SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) October 4, 1999
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NetObjects, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-25427 94-3233791
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(Commission File Number) (I.R.S. Employer Identification No.)
301 Galveston Drive, Redwood City, California 94063
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(Address of Principal Executive Offices)
(650) 482-3200
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition of Assets.
The information reported under this item is set forth in the press
release issued by the Company on October 5, 1999, a copy of which is attached as
an exhibit.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired:
Any required financial statements or other financial
information for the acquired business will be filed within 60
days.
(b) Pro forma financial information.
The required pro forma financial information will be filed
within 60 days.
(c) Exhibits.
A. October 5, 1999 press release announcing the acquisition of
Sitematic Corporation as of the same date.
B. Plan and Agreement of Reorganization between NetObjects,
Inc., SDI Acquisition Corp., Sitematic Corporation and the
holders of substantially all outstanding capital stock of
Sitematic Corporation dated as of October 4, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NETOBJECTS, INC.
Dated: October 19, 1999 By: /s/ Samir Arora
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Samir Arora
Chief Executive Officer and President
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Exhibit A
NetObjects to Acquire Sitematic, a Leading Small Business Online Site Building
And e-commerce Company
Adds Exciting New Online Applications for e-Business
REDWOOD CITY, Calif., Oct. 5 /PRNewswire/ -- NetObjects, Inc. today announced
that it has signed a definitive agreement to acquire Sitematic(TM) Corporation
for approximately $14.7 million. Sitematic's online applications and services
allow small businesses to create a Web site, e-commerce catalogs and stores, and
include Web site hosting, domain name and search engine registration, customer
management and promotion resources. Sitematic reaches small businesses by
partnering with major brand name companies, such as OfficeMax, US West and Sir
Speedy, that need to offer online services to enhance their customer
relationships.
Under the terms of the agreement NetObjects will acquire 100 percent of
Sitematic in exchange for 2 million shares of common stock and $1.5 million in
cash, for an approximate total value of $14.7 million. NetObjects also will
issue options to purchase 269,000 shares of common stock to replace Sitematic
employee options and, options for 500,000 additional shares will be offered to
continuing employees of Sitematic. The acquisition will be accounted for as a
purchase and is expected to close this month. After the acquisition, Peter Shaw,
CEO and president of Sitematic will become executive vice president of corporate
development at NetObjects, and Steve Mitgang, senior vice president of marketing
and business development will become executive vice president of small business
and corporate marketing at NetObjects.
"With the acquisition, NetObjects becomes the first company to offer online and
desktop Web site applications to bring small businesses online," said Samir
Arora, CEO and president of NetObjects. "The combination of our two companies
will revolutionize the way small businesses get online and do business online."
"NetObjects has created an exceptionally loyal customer base with over 500,000
copies sold," said Peter Shaw, CEO and president of Sitematic. "Together we can
leverage the brand and combined applications and services to address the needs
of the next wave of small business."
About Sitematic
Sitematic Corporation is an Application Services Provider (ASP) that provides
e-business solutions for small businesses. Sitematic offers a cost-effective,
easy-to-deploy approach for small businesses that want to establish a strong,
professional Web presence with e-commerce capabilities. Recently released
innovations include the first instant export to eBay for any item you sell in a
Sitematic Store, and customer management through email list management. As part
of its strategy, Sitematic works with corporate partners to offer server-based
solutions to their customers. Current partners include US WEST, Taylor Made
Golf, Tickets.com, Office Max, and
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Sir Speedy. Sitematic has won PC Magazine's Golden Gavel Award for Most
Promising New Product, PC Magazine's Top 100 Web Sites and the LISA Award (Local
Internet Service Award) for Best Vendor Application.
Sitematic can be used with AOL's browser, and Microsoft's Internet Explorer and
Netscape's Communicator on the Linux, Macintosh OS, Windows 98 and NT platforms.
For more information or for a free trial, visit the company's Web site at
www.netobjects.com.
About NetObjects
NetObjects, Inc., majority owned by IBM, is a leading provider of e-Business
software and services that enable small businesses as well as large-scale
enterprises to build, deploy and maintain Web sites on the Internet and
corporate Intranets. The NetObjects product family includes NetObjects Fusion(R)
and NetObjects Authoring Server Suite. In addition, NetObjects offers its
customers on-line solutions, including content, products and services to help
them register, host, build, maintain and promote their Web sites. NetObjects has
been ranked by Softletter 100, NewMedia 500 and as one of Fortune's 25 Very Cool
Companies. Its products have won over 50 awards including Windows Magazine's Win
100 award, InfoWorld's Analyst Choice award, CNET's Internet Excellence award,
PC Magazine's Editors Choice award and InternetWorld's Industry Award. More
information about NetObjects and its products can be found at
www.netobjects.com.
This press release contains forward-looking statements within the meaning of the
federal securities laws. Such statements can be identified by the words
"believes", "anticipates", "plans", "expects", and similar expressions. These
forward-looking statements include, without limitation, statements about the
market opportunities for Web site building software and services, NetObject's
strategy, and competition. These forward looking statements do not constitute
assurances regarding the Company's future operating results, including the
impact of our acquisition of Sitematic Corporation upon its operations, cash
flows, and financial condition. The Company's actual results could differ
materially from those expressed or implied by these forward-looking statements
due to various factors, including the risk factors described in our Form 10-Q
filed with the SEC pursuant to the Securities Exchange Act of 1934. NetObjects
undertakes no obligation to update publicly any forward-looking statements for
any reason, even if new information becomes available or relevant events occur
in the future.
NOTE: NetObjects is a registered trademark, and NetObjects Fusion and NetObjects
Authoring Server are trademarks of NetObjects, Inc. All other brand and product
names may be trademarks or registered trademarks of their respective companies.
SOURCE: NetObjects, Inc.
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Exhibit B
Plan and Agreement of Reorganization
This Plan and Agreement of Reorganization dated October __, 1999 is
entered into by NetObjects, Inc., a Delaware corporation ("NetObjects"), SDI
Acquisition Corp., a California corporation and wholly owned subsidiary of
NetObjects ("Subsidiary"), Sitematic Corporation, a California corporation (the
"Company"), and the undersigned holders of substantially all outstanding capital
stock of the Company. All holders of outstanding capital stock of the Company
are herein collectively referred to as the "Stockholders." The Company is a
provider of services that permit end users to create customized Internet
websites and operates its own website (the "Business").
Capitalized terms used herein have the meanings stated in Section 9.
NetObjects desires to acquire the Company through a merger of
Subsidiary with and into the Company (the "Merger"), and the Company and the
Stockholders desire to consummate the Merger, under the terms of this Agreement.
The Merger is intended to qualify as a reorganization within the
meaning of Section 368(a)(2)(E) of the Code.
Therefore, in consideration of the mutual agreements contained herein,
the parties hereby agree as follows:
Section 1 The Merger
1.1 Closing. The closing (the "Closing") under this Agreement shall
take place at the offices of McCutchen, Doyle, Brown & Enersen, LLP, Palo Alto,
within 5 business days after the satisfaction (or waiver by the party entitled
to waive) of all conditions stated in Sections 5 and 6, or at such other place
or on such other date as the parties may agree in writing.
1.2 Effective Time of Merger. The Merger shall take effect upon filing
of the Merger Agreement, substantially in the form attached as Exhibit A (the
"Merger Agreement"), with the California Secretary of State in accordance with
California Law (the "Merger Effective Time").
1.3 Effects of Merger. The effects of the Merger are set forth in the
Merger Agreement.
1.4 Bridge Loan. Immediately prior to the Merger Effective Time, any
outstanding principal and accrued interest loaned to the Company by NetObjects
under the Bridge Loan Agreement dated August 19, 1999 shall convert into shares
of the Company's Common Stock at the rate of one share of each $0.8579 of the
then outstanding principal and accrued unpaid interest.
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1.5 Other Agreements.
(a) The escrow agreement attached in the form of Exhibit B (the "Escrow
Agreement") sets forth the terms on which the portion specified therein of the
shares of NetObjects common stock to be issued to each Stockholder pursuant to
the Merger Agreement will be held by the escrow agent designated therein and the
authority of Peter Shaw to act on behalf of the Stockholders thereunder as the
"Holders' Agent." The Stockholders hereby confirm the terms of the Escrow
Agreement and such authority of the Holders' Agent.
(b) At the Closing, the Stockholders will enter into releases in favor
of the Company in the form attached as Exhibit C.
(c) At the Closing, the Stockholders included in Schedule 1.5(c) will
enter into noncompetition agreements with NetObjects in the form attached as
Exhibit D.
Section 2 Transactional Representations and Warranties of the Stockholders and
the Company
A. The Stockholders and the Company represent and warrant to NetObjects
that, on and as of the date hereof:
2.1 Capital Stock.
(a) The authorized and outstanding capital stock of the Company is as
follows:
Shares Shares
Designation of Class Authorized Outstanding
Common Stock 19,100,000 7,968,260
Series A Preferred Stock 8,200,000 8,200,000
There is no capital stock of the Company outstanding except as stated in this
Section 2.1(a). The outstanding Stock Rights of the Company are as follows:
Shares
Class of Subject to
Designation of Stock Right Stock Stock Right
Options under Sitematic 1998 Common 1,968,500
Equity Incentive Plan
Warrants Common 462,357
There are no Stock Rights outstanding with respect to the Company except as set
forth in this Section 2.1(a), and the terms of such Stock Rights are as set
forth in Schedule 2.1. Except as disclosed in Schedule 2.1, the Company is not a
party to any stockholders agreement, registration
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rights agreement, repurchase agreement or other Contract with respect to capital
stock or Stock Right issued or to be issued by it.
(b) All of the issued and outstanding capital stock of the Company has
been duly and validly authorized and issued and is fully paid and
non-assessable, and has not been issued in violation of any preemptive or
similar rights of any stockholder or any applicable securities law. Except as
disclosed in Schedule 2.1, no Person has any right to require the Company to
redeem, purchase or otherwise reacquire any capital stock issued by the Company
or any Stock Rights with respect to any capital stock issued by the Company.
There are no preemptive or similar rights in respect of any capital stock of the
Company except as set forth in Schedule 2.1.
(c) The Company has never declared or paid any dividend or made any
distribution in respect of any of its capital stock or any Stock Rights with
respect thereto, or, except as set forth in Schedule 2.1, directly or indirectly
redeemed, purchased or otherwise acquired any of the capital stock issued by it
or any Stock Rights with respect thereto.
2.2 Organization; Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of California
and has all requisite corporate power and authority to own, lease and operate
its Properties and to conduct the Business as currently conducted. The Company
is not required to be qualified to do business as a foreign corporation in any
jurisdiction. The Company is not a partner in any general or limited partnership
or a member in any limited liability company.
2.3. Authority. The Company has all requisite power and authority under
applicable corporate law to execute and deliver this Agreement and to perform
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all requisite corporate action on the part of the Company
(including without limitation all required shareholder approvals) and no other
approval on the part of the Company is necessary under applicable corporate law
for the execution, delivery and performance of this Agreement.
2.4 No Violation. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby (i) will not violate or
conflict with the articles of incorporation or by-laws of the Company, (ii) do
not require any Third-Party Action with respect to the Company, (iii) to the
knowledge of the Company, do not violate any Legal Requirement or Order
applicable to the Company, (iv) do not conflict with or constitute a default
under, or result in the acceleration or right of acceleration of any obligations
under, or result in the creation or imposition of any Third-Party Right under,
any Contract, excluding Minor Contracts, to which the Company is a party or (v)
to the knowledge of the Company, do not conflict with or constitute a default
under, or result in the acceleration or right of acceleration of any obligations
under, or result in the creation or imposition of any Third-Party Right under,
any Minor Contract to which the Company is a party.
B. Each Stockholder, with respect to itself, himself or herself only,
hereby represents and warrants to NetObjects that, on and as of the date hereof:
2.5. Power and Authority. Such Stockholder has all requisite power and
authority to execute and deliver this Agreement and to perform the transactions
contemplated hereby.
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2.6 Title. Such Stockholder is the sole record and beneficial owner of
the shares of Company stock set forth opposite such Stockholder's name on
Schedule 2.6. Such shares are free and clear of all Third-Party Rights, and such
Stockholder has the full and unrestricted right, power and authority to vote
such shares in favor of, and have such shares participate in, the Merger.
2.7 Authority; Enforceability; Approval. Such Stockholder has full
right and power and all authorization and approval required by any Legal
Requirement, and by any Contract to which such Stockholder is a party to vote
his, her or its shares in favor of the Merger. The execution, delivery and
performance of this Agreement by such Stockholder have been duly authorized by
all necessary action. This Agreement is legally binding on and enforceable
against such Stockholder in accordance with its terms. The execution, delivery
and performance of this Agreement by such Stockholder and the consummation by
such Stockholder of the Merger and all of other transactions contemplated hereby
(x) to the knowledge of such Stockholder, do not violate any Legal Requirement
or Order applicable to such Stockholder, (y) do not conflict with or constitute
a default (with or without the giving of notice or the passage of time or both)
under or result in any acceleration or right of acceleration of any obligations
under, any Contract, excluding Minor Contracts, to which such Stockholder is a
party, and (z) to the knowledge of such Stockholder, do not conflict with or
constitute a default (with or without the giving of notice or the passage of
time or both) under, or result in any acceleration or right of acceleration of
any obligations under, any Minor Contract to which such Stockholder is a party.
Such Stockholder has voted all of his, her or its shares of Company capital
stock fully and irrevocably in favor of the Merger.
2.8 Investment Intent. Such Stockholder is acquiring NetObjects Stock
under the terms of this Agreement for such Stockholder's own account and not
with the view to, or for resale in connection with, any distribution or public
offering thereof within the meaning of the Act. Such Stockholder understands
that the NetObjects Stock is characterized as "restricted securities" under the
federal securities laws inasmuch as the NetObjects Stock is being acquired from
NetObjects in a transaction not involving a public offering. Such Stockholder
understands that the NetObjects Stock has not been registered under the Act by
reason of its issuance or contemplated issuance in a transaction exempt from the
registration and prospectus delivery requirements of the Act, that it must be
held indefinitely unless a subsequent disposition thereof is registered under
the Act or is exempt from registration, and that the reliance of NetObjects and
others on this exemption is predicated in part on such Stockholder's
representations and warranties.
2.9 Investment Experience. Such Stockholder has carefully reviewed this
Agreement, including Exhibits and Schedules hereto, and has carefully reviewed
all other available materials concerning NetObjects and has asked NetObjects all
questions he, she or it deemed appropriate, and acknowledges that he, she or it
is experienced in evaluating and investing in companies similar to NetObjects,
can bear the economic risk of owning the NetObjects Stock, including a complete
loss of the investment, for an indefinite period of time, and has enough
knowledge and experience in financial and business matters to evaluate the
merits and risks of owning the NetObjects Stock.
2.10 Transfer and Assignment. Any transfer or assignment of the
NetObjects Stock must be made in compliance with the Act and applicable state
securities laws. No such assignment or transfer will be valid unless NetObjects
first receives notice of such assignment or transfer and an opinion of counsel
(which opinion of counsel must be reasonably satisfactory to NetObjects) to the
effect that such assignment or transfer does not violate the registration
requirements of the Act or
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any applicable state securities law. There are no agreements, refusal rights or
arrangements of any kind between such Stockholder and any other party that
require such Stockholder to offer or sell the NetObjects Stock to any Person,
whether in connection with the transaction contemplated by this Agreement, any
resale of the NetObjects Stock in the future or otherwise. Such Stockholder is
an "accredited investor," as that term is defined in ss501(a) of Regulation D of
the Act.
2.11 Legends. Such Stockholder understands that the certificate(s)
evidencing the NetObjects Stock may bear a legend substantially as follows:
The shares represented by this certificate have not been registered
under the Securities Act of 1933. The shares have been acquired not
with a view to distribution and may not be offered, sold, transferred,
pledged or hypothecated in the absence of an effective registration
statement for the shares under the Act and under any applicable state
securities laws, or an opinion of counsel satisfactory to NetObjects
that the proposed transfer can be made in compliance with federal and
state securities laws.
and any legend required by any applicable state laws or regulations.
2.12 Tax Status. Each Stockholder understands and acknowledges that the
qualification of the Merger as a reorganization under Section 368(a)(2)(E) of
the Code is dependent on a number of factors outside the control of NetObjects,
including without limitation, actions taken after the Closing by such
Stockholder and other Stockholders, and that, subject to Section 7.12,
NetObjects will have no responsibility with respect to any such matter and is
not assuring such Stockholder that such qualification will be achieved. Each
Stockholder confirms that he, she or it has relied upon his, her or its own tax
counsel, and not on NetObjects or any representative of NetObjects, with respect
to such qualification.
Section 3 Business Representations and Warranties of the Stockholders and the
Company
The Stockholders and the Company represent and warrant to NetObjects
that, on and as of the date hereof:
3.1 Subsidiaries, Etc. Except as set forth in Schedule 3.1, the Company
has does not beneficially own any equity or debt interest (except as a creditor
in the ordinary course of business), direct or indirect, in any Person.
3.2 Financial Statements, Etc.
(a) Financial Statements. Schedule 3.2(a) contains copies of the
unaudited consolidated balance sheets and consolidated statements of operations
and retained earnings and of cash flows for the Company at and for each of the
three years ended December 31, 1998 (the "Last Fiscal Year-End") (the "Year-End
Statements") and copies of the unaudited consolidated balance sheets and
consolidated statements of operations for the Company at and for the period
ended August 31, 1999 (the "Interim Statements" and, together with the Year-End
Statements, the "Financial Statements"). The Financial Statements fairly present
the consolidated financial condition of the Company at the dates indicated and
the consolidated results of operations and (in the case of the
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Year-End Statements) cash flows of the Company for the periods indicated in
accordance with GAAP consistently applied throughout the periods indicated
(except as stated therein and, in the case of the Interim Statements, for the
absence of statements of retained earnings and cash flows and footnotes and
subject to normal year-end adjustments).
(b) HSR Act. The balance sheet included in the Interim Statements is
the Company's last regularly prepared balance sheet within the meaning of the
HSR Act. The Company is its own ultimate parent entity within the meaning of the
HSR Act.
(c) Absence of Certain Liabilities. The Company has no liability or
obligation of any nature, whether absolute, accrued, contingent or otherwise,
arising out of acts or omissions heretofore occurring, or circumstances
currently or heretofore existing, except: (i) as expressly set forth in this
Agreement (including without limitation disclosures in Schedule 3.2(c) and any
other Schedules hereto); (ii) as accrued in the balance sheet included in the
Year-End Statements; (iii) for liabilities and obligations incurred since the
Last Fiscal Year-End in the ordinary course of business consistent in nature and
amount with past practice; and (iv) liabilities and obligations of a kind not
required to be accrued in a balance sheet at the date hereof prepared in
accordance with GAAP which individually (or in the aggregate for related
matters) will not subject the Company to Damages in excess of $50,000.
(d) Absence of Certain Changes. Since the Last Fiscal Year-End, except
as set forth in Schedule 3.2(d):
(i) The Company has operated its business in the ordinary
course.
(ii) There has been no material adverse change in the assets,
business, liabilities, financial condition, results of operations or
customer base of the Company.
(iii) There has not been any damage, destruction or
condemnation known to the Company with respect to Property having an
aggregate net book value on the Company's books in excess of $50,000,
net of any insurance recoveries.
(iv) There has not been any material change in the accounting
methods, practices or principles of the Company.
(v) The Company has not sold, transferred or otherwise
disposed of (or agreed or committed to sell, transfer or otherwise
dispose of) any Property other than the sale of inventory in the
ordinary course, or canceled, compromised, released or assigned any
debt or claim in its favor, where the aggregate amount of such sales,
transfers, dispositions, cancellations, compromises, releases or
assignments exceeds $50,000.
(vi) The Company has not instituted, settled or agreed to
settle any litigation, action or proceeding before any Governmental
Agency.
(vii) The Company has not assumed, guaranteed, endorsed or
otherwise become responsible (or otherwise agreed to become
responsible) for the obligations of any other Person, except for the
endorsement of negotiable instruments in the ordinary course of
business.
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(viii) The Company has not granted (or agreed or committed to
grant) any increase in compensation or fringe benefits other than
normal salary increases consistent with prior periods.
3.3 Taxes.
(a) Except as set forth in Schedule 3.3, the Company has filed, within
the time and in the manner prescribed by law, all Tax returns and other
documents required to be filed in respect of all Taxes, and all such returns and
other documents are true, correct and complete in all material respects. The
Company has furnished to NetObjects copies of all income Tax returns of the
Company for the past 3 years. The Company has, within the time and in the manner
prescribed by law, paid all Taxes that are due and payable. The Company has
established reserves on its books that are adequate for the payment of all Taxes
not yet due and payable.
(b) (i) None of such returns contained a disclosure statement
under Section 6662 of the Code or any similar provision of foreign law;
(ii) The Company has not received written notice from any
federal or foreign taxing authority asserting any deficiency against
the Company or any claim for additional Taxes in connection therewith,
other than any deficiency or claim which has been previously settled or
for which appropriate reserves are included in the Interim Statements;
(iii) To the knowledge of the Company, there is no pending
action, audit, proceeding or investigation with respect to the
assessment or collection of federal or foreign Taxes or a claim for
refund made by the Company with respect to federal or foreign Taxes
previously paid;
(iv) All amounts that are required to be collected or withheld
by the Company with respect to federal or foreign Taxes have been duly
collected or withheld, and all such amounts that are required to be
remitted to any federal or foreign taxing authority have been duly
remitted;
(v) No audit has been conducted of any federal or foreign
income tax return filed by the Company;
(vi) The Company has not requested nor been granted any
currently effective waiver or extension of any statute of limitations
with respect to the assessment or filing of any federal or foreign Tax
or return with respect thereto;
(vii) No consent has been filed under Section 341(f) of the
Code with respect to the Company;
(viii) The Company is not required to include in income any
adjustment pursuant to Section 481(a) of the Code (or similar
provisions of foreign laws or regulations) by reason of a change in
accounting method nor does the Company have any knowledge that the
Internal Revenue Service (or other federal or foreign taxing authority)
has proposed, or is considering, any such change in accounting method;
and
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(ix) The Company is not a party to and is not bound by nor has
any continuing obligation under any tax sharing or similar agreement or
arrangement with any Person.
3.4 Title to Properties.
(a) The Company owns no real Property.
(b) Schedule 3.4(b) is a true and complete summary based on the books
and records of the Company of all items of personal Property owned by the
Company with a net book value at the Last Fiscal Year-End in excess of $5,000
per item.
(c) Except as set forth in Schedule 3.4(c), the Company has good title
to all of its Properties, in each case free and clear of all Third-Party Rights.
(d) The Company owns all material items of non-inventory tangible and
intangible personal Property that were owned as of the Last Fiscal Year-End and
used in generating the revenue shown in the last audited statement of operations
of the Company for the fiscal year ending on the Last Fiscal Year-End previously
delivered to NetObjects, subject to any sales or dispositions of tangible
personal Property since the Last Fiscal Year-End in the ordinary course of
business.
3.5 Inventories. Since the Last Fiscal Year-End, all sales of inventory
have been made in the ordinary course of business and no inventory has been
pledged as collateral.
3.6 Accounts Receivable. Except as set forth in Schedule 3.6, the
accounts receivable of the Company (i) are bona fide and arose from valid sales
in the ordinary course of business in material conformity with all applicable
Legal Requirements, (ii) are valid and binding obligations of the debtors
requiring no further performance by the Company, and (iii) subject to the
allowance for doubtful accounts receivable in the balance sheet included in the
Interim Statements, are fully collectible and not subject to any offsets or
counterclaims and do not represent guaranteed sale, sell-or-return transactions
or any other similar understanding. No accounts receivable have been pledged as
collateral to any Person. The amounts shown for accounts receivable in the
Financial Statements reflect an allowance for doubtful accounts receivable in
accordance with GAAP.
3.7 Leases, Etc. Schedule 3.7 lists all leases, rental agreements,
conditional sales contracts and other similar Contracts under which the Company
leases (as lessor or lessee) any real or personal Property with rental payments
exceeding $5,000 per year (collectively, the "Disclosable Leases"). All
Disclosable Leases are, in all material respects, valid and enforceable by the
Company in accordance with their terms. Neither the Company nor, to the
knowledge of the Company, any other party to any Disclosable Lease is in
material breach thereof. The Company enjoys peaceable possession of all real
estate premises subject to Disclosable Leases to which it is a party and to all
personal Property subject to Disclosable Leases to which it is a party.
3.8 Facilities, Equipment. The Company owns or leases all material
land, buildings and equipment used in the operation of its business. The Company
has not received any notice of any material violation of any Legal Requirement
or Order by the Company's facilities which has not been corrected, and no
facility of the Company is in material violation of any Legal Requirement or
Order.
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3.9 Insurance. Schedule 3.9 lists and describes briefly all binders and
policies of liability, theft, life, fire and other forms of insurance and surety
bonds, insuring the Company or any of its Properties, assets and business as of
the date hereof. Except as noted in Schedule 3.9, all listed policies and
binders insure on an occurrence, rather than claims-made, basis. All policies
and binders listed in Schedule 3.9 are valid and in good standing and in full
force and effect and the premiums have been paid when due. Except for any claims
set forth in Schedule 3.9, there are no outstanding unpaid claims under such
policy or binder, and, except as set forth in Schedule 3.9, the Company has not
received any notice of cancellation, general disclaimer of liability or
non-renewal of any such policy or binder.
3.10 Employment and Benefit Matters.
(a) Schedule 3.10(a) lists each of the following for each employee of
the Company: name, hire date, current salary and currently held options
(including the vesting schedule applicable to such options). None of the
employees listed on Schedule 3.10(a) has given Company notice of his or her
intention to resign his or her position with the Company and Company has no
present intention to terminate such employees.
(b) Schedule 3.10(b) lists all of the following items which are
applicable to the Company: (i) employment Contracts with any employee, officer
or director; and (ii) Contracts or arrangements with any Person providing for
bonuses, profit sharing payments, deferred compensation, stock options, stock
purchase rights, retainer, consulting, incentive, severance pay or retirement
benefits, life, medical or other insurance, payments triggered by a change in
control or any other employee benefits or any other payments, "fringe benefits"
or perquisites which are not terminable at will without liability to the Company
or which are subject to ERISA. The contracts or arrangements referred to in the
foregoing clause (ii) are herein called "Benefit Plans."
(c) Neither the Company, nor any of its ERISA Affiliates, has any union
contracts, collective bargaining, union or labor agreements or other Contract
with any group of employees, labor union or employee representative(s), nor has
the Company or any ERISA Affiliate ever participated in or contributed to any
single employer defined benefit plan or multi-employer plan within the meaning
of ERISA Section 3(37), nor is the Company currently engaged in any labor
negotiations, excepting minor grievances, nor is the Company the subject of any
union organization effort. The Company is in material compliance with applicable
Legal Requirements respecting employment and employment practices and terms and
conditions of employment, including without limitation health and safety and
wages and hours. No unfair labor practice complaint is pending against the
Company before the National Labor Relations Board or other Governmental Agency.
There is no labor dispute, strike, slowdown or work stoppage pending or
threatened against the Company.
(d) True and correct copies of each Benefit Plan listed in Schedule
3.10(b) that is subject to ERISA (a "Company ERISA Plan") and related trust
agreements, insurance contracts, and summary descriptions have been delivered or
made available to NetObjects by the Company. The Company has also delivered or
made available to NetObjects a copy of the two most recently filed IRS Forms
5500, with attached financial statement and accountant's opinion, if applicable,
for each Company ERISA Plan. The Company has also delivered or made available to
NetObjects a copy of, in the case of each Company ERISA Plan intended to qualify
under Section 401(a) of the Code, the most
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recent Internal Revenue Service letter as to its qualification under Section
401(a) of the Code. To the knowledge of the Company, nothing has occurred prior
to or since the issuance of such letters to cause the loss of qualification
under the Code of any of such plans.
(e) Except as disclosed in Schedule 3.10(e), none of the Company ERISA
Plans has participated in, engaged in or been a party to any prohibited
transaction as defined in ERISA or the Code, and there are no material claims
pending or overtly threatened, involving any Benefit Plan listed in Schedule
3.10(b). There have been no material violations of any reporting or disclosure
requirements with respect to any Company ERISA Plan.
(f) Neither the Company nor any of its ERISA Affiliates has any
liability for any excise tax imposed by Section 4972, 4974, 4975, 4977, 4979,
4980 or 4980B of the Code. No Benefit Plans are subject to minimum funding
requirements or are an Employee Stock Ownership Plan under the Code.
(g) Except as disclosed in Schedule 3.10(g), the Company and its ERISA
Affiliates do not maintain any plans providing benefits within the meaning of
Section 3(1) of ERISA (other than group health plan continuation coverage under
Section 601 of ERISA and 4980B(f) of the Code) to former employees or retirees.
3.11 Contracts. Except as shown on Schedules 3.7 and 3.11, and except
for Contracts fully performed or terminable at will without liability to the
Company, the Company is not a party to any Contract that affects the Company,
its business, Properties, assets, operations or financial condition and which
contemplates performance by the Company during a remaining period of more than
one year (90 days in the case of any purchase Contract) or involves remaining
commitments for sale or purchase in excess of $25,000. True and complete copies
of each Contract disclosable on Schedule 3.11 (a "Disclosable Contract") have
been delivered to NetObjects. Each Disclosable Contract is, in all material
respects, valid and enforceable by the Company in accordance with its terms.
Neither the Company nor, to the knowledge of the Company, any other party to any
Disclosable Contract is in material breach thereof.
3.12 Officers and Directors, Etc. Schedule 3.12 is a true and complete
list of:
(a) the names and addresses of each of the Company's officers and
directors;
(b) the name of each bank or other financial institution in which the
Company has an account, deposit or safe deposit box and the names of all persons
authorized to draw thereon or to have access thereto; and
(c) the name of each bank or other financial institution in which the
Company has a line of credit or other loan facility.
3.13 Corporate Documents. The Company has furnished or made available
to NetObjects or its representatives true, correct and complete copies of (i)
the articles or certificate of incorporation and bylaws of the Company, (ii) the
minute books of the Company containing all records required to be set forth of
all proceedings, consents, actions and meetings of the stockholders and board of
directors of the Company; (iii) all material Permits and Orders with respect to
the
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Company and (iv) the stock transfer books of the Company setting forth all
transfers of any capital stock.
3.14 Legal Proceedings. There is no action, suit, proceeding or
investigation pending in any court or before any arbitrator or before or by any
Governmental Agency against the Company or any of its Properties or business,
and to the knowledge of the Company, there is no such action, suit, proceeding
or investigation threatened.
3.15 Compliance with Instruments, Orders and Legal Requirements. The
Company is not in material violation of, or in default in any material respect
with respect to, any term or provision of its articles or certificate of
incorporation or bylaws, or, to the knowledge of the Company, any Order or any
Legal Requirement applicable to the Company.
3.16 Permits. The Company holds all Permits material to the conduct its
business as and where now conducted. To the knowledge of the Company, there is
not pending nor threatened any proceedings to terminate, revoke, limit or impair
any material Permit.
3.17 Intellectual Property.
(a) Schedule 3.17(a) sets forth a true and complete list of
all patents, patent applications, trademarks, trade names, service marks and
registered copyrights and applications therefor, if any, owned or claimed by or
licensed to the Company. Except as set forth on Schedule 3.17(a), the Company
owns or is licensed or otherwise has the right to use, without future payment to
any other Person, all patents, patent applications, patent rights, trademarks,
trademark registrations, trademark applications, licenses, service marks,
business marks, trade names, brand names, copyright registrations, copyrights
(including those in computer programs, software, including all source code and
object code, development documentation, programming tools, drawings,
specifications and data), designs, trade secrets, technology, inventions,
discoveries and improvements, know-how, proprietary rights, formulae, processes,
software, data, methods, technical information, confidential and proprietary
information and all other intellectual property rights whether or not subject to
statutory registration or protection, and licenses to any or all of the
foregoing (collectively, the "Intellectual Property"), used in or necessary for
the conduct of its business as presently conducted and as proposed to be
conducted by the Company, free and clear of any Third-Party Right. Except as
otherwise indicated on Schedule 3.17(a), all patents, patent applications,
trademarks, trade names, service marks and copyrights of the Company have been
duly registered and filed with or issued by each appropriate Governmental Agency
in the jurisdictions indicated in Schedule 3.17(a), all necessary affidavits of
use or continuing use have been filed, and all necessary maintenance fees have
been paid to continue all such rights in effect. Except as disclosed in Schedule
3.17(a), the conduct of the Company's business, as presently conducted and as
proposed to be conducted by the Company, does not violate, conflict with or
infringe any Contract (other than any Minor Contract) between the Company and
any Person or any Contract (other than any Minor Contract), license (other than
any Minor License) or, to the knowledge of the Company, any Minor Contract,
Minor License or other Intellectual Property rights or proprietary, privacy,
publicity or similar rights, of any other Person. Except as otherwise indicated
on Schedule 3.17(a), the Company does not have any notice or knowledge of any
objection or claim being
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asserted by any Person with respect to the ownership, validity, enforceability
or use of any Intellectual Property or any names or slogans embodying business
or product goodwill (or both), or challenging or questioning the validity or
effectiveness of any license relating thereto. There are no unresolved conflicts
with, or pending claims by or against the Company, whether in Litigation or
otherwise, involving any Intellectual Property or any names or slogans embodying
business or product goodwill (or both), and there are no Liens or rights of any
other Person with respect to Intellectual Property that would prevent the
Company from fulfilling its obligations under this Agreement.
(b) Schedule 3.17(b) sets forth a true and complete list of
all material options, rights (including marketing rights), licenses or interests
of any kind relating to Intellectual Property granted to the Company and all
material options, rights (including marketing rights), licenses or interests of
any kind relating to Intellectual Property of the Company or any portions
thereof, granted by the Company to any other Person. To the knowledge of the
Company, no such Person is in breach of default under its obligations.
(c) All software, other than generally available software
(such as Word for Windows, Excel, WordPerfect and the like) and generally
available system development tools, that is either marketed to customers of the
Company as a program or as part of a service or is used by the Company to
support its business:
(i) is owned by the Company or the Company has the
right to use, modify, copy, sell, distribute, sublicense and
make derivative works free and clear of any limitations or
encumbrances except as may be set forth in any license
agreement listed in Schedule 3.17(b); and
(ii) is free from any interest of any former or
present employees of, or contractors or consultants to, the
Company.
(d) Except as disclosed in Schedule 3.17(a), the execution and
delivery of this Agreement, compliance with its terms and the consummation of
the transactions contemplated hereby do not and will not conflict with, or
result in any violation or breach of, or default (with or without notice or
lapse of time or both) or give rise to any right, license or Lien relating to
any material Intellectual Property owned by the Company or with respect to which
the Company now has or has had any Contract (to the knowledge of the Company, in
the case of any Minor Contract or Minor License) with any Person, or right of
termination, cancellation or acceleration of any material Intellectual Property
right or obligation set forth in any Contracts (to the knowledge of the Company,
in the case of any Minor Contract or Minor License) to which the Company is a
party, or the loss or encumbrance of any material Intellectual Property or
material benefit related thereto, or result in or require the creation,
imposition or extension of any Lien upon any material Intellectual Property or
right or otherwise impair the Company's right to use any material Intellectual
Property of the Company in the same manner as such Intellectual Property is
currently being used by the Company or the customers of the Company.
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(e) To the extent third party software is marketed to
customers of the Company together with the Intellectual Property of the Company,
(i) the third party rights have been identified (or the Contracts and the
specific third party software have been listed) on Schedule 3.17(b), (ii) all
necessary licenses have been obtained and are being complied with and (iii) no
royalties or payments are due (or such royalties and payments are identified on
Schedule 3.17(e)).
(f) None of the trade secrets (as defined in the Uniform Trade
Secrets Act) of the Company has been published or disclosed by the Company, or
to the knowledge of the Company by any other Person, to any Person except
pursuant to licenses or Contracts requiring such other Persons to keep such
trade secrets confidential.
(g) Except as disclosed in Schedule 3.17(b), the Company is
not, and to the knowledge of the Company, no other party to any licensing or
other similar arrangements with the Company relating to any Intellectual
Property (other than Minor Licenses of freeware, shareware or opensource) is in
breach of or default under its material obligations under such arrangements.
Except as disclosed in Schedule 3.17(b), to the knowledge of the Company,
neither it nor any other party to a Minor License of freeware, shareware or
opensource is in breach of or default under its material obligations under such
arrangements. Except as disclosed in Schedule 3.17(b), the Company is not, and
to the knowledge of the Company, no other party to any distributorship or other
similar arrangements with the Company relating to any material Intellectual
Property is, in breach of or default under its material obligations under such
arrangements.
(h) Except as set forth in Schedule 3.17(a), there exists no
litigation pending or, to the Company's knowledge, threatened against the
Company with regard to any patent, copyright, trade secret, trademark, trade
name, service mark or other Intellectual Property. There is no outstanding
order, writ, injunction, decree, judgment or stipulation by or with any court,
administrative agency or arbitration panel regarding patent, copyright, trade
secret, trademark, trade name or other claims relating to Intellectual Property
by which the Company is bound.
(i) Except as disclosed in Schedule 3.17(a) or Schedule
3.17(i), the Company has not received any communications alleging the Company
has infringed or violated or, by conducting its businesses as proposed by the
Company, would infringe or violate any of the patents, trademarks, service
marks, trade names, copyrights, trade secrets or other proprietary rights,
processes or other Intellectual Property of any other Person.
(j) Except as disclosed in Schedule 3.17(j), to the knowledge
of the Company, no Person is infringing on or otherwise violating any right of
the Company with respect to any Intellectual Property owned by or licensed to
the Company.
(k) The Company has taken reasonable and necessary steps to
protect the Intellectual Property of third parties received by the Company under
obligation of confidentiality and its material Intellectual Property and its
rights thereunder, and to the knowledge of the Company no such rights have been
lost or are in jeopardy of being lost through failure to act by
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the Company. Except as disclosed in Schedule 3.17(k), all current and former
employees of the Company, and all current and former independent contractors of
the Company furnishing services related to software and data, have signed
confidentiality/proprietary rights agreements substantially in the form attached
as Schedule 3.17(k). Schedule 3.17(k) lists all current and former independent
contractors of the Company furnishing services related to software and data.
(l) Except as disclosed in Schedule 3.17(l), no licenses or
rights have been granted to distribute or use the source code of, or to create
Derivative Works (as hereinafter defined) or, any product currently marketed by,
commercially available from or under development by the Company for which the
Company possesses the source code. As used herein, "Derivative Work" shall mean
a work that is based upon one or more preexisting works, such as a revision,
enhancement, modification, abridgment, condensation, expansion or any other form
in which such preexisting works may be recast, transformed or adapted, and
which, if prepared without authorization of the owner of the copyright in such
preexisting work, would constitute a copyright infringement. For purposes
hereof, a Derivative Work shall also include any compilation that incorporates
such a preexisting work as well as translations from one human language to
another and from one type of code to another.
(m) Except as disclosed in Schedule 3.17(m), the Company has
not assigned, sold or otherwise transferred ownership of or the right to use any
patent, patent application, trademark or service mark.
(n) Neither the Company nor any of its officers nor, to the
knowledge of the Company, any of its employees has any patents issued or patent
applications pending for any device, process, method, design or invention of any
kind now used or needed by the Company in the furtherance of its business
operations as presently conducted or as proposed to be conducted by the Company,
which patents or applications have not been assigned to the Company with such
assignment duly recorded in the United States Patent Office or with the
applicable foreign Governmental Agency.
(o) Without limiting the generality of this Section 3.17, the
software and related licenses referred to herein shall include freeware,
shareware and opensource.
3.18 Capital Expenditures. Schedule 3.18 sets forth, by nature and
amount, all budgeted capital expenditures of the Company for which commitments
have been made, or for which payments or current liabilities have been made or
incurred, after the Last Fiscal Year-End in excess of $5,000.
3.19 Environmental Matters. To the knowledge of the Company, there are
no Hazardous Materials used or present at any location used by the Company in
the conduct of the Business, except for any Hazardous Materials constituting
normal office supplies. To the knowledge of the Company, no location currently
or previously used by the Company is contaminated by any Hazardous Material, and
no event has occurred and no activity has been or is being conducted by the
Company which has resulted or could reasonably result in contamination of any
location currently or previously used by the Company by any Hazardous Material.
To the knowledge of the Company, no
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Government Agency has commenced any investigation or proceeding with respect to
the contamination of any location currently or previously used by the Company by
any Hazardous Material.
3.20 Illegal Payments. To the best knowledge the Company, none of the
Company or any director, officer, employee, or agent of the Company has,
directly or indirectly, paid or delivered any fee, commission, or other sum of
money or item of property however characterized to any broker, finder, agent,
government official, or other person, in the United States or any other country,
in any manner related to the business or operations of the Company, which the
Company or any such director, officer, employee, or agent knows or has reason to
believe to have been illegal under any law.
3.21 Confidentiality Obligations. The Company is not in possession of
any information, documents or materials under an obligation of confidentiality
or use to any other Person other than pursuant to a Contract described in
Schedule 3.11. The conduct of the Business as presently conducted does not
violate or conflict with the obligation of confidentiality or use to any other
Person.
3.22 Representations. No representation or warranty by the Company in
this Agreement, or in any Schedule, Exhibit or document furnished by the Company
at the Closing pursuant hereto contains any untrue statement of a material fact
or omits to state a fact necessary to make the statements contained herein and
therein not misleading.
Section 4 Representations and Warranties of NetObjects
NetObjects hereby represents and warrants to the Stockholders and the
Company that, on and as of the date hereof:
4.1 Organization, Standing, Etc. of NetObjects and Subsidiary.
NetObjects is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California. NetObjects and Subsidiary have full power and authority
under applicable corporate law to own, lease and operate their Properties and to
carry on the business in which they are engaged.
4.2 Authority; Enforceability. NetObjects and Subsidiary have all
necessary power and authority under applicable corporate law to execute, deliver
and perform their obligations under this Agreement. The execution, delivery and
performance of this Agreement by NetObjects and Subsidiary has been duly
authorized by all necessary action under applicable corporate law. This
Agreement is legally binding on and enforceable against NetObjects and
Subsidiary in accordance with its terms. The execution, delivery and performance
of this Agreement by NetObjects and Subsidiary and the consummation by
NetObjects and Subsidiary of all of the transactions contemplated hereby, (x) do
not require any Third-Party Action relating to NetObjects or Subsidiary except
those listed on Schedule 4.2, (y) do not violate any Legal Requirement or Order
applicable to NetObjects or Subsidiary and (z) do not conflict with or
constitute a default (with or without the giving of notice or the passage of
time or both) under, or result in any acceleration or right of acceleration of
any obligations under, any Contract to which NetObjects or Subsidiary is a
party,
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where, in each case, the absence of such Third-Party Action or such violation,
conflict, default or acceleration would in any way adversely affect the
transactions contemplated hereby.
4.3 SEC Information. As of their respective filing dates (except as
thereafter amended) all documents that NetObjects has filed with the SEC (the
"Company SEC Documents") have complied in all material respects with the
applicable requirements of the Act or the Exchange Act, and none of the Company
SEC Documents has contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading except to the extent corrected by a subsequently filed
Company SEC Document filed prior to the date hereof.
4.4 Litigation. There are no claims, actions, suits or other
proceedings pending, or to the knowledge of NetObjects, threatened, at law or in
equity, by or before any Governmental Agency or any arbitrator against
NetObjects which could reasonably be expected to have an adverse effect on the
ability of NetObjects to perform its obligations under this Agreement.
4.5 Material Adverse Change. No violation or other matter having a
material adverse change in NetObject's business, condition, assets, liabilities,
operations, financial performance or prospects has occurred since NetObjects'
last SEC report.
Section 5 Conditions to Obligations of NetObjects at Closing
The obligations of NetObjects hereunder to be performed at the Closing
are subject to the satisfaction at or prior to the Closing of the following
conditions, except for any condition NetObjects may waive in writing in
accordance with Section 8.3.
5.1 Representations and Warranties. The representations and warranties
contained in Sections 2 and 3 shall have been true in all material respects on
the date of this Agreement and shall be true in all material respects at and as
of immediately prior to the Closing with the same effect as though made at and
as of immediately prior to the Closing.
5.2 Performance. The Stockholders and the Company shall have performed
and complied in all material respects with all covenants required herein to be
performed or complied with by them or it on or before the Closing.
5.3 Third-Party Action. All Third-Party Action required in order to
consummate the Closing on the terms hereof.
5.4 Opinion of Counsel. NetObjects shall have received from Cooley
Godward, LLP, counsel to the Company, an opinion dated the date of the Closing,
in form and substance substantially as set forth in Exhibit E.
5.5 Transactional Litigation. No action, suit or proceeding before any
Governmental Agency shall have been commenced, and no investigation by any
Governmental Agency shall have been commenced or overtly threatened, against the
Company, NetObjects, Subsidiary, or any of their respective principals,
officers, directors or shareholders seeking to restrain, prevent or change the
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transactions contemplated hereby or questioning the validity or legality of any
of such transactions or seeking damages in connection with any of such
transactions.
5.6 Interim Events. None of the events listed in Sections 7.9(a)
through (h) shall have occurred without NetObject's written consent.
5.7 Management Changes. No change in the Chief Executive Officer, Chief
Technical Officer, Chief Financial Officer, Senior Vice President of Marketing
and Business Development, the Vice President of Engineering of the Company or
any employees of the Company listed on Schedule 5.8 shall have occurred from
September 1, 1999.
5.8 Releases. The Stockholders and the directors and officers of the
Company shall have entered into releases in favor of the Company in the form
attached as Exhibit C.
5.9 Exercise of Warrants. All issued and outstanding warrants of the
Company shall have been exercised in full.
5.10 Noncompetition Agreements. The individuals designated in Schedule
1.5(c) shall have entered into noncompetition agreements with NetObjects
substantially in the form attached as Exhibit D.
5.11 Employment Agreements. Key employees of the Company designated by
NetObjects shall have entered into employment agreements with NetObjects in
forms satisfactory to NetObjects.
5.12 Transaction Expenses. All legal fees and other transaction
expenses incurred by the Company in conjunction with the Merger shall be
reasonably satisfactory to NetObjects.
5.13 Corporate and Other Proceedings. All corporate and other
proceedings on the part of the Company and the Stockholders in connection with
the transactions to be consummated at the Closing, and all documents and
instruments incident to such transactions, shall be reasonably satisfactory in
substance and form to NetObjects.
Section 6 Conditions to Stockholders' and Company's Obligations at Closing
The obligations of the Stockholders and the Company hereunder to be
performed at the Closing are subject to the satisfaction at or prior to the
Closing of the following conditions, except for any condition the Holders' Agent
may waive in accordance with Section 8.3.
6.1 Representations and Warranties. The representations and warranties
of NetObjects contained in Section 4 shall have been true in all material
respects on the date of this Agreement and shall be true in all material
respects at and as of immediately prior to the Closing with the same effect as
though made at and as of immediately prior to the Closing.
6.2 Performance. NetObjects shall have performed and complied in all
material respects with all covenants required herein to be performed or complied
with by NetObjects on or before the Closing.
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6.3 Third-Party Action. All Third-Party Action required in order to
consummate the Closing on the terms hereof, other than any the absence of which
in the aggregate would not have a material effect on the transactions
contemplated hereby, shall have been taken.
6.4 Opinion of Counsel. The Stockholders and the Company shall have
received at the Closing from McCutchen, Doyle, Brown & Enersen, LLP, counsel to
NetObjects and Subsidiary, an opinion dated the date of the Closing, in form and
substance substantially as set forth in Exhibit F.
6.5 Transactional Litigation. No action, suit or proceeding before any
Governmental Agency shall have been commenced, and no investigation by any
Governmental Agency shall have been commenced or overtly threatened, against the
Company, NetObjects, Subsidiary or any of their respective principals, officers,
directors or stockholders seeking to restrain, prevent or change the
transactions contemplated hereby or questioning the validity or legality of any
of such transactions or seeking damages in connection with any of such
transactions.
6.6 Additional Options. NetObjects shall have authorized and issued an
additional 500,000 options for NetObjects common stock, to be granted at the
Merger Effective Time to such employees of the Company and in such allocation as
is mutually agreed by NetObjects and the Company.
6.7 Tax Opinion. The Stockholders of the Company shall have received at
the Closing a legal opinion of Cooley Godward LLP, counsel to the Company, dated
as of the Closing Date to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code.
6.8 Corporate and Other Proceedings. All corporate and other
proceedings on the part of NetObjects and Subsidiary in connection with the
transactions to be consummated at the Closing, and all documents and instruments
incident to such transactions, shall be reasonably satisfactory in substance and
form to the Company.
Section 7 Covenants of the Stockholders, the Company, Subsidiary and NetObjects
7.1 Non-Disclosure. Each party agrees not to divulge or communicate, or
use for any purpose other than evaluating this transaction or exercising rights
as a party hereto, any information or materials concerning this Agreement, the
negotiation between the parties hereto and the transactions contemplated hereby,
except to the extent that such information (w) is or hereafter becomes lawfully
obtainable from other sources, (x) is required to be disclosed to a Governmental
Agency having jurisdiction over the party or its Affiliates, (y) is otherwise
required by law to be disclosed or (z) is disclosed following a waiver in
writing from the other parties. Promptly after the Merger Effective Time,
NetObjects and the Company will issue a mutually agreeable press release
concerning the transactions contemplated hereby. The parties also hereby ratify
and confirm the Non-Disclosure Agreement dated July 29, 1999, which shall
continue in effect.
7.2 Survival of Representations and Warranties, Indemnification.
(a) Survival. All representations and warranties made under Section 2,
3 or 4 shall survive the Closing and any investigation with respect thereto by
an authorized party until the Last Escrow
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Claim Date. Following the Closing, however, the Company shall have no liability
with respect to any representation or warranty and shall not be subject to any
contribution, indemnity or similar claims with respect thereto by any
Stockholder or any other Person.
(b) Representations and Warranties in Section 3. In the event of any
misrepresentation or breach of warranty in Section 2 or Section 3 (it being
agreed that for purposes of determining the existence of any such
misrepresentation, all such representations, warranties or covenants of the
Stockholders and the Company that are qualified as to materiality or as to a
specified threshold or minimum amounts shall be deemed to be not so qualified),
NetObjects shall be entitled to recover the related Recoverable Amount from the
Escrow Account, provided that (i) NetObjects gives notice of such
misrepresentation or breach in accordance with the Escrow Agreement, in
reasonable detail, specifying the amount of the claim, on or before 5:00 p.m.
Pacific Time on the Last Escrow Claim Date, it being understood that no recovery
may be had against the Escrow Account with respect to any claim which is not the
subject of such a notice given by such time, and (ii) NetObjects shall not be
entitled to any such recovery unless the aggregate Recoverable Amount for all
claims made under this Section 7.2(b) exceeds $150,000, in which event
NetObjects may recover from the Escrow Account the entire Recoverable Amount.
"Recoverable Amount" means Damages, if any, proximately resulting to
NetObjects on account of any misrepresentation, breach of warranty or breach of
covenant.
The Company, the Stockholders, any Affiliate of the Company or any
Affiliate of the Stockholders shall not have any liability or obligation of any
kind to NetObjects, or any other Person on account of the breach of any
representation or warranty made in Section 3, except as stated in this Section
7.2. The sole recourse of NetObjects on account of the breach of any
representation or warranty made in Section 3 shall be with respect to the
property in the Escrow Account. Notwithstanding the foregoing, any liability or
obligation resulting from the knowing personal fraud of an individual shall not
be subject to any of the limitations or thresholds stated in this Section
7.2(b).
(c) Pre-Closing Taxes. NetObjects shall be entitled to recover against
the Escrow Account for Damages to it resulting from the failure of the Company
to pay Taxes payable, or accruing under GAAP, on or before the Closing.
(d) Limitations. Nothing in this Section 7.2 shall limit the
indemnification available to NetObjects and the Stockholders under Sections 7.10
or 8.1.
7.3 Disputed and Third-Party Claims.
(a) If NetObjects shall give notice of a claim in accordance with
Section 7.2, and NetObjects and the Holders' Agent do not resolve such matter by
written agreement within 45 days after such notice is given, the dispute will be
settled exclusively by arbitration before a single arbitrator appointed by
JAMS/Endispute. If the total amount (not including interest) of the dispute and
any counterclaim exceeds $250,000, the arbitration will be conducted in
accordance with the Comprehensive Arbitration Rules and Procedures of
JAMS/Endispute; any other arbitration under this Section will be conducted in
accordance with the Streamlined Arbitration Rules and Procedures of
JAMS/Endispute. NetObjects and the Holders' Agent shall each bear their own
expenses
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(including without limitation the fees and expenses of legal counsel and
accountants) in connection with such arbitration. The arbitral award shall
allocate the arbitrator's fees and expenses according to the relative success of
NetObjects and the Holders' Agent in the arbitration, as determined by the
arbitrator.
(b) To the extent a claim by NetObjects under Section 7.2 relates to a
claim asserted against a party to this Agreement (other than to enforce this
Agreement) (a "Third-Party Claim") and NetObjects gives notice of the assertion
of the Third-Party Claim, then the Holders' Agent will have the option,
exercisable by written notice to NetObjects within 20 days after receipt of
NetObjects' notice, to control the defense of such Third-Party Claim. All
expenses (including, without limitation, attorneys' fees) incurred by the
Holders' Agent in connection with his assumption of control of the defense of a
Third-Party Claim shall be paid by the Holders' Agent. If the Holders' Agent
have not assumed the defense of a Third-Party Claim, then NetObjects shall have
the right to control the defense of the Third-Party Claim, and the expenses
reasonably incurred by NetObjects in connection with such defense shall be
recoverable as part of the underlying claim on the same basis and subject to the
same limitations as stated in Section 7.2 and this Section.
(c) The party controlling the defense may use counsel selected by it,
but if the other party reasonably objects (within 20 days after designation of
counsel initially selected) on account of such counsel's representation or
potential representation of the designating party in matters in which
NetObjects' and the Stockholders' or the Company's interests are adverse or
potentially adverse, the designating party shall select other counsel free of
any such adverse representation. The party controlling the defense shall have
the right, in its discretion exercised in good faith and upon the advice of
counsel, to settle such matter, either before or after the initiation of
litigation, at such time and upon such terms as they deem fair and reasonable,
provided that (i) at least 10 days' prior notice shall be given to the other
party of the intention to settle the Third-Party Claim, (ii) no settlement by
the controlling party shall include any equitable relief binding on the
noncontrolling party, and (iii) the controlling party shall not agree to any
settlement of such Third-Party Claim without the prior written consent of the
other party, which consent shall not be unreasonably withheld. The
noncontrolling party will have the right to be represented by counsel, solely at
its own expense. The controlling party shall keep the other party advised of the
status of the Third-Party Claim and the defense thereof and shall consider in
good faith recommendations made by the other party with respect thereto.
(d) Unless otherwise agreed by the parties, arbitration under Section
7.3(a) of a claim by NetObjects with respect to a Third-Party Claim shall be
deferred until the resolution of the Third-Party Claim.
7.4 Termination of this Agreement. If any condition of the Closing
stated in Section 5 is not satisfied on or before October __, 1999, then,
provided NetObjects is not in material default hereunder, NetObjects may at any
time thereafter terminate any further obligations under this Agreement by giving
written notice thereof to the Company and the Holders' Agent. If any condition
of the Closing stated in Section 6 is not satisfied on or before such date,
then, provided the Company and the Stockholders are not in material default
hereunder, the Company and the Holders' Agent may at any time thereafter
terminate any further obligations under this Agreement by giving written notice
thereof to NetObjects. Any such termination will not, however, terminate or
otherwise affect the obligations of the parties under Sections 7.1, 8.1 or 8.2.
This Agreement may be
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so terminated, or terminated by mutual agreement of the parties upon the
authorization of their respective boards of directors, notwithstanding approval
of this Agreement by the stockholders of any or all parties.
7.5 Reasonable Business Efforts, No Inconsistent Action. Each party
will use its, his or her reasonable business efforts to cause the conditions
over which it has control to be satisfied on or before the Closing. Without
limiting the generality of the foregoing, the Company will use its best efforts
to ensure that all outstanding warrants are exercised in full prior to the
Closing. No party will take any action which will foreseeably result in the
nonsatisfaction of any condition stated in Section 5 or 6 on or before the
Closing.
7.6 Access. Between the date of this Agreement and the Closing or any
earlier termination of this Agreement in accordance with its terms, the Company
will (i) give NetObjects and its authorized representatives access to its books,
records, Properties, officers, attorneys and accountants and permit NetObjects
to make inspections and copies of such books and records, and (ii) furnish
NetObjects with such financial information and operating data and other
information with respect to its business and Properties, and to discuss with
NetObjects and its authorized representative its affairs, all as NetObjects may
from time to time reasonably request for the purposes of this Agreement, during
normal office hours. Any on-site visit shall be subject to reasonable advance
notice and to being accompanied by an officer or designated employee of the
Company.
7.7 No Solicitation or Negotiation. The Company and the Stockholders
agree that, between the date of this Agreement and the Closing or any earlier
termination of this Agreement in accordance with its terms, they will not (and
will not permit any person or entity which they control to) seek or entertain,
or negotiate any terms of, a Strategic Transaction with any party other than
NetObjects and its affiliates, or give any information concerning its business
to any such party, or enter into any agreement inconsistent with this Agreement
or the proposed transaction with NetObjects. A "Strategic Transaction" means (i)
any form of acquisition, direct or indirect, whether by purchase, merger, stock
sale (primary or secondary), reinsurance or any other structure, of any
significant (15% or greater in the aggregate) portion of the Company's
consolidated business or a significant (15% or greater in the aggregate) equity
interest therein, (ii) any arrangement whereby effective operating control of
the Company's consolidated business or a portion thereof is granted to another
party or (iii) any transaction involving the recapitalization, restructuring,
liquidation, dissolution or other similar type of transaction involving the
Company. During such period, the Company will promptly notify NetObjects of the
content and identity of any proposal or communication it receives from any such
person concerning any Strategic Transaction.
7.8 Interim Financial Information. The Company will supply to
NetObjects unaudited consolidated monthly financial statements within 30
business days of the end of each month ending between the date of this Agreement
and the Closing or any earlier termination of this Agreement in accordance with
its terms, prepared on a basis consistent with the unaudited consolidated
financial statements for the preceding months, together with additional monthly
reports substantially in the form heretofore delivered to the Company's major
stockholder. For purposes of these statements, employee bonuses and similar
expenses may be accrued based on actual results for the year to date and
budgeted results for the balance of the year.
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7.9 Interim Conduct of Business. From the date of this Agreement until
the Closing or any earlier termination of this Agreement in accordance with its
terms, unless approved by NetObjects in writing, the Company will operate its
business consistently with past practice and in the ordinary course of business,
and will not:
(a) merge or consolidate with or agree to merge or consolidate
with, or sell or agree to sell all or substantially all of its Property
to, or purchase or agree to purchase all or substantially all of the
Property of, or otherwise acquire, any other Person or a division
thereof, except as provided in this Agreement;
(b) amend its Articles of Incorporation or Bylaws;
(c) make any changes in its accounting methods, principles or
practices, except as required by GAAP;
(d) sell, consume or otherwise dispose of any Property, except
in the ordinary course of business consistent with past practices;
(e) authorize for issuance, issue, sell or deliver any
additional shares of its capital stock of any class or any securities
or obligations convertible into shares of its capital stock or issue or
grant any option, warrant or other right to purchase any shares of its
capital stock of any class, other than, in each case, the issuance of
Common Stock pursuant to the exercise of the warrants listed in
Schedule 7.9(e), the issuance of an additional 45,000 warrants to
Silicon Valley Bank (resulting in an issuance of 507,357 total
warrants), the exercise of any outstanding stock options prior to the
Merger Effective Time and the conversion of the bridge loan into Common
Stock as set forth in Section 1.4;
(f) declare any dividend on, make any distribution with
respect to, or redeem or repurchase, its capital stock except under
existing repurchase agreements or obligations as set forth in Schedule
2.1;
(g) modify, amend or terminate any Benefit Plans, except as
required under Legal Requirements or any Disclosable Contract; or
(h) authorize or enter into an agreement to do any of the
foregoing.
7.10 Registration.
(a) Registration Statement. Upon the written request of the
holders of NetObjects Stock issued under this Agreement (the "Holders")
certifying that they have a bona fide intention to sell a specified number, not
less than 300,000, of shares of NetObjects Stock, NetObjects shall file a
registration statement (the "Registration Statement"), registering the number of
shares NetObjects Stock so specified (the "Registrable Securities") for
non-underwritten resale into the open market, no later than May 12, 2000.
NetObjects will evaluate the feasibility of filing such registration statement
sooner than such date, but not before 180 days after the Merger Effective Time.
NetObjects may delay the filing of any such requested registration for up to 120
days from the date of the
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Holders' request if the Board of Directors of NetObjects determines in a written
certificate delivered to the Holders' Agent, signed by the chairman of
NetObjects Board of Directors, that such filing would be seriously detrimental
to NetObjects or its stockholders at such time.
(b) Company Registration. NetObjects shall notify the Holders in
writing at least 15 days prior to the filing of the Registration Statement and
will afford each Holder an opportunity to include in such Registration Statement
all or part of Registrable Securities held by such Holder. Each Holder desiring
to include in such Registration Statement all or any part of the Registrable
Securities held by such Holder shall, within 15 days after such notice from
NetObjects, so notify NetObjects in writing. Such notice shall state the
intended method of disposition of the Registrable Securities held by such
Holder.
(c) Obligations of NetObjects. In order to effect the
registration, NetObjects shall:
(1) prepare and file the Registration Statement with respect
to the Registrable Securities and use its best efforts to cause the Registration
Statement to become effective and remain effective for at least 90 days;
(2) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Act with
respect to the disposition of all securities covered by the Registration
Statement;
(3) furnish to the Stockholders the numbers of copies of the
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as the Stockholders may
reasonably request in order to facilitate the disposition of the Registrable
Securities;
(4) use its best efforts to register and qualify the
securities covered by the Registration Statement under other securities or blue
sky laws of such jurisdictions as shall be reasonably appropriate for
distribution of the securities covered by the Registration Statement, provided
that NetObjects shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions; and
(5) notify the Stockholders, at any time when a prospectus
relating thereto is required to be delivered under the Act, of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing.
(d) Furnish Information. It shall be a condition precedent to the
obligation of NetObjects under this Section 7.10 that the each Stockholder shall
furnish to NetObjects such information regarding such Stockholder, the shares of
Registrable Securities held by such
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Stockholder and the intended method of disposition of such shares as shall
reasonably be required to effect the registration of the Registrable Securities.
(e) Registration Expenses. NetObjects shall bear and pay all expenses
incurred by NetObjects in connection with any registration, filing or
qualification of the Registrable Securities with respect to registrations
pursuant to this Section 7.10, including (without limitation) all registration,
filing, qualification, printer's fees, accounting fees and expenses, but shall
not be responsible for brokerage commission, dealer discount or other similar
charges or the Stockholders' attorneys' fees and expenses or any taxes imposed
with respect to the Registrable Securities on the sale and transfer thereof.
(f) Indemnification.
(1) To the extent permitted by law, NetObjects will indemnify
and hold harmless any Stockholder and each person, if any, who controls
Stockholder within the meaning of the Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Act, or the Exchange Act, or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by NetObjects of the Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Act, or the
Exchange Act or any state securities law; and NetObjects will pay to such
Stockholder or controlling person, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection (1) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of NetObjects (which consent shall
not be unreasonably withheld), nor shall NetObjects be liable to any indemnitee
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished by such indemnitee expressly for
use in connection with such registration.
(2) To the extent permitted by law, Stockholder will indemnify
and hold harmless NetObjects, each of its directors, each of its officers who
has signed the Registration Statement, each person, if any, who controls
NetObjects within the meaning of the Act, any other shareholder selling
securities in the Registration Statement and any controlling person of any such
other shareholder, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
Act, or the Exchange Act, or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
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written information furnished by Stockholder expressly for use in connection
with such registration; and Stockholder will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be indemnified
pursuant to this subsection (2), in connection with investigating or defending
any such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection (2) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Stockholder, which consent
shall not be unreasonably withheld; and provided, that, in no event shall any
indemnity obligation under this subsection (2) (together with any obligation to
contribute under subsection (4)) exceed the gross proceeds from the offering
received by Stockholder.
(3) Promptly after receipt by an indemnified party under this
Section 7.10(f) of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 7.10(f), deliver
to the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
7.10(f), but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 7.10(f).
(4) If the indemnification provided for in this Section
7.10(f) is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. In no event shall any Stockholder's obligation to
contribute under this subsection (4) (together with any
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obligation to indemnify under subsection (2)) exceed the gross proceeds from the
offering received by such Stockholder.
(5) The obligations of NetObjects and Stockholder under this
Section 7.10(f) shall survive the completion of any offering of Registrable
Securities in the Registration Statement.
7.11 Indemnification of Company Indemnitees.
(a) All rights to indemnification for acts or omissions occurring prior
to the Merger Effective Time in favor of the directors or executive officers of
the Company (the "Company Indemnitees") as provided in the Company's Articles of
Incorporation and Bylaws immediately prior to the Merger Effective Time shall
survive the Merger and shall continue in full force and effect in accordance
with their terms for a period of 5 years after the Merger Effective Time. After
the Merger Effective Time, any Company Indemnitee wishing to claim
indemnification under this Section 7.11, upon learning of any such action, suit,
claim, proceeding or investigation, shall notify the Surviving Company (as such
term is defined in the Merger Agreement) or its successor (the "Indemnitor")
within 30 days thereof; provided, however, that any failure so to notify the
Indemnitor or any obligation to indemnify such Company Indemnitee or of any
other obligation imposed by this Section 7.11 shall not affect such obligations
except to the extent the Indemnitor is prejudiced thereby. The Indemnitor shall
be entitled to assume the defense of any such action, suit, claim, proceeding or
investigation with counsel of its choice, unless in the reasonable opinion of
counsel to the Company Indemnitees there is a conflict between the positions of
the Indemnitor, on the one hand, and the Company Indemnitees, on the other hand,
in which event the Company Indemnitee, together with all other similarly
situated Company Indemnitees in the same proceeding as a group, may retain one
law firm and one local counsel in each applicable jurisdiction to represent them
with respect to such matter, the cost of which shall be borne by the Indemnitor.
Neither the Indemnitor, on the one hand, nor any Company Indemnitee, on the
other hand, may settle any such action, suit, claim, proceeding or investigation
without the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed.
(b) If for a period of 5 years after the Merger Effective Time, the
Indemnitor (i) shall consolidate with or merge into any other corporation or
entity and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) shall transfer all or substantially all of
its properties and assets to any individual, corporation or other entity, then
and in each such case, proper provision shall be made so that the successors and
assigns of the Indemnitor shall assume the obligations of the Indemnitor in this
Section 7.11. If the Surviving Company shall liquidate, dissolve or otherwise
wind up its business, then NetObjects shall indemnify, defend and hold harmless
each Company Indemnitee to the same extent and on the same terms that the
Surviving Company was so obligated pursuant to this Section 7.11.
(c) The agreement of the Indemnitor to indemnify and advance or
reimburse the Company Indemnitees' fees to the Company Indemnitees hereunder and
each of the other provisions of this Section 7.11 shall survive the consummation
of the Merger and the other transactions contemplated by this Agreement and
shall inure to the benefit of and be enforceable by the Company Indemnitees and
their respective heirs, successors and legal representatives for a period of 5
years from the Merger Effective Time. The Company Indemnitees are interested,
and shall be deemed,
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third-party beneficiaries of this Section 7.11 and shall be entitled to enforce
its provisions directly against the Indemnitor.
7.12 Tax Matters. NetObjects and the Company agree to report the Merger
as a tax-free reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code and neither NetObjects nor the Company shall take any
action prior to or following the Closing that would cause this Merger to fail to
qualify as a "reorganization" within the meaning of Section 368(a) of the Code.
7.13 Continuing Employees. NetObjects agrees that following the Merger
Effective Time: (i) for the purposes of employment plans and arrangements which
NetObjects or the Company may extend to Continuing Employees (as defined below),
NetObjects shall give full credit to each Continuing Employee for such
Continuing Employee's period of service with the Company prior to the Merger
Effective Time to the extent such service was recognized under any comparable
employment plans or arrangements of the Company prior to the Merger Effective
Time; (ii) NetObjects will offer a starting salary not less than such Continuing
Employee's salary as an employee of the Company as in effect immediately prior
to the Merger Effective Time; and (iii) NetObjects shall recognize, and give
each Continuing Employee full credit for, all of the time-off (including, but
not limited to, vacation time and sick-leave) accrued by such Continuing
Employee as an employee of the Company prior to the Merger Effective Time. For
purposes of this Section 7.13, "Continuing Employee" shall mean any employee of
the Company who continues as an employee of NetObjects or the Company or any
subsidiary of NetObjects immediately after the Merger Effective Time. Nothing in
this Section 7.13 shall create any right to employment or continued employment
on behalf of any Continuing Employee.
7.14 Tax Representation Letters. At or prior to the Closing,
NetObjects, Subsidiary and the Company shall execute and deliver to Cooley
Godward, LLP tax representation letters in customary form.
7.15 Stock Option Agreements. Following the Closing, NetObjects and all
holders of Sitematic stock options under the Sitematic 1998 Equity Incentive
Plan who are receiving substitute NetObjects stock options under the NetObjects
1997 Stock Option Plan in accordance with Section 3 of the Merger Agreement,
shall sign a NetObjects Stock Option Agreement in the form attached as Exhibit
G.
Section 8 Miscellaneous
8.1 No Brokers, Finders, Etc.
(a) Company. Neither the Company nor the Stockholders have engaged any
agent, broker, finder or investment or commercial banker in connection with the
negotiation, execution or performance of this Agreement or the transactions
contemplated hereby. The Company and the Stockholders (severally and not
jointly) shall, indemnify, defend and hold NetObjects harmless against and in
respect of any claim for brokerage fees or other commissions incurred or owing
due to any such engagement or alleged engagement , including without limitation,
any fees and expenses of counsel incurred by NetObjects in connection with
enforcing this Section 8.1(a).
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(b) NetObjects. NetObjects has not engaged any agent, broker, finder or
investment or commercial banker in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated hereby.
NetObjects shall indemnify, defend and hold the Company and the Stockholders
harmless against and in respect of any claim for brokerage fees or other
commissions incurred or owing due to any such engagement or alleged engagement,
including without limitation, any fees and expenses of counsel incurred by the
Company and the Stockholders in connection with enforcing this Section 8.1(b).
8.2 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, the Company and NetObjects shall each pay their own
fees and expenses incident to the negotiation, preparation, execution, delivery
and performance hereof, including, without limitation, the fees and expenses of
their respective counsel, accountants and other experts. If the Closing does not
occur, the Stockholders and/or the Company shall bear the Company's portion of
such fees and expenses.
8.3 Complete Agreement; Waiver and Modification, Etc. This Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings of the parties, including, but not limited to, the
Non-Solicitation Agreement between NetObjects and the Company dated August 19,
1999, but excluding the Non-Disclosure Agreement dated July 29, 1999 between
NetObjects and the Company, which shall continue in effect. There are no
representations or warranties by any party except those expressly stated or
provided for herein, any implied warranties being hereby expressly disclaimed.
There are no covenants or conditions except those expressly stated herein. No
amendment, supplement or termination of or to this Agreement, and no waiver of
any of the provisions hereof, shall be binding on a party unless made in a
writing signed by such party. This Agreement may be modified by mutual agreement
of the parties as authorized by their respective boards of directors,
notwithstanding approval hereof and thereof by the stockholders of the parties,
subject to the limitations stated in Section 1104 of the California Corporations
Code. Nothing in this Agreement shall be construed to give any Person other than
the express parties hereto any rights or remedies.
8.4 Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and shall be given by delivery (by
mail or otherwise) or transmitted to the address or facsimile number listed
below, and will be effective (in all cases) upon receipt. Without limiting the
generality of the foregoing, a mail, express, messenger or other receipt signed
by any Person at such address shall conclusively evidence delivery to and
receipt at such address, and any printout showing successful facsimile
transmission of the correct total pages to the correct facsimile number shall
conclusively evidence transmission to and receipt at such facsimile number.
(a) If to NetObjects or Subsidiary:
301 Galveston Drive
Redwood City, CA 94063
facsimile: 650-482-3600
with copies to:
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McCutchen, Doyle, Brown & Enersen, LLP
3150 Porter Drive
Palo Alto, CA 94304
Attention: Bartley C. Deamer
(b) If to the Company:
10350 Science Center Drive
San Diego, CA 92121-1194
facsimile: 619-455-2093
with copies to:
Cooley Godward LLP
4365 Executive Drive, Suite 1100
San Diego, CA 92121
attention: Frederick T. Muto
(b) If to the Stockholders:
Peter Shaw
c/o Sitematic Corporation
10350 Science Center Drive
San Diego, CA 92121-1194
facsimile: 619-455-2093
Any party may change its address or facsimile number for purposes of this
Section 8.4 by giving the other party written notice of the new address or
facsimile number in accordance with this Section 8.4, provided it is a normal
street address, or normal operating facsimile number, in the continental United
States.
8.5 Law Governing. This Agreement shall be interpreted in accordance
with and governed by the laws of the State of California, without regard to
principles of conflicts of laws.
8.6 Headings; References; "Hereof," Etc. The Section headings in this
Agreement are provided for convenience only, and shall not be considered in the
interpretation hereof. References herein to Sections, Exhibits or Schedules
refer, unless otherwise specified, to the designated Section of or Exhibit or
Schedule to this Agreement. Terms such as "herein," "hereto" and "hereof" refer
to this Agreement as a whole.
8.7 Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the heirs, executors, administrators and successors of
the parties hereto, but no right or liability or obligation arising hereunder
may be assigned by any party hereto.
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8.8 Counterparts, Separate Signature Pages. This Agreement may be
executed in any number of counterparts, or using separate signature pages. Each
such executed counterpart and each counterpart to which such signature pages are
attached shall be deemed to be an original instrument, but all such counterparts
together shall constitute one and the same instrument.
8.9 Severability. In the event any of the provisions of this Agreement
shall be declared by a court or arbitrator to be void or unenforceable, then
such provision shall be severed from this Agreement without affecting the
validity and enforceability of any of the other provisions hereof, and the
parties shall negotiate in good faith to replace such unenforceable or void
provisions with a similar clause to achieve, to the extent permitted under law,
the purpose and intent of the provisions declared void and unenforceable.
8.10 Attorneys' Fees. In the event any suit, counterclaim, arbitration
or other proceeding is brought to enforce or interpret the provisions of this
Agreement, the prevailing side (NetObjects, on the one hand, and the Company
and/or the Stockholders on the other hand) shall be entitled to recover from the
nonprevailing side, in addition to all other remedies available at equity and
law, the cost, including but not limited to reasonable attorneys' fees, incurred
by the prevailing side therein, including any appeal or other subsequent
proceeding. A side shall be considered to prevail if it secures a more favorable
result than the other side (who shall be considered the nonprevailing party), as
determined by the arbitrator or judge.
Section 9 Glossary
Act - the Securities Act of 1933, as amended.
Affiliate - a Person who controls, is controlled by or is under common
control with another Person, or who directly or indirectly owns 10% or more of
the voting power in such other Person, or of whose voting power such other
Person (or a Person holding 10% or more of the voting power in such other
Person) owns 10% or more. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
Agreement - this Plan and Agreement of Reorganization, including the
Exhibits and Schedules hereto.
Benefit Plans - Section 3.10(b).
Business - introductory paragraphs.
Closing - Section 1.1.
Code - the Internal Revenue Code of 1986, as amended.
Common Stock - the Common Stock of the Company.
Company - introductory paragraphs.
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Company ERISA Plan - Section 3.10(d).
Company Indemnitees - Section 7.11(a).
Company SEC Documents - Section 4.3.
Continuing Employee - Section 6.9.
Contract - any agreement, written or oral, or any promissory note or
other instrument of a contractual nature, which is intended to be enforceable
against the Person in question or against any Property of such Person. Any
Person which is, or any of whose Property is, subject to enforcement of a
Contract shall, for purposes of this Agreement, be deemed a party to it.
Damages - any loss, loss in value, cost, liability or expense actually
incurred, including without limitation, costs and expenses of litigation and
reasonable attorneys' fees, but excluding in each case incidental, consequential
or punitive damages. (The foregoing exclusion of punitive damages does not
apply, however, to any punitive damages awarded in a Third-Party Claim.) All
Damages shall be net of (i) any applicable insurance recovery (net of any
retrospective premium adjustment), (ii) any related net realized tax benefit
(taking any applicable recovery into account), (iii) any related refund or
recovery realized by NetObjects, (iv) any related reserve included in the
Interim Statements, and (v) any other reserve (whether or not related to the
Damages in question) included in the Interim Statements, to the extent that, at
the time of determination of Damages under this Agreement, such other reserve
has proved to be in excess of the Company's actual losses or liabilities
reserved against (provided, that such other reserves shall thereafter be reduced
by the excess thus utilized for netting).
Derivative Work - Section 3.17(l).
Disclosable Contract - Section 3.11.
Disclosable Leases - Section 3.7.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute.
ERISA Affiliate - any company which, as of the relevant measuring date
under ERISA, is or was a member of a controlled group of corporations or trades
or businesses (as defined in Sections 414(b), (c), (m) or (o) of the Code) of
which the Company is or was a member.
Escrow Account - the Property held by the escrow agent under the Escrow
Agreement.
Escrow Agreement - Section 1.5(a).
Financial Statements - Section 3.2(a).
GAAP - generally accepted accounting principles applied on a consistent
basis, as set forth in authoritative pronouncements which are applicable to the
circumstances as of the date in question. The requirement that such principles
be applied on a "consistent basis" means that accounting
35
<PAGE>
principles observed in the period in question are comparable in all material
respects to those applied in the preceding periods, except as change is
permitted or required under or pursuant to such accounting principles.
Governmental Agency - any agency, department, board, commission,
district or other public organ, whether federal, state, local or foreign.
Hazardous Material - all or any of the following: (i) any substance the
presence of which requires investigation or remediation under any applicable law
or regulation; (ii) substances that are defined or listed in, or otherwise
classified pursuant to, any applicable laws or regulations as "hazardous
substances," "hazardous materials," "hazardous wastes," "toxic substances," or
any other formulation intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity or "EP toxicity;" (iii) any petroleum
products, explosives or radioactive materials; and (iv) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty parts per million.
Holders - Section 7.10(a).
Holders' Agent - Section 1.5(a).
HSR Act - the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended, and all regulations issued thereunder.
Indemnitor - Section 7.11(a).
Intellectual Property - Section 3.17(a).
Interim Statements - Section 3.2(a).
Knowledge - with respect to the Company shall mean the knowledge, as of
the time the applicable representation or warranty is made, of Keith
Cruickshank, Peter Shaw, Robert Kibble, David Titus, Warren Weiner or the
Company's Director of Human Resources.
Last Escrow Claim Date - the same numerical day in the month as the
numerical day on which the Closing occurs, in the 12th month following the month
in which the Closing occurs. If there is no corresponding numerical day in such
12th month, the Last Escrow Claim Date will be the first day of the 13th month
following the month in which the Closing occurs.
Last Fiscal Year-End - Section 3.2(a).
Legal Requirement - a statute, regulation, ordinance or similar legal
requirement, whether federal, state, local or foreign, or any requirement of a
permit or other authorization issued by a Governmental Agency.
Lien - any lien, security interest, mortgage, deed of trust, pledge,
hypothecation, capitalized lease or interest or right for security purposes.
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<PAGE>
Material Adverse Effect - a violation or other matter will be deemed to
have a "Material Adverse Effect" on the Company if such violation or other
matter (considered together with all other matters that would constitute
exceptions to the representations and warranties set forth in the Agreement or
in the Stockholders' Closing Certificate but for the presence of "Material
Adverse Effect" or other materiality qualifications, or any similar
qualifications, in such representations and warranties) would have a material
adverse effect on the Company's business, condition, assets, liabilities,
operations, financial performance or prospects.
Merger Agreement - Section 1.2.
Merger Effective Time - Section 1.2.
Minor Contract - any Contract that is not a Partner Contract and that
involves no more than $5,000 in annual payments due or owed under its terms.
Minor License - any license, without limitation including any freeware,
shareware and opensource license, that is immaterial and can be easily replaced
in the ordinary course of business without liability in excess of $5,000.
NetObjects - introductory paragraphs.
NetObjects Stock - the restricted shares of NetObjects common stock
into which Sitematic Shares will be converted pursuant to the Merger.
Order - any judgment, injunction, order or similar mandatory direction
of, or stipulation or agreement filed with, a Governmental Agency, court,
judicial body, arbitrator or arbitral body.
Partner Contract - any Contract identified on Schedule 3.17 as a
"Partner Contract".
Permit - a permit, license, franchise, certificate of authority or
similar instrument issued by a Governmental Agency.
Person - an individual, or a corporation, partnership, limited
liability company, trust, association or other entity of any nature, or a
Governmental Agency.
Preferred Stock - the Series A Preferred Stock of the Company.
Property - any interest in any real, personal or mixed property,
whether tangible or intangible.
Recoverable Amount - Section 7.2(b).
Registrable Securities - Section 7.10(a).
Registration Statement - Section 7.10(a).
SEC - the Securities and Exchange Commission.
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<PAGE>
Stock Right - any right (including without limitation any option or
warrant or subscription right) to acquire any capital stock or any other Stock
Right or any instrument convertible into or exchangeable for any capital stock
or any other Stock Right.
Stockholders - introductory paragraphs.
Strategic Transaction - Section 7.7.
Subsidiary - introductory paragraphs.
Tax - any federal, state, local or foreign tax, assessment, duty, fee
and other governmental charge or imposition of any kind, whether measured by
properties, assets, wages, payroll, purchases, value added, payments, sales,
use, business, capital stock, surplus or income, and any addition, interest,
penalty, deficiency imposed with respect to any Tax.
Third-Party Action - any consent, waiver, approval, license or other
authorization of, or notice to, or filing with, any other Person, whether or not
a Governmental Agency, and the expiration of any associated mandatory waiting
period.
Third-Party Claim - Section 7.3(b).
Third-Party Right - any Lien on any Property of the Person in question,
or any right (other than the rights of NetObjects hereunder) (i) to acquire,
lease, use, dispose of, vote or exercise any right or power conferred by any
Property of such Person, or (ii) restricting the Person's right to lease, use,
dispose of, vote or exercise any right or power conferred by any Property of
such Person.
Violation - Section 7.10(f)(1).
Year-End Statements - Section 3.2(a).
[remainder of page left blank intentionally]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Plan and Agreement
of Reorganization.
NetObjects: NETOBJECTS, INC.
By:________________________________
Name:____________________________
Title:___________________________
Subsidiary: SDI ACQUISITION CORP.
By:________________________________
Name:____________________________
Title:___________________________
Company: SITEMATIC CORPORATION
By:________________________________
Name:____________________________
Title:___________________________
Stockholders:
______________________________________
Keith Cruickshank
PETER J. SHAW & ELAINE R. SHAW FAMILY TRUST
By:__________________________________
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<PAGE>
Name: ________________________________
Title: _______________________________
JEREMY ANDREW SHAW MINORS TRUST
By:__________________________________
Name: ________________________________
Title: _______________________________
JENNIFER LYNN SHAW MINORS TRUST
By:__________________________________
Name: ________________________________
Title: _______________________________
_____________________________________
James R. Goode
_____________________________________
Joel T. Grushkin
THE TOWNSEND AGENCY
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<PAGE>
By:__________________________________
Name: ________________________________
Title: _______________________________
DHR INTERNATIONAL
By:__________________________________
Name: ________________________________
Title: _______________________________
_____________________________________
Lee Sharp
_____________________________________
Chuck Kimmel
_____________________________________
Jeff Phillips
MISSION VENTURES, L.P.
By:__________________________________
Name: ________________________________
41
<PAGE>
Title: _______________________________
MISSION VENTURES AFFILIATES, LP
By:__________________________________
Name: ________________________________
Title: _______________________________
WINDWARD VENTURES, LP
By:__________________________________
Name: ________________________________
Title: _______________________________
_____________________________________
Donald Cruickshank
_____________________________________
Warren Weiner
GC&H INVESTMENTS
By:__________________________________
Name: ________________________________
Title: _______________________________
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<PAGE>
_____________________________________
Mason Flemming
_____________________________________
Roy Lessard
_____________________________________
Gary Shields
DOMINION VENTURES
By:__________________________________
Name: _______________________________
Title: ______________________________
ACCEPTANCE:
The undersigned hereby accepts
appointment as the Holders' Agent, as
defined in this Agreement.
_____________________________________
_____________________________________
43
<PAGE>
Peter Shaw
Exhibits
A Merger Agreement
B Escrow Agreement
C Releases
D Noncompetition Agreement
E Opinion of Company's Counsel
F Opinion of NetObjects' Counsel
G Stock Option Agreement for Substituted Options
Schedules
Attached
44
<PAGE>
Exhibit C
Merger Agreement
This Merger Agreement (this "Merger Agreement") dated October __, 1999
is entered into by NetObjects, Inc., a Delaware corporation ("NetObjects"), SDI
Acquisition Corp., a California corporation and wholly owned subsidiary of
NetObjects ("Subsidiary"), and Sitematic Corporation, a California corporation
(the "Company").
The Company desires to merge with Subsidiary, and NetObjects and
Subsidiary desire to have Subsidiary merged into the Company (the "Merger"), on
the terms and conditions set forth herein and in the Plan and Agreement of
Reorganization dated the date hereof among the parties to this Merger Agreement
and the stockholders of the Company setting forth certain representations and
warranties, covenants and conditions in connection with the Merger (the "Plan
and Agreement").
Section 1. Merger
1.1 Merger. Upon the filing of this Merger Agreement with the
California Secretary of State in accordance with California law (the "Merger
Effective Time"), Subsidiary shall be merged with and into the Company and the
separate corporate existence of Subsidiary shall cease. The Company shall be the
surviving company in the Merger (the "Surviving Company") and the separate
corporate existence of the Company, with all its purposes, objects, rights,
privileges, powers, immunities and franchises, shall continue unaffected and
unimpaired by the Merger.
1.2 Articles of Incorporation. At the Merger Effective Time, the
Articles of Incorporation of the Company shall be the Articles of Incorporation
of the Surviving Company, subject always to the right of the Company to amend
its Articles of Incorporation after the Merger Effective Time in accordance with
the laws of the State of California, and shall not be amended by virtue of the
Merger.
1.3 By-Laws. At the Merger Effective Time, the Bylaws of the Subsidiary
shall be the Bylaws of the Surviving Company and shall not be amended by the
Merger.
1.4 Directors and Officers. At the Merger Effective Time, the directors
of Subsidiary immediately prior to the Merger Effective Time shall become the
directors of the Surviving Company, and the officers of the Company immediately
prior to the Merger Effective Time shall remain as the officers of the Surviving
Company, in each case until their successors have been elected and qualified or
until otherwise provided by law
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<PAGE>
Section 2. Effects on Capital Stock.
2.1 Company Shares Owned by Company or NetObjects. At the Merger
Effective Time, all of the shares of capital stock of the Company ("Shares")
that are owned directly or indirectly by the Company or any subsidiary of the
Company and any Shares owned by NetObjects, Subsidiary or any other subsidiary
of NetObjects shall be canceled and no NetObjects Stock or any other
consideration shall be delivered therefor.
2.2 Other Company Common Shares. At the Merger Effective Time, all of
the shares of Common Stock of the Company ("Common Shares"), other than those
referred to in Section 2.1, shall be converted into 0.135870 share of NetObjects
common stock, $0.01 par value ("NetObjects Stock"), subject, however, to Section
2.6.
2.3 Other Company Preferred Shares. At the Merger Effective Time, all
of the shares of Series A Preferred Stock of the Company ("Preferred Shares"),
other than those referred to in Section 2.1, shall be converted into 0.112482
share of NetObjects Stock and the right to receive, in accordance with this
Merger Agreement, $0.189523 in cash, subject, however, to Section 2.6.
2.4 Common Stock of Subsidiary. At the Merger Effective Time, all of
the outstanding shares of capital stock of Subsidiary shall be converted into an
equal number of Common Shares.
2.5 Fractional Shares. NetObjects shall not be required to issue or
deliver any fractional shares of NetObjects Stock or any certificates
representing fractional shares of NetObjects Stock for certificates representing
the Shares; however, NetObjects shall pay to each person who would otherwise be
entitled to receive a certificate representing a fractional share of NetObjects
Stock an amount in cash (rounded to the nearest whole cent) equal to the per
share value of NetObjects Stock (based on the last sales price of NetObjects
Stock as reported on Nasdaq on the Merger Effective Time) multiplied by the
fraction of a share of NetObjects Stock to which such Stockholder would
otherwise be entitled.
2.6 Escrow Deposit. Notwithstanding anything in this Section 2, a
number of shares of NetObjects Stock equal to (i) one-tenth of the number of
shares of NetObjects Stock into which the Shares held by each stockholder of the
Company (a "Stockholder") shall be converted by virtue of the Merger plus (ii)
one-tenth of the number determined by dividing (x) the amount of cash which each
Stockholder is entitled to receive by virtue of the Merger, if any, by (y) the
average closing price of NetObjects Stock determined in accordance with Article
III.B.2(e)(ii)(A)(1) of the Company's articles of incorporation, rounded up (if
a fractional share amount) to the next highest whole number of shares, shall be
subject to the escrow agreement dated the date hereof in the form attached to
the Plan and Agreement (the "Escrow Agreement"). Certificates representing such
NetObjects Stock shall be delivered to the escrow agent under the Escrow
Agreement (the "Escrow Agent") rather than such Stockholder.
Section 3. Company Stock Options
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<PAGE>
At the Merger Effective Time, there shall be substituted for each
option to acquire Common Shares then outstanding under the Sitematic 1998 Equity
Incentive Plan (the "Sitematic Option Plan") an option under the NetObjects 1997
Stock Option Plan (the "NetObjects Option Plan") to acquire a number of shares
of NetObjects Stock equal to the number of Common Shares subject to such option
under the Sitematic Option Plan immediately prior to the Merger Effective Time
multiplied by 0.135870, rounded down to the nearest whole number of shares of
NetObjects Stock. The per share exercise price for the NetObjects stock issuable
upon exercise of each substituted option shall be determined by dividing the
exercise price per share of the Common Stock subject to the option, as in effect
immediately prior to the Merger Effective Time, by 0.135870, and rounding the
resulting exercise price up to the nearest whole cent. For purpose of the
vesting provisions of the NetObjects Option Plan, the period of required
time-based vesting, and the commencement date of the actual vesting period,
applicable to options under the Sitematic Option Plan will also be applicable
(without any acceleration on account of the Merger) to the options under the
NetObjects Option Plan substituted therefor. Promptly after the Merger Effective
Time, NetObjects and such holders shall enter into option agreements reflecting
the terms of such options issued in substitution.
Section 4. Surrender of Certificates
4.1 Certificate Surrender Required. Notwithstanding any other provision
of this Merger Agreement, no certificate for NetObjects Stock and no cash amount
otherwise payable to a Stockholder who has not theretofore surrendered its, his
or her certificates formerly evidencing the Shares registered in its, his or her
name shall be issued or paid until the surrender of such certificates to
NetObjects, in which case it will be paid to such holder. Until properly
surrendered, certificates formerly evidencing the Shares shall be deemed for all
purposes to evidence only the shares of NetObjects Stock into which such Shares
were converted by virtue of the Merger and the right to receive the payments
specified in Section 3. No interest shall accrue after the Merger Effective Time
or be paid on any cash payment upon surrender of certificates which immediately
prior to the Merger Effective Time represented the Shares.
4.2 Notice. As soon as practicable after the Merger Effective Time, the
Company shall notify each Stockholder who has not already surrendered all its,
his or her certificates formerly evidencing the Shares registered in its, his or
her name, that the Merger has become effective and that such certificates may be
surrendered to the Company in order to receive certificates representing the
NetObjects Shares into which such Shares were converted by virtue of the Merger
and the amounts then payable to such holder in accordance with this Merger
Agreement.
4.3 Nonregistered Certificate Holders. If any part of the NetObjects
Stock or right to receive cash issuable or payable to a Stockholder is to be
issued or paid to a person other than the person in whose name the certificates
surrendered in exchange therefor are registered, it shall be a condition to such
issuance or payment that the certificate so surrendered shall be properly
endorsed or accompanied by appropriate stock powers and otherwise in proper form
for transfer, that such transfer otherwise be proper and that the person
requesting such transfer pay to the Company any transfer or other taxes payable
by reason of the foregoing or establish to the satisfaction of the Company that
such taxes have been paid or are not required to be paid.
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<PAGE>
4.4 Lost, Stolen or Destroyed Certificates. In the event any
certificate formerly representing the Shares shall have been lost, stolen or
destroyed, upon the making of any affidavit of that fact by the registered
holder thereof or his duly authorized attorney-in-fact, NetObjects shall issue
the certificate for NetObjects Stock and pay the cash amount to which such
Shares are then entitled by virtue of the Merger, provided that NetObjects may,
in its discretion and as a condition precedent to such issuance and payment,
require the owner of such lost, stolen or destroyed certificate to give
NetObjects and the Company a bond in such sum as it may direct as indemnity
against any claim that may be made against NetObjects or the Company with
respect to the certificate alleged to have been lost, stolen or destroyed.
Section 5. Miscellaneous
5.1 Other Agreements Superseded; Waiver and Modification, Etc. This
Merger Agreement, together with the Plan and Agreement, supersedes all prior
agreements or understandings, written or oral, of the Company and NetObjects and
Subsidiary relating to the acquisition of the Company or its business and
incorporates the entire understanding of the parties with respect thereto. The
parties to this Merger Agreement make no representations or warranties with
respect to any matter, except as expressly set forth in the Plan and Agreement.
The Merger Agreement may be amended or supplemented only by a written instrument
signed by the party against whom the amendment or supplement is sought to be
enforced. The party benefited by any condition or obligation may waive the same,
but such waiver shall not be enforceable by another party unless made by written
instrument signed by the waiving party and only to the extent expressly stated
therein.
5.2 Interpretation. The headings used in this Merger Agreement are
provided for convenience only and this Merger Agreement shall be interpreted as
though they did not appear herein. References in this Merger Agreement to
sections refer, unless otherwise specified, to the designated section of this
Merger Agreement.
5.3 Law Governing. This Merger Agreement shall be construed in
accordance with and governed by the laws of the State of California applicable
to contracts made and to be performed in California.
5.4 Time of Essence. Time is of the essence of this Merger Agreement
and all of the terms, conditions and provisions hereof.
5.5 Counterparts. This Merger Agreement may be executed in any number
of counterparts and each such executed counterpart shall be deemed to be an
original instrument, but all such executed counterparts together shall
constitute one and the same instrument. One party may execute one or more
counterparts other than that or those executed by another party, without thereby
affecting the effectiveness of any such signatures.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement.
Company: SITEMATIC CORPORATION
By _______________________________________
_____________________________________Name:
____________________________________Title:
By _______________________________________
_____________________________________Name:
____________________________________Title:
NetObjects: NETOBJECTS, INC.
By _______________________________________
_____________________________________Name:
____________________________________Title:
By _______________________________________
_____________________________________Name:
____________________________________Title:
Subsidiary: SDI ACQUISITION CORP.
By _______________________________________
_____________________________________Name:
____________________________________Title:
By _______________________________________
_____________________________________Name:
____________________________________Title:
49
