UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)1
NETIQ CORPORATION
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
64115 P 10 2
(CUSIP Number)
Michael Bennett
Mission Critical Software, Inc.
13939 Northwest Freeway
Houston, TX 77040
(888) 323-6768
Copies to:
William M. Kelly
Davis Polk & Wardwell
1600 El Camino Real
Menlo Park, CA 94025
(650) 752-2000
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
February 26, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Sections 240.13-1(e), 240.13d-(f) or
240.13d-1(g), check the following box. [ ]
NOTE: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Section
240.13d-7(b) for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 6 Pages)
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1 The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Mission Critical Software, Inc. I.R.S. Identification No.: 76-0509513
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
(b)
N/A
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
N/A
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
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NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY 3,520,234
OWNED BY EACH
REPORTING PERSON
WITH
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8 SHARED VOTING POWER
3,845,983
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9 SOLE DISPOSITIVE POWER
3,520,234
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10 SHARED DISPOSITIVE POWER
N/A
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,366,217
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
41.8%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 2 of 6
<PAGE>
Amendment No. 1 to Schedule 13D
The Reporting Person, Mission Critical Software, Inc., a Delaware
corporation ("MCS") hereby amends and restates the Schedule 13D filed by the
Reporting Person on March 8, 2000 with regard to the common stock, $.001 par
value per share, of NetIQ Corporation ("NetIQ") for the purpose of amending and
restating Items 4 and 5.
ITEM 4. PURPOSE OF TRANSACTION.
(a) Not applicable.
(b) As described in Item 3 above, this statement relates to the Merger
of Merger Sub, a wholly-owned subsidiary of NetIQ, with and into MCS in a
statutory merger pursuant to the applicable provisions of Delaware Law. At the
effective time of the Merger, the separate existence of Merger Sub will cease
and MCS will continue as the Surviving Corporation and as a wholly-owned
subsidiary of NetIQ. Each holder of outstanding MCS Common Stock will receive,
in exchange for each share of MCS Common Stock held by such holder, 0.9413
shares of NetIQ Common Stock. NetIQ will assume each outstanding option to
purchase MCS Common Stock under MCS's stock option plans. Furthermore, all
rights to purchase shares of MCS Common Stock under MCS's Employee Stock
Purchase Plan shall be converted into rights to purchase shares of NetIQ Common
Stock and shall be assumed by NetIQ.
Pursuant to the NetIQ Voting Agreements, the NetIQ Voting Agreement
Stockholders have agreed to vote their shares of NetIQ Common Stock (plus any
additional shares of NetIQ Common Stock and all additional options, warrants
and other rights to acquire shares of NetIQ Common Stock) beneficially owned by
the NetIQ Voting Agreement Stockholders (the "NetIQ Voting Agreement Shares")
at every MCS stockholders meeting and every written consent in lieu of such a
meeting to vote the shares (a) in favor of approval of the Merger, the Merger
Agreement and the issuance of shares of NetIQ Common Stock in exchange for all
outstanding capital stock of MCS as set forth in the Merger Agreement (the
"NetIQ Approval Matters"), (b) in favor of any matter that could reasonably be
expected to facilitate the NetIQ Approval Matters, and (c) in such manner as
MCS may direct with respect to all other proposals submitted to the
stockholders of NetIQ which, directly or indirectly, in any way relates to the
NetIQ Approval Matters. The NetIQ Voting Agreements terminate upon the earlier
to occur of (i) such date and time as the Merger shall become effective in
accordance with the terms and provisions of the Merger Agreement, or (ii) such
date and time as the Merger Agreement shall have been terminated pursuant to
Article VII thereof.
As a condition of MCS's willingness to enter into the Merger
Agreement, NetIQ agreed to grant to MCS an option to acquire up to 3,520,234
shares of NetIQ Common Stock pursuant to a stock option agreement (the "NetIQ
Stock Option Agreement"). The NetIQ Stock Option Agreement becomes exercisable
if the Merger Agreement is terminated under certain circumstances. The NetIQ
Stock Option Agreement expires upon the earliest of (i) the effectiveness of
the Merger or (ii) twelve months after a termination of the Merger Agreement
pursuant to certain of its provisions.
As an inducement for NetIQ to enter into the Merger Agreement and in
consideration thereof, certain stockholders of MCS entered into individual
agreements with NetIQ (collectively the "MCS Voting Agreements") whereby each
such stockholder (collectively, the "MCS Voting Agreement Stockholders")
agreed, severally and not jointly, to vote all of the shares of MCS Common
Stock beneficially owned by him in favor of approval and adoption of the Merger
Agreement and approval of the Merger and certain related matters. NetIQ did not
pay additional consideration to any MCS Voting Agreement Stockholder in
connection with the execution and delivery of the MCS Voting Agreements.
SCHEDULE 13D
Page 3 of 6
<PAGE>
Pursuant to the MCS Voting Agreements, the MCS Voting Agreement
Stockholders have agreed to vote their shares of MCS Common Stock (plus any
additional shares of MCS Common Stock and all additional options, warrants and
other rights to acquire shares of MCS Common Stock) beneficially owned by the
MCS Voting Agreement Stockholders (the "MCS Voting Agreement Shares") at every
MCS stockholders meeting and every written consent in lieu of such a meeting to
vote the shares (a) in favor of the Merger and the Merger Agreement (the "MCS
Approval Matters"), (b) in favor of any matter that could reasonably be
expected to facilitate the MCS Approval Matters and (c) in such manner as NetIQ
may direct with respect to all other proposals submitted to the stockholders of
MCS which, directly or indirectly, in any way relates to the MCS Approval
Matters. The MCS Voting Agreements terminate upon the earlier to occur of (i)
such date and time as the Merger shall become effective in accordance with the
terms and provisions of the Merger Agreement, or (ii) such date and time as the
Merger Agreement shall have been terminated pursuant to Article VII thereof.
In addition, MCS agreed to grant to NetIQ an option to acquire up to
3,416,052 shares of MCS Common Stock pursuant to a stock option agreement (the
"MCS Stock Option Agreement"). The MCS Stock Option Agreement becomes
exercisable if the Merger Agreement is terminated under certain circumstances.
The MCS Stock Option Agreement expires upon the earliest of (i) the
effectiveness of the Merger or (ii) twelve months after a termination of the
Merger Agreement pursuant to certain of its provisions.
The purpose of the transactions under the MCS Voting Agreements, the
NetIQ Voting Agreements, the MCS Stock Option Agreement and the NetIQ Stock
Option Agreement is to enable NetIQ and MCS to consummate the transactions
contemplated under the Merger Agreement.
(c) Not applicable.
(d) It is anticipated that upon consummation of the Merger, the
directors of the Surviving Corporation shall be the directors of Merger Sub
when formed. The initial officers of the Surviving Corporation shall be the
following persons, who shall hold the same offices in NetIQ:
Executive Chairman Michael Bennett
Chief Executive Officer Ching-Fa Hwang
Chief Operating Officer Steve Odom
Chief Financial Officer James Barth
Chief Technical Officer Tom Bernhardt
(e) Other than as a result of the Merger described in Item 3 above,
not applicable.
(f) Not applicable.
(g) Upon consummation of the Merger, the Certificate of Incorporation
of Merger Sub, as in effect immediately prior to the Merger, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by Delaware Law and such Certificate of Incorporation. Upon
consummation of the Merger, the Bylaws of Merger Sub, as in effect immediately
prior to the Merger, shall be the Bylaws of the Surviving Corporation until
thereafter amended.
(h) - (i) Not applicable.
(j) Other than described above, MCS currently has no plan or proposals
which relate to, or may result in, any of the matters listed in Items 4(a)-(j)
of Schedule 13D (although MCS reserves the right to develop such plans).
SCHEDULE 13D
Page 4 of 6
<PAGE>
References to, and descriptions of, the Merger and the Merger
Agreement as set forth in this Schedule 13D are qualified in their entirety by
reference to the copies of the Merger Agreement, included as an Exhibit to the
Form 8-K filed by MCS on March 3, 2000.
References to, and descriptions of, the MCS Stock Option Agreement,
the NetIQ Stock Option Agreement and the NetIQ Voting Agreements as set forth
in this Schedule 13D are qualified in their entirety by reference to the MCS
Stock Option Agreement, the NetIQ Stock Option Agreement and the NetIQ Voting
Agreement included as Exhibits A, B, and C, respectively, to this Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) - (b) As a result of the NetIQ Voting Agreements, MCS may be
deemed to be the beneficial owner of at least 7,366,217 shares of NetIQ Common
Stock. Such NetIQ Common Stock constitutes approximately 41.8% of the issued
and outstanding shares of NetIQ Common Stock based on the number of shares of
NetIQ Common Stock outstanding as of February 24, 2000 (as represented by NetIQ
in the Merger Agreement discussed in Items 3 and 4). MCS may be deemed to have
the shared power to vote the Shares with respect to those matters described
above. However, MCS (i) is not entitled to any rights as a stockholder of NetIQ
as to the Shares and (ii) disclaims any beneficial ownership of the shares of
NetIQ Common Stock which are covered by the Voting Agreements.
To MCS's knowledge, no person listed on Schedule A has an ownership
interest in NetIQ.
Set forth on Schedule B are the names of the stockholders of NetIQ
that have entered into an NetIQ Voting Agreement with MCS, and their present
principal occupation or employment, including the name, principal business and
address of any corporation or other organization in which such employment is
conducted, to MCS's knowledge.
(c) To the knowledge of MCS, no transactions in the class of
securities reported have been effected during the past sixty days by any person
named pursuant to Item 2.
(d) To the knowledge of MCS, no other person has the right to receive
or the power to direct the receipt of dividends from, or the proceeds from the
sale of, the securities of NetIQ reported on herein.
(e) Not applicable.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
The following document is re-filed as an amended exhibit:
C. Form of Voting Agreement, dated February 26, 2000, between
Mission Critical Software, Inc. and certain stockholders of
NetIQ Corporation.
SCHEDULE 13D
Page 5 of 6
<PAGE>
SIGNATURE
After reasonable 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 31, 2000 MISSION CRITICAL SOFTWARE, INC.
By: /s/ Stephen E. Odom
--------------------------
Stephen E. Odom
Chief Financial Officer
SCHEDULE 13D
Page 6 of 6
EXHIBIT C
NETIQ VOTING AGREEMENT
THIS NETIQ VOTING AGREEMENT (this "Agreement") is made and entered into as
of February 26, 2000, among Mission Critical Software Inc., a Delaware
corporation ("MCS"), and the undersigned stockholder (the "Stockholder") of
NetIQ Corp., a Delaware corporation ("NetIQ").
RECITALS
A. NetIQ, a subsidiary of NetIQ ("Merger Sub") and MCS have entered into
an Agreement and Plan of Reorganization (the "Merger Agreement"), which
provides for the merger (the "Merger") of Merger Sub with and into MCS.
Pursuant to the Merger, all outstanding capital stock of MCS shall be converted
into the right to receive NetIQ Common Stock, as set forth in the Merger
Agreement (the "Share Issuance");
B. Stockholder is the beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of such
number of shares of the outstanding capital stock of NetIQ and shares subject
to outstanding options and warrants as is indicated on the signature page of
this Agreement; and
C. In consideration of the execution of the Merger Agreement by MCS,
Stockholder (in his or her capacity as such) agrees to vote the Shares (as
defined below) and other such shares of capital stock of NetIQ over which
Stockholder has voting power so as to facilitate consummation of the Merger.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree as
follows:
1. Certain Definitions. Capitalized terms not defined herein shall have
the meanings ascribed to them in the Merger Agreement. For purposes of this
Agreement:
(a) "Expiration Date" shall mean the earlier to occur of (i) such date
and time as the Merger Agreement shall have been terminated pursuant to Article
VII thereof, or (ii) such date and time as the Merger shall become effective in
accordance with the terms and provisions of the Merger Agreement.
(b) "Person" shall mean any (i) individual, (ii) corporation, limited
liability company, partnership or other entity, or (iii) governmental
authority.
(c) "Shares" shall mean: (i) all securities of NetIQ (including all
shares of NetIQ Common Stock and all options, warrants and other rights to
acquire shares of NetIQ Common Stock) owned by Stockholder as of the date of
this Agreement; and (ii) all additional securities of NetIQ (including all
additional shares of NetIQ Common Stock and all additional options, warrants
and other rights to acquire shares of NetIQ Common Stock) of which Stockholder
acquires ownership during the period from the date of this Agreement through
the Expiration Date.
<PAGE>
(d) "Transfer." A Person shall be deemed to have effected a "Transfer"
of a security if such person directly or indirectly: (i) sells, pledges,
encumbers, grants an option with respect to, transfers or disposes of such
security or any interest in such security; or (ii) enters into an agreement or
commitment providing for the sale of, pledge of, encumbrance of, grant of an
option with respect to, transfer of or disposition of such security or any
interest therein.
2. Transfer of Shares.
(a) Transferee of Shares to be Bound by this Agreement. Stockholder
agrees that, during the period from the date of this Agreement through the
Expiration Date, Stockholder shall not cause or permit any Transfer of any of
the Shares to be effected unless each Person to which any of such Shares, or
any interest in any of such Shares, is or may be transferred shall have: (a)
executed a counterpart of this Agreement and a proxy in the form attached
hereto as Exhibit A (with such modifications as MCS may reasonably request);
and (b) agreed in writing to hold such Shares (or interest in such Shares)
subject to all of the terms and provisions of this Agreement.
(b) Transfer of Voting Rights. Stockholder agrees that, during the
period from the date of this Agreement through the Expiration Date, Stockholder
shall not deposit (or permit the deposit of) any Shares in a voting trust or
grant any proxy or enter into any voting agreement or similar agreement in
contravention of the obligations of Stockholder under this Agreement with
respect to any of the Shares.
3. Agreement to Vote Shares. At every meeting of the stockholders of NetIQ
called, and at every adjournment thereof, and on every action or approval by
written consent of the stockholders of NetIQ, Stockholder (in his or her
capacity as such) shall cause the Shares to be voted (a) in favor of approval
of the Merger, the Merger Agreement and the Share Issuance (the "NetIQ Approval
Matters"), (b) in favor of any matter that could reasonably be expected to
facilitate the NetIQ Approval Matters, and (c) in such manner as MCS may direct
with respect to all other proposals submitted to the stockholders of NetIQ
which, directly or indirectly, in any way relates to the NetIQ Approval
Matters.
4. Irrevocable Proxy. Concurrently with the execution of this Agreement, S
tockholder agrees to deliver to MCS a proxy in the form attached hereto as
Exhibit A (the "Proxy"), which shall be irrevocable to the fullest extent
permissible by law, with respect to the Shares.
5. Representations and Warranties of the Stockholder. Stockholder (i) is
the beneficial owner of the shares of NetIQ Common Stock indicated on the final
page of this Agreement, free and clear of any liens, claims, options, rights of
first refusal, co-sale rights, charges or other encumbrances; (ii) does not
beneficially own any securities of the NetIQ other than the shares of NetIQ
Common Stock and options and warrants to purchase shares of Common Stock of
NetIQ indicated on the final page of this Agreement; and (iii) has full power
and authority to make, enter into and carry out the terms of this Agreement and
the Proxy.
6. Additional Documents. Stockholder (in his or her capacity as such)
hereby covenants and agrees to execute and deliver any additional documents
necessary or desirable, in the reasonable opinion of MCS, to carry out the
intent of this Agreement.
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<PAGE>
7. Termination. This Agreement shall terminate and shall have no further
force or effect as of the Expiration Date.
8. Miscellaneous.
(a) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, then 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.
(b) Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by
either of the parties without prior written consent of the other.
(c) Amendments and Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
(d) Specific Performance; Injunctive Relief. The parties hereto
acknowledge that MCS shall be irreparably harmed and that there shall be no
adequate remedy at law for a violation of any of the covenants or agreements of
Stockholder set forth herein. Therefore, it is agreed that, in addition to any
other remedies that may be available to MCS upon any such violation, MCS shall
have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to MCS at law or
in equity.
(e) Notices. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to
the parties at the following address (or at such other address for a party as
shall be specified by like notice):
If to MCS: Mission Critical Software Inc.
13939 Northwest Freeway
Houston, Texas 77040
Attention: Chief Financial Officer
Facsimile: (713) 548-1829
With a copy to: Davis Polk & Wardwell
1600 El Camino Real
Menlo Park, California
Attention: William M. Kelly, Esq.
Facsimile: (650) 752-2111
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<PAGE>
If to Stockholder: To the address for notice set forth on the
signature page hereof.
(f) Governing Law. This Agreement shall be governed by the laws of the
State of Delaware, without reference to rules of conflicts of law.
(g) Entire Agreement. This Agreement and the Proxy contain the entire
understanding of the parties in respect of the subject matter hereof, and
supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
(h) Officers and Directors. To the extent that Stockholder is or
becomes (during the term hereof) a director or officer of NetIQ, he or she
makes no agreement or understanding herein in his or her capacity as such
director or officer, and nothing herein will limit or affect, or give rise to
any liability to Stockholder by virtue of, any actions taken by Stockholder in
his or her capacity as an officer or director of NetIQ in exercising its rights
under the Merger Agreement.
(i) Effect of Headings. The section headings are for convenience only
and shall not affect the construction or interpretation of this Agreement.
(j) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
[The remainder of this page has been intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written. The undersigned is executing
this Agreement only in its capacity as a stockholder. Such signature in no way
affects its obligations as an officer or director of NetIQ.
MISSION CRITICAL SOFTWARE INC. STOCKHOLDER
By: By:
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Signature
Name: Name:
---------------------------------- ----------------------------------
Title: Title:
--------------------------------- ----------------------------------
-------------------------------------
-------------------------------------
Print Address
-------------------------------------
Telephone
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Facsimile No.
Share beneficially owned:
_______________ NetIQ Common Shares
_______________ NetIQ Common Shares
issuable upon exercise of outstanding
options or warrants
[Signature Page to Voting Agreement]
<PAGE>
Exhibit A
IRREVOCABLE PROXY
The undersigned stockholder of NetIQ Corp., a Delaware corporation
("NetIQ"), hereby irrevocably (to the fullest extent permitted by law) appoints
Michael S. Bennett and Stephen E. Odom and each of them, as the sole and
exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of capital stock of NetIQ that now are or
hereafter may be beneficially owned by the undersigned, and any and all other
shares or securities of NetIQ issued or issuable in respect thereof on or after
the date hereof (collectively, the "Shares") in accordance with the terms of
this Proxy. The Shares beneficially owned by the undersigned stockholder of MCS
as of the date of this Proxy are listed on the final page of this Proxy. Upon
the undersigned's execution of this Proxy, any and all prior proxies given by
the undersigned with respect to any Shares are hereby revoked and the
undersigned agrees not to grant any subsequent proxies with respect to the
Shares until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the fullest extent permitted by law), is
coupled with an interest and is granted pursuant to that certain Voting
Agreement of even date herewith by and among Mission Critical Software Inc., a
Delaware corporation ("MCS"), and the undersigned stockholder (the "Voting
Agreement"), and is granted in consideration of MCS entering into that certain
Agreement and Plan and Reorganization (the "Merger Agreement"), by and between
NetIQ, a subsidiary of NetIQ ("Merger Sub") and MCS. The Merger Agreement
provides for the merger of Merger Sub with and into MCS in accordance with its
terms (the "Merger"). Pursuant to the Merger, all outstanding capital stock of
MCS shall be converted into the right to receive NetIQ Common Stock, as set
forth in the Merger Agreement (the "Share Issuance"). As used herein, the term
"Expiration Date" shall mean the earlier to occur of (i) such date and time as
the Merger Agreement shall have been validly terminated pursuant to Article VII
thereof or (ii) such date and time as the Merger shall become effective in
accordance with the terms and provisions of the Merger Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time prior to the
Expiration Date, to act as the undersigned's attorney and proxy to vote the
Shares, and to exercise all voting, consent and similar rights of the
undersigned with respect to the Shares (including, without limitation, the
power to execute and deliver written consents) at every annual, special or
adjourned meeting of stockholders of NetIQ and in every written consent in lieu
of such meeting (a) in favor of approval of the Merger, the Merger Agreement
and the Share Issuance (the "NetIQ Approval Matters"), (b) in favor of any
matter that could reasonably be expected to facilitate the NetIQ Approval
Matters, and (c) in such manner as MCS may direct with respect to all other
proposals submitted to the stockholders of NetIQ which, directly or indirectly,
in any way relates to the MCS.
The attorneys and proxies named above may not exercise this Proxy on
any other matter except as provided above. The undersigned stockholder may vote
the Shares on all other matters.
<PAGE>
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned. The undersigned is executing this
Proxy only in its capacity as a stockholder. Such signature in no way affects
its obligations as an officer or director of NetIQ.
This Proxy is irrevocable (to the fullest extent permitted by law).
This Proxy shall terminate, and be of no further force and effect,
automatically upon the Expiration Date.
Dated: , 2000
Signature of Stockholder:
-----------------------
Print Name of Stockholder:
-----------------------
Shares beneficially owned:
-----------------------
__________ NetIQ Common Shares
__________ NetIQ Common Shares issuable
upon exercise of outstanding
options or warrants
[Signature Page to Irrevocable Proxy]
