amendment (the
"SELLING Stockholders").
W I T N E S S E T H:
WHEREAS, iTurf, Merger Sub, and the Selling Stockholders have
previously entered into an Agreement and Plan of Merger, dated as of February 4,
2000 (the "ORIGINAL MERGER AGREEMENT"); and
WHEREAS, the parties desire to amend the Original Merger Agreement as
set forth herein (as amended, the "MERGER AGREEMENT").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereby agree to amend the Original Merger Agreement as
follows:
1. DEFINITIONS.
(a) Capitalized terms used and not defined herein shall have
the meanings ascribed to them in the Merger Agreement.
(b) Article IX of the Original Merger Agreement is hereby
amended to add the following definitions:
"ADJUSTED DEFERRED SHARE AMOUNT" means the difference
obtained by subtracting (1) the Deferred Share Adjustment FROM (2) 2,000,000.
"AGGREGATE SHARE APPRECIATION" means the product of
(1) the Per Share Appreciation MULTIPLIED BY (2) 2,000,000.
"ANCILLARY DOCUMENTS" means the Registration Rights
Agreement Amendment and the Second Escrow Agreement.
"DECEMBER 2000 PRICE" means the average of the
closing prices per share of iTurf Common Stock on the Nasdaq Stock Market for
the period consisting of the twenty (20) Trading Days immediately preceding
December 31, 2000.
"DEFERRED CASH PAYMENT" means Two Million Five
Hundred Thousand Dollars ($2,500,000) in cash.
"DEFERRED CONTINGENT PAYMENT" means the lesser of (1)
One Million Five Hundred Thousand Dollars ($1,500,000) and (2) the difference
(but not less than zero) obtained by
subtracting (A) the sum of (i) the Deferred Cash Payment to the extent timely
made to the Selling Stockholders and (ii) subject to the third sentence of
Section 1.11(d), the sum of all Strategic Transaction Proceeds Payments to the
extent timely made to the Selling Stockholders in accordance with Section
1.11(c)(iii) of the Merger Agreement FROM (B) Seven Million Five Hundred
Thousand Dollars ($7,500,000).
"DEFERRED SHARE ADJUSTMENT" means the product of (1)
0.5 MULTIPLIED BY (2) the quotient obtained by dividing (A) the Aggregate Share
Appreciation BY (B) the May 2001 Price.
"DEFERRED SHARES" means that number of shares of
iTurf Common Stock equal to the lesser of (1) 2,000,000 and (2) the Adjusted
Deferred Share Amount.
"FEBRUARY 2002 PRICE" means the average of the Market
Prices per share of iTurf Common Stock on the principal market on which it is
traded (currently the Nasdaq National Market) for the period consisting of the
twenty (20) Trading Days immediately preceding February 23, 2002.
"FIRST AMENDMENT" means the First Amendment to the
Merger Agreement, dated as of January 12, 2000, among iTurf, Merger Sub and the
Selling Stockholders.
"FIRST REFUSAL SHARES" means all Shares issued
pursuant to the Merger Agreement.
"INITIAL SHARES" means the number of shares of iTurf
Common Stock issued at Closing pursuant to clause 1 of Section 1.7(a)(i) of the
Merger Agreement.
"ITURF" means xXXxX*s Corp., a Delaware corporation
formerly known as iTurf Inc.
"ITURF COMMON STOCK" means Class A common stock, par
value $.01 per share, of xXXxX*s Corp.
"XXXX" means Xxxxxxx X. Xxxx, a natural person with
offices at 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"MARKET PRICE" of a share of iTurf Common Stock on
any Trading Day shall be (a) if the principal market for iTurf Common Stock is a
national securities exchange, the last reported sales price per share of iTurf
Common Stock on such day as reported on a consolidated tape reflecting
transactions on such exchange or, if not so reported, as reported by such
exchange, (b) if the principal market for iTurf Common Stock is not a national
securities exchange and iTurf Common Stock is quoted on the Nasdaq National
Market or Nasdaq SmallCap Market (collectively, "Nasdaq") and (i) if actual
sales price information is available with respect to iTurf Common Stock, the
last reported sales prices per share of iTurf Common Stock on such day as
reported by Nasdaq, or (ii) if such information is not available, the average of
the highest bid and the lowest asked prices per share for iTurf Common Stock on
such day as reported by Nasdaq, or (c) if the principal market for iTurf Common
Stock is not a national securities exchange and the Common Stock is not quoted
on Nasdaq, the average of the highest bid and lowest asked prices per share for
iTurf Common Stock on such day as reported on the OTC Bulletin Board or, if not
so reported, then by National Quotation Bureau, Incorporated; PROVIDED, HOWEVER,
that if clauses (a), (b) and (c) of this paragraph are all inapplicable because
iTurf Common Stock is not publicly traded or if no trades have been made and no
quotes are available for such day, the Market Price of a
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share of iTurf Common Stock on such day shall be determined by agreement between
the Sellers' Agents and iTurf or, if they fail to agree, by arbitration pursuant
to Section 10.9 of the Merger Agreement.
"MAY 2001 PRICE" means the average of the Market
Prices per share of iTurf Common Stock on the principal market on which it is
traded (currently The Nasdaq National Market) for the period consisting of the
twenty (20) Trading Days immediately preceding May 19, 2001.
"PER SHARE APPRECIATION" means the greater of (1)
zero and (2) the difference obtained by subtracting (1) the December 2000 Price
FROM (2) the May 2001 Price.
"SEC" means the Securities and Exchange Commission
"SECOND ESCROW AGREEMENT" means the Second Escrow
Agreement between iTurf, the Representatives and Xxxxxx Xxxxxx LLP (or its
successor), as escrow agent, in substantially the form annexed to the First
Amendment as Annex A, to be entered into contemporaneously with the delivery of
the Deferred Cash Payment to the Escrow Agent."
"SHARES" means shares of iTurf Common Stock
"SPARK TRANSACTION NET PROCEEDS" means the gross
proceeds actually received from time to time by Merger Sub from a Strategic
Transaction that is consummated after the transfer of Merger Sub pursuant to
Section 4.17(b)(ii) and prior to March 1, 2002 LESS (1) Transaction Expenses
incurred by the Selling Stockholders in connection with such transaction and (2)
liabilities of Merger Sub included on the face of its balance sheet in
accordance with GAAP that are not assumed by a third party in connection with a
Strategic Transaction.
"STRATEGIC TRANSACTION" means a merger or
consolidation of Merger Sub; a sale, pledge, hypothecation, exchange or other or
similar disposition of all or part of the capital stock of Merger Sub; or a
sale, lease, license, exchange or other disposition of Substantial Assets of
Merger Sub, in any case, in one or more transactions.
"STRATEGIC TRANSACTION NET PROCEEDS" means the gross
proceeds actually received by iTurf and/or Merger Sub (or deemed received in
accordance with Section 1.11(c)(ii) of the Merger Agreement by iTurf and/or the
Company) from one or more Strategic Transactions applicable to Merger Sub and/or
its businesses or assets, LESS (1) reasonable Transaction Expenses incurred by
iTurf and Merger Sub in connection with such transaction, (2) liabilities of
Merger Sub (other than liabilities for borrowed monies, guaranties of
obligations and other financial accommodations) incurred in the ordinary course
of business and incurred in a manner consistent with Merger Sub's practices as
they existed prior to October 28, 2000 included on the face of its balance sheet
prepared in accordance with GAAP on a basis consistent with Merger Sub's balance
sheet as at October 28, 2000 ("the OCTOBER 28 BALANCE SHEET") (a copy of which
will be delivered to Sellers' Agents in accordance with Section 13) and which
are not assumed by a third party in connection with a Strategic Transaction, and
(3) severance payments, accrued expenses and similar obligations paid by iTurf
or Merger Sub to Merger Sub employees .
"STRATEGIC TRANSACTION PROCEEDS PAYMENT" relating to
a Strategic Transaction means the product of (1) 50% MULTIPLIED BY the lesser of
(A) the Strategic Transaction Net Proceeds from such Strategic Transaction and
(B) Sixteen Million Dollars ($16,000,000).
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"SUBSTANTIAL ASSETS" means, with respect to Merger
Sub, a substantial portion of the intellectual property and/or physical assets
of Merger Sub and/or Merger Sub's (1) XxxXxxxx.xxx business, (2) the
Xxxxxxxxxx.xxx business or (3) the XxxxxXxxxx.xxx business.
"TRANSACTION EXPENSES" means legal, accounting and
financial advisory/investment banking and similar fees and expenses reasonably
incurred by iTurf or Merger Sub in connection with, and directly attributable to
the portion of a Strategic Transaction applicable to Merger Sub and/or its
businesses or assets.
2. RESTATEMENT OF SECTION 1.7(a)(i). Section 1.7(a)(i) of the Merger
Agreement is hereby amended and restated as follows:
1.7 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of iTurf, Merger Sub, the
Company or the holders of any of the following securities:
(a) CONVERSION OF SECURITIES
(i) Subject to Sections 1.8 and 1.9, each
share of Company Capital Stock issued and outstanding immediately prior to the
Effective Time (other than shares held in the treasury of the Company) shall be
converted into the right to receive:
(1) that number of fully paid and
non-assessable shares of Class A common stock, par value $.01 per share, of
iTurf ("ITURF COMMON STOCK") equal to the quotient obtained by dividing (A) One
Million One Hundred Thousand (1,100,000) by (B) the number of shares of Company
Capital Stock issued and outstanding immediately prior to the Effective Time
(the "MERGER DENOMINATOR"),
(2) the Deferred Shares divided by
the Merger Denominator,
(3) the Deferred Cash Payment
divided by the Merger Denominator,
(4) the Strategic Transaction
Proceeds Payment divided by the Merger Denominator, and
(5) the Deferred Contingent Payment
divided by the Merger Denominator (collectively, the "MERGER CONSIDERATION").
3. RESTATEMENT OF SECTION 1.11. Section 1.11 of the Merger Agreement is
hereby amended and restated as follows:
(a) DEFERRED SHARES. After May 19, 2001 but not later
than June 1, 2001, iTurf shall issue and deliver to the Selling Stockholders the
Deferred Shares on a pro-rata basis in accordance with SCHEDULE 2.3.
(b) DEFERRED CASH PAYMENT. Not later than nine days
after the fulfillment or waiver of the condition described in Section 13(a) of
the First Amendment, iTurf shall pay to the Selling Shareholders the Deferred
Cash Payment on a pro-rata basis in accordance with SCHEDULE 2.3, which
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payment shall be delivered by wire transfer of immediately available funds to
the escrow agent contemplated by the Second Escrow Agreement, which agent shall
hold the Deferred Cash Payment on behalf of the Selling Stockholders. It is
understood and agreed that all right, title and interest in the Deferred Cash
Payment shall vest in the Selling Stockholders, pro-rata in accordance with
SCHEDULE 2.3, upon delivery to the escrow agent, subject to (i) delayed delivery
by the escrow agent as provided in the Second Escrow Agreement and (ii) iTurf's
interest in the interest accruing on the Deferred Cash Payment as provided in
the Second Escrow Agreement.
(c) STRATEGIC TRANSACTION PROCEEDS PAYMENT.
(i) Promptly following the consummation of
each Strategic Transaction consummated prior to March 1, 2002, iTurf shall
deliver to the Selling Stockholders the portion of the Strategic Transaction
Proceeds Payment payable with respect to such Strategic Transaction on a
pro-rata basis in accordance with SCHEDULE 2.3, less, in the case of payments to
Net Associates, the Advanced Amount.
(ii) If a Strategic Transaction occurs as
part of what would be a similar transaction for or of iTurf or a similar
transaction (or series of similar transactions with the same purchaser or with
entities that control, are controlled by or are under common control with a
person or entity with whom a Strategic Transaction is consummated) involving
XXXX.xxx or other property, subsidiary or business owned, directly or
indirectly, by iTurf, the gross proceeds and the Transaction Expenses thereof
shall be allocated in determining the Strategic Transaction Net Proceeds in such
manner as iTurf and the Sellers' Agents may agree or, if they fail to agree
within ten (10) days following such transaction, the dispute shall be submitted
to such nationally recognized investment banking firm or appraiser as iTurf and
the Sellers' Agents may agree (the determination by which shall be final and
binding upon the parties).
(iii) For avoidance of doubt, it is
understood that if, in good faith, the gross proceeds received by iTurf or
Merger Sub from a Strategic Transaction are in the form of securities,
promissory notes or other payment obligations, assets, contingent payments or
other consideration rather than or in addition to cash, then (A) each Selling
Stockholder may elect to accept its pro rata (or a lesser) portion of such
Strategic Transaction Proceeds or (B) the Selling Stockholders may to reallocate
such Strategic Transaction Proceeds among them, and the Strategic Transaction
Proceeds shall be delivered in the same form, including cash, (provided,
however, in the instance of non-separable assets, the parties shall negotiate in
good faith an equitable ownership structure to share ownership of such assets in
common). It is also understood that to the extent proceeds received are in the
form of a contingent payment or similar right, then iTurf's obligation under
this Section 1.11(c)(iii) shall be deferred to the extent necessary to deliver
each Selling Stockholder's applicable portion of such contingent payment or
right at or promptly following the time of receipt of such contingent payment or
similar right.
(d) DEFERRED CONTINGENT PAYMENT. Not later than March
1, 2002, iTurf shall deliver to the Selling Stockholders the Deferred Contingent
Payment on a pro-rata basis in accordance with SCHEDULE 2.3. The Deferred
Contingent Payment may be made, at iTurf's election, in the form of cash or, to
the extent at the time registered for immediate resale under the Securities Act,
and listed for trading on the Nasdaq National Market, iTurf Common Stock ;
PROVIDED, HOWEVER, that if all or any portion of such payment is made by virtue
of iTurf's election under Section 4.17(b), such payment shall be made in cash.
If a part of the Strategic Transaction Proceeds is in the form of promissory
notes or other payment obligations and/or contingent payments or other similar
provision for potential deferred payment, then the Deferred Contingent Payment
shall be made on the basis of cash proceeds actually received therefrom
recalculated at the time the buyer makes the actual payment thereof based on the
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actual amounts received, with any additional (or refund) payments to be made at
that time. If the Deferred Contingent Payment is made in the form of iTurf
Common Stock, then the February 2002 Price shall be used for the purpose of
computing the number of shares.
(e) CESSATION OF LISTING. Notwithstanding anything in the foregoing to
the contrary:
(i) if on or prior to the date of issuance of Deferred Shares,
iTurf Common Stock is not traded on either the Nasdaq National Market or the New
York Stock Exchange, the Sellers' Agents may require that the Selling
Stockholders, in lieu of receiving the Deferred Shares, be paid in cash based on
the May 2001 Price; and
(ii) if iTurf elects to issue iTurf Common Stock in payment of
the Deferred Contingent Payment then, if prior to the issuance of such Shares,
iTurf Common Stock is not traded on either the Nasdaq National Market or the New
York Stock Exchange, the Sellers' Agents may require that payment of all or part
of the Deferred Contingent Payment be made in cash.
(f) LIMITATION ON REPURCHASES DURING PRICING PERIODS. iTurf has
announced a stock repurchase program. iTurf agrees that neither it nor any of
its affiliates will make market purchases (except for market purchases which
satisfy the conditions set forth in Rule 10b-18(b) promulgated under the
Exchange Act) of iTurf Common Stock in the periods during which the December
2000 Price, May 2001 Price or February 2002 Price are to be determined.
4. AMENDMENT AND RESTATEMENT OF SECTION 4.17. Section 4.17 of the
Merger Agreement is hereby amended and restated as follows:
4.17. EFFORTS TO SUPPORT THE SURVIVING CORPORATION.
(a) SUPPORT OBLIGATION.
(i) Until the date of the First Amendment:
iTurf will maintain, and use its
reasonable commercial efforts to support and expand, the Surviving Corporation's
domain name, Web site and organization and use reasonable commercial efforts
(including funding of operating expenses) to increase its sales commensurate
with the Surviving Corporation's growth opportunities. iTurf shall cause its
senior executive officers to consult no less often than quarterly with the
General Manager of the Surviving Corporation to discuss the performance of the
Surviving Corporation, budgetary issues, corporate strategy and such other
corporate issues as the General Manager of the Surviving Corporation shall
request. iTurf shall make all reasonable efforts to consult with the General
Manager of the Surviving Corporation prior to causing the Surviving Corporation
to hire or fire any employee of the Surviving Corporation. iTurf shall provide
employees of the Surviving Corporation with all medical insurance coverage and
other benefits which are generally provided to iTurf employees and shall include
employees of the Surviving Corporation in all employee benefit plans in which
iTurf employees generally participate, including without limitation, retirement
plans and equity participation plans. If at any time Yagan is not the General
Manager of the Surviving Corporation, or holding a similar or more senior
position with the Surviving Corporation, the Surviving Corporation's and iTurf's
obligations under this Section shall be to consult with Xxxxx if he holds such a
position at the Surviving Corporation or, if not, with the Surviving
Corporation's Creative Director. If neither Yagan nor Xxxxx is employed with the
Surviving Corporation, the Sellers' Agents may appoint another employee with
whom iTurf shall consult pursuant to this Section.
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The obligations of iTurf under this Section shall terminate upon the expiration
of the Second Earnout Measurement Period.
(ii) Subsequent to the date of the First
Amendment:
iTurf: (A) shall maintain the
Surviving Corporation's domain names and Web sites and; (B) shall not reduce the
number of employees authorized for employment as of December 18, 2000; (C) shall
provide a similar amount of office space to the Surviving Corporation as is
currently used by the Surviving Corporation, which space is to be either at its
current location or at a location reasonably approved by the General Manager of
the Surviving Corporation; and (D) shall operate and fund the Surviving
Corporation's business (following consultation with the General Manager of the
Surviving Corporation as to any proposed changes to operations or funding)
materially in accordance with the plan attached hereto as SCHEDULE A. . iTurf
shall cause its senior executive officers to consult no less often than monthly
with the General Manager of the Surviving Corporation to discuss the performance
of the Surviving Corporation, budgetary issues, corporate strategy and such
other corporate issues as the General Manager of the Surviving Corporation shall
request. iTurf shall not permit the Surviving Corporation to hire or fire any
employee of the Surviving Corporation without the consent of the General Manager
of the Surviving Corporation (which consent shall not be unreasonably withheld
or delayed), who is authorized to replace any employee who is terminated or who
voluntarily terminates employment with a person of similar experience, skill or
salary. iTurf shall provide employees of the Surviving Corporation with all
medical insurance coverage and other benefits which are generally provided to
iTurf employees and shall include employees of the Surviving Corporation in all
employee benefit plans in which iTurf employees generally participate, including
without limitation, retirement plans and equity participation plans. Until March
1, 2002 (or such earlier time as iTurf exercises its option under Section
4.17(b)), Yagan shall be the General Manager of the Surviving Corporation. If at
any time Yagan voluntarily terminates his employment with the Surviving
Corporation or resigns as the General Manager of the Surviving Corporation or a
similar or more senior position with the Surviving Corporation, Xxxxx shall be
appointed General Manager of the Surviving Corporation if Xxxxx is then employed
by the Surviving Corporation or, if not, with Xxxxxxx Xxxxx. If neither Yagan,
Xxxxx nor Xxxxx is employed with the Surviving Corporation, the Sellers' Agents
may appoint another employee with whom iTurf shall consult pursuant to this
Section.
(b) ELECTION TO TERMINATE OBLIGATIONS. However, iTurf may
elect to terminate its obligations under this Section 4.17 at any time after
June 1, 2001 by giving written notice thereof to the Selling Stockholders and
contemporaneously therewith: (i) paying to the Selling Stockholders the minimum
amount ($1,500,000) of the Deferred Contingent Payment (which, after payment, it
may set off against the first $1,500,000 of Strategic Transaction Proceeds
Payments due in excess of $5,000,000), which payment shall be on a pro-rata
basis in accordance with SCHEDULE 2.3; and (ii) at the option of the Sellers'
Agents exercised within thirty (30) days after receipt of written notice of
iTurf's election under this Section 4.17(b), delivering to the Selling
Stockholders, free and clear of any Liens, on a pro-rata basis in accordance
with SCHEDULE 2.3, all of the outstanding capital stock of Merger Sub. In
connection with such delivery, the Selling Stockholders shall concurrently agree
to pay to iTurf 50% of any Spark Transaction Net Proceeds, which agreement shall
be made in a writing mutually agreeable to iTurf and the Sellers' Agents. Prior
to such delivery, iTurf shall cause any liability of Merger Sub for (1)
obligations for borrowed money, (2) obligations of iTurf (including, without
limitation, guarantees of obligations or indebtedness of iTurf and similar
financial accommodations) or any of its Affiliates and (3) obligations owed to
iTurf or any of its Affiliates to be released and discharged.
(c) RELEASE OF CERTAIN SELLING STOCKHOLDER
OBLIGATIONS. Without limiting the Selling Stockholders' rights under Section
1.7., in the event iTurf makes the election contemplated by
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Section 4.17(b), all of the Selling Stockholders shall be released from their
obligations under Section 4.12(b) of the Merger Agreement and, upon request of a
Selling Stockholder, shall remove the legend thereon and stop transfer
instructions concerning such restrictions.
(d) TERMINATION FOLLOWING STRATEGIC TRANSACTIONS. In
the event of a Strategic Transaction in which less than all of the assets of
Merger Sub are disposed, iTurf's obligations under Section 4.17(b) shall be
equitably and proportionately adjusted to reflect the scale of the remaining
assets. Following one or more Strategic Transactions after which all or
substantially all of the assets of Merger Sub are no longer controlled directly
or indirectly by iTurf, iTurf's obligations under Section 4.17 shall terminate
if such obligations have not already been terminated.
4A. AMENDMENT OF SECTION 4.12. The last sentence of Section 4.12 of the
Merger Agreement is amended to read as follows:
Promptly following the earlier of the date the applicable periods in Section
4.12 lapse or the date of iTurf's termination of its obligations under Section
4.17, upon the request of a Selling Stockholder, iTurf shall cause appropriate
stock certificates to be issued in exchange for existing certificates without
the portion of any restrictive legend imprinted thereon, and shall cause all
stop transfer instructions to be removed that have been imposed, by virtue of
this Section 4.12(b).
5. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
Selling Stockholder hereby severally makes the following representations and
warranties to iTurf, each of which shall be unaffected by any investigation
heretofore or hereafter made by iTurf or Merger Sub or any notice to iTurf or
Merger Sub; PROVIDED, HOWEVER, that no Selling Stockholder is making any
representation or warranty hereby relating to any other Selling Stockholder:
(a) AUTHORITY RELATIVE TO THIS AMENDMENT. The Selling
Stockholder has all requisite power and authority to enter into and to deliver
this First Amendment and the Ancillary Documents and to perform the obligations
hereunder and thereunder to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by the Selling Stockholder of
this First Amendment and the Ancillary Documents have been duly authorized by
all necessary action, partnership or otherwise, on the part of the Selling
Stockholder and no other partnership or other proceedings on the part of the
Selling Stockholder is necessary to authorize this First Amendment or the
Ancillary Documents or to consummate the transactions contemplated hereby or
thereby. This First Amendment and the Ancillary Documents has been duly executed
and delivered by the Selling Stockholder, and assuming the due authorization,
execution and delivery of this First Amendment and the Ancillary Documents by
the other parties hereto and thereto, constitutes legal, valid and binding
obligations of the Selling Stockholder, enforceable against the Selling
Stockholder in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws now or hereafter in effect relating to creditors' rights generally
and general principles of equity (regardless of whether enforceability is
considered a proceeding at law or in equity).
(b) NO CONFLICTS. The execution and delivery by the Selling
Stockholder of this First Amendment and the Ancillary Documents and the
performance by the Selling Stockholder of this First Amendment and the Ancillary
Documents will not, (i) conflict with or violate the governing documents of the
Selling Stockholder that is not a natural person, (ii) conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to the Selling
Stockholder or by which the Selling Stockholder's properties are bound or
affected. The execution and delivery of this First Amendment and the Ancillary
Documents by the Selling Stockholder will not require of the Selling Stockholder
any consent, approval,
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authorization or permit of, or filing with or notification to, any governmental
entity where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of the transactions contemplated hereby or otherwise prevent the
Selling Stockholder from performing the Selling Stockholder's respective
obligations under this First Amendment and the Ancillary Documents.
(c) INVESTMENT REPRESENTATION. The Selling Stockholder
possesses such knowledge and experience in financial and business matters that
the Selling Stockholder is capable of evaluating the merits and risks of the
portion of the Merger Consideration consisting of shares of iTurf Common Stock
and contingent rights. The Selling Stockholder is fully aware of the
restrictions on resale of such shares pursuant to applicable securities laws
prior to registration thereof. The Selling Stockholder is acquiring the shares
of iTurf Common Stock for investment purposes and not with a view to or in
connection with a distribution within the meaning of the Securities Act, except
pursuant to an effective registration statement or an exemption therefrom.
The Selling Stockholder understands and acknowledges that the
shares of iTurf Common Stock included in the Merger Consideration and contingent
rights will not be registered for issuance to the Selling Stockholder under the
Securities Act in reliance upon an exemption from the registration requirements
thereof, and that such shares will not be registered or qualified under the
securities or Blue Sky laws of any other jurisdiction for issuance to the
Selling Stockholder. The Selling Stockholder understands and acknowledges that
the availability of such exemption is based, in part, upon the Selling
Stockholder's representations in this Section. The Selling Stockholder has also
been afforded an opportunity to ask questions of iTurf and its senior management
regarding iTurf and the terms of the transactions contemplated by this First
Amendment and have been given all information as has been requested by the
Selling Stockholder in order to evaluate fully the merits and risks of the
Merger Consideration. The Selling Stockholder has received a copy of each of the
SEC Reports (as defined below).
6. REPRESENTATIONS AND WARRANTIES OF ITURF AND MERGER SUB. iTurf and
Merger Sub, jointly and severally, hereby make the following representations and
warranties to the Selling Stockholders:
(a) ORGANIZATION AND QUALIFICATION.
(i) iTurf is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to conduct its business as it is presently being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority and approvals would not have a material adverse
effect on the business, results of operations or financial condition of iTurf
and its subsidiaries, taken as a whole (an "ITURF MATERIAL ADVERSE EFFECT").
iTurf is duly qualified or licensed as a foreign corporation to do business, and
is in good standing, in each jurisdiction where the conduct of its business or
the ownership or leasing of its properties requires such qualification, except
for such failures to be so duly qualified or licensed and in good standing that
would not have an iTurf Material Adverse Effect.
(ii) iTurf has heretofore furnished to counsel to the
Selling Stockholders true and complete copies of iTurf's certificate of
incorporation and bylaws, each as amended to date. Such certificate of
incorporation, articles of organization and bylaws are in full force and effect.
Neither iTurf nor Merger Sub is in violation of any of the provisions of such
instruments, except for any such violations as would not have an iTurf Material
Adverse Effect.
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(b) AUTHORITY RELATIVE TO THIS FIRST AMENDMENT.
(i) iTurf has all requisite corporate power and
authority to enter into and deliver this First Amendment and the Ancillary
Documents and to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this First Amendment and the Ancillary Documents to which each is
party and the consummation by iTurf of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
on the part of iTurf, and no other corporate proceedings on the part of iTurf
are necessary to authorize this First Amendment or the Ancillary Documents to
which each is party or to consummate the transactions so contemplated hereby and
thereby. This First Amendment and the Ancillary Documents to which each is party
have been duly executed and delivered by iTurf and Merger Sub and, assuming the
due authorization, execution and delivery of this First Amendment and the
Ancillary Documents to which each is party by the other parties hereto and
thereto, constitutes legal, valid and binding obligations of iTurf and Merger
Sub, enforceable against them in accordance with their respective terms except
as may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditors' rights generally and general principles of equity (regardless of
whether enforceability is considered a proceeding at law or in equity).
(ii) The respective Boards of Directors of iTurf and
Merger Sub (A) have declared that this First Amendment, the Ancillary Documents
to which each is party and transactions contemplated hereby and thereby are
advisable and in the best interests of the stockholders of iTurf and Merger Sub,
(B) have authorized, approved and adopted this First Amendment, the Ancillary
Documents and the transactions contemplated hereby and thereby and (C) have
authorized and empowered the officers of iTurf and Merger Sub executing and
delivering this First Amendment and the Ancillary Documents to which each is
party to execute and deliver this First Amendment and the Ancillary Documents to
which each is party.
(c) NO CONFLICT, REQUIRED FILINGS AND CONSENTS.
(i) Except for the consent or waiver described in
Section 13(a) of this First Amendment, the execution and delivery by iTurf and
Merger Sub of this First Amendment and the Ancillary Documents to which each is
party do not, and the performance by iTurf and Merger Sub of this First
Amendment and the Ancillary Documents to which each is party will not, (i)
conflict with or violate the certificate of incorporation or bylaws of iTurf or
Merger Sub, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to iTurf or Merger Sub or by which their
respective properties are bound or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or impair iTurf's rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of or result in the
creation of a Lien or encumbrance on any of the properties or assets of iTurf
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which iTurf is a
party or by which iTurf or its or any of its properties are bound or affected,
except in any such case that would not have an iTurf Material Adverse Effect.
(ii) The execution and delivery of this First
Amendment by iTurf will not require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental entity except (i)
for applicable requirements, if any, of the Securities Act, the Exchange Act
10
and Blue Sky Laws and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications would not
prevent iTurf from performing its obligations under this First Amendment and
(iii) as would not have an iTurf Material Adverse Effect.
(d) CAPITAL STOCK.
(i) As of the date of this First Amendment, the
authorized capital stock of iTurf consists of (i) 100,000,000 shares of Class A
common stock, par value $.01 per share, of which 38,275,306 shares are issued
and outstanding, (ii) 12,500,000 shares of Class B common stock, par value $.01
per share, of which 11,425,000 shares are issued and outstanding and (iii)
1,000,000 shares of preferred stock, par value $.01 per share, none of which are
issued and outstanding. Each outstanding share of iTurf capital stock is duly
authorized, validly issued and outstanding, fully paid and nonassessable and
free of any preemptive rights and not issued in violation of any federal or
state securities laws.
(ii) The shares of iTurf Common Stock which may be
issued under this First Amendment have been duly authorized and, when so issued
in accordance with the terms hereof, such shares will be validly issued, fully
paid and non-assessable and, based upon the representations and warranties made
by the Selling Stockholders in Section 5(c), will not be issued in violation of
any federal or state securities laws.
(e) SEC FILINGS, FINANCIAL STATEMENTS .
(i) iTurf has timely filed all forms, reports and
documents required to be filed by it with the SEC since April 9, 1999 and its
Registration Statement No. 333-36300 remains effective and current (it being
understood that iTurf filed a Notification of Late Filing on Form 12b-25 with
respect to its Quarterly Report on Form 10-Q for the period ended October 28,
2000, and filed such report within five days of the date on which such report
would otherwise have been required to be filed). iTurf has heretofore delivered
to the Selling Stockholders and their counsel, in the form filed with the SEC
and, to the extent required, delivered to the Nasdaq Stock Market its (i) Annual
Report on Form 10-K for the fiscal year ended January 29, 2000, (ii) Quarterly
Reports on Form 10-Q for the fiscal quarters ended April 28, 2000, July 31, 2000
and October 28, 2000 and (iii) Current Reports on Form 8-K filed with the SEC on
February 25, 2000, March 14, 2000, November 17, 2000, and December 4, 2000
(collectively, the "ITURF SEC REPORTS"). The iTurf SEC Reports (A) were prepared
in accordance with the requirements of the Exchange Act, and (B) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this First Amendment, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(ii) Each of the financial statements (including, in
each case, any related notes thereto) contained in the iTurf SEC Reports and the
October 28, 2000 balance sheet of the Surviving Corporation (which will be
delivered to the Sellers' Agent in accordance with Section 13) was prepared in
accordance with GAAP (except as may be indicated in the notes thereto) and each
fairly presents in all material respects the financial position of iTurf as at
the respective dates thereof and the results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments and
such statements do not contain all notes required by GAAP.
11
(d) ABSENCE OF CERTAIN CHANGES OR EVENTS . Except as set forth
in the iTurf SEC Reports, since October 28, 2000, to iTurf's knowledge, no event
or events has or have occurred, or failed to occur, that, either individually or
in the aggregate, has had, or reasonably could be expected to have, an iTurf
Material Adverse Effect.
7. [INTENTIONALLY OMITTED]
8. FIRST OFFER/LAST MATCHING RIGHT.
(a) Each Selling Stockholder may sell, assign or otherwise
transfer and solicit offers to purchase or otherwise acquire First Refusal
Shares issued under the Merger Agreement, as amended, only in compliance with
the provisions of this Section 8.
(b) A Selling Stockholder desiring to sell, assign or
otherwise transfer First Refusal Shares (a "SHARE SELLER") shall first deliver
written notice to iTurf (hereinafter referred to as the "NOTICE OF OFFER") which
Notice of Offer, may be by e-mail or telecopy to iTurf at the address(es) shown
in Section 12 of the First Amendment, shall specify (i) the number of Shares
owned by the Share Seller which such Share Seller wishes to sell (the "OFFERED
SHARES"), (ii) either (A) the Fair Market Value (as defined below) per share for
the Offered Shares on the day preceding the date on which the Notice of Offer is
sent to iTurf or (B) a price per share for the Offered Shares greater than such
Fair Market Value (the "Limit Offer Price"), in either case the specified price
per share being sometimes referred to herein as the "OFFER PRICE," (iii) whether
the Share Seller proposes to sell the Offered Shares to (x) a Third Party
Transferee (as defined in Section 8(e)) or (y) in one or more "brokers'
transactions," within the meaning of Section 4(4) of the Securities Act, in one
or more transactions directly with a "market maker," as defined in Section
3(a)(38) of the Exchange Act, or in one or more "crossed trades" in which the
purchaser of the Offered Shares is unknown to the Share Seller (a transaction
described in this clause (y) being referred to as a "MARKET TRANSACTION") and
(iv) a telecopy number or e-mail address to which notices pursuant to this
Section 8 may be sent to such Selling Stockholder. The Notice of Offer shall
constitute an irrevocable offer by the Share Seller to sell to iTurf and to
Xxxx, or their assignees, the Offered Shares at the Offer Price. The "FAIR
MARKET VALUE" of a Share shall be (a) the last reported sales price of a share
of the Common Stock on the NASDAQ Automated Quotation System ("NASDAQ") on the
date of determination, or if no sale took place on such date, the average of the
closing bid and asked prices for a Share on NASDAQ on such date, or (b) if
NASDAQ is closed on the date of determination or if no closing bid and closing
asked prices are published for the date of determination, then as provided in
clause (a) or clause (b), as applicable, on the last day prior to the date of
determination on which NASDAQ shall report transactions. If, however, the iTurf
Common Stock shall be listed or admitted for trading on the New York Stock
Exchange or the American Stock Exchange, the "Fair Market Value" of a share of
the Common Stock shall be (x) the last reported sales price of a share of Common
Stock on such exchange, or if no sale took place on such date, the average of
the closing bid and closing asked prices for a share of the iTurf Common Stock
on such exchange on such date, or (y) if the exchange is closed on the date of
determination or if no closing bid and closing asked prices are published for
the date of determination, then as provided in clause (x) or clause (y), as
applicable on the last day prior to the date of determination on which the
exchange shall be open for the transaction of business, in each case as reported
in the principal consolidated transaction reporting system for such national
securities exchange. If the iTurf Common Stock is not listed or traded on NASDAQ
or on the New York Stock Exchange or the American Stock Exchange, then "Fair
Market Value" shall be as determined by the Share Seller in good faith.
(c) Within one (1) business day following its receipt of the
Notice of Offer, (i) iTurf shall notify the Share Seller in writing at the
telecopy number or by e-mail to the e-mail address of
12
the Selling Stockholder set forth in the Notice of Offer as to the number of
Offered Shares, if any, it or Xxxx, or their assignees, is electing to purchase
(such notification is hereinafter referred to as a "NOTICE OF ACCEPTANCE")
which, except in the case of a Market Transaction or as otherwise permitted by
the Selling Stockholder, must be all of the Offered Shares. If iTurf does not
provide a Notice of Acceptance to the Share Seller within such period, iTurf and
Xxxx shall be deemed to have declined to purchase any of the Offered Shares. A
Notification of Acceptance shall be deemed to be an irrevocable commitment to
purchase the number of Offered Shares specified from the Share Seller.
(d) Following the decline of a Notice of Offer, Selling
Stockholder may make (i) Market Transactions, to the extent proposed in the
Selling Stockholder's Notice of Offer subject to the provisions of Section 8(f)
(it being understood that if the Notice of Offer contained a Limit Offer Price,
then the gross sales price per share in any such Market Transactions must be at
least equal to the Limit Offer Price) and (ii) other transfers in compliance
with the remaining provisions of Section 8(e) and Section 8(f).
(e) Prior to the acceptance of an offer from a third party (a
"THIRD PARTY TRANSFEREE"), the Share Seller shall notify iTurf of the Share
Seller's intention to make the Transfer (the "TRANSFER NOTICE"), which Transfer
Notice shall include (i) the number of Offered Shares, (ii) the identity of the
prospective Third Party Transferee(s), if known, (iii) the price per share
proposed by the Third Party Transferee (the "TRANSFER PRICE"), (iv) the material
terms and conditions upon which the proposed sale is to be made. The Transfer
Notice shall certify that the Share Seller has received a firm offer from the
prospective Third Party Transferee(s) and in good faith believes a binding
agreement for the Transfer is obtainable on the terms set forth in the Transfer
Notice. The Transfer Notice shall also include a copy of any written proposal,
term sheet or letter of intent or other agreement relating to the proposed
Transfer. iTurf shall have an option, which shall expire at 9:00 a.m. on the
next Trading Day following the date of receipt of the Transfer Notice, to elect
to purchase (or cause its assignees to purchase) the Offered Shares at the
Transfer Price subject to the same material terms and conditions as described in
the Transfer Notice. iTurf (or its assignees) may exercise such purchase option
and, thereby, purchase all (but not less than all) the Offered Shares by
notifying the Share Seller in writing at the telecopy number or by e-mail to the
e-mail address of the Selling Stockholder set forth in the Notice of Offer
before the expiration of the option as to whether it intends to purchase the
Offered Shares. With respect to proposed Transfers of Offered Shares other than
in Market Transactions, if iTurf fails to timely exercise its option to purchase
all of the Offered Shares specified in a Transfer Notice within the period
provided, then the Share Seller may, within a period of ten (10) Trading Days
from the date of the date of expiration of the option under Section 8(e),
consummate the sale of the Offered Shares to one or more third parties for cash
or a promissory note or other binding payment obligation at a price per share
not less than the Transfer Price, and on such other terms and conditions as are
no more favorable to the proposed transferee than those specified in the
Transfer Notice and may consummate a sale to such transferee.
(f) If the Share Seller does not complete the sale of the
Offered Shares (i) in the case of a Market Transaction, within thirty (30)
Trading Days or (ii) other than in the case of a Market Transaction, within ten
(10) Trading Days of the date of expiration of the option under Section 8(e),
the provisions of this Section 8 shall again apply, and no sale of Offered
Shares not theretofore sold in accordance with this Section 8 by the Share
Seller shall be made otherwise than in accordance with the terms of this First
Amendment, including the delivery of a Notice of Offer in accordance with
Section 8(b) hereof.
(g) The closing of purchases of Offered Shares by iTurf or
Xxxx pursuant to this Section 8 shall take place no later than five (5) Trading
Days after the date of the applicable Notice of Offer or Transfer Notice, at
10:00 A.M. local time at the principal offices of iTurf, or at such other date,
13
time or place as the parties to the sale may agree. At least three (3) Trading
Days prior to such closing, iTurf shall notify the Share Seller(s) in writing of
the names of purchaser(s) and the portion of the Offered Shares to be purchased
by each. At such closing, the Share Seller(s) shall sell, transfer and deliver
full right, title and interest in and to the Offered Shares to the purchaser(s),
free and clear of all liens, security interests, adverse claims or restrictions
of any kind and nature and shall deliver to iTurf a certificate or certificates
representing the Offered Shares sold to the purchaser(s), in each case duly
endorsed for transfer or accompanied by appropriate stock transfer powers in
favor of the purchaser(s) duly endorsed with signatures guaranteed by a
commercial bank, trust company or registered broker dealer and any other
documents reasonably necessary for such transfer. Simultaneously with delivery
of such certificates, the purchaser(s) of the Offered Shares shall deliver to
the Share Seller(s), by wire transfer of immediately available funds to such
bank account as the Share Seller(s) shall designate, a cash amount equal to the
product of the Offer Price or the Transfer Price, as the case may be, and the
number of Offered Shares being acquired by such purchaser, in full payment of
the purchase price of the Offered Shares purchased.
(h) The right of first offer provided under this Section 8
shall terminate on March 1, 2002 and shall not apply to sales made between and
including May 20, 2001 and November 20, 2001.
(i) Notwithstanding anything to the contrary contained herein,
this Section 8 shall not require a Share Seller to deliver a Notice of Offer
with respect to the proposed sale of less than an aggregate of 10,000 Shares in
one or more transactions within any ten (10) day period.
(j) Notwithstanding anything to the contrary contained herein,
the Company may assign in whole or in part to Xxxx or any "accredited investor"
(within the meaning of SEC Regulation D) its rights to accept an offer made in a
Notice of Offer or in a Transfer Notice.
(k) iTurf shall be permitted to place a restrictive legend on
each certificate representing Shares subject to the provisions of this Section
8.
9. ANCILLARY AGREEMENTS.
(a) iTurf and the Selling Stockholders shall negotiate in good
faith and enter into an escrow agreement or substantively similar arrangements
with terms and provisions acceptable to each party (the "SECOND ESCROW
AGREEMENT").
(b) Concurrently with the execution of this First Amendment,
iTurf and the Selling Stockholders and the Escrow Agent shall execute an
amendment to the Registration Rights Agreement in the form attached hereto as
EXHIBIT A (the "REGISTRATION RIGHTS AGREEMENT AMENDMENT").
10. AMENDMENT AND RESTATEMENT OF SECTION 10.9. Section 10.9 of the
Merger Agreement is hereby amended and restated as follows:
10.9 GOVERNING LAW; CONSENT TO JURISDICTION. The Merger
Agreement , as amended by the First Amendment, shall be governed by and
construed and interpreted in accordance with the laws of the Commonwealth of
Massachusetts. The United States Arbitration Act shall govern the
interpretation, enforcement, and proceedings pursuant to the arbitration clause
herein. Any controversy or claim arising out of or relating to the Merger
Agreement, as amended by the First Amendment (and as such may be amended,
supplemented or restated from time to time), or the breach thereof, shall be
settled by arbitration administered by the American Arbitration Association in
accordance with its Commercial
14
Arbitration Rules, Expedited Procedure, as modified herein, and judgment on the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. In the event that any party's claim exceeds $1 million,
exclusive of interest and attorneys' fees, the dispute shall be heard and
determined by three arbitrators. The place of arbitration shall be the Borough
of Manhattan, City of New York, State of New York. Each party shall bear its own
costs and expenses and an equal share of the arbitrators' and administrative
fees of arbitration. Subject to the provisions of this Section relating to
arbitration, the state courts of the State of New York in New York County and,
if the jurisdictional prerequisites exist at the time, the United States
District Court for the Southern District of New York, shall have sole and
exclusive jurisdictions to hear and determine any dispute or controversy arising
under or concerning this Merger Agreement, as amended by the First Amendment. In
any action or proceeding concerning such dispute or controversy, the parties
consent to jurisdiction and waive personal service of any summons, complaint or
other process; a summons or complaint in any such action or proceeding may be
served by mail in accordance with Section 10.1 of the Merger Agreement.
11. PAYMENT OF CERTAIN TRANSACTIONS COSTS. Promptly following execution
of this Agreement:
(a) iTurf shall pay to Xxxxxx Xxxxxx LLP (or its successor firm), on
behalf of Net Associates, the sum of $36,242 (the "ADVANCED AMOUNT"),
representing the balance of legal fees and disbursements incurred by certain
Selling Stockholders in connection with the entering into of the Merger
Agreement (in addition to the amount previously borne by iTurf). This payment
shall be deemed an advance of iTurf's obligations to Net Associates under
Section 1.7(a)(i)(4) of the Merger Agreement and any payments Net Associates is
subsequently entitled to pursuant to such Section shall be reduced by the
Advanced Amount.
(b) Promptly following presentation by Xxxxxx Xxxxxx LLP (or its
successor firm) to iTurf of a detailed invoice reasonably satisfactory to iTurf,
iTurf shall pay to Xxxxxx Xxxxxx LLP (or its successor firm) legal fees and
disbursements incurred by Xxxxxx Xxxxxx LLP (and its successor firm) on behalf
of the Selling Stockholders with respect to the First Amendment in an amount not
to exceed $15,000.
12. MISCELLANEOUS.
(a) NOTICES. All notices or other communications in connection
with this First Amendment shall be given in accordance with Section 10.1 of the
Merger Agreement except that:
(i) Notices may be made by any other method expressly
contemplated by the First Amendment.
(ii) For purposes of Section 8 of the First
Amendment, iTurf may receive notices by e-mail by transmitting e-mail to both of
the following addresses:
Xxxxx@xxxxxx.xxx and Xxxxx@xxxxxx.xxx
(iii) For purposes of Section 8 of the First
Amendment, iTurf may receive notices by facsimile transmission at: (000)000-0000
(iv) For purposes of the Merger Agreement and the
First Amendment, Yagan's address is:
15
Xxx Xxxxx
c/o iTurf Inc.
0 Xxxxxxx Xxxx Xxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
with copies to:
Xxx Xxxxx
000 Xxxxxx Xx., #00X
Xxx Xxxx, XX 00000
and
Xxxxxx Xxxxxx LLP
Attn: Xxxxxxx Xxxxx
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
(b) FURTHER ASSURANCES . Each party agrees to execute any and
all documents and to perform such other acts as may be reasonable and necessary
or expedient to further the purposes of this First Amendment and the
transactions completed hereby. Without limiting the foregoing, iTurf covenants
and agrees that it will perform its obligations under Section 2 of the RRA
Amendment.
(c) ENTIRE AGREEMENT . This First Amendment sets forth the
parties' final and entire agreement with respect to its subject matter and
supersede any and all prior understandings and agreements (other than the Merger
Agreement which, except as expressly modified herein, shall continue in full
force and effect). This First Amendment can be amended, supplemented or changed,
and any provision hereof can be waived, only by a written instrument making
specific reference to this First Amendment signed by the party against whom
enforcement of any such amendment, supplement, change or waiver is sought except
that this First Amendment may be amended by iTurf, the Company, and a majority
in interest of the Selling Stockholders so long as the amendment does not
adversely affect a non-signing Selling Stockholder in a disparate manner.
(d) ASSIGNMENT; BINDING EFFECT . This First Amendment shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, personal representatives,
successors and assigns; PROVIDED, HOWEVER, that neither this First Amendment nor
any right or obligation hereunder may be assigned or transferred without the
written consent of the other parties. Notwithstanding anything to the contrary
contained herein, it is understood that the right of the Selling Stockholders to
receive Merger Consideration is not transferable under any circumstances except
by operation of law or the laws of descent and distribution.
(e) NO THIRD PARTY BENEFICIARY . Except as otherwise expressly
provided herein, the terms and provisions of this First Amendment are intended
solely for the benefit of the parties hereto and their respective successors and
assigns, and it is not the intention of the parties to confer third-party
beneficiary rights upon any other person.
16
(f) PARAGRAPH HEADINGS . The paragraph or section headings in
this First Amendment are for reference purposes only and shall not affect in any
way the meaning or interpretation of this First Amendment.
(g) SEVERABILITY; CONFLICT. If any provision of this First
Amendment shall be held by any court of competent jurisdiction to be illegal,
invalid or unenforceable, such provision (to the extent possible) shall be
construed and enforced as if it had been more narrowly drawn so as not to be
illegal, invalid or unenforceable, and such illegality, invalidity or
unenforceability shall have no effect upon and shall not impair the
enforceability of any other provision of this First Amendment.
(h) [Intentionally omitted].
(i) COUNTERPARTS. This First Amendment may be delivered by
facsimile and executed in one or more counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.
(j) SELLERS' AGENT. The agency and attorney powers created in
Section 10.11 of the Merger Agreement shall apply to this First Amendment to the
same extent as they do to the Merger Agreement. iTurf and the Company shall be
entitled to rely exclusively upon any communications given by the Sellers'
Agents on behalf of any of the Selling Stockholders in accordance with this
Section and Section 10.11 of the Merger Agreement and shall not be liable in any
manner whatsoever for any action taken or not taken in reliance upon the actions
taken or not taken or communications made by the Sellers' Agents in accordance
with this Section and Section 10.11 of the Merger Agreement. Notwithstanding
anything to the contrary contained herein, iTurf, Merger Sub and the Surviving
Corporation shall be entitled to disregard any notices or communications given
or made by the Selling Stockholders unless given or made through the Sellers'
Agents, except as provided in Section 10.11(b) of the Merger Agreement or
Section 8 of the First Amendment.
(k) CONSTRUCTION . Each of the parties hereto has participated
jointly in the negotiation and drafting of this First Amendment. In the event an
ambiguity or question of intent or interpretation arises, this First Amendment
shall be construed as if drafted jointly by the parties and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this First Amendment. In the event of any
conflict between the terms of the Merger Agreement and the First Amendment, the
terms of the First Amendment shall prevail and the Merger Agreement shall be
interpreted in the manner contemplated by the First Amendment. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. The word "including" shall mean including without
limitation. The parties intend that each representation, warranty, and covenant
contained herein shall have independent significance. If any party has breached
any representation, warranty, or covenant contained herein in any respect, the
fact that there exists another representation, warranty, or covenant relating to
the same subject matter (regardless of the relative levels of specificity) which
the party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty, or covenant.
13. CONDITIONS PRECEDENT.
(a) CONGRESS Consent. iTurf requires the consent or waiver of
Congress Financial Corporation in order to execute, deliver and perform its
obligations under this First Amendment and the Merger Agreement as amended
hereby. The receipt of such consent is a condition precedent to the obligations
of each of the parties hereto. iTurf shall promptly notify Sellers' Agents when
it has received
17
such consent. If iTurf has not notified Sellers' Agents of the receipt of such
consent by January 22, 2001, this First Amendment shall be null and void and the
Merger Agreement shall continue in full force and effect as if this First
Amendment had not been executed.
(b) OCTOBER 28 BALANCE SHEET. iTurf shall deliver a copy of the
October 28 Balance Sheet to Sellers' Agent not later than January 15, 2001.
Sellers' Agents may accept or reject such balance sheet for any reason related
to this Agreement by written notice to iTurf of such acceptance or rejection. If
Sellers' Agents have not notified iTurf of their rejection of such balance sheet
by January 9, 2000, then such balance sheet shall be deemed to be accepted by
Sellers' Agents. The acceptance of such balance sheet by Sellers' Agents is a
condition precedent to the obligations of each of the parties hereto. If iTurf
has not delivered such balance sheet to Sellers' Agents by January 15, 2001, the
Sellers' Agents may, by written notice to iTurf, elect that this First Amendment
shall be null and void and the Merger Agreement shall continue in full force and
effect as if this First Amendment had not been executed.
[SIGNATURE PAGE FOLLOWS]
18
[SIGNATURE PAGE TO FIRST AMENDMENT TO MERGER AGREEMENT]
IN WITNESS WHEREOF, iTurf, the Company and the Selling Stockholders
have caused this Amendment to be executed as of the date first written above by
their respective officers thereunto duly authorized.
xXXxX*s CORP. (F/K/A ITURF INC.)
By:
----------------------------------
Xxxxxx Xxxxxxxxx
Chief Financial Officer
XXXXXXXX.XXX INC.
By:
----------------------------------
Xxxxxx Xxxxxxxxx
Chief Financial Officer
XXX XXXXX, for himself and as Sellers'
Agent*
-------------------------------------
XXXXXX XXXXXXXX, for Net Associates and
as Sellers' Agent*
-------------------------------------
* Messrs. Yagan and Gantcher are acting in their capacity as Sellers' Agents as
agent and attorney-in-fact for the Selling Stockholders listed below:
SELLING STOCKHOLDERS:
--------------------
XXXXX XXXXXXXX XXXXXXXXXXX XXXXX
XXXXXX XXXXXXX XXXXXXX XXXXX
XXXXXX XXXXXXXX XXX XXXXXXX
XXXXXXXXX XXXXXX XXX XXXX
XXXXXXX XXXXXXXX XXXXXX XXXXX
19
SCHEDULE A:
20
