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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
and
SCHEDULE 13D
Under the Securities Exchange Act of 1934
GO2NET, INC.
(Name of Subject Company)
VULCAN VENTURES INCORPORATED
(Bidder)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of class of securities)
383586 10 7
(CUSIP number of class of securities)
WILLIAM D. SAVOY
Vulcan Ventures Incorporated
110-110th Avenue N.E., Suite 550
Bellevue, Washington 98004
(206) 453-1960
(Name, address and telephone number of person authorized to
receive notices and communications on behalf of bidder)
WITH A COPY TO:
Alvin G. Segel, Esq.
Irell & Manella LLP
1800 Avenue Of The Stars, Suite 900
Los Angeles, California 90067
(310) 277-1010
Calculation of Filing Fee
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Transaction Amount of
valuation* filing fee**
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$323,701,920 $64,740
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* For purposes of calculating the filing fee only. This calculation assumes
the purchase of 3,596,688 shares of Common Stock, $.01 par value per
share, of Go2Net, Inc. at $90.00 net per share in cash.
** The amount of the filing fee, calculated in accordance with Rule 0-11(d) of
the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the aggregate value of cash offered by Vulcan Ventures
Incorporated for such number of shares.
Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: Not applicable.
Filing Party: Not applicable.
Form or Registration No.: Not applicable.
Date Filed: Not applicable.
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CUSIP NO. 383586 10 7 14D-1 Page of Pages
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1. NAMES OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Vulcan Ventures Incorporated
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
[ ] (a)
[ ] (b)
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3. SEC USE ONLY
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4. SOURCES OF FUNDS (SEE INSTRUCTIONS)
AF, WC, BK
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5. [ ] CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(e) or 2(f)
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Washington
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,553,762 Shares (See Introduction and Section 11 of the Offer to Purchase
dated March 19, 1999 filed as Exhibit (a)(1) hereto)*
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8. [ ] CHECK IF THE AGGREGATE AMOUNT IN ROW 7 EXCLUDES CERTAIN SHARES*
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 7
16.6%*
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10. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
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* Prior to the execution of the agreement described below, Vulcan Northwest
(the "Purchaser") beneficially owned 20,000 shares of the common stock, $.01
par value per share (the "Common Stock"), of Go2Net, Inc.. (the "Company"),
which represented less than one percent (1%) of the outstanding shares of
Common Stock. On March 15, 1999, the Purchaser and the Company entered into
a Stock Purchase Agreement (the "Stock Purchase Agreement") pursuant to
which the Purchaser purchased 167,507 newly issued
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shares of Series A Convertible Preferred Stock (the "Series A Preferred
Stock") for $1,000 per share (the "First Issuance Preferred Shares") and
agreed to commence an offer to purchase up to 3,596,688 shares of Common
Stock for $90.00 per share from the Company's stockholders (the "Offer").
The Purchaser has also agreed to purchase 132,493 additional shares of
Series A Preferred Stock (the "Second Issuance Preferred Shares" and
together with the First Issuance Preferred Shares, the "New Issue Preferred
Shares") for $1,000 per share. Upon consummation of the transactions
contemplated by the Stock Purchase Agreement, including the Offer and the
purchase of shares of Common Stock from the Company's directors, including
three directors who are also executive officers, the Purchaser will
beneficially own approximately 55% of the total number of shares of the
Company's Common Stock then outstanding (assuming conversion into Common
Stock of the New Issue Preferred Shares, and assuming that no other shares
of Common Stock are issued). The Stock Purchase Agreement is more fully
described in Section 14 of the Offer to Purchase, which is attached hereto
as Exhibit (a)(1).
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This statement relates to the offer by Vulcan Ventures Incorporated, a
Washington corporation (the "Purchaser"), to purchase up to 3,596,688 shares of
the outstanding Common Stock, par value $.01 per share (the "Common Stock"), of
Go2Net, Inc., a Delaware corporation (the "Company") (shares of Common Stock
being referred to as the "Shares"), upon the terms and subject to the conditions
set forth in the Offer to Purchase dated March 19, 1999 and in the related
Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer"), at the purchase price of $ 90.00 per share,
net to the tendering stockholder in cash.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Go2Net, Inc., a Delaware
corporation, and the address of its principal executive offices is 999
Third Avenue, Suite 4700, Seattle, Washington 98104.
(b) The securities to which this statement relates are the Shares. The
information set forth in the Introduction and Section 1 ("Terms of the
Offer; Extension of Tender Period; Termination; Amendments") of the
Offer to Purchase annexed hereto as Exhibit (a)(1) (the "Offer to
Purchase") is incorporated herein by reference.
(c) The information set forth in Section 7 ("Price Range of the Common
Stock") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) The Purchaser is incorporated under the laws of the State
of Washington. The information set forth in Section 11
("Certain Information Concerning the Purchaser") of the
Offer to Purchase is incorporated herein by reference. The
name, business address, present principal occupation or
employment, the material occupations, positions, offices or
employments for the past five years and citizenship of each
executive officer and director of the Purchaser, each
person controlling the Purchaser, and the name, principal
business and address of any corporation or other
organization in which such occupations, positions, offices
and employments are or were carried on are set forth in
Annex A to the Offer to Purchase and incorporated herein by
reference.
(e); (f) During the last five years, neither the Purchaser nor, to
the best of the Purchaser's knowledge, any of the executive
officers or directors of the Purchaser or any controlling
person of the Purchaser has been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors) or was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction
as a result of which any such person was or is subject to a
judgment, decree or final order enjoining future violations
of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such law.
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ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction and Section 13
("Contacts with the Company; Background of the Offer") of the
Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 12 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by
reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
The information set forth in the Introduction and Sections 8 ("Possible
Effects of the Offer on the Market for Common Stock; Stock Quotation;
Registration Under the Exchange Act"), 9 ("Dividends and Distribution") and 14
("Purpose of the Offer; Plans for the Company -- Stock Purchase Agreement;
Management Stock Agreements; Certificate of Designation; Registration Rights
Agreement") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction, Section 11 and
Annex A of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Sections 11 ("Certain
Information Concerning the Purchaser"), 13 ("Contacts with the Company;
Background of the Offer") and 14 ("Purpose of the Offer; Plans for the Company--
Stock Purchase Agreement; Management Stock Agreements; Certificate of
Designation; Registration Rights Agreement") of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 16 ("Fees and Expenses") of the Offer
to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
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ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) The information set forth in Section 15 ("Certain Legal Matters")
of the Offer to Purchase is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Offer to Purchase, dated March 19, 1999.
(2) Letter of Transmittal.
(3) Letter, dated March 19, 1999, from the Dealer Manager to
brokers, dealers, commercial banks, trust companies and nominees
(4) Letter, dated March 19, 1999, to be sent by brokers, dealers,
commercial banks, trust companies and nominees to their clients.
(5) Notice of Guaranteed Delivery.
(6) IRS Guidelines to Substitute Form W-9.
(7) Press Release, dated March 15, 1999.
(8) Summary newspaper advertisement, dated March 19, 1999
(b) (1) Customer Agreement, between Alex Brown & Sons Incorporated (now
BT Alex. Brown Incorporated) and Paul G. Allen
(c) (1) Stock Purchase Agreement, dated March 15, 1999, between the
Purchaser and the Company.
(c) (2) Form of Stock Purchase and Voting Agreement, dated March 15,
1999 between the Purchaser and each non-executive officer
director of the Company
(c) (3) Form of Stock Purchase and Voting Agreement, dated March 15,
1999 between the Purchaser and each executive officer director
of the Company
(c) (4) Certificate of Designation of Series A Convertible Preferred
Stock of the Company.
(c) (5) Registration Rights Agreement, dated March 15, 1999, between the
Purchaser and the Company.
(d) Not applicable.
(e) Not applicable.
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(f) Not applicable.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: March 19, 1999
VULCAN VENTURES INCORPORATED
By: /s/ William D. Savoy
-------------------------
Name: William D. Savoy
Title: Vice President
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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(a) (1) Offer to Purchase, dated March 19, 1999.
(2) Letter of Transmittal, dated March 19, 1999.
(3) Letter, dated March 19, 1999, from the Dealer Manager to
brokers, dealers, commercial banks, trust companies and
nominees
(4) Letter, dated March 19, 1999, to be sent by brokers, dealers,
commercial banks, trust companies and nominees to their
clients.
(5) Notice of Guaranteed Delivery.
(6) IRS Guidelines to Substitute Form W-9.
(7) Press Release, dated March 15, 1999.
(8) Summary newspaper advertisement, dated March 19, 1999
(b) (1) Customer Agreement, between Alex. Brown & Sons Incorporated
(now BT Alex. Brown Incorporated) and Paul G. Allen
(c) (1) Stock Purchase Agreement, dated March 15, 1999, between the
Purchaser and the Company.
(c) (2) Form of Stock Purchase and Voting Agreement, dated March 15,
1999 between the Purchaser and each non-executive officer
director of the Company
(c) (3) Form of Stock Purchase and Voting Agreement, dated March 15,
1999 between the Purchaser and each executive officer director
of the Company
(c) (4) Certificate of Designation of Series A Convertible Preferred
Stock of the Company.
(c) (5) Registration Rights Agreement, dated March 15, 1999, between
the Purchaser and the Company.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable
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<PAGE>
EXHIBIT 99(a)(1)
Offer to Purchase for Cash
up to 3,596,688 Shares of Common Stock
Of
Go2Net, Inc.
At
$90.00 Net Per Share
By
Vulcan Ventures Incorporated
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THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 15, 1999, UNLESS THE OFFER IS
EXTENDED.
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THE OFFER IS BEING MADE PURSUANT TO THE TERMS OF A STOCK PURCHASE AGREEMENT
DATED MARCH 15, 1999 (THE "STOCK PURCHASE AGREEMENT") BY AND BETWEEN GO2NET,
INC., A DELAWARE CORPORATION (THE "COMPANY"), AND VULCAN VENTURES
INCORPORATED, A WASHINGTON CORPORATION (THE "PURCHASER"). UPON CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED BY THE STOCK PURCHASE AGREEMENT, INCLUDING THE
OFFER AND THE PURCHASE OF SHARES OF COMMON STOCK FROM THE COMPANY'S DIRECTORS,
INCLUDING THREE DIRECTORS WHO ARE ALSO EXECUTIVE OFFICERS (THE "MANAGEMENT
STOCK PURCHASES"), THE PURCHASER WILL BENEFICIALLY OWN APPROXIMATELY 55% OF
THE TOTAL NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK THEN OUTSTANDING
(ASSUMING CONVERSION INTO COMMON STOCK OF ALL SHARES OF SERIES A CONVERTIBLE
PREFERRED STOCK (THE "SERIES A PREFERRED STOCK") PURCHASED OR TO BE PURCHASED
(THE "PREFERRED STOCK ACQUISITIONS") BY THE PURCHASER PURSUANT TO THE STOCK
PURCHASE AGREEMENT, AND ASSUMING THAT NO OTHER SHARES OF COMMON STOCK ARE
ISSUED). FOLLOWING CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THE STOCK
PURCHASE AGREEMENT, THE PURCHASER'S DESIGNEES WILL CONSTITUTE A MAJORITY OF
THE COMPANY'S BOARD OF DIRECTORS AND THE PURCHASER WILL CONTROL THE COMPANY.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OR WAIVER
OF CERTAIN CONDITIONS, INCLUDING RECEIPT BY THE PURCHASER AND THE COMPANY OF
REGULATORY APPROVALS. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF
SHARES BEING TENDERED. ALTHOUGH THE OFFER IS NOT SUBJECT TO STOCKHOLDER
APPROVAL, STOCKHOLDER APPROVAL WILL BE REQUIRED FOR A PORTION OF THE PREFERRED
STOCK ACQUISITIONS AND FOR THE MANAGEMENT STOCK PURCHASES.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE STOCK
PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER. THE BOARD OF DIRECTORS OF THE COMPANY HAS EXPRESSED NO OPINION,
HOWEVER, AS TO WHETHER STOCKHOLDERS SHOULD ACCEPT THE OFFER AND TENDER THEIR
SHARES HEREUNDER. THE SHARES ARE LISTED FOR TRADING ON THE NASDAQ NATIONAL
MARKET UNDER THE SYMBOL "GNET." SEE SECTION 7.
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IMPORTANT
Any stockholder desiring to tender Shares (as defined herein) should either
(1) complete and sign the Letter of Transmittal, or a facsimile copy thereof,
in accordance with the instructions in the Letter of Transmittal, mail or
deliver it and any other required documents to the Depositary and either
deliver the certificates for such Shares to the Depositary along with the
Letter of Transmittal or tender such Shares pursuant to the procedure for
book-entry transfer set forth in Section 2 of this Offer to Purchase or (2)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for the stockholder. Stockholders
having Shares registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee if they desire to tender such Shares.
A stockholder who desires to tender Shares and whose certificates for Shares
are not immediately available, or who cannot comply with the procedures for
book-entry transfer described in this Offer to Purchase on a timely basis, may
tender such Shares by following the procedure for guaranteed delivery set
forth in Section 2.
Questions and requests for assistance, or for additional copies of this
Offer to Purchase, the Letter of Transmittal or other tender offer materials,
may be directed to the Dealer Manager or the Information Agent at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase. Holders of Shares may also contact brokers, dealers,
commercial banks or trust companies for assistance concerning the Offer.
----------------
The Dealer Manager for the Offer is:
[LOGO OF NATIONSBANC MONTGOMERY SECURITIES]
[NationsBanc Montgomery Securities LLC]
March 19, 1999
ii
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION.............................................................. 2
The Tender Offer
1. Terms Of The Offer; Extension Of Tender Period; Termination;
Amendments........................................................... 5
2. Procedure For Tendering Shares....................................... 6
3. Withdrawal Rights.................................................... 9
4. Acceptance For Payment And Payment Of Purchase Price................. 9
5. Certain Federal Income Tax Consequences.............................. 10
6. Certain Conditions Of The Offer...................................... 11
7. Price Range Of The Common Stock...................................... 13
8. Possible Effects Of The Offer On The Market For Common Stock; Stock
Quotation; Registration Under The Exchange Act....................... 13
9. Dividends And Distributions.......................................... 14
10. Certain Information Concerning The Company........................... 14
11. Certain Information Concerning The Purchaser......................... 16
12. Source And Amount Of Funds........................................... 16
13. Contacts With The Company; Background Of The Offer................... 17
14. Purpose Of The Offer; Stock Purchase Agreement; Management Stock
Agreements; Certificate of Designation; Registration Rights
Agreement............................................................ 18
15. Certain Legal Matters................................................ 26
16. Fees And Expenses.................................................... 28
17. Miscellaneous........................................................ 29
Annex A -- Information Relating to Directors and Executive Officers of the
Purchaser............................................................ 30
</TABLE>
<PAGE>
To All Holders of Common Stock of Go2Net, Inc.:
INTRODUCTION
THE OFFER
Vulcan Ventures Incorporated, a Washington corporation (the "Purchaser"),
hereby offers to purchase up to 3,596,688 shares of Common Stock, par value
$.01 per share (the "Common Stock") (shares of Common Stock being referred to
as the "Shares"), of Go2Net, Inc., a Delaware corporation (the "Company"),
upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"), at the
purchase price of $90.00 per Share (the "Offer Price"), net to the tendering
stockholder in cash. The Offer is being made pursuant to the terms of the
Stock Purchase Agreement dated March 15, 1999 by and between the Company and
the Purchaser (the "Stock Purchase Agreement").
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE STOCK
PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER. THE BOARD OF DIRECTORS OF THE COMPANY HAS EXPRESSED NO OPINION,
HOWEVER, AS TO WHETHER STOCKHOLDERS SHOULD ACCEPT THE OFFER AND TENDER THEIR
SHARES HEREUNDER.
The Offer is conditioned upon, among other things, the satisfaction or
waiver of certain conditions, including receipt by the Purchaser and the
Company of all necessary regulatory approvals. This Offer is not conditioned
on any minimum number of shares being tendered. See Section 6.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WOULD BE MADE ONLY PURSUANT
TO SEPARATE PROXY MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT").
The Offer will expire at 12:00 midnight, New York City time, on Thursday,
April 15, 1999, unless extended.
Upon the terms and subject to the conditions of the Offer, the Purchaser
will purchase up to 3,596,688 Shares, which Shares, together with the maximum
number of shares of Series A Convertible Preferred Stock (the "Series A
Preferred Stock") of the Company that may be purchased by Purchaser under the
Stock Purchase Agreement and the Shares of Common Stock that may be purchased
by Purchaser from certain of the Company's executive officers and directors as
contemplated by the Stock Purchase Agreement, would equal approximately 55% of
the outstanding Shares (assuming conversion of the Series A Preferred Stock
into Shares of Common Stock, and assuming that no other Shares of Common Stock
are issued). If more than 3,596,688 Shares are validly tendered prior to the
expiration of the Offer and not properly withdrawn in accordance with Section
3, such Shares will be accepted for payment on a pro rata basis according to
the number of Shares validly tendered and not properly withdrawn by the
expiration of the Offer (with appropriate adjustments to avoid the purchase of
fractional shares).
Tendering stockholders will not be obligated to pay brokerage commissions,
solicitation fees or, subject to Instruction 6 of the Letter of Transmittal,
stock transfer taxes on the purchase of Shares by the Purchaser pursuant to
the Offer. However, any tendering stockholder or other payee who fails to
complete and sign the Substitute Form W-9 that is included in the Letter of
Transmittal may be subject to a required backup federal income tax withholding
of 31% of the gross proceeds payable to such stockholder or other payee
pursuant to the Offer. See Section 2. The Purchaser will pay all charges and
expenses of NationsBanc Montgomery Securities LLC, as Dealer Manager (in such
capacity, the "Dealer Manager"), IBJ Whitehall Bank & Trust Company, as
Depositary (in such capacity, the "Depositary"), and MacKenzie Partners, Inc.,
as Information Agent (in such capacity, the "Information Agent"), incurred in
connection with the Offer. For a description of the fees and expenses to be
paid by the Purchaser, see Section 16.
2
<PAGE>
THE PURCHASER ACQUISITIONS
Pursuant to the terms of the Stock Purchase Agreement, the Purchaser has
purchased (the "First Preferred Stock Purchase") 167,507 newly issued shares
of Series A Convertible Preferred Stock of the Company (the "Series A
Preferred Stock") for $1,000 per share (the "First Issuance Preferred
Shares"), or an aggregate of $167,507,000, and has agreed to commence the
Offer. The Purchaser has also agreed to purchase (the "Second Preferred Stock
Purchase" and together with the First Preferred Stock Purchase, the "Preferred
Stock Acquisitions") an additional 132,493 shares of Series A Preferred Stock
(the "Second Issuance Preferred Shares" and, together with the First Issuance
Preferred Shares, the "New Issue Preferred Shares") for $1,000 per share, or
an aggregate of $132,493,000. As a result of its acquisition of the First
Issuance Preferred Shares, the Purchaser beneficially owns approximately 16.6%
of the outstanding Shares of Common Stock, assuming conversion of the First
Issuance Preferred Shares into Shares of Common Stock at the initial
conversion price of $66.11 per Share (see Section 14), and assuming that no
other shares of Common Stock are issued.
As an inducement to the Purchaser to enter into this Agreement, each of the
directors of the Company, including three directors who are executive officers
of the Company (the "Management Stockholders"), have entered into agreements
with the Purchaser (the "Management Stock Agreements") pursuant to which,
among other things (i) each Management Stockholder has agreed to sell to the
Purchaser, and the Purchaser has agreed to purchase from him (collectively,
the "Management Stock Purchases"), certain of his shares of the Company's
Common Stock (including certain shares of Common Stock issuable pursuant to
the exercise of vested stock options) aggregating a total of 1,403,312 Shares
of Common Stock (the "Management Shares"), at $90.00 per share, and (ii) each
Management Stockholder has agreed to vote all of his Management Shares in
favor of the issuance to Purchaser of the Second Issuance Preferred Shares and
the Management Stock Purchases. The Second Preferred Stock Purchase and the
Management Stock Purchases are sometimes referred to collectively as the
"Purchaser Acquisitions."
The obligations of the Purchaser and the Company to consummate the Second
Preferred Stock Purchase, and of the Purchaser and the Management Stockholders
to consummate the Management Stock Purchases, are subject to the satisfaction
of certain conditions, including approval by the Company's stockholders. See
Section 14, "Management Stock Agreements."
The Company has informed the Purchaser that as of March 11, 1999 there were
12,732,545 Shares of Common Stock issued and outstanding. Upon consummation of
the Offer, the Preferred Stock Acquisitions and the Management Stock
Purchases, the Purchaser will beneficially own approximately 55% of the total
number of Shares of the Company's Common Stock outstanding (assuming
conversion into Common Stock of the New Issue Preferred Shares and assuming
that no other shares of Common Stock are issued), and the Purchaser's
designees will constitute a majority of the Company's Board of Directors. If
the Offer is not consummated, but the Preferred Stock Acquisitions and the
Management Stock Purchases are consummated, the Purchaser would beneficially
own approximately 34% of the total number of Shares of the Company's Common
Stock then outstanding (assuming conversion of the New Issue Preferred Shares,
and assuming that no other shares of Common Stock are issued), and the
Purchaser's designees will constitute a majority of the Company's Board of
Directors. The Purchaser will also have certain rights to acquire additional
equity securities of the Company in order to maintain its percentage ownership
interest in the Company, subject to certain conditions. See Section 14, "Stock
Purchase Agreement."
Immediately upon expiration or early termination of the waiting period under
the HSR Act (as defined herein) applicable to the transactions contemplated by
the Stock Purchase Agreement, the Purchaser shall be entitled to designate two
directors to serve on the Board of Directors of the Company. The Company
shall, as soon as practicable after such time, take all action necessary to
cause such individuals to be appointed to the Board of Directors and to have
at least one such individual on each committee of the Board of Directors. The
Stock Purchase Agreement also provides that, upon and as a condition to the
consummation of the Second Preferred Share Issuance, the size of the Company's
Board of Directors will be set at five and three individuals
3
<PAGE>
designated by the Purchaser will be included in the slate of nominees the
Company will propose for election to the Board by the Company's stockholders
at a special meeting called, among other things, to approve the Purchaser
Acquisitions, and, if so elected, will constitute a majority of the Board of
Directors.
In addition, the Stock Purchase Agreement provides for the Company and
Charter Communications and Marcus Cable, which are cable company affiliates of
the Purchaser, to enter into negotiations following consummation of the
transactions contemplated by the Stock Purchase Agreement with respect to the
establishment of a distribution or other relationship to offer the Company's
content to their subscribers, but the respective parties will not have any
legal obligation to the other if such a relationship is not established. The
Stock Purchase Agreement further provides, as an inducement to the Purchaser
to enter into the Stock Purchase Agreement, for the Purchaser and certain
related entities to have the right to use up to ten percent of the Company's
unsold advertising inventory in existence from time to time (subject to
certain conditions).
The Series A Preferred Stock has rights, preferences and privileges
designated in the Certificate of Designation of Series A Convertible Preferred
Stock of Go2Net, Inc. (the "Certificate of Designation"). The Certificate of
Designation designates 300,000 shares of the Company's authorized Preferred
Stock, $.01 par value, to constitute the Series A Preferred Stock. Pursuant to
the Certificate of Designation, the Series A Preferred Stock has certain
dividend rights and each share of Series A Preferred Stock is entitled to a
liquidation preference of $1,000 per share (the "Liquidation Preference") in
the event of any voluntary or involuntary liquidation, dissolution or winding
up of the Company, plus declared but unpaid dividends. The Certificate of
Designation also provides that each holder of shares of Series A Preferred
Stock shall have the right to one vote for each share of Common Stock into
which such holder's shares of Series A Preferred Stock could then be converted
and, except as otherwise required by law, shall be entitled to vote with
respect to any question upon which holders of Common Stock have the right to
vote; provided, however, that the shares of Series A Preferred Stock shall not
have any voting power with respect to the election of directors until the
expiration or termination of any applicable waiting periods under the HSR Act.
In addition, after the Second Preferred Stock Purchase and so long as at least
fifty percent of the shares of Series A Preferred Stock remain outstanding,
the Company may not engage in certain actions, including certain mergers and
acquisitions, without the consent of the holders of a majority of the
outstanding shares of Series A Preferred Stock. Subject to compliance with the
HSR Act, each holder of Series A Preferred Stock shall have the right, at its
option, at any time, to convert all or any portion of its Series A Preferred
Stock then outstanding into such number of shares of Common Stock equal to the
result of dividing (i) the sum of (A) the aggregate Liquidation Preference of
all shares of Series A Preferred Stock to be converted plus (B) any declared
but unpaid dividends on such shares, by (ii) the applicable Conversion Price.
The "Conversion Price" shall initially be $66.11 per share of Common Stock,
subject to adjustment from time to time for stock dividends, subdivisions,
reclassifications or combinations and for certain other events. In addition,
shares of Series A Preferred Stock will automatically be converted on the same
basis into shares of Common Stock if (x) a holder transfers such shares to an
unaffiliated party or (y) the Company consummates a transaction which will
result in the transfer of 50% or greater of the voting securities of the
Company to an unrelated party. The Series A Preferred Stock is not redeemable.
See Section 14, "Certificate of Designation."
The Purchaser and the Company have also entered into a Registration Rights
Agreement which grants the Purchaser certain demand and incidental
registration rights for the Series A Preferred Stock. See Section 14,
"Registration Rights Agreement."
Immediately following the consummation of the Offer, the Second Preferred
Stock Purchase and the Management Stock Purchases, the Company will remain a
public company subject to the informational filing requirements of the
Exchange Act, and the Shares are expected to continue to trade on The Nasdaq
National Market ("Nasdaq").
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
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THE TENDER OFFER
1. Terms Of The Offer; Extension Of Tender Period; Termination; Amendments.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and pay for up to
3,596,688 Shares that are validly tendered on or prior to the Expiration Date
and not theretofore withdrawn as provided in Section 3. The term "Expiration
Date" shall mean 12:00 midnight, New York City time, on Thursday, April 15,
1999, unless and until the Purchaser, in its sole discretion (but subject to
the terms of the Stock Purchase Agreement), shall from time to time have
extended the period of time for which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Purchaser, shall expire.
If more than 3,596,688 Shares are validly tendered prior to the Expiration
Date and not properly withdrawn, such Shares will be accepted for payment on a
pro rata basis according to the number of Shares validly tendered and not
properly withdrawn by the Expiration Date (with appropriate adjustments to
avoid the purchase of fractional Shares). In the event that such proration is
required, because of the time required to determine the precise number of
Shares validly tendered and not properly withdrawn, the Purchaser does not
expect to announce the final results of proration or to pay for any Shares
immediately after the Expiration Date. The Purchaser will announce the
preliminary results of proration by press release as soon as practicable
following the Expiration Date, and expects to be able to announce the final
results of proration within eight Nasdaq trading days after the Expiration
Date. Holders of Shares may obtain such preliminary information from the
Depositary or the Information Agent and may be able to obtain such information
from their brokers.
Pursuant to the Stock Purchase Agreement, the Purchaser shall not, without
the prior written consent of the Company, (i) terminate the Offer other than
in accordance with its terms, (ii) extend the Expiration Date to a date later
than August 31, 1999, or (iii) amend the Offer, other than as set forth in the
next two paragraphs; provided, however, (i) the Purchaser shall have the right
to close the Offer and accept and pay for tendered shares of Common Stock at
any time it may be permitted to under applicable law, (ii) the Purchaser is
not obligated to keep the Offer open until the stockholders meeting to be
called to approve the Second Preferred Stock Purchase and the Management Stock
Purchases and to elect certain of Purchaser's designees to the Company's Board
of Directors occurs and (iii) in the event that the parties' obligations to
consummate the Second Preferred Stock Purchase are terminated pursuant to the
Stock Purchase Agreement, Purchaser may elect, in its sole discretion, to
continue to conduct the Offer and may increase the maximum number of Shares
subject to the Offer to 5,000,000 shares of Common Stock.
Pursuant to the Stock Purchase Agreement, the Purchaser may increase the
Offer Price and may make any other changes in the terms and conditions of the
Offer; provided, however, that, unless previously approved by the Company in
writing, the Purchaser may not (i) decrease the Offer Price, (ii) change the
form of consideration payable in the Offer, (iii) increase or decrease the
maximum number of Shares sought pursuant to the Offer, (iv) add to or modify
the Offer Conditions (as defined herein), or (v) otherwise amend the Offer in
any manner adverse to the Company's stockholders.
The Purchaser may, without the Company's consent, (i) extend the Offer if at
the scheduled Expiration Date of the Offer any of the conditions to the
Purchaser's obligation to accept for payment, and pay for, the Shares tendered
in the Offer shall not have been satisfied or waived, until such time as such
conditions are satisfied or waived, (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "Commission") or the staff thereof applicable to
the Offer and (iii) extend the Offer for any reason on one or more occasions
for an aggregate period of not more than ten business days beyond the latest
Expiration Date that would otherwise be permitted under clauses (i) or (ii) of
this sentence. As used in this Offer to Purchase, "business day" means any day
other than a Saturday, Sunday or United States federal holiday and consists of
the time period from 12:01 a.m. through 12:00 midnight, New York City time.
The Purchaser confirms that its right to delay payment for Shares that it has
accepted for
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payment is limited by Rule 14e-1(c) under the Exchange Act, which requires
that a tender offeror pay the consideration offered or return the tendered
securities promptly after the termination or withdrawal of a tender offer.
Subject to the terms of the Stock Purchase Agreement, if by 12:00 midnight,
New York City time, on Thursday, April 15, 1999 (or any other date or time
then set as the Expiration Date), any or all conditions to the Offer have not
been satisfied or waived, the Purchaser reserves the right (but shall not be
obligated) (i) to decline to purchase any of the Shares tendered and terminate
the Offer, (ii) to waive all of the unsatisfied conditions and, subject to
complying with applicable rules and regulations of the Commission, to purchase
all Shares validly tendered or (iii) to extend the Offer and, subject to the
right of stockholders to withdraw Shares until the Expiration Date, retain the
Shares that have been tendered during the period or periods for which the
Offer is extended. In the event that the Purchaser waives any of the
conditions set forth in Section 6, the Commission may, if the waiver is deemed
to constitute a material change to the information previously provided to the
stockholders, require that the Offer remain open for an additional period of
time and/or that the Purchaser disseminate information concerning such waiver.
Any extension, amendment or termination will be followed as promptly as
practicable by public announcement in accordance with the public announcement
requirements of Rule 14e-1(d) under the Exchange Act. Subject to applicable
law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which
require that any material change in the information published, sent or given
to stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change) and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser shall have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its payment for
Shares or is unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in Section 3. However, as described
above, the ability of the Purchaser to delay payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials (including by
public announcement as set forth above) and extend the Offer to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. Such
rules generally provide that the minimum period during which a tender offer
must remain open following a material change in the terms of the offer or
information concerning the offer, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the changes in the terms or information.
With respect to a change in price or a change in percentage of securities
sought, a minimum ten business day period is generally required to allow for
adequate dissemination to stockholders and for investor response.
The Company has provided the Purchaser with the Company's stockholder list,
a non-objecting beneficial owners list, if any, and security position listings
for the purpose of disseminating the Offer to holders of Shares. This Offer to
Purchase and the Letter of Transmittal and other relevant materials will be
mailed to record holders of Shares and furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the stockholder list or, if applicable, who
are listed as participants in a clearing agency's security position listing,
for subsequent transmittal to beneficial owners of Shares.
2. Procedure For Tendering Shares.
Valid Tender of Shares. For a stockholder validly to tender Shares pursuant
to the Offer, a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof), with any required
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signature guarantees and any other required documents, or an Agent's Message
(as defined herein) in case of book-entry delivery as described below, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase, and either certificates for tendered Shares must be
received by the Depositary at one of such addresses or such Shares must be
delivered pursuant to the procedure for book-entry transfer set forth below
(and a confirmation of receipt of such delivery received by the Depositary),
in each case prior to the Expiration Date, or the tendering stockholder must
comply with the guaranteed delivery procedures set forth below.
Signature Guarantees. No signature guarantee on the Letter of Transmittal is
required if the Letter of Transmittal is signed by the registered holder of
the Shares tendered therewith (unless such holder has completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" in the Letter of Transmittal) or if Shares are tendered for the
account of a firm which is a member of the Medallion Signature Guarantee
Program, or by any other "eligible guarantor institution," as such term is
defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing, an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instructions 1
and 5 of the Letter of Transmittal.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfers. The Depositary will make a request to establish
accounts with respect to the Shares at The Depository Trust Company (the
"Book-Entry Transfer Facility") for purposes of the Offer within two business
days after the date of this Offer to Purchase, and any financial institution
that is a participant in the Book-Entry Transfer Facility's systems may make
book-entry delivery of the Shares by causing the Book-Entry Transfer Facility
to transfer such Shares into the Depositary's account in accordance with such
Book-Entry Transfer Facility's procedure for such transfer. Although delivery
of Shares may be effected through book-entry transfer at the Book-Entry
Transfer Facility, a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof), with any required
signature guarantees, or an Agent's Message in lieu of the Letter of
Transmittal, and any other required documents, must, in any case, be
transmitted to and received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration
Date, or the guaranteed delivery procedures described below must be complied
with. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE
WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
Backup Federal Income Tax Withholding. To prevent backup federal income tax
withholding on payments made with respect to Shares purchased pursuant to the
Offer, a tendering stockholder must provide the Depositary with such
stockholder's correct taxpayer identification number by completing the
Substitute Form W-9 included in the Letter of Transmittal. See Instruction 6
of the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available (or the procedures for book-entry transfer cannot be completed on a
timely basis) or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such Shares may nevertheless be
tendered provided that all of the following conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives, prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery substantially in
the form provided by the Purchaser; and
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(c) the certificates for all tendered Shares, in proper form for transfer
(or confirmation of book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility), together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by the Letter of Transmittal, are
received by the Depositary within three Nasdaq trading days after the date
of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or may be
transmitted by telegram, telex, facsimile transmission or mail, to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery and a representation that the
stockholder on whose behalf the tender is being made is deemed to own the
Shares being tendered within the meaning of Rule 14e-4 under the Exchange Act.
Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of certificates for such Shares (or a
timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility), a properly
completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) or an Agent's Message in connection with a book-entry
transfer and any other documents required by the Letter of Transmittal. The
term "Agent's Message" means a message transmitted through electronic means by
a Book-Entry Transfer Facility to and received by the Depositary and forming a
part of a book-entry confirmation, which states that such Book-Entry Transfer
Facility has received an express acknowledgment from the participant in such
Book-Entry Transfer Facility tendering the Shares that such participant has
received and agrees to be bound by the Letter of Transmittal and that the
Company may enforce such agreement against such participant.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of the Purchaser as such
stockholder's proxies, in the manner set forth in the Letter of Transmittal,
each with full power of substitution, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder (and any and
all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after March 15, 1999), effective when, if and to the
extent that the Purchaser accepts such Shares for payment pursuant to the
Offer. Upon such acceptance for payment, all prior proxies given by such
stockholder with respect to such Shares accepted for payment or other
securities or rights will, without further action, be revoked, and no
subsequent proxies may be given. Such designees of the Purchaser will, with
respect to such Shares, be empowered to exercise all voting and other rights
of such stockholder as they in their sole discretion may deem proper in
respect of any annual, special or adjourned meeting of the Company's
stockholders, by consent in lieu of any such meeting or otherwise. In order
for Shares to be deemed validly tendered, immediately after the Purchaser's
acceptance for payment of such Shares, the Purchaser must be able to exercise
full voting and other rights with respect to such Shares.
The Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering stockholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares will be determined by the Purchaser in its sole discretion,
and its determination will be final and binding. The Purchaser reserves the
absolute right to reject any or all tenders of any Shares that it determines
are not in appropriate form or the acceptance for payment of or payment for
which may, in the opinion of the Purchaser's counsel, be unlawful. The
Purchaser also reserves the absolute right to waive any of the conditions of
the Offer or any defect or irregularity in any tender with respect to any
particular Shares or any particular stockholder and the Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter
of Transmittal and the Instructions thereto) will be final and binding. No
tender of Shares will be deemed to have been validly made until all defects or
irregularities have been cured or expressly waived. None of the Purchaser, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be obligated to give notice of any defects or irregularities in tenders or
incur any liability for failure to give any such notice.
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3. Withdrawal Rights.
Tenders of Shares made pursuant to the Offer will be irrevocable, except
that Shares tendered may be withdrawn at any time prior to the Expiration
Date, and, unless theretofore accepted for payment and paid for as provided
herein, may also be withdrawn at any time on or after May 18, 1999.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase.
Any notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name in
which the certificates representing such Shares are registered, if different
from that of the person who tendered such Shares. If certificates for Shares
to be withdrawn have been delivered or otherwise identified to the Depositary,
the serial numbers shown on the particular certificates evidencing such Shares
to be withdrawn must also be furnished to the Depositary as aforesaid prior to
the physical release of the Shares to be withdrawn, together with a signed
notice of withdrawal with signatures guaranteed by an Eligible Institution
(except, with respect to signature guarantees, in the case of Shares tendered
by an Eligible Institution). If Shares have been delivered pursuant to the
procedure for book-entry transfer set forth in Section 2, any notice of
withdrawal must specify the name and number of the account at the appropriate
Book-Entry Transfer Facility to be credited with such withdrawn Shares and
must otherwise comply with such Book-Entry Transfer Facility's procedures.
If the Purchaser extends the Offer, is delayed in its acceptance for payment
of or payment for Shares, or is unable to accept or pay for Shares for any
reason, then, without prejudice to the Purchaser's rights under the Offer,
tendered Shares may be retained by the Depositary on behalf of the Purchaser
and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as set forth in this Section 3.
Withdrawals of tendered Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered by again following the
procedures described in Section 2 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, and its determination will be final and binding. None of the
Purchaser, the Dealer Manager, the Depositary, the Information Agent or any
other person will be obligated to give notice of any defects or irregularities
in any notice of withdrawal, nor shall any of them incur any liability for
failure to give any such notice.
4. Acceptance For Payment And Payment Of Purchase Price.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for up to 3,596,688
Shares validly tendered prior to the Expiration Date (and not properly
withdrawn in accordance with Section 3 above) as soon as practicable after the
Expiration Date. Any determination concerning the satisfaction of such terms
and conditions shall be within the sole discretion of the Purchaser and such
determination shall be final and binding on all tendering stockholders. See
Section 6. The Purchaser expressly reserves the right to delay acceptance for
payment of, or payment for, Shares in order to comply in whole or in part with
any applicable law, including, without limitation, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"). If the
Purchaser desires to delay payment for Shares purchased pursuant to the Offer,
and such delay would otherwise be in contravention of Rule 14e-1(c) of the
Exchange Act, the Purchaser will formally extend the Offer. In all cases,
payment for Shares accepted for payment pursuant to the Offer will be made
only after timely receipt by the Depositary of certificates for such Shares
(or a timely confirmation of a book- entry transfer of such Shares into the
Depositary's account at the Book- Entry Transfer Facility, as described in
Section 2), a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) or an Agent's Message in connection with a
book-entry transfer and any other documents required by the Letter of
Transmittal.
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The Purchaser expects to file a Notification and Report Form with respect to
the Offer and the Stock Acquisition under the HSR Act as soon as practicable
following commencement of the Offer. The waiting period under the HSR Act with
respect to the Offer and the Purchaser Acquisitions will expire at 11:59 p.m.,
New York City time, on the 15th day after the date such form is filed, unless
early termination of the waiting period is granted. In addition, the Antitrust
Division of the Department of Justice (the "Antitrust Division") or the
Federal Trade Commission (the "FTC") may extend such waiting periods by
requesting additional information or documentary material from the Purchaser.
If such a request is made, the waiting period related to the Offer will expire
at 11:59 p.m., New York City time, on the 10th day after substantial
compliance by the Purchaser with such request. See Section 15 for additional
information concerning the HSR Act.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, validly tendered Shares when, as and if the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance for payment of such Shares pursuant to the Offer. Upon the terms
and subject to the conditions of the Offer, payment for Shares so accepted for
payment will be made by the deposit of the purchase price therefor with the
Depositary, which will act as agent for the tendering stockholders for the
purpose of receiving such payment from the Purchaser and transmitting such
payment to tendering stockholders. IN NO CIRCUMSTANCES WILL INTEREST BE PAID
ON THE PURCHASE PRICE BY REASON OF ANY DELAY IN MAKING SUCH PAYMENT.
If for any reason (including, without limitation, proration) acceptance for
payment of or payment for any Shares tendered pursuant to the Offer is delayed
or the Purchaser is unable to accept for payment or pay for tendered Shares,
then, without prejudice to the Purchaser's rights under Section 6, the
Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that
tendering stockholders are entitled to withdrawal rights as described in
Section 3.
If any tendered Shares are not accepted for payment and paid for,
certificates for such Shares will be returned (or, in the case of Shares
delivered by book-entry transfer with the Book-Entry Transfer Facility as
permitted by Section 2, such Shares will be credited to an account maintained
with the Book-Entry Transfer Facility) without expense to the tendering
stockholder as promptly as practicable following the expiration or termination
of the Offer, as the case may be.
If, prior to the Expiration Date, the Purchaser increases the consideration
to be paid for Shares pursuant to the Offer, the Purchaser will pay such
increased consideration for all Shares accepted for payment pursuant to the
Offer, whether or not such Shares have been tendered or accepted for payment
prior to such increase in the consideration.
The Purchaser reserves the right to transfer or assign to one or more
subsidiaries or affiliates of the Purchaser the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve the Purchaser of its obligations under the Offer or prejudice the
rights of tendering stockholders to receive payment for Shares validly
tendered and accepted for payment pursuant to the Offer.
5. Certain Federal Income Tax Consequences.
U.S. Federal Income Tax. The receipt of cash for Shares pursuant to the
Offer will be a taxable transaction for U.S. federal income tax purposes under
the Code and may also be a taxable transaction under applicable state, local
or foreign tax laws. In general, a stockholder will recognize gain or loss for
U.S. federal income tax purposes equal to the difference between the amount of
cash received in exchange for the Shares sold and such stockholder's adjusted
tax basis in such Shares. Assuming the Shares constitute capital assets in the
hands of the stockholder, such gain or loss will be capital gain or loss. In
the case of an individual stockholder, such capital gain generally will be
subject to a maximum federal income tax rate of 20% if the individual has held
the Shares for more than one year or 39.6% if the individual has held the
Shares for one year or less. Gain or loss will be calculated separately for
each block of Shares tendered pursuant to the Offer. The deductibility of
capital losses is subject to certain limitations. Stockholders should consult
their own tax advisors in this regard.
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In general, in order to prevent backup federal income tax withholding at a
rate of 31% on the cash consideration to be received in the Offer, each
stockholder who is not otherwise exempt from such requirements must provide
such stockholder's correct taxpayer identification number (and certain other
information) by completing the Substitute Form W-9 in the Letter of
Transmittal.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
STOCKHOLDERS, INCLUDING BROKER-DEALERS, STOCKHOLDERS WHO ACQUIRED SHARES
PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION, INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED
STATES AND FOREIGN CORPORATIONS. THE U.S. FEDERAL INCOME TAX DISCUSSION SET
FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT
LAW, WHICH IS SUBJECT TO CHANGE POSSIBLY WITH RETROACTIVE EFFECT. STOCKHOLDERS
ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX
CONSEQUENCES OF THE OFFER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF
STATE, LOCAL AND FOREIGN TAX LAWS.
6. Certain Conditions Of The Offer.
Notwithstanding any other provision of the Offer or the Stock Purchase
Agreement, and in addition to (and not in limitation of) the Purchaser's
rights to extend and amend the Offer at any time in its sole discretion
(subject to the provisions of the Stock Purchase Agreement), and subject to
any applicable rules and regulations of the Commission, including Rule 14e-
1(c) relating to the Purchaser's obligation to pay for or return tendered
Shares after termination of the Offer, the Purchaser's obligation to accept
for payment or pay for any Shares tendered pursuant to the Offer is subject to
the condition that the Stock Purchase Agreement shall not have been terminated
and to the satisfaction of the following conditions (together, the "Offer
Conditions"):
(a) there shall not have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on The Nasdaq Stock Market for
at least one full trading day, (ii) any decline, measured from the close of
business on March 12, 1999, in the NASDAQ Composite Index by an amount in
excess of 15% at any time during any three trading days in a ten consecutive
trading day period, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether or
not mandatory), (iv) a declaration of a war or other international or national
calamity directly or indirectly involving the United States, or (v) in the
case of any of the foregoing matters described in clauses (iii) and (iv)
existing at the time of commencement of the Offer, a material acceleration or
worsening thereof;
(b) no statute, rule, regulation, judgment, order, decree, ruling,
injunction, litigation or other action shall have been entered, promulgated,
enforced, initiated or threatened by any governmental, quasi-governmental,
judicial, or regulatory agency or entity or subdivision thereof with
jurisdiction over the Company or the Purchaser or any of their subsidiaries or
the purchase and sale of the tendered Shares or Second Issuance Preferred
Shares or any of the other transactions contemplated by the Stock Purchase
Agreement that purports, seeks, or threatens to (i) prohibit, restrain,
enjoin, or restrict in a material manner, the purchase and sale of any
tendered Shares or the Second Issuance Preferred Shares as contemplated by the
Stock Purchase Agreement, or (ii) impose material adverse terms or conditions
(not set forth in the Stock Purchase Agreement) upon the purchase and sale of
any Second Issuance Preferred Shares or any tendered Shares as contemplated by
the Stock Purchase Agreement;
(c) the Purchaser and the Company shall have obtained any and all consents,
permits and waivers necessary for consummation of the transactions
contemplated by the Stock Purchase Agreement and the Management Stock
Agreements (except for such as may be properly obtained subsequent to the
consummation of the Offer) unless the failure to obtain such consents, permits
or waivers is a result of a breach by the Purchaser or would not have a
Material Adverse Effect (as defined in the Stock Purchase Agreement); all
waiting periods under the HSR Act shall have expired or terminated;
11
<PAGE>
(d) the representations and warranties of the Company set forth in the Stock
Purchase Agreement hereof shall be true and correct (determined without regard
to any materiality qualifiers, including without limitation "Material Adverse
Effect," contained in the specific representation or warranty) (i) as of March
15, 1999 and (ii) as of the consummation of the Offer as if made on such date
(provided that in the cases of clauses (i) and (ii) any such representation
and warranty made as of a specific date shall be true and correct as of such
specific date), except in the case of clauses (i) and (ii), for such
inaccuracies that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect;
(e) the Company shall have performed in all material respects all covenants
and obligations required to be performed or observed by it pursuant to the
Stock Purchase Agreement on or prior to the consummation of the Offer;
(f) there shall not have occurred after March 15, 1999 any material adverse
change in the business, properties, results of operation or financial
condition of the Company and its subsidiaries taken as a whole, other than any
adverse change following the date of the Stock Purchase Agreement that the
Company shall have demonstrated is substantially attributable to (i) the
transactions contemplated by the Stock Purchase Agreement or the announcement
of the transactions contemplated by the Stock Purchase Agreement or (ii) any
material economic downturn in the Internet industry generally or any material
national economic downturn;
(g) the Company shall have appointed to its Board of Directors two persons
designated by the Purchaser and the Company shall have complied with all of
its other obligations under the Stock Purchase Agreement with respect to the
appointment and/or election of the Purchaser's nominees to the Board of
Directors and its committees;
(h) the Company shall have delivered to the Purchaser or its counsel a
Compliance Certificate, executed by the President and the Chief Financial
Officer of the Company, dated as of the consummation of the Offer, to the
effect that the conditions specified in clauses (c) through (g) have been
satisfied;
(i) the Purchaser shall have received from Hutchins, Wheeler & Dittmar, A
Professional Corporation, an opinion addressed to it, dated as of the
consummation of the Offer, covering the items listed in Exhibit D to the Stock
Purchase Agreement in form and substance satisfactory to the Purchaser; and
(j) each Management Stock Agreement executed as of the date of the Stock
Purchase Agreement shall be in full force and effect and no breach shall have
occurred on the part of any Management Stockholder under such agreement.
The Stock Purchase Agreement provides that the Purchaser may delay
acceptance for payment of or, subject to the restrictions referred to above,
the payment for, any tendered Shares, and may terminate the Offer as to any
Shares not then paid for, if such Offer Conditions are not satisfied.
The Stock Purchase Agreement provides that the Offer Conditions are for the
sole benefit of the Purchaser and may be asserted by the Purchaser regardless
of the circumstances giving rise to any such condition (including without
limitation any action or inaction by the Purchaser, other than actions the
Purchaser is required to take in order to satisfy its obligations to use its
best efforts to ensure that the Offer Conditions are satisfied, insofar as
such matters are within its control), or may be waived by the Purchaser, in
whole or in part at any time and from time to time, in the Purchaser's sole
discretion. In the event that the Second Issuance Agreements are terminated,
Purchaser may elect, in its sole discretion, to continue to conduct the Offer.
The failure by the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such rights and each such right
shall be deemed an ongoing right which may be asserted at any time and from
time to time. Any determination (which shall be made in good faith) by the
Purchaser with respect to any of the foregoing conditions (including without
limitation the satisfaction of such conditions) will be final and binding on
all parties.
12
<PAGE>
A public announcement shall be made of a material change in, or waiver of,
such conditions, and the Offer may, in certain circumstances, be extended in
connection with any such change or waiver.
The Purchaser acknowledges that the Commission believes that (a) if the
Purchaser is delayed in accepting the Shares it must either extend the Offer
or terminate the Offer and promptly return the Shares, and (b) the
circumstances in which a delay in payment is permitted are limited and do not
include unsatisfied conditions of the Offer, except with respect to any
approval required under the HSR Act and most other regulatory approvals.
7. Price Range Of The Common Stock.
The Common Stock was traded on the NASDAQ Small Cap Market under the symbol
"GNET" from the Company's initial public offering on April 23, 1997 until
September 30, 1998. Prior to April 23, 1997, there was no public market for
the Company's Common Stock. On October 1, 1998, the Company's Common Stock was
approved for trading on The Nasdaq National Market. The following table sets
forth the high and low closing sale prices of the Shares on such markets for
the periods indicated. All of the sales price information has been adjusted to
give effect the Company's 2-for-1 stock split effected on February 23, 1999.
<TABLE>
<CAPTION>
High Low
-------- ---------
<S> <C> <C>
Fiscal 1997
June 30, 1997 (Commencing April 23, 1997*)............. $ 5 1/2 $ 2 5/8
September 30, 1997..................................... 4 29/32 2 13/16
Fiscal 1998
December 31, 1997...................................... 5 1/8 3 3/16
March 31, 1998......................................... 8 7/8 3 1/2
June 30, 1998.......................................... 17 1/2 8 13/32
September 30, 1998..................................... 16 7/8 6 29/32
Fiscal 1999
December 31, 1998...................................... 25 7/8 7
March 31, 1999 (through March 18, 1999)................ 135 3/8 17 11/16
</TABLE>
- --------
* The Company filed its initial public offering on Form S-1 on April 23, 1997
at an initial price to the public of $4.00 per share (as adjusted to give
effect the Company's 2-for-1 stock split effected on February 23, 1999).
As of March 15, 1999, the approximate number of holders of record of the
Shares was 136.
On March 12, 1999, the last full trading day prior to the date of the
announcement of the execution of the Stock Purchase Agreement and the
Purchaser's intention to commence the Offer, the last sales price of the
Common Stock on Nasdaq was $87.00 per Share. On March 18, 1999, the last full
trading day prior to the commencement of the Offer, such last sales price was
$118 1/4 per Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET
QUOTATION FOR THE COMMON STOCK.
8. Possible Effects Of The Offer On The Market For Common Stock; Stock
Quotation; Registration Under The Exchange Act.
The purchase of Shares pursuant to the Offer will likely reduce the number
of Shares that might otherwise trade publicly. However, a significant
percentage of the outstanding Shares will continue to be held by persons other
than the Purchaser, and the Purchaser does not believe that its purchase of
Shares pursuant to the Offer is likely to result in the Company's failure to
meet the requirements of Nasdaq for continued inclusion in Nasdaq or in the
Shares becoming eligible for deregistration under the Exchange Act. The
Purchaser believes that its purchase of Shares pursuant to the Offer and the
New Issue Preferred Shares should not have a material adverse effect on the
liquidity and market value of the remaining Shares held by the public.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System, which has the effect, among
other things, of allowing brokers to extend credit on such Shares as
collateral. Following the Offer, the Shares will continue to be "margin
securities."
13
<PAGE>
The Shares are currently registered under the Exchange Act and will continue
to be registered thereunder after the Offer.
9. Dividends And Distributions.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1998 (the "1998 10-K"), the Company has not paid cash
dividends to date. Pursuant to the terms of the Stock Purchase Agreement, the
Company is prohibited from taking certain of the actions described in the two
succeeding paragraphs, and nothing herein shall constitute a waiver by the
Purchaser of any of its rights under the Stock Purchase Agreement or
limitation of remedies available to the Purchaser for any breach of the Stock
Purchase Agreement, including termination thereof.
In the event of any change in the Common Stock by reason of a stock
dividend, split-up, recapitalization, combination, conversion, exchange of
shares or other similar change in the corporate or capital structure of the
Company, then, without prejudice to the Purchaser's rights under Sections 6
and 15, the Purchaser may make such adjustments in the purchase price and
other terms of the Offer as it deems appropriate, including, without
limitation, the number and type of securities to be purchased.
If on or after the date of the Stock Purchase Agreement, the Company should
declare or pay any cash or stock dividend or other distribution on, or issue
any rights with respect to, the Shares, payable or distributable to
stockholders of record on a date prior to the transfer to the name of the
Purchaser or its nominees or transferees on the Company's stock transfer
records of the Shares purchased pursuant to the Offer, then, without prejudice
to the Purchaser's rights under Section 6, (i) the purchase price per Share
payable by the Purchaser pursuant to the Offer may, in the sole discretion of
the Purchaser, be reduced by the amount of any such cash dividend or
distribution, and (ii) any non-cash dividend, distribution or right to be
received by the tendering stockholders will (a) be received and held by the
tendering stockholders for the account of the Purchaser and will be required
to be promptly remitted and transferred by each tendering stockholder to the
Depositary for the account of the Purchaser, accompanied by appropriate
documentation of transfer, or (b) at the direction of the Purchaser, be
exercised for the benefit of the Purchaser, in which case the proceeds of such
exercise will promptly be remitted to the Purchaser. Pending such remittance,
the Purchaser will be entitled to all rights and privileges as owner of any
such non-cash dividend, distribution or right or such proceeds and may
withhold the entire purchase price or deduct from the purchase price the
amount or value thereof, as determined by the Purchaser in its sole
discretion.
10. Certain Information Concerning The Company.
The Company is a Delaware corporation with its principal offices located at
999 Third Avenue, Suite 4700, Seattle, Washington 98104. The telephone number
of the Company at such offices is (206) 447-1595. The Company offers through
the World Wide Web a network of branded, technology and community-driven Web
sites. The Company's properties available through the Go2Net Network
(www.go2net.com) include: MetaCrawler (www.metacrawler.com), a metasearch
service that combines various existing search/index guides into one service;
PlaySite (www.playsite.com), a Java-based multiplayer game site; StockSite
(www.stocksite.com), a business and finance site which offers proprietary
articles, portfolio tracking tools, company research and news relating to
business and finance; Silicon Investor (www.siliconinvestor.com), the Web's
premier financial discussion community; HyperMart (www.hypermart.net), the
Web's leading provider of free business hosting services; WebMarket
(www.webmarket.com), a one-stop comparison shopping service; and 100hot
(www.100hot.com), a directory of popular websites. The Go2Net Lab's division
develops innovative technologies to enhance the features and functionality of
the Go2Net sites and for licensing to other Internet companies. The Company
focuses on utilizing innovative technologies to deliver its content and to
enhance the attractiveness and utility of its product offerings.
14
<PAGE>
Financial Information. Set forth below is certain financial information
relating to the Company and its subsidiaries which has been excerpted or
derived from the audited financial statements contained in the 1998 10-K, the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1997 (the "1997 10-K") and from the unaudited financial statements contained
in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 1998, in each case filed by the Company with the Commission. More
comprehensive financial information is included in such reports and other
documents filed by the Company with the Commission. The financial information
that follows is qualified in its entirety by reference to the those reports
and other documents, including the financial statements and related notes
contained therein. The 1998 10-K, the 1997 10-K and other documents may be
examined and copies may be obtained from the offices of the Commission and
otherwise in the manner set forth below.
<TABLE>
<CAPTION>
Three Months
Ended Three Months
December 31, December 31, Year Ended Year Ended Year Ended
1998 1997 September 30, September 30, September 30,
(Unaudited) (Unaudited) 1998 1997 1996
------------ ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $2,600,040 $1,109,889 $ 4,830,882 $ 528, 595 $ 8,000
Cost of revenues........ 688,092 348,604 1,803,895 228,597 7,000
Gross Profit............ 1,911,948 761,285
Operating expenses
Advertising and
marketing............. 920,883 444,995 1,281,312 102,042 14,255
Product development.... 394,926 302,239 1,124,623 612,923 163,408
General and
administrative........ 733,561 376,205 2,066,962 1,602,791 329,594
Merger and acquisition
related costs......... 650,257 -- 1,035,494 -- --
Impairment loss........ 70,947 35,474 398,126 -- --
---------- ---------- ----------- ----------- ----------
Total operating
expenses............ 2,770,574 1,158,913 5,906,517 2,317,756 507,257
---------- ---------- ----------- ----------- ----------
Loss from operations.... (858,626) (397,628) (2,879,530) (2,017,758) (506,257)
Interest income......... 115,772 124,905 508,405 261,511 11,818
---------- ---------- ----------- ----------- ----------
Net loss................ $ (742,854) $ (272,723) $(2,371,125) $(1,756,247) $ (494,439)
========== ========== =========== =========== ==========
Net loss per share...... $ (.12) $ (.04) $ (0.41) $ (0.39) $ (0.38)
Number of shares used in
computing net loss per
share(1)............... 6,312,577 6,070,702 5,781,937 4,518,390 1,318,299
</TABLE>
<TABLE>
<CAPTION>
December 31,
1998 September 30, September 30, September 30,
(Unaudited) 1998 1997 1996
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents
and marketable
securities............. $8,975,277 $8,885,600 $10,926,781 $1,206,824
Working capital......... 8,507,890 9,147,816 10,841,073 $ 812,325
Total assets............ 13,361,564 12,535,206 12,811,065 $1,500,651
Stockholders' equity.... 10,462,100 10,901,165 12,473,847 $1,097,936
</TABLE>
- --------
(1) Net loss per share is calculated using the weighted average number of
shares of Common Stock outstanding during such period.
Other Information. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational filing requirements
of the Exchange Act and, in accordance therewith, is obligated to file
periodic reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information,
as of particular dates, concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interest of such persons in transactions with the
Company is required to be disclosed in such proxy statements and distributed
to the Company's stockholders and filed with the Commission. Such reports,
proxy statements and other information should be available for inspection at
the public reference facilities of the Commission located in Judiciary Plaza,
450 Fifth Street, N.W., Room 2120 Washington, D.C. 20549, and should also be
available for inspection and copying at the regional offices of the Commission
located in Citicorp Center, 500 West Madison Street, Suite 1400 Chicago,
Illinois 60661, and Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of this material may also be obtained by mail, upon payment of
the Commission's customary fees, from the Commission's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a
Web site on the World Wide Web at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the
15
<PAGE>
Commission. In addition, such material should also be available for inspection
at the library of Nasdaq. Except as otherwise noted in this Offer to Purchase,
all of the information with respect to the Company set forth in this Offer to
Purchase has been derived from publicly available information. Although the
Purchaser has no knowledge that any such information is untrue, the Purchaser
takes no responsibility for the accuracy or completeness of information
contained in this Offer to Purchase with respect to the Company or for any
failure by the Company to disclose events which may have occurred or may
affect the significance or accuracy of any such information.
11. Certain Information Concerning The Purchaser.
The Purchaser was founded by Paul G. Allen in 1990 to research and implement
his investments. Through the Purchaser, Mr. Allen invests in companies which
offer products, services or technologies that fit his wired world strategy and
can contribute to or benefit from the technology and strategy of other Paul
Allen companies. The Purchaser controls, among other companies, Charter
Communications and Marcus Cable Company, which, taken together, are the
nation's seventh largest cable operator.
The name, business address, present principal occupation or employment and
citizenship of each of the directors and executive officers of the Purchaser
are set forth in Annex A hereto.
Except as described in this Offer to Purchase and Annex A hereto, (i) none
of the Purchaser or, to the best knowledge of the Purchaser, any of the
persons listed in Annex A hereto, or any associate or majority-owned
subsidiary of the Purchaser or any of the persons so listed, beneficially owns
any security of the Company or has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any
securities of the Company, joint ventures, loan or option arrangements, puts
or calls, guaranties of loans, guaranties against loss, or the giving or
withholding of proxies, and (ii) none of the Purchaser or, to the best
knowledge of the Purchaser, any of the other persons referred to above, or any
of the respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in any security of the Company during
the past 60 days.
12. Source And Amount Of Funds.
The total amount of funds required by the Purchaser to purchase the Shares
tendered pursuant to the Offer, the New Issue Preferred Shares and the
Management Shares and to pay related fees and expenses will be approximately
$760 million. The Purchaser will provide such funds from its working capital
or its affiliates' working capital or from a capital contribution from Paul G.
Allen, the Purchaser's chairman and sole stockholder, which may be funded
either by Mr. Allen's personal funds, working capital and/or from an existing
margin credit facility (the "Margin Facility") maintained by Mr. Allen with BT
Alex. Brown Incorporated ("BT Alex. Brown") or from a combination of the
foregoing. No decision has been made concerning which of the foregoing sources
the Purchaser will utilize. Such decision will be made based on the
Purchaser's review from time to time of the advisability of particular
actions, as well as on prevailing interest rates and financial and other
economic conditions and such other factors as the Purchaser may deem
appropriate. The Purchaser will, to the extent required by the Commission's
rules and regulations, file an amendment to its Tender Offer Statement on
Schedule 14D-1 and Schedule 13D (the "Schedule 14D-1") promptly after any such
decision is made. The Purchaser has not conditioned the Offer or the Second
Preferred Stock Purchase on obtaining financing.
The Margin Facility provides for loans by BT Alex. Brown to Mr. Allen under
BT Alex. Brown's standard Customer Agreement at a variable interest rate of
1/2% to 2% above the prevailing call money rate for the relevant interest
computation period. The loans are secured by Mr. Allen's securities maintained
with BT Alex. Brown ("Margin Securities"). BT Alex. Brown may, in accordance
with its general policies regarding margin maintenance requirements, or
otherwise in its discretion or upon the occurrence of certain events specified
in the Customer Agreement, sell Margin Securities and take other actions with
respect to Mr. Allen's accounts in order to provide BT Alex. Brown with
additional collateral. The Margin Facility has no stated maturity, and BT
Alex. Brown may request repayment of all loan balances on demand.
16
<PAGE>
The Purchaser understands that Mr. Allen anticipates that any indebtedness
incurred through borrowings under the Margin Facility will be repaid from a
variety of sources, which may include, but may not be limited to, funds
generated internally by the Purchaser and its affiliates or by bank financing.
No decision has been made concerning the method to be employed to repay such
indebtedness. Such decision will be made based on Mr. Allen's review from time
to time of the advisability of particular actions, as well as on prevailing
interest rates and financial and other economic conditions and such other
factors as Mr. Allen may deem appropriate.
13. Contacts With The Company; Background Of The Offer.
As part of an on-going strategic effort to develop and exploit its cable
assets, Purchaser has been seeking to form a strategic alliance with an
Internet portal company for several months. Several Internet portal companies
were identified, including the Company. On January 18, 1999, a meeting was
arranged among representatives of the Purchaser and Russell Horowitz, Chairman
and Chief Executive Officer, and Dino Christofilis, Vice President of
Corporate Development, of the Company to discuss the possibility of an
investment in the Company by the Purchaser. At the meeting, Mr. Horowitz
expressed an interest in raising at least $50 million from a strategic
investor and stated that although the Company was not for sale, he was
interested in discussing the merits of a strategic relationship with the
Purchaser and wished to explore further the potential benefits of any such
relationship.
During late January and the first half of February 1999, representatives of
the Purchaser held numerous discussions with Messrs. Horowitz and
Christofilis, Michael Riccio, a director and Chief Operating Officer of the
Company, and John Keister, a director and President of the Company, to discuss
a strategic investment by
the Purchaser in the Company. During these discussions, the parties considered
an investment by the Purchaser of at least $100 million to $200 million to
acquire a significant ownership interest in the Company, and discussed issues
relating to board representation and approval rights for the Purchaser.
During middle and late February 1999, the Purchaser, together with
representatives of NationsBanc Montgomery Securities LLC, the Purchaser's
financial advisor, held a series of meetings and conference calls with the
Company for the purpose of, among other things, conducting financial due
diligence regarding the Company.
During this period, the Purchaser and the Company discussed various
possibilities for the structure of the proposed transaction. The parties
agreed that the Purchaser's investment would be partially or wholly in the
form of a new series of convertible preferred stock. The parties also
discussed the potential terms of the preferred stock, including liquidation
and dividend preferences, voting rights, anti-dilution protection and various
negative controls. In addition, some of the transactions proposals considered
by the parties contemplated that the Purchaser would obtain majority
representation on the Company's Board of Directors
Throughout late February and early March 1999, the parties continued to hold
discussions to address both the Purchaser's and the Company's concerns and to
evaluate the feasibility of various structures for the transaction. On or
about February 27, 1999, the Purchaser delivered a written proposal to the
Company proposing a $200 million investment by the Purchaser in a new series
of convertible preferred stock. The Purchaser and the Company thereafter
exchanged proposals regarding the amount of the investment that would be made
by the Purchaser and the terms of the preferred stock. Throughout these
discussions, the Purchaser indicated that, depending on the size and scope of
any strategic investment it might make, it may have to obtain majority
representation on the Board of Directors. In addition, the Company requested
that the Purchaser agree, in addition to purchasing newly-issued preferred
stock from the Company, to conduct a tender offer for a significant number of
shares of the Company's common stock as part of the transaction structure to
provide liquidity to the Company's existing stockholder and to provide the
Company with certain distribution rights through the Purchasers cable assets.
The Company also indicated that members of the Company's management were
prepared to commit to tender a portion of their shares in connection with any
tender offer.
17
<PAGE>
On or about March 10, 1999 the Company and the Purchaser agreed on the basic
structure of the transaction, which would involve the acquisition by the
Purchaser of $300 million of a new series of convertible preferred stock, as
well as a tender offer by the Purchaser for a portion of the outstanding
shares of the Company's common stock, although the conversion price for the
preferred stock, the number of shares that the Purchaser would tender for and
the tender price were not agreed to at that time. The Purchaser and the
Company, together with their representatives (including legal counsel),
proceeded to negotiate the definitive terms of the Stock Purchase Agreement,
the preferred stock and related agreements. During this process, the parties
continued to negotiate the exact terms of the transaction, including the
conversion price and other rights, preferences and privileges of the preferred
stock, the number of shares to be tendered for, the tender price and the
nature of Company management's participation. Following extensive
negotiations, the parties agreed on the terms of the new series of preferred
stock to be purchased by the Purchaser, the specifics of the tender offer to
be conducted by the Purchaser and the form of Company management's
participation in the transaction, and on March 15, 1999, the Company and the
Purchaser executed and delivered the transaction agreements, including the
Stock Purchase Agreement and the Registration Rights Agreement, and the
Purchaser and the Company's directors, including three directors who are
executive officers of the Company, executed and delivered the Management Stock
Agreements.
14. Purpose Of The Offer; Stock Purchase Agreement; Management Stock
Agreements; Certificate of Designation; Registration Rights Agreement.
Purpose Of The Offer; Plans For The Company
The purpose of the Offer is for the Purchaser to acquire the Shares tendered
in the Offer as one step in acquiring up to a 55% equity interest in the
Company and obtaining control of the Company through the appointment and/or
election of the Purchaser's designees to the Company's Board of Directors, all
pursuant to the Stock Purchase Agreement and related documents as more fully
described below. As holder of the Series A Preferred Stock, the Purchaser will
also have certain other rights allowing the Purchaser to influence the
business of the Company.
Stock Purchase Agreement
The following summary of certain terms of the Stock Purchase Agreement does
not purport to be complete and is qualified in its entirety by reference to
the complete text of the Stock Purchase Agreement, which is filed as an
exhibit to the Schedule 14D-1 and incorporated herein by reference.
Capitalized terms used herein and not otherwise defined shall have the meaning
ascribed to them in the Stock Purchase Agreement. YOU ARE URGED TO READ THE
STOCK PURCHASE AGREEMENT IN ITS ENTIRETY.
The Share Issuances. The Company has agreed to issue and sell to the
Purchaser, and the Purchaser has agreed to purchase from the Company, 300,000
shares of the Series A Preferred Stock for a purchase price of $1,000 per
share, in two separate issuances of 167,507 shares and 132,493 shares. The
First Preferred Stock Purchase was consummated concurrently with the execution
of the Stock Purchase Agreement on March 15, 1999. Simultaneously with the
closing of the First Preferred Stock Purchase, the Company and the Purchaser
entered into the Registration Rights Agreement and the Purchaser entered into
the Management Stock Agreements with the Management Stockholders.
The closing of the Second Preferred Stock Purchase is to occur as soon as
practicable (but not more than three business days) after the satisfaction or
waiver of all of the closing conditions set forth in the Stock Purchase
Agreement. These closing conditions include: (i) the prior approval by the
Company's stockholders, at a special stockholder's meeting to be called by the
Company (the "Stockholders Meeting"), of the Second Preferred Stock Purchase
and the Management Stock Purchases (together, the "Purchaser Acquisitions");
(ii) the receipt of all necessary governmental approvals relating to the
Purchaser Acquisitions, including those required by the HSR Act; (iii) the
Purchaser's designees to the Company's Board of Directors having been duly
elected by a vote of the Company's stockholders and constituting a majority of
the entire Board of Directors; (iv) the absence
18
<PAGE>
of a material adverse change in the Company's business, properties, results of
operations or financial condition after March 15, 1999; (v) the truth and
accuracy at the closing of the representations and warranties made by the
parties in the Stock Purchase Agreement; (vi) the parties' material compliance
with their respective obligations under the Stock Purchase Agreement; and
(vii) other customary conditions.
The Offer. Under the terms of the Stock Purchase Agreement, the Purchaser
was required to commence the Offer no later than five business days after the
date of the Agreement. The obligations of the Purchaser to accept for payment,
and pay for, any Shares tendered pursuant to the Offer are subject only to the
Offer Conditions. The Purchaser may increase the Offer Price and may make any
other changes in the terms and conditions of the Offer; except that the
Purchaser may not without the Company's consent decrease the Offer Price,
change the form of consideration to be paid in the Offer, increase or decrease
the maximum number of shares sought pursuant to the Offer, add to or modify
the Offer Conditions, terminate the Offer other than in accordance with its
terms, extend the Expiration Date to a date later than August 31, 1999, or
otherwise amend the Offer in a manner adverse to the Company's stockholders.
The Purchaser is not obligated to keep the Offer open until the Stockholders
Meeting occurs. In addition, in the event the parties' obligations to
consummate the Second Preferred Stock Purchase are terminated as discussed
below, the Purchaser may elect, in its sole discretion, to continue to conduct
the Offer and may increase the Maximum Tender Number to 5,000,000 shares of
Common Stock.
Subject to the Offer Conditions, the Purchaser is required to accept for
payment, purchase, and pay for, in accordance with the terms of the Offer,
Shares validly tendered and not withdrawn pursuant to the Offer at the
earliest time following expiration of the Offer that all conditions to the
Offer and its consummation have been satisfied or waived by the Purchaser. The
Offer Conditions are for the sole benefit of the Purchaser and may be asserted
by the Purchaser regardless of the circumstances giving rise to any such
condition (including without limitation any action or inaction by the
Purchaser) or may be waived by the Purchaser, in whole or in part at any time
and from time to time, in the Purchaser's sole discretion.
Board Composition. In accordance with the requirements of the Stock Purchase
Agreement, the Purchaser shall be entitled to designate two directors to serve
on the Board of Directors of the Company, subject to expiration or early
termination of the applicable waiting periods under the HSR Act. The Company
shall, as soon as practicable after such time, take all action necessary to
cause such individuals to be appointed to the Board of Directors and to have
at least one such individual on each committee of the Board, including either
increasing the size of the Board or securing the resignations of incumbent
directors or both. The Company is also required to nominate for election at
the Stockholders Meeting a new Board comprised of a slate of director
candidates reasonably acceptable to the Purchaser. This slate will include
three candidates designated by the Purchaser (the "Purchaser Designees"), the
existing Chief Executive Officer of the Company (the "Management Designee")
and one candidate selected by the Purchaser and the Company who is not an
affiliate or employee of either the Purchaser or the Company and who must
otherwise constitute an "independent director" under the rules of The Nasdaq
Stock Market (the "Outside Designee"). The Purchaser has agreed, to the extent
permitted under applicable law, to vote its shares at the Stockholders Meeting
in favor of the election of the Outside Designee and the Management Designee,
as well as in favor of the Purchaser Acquisitions.
If, following the Stockholders Meeting but prior to the closing of the
Second Preferred Stock Purchase, the Company terminates its obligation to
issue and sell the Second Issuance Preferred Shares for certain specified
reasons, a Purchaser Designee will resign from the Company's Board if
necessary to cause the Purchaser's allocation of board seats to be
proportionate to the Purchaser's economic interest in the Company (rounded
down to the nearest whole number of directors). However, in no event will the
Purchaser have fewer than two Purchaser Designees on the Company's Board of
the Directors following such reallocation.
So long as the Purchaser owns at least 50% of the total shares of Common
Stock purchased in the First Preferred Stock Issuance and the Offer (assuming
conversion of the Series A Preferred Stock into Shares of Common Stock), the
Company's Board of Directors, subject to its fiduciary duties, will nominate
at each
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stockholder meeting at which the election of directors is considered at least
two Purchaser representatives for election to the Board. The Purchaser has
agreed, so long as the current Management Designee is the Chief Executive
Officer of the Company, to vote its shares in favor of such person's election
at each stockholder meeting at which the election of directors is considered.
The Stockholders Meeting. The Stock Purchase Agreement requires the Company
to call and hold, as soon as reasonably practicable, the Stockholders Meeting
for the purpose of voting on the approval of the Purchaser Acquisitions and
the election to the Company's Board of Directors of the nominees discussed
above. The Company has agreed that the proxy materials for the Stockholders
Meeting will contain the recommendation of the Board of Directors that the
stockholders approve the Purchaser Acquisitions and will state that the
Company is neutral with respect to, or recommends, the Offer.
Representations and Warranties. The Stock Purchase Agreement contains
various customary representations and warranties of the parties, including
representations by the Company as to (i) the absence of a material adverse
change to the business or financial condition of the Company, (ii) the absence
of certain other changes or events concerning the Company, and (iii)
compliance with law, litigation, employee benefit plans, intellectual
property, taxes and material contracts.
Conduct of Business of the Company. The Stock Purchase Agreement provides
that until the closing of the Second Preferred Stock Issuance, the business of
the Company and each of its subsidiaries will be conducted in the ordinary
course of business and in accordance with past practice. Accordingly, without
the Purchaser's prior consent, neither the Company nor any of its subsidiaries
may, prior to such closing, engage or agree to engage in an enumerated list of
actions generally characterized as being outside the ordinary course of
business. Such actions requiring the Purchaser's prior approval include, among
other things (but subject to certain exceptions stated in the Stock Purchase
Agreement), (i) making new commitments for capital expenditures in excess of
specified levels, (ii) granting any bonus, severance or termination pay or
increasing executive officer compensation except in the ordinary course of
business consistent with past practice, (iii) granting stock options, (iv)
entering into business combinations, acquiring assets above specified limits,
and selling assets other than in the ordinary course of business, (v)
declaring or paying dividends or redeeming equity securities, or (vi) issuing
equity securities other than under specified circumstances. The Stock Purchase
Agreement permits the Company to accelerate the vesting, effective as of the
closing of the Second Preferred Stock Issuance, of up to 35% of the unvested
portion of outstanding stock options.
Distribution Agreement. In the Stock Purchase Agreement, the Company and the
Purchaser acknowledged that an important consideration for the Company
entering into the Stock Purchase Agreement was the fact that the Purchaser,
through its affiliated entities Marcus Cable and Charter Communications (the
"Cable Companies"), operates cable systems that serve over 2 million cable
subscribers and that such Cable Companies will provide an opportunity for the
Company to establish a distribution or other relationship with them. The Stock
Purchase Agreement provides that, after the consummation of the transactions
contemplated by the Stock Purchase Agreement, the Company and the Cable
Companies will promptly commence negotiations with respect to the
establishment of a distribution or other relationship to offer the Company's
content to the Cable Companies' subscribers. The Stock Purchase Agreement also
provides that the parties will negotiate in good faith and use reasonable
efforts to establish a distribution or other relationship, although none of
the parties will have any legal obligation to the others if such a
relationship is not established.
Other Covenants of the Parties. The Stock Purchase Agreement provides that
if the Company issues any equity securities after March 15, 1999, the
Purchaser will have the right (subject to certain exceptions) to acquire
shares on comparable terms in order to enable the Purchaser to maintain its
percentage interest in the Company. This right expires if the Purchaser ceases
to own a specified percentage of the Company's stock or if the Second
Preferred Stock Issuance is not consummated. The Stock Purchase Agreement also
prohibits the Purchaser from selling more than a specified amount of Company
stock in a privately-negotiated transaction for a cash price exceeding the
stock market price of the Common Stock, unless the buyer in such transaction
has agreed to make an offer to purchase an equivalent percentage of the Common
Stock held by other stockholders of the Company.
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In addition, the Company has agreed to permit the Purchaser and its
affiliates (as well as certain other entities in which the Purchaser and its
affiliates have an interest), to use up to 10% of the Company's unsold
advertising inventory in existence from time to time, subject to certain
specified conditions. This obligation expires on March 15, 2004, or at any
time after March 15, 2000 upon the Purchaser ceasing to own at least 10% of
the Company's outstanding stock.
Other Potential Bidders and Transactions. The Stock Purchase Agreement
requires the Company and its affiliates and their respective officers,
directors, employees, investment bankers, attorneys, accountants and other
representatives and agents to immediately cease any existing discussions or
negotiations with any third party with respect to (i) any merger,
consolidation, share exchange, business combination or other similar
transaction or series of related transactions involving the Company or a
subsidiary, (ii) any sale or other disposition of more than 20% of the assets
of the Company or any subsidiary, (iii) any acquisition of a substantial
equity interest in the Company or any equity interest in any of its
subsidiaries, (iv) any offer to purchase, tender offer, exchange offer or
similar transaction involving the capital stock of the Company or any
subsidiary, and (v) a liquidation or dissolution of the Company (each a
"Transaction Proposal"). Except as provided in the next paragraph, the
Company, its affiliates and their respective representatives and agents may
not directly or indirectly, initiate, solicit, encourage or participate in
discussions relating to, or provide information to a third party concerning,
or otherwise facilitate the making of, any inquiry, offer or proposal
regarding a Transaction Proposal, or agree to approve or recommend any
Transaction Proposal.
The Stock Purchase Agreement permits the Company to participate in
discussions with or furnish information to an unaffiliated third party that
makes an unsolicited bona fide Transaction Proposal in writing, if: (i) the
proposal specifies a price to be paid for the Company's stock or assets that
the Company's Board of Directors has determined, after consultation with the
Company's investment bankers, if such transaction were consummated, would be
financially more favorable to the Company's stockholders than the Offer
(assuming for these purposes that the Offer is for 5,000,000 shares of Common
Stock) (a "Superior Proposal"); (ii) the Board of Directors has determined,
after consultation with the Company's investment bankers, that such third
party is financially capable of consummating the Superior Proposal and that
the Superior Proposal is at least as likely to be consummated, and is not
subject to materially greater conditions, than the transactions contemplated
by the Stock Purchase Agreement; (iii) the Board of Directors has determined,
after consultation with its outside legal counsel, that the failure to
participate in discussions or negotiations with or furnish information to such
third party would result in a substantial risk of liability to the Board
members for a breach of their fiduciary duties under Delaware law; and (iv)
the Company informs the Purchaser in writing of the principal terms of the
proposal. The Company is prohibited from accepting or entering into any
agreement concerning a Superior Proposal for at least 36 hours after the
Company notifies the Purchaser of the Superior Proposal, and is required to
afford the Purchaser an opportunity to discuss the Purchaser's desired
response to the proposal.
The Stock Purchase Agreement permits the Company, after the occurrence of
the events discussed above and the satisfaction of certain other conditions,
to (i) change its recommendations concerning the Purchaser Acquisitions, (ii)
accept the Superior Proposal, and (iii) enter into an agreement with the third
party concerning the Superior Proposal. In such event, the Company would be
required to pay immediately to the Purchaser a $17.5 million cash fee.
Termination. The Stock Purchase Agreement permits either the Purchaser or
the Company to terminate its obligations to consummate the Second Preferred
Stock Issuance if (i) consummation is prohibited by a final, non-appealable
governmental order, provided that the party seeking to terminate its
obligations must have used its best efforts to prevent entry of and to remove
such order, (ii) the Company's stockholders do not approve the Purchaser
Acquisitions at the Stockholders Meeting, (iii) the closing of the Second
Preferred Stock Issuance does not occur by August 31, 1999 and the failure to
close on or before such date did not result from the failure by the party
seeking termination to perform any obligation required to be performed by such
party prior to such time, or (iv) the party seeking to terminate has not
committed a material uncured breach of any representation, warranty, covenant
or agreement and there has been a material breach by the other party of any
representation, warranty, covenant or agreement that has not been cured within
five days' notice of such breach and causes the failure of a closing
condition.
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The Company may terminate its obligation to sell and issue the Second
Issuance Preferred Shares if (i) any change is made to the Offer in violation
of the Stock Purchase Agreement or the Offer Conditions, (ii) the Company's
Board of Directors withdraws or modifies in a manner adverse to the Purchaser
the Board's approval of the Stock Purchase Agreement, or (iii) the Board of
Directors accepts a Superior Proposal after complying with the applicable
requirements described above.
The Purchaser may terminate its obligation to purchase the Second Issuance
Preferred Shares if the Company's Board of Directors (i) fails to recommend,
or withdraws, modifies or changes in a manner adverse to the Purchaser (or
resolves to do so) its approval or recommendation of the transactions
contemplated by the Stock Purchase Agreement, (ii) submits or recommends to
its stockholders or approves a Transaction Proposal, (iii) accepts or
recommends to its stockholders a Superior Proposal, or (iv) publicly announces
its intention to do any of the foregoing. The Purchaser may also terminate its
obligation to purchase the Second Issuance Preferred Shares if the Company or
its affiliates breach the Company's obligations described above regarding the
non-solicitation of a Transaction Proposal.
Under the Stock Purchase Agreement, the Company will be required to pay to
the Purchaser liquidated damages of $17.5 million in case of a termination by
the Purchaser for the Company's uncured material breach, the Company's breach
of its non-solicitation obligations, or for any of the reasons specified in
the first sentence of the immediately preceding paragraph. In addition, these
liquidated damages will be payable in case of a termination by the Company
after its Board of Directors has withdrawn or modified in a manner adverse to
the Purchaser the Board's recommendation of the Stock Purchase Agreement or
has accepted or recommended a Superior Proposal. These liquidated damages will
also be payable if the Company's stockholders do not approve the Purchaser
Acquisitions at the Stockholders Meeting and prior to the meeting a
Transaction Proposal was made known to the Company or was made directly to its
stockholders or any person publicly announced an intention to make a
Transaction Proposal.
Transaction Expenses. The Company has agreed to pay to the Purchaser, upon
the closing of the Second Issuance, $8,000,000 for the Purchaser's fees and
expenses in connection with the transactions contemplated by the Stock
Purchase Agreement. Except for such payment and the amount of any liquidated
damages that may be payable in case of a termination as described above, the
Company and the Purchaser have agreed that each of the parties will pay its
own costs and expenses incurred in connection with the transactions.
Management Stock Agreements
The following summary of certain terms of the Management Stock Agreements
does not purport to be complete and is qualified in its entirety by reference
to the complete text of the forms of Management Stock Agreements, which are
filed as exhibits to the Schedule 14D-1 and incorporated herein by reference.
Capitalized terms used herein and not otherwise defined shall have the meaning
ascribed to them in the Management Stock Agreements. YOU ARE URGED TO READ THE
MANAGEMENT STOCK AGREEMENTS IN THEIR ENTIRETY.
Agreement to Purchase. As a condition to entering into the Stock Purchase
Agreement, Purchaser and each director of the Company, including directors who
are executive officers of the Company, entered into a Management Stock
Agreement with the Purchaser. Under the Management Stock Agreements, on the
date of the closing of the Second Preferred Stock Purchase, the Purchaser
shall purchase from each Management Stockholder a number of shares equal to
36% of such Management Stockholder's interest in the Company, which interest
is represented by the sum of (i) the number of Shares of Common Stock held by
the Management Stockholder on March 15, 1999 and (ii) the number of Shares
that the Management Stockholder has the right to acquire within thirty days of
such date, at a purchase price of $90.00 per share or, if higher, the purchase
price paid by the Company in the Offer (the "Management Shares"). A Management
Stockholder who does not hold a sufficient number of shares of Common Stock to
meet his obligation under his Management Stock Agreement must exercise the
number of stock options necessary to permit him to deliver the number of
Management Shares required to be delivered under his Management Stock
Agreement.
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Conditions to Closing. The Management Stock Agreements provide that the
obligations of each Management Stockholder and the Purchaser are subject to
the following conditions: (i) the representations and warranties of the other
party to the Management Stock Agreement shall be true and correct on the date
of the closing of the Second Preferred Stock Purchase; (ii) all waiting
periods under the HSR Act shall have either expired or terminated and (iii)
there shall be no injunction or other order issued by a governmental body and
no statute, rule or regulation prohibiting or otherwise restraining such sale.
In addition, the Purchaser's obligations are also conditioned on the Purchaser
having received all regulatory approvals required under the Stock Purchase
Agreement and on there being no pending or threatened litigation or proceeding
in respect of the transactions contemplated by the Management Stock
Agreements.
Agreement Not To Tender. Under the Management Stock Agreements, the
Management Stockholders are prohibited from tendering the shares of Common
Stock owned beneficially or of record by them in the Offer.
Voting Agreement. Under the Management Stock Agreements, each Management
Stockholder has agreed to vote all of the Shares of Common Stock owned
beneficially or of record by him (i) in favor of the Second Preferred Stock
Purchase and the Management Stock Purchases and any matter that could
reasonably be expected to facilitate such transactions and (ii) against any
action that would (a) result in a breach by the Company or such Management
Stockholder of any covenant, obligation, or representation and warranty under
the Stock Purchase Agreement or the Management Stock Agreements, respectively
or (b) that would interfere with or delay the Second Preferred Stock Purchase
and the Management Stock Purchases and the other transactions contemplated by
the Stock Purchase Agreement or the Management Stock Agreements. Each
Management Stockholder's voting obligations expire (i) on or after the date of
the Second Preferred Stock Purchase or (ii) upon a termination of the
Company's and the Purchaser's obligations to consummate the Second Preferred
Stock Purchase pursuant to the Stock Purchase Agreement.
Additional Covenants. Subject to the Management Stockholders' fiduciary
duties as directors of the Company, the Management Stock Agreements prohibit
the Management Stockholders from directly or indirectly soliciting,
responding, or proposing a Transaction Proposal. In addition, the Purchaser
has the right to be notified in the event that a Transaction Proposal is
received by the Company.
Termination. In the event of a termination of the Company's and the
Purchaser's obligations to consummate the Second Preferred Stock Purchase
pursuant to the terms of the Stock Purchase Agreement, the obligations of the
Management Stockholders and the Company to consummate the Management Stock
Purchases will also terminate. However, in the case of Management Stockholders
who are executive officers of the Company, the Purchaser will have a 30-day
option to purchase one-half of their Management Shares for $90.00 per share,
unless the termination of the Second Preferred Stock Purchase was due to the
Purchaser's breach of the Stock Purchase Agreement.
The Management Stockholders are Russell C. Horowitz, John Keister, Michael
J. Riccio, Dennis Cline, Martin L. Schoffstall and Dr. Oren Etzioni, all of
whom are directors of the Company. Messrs. Horowitz, Keister and Riccio are
also executive officers of the Company.
Certificate of Designation
The following summary of the Certificate of Designation does not purport to
be complete and is qualified in its entirety by reference to the complete text
of the Certificate of Designation, which is filed as an exhibit to the
Schedule 14D-1 and incorporated herein by reference. Capitalized terms used
herein and not otherwise defined shall have the meaning ascribed to them in
the Certificate of Designation. YOU ARE URGED TO READ THE CERTIFICATE OF
DESIGNATION IN ITS ENTIRETY.
The Series A Preferred Stock is entitled to the rights, preferences and
privileges set forth in the Certificate of Designation.
Number of Shares. The Certificate of Designation designates 300,000 shares
of the Company's authorized Preferred Stock, $.01 par value, to constitute the
Series A Preferred Stock.
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Dividends. Pursuant to the Certificate of Designation (i) the Series A
Preferred Stock is not entitled to receive dividends unless and until, among
other things, the Board of Directors of the Company declares a dividend on the
Common Stock and (ii) the Board of Directors may not declare or pay such a
dividend on the Common Stock unless there shall be simultaneous declaration or
payment, as applicable, of a dividend upon the Series A Preferred Stock and
after the payment of the dividends upon the Common Stock and the Series A
Preferred Stock, the Company's net worth exceeds the aggregate liquidation
preference of the Series A Preferred Stock, and (iii) the dividend which is
declared upon each share of Series A Preferred Stock shall be equal in amount
to the dividend payable upon that number of shares of Common Stock then
acquirable upon conversion of a share of Series A Preferred Stock.
Liquidation, Dissolution or Winding Up. Upon a voluntary or involuntary
liquidation, dissolution or winding up of the Company, (i) the Series A
Preferred Stock shall rank senior to the Common Stock and any other Company
stock that is junior to the Series A Preferred Stock (collectively, "Junior
Stock"), and (ii) the Series A Preferred Stock shall be entitled to $1,000 per
share (the "Liquidation Preference") plus declared and unpaid dividends prior
to any payment to Junior Stock. Except as set forth in the previous sentence,
holders of shares of Series A Preferred Stock shall not be entitled to any
distribution in the event of liquidation, dissolution or winding up of the
Company.
Voting. Each holder of shares of Series A Preferred Stock shall have the
right to one vote for each share of Common Stock into which such holder's
shares of Series A Preferred Stock could then be converted and, except as
otherwise required by law, shall be entitled to vote with respect to any
question upon which holders of Common Stock have the right to vote; provided,
however, that the shares of Series A Preferred Stock shall not have any voting
power with respect to the election of directors unless and until the making of
any necessary filings required by, and the expiration or termination of any
applicable waiting periods under, the HSR Act.
In addition, the consent of the holders of Series A Preferred Stock, voting
as a class, is required to effect certain corporate actions, including without
limitation, to amend or modify the Company's Certificate of Incorporation or
By-Laws or the Certificate of Designation in any manner that would adversely
affect the powers, preferences or special rights of the Series A Preferred
Stock.
Upon the consummation of the Second Preferred Stock Purchase, and continuing
as long as a majority of the Series A Preferred Stock remains outstanding, the
consent of holders of a majority of the Series A Preferred Stock is also
required for any of the following corporate actions: (i) any lease, sale or
transfer of at least 30% of the Company's assets; (ii) any merger,
consolidation or other reorganization of the Company which would result in the
stockholders of the Company immediately prior to such transaction holding less
than 66-2/3% of the voting securities of the surviving corporation; (iii) the
acquisition of another entity or business by any means where the consideration
involved has a value of at least $100,000,000; (iv) the liquidation,
dissolution or winding up of the Company; (v) the commencement by the Company
of any voluntary bankruptcy proceeding; and (vi) the redemption or repurchase
of any Junior Stock or stock ranking on liquidation on parity with the Series
A Preferred Stock other than a repurchase in connection with the termination
of employees of the Company.
Conversion Rights. Subject to compliance with the HSR Act, each share of
Series A Preferred Stock is convertible at any time at the option of the
holder into a number of shares of Common Stock equal to the result of dividing
(i) the sum of (A) the aggregate Liquidation Preference of all the Series A
Preferred Stock to be converted plus (B) any declared but unpaid dividends on
such shares, by (ii) the Conversion Price, which initially is set at $66.11
per share of Common Stock, subject to adjustment from time to time for stock
dividends, subdivisions, reclassifications or combinations and for certain
other events. In addition, shares of Series A Preferred Stock will
automatically be converted on the same basis into shares of Common Stock if
(x) a holder transfers such shares to an unaffiliated party or (y) the Company
consummates a transaction which will result in the transfer of 50% or greater
of the voting securities of the Company to an unrelated party.
No Redemption Rights. The Series A Preferred Stock is not subject to
mandatory or optional redemption.
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Registration Rights Agreement
The following summary of the Registration Rights Agreement does not purport
to be complete and is qualified in its entirety by reference to the complete
text of the Registration Rights Agreement, which is filed as an exhibit to the
Schedule 14D-1 and incorporated herein by reference. Capitalized terms used
herein and not otherwise defined shall have the meaning ascribed to them in
the Registration Rights Agreement. YOU ARE URGED TO READ THE REGISTRATION
RIGHTS AGREEMENT IN ITS ENTIRETY.
The Registration Rights Agreement was entered into concurrently with the
Stock Purchase Agreement. The Registration Rights Agreement provides, among
other things, that at any time beginning 180 days after March 15, 1999, the
Holders (defined as the Purchaser and all of its Affiliates and certain
transferees) of a majority of the shares of Common Stock held by all Holders
at the time of any request for registration shall have the right by written
notice (a "Demand Notice") to require the Company to file a Registration
Statement under the Securities Act; provided, however, that this right may be
exercised on no more than three occasions. Under the Registration Rights
Agreement, a registration request will not be deemed to have been made if the
Registration Statement does not become effective under the Securities Act or
if an order or an injunction interferes or prevents the contemplated method of
distribution.
Pursuant to the Registration Rights Agreement, the Company has the right to
include a primary offering of additional shares of Common Stock, including
shares held by other stockholders of the Company, in any Registration
Statement filed pursuant to a Demand Notice. If the managing underwriter of
such an offering (the "Underwriter") determines in good faith that if all the
shares of Common Stock that the Selling Holders and the Company wish to
include in the Registration Statement were included, the success of the
offering would be materially and adversely affected, then the total number of
shares to be included in the Registration Statement shall be reduced to the
amount recommended by the Underwriter. If the event of such a reduction in the
number of shares to be registered, then (i) unless the Registration Statement
includes all of the Common Stock designated for sale by all Selling Holders
participating in the demand registration, the Registration Statement shall not
include any shares to be offered by the Company or sold by other stockholders,
and (ii) if the Registration Statement does not include all of the Common
Stock designated for sale by such Selling Holders, the Common Stock included
in the Registration Statement shall be allocated among such Selling Holders
pro rata (based on the number of shares held by each). The Registration Rights
Agreement provides that if the number of shares requested to be registered is
reduced by 15% of more pursuant to the recommendation of the Underwriter, then
the Demand Notice shall not be deemed to have been made.
In addition, the Registration Rights Agreement allows the Company to defer
the filing of a Registration Statement made pursuant to a Demand Notice under
certain circumstances. In addition to registration rights pursuant to a Demand
Notice, the Registration Rights Agreement provides that the Holders shall have
certain incidental or "piggy-back" registration rights with respect to most
offerings of Common Stock. The Holders' incidental registration rights are,
however, more limited than their registration rights pursuant to a Demand
Notice. The Registration Rights Agreement also includes certain Hold-Back
Agreements, applicable to both the Selling Holders and the Company.
The Registration Rights Agreement provides that expenses relating to the
registration of shares (other than the Selling Holders' legal expenses and
commissions) will be paid by the Company and otherwise contains terms that are
customary to registration rights agreements of its type, including, but not
limited to, rights of indemnification and contribution.
Other Matters
Except as otherwise described in this Offer to Purchase, the Purchaser has
no current plans or proposals that would relate to, or result in, any
extraordinary corporate transaction involving the Company, such as a merger,
reorganization or liquidation involving the Company or any of its
subsidiaries, a sale or transfer of a material amount of assets of the Company
or any of its subsidiaries, any change in the Company's capitalization
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or dividend policy or any other material change in the Company's business,
corporate structure or personnel. The Purchaser and its affiliates reserve the
right to purchase, following consummation or termination of the Offer,
additional shares from the Company, in the open market or otherwise. Any
additional purchases of Shares could be at a price greater or less than the
price to be paid for Shares in the Offer.
15. Certain Legal Matters.
General
Except as described below, based on its examination of publicly available
filings by the Company with the Commission and other publicly available
information concerning the Company, the Purchaser is not aware of any license
or regulatory permit that appears to be material to the business of the
Company and its subsidiaries, taken as a whole, that might be adversely
affected by the Purchaser's acquisition of Shares pursuant to the Purchaser
Acquisitions or the Offer, or of any approval or other action by any
Governmental Authority or public body, domestic or foreign, that would be
required for the acquisition or ownership of Shares by the Purchaser pursuant
to the Purchaser Acquisitions or the Offer. Should any such approval or other
action be required, it is presently contemplated that such approval or action
would be sought except as described below under "Other State Takeover
Statutes." While the Purchaser does not currently intend to delay acceptance
for payment of Shares tendered pursuant to the Offer pending the outcome of
any such matter, there can be no assurance that any such approval or other
action, if needed, would be obtained without substantial conditions or that
adverse consequences might not result to the Company's business or that
certain parts of the Company's business might not have to be disposed of in
the event that such approvals were not obtained or such other actions were not
taken or in order to obtain any such approval or other action. The Purchaser's
obligation under the Offer to accept for payment and pay for shares is subject
to the Offer Conditions, including conditions relating to legal matters
discussed in this Section 15.
THE OFFER IS SUBJECT TO THE CONDITION THAT PURCHASER SHALL HAVE RECEIVED ALL
NECESSARY REGULATORY APPROVALS FOR THE ACQUISITION OF SHARES PURSUANT TO THE
OFFER AND FOR CONSUMMATION OF THE PURCHASER ACQUISITIONS. UNLESS EARLIER
TERMINATED, THE PURCHASER EXPECTS THAT IT WILL EXTEND THE OFFER FROM TIME TO
TIME UNTIL ALL SUCH APPROVALS HAVE BEEN RECEIVED.
Antitrust
Under the HSR Act and the rules that have been promulgated thereunder by the
FTC, certain acquisition transactions may not be consummated unless certain
information has been furnished to the Antitrust Division and the FTC and
certain waiting period requirements have been satisfied. The acquisition of
Shares pursuant to the Offer is subject to such requirements. See Sections 5
and 6.
The Purchaser expects to file a Notification and Report Form with respect to
the Offer and the Purchaser Acquisitions under the HSR Act as soon as
practicable following commencement of the Offer. The waiting period under the
HSR Act with respect to the Offer and the Purchaser Acquisitions will expire
at 11:59 p.m., New York City time, on the 15th day after the date such form is
filed unless early termination of the waiting period is granted. In addition,
the Antitrust Division or the FTC may extend such waiting periods by
requesting additional information or documentary material from the Purchaser.
If such a request is made, the waiting period related to the Offer will expire
at 11:59 p.m. New York City time on the 10th day after substantial compliance
by the Purchaser with such request. The Antitrust Division or the FTC may
issue only one request for additional information. In practice, complying with
a request for additional information or material can take a significant amount
of time. In addition, if the Antitrust Division or the FTC raises substantive
issues in connection with a proposed transaction, the parties may engage in
negotiations with the relevant governmental agency concerning possible means
of addressing those issues and may agree to delay consummation of the
transaction while such negotiations continue. Expiration or termination of
applicable waiting periods under the HSR Act is a condition to the Purchaser's
obligation to accept for payment and pay for Shares tendered pursuant to the
Offer.
26
<PAGE>
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed purchase of the Second
Issuance Preferred Shares and Shares tendered pursuant to the Offer by the
Purchaser. At any time before or after such purchase, the Antitrust Division
or the FTC could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
transaction or seeking divestiture of the Shares so acquired or divestiture of
substantial assets of the Purchaser or the Company. Litigation seeking similar
relief could be brought by private parties.
The Purchaser does not believe that consummation of the Offer and the
Purchaser Acquisitions and the other transactions contemplated by the Stock
Purchase Agreement will result in violation of any applicable antitrust laws.
However, there can be no assurance that a challenge to the Offer and the other
transactions contemplated by the Stock Purchase Agreement on antitrust grounds
will not be made, or if such a challenge is made, what the result will be. See
Section 6 for certain conditions to the purchase and sale of the Shares
tendered in the Offer and the Second Issuance Preferred Shares, including
conditions with respect to litigation and certain governmental actions.
State Takeover Statutes
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire securities of corporations that are incorporated in
such states, or whose business operations have substantial economic effects in
such states, or which have substantial assets, security holders, employees,
principal executive offices or places of business in such states.
In Edgar v. MITE Corporation, the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Act,
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in CTS Corp. v. Dynamics
Corp. of America, the Supreme Court held that a state may, as a matter of
corporate law and, in particular, those laws concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of
a target corporation without prior approval of the remaining stockholders,
provided that such laws were applicable under certain conditions, in
particular, that the corporation has a substantial number of stockholders in
the state and is incorporated there.
The Company is incorporated under the laws of the State of Delaware. In
general, Section 203 of the Delaware General Corporation law ("DGCL") prevents
an "interested stockholder" (generally, a person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock, or an
affiliate or associate thereof) from engaging in a "business combination"
(defined to include mergers and certain other transactions) with a Delaware
corporation for a period of three years following the date such person became
an interested stockholder unless, among other things, prior to such date the
board of directors of the corporation approved either the business combination
or the transaction which resulted in the stockholder becoming an interested
stockholder.
Upon consummation of the purchase of the First Issuance Preferred Shares,
the Purchaser became an interested stockholder within the meaning of Section
203 of the DGCL pursuant to the Stock Purchase Agreement. The Board of
Directors of the Company approved the Stock Purchase Agreement and the
transactions contemplated thereby prior to the time that the Purchaser became
an interested stockholder. Accordingly Section 203 of the DGCL is inapplicable
to the Offer, and the Purchaser Acquisitions.
The Company, which has its principal offices in the State of Washington, is
also subject to the Washington takeover statute. RCW 23B.19 contains the anti-
takeover provisions of the Washington Business Corporation Act (the "WBCA").
In general, "target corporations" (Washington corporations, and foreign
corporations that are qualified to do business in Washington and have a class
of securities registered under Section 12 or 15 of the Exchange Act) are
subject, without any additional corporate action, to the anti-takeover
provisions under the WBCA. In general, RCW 23B.19 prevents a target
corporation from engaging in a merger, share exchange, consolidation, or a
significant sale, lease, exchange, mortgage, or similar "significant business
transaction" (as
27
<PAGE>
more fully described in RCW 23B.19.020) for a period of five years following
an "acquiring person's" acquisition of ten percent or more of the target
corporation's outstanding voting stock. A target corporation may engage in a
significant business transaction at any time, however, if either the proposed
significant business transaction or the acquiring person's acquisition of ten
percent or more of the target corporation's outstanding voting stock is
approved by the majority of the target corporation's board of directors prior
to the date on which the acquiring person acquired ten percent or more of the
stock. However, unless the significant business transaction was approved by
the target corporation's board of directors prior to the acquiring person's
acquisition of stock, a subsequent significant business transaction involving
a merger, share exchange, consolidation, liquidation or dissolution will be
subject to the provisions of RCW 23B.19.040 mandating certain minimum
consideration that must be paid to the target corporation's shareholders by
the acquiring person in such transaction.
The Purchaser became, upon consummation of the purchase of the First
Issuance Preferred Shares, an acquiring person within the meaning of RCW
23B.19. The Board of Directors of the Company approved the Stock Purchase
Agreement and the transactions contemplated thereby prior to the time that the
Purchaser became an acquiring person; accordingly, the Company will be
permitted to engage in a significant business transaction with the Purchaser.
However, such a transaction involving a merger, share exchange, consolidation
or liquidation might nevertheless be subject to the minimum price provisions
of RCW 23B.19.040.
The Company, directly or through subsidiaries, conducts business in a number
of other states throughout the United States, some of which have enacted
"takeover" laws. The Purchaser does not know whether any of these laws will,
by their terms, apply to the Offer or the Purchaser Acquisitions, and has not
complied with any such laws. To the extent that certain provisions of these
statutes purport to apply to the Offer or the Purchaser Acquisitions, the
Purchaser believes that there are reasonable bases for contesting such laws.
If any person should seek to apply any state takeover law, the Purchaser would
take such action as then appears desirable, which action may include
challenging the validity or applicability of any such law in appropriate court
proceedings. If it is asserted that one or more takeover laws apply to the
Offer or the Purchaser Acquisitions, and it is not determined by an
appropriate court that such law or laws do not apply or are invalid as applied
to the Offer or the Purchaser Acquisitions, the Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities, and the Purchaser might be unable to purchase or pay for shares
tendered pursuant to the Offer, or be delayed in continuing or consummating
the Offer or the Purchaser Acquisitions. In such case, the Purchaser may not
be obligated to accept for payment or pay for Shares tendered pursuant to the
Offer. See "THE TENDER OFFER-Section 6. Certain Conditions to the Offer."
16. Fees And Expenses.
The Purchaser has retained NationsBanc Montgomery Securities LLC as its
financial advisor in connection with the Offer, the Preferred Stock
Acquisitions and the Management Stock Purchases and as Dealer Manager for the
Offer. Pursuant to the terms of NationsBanc Montgomery Securities LLC's
engagement, the Purchaser has agreed to pay NationsBanc Montgomery Securities
LLC upon consummation of the applicable transaction an aggregate financial
advisory fee equal to 1.0% of the total consideration payable in the Offer,
the Preferred Stock Acquisitions and the Management Stock Purchases for its
services as financial advisor. The Purchaser has also agreed to pay
NationsBanc Montgomery Securities LLC a fee of $250,000 for its services as
Dealer Manager, which fee will be credited against the fees otherwise due to
NationsBanc Montgomery Securities LLC in its capacity as financial advisor. In
addition, the Purchaser has agreed to reimburse NationsBanc Montgomery
Securities LLC for its reasonable out-of-pocket expenses, including reasonable
fees and disbursements of counsel, and to indemnify NationsBanc Montgomery
Securities LLC and certain related parties against certain liabilities,
including certain liabilities under the federal securities laws, relating to,
or arising out of, its engagement.
The Purchaser has retained MacKenzie Partners, Inc. to act as the
Information Agent and IBJ Whitehall Bank & Trust Company to act as the
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telex, telegraph and personal interview
and may request brokers,
28
<PAGE>
dealers and other nominee stockholders to forward the Offer materials to
beneficial owners. The Information Agent will receive a fee for services as
Information Agent of $7,500 and will be reimbursed for certain out-of-pocket
expenses. The Depositary will receive reasonable and customary compensation
for services relating to the Offer and will be reimbursed for certain out-of-
pocket expenses. The Purchaser has also agreed to indemnify the Information
Agent and the Depositary against certain liabilities and expenses in
connection with the Offer, including certain liabilities under the federal
securities laws.
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other person for soliciting tenders of Shares pursuant to the Offer
(other than to the Dealer Manager and the Information Agent). Brokers,
dealers, commercial banks and trust companies will, upon request, be
reimbursed by the Purchaser for customary mailing and handling expenses
incurred by them in forwarding offering materials to their customers.
17. Miscellaneous.
The Offer is being made to all holders of Shares. The Purchaser is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If the Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of the Shares pursuant thereto, the Purchaser will make a good
faith effort to comply with such statute or seek to have such statute declared
inapplicable to the Offer. If, after such good faith effort, the Purchaser
cannot comply with any such statute, the Offer will not be made to (and
tenders will not be accepted from or on behalf of) the holders of Shares in
such state. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Purchaser by the Dealer Manager or one or
more registered brokers or dealers licensed under the laws of such
jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of the Purchaser or the Company not contained in this
Offer to Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been
authorized.
The Purchaser has filed the Schedule 14D-1 with the Commission, together
with all exhibits thereto, pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer. Such Tender Offer Statement and any amendments
thereto, including exhibits, may be inspected and copies may be obtained from
the offices of the Commission in the manner set forth in Section 10 (except
that they will not be available at the regional offices of the Commission).
Vulcan Ventures Incorporated
March 19, 1999
29
<PAGE>
ANNEX A
INFORMATION RELATING TO DIRECTORS AND
EXECUTIVE OFFICERS OF THE PURCHASER
The following table sets forth the names, addresses, present principal
occupations or employment and material occupations, positions, offices or
employment, during the last five years of the directors and executive officers
of the Purchaser. The business address of each person listed below is Vulcan
Ventures Incorporated, 110-110th Avenue N.E. Suite 550, Bellevue, WA 98004.
All of the persons listed below are citizens of the United States.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT
---- ----------------------------------
<C> <S>
Paul G. Allen For at least the past five years, President, Chairman,
Director and sole shareholder of the Purchaser and Chairman
of Vulcan Northwest Inc ("VNW"), which manages Mr. Allen's
personal and professional endeavors, including Asymetrix
Learning Systems, Inc., Charter Communications and Marcus
Cable Company. Mr. Allen is a private investor with interests
in a wide variety of companies, many of which focus on
multimedia digital communications such as Interval Research
Corporation, of which Mr. Allen is the controlling
shareholder and a director. In addition, Mr. Allen is the
owner and the Chairman of the Board of the Portland Trail
Blazers of the National Basketball Association, and is the
owner and the Chairman of the Board of the Seattle Seahawks
of the National Football League. Mr. Allen currently serves
as a director of Microsoft Corporation and USA Networks, Inc.
and also serves as a director of various private
corporations.
William D. Savoy For at least the past five years, Vice President and Director
of the Purchaser and President and Director of VNW. Mr. Savoy
currently serves as a director of Charter Communications.
From 1987 until November 1990, Mr. Savoy was employed by
Layered Inc. and became its President in 1988. Mr. Savoy
serves on the Advisory Board of DreamWorks SKG and also
serves as director of CNET, Inc., Harbinger Corporation,
Metricom, Inc., Telescan, Inc., Ticketmaster Online, City
Search, U.S. Satellite Broadcasting Co., Inc., and USA
Networks, Inc.
Bert E. Kolde For at least the past five years, Vice President, Secretary
and Treasurer of the Purchaser and Vice President of VNW.
Jo Allen Patton For at least the past five years, Vice President, Vice
Chairman and Director of the Purchaser and Vice Chairman of
VNW.
</TABLE>
On January 19, 1999, Mr. Allen purchased 20,000 Shares of Common Stock in an
open market transaction at a price of $55.875 per Share.
30
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal and certificates for Shares should be sent or
delivered by each stockholder of the Company or his broker, dealer, commercial
bank or trust company to the Depositary at one of its addresses set forth
below:
The Depositary for the Offer is: IBJ Whitehall Bank & Trust Company
<TABLE>
<S> <C> <C>
Mailing Address: By Facsimile Copy Number: Hand/Overnight Delivery:
BJ Whitehall Bank & Trust CompanyI (For Eligible IBJ Whitehall Bank & Trust Company
P.O. Box 84 Institutions Only) One State Street
Bowling Green Station (212) 858-2611 New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing
Attn: Reorganization Operations Confirm Receipt of Window, Subcellar One, (SC-1)
Department Facsimile by Telephone:
(212) 858-2103
</TABLE>
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers set forth below. Additional copies of this Offer to Purchase and the
Letter of Transmittal may be obtained from the Information Agent. Stockholders
may also contact their brokers, dealers, commercial banks or trust companies
for assistance concerning the Offer.
The Information Agent for the Offer is:
[LOGO OF MACKENZIE PARTNERS, INC.]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
CALL TOLL-FREE (800) 322-2885
The Dealer Manager for the Offer is:
[LOGO OF NATIONSBANC MONTGOMERY SECURITIES]
NationsBanc Montgomery Securities LLC
11601 Wilshire Boulevard, Suite 500
Los Angeles, California 90025
(310) 575-4820, Extension 1 or 7
<PAGE>
EXHIBIT 99(a)(2)
Letter of Transmittal
To Tender Shares of Common Stock
of
Go2Net, Inc.
at
$90.00 Net Per Share
Pursuant to the Offer to Purchase Dated March 19, 1999
by
Vulcan Ventures Incorporated
The Purchaser
- -------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 15, 1999,
UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
The Depositary for the Offer is: IBJ WHITEHALL BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
Mailing Address: By Facsimile Copy Number: Hand/Overnight Delivery:
IBJ Whitehall Bank & Trust Company (For Eligible Institutions Only) IBJ Whitehall Bank & Trust Company
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Confirm Receipt of Attn: Securities Processing Window,
Attn: Reorganization Operations Facsimile by Telephone: Subcellar One, (SC-1)
Department (212) 858-2103
</TABLE>
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s)
(Please fill in, if blank, exactly as name(s) and share(s) Numbers of Share
tendered appear(s) on share certificate(s)) Share Total Number Certificate(s)
(Attach additional list, if necessary) Certificate(s)* of Shares* Tendered**
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Total Shares
- ----------------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares being
delivered to the Depositary are being tendered. See Instruction 4.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR AND COMPLETE THE
SUBSTITUTE FORM W-9 SET FORTH BELOW.
<PAGE>
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchase) is utilized, if delivery is to be made by book-entry transfer to the
account maintained by the Depositary at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 2 of the Offer to Purchase. Stockholders whose certificates are not
immediately available or who cannot deliver their certificates or deliver
confirmation of the book-entry transfer of their Shares (as defined below)
into the Depositary's account at the Book-Entry Transfer Facility ("Book-Entry
Confirmation") and all other documents required hereby to the Depositary on or
prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase) must tender their Shares according to the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase. See Instruction 2.
Delivery of documents to the Book-Entry Transfer Facility does not constitute
delivery to the Depositary.
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ______________________________________________
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) _____________________________________________
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution that Guaranteed Delivery _______________________________
If delivery is by Book-Entry Transfer, give the following:
DTC Account Number _________________________________________________________
Transaction Code Number ____________________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
(TO BE COMPLETED)
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
GENTLEMEN AND LADIES:
The undersigned hereby tenders to Vulcan Ventures Incorporated, a
Washington corporation (the "Purchaser"), the above described shares of Common
Stock, par value $.01 per share (the "Common Stock"), of Go2Net, Inc., a
Delaware corporation (the "Company") (shares of the Common Stock being
referred to as the "Shares"), pursuant to the Purchaser's offer to purchase up
to 3,596,688 of the outstanding Shares upon the terms and subject to the
conditions set forth in the Offer to Purchase dated March 19, 1999 (the "Offer
to Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together constitute the "Offer"), at the purchase price of
$90.00 per Share, net to the seller in cash.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms and subject to the conditions
of the Offer, the undersigned hereby sells, assigns, and transfers to, or upon
the order of, the Purchaser all right, title and interest in and to all the
Shares that are being tendered hereby (and any and all other Shares or other
securities issued or issuable in respect thereof on or after March 15, 1999)
and irrevocably constitutes and appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares (and
any such other Shares or securities) with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (a) deliver certificates for such Shares (and any such other
Shares or securities), or transfer ownership of such Shares (and any such
other Shares or securities) on the account books maintained by the Book-Entry
Transfer Facility, together in either such case with all accompanying
evidences of transfer and authenticity, to or upon the order of the Purchaser
upon receipt by the Depositary, as the undersigned's agent, of the purchase
price (adjusted, if appropriate, as provided in the Offer to Purchase), (b)
present such Shares (and any such other Shares or securities) for transfer on
the books of the Company and (c) receive all benefits and otherwise exercise
all rights of beneficial ownership of such Shares (and any such other Shares
or securities), all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints each designee of the Purchaser
as the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to vote in such manner as each such attorney and proxy or his
substitute shall in his sole discretion deem proper, and otherwise act
(including pursuant to written consent) with respect to all the Shares
tendered hereby which have been accepted for payment by the Purchaser prior to
the time of such vote or action (and any and all other Shares or securities
issued or issuable in respect thereof on or after March 15, 1999), which the
undersigned is entitled to vote at any meeting of stockholders (whether annual
or special and whether or not an adjourned meeting) of the Company, or consent
in lieu of any such meeting, or otherwise. This proxy is coupled with an
interest in the Company and in the Shares and is irrevocable and is granted in
consideration of, and is effective upon, the deposit by the Purchaser with the
Depositary of the purchase price for such Shares in accordance with the terms
of the Offer. Such acceptance for payment shall revoke all prior proxies
granted by the undersigned at any time with respect to such Shares (and any
such other Shares or other securities) and no subsequent proxies will be given
(and if given will be deemed not to be effective) with respect thereto by the
undersigned.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any and all other Shares or other securities issued or
issuable in respect thereof on or after March 15, 1999) and that, when the
same are accepted for payment by the Purchaser, the Purchaser will acquire
good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and the same will not be subject to any
adverse claim. The undersigned, upon request, will execute and deliver any
additional documents deemed by the Depositary or the Purchaser to be necessary
or desirable to complete the sale, assignment and transfer of the Shares
tendered hereby (and any and all such other Shares or other securities).
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall not be affected by, and shall survive, the death or
incapacity of the undersigned and any obligation of the undersigned hereunder
shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as stated
in the Offer to Purchase, this tender is irrevocable.
3
<PAGE>
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer.
The undersigned understands that if more than 3,596,688 Shares are validly
tendered prior to the expiration of the Offer and not validly withdrawn in
accordance with Section 3 of the Offer to Purchase, Shares so tendered and not
validly withdrawn shall be accepted for payment on a pro rata basis according
to the number of Shares validly tendered and not withdrawn by the Expiration
Date (with appropriate adjustments to avoid the purchase of fractional
Shares).
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or any certificates for
Shares not tendered or accepted for payment in the name(s) of the undersigned.
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment (and accompanying documents,
as appropriate) to the undersigned at the address shown below the
undersigned's signature. In the event that both the Special Delivery
Instructions and the Special Payment Instructions are completed, please issue
the check for the purchase price and/or any certificates for Shares not
tendered or accepted for payment in the name of, and deliver said check and/or
return such certificates to, the person or persons so indicated. Stockholders
delivering Shares by book-entry transfer may request that any Shares not
accepted for payment be returned by crediting such account maintained at a
Book-Entry Transfer Facility as such stockholder may designate by making an
appropriate entry under "Special Payment Instructions." The undersigned
recognizes that the Purchaser has no obligation pursuant to the Special
Payment Instructions to transfer any Shares from the name of the registered
holder thereof if the Purchaser does not accept for payment any of the Shares
so tendered.
4
<PAGE>
- ----------------------------------- -----------------------------------
SPECIAL PAYMENT INSTRUCTIONS (See SPECIAL DELIVERY INSTRUCTIONS
Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7)
To be completed ONLY if To be completed ONLY if
certificates for Shares not certificates for Shares not
tendered or not purchased and/or tendered or not purchased and/or
the check for the purchase price the check for the purchase price
of Shares purchased are to be of Shares purchased are to be
issued in the name of someone sent to someone other than the
other than the undersigned, or if undersigned, or to the
Shares delivered by book-entry undersigned at an address other
which are not purchased are to be than that shown above.
returned by credit to an account
maintained at the Book-Entry
Transfer Facility other than that
designated above.
Issue [_] Check and/or Issue [_] Check and/or
[_] Certificate to: [_] Certificate to:
Name______________________________
(Please Print)
Address __________________________
Name _____________________________ __________________________________
(Please Print) (Zip Code)
Address __________________________
__________________________________ __________________________________
(Include Zip Code) (Tax Identification or Social
Security Number)
__________________________________ (See Substitute Form W-9 on
(Tax Identification or Social Reverse Side)
Security Number)
(See Substitute Form W-9 on
Reverse Side)
Credit unpurchased Shares
delivered by book-entry transfer
to the Book-Entry Transfer
Facility account set forth below:
__________________________________
(Account Number)
5
<PAGE>
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
............................................................................
............................................................................
(Signature(s) of Owner(s))
Dated: , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, agents, officers of
corporations or others acting in a fiduciary or representative capacity,
please provide the following information. See Instruction 5.)
Name(s).....................................................................
............................................................................
(Please Print)
Capacity (full title).......................................................
Address.....................................................................
............................................................................
(Include Zip Code)
Area Code and Telephone Number..............................................
............................................................................
(Tax Identification or Social Security No.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
............................................................................
(Authorized Signature)
Name........................................................................
(Please Print)
Title.......................................................................
Name of Firm................................................................
Address.....................................................................
............................................................................
............................................................................
(Include Zip Code)
Area Code and Telephone Number..............................................
Dated: , 1999
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder of the Shares (which term, for purposes of this document,
shall include any participant in the Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of Shares) tendered
herewith, unless such holder has completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the reverse hereof, or (ii) if such Shares are tendered for the account of a
firm which is a member of the Medallion Signature Guarantee Program, or by any
other "eligible guarantor institution," as such term is defined in Rule 17Ad-
15 under the Exchange Act (each of the foregoing, an "Eligible Institution").
In all other cases, all signatures on this Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates. This Letter of
Transmittal is to be completed by stockholders either if certificates are to
be forwarded herewith or if tenders of Shares are to be made pursuant to the
procedures for delivery by book-entry transfer set forth in Section 2 of the
Offer to Purchase. Certificates for all physically tendered Shares, or any
Book-Entry Confirmation of Shares, as the case may be, as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
unless an Agent's Message (as defined in the Offer to Purchase) is utilized,
and any other documents required by this Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth herein on or
prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase). Stockholders whose certificates for Shares are not immediately
available or who cannot deliver their certificates and all other required
documents to the Depositary on or prior to the Expiration Date may tender
their Shares by properly completing and duly executing the Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in
Section 2 of the Offer to Purchase. Pursuant to such procedure, (i) such
tender must be made by or through an Eligible Institution, (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in
the form provided by the Purchaser, must be received by the Depositary prior
to the Expiration Date, and (iii) the certificates for all physically tendered
Shares or Book-Entry Confirmation of Shares, as the case may be, together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), unless an Agent's Message (as defined in the Offer to Purchase) is
utilized, and any other documents required by this Letter of Transmittal, must
be received by the Depositary within three Nasdaq National Market System
trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in Section 2 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATE FOR
SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-
ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING
STOCKHOLDER AND, EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION 2, THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
INSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal (or facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule attached hereto.
4. Partial Tenders. (Not applicable to stockholders who tender by book-
entry transfer.) If fewer than all the Shares evidenced by any certificate
submitted are to be tendered, fill in the number of Shares which are to be
tendered in the box entitled "Number of Shares Tendered." In such case, new
certificate(s) for the remainder of the Shares that were evidenced by your old
certificate(s) will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after
the Expiration Date. All Shares represented by certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
7
<PAGE>
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or
any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Purchaser of such person's authority so to
act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment or certificates for Shares
not tendered or purchased are to be issued to a person other than the
registered owner(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. Stock Transfer Taxes. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect
to the transfer and sale of purchased Shares to it or its order pursuant to
the Offer. If payment of the purchase price is to be made to, or if
certificates for Shares not tendered or purchased are to be registered in the
name of, any person other than the registered holder, or if tendered
certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any stock transfer taxes
(whether imposed on the registered holder or such person) payable on account
of the transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. Special Payment and Delivery Instructions. If a check and/or
certificates for unpurchased Shares are to be issued in the name of a person
other than the signer of this Letter of Transmittal or if a check is to be
sent and/or such certificates are to be returned to someone other than the
signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be
completed. Stockholders tendering Shares by book-entry transfer may request
that Shares not purchased be credited to such account maintained at the Book-
Entry Transfer Facility as such stockholder may designate hereon. If no such
instructions are given, such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated above.
8. Questions and Requests for Assistance or Additional Copies. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase and this Letter of Transmittal may be obtained from, the
Information Agent or the Dealer Manager at their respective addresses set
forth below or from your broker, dealer, commercial bank or trust company.
9. Waiver of Conditions. Subject to the terms of the Stock Purchase
Agreement (as defined in the Offer to Purchase), the conditions of the Offer
may be waived by the Purchaser, in whole or in part, at any time and from time
to time in the Purchaser's sole discretion, in the case of any Shares
tendered.
8
<PAGE>
10. Substitute Form W-9. The tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify whether the stockholder is subject to backup withholding of
Federal income tax. If a tendering stockholder is subject to backup
withholding, the stockholder must cross out item (2) of the Certification box
of the Substitute Form W-9. Failure to provide the information on the
Substitute Form W-9 may subject the tendering stockholder to 31% Federal
income tax withholding on the payment of the purchase price. If the tendering
stockholder has not been issued a TIN and has applied for a number or intends
to apply for a number in the near future, he or she should write "Applied For"
in the space provided for the TIN in Part 1, and sign and date the Substitute
Form W-9. If "Applied For" is written in Part 1 and the Depositary is not
provided with a TIN within 60 days, the Depositary will withhold 31% on all
payments of the purchase price until a TIN is provided to the Depositary.
11. Lost, Destroyed or Stolen Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), TOGETHER
WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is
an individual, the TIN is his social security number. If a tendering
stockholder is subject to backup withholding, he must cross out item (2) of
the Certification box on the Substitute Form W-9. If the Depositary is not
provided with the correct TIN, the stockholder may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, payments that are made
to such stockholder with respect to Shares purchased pursuant to the Offer may
be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of his correct TIN by completing the form
below certifying that the TIN provided on the Substitute Form W-9 is correct
(or that such stockholder is awaiting a TIN).
9
<PAGE>
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on
which number to report. If the tendering stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, he should write "Applied For" in the space provided for in the TIN in
Part 1, and sign and date the Substitute Form W-9. If "Applied For" is written
in Part 1 and the Depositary is not provided with a TIN within 60 days, the
Depositary will withhold 31% on all payments of the purchase price until a TIN
is provided to the Depositary.
10
<PAGE>
PAYER'S NAME: IBJ WHITEHALL BANK & TRUST COMPANY
Part 1--For all accounts,
SUBSTITUTE enter your taxpayer
Form W-9 identification number in
the box at right. (For most
individuals, this is your
social security number. If ----------------------
you do not have a number, Social security number
see Obtaining a Number in
the enclosed guidelines.)
Department of (If awaiting TIN write OR
the Treasury "Applied For".) Certify by
Internal signing and dating below. -----------------------
Revenue Note: If the account is in
Service more than one name, see the
chart in the enclosed Employer identification
Guidelines to determine number
which number to give the -----------------------
payer.
Part 2--Certification--Under penalties of perjury, I
certify that:
(1) The number shown on this form is my correct
taxpayer identification number (or I am waiting
for a number to be issued to me); and
(2) I am not subject to backup withholding because I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or the IRS has
notified me that I am no longer subject to backup
withholding.
Certification Instructions--You must cross out item
(2) above if you have been notified by the IRS that
you are subject to backup withholding because of
underreporting interest or dividends on your tax re-
turn. However, if after being notified by the IRS
that you were subject to backup withholding you re-
ceived another notification from the IRS that you are
no longer subject to backup withholding, do not cross
out item (2). (Also see instructions in the enclosed
Guidelines.)
Payer's Request for Taxpayer Identification Number (TIN)
For Payees Exempt
From Backup
Withholding, see the
enclosed Guidelines
and complete as
instructed herein.
Signature: _________________ Date: ________________
Name (Please Print):
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THIS OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
11
<PAGE>
The Depositary for the Offer is:
IBJ WHITEHALL BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
Mailing Address: By Facsimile Copy Number: Hand/Overnight Delivery:
IBJ Whitehall Bank & Trust Company (For Eligible IBJ Whitehall Bank & Trust Company
P.O. Box 84 Institutions Only) One State Street
Bowling Green Station (212) 858-2611 New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing Window,
Attn: Reorganization Operations Confirm Receipt of Subcellar One, (SC-1)
Department Facsimile by Telephone:
(212) 858-2103
</TABLE>
Questions or requests for assistance may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of the Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent. A stockholder may also contact brokers, dealers, commercial
banks or trust companies for assistance concerning the Offer.
The Information Agent for the Offer is:
[LOGO OF MACKENZIE PARTNERS, INC.]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
CALL TOLL-FREE (800) 322-2885
The Dealer Manager for the Offer is:
[LOGO OF NATIONSBANC MONTGOMERY SECURITIES]
NATIONSBANC MONTGOMERY SECURITIES LLC
11601 Wilshire Boulevard, Suite 500
Los Angeles, California 90025
(310) 575-4820, Extension 1 or 7
12
<PAGE>
EXHIBIT 99(a)(3)
Offer to Purchase for Cash
up to 3,596,688 Shares of Common Stock
of
Go2Net, Inc.
at
$90.00 Net Per Share
by
Vulcan Ventures Incorporated
- ------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 15, 1999, UNLESS THE
OFFER IS EXTENDED.
- ------------------------------------------------------------------------
March 19, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies And Other Nominees:
We have been engaged to act as Dealer Manager in connection with the offer
by Vulcan Ventures Incorporated, a Washington corporation (the "Purchaser"),
to purchase up to 3,596,688 outstanding shares of Common Stock, par value $.01
per share (the "Shares"), of Go2Net, Inc., a Delaware corporation (the
"Company"), at $90.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase dated
March 19, 1999 (the "Offer to Purchase") and the related Letter of Transmittal
(which, as amended or supplemented from time to time, together constitute the
"Offer").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OR
WAIVER OF CERTAIN CONDITIONS, INCLUDING RECEIPT BY THE PURCHASER AND THE
COMPANY OF REGULATORY APPROVALS. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM
NUMBER OF SHARES BEING TENDERED.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. Offer to Purchase dated March 19, 1999;
2. Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer and tendering Shares;
3. Letter to Clients which may be sent to your clients for whose account
you hold Shares in your name or in the name of your nominees, with space
provided for obtaining such clients' instructions with regard to the Offer;
4. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or time will not
permit all required documents to reach the Depositary prior to the
Expiration Date (as defined in the Offer to Purchase) or if the procedures
for book-entry transfer (as set forth in the Offer to Purchase) cannot be
completed on a timely basis;
5. A letter to stockholders of the Company from Russell C. Horowitz,
Chairman of the Board and Chief Executive Officer of the Company, together
with a Solicitation/Recommendation Statement on Schedule 14D-9 filed with
the Securities and Exchange Commission.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. Return envelope addressed to IBJ Whitehall Bank & Trust Company, as
Depositary.
<PAGE>
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Dealer Manager, the Depositary and the
Information Agent as described in the Offer to Purchase) in connection with
the solicitation of tenders of Shares pursuant to the Offer. However, the
Purchaser will reimburse you for customary mailing and handling expenses
incurred by you in forwarding the enclosed materials to your clients.
The Purchaser will pay or cause to be paid any stock transfer taxes payable
on the transfer of Shares to it, except as otherwise provided in Instruction 6
of the enclosed Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 15, 1999,
UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be
sent to the Depositary and certificates representing the tendered Shares
should be delivered, or such Shares should be tendered by book-entry transfer,
all in accordance with the Instructions set forth in the Letter of Transmittal
and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents prior to the expiration
of the Offer, a tender may be effected by following the guaranteed delivery
procedures specified under Section 2, "Procedure for Tendering Shares" in the
Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
NationsBanc Montgomery Securities LLC or MacKenzie Partners, Inc. at their
respective addresses and telephone numbers set forth on the back cover page of
the Offer to Purchase.
Additional copies of the enclosed materials may be obtained by calling the
Information Agent, MacKenzie Partners, Inc., at (800) 322-2885.
Very truly yours,
NationsBanc Montgomery
Securities LLC
Enclosures
- ----------------------------------------------------------------------------
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
YOU OR ANY PERSON AS AN AGENT OF THE PURCHASER, THE DEPOSITARY, THE
INFORMATION AGENT OR THE DEALER MANAGER OR AUTHORIZE YOU OR ANY OTHER
PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM
IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED AND THE
STATEMENTS CONTAINED THEREIN.
- ----------------------------------------------------------------------------
<PAGE>
EXHIBIT 99(a)(4)
Offer to Purchase for Cash
up to 3,596,688 Shares of Common Stock
of
Go2Net, Inc.
at
$90.00 Net Per Share
by
Vulcan Ventures Incorporated
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 15, 1999, UNLESS THE OFFER IS
EXTENDED.
- --------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated March 19, 1999
and the related Letter of Transmittal (which, as amended or supplemented from
time to time, together constitute the "Offer") relating to an offer by Vulcan
Ventures Incorporated, a Washington corporation (the "Purchaser"), to purchase
up to 3,596,688 of the outstanding shares of Common Stock, par value $.01 per
share (the "Shares"), of Go2Net, Inc., a Delaware corporation (the "Company"),
at a purchase price of $90.00 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer. We are the holder
of record of Shares held by us for your account. The Letter of Transmittal is
furnished to you for your information only and cannot be used by you to tender
Shares. A tender for such Shares can be made only by us as the holder of record
and pursuant to your instructions.
We request instructions as to whether you wish to tender any or all of such
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is invited to the following:
1. The tender price is $90.00 per Share, net to the seller in cash.
2. This Offer is being made pursuant to the terms of a Stock Purchase
Agreement, dated March 15, 1999 ("Stock Purchase Agreement"), between the
Company and the Purchaser. Upon the consummation of the transactions
contemplated by the Stock Purchase Agreement, including the Offer, the
Purchaser will beneficially own approximately 55% of the total number of
outstanding shares of the Company's Common Stock (assuming conversion into
Common Stock of all Series A Convertible Preferred Stock that may be purchased
by Purchaser, and assuming that no other shares of Common Stock are issued).
Upon the terms and subject to the conditions of the Offer, if more than
3,596,688 Shares are validly tendered prior to the expiration of the Offer and
not properly withdrawn in accordance with Section 3 of the Offer to Purchase,
such Shares will be accepted for payment on a pro rata basis (with appropriate
adjustments to avoid the purchase of fractional Shares) according to the number
of Shares validly tendered and not properly withdrawn by the expiration of the
Offer.
3. The Offer, proration period and withdrawal rights will expire at 12:00
midnight, New York City time, on Thursday, April 15, 1999, unless the Offer is
extended.
4. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OR
WAIVER OF CERTAIN CONDITIONS, INCLUDING RECEIPT BY THE PURCHASER AND THE
COMPANY OF REGULATORY APPROVALS. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM
NUMBER OF SHARES BEING TENDERED.
5. Stockholders who tender Shares will not be obligated to pay brokerage
fees or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by the Purchaser pursuant
to the Offer.
<PAGE>
If you wish to have us tender any or all of your Shares, please complete,
sign and return the form set forth on the reverse side of this letter. An
envelope to return your instructions is enclosed. If you authorize tender of
your Shares, all such Shares will be tendered unless otherwise indicated by you
in the instruction form. Please forward your instructions to us as soon as
possible to allow us ample time to submit a tender on your behalf prior to the
expiration of the Offer.
The Offer is made solely pursuant to the Offer to Purchase and the related
Letter of Transmittal and any amendments or supplements thereto. The Offer is
not being made to, nor will tenders be accepted from or on behalf of, holders
of Shares residing in any jurisdiction in which the making of the Offer or
acceptance thereof would not be in compliance with the securities laws of such
jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER
TO PURCHASE UP TO 3,596,688 SHARES OF COMMON STOCK
of
Go2Net, Inc.
by
Vulcan Ventures Incorporated
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase of Vulcan Ventures Incorporated (the "Purchaser") dated March 19,
1999 and the related Letter of Transmittal relating to shares of Common Stock,
par value $.01 per share (collectively, the "Shares"), of Go2Net, Inc.
This will instruct you to tender to the Purchaser the number of Shares
indicated below held by you for the account of the undersigned, on the terms
and subject to the conditions set forth in the Offer to Purchase and Letter of
Transmittal.
- --------------------------------------------------------------------------------
Number of Shares to be Tendered:
__________ Shares*
SIGN HERE
Account Number: _________________________Signature: __________________________
Dated:___________________, 1999
______________________________________________________________________________
Please type or print name(s)
______________________________________________________________________________
Please type or print address(es) here
______________________________________________________________________________
Area Code and Telephone Number
______________________________________________________________________________
Taxpayer Identification or Social Security Number(s)
- --------------------------------------------------------------------------------
_________
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE>
EXHIBIT 99(a)(5)
Notice of Guaranteed Delivery
for
Tender of Shares of Common Stock
of
Go2Net, Inc.
to
Vulcan Ventures Incorporated
- -------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, APRIL 15, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
This form, or one substantially equivalent hereto, must be used to accept
the Offer (as defined below) if certificates representing shares of Common
Stock, par value $.01 per share (the "Shares"), of Go2Net, Inc., a Delaware
corporation, are not immediately available, if the procedure for book-entry
transfer cannot be completed on a timely basis, or if time will not permit all
required documents to reach the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase). Such form may be delivered by
hand or transmitted by telegram, telex, facsimile transmission or mail to the
Depositary. See Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
IBJ WHITEHALL BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
Mailing Address: By Facsimile Copy Number: Hand/Overnight Delivery:
IBJ Whitehall Bank & Trust Company (For Eligible IBJ Whitehall Bank & Trust Company
P.O. Box 84 Institutions Only) One State Street
Bowling Green Station (212) 858-2611 New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing Window,
Attn: Reorganization Operations Confirm Receipt of Subcellar One, (SC-1)
Department Facsimile by Telephone:
(212) 858-2103
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Vulcan Ventures Incorporated, a Washington
corporation, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated March 19, 1999 and the related Letter of Transmittal
(which together constitute the "Offer"), receipt of which is hereby
acknowledged, the number of Shares indicated below pursuant to the guaranteed
delivery procedures set forth in Section 2 of the Offer to Purchase.
Number of Shares:
Name(s) of Record Holder(s):
_____________________________________ _____________________________________
Certificate Numbers (if available): _____________________________________
(Please Print)
_____________________________________
Address:
[_]Check box if Shares will be
delivered by book-entry transfer _____________________________________
_____________________________________
(Zip Code)
Area Code and Telephone No.: ________
Signature(s): _______________________
_____________________________________
Dated: ________________________, 1999
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of the Medallion Signature
Guarantee Program, or by any other "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Exchange Act, (a) represents that the
above named person(s) "own(s)" the Shares tendered hereby within the meaning of
Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (b) represents that such tender of Shares complies with
Rule 14e-4 under the Exchange Act, (c) guarantees delivery to the Depositary,
at one of its addresses set forth above, of certificates representing the
Shares tendered hereby in proper form for transfer, or confirmation of book-
entry transfer of such Shares into the Depositary's accounts at The Depository
Trust Company, in each case with delivery of a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), and any other required
documents, within three Nasdaq National Market trading days after the date
hereof.
_____________________________________ _____________________________________
Name of Firm Authorized Signature
_____________________________________ _____________________________________
Address
Title
_____________________________________ Name: _______________________________
Zip Code Please Type or Print
_____________________________________ Dated: ________________________, 1999
Area Code and Telephone No.
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
EXHIBIT 99(a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer.
Social security numbers have nine digits separated by two hyphens: i.e. 000-
00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
- ---------------------------------------------
<CAPTION>
Give the
For this type of account: SOCIAL SECURITY
number of--
- ---------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on
the account(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor
guardian or committee or incompetent
for a designated ward, person(3)
minor or incompetent
person
7.a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- ---------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------
Give the EMPLOYER
For this type of account: IDENTIFICATION
number of--
- ----------------------------------------------
<S> <C>
9. Sole proprietorship The owner
account
10. A valid trust, estate, The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
11. Corporate account The corporation
12. Partnership account The partnership
held in the name of
the business
13. Association, club, The organization
religious, charitable,
or other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
- -----------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. The name of the business or the "doing
business as" name may also be entered. Either the social security number
or the employer identification number may be used.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note:If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a taxpayer identification number ("TIN") or you don't know
your number, obtain Form SS-5, Application for a Social Security Number Card,
or Form SS-4, Application for Employer Identification Number, at the local
office of the Social Security Administration or the Internal Revenue Service
and apply for a number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on all dividend and
interest payments and on broker transactions include the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under Section 501(a), or an individual
retirement plan, or a custodian account under Section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under Section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding including the following:
. Payments to nonresident aliens subject to withholding under Section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including the exempt-interest dividends
under Section 852).
. Payments described in Section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under Section 1451.
. Payments made by certain foreign organizations.
. Payments described in Section 6049(b)(6) to nonresident aliens.
. Payments of tax-exempt interest (including the exempt-interest dividends
under Section 859).
. Payments described in Section 6049(b)(7) to resident aliens.
. Payments on tax-free covenant bonds under Section 1466.
. Payments made to a nominee.
Exempt payees described above should file the Substitute Form W-9 to avoid
possible erroneous backup withholding. Complete the Substitute Form W-9 as
follows:
ENTER YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ACROSS THE FACE OF
THE FORM, SIGN, DATE, AND RETURN THE FORM TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup with-
holding. For details, see the Sections 6041, 6041A(a), 6042, 6044, 6045, 6049,
6050A and 6050N and the regulations thereunder.
Privacy Act Notice.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes and to help verify the accuracy of tax reforms. Payers must be given
the numbers whether or not recipients are required to file tax returns. Payers
must generally withhold 31% of taxable interest, dividend, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your correct taxpayer identification number to a payer, you
are subject to a penalty of $50 for each such failure unless your failure is
due to reasonable cause and not to willful neglect.
(2) Penalty for False Information With Respect to Withholding.--If you make a
false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) Misuse of Taxpayer Identification Numbers.--If the payer discloses or uses
taxpayer identification numbers in violation of Federal law, the payer may be
subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT 99(a)(7)
NEWS RELEASE
Go2Net to Receive $300 Million Investment From Paul G. Allen; Allen Also
Initiates Cash Tender Offer for 5 Million Shares of Go2Net at $90 per Share For
Controlling Interest in the Company
Allen Plans to Integrate and Offer Go2Net Portal Services Over Cable Systems
SEATTLE, March 15/PRNewswire/ -- Go2Net (Nasdaq: GNET - news), a network
---- ----
of branded, technology- and community-driven Web sites, today announced a $300
million investment by Paul G. Allen through the sale of convertible preferred
stock to Vulcan Ventures Inc., Mr. Allen's investment organization. Today,
Vulcan Ventures purchased approximately $165 million of convertible preferred
stock, with the remainder of the preferred stock to be purchased upon
shareholder approval. As part of the transaction, Vulcan Ventures entered into
agreements to purchase 1.4 million shares of common stock from Go2Net's
executive officers and Directors, and agreed to also commence a tender offer to
purchase up to 3.6 million shares of Go2Net's outstanding common stock at $90
per share in cash. Assuming that all the shares being tendered for are
purchased and the remainder of the preferred stock is purchased by Vulcan, Allen
will own more than 54% of Go2Net's outstanding shares. Go2Net CEO Russell C.
Horowitz and the company's existing management team will continue to manage the
company and lead its strategic expansion. "Go2Net's association with Paul Allen
is significant for a number of reasons: It provides Go2Net the capital and
strategic resources necessary to build the Go2Net brand, extend our acquisition
strategy, and enhance our existing properties and infrastructure, while setting
the stage for the Go2Net Network to become a primary platform for content
delivery and value creation in the broadband world," said Russell C. Horowitz,
Go2Net Chief Executive Officer. "Paul Allen's vision and commitment to the
future of our industry are unmatched. We're excited about the prospect of
having an opportunity to provide Go2Net's premier content and services to
certain Paul Allen assets, including one of the nation's largest and
fastest-growing networks of cable systems."
In addition to supporting the ongoing growth and development of the Go2Net
Network, the agreement indicates that Go2Net will work with Allen's affiliated
cable companies to provide those companies' subscribers with access to Go2Net's
portal services. Allen's cable assets, which include Charter Communications
Inc. and Marcus Cable Company, currently comprise the nation's 7th largest cable
operation. He is also a significant shareholder of Denver-based High Speed
Access Corporation (HSA), a leading provider of high speed Internet cable
services.
"Comprehensive portal services such as Go2Net delivered directly to set top
boxes will be a critical development in the future of cable," said Allen. "I
look forward to working with Go2Net to develop these services for the customers
of our cable systems, and to
<PAGE>
forging relationships between Go2Net and my cable holdings to further enhance
the companies' existing offerings."
One of the most significant cash investments involving the Internet sector
to-date, Allen's investment enables Go2Net to greatly enhance the development of
the Go2Net Network, currently focused on the categories of search, finance,
ecommerce and games.
Additional Terms of the Agreement
Paul G. Allen agrees to purchase an aggregate of $300 million worth of a
new series of convertible preferred stock of Go2Net, convertible into
approximately 26% of Go2Net's common stock. Approximately $165 million of
convertible preferred stock was purchased today, with the remaining shares to be
purchased upon shareholder approval. Pursuant to the agreement with the company,
Allen also agreed that Vulcan Ventures Inc., his investment organization, would
commence a tender offer to purchase up to 3.6 million shares of common stock of
the company at $90 per share in cash on or before Friday, Mach 19, 1999. Certain
members of the company's management and Board of Directors have entered into
agreements under which Allen will buy an aggregate of 1.4 million shares of
Go2Net's common stock at $90 per share and have agreed to vote all of their
Go2Net stock in favor of the transaction. Assuming that all of the shares being
tendered for are purchased and the preferred stock sale is consummated, Allen
will own approximately 54% of the outstanding shares of the company, assuming
conversion of the preferred stock. Broadview International LLC was the financial
advisor to Go2Net for this transaction and NationsBanc Montgomery Securities
represented Paul G. Allen and Vulcan Ventures Inc.
About Go2Net, Inc.
Go2Net is a network of branded, technology-and community-driven Web sites
focused on the following categories: personal finance, search, commerce, and
games. The company also develops Web-related software. The Go2Net Network's
properties include:Go2Net Personal (http://www.go2net.com), which provides users
---------------------
with a comprehensive Internet start page offering customizable news, discussion,
and stock information, as well as direct access to Go2Net's own finance, search,
free Web hosting, shopping and Java multiplayer game sites; Silicon Investor
(http://www.siliconinvestor.com), the Web's premier financial discussion site;
------------------------------
StockSite (http://www.stocksite.com), which offers proprietary articles,
------------------------
portfolio tracking tools, company research and news relating to business and
finance; MetaCrawler (http://www.metacrawler.com), a metasearch service that
---------------------------
combines various existing search/index guides into one service; 100hot
(http://www.100hot.com), the Internet's premier category-by-category ranking
---------------------
index of Web sites; HyperMart (http://www.hypermart.net), the Web's leading
------------------------
provider of free business hosting services; WebMarket
(http://www.webmarket.com), a one-stop comparison shopping service; and PlaySite
------------------------
(http://www.playsite.com), the Web's premier Java-based multi-player games
-----------------------
site. The company's Go2Net Labs division develops innovative technologies to
enhance the features and functionality of the go2Net sites and for licensing to
other Internet companies.
<PAGE>
About Paul G. Allen
Paul G. Allen owns and invests in a suite of companies exploring the
potential of digital communications. Allen's business strategy includes
encouraging communications and synergy between his companies for mutual benefit.
His primary companies include Asymetrix Learning Systems (Nasdaq: ASYM - news),
---- ----
Vulcan Ventures Inc. and Vulcan Northwest Inc., all of Bellevue, Wash., and
Interval Research Corp. of Palo Alto, Calif. Allen recently acquired limited
partnership interest of Marcus Cable of Dallas and Charter Communications of St.
Louis. Allen is owner of the Portland Trail Blazers NBA team and the NFL's
Seattle Seahawks franchise, is a partner in the entertainment studio Dream Works
SKG and holds investments in more than 50 new media companies which further his
vision of a Wired World. Allen co-founded Microsoft Corp. with Bill Gates in
1975 and served as the company's executive vice president of research and new
product development, the company's senior technology post, until 1983. Allen
gives back to the community through the six Allen Charitable Foundations, which
support arts, medical, forest protection and other charitable needs in the
Pacific Northwest, and is the founder of Experience Music Project in Seattle.
This announcement contains forward-looking statements that involve risks
and uncertainties, including those relating to the company's ability to grow its
user and advertiser base. Actual results may differ materially from the results
predicted and reported results should not be considered as an indication of
future performance. The potential risks and uncertainties include, among others,
the company's limited operating history, the competitive environment in which
the company competes, the early stage of the Web as an advertising and
electronic commerce medium, the company's dependence on advertising and
sponsorship revenues, the company's dependence on strategic relationships to
drive traffic to its Web sites, consumer acceptance of the company's new
products and services, the company's ability to develop and integrate new
technologies and services into its existing services, and the increased use of
the Web for commerce. More information about the potential factors that could
affect the company's business and financial results is included in the company's
Annual Report on Form 10-K for the year ended September 30, 1998 and Quarterly
Report on Form 10-Q for the quarter ended December 31, 1998, which are on file
with the Securities and Exchange Commission.
CONTACT: Mark S. Peterson of Go2Net, Inc., 206-447-1595, or [email protected]; or
---------------
Susan Pierson Brown, 425-453-1940, or [email protected], for Paul G. Allen/Vulcan
--------------
Ventures Inc.
-3-
<PAGE>
EXHIBIT 99 (a) (8)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell shares. The Offer is made solely by the Offer to Purchase
dated March 19, 1999 and the related Letter of Transmittal and is
being made to all holders of Shares. The Purchaser is not aware
of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state
statute prohibiting the making of the Offer or the acceptance
of the Shares pursuant thereto, the Purchaser will make a
good faith effort to comply with any such state statute
or seek to have statute declared inapplicable to the
Offer.
If, after such good faith effort, the Purchaser cannot comply with any such
state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such
state. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by
a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Purchaser
by NationsBanc Montgomery Securities LLC
or one or more registered brokers or
dealers licensed under the laws
of such jurisdiction.
Notice of Offer to Purchase for Cash
Up to 3,596,688 Shares of Common Stock
of Go2Net, Inc.
at
$90.00 Net Per Share
by
Vulcan Ventures Incorporated
Vulcan Ventures Incorporated, A Washington corporation (the "Purchaser"), is
offering to purchase up to 3,596,688 shares of Common Stock, par value $0.01
per share (the "Shares"), of Go2Net, Inc., a Delaware corporation (the
"Company"), at a price of $90.00 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
March 19, 1999 (the "Offer to Purchase") and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
together constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
THURSDAY, APRIL 15, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
The Offer is being made pursuant to the terms of a Stock Purchase Agreement
dated as of March 15, 1999 (the "Stock Purchase Agreement") by and between the
Company and the Purchaser. Upon consummation of the transactions contemplated
by the Stock Purchase Agreement, including the Offer and the purchase of Shares
of the Company's Common Stock from directors of the Company (including three
directors who are executive officers), the Purchaser's interest in the Company
will equal approximately 55% of the total number of Shares of the Company's
Common Stock then outstanding (assuming conversion of the Series A Convertible
Preferred Stock purchased or to be purchased by the Purchaser pursuant to the
Stock Purchase Agreement, and assuming that no other shares of Common Stock are
issued). The purpose of the Offer is to acquire a portion of this interest in
the Company as part of the Purchaser obtaining control of the Company.
The Offer is conditioned upon, among other things, the satisfaction or
waiver of certain conditions, including receipt by Purchaser and the Company of
regulatory approvals. The Offer is not conditioned on any minimum number of
Shares being tendered.
The Board of Directors of the Company has unanimously approved the Stock
Purchase Agreement and the transactions contemplated thereby, including the
Offer. The Board of Directors of the Company expresses no opinion, however, as
to whether stockholders should accept the Offer and tender their Shares pursuant
thereto.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares that have been validly tendered and
not properly withdrawn when, as and if the Purchaser gives oral or written
notice to the Depositary (as defined in the Offer to Purchase) of its acceptance
for payment of such Shares pursuant to the Offer. Upon the terms and subject to
the conditions of the Offer, payment for Shares so accepted for payment will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for all tendering stockholders for the purpose of receiving payment
from the Purchaser and transmitting such payment to tendering stockholders. In
no circumstances will interest be paid on the purchase price by reason of any
delay in making such payment. In all cases, payment for shares accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates for such Shares (or timely confirmation of
book-entry transfer of such Shares into the Depositary's account at the
Book-Entry Facility (as defined in the Offer to Purchase) as described in
Section 2 of the Offer to Purchase); (ii) a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees (or in the case of a book-entry transfer, an Agent's Message (as
defined in the Offer to Purchase)); and (iii) any other documents required by
the Letter of Transmittal.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Thursday, April 15, 1999, unless and until the Purchaser shall have extended
the period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date on which the Offer, as so
extended by the Purchaser, shall expire. The Purchaser expressly reserves the
right (subject to the terms of the Stock Purchase Agreement), at any time or
from time to time, to extend the period of time during which the Offer is open
and thereby delay acceptance for payment of, and the payment for, any Shares, by
giving oral or written notice of such extension to the Depositary. The Purchaser
shall not have any obligation to pay interest on the purchase price for tendered
Shares in the event the period of time during which the Offer is open is
extended for any reason. Without limiting the manner in which the Purchaser may
choose to make any public announcement, the Purchaser will have no obligation to
publish, advertise or otherwise communicate any such announcement other than by
issuing a press release or as otherwise may be required by law or applicable
regulation or practice. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
right of a tendering stockholder to withdraw such stockholder's Shares.
If more than 3,596,688 Shares are validly tendered prior to the Expiration
Date and not properly withdrawn, the Purchaser will, upon the terms and subject
to the conditions of the Offer, accept such Shares for payment on a pro rata
basis, with adjustments to avoid purchases of fractional Shares, based upon the
number of Shares validly tendered prior to the Expiration Date and not properly
withdrawn. Because of the time required to determine the precise number of
Shares validly tendered and not properly withdrawn, if proration is required the
Purchaser would not expect to announce the final results of proration or pay for
any Shares immediately after the Expiration Date. The Purchaser will announce
the preliminary results of proration by press release as promptly as
practicable, and expects to be able to announce the final results of proration
within eight Nasdaq National Market trading days after the Expiration Date.
Holders of Shares may obtain such preliminary information and final results from
the Depositary or the Information Agent and may be able to obtain such
information from their brokers.
Tenders of Shares pursuant to the Offer will be irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date, and, unless theretofore accepted for payment and paid for by
the Purchaser pursuant to the Offer, may also be withdrawn at any time on or
after May 18, 1999. For a withdrawal to be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase and must specify the name of the person having tendered the Shares to
be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates for Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution (as defined in Section 2 of the Offer
to Purchase), the signatures on the notice of withdrawal must be guaranteed by
an Eligible Institution. If Shares have been tendered pursuant to the
procedures for book-entry transfers as set forth in Section 2 of the Offer to
Purchase, any notice of withdrawal must also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for any purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 2 of the Offer to Purchase at any time prior to
the Expiration Date. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by the Purchaser in its
sole discretion, whose determination will be final and binding. None of the
Purchaser, the Dealer Manager, the Depositary, the Information Agent or any
other person will be obligated to give notice of any defects or irregularities
in tenders or withdrals or incur any liability for failure to give any such
notice. The Company has provided the Purchaser with the Company stockholder
list, a non-objecting beneficial owner list, if any, and security position
listings for the purpose of disseminating the Offer. The Offer to Purchase and
the related Letter of Transmittal and other relevant materials will be mailed to
record holders of Shares and furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the Company's stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Offer to Purchase and the Letter of Transmittal contain important
information which should be read carefully before any decision is made with
respect to the Offer.
Requests for copies of the Offer to Purchase, the Letter of Transmittal and
all other tender offer materials may be directed to the Information Agent as set
forth below, and copies will be furnished promptly at the Purchaser's expense.
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
[NATIONSBANC MONTGOMERY SECURITIES LLC]
11601 Wilshire Boulevard, Suite 500
Los Angeles, California 90025
(310) 575-4820, Extension 1 or 7
<PAGE>
EXHIBIT 99(b)(1)
CUSTOMER AGREEMENT
Account No.
----------
Alex. Brown & Sons
INCORPORATED
135 E. Baltimore Street
Baltimore, Maryland 21202
Gentlemen:
In consideration for your accepting and carrying for the undersigned one or
more accounts, the undersigned hereby consents and agrees that:
1. MARGIN REQUIREMENTS: The undersigned will maintain such securities and
other property in the accounts of the undersigned for margin purposes as you
shall require from time to time.
2. PAYMENT OF INDEBTEDNESS UPON DEMAND: The undersigned shall at all
times be liable for the payment of any debit balance or other obligations owing
in any of the accounts of the undersigned with you, and the undersigned shall be
liable to you for any deficiency remaining in any such accounts in the event of
the liquidation thereof, in whole or in part, by you or by the undersigned;
and the undersigned shall make payment of such obligations and indebtedness upon
demand. Additionally, the reasonable costs and expenses of collection of the
debit balance and any unpaid deficiency in the accounts of the undersigned with
you, including, but nor limited to, attorney's fees, incurred and payable or
paid by you shall be payable to you by the undersigned.
3. LIEN: All securities belonging to the undersigned now or hereafter
held, carried or maintained by you in your possession and control for any
purpose, in or for any account of the undersigned, now or hereafter opened,
including any accounts in which the undesigned may have an interest, shall be
subject to a lien for the discharge of all the indebtedness and other
obligations of the undersigned to you, and are to be held by you as security for
the payment of any liability or indebtedness of the undersigned to you in any of
said accounts. You shall have the right to transfer securities and other
property so held by you from or to any other of the accounts of the undersigned
whenever in your judgment you consider such a transfer necessary for your
protection. In enforcing your lien, you shall have the discretion to determine
which securities and property are to be sold and which contracts are to be
closed.
4. LIQUIDATION: You shall have the right, in accordance with your general
policies regarding your margin maintenance requirements, as such may be
modified, amended or supplemented from time to time, or if, in you discretion
you consider it necessary for your protection to require additional collateral
at an earlier or later point in time than called for by said general policies,
or in the event that a petition in bankruptcy, or for appointment of a receiver
in filed by or against the undersigned, or an attachment is levied against the
accounts of the undersigned, or in the event of the death of the undersigned, to
sell any or all securities and other property belonging to the undersigned in
the accounts of the undersigned with you, whether carried individually or
jointly with others, to buy any or all securities and other property which may
be short in such accounts, to cancel any open orders and to close any or all
outstanding contracts, all without demand for margin or additional margin,
notice of sale or purchase, or other notice or advertisement. Any such sales or
purchases may be made at your discretion on any exchange or other market where
such business is usually transacted, or at public auction or private sale; and
you may be the purchasers for your own account.
5. PLEDGE OF SECURITIES AND OTHER PROPERTY: All securities and other
property now or hereafter held, carried or maintained by you in your possession
in any account of the undersigned may be pledged and repledged by you from time
to time, without notice to the undersigned, either separately or in common with
other securities and other property for any amount due in the accounts of the
undersigned, or for any greater amount, and you may do so without retaining to
your possession or control for delivery a like amount of similar securities or
other property.
6. INTEREST AND SERVICE CHARGES: Debit balances in each account of the
undersigned will be charged in accordance with your usual custom, and the
undersigned agrees to pay, interest at a rate permitted by the laws of the State
of Maryland. In addition, you may charge and collect from each such account a
service charge for the collection, crediting and disbursement of income and the
furnishing of income tax and other information. Such interest and service
charge will be computed in each account of the undersigned on the net daily
debit balance, which is computed by combining all debit and balances and credit
balances in each account with the exception of credit balances associated with
short security positions.
7. CHANGES IN RATES OF INTEREST AND SERVICE CHARGES: The annual rate of
interest will be 1/2% to 2% above the average prevailing call money rate for the
period for which the interest computation is made. The rate of interest may be
changed without notice in accordance with fluctuations in the call money rate.
Prior written notice will be given in connection with increases in the rate and
amount of interest or service charges for any other reason. Charges in the rate
and amount of interest or service charges for whatever reason will be disclosed
in regular statements provided by you to the undersigned.
8. ACCOUNTS CARRIED AS CLEARING BROKER: If you are carrying the account
of the undersigned as clearing broker by arrangement with another broker through
whose courtesy the account of the undersigned has been introduced, then until
receipt from the undersigned of written notice to the contrary, you may accept
from such other broker, without inquiry or investigation by you: (i) orders for
the purchase or sale in said account of securities and other property on margin
or otherwise; and (ii) any other instructions concerning said account. You
shall not be responsible or liable for any acts or omissions of such other
broker or its employees.
9. APPLICABLE RULES AND REGULATIONS: All transactions for the undersigned
shall be subject to the provisions of the Securities Exchange Act of 1934, as
amended, and to the rules and regulations promulgated by the Securities and
Exchange Commission and the Federal Reserve Board, and to the constitution,
rules, regulations, customs and usages of the exchange or market and its
clearing house, if any, where executed by you or your agents.
10. THE LAWS OF THE STATE OF MARYLAND GOVERN: This agreement and its
enforcement shall be governed by the laws of the State of Maryland; shall cover
individually and collectively all accounts which the undersigned may open or
reopen with you, and shall inure to the benefit of your successors whether by
merger, consolidation or otherwise, and assigns, and you may transfer the
accounts of the undersigned to your successors and assigns, and this agreement
shall be binding upon the heirs, executors, administrators, successors and
assigns of the undersigned.
11. COMMUNICATIONS: Communications may be sent to the undersigned at the
address of the undersigned or at such other address as the undersigned may
hereafter give you in writing, and all communications so sent, whether by
<PAGE>
mail, telegraph, messenger or otherwise, shall be deemed given to the
undersigned personally, whether actually received or not.
12. JOINT AND SEVERAL LIABILITY: If the undersigned shall consist of more
than one individual, their obligations under this agreement shall be joint and
several.
13. WAIVER: Your failure to exercise any right or privilege granted to you
hereby or any waiver by you of the exercise of the same at any time shall not
constitute a waiver thereof on any subsequent occasion; nor shall any notice or
demand addressed by you to the undersigned, nor any forbearance on your part,
constitute a waiver of any such right or privilege.
14. EXTRAORDINARY EVENTS: You shall not be liable for loss caused directly
or indirectly by government restrictions, exchange or market rulings, suspension
of trading, war, strikes or other conditions beyond your control.
15. REPRESENTATION AS TO CAPACITY TO ENTER INTO AGREEMENT: The undersigned,
if an individual, represents that the undersigned is full age, and that unless
you have been notified thereof in writing the undersigned is not an employee of
any exchange, or of any corporation of which any exchange owns a majority of the
capital stock, or of a member of any exchange, or of a member firm or member
corporation registered on any exchange or of a bank, trust company, insurance
company or of any corporation, firm or individual engaged in the business of
dealing either as a broker or as principal in securities, bills or exchange,
acceptances or other forms of commercial paper. The undersigned further
represents that no one except the undersigned has an interest in the account or
accounts of the undersigned with you.
16. SEPARABILITY: If any provision or condition of this agreement shall be
held to be invalid or unenforceable by any court, or regulatory or
self-regulatory agency or body, such invalidity or unenforceability shall attach
only to such provision or condition. The validity of the remaining provisions
and conditions shall not be affected thereby and this agreement shall be carried
out as if any such invalid or unenforceable provision or condition were not
contained herein.
17. TRUTH IN LENDING STATEMENT: The undersigned acknowledges receipt of
your pamphlet, entitled "To Our Customers," which sets forth the terms and
conditions under which interest and service charges will be applied.
SIGNATURES
(Please sign in the appropriate spaces provided immediately below
and in the Lending Agreement section.)
(Individuals) (Partnership)
/s/ Paul G. Allen
- -------------------------------- -------- --------------------------------
(Date) (Name of Partnership)
By
- -------------------------------- -------- -------------------- --------
(Second Party, If Joint Account) (Date) (General Partner) (Date)
(Corporation)
---------------------------------
(Name of Corporation)
(Seal)
Attest By
------------------------ -------- ---------------------- --------
(Date) (Date)
Title Title
------------------------- -----------------------------
LENDING AGREEMENT
To: Alex. Brown & Sons
INCORPORATED
135 E. Baltimore Street
Baltimore, Maryland 21202
You are hereby specifically authorized to lend to yourselves, as principal
or otherwise, or to others, any securities held by you on margin for any
accounts of the undersigned or as collateral therefor, either separately or with
other securities.
This agreement shall inure to the benefit of your successors, by merger,
consolidation or otherwise, and assigns, and you may transfer the account of the
undersigned to any such successors or assigns.
SIGNATURES
(Individuals) (Partnership)
/s/ Paul G. Allen
- -------------------------------- -------- --------------------------------
(Date) (Name of Partnership)
By
- -------------------------------- -------- -------------------- --------
(Second Party, If Joint Account) (Date) (General Partner) (Date)
(Corporation)
---------------------------------
(Name of Corporation)
(Seal)
Attest By
------------------------ -------- ---------------------- --------
(Date) (Date)
Title Title
------------------------- -----------------------------
BRANCH MANAGER APPROVAL
----------------------------------
(Signature)
<PAGE>
EXHIBIT 99(c)(1)
STOCK PURCHASE AGREEMENT
-------------------------
BETWEEN
-------
GO2NET, INC.
------------
AND
---
VULCAN VENTURES INCORPORATED
----------------------------
MARCH 15, 1999
--------------
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
This STOCK PURCHASE AGREEMENT is made as of March 15, 1999 between GO2NET,
INC. (the "Company"), a corporation organized under the laws of the State of
Delaware, and VULCAN VENTURES INCORPORATED, a corporation organized under the
laws of the State of Washington ("Purchaser").
WHEREAS, the Company wishes to sell to Purchaser 300,000 shares of the
Company's Series A Convertible Preferred Stock, $.01 par value (the "Series A
Preferred Stock"), on the terms and conditions hereinafter provided;
WHEREAS, as an inducement to Purchaser to enter into this Agreement,
certain executive officers and directors of the Company (the "Management
Stockholders") have entered into agreements with Purchaser (the "Management
Agreements") pursuant to which, among other things (i) each Management
Stockholder has agreed to sell to Purchaser, and Purchaser has agreed to
purchase from him, certain of his shares of the Company's Common Stock, $.01 par
value (the "Common Stock") (including certain shares of Common Stock issuable
pursuant to the exercise of vested stock options) aggregating a total of
1,403,312 shares of Common Stock under all the Management Agreements taken
together, at $90 per share, and (ii) each Management Stockholder has agreed to
vote all of his shares of Common Stock in favor of the issuance to Purchaser of
the Series A Preferred Stock to be issued at the Second Closing (as defined
below), in each case upon the terms and subject to the conditions set forth
therein; and
WHEREAS, Purchaser will commence, within five (5) business days of the date
hereof, at a price of $90 per share net to the seller in cash, a tender offer
(the "Offer") for up to 3,596,688 shares of Common Stock (the "Offer Shares"),
which shares, together with the maximum number of shares of Series A Preferred
Stock that may be purchased by Purchaser under this Agreement, would equal at
least 51% of the outstanding shares of Common Stock (assuming conversion into
Common Stock, at the initial conversion rate, of all such shares of Series A
Preferred Stock).
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained in this Agreement, the Company and Purchaser agree as follows:
1. Purchase and Sale of Shares. On the terms and subject to the
---------------------------
conditions set forth herein, the Company agrees to issue and sell to Purchaser,
and Purchaser agrees to purchase from the Company, (a) at the First Closing (as
defined below), 167,507 shares (the "First Issuance Shares") of Series A
Preferred Stock, and (b) at the Second Closing (as defined below), an additional
132,493 shares of Series A Preferred Stock (the "Second Issuance Shares," and
collectively with the First Issuance Shares, the "Shares"), in each case for a
purchase price of One Thousand Dollars ($1,000) per share. The Series A
Preferred Stock shall have the terms designated in the Certificate of
Designation of Series A Convertible Preferred Stock attached hereto as Exhibit A
---------
(the "Certificate of Designation").
-1-
<PAGE>
2. Closing; Deliveries.
-------------------
2.1. First Closing. The closing of the purchase and sale of the
-------------
First Issuance Shares (the "First Closing") shall occur at the offices of Irell
& Manella LLP ("I&M"), 1800 Avenue of the Stars, Suite 900, Los Angeles,
California 90067, concurrently with the execution of this Agreement. At the
First Closing, the Company shall deliver to Purchaser one or more stock
certificates evidencing the First Issuance Shares registered in the name of
Purchaser and Purchaser shall pay to the Company the purchase price for the
First Issuance Shares $25,000 by check or wire transfer and the balance in the
form of a promissory note in the form of Exhibit B hereto. At the First Closing,
---------
the parties will also duly execute and deliver the Registration Rights Agreement
in the form of Exhibit C hereto (the "Registration Rights Agreement") and the
---------
Purchaser shall receive an opinion from Hutchins, Wheeler & Dittmar as to
certain matters. The date on which the First Closing occurs is hereinafter
referred to as the "First Closing Date." The First Closing shall occur prior to
any public announcement of the tender offer contemplated hereby.
2.2. Second Closing. The closing of the purchase and sale
--------------
of the Second Issuance Shares (the "Second Closing") shall occur at the offices
of I&M as soon as practicable (but not more than three (3) business days) after
the satisfaction or waiver of all of the conditions to the Second Closing set
forth herein, or at such other place and time as the Company and Purchaser may
agree. At the Second Closing, the Company shall deliver to Purchaser one or more
stock certificates evidencing the Second Issuance Shares registered in the name
of Purchaser and Purchaser shall pay to the Company the purchase price for the
Second Issuance Shares by check or wire transfer. The date on which the Second
Closing occurs is hereinafter referred to as the "Second Closing Date."
3. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to Purchaser as follows (it being agreed that for
purposes of the representations and warranties set forth in this Section 3, the
term the "Company" shall be deemed to refer to the Company and each of its
subsidiaries on a consolidated basis, except where the context reasonably
indicates otherwise):
3.1. Organization and Qualification. The Company is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of its
state of incorporation, has all requisite corporate power and authority to
conduct its business as currently conducted and to enter into and to carry out
and perform its obligations under the Transaction Documents. For purposes of
this Agreement, "Transaction Documents" shall mean (a) this Agreement, (b) the
Registration Rights Agreement, and (c) the Certificate of Designation. The
Company is duly qualified as a foreign corporation and is in good standing in
each jurisdiction in which the failure to be so qualified or in good standing
could reasonably be expected to have a material adverse effect on the business,
properties, results of operations or financial condition of the Company and its
subsidiaries taken as a whole, other than any adverse effect following the date
of this Agreement that the Company shall have demonstrated is substantially
attributable to (i) the transactions contemplated by this Agreement or the
announcement of the transactions contemplated by this Agreement or (ii) any
material economic downturn in the Internet industry generally or any material
national economic downturn (a "Material Adverse Effect").
-2-
<PAGE>
3.2. Authorized Capital Stock. As of the date hereof, the
------------------------
authorized capital stock of the Company consists of (a) 50,000,000 shares of
Common Stock, and (b) 1,000,000 shares of Preferred Stock, $.01 par value per
share, 300,000 shares of which are designated as Series A Preferred Stock. As of
March 11, 1999, there were 12,732,545 shares of Common Stock outstanding and no
shares of Preferred Stock outstanding. All of the outstanding shares of Common
Stock have been duly authorized and validly issued and are fully paid and
nonassessable. The Company has reserved for issuance upon conversion of the
Series A Preferred Stock 4,537,891 shares of Common Stock. The Company has
reserved for issuance upon exercise of options granted under its 1996 Stock
Option Plan ("Company Option Plan") and outside such plan an aggregate of
5,182,293 shares of Common Stock. The Company's Board of Directors has
authorized an increase in the number of shares of Common Stock reserved for
issuance under the Company Option Plan from 5,000,000 to 8,000,000 shares of
Common Stock, subject to stockholder approval. The Company also assumed the
outstanding options under the former Silicon Investor and Web21 stock option
plans (the "Assumed Option Plans"), the shares under which are in addition to
the shares available under the Company Option Plan. An aggregate of 121,944
shares of Common Stock are reserved for issuance upon exercise of options
pursuant to the Assumed Option Plans. As of March 11, 1999, there were not
outstanding or existing any options, warrants, rights (including conversion or
preemptive rights) or agreements for the purchase or acquisition from the
Company of any shares of its capital stock or any securities exercisable for or
convertible into shares of its capital stock, except for options to purchase an
aggregate of 5,304,237 shares of Common Stock outstanding under the Company
Option Plan and the Assumed Option Plans.
3.3. Subsidiaries. Except as set forth in Schedule 3.3, the
------------ ------------
Company (a) owns no equity securities of any other corporation, limited
partnership or similar entity, and (b) is not a participant in any joint
venture, partnership or similar arrangement.
3.4. Due Execution, Delivery and Performance of the Agreement;
--------------------------------------------------------
No Conflict.
- -----------
3.4.1. Subject only to approval of the issuance and sale to
Purchaser of the Second Issuance Shares by the holders of the Common Stock, the
execution, delivery and performance of the Transaction Documents have been duly
authorized by all necessary corporate action on the part of the Company. The
Company's Board of Directors has approved the Certificate of Designation. This
Agreement has been, and when executed and delivered at the First Closing or the
Second Closing (as the case may be) the other Transaction Documents will be,
duly executed and delivered by the Company and constitutes, or when executed and
delivered at the First Closing or the Second Closing (as the case may be) will
constitute, valid and binding obligations of the Company, enforceable against it
in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws and
equitable principles relating to or limiting creditors' rights generally.
3.4.2. The execution, delivery and, subject to obtaining the
consents set forth in Schedule 3.4, performance by the Company of the
------------
Transaction Documents and the consummation of the transactions contemplated
thereby will not, except in each case where the effect of non-compliance could
not, individually or in the aggregate, reasonably
-3-
<PAGE>
be expected to have a Material Adverse Effect, (i) modify, breach or constitute
grounds for the occurrence or declaration of a default under or give rise to a
right to terminate any agreement, license, indenture, undertaking or other
instrument to which the Company is a party or by which it or any of its assets
may be bound or affected, (ii) violate any provision of law or any regulation or
any order, judgment, or decree of any court or other agency of government to
which the Company is subject, (iii) violate any provision of the Restated
Certificate of Incorporation (the "Certificate of Incorporation") or By-Laws of
the Company, or (iv) result in the creation or imposition of (or the obligation
to create or impose) any liens, mortgages, pledges, charges, claims or other
encumbrances (collectively, "Liens") on any of the Company's properties.
3.5. State Takeover Statutes. The Board, at a meeting duly called (or
-----------------------
for which notice was duly waived by all directors of the Company) and held on
March 14, 1999, has unanimously approved the terms of this Agreement and the
other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby (including without limitation the sale and
issuance to Purchaser of the Shares pursuant to this Agreement, and Purchaser's
acquisition of shares of Common Stock pursuant to the Management Agreements and
the Offer) and such approval constitutes approval of such transactions by the
Board under the provisions of Section 203 of the Delaware General Corporation
Law (the "DGCL") and Chapter 23B.19 of the Washington Business Corporation Act
(the "WBCA"), and constitutes all actions necessary to ensure that the
restrictions contained in Section 203 of the DGCL and Chapter 23B.19 of the WBCA
will not apply to Purchaser in connection with or following such transactions.
To its knowledge, no other state takeover statute is applicable to the
transactions contemplated by this Agreement and the other Transaction Documents.
3.6. Issuance, Sale and Delivery of the Shares.
-----------------------------------------
3.6.1. When issued in compliance with the provisions of this
Agreement, the Shares will be validly issued, fully paid and nonassessable, and
will be free of any Liens, other than restrictions on transfer under state
and/or federal securities laws. The sale of the Shares is not subject to any
preemptive rights or rights of first refusal that have not been properly waived
or complied with. Upon the filing with the Delaware Secretary of State and
effectiveness of the Certificate of Designation, the rights, privileges and
preferences of the Series A Preferred Stock set forth in the Certificate of
Designation will constitute the valid and binding obligations of the Company,
enforceable against it in accordance with their respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws and equitable principles relating to or limiting creditors' rights
generally.
3.6.2. The shares of Common Stock that are issuable upon
conversion of the Series A Preferred, when so issued, will be validly issued,
fully paid and nonassessable, and will be free of any Liens, other than
restrictions on transfer under state and/or federal securities laws. Issuance of
such shares of Common Stock is not subject to any preemptive rights or rights of
first refusal that have not been properly waived or complied with.
-4-
<PAGE>
3.7. Governmental Consent. No consent, approval or authorization of,
--------------------
or declaration or filing with, any governmental authority on the part of the
Company is required for the execution and delivery of the Transaction Documents
or the sale of the Shares to Purchaser pursuant to this Agreement, except for
the filing of the Certificate of Designation and, to the extent applicable, the
required filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and the expiration or early termination of the
waiting period thereunder.
3.8. SEC Reports; Financial Statements.
---------------------------------
3.8.1. The Company has filed all forms, reports and documents
(except for employment agreements with certain executive officers of the
Company, copies of which have been provided to Purchaser (the "Executive
Employment Agreements")) required to be filed by it with the Securities and
Exchange Commission (the "SEC") since and including the filing date of the
Registration Statement with respect to the Company's initial public offering
(the "SEC Reports"). The SEC Reports (x) were prepared in accordance with the
requirements of the Securities Act of 1933, as amended (the "Securities Act")
and the Exchange Act, as the case may be, and the rules and regulations
thereunder and (y) did not at the time they were filed, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
3.8.2. Each of the financial statements (including, in each
case, any notes thereto) of the Company included in the SEC Reports (the
"Financial Statements"), was prepared in accordance with GAAP (subject, in the
case of unaudited statements, to the absence of footnotes thereto and to normal
and recurring year-end adjustments which were not and are not expected to be
material in amount) and each fairly presented the financial position, results of
operations and cash flows of the Company as at the respective dates thereof and
for the respective periods indicated therein (except as may be indicated in the
notes thereto) in all material respects.
3.8.3. Except as set forth in Schedule 3.8 hereto, to the
------------
Company's knowledge, the Company has no liability or obligation (whether
accrued, absolute, contingent or otherwise) other than (a) liabilities and
obligations reflected on the unaudited balance sheet of the Company as of
December 31, 1998 contained in the Financial Statements (the "Unaudited Balance
Sheet"), and (b) liabilities or obligations incurred since December 31, 1998 in
the ordinary course of business consistent with past practice or that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
3.9. Proxy Statement; Offer Documents. The Proxy Statement
--------------------------------
described in Section 5.3, including any amendments or supplements thereto, shall
not, at the time filed with the SEC, as of the date mailed to the Company's
stockholders or at the time of the Stockholders Meeting (as defined in Section
5.2), contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. Neither the Schedule 14D-9 (as defined in Section 7.8), nor any of
the
-5-
<PAGE>
information supplied by the Company for inclusion in the Offer Documents (as
defined in Section 7.7), shall, at the respective times such Schedule 14D-9, the
Offer Documents or any amendments or supplements thereto are filed with the SEC
or are first published, sent or given to shareholders, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information provided by Purchaser specifically
for use in the Proxy Statement or the Schedule 14D-9. The Proxy Statement and
the Schedule 14D-9 will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
3.10. Absence of Litigation. Except as set forth on Schedule 3.10
--------------------- -------------
hereto, there is no claim, action, proceeding or investigation pending or, to
the knowledge of the Company, threatened against the Company, any director or
officer of the Company or any property or asset of the Company, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign that individually or in the aggregate could reasonably
be expected to have a Material Adverse Effect on the Company. Except as set
forth on Schedule 3.10 hereto, neither the Company nor any of its properties or
-------------
assets is subject to any order, writ, judgment, injunction, decree,
determination or award that individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect on the Company.
3.11. Absence of Certain Changes or Events. Except as disclosed in
------- -- ------- ------- -- ------
the Company's Annual Report on Form 10-K for the fiscal year ending September
30, 1998, the Quarterly Report on Form 10-Q for the period ending December 31,
1998 or in Schedule 3.11, or as specifically contemplated by this Agreement,
-------------
since September 30, 1998 there has not been (i) any transaction, commitment,
dispute or other event or condition (financial or otherwise) of any character
(whether or not in the ordinary course of business) individually or in the
aggregate which has had or could reasonably be expected to have a Material
Adverse Effect; (ii) any damage, destruction or loss, whether or not covered by
insurance, which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect; (iii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the capital stock of the Company; (iv) except for
normal increases in the ordinary course of business and except for the execution
of amended and restated employment agreements entered into with certain
executive officers (copies of which have been provided to Purchaser), any
increases by the Company in the wages, salaries, compensation, pension or other
fringe benefits or perquisites payable to any executive officer or director,
grants by the Company of any severance or termination pay, execution by the
Company of any contract to make or grant any severance or termination pay, or
payments by the Company of any bonus, in each case with respect to any such
executive officer or director, other than pursuant to preexisting agreements or
arrangements; or (v) entry into any commitment or transaction material to the
Company (including, without limitation, any borrowing or sale of assets) except
in the ordinary course of business consistent with past practice.
-6-
<PAGE>
3.12. Compliance with Laws; Permits. The Company has at all times
-----------------------------
complied, and it currently in compliance, with all applicable statutes, rules,
regulations and orders of the United States or any state in which the Company is
engaged in business and has obtained all required licenses, permits and other
approvals of any governmental authority, except where a failure to comply or
obtain such approvals, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
3.13. Material Contracts. Each of the contracts required to be filed
------------------
as contracts as exhibits to the SEC Reports (the "Material Contracts")
(including all amendments, modifications and waivers) (a) except for the
Executive Employment Agreements, has been filed with the SEC, (b) has been duly
authorized, executed and delivered by the parties thereto, (c) remains in full
force and effect to the extent of its terms without any amendment, modification
or waiver not reflected in the Material Contracts, (d) is binding on the parties
thereto in accordance with and to the extent of its terms and applicable laws,
and (e) is not subject to, and the Company has not received any written notice
threatening or declaring, termination as a result of any alleged uncured breach
or default. The Company has performed all material obligations required to be
performed by it to date under each Material Contract, and the Company is not in
material breach or default under any Material Contract. To the Company's
knowledge, without a specific review having been conducted by the Company, no
other party to any Material Contract is in material breach or default thereunder
or in material violation thereof, and no condition exists that with notice or
lapse of time or both would constitute a material violation thereof or a
material default thereunder.
3.14. Intellectual Property Rights.
----------------------------
3.14.1. The Company owns or has licenses to use registered
copyrights, copyright registration and copyright applications, trademark
registrations and applications for registration, patents and patent
applications, trademarks, service marks, trade names, Internet domain names and
other intellectual property rights (collectively, "Intellectual Property
Rights") which are sufficient to carry on the business of the Company as
presently conducted, except where a failure to own or license Intellectual
Property Rights could not, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Company.
3.14.2. To the Company's knowledge, the operation of the
business of the Company does not, and except as identified on Schedule 3.14, the
-------------
Company has not received any notice from any person claiming that the business
of the Company does infringe or misappropriate the Intellectual Property Rights
of any person, violate any export control law or regulation, violate the rights
of any person (including rights to privacy or publicity), or constitute unfair
competition or trade practices under any applicable laws.
3.14.3. Except as set forth on Schedule 3.14, to the
-------------
knowledge of the Company, no person is infringing or misappropriating any
Intellectual Property Rights owned or licensed by the Company or engaging in
other conduct that may diminish or undermine such Intellectual Property Rights,
such as the disclosure of Company confidential information, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
-7-
<PAGE>
3.14.4. The Company has taken all reasonable steps to protect
the Company's rights in confidential information and trade secrets of the
Company or provided by any other person to the Company subject to a duty of
confidentiality. Without limiting the foregoing, the Company has, and enforces,
a policy requiring each of its executive officers and research and development
personnel to execute proprietary information, confidentiality and invention and
copyright assignment agreements, and all such individuals have executed such an
agreement.
3.15. Certain Matters Regarding Employees. To the best knowledge of
-----------------------------------
the Company, no officer or key employee of the Company is subject to any
contract, agreement, undertaking, commitment or instrument (including any no
hire or non-competition agreements) which would impair his or her ability to
perform the services on behalf of Company contemplated to be performed by such
officers or key employee.
3.16. Tax Matters.
-----------
3.16.1. The Company (i) has timely filed all material Tax
Returns required to be filed by it as of the date hereof, (ii) has used its
commercially reasonable efforts to maintain all required records with respect to
any liability for Taxes for taxable years with respect to which the statute of
limitations has not yet expired, regardless of whether such liability has been
previously assessed in whole or in part or is assessed in whole or in part after
the date of this Agreement, and (iii) has timely paid, or has made appropriate
provision on its balance sheet (in accordance with GAAP) for, all Taxes due or
claimed to be due from it by any Governmental Body with respect to any liability
for Taxes except where such failure, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company. All Tax
Returns described in clause (i) are true, correct and complete in all material
respects. With respect to periods commencing on or after September 30, 1996, the
Company has not incurred any liability for Taxes which could reasonably be
expected to have a Material Adverse Effect other than (i) as set forth on
Schedule 3.16, (ii) as reflected on the audited balance sheet of the Company as
- -------------
of September 30, 1998 contained in the Financial Statements (the "Audited
Balance Sheet") or the Unaudited Balance Sheet, or (iii) federal and state
income taxes payable on the Company's income after December 31, 1998. There are
no material Liens with respect to Taxes upon any of the Company's properties or
assets, except for current Taxes not yet due.
3.16.2. Except as set forth in Schedule 3.16, to the Company's
knowledge, none of the Tax Returns of the Company have been or is currently
being audited or examined by the Internal Revenue Service (the "IRS"). Except to
the extent reserved for in the Audited Balance Sheet, no material issue of which
the Company has received notice has been raised by a Governmental Body in any
audit or examination which reasonably could be expected to result in a proposed
deficiency, penalty or interest for any other period, which could reasonably be
expected to have a Material Adverse Effect on the Company.
3.16.3. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any Tax Returns
required to be filed by, or which include or are treated as including, the
Company.
-8-
<PAGE>
3.16.4. The Company is not involved in or subject to any joint
venture, partnership or other arrangement or contract which is treated as a
partnership for federal, state, local or foreign income tax purposes.
3.16.5. All material elections with respect to Taxes affecting
the Company as of the date hereof are set forth in Schedule 3.16. No consent to
-------------
the application of section 341(f)(2) of the Code (as defined below) has been
filed with respect to any property or assets held, acquired, or to be acquired
by the Company.
3.16.6. There are no tax sharing agreements or similar
arrangements with respect to or involving the Company.
3.16.7. The Company was not included and is not includible in
any consolidated or unitary Tax Return with any corporation other than such a
return of which the Company is the common parent corporation.
3.16.8. The Company has not agreed to and is not required to
make any material adjustment under section 481(a) of the Internal Revenue Code
of 1986, as amended (the "Code").
3.16.9. "Tax" or "Taxes", as the context may require, include:
(i) any income, alternative or add-on minimum tax, gross income, gross receipts,
franchise, profits, sales, use, ad valorem, business license, withholding,
payroll, employment, excise, stamp, transfer, recording, occupation, premium,
property, value added, custom duty, severance, windfall profit or license tax,
including estimated taxes relating to any of the foregoing, or other similar tax
or other like assessment or charge of similar kind whatsoever together with any
interest and any penalty, addition to tax or additional amount imposed by any
Governmental Body responsible for the imposition of any such Tax; or (ii) any
liability of a Person for the payment of any taxes, interest, penalty, addition
to tax or like additional amount resulting from the application of Treas. Reg.
(S) 1.1502-6 or comparable provisions of any Governmental Body in respect of a
consolidated or combined return.
3.16.10. "Tax Return" means any return (including any
information return), report, statement, schedule, notice, form, or other
document or information filed with or submitted to, or required to be filed with
or submitted to, any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any Law
relating to any Tax.
3.17. Title to Properties; Liens and Encumbrances. The Company has
-------------------------------------------
good and marketable title to all of its material owned properties and assets and
such properties and assets are not subject to any Liens, except for (a) Liens
under the line of credit between the Company and Imperial Bank, (b) immaterial
Liens which arise in the ordinary course of business (including without
limitation Liens from current taxes not yet due and payable), and (c) Liens
which individually or in the aggregate could not reasonably be expected to have
a Material Adverse Effect on the Company or its material properties. All
material leases, subleases, conditional sale contracts and other agreements
pursuant to which the Company leases or otherwise uses real or personal property
(collectively, "Leases") are in
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<PAGE>
good standing and are valid and effective in accordance with their respective
terms. The Company has performed its obligations in all material respects to
date under all such Leases.
3.18. Employee Benefit Plans. Except as listed in Schedule 3.18
---------------------- -------------
or as described in the SEC Reports or as could not, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, the
Company does not maintain, sponsor, or contribute to any program or arrangement
that is an "employee welfare benefit plan," as that term is defined in Section
3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or any similar employment, severance or other arrangement or policy
of the Company (whether written or oral) providing for insurance coverage
(including self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, fringe benefits
or for deferred compensation, bonuses, stock options, stock appreciation or
other forms of incentive compensation or post-retirement insurance, compensation
or benefits (a "Plan"). Neither the Company nor or any member of the same
controlled group of businesses as the Company within the meaning of Section
4001(a)(14) of ERISA (an "ERISA Affiliate") maintains or is obligated to
contribute to, or has ever maintained or been obligated to contribute to, any
"pension plan" within the meaning of Section 3(2) of ERISA, or any
"multiemployer plan" within the meaning of Section 3(37) of ERISA (a "Pension
Plan"). Each Plan which is subject to ERISA is in substantial compliance with
ERISA. None of the Plans provides or provided post-retirement medical or health
benefits. None of the Plans is or was a "welfare benefit fund," as defined in
Section 419(e) of the Code, or an organization described in Sections 501(c)(9)
or 501(c)(20) of the Code. The Company is not and never has been a party to any
collective bargaining agreement. Except as disclosed in the SEC Reports, the
Company has not announced or otherwise made any commitment to create or amend
any Plan, and neither the Company nor any ERISA Affiliate has announced or
otherwise made any commitment to create or begin contributing to any Pension
Plan. All contributions required to be made under the terms of each Plan have
been timely made. Each Plan which is required to comply with the provisions of
Sections 4980B and 4980C of the Code, or with the requirements referred to in
Section 4980D(a) of the Code, has complied in all material respects. Each Plan
intended to meet the requirements for tax-favored treatment under Subchapter B
of Chapter 1 of the Code meets such requirements. Except as provided in Section
5.4(e), the execution and performance of this Agreement will not (i) result in
any obligation or liability (with respect to accrued benefits or otherwise) of
the Company to any Plan, or any present or former employee of the Company, (ii)
be a trigger event under any Plan that will result in any payment (whether of
severance pay or otherwise) becoming due to any present or former employee,
officer, director, stockholder, contractor, or consultant, or any of their
dependents, or (iii) except as otherwise expressly contemplated by this
Agreement, accelerate the time of payment or vesting, or increase the amount, of
compensation due to any employee, officer, director, stockholder, contractor, or
consultant of the Company.
3.19. Year 2000 Compliance. The Company has completed its assessment
--------------------
of all current versions (including products and services currently operating or
under development) of its information technology systems (including systems
utilized in the operation of its Internet sites) and believes they are year 2000
compliant. The Company has made appropriate inquiries of its key vendors and
suppliers and has been assured that such
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<PAGE>
persons have also taken appropriate actions to assure that there shall be no
material adverse change to its business and electronic systems related to year
2000 issues. Based upon the information provided to the Company and its own
internal assessment, the Company does not believe that its year 2000 issues will
have a Material Adverse Effect on the Company.
3.20. Fairness Opinion. The Company has received the opinion of
----------------
Broadview International LLC (the "Company Financial Advisor") that the
transactions contemplated hereby, including the issuance of the Class A
Preferred Stock [and the acquisition by Purchaser of shares of Common Stock
pursuant to the Offer,] are fair to the Company's stockholders from a financial
point of view.
3.21. Finders' Fees. There is no investment banker, broker, finder or
-------------
other intermediary that has been retained by or is authorized to act on behalf
of Company who might be entitled to any fee or commission upon consummation of
the transactions contemplated by this Agreement and each of the other
Transaction Documents other than the Company Financial Advisor.
4. Representations and Warranties of Purchaser. Purchaser hereby
-------------------------------------------
represents and warrants to the Company as follows:
4.1. Organization and Qualification. Purchaser is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Washington. Purchaser has all requisite corporate power and authority to
conduct its business as currently conducted and to enter into and to carry out
and perform its obligations under the Transaction Documents.
4.2. Due Execution, Delivery and Performance of the Agreement. The
--------------------------------------------------------
execution, delivery and performance of the Transaction Documents have been duly
authorized by all necessary corporate action on the part of Purchaser. This
Agreement has been, and when executed and delivered at the First Closing or the
Second Closing (as the case may be) the other Transaction Documents will be,
duly executed and delivered by Purchaser and constitutes, or when executed and
delivered at the First Closing or the Second Closing (as the case may be) will
constitute, valid and binding obligations of Purchaser, enforceable against it
in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws and
equitable principles relating to or limiting creditors' rights generally.
4.3. Evaluation; Purchase for Investment, Illiquid Investment.
-----------------------------------
Purchaser has been furnished any and all materials relating to the Company and
its Affiliates (as defined below) and the offering of the Shares that Purchaser
has requested and Purchaser has been afforded the opportunity to obtain any
additional information necessary to verify the accuracy of any such information.
Purchaser is a sophisticated investor capable of evaluating the merits and risks
of the purchase of the Shares. Purchaser is purchasing the Shares for its own
account as principal, for investment and not with a view to the resale or
distribution of all or any part thereof. Purchaser recognizes that the Shares
being purchased pursuant to this Agreement have not been registered under
applicable Federal or State securities laws, and that such Shares are being
offered and sold in reliance upon the exemptions from registration provided in
the Securities Act and applicable exemptions
-11-
<PAGE>
under State securities laws. Purchaser is an accredited investor (as that term
is defined in Regulation D under the Securities Act) and has the economic
ability to maintain its investment in such Shares for an indefinite period of
time. For purposes of this Agreement, "Affiliate" shall have the meaning set
forth in Rule 501(d) under the Securities Act.
4.4. Proxy Statement; Offer Documents. All information included in
--------------------------------
the Proxy Statement (as defined in Section 5.3) furnished by Purchaser will not,
at the date of mailing of the Proxy Statement to the stockholders of the
Company, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which made, not misleading. Neither the Offer Documents (as
defined in Section 7.7)nor any of the information supplied by Purchaser for
inclusion in the Schedule 14D-9 shall, at the respective times such Offer
Documents and Schedule 14D-9 are filed with the SEC or are first published, sent
or given to shareholders, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, Purchaser makes no representation or
warranty with respect to any information supplied by the Company or any of its
representatives which is contained in the Offer Documents. The Schedule 14D-1
will comply in all material respects as to form with the requirements of the
Exchange Act and the rules and regulations promulgated thereunder.
4.5. Finders' Fees. Except for NationsBanc Montgomery Securities LLC,
-------------
there is no investment banker, broker, finder or other intermediary that has
been retained by or is authorized to act on behalf of Purchaser who might be
entitled to any fee or commission upon consummation of the transactions
contemplated by this Agreement and each of the other Transaction Documents.
4.6. Financial Condition. As of the date hereof, Purchaser has
-------------------
sufficient resources to fulfill its financial obligations under this
Agreement and the transactions contemplated hereby.
4.7. Cable Subscribers. As of the date hereof, Purchaser controls,
-----------------
directly or indirectly, cable television companies which have an aggregate
number of subscribers of not less than 2,000,000.
4.8. Ownership. As of the date hereof, Purchaser and its Affiliates
---------
are the record and beneficial owner of not more than 40,000 shares of Common
Stock in the aggregate.
4.9. Interested Stockholder. In each case within the meaning of
----------------------
Section 203 of the Delaware General Corporation Law:
(a) at no time since immediately prior to the time the
Company's Board of Directors approved the transactions contemplated by this
Agreement through the time of the signing hereof, has Purchaser or any
"affiliate" or "associate" of Purchaser "owned" fifteen percent (15%) or
more of the Company's "voting stock"; and
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<PAGE>
(b) there are no facts known to Purchaser or any
"affiliate" or "associate" of Purchaser, that have not been disclosed to
the Company that relate to whether Purchaser or any "affiliate" or
"associate" of Purchaser, directly or indirectly, through one or more
intermediaries, "controls" or "controlled" or is or was "controlled by" or
is or was "under common control with" the Company.
4.10. Acquiring Person. At no time since immediately prior to the
----------------
time the Company's Board of Directors approved the transactions contemplated by
this Agreement through the time of the signing hereof, has Purchaser or any
group of which Purchaser is a part become an "acquiring person" under Section
23B.19 of the Washington Business Corporation Act.
5. Covenants of the Company. The Company hereby covenants and agrees with
------------------------
Purchaser as follows:
5.1. Access. At all times through the Second Closing, the Company
------
will permit Purchaser and its authorized representatives, at reasonable times
during ordinary business hours and upon reasonable advance notice, access to all
of the books, records, personnel and properties of the Company and its
subsidiaries for the purpose of verifying the accuracy of the Company's
representations and warranties contained herein and the satisfaction of
Purchaser's conditions to the Second Closing and the Offer contained in Section
8.1 and Annex A, respectively.
5.2. Stockholders Meeting. The Company shall cause a meeting of its
--------------------
stockholders to be duly called and held as soon as reasonably practicable for
the purpose of voting on the approval of the issuance and sale to Purchaser of
the Second Issuance Shares and the acquisition of Common Stock pursuant to the
Management Agreements and the election of directors pursuant to this Agreement (
the "Stockholders Meeting"). The proxy materials relating to such meeting shall
(i) contain the recommendation of the Board that the stockholders approve the
issuance and sale to Purchaser of the Second Issuance Shares pursuant to this
Agreement and Purchaser's acquisition of Common Stock pursuant to the Management
Agreement (collectively, the "Purchaser Acquisitions"), and (ii) state that the
Company is neutral with respect to or recommends the Offer.
5.3. Proxy Statement. As promptly as practicable after the date of
---------------
this Agreement, the Company shall prepare and cause to be filed with the SEC a
Proxy Statement in connection with the transactions contemplated hereby (the
"Proxy Statement"), and the Company shall respond promptly to any comments of
the SEC or its staff with respect thereto. The Company will afford Purchaser a
reasonable opportunity to review and comment on the proposed form of Proxy
Statement prior to its filing with the SEC. Purchaser shall promptly furnish to
the Company all information concerning Purchaser and its stockholders as may be
required or reasonably requested in connection with any action contemplated by
this Section 5.3. The Company shall (a) notify Purchaser promptly of the receipt
of any comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Proxy Statement or for additional
information and (b) supply Purchaser with copies of all correspondence with the
SEC or its staff with respect to the Proxy Statement. Whenever any event occurs
that should be set forth in an amendment or supplement to the Proxy Statement,
Purchaser or the Company, as
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<PAGE>
the case may be, shall promptly inform the other of such occurrence and shall
cooperate in filing with the SEC or its staff, and, if appropriate, mailing to
stockholders of the Company, such amendment or supplement.
5.4. Conduct of Business. From the date hereof through the Second
-------------------
Closing, the Company shall and shall cause each of its subsidiaries to, as
contemplated by this Agreement, or as consented to by Purchaser in writing,
operate its businesses in the ordinary course of business and in accordance with
past practice and not take any action inconsistent with this Agreement or with
the consummation of the Second Closing. Without limiting the generality of the
foregoing, the Company shall not and shall cause each of its subsidiaries not
to, except as specifically contemplated by this Agreement or as consented to by
Purchaser in writing :
(a) change or amend the Certificate of Incorporation
or By-Laws of the Company;
(b) enter into, extend, materially modify, terminate
or renew any Material Contract, except in the ordinary course of business;
(c) sell, assign, transfer, convey, lease, mortgage,
pledge dispose of or encumber any assets, or any interests therein,
except in the ordinary course of business;
(d) make new commitments for capital expenditures in
excess of $2,000,000 in any one quarter;
(e) take any action with respect to the grant of any
bonus, severance or termination pay or with respect to any increase of
benefits payable (including the grant of stock options) under its
severance or termination pay policies or agreements in effect on the date
hereof or increase in any manner the compensation or benefits of any
executive officer except in the ordinary course of business consistent
with past practice or pay any benefit not required by any existing
employee benefit plan or policy (except that the Company shall not be
permitted to grant stock options or accelerate the vesting of stock
options except as permitted by the following proviso); provided, however,
that the Company shall be permitted (i) to accelerate, effective on the
Second Closing, the vesting of up to 35% of the unvested portion
(determined as of the Second Closing) of the shares issuable upon exercise
of all outstanding options; provided that (a) the Company accelerates the
vesting of the options that would otherwise vest closest in time to the
date of the Second Closing and (b) the Company receives written waivers
prior to any such acceleration from any officer or employee (including the
Company's Chief Executive Officer, President and Chief Operating Officer)
of any right they may have under any agreement or arrangement with the
Company which would otherwise require that, as a result of such
acceleration, a greater percentage of their unvested options be
accelerated than the percentage of options that the Company proposes to
accelerate for other employees generally, (ii) grant options to bona fide
new employees hired after the date hereof (provided that the Company shall
consult with Purchaser regarding the hiring or appointment of any
executive officer of the Company who would have the
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<PAGE>
title of Vice President or higher) in the ordinary course of business, but
in no event covering more than the number of shares of Common Stock set
forth in Schedule 5.3(e) hereto for the position of such new employee,
--------------
(iii) grant options covering up to 5,000 shares of Common Stock to an
employee as part of his or her normal review, (iv) adopt the 1999 Employee
Stock Purchase Plan as described in the Proxy Statement for the annual
meeting of Stockholders dated February 22, 1999, (v) to pay to and hold
harmless its officers, on an after-tax basis, for any excise taxes
(including any "gross-up" payments) in an aggregate amount not to exceed
$3,000,000 incurred by them in connection with the acceleration of options
under (i) above (which amount the Company represents is based on the stock
price of the Company's Common Stock as of March 12, 1999, and which amount
the parties understand may increase due to increases in the Common Stock
price), so long as such payments are not made prior to the time such tax
payments are actually due; and (vi) the Company will be permitted to enter
into severance agreements with certain key employees (not to exceed 10
persons) providing for six months severance and the acceleration of all
options currently held by such a key employee in the event of a
termination of such key employee's employment by the Company "without
cause" or by the employee for "good reason" (as such terms are defined in
the Company's currently existing employment agreements with its executive
officers);
(f) make any change in the key management structure,
including, without limitation, the hiring of additional executive officers
or the termination of existing executive officers;
(g) acquire by merger or consolidation with, or merge
or consolidate with, or purchase substantially all of the assets of, or
otherwise acquire any material assets or business of any corporation,
partnership, association or other business organization or division
thereof; provided, however, that the Company shall be permitted to
consummate any such transaction involving the payment by the Company of
cash or the issuance by the Company of shares of Common Stock with an
aggregate value per transaction not to exceed $10,000,000 and on an
aggregate basis not to exceed $100,000,000;
(h) declare, set aside, make or pay any dividend or
other distribution in respect of its capital stock, other than a split of
the Common Stock or a dividend payable in shares of Common Stock pro rata
to all holders of the Common Stock;
(i) fail to comply in all material respects with all
legal requirements applicable to it, its assets and its business;
(j) intentionally do any other act which would cause
any representation or warranty of the Company in this Agreement to be or
become untrue in any material respect;
(k) issue, repurchase or redeem or commit to issue,
repurchase or redeem, any shares of its capital stock, any options or other
rights to acquire such stock or any securities convertible into or
exchangeable for such stock,
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<PAGE>
other than the following: (i) issuance of shares in connection with the
consummation of a Superior Proposal (as defined in Section 5.5.2) or in
connection with stock issuances permitted under Section 5.4(g) (subject to
the provisions of Section 5.6), (ii) issuance of shares by employees,
consultants and directors of the Company pursuant to stock options existing
as of the date hereof and those permitted to be granted by Section 5.4(e)
above, (iii) repurchases of shares from employees or consultants in
connection with the termination of their employment or consultancy with the
Company, and (iv) the issuance of up to an aggregate of $10,000,000 in
value of shares of the Company's capital stock (subject to the provisions
of Section 5.6);
(l) fail to use its reasonable best efforts to (i)
retain its key employees and (ii) maintain existing relationships with
material suppliers, customers and others having business dealings with it
and (iii) otherwise preserve the goodwill of its business so that such
relationships and goodwill will be preserved on and after the Second
Closing Date; or
(m) enter into any agreement, or otherwise become
obligated, to do any action prohibited under this Section 5.4.
5.5. No Solicitation.
---------------
5.5.1. Subject to Section 5.5.3 the Company shall not, and the
Company shall cause its Affiliates and the respective officers, directors,
employees, investment bankers, attorneys, accountants and other representatives
and agents (collectively, "Representatives") of the Company and its Affiliates
not to, directly or indirectly, initiate, solicit, encourage or participate in
negotiations or discussions relating to, or provide any information to any
person concerning, or take any action to facilitate the making of, any offer or
proposal which constitutes or is reasonably likely to lead to any Transaction
Proposal (as defined below), or any inquiry with respect thereto, or agree to
approve or recommend any Transaction Proposal. The Company shall, and shall
cause its Affiliates and the respective Representatives of the Company and its
Affiliates to, immediately cease and cause to be terminated all existing
activities, discussions and negotiations, if any, with any parties conducted
heretofore with respect to any of the foregoing.
5.5.2. For purposes of this Agreement, "Transaction Proposal"
shall mean any proposal (other than any proposal by Purchaser or its Affiliates)
regarding (i) any merger, consolidation, share exchange, business combination or
other similar transaction or series of related transactions involving the
Company or a subsidiary of the Company (other than a merger involving a newly-
formed subsidiary of the Company in order to effect an acquisition permitted
under Section 5.4(g)); (ii) any sale, lease, exchange, transfer or other
disposition of more than twenty percent (20%) of the assets of the Company or
any subsidiary of the Company; (iii) any acquisition of a substantial equity
interest in the Company or any equity interest in any of its subsidiaries (with
"substantial equity interest" meaning (a) in the case of an institutional
investor acquiring such interest for investment purposes only, equity interests
representing at least 20% of the Company's outstanding capital stock (by voting
power or otherwise) prior to such investment and (b) in any other
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<PAGE>
case, at least 10% of the Company's outstanding capital stock (by voting power
or otherwise) prior to such investment); (iv) any offer to purchase (whether
from the Company or otherwise), tender offer, exchange offer or similar
transaction involving the capital stock of the Company or any subsidiary of the
Company; and (v) a liquidation or dissolution of the Company.
5.5.3. Notwithstanding anything to the contrary contained in
this Section 5.5 or elsewhere in this Agreement, the Company may, in response to
an unsolicited bona fide Transaction Proposal from an unaffiliated third party,
participate in discussions or negotiations with or furnish information to the
third party making such Transaction Proposal, if all of the following events
have occurred: (a) such third party has made a written proposal to the Board of
Directors of the Company to consummate a Transaction Proposal which proposal
identifies a price to be paid for the capital stock or assets of the Company
that the Board has determined, after consultation with the investment bankers
for the Company, if such transaction is consummated, would be financially more
favorable than the Offer (assuming for these purposes that the Offer is for
5,000,000 shares of Common Stock) to the stockholders of the Company (a
"Superior Proposal"); (b) the Board has determined, after consultation with the
Company's investment bankers, that such third party is financially capable of
consummating such Superior Proposal and that such Superior Proposal is at least
as likely to be consummated, and is not subject to materially greater
conditions, than the transactions contemplated by this Agreement; (c) the Board
shall have determined, after consultation with its outside legal counsel, that
the failure to participate in discussions or negotiations with or furnish
information to such third party would result in a substantial risk of liability
for a breach of the fiduciary duties of the members of such Board under
applicable Delaware law; and (d) Purchaser shall have been notified in writing
of such Transaction Proposal, including its principal financial and other
material terms and conditions, including the identity of the person and its
Affiliates (if relevant) making such Transaction Proposal.
Notwithstanding the foregoing, the Company shall not provide any non-public
information to such third party unless (a) it has prior to the date thereof
provided such information to Purchaser or its Representatives, and (b) it has
provided such non-public information pursuant to a non-disclosure agreement with
terms which are at least as restrictive as the nondisclosure agreement
heretofore entered into between the Company and Purchaser. In addition to the
foregoing, the Company shall not accept or enter into any agreement concerning a
Superior Proposal nor issue any securities or agree to pay a termination or
break-up fee in connection with a Superior Proposal for a period of not less
than 36 hours after Purchaser's receipt of the notification in clause (d) of the
preceding paragraph, and the Company will afford Purchaser an opportunity to
discuss with the Company what, if any, response Purchaser may desire to make
with to such Transaction Proposal. Upon the occurrence of all of the events in
the preceding paragraph and this paragraph, the Company shall be entitled to (1)
change its recommendations concerning the Purchaser Acquisitions, (2) accept
such Superior Proposal, and (3) enter into an agreement with such third party
concerning a Superior Proposal provided that the Company shall immediately make
payment in full to Purchaser of the cash fee provided for in Section 10.2.
Company will promptly communicate to Purchaser the principal terms of any
proposal or inquiry, including the identity of the person and its Affiliates
making the same, that it may
-17-
<PAGE>
receive in respect of any such Transaction Proposal, or of any such information
requested from it or of any such negotiations or discussions being sought to be
initiated with it regarding a Transaction Proposal.
5.5.4. Notwithstanding anything to the contrary
contained in this Section 5.4.3 or elsewhere in the Agreement, at any time after
the date hereof, the Company may file with the Commission a Current Report on
Form 8-K with respect to this Agreement and may file a copy of this Agreement
and any related agreement as an exhibit to such Report.
5.6. Additional Issuances.
--------------------
5.6.1. At any time after the date hereof, so long as
Purchaser (together with its Affiliates) holds of record or beneficially owns at
least fifteen percent (15%) of the outstanding Common Stock of the Company
(measured as of the date of this Agreement if the Additional Issuance is prior
to the Second Closing and measured as of the date of the Additional Issuance if
occurring after the Second Closing) (the "Minimum Percentage") (assuming
conversion into Common Stock, at the conversion rate then in effect, of all
shares of Series A Preferred Stock held of record or beneficially owned by
Purchaser and its Affiliates), in the event the Company shall issue (an
"Additional Issuance") any capital stock, including securities of any type that
are, or may become, convertible into or exercisable or exchangeable for capital
stock of the Company (the "Additional Securities"), Purchaser shall have the
right to subscribe for and to purchase that number of Additional Securities such
that Purchaser holds the same percentage of the Company's outstanding capital
stock immediately prior to and immediately following the Additional Issuance
(the "Pro Rata Share"); provided, however, that this Section 5.6 shall not apply
-------- -------
to shares issued:
(a) to employees, officers or directors of, or
consultants or advisors to the Company or any subsidiary, pursuant to stock
purchase, Company Option Plans, Assumed Option Plans or other option plans
or arrangements approved by the Board;
(b) pursuant to any options, warrants, conversion
rights or other rights or agreements outstanding as of the date of this
Agreement or pursuant to the conversion of the shares of Series A Preferred
Stock contemplated to be issued pursuant to this Agreement;
(c) in connection with any stock split, stock dividend
or recapitalization by the Company;
(d) pursuant to a Superior Proposal if this Agreement
is terminated in connection therewith;
(e) in any Additional Issuance that reduces the
Purchaser's equity percentage by less than 10% of its holdings, so long as
at the time of an Additional Issuance which either solely or considered
together with prior Additional Issuances that reduced the Purchaser's
equity percentage by less than 10% is an
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<PAGE>
Additional Issuance of greater than 10%, the Purchaser has the right to
purchase common stock in order to retain the percentage ownership it had at
the time of the first Additional Issuance which did not exceed 10%; or
(f) pursuant to any equipment leasing arrangement or
debt financing from a bank or similar financial institution, not to exceed
100,000 shares of Common Stock in the aggregate;
provided further, Purchaser's rights under this Section 5.6 shall
- -------- -------
terminate if the Second Closing is not consummated.
5.6.2. If the Company proposes an Additional Issuance, the
Company shall, at least five (5) business days prior to the proposed closing
date of such issuance, give written notice to Purchaser and offer to sell to
Purchaser its Pro Rata Share of the Additional Securities at the lowest price
per share, and otherwise on the same terms and conditions (or, if the nature of
the transaction involves an exchange of assets or securities which cannot be
delivered by Purchaser, then for cash on the same economic terms), offered to
other investors. Such notice shall describe the type of Additional Securities
which the Company is offering to Purchaser, the price of the Additional
Securities and the general terms upon which the Company will issue same.
Purchaser shall have five (5) business days from the date of mailing of any such
notice to agree to purchase its Pro Rata Share of such Additional Securities for
the price and upon the general terms specified in the notice by giving written
notice to the Company and stating therein the quantity of Additional Securities
to be purchased. Sale and issuance of the Additional Securities which Purchaser
has elected to purchase shall be effected concurrently with the closing of the
issuance of securities which gave rise to Purchaser's right to buy such
securities, but only after compliance with all governmental regulations,
including but not limited to the expiration or early termination of the
applicable waiting periods under the HSR Act, if applicable.
5.6.3. In the event that, at any time, the percentage of the
outstanding Common Stock held of record or beneficially owned by Purchaser and
its affiliates (assuming conversion into Common Stock, at the conversion rate
then in effect, of all shares of Series A Preferred Stock held of record or
beneficially owned by Purchaser and its affiliates) shall be decreased as a
result of (i) any transfer by Purchaser or any of its affiliates to one or more
transferees that are not affiliates of Purchaser of any Shares or other
securities held of record or beneficially owned by Purchaser or its affiliates,
or (ii) Purchaser's not purchasing the full amount of Additional Securities
offered for purchase pursuant to this Section 5.6, a new percentage ownership
level shall be established based on the percentage ownership of Purchaser and
its affiliates in effect immediately following such transfer or Additional
Issuance (the "Reduced Percentage Ownership"), and thereafter the Company shall
be required to offer to Purchaser only such number of Additional Securities
pursuant to this Section 5.6 as would permit Purchaser to maintain the Reduced
Percentage Ownership.
5.7. Tag Along. From and after the Second Closing, Purchaser shall
---------
not consummate a Tag-Along Sale (as defined below) unless, in connection
therewith, the buying parties in such Tag-Along Sale shall have agreed to make,
as soon as practicable after the closing of the Tag-Along Sale, an offer to
purchase from each other stockholder of
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<PAGE>
the Company (by merger, tender offer or otherwise) an Equivalent Percentage (as
defined below) of the shares of Common Stock held by such other stockholder
(including, in the case of Company employees, shares of Common Stock purchasable
upon exercise of vested employee stock options), on terms no less favorable than
those received by Purchaser in the Tag-Along Sale. "Tag-Along Sale" shall mean a
sale for cash by Purchaser, in a privately negotiated transaction (other than to
an Affiliate of Purchaser (with a person or entity to be deemed to be an
Affiliate of Purchaser for purposes of this Section 5.7, Section 7.9 and Section
12.4 only if the control relationship involves direct or indirect ownership of
at least a majority of the outstanding voting interests of the applicable
entity, it being understood that any entity that is majority owned (directly or
indirectly) by a person or entity that directly or indirectly owns a majority of
the outstanding voting interests of Purchaser shall be an Affiliate of Purchaser
for these purposes)), in which (a) Purchaser's sale price per share of Common
Stock (assuming conversion into Common Stock of any Series A Preferred Stock
included in the Tag-Along Sale) exceeds the average closing trading price of the
Common Stock for the ten consecutive trading days prior to the date of
announcement of the proposed Tag-Along Sale, and (b) the number of shares of
Common Stock sold by Purchaser (assuming conversion into Common Stock of any
Series A Preferred Stock included in the Tag-Along Sale) represents greater than
twenty-five percent (25%) of the sum of (i) the total number of shares of Common
Stock acquired by Purchaser pursuant to the Management Agreements and the Offer
and (ii) the total number of shares of Common Stock underlying the shares of
Series A Preferred Stock that is purchased by Purchaser in the First Closing and
the Second Closing. "Equivalent Percentage" shall mean the percentage the number
of shares of Common Stock sold by Purchaser in the Tag-Along Sale bears to
Purchaser's total holdings of Common Stock immediately prior to such sale
(assuming conversion into Common Stock, prior to the Tag-Along Sale, of the
Series A Preferred Stock).
6. Covenants of Purchaser. Purchaser hereby covenants and agrees with the
----------------------
Company as follows:
6.1. Transfer Restrictions. Purchaser agrees that it will not sell or
---------------------
otherwise transfer any Shares unless such sale or transfer is made under an
effective Securities Act registration statement or pursuant to an available
exemption from the registration requirements of the Securities Act and Purchaser
shall have delivered to the Company an opinion of securities counsel to
Purchaser, in form and substance reasonably satisfactory to the Company, to the
forgoing effect. Each certificate representing any Shares shall contain a
legend to the following effect:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS SUCH SALE OR TRANSFER IS MADE UNDER AN EFFECTIVE
SECURITIES ACT REGISTRATION STATEMENT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT.
-20-
<PAGE>
Notwithstanding the foregoing, certificates issued after the date hereof
and representing Shares shall not contain the foregoing legend to the extent
that Purchaser shall have delivered to the Company an opinion of securities
counsel to Purchaser, in form and substance reasonably satisfactory to the
Company, to the effect that the statements made in such legend are no longer
relevant.
6.2. Distribution Arrangement. The Company and Purchaser acknowledge
------------------------
that an important consideration for the Company entering into this Agreement is
the fact that the Purchaser, through its affiliated entities Marcus Cable and
Charter Communications (the "Cable Companies"), operates cable systems that
serve over 2 million cable subscribers and that such Cable Companies will
provide an opportunity for the Company to establish a distribution or other
relationship with them. Accordingly, after the consummation of the transactions
contemplated by this Agreement, the Company shall promptly commence negotiations
with the Cable Companies, and Purchaser shall cause the Cable Companies to
commence such negotiations, with respect to the establishment of a distribution
or other relationship to offer the Company's content to their subscribers. The
parties will negotiate in good faith and use reasonable efforts to establish
such distribution or other relationship, but neither Purchaser nor the Cable
Companies, on the one hand, or the Company, on the other hand, shall have any
legal obligation to the other if such a relationship is not established.
7. Additional Covenants of the Parties.
-----------------------------------
7.1. Conditions to the Second Closing. The Company and Purchaser agree
--------------------------------
to use their respective best efforts to ensure that the conditions set forth in
Section 8 are satisfied, insofar as such matters are within their respective
control.
7.2. Board Composition.
-----------------
7.2.1. Immediately upon expiration or early termination of the
waiting period under the HSR Act applicable to the transactions contemplated
hereby, Purchaser shall be entitled to designate two (2) directors to serve on
the Board of Directors of the Company. The Company shall, as soon as practicable
after such time, take all action necessary to cause such individuals to be
appointed to the Board and to have at least one such individual on each
committee of the Board, including either increasing the size of the Board or
securing the resignations of incumbent directors or both.
7.2.2. In connection with the Stockholders Meeting, the Company
shall (i) set the size of its Board at five directors and (ii) nominate for
election at the Stockholders Meeting a slate of director candidates reasonably
acceptable to Purchaser, which shall include three candidates designated by
Purchaser ("Purchaser Designees"), the existing Chief Executive Officer (the
"Management Designee") and one candidate selected by the Purchaser and the
Company who shall not be an Affiliate or employee of either the Purchaser or the
Company and shall otherwise constitute an "independent director" under the rules
of the The Nasdaq Stock Market (the "Outside Designee"), and the Company shall,
at such time, promptly take all action necessary to cause the Purchaser
Designees, the Management Designee and the Outside Designee to be so elected,
including either increasing the size of the Board or securing the resignations
of incumbent directors or both.
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<PAGE>
To the extent that Purchaser is otherwise permitted to vote in the election of
directors at the Stockholders Meeting, Purchaser agrees to vote any shares of
the Series A Preferred Stock or Common Stock it owns in favor of the election of
the Outside Designee and the Management Designee at the Stockholders Meeting. To
the extent that the Purchaser Designees and the Management Designee are elected
as directors, the Company will use its reasonable best efforts to cause the
number of Purchaser Designees and Management Designee, respectively, to
constitute the same percentage as they represent on the Board of each committee
of the Board. Nothing in this Section 7.2.2 shall be deemed to constitute an
admission that any of the Purchaser Designees are not "independent directors"
for purposes of the rules of The Nasdaq Stock Market. In connection with the
Stockholders Meeting, Purchaser agrees to vote all shares of the Series A
Preferred Stock and Common Stock owned by it in favor of the Purchaser
Acquisitions.
7.2.3. If the Company terminates the Second Issuance Agreements
pursuant to Section 9.1.4, then to the extent that three Purchaser Designees
have been elected to the Company's Board of Directors at the Stockholders
Meeting, then Purchaser agrees to cause such number of Purchaser Designees to
resign from the Company's Board of Directors so as to reflect a reallocation of
board seats (based on a five-person Board of Directors) proportionate to
Purchaser's economic interest in the Company, rounded down to the nearest whole
number of directors; provided however, that in no event shall Purchaser have
----------------
fewer than two Purchaser Designees on the Company's Board of the Directors
following such reallocation.
7.2.4. At each annual or other meeting after the Stockholders
Meeting at which the election of directors is considered, so long as Purchaser
owns not less than one-half of the aggregate shares of Common Stock (including
those issuable upon conversion of the Series A Preferred Stock) purchased in the
Offer and in the First Closing, the Board of Directors of the Company, subject
to its fiduciary duties, shall continue to nominate at least two representatives
of Purchaser for election to the Board. Purchaser agrees that, so long as the
current Management Designee is the Chief Executive Officer, Purchaser will vote
its shares in favor of such person's election at each annual or other meeting
after the Stockholders Meeting at which the election of directors is considered.
7.3. Transaction Documents. At the Second Closing, each party
---------------------
shall, and shall cause each of its Affiliates to, execute and deliver to the
other party the Transaction Documents that are to be delivered at the Second
Closing.
7.4. Regulatory Approval. The Company and Purchaser shall use
-------------------
commercially reasonable efforts to file, as soon as practicable after the date
of this Agreement, all notices, reports and other documents required to be filed
with any federal, state, local, municipal, foreign or other governmental body
("Governmental Body") with respect to the transactions contemplated by this
Agreement, and to submit promptly any additional information requested by any
such Governmental Body. Without limiting the generality of the foregoing, the
Company and Purchaser shall, promptly after the date of this Agreement, prepare
and file the notifications required under the HSR Act in connection with the
transactions contemplated by this Agreement. The Company and Purchaser shall
respond as promptly as practicable to (i) any inquiries or requests received
from the Federal Trade Commission or the Department of Justice for additional
information or documentation
-22-
<PAGE>
and (ii) any inquiries or requests received from any state attorney general or
other Governmental Body in connection with antitrust or related matters. Each of
the Company and Purchaser shall (A) give the other party prompt notice of the
commencement of any action, suit, litigation, arbitration, preceding or
investigation ("Legal Proceeding") by or before any Governmental Body with
respect to the transactions contemplated by this Agreement, (B) keep the other
party informed as to the status of any such Legal Proceeding, and (C) promptly
inform the other party of any communication to or from the Federal Trade
Commission, the Department of Justice or any other Governmental Body regarding
the transactions contemplated by this Agreement.
7.5. Amendment of Certificate of Incorporation or By-Laws. The
----------------------------------------------------
Company shall take all steps reasonably necessary to amend the Certificate of
Incorporation and By-Laws to implement the rights and obligations of the parties
contained herein to the extent necessary or appropriate under Delaware law.
7.6. Disclosure; Public Announcements. At all times at or before
--------------------------------
the Second Closing, no party hereto will issue or make any reports, statements
or releases to the public with respect to this Agreement or the transactions
contemplated hereby without the consent of the other party hereto, which consent
shall not be unreasonably withheld. If either party hereto is unable to obtain,
after reasonable effort, the approval of its public report, statement or release
from the other party hereto and such report, statement or release is, in the
opinion of legal counsel to such party, required by law in order to discharge
such party's disclosure obligations, then such party may make or issue the
legally required report, statement or release and promptly furnish the other
parties with a copy thereof. Each party hereto will also obtain the prior
approval of the other party hereto of any press release to be issued announcing
the consummation of the transactions contemplated by this Agreement; provided,
however, no such press release shall be issued prior to consummation of the
First Closing.
7.7. Tender Offer.
------------
7.7.1. Within five (5) business days after the date
hereof, Purchaser shall commence the Offer to purchase up to 3,596,688 shares of
the Company's Common Stock (the "Maximum Tender Number") at $90 per share in
cash (the "Offer Price"), subject only to the conditions set forth in Annex A
-------
hereto.
7.7.2. On the date of commencement of the Offer, Purchaser
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (together
with all amendments and supplements thereto, the "Schedule 14D-1") with respect
to the Offer. The Schedule 14D-1 shall contain or shall incorporate by reference
an offer to purchase (the "Offer to Purchase") and forms of the related letter
of transmittal and any related summary advertisement (the Schedule 14D-1, the
Offer to Purchase and such other documents, together with all supplements and
amendments thereto, being referred to herein collectively as the "Offer
Documents"). Purchaser and the Company agree to promptly correct any information
provided by either of them for use in the Offer Documents which shall have
become false or misleading, and Purchaser further agrees to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the other Offer Documents as so corrected to be disseminated to holders of
shares of Common Stock, in each case as
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<PAGE>
and to the extent required by applicable federal securities laws. Purchaser
agrees to provide the Company with a written copy of any comments it or its
counsel may receive from time to time from the SEC or its staff with respect to
the Schedule 14D-1 promptly after receipt of such comments.
7.7.3. Purchaser shall not, without the prior written
consent of the Company, (i) terminate the Offer other than in accordance with
its terms, (ii) extend the Expiration Date to a date later than August 31, 1999,
or (iii) amend the Offer, other than as permitted in Annex A; provided, however,
------- -------- -------
it is understood that i) Purchaser shall have the right to close the Offer and
accept and pay for tendered shares of Common Stock at any time it may be
permitted to under applicable law, (ii) Purchaser is not obligated to keep the
Offer open until the Stockholders Meeting occurs and (iii) in the event that the
Second Issuance Agreements are terminated, Purchaser may elect, in its sole
discretion, to continue to conduct the Offer and may increase the Maximum Tender
Number to 5,000,000 shares of Common Stock.
7.7.4. The Company's obligations hereunder shall not be
conditioned on the number of shares tendered to Purchaser. Purchaser shall
purchase all shares of Common Stock tendered pursuant to the Offer up to the
Maximum Tender Number. Purchaser shall not have any right hereunder to acquire
the Second Issuance Shares if Purchaser fails to acquire in contravention of the
terms of Annex A all shares of Common Stock tendered pursuant to the Offer up to
-------
the Maximum Tender Number.
7.8. Company Action.
--------------
7.8.1. The Company shall use its reasonable best efforts
to cause the Company Financial Adviser to permit the inclusion of the fairness
opinion referred to in Section 3.21 (or a reference thereto) in the Schedule
14D-9 referred to below and the Proxy Statement referred to in Section 5.3 and a
reference to such opinion in the Offer Documents. The Company hereby consents to
the inclusion in the Offer Documents of the recommendations of the Board
described in Section 5.2.
7.8.2. The Company shall file with the SEC,
contemporaneously with the commencement of the Offer pursuant to Section 7.7, a
Solicitation/ Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing the
statements of the Board described in Section 5.2, and shall promptly mail the
Schedule 14D-9 to the shareholders of the Company. The Schedule 14D-9 and all
amendments thereto will comply in all material respects with the Exchange Act
and the rules and regulations promulgated thereunder. The Company and Purchaser
each agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 that shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to
holders of shares of Common Stock, in each case as and to the extent required by
applicable federal securities laws.
7.8.3. In connection with the Offer, the Company shall
promptly furnish Purchaser with mailing labels, security position listings, any
non-objecting beneficial
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<PAGE>
owner lists and any available listings or computer files containing the names
and addresses of the record holders of shares of Common Stock, each as of a
recent date, and shall promptly furnish Purchaser with such additional
information (including but not limited to updated lists of shareholders, mailing
labels, security position listings and non-objecting beneficial owner lists) and
such other assistance as Parent, Purchaser or their agents may reasonably
require in communicating the Offer to the record and beneficial holders of
shares of Common Stock. Subject to the requirements of applicable law, and
except for such steps as are appropriate to disseminate the Offer Documents and
any other documents necessary to consummate the Preferred Stock Sale, Purchaser
and its affiliates, associates, agents and advisors shall use the information
contained in any such labels, listings and files only in connection with the
Offer and the Preferred Stock Sale, and, if this Agreement shall be terminated,
will deliver to the Company all copies of such information then in their
possession.
7.9. Advertising. As an inducement to Purchaser to enter into this
-----------
Agreement, the Company agrees that, Purchaser shall have the right to use up to
ten percent of the Company's unsold advertising inventory in existence from time
to time. Purchaser shall have such right for a period of five years from the
date hereof , provided that, following the first anniversary of the date hereof,
Purchaser shall have such right for the balance of such five-year period only so
long as Purchaser (together with its Affiliates) holds of record or beneficially
owns at least ten percent (10%) of the outstanding Common Stock of the Company
(assuming conversion into Common Stock, at the conversion rate then in effect,
of all shares of Series A Preferred Stock held of record or beneficially by
Purchaser and its Affiliates). The Company and Purchaser shall cooperate in
establishing procedures to implement this agreement, including the provision of
reasonable advance notice by the Company to Purchaser of the advertising space
available. Purchaser agrees to comply with all of the Company's generally-
applicable advertising guidelines, as they may be in effect from time to time.
The Company agrees that Purchaser may allocate some or all of the advertising
space to which it may become entitled to any entity in which it or an Affiliate
(as defined in Section 5.7) has at least a five percent voting or economic
equity interest, provided that neither Purchaser nor any such entity may
commercially resell any of such advertising space. The parties agree that
advertising space that the Company trades for goods and services or other
promotions in "barter" transactions shall not be deemed to be unsold for
purposes of this Section. Notwithstanding any provision to the contrary in this
Agreement, this covenant will survive any termination of this Agreement or the
Second Issuance Agreements. In no event will Purchaser or any other entity that
is permitted to use advertising under this Section 7.9 be entitled to use
advertising that the Company reasonably determines conflicts or competes with
the Company's products or services or the Company's contractual arrangements
with third parties.
8. Conditions to the Second Closing.
--------------------------------
8.1. Conditions to Purchaser's Obligations at the Second Closing.
-----------------------------------------------------------
Purchaser's obligations to purchase the Second Issuance Shares at the Second
Closing are subject to the satisfaction (or waiver by Purchaser), at or prior to
the Second Closing, of the following conditions:
-25-
<PAGE>
8.1.1. Representations and Warranties True. The representations
-----------------------------------
and warranties of the Company set forth in Section 3 hereof shall be true and
correct (determined without regard to any materiality qualifiers, including
without limitation "Material Adverse Effect," contained in the specific
representation or warranty) (i) as of the date hereof and (ii) as of the Second
Closing Date as if made on such date (provided that in the cases of clauses (i)
and (ii) any such representation and warranty made as of a specific date shall
be true and correct as of such specific date), except for such inaccuracies in
the cases of clauses (i) and (ii) that individually or in the aggregate could
not reasonably be expected to have a Material Adverse Effect.
8.1.2. Performance of Obligations. The Company shall have
--------------------------
performed in all material respects all covenants and obligations herein required
to be performed or observed by it on or prior to the Second Closing.
8.1.3. Consents, Permits, and Waivers. On or prior to the Second
------------------------------
Closing Date, Purchaser and the Company shall have obtained any and all
consents, permits and waivers necessary for consummation of the transactions
contemplated by this Agreement and the other Transaction Documents (except for
such as may be properly obtained subsequent to the Second Closing) unless the
failure to obtain such consents, permits or waivers is a result of a breach by
Purchaser or would not have a Material Adverse Effect. All waiting periods under
the HSR Act shall have expired or terminated.
8.1.4. Absence of Restraint. No order to restrain, enjoin or
--------------------
otherwise prevent the consummation of the transactions contemplated hereby shall
have been entered by any court or other governmental authority and not rescinded
or overturned. No litigation instituted by any governmental body or other
regulatory authority shall be pending to restrain or invalidate any material
part of the transactions contemplated by this Agreement.
8.1.5. Absence of Material Adverse Change. There shall not have
----------------------------------
occurred after the date hereof any material adverse change in the business,
properties, results of operation or financial condition of the Company and its
subsidiaries taken as a whole, other than any adverse change following the date
of this Agreement that the Company shall have demonstrated is substantially
attributable to (i) the transactions contemplated by this Agreement or the
announcement of the transactions contemplated by this Agreement or (ii) any
material economic downturn in the Internet industry generally or any material
national economic downturn.
8.1.6. Stockholder Approval. On or prior to the Second Closing
--------------------
Date, the Purchaser Acquisitions shall have been approved by the affirmative
vote of the holders of a majority of the capital stock of the Company
represented and voting on such matters (the "Requisite Vote").
8.1.7. Board of Directors. As of the Second Closing, all of the
------------------
Purchaser Designees shall have been duly elected to the Board by a vote of the
Company's stockholders and shall constitute a majority of the entire Board.
-26-
<PAGE>
8.1.8. Compliance Certificate. The Company shall have delivered
----------------------
to Purchaser or its counsel a Compliance Certificate, executed by the President
and the Chief Financial Officer of the Company, dated as of the Closing Date, to
the effect that the conditions specified in Sections 8.1.1 through 8.1.7 have
been satisfied.
8.1.9. Legal Opinion. Purchaser shall have received from
-------------
Hutchins, Wheeler & Dittmar an opinion addressed to it, dated as of the Second
Closing date, covering the matters set forth in Exhibit D and otherwise in form
and substance satisfactory to Purchaser.
8.1.10. Management Agreements. Each Management Agreement
---------------------
executed as of the date hereof shall be in full force and effect and no breach
shall have occurred on the part of any Management Stockholder under such
agreement.
8.2. Conditions to Obligations of the Company. The Company's
----------------------------------------
obligation to issue and sell the Second Issuance Shares at the Second Closing is
subject to the satisfaction (or waiver by the Company), on or prior to the
Second Closing, of the following conditions:
8.2.1. Representations and Warranties True. The representations
-----------------------------------
and warranties of Purchaser set forth in Section 4 hereof shall be true and
correct in all material respects (i) as of the date hereof and (ii) as of the
Second Closing Date as if made on such date (provided that in the cases of
clauses (i) and (ii) any such representation and warranty made as of a specific
date shall be true and correct in all material respects as of such specific
date).
8.2.2. Performance of Obligations. Purchaser shall have
--------------------------
performed in all material respects all covenants and obligations herein required
to be performed or observed by it on or prior to the Second Closing.
8.2.3. Consents, Permits, and Waivers. On or prior to the Second
------------------------------
Closing Date, Purchaser and the Company shall have obtained any and all
consents, permits and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement and the other Transaction Documents
(except for such as may be properly obtained subsequent to the Second Closing)
unless the failure to obtain such consents, permits or waivers is a result of a
breach by the Company. All waiting periods under the HSR Act shall have expired
or terminated.
8.2.4. Absence of Restraint. No order to restrain, enjoin or
--------------------
otherwise prevent the consummation of the transactions contemplated hereby shall
have been entered by any court or other governmental authority.
8.2.5. Stockholder Approval. On or prior to the Second Closing
--------------------
Date, the issuance and sale to Purchaser of the Second Issuance Shares and the
purchase of Common Stock pursuant to the Management Agreements shall have been
approved by the Requisite Vote of the Company's stockholders.
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<PAGE>
8.2.6. Tender Offer. The Purchaser shall have made the Offer and
------------
shall not have terminated such Offer except in accordance with its terms, and
shall have purchased all shares tendered thereby in accordance with the Offer up
to the Maximum Tender Number.
8.2.7. Legal Opinion. The Company shall have received from Irell
-------------
& Manella LLP an opinion addressed to it, dated as of the Second Closing
date, covering the matters set forth in Exhibit E and otherwise in form
and substance satisfactory to the Company.
9. Termination.
-----------
9.1. Termination. The obligations of the parties contained herein
-----------
relating to the sale and purchase of the Second Issuance Shares (including
without limitation the agreements contained in Sections 1(b), 2.2, 5.1, 5.2,
5.3, 5.4, 5.5, 7.3, 7.4 (relating to the Second Issuance only, but not to
approvals under the HSR Act and other regulatory approvals in connection with
the First Issuance, the Offer or the Management Agreements), 7.7 (relating to
Purchaser's obligation to conduct the Offer only, but not its right to conduct
the Offer) and 7.8 (the "Second Issuance Agreements") may be terminated at any
time prior to the Second Closing Date:
9.1.1. By mutual agreement of the Company and Purchaser;
9.1.2. By either the Company or Purchaser if :
(a) this Agreement shall not have been consummated by August
31, 1999, unless extended by mutual agreement or unless the failure to
consummate the Agreement is attributable to a failure on the part of the
party seeking to terminate this Agreement to perform any obligation
required to be performed by such party at or prior to the Closing Date;
(b) the Requisite Vote of the Company's stockholders shall not
have been obtained at the Stockholders Meeting duly convened and finally
adjourned;
(c) any Governmental Body shall have issued an injunction,
order or decree (a "Restraint") or taken any other action permanently
enjoining, restraining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement and such Restraint or other
action shall become final and non-appealable, provided the party seeking
to terminate this Agreement shall have used its best efforts to prevent
entry of and to remove such Restraint.
9.1.3. By Purchaser if:
(a) the Board (i) shall have failed to recommend, or shall have
withdrawn, modified or changed in a manner adverse to Purchaser its
approval or recommendation, of the Transaction Documents, the Purchaser
Acquisitions or the other transactions contemplated thereby, or the Board
or any committee thereof shall
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<PAGE>
have resolved to take any of the foregoing actions, (ii) shall have
submitted or recommended to the stockholders of the Company or shall have
approved a Transaction Proposal, (iii) shall have accepted or recommended
to its stockholders a Superior Proposal, or (iv) shall have publicly
announced its intention to do any of the foregoing;
(b) the Company shall have breached or failed to perform in any
material respect any of its representations or warranties (with respect to
materiality, in a manner such that the condition in Section 8.1.1 would
not be satisfied), or covenants or other agreements contained in this
Agreement, which breach or failure to perform cannot be or has not been
cured within five days after the giving of written notice to the Company
of such breach and which, as a result of such breach, considered either
individually or in the aggregate, any condition to Purchaser's obligations
to consummate the Second Closing set forth in Section 8.1 would not at
that time be satisfied (a "Company Material Breach") (provided that
Purchaser is not then in Purchaser Material Breach (as defined below) of
any representation, warranty, covenant or other agreement contained in
this Agreement); or
(c) the Company shall have breached or failed to perform in any
respect any of its obligations under Section 5.5; provided the Company
--------
shall be deemed to have breached its obligations under Section 5.5 if any
Affiliate of the Company, or any Representative of the Company and its
Affiliates, shall have engaged in any activities prohibited by Section
5.5.
9.1.4. By the Company, if (i) Purchaser shall have breached or failed
to perform in any material respect any of its representations or warranties
(with respect to materiality, in a manner such that the condition in Section
8.2.1 would not be satisfied), or covenants or other agreements contained in
this Agreement, which breach or failure to perform cannot be or has not been
cured within five days after the giving of written notice to Purchaser of such
breach and which, as a result of such breach, considered either individually or
in the aggregate, any condition to the Company's obligations to consummate the
Second Closing set forth in Section 8.2 would not at that time be satisfied (a
"Parent Material Breach") (provided that the Company is not then in Company
Material Breach of any representation, warranty, covenant or other agreement
contained in this Agreement), (ii) Purchaser has failed to commence the Offer
within five (5) business days following the date hereof, (iii) any change is
made to the Offer in contravention of Section 7.7.3 or the provisions of
Annex A, (iv) the Board of Directors shall have withdrawn or modified in a
- -------
manner adverse to Purchaser the Board's approval of the Transaction Documents or
(v) the Board has accepted a Superior Proposal in accordance with the provisions
of Section 5.5 hereof. Notwithstanding anything in this Agreement to the
contrary, following any such termination by the Company hereunder Purchaser may
continue to pursue the Offer in accordance with Section 7.7.3.
9.2. Effect of Termination. In the event of the termination of the Second
---------------------
Issuance Agreements pursuant to Section 9.1, the Second Issuance Agreements
shall become void and have no effect, without any liability on the part of any
party or its directors, officers or stockholders, except as set forth in Section
10. Notwithstanding the foregoing, nothing in
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<PAGE>
this Section 9.2 or in Section 10 shall relieve any party to this Agreement of
liability for fraud in connection with this Agreement.
10. Fees and Expenses.
-----------------
10.1. Except as contemplated by Sections 10.2 or 10.3, all costs
and expenses incurred in connection with this Agreement and the consummation of
the transactions contemplated hereby shall be paid by the party incurring such
expenses.
10.2. The Company shall pay or cause to be paid to Purchaser a cash
fee in an amount equal to $17,500,000 if:
(a) the Company or Purchaser shall terminate the Second
Issuance Agreements pursuant to Section 9.1.2(b) hereof and prior to the
Stockholders Meeting, a Transaction Proposal shall have been made known to
the Company or shall have been made directly to its stockholders or any
person shall have publicly announced an intention (whether or not
conditional) to make a Transaction Proposal;
(b) Purchaser shall terminate the Second Issuance
Agreements pursuant to Section 9.1.3(a) or (c) or the Company shall
terminate the Second Issuance Agreements pursuant to clauses (iv) or (v) of
Section 9.1.4; or
(c) Purchaser shall terminate the Second Issuance
Agreements pursuant to Section 9.1.3(b) for a Company Material Breach.
10.3. Upon the Second Closing, the Company will pay to Purchaser the
sum of $8,000,000 on account of Purchaser's fees and expenses in connection with
the transactions contemplated by this Agreement.
10.4. Except as provided in Section 5.5.3, any payments to which
Purchaser may become entitled pursuant to this Section 10 shall be payable by
the Company within two (2) business days after the relevant triggering event.
10.5. The parties agree that it would be speculative, impractical and
extremely difficult to determine or estimate the damages that would be suffered
by Purchaser in the event the Second Closing is not consummated. The parties
hereby agree that the cash fee specified in Section 10.2 is a reasonable
estimate of the total net detriment that Purchaser would suffer as a result of
any failure to consummate the Second Closing. Such fee shall constitute
liquidated damages and, except for fraud in connection with this Agreement,
shall constitute Purchaser's sole and exclusive remedy hereunder. This
liquidated damages provision shall not limit and shall be in addition to
Purchaser's rights to obtain injunctive and other equitable relief against the
Company.
11. [Intentionally Omitted.]
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<PAGE>
12. Miscellaneous.
-------------
12.1. Survival of Representations, Warranties and Agreement.
-----------------------------------------------------
Notwithstanding any investigation made by any party to this Agreement, the
representations and warranties made by the Company and Purchaser in connection
with the First Closing and the Second Closing shall not survive the First
Closing and Second Closing, respectively (other than the representations and
warranties of the Company set forth in Sections 3.4.1, 3.4.2(iii), 3.5 and 3.6,
which shall survive indefinitely), and shall thereafter be of no further force
or effect, except in the case of fraud in connection with this Agreement. All
covenants and agreements contained in this Agreement (except to the extent the
Second Issuance Agreements are terminated pursuant to Section 10) shall survive
the First Closing Date and Second Closing Date in accordance with their terms.
12.2. Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing, shall be in writing, shall be
mailed by first-class registered or certified airmail, or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as follows:
if to the Company, to:
Go2Net, Inc.
999 Third Avenue, Suite 4700
Seattle, WA 98104
Attention: Russell C. Horowitz
with a copy so mailed to:
Hutchins Wheeler & Dittmar, A Professional Corporation
101 Federal Street
Boston, MA 02110
Attention: Thomas M. Camp, Esq.
if to Purchaser,
Vulcan Ventures Incorporated
110 110th Avenue, N.E., Suite 550
Bellevue, WA 98004
Attention: William D. Savoy
with a copy so mailed to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067
Attention: Al Segel, Esq.
12.3. Adjustments. In the event of any change in the Common Stock by
-----------
reason of a stock dividend, split-up, recapitalization, combination, conversion,
exchange of shares or other similar change in the corporate or capital structure
of the Company, the type
-31-
<PAGE>
and number of shares or securities subject to various provisions of this
Agreement (and the per share price of such shares or securities) shall, where
applicable, be adjusted appropriately, so that Purchaser's rights under this
Agreement shall be preserved as nearly as practicable. Without limiting the
generality of the foregoing, any such change in the Common Stock shall cause a
proportionate change in the Maximum Tender Number and the Offer Price.
12.4. Assignability and Enforceability. This Agreement shall be
--------------------------------
binding on and enforceable by the parties and their respective successors and
permitted assigns. No party may assign any of its rights, benefits or
obligations under this Agreement to any person without the prior written consent
of the other party; provided, however, that Purchaser may assign its rights,
------------------
benefits or obligations under this Agreement, without the prior consent of the
Company, to an Affiliate (as defined in Section 5.7). No such assignment shall
relieve the Purchaser of its obligations under this Agreement.
12.5. Amendments and Waivers. No amendment or waiver of any
----------------------
provision of this Agreement shall be binding on any party unless consented to in
writing by such party. No waiver of any provision of this Agreement shall be
construed as a waiver of any other provision nor shall any waiver constitute a
continuing waiver unless otherwise expressly provided. No provision of this
Agreement shall be deemed waived by a course of conduct including the act of
Closing unless such waiver is in writing signed by all parties and stating
specifically that it was intended to modify this Agreement.
12.6. Entire Agreement. This Agreement and the other Transaction
----------------
Documents, including the Schedules and Exhibits and any agreements or documents
referred to herein or therein or executed contemporaneously herewith or
therewith, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether written or oral. There are no conditions,
covenants, agreements, representations, warranties or other provisions, express
or implied, collateral, statutory or otherwise, relating to the subject matter
hereof except as herein provided.
12.7. Headings. The headings of the various sections of this
--------
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
12.8. Severability. In case any provision contained in this
------------
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
12.9. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware as to matters
between the Company and its stockholders and other matters of corporate
governance and, as to all other matters, with the laws of the State of
Washington, without regard to the choice of law provisions thereof, and the
federal law of the United States of America.
-32-
<PAGE>
12.10. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
[Remainder of Page Intentionally Left Blank]
-33-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
GO2NET, INC.
By: /s/ Russell C. Horowitz
---------------------------------------------
Russell C. Horowitz, Chief Executive Officer
VULCAN VENTURES INCORPORATED
By: /s/ William D. Savoy
---------------------------------------------
William D. Savoy, Vice President
-34-
<PAGE>
ANNEX A
CONDITIONS TO THE TENDER OFFER
Notwithstanding any other provision of the Offer or the Stock Purchase
Agreement, and in addition to (and not in limitation of) Purchaser's rights to
extend and amend the Offer at any time in its sole discretion (subject to the
provisions of the Agreement and this Annex A), and subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) relating to the
Purchaser's obligation to pay for or return tendered shares of Common Stock
("Offer Shares") after termination of the Offer, the Purchaser's obligation to
accept for payment or pay for any Common Shares tendered pursuant to the Offer
is subject to the condition that the Second Issuance Agreements (as defined in
the Stock Purchase Agreement) shall not have been terminated and to the
satisfaction of the following conditions (together, the "Offer Conditions"):
(a) there shall not have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on The Nasdaq Stock Market for
at least one full trading day, (ii) any decline, measured from the close of
business on March 12, 1999, in the Nasdaq Composite Index by an amount in excess
of 15% at any time during any three trading days in a ten consecutive trading
day period, (iii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory),
(iv) a declaration of a war or other international or national calamity directly
or indirectly involving the United States, or (v) in the case of any of the
foregoing matters described in clauses (iii) through (v) existing at the time of
commencement of the Offer, a material acceleration or worsening thereof;
(b) no statute, rule, regulation, judgment, order, decree, ruling,
injunction, litigation or other action shall have been entered, promulgated,
enforced, initiated or threatened by any governmental, quasi-governmental,
judicial, or regulatory agency or entity or subdivision thereof with
jurisdiction over the Company or the Purchaser or any of their subsidiaries or
the purchase and sale of the Offer Shares or Second Issuance Shares or any of
the other transactions contemplated by the Stock Purchase Agreement that
purports, seeks, or threatens to (i) prohibit, restrain, enjoin, or restrict in
a material manner, the purchase and sale of any Offer Shares or the Second
Issuance Shares as contemplated by the Stock Purchase Agreement, or (ii) impose
material adverse terms or conditions (not set forth in the Stock Purchase
Agreement) upon the purchase and sale of any Second Issuance Shares or the Offer
Shares as contemplated by the Stock Purchase Agreement;
(c) the Purchaser and the Company shall have obtained any and all consents,
permits and waivers necessary for consummation of the transactions contemplated
by the Stock Purchase Agreement and the other Transaction Documents (except for
such as may be properly obtained subsequent to the consummation of the Offer)
unless the failure to obtain such consents, permits or waivers is a result of a
breach by the Purchaser or would not have a Material Adverse Effect; all waiting
periods under the HSR Act shall have expired or terminated;
(d) the representations and warranties of the Company set forth in the
Agreement hereof shall be true and correct (determined without regard to any
materiality qualifiers,
-35-
<PAGE>
including without limitation "Material Adverse Effect," contained in the
specific representation or warranty) (i) as of the date hereof and (ii) as of
the date of consummation of the Offer if made on such date (provided that in the
cases of clauses (i) and (ii) any such representation and warranty made as of a
specific date shall be true and correct as of such specific date), except in the
case of clauses (i) and (ii), for such inaccuracies that individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect;
(e) the Company shall have performed in all material respects all covenants
and obligations herein required to be performed or observed by it on or prior to
the Second Closing;
(f) There shall not have occurred after the date hereof any material
adverse change in the business, properties, results of operation or financial
condition of the Company and its subsidiaries taken as a whole, other than any
adverse change following the date of the Stock Purchase Agreement that the
Company shall have demonstrated is substantially attributable to (i) the
transactions contemplated by the Stock Purchase Agreement or the announcement of
the transactions contemplated by the Stock Purchase Agreement or (ii) any
material economic downturn in the Internet industry generally or any material
national economic downturn;
(g) the Company shall have appointed to its Board of Directors two persons
designated by the Purchaser in accordance with Section 7.2.1 of the Stock
Purchase Agreement, and the Company shall have complied with all of its other
obligations under Section 7.2 of the Stock Purchase Agreement;
(h) the Company shall have delivered to the Purchaser or its counsel a
Compliance Certificate, executed by the President and the Chief Financial
Officer of the Company, dated as of the consummation of the Offer, to the effect
that the conditions specified in clauses (c) through (h) have been satisfied;
(i) the Purchaser shall have received from Hutchins, Wheeler & Dittmar, A
Professional Corporation, an opinion addressed to it, dated as of the
consummation of the Offer, covering the items listed in Exhibit D in form and
---------
substance satisfactory to the Purchaser;
(j) Each Management Agreement executed as of the date of the Agreement
shall be in full force and effect and no breach shall have occurred on the part
of any Management Stockholder under such agreement.
The Purchaser may delay acceptance for payment of or, subject to the
restrictions referred to above, the payment for, any tendered Shares, and may
terminate the Offer as to any Shares not then paid for, if such Offer Conditions
are not satisfied.
The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted by the Purchaser regardless of the circumstances giving rise to any
such condition (including without limitation any action or inaction by the
Purchaser, other than actions Purchaser is required to take under Section 7.1 of
the Stock Purchase Agreement), or may be
-36-
<PAGE>
waived by the Purchaser, in whole or in part at any time and from time to time,
in the Purchaser's sole discretion. The Purchaser is not obligated to keep the
Offer open until the Stockholders Meeting occurs. In the event that the Second
Issuance Agreements are terminated, the Purchaser may elect, in its sole
discretion, to continue to conduct the Offer.
The failure by the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such rights and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination (which shall be made in good faith) by the Purchaser
with respect to any of the foregoing conditions (including without limitation
the satisfaction of such conditions) will be final and binding on all parties.
The Purchaser may increase the Offer Price and may make any other changes
in the terms and conditions of the Offer; provided, however, that, except as
permitted under Section 7.7.3 of this Agreement or unless previously approved by
the Company in writing, the Purchaser may not (i) decrease the Offer Price, (ii)
change the form of consideration payable in the Offer, (iii) increase or
decrease the maximum number of Shares sought pursuant to the Offer, (iv) add to
or modify the Offer Conditions, or (v) otherwise amend the Offer in any manner
adverse to the Company's stockholders.
The Purchaser may, without the Company's consent, (i) extend the Offer if
at the scheduled Expiration Date of the Offer if any of the conditions to the
Purchaser's obligation to accept for payment, and pay for, the Offer Shares
shall not have been satisfied or waived, until such time as such conditions are
satisfied or waived, (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer and (iii) extend the Offer for any reason on one or more
occasions for an aggregate period of not more than ten business days beyond the
latest Expiration Date that would otherwise be permitted under clauses (i) or
(ii) of this sentence. As used herein, "business day" means any day other than
a Saturday, Sunday or United States federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, New York City time.
-37-
<PAGE>
EXHIBIT A
---------
CERTIFICATE OF DESIGNATION OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
GO2NET, INC.
Go2Net, Inc., (hereinafter called the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify:
1. The name of the Corporation is Go2Net, Inc.
2. The certificate of incorporation of the Corporation authorizes the
issuance of 1,000,000 shares of Preferred Stock, $.01 par value, and expressly
vests in the Board of Directors of the Corporation the authority provided
therein to provide for the issuance of said shares in series and by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the numbers of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the shares
of each such series and the qualifications, limitations, or restrictions
thereof.
3. The Board of Directors of the Corporation, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating a "Series A Convertible" issue of Preferred Stock:
RESOLVED, that a series of the class of authorized Preferred Stock of the
Corporation be and hereby is created, and that the designation and amount
thereof and the voting powers, preferences and relative participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof as follows:
SERIES A CONVERTIBLE PREFERRED STOCK
------------------------------------
1. Designation And Amount. The shares of such series shall be designated
----------------------
"Series A Convertible Preferred Stock" (the "Series A Preferred Stock") and the
number of shares constituting such series shall be 300,000.
2. Dividends.
---------
(a) The Series A Preferred Stock shall not be entitled to receive
dividends unless and until the Board of Directors declares a dividend in respect
of the Common Stock out of legally available funds therefor; provided, however,
-------- -------
that no dividends shall be declared or paid upon the Common Stock (other than
dividends payable upon the Common Stock solely in additional shares of Common
Stock, provided that an appropriate adjustment in the Conversion Price is made
under Section 6(a) hereof) or any other stock ranking on liquidation junior to
the Series A Preferred Stock (such stock being referred to hereinafter
collectively as "Junior Stock") unless (i) after the payment of the dividend on
the Common Stock and Junior Stock (and the simultaneous dividend on the Series A
Preferred Stock) the Corporation's net worth exceeds the aggregate liquidation
preference of the Series A Preferred Stock (provided that this clause (i) shall
not apply if the dividend is approved by the holders of a majority of the
outstanding shares of Series A Preferred Stock) and (ii) there
<PAGE>
shall be simultaneous declaration or payment, as applicable, of a dividend upon
the Series A Preferred Stock.
(b) In the case of any dividend being declared upon the Common Stock, the
dividend which shall be declared upon each share of Series A Preferred Stock as
a condition to such dividend upon the Common Stock shall be equal in amount to
the dividend payable upon that number of shares of Common Stock acquirable upon
conversion of a share of Series A Preferred Stock immediately before the
declaration of such dividend, with such conversion being based on the then
applicable Conversion Price determined in accordance with Section 6 as of the
record date for the declaration of such dividend on the Common Stock.
(c) In the case of any dividend being declared upon any class of Junior
Stock that is convertible into Common Stock, the amount of the dividend which
shall be declared upon each share of Series A Preferred Stock as a condition to
such dividend on Junior Stock, divided by the number of shares of Common Stock
acquirable upon conversion of a share of Series A Preferred Stock, shall equal
the amount of the dividend declared upon each share of such class of Junior
Stock, divided by the number of shares of Common Stock acquirable upon
conversion of a share of such class of Junior Stock, in each case assuming such
conversion occurred immediately before the declaration of such dividend.
(d) No dividend shall be declared or paid upon any class of Junior Stock
(other than Common Stock) that is not convertible into Common Stock without the
consent of holders of at least a majority of the outstanding shares of Series A
Preferred Stock.
(e) Holders of shares of Series A Preferred Stock shall be entitled to
share equally, share for share, in all such dividends declared upon the Series A
Preferred Stock.
3. Liquidation, Dissolution Or Winding Up.
---------------------------------------
(a) In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the holders of shares of Series A Preferred
Stock then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders, after and subject to
the payment in full of all amounts required to be distributed to the holders of
any Preferred Stock of the Corporation ranking on liquidation prior and in
preference to the Series A Preferred Stock (such Preferred Stock that is senior
to the Series A Preferred Stock being referred to hereinafter as "Senior Stock")
upon such liquidation, dissolution or winding up, but before any payment shall
be made to the holders of Common Stock or other Junior Stock, an amount equal to
the sum of (i) $1,000 per share (the "Liquidation Preference") (subject to
adjustment in the event of any stock dividend, stock split, stock distribution
or combination with respect to such shares), and (ii) the amount of all declared
but unpaid dividends on the Series A Preferred Stock. If upon any such
liquidation, dissolution or winding up of the Corporation, the remaining assets
of the Corporation available for the distribution to its stockholders after
payment in full of amounts required to be paid or distributed to holders of any
other Senior Stock shall be insufficient to pay the holders of shares of Series
A Preferred Stock the full amount to
<PAGE>
which they shall be entitled, the holders of shares of Series A Preferred Stock,
and any class of stock ranking on liquidation on a parity with the Series A
Preferred Stock (such Preferred Stock ranking on liquidation on parity with the
Series A Preferred Stock being referred to as "Parity Stock"), shall share
ratably in any distribution of the remaining assets and funds of the Corporation
in proportion to the respective amounts which would otherwise be payable with
respect to the shares held by them upon such distribution if all amounts payable
on or with respect to said shares were paid in full. Except as set forth in this
clause (a), holders of shares of Series A Preferred Stock shall not be entitled
to any distribution in the event of liquidation, dissolution or winding up of
the Corporation.
(b) The merger or consolidation of the Corporation with or
into any other corporation or entity, or the sale or conveyance of all or
substantially all the assets of the Corporation, shall not be deemed to be a
liquidation, dissolution or winding up of the Corporation for purposes of this
Section 3.
4. Voting.
------
(a) Each holder of shares of Series A Preferred Stock shall
have the right to one vote for each share of Common Stock into which such
holder's shares of Series A Preferred Stock could then be converted, and with
respect to such vote, such holder shall have full voting rights and powers equal
to the voting rights and powers of the holders of Common Stock, except as
otherwise provided in Sections 4(b) and 4(c) hereof, or as required by law, and
shall be entitled, notwithstanding any provision hereof, to notice of any
shareholders' meeting in accordance with the Bylaws of the Corporation, and
shall be entitled to vote, together with holders of Common Stock, with respect
to any question upon which holders of Common Stock have the right to vote;
provided, however, that the shares of Series A Preferred Stock shall not have
- -------- -------
any voting power with respect to the election of directors unless and until the
making of any necessary filings required by, and the expiration or termination
of any applicable waiting periods under, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act").
(b) The consent of holders of at least a majority of the
outstanding shares of Series A Preferred Stock, voting separately as a single
class, in person or by proxy, either in writing without a meeting or at a
special or annual meeting of stockholders called for such purpose, shall be
necessary to amend, modify or repeal any provision of the Certificate of
Incorporation (including any provision of the Certificate of Designation of
Series A Convertible Preferred Stock) or Bylaws of the Corporation in any manner
which would adversely affect the powers, preferences or special rights of the
Series A Preferred Stock. The authorization or creation of any shares of any
class or series of Senior Stock or Parity Stock of the Corporation or the
reclassification of any authorized stock of the Corporation or security
convertible into or evidencing the right to purchase shares of any such Senior
Stock or Parity Stock shall be deemed to adversely affect the Series A Preferred
Stock. The authorization or creation of any shares of any class or series of
Junior Stock of the Corporation or the reclassification of any authorized stock
of the Corporation into any such Junior Stock, or the creation or authorization
of any obligation or security convertible into or evidencing the right to
purchase shares of any such Junior Stock shall be deemed not to adversely affect
the powers, preferences or special rights of the Series A Preferred Stock.
<PAGE>
(c) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law and so long as there is outstanding at
least 50% of the Series A Preferred Stock, the consent of the holders of at
least a majority of the outstanding shares of Series A Preferred Stock, voting
together as a separate class, in person or proxy, either in writing without a
meeting or at a special or annual meeting of stockholders called for such
purpose, shall be necessary to authorize or effect (i) any sale, lease, transfer
or other disposition of assets (including without limitation by merger) having a
fair market value of at least 30% of the fair market value of the assets of the
Corporation and its subsidiaries on a consolidated basis; (ii) any merger or
consolidation or other reorganization of the Corporation with or into another
corporation in one transaction or a series of related transactions pursuant to
which the stockholders of the Corporation immediately prior to consummation of
such transaction would hold less than 66-2/3% of the voting securities of the
entity surviving the transaction; (iii) the acquisition by the Corporation or
any subsidiary thereof of another entity or business whether by means of a
purchase of equity interests or the purchase of all or substantially all of the
assets of such entity or merger, consolidation, reorganization, issuance or
exchange of securities or otherwise where the consideration involved (including
non-cash consideration) has a value of at least $100,000,000; (iv) a
liquidation, winding up or dissolution of the corporation or adoption of any
plan of the same; (v) the commencement by the Corporation of a voluntary case or
proceeding under applicable bankruptcy laws or any other insolvency,
receivership, reorganization, moratorium or similar laws providing relief to
debtors; and (vi) any redemption or repurchase by the Corporation of any Junior
Stock or Parity Stock or any securities convertible into Junior Stock or Parity
Stock, other than the repurchase of shares in connection with the termination of
employees of the Corporation pursuant to rights under written agreements:
provided, however, except to the extent provided by law, the holders of the
- -----------------
Series A Preferred Stock shall not have any consent rights under this Section
4(c) until the Second Closing (as defined in that certain Stock Purchase
Agreement dated March 15, 1999, between this Corporation and Vulcan Ventures
Incorporated) shall have occurred, but this proviso shall not in any way impair
or restrict the voting rights of the holders of the Series A Preferred Stock in
any other respect, including without limitation, the right to vote together with
the holders of the Common Stock pursuant to Section 4(a) or the voting right
under Section 4(b).
5. Conversion Rights.
-----------------
(a) Exercise of Conversion Rights. Subject to Compliance with
-----------------------------
the HSR Act, each holder of Series A Preferred Stock shall have the right, at
its option, at any time, to convert, subject to the terms and provisions of this
Section 5, all or any portion of its Series A Preferred Stock then outstanding
into such number of fully paid and non-assessable shares of Common Stock as
results from dividing (i) the sum of (A) the aggregate Liquidation Preference of
all shares of Series A Preferred Stock to be converted plus (B) any declared but
unpaid dividends on such shares, by (ii) the applicable Conversion Price (as
defined in Section 6 below) on the Conversion Date (as defined below). Such
conversion shall be deemed to have been made at the close of business on the
date that the certificate or certificates for shares of Series A Preferred Stock
shall have been surrendered for conversion and written notice shall have been
received as provided in Section 5(b) (the "Conversion Date"), so that the person
or persons entitled to receive the shares of Common
<PAGE>
Stock upon conversion of such shares of Series A Preferred Stock shall be
treated for all purposes as having become the record holder or holders of such
shares of Common Stock at such time and such conversion shall be at the
Conversion Price in effect at such time. Upon conversion of any shares of Series
A Preferred Stock pursuant to this Section 5, the rights of the holder of such
shares upon the Conversion Date shall be the rights of a holder of Common Stock
only, and each such holder shall not have any rights in its former capacity as a
holder of shares of Series A Preferred Stock.
(b) Notice to the Corporation. In order to convert all or any
-------------------------
portion of its outstanding Series A Preferred Stock into shares of Common Stock,
the holder of such Series A Preferred Stock shall deliver the shares of Series A
Preferred Stock to be converted to the Corporation at its principal office,
together with written notice that it elects to convert those shares of Series A
Preferred Stock in to shares of Common Stock in accordance with the provisions
of this Section 5. Such notice shall specify the number of shares of Series A
Preferred Stock to be converted and the name or names in which the holder wishes
the certificates for shares of Common Stock to be registered, together with the
address or addresses of the person or persons so named , and, if so required by
the Corporation, shall be accompanied by a written instrument or instruments of
transfer in form reasonably satisfactory to the Corporation, duly executed by
the registered holder of the shares of Series A Preferred Stock to be converted
or by its attorney duly authorized in writing.
(c) Delivery of Certificate. As promptly as practicable after the
-----------------------
surrender as hereinabove provided of shares of Series A Preferred Stock for
conversion into shares of Common Stock, the Corporation shall deliver or cause
to be delivered to the holder, or the holder's designees, certificates
representing the number of fully paid and non-assessable shares of Common Stock
into which the shares of Series A Preferred Stock are entitled to be converted,
together with a cash adjustment in respect of any fraction of a share to which
the holder shall be entitled as provided in Section 5(d), and, if less than the
entire number of shares of Series A Preferred Stock represented by the
certificate or certificates surrendered is to be converted, a new certificate
for the number of shares of Series A Preferred Stock not so converted. So long
as any shares of Series A Preferred Stock remain outstanding, the Corporation
shall not close its Common Stock transfer books. The issuance of certificates
for shares of Common Stock upon the conversion of shares of Series A Preferred
Stock shall be made without charge to the holder for any tax in respect of the
issuance of such certificates (other than any transfer, withholding or other tax
if the shares of Common Stock are to be registered in a name different from that
of the registered holder of Series A Preferred Stock).
(d) Fractional Shares. No fractional shares of Common Stock or
-----------------
scrip representing fractional shares of Common Stock shall be issued upon any
conversion of any shares of Series A Preferred Stock, but, in lieu thereof,
there shall be paid an amount in cash equal to the same fraction of the Market
Price of a whole share of Common Stock as of the Conversion Date. The "Market
Price" of a share of Common Stock on or with respect to any day shall mean (i)
the closing sales price on the immediately preceding trading day of a share of
Common Stock on the principal national securities exchange or automated
quotation system on which the shares of Common Stock are listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange or automated
<PAGE>
quotation system, the average of the last reported bid and asked prices on such
immediately preceding trading day in the over-the-counter market as furnished
by the National Association of Securities Dealers, Inc., or, if such firm is
not then engaged in the business of reporting such prices, as furnished by any
similar firm then engaged in such business selected in good faith by the Company
or, if there is no such firm, as furnished by any member of the National
Association of Securities Dealers, Inc., selected in good faith by the Company,
or (ii) if the shares of Common Stock are not then traded on any such exchange
or system, the amount determined in good faith by the Board to represent the
fair value of a share of Common Stock.
(e) Reservation of Shares. The Corporation shall at all times
---------------------
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of shares of Series A
Preferred Stock, the full number of whole shares of Common Stock then
deliverable upon the conversion of all shares of Series A Preferred Stock then
outstanding. The Corporation shall take at all times such corporate action as
shall be necessary in order that the Corporation may validly and legally issue
fully paid and non-assessable shares of Common Stock upon the conversion of
shares of Series A Preferred Stock in accordance with the provisions of this
Section 5.
(f) Registration. If any shares of Common Stock to be reserved for
------------
the purpose of conversion of Series A Preferred Stock require registration or
listing with, or approval of, any governmental authority, stock exchange or
other regulatory body under any federal or state law or regulation or otherwise,
before such shares may be validly issued or delivered upon conversion, the
Corporation shall, in good faith and as expeditiously as possible, endeavor to
secure such registration, listing or approval, as the case may be.
(g) Shares Validly Issued and Non-Assessable. All shares of Common
----------------------------------------
Stock that may be issued, fully paid and nonassessable and free from all taxes,
liens and charges with respect to the issuance thereof.
(h) Retirement of Shares. Any shares of Series A Preferred Stock
--------------------
converted pursuant to the provisions of this Section 6 shall be retired and
given the status of authorized and unissued Preferred Stock, undesignated as to
series, subject to reissuance by the Corporation as shares of Preferred Stock of
one or more series, as may be determined from time to time by the Board.
(i) Automatic Conversion.
--------------------
(i) Transfer of Shares. In the event that a holder of shares of
------------------
Series A Preferred Stock desires to transfer some or all of such shares to an
unaffiliated party, each share of Series A Preferred Stock so transferred shall
be converted into the number of fully paid and non-assessable shares of Common
Stock into which such share is then convertible pursuant to Section 5 hereof
automatically and without further action, immediately upon the transfer of such
shares.
(ii) Transaction. In the event that the Corporation enters into
a transaction which will result in the transfer of 50% or greater of the voting
securities of the
<PAGE>
Company to an unrelated party, then each share of Series A Preferred Stock
outstanding shall be converted into the number of fully paid and non-assessable
shares of Common Stock into which such share is then convertible pursuant to
Section 6 hereof automatically and without further action, immediately upon the
transfer of such shares.
(iii) Mechanics of Automatic Conversion. Upon any automatic
---------------------------------
conversion of shares of Series A Preferred Stock into shares of Common Stock
pursuant to this Section 5(i), the holders of such converted shares shall
surrender the certificates formerly representing such shares at the office of
the Corporation or of any transfer agent for Common Stock. Thereupon, there
shall be issued and delivered to each such holder, promptly at such office and
in his, her or its name as shown on such surrendered certificate or
certificates, a certificate or certificates for the number of shares of Common
Stock into which such shares of Series A Preferred Stock were so converted and
cash as provided in Section 5(d) above in respect of any fraction of a share of
Common Stock issuable upon such conversion. The Corporation shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable
upon such conversion unless and until certificates formerly evidencing the
converted shares of Series A Preferred Stock are either delivered to the
Corporation or its transfer agent, as hereinafter provided, or the holder
thereof notifies the Corporation or such transfer agent that such certificates
have been lost, stolen, or destroyed and executes and delivers an agreement to
indemnity the Corporation from any loss incurred by it in connection therewith.
6. Conversion Price. As used herein, the "Conversion Price" shall
----------------
initially be $66.11 per share of Common Stock, subject to adjustment as set
forth below. The Conversion Price shall be subject to adjustment from time to
time as follows:
(a) Stock Dividends, Subdivisions, Reclassifications or
--------------------------------------------------
Combinations. If the Corporation shall (i) declare a dividend or make a
- ------------
distribution on its Common Stock in shares of its Common Stock, (ii) subdivide
or reclassify the outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify the outstanding Common Stock into a
smaller number of shares, the Conversion Price in effect at the time of the
record date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be proportionately adjusted
so that the holder of any shares of Series A Preferred Stock surrendered for
conversion after such date shall be entitled to receive the number of shares of
Common Stock which he would have owned or been entitled to receive had such
shares of Series A Preferred Stock been converted immediately prior to such
date. Successive adjustment in the Conversion Price shall be made whenever
any event specified above shall occur.
(b) Other Distributions. In case the Corporation shall fix a record
-------------------
date for the making of a distribution to all holders of shares of its Common
Stock (i) of shares of any class other than its Common Stock, (ii) of evidence
of indebtedness of the Corporation or any subsidiary of the Corporation (iii) of
assets, or (iv) of rights or warrants, in each such case all holders of shares
of its Series A Preferred Stock shall receive a distribution (i) of shares of
any class other than its Common Stock, (ii) of evidence of indebtedness of the
Corporation or any subsidiary of the Corporation, (iii) of assets, or (iv) of
rights or warrants, as applicable, equal in amount to the distribution which
they would have received had such
<PAGE>
holders converted their shares of Series A Preferred Stock into Common Stock
immediately prior to the distribution.
(c) Consolidation, Merger, Sale, Lease or Conveyance or
---------------------------------------------------
Reclassifications or Reorganizations. In case of any consolidation with or
- ------------------------------------
merger of the Corporation with or into another corporation or other entity, or
in case of any sale, lease or conveyance to another entity of the assets of the
Corporation as an entirety or substantially as an entirety, or in the event of
any reclassification, recapitalization or other change of the Common Stock in
which the Common Stock is changed into the same or a different number of shares
of any class or classes of stock, then each share of Series A Preferred Stock
shall after the date of such consolidation, merger, sale, lease or conveyance or
such reclassification, reorganization or other change be convertible into the
number of shares of stock or other securities or property (including cash) to
which the Common Stock issuable (at the time of such consolidation, merger,
sale, lease or conveyance or such reclassification, recapitalization or other
change) upon conversion of such share of Series A Preferred Stock would have
been entitled upon such consolidation, merger, sale, lease or conveyance or
such reclassification, recapitalization or other change; and in any case, if
necessary, the provisions set forth herein with respect to the rights and
interests thereafter of the holders of the shares of Series A Preferred Stock
shall be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to any shares of stock or other securities or property
thereafter deliverable on the conversion of the shares of Series A Preferred
Stock.
(d) Notice to Holders. In the event the Corporation shall propose
-----------------
to take any action of the type described in subsections (a), (b) and (c) of
this Section 6, the Corporation shall give notice to each holder of shares of
Series A Preferred Stock, which notice shall specify the record date, if any,
with respect to any such action and the approximate date on which such action
is to take place. Such notice shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such action
on the Conversion Price and the number, kind or class of shares or other
securities or property which shall be deliverable upon conversion of shares of
Series A Preferred Stock. In the case of any action which would require the
fixing of a record date, such notice shall be given at least 15 days prior to
the date so fixed, and in the case of all other action, such notice shall be
given at least 20 days prior to the taking of such proposed action.
(e) Statement Regarding Adjustments. Upon the occurrence of each
-------------------------------
adjustment or readjustment of the Conversion Price of the Series A Preferred
Stock pursuant to this Section 6, the Corporation shall compute such adjustment
or readjustment in accordance with the terms hereof and prepare and furnish to
each holder a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is
based. Each such statement shall be signed by the Corporation's public
accountants.
(f) Treasury Stock. For the purposes of this Section 6, the sale or
--------------
other disposition of any Common Stock theretofore held in the Corporation's
treasury shall be deemed to be an issuance thereof.
(g) Good Faith. The Corporation shall not, by amendment of its
----------
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation,
<PAGE>
merger, dissolution, issuance or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the Corporation, but shall at all times
in good faith assist in the carrying out of all the provisions of this Section 6
and in the taking of all such action as may be necessary or appropriate in order
to protect the conversion rights of the holders of the shares of Series A
Preferred Stock shares against impairment of any kind.
7. No Redemption Rights. The Series A Preferred Stock shall not be
--------------------
subject to redemption, whether at the option of either the Corporation or any
holder of the Series A Preferred Stock.
FURTHER RESOLVED, that the statements contained in the foregoing resolutions
creating and designating the said Series A Convertible issue of Preferred Shares
and fixing the number, powers, preferences and relative, optional,
participating, and other special rights and the qualifications, limitations,
restrictions, and other distinguishing characteristics thereof shall, upon the
effective date of said series, be deemed to be included in and be a part of the
certificate of incorporation of the Corporation pursuant to the provisions of
Sections 104 and 151 of the General Corporation Law of the State of Delaware.
[The remainder of this page is intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, said Corporation has caused this Certificate to be
signed by its Chief Executive Officer, this 15th day of March, 1999. The
signature below shall constitute the affirmation or acknowledgment of the
signatory, under penalties of perjury, that the instrument is the act and deed
of the Corporation and that the facts stated herein are true.
---------------------------
Russell C. Horowitz
Chief Executive Officer
<PAGE>
EXHIBIT B
---------
PROMISSORY NOTE
$167,482,000.00 Bellevue, Washington
March 15, 1999
FOR VALUE RECEIVED, the undersigned, VULCAN VENTURES INCORPORATED, a
Washington corporation ("Maker"), hereby promises to pay to the order of GO2NET,
INC., a Delaware corporation ("Holder"), the principal sum of One Hundred Sixty-
Seven Million Four Hundred Eighty-Two Thousand Dollars ($167,482,000.00), plus
interest on the unpaid principal balance from time to time after the date hereof
at the rate of 8% per annum.
The entire outstanding principal amount of this Note and all accrued but
unpaid interest thereon shall be due and payable on March 22, 1999.
All payments hereunder shall be made in lawful money of the United States
of America to Holder at 999 Third Avenue, Suite 4700, Seattle, Washington 98004,
or at such other address as shall be designated in writing from time to time by
Holder.
Interest shall be computed on the actual number of days in a year, for the
number of days actually elapsed.
If Maker fails to make any payment of principal or interest when required
under this Note, then Holder may, at its sole option with notice to Maker,
declare immediately due and payable the entire unpaid principal balance of this
Note.
This Note may be prepaid in whole or in part at any time, without penalty
or fee of any kind.
If this Note is not paid when due, Maker promises to pay all reasonable
costs of collection incurred by Holder.
All persons or entities now or at any time liable for payment of the
indebtedness evidenced by this Note, expressly waive presentment for payment,
notice of dishonor, protest, notice of protest and diligence in collection and
consent that the time of the payments or any part of the payments may be
extended by Holder.
This Note shall be governed by and construed under the laws of the State of
Delaware.
"Maker"
VULCAN VENTURES INCORPORATED
By:
---------------------------------
William D. Savoy, Vice President
<PAGE>
EXHIBIT C
---------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into this
15th day of March, 1999, by and among GO2NET, INC., a Delaware corporation (the
"Company"), and VULCAN VENTURES INCORPORATED, a Washington corporation
("Vulcan").
A. Concurrently with the execution of this Agreement, Vulcan is purchasing
167,507 shares of the Company's Series A Convertible Preferred Stock, $.01 par
value (the "Series A Preferred Stock"), pursuant to that certain Stock Purchase
Agreement dated March 15, 1999, between the Company and Vulcan (the "Stock
Purchase Agreement"). The Stock Purchase Agreement also contemplates Vulcan's
acquisition of additional shares of the Series A Preferred Stock and certain
shares of the Company's Common Stock, $.01 par value (the "Common Stock").
B. The parties hereto desire to set forth the respective rights of the
Company and Vulcan with respect to the registration of the shares of the
Company's Common Stock that Vulcan may acquire.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises contained herein, the parties hereto agree as follows:
1. Definitions.
-----------
1.1 As used in this Agreement, the following capitalized terms shall
have the following meanings:
Affiliate: A Person that directly, or indirectly through one or more
---------
intermediaries, controls or is controlled by, or is under common control with,
Vulcan; provided that such control relationship involves direct or indirect
ownership of at least a majority of the outstanding voting interests of the
applicable Person. Without limiting the generality of the foregoing, it is
understood that any entity that is majority owned (directly or indirectly) by a
Person that directly or indirectly owns a majority of the outstanding voting
interests of Vulcan shall be an Affiliate of Vulcan.
Common Stock: All shares now or hereafter authorized of any class of
------------
common stock of the Company, and any other equity securities of the Company,
howsoever designated, which have the right (subject always to prior rights of
any class or series of preferred shares) to participate in the distribution of
the assets and the earnings of the Company without limit as to per share amount.
Exchange Act: The Securities Exchange Act of 1934, as amended from
------------
time to time.
Holders: Vulcan, all of its Affiliates (including without limitation
-------
Paul G. Allen), any Person to which Common Stock is transferred by Vulcan and
its Affiliates for purposes of Paul G. Allen's estate planning, and any Person
to which Common Stock is
<PAGE>
transferred by Vulcan and its Affiliates that has registration rights pursuant
to Section 10 below.
Majority Holders: Holders of a majority of the Registrable Securities
----------------
held by all Holders at the time of any request for registration pursuant to
Section 2.1(a).
Person: An individual, corporation, partnership, limited liability
------
company, trust, unincorporated organization or a government or any agency or
political subdivision thereof.
Prospectus: The definitive prospectus included in any Registration
----------
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by the Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
Registrable Securities: Those shares of Common Stock now or hereafter
----------------------
owned of record or beneficially by the Holders (including, without limitation,
any shares of Common Stock acquired by the Holders upon conversion of the Series
A Preferred Stock) plus any shares received from the Company with respect to or
in replacement of such shares by reason of splits, dividends and
recapitalizations and other changes in the Company's capital structure , but
excluding any shares which may be then immediately sold to the public without
registration pursuant to Rule 144 under the Securities Act.
Registration Expenses: See Section 6 hereof.
---------------------
Registration Statement: Any registration statement of the Company
----------------------
filed under the Securities Act which covers Registrable Securities pursuant to
the provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
SEC: The Securities and Exchange Commission.
---
Securities Act: The Securities Act of 1933, as amended from time to
--------------
time.
Selling Holders: Holders of Registrable Securities who seek to sell
---------------
such securities under any Registration Statement.
2. Registration Rights.
-------------------
2.1 Registration Upon Request.
-------------------------
(a) At any time beginning 180 days after the date hereof, the
Majority Holders may request by written notice (a "Demand Notice") to the
Company that the Company effect the registration under the Securities Act of a
number of Registrable Securities at least equal to 5% of the shares of the
Common Stock then outstanding, stating the intended method of disposition of
such shares. The registration rights contemplated by this Section 2.1 may be
exercised only three (3) times by the Majority Holders during the
-2-
<PAGE>
term of this Agreement; provided, however, the request for registration shall
-------- -------
not be deemed made if either (i) the Registration Statement does not become
effective under the Securities Act (including without limitation if the Selling
Holders withdraw the Registration Statement, provided in case of such withdrawal
the request for registration will be deemed made unless the Selling Holders
reimburse the Company for its reasonable expenses in connection with such
Registration Statement) or a stop order, injunction or other order interferes or
prevents the contemplated method of distribution or (ii) the number of
Registrable Securities requested to be included in the registration is reduced
by 15% or more pursuant to Section 2.1(c). Within five (5) business days after
receipt of a Demand Notice, the Company shall notify all other Holders and offer
to them the opportunity to include their Registrable Securities in such
registration.
(b) Upon receipt of such request, the Company shall, as soon as
practicable, prepare and file a Registration Statement with the SEC on an
appropriate form under the Securities Act with respect to all of the Registrable
Securities that Holders of such securities have requested that the Company
register, and use its best efforts to cause such Registration Statement to
become effective.
(c) In connection with any Registration Statement filed in
response to such request, the Company, at its option, may include a primary
offering of additional shares of Common Stock and/or may include shares to be
sold by other stockholders of the Company; provided, however, that if the
-------- -------
managing underwriter of such offering reasonably determines in good faith and
delivers to the Selling Holders a written opinion that the number of shares
otherwise to be included in the Registration Statement is such that the success
of the underwritten offering would be materially and adversely affected and,
accordingly, the total number of shares to be included in the Registration
Statement is reduced to the amount recommended by such underwriter, then (i)
unless the Registration Statement includes all of the Registrable Securities
designated for sale by all Selling Holders participating in the demand
registration pursuant to Section 2.1(a), the Registration Statement shall not
include any shares to be offered by the Company or sold by other stockholders
(including other Holders exercising incidental registration rights pursuant to
Section 2.2), and (ii) if the Registration Statement does not include all of the
Registrable Securities designated for sale by such Selling Holders, the number
of Registrable Securities included in the Registration Statement shall be
allocated among such Selling Holders pro rata (based on the number of
Registrable Securities held by each).
(d) Notwithstanding the foregoing, upon delivery of written
notice (deliverable no later than 10 days after delivery of the Demand Notice)
to the person(s) who delivered the Demand Notice, the Company shall be entitled
to postpone filing of the Registration Statement, and may withhold efforts to
cause the Registration Statement to become effective, for a reasonable period of
time (not to exceed the shorter of 90 days or the Company's termination of
consideration of a Company Offering (as defined below) or completion of any
Transaction (as defined below), as the case may be) if (i) the Company is
contemplating filing a registration statement in connection with the offering of
its securities (a "Company Offering") within 90 days of delivery of the Demand
Notice, or (ii) the Company determines in good faith that a registration
pursuant to the Demand Notice might interfere with or adversely affect the
negotiations or completion of any transaction that is
-3-
<PAGE>
being contemplated by the Company at the time the right to delay is exercised (a
"Transaction").
2.2 Incidental Registration.
-----------------------
(a) If at any time after the date hereof the Company proposes to
register any shares of Common Stock under the Securities Act (except pursuant to
a registration statement filed on Form S-8 or Form S-4 or such other form as
shall be prescribed under the Securities Act for the same purposes, or a
registration statement filed on Form S-3 covering exclusively shares issued in
acquisitions pursuant to Section 4(2) under the Securities Act), or if any other
stockholder is being afforded an opportunity to register shares of Common Stock
(including pursuant to Section 2.1(a)), the Company will at each such time give
written notice to the Holders (other than Holders participating in a demand
registration pursuant to Section 2.1(a)) as provided in Section 11.4 hereof of
its intention to do so. Within twenty (20) days after receipt of such notice,
such Holders may request that the Company register all or part of the
Registrable Securities, stating in such request the intended method of
distribution of such securities (the "Designated Securities"). Upon receipt of
such request, the Company shall use its best efforts to effect the registration
of the Designated Securities by including the Designated Securities in such
Registration Statement.
(b) In the event that securities of the same class as the
Registrable Securities are being registered by the Company in such Registration
Statement and such securities as well as any of the Designated Securities are to
be distributed in an underwritten offering, such Designated Securities shall be
included in such underwritten offering on the same terms and conditions as the
securities being issued by the Company for distribution pursuant to such
underwritten offering; provided, however, that if the managing underwriter of
-------- -------
such underwritten offering reasonably determines in good faith and advises the
parties that the inclusion in such underwritten offering of all the Designated
Securities would materially and adversely affect the success of the underwritten
offering, then the number of Designated Securities to be included in the
Registration Statement shall be reduced to the amount recommended in good faith
by and set forth in the opinion of such managing underwriter; provided, further,
-------- -------
that as to the Selling Holders exercising incidental registration rights
pursuant to this Section 2.2, such reduction shall be pro rata (based on the
number of shares held by each) with respect to the Designated Securities with
other Persons holding contractual incidental or "piggy-back" registration rights
in such underwritten offering.
(c) No registration effected under this Section 2.2 shall
relieve the Company of its obligations to effect registrations at the request of
the Holders under Section 2.1.
3. Hold-Back Agreements.
--------------------
3.1 Restrictions on Public Sale by Holders. Each Selling Holder whose
--------------------------------------
Registrable Securities are covered by a Registration Statement filed pursuant to
Section 2 hereof agrees, if requested by the managing underwriters in an
underwritten offering, not to effect any public sale or distribution of
securities of the Company of the same class as the
-4-
<PAGE>
securities included in such Registration Statement during a period, not to
exceed 90 days, beginning on the closing date of each underwritten offering made
pursuant to such Registration Statement, to the extent timely notified in
writing by the managing underwriters.
3.2 Restrictions on Public Sale by the Company and Others. The
-----------------------------------------------------
Company agrees not to effect any public sale or distribution of its Common
Stock, during a period, not to exceed 45 days, beginning on the closing date of
an underwritten offering made pursuant to a Registration Statement filed under
Section 2 hereof to the extent timely notified in writing by the managing
underwriters (except as part of such underwritten registration or pursuant to
registrations on Forms S-4 or S-8 or any successor form to such Forms).
4. Registration Procedures. In connection with the Company's registration
-----------------------
obligations pursuant to Section 2 hereof, the Company will use its best efforts
to effect such registration to permit the sale of such Registrable Securities in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company will:
4.1 Preparation of Registration Statement. Prepare and file with the
-------------------------------------
SEC, within the time periods specified in Section 2, a Registration Statement on
such form as may be appropriate under the Securities Act, and use its best
efforts to cause such registration Statement to become effective.
4.2 Maintaining Effectiveness. Promptly prepare and file with the
-------------------------
SEC such amendments to the Registration Statement as may be necessary to keep
such Registration Statement effective for a period of not more than 180 days
(or, in the case of an underwritten offering, no more than 5 business days), or
such shorter period which will terminate when all Registrable Securities covered
by such Registration Statement have been sold.
4.3 Notification. Immediately notify the Selling Holders and the
------------
managing underwriters, if any, and (if requested by any such Person) confirm
such advice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of the issuance by the SEC of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceeding for that
purpose, (iii) of the receipt by the Company of any notification with respect to
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, and (iv) of the happening of any event which makes any statement
made in the Registration Statement, the Prospectus or any document incorporated
therein by reference untrue or which requires the making of any changes in the
Registration Statement, the Prospectus, or any document incorporated therein by
reference so that they will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statement therein not misleading.
-5-
<PAGE>
4.4 Stop Orders. Make every reasonable effort to obtain the
-----------
withdrawal of any order suspending the effectiveness of a Registration Statement
or the qualification of any Registrable Securities for sale in any jurisdiction
at the earliest possible moment.
4.5 Consultation with Holders. Prior to the filing of any
-------------------------
Registration Statement or amendment thereto, provide copies of such document to
the Selling Holders and to the managing underwriters, if any, make the Company's
representatives and the Company's counsel available for discussion of such
document and make such changes in such document relating to the Selling Holders
prior to the filing thereof as such Selling Holders, counsel for such Selling
Holders, or underwriters may reasonably request.
4.6 Copies of Registration Statements. Furnish to each Selling Holder
---------------------------------
and each managing underwriter, if any, without charge, at least one originally
executed copy of the Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those incorporated
by reference).
4.7 Prospectuses. Deliver to each Selling Holder and the
------------
underwriters, if any, without charge, as many copies of the Prospectus (and each
preliminary prospectus) and any amendment or supplement thereto as such Persons
may reasonably request so long as the Registration Statement to which such
Prospectus or any amendment or supplement thereto relates is effective.
4.8 Blue Sky Laws. Prior to any public offering of Registrable
-------------
Securities, use its best efforts to register or qualify or cooperate with the
Selling Holders, the underwriters, if any, and their respective counsel in
connection with the registration or qualification of such Registrable Securities
for offer and sale under the securities or blue sky laws of such jurisdictions
within the United States as any Selling Holder or underwriter reasonably
requests, and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statement; provided, however, that the Company will
-------- -------
not be required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action which would subject it to general
service of process or taxation in any such jurisdiction where it is not then so
subject.
4.9 Amendments Upon Changes. Upon the occurrence of any event
-----------------------
contemplated by Sections 4.3(ii), (iii) or (iv) or 4.4 above, prepare, as
promptly as practicable, a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document incorporated
therein by reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder,
such Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading.
4.10 Underwriting Agreements. Enter into such customary agreements
-----------------------
(including an underwriting agreement) and take all such other actions reasonably
required in connection therewith in order to expedite or facilitate the
disposition of such Registrable Securities.
-6-
<PAGE>
4.11 Compliance with Laws; Section 11(a). Otherwise use its best
-----------------------------------
efforts to comply with all applicable federal and state securities laws
(including without limitation the rules and regulations of the SEC), and make
generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act no later than 45 days after
the end of each 12-month period (or within 90 days after the end of a fiscal
year).
4.12 Opinions. At the request of any Selling Holder, use its best
--------
efforts to furnish on the date that the Registrable Securities are delivered to
that Holder and any underwriter for sale in connection with a registration
pursuant to this Agreement (i) an opinion of the counsel representing the
Company for the purposes of such registration, and (ii) a letter from the
independent certified public accountants of the Company, each dated such date
and in form and substance as is customarily given by counsel and independent
certified public accountants to underwriters in an underwritten public offering,
addressed to any Selling Holders' underwriter and to the Selling Holders.
5. Selling Holders' Obligations.
----------------------------
5.1 Provision of Information. The Company may require each Selling
------------------------
Holder of Registrable Securities as to which any registration is being effected
to furnish to the Company such information regarding the distribution of such
securities by, and such other information relevant to, the Selling Holder for
inclusion in such Registration Statement, as the Company may from time to time
reasonably request in writing.
5.2 Discontinued Use of Prospectus. Each Holder of Registrable
------------------------------
Securities agrees by execution of this Agreement that, upon receipt of any
written notice from the Company of the happening of any event of the kind
described in clauses (ii), (iii) or (iv) of Section 4.3 or Section 4.4 hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 4.9 hereof, or until it is advised in writing
(the "Advice") by the Company that the use of the Prospectus may be resumed, and
has received copies of any additional or supplemental filings which are
incorporated by reference in such Prospectus, and, if so directed by the Company
such Holder will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice. In the event the Company shall give any such notice, the time
period mentioned in Section 4.2 hereof shall be extended by the number of days
during the period from and including the date of the giving of such notice to
and including the date when each Selling Holder shall have received the copies
of the supplemental or amended Prospectus contemplated by Section 4.9 hereof or
the Advice.
5.3 Underwriting Agreement. Each Selling Holder participating in an
----------------------
underwritten offering pursuant to Section 2.1 or 2.2 will enter into a customary
underwriting agreement on terms reasonably satisfactory to the managing
underwriter.
-7-
<PAGE>
6. Registration Expenses. The Company shall bear all expenses other than
---------------------
Selling Holder Expenses (defined below) incurred in connection with any
Registration Statement, including without limitation all registration and filing
fees, fees with respect to any filings required to be made with the National
Association of Securities Dealers, listing fees relative to any stock exchange
or national market system, fees and expenses of compliance with state securities
or blue sky laws (including reasonable fees and expenses of counsel for the
underwriters in connection therewith), printing expenses, fees and disbursements
of counsel for the Company, and fees and disbursements of all independent public
accountants of the Company. Each Selling Holder shall bear his or its pro rata
share of any Selling Holder Expenses. "Selling Holder Expenses" shall consist
of and be limited to (i) the Selling Holder's legal costs, including the fees
and expenses of any counsel selected by the Selling Holder to represent him or
it, and (ii) the proportionate share of brokerage or underwriting commissions
attributable to the Selling Holder's shares.
7. Indemnification.
---------------
7.1 Indemnification by the Company. The Company agrees to indemnify
------------------------------
and hold harmless each Holder of Registrable Securities, each Person who
controls such Holder (within the meaning of the Securities Act or the Exchange
Act) (a "controlling person"), and each officer, director, employee and agent of
such Holder and each controlling person and each underwriter or selling agent
(the "indemnified parties") from and against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or preliminary
prospectus or any amendment or supplement thereto or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as (i)
the Company has demonstrated that the same are caused by or contained in any
information furnished to the Company by such Holder, expressly for use therein,
or (ii) the Company has advised such Holders' Representative in writing of a
Section 4.3(iv) event and the Holder has sold Registrable Securities
notwithstanding receipt of such notice prior to receipt of a supplement or
amended Prospectus pursuant to Section 4.9 herein; provided, however, that the
-------- -------
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any preliminary prospectus if (i) such Holder failed to send or deliver a copy
of the Prospectus with or prior to the delivery of written confirmation of the
sale of Registrable Securities and (ii) the Prospectus would have corrected such
untrue statement or omission; provided, further, that the Company shall not be
-------- -------
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission in the Prospectus, if
such untrue statement or alleged untrue statement, omission or alleged omission
is corrected in an amendment or supplement to the Prospectus and if, having
previously been furnished by or on behalf of the Company with copies of the
Prospectus as so amended or supplemented, such Holder thereafter fails to
deliver such Prospectus as so amended or supplemented, prior to or concurrently
with the sale of a Registrable Security to the Person asserting such loss,
claim, damage, liability or expense who purchased such Registrable Security
which is the subject thereof from such Holder. The indemnity provided herein
shall remain in full force and effect regardless of any investigation made by or
on
-8-
<PAGE>
behalf of an indemnified party and shall survive the transfer of Registrable
Securities by the Selling Holder.
7.2 Indemnification by Holders. In connection with the Registration
--------------------------
Statements hereunder, each Selling Holder agrees to indemnify, to the full
extent permitted by law, the Company, and each Person who controls the Company
(within the meaning of the Securities Act or the Exchange Act) and each
director, officer, employee and agent of each such Person from and against any
losses, claims, damages, liabilities and expenses caused by any untrue statement
of a material fact or any omission of a material fact required to be stated in
any Registration Statement or Prospectus or preliminary prospectus or necessary
to make the statements therein not misleading, to the extent, but only to the
extent, that the Company has demonstrated that such untrue statement or omission
is contained in any information or affidavit so furnished by such Holder to the
Company specifically for inclusion in such Registration Statement or Prospectus.
In no event, however, shall the liability of any Selling Holder hereunder be
greater in amount than the dollar amount of the proceeds (net of underwriters'
discounts and commissions) received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation. The
Company shall be obligated to give to, and shall be entitled to receive from,
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution customary indemnities.
7.3 Conduct of Indemnification Proceedings. Any Person entitled to
--------------------------------------
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any person
-------- -------
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such Person unless (a) the
indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume within a reasonable period of
time the defense of such claim and employ counsel reasonably satisfactory to
such person or (c) in the reasonable judgment of any such Person, based upon
written advice of its counsel, a conflict of interest may exist between such
Person and the indemnifying party with respect to such claims or such Person may
have separate or additional defenses (in which case, if the Person notifies the
indemnifying party in writing that such Person elects to employ separate counsel
at the expense of the indemnifying party, the indemnifying party shall not have
the right to assume the defense of such claim on behalf of such Person). If
such defense is not assumed by the indemnifying party, the indemnifying party
will not be subject to any liability for any settlement made without its consent
(but such consent will not be unreasonably withheld). No indemnifying party
will consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation. An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one principal and one local counsel for all
parties indemnified by such indemnifying party with respect to such claim.
-9-
<PAGE>
7.4 Contribution. If the indemnification provided for in Sections
------------
7.1 or 7.2 is unavailable to the indemnified parties in respect of any losses,
claims, damages or liabilities referred to herein, then each such indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (i) as between the Company and the Selling
Holders on the one hand and the underwriters on the other hand, in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Holders on the one hand and the underwriters on the
other hand from the offering of all of the securities sold in the offering, or
if such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also the relative
fault of the Company and the Selling Holders on the one hand and of the
underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations and (ii) as between the Company on the
one hand and each Selling Holder on the other hand, in such proportion as is
appropriate to reflect the relative fault of the Company and of each Selling
Holder in connection with such statements or omissions, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Selling Holders on the one hand and the underwriters on the other hand
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and the Selling Holders bear to the total
underwriting discounts and commissions received by the underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company and the Selling Holders on the one hand and of the
underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Selling Holders or by the underwriters. The
relative fault of the Company on the one hand and of each Selling Holder on the
other hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7.4 were determined by pro
rata allocation (even if the underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7.4, no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Common Stock underwritten by it and distributed to the public
was offered to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to
-10-
<PAGE>
contribute any amount in excess of the amount by which the total price at which
the securities of such Selling Holder were offered to the public exceeds the
amount of any damages which such Selling Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Selling
Holders' obligations to contribute pursuant to this Section 7.4 are several in
proportion to the proceeds of the offering received by each Selling Holder bears
to the total proceeds of the offering received by all the Selling Holders and
not joint.
8. Selection of Underwriters. In connection with any request for
-------------------------
registration under Section 2.1 hereof, the Company shall be entitled to select
the managing underwriter if it is also registering shares on its own behalf. The
Selling Holders, however, shall be entitled to select the co-managing
underwriter. If the Registration Statement covers only shares being sold by the
Selling Holders, then the Selling Holders shall be entitled to select the
managing underwriter, subject to approval by the Company, which approval shall
not be unreasonably withheld. In connection with any registration under Section
2.2, the Selling Holders shall have no right to select underwriters.
9. Rule 144 The Company covenants that, after it has filed a registration
--------
pursuant to Section 12 of the Exchange Act or a registration statement under the
Securities Act becomes effective, it will file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder, and it will take such further action
as may be reasonably and customarily requested by any Holder of Registrable
Securities, all to the extent required from time to time to enable such Holder
to sell Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
any Holder of Registrable Securities, the Company will deliver to such Holder a
written statement as to whether it has complied with such information and
requirements.
10. Transfer of Registration Rights. The registration rights granted
-------------------------------
pursuant to this Agreement shall be available to a transferee of any Registrable
Securities if (i) the transferring Holder gives the Company written notice of
such transfer, identifying the name and address of the transferee and the
securities involved; (ii) the transferee agrees in writing to be bound by the
provisions of this Agreement; and (iii) as a result of such transfer, the
transferee holds at least 5% (or, if the "Second Closing" under the Stock
Purchase Agreement shall have been consummated, 10%) of the shares of Common
Stock outstanding as of the date of the transfer.
11. Miscellaneous.
-------------
11.1 Remedies. In the event of a breach by the Company of its
--------
obligations under this Agreement, each Holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by
-11-
<PAGE>
it of any of the provisions of this Agreement and hereby waives the defense in
any action for specific performance that a remedy at law would be adequate.
11.2 No Inconsistent Agreements. The Company will not on or after the
--------------------------
date of this Agreement enter into any agreement with respect to its securities
which is inconsistent with or limits or impairs the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof.
11.3 Adjustments Affecting Registrable Securities. The Company will not
--------------------------------------------
take any action, or permit any change to occur, with respect to the Registrable
Securities which would adversely affect the ability of the Holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement.
11.4 Notices. All notices or other communications hereunder shall be in
-------
writing and shall be given by (i) personal delivery, (ii) courier or other
delivery service which obtains a receipt evidencing delivery, (iii) registered
or certified mail (postage prepaid and return receipt requested), or (iv)
facsimile or similar electronic device, to such address as may be designated
from time to time by the relevant party, and which shall initially be: (i) in
the case of the Company, 999 Third Avenue, Seattle, Washington 98004, Attention:
Russell C. Horowitz, facsimile (206) 447-1646, with a copy to Hutchins, Wheeler
& Dittmar, A Professional Corporation, 101 Federal Street, Boston, MA 02110,
Attn: Thomas M. Camp, Esq., facsimile (617) 951-1295; and (ii) in the case of
Vulcan, 110 110th Avenue N.E., Suite 550, Bellevue, Washington 98004, attention:
William D. Savoy, facsimile (425) 453-1985, with a copy to Irell & Manella LLP,
1800 Avenue of the Stars, Suite 900, Los Angeles, CA 90067, Attn: Alvin G.
Segel, Esq., facsimile (310) 203-7199. All notices and other communications
shall be deemed to have been given (i) if delivered by the United States mail,
three business days after mailing (five business days if delivered to an address
outside of the United States), (ii) if delivered by a courier or other delivery
service, one business day after dispatch (two business days if delivered to an
address outside of the United States), and (iii) if personally delivered or sent
by facsimile or similar electronic device, upon receipt by the recipient or its
agent or employee (which, in the case of a notice sent by facsimile or similar
electronic device, shall be the time and date indicated on the transmission
confirmation receipt). No objection may be made by a party to the manner of
delivery of any notice actually received in writing by an authorized agent of
such party.
11.5 Complete Agreement; Modifications. This Agreement and any documents
---------------------------------
referred to herein or executed contemporaneously herewith constitute the
parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. This Agreement may be amended, altered or modified only by a writing
signed by the Company, the Majority Holders.
11.6 Successors and Assigns. Except as provided herein to the contrary,
----------------------
this Agreement shall be binding upon and inure to the benefit of the parties,
their respective successors and permitted assigns, including without limitation
and without the need for an express assignment, subsequent Holders of
Registrable Securities.
-12-
<PAGE>
11.7 Governing Law. All questions with respect to the Agreement and the
-------------
rights and liabilities of the parties shall be governed by the laws of the State
of Delaware, regardless of the choice of laws provisions of Delaware or any
other jurisdiction.
11.8 Attorneys' Fees. Should any litigation be commenced (including any
---------------
proceedings in a bankruptcy court) between the parties hereto or their
representatives concerning any provision of this Agreement or the rights and
duties of any Person or entity hereunder, the party or parties prevailing in
such proceeding shall be entitled, in addition to such other relief as may be
granted, to the reasonable attorneys' fees and court costs incurred by reason of
such litigation.
11.9 Headings. The Article and Section headings in this Agreement are
--------
inserted only as a matter of convenience, and in no way define, limit, extend or
interpret the scope of this Agreement or of any particular Article or Section.
11.10 Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
11.11 Gender. Throughout this Agreement, as the context may require, the
------
masculine gender includes the feminine and neuter; and the neuter gender
includes the masculine and feminine.
11.12 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
[Remainder of this page intentionally left blank.]
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<PAGE>
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth hereinabove.
GO2NET, INC.
By:______________________________
Its:______________________________
VULCAN VENTURES INCORPORATED
By:______________________________
Its:______________________________
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<PAGE>
EXHIBIT D
[HUTCHINS, WHEELER & DITTMAR, A PROFESSIONAL CORPORATION LETTERHEAD]
March 15, 1999
Vulcan Ventures Incorporated
110th Avenue N.E., Suite 550
Bellevue, Washington 98004
Re: Stock Purchase Agreement dated as of March 15, 1999
---------------------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you in connection with the execution and
delivery by Go2Net, Inc., a Delaware corporation (the "Company") of the Stock
Purchase Agreement dated as of March 15, 1999 (the "Purchase Agreement") by and
between the Company and Vulcan Ventures Incorporated (the "Purchaser"). This
opinion is rendered to you, at the request of the Company, pursuant to Section
2.1 of the Purchase Agreement. Capitalized terms not otherwise defined herein
shall have the meanings set forth in the Purchase Agreement.
We have acted as counsel to the Company in connection with the preparation,
execution and delivery of the Purchase Agreement and the transactions
contemplated therein. In connection with such representation, we have examined
originals, or copies identified to our satisfaction as being true copies, of the
following:
(1) The Purchase Agreement;
(2) The Registration Rights Agreement;
(3) The Certificate of Designation;
(4) The Officer's Certificate attached hereto as Exhibit A;
---------
(5) The By-laws of the Company, as amended to date, certified by its
Secretary;
(6) The Restated Certificate of Incorporation of the Company, as amended
to date, certified by its Secretary;
(7) Resolutions of the directors of the Company certified by its
Secretary, approving
<PAGE>
HUTCHINS, WHEELER & DITTMAR
Vulcan Ventures Incorporated
March 15, 1999
Page 2
the transactions contemplated by the Transaction Documents (as
hereinafter defined) to which it is a party; and
(8) Certificates of the Secretary of State of the State of Delaware
regarding the legal existence and corporate good standing of the
Company dated as of March 15, 1999.
The agreements, documents and instruments referred to in clauses (1)
through (3) above are referred to in this letter as the "Transaction Documents."
We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such agreements and instruments, corporate
records, certificates of public officials and of officers of the Company,
including the Officer's Certificate attached hereto as Exhibit A, and such other
---------
documents and records and such matters of law as we have deemed necessary as a
basis for the opinions set forth below. As to questions of fact material to
such opinions, we have relied, without independent verification, upon
certificates of public officials and of officers of the Company, copies of which
have been delivered to you, and the factual accuracy and completeness of all the
representations and warranties made by the parties to the Company and the other
documents executed by the Company in connection with the transactions
contemplated by the Transaction Documents. The opinions expressed herein as to
the valid existence and good standing of the Company are as of the date of the
certificate referred to in clause (8) above and are based solely on such
certificate.
As used in this opinion and unless otherwise specified herein, the phrases
"to our knowledge," "known to us" and the like refer to the actual present
knowledge of lawyers currently in this firm who have performed substantive legal
services on behalf of the Company in connection with the transactions referred
to herein, without any independent investigation or file or docket review.
For purposes of this opinion, we have assumed, with your permission and
without independent verification, (a) the genuineness of all signatures, (b) the
legal capacity of all natural persons who have signed documents examined by us,
(c) the authenticity of all documents submitted to us as originals and the
conformity to original documents of all documents submitted to us as certified
or photostatic copies, (d) that the parties to the Transaction Documents other
than the Company have each duly authorized, executed and delivered such
Transaction Documents and all other relevant documents and instruments, and (e)
that each of the parties to the Transaction Documents other than the Company has
all requisite power and authority to enter into and perform its respective
obligations in connection with the transactions described in the Transaction
Documents to which it is a party.
We express no opinion as to the laws of any jurisdiction other than the
federal laws of the
<PAGE>
HUTCHINS, WHEELER & DITTMAR
Vulcan Ventures Incorporated
March 15, 1999
Page 3
United States of America, the laws of The Commonwealth of Massachusetts, and the
General Corporation Law of the State of Delaware. Accordingly, to the extent
that any laws of any jurisdiction other than any of the foregoing govern any of
the matters as to which we express an opinion below, we have assumed, with your
permission and without independent investigation, that the law of such
jurisdiction is the same as the substantive state laws of the Commonwealth of
Massachusetts (and we express no opinion as to whether such assumption is
reasonable or correct). We note that the Transaction Documents are governed by
Delaware law and Washington law. We express no opinion regarding the effect of
federal or state antitrust laws, including, without limitation, the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended.
Based upon the foregoing and in reliance thereon and subject to the
assumptions, limitations, qualifications and exceptions set forth below, we are
of the opinion that:
1. The Company is duly incorporated and validly existing under the laws
of the State of Delaware.
2. Each of the Transaction Documents to which the Company is a party has
been duly and validly authorized by all necessary corporate action, and has been
duly and validly executed and delivered by the Company.
3. The Certificate of Designation has been duly authorized by all
necessary corporate action and has been filed with the Secretary of State of the
State of Delaware.
4. The Shares have been duly and validly authorized for issuance and sale
to Purchaser by the Company, and the First Issuance Shares have been validly
issued and are outstanding. Assuming delivery of the cash and promissory note
contemplated by the Purchase Agreement concurrently with the execution of the
Purchase Agreement, the First Issuance Shares will be fully paid and non-
assessable and will be entitled to the rights, preferences and privileges set
forth in the Certificate of Designation.
5. The shares of Common Stock issuable upon conversion of the First
Issuance Shares have been duly and validly authorized for issuance and, when
issued upon conversion of Shares in accordance with the Certificate of
Designation, will be validly issued, fully paid and non-assessable, free of any
preemptive rights.
6. Each of the Transaction Documents to which the Company is a party is a
valid and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms.
7. Prior to the execution and delivery of the Purchase Agreement, the
Board of
<PAGE>
HUTCHINS, WHEELER & DITTMAR
Vulcan Ventures Incorporated
March 15, 1999
Page 4
Directors of the Company took all action necessary under the provisions of
Section 203 of the Delaware General Corporation Law and such action constitutes
all action necessary to ensure that the restrictions contained in Section 203 of
the Delaware General Corporation Law will not apply to Purchaser in connection
with or following the consummation of the First Closing, the Second Closing or
the other transactions contemplated by the Transaction Documents.
8. The execution, delivery and, subject to obtaining the consents set
forth in Schedule 3.4 of the Purchase Agreement, performance by the Company of
------------
the Transaction Documents and the consummation of the transaction contemplated
thereby will not, except in each case where the effect of non-compliance could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, (i) violate any provision of law or any regulation customarily
applicable to transactions of the type contemplated by the Purchase Agreement
or, to the extent actually known to such counsel, any order, judgment, or decree
of any court or other agency of government to which the Company is subject, or
(ii) violate any provision of the Restated Certificate of Incorporation or By-
Laws of the Company.
The opinions contained herein are subject to the following conditions and
qualifications:
(A) We have not been requested to render, and with your permission we do
not express, an opinion as to the application of any fraudulent conveyance,
fraudulent transfer, fraudulent obligation or similar laws.
(B) Our opinions in paragraph 6 above, with respect to the validity,
binding effect and enforceability of the agreements or provisions thereof
referred to in such paragraph, are subject to the following: (i) bankruptcy,
insolvency, reorganization, moratorium, receivership and other laws now or
hereafter in effect relating to or affecting the enforcement of creditors'
rights, (ii) the effect of general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, and the possible unavailability of specific performance or injunctive
relief, whether considered in a proceeding in equity or at law, and to the
discretion of the court before which any such proceeding may be brought and
(iii) public policy considerations or court decisions which may limit the rights
of any party to obtain certain remedies and to indemnification, including
indemnification for tortious or criminal acts or violations of law.
The opinions set forth in this letter are limited to the specific issues
addressed herein and to statutes, regulations, rules, decisions, decrees and
facts existing on the date hereof. In rendering such opinions, we disclaim any
obligation to advise any party to whom this opinion is addressed of any change
in any of these sources of law or of any subsequent legal or factual
developments which might affect any matters addressed or opinions set forth
herein.
The opinions set forth herein are rendered solely to the parties to whom
this letter is
<PAGE>
HUTCHINS, WHEELER & DITTMAR
Vulcan Ventures Incorporated
March 15, 1999
Page 5
addressed, are solely for the benefit of such parties in connection with the
transactions contemplated by the Purchase Agreement, and may not be relied upon
by them for any other purpose. This letter is not to be quoted in whole or in
part or otherwise referred to in any financial statements or other public
releases, nor is it to be filed with any governmental agency or other person or
entity, without the prior written consent of this firm. This letter may not be
delivered to or relied upon by any other person or entity for any purpose
without the prior written consent of this firm.
Very truly yours,
Hutchins, Wheeler & Dittmar
A Professional Corporation
<PAGE>
EXHIBIT E
---------
[IRELL & MANELLA LLP LETTERHEAD]
March 15, 1999
Go2Net, Inc.
999 Third Avenue, Suite 4700
Seattle, Washington 98004
Re: Stock Purchase Agreement, dated March 15, 1999, between Go2Net, Inc.
--------------------------------------------------------------------
and Vulcan Ventures Incorporated (the "Agreement")
--------------------------------------------------
Gentlemen:
We have acted as legal counsel to Vulcan Ventures Incorporated, a
Washington corporation (the "Purchaser"), in connection with the transactions
contemplated by the Agreement, and we are rendering this opinion pursuant to the
Agreement.
For the purposes of rendering this opinion, in addition to the Agreement,
we have reviewed the following documents, each dated the date hereof:
(a) Registration Rights Agreement between Purchaser and Go2Net, Inc. (the
"Company");
(b) Promissory Note in the principal amount of $167,482,000, executed by
Purchaser in the Company's favor (the "Note");
(c) Stock Purchase and Voting Agreement between Purchaser and Russell
Horowitz;
(d) Stock Purchase and Voting Agreement between Purchaser and John
Keister;
(e) Stock Purchase and Voting Agreement between Purchaser and Michael
Riccio;
(f) Stock Purchase and Voting Agreement between Purchaser and Dennis
Cline;
(g) Stock Purchase and Voting Agreement between Purchaser and Martin
Schoffstall; and
(h) Stock Purchase and Voting Agreement between Purchaser and Oren
Etzioni.
For purposes of this opinion, the Agreement and the documents listed in
clauses (a) through (h) above shall hereinafter be referred to collectively as
the "Transaction Documents" and each as a "Transaction Document."
<PAGE>
Go2Net, Inc.
March 15, 1999
Page 2
We have reviewed such matters of fact and law and documents as we have
deemed necessary or relevant as a basis for this opinion. In our review, we
have assumed, without investigation, the legal capacity of all natural persons
signing documents in their respective individual capacities, the genuineness of
all signatures not witnessed by us, the authenticity of all documents submitted
to us as originals, the lack of any undisclosed modifications, waivers or
amendments to any agreements reviewed by us, the conformity to original
documents of all documents submitted to us as certified, photostatic or
telecopied copies, and the authenticity of the originals of such copies. In
addition, we have obtained and relied upon such certificates and assurances from
public officials as we have deemed necessary. We have also assumed that the
execution, delivery and performance of any agreements or consents are within the
powers of each signatory (other than Purchaser) and have been duly authorized
and validly carried out by each such signatory. Furthermore, we have examined,
relied upon and assumed to be complete and correct the representations and
warranties contained in the Transaction Documents as to matters of fact (other
than facts constituting conclusions of law).
Based upon and subject to the foregoing, and subject to the qualifications
set forth herein, we are of the opinion that:
1. Purchaser is a corporation validly existing and in good standing under
the laws of the State of Washington.
2. The Transaction Documents have been duly authorized, executed and
delivered by Purchaser.
3. Assuming due authorization, execution and delivery of the Transaction
Documents by the other parties thereto, the Transaction Documents (including,
without limitation, the Note) constitute the legal, valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with their
respective terms.
4. Neither the execution and delivery of the Transaction Documents, nor
the consummation of the transactions contemplated thereby, violates (i) any
provision of the articles of incorporation or bylaws of Purchaser, or (ii) any
federal or California statute, ordinance or regulation applicable to Purchaser
that, in our experience, is normally applicable to Purchaser in transactions of
the nature contemplated by the Transaction Documents.
The opinions expressed above are subject to and limited by the following
qualifications:
<PAGE>
Go2Net, Inc.
March 15, 1999
Page 3
(a) the effect of bankruptcy, insolvency, reorganization, moratorium and
other similar laws and legal and equitable principles relating to, limiting or
affecting the enforcement of creditors' rights generally;
(b) the effect of general principles of equity including, without
limitation, concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance or injunctive relief
regardless of whether considered in a proceeding in equity or at law;
(c) the unenforceability under certain circumstances of provisions waiving
vaguely or broadly stated rights or unknown future rights and of provisions
stating that rights or remedies are not exclusive, that every right or remedy is
cumulative and may be exercised in addition to or with any other right or
remedy, or that the election of some particular remedy or remedies does not
preclude recourse to one or more others;
(d) the effect of (i) any federal or state securities laws, or (ii)
federal or state antitrust laws, including, without limitation, the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended; and
(e) we express no opinion as to the effect on rights to indemnification and
contribution to the extent such rights may be limited by federal or state
securities laws or public policy relating thereto.
Our opinions expressed herein are limited to the laws of the State of
California and the federal law of the United States, in each case to the extent
not specifically excluded herein and as in effect on the date hereof, and we do
not express herein any opinion as to any other laws. In this regard, we note
that the Transaction Documents and certain other agreements and instruments to
be executed and delivered by Purchaser purport to be governed by the laws of the
State of Delaware or the State of Washington. For purposes of this opinion, we
have assumed, without investigation, that the governing law of the Transaction
Documents and such other agreements and instruments is in all material respects
identical to the laws of the State of California although the results might
differ from those that would be obtained by applying Delaware or Washington law
or the law of any jurisdiction other than California, and we express no opinion
as to the similarity of Delaware, Washington and California law or the law of
any other jurisdiction. No opinion is expressed as to whether a court would
recognize and enforce the provisions of the Transaction Documents and such other
agreements and instruments providing that the laws of a particular state shall
govern.
<PAGE>
Go2Net, Inc.
March 15, 1999
Page 4
This opinion is solely for your benefit pursuant to the Agreement and is
not to be made available to or relied upon by any other person or entity or by
you for any other purpose or in any other context without our express prior
written consent.
Very truly yours,
IRELL & MANELLA LLP
<PAGE>
EXHIBIT 99(c)(2)
STOCK PURCHASE AND VOTING AGREEMENT
(Non-Executive Directors)
This Stock Purchase and Voting Agreement (the "Agreement") is made as of
March 15, 1999 between Vulcan Ventures Incorporated, a Washington corporation
("Purchaser"), and ________________, an individual ("Seller"), with reference to
the following facts:
Concurrently herewith Purchaser is entering into an agreement (the "Stock
Purchase Agreement") with Gordon, Inc., a Delaware corporation (the "Company")
to purchase shares of the Company's Series A Convertible Preferred Stock (the
"Series A Preferred Stock") in two issuances (the "First Issuance" and "Second
Issuance," respectively).
Purchaser would be unwilling to enter into the Stock Purchase Agreement
without the agreements of Seller contained herein.
As an inducement to cause Purchaser to enter into the Stock Purchase
Agreement, Seller has agreed to enter into this Agreement.
In consideration of the foregoing premises and the mutual covenants and
promises contained herein, Purchaser and Seller hereby agree as follows:
1. Purchase and Sale of Shares.
---------------------------
1.1 Agreement to Purchase.
---------------------
(a) On the terms and subject to the conditions set forth herein,
Seller agrees to sell to Purchaser, and Purchaser agrees to purchase from
Seller, at the Closing (as defined in Section 1.1(d)), ____________ shares (the
"Shares") of the Company's Common Stock, $.01 par value (the "Common Stock"), at
a purchase price per share (the "Purchase Price") equal to the greater of $90.00
or the price paid by the Company in the Offer (as defined below). The parties'
obligations under this Section 1 shall terminate concurrently with a termination
of the Second Issuance Agreements (as defined in the Stock Purchase Agreement)
pursuant to Section 9 of the Stock Purchase Agreement.
(b) The obligation of Seller to close the sale of Shares pursuant
to this Section 1 is subject to the following conditions, any of which may be
waived by Seller in his or her sole discretion: (i) the representations and
warranties of Purchaser in Section 4 of this Agreement shall be true and correct
in all material respects on the Closing Date with the same effect as if made on
and as of such date; (ii) all waiting periods under the Hart Scott Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall have
expired or been terminated; and (iii) there shall be no preliminary or permanent
injunction or other order, decree or ruling issued by any governmental body, nor
any statute, rule, regulation or order promulgated or enacted by any
governmental body prohibiting, or otherwise restraining, such sale.
<PAGE>
(c) The obligation of Purchaser to close the purchase of the
Shares pursuant to this Section 1 is subject to the following conditions, any of
which may be waived by Purchaser in its sole discretion: (i) the representations
and warranties of Seller in Section 3 of this Agreement shall be true and
correct on the Closing Date with the same effect as if made on and as of such
date; (ii) at the Closing, there shall not be in effect any injunction, writ or
temporary restraining order or any other order of any nature issued by a court
or agency of competent jurisdiction directing that the transaction provided for
herein not be consummated as herein provided nor shall there by any litigation
or proceeding pending or threatened in respect of the transactions contemplated
hereby; and (iii) Purchaser shall have received all regulatory approvals under
the Stock Purchase Agreement, including the expiration or termination of the
waiting period under the HSR Act.
(d) The closing of the purchase of Shares pursuant to this Section
1 (the "Closing") shall take place concurrently with, and at the same place as,
the "Second Closing" under the Stock Purchase Agreement if such Second Closing
occurs; provided, however, that if as of the Second Closing any of the
-------- -------
conditions specified in Section 1.1(c) hereof shall not have been satisfied or
waived, Purchaser may postpone the Closing until a date within two business days
after such conditions are satisfied or waived; provided further, the Closing
-------- -------
shall not precede the Company's public release of its financial results for its
fiscal quarter ending March 31, 1999, and the Closing shall be postponed until
such date if necessary; provided further, upon consummation of the Second
----------------
Closing and the Offer, the conditions to the Closing set forth in Sections
1.1(b)(i) and 1.1(c)(i) above shall be deemed to be satisfied, other than with
respect to Seller's representations and warranties contained in Section 3.1. The
date of the Closing is hereinafter referred to as the "Closing Date."
At the Closing, Seller will deliver to Purchaser the certificates
representing the Shares being purchased pursuant to this Section 1.1, without
restrictive legends (other than with regard to the registration requirements
under the Securities Act of 1933, as amended) and duly endorsed or accompanied
by stock powers duly executed in blank. At such Closing, Purchaser shall either
(i) wire transfer to the account designated by Seller or (ii) deliver to Seller
a certified or bank cashier's check payable to or upon the order of Seller, in
either case in an amount equal to the sum of the number of Shares being
purchased from Seller at such Closing multiplied by the Purchase Price in
immediately available funds.
(e) In the event of any change in the Common Stock by reason of a
stock dividend, split-up, recapitalization, combination, conversion, exchange
of shares or other similar change in the corporate or capital structure of the
Company, the type and number of shares or securities subject to this Section 1,
and the Purchase Price, shall be adjusted appropriately, and proper provision
shall be made in the agreements governing such transaction, so that Purchaser
shall receive at the Closing the same class and number of outstanding shares or
other securities or property that Purchaser would have received in respect of
the Common Stock if the Closing had occurred immediately prior to such event,
or the record date therefor, as applicable.
1.2 Agreement Not to Tender. If Purchaser commences a tender offer (the
-----------------------
"Offer") for the Common Stock pursuant to the Stock Purchase Agreement, Seller
shall not tender any shares of Common Stock that he owns beneficially or of
record in such Offer.
<PAGE>
1.3 Covered Option Shares. The parties acknowledge and agree that the
---------------------
Shares subject to this Section 1 include _________ shares of Common Stock (the
"Covered Option Shares") that Seller has the right to acquire within thirty (30)
days of the date hereof through exercise of vested options to purchase Common
Stock ("Stock Options"). Seller agrees to exercise a sufficient number of Stock
Options sufficiently in advance of the Closing, and to take all action necessary
to have certificates issued with respect to the shares issuable upon exercise of
such Stock Options, to permit Seller to deliver the number of Covered Option
Shares to Purchaser pursuant to this Agreement at such Closing.
2. Voting Agreement.
----------------
2.1 Except as provided in Section 2.2, Seller agrees that at every
meeting of the stockholders of the Company called with respect to any of the
following, and at every adjournment or postponement thereof, and on every action
or approval by written consent of the stockholders of the Company with respect
to any of the following, Seller will vote (or cause to be voted) all of the
shares of the Company owned beneficially or of record by Seller (including,
without limitation, any shares as to which Seller becomes the record or
beneficial owner after the date hereof) (a) in favor of approval of (i)
Purchaser's acquisition of the Company's capital stock pursuant to the Second
Issuance, the Offer, and this Agreement and similar agreements with other
officers, directors and employees of the Company (together, the "Purchaser
Acquisitions"), and (ii) any matter that could reasonably be expected to
facilitate the Purchaser Acquisitions and the other transactions contemplated by
the Stock Purchase Agreement (including the election of a Board of Directors of
the Company consistent with the provisions of the Stock Purchase Agreement); (b)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Stock Purchase Agreement or of Seller under this
Agreement; and (c) against any action or agreement that is intended, or might
reasonably be expected, to impede, interfere with, delay, postpone or attempt to
discourage or adversely affect the Purchaser Acquisitions and the other
transactions contemplated by this Agreement and the Stock Purchase Agreement.
2.2 Exceptions. Notwithstanding anything herein to the contrary,
----------
Seller shall not be obligated to vote any Shares or any other capital stock in
the manner described in Section 2.1 on or after the first to occur of the
Closing or a termination of the parties' obligations under Section 1.
3. Representations and Warranties of Seller. As a material inducement to
----------------------------------------
Purchaser to enter into this Agreement, Seller represents and warrants to
Purchaser that as of the date hereof and as of the Closing Date:
3.1 Sole Ownership of Shares; No Encumbrances. On the date hereof,
-----------------------------------------
Seller is the record owner of (a) ___________ shares of Common Stock (the
"Existing Shares"), and (b) Stock Options to purchase ________ shares of Common
Stock (the "Existing Options"), which Stock Options will be vested as to
________ shares of Common Stock within 30 days of the date hereof. On the date
hereof, such shares and Stock Options constitute all of the shares of Common
Stock and Stock Options owned of record and beneficially by Seller. Seller has
sole voting power, sole power of disposition and sole power to agree to all of
the matters set forth in this Agreement with respect to the Existing
<PAGE>
Shares and the shares of Common Stock purchasable upon exercise of the Existing
Options, with no limitations, qualifications or restrictions on such rights, and
Seller does not possess such powers over any other shares of Common Stock. The
Existing Shares and the certificates representing such shares are now, and at
all times during the term hereof the Existing Shares and any shares of Common
Stock that Seller acquires through the exercise of Stock Options will be, held
by Seller free and clear of all liens, claims, security interests, proxies,
voting trusts or agreements, understandings or arrangements or any other
encumbrances whatsoever and, in connection with the transfer of Shares to
Purchaser in the Offer, Seller shall transfer to and unconditionally vest in
Purchaser good and valid title to such Shares, free and clear of all claims,
liens, restrictions, security interests, pledges, limitations and encumbrances
whatsoever.
3.2 Validity; Binding Effect; No Conflict. This Agreement has been
-------------------------------------
duly and validly executed by Seller and constitutes the valid and binding
obligation of Seller enforceable against Seller in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally and the
availability of equitable remedies may be limited by equitable principles of
general applicability. The execution and delivery of this Agreement does not and
the consummation of the transactions contemplated hereby will not, (i) violate
or conflict with any law, ordinance, rule, regulations, orders, judgment, or
decree to which Seller is subject or by which Seller is bound; or (ii) violate
or conflict with or constitute a default (or an event which, with notice or the
lapse of time, or both, would constitute a default) under, or will result in the
termination of, or accelerate the performance required by or result in the
creation of any lien, security interest, change or encumbrance upon any of the
properties or assets under, any term or provision of any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which Seller is a party or by which any of her assets may be bound or affected.
Except for required approvals under the HSR Act, no consent, approval,
authorization or action by or any filings with any federal, state or local
governmental agency or any other third party are required in connection with the
execution and delivery by Seller of this Agreement or the consummation by Seller
of the transactions contemplated hereby.
3.3 Brokerage. No investment banker, broker, financial advisor, finder
---------
or other person is entitled to a commission or fee from Seller in respect of
this Agreement or the transactions contemplated hereby based upon any
arrangement or agreement made by or on behalf of Seller.
3.4 Reliance by Purchaser. Seller understands and acknowledges that
---------------------
Purchaser is entering into the Stock Purchase Agreement in reliance upon
Seller's execution and delivery of this Agreement and the representations,
warranties and covenants of Seller set forth herein.
4. Representations and Warranties of Purchaser. As a material inducement
-------------------------------------------
to Seller to enter into this Agreement, Purchaser represents and warrants to
Seller that as of the date hereof and as of the Closing Date:
4.1 Validity; Binding Effect; No Conflict. This Agreement has been
-------------------------------------
duly and validly executed by Purchaser and constitutes the valid and binding
obligation of
<PAGE>
Purchaser enforceable against Purchaser in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and the availability of
equitable remedies may be limited by equitable principles of general
applicability. The execution and delivery of this Agreement does not and the
consummation of the transactions contemplated hereby will not, (i) violate or
conflict with any law, ordinance, rule, regulations, orders, judgment, or decree
to which Purchaser is subject or by which Purchaser is bound; or (ii) violate or
conflict with or constitute a default (or an event which, with notice or the
lapse of time, or both, would constitute a default) under, or will result in the
termination of, or accelerate the performance required by or result in the
creation of any lien, security interest, change or encumbrance upon any of the
properties or assets under, any term or provision of any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which Purchaser is a party or by which any of her assets may be bound or
affected. Except for required approvals under the HSR Act, no consent, approval,
authorization or action by or any filings with any federal, state or local
governmental agency or any other third party are required in connection with the
execution and delivery by Purchaser of this Agreement or the consummation by
Purchaser of the transactions contemplated hereby.
4.2 Brokerage. Except for NationsBanc Montgomery Securities LLC, no
---------
investment banker, broker, financial advisor, finder or other person is entitled
to a commission or fee from Purchaser in respect of this Agreement or the
transactions contemplated hereby based upon any arrangement or agreement made by
or on behalf of Purchaser.
5. Additional Covenants.
--------------------
5.1 No Solicitation. Seller shall not, and shall direct and use
---------------
Seller's best efforts to cause his or her agents and representatives not to,
directly or indirectly solicit (including by way of furnishing information) or
respond to any inquires or the making of any proposal by any person or entity
(other than Purchaser) concerning any Transaction Proposal (as defined in the
Stock Purchase Agreement); provided, however, nothing herein shall preclude
-------- -------
Seller, in his as a director of the Company, from exercising his fiduciary
duties in accordance with Section 5.5 of the Stock Purchase Agreement. If Seller
receives any such inquiry or proposal with respect to the sale of Shares, then
Seller shall promptly inform Purchaser in the same manner as set forth in
Section 12.2 of the Stock Purchase Agreement. Seller shall immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing.
5.2 Notice of Additional Shares. Seller hereby agrees to promptly
---------------------------
notify Purchaser in writing of the number of shares of Common Stock that may be
acquired by Seller, if any, after the date hereof.
5.3 Further Assurances. From time to time, at the other party's
------------------
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further action as may be
necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement.
<PAGE>
5.4 Restrictions on Transfers. Prior to the first to occur of the
-------------------------
Closing or a termination of the parties' obligations under Section 1, Seller
shall not sell, transfer, encumber or otherwise dispose of any of the Shares,
and shall not take any action inconsistent with his or her obligations
hereunder.
6. Miscellaneous.
-------------
6.1 Survival of Representations, Warranties and Agreements. All
------------------------------------------------------
representations, warranties and agreements made by Seller or Purchaser pursuant
hereto shall survive Closing.
6.2 Binding Agreement; Assignments; Third-Party Beneficiaries. This
---------------------------------------------------------
Agreement shall be binding on and enforceable by the parties and their
respective successors and permitted assigns. No party may assign any of its
rights, benefits or obligations under this Agreement to any person without the
prior written consent of the other party; provided, however, that Purchaser may
-------- -------
assign its rights, benefits or obligations under this Agreement, without the
prior consent of the Company, to an Affiliate of Purchaser (as defined in
Section 5.7 of the Stock Purchase Agreement). No such assignment shall relieve
the Purchaser of its obligations under this Agreement. Nothing contained in this
Agreement shall confer any rights or remedies upon any other person, firm or
corporation.
6.3 Waiver of Provisions. The terms, covenants, representations,
--------------------
warranties and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time or times to require performance of any provision of this Agreement
shall in no manner affect the right at a later date to enforce the same. No
waiver by any party of any condition or the breach of any provision, term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as further or continuing waiver of any such condition or of the breach
of any other provision, term, covenant, representation or warranty of this
Agreement.
6.4 Specific Performance. Each of the parties hereto recognizes and
--------------------
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
6.5 Notices. Any notice or other communication required or permitted
-------
hereunder shall be expressed in writing and delivered in person or sent by
certified or registered mail, return receipt requested, or sent by overnight
courier service such as Federal Express and confirmed by certified or registered
mail, return receipt requested, or sent by facsimile (receipt confirmed) to (a)
Purchaser at its address specified in the Stock Purchase Agreement, and (b) to
Seller at the addresses set forth on the signature page hereof, or at such other
addresses as the parties shall designate by written notice to the other. All
notices shall be deemed received on the third business day after mailing or the
first business day
<PAGE>
after delivery to the overnight courier service or the same business day if
personally delivered or sent by facsimile.
6.6 Cooperation. Each party shall cooperate and use its best efforts
-----------
to consummate the transaction contemplated herein. In addition, each party shall
cooperate and take such action and execute such other and further documents as
reasonably may be requested by any other party from time to time after the
consummation of the transactions contemplated herein to carry out the terms and
provisions and intent of this Agreement.
6.7 Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
6.8 Entire Agreement; Modification. This Agreement contains the entire
------------------------------
agreement between the parties and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. This Agreement may be amended, modified and supplemented
in any and all respects by written agreement of the parties hereto.
6.9 Governing Law. The Agreement shall be governed by and construed
-------------
under the laws of the State of Washington.
6.10 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which taken together shall constitute one instrument.
<PAGE>
SIGNATURE PAGE TO
STOCK PURCHASE AND VOTING AGREEMENT
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above set forth.
PURCHASER:
Vulcan Ventures Incorporated
By:
------------------------------
Name:
Title:
SELLER:
Signature:
---------------------------
Print Name:
--------------------------
Address:
-----------------------------
Facsimile:
----------------------------
<PAGE>
EXHIBIT 99(c)(3)
STOCK PURCHASE AND VOTING AGREEMENT
(Executive Officers)
This Stock Purchase and Voting Agreement (the "Agreement") is made as of
March 15, 1999 between Vulcan Ventures Incorporated, a Washington corporation
("Purchaser"), and ________________, an individual ("Seller"), with reference to
the following facts:
Concurrently herewith Purchaser is entering into an agreement (the "Stock
Purchase Agreement") with Gordon, Inc., a Delaware corporation (the "Company")
to purchase shares of the Company's Series A Convertible Preferred Stock (the
"Series A Preferred Stock") in two issuances (the "First Issuance" and "Second
Issuance," respectively).
Purchaser would be unwilling to enter into the Stock Purchase Agreement
without the agreements of Seller contained herein.
As an inducement to cause Purchaser to enter into the Stock Purchase
Agreement, Seller has agreed to enter into this Agreement.
In consideration of the foregoing premises and the mutual covenants and
promises contained herein, Purchaser and Seller hereby agree as follows:
1. Purchase and Sale of Shares.
---------------------------
1.1 Agreement to Purchase; Option.
-----------------------------
(a) On the terms and subject to the conditions set forth herein,
Seller agrees to sell to Purchaser, and Purchaser agrees to purchase from
Seller, at the Closing (as defined in Section 1.1(d)), ____________ shares (the
"Shares") of the Company's Common Stock, $.01 par value (the "Common Stock"), at
a purchase price per share (the "Purchase Price") equal to the greater of $90.00
or the price paid by the Company in the Offer (as defined below).
Notwithstanding the foregoing, in the event of a termination of the Second
Issuance Agreements (as defined in the Stock Purhase Agreement) pursuant to
Section 9 of the Stock Purchase Agreement (other than on account of Purchaser's
breach), Purchaser shall instead have the option (the "Option") (but not the
obligation) in its sole and absolute discretion to purchase from Seller, at the
Closing, one-half of the Shares for the Purchase Price. The Option shall be
exercisable in whole or in part by Purchaser by written notice to Seller (the
"Exercise Notice"), specifying the total number of Shares Purchaser intends to
purchase pursuant to such exercise, within thirty (30) days after such
termination of the Second Issuance Agreements. In the event of a termination of
the Second Issuance Agreements on account of Purchaser's breach, all obligations
of the parties under this Section 1 will immediately terminate and Purchaser
shall not be entitled to exercise the Option.
(b) The obligation of Seller to close the sale of Shares pursuant
to this Section 1 is subject to the following conditions, any of which may be
waived by Seller in his or her sole discretion: (i) the representations and
warranties of Purchaser in Section 4 of this Agreement shall be true and correct
in all material respects on the Closing Date with
<PAGE>
the same effect as if made on and as of such date; (ii) all waiting periods
under the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), shall have expired or been terminated; and (iii) there shall be no
preliminary or permanent injunction or other order, decree or ruling issued by
any governmental body, nor any statute, rule, regulation or order promulgated or
enacted by any governmental body prohibiting, or otherwise restraining, such
sale .
(c) The obligation of Purchaser to close the purchase of the
Shares pursuant to this Section 1 is subject to the following conditions, any of
which may be waived by Purchaser in its sole discretion: (i) the representations
and warranties of Seller in Section 3 of this Agreement shall be true and
correct on the Closing Date with the same effect as if made on and as of such
date; (ii) at the Closing, there shall not be in effect any injunction, writ or
temporary restraining order or any other order of any nature issued by a court
or agency of competent jurisdiction directing that the transaction provided for
herein not be consummated as herein provided nor shall there by any litigation
or proceeding pending or threatened in respect of the transactions contemplated
hereby; and (iii) Purchaser shall have received all regulatory approvals under
the Stock Purchase Agreement, including the expiration or termination of the
waiting period under the HSR Act.
(d) The closing of the purchase of Shares pursuant to this Section
1 (the "Closing") shall take place (i) concurrently with, and at the same place
as, the "Second Closing" under the Stock Purchase Agreement if such Second
Closing occurs, or (ii) if Purchaser exercises the Option, on the date and at
the time and place specified in the Exercise Notice; provided, however, that if
-------- -------
as of the Second Closing or the date for closing specified in the Exercise
Notice (as applicable) any of the conditions specified in Section 1.1(c) hereof
shall not have been satisfied or waived, Purchaser may postpone the Closing
until a date within two business days after such conditions are satisfied or
waived; provided further, the Closing shall not precede the Company's public
-------- -------
release of its financial results for its fiscal quarter ending March 31, 1999,
and the Closing shall be postponed until such date if necessary; provided
--------
further,upon consummation of the Second Closing and the Offer, the conditions to
- -------
the Closing set forth in Sections 1.1(b)(i) and 1.1(c)(i) above shall be deemed
to be satisfied, other than with respect to Seller's representations and
warranties contained in Section 3.1. The date of the Closing is hereinafter
referred to as the "Closing Date."
At the Closing, Seller will deliver to Purchaser the certificates
representing the Shares being purchased pursuant to this Section 1.1, without
restrictive legends (other than with regard to the registration requirements
under the Securities Act of 1933, as amended) and duly endorsed or accompanied
by stock powers duly executed in blank. At such Closing, Purchaser shall either
(i) wire transfer to the account designated by Seller or (ii) deliver to Seller
a certified or bank cashier's check payable to or upon the order of Seller, in
either case in an amount equal to the sum of the number of Shares being
purchased from Seller at such Closing multiplied by the Purchase Price in
immediately available funds.
(e) In the event of any change in the Common Stock by reason of a
stock dividend, split-up, recapitalization, combination, conversion, exchange of
shares or other similar change in the corporate or capital structure of the
Company, the type and number of shares or securities subject to this Section 1,
and the Purchase Price, shall be
-2-
<PAGE>
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction, so that Purchaser shall receive at the Closing the
same class and number of outstanding shares or other securities or property that
Purchaser would have received in respect of the Common Stock if the Closing had
occurred immediately prior to such event, or the record date therefor, as
applicable.
1.2 Agreement Not to Tender. If Purchaser commences a tender offer
-----------------------
(the "Offer") for the Common Stock pursuant to the Stock Purchase Agreement,
Seller shall not tender any shares of Common Stock that he owns beneficially or
of record in such Offer.
1.3 Covered Option Shares. The parties acknowledge and agree that
---------------------
the Shares subject to this Section 1 include _________ shares of Common Stock
(the "Covered Option Shares") that Seller has the right to acquire within thirty
(30) days of the date hereof through exercise of vested options to purchase
Common Stock ("Stock Options"). Seller agrees to exercise a sufficient number of
Stock Options sufficiently in advance of the Closing, and to take all action
necessary to have certificates issued with respect to the shares issuable upon
exercise of such Stock Options, to permit Seller to deliver the number of
Covered Option Shares to Purchaser pursuant to this Agreement at such Closing.
2. Voting Agreement.
----------------
2.1 Except as provided in Section 2.2, Seller agrees that at every
meeting of the stockholders of the Company called with respect to any of the
following, and at every adjournment or postponement thereof, and on every action
or approval by written consent of the stockholders of the Company with respect
to any of the following, Seller will vote (or cause to be voted) all of the
shares of the Company owned beneficially or of record by Seller (including,
without limitation, any shares as to which Seller becomes the record or
beneficial owner after the date hereof) (a) in favor of approval of (i)
Purchaser's acquisition of the Company's capital stock pursuant to the Second
Issuance, the Offer, and this Agreement and similar agreements with other
officers, directors and employees of the Company (together, the "Purchaser
Acquisitions"), and (ii) any matter that could reasonably be expected to
facilitate the Purchaser Acquisitions and the other transactions contemplated by
the Stock Purchase Agreement (including the election of a Board of Directors of
the Company consistent with the provisions of the Stock Purchase Agreement); (b)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Stock Purchase Agreement or of Seller under this
Agreement; and (c) against any action or agreement that is intended, or might
reasonably be expected, to impede, interfere with, delay, postpone or attempt to
discourage or adversely affect the Purchaser Acquisitions and the other
transactions contemplated by this Agreement and the Stock Purchase Agreement.
2.2 Exceptions. Notwithstanding anything herein to the contrary,
----------
Seller shall not be obligated to vote any Shares or any other capital stock in
the manner described in Section 2.1 on or after the first to occur of the
Closing or a termination of the parties' obligations under Section 1.
-3-
<PAGE>
3. Representations and Warranties of Seller. As a material inducement to
----------------------------------------
Purchaser to enter into this Agreement, Seller represents and warrants to
Purchaser that as of the date hereof and as of the Closing Date:
3.1 Sole Ownership of Shares; No Encumbrances. On the date hereof,
-----------------------------------------
Seller is-the record owner of (a) ___________ shares of Common Stock (the
"Existing Shares"), and (b) Stock Options to purchase ________ shares of Common
Stock (the "Existing Options"), which Stock Options will be vested as to
________ shares of Common Stock within 30 days of the date hereof. On the date
hereof, such shares and Stock Options constitute all of the shares of Common
Stock and Stock Options owned of record and beneficially by Seller. Seller has
sole voting power, sole power of disposition and sole power to agree to all of
the matters set forth in this Agreement with respect to the Existing Shares and
the shares of Common Stock purchasable upon exercise of the Existing Options,
with no limitations, qualifications or restrictions on such rights, and Seller
does not possess such powers over any other shares of Common Stock. The Existing
Shares and the certificates representing such shares are now, and at all times
during the term hereof the Existing Shares and any shares of Common Stock that
Seller acquires through the exercise of Stock Options will be, held by Seller
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreements, understandings or arrangements or any other encumbrances
whatsoever and, in connection with the transfer of Shares to Purchaser in the
Offer, Seller shall transfer to and unconditionally vest in Purchaser good and
valid title to such Shares, free and clear of all claims, liens, restrictions,
security interests, pledges, limitations and encumbrances whatsoever.
3.2 Validity; Binding Effect; No Conflict. This Agreement has been duly
-------------------------------------
and validly executed by Seller and constitutes the valid and binding obligation
of Seller enforceable against Seller in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and the availability of
equitable remedies may be limited by equitable principles of general
applicability. The execution and delivery of this Agreement does not and the
consummation of the transactions contemplated hereby will not, (i) violate or
conflict with any law, ordinance, rule, regulations, orders, judgment, or decree
to which Seller is subject or by which Seller is bound; or (ii) violate or
conflict with or constitute a default (or an event which, with notice or the
lapse of time, or both, would constitute a default) under, or will result in the
termination of, or accelerate the performance required by or result in the
creation of any lien, security interest, change or encumbrance upon any of the
properties or assets under, any term or provision of any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which Seller is a party or by which any of her assets may be bound or affected.
Except for required approvals under the HSR Act, no consent, approval,
authorization or action by or any filings with any federal, state or local
governmental agency or any other third party are required in connection with the
execution and delivery by Seller of this Agreement or the consummation by Seller
of the transactions contemplated hereby.
3.3 Brokerage. No investment banker, broker, financial advisor, finder
---------
or other person is entitled to a commission or fee from Seller in respect of
this Agreement or
-4-
<PAGE>
the transactions contemplated hereby based upon any arrangement or agreement
made by or on behalf of Seller.
3.4 Reliance by Purchaser. Seller understands and acknowledges that
---------------------
Purchaser is entering into the Stock Purchase Agreement in reliance upon
Seller's execution and delivery of this Agreement and the representations,
warranties and covenants of Seller set forth herein.
4. Representations and Warranties of Purchaser. As a material
-------------------------------------------
inducement to Seller to enter into this Agreement, Purchaser represents and
warrants to Seller that as of the date hereof and as of the Closing Date:
4.1 Validity; Binding Effect; No Conflict. This Agreement has been
-------------------------------------
duly and validly executed by Purchaser and constitutes the valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and the
availability of equitable remedies may be limited by equitable principles of
general applicability. The execution and delivery of this Agreement does not and
the consummation of the transactions contemplated hereby will not, (i) violate
or conflict with any law, ordinance, rule, regulations, orders, judgment, or
decree to which Purchaser is subject or by which Purchaser is bound; or (ii)
violate or conflict with or constitute a default (or an event which, with notice
or the lapse of time, or both, would constitute a default) under, or will result
in the termination of, or accelerate the performance required by or result in
the creation of any lien, security interest, change or encumbrance upon any of
the properties or assets under, any term or provision of any contract,
commitment, understanding, arrangement, agreement or restriction of any kind or
character to which Purchaser is a party or by which any of her assets may be
bound or affected. Except for required approvals under the HSR Act, no consent,
approval, authorization or action by or any filings with any federal, state or
local governmental agency or any other third party are required in connection
with the execution and delivery by Purchaser of this Agreement or the
consummation by Purchaser of the transactions contemplated hereby.
4.2 Brokerage. Except for NationsBanc Montgomery Securities LLC, no
---------
investment banker, broker, financial advisor, finder or other person is entitled
to a commission or fee from Purchaser in respect of this Agreement or the
transactions contemplated hereby based upon any arrangement or agreement made by
or on behalf of Purchaser.
5. Additional Covenants.
--------------------
5.1 No Solicitation. Seller shall not, and shall direct and use
---------------
Seller's best efforts to cause his or her agents and representatives not to,
directly or indirectly solicit (including by way of furnishing information) or
respond to any inquires or the making of any proposal by any person or entity
(other than Purchaser) concerning any Transaction Proposal (as defined in the
Stock Purchase Agreement); provided, however, nothing herein shall preclude
-------- -------
Seller, in his capacity as a director of the Company, from exercising his
fiduciary duties in accordance with Section 5.5 of the Stock Purchase Agreement.
If Seller receives any such inquiry or proposal with respect to the sale of
Shares, then Seller shall
-5-
<PAGE>
promptly inform Purchaser in the same manner as set forth in Section 12.2 of the
Stock Purchase Agreement. Seller shall immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing.
5.2 Notice of Additional Shares. Seller hereby agrees to promptly
---------------------------
notify Purchaser in writing of the number of shares of Common Stock that may be
acquired by Seller, if any, after the date hereof.
5.3 Further Assurances. From time to time, at the other party's
------------------
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further action as may be
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
5.4 Restrictions on Transfers. Prior to the first to occur of the
-------------------------
Closing or a termination of the parties' obligations under Section 1, Seller
shall not sell, transfer, encumber or otherwise dispose of any of the Shares,
and shall not take any action inconsistent with his or her obligations
hereunder.
5.5 Right of First Refusal
----------------------
(a) Except for Permitted Transfers, so long as Purchaser owns
beneficially or of record shares of Common Stock (including shares of Common
Stock issuable upon the conversion of Series A Preferred Stock) representing at
least 15% of the outstanding Common Stock, Seller shall not Transfer after
consummation of the Second Closing any shares of the Common Stock (whether owned
as of the date hereof or acquired thereafter) (such shares of Common Stock are
hereinafter referred to as the "Subject Shares"), or any right or interest
therein, unless Seller shall have first given at least two full business days'
advance written notice (the "Right of First Refusal Notice") to Purchaser of
Seller's intent to do so and such Transfer is thereafter completed in accordance
with this Section 5.5. The Right of First Refusal Notice shall specify the terms
of the proposed Transfer, including without limitation the number of Subject
Shares proposed to be Transferred, the consideration per share, the timing of
the transaction, and the name of the proposed transferee if Seller has received
a bona fide offer to acquire Subject Shares. Purchaser shall have the right,
exercisable by written notice to Seller ("Purchaser's Notice") within such two
business day period, to purchase from Seller such number of the Subject Shares
Seller proposes to Transfer as described in Purchaser's Notice on the terms set
forth in the Right of First Refusal Notice (provided that if the proposed
Transfer is not for cash, then Purchaser may deliver cash equal to the fair
market value of such non-cash consideration); provided, however, that if Seller
-----------------
proposes to Transfer Subject Shares pursuant to a bona fide written offer which
is disclosed in the Right of First Refusal Notice, then Purchaser may not
exercise its right of first refusal with respect to less than all of the Subject
Shares Seller proposes to Transfer pursuant to such bona fide written offer. In
the event that Purchaser does not exercise its right of first refusal with
respect to a proposed Transfer described in a Right of First Refusal Notice,
Seller shall have the right, for a period of ninety (90) days from the date of
the Right of First Refusal Notice, to Transfer such number of Subject Shares
described in such Right of First Refusal Notice at the price and on
-6-
<PAGE>
the terms set forth in such Right of First Refusal Notice. No Transfer of the
Subject Shares specified in the Right of First Refusal Notice shall be made
after the expiration of such 90-day period, nor shall any change in the terms of
Transfer or change in the transferee (if specified) be made, without a new Right
of First Refusal Notice and compliance with the terms of this Section 5.5.
(b) The term "Permitted Transfer" for purposes of this Section
5.5 shall mean (i) any Transfer of Subject Shares pursuant to a merger or other
reorganization which would be tax-free to Seller (without regard to the amount
of the gain or loss), provided that Purchaser's right of first refusal shall,
with respect to such Subject Shares, be applicable to the securities or other
consideration acquired in such merger or other reorganization, (ii) any sales
pursuant to the manner of sale restrictions and unsolicited broker's transaction
provisions of Rule 144(f) and (g) under the Securities Act of 1933, as amended,
(iii) bona fide gifts of no more than an aggregate of 5% of the Subject Shares
in any 360-day period, (iv) Transfers to trusts for the benefit of Seller or his
immediate family for estate planning purposes where the transferee has agreed in
writing to be bound by Seller's obligations under this Section 5.5. The term
"Transfer" shall mean any sale, transfer, assignment, hypothecation, encumbrance
or other disposition, whether voluntary or involuntary, whether by gift, bequest
or otherwise, of any interest in the Subject Shares.
(c) Purchaser's rights under this Section 5.5 all terminate 180
days after the date on which Seller ceases to be an officer of the Company.
6. Miscellaneous.
-------------
6.1 Survival of Representations, Warranties and Agreements. All
------------------------------------------------------
representations, warranties and agreements made by Seller or Purchaser pursuant
hereto shall survive Closing.
6.2 Binding Agreement; Assignments; Third-Party Beneficiaries. This
---------------------------------------------------------
Agreement shall be binding on and enforceable by the parties and their
respective successors and permitted assigns. No party may assign any of its
rights, benefits or obligations under this Agreement to any person without the
prior written consent of the other party; provided, however, that Purchaser may
-------- -------
assign its rights, benefits or obligations under this Agreement, without the
prior consent of the Company, to an Affiliate of Purchaser (as defined in
Section 5.7 of the Stock Purchase Agreement). No such assignment shall relieve
the Purchaser of its obligations under this Agreement. Nothing contained in this
Agreement shall confer any rights or remedies upon any other person, firm or
corporation.
6.3 Waiver of Provisions. The terms, covenants, representations,
--------------------
warranties and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time or times to require performance of any provision of this Agreement
shall in no manner affect the right at a later date to enforce the same. No
waiver by any party of any condition or the breach of any provision, term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as further or continuing waiver of any such condition or of the breach
of any other provision, term, covenant, representation or warranty of this
Agreement.
-7-
<PAGE>
6.4 Specific Performance. Each of the parties hereto recognizes and
--------------------
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
6.5 Notices. Any notice or other communication required or permitted
-------
hereunder shall be expressed in writing and delivered in person or sent by
certified or registered mail, return receipt requested, or sent by overnight
courier service such as Federal Express and confirmed by certified or registered
mail, return receipt requested, or sent by facsimile (receipt confirmed) to (a)
Purchaser at its address specified in the Stock Purchase Agreement, and (b) to
Seller at the addresses set forth on the signature page hereof, or at such other
addresses as the parties shall designate by written notice to the other. All
notices shall be deemed received on the third business day after mailing or the
first business day after delivery to the overnight courier service or the same
business day if personally delivered or sent by facsimile.
6.6 Cooperation. Each party shall cooperate and use its best efforts to
-----------
consummate the transaction contemplated herein. In addition, each party shall
cooperate and take such action and execute such other and further documents as
reasonably may be requested by any other party from time to time after the
consummation of the transactions contemplated herein to carry out the terms and
provisions and intent of this Agreement.
6.7 Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
6.8 Entire Agreement; Modification. This Agreement contains the entire
------------------------------
agreement between the parties and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. This Agreement may be amended, modified and supplemented
in any and all respects by written agreement of the parties hereto.
6.9 Governing Law. The Agreement shall be governed by and construed
-------------
under the of the State of Washington.
6.10 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which taken together shall constitute one instrument.
-8-
<PAGE>
SIGNATURE PAGE TO
STOCK PURCHASE AND VOTING AGREEMENT
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above set forth.
PURCHASER:
Vulcan Ventures Incorporated
By:
------------------------------
Name:
Title:
SELLER:
Signature:
---------------------------
Print Name:
--------------------------
Address:
-----------------------------
-----------------------------
Facsimile:
----------------------------
-9-
<PAGE>
EXHIBIT 99(c)(4)
CERTIFICATE OF DESIGNATION OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
GO2NET, INC.
Go2Net, Inc., (hereinafter called the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify:
1. The name of the Corporation is Go2Net, Inc.
2. The certificate of incorporation of the Corporation authorizes the
issuance of 1,000,000 shares of Preferred Stock, $.01 par value, and expressly
vests in the Board of Directors of the Corporation the authority provided
therein to provide for the issuance of said shares in series and by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the numbers of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the shares
of each such series and the qualifications, limitations, or restrictions
thereof.
3. The Board of Directors of the Corporation, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating a "Series A Convertible" issue of Preferred Stock:
RESOLVED, that a series of the class of authorized Preferred Stock of the
Corporation be and hereby is created, and that the designation and amount
thereof and the voting powers, preferences and relative participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof as follows:
SERIES A CONVERTIBLE PREFERRED STOCK
------------------------------------
1. Designation And Amount. The shares of such series shall be designated
----------------------
"Series A Convertible Preferred Stock" (the "Series A Preferred Stock") and the
number of shares constituting such series shall be 300,000.
2. Dividends.
---------
(a) The Series A Preferred Stock shall not be entitled to receive
dividends unless and until the Board of Directors declares a dividend in respect
of the Common Stock out of legally available funds therefor; provided, however,
-------- -------
that no dividends shall be declared or paid upon the Common Stock (other than
dividends payable upon the Common Stock solely in additional shares of Common
Stock, provided that an appropriate adjustment in the Conversion Price is made
under Section 6(a) hereof) or any other stock ranking on liquidation junior to
the Series A Preferred Stock (such stock being referred to hereinafter
collectively as "Junior Stock") unless (i) after the payment of the dividend on
the Common Stock and Junior Stock (and the simultaneous dividend on the Series A
Preferred Stock) the Corporation's net worth exceeds the aggregate liquidation
preference of the Series A Preferred Stock (provided that this clause (i) shall
not apply if the dividend is approved by the holders of a majority of the
outstanding shares of Series A Preferred Stock) and (ii) there
<PAGE>
shall be simultaneous declaration or payment, as applicable, of a dividend upon
the Series A Preferred Stock.
(b) In the case of any dividend being declared upon the Common Stock, the
dividend which shall be declared upon each share of Series A Preferred Stock as
a condition to such dividend upon the Common Stock shall be equal in amount to
the dividend payable upon that number of shares of Common Stock acquirable upon
conversion of a share of Series A Preferred Stock immediately before the
declaration of such dividend, with such conversion being based on the then
applicable Conversion Price determined in accordance with Section 6 as of the
record date for the declaration of such dividend on the Common Stock.
(c) In the case of any dividend being declared upon any class of Junior
Stock that is convertible into Common Stock, the amount of the dividend which
shall be declared upon each share of Series A Preferred Stock as a condition to
such dividend on Junior Stock, divided by the number of shares of Common Stock
acquirable upon conversion of a share of Series A Preferred Stock, shall equal
the amount of the dividend declared upon each share of such class of Junior
Stock, divided by the number of shares of Common Stock acquirable upon
conversion of a share of such class of Junior Stock, in each case assuming such
conversion occurred immediately before the declaration of such dividend.
(d) No dividend shall be declared or paid upon any class of Junior Stock
(other than Common Stock) that is not convertible into Common Stock without the
consent of holders of at least a majority of the outstanding shares of Series A
Preferred Stock.
(e) Holders of shares of Series A Preferred Stock shall be entitled to
share equally, share for share, in all such dividends declared upon the Series A
Preferred Stock.
3. Liquidation, Dissolution Or Winding Up.
---------------------------------------
(a) In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the holders of shares of Series A Preferred
Stock then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders, after and subject to
the payment in full of all amounts required to be distributed to the holders of
any Preferred Stock of the Corporation ranking on liquidation prior and in
preference to the Series A Preferred Stock (such Preferred Stock that is senior
to the Series A Preferred Stock being referred to hereinafter as "Senior Stock")
upon such liquidation, dissolution or winding up, but before any payment shall
be made to the holders of Common Stock or other Junior Stock, an amount equal to
the sum of (i) $1,000 per share (the "Liquidation Preference") (subject to
adjustment in the event of any stock dividend, stock split, stock distribution
or combination with respect to such shares), and (ii) the amount of all declared
but unpaid dividends on the Series A Preferred Stock. If upon any such
liquidation, dissolution or winding up of the Corporation, the remaining assets
of the Corporation available for the distribution to its stockholders after
payment in full of amounts required to be paid or distributed to holders of any
other Senior Stock shall be insufficient to pay the holders of shares of Series
A Preferred Stock the full amount to
<PAGE>
which they shall be entitled, the holders of shares of Series A Preferred Stock,
and any class of stock ranking on liquidation on a parity with the Series A
Preferred Stock (such Preferred Stock ranking on liquidation on parity with the
Series A Preferred Stock being referred to as "Parity Stock"), shall share
ratably in any distribution of the remaining assets and funds of the Corporation
in proportion to the respective amounts which would otherwise be payable with
respect to the shares held by them upon such distribution if all amounts payable
on or with respect to said shares were paid in full. Except as set forth in this
clause (a), holders of shares of Series A Preferred Stock shall not be entitled
to any distribution in the event of liquidation, dissolution or winding up of
the Corporation.
(b) The merger or consolidation of the Corporation with or
into any other corporation or entity, or the sale or conveyance of all or
substantially all the assets of the Corporation, shall not be deemed to be a
liquidation, dissolution or winding up of the Corporation for purposes of this
Section 3.
4. Voting.
------
(a) Each holder of shares of Series A Preferred Stock shall
have the right to one vote for each share of Common Stock into which such
holder's shares of Series A Preferred Stock could then be converted, and with
respect to such vote, such holder shall have full voting rights and powers equal
to the voting rights and powers of the holders of Common Stock, except as
otherwise provided in Sections 4(b) and 4(c) hereof, or as required by law, and
shall be entitled, notwithstanding any provision hereof, to notice of any
shareholders' meeting in accordance with the Bylaws of the Corporation, and
shall be entitled to vote, together with holders of Common Stock, with respect
to any question upon which holders of Common Stock have the right to vote;
provided, however, that the shares of Series A Preferred Stock shall not have
- -------- -------
any voting power with respect to the election of directors unless and until the
making of any necessary filings required by, and the expiration or termination
of any applicable waiting periods under, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act").
(b) The consent of holders of at least a majority of the
outstanding shares of Series A Preferred Stock, voting separately as a single
class, in person or by proxy, either in writing without a meeting or at a
special or annual meeting of stockholders called for such purpose, shall be
necessary to amend, modify or repeal any provision of the Certificate of
Incorporation (including any provision of the Certificate of Designation of
Series A Convertible Preferred Stock) or Bylaws of the Corporation in any manner
which would adversely affect the powers, preferences or special rights of the
Series A Preferred Stock. The authorization or creation of any shares of any
class or series of Senior Stock or Parity Stock of the Corporation or the
reclassification of any authorized stock of the Corporation or security
convertible into or evidencing the right to purchase shares of any such Senior
Stock or Parity Stock shall be deemed to adversely affect the Series A Preferred
Stock. The authorization or creation of any shares of any class or series of
Junior Stock of the Corporation or the reclassification of any authorized stock
of the Corporation into any such Junior Stock, or the creation or authorization
of any obligation or security convertible into or evidencing the right to
purchase shares of any such Junior Stock shall be deemed not to adversely affect
the powers, preferences or special rights of the Series A Preferred Stock.
<PAGE>
(c) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law and so long as there is outstanding at
least 50% of the Series A Preferred Stock, the consent of the holders of at
least a majority of the outstanding shares of Series A Preferred Stock, voting
together as a separate class, in person or proxy, either in writing without a
meeting or at a special or annual meeting of stockholders called for such
purpose, shall be necessary to authorize or effect (i) any sale, lease, transfer
or other disposition of assets (including without limitation by merger) having a
fair market value of at least 30% of the fair market value of the assets of the
Corporation and its subsidiaries on a consolidated basis; (ii) any merger or
consolidation or other reorganization of the Corporation with or into another
corporation in one transaction or a series of related transactions pursuant to
which the stockholders of the Corporation immediately prior to consummation of
such transaction would hold less than 66-2/3% of the voting securities of the
entity surviving the transaction; (iii) the acquisition by the Corporation or
any subsidiary thereof of another entity or business whether by means of a
purchase of equity interests or the purchase of all or substantially all of the
assets of such entity or merger, consolidation, reorganization, issuance or
exchange of securities or otherwise where the consideration involved (including
non-cash consideration) has a value of at least $100,000,000; (iv) a
liquidation, winding up or dissolution of the corporation or adoption of any
plan of the same; (v) the commencement by the Corporation of a voluntary case or
proceeding under applicable bankruptcy laws or any other insolvency,
receivership, reorganization, moratorium or similar laws providing relief to
debtors; and (vi) any redemption or repurchase by the Corporation of any Junior
Stock or Parity Stock or any securities convertible into Junior Stock or Parity
Stock, other than the repurchase of shares in connection with the termination of
employees of the Corporation pursuant to rights under written agreements:
provided, however, except to the extent provided by law, the holders of the
- -----------------
Series A Preferred Stock shall not have any consent rights under this Section
4(c) until the Second Closing (as defined in that certain Stock Purchase
Agreement dated March 15, 1999, between this Corporation and Vulcan Ventures
Incorporated) shall have occurred, but this proviso shall not in any way impair
or restrict the voting rights of the holders of the Series A Preferred Stock in
any other respect, including without limitation, the right to vote together with
the holders of the Common Stock pursuant to Section 4(a) or the voting right
under Section 4(b).
5. Conversion Rights.
-----------------
(a) Exercise of Conversion Rights. Subject to Compliance with
-----------------------------
the HSR Act, each holder of Series A Preferred Stock shall have the right, at
its option, at any time, to convert, subject to the terms and provisions of this
Section 5, all or any portion of its Series A Preferred Stock then outstanding
into such number of fully paid and non-assessable shares of Common Stock as
results from dividing (i) the sum of (A) the aggregate Liquidation Preference of
all shares of Series A Preferred Stock to be converted plus (B) any declared but
unpaid dividends on such shares, by (ii) the applicable Conversion Price (as
defined in Section 6 below) on the Conversion Date (as defined below). Such
conversion shall be deemed to have been made at the close of business on the
date that the certificate or certificates for shares of Series A Preferred Stock
shall have been surrendered for conversion and written notice shall have been
received as provided in Section 5(b) (the "Conversion Date"), so that the person
or persons entitled to receive the shares of Common
<PAGE>
Stock upon conversion of such shares of Series A Preferred Stock shall be
treated for all purposes as having become the record holder or holders of such
shares of Common Stock at such time and such conversion shall be at the
Conversion Price in effect at such time. Upon conversion of any shares of Series
A Preferred Stock pursuant to this Section 5, the rights of the holder of such
shares upon the Conversion Date shall be the rights of a holder of Common Stock
only, and each such holder shall not have any rights in its former capacity as a
holder of shares of Series A Preferred Stock.
(b) Notice to the Corporation. In order to convert all or any
-------------------------
portion of its outstanding Series A Preferred Stock into shares of Common Stock,
the holder of such Series A Preferred Stock shall deliver the shares of Series A
Preferred Stock to be converted to the Corporation at its principal office,
together with written notice that it elects to convert those shares of Series A
Preferred Stock in to shares of Common Stock in accordance with the provisions
of this Section 5. Such notice shall specify the number of shares of Series A
Preferred Stock to be converted and the name or names in which the holder wishes
the certificates for shares of Common Stock to be registered, together with the
address or addresses of the person or persons so named , and, if so required by
the Corporation, shall be accompanied by a written instrument or instruments of
transfer in form reasonably satisfactory to the Corporation, duly executed by
the registered holder of the shares of Series A Preferred Stock to be converted
or by its attorney duly authorized in writing.
(c) Delivery of Certificate. As promptly as practicable after the
-----------------------
surrender as hereinabove provided of shares of Series A Preferred Stock for
conversion into shares of Common Stock, the Corporation shall deliver or cause
to be delivered to the holder, or the holder's designees, certificates
representing the number of fully paid and non-assessable shares of Common Stock
into which the shares of Series A Preferred Stock are entitled to be converted,
together with a cash adjustment in respect of any fraction of a share to which
the holder shall be entitled as provided in Section 5(d), and, if less than the
entire number of shares of Series A Preferred Stock represented by the
certificate or certificates surrendered is to be converted, a new certificate
for the number of shares of Series A Preferred Stock not so converted. So long
as any shares of Series A Preferred Stock remain outstanding, the Corporation
shall not close its Common Stock transfer books. The issuance of certificates
for shares of Common Stock upon the conversion of shares of Series A Preferred
Stock shall be made without charge to the holder for any tax in respect of the
issuance of such certificates (other than any transfer, withholding or other tax
if the shares of Common Stock are to be registered in a name different from that
of the registered holder of Series A Preferred Stock).
(d) Fractional Shares. No fractional shares of Common Stock or
-----------------
scrip representing fractional shares of Common Stock shall be issued upon any
conversion of any shares of Series A Preferred Stock, but, in lieu thereof,
there shall be paid an amount in cash equal to the same fraction of the Market
Price of a whole share of Common Stock as of the Conversion Date. The "Market
Price" of a share of Common Stock on or with respect to any day shall mean (i)
the closing sales price on the immediately preceding trading day of a share of
Common Stock on the principal national securities exchange or automated
quotation system on which the shares of Common Stock are listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange or automated
<PAGE>
quotation system, the average of the last reported bid and asked prices on such
immediately preceding trading day in the over-the-counter market as furnished
by the National Association of Securities Dealers, Inc., or, if such firm is
not then engaged in the business of reporting such prices, as furnished by any
similar firm then engaged in such business selected in good faith by the Company
or, if there is no such firm, as furnished by any member of the National
Association of Securities Dealers, Inc., selected in good faith by the Company,
or (ii) if the shares of Common Stock are not then traded on any such exchange
or system, the amount determined in good faith by the Board to represent the
fair value of a share of Common Stock.
(e) Reservation of Shares. The Corporation shall at all times
---------------------
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of shares of Series A
Preferred Stock, the full number of whole shares of Common Stock then
deliverable upon the conversion of all shares of Series A Preferred Stock then
outstanding. The Corporation shall take at all times such corporate action as
shall be necessary in order that the Corporation may validly and legally issue
fully paid and non-assessable shares of Common Stock upon the conversion of
shares of Series A Preferred Stock in accordance with the provisions of this
Section 5.
(f) Registration. If any shares of Common Stock to be reserved for
------------
the purpose of conversion of Series A Preferred Stock require registration or
listing with, or approval of, any governmental authority, stock exchange or
other regulatory body under any federal or state law or regulation or otherwise,
before such shares may be validly issued or delivered upon conversion, the
Corporation shall, in good faith and as expeditiously as possible, endeavor to
secure such registration, listing or approval, as the case may be.
(g) Shares Validly Issued and Non-Assessable. All shares of Common
----------------------------------------
Stock that may be issued upon conversion of the Series A Preferred Stock shall
upon issuance by the Corporation by validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issuance thereof.
(h) Retirement of Shares. Any shares of Series A Preferred Stock
--------------------
converted pursuant to the provisions of this Section 6 shall be retired and
given the status of authorized and unissued Preferred Stock, undesignated as to
series, subject to reissuance by the Corporation as shares of Preferred Stock of
one or more series, as may be determined from time to time by the Board.
(i) Automatic Conversion.
--------------------
(i) Transfer of Shares. In the event that a holder of shares of
------------------
Series A Preferred Stock desires to transfer some or all of such shares to an
unaffiliated party, each share of Series A Preferred Stock so transferred shall
be converted into the number of fully paid and non-assessable shares of Common
Stock into which such share is then convertible pursuant to Section 5 hereof
automatically and without further action, immediately upon the transfer of such
shares.
(ii) Transaction. In the event that the Corporation enters into
a transaction which will result in the transfer of 50% or greater of the voting
securities of the
<PAGE>
Company to an unrelated party, then each share of Series A Preferred Stock
outstanding shall be converted into the number of fully paid and non-assessable
shares of Common Stock into which such share is then convertible pursuant to
Section 6 hereof automatically and without further action, immediately upon the
transfer of such shares.
(iii) Mechanics of Automatic Conversion. Upon any automatic
---------------------------------
conversion of shares of Series A Preferred Stock into shares of Common Stock
pursuant to this Section 5(i), the holders of such converted shares shall
surrender the certificates formerly representing such shares at the office of
the Corporation or of any transfer agent for Common Stock. Thereupon, there
shall be issued and delivered to each such holder, promptly at such office and
in his, her or its name as shown on such surrendered certificate or
certificates, a certificate or certificates for the number of shares of Common
Stock into which such shares of Series A Preferred Stock were so converted and
cash as provided in Section 5(d) above in respect of any fraction of a share of
Common Stock issuable upon such conversion. The Corporation shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable
upon such conversion unless and until certificates formerly evidencing the
converted shares of Series A Preferred Stock are either delivered to the
Corporation or its transfer agent, as hereinafter provided, or the holder
thereof notifies the Corporation or such transfer agent that such certificates
have been lost, stolen, or destroyed and executes and delivers an agreement to
indemnity the Corporation from any loss incurred by it in connection therewith.
6. Conversion Price. As used herein, the "Conversion Price" shall
----------------
initially be $66.11 per share of Common Stock, subject to adjustment as set
forth below. The Conversion Price shall be subject to adjustment from time to
time as follows:
(a) Stock Dividends, Subdivisions, Reclassifications or
--------------------------------------------------
Combinations. If the Corporation shall (i) declare a dividend or make a
- ------------
distribution on its Common Stock in shares of its Common Stock, (ii) subdivide
or reclassify the outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify the outstanding Common Stock into a
smaller number of shares, the Conversion Price in effect at the time of the
record date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be proportionately adjusted
so that the holder of any shares of Series A Preferred Stock surrendered for
conversion after such date shall be entitled to receive the number of shares of
Common Stock which he would have owned or been entitled to receive had such
shares of Series A Preferred Stock been converted immediately prior to such
date. Successive adjustment in the Conversion Price shall be made whenever
any event specified above shall occur.
(b) Other Distributions. In case the Corporation shall fix a record
-------------------
date for the making of a distribution to all holders of shares of its Common
Stock (i) of shares of any class other than its Common Stock, (ii) of evidence
of indebtedness of the Corporation or any subsidiary of the Corporation (iii) of
assets, or (iv) of rights or warrants, in each such case all holders of shares
of its Series A Preferred Stock shall receive a distribution (i) of shares of
any class other than its Common Stock, (ii) of evidence of indebtedness of the
Corporation or any subsidiary of the Corporation, (iii) of assets, or (iv) of
rights or warrants, as applicable, equal in amount to the distribution which
they would have received had such
<PAGE>
holders converted their shares of Series A Preferred Stock into Common Stock
immediately prior to the distribution.
(c) Consolidation, Merger, Sale, Lease or Conveyance or
---------------------------------------------------
Reclassifications or Reorganizations. In case of any consolidation with or
- ------------------------------------
merger of the Corporation with or into another corporation or other entity, or
in case of any sale, lease or conveyance to another entity of the assets of the
Corporation as an entirety or substantially as an entirety, or in the event of
any reclassification, recapitalization or other change of the Common Stock in
which the Common Stock is changed into the same or a different number of shares
of any class or classes of stock, then each share of Series A Preferred Stock
shall after the date of such consolidation, merger, sale, lease or conveyance or
such reclassification, reorganization or other change be convertible into the
number of shares of stock or other securities or property (including cash) to
which the Common Stock issuable (at the time of such consolidation, merger,
sale, lease or conveyance or such reclassification, recapitalization or other
change) upon conversion of such share of Series A Preferred Stock would have
been entitled upon such consolidation, merger, sale, lease or conveyance or
such reclassification, recapitalization or other change; and in any such case,
if necessary, the provisions set forth herein with respect to the rights and
interests thereafter of the holders of the shares of Series A Preferred Stock
shall be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to any shares of stock or other securities or property thereafter
deliverable on the conversion of the shares of Series A Preferred Stock.
(d) Notice to Holders. In the event the Corporation shall propose
-----------------
to take any action of the type described in subsections (a), (b) and (c) of
this Section 6, the Corporation shall give notice to each holder of shares of
Series A Preferred Stock, which notice shall specify the record date, if any,
with respect to any such action and the approximate date on which such action
is to take place. Such notice shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such action
on the Conversion Price and the number, kind or class of shares or other
securities or property which shall be deliverable upon conversion of shares of
Series A Preferred Stock. In the case of any action which would require the
fixing of a record date, such notice shall be given at least 15 days prior to
the date so fixed, and in the case of all other action, such notice shall be
given at least 20 days prior to the taking of such proposed action.
(e) Statement Regarding Adjustments. Upon the occurrence of each
-------------------------------
adjustment or readjustment of the Conversion Price of the Series A Preferred
Stock pursuant to this Section 6, the Corporation shall compute such adjustment
or readjustment in accordance with the terms hereof and prepare and furnish to
each holder a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is
based. Each such statement shall be signed by the Corporation's public
accountants.
(f) Treasury Stock. For the purposes of this Section 6, the sale or
--------------
other disposition of any Common Stock theretofore held in the Corporation's
treasury shall be deemed to be an issuance thereof.
(g) Good Faith. The Corporation shall not, by amendment of its
----------
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation,
<PAGE>
merger, dissolution, issuance or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the Corporation, but shall at all times
in good faith assist in the carrying out of all the provisions of this Section 6
and in the taking of all such action as may be necessary or appropriate in order
to protect the conversion rights of the holders of the shares of Series A
Preferred Stock shares against impairment of any kind.
7. No Redemption Rights. The Series A Preferred Stock shall not be
--------------------
subject to redemption, whether at the option of either the Corporation or any
holder of the Series A Preferred Stock.
FURTHER RESOLVED, that the statements contained in the foregoing resolutions
creating and designating the said Series A Convertible issue of Preferred Shares
and fixing the number, powers, preferences and relative, optional,
participating, and other special rights and the qualifications, limitations,
restrictions, and other distinguishing characteristics thereof shall, upon the
effective date of said series, be deemed to be included in and be a part of the
certificate of incorporation of the Corporation pursuant to the provisions of
Sections 104 and 151 of the General Corporation Law of the State of Delaware.
[The remainder of this page is intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, said Corporation has caused this Certificate to be
signed by its Chief Executive Officer, this 15th day of March, 1999. The
signature below shall constitute the affirmation or acknowledgment of the
signatory, under penalties of perjury, that the instrument is the act and deed
of the Corporation and that the facts stated herein are true.
/s/ Russell C. Horowitz
---------------------------
Russell C. Horowitz
Chief Executive Officer
<PAGE>
EXHIBIT 99(c)(5)
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into this
15th day of March, 1999, by and among GO2NET, INC., a Delaware corporation (the
"Company"), and VULCAN VENTURES INCORPORATED, a Washington corporation
("Vulcan").
A. Concurrently with the execution of this Agreement, Vulcan is purchasing
167,507 shares of the Company's Series A Convertible Preferred Stock, $.01 par
value (the "Series A Preferred Stock"), pursuant to that certain Stock Purchase
Agreement dated March 15, 1999, between the Company and Vulcan (the "Stock
Purchase Agreement"). The Stock Purchase Agreement also contemplates Vulcan's
acquisition of additional shares of the Series A Preferred Stock and certain
shares of the Company's Common Stock, $.01 par value (the "Common Stock").
B. The parties hereto desire to set forth the respective rights of the
Company and Vulcan with respect to the registration of the shares of the
Company's Common Stock that Vulcan may acquire.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises contained herein, the parties hereto agree as follows:
1. Definitions.
-----------
1.1 As used in this Agreement, the following capitalized terms shall
have the following meanings:
Affiliate: A Person that directly, or indirectly through one or more
---------
intermediaries, controls or is controlled by, or is under common control with,
Vulcan; provided that such control relationship involves direct or indirect
ownership of at least a majority of the outstanding voting interests of the
applicable Person. Without limiting the generality of the foregoing, it is
understood that any entity that is majority owned (directly or indirectly) by a
Person that directly or indirectly owns a majority of the outstanding voting
interests of Vulcan shall be an Affiliate of Vulcan.
Common Stock: All shares now or hereafter authorized of any class of
------------
common stock of the Company, and any other equity securities of the Company,
howsoever designated, which have the right (subject always to prior rights of
any class or series of preferred shares) to participate in the distribution of
the assets and the earnings of the Company without limit as to per share amount.
Exchange Act: The Securities Exchange Act of 1934, as amended from
------------
time to time.
Holders: Vulcan, all of its Affiliates (including without limitation
-------
Paul G. Allen), any Person to which Common Stock is transferred by Vulcan and
its Affiliates for purposes of Paul G. Allen's estate planning, and any Person
to which Common Stock is
<PAGE>
transferred by Vulcan and its Affiliates that has registration rights pursuant
to Section 10 below.
Majority Holders: Holders of a majority of the Registrable Securities
----------------
held by all Holders at the time of any request for registration pursuant to
Section 2.1(a).
Person: An individual, corporation, partnership, limited liability
------
company, trust, unincorporated organization or a government or any agency or
political subdivision thereof.
Prospectus: The definitive prospectus included in any Registration
----------
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by the Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
Registrable Securities: Those shares of Common Stock now or hereafter
----------------------
owned of record or beneficially by the Holders (including, without limitation,
any shares of Common Stock acquired by the Holders upon conversion of the Series
A Preferred Stock) plus any shares received from the Company with respect to or
in replacement of such shares by reason of splits, dividends and
recapitalizations and other changes in the Company's capital structure , but
excluding any shares which may be then immediately sold to the public without
registration pursuant to Rule 144 under the Securities Act.
Registration Expenses: See Section 6 hereof.
---------------------
Registration Statement: Any registration statement of the Company
----------------------
filed under the Securities Act which covers Registrable Securities pursuant to
the provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
SEC: The Securities and Exchange Commission.
---
Securities Act: The Securities Act of 1933, as amended from time to
--------------
time.
Selling Holders: Holders of Registrable Securities who seek to sell
---------------
such securities under any Registration Statement.
2. Registration Rights.
-------------------
2.1 Registration Upon Request.
-------------------------
(a) At any time beginning 180 days after the date hereof, the
Majority Holders may request by written notice (a "Demand Notice") to the
Company that the Company effect the registration under the Securities Act of a
number of Registrable Securities at least equal to 5% of the shares of the
Common Stock then outstanding, stating the intended method of disposition of
such shares. The registration rights contemplated by this Section 2.1 may be
exercised only three (3) times by the Majority Holders during the
-2-
<PAGE>
term of this Agreement; provided, however, the request for registration shall
-------- -------
not be deemed made if either (i) the Registration Statement does not become
effective under the Securities Act (including without limitation if the Selling
Holders withdraw the Registration Statement, provided in case of such withdrawal
the request for registration will be deemed made unless the Selling Holders
reimburse the Company for its reasonable expenses in connection with such
Registration Statement) or a stop order, injunction or other order interferes or
prevents the contemplated method of distribution or (ii) the number of
Registrable Securities requested to be included in the registration is reduced
by 15% or more pursuant to Section 2.1(c). Within five (5) business days after
receipt of a Demand Notice, the Company shall notify all other Holders and offer
to them the opportunity to include their Registrable Securities in such
registration.
(b) Upon receipt of such request, the Company shall, as soon as
practicable, prepare and file a Registration Statement with the SEC on an
appropriate form under the Securities Act with respect to all of the Registrable
Securities that Holders of such securities have requested that the Company
register, and use its best efforts to cause such Registration Statement to
become effective.
(c) In connection with any Registration Statement filed in
response to such request, the Company, at its option, may include a primary
offering of additional shares of Common Stock and/or may include shares to be
sold by other stockholders of the Company; provided, however, that if the
-------- -------
managing underwriter of such offering reasonably determines in good faith and
delivers to the Selling Holders a written opinion that the number of shares
otherwise to be included in the Registration Statement is such that the success
of the underwritten offering would be materially and adversely affected and,
accordingly, the total number of shares to be included in the Registration
Statement is reduced to the amount recommended by such underwriter, then (i)
unless the Registration Statement includes all of the Registrable Securities
designated for sale by all Selling Holders participating in the demand
registration pursuant to Section 2.1(a), the Registration Statement shall not
include any shares to be offered by the Company or sold by other stockholders
(including other Holders exercising incidental registration rights pursuant to
Section 2.2), and (ii) if the Registration Statement does not include all of the
Registrable Securities designated for sale by such Selling Holders, the number
of Registrable Securities included in the Registration Statement shall be
allocated among such Selling Holders pro rata (based on the number of
Registrable Securities held by each).
(d) Notwithstanding the foregoing, upon delivery of written
notice (deliverable no later than 10 days after delivery of the Demand Notice)
to the person(s) who delivered the Demand Notice, the Company shall be entitled
to postpone filing of the Registration Statement, and may withhold efforts to
cause the Registration Statement to become effective, for a reasonable period of
time (not to exceed the shorter of 90 days or the Company's termination of
consideration of a Company Offering (as defined below) or completion of any
Transaction (as defined below), as the case may be) if (i) the Company is
contemplating filing a registration statement in connection with the offering of
its securities (a "Company Offering") within 90 days of delivery of the Demand
Notice, or (ii) the Company determines in good faith that a registration
pursuant to the Demand Notice might interfere with or adversely affect the
negotiations or completion of any transaction that is
-3-
<PAGE>
being contemplated by the Company at the time the right to delay is exercised (a
"Transaction").
2.2 Incidental Registration.
-----------------------
(a) If at any time after the date hereof the Company proposes to
register any shares of Common Stock under the Securities Act (except pursuant to
a registration statement filed on Form S-8 or Form S-4 or such other form as
shall be prescribed under the Securities Act for the same purposes, or a
registration statement filed on Form S-3 covering exclusively shares issued in
acquisitions pursuant to Section 4(2) under the Securities Act), or if any other
stockholder is being afforded an opportunity to register shares of Common Stock
(including pursuant to Section 2.1(a)), the Company will at each such time give
written notice to the Holders (other than Holders participating in a demand
registration pursuant to Section 2.1(a)) as provided in Section 11.4 hereof of
its intention to do so. Within twenty (20) days after receipt of such notice,
such Holders may request that the Company register all or part of the
Registrable Securities, stating in such request the intended method of
distribution of such securities (the "Designated Securities"). Upon receipt of
such request, the Company shall use its best efforts to effect the registration
of the Designated Securities by including the Designated Securities in such
Registration Statement.
(b) In the event that securities of the same class as the
Registrable Securities are being registered by the Company in such Registration
Statement and such securities as well as any of the Designated Securities are to
be distributed in an underwritten offering, such Designated Securities shall be
included in such underwritten offering on the same terms and conditions as the
securities being issued by the Company for distribution pursuant to such
underwritten offering; provided, however, that if the managing underwriter of
-------- -------
such underwritten offering reasonably determines in good faith and advises the
parties that the inclusion in such underwritten offering of all the Designated
Securities would materially and adversely affect the success of the underwritten
offering, then the number of Designated Securities to be included in the
Registration Statement shall be reduced to the amount recommended in good faith
by and set forth in the opinion of such managing underwriter; provided, further,
-------- -------
that as to the Selling Holders exercising incidental registration rights
pursuant to this Section 2.2, such reduction shall be pro rata (based on the
number of shares held by each) with respect to the Designated Securities with
other Persons holding contractual incidental or "piggy-back" registration rights
in such underwritten offering.
(c) No registration effected under this Section 2.2 shall
relieve the Company of its obligations to effect registrations at the request of
the Holders under Section 2.1.
3. Hold-Back Agreements.
--------------------
3.1 Restrictions on Public Sale by Holders. Each Selling Holder whose
--------------------------------------
Registrable Securities are covered by a Registration Statement filed pursuant to
Section 2 hereof agrees, if requested by the managing underwriters in an
underwritten offering, not to effect any public sale or distribution of
securities of the Company of the same class as the
-4-
<PAGE>
securities included in such Registration Statement during a period, not to
exceed 90 days, beginning on the closing date of each underwritten offering made
pursuant to such Registration Statement, to the extent timely notified in
writing by the managing underwriters.
3.2 Restrictions on Public Sale by the Company and Others. The
-----------------------------------------------------
Company agrees not to effect any public sale or distribution of its Common
Stock, during a period, not to exceed 45 days, beginning on the closing date of
an underwritten offering made pursuant to a Registration Statement filed under
Section 2 hereof to the extent timely notified in writing by the managing
underwriters (except as part of such underwritten registration or pursuant to
registrations on Forms S-4 or S-8 or any successor form to such Forms).
4. Registration Procedures. In connection with the Company's registration
-----------------------
obligations pursuant to Section 2 hereof, the Company will use its best efforts
to effect such registration to permit the sale of such Registrable Securities in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company will:
4.1 Preparation of Registration Statement. Prepare and file with the
-------------------------------------
SEC, within the time periods specified in Section 2, a Registration Statement on
such form as may be appropriate under the Securities Act, and use its best
efforts to cause such registration Statement to become effective.
4.2 Maintaining Effectiveness. Promptly prepare and file with the
-------------------------
SEC such amendments to the Registration Statement as may be necessary to keep
such Registration Statement effective for a period of not more than 180 days
(or, in the case of an underwritten offering, no more than 5 business days), or
such shorter period which will terminate when all Registrable Securities covered
by such Registration Statement have been sold.
4.3 Notification. Immediately notify the Selling Holders and the
------------
managing underwriters, if any, and (if requested by any such Person) confirm
such advice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of the issuance by the SEC of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceeding for that
purpose, (iii) of the receipt by the Company of any notification with respect to
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, and (iv) of the happening of any event which makes any statement
made in the Registration Statement, the Prospectus or any document incorporated
therein by reference untrue or which requires the making of any changes in the
Registration Statement, the Prospectus, or any document incorporated therein by
reference so that they will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statement therein not misleading.
-5-
<PAGE>
4.4 Stop Orders. Make every reasonable effort to obtain the
-----------
withdrawal of any order suspending the effectiveness of a Registration Statement
or the qualification of any Registrable Securities for sale in any jurisdiction
at the earliest possible moment.
4.5 Consultation with Holders. Prior to the filing of any
-------------------------
Registration Statement or amendment thereto, provide copies of such document to
the Selling Holders and to the managing underwriters, if any, make the Company's
representatives and the Company's counsel available for discussion of such
document and make such changes in such document relating to the Selling Holders
prior to the filing thereof as such Selling Holders, counsel for such Selling
Holders, or underwriters may reasonably request.
4.6 Copies of Registration Statements. Furnish to each Selling Holder
---------------------------------
and each managing underwriter, if any, without charge, at least one originally
executed copy of the Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those incorporated
by reference).
4.7 Prospectuses. Deliver to each Selling Holder and the
------------
underwriters, if any, without charge, as many copies of the Prospectus (and each
preliminary prospectus) and any amendment or supplement thereto as such Persons
may reasonably request so long as the Registration Statement to which such
Prospectus or any amendment or supplement thereto relates is effective.
4.8 Blue Sky Laws. Prior to any public offering of Registrable
-------------
Securities, use its best efforts to register or qualify or cooperate with the
Selling Holders, the underwriters, if any, and their respective counsel in
connection with the registration or qualification of such Registrable Securities
for offer and sale under the securities or blue sky laws of such jurisdictions
within the United States as any Selling Holder or underwriter reasonably
requests, and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statement; provided, however, that the Company will
-------- -------
not be required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action which would subject it to general
service of process or taxation in any such jurisdiction where it is not then so
subject.
4.9 Amendments Upon Changes. Upon the occurrence of any event
-----------------------
contemplated by Sections 4.3(ii), (iii) or (iv) or 4.4 above, prepare, as
promptly as practicable, a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document incorporated
therein by reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder,
such Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading.
4.10 Underwriting Agreements. Enter into such customary agreements
-----------------------
(including an underwriting agreement) and take all such other actions reasonably
required in connection therewith in order to expedite or facilitate the
disposition of such Registrable Securities.
-6-
<PAGE>
4.11 Compliance with Laws; Section 11(a). Otherwise use its best
-----------------------------------
efforts to comply with all applicable federal and state securities laws
(including without limitation the rules and regulations of the SEC), and make
generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act no later than 45 days after
the end of each 12-month period (or within 90 days after the end of a fiscal
year).
4.12 Opinions. At the request of any Selling Holder, use its best
--------
efforts to furnish on the date that the Registrable Securities are delivered to
that Holder and any underwriter for sale in connection with a registration
pursuant to this Agreement (i) an opinion of the counsel representing the
Company for the purposes of such registration, and (ii) a letter from the
independent certified public accountants of the Company, each dated such date
and in form and substance as is customarily given by counsel and independent
certified public accountants to underwriters in an underwritten public offering,
addressed to any Selling Holders' underwriter and to the Selling Holders.
5. Selling Holders' Obligations.
----------------------------
5.1 Provision of Information. The Company may require each Selling
------------------------
Holder of Registrable Securities as to which any registration is being effected
to furnish to the Company such information regarding the distribution of such
securities by, and such other information relevant to, the Selling Holder for
inclusion in such Registration Statement, as the Company may from time to time
reasonably request in writing.
5.2 Discontinued Use of Prospectus. Each Holder of Registrable
------------------------------
Securities agrees by execution of this Agreement that, upon receipt of any
written notice from the Company of the happening of any event of the kind
described in clauses (ii), (iii) or (iv) of Section 4.3 or Section 4.4 hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 4.9 hereof, or until it is advised in writing
(the "Advice") by the Company that the use of the Prospectus may be resumed, and
has received copies of any additional or supplemental filings which are
incorporated by reference in such Prospectus, and, if so directed by the Company
such Holder will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice. In the event the Company shall give any such notice, the time
period mentioned in Section 4.2 hereof shall be extended by the number of days
during the period from and including the date of the giving of such notice to
and including the date when each Selling Holder shall have received the copies
of the supplemental or amended Prospectus contemplated by Section 4.9 hereof or
the Advice.
5.3 Underwriting Agreement. Each Selling Holder participating in an
----------------------
underwritten offering pursuant to Section 2.1 or 2.2 will enter into a customary
underwriting agreement on terms reasonably satisfactory to the managing
underwriter.
-7-
<PAGE>
6. Registration Expenses. The Company shall bear all expenses other than
---------------------
Selling Holder Expenses (defined below) incurred in connection with any
Registration Statement, including without limitation all registration and filing
fees, fees with respect to any filings required to be made with the National
Association of Securities Dealers, listing fees relative to any stock exchange
or national market system, fees and expenses of compliance with state securities
or blue sky laws (including reasonable fees and expenses of counsel for the
underwriters in connection therewith), printing expenses, fees and disbursements
of counsel for the Company, and fees and disbursements of all independent public
accountants of the Company. Each Selling Holder shall bear his or its pro rata
share of any Selling Holder Expenses. "Selling Holder Expenses" shall consist
of and be limited to (i) the Selling Holder's legal costs, including the fees
and expenses of any counsel selected by the Selling Holder to represent him or
it, and (ii) the proportionate share of brokerage or underwriting commissions
attributable to the Selling Holder's shares.
7. Indemnification.
---------------
7.1 Indemnification by the Company. The Company agrees to indemnify
------------------------------
and hold harmless each Holder of Registrable Securities, each Person who
controls such Holder (within the meaning of the Securities Act or the Exchange
Act) (a "controlling person"), and each officer, director, employee and agent of
such Holder and each controlling person and each underwriter or selling agent
(the "indemnified parties") from and against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or preliminary
prospectus or any amendment or supplement thereto or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as (i)
the Company has demonstrated that the same are caused by or contained in any
information furnished to the Company by such Holder, expressly for use therein,
or (ii) the Company has advised such Holders' Representative in writing of a
Section 4.3(iv) event and the Holder has sold Registrable Securities
notwithstanding receipt of such notice prior to receipt of a supplement or
amended Prospectus pursuant to Section 4.9 herein; provided, however, that the
-------- -------
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any preliminary prospectus if (i) such Holder failed to send or deliver a copy
of the Prospectus with or prior to the delivery of written confirmation of the
sale of Registrable Securities and (ii) the Prospectus would have corrected such
untrue statement or omission; provided, further, that the Company shall not be
-------- -------
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission in the Prospectus, if
such untrue statement or alleged untrue statement, omission or alleged omission
is corrected in an amendment or supplement to the Prospectus and if, having
previously been furnished by or on behalf of the Company with copies of the
Prospectus as so amended or supplemented, such Holder thereafter fails to
deliver such Prospectus as so amended or supplemented, prior to or concurrently
with the sale of a Registrable Security to the Person asserting such loss,
claim, damage, liability or expense who purchased such Registrable Security
which is the subject thereof from such Holder. The indemnity provided herein
shall remain in full force and effect regardless of any investigation made by or
on
-8-
<PAGE>
behalf of an indemnified party and shall survive the transfer of Registrable
Securities by the Selling Holder.
7.2 Indemnification by Holders. In connection with the Registration
--------------------------
Statements hereunder, each Selling Holder agrees to indemnify, to the full
extent permitted by law, the Company, and each Person who controls the Company
(within the meaning of the Securities Act or the Exchange Act) and each
director, officer, employee and agent of each such Person from and against any
losses, claims, damages, liabilities and expenses caused by any untrue statement
of a material fact or any omission of a material fact required to be stated in
any Registration Statement or Prospectus or preliminary prospectus or necessary
to make the statements therein not misleading, to the extent, but only to the
extent, that the Company has demonstrated that such untrue statement or omission
is contained in any information or affidavit so furnished by such Holder to the
Company specifically for inclusion in such Registration Statement or Prospectus.
In no event, however, shall the liability of any Selling Holder hereunder be
greater in amount than the dollar amount of the proceeds (net of underwriters'
discounts and commissions) received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation. The
Company shall be obligated to give to, and shall be entitled to receive from,
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution customary indemnities.
7.3 Conduct of Indemnification Proceedings. Any Person entitled to
--------------------------------------
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any person
-------- -------
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such Person unless (a) the
indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume within a reasonable period of
time the defense of such claim and employ counsel reasonably satisfactory to
such person or (c) in the reasonable judgment of any such Person, based upon
written advice of its counsel, a conflict of interest may exist between such
Person and the indemnifying party with respect to such claims or such Person may
have separate or additional defenses (in which case, if the Person notifies the
indemnifying party in writing that such Person elects to employ separate counsel
at the expense of the indemnifying party, the indemnifying party shall not have
the right to assume the defense of such claim on behalf of such Person). If
such defense is not assumed by the indemnifying party, the indemnifying party
will not be subject to any liability for any settlement made without its consent
(but such consent will not be unreasonably withheld). No indemnifying party
will consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation. An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one principal and one local counsel for all
parties indemnified by such indemnifying party with respect to such claim.
-9-
<PAGE>
7.4 Contribution. If the indemnification provided for in Sections
------------
7.1 or 7.2 is unavailable to the indemnified parties in respect of any losses,
claims, damages or liabilities referred to herein, then each such indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (i) as between the Company and the Selling
Holders on the one hand and the underwriters on the other hand, in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Holders on the one hand and the underwriters on the
other hand from the offering of all of the securities sold in the offering, or
if such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also the relative
fault of the Company and the Selling Holders on the one hand and of the
underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations and (ii) as between the Company on the
one hand and each Selling Holder on the other hand, in such proportion as is
appropriate to reflect the relative fault of the Company and of each Selling
Holder in connection with such statements or omissions, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Selling Holders on the one hand and the underwriters on the other hand
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and the Selling Holders bear to the total
underwriting discounts and commissions received by the underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company and the Selling Holders on the one hand and of the
underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Selling Holders or by the underwriters. The
relative fault of the Company on the one hand and of each Selling Holder on the
other hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7.4 were determined by pro
rata allocation (even if the underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7.4, no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Common Stock underwritten by it and distributed to the public
was offered to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to
-10-
<PAGE>
contribute any amount in excess of the amount by which the total price at which
the securities of such Selling Holder were offered to the public exceeds the
amount of any damages which such Selling Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Selling
Holders' obligations to contribute pursuant to this Section 7.4 are several in
proportion to the proceeds of the offering received by each Selling Holder bears
to the total proceeds of the offering received by all the Selling Holders and
not joint.
8. Selection of Underwriters. In connection with any request for
-------------------------
registration under Section 2.1 hereof, the Company shall be entitled to select
the managing underwriter if it is also registering shares on its own behalf. The
Selling Holders, however, shall be entitled to select the co-managing
underwriter. If the Registration Statement covers only shares being sold by the
Selling Holders, then the Selling Holders shall be entitled to select the
managing underwriter, subject to approval by the Company, which approval shall
not be unreasonably withheld. In connection with any registration under Section
2.2, the Selling Holders shall have no right to select underwriters.
9. Rule 144 The Company covenants that, after it has filed a registration
--------
pursuant to Section 12 of the Exchange Act or a registration statement under the
Securities Act becomes effective, it will file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder, and it will take such further action
as may be reasonably and customarily requested by any Holder of Registrable
Securities, all to the extent required from time to time to enable such Holder
to sell Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
any Holder of Registrable Securities, the Company will deliver to such Holder a
written statement as to whether it has complied with such information and
requirements.
10. Transfer of Registration Rights. The registration rights granted
-------------------------------
pursuant to this Agreement shall be available to a transferee of any Registrable
Securities if (i) the transferring Holder gives the Company written notice of
such transfer, identifying the name and address of the transferee and the
securities involved; (ii) the transferee agrees in writing to be bound by the
provisions of this Agreement; and (iii) as a result of such transfer, the
transferee holds at least 5% (or, if the "Second Closing" under the Stock
Purchase Agreement shall have been consummated, 10%) of the shares of Common
Stock outstanding as of the date of the transfer.
11. Miscellaneous.
-------------
11.1 Remedies. In the event of a breach by the Company of its
--------
obligations under this Agreement, each Holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by
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<PAGE>
it of any of the provisions of this Agreement and hereby waives the defense in
any action for specific performance that a remedy at law would be adequate.
11.2 No Inconsistent Agreements. The Company will not on or after the
--------------------------
date of this Agreement enter into any agreement with respect to its securities
which is inconsistent with or limits or impairs the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof.
11.3 Adjustments Affecting Registrable Securities. The Company will not
--------------------------------------------
take any action, or permit any change to occur, with respect to the Registrable
Securities which would adversely affect the ability of the Holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement.
11.4 Notices. All notices or other communications hereunder shall be in
-------
writing and shall be given by (i) personal delivery, (ii) courier or other
delivery service which obtains a receipt evidencing delivery, (iii) registered
or certified mail (postage prepaid and return receipt requested), or (iv)
facsimile or similar electronic device, to such address as may be designated
from time to time by the relevant party, and which shall initially be: (i) in
the case of the Company, 999 Third Avenue, Seattle, Washington 98004, Attention:
Russell C. Horowitz, facsimile (206) 447-1646, with a copy to Hutchins, Wheeler
& Dittmar, A Professional Corporation, 101 Federal Street, Boston, MA 02110,
Attn: Thomas M. Camp, Esq., facsimile (617) 951-1295; and (ii) in the case of
Vulcan, 110 110th Avenue N.E., Suite 550, Bellevue, Washington 98004, attention:
William D. Savoy, facsimile (425) 453-1985, with a copy to Irell & Manella LLP,
1800 Avenue of the Stars, Suite 900, Los Angeles, CA 90067, Attn: Alvin G.
Segel, Esq., facsimile (310) 203-7199. All notices and other communications
shall be deemed to have been given (i) if delivered by the United States mail,
three business days after mailing (five business days if delivered to an address
outside of the United States), (ii) if delivered by a courier or other delivery
service, one business day after dispatch (two business days if delivered to an
address outside of the United States), and (iii) if personally delivered or sent
by facsimile or similar electronic device, upon receipt by the recipient or its
agent or employee (which, in the case of a notice sent by facsimile or similar
electronic device, shall be the time and date indicated on the transmission
confirmation receipt). No objection may be made by a party to the manner of
delivery of any notice actually received in writing by an authorized agent of
such party.
11.5 Complete Agreement; Modifications. This Agreement and any documents
---------------------------------
referred to herein or executed contemporaneously herewith constitute the
parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. This Agreement may be amended, altered or modified only by a writing
signed by the Company, the Majority Holders.
11.6 Successors and Assigns. Except as provided herein to the contrary,
----------------------
this Agreement shall be binding upon and inure to the benefit of the parties,
their respective successors and permitted assigns, including without limitation
and without the need for an express assignment, subsequent Holders of
Registrable Securities.
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<PAGE>
11.7 Governing Law. All questions with respect to the Agreement and the
-------------
rights and liabilities of the parties shall be governed by the laws of the State
of Delaware, regardless of the choice of laws provisions of Delaware or any
other jurisdiction.
11.8 Attorneys' Fees. Should any litigation be commenced (including any
---------------
proceedings in a bankruptcy court) between the parties hereto or their
representatives concerning any provision of this Agreement or the rights and
duties of any Person or entity hereunder, the party or parties prevailing in
such proceeding shall be entitled, in addition to such other relief as may be
granted, to the reasonable attorneys' fees and court costs incurred by reason of
such litigation.
11.9 Headings. The Article and Section headings in this Agreement are
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inserted only as a matter of convenience, and in no way define, limit, extend or
interpret the scope of this Agreement or of any particular Article or Section.
11.10 Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
11.11 Gender. Throughout this Agreement, as the context may require, the
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masculine gender includes the feminine and neuter; and the neuter gender
includes the masculine and feminine.
11.12 Counterparts. This Agreement may be executed in any number of
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counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
[Remainder of this page intentionally left blank.]
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<PAGE>
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth hereinabove.
GO2NET, INC.
By: /s/ Russell C. Horowitz
--------------------------------------------
Russell C. Horowitz, Chief Executive Officer
VULCAN VENTURES INCORPORATED
By: /s/ William D. Savoy
--------------------------------------------
William D. Savoy, Vice President
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