Exhibit 10.6
CONFORMED COPY
BRIDGE LOAN WARRANT AGREEMENT
between
▇▇▇▇▇▇▇▇▇▇.▇▇▇ INC.,
as Issuer,
and
USA NETWORKS, INC.,
as Warrantholder
----------------------
Dated as of January 24, 2000
----------------------
TABLE OF CONTENTS
PAGE
SECTION 1. Definitions........................................................1
SECTION 2. The Warrants.......................................................5
SECTION 3. Exercise...........................................................5
SECTION 4. Payment of Taxes...................................................6
SECTION 5. Replacement Warrant................................................6
SECTION 6. Reservation of Common Stock and Other Covenants....................7
SECTION 7. Antidilution Provisions............................................8
SECTION 8. No Dilution or Impairment.........................................15
SECTION 9. Transfers of the Warrant..........................................15
SECTION 10. Registration Rights...............................................16
SECTION 11. Survival of Provisions............................................18
SECTION 12. Delays, Omissions and Indulgences.................................18
SECTION 13. Rights of Transferees.............................................18
SECTION 14. Captions..........................................................18
SECTION 15. Notices...........................................................18
SECTION 16. Successors and Assigns............................................19
SECTION 17. Severability......................................................19
SECTION 18. Governing Law.....................................................19
SECTION 20. Entire Agreement; Amendment.......................................20
SECTION 21. Rules of Construction.............................................20
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BRIDGE LOAN WARRANT AGREEMENT
BRIDGE LOAN WARRANT AGREEMENT, dated as of January 24, 2000, between
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Inc., a California corporation (the "COMPANY"), and USA Networks,
Inc., a Delaware corporation (the "WARRANTHOLDER").
W I T N E S S E T H:
WHEREAS, the Company and USANi Sub LLC, a Delaware limited liability
company ("PARENT"), are entering into an Agreement and Plan of Merger, dated as
of the date hereof (the "MERGER AGREEMENT"), which provides for, among other
things, the merger of the Company (the "MERGER") with a wholly owned subsidiary
of a Delaware corporation to be formed by Parent ("NEWCO"), and the concurrent
contribution by Parent to Newco of all of the outstanding limited liability
interests of Internet Shopping Network LLC, a Delaware limited liability
company;
WHEREAS, the Company and the Warrantholder are entering into a Credit
Agreement, dated as of the date hereof (the "CREDIT AGREEMENT"), pursuant to
which the Warrantholder commits to make a loan to the Company in a principal
amount not to exceed $10 million and the Company agrees to issue to the
Warrantholder a promissory note (the "NOTE") in a principal amount equal to the
principal amount of such loan;
WHEREAS, as a condition to the willingness of the parties to enter into
the Merger Agreement and the Credit Agreement, the Company has agreed to issue a
warrant (the "WARRANT") to purchase shares of Common Stock (as defined below) to
the Warrantholder;
WHEREAS, the Company proposes to issue a certificate evidencing the
Warrant (such warrant certificate issued pursuant to this Agreement being
hereinafter referred to as the "WARRANT CERTIFICATE"); and
WHEREAS, the Company and the Warrantholder desire to set forth in this
Agreement, among other things, the form and provisions of the Warrant
Certificate and the terms and conditions under which it may be issued,
transferred, exchanged, replaced and surrendered in connection with the exercise
of the Warrant.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS. As used herein, the following terms shall have
the following meanings.
"AFFILIATE" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by,
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or is under common control with, such first Person. The term "CONTROL" means
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"AGGREGATE EXERCISE PRICE" has the meaning assigned thereto in Section
3(b).
"BLACK-SCHOLES AMOUNT" means an amount determined by calculating the
"Black-Scholes" value of an option to purchase one share of Common Stock on the
applicable page on the Bloomberg online page, using the following variable
values: (i) the current market price of the Common Stock equal to the closing
trade price on the last trading day before the date of the Notice of the Major
Transaction; (ii) volatility of the Common Stock equal to the volatility of the
Common Stock during the 100 trading day period preceding the date of the Notice
of the Major Transaction; (iii) a risk free rate equal to the interest rate on
the United States treasury ▇▇▇▇ or treasury note with a maturity corresponding
to the remaining term of this Warrant on the date of the Notice of the Major
Transaction; and (iv) an exercise price equal to the Exercise Price on the date
of the Notice of the Major Transaction. In the event such calculation function
is no longer available utilizing the Bloomberg online page, the Warrantholder
shall calculate such amount in its sole discretion using the closest available
alternative mechanism and variable values to those available utilizing the
Bloomberg online page for such calculation function.
"BUSINESS DAY" means any day other than a day on which (i) banks in the
State of New York are authorized or obligated to be closed or (ii) the New York
Stock Exchange is closed.
"BOARD OF DIRECTORS" means the Board of Directors of the Company.
"CAPITAL STOCK" means (a) in the case of a corporation, capital stock,
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (c) in the case of a partnership, partnership interests (whether
general or limited), (d) in the case of a limited liability company, membership
interests and (e) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"CASHLESS EXERCISE" has the meaning assigned thereto in Section 3(c).
"CHARTER DOCUMENTS" means the Certificate of Incorporation and the
Bylaws of the Company, as amended or supplemented from time to time.
"COMMON STOCK" means (a) the common stock of the Company, no par value
per share, (b) any other Capital Stock into which such Common Stock is
reclassified or reconstituted and (c) in the case of any reorganization,
reclassification, consolidation,
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merger, or sale of the character referred to in Section 7(e) hereof, the stock
or other securities or property provided for in such Section.
"COMMON STOCK DEEMED OUTSTANDING" shall mean the number of shares of
Common Stock actually outstanding (not including shares of Common Stock held in
the treasury of the Company), plus (x) in case of any adjustment required by
Section 7(a) resulting from the issuance of any Options, the maximum total
number of shares of Common Stock issuable upon the exercise of the Options for
which the adjustment is required (including any Common Stock issuable upon the
conversion of Convertible Securities issuable upon the exercise of such
Options), and (y) in the case of any adjustment required by Section 7(a)
resulting from the issuance of any Convertible Securities, the maximum total
number of shares of Common Stock issuable upon the exercise, conversion or
exchange of the Convertible Securities for which the adjustment is required, as
of the date of issuance of such Convertible Securities, if any.
"CONVERTIBLE SECURITIES" means evidences of indebtedness, shares of
stock or other securities which are directly or indirectly convertible or
exchangeable, with or without payment of additional consideration in cash or
property, for shares of Common Stock, either immediately or upon the onset of a
specified date or the happening of a specified event.
"DISTRIBUTION" has the meaning assigned thereto in Section 7(g).
"ELECTION TO PURCHASE" has the meaning assigned thereto in Section
3(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"EXERCISE AMOUNT" has the meaning assigned thereto in Section 3(a).
"EXERCISE PRICE" has the meaning assigned thereto in Section 2.
"EXPIRATION DATE" means the tenth (10th) anniversary of the date
hereof.
"MARKET PRICE" as of any date, (i) means the average of the daily
closing bid prices for the shares of Common Stock as reported to The Nasdaq
National Market for the trading day immediately preceding such date, or (ii) if
The Nasdaq National Market is not the principal trading market for the Common
Stock, the average of the last reported bid prices on the principal trading
market for the Common Stock during the same period, or, if there is no bid price
for such period, the last reported sales price for such period, or (iii) if
market value cannot be calculated as of such date on any of the foregoing bases,
the Market Price shall be the average fair market value as reasonably determined
by an investment banking firm selected by the Company and reasonably acceptable
to the Holders of a majority in
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interest of the Warrants, with the costs of the appraisal to be borne by the
Company. The manner of determining the Market Price of the Common Stock set
forth in the foregoing definition shall apply with respect to any other security
in respect of which a determination as to market value must be made hereunder.
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.
"PERSON" means any individual, corporation, partnership, firm, group
(as such term is used in Section 13(d)(3) of the Exchange Act), joint venture,
asso ciation, trust, limited liability company, unincorporated organization,
estate, trust or other entity.
"PRINCIPAL OFFICE" means the Company's principal office as set forth in
Section 14 hereof or such other principal office of the Company in the United
States of America the address of which first shall have been set forth in a
notice to the Warrantholder.
"REGULATORY REQUIREMENT" has the meaning assigned thereto in Section
6(c).
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SIGNIFICANT STOCKHOLDER" means any stockholder of the Company that,
together with its Affiliates, beneficially owns more than 50% of the then
outstanding voting securities of the Company.
"SUBSIDIARY" of any Person means any corporation, partnership, joint
venture or other legal entity of which such Person (either directly or through
or together with any other Subsidiary of such Person), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or similar governing body of such corporation, partnership, joint venture or
other legal entity.
"WARRANT SHARES" means (a) the shares of Common Stock issued or
issuable upon exercise of the Warrant in accordance with its terms and (b) all
other shares of the Company's capital stock issued with respect to such shares
by way of stock dividend, stock split or other reclassification or in connection
with any merger, consolidation, recapitalization or other reorganization
affecting the Company's Capital Stock.
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SECTION 2. THE WARRANTS.
Subject to the terms and conditions of this Agreement, the Company
hereby issues and delivers to the Warrantholder a warrant, substantially in the
form of Exhibit A hereto, to purchase 328,084 shares of fully paid and
nonassessable Common Stock at a price per share equal to $19.05 (the "EXERCISE
PRICE").
SECTION 3. EXERCISE.
(a) METHOD OF EXERCISE. From time to time on or before the
Expiration Date, the Warrantholder, in accordance with the terms hereof, may
exercise the Warrant, in whole or in part. The Warrantholder shall effect any
such exercise by delivering the Warrant to the Company during normal business
hours on any Business Day at the Company's Principal Office, together with the
Election to Purchase, substantially in the form of Exhibit B hereto (the
"ELECTION TO PURCHASE"), duly executed, and payment, in accordance with Section
3(b), of the Exercise Price for the number of Warrant Shares (the "EXERCISE
AMOUNT") to be so purchased, as specified in the Election to Purchase. If the
Expiration Date is not a Business Day, then the Warrant may be exercised on the
next succeeding Business Day.
(b) PAYMENT OF EXERCISE PRICE. Payment of the Aggregate
Exercise Price (as defined below) shall be made to the Company in cash or other
immediately available funds or as provided in Sections 3(c) or 3(d), or a
combination thereof, with respect to any exercise of the Warrant. In the case of
payment of all or a portion of the Aggregate Exercise Price pursuant to Sections
3(c) or 3(d), the direction by the Warrantholder to make a Cashless Exercise or
Note Exercise, respectively, shall serve as accompanying payment for such
portion of the Aggregate Exercise Price. The amount to be paid (the "AGGREGATE
EXERCISE PRICE") shall equal the product of (a) the Exercise Amount multiplied
by (b) the Exercise Price.
(c) CASHLESS EXERCISE. The Warrantholder shall have the right,
but no obligation, to pay all or a portion of the Aggregate Exercise Price by
making a cashless exercise pursuant to this Section 3(c) (a "CASHLESS
EXERCISE"), in which case the portion of the Aggregate Exercise Price to be so
paid shall be deemed paid in full by the reduction of the number of Warrant
Shares otherwise issuable pursuant to the Election to Purchase by that number of
Warrant Shares equal to the quotient obtained by dividing (x) the value of the
Warrant at the time of exercise (determined by subtracting (a) the Aggregate
Exercise Price in effect immediately prior to exercise from (b) the aggregate
Market Price immediately prior to exercise) by (y) the Market Price immediately
prior to exercise.
(d) NOTE EXERCISE. The Warrantholder shall have the right, but
no obligation, to pay all or a portion of the Aggregate Exercise Price by making
a note exercise pursuant to this Section 3(d) (a "NOTE EXERCISE"), in which case
the portion of the Aggregate Exercise Price to be so paid shall be deemed paid
in full by reducing the
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principal amount due under the Note by an amount equal to the portion of the
Aggregate Exercise Price to be so paid.
(e) ISSUANCE OF SHARES OF COMMON STOCK. Upon receipt by the
Company of the Warrant at its Principal Office in proper form for exercise, and
accompanied by payment of the Aggregate Exercise Price as aforesaid and, in the
case of any payment pursuant to Section 3(d) above, accompanied by reasonably
satisfactory evidence of such reduced principal amount due under the Note, the
Warrantholder shall be deemed to be the holder of record of the shares of Common
Stock issuable upon such exercise, notwithstanding that certificates
representing such shares of Common Stock may not then be actually delivered.
Upon surrender of the Warrant and payment of the Aggregate Exercise Price as
aforesaid, the Company shall issue and cause to be delivered with all reasonable
dispatch to, or upon the written order of, the Warrantholder (and in such name
or names as the Warrantholder may designate) a certificate or certificates for
the Exercise Amount, subject to any reduction as provided in Section 3(c) for a
Cashless Exercise.
(f) FRACTIONAL SHARES. The Company shall not be required to
deliver fractions of shares of Common Stock upon exercise of the Warrant. If any
fraction of a share of Common Stock would be deliverable upon exercise of the
Warrant, the Company may, in lieu of delivering such fraction of a share of
Common Stock, make a cash payment to the Warrantholder in an amount equal to the
same fraction of the Market Price determined as of the Business Day immediately
preceding the date of exercise of the Warrant.
(g) PARTIAL EXERCISE. In the event of a partial exercise of
the Warrant, the Company shall issue to the Warrantholder a Warrant in like form
for the unexercised portion thereof.
SECTION 4. PAYMENT OF TAXES.
The Company shall pay all stamp taxes attributable to the initial
issuance of shares or other securities issuable upon the exercise of the Warrant
or issuable pursuant to Section 7 hereof, excluding any tax or taxes which may
be payable because of the transfer involved in the issuance or delivery of any
certificates for shares of Common Stock or other securities in a name other than
that of the Warrantholder in respect of which such shares or securities are
issued.
SECTION 5. REPLACEMENT WARRANT.
If the Warrant is mutilated, lost, stolen or destroyed, the Company
shall issue and deliver in exchange and substitution for and upon cancellation
of the mutilated Warrant, or in lieu of and in substitution for the Warrant
lost, stolen or destroyed, a new Warrant of like tenor and representing an
equivalent right or interest, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or
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destruction of such Warrant and upon receipt of indemnity reasonably
satisfactory to the Company.
SECTION 6. RESERVATION OF COMMON STOCK AND OTHER COVENANTS.
(a) RESERVATION OF AUTHORIZED COMMON STOCK. The Company shall
at all times reserve and keep available out of the aggregate of its authorized
but unissued shares, free of preemptive rights, such number of its duly
authorized shares of Common Stock, or other stock or securities deliverable
pursuant to Section 7 hereof, as shall be sufficient to enable the Company at
any time to fulfill all of its obligations under this Agreement and the Warrant.
(b) AFFIRMATIVE ACTIONS TO PERMIT EXERCISE AND REALIZATION OF
BENEFITS. If any shares of Common Stock reserved or to be reserved for the
purpose of exercise of the Warrant, or any shares or other securities reserved
or to be reserved for the purpose of issuance pursuant to Section 7 hereof,
require registration with or approval (other than as a result of a Regulatory
Requirement contemplated by Section 6(c)) of any governmental authority under
any federal or state law (including approvals or expirations of waiting periods
required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act, but excluding
the Securities Act and any state securities or "blue sky" laws) before such
shares or other securities may be validly delivered upon exercise of the
Warrant, then the Company and the Warrantholder shall cooperate with each other
so that each may prepare and file notification and report forms in compliance
with such law and shall otherwise fully comply with the requirements of such
law, to the extent required in connection with the exercise of the Warrant. The
Company shall bear all expenses in connection with the filing of such forms.
(c) REGULATORY REQUIREMENTS AND RESTRICTIONS. In the event of
any reasonable determination by the Warrantholder that, by reason of any
existing or future federal or state law, statute, rule, regulation, guideline,
order, court or administrative ruling, request or directive (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful) (a "REGULATORY REQUIREMENT"), the Warrantholder is effectively
restricted or prohibited from holding the Warrant or the related Warrant Shares
(including any shares of capital stock or other securities distributable to the
Warrantholder in any merger, reorganization, readjustment or other
reclassification), or otherwise realize upon or receive the benefits intended
under the Warrant, the Company shall, and shall use its commercially reasonable
efforts to have its stockholders, take such action as the Warrantholder may deem
reasonably necessary to permit the Warrantholder to comply with such Regulatory
Requirement. The costs of taking such action shall be shared equally by the
Company and the Warrantholder. Such action to be taken may include the Company's
authorization of one or more new classes of capital stock for which the Warrant
may be exercised or the adoption of such modifications and amendments to the
Charter Documents, this Agreement, the Warrant or any other documents and
instruments related to or executed in connection herewith or with the Warrant as
may be deemed reasonably necessary by the Warrantholder. The Warrantholder shall
give written notice to the Company of any such determination and the
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action or actions necessary to comply with such Regulatory Requirement, which
notice and determination shall be conclusive absent manifest error, and the
Company shall take all commercially reasonable steps necessary to comply with
such determination as expeditiously as possible.
(d) VALIDLY ISSUED SHARES. The Company covenants that all
shares of Common Stock or other securities that may be delivered upon exercise
of the Warrant (including those issued pursuant to Section 7 hereof) shall, upon
delivery by the Company, be duly authorized and validly issued, fully paid and
nonassessable, free from all taxes, liens and charges with respect to the issue
or delivery thereof and otherwise free of all other security interests,
encumbrances and claims of any nature whatsoever.
SECTION 7. ANTIDILUTION PROVISIONS. Prior to the Expiration Date or
until the Warrant is fully exercised, the Exercise Price and the number of
Warrant Shares shall be subject to adjustment from time to time as provided in
this Section 7. In the event that any adjustment of the Exercise Price as
required herein results in a fraction of a cent, such Exercise Price shall be
rounded up or down to the nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES UPON
ISSUANCE OF COMMON STOCK. Except as otherwise provided in Section 7(c) and 7(e)
hereof, if and whenever after the initial issuance of this Warrant, the Company
issues or sells, or in accordance with Section 7(b) hereof is deemed to have
issued or sold, any shares of Common Stock for no consideration or for a
consideration per share less than the Market Price on the date of issuance (a
"DILUTIVE ISSUANCE"), then effective immediately upon the Dilutive Issuance, the
Exercise Price will be adjusted in accordance with the following formula:
E' = (E) (O + P/M) / (CSDO)
where:
E' = the adjusted Exercise Price;
E = the then current Exercise Price;
M = the then current Market Price;
O = the number of shares of Common Stock outstanding immediately
prior to the Dilutive Issuance;
P = the aggregate consideration, calculated as set
forth in Section 7(b) hereof, received by the Company
upon such Dilutive Issuance; and
CSDO = the total number of shares of Common Stock Deemed
Outstanding immediately after the Dilutive Issuance.
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes
of determining the adjusted Exercise Price under Section 7(a) hereof, the
following will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in any
manner issues or grants any warrants, rights or options, whether or not
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immediately exercisable, to subscribe for or to purchase Common Stock
or other securities exercisable, convertible into or exchangeable for
Common Stock ("CONVERTIBLE SECURITIES"), but not to include the grant
or exercise of any stock or options which may hereafter be granted or
exercised under any employee or director benefit plan of the Company
now existing or to be implemented in the future, so long as the
issuance of such stock or options is approved by a majority of the
non-employee members of the Board of Directors or a majority of the
members of a committee of non-employee directors established for such
purpose (such warrants, rights and options to purchase Common Stock or
Convertible Securities are hereinafter referred to as "OPTIONS"), and
the price per share for which Common Stock is issuable upon the
exercise of such Options is less than the Market Price on the date of
issuance ("BELOW MARKET OPTIONS"), then the maximum total number of
shares of Common Stock issuable upon the exercise of all such Below
Market Options (assuming full exercise, conversion or exchange of
Convertible Securities, if applicable) will, as of the date of the
issuance or grant of such Below Market Options, be deemed to be
outstanding and to have been issued and sold by the Company for such
price per share. For purposes of the preceding sentence, the price per
share for which Common Stock is issuable upon the exercise of such
Below Market Options is determined by dividing (A) the total amount, if
any, received or receivable by the Company as consideration for the
issuance or granting of such Below Market Options, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of all such Below Market Options, plus, in
the case of Convertible Securities issuable upon the exercise of such
Below Market Options, the minimum aggregate amount of additional
consideration payable upon the exercise, conversion or exchange thereof
at the time such Convertible Securities first become exercisable,
convertible or exchangeable, by (B) the maximum total number of shares
of Common Stock issuable upon the exercise of all such Below Market
Options (assuming full conversion of Convertible Securities, if
applicable). No further adjustment to the Exercise Price will be made
upon the actual issuance of such Common Stock upon the exercise of such
Below Market Options or upon the exercise, conversion or exchange of
Convertible Securities issuable upon exercise of such Below Market
Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES.
(A) If the Company in any manner issues or sells any
Convertible Securities, whether or not immediately convertible
(other than where the same are issuable upon the exercise of
Options) and the price per share for which Common Stock is
issuable upon such exercise, conversion or exchange (as
determined pursuant to Section 7(b)(ii)(B) if applicable) is
less than the Market Price on the date of issuance, then the
maximum total number of shares of Common Stock issuable upon
the exercise, conversion or exchange of all such Convertible
Securities will, as of the date of the issuance of such
Convertible Securities, be deemed to be outstanding and to
have been issued and sold by the Company for such
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price per share. For the purposes of the preceding sentence,
the price per share for which Common Stock is issuable upon
such exercise, conversion or exchange is determined by
dividing (I) the total amount, if any, received or receivable
by the Company as consideration for the issuance or sale of
all such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the
Company upon the exercise, conversion or exchange thereof at
the time such Convertible Securities first become exercisable,
convertible or exchangeable, by (II) the maximum total number
of shares of Common Stock issuable upon the exercise,
conversion or exchange of all such Convertible Securities. No
further adjustment to the Exercise Price will be made upon the
actual issuances of such Common Stock upon exercise,
conversion or exchange of such Convertible Securities.
(B) If the Company in any manner issues or sells any
Convertible Securities with a fluctuating conversion or
exercise price or exchange ratio (a "VARIABLE RATE CONVERTIBLE
SECURITY"), then the price per share for which Common Stock is
issuable upon such exercise, conversion or exchange for
purposes of the calculation contemplated by Section
7(b)(ii)(A) shall be deemed to be the lowest price per share
which would be applicable assuming that (I) all holding period
and other conditions to any discounts contained in such
Convertible Security have been satisfied, and (II) the Market
Price on the date of issuance of such Convertible Security was
80% of the Market Price on such date (the "ASSUMED VARIABLE
MARKET PRICE").
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. Except for
the grant or exercise of any stock or options which may hereafter be
granted or exercised under any employee or director benefit plan of the
Company now existing or to be implemented in the future, so long as the
issuance of such stock or options is approved by a majority of the
non-employee members of the Board of Directors of the Company or a
majority of the members of a committee of non-employee directors
established for such purpose, if there is a change at any time in (A)
the amount of additional consideration payable to the Company upon the
exercise of any Options; (B) the amount of additional consideration, if
any, payable to the Company upon the exercise, conversion or exchange
or any Convertible Securities; or (C) the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock (other
than under or by reason of provisions designed to protect against
dilution), the Exercise Price in effect at the time of such change will
be readjusted to the Exercise Price which would have been in effect at
such time had such Options or Convertible Securities still outstanding
provided for such changed additional consideration or changed
conversion rate, as the case may be, at the time initially granted,
issued or sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. If, in any case, the total number of shares of Common Stock
issuable
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upon exercise of any Options or upon exercise, conversion or exchange
of any Convertible Securities is not, in fact, issued and the rights to
exercise such option or to exercise, convert or exchange such
Convertible Securities shall have expired or terminated, the Exercise
Price then in effect will be readjusted to the Exercise Price which
would have been in effect at the time of such expiration or termination
had such Options or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination (other than in
respect of the actual number of shares of Common Stock issued upon
exercise or conversion thereof), never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Options or Convertible Securities are issued, granted or sold
for cash, the consideration received therefor for purposes of this
Warrant will be the amount received by the Company therefor, before
deduction of reasonable commissions, underwriting discounts or
allowances or other reasonable expenses paid or incurred by the Company
in connection with such issuance, grant or sale. In case any Common
Stock, Options or Convertible Securities are issued or sold for a
consideration part or all of which shall be other than cash, the amount
of the consideration other than cash received by the Company will be
the fair market value of such consideration except where such
consideration consists of freely-tradeable securities, in which case
the amount of consideration received by the Company will be the Market
Price thereof as of the date of receipt. The fair market value of any
consideration other than cash or securities will be determined in the
good faith reasonable business judgment of the Board of Directors.
(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No adjustment
to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities issued and outstanding on
the date hereof in accordance with the terms of such securities as of
such date; (ii) upon the grant or exercise of any stock or options
which may hereafter be granted or exercised under any employee or
director benefit plan of the Company now existing or to be implemented
in the future, so long as the issuance of such stock or options is
approved by a majority of the non-employee members of the Board of
Directors or a majority of the members of a committee of non-employee
directors established for such purpose; or (iii) upon the exercise of
the Warrants.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the
Company, at any time after the initial issuance of this Warrant, subdivides (by
any stock split, stock dividend, recapitalization, reorganization,
reclassification or otherwise) its shares of Common Stock into a greater number
of shares, then, after the date of record for effecting such subdivision, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company, at any time after the initial issuance
of this Warrant, combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) its shares of Common Stock into a
smaller number of shares, then, after the date of record for effecting such
combination, the Exercise Price in effect immediately prior to such combination
will be proportionately increased.
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(d) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Section 7, the number of
shares of Common Stock issuable upon exercise of this Warrant shall be adjusted
by multiplying a number equal to the Exercise Price in effect immediately prior
to such adjustment by the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
(e) MAJOR TRANSACTIONS. If the Company shall consolidate or
merge with any other corporation or entity (other than a merger in which the
Company is the surviving or continuing entity and its capital stock is unchanged
and unissued in such transaction (except for Common Stock constituting less than
twenty percent (20%) of the Company's Common Stock then outstanding)) or any
subsidiary of the Company shall be a party to a merger or consolidation or other
extraordinary transaction and the Company issues twenty percent (20%) or more of
its Common Stock in any such merger, consolidation or other transaction or there
shall occur any share exchange pursuant to which all of the outstanding shares
of Common Stock are converted into other securities or property or any
reclassification or change of the outstanding shares of Common Stock (each of
the foregoing being a "MAJOR TRANSACTION"), then the Warrantholder may
thereafter, at its option, be entitled, at its election, either to (a) in the
event that the Common Stock remains outstanding or holders of Common Stock
receive any common stock or substantially similar equity interest, in each of
the foregoing cases which is publicly traded, retain its Warrant and the Warrant
shall continue to apply to such Common Stock or shall apply, as nearly as
practicable, to such other common stock or equity interest, as the case may be,
or (b) regardless of whether (a) applies, receive consideration, in exchange for
the Warrant, equal to the greater of, as determined in the sole discretion of
the Warrantholder, (i) the number of shares of stock or securities or property
of the Company, or of the entity resulting from such Major Transaction (the
"MAJOR TRANSACTION CONSIDERATION"), to which a holder of the number of shares of
Common Stock delivered upon the exercise of the Warrant would have been entitled
upon such Major Transaction had the Warrantholder exercised the Warrant (without
regard to any limitations on conversion or elsewhere contained) on the trading
date immediately preceding the public announcement of the transaction resulting
in such Major Transaction and had such Common Stock been issued and outstanding
and had the Warrantholder been the holder of record of such Common Stock at the
time of the consummation of such Major Transaction, and (ii) cash paid by the
Company in immediately available funds, in an amount equal to one hundred and
twenty-five percent (125%) of the Black-Scholes Amount times the number of
shares of Common Stock for which this Warrant was exercisable (without regard to
any limitations on exercise herein contained); and the Company shall make lawful
provision for the foregoing as a part of such Major Transaction. No sooner than
ten Business Days nor later than five Business Days prior to the consummation of
the Major Transaction, but not prior to the public announcement of such Major
Transaction, the Company shall deliver written notice ("NOTICE OF MAJOR
TRANSACTION") to the Warrantholder, which Notice of Major Transaction shall be
deemed to have been delivered one Business Day after the Company's sending such
notice by telecopy (provided that the Company sends a confirming copy of such
notice on the same
13
day by overnight courier) of such Notice of Major Transaction. Such Notice of
Major Transaction shall indicate the amount and type of the Major Transaction
Consideration which the Warrantholder would receive under this Section. If the
Major Transaction Consideration does not consist entirely of United States
currency, such holder may elect to receive United States currency in an amount
equal to the value of the Major Transaction Consideration in lieu of the Major
Transaction Consideration by delivering notice of such election to the Company
within five Business Days of such holder's receipt of the Notice of Major
Transaction.
(f) EFFECT OF MERGER. (i) If, pursuant to clause (a) of
Section 7(e), the Warrantholder elects to retain the Warrant with the Warrant
continuing to apply to the Common Stock or applying, as nearly as practicable,
to other common stock or equity interest received by the stockholders of the
Company in connection with the Merger, then (A) Section 7(b)(vi) shall be
amended to include the following clause (iv): "(iv) upon the issuance of Common
Stock or other Capital Stock of the Company as consideration in an acquisition
of or from a third party or in connection with a merger with a third party;
provided that, with respect to clause (iv), such third party is not a controlled
Affiliate of the Company or such transaction (A) has been approved by a special
committee of the Board of Directors comprised solely of independent directors
and such special committee has recommended that the stockholders of the Company
vote in favor thereof and (B) the Company has received from a nationally
recognized investment banking firm a written opinion addressed to such special
committee, for inclusion in the proxy statement to be delivered to the
stockholders, substantially to the effect that such transaction is fair to the
Company or to the Company's stockholders (other than any Significant
Stockholder) from a financial point of view" and (B) Section 7(e) shall be
amended to delete clause (b)(ii) thereof.
(ii) Notwithstanding anything to the contrary contained
herein, if the Warrantholder elects, pursuant to clause (a) of Section 7(e), to
retain the Warrant following the Merger, then the Warrant shall automatically be
amended to become exercisable for a number of shares of Class B Common Stock,
par value $0.01 per share, of Newco equal to the number of shares of Common
Stock for which the Warrant was exercisable immediately prior to the Merger.
(g) DISTRIBUTION OF ASSETS. In case the Company shall declare
or make any distribution of its assets (or rights to acquire its assets) to
holders of Common Stock as a partial liquidating dividend, by way of return of
capital or otherwise (including any dividend or distribution to the Company's
shareholders of cash or shares (or rights to acquire shares) of capital stock of
a subsidiary) (a "Distribution"), at any time after the initial issuance of this
Warrant, then the Warrantholder shall be entitled upon exercise of this Warrant
for the purchase of any or all of the shares of Common Stock subject hereto, to
receive the amount of such assets (or rights) which would have been payable to
the Warrantholder had the Warrantholder been the holder of such shares of Common
Stock on the record date for the determination of shareholders entitled to such
Distribution.
14
(h) NOTICES OF ADJUSTMENT. Upon the occurrence of any event
which requires any adjustment of the Exercise Price, then, and in each such
case, the Company shall give notice thereof to the Warrantholder, which notice
shall state the Exercise Price resulting from such adjustment and the increase
or decrease in the number of Warrant Shares purchasable at such price upon
exercise, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Such calculation shall be certified
by the chief financial officer of the Company.
(i) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
(j) NO FRACTIONAL SHARES. No fractional shares of Common Stock
are to be issued upon the exercise of this Warrant, but the Company shall pay a
cash adjustment in respect of any fractional share which would otherwise be
issuable in an amount equal to the same fraction of the Market Price of a share
of Common Stock; PROVIDED that in the event that sufficient funds are not
legally available for the payment of such cash adjustment any fractional shares
of Common Stock shall be rounded up to the next whole number.
(k) OTHER NOTICES. In case at any time:
(i) the Company shall declare any dividend upon the Common
Stock payable in shares of stock of any class or make any other
distribution to the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any class
or other rights;
(iii) there shall be any capital reorganization of the
Company, or reclassification of the Common Stock, or consolidation or
merger of the Company with or into, or sale of all or substantially all
of its assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the Warrantholder (a) notice
of the date on which the books of the Company shall close or a record shall be
taken for determining the holders of Common Stock entitled to receive any such
dividend, distribution, or subscription rights or for determining the holders of
Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation,
15
merger, sale, dissolution, liquidation or winding-up and (b) in the case of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, notice of the date (or, if not then known, a
reasonable approximation thereof by the Company) when the same shall take place.
Such notice shall also specify the date on which the holders of Common Stock
shall be entitled to receive such dividend, distribution, or subscription rights
or to exchange their Common Stock for stock or other securities or property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, or winding-up, as the case may be. Such notice
shall be given at least 30 days prior to the record date or the date on which
the Company's books are closed in respect thereto, but in no event earlier than
public announcement of such proposed transaction or event. Failure to give any
such notice or any defect therein shall not affect the validity of the
proceedings referred to in clauses (i), (ii), (iii) and (iv) above.
SECTION 8. NO DILUTION OR IMPAIRMENT.
The Company will not, by amendment of its Charter Documents or through
any reorganization, recapitalization, transfer of assets, consolidation, merger,
share exchange, dissolution or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of the Warrant,
including the adjustments required under Section 7 hereof, and will at all times
in good faith assist in the carrying out of all such terms and in taking of all
such action as may be necessary or appropriate to protect the rights of the
Warrantholder against dilution or other impairment. Without limiting the
generality of the foregoing and notwithstanding any other provision of the
Warrant to the contrary (including by way of implication), the Company (a) will
not increase the par value of any shares of Common Stock receivable on the
exercise of the Warrant above the amount payable therefor on such exercise and
(b) will take all such corporate action as may be necessary or appropriate so
that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock on the exercise of the Warrant.
SECTION 9. TRANSFERS OF THE WARRANT.
(a) TRANSFER AND EXCHANGES. The Company shall initially record
the Warrant on a register to be maintained by the Company with its other stock
books and, subject to Section 9(b) hereof, from time to time thereafter shall
record a transfer of the Warrant on such register when the Warrant is: (i)
surrendered for transfer in accordance with the terms hereof, (ii) properly
endorsed and accompanied by appropriate instructions, and (iii) accompanied by
payment in cash or by check, bank draft or money order payable to the order of
the Company, in United States currency, of an amount equal to any stamp or other
tax or governmental charge or fee required to be paid in connection with the
transfer thereof. Upon any such transfer, a new Warrant or Warrants shall be
issued to the transferee and the Warrantholder (in the event that the Warrant is
only partially transferred) and the surrendered Warrant shall be canceled. Each
such transferee shall succeed to all of the rights of the transferring
Warrantholder under this Agreement or in the event that the Warrant is only
partially transferred, the transferring Warrantholder and such transferee shall,
simultaneously, hold rights hereunder in proportion to their
16
respective percentage interests of the original Warrant. The Warrant may be
exchanged at the option of the Warrantholder, when surrendered at the Principal
Office of the Company, for another Warrant or other Warrants of like tenor and
representing in the aggregate the right to purchase a like number of shares of
Common Stock, subject to adjustment as more fully set forth herein.
(b) TRANSFERS SUBJECT TO SECURITIES LAWS. Subject to the
restrictions set forth in this Section 9, the Warrantholder may at any time and
from time to time freely transfer the Warrant and the Warrant Shares in whole or
in part. The Warrant has not been, and the Warrant Shares at the time of their
issuance may not be, registered under the Securities Act, and nothing herein
contained shall be deemed to require the Company to so register the Warrant or
Warrant Shares. The Warrant and the Warrant Shares are issued or issuable
subject to the provisions and conditions contained herein and the Warrantholder
by accepting the Warrant agrees with the Company to such provisions and
conditions, and represents to the Company that the Warrant has been acquired and
the Warrant Shares will be acquired for the account of the Warrantholder for
investment and not with a view to or for sale in connection with any
distribution thereof.
(c) TRANSFERS TO NON-AFFILIATES. Notwithstanding the
foregoing, upon any transfer of this Warrant to a transferee that is not an
Affiliate of the Warrantholder, this Warrant shall automatically be amended to
(i) provide that such transferee shall not be entitled to pay the Aggregate
Exercise Price by a Note Exercise pursuant to Section 3(d), (ii) delete Section
7(f)(ii), if the Warrant is exercisable for shares of Common Stock of the
Company at the time of such transfer and (iii) become exercisable for shares of
Class A Common Stock, par value $0.01 per share, of Newco, if the Warrant has
become exercisable for shares of Class B Common Stock, par value $0.01 per
share, of Newco pursuant to Section 4(f)(ii).
SECTION 10. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS. In the event that the
Warrantholder shall desire to sell any of the Warrant Shares, and such sale
requires, in the opinion of counsel to the Warrantholder, which opinion shall be
reasonably satisfactory to the Company and its counsel, registration of such
Warrant Shares under the Securities Act, the Company will cooperate with the
Underwriter and any underwriters in registering such Warrant Shares for resale,
including promptly filing a registration statement which complies with the
requirements of applicable federal and state securities laws, and entering into
an underwriting agreement with such underwriters upon such terms and conditions
as are customarily contained in underwriting agreements with respect to
secondary distributions; PROVIDED that the Company shall not be required to have
declared effective more than two registration statements hereunder and shall be
entitled to delay the filing or effectiveness of any registration statement for
up to 90 days if the offering would, in the judgment of the Board of Directors
of the Company, require premature disclosure of any material corporate
development or material transaction involving the Company or interfere with any
previously planned securities offering by the Company.
17
(b) MAINTENANCE OF REGISTRATION STATEMENT; INDEMNIFICATION OF
WARRANTHOLDER. If the Warrant Shares are registered pursuant to the provisions
of this Section 10, the Company agrees (i) to furnish copies of the registration
statement and the prospectus relating to the Warrant Shares covered thereby in
such numbers as the Warrantholder may from time to time reasonably request and
(ii) if any event shall occur as a result of which it becomes necessary to amend
or supplement any registration statement or prospectus, to prepare and file
under the applicable securities laws such amendments and supplements as may be
necessary to keep available for at least 90 days a prospectus covering the
Warrant Shares meeting the requirements of such securities laws, and to furnish
the Warrantholder such numbers of copies of the registration statement and
prospectus, as amended or supplemented, as may reasonably be requested. The
Company shall bear the cost of the registration, including all registration and
filing fees, printing expenses, and fees and disbursements of counsel and
accountants for the Company, except that the Warrantholder shall pay the fees
and disbursements of its counsel, and the underwriting fees and selling
commissions applicable to the shares of Common Stock sold by the Warrantholder.
The Company shall indemnify and hold harmless (x) the Warrantholder, its
affiliates and its officers and directors and each person who controls the
Warrantholder within the meaning of the Securities Act or Exchange Act and (y)
each underwriter and each person who controls any underwriter within the meaning
of the Securities Act or the Exchange Act (collectively, the "UNDERWRITERS")
((x) and (y) being referred to as "INDEMNIFIED PARTIES") against any losses,
claims, damages, liabilities or expenses, to which the Indemnified Parties may
become subject, insofar as such losses, claims, damages, liabilities (or actions
in respect thereof) and expenses arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained or
incorporated by reference in any registration statement or prospectus filed
pursuant to this paragraph, or arise out of or are 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 not misleading; PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent that any such
loss, liability, claim, damage or expense arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or alleged omission
from any such documents in reliance upon and in conformity with written
information furnished to the Company by the Indemnified Parties expressly for
use or incorporation by reference therein.
(c) INDEMNIFICATION OF THE COMPANY. The Warrantholder and the
Underwriters shall indemnify and hold harmless the Company, its affiliates and
its officers and directors and each person who controls the Company within the
meaning of the Securities Act or Exchange Act against any losses, claims,
damages, liabilities or expenses to which the Company, its affiliates and its
officers and directors may become subject, insofar as such losses, claims,
damages, liabilities (or actions in respect thereof) and expenses arise out of
or are based upon any untrue statement of any material fact contained or
incorporated by reference in any registration statement filed pursuant to this
paragraph, or arise out of or are 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 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 reliance
18
upon and in conformity with written information furnished to the Company by the
Warrantholder or the Underwriters, as applicable, specifically for use or
incorporation by reference therein.
SECTION 11. SURVIVAL OF PROVISIONS.
The provisions of this Agreement and the Warrant shall survive until
the earlier of (a) the full exercise by of the Warrant or (b) the Expiration
Date.
SECTION 12. DELAYS, OMISSIONS AND INDULGENCES.
No delay or omission to exercise any right, power or remedy accruing to
the Warrantholder upon any breach or default of the Company hereunder or under
the Warrant shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach or default, or any acquiescence
therein, or of or in any similar breach or default thereafter occurring, nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the Warrantholder's part of any
breach or default hereunder or under the Warrant, or any waiver on the
Warrantholder's part of any provisions or conditions hereof or of the Warrant
must be in writing and that all remedies, either hereunder, under the Warrant or
by law or otherwise afforded to the Warrantholder, shall be cumulative and not
alternative.
SECTION 13. RIGHTS OF TRANSFEREES.
Subject to Section 9(c), the rights granted to the Warrantholder
hereunder and under the Warrant shall pass to and inure to the benefit of all
subsequent transferees of all or any portion of the Warrant until extinguished
pursuant to the terms hereof; PROVIDED that the Warrantholder and any transferee
shall hold such rights in proportion to their respective ownership of the
Warrant and Warrant Shares.
SECTION 14. CAPTIONS.
The titles and captions of the Sections and other provisions hereof are
for convenience of reference only and are not to be considered in construing
this Agreement.
SECTION 15. NOTICES.
All notices, demands and other communications provided for or permitted
hereunder shall be made in writing and shall be by registered or certified
first-class mail, return receipt requested, telecopy, overnight courier service
or personal delivery:
19
(a) if to the Company:
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Warrantholder:
USA Networks, Inc.
Carnegie Hall Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied.
SECTION 16. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, provided that the
Company shall have no right to assign its rights, or to delegate its
obligations, hereunder without the prior written consent of the Warrantholder.
SECTION 17. SEVERABILITY.
If any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
SECTION 18. GOVERNING LAW.
THIS AGREEMENT AND THE WARRANT IS TO BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
20
SECTION 19. JURISDICTION. Each party to this Agreement hereby
irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement or any agreements or transactions contemplated hereby
shall be brought in the courts of the State of New York and hereby expressly
submits to the personal jurisdiction and venue of such courts for the purposes
thereof and expressly waives any claim of improper venue and any claim that such
courts are an inconvenient forum.
SECTION 20. ENTIRE AGREEMENT; AMENDMENT.
This Agreement, the Warrant, the Merger Agreement, the Credit Agreement
and the other agreements and documents referenced in the Merger Agreement and
the Credit Agreement are intended by the parties as a final expression of their
agreement and are intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement or of the Warrant may be amended
or modified only by an instrument in writing signed by the Company and the
Warrantholder.
SECTION 21. RULES OF CONSTRUCTION.
Unless the context otherwise requires "or" is not exclusive, and
references to sections or subsections refer to sections or subsections of this
Agreement. All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
* * *
21
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
duly executed as of the date first above written.
▇▇▇▇▇▇▇▇▇▇.▇▇▇ INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Chief Financial Officer
USA NETWORKS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Title:
22
EXHIBIT A
FORM OF WARRANT
---------------
THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES THAT MAY BE PURCHASED
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE
SECURITIES LAWS OF ANY STATE. THIS COMMON STOCK PURCHASE WARRANT HAS BEEN
ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION, AND THIS
COMMON STOCK PURCHASE WARRANT AND THE SHARES THAT MAY BE PURCHASED HEREUNDER MAY
NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AND REGISTRATION OR QUALIFICATION
UNDER APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL THAT THE
PROPOSED TRANSACTION DOES NOT VIOLATE THE SECURITIES ACT OF 1933, AND APPLICABLE
STATE SECURITIES LAWS.
THIS WARRANT IS SUBJECT TO THE TERMS OF A WARRANT AGREEMENT, DATED AS OF JANUARY
24, 2000, BETWEEN ▇▇▇▇▇▇▇▇▇▇.▇▇▇ INC. AND USA NETWORKS, INC.
▇▇▇▇▇▇▇▇▇▇.▇▇▇ INC.
COMMON STOCK PURCHASE WARRANT
NUMBER _____
THIS IS TO CERTIFY that USA Networks, Inc., a Delaware corporation, and
its transferees, successors and assigns (the "WARRANTHOLDER"), for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, is entitled to purchase from ▇▇▇▇▇▇▇▇▇▇.▇▇▇ Inc., a California
corporation (the "COMPANY"), at a price per share equal to the Exercise Price,
328,084 shares of fully paid and nonassessable Common Stock of the Company,
subject to the terms and conditions of the Warrant Agreement, dated as of
January 24, 2000, between the Company and the Warrantholder (as amended or
otherwise modified, the "WARRANT AGREEMENT"). The number of shares of Common
Stock subject to this Warrant is subject to adjustment or reduction as set forth
in Section 7 of the Warrant Agreement. Capitalized terms used herein shall have
the meanings ascribed to such terms in the Warrant Agreement.
23
Payment of the Exercise Price may be made as set forth in Section 3 of
the Warrant Agreement.
If this Warrant is not exercised on or before 5:00 p.m., Pacific
Standard time on the Expiration Date, this Warrant shall become void and all
rights hereunder shall cease as of such time, except as provided in the Warrant
Agreement.
This Warrant is issued pursuant to the Warrant Agreement and is subject
to, and entitled to the benefits of, all of the terms, provisions and conditions
of the Warrant Agreement, which Warrant Agreement is hereby incorporated by
reference herein and made a part hereof. The Warrant Agreement sets forth a full
description of the rights, limitations of rights, obligations, duties and
immunities of the Company and the Warrantholder with respect to this Warrant.
Copies of the Warrant Agreement are on file at the Principal Office of the
Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name by its duly authorized officer, as of the 24th day of January, 2000.
▇▇▇▇▇▇▇▇▇▇.▇▇▇ INC.
By:
-------------------------------------
Name:
Title:
24
EXHIBIT B
FORM OF NOTICE OF EXERCISE
________________ __, ____
To: [______________]
[______________]
[______________]
[______________]
Attention: [______________]
Telecopy: [______________]SS
1. The undersigned, pursuant to the provisions of the attached Warrant,
hereby elects to exercise such Warrant with respect to ________ shares of Common
Stock (the "EXERCISE AMOUNT"). Capitalized terms used but not otherwise defined
herein have the meanings ascribed thereto in the attached Warrant.
2. The undersigned herewith tenders payment for such shares in the
following manner (please check type, or types, of payment and indicate the
portion of the Exercise Price to be paid by each type of payment):
____ Exercise for Cash
____ Cashless Exercise
____ Note Exercise
3. Please issue a certificate or certificates representing the shares
issuable in respect hereof under the terms of the attached Warrant, as follows:
(Name of Record Warrantholder/Transferee)
and deliver such certificate or certificates to the following address:
(Address of Record Warrantholder/Transferee)
4. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
25
5. If the Exercise Amount is less than all of the shares of Common
Stock purchasable hereunder, please issue a new warrant representing the
remaining balance of such shares, as follows:
(Name of Record Warrantholder/Transferee)
and deliver such warrant to the following address:
(Address of Record Warrantholder/Transferee)
In witness whereof, the undersigned Warrantholder has caused this
Notice of Exercise to be executed as of this _____ day of __________, ______.
(Name of Warrantholder)
By:
----------------------------------------
Name:
Title:
