<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 26, 1998
REGISTRATION NO. 333-57437
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO.1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CITYSEARCH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 7375 95-4546874
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR ----------------
ORGANIZATION)
CITYSEARCH, INC.
790 E. COLORADO BOULEVARD, SUITE 200
PASADENA, CA 91101
(626) 405-0050
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
CHARLES CONN
CHIEF EXECUTIVE OFFICER
CITYSEARCH, INC.
790 E. COLORADO BOULEVARD, SUITE 200
PASADENA, CA 91101
(626) 405-0050
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
COPIES TO:
LARRY W. SONSINI GLEN R. VAN LIGTEN
JOHN T. SHERIDAN CRAIG E. SHERMAN
NAN H. KIM ADAM J. ROSENBERG
WILSON SONSINI GOODRICH & ROSATI VENTURE LAW GROUP
PROFESSIONAL CORPORATION A PROFESSIONAL CORPORATION
650 PAGE MILL ROAD 2800 SAND HILL ROAD
PALO ALTO, CA 94304 MENLO PARK, CA 94025
(650) 493-9300 (650) 854-4488
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
----------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH PROPOSED MAXIMUM AGGREGATE AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(1)(2) FEE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value................. $ $50,000,000 $14,750(3)
</TABLE>
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- -------------------------------------------------------------------------------
(1)Includes shares that the Underwriters have the option to purchase to cover
over-allotments, if any.
(2)Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(a) promulgated under the Securities
Act of 1933, as amended.
(3) Previously paid in connection with the Registration Statement filed on
June 22, 1998.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts, commissions and certain accountable expenses, payable
by the Company in connection with the sale of Common Stock being registered.
All amounts are estimates except the SEC registration fee and the NASD filing
fee.
<TABLE>
<S> <C>
SEC Registration Fee................................................ $14,750
NASD Filing Fee..................................................... 5,500
Nasdaq Listing Fee..................................................
Printing Fees and Expenses..........................................
Legal Fees and Expenses.............................................
Accounting Fees and Expenses........................................
Blue Sky Fees and Expenses..........................................
Transfer Agent and Registrar Fees...................................
Miscellaneous.......................................................
-------
Total............................................................. $
=======
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a corporation to
include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
The Registrant's Restated Certificate of Incorporation provides for the
indemnification of directors to the fullest extent permissible under Delaware
law.
The Registrant's Bylaws provide for the indemnification of officers,
directors and third parties acting on behalf of the Registrant if such person
acted in good faith and in a manner reasonably believed to be in and not
opposed to the best interest of the Registrant, and, with respect to any
criminal action or proceeding, the indemnified party had no reason to believe
his conduct was unlawful.
The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for
in the Registrant's Bylaws, and intends to enter into indemnification
agreements with any new directors and executive officers in the future.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since inception of Registrant (September 20, 1995), the Registrant has
issued and sold the following unregistered securities:
(1) From September 20, 1995 to June 1, 1998, Registrant granted options
to purchase 4,614,011 shares of Common Stock pursuant to its 1996 Stock
Option Plan at exercise prices ranging from $.10 to $5.50.
(2) From September 20, 1995 to June 1, 1998, Registrant issued and sold
an aggregate of 1,233,160 shares of Common Stock to its employees,
directors and consultants upon exercise of stock options granted pursuant
to its 1996 Stock Option Plan at exercise prices ranging from $.10 to $3.00
for an aggregate consideration of $220,990.70.
(3) In September 1995; at Registrant formation, Registrant issued and
sold 6,622,857 shares of Common Stock to William Gross for an aggregate
cash consideration of $5,000 and for services provided to the Company.
II-1
<PAGE>
(4) In October 1995, Registrant issued and sold an aggregate of 4,233,500
shares of its Common Stock for an aggregate cash consideration of $84,670.
These shares were issued to the following key founding employees: Charles
Conn, III; Thomas Layton; Jeffrey Brewer; Kristen Ding; Caskey Dickson;
David Holtz; Tamar Halpern; Brad Haugaard; Taylor Wescoatt; Linda Gross;
Karen DeDea; Lee Husiuk and Michael Radford.
(5) From November 1995 to December 1995, Registrant issued and sold an
aggregate 1,791,173 shares of Series A Preferred Stock for an aggregate
cash consideration of approximately $1.6 million. Shares of Series A
Preferred Stock were issued to the following: David M. Balkin; Robert
McLean; Morris Ventures; Robert W. Shaw, Jr.; Philip E. Berney; WS
Investment Company 95B; William N. Melton; Stuart Cohen; Robert Kavner;
Edwin C. Cohen; Peter R. Bleyleben; Steven Spielberg; Gerald Breslauer;
Barry S. Volpert; Pando Associates, Ltd.; John Wylie; Jeffrey Glynn and
Victoria Jo Edwards, Co-Trustees of the Edwards Family Trust of 1995;
Charles R. Conn, II; Taylor Wescoatt; North American Trust Co., TTEE FBO
L&W Dickson #410280.
(6) In June 1996, Registrant issued an aggregate 157,074 shares of Series
B Preferred Stock at $3.4665 per share as part consideration for the
acquisition of MetroBeat, Inc. Such shares were issued to the following
shareholders of MetroBeat, Inc.: Mark Davies and Joshua White.
(7) From May 1996 to July 1996, Registrant issued and sold an aggregate
3,261,024 shares of Series C Preferred Stock for an aggregate cash
consideration of approximately $11.3 million. Shares of Series C Preferred
Stock were issued to the following: GS Capital Partners II, L.P; GS Capital
Partners II Offshore, L.P.; Goldman, Sachs & Co. Verwaltungs GmbH; The
Goldman Sachs Group, L.P.; AT&T Venture Fund I, L.P.; AT&T Venture Fund II,
L.P.; Steven Spielberg; Edwin C. Cohen; Pamela C. Alexander; Barry S.
Volpert; Alexander Communications, Inc.; Jeffrey G. Edwards; IRA MSTC
Custodian; Morris Ventures; Byters; David White; Robert W. Shaw, Jr.;
Charles R. Conn, II; The Pacific Bank, N.A., Trustee E. Keith Thomson IRA;
Michael Barton; Eric Higgs; Mark Lewyn; Emily Martin; Douglas M. McPherson;
Ted Meisel.
(8) From December 1996 to October 1997, Registrant issued and sold an
aggregate 4,430,313 shares of Series D Preferred Stock for an aggregate
cash consideration of approximately $28.0 million and for services provided
to the Company. Such shares of Series D Preferred Stock were issued to the
following: GS Capital Partners II, L.P.; GS Capital Partners II Offshore,
L.P.; Goldman, Sachs & Co. Verwaltungs GmbH; Stone Street Fund 1996, L.P.;
Bridge Street Fund 1996, L.P.; Edwin C. Cohen; EnCompass Group, Inc.;
Michael Barton; Mark Lewyn; Brian A. Goler; Emily Bloomfield; Bradley
Ramberg; Lamar Rutherford; Kristen Brown; James R. McGovern; AnneMarie
Weibel; Debra J. Wilkens; Francesca Colloredo-Mansfeld; Kathryn Takach;
Byters; Comcast CitySearch, Inc.; Far West Capital Partners, L.P.; Robert
McLean; Morris Ventures; Steven Spielberg; David White; CPQ Holdings, Inc.;
Intel Corporation; Bayview Investors, Ltd.; Toronto Star Newspapers
Limited; AT&T Venture Fund I, L.P.; AT&T Venture Fund II, L.P.; Bill Gross'
idealab!; Alexander Communications, Inc.; The Times Mirror Company; Paul S.
Larsen; ServiceMaster Venture Fund L.L.C.; Digital Ink Company and
Korn/Ferry International.
(9) In June 1997, Registrant issued an aggregate 68,274 shares of Series
B Preferred Stock at $6.5251 per share as additional consideration for the
acquisition of Metro Beat, Inc. Such shares were issued to the following
shareholders of MetroBeat, Inc.: Mark Davies and Joshua White.
(10) In November 1997, Registrant issued and sold an aggregate 4,714,286
shares of Series E Preferred Stock for an aggregate cash consideration of
approximately $33.0 million. Such shares of Series E Preferred Stock were
issued to the following: USA Networks, Inc.; Comcast CitySearch, Inc.; Far
West Capital Partners, LP; Intel Corporation; Endurance Fund; Gary Lauder;
The Thomas and Janet Unterman Living Trust dated 12/30/94; East Peak
Partners; Margaret L. Taylor; David A. Duffield Trust dated 7/14/88; Orchid
& Co.; Digital Ink Company; Global Retail Partners, L.P.; DLJ Diversified
Partners, L.P.; GRP Partners, L.P.; Global Retail Partners Funding, Inc.;
DLJ First ESC L.P. and Schibsted ASA.
II-2
<PAGE>
NationsBanc Montgomery Securities LLC ("NationsBanc") acted as placement
agent. As consideration for such services, Registrant paid NationsBanc
$1,546,182 in cash and issued a warrant to purchase 94,286 shares of Series
E Preferred Stock, which terms and conditions are described in item (11)
below.
(11) In November 1997, as part consideration for services provided as
placement agent, Registrant issued to NationsBanc a warrant to purchase
94,286 shares of Series E Preferred Stock. The warrant is exercisable at
any time at an exercise price equal to $8.75 per share and any unexercised
portion of the warrant is automatically convertible immediately prior to
the closing of this offering.
(12) In May 1998, Registrant issued an sold an aggregate 1,000,000 shares
of Series E Preferred Stock for an aggregate cash consideration of
approximately $7.0 million. Such shares of Series E Preferred Stock were
issued to the following: USA Networks, Inc. and American Express Travel
Related Services, Inc.
The sales of the securities described in Items 15(1) and 15(2) were deemed
to be exempt from registration under the Securities Act in reliance on Rule
701 promulgated under Section 3(b) of the Securities Act as transactions
pursuant to compensatory benefit plans and contracts relating to compensation
as provided under such Rule 701. The sale of the securities described in Items
15(3) through 15(12) were deemed to be exempt from registration under the
Securities Act in reliance on Section 4(2) of the Securities Act, or
Regulation D promulgated thereunder, as transactions by an issuer not
involving a public offering. The recipients of securities in each such
transaction represented their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends were affixed to the share
certificates and other instruments issued in such transactions. All recipients
either receive adequate information about the Registrant or had access,
through employment or other relationships, to such information.
II-3
<PAGE>
ITEM 16. EXHIBITS
(a) Exhibits
<TABLE>
<C> <S>
1.1** Form of Underwriting Agreement.
2.1 +Agreement and Plan of Reorganization, among Registrant, MS
Acquisition Corporation, MetroBeat, Inc., Mark Davies and Joshua
White, dated May 31, 1996.
3.1** Restated Certificate of Incorporation, as currently in effect.
3.2* Restated Certificate of Incorporation, to be filed prior to the
consummation of the offering.
3.3* Restated Certificate of Incorporation, to be filed immediately
following the consummation of the offering.
3.4 Bylaws, as currently in effect.
3.5** Restated Bylaws, to be effective upon the closing of the offering.
4.1* Specimen Common Stock Certificate.
4.2** Sixth Amended and Restated Stockholders' Agreement by and among
Registrant and certain stockholders of the Registrant, dated May 26,
1998.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
as to the legality of the securities being registered.
10.1** Form of Indemnification Agreement for directors and officers.
10.2* 1996 Stock Plan and form of agreement thereunder.
10.3* 1998 Employee Stock Purchase Plan.
10.4* 1998 Director Option Plan.
10.5 +License Agreement between Registrant and Perly, Inc., dated March 9,
1996.
10.6 +Marketing Agreement between Registrant and American Express Travel
Related Services Company, Inc., dated May 26, 1998.
10.7** Employment Agreement between Registrant and Charles Conn, dated May 9,
1996.
10.8 +Partnership Agreement between Metroland Printing, Publishing &
Distributing Ltd. 1217554 Ontario Inc., Registrant and Torstar
Corporation, dated February 17, 1997.
10.9 +License and Services Agreement between Registrant and 1217554 Ontario
Inc., dated February 17, 1997.
10.10 +Noncompetition Agreement between Registrant, 1217554 Ontario Inc.,
Torstar Corporation and Metroland Printing, Publishing & Distributing
Ltd., dated February 17, 1997.
10.11 +Assignment Agreement between Registrant, 1217554 Ontario Inc., and
Toronto Star CitySearch, dated February 17, 1997.
10.12* Lease Agreement by and between Registrant and West End Land
Development Co., L.P., dated November 7, 1996.
10.13* Standard Form of Lease, Aeriel Center Executive Park, between
Pizzagalli Investment Company and Registrant, dated May 8, 1996.
10.14* Standard Office Lease between Registrant and Sage Realty Corporation,
dated May 6, 1997.
10.15* Standard Office Lease between Registrant and H. Naito Corporation,
dated March 6, 1997.
10.16* Standard Office Lease between Registrant and Brazos Austin Centre,
Ltd., dated August 15, 1996.
10.17* Standard Office Lease between Registrant and Judge Building Group,
dated September 10, 1996.
10.18* Standard Office Lease between Registrant and Sobel Building
Development, dated May 31, 1996.
10.19* Standard Office Lease between Registrant and BPG Pasadena, L.L.C.
(later assigned to Spieker Properties), dated September 30, 1996.
10.20 Lease Agreement between Registrant and Secured Properties Investors
II, L.P., dated May 13, 1998.
10.21** Amended and Restated Voting Agreement by and among Registrant and
certain stockholders of Registrant, dated November 12, 1997.
10.22 Employment Agreement between Registrant and Thomas Layton, dated July
2,1997.
21.1** Subsidiaries of the Registrant.
23.1** Consent of Independent Auditors.
23.2* Consent of Counsel (included in Exhibit 5.1).
24.1** Power of Attorney.
27.1** Financial Data Schedule (available in EDGAR format only).
</TABLE>
(b) Schedules
Schedule II--Valuation and Qualifying Accounts
- --------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment requested.
II-4
<PAGE>
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes to provide the Underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the provisions described in Item 14 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer, or controlling person of the Registrant in the successful defense of
any action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933, and will be governed by the
final adjudication of such issue.
The undersigned Registrant undertakes that: (1) for purposes of determining
any liability under the Securities Act of 1933, the information omitted from
the form of prospectus as filed as part of the registration statement in
reliance upon Rule 430A and contained in the form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as of the time
it was declared effective, and (2) for the purpose of determining any
liability under the Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT ON
FORM S-1 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF PASADENA, STATE OF CALIFORNIA, ON THE 26 DAY OF
JUNE, 1998.
CITYSEARCH, INC.
/s/ Charles Conn
By___________________________________
CHARLES CONN CHIEF EXECUTIVE
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED
SIGNATURE TITLE DATE
/s/ Charles Conn Chief Executive June 26, 1998
- ------------------------------------- Officer and
CHARLES CONN Director (Principal
Executive Officer)
/s/ Bradley Ramberg Chief Financial June 26, 1998
- ------------------------------------- Officer and Vice
BRADLEY RAMBERG President, Finance
and Administration
and Secretary
(Principal
Financial Officer
and Principal
Accounting Officer)
* President, Chief June 26, 1998
- ------------------------------------- Operating Officer,
THOMAS LAYTON Treasurer and
Director
II-6
<PAGE>
SIGNATURE TITLE DATE
* Director June 26, 1998
- -------------------------------------
GERALD BRESLAUER
Director
- -------------------------------------
BARRY DILLER
* Director June 26, 1998
- -------------------------------------
JOSEPH GLEBERMAN
* Director June 26, 1998
- -------------------------------------
WILLIAM GROSS
* Director June 26, 1998
- -------------------------------------
ROBERT KAVNER
Director
- -------------------------------------
ALAN SPOON
* Director June 26, 1998
- -------------------------------------
YVES SISTERON
* Director June 26, 1998
- -------------------------------------
THOMAS UNTERMAN
/s/ Charles Conn
By: _________________________________
CHARLES CONN
ATTORNEY-IN-FACT
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
1.1** Form of Underwriting Agreement.
2.1 +Agreement and Plan of Reorganization, among Registrant, MS
Acquisition Corporation, MetroBeat, Inc., Mark Davies and Joshua
White, dated May 31, 1996.
3.1** Restated Certificate of Incorporation, as currently in effect.
3.2* Restated Certificate of Incorporation, to be filed prior to the
consummation of the offering.
3.3* Restated Certificate of Incorporation, to be filed immediately
following the consummation of the offering.
3.4 Bylaws, as currently in effect.
3.5** Restated Bylaws, to be effective upon the closing of the offering.
4.1* Specimen Common Stock Certificate.
4.2** Sixth Amended and Restated Stockholders' Agreement by and among
Registrant and certain stockholders of the Registrant, dated May
26, 1998.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, as to the legality of the securities being
registered.
10.1** Form of Indemnification Agreement for directors and officers.
10.2* 1996 Stock Plan and form of agreement thereunder.
10.3* 1998 Employee Stock Purchase Plan.
10.4* 1998 Director Option Plan.
10.5 +License Agreement between Registrant and Perly, Inc., dated March
9, 1996.
10.6 +Marketing Agreement between Registrant and American Express
Travel Related Services Company, Inc., dated May 26, 1998.
10.7** Employment Agreement between Registrant and Charles Conn, dated
May 9, 1996.
10.8 +Partnership Agreement between Metroland Printing, Publishing &
Distributing Ltd. 1217554 Ontario Inc., Registrant and Torstar
Corporation, dated February 17, 1997.
10.9 +License and Services Agreement between Registrant and 1217554
Ontario Inc., dated February 17, 1997.
10.10 +Noncompetition Agreement between Registrant, 1217554 Ontario
Inc., Torstar Corporation and Metroland Printing, Publishing &
Distributing Ltd., dated February 17, 1997.
10.11 +Assignment Agreement between Registrant, 1217554 Ontario Inc.,
and Toronto Star CitySearch, dated February 17, 1997.
10.12* Lease Agreement by and between Registrant and West End Land
Development Co., L.P., dated November 7, 1996.
10.13* Standard Form of Lease, Aeriel Center Executive Park, between
Pizzagalli Investment Company and Registrant, dated May 8, 1996.
10.14* Standard Office Lease between Registrant and Sage Realty
Corporation, dated May 6, 1997.
10.15* Standard Office Lease between Registrant and H. Naito Corporation,
dated March 6, 1997.
10.16* Standard Office Lease between Registrant and Brazos Austin Centre,
Ltd., dated August 15, 1996.
10.17* Standard Office Lease between Registrant and Judge Building Group,
dated September 10, 1996.
10.18* Standard Office Lease between Registrant and Sobel Building
Development, dated May 31, 1996.
10.19* Standard Office Lease between Registrant and BPG Pasadena, L.L.C.
(later assigned to Spieker Properties), dated September 30, 1996.
10.20 Lease Agreement between Registrant and Secured Properties
Investors II, L.P., dated May 13, 1998.
10.21** Amended and Restated Voting Agreement by and among Registrant and
certain stockholders of Registrant, dated November 12, 1997.
10.22 Employment Agreement between Registrant and Thomas Layton, dated
July 2,1997.
21.1** Subsidiaries of the Registrant.
23.1** Consent of Independent Auditors.
23.2* Consent of Counsel (included in Exhibit 5.1).
24.1** Power of Attorney.
27.1** Financial Data Schedule (available in EDGAR format only).
</TABLE>
(b) Schedules
Schedule II--Valuation and Qualifying Accounts
- --------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment requested.
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
PERFECTMARKET, INC.
MB ACQUISITION CORPORATION
METROBEAT, INC.
MARK DAVIES
AND
JOSHUA WHITE
MAY 31, 1996
- ------------------
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1 - THE MERGER.......................................................... 1
1.1 Merger.............................................................. 1
1.2 Effective Time of the Merger........................................ 1
1.3 Closing............................................................. 1
1.4 Effects of the Merger............................................... 2
1.5 Certificate of Incorporation; Bylaws; Directors; Officers........... 2
1.6 Taking of Necessary Action.......................................... 2
SECTION 2 - EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; SURRENDER OF CERTIFICATES................. 2
2.1 Consideration; Payment.............................................. 2
2.2 Effect on Capital Stock of Sub...................................... 3
2.3 Surrender of Certificates........................................... 6
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF METROBEAT......................... 7
3.1 Organization, Standing and Power.................................... 8
3.2 Capital Structure................................................... 8
3.3 Authority........................................................... 9
3.4 Financial Statements................................................ 10
3.5 Inventory........................................................... 10
3.6 Receivables......................................................... 11
3.7 Compliance with Law................................................. 11
3.8 No Defaults......................................................... 11
3.9 Litigation.......................................................... 12
3.10 No Material Adverse Effect.......................................... 12
3.11 Absence of Undisclosed Liabilities.................................. 13
3.12 Information Supplied................................................ 13
3.13 Certain Agreements.................................................. 14
3.14 Plans............................................................... 14
3.15 Major Contracts..................................................... 14
3.16 Taxes............................................................... 16
3.17 Interests of Officers............................................... 17
3.18 Technology.......................................................... 18
3.19 Restrictions on Business Activities................................. 19
3.20 Title to Properties: Absence of Liens and Encumbrances:
Condition of Equipment.............................................. 20
3.21 Governmental Authorizations and Licenses............................ 20
</TABLE>
<PAGE>
<TABLE>
<S> <C>
3.22 Environmental Matters............................................... 20
3.23 Insurance........................................................... 21
3.24 Labor Matters....................................................... 21
3.25 Customers; Backlog; Returns and Complaints.......................... 21
3.26 Employees........................................................... 22
3.27 Questionable Payments............................................... 22
3.28 Import/Export....................................................... 22
3.29 Brokers; Finders.................................................... 22
3.30 Disclosure.......................................................... 22
SECTION 4 - REPRESENTATIONS AND WARRANTIES OF
PERFECTMARKET AND SUB............................................... 23
4.1 Organization; Standing and Power.................................... 23
4.2 Capitalization of PerfectMarket..................................... 23
4.3 Authority........................................................... 24
4.4 Financial Statements................................................ 25
4.5 Compliance with Law................................................. 25
4.6 No Defaults......................................................... 25
4.7 Litigation.......................................................... 26
4.8 No Material Adverse Effect.......................................... 26
4.9 Absence of Undisclosed Liabilities.................................. 26
4.10 Technology.......................................................... 26
4.11 Governmental Authorizations and Licenses............................ 27
4.12 Environmental Matters............................................... 27
4.13 Labor Matters....................................................... 28
4.15 Import/Export....................................................... 28
4.16 Brokers; Finders.................................................... 28
4.17 Disclosure.......................................................... 28
SECTION 5 - CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME;
ADDITIONAL AGREEMENTS............................................... 29
5.1 Conduct of Business of MetroBeat.................................... 29
5.2 Exclusivity; Acquisition Proposals.................................. 31
5.3 MetroBeat Shareholders' Approval.................................... 31
5.4 Notification of Certain Matters..................................... 32
5.5 Consents............................................................ 32
5.6 Reasonable Efforts.................................................. 32
5.7 Public Announcements................................................ 33
5.8 Tax Returns and Income Tax Liability................................ 33
5.9 Support of Event Listings Business.................................. 34
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
5.10 Payment of Liabilities.............................................. 34
5.11 Payment of Legal Expenses........................................... 34
5.12 "MetroBeat" Mark.................................................... 34
SECTION 6 - CONDITIONS PRECEDENT................................................ 35
6.1 Conditions to Each Party's Obligation to Effect the Merger.......... 35
6.2 Conditions to Obligations of PerfectMarket and Sub.................. 35
6.3 Conditions to Obligations of MetroBeat.............................. 37
SECTION 7 - INDEMNIFICATION..................................................... 37
7.1 Indemnification..................................................... 37
7.2 Procedures.......................................................... 38
7.3 Right of Set-Off.................................................... 38
7.4 Survival of Representations, Warranties and Covenants............... 38
SECTION 8 - TERMINATION......................................................... 39
8.1 Termination......................................................... 39
8.2 Expenses............................................................ 39
8.3 Procedure and Effect of Termination................................. 39
SECTION 9 - GENERAL PROVISIONS.................................................. 40
9.1 Amendment........................................................... 40
9.2 Extension; Waiver................................................... 40
9.3 Arbitration......................................................... 40
9.4 Notices............................................................. 41
9.5 Broker's or Finder's Fees........................................... 42
9.6 Interpretation...................................................... 42
9.7 Counterparts........................................................ 42
9.8 Entire Agreement.................................................... 42
9.9 No Transfer......................................................... 42
9.10 Severability........................................................ 42
9.11 Other Remedies...................................................... 42
9.12 Further Assurances.................................................. 43
9.13 Absence of Third-Party Beneficiary Rights........................... 43
9.14 Mutual Drafting..................................................... 43
9.15 Governing Law....................................................... 43
9.16 Employees........................................................... 43
</TABLE>
-iii-
<PAGE>
EXHIBITS
Exhibit A Plan of Merger
Exhibit B Certificate of Merger
Exhibit C Restated Certificate of Incorporation of PerfectMarket
Exhibit D MetroBeat Disclosure Schedule
Exhibit E PerfectMarket Disclosure Schedule
Exhibit F Form of Opinion of Counsel to MetroBeat
Exhibit G Form of FIRPTA Notification Letter and Form of Notice
Exhibit H Form of Employment and Noncompetition Agreement
Exhibit I Form of Shareholder's Representation Statement
-iv-
<PAGE>
SCHEDULES
3.1 Qualifications to do Business
3.2(c) Capital Structure
3.3(b) Third-Party Consents
3.6 Accounts Receivable
3.7 Compliance with Laws
3.9 Litigation
3.14 Employee Benefit Plans
3.15 Major Contracts
3.18(a) MetroBeat Intellectual Property Rights
3.18(b) Third-Party Intellectual Property Rights
3.18(c) MetroBeat's standard end-user license agreements
3.20 Real Property
3.23 Insurance
3.25 Significant Customers
3.26 Employees
5.1 Conduct of Business
-v-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is dated as of
May 31, 1996 among PERFECTMARKET, INC., a Delaware corporation
("PerfectMarket"), MB ACQUISITION CORPORATION, a New York corporation and a
wholly-owned subsidiary of PerfectMarket ("Sub"), METROBEAT, INC., a New York
corporation ("MetroBeat"), Mark Davies (the "Principal Shareholder") and Joshua
White.
RECITAL
The Boards of Directors of PerfectMarket, MetroBeat and Sub have each
approved the terms and conditions of the acquisition of MetroBeat by
PerfectMarket to be effected by the merger of Sub with and into MetroBeat,
pursuant to the terms and subject to the conditions of this Agreement in
accordance with the New York Business Corporation Law.
NOW THEREFORE, in consideration of the premises and mutual covenants and
agreements contained in this Agreement, PerfectMarket, Sub, MetroBeat and the
Principal Shareholder agree as follows:
SECTION 1.
THE MERGER
A. MERGER. Subject to the terms and conditions of this Agreement, the
------
Plan of Merger in substantially the form attached hereto as Exhibit A (the "Plan
---------
of Merger") and the Certificate of Merger in substantially the form attached
hereto as Exhibit B (the "Certificate of Merger"), Sub will be merged with and
---------
into MetroBeat (the "Merger") in accordance with the applicable provisions of
the New York Business Corporation Law (the "New York Statute"). The Plan of
Merger provides for the mode of consummating the Merger. The Certificate of
Merger shall be executed by the parties thereto concurrently with the execution
of this Agreement.
B. EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
----------------------------
Agreement and the Plan of Merger, the Certificate of Merger and the required
certificates, if any, shall be duly filed in accordance with the New York
Secretary of State in accordance with the New York Statute simultaneous with or
as soon as practicable following the Closing (as defined in Section 1.3 below).
The Merger shall become effective (the "Effective Time") upon the filing of the
Certificate of Merger with the New York Secretary of State (as defined in
Section 1.3 below) and as provided under the New York Statute.
C. CLOSING. Unless this Agreement shall have been terminated pursuant to
-------
Section 8, the closing of the Merger (the "Closing") will take place at 10:00
a.m. Pacific Standard Time on June 19, 1996 (the "Closing Date") or, if the
closing conditions contained in Section 6 are not satisfied or waived
<PAGE>
on or prior to such date, the first business day after satisfaction or waiver of
all such conditions, at the offices of Wilson, Sonsini, Goodrich & Rosati,
Professional Corporation, 650 Page Mill Road, Palo Alto, California 94304,
unless a different date or place is agreed to in writing by the parties.
D. EFFECTS OF THE MERGER. Subject to the terms and conditions of this
---------------------
Agreement and the Certificate of Merger, at the Effective Time: (i) the separate
existence of Sub shall cease and Sub shall be merged with and into MetroBeat
(Sub and MetroBeat are sometimes referred to as the "Constituent Corporations,"
and MetroBeat after the Merger is sometimes referred to as the "Surviving
Corporation"), and (ii) the Merger shall have all the effects provided by the
New York Statute, this Agreement and the Certificate of Merger.
E. CERTIFICATE OF INCORPORATION; BYLAWS; DIRECTORS; OFFICERS. At the
---------------------------------------------------------
Effective Time, (i) the Certificate of Incorporation of MetroBeat, as amended
and substantially in the form attached to the Plan of Merger as Exhibit A, shall
---------
be the Certificate of Incorporation of the Surviving Corporation, until altered,
amended or repealed as provided in the New York Statute; (ii) the Bylaws of Sub,
as in effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation, until thereafter duly altered, amended or repealed as
provided in the New York Statute or in the Certificate of Incorporation or
Bylaws of the Surviving Corporation; (iii) the directors of Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation and will hold office from the Effective Time until their respective
successors are duly elected or appointed and qualified in the manner provided in
the Certificate of Incorporation and Bylaws of the Surviving Corporation, as
such instruments may be amended from time to time, either before or after the
Effective Time, or as otherwise provided by law; and (iv) the officers of Sub at
the Effective Time shall be the initial officers of the Surviving Corporation.
F. TAKING OF NECESSARY ACTION. Prior to the Effective Time, the parties
--------------------------
shall take, or cause to be taken, all such reasonable actions as may be
necessary or appropriate in order to effect, as expeditiously as reasonably
practicable, the Merger.
SECTION 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS;
SURRENDER OF CERTIFICATES
A. CONSIDERATION; PAYMENT. In consideration of the transactions
----------------------
contemplated hereby, PerfectMarket has agreed to pay an aggregate of $[*]
in the form of Series B Preferred Stock, par value $ 0.01 per share, of
PerfectMarket (the "Series B Preferred") and/or cash (the "Aggregate
Consideration"), pursuant to the terms and subject to the conditions set forth
in this Agreement. The Series B Preferred shall have the rights, preferences
and privileges set forth in the Restated Certificate of Incorporation of
PerfectMarket, substantially in the form attached hereto as Exhibit C (the
---------
"Restated Certificate").
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-2-
<PAGE>
B. EFFECT ON CAPITAL STOCK OF SUB. At the Effective Time by virtue of
------------------------------
the Merger and without any action on the part of the holders of any shares of
capital stock of MetroBeat:
i. Capital Stock of Sub. Each issued and outstanding share of
--------------------
capital stock of Sub shall be converted into one share of Common Stock, $.001
par value, of the Surviving Corporation. Each stock certificate of Sub
evidencing ownership of any such shares shall continue to evidence ownership of
such shares of capital stock of the Surviving Corporation.
ii. Cancellation of Certain Shares of Capital Stock of MetroBeat.
------------------------------------------------------------
All shares of capital stock of MetroBeat ("MetroBeat Capital Stock") that are
owned directly or indirectly by MetroBeat or any subsidiary of MetroBeat shall,
by virtue of the Merger and without any action on the part of MetroBeat or any
subsidiary of MetroBeat, be canceled, and no consideration shall be delivered in
exchange therefor.
iii. Effect on MetroBeat Capital Stock. Each share of MetroBeat
---------------------------------
Capital Stock (other than shares canceled pursuant to Section 2.2(b)) that is
issued and outstanding immediately prior to the Effective Time, shall, subject
to Section 2.2(f) and (g) below, be automatically canceled and extinguished and
be converted into the right to receive an amount equal to the Aggregate
Consideration divided by the number of shares of MetroBeat Capital Stock issued
and outstanding as of the Effective Time.
iv. Cancellation of Other Equity Securities. Except as otherwise
---------------------------------------
provided in this Agreement, all shares of and all options to acquire shares of
capital stock or other equity securities of MetroBeat other than MetroBeat
Capital Stock shall be canceled as of the Effective Time without consideration
received in exchange therefor.
v. Payment of the Aggregate Consideration.
--------------------------------------
(1) Subject to Section 2.2(e)(iii) below, the Aggregate
Consideration to be paid by PerfectMarket pursuant to the Merger shall be [*]
(2) The Final Payment shall be paid by PerfectMarket either in
the form of Series B Preferred and/or cash. At least [*], each of PerfectMarket,
on the one hand, and Shareholder's Agent (as defined in Section 7.2), on the
other hand, shall elect the form of consideration (cash or Series B Preferred
(or if after the closing of an IPO as defined in Section
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-3-
<PAGE>
2.2(e)(iv) below, Common Stock)) comprising 50% of the Final Payment. If any
portion of the Final Payment is elected to be made in cash, such cash payment
shall be secured by a number of shares of Series B Preferred equal to the value
of such cash payment (the value of such Series B Preferred to be calculated in
accordance with Section 2.2(e)(v)).
(3) PerfectMarket shall issue a minimum of [*] shares and a
maximum of [*] shares of its capital stock (as adjusted for stock splits,
stock dividends and similar recapitalizations of PerfectMarket) to the
shareholders of MetroBeat pursuant to this Section 2.2. If the shareholders
elect cash for any portion of the Final Payment pursuant to Section 2.2(e)(ii),
then both the minimum of [*] shares and the maximum of [*] shares shall
be reduced by the number of shares equal to such minimum or maximum multiplied
by the percentage equal to the amount of the cash payment elected by the
shareholders as the numerator, and $[*] million as the denominator. Such
an adjustment shall not be applicable to any portion of the Final Payment
PerfectMarket elects to make in cash. At the time PerfectMarket shall be
obligated to deliver a cumulative aggregate amount to the shareholders of
MetroBeat of [*] shares of capital stock in accordance with the provisions
of this Section 2.2(e), all payment obligations of PerfectMarket in excess of
such amount shall immediately terminate. In the event that PerfectMarket's
payment obligations as calculated through the Final Payment shall be less than
[*] shares of capital stock, PerfectMarket shall issue as part of the Final
Payment such additional number of shares of capital stock as required such that
the cumulative aggregate shares issued pursuant to this Section 2.2(e) shall
equal [*] shares.
(4) Notwithstanding anything to the contrary in this Agreement,
in the event that PerfectMarket closes an initial public offering (an "IPO") of
its Common Stock, par value $0.01 per share (the "PM Common Stock"), then
PerfectMarket may, in its sole discretion (A) accelerate any portion or all of
the Aggregate Consideration not yet due to the shareholders of MetroBeat
pursuant to this Agreement, and/or (B) issue shares of PM Common Stock instead
of Series B Preferred under this Section 2.2(e); provided, however, that in the
-------- -------
event such IPO closes prior to the First Anniversary, 50% of the First and
Second Deferred and Final Payments shall be accelerated to the IPO closing date,
in the event such IPO closes after the First Anniversary but before the Second
Anniversary, 50% of the Second Deferred and Final Payments shall be accelerated
to the IPO closing date and in the event such IPO closes after the Second
Anniversary but before the Third Anniversary, 50% of the Final Payment shall be
accelerated to the IPO closing date.
(5) The valuation of the Series B Preferred (or PM Common Stock
if applicable) shall be determined as follows:
(a) If the PM Common Stock is traded or quoted on a national
securities exchange or the Nasdaq National Market, the per share valuation of
the PM Common Stock shall be the average of the closing prices of the PM Common
Stock as quoted on the exchange or the Nasdaq National Market for the ten day
period ending on the day before the applicable Payment Date.
(b) If the Payment Date is the date of the closing of a PerfectMarket
IPO, the valuation shall equal the price to the public of PM Common Stock in the
IPO;
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-4-
<PAGE>
(c) If (A) or (B) above do not apply and PerfectMarket shall have
closed a Preferred Stock financing within 90 days of the Payment Date, the per
share valuation will equal the purchase price of such Preferred Stock; and
(d) If none of (A), (B) or (C) apply, the parties shall negotiate in
good faith the valuation of the Series B Preferred. If PerfectMarket and the
Shareholders' Agent are unable to agree on the valuation as of the Payment Date,
then the valuation, which valuation shall be based on fair market value, shall
be set by an independent appraiser agreed to by PerfectMarket and the
Shareholders' Agent. If PerfectMarket and the Shareholders' Agent cannot agree
on an appraiser within 30 days after the Payment Date, each of PerfectMarket and
Shareholders' Agent shall pick one appraiser and these two appraisers shall pick
a third appraiser to determine the valuation. Any appraiser chosen under this
provision shall be one of the six largest accounting firms in the U.S. (a "Big
Six Accounting Firm"), or an internationally known valuation firm with expertise
in determining the valuation of companies such as PerfectMarket. In the event
of such arbitration, PerfectMarket and Shareholders' Agent agree that (x) the
last completed Preferred Stock financing of PerfectMarket, if it shall have
occurred within 24 months of the Payment Date, shall be a minimum price for
determining the valuation by the appraisers and (y) PerfectMarket shall pay two-
thirds of the cost of the appraisal and the shareholders of MetroBeat shall pay
one-third of such cost, provided, however, (I) that PerfectMarket shall pay all
-------- -------
of the shareholders' portion of the appraisal cost to the extent such portion
exceeds $25,000, and (II) unless otherwise prohibited by law, the shareholders
may elect to have PerfectMarket pay the shareholders' portion of the cost of the
appraisal above $5,000 (the "Reimbursable Amount") and, in such event, the
shareholders shall deliver to PerfectMarket a number of shares of capital stock
of PerfectMarket the fair market value of which shall equal the Reimbursable
Amount (as determined by the appraisal described above). In the event the per
share valuation is determined in accordance with this Section 2.2(e)(D), the
Payment Date shall be postponed until ten (10) days after a final determination
of the valuation.
vi. Fractional Shares. No fractional shares of Series B Preferred or
-----------------
PM Common Stock, as the case may be, shall be issued, but in lieu thereof each
holder of shares of MetroBeat Common Stock who would otherwise be entitled to
receive a fraction of a share of Series B Preferred or PM Common Stock, as the
case may be, shall receive from PerfectMarket an amount of cash equal to the per
share valuation of the Series B Preferred or PM Common Stock, as the case may
be, as determined in Section 2.2(e) above multiplied by the fraction of a share
of Series B Preferred or PM Common Stock, as the case may be, to which such
holder would otherwise be entitled. The fractional share interests of each
shareholder shall be aggregated, so that no shareholder shall receive cash in an
amount greater than the value of one full share of Series B Preferred or PM
Common Stock, as the case may be.
vii. Dissenters' Rights. Any shares of MetroBeat Capital Stock held
------------------
by a holder who has properly exercised dissenters' rights for such shares in
accordance with the New York Statute and who, as of the Effective Time, has not
effectively withdrawn or lost such dissenters' rights ("Dissenting Shares")
shall not be converted into the right to receive the consideration set forth in
Section 2, but shall instead be converted into the right to receive such
consideration as may be determined to be due with
-5-
<PAGE>
respect to such Dissenting Shares pursuant to the New York Statute. MetroBeat
agrees that, except with the prior written consent of PerfectMarket, or as
required under the New York Statute, it will not voluntarily make any payment
with respect to, or settle or offer to settle, any such purchase demand. If
after the Effective Time any Dissenting Shares shall lose their status as
Dissenting Shares, PerfectMarket shall deliver, upon surrender by such
shareholder of a certificate or certificates representing shares of MetroBeat
Capital Stock in accordance with Section 2.3(c), the amount of consideration to
which the holder thereof would otherwise be entitled under Section 2.2.
viii. Relinquishment of Shares. In the event the Principal
------------------------
Shareholder voluntarily terminates his employment with PerfectMarket or its
subsidiary, as the case may be, prior to 24 months following the Closing, as set
forth pursuant to the terms of the Employment and Noncompetition Agreement in
the form attached hereto as Exhibit F, [*] In the event PerfectMarket is
precluded by applicable law from accepting the return of such consideration at
such time, such consideration shall be held in escrow by a third-party selected
by PerfectMarket and shall be returned to PerfectMarket at the earliest date
permitted under applicable law.
C. SURRENDER OF CERTIFICATES.
-------------------------
i. Exchange Agent. PerfectMarket shall act as Exchange Agent (the
--------------
"Exchange Agent") in the Merger. Prior to the Closing Date, MetroBeat shall
deliver to the Exchange Agent specific instructions to be followed by Exchange
Agent, and Exchange Agent shall have no liability for acting in accordance with
those instructions.
ii. PerfectMarket to Provide the Aggregate Consideration. On the
----------------------------------------------------
Closing Date, PerfectMarket shall set aside the Aggregate Consideration for
exchange in accordance with Section 2.2 and the Plan of Merger, through such
reasonable procedures as PerfectMarket may adopt.
iii. Exchange Procedures. Prior to the Closing Date, the Exchange
-------------------
Agent or MetroBeat, as PerfectMarket and MetroBeat shall agree, shall mail to
each holder of record of certificate(s) or other documents which represent
MetroBeat Capital Stock (the "Certificates"), to be converted into the Aggregate
Consideration pursuant to Section 2.2(c) hereof and the Plan of Merger: (i) a
letter of transmittal (which shall specify that, with respect to the
Certificates, delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-6-
<PAGE>
the Exchange Agent and shall be in such form and have such other provisions as
PerfectMarket may reasonably specify); and (ii) instructions for use in
effecting the surrender of the Certificates. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by PerfectMarket, together with such letter of transmittal, duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor that portion of the Aggregate Consideration with respect to
the MetroBeat Capital Stock properly covered by such Certificate as to which
such holder is entitled pursuant to Section 2.2(c) and the Plan of Merger.
Certificates so surrendered pursuant to this Section 2.3 shall be canceled at
the Effective Time (if not otherwise canceled or terminated in accordance with
their terms). In the event of a transfer of ownership of MetroBeat Capital Stock
which is not registered on the transfer records of MetroBeat, the appropriate
Aggregate Consideration may be delivered to a transferee if the Certificate
representing such transferred security is presented to the Exchange Agent and
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.3, each Certificate shall be
deemed at any time after the Effective Time to represent solely the right to
receive upon such surrender that portion of the Aggregate Consideration (without
interest and subject to applicable withholding, escheat, and other laws) to
which such holder is entitled.
iv. No Further Ownership Rights in Capital Stock of MetroBeat. The
---------------------------------------------------------
amounts paid in respect of MetroBeat Capital Stock in accordance with the terms
of this Agreement and the Plan of Merger shall be deemed to have been delivered
in full satisfaction of all rights pertaining thereto, and following the
Effective Time, holders of the Certificates shall have no further rights to, or
ownership in, shares of capital stock of MetroBeat. There shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of MetroBeat Capital Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged in accordance with the terms of this Agreement
and the Plan of Merger.
v. No Liability. Notwithstanding anything to the contrary in this
------------
Section 2.3, none of the Exchange Agent, the Surviving Corporation or any party
hereto shall be liable to a holder of shares of the capital stock of MetroBeat
for any amount paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
vi. Lost, Stolen or Destroyed Certificates. In the event any
--------------------------------------
certificates evidencing shares of MetroBeat Capital Stock shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Certificates, upon the making of an affidavit in a form
reasonably satisfactory to PerfectMarket of that fact by the holder thereof,
such consideration as may be required pursuant to Section 2.2(c).
SECTION 3
REPRESENTATIONS AND WARRANTIES OF METROBEAT
-7-
<PAGE>
Except as disclosed in the disclosure schedule attached as Exhibit C which
---------
identifies by section and subsection number any exception to a representation
and warranty in this Section 3 as well as the basis for any such exception (the
"MetroBeat Disclosure Schedule"), each of MetroBeat and the Principal
Shareholder represents and warrants to PerfectMarket and Sub as follows:
A. ORGANIZATION, STANDING AND POWER. MetroBeat is a corporation duly
--------------------------------
organized and validly and legally existing under the laws of New York and has
all requisite power and authority to own, operate and lease its properties and
to carry on its business as now being conducted. MetroBeat is duly qualified as
a foreign corporation and is in good standing in each jurisdiction in which the
failure to so qualify would have a Material Adverse Effect (as defined below).
Schedule 3.1 sets forth a true and complete list of the states and foreign
- ------------
countries where MetroBeat is qualified as a foreign corporation. MetroBeat has
no subsidiaries or affiliated companies and does not otherwise own or control,
directly or indirectly, any equity interest in any partnership, corporation,
joint venture, business association or other entity and has no loans to any
partnership, corporation, joint venture, business association or other entity.
MetroBeat has delivered to PerfectMarket complete and correct copies of its
Certificate of Incorporation and Bylaws, in each case as amended to the date
hereof, and has delivered or made available to PerfectMarket copies of its
corporate minute books which include all minutes of MetroBeat's directors' and
shareholders' meetings and a stock ledger setting forth the record ownership of
all outstanding shares of MetroBeat Capital Stock. The term "Material Adverse
Effect" means any change, event or effect that is materially adverse to the
business, assets (including intangible assets), liabilities, financial
condition, results of operations or prospects of MetroBeat, or Perfect Market,
as the context requires.
B. CAPITAL STRUCTURE.
-----------------
i. The authorized capital stock of MetroBeat consists of 200 shares
of Common Stock, no par value ("MetroBeat Common Stock"). There are issued and
outstanding 198 shares of MetroBeat Common Stock. All outstanding shares of
MetroBeat Common Stock are validly issued, fully paid and nonassessable and not
subject to preemptive rights created by statute, or by MetroBeat's Certificate
of Incorporation or Bylaws, each as in effect immediately prior to the Effective
Time, or by any agreement to which MetroBeat is a party or by which MetroBeat
may be bound.
ii. Other than as described in this Section 3.2, there are no
outstanding shares of MetroBeat Common Stock, preferred stock or any other
equity securities of MetroBeat, and there are no options, warrants, calls,
conversion rights, commitments or agreements of any character to which MetroBeat
or the Principal Shareholder is a party or by which MetroBeat or the Principal
Shareholder may be bound that do or may obligate MetroBeat to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of MetroBeat
Common Stock, preferred stock or other equity securities or that do or may
obligate MetroBeat to grant, extend or enter into any such option, warrant,
call, conversion right, commitment or agreement. There are no outstanding
arrangements, agreements, commitments or understandings of any kind affecting or
relating to the voting, issuance, purchase, redemption, repurchase or transfer
of any capital stock of MetroBeat or any other securities of MetroBeat. Other
than as provided in or contemplated by this Agreement, MetroBeat and the
Principal Shareholder have not,
-8-
<PAGE>
and prior to the Effective Time will not, become party to or subject to any
contract or obligation wherein any person has a right or option to purchase or
acquire any rights in any additional capital stock or securities of MetroBeat.
iii. Schedule 3.2(c) contains a complete and accurate list of, and the
---------------
number of shares owned of record by, the holders of outstanding MetroBeat Common
Stock. As of the Balance Sheet Date (as defined in Section 3.4), no shares of
MetroBeat Common Stock held by certain persons were subject to repurchase upon
termination of employment.
iv. As of the Effective Time, there shall be no shares of capital
stock of MetroBeat or options or other rights therefor outstanding or in
existence other than those held by PerfectMarket.
C. AUTHORITY.
---------
i. MetroBeat has all requisite corporate power and authority to
enter into this Agreement and the Certificate of Merger and to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Certificate of Merger, the performance by MetroBeat of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of MetroBeat, including approval by its Board of
Directors and shareholders. The Principal Shareholder has full power and
authority to execute and deliver this Agreement, to perform such shareholder's
obligations under this Agreement, and to consummate the transactions
contemplated by this Agreement and the Certificate of Merger. The Principal
Shareholder has full power and authority to vote the outstanding shares of
MetroBeat Common Stock held by such shareholder to approve this Agreement, the
Plan of Merger, the Certificate of Merger and the transactions contemplated
hereby and thereby, and will vote all of such shares to approve this Agreement,
the Plan of Merger, the Certificate of Merger and the transactions contemplated
hereby and thereby in compliance with all applicable laws, and the Certificate
of Incorporation and Bylaws of MetroBeat. This Agreement is a legal, valid and
binding obligation of each of MetroBeat and the Principal Shareholder,
enforceable against MetroBeat and the Principal Shareholder in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency, or
other similar laws affecting the enforcement of creditors' rights generally and
except that the availability of equitable remedies is subject to the discretion
of the court before which any proceeding therefor may be brought. The
Certificate of Merger, when delivered by the parties thereto, will be a legal,
valid and binding obligation of MetroBeat enforceable against MetroBeat in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, or other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies is subject to
the discretion of the court before which any proceeding therefore may be
brought. The only vote of the holders of any class or series of MetroBeat
Capital Stock necessary to approve this Agreement, the Plan of Merger, the
Certificate of Merger and the transactions contemplated hereby and thereby was
the affirmative vote of the holders of a majority of the outstanding shares of
MetroBeat Common Stock.
-9-
<PAGE>
ii. The execution and delivery of this Agreement does not, and the
execution and delivery of the Certificate of Merger and the consummation of the
transactions contemplated hereby and thereby will not, conflict with or result
in any violation of any statute, law, rule, regulation, judgment, order, decree,
or ordinance applicable to MetroBeat or its properties or assets or the
Principal Shareholder, or conflict with or result in any breach or default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
benefit under, or result in the creation of a lien or encumbrance on any of the
properties or assets of MetroBeat pursuant to (i) any provision of the
Certificate of Incorporation or Bylaws of MetroBeat or (ii) any agreement,
contract, note, mortgage, indenture, lease instrument, permit, concession,
franchise or license to which MetroBeat is a party or by which MetroBeat or any
of its property or assets may be bound or affected. Schedule 3.3(b) lists all
---------------
consents, waivers, and approvals under any of MetroBeat's agreements, contracts,
licenses or leases required to be obtained in connection with the consummation
of the transactions contemplated hereby and by the Plan of Merger and the
Certificate of Merger ("MetroBeat Third-Party Consents"). Copies of such
MetroBeat Third-Party Consents will be delivered by MetroBeat to PerfectMarket
prior to the Closing.
iii. No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency, commission,
regulatory authority or other governmental authority or instrumentality, whether
domestic or foreign (a "Governmental Entity"), is required by or with respect to
MetroBeat or the Principal Shareholder in connection with the execution and
delivery of this Agreement and the Certificate of Merger by MetroBeat or the
consummation by MetroBeat of the transactions contemplated hereby or thereby,
except for (i) the filing of the Certificate of Merger and officers'
certificates with the New York Secretary of State and appropriate documents with
the relevant authorities of other states in which MetroBeat is qualified to do
business and (ii) such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the Merger.
D. FINANCIAL STATEMENTS. MetroBeat has furnished or made available to
--------------------
PerfectMarket its financial statements for the fiscal year ended on December 31,
1995, including the balance sheet of MetroBeat, and the related statement of
operations, cash flows and shareholders' equity (collectively, the "MetroBeat
Year-End Financial Statements") and MetroBeat's financial statements as of April
30, 1996, including a balance sheet of MetroBeat (the "Interim Balance Sheet")
as of April 30, 1996 (the "Balance Sheet Date") and the related statement of
income, retained earnings and, cash flows (the "Interim Financial Statements")
(the Interim Financial Statements together with the MetroBeat Year-End Financial
Statements are collectively referred to as the "MetroBeat Financial
Statements"). The MetroBeat Financial Statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied and fairly present the financial position of MetroBeat as of the dates
thereof and the results of its operations and cash flows for the periods then
ended, except that the Interim Financial Statements do not contain any footnote
disclosure required by GAAP. There has been no change in MetroBeat's accounting
policies, except as described in the notes to the MetroBeat Financial
Statements.
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E. INVENTORY. The inventories of MetroBeat shown on the Interim Balance
---------
Sheet ("Inventories") were valued at cost or market, whichever is lower, with
adequate allowances for excess and obsolete materials and materials below
standard quality, in accordance with GAAP consistently applied. The quality and
quantity of the Inventories are such that the Inventories are readily usable and
saleable in the normal course of business of MetroBeat, except such amounts as
are reserved on the Interim Balance Sheet in accordance with GAAP consistently
applied and in accordance with the past practice of MetroBeat. All items
included in such Inventories are owned by MetroBeat, except for sales made
subsequent to the Balance Sheet Date in the ordinary course of business, for all
of which either the purchaser has made full payment or the purchaser is
obligated to make payment and such obligation is an asset of MetroBeat in
accordance with GAAP consistently applied. Schedule 3.5 lists all Inventories
------------
materially in excess of reasonable estimated requirements for MetroBeat based
on current operations for the next three months.
F. RECEIVABLES. The receivables shown on the Interim Balance Sheet arose
-----------
in the ordinary course of business and have been collected or are collectible in
the book amounts thereof, less an amount not in excess of the allowance for
doubtful accounts provided for in such balance sheet. Allowances for doubtful
accounts and warranty returns are adequate and have been prepared in accordance
with GAAP consistently applied and in accordance with the past practices of
MetroBeat. The receivables of MetroBeat arising after the Balance Sheet Date
and prior to the Effective Time arose or will arise in the ordinary course of
business and have been collected or are collectible in the book amounts thereof,
less allowances for doubtful accounts and warranty returns determined in
accordance with the past practices of MetroBeat. None of the receivables of
MetroBeat is subject to any material claim of offset, recoupment, set off or
counterclaim and neither MetroBeat nor the Principal Shareholder has any
knowledge of any specific facts or circumstances (whether asserted or
unasserted) that could give rise to any such claim. No amount of receivables
are contingent upon the performance by MetroBeat of any obligation or contract.
No person has any lien on any of such receivables and no agreement for deduction
or discount has been made with respect to any of such receivables. Schedule 3.6
------------
sets forth an aging of accounts receivable of MetroBeat as of the Balance Sheet
Date in the aggregate and by customer (0-30 days, 31-60 days, 60-90 days and
greater than 90 days), and indicates for each category the respective amounts of
allowances for doubtful accounts and warranty returns and the amounts of
accounts receivable within each category which are subject to warranty claims in
the aggregate. Prior to the date of this Agreement, MetroBeat has provided
PerfectMarket with information regarding amounts of accounts receivable which
are subject to warranty claims by customer and has made available detailed
information regarding warranty claims made within the last year, including the
type and amounts of such claims. Schedule 3.6 lists pending authorized product
------------
returns.
G. COMPLIANCE WITH LAW. MetroBeat is in compliance and has conducted its
-------------------
business so as to comply with all laws, rules and regulations, judgments,
decrees or orders of any Governmental Entity applicable to its operations or
with respect to which compliance is a condition of engaging in the business
thereof. There are no judgments or orders, injunctions, decrees, stipulations
or awards (whether rendered by a court or administrative agency or by
arbitration) against MetroBeat or against any of its properties or businesses.
Without limiting the generality of the foregoing, MetroBeat has not violated any
United States and foreign import and export control laws and regulations, export
licensing laws and
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<PAGE>
regulations and customs regulations (including its obligations under the Foreign
Corrupt Practices Act) applicable to MetroBeat. MetroBeat has not been cited by
the United States Department of Commerce, the United States Customs Service or
any other relevant Governmental Entity for any violation of United States laws
or regulations relating to importing or exporting of products, materials or
services. Schedule 3.7 contains a summary of any violation of, or conflict with,
------------
any applicable statute, law, rule, regulation, ruling, order, judgment or decree
of which such Governmental Entity has notified MetroBeat, including any of the
foregoing relating to Environmental Laws (as defined in Section 3.22(c) below).
H. NO DEFAULTS. MetroBeat is not, nor has it or the Principal
-----------
Shareholder received notice that MetroBeat is or would be with the passage of
time, (a) in violation of any provision of its Certificate of Incorporation or
Bylaws or (b) in default or violation of any term, condition or provision of (i)
any judgment, decree, order, injunction or stipulation applicable to MetroBeat
or (ii) any agreement, note, mortgage, indenture, contract, lease or instrument,
permit, concession, franchise or license to which MetroBeat is a party or by
which MetroBeat or its properties or assets may be bound.
I. LITIGATION. There is no action, suit, proceeding, claim, arbitration
----------
or investigation pending or, to the knowledge of MetroBeat and the Principal
Shareholder, threatened, against MetroBeat or the Principal Shareholder, or
which in any manner challenges or seeks to prevent, enjoin, alter or delay any
of the transactions contemplated hereby. Schedule 3.9 sets forth with respect
------------
to each pending action, suit, proceeding, claim, arbitration or investigation to
which MetroBeat is a party, the forum, the parties thereto, a brief description
of the subject matter thereof and the amount of damages claimed. Neither
MetroBeat nor the Principal Shareholder is aware of any reasonable basis for any
other such litigation. MetroBeat has delivered or made available to
PerfectMarket correct and complete copies of all correspondence prepared by its
counsel for MetroBeat's independent public accountants in connection with all
completed audits or reviews of MetroBeat's financial statements and any such
correspondence since the date of the last such audit or review. Schedule 3.9
------------
accurately describes all product liability claims made against MetroBeat since
inception.
J. NO MATERIAL ADVERSE EFFECT. Since the Balance Sheet Date, MetroBeat
--------------------------
has conducted its business in the ordinary course and there has not occurred:
i. Any Material Adverse Effect;
ii. Any amendments or changes in the Certificate of Incorporation or
Bylaws of MetroBeat;
iii. Any damage, destruction or loss, whether covered by insurance or
not, materially and adversely affecting any of the properties or businesses of
MetroBeat;
iv. Any issuance, redemption, repurchase or other acquisition of
shares of capital stock of MetroBeat, or any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the capital stock of MetroBeat;
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<PAGE>
v. Any increase in or modification of the compensation or benefits
payable or to become payable by MetroBeat to any of its directors or employees;
vi. Any increase in or modification of any bonus, pension, insurance
or other employee benefit plan, payment or arrangement (including the granting
of stock options, restricted stock awards or stock appreciation rights) made to,
for or with any of its employees;
vii. Any sale of the property or assets of MetroBeat individually in
excess of $5,000 or in the aggregate in excess of $10,000 other than inventory
sales in the ordinary course of business consistent with past practice;
viii. Any alteration in any term of any outstanding security of
MetroBeat;
ix. Any (A) incurrence, assumption or guarantee by MetroBeat of any
debt for borrowed money; (B) issuance or sale of any securities convertible into
or exchangeable for debt securities of MetroBeat; or (C) issuance or sale of
options or other rights to acquire from MetroBeat, directly or indirectly, debt
securities of MetroBeat or any securities convertible into or exchangeable for
any such debt securities;
x. Any creation or assumption by MetroBeat of any mortgage, pledge,
security interest or lien or other encumbrance on any asset (other than liens
arising in the ordinary course of MetroBeat's business which in the aggregate
are not material and liens for taxes not yet due and payable);
xi. Any making of any loan, advance or capital contribution to, or
investment in, any person other than (A) travel loans or advances made in the
ordinary course of business of MetroBeat and (B) other loans and advances in an
aggregate amount which does not exceed $10,000 outstanding at any time;
xii. Any entry into, amendment of, relinquishment, termination or
nonrenewal by MetroBeat of any contract, lease transaction, commitment or other
right or obligation other than in the ordinary course of business consistent
with past practice;
xiii. Any transfer or grant of a right under the MetroBeat
Intellectual Property Rights (as defined in Section 3.18) other than those
transferred or granted in the ordinary course of business consistent with past
practice;
xiv. Any labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof to
organize any employees of MetroBeat;
xv. Any violation of or conflict with any applicable laws, statutes,
orders, rules and regulations promulgated or judgment entered by any
Governmental Entity which, individually or in the aggregate, materially and
adversely affects (or, insofar as MetroBeat or the Principal Shareholder know,
might reasonably be expected to materially and adversely affect) MetroBeat; or
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<PAGE>
xvi. Any agreement or arrangement made by MetroBeat or the Principal
Shareholder to take any action which, if taken prior to the date hereof, would
have made any representation or warranty set forth in this Section 3.10 untrue
or incorrect as of the date when made.
K. ABSENCE OF UNDISCLOSED LIABILITIES. MetroBeat has no material
----------------------------------
liabilities or obligations (whether absolute, accrued, contingent or otherwise
and whether or not determined or determinable) except liabilities or obligations
(i) adequately provided for in the Interim Balance Sheet or (ii) incurred in the
ordinary course of business consistent with past practice and which are not,
individually or in the aggregate, material to MetroBeat. MetroBeat shall
provide PerfectMarket with a schedule of all outstanding liabilities as of the
Closing Date.
L. INFORMATION SUPPLIED. The materials to be prepared for use in
--------------------
soliciting approval of the Merger by MetroBeat's shareholders as described in
Section 5.3 and other solicitation materials relating to the Merger, on the date
on which MetroBeat mails such materials to its shareholders and at all times
from such date up to and including the Effective Time, will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, and will
comply in all respects with all applicable federal and state securities law
requirements.
M. CERTAIN AGREEMENTS. Neither the execution and delivery of this
------------------
Agreement or the Certificate of Merger nor the consummation of the transactions
contemplated hereby or thereby will (a) result in any payment (including
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any director or employee of MetroBeat under any Plan (as defined
in Section 3.14) or otherwise, (b) materially increase any benefits otherwise
payable under any Plan, or (c) result in the acceleration of the time of payment
or vesting of any such benefits.
3.14 PLANS. All employee compensation, incentive, fringe or benefit
-----
plans, programs, policies, commitments or other arrangements (whether or not set
forth in a written document) covering any active, former or retired employee or
consultant of MetroBeat, or with respect to which MetroBeat has or may in the
future have liability, are listed on Schedule 3.14 (the "Plans"). To the extent
-------------
applicable, the Plans comply with the requirements of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and the Code, and no Plan is
an "employee pension plan" within the meaning of Section 3 of ERISA, nor is any
Plan intended to be qualified under Section 401(a) of the Code. MetroBeat has
furnished or made available to PerfectMarket copies of the most recent Internal
Revenue Service letters and Forms 5500 with respect to any such Plan. No Plan
is covered by Title IV of ERISA or Section 412 of the Code. Neither MetroBeat
nor any officer or director of MetroBeat has incurred any liability or penalty
under Section 4975 through 4980B of the Code or Title 1 of ERISA. Each Plan has
been maintained and administered in all material respects in compliance with its
terms and with the requirements prescribed by and all statutes, orders, rules
and regulations, including but not limited to ERISA and the Code, which are
applicable to such Plans. No suit, action or other litigation (excluding claims
for benefits incurred in the ordinary course of Plan activities) has been
brought, or to the best knowledge of MetroBeat and the Principal Shareholder is
threatened, against or with respect to any such
-14-
<PAGE>
Plan. All contributions, reserves or premium payments required to be made or
accrued as of the date hereof to the Plans have been made or accrued. Schedule
--------
3.14 includes a listing of the accrued vacation liability of the Company as of
- ----
the Balance Sheet Date.
O. MAJOR CONTRACTS. Schedule 3.15 lists and describes:
--------------- -------------
i. Any union contract or any employment or consulting contract or
arrangement providing for future compensation, written or oral, with any
officer, consultant, director or employee which is not terminable by MetroBeat
on 30 days' notice or less without penalty or obligation to make payments
related to such termination;
ii. Any plan, contract or arrangement, whether written or oral,
providing for bonuses, pensions, deferred compensation, severance pay or
benefits, retirement payments, profit-sharing or the like;
iii. Any joint venture contract or arrangement or any other agreement
currently in effect which has involved or is expect to involve a sharing of
profits with other persons;
iv. Any existing OEM agreement, distribution agreement, volume
purchase agreement, or other similar agreement (but excluding individual
customer purchase orders) in which the annual amount involved in fiscal 1995
exceeded or is expected to exceed in fiscal 1996 $10,000 in aggregate amount or
pursuant to which MetroBeat has granted or received most favored nation pricing
provisions or exclusive marketing rights related to any product, group of
products or territory;
v. Any current individual customer purchase order for the sale of
goods or services in excess of $15,000;
vi. Any lease for real or personal property in which the amount of
payments which MetroBeat is required to make on an annual basis exceeds $10,000;
vii. Except for trade indebtedness incurred in the ordinary course of
business, any instrument evidencing or related in any way to indebtedness
incurred in the acquisition of companies or other entities or indebtedness for
borrowed money by way of direct loan, sale of debt securities, purchase money
obligation, conditional sale, guarantee, leasehold obligations or otherwise;
viii. Any license agreement, either as licensor or licensee (excluding
nonexclusive software licenses granted to customers or end-users in the ordinary
course of business);
ix. Any contract containing covenants purporting to limit the
freedom of MetroBeat to compete in any line of business in any geographic area;
x. Any agreement of indemnification other than those entered in
connection with the sale of MetroBeat products in the ordinary course of
business;
-15-
<PAGE>
xi. Any agreement, contract or commitment relating to capital
expenditures and which involve future payments individually in excess of $5,000
or in the aggregate in excess of $10,000 by MetroBeat;
xii. Any agreements, contracts or commitments relating to the disposition
or acquisition of any assets (other than Inventory) which involve payments
individually in excess of $5,000 or in the aggregate in excess of $10,000 by
MetroBeat;
xiii. Any purchase orders or contracts for the purchase of raw materials
which involve payments individually in excess of $5,000 or in the aggregate in
excess of $10,000;
xiv. Any agreement, contract or commitment relating to the disposition or
acquisition by MetroBeat of any Intellectual Property Rights; or
xv. Any other agreement, contract or commitment which is material to
MetroBeat. Each agreement, contract, mortgage, indenture, plan, lease,
instrument, permit, concession, franchise, arrangement, license and commitment
listed on the Schedule 3.15 (the "Major Contracts") is valid and binding on
MetroBeat, and is in full force and effect, and neither MetroBeat nor, to the
best knowledge of MetroBeat and the Principal Shareholder, any other party
thereto, has breached, any provision of, or is in default under the terms of,
any such Major Contract. No such Major Contract contains any material liquidated
damages, penalty or similar provision. MetroBeat does not intend to cancel,
withdraw, modify or amend any such Major Contract and, to the best knowledge of
MetroBeat and the Principal Shareholder, no party to any such contract,
agreement or instrument intends to cancel, withdraw, modify or amend any such
Major Contract.
P TAXES.
-----
i. All Tax (as defined below in Section 3.16(e)) returns,
statements, reports and forms (including estimated Tax returns and reports and
information returns and reports) required to be filed with any Taxing Authority
(as defined below) with respect to any Taxable period ending on or before the
Effective Time, by or on behalf of MetroBeat (collectively, the "MetroBeat
Returns"), have been or will be filed when due (including any extensions of such
due date), and all amounts shown due thereon on or before the Effective Time
have been or will be paid on or before such date. The Interim Balance Sheet (i)
fully accrues all actual and contingent liabilities for Taxes with respect to
all periods through the Balance Sheet Date and MetroBeat has not and will not
incur any Tax liability in excess of the amount reflected on the Interim Balance
Sheet with respect to such periods, and (ii) properly accrues in accordance with
GAAP all liabilities for Taxes payable after the Balance Sheet Date with respect
to all transactions and events occurring on or prior to such date. All
information set forth in the notes to the MetroBeat Year-End Financial
Statements relating to Tax matters is true, complete and accurate in all
material respects.
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<PAGE>
ii. No material Tax liability has been incurred since the Balance
Sheet Date other than in the ordinary course of business and adequate provision
has been or will be made for all Tax liabilities incurred since that date in
accordance with GAAP on at least a quarterly basis. MetroBeat has withheld and
paid to the applicable financial institution or Taxing Authority all amounts
required to be withheld. All MetroBeat Returns filed with respect to Taxable
years of MetroBeat through the Taxable year ended December 31, 1995, in the case
of the United States, have been examined and closed or are MetroBeat Returns
with respect to which the applicable period for assessment under applicable law,
after giving effect to extensions or waivers, has expired. Neither MetroBeat
nor any member of any affiliated or combined group of which MetroBeat has been a
member has granted any extension or waiver of the limitation period applicable
to any MetroBeat Returns.
iii. There is no material claim, audit, action, suit, proceeding, or
investigation now pending or, threatened against or with respect to MetroBeat in
respect of any Tax or assessment. No notice of deficiency or similar document of
any Taxing Authority has been received by MetroBeat, and there are no
liabilities for Taxes (including liabilities for interest, additions to tax and
penalties thereon and related expenses) with respect to the issues that have
been raised (and are currently pending) by any Tax Authority that could, if
determined adversely to MetroBeat, materially and adversely affect the liability
of MetroBeat for Taxes. Neither MetroBeat, nor any person on behalf of
MetroBeat, has entered into nor will it enter into any agreement or consent
pursuant to Section 341(f) of the Code. There are no liens for Taxes upon the
assets of MetroBeat except liens for current Taxes not yet due. Except as may be
required as a result of the Merger, MetroBeat has not been or will not be
required to include any material adjustment in Taxable income for any Tax period
(or portion thereof) ending on or after the Closing pursuant to Section 481 or
263A of the Code or any comparable provision under state or foreign Tax laws as
a result of transactions, events or accounting methods employed prior to the
Closing.
iv. There is no contract, agreement, plan or arrangement, including,
but not limited to, the provisions of this Agreement, covering any employee or
independent contractor or former employee or independent contractor of MetroBeat
that, individually or collectively, could give rise to the payment of any amount
that would not be deductible pursuant to Section 280G, 162 or 404 of the Code.
Other than pursuant to this Agreement, MetroBeat is not a party to or bound by
(or will prior to the Effective Time become a party to or bound by) any tax
indemnity, tax sharing or tax allocation agreement (whether written, unwritten
or arising under operation of federal law as a result of being a member of a
group filing consolidated tax returns, under operation of certain state laws as
a result of being a member of a unitary group, or under comparable laws of other
states or foreign jurisdictions) which includes a party other than MetroBeat.
None of the assets of MetroBeat (i) is property that MetroBeat is required to
treat as owned by any other person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Code, (ii) directly or indirectly
secures any debt the interest on which is tax exempt under Section 103(a) of the
Code or (iii) is "tax exempt use property" within the meaning of Section 168(h)
of the Code. MetroBeat has not participated in (nor will prior to the Effective
Time participate in) an international boycott within the meaning of Section 999
of the Code. MetroBeat has previously provided or made available to
PerfectMarket true and correct copies of all material Tax Returns, and, as
reasonably requested by PerfectMarket, prior to or following the date hereof,
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<PAGE>
information statements, reports, work papers, Tax opinions and memoranda and
other Tax data and documents.
v. For purposes of this Agreement, the term "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means (i) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Entity (a "Taxing Authority") responsible for the imposition of any
such tax (domestic or foreign), (ii) any liability for the payment of any
amounts of the type described in clause (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period and
(iii) any liability for the payment of any amounts of the type described in
clause (i) or (ii) as a result of any express or implied obligation to indemnify
any other person.
Q INTERESTS OF OFFICERS. Neither the Principal Shareholder nor any of
---------------------
MetroBeat's other officers or directors have any interest, either directly or
indirectly, in any property, real or personal, tangible or intangible, used in
or pertaining to MetroBeat's business, including any interest in the
Intellectual Property Rights (as defined in Section 3.18(a) below), except for
rights as a shareholder, and except for rights under any Plan. No employee,
shareholder, officer or director of MetroBeat, or their spouses or children, is
indebted to MetroBeat, nor is MetroBeat indebted to any of them.
-18-
<PAGE>
R TECHNOLOGY.
----------
i. MetroBeat owns, or is licensed or otherwise entitled to exercise
all rights under or with respect to all patents, trademarks, trade names,
service marks, copyrights, and any applications therefor, formulae, processes,
designs, schematics, compositions, ideas, technology, know-how and tangible or
intangible proprietary information, trade secrets or materials employed in the
operation of the business of MetroBeat as currently conducted or as currently
proposed to be conducted (the "Intellectual Property Rights"). MetroBeat has
entered into a confidentiality and invention assignment agreement, in the form
previously provided to PerfectMarket, with each of its officers, directors,
employees and consultants providing MetroBeat, to the extent permitted by
applicable law, with title and ownership to Intellectual Property Rights
conceived, developed, reduced to practice by or at the direction of such person,
solely or jointly, during the period of employment by MetroBeat. Schedule
--------
3.18(a) lists all MetroBeat patents, trademarks, works of authorship, registered
- -------
and unregistered copyrights, registered and unregistered trademarks, trade names
and service marks, and any applications therefor, which relate to or are a part
of MetroBeat's products or services (the "MetroBeat Intellectual Property
Rights"), and specifies the jurisdictions in which each such issuance and
registration has been filed, including the respective registration or
application numbers, together with a list of all of MetroBeat's currently
marketed software products and an indication as to which, if any, of such
software products have been registered for copyright protection with the United
States Copyright Office and any foreign offices. Without in any manner limiting
the foregoing, MetroBeat represents that it has filed for trademark registration
in the United States for the name "MetroBeat", that it has received confirmation
of receipt of such filing, and that it has conducted a trademark search that
showed the "MetroBeat" mark clear of prior registration or use.
ii. Schedule 3.18(b) includes and specifically identifies all third-
----------------
party patents, trademarks, works of authorship, registered and unregistered
copyrights, registered and unregistered trademarks, trade names and service
marks, and any applications therefor (the "Third-Party Intellectual Property
Rights") which are incorporated in, are, or form a part of, any MetroBeat
product or service. Schedule 3.18(b) lists (i) any requests MetroBeat has
----------------
received to make any such registration, including the identity of the requestor
and the item requested to be so registered, and the jurisdiction for which such
request has been made; (ii) all material licenses, sublicenses and other
agreements as to which MetroBeat is a party and pursuant to which any person is
authorized to use any MetroBeat Intellectual Property Rights or any trade secret
material to MetroBeat; and (iii) all material licenses, sublicenses and other
agreements as to which MetroBeat is a party and pursuant to which MetroBeat is
authorized to use any Third-Party Intellectual Property Rights, or trade secret
of a third party in or as any product or service, and includes the identity of
all parties thereto and a description and statement as to the status of the
applicable royalty thereof. Schedule 3.18(c) includes copies of MetroBeat's
----------------
standard end-user license agreements and lists all other agreements with respect
to which MetroBeat indemnifies third parties against intellectual property
infringement.
MetroBeat is not, nor as a result of the execution and delivery of this
Agreement or the performance of MetroBeat's obligations hereunder will be, in
violation of any license, sublicense or other agreement applicable to it.
MetroBeat is the sole and exclusive owner or licensee of, with all right,
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title and interest in and to (free and clear of any liens or encumbrances), the
Intellectual Property Rights, and has sole and exclusive rights in respect
thereof, and is not contractually obligated to pay any compensation to any third
party. After the Closing, the Surviving Corporation will own or have the
exclusive right to use, sell, license and dispose of and the exclusive right to
bring actions for infringement of and otherwise exercise all Intellectual
Property Rights.
iii. No claims with respect to the Intellectual Property Rights have
been asserted, have been threatened or are likely to be threatened, by any
person. In addition, no grounds exist for any claims now or in the future (i)
to the effect that any business of MetroBeat as currently conducted or proposed
to be conducted infringes on or misappropriates any patents, works of
authorship, registered and unregistered copyrights, registered and unregistered
trademarks, trade name, service marks, trade secrets, tangible and intangible
proprietary information and technical knowhow and any applications therefor in
which a third party has any rights or (ii) challenging the ownership, validity
or effectiveness of any of the Intellectual Property Rights. No MetroBeat
Intellectual Property Right is subject to any lien, encumbrance or other secured
interest. MetroBeat does not know of any fact that would render the MetroBeat
Intellectual Property Rights invalid. There is no material unauthorized use,
infringement or misappropriation of any of the MetroBeat Intellectual Property
Rights by any third party, including any present or former employee of
MetroBeat. There is no material unauthorized use, infringement or
misappropriation of any of the Third-Party Intellectual Property Rights by
MetroBeat or by any third party, including any present or former employee of
MetroBeat. No Intellectual Property Right is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting in any manner the
licensing or exploitation thereof by MetroBeat. Except for end-user object code
license agreements for MetroBeat's products executed in the ordinary course of
business, without alteration or amendment of any material term therein, and in
accordance with MetroBeat's past practices (true and correct copies of the forms
of these agreements are attached as part of Schedule 3.18(c)), MetroBeat has not
----------------
entered into any agreement to indemnify any other person against any charge of
infringement relating to any Intellectual Property Right. No employee of
MetroBeat is in violation of any term of any confidentiality or invention
assignment agreement, employment contract (whether written or verbal), patent
disclosure agreement or any other contract or agreement relating to the
relationship of any such employee with MetroBeat or any other party (including
prior employers) because of the nature of the business conducted or proposed to
be conducted by MetroBeat.
S RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
-----------------------------------
judgment, injunction, order or decree binding upon MetroBeat or which has or
could reasonably be expected to have the effect of prohibiting or materially
impairing any business practice of MetroBeat, any acquisition of property by
MetroBeat or the conduct of business of MetroBeat as currently conducted or as
currently proposed to be conducted.
-20-
<PAGE>
T TITLE TO PROPERTIES: ABSENCE OF LIENS AND ENCUMBRANCES: CONDITION OF
--------------------------------------------------------------------
EQUIPMENT.
- ---------
i. Schedule 3.20 sets forth a true and complete list of all real
-------------
property owned or leased by MetroBeat and summarizes all material lease terms,
including the aggregate annual rental or other fees payable, the length of all
leases and the number of extensions available.
ii. MetroBeat has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used in its business, free and
clear of any liens (other than liens for Taxes that are not yet delinquent),
charges, pledges, security interests or other encumbrances, except for such
imperfections of title and encumbrances, if any, which are not substantial in
character, amount or extent, and which do not materially detract from the value,
or interfere with the present use, of the property subject thereto or affected
thereby.
iii. MetroBeat has previously provided PerfectMarket with a listing of
the machinery and equipment (the "Equipment") owned or leased by MetroBeat as of
the Balance Sheet Date. The Equipment is, taken as a whole, (i) adequate for
the conduct of the business of MetroBeat consistent with its past practice, (ii)
suitable for the uses to which it is currently employed, (iii) in good operating
condition, subject to normal wear and tear, (iv) regularly and properly
maintained, (v) not obsolete, dangerous or in need of renewal or replacement,
except for renewal or replacement in the ordinary course of business, and (vi)
free from any material defects.
U GOVERNMENTAL AUTHORIZATIONS AND LICENSES. MetroBeat is the holder
----------------------------------------
of all licenses, authorizations, permits, concessions, certificates and other
franchises of any Governmental Entity required to operate its business
(collectively, the "Licenses") and is in compliance with the terms, conditions,
limitations, restrictions, standards, prohibitions, requirements and obligations
of such Licenses. The Licenses are in full force and effect. There is not now
pending, or to the best knowledge of MetroBeat and the Principal Shareholder is
there threatened in writing, any action, suit, investigation or proceeding
against MetroBeat before any Governmental Entity with respect to the Licenses,
nor is there any issued or outstanding notice, order or complaint with respect
to the violation by MetroBeat of the terms of any License or any rule or
regulation applicable thereto.
V ENVIRONMENTAL MATTERS.
---------------------
i. No substance that is regulated by any Governmental Entity or that
has been designated by any Governmental Entity to be radioactive, toxic,
hazardous or otherwise a danger to health or the environment (a "Hazardous
Material") is present in, on or under any property that MetroBeat has at any
time owned, operated, occupied or leased.
ii. MetroBeat does not and has not transported, stored, used,
manufactured, released or exposed its employees or any other person to any
Hazardous Material in violation of any applicable statute, rule, regulation,
order or law.
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<PAGE>
iii. No permits, consents, waivers, exemptions, licenses, approvals
and other authorizations are required to be obtained by it under the laws of any
Governmental Entity relating to land use, public and employee health and safety,
pollution or protection of the environment (collectively, "Environmental Laws").
MetroBeat is in compliance in all material respects with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws or contained in any
regulation, code, plan, order, decree, judgment, notice or demand letter issued,
entered, promulgated or approved thereunder. Neither MetroBeat nor the Principal
Shareholder has received any notice and is not aware of any past or present
condition or practice of the businesses conducted by MetroBeat which forms or
could be reasonably expected to form the basis of any material claim, action,
suit, proceeding, hearing or investigation against MetroBeat, arising out of the
manufacture, processing, distribution, use, treatment, storage, spill, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any Hazardous Material by MetroBeat.
W INSURANCE. Schedule 3.23 lists and summarizes all insurance policies
--------- -------------
and fidelity or surety bonds covering the assets, business, equipment,
properties, operations of MetroBeat, or the employees, officers and directors of
MetroBeat, their termination dates and the amounts of coverage under each such
policy and bond of MetroBeat. MetroBeat has not been refused any requested
insurance coverage. All premiums payable under all such policies and bonds have
been paid and MetroBeat is otherwise in full compliance with the terms of such
policies and bonds (or other policies and bonds providing substantially similar
insurance coverage). Such policies of insurance and bonds are of the type and in
amounts customarily carried by persons conducting businesses similar to that of
MetroBeat. Neither MetroBeat nor the Principal Shareholder knows of any
threatened termination of, or material premium increase with respect to, any of
such policies.
X LABOR MATTERS. MetroBeat is in compliance in all material respects
-------------
with all currently applicable laws and regulations respecting employment,
discrimination in employment, terms and conditions of employment and wages and
hours and occupational safety and health and employment practices, and is not
engaged in any unfair labor practice. Neither MetroBeat nor the Principal
Shareholder has received any notice from any Governmental Entity, and, there has
not been asserted before any Governmental Entity, any claim, action or
proceeding to which MetroBeat is a party or involving MetroBeat, and there is
neither pending nor, to MetroBeat's and the Principal Shareholder's best
knowledge, threatened any investigation or hearing concerning MetroBeat arising
out of or based upon any such laws, regulations or practices.
Y CUSTOMERS; BACKLOG; RETURNS AND COMPLAINTS. Schedule 3.25 sets
------------------------------------------ -------------
forth the customers of MetroBeat from January 1, 1995 to the date hereof which
purchased MetroBeat's products or consulting services in aggregate amounts in
excess of $15,000 ("Significant Customers"). As of the date hereof, MetroBeat
has no material backlog of customer orders. MetroBeat has not received any
customer complaints concerning its products and/or services which complaints it
has not been able to address to the satisfaction of the complainant within a
commercially reasonable length of time after MetroBeat received notice of such
complaint, nor has it had any of its products returned by a purchaser
-22-
<PAGE>
thereof except for normal warranty returns consistent with past history and
those returns that would not result in a reversal of any revenue by MetroBeat.
Z EMPLOYEES. Schedule 3.26 identifies all MetroBeat employees and
--------- -------------
sets forth the job title and responsibilities of each such employee. MetroBeat
has previously provided to PerfectMarket a schedule setting forth the cash
compensation of the employees listed on Schedule 3.26 during the period from
-------------
January 1, 1995 to December 31, 1995 and from January 1, 1996 to the Balance
Sheet Date. None of such employees has indicated to MetroBeat or the Principal
Shareholder that he or she has a present intention to resign or retire.
AA QUESTIONABLE PAYMENTS. None of MetroBeat, the Principal Shareholder
---------------------
nor any director, officer or other employee of MetroBeat has: (i) made any
payments or provided services or other favors in the United States of America or
in any foreign country in order to obtain preferential treatment or
consideration by any Governmental Entity with respect to any aspect of the
business of MetroBeat; or (ii) made any political contributions which would not
be lawful under the laws of the United States (including the Foreign Corrupt
Practices Act) or the foreign country in which such payments were made. None of
MetroBeat, the Principal Shareholder nor any director, officer or other employee
of MetroBeat nor, to MetroBeat's or the Principal Shareholder's best knowledge,
any supplier of MetroBeat has been the subject of any inquiry or investigation
by any Governmental Entity in connection with payments or benefits or other
favors to or for the benefit of any governmental or armed services official,
agent, representative or employee with respect to any aspect of the business of
MetroBeat or with respect to any political contribution.
BB IMPORT/EXPORT. MetroBeat has not violated any United States and
-------------
foreign import and export control laws and regulations, export licensing laws
and regulations and customs regulations applicable to MetroBeat. MetroBeat has
not been cited by the United States Department of Commerce, the United States
Customs Service or any other relevant Governmental Entity for any material
violation of United States laws or regulations relating to importing or
exporting of products, materials or services. All goods imported into the United
States or any other country by MetroBeat ("Imported Goods") have with such
exceptions as are not material to MetroBeat been properly valued and classified
in accordance with applicable tariff laws, rules and regulations and all proper
duties, tariffs or excise taxes have been paid with respect to the Imported
Goods. No penalties have been assessed, asserted or claimed with respect to any
Imported Goods. All Imported Goods have been properly marked as to country of
origin, content and material.
CC BROKERS; FINDERS. MetroBeat has made no commitments to pay any
----------------
broker's or finder's fee or any similar commission or fee in connection with any
of the transactions contemplated by this Agreement, the Plan of Merger or the
Certificate of Merger ("Broker's or Finder's Fee") to any agent, broker,
investment banker or other firm or person.
DD DISCLOSURE. No representation or warranty made by MetroBeat or the
----------
Principal Shareholder in this Agreement, nor any financial statement, other
written financial information or schedule, certificate, schedule or exhibit
prepared and furnished or to be prepared and furnished by MetroBeat, the
Principal Shareholder or its representatives pursuant hereto or in connection
with the
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<PAGE>
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained herein or therein not misleading in light
of the circumstances under which they were furnished. There is no event, fact or
condition that has caused, or that reasonably could be expected to cause, a
Material Adverse Effect, that has not been set forth in this Agreement or the
MetroBeat Disclosure Schedule. The financial projections relating to MetroBeat
which were delivered to PerfectMarket prior to the date of this Agreement
("Financial Projections") were prepared by MetroBeat in good faith based upon
assumptions MetroBeat believes to be reasonable. MetroBeat is not aware of any
fact or information that would lead MetroBeat to believe that the Financial
Projections are misleading in any material respect.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF PERFECTMARKET AND SUB
Except as disclosed in the disclosure schedule attached as Exhibit D which
---------
identifies by section and subsection number any exception to representation and
warranty in this Section 3 as well as the basis for any such exception (the
"PerfectMarket Disclosure Schedule"), each of PerfectMarket and Sub represents
and warrants to MetroBeat as follows:
A ORGANIZATION; STANDING AND POWER. Each of PerfectMarket and Sub is a
--------------------------------
corporation legally and validly existing under the laws of its state of
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
PerfectMarket is duly qualified as a foreign corporation and is in good standing
in each jurisdiction in which the failure to so qualify would have a material
adverse effect. PerfectMarket has no direct or indirect subsidiaries or
affiliated companies (other than Sub) and does not otherwise own or control,
directly or indirectly, any equity interest in any partnership, corporation,
joint venture business association or other entity and has no loans to any
partnership, corporation, joint venture, business association or other entity.
PerfectMarket has delivered to MetroBeat complete and correct copies of its
Certificate of Incorporation and Bylaws, in each case as amended to the date
hereof.
B CAPITALIZATION OF PERFECTMARKET. Upon the filing of the Restated
--------------------------------
Certificate of Incorporation, the authorized capital Stock of PerfectMarket
shall consist of 25,000,000 shares of PM Common Stock, of which 8,740,357 shares
are currently issued and outstanding, 1,791,178 shares of Series A Preferred
Stock, par value $0.01 per share, of which 1,791,178 shares are currently issued
and outstanding, [*] shares of Series B Preferred, none of which shares
shall be issued and outstanding and 3,190,540 shares of Series C Preferred
Stock, par value $0.01 per share, up to which 3,190,540 shares shall be issued
outstanding. The authorized capital Stock of MB Acquisition Corporation consists
of 1,000 shares of Common Stock, par value $0.01 per share, of which 1,000
shares are issued and outstanding and owned beneficially and of record by
PerfectMarket. In addition, PerfectMarket has authorized 2,500,000 shares of
Common Stock under its 1996 Stock Option Plan. The Series B Preferred or PM
Common Stock, as the case may be, to be delivered by PerfectMarket at each
Payment Date will be duly authorized, validly issued shares of stock of
PerfectMarket, fully paid and
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-24-
<PAGE>
nonassessable. All of the shares of Series B Preferred or PM Common Stock to be
issued to the Principal Shareholder in accordance herewith will be offered,
issued, sold and delivered by PerfectMarket in compliance with all applicable
state and federal laws concerning the issuance of securities and none of such
shares were or will be issued in violation of the preemptive rights of any
shareholder of PerfectMarket. In the event the Principal Shareholder were to own
300,000 shares of capital stock of PerfectMarket as of the date hereof, there
would be no more than four active members of the Company's; management team who
own more outstanding shares of PerfectMarket (on an as converted to Common Stock
basis) as of the date hereof.
C AUTHORITY.
---------
i. Each of PerfectMarket and Sub has all requisite corporate power
and authority to enter into this Agreement and the Certificate of Merger and to
perform its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Certificate of Merger, the performance by each of
PerfectMarket and Sub of its obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of
PerfectMarket and Sub, including approval by their Board of Directors and
shareholders. Each of PerfectMarket and Sub has full power and authority to
execute and deliver this Agreement, to perform their obligations under this
Agreement, and to consummate the transactions contemplated by this Agreement,
the Plan of Merger and the Certificate of Merger. This Agreement is a legal,
valid and binding obligation of each of PerfectMarket and Sub, enforceable
against PerfectMarket and Sub in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, or other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought. The Certificate of Merger,
when delivered by the parties thereto, will be a legal, valid and binding
obligation of Sub enforceable against Sub in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, or other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefore may be brought.
ii. The execution and delivery of this Agreement does not, and the
execution and delivery of the Certificate of Merger and the consummation of the
transactions contemplated hereby and thereby will not, conflict with or result
in any violation of any statute, law, rule, regulation, judgment, order, decree,
or ordinance applicable to PerfectMarket or Sub or their properties or assets,
or conflict with or result in any breach or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a benefit under, or
result in the creation of a lien or encumbrance on any of the properties or
assets of PerfectMarket pursuant to (i) any provision of the Certificate of
Incorporation or Bylaws of PerfectMarket or (ii) any agreement, contract, note,
mortgage, indenture, lease instrument, permit, concession, franchise or license
to which PerfectMarket is a party or by which PerfectMarket or any of its
property or assets may be bound or affected.
-25-
<PAGE>
iii. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or with
respect to PerfectMarket or Sub in connection with the execution and delivery of
this Agreement and the Certificate of Merger by PerfectMarket or Sub or the
consummation by PerfectMarket or Sub of the transactions contemplated hereby or
thereby, except for (i) the filing of the Certificate of Merger and officers'
certificates with the New York Secretary of State and (ii) such consents,
approvals, authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the Merger.
D FINANCIAL STATEMENTS.
--------------------
i. PerfectMarket has furnished or made available to MetroBeat the
compiled financial statements from the year ended December 31, 1995 (the
"PerfectMarket Balance Sheet Date")(the "PerfectMarket Year-End Financial
Statements"). PerfectMarket has also furnished or made available to MetroBeat
PerfectMarket's internal cash-based financial statements for the quarter ended
March 31, 1996 (the "PerfectMarket Interim Financial Statements" and
collectively with PerfectMarket Year-End Financial Statements, the
"PerfectMarket Financial Statements") including a Balance Sheet as of March 31,
1996. The PerfectMarket Financial Statements (i) are complete and correct in
all material respects, (ii) fairly present the financial condition of the
PerfectMarket of the date of the balance sheet contained therein, and the
statement of operations contained therein accurately presents the operating
results of PerfectMarket during the period indicated therein, (iii) are in
accordance with the books and records of PerfectMarket, and (iv) with respect to
the PerfectMarket Year-End Financial Statements only, have been prepared in
accordance with generally accepted accounting principles consistently applied
except that footnote disclosures contemplated by generally accepted accounting
principles are not provided.
ii. Except as set forth in the PerfectMarket Financial Statements,
the PerfectMarket has no material liabilities, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business subsequent to
the PerfectMarket Balance Sheet Date and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the PerfectMarket
Financial Statements, which, in both cases, individually or in the aggregate,
are not material to the financial condition or operating results of
PerfectMarket.
E COMPLIANCE WITH LAW. PerfectMarket is in compliance and has conducted
-------------------
its business so as to comply with all laws, rules and regulations, judgments,
decrees or orders of any Governmental Entity applicable to its operations or
with respect to which compliance is a condition of engaging in the business
thereof. There are no judgments or orders, injunctions, decrees, stipulations
or awards (whether rendered by a court or administrative agency or by
arbitration) against PerfectMarket or against any of its properties or
businesses. Without limiting the generality of the foregoing, PerfectMarket has
not violated any United States and foreign import and export control laws and
regulations, export licensing laws and regulations and customs regulations
(including its obligations under the Foreign Corrupt Practices Act) applicable
to PerfectMarket. PerfectMarket has not been cited by the United States
-26-
<PAGE>
Department of Commerce, the United States Customs Service or any other relevant
Governmental Entity for any violation of United States laws or regulations
relating to importing or exporting of products, materials or services.
F NO DEFAULTS. PerfectMarket is not, (a) in violation of any provision
-----------
of its Certificate of Incorporation or Bylaws or (b) in default or violation of
any term, condition or provision of (i) any judgment, decree, order, injunction
or stipulation applicable to PerfectMarket or (ii) any agreement, note,
mortgage, indenture, contract, lease or instrument, permit, concession,
franchise or license to which PerfectMarket is a party or by which PerfectMarket
or its properties or assets may be bound.
G LITIGATION. There is no action, suit, proceeding, claim, arbitration
----------
or investigation pending or, to the knowledge of PerfectMarket, threatened,
against PerfectMarket, or which in any manner challenges or seeks to prevent,
enjoin, alter or delay any of the transactions contemplated hereby.
PerfectMarket is not aware of any reasonable basis for any other such
litigation.
H NO MATERIAL ADVERSE EFFECT. Since the Balance Sheet Date,
--------------------------
PerfectMarket has conducted its business in the ordinary course and there has
not occurred any Material Adverse Effect.
I ABSENCE OF UNDISCLOSED LIABILITIES. PerfectMarket has no material
----------------------------------
liabilities or obligations (whether absolute, accrued, contingent or otherwise
and whether or not determined or determinable) except liabilities or obligations
(i) adequately provided for in the PerfectMarket Year End Financial Statements
or (ii) incurred in the ordinary course of business consistent with past
practice since the PerfectMarket Balance Sheet Date.
J TECHNOLOGY.
----------
i. PerfectMarket owns, or is licensed or otherwise entitled to
exercise all rights under or with respect to all patents, trademarks, trade
names, service marks, copyrights, and any applications therefor, formulae,
processes, designs, schematics, compositions, ideas, technology, know-how and
tangible or intangible proprietary information, trade secrets or materials
employed in the operation of the business of PerfectMarket as currently
conducted or as currently proposed to be conducted (the "PerfectMarket
Intellectual Property Rights"). PerfectMarket has entered into a
confidentiality and invention assignment agreement, with each of its officers,
directors, employees and consultants providing PerfectMarket, to the extent
permitted by applicable law, with title and ownership to PerfectMarket
Intellectual Property Rights conceived, developed, reduced to practice by or at
the direction of such person, solely or jointly, during the period of employment
by PerfectMarket.
ii. PerfectMarket is not, nor as a result of the execution and
delivery of this Agreement or the performance of PerfectMarket's obligations
hereunder will be, in violation of any license, sublicense or other agreement
applicable to it. PerfectMarket is the sole and exclusive owner or licensee of,
with all right, title and interest in and to (free and clear of any liens or
encumbrances), the PerfectMarket Intellectual Property Rights, and has sole and
exclusive rights in respect thereof, and is not contractually obligated to pay
any compensation to any third party.
-27-
<PAGE>
iii. No claims with respect to the PerfectMarket Intellectual Property
Rights have been asserted, have been threatened or are likely to be threatened,
by any person. In addition, no grounds exist for any claims now or in the
future (i) to the effect that any business of PerfectMarket as currently
conducted or proposed to be conducted infringes on or misappropriates any
patents, works of authorship, registered and unregistered copyrights, registered
and unregistered trademarks, trade name, service marks, trade secrets, tangible
and intangible proprietary information and technical knowhow and any
applications therefor in which a third party has any rights or (ii) challenging
the ownership, validity or effectiveness of any of the PerfectMarket
Intellectual Property Rights. No PerfectMarket Intellectual Property Right is
subject to any lien, encumbrance or other secured interest. PerfectMarket does
not know of any fact that would render the PerfectMarket Intellectual Property
Rights invalid. There is no material unauthorized use, infringement or
misappropriation of any of the PerfectMarket Intellectual Property Rights by any
third party, including any present or former employee of PerfectMarket. No
PerfectMarket Intellectual Property Right is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting in any manner the
licensing or exploitation thereof by PerfectMarket. No employee of PerfectMarket
is in violation of any term of any confidentiality or invention assignment
agreement, employment contract (whether written or verbal), patent disclosure
agreement or any other contract or agreement relating to the relationship of any
such employee with PerfectMarket or any other party (including prior employers)
because of the nature of the business conducted or proposed to be conducted by
PerfectMarket.
K GOVERNMENTAL AUTHORIZATIONS AND LICENSES.
----------------------------------------
PerfectMarket is the holder of all licenses, authorizations, permits,
concessions, certificates and other franchises of any Governmental Entity
required to operate its business (collectively, the "PerfectMarket Licenses")
and is in compliance with the terms, conditions, limitations, restrictions,
standards, prohibitions, requirements and obligations of such PerfectMarket
Licenses. The PerfectMarket Licenses are in full force and effect. There is
not now pending, or to the best knowledge of PerfectMarket is there threatened
in writing, any action, suit, investigation or proceeding against PerfectMarket
before any Governmental Entity with respect to the Licenses, nor is there any
issued or outstanding notice, order or complaint with respect to the violation
by PerfectMarket of the terms of any License or any rule or regulation
applicable thereto.
L ENVIRONMENTAL MATTERS.
---------------------
i. No Hazardous Material is present in, on or under any property
that PerfectMarket has at any time owned, operated, occupied or leased.
ii. PerfectMarket does not and has not transported, stored, used,
manufactured, released or exposed its employees or any other person to any
Hazardous Material in violation of any applicable statute, rule, regulation,
order or law.
iii. No permits, consents, waivers, exemptions, licenses, approvals
and other authorizations are required to be obtained by it under Environmental
Laws. PerfectMarket is in compliance in all material respects with all other
limitations, restrictions, conditions, standards,
-28-
<PAGE>
prohibitions, requirements, obligations, schedules and timetables contained in
the Environmental Laws or contained in any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder. PerfectMarket has not received any notice and is not aware
of any past or present condition or practice of the businesses conducted by
PerfectMarket which forms or could be reasonably expected to form the basis of
any material claim, action, suit, proceeding, hearing or investigation against
PerfectMarket, arising out of the manufacture, processing, distribution, use,
treatment, storage, spill, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any Hazardous
Material by PerfectMarket..
M LABOR MATTERS. PerfectMarket is in compliance in all material
-------------
respects with all currently applicable laws and regulations respecting
employment, discrimination in employment, terms and conditions of employment and
wages and hours and occupational safety and health and employment practices, and
is not engaged in any unfair labor practice. PerfectMarket has not received any
notice from any Governmental Entity, and, there has not been asserted before any
Governmental Entity, any claim, action or proceeding to which PerfectMarket is a
party or involving PerfectMarket, and there is neither pending nor, to
PerfectMarket's best knowledge, threatened any investigation or hearing
concerning PerfectMarket arising out of or based upon any such laws, regulations
or practices.
N QUESTIONABLE PAYMENTS. Neither PerfectMarket nor any director,
---------------------
officer or other employee of PerfectMarket has: (i) made any payments or
provided services or other favors in the United States of America or in any
foreign country in order to obtain preferential treatment or consideration by
any Governmental Entity with respect to any aspect of the business of
PerfectMarket; or (ii) made any political contributions which would not be
lawful under the laws of the United States (including the Foreign Corrupt
Practices Act) or the foreign country in which such payments were made. None of
Neither PerfectMarket, nor any director, officer or other employee of
PerfectMarket nor, to PerfectMarket's or the best knowledge, any supplier of
PerfectMarket has been the subject of any inquiry or investigation by any
Governmental Entity in connection with payments or benefits or other favors to
or for the benefit of any governmental or armed services official, agent,
representative or employee with respect to any aspect of the business of
PerfectMarket or with respect to any political contribution.
O IMPORT/EXPORT. PerfectMarket has not violated any United States and
-------------
foreign import and export control laws and regulations, export licensing laws
and regulations and customs regulations applicable to PerfectMarket.
PerfectMarket has not been cited by the United States Department of Commerce,
the United States Customs Service or any other relevant Governmental Entity for
any material violation of United States laws or regulations relating to
importing or exporting of products, materials or services. All goods imported
into the United States or any other country by PerfectMarket ("Perfect Market
Imported Goods") have with such exceptions as are not material to PerfectMarket
been properly valued and classified in accordance with applicable tariff laws,
rules and regulations and all proper duties, tariffs or excise taxes have been
paid with respect to the PerfectMarket Imported Goods. No penalties have been
assessed, asserted or claimed with respect to any PerfectMarket Imported Goods.
All PerfectMarket Imported Goods have been properly marked as to country of
origin, content and material.
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<PAGE>
P BROKERS; FINDERS. PerfectMarket has made no commitments to pay any
----------------
Broker's or Finder's fee to any agent, broker, investment banker or other firm
or person.
Q DISCLOSURE. No representation or warranty made by PerfectMarket,
----------
nor any financial statement, other written financial information or schedule,
certificate, schedule or exhibit prepared and furnished or to be prepared and
furnished by PerfectMarket, Sub or their representatives pursuant hereto or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements or facts contained herein or
therein not misleading in light of the circumstances under which they were
furnished. There is no event, fact or condition that has caused, or that
reasonably could be expected to cause, a Material Adverse Effect, that has not
been set forth in this Agreement or the MetroBeat Disclosure Schedule.
SECTION 5
CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE
TIME; ADDITIONAL AGREEMENTS
A CONDUCT OF BUSINESS OF METROBEAT. During the period from the date of
--------------------------------
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, MetroBeat shall carry on its business in the
usual, regular and ordinary course in substantially the same manner as conducted
prior to the date of this Agreement and, to the extent consistent with such
business, use all commercially reasonable efforts consistent with past practice
and policies to preserve intact its present business organization, keep
available the services of its present officers and key employees and preserve
its relationships with customers, suppliers, distributors, licensors, licensees,
and others having business dealings with it, with the objective that its
goodwill and ongoing business shall be unimpaired at the Effective Time.
MetroBeat shall promptly notify PerfectMarket of any event or occurrence not in
the ordinary course of business of MetroBeat, and any event which has had, or
could reasonably be expected to have, a Material Adverse Effect, subject to
MetroBeat's continuing operating losses consistent with its operating plan as
provided to PerfectMarket. Except as expressly contemplated by this Agreement
or as set forth on Schedule 5.1, MetroBeat shall not, without the prior written
------------
consent of PerfectMarket:
i. Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock, or
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or repurchase or otherwise acquire, directly or
indirectly, any shares of its capital stock;
ii. Issue, deliver or sell, authorize or propose the issuance,
delivery or sale of, or purchase or propose the purchase of, any shares of its
capital stock or securities convertible into, or subscriptions, rights, warrants
or options to acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities or
authorize or propose any change in its equity capitalization;
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iii. Solicit approval for or effect any amendments to MetroBeat's
Certificate of Incorporation or Bylaws;
iv. Acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to MetroBeat;
v. Sell, lease, license, pledge or otherwise dispose of or encumber
any of its properties or assets except in the ordinary course of business
consistent with past practice (including any indebtedness owed to it or any
claims held by it);
vi. Incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or guarantee, endorse or
otherwise become responsible for the obligations of others, or make loans or
advances;
vii. Pay, discharge or satisfy in an amount in excess of $5,000 in
any one case any claim, liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business consistent with past practice of
liabilities reflected or reserved against in the MetroBeat's Financial
Statements or those incurred after the Balance Sheet Date in the ordinary course
of business;
vii. Adopt or amend any Plan, enter into or amend any employment,
severance or termination contract with or pay any special bonus or special
remuneration, including any severance or termination pay to, any director,
employee or consultant, or increase the salaries or wage rates of its employees;
ix. Commence a lawsuit other than for the routine collection of
bills;
x. Except for end-user licenses granted in the ordinary course of
business, transfer to any person or create entitlement to any rights to the
MetroBeat Intellectual Property Rights or enter into or amend any agreements
pursuant to which any other party is granted marketing or other similar rights
of any type or scope with respect to any products of MetroBeat;
xi. Violate, amend or otherwise modify the terms of any of
MetroBeat's material contracts binding on MetroBeat set forth in Schedule 3.15;
-------------
xii. Revalue any of its assets, including writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business and consistent with past practice;
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<PAGE>
xiii. Make any Tax election other than in the ordinary course of
business and consistent with past practice, change any Tax election, adopt any
Tax accounting method other than in the ordinary course of business and
consistent with past practice, change any tax accounting method, file any Tax
return (other than any estimated tax returns, payroll tax returns or sale tax
returns or other returns in the ordinary course of business) or any amendment to
a Tax return, enter into any closing agreement, settle any Tax claim or
assessment, or consent to any Tax claim or assessment, without the prior written
consent of PerfectMarket, which consent will not be unreasonably withheld;
xiv. Engage in any activities or transactions that are outside the
ordinary course of its business consistent with past practice;
xv. Fail to pay or otherwise satisfy its monetary obligations as
they become due, except such as are being contested in good faith; or waive or
commit to waive any rights of substantial value; or cancel, materially amend or
renew any insurance policy;
xvi. Pay or agree to pay any bonuses out of the ordinary course of
business to any employee, officer, consultant, director or other agent of
MetroBeat; or
xvii. Take, or agree (in writing or otherwise) to take, any of the
actions described in Sections 5.1(a) through (p) above, or any action which
would make any of the representations or warranties of MetroBeat contained in
this Agreement untrue or incorrect or result in any of the conditions to the
Merger set forth in Section 6 not being satisfied.
B. EXCLUSIVITY; ACQUISITION PROPOSALS. Unless and until this Agreement
----------------------------------
shall have been terminated by either party pursuant to Section 8.1, neither
MetroBeat nor the Principal Shareholder shall, directly or indirectly, through
any officer, director, shareholder, employee, representative, agent or
otherwise, solicit, initiate, entertain or encourage any proposals or offers
from any third party relating to any possible acquisition of MetroBeat or any of
its subsidiaries (whether by way of merger, purchase of capital stock, purchase
of assets or otherwise) (an "Alternative Acquisition"), or engage in any sale of
equity interests in MetroBeat's (other than pursuant to the exercise of
outstanding options or warrants) (an "Equity Transaction"); nor will MetroBeat
participate in any negotiations regarding, or furnish to any person any
information with respect to, or otherwise cooperate with, facilitate or
encourage any effort or attempt by any person to do or seek any Alternative
Acquisition or Equity Transaction. In addition, (a) MetroBeat will maintain the
confidentiality of its confidential information, including information with
respect to its financial and operating condition, and (b) without
PerfectMarket's written consent, MetroBeat and its representatives will not
disclose to any other person (other than its accountants, lawyers and other
professional advisers) the nature of the discussions or negotiations taking
place concerning the proposed transaction involving the parties or any of the
terms, conditions or other facts with respect thereto (including the status
thereof). In the event MetroBeat or the Principal Shareholder receive from any
third party any offer or indication of interest (whether made in writing or
otherwise) regarding an Alternative Transaction or an Equity Transaction, or any
request for information about MetroBeat with respect to any of the foregoing,
then MetroBeat shall promptly communicate to PerfectMarket the material terms of
each such offer, indication of interest, or request, including the
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identity of the third party. The Principal Shareholder further agrees not to
transfer, sell, exchange, pledge or otherwise dispose of or encumber any shares
of MetroBeat Common Stock or to discuss, negotiate, or make any offer or
agreement relating thereto, at any time prior to the earliest to occur of the
termination of this Agreement and the Effective Time.
C. METROBEAT SHAREHOLDERS' APPROVAL. MetroBeat shall either (i) call a
--------------------------------
meeting of its shareholders (the "Shareholders' Meeting") to be held as promptly
as practicable (the date on which such meeting is scheduled is referred to as
the "Shareholders' Meeting Date") or (ii) solicit shareholder approval by
written consent in accordance with applicable law, for the purpose of obtaining
the shareholder approval required in connection with the transactions
contemplated hereby, by the Plan of Merger and the Certificate of Merger, and
shall use its best efforts to obtain such approval. If a Shareholders' meeting
is called, MetroBeat shall not change the Shareholders' Meeting Date without the
prior written consent of PerfectMarket, nor shall MetroBeat adjourn the
Shareholders' Meeting without the prior consent of PerfectMarket, unless such
adjournment is due to the lack of a quorum, in which case the Chairman of the
Shareholders' Meeting shall announce at such meeting the time and place of the
adjourned meeting. As soon as practicable after the execution of this
Agreement, MetroBeat shall prepare and distribute to its shareholders a Proxy or
Information Statement for purposes of soliciting the approval of the
shareholders of MetroBeat of this Agreement, the Plan of Merger or the
Certificate of Merger and the transactions contemplated hereby and thereby.
MetroBeat shall use its best efforts to cause the Proxy or Information Statement
to comply with applicable federal and state securities law requirements. The
Proxy or Information Statement shall be subject to prior review and approval by
PerfectMarket. The Proxy or Information Statement shall contain the unanimous
recommendation of the Board of Directors of MetroBeat that the MetroBeat
shareholders approve the Merger and this Agreement and the conclusion of the
Board of Directors that the terms and conditions of the Merger are fair and
reasonable to the shareholders of MetroBeat.
D. NOTIFICATION OF CERTAIN MATTERS. MetroBeat and the Principal
-------------------------------
Shareholder shall give prompt notice to PerfectMarket, and PerfectMarket and Sub
shall give prompt notice to MetroBeat, of the occurrence, or pending or
threatened occurrence or failure to occur, of any event, which occurrence or
failure to occur would be likely to cause (a) any representation or warranty
contained in this Agreement to be untrue or inaccurate at any time from the date
of this Agreement to the Effective Time, or (b) any material failure of
MetroBeat or PerfectMarket and Sub (as the case may be), or of any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement. Each party shall use all reasonable efforts to prevent or promptly
remedy such breach or inaccuracy.
E. CONSENTS. Each of PerfectMarket and MetroBeat shall promptly apply
--------
for or otherwise seek, and use all reasonable efforts to obtain, all consents
and approvals, including all MetroBeat Third-Party Consents, required to be
obtained by it for the consummation of the Merger and the transactions
contemplated by this Agreement and to enable the Surviving Corporation to
conduct and operate the business of MetroBeat substantially as presently
conducted and as contemplated to be conducted.
F. REASONABLE EFFORTS.
------------------
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<PAGE>
i. MetroBeat and the Principal Shareholder shall each use its or his
reasonable efforts to effect the transactions contemplated hereby and to fulfill
and cause to be fulfilled the conditions to Closing under this Agreement.
MetroBeat shall take all reasonable actions necessary to comply promptly with
all legal requirements which may be imposed on MetroBeat with respect to the
Merger and will promptly cooperate with and furnish information to PerfectMarket
in connection with any such requirements imposed upon PerfectMarket, Sub or any
other subsidiary of PerfectMarket in connection with the Merger. MetroBeat
shall take all reasonable actions to obtain (and to cooperate with PerfectMarket
and its subsidiaries in obtaining) any consent, authorization, order or approval
of, or any exemption by, any Governmental Entity, required to be obtained or
made by MetroBeat (or by PerfectMarket or its subsidiaries) in connection with
the Merger or the taking of any action contemplated thereby, by this Agreement,
by the Plan of Merger or the Certificate of Merger, and to defend all lawsuits
or other legal proceedings challenging this Agreement, the Plan of Merger or the
Certificate of Merger, or the consummation of the transactions contemplated
hereby and thereby, to lift or rescind any injunction or restraining order or
other order adversely affecting the ability or the parties to consummate the
transactions contemplated hereby and thereby, and to effect all necessary
registrations and filings and submissions or information required by any
Governmental Entity, and to fulfill all conditions to this Agreement.
ii. Each of PerfectMarket and Sub shall take all reasonable actions
necessary to comply promptly with all legal requirements which may be imposed on
them with respect to the Merger and will promptly cooperate with and furnish
information to MetroBeat and the Principal Shareholder in connection with any
such requirement imposed upon MetroBeat in connection with the Merger.
PerfectMarket and Sub shall take all reasonable actions to obtain (and to
cooperate with MetroBeat in obtaining) any consent, authorization, order or
approval of, or exemption by, any Governmental Entity required to be obtained or
made by PerfectMarket or any of its subsidiaries (or by MetroBeat) in connection
with the Merger or the taking of any action contemplated by this Agreement, by
the Plan of Merger or the Certificate of Merger, and to defend all lawsuits or
other legal proceedings challenging this Agreement or the consummation of the
transactions contemplated hereby and by the Plan of Merger and the Certificate
of Merger, to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby and by the Plan of Merger and the Certificate of Merger, and
to effect all necessary registrations and filings and submissions of information
requested by any Governmental Entity, and to fulfill all conditions to this
Agreement.
G. PUBLIC ANNOUNCEMENTS. Each party will consult in advance with the
--------------------
other concerning the timing and content of any announcements, press releases and
public statements concerning the Merger and will not make any such announcement,
release or statement without the other's consent; provided, however, that
-------- -------
PerfectMarket may make any public statement concerning the Merger without
MetroBeat's consent if, in the opinion of counsel for PerfectMarket, such
statement or announcement is required or advisable to comply with applicable
law.
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<PAGE>
H. TAX RETURNS AND INCOME TAX LIABILITY. The Principal Shareholder shall
------------------------------------
timely file all federal and state income tax returns for taxable periods ending
on or prior to the Effective Time and have paid or will pay all Taxes
attributable to such periods. Such returns will be prepared and filed in
accordance with applicable law and in a manner consistent with past practices
and shall be subject to review and approval by PerfectMarket. After the
Effective Time, PerfectMarket and MetroBeat, on the one hand, and the former
shareholders of MetroBeat, on the other hand, will make available to the other,
as reasonably requested, all information, records or documents relating to the
liability for Taxes of MetroBeat for all periods prior to or including the
Effective Time and will preserve such information, records or documents until
the expiration of any applicable statute of limitations or extensions thereof.
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<PAGE>
I. SUPPORT OF EVENT LISTINGS BUSINESS. After the Closing, PerfectMarket
----------------------------------
agrees to commit to providing to the MetroBeat operations design, technical and
marketing resources, including an initial agreement by PerfectMarket to provide
$1.5 million in funding for the events listing business. In connection
therewith, PerfectMarket acknowledges that it intends, after the Closing, to
perform the following:
i. to spend not less than $5,000 per month for a period of four
months and up to $10,000 per month in both Los Angeles and San Francisco in
fiscal 1996 to set the ground work for future entry in those markets, including
performing the photography and site information collection to reduce the time
necessary to launch an events listing service, if PerfectMarket so determines,
in those markets;
ii. to provide up to $75,000 in order to complete the
development, testing and debugging of MetroBeat 2.0 and to put the MetroBeat
service on a faster computer platform, and provide reasonably necessary computer
support and database administration to accomplish this objective;
iii. to support with PerfectMarket staff the design and interface
design for the development of MetroBeat 2.0 and an integrated
MetroBeat/PerfectMarket offering; and
iv. to cooperate with the Principal Shareholder in the development
of a dynamic event listings in markets targeted by PerfectMarket in its sole
discretion.
J. PAYMENT OF LIABILITIES. Within thirty (30) days after the
----------------------
Closing, PerfectMarket agrees to pay the liabilities of MetroBeat to Davies,
Joshua White and the American Broadcasting Corporation in the aggregate amount
not to exceed $[*].
K. PAYMENT OF LEGAL EXPENSES. Within thirty (30) days after the
-------------------------
Closing, PerfectMarket agrees to pay the reasonable legal expenses of MetroBeat
incurred by it in connection with the transactions contemplated by this
Agreement, the Plan of Merger and the Certificate of Merger.
L. "METROBEAT" MARK. In the event that the Principal Shareholder's
----------------
employment is terminated by either party for any reason under the Employment
Agreement, PerfectMarket shall assign the mark "MetroBeat" to the Principal
Shareholder on the first anniversary of such termination, provided, that,
-------- ----
PerfectMarket shall have failed to use such mark for at least three years prior
thereto.
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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<PAGE>
SECTION 6
CONDITIONS PRECEDENT
A. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
----------------------------------------------------------
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing of the following conditions:
i. Shareholder Approval. This Agreement, the Plan of Merger and
--------------------
the Certificate of Merger and all the transactions contemplated hereby and
thereby shall have been approved and adopted by the affirmative vote of the
holders of the outstanding shares of MetroBeat Common Stock as required by
applicable law and by MetroBeat's Certificate of Incorporation and Bylaws.
ii. Legal Action. No temporary restraining order, preliminary
------------
injunction or permanent injunction or other order preventing the consummation of
the Merger or the transactions contemplated by this Agreement shall have been
issued by any Governmental Entity and remain in effect, and no litigation
seeking the issuance of such an order or injunction, or seeking relief against
MetroBeat, the Surviving Corporation or PerfectMarket if the Merger is
consummated, shall be pending which, in the good faith judgment of MetroBeat's
or PerfectMarket's Board of Directors (acting upon the written opinion of their
respective outside counsel) has a reasonable probability of resulting in such
order, injunction or relief and such order, injunction or relief would have a
Material Adverse Effect on MetroBeat. In the event any such order or injunction
shall have been issued, each party agrees to use commercially reasonable efforts
to have any such order or injunction lifted.
iii. Statutes. No action shall have been taken, and no statute,
--------
rule, regulation or order shall have been enacted, promulgated or issued or
deemed applicable to the Merger by any Governmental Entity which would (i) make
the consummation of the Merger illegal, (ii) prohibit PerfectMarket's or
MetroBeat's ownership or operation of all or a material portion of the business
or assets of MetroBeat, or PerfectMarket and its subsidiaries taken as a whole,
or compel PerfectMarket or MetroBeat to dispose of or hold separate all or a
material portion of the business or assets of MetroBeat, or PerfectMarket and
its subsidiaries taken as a whole, as a result of the Merger or (iii) render
PerfectMarket, Sub, MetroBeat or the Principal Shareholder unable to consummate
the Merger.
iv. Financing PerfectMarket shall have closed its next round of
---------
equity financing.
B. CONDITIONS TO OBLIGATIONS OF PERFECTMARKET AND SUB. The obligations
--------------------------------------------------
of PerfectMarket and Sub to effect the Merger are subject to the satisfaction of
the following conditions, unless waived by PerfectMarket and Sub:
i. Representations and Warranties. The representations and
------------------------------
warranties of MetroBeat and the Principal Shareholder set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date, and PerfectMarket shall
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<PAGE>
have received a certificate signed by the Principal Shareholder in his
individual capacity and each of the President and Treasurer of MetroBeat on
behalf of MetroBeat to such effect on the Closing Date.
ii. No Material Adverse Effect. There shall have been no Material
--------------------------
Adverse Effect on MetroBeat from the date of this Agreement through the Closing
Date, and PerfectMarket shall have received a certificate signed by the
Principal Shareholder in his individual capacity and each of the President and
Treasurer of MetroBeat on behalf of MetroBeat to such effect on the Closing
Date.
iii. Opinion of Counsel to MetroBeat. PerfectMarket shall have
-------------------------------
received written opinions dated as of the Closing Date of Rosalind Lichter or
Jed Alpert, counsel to MetroBeat, substantially in the form attached as Exhibit
-------
E hereto.
- -
iv. Performance of Obligations of MetroBeat. MetroBeat and the
---------------------------------------
Principal Shareholder shall have performed all obligations and covenants
required to be performed by it under this Agreement, the Plan of Merger and the
Certificate of Merger prior to the Closing Date, and PerfectMarket shall have
received a certificate signed by the Principal Shareholder in his individual
capacity and each of the President and Treasurer of MetroBeat on behalf of
MetroBeat to such effect on the Closing Date.
v. Approvals and Consents. All authorizations, consents, orders or
----------------------
approvals of, or declarations or filings with, any Governmental Entity necessary
for the consummation of the transactions contemplated by this Agreement shall
have been filed, occurred or been obtained, and PerfectMarket shall have
received duly executed copies of all MetroBeat Third-Party Consents in form and
substance satisfactory to PerfectMarket.
vi. FIRPTA. PerfectMarket shall have received a properly executed
------
Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") Notification
Letter, which states that shares of capital stock of MetroBeat do not constitute
"United States real property interests" under Section 897(c) of the Code, for
purposes of satisfying PerfectMarket's obligations under Treasury Regulation
Section 1.1445-2(c)(3). In addition, simultaneously with delivery of such
Notification Letter, MetroBeat shall have provided to PerfectMarket a form of
notice to the Internal Revenue Service in accordance with the requirements of
Treasury Regulation Section 1.897-2(h)(2) along with written authorization for
PerfectMarket to deliver such notice to the Internal Revenue Service on behalf
of MetroBeat. Such FIRPTA Notification Letter and form of notice shall be in
substantially the form attached hereto as Exhibit F.
---------
vii. Resignation of Officers and Directors. The officers and directors
-------------------------------------
of MetroBeat in office immediately prior to the Effective Time shall have
resigned as officers and directors of the Surviving Corporation effective as of
the Effective Time.
viii. Employment Agreements. All employment agreements entered into by
---------------------
MetroBeat with any of its employees shall have been terminated in full and be of
no further force and
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<PAGE>
effect as of the Effective Time and no payments shall be due thereunder. Such
terminations shall be pursuant to documentation reasonably satisfactory to
PerfectMarket .
ix. Employee Retention. PerfectMarket shall be satisfied in its sole
------------------
discretion (exercised reasonably and in good faith) that a sufficient core group
of employees (including the Principal Shareholder) at MetroBeat are ready,
willing and able to remain with MetroBeat and PerfectMarket following the
transaction to enable the continued operation of MetroBeat's business.
x. Employment and Noncompetition Agreement. PerfectMarket shall have
---------------------------------------
received the executed employment and noncompetition agreement, substantially in
the form attached hereto as Exhibit G (the "Employment Agreement"), of the
---------
Principal Shareholder.
xi. Shareholder's Representation Statement. All shareholders of
--------------------------------------
MetroBeat shall have executed and delivered a Shareholder's Representation
Statement, substantially in the form attached hereto as Exhibit H.
---------
xii. Hells Kitchen Systems. PerfectMarket shall have received
---------------------
clarification to its satisfaction of the status of Hells Kitchen Systems, Inc.
as a shareholder of MetroBeat .
C. CONDITIONS TO OBLIGATIONS OF METROBEAT. The obligation of MetroBeat
--------------------------------------
to effect the Merger is subject to the satisfaction of the following conditions,
unless waived by MetroBeat:
i. Representations and Warranties. The representations and
------------------------------
warranties of PerfectMarket and Sub set forth in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date. MetroBeat shall have received a certificate signed by an
officer of each of PerfectMarket and Sub to such effect on the Closing Date.
ii. Performance of Obligations of PerfectMarket and Sub.
---------------------------------------------------
PerfectMarket and Sub shall have performed all obligations and covenants
required to be performed by them under this Agreement, the Plan of Merger and
the Certificate of Merger prior to the Closing Date, and MetroBeat shall have
received a certificate signed by an officer of PerfectMarket to such effect on
the Closing Date.
iii. Approvals and Consents. All authorizations, consents, orders or
----------------------
approvals of, or declarations or filings with, any Governmental Entity necessary
for the consummation of the transactions contemplated by this Agreement shall
have been filed, occurred or been obtained.
iv. No Material Adverse Effect. There shall have been no Material
--------------------------
Adverse Effect on PerfectMarket from the date of this Agreement through the
Closing Date, and MetroBeat shall have received a certificate signed by the
Chief Executive Officer of PerfectMarket to such effect on the Closing Date.
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SECTION 7
INDEMNIFICATION
A. INDEMNIFICATION. From and after the Closing Date, PerfectMarket, Sub
---------------
and the Surviving Corporation, and the respective officers, directors,
employees, shareholders, assigns and successors and the affiliates of the
foregoing persons and entities (individually, an "Indemnified Person" and
collectively,"Indemnified Persons"), shall be held harmless from and against and
in respect of any and all claims, demands, lawsuits, actions, causes of actions,
administrative proceedings (including informal proceedings), losses,
assessments, costs, damages, punitive damages, judgments, liabilities (including
sums paid in settlement of claims), penalties, fines, interest (including
interest from the date of such damages), and costs and expenses including
reasonable legal fees and disbursements of every kind, nature and description
(collectively "Damages") that arise or result from or relate to, directly or
indirectly, any breach of any of the representations, warranties, and covenants
given or made by MetroBeat and the Principal Shareholder in this Agreement or
any certificate, document, or instrument delivered by or on behalf of MetroBeat
pursuant hereto.
B. PROCEDURES. The Indemnified Person shall promptly notify Mr. Mark
----------
Davies, as agent of the shareholders of MetroBeat hereunder (the "Shareholder's
Agent"), in writing of the existence of any claim, demand or other matter (a
"Claim") involving Damages to which the indemnification obligations in this
Section 7 would apply. The Shareholders' Agent and each Indemnified Person
agrees to cooperate with the other in determining the validity of any such
Claim. If such Claim relates to a claim or demand asserted by a third party, the
Shareholders' Agent shall have the right at its expense to employ counsel to
defend such claim or demand and the Indemnified Person shall have the right at
its expense, but not the obligation, to participate in the defense of any such
claim or demand. So long as the Shareholders' Agent is defending such Claim in
good faith, the Indemnified Person will not settle such claim or demand without
the consent of the Shareholders' Agent, which consent shall not be unreasonably
withheld. The Indemnified Person shall make available to the Shareholders' Agent
all records and other materials reasonably required by it in contesting a claim
or demand asserted by a third party against the Indemnified Person and shall
cooperate in the defense thereof.
C. RIGHT OF SET-OFF. To the extent, but only to the extent, that any
----------------
Indemnified Person would be entitled to indemnification for Damages under this
Section 7, PerfectMarket shall have an express right of set-off of such Damages
against any future obligations of PerfectMarket to make any payments under this
Agreement to the former shareholders of MetroBeat. In the event that on a
Payment Date there are Claims pending under this Section 7, the payment to be
made on such Payment Date shall be deferred, to the extent of such pending
Claims, until resolution of such pending Claims. The Company agrees that it
shall first seek to recover indemnification for any Damages under this Section 7
by seeking to secure shares of Series B Preferred issued to the former
shareholders of MetroBeat pursuant to this Agreement and thereafter to seek
recovery against any other assets of such shareholders.
D. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. For purposes
-----------------------------------------------------
of asserting Claims under this Section 7, all representations, warranties and
covenants made by MetroBeat in or pursuant to this Agreement or in any document
delivered pursuant hereto will survive the Closing and
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<PAGE>
will remain in effect until (i) the First Anniversary or (ii) with respect to
the representations, warranties and covenants set out in Section 3.16 (Taxes)
and Section 3.22 (Environmental Matters), until expiration of the applicable
statute of limitations; provided, however, that the indemnification obligations
under this Section 7 shall continue in effect after the applicable termination
date with respect to any Claim pending as of such date until the final
resolution of any such pending Claim. All representations, warranties and
covenants made by PerfectMarket pursuant to this Agreement or in any document
delivered pursuant hereto shall survive for a period of one year after the
Closing.
SECTION 8.
TERMINATION
A. TERMINATION.
-----------
i. This Agreement may be terminated at any time prior to the
Effective Time:
(1 by mutual agreement of the Boards of Directors of
PerfectMarket and MetroBeat;
(2 by PerfectMarket on or after the tenth business day
following delivery of written notice thereof to MetroBeat, if there has been a
material breach by MetroBeat or the Principal Shareholder of any representation,
warranty, covenant or agreement set forth in this Agreement on the part of
MetroBeat that remains uncured as of such sixth business day;
(3 by MetroBeat on or after the tenth business day following
delivery of written notice thereof to PerfectMarket, if there has been a
material breach by PerfectMarket or Sub of any representation, warranty,
covenant or agreement set forth in this Agreement on the part of PerfectMarket
or Sub that remains uncured as of such sixth business day;
(4 by PerfectMarket or MetroBeat, if the Merger shall not have
been consummated on or before July 31, 1996; or
(5 by PerfectMarket or MetroBeat if any permanent injunction
or other order of a court or other competent authority preventing the Merger
shall have become final and nonappealable.
ii. Where action is taken to terminate this Agreement pursuant to
this Section 8.1, it shall be sufficient for such action to be authorized by the
Board of Directors of the party taking such action.
B. EXPENSES. Whether or not the Merger is consummated, except as
--------
otherwise set forth herein all costs and expenses incurred in connection with
this Agreement, the Plan of Merger, the Certificate of Merger and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such expense.
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<PAGE>
C. PROCEDURE AND EFFECT OF TERMINATION. In the event of termination of
-----------------------------------
this Agreement as provided in this Section 8, the terminating party shall
provide written notice of such termination to the other party and the provisions
of this Agreement shall forthwith become void, except that the agreements
contained or referred to in the Non-Disclosure Agreement and in Sections 3.29
(Brokers; Finders), 4.5 (Brokers; Finders), 5.7 (Public Announcements), 8
(Termination) and 9 (General Provisions) of this Agreement shall survive.
Notwithstanding the foregoing, in the event of a termination of this Agreement
by any party hereto, nothing herein shall limit the remedies at law or in equity
of any party with respect to any breaches hereof by any other party.
SECTION 9
GENERAL PROVISIONS
A. AMENDMENT. This Agreement may be amended by the parties hereto at any
---------
time prior to the Closing, provided that, no amendment shall be made which by
law requires the further approval of the shareholders of MetroBeat without
obtaining such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
B. EXTENSION; WAIVER. At any time prior to the Effective Time, each of
-----------------
MetroBeat and PerfectMarket, by action taken by its Board of Directors, may, to
the extent legally allowed, (i) extend the time for the performance of any of
the obligations or other acts of the other, (ii) waive any inaccuracies in the
representations and warranties made to it contained herein or in any document
delivered pursuant hereto and (iii) waive compliance with any of the agreements
or conditions for the benefit of it contained herein. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
C. ARBITRATION. All disputes or controversies (whether of law or fact)
-----------
of any nature whatsoever arising from or relating to this Agreement and the
transactions contemplated hereby shall be decided by arbitration by the American
Arbitration Association (the "Association") in accordance with the Commercial
Arbitration Rules of the Association. The arbitrators shall be selected as
follows: PerfectMarket and the Shareholders' Agent shall, within 30 days of the
date of demand by either party for arbitration, each select one independent,
qualified arbitrator and the two arbitrators so selected shall select the third
arbitrator within 30 days after their appointment as party arbitrators. Each
party reserves the right to object to any individual arbitrator who shall be
employed by or affiliated with a competing organization. In the event objection
is made, the Association shall resolve any dispute regarding the propriety of an
individual arbitrator acting in that capacity. The parties shall each bear the
expenses of the arbitrator chosen by it, and shall bear one-half the expenses of
the independent arbitrator. Hearings in the proceeding shall commence within
120 days of the selection of the neutral arbitrator. Arbitration shall take
place in Los Angeles County, California. At the request of
<PAGE>
vote, shall be able to decree any and all relief of an equitable and legal
nature, including but not limited to such relief as a temporary restraining
order, a temporary and/or a permanent injunction, and shall also be able to
award damages, with or without an accounting and costs. The decree or award
rendered by the arbitrators may be entered as a final and binding judgment in
any court having jurisdiction thereof. Reasonable notice of the time and place
of arbitration shall be given to all persons, other than the parties, as shall
be required by law, in which case such persons or those authorized
representatives shall have the right to attend and/or participate in all the
arbitration hearings in such manner as the law shall require. The resolution of
conflicts procedures set forth in this Section 9.3 are the parties' sole and
exclusive methods for resolving disputes arising out of this Agreement. Except
as expressly set forth above, the parties agree to waive all rights to commence
any action in law or equity arising out of this Agreement.The arbitrators shall
be entitled to award the costs and expenses of the arbitration proceeding
(including the arbitrators' fees and attorneys' fees) to the prevailing party.
D. NOTICES. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) or sent by telecopy,
confirmation received, to the parties at the following addresses and telecopy
numbers (or at such other address or number for a party as shall be specified by
like notice):
i. If to PerfectMarket or Sub, to:
PerfectMarket, Inc.
4502 Dyer Street, Suite 201
La Cresenta, CA 91214
Attn.: Charles Conn
Telecopy No.: (818) 542-3837
Telephone No.: (818) 542-3820
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attn: Larry W. Sonsini, Esq.
Telecopy No.: (415) 493-6811
Telephone No.: (415) 493-9300
-43-
<PAGE>
ii. if to MetroBeat or the Principal Shareholder, to:
MetroBeat, Inc.
225 Lafayette Street
New York, NY 10012
Attn: Mark Davies
Telecopy No.: (212) 925-1399
Telephone No.: (212) 925-1426
with a copy to:
Rosalind Lichter
Law Offices of Rosalind Lichter
375 Greenwich Street
New York, New York 10013
Telecopy No.: (212) 941-4076
Telephone No.: (212) 941-4075
E. BROKER'S OR FINDER'S FEES. MetroBeat agrees to indemnify
-------------------------
PerfectMarket and Sub for any Broker's or Finder's Fees incurred by MetroBeat or
any Shareholder in connection with the transactions contemplated by this
Agreement, the Plan of Merger and the Certificate of Merger. PerfectMarket
agrees to indemnify MetroBeat and the Principal Shareholder for any Broker's or
Finder's Fees incurred by PerfectMarket or Sub in connection with the
transactions contemplated by this Agreement, the Plan of Merger and the
Certificate of Merger.
F. INTERPRETATION. When a reference is made in this Agreement to
--------------
Sections, Schedules or Exhibits, such references shall be to a Section of or
Schedule or Exhibit to this Agreement unless otherwise indicated. The words
"include," "includes" and "including" when used herein shall be deemed in each
case to be followed by the words "without limitation." The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
G. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
H. ENTIRE AGREEMENT. This Agreement (including the Exhibits and the
----------------
Schedules), the Non-Disclosure Agreement and the documents and instruments and
other agreements among the parties delivered pursuant hereto constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and are not intended to
confer upon any other person any rights or remedies hereunder except as
otherwise expressly provided herein.
-44-
<PAGE>
I. NO TRANSFER. This Agreement and the rights and obligations set forth
-----------
herein may not be transferred or assigned by operation of law or otherwise
without the consent of each party hereto, provided that Sub may assign all or
any portion of its rights hereunder to any other newly-formed, wholly-owned
subsidiary of PerfectMarket. This Agreement is binding upon and will inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
J. SEVERABILITY. If any provision of this Agreement, or the
------------
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of the void or unenforceable provision.
K. Other Remedies. Except as otherwise provided herein, any and
--------------
all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby or by law or equity
on such party; and the exercise of any one remedy will not preclude the exercise
of any other.
L. FURTHER ASSURANCES. Each party agrees to cooperate fully with
------------------
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.
M. ABSENCE OF THIRD-PARTY BENEFICIARY RIGHTS. No provision of
-----------------------------------------
this Agreement is intended, nor will be interpreted, to provide or create any
third-party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, employee, partner or any party hereto or any
other person or entity, and all provisions hereof will be personal solely
between the parties to this Agreement.
N. MUTUAL DRAFTING. This Agreement is the joint product of
---------------
PerfectMarket and MetroBeat, and each provision of this Agreement has been
subject to the mutual consultation, negotiation and agreement of PerfectMarket
and MetroBeat, and shall not be construed for or against any party hereto.
O. GOVERNING LAW. This Agreement shall be governed in all
-------------
respects, including validity, interpretation and effect, by the laws of the
State of New York (without giving effect to its choice of law principles).
P. EMPLOYEES. The Company agrees that the employees of MetroBeat,
---------
for so long as they remain employees of PerfectMarket or any subsidiary of
PerfectMarket subsequent to the Closing, shall be entitled to benefits
(including stock options) comparable to the benefits received by other employees
of PefectMarket or such subsidiaries who hold positions of comparable levels.
-45-
<PAGE>
IN WITNESS WHEREOF, PerfectMarket, Sub and MetroBeat have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
and the Principal Shareholder have signed this Agreement in their respective
individual capacities, all as of the date first written above.
PERFECTMARKET, INC.
By:_____________________________________
Name:
Title:
MB ACQUISITION CORPORATION
By:_____________________________________
Name:
Title:
METROBEAT, INC.
By:_____________________________________
Name:
Title:
PRINCIPAL SHAREHOLDER
________________________________________
Mark Davies
Joshua White
-46-
<PAGE>
CERTIFICATE OF MERGER
OF
MB ACQUISITION CORPORATION
A NEW YORK CORPORATION,
INTO
METROBEAT, INC.
A NEW YORK CORPORATION
UNDER SECTION 904 OF THE BUSINESS CORPORATION LAW
ARTICLE I
A. The names of the constituent corporations are MB Acquisition
Corporation (the "Merged Corporation" or "Sub") and MetroBeat, Inc.
("MetroBeat")
B. The surviving corporation shall be MetroBeat and following the Merger
its name shall be MetroBeat, Inc. Metrobeat, as it exists from and after the
effective time of the Merger shall be referred to as the "Surviving Corporation"
C. As to the Merged Corporation, the number of shares outstanding which
are entitled to vote on the merger is as follows:
Common Stock 1,000 shares outstanding
D. As to Metrobeat, the number of shares of outstanding which are
entitled to vote on the merger is as follows:
Common Stock 198 shares outstanding
E. At the effective time of the Merger, the Articles of Incorporation of
MetroBeat, Inc. prior to the effective time shall be the Articles of
Incorporation of the Surviving Corporation.
<PAGE>
ARTICLE II
A. The effective date of the merger shall be the date of filing of this
certificate of merger.
ARTICLE III
A. The certificate of incorporation of Sub was filed by the Department of
State of the State of New York on May 8, 1996.
B. The certificate of incorporation of MetroBeat was filed by the
Department of State of the State of New York on May 2, 1995.
ARTICLE IV
A. The merger was approved by Action of Unanimous Written Consent of the
Board of Directors of Sub on May 21, 1996 and by Action by Written Consent of
Sole Stockholder of Sub on May 21, 1996.
B. The merger was approved by Action of Unanimous Written Consent of the
Board of Directors of MetroBeat on May 20, 1996 and by Written Consent of the
Shareholders of MetroBeat on May 20, 1996.
C. This Certificate of Merger may be signed in counterparts.
-2-
<PAGE>
We affirm the statements contained herein as true under penalties of perjury.
Executed on June 21, 1996
MB ACQUISITION CORPORATION
a New York corporation
By: /s/ Charles Conn
---------------------------------
Name: Charles Conn
Title: President
By: /s/ Jeffrey Brewer
---------------------------------
Name: Jeffrey Brewer
Title: Secretary
METROBEAT, INC.
a New York corporation
By: /s/ Mark Davies
--------------------------------
Name: Mark Davies
Title: President
By: /s/ Joshua White
--------------------------------
Name: Joshua White
Title: Secretary
<PAGE>
CORRECTED AND RESTATED CERTIFICATE OF INCORPORATION
OF
PERFECTMARKET, INC.
A DELAWARE CORPORATION
PerfectMarket, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of Delaware, hereby corrects the
previously filed Restated Certificate of Incorporation as follows: (i) the
phrase "thirty million, four hundred thirty nine thousand, seven hundred
eighteen (30,439,718)" in the third and fourth lines of the first paragraph of
Article IV shall be deleted and the phrase "thirty million, four hundred thirty
one thousand, seven hundred eighteen (30,431,718)" shall be inserted in lieu
thereof; (ii) the phrase "five million, four hundred thirty nine thousand seven
hundred eighteen (5,439,718)" in the fifth and sixth line of the first paragraph
of Article IV shall be deleted and the phrase "five million, four hundred thirty
one thousand, seven hundred eighteen (5,431,718)" shall be inserted in lieu
thereof; and (iii) the number "3,198,540" in the third line of the second
paragraph of Article IV shall be deleted and the phrase "3,190,540" shall be
inserted in lieu thereof. The Corrected and Restated Certificate of
Incorporation shall read as follows:
<PAGE>
EXHIBIT C
---------
RESTATED CERTIFICATE OF INCORPORATION
OF
PERFECTMARKET, INC.
A DELAWARE CORPORATION
PerfectMarket, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of Delaware (the "Corporation"), does
hereby certify as follows:
FIRST: The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on September 20,
1995, amended by the Certificate of Amendment of Certificate of Incorporation
filed with the Secretary of State of the State of Delaware on November 27, 1995.
SECOND: This Restated Certificate of Incorporation has been duly adopted
in accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware by the Board of Directors of the
Corporation.
THIRD: This Restated Certificate of Incorporation was approved by written
consent of the stockholders pursuant to Section 228 of the General Corporation
Law of the State of Delaware.
FOURTH: The Restated Certificate of Incorporation, of this Corporation is
amended and restated in its entirety to read as follows:
I.
The name of the Corporation is PerfectMarket, Inc..
II.
The address of the Corporation's registered office in the State of Delaware
is 1209 Orange Street, in the City of Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust Company.
<PAGE>
III.
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
IV.
The Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock" all of which
shall have a par value of $0.01 per share. The total number of shares which the
Corporation is authorized to issue is thirty million, four hundred thirty one
thousand, seven hundred eighteen (30,431,718) shares. Twenty five million
(25,000,000) shares shall be Common Stock and five million, four hundred thirty
one thousand seven hundred eighteen (5,431,718) shares shall be Preferred Stock.
1,791,178 shares of Preferred Stock shall be designated "Series A
Preferred Stock" (hereinafter "Series A Preferred"), [*] shares of Preferred
Stock shall be designated "Series B Preferred Stock" (hereinafter "Series B
Preferred"), and 3,190,540 shares of Preferred Stock shall be designated "Series
C Preferred Stock" (hereinafter "Series C Preferred" and together with the
Series A Preferred and Series B Preferred, the "Preferred Stock"). The rights,
preferences, restrictions and other matters relating to the Preferred Stock are
as follows:
1. LIQUIDATION PREFERENCE. (a) At any time, in the event of any of
----------------------
the following occurrences (a "Transaction"):
(i) Any dissolution of the Corporation, followed by the
liquidation and winding up of the Corporation;
(ii) Any liquidation or winding up of the Corporation as a result
of a bankruptcy, reorganization or similar proceeding;
(iii) Any foreclosure by creditors of the Corporation on all or
substantially all of the assets or equity interests in the Corporation; or
(iv) An acquisition, merger or consolidation of the Corporation
in which more than 50% of the outstanding capital stock of the Company is being
acquired for cash and the price per share of Common Stock (on a fully diluted
basis) is below the Conversion Price (as defined in Section 2 below) then in
effect;
the Corporation shall take appropriate steps in connection with such Transaction
to ensure that the assets of the Corporation available for distribution shall be
distributed at the closing of the Transaction in the order and priority as
follows:
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
(i) the holders of the Preferred Stock shall receive ratably (based
on their respective preference amounts) an amount per share equal to the price
for which such share of Preferred Stock was originally issued, as adjusted for
any stock dividends, combinations or splits with respect to such shares, plus
any declared and unpaid dividends on the Preferred Stock; and
(ii) all remaining assets available for distribution shall be
distributed pro rata among the holders of the Common Stock based on the number
of shares held by each.
If upon the occurrence of a Transaction, the assets and funds thus distributed
among the holders of Preferred Stock shall be insufficient to permit the payment
to such holders of the full aforesaid preferential amount, then the entire
assets and funds of the Corporation legally available for distribution shall be
distributed ratably among the holders of Preferred Stock in proportion to the
liquidation preference amount each holder is otherwise entitled.
(b) With respect to any Transaction, if the consideration received by
the Corporation is other than cash, its value will be deemed its fair market
value. Any securities shall be valued as follows:
(i) Securities not subject to investment letter or other similar
restrictions on free marketability:
(A) If traded on a securities exchange or through Nasdaq,
the value shall be deemed to be the average of the closing prices of the
securities on such exchange over the thirty-day period ending three (3) days
prior to the closing;
(B) If actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the thirty-day period ending three (3) days prior to the
closing; and
(C) If there is no active public market, the value shall be
the fair market value thereof, as mutually determined by the Corporation and the
holders of at least a majority of the voting power of all then outstanding
shares of Preferred Stock.
(ii) The method of valuation of securities subject to investment
letter or other restrictions on free marketability (other than restrictions
arising solely by virtue of a stockholder's status as an affiliate or former
affiliate) shall be to make an appropriate discount from the market value
determined as above in (i)(A), (B) or (C) to reflect the approximate fair market
value thereof, as mutually determined by the Corporation and the holders of at
least a majority of the voting power of all then outstanding shares of such
Preferred Stock.
(c) In the event the requirements of this Section 1 are not complied
with, this Corporation shall forthwith either:
3
<PAGE>
(i) cause such closing to be postponed until such time as the
requirements of this Section 1 have been complied with; or
(ii) cancel such Transaction, in which event the rights, preferences
and privileges of the holders of the Preferred Stock shall revert to and be the
same as such rights, preferences and privileges existing immediately prior to
the date of the first notice referred to in Section 1(d) hereof.
(d) The Corporation shall give each holder of record of Preferred Stock
written notice of such impending Transaction not later than twenty (20) days
prior to the stockholder's meeting called to approve such Transaction, or twenty
(20) days prior to the closing of such Transaction, whichever is earlier, and
shall also notify such holders in writing of the final approval of such
Transaction. The first of such notices shall describe the material terms and
conditions of the impending Transaction and the provisions of this Section 1,
and the Corporation shall thereafter give such holders prompt notice of any
material changes. The Transaction shall in no event take place sooner than
twenty (20) days after the Corporation has given the first notice provided for
herein or sooner than ten (10) days after the Corporation has given notice of
any material changes provided for herein; provided, however, that such periods
may be shortened upon the written consent of the holders of Preferred Stock that
are entitled to such notice rights or similar notice rights and that represent
at least a majority of the voting power of all then outstanding shares of such
Preferred Stock.
2. CONVERSION. The holders of the Preferred Stock have conversion
----------
rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred Stock shall be
----------------
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the Corporation or any transfer agent
for the Preferred Stock, into such number of fully paid and nonassessable shares
of Common Stock as is determined: in the case of the Series A Preferred, by
dividing $0.90446 by the Series A Conversion Price, determined as hereinafter
provided, in effect at the time of the conversion; in the case of the Series B
Preferred, by dividing $3.4665 by the Series B Conversion Price, determined as
hereinafter provided, in effect at the time of the conversion; and in the case
of Series C Preferred, by dividing $3.4665 by the Series C Conversion Price,
determined as hereinafter provided, in effect at the time of the conversion.
The price at which shares of Common Stock shall be deliverable upon conversion
of the Series A Preferred (the "Series A Conversion Price") shall initially be
$0.90446 per share of Common Stock. The price at which shares of Common Stock
shall be deliverable upon conversion of the Series B Preferred (the "Series B
Conversion Price") shall initially be $3.4665 per share of Common Stock. The
price at which shares of Common Stock shall be deliverable upon conversion of
the Series C Preferred (the "Series C Conversion Price") shall initially be
$3.4665 per share of Common Stock. The term "Conversion Price," as used herein
shall refer to the respective Conversion Price of each series of Preferred
Stock. Each such Conversion Price shall be subject to adjustment as hereinafter
provided. Upon conversion, all declared and unpaid dividends on the Preferred
Stock shall be paid, to the extent funds are legally available therefor, either
in cash or in shares of Common Stock of the Corporation, at the election of the
Corporation, wherein the shares of Common Stock
4
<PAGE>
shall be valued at the fair market value at the time of such conversion, as
determined in good faith by the Board.
(b) Automatic Conversion. Each share of Preferred Stock shall
--------------------
automatically be converted into shares of Common Stock at the then effective
Conversion Price upon: (i) the closing of a firm underwritten public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, covering the offer and sale of shares of the Corporation's
Common Stock with an aggregate net proceeds (after deduction of underwriter's
discounts and commissions and offering expenses) to the Company of not less than
$20,000,000, the price per share to the public of which was not less than $7.70
per share (a "Qualified IPO"); or (ii) the written election of holders of not
less than a majority of the then outstanding Preferred Stock and a majority of
the then outstanding Series C Preferred. In the event of the automatic
conversion of the Preferred Stock upon a public offering as aforesaid, the
person(s) entitled to receive the Common Stock issuable upon such conversion of
Preferred Stock shall not be deemed to have converted such Preferred Stock until
immediately prior to the closing of such sale of securities.
(c) Mechanics of Conversion. No fractional shares of Common Stock
-----------------------
shall be issued upon conversion of Preferred Stock. In lieu of any fractional
shares to which the holder would otherwise be entitled (after aggregating all
shares of Preferred Stock held by such holder such that the maximum number of
whole shares of Common Stock is issued to such holder upon conversion), the
Corporation shall pay cash equal to such fraction multiplied by the then fair
market value of a share of Common Stock. Before any holder of Preferred Stock
shall be entitled to convert the same into full shares of Common Stock and to
receive certificates therefor, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Preferred Stock, and shall give written notice to the
Corporation at such office that such holder elects to convert the same;
provided, however, that in the event of an automatic conversion pursuant to
paragraph (b) hereof, the outstanding shares of Preferred Stock shall be
converted automatically without any further action by the holders of such shares
and whether or not the certificates representing such shares are surrendered to
the Corporation or its transfer agent, and provided further that the Corporation
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such automatic conversion unless the certificates evidencing
such shares of Preferred Stock are either delivered to the Corporation or its
transfer agent as provided above, or the holder notifies the Corporation or its
transfer agent that such certificates have been lost, stolen or destroyed and
executes an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with such certificates.
The Corporation shall, as soon as practicable after such delivery, or after
such agreement and indemnification, issue and deliver at such office to such
holder of Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which the holder shall be entitled as aforesaid and a
check payable to the holder in the amount of any cash amounts payable as the
result of a conversion into fractional shares of Common Stock. Such conversion
shall be deemed to have been made immediately prior to the close of business on
the date of such surrender of the
5
<PAGE>
shares of Preferred Stock to be converted, or, in the case of automatic
conversion, on the date of closing of the offering or the date of written
election to convert, and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on such date.
(d) Adjustments of the Conversion Price.
-----------------------------------
(i) If the number of shares of Common Stock outstanding at any
time after the date upon which any shares of Series C Preferred were first
issued (the "Original Issue Date") is increased by split or subdivision of the
outstanding shares of Common Stock or the receipt by holders of Common Stock of
a dividend or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the number of shares of Common Stock issuable on conversion of each share of
Preferred Stock shall be increased in proportion to such increase in outstanding
shares.
(ii) If the number of shares of Common Stock outstanding at any
time after the Original Issue Date is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the number of shares of Common Stock issuable on conversion of each
share of Preferred Stock shall be decreased in proportion to such decrease in
outstanding shares.
(iii) If at any time or from time to time the Corporation
distributes to all holders of the Corporation evidences of indebtedness or
assets of the Corporation (other than cash dividends), the holders of the
Preferred Stock shall thereafter be entitled to receive upon conversion of the
Preferred Stock the amount of such evidences of indebtedness or assets of the
Corporation as such holders of Preferred Stock would have been entitled to
receive had they converted their shares of Preferred Stock into shares of Common
Stock immediately prior to such distribution.
(e) Adjustments for Certain Corporate Transactions. If the Common Stock
----------------------------------------------
issuable upon conversion of the Preferred Stock shall be changed into the same
or a different number of shares of any other class or classes of stock of the
Corporation or another corporation, whether by merger, consolidation, sale of
all or substantially all of the assets of the Corporation, liquidation, capital
reorganization, reclassification or otherwise (other than a dividend,
subdivision, combination or consolidation of shares provided for above) (a
"Reorganization"), the Conversion Price then in effect shall, concurrently with
the effectiveness of such Reorganization, be proportionately adjusted such that
the Preferred Stock shall be convertible into, in lieu of the number of shares
of Common Stock which the holders would otherwise have been entitled to receive,
a number of shares of such other class or classes of stock of the Corporation or
other
6
<PAGE>
corporation, as the case may be, equivalent to the number of shares of Common
Stock that would have been subject to receipt by the holders upon conversion of
such shares of Preferred Stock immediately before such Reorganization.
Furthermore, in the event of an acquisition, merger or consolidation of the
Corporation whereby the Corporation's stockholders of record immediately prior
to such acquisition, merger or consolidation hold less than 50% of the voting
power of the surviving entity immediately after such acquisition, merger or
consolidation and (i) such acquisition, merger or consolidation shall be
effected in such a way that the holders of the Corporation's Common Stock shall
be entitled to receive stock, securities or assets other than cash and (ii) the
surviving entity is not subject to the periodic reporting requirements of
Sections 12(g) or 15(d) of the Securities Act of 1934, as amended, immediately
after such acquisition, merger or consolidation, appropriate provisions shall be
made with respect to the rights and interests of holders of Preferred Stock to
the end that the rights, preferences and privileges of the Preferred Stock as
set forth in this Restated Certificate, as applicable (including without
limitation provisions for adjustments of the Conversion Price), shall thereafter
be incorporated into any shares of stock or securities thereafter deliverable
upon the exercise of such conversion rights.
(f) Adjustment of Series C Conversion Price. Upon conversion of any
---------------------------------------
shares of Series C Preferred to Common Stock in accordance with this Section 2,
the Series C Conversion price shall be adjusted to the extent necessary to an
amount equal to the following:
Series C Conversion Price = $45 million
--------------------------------------
Measurement Shares plus Option Shares
For purposes of this Section 2(f), (i) the term "Measurement Shares" shall equal
10,690,196 shares of Common Stock (as adjusted for stock splits, stock dividends
or similar recapitalizations after the Original Issue Date) and (ii) the term
"Option Shares" shall equal the 2,291,181 shares of Common Stock issuable upon
exercise of stock options ("Original Issue Date Options") outstanding as of the
Original Issue Date less such number of Option Shares that were subject to
Original Issue Date Options that were canceled as a result of the termination of
employment or consulting services on or prior to the date of conversion of the
Series C Preferred (as adjusted for stock splits, stock dividends or similar
recapitalizations after the Original Issue Date).
(g) No Fractional Shares as to Adjustments. No fractional shares shall
--------------------------------------
be issued upon the conversion of any share or shares of the Preferred Stock, and
the number of shares of Common Stock to be issued shall be rounded down to the
nearest whole share. Whether fractional shares are issuable upon such
conversion shall be determined on the basis of the total number of shares of
Preferred Stock the holder is at the time converting into Common Stock and the
number of shares of Common Stock issuable upon such aggregate conversion.
(h) No Impairment. The Corporation will not, by amendment of its
-------------
Restated Certificate of Incorporation or through any Reorganization, issue or
sell securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in
7
<PAGE>
the carrying out of all the provisions of this Section 2 and in the taking of
all such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Preferred Stock against impairment.
(i) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment of the Conversion Price pursuant to this Section 2, the Corporation
at its expense shall promptly compute such adjustment in accordance with the
terms hereof and furnish to each holder of Preferred Stock a certificate setting
forth such adjustment and showing in detail the facts upon which such adjustment
is based. The Corporation shall, upon the written request at any time of any
holder of Preferred Stock, furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Price at the time in effect, and (iii) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of such holder's shares of Preferred Stock.
3. MANDATORY REDEMPTION.
--------------------
(a) The Corporation shall redeem, from any source of funds legally
available therefor, all then outstanding shares of Series C Preferred on the
ten-year anniversary date (the "Redemption Date") of the Original Issue Date.
The Corporation shall effect such redemption on the Redemption Date by paying in
exchange for the outstanding shares of Series C Preferred Stock cash in the
amount equal to the liquidation value of such shares pursuant to Section 1 above
(the "Redemption Price").
(b) At least fifteen (15) but no more than thirty (30) days prior to the
Redemption Date, written notice shall be mailed, first class postage prepaid, to
each holder of record (at the close of business on the business day next
preceding the day on which notice is given) of the Series C Preferred, at the
address last shown on the records of the Corporation for such holder, notifying
such holder of the redemption to be effected, specifying the Redemption Date,
the Redemption Price, the place at which payment may be obtained and calling
upon such holder to surrender to the Corporation, in the manner and at the place
designated, his or her certificate or certificates representing the Series C
Preferred (the "Redemption Notice"). Except as provided in Section 3(c) below,
on or after the Redemption Date, each holder of Series C Preferred shall
surrender to the Corporation the certificate or certificates representing such
shares, in the manner and at the place designated in the Redemption Notice, and
thereupon the Redemption Price of such shares shall be payable to the order of
the person whose name appears on such certificate or certificates as the owner
thereof and each surrendered certificate shall be canceled.
(c) From and after the Redemption Date, unless there shall have been a
default in the payment of the Redemption Price, all rights of the holders of
shares of Series C Preferred (except the right to receive the Redemption Price
without interest upon surrender of their certificate or certificates) shall
cease with respect to such shares, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be outstanding for
any purpose whatsoever. If the funds of the Corporation legally available for
redemption of shares of Series C Preferred on the
8
<PAGE>
Redemption Date are insufficient to redeem the total number of shares of Series
C Preferred, those funds which are legally available will be used to redeem the
maximum possible number of such shares ratably among the holders of Series C
Preferred based on their holdings of Series C Preferred. The shares of Series C
Preferred not redeemed shall remain outstanding and entitled to all the rights
and preferences provided herein. At any time thereafter when additional funds of
the Corporation are legally available for the redemption of shares of Series C
Preferred such funds will immediately be used to redeem the balance of the
shares to the extent of such additional funds until all shares of Series C
Preferred are redeemed.
(d) At least ten days prior to the Redemption Date, the Corporation
shall deposit the Redemption Price of all shares of Series C Preferred with a
bank or trust corporation having aggregate capital and surplus in excess of
$100,000,000 as a trust fund for the benefit of the respective holders of the
Series C Preferred, with irrevocable instructions and authority to the bank or
trust corporation to pay the Redemption Price for such shares to their
respective holders on or after the Redemption Date upon receipt of notification
from the Corporation that such holder has surrendered his or her share
certificate to the Corporation pursuant to Section 3(b) above. As of the
Redemption Date, the deposit shall constitute full payment of the shares to
their holders, and from and after the Redemption Date the shares of Series C
Preferred shall be redeemed and shall be deemed to be no longer outstanding, and
the holders thereof shall cease to be stockholders with respect to such shares
and shall have no rights with respect thereto except the rights to receive from
the bank or trust corporation payment of the Redemption Price of the shares,
without interest, upon surrender of their certificates therefor. Such
instructions shall also provide that any moneys deposited by the Corporation
pursuant to this Section 3(d) for the redemption of shares thereafter converted
into shares of the Corporation's Common Stock pursuant to Section 2 hereof prior
to the Redemption Date shall be returned to the Corporation forthwith upon such
conversion. The balance of any moneys deposited by the Corporation pursuant to
this Section 3(d) remaining unclaimed at the expiration of two years following
the Redemption Date shall thereafter be returned to the Corporation upon its
request expressed in a resolution of its Board of Directors.
(e) Notwithstanding anything to the contrary in this Section 3, in the
event the Corporation is precluded by applicable law from redeeming any of the
Series C Preferred hereunder, the Corporation shall redeem such Series C
Preferred at the earliest date permitted under applicable law.
(f) The provisions of this Section 3 shall terminate upon the closing of
a Qualified IPO.
4. VOTING RIGHTS.
-------------
(a) General. Except as otherwise provided herein or required by law,
-------
the holder of each share of Common Stock issued and outstanding shall have one
vote and the holder of each share of Preferred Stock shall be entitled to the
number of votes equal to the number of shares of Common Stock into which such
share of Preferred Stock could be converted at the record date for
9
<PAGE>
determination of the stockholders entitled to vote on such matters, or, if no
such record date is established, at the date such vote is taken or any written
consent of stockholders is solicited, such votes to be counted together with all
other shares of stock of the Corporation having a general voting power and not
separately as a class. Holders of Common Stock and Preferred Stock shall be
entitled to notice of any stockholders' meeting in accordance with the Bylaws of
the Corporation. Fractional votes by the holders of Preferred Stock shall not,
however, be permitted and any fractional voting rights shall (after aggregating
all shares into which shares of Preferred Stock held by each holder could be
converted) be rounded to the nearest whole number.
(b) The holders of Series C Preferred voting together as a separate
class shall have the right to elect one (1) member of the Board of Directors
until the earlier of (i) a Qualified IPO or (ii) at such time as the outstanding
Series C Preferred (including shares of Common Stock issuable upon conversion of
the Series C Preferred) shall be less than five percent (5%) of the then
outstanding Common Stock of the Company (including shares of Common Stock
issuable upon conversion, exchange or exercise of securities convertible into or
exercisable for or exchangeable for Common Stock). In the event that the Board
of Directors is increased after the Original Issue Date to a number of members
greater than ten (10), then for purposes of the preceding sentence, the holders
of Series C Preferred voting together as a separate class shall have the right
(i) to elect two (2) members of the Board of Directors so long as the total
number shall be between 11 and 13 and (iii) to elect a number of directors
equivalent to the number of directors that could be elected by the holders of
Series C Preferred by cumulative voting in the event the total number of
directors exceeds 13.
(c) Protective Provisions. So long as any shares of Series C Preferred
---------------------
remain outstanding, the Corporation shall not, without the vote or written
consent of not less than a majority of such outstanding shares of Series C
Preferred voting together as a single class:
(i) Increase or decrease the total number of authorized shares of
Series C Preferred;
(ii) Alter or change by amendment to this Restated Certificate of
Incorporation or otherwise the terms and provisions of the Series C Preferred or
any other terms so as to affect adversely the rights, preferences or privileges
of the Series C Preferred; or
(iii) Create or issue any new shares or any other securities
convertible into equity securities of the Corporation having a preference senior
to the Series C Preferred with respect to voting, dividends, redemption or upon
liquidation.
5. STATUS OF CONVERTED STOCK. In case any shares of Preferred Stock shall
-------------------------
be converted pursuant to Section 2 hereof, the shares so converted shall be
canceled and shall not be issuable by the Corporation. From time to time, this
Restated Certificate of Incorporation shall be appropriately revised to reflect
the corresponding reduction in the Corporation's authorized capital stock.
10
<PAGE>
V.
The Board is expressly authorized to make, alter or repeal Bylaws of the
Corporation, but the stockholders may make additional Bylaws and may alter or
repeal any Bylaw whether adopted by them or otherwise.
VI.
Elections of directors need not be by written ballot except and to the
extent provided in the Bylaws of the Corporation.
VII.
(a) To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or as may hereafter be amended, a director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
(b) The Corporation shall indemnify to the fullest extent permitted by
law any person made or threatened to be made a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he, his testator or intestate is or was a director, officer or employee of
the Corporation or any predecessor of the Corporation or serves or served at any
other enterprise as a director, officer or employee at the request of the
Corporation or any predecessor to the Corporation.
(c) Neither any amendment nor repeal of this Article VII, nor the
adoption of any provision of the Corporation's Restated Certificate of
Incorporation inconsistent with this Article VII, shall eliminate or reduce the
effect of this Article VII in respect of any matter occurring, or any action or
proceeding accruing or arising or that, but for this Article VII, would accrue
or arise, prior to such amendment, repeal or adoption of an inconsistent
provision.
FIFTH: That thereafter, pursuant to a resolution of its Board of
Directors, the foregoing resolutions were submitted to the stockholders of the
Corporation for their approval by written consent in accordance with Section 228
of the General Corporation Law of the State of Delaware, by which written
consent the necessary number of shares as required by statute were voted in
favor of the amendment.
SIXTH: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
SEVENTH: That written notice of said amendment was duly given to the
stockholders of this corporation who did not consent in writing to the foregoing
resolutions.
11
<PAGE>
IN WITNESS WHEREOF, PerfectMarket, Inc. has caused this Restated
Certificate of Incorporation to be signed by its President and Chief Executive
Officer and attested to by its Secretary this ______ day of May, 1996.
_____________________________________
Charles Conn
President and Chief Executive Officer
ATTEST:
Jeffrey Brewer
Secretary
13
<PAGE>
METROBEAT, INC.
225 Lafayette Street
New York, New York 10012
June 7, 1996
Assistant Commissioner (International)
Director, Office of Compliance
OP:I:C:E:666
950 L'Enfant Plaza South, S.W.
COMSAT Building
Washington, D.C. 20024
Re: Notice Required Under Treasury Regulation Section 1.897-2(h)(2)
---------------------------------------------------------------
Gentlemen:
At the request of PerfectMarket, Inc. ("PerfectMarket"), in connection with
their acquisition of MetroBeat, Inc. ("MetroBeat"), we provided the attached
statement to PerfectMarket on June 7, 1996.
(i) This notice is provided pursuant to the requirements of Treasury
Regulation Section 1.897-2(h)(2);
(ii) The following information relates to the corporation providing the
notice:
Name MetroBeat, Inc.
Address 225 Lafayette Street
New York, New York 10012
Taxpayer Identification
Number
(iii) The attached statement was not requested by a foreign interest
holder. It was voluntarily provided by MetroBeat in response to a
request from PerfectMarket in accordance with Treasury Regulation
Section 1.1445-2(c)(3)(i). The following information relates to
PerfectMarket which requested the attached statement:
Name PerfectMarket, Inc.
Address 4502 Dyer Street, Suite 201
La Cresenta, CA 91214
<PAGE>
Taxpayer Identification
Number 95-4546874
(iv) The interest in question (capital stock and rights to acquire
capital stock of MetroBeat) is not a U.S. real property interest.
Under penalties of perjury, the undersigned declares that the above notice
(including the attachment hereto) is correct to my knowledge and belief.
Sincerely,
Mark Davies
President
Enclosure
<PAGE>
EMPLOYMENT AND NONCOMPETITION AGREEMENT
Agreement made on June 21, 1996, between PerfectMarket, Inc., a Delaware
corporation (the "Company"), and Mark Davies ("Executive") and for purposes of
Sections 1(d)(i) and 1(e) only, Joshua White (the "Shareholder").
RECITALS
--------
A. The Company, MetroBeat, Inc., a New York corporation ("MetroBeat"), MB
Acquisition Corporation, a New York corporation and wholly-owned subsidiary of
the Company ("Sub"), and the Executive have executed and delivered an Agreement
and Plan of Reorganization dated May 31, 1996 (the "Reorganization Agreement"),
providing for the acquisition of MetroBeat by the Company which became effective
on the date hereof pursuant to a merger of Sub with and into MetroBeat.
B. The Company and Executive desire to enter into certain agreements
providing for Executive's employment with the Company on the terms hereinafter
set forth.
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Employment. The Company agrees to employ Executive and Executive
----------
accepts such employment for the period beginning as of the date hereof and
ending upon the earlier of (i) termination pursuant to paragraph 1(d) or 1(e)
hereof or (ii) the date two (2) years from the date of this Agreement (the
"Employment Period").
(a) Services. During the Employment Period, Executive will render
--------
such services of an executive and administrative character to the Company and
its affiliates as the Chief Executive Officer, President or Chief Operating
Officer (or any officer of the Company who reports directly to any such
person)(collectively, the "Senior Officers") may from time to time direct.
Executive will devote his best efforts and substantially all of his business
time and attention (except for vacation periods and reasonable periods of
illness or other incapacity) to the business of the Company and its affiliates
and will faithfully and diligently carry out such duties and have such
responsibilities as are customary among persons employed in substantially
similar capacities for similar companies. Executive will report to the Chief
Executive Officer, or such other officer designated by the Chief Executive
Officer, and shall faithfully and diligently comply with all of its reasonable
and lawful directives. For purposes of this Agreement, the term "affiliates"
means any corporation, limited partnership, limited liability company or other
entity
<PAGE>
engaged in the same business as the Company or a related business, which is
controlled by or under common control with the Company.
(b) Salary. During the Employment Period and thereafter as provided
------
in paragraph (d) below, the Company will pay Executive a base salary at the rate
of not less than $[*] per annum (or such higher amount as the Board may
-------------
establish from time to time). Executive's salary will be consistent with other
officers of the Company with a similar level of responsibility and performance.
Executive's base salary for any partial year will be prorated based upon the
number of days elapsed in such year and will be payable in accordance with the
Company's customary payroll practices.
(c) Benefits. In addition to the compensation described above in
--------
this paragraph 1, Executive will be entitled during the Employment Period to the
following benefits:
(i) such health insurance and other benefits as are
available from time to time to the executive officers employees
generally;
(ii) vacation, sick leave and personal time in accordance
with the Company's vacation and absence policies as in effect
from time to time;
(iii) reimbursement, upon submission of documentation in
accordance with the Company's regular expense policies, for
reasonable business expenses incurred on the Company's behalf by
Executive; and
(iv) participation in any savings plan, 401(k) plan,
profit sharing plan or pension plan as the Company may establish
in the future for the Company's salaried employees generally.
(d) Termination. Executive's employment with the Company will
-----------
continue until terminated by Executive's death, disability which cannot be
reasonably accommodated, or termination of Executive's employment pursuant to
any of the following provisions:
(i) Termination by the Company without Cause;
-----------------------------------------
Constructive Termination. The Company may at any time
------------------------
terminate Executive's employment without Cause (as defined below)
by giving Executive notice of the effective date of termination
(which effective date may be the date of such notice). In the
event of such termination or a Constructive Termination (as
defined below), the Company shall be obligated to pay Executive
continuing payments of base salary in accordance with paragraph
(b) above at the rate in effect at the effective date of such
termination for a period of twelve (12) months following the
effective date of such termination (the "Salary Severance") and
Executive and the other former shareholders of MetroBeat shall
receive any remaining payments due to them under Section
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
2.2(e) of the Reorganization Agreement (without regard to Section
2.2(h) thereto) (the "Merger Payments"); provided that, in the
event that Executive breaches any of the representations,
warranties and covenants set forth in paragraphs 2 and 4 below,
(x) with respect to the Salary Severance, the Company will have
no further obligation to make payments of the base salary
following knowledge of such breach and may pursue all other
available remedies, and the Executive shall be obligated to repay
the Company the amount of Salary Severance within ten (10) days
following delivery by the Company to Executive of written
confirmation of such breach, and (y) (if the termination occurs
within 24 months after the date hereof), with respect to the
Merger Payments, Section 2.2(h) of the Reorganization Agreement
shall apply and the Shareholder shall be obligated to return to
the Company any shares required to be returned as set forth in
said Section 2.2(h) of the Reorganization Agreement.
As used in this Agreement, "Constructive Termination" shall mean
the termination of Executive's employment by Executive if, during
the Employment Period, one or more of the following events have
occurred:
(A) without Executive's express written consent, the
assignment to Executive of any duties or the reduction of
Executive's duties, either of which results in a significant
diminution in Executive's position or responsibilities with the
Company in effect immediately prior to such assignment, or the
removal of Executive from such position and responsibilities; or
(B) any material breach by the Company of any material
provision of this Agreement.
(ii) Termination by the Company for Cause. A majority of
------------------------------------
the Board shall have the right to terminate Executive's
employment at any time for any of the following reasons (each of
which is referred to herein as "Cause") by giving Executive
written notice of the Cause and Executive shall have fifteen (15)
days from the receipt of such notice to cure such Cause, to the
extent such cause is curable. If the cause is not cured within
fifteen days or the Cause is not curable, the Company shall give
Executive written notice of the effective date of termination
(which effective date may be the date of such notice):
(A) the willful breach of any provision of paragraphs
1(a), 2 or 4 (including but not limited to a refusal to follow
reasonable and lawful directives of the Board of Directors or the
Senior Officers);
-3-
<PAGE>
(B) any act of fraud or dishonesty with respect to any
aspect of the Company's or any affiliate's business;
(C) continued use of illegal drugs;
(D) as a result of Executive's gross negligence or
willful misconduct, Executive shall violate, or cause the Company
to violate, any applicable federal or state securities or banking
law or regulation and as a result of such violation, shall
become, or shall cause the company or any affiliate to become the
subject of any legal action or administrative proceeding seeking
an injunction from further violations or a suspension of any
right or privilege;
(E) as a result of Executive's gross negligence or
willful misconduct, Executive shall commit any act that causes,
or shall knowingly fail to take reasonable and appropriate action
to prevent, any material injury to the financial condition or
business reputation of the Company or any affiliate; or
(F) indictment for a felony.
If a majority of the Board terminates Executive's employment for
any of the reasons set forth above in this paragraph 1(d)(ii), the
Company shall have no further obligations hereunder from and after the
effective date of termination and shall have all other rights and
remedies available under this or any other agreement and at law or in
equity.
(e) Voluntary Termination by Executive. In the event that
----------------------------------
Executive's employment with the Company is terminated by Executive (except as
set forth in paragraph 1(d)(i)), the Company shall have no further obligations
hereunder from and after the date of such termination. Upon termination of
Executive's employment under this Section 1(e) within the Employment Period,
Executive and the Shareholder shall relinquish their right to receive certain
shares of the Company's capital stock or return shares to the Company, as the
case may be, pursuant to Section 2.2(h) of the Reorganization Agreement.
2. Nondisclosure. During the Employment Period and thereafter, Executive
-------------
shall not, without the prior written consent of the Board of Directors, disclose
or use for any purpose (except in the course of his employment under this
Agreement and in furtherance of the business of the Company or any of its
affiliates or subsidiaries) any confidential or proprietary data of the Company.
As an express condition of Executive's employment with the Company, Executive
agrees to execute confidentiality agreements as requested by the Company,
including but not limited to the Company's form of Employee Inventions and
Confidentiality Agreement which is attached hereto as Exhibit A and incorporated
---------
herein by reference.
-4-
<PAGE>
3. Other Businesses. During the Employment Period, Executive agrees that
----------------
he will not, directly or indirectly except with the express written consent of
the Board, become engaged in, render services for, or permit his name to be used
in connection with, or directly or indirectly counsel or consult with, any
business other than the business of the Company and its affiliates.
4. Noncompetition.
--------------
(a) Executive agrees that, with respect to the Current Restricted
Business (as defined on Exhibit B hereto):
---------
(i) During the term he performs services for the Company
and for a period of [*] after the termination thereof (for any
reason), he will not interfere with the relationship of the
Company and any employee, agent or representative.
(ii) During the term he performs services for the Company
and for a period of [*] after the termination thereof (for any
reason), he will not directly or indirectly interfere with the
relationships of the Company with customers, dealers,
distributors, vendors or sources of supply.
(iii) Executive further agrees that during the term he
performs services for the Company and for a period of [*] after
the termination thereof (for any reason) he will not directly or
indirectly own, manage, operate, control, be employed by,
participate in, or be connected in any manner with the ownership,
management, operation or control of, any Current Restricted
Business worldwide.
(b) Executive agrees that, with respect to an Alternative Restricted
Business (as defined on Exhibit B hereto):
---------
(i) During the term he performs services for the Company
and for a period of [*] after the termination thereof (for any
reason), he will not interfere with the relationship of the
Company and any employee, agent or representative.
(ii) During the term he performs services for the Company
and for a period of [*] after the termination thereof (for any
reason), he will not directly or indirectly interfere with the
relationships of the Company with customers, dealers,
distributors, vendors or sources of supply.
(iii) Executive further agrees that during the term he
performs services for the Company and for a period of [*] after
the termination thereof (for any reason) he will not directly or
indirectly own, manage,
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-5-
<PAGE>
operate, control, be employed by, participate in, or be connected
in any manner with the ownership, management, operation or
control of, any Alternative Restricted Business worldwide.
(c) After discussing the matter with Executive, the Company shall
have the right, subject to applicable law, to inform any other third party that
the Company reasonably believes to be, or to be contemplating, participating
with Executive or receiving from Executive assistance in violation of this
Agreement, of the terms of this Agreement and of the rights of the Company
hereunder, and that participation by any such third party with Executive in
activities in violation of this Section 4 may give rise to claims by the Company
against such third party.
5. Right of First Offer.
--------------------
(a) If, during the two (2) year period from the date thereof, the Company
shall desire to effect a sale, disposition or other transfer (a "Transfer") of
the New York operations of the Company consisting of the business of MetroBeat
as currently being, or as may in the future be, conducted (the "New York
Operations"), then the Company shall first submit a notice (the "Offering
Notice") to the Executive specifying all of the material terms of the proposed
Transfer, including the price being requested and the name and address of the
proposed transferee (if any).
(b) Within 15 days after receipt of an Offering Notice, Executive shall
give notice to the Company stating whether Executive elects to acquire all of
the New York Operations on the terms set forth in the Offering Notice. If
Executive does not elect to acquire all of the New York Operations on the terms
set forth in the Offering Notice, the Company may, for a period of 180 days from
the end of such 15-day period, effect a Transfer of the New York Operations to a
third party on terms no more favorable than the terms set forth in the Offering
Notice. If the Company fails to effect such a Transfer to a third party within
such 180-day period, the Company shall thereafter be required to submit another
Offering Notice in order to effect any Transfer of the New York Operations under
this Section 5.
(c) The right of first offer set forth in this Section 5 shall be
nonassignable by Executive.
(d) Notwithstanding anything to the contrary in this Section 5, Perfect
Market shall not be under any obligation to effect a Transfer.
6. Termination of Agreement. This Agreement shall terminate on the
------------------------
second anniversary of the date hereof.
7. General Provisions.
------------------
(a) Notices. Any notice provided for in this Agreement must be in
-------
writing and must be either personally delivered, or mailed by first class mail
(postage prepaid and return
-6-
<PAGE>
receipt requested) or sent by reputable overnight courier service, to the
recipient at the address below indicated:
To the Company:
PerfectMarket, Inc.
4502 Dyer Street, Suite 201
LaCresenta, CA 91214
Attn: Chief Executive Officer
To Executive:
At Executive's last known
address as listed with
the Company
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or if mailed, five days after so mailed.
(b) Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision in any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein except that
any court having jurisdiction shall have the power to reduce the duration, area
or scope of such invalid, illegal or unenforceable provision and, in its reduced
form, it shall be enforceable.
(c) Complete Agreement. This Agreement (with all exhibits hereto)
------------------
and the Reorganization Agreement, which agreement is incorporated herein by
reference, embodies the complete agreement and understanding between the parties
and supersedes and preempts any prior understandings, agreements or
representations by or between the parties, written or oral, which may have
related to the subject matter hereof in any way.
(d) Successors and Assigns. This Agreement is intended to bind and
----------------------
inure to the benefit of and be enforceable by Executive and the Company [and,
with respect to Sections 1(d)(i) and 1(e), the Shareholder], except that
Executive may not assign any of his rights or obligations under this Agreement.
The Company may assign its rights under this Agreement, as security, to any
lender to the Company, and in the event of a sale of the stock, or substantially
all of the stock, of the Company, or consolidation or merger of the Company into
another corporation
-7-
<PAGE>
or entity, or the sale of substantially all of the operating assets of the
Company to another corporation, entity or individual, the Company may assign its
rights and obligations under this Agreement to its successor-in-interest, in
which event such successor-in-interest shall be deemed to have acquired all
rights and assumed all obligations of the Company hereunder.
(e) CHOICE OF LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
-------------
VALIDITY AND INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL
LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF CALIFORNIA.
(f) Remedies. Each of the parties to this Agreement will be entitled
--------
to enforce his or its rights under this Agreement specifically, to recover
damages (including, without limitation, reasonable fees and expenses of counsel)
by reason of any breach of any provision of this Agreement and to exercise all
other rights existing in his or its favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach or
threatened breach of the provisions of this Agreement and that any party may in
his or its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement.
(g) Amendments and Waivers. Any provision of this Agreement may be
----------------------
amended or waived only with the prior written consent of Executive and a
majority of the Board.
(h) Absence of Conflicting Agreements. Executive hereby warrants and
---------------------------------
covenants that his employment by the Company does not result in a breach of the
terms, conditions or provisions of any agreement to which Executive is subject.
(i) Survival. No termination of Executive's employment by either or
--------
both parties shall reduce or terminate Executive's covenants and agreements in
paragraphs 2 and 4.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered on the day and year first above written.
PERFECTMARKET, INC.
By:____________________________
Name: Charles Conn
Title: President
EXECUTIVE
_______________________________
Mark Davies
SHAREHOLDER
_______________________________
Joshua White
(EMPLOYMENT AGREEMENT SIGNATURE PAGE - MARK DAVIES)
-9-
<PAGE>
EXHIBIT A
EMPLOYEE INVENTIONS AND CONFIDENTIALITY AGREEMENT
-10-
<PAGE>
EXHIBIT B
DEFINITIONS OF CURRENT RESTRICTED BUSINESS
AND ALTERNATIVE RESTRICTED BUSINESS
As used in Section 4, the term "Current Restricted Business" shall mean the
business of providing business directory listings, events listings and community
and civic information in electronic form or any other business in which the
Company actively engages as of the date of this Agreement.
As used in Section 4, the term "Alternative Restricted Business" shall mean
any business in which the Company may actively engage from time to time during
the Employment Period, but which is not included in the definition of Current
Restricted Business above.
-11-
<PAGE>
EXHIBIT I
---------
INVESTMENT REPRESENTATION STATEMENT
Pursuant to the Agreement and Plan of Reorganization by and among
PerfectMarket, Inc., a Delaware corporation ("PerfectMarket"), MB Acquisition
Corporation, a New York corporation and wholly-owned subsidiary of PerfectMarket
("Sub"), MetroBeat, Inc., a New York corporation ("MetroBeat"), and a
shareholder of MetroBeat, PerfectMarket is acquiring MetroBeat in a merger of
Sub with and into MetroBeat (the "Merger") and the former shareholders of
MetroBeat are acquiring certain securities of PerfectMarket and rights to
acquire securities (the "Securities") of PerfectMarket upon the occurrence of
certain events. In connection with the acquisition of the Securities in the
Merger, the undersigned shareholder of MetroBeat (the "Shareholder") represents
to PerfectMarket as follows:
(a) Shareholder is aware of PerfectMarket's business affairs and
financial condition and has acquired sufficient information about PerfectMarket
to reach an informed and knowledgeable decision to acquire the Securities.
Shareholder is acquiring these Securities for investment for Shareholder's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
(b) Shareholder acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Shareholder's investment intent as expressed herein. In this
connection, Shareholder understands that, in the view of the Securities and
Exchange Commission, the statutory basis for such exemption may be unavailable
if Shareholder's representation was predicated solely upon a present intention
to hold these Securities for the minimum capital gains period specified under
tax statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Shareholder further understands that the Securities must
be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Shareholder
further understands that no public market currently exists for the securities of
PerfectMarket, and that even if a public market exists at the time the
Shareholder wishes to sell the Securities, PerfectMarket may not be satisfying
the current public information requirements of Rule 144 as promulgated under the
Securities Act. Shareholder further acknowledges and understands that
PerfectMarket is under no obligation to register the Securities. Shareholder
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to PerfectMarket and any other legend required under applicable
state securities laws.
<PAGE>
(c) Shareholder is familiar with the provisions of Rule 144 which,
in substance, permit limited public resale of "restricted securities"
acquired, directly or indirectly from the issuer thereof, in a non-public
offering subject to the satisfaction of certain conditions set forth in Rule
144, which requires the resale to occur not less than two years after the
later of the date the Securities were sold by PerfectMarket or the date the
Securities were sold by an affiliate of PerfectMarket, within the meaning of
Rule 144; and, in the case of acquisition of the Securities by an affiliate,
or by a non-affiliate who subsequently holds the Securities less than three
years.
(e) Shareholder further understands that in the event all of the
applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
are not exclusive, the Staff of the Securities and Exchange Commission has
expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that
such persons and their respective brokers who participate in such transactions
do so at their own risk. Shareholder understands that no assurances can be
given that any such other registration exemption will be available in such
event.
Signature of Shareholder:
/s/ Mark Davies
___________________________________
Date: June 12, 1996
<PAGE>
(c) Shareholder is familiar with the provisions of Rule 144 which,
in substance, permit limited public resale of "restricted securities"
acquired, directly or indirectly from the issuer thereof, in a non-public
offering subject to the satisfaction of certain conditions set forth in Rule
144, which requires the resale to occur not less than two years after the
later of the date the Securities were sold by PerfectMarket or the date the
Securities were sold by an affiliate of PerfectMarket, within the meaning of
Rule 144; and, in the case of acquisition of the Securities by an affiliate,
or by a non-affiliate who subsequently holds the Securities less than three
years.
(e) Shareholder further understands that in the event all of the
applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
are not exclusive, the Staff of the Securities and Exchange Commission has
expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that
such persons and their respective brokers who participate in such transactions
do so at their own risk. Shareholder understands that no assurances can be
given that any such other registration exemption will be available in such
event.
Signature of Shareholder:
/s/ Joshua White
___________________________________
Date: June 5, 1996
<PAGE>
AMENDMENT #1 TO
AGREEMENT AND PLAN OF REORGANIZATION
This Amendment (the "Amendment") to the Agreement and Plan of
Reorganization, dated May 31, 1996, by and among PerfectMarket, Inc., a
Delaware corporation ("PerfectMarket"), MB Acquisition Corporation, a New
York corporation ("MB Acquisition"), MetroBeat, Inc., a New York corporation
("MetroBeat"), Mark Davies and Joshua White (the "Agreement"), is made as of
June 21, 1996 among the same parties.
RECITAL
-------
WHEREAS, the parties entered into the Agreement pursuant to which MB
Acquisition shall be merged with and into MetroBeat such that MetroBeat
becomes a wholly-owned subsidiary of PerfectMarket; and
WHEREAS, the Agreement provided for the issuance by PerfectMarket of
Series B Preferred Stock and/or cash with an aggregate value of [*] ("Purchase
Price"); and
WHEREAS, the parties desire to amend the Agreement to provide that the
Purchase Price shall be decreased to [*].
NOW, THEREFORE, in consideration of the foregoing, the parties agree
as follows:
1. AMENDMENTS TO THE AGREEMENT. The parties hereby agree that the
---------------------------
Agreement shall be amended as follows:
1.1 Amendment to Section 2.2(e)(i). Section 2.2(e)(i) of the
------------------------------
Agreement shall be deleted in its entirety and the following shall be
substituted in lieu thereof:
"(i) Subject to Section 2.2(e)(iii) below, the Aggregate
Consideration to be paid by PerfectMarket pursuant to the Merger shall
[*]."
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
1.2 Amendment to Section 2.2(e)(iii). Section 2.2(e)(iii)
--------------------------------
of the Agreement shall be deleted in its entirety and the following shall be
substituted in lieu thereof.
"(i) PerfectMarket shall issue a minimum of [*] shares
and a maximum of [*] shares of its capital stock (as adjusted for
stock splits, stock dividends and similar recapitalizations of
PerfectMarket) to the shareholders of MetroBeat pursuant to this
Section 2.2. If the shareholders elect cash for any portion of the
Final Payment pursuant to Section 2.2(e)(ii), then both the minimum of
[*] shares and the maximum of [*] shares shall be reduced by the
number of shares equal to such minimum or maximum multiplied by the
percentage equal to the amount of the cash payment elected by the
shareholders as the numerator, and $[*] as the denominator. Such an
adjustment shall not be applicable to any portion of the Final Payment
PerfectMarket elects to make in cash. At the time PerfectMarket shall
be obligated to deliver a cumulative aggregate amount to the
shareholders of MetroBeat of [*] shares of capital stock in accordance
with the provisions of this Section 2.2(e), all payment obligations
of PerfectMarket in excess of such amount shall immediately terminate.
In the event that PerfectMarket's payment obligations as calculated
through the Final Payment shall be less than [*] shares of capital
stock, PerfectMarket shall issue as part of the Final Payment such
additional number of shares of capital stock as required such that the
cumulative aggregate shares issued pursuant to this Section 2.2(e)
shall equal [*] shares."
1.3 Amendment to Section 5.10. Section 5.10 of the Agreement
-------------------------
shall be deleted in its entirety and the following shall be substituted in
lieu thereof:
"Within thirty (30) days after the Closing, PerfectMarket agrees to
pay the liabilities of MetroBeat to Davies, Joshua White and the
American Broadcasting Corporation in the aggregate amount not to
exceed $[*]
2. MISCELLANEOUS.
-------------
2.1 Successors and Assigns. Except as otherwise expressly
----------------------
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.
2.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO
CONTRACTS ENTERED INTO AND WHOLLY TO BE PERFORMED WITHIN THE STATE OF
CALIFORNIA BY CALIFORNIA RESIDENTS.
2.3 Waivers and Amendments. The rights and obligations of
----------------------
the parties under this Agreement may be amended, waived or discharged (either
generally or in a particular instance, either retroactively or prospectively,
and either for a specified period of time or indefinitely) only by a written
instrument effecting such amendment, waiver or discharge signed by the Company
and by Purchasers holding at least a majority of the Shares. Any amendment or
waiver effected in
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-2-
<PAGE>
accordance with this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities and the Company.
2.4 Titles and Subtitles. The titles of the paragraphs and
--------------------
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
2.5 Severability of this Agreement. If any provision of this
------------------------------
Agreement shall be judicially determined to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
2.6 Delays or Omissions. It is agreed that no delay or omission to
-------------------
exercise any right, power or remedy accruing to any party upon any breach or
default of any other party under this Agreement 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 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. It is further agreed that any waiver, permit, consent or approval
of any kind or character of any breach or default under this Agreement, or any
waiver of any provisions or conditions of this Agreement must be in writing
and shall be effective only to the extent specifically set forth in writing
and that all remedies, either under this Agreement, by law or otherwise, shall
be cumulative and not alternative.
2.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first written above.
PERFECTMARKET, INC.
By: /s/ Charles Conn, III
-----------------------------------------
Charles Conn, President and Chief
Executive Officer
MB ACQUISITION CORPORATION
By: /s/ Charles Conn, III
-----------------------------------------
Charles Conn, President
METROBEAT, INC.
By: /s/ Mark Davies
-----------------------------------------
Mark Davies, President
PRINCIPAL SHAREHOLDER
/s/ Mark Davies
--------------------------------------------
Mark Davies
/s/ Joshua White
--------------------------------------------
Joshua White
[AMENDMENT]
-4-
<PAGE>
EXHIBIT 3.4
BYLAWS
OF
PERFECTMARKET, INC.
a Delaware corporation
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I OFFICES................................................ 1
Section 1.01 Registered Office.............................. 1
Section 1.02 Principal Office............................... 1
Section 1.03 Other Offices.................................. 1
ARTICLE II MEETINGS OF STOCKHOLDERS.............................. 1
Section 2.01 Annual Meetings................................ 1
Section 2.02 Special Meetings............................... 1
Section 2.03 Place of Meetings.............................. 2
Section 2.04 Notice of Meetings............................. 2
Section 2.05 Quorum......................................... 2
Section 2.06 Voting......................................... 2
Section 2.07 List of Stockholders........................... 3
Section 2.08 Inspector of Election.......................... 3
Section 2.09 Stockholder Action Without Meeting............. 4
ARTICLE III BOARD OF DIRECTORS................................... 4
Section 3.01 General Powers................................. 4
Section 3.02 Number......................................... 4
Section 3.03 Election of Directors.......................... 4
Section 3.04 Resignations................................... 4
Section 3.05 Vacancies...................................... 4
Section 3.06 Place of Meeting; Telephone Conference Meeting. 5
Section 3.07 First Meeting.................................. 5
</TABLE>
i
<PAGE>
TABLE OF CONTENTS (Con't.)
--------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 3.08 Regular Meetings.............................. 5
Section 3.09 Special Meetings.............................. 5
Section 3.10 Quorum and Action............................. 6
Section 3.11 Action by Consent............................. 6
Section 3.12 Compensation.................................. 6
Section 3.13 Committees.................................... 6
Section 3.14 Officers of the Board......................... 6
ARTICLE IV OFFICERS............................................. 7
Section 4.01 Officers...................................... 7
Section 4.02 Election...................................... 7
Section 4.03 Subordinate Officers.......................... 7
Section 4.04 Removal and Resignation....................... 7
Section 4.05 Vacancies..................................... 7
Section 4.06 President/Chief Executive Officer............. 7
Section 4.07 Vice President................................ 8
Section 4.08 Secretary..................................... 8
Section 4.09 Treasurer..................................... 8
ARTICLE V CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC......... 9
Section 5.01 Execution of Contracts........................ 9
Section 5.02 Checks, Drafts, Etc........................... 9
Section 5.03 Deposit....................................... 9
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS (Con't.)
--------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 5.04 General and Special Bank Accounts............. 9
ARTICLE VI SHARES AND THEIR TRANSFER............................ 9
Section 6.01 Certificates for Stock........................ 9
Section 6.02 Transfer of Stock............................. 10
Section 6.03 Regulations................................... 10
Section 6.04 Lost, Stolen, Destroyed and
Mutilated Certificates.................................... 10
Section 6.05 Record Date................................... 10
Section 6.06 Representation of Shares of Other Corporations 10
ARTICLE VII INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND OTHER AGENTS................................. 11
Section 7.01 Agents, Proceedings, and Expenses............. 11
Section 7.02 Indemnification............................... 11
Section 7.03 Advance of Expenses........................... 11
Section 7.04 Other Contractual Rights...................... 11
Section 7.05 Limitations................................... 12
Section 7.06 Insurance..................................... 12
Section 7.07 Fiduciaries of Corporate Employee
Benefit Plan.............................................. 12
ARTICLE VIII MISCELLANEOUS...................................... 12
Section 8.01 Seal.......................................... 12
Section 8.02 Waiver of Notices............................. 12
Section 8.03 Loans and Guaranties.......................... 12
Section 8.04 Gender........................................ 12
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS (Con't)
-------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 8.05 Amendments..................................... 13
CERTIFICATE OF SECRETARY......................................... 14
</TABLE>
iv
<PAGE>
BYLAWS
of
PERFECTMARKET, INC.
a Delaware corporation
ARTICLE I
OFFICES
Section 1.01 Registered Office. The registered office of PerfectMarket,
---------- ------
Inc. (hereinafter called the "Corporation") shall be at the following place in
the State of Delaware, or at such other place in the State of Delaware as shall
be designated by the Board of Directors (hereinafter called the "Board") from
time to time:
c/o Incorporating Services, Ltd.
15 East North Street
Dover, Delaware 19901
Section 1.02 Principal Office. The principal office for the transaction of
----------------
the business of the Corporation shall be located at 4502 Dyer Street, La
Crescenta, California 91214, or at such other place as designated by the Board
from time to time.
Section 1.03 Other Offices. The Corporation may also have an office or
-------------
offices at such other place or places, either within or without the State of
Delaware, as the Board may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.01 Annual Meetings. Annual meetings of the stockholders of the
---------------
Corporation for the purpose of electing directors and for the transaction of
such other proper business as may come before such meetings may be held at such
time, date and place as the Board shall determine by resolution. In the absence
of any such resolution by the Board, the annual meeting of the stockholders of
the Corporation shall be held at the principal office of the Corporation, on the
second Tuesday in April, at the hour of 10:00 a.m.
Section 2.02 Special Meetings. Special meetings of the stockholders of the
----------------
Corporation for any purpose or purposes may be called at any time by the Board
or by a committee of the Board which has been duly designated by the Board and
whose powers and authority, as provided in a resolution of the Board or in the
Bylaws, include the power to call such meetings, but such special meetings may
not be called by any other person or persons; provided, however, that if and to
the extent that any special meeting of stockholders may be called by any other
person or persons specified in any provisions of the Certificate of
Incorporation or any amendment thereto or any certificate filed under Section
151(g) of the General Corporation Law of Delaware (or its successor statute as
in effect from time to time here-
1
<PAGE>
after), then such special meeting may also be called by the person or persons,
in the manner, at the time and for the purposes so specified.
Section 2.03 Place of Meetings. All meetings of the stockholders shall be
-----------------
held at such places, within or without the State of Delaware, as may from time
to time be designated by the person or persons calling the respective meetings
and specified in the respective notices or waivers of notice thereof.
Section 2.04 Notice of Meetings. Except as otherwise required by law,
------------------
notice of each meeting of the stockholders, whether annual or special, shall be
given not less than ten (10) nor more than sixty (60) days before the date of
the meeting to each stockholder of record entitled to vote at such meeting by
delivering a typewritten or printed notice thereof to him personally, or by
depositing such notice in the United States mail, in a postage prepaid envelope,
directed to him at his address furnished by him to the Secretary of the
Corporation for such purpose or, if he shall not have furnished to the Secretary
his address for such purpose, then at his address last known to the Secretary,
or by transmitting a notice thereof to him at such address by telegraph,
telecopy, cable or wireless. Except as otherwise expressly required by law, no
publication of any notice of a meeting of the stockholders shall be required.
Every notice of a meeting of the stockholders shall state the place, date and
hour of the meeting, and, in the case of a special meeting shall also state the
purpose or purposes for which the meeting is called. Except as otherwise
expressly required by law, notice of any adjourned meeting of the stockholders
need not be given if the time and place thereof are announced at the meeting at
which the adjournment is taken.
Section 2.05 Quorum. The holders of record of a majority in voting interest
------
of the shares of stock of the Corporation entitled to be voted, present in
person or by proxy, shall constitute a quorum for the transaction of business at
any meeting of the stockholders of the Corporation or any adjournment thereof.
The stockholders present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum. In the absence of
a quorum at any meeting or any adjournment thereof, a majority in voting
interest of the stockholders present in person or by proxy and entitled to vote
thereat or, in the absence therefrom of all the stockholders, any officer
entitled to preside at or to act as secretary of such meeting may adjourn such
meeting from time to time. At any such adjourned meeting at which a quorum is
present any business may be transacted which might have been transacted at the
meeting as originally called.
Section 2.06 Voting.
------
(a) At each meeting of the stockholders, each stockholder shall be entitled
to vote in person or by proxy such share or fractional share of the stock of the
Corporation which has voting rights on the matter in question and which shall
have been held by him and registered in his name on the books of the
Corporation:
(i) on the date fixed pursuant to Section 6.05 of these Bylaws as
the record date for the determination of stockholders entitled to notice of and
to vote at such meeting; or
(ii) if no such record date shall have been so fixed, then (A) at the
close of business on the day next preceding the day on which notice of the
meeting shall be given, or (B) if notice of the
2
<PAGE>
meeting shall be waived, at the close of business on the day next preceding the
day on which the meeting shall be held.
(b) Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors in such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary capacity shall
be entitled to vote such stock. Persons whose stock is pledged shall be entitled
to vote, unless in the transfer by the pledgor on the books of the Corporation
he shall have expressly empowered the pledgee to vote thereon, in which case
only the pledgee, or his proxy, may represent such stock and vote thereon. Stock
having voting power standing of record in the names of two or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in common,
tenants by the entirety or otherwise, or with respect to which two or more
persons have the same fiduciary relationship, shall be voted in accordance with
the provisions of the General Corporation Law of Delaware.
(c) Any such voting rights may be exercised by the stockholder entitled
thereto in person or by his proxy appointed by an instrument in writing,
subscribed by such stockholder or by his attorney thereunto authorized and
delivered to the secretary of the meeting; provided, however, that no proxy
shall be voted or acted upon after three years from its date unless said proxy
shall provide for a longer period. The attendance at any meeting of a
stockholder who may theretofore have given a proxy shall not have the effect of
revoking the same unless he shall in writing so notify the secretary of the
meeting prior to the voting of the proxy. At any meeting of the stockholders all
matters, except as otherwise provided in the Certificate of Incorporation, in
these Bylaws or by law, shall be decided by the vote of a majority in voting
interest of the stockholders present in person or by proxy and entitled to vote
thereat and thereon. The stockholders present at a duly called or held meeting
at which a quorum is present may continue to do business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum. The vote at any meeting of the stockholders on any question need not be
by ballot, unless so directed by the chairman of the meeting. On a vote by
ballot, each ballot shall be signed by the stockholder voting, or by his proxy
if there be such proxy, and it shall state the number of shares voted.
Section 2.07 List of Stockholders. The Secretary of the Corporation shall
--------------------
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the entire
duration thereof, and may be inspected by any stockholder who is present.
Section 2.08 Inspector of Election. If at any meeting of the stockholders a
--------- -- --------
vote by written ballot shall be taken on any question, the chairman of such
meeting may appoint an inspector or inspectors of election to act with respect
to such vote. Each inspector so appointed shall first subscribe an oath
faithfully to execute the duties of an inspector at such meeting with strict
impartiality and according to the best of his ability. Such inspectors shall
decide upon the qualification of the voters and shall report the number of
shares represented at the meeting and entitled to vote on such question, shall
conduct and
3
<PAGE>
accept the votes, and, when the voting is completed, shall ascertain and report
the number of shares voted respectively for and against the question. Reports of
the inspectors shall be in writing and subscribed and delivered by them to the
Secretary of the Corporation. Inspectors need not be stockholders of the
Corporation, and any officer of the Corporation may be an inspector on any
question other than a vote for or against a proposal in which he shall have a
material interest.
Section 2.09 Stockholder Action Without Meeting. Any action required by the
----------------------------------
General Corporation Law of Delaware to be taken at any annual or special meeting
of the stockholders, or any action which may be taken at any annual or special
meeting of stockholders, may be taken without a meeting, without prior notice
and without a vote, if a consent in writing setting forth the action so taken
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01 General Powers. The property, business and affairs of the
--------------
Corporation shall be managed by or under the direction of the Board, which may
exercise all of the powers of the Corporation, except such as are by the
Certificate of Incorporation, by these Bylaws or by law conferred upon or
reserved to the stockholders.
Section 3.02 Number. The authorized number of directors of the Corporation
------
shall be three until changed by an amendment to this Section made pursuant to
the provisions of Article VIII, Section 8.05 of these Bylaws, subject to the
provisions of the General Corporation Law of Delaware. Directors need not be
stockholders in the Corporation.
Section 3.03 Election of Directors. The directors shall be elected by the
---------------------
stockholders of the Corporation, and at each election the persons receiving the
greatest number of votes, up to the number of directors then to be elected,
shall be the persons then elected. The election of directors is subject to the
provisions contained in the Certificate of Incorporation and relating thereto,
including any provisions for a classified board.
Section 3.04 Resignations. Any director of the Corporation may resign at
------------
any time by giving written notice to the Board or to the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time is not specified, it shall take effect immediately upon
its receipt; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 3.05 Vacancies. Except as otherwise provided in the Certificate of
---------
Incorporation or the Shareholders Agreement, any vacancy in the Board, whether
because of death, resignation, disqualification, an increase in the number of
directors, or any other cause, may be filled by vote of the majority of the
remaining directors, although less than a quorum, or by a sole remaining
director. Each director so chosen to fill a vacancy shall hold office until his
successor shall have been elected and shall
4
<PAGE>
qualify or until he shall resign or shall have been removed. No reduction of the
authorized number of directors shall have the effect of removing any director
prior to the expiration of his term of office.
Upon the resignation of one or more directors from the Board, effective at
a future date, a majority of the directors then in office, including those who
have so resigned, shall have the power to fill such vacancy or vacancies, the
vote thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided hereinabove
in the filling of other vacancies.
Section 3.06 Place of Meeting: Telephone Conference Meeting. The Board may
-------- -------------------------------------
hold any of its meetings at such place or places within or without the State of
Delaware as the Board may from time to time by resolution designate or as shall
be designated by the person or persons calling the meeting or in the notice or
waiver of notice of any such meeting. Directors may participate in any regular
or special meeting of the Board by means of conference telephone or similar
communications equipment pursuant to which all persons participating in the
meeting of the Board can hear each other, and such participation shall
constitute presence in person at such meeting.
Section 3.07 First Meeting. The Board shall meet as soon as practicable
----- -------
after each annual election of directors and notice of such first meeting shall
not be required.
Section 3.08 Regular Meetings. Regular meetings of the Board may be held at
----------------
such times as the Board shall from time to time by resolution determine. If any
day fixed for a meeting shall be a legal holiday at the place where the meeting
is to be held, then the meeting shall be held at the same hour and place on the
next succeeding business day which is not a legal holiday. Except as provided by
law, notice of regular meetings need not be given.
Section 3.09 Special Meetings.
----------------
(a) Special meetings of the Board may be called at any time by the Chairman
of the Board, the President/Chief Executive Officer or any Vice President or the
Secretary or by any two (2) directors, to be held at the principal office of the
Corporation, or at such other place or places, within or without the State of
Delaware, as the person or persons calling the meeting may designate.
(b) Notice of the time and place of special meetings shall be given to each
director either: (i) by mailing or otherwise sending to him a written notice of
such. meeting, charges prepaid, addressed to him at his address as it is shown
upon the records of the Corporation, or if it is not so shown on such records or
is not readily ascertainable, at the place in which the meetings of the
directors are regularly held, at least seventy-two (72) hours prior to the time
of the holding of such meeting; or (ii) by orally communicating the time and
place of the special meeting to him at least forty-eight (48) hours prior to the
time of the holding of such meeting. Either of the notices as above provided
shall be due, legal and personal notice to such director.
(c) Whenever notice is required to be given, either to a stockholder or a
director, under any provision of the General Corporation Law of Delaware, the
Certificate of Incorporation or these Bylaws, a written waiver thereof, signed
by the person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting, whether in person or by proxy, shall constitute a waiver of notice of
such meeting, except when the person attends a meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
5
<PAGE>
business because the meeting is not lawfully called or convened. Neither the
business to be transacted nor the purpose of any regular or special meeting of
directors or committee of directors need be specified in any written waiver of
notice. All such waivers shall be filed with the corporate records or made a
part of the minutes of the meeting.
Section 3.10 Quorum and Action. Except as otherwise provided in these
-----------------
Bylaws or by law, the presence of all of the authorized number of directors
shall be required to constitute a quorum for the transaction of business at any
meeting of the Board, and all matters shall be decided at any such meeting, a
quorum being present, by the affirmative votes of all of the directors present.
In the absence of a quorum, a majority of directors present at any meeting may
adjourn the same from time to time until a quorum shall be present. Notice of
any adjourned meeting need not be given. The directors shall act only as a
Board, and the individual directors shall have no power as such.
Section 3.11 Action by Consent. Any action required or permitted to be
-----------------
taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or such committee. Such
action by written consent shall have the same force and effect as the unanimous
vote of such directors.
Section 3.12 Compensation. No stated salary need be paid to directors, as
------------
such, for their services but, as fixed from time to time by resolution of the
Board, the directors may receive directors' fees, compensation and reimbursement
for expenses for attendance at directors' meetings, for serving on committees
and for discharging their duties; provided that nothing herein contained shall
be construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 3.13 Committees.
----------
(a) The Board may, by its unanimous resolution, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. Any such committee, to the extent provided in the resolution of the
Board, shall have and may exercise all the powers and authority of the Board in
the management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it;
but no such committee shall have any power or authority in reference to amending
the Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of a
dissolution, or amending the Bylaws of the Corporation; and unless the
resolution of the Board expressly so provides, no such committee shall have the
power or authority to declare a dividend or to authorize the issuance of stock.
Any such committee shall keep written minutes of its meetings and report the
same to the Board when required.
(b) The presence of all of the members of any such committee shall
constitute a quorum for the transaction of business. Every act or decision done
or made by said committee shall be authorized by unanimous resolution of the
members thereof.
Section 3.14 Officers of the Board. The Board may have a Chairman of the
---------------------
Board. The Chairman of the Board may be appointed from time to time by the
Board and the powers and duties of such Chairman shall be as so provided by the
Board from time to time.
6
<PAGE>
ARTICLE IV
OFFICERS
Section 4.01 Officers. The officers of the Corporation shall be a
--------
President/Chief Executive Officer, a Secretary and a Treasurer. The Corporation
may also have, at the discretion of the Board, a Chairman of the Board, one or
more Vice Presidents, one or more Assistant Vice Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers and such other officers
as may be appointed in accordance with the provisions of Section 4.03 of these
Bylaws. One person may hold two or more offices. The salaries of all officers of
the Corporation shall be fixed by the Board.
Section 4.02 Election. The officers of the Corporation, except such
--------
officers as may be appointed in accordance with the provisions of Section 4.03
or Section 4.05 of these Bylaws, shall be chosen annually by the Board, and each
shall hold his or her office until he or she shall resign or shall be removed or
shall be otherwise disqualified to serve, or until his or her successor shall be
elected and qualified.
Section 4.03 Subordinate Officers. The Board may appoint, or may authorize
----------- --------
the President/Chief Executive Officer or Chairman of the Board to appoint, such
other officers as the business of the Corporation may require, each of whom
shall have such authority and perform such duties as are provided in these
Bylaws or as the Board or the President/Chief Executive Officer or Chairman of
the Board from time to time may specify, and shall hold office until he or she
shall resign or shall be removed or otherwise disqualified to serve.
Section 4.04 Removal and Resignation.
-----------------------
(a) Any officer may be removed, with or without cause, by a majority of the
directors at the time in office, at any regular or special meeting of the Board,
or, except in case of an officer chosen by the Board, by the President/Chief
Executive Officer or Chairman of the Board upon whom such power of removal may
be conferred by the Board.
(b) Any officer may resign at any time by giving written notice to the
Board, the Chairman of the Board, the President/Chief Executive Officer or the
Secretary of the Corporation. Any such resignation shall take effect at the date
of the receipt of such notice or at any later time specified therein; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 4.05 Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these Bylaws for the regular appointments to such office.
Section 4.06 President/Chief Executive Officer. Subject to such supervisory
--------------- -----------------
powers, if any, as may be given by the Board to the Chairman of the Board, if
there be such an officer, the President/Chief Executive Officer shall, subject
to the control of the Board, have general supervision, direction, and control of
the business and the officers of the Corporation. The President/Chief Executive
Officer shall preside at all meetings of the stockholders and, in the absence of
the Chairman of the Board, at all meetings of the Board. The President/Chief
Executive Officer shall have the general powers and duties
7
<PAGE>
of management usually vested in the office of President/Chief Executive Officer
of a Corporation, and shall have such other powers and duties as may be
prescribed by the Board or the Bylaws.
Section 4.07 Vice President. The Vice President(s), if any, shall exercise
--------------
and perform such powers and duties with respect to the administration of the
business and affairs of the Corporation as from time to time may be assigned to
each of them by the President/Chief Executive Officer, by the Board or as is
prescribed by these Bylaws. In the absence or disability of the President/Chief
Executive Officer, the Vice Presidents, in order of their rank as fixed by the
Board, or if not ranked, the Vice President designated by the Board, shall
perform all of the duties of the President/Chief Executive Officer and when so
acting shall have all of the powers of and be subject to all the restrictions
upon the President/Chief Executive Officer.
Section 4.08 Secretary.
---------
(a) The Secretary shall keep, or cause to be kept, a book of minutes at the
principal office for the transaction of the business of the Corporation, or such
other place as the Board may order, of all meetings of directors and
stockholders, with the time and place of holding, whether regular or special,
and if special, how authorized and the notice thereof given, the names of those
present at directors' meetings, the number of shares present or represented at
stockholders' meetings and the proceedings thereof.
(b) The Secretary shall keep, or cause to be kept, at the principal office
for the transaction of the business of the Corporation or at the office of the
Corporation's transfer agent, a share register, or a duplicate share register,
showing the names of the stockholders and their addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the same, and the number and date of cancellation of every certificate
surrendered for cancellation.
(c) The Secretary shall give, or cause to be given, notice of all the
meetings of the stockholders and of the Board required by these Bylaws or by law
to be given, and he shall keep the seal of the Corporation in safe custody, and
shall have such other powers and perform such other duties as may be prescribed
by the Board or these Bylaws. If for any reason the Secretary shall fail to give
notice of any special meeting of the Board called by one or more of the persons
identified in Section 3.09 of these Bylaws, or if he shall fail to give notice
of any special meeting of the stockholders called by one or more of the persons
identified in Section 2.02 of these Bylaws, then any such person or persons may
give notice of any such special meeting.
Section 4.09 Treasurer.
---------
(a) The Treasurer, who may be referred to as the "Chief Financial Officer",
shall keep and maintain or cause to be kept and maintained, adequate and correct
accounts of the properties and business transactions of the Corporation,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital, surplus and shares. Any surplus, including earned surplus,
paid-in surplus and surplus arising from a reduction of capital, shall be
classified according to source and shown in a separate account. The books of
account at all reasonable times shall be open to inspection by any director.
(b) The Treasurer shall deposit all moneys and other valuables in the name
and to the credit of the Corporation with such depositories as may be designated
by the Board. He shall disburse the funds
8
<PAGE>
of the Corporation as may be ordered by the Board, shall render to the
President/Chief Executive Officer and to the directors, whenever they request
it, an account of all of his transactions as Treasurer and of the financial
condition of the Corporation, and shall have such other powers and perform such
other duties as may be prescribed by the Board or these Bylaws.
ARTICLE V
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
Section 5.01 Execution of Contracts. The Board, except as otherwise
----------------------
provided in these Bylaws, may authorize any officer or officers, agent or
agents, to enter into any contract or execute any instrument in the name and on
behalf of the Corporation, and such authority may be general or confined to
specific instances. Unless so authorized by the Board or by these Bylaws, no
officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or in any amount.
Section 5.02 Checks. Drafts. Etc. All checks, drafts or other orders for
-------------------
payment of money, notes or other evidence of indebtedness, issued in the name of
or payable to the Corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Board. Each such person shall give such bond, if any, as the
Board may require.
Section 5.03 DEPOSITS. All funds of the Corporation not otherwise employed
--------
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board may select, or as may
be selected by any officer or officers, assistant or assistants, agent or
agents, attorney or attorneys, of the Corporation to whom such power shall have
been delegated by the Board. For the purpose of deposit and for the purpose of
collection for the account of the Corporation, the President/Chief Executive
Officer, any Vice President or the Treasurer (or any other officer or officers,
assistant or assistants, agent or agents, or attorney or attorneys of the
Corporation who shall be determined by the Board from time to time) may endorse,
assign and deliver checks, drafts and other orders for the payment of money
which are payable to the order of the Corporation.
Section 5.04 General and Special Bank Accounts. The Board may from time to
---------------------------------
time authorize the opening and keeping of general and special bank accounts with
such banks, trust companies or other depositories as the Board may select or as
may be selected by an officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent with the
provisions of these Bylaws, as it may deem expedient.
ARTICLE VI
SHARES AND THEIR TRANSFER
Section 6.01 Certificates for Stock. Every owner of stock of the
----------------------
Corporation shall be entitled to have a certificate or certificates, in such
form as the Board shall prescribe, certifying the number and class of shares of
the stock of the Corporation owned by him. The certificates representing shares
of such stock shall be numbered in the order in which they shall be issued and
shall be signed in the name of the Corporation by the Chairman of the Board, the
President/Chief Executive Officer or a Vice
9
<PAGE>
President and by the Secretary or an Assistant Secretary or by the Treasurer or
an Assistant Treasurer. Any or all of the signatures on the certificates may be
a facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon any such certificate shall
thereafter have ceased to be such officer, transfer agent or registrar before
such certificate is issued, such certificate may nevertheless be issued by the
Corporation with the same effect as though the person who signed such
certificate, or whose facsimile signature shall have been placed thereupon, were
such officer, transfer agent or registrar at the date of issue. A record shall
be kept of the respective names of the persons, firms or corporations owning
the stock represented by such certificates, the number and class of shares
represented by such certificates, respectively, and the respective dates
thereof, and in case of cancellation, the respective dates of cancellation.
Every certificate surrendered to the Corporation for exchange or transfer shall
be cancelled, and no new certificate or certificates shall be issued in exchange
for any existing certificate until such existing certificate shall have been so
cancelled, except in cases provided for in Section 6.04 of these Bylaws.
Section 6.02 Transfer of Stock. Transfer of shares of stock of the
-----------------
Corporation shall be made only on the books of the Corporation by the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary, or with a transfer clerk or a
transfer agent appointed as provided in Section 6.03 of these Bylaws, and upon
surrender of the certificate or certificates for such shares properly endorsed
and the payment of all taxes thereon. The person in whose name shares of stock
stand on the books of the Corporation shall be deemed the owner thereof for all
purposes as regards the Corporation. Whenever any transfer of shares shall be
made for collateral security, and not absolutely, such fact shall be stated
expressly in the entry of transfer if, when the certificate or certificates
shall be presented to the Corporation for transfer, both the tansferor and the
transferee request the Corporation to do so.
Section 6.03 Regulations. The Board may make such rules and regulations as
-----------
it may deem expedient, not inconsistent with these Bylaws, concerning the issue,
transfer and registration of certificates for shares of the stock of the
Corporation. The Board may appoint, or authorize any officer or officers to
appoint, one or more transfer clerks or one or more transfer agents and one or
more registrars, and may require all certificates for stock to bear the
signature or signatures of any of them.
Section 6.04 Lost, Stolen, Destroyed and Mutilated Certificates. In any
--------------------------------------------------
case of loss, theft, destruction, or mutilation of any certificate of stock,
another may be issued in its place upon proof of such loss, theft, destruction,
or mutilation and upon the giving of a bond of indemnity to the Corporation in
such form and in such sums as the Board may direct; provided, however, that a
new certificate may be issued without requiring any bond when, in the judgment
of the Board, it is proper to do so.
Section 6.05 Record Date. In order that the Corporation may determine the
-----------
stockholders entitled to notice of or to vote at any meeting of the stockholders
or any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any other change, conversion or exchange of stock or for
the purpose of any other lawful action, the Board may fix, in advance, a record
date, which shall not be more than sixty (60) nor less than ten (10) days before
the date of such meeting, nor more than sixty (60) days prior to any other
action. If, in any case involving the determination of stockholders for any
purpose other than notice of or voting at a meeting of stockholders, the Board
shall not fix such a record date, the record date for determining stockholders
for such purpose shall be the close of business on the day on which the Board
shall adopt the resolution relating thereto. A determination of stockholders
entitled to notice
10
<PAGE>
of or to vote at a meeting of stockholders shall apply to any adjournment of
such meeting; provided, however, that the Board may fix a new record date for
the adjourned meeting.
Section 6.06 Representation of Shares of Other Corporations. The
----------------------------------------------
President/Chief Executive Officer or any Vice President and the Secretary or any
Assistant Secretary of this Corporation are authorized to vote, represent and
exercise on behalf of this Corporation all rights incident to all shares of any
other corporation or corporations standing in the name of this Corporation. The
authority herein granted to said officers to vote or represent on behalf of this
Corporation any and all shares held by this Corporation in any other corporation
or corporations may be exercised either by such officers in person or by any
person authorized so to do by proxy or power of attorney duly executed by said
officers.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND OTHER AGENTS
Section 7.01 Agents. Proceedings. and Expenses. For the purposes of this
---------------------------------
Article: (i) "agent" means any person who is or was a director, officer,
employee, or other agent of this Corporation, or is or was serving at the
request of this Corporation as a director, officer, employee or agent of another
foreign or domestic corporation, partnership, joint venture, trust or other
enterprise, or was a director, officer, employee, or agent of a foreign or
domestic corporation which was a predecessor corporation of this Corporation or
of another enterprise at the request of such predecessor corporation;
"proceeding" means any threatened, pending or completed action or proceeding,
whether civil, criminal, administrative, or investigative; and (ii) "expenses"
includes, without limitation, attorneys' fees and any expenses of establishing a
right to indemnification under Sections 7.02 or 7.03 of this Article.
Section 7.02 Indemnification. Except where and to the extent prohibited by
---------------
the Delaware General Corporation Law or by the Certificate of Incorporation,
this Corporation shall indemnify any person who was or is a party, or is
threatened to be made a party, to any proceeding by reason of the fact that such
person is or was an agent of this Corporation, against expenses, judgments,
fines, settlements and other amounts, including attorney fees and costs,
actually and reasonably incurred in connection with such proceeding regardless
of whether the proceeding is brought by any third party or by or in the right of
this Corporation, to the broadest extent permissible by Delaware law. Further,
this Corporation eliminates the personal liability of each member of its Board
and each officer to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty, to the fullest extent permitted by Section 145 of the
General Corporation Law of Delaware, as the same may be amended and
supplemented. The Corporation shall to the fullest extent permitted by said
section indemnify each member of the Board and each officer from and against any
and all of the expenses, liabilities or other matters referred to in or covered
in Article VII of these Bylaws.
Section 7.03 Advance of Expenses. To the maximum extent permissible by the
-------------------
Delaware General Corporation Law and the Certificate of Incorporation of this
Corporation, expenses incurred in defending any proceeding shall be advanced by
this Corporation prior to the final disposition of such proceeding upon receipt
of an undertaking by or on behalf of the agent to repay the amount of the
advance if it shall be determined ultimately that the agent is not entitled to
be indemnified as authorized in this Article.
11
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Section 7.04 Other Contractual Rights. The indemnification provided by this
------------------------
Article VII shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office. The rights to indemnity hereunder shall continue as to a person who has
ceased to be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of the person. Nothing
contained in this Article shall affect any right to indemnification to which
persons other than directors and officers of this Corporation or any subsidiary
hereof may be entitled by contract or otherwise.
Section 7.05 Limitations. No indemnification or advance shall be made under
-----------
this Article in any circumstance where it appears: (i) that it would be
inconsistent with a provision of an agreement to which the indemnitee is a party
and which was in effect at the time of the accrual of the alleged cause of
action asserted in the proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification; or (ii)
that it would be inconsistent with any condition expressly imposed by a court in
approving a settlement.
Section 7.06 Insurance. Upon and in the event of a determination by the
---------
Board of this Corporation to purchase such insurance, this Corporation shall
have the power to purchase and maintain insurance on behalf of any agent of the
Corporation against any liability asserted against or incurred by the agent in
such capacity or arising out of the agent's status as such whether or not this
Corporation would have the power to indemnify the agent against that liability
under the provisions of this Article VII.
Section 7.07 Fiduciaries of Corporate Employee Benefit Plan. This Article
----------------------------------------------
does not apply to any proceeding against any trustee, investment manager, or
other fiduciary of an employee benefit plan in that person's capacity as such,
even though that person may also be an agent of the Corporation as defined in
Section 7.01 of this Article. This Corporation shall have power to indemnify
such a trustee, investment manager or other fiduciary to the maximum extent
permitted by Delaware law.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Seal. The Board shall provide a corporate seal, which shall be
----
in the form of a circle and shall bear the name of the Corporation and words and
figures showing that the Corporation was incorporated in the State of Delaware
and showing the year of incorporation.
Section 8.02 Waiver of Notices. Whenever notice is required to be given by
-----------------
these Bylaws or the Certificate of Incorporation or by law, the person entitled
to said notice may waive such notice in writing, either before or after the time
stated therein, and such waiver shall be deemed equivalent to notice.
Section 8.03 Loans and Guaranties. The Corporation may lend money to, or
--------------------
guarantee any obligation of, and otherwise assist any officer or other employee
of the Corporation or of its subsidiaries, including any officer who is a
director, whenever, in the judgment of the Board, such loan, guaranty or
assistance may reasonably be expected to benefit the Corporation. The loan,
guaranty, or other assistance may be with or without interest, and may be
unsecured or secured in such manner as the Board shall approve, including,
without limitation, a pledge of shares of stock of the Corporation.
12
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Section 8.04 Gender. All personal pronouns used in these Bylaws shall
------
include the other genders, whether used in the masculine, feminine or neuter
gender, and the singular shall include the plural, and vice versa, whenever and
as often as may be appropriate.
Section 8.05 Amendments. Except as provided in this Section 8.05 of these
----------
Bylaws, these Bylaws, or any of them, may be rescinded, altered, amended or
repealed, and new Bylaws may be made (i) by the Board, by vote of a majority of
the number of directors then in office as directors, acting at any meeting of
the Board or (ii) by the stockholders, by the vote of a majority of the
outstanding shares of voting stock of the Corporation, at an annual meeting of
stockholders, without previous notice, or at any special meeting of
stockholders, provided that notice of such proposed amendment, modification,
repeal or adoption is given in the notice of special meeting; provided, however,
that Section 3.02 of these Bylaws can only be amended if that Section as amended
would not conflict with the Corporation's Certificate of Incorporation and that
Sections 7.02, 7.03 and 7.04 of these Bylaws can only be amended if such
Sections as amended would pertain only to prospective acts. Except as provided
in this Section 8.05, any Bylaw made or altered by the stockholders may be
altered or repealed by the Board or may be altered or repealed by the
stockholders.
13
<PAGE>
CERTIFICATE OF SECRETARY
The undersigned hereby certifies as follows:
(1) That the undersigned is the duly elected and acting Secretary of
PerfectMarket, Inc., a Delaware corporation (the "Corporation");
(2) That the foregoing Bylaws constitute the Bylaws of the Corporation as
duly adopted by the Written Consent of the Sole Incorporator, dated September
21, 1995; and
(3) That the foregoing Bylaws constitute the Bylaws of the Corporation as
duly approved and adopted by the Unanimous Written Consent in Lieu of the
Organizational Meeting of the Board of Directors, dated as of 9-22, 1995.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal
of the Corporation this 22nd day of Sept, 1995.
/s/ Jeffrey Brewer
----------------------------
Jeffrey Brewer, Secretary
14
<PAGE>
CERTIFICATE OF AMENDMENT OF BYLAWS
OF
CITYSEARCH, INC.
Effective as of December 15, 1995
The following amendment to the Corporation's Bylaws were approved by the
Corporation's Board of Directors on December 15, 1995, to read in its entirety
as follows:
"Section 3.02 Number. The authorized number of directors of the Corporation
------
shall be five until changed by an amendment to this Section made pursuant to
the provisions of Article VIII, Section 8.05 of these Bylaws, subject to the
provisions of the General Corporation Law of Delaware. Directors need not be
stockholders of the Corporation."
<PAGE>
CERTIFICATE OF AMENDMENT OF BYLAWS
OF
CITYSEARCH, INC.
Effective as of May 13, 1996
The following amendment to the Corporation's Bylaws were approved by the
Corporation's Board of Directors on May 13, 1996, to read in its entirety as
follows:
"Section 3.02 Number. The authorized number of directors of the Corporation
------
shall be seven until changed by an amendment to this Section made pursuant to
the provisions of Article VIII, Section 8.05 of these Bylaws, subject to the
provisions of the General Corporation Law of Delaware. Directors need not be
stockholders of the Corporation."
<PAGE>
CERTIFICATE OF AMENDMENT OF BYLAWS
OF
CITYSEARCH, INC.
Effective as of June 23, 1997
The following amendment to the Corporation's Bylaws were approved by the
Corporation's Board of Directors on June 23, 1997, to read in its entirety as
follows:
"Section 3.02 Number. The authorized number of directors of the Corporation
------
shall be eight until changed by an amendment to this Section made pursuant to
the provisions of Article VIII, Section 8.05 of these Bylaws, subject to the
provisions of the General Corporation Law of Delaware. Directors need not be
stockholders of the Corporation."
<PAGE>
CERTIFICATE OF AMENDMENT OF BYLAWS
OF
CITYSEARCH, INC.
Effective as of December 8, 1997
The following amendment to the Corporation's Bylaws were approved by the
Corporation's Board of Directors on December 8, 1997, to read in its entirety as
follows:
"Section 3.02 Number. The authorized number of directors of the Corporation
------
shall be eleven until changed by an amendment to this Section made pursuant to
the provisions of Article VIII, Section 8.05 of these Bylaws, subject to the
provisions of the General Corporation Law of Delaware. Directors need not be
stockholders of the Corporation."
<PAGE>
EXHIBIT 10.5
LICENSE AGREEMENT
-----------------
THIS LICENSE AGREEMENT made and effective this 9th day of March, 1996
BETWEEN: PERLY INC., of
345 Adelaide Street West,
Suite 400,
Toronto, Ontario
M5V 1R5
("Perly")
AND: PERFECT MARKET INC., of
4502 Dyer Street, Suite 201,
La Crescenta, California,
U.S.A. 91214
("Perfect")
BACKGROUND
- ----------
A. Perly is the owner of U.S. trademark and service mark registration no.
1.706.303 registered August 11, 1992, and is the owner of non-U.S trademark
and service mark no. 617598 registered February 23, 1990 for CITISEARCH,
for computer programs in the field of geographic information and data bases
containing geographic information, and for consulting services in the field
of geographic information.
B. Perfect wishes to use the trademark CITYSEARCH as a trademark for providing
on the Internet listings of businesses, attractions and facilities and
their locations (including maps), as well as current events and community
information for the public and wishes to have a license from Perly for such
use.
1. Perly hereby grants to Perfect a license, subject to the terms of this
agreement, to use the mark CITYSEARCH [*]. The license will be worldwide
except for Canada, subject to notices and payments of fees as set forth
below. Perly agrees not to license any user other than Perfect for a
service similar to that of Perfect. Perfect agrees that Perly may utilize
the mark itself and/or may license a user that is associated or affiliated
with Perly.
2. As partial consideration for the grant of this license. Perfect will pay
Perly a sum of [*] (all sums mentioned herein are in U.S. dollars)
concurrently with signing of this agreement by both parties. In addition,
Perfect will within 10 days from receipt of invoices therefor from Perly,
pay to Perly the out-of-pocket expenses incurred by Perly in relation to
the subject matter of this agreement, including Perly's costs relating to
the preparation of this agreement, and Perly's costs in relation to any
work performed concerning any trademark applications or registrations which
Perly reasonably believes are necessary or desirable to improve or obtain
protection in any place for the mark CITYSEARCH relating to this license.
Perly agrees to notify Perfect if on any occasion its above-mentioned costs
exceed $4,000.
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[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-2-
3. Perfect's license will be effective without further payment other than as
specified above, for Internet listings as specified above in the city of
Pasadena, California and for the U.S. metropolitan area as defined by the
U.S. Census Bureau which contains Pasadena. [*]
4. If Perfect wishes to make its license effective in any country outside the
U.S. (excluding Canada), Perfect will so notify Perly and will pay Perly
the sum of $1,000.00 for each country outside the U.S. Upon Perly's receipt
of such notice and payment, and subject to the terms of this agreement and
applicable law, Perfect's license for the country in question will become
effective.
5. Perfect will use the mark CITYSEARCH [*] All such listings and their manner
of provision will be of a high quality and standard which will be subject
to Perly's approval, such approval not unreasonably to be withheld. Perfect
will notify Perly of any substantial change in the above mentioned Internet
service or associated material. Perfect may use the name CitySearch in its
corporate name or trade style.
6. Perfect shall in its use of the CITYSEARCH trademark publish such trademark
notice or notices, and in such matter, as Perly may from time to time
request. The standard for Perly's trademark notice request shall be that
such notifications are readable and reasonable.
7. Perfect will defend, indemnify and hold Perly harmless against all claims,
actions and suits brought against Perly and which result from, relate to or
arise from Perfect's activities under this license.
8. Perfect agrees that it will not use or advertise any word, design, mark or
name which is, or any part of which is, the same as, similar to or
confusingly similar with the mark CITYSEARCH except as specifically
permitted under this agreement.
9. Perfect acknowledges that the mark CITISEARCH and CITYSEARCH are and shall
at all times be solely the property of Perly, and that its use of the mark
CITYSEARCH enures to the benefit of Perly, and Perfect agrees that it will
not directly or indirectly do or cause to be done, whether by commission or
omission, any act which may in any way jeopardize or adversely affect the
validity or distinctiveness of such marks or the title of Perly thereto,
and Perfect agrees that it will without charge to Perly, upon request by
Perly or its representatives, do all things and execute all documents that
may at any time be necessary or desirable to ensure the validity and
distinctiveness of the mark CITISEARCH and CITYSEARCH and to ensure the
title of Perly thereto for all countries.
10. It is understood that Perly does not provide any warranties concerning the
trade marks licensed hereunder or Perfect's right to use such trade marks
in any place, other than Perly's own covenant not to complain of such use
by Perfect so long as Perfect complies in all respect with the terms of
this agreement. Perly warrants that Perly is the sole and exclusive owner
of the mark, free of all liens and encumbrances; there are no claims,
judgements or settlements to be paid by Perly or pending claims or
litigation relating to the mark.
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-3-
11. Perfect agrees that Perly shall have the right of first refusal to supply
maps or mapping software for use in its service provided that the price and
quality of Perly's offerings shall be at least equal to Perfect's current
or proposed supplier. This right shall be subject to any previous agreement
or contract with Perfect and a third party. Perly shall have the onus to
advise Perfect when it has maps or map software where Perfect is operating.
12. The term of this license shall be [*] from its date, subject to earlier
termination and to renewal as set forth below.
13. Perfect shall have the right to renew this agreement on the same terms and
conditions as those set forth here within for successive periods of one
year each by notice given to Perly at least 45 days before the expiry this
agreement or any renewal, and upon payment by Perfect to Perly of a
Paymment of [*] for each one year renewal, but no such renewal shall be
effective if Perfect is in breach of any term of this agreement, either at
time of notice or renewal.
14. If Perfect breaches this agreement, and if such breach is not remedied
within 45 days after notice of the breach is given by Perly to Perfect,
then Perly may terminate this agreement including any renewal thereof.
15. This agreement and any renewal thereof shall terminate if Perfect becomes
bankrupt or insolvent, or makes an assignment for the benefit of creditors,
or if all or any part of its business is placed in the hands of a receiver
or trustee, or if it seeks the benefit of any statute for the protection of
creditors or fails to meet its debts in general as they become due, or if
it ceases for a continuous period of six months to use the mark CITYSEARCH
for the Internet listings in question.
16. Perfect agrees that on termination or expiry of this agreement, it will
promptly cease use of the mark CITYSEARCH and will not thereafter use or
advertise the mark CITYSEARCH or any word, design, trademark or trade name
which is, or any part of which is, similar to or confusingly similar with
the mark CITISEARCH or CITYSEARCH, whether as a part of its corporate name
or otherwise.
17. It is agreed that clauses 7.9 and 16 will survive the termination or expiry
of this agreement and will remain in full force and effect at all times.
18. All notices given under this agreement will be considered properly given if
they are sent by facsimile, courier, or registered or certified mail to the
addresses of the parties as set forth above or to such other addresses as
the parties may in writing advise. Notices sent by facsimile or courier
will be considered given when received. Notices sent by registered or
certified mail will be considered given seven business days after being
mailed if there is no postal interruption in effect which would delay their
delivery.
19. [*]
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-4-
20. This agreement shall be governed by the laws of Ontario, Canada and all
disputes relating to the subject matter thereof shall be resolved by
appropriate tribunals in Ontario, Canada, whose decisions will be binding
on the parties.
21. This agreement will be binding upon and will enure to the benefit of the
parties and their respective permitted successors and assigns.
IN WITNESS OF WHICH the parties have duly executed this agreement under the
hands of their properly authorized officers.
PERLY INC.
By: [SIGNATURE ILLEGIBLE]
-----------------------
Title: President
PERFECTMARKET INC.
By: /s/ Charles Conn III
-----------------------
Title: President & CEO
<PAGE>
Amendment of License
Recitals:
1. Perly Inc. ("Perly") and PerfectMarket Inc. (predecessor to CitySearch
Inc., "CS", collectively the "Parties," executed that certain license
agreement dated March 9, 1996 (the "License"), whose subject matter is the
trademark "CITYSEARCH" described more fully therein (the "Mark").
2. Perly is the owner of registration number 365856 for the trademark
"CITYSEARCH" and recresents that this is a valid registration.
3. The Parties wish to amend the License to include Canada.
Therefore,
1. The License is hereby amended as follows:
a. Paragraph 1, line 4: "except for Canada" is deleted.
b. Paragraph 4, line 2: "(excluding Canada)" is deleted.
2. The Parties acknowledge that the purpose of this amendment is for Perly to
grant CS a license to use the Mark in Canada pursuant to the terms and
conditions contained in the License.
3. In partial consideration for this amendment CS agrees to pay to Perly a sum
of U.S. [*], receipt of which is hereby acknowledged.
4. The parties acknowledge that the U.S. [*] payment will satisfy all
payment obligations with respect to Canada pursuant to paragraph 4 of the
License.
5. If the Parties further amend the License with respect to any terms and
conditions therein including, but not limited to assigning the Mark to CS, the
U.S. [*] amount will be applied toward CS's payment obligations, if any,
under the further amendment.
6. The Parties will take all necessary actions with respect to the Canadian
Trademark Office to record or otherwise validate the License and this
amendment, including, without limitation, the filing, at CS's expense, of a
Canadian application for the Mark, provided that no such Canadian application
will be filed earlier than one month from the date hereof without CS's consent.
Perly, Inc. CitySearch Inc.
By: [SIGNATURE ILLEGIBLE] By: /s/ Charles Conn III
--------------------- ---------------------
Its: President Its: Chief Executive Officer
---------------------
Date:Mar 14 1997 Date: 18 March 1997
-------------------- --------------------
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[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
EXHIBIT 10.6
EXECUTION COPY
MARKETING AGREEMENT
This Marketing Agreement (this "Agreement") is entered into this 26th day of
May 1998, by and between CITYSEARCH, INC., a Delaware corporation ("Company"),
and AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC., a New York
corporation ("AMEX").
WHEREAS, Company is engaged in, among other things, the business of promoting,
selling and providing to merchant establishments services associated with the
World Wide Web (the "Web") Internet sites; and
WHEREAS, Company and AMEX are parties to that certain Series E Preferred Stock
Purchase Agreement and related exhibits;
WHEREAS, AMEX desires to have offered, and to participate with Company in the
offering of the Service (as defined below), to certain of AMEX's current and
future merchants that accept the charge, credit, stored value, smart and other
cards offered for use and acceptance on the American Express network (the "AMEX
Merchant Customers") on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
in this Agreement, the parties hereto agree as follows:
1. THE SERVICE:
------------
(a) AMEX hereby retains Company, and Company hereby agrees, to provide
AMEX Merchant Customers with a development and hosting service for
AMEX Merchant InfoSites (as defined in subsection (b) below) and with
the ability to offer certain promotions over the Web (such service as
offered or modified by Company from time to time, the "Basic Service;"
the Basic Service as offered on the date hereof is more specifically
described in Exhibit A hereto), with changes and enhancements thereto
---------
as developed by Company from time to time specifically for AMEX and
approved by AMEX and Company (such changes and enhancements, the
"Enhancements"; the Basic Service and such Enhancements, collectively
the "Service"). The Service shall accord with the terms of this
Agreement. The Enhancements (including by way of example additional
services, reduced pricing or incentive offers) will be exclusively
offered to AMEX Merchant Customers as described in Section 7(a)(i).
AMEX reserves the right, subject to the Company's systems
capabilities, not to include any Enhancement to AMEX Merchant
Customers identified by AMEX. AMEX will consult with the Company from
time to time as to procedures for excluding Enhancements for
particular AMEX Merchant Customers.
- --------------
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-1-
<PAGE>
(b) The Service shall include, without limitation, the Company's
production and delivery via the Web of comprehensive local city guides
which will provide, to consumers who access the Company's Web sites
(together with the Company's national home page, the "Company Local
Sites") or Web sites that are offered by Company's licensees that are
permitted to participate in the Service (the "Partner-Led Market
Sites"; and together with the Company Local Sites, the "CitySearch Web
Sites"), up-to-date localized information regarding arts and
entertainment, community activities and events, recreation, and news.
The Company, in connection with the Service, shall create and host for
AMEX Merchant Customers custom Web sites ("AMEX Merchant InfoSites"),
which will be linked to the appropriate Company Local Sites. Company
shall use commercially reasonable efforts to have AMEX Merchant
InfoSites linked to appropriate Partner-Led Market Sites as requested
by AMEX.
(c) AMEX Merchant InfoSites shall contain, at AMEX's election, trademarks
or service marks of AMEX in a manner determined by AMEX. The design
and location of such trademarks or service marks shall be appropriate
in relation to the design and graphical user interface as the parties
shall agree. Without limiting the foregoing, the AMEX Merchant
InfoSites shall contain such messages and such trademarks as the
parties shall reasonably determine.
(d) AMEX shall determine the eligibility of AMEX Merchant Customers that
may enroll in the Service, provided that Company shall be entitled to
comment on and approve such eligibility criteria, which approval shall
not be unreasonably withheld.
2. E-COMMERCE:
----------
(a) As used herein:
(i) "AMEX E-Commerce Software" shall mean collectively, the High-End
E-Commerce Software and the Low-End E-Commerce Software;
(ii) "Commercially Viable" shall describe products and services that
are generally commercially available and that are competitive in
price and functionality with comparable products or services
offered by third parties.
(iii) "E-Commerce Authorization" shall mean the process via the Web
for receiving approval from AMEX and other credit, charge,
debit, stored valued and smart card issuers of E-Commerce
Transactions pursuant to applicable card acceptance agreements
between AMEX or such other issuers and Merchant Enrollees;
(iv) "E-Commerce Processor" shall mean the agent on behalf of each
Merchant Enrollee that processes the E-Commerce Authorizations;
-2-
<PAGE>
(v) "E-Commerce Transaction" shall mean, collectively, the High-End
E-Commerce Transaction and the "Low-End" E-Commerce Transaction;
(vi) "High-End E-Commerce Software" shall mean the software, owned or
licensed by AMEX, which provides "high-end" E-Commerce
Transaction capabilities to the AMEX Merchant InfoSites, the
Company Local Sites and certain permitted Partner-Led Market
Sites. Certain current requirements of such "high-end"
capabilities, which may be modified from time to time, are set
forth on Exhibit B hereto;
---------
(vii) "High-End E-Commerce Transaction" shall mean any purchase of
goods or services from a Merchant Enrollee by Cardholders (as
defined in Section 3(a)(i)) or any other holders of credit,
charge, debit, stored valued and smart cards via the Web that
utilizes the High-End E-Commerce Software. Such purchase shall
be made from any AMEX Merchant InfoSite, any Company Local Site
or any participating Partner-Led Market Site;
(viii)"Low-End E-Commerce Software" shall mean the electronic commerce
software owned or licensed by AMEX, which provides "low-end" E-
Commerce Transaction capabilities to the AMEX Merchant
InfoSites, the Company Local Sites and any participating
Partner-Led Market Sites. Certain current requirements of such
"low-end" capabilities, which may be modified from time to time,
are set forth on Exhibit C hereto.
---------
(ix) "Low-End E-Commerce Transaction" shall mean any purchase of
goods or services from a Merchant Enrollee by Cardholders or any
other holders of credit, charge, debit, stored valued and smart
cards via the Web that utilizes the Low-End E-Commerce Software.
Such purchase shall be made from any AMEX Merchant InfoSite, any
Company Local Site or any Partner-Led Market Site;
(x) "Merchant Enrollee" shall mean any AMEX Merchant Customer that
enrolls in the Service.
(b) Company agrees to develop an electronic commerce capability for the
Service which will allow individuals who access any Company Local
Site, any AMEX Merchant InfoSites, or participating Partner-Led Market
Sites, to conduct E-Commerce Transactions. Upon execution of an E-
Commerce Transaction (e.g., submission of all data necessary to
complete such transaction), a message shall be displayed, in a form
and content reasonably requested by AMEX, which shall indicate that
such E-Commerce Transaction is being processed by AMEX.
(c) [*]
---
(i) E-Commerce Processor [*]
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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<PAGE>
[*] During the term of this Agreement, AMEX E-Commerce Processor
pricing, taking into account all related fees, and functionality
will be comparable to pricing and functionality for competing
processor services.
- -------------
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-4-
<PAGE>
(ii) High-End [*].
(A) [*] The design and location of the message or icon shall be
appropriate in relation to the design and graphical user
interface as agreed by the parties.
(B) Provided that AMEX has committed to market the Service to
AMEX Merchant Customers in addition to those identified in
Section 4(b)(ii) hereof after the commencement of the third
year of this Agreement, then the provisions of subsection
(c)(ii)(A) hereof shall extend for so long as AMEX continues
to market the Service to AMEX Merchant Customers at levels
no less than those described in Section 4(b)(ii) on an
annual basis.
(iii) Low-End [*]. If Company chooses to offer a Low-End E-
Commerce Software solution to any merchant customer of the
Company, then Company shall give AMEX written notification
thereof. AMEX shall have sixty (60) days from the date of its
receipt of such notice to provide Company with a commercially
viable Low-End E-Commerce Software solution to offer to AMEX
Merchant Customers and other merchant customers of Company.
(A) [*]
(B) [*]
- -------------
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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<PAGE>
[*] No AMEX Merchant Enrollee that uses a third party E-
Commerce Software solution selected by the Company in
accordance with the terms of this subsection (iii)(B) shall
be required to terminate its low-end software solution
relationship with such third party.
(C) [*]
(d) [*]
(e) Company agrees to promote to its licensees the AMEX E-Commerce
Software and AMEX's capabilities as the E-Commerce Processor. Company
agrees to use commercially reasonable efforts to induce its licensees
that own or operate the Partner-Led Market Sites to utilize the
AMEX E-Commerce Software and to utilize AMEX as the exclusive
E-Commerce Processor. Company agrees to notify its potential licensees
of Company's relationship with AMEX, to provide AMEX with
introductions to such licensees, to facilitate technical discussions
with such licensees regarding the E-Commerce Software and E-Commerce
Processor capabilities, and to participate in meetings with such
potential licensees and AMEX at AMEX's reasonable request.
(f) Company agrees to negotiate in good faith with AMEX the definitive
terms of the Merchant Hosting and Distribution License Agreement in
connection with the licensing by Company of the AMEX E-Commerce
Software. Furthermore each Merchant Enrollee that desires to allow its
customers to conduct E-Commerce Transactions shall execute and deliver
a license agreement, in a form provided by AMEX, in connection with
the sub-licensing from Company of the AMEX E-Commerce Software.
(g) During the term of the Agreement, AMEX agrees to provide to Company
the AMEX E-Commerce Software and the E-Commerce Processor that AMEX
makes generally available to the public. [*]
- -------------
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-6-
<PAGE>
[*]
(h) Nothing in this Section 2 shall be construed to limit Company's
ability to offer online transaction capabilities provided by third
parties, retailers, merchandisers to its customers or users or to
provide links to other web sites outside of the Company's platform
that provides E-Commerce Transaction capabilities.
3. PROMOTIONAL SITE:
----------------
(a) As used herein:
(i) "AMEX Merchant Offer" shall mean each specific offer listed in
the Promotional Site and the National Promotional Site from AMEX
Merchant Customers exclusively to holders ("Cardholders") of a
charge, credit, debit or stored value card issued by AMEX or its
licensee and accepted on the AMEX network (the "AMEX Card") and
requiring payment using an AMEX Card. Such offers shall include,
without limitation, price discounts and free or discounted
products;
(ii) "National Promotional Site" shall mean a web page or web pages
that may or may not be developed, maintained or hosted by the
Company, which web page or web pages are designed to collect and
display, on a national (rather than local) level, AMEX Merchant
Offers for presentation to Cardholders;
(iii) "Promotional Site" shall mean a web page or web pages located
exclusively within the Company Site, developed and maintained by
the Company for the purpose of presenting AMEX Merchant Offers
to Cardholders.
(b) AMEX will make commercially reasonable efforts to publish AMEX
Merchant Offers solicited by AMEX in the Promotional Site.
(c) AMEX Merchant Offers that are solicited by Company shall appear in the
Promotional Site and AMEX will make commercially reasonable efforts to
publish such Company solicited AMEX Merchant Offers in the National
Promotional Site.
(d) The following AMEX Merchant Offers will link back to the Promotional
Site or to the related AMEX Merchant InfoSite unless the related AMEX
Merchant Customer elects otherwise: any AMEX Merchant Offer that is
(i) solicited by AMEX and (ii) derived from an AMEX Merchant Customer
that is located in a market in which the Company has a Company Local
Site which is located on the National Promotional Site.
(e) The Company agrees to develop the Promotional Site and make the
related AMEX Merchant Offers accessible to Cardholders, which may
include, without limitation,
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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<PAGE>
Cardholders who conduct E-Commerce Transactions. The Company agrees to
use commercially reasonable efforts to develop the Promotional Site
within six (6) months of AMEX's written notice to Company of AMEX's
desire to launch such Promotional Site. The Promotional Site shall be
branded prominently with an AMEX trademark as selected by AMEX and
agreed to by Company. Company agrees to post on the home page of the
appropriate Company Local Site an icon that shall hypertext link to
the Promotional Site. AMEX agrees to place an icon and hypertext link
on pages of the National Promotional Site as the parties shall agree.
(f) The Company agrees to grant AMEX an option for the Company to develop
a National Promotional Site where AMEX Merchant Offers may be
published and available to Cardholders, which may include, without
limitation, Cardholders who conduct E-Commerce Transactions. The
Company agrees to use commercially reasonable efforts to develop such
National Promotional Site within six (6) months of AMEX's written
notice to Company of AMEX's desire to launch such National Promotional
Site. Upon receipt of such notice, Company agrees to negotiate in good
faith with AMEX on additional terms, conditions and fees for the
Company's development of the National Promotional Site. The National
Promotional Site shall be branded prominently with an AMEX trademark
as selected by AMEX and agreed to by Company.
(g) If Company creates a site (the "Similar Site") similar to the
Promotional Site and a Merchant Enrollee posts an offer or promotion
in both the Similar Site and the Promotional Site, then Company agrees
to use commercially reasonable efforts to assure that such offer or
promotion posted in the Similar Site shall not have terms more
favorable than the AMEX Merchant Offer posted in the Promotional Site.
4. PROMOTION OF THE SERVICE:
-------------------------
(a) AMEX and Company shall promote the Service to AMEX Merchant Customers
by participating in promotional programs (as defined below) in the
manner and to the extent provided in this Agreement. From time-to-time
during the term of this Agreement AMEX may engage in other
solicitation activities relating to the Service.
(b) Programs:
---------
(i) The parties acknowledge that they intend to offer the Service
during the term of this Agreement through various promotional
programs and channels as the parties shall mutually agree
("Programs"). All marketing and other promotional materials
(including without limitation, solicitation, fulfillment,
customer service and retention materials) developed hereunder in
connection with any Program or the Service shall be referred to
as "Promotional Materials." In the event of a disagreement, AMEX
shall have the final controlling rights on all marketing and
promotion of the Service (including but not limited to
presentation, copy, format, design, script development, etc.) so
long as such marketing and promotion do not violate any
contracts, laws or
-8-
<PAGE>
regulations. The timing and scope (i.e., size and frequency of
solicitations) will be mutually approved by both parties, which
approval shall not unreasonably withheld.
(ii) The initial Program shall involve the marketing of the Service,
including without limitation the delivery of Promotional
Materials, to one hundred thousand (100,000) AMEX Merchant
Customers located in geographic areas in which Company operates
the Basic Service. Such Program shall commence no later than
ninety (90) days from the date hereof. AMEX shall identify such
AMEX Merchant Customers in accordance with criteria that AMEX
shall identify to Company.
(c) Promotional Materials: Company and AMEX shall prepare Promotional
---------------------
Materials for the Service. Such materials shall be designed to
solicit Merchant Enrollees. The Company shall be solely responsible
for verifying the accuracy of all statements relating to the Service
contained in the Promotional Materials.
(d) Performance Standards: Company shall fulfill the requirements set
---------------------
forth in the following exhibits attached hereto and made a part
hereof:
Exhibit A Description of the Basic Service
---------
Exhibit D Financial Arrangement
---------
Exhibit E Customer Service
---------
The requirements set forth in the foregoing shall be deemed the
performance standards (the "Performance Standards") hereunder. The
parties hereto agree and acknowledge that the failure of the Company
to fulfill the requirements of the Performance Standards shall
constitute a material breach of this Agreement.
(e) Solicitation and Selection of AMEX Merchant Customers.
------------------------------------------------------
(i) AMEX shall provide to Company a list of AMEX Merchant Customers
which Company may solicit for enrollment in the Service. Such
solicitation shall be conducted by Company in person by the
Company's sales force or by any other method mutually approved by
the parties. Each proposed Merchant Enrollee shall execute a
Service agreement in the form of Schedule 1 hereto as amended
----------
from time to time and as approved by AMEX.
(ii) Company shall provide to AMEX the sales materials used by Company
or its agents to solicit AMEX Merchant Customers. All such
materials shall be subject to AMEX's review and comment and shall
not be used if, in AMEX's sole discretion, the materials are
deemed unacceptable.
(f) Costs and Expenses:
-------------------
(vi) Except as set forth in subsection (ii) below, all costs and
expenses associated with a
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<PAGE>
Program or the Service, including without limitation costs and
expenses related to merchant solicitations, AMEX Merchant
InfoSite creation and development, market research, market
tests, public relations, list development, ad agency fees,
software development and Customer Service, whether incurred by
the Company or reasonably incurred by AMEX in connection with
its obligations hereunder, shall be payable by the Company. Any
reimbursable amounts incurred by AMEX shall conform with the
requirements set forth in subsection (A) below or otherwise as
approved by Company in writing. Any amounts incurred by AMEX
shall be invoiced to the Company, with reasonable documentary
support for the amounts stated therein, and paid by Company
within thirty (30) days of its receipt thereof. [*]
(A) Reimbursable costs and expenses incurred by AMEX shall
conform with the following: postage, printing and
creative development fees (including without limitation
fees for creative agencies) not to exceed [*] per year
and market research expenses not to exceed [*] per year.
Without limiting the foregoing, AMEX agrees to make
reasonably commercial efforts to inform Company of AMEX's
proposed expenditure of amounts greater than $5,000 that
are reimbursable hereunder.
(ii) AMEX shall be responsible for costs and expenses incurred by
AMEX in connection with any direct mail or telemarketing
solicitations of AMEX Merchant Customers.
(iii) AMEX shall invoice to Company any amounts reimbursable by
Company hereunder, with reasonable documentary support for the
amounts stated therein. Company shall pay such amounts within
thirty (30) days of its receipt thereof. Company shall pay
interest at the rate of eighteen percent (18%) per annum on all
such amounts paid after the due date, and a penalty of five
percent (5%) of such amounts due that is not received by AMEX
within thirty (30) days of the original due date.
(g) AMEX's Sponsorship Commitments. AMEX agrees to spend a minimum of
[*] within 90 days of the execution of this Agreement with
Company in connection with advertising and sponsorship Programs, which
may include, but not be limited to, banners, content sponsorships,
contests and other service promotions. AMEX and Company will jointly
determine the nature of the advertising expenditure including, but not
limited to, specific programming, markets, sponsorships, banner
campaigns, etc. The advertising will be priced favorably to AMEX at
discounted rates relative to other Company advertisers of similar size
and nature, and as mutually agreed upon by both parties. [*]
Dedicated account support, campaign management and post-sales follow-
up and tracking reports will be provided to AMEX by Company on a
timely basis. [*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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[*]
5. CUSTOMER SERVICE:
----------------
(a) The Company agrees to provide customer service ("Customer Service") to
AMEX Merchant Customers in accordance with the standards set forth on
Exhibit E hereto.
---------
(b) Customer Service shall be provided to AMEX Merchant Customers for the
term of their respective enrollment in the Service. [*]
(c) The Company shall provide AMEX with the following reports, at the time
and in the form and substance mutually agreed upon by the parties
hereto.
(i) AMEX Merchant Customer report including: (A) total number
of Merchant Enrollees; (B) Merchant Enrollees' names; (C)
Merchant Enrollees' Merchant Account numbers; (D) Merchant
Enrollees' dates of enrollment;
(ii) Revenue report setting forth revenues generated by the
Service;
(iii) Customer Service report including: (A) number of AMEX
Merchant Customers contacting Customer Service, (B)
wait/response time for telephone, and (C) length of
telephone calls;
(iv) Attrition report including: (A) total number of the
Merchant Enrollees that cancel their enrollment in the
Service; (B) reasons disclosed to Company for such AMEX
Merchant Customers' discontinuing their respective
enrollment in the use of the Service; and (C) date of
cancellation by such Merchant Enrollees.
The report required by (i) above shall be provided on a weekly basis for
the first three (3) months of the Service thereafter it shall be provided
on a monthly basis. The report required by (iv) above shall be provided on
a quarterly basis. The other reports described above will be provided to
AMEX on a monthly basis or as otherwise jointly agreed by AMEX and the
Company.
6. FINANCIAL ARRANGEMENT:
----------------------
- -------------
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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(a) AMEX Merchant Customers enrolling in the Service shall be charged the
price or prices determined by Company and approved by AMEX (the
"Enrollment Fees"). Company shall be responsible for billing and
collecting all Enrollment Fees. Such Enrollment Fees will be billed by
invoice, automatic debit from a demand deposit account, or, when
available, to the AMEX Merchant Customers' American Express Corporate
Purchasing Card account. Payment schedules and procedures will be set
forth in detail on Exhibit D.
---------
(b) Company understands that it will be responsible for paying any charges
incurred in connection with the Acceptance Agreements (as defined in
Section 13(d) below), including the payment of any discount fees
payable thereunder. (Any revenues to AMEX generated by the terms of
the Acceptance Agreements shall not be calculated as part of the gross
revenues for purposes of Exhibit D hereto.)
---------
[*]
(iii) During the term of this Agreement, AMEX shall be the preferred
travel agency and financial services sponsor of the Service, the
AMEX Merchant InfoSites and the Company's Local Sites. Company
agrees to promote AMEX as such preferred sponsor in the manner
reasonably requested by AMEX and as appropriate for the AMEX
sponsorship commitment. The Company will make commercially
reasonable efforts to notify AMEX of sponsorship opportunities in
other areas and to grant AMEX a right of first refusal to sponsor
such other areas on terms no less favorable than the sponsorship
opportunities the Company proposes to grant to a third party. The
foregoing shall not be construed to restrict Company from
accepting banner
- -------------
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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<PAGE>
advertisements or regional sponsorships from third party travel
agencies or financial services providers.
(b) For the Benefit of Company.
--------------------------
(i) As used herein:
(A) "Non-Solicitation Period" shall mean the six (6) month
period commencing on the date AMEX drops mail in connection
a Service Promotion;
(B) "Service Promotion" shall mean the direct mail
solicitation, billing statement inserts and proactive
telemarketing solicitation of AMEX Merchant Customers for
enrollment in the Service;
(C) "Similar Service" shall mean a product or service
substantially similar to the Service or the Basic Service
and offered by Microsoft Sidewalk, Digital City, Cox
Interactive Media or the New York Times Company.
(ii) [*]
(iii) AMEX agrees to use commercially reasonable efforts to have the
AMEX proprietary sales force which markets to AMEX Merchant
Customers Web-related products and services to include the
Service in its schedule of available products. AMEX shall use
such efforts only in markets where the Company operates a
Company Local Site or in a Partner-Led Market Site participating
with AMEX pursuant to this Agreement. Furthermore, AMEX shall
use such efforts in connection with its sales efforts and
inbound sales calls.
(iv) AMEX agrees to identify the Service as the AMEX sponsored online
local guide and service which develops and hosts merchant Web
sites. AMEX agrees to coordinate with Company on the specific
language in connection with such identification and the
Company's preferential status. Furthermore, AMEX shall use such
efforts in connection with its proprietary sales force efforts
and inbound sales calls.
(v) The rights of Company under this Section 7(b) shall be subject
to the terms set forth in Section 2(c)(iii)(C) hereof.
8. ADVERTISEMENTS. Company agrees to comply with the Advertisement Policy set
--------------
forth in Exhibit F hereto.
---------
9. INDEMNIFICATION AND HOLD HARMLESS:
----------------------------------
- -------------
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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<PAGE>
(a) Each party hereto (an "Indemnitor") shall indemnify and hold harmless the
other party, its parent, subsidiaries, affiliates successors, assignees,
directors, officers, agents and employees (each an "Indemnitee") from and
against any loss, damage, cost, expense, liability, and settlement,
including without limitation, any reasonable attorney fees and court costs
(each of the foregoing a "Claim") reasonably incurred by any Indemnitee
which Claim arises out of or in connection with (i) the intentional or
negligent act or omission of the Indemnitor or its officers, directors,
employees, contractors or agents (collectively, the "Agents") in the course
of the performance of Indemnitor's duties and obligations under this
Agreement; (ii) the failure of Indemnitor or its Agents, as the case may
be, to comply with the terms of this Agreement; or (iii) the failure of
Indemnitor (including without limitation its Agents who perform on behalf
of Indemnitor hereunder) to comply with its obligations under any and all
laws, rules, or regulations applicable to Indemnitor, its Agent or the
Service, as the case may be.
(b) Each Indemnitee seeking indemnification under this Agreement shall give
prompt notice to Indemnitor along with such Indemnitee's request for
indemnification, of any Claim for which it is seeking indemnification. The
parties understand and further agree that no settlement of an indemnified
Claim shall be made by an Indemnitee without the concurrence of Indemnitor.
Indemnitor shall control the settlement or defense of any Claim; provided,
however, that the Indemnitee may, at its cost, engage its own attorneys.
The Indemnitee will fully cooperate with Indemnitor to enable it to fulfill
its obligations with respect to such Claim.
(c) IN NO EVENT WILL EITHER PARTY HERETO BE RESPONSIBLE FOR ANY INCIDENTAL,
INDIRECT, CONSEQUENTIAL, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES OF ANY
KIND, INCLUDING WITHOUT LIMITATION LOST REVENUES, LOSS OF PROFITS OR LOSS
OF BUSINESS.
(d) The provisions of this Section 9 shall survive the termination of this
Agreement.
10. PUBLICITY: Except as may be required by law, no party hereto shall
----------
issue advertising, promotional activity, press or publicity release
relating to the Service or this Agreement without securing the prior
written consent of such other party.
11. CONFIDENTIALITY:
----------------
(a) Company and AMEX acknowledge that as a result of the performance of
their respective responsibilities under this Agreement, AMEX will
obtain access to confidential and proprietary information of the
Company and Company shall obtain access to confidential and
proprietary information concerning Cardholders, AMEX's business,
customers, methodologies and strategies (all such information herein
the "Confidential Information"). All such Confidential Information of
the other party shall be deemed to be confidential and proprietary
unless such Confidential Information: (i) is clearly intended for
public distribution by AMEX, in the case of AMEX Confidential
Information, or by
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<PAGE>
Company, in the case of Company's Confidential Information; (ii) is
known by the receiving party prior to its receipt thereof; (iii) is
lawfully obtained by the receiving party from a third party; or (iv)
is independently developed by the receiving party without use of any
portion of such Confidential Information which can be reasonably
demonstrated by written record.
(b) This Agreement, including all exhibits and schedules hereto, is hereby
designated as confidential within the meaning of this Section 11 and
shall not be disclosed to a third party unless disclosure is required
by government regulation or court order.
(c) Company and AMEX shall not use any of the other party's Confidential
Information for any purpose other than to perform their respective
responsibilities under this Agreement. Company and AMEX shall each
take the same measures to protect the Confidential Information of the
other party received by it as it prudentially should take with respect
to its own Confidential Information, including, but not limited to,
instructing its employees, vendors, agents, and independent
contractors (excluding only those retained to provide the Service) of
the foregoing and requiring them to be bound by appropriate
confidentiality agreements.
(d) AMEX shall have all rights and interests to the list of AMEX Merchant
Customers and the information contained thereon. Company (i) shall not
solicit AMEX Merchant Customers for any reason other than in
accordance with the terms of this Agreement or as requested by AMEX in
writing and (ii) may neither communicate with, nor permit its licensee
or designee to communicate with, Merchant Enrollees other than in
accordance with the terms of this Agreement without the prior written
consent of AMEX. Notwithstanding the foregoing, the Company may market
products and services to, or communicate with, its own merchant
customers and potential merchant customers provided that the source of
the information used by the Company to market to or communicate with
such merchant customer or potential merchant customer is neither AMEX
nor the lists provided by or on behalf of AMEX under this Agreement.
(e) It is understood and agreed by the parties hereto that all files of
Merchant Enrollees supplied to the Company in connection with the
Service (including, but not limited to, the master file tape for the
Service) are and always have been the exclusive property of AMEX, and
will be turned over to AMEX, at no cost to AMEX, upon termination of
this Agreement.
(f) Nothing in this Agreement shall be deemed to prevent Company or AMEX
from providing information to their respective independent contractors
who are retained to assist in the performance of such party's
obligations hereunder provided that the conditions set forth herein
are complied with by such party and its independent contractors and
such independent contractors are not competitors of the other party.
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<PAGE>
(g) Each party acknowledges that irreparable injury would be caused to the
other party in the event of unauthorized use of such other party's
confidential information, and agrees that preliminary and permanent
injunctive relief would be appropriate in the event of breach of this
Section 11.
(h) Upon termination or expiration of this Agreement and at the request
and option of AMEX or Company, as the case may be, each of AMEX and
Company agrees promptly (i) to return the confidential information of
the other party to such party or (ii) destroy the confidential
information of the other party and acknowledge in a sworn affidavit
that all such confidential information has been destroyed.
(i) Section 11 in its entirety, shall survive the termination of this
Agreement.
12. DATA AND RECORDS: Acknowledging the confidentiality of AMEX Merchant
-----------------
Customer data, Company hereby agrees to the terms of the AMEX Data Access
Document attached hereto as Exhibit G and the AMEX Merchant Customer Data
---------
and Data Related Rights schedule attached hereto as Exhibit I the terms of
---------
which are hereby incorporated herein and made a part hereof. Company will
comply with the exhibits entitled Security attached hereto as Exhibit J and
---------
AMEX Audit Rights attached hereto as Exhibit K, the terms of both are
---------
incorporated herein by reference and made a part hereof. In the event
Company uses the services of third party vendors, representatives or
subcontractors, Company shall be responsible for ensuring their compliance
with the terms of this Agreement, and shall ensure that all such vendors,
representatives or subcontractors execute the Non-Disclosure Agreement
substantially similar to that attached hereto as Exhibit L. With respect to
---------
access of AMEX data via a computer, Company's employees and agents will
follow the Terminal Rules set forth in Exhibit M.
---------
13. REPRESENTATIONS, WARRANTIES & COVENANTS:
----------------------------------------
(a) Each party hereto represents and warrants that it has full power and
authority to execute this Agreement and to take all actions required
by, and to perform the agreements contained in, this Agreement, and
that each party's respective obligations under this Agreement do not
conflict with its obligations under any other agreement by which the
such party is bound.
(b) Each party represents, warrants and covenants that the performance of
its respective obligations under this Agreement in connection with the
Service complies and will comply with all applicable federal, state,
local and foreign laws and regulations.
(c) Each party represents, warrants and covenants that each of its
respective employees assigned to perform services with respect to the
Service has and will have the skill and background to perform such
assigned services in a competent and professional manner, and to act
in compliance with all applicable laws and regulations.
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<PAGE>
(d) Company represents, warrants and covenants that it is and shall
continue to be during the terms of this Agreement a party in good
standing to (i) a card acceptance agreement with AMEX (the "Retail
Acceptance Agreement") for the acceptance of the American Express(R)
Cards and (ii) a corporate purchasing card acceptance agreement with
AMEX (the CPC Acceptance Agreement"; and together with the Retail
Acceptance Agreement, the "Acceptance Agreements") for the acceptance
of the American Express(R) Corporate Purchasing Cards.
(e) Company covenants that the Service shall comply with AMEX's policies,
as amended from time to time, relating to privacy of customer data.
Attached hereto as Exhibit N is a copy of AMEX's online privacy
---------
policies in effect on the date hereof.
14.TRADEMARKS: Notwithstanding any other provision of this Agreement, neither
----------
party shall have the right to use the other party's registered or
unregistered trademarks, service marks, or trade names, or to refer to the
other party directly or indirectly, in connection with any product, promotion
or publication without the prior written approval of that party.
15.INTELLECTUAL PROPERTY OWNERSHIP:
--------------------------------
(a) As used herein "Developed Materials" shall mean, hereunder, all
inventions, methods, techniques, works of authorship, computer software,
computer upgrades, computer programs, service providers, vendors
information, training materials, telemarketing scripts, computer
screens, reports, data, any other proprietary or confidential
information made, created, developed or written hereunder and other
intellectual property created, developed or written in accordance with
the activities contemplated hereunder. In the event any Developed
Material (i) is fully paid for by AMEX and Company has not provided
material creative or developmental input therein (including without
limitation provision of proprietary or confidential information), then
such Developed Material shall be deemed the sole property of AMEX and
any use thereof by Company shall require consent thereto by AMEX; (ii)
is substantially paid for by AMEX and Company has had material creative
or developmental input therein (including without limitation provision
of proprietary or confidential information), then such Developed
Material shall be deemed the property of AMEX with Company having a non-
exclusive, royalty-free right of use thereof; (iii) is substantially
paid for by Company and AMEX has had material creative or developmental
input therein (including without limitation provision of proprietary or
confidential information), then such Developed Material shall be deemed
the property of Company with AMEX having a non-exclusive, royalty-free
right of use thereof; and (iv) is fully paid for by Company and AMEX has
not provided material creative or developmental input therein (including
without limitation provision of proprietary or confidential
information), then such Developed Material shall be deemed the sole
property of Company and any use thereof by AMEX shall require consent
thereto by Company. As used herein, "AMEX Property" shall mean the
Developed Material as described in (i) and (ii) above; "Company
Property" shall mean the Developed Material as described in (iii) and
(iv) above.
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<PAGE>
(b) All Developed Materials shall be deemed Confidential Data and
Information and subject to the confidentiality provisions of this
Agreement.
(c) Nothing herein shall be construed to restrict, impair or deprive Company
or AMEX of any of their respective rights or proprietary interests in
technology or products that existed prior to and independent of the
performance of their respective obligations hereunder.
16. INTELLECTUAL PROPERTY INFRINGEMENT
----------------------------------
(a) Each party agrees to defend and/or handle at its own expense, any claim
or action against the other party or its affiliates (including without
limitation, its parent, subsidiaries, officers and directors) for any
actual or alleged infringement of any intellectual or industrial
property right, including, without limitation, trademarks, service
marks, patents, copyrights, misappropriation of trade secrets or any
similar proprietary rights, based upon the Service or any portion
thereof furnished or utilized by such party or based on the other
party's use thereof. Each party further agrees to indemnify and hold the
other party and its affiliates harmless from and against any and all
liabilities, losses, costs, damages and expenses (including reasonable
attorneys' fees) associated with any such claim or action. Each
indemnifying party shall have the sole right to conduct the defense of
any such claim or action and all negotiations for its settlement or
compromise, unless otherwise mutually agreed to in writing.
(b) If any portions of the Service become, or in Company's opinion are
likely to become, the subject of any claim or action as described in
subsection (a) above, then, Company, at its expense may either: (i)
procure for AMEX the right to continue using same as contemplated
hereunder; (ii) modify same to render same non-infringing (provided such
modification does not adversely affect the use of the Service as
contemplated hereunder); or (iii) to AMEX's satisfaction, replace same
with equally suitable, functionally equivalent, compatible, non-
infringing products, materials or services.
17. NOTICES: All notices, consents, requests, instructions, approvals, and
--------
other communications made, required or permitted hereunder (each herein, a
"Notice") shall be given in writing and delivered to the receiving party
to its respective address set forth below (i) by personal delivery to the
individual identified below, (ii) by certified or registered mail (return
receipt requested), or (iii) by a nationally recognized courier. The
effective date of such Notice shall be deemed to be the date upon which
any such Notice is personally received by the addressee. Any party hereto
may change its address set forth below by written notice to the other
party hereto in accordance with the terms of this Section:
(a) If to AMEX:
American Express Travel Related Services Company, Inc.
American Express Tower
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<PAGE>
3 World Financial Center
New York, New York 10285-4221
Attn: Pierric Beckert
Vice President
Interactive Enterprise Development
American Express Relationship Services
Copy to:
American Express Travel Related Services
Company, Inc.
General Counsel's Office
American Express Tower
3 World Financial Center
New York, New York 10285-4909
Attn: Francis M. Caesar
Counsel for AERS
(b) If to Company:
CitySearch, Inc.
790 East Colorado Boulevard
Suite 200
Pasadena, California 91101
Attn: Charles Conn III
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<PAGE>
Copy to:
CitySearch, Inc.
790 East Colorado Boulevard
Suite 200
Pasadena, California 91101
Attn: Douglas McPherson
Chief Legal Officer
18. TERM AND TERMINATION:
---------------------
(a) This Agreement shall take effect upon the date hereof (the "Effective
Date"), and continue until [*] (including any renewal period as
provided herein, the "Expiration Date") unless earlier terminated in
accordance with this Section.
(b) Early Termination: In accordance with the following, this Agreement
-----------------
may be terminated by either party prior to the Expiration Date:
(i) In the event that the other party commits a material breach or
default under this Agreement which breach is not cured by the
breaching party thirty (30) days from the receipt of notice to
cure the breach from the non-breaching party, then the non-
breaching party may terminate this Agreement in its discretion
at any time after such thirty (30) day period; provided that if
such cure cannot be accomplished within such thirty (30) day
period, then, with the non-breaching party's consent which shall
not be unreasonably withheld, such period shall be extended for
such reasonable additional period as shall be necessary to
effect such cure, so long as the party shall have commenced such
cure within such thirty (30) day period and shall thereafter
proceed diligently to complete the cure.
(ii) In the event (1) of a sale or distribution of all or
substantially all of the assets of Company or a sale or
distribution of sufficient stock (other than pursuant to a
public offering) of Company to effect a change in control or (2)
that Company or its affiliate enters into the business of
providing financial services or provides a financial product or
service substantially similar to any of AMEX's financial
products or services, AMEX may, in its sole discretion,
terminate this Agreement immediately. In the event that AMEX
terminates this Agreement pursuant to the preceding sentence of
this Section, Company shall reimburse AMEX for reasonable
out-of-pocket expenses (not to exceed $100,000) incurred in
transferring all data contained within the AMEX Merchant
InfoSites (excluding Company Property) at AMEX's election, to
another vendor of AMEX or to AMEX itself. The expenses described
in the foregoing shall include costs associated with consultants
retained by AMEX in connection with such termination.
Furthermore, the costs associated with Company's obligations in
Section 11(e) shall not be applied against the $100,000 cap
stated herein.
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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(iii) Either party may terminate this Agreement with immediate effect:
(1) upon the institution by the other party of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by the other
party to institution of bankruptcy or insolvency proceedings
against it or the filing by the other party of a petition or
answer or consent seeking reorganization or release under the
Federal Bankruptcy Code, or any other applicable Federal or state
law, or the consent by the other party to the filing of any such
petition or the appointment of a receiver, liquidator, assignee,
trustee, or other similar official of the other party or of any
substantial part of its property, or the making by the other
party of an assignment for the benefit of creditors, or the
admission in writing by the other party of an assignment for the
benefit of creditors, or the admission in writing by the other
party of its inability to pay its debts generally as they become
due or the taking of corporate action by the other party in
furtherance of any such actions; (2) if, within 60 days after the
commencement of an action against the other party seeking any
bankruptcy, insolvency, reorganization, liquidation, dissolution
or similar relief under any present or future law or regulation,
such action shall not have been dismissed or all orders or
proceedings thereunder affecting the operations or the business
of the other party stayed, or if the stay of any such order or
proceeding shall thereafter be set aside; or if, within 60 days
after the appointment without the consent or acquiescence of the
other party of any trustee, receiver or liquidator or similar
official of the other party, or of all or any substantial part of
the property of the other party, such appointment shall not have
been vacated.
(c) Transfer Assistance: Upon the termination of this Agreement due to an
--------------------
event described in Section 18(b)(i), where the material breach relates to
the Company's obligations under this Agreement, Section 18(b)(ii) or
Section 18(b)(iii), where the events described therein occur with respect
to Company, Company shall, upon AMEX's request, provide the following
assistance: (i) continue to provide the Service to the extent requested by
AMEX in accordance with the Performance Standards for the remainder of all
Merchant Enrollees' enrollment period up to one (1) year provided that
Company has been paid for such enrollment period; (ii) provide such
assistance ("Transfer Assistance") as reasonably requested by AMEX to
transfer the Service to another vendor or to AMEX itself during a one-
hundred eighty (180) day period following the effective date of the
termination of the Agreement; (iii) answer AMEX Merchant Customers'
questions regarding the Services as mutually agreed on an as needed basis;
and (iv) deliver to AMEX any remaining AMEX-owned reports and documentation
still in Company's possession, or at AMEX's direction, destroy all AMEX
data and information in the Company's possession. The above referenced
Transfer Assistance shall be provided at AMEX's expense unless otherwise
provided herein or the termination is due to a material breach by Company.
(d) Certain Post-Termination Rights and Obligations.
-----------------------------------------------
(i) As used herein "Post-Termination Period" shall mean the one (1) year
period following termination of this Agreement so long as such
termination is not due to an
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<PAGE>
event described in the following sections: 18(b)(i), where the
material breach relates to the Company's obligations under this
Agreement; 18(b)(ii); or 18(b)(iii), where the events described
therein occur with respect to Company. During the Post-Termination
Period:
(A) AMEX and Company agree that Company shall continue to provide the
Service to Merchant Enrollees in accordance with the terms and
conditions of this Agreement; the term of the Agreement shall be
deemed extended through the expiration of the Post-Termination
Period with respect to the Merchant Enrollees. Any and all
solicitations by Company under this Agreement for new enrollments
in the Service shall cease immediately prior to the commencement
of the Post-Termination Period;
(B) Company may, but is not obligated to, renew the enrollment of any
Merchant Enrollee, provided that no term of such renewal
enrollment shall extend for more than a twelve (12) month period.
[*]
(C) AMEX shall not solicit Merchant Enrollees to enroll in a service
that is substantially similar to the Service.
(ii) For a period of five (5) years following the termination of the
Agreement, Company agrees not to promote or sponsor an AMEX
Competitor on any AMEX Merchant InfoSite, regardless of whether such
AMEX Merchant InfoSite is hosted or maintained by Company. As used
herein, "AMEX Competitor" shall mean an entity engaged in the
issuance or promotion of Charge Card Products or is engaged in the
financial services business.
(iii) Upon expiration of the Post-Termination Period, Company's obligations
to brand any portion of the AMEX Merchant InfoSite with an AMEX
trademark shall cease.
19. MISCELLANEOUS:
--------------
(a) Headings: Headings stated in this Agreement are for convenience of
---------
reference only and are not intended as a summary of such sections and
do not affect, limit, modify, or construe the contents thereof.
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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<PAGE>
(b) 21/st/ Century. No later than December, 1998, Company shall (i)
--------------
manage and manipulate data in connection with the Service involving
all dates from the 20/th/ and 21/st/ centuries without functional or
data abnormality related to such dates; (ii) manage and manipulate
data in connection with the Service involving all dates from the
20/th/ and 21/st/ centuries without inaccurate results related to
such dates; (iii) have user interfaces and data fields in connection
with the Service formatted to distinguish between dates from the
20/th/ and 21/st/ centuries; and (iv) represent all data in
connection with the Service to include indications of the millennium,
century, and decade as well as the actual year.
(c) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall constitute an original, but all of
which together shall constitute one instrument notwithstanding that
all parties are not signatories to the same counterparts.
(d) Informal Resolution and Arbitration.
-----------------------------------
(i) With the exception of the disputes arising under the provisions
of Section 11 hereof, if that there is a dispute between the
parties relating to this Agreement, the parties agree the party
claiming the dispute will provide written notice of the dispute
to the other party. Within thirty (30) days after receipt of the
written notice, AMEX and Company will each appoint a
representative with full authority to negotiate a resolution of
the dispute and meet as often as is necessary in a good faith
effort to resolve the dispute without the necessity of a formal
meeting. In the event that representatives are unable to resolve
the dispute within ninety (90) days of the date of the written
notice, said dispute shall be submitted to mandatory and binding
arbitration as provided below in Section 19(e)(ii).
(ii) To initiate the arbitration, the disputing party shall notify
the other party in writing which shall describe in reasonable
detail the nature of the dispute, state the amount of the claim,
specify the requested relief and name an arbitrator who has been
licensed to practice law in the U.S. for at least ten years, is
not an employee of AMEX or Company or an employee of an
affiliate of either AMEX or Company, is experienced in
representing clients in connection with commercial agreements
and is impartial, neutral, disinterested, unbiased and bound by
the Rules of Ethics of the ABA and AAA for neutral arbitrators
and shall not have ex parte communications with the parties
(Basic Qualifications). Within fifteen (15) days after the other
party's receipt of the Arbitration Demand, such other party
shall file and serve on the disputing party a written statement
answering the claims set forth in the Arbitration Demand and
including any affirmative defenses of such party, asserting any
counterclaim which shall describe in reasonable detail the
nature of the dispute relating to the counterclaim, and state
the amount of the counterclaim and specify the requested relief
and name the second arbitrator satisfying the Basic
Qualifications. Within fifteen (15) days thereafter, the two
party selected arbitrators shall select a third neutral
arbitrator from a list provided by the AAA of potential
arbitrators who satisfy the Basic Qualifications and who have no
past or present relationship with the parties or their counsel
except as disclosed in writing to and approved by the parties.
The
-23-
<PAGE>
third arbitrator selected by the two party appointed arbitrator
shall serve and have sole responsibility as the "case manager".
Within forty-five (45) days after the arbitration panel has been
appointed, the case manager shall meet with the parties and
their counsel to agree to a case management agreement which
shall include the arbitration panel's commitment that they have
sufficient time available for the handling of the dispute to
final disposal within one hundred eighty (180) days. The
arbitration will be heard by a panel of the three arbitrators so
chosen and decisions of a majority of the members of the
arbitration panel shall be final and subject to the provisions
of Section 11 hereof. The arbitration panel shall have the power
and authority and is instructed to exclude evidence on grounds
of prejudice, immateriality and/or redundancy and no ruling by
the arbitrator rejecting evidence on such ground shall be a
ground for vacating the arbitration award.
(iii) Any controversy, dispute, disagreement or claim arising out of
or relating to this Agreement, or any alleged breach thereof, or
the subject matter thereof, shall be settled exclusively by
binding arbitration, as described in above in subparagraphs (i)
and (ii), which shall be conducted in New York, New York. The
arbitration panel is specifically authorized to render partial
or full summary judgment as provided by the Federal Rules of
Civil Procedure. In the event full or partial summary judgment
is granted, the non-prevailing party may not raise as a basis
for a motion to vacate an award that the Arbitration Panel
failed or refused to consider evidence of bearing on the
dismissed claim or issue. The Federal Rules of Civil Procedure
shall apply to all discovery pursuant to the arbitration process
and the Federal Rules of Evidence and Subpoena shall apply to
the arbitration hearing. The party bringing a particular claim
or asserting an affirmative defense shall have the burden of
proof with respect to thereto. The arbitration proceeding and
all testimony, filings, documents and information relating to or
presented during the arbitration proceedings shall be deemed to
be information subject to the confidentiality provisions of the
Agreement. The arbitration panel will have no power or authority
under the Commercial Arbitration Rules of the AAA or otherwise,
to relieve the parties from their agreement hereunder to
arbitrate or otherwise to amend or disregard any provision of
the Agreement, including without limitation the provisions of
this Section 19(d), except that the parties hereto expressly
agree that claims pursuant to Section 11(g) hereof will not be
subject to the requirements of this Section 19(d).
(iv) Should an arbitrator refuse or be unable to proceed with
arbitration proceedings, he/she shall be replaced by the party
who selected such arbitrator or if such arbitrator was selected
by the two party appointed arbitrators, by such two party
appointed arbitrators selecting a new third arbitrator in
accordance with the basic qualifications.
(v) Any award rendered by the arbitration panel will be final,
conclusive and binding upon the parties and any judgment hereon
may be entered and enforced in any court of competent
jurisdiction.
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<PAGE>
(vi) Each party will bear a pro rata share of all fees, costs and
expenses of the arbitrators, and notwithstanding any law to the
contrary, each party will bear all fees, costs and expenses of
its own attorneys, experts and witnesses; provided, however that
in connection with any judicial proceeding to compel arbitration
pursuant to this agreement or to confirm, vacate or enforce any
award rendered by the arbitration panel, the prevailing party in
such proceeding will be entitled to recover reasonable attorneys
fees and expenses incurred in connection with such proceeding,
in addition to any other relief to which it may be entitled.
(f) New York Law: This Agreement shall be governed by and in accordance
-------------
with the laws of the State of New York, without reference to its
conflict of laws principles.
(g) Independent Contractor Status And Authority.
-------------------------------------------
(i) Company agrees and acknowledges that in its performance of its
obligations under this Agreement, Company is an independent
contractor of AMEX. Company is solely responsible for its own
activities. Company has no authority to make commitments or enter
into contracts on behalf of, bind or otherwise obligate AMEX in
any manner whatsoever except as expressly stated in this
Agreement.
(ii) Since Company is an independent contractor and not an agent of
AMEX, Company represents, warrants and agrees that it shall be
liable for all taxes, withholdings, and imposts of any nature
applicable to the payment of compensation, whether current or
deferred, for the work performed on Company's behalf in
accordance with Company's obligations hereunder. Furthermore,
Company will indemnify and hold AMEX harmless for any such
taxes, withholding or imposts for which AMEX may be determined
to be liable.
(h) Non-Waiver; Cumulative Rights: No failure or delay (in whole or in
------------------------------
part) on the part of any party to exercise any right or remedy
hereunder shall or operate as a waiver thereof or effect any other
right or remedy. All rights and remedies hereunder are cumulative and
are not exclusive of any other rights or remedies provided hereunder or
by law.
(i) Severability: If any provision contained in this Agreement is or
-------------
becomes invalid, illegal, or unenforceable in whole or in part, such
invalidity, legality, or unenforceability shall not affect the
remaining provisions and portions of this Agreement.
(j) Assignment: This Agreement may not be assigned by either party without
the prior written consent of the other party.
(k) No Creation of Partnership. This Agreement shall not be construed to
--------------------------
create or constitute a partnership for tax or other purposes.
-25-
<PAGE>
(l) Sales Tax. Company, and not AMEX, is the seller of the services
---------
hereunder. Company is responsible for collecting and remitting to the
appropriate jurisdiction any and all applicable sales or use taxes and
shall fully indemnify and hold AMEX harmless for any sales, use or
similar transaction taxes that are assessed, whether against AMEX or
Company, with respect to such sales.
(m) Access to AMEX Merchant Customer Lists. The access provided by AMEX
--------------------------------------
to Company of certain lists of AMEX Merchant Customers shall be
provided to Company at no additional charge.
(n) Entire Agreement: This Agreement constitutes the entire Agreement
-----------------
between the parties with respect to the subject matter hereof and
supersedes all prior contemporaneous oral or written understandings or
Agreements among the parties which relate to the subject matter hereof.
No modification or amendment of this Agreement or any of its provisions
shall be binding upon any party unless made in writing and duly
executed by authorized representatives of all parties.
IN WITNESS WHEREOF, AMEX and Company, intending to be legally bound by the terms
of this Agreement, have caused this Agreement to be executed by their duly
authorized representatives as of the date and year first above written.
AMERICAN EXPRESS TRAVEL
RELATED SERVICES COMPANY, INC.
By:_________________________________
Name: Pierric Beckert
Title: Vice President
Interactive Enterprise Development
American Express Relationship Services
By:_________________________________
Name: Paul Dottle
Title: Vice President
Establishment Services
CITYSEARCH, INC.
By:_________________________________
-26-
<PAGE>
Name: Charles Conn
Title: CEO
-27-
<PAGE>
EXHIBIT A
---------
DESCRIPTION OF THE BASIC SERVICE
--------------------------------
The Basic Service
- -----------------
Company produces and delivers comprehensive local city guides on the Web at
its Web site, www.citysearch.com, providing up-to-date information regarding
arts and entertainment, community activities and events, recreation, businesses
and news/sports/weather to consumers in major metropolitan areas. Each local
city guide consists of original content developed and designed specifically for
the Web by the Company and its licensees. The Company creates custom-built Web
sites ("InfoSites") for local businesses, aggregates them in a local city
environment and provides consumers the ability to regularly update and expand
the sites according to customer preferences. By enabling consumers to search,
sort and filter information and engage in interactive relationships, the Basic
Service offers local and regional businesses the opportunity to reach and
interact with targeted audiences in a cost-effective manner. The Basic Service
is built in cooperation with the community, and in partnership with local
government, community and volunteer associations, business and professional
groups, educational institutions and local media companies.
Services to Consumers
- ---------------------
Company provides events, community, business and news information in a
complete and current guide to a local city at no charge to consumers. For
example, the Basic Service lists restaurants, music, movies, theater, volunteer
information, children's activities, gift ideas, entertainment, local getaway
ideas, physicians, pets, shopping and short features. The information and the
interface have been designed to cater to a broad range of interests in an easily
navigable, intuitive format.
Company has developed technology which enables consumers to perform
sophisticated search functions and allows filtering for their personal
interests, with e-mail delivery. The information can be searched, sorted and
filtered by keyword, time and geography. For example, if a consumer in San
Francisco wants to locate a traditional Italian restaurant in North Beach
neighborhood, he could access the San Francisco site and type in the keywords
"Italian restaurant" in the "What Are You Looking For" box and click on "North
Beach" at the "Area" prompt. The Basic Service would return all Italian
restaurants in North Beach. At the consumer's discretion, the search result
could be sorted by InfoSite size, alphabetically or by category and viewed as
either a list or map. The list view provides each restaurant's name, address,
telephone number and, if the restaurant has purchased an InfoSite, provides the
number of pages purchased. The map view displays each restaurant's name and
location. For restaurants that have purchased InfoSites, the consumer can click
on the restaurant's name or icon to find additional information.
-28-
<PAGE>
By using the Basic Service, consumers can search main shopping areas
navigable maps, community organizations and vendors can be contacted via e-mail,
and consumers can engage in the chat and bulletin board discussions with
individuals such as local public officials and celebrities. Consumers may also
access video streams from local television stations, including recent news,
weather and traffic. The Company is continuing to develop a local platform for
electronic commerce, including ticketing, reservations, sales event
notifications, electronic coupons, newsletters and other transactions.
Value Proposition to Business Customers
- ---------------------------------------
The Company creates and hosts InfoSites for local businesses and
organizations for a monthly fee. Company believes it offers an attractive value
proposition for local businesses. For an initial fee ranging from $60 to $650
per month, the Company provides a turn-key solution for businesses to establish
a Web presence including design, layout, photography, posting of updated
information, hosting and maintenance. Business customers are able to provide a
targeted audience with updated information about their stores and services
including pictures, prices, store location, live entertainment, weekly specials
or sales and other relevant information. Electronic delivery enables the
service to be provided at a fraction of the cost of paper-based media. The
Company's efficient, proprietary site design tools and significant production
economies enable it to build customized multi-paged Web sites without charging
customers an up-front fee. Furthermore, the Company encourages frequent
information updates by offering business customers a certain number of free
updates each month. This is in contrast to yellow pages and similar forms of
advertising which print infrequently and do not allow for regular information
updates.
By building and hosting custom Web sites in its local city guide
environment, Company provides business customers a cost effective way to
establish a meaningful presence on the Web. In addition, the Company offers a
number of additional benefits to customers. By aggregating a business
customer's InfoSite with those of numerous other businesses in a comprehensive
local city guide, Company provides categorical and geographic context to a
business customer's Web presence rather than allowing it to "free-float" in
cyberspace. Business customers, moreover, receive free promotion of their
InfoSite as part of the Basic Service. Company's business customers receive
usage reports, e-mail functionality to enable consumers and businesses to
communicate with each other, community sponsorship opportunities and access to
an expanded base of potential buyers including tourists and mail order users.
The Company is also developing the system as a platform for electronic commerce,
including ticketing, reservations, sales events notifications, electronic
coupons, newsletters and other transactions).
-29-
<PAGE>
EXHIBIT B
---------
HIGH-END CAPABILITIES
---------------------
[*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-30-
<PAGE>
EXHIBIT C
---------
LOW-END CAPABILITIES
--------------------
[*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-31-
<PAGE>
[*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-32-
<PAGE>
EXHIBIT D
---------
FINANCIAL ARRANGEMENT
---------------------
[*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-33-
<PAGE>
EXHIBIT E
---------
CUSTOMER SERVICE
[*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-34-
<PAGE>
[*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-35-
<PAGE>
[*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-36-
<PAGE>
EXHIBIT F
---------
ADVERTISEMENT POLICY
--------------------
1. Advertisements on the AMEX Merchant InfoSites, any portion of the Service
or the CitySearch Web Sites (to the extent such CitySearch Web Sites are
branded with an AMEX trademark), shall not:
(a) Contain any unlawful, harmful, threatening, abusive, harassing,
defamatory, vulgar, obscene, profane, hateful, racially, ethnically or
otherwise objectionable material of any kind, including, but not
limited to, any material which encourages conduct that would
constitute a criminal offense, give rise to civil liability or
otherwise violate any applicable local, state, national or
international law.
(b) Contain personal attacks on a company or individual.
(c) Offer unauthorized downloads of any copyrighted or private
information.
(d) Purport to be from someone other than the author.
(e) Violate applicable law, including but not limited to any FTC or unfair
advertising rules, regulations, and laws.
2. The Company agrees to provide AMEX with a quarterly list of advertisers and
services offered through the AMEX Merchant InfoSites and the CitySearch Web
pages (to the extent such CitySearch Web pages are branded with an AMEX
trademark).
3. The parties reserve the right at any time to exclude any specific
advertisers and advertisements in the AMEX Merchant InfoSites, the Service
and the CitySearch Web Sites (to the extent such CitySearch Web Sites are
branded with an AMEX trademark), including any promotional materials
related thereto, by written notice to each other.
-37-
<PAGE>
EXHIBIT G
---------
AMEX DATA ACCESS DOCUMENT
-------------------------
Information Security Requirements
- ---------------------------------
The following are provided as minimum requirements or guidelines only.
GENERAL
- -------
[*]
Company agrees to abide by the Privacy Principles as adopted by AMEX for itself
from time to time. Those requirements are currently as follows:
1. COLLECT ONLY CUSTOMER INFORMATION THAT IS NEEDED, AND TELL CUSTOMERS HOW
IT WILL BE USED.
Limit the collection of information about customers to what is needed to be
known to administer their accounts, to provide customer services, to offer
new products and services, and to fulfill any legal and regulatory
requirements. Tell customers about the general uses of the information
collected about them, and will provide additional explanation if customers
request it.
2. GIVE CUSTOMERS CHOICES ABOUT HOW THEIR DATA WILL BE USED.
On a regular basis, give customers the option to decide whether or not they
wish to have their names removed from lists used for mail, telephone and
online marketing. These "opt-out" choices include product and service
offers from AMEX and those made in conjunction with AMEX's business
partners.
3. ENSURE INFORMATION QUALITY.
Use advanced technology and well-defined employee practices to help ensure
that customer data are processed promptly, accurately and completely.
Require high standards of quality from the consumer reporting agencies and
others who provide information about prospective customers.
4. USE INFORMATION SECURITY SAFEGUARDS.
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-38-
<PAGE>
Access to customer data is limited to those who specifically need it to
conduct their business responsibilities. Use security techniques designed
to protect customer data -- especially when certain data are used by
employees and business partners to fulfill customer services.
5. LIMIT THE RELEASE OF CUSTOMER INFORMATION.
In addition to providing customers with the opportunity to "opt out" of
marketing offers, information is released only with the customers' consent
or request, or when required to do so by law or other regulatory authority.
When a court order or subpoena requires release of information, customer is
notified promptly to give the customer an opportunity to exercise his or
her legal rights. The only exceptions to this policy are when notifying the
customer is prohibited by court order or law, or cases in which fraud
and/or criminal activity is suspected.
6. BE RESPONSIVE TO CUSTOMERS' REQUESTS FOR EXPLANATIONS.
If an application for services is denied or a customer's relationship is
ended, to the extent permitted by applicable laws, an explanation is
provided, if requested. The reasons for the action taken is stated and the
information upon which the decision was based, unless the issue involves
potential criminal activity. Medical information about an applicant for
insurance, or an insured individual, may be disclosed to a physician
designated by the customer rather than to the customer directly.
7. EXTEND THESE PRIVACY PRINCIPLES TO BUSINESS RELATIONSHIPS.
AMEX expects the companies selected as business partners to honor AMEX's
Privacy Principles in the handling of customer information. These include
companies which (a) assist in providing services to AMEX customers; (b)
supply AMEX with information for identifying or evaluating prospective
customers; or (c) are given the opportunity to send mailings to approved
AMEX customer lists. In selecting business partners, consider the accuracy
and quality of the data they provide, how they respond to consumer
complaints and whether or not they provide "opt out" choices for those
whose information they process.
8. HOLD EMPLOYEES RESPONSIBLE FOR THESE PRIVACY PRINCIPLES.
Each employee is personally responsible for maintaining consumer confidence
in the company. Provide training and communications programs designed to
educate employees about the meaning and requirements of these Privacy
Principles. Conduct internal audits and commission outside-expert reviews
of compliance with the Privacy Principles and the specific policies and
practices that support the Principles.
Disregard of these Privacy Principles shall be deemed a breach of the Agreement
and cause for termination pursuant to the terms thereof.
[*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-39-
<PAGE>
CARDMEMBER PRIVACY
- ------------------
[*]
EMPLOYEE RESPONSIBILITIES
- -------------------------
[*]
SECURITY ADMINISTRATION AND RESPONSIBILITIES
- --------------------------------------------
[*]
SYSTEM SECURITY
- ---------------
[*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-40-
<PAGE>
[*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-41-
<PAGE>
EXHIBIT H
---------
[INTENTIONALLY OMITTED]
-42-
<PAGE>
EXHIBIT I
---------
CUSTOMER DATA AND DATA-RELATED RIGHTS
-------------------------------------
1. Limited Access to AMEX Merchant Customer Data. Company shall have limited
---------------------------------------------
access to certain Card Member data including AMEX Merchant Customer account
number, address and other relevant information (the "AMEX Merchant Customer
Data") solely for the purposes of investigating and monitoring the handling of
cases and related customer services for particular AMEX Programs and plans to be
determined by the parties hereto. AMEX shall have the sole responsibility of
overseeing all security standards and requirements as set forth by AMEX in
relation to the AMEX Merchant Customer Data in Company's possession. Company
shall insure that all standards and requirements will meet AMEX's full and
reasonable satisfaction.
2. Data and Reports
----------------
Ownership of AMEX Data. All data and information submitted to Company by AMEX in
- ----------------------
connection with the Services (the "AMEX Data") is and shall remain the property
of AMEX. The AMEX Data shall: (1) not be used by Company other than in
connection with providing or analyzing the Services, (2) not be disclosed, sold,
assigned, leased or otherwise provided to third parties by Company; and (3) not
be commercially exploited by or on behalf of Company, its employees or agents
except as provided in this Agreement. Company shall take all appropriate actions
to safeguard the AMEX Data. The database of Enrolled AMEX Merchant Customers
shall remain the sole property of AMEX.
Return of Data. Upon request by AMEX upon the termination or expiration of this
- --------------
Agreement, Company shall (1) promptly return to AMEX, in a format agreed upon by
the parties hereto and on the media reasonably requested by AMEX, all AMEX Data
and/or (2) erase or destroy under the supervision of AMEX, all AMEX Data in
Company possession.
Accuracy of Data. As part of the Services, each party shall be responsible for
- ----------------
the accuracy and completeness of the data and information submitted by a party
to the other and any errors in and with respect to data and information
submitted to the other. Each party shall promptly correct any errors or
inaccuracies in the data or information prepared by one party and submitted to
the other.
Corrections of Errors. As part of the Service, Company shall promptly correct
- ---------------------
any errors or inaccuracies made known to them either through their own sources
or made known to them by AMEX in the AMEX Data. AMEX shall be responsible for
(1) the accuracy and completeness of the AMEX Data submitted by AMEX to Company
and (2) any errors in and with respect to data obtained from Company caused by
inaccurate or incomplete AMEX Data.
-43-
<PAGE>
EXHIBIT J
---------
SECURITY
--------
1. Safety and Security Procedures: [*]
- ------------------------------------
2. Logical Security Controls: [*]
- ------------------------------
3. Authorized Access: [*]
- -----------------------
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-44-
<PAGE>
4. Security Relating to Competitors: [*]
- --------------------------------------
5. Disaster Recovery: [*]
- -----------------------
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-45-
<PAGE>
EXHIBIT K
AMEX AUDIT RIGHTS
-----------------
Company shall keep all documents (excluding credit and monitoring reports)
relating to services provided under this Agreement for a period of three (3)
years or longer as required by applicable law. Unless otherwise instructed by
AMEX, Company shall promptly deliver all such documents to AMEX upon the
termination of this Agreement.
AMEX shall have the right, during normal business hours and with 24 hour notice
to Company, to visit Company's operations center to (i) monitor telephone
conversations between Company customer service representatives and AMEX Merchant
Customers/AMEX Merchant Customers to the extent permitted by and in accordance
with applicable law, and (ii) to audit Company's Service Locations and files for
the services described in this Agreement and otherwise relating to Company's
performance of its obligations under this Agreement. Upon AMEX's request,
Company shall also cooperate with AMEX in developing the telecommunications
systems necessary to enable AMEX to conduct such telephone monitoring at any
time from AMEX's New York headquarters or other reasonable remote location(s) to
the extent permitted by and in accordance with applicable law. In the event such
systems are developed, AMEX may conduct such remote monitoring at any time to
the extent permitted by and in accordance with applicable law and to the extent
AMEX will cover the cost to develop the necessary telecommunications systems,
AMEX shall cover those costs that are reasonable and appropriate.
AMEX shall have the right, without notice, to perform a Data Security review of
Company's security controls as they relate to the physical security and
protection of AMEX Confidential data/system access.
-46-
<PAGE>
EXHIBIT L
---------
NON DISCLOSURE AGREEMENT
------------------------
[Subcontractor/Agent/Representative Name] ("Receiving Party") agrees that
Receiving Party is aware that American Express Travel Related Services Company,
Inc. ("AMEX") and ________________________ ("Company") have entered into a
Marketing Agreement ("Agreement") that imposes certain obligations on Company,
some of which are specifically set forth below. Receiving Party understands that
as part of obligations under the Marketing Agreement, Company is required to
obtain this written agreement from Receiving Party to further ensure
understanding and compliance with these obligations.
In consideration of Receiving Party's future assignment and/or responsibilities
in connection with Company's performance under the Marketing Agreement,
Receiving Party hereby acknowledges, represents and confirms to Company and AMEX
as follows: (a) Receiving Party has read the provisions of this Non-Disclosure
Agreement, understands each of them, agrees to them, and knows of no agreements,
obligations or restrictions which prevent or prohibit Receiving Party from
complying with them; (b) Receiving Party shall receive and maintain all AMEX
information and perform services in a manner consistent with these obligations;
and (c) Receiving Party agrees not to, directly or indirectly, engage in or
assist others to engage in, any activity or conduct which violates the
provisions of this Non-Disclosure Agreement.
1. General Obligations. All confidential or proprietary information and
-------------------
documentation ("Confidential Information" (including the terms of this Non-
------------------------
Disclosure Agreement, the AMEX Data and the Software) relating to AMEX
(including without limitation AMEX's customers, partners and clients) shall be
held in confidence by Receiving Party to the same extent and in at least the
same manner as AMEX protects its own confidential or proprietary information and
as recommended as a result of any facility audits or reviews. Receiving Party
shall not disclose, publish, release, transfer or otherwise make available
Confidential Information in any form to, or for the use or benefit of, any
person or entity without AMEX's express written consent. Receiving Party shall,
however, be permitted to disclose relevant aspects of the Confidential
Information to its officers, agents, subcontractors and employees and to the
officers, agents, subcontractors and employees of its corporate affiliates or
subsidiaries to the extent that such disclosure is reasonably necessary for the
performance of its duties and obligations to Company under the Marketing
Agreement; provided, that Company shall take all reasonable measures to ensure
that the Confidential Information is not disclosed or duplicated in
contravention of the provisions of this Non-Disclosure Agreement by such
officers, agents, subcontractors and employees. The obligations in this Section
-------
1 shall not restrict any disclosure by Receiving Party pursuant to any
- -
applicable law, or by order of any court or government agency (provided that
Receiving Party shall give prompt notice to AMEX of such order) and shall not
apply with respect to information which (a) is developed by Receiving Party
without violating AMEX's proprietary and confidential rights, (b) is or becomes
publicly known (other than through unauthorized disclosure), (c) is disclosed by
AMEX to a third-party free of any obligation of confidentiality, is already
known by the Receiving Party without an obligation of confidentiality other than
pursuant to this Non-Disclosure Agreement or any confidentiality agreements
entered into before the effective date of the Marketing Agreement, or (d) is
rightfully received by Receiving Party free of any obligation of
confidentiality.
2. Unauthorized Acts. Receiving Party shall: (a) notify AMEX promptly of any
-----------------
material unauthorized possession, use or knowledge, or attempt thereof, of the
Confidential Information by any person or
-47-
<PAGE>
entity which may become known to such party, (b) promptly furnish to AMEX full
details of the unauthorized possession, use or knowledge, or attempt thereof,
and use reasonable efforts to investigate and prevent the recurrence of any
unauthorized possession, use or knowledge, or attempt thereof, of the
Confidential Information, (c) use reasonable efforts to cooperate with AMEX in
any litigation and investigation against third parties deemed necessary by AMEX
to protect its proprietary and confidential rights and (d) promptly use all
reasonable efforts to prevent a recurrence of any such unauthorized possession,
use or knowledge of the Confidential Information. Receiving Party shall bear the
cost it incurs as a result of compliance with this Section 2.
---------
3. Receiving Party agrees that if Receiving Party threatens to or actually
breaches or fails to observe any of the obligations set forth in this Non-
Disclosure Agreement, AMEX and Company shall be subject to irreparable harm
which shall not be adequately satisfied by damages. Receiving Party therefore
agrees that Company or AMEX shall be entitled to an injunction and/or any other
remedies permitted, to ensure and enforce Receiving Party's compliance with
these obligations; provided, however, that no specification herein of any
particularly legal or equitable remedy shall be construed as a waiver,
prohibition or limitation of any legal or equitable remedies.
By: ________________________________
Name: ______________________________
(Type, Stamp or Print)
Title: _____________________________
Date: ______________________________
Witness: ___________________________
-48-
<PAGE>
EXHIBIT M
---------
________________________________________________________________________________
[LOGO OF AMERICAN EXPRESS APPEARS HERE]
TERMINAL RULES AND REGULATIONS
________________________________________________________________________________
Part of our mission is to make changes and adjustments to various AMEX Merchant
Customer accounts. This is done through the use of our computer system. The use
of this system is extremely critical. There are a few very specific rules and
regulations that go along with working with the computer system. These rules
must be followed in detail by every employee who is involved with the computer
system. Therefore, you are being shown the rules and regulations so that you
understand how the system works. It is very important that you understand and
comply with the following operating rules and regulations.
MAINTENANCE CHANGES TO CARDMEMBER ACCOUNTS.
[*]
USE OF YOUR PASSWORD AND IDENTIFICATION NUMBER
[*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-49-
<PAGE>
[*]
MONITORING
[*]
UNAUTHORIZED ACCESS/VIEWING OF ACCOUNTS
[*]
IMPORTANCE OF THE RULES AND REGULATIONS
[*]
ACKNOWLEDGMENT
I have read and understand the above regulations and agree to comply with them.
_________________________ __________________________________________________
Employee Signature Print Name Date
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-50-
<PAGE>
EXHIBIT N
---------
AMERICAN EXPRESS CUSTOMER INTERNET PRIVACY STATEMENT
Protecting your privacy is important to us. We hope the following statement will
help you understand how American Express collects, uses and safeguards the
personal information you provide to us on our website.
. Security
--------
. Information Collection
----------------------
. Information Use
---------------
. Declining Email Offers
----------------------
Set Email Preferences - set, review or change preferences regarding
---------------------
the type email offers you do not want to receive.
. Children
--------
. Company Commitment to Privacy
-----------------------------
___________________________________________________________________________
SECURITY
When you send confidential personal account data to us on an American Express
website, we require that a "secure session" first be established using Secure
Socket Layer (SET), or Secure Electronic Transactions (SET) when that is fully
available. For further information about SSL, SET and the safety and
confidentiality of personal data transmissions over the Internet, please read
our Security Q & A.
--------------
INFORMATION COLLECTION
When you BROWSE any American Express website, you do so anonymously. Personal
information including your email address is NOT collected. Some of our websites,
however, may request that you VOLUNTARILY supply us with personal information,
including your email address and account number [if you are an American Express
Cardmember or InvestDirect user], for purposes such as correspondence, site
registration, checking your bill or investments online, making a purchase, or
participating in online surveys.
Like many other commercial websites, the American Express website may utilize a
standard technology called a "cookie" to collect information about how our site
is used. Please read About Cookies for more information.
-------------
INFORMATION USE
If you provide us with your email address, or have done so in the past, we may
upon occasion send you email offers. We may use information you have given us
to, for example, provide a service, ensure proper billing, measure consumer
interest in our various services and inform you about
-51-
<PAGE>
products and services. These offers may be based on information you provided in
your initial transaction with us, in surveys, from information that may indicate
purchasing preferences and lifestyle, as well as information available from
external sources, such as census bureau data. Primarily, these email offers will
come from American Express. We may also, upon occasion, share email addresses
with certain establishments that accept the American Express Card, or with other
well-established companies so that they can send you product and service offers
that may be of interest.
All offers are carefully developed to ensure that they meet our standards. Our
goal is to target offers to people who we believe will find them of value. The
lists used to send you product and service offers are developed and managed
under strict conditions designed to safeguard the security and privacy of
customer personal information. For an illustration of the types of offers we may
provide with our business partners exclusively to American Express Cardmembers,
please view American Express Special Offers.
-------------------------------
Please note that our free email service, AMEXMAIL, as well as our financial
services websites, AMERICAN EXPRESS FINANCIAL ADVISORS and AMERICAN EXPRESS
FINANCIAL DIRECT, do not share email addresses with any company outside of
------
American Express.
DECLINING EMAIL OFFERS
American Express provides customers with an easy means to decline receiving
email offers.
Although most customers tell us they appreciate receiving notice of these
carefully designed opportunities, we recognize the importance of providing you
with choices. At any time, you may request to discontinue receiving these offers
from us by simply replying to the email and informing us of your preferences.
All email offers that you receive from American Express will inform you of how
to decline receiving further email offers. Additionally, you may Set Email
---------
Preferences to notify us of your preferences regarding the type of email offers
- -----------
you do not want to receive, and you may also review and change preferences you
have previously set.
CHILDREN
American Express does not knowingly solicit data from children, and we do not
knowingly market to children.
COMPANY COMMITMENT TO PRIVACY
In keeping with our long-standing leadership in consumer privacy protection,
American Express is actively involved with current industry initiatives to
preserve individual privacy rights on the Internet and in all aspects of
electronic commerce.
For additional information about our commitment to protecting the privacy of our
customers both online and offline, please read the American Express Customer
-------------------------
Privacy Principles. The American Express Customer Internet Privacy Statement is
- ------------------
currently applicable only to our U.S. customers and visitors to our website. As
we develop websites for international audiences, they
-52-
<PAGE>
will maintain their own additional rules and practices, which are fully
consistent with this Statement, and which they may modify as needed for
particular products and services, or to conform to local laws or customs around
the world. If you have any questions about this statement, you can reach us at
1-800-AXP-1234, or you may send us an email.
----------------
To obtain information about American Express direct mail and telemarketing
privacy policies for the U.S., please call: 1-800-528-4800.
ABOUT COOKIES
Cookies were originally designed to help a website distinguish a user's browser
as a previous visitor and thus save and remember any preferences that may have
been set while the user was browsing the site. A cookie is a small string of
text that a website can send to your browser. A COOKIE CANNOT RETRIEVE ANY OTHER
DATA FROM YOUR HARD DRIVE, PASS ON COMPUTER VIRUSES, OR CAPTURE YOUR EMAIL
ADDRESS. Currently, websites use cookies to enhance the user's visit; in
general, cookies can securely store a user's ID and password, personalize home
pages, identify which parts of a site have been visited or keep track of
selections in a "shopping cart."
If you are just browsing an American Express website, a cookie identifies only
your browser. If you become a registered user on an American Express website
(with a designated user ID and password), we may use cookies so that we can
provide personalized information that we believe will be of value to you based
on preferences you have indicated while visiting the site.
It is possible to set your browser to inform you when a cookie is being placed
this way, you have the opportunity to decide whether to accept the cookie. If
you are just browsing our site and are not a registered user, you do not have to
accept a cookie and you may still continue utilizing the site. However, if you
are visiting a site where you will be accessing your confidential account
information (such as Checking Your Bill), you must accept that site's cookies as
they are essential for site administration and security. By accepting a cookie,
keep in mind that your choice to decline email offers remains unaffected. Here
is how to set your cookie preferences:
NETSCAPE NAVIGATOR 3: Select Network Preferences from the Options menu. From the
Network Preferences menu, select the Protocols tab and modify your preference if
you wish to be warned before accepting cookies.
NETSCAPE NAVIGATOR 4: Select Preferences from the Edit menu. From the
Preferences menu, select Advanced and several options for cookies will be listed
in the lower right of the menu. Additionally, you may select Help for more
details. For further information about the Netscape browser and use of cookies,
visit Netscape's website at http://home.netscape.com.
MICROSOFT INTERNET EXPLORER 3: Select Options from the View menu. Choose the
Advanced menu to modify your preference if you wish to be warned before
accepting cookies.
MICROSOFT INTERNET EXPLORER 4: Select Options from the View menu. Choose the
Advanced menu and scroll to the section labeled "Cookies," where several options
are listed. For further information about the Microsoft Internet Explorer
browser and use of cookies, visit Microsoft's website at
http://www.microsoft.com/Misc/Cookie.htm.
-53-
<PAGE>
AOL: The following AOL browsers automatically accept cookies and do not allow
you to set cookie preferences: AOL v3.0 for Windows 3.0 using AOL's proprietary
browser or Microsoft Internet Explorer v3.0 for AOL. AOL v3.0 for Windows 95
using Microsoft Internet Explorer v3.0, or AOL for the MAC using Microsoft
Internet Explorer 2.1. All OTHER earlier versions of AOL browsers do not support
cookies, and therefore cannot authenticate you as a registered user on American
Express websites that involve sending or receiving personal account information.
-54-
<PAGE>
SCHEDULE 1
----------
FORM OF SERVICE AGREEMENT
-55-
<PAGE>
EXHIBIT 10.8
PARTNERSHIP AGREEMENT
BETWEEN
METROLAND PRINTING, PUBLISHING & DISTRIBUTING LTD.
AND
1217554 ONTARIO INC.
AND
CITYSEARCH, INC
AND
TORSTAR CORPORATION
MADE AS OF
FEBRUARY 17, 1997
- ------------
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
ARTICLE ONE - INTERPRETATION 2
1.01 Definitions 2
1.02 Headings 5
1.03 Extended Meanings 5
1.04 Accounting Principles 5
1.05 Currency 5
ARTICLE TWO - FORMATION OF PARTNERSHIP 6
2.01 Formation 6
2.02 Business 6
2.03 Name 6
2.04 Authority 6
2.05 Activities 6
2.06 California Franchise Disclaimer 7
2.07 Ownership of Partners 7
ARTICLE THREE - PLACE OF PARTNERSHIP BUSINESS 7
3.01 Location 7
3.02 Qualification 7
ARTICLE FOUR - MANAGEMENT 8
4.01 Executive Committee 8
4.02 Responsibilities 8
4.03 Compensation 9
4.04 Chairperson 9
4.05 Secretary 9
4.06 Quorum 9
4.07 Voting 9
4.08 Procedures 9
4.09 Unanimous Approval of Matters 11
4.10 Signed Instruments in Lieu of Meeting 12
4.11 No Personal Liability 12
4.12 Execution of Instruments 13
ARTICLE FIVE - ACCOUNTING AND FINANCIAL STATEMENTS 13
5.01 Books and Records 13
5.02 Auditors 13
5.03 Financial Statements 13
5.04 Fiscal Year End 14
</TABLE>
<PAGE>
-ii-
<TABLE>
<S> <C>
ARTICLE SIX - CONTRIBUTIONS, OTHER FINANCING,
ALLOCATIONS AND DISTRIBUTIONS 14
6.01 Classes of Accounts 14
6.02 Initial Capital Contributions 14
6.03 Additional Partnership Financing 15
6.04 Further Capital Contributions 15
6.05 Income and Losses 16
6.06 Partnership Distributions 16
6.07 Required Expansion Funds 16
6.08 Excluded Torstar Assets 16
6.09 Torstar Service Fees 17
6.10 Back Office Software 17
ARTICLE SEVEN - COVENANTS 17
7.01 Covenants 17
ARTICLE EIGHT - TRANSFER OF PARTNERSHIP INTEREST 18
8.01 No Transfer 15
8.02 Right of First Refusal 18
8.03 Events of Default 20
8.04 Allocation in Event of Transfer 22
ARTICLE NINE - TERMINATION. DISSOLUTION AND NON-COMPETITION 23
9.01 Term 23
9.02 Dissolution 23
9.03 Non-Competition 23
ARTICLE TEN - INSURANCE 24
10.01 Insurance 24
ARTICLE ELEVEN - GENERAL 24
11.01 Further Assurances 24
11.02 Public Announcements 25
11.03 Dispute Resolution 25
11.04 Benefit of the Agreement 25
11.05 Entire Agreement 25
11.06 Currency 25
11.07 Amendment and Waiver 26
11.08 Assignment 26
11.09 Notices 26
11.10 Governing Law 27
</TABLE>
<PAGE>
PARTNERSHIP AGREEMENT
---------------------
THIS AGREEMENT made as of February 17, 1997;
B E T W E E N:
METROLAND PRINTING, PUBLISHING &
DISTRIBUTING LTD., a corporation incorporated
under the laws of Ontario (hereinafter referred to as "Metroland")
OF THE FIRST PART.
- and -
1217554 ONTARIO INC.. a corporation incorporated
under the laws of Ontario (hereinafter referred to as "CitySearch,
Ontario"),
OF THE SECOND PART.
- and -
CITYSEARCH, INC., a corporation incorporated under the
Laws of Delaware (hereinafter referred to as "CitySearch,
U.S.A.")
OF THE THIRD PART.
- and -
TORSTAR CORPORATION, a corporation incorporated,
under the laws of Ontario (hereinafter referred to as "Torstar")
OF THE FOURTH PART.
WHEREAS Metroland and CitySearch Ontario wish to enter into a general
partnership for the purpose of establishing a CitySearch Information Service (as
hereinafter defined), upon and subject to the terms and conditions of this
Agreement;
<PAGE>
AND WHEREAS CitySearch U.S.A. and Torstar are parties to this Agreement
solely for the purpose of giving the representations and warranties provided for
in Section 2.07;
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the
premises and the covenants and agreements herein contained. the parties hereto
agree as follows:
ARTICLE ONE - INTERPRETATION
----------------------------
1.01 DEFINITIONS
-----------
In this Agreement, unless something in the subject matter or context
is inconsistent therewith:
(a) "Affiliate" means an affiliate of a party as determined by the
provisions of the Business Corporations Act (Ontario) as now enacted
or as the same may be from time to time amended, re-enacted or
replaced;
(b) "Agreement" means this agreement and all amendments made hereto by
written agreement between the parties hereto.
(c) "Ancillary Agreements" means the License and Services Agreement, the
Assignment Agreement and the Non-Competition Agreement, each made as
of the date hereof:
(d) "Annual Budget" has the meaning set forth in Section 4.02;
(e) "Auditors" means the auditors appointed pursuant to Section 5.02;
(f) "Business Day" means a day other than a Saturday, Sunday or statutory
holiday in Ontario or California;
(g) "Capital" means the amount of cash or the value of all property
contributed to the capital of the Partnership pursuant to the
provisions hereof.
(h) "Capital Account" of a Partner means an account to which is credited
or debited all Capital contributions received from and Capital
distributions made, respectively, to such Partner, in accordance with
the provisions of Section 6.01;
(i) "Chairperson" means the individual appointed pursuant to Section 4.04;
<PAGE>
(j) "CitySearch Information Service" has the meaning ascribed thereto in
the License and Services Agreement;
(k) "Content" has the meaning ascribed thereto in the License and Services
Agreement;
(l) "Current Account" of a Partner means an account to which is credited
or debited the net income or net loss, respectively, of the
Partnership allocated to such Partner in accordance with the
provisions of Section 6.01;
(m) "Direct Competitor" of Metroland shall mean a person whose business is
primarily involved in newspaper or electronic publishing in the
Exclusive Territory and a Direct Competitor of CitySearch Ontario
shall mean a person whose business competes directly With that of
CitySearch Ontario. CitySearch U.S.A. or any of their respective
Affiliates involved in electronic publishing;
(n) "Exclusive Territory" means the territory so marked in Schedule A
hereto together with any portion of the Extended Territory to the
extent it shall be deemed to be part of the Exclusive Territory in
accordance with Section 9.03;
(o) "Executive Committee" means the Executive Committee constituted
pursuant to Section 4.01;
(p) "Extended Territory" means the [*] territories so marked in Schedule
A hereto except co the extent that any portion thereof has been deemed
to be part of the Exclusive Territory in accordance with Section 9.03;
(q) "Free Cash Flow" means, in respect of any particular period, an amount
determined as follows:
[*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-4-
[*]
(r) "Launch" means giving written notice (a "Launch Notice"), in the case
of a Launch by the Partnership, to CitySearch Ontario or, in the case
of a Launch by an entity affiliated with CitySearch Ontario or any
Affiliate of CitySearch U.S.A., to the Partnership, of a date when a
CitySearch Information Service will be accessible to the public for a
particular region not more than 150 days from the date of such notice
and -"Launched" and "Launching" shall have corresponding meanings:
(s) "License and Services Agreement" means an agreement made as of even
date herewith between CitySearch U.S.A. and CitySearch Ontario
providing for the licensing to CitySearch Ontario of certain software,
technology and knowhow;
(t) "Non-Competition Agreement" means an agreement made as of even date
herewith between Torstar, CitySearch U.S.A., CitySearch Ontario and
Metroland;
(u) "Partners" means Metroland and CitySearch Ontario, together with such
other persons who may become parties to this Agreement;
(v) "Partnership" means the general partnership constituted by this
Agreement:
(w) "Partnership Business" means the provision of a CitySearch Information
Service and any change made thereto pursuant to Section 4.09;
(x) "Partnership Interest" has the meaning, subject to adjustment pursuant
to Section 6.03(2), set forth on Schedule B;
(y) "Representatives" means the persons who are appointed from time to
time by a Partner pursuant to Section 4.01 which, in the case of a
Partner who is an individual. may be the Partner;
(z) "Required Expansion Funds" means that amount of the Partnership's
revenues which are determined to be applied to fund the Partnership's
expansion;
(aa) "Secretary" means the individual appointed pursuant to Section 4.05;
and
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-5-
(bb) "Working Capital" means [*]
1.02 HEADINGS
--------
The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article. Section or other portion hereof
and include any agreement supplemental hereto. Unless something in the subject
matter or context is inconsistent therewith, references herein to Articles and
Sections are to Articles and Sections of this Agreement.
1.03 EXTENDED MEANINGS
-----------------
In this Agreement words importing the singular number only shall
include the plural and vice versa, words importing any gender shall include all
genders and words importing persons shall include individuals, partnerships,
associations, trusts, unincorporated organizations and corporations.
1.04 ACCOUNTING PRINCIPLES
---------------------
Wherever in this Agreement reference is made to a calculation to be
made in accordance with generally accepted accounting principles, such reference
shall be deemed to be to the generally accepted accounting principles from time
to time approved by the Canadian Institute of Chartered Accountants, or any
successor institute, applicable as at the date on which such calculation is made
or required to be made. Wherever in this Agreement reference is made to a
calculation to be made in accordance with United States generally accepted
accounting principles, such reference shall be deemed to be to the generally
accepted accounting principles from time to time approved by the American
Institute of Certified Public Accountants, or any successor institute,
applicable as at the date on which such calculation is made or is required to be
made.
1.05 CURRENCY
--------
All references to currency herein are to lawful money of Canada.
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-6-
ARTICLE TWO - FORMATION OF PARTNERSHIP
--------------------------------------
2.01 FORMATION
---------
The Partners hereby constitute themselves a general partnership for the
purpose of carrying on the Partnership Business. To the extent not otherwise
provided for herein, the Partnership shall be governed by the provisions of the
Partnerships Act (Ontario) as now enacted or as the same may be from time to
time amended, re-enacted or replaced.
2.02 BUSINESS
--------
The Partnership shall not carry on any business other than the
Partnership Business and no assets of the Partnership shall be used by any
Partner for any purpose other than the Partnership Business.
2.03 NAME
----
(1) The name of the Partnership shall be Toronto Star CitySearch. The
Partnership's CitySearch Information Service shall, subject to Section 2.03(2),
be co branded to include the Toronto Star name and logo, the logo of CitySearch
U.S.A. and, subject to satisfactory resolution of any relevant trademark
disputes, the CitySearch name.
(2) The Partnership's obligation under Section 2.03(l) to co-brand by
including the logo of CitySearch U.S.A. and the CitySearch name shall be
suspended during any period in which it is determined that the CitySearch
Information Services offered by CitySearch U.S.A. have materially deteriorated
from the standard of such services offered as of the date of this Agreement.
Such co-branding obligation shall recommence at such time as it is determined
that the CitySearch Information Services offered by CitySearch U.S.A. again meet
the standard of such services offered as of the date of this Agreement. All such
determinations must be made unanimously by the Representatives or by an
arbitrator in accordance with the provisions of Section 11.03.
2.04 AUTHORITY
---------
Except as otherwise provided herein no Partner shall have any authority
to act for, or assume any obligation or responsibility on behalf of, any other
Partner or the Partnership.
2.05 ACTIVITIES
----------
Each Partner shall act in good faith toward, and in the best interests
of, the Partnership and shall devote such time as may be required to fulfill the
obligations assumed
<PAGE>
-7-
by the Partner in this Agreement. Except as otherwise provided in Section 9.03
and subject to such activities not causing a breach of this Agreement, each
Partner may engage in any other business or activity outside the Partnership
Business.
2.06 CALIFORNIA FRANCHISE DISCLAIMER
-------------------------------
The parties agree that neither this Agreement nor the business
relationship established hereunder will be construed as granting a franchise.
The parties warrant to one another that they have consulted counsel in reviewing
and negotiating this Agreement and have concluded that no business plan or
franchise fees are conveyed or provided for in this Agreement or otherwise by
the relationship established hereby or by the relationship between the parties.
2.07 OWNERSHIP OF PARTNERS
---------------------
(1) CitySearch U.S.A. represents and warrants to Torstar and Metroland that it
is the beneficial and registered owner of all of the outstanding shares of
CitySearch Ontario. Subject to the terms of this Agreement. CitySearch U.S.A.
covenants to ensure that the Partnership Interest held by CitySearch Ontario
continues to be held by a direct or indirect wholly-owned subsidiary of
CitySearch U.S.A.
(2) Torstar represents and warrants to CitySearch U.S.A. and CitySearch
Ontario that it is the beneficial and registered owner of all of the outstanding
shares of Toronto Star Newspapers Limited, which is the beneficial and
registered owner of all of the outstanding shares of Metroland. Subject to the
terms of this Agreement, Torstar covenants to ensure that the Partnership
Interest held by Metroland continues to be held by a direct or indirect wholly-
owned subsidiary of Torstar.
ARTICLE THREE - PLACE OF PARTNERSHIP BUSINESS
---------------------------------------------
3.01 LOCATION
--------
The principal place of business shall be at 1 Yonge Street, in the City
of Toronto in the Province of Ontario, M5E IE6, or as may otherwise be
unanimously agreed by the Partners, and the books and records of accounts of the
Partnership shall be kept in such location.
3.02 QUALIFICATION
-------------
To the extent required by any applicable law, the Partnership and each
Partner shall qualify to carry on the Partnership Business where the Partnership
Business is to be carried on from time to time and shall maintain such
registrations as may be necessary to lawfully carry on the Partnership Business.
<PAGE>
-8-
ARTICLE FOUR - MANAGEMENT
-------------------------
4.01 EXECUTIVE COMMITTEE
-------------------
(1) The Executive Committee shall consist of [*] Representatives. Upon
execution of this Agreement, each Partner shall appoint the number of
individuals as its Representatives set forth opposite its name below:
PARTNER NO. OF REPRESENTATIVES
------- ----------------------
Metroland [*]
CitySearch Ontario [*]
From time to time, on written notice to the other Partners, a Partner may
replace any of its Representatives. The names of the Representatives shall be
entered in the records of the Partnership.
(2) Each Partner shall obtain the written undertaking of each of its
Representatives:
(a) to act and vote as a Representative in order that the purpose, intent
and provisions of this Agreement shall be carried out;
(b) to act honestly, in good faith and in the best interests of the
Partnership: and
(c) to exercise the degree of care, diligence and skill that a reasonably
prudent person would exercise in the circumstances.
4.02 RESPONSIBILITIES
----------------
Subject to Section 4.09, the Executive Committee shall manage the
business and affairs of the Partnership. The Executive Committee may empower
such persons as it deems appropriate (including, without limitation, any
Partner) to bind and commit the Partnership in connection with the Partnership
Business or any part thereof. [*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-9-
4.03 COMPENSATION
------------
The Representatives shall serve in that capacity without compensation
provided that each shall be reimbursed by the Partnership for their reasonable
costs and out-of-pocket expenses in connection with the performance of their
duties hereunder.
4.04 CHAIRPERSON
-----------
The Representatives shall elect from among themselves a Chairperson at
the first meeting of the Executive Committee and thereafter annually at the
first meeting of the Executive Committee in each year and such Chairperson shall
serve until a successor is elected. The Chairperson shall preside at all
meetings of the Executive Committee if present, and if not present, the
Representatives shall elect an alternative Chairperson from among themselves to
preside at the meeting.
4.05 SECRETARY
---------
At the first meeting of the Executive Committee the Representatives
shall appoint a Secretary of meetings of the Executive Committee, who need not
be a Representative. The Secretary shall keep records of all proceedings and
decisions of the Executive Committee and the Partners and distribute copies
thereof to each Representative and to each Partner promptly thereafter, and keep
copies of all correspondence and documentation received and sent by the
Representatives and Partners and each Partner shall have the right to examine
the same and take copies thereof.
4.06 QUORUM
------
[*]
4.07 VOTING
------
Each Representative shall have one vote on each matter to be decided
at a meeting of the Executive Committee and each matter shall be decided, unless
otherwise specifically provided herein, by a majority of the votes cast on the
question. The proceedings at each meeting shall be evidenced by minutes signed
by the Chairperson and Secretary.
4.08 PROCEDURES
----------
Meetings of the Executive Committee shall be governed by the following:
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(a) meetings of the Executive Committee
(i) shall be held at least quarterly: and
(ii) may be held any other time
and, unless otherwise agreed by the Representatives, shall be called
by any two Representatives upon not less than 10 Business Days prior
notice and held at the principal office of the Partnership or at such
other location as may be agreed by the Partners:
(b) notice of any meeting of the Executive Committee shall be sent to each
Partner and to each Representative as last recorded in the books of
the Partnership; such notice shall be accompanied by an agenda
prepared by the Chairperson or the other Representatives calling the
meeting, as the case may be, that sets forth those matters to be
considered at the meeting;
(c) with the unanimous approval of the Representatives present at any
meeting of the Executives Committee (or, if all of the Representatives
are present, the approval of a majority of the Representatives), the
business conducted at such meeting may include business in addition to
that set out in the agenda:
(d) provision may be made by the Partners for the holding of regular
meetings in addition to the meetings contemplated in Section
4.08(a)(i) at a specified place and time on specified Business Days of
specified months, and provided that each Partner and each
Representative last recorded in the books of the Partnership has been
sent notice setting forth the particulars of such regular meetings, no
further or other notice shall be required for the calling thereof and
the transaction of business thereat at such a meeting, any such
meeting however shall be preceded by an agenda to be forwarded to the
Partners and Representatives in accordance with the time limits
prescribed in Section 4.08(a);
(e) subject to prior notice of such meeting in the normal manner as is
required by this Agreement, meetings of the Executive Committee may be
conducted by means of telephone or other communications facilities as
permit all persons participating in the meeting to hear each other,
and a Partner's Representative participating in such a meeting by such
means is deemed present at that meeting; and
(f) no notice calling a meeting of the Executive Committee shall be
required if all the Representatives are present or those absent have
waived notice in writing of such meeting in advance.
<PAGE>
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4.09 UNANIMOUS APPROVAL OF MATTERS
-----------------------------
Notwithstanding any of the other provisions hereof, the following
matters shall require the prior unanimous approval of the Partners:
(a) any material change in the Partnership Business or in the name of the
Partnership;
(b) the entering into or amendment of any agreement with third parties
except as otherwise permitted hereunder:
(c) the purchase or sale of any assets from or to the Partnership or the
provision of services to the Partnership by any Partner or a related
person to any Partner (as the term "related person" is defined in the
Income Tax Act (Canada)), except (i) pursuant to the License
Agreement, (ii) in an amount not exceeding $1,000 or (iii) as
otherwise permitted herein;
(d) the sale of any assets of the Partnership or the purchase of any
assets by the Partnership with an aggregate price in excess of
$100,000 other than as may be approved in the Annual Budget;
(e) any arrangement for the sharing of profits or any joint venture with
any person;
(f) the merger or other reorganization of the Partnership with any person
or the acquisition by the Partnership of any business;
(g) the admission of a new Partner unless in accordance with visions of
Section 8.02;
(h) other than as may be approved in the Annual Budget, borrowing of any
money in excess of the aggregate principal amount of $100,000.00, the
giving of any security or the making or incurring of any capital
expenditures which, in the aggregate, are in excess of $100,000.00 in
any year;
(i) the making of any decision to Launch or carry on a CitySearch
Information Service to standards that are not equal to the Quality
Standards (as defined in the License and Services Agreement) or to use
any navigation layouts or hierarchical maps inconsistent with those
established from time to time by CitySearch U.S.A.;
(j) the making of any amendments to this Agreement;
<PAGE>
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(k) initiating or settling any material litigation involving the
Partnership Business or any of its assets or undertaking;
(1) other than as may be approved in the Annual Budget, the entering into
contracts with a value or which result in obligations over the term
thereof greater than $200,000.00;
(m) the approval of the following management team positions for the
Partnership Business: General Manager, Head of Operations, Head of
Marketing, Head of Sales, Head of Community, Head of Content, Head of
Technology and Head of Design;
(n) the removal or replacement of the Auditors during their term of
appointment. and
(o) the carrying on of the Partnership Business other than in the
Exclusive Territory or the Extended Territory.
4.10 SIGNED INSTRUMENTS IN LIEU OF MEETING
-------------------------------------
Any matter to be decided by the Executive Committee or the Partners
may be passed by resolution signed by each of the Representatives or Partners,
as the case may be. Any resolution so signed is as valid and effective as if
passed at a meeting duly called, constituted and held for that purpose.
4.11 NO PERSONAL LIABILITY
---------------------
No Representative shall incur any personal liability pursuant to
Partnership activities conducted by the Representative in accordance with the
undertaking referred to in Section 4.01(2). The Partnership shall indemnify
Representatives and all employees of the Partnership and their heirs and legal
representatives against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, reasonably incurred by them in
respect of any civil, criminal or administrative action or proceeding to which
such person is made a party by reason of being or having served in such capacity
if:
(a) such person acted honestly and in good faith with a view to the best
interests of the Partnership, and
(b) in the case of a criminal or administrative action or proceeding that
is enforced by a monetary penalty, such person had reasonable grounds
for believing that his or her conduct was lawful
<PAGE>
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and whether or not such person is still serving in such capacity at the time of
such action or judgment.
4.12 EXECUTION OF INSTRUMENTS
------------------------
Contracts, documents or instruments in writing referred to in Section
4.09 which require the approval of all Partners shall be signed by at least one
Representative of each Partner. All other contracts, documents or instruments
in writing requiring execution by the Partnership may be signed in such manner
as is approved by the Executive Committee. All contracts, documents and
instruments in writing so signed shall be binding upon the Partnership without
further authorization or formality. The Executive Committee is authorized from
time to time by resolution to appoint any Partner or Representative or any other
person to sign and deliver on behalf of the Partnership either contracts,
documents or instruments in writing generally or specific contracts, documents
or instruments in writing. Without limiting the generality of the foregoing,
all contracts, documents or instruments requiring execution by the Partnership
and involving expenditures of less than $10,000 (other than those specified in
Section 4.09 as requiring the approval of all Partners) may be signed by any
General Manager of the Partnership.
ARTICLE FIVE - ACCOUNTING AND FINANCIAL STATEMENTS
--------------------------------------------------
5.01 BOOKS AND RECORDS
-----------------
The books and records of accounts of the Partnership shall reflect all
Partnership transactions. Such books and records shall be maintained at the
principal place of business of the Partnership and shall be open to examination
during normal business hours by any Partner. Representative or, at the expense
of a Partner, by an independent accountant selected by a Partner.
5.02 AUDITORS
--------
Ernst & Young shall be appointed the Auditors unless, prior to the
appointment of any other person as Auditors all of the Partners have consented
in writing to such person being appointed.
5.03 FINANCIAL STATEMENTS
--------------------
(1) As soon as practicable after the end of each month but no later than
15 days thereafter, financial statements shall be prepared by the Partnership,
for and as of the end of such month, in accordance with generally accepted
accounting principles consistently applied, and such financial statements shall
show the assets and the liabilities of the Partnership, all income and revenue
received and receivable and all expenses, costs and charges incurred and paid or
payable by the Partnership in respect of such month, with the
<PAGE>
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resulting net profit or loss of the Partnership in respect of such month, and
shall also show the amounts standing to the credit of each Partner hereto in
respect of its Capital Account and Current Account, all in accordance with the
provisions herein contained. As soon as practicable at the end of each fiscal
year of the Partnership but no more than 30 days thereafter, like financial
statements shall be prepared for and as of the end of such fiscal year. As soon
as practicable at the end of each fiscal year of the Partnership and no later
than 90 days thereafter, audited financial statements shall be prepared for the
Partnership at the expense of the Partnership. All financial statements
referred to in this Section 5.03 will be accompanied by a restatement to United
States generally accepted accounting principles, which restatement shall be
prepared at the expense of the Partnership.
(2) Any financial statements prepared and certified by the Auditors as
herein provided shall be final, binding and conclusive among the Partners in the
absence of manifest error.
5.04 FISCAL YEAR END
---------------
The fiscal year end of the Partnership shall be December 31.
ARTICLE SIX - CONTRIBUTIONS, OTHER FINANCING,
---------------------------------------------
ALLOCATIONS AND DISTRIBUTIONS
-----------------------------
6.01 CLASSES OF ACCOUNTS
-------------------
[*]
6.02 INITIAL CAPITAL CONTRIBUTIONS
-----------------------------
Not later than the close of business on the Business Day following the
date of this Agreement, the Partners shall make Capital contributions to the
Partnership as follows:
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[*]
6.03 ADDITIONAL PARTNERSHIP FINANCING
--------------------------------
(1) It is the intention of the Partners that additional Capital
contributions required for the Partnership be identified and provided for in the
Annual Budget. By the close of business on the Last Business Day of each fiscal
quarter, the Partners agree to make any additional Capital contributions, on a
[*]% by Metroland [*]% by CitySearch Ontario basis, which are specified in the
Annual Budget as being required for the fiscal quarter following the next
succeeding fiscal quarter. In addition, the Executive Committee shall have the
authority to determine, on a quarterly basis, the amount of any additional
required Capital contributions not identified in the Annual Budget which are in
the best interest of the Partnership. Such additional Capital contributions
determined by the Executive Committee as being required in a particular fiscal
quarter shall not exceed [*]% of the Capital contributions specified in the
Annual Budget for such fiscal quarter. The Partners agree to make additional
Capital contributions, on a [*]% by Metroland and [*]% by CitySearch Ontario
basis, by the close of business on the second Business Day following a capital
call by the Executive Committee. After the Partnership's Free Cash Flow has been
positive for [*], it is the intention of the Partners that, to the greatest
extent possible, funds necessary to carry on the Partnership Business shall be
obtained from the cash flow of the Partnership.
(2) In the event that any Partner fails to make a Capital contribution
required pursuant to Section 6.03(l), the Executive Committee shall cause
Schedule B to be amended to appropriately reflect a pro rata adjustment to the
Partnership Interests of the Partners.
6.04 FURTHER CAPITAL CONTRIBUTIONS
-----------------------------
Subject to Section 6.03, no Partner shall make any further Capital
contributions to the Partnership except with the unanimous agreement of the
other Partners.
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6.05 INCOME AND LOSSES
-----------------
Income and losses of the Partnership shall be determined in accordance
with the Income Tax Act (Canada). All net income and net losses of the
Partnership shall be shared by and allocated for accounting and income tax
purposes to the Partners as follows:
(a) all net income of the Partnership shall be shared by and allocated to
the Partners in proportion to their respective Partnership Interests:
(b) all net losses of the Partnership shall be allocated to Metroland
until it has been allocated cumulative net losses equal to $[*],
and thereafter all net losses of the Partnership shall be shared by
the Partners and allocated [*]% to Metroland and [*]% to CitySearch
Ontario
6.06 PARTNERSHIP DISTRIBUTIONS
-------------------------
(1) Except as otherwise expressly provided in this Agreement, Capital
shall only be returned to the Partners with the unanimous approval of all of the
Partners.
(2) Unless otherwise agreed by the Partners, all cash flow of the
Partnership shall be distributed to the Partners once the Partnership's Free
Cash Flow has been positive for [*]. Prior to such time, no cash flow of the
Partnership shall be distributed. After such time, CitySearch Ontario shall be
entitled to draw an amount of Free Cash Flow equal to [*] and thereafter the
Partners shall be entitled to draw any Free Cash Flow in respect of a fiscal
quarter of the Partnership at the end of such fiscal quarter in proportion to
their respective Partnership Interests.
6.07 REQUIRED EXPANSION FUNDS
------------------------
The Required Expansion Funds shall be determined by the unanimous
agreement of the Partners until such time as CitySearch Ontario has received an
amount of Free Cash Flow equal to the cash portion of its initial Capital
Contribution pursuant to Section 6.02, and thereafter shall be specified in the
Annual Budget, provided that the Executive Committee shall have the authority to
require deviations from the Annual Budget by up to [*]% in any particular year.
6.08 EXCLUDED TORSTAR ASSETS
-----------------------
The Partners acknowledge that Metroland and Torstar Electronic
Publishing Ltd. ("TEP"), an affiliate of Torstar, have built and currently offer
in both the Exclusive Territory and the Extended Territory certain electronic
offerings. The Partners recognize that some combination of such electronic
offerings with the Partnership Business may be to
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<PAGE>
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the mutual advantage of Metroland, TEP and the Partnership. In the event of
such a contribution, details of which are subject to negotiation, the Partners
intend that: (a) the revenues from TEP's and Metroland's currently existing
business will be excluded from the circulation of the Partnership's income and
Free Cash Flow: and (b) the Partnership will share in a portion of any revenues
of Metroland or TEP related to products or services jointly developed with the
Partnership.
6.09 TORSTAR SERVICE FEES
--------------------
To the extent that Torstar or any of its Affiliates provide services
to the Partnership, such services shall be paid for on a cost plus basis in
accordance with the cost plus schedule set out in Schedule E to the License and
Services Agreement.
6.10 BACK OFFICE SOFTWARE
--------------------
The Partners acknowledge that the Partnership may wish to acquire the
right to use certain "back office" software in conjunction with its CitySearch
Information Service. Such software is partly owned by CitySearch U.S.A. and
partly owned by certain third parties. In order to facilitate the use by the
Partnership of that part of the software which is owned by CitySearch U.S.A.,
CitySearch U.S.A. shall use all commercially reasonable efforts to grant, within
30 days, a license to such third party or parties on an "as is" basis for the
use of such part of the software. If desired by the Partnership, CitySearch
U.S.A. will request that such third party or parties enter into a license and
sublicense agreement with the Partnership for the use of the software, such
agreement to be negotiated between the Partnership and such third party or
parties and be on terms mutually agreeable to each of them.
ARTICLE SEVEN - COVENANTS
-------------------------
7.01 COVENANTS
---------
Each Partner covenants that, throughout the term of this Agreement,
the Partner shall:
(a) ensure its continued qualification under the laws of its jurisdiction
of incorporation and such jurisdictions where the Partnership conducts
the Partnership Business to the extent it is reasonably within its
power to do so;
(b) subject to the rights and obligation of the Partners pursuant to the
License Agreement, the Partners agree not to disclose or use any
confidential or proprietary information of the other Partner or any of
its Affiliates or of the Partnership to which it may have access or
have disclosed to it by virtue of the Partnership, except for the
purposes of the Partnership and shall ensure
<PAGE>
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that all persons to whom any such information is disclosed is bound by
a duty of confidence with respect thereto:
(c) not permit any security interest, encumbrance, pledge or other similar
claim co exist on its Partnership Interest or its interest in any
property of the Partnership:
(d) at all times duly and punctually pay and discharge separate and
private debts and engagements whether present or future and keep the
Partnership and the other Partners indemnified therefrom and from all
actions, proceedings, costs, claims, demands, damages and expenses in
respect thereof; and
(e) maintain its Canadian resident status for purposes of the Income Tax
Act (Canada).
ARTICLE EIGHT - TRANSFER OF PARTNERSHIP INTEREST
------------------------------------------------
8.01 NO TRANSFER
-----------
(1) Except as expressly provided herein, a Partner shall not sell,
transfer, assign, pledge, charge or in any other way dispose of or encumber its
Partnership Interest without the prior written consent of the other Partners.
(2) Subject to such Affiliate agreeing to be bound by and becoming a party
to this Agreement, each Partner shall be entitled to sell and transfer its
Partnership Interest herein to an Affiliate of such Partner and shall provide
the other Partner with notice in writing of any such sale and transfer as soon
as practicable after such sale and transfer, but in any event in not more than
two Business Days following the sale and transfer.
8.02 RIGHT OF FIRST REFUSAL
----------------------
(1) Before accepting an offer (an "Offer") to purchase all or any of a
Partner's Partnership Interest, such Partner (hereinafter in this Section 8.02
referred to as the "Offeror") shall give notice (hereinafter in this Section
8.02 referred to as the "Notice") of the terms and price of the Offer (such
price being hereinafter in this Section 8.02 referred to as the "Purchase
Price") to the Partnership and to the other Partners.
(2) Upon the Notice being given, the other Partners (hereinafter in this
Section 8.02 sometimes collectively referred to as the "Offerees" and sometimes
individually referred to as an "Offeree") shall have the right to purchase all,
but not less than all, of the Partnership Interest of the Offeror for the
Purchase Price. The Offerees shall be entitled to purchase the Partnership
Interest of the Offeror pro rata based upon the percentage of the
<PAGE>
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Partnership Interests beneficially owned by the Offerees or to purchase in such
ocher proportion as the Offerees may agree in writing.
(3) Within 30 Business Days of having been given the Notice, each Offeree
who desires to purchase all of the Partnership Interest of the Offeror that it
is entitled to purchase in accordance with the provisions of Section 8.02(2)
shall give notice to the Offeror, to the Partnership and to the other Offerees.
If any Offeree does not give such notice, the Partnership Interest of the
Offeror that it had been entitled to purchase (hereinafter in this Section
8.02(3) referred to as the "Rejected Interest") may instead be purchased by the
Offerees who did give such notice, pro rata based upon the percentages of the
Partnership Interests beneficially owned by such Offerees as between themselves
or in such other proportion as such Offerees may agree in writing, and, within
five Business Days of the expiry of the 30 Business Day period specified in this
Section 8.02(3), each Offeree who desires to purchase all of the Rejected
Interest that it is entitled to purchase in accordance with the provisions of
this Section 8.02(3) shall give an additional notice to the Offeror, to the
Partnership and to the other Offerees. If any Offeree entitled to give the said
additional notice does not do so, the Rejected Interest that it had been
entitled to purchase may instead be purchased by the Offerees who did give such
notice, and so on from time to time until the Offerees are willing to purchase
all of the Partnership Interest of the Offeror or until they are not willing to
purchase any more. If the Offerees are willing to purchase all, but not less
than all, of the Partnership Interest of the Offeror, the transaction of
purchase and sale shall be completed in accordance with the terms set out in the
Notice.
(4) If the Offeror makes default in transferring its Partnership Interest
to the Offerees in accordance with the terms set out in the Notice, the
Secretary of the Partnership is authorized and directed to receive the purchase
money and to thereupon cause the names of the Offerees to be entered in the
registers of the Partnership as the holders of the Partnership Interests
purchasable by them. The said purchase money shall be held in trust by the
Partnership on behalf of the Offeror and not commingled with the Partnership's
assets, except that any interest thereon shall be for the account of the
Partnership. The receipt by the Secretary of the Partnership for the purchase
money shall be a good discharge to the Offerees and, after their names have been
entered in the registers of the Partnership in exercise of the aforesaid power,
the validity of the proceedings shall not be subject to question by any person.
On such registration, the Offeror shall cease to have any right to or in respect
of the Partnership Interest of the Offeror except the right to receive, without
interest, the purchase price received by the Secretary of the Partnership.
(5) If the Offerees do not give notice in accordance with the provisions
of Section 8.02(3) that they are willing to purchase all of the Partnership
Interest of the Offeror, the rights of the Offerees, subject as hereinafter
provided, to purchase the Partnership Interest of the Offeror shall forthwith
cease and determine and the Offeror
<PAGE>
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may, within four months after the expiry of the 30 Business Day period or five
Business Day periods, as the case may be, specified in Section 8.02(3), accept
the Offer, provided that the person to whom its Partnership Interest is to be
sold agrees prior to such transaction to be bound by this Agreement and to
become a party hereto in place of the Offeror with respect to the Partnership
Interest of the Offeror. If the Offer is not accepted within such four month
period on such terms, the rights of the Offerees pursuant to this Section 8.02
shall again take effect and so on from time to time.
(6) [*]
(7) [*]
8.03 EVENTS OF DEFAULT
-----------------
(1) In any of the following events:
(a) any Partner is in breach of a covenant in Article, Seven and, if such
breach is capable of being remedied, such breach is not remedied
within 5 days after notice has been given to such Partner specifying
such breach;
(b) [*]
(c) a process of execution is issued against the Partnership Interest of
any Partner and such execution is not released or vacated within the
shorter of a period of 30 days or such shorter period as would permit
the Partnership Interest to be sold;
(d) any Partner makes an assignment for the benefit of creditors of any
material portion of its assets or is in bankruptcy or is adjudged
bankrupt or insolvent within the meaning of the Bankruptcy and
Insolvency Act (Canada); or
(e) substantially all of the assets of any Partners are seized or
otherwise attached by anyone pursuant to any legal process or other
means, including distress, execution or any other step or proceeding
with similar effect and the same is not released or vacated within the
shorter of a period of 30 days
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<PAGE>
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or such shorter period as would permit such property or any part
thereof to be sold pursuant thereto,
the Partners (the "Offerees"), other than the Partner referred to in Sections
8.03 (a) to (d) (the "Defaulting Partner"), shall have the right to purchase
all, but not less than all, of the Partnership Interest beneficially owned by
the Defaulting Partner (the "Offered Interest").
(2) The Offerees shall be entitled to purchase the Offered Interest pro
rata based upon the percentage of the Partnership Interests beneficially owned
by the Offerees or to purchase in such other proportion as the Offerees may
agree in writing.
(3) The price of the Offered Interest, unless the Partners otherwise agree
in writing within 15 Business Days of notice of the date of the event referred
to in Section 8.03(l), shall be an amount equal to the fair value (taking into
account, among other things, the markets, cash flow and prospects of the
Partnership) of the Offered Interest (the "Purchase Price") as determined by an
internationally recognized accounting firm, business valuator or investment bank
(the "Third Party Valuator") agreed to by the Partners as at the end of the
fiscal quarter of the Partnership immediately preceding the fiscal quarter in
which the event referred to in Section 8.03(1) occurred. Such determination
shall be made in writing and given to all of the Partners and to the Partnership
within 30 Business Days of notice of the date of the event referred to in
Section 8.03(1) or as soon thereafter as may be reasonably possible.
(4) The report of the Third Party Valuator when delivered to the Partners
and to the Partnership, shall be conclusive and binding upon all parties.
(5) Within 10 Business Days of having been given the Third Party
Valuator's report of the Purchase Price, each Offeree who desires to purchase
all of the Offered Interest that it is entitled to purchase in accordance with
the provisions of Section 8.03(2) shall give notice to the Defaulting Partner,
to the Partnership and to the other Offerees. If any Offeree does not give such
notice, the portion of the Offered Interest that it had been entitled to
purchase (the "Rejected Interest") may instead be purchased by the Offerees who
did give such notice, pro rata based upon the percentages of the Partnership
Interests beneficially owned by such Offerees as between themselves or in such
other proportion as such Offerees may agree in writing, and, within five
Business Days of the expiry of the 10 Business Day period specified in this
Section 8.03(5), each Offeree who desires to purchase all of the Rejected
Interest that it is entitled to purchase in accordance with the provisions of
this Section 8.03(5) shall give an additional notice to the Defaulting Partner,
to the Partnership and to the other Offerees. If any Offeree entitled to give
the said additional notice does not do so, the Rejected Interest that it had
been entitled to purchase may instead be purchased by the Offerees who did give
such notice, pro rata based upon the percentages of the Partnership Interests
beneficially owned by such Offerees as between themselves or in such other
proportion as such Offerees may agree in writing, and so on
<PAGE>
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from time to time until the Offerees are willing to purchase all of the Offered
Interest or until they are not willing to purchase any more. If the Offerees
are willing to purchase all, but not less than all, of the Offered Interest, the
transaction of purchase and sale shall be completed within 20 Business Days of
the expiry of the 10 Business Day period or five Business Day period, as the
case may be, specified in this Section 8.03(5). The transaction shall be
completed at the Partnership's principal office where transfer of the Offered
Interest shall be made by the Defaulting Partner with good title. free and clear
of all liens, charges, encumbrances and any other rights of others, against
payment by certified cheque by the Offerees.
(6) If the Defaulting Partner makes default in transferring the Offered
Interest to the Offerees as provided for in this Section 8.03, the Secretary of
the Partnership is authorized and directed to receive the purchase money and
thereupon to cause the names of the purchasing Offerees to be entered in the
registers of the Partnership as the holders of the portion of the Partnership
Interest purchasable by them. The said purchase money shall be held in trust by
the Partnership on behalf of the Defaulting Partner and not commingled with the
Partnership's assets, except that any interest accruing thereon shall be for the
account of the Partnership. The receipt by the Secretary of the Partnership for
the purchase money shall be a good discharge to the Offerees and, after their
names have been entered in the registers of the Partnership in exercise of the
aforesaid power, the validity of the proceedings shall not be subject to
question by any person. On such registration, the Defaulting Partner shall
cease to have any right to or in respect of the Offered Interest except the
right to receive, without interest, the purchase price received by the Secretary
of the Partnership.
(7) If the Offerees do not give notice in accordance with the provisions
of this Section 8.03 that they are willing to purchase all of the Offered
Interest or complete the purchase of the Offered Interest as provided therein,
the rights of the Offerees, except as hereinafter provided, to purchase the
Offered Interest shall forthwith cease and determine but any Offeree may, except
in respect of a default under Section 8.03(l)(b), within 20 Business Days of the
expiry of the applicable time period referred to in Section 8.03(5), give notice
to the Defaulting Partner, the Partnership and the other Offerees requiring the
dissolution Of the Partnership.
8.04 ALLOCATION IN EVENT OF TRANSFER
-------------------------------
If a Partnership Interest is transferred in accordance with the terms
of this Agreement, all items of income, gain, loss, deduction and credit of the
Partnership shall be allocated between the periods before and after the transfer
by a "closing of the books" method. As of the date of such transfer, the
transferee shall succeed to the Capital Account of the transferor Partner with
respect to the transferred Partnership Interest. This Section 8.04 shall apply
for purposes of computing a Partner's Capital Account.
<PAGE>
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ARTICLE NINE - TERMINATION, DISSOLUTION AND NON-COMPETITION
-----------------------------------------------------------
9.01 TERM
----
The Partnership created by this Agreement shall begin on the date
hereof and shall continue [*]
9.02 DISSOLUTION
-----------
(1) The Partnership shall only be dissolved (a) upon agreement in writing
of all the Partners; or (b) if any Partner gives a notice requiring dissolution
pursuant to Section 8.03(7).
(2) Upon dissolution of the Partnership, a full and general account shall
be taken of the assets, credits, debts and liabilities of the Partnership and of
the transactions and dealings thereof and with all convenient speed such assets
and credits shall be sold, realized and got in and the proceeds applied as
follows:
(a) firstly, in paying and discharging the debts and liabilities of the
Partnership to the persons who are not Partners and the expenses of
and incidental to the dissolution of the Partnership;
(b) secondly, in paying to each Partner any unpaid debts and liabilities
(including any unpaid net profits) which may be due to it;
(c) thirdly, in paying to each Partner an amount equal to any credit
balance in its Capital Account limited, in the case of CitySearch
Ontario, to the balance in such account which relates to a cash
contribution; and
(d) fourthly, the balance, if any, of such proceeds shall be divided
between the Partners proportionately to their Partnership Interests.
(3) On dissolution of the Partnership, the Executive Committee shall act
as the receiver of the Partnership. If the Executive Committee shall
be unable or unwilling to so act, the Partners may appoint some other
appropriate person as receiver of the Partnership.
9.03 NON-COMPETITION
---------------
(1) Subject to Section 9.03(3) or any agreement in writing of the parties,
the Partnership Business shall be restricted to offering a CitySearch
Information Service with
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-24-
Content pertaining solely to the Exclusive Territory. The Partners hereby
undertake and agree to be bound by their respective obligations under the Non-
Competition Agreement.
(2) [*]
(3) [*]
ARTICLE TEN - INSURANCE
-----------------------
10.01 INSURANCE
---------
Unless the Partners otherwise agree, the Partnership shall maintain
insurance in respect of its business, operations and activities, and the other
assets of the Partnership of such types and in such amounts as the Executive
Committee deems advisable including, without limitation, third party liability
insurance and product liability insurance, both during the operation of the
Partnership Business and until any dissolution is completed.
ARTICLE ELEVEN - GENERAL
------------------------
11.01 FURTHER ASSURANCES
------------------
Each Partner shall from time to time execute and deliver all such
further documents and instruments and do all acts and things as the other
Partners or the Executive
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
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Committee may reasonably require to effectively carry out or better evidence or
perfect the full intent and meaning of this Agreement.
11.02 PUBLIC ANNOUNCEMENTS
--------------------
Subject to applicable law or stock exchange regulation, no public
announcement or press release primarily concerning the Partnership shall be made
by any Partner without the prior consent and joint approval of the other
Partners. If a Partner wishes to issue a press release primarily concerning the
Partnership it shall provide a draft thereof (or the portion thereof relating to
the Partnership) to the other Partners as soon as a draft is available and shall
consider any reasonable comments of the other Partners with respect to the press
release provided that such comments are provided forthwith upon receipt of the
draft. Any failure to provide comment with respect to a draft press release
shall be deemed to constitute consent to the release thereof.
11.03 DISPUTE RESOLUTION
------------------
Any dispute, disagreement, controversy, question or claim arising out
of or relating to this Agreement (a "Dispute"), other than a Dispute relating to
confidential information or intellectual property rights of either Partner, must
be conclusively settled by submission to arbitration in accordance with the
rules provided in Schedule "B" hereto.
11.04 BENEFIT OF THE AGREEMENT
------------------------
This Agreement shall enure to the benefit of and be binding upon the
respective heirs, executors, administrators, successors and permitted assigns of
the parties hereto.
11.05 ENTIRE AGREEMENT
----------------
This Agreement and the Ancillary Agreements constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and cancels and supersedes any prior understandings and agreements between the
parties hereto with respect thereto. There are no representations, warranties,
terms, conditions, undertakings or collateral agreements, express, implied or
statutory, between the parties other than as expressly set forth in this
Agreement or the Ancilliary Agreements.
11.06 CURRENCY
--------
Unless otherwise provided herein, all reference to currency shall be
to Canadian dollars.
<PAGE>
-26-
11.07 AMENDMENT AND WAIVER
--------------------
No modification of or amendment to this Agreement shall be valid or
binding unless set forth in writing and duly executed by the parties hereto and
no waiver of any breach of any term or provision of this Agreement shall be
effective or binding unless made in writing and signed by the party purporting
to give the same and, unless otherwise provided, shall be limited to the
specific breach waived.
11.08 ASSIGNMENT
----------
Except as may be expressly provided in this Agreement, no Partner may
assign its rights or obligations under this Agreement without the prior written
consent of the other Partners.
11.09 NOTICES
-------
Any demand, notice or other communication to be given in connection
with this Agreement shall be given in writing and shall be given by personal
delivery or by transmittal by electronic means of communication addressed to the
recipient as follows:
To Metroland or Torstar:
c/o Torstar Corporation
1 Yonge Street
Toronto, Ontario
M5E 1P9
Fax No.: (416) 869-4183
Attention: General Counsel
---------
with a copy to:
Toronto Star Newspapers Limited
1 Yonge Street
Toronto, Ontario
M5E 1E6
Fax No.: (416) 869-4762
Attention: Vice-President, Strategic Planning
---------
<PAGE>
-27-
To CitySearch Ontario or CitySearch U.S.A.:
c/o CitySearch, Inc.
790 East Colorado Boulevard
Suite 200
Pasadena, California 91 101
U. S. A.
Fax No.: (818) 405-9929
Attention: Bradley Ramberg, Chief Financial Officer
---------
or to such other address, electronic communication number or individual as may
be designated by notice given by any Partner to the others. Any communication
shall be conclusively deemed to have been given on the day of actual delivery
thereof if such day is a Business Day and the communication is delivered or
transmitted during the normal business hours of the recipient and on the
Business Day during which normal business hours next occur if given after such
hours on any day.
11.10 GOVERNING LAW
-------------
This Agreement shall be governed by and construed in accordance With
the laws of the Province of Ontario and the laws of Canada applicable therein.
IN WITNESS WHEREOF the Partners have executed this Agreement.
METROLAND PRINTING, PUBLISHING &
DISTRIBUTING LTD.
Per: /s/ Signature Illegible
1217554 ONTARIO INC.
Per: /s/ Signature Illegible
CITYSEARCH, INC,
Per: /s/ Signature Illegible
TORSTAR CORPORATION
Per: /s/ Signature Illegible
<PAGE>
Schedule A
EXCLUSIVE TERRITORY/EXTENDED TERRITORY
--------------------------------------
[*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
Schedule B
PARTNERSHIP INTEREST
--------------------
Metroland [*]%
CitySearch Ontario [*]%
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
EXHIBIT 10.9
LICENSE AND SERVICES AGREEMENT
BETWEEN
CITYSEARCH INCORPORATED
AND
1217554 ONTARIO INC.
MADE AS OF
FEBRUARY 17, 1997
- --------------------
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE ONE - INTERPRETATION
----------------------------
<S> <C>
1.01 Definitions................................................... 2
1.02 Headings...................................................... 6
1.03 Extended Meanings............................................. 6
1.04 Accounting Principles......................................... 6
1.05 Currency...................................................... 6
1.06 Schedules..................................................... 7
ARTICLE TWO - LICENSE TO CITYSEARCH SYSTEMS
-------------------------------------------
2.01 License to CitySearch Systems................................. 7
2.02 License to CitySearch Documentation........................... 8
ARTICLE THREE - SERVICES
------------------------
3.01 Delivery of Materials......................................... 8
3.02 Training Service.............................................. 8
3.03 Consulting Service............................................ 8
3.04 Customization Service......................................... 8
3.05 Responsibilities of Licensee.................................. 9
ARTICLE FOUR - FEES AND EXPENSES
--------------------------------
4.01 License....................................................... 10
4.02 Initial Service Fee........................................... 10
4.03 Additional Service Fees....................................... 11
4.04 Invoicing..................................................... 11
4.05 Expenses...................................................... 11
4.06 Taxes......................................................... 11
4.07 Disputed Payments............................................. 12
ARTICLE FIVE - INTELLECTUAL PROPERTY RIGHTS
-------------------------------------------
5.01 Ownership of CitySearch Systems............................... 12
5.02 Ownership of Content.......................................... 12
5.03 Ownership of Work Product..................................... 13
5.04 Disclosure of Licensee Improvements........................... 14
5.05 Disclosure of Licensor Improvements........................... 14
5.06 Source Codes.................................................. 14
</TABLE>
<PAGE>
-ii-
<TABLE>
<CAPTION>
ARTICLE SIX - TRADE-MARKS AND QUALITY STANDARDS
-----------------------------------------------
<S> <C>
6.01 Grant of License to Trade-Marks.............................. 17
6.02 Ownership of Trade-Marks..................................... 17
6.03 Restrictions on Use of the Trade-Marks....................... 17
6.04 Quality Standards............................................ 17
ARTICLE SEVEN - PROPRIETARY RIGHTS
AND CONFIDENTIAL INFORMATION
----------------------------
7.01 Duty of Confidence........................................... 19
7.02 Protection of Proprietary Rights............................. 20
7.03 Inspection by Licensor....................................... 20
7.04 Third Party Information...................................... 21
7.05 Loss of Confidential Information............................. 21
7.06 Enforcement of Confidentiality Obligation.................... 21
ARTICLE EIGHT - INFRINGEMENT
----------------------------
8.01 Prosecution of Infringement Claims........................... 21
8.02 Licensor's Defence of Infringement Claims.................... 22
8.03 Licensee's Defence of Infringement Claims.................... 23
ARTICLE NINE - WARRANTIES AND DISCLAIMERS
-----------------------------------------
9.01 Warranty..................................................... 24
9.02 Electronic Access............................................ 25
9.03 Disclaimer of Warranty....................................... 25
9.04 Limit of Liability........................................... 25
9.05 Limitation Period............................................ 27
9.06 California Franchise Disclaimer.............................. 27
ARTICLE TEN - TERM AND TERMINATION
----------------------------------
10.01 Term........................................................ 27
10.02 Termination................................................. 27
10.03 Effect of Termination by Licensor........................... 28
10.04 Return of Intellectual Property............................. 28
10.05 Survival.................................................... 29
</TABLE>
<PAGE>
- iii -
<TABLE>
<CAPTION>
<S> <C>
10.06 Sale of Partnership Interest................................ 30
ARTICLE ELEVEN - GENERAL
------------------------
11.01 Further Assurances.......................................... 31
11.02 Public Announcements........................................ 31
11.03 Dispute Resolution.......................................... 32
11.04 Entire Agreement............................................ 32
11.05 Force Majeure............................................... 32
11.06 Amendment and Waiver........................................ 32
11.07 Assignment.................................................. 33
11.08 Notices..................................................... 33
11.09 Governing Law............................................... 34
</TABLE>
<PAGE>
LICENSE AND SERVICES AGREEMENT
------------------------------
THIS AGREEMENT made as of February 17, 1997;
B E T W E E N:
CITYSEARCH INCORPORATED, a corporation incorporated under
the laws of Delaware (hereinafter referred to as "Licensor")
OF THE FIRST PART.
- and -
1217554 ONTARIO INC., a corporation incorporated under the
laws of Ontario (hereinafter referred to as "Licensee"),
OF THE SECOND PART.
WHEREAS Licensor is engaged in the business of providing CitySearch
Information Services (as defined below) in the United States and elsewhere;
AND WHEREAS Toronto Star CitySearch (the "Partnership") a general
partnership between Metroland Printing, Publishing & Distributing Ltd.
("Metroland"), a subsidiary of Torstar Corporation and Licensee has been formed
to carry on a CitySearch Information Service in the Exclusive Territory (as
defined below);
AND WHEREAS Licensee is a wholly-owned subsidiary of Licensor and has
requested Licensor to grant to it the License and to provide it with the
Services to enable the Partnership to establish and operate a CitySearch
Information Service in the Exclusive Territory;
AND WHEREAS Licensee intends to assign this Agreement to the
Partnership as part of its capital contribution towards the Partnership and
Licensor is prepared to agree to such assignment, upon and subject to the terms
and conditions of this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the
issuance to Licensor of fifty (50) common shares of Licensee and the premises
and the covenants and agreements herein contained, the parties hereto agree as
follows;
<PAGE>
-2-
ARTICLE ONE - INTERPRETATION
----------------------------
1.01 DEFINITIONS
-----------
In this Agreement
(a) "Access Event" has the meaning ascribed to it in Section 5.06(a).
(b) "Additional Service Fees" shall have the meaning ascribed to it
in Section 4.03.
(c) "Affiliate" means an affiliate of a party as determined by the
provisions of the Business Corporations Act (Ontario) as now
enacted or as the same may be from time to time amended, re-
enacted or replaced.
(d) "Agreement" means this agreement, the schedules hereto annexed
and all amendments made hereto by written agreement between the
parties hereto.
(e) "Business Day" means a day other than a Saturday, Sunday or
statutory holiday in Ontario or California.
(f) "CitySearch Business Systems" means the methods of operation
procedures and standards to implement, maintain, market and
advertise a CitySearch Information Service, described in Schedule
B and all Licensor Improvements thereto.
(g) "CitySearch Documentation" means documentation, however recorded,
which forms part of and which describes the CitySearch Business
Systems and CitySearch Technology Systems and which are provided
by Licensor to Licensee hereunder. For the avoidance of doubt
the term "CitySearch Documentation" does not include any of the
Licensed Programs.
(h) "CitySearch Information Service" means an online service of
providing Content related to restaurants, entertainment, retail
establishments, community events and other services pertaining
to a particular city or geographic region which uses the
CitySearch Systems.
(i) "CitySearch Systems" means the CitySearch Technology Systems.
CitySearch Business Systems, and related CitySearch
Documentation.
<PAGE>
-3-
(j) "CitySearch Technology Systems" means the proprietary software
and tools described in Schedule A and database structures text
and artwork formats, computer and human interfaces, databases
and other Intellectual Property related thereto and all Licensor
Improvements thereto.
(k) "Competing Business" has the meaning ascribed to it in the
Partnership Agreement.
(1) "Confidential Information" means the confidential, secret or
proprietary information of one party (the "Disclosing Party"),
including technical, financial, and business information and
software of the Disclosing Party which has been or may hereafter
be disclosed, directly or indirectly to the other party (the
"Recipient"), either orally, in writing or in any other material
form.
(m) "Consulting Service" means the consulting assistance described in
Section 3.03.
(n) "Content" with respect to a CitySearch Information Service
includes all information, databases, advertisements, text, sound,
photographic images, video and other content which is
displayed or accessible to a consumer using the service. For the
avoidance of doubt, the term "Content" does not include any
CitySearch System or any Improvement thereto.
(o) "Customization Service" means the service described in Section
3.04.
(p) "Direct Competitor" has the meaning ascribed to it in the
Partnership Agreement.
(q) "Designated Location" means the location(s) described in Schedule
C at which the CitySearch Systems must be used and includes such
replacement locations in the Exclusive Territory owned or
controlled by Licensee or any of its Affiliates which are
notified to Licensor in writing by Licensee.
(r) "Effective Date" means the date first set out above.
(s) "Escrow Agreement" means the agreement described in Section
5.06(a).
(t) "Event of Default" has the meaning ascribed to it in Section
10.02(a).
<PAGE>
-4-
(u) "Exclusive Territory" shall have the meaning ascribed to it in
the Partnership Agreement.
(v) "Improvements" means, in relation to any technology or
Intellectual Property, changes, modifications improvements,
enhancements, additions and adaptations to, and derivative
works based upon or derived from, the technology or intellectual
Property.
(w) "Initial Service Fee" shall have the meaning ascribed to it in
Section 4.02.
(x) "Intellectual Property" means all intellectual and industrial
property including without limitation all works in which
copyright subsists or may subsist (such as computer programs,
designs and documentation, data structures, audio-visual
displays, databases, and designs), methods, operational
procedures, specialized techniques, processes, formula, know-
how, trade secrets and confidential information, and discoveries
and inventions.
(y) "Intellectual Property Rights" includes all trade-mark rights and
trademarks and trade names, patents, copyrights, industrial
design rights, design rights, integrated circuit topography
rights, rights in trade secrets, confidential information and
know-how, applications and registrations for the foregoing, and
other proprietary rights including privacy rights, moral rights,
publicity rights, neighbouring rights, and rights of a similar
nature.
(z) "Jointly Owned Work Products" means the Work Products described
in Section 5.03 (b).
(aa) "Launch" means the date when the Toronto CitySearch Information
Service will be accessible to the public and "Launched" shall
have a corresponding meaning.
(bb) "License" means the license rights conferred upon Licensee
pursuant to Article 2 and Sections 5.06(b) and 6.01.
(cc) "Licensed Programs" means the computer programs forming part of
the CitySearch Technology Systems described in Schedule A.
(dd) "Licensed Trade-Marks" means the words, symbols, icons, logos,
trade-marks and other indicia of origin described in Schedule D.
<PAGE>
-5-
(ee) "Licensee Improvements" means the Licensee Owned Work Products,
the Jointly Owned, Work Products to the extent created by
Licensee, and the Source Modifications.
(ff) "Licensee Owned Work Products" means the Work Products described
in Section 5.03(a).
(gg) "Licensor Improvements" means Improvements made by Licensor to
the CitySearch Systems which are owned or controlled by Licensor
and, which are made generally available by Licensor to its
Affiliates and other persons to whom it has granted licenses to
use the CitySearch Systems to carry on a CitySearch Information
Service during the term of this Agreement.
(hh) "Licensor Owned Work Products" means the Work Products described
in Section 5.03(e)
(ii) "Non-Competition Agreement" means an agreement as of even date
herewith between Metroland, Licensor, Licensee, and Torstar
Corporation.
(jj) "Partnership Agreement" means an agreement made as of even date
herewith between Licensee and Metroland.
(kk) "Partnership Interest" shall have the meaning ascribed thereto in
the Partnership Agreement,
(ll) "Quality Standards" has the meaning ascribed thereto in Section
6.04.
(mm) "Services" means Services which are provided by Licensor to
Licensee under this Agreement.
(nn) "Source Modifications" has the meaning ascribed thereto in
Section 5.06(b).
(oo) "Toronto Star CitySearch Information Service" means a CitySearch
Information Service which contains Content related solely to the
Exclusive Territory as set out in Section 2.01(c).
(pp) "Training Services" means the training services described in
Section 3.02.
<PAGE>
-6-
(qq) "Work Product" means Intellectual Property (other than trade-
marks) originated or developed by either party either alone or
with the assistance of the other party pursuant to this
Agreement.
1.02 HEADINGS
--------
The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, Section or other portion hereof and
include any agreement supplemental hereto. Unless something in the subject
matter or context is inconsistent therewith, references herein to Articles and
Sections are to Articles and Sections of this Agreement.
1.03 EXTENDED MEANINGS
-----------------
In this Agreement words importing the singular number only shall
include the plural and vice versa, words importing any gender shall include all
genders and words importing persons shall include individuals, partnerships,
associations, trusts, unincorporated organizations and corporations. The terms
"provision" and "provisions" refer to terms, conditions, provisions, covenants,
obligations, undertakings, warranties and representations in this Agreement. The
term "includes" or "including" or "such as" shall be construed as meaning
"includes without limitation", "including without limitation" and "such as
without limitation", as the case may be.
1.04 ACCOUNTING PRINCIPLES
---------------------
Wherever in this Agreement reference is made to a calculation to be
made in accordance with generally accepted accounting principles, such reference
shall be deemed to be to the generally accepted accounting principles from time
to time approved by the Canadian Institute of Chartered Accountants, or any
successor institute, applicable as at the date on which such calculation is made
or required to be made. Wherever in this Agreement reference is made to a
calculation to be made in accordance with United States generally accepted
accounting principles, such reference shall be deemed to be to the generally
accepted accounting principles from time to time approved by the American
Institute of Certified Public Accountants, or any successor institute,
applicable as at the date on which such calculation is made or is required to be
made.
1.05 CURRENCY
--------
All references to currency herein are to lawful money of Canada. Any
conversion of funds required to enable payments to be made or calculated in
Canadian dollars shall be converted at the spot buying rate for such funds
quoted by the Canadian Imperial
<PAGE>
-7-
Bank of Commerce at its office in Toronto at approximately noon on the
business day immediately preceding the due date of the payment or calculation,
as the case may be.
1.06 SCHEDULES
---------
The Schedules To This Agreement Are As Follows;
Schedule A - CitySearch Technology Systems
Schedule B - CitySearch Business Systems
Schedule C - Designated Locations
Schedule D - Licensed Trade-Marks
Schedule E - Cost Plus Fee Schedule
Schedule F - Assignment Agreement
ARTICLE TWO - LICENSE TO CITYSEARCH SYSTEMS
--------------------------------------------
2.01 LICENSE TO CITYSEARCH SYSTEMS
-----------------------------
(a) Subject to the provisions of this Agreement including the
provisions of Article 10, Licensor hereby grants to Licensee and Licensee hereby
accepts from Licensor a [*] license to use the CitySearch Systems in the
Exclusive Territory solely for the purpose of establishing and operating the
Toronto Star CitySearch Information Service. Notwithstanding the foregoing, the
Licensor reserves the right to, and to authorize other persons to, use the
CitySearch Systems at a site or sites in the Exclusive Territory for the purpose
of operating or establishing CitySearch Information Services for a territory
outside the Exclusive Territory.
(b) The Licensed Programs may be reproduced solely to (i) install
same on computers located at the Designated Location, (ii) for processing of
the machine instructions, statements or data therein, and (iii) as may be
necessary for archival and backup purposes in accordance with Licensee's Written
archival and backup policies.
(c) The CitySearch Systems may be used only as set out in this
Agreement and Licensee agrees not to make any copies or use thereof other than
as expressly permitted herein. Without limiting the generality of the
foregoing, Licensee agrees to use the CitySearch Systems only in the Exclusive
Territory, at the Designated Location, and for the purpose of providing a
CitySearch Information Service with Content related solely to the Exclusive
Territory. The parties agree that particular Content that relates primarily to
the Exclusive Territory but which also refers to a place or places outside of
the Exclusive Territory will be considered to be Content related solely to the
Exclusive Territory. Licensee agrees not to use the CitySearch Systems for the
purpose of providing any service other than the Toronto Star City Search
Information Service.
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-8-
2.02 LICENSE TO CITYSEARCH DOCUMENTATION
-----------------------------------
CitySearch Documentation provided in machine readable form may be
printed and used solely for the purpose of establishing and operating the
Toronto Star CitySearch Information Service. No other reproduction or use of
the CitySearch Documentation is permitted.
ARTICLE THREE - SERVICES
------------------------
3.01 DELIVERY OF MATERIALS
---------------------
Licensor agrees to deliver to Licensee by no later than 120 days
following the Effective Date, a technology information package containing a
copy of the materials described in Schedules A and B made generally available by
Licensor to its Affliliates and other persons to, whom it has granted licenses
to use the CitySearch Systems to assist them in establishing and operating a
CitySearch Information Service. Except as agreed to pursuant to this Article 3,
Licensor shall not be required to create any computer programs, documentation or
other Intellectual Property for delivery to or use by Licensee.
3.02 TRAINING SERVICE
----------------
Upon the request of Licensee, Licensor agrees to permit employees of
Licensee to attend and participate in management workshops and planning
sessions, sales training sessions and other training sessions provided by
Licensor to its own staff in the course of carrying on its CitySearch
Information Service business (the "Training Services").
3.03 CONSULTING SERVICE
------------------
Licensor agrees to provide consulting assistance to Licensee to update
the financial model for the Toronto Star CitySearch Information Service.
Licensor also agrees to provide Licensee with other consulting services as
reasonably requested by Licensee (subject to availability of staff of Licensor)
related to the CitySearch Systems and the Toronto Star CitySearch Information
Service (all consulting assistance and service provided by CitySearch pursuant
to this Section 3.03 is referred to here as the "Consulting Service").
3.04 CUSTOMIZATION SERVICE
---------------------
(a) The parties acknowledge that there may be a need to customize
the CitySearch Technology Systems to adapt same for use in the Toronto Star
CitySearch Information Service such as, for example, customization of
interfaces, design tools, mapping of geographic data and of spellings, phrases
and colloquialisms to conform to norms in the Exclusive Territory. (Any such
customization service provided by Licensor is referred to here
<PAGE>
-9-
as the "Customization Service"). Licensee shall initiate a request for
Customization Service by submitting a request for Customization Service to
Licensor (the "Request"). Each Request shall contain a description of the
specific Customization Service and the CitySearch System Technology which is the
subject of the Request (the "Project").
(b) Licensor shall submit within a reasonable period of time a reply
to Licensee's Request (the "Work Plan"). Where applicable the Work Plan will
include the following: (i) a description of the Customization Service to be
performed and the CitySearch Technology Systems to be customized; (ii)
acceptance tests or means proposed for testing the Systems delivered at the
completion of the Project; (iii) an implementation schedule which shows the time
frames for all stages of the Project's development and completion; and where the
costs of the Project will not be paid for in accordance with the fees schedule
set out in Schedule E, the costs of the Project and a schedule of payments to be
made during or at the completion of the Project. For larger Projects, the Work
Plan may provide for a development program of several stages, such stages, for
example, being the production of specifications and completions of the
development of custom changes. If the Customization Service to be provided will
be paid for on a cost plus basis the Work Plan shall, unless otherwise agreed to
by the parties, contain an estimate of the time and cost for all phases as well
as an estimate of the time and cost for the first phase of the Project.
(c) Neither party shall be bound to proceed with any Project until
the parties have agreed in writing to the terms of the applicable Work Plan:
Licensor and Licensee shall negotiate in good faith the terms of each Work Plan.
At Licensor's discretion, Licensor may notify Licensee that it does not desire
to perform Customization Service requested by Licensee pursuant to Section
3.04(b). Upon receipt of such notice, or in the event the parties are unable to
agree on the terms of a Work Plan after negotiating same in good faith. Licensee
shall he entitled to obtain access to the Source Materials necessary to perform
the work which is the subject of the Request, subject to the provisions of
Section 5.06 and the Escrow Agreement.
(d) Licensee shall assist Licensor in the performance of the
Customization Service by making available all equipment, software, documentation
and data, information and personnel described in a Work Plan on a timely basis.
Licensee shall also ensure that those of its personnel who are assigned to
assist Licensor are familiar with Licensee's requirements and have the expertise
and capabilities necessary to permit Licensor to undertake and complete the
Services.
3.05 RESPONSIBILITIES OF LICENSEE
----------------------------
Licensee acknowledges that Licensor shall not be required to:
(i) use its site production management staff and resources to develop
or operate the Toronto Star CitySearch Information Service;
<PAGE>
-10-
(ii) provide any Training Service, Consulting Service or
Customization Service for any CitySearch Information Service
other than the Toronto Star CitySearch Information Service;
(iii) deploy any of its personnel or resources to provide any
services that could substantially change Licensor's own
priorities such as writing additional manuals or scheduling
additional training that ordinarily would not have been
provided by Licensor in the course of conducting its business
in the United States;
(iv) developing or providing any Content;
(v) providing any of Licensor's back office support systems such as
sales tracking, site creation tracking, billing and customer
services;
(vi) providing access to or use of any of Licensor's databases,
servers or other computer or communications hardware or
software, except as provided in Schedule A;
(vii) purchase, lease, license or otherwise provide any hardware or
software, other than as set forth in Schedule A; or
(viii) furnish or license to Licensee any third party software such as
Informix/Illustra, Etak, Perly, Photoshop, Microsoft Word, SQL
Server, Windows 95 and Windows NT, or networking software such
TCP/IP.
ARTICLE FOUR - FEES AND EXPENSES
--------------------------------
4.01 LICENSE
-------
The parties acknowledge that the License has a value of [*] and that
Licensee has issued to Licensor [*] of Licensee in consideration for the grant
of the License.
4.02 INITIAL SERVICE FEE
-------------------
Licensee shall pay to Licensor a [*] service fee (the "Initial Service
Fee") of [*] with respect to Services to be provided by Licensor under this
Agreement. The Initial Service Fee shall be paid on the Effective Date.
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-11-
4.03 ADDITIONAL SERVICE FEES
-----------------------
Licensee shall pay to Licensor service fees with respect to
Customization Services, Training Services and Consulting Services. Except as
provided to the contrary in any Work Plan, the said services shall be paid for
on a cost plus basis in accordance with the cost plus schedule of Licensor set
out in Schedule E (the "Additional Service Fees"). In consideration of the
payment by Licensee to Licensor of the Initial Service Fee, Licensor hereby
waives its right to be paid [*] of Additional Service Fees.
4.04 INVOICING
---------
Except as otherwise set forth in a Work Plan, any Additional Service
Fees billed to Licensee will be invoiced regularly once a month in arrears and
will be due and payable within forty-five (45) days of receipt by Licensee. Any
sum due to Licensor that is not paid when due shall bear interest from the due
date thereof to the date of payment at the prime rate plus tWo percent (2%) per
annum, calculated and payable monthly. For the purpose of this section, the
term "prime rate means at any time the rate per annum, commonly known as the
prime rate, announced by the Canadian Imperial Bank of Commerce from time to
time, being its reference rate in effect for determining interest rates on
Canadian dollar commercial loans made at Toronto.
4.05 EXPENSES
--------
Licensee agrees to reimburse Licensor for all expenses incurred by it
in connection with travel (including airfare and hotel accommodation)
pertaining to providing Services to Licensee hereunder. The amount to which
Licensor shall be entitled to be reimbursed for travel shall not exceed amounts
which have been approved in advance by Licensee, or amounts generally approved
by Metroland for travel, from time to time, whichever is the greater. Licensee
also agrees to reimburse Licensor for any costs or expenses incurred by it in
connection to rent or lease dedicated communication lines between Licensor and
Licensee, and other out-of-pocket expenses such as expenses for discs, tapes,
and other magnetic media provided by Licensor to Licensee.
4.06 TAXES
-----
All payments to be made to Licensor under this Agreement are exclusive
of all taxes and Licensee shall pay any sales, use, goods and services, personal
property, consumption, value added, or other tax and any duties or tariffs that
now exist or which may arise in the future related to this Agreement or the
performance of the Services or otherwise, except for tax based on the income of
Licensor. Licensee shall be entitled to deduct withholding taxes which may be
imposed by any governmental authority in Canada with
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-12-
respect to Services performed in Canada otherwise due to Licensor; provided,
however, that no such deduction shall be taken unless Licensee makes payment to
the government authority responsible for the collection of such taxes within 30
days of the month following the month in which the payments are made to Licensor
hereunder. Not less frequently than once each year during the term of this
Agreement and during the year immediately following the termination of this
Agreement, Licensee shall forward to Licensor a copy of any and all
correspondence filed with governmental authorities directly relating to the
reporting and/or payment of withholding taxes clue on account of payments made
to Licensor hereunder Licensee shall provide to Licensor such reasonable
assistance as Licensor may request in connection with any claim by Licensor for
a credit or refund of such withholding taxes.
4.07 DISPUTED PAYMENTS
-----------------
[*]
ARTICLE FIVE - INTELLECTUAL PROPERTY RIGHTS
-------------------------------------------
5.01 OWNERSHIP OF CITYSEARCH SYSTEMS
-------------------------------
Nothing herein shall transfer or convey or operate so as to grant to
Licensee any right, title or interest to all or any part of the CitySearch
Systems or any of the Licensed Trade-Marks.
5.02 OWNERSHIP OF CONTENT
--------------------
Nothing herein shall transfer or convey or operate so as to grant to
Licensor any right, title or interest to all or any part of the Content
developed by Licensee for use as part of the Toronto Star CitySearch Information
Service.
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-13-
5.03 OWNERSHIP OF WORK PRODUCTS
--------------------------
Except as otherwise specifically provided in a Work Plan, ownership
of Work Products and the Intellectual Property Rights therein shall be as
follows;
(a) With respect to Work Products developed and prepared solely by
Licensee during the term of this Agreement and which are not Improvements to the
CitySearch Systems (the "Licensee Owned Work Products"), the Intellectual
Property Rights therein shall be and remain the exclusive property of Licensee.
Licensee shall disclose to Licensor the Licensee Owned Work Products and shall,
if requested to do so by Licensor, negotiate in good faith with Licensor a
license to use and to enable Affiliates and other licensees of Licensor to use
the Licensee Owned Work Products in consideration of the payment to Licensee of
a reasonable license fee.
(b) With respect to Work Products which are: (i) developed and
prepared solely by Licensee during the term of this Agreement or during any
period in which the License in respect of the CitySearch Systems conferred by
Article 2 shall survive termination of the Agreement, and which are Improvements
to the CitySearch Systems, or (ii) developed and prepared jointly by Licensor
and Licensee during the term or following the termination of this Agreement
including Work Products developed and prepared by Licensor or jointly by
Licensor and Licensee in the course of performing Customization Service (the
"Jointly Owned Work Products"), the Intellectual Property Rights therein shall
be jointly owned by Licensor and Licensee as tenants-in-common.
(c) Licensee agrees that during the term of this Agreement and
thereafter for as long as any copyright or other Intellectual Property Right
subsists in Canada or the United States in the Jointly Owned Work Products that
it will not itself, and it will not authorize or permit any other person to, use
the Jointly Owned Work Products to provide, operate, manage or carry on a
Competing Business to the business of Licensor. Further, Licensee agrees that it
will not make any grant including any grant of any interest or license in the
Jointly Owned Work Products to any person without obtaining the agreement of
such person that it will not itself and that it will not authorize or permit any
other person to use the Jointly Owned Work Products to provide, operate, manage
or carry on a Competing Business to the business of Licensor. The aforesaid
restrictions shall not operate, however, following the termination of this
Agreement so as to prevent Licensee from using the Jointly Owned Work Products
to carry on a CitySearch Information Service pertaining to any geographic region
in the Province of Ontario other than the Ottawa-Carleton region. Subject to the
foregoing and to Licensee's obligations under the Non-Competition Agreement.
Licensee shall have the right to, and to authorize others to, make changes,
modifications and enhancements (but not other adaptations or derivative works
which Licensee agrees not to make) to the Jointly Owned Work Products and to
reproduce and commercially exploit same without any obligation to obtain the
consent of or to account to Licensor with respect to the
<PAGE>
-14-
said activities. The parties agree that any changes, modifications or
enhancements made to the Jointly Owned Work Products by Licensee during the term
of this Agreement or during any period in which the License in respect of the
CitySearch Systems conferred by Article 2 shall survive a termination of the
Agreement, shall be considered to be Jointly Owned Work Products. Provided,
however, nothing in this Section 5.03 authorizes Licensee to use or reproduce
any CitySearch Systems or to commercially exploit or embed same in connection
with the commercial exploitation of the Jointly Owned Work Products. The parties
agree that Improvements made to the Jointly Owned Work Products by Licensor
shall be considered to be Licensor Owned Work Products.
(d) Subject to Licensor's obligations under the Non-Competition
Agreement, Licensor shall have the right to, and to authorize others to, make
Improvements to the Jointly Owned Work Products and to reproduce and
commercially exploit same without any obligation to obtain the consent of or to
account to Licensee with respect to the said activities.
(e) With respect to all Work Products developed and prepared solely
by Licensor during the term of this Agreement (the "Licensor Owned Work
Products"), the Intellectual Property Rights therein shall be and remain the
exclusive property of Licensor. Such Work Products shall be considered to be
CitySearch Systems for all purposes herein which Licensee shall have the right
to use pursuant to Article 2 during the term of this Agreement.
5.04 DISCLOSURE OF LICENSEE IMPROVEMENTS
-----------------------------------
Licensee will promptly inform Licensor of any and all Licensee
Improvements. Upon request, Licensee agrees to furnish Licensor with copies of
all Intellectual Property including source codes and technical documentation
related thereto, provided, however, that Licensee shall not be required to
deliver to Licensor the source codes to Licensee Owned Work Products unless
Licensee agrees to do so pursuant to an agreement reached by the parties
pursuant to Section 5.03(a).
5.05 DISCLOSURE OF LICENSOR IMPROVEMENTS
-----------------------------------
Licensor will promptly inform Licensee of Licensor Improvements. Upon
request, Licensor will furnish Licensee with copies of the Intellectual Property
related thereto.
5.06 SOURCE CODES
------------
(a) Except as may be otherwise provided in a Work Plan, Licensor
shall not be required to disclose to Licensee the source codes, models, or other
high level language versions of any computer programs forming part of the
CitySearch Systems. [*]
- -------------
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-15-
[*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-16-
[*]
(e) Licensee acknowledges and agrees that Licensor will suffer
irreparable injury if Licensee breaches any of the provisions of this Section
5.06 and that the damages suffered by Licensor would be an inadequate remedy in
respect of such breach. Licensee hereby agrees in advance, that in the event of
such breach, that Licensor shall be entitled in addition to such other
remedies, damages and relief as may be available under applicable law.
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-17-
[*]
ARTICLE SIX - TRADE-MARKS AND QUALITY STANDARDS
-----------------------------------------------
6.01 GRANT OF lICENSE TO TRADE-MARKS
-------------------------------
(a) Licensor hereby grants to Licensee, and Licensee hereby accepts
from Licensor, a personal, non-exclusive, non-transferable license during the
term of this Agreement to use the Licensed Trade-Marks solely in conjunction
with the Toronto Star CitySearch Information Service.
(b) During the term of this Agreement, Licensor agrees not to use
the Licensed Trade-Marks in conjunction with a CitySearch Information Service
pertaining to the Exclusive Territory or to license any other person to do so,
without Licensee's prior written consent. However, nothing herein shall prevent
Licensor or persons authorized by Licensor from using the Licensed Trade-Marks
to market, advertise or promote the Toronto Star CitySearch Information Service
or to operate other CitySearch Information Services.
6.02 OWNERSHIP OF TRADE-MARKS
------------------------
Licensee acknowledges that all goodwill associated with Licensee's use
of the Licensed Trade-Marks will enure to the exclusive benefit of Licensor
Licensee agrees that it will not challenge the validity or ownership or
Licensor's right to use the Licensed Trade-Marks. Licensee also agrees that it
will not apply for registration of any of the Licensed Trade-Marks, or any
substantially similar mark, in the Exclusive Territory or outside the Exclusive
Territory, either during or after the term of this Agreement.
6.03 RESTRICTIONS ON USE OF THE TRADE-MARKS
--------------------------------------
Licensee agrees to comply with all instructions and requirements
provided by Licensor in writing to Licensee with respect to the use of the
Licensed Trade-Marks from time to time. Licensee will not make any use of the
Licensed Trade-Marks including any use over any network until Licensor has
approved such use in writing. Licensee agrees not to use the Licensed Trade-
Marks, or any variation thereof, as a corporate name or trade name of Licensee
or any affiliate of Licensee, without Licensor's prior written consent.
6.04 QUALITY STANDARDS
-----------------
(a) Licensee acknowledges that high standards of quality are required
for the operation of the Toronto Star CitySearch Information Service to
maintain the good public image and reputation of the Licensed Trade-Marks and
the business of Licensor and Licensee
- -------------
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-18-
agrees to maintain such standards. Without limiting the generality of the
foregoing, Licensee agrees:
(i) to comply with all policies, standards and specifications
established from time to time by Licensor and notified to
Licensee in writing for the establishment and operation of
a CitySearch Information Service including those related
to navigational layouts, hierarchical maps and the use of
trade-marks and logos;
(ii) to implement and enforce the policies and procedures
adopted by Torstar Corporation for the operation of its
electronic publishing business and those of its Affiliates
(or replacement policies and procedures agreed to in
writing by the parties) (the "Offensive Content
Standards"); to ensure that the Content which is displayed
or accessible to consumer(s) using the Toronto CitySearch
Information Service will not be obscene, indecent,
pornographic or offensive or be defamatory of any person,
or infringe upon or violate any Intellectual Property
Right of any person; and, to promptly delete from the
service any such Content or Content which contravenes the
Offensive Content Standards;
(iii) that the Toronto Star CitySearch Information Service will
be available to consumers 7 days a week, 24 hours a day,
subject only to scheduled maintenance and system failures
which could not have been reasonably avoided by Licensee;
(iv) to conduct the Toronto Star CitySearch Information Service
in a manner that will reflect favourably on the good name
and reputation of Licensor and its business of providing
CitySearch Information Services, and refrain from engaging
in any unfair, or deceptive trade practice, or unethical
business practice whatever, or practice that could
unfavourably reflect upon Licensor or the CitySearch
Information Services provided by Licensor; and
(v) to comply with all applicable laws, regulations, and
ordinances and obtain all necessary licenses, permits and
consents pertaining to or required for the establishment
and operation of the Toronto Star CitySearch Information
Service including consents from persons with any
Intellectual Property Right in any Content used or
displayed in the provision of the Toronto
<PAGE>
-19-
Star Information Service (the requirements set out in this
Section 6.04(a) are referred to here as the "Quality
Standards").
(b) Prior to Launching the Toronto Star CitySearch Inforrmation
Service. Licensee shall demonstrate to the reasonable satisfaction of Licensor
that the service meets all of the Quality Standards.
(c) Licensor, either by itself or through third parties, shall have
the right to test the Toronto Star CitySearch Information Service provided from
time to time by Licensee. In connection with the foregoing, Licensee agrees to
provide Licensor with access to the Designated Locations from which the service
is provided, subject to the reasonable security and confidentiality requirements
of Licensee. In the event the Quality Standards are not complied with, Licensee,
if requested to do so in writing by Licensor, shall cease to use the Licensed
Trade-Marks until such time as Licensee can demonstrate to the reasonable
satisfaction of Licensor that the service meets or exceeds the Quality
Standards, if Licensor shall have given written notice to Licensee describing in
reasonable detail the failures of the Toronto Star CitySearch Service to meet
the Quality Standards and such breach shall not have been remedied by Licensee
within thirty (30) days after receipt of such written notice.
(d) Licensee assumes all responsibility and liability for loss or
damage caused by or attributable to the Toronto Star CitySearch Information
Service, however caused, Licensee agrees to indemnify and hold harmless
Licensor and its Affiliates and their officers, directors, employees and agents
from any and all claims, damages, liabilities and costs. including reasonable
legal fees and disbursements, which Licensor or any of the said persons shall
suffer or incur as a result of the failure of Licensee to meet the Quality
Standards or the operation of the Toronto Star CitySearch Information Service.
Notwithstanding the foregoing. Licensee shall not be responsible for, and shall
have no liability to indemnify Licensor hereunder for, any claim, damage,
liability or cost to the extent that it is caused by Licensor or the failure of
the CitySearch Systems to operate as described in Section 9.01.
ARTICLE SEVEN - PROPRIETARY RIGHTS
AND CONFIDENTIAL INFORMATION
----------------------------
7.01 DUTY OF CONFIDENCE
------------------
(A) Each of Licensee and Licensor acknowledges that Confidential
Information will be exchanged between them pursuant to this Agreement. Each of
Licensee and Licensor shall use no less than the same means it uses to protect
its similar confidential and proprietary information, but in any event not less
than commercially reasonable means, to prevent the disclosure and to protect the
confidentiality of the Confidential Information of the other. Each of Licensee
and Licensor agrees that, except as provided herein, it will not
<PAGE>
-20-
use the Confidential Information of the other except for the purposes of this
Agreement and as authorized herein.
(b) Licensee shall not disclose, provide, or make the CitySearch
Systems or any part thereof available in any form or medium to any person except
to its employees, and to contractors and consultants of Licensee approved in
writing by Licensor with a need for access to enable Licensee to exercise its
license rights under this Agreement, All persons to whom access is given shall
execute a confidentiality agreement in a form to be approved by Licensor.
(c) Notwithstanding section 7.01(a), the Recipient of Confidential
Information may use or disclose the Confidential Information to the extent that
the Recipient can show that such Confidential Information is (i) already known
by the Recipient without an obligation of confidentiality (ii) publicly known
or becomes publicly known through no unauthorized act of the Recipient, (iii)
rightfully received from a third party, (iv) independently developed by the
Recipient without use of the information of the Disclosing Party (v) approved
by the Disclosing Party for disclosure, or (vi) required to be disclosed
pursuant to a requirement of a governmental agency or law so long as the
Recipient provides the other party with notice of such requirement prior to any
such disclosure and takes all reasonable steps available to maintain the
information in confidence.
7.02 PROTECTION OF PROPRIETARY RIGHTS
--------------------------------
(a) On all authorized copies of the CitySearch Systems and Source
Materials Licensee shall make and include all proprietary, copyright, patent,
trade-mark, design right and trade secret legends and alphanumeric codes, in the
same form and location as the legends appearing on the CitySearch Systems and
Source Materials. Further, Licensee shall not remove any proprietary, copyright,
patent, trade-mark, design right or trade secret legends from the CitySearch
Systems or Source Materials.
(b) Licensee agrees not to disassemble, decompile, translate or
convert into human readable form or into another computer language,
reconstruct or decrypt, or reverse engineer, all or any part of the CitySearch
Systems.
7.03 INSPECTION BY LICENSOR
----------------------
Licensee agrees to provide Licensor with reasonable access to the
Designated Locations where the CitySearch Systems and Source Materials are used
for the purpose of enabling Licensor to verify that the CitySearch Systems and
Source Materials are and have been Used in compliance with the provisions of
this Agreement. Licensor agrees to give Licensee reasonable notice of its
intention to make the aforesaid investigation.
<PAGE>
-21-
7.04 THIRD PARTY INFORMATION
-----------------------
Neither Licensee nor Licensor shall disclose to the other any
proprietary, confidential, secret, or private information of any third person
which It is under a duty not to disclose.
7.05 LOSS OF CONFIDENTIAL INFORMATION
--------------------------------
In the event of any unauthorized disc disclosure or loss of, or
inability to account for, Confidential Information of the Disclosing Party, the
Recipient will notify the Disclosing Party immediately.
7.06 ENFORCEMENT OF CONFIDENTIALITY OBLIGATION
---------------------------------------------
Each of Licensee and Licensor acknowledges and agrees that irreparable
injury may result to the other if it breaches the provisions of this Article and
that damages may be an inadequate remedy in respect of such breach. Each of
Licensee and Licensor hereby agree in advance that, in the event of such breach,
the other of them shall be entitled, in addition to such other remedies, damages
and relief as ANY be available under applicable law, to the granting of
injunctive relief in such party's favour.
ARTICLE EIGHT - INFRINGEMENT
----------------------------
8.01 PROSECUTION OF INFRINGEMENT CLAIMS
----------------------------------
(a) The parties shall as soon as possible notify each other in writing
of any actual, alleged, or threatened infringements or other unauthorized uses
of the CitySearch Systems or the Licensed Trade-Marks in conjunction with a
CitySearch Information Service pertaining to the Exclusive Territory (the
foregoing are referred to here as "Infringements") of which they become aware.
Licensor may, but is not required to, take any and all actions, legal or
otherwise, which are necessary to terminate or prevent Infringements. Licensee
shall have the right to be kept informed of the status and progress of all
actions instituted by Licensor pursuant to this section 8.01(a). Licensee agrees
to comply with all reasonable requests for assistance from Licensor in
connection with Infringements. Licensor agrees to reimburse Licensee for its
costs of providing such assistance, provided that Licensee gives Licensor a
written estimate of the costs to he incurred and provided further that the costs
for which reimbursement are sought do not exceed the estimate. Licensor shall
bear all expenses of all actions which it initiates pursuant to this section
8.01(a).
<PAGE>
-22-
(b) If Licensor does not institute an action within thirty (30) days
after receiving notice from Licensee of an Infringement and a request by
Licensee to commence an action to terminate the Infringement itself, then
Licensee may institute an action with respect thereto only upon receiving the
prior written consent of Licensor, which consent will not be unreasonably
refused. Licensee agrees that if any of the Licensed Trade-Marks are not owned
by Licensor that Licensor may not be able to consent to Licensee's instituting
any action with respect thereto. Licensee shall have no right hereunder to
commence any action with respect to any Infringements which do not pertain to
the use of the CitySearch Systems or the Licensed Trade-Marks, in connection
with a CitySearch Information System pertaining to the Exclusive Territory.
Licensor shall have the right to be kept informed of the status and progress of
all such actions instituted by Licensee pursuant to this section 8.01(b).
Licensee shall bear all the expenses of all actions which it initiates pursuant
to this Section 8.01(b) including without limitation all legal fees and
disbursements which Licensor may incur in connection with such actions
regardless of whether Licensor is a party to such action and Licensee shall
indemnify and hold Licensor harmless with respect to such costs. Licensor agrees
to comply with all reasonable requests for assistance from Licensee in
connection with actions instituted by Licensee under this Section. Licensee
agrees to reimburse Licensor for its costs of providing such assistance,
provided that Licensor gives Licensee a written estimate of the costs to be
incurred and provided further that the costs for which reimbursement are sought
do not exceed the estimate.
(c) In the event Licensee and Licensor jointly agree to institute an
action to terminate or prevent Infringements, Licensee and Licensor shall
jointly control any such proceedings and shall develop mutually satisfactory
procedures for prosecuting the said action.
(d) Unless otherwise provided for herein, any recoveries or settlement
fees received from suits or settlements involving an action initiated pursuant
to section 8.01(a) or (b) shall be paid to the party which initiated such suit
or action in accordance with Section 8.01(a) or (b), and shall be for such
party's own use and benefit. Any recoveries or settlement fees received from
suits or settlements involving an action initiated pursuant to section 8.01(c)
shall, unless otherwise agreed to by the parties in writing, be to the joint
benefit of Licensor and Licensee after payment of all expenses (including all
legal fees).
8.02 LICENSOR'S DEFENCE OF INFRINGEMENT CLAIMS
-----------------------------------------
(a) Licensor will defend or (at its option) settle, any claim or
action brought against Licensee to the extent that it is based on a claim that
the CitySearch Systems infringes any copyright, patent, trade secret, trademark
or contractual right enforceable in Canada or the United States of any third
person (a "Claim") and indemnify Licensee against damages and costs awarded
against Licensee by a court of competent jurisdiction by final order from which
the appeal is taken or the time for appealing has expired; provided that
Licensee notifies Licensor promptly in writing of same; and provided further
that Licensee permits Licensor thereof to defend, compromise or settle the
Claim, and at Licensor's expense provides all
<PAGE>
-23-
available information assistance and authority to enable Licensor to do so.
Licensor shall be responsible for paying for any compromises or settlements with
respect to Claims, provided that Licensor shall not be liable to reimburse
Licensee for any compromise or settlement made by Licensee without Licensor's
prior written consent. Licensor shall not be liable to reimnburse License for
any legal fees or expenses incurred by Licensee in connection with any Claim.
Licensee shall have no authority to settle any Claim on behalf of Licensor.
(b) Should the CitySearch Systems or any part thereof become, or in
Licensor's sole opinion be likely to become, the subject of a claim of
infringement, misappropriation, or violation of any Intellectual Property Right
(an "Infringement Claim") Licensor shall (i) procure for Licensee, at no cost to
Licensee the right to continue to use the CitySearch System or component which
is the subject of the Infringement Claim, (ii) replace or modify the CitySearch
System (or the component thereof which is the subject of the Infringement Claim)
at no cost to Licensee with a functionally equivalent system or component, or
(iii) if none of the forgoing alternatives are reasonably practical in
Licensor's sole judgement, if requested to do so by Licensee remove the
component that is the subject of the Infringement Claim and refund all license
fees paid by Licensee related to such component.
(c) Licensor shall have no liability for any Claim to the extent that
it is based on (i) the use of other than the latest release and version of any
Intellectual Property provided to Licensee, (ii) the use or combination of the
CitySearch Systems with software, hardware or any other product not provided by
Licensor or recommended or approved in writing by Licensor, or (iii) any
Licensee Improvement to the CitySearch Systems or use of the CitySearch Systems
other than as authorized herein or as described or recommended by Licensor in
the CitySearch Documentation.
(d) Except as expressly provided herein, this Section 8.02 states the
entire liability of Licensor and Licensee's sole remedies with respect to any
Infringement Claim.
8.03 LICENSEE'S DEFENCE OF INFRINGEMENT CLAIMS
-----------------------------------------
(a) Licensee will defend or (at its option) settle, any claim or
action brought against Licensor to the extent that it is based upon a claim that
any Licensee Improvement or Content displayed or accessible to consumers using
the Toronto CitySearch Information Service infringes or violates an Intellectual
Property Right or contractual right enforceable in Canada or the United States
(a "Claim") of any third person and indemnifies Licensor against damages and
costs awarded against Licensor by a court of competent jurisdiction by final
order from which no appeal is taken or the time for appealing has expired,
provided that Licensor notifies Licensee promptly in writing of same; and
provided further that Licensor permits Licensee to defend, compromise or settle
the Claim and at Licensee's expense provides all available information,
assistance and authority to enable Licensee to do so. Licensee shall be
responsible for paying for any compromises or settlements with respect to
<PAGE>
-24-
Claims, provided that Licensee shall not be liable to reimburse Licensor for any
compromise or settlement made by Licensor without Licensee's prior written
consent. Licensee shall also not be liable to reimburse Licensor for any legal
fees or expenses incurred by Licensor in connection with any Claims. Licensor
shall have no authority to settle any Claim on behalf of Licensee.
(b) Licensee shall have no liability for any Claim to the extent that
it is based on any Improvement made by Licensor to the Licensee Improvement or
Content or for the use thereof other than related to a CitySearch Information
Service.
(c) Except as otherwise provided herein, this Section 8.03 states the
entire liability of Licensee and Licensor's sole remedies with respect to any
Claim.
ARTICLE NINE - WARRANTIES AND DISCLAIMERS
-----------------------------------------
9.01 WARRANTY
--------
(a) During the term of this Agreement, Licensor will make commercially
reasonable efforts to correct or provide Licensee with a workaround for the
failure of the CitySearch Systems to conform in all material respects to the
description thereof in the CitySearch Documentation and provide Licensee with
replacement media in the event there are defects in materials or workmanship in
the media upon which the CitySearch Systems are provided. Licensor shall have no
obligations under this Section 9.01 with respect to any changes, modifications
or enhancements made by Licensee to the CitySearch Systems or to any part of the
CitySearch Systems affected by any such changes, modifications or enhancements,
except as may be specifically agreed to by Licensor and Licensee in a Work Plan
or other agreement of the parties in writing.
(b) Licensor Warrants to Licensee that all Services will be performed
with reasonable skill and care and by persons qualified to provide the Services.
Licensor also warrants that to its knowledge, the Licensed Programs do not
contain any viruses, locks or codes which are intended to interfere with their
use.
(c) In the event of Licensor's material failure to comply with its
obligations under Section 9.01(a) that results in the Toronto Star CitySearch
System being unavailable to the public after the Launch and Licensee having
given written notice of same to Licensor in sufficient detail to enable
Licensor to reproduce the problems experienced by Licensee. Licensor agrees that
if such problems are not substantially remedied (or a work-around provided to
Licensee therefor) within two (2) days following receipt of the notice, that
Licensor will, if requested to do so by Licensee and subject to Licensor's
security and confidentiality requirements, permit up to two (2) members of
Licensee's technical staff to
<PAGE>
-25-
access the Source Materials pertaining to the problem at the business premises
of Licensor to assist Licensor in resolving the problem.
9.02 ELECTRONIC ACCESS
-----------------
Licensee agrees to provide Licensor with access to the computer upon which
the CitySearch Systems are installed, used, or accessed, to perform its
obligations hereunder, subject to compliance with Licensee's security and
confidentiality policies. Access to the said systems shall include access by
physical and direct remote electronic access means. To facilitate such access,
Licensee agrees to establish and maintain, at its own expense, during the term
of this Agreement all reasonable communication equipment and related software
and other items reasonably requested by Licensor to enable Licensor to access
and use the said systems. The remote electronic access shall be available at all
times (twenty-four (24) hours seven (7) days a week), except for scheduled
maintenance and downtimes due to failures of the systems. Licensee shall also
reimburse Licensor for its costs of establishing and maintaining electronic
links with Licensee including without limitation any equipment purchased by
Licensor specifically to provide Services to Licensee hereunder and, monthly
line charges.
9.03 DISCLAIMER OF WARRANTY
----------------------
(A) LICENSOR EXPRESSLY DISCLAIMS ALL REPRESENTATIONS, WARRANTIES AND
CONDITIONS EXPRESS OR IMPLIED NOT CONTAINED HEREIN, INCLUDING REPRESENTATIONS,
WARRANTIES AND CONDITIONS OF QUALITY, PERFORMANCE, MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE, TITLE AND THOSE ARISING BY STATUTE OR OTHERWISE IN LAW OR
FROM A COURSE OF DEALING OR USE OF TRADE. LICENSOR DOES NOT REPRESENT OR WARRANT
THAT (I) THE OPERATION OF THE CITYSEARCH SYSTEMS WILL BE ERROR FREE OR
UNINTERRUPTED OR (II) ALL PROGRAMMING ERRORS CAN BE CORRECTED OR FOUND IN ORDER
TO BE CORRECTED.
(b) Licensee is responsible for taking precautionary measures to
prevent the loss or destruction of Content such as, for example, making regular
backups and verifying the results obtained from using the CitySearch Systems.
9.04 LIMIT OF LIABILITY
------------------
(a) For breach or default by Licensor of any of the provisions of this
Agreement, or in respect of any claim arising herefrom or related hereto,
Licensor's entire liability, regardless of the form of action, whether based on
contract or tort, including negligence, shall be [*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-26-
[*]
(B) IN NO EVENT WILL EITHER PARTY BE LIABLE FOR SPECIAL, INCIDENTAL,
INDIRECT, OR CONSEQUENTIAL LOSS OR DAMAGE, LOST BUSINESS REVENUE, LOSS OF
PROFITS, LOSS OF DATA, FAILURE TO REALIZE EXPECTED PROFITS OR SAVINGS OR ANY
CLAIM AGAINST THE OTHER PARTY BY ANY OTHER PERSON (EVEN IF THE PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE). THE LIMITATION OF
LIABILITY IN THIS SECTION 9.04(B) SHALL NOT APPLY TO ANY CLAIM TO THE EXTENT
THAT THE CLAIM IS BASED UPON A BREACH OR DEFAULT BY LICENSEE OF ARTICLES 2, 5,
OR 6, OR SECTIONS 7.01, 7.02, OR 8.03. THE LIMITATION OF LIABILITY IN THIS
SECTION 9.04(B) SHALL NOT APPLY TO ANY CLAIM TO THE EXTENT THAT THE CLAIM IS
BASED UPON A BREACH OR DEFAULT BY LICENSOR OF SECTIONS 5.06(A) (LICENSOR'S
REFUSAL TO ESTABLISH AN ESCROW AGREEMENT WITH AN INDEPENDENT SOURCE CODE AGENT
AS REQUIRED IN SECTION 5.06(A)) 7.01 OR 8.02.
(C) LICENSOR SHALL BE LIABLE TO LICENSEE AS EXPRESSLY PROVIDED IN THIS
AGREEMENT BUT SHALL HAVE NO OTHER OBLIGATION, DUTY, OR LIABILITY WHATSOEVER IN
CONTRACT, TORT OR OTHERWISE TO LICENSEE INCLUDING ANY LIABILITY FOR NEGLIGENCE,
THE LIMITATIONS, EXCLUSIONS AND DISCLAIMERS IN THIS AGREEMENT SHALL APPLY
IRRESPECTIVE OF THE NATURE OF THE CAUSE OF ACTION, DEMAND, OR ACTION BY
LICENSEE, INCLUDING BUT NOT LIMITED TO BREACH OF CONTRACT, NEGLIGENCE, TORT,
OR ANY OTHER LEGAL THEORY AND SHALL SURVIVE A FUNDAMENTAL BREACH OR BREACHES
OR THE FAILURE OF THE ESSENTIAL PURPOSE OF THIS AGREEMENT OR OF ANY REMEDY
CONTAINED HEREIN.
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-27-
9.05 LIMITATION PERIOD
-----------------
Neither party may bring an action, regardless of form, arising out of or
related to this Agreement more than [*] after the cause of action has arisen or
the date of discovery of such cause, whichever is later.
9.06 CALIFORNIA FRANCHISE DISCLAIMER
-------------------------------
The parties agree that neither this Agreement nor the business
relationship established hereunder will be construed as granting a franchise.
The parties warrant to one another that they have consulted counsel in reviewing
and negotiating this Agreement and have concluded that no business plan or
franchise fees are conveyed or provided for in this Agreement or otherwise by
the relationship established hereby or by the relationship between the parties.
ARTICLE TEN - TERM AND TERMINATION
----------------------------------
10.01 TERM
----
The term of this Agreement shall commence on the Effective Date and
shall continue until [*]
10.02 TERMINATION
-----------
(a) This Agreement may be terminated (each ground for termination below
is referred to here as an "Event of Default"):
(i) at any time by mutual written consent of Licensee and
Licensor;
(ii) by notice from one party to the other in the event the other
party becomes insolvent, makes an assignment for the benefit
of its creditors, ceases operation, a receiver is appointed
for the other party or its property, or the other party
becomes subject to bankruptcy or receivership proceedings;
(iii) by a party immediately upon notice to the other party in the
event of any material breach or default by the other party of
any provision in this Agreement, if the party shall have
given written notice to the other party of such breach or
default and such breach or default shall not have been
remedied within thirty (30) days after receipt of such
written notice;
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-28-
(iv) by a party effective immediately upon notice to the other
party in the event of a material breach of the provisions
of Article 7 by the other party, if the party shall have
given written notice to the other party of such material
breach and such material breach shall not have been remedied
within ten (10) days after receipt of such written notice:
(v) by Licensor in the event Licensee or Torstar Corporation is
in breach of the Non-Competition Agreement and such breach
has not been remedied within thirty (30) days after receipt
of such written notice or by Licensee in the event Licensor
or 1217554 Ontario Inc. is in breach of the Non-competition
Agreement and such breach has not been remedied within
thirty (30) days after receipt of such written notice; or
(vi) by Licensor upon written notice to Licensee in the event
Licensee's use of CitySearch Systems or Source Materials or
any part thereof exceeds the License granted to Licensee or
is in contravention of any of the provisions of Article 2 or
Article 6 or Section 5.06, if such use or contravention has
not been remedied with twenty (20) days after receipt of
such written notice.
(b) The failure of any party to terminate this Agreement for any of
the reasons specified in Section 10.02, or in this Agreement, shall not in any
way be deemed a waiver of such party's rights in respect thereof or otherwise
limit its rights to enforce the obligations of the other party hereunder.
10.03 EFFECT OF TERMINATION BY LICENSOR
---------------------------------
Upon the termination of this Agreement by Licensor pursuant to Section
10.02 or by the parties pursuant to Section 10.02(i), the rights, powers,
privileges, and licenses including the License granted to Licensee shall
immediately terminate. Without limiting the generality of the foregoing, upon
any such termination, Licensee shall have no right to continue to use the
CitySearch Systems, to receive or use any Licensor Improvements, or to use
the Licensed Trade-marks.
10.04 RETURN OF INTELLECTUAL PROPERTY
-------------------------------
Subject to the provisions of Section 10.05(b), upon the termination of
this Agreement, Licensee shall cease all use of the CitySearch Systems
(including the Source Materials) and Licensee shall return to Licensor all of
Licensor's Confidential Information (including Source Materials) and
CitySearch Systems in its possession, power or control.
<PAGE>
-29-
10.05 SURVIVAL
--------
(a) The termination of this Agreement by Licensor under Section 10.02
or by the parties pursuant to Section 10.02(i) shall not limit or otherwise
affect the respective rights and obligations of the parties under Articles 4, 7
and 9 and Sections 5.03, 6.02, 6.03, 6.04(d), 10.03, 10.04, 11.01, 11.03, 12.02,
or 12.03 or any other right or obligation of the parties hereunder accrued prior
to the date of the termination.
(b) The termination of this Agreement by Licensee under Section 10.02
shall not limit or otherwise affect the respective rights and obligations of the
parties under Articles 4, 7 and 9 and Sections 5.03, 5.04, 5.06, 6.02, 6.03,
6.04(d), 8.03, 11.01, 11.03, 12.02, or 12.03 or any other rights and obligations
of the parties hereunder accrued prior to the date of the termination. Further,
and notwithstanding any termination of this Agreement by Licensee pursuant
to Section 10.02 (the date of the occurrence of any such event is referred to
here as the "Licensee Termination Date"), the following shall occur:
(i) the License in respect of the CitySearch System conferred by
Article 2 shall continue with respect to the version and
release thereof delivered to Licensee as of the Licensee
Termination Date subject to the provisions and restrictions
set out in Article 2 related to the use of the CitySearch
Systems;
(ii) Licensee shall have no right to receive or use any Licensor
Improvements made after the Licensee Termination Date;
(iii) Licensee's License to use the Licensed Trade-Marks shall
terminate. Licensor's obligations under Section 6.01(b) shall
terminate, and Licensee shall make no further use of any of
the Licensed Trade-Marks other than for the minimum period,
not to exceed thirty (30) days, which is necessary for
Licensee to remove all reference to the Licensed Trade-Marks
from the Toronto Star CitySearch Information Service (provided
that the Quality Standards shall be met during this period);
(iv) Licensee's License to use the CitySearch Systems conferred by
Section 2.01 shall become non-exclusive and Licensor, subject
to the restrictions contained in the Non-Competition
Agreement, shall be entitled to, and may authorize third
persons to, use the CitySearch Systems in the Exclusive
Territory or outside thereof for the purpose of establishing
and operating a CitySearch Information Service;
<PAGE>
-30-
(v) Licensor shall have no further obligations to Licensee
hereunder to provide any Services, or to provide Licensee
with the warranty support described in Section 9.01;
(vi) Licensee shall not have any right to take or continue any
action against any person for the infringement of any
Intellectual Property Right in connection with the use of
the CitySearch Systems or the Licensed Trade-Marks; and
(vii) Licensor shall be entitled to terminate any of the rights of
Licensee which pursuant to this Section 10.05(b) shall have
expressly survived a termination of this Agreement by
Licensee pursuant to Section 10.02(a), upon the occurrence of
an Event of Default which would have entitled Licensor to
terminate this Agreement pursuant to Section 10.02(a) and the
provisions of Section 10.05(a) shall apply mutatis mutandis
upon the termination of the said rights.
10.06 SALE OF PARTNERSHIP INTEREST
----------------------------
Upon the sale by Licensor of its Partnership Interest pursuant to
Section 8.02 or Section 8.03 of the Partnership Agreement, or upon the
dissolution of the Partnership pursuant to Section 8.03(7) of the Partnership
Agreement by reason of an event of default by CitySearch U.S.A. as described in
Section 8.03(1) of the Partnership Agreement (the date of the occurrence of any
such event is referred to here as the "Sale Date"), the following shall occur:
(i) the License in respect of the CitySearch System conferred by
Article 2 shall continue with respect to the version and
release thereof delivered to Licensee as of the Sale Date,
subject to the provisions and restrictions set out in
Article 2 related to the use of the CitySearch Systems;
(ii) Subject to Sub-section (v) below, Licensee shall have no
right to receive or to use any Licensor Improvements made
after the Sale Date;
(iii) Licensee's License to use the Licensed Trade-Marks shall
terminate. Licensor's obligations under Section 6.01(b) shall
terminate, and Licensee shall make no further use of any of
the Licensed Trade-Marks, other than for the minimum
period, not to exceed thirty (30) days, which is necessary
for Licensee to remove all reference to the Licensed
Trade-Marks from the
<PAGE>
-31-
Toronto Star CitySearch Information Service (provided that
the Quality Standards shall be met during this period);
(iv) Licensee's License to use the CitySearch Systems conferred by
Article 2 shall become non-exclusive and Licensor, subject to
the restrictions contained in the Non-Competition Agreement,
shall be entitled to, and may authorize third persons to, use
the CitySearch Systems in the Exclusive Territory or outside
thereof for the purpose of establishing and operating a
CitySearch Information Service;
(v) Licensor shall have no further obligations to Licensee
hereunder to provide any Services, or to provide Licensee with
the warranty support described in Section 9.01; however, upon
being requested to do so by Licensee, Licensor agrees to
negotiate with Licensee in good faith a renewal of the said
obligations and a license to use Licensor Improvements
developed after the Sale Date upon terms to be mutually agreed
upon by the parties including terms pertaining to the payment
of reasonable license fees for the use of Licensor Improvements
and for the provision of Services, provided that Licensor shall
have no obligation to enter into any such agreement in the
event Licensor has ceased to or has plans to cease to operate
CitySearch Information Services; and
(vi) the provisions of Sections 3.01-3.04, 6.01, 6.04(a), 8.01
(other than Licensee's obligations to assist Licensor), 9.01
and 9.02 shall cease to apply.
ARTICLE ELEVEN - GENERAL
------------------------
11.01 FURTHER ASSURANCES
------------------
Each party shall from time to time execute and deliver all such
further documents and instruments and do all acts and things as the other party
may reasonably require (at the requesting party's expense) to effectively carry
out or better evidence or perfect the full intent and meaning of this Agreement.
11.02 PUBLIC ANNOUNCEMENTS
--------------------
Subject to applicable law or stock exchange regulation, no public
announcement or press release concerning this Agreement shall be made by any
party without the prior
<PAGE>
-32-
consent and joint approval of the other party. If a party wishes to issue a
press release it shall provide a draft thereof to the other party at least
three days prior to its intended release and shall consider the reasonable
comments of the other party with respect to the press release. Any failure to
provide comment within a period of thirty (30) days with respect to a draft
press release shall be deemed to constitute consent to the release thereof.
11.03 DISPUTE RESOLUTION
------------------
Any dispute, disagreement, controversy, question or claim arising out
of or relating to this Agreement shall be settled in accordance with the
provisions of Section 11.03 (Dispute Resolution) of the Partnership Agreement.
11.04 ENTIRE AGREEMENT
----------------
This Agreement together with the Partnership Agreement, the Non-
Competition Agreement and the Assignment Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and cancels and supersedes any prior understandings and agreements between the
parties hereto with respect thereto. There are no representations, warranties,
terms, conditions, undertakings or collateral agreements, express, implied or
statutory, between the parties other than as expressly set forth in this
Agreement.
11.05 FORCE MAJEURE
-------------
If the performance of this Agreement, or any obligation thereunder
except the making of payments hereunder is prevented, restricted, or interfered
with by reason of; fire, flood, earthquake, explosion or other casualty or
accident or act of God; strikes or labour disputes; inability to procure or
obtain delivery of parts, supplies, power, equipment or software from suppliers,
war or other violence; any law, order, regulation, ordinance, demand or
requirement of any governmental authority; or any other act or condition
whatsoever beyond the reasonable control of the affected party, the party so
affected, upon giving prompt notice to the other party, shall be excused from
such performance to the extent of such prevention, restriction or interference;
provided, however, that the party so affected shall take all commercially
reasonable steps to avoid or remove such cause of non-performance and shall
resume performance hereunder with dispatch whenever such causes are removed.
11.06 AMENDMENT AND WAIVER
--------------------
No modification of or amendment to this Agreement shall be valid or
binding unless set forth in writing and duly executed by the parties hereto and
no waiver of any breach of any term or provision of this Agreement shall be
effective or binding unless made in writing and signed by the party purporting
to give the same and, unless otherwise provided, shall be limited to the
specific breach waived.
<PAGE>
-33-
11.O7 ASSIGNMENT
----------
[*] This Agreement shall enure to the benefit of and be binding upon the
successors and permitted assigns of the parties. Either party may also assign
this Agreement with the prior written consent of the other party.
11.08 NOTICES
-------
Any demand, notice or other communication to be given in connection
with this Agreement shall be given in writing and shall be given by personal
delivery or by transmittal by electronic means of communication addressed to
the recipient as follows:
To Licensee:
c/o Torstar Corporation
1 Yonge Street
Toronto, Ontario
M5E 1P9
Fax No.: (416) 869-4183
Attention: General Counsel
----------
with a copy to:
Toronto Star Newspapers Limited
1 Yonge Street
Toronto, Ontario
M5E 1E6
Fax No.: (416) 869-4762
Attention: Vice-President, Strategic Planning
----------
To Licensor:
790 East Colorado Boulevard
Suite 200
Pasadena, California 91101
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-34-
U.S.A.
Fax No.: (818) 405-9929
Attention: Bradley Ramberg, Chief Financial Officer
---------
or to such other address, electronic communication number or individual as may
be designated by notice given by any party to the other. Any communication
shall be conclusively deemed to have been given on the day or actual delivery
thereof if such day is a Business Day and the communication is delivered or
transmitted during the normal business hours of the recipient and on the
Business Day during which normal business hours next occur if given after such
hours on any day.
11.09 GOVERNING LAW
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein.
IN WITNESS WHEREOF the parties have executed this Agreement.
CITYSEARCH INCORPORATED
Per: [SIGNATURE ILLEGIBLE]
-------------------------------
1217554 ONTARIO INC.
Per: [SIGNATURE ILLEGIBLE]
-------------------------------
<PAGE>
SCHEDULE A
CITYSEARCH TECHNOLOGY SYSTEMS
CITYSEARCH TECHNOLOGY SYSTEMS
- -----------------------------
The CitySearch Technology Systems are composed of four systems:
the CitySearch client
CityServer
the CitySearch Staging Server
CityWorks
These systems form a CitySearch technology infrastructure which supports
content management and on-line delivery mechanisms. Licensee will have access
to hardware configuration documentation and initial setup support for all
CitySearch Technology Systems. Licensee will be responsible for acquiring,
configuring all third party hardware and software components required by the
CitySearch Systems before the actual delivery and setup of the CitySearch
Systems begins.
Licensee understands that the CitySearch Systems are not "shrink wrapped" and
will require significant setup time and tailoring for Exclusive Territory.
Customization Service activities are likely to include but not be limited to:
. Canadian editorial content such as record categorization model and
associated keywords/synonyms.
. Canadian interface " look and feel".
. Acquisition and incorporation of telephone directory listings data for
the Exclusive Territory.
. Acquisition and incorporation of mapping data and associated rendering,
server and geocoding software related to the Exclusive Territory.
The actual components and configuration of the CitySearch Systems will change
over time in response to market conditions, externally available hardware and
software, and internally generated improvements. The CitySearch Systems
delivered to Licensee initially will be based upon those used in the San
Francisco deployment.
The following is a summary of the CitySearch Technology Systems components to be
delivered to Licensee:
CitySearch Client
- -----------------
<PAGE>
-2-
CitySearch Interface: This is the interface the user sees and includes icons,
- --------------------
buttons, the CitySearch map and other graphic design elements. This is the
interface through which the user initiates tasks to be performed by the
CityServer.
The CitySearch Client application is capable of initiating keyword, spatial and
temporal search on the CitySearch database resident on the CityServer. This
proprietary search interface is included as part of the CitySearch interface.
CityServer
- ----------
Proprietary Server Components: CityServer consists of a collection of custom
- -----------------------------
server software modules which provide the core functionality for the on-line
delivery of the CitySearch application. The proprietary components manage
communications between the CitySearch client application, the Informix/Illustra
database and the CitySearch Staging server.
Customized front end to the Informix/Illustra database: CitySearch has chosen
to use Informix/Illustra, an object relational database which provides features
including text, web, 2D and geo-spacial DataBlades (an Illustra technical term)
as well as proprietary temporal search components developed by CitySearch.
Subject to the provisions of Article 10, any Licensor Improvements to the
proprietary software developed by CitySearch designed to be used with
Informix/Illustra will be delivered to Licensee. The Informix/Illustra database
licenses must be sublicensed from Licensor in consideration of the payment by
Licensee to Licensor of the license fee payable to third parties plus expenses
of Licensor in entering into the sublicense agreement.
CitySearch Staging Server.
- -------------------------
Proprietary Server Software: The CitySearch Staging Server is a collection of
- ---------------------------
proprietary software modules which provide server support for the development
and maintenance of the CitySearch service for one or more markets. The
CitySearch Staging Server manages communications between the CityServer, the
Informix/Illustra database and components of the City works system.
Customization of the Informix/Illustra database: CitySearch has chosen to build
- -----------------------------------------------
the CitySearch Staging Server around Informix/Illustra, an object relational
database. The Informix/Illustra database licenses must he acquired pursuant to
a sublicense from Licensor in consideration of the payment by Licensee to
Licensor of the license fee payable to third parties plus expenses of Licensor
in entering into the sublicense agreement.
<PAGE>
-3-
Subject to the provisions of Article 12 of the Agreement, any Licensor's
Improvements to the proprietary software developed by CitySearch designed to be
used with Informix/Illustra will be delivered to Licensee.
City works:
- -----------
Content Creation and Maintenance: The City works system includes tools and
- --------------------------------
support software needed to create and maintain the content of the CitySearch
system. Most of the tools run under Windows 95 or Windows NT on PC platforms.
The proprietary tools InfoWorks and SiteWorks operate in conjunction with third
party software (Photoshop and Word, for example). The PC platforms, TCP/IP
networking components, operating systems, and required third party software need
to be obtained and configured by Licensee before City works can be put in place.
Other tools such as EditWorks are used in conjunction with a local database
in order to generate and maintain editorial content. The local database requires
the Windows NT Server operating system and SQL Server.
<PAGE>
SCHEDULE B
CITYSEARCH BUSINESS SYSTEMS
CITYSEARCH BUSINESS SYSTEMS
- ---------------------------
CitySearch has developed a scalable business model to enable rapid adoption of
the service. Licensee will have full access to the CitySearch consumer and
vendor roll-out plan aimed at building a durable franchise. Specifically, the
business systems made available to Licensee will include the following
components (much of which is embedded in staff member's experience base).
Community selection approach: CitySearch has developed a statistically weighted
- ----------------------------
model of the US which "weights" nearly one hundred cities (through CitySearch
developed value criterion) as to their potential for the CitySearch service The
methodology and weighting used in this model will, in most cases also apply in
the Exclusive Territory.
Market segmentation/prioritization approach: This approach helps determine which
- -------------------------------------------
suburbs and shopping areas to cover within a target market, and in what order.
Categorization of community information: This involves market prioritization for
- ---------------------------------------
certain high leverage categories such as entertainment, education, government,
health/human services, sports/recreation, arts and culture. The CitySearch
philosophy involves providing comprehensive coverage of both community and
business information in a dense local area, and attempts to insures that the
information is meaningful and easy to use for the end user.
City organization approach: CitySearch will provide its approach to how to work
- --------------------------
with various organizations within a community. CitySearch will advise as to how
Licensee first establishes sponsorships from the important merchant associations
and government groups.
Statistics/surveys and accompanying methodology: Statistical data has been
- -----------------------------------------------
accumulated and continues to be accumulated on existing CitySearch markets. In
addition, CitySearch has conducted numerous focus groups and consumer surveys
around information content, user interfaces, search functionality, and other
essential subjects. This documentation will be provided to Licensee.
Sales force training, techniques and approaches: CitySearch has organized a
- -----------------------------------------------
fluid sales team structure to maximize speed of entry and capture. This
commissioned, flexible sales force is supported by a custom designed training
program and a demo-assisted sales process. CitySearch will provide education as
to its methods of operating the sales force training through secondments of the
Exclusive Territory staff to the US, supplemented by appropriate telephone/e-
mail interaction.
<PAGE>
SCHEDULE C
DESIGNATED LOCATIONS
1 Yonge Street, Toronto, Ontario
<PAGE>
SCHEDULE D
LICENSED TRADE-MARKS
The Licensed Trade-Marks are as follows:
The following CitySearch Logo:
[LOGO APPEARS HERE]
In the event Licensor becomes the owner of or acquires license rights to use the
trade-marks "CitySearch" in Canada, the said trade-mark, upon notice from
Licensor to Licensee shall be deemed to be included in this Schedule D.
<PAGE>
SCHEDULE E
COST PLUS FEE SCHEDULE
Calculation Methodology:
- -----------------------
Source
------
Employee Salary actual, at time of billing
Overhead actual, at time of billing (based on generally
applied CitySearch formulae)
Benefits 30% of salary
Equipment Costs actual, at time of billing (based on generally
applied CitySearch formulae)
Total Costs sum of above
Administrative Fee 2.5% of Total Costs
-------------------
Total cost + fee Total Costs + Administrative fee
EXAMPLES OF CALCULATION AT 11/30/96, FOR ILLUSTRATIVE PURPOSES ONLY
<PAGE>
-2-
<TABLE>
<CAPTION>
===================================================================================================================================
EXAMPLE - FOR ILLUSTRATIVE PURPOSES ONLY FOR WORK PERFORMED IN THE USA *
- ----------------------------------------------------------------------------------------------------------------------------------
TECHNICAL RANGE PER YEAR RANGE PER hour ***
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ITEM LOW/BASE HIGH Low/Base High
- ----------------------------------------------------------------------------------------------------------------------------------
Employee Salary **
- ----------------------------------------------------------------------------------------------------------------------------------
Technical $ 96,000 $ 144,000 $ 46 $ 69
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Overhead 22266 22266 11 11
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Benefits 30% 28800 43200 14 21
- -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Equipment 25938 25938 12 12
- -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total Cost $173,004 $ 235,404 $ 83 $113
- -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Administrative Fee 30% 51901 70621 25 34
- -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total Cost + Fee $224,906 $ 306,026 $108 $147
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
===================================================================================================================================
EXAMPLE - FOR ILLUSTRATIVE PURPOSES ONLY
- -----------------------------------------------------------------------------------------------------------------------------------
Design Range per year Range per hour
- -----------------------------------------------------------------------------------------------------------------------------------
Item LOW/BASE HIGH LOW/BASE High
- -----------------------------------------------------------------------------------------------------------------------------------
Employee Salary * *
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Design $ 54,000 $ 90,000 $ 26 $ 43
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Overhead 22266 22266 11 11
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Benefits 30% 16200 21000 8 13
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Equipment 12872 12872 6 6
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total Cost $105,338 $152,138 $ 51 $ 73
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Fee 30% 31601 45641 14 22
- -----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total Cost + Fee $136,939 $197,779 $ 66 $ 95
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* All amounts in U S dollars.
** Salaries may vary from time to time.
*** The range/per hour may vary from time to time based upon changes in
salaries paid to employees.
<PAGE>
SCHEDULE F
ASSIGNMENT AGREEMENT
<PAGE>
LICENSE AND SERVICES AGREEMENT AMENDING AGREEMENT
-------------------------------------------------
THIS AGREEMENT made as of December 31, 1997;
BETWEEN :
CITYSEARCH, INC., a corporation incorporated under the laws of Delaware
(hereinafter referred to as the "Licensor")
OF THE FIRST PART,
-and-
CITYSEARCH CANADA INC., a corporation incorporated under the laws of
Ontario (hereinafter referred to as the "Licensee")
OF THE SECOND PART.
WHEREAS the Licensor and the Licensee entered into a license and services
agreement made as of February 17, 1997 (the "License Agreement ") with respect
to the use by Licensee of the CitySearch Systems in the Exclusive Territory for
the purpose of establishing and operating the Toronto Star CitySearch
Information Service;
AND WHEREAS the Licensor and Licensee desire to amend the terms of the
License Agreement;
NOW THEREFORE this agreement witnesses that, for good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
each of the parties), the parties covenant and agree as follows:
1. The License Agreement is amended by deleting in its entirety the fourth
recital on page 1.
2. The License Agreement is amended by deleting in its entirety Section 4.01,
3. The License Agreement is amended by adding the following as a new section
4.08;
"4.08 Annual Royalty Fee
------------------
Licensee shall pay to Licensor an annual royalty fee in an amount and on
terms to be agreed upon by Licensee and Licensor by January 31, 1998."
<PAGE>
-2-
4. The License Agreement is amended by deleting the second sentence of section
11.07 and substituting the following therefor:
"Licensee may grant a sublicense of its rights hereunder to the
Partnership, either with or without the royalty obligation provided for in
Section 4.08."
5. This agreement amends the License Agreement. This agreement and the License
Agreement shall be read, interpreted, construed and have effect as, and
shall constitute, one agreement with the same effect as if the amendments
made by this agreement had been contained in the License Agreement as of
the date of this agreement. All capitalized terms used herein and not
otherwise defined shall have the respective meanings ascribed thereto in
the License Agreement.
6. This agreement and the amendments to the License Agreement contained herein
shall be effective as of and from the date of this agreement. The License
Agreement, as amended by this agreement, is hereby confirmed by Licensor
and Licensee.
7. This agreement shall enure to the benefit of and be binding upon each of
the Licensor and Licensee and their respective successors and permitted
assigns.
8. This agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein.
9. This agreement may be executed in counterparts. Each executed counterpart
shall be deemed to be an original and all counterparts taken together shall
constitute one and the same agreement.
IN WITNESS WHEREOF the parties have executed this agreement as of the date
first referred to above.
CITYSEARCH, INC.
Per: [SIGNATURE ILLEGIBLE]
-----------------------------
CITYSEARCH CANADA INC.
Per: [SIGNATURE ILLEGIBLE]
-----------------------------
<PAGE>
EXHIBIT 10.10
NON-COMPETITION AGREEMENT
BETWEEN
CITYSEARCH, INC.
AND
1217554 ONTARIO INC.
AND
TORSTAR CORPORATION
AND
METROLAND PRINTING, PUBLISHING & DISTRIBUTING LTD.
MADE AS OF FEBRUARY 17,1997
- -------------
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
NON-COMPETITION AGREEMENT
THIS AGREEMENT made as of February 17, 1997;
BETWEEN:
CITYSEARCH, INC., a corporation incorporated under the laws of Delaware
(hereinafter referred to as "CitySearch U.S.A.")
OF THE FIRST PART,
- and -
1217554 ONTARIO INC., a corporation incorporated under the laws of Ontario
(hereinafter referred to as "CitySearch Ontario")
OF THE SECOND PART,
- and -
TORSTAR CORPORATION, a corporation incorporated under the laws of the
Province of Ontario
(hereinafter referred to as "TorStar")
OF THE THIRD PART,
- and -
METROLAND PRINTING, PUBLISHING & DISTRIBUTING LTD..
a corporation incorporated under the laws of the Province of Ontario
(hereinafter referred to as "Metroland")
<PAGE>
-2-
OF THE FOURTH PART.
WHEREAS CitySearch U.S.A. is engaged in the business of establishing
and operating, either directly or through Affiliates, CitySearch Information
Services;
AND WHEREAS TorStar is engaged in the publication of newspapers and
electronic publishing in the Exclusive Territory;
AND WHEREAS CitySearch Ontario is an Affiliate of CitySearch U.S.A.
and Metroland is an indirect subsidiary of TorStar;
AND WHEREAS Metroland and CitySearch Ontario formed the general
partnership Toronto Star CitySearch (the "Partnership") for the purpose of
carrying on a CitySearch Information Service in the Exclusive Territory;
AND WHEREAS Metroland and CitySearch Ontario entered into a
partnership agreement made as of the date hereof (the "Partnership Agreement");
AND WHEREAS CitySearch U.S.A. and CitySearch Ontario are parties to a
license and services agreement made as of the date hereof (the "License and
Services Agreement), which agreement was assigned by CitySearch Ontario to the
Partnership pursuant to an assignment agreement between CitySearch Ontario,
Metroland and CitySearch U.S.A. entered into as of the date hereof (the
"Assignment Agreement");
AND WHEREAS pursuant to the transactions described above, Metroland
and TorStar will have access to extremely confidential and valuable information
of CitySearch U.S.A. pertaining, inter alia, to its business and technology
related to the establishment and operation of CitySearch Information Services;
NOW THEREFORE THIS AGREEMENT WITNESSES that, for good and valuable
consideration and the payment by each of the parties to the other of the sum of
$1.00 of lawful money of Canada (the receipt and sufficiency of which
consideration is hereby acknowledged by each of the parties), the parties agree
as follows:
ARTICLE ONE - INTERPRETATION
----------------------------
1.01 DEFINITIONS
-----------
In this Agreement, unless something in the subject matter or context
is inconsistent therewith:
<PAGE>
-3-
(a) "Affiliate" means an affiliate of a party as determined by the
provisions of the Business Corporations Act (Ontario) as now
enacted or as the same may be from time to time amended, re-
enacted or replaced.
(b) "Agreement" means this agreement and all amendments made hereto
by written agreement between the parties hereto.
(c) "CitySearch Information Service" means an online service of
providing Content related to restaurants, entertainment, retail
establishments, community events and other services pertaining to
a particular city or geographic region, whether or not such
service uses the CitySearch Systems or any part thereof.
(d) "CitySearch Systems" has the meaning ascribed to it in the
License and Services Agreement.
(e) "Competing Business" means (i) in relation to CitySearch U.S.A.
or CitySearch Ontario, a business or service which directly or
indirectly carries on, engages in, or is concerned with or
interested in a CitySearch Information Service or similar or
competing on-line service pertaining to a city, region or other
territory inside or outside of the Exclusive Territory, and (ii)
in relation to TorStar or Metroland, a business or service which
directly or indirectly carries on, engages in, or is concerned
with or interested in a CitySearch Information Service or similar
or competing on-line service pertaining to the Exclusive
Territory.
(f) "Confidential Information" has the meaning ascribed to it in the
License and Services Agreement.
(g) "Content" with respect to a CitySearch Information Service
includes all information, databases, advertisements, text, sound,
photographic images, video and other content which is displayed
or accessible to a consumer using the service.
(h) "Covenantee" means as the context requires one of the parties
hereto to whom a covenant is made.
(i) "Covenantor" means as the context requires one of the parties
hereto and the term "Covenantors" means collectively each
Covenantor.
(j) "Direct Competitor" means (i) in relation to TorStar or
Metroland, a person whose business is primarily involved in
newspaper or electronic
<PAGE>
-4-
publishing in the Exclusive Territory, and (ii) In relation to
CitySearch U.S.A. or CitySearch Ontario, a person whose business
competes directly with that of CitySearch U.S.A. or any Affiliate
of CitySearch U.S.A. or CitySearch Ontario.
(k) "Exclusive Territory" has the meaning ascribed to it in the
Partnership Agreement.
(1) "Improvement" has the meaning ascribed to it in the License and
Services Agreement.
(m) "Launch" has the meaning ascribed to it in the License and
Services Agreement.
(n) "Other Agreements" means the Partnership Agreement and the
License and Services Agreement.
(o) "Partnership Interest" has the meaning ascribed to it in the
Partnership Agreement.
(p) "Restricted Period" means the period commencing on the date
hereof and expiring [*].
(q) "Toronto Star CitySearch Information Service" has the meanings
ascribed to it in the License and Services Agreement.
1.02 HEADINGS
--------
The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, Section or other portion hereof and
include any agreement supplemental hereto. Unless something in the subject
matter or context is inconsistent therewith, references herein to Articles and
Sections are to Articles and Sections of this Agreement.
1.03 EXTENDED MEANINGS
-----------------
In this Agreement words importing the singular number only shall
include the plural and vice versa, words importing any gender shall include all
genders and words
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-5-
importing persons shall include individuals, partnerships, associations, trusts,
unincorporated organizations and corporations. The terms "provision" and
"provisions" refer to terms, conditions, provisions, covenants, obligations,
undertakings, warranties and representations in this Agreement. The term
"Includes" or "including" or "such as" shall be construed as meaning "Includes
without limitation", "including without limitation" and "such as without
limitation", as the case may be.
ARTICLE TWO - COVENANTS
-----------------------
2.01 COVENANTS OF METROLAND AND TORSTAR
----------------------------------
(a) Recognizing and acknowledging that the following undertakings, each of
which shall be construed as a separate and several undertaking, are essential
for the protection of the business, property, and proprietary rights of
CitySearch U.S.A. and CitySearch Ontario. Metroland and TorStar undertake and
agree jointly and severally to CitySearch U.S.A. and CitySearch Ontario that
each such Covenantor will not, without the prior written consent of CitySearch
U.S.A.:
(i) in the Restricted Period, either alone or through an Affiliate
or in partnership or in conjunction with any person or persons,
as principal, agent, trustee, investor, consultant,
shareholder, or in any other manner whatsoever, carry on,
engage in, or be concerned with or interested in, or control or
manage any Competing Business of CitySearch U.S.A. or
CitySearch Ontario; and
(ii) in the Restricted Period not, directly or indirectly, solicit
for employment, or endeavor to employ or to retain as an
independent contractor or agent, any person who is an employee
of CitySearch U.S.A. or CitySearch Ontario or who provided any
assistance or service to Metroland pursuant to the License and
Services Agreement, or not offer to nor employ or retain as an
independent contractor or agent any person who provided any
assistance or services to Metroland pursuant to the License and
Services Agreement for a period of six (6) months following
such person's termination of employment With CitySearch U.S.A.
or CitySearch Ontario.
(b) The restriction contained in Section 2.01(a)(i) shall not prevent
Metroland or TorStar or any Affiliate thereof:
(i) during the period commencing on the date hereof and expiring
thirty (30) days following the Launch of the Toronto Star
CitySearch Information Service or September 1, 1997, whichever
is the earlier.
<PAGE>
-6-
from continuing to publish the "Totally Toronto" information
service; however following the said date the said service shall
be discontinued;
(ii) [*]
(iii) [*]
2.02 COVENANTS OF CITYSEARCH U.S.A. AND CITYSEARCH ONTARIO
-----------------------------------------------------
Recognizing and acknowledging that the following undertakings, each of
which shall be construed as a separate and several undertaking, are essential
for the protection of the business, property, and proprietary rights of TorStar
and Metroland, CitySearch U.S.A. and CitySearch Ontario undertake and agree
jointly and severally to TorStar and Metroland that each such Covenantor will
not, without the prior written consent of TorStar:
(i) in the Restricted Period, either alone or through an Affiliate
or in partnership or in conjunction with any person or persons,
as principal, agent, trustee, investor, consultant,
shareholder, or in any other manner whatsoever, carry on,
engage in, or be concerned with or interested in, or control or
manage, any Competing Business of TorStar or Metroland; and
(ii) in the Restricted Period not, directly or indirectly, solicit
for employment, or endeavor to employ or to retain as an
independent contractor or agent, any person who is an employee
of TorStar or Metroland or who interfaced With CitySearch
U.S.A. to receive any assistance or service pursuant to the
License and Services Agreement, or not offer to nor employ or
retain as an independent contractor or agent any person who
interfaced with CitySearch U.S.A. to receive any assistance or
services pursuant to the License and Services Agreement for a
period of six (6) months following such person's termination of
employment with TorStar or Metroland.
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-7-
2.03 SALE OF PARTNERSHIP INTEREST
----------------------------
[*]
2.04 LIMITATION OF RESTRICTIONS
--------------------------
The restrictions in Sections 2.01 or 2.02 shall not prevent any of the
Covenantors from owning, directly or indirectly, an aggregate of not more than
two percent (2%) of the issued shares of a corporation, the shares of which are
listed on any recognized stock exchange or traded in the over-the-counter market
in Canada or the United States, which carries on a Competing Business.
2.05 ACKNOWLEDGEMENT
---------------
(a) Each of the Covenantors hereby acknowledges and agrees that
each of the covenants in Sections 2.01, 2.02 and 2.03 are fair and reasonable
and valid and are reasonably required for the protection of the interest and
property of the Covenantee for whose benefit it was made and waives all defenses
to the strict enforcement thereof. However, it is nevertheless agreed that if
one or more of such covenants shall be judged to be void as going beyond what is
reasonable in all of the circumstances for the protection of the interests of
the Covenantee, but would be valid if part of the wording thereof were deleted
or the period thereof reduced or the range of activities covered thereby reduced
in scope, the said reduction shall be deemed to apply with such modifications as
may be necessary to make them valid and effective and any such modifications
shall not thereby affect the validity of any other covenant contained in this
Agreement.
(b) Each of the Covenantors acknowledges and agrees that any
violation of any of the covenants made in this Agreement will cause irreparable
damage or injury to the Covenantee for whose benefit it was made, the exact
amount of which would be impossible to ascertain, and that, for such reason, the
Covenantee should be entitled to obtain interim, interlocutory, and final
injunctive relief restraining each Covenantor from breaking, and requiring each
Covenantor to comply with, its obligations under this Agreement. Each Covenantor
hereby acknowledges the importance to the Covenantee of the strict compliance
with the terms of this Agreement and acknowledges that the Covenantee's interest
in the strict enforcement thereof will outweigh the balance of convenience or
harm which the Covenantor may suffer as a result of the strict enforcement of
this Agreement.
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-8-
2.06 EQUITABLE RIGHTS
----------------
Nothing in this Agreement shall be construed as abrogating or
diminishing any right of a party hereto at common law or in equity to restrain a
breach of duty including without limitation any breach of trust, confidence or
fiduciary duty.
ARTICLE THREE - GENERAL
-----------------------
3.01 FURTHER ASSURANCES
------------------
Each party shall from time to time execute and deliver all such
further documents and instruments and do all acts and things as the other party
may reasonably require to effectively carry out or better evidence or perfect
the full intent and meaning of this Agreement.
3.02 DISPUTE RESOLUTION
------------------
Any dispute, disagreement, controversy, question or claim arising out
of or relating to this Agreement shall be settled in accordance with the
provisions of Section 11.03 (Dispute Resolution) of the Partnership Agreement.
3.03 ENTIRE AGREEMENT
----------------
This Agreement and the Other Agreements constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and cancels and supersedes any prior understandings and agreements between the
parties hereto with respect thereto.
3.04 AMENDMENT AND WAIVER
--------------------
No modification of or amendment to this Agreement shall be valid or
binding unless set forth in writing and duly executed by the parties hereto and
no waiver of any breach of any term or provision of this Agreement shall be
effective or binding unless made in writing and signed by the party purporting
to give the same and, unless otherwise provided, shall be limited to the
specific breach waived.
3.05 GOVERNING LAW
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein.
<PAGE>
-9-
IN WITNESS WHEREOF the parties have executed this Agreement.
CITYSEARCH, INC.
Per: /s/ Charles R. Conn III
Name: /s/ Charles R. Conn 3rd
Title: CEO
1217554 ONTARIO INC.
Per: /s/ Charles R. Conn III
Name: Charles R. Conn 3rd
Title: Director
TORSTAR CORPORATION
Per: /s/ David Galloway
Name: David Galloway
Title: Pres. & CEO
METROLAND PRINTING, PUBLISHING
& DISTRIBUTING LTD.
Per: /s/ R. J. Steacy
Name: R. J. Steacy
Title: Assistant Secretary
<PAGE>
EXHIBIT 10.11
ASSIGNMENT AGREEMENT
THIS AGREEMENT made as of February 17, 1997;
B E T W E E N:
CITYSEARCH, INC., a corporation incorporated under the laws of Delaware
(hereinafter referred to as "CitySearch U.S.A.")
OF THE FIRST PART,
- and -
1217554 ONTARIO INC., a corporation incorporated under the laws of
Ontario
(hereinafter referred to as "CitySearch Ontario")
OF THE SECOND PART,
- and -
TORONTO STAR CITYSEARCH, a general partnership formed under the laws
of the province of Ontario
(hereinafter referred to as "the Partnership")
OF THE THIRD PART.
WHEREAS CitySearch U.S.A. and CitySearch Ontario are parties to a
license and services agreement made as of the date hereof (the "License and
Services Agreement"):
- -----------------
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-2-
AND WHEREAS CitySearch Ontario desires to assign the License and
Services Agreement to the Partnership and the Partnership desires to receive an
assignment of the License and Services Agreement:
NOW THEREFORE, for good and valuable consideration (the adequacy and
receipt of which consideration is hereby acknowledged by each of the parties),
the parties covenant and agree as follows:
ARTICLE ONE - ASSIGNMENT
1.01 ASSIGNMENT
----------
(a) CitySearch Ontario hereby sells, transfers and assigns to the
Partnership all of its right, title and interest in and to the License and
Services Agreement and the Partnership hereby assumes all of the rights,
obligations and liabilities of CitySearch Ontario under the License and Services
Agreement. Such sale, transfer and assignment by CitySearch Ontario shall be
treated as a contribution to the Partnership in an amount equal to its fair
market value, which the parties acknowledges is [*]
(b) The Partnership covenants to CitySearch U.S.A. that it will assume,
duly discharge, perform and observe all of the liabilities, obligations, duties
and responsibilities of CitySearch Ontario under or by virtue of or in respect
of the License and Services Agreement.
1.02 CONSENT OF CITYSEARCH U.S.A.
----------------------------
CitySearch U.S.A. hereby consents to the assignment of the License and
Services Agreement to the Partnership. CitySearch U.S.A. and the Partnership
agree that (i) the Partnership shall stand in the place and stead of CitySearch
Ontario, (ii) CitySearch U.S.A. may fully enforce the License and Services
Agreement against the Partnership as if it was an original party to the License
and Services Agreement, (iii) the Partnership may fully enforce the License and
Services Agreement against CitySearch U.S.A. as if the Partnership was an
original party to the License and Services Agreement, and (iv) CitySearch
Ontario is released from all of its obligations under or with respect to the
License and Services Agreement.
1.03 ACKNOWLEDGEMENT
---------------
The Partnership acknowledges that there is an obligation under the
License and Services Agreement binding upon it to pay CitySearch U.S.A. the
Initial Service Fee (as that term is defined in the License and Services
Agreement) of [*]
- -------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
-3-
ARTICLE TWO - GENERAL
2.01 ENUREMENT
---------
This Agreement shall enure to the benefit of and be binding upon the
parties, their respective administrators, successors and permitted assigns.
2.02 FURTHER ASSURANCES
------------------
Each party shall from time to time execute and deliver all such
further documents and instruments and do all acts and things as the other party
may reasonably require to effectively carry out or better evidence or perfect
the full intent and meaning of this Agreement.
2.03 DISPUTES
--------
Any dispute, disagreement, controversy, question or claim arising out
of or relating to this Agreement must be conclusively settled by submission to
arbitration in accordance with the procedure described in the Partnership
Agreement between CitySearch Ontario and Metroland Printing, Publishing &
Distributing Ltd. made as of the date hereof.
2.04 ENTIRE AGREEMENT
----------------
This Agreement constitutes the entire Agreement between the parties
hereto with respect to the subject matter hereof and cancels and supersedes any
prior understandings and agreements between the parties hereto with respect
thereto.
2.05 MODIFICATION OF AGREEMENT
-------------------------
No modification of or amendment to this Agreement shall be valid or
binding unless set forth in writing and duly executed by the parties hereto and
no waiver of any breach of any term or provision of this Agreement shall be
effective or binding unless made in writing and signed by the party purporting
to give the same and, unless otherwise provided, shall be limited to the
specific breach waived.
2.06 GOVERNING LAW
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the province of Ontario and the laws of Canada applicable therein.
<PAGE>
-4-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CITYSEARCH, INC.
Per: /s/ Charles R. Conn III
-------------------------------
Name: /s/ Charles R. Conn 3rd
------------------------------
Title: CEO
-----------------------------
1217554 ONTARIO INC.
Per: /s/ Charles R. Conn III
-------------------------------
Name: /s/ Charles R. Conn 3rd
-------------------------------
Title: Director
-----------------------------
TORONTO STAR CITYSEARCH
by Metroland Printing, Publishing &
Distributing Ltd.
Per: /s/ David Galloway
-------------------------------
Name: /s/ David Galloway
------------------------------
TITLE: Director
-----------------------------
<PAGE>
EXHIBIT 10.20
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT (the "Lease") is made and entered into as of the 13
--
day of MAY, 1998 by and between Secured Properties Investors II, L.P., having a
--- ----
mailing address of Two Paces Ferry West, Suite 1600, 2727 Paces Ferry Road,
Attn. JAMESTOWN Management Corporation, Atlanta, Georgia 30339 ("Landlord")and
City Search Inc., a Delaware corporation,having a mailing address of 790 E.
-------- ------
Colorado Blvd, Suite 200 Pasadena CA, 91101 ("Tenant").
- -------------------------------------------
RECITALS:
--------
In consideration of the rent to be paid, the mutual covenants and
agreements herein contained and other good and valuable considerations, the
receipt and legal sufficiency of which are hereby acknowledged by the parties
hereto, Landlord hereby leases and rents to Tenant, and Tenant hereby leases and
rents from Landlord, the "Demised Premises" hereinafter described upon the
terms, provisions and conditions hereinafter set forth:
1. DEMISED PREMISES: Landlord hereby leases and rents to Tenant and
----------------
Tenant hereby leases and rents from Landlord, that certain rental space
(hereinafter referred to as the "Demised Premises") containing approximately
7,880 square feet, shown outlined in red on the Building Plan attached hereto as
Exhibit "A," made a part hereof by reference and pertaining to a multi-tenant
building and related improvements (hereinafter referred to as the "Project")
which is on a tract of land (hereinafter referred to as the "Building Site")
fronting Triangle Drive in the Research Triangle Park, Durham County, North
Carolina and as described on Exhibit "B" attached hereto; together with the
nonexclusive license to use in connection with other tenants of the Project, all
of the parking areas, driveways, sidewalks and other common facilities made
available by Landlord from time to time to the Project, all subject to such
reasonable rules and regulations as may be prescribed by Landlord from time to
time.
2. IMPROVEMENTS AND DELIVERY OF DEMISED PREMISES: Landlord represents
---------------------------------------------
that it will cause the Demised Premises to be constructed thereon substantially
in accord with the Design Plans and specifications attached hereto as Exhibit
"C" and incorporated herein by reference. Finished Design Plans and
specifications (hereinafter referred to as the "Final Plans") 'for the Demised
Premises shall be prepared by Tenant's architect and consented to by Landlord,
which consent shall not be unreasonably withheld. The Final Plans for the
Demised Premises shall comply with all laws, ordinances, decrees, orders, rules
and regulations of any lawful authority, agency or governmental unit having
jurisdiction over the Demised Premises and Landlord's consent to the Final Plans
shall not be construed as a representation that the Final Plans are sufficient
for any purpose.
The date on which Landlord has completed construction of the Demised
Premises and obtained a certificate of Occupancy for the Demised Premises shall
be referred to herein as the
<PAGE>
"Completion Date." Landlord shall provide notice to Tenant thirty (30) days
before the Completion Date. Landlord agrees to use due diligence in completing
construction of the Demised Premises as soon as possible after the date Tenant
delivers the Final Plans to Landlord. Landlord shall not be responsible for
delay(s) caused by or resulting from strikes, unavailability of materials,
casualty, acts of God, or any other matter(s) beyond its control, and the
Completion Date shall be automatically extended for the period(s) of time caused
by such delay(s). If Landlord, due to circumstances beyond its reasonable
control, is unable to substantially complete construction of the Demised
Premises within one hundred eighty (180) days after the date Tenant delivers the
Final Plans to Landlord, this Lease may be terminated at the option of Landlord
or Tenant. Such options shall be exercised, if at all, by delivery of not less
than 30 days advance notice of same to the other party and, upon any such
termination, neither party shall have any rights against the other. Completion
of the Demised Premises shall not include punch-list items that may be completed
after Tenant takes occupancy. All improvements constructed by Landlord pursuant
to this paragraph shall remain the property of Landlord.
At any time after the execution of this Lease and prior to the Completion
Date, Tenant, its agents and contractors, shall have the privilege of entering
upon the Demised Premises at their sole risk for the purpose of taking
measurements, making tenant improvements, and for any other purpose expressly
permitted by Landlord; provided, however, such entry shall not interfere with,
hinder, obstruct or delay the progress of construction by Landlord of the
Project.
Upon final completion of the Demised Premises, Landlord shall furnish
Tenant a certificate of occupancy from the appropriate governmental authority
having jurisdiction. Upon receipt of this item, Tenant agrees that it accepts
the Demised Premises "as is" and pursuant to Section 9 hereof, Tenant agrees to
take full responsibility for the Demised Premises.
In connection with Landlord's construction obligation, Landlord shall pay a
tenant improvement allowance not to exceed $66,980.00 (the "Construction
Allowance"), for the improvements referenced herein, including preparation of
Final Plans, architectural and engineering fees, attorneys' fees, permit costs
and actual hard construction costs. In no event shall Landlord be obligated to
pay any amount for the improvements referenced herein which exceeds the
Construction Allowance. Any unused portion of the Construction Allowance shall
be deemed forfeited by Tenant.
All facilities furnished to the Project and designated for the general use,
in common, of occupants of the Project (including Tenant hereunder, its
officers, agents, employees and business guests) including, but not limited to,
parking areas, streets, sidewalks, canopies, roadways, shelters, driveways,
landscaped areas and other similar facilities (herein called "common
facilities"), shall be subject at all times to the right of Landlord to change
from time to time the area, level, location, and arrangement of such common
facilities, to restrict parking by tenants, their employees, and business guests
to designated parking areas, and to make all reasonable rules and regulations
and do such further things from time to time as in Landlord's sole discretion
may be necessary or appropriate regarding said common facilities.
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3. TERM AND OPTION TO RENEW: The initial term of this Lease (the "Initial
------------------------
Term") shall begin on the Completion Date and shall end at 12:00 o'clock
midnight on the date five years from the Completion Date, In addition to the
Initial Term, and provided Tenant is not in default under any of the terms,
provisions or conditions of this Lease, Tenant shall have one option to renew
(the "Option") the term of this Lease for a period of five years (the "Option
Period") at the rental for each Option Period specified in Section 4 hereof,
such Option to renew being exercisable by written notice to Landlord not less
than 180 days prior to the end of the Initial Term. (The Initial Term together
with any Option Period is collectively referred to as the "Lease Term.") Time
is of the essence with respect to the time of exercise of each option to renew
and any failure to renew shall extinguish all subsequent renewal options.
4. RENTAL: Tenant shall pay to Landlord for the use and occupancy of the
------
Demised Premises during the first year of Initial Term an initial annual rental
of $9.75 per square foot, payable in equal monthly installments of $6,402.50 in
advance on or before the first day of each and every month beginning on the
Completion Date. During the remainder of the Lease Term, base rent shall
increase by three percent per year, effective on each 12-month anniversary date
of the Completion Date. All rental payments provided herein shall be payable to
Landlord, until notice to the contrary is given by Landlord. Tenant shall have
no right to offset against rent hereunder. Any payment of rent not received on
or before the first day of the month shall incur a late fee equal to fifty
dollars ($50.00). In addition, any amounts of rent not paid when due hereunder
shall bear interest at the rate of ten percent (10%) per annum from the date due
until paid in full.
As security for the faithful performance by Tenant throughout the term, and
any extensions or renewals thereof, of all the terms and conditions of the Lease
on the part of Tenant, Tenant shall deposit with Landlord the sum of $6,402.50
(the "Security Deposit") on the date Tenant executes and delivers this Lease to
Landlord. Such amount shall be returned to Tenant, without interest, after the
expiration of the Lease Term, provided Tenant has fully and faithfully observed
and performed all of the terms, covenants, agreements, warranties and conditions
hereof on its part to be observed and performed. Landlord shall have the right
to apply all or any part of the Security Deposit toward the cure of any default
of Tenant. If all or any part of said security deposit is so applied by
Landlord, then Tenant shall immediately pay to Landlord an amount sufficient to
return said security deposit to the balance on deposit with Landlord prior to
said application, Neither Landlord nor its agents shall be required to keep the
Security Deposit separate from their general accounts, it being agreed that the
Security Deposit may be commingled with other funds of Landlord or of its
agents. It is further agreed and acknowledged by Tenant that Landlord or its
agents shall have the right to deposit the Security Deposit in an interest-
bearing account, and all interest accrued on the Security Deposit shall belong
to Landlord and will be retained by Landlord as its property.
5. USE OF DEMISED PREMISES: Tenant shall use the Demised Premises only
-----------------------
for general office purposes and shall not use or store any environmental
contaminants, as defined by either state of federal law, on the Demised
Premises, other than janitorial supplies and other
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substances commonly used for office purposes. Tenant shall comply with all laws,
ordinances, decrees, orders, rules, and regulations of any lawful authority,
agency or governmental unit having jurisdiction over the Demised Premises.
However, Tenant shall not, by reason of such compliance, be required to make any
repairs or alterations to the Demised Premises unless such repairs or
alterations are required by Tenant's particular use of the Demised Premises.
Tenant shall save the Landlord harmless from penalties, fines, costs, expenses
or damages resulting from any failure of the Tenant to perform its obligations
under this Section. Tenant shall not do any act or follow any practices in or
about the Demised Premises which shall constitute a nuisance or detract from or
impair the reputation of the Project. Without limiting the generality of the
foregoing, Tenant shall make such arrangements for the storage and timely
disposition of all garbage and refuse as may be required in order to keep the
Demised Premises in a neat and orderly condition, clean and free from rubbish,
dirt, snow and ice, and shall not cause disturbing or offensive odors, fumes, or
gases or any smoke, dust, steam or vapors, or any loud or disturbing noise or
vibrations to be emitted from the Demised Premises.
Tenant understands and acknowledges that the Demised Premises are part of
the Research Triangle Park and are subject to special zoning requirements and
regulations under the Durham County Zoning Ordinance (the "Zoning Ordinance").
Tenant represents to Landlord that Tenant has conducted its own independent
investigation of the Zoning Ordinance as same relates to Tenant's intended use
and occupancy of the Demised Premises, and Tenant has satisfied itself that its
intended use and occupancy of the Demised Premises will not violate the Zoning
Ordinance.
6. TAXES: Tenant covenants and agrees to pay promptly all Taxes affecting
-----
the Demised Premises which are now or may hereafter be imposed or assessed upon
the Demised Premises, except as otherwise expressly provided for in this Lease.
The word "Taxes" shall mean (i) all real estate taxes, payable (adjusted after
protest or litigation, if any) for any part of the Lease Term, exclusive of
penalties or discounts, on the Project, (ii) any taxes which shall be levied in
lieu of any real estate taxes, (iii) any special assessments for benefits on the
Project (except any payable in whole or in part during the base year for taxes)
and (iv) the expense of contesting the amount or validity of any such Taxes,
charges or assessments, such expense to be applicable to the period of the item
contested (Landlord hereby exclusively reserving the right to contest same).
With respect to any Taxes for which the Demised Premises are not separately
assessed. Tenant shall pay its proportionate share ("Tenant's Proportionate
Share"), which will be determined by dividing the total number of square feet of
the Demised Premises by the total number of square feet of rentable floor area
of the entire Project. Landlord shall not be required to pay any taxes or
assessments of any nature imposed or assessed upon fixtures, equipment,
machinery, merchandise or other property installed in the Demised Premises or
brought thereon by Tenant or at Tenant's direction, but such shall be the
obligation of Tenant, and Tenant agrees that it will promptly pay all such taxes
or assessments before they become delinquent.
Tenant shall pay to Landlord in monthly installments on the same day that
rent is due hereunder, an amount equal to one-twelfth (1/12th) of the Taxes due
hereunder, as estimated by
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Landlord in good faith from time to time. As soon as practical after the close
of each callender year during the Lease Term, Landlord shall furnish a statement
in writing to Tenants specifying the actual amount due by Tenant in respect of
Taxes. In the event the total of the monthly payment theretofore made by Tenant
under this Section for such year exceeds the actual amount due, then the excess
shall be applied pro rata as a credit on the monthly installments thereafter
coming due, In the event that the total monthly payments made by Tenants under
this Section is less than the actual amounts due, any such deficiency shall be
due and payable by Tenant to Landlord within 10 days after Tenant's receipt of
such statement.
7. FIRE AND EXTENDED COVERAGE INSURANCE: Landlord will maintain and pay
------------------------------------
for "all-risk" and "named perils" coverage in an amount at least equal to the
value of the Project. Tenant will provide and pay for all insurance on its own
contents in the Demised Premises. Tenant shall pay a proportionate share (said
"proportionate share" to be determined in the same manner as "Tenant's
Proportionate Share" under Section 6 hereof) of the insurance premium provided
for in this Section, due in monthly installments as estimated by Landlord.
8. LANDLORD'S COVENANT TO REPAIR AND REPLACE: In the event it becomes
-----------------------------------------
necessary during the Lease Term to repair utility lines prior to the point of
entry into the Demised Premises, roof, exterior walls, or structural members,
including foundation and subflooring, of the Demised Premises, Landlord shall
make such repairs or replacements at its sole cost and expense within a
reasonable time after demand to do so by Tenant, unless such repairs or
replacements are required as a result of the negligence, misconduct or
intentional acts or omissions of Tenant, its employees, invitees or licensees,
and in that event such necessary repairs or replacements shall be made at
Tenant's sole expense.
Provided Landlord's work does not unreasonably interfere with Tenant's use
of the Demised Premises, Landlord shall repair and replace the IIVAC systems
within the Demised Premises, as necessary, after termination of Tenant's
obligation to perform such work as provided in Paragraph 9.
9. TENANT'S COVENANT TO REPAIR AND MAINTAIN: Except as expressly
----------------------------------------
provided in Section 8 hereof, Tenant will, at its own expense, keep and maintain
in good order and repair, and replace as necessary, during the Lease Term all
parts of the Demised Premises, including the plumbing, wiring, electrical
systems, heating systems, air conditioning systems and equipment and machinery
constituting fixtures, unless any of such repairs are required by the negligence
of Landlord, in which case such repairs shall be made at Landlord's expense; and
Tenant will, upon termination or expiration of this Lease, deliver the Demised
Premises to the Landlord in as good condition as they were when received by it,
excepting only normal wear and tear, acts of God and repairs required to be made
by Landlord pursuant to the provisions of Section 11 hereof. Tenant shall bear
the expense of any trash, janitorial and/or cleaning services necessary to
maintain the Demised Premises in the condition required by this Lease. In
addition, Tenant shall bear a proportionate share (said "proportionate share" to
be determined in the same manner as "Tenant's Proportionate Share" under Section
6 hereof) of the cost of any maintenance
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<PAGE>
or cleaning services necessary to maintain the common areas in the condition
required by this Lease.
Landlord shall deliver space at occupancy with a fully operational HVAC
system. After tenant takes possession of the space, Tenant shall be obligated to
repair and replace the HVAC system within the Demised Premises up to $1,000 in
any given year, each year commencing on the anniversary of the Completion
Date. Tenant's obligations hereunder shall be cumulative, but Tenant's
obligation to repair the HVAC system shall not exceed $5,000 over the life of
the Lease Term. Tenant agrees to keep in force throughout the Lease Term, at its
expense, a standard maintenance agreement on all HVAC equipment serving the
Demised Premises from a vendor approved by Landlord and to provide a copy of the
maintenance agreement to Landlord accompanied by proof of payment of the service
fee therefor, Repairs to the HVAC system shall be tested and approved by the
approved HVAC maintenance vendor.
10. ALTERATIONS BY TENANT: Except for structural work, for which
---------------------
Landlord's consent shall be required (at Landlord's sole and absolute
discretion), Tenant may at any time during the Lease Term (if Tenant shall not
then be in default), at its own expense, make non-structural alterations,
additions or improvements ("Alterations") upon or to the interior of the Demised
Premises, as Tenant deems desirable, without Landlord's consent, provided that
such Alterations: shall be performed in a good and workmanlike manner, in
conformity with applicable building codes and governmental laws and
requirements; do not endanger or in any way impair the structural integrity of
the Demised Premises; and cost in the aggregate no more than $5,000.00. Such
Alterations, when made, become the property of Landlord and shall remain upon
and be surrendered with the Demised Premises as a part thereof at the expiration
of the Lease Term. Landlord shall have no obligation (other than its obligation
to incorporate into the Demised Premises the improvements shown on the Final
Plans) to make any alterations, improvements or repairs to the Demised Premises.
11. DAMAGE OR DESTRUCTION OF DEMISED PREMISES: If the Demised Premises
-----------------------------------------
shall be damaged by fire or other casualty, but are not thereby rendered
untenantable in whole or in part in Landlord's reasonable opinion, Landlord
shall without unreasonable delay, cause such damage to be repaired within one
hundred eighty (180) days, and the rental shall not be abated.
In the event the Demised Premises shall be destroyed or damaged and
rendered untenantable, Landlord may, at its option, terminate this Lease by
notice to Tenant, provided that: such notice shall be delivered to Tenant within
sixty (60) days of the destructive event and such termination shall not affect
any rights theretofore accrued to Landlord hereunder because of prior defaults
of Tenant. Except as herein provided, there shall be no obligation on Landlord
to repair or rebuild in case of fire or other casualty, in the event of damage
or destruction not covered by the insurance required of Landlord herein. In the
event Landlord elects not to repair or rebuild the Demised Premises, Tenant
shall have the right, on ten (10) days notice, to terminate this Lease. If
Landlord elects to repair or rebuild the Demised Premises and the anticipated
period for
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<PAGE>
substantial completion of such repair and rebuilding exceeds (i) two hundred and
seventy (270) days, or (ii) the end of the Initial Term (or the end of the
Option Period, if applicable), Tenant shall have the right, on ten (10) days
notice, to terminate this Lease.
Tenant's rental and all other charges under this Lease shall be fully
abated during any time period when the Demised Premises are destroyed or damaged
and rendered untenantable. If Tenant is able to occupy and does occupy a portion
of the Premises during such time period, rental and other charges under this
Lease shall be shared only for the portion of the Demised Premises not occupied
by Tenant.
12. MUTUAL WAIVER OF SUBROGATION: Tenant and Landlord each hereby waive,
----------------------------
and shall cause their respective insurers to similarly waive, any and all rights
of recovery against the other, or against the officers, employees, partners,
agents and representatives of the other, for loss of or damage to the property
of the waiving party or the property under its control, to the extent such loss
or damage is (or would have been) insured against under any insurance policy
carried or required to be carried) by Landlord or Tenant hereunder.
13. TRADE FIXTURES AND EQUIPMENT: Any trade fixtures or equipment
----------------------------
(collectively, the "fixtures") installed in or attached to the Demised Premises
by or at the expense of the Tenant shall remain the property of Tenant, provided
it is not then in default hereunder, Tenant shall have the right to remove any
and all of such fixtures; provided, however, that in such event Tenant shall
-------- -------
restore the Demised Premises to substantially the same condition in which they
were at the time Tenant took possession, ordinary wear and tear excepted. Any
such fixtures not removed at or prior to such termination shall be and become
the property of Landlord.
14. UTILITIES: During the Lease Term, the Tenant shall pay for all
---------
electricity, gas, heat, air conditioning, water, sewerage, janitorial services,
garbage disposal and other utilities or services relating to its use and/or
occupancy of the Demised Premises. Landlord shall have no duty or responsibility
to Tenant for the stoppage or interruption of such utilities or services.
Landlord hereby confirms that the Demised Premises currently are served by
electricity, gas, heat, air conditioning and water, Tenant shall be permitted to
bring ISDN, T-1 or other necessary telecommunications facilities to the Demised
Premises, provided that: all of such work shall be done at Tenant's cost and
expense and Tenant indemnifies Landlord for any damages incurred by Landlord
with respect to such work.
15. SIGNS AND ADVERTISING: In order to preserve the overall architectural
---------------------
continuity and aesthetic harmony of the Project, Tenant may install only such
signs, marquees, billboards, outside lighting fixtures and/or other decorations
on the Demised Premises as may from time to time be approved in writing by
Landlord, such approval not to be unreasonably withheld, and as shall not damage
or impair the attractiveness of the Project; provided, however that the care
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and maintenance of such signs shall be the sole responsibility of Tenant and
Tenant also must obtain the consent of the Research Triangle Foundation.
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<PAGE>
16. INDEMNIFICATION AND PUBLIC LIABILITY INSURANCE: Tenant indemnifies and
----------------------------------------------
holds Landlord harmless from any injury or damage to Landlord or its agents or
employees and from any and all liability for injury to third persons or damage
to the property of third persons, including cost, expenses, and reasonable
counsel fees, while lawfully upon the Demised Premises occurring by reason of
any negligent act or omission of Tenant, its agents, or employees. Tenant shall,
at all times during the term hereof, keep in force at its own expense in such
amounts and with such companies as shall from time to time be acceptable to
Landlord (and to any lender having mortgage interest in the Demised Premises)
and naming as insured both Landlord and Tenant: public liability insurance with
minimum limits of $2,000,000.00 on account of bodily injury or death of one or
more persons, and $1,000,000,00 on account of damage to property; and fire
insurance with extended coverage equal to the replacement cost of Tenant's
betterments, improvements and contents on or in the Demised Premises to the
extent of such betterments, improvements, and contents. Tenant will furnish to
Landlord at least five (5) working days prior to the Completion Date, copies of
policies or certificates of insurance evidencing the coverages required by this
Lease. All policies required hereunder shall provide for waiver of subrogation
and shall contain an endorsement providing that the insurer will not cancel or
materially change the coverage of said policy or policies without first giving
thirty (30) days' prior written notice thereof to Landlord. Landlord will
furnish to Tenant within five (5) days of the Completion Date evidence of the
indemnification and liability insurance carried by the Landlord,
17. LANDLORD'S RIGHT OF ENTRY: The Landlord and those persons authorized
-------------------------
by it shall have the right to enter upon the Demised Premises at all reasonable
times during the Lease Term for the purposes of inspection, and to show the
Demised Premises to prospective tenants, purchasers and/or lenders provided
Landlord has given Tenant at least twenty-four (24) hour notice.
18. EMINENT DOMAIN: If more than twenty percent (20%) of the Building Site
--------------
or any portion of the Demised Premises is taken under the power of eminent
domain (including any conveyance made in lieu thereof) and such taking shall
make the operation of Tenant's business on the Demised Premises unfeasible, then
Tenant shall have the right to terminate this Lease by giving Landlord written
notice of such termination within thirty (30) days after such taking; and if
Tenant does not so elect to terminate this Lease, Landlord, at its own expense,
will repair and restore the Demised Premises to tenantable condition, and the
rental to be paid by Tenant hereunder shall be proportionately and equitably
reduced.
All compensation awarded for any taking (or the proceeds of private sale in
lieu thereof) whether for the whole or a part of the Demised Premises, shall be
the property of the Landlord, and Tenant hereby assigns all of its interest in
any such award to Landlord; provided, however, Landlord shall have no interest
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in any award made to Tenant for loss of business or for the taking of Tenant's
fixtures and other property within the Demised Premises if a separate award for
such items is made to Tenant.
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19. EVENTS OF DEFAULT: If any one or more of the following events ("Events
-----------------
of Default") shall occur;
a. if the Tenant shall default in the payment when due of any
rental or other sum of money specified hereunder to be paid by Tenant five
days after written notice of same; or
b. if Tenant shall default in the performance of any other of the
terms, conditions, or covenants contained in this Lease to be performed or
observed by it and Tenant does not remedy such default within thirty days
after written notice thereof; or
c. if the Tenant shall become bankrupt or insolvent; or
d. if the Tenant shall vacate, fail to operate in or abandon the
Demised Premises or any substantial part thereof or suffer the Lease to be
taken under any writ of execution and such writ is not vacated or set aside
within fifteen (15) days;
Then in the case of any one or more of such Events of Default, Landlord
will have the right to terminate and cancel this Lease; to the full extent
allowed by law, the right to place a lien on Tenant's personal property located
at the Demised Premises; or, without excluding other rights or remedies that it
may have, Landlord shall have the immediate right of reentry and may remove all
persons and properties from the Demised Premises and dispose of such property as
it deems fit, all without resort to legal process and without being deemed
guilty of trespass, or becoming liable for any loss or damage which may be
occasioned thereby. If the Landlord should elect to reenter as herein provided,
or should it take possession pursuant to legal proceedings, it may either
terminate this Lease or it may from time to time without terminating this
Lease, make such alterations and repairs as may be necessary or appropriate in
order to relet the Demised Premises, and relet the Demised Premises for such
term and at such rental and upon such other terms and conditions as the Landlord
may deem advisable. No such reentry or taking possession of the Demised Premises
by the Landlord shall be construed as an election to terminate this Lease unless
a written notice of such intention is given by the Landlord to the Tenant at the
time of such reentry; but, notwithstanding any such reentry or reletting without
termination, the Landlord may at any time thereafter elect to terminate this
Lease for such previous breach. In the event of any termination by Landlord,
whether before or after reentry, Landlord may recover from the Tenant damages
incurred by reason of such breach, including without limitation, the
out-of-pocket costs and expenses incurred by Landlord in recovering the Demised
Premises. Tenant shall remain liable to the Landlord for the rental hereinabove
specified until the expiration of the term of the Lease or earlier termination
date, less the rentals actually received by Landlord from any reletting.
Landlord shall not be liable to Tenant for rentals received from any reletting
in excess of the rental specified in this Lease.
20. SUBORDINATION: Tenant shall, upon request by Landlord, subject and
-------------
subordinate all or any of its rights under this Lease to any and all mortgages
and deeds of trust
9
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now existing or hereafter placed on the property of which the Premises are a
part, Tenant agrees that this Lease shall remain in full force and effect
notwithstanding any default or foreclosure under any such mortgage or deed of
trust and that it will attorn to the mortgagee, trustee or beneficiary of such
mortgage or deed of trust and their successors or assigns and to the purchaser
or assignee under such foreclosure. Tenant will, upon request by Landlord,
execute and deliver to Landlord or to any other person designated by Landlord
any instrument or instruments required to give effect to the provisions of this
Section. In conjunction therewith, Landlord shall use its best efforts to obtain
a non-disturbance agreement acceptable to Tenant.
21. ASSIGNING, MORTGAGING, SUBLETTING: Tenant agrees not to assign,
---------------------------------
sublet, mortgage, pledge or encumber this Lease in whole or in part, without
first obtaining the written consent of Landlord, which consent shall not be
unreasonably withheld. Tenant agrees that, in the event of any such assignment,
mortgaging or subletting made with the written consent of Landlord as aforesaid,
Tenant will nevertheless remain primarily liable for the performance of all of
the terms, conditions and covenants of this Lease on its part to observe, comply
with or perform. This Lease is binding on all successors and assigns.
22. ESTOPPEL CERTIFICATE: Within ten (10) days after request therefor by
---------------------
Landlord or any mortgagee or trustee, Tenant shall deliver in form recordable in
the office of the Register of Deeds of Durham County, North Carolina, a
certificate in form satisfactory to Landlord and directed to the proposed
mortgagee, purchaser or other transferee, and/or to Landlord, certifying any
facts that are then true with respect to this Lease, including, without
limitation (if such be the case), that this Lease is in full force and effect,
that no default exists on the part of Landlord or Tenant under the Lease, that
Tenant is in possession, that Tenant has commenced the payment of rent, and that
there are no defenses or offsets claimed by Tenant with respect to the rentals
under the Lease.
23. ADDITIONAL, COVENANTS OF TENANT. Tenant covenants and agrees to do all
-------------------------------
things necessary to prevent the filing of any mechanics' or other liens against
the Demised Premises or any part thereof by reason of work. labor, services or
materials supplied or claimed to have been supplied to Tenant, or anyone holding
the Demised Premises or any part thereof, through or under Tenant. If any such
lien shall at any time be filed against Tenant's interest in the Demised
Premises, Tenant shall either cause the same to be discharged of record within
twenty (20) days after the date of filing of the same, or, if Tenant, in
Tenant's discretion and in good faith, determines that such lien should be
contested, shall furnish such security as may be necessary or required to
prevent any foreclosure proceedings against Tenant's interest in the Demised
Premises during the pendency of such contest. If Tenant shall fail to discharge
such lien within such period or fail to furish such security, then, in addition
to any other rights or remedies of Landlord resulting from Tenant's default,
Landlord may, but shall not be obligated to, discharge the same either by paying
the amount claimed to be due (in which event Tenant shall immediately reimburse
Landlord for all sums so paid by Landlord and all costs and expenses incurred by
Landlord in connection with the performance of such act together with interest
on the aggregate of such sums, costs and expenses at the maximum legal rate
payable by corporate
10
<PAGE>
borrowers under North Carolina law at the time of Tenant's failure, but in no
event more than 15% per annum) or by procuring the discharge of such lien by
giving security or in such other manner as is, or may be, prescribed by law.
Nothing contained herein shall imply any consent or agreement on the part of
Landlord to subject Landlord's estate to liability under any mechanics' or other
lien law.
24. FORCE MAJEURE: In the event that Landlord or Tenant shall be delayed,
-------------
hindered or prevented from the performance of any act required hereunder, by
reason of governmental restrictions, scarcity of labor or materials, strikes,
fire, or any other reason beyond its reasonable control, the performance of such
act shall be excused for the period of delay, and the period of the performance
of any such act shall be extended for the period necessary to complete
performance after the end of the period of such delay. Notwithstanding anything
herein contained to the contrary, the provisions of this Section shall not be
applicable to Tenant's obligation to pay rent or any other sum, monies, costs,
charges or expenses required to be paid by Tenant on and subsequent to the
Completion Date.
25. REMEDIES CUMULATIVE -- NONWAIVER: No remedy herein or otherwise
--------------------------------
conferred upon or reserved to Landlord shall be considered exclusive of any
other remedy, but the same shall be distinct, separate and cumulative and shall
be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute and every power and remedy given by
this Lease to Landlord may be exercised from time to time as often as occasion
may arise, or as may be deemed expedient. No course of dealing between Landlord
and Tenant, or delay or omission of Landlord to exercise any right or power
arising from any default on the part of the Tenant shall impair any such right
or power, or shall be construed to be a waiver of any such default or an
acquiescence thereto.
26. LIABILITY AND INDEMNITY: Landlord shall not have any liability to
-----------------------
Tenant or any of Tenant's officers, employees or agents for any damage or injury
to person or property, or both, directly or indirectly caused by or arising
from, in whole or in part, any act or failure to act of Landlord or any of
Landlord's employees or agents, unless such damage or injury is the direct
result of the negligence of Landlord or the failure of the Project to comply
with applicable local, state, and federal regulations, including but not limited
to the Americans With Disabilities Act, provided such was enacted subsequent to
the delivery of Final Plans. Landlord shall have no personal liability with
respect to any of the provisions of this Lease. If Landlord is in default with
respect to its obligations under this Lease, Tenant shall look solely to the
equity of Landlord in and to the Demised Premises for satisfaction of Tenant's
remedies, if any. It is expressly understood and agreed that Landlord's
liability under the terms of this Lease shall in no event exceed the amount of
its interest in and to the Demised Premises. Such exculpation of personal
liability is absolute and without exception whatsoever. All personal property
brought into the Demised Premises by Tenant, or Tenant's employees, agents, or
business visitors, shall be at the risk of Tenant only, and Landlord shall not
be liable for theft thereof or any damage thereto occasioned by any act of co-
tenants, occupants, invitees or other users of the Improvements or any other
person.
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Moreover, during the Lease Term, Tenant shall pay, and shall protect, indemnify
and hold harmless Landlord and Landlord's beneficiaries, employees and agents
from, against and in respect of, all liabilities, damages, losses, costs,
expenses (including all reasonable attorneys' fees and expenses of Landlord),
causes of action, suits, claims, demands and judgments of any nature whatsoever
arising out of, by reason of or in connection with the Lease.
27. HOLDING OVER: If Tenant remains in possession of the Demised
------------
Premises or any part thereof after the expiration of the Lease Term, with
Landlord's acquiescence and without any written agreement between the parties,
Tenant shall be only a tenant at will and there shall be no renewal of this
Lease or any exercise of the Option by operation of law.
28. NOTICES: Any notice provided for herein shall be deemed to have been
-------
sufficiently served if the same shall be in writing and placed in the United
States mail, via certified mail or registered mail, return receipt requested,
with postage prepaid and in the proper amount, and addressed as shown on page
one (1), with a copy to A. Summey Orr III, Esq., Holland & Knight, LLP, 1201
West Peachtree, N,E., Suite 2000, One Atlantic Center, Atlanta, Georgia 30309-
3400 and Douglas McPherson, CitySearch, 790 E, Colorado Blvd., Suite 200,
Pasadena, California 91101.
The address of both Landlord and Tenant and the person, if any, to whose
attention a notice or copy of same shall be directed, may be changed or added
from time to time by either party serving written notice upon the other, in the
above-prescribed manner.
29. NATURE AND EXTENT OF AGREEMENT: This instrument contains the complete
------------------------------
agreement of the parties regarding the terms and conditions of the lease of the
Demised Premises, and there are no oral or written conditions, terms,
understandings or other agreements pertaining thereto which have not been
incorporated herein. This instrument creates only the relationship of Landlord
and Tenant between the parties hereto as to the Demised Premises; and nothing
herein shall in any way be construed to impose upon either party hereto any
obligations or restrictions not herein expressly set forth. The laws of the
State of North Carolina shall govern the validity, interpretation, performance
and enforcement of this Lease. Notwithstanding that this Lease was drafted by
Landlord, in the event of any ambiguous provisions hereof, there shall be no
presumption in favor of either Landlord or Tenant.
30. BINDING EFFECT: This Lease shall be binding upon and shall inure to
--------------
the benefit of the parties hereto and their respective successors and assigns
during the Lease Term.
31. ATTORNEYS' FEES: If either party commences an action against the other
---------------
party arising out of or in connection with this Lease, the prevailing party
shall be entitled to have and recover from the losing party reasonable
attorneys' fees and costs of suit. Notwithstanding, Tenant shall be responsible
for Landlord's attorney's fees in any suit or threatened suit by Landlord to
collect rent.
12
<PAGE>
32. BROKERS: Tenant represents that it has not engaged a broker in
-------
connection with this Lease, other than Thomas Commercial, Inc., which will not
be owed a separate commission from Landlord (other than its participating share
from Landlord's broker), and agrees to indemnify and hold Landlord harmless from
any claim made by a broker with respect to this Lease.
33. CAPTIONS AND HEADINGS: The captions and headings throughout this Lease
---------------------
are for convenience and reference only, and the words contained therein shall in
no way be held or deemed to define, limit, describe, explain, modify, amplify or
add to the interpretation, construction, or meaning of any provision of or the
scope or intent of this Lease or in any way affect this Lease.
34. HAZARDOUS MATERIALS: Landlord agrees to defend, indemnify and hold
-------------------
harmless Tenant, its officers, directors, employees and agents from and against
any and all liability, loss, suits, claims, actions, causes of action,
proceedings, demands, costs, penalties, fines and expenses, including without
limitation attorney's fees, consultant's fees, litigation costs and cleanup
costs asserted against or incurred by Tenant at any time and from time to time
by reason of or arising out of the generation, storage, treatment, handling,
transportation, disposal or release, other than by Tenant or any of its agents,
of any Hazardous Materials, as such term is defined by North Carolina law, at or
upon the Project.
35. AUTHORITY: The parties executing this Lease hereby represent and
---------
warrant that they have all necessary power and authority to execute and deliver
this Lease on behalf of the Landlord and Tenant, respectively.
36. QUIET ENJOYMENT. Landlord covenants that upon Tenant's paying the rent
---------------
and performing each of Tenant's covenants hereunder, Tenant may peaceably and
quietly have, hold, and enjoy the Demised Premises, subject to the terms and
conditions of this Lease.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed in their corporate names and their corporate seals hereto affixed, all
in pursuance of authority duly given by their respective Boards of Directors, as
of the day and year first above written.
SECURED PROPERTIES INVESTORS II, L.P.
By: JAMESTOWN
[SIGNATURE ILLEGIBLE]
By:----------------------------
__________________
Secretary
CITYSEARCH, INC.
[SIGNATURE ILLEGIBLE]
Name:------------------------
Chief Legal Officer
Title:-----------------------
[CORPORATE SEAL]
[SIGNATURE ILLEGIBLE]
- ---------------------
Secretary
14
<PAGE>
STATE OF _______________
COUNTY OF ______________
This ___ day of ________________ , 19__, personally came before me
_______________________ who being by me duly sworn, says that he is
__________________________ of _________________________________________ that the
seal affixed to the foregoing instrument in writing is the corporate seal of the
Corporation, and that said writing was signed and sealed by him in behalf of
said Corporation, by its authority duly given, and the said _________________
acknowledged the said writing to be the act and deed of said Corporation.
_________________________
Notary Public
My Commission Expires:
_____________________
[NOTARY SEAL]
<PAGE>
EXHIBIT "A"
-----------
<PAGE>
[PLAN APPEARS HERE]
<PAGE>
EXHIBIT "B"
-----------
BEING that certain acre tract of land fronting Service Drive, in
the Research Triangle Park, Durham County, North Carolina, as
described on that certain survey dated December 5, 1979, and
prepared by Boney & Associates, Inc. of Raleigh, North Carolina
and being recorded in Book of Maps 95 at Page 199 in the office
of the Register of Deeds, Durham County, North Carolina.
<PAGE>
EXHIBIT "C"
-----------
<PAGE>
[LETTERHEAD OF PRIME BUILDING COMPANY APPEARS HERE]
April 14, 1998
Mr. Rob Czyzewski
Operations Manager
Citysearch.com
3000 Aerial Center Parkway, Suite 140
Morrisville, NC 27560
Dear Rob:
Prime Building is pleased to offer the following budget estimate for your
proposed relocation to the MET building at 5 Triangle Drive in RTP.
Our price is based on my site visit with Lee Clyburn last week and the single
page floor plan I received from your office.
Lump sum total at this stage is Sixty nine thousand two hundred fifty three
dollars ($69,253.00).
Once a building permit is secured, we estimate a 4 week construction schedule.
In the meantime, I would be happy to provide carpet, paint and wallcovering
samples for your review.
Attached please find a detailed cost estimate with assumptions and
clarifications for your review. Contact me at the office should you have any
additional questions.
Respectfully,
/s/ Charles Zevenhuizen
Charles Zevenhuizen
Project Estimator
<PAGE>
citysearch.com
Cost Breakdown
April 14, 1998
<TABLE>
<S> <C>
Field Administration-supervision, truck and mileage, phone and pager, $ 5,500.00
- ---------------------
equipment rental, dumpster and debris removal, general cleaning
Architectural and Engineering--- allowance for design services $ 8,000.00
- ---------------------------------
Demolition - remove indicated walls, doors and frames, floor coverings, $ 6,884.00
- ------------
old cabinetry, necessary ceiling tile and grid, old VWC in restrooms
Cabinetry- new kitchen and conference room cabinets as shown, new $ 5,540.00
- ----------
laminate countertops in restrooms
Doors, Frames, Hardware- install (2) reused doors in locations shown $ 100.00
- -----------------------
Drywall- build new walls as shown,'repair existing walls, repair old $ 1,988.00
- -------
door and window locations
Acoustical Ceilings- replace grid on right 1/3 of building, replace tile as $ 3,2O0.00
- ---------------------
needed
Carpet and Base- $14.00/sy direct glue down carpet in all areas except $ 15,750.00
- ----------------
restrooms, breakroom and vault
Paint and Wallcovering- paint existing walls with (1) coat flat latex, paint $ 5,770.00
- -----------------------
new walls with (2) coats flat latex, install new vinyl wallcovering in
restrooms, touch up existing doors
Plumbing- provide new stainless steel sink in conference room, reinstall $ 700.00
- --------
existing sink in breakroom and bathrooms
HVAC- allowance to relocate existing grills and thermostats $ 1,200.00
- ------
Electrical- rewire lights after new ceiling installation, add (10) duplex $ 3,900.0O
- -----------
receptacles, relocate fire alarm, install (5) power poles, add (10) data/com
boxes, sensor for small conference room lighting
Final Cleaning- prior to tenant occupancy $ 975.00
- -------------- ------------
Sub-total $ 59,507.00
Taxes $ 2,041.00
Insurance, Permit $ 285.00
OH&P $ 7,420.00
------------
TOTAL $ 69,253.00
</TABLE>
Please note the following exclusions:
brick cleaning, interior blinds, fire sprinklers, appliances, carpet
squares in small conference room, tele/comm installation, electrical
service upgrades, any item not specifically listed above
<PAGE>
LEASEHOLD IMPROVEMENT AGREEMENT
This Leasehold Improvement Agreement ("Improvement Agreement") is dated for
reference purposes only as May 13, 1998, and is made by and between Secured
Properties Investors II, L.P. ("Landlord") and CitySearch, Inc, ("Tenant") as
part of that certain Lease of even date herewith between them, affecting that
real property commonly known as 5 Triangle Drive, Durham County, North Carolina
(the "Lease"). The following provisions are hereby added to the Lease and in the
event of conflict between this Improvement Agreement and the Lease, this
Improvement Agreement shall prevail:
SECTION 1
DEFINITIONS
1.1 Definitions. All capitalized terms in this Improvement Agreement
-----------
shall have the meaning defined in the Lease. Wherever used in this Improvement
Agreement, the following terms are defined as follows:
1.1.1 "Allowance" is the maximum amount Landlord is required to pay
toward Construction Cost of the Improvements, which amount is $66,980.00.
1.1.2 "Architect(s)" collectively means The Smith Sinnett Associates,
P.A., and all other architects, structural engineers, mechanical engineers and
the other design professionals as are needed to design the Improvements, each of
whom shall be duly licensed by the State of North Carolina and in good
professional standing.
1.1.3 "Applicable Laws and Restrictions" means all laws (including
without limitation the Americans With Disabilities Act), building codes,
ordinances, regulations, title covenants, conditions, and restrictions, and
casualty underwriters requirements applicable to the premises and the
improvements.
1.1.4 The "Building" is the multi-tenant building in which the Demised
Premises are situated.
1.1.5 "Contractor(s)" means Prime Building Co. and all other general
contractors, design-build contractors, subcontractors, and material suppliers
who provide labor and materials for construction of the Improvements. To the
extent required by Applicable Laws and Restrictions, each Contractor shall be
duly licensed by the State of North Carolina and in good professional standing.
1.1.6 "Construction Cost" means all of the following:
a. fees paid by Landlord to Architect(s) for services required
by this Improvement Agreement;
b. fees paid by Landlord for engineering fees for construction
of the Improvements;
c. fees of governmental and quasi-governmental agencies for
Permits;
d. payments to Contractor(s) for labor, materials, and
equipment.
1
<PAGE>
1.1.7 "Construction Documents" are the Design Plans and the Final
Plans
1.1.8 "Construction Schedule" is the schedule for commencement,
prosecution and Substantial Completion of the Improvements.
1.1.9 "Improvements" are the alterations, modifications and
improvement described on the Final Plans which will be constructed pursuant to
this Improvement Agreement.
1.1.10 "Landlord's Work" is the construction of all of the
Improvements
1.1.11 "Landlord's Representative" is Ben Gainey or such other person
as the Landlord shall designate in writing to Tenant as its authorized
representative for the purposes of administering this improvement Agreement.
1.1.12 "Permits" are those permits approvals and consents of
governmental authorities and third parties having jurisdiction over the work
which are required for commencement and completion of the Improvements.
1.1.13 "Substantial Completion" or "Substantially Completed" is
defined in Section 5.1. The "Substantial Completion Date" is the date the
Improvements are Substantially Completed.
1.1.14 "Scheduled Completion Date" is the scheduled date for
Substantial Completion of the Improvements.
1.1.15 "Tenant's Representative" is Robb Czyzewski or such other
person as the Tenant shall designate in writing to Landlord as its authorized
representative for the purposes of administering this Improvement Agreement.
1.1.16 "Tenant's Work" is limited to the installation of the Tenant's
trade fixtures, furnishings, and equipment in the premises alter completion of
the Landlord's Work.
SECTION 2
DESIGNATION OF REPRESENTATIVE
2.1 Designation of Representative. Landlord and Tenant hereby respectively
-----------------------------
appoint the Landlord's Representative and the Tenant's Representative as its
sole representative for the purposes of this Improvement Agreement. Until
replaced by written notice, the Landlord's Representative and the Tenant's
Representative will have the full authority and responsibility to act on behalf
of Landlord and Tenant respectively, as required in this Improvement Agreement.
SECTION 3
CONTRACT DOCUMENTS & PERMITS
3.1 Retention of Architects and Delivery of Final Plans. Tenant shall
---------------------------------------------------
direct and Landlord shall pay for the services of the Architect(s) to prepare
the finished Design Plans and
2
<PAGE>
specifications for the Improvements (the "Final Plans"). The Final Plans shall
be based upon and consistent with the Design Plans and specifications attached
to the Lease as Exhibit C and subject to approval by Landlord, which approval
shall not be unreasonably withheld, denied or delayed.
3.2 Preparation and Approval of Cost Estimate and Construction Schedule.
-------------------------------------------------------------------
Immediately following approval of the Final Plans, Landlord shall cause the
Architect to prepare a preliminary Cost Estimate and Construction Schedule.
Landlord and Tenant shall review the Cost Estimate and the Construction Schedule
and promptly deliver to the other party and to the Architect(s) the party's
written approval or disapproval thereof. If the Cost Estimate or Construction
Schedule is disapproved in any respect, the parties shall confer and negotiate
in good faith to reach written agreement. Landlord's and Tenant's approval of
the Cost Estimate or the Construction Schedule shall not be unreasonably
withheld, denied or delayed, provided, however, that (I) Tenant may deny
approval in its sole discretion of any Cost Estimate which exceeds $66,980.00,
and (2) Landlord or Tenant may deny approval of any Construction Schedule which
calls for a Substantial Completion Date of more than 180 days after the date
Tenant first delivered the Final Plans to Landlord. Any disapproval by Landlord
or Tenant shall be accompanied by a written statement of the disapproved item,
the reasons for disapproval and the specific changes required to make the item
acceptable. If a party's written notice of disapproval is not delivered within
10 days from delivery of the Cost Estimate or the Construction Schedule,
approval shall be deemed given. If the Cost Estimate or Construction Schedule is
disapproved as provided herein, the parties shall confer and negotiate in good
faith to reach written agreement.
3.3 Application for Approvals. Landlord shall submit the Final Plans to
-------------------------
all appropriate governmental agencies and third parties for issuance of the
Permits required for the construction of the Improvements and occupancy by
Tenant of the Improvements for its intended use. Landlord shall use all
reasonable efforts to obtain the Permits on or before the date specified for
same in the Contract Schedule, Landlord shall not be responsible for any delay
or denial of a Permit which is beyond its reasonable control.
3.4 Changes to Final Plans. The Final Plans may be modified only by a
----------------------
written "Change Order" executed by Landlord and Tenant, which clearly describes
(i) the change, (ii) the party required to perform the change, (iii) the party
required to pay for the change, and (iv) any revision of the Construction
Schedule occasioned by the change. Neither Landlord nor Tenant shall
unreasonably deny, withhold or delay its approval of a change, whether requested
by a party or required by an Applicable Law or Restriction.
3.5 Delay of Substantial Completion Date. Upon any delay in the
------------------------------------
Substantial Completion Date beyond 180 days after the date when the Final Plans,
Cost Estimate and Construction Schedule are all approved, which is due to
circumstances beyond the reasonable control of Landlord, either Landlord or
Tenant may terminate this Lease.
3
<PAGE>
SECTION 4
PERFORMANCE OF THE WORK
4.1 Selection of Contractor(s) and Suppliers. Construction of the
----------------------------------------
Landlord's Work shall be performed under the direction of Landlord and by
Contractor(s) selected by Landlord.
4.2 Commencement and Completion of Improvements. When all Permits have
-------------------------------------------
been obtained, Landlord shall cause its Contractor(s) to commence and to
thereafter diligently prosecute the construction of the Landlord's Work so that
the Landlord's Work will be Substantially Completed on or before the Scheduled
Completion Date.
4,3 Standards for Performance of Work. Landlord shall cause the
----------------------------------
Landlord's Work to be constructed by well-trained, adequately supervised
workers, in a good and workmanlike manner, free from design, material and
workmanship defects in accordance with all Construction Documents. Tenant shall
comply, and shall cause its Contractor to comply with the reasonable rules and
regulations promulgated by Landlord for the performance and scheduling of the
Tenant's Work. The parties shall cooperated in good faith to schedule,
coordinate, and perform Landlord's Work and Tenant's Work.
SECTION 5
COMPLETION OF THE WORK
5.1 Inspection, Substantial Completion & Punchlist. Tenant's
-----------------------------------------------
Representative and Architect shall have the right to enter the Demised Premises
at all reasonable times for the purpose of inspecting the progress of the work.
Landlord's Work shall be deemed "Substantially Completed" or in "Substantial
Completion" when (i) construction of the Improvements has been completed and all
incomplete or defective Landlord's Work which interferes with Tenant's use of
the Demised Premises has been remedied; (ii) the Architect has certified that
the Landlord's Work has been constructed in accordance with the Final Plans,
(iii) all necessary governmental approvals for occupancy of the Demised Premises
and the Improvements have been obtained, including a Certificate of Occupancy;
and (iv) all utilities are hooked up and available for use. Landlord shall
notify Tenant when the Landlord's Work is Substantially Completed and the
Tenant's Representative, Landlord's Representative, and the Architect(s) shall
immediately inspect the Landlord's Work and prepare a written list of any
defective an incomplete work (the "Punchlist"). Tenant may augment the Punchlist
at any time on or before 20 days following the Substantial Completion Date.
Landlord shall promptly remedy all Punchlist items. Notwithstanding the
foregoing, (1) Tenant's failure to specify any defect on the Punchlist shall not
waive any obligation of the Landlord to complete the Improvements in accordance
with this Improvement Agreement, and (2) Landlord shall not be obligated to pay
more than the Allowance.
SECTION 6
PAYMENT OF CONSTRUCTION COST
6.1 Duty to Pay Construction Cost. Landlord shall pay the Construction
------------------------------
Cost of the Improvements, up to an amount equal to the Allowance. Tenant shall
pay any remainder of such
4
<PAGE>
Construction Cost and Tenant shall pay the entire cost of Tenant's Work, without
reimbursement by Landlord.
6.2 Notice of Non-Responsibility. Tenant shall provide Landlord with at
----------------------------
least 10 days prior written notice for commencement of the Tenant's Work, in
order to permit the Landlord to post and record such Notices of non-
Responsibility and other instruments as may be necessary to protect the Landlord
and its property from claims by Contractor's for unpaid costs and other
liabilities associated with the Tenant's Work.
SECTION 7
RISK OF LOSS
7.1 Casualty. If the Building is damaged or destroyed prior to the
--------
Completion Date, Landlord and Tenant shall have the right to terminate this
Lease, if, in the reasonable opinion of the Architect(s), the Building cannot be
restored and the Improvements Substantially Completed within 180 days after
Tenant first delivers the Final Plans to Landlord. If the Building is damaged or
destroyed and the Lease is not terminated pursuant to this Section, Landlord
shall promptly and diligently complete repair of the Building and construction
of the Improvements.
IN WITNESS WHEREOF, the Landlord and Tenant have executed this Improvement
Agreement, intending to be bound thereby as of the date first above written.
Landlord Tenant
Secured Properties Investors II, L.P. CitySearch, Inc.
/s/ Douglas McPherson
By___________________________________ By---------------------------
Douglas McPherson
Name:________________________________ Name:------------------------
Chief Legal Officer
Title:_______________________________ Title:-----------------------
5
<PAGE>
EXHIBIT 10.22
PERFECTMARKET, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into between
PERFECTMARKET, INC., ("PMI"), a Delaware corporation, and Thomas Layton
("Employee"). PMI and Employee agree, in consideration for each others' promises
as described in this Agreement, as follows:
1. Position and Duties. PMI agrees to hire Employee, initially in the
-------------------
position of Chief Operating Officer and Vice President of Sales and Marketing,
and Employee accepts such employment. Employee agrees to perform any and all
services as are required by PMI, and agrees to perform such services at the time
and in the manner so designated by PMI. Employee agrees to devote Employee's
full time and energy toward the performance of the duties and responsibilities
assigned to Employee, which may be changed at any time and from time and time.
Employee further agrees to at all times abide by the policies, procedures and
directions of PMI.
2. Compensation. In exchange for Employee consenting to this Agreement,
------------
PMI agrees to employ Employee pursuant to the terms hereof, and to compensate
Employee for such employment. Employee's compensation, and benefits if any,
shall be as agreed by PMI and Employee. PMI may adjust said salary from time to
time in its sole discretion, in view of changes in Employees's job duties and
responsibilities. Employees's job performance, financial considerations of PMI,
and other similar business factors.
3. Insurance. Employee agrees to provide PMI with a certificate of
---------
automobile liability insurance covering any vehicle that Employee intends or
actually uses during the course of his employment with PMI in the performance of
his duties and responsibilities. Such insurance coverage must meet the minimum
coverage required by state law.
4. Safety Procedures. Employee agrees to abide by all procedures,
-----------------
practices, guidelines and directions of PMI relating to safety. Failure to
comply with such procedures, practices, guidelines and directions may result in
termination.
5. Termination of Employment. Employee understands and agrees that
-------------------------
Employee is employed "at will." This means that either Employer or PMI may
terminate Employee's employment with PMI at any time, for any reason, with or
without cause or notice.
No express or implied agreement contrary to this at-will employment provision
exists between Employee and PMI.
In the event that Employee is terminated, Employee will receive salary
continuation pay of full-salary for the first three months after termination,
and half-salary for the second three months after termination, until Employee is
employed by a recognized company, but in no case more than six months of salary
continuation.
6. Inventions, Trade Secrets and Proprietary Information. Employee agrees
-----------------------------------------------------
to execute and abide by PMI's Employee Inventions & Confidentiality Agreement.
Any breach of that Agreement shall be a material breach of this Agreement. The
obligations undertaken by Employee in the Inventions & Confidentiality Agreement
shall survive termination of this Agreement.
7. Entire Agreement. This Agreement constitutes the sole and entire
----------------
agreement between the parties concerning Employee's employment, and supersedes
any and all other agreements between them, whether oral or written, implied or
express. There are no understandings or agreements between the parties which are
not expressly set forth in this Agreement. Any modification to this Agreement
will be effective only if in writing and if fully executed by Employee and the
President of PMI.
<PAGE>
8. SEVERABILITY. If any provision of this Agreement is held void or
------------
unenforceable for any reason, that provision shall be severed from the Agreement
and all remaining Provisions shall be valid and fully enforceable.
9. Governing Law. This Agreement shall be construed, applied,
-------------
interpreted and enforced in accordance with the laws of the State of California.
EMPLOYEE HEREBY ACKNOWLEDGES THAT: (1) EMPLOYEE HAS READ THIS ENTIRE
EMPLOYMENT, CONFIDENTIALITY & INVENTIONS AGREEMENT; (2) EMPLOYEE UNDERSTANDS
THIS ENTIRE AGREEMENT AND HAS HAD AN OPPORTUNITY TO ASK QUESTIONS ABOUT IT
BEFORE SIGNING IT; AND (3) EMPLOYEE UNDERSTANDS THAT THIS AGREEMENT IS THE SOLE
AGREEMENT PERTAINING TO THE CONDITIONS, NATURE, TENURE AND/OR DURATION OF THE
PARTIES' EMPLOYMENT RELATIONSHIP.
Employee:
Thomas Layton
- ------------------------------
Please Print Name
/s/ Thomas Layton 7/2/97
- ------------------------------ ------------
Employee's Signature Date
PERFECTMARKET. INC.
By: /s/ Charles Conn III
--------------------------- ------------
Charles Conn, President Date
