DRAFT
-----
____________ SHARES
CITYSEARCH, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
DATED NOVEMBER __, 1998
TABLE OF CONTENTS
SECTION 1. REPRESENTATIONS AND WARRANTIES......................................................... 2
COMPLIANCE WITH REGISTRATION REQUIREMENTS.............................................. 2
OFFERING MATERIALS FURNISHED TO UNDERWRITERS........................................... 3
DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY....................................... 3
THE UNDERWRITING AGREEMENT............................................................. 3
AUTHORIZATION OF THE CLASS B COMMON SHARES............................................. 3
NO APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS..................................... 3
NO MATERIAL ADVERSE CHANGE............................................................. 3
INDEPENDENT ACCOUNTANTS................................................................ 4
PREPARATION OF THE FINANCIAL STATEMENTS................................................ 4
INCORPORATION AND GOOD STANDING OF THE COMPANY
AND ITS SUBSIDIARIES.................................................................. 4
CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS......................................... 5
STOCK EXCHANGE LISTING;................................................................ 5
NON-CONTRAVENTION OF EXISTING INSTRUMENTS; NO
FURTHER AUTHORIZATIONS OR APPROVALS REQUIRED.......................................... 5
NO MATERIAL ACTIONS OR PROCEEDINGS..................................................... 6
INTELLECTUAL PROPERTY RIGHTS........................................................... 6
ALL NECESSARY PERMITS, ETC............................................................. 6
TITLE TO PROPERTIES.................................................................... 6
TAX LAW COMPLIANCE..................................................................... 7
COMPANY NOT AN INVESTMENT COMPANY...................................................... 7
INSURANCE.............................................................................. 7
NO PRICE STABILIZATION OR MANIPULATION................................................. 7
RELATED PARTY TRANSACTIONS............................................................. 7
NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS............................................ 8
COMPANY'S ACCOUNTING SYSTEM............................................................ 8
COMPLIANCE WITH ENVIRONMENTAL LAWS..................................................... 8
ERISA COMPLIANCE....................................................................... 9
MERGER AGREEMENT....................................................................... 9
YEAR 2000 COMPLIANCE................................................................... 9
SECTION 2. PURCHASE, SALE AND DELIVERY OF CLASS B COMMON SHARES................................... 10
THE FIRM CLASS B COMMON SHARES......................................................... 10
THE FIRST CLOSING DATE................................................................. 10
THE OPTIONAL CLASS B COMMON SHARES; THE SECOND CLOSING DATE............................ 11
PUBLIC OFFERING OF THE CLASS B COMMON SHARES........................................... 11
PAYMENT FOR THE CLASS B COMMON SHARES.................................................. 11
DELIVERY OF THE CLASS B COMMON SHARES.................................................. 12
DELIVERY OF PROSPECTUS TO THE UNDERWRITERS............................................. 12
SECTION 3. ADDITIONAL COVENANTS................................................................... 12
-i-
REPRESENTATIVE'S REVIEW OF PROPOSED AMENDMENTS AND SUPPLEMENTS.......................... 12
SECURITIES ACT COMPLIANCE............................................................... 12
AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER SECURITIES ACT MATTERS........... 13
COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS.............................. 13
BLUE SKY COMPLIANCE..................................................................... 13
USE OF PROCEEDS......................................................................... 13
TRANSFER AGENT.......................................................................... 13
EARNINGS STATEMENT...................................................................... 13
PERIODIC REPORTING OBLIGATIONS.......................................................... 14
AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES.................................... 14
FUTURE REPORTS TO THE REPRESENTATIVE.................................................... 14
SECTION 4. PAYMENT OF EXPENSES..................................................................... 14
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS....................................... 15
ACCOUNTANTS' COMFORT LETTER............................................................. 15
COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO STOP ORDER, NO OBJECTION FROM NASD........ 15
NO MATERIAL ADVERSE CHANGE OR RATINGS AGENCY CHANGE..................................... 16
OPINION OF COUNSEL FOR THE COMPANY...................................................... 16
OPINION OF COUNSEL FOR THE UNDERWRITERS................................................. 16
OFFICERS' CERTIFICATE................................................................... 17
BRING-DOWN COMFORT LETTER............................................................... 17
LOCK-UP AGREEMENT FROM CERTAIN STOCKHOLDERS OF THE COMPANY.............................. 17
ADDITIONAL DOCUMENTS.................................................................... 17
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES................................................. 18
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT......................................................... 18
SECTION 8. INDEMNIFICATION......................................................................... 18
INDEMNIFICATION OF THE UNDERWRITERS..................................................... 18
INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND OFFICERS.............................. 19
NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES...................................... 20
SETTLEMENTS............................................................................. 21
SECTION 9. CONTRIBUTION............................................................................ 21
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS...................................... 23
SECTION 11. TERMINATION OF THIS AGREEMENT........................................................... 23
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY..................................... 24
-ii-
SECTION 13. NOTICES........................................................................ 24
SECTION 14. SUCCESSORS..................................................................... 25
SECTION 15. PARTIAL UNENFORCEABILITY....................................................... 25
SECTION 16. GOVERNING LAW PROVISIONS....................................................... 25
SECTION 17. GENERAL PROVISIONS............................................................. 26
-iii-
DRAFT
-----
UNDERWRITING AGREEMENT
November __, 1998
NATIONSBANC XXXXXXXXXX SECURITIES LLC
XXXXX & COMPANY INCORPORATED
BANCAMERICA XXXXXXXXX XXXXXXXX
BEAR, XXXXXXX & CO. INC.
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
As Representatives of the several Underwriters
c/o NATIONSBANC XXXXXXXXXX SECURITIES LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
INTRODUCTORY. Ticketmaster Online-CitySearch, Inc., a Delaware corporation
(the "Company"), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of _________ shares (the "Firm
----------
Class B Common Shares") of its Class B Common Stock, par value $0.01 per share
(the "Class B Common Stock"). In addition, the Company has granted to the
Underwriters an option to purchase up to an additional ________ shares (the
"Optional Class B Common Shares") of Class B Common Stock, as provided in
Section 2. The Firm Class B Common Shares and, if and to the extent such option
is exercised, the Optional Class B Common Shares are collectively called the
"Class B Common Shares". Nationsbanc Xxxxxxxxxx Securities LLC ("NMS"), Xxxxx &
Company Incorporated ("ACI"), BancAmerica Xxxxxxxxx Xxxxxxxx ("BRS"), Bear,
Xxxxxxx & Co. Inc. ("BSC") and Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation ("DLJ") have agreed to act as representatives of the several
Underwriters (in such capacity, the "Representatives") in connection with the
offering and sale of the Class B Common Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-____), which contains a form of prospectus to be used in connection with the
public offering and sale of the Common Shares. Such registration statement, as
amended, including the financial statements, exhibits and schedules thereto, in
the form in which it was declared effective by the Commission under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the "Securities Act"), including any information
deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A
or Rule 434 under the Securities Act, is called the "Registration Statement."
Any registration statement filed by the Company pursuant to Rule 462(b) under
the Securities Act is called the "Rule 462(b) Registration Statement," and from
and after the date and time of filing of the Rule 462(b) Registration Statement
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. Such prospectus, in the form first used by the Underwriters to
confirm sales of the Class B Common
-1-
Shares, is called the "Prospectus;" provided, however, if the Company has, with
the consent of the Representatives, elected to rely upon Rule 434 under the
Securities Act, the term "Prospectus" shall mean the Company's prospectus
subject to completion (each, a "preliminary prospectus") dated October ___, 1998
(such preliminary prospectus is called the "Rule 434 preliminary prospectus"),
together with the applicable term sheet (the "Term Sheet") prepared and filed by
the Company with the Commission under Rules 434 and 424(b) under the Securities
Act and all references in this Agreement to the date of the Prospectus shall
mean the date of the Term Sheet. All references in this Agreement to the
Registration Statement, the Rule 462(b) Registration Statement, a preliminary
prospectus, the Prospectus or the Term Sheet, or any amendments or supplements
to any of the foregoing, shall include any copy thereof filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System ("XXXXX").
The Company hereby confirms its agreements with the Underwriters as
follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES.
The Company hereby represents, warrants and covenants to each Underwriter
as follows:
(a) Compliance with Registration Requirements. The Registration
Statement and any Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company has
complied to the Commission's satisfaction with all requests of the Commission
for additional or supplemental information. No stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement is in effect and no proceedings for such purpose have been
instituted or are pending or, to the best knowledge of the Company, are
contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed complied in all
material respects with the Securities Act and, if filed by electronic
transmission pursuant to XXXXX (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Class B
Common Shares. Each of the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendment thereto, at the time
it became effective and at all subsequent times, complied and will comply in
all material respects with the Securities Act and did not and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Prospectus, as amended or supplemented, as of its date and at
all subsequent times, did not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The representations and warranties set forth in the two
immediately preceding sentences do not apply to statements in or omissions
from the Registration Statement, any Rule 462(b) Registration Statement, or
any post-effective amendment thereto, or the Prospectus, or any amendments or
supplements thereto, made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by the
Representatives expressly for use therein. There are no contracts or other
documents required to be described in the Prospectus or to be filed as
exhibits to the Registration Statement which have not been described or filed
as required.
-2-
(b) Offering Materials Furnished to Underwriters. The Company has
delivered to the Representatives three complete manually signed copies of the
Registration Statement and of each consent and certificate of experts filed as
a part thereof, and conformed copies of the Registration Statement (without
exhibits) and preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representatives
have reasonably requested for each of the Underwriters.
(c) Distribution of Offering Material By the Company. The Company has
not distributed and will not distribute, prior to the later of the Second
Closing Date (as defined below) and the completion of the Underwriters'
distribution of the Class B Common Shares, any offering material in connection
with the offering and sale of the Class B Common Shares other than a
preliminary prospectus, the Prospectus or the Registration Statement.
(d) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement
of, the Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(e) Authorization of the Class B Common Shares. The Class B Common
Shares to be purchased by the Underwriters from the Company have been duly
authorized for issuance and sale pursuant to this Agreement and, when issued
and delivered by the Company pursuant to this Agreement, will be validly
issued, fully paid and nonassessable and issued in compliance with all
applicable federal and state securities laws.
(f) No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights as have
been duly waived or relinquished in accordance with their terms.
(g) No Material Adverse Change. Except as otherwise disclosed in the
Prospectus, subsequent to the respective dates as of which information is
given in the Prospectus: (i) there has been no material adverse change, or
any development that could reasonably be expected to result in a material
adverse change, in the condition, financial or otherwise, or in the earnings,
business, operations or prospects, whether or not arising from transactions in
the ordinary course of business, of the Company and its subsidiaries,
considered as one entity, or of Ticketmaster Multimedia Holdings, Inc.
("TMOL") (any such change is called a "Material Adverse Change"); (ii) neither
the Company and its subsidiaries, considered as one entity, nor TMOL have
incurred any material liability or obligation, indirect, direct or contingent,
not in the ordinary course of business nor entered into any material
transaction or agreement not in the ordinary course of business; and (iii)
there has been no dividend or distribution of any kind declared, paid or made
by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of any
class of capital stock.
-3-
(h) Independent Accountants. Ernst & Young LLP, which has expressed its
opinion with respect to the financial statements (which term as used in this
Agreement includes the related notes thereto) and supporting schedules filed
with the Commission as a part of the Registration Statement and included in
the Prospectus, are independent certified public accountants as required by
the Securities Act.
(i) Preparation of the Financial Statements. The historical financial
statements filed with the Commission as a part of the Registration Statement
and included in the Prospectus present fairly the consolidated financial
position of CitySearch, Inc. and its subsidiaries ("CitySearch") (the
"CitySearch Financial Statements") as of and at the dates indicated and the
results of their operations and cash flows for the periods specified. The
historical financial statements of TMOL (the "TMOL Financial Statements")
filed with the Commission as a part of the Registration Statement and included
in the Prospectus present fairly (i) the financial position of TMOL prior to
consummation of the Merger Agreement (as defined below) as of and at the dates
indicated and the results of its operations and cash flows for the periods
specified and (ii) the financial position of TMOL and CitySearch on a
consolidated basis following consummation of the Merger Agreement as of and at
the dates indicated and the results of operations and cash flows for the
periods specified. The condensed combined pro forma financial statements (the
"Pro Forma Financial Statements") of TMOL and CitySearch fairly present the
combined pro forma financial position of CitySearch and TMOL on and at the
dates indicated and the combined pro forma results of their operations and
cash flows for the periods specified. The supporting schedules included in
the Registration Statement present fairly the information required to be
stated therein. The CitySearch Financial Statements, the TMOL Financial
Statements and the Pro Forma Financial Statements, and supporting schedules
included in the Registration Statement present fairly the information required
to be stated therein. Such financial statements and supporting schedules have
been prepared in conformity with United States generally accepted accounting
principles applied on a consistent basis throughout the periods involved,
except as may be expressly stated in the related notes thereto. No other
financial statements or supporting schedules are required to be included in
the Registration Statement. The financial data set forth in the Prospectus
under the captions "Prospectus Summary--CitySearch Summary Historical
Financial Data", "Prospectus Summary--Ticketmaster Online Summary Historical
Financial Data," "Prospectus Summary--Summary Unaudited Pro Forma Combined
Financial Data," "Selected Historical Financial Data," "Selected Unaudited Pro
Forma Combined Financial Data" and "Capitalization" fairly present the
information set forth therein on a basis consistent with that of the audited
financial statements contained in the Registration Statement.
(j) Incorporation and Good Standing of the Company and its Subsidiaries.
Each of the Company and its subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation and has corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Prospectus and, in the case of the Company, to enter into and perform
its obligations under this Agreement. Each of the Company and each subsidiary
is duly qualified as a foreign corporation to transact business and is in good
standing in the State of California and each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except for such jurisdictions (other than
the State of California) where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a Material
Adverse
-4-
Change. All of the issued and outstanding capital stock of each subsidiary has
been duly authorized and validly issued, is fully paid and nonassessable and
is owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance or claim. The
Company does not own or control, directly or indirectly, any corporation,
association or other entity other than the subsidiaries listed in Exhibit 22.1
to the Registration Statement.
(k) Capitalization and Other Capital Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Prospectus under the caption "Capitalization" (other than for subsequent
issuances, if any, pursuant to employee benefit plans described in the
Prospectus or upon exercise of outstanding options or warrants described in
the Prospectus). The Class B Common Stock (including the Class B Common
Shares) and the Company's Class A Common Stock, par value $0.01 per share (the
"Class A Common Stock" and together with the Class B Common Stock, the "Common
Stock"), each conforms in all material respects to the description thereof
contained in the Prospectus. All of the issued and outstanding shares of
Common Stock have been duly authorized and validly issued, are fully paid and
nonassessable and have been issued in compliance with all applicable federal
and state securities laws. None of the outstanding shares of Common Stock
were issued in violation of any preemptive rights, rights of first refusal or
other similar rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding options, warrants, preemptive rights,
rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable or exercisable for, any capital
stock of the Company or any of its subsidiaries other than those accurately
described in the Prospectus. The description of the Company's stock option,
stock bonus and other stock plans or arrangements, and the options or other
rights granted thereunder, set forth in the Prospectus accurately and fairly
presents, in all material respects, the information required to be shown with
respect to such plans, arrangements, options and rights.
(l) Stock Exchange Listing. The Class B Common Shares have been
approved for inclusion on the Nasdaq National Market, subject only to official
notice of issuance.
(m) Non-Contravention of Existing Instruments; No Further Authorizations
or Approvals Required. Neither the Company nor any of its subsidiaries is in
violation of its charter or by-laws or is in default (or, with the giving of
notice or lapse of time, would be in default) ("Default") under any indenture,
mortgage, loan or credit agreement, note, contract, franchise, lease or other
instrument to which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound or to which any of the property or assets
of the Company or any of its subsidiaries is subject (each, an "Existing
Instrument"), except for such Defaults as would not, individually or in the
aggregate, result in a Material Adverse Change. The Company's execution,
delivery and performance of this Agreement and consummation of the
transactions contemplated hereby and by the Prospectus (i) have been duly
authorized by all necessary corporate action and will not result in any
violation of the provisions of the charter or by-laws of the Company or any
subsidiary, (ii) will not conflict with or constitute a breach of, or Default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, or require the consent of any other party to, any
Existing Instrument, except for such conflicts, breaches, Defaults, liens,
charges or encumbrances as would not, individually or in the aggregate, result
in a Material Adverse Change and (iii) will not result in any violation of any
law, administrative regulation or administrative or court
-5-
decree applicable to the Company or any subsidiary, which violation would,
individually or in the aggregate, result in a Material Adverse Change. No
consent, approval, authorization or other order of, or registration or filing
with, any court or other governmental or regulatory authority or agency, is
required for the Company's execution, delivery and performance of this
Agreement and consummation of the transactions contemplated hereby and by the
Prospectus, except such as have been obtained or made by the Company and are
in full force and effect under the Securities Act, applicable state securities
or blue sky laws, and the rules and regulations promulgated by the National
Association of Securities Dealers, Inc. (the "NASD").
(n) No Material Actions or Proceedings. There are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened (i) against or affecting the Company or any of
its subsidiaries, (ii) to the best of the Company's knowledge, against
Ticketmaster Corp. ("Ticketmaster") or any of its affiliates that could
reasonably be expected to affect the Company and its subsidiaries taken as a
whole, (iii) which has as the subject thereof any officer or director of, or
property owned or leased by, the Company or any of its subsidiaries or (iv)
relating to environmental or discrimination matters, where in any such case
(A) there is a reasonable possibility that such action, suit or proceeding
might be determined adversely to the Company or such subsidiary and (B) any
such action, suit or proceeding, if so determined adversely, would reasonably
be expected to result in a Material Adverse Change or adversely affect the
consummation of the transactions contemplated by this Agreement. No material
labor dispute with the employees of the Company or any of its subsidiaries
exists or, to the best of the Company's knowledge, is threatened or imminent.
(o) Intellectual Property Rights. The Company and its subsidiaries own
or possess sufficient trademarks, trade names, patent rights, copyrights,
licenses, approvals, trade secrets and other similar rights (collectively,
"Intellectual Property Rights") reasonably necessary to conduct their
businesses as now conducted; and the expected expiration of any of such
Intellectual Property Rights would not result in a Material Adverse Change.
Neither the Company nor any of its subsidiaries has received any notice of
infringement or conflict with asserted Intellectual Property Rights of others,
which infringement or conflict, if the subject of an unfavorable decision,
would result in a Material Adverse Change.
(p) All Necessary Permits, etc. The Company, each subsidiary of the
Company, and, to the best of the Company's knowledge, Ticketmaster each
possess such valid and current certificates, authorizations or permits
(collectively, "Permits") issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct their respective businesses
except where the failure to possess such Permit would not singly or in the
aggregate result in a Material Adverse Change, and neither the Company nor any
such subsidiary nor Ticketmaster has received any notice of proceedings
relating to the revocation or modification of, or non-compliance with, any
such Permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could result in a Material Adverse
Change.
(q) Title to Properties. The Company and each of its subsidiaries has
good and marketable title to all the properties and assets reflected as owned
in the financial statements referred to in Section 1(i) above (or elsewhere in
the Prospectus), in each case free and clear of any security interests,
mortgages, liens, encumbrances, equities, claims and other defects,
-6-
except such as do not materially and adversely affect the value of such
property and do not materially interfere with the use made or proposed to be
made of such property by the Company or such subsidiary. The real property,
improvements, equipment and personal property held under lease by the Company
or any subsidiary are held under valid and enforceable leases, with such
exceptions as are not material and do not materially interfere with the use
made or proposed to be made of such real property, improvements, equipment or
personal property by the Company or such subsidiary.
(r) Tax Law Compliance. The Company and its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns other
than those being contested in good faith and have paid all material taxes
required to be paid by any of them and, if due and payable, any related or
similar material assessment, fine or penalty levied against any of them other
than those being contested in good faith and for which adequate reserves have
been provided, if required by United States generally accepted accounting
principles. The Company has made adequate charges, accruals and reserves (if
required by United States generally accepted accounting principles) in the
applicable financial statements referred to in Section 1 (i) above in respect
of all federal, state and foreign income and franchise taxes for all periods
as to which the tax liability of the Company or any of its subsidiaries has
not been finally determined.
(s) Company Not an "Investment Company". The Company has been advised
of the rules and requirements under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). The Company is not, and after receipt
of payment for the Class B Common Shares will not be, an "investment company"
within the meaning of the Investment Company Act and will conduct its business
in a manner so that it will not become subject to the Investment Company Act.
(t) Insurance. Each of the Company and its subsidiaries are insured by
recognized, financially sound and reputable institutions with policies in such
amounts and with such deductibles and covering such risks as are generally
deemed adequate and customary for their businesses including, but not limited
to, policies covering real and personal property owned or leased by the
Company and its subsidiaries against theft, damage, destruction, acts of
vandalism and earthquakes. The Company has no reason to believe that it or
any subsidiary will not be able (i) to renew its existing insurance coverage
as and when such policies expire or (ii) to obtain comparable coverage from
similar institutions as may be necessary or appropriate to conduct its
business as now conducted and at a cost that would not result in a Material
Adverse Change. Neither the Company nor any subsidiary has been denied any
insurance coverage which it has sought or for which it has applied.
(u) No Price Stabilization or Manipulation. The Company has not taken
and will not take, directly or indirectly, any action designed to or that
might be reasonably expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Class B Common Shares in violation of applicable
securities laws.
(v) Related Party Transactions. There are no business relationships or
related-party transactions or relationships involving the Company or any
subsidiary of the Company or, to the best of the Company's knowledge, any
other person required to be described in the Prospectus which have not been
described as required.
-7-
(w) No Unlawful Contributions or Other Payments. Neither the Company
nor any of its subsidiaries nor, to the best of the Company's knowledge, any
employee or agent of the Company or any subsidiary, has made any contribution
or other payment to any official of, or candidate for, any federal, state or
foreign office in violation of any law or of the character required to be
disclosed in the Prospectus.
(x) Company's Accounting System. The Company maintains a system of
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with United States generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(y) Compliance with Environmental Laws. Except as would not,
individually or in the aggregate, result in a Material Adverse Change (i)
neither the Company nor any of its subsidiaries is in violation of any
federal, state, local or foreign law or regulation relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum and petroleum products (collectively, "Materials of Environmental
Concern"), or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environment Concern (collectively, "Environmental Laws"), which violation
includes, but is not limited to, noncompliance with any permits or other
governmental authorizations required for the operation of the business of the
Company or its subsidiaries under applicable Environmental Laws, or
noncompliance with the terms and conditions thereof, nor has the Company or
any of its subsidiaries received any written communication, whether from a
governmental authority, citizens group, employee or otherwise, that alleges
that the Company or any of its subsidiaries is in violation of any
Environmental Law; (ii) there is no claim, action or cause of action filed
with a court or governmental authority, no investigation with respect to which
the Company has received written notice, and no written notice by any person
or entity alleging potential liability for investigatory costs, cleanup costs,
governmental responses costs, natural resources damages, property damages,
personal injuries, attorneys' fees or penalties arising out of, based on or
resulting from the presence, or release into the environment, of any Material
of Environmental Concern at any location owned, leased or operated by the
Company or any of its subsidiaries, now or in the past (collectively,
"Environmental Claims"), pending or, to the best of the Company's knowledge,
threatened against the Company or any of its subsidiaries or any person or
entity whose liability for any Environmental Claim the Company or any of its
subsidiaries has retained or assumed either contractually or by operation of
law; and (iii) to the best of the Company's knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Material of Environmental Concern, that reasonably could
result in a violation of any Environmental Law or form the basis of a
potential Environmental Claim against the
-8-
Company or any of its subsidiaries or against any person or entity whose
liability for any Environmental Claim the Company or any of its subsidiaries
has retained or assumed either contractually or by operation of law.
(z) ERISA Compliance. The Company and its subsidiaries and any "employee
benefit plan" (as defined under the Employee Retirement Income Security Act of
1974, as amended, and the regulations and published interpretations thereunder
(collectively, "ERISA")) established or maintained by the Company, its
subsidiaries or their "ERISA Affiliates" (as defined below) are in compliance
in all material respects with ERISA. "ERISA Affiliate" means, with respect to
the Company or a subsidiary, any member of any group of organizations
described in Sections 414(b),(c),(m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder
(the "Code") of which the Company or such subsidiary is a member. No
"reportable event" (as defined under ERISA) has occurred or is reasonably
expected to occur with respect to any "employee benefit plan" established or
maintained by the Company, its subsidiaries or any of their ERISA Affiliates.
No "employee benefit plan" established or maintained by the Company, its
subsidiaries or any of their ERISA Affiliates, if such "employee benefit plan"
were terminated, would have any "amount of unfunded benefit liabilities" (as
defined under ERISA). Neither the Company, its subsidiaries nor any of their
ERISA Affiliates has incurred or reasonably expects to incur any liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal
from, any "employee benefit plan" or (ii) Sections 412, 4971, 4975 or 4980B of
the Code. Each "employee benefit plan" established or maintained by the
Company, its subsidiaries or any of their ERISA Affiliates that is intended to
be qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or failure to act, which would cause the loss of
such qualification.
(aa) Merger Agreement. The execution and delivery of the Agreement and
Plan of Reorganization dated as of August 12, 1998 (the "Merger Agreement") by
and among CitySearch, USA Networks, Inc., Ticketmaster Group, Inc. and
Ticketmaster, TMOL and Tiberius, Inc. ("Tiberius") was duly authorized by all
necessary corporate action on the part of the Company and Tiberius. Each of
the Company and Tiberius had all corporate power and authority to execute and
deliver the Merger Agreement, to file the Merger Agreement with the Secretary
of State of the State of Delaware and to consummate the transactions
contemplated by the Merger Agreement, and the Merger Agreement at the time of
execution and filing constituted a valid and binding obligation of each of the
Company and Tiberius.
(bb) Year 2000 Compliance.
(a) All of the current or past products and/or services offered by
the Company and/or its subsidiaries and by Ticketmaster Corp., in the case of
Ticketmaster Corp., to the extent such products and services relate to or are
utilized in the online sale of live event tickets and related merchandise
(including any predecessor in interest), including each item of hardware,
software, or firmware, any system, equipment, or products consisting of or
containing one or more thereof, and any and all enhancements, upgrades,
customizations, modifications, maintenance and the like are Year 2000
Compliant (as defined herein). Neither the Company nor any of its subsidiaries
is subject to any pending or threatened claim, regulatory action, proceeding
or investigation concerning the Year 2000 Compliance of its respective
products, services or operations, and, to the Company's knowledge after a
reasonable investigation, there is no basis for any such claim, regulatory
-9-
action, investigation or proceeding. All of the internal management
information systems (including hardware, firmware, operating system software,
utilities, and applications software) and all facilities and systems used in
the ordinary course of business by or on behalf of the Company and its
subsidiaries, including payroll, accounting, billing/receivables, customer
service, human resources, and e-mail systems used by the Company and its
subsidiaries, are Year 2000 Compliant. To the best of the Company's knowledge,
after reasonable investigation, all vendors of products or services to the
Company and/or its subsidiaries, and its respective products, services and
operations, are Year 2000 Compliant, and each such vendor will continue to
furnish its products or services to the Company, without interruption or
material delay, on and after January 1, 2000.
(b) For purposes of this Agreement, "Year 2000 Compliant" means that
(1) the products, services, or other item(s) at issue accurately process,
provide and/or receive all date/time data (including calculating, comparing,
and sequencing) within, from, into, and between centuries (including the
twentieth and twenty-first centuries and the years 1999 and 2000), including
leap year calculations, and (2) neither the performance nor the functionality
nor the Company's provision of the products, services, and other item(s) at
issue will be affected by any dates/times prior to, on, after, or spanning
January 1, 2000. The design of the products, services, and other item(s) at
issue includes proper date/time data century recognition and recognition of
1999 and 2000, calculations that accommodate single century and multi-century
formulae and date/time values before, on, after, and spanning January 1, 2000,
and date/time data interface values that reflect the century, 1999, and 2000.
Any certificate signed by an officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the
matters set forth therein.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE CLASS B COMMON SHARES.
(a) The Firm Class B Common Shares. The Company agrees to issue and
sell to the several Underwriters the Firm Class B Common Shares upon the terms
herein set forth. On the basis of the representations, warranties and
agreements herein contained, and upon the terms but subject to the conditions
herein set forth, the Underwriters agree, severally and not jointly, to purchase
from the Company the respective number of Firm Class B Common Shares set forth
opposite their names on Schedule A. The purchase price per Firm Class B Common
----------
Share to be paid by the several Underwriters to the Company shall be $[___] per
share.
(b) The First Closing Date. Delivery of certificates for the Firm
Class B Common Shares to be purchased by the Underwriters and payment therefor
shall be made at the offices of NMS, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx (or such other place as may be agreed to by the Company and the
Representatives) at 6:00 a.m. San Francisco time, on [___], or such other time
and date not later than 10:30 a.m. San Francisco time , on [___] as the
Representatives shall designate by notice to the Company (the time and date of
such closing are called the "First Closing Date"). The Company hereby
acknowledges that circumstances under which the Representatives may provide
notice to postpone the First Closing Date as originally scheduled include, but
are in no way limited to, any determination by the Company or the
Representatives to recirculate to the public copies of an amended or
supplemented Prospectus or a delay as contemplated by the provisions of Section
10.
-10-
(c) The Optional Class B Common Shares; the Second Closing Date. In
addition, on the basis of the representations, warranties and agreements herein
contained, and upon the terms but subject to the conditions herein set forth,
the Company hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of [___] Optional Class B Common
Shares from the Company at the purchase price per share to be paid by the
Underwriters for the Firm Class B Common Shares. The option granted hereunder
is for use by the Underwriters solely in covering any over-allotments in
connection with the sale and distribution of the Firm Class B Common Shares.
The option granted hereunder may be exercised at any time (but not more than
once) upon notice by the Representatives to the Company, which notice may be
given at any time within 30 days from the date of this Agreement. Such notice
shall set forth (i) the aggregate number of Optional Class B Common Shares as to
which the Underwriters are exercising the option, (ii) the names and
denominations in which the certificates for the Optional Class B Common Shares
are to be registered and (iii) the time, date and place at which such
certificates will be delivered (which time and date may be simultaneous with,
but not earlier than, the First Closing Date; and in such case the term "First
Closing Date" shall refer to the time and date of delivery of certificates for
the Firm Class B Common Shares and the Optional Class B Common Shares). Such
time and date of delivery, if subsequent to the First Closing Date, is called
the "Second Closing Date" and shall be determined by the Representatives and
shall not be earlier than three nor later than five full business days after
delivery of such notice of exercise. If any Optional Class B Common Shares are
to be purchased, each Underwriter agrees, severally and not jointly, to purchase
the number of Optional Class B Common Shares (subject to such adjustments to
eliminate fractional shares as the Representatives may determine) that bears the
same proportion to the total number of Optional Class B Common Shares to be
purchased as the number of Firm Class B Common Shares set forth on Schedule A
----------
opposite the name of such Underwriter bears to the total number of Firm Class B
Common Shares. The Representatives may cancel the option at any time prior to
its expiration by giving written notice of such cancellation to the Company.
(d) Public Offering of the Class B Common Shares. The
Representatives hereby advise the Company that the Underwriters intend to offer
for sale to the public, as described in the Prospectus, their respective
portions of the Class B Common Shares as soon after this Agreement has been
executed and the Registration Statement has been declared effective as the
Representatives, in their sole judgment, have determined is advisable and
practicable.
(e) Payment for the Class B Common Shares. Payment for the Class B
Common Shares shall be made at the First Closing Date (and, if applicable, at
the Second Closing Date) by wire transfer of immediately available funds to the
order of the Company.
It is understood that the Representatives have been authorized, for
their own account and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Class B Common Shares and any Optional Class B Common Shares the
Underwriters have agreed to purchase. NMS, ACI, BSC, BRS or DLJ individually
and not as the Representatives of the Underwriters, may (but shall not be
obligated to) make payment for any Class B Common Shares to be purchased by any
Underwriter whose funds shall not have been received by the Representatives by
the First Closing Date or the Second Closing Date, as the case may be, for the
account of such Underwriter, but any such payment shall not relieve such
Underwriter from any of its obligations under this Agreement.
-11-
(f) Delivery of the Class B Common Shares. The Company shall
deliver, or cause to be delivered, to the Representatives for the accounts of
the several Underwriters certificates for the Firm Class B Common Shares at the
First Closing Date, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price therefor. The
Company shall also deliver, or cause to be delivered, to the Representatives for
the accounts of the several Underwriters, certificates for the Optional Class B
Common Shares the Underwriters have agreed to purchase at the First Closing Date
or the Second Closing Date, as the case may be, against the irrevocable release
of a wire transfer of immediately available funds for the amount of the purchase
price therefor. The certificates for the Class B Common Shares shall be in
definitive form and registered in such names and denominations as the
Representatives shall have requested at least two full business days prior to
the First Closing Date (or the Second Closing Date, as the case may be) and
shall be made available for inspection on the business day preceding the First
Closing Date (or the Second Closing Date, as the case may be) at a location in
New York City as the Representatives may reasonably designate. Time shall be of
the essence, and delivery at the time and place specified in this Agreement is a
further condition to the obligations of the Underwriters.
(g) Delivery of Prospectus to the Underwriters. Not later than 12:00
p.m. on the second business day following the date the Class B Common Shares are
released by the Underwriters for sale to the public, the Company shall deliver
or cause to be delivered copies of the Prospectus in such quantities and at such
places as the Representatives shall reasonably request.
SECTION 3. ADDITIONAL COVENANTS.
(a) Representatives' Review of Proposed Amendments and Supplements.
During such period beginning on the date hereof and ending on the later of the
First Closing Date or such date, as in the opinion of counsel for the
Underwriters, the Prospectus is no longer required by law to be delivered in
connection with sales by an Underwriter or dealer (the "Prospectus Delivery
Period"), prior to amending or supplementing the Registration Statement
(including any registration statement filed under Rule 462(b) under the
Securities Act) or the Prospectus, the Company shall furnish to the
Representatives for review a copy of each such proposed amendment or
supplement, and the Company shall not file any such proposed amendment or
supplement to which the Representatives reasonably object.
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Representatives in writing (i) of the
receipt of any comments of, or requests for additional or supplemental
information from, the Commission, (ii) of the time and date of any filing of
any post-effective amendment to the Registration Statement or any amendment or
supplement to any preliminary prospectus or the Prospectus, (iii) of the time
and date that any post-effective amendment to the Registration Statement
becomes effective and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any post-
effective amendment thereto or of any order preventing or suspending the use
of any preliminary prospectus or the Prospectus, or (v) during the two year
period following the date hereof, of any proceedings to remove, suspend or
terminate from listing or quotation the Class B Common Stock from any
securities exchange upon which it is listed for trading or included or
designated for quotation, or of the threatening or initiation of any
proceedings for any of such purposes. If the Commission
-12-
shall enter any such stop order at any time, the Company will use its best
efforts to obtain the lifting of such order at the earliest possible moment.
Additionally, the Company agrees that it shall comply with the provisions of
Rules 424(b), 430A and 434, as applicable, under the Securities Act and will
use its reasonable efforts to confirm that any filings made by the Company
under such Rule 424(b) were received in a timely manner by the Commission.
(c) Amendments and Supplements to the Prospectus and Other Securities
Act Matters. If, during the Prospectus Delivery Period, any event shall occur
or condition shall exist as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in the
light of the circumstances when the Prospectus is delivered to a purchaser,
not misleading, or if in the opinion of the Representatives or counsel for the
Underwriters it is otherwise necessary to amend or supplement the Prospectus
to comply with law, the Company agrees to promptly prepare (subject to Section
3(a) hereof), file with the Commission and furnish at its own expense to the
Underwriters and to dealers, amendments or supplements to the Prospectus so
that the statements in the Prospectus as so amended or supplemented will not,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(d) Copies of any Amendments and Supplements to the Prospectus. The
Company agrees to furnish the Representatives, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any
amendments and supplements thereto as the Representatives may reasonably
request.
(e) Blue Sky Compliance. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register the
Class B Common Shares for sale under (or obtain exemptions from the
application of) state securities or blue sky laws or Canadian provincial
securities laws of those jurisdictions designated by the Representatives,
shall comply with such laws and shall continue such qualifications,
registrations and exemptions in effect so long as required for the
distribution of the Class B Common Shares. The Company shall not be required
to qualify as a foreign corporation or to take any action that would subject
it to general service of process in any such jurisdiction where it is not
presently qualified or where it would be subject to taxation as a foreign
corporation where it is not presently so subject. The Company will advise the
Representatives promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Class B Common Shares
for offering, sale or trading in any jurisdiction or any initiation or threat
of any proceeding for any such purpose, and in the event of the issuance of
any order suspending such qualification, registration or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.
(f) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Class B Common Shares sold by it in the manner described under the
caption "Use of Proceeds" in the Prospectus.
(g) Transfer Agent. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Class B Common Stock.
(h) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement (which need
-13-
not be audited) covering the twelve-month period ending September 30, 1998
that satisfies the provisions of Section 11(a) of the Securities Act.
(i) Periodic Reporting Obligations. During the Prospectus Delivery Period
the Company shall file, on a timely basis, with the Commission and the Nasdaq
National Market all reports and documents required to be filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(j) Agreement Not To Offer or Sell Additional Securities During the period
of 180 days following the date any of the Class B Common Shares is released by
the Representatives for sale to the public, the Company will not, without the
prior written consent of NMS (which consent may be withheld at the sole
discretion of NMS), directly or indirectly, sell, offer, contract or grant any
option to sell, pledge, transfer or establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Exchange Act, or
otherwise dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any shares of
Common Stock, options or warrants to acquire shares of the Common Stock or
securities exchangeable or exercisable for or convertible into shares of
Common Stock (other than as contemplated by this Agreement with respect to the
Class B Common Shares); provided, however, that the Company may (i) issue,
without the prior written consent of NMS, shares of its Class B Common Stock
or options to purchase its Class B Common Stock, or Class A or Class B Common
Stock upon exercise of options, pursuant to any stock option, stock bonus or
other stock plan or arrangement described in the Prospectus, (ii) issue shares
of Class B Common Stock upon mandatory or voluntary conversion of Class A
Common Stock and (iii) issue shares of its Class A or Class B Common Stock, or
securities exchangeable or exercisable for or convertible into shares of Class
A or Class B Common Stock, as consideration in the acquisitions of businesses
(whether by merger, consolidation, purchase or otherwise).
(k) Future Reports to the Representatives. During the period of five years
hereafter the Company will furnish to the Representatives at 000 Xxxxxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, XX 00000 Attention: Xxxxx Xxxx, (i) as soon as
practicable after the end of each fiscal year, copies of the Annual Report of
the Company containing the balance sheet of the Company as of the close of
such fiscal year and statements of income, stockholders' equity and cash flows
for the year then ended and the opinion thereon of the Company's independent
public or certified public accountants; (ii) as soon as practicable after the
filing thereof, copies of each proxy statement, Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K or other report
filed by the Company with the Commission, the NASD or any securities exchange;
and (iii) as soon as available, copies of any report or communication of the
Company mailed generally to holders of its capital stock.
NMS, on behalf of the several Underwriters, may, in its sole discretion,
waive in writing the performance by the Company of any one or more of the
foregoing covenants or extend the time for their performance.
SECTION 4. PAYMENT OF EXPENSES. The Company agrees to pay all costs,
fees and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the issuance and delivery of the
Class B Common Shares (including all
-14-
printing and engraving costs), (ii) all fees and expenses of the registrar and
transfer agent of the Class B Common Stock, (iii) all necessary issue, transfer
and other stamp taxes in connection with the issuance and sale of the Class B
Common Shares to the Underwriters, (iv) all fees and expenses of the Company's
counsel, independent certified public accountants and other advisors, (v) all
costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration Statement (including
financial statements, exhibits, schedules, consents and certificates of
experts), each preliminary prospectus and the Prospectus, and all amendments and
supplements thereto, and this Agreement, (vi) all filing fees, attorneys' fees
and expenses incurred by the Company or the Underwriters in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Class B Common Shares for offer and sale
under the state securities or blue sky laws or the provincial securities laws of
Canada, and, if requested by the Representatives, preparing and printing a "Blue
Sky Survey" or memorandum, and any supplements thereto, advising the
Underwriters of such qualifications, registrations and exemptions, (vii) the
filing fees incident to, and the reasonable fees and expenses of counsel for the
Underwriters in connection with, the NASD's review and approval of the
Underwriters' participation in the offering and distribution of the Class B
Common Shares, (viii) the fees and expenses associated with including the Class
B Common Shares on the Nasdaq National Market, and (ix) all other fees, costs
and expenses referred to in Item 13 of Part II of the Registration Statement.
Except as provided in this Section 4, Section 6, Section 8 and Section 9 hereof,
the Underwriters shall pay their own costs and expenses, including the fees and
disbursements of their counsel.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Class B
Common Shares as provided herein on the First Closing Date and, with respect to
the Optional Class B Common Shares, the Second Closing Date, shall be subject to
the accuracy of the representations and warranties on the part of the Company
set forth in Section 1 hereof as of the date hereof and as of the First Closing
Date as though then made and, with respect to the Optional Class B Common
Shares, as of the Second Closing Date as though then made, to the timely
performance by the Company of its covenants and other obligations hereunder, and
to each of the following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the Representatives
shall have received from Ernst & Young LLP, independent certified public
accountants for the Company, a letter dated the date hereof addressed to the
Underwriters, in form and substance satisfactory to the Representatives,
containing statements and information of the type ordinarily included in
accountant's "comfort letters" to underwriters, delivered according to
Statement of Auditing Standards No. 72 (or any successor bulletin), with
respect to the audited and unaudited financial statements and certain
financial information contained in the Registration Statement and the
Prospectus (and the Representatives shall have received an additional [___]
conformed copies of such accountants' letter for each of the several
Underwriters).
(b) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD. For the period from and after effectiveness of this
Agreement and prior to the First Closing Date and, with respect to the
Optional Class B Common Shares, the Second Closing Date:
-15-
(i) the Company shall have filed the Prospectus with the Commission
(including the information required by Rule 430A under the Securities Act)
in the manner and within the time period required by Rule 424(b) under the
Securities Act; or the Company shall have filed a post-effective amendment
to the Registration Statement containing the information required by such
Rule 430A, and such post-effective amendment shall have become effective;
or, if the Company elected to rely upon Rule 434 under the Securities Act
and obtained the Representatives' consent thereto, the Company shall have
filed a Term Sheet with the Commission in the manner and within the time
period required by such Rule 424(b);
(ii) no stop order suspending the effectiveness of the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective
amendment to the Registration Statement, shall be in effect and no
proceedings for such purpose shall have been instituted or threatened by
the Commission; and
(iii) the NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
(c) No Material Adverse Change or Ratings Agency Change. For the period
from and after the date of this Agreement and prior to the First Closing
Date and, with respect to the Optional Class B Common Shares, the Second
Closing Date:
(i) in the judgment of the Representatives there shall not have
occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any securities of the Company or
any of its subsidiaries by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under
the Securities Act.
(d) Opinion of Counsel for the Company. On each of the First Closing
Date and the Second Closing Date the Representatives shall have received the
favorable opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, counsel for the Company, dated as of such Closing Date, the form
of which is attached as Exhibit A (and the Representatives shall have received
---------
an additional [___] conformed copies of such counsel's legal opinion for each
of the several Underwriters).
(e) Opinion of Counsel for the Underwriters. On each of the First
Closing Date and the Second Closing Date the Representatives shall have
received the favorable opinion of Venture Law Group, A Professional
Corporation, counsel for the Underwriters, dated as of such Closing Date, with
respect to the matters set forth in paragraph (i), (vii) (with respect to
subparagraph (i) only), (viii), (ix), (x), (xi), (xii) and (xiii) (with
respect to the captions "Description of Capital Stock" and "Underwriting"
under subparagraph (i) only), and the next-to-last paragraph of Exhibit A (and
---------
the Representatives shall have received an additional [___] conformed copies
of such counsel's legal opinion for each of the several Underwriters).
-16-
(f) Officers' Certificate. On each of the First Closing Date and the
Second Closing Date the Representatives shall have received a written
certificate executed by the Chairman of the Board, Chief Executive Officer or
President of the Company and the Chief Financial Officer or Chief Accounting
Officer of the Company, dated as of such Closing Date, to the effect set forth
in subsections (b)(ii) and (c)(ii) of this Section 5, and further to the
effect that:
(i) for the period from and after the date of this Agreement and
prior to such Closing Date, there has not occurred any Material Adverse
Change;
(ii) the representations, warranties and covenants of the Company set
forth in Section 1 of this Agreement are true and correct with the same
force and effect as though expressly made on and as of such Closing Date;
and
(iii) the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or prior to
such Closing Date.
(g) Bring-down Comfort Letter. On each of the First Closing Date and the
Second Closing Date the Representatives shall have received from Ernst & Young
LLP, independent certified public accountants for the Company, a letter dated
such date, in form and substance satisfactory to the Representatives, to the
effect that they reaffirm the statements made in the letter furnished by them
pursuant to subsection (a) of this Section 5, except that the specified date
referred to therein for the carrying out of procedures shall be no more than
three business days prior to the First Closing Date or Second Closing Date, as
the case may be (and the Representatives shall have received an additional
[___] conformed copies of such accountants' letter for each of the several
Underwriters).
(h) Lock-Up Agreement from Certain Stockholders of the Company. On the
date hereof, each director of the Company owning shares of Common Stock, each
officer of the Company and the beneficial owners holding more than 90% of the
shares of Common Stock (as defined and determined according to Rule 13d-3
under the Exchange Act, except that a one hundred eighty day period shall be
used rather than the sixty day period set forth therein) shall be subject to
an agreement substantially in the form of Exhibit B hereto or shall be subject
--------
to an agreement with the Company similar in substance to such agreement and
such agreements shall be in full force and effect on each of the First Closing
Date and the Second Closing Date. To the extent that any holder of Common
Stock, options or warrants to acquire shares of Common Stock or any other
securities of the Company convertible into or exercisable or exchangeable for
is subject to an agreement with the Company and not the Representatives, the
Company will not release such holder from the terms of such agreement without
the consent of NMS.
(i) Additional Documents. On or before each of the First Closing Date
and the Second Closing Date, the Representatives and counsel for the
Underwriters shall have received such information, documents and opinions as
they may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Class B Common Shares as contemplated herein, or in
order to evidence the accuracy of any of the representations and warranties,
or the satisfaction of any of the conditions or agreements, herein contained.
-17-
If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated with respect to the
Firm Class B Common Shares by the Representatives by notice to the Company at
any time on or prior to the First Closing Date and, with respect to the Optional
Class B Common Shares, at any time prior to the Second Closing Date, which
termination shall be without liability on the part of any party to any other
party, except that Section 4, Section 6, Section 8 and Section 9 shall at all
times be effective and shall survive such termination.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If this
Agreement is terminated by the Representatives pursuant to Section 5, Section 7,
Section 10 or Section 11, or if the sale to the Underwriters of the Class B
Common Shares on the First Closing Date is not consummated because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse the Representatives and the other Underwriters (or such Underwriters
as have terminated this Agreement with respect to themselves), severally, upon
demand for all out-of-pocket expenses that shall have been reasonably incurred
by the Representatives and the Underwriters in connection with the proposed
purchase and the offering and sale of the Common Shares, including but not
limited to reasonable fees and disbursements of counsel, printing expenses,
travel expenses, postage, facsimile and telephone charges.
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT.
This Agreement shall not become effective until the later of (i) the
execution of this Agreement by the parties hereto and (ii) notification by the
Commission to the Company and the Representatives of the effectiveness of the
Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated by any
party by notice to each of the other parties hereto, and any such termination
shall be without liability on the part of (a) the Company to any Underwriter,
except that the Company shall be obligated to reimburse the expenses of the
Representatives and the Underwriters pursuant to Sections 4 and 6 hereof, (b)
any Underwriter to the Company, or (c) any party hereto to any other party
except that the provisions of Section 8 and Section 9 shall at all times be
effective and shall survive such termination.
SECTION 8. INDEMNIFICATION.
(a) Indemnification of the Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter, its officers and employees, and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act and the Exchange Act against any loss, claim, damage, liability
or expense, as incurred, to which such Underwriter or such controlling person
may become subject, under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected
with the written consent of the Company), insofar as, and to the extent that,
such loss, claim, damage, liability or expense (or actions in respect thereof
as contemplated below) arises out of or is based (i) upon any untrue statement
or alleged untrue statement of a material fact contained
-18-
in the Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A or Rule 434
under the Securities Act, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; or (ii) upon any untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; or (iii) in whole or in part upon any inaccuracy in the
representations and warranties of the Company contained herein; or (iv) in
whole or in part upon any failure of the Company to perform its obligations
hereunder or under law; or (v) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any
manner to, the Class B Common Stock or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon any matter covered by clause
(i) or (ii) above, provided that the Company shall not be liable under this
clause (v) to the extent that a court of competent jurisdiction shall have
determined by a final judgment that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such Underwriter through its bad faith or willful
misconduct; and to reimburse each Underwriter and each such controlling person
for any and all expenses (including the fees and disbursements of counsel
chosen by NMS) as such expenses are reasonably incurred by such Underwriter or
such controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the foregoing indemnity agreement shall not
apply to any loss, claim, damage, liability or expense to the extent, but only
to the extent, arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by the
Representatives expressly for use in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); and provided, further, that with respect to any preliminary
prospectus, the foregoing indemnity agreement shall not inure to the benefit
of any Underwriter from whom the person asserting any loss, claim, damage,
liability or expense purchased Class B Common Shares, or any person
controlling such Underwriter, if copies of the Prospectus were timely
delivered to the Underwriter pursuant to Section 2 and a copy of the
Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or
on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Class B Common Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or expense. The indemnity agreement set forth in this
Section 8(a) shall be in addition to any liabilities that the Company may
otherwise have.
(b) Indemnification of the Company, its Directors and Officers. Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act, against any
loss, claim, damage, liability or expense, as incurred, to which the Company,
or any such director, officer or controlling person may become subject, under
the Securities Act, the Exchange Act, or other federal or state statutory law
or regulation, or at common
-19-
law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter), insofar
as such loss, claim, damage, liability or expense (or actions in respect
thereof as contemplated below) arises out of or is based upon any untrue or
alleged untrue statement of a material fact contained in the Registration
Statement, any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or arises out of or is based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in
reliance upon and in conformity with written information furnished to the
Company by the Representatives expressly for use therein; and to reimburse the
Company, or any such director, officer or controlling person for any legal and
other expense reasonably incurred by the Company, or any such director,
officer or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action. The Company hereby acknowledges that the only information
that the Underwriters have furnished to the Company expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) are the statements set forth (A) as the
second to last paragraph on the inside front cover page of the Prospectus
concerning stabilization by the Underwriters and (B) in the table in the first
paragraph and as the [second and eighth] paragraphs under the caption
"Underwriting" in the Prospectus; and the Underwriters confirm that such
statements are correct. The indemnity agreement set forth in this Section 8(b)
shall be in addition to any liabilities that each Underwriter may otherwise
have.
(c) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8,
notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section 8 or to
the extent it is not prejudiced as a proximate result of such failure. In
case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate in, and, to the
extent that it shall elect, jointly with all other indemnifying parties
similarly notified, by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that a conflict may arise
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of such indemnifying party's
election so to assume the defense of such action and approval by
-20-
the indemnified party of counsel (which approval shall not be unreasonably
withheld), the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the reasonable expenses of more
than one separate counsel (together with local counsel), approved by the
indemnifying party (NMS in the case of Section 8(b) and Section 9),
representing the indemnified parties who are parties to such action) or (ii)
the indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there is a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel as contemplated by
Section 8(c) hereof, the indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. If during any period of time the
indemnifying party is disputing in good faith the reasonableness of such fees
and expenses of counsel, such period of time shall not be counted in
calculating such 30-day period. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement, compromise or
consent to the entry of judgment in any pending or threatened action, suit or
proceeding in respect of which any indemnified party is or could have been a
party and indemnity was or could have been sought hereunder by such indemnified
party, unless such settlement, compromise or consent includes (i) an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding and (ii) does
not include a statement as to or an admission of fault, culpability or a
failure to act, by or on behalf of the indemnified party.
SECTION 9. CONTRIBUTION.
If the indemnification provided for in Section 8 is for any reason
held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the
-21-
Underwriters, on the other hand, from the offering of the Class B Common Shares
pursuant to this Agreement or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company, on the one hand, and the Underwriters,
on the other hand, in connection with the statements or omissions or
inaccuracies in the representations and warranties herein which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand, and the Underwriters, on the other hand, in connection with the
offering of the Class B Common Shares pursuant to this Agreement shall be deemed
to be in the same respective proportions as the total net proceeds from the
offering of the Class B Common Shares pursuant to this Agreement (before
deducting expenses) received by the Company, and the total underwriting discount
received by the Underwriters, in each case as set forth on the front cover page
of the Prospectus (or, if Rule 434 under the Securities Act is used, the
corresponding location on the Term Sheet) bear to the aggregate initial public
offering price of the Class B Common Shares as set forth on such cover. The
relative fault of the Company, on the one hand, and the Underwriters, on the
other hand, shall be determined by reference to, among other things, whether any
such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact or any such inaccurate or alleged
inaccurate representation or warranty relates to information supplied by the
Company, on the one hand, or the Underwriters, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter shall
be required to contribute any amount in excess of the underwriting commissions
received by such Underwriter in connection with the Class B Common Shares
underwritten by it and distributed to the public. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 9 are several, and not joint, in proportion
to their respective underwriting commitments as set forth opposite their names
in Schedule A. For purposes of this Section 9, each officer and employee of an
----------
Underwriter and each person, if any, who controls an Underwriter within the
meaning of the Securities Act and the Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as the Company.
-22-
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS. If,
on the First Closing Date or the Second Closing Date, as the case may be, any
one or more of the several Underwriters shall fail or refuse to purchase Class B
Common Shares that it or they have agreed to purchase hereunder on such date,
and the aggregate number of Class B Common Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase does not
exceed 10% of the aggregate number of the Class B Common Shares to be purchased
on such date, the other Underwriters shall be obligated, severally, in the
proportions that the number of Firm Class B Common Shares set forth opposite
their respective names on Schedule A bears to the aggregate number of Firm Class
----------
B Common Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as may be specified by the
Representatives with the consent of the non-defaulting Underwriters, to purchase
the Class B Common Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase on such date. If, on the First Closing
Date or the Second Closing Date, as the case may be, any one or more of the
Underwriters shall fail or refuse to purchase Class B Common Shares and the
aggregate number of Class B Common Shares with respect to which such default
occurs exceeds 10% of the aggregate number of Class B Common Shares to be
purchased on such date, and arrangements satisfactory to the Representatives and
the Company for the purchase of such Class B Common Shares are not made within
48 hours after such default, this Agreement shall terminate without liability of
any party to any other party except that the provisions of Section 4, Section 8
and Section 9 shall at all times be effective and shall survive such
termination. In any such case either the Representatives or the Company shall
have the right to postpone the First Closing Date or the Second Closing Date, as
the case may be, but in no event for longer than seven days in order that the
required changes, if any, to the Registration Statement and the Prospectus or
any other documents or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
10. Any action taken under this Section 10 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
SECTION 11. TERMINATION OF THIS AGREEMENT. Prior to the First Closing
Date this Agreement may be terminated by the Representatives by notice given to
the Company if at any time (i) trading or quotation in any of the Company's
securities shall have been suspended or limited by the Commission or by the
Nasdaq Stock Market, or trading in securities generally on either the Nasdaq
Stock Market or the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the NASD; (ii) a general
banking moratorium shall have been declared by any of federal, New York,
Delaware or California authorities; (iii) there shall have occurred any outbreak
or escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial markets,
or any substantial change or development involving a prospective substantial
change in United States' or international political, financial or economic
conditions, as in the judgment of the Representatives is material and adverse
and makes it impracticable to market the Class B Common Shares in the manner and
on the terms described in the Prospectus or to enforce contracts for the sale of
securities; (iv) in the judgment of the Representatives there shall have
occurred any Material Adverse Change; or (v) the Company shall have sustained a
loss by strike, fire, flood, earthquake, accident or other calamity of such
character as in the judgment of the
-23-
Representatives may interfere materially with the conduct of the business and
operations of the Company regardless of whether or not such loss shall have been
insured. Any termination pursuant to this Section 11 shall be without liability
on the part of (a) the Company to any Underwriter, except that the Company shall
be obligated to reimburse the expenses of the Representatives and the
Underwriters pursuant to Sections 4 and 6 hereof, (b) any Underwriter to the
Company, or (c) of any party hereto to any other party except that the
provisions of Section 8 and Section 9 shall at all times be effective and shall
survive such termination.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Company or any of its or their partners, officers or directors or any
controlling person, as the case may be, and will survive delivery of and payment
for the Class B Common Shares sold hereunder and any termination of this
Agreement.
SECTION 13. NOTICES. All communications hereunder shall be in
writing and shall be mailed, hand delivered or telecopied and confirmed to the
parties hereto as follows:
If to the Representatives:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000)000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
and a copy to:
Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxx Xxxxxx
If to the Company:
CitySearch, Inc.
000 X. Xxxxxxxx Xxxxxxxxx, Xxx. 000
-00-
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx, Chief Financial Officer
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx and Xxxx X. Xxxxxxxx
and:
USA Networks, Inc.
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 1001__
Facsimile: (000) 000-0000
Attention: General Counsel
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 14. SUCCESSORS. This Agreement will inure to the benefit
of and be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 10 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 8 and Section 9, and in
each case their respective successors, and personal representatives, and no
other person will have any right or obligation hereunder. The term "successors"
shall not include any purchaser of the Class B Common Shares as such from any of
the Underwriters merely by reason of such purchase.
SECTION 15. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 16. (A) GOVERNING LAW PROVISIONS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
(b) Consent to Jurisdiction. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby ("Related Proceedings") may be instituted in the federal courts of the
United States of America located in the City and
-25-
County of San Francisco or the courts of the State of California in each case
located in the City and County of San Francisco (collectively, the "Specified
Courts"), and each party irrevocably submits to the exclusive jurisdiction
(except for proceedings instituted in regard to the enforcement of a judgment of
any such court (a "Related Judgment"), as to which such jurisdiction is non-
exclusive) of such courts in any such suit, action or proceeding. Service of any
process, summons, notice or document by mail to such party's address set forth
above shall be effective service of process for any suit, action or other
proceeding brought in any such court. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any suit, action
or other proceeding in the Specified Courts and irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such suit,
action or other proceeding brought in any such court has been brought in an
inconvenient forum.
SECTION 17. GENERAL PROVISIONS. This Agreement constitutes the
entire agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings and
negotiations of the parties to this Agreement with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. The Table of Contents and the Section
headings herein are for the convenience of the parties only and shall not affect
the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any preliminary
prospectus and the Prospectus (and any amendments and supplements thereto), as
required by the Securities Act and the Exchange Act.
-26-
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company the enclosed copies hereof, whereupon this
instrument, along with all counterparts hereof, shall become a binding agreement
in accordance with its terms.
Very truly yours,
CITYSEARCH, INC.
By:__________________________
Xxxxxxx Xxxx
Chief Executive Officer
The foregoing Underwriting Agreement is hereby confirmed and accepted by
the Representatives in San Francisco, California as of the date first above
written.
NATIONSBANC XXXXXXXXXX SECURITIES LLC
XXXXX & COMPANY INCORPORATED
BANCAMERICA XXXXXXXXX XXXXXXXX
BEAR, XXXXXXX & CO. INC.
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By NATIONSBANC XXXXXXXXXX SECURITIES LLC
By: _____________________________
Xxxxxxx X. Xxxxx
Managing Director
-27-
SCHEDULE A
NUMBER OF FIRM CLASS B
COMMON SHARES TO BE
UNDERWRITERS PURCHASED
NationsBanc Xxxxxxxxxx Securities LLC.............. [___]
Xxxxx & Company Incorporated....................... [___]
BancAmerica Xxxxxxxxx Xxxxxxxx [___]
Bear, Xxxxxxx & Co. Inc. .......................... [___]
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities [___]
Corporation
[___].............................................. [___]
[___].............................................. [___]
Total .................................... [___]
EXHIBIT A
The final opinion in draft form should be attached as Exhibit A at the time this
Agreement is executed.
Opinion of counsel for the Company to be delivered pursuant to Section
5(d) of the Underwriting Agreement.
References to the Prospectus in this Exhibit A include any supplements
---------
thereto at the Closing Date.
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the
Underwriting Agreement.
(iii) The Company is duly qualified as a foreign corporation to transact
business and is in good standing in the State of California and in each other
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except for such
jurisdictions (other than the State of California) where the failure to so
qualify or to be in good standing would not, individually or in the aggregate,
result in a Material Adverse Change.
(iv) Ticketmaster Multimedia Holdings, Inc. and each of the Company's
significant subsidiaries (as defined in Rule 405 under the Securities Act) has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and, to the knowledge of
such counsel, is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except for such jurisdictions where the failure to so
qualify or to be in good standing would not, individually or in the aggregate,
result in a Material Adverse Change.
(v) All of the issued and outstanding capital stock of MetroBeat, Inc.
and Ticketmaster Multimedia Holdings, Inc., respectively, has been duly
authorized and validly issued, is fully paid and non-assessable and is owned
by the Company, free and clear of any security interest, mortgage, pledge,
lien, encumbrance or, to the best knowledge of such counsel, any pending or
threatened claim.
(vi) The authorized, issued and outstanding capital stock of the Company
(including the Class B Common Stock) conforms in all material respects to the
descriptions thereof set forth or incorporated by reference in the Prospectus.
All of the outstanding shares of Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable and, to such counsel's
knowledge, have been issued in compliance with the
A-1
registration and qualification requirements of all applicable federal and
state securities laws. The form of certificate used to evidence the Class B
Common Stock is in due and proper form and complies with all applicable
requirements of the charter and by-laws of the Company and the General
Corporation Law of the State of Delaware. The description of the Company's
stock option, stock bonus and other stock plans or arrangements, and the
options or other rights granted and exercised thereunder, set forth in the
Prospectus accurately and fairly presents in all material respects the
information required to be shown with respect to such plans, arrangements,
options and rights.
(vii) No stockholder of the Company or any other person has any
preemptive right, right of first refusal or other similar right to subscribe
for or purchase securities of the Company arising (i) by operation of the
charter or by-laws of the Company or the General Corporation Law of the State
of Delaware or (ii) to the best knowledge of such counsel, otherwise, except
for such rights as have been duly waived.
(viii) The Underwriting Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company,
enforceable in accordance with its terms, except as rights to indemnification
thereunder may be limited by applicable law and except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting creditors' rights generally or
by general equitable principles.
(ix) The Class B Common Shares to be purchased by the Underwriters
from the Company have been duly authorized for issuance and sale pursuant to
the Underwriting Agreement and, when issued and delivered by the Company
pursuant to the Underwriting Agreement against payment of the consideration
set forth therein, will be validly issued, fully paid and nonassessable and
issued in compliance with all applicable federal and state securities laws.
(x) Each of the Registration Statement and the Rule 462(b)
Registration Statement, if any, has been declared effective by the Commission
under the Securities Act. To the knowledge of such counsel, no stop order
suspending the effectiveness of either of the Registration Statement or the
Rule 462(b) Registration Statement, if any, has been issued under the
Securities Act and no proceedings for such purpose have been instituted or are
pending or are contemplated or threatened by the Commission. Any required
filing of the Prospectus and any supplement thereto pursuant to Rule 424(b)
under the Securities Act has been made in the manner and within the time
period required by such Rule 424(b).
(xi) The Registration Statement, including any Rule 462(b)
Registration Statement, the Prospectus including any document incorporated by
reference therein, and each amendment or supplement to the Registration
Statement and the Prospectus including any document incorporated by reference
therein, as of their respective effective or issue dates (other than the
financial statements and supporting schedules included or incorporated by
reference therein or in exhibits to or excluded from the Registration
Statement, as to which no opinion need be rendered) comply as to form in all
material respects with the applicable requirements of the Securities Act.
A-2
(xii) The Class B Common Shares have been approved for listing on
the Nasdaq National Market.
(xiii) The statements (i) on the cover of the Prospectus and in the
Prospectus under the captions "Prospectus Summary --Ticketmaster Online-
CitySearch Merger," "Prospectus Summary--the Offering," "Risk Factors--
Dependence on Relationship with Ticketmaster Corp.," "Risk Factors--Control by
and Relationship with USA," "Risk Factors--Conflicts of Interest," "Risk
Factors--Potential Governmental Investigation and Litigation," "Risk Factors--
Uncertain Protection of Intellectual Property; Risks of Third Party Licenses,"
"Risk Factors--Antitakeover Effects of Certain Charter and Contractual
Provisions," "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Overview," "Description of Capital Stock," "Business--
Ticketmaster Online Business-Ticketmaster License Agreement," "Business--
Proprietary Rights," "Ticketmaster Online-CitySearch Merger," "Shares Eligible
for Future Sale" and "Underwriting" and (ii) in Item 14 and Item 15 of the
Registration Statement, insofar as such statements constitute matters of law,
summaries of legal matters, the Company's charter or by-law provisions,
documents or legal proceedings, or legal conclusions, have been reviewed by
such counsel and fairly present and summarize, in all material respects, the
matters referred to therein.
(xiv) To the knowledge of such counsel, there are no legal or
governmental actions, suits or proceedings pending or threatened which are
required to be disclosed in the Registration Statement, other than those
disclosed therein.
(xv) To the knowledge of such counsel, there are no Existing
Instruments (or any amendments or supplements thereto) required to be
described or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto; and the descriptions thereof
and references thereto are correct in all material respects.
(xvi) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the Company's execution, delivery and performance of
the Underwriting Agreement and consummation of the transactions contemplated
thereby and by the Prospectus, except as required under the Securities Act,
applicable state securities or blue sky laws, and the rules and regulations
promulgated by the NASD.
(xvii) The execution and delivery of the Underwriting Agreement by
the Company and the performance by the Company of its obligations thereunder
(other than performance by the Company of its obligations under the
indemnification section of the Underwriting Agreement, as to which no opinion
need be rendered) (i) have been duly authorized by all necessary corporate
action on the part of the Company; (ii) will not result in any violation of
the provisions of the charter or by-laws of the Company or any subsidiary;
(iii) will not to the knowledge of such counsel constitute a breach of, or
Default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any material Existing Instrument; or (iv) to
A-3
the knowledge of such counsel, will not result in any violation of any law,
administrative regulation or administrative or court decree applicable to the
Company or any subsidiary, which violation, individually or in the aggregate,
would result in a Material Adverse Change.
(xviii) The Company is not, and after receipt of payment for the
Common Shares will not be, an "investment company" within the meaning of
Investment Company Act.
(xix) Except as disclosed in the Prospectus under the caption
"Shares Eligible for Future Sale", to the knowledge of such counsel, there are
no persons with registration or other similar rights to have any equity or
debt securities registered for sale under the Registration Statement or
included in the offering contemplated by the Underwriting Agreement, except
for such rights as have been duly waived.
(xx) To the knowledge of such counsel, neither the Company,
MetroBeat, Inc. nor Ticketmaster Multimedia Holdings, Inc. is in violation of
its charter or by-laws or any law, administrative regulation or administrative
or court decree applicable to the Company or any such subsidiary or is in
Default in the performance or observance of any obligation, agreement,
covenant or condition contained in any material Existing Instrument, except in
each such case for such violations or Defaults as would not, individually or
in the aggregate, result in a Material Adverse Change.
(xxi) The execution and delivery of the Merger Agreement was duly
authorized by all necessary corporate action on the part of each of the
Company and Tiberius, Inc.; and
(xxii) Each of the Company and Tiberius, Inc. had all corporate power
and authority to execute and deliver the Merger Agreement, to file the Merger
Agreement with the Secretary of State of the State of Delaware and to
consummate the transaction contemplated by the Merger Agreement, and the
Merger Agreement at the time of execution and filing constituted a valid and
binding obligation of each of the Company and Tiberius, Inc.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants for
the Company and with representatives of the Underwriters at which the contents
of the Registration Statement and the Prospectus, and any supplements or
amendments thereto, and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (other than as specified above), and
any supplements or amendments thereto, on the basis of the foregoing, nothing
has come to their attention which would lead them to believe that either the
Registration Statement or any amendments thereto, at the time the Registration
Statement or such amendments became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus, as of its date or at the First Closing Date or the Second Closing
Date, as the case may be, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (it
A-4
being understood that such counsel need express no belief as to the financial
statements or schedules or other financial or statistical data derived
therefrom, included or incorporated by reference in the Registration Statement
or the Prospectus or any amendments or supplements thereto).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the General
Corporation Law of the State of Delaware, the General Corporation Law of the
State of California or the federal law of the United States, to the extent they
deem proper and specified in such opinion, upon the opinion (which shall be
dated the First Closing Date or the Second Closing Date, as the case may be,
shall be satisfactory in form and substance to the Underwriters, shall expressly
state that the Underwriters may rely on such opinion as if it were addressed to
them and shall be furnished to the Representatives) of other counsel of good
standing whom they believe to be reliable and who are satisfactory to counsel
for the Underwriters; provided, however, that such counsel shall further state
that they believe that they and the Underwriters are justified in relying upon
such opinion of other counsel, and (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Company and public
officials.
A-5
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
_____________________________________________
Printed Name of Holder
By:__________________________________________
Signature
_____________________________________________
Printed Name of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
EXHIBIT B
[Date]
NationsBanc Xxxxxxxxxx Securities LLC
Xxxxx & Company Incorporated
BancAmerica Xxxxxxxxx Xxxxxxxx
Bear, Xxxxxxx & Co. Inc.
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
As Representatives of the Several Underwriters
c/o NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: CitySearch, Inc. (or any successor-in-interest thereto) (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of Class
A Common Stock of the Company or securities convertible into or exchangeable or
exercisable for Class A or Class B Common Stock of the Company (together or
individually hereinafter defined as "Common Stock"). The Company proposes to
carry out a public offering of Class B Common Stock (the "Offering") for which
you will act as the representatives (the "Representatives") of the underwriters.
The undersigned recognizes that the Offering will be of benefit to the
undersigned and will benefit the Company by, among other things, raising
additional capital for its operations. The undersigned acknowledges that you
and the other underwriters are relying on the representations and agreements of
the undersigned contained in this letter in carrying out the Offering and in
entering into underwriting arrangements with the Company with respect to the
Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of NationsBanc
Xxxxxxxxxx Securities LLC (which consent may be withheld in its sole
discretion), directly or indirectly, sell, offer, contract or grant any option
to sell (including without limitation any short sale) pledge, transfer,
establish an open "put equivalent position" within the meaning of Rule 16a-1(h)
under the Securities Exchange Act of 1934, as amended, or otherwise dispose of
any shares of Common Stock, options or warrants to acquire shares of Common
Stock, securities exchangeable or exercisable for or convertible into shares of
Common Stock or any other securities of the Company currently or hereafter owned
either of record or beneficially (as defined in Rule 13d-3 under Securities
Exchange Act of 1934, as amended) by the undersigned, or publicly announce the
undersigned's intention to do any of the foregoing, for a period commencing on
the date hereof and continuing to a date 180 days after the first date any of
the Common Stock to be sold in the Offering is released by you for sale to the
public. The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock or any other securities of the
Company held by the undersigned except in compliance with the foregoing
restrictions.
