SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) February 9, 1999
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Lycos, Inc.
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(Exact name of Registrant as specified in its charter)
Delaware 0-27830 04-3277338
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(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification No.)
400-2 Totten Pond Road
Waltham, Massachusetts 02154
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code (781) 370-2700
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ITEM 5. OTHER EVENTS
On February 9, 1999, USA Networks, Inc. ("USAi"), Lycos, Inc.
("Lycos") and Ticketmaster Online-CitySearch, Inc. ("TMCS") announced that they
had entered into definitive agreements (the "Agreements") relating to the
combination of TMCS, Lycos and USAi's Home Shopping, Ticketmaster and Internet
Shopping Network/First Auction businesses (the "Contributed Businesses") in a
new company to be named USA/Lycos Interactive Networks, Inc. ("Newco"). The
transactions will be effected by mergers of Lycos and TMCS with subsidiaries of
Newco and the contribution by USAi to Newco of the Contributed Businesses, in
exchange for the consideration summarized below (the "Transactions").
Pursuant to the Agreements, upon consummation of the
Transactions:
(i) each share of Lycos Common Stock will be converted
into the right to receive (a) 1 share of Newco
Common Stock and (b) 0.2963 of a share of Newco
Series A Convertible Redeemable Preferred Stock
(the "Series A Preferred Stock");
(ii) each share of TMCS Class B Common Stock (the
publicly traded TMCS stock) will be converted into
the right to receive (x) 0.4464 of a share of Newco
Common Stock and (y) 0.0584 of a share of Series A
Preferred Stock;
(iii) each share of TMCS Class A Common Stock will be
converted into the right to receive 0.4464 of a
share of Newco Class B Common Stock; and
(iv) USAi will receive 88,353,398 shares of Newco Class
B Common Stock and 1,938,853 shares of Series A
Preferred Stock in exchange for the Contributed
Businesses.
Both the Newco Common Stock and the Series A Preferred Stock
will be publicly traded. The Newco Class B common stock will not be publicly
traded. Except as otherwise provided by Delaware law, the Newco Common Stock
will have one vote per share, and the Newco Class B Common Stock will have 15
votes per share on all matters submitted to a vote of Newco's stockholders,
including the election of directors of Newco.
Upon closing of the Transactions, based on the expected
initial ownership of Newco on an adjusted fully diluted basis, former Lycos
shareholders will own 30% of the Newco equity, former TMCS shareholders (other
than USAi) will own 8.5% of the Newco equity and USAi will own 61.5% of the
Newco equity (including 10.9% relating to USAi's controlling interest in TMCS).
Upon the closing, USAi will beneficially own shares of Newco stock representing
approximately 96% of the combined voting power of
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Newco, assuming all holders of TMCS Class A Common Stock, other than USAi,
convert their shares into shares of TMCS Class B Common Stock prior to the
closing.
The terms of the Series A Preferred Stock provide for the
issuance in certain circumstances of additional shares of Newco Common Stock to
the holders thereof following the 39-month anniversary of the closing of the
Transactions. Each share of Series A Preferred Stock will be, following such
anniversary, automatically converted into the right to receive a number of
shares of Newco Common Stock based on the "Final Market Price" of the Newco
Common Stock, which is equal to the sum of (i) .5 times the average of the
90-day, volume-weighted average closing price (the "Market Price") of the Newco
Common Stock ending on (x) the 90th day following the closing, (y) the 15-month
anniversary of the closing and (z) the 27-month anniversary of the closing, and
(ii) .5 times the Market Price for the 90-day period ending on the 39-month
anniversary of the closing (the sum of (i) and (ii), the "Final Market Price").
If the Final Market Price is equal to or greater than $257.88 (which would imply
a market capitalization, based on Newco's expected initial capitalization at
closing, of $45 billion), each share of Series A Preferred Stock will be
converted into 1 share of Newco Common Stock, if the Final Market Price is equal
to or less than $143.27 (which would imply a market capitalization, based on
Newco's expected initial capitalization at closing, of $25 billion), each Series
A Preferred Stock share will be convertible into no shares of Newco Common Stock
and the shares of Series A Preferred Stock will be redeemed by Newco for $.01
per share. At Final Market Prices between $143.27 and $257.88, the shares to be
issued will vary, on an interpolated basis. The Series A Preferred Stock will
contain customary anti-dilution adjustments for the Final Market Price and the
conversion ratio. The terms of the Series A Preferred Stock are set forth in
Exhibit B to the Agreement and Plan of Reorganization, filed as an exhibit
hereto.
The parties have also entered into option agreements, filed as
exhibits hereto, which under certain circumstances provide USAi and TMCS with
the right to acquire, in the aggregate, up to 19.9% of the outstanding Lycos
Common Stock.
The Transactions are subject to Lycos shareholder approval as
well as receipt of required regulatory approvals and other customary conditions.
Upon closing of the Transactions, Barry Diller, Chairman and
Chief Executive Officer of USAi, will be Chairman of the Board of Newco; Robert
J. Davis, the President and Chief Executive Officer of Lycos, will be the
President and Chief Executive Officer of Newco; and Edward M. Philip, Chief
Operating Officer and Chief Financial Officer of Lycos, will be the Chief
Financial Officer of Newco. In addition to Mr. Diller, Messrs. Davis and Philip
will be directors of Newco. Lycos will be entitled to appoint one additional
director to serve for a one-year term, and USAi will appoint the remaining
directors of Newco.
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The Agreements summarized above are filed as exhibits hereto,
and the foregoing summary descriptions of such agreements are qualified in their
entirety by reference to such exhibits, which are incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
Exhibit No. Description
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2.1 Agreement and Plan of Reorganization, dated as of February
8, 1999, by and among USA Networks, Inc., Ticketmaster
Online-CitySearch, Inc., Lycos, Inc., USA Interactive Inc.,
Lemma, Inc. and Tycho, Inc. (the "Merger Agreement"),
including Form of Certificate of Designations, Preferences
and Rights of Series A Convertible Redeemable Preferred
Stock of USA/Lycos Interactive Networks, Inc. (Exhibit B to
the Merger Agreement)
2.2 Contribution Agreement, dated as of February 8, 1999, by and
among USA Networks, Inc., USANi LLC and USA Interactive Inc.
2.3 Stock Option Agreement, dated February 8, 1999, between Lycos,
Inc. and USA Networks, Inc. (Exhibit A-1 to the Merger Agreement)
2.4 Stock Option Agreement, dated February 8, 1999, between Lycos,
Inc. and Ticketmaster Online-CitySearch, Inc. (Exhibit A-2 to the
Merger Agreement)
3.1 Certificate of Incorporation of USA Interactive Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LYCOS, INC.
Date: February 25, 1999 By: /s/ Thomas E. Guilfoile
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Thomas E. Guilfoile
Vice President, Finance &
Adminstration
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EXHIBIT INDEX
Exhibit No. Description Page No.
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2.1 Agreement and Plan of Reorganization, dated as of
February 8, 1999, by and among USA Networks, Inc.,
Ticketmaster Online-CitySearch, Inc., Lycos, Inc.,
USA Interactive Inc., Lemma, Inc. and Tycho, Inc.
(the "Merger Agreement"), including Form of Certificate
of Designations, Preferences and Rights of Series A
Convertible Redeemable Preferred Stock of USA/Lycos
Interactive Networks, Inc. (Exhibit B to the Merger
Agreement)
2.2 Contribution Agreement, dated as of February 8, 1999,
by and among USA Networks, Inc., USANi LLC and USA
Interactive Inc.
2.3 Stock Option Agreement, dated February 8, 1999,
between Lycos, Inc. and USA Networks, Inc. (Exhibit A-1
to the Merger Agreement)
2.4 Stock Option Agreement, dated February 8, 1999,
between Lycos, Inc. and Ticketmaster Online-CitySearch,
Inc. (Exhibit A-2 to the Merger Agreement)
3.1 Certificate of Incorporation of USA Interactive Inc.
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