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Online games site Pogo.com Inc. is seeking damages of $100 million from [email protected] Corp. after the Internet service provider canceled a merger between the two companies. According to Garth Chouteau, director of corporate communications with San Francisco-based Pogo, the company filed the suit Monday in San Mateo Superior Court in California for what it charges was wrongful termination of a $125 million merger agreement with Excite, which called off the deal Jan. 5. EA.com, a subsidiary of Electronic Arts Inc., subsequently bought Pogo in late February for what sources said was less than $45 million. “[email protected] wrongfully refused to close the merger, contending just prior to the scheduled closing that consummation of the merger would somehow be prohibited by Nasdaq stock market listing rules,” according to Bergeson & Eliopolous LLP, the San Jose, Calif., law firm representing Pogo in the suit. Ruby & Schofield, also of San Jose, is co-counsel. Pogo also alleges that Excite, a subsidiary of AT&T Corp., reneged on an agreement to provide $5 million in bridge funding and monthly interim loans of up to $1.8 million per month. Chouteau said Excite told the online gaming company it was ending the merger because terms of the original deal were not met, though he said the portal did not elaborate on the specific terms. Pogo offered to amend the original agreement after Excite’s stock fell between the time the deal was announced Aug. 31 and its anticipated closing date in December, but Excite refused to budge, he added. “The bottom line is I don’t think there was any reason they said ‘Here’s why we didn’t buy you,’” Chouteau said. “I don’t think they ever said ‘Here is a list of things that haven’t happened.’ To my knowledge, that step was never taken, that stage never occurred.” Alison Bowman, spokeswoman for [email protected], would not comment on the suit. She did say that the company did not publicly explain its decision to terminate the merger with Pogo other than to say that certain required conditions were not met. A source close to Pogo indicated that a sharp fall in Excite’s stock price between the deal’s announcement and its expected close likely played a role in the Internet company backing out. When the deal was announced, Excite was trading at about $14.50 per share. When the deal was called off Jan. 8, Excite’s share had dropped to about $5.50 — it was holding at $5.31 in late trading Wednesday. “To my knowledge, there was no stipulation in the agreement having to do with Excite’s stock price being at a certain level in order for the deal to close,” the source said. Pogo was “left at the altar,” he added, thus limiting the company’s options. The suit says Excite first raised concerns about the deal in mid-December. The portal, Pogo contends, indicated the agreement might violate a Nasdaq rule that requires an acquiring company’s shareholders to approve a merger when companies have many shareholders in common and when the buyer has to issue more than five percent of its stock in exchange for the seller’s stock to qualify for listing on Nasdaq. Flouting the rule can result in de-listing from the high-tech exchange. The rule applied because AT&T was a “common substantial shareholder” in both Pogo and Excite. At the time it terminated the agreement, Excite held a 10 percent stake in Pogo. It continues to offer Pogo’s gaming services on its site, including card, board, word, puzzle, trivia, sports, arcade and no-risk casino games. Copyright (c)2001 TDD, LLC. All rights reserved.

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