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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EXCITE, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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<PAGE> 2
LOGO
May , 1998
To Our Shareholders:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders
of Excite, Inc. to be held at the corporate offices of the Company, located at
555 Broadway, Redwood City, California on at 10:00 a.m.,
California time.
The matters expected to be acted upon at the meeting are described in
detail in the following Notice of Annual Meeting of Shareholders and Proxy
Statement.
It is important that you use this opportunity to take part in the affairs
of Excite, Inc. by voting on the business to come before this meeting. WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING. Returning the Proxy does not
deprive you of your right to attend the meeting and to vote your shares in
person.
We look forward to seeing you at the meeting.
Sincerely,
GEORGE BELL
President and Chief Executive Officer
<PAGE> 3
EXCITE, INC.
555 BROADWAY
REDWOOD CITY, CALIFORNIA 94063
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Excite,
Inc. (the "Company") will be held at the corporate offices of the Company,
located at 555 Broadway, Redwood City, California on at
10:00 a.m., California time, for the following purposes:
1. To elect five directors of the Company, each to serve until the
next Annual Meeting of Shareholders and until his successor has been
elected and qualified or until his earlier resignation or removal.
2. To approve an amendment to the Company's 1996 Equity Incentive Plan
to increase the number of shares issuable thereunder by an aggregate of
3,300,000 shares.
3. To approve an amendment to the Company's 1996 Employee Stock
Purchase Plan to increase the number of shares issuable thereunder by an
aggregate of 300,000 shares.
4. To approve a change in the Company's state of incorporation from
California to Delaware.
5. To ratify the selection of Ernst & Young LLP as independent
auditors for the Company for the fiscal year ending December 31, 1998.
6. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on , 1998
are entitled to notice of and to vote at the meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
ROBERT C. HOOD
Executive Vice President,
Chief Administrative Officer and
Chief Financial Officer
Redwood City, California
May , 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
<PAGE> 4
EXCITE, INC.
555 BROADWAY
REDWOOD CITY, CALIFORNIA 94063
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PROXY STATEMENT
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MAY , 1998
The accompanying proxy is solicited on behalf of the Board of Directors of
Excite, Inc., a California corporation (the "Company"), for use at the Annual
Meeting of Shareholders of the Company to be held at the corporate offices of
the Company located at 555 Broadway, Redwood City, California on ,
1998 at 10:00 a.m., California time, (the "Meeting"). Only holders of record of
the Company's Common Stock at the close of business on , 1998 (the
"Record Date") will be entitled to vote at the Meeting. At the close of business
on , 1998, the Company had shares of Common Stock
outstanding and entitled to vote. A majority of the shares of Common Stock
outstanding on the Record Date will constitute a quorum for the transaction of
business. All proxies will be voted in accordance with the instructions
contained therein and, if no choice is specified, the proxies will be voted in
favor of the nominees and the proposals set forth in the accompanying Notice of
Meeting and this Proxy Statement. This Proxy Statement and the accompanying form
of proxy were first mailed to shareholders on or about May , 1998. An annual
report for the fiscal year ended December 31, 1997 is enclosed with this Proxy
Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Holders of the Company's Common Stock are entitled to one vote for each
share held as of the Record Date, except that in the election of directors each
shareholder has cumulative voting rights and is entitled to a number of votes
equal to the number of shares held by such shareholder multiplied by the number
of directors to be elected for which such shareholder is eligible to vote. The
shareholder may cast these votes all for a single candidate or distribute the
votes among any or all of the candidates. No shareholder will be entitled to
cumulate votes for a candidate, however, unless that candidate's name has been
placed in nomination prior to the voting and the shareholder, or any other
shareholder, has given notice at the Meeting prior to the voting of an intention
to cumulate votes. In such an event, the proxy holder may allocate among the
Board of Directors' nominees the votes represented by proxies in the proxy
holder's sole discretion.
With respect to Proposal No. 1, five (5) directors will be elected by a
plurality of the votes of the shares of Common Stock present in person or
represented by proxy at the Meeting and voting on the election of directors.
Each of Proposals No. 2, 3 and 5 requires for approval the affirmative vote of a
majority of the shares of Common Stock present in person or represented by proxy
at the Meeting. Proposal No. 4 requires approval of the affirmative vote of a
majority of the shares of Common Stock outstanding as of the Record Date.
The effectiveness of any of the Proposals is not conditioned upon the
approval of any of the other Proposals by the shareholders.
The required quorum for the transaction of business at the Meeting is a
majority of the shares of Common Stock outstanding on the Record Date.
Abstentions will be included in determining the number of shares present and
voting at the Meeting and will have the same effect as votes against Proposals
No. 2, 3, 4 and 5. Since the required vote of holders of Common Stock for
Proposal No. 4 is based upon the number of outstanding shares rather than upon
the shares actually voted in person or by proxy at the Meeting, the failure of a
holder to submit a proxy or to vote in person at the Meeting (including
abstentions and "broker non-votes") will have the same effect as a vote against
approval of Proposal No. 4. With respect to each of the other proposals, broker
non-votes will have no effect.
In the event that sufficient votes in favor of the Proposals are not
received by the date of the Meeting, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitations of
proxies. Any such adjournment would require the affirmative vote of the majority
of the outstanding shares present in person or represented by proxy at the
Meeting.
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The expenses of soliciting proxies to be voted at the Meeting will be paid
by the Company. Following the original mailing of the proxies and other
soliciting materials, the Company and/or its agents may also solicit proxies by
mail, telephone, telegraph or in person. Following the original mailing of the
proxies and other soliciting materials, the Company will request that brokers,
custodians, nominees and other record holders of the Company's shares forward
copies of the proxy and other soliciting materials to persons for whom they hold
shares and request authority for the exercise of proxies. In such cases, the
Company, upon the request of the record holders, will reimburse such holders for
their reasonable expenses.
REVOCABILITY OF PROXIES
Any person signing a proxy in the form accompanying this Proxy Statement
has the power to revoke it prior to the Meeting or at the Meeting prior to the
vote pursuant to the proxy. A proxy may be revoked by any of the following
methods: (i) a written instrument delivered to the Company stating that the
proxy is revoked; (ii) a subsequent proxy that is signed by the person who
signed the earlier proxy and is presented at the Meeting; or (iii) attendance at
the Meeting and voting in person. Please note, however, that if a shareholder's
shares are held of record by a broker, bank or other nominee and that
shareholder wishes to vote at the Meeting, the shareholder must bring to the
Meeting a letter from the broker, bank or other nominee confirming that
shareholder's beneficial ownership of the shares.
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PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
At the Meeting, shareholders will elect directors to hold office until the
next Annual Meeting of Shareholders and until their respective successors have
been elected and qualified or until such directors' earlier resignation or
removal. The size of the Company's Board of Directors (the "Board") is currently
set at five members. Accordingly, five nominees will be elected at the Meeting
to be the five directors of the Company. If any nominee for any reason is unable
to serve, or for good cause will not serve, as a director, the proxies may be
voted for such substitute nominee as the proxy holder may determine. The Company
is not aware of any nominee who will be unable to serve, or for good cause will
not serve, as a director.
DIRECTORS/NOMINEES
The names of the nominees, and certain information about them, are set
forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- -------------------- --------
<S> <C> <C> <C>
George Bell................... 41 President, Chief Executive Officer and 1996
Director of the Company(1)
Joseph R. Kraus, IV........... 26 Senior Vice President and Director of 1994
the Company
Donn M. Davis................. 35 President of Tribune Ventures(1) 1995
Vinod Khosla.................. 43 General Partner, Kleiner, Perkins, 1995
Caufield & Byers(2)
Geoffrey Y. Yang.............. 38 General Partner, Institutional Venture 1996
Partners(1)(2)
</TABLE>
- ---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Mr. Bell has been President, Chief Executive Officer and a director of the
Company since January 1996. From December 1995 until January 1996, he was a
consultant to the Company. From May 1991 to December 1995, Mr. Bell was employed
by The Times Mirror Company, a publishing and cable television company, most
recently as President -- The Skiing Company for Times Mirror Magazines and
previously as President -- The Outdoor Company and Vice President, Multimedia
for Times Mirror Magazines. Prior to joining The Times Mirror Company, Mr. Bell
worked as an independent producer, writer and packager of television sports and
documentary programming and as a staff producer and writer for the ABC
television network. Mr. Bell has received four Emmy Awards. He received a B.A.
in English from Harvard College.
Mr. Kraus has been Senior Vice President of the Company since January 1997
and a director of the Company since June 1994. He served as Senior Vice
President, Business Development of the Company from January 1996 to January 1997
and, from June 1994 to January 1996, served as President of the Company. Prior
to joining the Company, Mr. Kraus was a student at Stanford University. He
received a B.A. in Political Science from Stanford University.
Mr. Davis has served as a director of the Company since March 1996. He is
currently also a director of StarSight Telecast, Inc. Mr. Davis has been
President of Tribune Ventures, a Venture investment unit of Tribune Company,
since February 1995. From August 1992 to February 1995, Mr. Davis served as
Senior Counsel for Tribune Company. From 1988 to July 1992, Mr. Davis was an
associate with the law firm of Sidley & Austin. Mr. Davis received a B.S. in
Finance from Miami University (Ohio) and a J.D. from the University of Michigan
Law School.
Mr. Khosla has served as a director of the Company since July 1995. He is
currently also a director of Picture Tel, Spectrum Holobyte, The 3DO Company and
several privately held companies. He has been a general partner at Kleiner
Perkins Caufield & Byers since 1986. Mr. Khosla received a Bachelor of
Technology in Electrical Engineering from the Indian Institute of Technology, an
M.S. in Biomedical Engineering from Carnegie Mellon University and an M.B.A.
from Stanford University.
Mr. Yang has served as a director of the Company since July 1995. He is
currently also a director of several privately held companies. He has been a
general partner of Institutional Venture Partners since 1987.
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He received a B.A. in Economics and a B.S.E. in Information Systems Engineering
from Princeton University and an M.B.A. from Stanford University.
Executive officers are chosen by, and serve at the discretion of, the
Board. There are no family relationships among any of the directors and
executive officers of the Company.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board met six times, including telephone conference meetings, and acted
by written consent seven times, during 1997. No director attended fewer than 75%
of the aggregate of the total number of meetings of the Board (held during the
period for which such director was a director) and the total number of meetings
held by all committees of the Board on which such director served (during the
period that such director served).
Standing committees of the Board include an Audit Committee and a
Compensation Committee. The Board does not have a nominating committee or a
committee performing similar functions.
Messrs. Bell, Davis and Yang are the current members of the Audit
Committee. The Audit Committee met one time and took no actions by written
consent during 1997. The Audit Committee meets with the Company's independent
auditors to review the adequacy of the Company's internal control systems and
financial reporting procedures; reviews the general scope of the Company's
annual audit and the fees charged by the independent auditors; reviews and
monitors the performance of non-audit services by the Company's auditors;
reviews the fairness of any proposed transaction between any officer, director
or other affiliate of the Company and the Company, and after such review, makes
recommendations to the full Board; and performs such further functions as may be
required by any stock exchange or over-the-counter market upon which the
Company's Common Stock may now or in the future be listed.
Messrs. Khosla and Yang are the current members of the Compensation
Committee. The Compensation Committee held no meetings and acted by written
consent 22 times during 1997. The Compensation Committee reviews and approves
compensation and benefits for the Company's key executive officers, administers
the Company's stock purchase and equity incentive plans and makes
recommendations to the Board regarding such matters.
DIRECTOR COMPENSATION
None of the members of the Company's Board currently receives any fees
associated with his attendance at Board meetings or at Board Committee meetings.
In February 1996, the Board adopted, and in March 1996, the shareholders of
the Company approved, the 1996 Directors Stock Option Plan (the "Directors
Plan") and reserved a total of 150,000 shares of the Company's Common Stock for
issuance thereunder. The Directors Plan was amended by the Board in March 1996.
Members of the Board who (i) are not employees of the Company (or of any parent,
subsidiary or affiliate of the Company), (ii) do not represent a venture capital
investor, or (iii) do not own more than 5% of the Company's Common Stock are,
subject to certain exclusions, eligible to participate in the Directors Plan.
Each eligible person who first becomes a member of the Board will automatically
be granted an option for 15,000 shares on the date such person becomes a
director. Also, at each annual meeting of the Company, each eligible director
will receive an additional grant of 7,500 shares if such director has served
continuously as a member of the Board since the later of the date the Board
adopted the Directors Plan or the date such director first became a member of
the Board. Each option will vest as to 2.08% of the shares covered thereby on
the last date of each month following the grant date. All options granted under
the Directors Plan will be granted at an exercise price equal to the fair market
value of the Company's Common Stock on the date of grant, and, in the event of a
merger, consolidation or certain other change of control transactions, the
vesting of all options granted pursuant to the Directors Plan will accelerate
and the options will become exercisable in full. The Directors Plan will
terminate in February 2006, unless terminated earlier in accordance with the
provisions thereof. As of December 31, 1997, 147,500 shares of Common Stock are
available for issuance under the Directors Plan.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF
EACH OF THE NOMINATED DIRECTORS
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PROPOSAL NO. 2 -- ADOPTION OF AMENDMENTS TO
1996 EQUITY INCENTIVE PLAN
Below is a summary of the principal provisions of the Company's 1996 Equity
Incentive Plan. This summary is qualified in its entirety by reference to the
full text of such plan.
PLAN HISTORY
In February 1996, the Board adopted, and in March 1996, the shareholders of
the Company approved, the 1996 Equity Incentive Plan (the "Plan"). The Plan
serves as the successor equity incentive program to the Company's 1995 Equity
Incentive Plan (the "1995 Plan"). Options granted under the 1995 Plan before its
termination in April 1996 remain outstanding in accordance with their terms, but
no further options have been granted under the 1995 Plan after the date of its
termination. The Company initially reserved 1,500,000 shares of the Company's
Common Stock for issuance under the Plan. In November 1996 and January 1997, the
Board approved amendments to the Plan to increase the number of shares reserved
and authorized for issuance thereunder by 800,000 shares and 2,455,000 shares,
respectively. These amendments were approved by the shareholders in June 1997.
PROPOSED AMENDMENT TO THE PLAN
In March 1998, the Board approved an amendment to the Plan to increase the
number of shares reserved and authorized for issuance thereunder by 3,300,000
shares. This amendment to the Plan to increase, by an aggregate of 3,300,000
shares, the total number of shares issuable thereunder to 8,055,000 shares is
the subject of this Proposal. The Board believes that the increase in the number
of shares reserved under the Plan proposed by this amendment is necessary in
order to enable the Company to continue to use the grant of stock options and
other equity awards to retain and attract qualified employees and to also
encourage stock ownership by Plan participants, thereby aligning their interests
with those of the Company's shareholders.
SHARES SUBJECT TO THE PLAN
An aggregate of 8,055,000 shares of the Common Stock of the Company has
been reserved by the Board for issuance under the Plan (after approval of the
amendment under this Proposal). If any option granted pursuant to the Plan
expires or terminates for any reason without being exercised in whole or in
part, or any award terminates without being issued, or any award is forfeited or
repurchased by the Company at the original purchase price, the shares released
from such award will again become available for grant and purchase under the
Plan. This number of shares is subject to proportional adjustment to reflect
stock splits, stock dividends and other similar events.
ADMINISTRATION
The Plan is administered by the Compensation Committee, the members of
which are appointed by the Board. The Compensation Committee currently consists
of Messrs. Khosla and Yang, both of whom are "non-employee directors", as that
term is defined in the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and "outside directors", as that term is defined pursuant to
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
Subject to the terms of the Plan, the Compensation Committee determines the
persons who are to receive awards, the number of shares subject to each such
award and the terms and conditions of each such award. The Compensation
Committee has the authority to construe and interpret any of the provisions of
the Plan or any awards granted thereunder.
ELIGIBILITY
Employees, officers, directors, consultants, independent contractors and
advisors of the Company (and of any subsidiaries and affiliates) are eligible to
receive awards under the Plan (the "Participants"). No Participant is eligible
to receive more than 500,000 shares of Common Stock in any calendar year under
the
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Plan, other than new employees of the Company (including directors and officers
who are also new employees), who are eligible to receive up to a maximum of
800,000 shares of Common Stock in the calendar year in which they commence their
employment with the Company. As of December 31, 1997, approximately 296 persons
were eligible to participate in the Plan.
STOCK OPTIONS
The Plan permits the granting of options that are intended to qualify
either as Incentive Stock Options ("ISOs") or Nonqualified Stock Options
("NQSOs"). ISOs may be granted only to employees (including officers and
directors who are also employees) of the Company or any parent or subsidiary of
the Company.
The option exercise price for each ISO share must be no less than 100% of
the "fair market value" (as defined in the Plan) of a share of Common Stock at
the time the ISO is granted. In the case of an ISO granted to a 10% shareholder,
the exercise price for each such ISO share must be no less than 110% of the fair
market value of a share of Common Stock at the time the ISO is granted. The
option exercise price for each NQSO share must be no less than 85% of the fair
market value of a share of Common Stock at the time of grant. To date, the
Company has not granted options under the Plan at less than fair market value.
The exercise price of options granted under the Plan may be paid as
approved by the Compensation Committee at the time of grant: (1) in cash (by
check); (2) by cancellation of indebtedness of the Company to the Participant;
(3) by surrender of shares of the Company's Common Stock owned by the
Participant for at least six months and having a fair market value on the date
of surrender equal to the aggregate exercise price of the option; (4) by tender
of a full recourse promissory note; (5) by waiver of compensation due to or
accrued by the Participant for services rendered; (6) by a "same-day sale"
commitment from the Participant and a National Association of Securities
Dealers, Inc. ("NASD") broker; (7) by a "margin" commitment from the Participant
and a NASD broker; or (8) by any combination of the foregoing.
TERMINATION OF OPTIONS
Options are generally exercisable for a period of 10 years. Options granted
under the Plan terminate three months (or such shorter or longer period as
determined by the Compensation Committee not exceeding five years) after the
Participant ceases to be employed or retained by the Company unless the
termination of employment or retention is due to disability or death, in which
case the option may, but need not, provide that it may be exercised at any time
within 12 months of termination to the extent the option was exercisable on the
date of termination. In no event will an option be exercisable after the
expiration date of the option.
RESTRICTED STOCK AWARDS
The Compensation Committee may grant Participants restricted stock awards
to purchase stock either in addition to, or in tandem with, other awards under
the Plan, under such terms, conditions and restrictions as the Compensation
Committee may determine. The purchase price for such awards must be no less than
85% of the fair market value of the Company's Common Stock on the date of the
award (and in the case of an award granted to a 10% shareholder, the purchase
price shall be 100% of fair market value) and can be paid for in any of the
forms of consideration listed in items (1) through (5) in "Stock Options" above,
as are approved by the Compensation Committee at the time of grant. To date, the
Company has not granted any restricted stock awards.
STOCK BONUS AWARDS
The Compensation Committee may grant Participants stock bonus awards either
in addition to, or in tandem with, other awards under the Plan, under such
terms, conditions and restrictions as the Compensation Committee may determine.
To date, the Company has not granted any stock bonus awards.
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MERGERS, CONSOLIDATIONS, CHANGE OF CONTROL
In the event of a merger, consolidation, dissolution or liquidation of the
Company, the sale of substantially all the assets of the Company or any other
similar corporate transaction, the successor corporation may assume, replace or
substitute equivalent options in exchange for those granted under the Plan or
provide substantially similar consideration, shares or other property as was
provided to shareholders of the Company (after taking into account provisions of
the awards) under the Plan. In the event that the successor corporation, if any,
does not assume or substitute the options awarded, such options shall expire
upon the closing of such transaction at the time and upon the conditions as the
Board determines.
AMENDMENT OF THE PLAN
The Board may at any time amend or terminate the Plan, including amendment
of any form of award agreement or instrument to be executed pursuant to the
Plan. However, the Board may not amend the Plan in any manner that requires
shareholder approval pursuant to the Code or the regulations promulgated
thereunder, or the Exchange Act or Rule 16b-3 (or its successor) promulgated
thereunder.
TERM OF THE PLAN
Unless terminated earlier as provided in the Plan, the Plan will terminate
in February 2006, ten (10) years from the date the Plan was adopted by the
Board.
FEDERAL INCOME TAX INFORMATION
THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY STATEMENT
OF THE FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND PARTICIPANTS UNDER THE
PLAN. THE FEDERAL TAX LAWS MAY CHANGE AND THE FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES FOR ANY PARTICIPANT WILL DEPEND UPON HIS OR HER INDIVIDUAL
CIRCUMSTANCES. EACH PARTICIPANT HAS BEEN, AND IS, ENCOURAGED TO SEEK THE ADVICE
OF A QUALIFIED TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF PARTICIPATION IN
THE PLAN.
Incentive Stock Options. A Participant will not recognize income upon grant
of an ISO and will not incur tax on its exercise (unless the Participant is
subject to the alternative minimum tax described below). If the Participant
holds the stock acquired upon exercise of an ISO (the "ISO Shares") for one year
after the date the option was exercised and for two years after the date the
option was granted, the Participant generally will realize capital gain or loss
(rather than ordinary income or loss) upon disposition of the ISO Shares. This
gain or loss will be equal to the difference between the amount realized upon
such disposition and the amount paid for the ISO shares.
If the Participant disposes of ISO Shares prior to the expiration of either
required holding period (a "disqualifying disposition"), then gain realized upon
such disposition, up to the difference between the fair market value of the ISO
Shares on the date of exercise (or, if less, the amount realized on a sale of
such shares) and the option exercise price, generally will be treated as
ordinary income. Any additional gain will be capital gain, taxed at a rate that
depends upon the amount of time the ISO Shares were held by the Participant.
Alternative Minimum Tax. The difference between the fair market value of
the ISO shares on the date of exercise and the exercise price is an adjustment
to income for purposes of the alternative minimum tax (the "AMT"). The AMT
(imposed to the extent it exceeds the taxpayer's regular tax) is 26% of an
individual taxpayer's alternative minimum taxable income (28% in the case of
alternative minimum taxable income in excess of $175,000). A maximum 20% AMT
rate applies to the portion of alternative minimum taxable income that would
otherwise be taxable as net capital gain. Alternative minimum taxable income is
determined by adjusting regular taxable income for certain items, increasing
that income by certain tax preference items (including the difference between
the fair market value of the ISO shares on the date of exercise and the exercise
price) and reducing this amount by the applicable exemption amount ($45,000 in
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the case of a joint return, subject to reduction under certain circumstances).
If a disqualifying disposition of the ISO Shares occurs in the same calendar
year as exercise of the ISO, there is no AMT adjustment with respect to those
shares. Also upon a sale of ISO shares that is not a disqualifying disposition,
alternative minimum taxable income is reduced in the year of sale by the excess
of fair market value of the ISO shares at exercise over the amount paid for the
ISO shares. Special rules apply where all or a portion of the exercise price is
paid by tendering shares of Common Stock.
Nonqualified Stock Options. A Participant will not recognize any taxable
income at the time a NQSO is granted. However, upon exercise of a NQSO the
Participant will include in income as compensation an amount equal to the
difference between the fair market value of the shares on the date of exercise
and the Participant's exercise price. The included amount will be treated as
ordinary income by the Participant and may be subject to income tax and FICA
withholding by the Company (either by payment in cash or withholding out of the
Participant's salary). Upon resale of the shares by the Participant, any
subsequent appreciation or depreciation in the value of the shares will be
treated as capital gain or loss. Special rules apply where all or a portion of
the exercise price is paid by tendering shares of Common Stock.
Tax Treatment of the Company. The Company will be entitled to a deduction
in connection with the exercise of a NQSO by a Participant or the receipt of
restricted stock or stock bonuses by a Participant to the extent that the
Participant recognizes ordinary income. The Company will be entitled to a
deduction in connection with the disposition of ISO Shares only to the extent
that the Participant recognizes ordinary income on a disqualifying disposition
of the ISO Shares.
ERISA
The Plan is not subject to any of the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA") and is not qualified under Section 401(a)
of the Code.
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NEW PLAN BENEFITS
No option grants have made through December 31, 1997 under the Plan out of
the 3,300,000 additional shares reserved under the Plan that shareholders are
being asked to approve. The numbers of option grants to be made under the Plan
in 1998 to the below-listed individuals or groups of individuals, and the prices
at which such grants will be made, are not determinable. The following table
sets forth the option grants that were made during the fiscal year ended
December 31, 1997 under the Plan to (i) the Named Officers (see "Executive
Compensation"), (ii) all current executive officers, as a group, (iii) all
current directors who are not executive officers, as a group, and (iv) all
employees, including officers who are not executive officers, as a group.
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE NUMBER OF
NAME AND POSITION PRICE(1) SHARES(1)
----------------- -------- ---------
<S> <C> <C>
George Bell................................................. $ 7.88 83,000
President and Chief Executive Officer
Brett T Bullington.......................................... $ 8.75 35,000
Executive Vice President, Strategic and Business
Development
Robert C. Hood.............................................. -- --
Executive Vice President, Chief Administrative Officer and
Chief Financial Officer
Kenneth Wachtel............................................. $ 8.75 100,000
Senior Vice President, Sales
Joseph R. Kraus, IV......................................... -- --
Senior Vice President
All current executive officers, as a group (7 persons)...... $ 9.39 421,000
All current directors who are not executive officers, as a
group (3 persons)......................................... -- --
All employees, including officers who are not executive
officers, as a group...................................... $13.08 1,958,000
</TABLE>
- ---------------
(1) The exercise price and number of options to be granted in the future under
the Plan is unknown, as the exercise price will be equal to fair market
value on the date of grant and option grants are made at the discretion of
the Compensation Committee.
The affirmative vote of a majority of the shares of the Company's Common
Stock represented in person or by proxy will be required to approve the
amendment to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR INCREASING
THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED
FOR ISSUANCE UNDER THE PLAN.
9
<PAGE> 13
PROPOSAL NO. 3 -- ADOPTION OF AMENDMENT TO
1996 EMPLOYEE STOCK PURCHASE PLAN
Below is a summary of the principal provisions of the Company's 1996
Employee Stock Purchase Plan. This summary is qualified in its entirety by
reference to the full text of such plan.
ESPP HISTORY
In February 1996, the Board adopted, and in March 1996, the shareholders of
the Company approved, the 1996 Employee Stock Purchase Plan (the "ESPP") to
provide employees of the Company with an opportunity to purchase Common Stock
through payroll deductions. Offering periods under the ESPP are of 24 months
duration and are comprised of four six-month purchase periods. The first
offering period began in December 1996. Offering periods thereafter begin on
February 1 and August 1 of each year, provided however that the Board may change
the duration of offering periods or purchase periods. Eligible employees may
participate in the ESPP by authorizing payroll deductions of an amount
determined by the Board of Directors. The amount of authorized payroll
deductions may not be less than 2% or more than 10% of an employee's
compensation, as defined. Amounts withheld are applied at the end of each
six-month purchase period to purchase shares of Common Stock, subject to certain
limitations in the ESPP. The purchase price is equal to 85% of the lower of (i)
the market price of the Company's Common Stock immediately before the beginning
of the applicable offering period or (ii) the market price of the Company's
Common Stock at the time of purchase.
The Company initially reserved 150,000 shares of the Company's Common Stock
for issuance under the Plan.
PROPOSED AMENDMENT TO THE ESPP
In March 1998, the Board approved an amendment to the ESPP to increase the
number of shares reserved and authorized for issuance thereunder by 300,000
shares. This amendment to the ESPP to increase, by an aggregate of 300,000
shares, the total number of shares issuable thereunder to 450,000 shares is the
subject of this Proposal. The Board believes that the increase in the number of
shares reserved under the ESPP proposed by this amendment is necessary in order
to enable the Company to continue to provide employees of the Company the
opportunity to purchase Common Stock through payroll deductions and to encourage
stock ownership by ESPP participants, thereby aligning their interests with
those of the Company's shareholders.
SHARES SUBJECT TO THE ESPP
An aggregate of 450,000 shares of the Common Stock of the Company has been
reserved by the Board for issuance under the ESPP (after approval of the
amendment under this Proposal).
ADMINISTRATION
The ESPP is administered by the Compensation Committee, the members of
which are appointed by the Board. The Compensation Committee currently consists
of Messrs. Khosla and Yang, both of whom are "non-employee directors", as that
term is defined in the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and "outside directors", as that term is defined pursuant to
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
Subject to the terms of the ESPP, the Compensation Committee may determine
the duration of the offering periods, the authorized amount of payroll
deductions and the maximum number of shares that may be purchased. The
Compensation Committee has the authority to construe and interpret any of the
provisions of the ESPP.
10
<PAGE> 14
ELIGIBILITY
Any employee, including officers and employee-directors, who is employed
more than twenty (20) hours per week for more than five (5) months per calendar
year by the Company or any participating parent or subsidiary corporation
(including any corporation which subsequently becomes such at any time during
the term of the ESPP) will become eligible to participate in the ESPP on the
first day of the first offering period following such individual's completion of
one month of employment.
As of December 31, 1997, approximately 296 employees (including seven (7)
executive officers) were eligible to participate in the ESPP.
SPECIAL LIMITATIONS
The ESPP imposes certain limitations upon a participant's rights to acquire
Common Stock, including the following limitations:
1. Purchase rights may not be granted to any individual who owns stock
(including stock purchasable under any outstanding purchase rights)
possessing 5% or more of the total combined voting power or value of all
classes of stock of the Company or any of its affiliates.
2. Purchase rights granted to a participant may not permit such
individual to purchase more than $25,000 of Common Stock (valued at the
time each purchase right is granted) during any one calendar year.
TERMINATION OF PURCHASE RIGHTS
The purchase right will terminate upon the participant's election to
withdraw from the ESPP. Any payroll deductions which the participant may have
made with respect to the terminated purchase right will be refunded to the
participant if the election to withdraw from the ESPP is received by the Company
at least 15 days prior to the end of a purchase period. If the participant's
election to withdraw is received by the Company less than 15 days prior to the
end of a purchase period, the participant's payroll deductions will be used to
purchase shares on the purchase date and his participation will end at the
beginning of the next purchase period or offering period. A participant's
election to withdraw from the Purchase Plan is irrevocable, and the participant
may not rejoin the purchase period or offering period for which the terminated
purchase right was granted.
The purchase right will also terminate upon the participant's termination
of employment. Any payroll deductions that the participant may have made during
the purchase period in which such termination occurs will be refunded to the
participant.
In addition, the Company has specifically reserved the right, exercisable
in the sole discretion of the Board, to terminate the ESPP at any time. If such
right is exercised by the Company, then the ESPP will terminate in its entirety
and no further purchase rights will be granted or exercised thereunder.
SHAREHOLDER RIGHTS
No participant will have any shareholder rights with respect to the shares
covered by his or her purchase rights until the shares are actually purchased on
the participant's behalf. No adjustment will be made for dividends,
distributions or other rights for which the record date is prior to the date of
such purchase.
ASSIGNABILITY
No purchase rights will be assignable or transferable by the participant,
except by will or the laws of inheritance following the participant's death.
Each purchase right will, during the lifetime of the participant, be exercisable
only by the participant.
11
<PAGE> 15
MERGERS, CONSOLIDATIONS, CHANGE OF CONTROL
In the event of a merger, consolidation, dissolution or liquidation of the
Company, the sale of substantially all the assets of the Company or any other
similar corporate transaction, the successor corporation may assume, replace or
substitute equivalent purchase rights in exchange for those granted under the
ESPP, unless the Board determines that participants may exercise all purchase
rights prior to the closing of such transaction.
AMENDMENT OF THE PLAN
The Board may at any time amend or terminate the ESPP, including amendment
of any form of award agreement or instrument to be executed pursuant to the
Plan. However, the Board may not amend the ESPP in any manner that requires
shareholder approval pursuant to the Code or the regulations promulgated
thereunder, or the Exchange Act or Rule 16b-3 (or its successor) promulgated
thereunder.
The ESPP will terminate upon the earlier of (i) the last day of the
purchase period ending in February 2006 or (ii) the date on which all shares
available for issuance thereunder are sold pursuant to exercised purchase
rights.
FEDERAL TAX CONSEQUENCES
The ESPP is intended to be an "employee stock purchase plan" within the
meaning of Section 423 of the Internal Revenue Code. Under a plan that so
qualifies, no taxable income will be reportable by a participant, and no
deductions will be allowable to the Company, by reason of the grant or exercise
of the purchase rights issued thereunder. Taxable income will not be recognized
until there is a sale or other disposition of the shares acquired under the ESPP
or in the event the participant should die while still owning the purchased
shares.
If the participant sells or otherwise disposes of the purchased shares
within two (2) years after commencement of the offering period during which
those shares were purchased or within one year of the date of purchase, the
participant will recognize ordinary income in the year of sale or disposition
equal to the amount by which the fair market value of the shares on the purchase
date exceeded the purchase price paid for those shares. If the participant sells
or disposes of the purchased shares more than two (2) years after the
commencement of the offering period in which those shares were purchased and
more than one year from the date of purchase, then the participant will
recognize ordinary income in the year of sale or disposition equal to the lesser
of (i) the amount by which the fair market value of the shares on the sale or
disposition date exceeded the purchase price paid for those shares or (ii) 15%
of the fair market value of the shares on the date of commencement of such
offering period. Any additional gain upon the disposition will be taxed as a
capital gain.
If the participant still owns the purchased shares at the time of death,
the lesser of (i) the amount by which the fair market value of the shares on the
date of death exceeds the purchase price or (ii) 15% of the fair market value of
the shares on the date of commencement of the offering period during which those
shares were purchased will constitute ordinary income in the year of death.
If the purchased shares are sold or otherwise disposed of within two (2)
years after commencement of the offering period during which those shares were
purchased or within one year after the date of purchase, then the Company will
be entitled to an income tax deduction in the year of sale or disposition equal
to the amount of ordinary income recognized by the participant as a result of
such sale or disposition. In all other cases, no deduction will be allowed.
12
<PAGE> 16
NEW ESPP BENEFITS
No shares have been issued through December 31, 1997 under the ESPP out of
the 300,000 additional shares reserved under the ESPP that shareholders are
being asked to approve. The number of shares to be issued under the ESPP in 1998
to the below-listed individuals or groups of individuals and the net values to
be realized upon such issuances, are not determinable. The following table sets
forth the ESPP shares that were issued during the fiscal year ended December 31,
1997 under the ESPP to (i) the Named Officers (see "Executive Compensation"),
(ii) all current executive officers, as a group, (iii) all current directors who
are not executive officers, as a group, and (iv) all employees, including
officers who are not executive officers, as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES NET VALUE
NAME AND POSITION PURCHASED REALIZED(1)
----------------- --------- -----------
<S> <C> <C>
George Bell................................................. -- $ --
President and Chief Executive Officer
Brett T Bullington.......................................... -- $ --
Executive Vice President, Strategic and Business
Development
Robert C. Hood.............................................. -- $ --
Executive Vice President, Chief Administrative Officer and
Chief Financial Officer
Kenneth Wachtel............................................. -- $ --
Senior Vice President, Sales
Joseph R. Kraus, IV......................................... 502 $ 9,884
Senior Vice President
All current executive officers, as a group (7 persons)...... 502 $ 9,884
All current directors who are not executive officers, as a
group (3 persons)......................................... -- $ --
All employees, including officers who are not executive
officers, as a group...................................... 27,230 $267,807
</TABLE>
- ---------------
(1) Computed as the fair market value of the purchased shares on the purchase
date less the purchase price.
The affirmative vote of a majority of the shares of the Company's Common
Stock represented in person or by proxy will be required to approve the
amendment to the ESPP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR INCREASING
THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED
FOR ISSUANCE UNDER THE PLAN.
13
<PAGE> 17
PROPOSAL NO. 4 -- CHANGE IN STATE OF INCORPORATION
FROM CALIFORNIA TO DELAWARE
INTRODUCTION
For the reasons set forth below, the Board believes that it is in the best
interests of the Company and its shareholders to change the state of
incorporation of the Company from California to Delaware (the
"Reincorporation"). SHAREHOLDERS ARE URGED TO READ CAREFULLY THIS SECTION OF THE
PROXY STATEMENT, INCLUDING THE RELATED EXHIBITS REFERENCED BELOW AND ATTACHED
HERETO, BEFORE VOTING ON THE REINCORPORATION. Throughout this Proxy Statement,
the term "Excite California" or the "Company" refers to Excite, Inc., the
existing California corporation, and the term "Excite Delaware" refers to the
new Delaware corporation, a wholly-owned subsidiary of Excite California, which
is the proposed successor to Excite California in the proposed Reincorporation.
As discussed below, the principal reasons for the proposed Reincorporation
are the greater flexibility of Delaware corporate law and the substantial body
of case law interpreting that law. The Company believes that its shareholders
will benefit from the well-established principles of corporate governance that
Delaware law affords. The proposed Delaware Certificate of Incorporation and
Bylaws are substantially similar to the Articles of Incorporation and Bylaws
currently in effect for Excite California, with the exceptions that (i) the
ability of shareholders holding not less than 10% of the voting power to call a
special meeting will be eliminated, (ii) the ability of shareholders to act by
written consent will be eliminated, and (iii) the procedures for the proposal of
business to be considered at shareholder meetings will be changed. The
Reincorporation is not being proposed in order to prevent an unsolicited
takeover attempt, and the Board of Directors is not aware of any present attempt
by any person to acquire control of the Company, obtain representation on the
Board of Directors or take any action that would materially affect the
governance of the Company.
If the proposed Reincorporation is adopted, Excite California will merge
into and its business will be continued by Excite Delaware under the Company's
current name. Upon completion of the Reincorporation, Excite California, as a
corporate entity, will cease to exist.
Pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), each
outstanding share of Excite California Common Stock, no par value, will be
automatically converted into one share of Excite Delaware Common Stock, par
value $0.001 per share, upon the effective date of the Reincorporation. Each
stock certificate representing issued and outstanding shares of Excite
California Common Stock will continue to represent the same number of shares of
Common Stock of Excite Delaware. It will not be necessary for shareholders to
exchange their existing stock certificates for stock certificates of Excite
Delaware. However, shareholders may exchange their certificates if they so
choose. The Common Stock of Excite California is listed for trading on the
Nasdaq National Market and, after the Reincorporation, Excite Delaware's Common
Stock will continue to be traded on the Nasdaq National Market, without
interruption, under the same symbol ("XCIT") under which the shares of Excite
California Common Stock are currently traded.
Under California law, the affirmative vote of a majority of the outstanding
shares of Common Stock of Excite California is required for approval of the
Merger Agreement and the other terms of the Reincorporation. The Reincorporation
has been unanimously approved by the Company's Board. If approved by the
shareholders, it is anticipated that the Reincorporation will become effective
as soon as practicable (the "Effective Date") following the Meeting. However,
pursuant to the Merger Agreement, the Reincorporation may be abandoned or the
Merger Agreement may be amended by the Board (except that the principal terms
may not be amended without shareholder approval) either before or after
shareholder approval has been obtained and prior to the Effective Date if, in
the opinion of the Board, circumstances arise which make it inadvisable to
proceed under the original terms of the Merger Agreement. Shareholders of Excite
California will have no appraisal rights with respect to the Reincorporation.
The discussion set forth below is qualified in its entirety by reference to
the Merger Agreement and to the Certificate of Incorporation of Excite Delaware
and the Bylaws of Excite Delaware, copies of which are attached hereto as
Appendices A and B, respectively.
14
<PAGE> 18
APPROVAL BY SHAREHOLDERS OF THE PROPOSED REINCORPORATION WILL CONSTITUTE
APPROVAL OF THE MERGER AGREEMENT, THE CERTIFICATE OF INCORPORATION AND THE
BYLAWS OF EXCITE DELAWARE AND ALL PROVISIONS THEREOF.
VOTE REQUIRED FOR THE REINCORPORATION
Approval of the Reincorporation, which will also constitute approval of (i)
the Merger Agreement, the Certificate of Incorporation and the Bylaws of Excite
Delaware, and (ii) the assumption of Excite California's employee benefit plans,
stock option and employee stock purchase plans and outstanding warrants by
Excite Delaware, will require the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock of Excite California entitled to vote.
PRINCIPAL REASONS FOR THE REINCORPORATION
The Board believes that it is in the best interests of the Company to have
the principles of corporate governance provided by Delaware corporate law
available to it in making legal and business decisions. The prominence and
predictability of Delaware corporate law provide a reliable foundation on which
to base the Company's governance decisions, and the Company believes that
shareholders will benefit from the responsiveness of Delaware corporate law to
their needs and to those of the Company.
Predictability and Flexibility of Delaware Law. For many years Delaware has
followed a policy of encouraging incorporation in that state. In furtherance of
that policy, Delaware has adopted comprehensive corporate laws that are revised
regularly to address changing business circumstances. Many corporations have
chosen Delaware initially as their state of incorporation, and in recent years a
number of major public companies have obtained the approval of their
shareholders to reincorporate in Delaware. Because of Delaware's prominence as
the state of incorporation for many major corporations, the Delaware legislature
is particularly sensitive to issues regarding corporate law and is especially
responsive to developments in modern corporate law. The Delaware courts have
developed considerable expertise in dealing with corporate issues as well as a
substantial body of case law. As a result of these factors, it is anticipated
that Delaware law will provide greater predictability in the Company's legal
affairs than is presently available under California law.
Increased Ability to Attract and Retain Qualified Directors. Both
California and Delaware law permit a corporation to include a provision in its
articles of incorporation or its certificate of incorporation, as applicable,
that reduces or limits the monetary liability of directors for breaches of
fiduciary duty in certain circumstances. There has been an increasing frequency
of claims and litigation directed against directors and officers, and the risks
facing directors and officers of corporations in exercising their respective
duties has increased. The amount of time and money required to respond to such
claims and to defend such litigation can be substantial. It is the Company's
desire to reduce these risks to its directors and officers and to limit
situations in which monetary damages can be recovered against directors so that
the Company may continue to attract and retain qualified directors who otherwise
might be unwilling to serve because of the risks involved. The Company believes
that, in general, Delaware law provides greater protection to directors than
California law and that Delaware case law regarding a corporation's ability to
limit director liability is more developed and provides more guidance than
California law.
Well-Established Principles of Corporate Governance. There is substantial
judicial precedent in the Delaware courts as to the legal principles applicable
to measures that may be taken by a corporation and as to the conduct of the
Board of Directors such as under the business judgment rule and other standards.
The Company believes that its shareholders will benefit from the
well-established principles of corporate governance that Delaware law affords.
NO CHANGE IN THE BUSINESS AND OPERATIONS OF THE COMPANY
The Reincorporation will effect only a change in the state of incorporation
of the Company and certain other changes of a legal nature which are described
in this Proxy Statement. The Reincorporation will not result in any change in
the name, business, management, fiscal year, assets or liabilities or location
of the principal facilities of the Company. The five (5) directors who will be
elected at the Meeting will become the
15
<PAGE> 19
directors of Excite Delaware. All employee benefit, stock option and employee
stock purchase plans of Excite California will be assumed and continued by
Excite Delaware, and each option or right issued pursuant to such plans will
automatically be converted into an option or right to purchase the same number
of shares of Excite Delaware Common Stock, at the same price per share, upon the
same terms, and subject to the same conditions. Shareholders should note that
approval of the Reincorporation will also constitute approval of the assumption
of these plans by Excite Delaware. Other employee benefit arrangements of Excite
California will also be continued by Excite Delaware upon the terms and subject
to the conditions currently in effect. As noted above, after the Reincorporation
the shares of Common Stock of Excite Delaware will continue to be traded,
without interruption, on the Nasdaq National Market under the same symbol
("XCIT") as the shares of Common Stock of Excite California are currently
traded. The Company believes that the Reincorporation will not affect any of its
material contracts with any third parties and that Excite California's rights
and obligations under such material contractual arrangements will continue and
be assumed by Excite Delaware.
ANTITAKEOVER EFFECTS
Delaware, like many other states, permits a corporation to adopt a number
of measures designed to reduce a corporation's vulnerability to unsolicited
takeover attempts through amendment of the corporate charter or bylaws or
otherwise. The Reincorporation is not being proposed in order to prevent such a
change in control and the Board is not aware of any present attempt to acquire
control of the Company or to obtain representation on the Board.
However, the Board believes that future unsolicited takeover attempts may
be unfair or disadvantageous to the Company and its shareholders because, among
other reasons: (i) a non-negotiated takeover bid may be timed to take advantage
of temporarily depressed stock prices; (ii) a non-negotiated takeover bid may be
designed to foreclose or minimize the possibility of more favorable competing
bids or alternative transactions; (iii) a non-negotiated takeover bid may
involve the acquisition of only a controlling interest in the corporation's
stock, without affording all shareholders the opportunity to receive the same
economic benefits; and (iv) certain of the Company's contractual arrangements
provide that they may not be assigned pursuant to a transaction which results in
a "change of control" of the Company without the prior written consent of the
licensor or other contracting party.
By contrast, in a transaction in which a potential acquirer must negotiate
with an independent board of directors, the board can and should take account of
the underlying and long-term values of the Company's business, technology and
other assets, the possibilities for alternative transactions on more favorable
terms, anticipated favorable developments in the Company's business not yet
reflected in the stock price and equality of treatment of all shareholders.
Certain aspects of the Reincorporation may have the effect of deterring
hostile takeover attempts. Section 203 of the Delaware General Corporation Law,
from which Excite Delaware does not intend to opt out, prevents certain Delaware
corporations, including those whose securities are listed on the Nasdaq National
Market, from engaging, under certain circumstances, in certain "business
combinations" with "interested stockholders" for three years following the date
that such persons become an interested stockholder, unless certain conditions
are met. See "Significant Differences Between the Corporation Laws of California
and Delaware -- Stockholder Approval of Certain Business Combinations".
Despite the Board's belief that the Reincorporation will benefit Excite and
its shareholders, it may be disadvantageous to the extent that it has the effect
of discouraging a future takeover attempt which is not approved by the Board,
but which a majority of the shareholders may deem to be in their best interests
or in which shareholders may receive a substantial premium for their shares over
the then current market value or over their cost basis in such shares. As a
result of such effects of the Reincorporation, shareholders that might wish to
participate in an unsolicited tender offer may not have an opportunity to do so.
In addition, to the extent that provisions of Delaware law enable the Board to
resist a takeover or a change in control of the Company, such provisions could
make it more difficult to change the existing Board and management.
16
<PAGE> 20
THE CHARTERS AND BYLAWS OF EXCITE CALIFORNIA AND EXCITE DELAWARE
The provisions of the Excite Delaware Certificate of Incorporation and
Bylaws are similar to those of the Excite California Articles of Incorporation
and Bylaws in almost all respects. The only material differences are (i) the
elimination of the right of shareholders controlling at least ten percent (10%)
of the voting shares to call a special meeting of shareholders, (ii) the
elimination of the ability of shareholders to act by written consent, and (iii)
the institution of procedures required for shareholders to propose business to
be considered at a meeting of shareholders. However, while the Company has no
present intention to do so, Excite Delaware could in the future implement
certain other changes by amendment of its Certificate of Incorporation or
Bylaws. For a discussion of such changes, see "Significant Differences Between
the Corporation Laws of California and Delaware." This discussion of the
Certificate of Incorporation and Bylaws of Excite Delaware is qualified by
reference to Appendices A and B hereto, respectively.
The Articles of Incorporation of Excite California currently authorize the
Company to issue up to 50,000,000 shares of Common Stock and 4,000,000 shares of
Preferred Stock, of which 650,000 shares are designated as Series E-3 Preferred
Stock. The Certificate of Incorporation of Excite Delaware provides that it will
have 50,000,000 authorized shares of Common Stock, par value $0.001 per share,
and 4,000,000 shares of Preferred Stock, par value $0.001 per share, of which
325,000 shares will be designated as Series E-3 Preferred Stock. Like Excite
California's Articles of Incorporation, Excite Delaware's Certificate of
Incorporation provides that the Board is entitled to determine the powers,
preferences and rights, and the qualifications, limitations or restrictions, of
the authorized and unissued Preferred Stock.
Monetary Liability of Directors. The Articles of Incorporation of Excite
California and the Certificate of Incorporation of Excite Delaware both provide
for the elimination of personal monetary liability of directors to the fullest
extent permissible under the laws of the respective states. The provision
eliminating monetary liability of directors set forth in the Excite Delaware
Certificate of Incorporation is potentially more expansive than the
corresponding provision in the Excite California Articles of Incorporation, in
that the former incorporates future amendments to Delaware law with respect to
the elimination of such liability. For a more detailed explanation of the
foregoing, see "Significant Differences Between the Corporation Laws of
California and Delaware -- Indemnification and Limitation of Liability."
Cumulative Voting for Directors. The Excite Delaware Certificate of
Incorporation does not provide for cumulative voting rights. Under Delaware law,
cumulative voting in the election of directors is not mandatory but is a
permitted option. Under California law, until such time that the Company is a
"listed corporation" as defined thereunder, if any shareholder has given notice
of an intention to cumulate votes for the election of directors, such
shareholder and any other shareholder of the corporation would be entitled to
cumulate his or her votes at such election. Cumulative voting provides that each
share of stock normally having one vote is entitled to a number of votes equal
to the number of directors to be elected. A shareholder may then cast all such
votes for a single candidate or may allocate them among as many candidates as
the shareholder may choose. In the absence of cumulative voting, the holders of
the majority of the shares present or represented at a meeting in which
directors are to be elected would have the power to elect all the directors to
be elected at such meeting, and no person could be elected without the support
of holders of the majority of shares present or represented at such meeting.
Elimination of cumulative voting could make it more difficult for a minority
shareholder adverse to a majority of the shareholders to obtain representation
on the Company's Board. California corporations whose stock is listed on a
national stock exchange or whose stock is listed on the Nasdaq National Market
and which has at least 800 holders of record of its equity securities as of such
corporation's most recent annual meeting of shareholders can also eliminate
cumulative voting with shareholder approval.
Power to Call Special Shareholders' Meetings. Under California law and
Excite California's Bylaws, a special meeting of shareholders may be called by
the Board or by two or more members thereof, the Chairman of the Board, the
President, the holders of shares entitled to cast not less than 10% of the votes
at such meeting and such additional persons as are authorized by the Articles of
Incorporation or the Bylaws. Under Delaware law, a special meeting of
stockholders may be called by the board of directors or any other person
authorized to do so in the certificate of incorporation or the bylaws. The
Bylaws of Excite Delaware authorize the Chairman of the Board, the President,
any Vice President, the Secretary or any two or more directors to call a
17
<PAGE> 21
special meeting of stockholders. Therefore, holders of 10% or more of the voting
shares of the Company will no longer be able to call a special meeting of
stockholders. The Company believes this change is warranted as a prudent
corporate governance measure to prevent an inappropriately small number of
stockholders from prematurely forcing stockholder consideration of a proposal
over the opposition of the Board by calling a special stockholders' meeting
before (i) the time that the Board believes such consideration to be appropriate
or (ii) the next annual meeting (provided that the holders meet the notice
requirements for consideration of a proposal). Such special meetings would
involve substantial expense and diversion of board and management time that the
Company believes to be inappropriate for an enterprise the size of the Company.
Aside from the foregoing, no other change is contemplated in the procedures to
call a special stockholders' meeting, although in the future the Board could
amend the Bylaws of Excite Delaware without stockholder approval.
Action Without A Meeting. Under California law and Excite California
Bylaws, any action which may be taken at an annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, shall be signed by
holders of outstanding shares 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. Under Delaware law,
unless otherwise provided in a company's certificate of incorporation, any
action required or permitted to 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 or consents in writing, setting forth the action to be 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 and shall be properly delivered to the corporation. The
Excite Delaware Certificate of Incorporation will contain a provision
eliminating the ability of stockholders to act by written consent without a
meeting.
Filling Vacancies on the Board of Directors. Under California law, any
vacancy on the Board other than one created by removal of a director may be
filled by the Board. If the number of directors is less than a quorum, a vacancy
may be filled by the unanimous written consent of the directors then in office,
by the affirmative vote of a majority of the directors at a meeting held
pursuant to notice or waivers of notice or by a sole remaining director. A
vacancy created by removal of a director may be filled by the Board only if so
authorized by a corporation's articles of incorporation or by a bylaw approved
by the corporation's shareholders. Excite California's Articles of Incorporation
and Bylaws do not permit directors to fill vacancies created by removal of a
director. Under Delaware law, vacancies and newly created directorships may be
filled by a majority of the directors then in office (even though less than a
quorum) or by a sole remaining director, unless otherwise provided in the
certificate of incorporation or bylaws (or unless the certificate of
incorporation directs that a particular class of stock is to elect such
director(s), in which case a majority of the directors elected by such class, or
a sole remaining director so elected, shall fill such vacancy or newly created
directorship). The Bylaws of Excite Delaware provide, consistent with the Bylaws
of Excite California, that any vacancy created by the removal of a director by
the stockholders of Excite Delaware may be filled only by the stockholders.
Following the Reincorporation, the Board of Excite Delaware could, although it
has no current intention to do so, amend the Bylaws to provide that directors
may fill any vacancy created by removal of directors by the stockholders.
Notice of Board Nominations and Other Shareholder or Stockholder
Business -- Annual Meetings. The Bylaws of Excite Delaware require that
nominations of persons for election to the Board and the proposal of business to
be considered at an annual meeting of Stockholders must be made: (i) pursuant to
notice by Excite Delaware of such meeting; (ii) by the Board; or (iii) if by a
stockholder, by advance written notice given to Excite Delaware between 60 to 90
days prior to the first anniversary of the preceding year's annual meeting of
stockholders. However, if the date of the annual meeting at which such
nomination or business is proposed by a stockholders is more than 30 days before
or more than 60 days after such anniversary, then such notice may be given by
the stockholder no earlier than the 90th day prior to such meeting and not later
than the later of 60 days prior to such meeting or the 10th day following the
first public announcement of such meeting. The above notice provisions are
subject to certain exceptions with respect to electing directors to fill Board
seats resulting from increases in the size of the Board not publicly announced
at least 70 days prior to
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<PAGE> 22
the annual meeting. In addition, certain other information regarding a Board
nominee or the business proposed for discussion must be included in the
stockholder's notice to Excite Delaware.
Notice of Board Nominations and Other Shareholder or Stockholder
Business -- Special Meetings. Excite Delaware's Bylaws also provide that, at
special meetings of stockholders, the only business that can be conducted will
be the items of business set forth in notice of such special meeting. The Bylaws
also provide that nominations of persons for election to the Board at a special
meeting at which directors are go be elected pursuant to the notice of the
meeting shall be made: (i) by the Board; or (ii) if the Board has determined
that directors will be elected at the meeting, by a stockholder of record
meeting certain qualification who gives Excite Delaware advance written notice
of such nominations no earlier than 90 days prior to such special meeting and no
later than the later of 60 days before such special meeting, or the 10th day
after the first public announcement of such meeting and of the nominees proposed
by the Board to be elected at such meeting.
By requiring advance notice of nominations by shareholders, the Board is
afforded the opportunity to consider the qualifications of the proposed nominees
and, to the extent deemed necessary or desirable by the Board, to inform the
stockholders about such qualifications. By requiring advance notice of proposed
business, the Board is provided the opportunity to inform stockholders of any
business proposed to be conducted at a meeting and the Board's position on any
such proposal, enabling stockholders to better determine whether they desire to
attend the meeting or grant a proxy to the Board as to the disposition of such
business. Although the Excite Delaware Bylaws do not give the Board any power to
approve or disapprove stockholder nominations for the election of directors or
any other business desired by stockholders to be conducted at a meeting, the
Excite Delaware Bylaws may have the effect of precluding a nomination for the
election of directors or of precluding any other business at a particular
meeting if the proper procedures are not followed. In addition, the procedures
may discourage or deter a third party from conducting a solicitation of proxies
to elect its own slate of directors or otherwise attempting to obtain control of
the Company, even if the conduct of such business or such attempt might be
deemed to be beneficial to the Company and its stockholders.
SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF CALIFORNIA AND DELAWARE
The following provides a summary of the major substantive differences
between the Corporation Laws of California and Delaware. It is not an exhaustive
description of all differences between the two states' laws.
STOCKHOLDER APPROVAL OF CERTAIN BUSINESS COMBINATIONS
DELAWARE. If the Reincorporation is approved by the Company's shareholders,
the Company will be subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203") regulating corporate takeovers. Section
203 prevents certain Delaware corporations, including those whose securities are
listed on the Nasdaq National Market, from engaging, under certain
circumstances, in a 'business combination" (which included a merger or sale of
more than 10% of the corporation's assets) with any "interested stockholder" (a
stockholder who owns 15% or more of the corporation's outstanding voting stock,
as well as affiliates and associates of any such persons) for three years
following the date that such stockholder became an "interested stockholder"
unless (i) the transaction is approved by the board of directors prior to the
date the "interested stockholder" attained such status, (ii) upon consummation
of the transaction that resulted in the stockholder's becoming an "interested
stockholder," the "interested stockholder" owned at least 85% of the voting
stock of the corporation outstanding at the time the transactions commenced
(excluding those shares owned by (a) persons who are directors and also officers
and (b) employee stock plans in which employee participants do not have the
right to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer), or (iii) on or subsequent to such
date the "business combination" is approved by the board of directors and
authorized at an annual or special meeting of stockholders by the affirmative
vote of at least two-thirds of the outstanding voting stock that is not owned by
the "interested stockholder." A Delaware corporation may "opt out" of Section
203 with an express provision in its original certificate of incorporation or
bylaws resulting from a stockholders' amendment approved by at least a majority
of the outstanding voting shares. Excite Delaware does not intend to opt out of
the provisions of Section 203.
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<PAGE> 23
The Company believes that Section 203 will encourage any potential acquirer
to negotiate with the Company's Board. Section 203 also might have the effect of
limiting the ability of a potential acquirer to make a two-tiered bid for Excite
Delaware in which all stockholders would not be treated equally. Shareholders
should note, however, that the application of Section 203 to Excite Delaware
will give the Board the power to reject a proposed business combination in
certain circumstances, even though a potential acquirer may be offering a
substantial premium for Excite Delaware's shares over the then-current market
price. Section 203 would also discourage certain potential acquirers unwilling
to comply with its provisions.
CALIFORNIA. California law requires that holders of common stock receive
common stock in a merger of the corporation with the holder of more than fifty
percent (50%) but less than ninety percent (90%) of the target's common stock or
its affiliate unless all of the target company's shareholders consent to the
transaction. This provision of California law may have the effect of making a
"cash-out" merger by a majority shareholder more difficult to accomplish.
Although Delaware law does not parallel California law in this respect, under
some circumstances Section 203 does provide similar protection to stockholders
against coercive two-tiered bids for a corporation in which the stockholders are
not treated equally.
CLASSIFIED BOARD OF DIRECTORS
A classified board is one on which a certain number, but not all, of the
directors are elected on a rotating basis each year.
DELAWARE. Delaware law permits, but does not require, a classified board of
directors, pursuant to which the directors can be divided into as many as three
classes with staggered terms of office, with only one class of directors
standing for election each year. The Excite Delaware Certificate of
Incorporation and Bylaws do not provide for a classified Board, and the adoption
of a classified Board in the future would require stockholder approval.
CALIFORNIA. Under California law, a corporation generally may provide for a
classified board of directors by adopting amendments to its charter or bylaws,
which amendments must be approved by the shareholders. The Excite California
Articles of Incorporation and Bylaws do not currently provide for a classified
Board.
REMOVAL OF DIRECTORS
DELAWARE. Under Delaware law, any director or the entire board of directors
of a corporation that does not have a classified board of directors or
cumulative voting may be removed with or without cause with the approval of a
majority of the outstanding shares entitled to vote at an election of directors.
In the case of a Delaware corporation having cumulative voting, if less than the
entire board is to be removed, a director may not be removed without cause if
the number of shares voted against such removal would be sufficient to elect the
director under cumulative voting.
CALIFORNIA. Under California law, any director or the entire board of
directors may be removed, with or without cause, with the approval of a majority
of the outstanding shares entitled to vote; however, no individual director may
be removed (unless the entire board is removed) if the number of votes cast
against such removal would be sufficient to elect the director under cumulative
voting.
Excite California's Articles of Incorporation do not provide for a
classified Board but under California law, Excite California shareholders are
entitled to cumulative voting or for a classified Board. The Excite Delaware
Certificate of Incorporation will not provide for cumulative voting. As a
result, after the Reincorporation, the Company's directors could be removed with
or without cause with the approval of a majority of the outstanding shares
entitled to vote at an election of directors.
INDEMNIFICATION AND LIMITATION OF LIABILITY
California and Delaware have similar laws respecting indemnification by a
corporation of its officers, directors, employees and other agents. The laws of
both states also permit, with certain exceptions, a corporation to adopt charter
provisions eliminating the liability of a director to the corporation or its
shareholders for monetary damages for breach of the director's fiduciary duty.
There are, however, certain
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<PAGE> 24
differences between the laws of the two states respecting indemnification and
limitation of liability which are summarized below.
DELAWARE. The Excite Delaware Certificate of Incorporation would eliminate
the liability of directors to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director to the fullest extent
permissible under Delaware law, as such law exists currently and as it may be
amended in the future. Under Delaware law, such provision may not eliminate or
limit director monetary liability for: (a) breaches of the director's duty of
loyalty to the corporation or its stockholders; (b) acts or omissions not in
good faith or involving intentional misconduct or knowing violations of law; (c)
the payment of unlawful dividends or unlawful stock repurchases or redemptions;
or (d) transactions in which the director received an improper personal benefit.
Such limitation of liability provisions also may not limit a director's
liability for violation of, or otherwise relieve the Company or its directors
from the necessity of complying with, federal or state securities laws, or
affect the availability of nonmonetary remedies such as injunctive relief or
rescission.
CALIFORNIA. The Excite California Articles of Incorporation eliminate the
liability of directors to the corporation to the fullest extent permissible
under California law. California law does not permit the elimination of monetary
liability where such liability is based on: (a) intentional misconduct or
knowing and culpable violation of law; (b) acts or omissions that a director
believes to be contrary to the best interests of the corporation or its
shareholders or that involve the absence of good faith on the part of the
director; (c) receipt of an improper personal benefit by the director; (d) acts
or omissions that show reckless disregard for the director's duty to the
corporation or its shareholders, where the director was aware, or in the
ordinary course of performing a director's duties should be aware, of a risk of
serious injury to the corporation or its shareholders; (e) acts or omissions
that constitute an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the corporation and its shareholders; (f)
transactions between the corporation and a director who has a material financial
interest in such transaction; and (g) liability for improper distributions,
loans or guarantees.
INDEMNIFICATION COMPARED AND CONTRASTED. California law requires
indemnification when the individual has defended successfully the action on the
merits while Delaware law requires indemnification whether there has been
successful or unsuccessful defense on the merits or otherwise. Delaware law
generally permits indemnification of expenses, including attorneys' fees,
actually and reasonably incurred in the defense or settlement of a derivative or
third-party action, provided there is a determination by a majority vote of a
disinterested quorum of the directors, by independent legal counsel or by a
majority vote of a quorum of the stockholders that the person seeking
indemnification acted in good faith and in a manner reasonably believed to be in
best interests of the corporation. Without court approval, however, no
indemnification may be made in respect of any derivative action in which such
person is adjudged liable for negligence or misconduct in the performance of his
or her duty to the corporation. Delaware law requires indemnification of
expenses when the individual being indemnified has successfully defended any
action, claim, issue or matter therein, on the merits or otherwise.
Expenses incurred by an officer or director in defending an action may be
paid in advance, under Delaware law and California law, if such director or
officer undertakes to repay such amounts if it is ultimately determined that he
or she is not entitled to indemnification. In addition, the laws of both states
authorize a corporation's purchase of indemnity insurance for the benefit of its
officers, directors, employees and agents whether or not the corporation would
have the power to indemnify against the liability covered by the policy.
California law permits a California corporation to provide rights to
indemnification beyond those provided therein to the extent such additional
indemnification is authorized in the corporation's Articles of Incorporation.
Thus, if so authorized, rights to indemnification may be provided pursuant to
agreements or bylaw provisions that make mandatory the permissive
indemnification provided by California law. Excite California's Articles of
Incorporation permit indemnification beyond that expressly mandated by
California law and limit director monetary liability to the extent permitted by
California law. Delaware law also permits a Delaware corporation to provide
indemnification in excess of that provided by statute. By contrast to California
law, Delaware law does not require authorizing provisions in the certificate of
incorporation and does not contain
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<PAGE> 25
express prohibitions on indemnification in certain circumstances. Limitations on
indemnification may be imposed by a court, however, based on principles of
public policy.
INSPECTION OF SHAREHOLDER OR STOCKHOLDER LISTS
Both California and Delaware law allow any shareholder to inspect the
shareholder list for a purpose reasonably related to such person's interest as a
shareholder. California law provides that a shareholder or shareholders holding
five percent (5%) or more of a corporation's voting shares, or who hold one
percent (1%) or more of such shares after it is a public company and have filed
a Schedule 14A with the Securities and Exchange Commission relating to the
election of directors, have an absolute right to inspect and copy the
corporation's shareholder list. Delaware law permits a stockholder to inspect
the stockholder list during the ten-day period preceding a stockholders' meeting
for any purpose germane to the meeting, but does not contain a provision
comparable to the absolute right of inspection provided by California law to
certain shareholders.
PAYMENT OF DIVIDENDS
California law does not use the concepts of par value of shares, capital or
surplus. The concepts of par value, capital and surplus are retained under
Delaware law.
DELAWARE. Delaware law permits the payment of dividends out of surplus
(generally defined as stockholders' equity less the par value of outstanding
stock) or, if there is no surplus, out of net profits for the current fiscal
year and/or the preceding fiscal year. Delaware law generally provides that a
corporation may redeem or repurchase its shares only if such redemption or
repurchase would not impair the capital of the corporation.
CALIFORNIA. Under California law, any distribution of corporate assets to
shareholders (including dividends and repurchases of shares) are limited either
to: (i) retained earnings, or (ii) an amount that would leave the corporation
with assets (exclusive of goodwill, capitalized research and development
expenses and deferred charges) equal to 1 1/4 times its liabilities (not
including deferred taxes, deferred income and other deferred credits) and with
current assets, as defined, at least equal to its current liabilities (or 1 1/4
times its current liabilities if the average pretax and pre-interest earnings
for the preceding two fiscal years were less than the average interest expense
for such years). There are exceptions to the foregoing rules for repurchases
pursuant to employee stock plans. Additionally, a corporation cannot make a
distribution if, as a result of such distribution, the corporation would likely
be unable to meet its liabilities as they come due or if such distribution would
impair certain preference rights of the holders of preferred stock.
SHAREHOLDER VOTING
Both California and Delaware law generally require that a majority of the
shareholders of both acquiring and target corporations approve statutory
mergers.
DELAWARE. Delaware law does not require a stockholder vote of the surviving
corporation in a merger (unless the corporation provides otherwise in its
certificate of incorporation) if: (a) the merger agreement does not amend the
existing certificate of incorporation; (b) each share of stock of the surviving
corporation outstanding immediately before the effective date of the merger is
an identical outstanding share after the merger and; (c) either no shares of
common stock of the surviving corporation and no shares, securities or
obligations convertible into such stock are to be issued or delivered under the
plan of merger, or the authorized unissued shares or shares of common stock of
the surviving corporation to be issued or delivered under the plan of merger
plus those initially issuable upon conversion of any other shares, securities or
obligations to be issued or delivered under such plan do not exceed twenty
percent (20%) of the shares of common stock of such constituent corporation
outstanding immediately prior to the effective date of the merger.
CALIFORNIA. California law contains a similar exception to its voting
requirements for reorganizations where shareholders or the corporation itself,
or both, immediately prior to the reorganization will own
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<PAGE> 26
immediately after the reorganization equity securities constituting more than
83.3% (or five-sixths) of the voting power of the surviving or acquiring
corporation or its parent entity.
APPRAISAL RIGHTS
Under both California and Delaware law, a shareholder of a corporation
participating in certain major corporate transactions may, under varying
circumstances, be entitled to appraisal rights pursuant to which such
shareholder may receive cash in the amount of the fair market value of his or
her shares in lieu of the consideration he or she would otherwise receive in the
transaction.
DELAWARE. Under Delaware law, such appraisal rights are not available: (a)
with respect to the sale, lease or exchange of all or substantially all of the
assets of a corporation; (b) with respect to a merger or consolidation by a
corporation the shares of which are either listed on a national securities
exchange or are held of record by more than 2,000 holders if such stockholders
receive only shares of the surviving corporation or shares of any other
corporation that are either listed on a national securities exchange or held of
record by more than 2,000 holders, plus cash in lieu of fractional shares of
such corporations; or (c) to stockholders of a corporation surviving a merger if
no vote of the stockholders of the surviving corporation is required to approve
the merger under Delaware law.
CALIFORNIA. The limitations on the availability of appraisal rights under
California law are different from those under Delaware law. Shareholders of a
California corporation whose shares are listed on a national securities exchange
generally do not have such appraisal rights unless the holders of at least five
percent (5%) of the class of outstanding shares claim the right or the
corporation or any law restricts the transfer of such shares. Appraisal rights
are also unavailable if the shareholders of a corporation or the corporation
itself, or both, immediately prior to the reorganization will own immediately
after the reorganization equity securities constituting more than 83.3% (or
five-sixths) of the voting power of the surviving or acquiring corporation or
its parent entity. California law generally affords appraisal rights in sale of
asset reorganizations.
DISSOLUTION
Under California law, shareholders holding fifty percent (50%) or more of
the total voting power may authorize a corporation's dissolution, with or
without the approval of the corporation's board of directors, and this right may
not be modified by the articles of incorporation. Under Delaware law, unless the
board of directors approves the proposal to dissolve, the dissolution must be
unanimously approved by all the stockholders entitled to vote thereon. Only if
the dissolution is initially approved by the board of directors may the
dissolution be approved by a simple majority of the outstanding shares of the
corporation's stock entitled to vote. In the event of such a board-initiated
dissolution, Delaware law allows a Delaware corporation to include in its
certificate of incorporation a supermajority (greater than a simple majority)
voting requirement in connection with dissolutions. Excite Delaware's
Certificate of Incorporation contains no such supermajority voting requirement.
INTERESTED DIRECTOR TRANSACTIONS
Under both California and Delaware law, certain contracts or transactions
in which one or more of a corporation's directors has an interest are not void
or voidable because of such interest, provided that certain conditions, such as
obtaining the required approval and fulfilling the requirements of good faith
and full disclosure, are met. With certain minor exceptions, the conditions are
similar under California and Delaware law.
SHAREHOLDER DERIVATIVE SUITS
California law provides that a shareholder bringing a derivative action on
behalf of a corporation need not have been a shareholder at the time of the
transaction in question, provided that certain tests are met. Under Delaware
law, a stockholder may bring a derivative action on behalf of the corporation
only if the stockholder was a stockholder of the corporation at the time of the
transaction in question or if his or her stock thereafter devolved upon him or
her by operation of law. California law also provides that the corporation or
the
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<PAGE> 27
defendant in a derivative suit may make a motion to the court for an order
requiring the plaintiff shareholder to furnish a security bond. Delaware does
not have a similar bonding requirement.
APPLICATION OF THE GENERAL CORPORATION LAW OF CALIFORNIA TO DELAWARE
CORPORATIONS
Under Section 2115 of the California General Corporation Law, certain
corporations not organized under California law which have significant contacts
with California are subject to a number of key provisions of the California
General Corporation Law. An exemption from Section 2115 is provided for
corporations whose shares are listed on a major national securities exchange or
for corporations having at least 800 stockholders of record whose shares are
listed on the Nasdaq National Market. Following the Reincorporation, the Common
Stock of Excite Delaware will continue to be traded on the Nasdaq National
Market; however, the Company does not expect to have greater than 800
stockholders of record. Accordingly, it is expected that Excite Delaware will
not be exempt from Section 2115.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of certain federal income tax considerations
that may be relevant to holders of Excite California Common Stock who receive
Excite Delaware Common Stock in exchange for their Excite California Common
Stock as a result of the Reincorporation. The discussion does not address all of
the tax consequences of the Reincorporation that may be relevant to particular
Excite California shareholders, such as dealers in securities, or those Excite
California shareholders who acquired their shares upon the exercise of stock
options, nor does it address the tax consequences to holders of options or
warrants to acquire Excite California Common Stock. Furthermore, no foreign,
state, or local tax considerations are addressed herein. IN VIEW OF THE VARYING
NATURE OF SUCH TAX CONSEQUENCES, EACH SHAREHOLDER IS URGED TO CONSULT HIS OR HER
OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE PROPOSED
REINCORPORATION, INCLUDING THE APPLICABILITY OF FEDERAL, STATE, LOCAL OR FOREIGN
TAX LAWS.
Subject to the limitations, qualifications and exceptions described herein,
and assuming the Proposed Reincorporation qualifies as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), the following tax consequences generally should result:
(a) No gain or loss should be recognized by holders of Excite
California Common Stock upon receipt of Excite Delaware Common Stock
pursuant to the Reincorporation;
(b) The aggregate tax basis of the Excite Delaware Common Stock
received by each shareholder in the Reincorporation should be equal to the
aggregate tax basis of the Excite California Common Stock surrendered in
exchange therefor; and
(c) The holding period of the Excite Delaware Common Stock received by
each shareholder of Excite California should include the period for which
such shareholder held the Excite California Common Stock surrendered in
exchange therefor, provided that such Excite California Common Stock was
held by the shareholder as a capital asset at the time of the
Reincorporation.
The Company has not requested a ruling from the Internal Revenue Service
(the "IRS") or an opinion of counsel with respect to the federal income tax
consequences to the shareholders of the Company of the Reincorporation under the
Code. ACCORDINGLY, EACH SHAREHOLDER IS ENCOURAGED TO CONSULT A TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE PROPOSED
REINCORPORATION. The Reincorporation is intended to qualify as a reorganization
within the meaning of Section 368(a) of the Code.
A successful IRS challenge to the reorganization status of the
Reincorporation (in consequence of a failure to satisfy the "continuity of
interest" requirement or otherwise) would result in a shareholder recognizing
gain or loss with respect to each share of Excite California Common Stock
exchanged in the Reincorporation equal to the difference between the
shareholder's basis in such share and the fair market value, as of the time of
the Reincorporation, of the Excite Delaware Common Stock received in exchange
therefor. In such event, a shareholder's aggregate basis in the shares of Excite
Delaware Common Stock
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<PAGE> 28
received in the exchange would equal their fair market value on such date, and
the shareholder's holding period for such shares would not include the period
during which the shareholder held Excite California Common Stock. Even if the
Reincorporation qualifies as a reorganization under the Code, a shareholder
would recognize gain to the extent the shareholder received (actually or
constructively) consideration other than Excite Delaware Common Stock in
exchange for the shareholder's Excite California Common Stock.
State, local or foreign income tax consequences to shareholders may vary
from the federal tax consequences described above.
The Company should not recognize gain or loss for federal income tax
purposes as a result of the Reincorporation, and Excite Delaware should succeed,
without adjustment, to the federal income tax attributes of Excite California. A
shareholder's aggregate basis in the shares of Excite Delaware Common Stock
received in the exchange would equal their fair market value on such date, and
the shareholder's holding period for such shares would not include the period
during which the shareholder held Excite California Common Stock. Even if the
Reincorporation qualifies as a reorganization under the Code, a shareholder
would recognize gain to the extent the shareholder received (actually or
constructively) consideration other than Excite Delaware Common Stock in
exchange for the shareholder's Excite California Common Stock.
THE BOARD RECOMMENDS A VOTE FOR THE REINCORPORATION.
THE EFFECT OF AN ABSTENTION OR A BROKER NON-VOTE IS THE SAME
AS THAT OF A VOTE AGAINST THE REINCORPORATION PROPOSAL.
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<PAGE> 29
PROPOSAL NO. 5 -- RATIFICATION OF SELECTION
OF INDEPENDENT AUDITORS
The Company has selected Ernst & Young LLP as its independent auditors to
perform the audit of the Company's financial statements for the fiscal year
ending December 31, 1998, and the shareholders are being asked to ratify such
selection. Representatives of Ernst & Young LLP are expected to be present at
the Meeting, will have the opportunity to make a statement at the Meeting if
they desire to do so and are expected to be available to respond to appropriate
questions.
The affirmative vote of a majority of the shares of Common Stock
represented in person or by proxy at the Meeting and voting together as a class
will be required to approve the ratification of Ernst & Young LLP as the
Company's independent auditors.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE SELECTION OF ERNST & YOUNG LLP
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<PAGE> 30
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding beneficial ownership of the Company's Common Stock as of December 31,
1997 by (i) each person known by the Company to be the beneficial owner of more
than 5% of the Company' s Common Stock, each of whom the Company believes to be
an affiliate of the Company, (ii) each of the Company's directors, (iii) each
Named Officer (see "Executive Compensation") and (iv) all executive officers and
directors as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP(1)
--------------------
NAME OF BENEFICIAL OWNERS NUMBER PERCENT
------------------------- --------- -------
<S> <C> <C>
Intuit, Inc.(2)............................................. 2,900,000 15.5%
Vinod Khosla................................................ 2,693,322 14.4%
Kleiner Perkins Caufield & Byers(3)
America Online, Inc.(4)..................................... 2,575,777 13.6%
Geoffrey Y. Yang............................................ 2,293,322 12.3%
Institutional Venture Partners(5)
Joseph R. Kraus, IV(6)...................................... 351,395 1.9%
George Bell(7).............................................. 216,000 1.1%
Brett T Bullington(8)....................................... 91,984 *
Robert C. Hood(9)........................................... 62,500 *
Kenneth Wachtel(10)......................................... 27,083 *
Donn M. Davis(11)........................................... -- *
All executive officers and directors as a group (10
persons)(12).............................................. 5,894,592 30.2%
</TABLE>
- ---------------
* Less than 1%.
(1) Unless otherwise indicated below, the persons and entities named in the
table have sole voting and sole investment power with respect to all shares
beneficially owned, subject to community property laws where applicable.
Shares of Common Stock subject to options or warrants that are currently
exercisable or exercisable within 60 days of December 31, 1997 are deemed
to be outstanding and to be beneficially owned by the person holding such
options or warrants for the purpose of computing the percentage ownership
of such person, but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person.
(2) The address of Intuit is 2535 Garcia Avenue, Mountain View, California
94043. See "Certain Transactions."
(3) Represents 2,235,990 shares of Common Stock held of record by Kleiner
Perkins Caufield & Byers ("KPCB"), 57,332 shares of Common Stock held of
record by KPCB Information and 400,000 shares of Common Stock held of
record by Mr. Khosla. Mr. Khosla, a director of the Company, is a general
partner of KPCB and KPCB Information and may be deemed to beneficially own
the shares owned by those entities. Mr. Khosla disclaims beneficial
ownership of such shares except to the extent of his indirect pecuniary
interest therein. The address of Mr. Khosla and Kleiner Perkins Caufield &
Byers is 2750 Sand Hill Road, Menlo Park, California 94025.
(4) Includes 325,000 shares of Series E-3 Preferred Stock issuable upon
exercise of a warrant held by AOL Ventures, a wholly-owned subsidiary of
AOL. All of the shares of Series E Preferred Stock are convertible into
Common Stock on a one-for-one basis. All shares of the Series E Preferred
Stock beneficially owned by AOL are subject to the terms of a Voting Trust
Agreement in the event that under California law a separate class vote of
the Series E Preferred Stock is required to be taken. See "Certain
Transactions." AOL's address is 22000 AOL Way, Dulles, Virginia 20166.
(5) Represents 45,864 shares of Common Stock held of record by Institutional
Venture Management VI ("IVM"), 2,191,722 shares of Common Stock held of
record by Institutional Venture Partners VI ("IVP"), and 55,736 shares of
Common Stock held of record by IVP Founders Fund I, L.P. ("IVP Founders").
Mr. Yang, a director of the Company, is a general partner of IVM, which is
the general
27
<PAGE> 31
partner of IVP and of IVP Founders and may be deemed to beneficially own
the shares beneficially owned by these entities. Mr. Yang disclaims
beneficial ownership of such shares except for his proportional interest
therein. The address of Mr. Yang and Institutional Venture Partners is 3000
Sand Hill Road, Building 2, Suite 290, Menlo Park, California 94025.
(6) Includes approximately 40,382 shares of Common Stock subject to a
repurchase right of the Company upon cessation of Mr. Kraus's service to
the Company. Such repurchase right lapses with respect to approximately
5,769 of such shares per month.
(7) Represents 216,000 shares of Common Stock subject to options that are
currently exercisable or exercisable within 60 days of December 31, 1997.
(8) Includes 24,602 shares of Common Stock subject to options that are
currently exercisable or exercisable within 60 days of December 31, 1997.
(9) Represents 62,500 shares of Common Stock subject to options that are
currently exercisable or exercisable within 60 days of December 31, 1997.
(10) Represents 27,083 shares of Common Stock subject to options that are
currently exercisable or exercisable within 60 days of December 31, 1997.
(11) Mr. Davis, a director of the Company, is the President of Tribune Ventures,
a unit of Tribune Company. Mr. Davis disclaims beneficial ownership of
804,629 shares held by Tribune Company. Mr. Davis' address is c/o Tribune
Company, 435 North Michigan Avenue, Suite 600, Chicago, Illinois 60611.
(12) Includes an aggregate of 339,831 shares of Common Stock subject to options
or warrants that are currently exercisable or exercisable within 60 days of
April 15, 1998. Also includes approximately 40,382 shares of Common Stock
subject to a repurchase right of the Company upon cessation of the
officer's or director's service to the Company. Such repurchase right
lapses with respect to approximately 5,769 shares per month.
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<PAGE> 32
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by, or
paid for services rendered to the Company in all capacities during the years
ended December 31, 1997 and 1996 by (i) the Company's Chief Executive Officer
and (ii) the Company's four other executive officers who were serving as
executive officers as of December 31, 1997 and whose total annual salary and
bonus in such year exceeded $100,000 (together, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
--------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
George Bell........................ 1997 $198,900 $144,000 83,000 $ --
President and Chief Executive 1996 185,000 60,000 48,458 53,575(1)
Officer
Brett T Bullington(2).............. 1997 $170,000 $ 61,200 35,000 $ --
Executive Vice President, 1996 155,000 -- 45,774 $ --
Strategic and Business
Development
Robert C. Hood(3).................. 1997 $175,000 $ 55,125 -- $ --
Executive Vice President, 1996 10,657 -- 200,000 --
Chief Administrative Officer and
Chief Financial Officer
Kenneth Wachtel(4)................. 1997 $189,700 $ -- 100,000 $ --
Senior Vice President, Sales 1996 -- -- -- $ --
Joseph R. Kraus, IV(5)............. 1997 $125,000 $ 28,125 -- $ --
Senior Vice President 1996 115,000 -- -- --
</TABLE>
- ---------------
(1) Represents reimbursement for certain expenses in connection with the sale of
Mr. Bell's residence in New York.
(2) In March 1998, Mr. Bullington became Chief Operating Officer of the Company.
(3) Mr. Hood joined the Company in December 1996.
(4) Mr. Wachtel joined the Company in March 1997.
(5) Mr. Kraus also served as President of the Company from June 1994 to January
1996.
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<PAGE> 33
The following table sets forth further information regarding option grants
pursuant to the Company's 1995 Plan and the Plan during 1997 to each of the
Named Officers. In accordance with the rules of the Commission, the potential
realizable values for such options shown in the table are based on assumed rates
of stock price appreciation of 5% and 10% compounded annually from the date the
respective options were granted to their expiration date. The assumed rates of
appreciation do not represent the Company's estimate or projection of the
appreciation of the Common Stock.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
NUMBER OF PERCENTAGE OF RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME GRANTED(1) 1997 PER SHARE DATE 5% 10%
---- ---------- -------------- -------------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
George Bell............ 83,000 4.3% $7.88 5/15/07 $411,061 $1,041,710
Brett T Bullington..... 35,000 1.8 8.75 1/10/07 192,599 488,084
Robert C. Hood......... -- -- -- -- -- --
Kenneth Wachtel........ 100,000 5.2 8.75 1/10/07 550,283 1,394,525
Joseph R. Kraus, IV.... -- -- -- -- -- --
</TABLE>
- ---------------
(1) Options granted under the Plan in 1997 were incentive stock options or
nonqualified stock options that were granted at fair market value at the
time of grant and that generally vest over a four-year period so long as the
individual is employed by the Company. Options expire ten years from the
date of grant.
The following table sets forth the number of shares covered by both
exercisable and unexercisable stock options held by each of the Named Officers
at December 31, 1997. Also reported are values of "in-the-money" options which
represent the positive spread between the respective exercise prices of
outstanding stock options and the fair market value of the Company's Common
Stock as of December 31, 1997 ($30.38) based on the last sales price of the
Common Stock on the Nasdaq National Market on such date.
AGGREGATE OPTION EXERCISES IN 1997 AND FISCAL YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END
ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ --------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
George Bell................ 8,600 $272,927 183,811 288,203 $5,434,459 $7,920,685
Brett T Bullington......... 48,600 894,791 6,250 97,350 151,563 2,560,463
Robert C. Hood............. -- -- 54,167 145,833 1,313,550 3,536,450
Kenneth Wachtel............ -- -- -- 100,000 -- 2,162,500
Joseph R. Kraus, IV........ -- -- -- -- -- --
</TABLE>
COMPENSATION ARRANGEMENTS WITH EXECUTIVE OFFICERS
The Company has entered into compensation arrangements pursuant to offer
letters with the following executive officers of the Company: George Bell, the
Company's President and Chief Executive Officer; Brett T Bullington, the
Company's Executive Vice President, Strategic and Business Development; James
Desrosier, the Company's Executive Vice President, Corporate Marketing; Robert
C. Hood, the Company's Executive Vice President, Chief Administrative Officer
and Chief Financial Officer; Chris M. Vail, the Company's Vice President,
General Counsel and Corporate Secretary; and Kenneth Wachtel, the Company's
Senior Vice President, Sales.
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<PAGE> 34
Mr. Bell's annual base salary was initially set at $185,000 and was
subsequently increased to $200,000. At the time of his employment, he was
granted an option to purchase an aggregate of 18,458 shares of Common Stock. Mr.
Bell received a guaranteed bonus of $60,000 during his first year of employment
and the Company reimbursed Mr. Bell for certain expenses in connection with the
sale of his residence in New York. Under the Company's 1997 Bonus Plan, Mr. Bell
is eligible to receive a bonus targeted at 62% of his annual base salary in each
year subsequent to his first year of employment, subject to meeting certain
individual and company goals. This agreement may be terminated by the Company or
Mr. Bell at any time for any reason.
Mr. Bullington initially received an annual base salary of $150,000 and was
granted an option to purchase an aggregate of 25,774 shares of Common Stock. Mr.
Bullington's annual base salary has subsequently been increased to $170,000.
Under the Company's 1997 Bonus Plan, Mr. Bullington is eligible to receive a
bonus targeted at 40% of his annual base salary, subject to meeting certain
individual and company goals. This agreement may be terminated by the Company or
by Mr. Bullington at any time for any reason.
Mr. Desrosier receives an annual base salary of $175,000 and was granted an
option to purchase an aggregate of 150,000 shares of Common Stock. Under the
Company's 1997 Bonus Plan, Mr. Desrosier is eligible to receive a bonus targeted
at 30% of his annual base salary, subject to meeting certain individual and
company goals. In the event that Mr. Desrosier ceases to be employed by the
Company prior to July 15, 1999, for any reason other than "cause," as defined,
he will be entitled to receive an amount equal to six months of his then-current
base salary, an additional six months vesting of his stock options and six
months continuation of benefits. This agreement may be terminated by the Company
or by Mr. Desrosier at any time for any reason.
Mr. Hood receives an annual base salary of $175,000. In the event that the
Company is acquired by a company that does not continue to employ Mr. Hood
before Mr. Hood's option granted under a consulting arrangement is fully vested
(see "Certain Transactions -- Consulting Arrangements"), he will receive a
consultant fee of $175,000 that will entitle the Company to retain Mr. Hood for
consulting services for a period of one year following the acquisition. Under
the Company's 1997 Bonus Plan, Mr. Hood is eligible to receive a bonus
originally targeted at 20% of his annual base salary and subsequently increased
to 40% of his annual base salary, subject to meeting certain individual and
company goals. This agreement may be terminated by the Company or Mr. Hood at
any time for any reason. If Mr. Hood is terminated for reasons other than cause,
he will continue to receive his base salary for an additional six months.
Mr. Vail receives an annual base salary of $138,000 and was granted an
option to purchase an aggregate of 8,000 shares of Common Stock. . Under the
Company's 1997 Bonus Plan, Mr. Vail is eligible to receive a bonus targeted at
25% of his annual base salary, subject to meeting certain individual and company
goals. This agreement may be terminated by the Company or by Mr. Vail at any
time for any reason.
Mr. Wachtel receives an annual base salary of $145,000 and received a
signing bonus of $15,000. Under the Company's 1997 Bonus Plan, Mr. Wachtel is
eligible to receive a bonus targeted at 65% of his annual base salary, subject
to meeting certain individual and company goals. This agreement may be
terminated by the Company or Mr. Wachtel at any time for any reason.
31
<PAGE> 35
PURSUANT TO ITEM 402(A)(9) OF REGULATION S-K PROMULGATED BY THE SECURITIES
AND EXCHANGE COMMISSION (THE "SEC"), NEITHER THE "COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION" NOR THE MATERIAL UNDER THE CAPTION "COMPANY STOCK
PRICE PERFORMANCE" SHALL BE DEEMED TO BE FILED WITH THE SEC FOR PURPOSES OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, NOR SHALL SUCH REPORT OR SUCH
MATERIAL BE DEEMED TO BE INCORPORATED BY REFERENCE IN ANY PAST OR FUTURE FILING
BY THE COMPANY UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, OR THE
SECURITIES ACT OF 1933, AS AMENDED.
REPORT OF THE COMPENSATION COMMITTEE
The Company's executive compensation program is currently administered by
the Compensation Committee of the Board of Directors (the "Committee"). Prior to
the Company's initial public offering in April 1996, the Committee had not been
formed and compensation decisions and grants of stock options were made by the
Board. The current members of the Committee are Vinod Khosla and Geoffrey Y.
Yang. Each of these persons is a non-employee director within the meaning of
Section 16 of the Securities Exchange Act of 1934, as amended, and an "outside
director" within the meaning of Section 162(m) of the Code.
GENERAL COMPENSATION PHILOSOPHY
The role of the Compensation Committee is to set the salaries and other
compensation of the executive officers and certain other key employees of the
Company, and to make grants under, and to administer, the stock option and other
employee equity and bonus plans. The Company's compensation philosophy for
executive officers is to relate compensation to corporate performance and
increases in shareholder value, while providing a total compensation package
that is competitive and enables the Company to attract, motivate, reward and
retain key executives and employees. The Committee currently uses salaries,
bonuses and stock options to meet these goals.
EXECUTIVE COMPENSATION
Base Salary. Salaries for executive officers for 1997 were generally
determined on an individual basis by evaluating each executive's scope of
responsibility, performance, prior experience and salary history, as well as the
salaries for similar positions at comparable companies.
Annual Incentive Awards. During 1997, the Company established the 1997
Bonus Plan (the "Bonus Plan"). All full-time employees of the Company, including
executive officers, are eligible to participate in the Bonus Plan. The Committee
has the sole discretion to determine the individuals who participate in the
Bonus Plan. Bonuses will be paid as a percentage of base wages earned during the
year. A significant portion of all bonuses will be based upon total company
financial goals as determined by the Committee. The balance will be based upon
achievement of personal and team objectives, as determined by the Committee or
such person designated by the Committee. The weighting between total company
financial goals versus personal and team goals may vary by position at the sole
discretion of the Committee.
Long-Term Incentive Awards. The Committee believes that equity-based
compensation in the form of stock options links the interests of executives with
the long-term interests of the Company's shareholders and encourages executives
to remain in the Company's employ. The Company grants stock options in
accordance with the Plan. Grants are awarded based on a number of factors,
including the individual's level of responsibility, the amount and term of
options already held by the individual, the individual's contributions to the
achievement of the Company's financial and strategic objectives, and industry
practices and norms.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Bell's base salary, target bonus, bonus paid and long-term incentive
awards for 1997 were determined in a manner consistent with the factors
described above for all executive officers.
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<PAGE> 36
INTERNAL REVENUE CODE SECTION 162(M) LIMITATION
Section 162(m) of the Internal Revenue Code limits the tax deduction to
$1.0 million for compensation paid to certain executives of public companies.
Having considered the requirements of Section 162(m), the Committee believes
that grants made pursuant to the 1995 Plan and the Plan meet the requirements
that such grants be "performance based" and are, therefore, exempt from the
limitations on deductibility. Historically, the combined salary and bonus of
each executive officer has been below the $1.0 million limit. The Committee's
present intention is to comply with Section 162(m) unless the Committee feels
that required changes would not be in the best interest of the Company or its
shareholders.
COMPENSATION COMMITTEE
Vinod Khosla
Geoffrey Y. Yang
33
<PAGE> 37
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Company's Common Stock, the Nasdaq Composite Index ("Nasdaq"), and the Hambrecht
& Quist Internet Index ("H&Q Internet"). The graph assumes that $100 was
invested in the Company's Common Stock, Nasdaq and H&Q Internet on April 4, 1996
and calculates the return monthly through December 31, 1997. The stock price
performance on the following graph is not necessarily indicative of future stock
price performance.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Excite Nasdaq H&O Internet
<S> <C> <C> <C>
4/4/96 100.00 100.00 100.00
4/30/96 86.25 106.47 116.04
5/31/96 80.65 111.20 121.35
6/30/96 41.90 105.97 110.96
7/31/96 35.65 96.64 89.07
8/31/96 28.75 102.08 93.32
9/30/96 41.90 109.72 103.07
10/31/96 30.65 109.24 94.43
11/30/96 48.75 115.60 100.34
12/31/96 51.25 115.46 94.95
1/31/97 91.25 123.40 96.06
2/28/97 79.38 117.06 81.56
3/31/97 53.75 109.25 75.28
4/30/97 45.63 112.75 78.69
5/31/97 59.38 125.23 94.33
6/30/97 71.56 128.96 93.72
7/31/97 92.50 142.53 107.96
8/31/97 114.69 141.95 109.53
9/30/97 142.34 150.75 124.08
10/31/97 124.69 142.51 120.14
11/30/97 128.28 143.14 118.48
12/31/97 150.00 140.43 127.43
</TABLE>
34
<PAGE> 38
CERTAIN TRANSACTIONS
Since January 1, 1997, there has not been, nor is there currently proposed,
any transaction or series of similar transactions to which the Company was or is
to be a party in which the amount involved exceeds $60,000 and in which any
director, executive officer or holder of more than 5% of any class of voting
securities of the Company or members of such person's immediate family had or
will have a direct or indirect material interest other than (i) the compensation
agreements which are described in "Executive Compensation" and "Compensation
Arrangements with Executive Officers," and (ii) the transactions described
below.
TRANSACTIONS WITH INTUIT
On June 25, 1997, the Company sold 2,900,000 shares of its Common Stock to
Intuit Inc. ("Intuit") pursuant to a stock purchase agreement (the "Stock
Purchase Agreement") for an aggregate purchase price of $39,150,000 (the "Intuit
Purchase"). As a result of the Intuit Purchase, the Company believes that Intuit
became an affiliate of the Company. In connection with the Intuit Purchase,
Intuit agreed not to acquire more than 25% of the total voting securities of the
Company (the "Standstill Percentage") without the consent of the Board. In the
event that a third party acquires a number of voting securities of the Company
in excess of the Standstill Percentage, the Standstill Percentage will be
increased to the percentage of the voting securities of the Company held by such
third party. The Company is also obligated to notify Intuit in the event that it
enters into or intends to enter into any bona fide discussions with any third
party which will result in the acquisition of or change in control with respect
to the Company (a "Change in Control Transaction").
Intuit's "standstill" obligations will terminate on the earlier to occur of
(i) December 11, 2000, or (ii) the termination of similar standstill obligations
of America Online, Inc. to the Company. Intuit's standstill obligations will
also terminate (i) upon the making of a bona fide offer by any third party or
group (a "Third-Party Offer") of an intention to acquire voting securities of
the Company which, if successful, would result in such third party or group
owning, or having the right to acquire beneficial ownership of, more than 20% of
the Company's voting securities or (ii) upon the Company's intention to enter
into a Change in Control Transaction.
Except as provided below, until December 12, 1998, Intuit may not, without
the prior written consent of the Company, dispose of any of the shares purchased
in the Intuit Purchase or any other securities of the Company owned by it. The
Stock Purchase Agreement also limits the number of shares of Common Stock that
Intuit may sell on any trading day on the Nasdaq National Market. These
restrictions on resale will be suspended in the event that Intuit's "standstill"
obligations will be suspended in the event of a Third Party Offer or if the
Company proposes to enter into a Change in Control Transaction.
In connection with the Intuit Purchase, Intuit and the Company entered into
a Registration Rights Agreement dated as of June 25, 1997 (the "Registration
Rights Agreement") which provides, among other things, certain registration
rights with respect to the shares purchased in the Intuit Purchase and any
shares of the Company's Common Stock issued pursuant to the Right of First
Refusal Agreement described below.
The Company has filed a registration statement (the "Shelf Registration
Statement") on Form S-3 under the Securities Act of 1933, as amended, (the
"Securities Act") pursuant to the Registration Rights Agreement. The Company is
required to maintain the effectiveness of the Shelf Registration Statement for a
two year period (the "Initial Effectiveness Period"). If, after the Initial
Effectiveness Period, Intuit continues to hold any shares of Common Stock of the
Company to which the Shelf Registration Statement relates, then the Company is
required to file an additional Shelf Registration Statement (the "Subsequent
Shelf Registration Statement") and maintain the effectiveness of the Subsequent
Shelf Registration Statement for a one year period (the "Subsequent
Effectiveness Period").
If, after the Subsequent Effectiveness Period, any registration rights with
respect to any securities of the Company which were granted subsequent to June
25, 1997 are still in effect, and Intuit still holds any of the shares purchased
in the Intuit Purchase or any securities issued pursuant to the Right of First
Refusal Agreement described below, the Company will be obligated to file an
additional Shelf Registration Statement
35
<PAGE> 39
(an "Additional Shelf Registration Statement") and maintain the effectiveness of
such Additional Shelf Registration Statement for up to two years (the
"Additional Effectiveness Period").
If securities of the Company having an aggregate purchase price in excess
of $250,000 are sold to Intuit pursuant to the Right of First Refusal Agreement
described below, during the Initial Effectiveness Period, the Subsequent
Effectiveness Period or the Additional Effectiveness Period, the Company will be
required to file an additional Shelf Registration Statement with respect to such
securities. The Company will be required to maintain the effectiveness of such
Shelf Registration Statement until no later than the expiration of the Initial
Effectiveness Period, the Subsequent Effectiveness Period of the Additional
Effectiveness Period, as applicable.
The shares of Common Stock covered by the Shelf Registration Statement may
be sold by Intuit or by its permitted transferees during one of four periods of
30 consecutive calendar days each, which periods shall be separated by intervals
of at least 90 days and shall occur no more than four times during the Initial
Effectiveness Period and two times during the Additional Effectiveness Period.
Subject to certain limitations, Intuit may also require the Company to file
a registration statement under the Securities Act with respect to all or a
portion of the securities of the Company owned by it (a "Demand Registration").
Intuit may request only two such Demand Registrations. Intuit may request that
the shares registered in a Demand Registration be offered by means of an
underwritten offering. In any such underwritten offering of the Company's
securities, the underwriters may reduce the number of shares to be included in
the Demand Registration, but shall not limit the shares to be included by Intuit
in such Demand Registration unless all other securities proposed to be sold by
persons or entities other than Intuit are first entirely excluded.
If the Company proposes to register any of its securities under the Act, it
must give prior notice to Intuit and permit Intuit, subject to certain
limitations, to include in such registration all or a portion of the securities
of the Company owned by it (a "Piggyback Registration"). If such registrations
relate to an underwritten public offering, the underwriters (if any) may reduce
the number of shares to be included in a Piggyback Registration, provided that
each of Intuit, AOL and certain other investors of the Company shall be subject
to such reduction only on a pro rata basis.
The Company is required to bear all expenses (other than underwriting
discounts and commissions) in connection with the Registration Rights Agreement.
The Registration Rights Agreement will terminate (a) if all of the shares
purchased in the Intuit Purchase have been registered and sold pursuant to
registrations effected pursuant to the Registration Rights Agreement or (b) at
such time as all of the shares purchased in the Intuit Purchase may be sold
within a three month period under Rule 144 promulgated under the Securities Act.
Pursuant to a Right of First Refusal Agreement dated as of June 25, 1997
between the Company and Intuit, which was entered into in connection with the
Intuit Purchase, Intuit was granted a right of first refusal to participate in
certain issuances of Company's securities. So long as Intuit holds at least ten
percent of the Company's outstanding Common Stock (including shares issuable
upon conversion of outstanding shares of preferred stock of the Company), in the
event that the Company proposes to issue any securities in a financing
transaction solely for cash consideration, Intuit is permitted to purchase all
or a portion of Intuit's "Pro Rata Share" (defined below) of such securities,
such that Intuit's Pro Rata Share equals up to nineteen percent immediately
after such issuance. The term "Pro Rata Share" means the ratio of (a) the number
of shares of the Company's Common Stock (on an as-converted to Common Stock
basis) owned by Intuit, to (b) a number of shares of Common Stock of the Company
equal to the sum of (i) the total number of shares of Common Stock of the
Company then outstanding plus (ii) the total number of shares of Common Stock of
the Company into which all then-outstanding shares of voting preferred stock of
the Company are then convertible.
In connection with the Intuit Purchase, the Company and Intuit entered into
a Nomination and Observer Agreement dated as of June 25, 1997, which provides
that, for so long as Intuit owns at least 10% of the Common Stock of the Company
(on an as-converted to Common Stock basis), it is entitled to nominate one
candidate (the "Intuit Designee") for election to the Company's Board of
Directors in connection with any
36
<PAGE> 40
shareholder solicitation or action relating to the election of directors. In the
event that Intuit wishes to appoint an Intuit Designee to the Board other than
in connection with a shareholder solicitation or an action relating to the
election of directors, the Company is obligated to appoint such Intuit Designee
to the Board. The Company is generally obligated to use its best efforts to
cause to be voted in favor of an Intuit Designee all shares for which the
Company's management or the Board holds proxies or otherwise are entitled to
vote, and to cause the Board to unanimously recommend the Intuit Designee for
election. If an Intuit Designee is not a member of the Board, Intuit has certain
rights to have a representative attend all meetings and receive all
communications of the Company directed to the Board or the audit committee
thereof in a non-voting observer capacity.
In connection with the Intuit Purchase the Company and Intuit entered into
a Joint Activities Agreement (the "Agreement"), dated as of June 25, 1997,
pursuant to which the Company and Intuit have created a new online financial
channel offering content and services designed to help consumers organize and
manage their finances. This new channel was introduced in the third quarter of
1997. Under the Agreement, Intuit is the exclusive provider and aggregator of
financial content on all the Company's services, and the Company is the
exclusive search and navigation service featured on the U.S. versions of certain
of Intuits software products.
TRANSACTIONS WITH AOL
On November 25, 1996, the Company, AOL and a wholly-owned subsidiary of AOL
entered into an Acquisition Agreement (the "Acquisition Agreement") pursuant to
which the Company agreed to acquire certain assets relating to the WebCrawler
search and directory service (the "WebCrawler Assets") from AOL. The closing
under the Acquisition Agreement occurred in March 1997. In addition, the Company
entered into a Technology License, Distribution, Services and Co-Marketing
Agreement (the "Distribution Agreement") with AOL. In consideration of the
Acquisition and the rendering of certain services to the Company, the Company
issued to AOL 1,250,000 and 700,000 shares of its Series E-1 and Series E-2
Preferred Stock, respectively. In addition, as part of the transactions
contemplated by the Acquisition Agreement and the Distribution Agreement (i) AOL
will have the right (the "Exchange Right"), for a 90-day period following March
27, 1997, to have the 680,330 shares of Common Stock beneficially owned by AOL
cancelled and an equivalent number of shares of Series E-4 Preferred Stock
issued to AOL Ventures and (ii) a warrant, which previously was exercisable into
650,000 shares of Common Stock at an exercise price of $8.00 per share, was
amended to become exercisable into 650,000 shares of Series E-3 Preferred Stock
at the same exercise price per share (the "AOL Warrant"). In addition, the
expiration date of the AOL Warrant was amended so that the expiration date with
respect to 325,000 shares of Series E-3 Preferred Stock was September 30, 1997
and the expiration date for the remaining shares will remain March 8, 2001. AOL
exercised this warrant on a net exercise basis in September 1997. AOL also
exercised the Exchange Right in June 1997 and in December 1997, converted all of
the Preferred Stock held by it into Common Stock.
The Series E-3 Preferred Stock will, upon the liquidation, dissolution or
winding up of the Company, be entitled to receive a liquidation preference of
$8.00 per share. Each share of Series E-3 Preferred Stock will be convertible
into shares of Common Stock at the option of the holders thereof, with such
conversion to occur on a one-to-one basis, as adjusted for certain events. The
holders of outstanding shares of Series E-3 Preferred Stock shall be entitled to
vote together with the holders of Common Stock, on an as-converted-to-Common
Stock basis. The Company has filed a "shelf" registration statement providing
for the resale of all of the Common Stock issued upon conversion of the
Preferred Stock held by AOL (or issuable to AOL upon exercise of the AOL
Warrant) (the "AOL Registerable Securities") during no more than four 30 day
periods which must be at least 90 days apart in time and in accordance with the
manner of sale provisions set forth in Rule 144(f) under the Securities Act or
in other customary brokerage transactions in the public market. The Company has
the right to delay the sale of the AOL Registrable Securities under such shelf
registration, for up to 60 or 90 days under certain circumstances. The first
$50,000 of the expenses relating to the issuance of the Preferred Stock and in
connection with such shelf registration were borne by the Company.
Pursuant to the Distribution Agreement, a co-branded version of the Excite
service will be the exclusive provider of Web search and directory services to
AOL's customers for a minimum of two years. After the initial two-year
exclusivity period, either party may elect to terminate the exclusivity
arrangement by prior written
37
<PAGE> 41
notice. In the event of such a termination, the co-branded search and directory
service will be the "default" search and directory service for AOL. The
Distribution Agreement has a term of five years and can be renewed by AOL for an
additional five year period and provides that the Company will receive a share
of revenues generated on the AOL search and directory site, with AOL incurring
all hosting, advertising and selling expenses. In addition, after the term of
the Distribution Agreement, AOL will have a non-exclusive, non-transferable
license to any navigation service owned or controlled by Excite for successive
one-year periods at "customary fair market rates" and other terms to be mutually
agreed upon by the Company and AOL.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions between the Company and its
officers, directors and principal shareholders and their affiliates will be
approved by a majority of the Board, including a majority of the independent and
disinterested directors of the Board, and will be on terms no less favorable to
the Company than could be obtained from unaffiliated third parties.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's 1999
Annual Meeting of Shareholders must be received by the Company at its principal
executive offices no later than February 18, 1999 in order to be included in the
Company's Proxy Statement and form of proxy relating to the meeting.
SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and officers, and persons who own more than 10% of the
Company's Common Stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission (the "SEC") and
the Nasdaq National Market. Such persons are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements for the year
ended December 31, 1997 were met, except that a Form 4 was filed late for Brett
T Bullington, Executive Vice President of the Company.
OTHER BUSINESS
The Board does not presently intend to bring any other business before the
Meeting, and, so far as is known to the Board, no matters are to be brought
before the Meeting except as specified in the Notice of the Meeting. As to any
business that may properly come before the Meeting, however, it is intended that
proxies, in the form enclosed, will be voted in respect thereof in accordance
with the judgment of the persons voting such proxies.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED POSTAGE PAID ENVELOPE SO THAT YOUR SHARES MAY BE
REPRESENTED AT THE MEETING.
38
<PAGE> 42
APPENDIX A
CERTIFICATE OF INCORPORATION
OF
EXCITE, INC.
ARTICLE I
The name of the corporation is Excite, Inc.
ARTICLE II
The address of the registered office of the corporation in the State of
Delaware is 1013 Centre Road, City of Wilmington, County of New Castle. The name
of its registered agent at that address is Corporation Service Company.
ARTICLE 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 the
State of Delaware.
ARTICLE IV
The total number of shares of all classes of stock which the corporation
has authority to issue is fifty-four million (54,000,000) shares, consisting of
two classes: fifty million (50,000,000) shares of Common Stock, $0.001 par value
per share, and four million (4,000,000) shares of Preferred Stock, $0.001 par
value per share.
The Board of Directors is authorized, subject to any limitations prescribed
by the law of the State of Delaware, to provide for the issuance of the shares
of Preferred Stock in one or more series, and, by filing a Certificate of
Designation pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, to fix the designation, powers, preferences and rights of the shares of
each such series and any qualifications, limitations or restrictions thereof,
and to increase or decrease the number of shares of any such series (but not
below the number of shares of such series then outstanding). The number of
authorized shares of Preferred Stock may also be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the stock of the corporation entitled to vote,
unless a vote of any other holders is required pursuant to a Certificate or
Certificates establishing a series of Preferred Stock.
Except as otherwise expressly provided in any Certificate of Designation
designating any series of Preferred Stock pursuant to the foregoing provisions
of this Article IV, any new series of Preferred Stock may be designated, fixed
and determined as provided herein by the Board of Directors without approval of
the holders of Common Stock or the holders of Preferred Stock, or any series
thereof, and any such new series may have powers, preferences and rights,
including, without limitation, voting rights, dividend rights, liquidation
rights, redemption rights and conversion rights, senior to, junior to or pari
passu with the rights of the Common Stock, the Preferred Stock, or any future
class or series of Preferred Stock or Common Stock.
ARTICLE V
The Board of Directors of the corporation shall have the power to adopt,
amend or repeal Bylaws of the corporation.
A-1
<PAGE> 43
ARTICLE VI
Pursuant to the provisions of Section 228 of the Delaware General
Corporation Law, actions which are required to be or which may be taken at taken
at any annual or special meeting of stockholders may not be taken without a
meeting by the consent in writing of the stockholders of the corporation.
ARTICLE VII
Election of directors need not be by written ballot unless the Bylaws of
the corporation shall so provide.
ARTICLE VIII
To the fullest extent permitted by law, no director of the corporation
shall be personally liable for monetary damages for breach of fiduciary duty as
a director. Without limiting the effect of the preceding sentence, if the
Delaware General Corporation Law is hereafter amended to authorize the further
elimination or limitation of the liability of a director, then the liability of
a director of the corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
Neither any amendment nor repeal of this Article VIII, nor the adoption of
any provision of this Certificate of Incorporation inconsistent with this
Article VIII, shall eliminate, reduce or otherwise adversely affect any
limitation on the personal liability of a director of the corporation existing
at the time of such amendment, repeal or adoption of such an inconsistent
provision.
ARTICLE IX
The name and mailing address of the incorporator is Michael J. McAdam, c/o
Fenwick & West LLP, Two Palo Alto Square, Palo Alto, California 94306.
The undersigned incorporator hereby acknowledges that the foregoing
certificate is his act and deed and that the facts stated herein are true.
Date: March , 1998
--------------------------------------
Michael J. McAdam, Incorporator
A-2
<PAGE> 44
CERTIFICATE OF DESIGNATION
OF
SERIES E-3 PREFERRED STOCK
OF
EXCITE, INC.
Pursuant to Section 151 of the
Delaware General Corporation Law
Excite, Inc., a Delaware corporation, (the "Company") does hereby certify
that, pursuant to the authority contained in Article VI of its Certificate of
Incorporation, and in accordance with the provisions of Section 151 of the
Delaware General Corporation Law, the Company's Board of Directors has duly
adopted the following resolution creating a series of Preferred Stock designated
as Series E-3 Preferred Stock:
RESOLVED, that the Company hereby designates and creates a series of the
authorized Preferred Stock designated as Series E-3 Preferred stock as
follows:
Of the 4,000,000 shares of Preferred Stock authorized to be issued by this
corporation, 325,000 shares are hereby designated as "Series E-3 Preferred
Stock." The rights, preference, privileges and restrictions granted to and
imposed upon the Series E-3 Preferred Stock are as set forth below:
1. DEFINITIONS. For purposes of this resolution, the following definitions
shall apply:
1.1 "Board" shall mean the Board of Directors of the Company.
1.2 "Company" shall mean this corporation.
1.3 "Common Stock" shall mean the Common Stock, $0.001 par value, of
the Company.
1.4 "Common Stock Dividend" shall mean a stock dividend declared and
paid on the Common Stock that is payable in shares of Common Stock.
1.5 "Original Issue Date" shall mean the date on which the first share
of Series E-3 Preferred Stock was issued by the Company.
1.6 "Original Issue Price" shall mean $8.00 per share of Series E-3
Preferred Stock.
1.7 "Subsidiary" shall mean any corporation of which at least fifty
percent (50%) of the outstanding voting stock is at the time owned directly
or indirectly by the Company or by one or more of such subsidiary
corporations.
2. DIVIDEND RIGHTS.
2.1 Series E-3 Preferred Stock. In each calendar year, the holders of
the then outstanding Series E-3 Preferred Stock shall be entitled to
receive, when, as and if declared by the Board, out of any funds and assets
of the Company legally available therefor, noncumulative dividends in the
amount determined by the Board on a pro rata basis with the Common Stock
according to the number of shares of Common Stock held by such holders,
where each holder of shares of Series E-3 Preferred Stock is to be treated
for this purpose as holding the greatest whole number of shares of Common
Stock then issuable upon conversion of all shares of Series E-3 Preferred
Stock held by such holder pursuant to Section 5. Dividends on the Series
E-3 Preferred Stock shall not be mandatory or cumulative, and no rights or
interest shall accrue to the holders of the Series E-3 Preferred Stock by
reason of the fact that the Company shall fail to declare or pay dividends
on the Series E-3 Preferred Stock in any amount in any calendar year or any
fiscal year of the Company, whether or not the earnings of the Company in
any calendar year or fiscal year were sufficient to pay such dividends in
whole or in part.
2.2 Non-Cash Dividends. Whenever a dividend provided for in this
Section 2 shall be payable in property other than cash, the value of such
dividend or distribution shall be deemed to be the fair market value of
such property as determined in good faith by the Board.
1
<PAGE> 45
3. LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, the funds and
assets of the Company that may be legally distributed to the Company's
stockholders (the "Available Funds and Assets") shall be distributed to
stockholders in the following manner:
3.1 Series E-3 Preferred Stock. Prior to any consolidation or merger
of the Company with or into any other corporation or corporations or other
entity, corporate reorganization, sale, conveyance or disposition of all or
substantially all of the assets of the Company, liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, the Company
shall give the holders of the Series E-3 Preferred Stock at least ten (10)
days notice thereof and afford such holders the opportunity to convert such
shares of Series E-3 Preferred Stock into shares of the Company's Common
Stock pursuant to Section 5.1 hereof. Upon the liquidation, dissolution of
winding up of the Company, whether voluntary or involuntary, the holders of
each share of Series E-3 Preferred Stock then outstanding shall be entitled
to be paid, out of the Available Funds and Assets, and prior and in
preference to any payment or distribution (or any setting apart of any
payment or distribution) of any Available Funds and Assets on any shares of
Common Stock, an amount per share equal to the Original Issue Price for the
Series E-3 Preferred Stock plus all declared but unpaid dividends on the
Series E-3 Preferred Stock. If upon any liquidation, dissolution or winding
up of the Company, the Available Funds and Assets shall be insufficient to
permit the payment to holders of the Series E-3 Preferred Stock of their
full preferential amount described in this subsection, then all of the
remaining Available Funds and Assets shall be distributed among the holders
of the then outstanding Series E-3 Preferred Stock pro rata, according to
the number of outstanding shares of Series E-3 Preferred Stock held by each
holder thereof.
3.2 Remaining Assets. If there are any Available Funds and Assets
remaining after the payment or distribution (or the setting aside for
payment or distribution) to the holders of the Series E-3 Preferred Stock
of their full preferential amounts described above in this Section 3, then
all such remaining Available Funds and Assets shall be distributed among
the holders of the then outstanding Common Stock pro rata according to the
number of shares of Common Stock held by each holder thereof.
3.3 Merger or Sale of Assets. A consolidation or merger of the Company
with or into any other corporation or corporations or other entity, a
corporate reorganization, or a sale, conveyance or disposition of all or
substantially all of the assets of the Company shall not be deemed a
liquidation, dissolution or winding up of the Company within the meaning of
this Section 3.
3.4 Non-Cash Consideration. If any assets of the Company distributed
to stockholders in connection with any liquidation, dissolution, or winding
up of the Company are other than cash, then the value of such assets shall
be their fair market value as determined by the Board, except that any
securities to be distributed to stockholders in a liquidation, dissolution,
or winding up of the Company shall be valued as follows:
(a) The method of valuation of securities not subject to investment
letter or other similar restrictions on free marketability shall be as
follows:
(i) if the securities are then traded on a national securities
exchange or the Nasdaq National Market System (or a similar national
quotation system), then the value shall be deemed to be the average
of the closing prices of the securities on such exchange or system
over the 30-day period ending three (3) days prior to the
distribution; and
(ii) if actively traded over-the-counter, then the value shall
be deemed to be the average of the closing bid prices over the 30-day
period ending three (3) days prior to the closing of such merger,
consolidation or sale; and
(iii) if there is no active public market, then the value shall
be the fair market value thereof, as determined in good faith by the
Board.
(b) The method of valuation of securities subject to investment
letter or other restrictions on free marketability shall be to make an
appropriate discount from the market value determined as
2
<PAGE> 46
above in subparagraphs (a)(i), (ii) or (iii) of this subsection to
reflect the approximate fair market value thereof, as determined in good
faith by the Board.
4. VOTING RIGHTS.
In every vote of the stockholders of the Company, each holder of shares of
Series E-3 Preferred Stock shall be entitled to the number of votes equal to the
number of whole shares of Common Stock into which such shares of Series E-3
Preferred Stock could be converted pursuant to the provisions of Section 5 below
at the record date for the determination of the stockholders entitled to vote
or, if no such record date is established, the date such vote is taken or any
written consent of stockholders is solicited. Except as required by law, the
holders of Series E-3 Preferred Stock and holders of Common Stock shall vote
together and not as separate classes.
5. CONVERSION RIGHTS. The outstanding shares of Series E-3 Preferred Stock
shall be convertible into Common Stock as follows:
5.1 Optional Conversion.
(a) At the option of the holder thereof, each share of Series E-3
Preferred Stock shall be convertible, at any time or from time to time.
(b) Each holder of Series E-3 Preferred Stock who elects to convert
the same into shares of Common Stock shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Company or any
transfer agent for the Series E-3 Preferred Stock or Common Stock, and
shall give written notice to the Company at such office that such holder
elects to convert the same and shall state therein the number of shares of
Series E-3 Preferred Stock being converted. Thereupon the Company shall
promptly issue and deliver at such office to such holder a certificate or
certificates for the number of shares of Common Stock to which such holder
is entitled upon such conversion. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of the certificate or certificates representing the shares of
Series E-3 Preferred Stock to be converted, and the person entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder of such shares of Common
Stock on such date.
5.2 Conversion Price. Each share of Series E-3 Preferred Stock shall
be convertible in accordance with subsection 5.1 above into the number of
shares of Common Stock which results from dividing the Original Issue Price
for the Series E-3 Preferred Stock by the conversion price for the Series
E-3 Preferred Stock that is in effect at the time of conversion (the
"Conversion Price"). The initial Conversion Price for the Series E-3
Preferred Stock shall be the Original Issue Price for the Series E-3
Preferred Stock. The Conversion Price of the Series E-3 Preferred Stock
shall be subject to adjustment from time to time as provided below.
5.3 Adjustment Upon Common Stock Event. Upon the happening of a Common
Stock Event (as hereinafter defined), the Conversion Price of the Series
E-3 Preferred Stock shall, simultaneously with the happening of such Common
Stock Event, be adjusted by multiplying the Conversion Price for the Series
E-3 Preferred Stock in effect immediately prior to such Common Stock Event
by a fraction, (i) the numerator of which shall be the number of shares of
Common Stock issued and outstanding immediately prior to such Common Stock
Event, and (ii) the denominator of which shall be the number of shares of
Common Stock issued and outstanding immediately after such Common Stock
Event, and the product so obtained shall thereafter be the Conversion Price
for the Series E-3 Preferred Stock. The Conversion Price for the Series E-3
Preferred Stock shall be readjusted in the same manner upon the happening
of each subsequent Common Stock Event. As used herein, the term "Common
Stock Event" shall mean (i) the issue by the Company of additional shares
of Common Stock as a dividend or other distribution on outstanding Common
Stock, (ii) a subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock, or (iii) a combination of the
outstanding shares of Common Stock into a smaller number of shares of
Common Stock.
3
<PAGE> 47
5.4 Adjustments for Other Dividends and Distributions. If at any time
or from time to time after the Original Issue Date the Company pays a
dividend or makes another distribution to the holders of the Common Stock
payable in securities of the Company other than shares of Common Stock,
then in each such event provision shall be made so that the holders of the
Series E-3 Preferred Stock shall receive upon conversion thereof, in
addition to the number of shares of Common Stock receivable upon conversion
thereof, the amount of securities of the Company which they would have
received had their Series E-3 Preferred Stock been converted into Common
Stock on the date of such event (or such record date, as applicable) and
had they thereafter, during the period from the date of such event (or such
record date, as applicable) to and including the conversion date, retained
such securities receivable by them as aforesaid during such period, subject
to all other adjustments called for during such period under this Section 5
with respect to the rights of the holders of the Series E-3 Preferred Stock
or with respect to such other securities by their terms.
5.5 Adjustment for Reclassification, Exchange and Substitution. If at
any time or from time to time after the Original Issue Date the Common
Stock issuable upon the conversion of the Series E-3 Preferred Stock is
changed into the same or a different number of shares of any class or
classes of stock, whether by recapitalization, reclassification or
otherwise (other than by a Common Stock Event or a stock dividend,
reorganization, merger, consolidation or sale of assets provided for
elsewhere in this Section 5), then in any such event each holder of Series
E-3 Preferred Stock shall have the right thereafter to convert such stock
into the kind and amount of stock and other securities and property
receivable upon such recapitalization, reclassification or other change by
holders of the number of shares of Common Stock into which such shares of
Series E-3 Preferred Stock could have been converted immediately prior to
such recapitalization, reclassification or change, all subject to further
adjustment as provided herein or with respect to such other securities or
property by the terms thereof.
5.6 Certificate of Adjustment. In each case of an adjustment or
readjustment of the Conversion Price for the Series E-3 Preferred Stock,
the Company, at its expense, shall cause its Chief Financial Officer to
compute such adjustment or readjustment in accordance with the provisions
hereof and prepare a certificate showing such adjustment or readjustment,
and shall mail such certificate, by first class mail, postage prepaid, to
each registered holder of the Series E-3 Preferred Stock at the holder's
address as shown in the Company's books.
5.7 Fractional Shares. No fractional shares of Common Stock shall be
issued upon any conversion of Series E-3 Preferred Stock. In lieu of any
fractional share to which the holder would otherwise be entitled, the
Company shall pay the holder cash equal to the product of such fraction
multiplied by the Common Stock's fair market value as determined in good
faith by the Board as of the date of conversion.
5.8 Reservation of Stock Issuable Upon Conversion. The Company shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion
of the shares of the Series E-3 Preferred Stock, such number of its shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series E-3 Preferred Stock; and
if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then outstanding
shares of the Series E-3 Preferred Stock, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number
of shares as shall be sufficient for such purpose.
5.9 Notices. Any notice required by the provisions of this Section 5
to be given to the holders of shares of the Series E-3 Preferred Stock
shall be deemed given upon the earlier of actual receipt or deposit in the
United States mail, by certified or registered mail, return receipt
requested, postage prepaid, addressed to each holder of record at the
address of such holder appearing on the books of the Company.
5.10 No Impairment. The Company shall not avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but shall at all times in good
4
<PAGE> 48
faith assist in carrying out all such action as may be reasonably necessary
or appropriate in order to protect the conversion rights of the holders of
the Series E-3 Preferred Stock against impairment.
6. MISCELLANEOUS
6.1 No Reissuance of Series E-3 Preferred Stock. No share or shares of
Series E-3 Preferred Stock acquired by the Company by reason of purchase,
conversion or otherwise shall be reissued, and all such shares shall be
canceled, retired and eliminated from the shares which the Company shall be
authorized to issue.
6.2 Consent to Certain Transactions. Each holder of shares of Series
E-3 Preferred Stock shall, by virtue of its acceptance of a stock
certificate evidencing Series E-3 Preferred Stock, be deemed to have
consented, so long as the Company is deemed a "foreign corporation" as
defined under Section 2115 of the California Corporations Code, for
purposes of Sections 502, 503 and 506 of the California Corporations Code,
to all repurchases by the Company of shares of Common Stock held by
employees, officers, directors, consultants, independent contractors,
advisors, or other persons performing services for the Company or a
subsidiary that are subject to restricted stock purchase agreements or
stock option exercise agreements under which the Company has the option to
repurchase such shares."
IN WITNESS WHEREOF, said corporation has caused this Certificate of
Designation to be signed and attested by its duly authorized officers this
day of , 1998.
EXCITE, INC.
--------------------------------------
George Bell,
President and Chief Executive Officer
ATTEST:
- ---------------------------------------------
Chris M. Vail, Secretary
5
<PAGE> 49
APPENDIX B
BYLAWS
OF
EXCITE, INC.
(a Delaware corporation)
As Adopted March , 1998
<PAGE> 50
BYLAWS
OF
EXCITE, INC.
A Delaware Corporation
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I -- STOCKHOLDERS..................................................... B-1
Section 1.1: Annual Meetings............................................. B-1
Section 1.2: Special Meetings............................................ B-1
Section 1.3: Notice of Meetings.......................................... B-1
Section 1.4: Adjournments................................................ B-1
Section 1.5: Quorum...................................................... B-1
Section 1.6: Organization................................................ B-1
Section 1.7: Voting; Proxies............................................. B-2
Section 1.8: Fixing Date for Determination of Stockholders of Record..... B-2
Section 1.9: List of Stockholders Entitled to Vote....................... B-2
Section 1.10: Inspectors of Elections..................................... B-2
Section 1.11: Notice of Stockholder Business; Nominations................. B-3
ARTICLE II -- BOARD OF DIRECTORS.............................................. B-5
Section 2.1: Number; Qualifications...................................... B-5
Section 2.2: Election; Resignation; Removal; Vacancies................... B-5
Section 2.3: Regular Meetings............................................ B-5
Section 2.4: Special Meetings............................................ B-5
Section 2.5: Telephonic Meetings Permitted............................... B-5
Section 2.6: Quorum; Vote Required for Action............................ B-5
Section 2.7: Organization................................................ B-6
Section 2.8: Written Action by Directors................................. B-6
Section 2.9: Powers...................................................... B-6
Section 2.10: Compensation of Directors................................... B-6
ARTICLE III -- COMMITTEES..................................................... B-6
Section 3.1: Committees.................................................. B-6
Section 3.2: Committee Rules............................................. B-6
ARTICLE IV -- OFFICERS........................................................ B-7
Section 4.1: Generally................................................... B-7
Section 4.2: Chief Executive Officer..................................... B-7
Section 4.3: Chairman of the Board....................................... B-7
Section 4.4: President................................................... B-7
Section 4.5: Vice President.............................................. B-7
Section 4.6: Chief Financial Officer..................................... B-8
Section 4.7: Treasurer................................................... B-8
Section 4.8: Secretary................................................... B-8
Section 4.9: Delegation of Authority..................................... B-8
Section 4.10: Removal..................................................... B-8
ARTICLE V -- STOCK............................................................ B-8
Section 5.1: Certificates................................................ B-8
Section 5.2: Lost, Stolen or Destroyed Stock Certificates; Issuance of
New Certificates............................................ B-8
Section 5.3: Other Regulations........................................... B-8
</TABLE>
i
<PAGE> 51
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE VI -- INDEMNIFICATION................................................. B-8
Section 6.1: Indemnification of Officers and Directors................... B-8
Section 6.2: Advance of Expenses......................................... B-9
Section 6.3: Non-Exclusivity of Rights................................... B-9
Section 6.4: Indemnification Contracts................................... B-9
Section 6.5: Effect of Amendment......................................... B-9
ARTICLE VII -- NOTICES........................................................ B-9
Section 7.1: Notice...................................................... B-9
Section 7.2: Waiver of Notice............................................ B-10
ARTICLE VIII -- INTERESTED DIRECTORS.......................................... B-10
Section 8.1: Interested Directors; Quorum................................ B-10
ARTICLE IX -- MISCELLANEOUS................................................... B-10
Section 9.1: Fiscal Year................................................. B-10
Section 9.2: Seal........................................................ B-10
Section 9.3: Form of Records............................................. B-10
Section 9.4: Reliance Upon Books and Records............................. B-10
Section 9.5: Certificate of Incorporation Governs........................ B-11
Section 9.6: Severability................................................ B-11
ARTICLE X -- AMENDMENT........................................................ B-11
Section 10.1: Amendments.................................................. B-11
</TABLE>
ii
<PAGE> 52
BYLAWS
OF
EXCITE, INC.
(a Delaware corporation)
As Adopted March , 1998
ARTICLE I
STOCKHOLDERS
SECTION 1.1: Annual Meetings. An annual meeting of stockholders shall be
held for the election of directors at such date, time and place, either within
or without the State of Delaware, as the Board of Directors shall each year fix.
Any other proper business may be transacted at the annual meeting.
SECTION 1.2: Special Meetings. Special meetings of stockholders for any
purpose or purposes may be called at any time by the Chairman of the Board, the
President, or by the Board of Directors or two or more members thereof. Special
meetings may not be called by any other person or persons. If a special meeting
of stockholders is called by any person or persons other than by a majority of
the members of the Board of Directors, then such person or persons shall call
such meeting by delivering a written request to call such meeting to each member
of the Board of Directors, and the Board of Directors shall then determine the
time, date and place of such special meeting, which shall be held not more than
one hundred twenty (120) nor less than thirty-five (35) days after the written
request to call such special meeting was delivered to each member of the Board
of Directors.
SECTION 1.3: Notice of Meetings. Written notice of all meetings of
stockholders shall be given stating the place, date and time of the meeting and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called. Unless otherwise required by applicable law or the Certificate of
Incorporation of the Corporation, such notice shall be given not less than ten
(10) nor more than sixty (60) days before the date of the meeting to each
stockholder entitled to vote at such meeting.
SECTION 1.4: Adjournments. Any meeting of stockholders may adjourn from
time to time to reconvene at the same or another place, and notice need not be
given of any such adjourned meeting if the time, date and place thereof are
announced at the meeting at which the adjournment is taken; provided, however,
that if the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, then a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting. At the adjourned meeting the Corporation may transact
any business that might have been transacted at the original meeting.
SECTION 1.5: Quorum. At each meeting of stockholders the holders of a
majority of the shares of stock entitled to vote at the meeting, present in
person or represented by proxy, shall constitute a quorum for the transaction of
business, except if otherwise required by applicable law. If a quorum shall fail
to attend any meeting, the chairman of the meeting or the holders of a majority
of the shares entitled to vote who are present, in person or by proxy, at the
meeting may adjourn the meeting. Shares of the Corporation's stock belonging to
the Corporation (or to another corporation, if a majority of the shares entitled
to vote in the election of directors of such other corporation are held,
directly or indirectly, by the Corporation), shall neither be entitled to vote
nor be counted for quorum purposes; provided, however, that the foregoing shall
not limit the right of the Corporation or any other corporation to vote any
shares of the Corporation's stock held by it in a fiduciary capacity.
SECTION 1.6: Organization. Meetings of stockholders shall be presided over
by such person as the Board of Directors may designate, or, in the absence of
such a person, the Chairman of the Board, or, in the absence of such person, the
President of the Corporation, or, in the absence of such person, such person as
may be chosen by the holders of a majority of the shares entitled to vote who
are present, in person or by proxy, at the meeting. Such person shall be
chairman of the meeting and, subject to Section 1.11 hereof, shall determine the
order of business and the procedure at the meeting, including such regulation of
the manner of
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voting and the conduct of discussion as seems to him or her to be in order. The
Secretary of the Corporation shall act as secretary of the meeting, but in his
or her absence the chairman of the meeting may appoint any person to act as
secretary of the meeting.
SECTION 1.7: Voting; Proxies. Unless otherwise provided by law or the
Certificate of Incorporation, and subject to the provisions of Section 1.8 of
these Bylaws, each stockholder shall be entitled to one (1) vote for each share
of stock held by such stockholder. Each stockholder entitled to vote at a
meeting of stockholders may authorize another person or persons to act for such
stockholder by proxy. Such a proxy may be prepared, transmitted and delivered in
any manner permitted by applicable law. Voting at meetings of stockholders need
not be by written ballot unless such is demanded at the meeting before voting
begins by a stockholder or stockholders holding shares representing at least one
percent (1%) of the votes entitled to vote at such meeting, or by such
stockholder's or stockholders' proxy; provided, however, that an election of
directors shall be by written ballot if demand is so made by any stockholder at
the meeting before voting begins. If a vote is to be taken by written ballot,
then each such ballot shall state the name of the stockholder or proxy voting
and such other information as the chairman of the meeting deems appropriate.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. Unless otherwise provided by applicable law, the
Certificate of Incorporation or these Bylaws, every matter other than the
election of directors shall be decided by the affirmative vote of the holders of
a majority of the shares of stock entitled to vote thereon that are present in
person or represented by proxy at the meeting and are voted for or against the
matter.
SECTION 1.8: Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of 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 change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors and 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 no record date is fixed by the Board of Directors,
then the record date shall be as provided by applicable law. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 1.9: List of Stockholders Entitled to Vote. A complete list of
stockholders entitled to vote at any meeting of stockholders, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in the name of each stockholder, 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 whole time
thereof and may be inspected by any stockholder who is present at the meeting.
SECTION 1.10: Inspectors of Elections.
(a) Applicability. Unless otherwise provided in the Corporation's
Certificate of Incorporation or required by the Delaware General Corporation
Law, the following provisions of this Section 1.10 shall apply only if and when
the Corporation has a class of voting stock that is: (i) listed on a national
securities exchange; (ii) authorized for quotation on an interdealer quotation
system of a registered national securities association; or (iii) held of record
by more than 2,000 stockholders; in all other cases, observance of the
provisions of this Section 1.10 shall be optional, and at the discretion of the
Corporation.
(b) Appointment. The Corporation shall, in advance of any meeting of
stockholders, appoint one or more inspectors of election to act at the meeting
and make a written report thereof. The Corporation may designate one or more
persons as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the person
presiding at the meeting shall appoint one or more inspectors to act at the
meeting.
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(c) Inspector's Oath. Each inspector of election, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to the best of his
ability.
(d) Duties of Inspectors. At a meeting of stockholders, the inspectors of
election shall (i) ascertain the number of shares outstanding and the voting
power of each share, (ii) determine the shares represented at a meeting and the
validity of proxies and ballots, (iii) count all votes and ballots, (iv)
determine and retain for a reasonable period of time a record of the disposition
of any challenges made to any determination by the inspectors, and (v) certify
their determination of the number of shares represented at the meeting, and
their count of all votes and ballots. The inspectors may appoint or retain other
persons or entities to assist the inspectors in the performance of the duties of
the inspectors.
(e) Opening and Closing of Polls. The date and time of the opening and the
closing of the polls for each matter upon which the stockholders will vote at a
meeting shall be announced by the inspectors at the meeting. No ballot, proxies
or votes, nor any revocations thereof or changes thereto, shall be accepted by
the inspectors after the closing of the polls unless the Court of Chancery upon
application by a stockholder shall determine otherwise.
(f) Determinations. In determining the validity and counting of proxies and
ballots, the inspectors shall be limited to an examination of the proxies, any
envelopes submitted with those proxies, any information provided in connection
with proxies in accordance with Section 212(c)(2) of the Delaware General
Corporation Law, ballots and the regular books and records of the Corporation,
except that the inspectors may consider other reliable information for the
limited purpose of reconciling proxies and ballots submitted by or on behalf of
banks, brokers, their nominees or similar persons which represent more votes
than the holder of a proxy is authorized by the record owner to cast or more
votes than the stockholder holds of record. If the inspectors consider other
reliable information for the limited purpose permitted herein, the inspectors at
the time they make their certification of their determinations pursuant to this
Section 1.10 shall specify the precise information considered by them, including
the person or persons from whom they obtained the information, when the
information was obtained, the means by which the information was obtained and
the basis for the inspectors' belief that such information is accurate and
reliable.
SECTION 1.11: Notice of Stockholder Business; Nominations.
(a) Annual Meeting of Stockholders.
(i) Nominations of persons for election to the Board of Directors and
the proposal of business to be considered by the stockholders shall be made
at an annual meeting of stockholders (A) pursuant to the Corporation's
notice of such meeting, (B) by or at the direction of the Board of
Directors or (C) by any stockholder of the Corporation who was a
stockholder of record at the time of giving of the notice provided for in
this Section 1.11, who is entitled to vote at such meeting and who complies
with the notice procedures set forth in this Section 1.11.
(ii) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (C) of subparagraph
(a)(i) of this Section 1.11, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation and such other
business must otherwise be a proper matter for stockholder action. To be
timely, a stockholder's notice must be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the sixtieth (60th) day nor earlier than the close of business
on the ninetieth (90th) day prior to the first anniversary of the preceding
year's annual meeting; provided, however, that in the event that the date
of the annual meeting is more than thirty (30) days before or more than
sixty (60) days after such anniversary date, notice by the stockholder to
be timely must be so delivered not earlier than the close of business on
the ninetieth (90th) day prior to such annual meeting and not later than
the close of business on the later of the sixtieth (60th) day prior to such
annual meeting or the close of business on the tenth (10th) day following
the day on which public announcement of the date of such meeting is first
made by the Corporation. Such stockholder's notice shall set forth: (a) as
to each person whom the stockholder proposes to nominate for election or
reelection as a director all information relating to such
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person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including such person's written consent to being named in
the proxy statement as a nominee and to serving as a director if elected;
(b) as to any other business that the stockholder proposes to bring before
the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting
and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (c) as
to the stockholder giving the notice and the beneficial owner, if any, on
whose behalf the nomination or proposal is made (1) the name and address of
such stockholder, as they appear on the Corporation's books, and of such
beneficial owner, and (2) the class and number of shares of the Corporation
that are owned beneficially and held of record by such stockholder and such
beneficial owner.
(iii) Notwithstanding anything in the second sentence of subparagraph
(a)(ii) of this Section 1.11 to the contrary, in the event that the number
of directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement by the Corporation naming all
of the nominees for director or specifying the size of the increased board
of directors at least seventy (70) days prior to the first anniversary of
the preceding year's annual meeting (or, if the annual meeting is held more
than thirty (30) days before or sixty (60) days after such anniversary
date, at least seventy (70) days prior to such annual meeting), a
stockholder's notice required by this Section 1.11 shall also be considered
timely, but only with respect to nominees for any new positions created by
such increase, if it shall be delivered to the Secretary of the Corporation
at the principal executive office of the Corporation not later than the
close of business on the tenth (10th) day following the day on which such
public announcement is first made by the Corporation.
(b) Special Meetings of Stockholders. Only such business shall be conducted
at a special meeting of stockholders as shall have been brought before the
meeting pursuant to the Corporation's notice of such meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
Corporation's notice of such meeting (i) by or at the direction of the Board of
Directors or (ii) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice of
the special meeting, who shall be entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section 1.11. In the event
the Corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board of Directors, any such stockholder
may nominate a person or persons (as the case may be) for election to such
position(s) as specified in the Corporation's notice of meeting, if the
stockholder's notice required by subparagraph (a)(ii) of this Section 1.11 shall
be delivered to the Secretary of the Corporation at the principal executive
offices of the Corporation not earlier than the ninetieth (90th) day prior to
such special meeting and not later than the close of business on the later of
the sixtieth (60th) day prior to such special meeting or the tenth (10th) day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting.
(c) General.
(i) Only such persons who are nominated in accordance with the
procedures set forth in this Section 1.11 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance
with the procedures set forth in this Section 1.11. Except as otherwise
provided by law or these bylaws, the chairman of the meeting shall have the
power and duty to determine whether a nomination or any business proposed
to be brought before the meeting was made or proposed, as the case may be,
in accordance with the procedures set forth in this Section 1.11 and, if
any proposed nomination or business is not in compliance herewith, to
declare that such defective proposal or nomination shall be disregarded.
(ii) For purposes of this Section 1.11, the term "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news
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service or in a document publicly filed by the Corporation with the
Securities and Exchange Commission pursuant to section 13, 14 or 15(d) of
the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this Section 1.11, a
stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth herein. Nothing in this Section 1.11 shall be deemed to
affect any rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange
Act.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1: Number; Qualifications. The Board of Directors shall consist
of one or more members. The initial number of directors shall be five (5), and
thereafter shall be fixed from time to time by resolution of the Board of
Directors. No decrease in the authorized number of directors constituting the
Board of Directors shall shorten the term of any incumbent director. Directors
need not be stockholders of the Corporation.
SECTION 2.2: Election; Resignation; Removal; Vacancies. The Board of
Directors shall initially consist of the person or persons elected by the
incorporator or named in the Corporation's initial Certificate of Incorporation.
Each director shall hold office until the next annual meeting of stockholders
and until his or her successor is elected and qualified, or until his or her
earlier death, resignation or removal. Any director may resign at any time upon
written notice to the Corporation. Subject to the rights of any holders of
Preferred Stock then outstanding: (i) any director or the entire Board of
Directors may be removed, with or without cause, by the holders of a majority of
the shares then entitled to vote at an election of directors and (ii) any
vacancy occurring in the Board of Directors for any cause, and any newly created
directorship resulting from any increase in the authorized number of directors
to be elected by all stockholders having the right to vote as a single class,
may be filled by the stockholders, by a majority of the directors then in
office, although less than a quorum, or by a sole remaining director.
SECTION 2.3: Regular Meetings. Regular meetings of the Board of Directors
may be held at such places, within or without the State of Delaware, and at such
times as the Board of Directors may from time to time determine. Notice of
regular meetings need not be given if the date, times and places thereof are
fixed by resolution of the Board of Directors.
SECTION 2.4: Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board, the President, any Vice President,
the Secretary or any two or more directors then in office and may be held at any
time, date or place, within or without the State of Delaware, as the person or
persons calling the meeting shall fix. Notice of the time, date and place of
such meeting shall be given, orally or in writing, by the person or persons
calling the meeting to all directors at least four (4) days before the meeting
if the notice is mailed, or at least twenty-four (24) hours before the meeting
if such notice is given by telephone, hand delivery, telegram, telex, mailgram,
facsimile or similar communication method. Unless otherwise indicated in the
notice, any and all business may be transacted at a special meeting.
SECTION 2.5: Telephonic Meetings Permitted. Members of the Board of
Directors, or any committee of the Board, may participate in a meeting of the
Board or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to
conference telephone or similar communications equipment shall constitute
presence in person at such meeting.
SECTION 2.6: Quorum; Vote Required for Action. At all meetings of the
Board of Directors a majority of the total number of authorized directors shall
constitute a quorum for the transaction of business. Except as otherwise
provided herein or in the Certificate of Incorporation, or required by law, the
vote of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.
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SECTION 2.7: Organization. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, or in his or her absence by the
President, or in his or her absence by a chairman chosen at the meeting. The
Secretary shall act as secretary of the meeting, but in his or her absence the
chairman of the meeting may appoint any person to act as secretary of the
meeting.
SECTION 2.8: Written Action by Directors. Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting if all members of the Board or such
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee,
respectively.
SECTION 2.9: Powers. The Board of Directors may, except as otherwise
required by law or the Certificate of Incorporation, exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation.
SECTION 2.10: Compensation of Directors. Directors, as such, may receive,
pursuant to a resolution of the Board of Directors, fees and other compensation
for their services as directors, including without limitation their services as
members of committees of the Board of Directors.
ARTICLE III
COMMITTEES
SECTION 3.1: Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of the committee, the
member or members thereof present at any meeting of such committee who are not
disqualified from voting, whether or not he, she or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member. Any such committee,
to the extent provided in a resolution of the Board of Directors, shall have and
may exercise all the powers and authority of the Board of Directors 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 that may require it; but no
such committee shall have the power or authority in reference to amending the
Certificate of Incorporation (except that a committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of shares
of stock adopted by the Board of Directors as provided in subsection (a) of
Section 151 of the Delaware General Corporation Law, fix the designations and
any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the Corporation, or the
conversion into, or the exchange of such shares for, shares of any other class
or classes or any other series of the same or any other class or classes of
stock of the Corporation, or fix the number of shares of any series of stock or
authorize the increase or decrease of the shares of any series), adopting an
agreement of merger or consolidation under Sections 251 or 252 of the Delaware
General Corporation Law, 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 of Directors expressly so provides, no such
committee shall have the power or authority to declare a dividend, authorize the
issuance of stock or adopt a certificate of ownership and merger pursuant to
section 253 of the Delaware General Corporation Law.
SECTION 3.2: Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board may make, alter and repeal
rules for the conduct of its business. In the absence of such rules each
committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to Article II of these Bylaws.
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ARTICLE IV
OFFICERS
SECTION 4.1: Generally. The officers of the Corporation shall consist of a
Chief Executive Officer and/or a President, one or more Vice Presidents, a
Secretary, a Treasurer and such other officers, including a Chairman of the
Board of Directors and/or Chief Financial Officer, as may from time to time be
appointed by the Board of Directors. All officers shall be elected by the Board
of Directors; provided, however, that the Board of Directors may empower the
Chief Executive Officer of the Corporation to appoint officers other than the
Chairman of the Board, the Chief Executive Officer, the President, the Chief
Financial Officer or the Treasurer. Each officer shall hold office until his or
her successor is elected and qualified or until his or her earlier resignation
or removal. Any number of offices may be held by the same person. Any officer
may resign at any time upon written notice to the Corporation. Any vacancy
occurring in any office of the Corporation by death, resignation, removal or
otherwise may be filled by the Board of Directors.
SECTION 4.2: Chief Executive Officer. Subject to the control of the Board
of Directors and such supervisory powers, if any, as may be given by the Board
of Directors, the powers and duties of the Chief Executive Officer of the
Corporation are:
(a) To act as the general manager and, subject to the control of the
Board of Directors, to have general supervision, direction and control of
the business and affairs of the Corporation;
(b) To preside at all meetings of the stockholders;
(c) To call meetings of the stockholders to be held at such times and,
subject to the limitations prescribed by law or by these Bylaws, at such
places as he or she shall deem proper; and
(d) To affix the signature of the Corporation to all deeds,
conveyances, mortgages, guarantees, leases, obligations, bonds,
certificates and other papers and instruments in writing which have been
authorized by the Board of Directors or which, in the judgment of the Chief
Executive Officer, should be executed on behalf of the Corporation; to sign
certificates for shares of stock of the Corporation; and, subject to the
direction of the Board of Directors, to have general charge of the property
of the Corporation and to supervise and control all officers, agents and
employees of the Corporation.
The President shall be the Chief Executive Officer of the Corporation
unless the Board of Directors shall designate another officer to be the Chief
Executive Officer. If there is no President, and the Board of Directors has not
designated any other officer to be the Chief Executive Officer, then the
Chairman of the Board shall be the Chief Executive Officer.
SECTION 4.3: Chairman of the Board. The Chairman of the Board shall have
the power to preside at all meetings of the Board of Directors and shall have
such other powers and duties as provided in these bylaws and as the Board of
Directors may from time to time prescribe.
SECTION 4.4: President. The President shall be the Chief Executive Officer
of the Corporation unless the Board of Directors shall have designated another
officer as the Chief Executive Officer of the Corporation. Subject to the
provisions of these Bylaws and to the direction of the Board of Directors, and
subject to the supervisory powers of the Chief Executive Officer (if the Chief
Executive Officer is an officer other than the President), and subject to such
supervisory powers and authority as may be given by the Board of Directors to
the Chairman of the Board, and/or to any other officer, the President shall have
the responsibility for the general management the control of the business and
affairs of the Corporation and the general supervision and direction of all of
the officers, employees and agents of the Corporation (other than the Chief
Executive Officer, if the Chief Executive Officer is an officer other than the
President) and shall perform all duties and have all powers that are commonly
incident to the office of President or that are delegated to the President by
the Board of Directors.
SECTION 4.5: Vice President. Each Vice President shall have all such
powers and duties as are commonly incident to the office of Vice President, or
that are delegated to him or her by the Board of Directors or the Chief
Executive Officer. A Vice President may be designated by the Board to perform
the
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duties and exercise the powers of the Chief Executive Officer in the event of
the Chief Executive Officer's absence or disability.
SECTION 4.6: Chief Financial Officer. Subject to the direction of the
Board of Directors and the President, the Chief Financial Officer shall perform
all duties and have all powers that are commonly incident to the office of chief
financial officer.
SECTION 4.7: Treasurer. The Treasurer shall have custody of all monies and
securities of the Corporation. The Treasurer shall make such disbursements of
the funds of the Corporation as are authorized and shall render from time to
time an account of all such transactions. The Treasurer shall also perform such
other duties and have such other powers as are commonly incident to the office
of Treasurer, or as the Board of Directors or the President may from time to
time prescribe.
SECTION 4.8: Secretary. The Secretary shall issue or cause to be issued
all authorized notices for, and shall keep, or cause to be kept, minutes of all
meetings of the stockholders and the Board of Directors. The Secretary shall
have charge of the corporate minute books and similar records and shall perform
such other duties and have such other powers as are commonly incident to the
office of Secretary, or as the Board of Directors or the President may from time
to time prescribe.
SECTION 4.9: Delegation of Authority. The Board of Directors may from time
to time delegate the powers or duties of any officer to any other officers or
agents, notwithstanding any provision hereof.
SECTION 4.10 Removal. Any officer of the Corporation shall serve at the
pleasure of the Board of Directors and may be removed at any time, with or
without cause, by the Board of Directors. Such removal shall be without
prejudice to the contractual rights of such officer, if any, with the
Corporation.
ARTICLE V
STOCK
SECTION 5.1: Certificates. Every holder of stock shall be entitled to have
a certificate signed by or in the name of the Corporation by the Chairman or
Vice-Chairman of the Board of Directors, or the President or a Vice President,
and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, of the Corporation, certifying the number of shares owned by such
stockholder in the Corporation. Any or all of the signatures on the certificate
may be a facsimile.
SECTION 5.2: Lost, Stolen or Destroyed Stock Certificates; Issuance of New
Certificates. The Corporation may issue a new certificate of stock in the place
of any certificate previously issued by it, alleged to have been lost, stolen or
destroyed, and the Corporation may require the owner of the lost, stolen or
destroyed certificate, or such owner's legal representative, to agree to
indemnify the Corporation and/or to give the Corporation a bond sufficient to
indemnify it, against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate.
SECTION 5.3: Other Regulations. The issue, transfer, conversion and
registration of stock certificates shall be governed by such other regulations
as the Board of Directors may establish.
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 Indemnification of Officers and Directors. Each person who was
or is made a party to, or is threatened to be made a party to, or is involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he or she (or a
person of whom he or she is the legal representative), is or was a director or
officer of the Corporation or a Reincorporated Predecessor (as defined below) or
is or was serving at the request of the Corporation or a Reincorporated
Predecessor (as defined below) as a director or officer of another corporation,
or of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, shall be indemnified
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and held harmless by the Corporation to the fullest extent permitted by the
Delaware General Corporation Law, against all expenses, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes and penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith, and such indemnification shall continue as
to a person who has ceased to be a director or officer and shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
that the Corporation shall indemnify any such person seeking indemnity in
connection with a proceeding (or part thereof) initiated by such person only if
such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. As used herein, the term "Reincorporated Predecessor" means a
corporation that is merged with and into the Corporation in a statutory merger
where (a) the Corporation is the surviving corporation of such merger; (b) the
primary purpose of such merger is to change the corporate domicile of the
Reincorporated Predecessor to Delaware.
SECTION 6.2: Advance of Expenses. The Corporation shall pay all expenses
(including attorneys' fees) incurred by such a director or officer in defending
any such proceeding as they are incurred in advance of its final disposition;
provided, however, that if the Delaware General Corporation Law then so
requires, the payment of such expenses incurred by such a director or officer in
advance of the final disposition of such proceeding shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it should be determined
ultimately that such director or officer is not entitled to be indemnified under
this Article VI or otherwise; and provided, further, that the Corporation shall
not be required to advance any expenses to a person against whom the Corporation
directly brings a claim, in a proceeding, alleging that such person has breached
his or her duty of loyalty to the Corporation, committed an act or omission not
in good faith or that involves intentional misconduct or a knowing violation of
law, or derived an improper personal benefit from a transaction.
SECTION 6.3: Non-Exclusivity of Rights. The rights conferred on any person
in this Article VI shall not be exclusive of any other right that such person
may have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise. Additionally, nothing in this Article VI shall limit
the ability of the Corporation, in its discretion, to indemnify or advance
expenses to persons whom the Corporation is not obligated to indemnify or
advance expenses pursuant to this Article VI.
SECTION 6.4: Indemnification Contracts. The Board of Directors is
authorized to cause the Corporation to enter into indemnification contracts with
any director, officer, employee or agent of the Corporation, or any person
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, including employee benefit plans, providing indemnification rights
to such person. Such rights may be greater than those provided in this Article
VI.
SECTION 6.5: Effect of Amendment. Any amendment, repeal or modification of
any provision of this Article VI shall be prospective only, and shall not
adversely affect any right or protection conferred on a person pursuant to this
Article VI and existing at the time of such amendment, repeal or modification.
ARTICLE VII
NOTICES
SECTION 7.1: Notice. Except as otherwise specifically provided herein or
required by law, all notices required to be given pursuant to these Bylaws shall
be in writing and may in every instance be effectively given by hand delivery
(including use of a delivery service), by depositing such notice in the mail,
postage prepaid, or by sending such notice by prepaid telegram, telex, overnight
express courier, mailgram or facsimile. Any such notice shall be addressed to
the person to whom notice is to be given at such person's address as it appears
on the records of the Corporation. The notice shall be deemed given (i) in the
case of hand delivery, when received by the person to whom notice is to be given
or by any person accepting such notice on behalf of such person, (ii) in the
case of delivery by mail, upon deposit in the mail, (iii) in the case of
delivery by overnight express courier, on the first business day after such
notice is dispatched, and (iv) in the case of delivery via telegram, telex,
mailgram, or facsimile, when dispatched.
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SECTION 7.2: Waiver of Notice. Whenever notice is required to be given
under any provision of these bylaws, a written waiver of notice, 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 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 business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors or members of a
committee of directors need be specified in any written waiver of notice.
ARTICLE VIII
INTERESTED DIRECTORS
SECTION 8.1: Interested Directors; Quorum. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board or committee thereof that authorizes
the contract or transaction, or solely because his, her or their votes are
counted for such purpose, if: (i) the material facts as to his, her or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board or committee
in good faith authorizes the contract or transaction by the affirmative votes of
a majority of the disinterested directors, even though the disinterested
directors be less than a quorum; (ii) the material facts as to his, her or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee thereof, or the stockholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1: Fiscal Year. The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
SECTION 9.2: Seal. The Board of Directors may provide for a corporate
seal, which shall have the name of the Corporation inscribed thereon and shall
otherwise be in such form as may be approved from time to time by the Board of
Directors.
SECTION 9.3: Form of Records. Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of account
and minute books, may be kept on, or be in the form of, magnetic tape,
diskettes, photographs, microphotographs or any other information storage
device, provided that the records so kept can be converted into clearly legible
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
SECTION 9.4: Reliance Upon Books and Records. A member of the Board of
Directors, or a member of any committee designated by the Board of Directors
shall, in the performance of his or her duties, be fully protected in relying in
good faith upon records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of the Corporation's
officers or employees, or committees of the Board of Directors, or by any other
person as to matters the member reasonably believes are within such other
person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation.
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SECTION 9.5: Certificate of Incorporation Governs. In the event of any
conflict between the provisions of the Corporation's Certificate of
Incorporation and Bylaws, the provisions of the Certificate of Incorporation
shall govern.
SECTION 9.6: Severability. If any provision of these Bylaws shall be held
to be invalid, illegal, unenforceable or in conflict with the provisions of the
Corporation's Certificate of Incorporation, then such provision shall
nonetheless be enforced to the maximum extent possible consistent with such
holding and the remaining provisions of these Bylaws (including without
limitation, all portions of any section of these Bylaws containing any such
provision held to be invalid, illegal, unenforceable or in conflict with the
Certificate of Incorporation, that are not themselves invalid, illegal,
unenforceable or in conflict with the Certificate of Incorporation) shall remain
in full force and effect.
ARTICLE X
AMENDMENT
SECTION 10.1 Amendments. Stockholders of the Corporation holding a
majority of the Corporation's outstanding voting stock shall have the power to
adopt, amend or repeal Bylaws. To the extent provided in the Corporation's
Certificate of Incorporation, the Board of Directors of the Corporation shall
also have the power to adopt, amend or repeal Bylaws of the Corporation, except
insofar as Bylaws adopted by the stockholders shall otherwise provide.
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CERTIFICATION OF BYLAWS
OF
EXCITE, INC.
(A DELAWARE CORPORATION)
KNOW ALL BY THESE PRESENTS:
I, Chris M. Vail, certify that I am Secretary of Excite, Inc., a Delaware
corporation (the "Company"), that I am duly authorized to make and deliver this
certification, that the attached Bylaws are a true and correct copy of the
Bylaws of the Company in effect as of the date of this certificate.
Dated: March , 1998
--------------------------------------
Chris M. Vail, Secretary
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EXCITE, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
__________, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY.
The undersigned hereby appoints Robert C. Hood and Chris M. Vail, or either of
them, as proxies, each with full power of substitution, and hereby authorizes
them to represent and to vote, as designated below, all shares of Common Stock,
no par value, of Excite, Inc. (the "Company"), held of record by the undersigned
on __________, 1998, at the Annual Meeting of Shareholders of the Company to be
held at the corporate offices of the Company, on __________, __________, 1998,
at 10:00 a.m. California time, and at any adjournments or postponements thereof.
1. ELECTION OF DIRECTORS.
[ ] FOR all nominees listed [ ] WITHHOLDING AUTHORITY
below (except as indicated to vote for all nominees
to the contrary below) listed below
Nominees: George Bell, Joseph R. Kraus, IV, Donn M. Davis, Vinod Khosla
and Geoffrey Y. Yang.
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
_________________________________________________________________
2. APPROVAL OF AMENDMENT TO THE 1996 EQUITY INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVAL OF AMENDMENT TO THE 1996 EMPLOYEE STOCK PURCHASE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. APPROVAL OF A CHANGE IN THE COMPANY'S STATE OF INCORPORATION FROM
CALIFORNIA TO DELAWARE.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends that you vote FOR the election of the
five nominees listed in Proposal 1 and FOR each of Proposals 2, 3, 4
and 5.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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(CONTINUED FROM OTHER SIDE)
THIS PROXY WILL BE VOTED AS DIRECTED ABOVE. WHEN NO CHOICE IS INDICATED,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES LISTED IN PROPOSAL 1
AND FOR EACH OF PROPOSALS 2, 3, 4 AND 5. In their discretion, the proxy
holders are authorized to vote upon such other business as may properly come
before the meeting or any adjournments or postponements thereof to the extent
authorized by Rule 14a-4(c) promulgated under the Securities Exchange Act of
1934, as amended.
_____________________________________________________
(Print Shareholder(s) name)
_____________________________________________________
(Signature(s) of Shareholder or Authorized Signatory)
_____________________________________________________
Dated: __________, 1998
Please sign exactly as your name(s) appear(s) on your stock certificate. If
shares of stock stand of record in the names of two or more persons or in the
name of husband and wife, whether as joint tenants or otherwise, both or all of
such persons should sign the proxy. If shares of stock are held of record by a
corporation, the proxy should be executed by the president or vice president and
the secretary or assistant secretary. Executors, administrators or other
fiduciaries who execute the above proxy for a deceased shareholder should give
their full title. Please date the proxy.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
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