<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): DECEMBER 1, 1997
-----------------
NETSCAPE COMMUNICATIONS CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-26310 94-3200270
- ------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification Number)
incorporation)
501 EAST MIDDLEFIELD ROAD, MOUNTAIN VIEW, CALIFORNIA 94043
-----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 254-1900
--------------
N/A
------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 1, 1997 (the "Closing Date"), pursuant to an Agreement and
Plan of Reorganization dated as of November 24, 1997 (the "Reorganization
Agreement"), among Netscape Communications Corporation ("Netscape"), Knife
Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary
of Netscape ("Merger Sub"), and KIVA Software Corporation, a California
corporation ("KIVA"), Netscape acquired KIVA by means of a statutory merger
(the "Merger") of Merger Sub with and into KIVA, with KIVA remaining as the
surviving corporation in the Merger. As a result of the Merger, KIVA became
a wholly-owned subsidiary of Netscape. Merger Sub was formed solely for the
purpose of effecting the Merger.
Pursuant to the Reorganization Agreement, an aggregate of 6,044,404
shares of Netscape Common Stock were (i) issued in exchange for all of the
issued and outstanding capital stock of KIVA and (ii) reserved for issuance
upon exercise of all unexpired and unexercised stock options to acquire
capital stock of KIVA (which were assumed by Netscape in the Merger). Each
outstanding share of KIVA capital stock was converted into the right to
receive a number of shares of Netscape Common Stock equal to 6,044,404
divided by the sum of (i) the total number of shares of KIVA capital stock
outstanding on the Closing Date, and (ii) the total number of shares of KIVA
capital stock subject to unexpired and unexercised options and warrants to
purchase KIVA capital stock outstanding on the Closing Date (the "Exchange
Ratio"). All outstanding options to purchase KIVA capital stock outstanding
immediately prior to the Merger were assumed by Netscape. Each such option
became exercisable for that number of shares of Netscape Common Stock equal
to the product of (a) the Exchange Ratio and (b) the number of shares of KIVA
capital stock subject to such option immediately prior to the Merger. The
per share exercise price of each such option was adjusted to equal the
quotient of (x) the per share exercise price of such option immediately prior
to the Merger and (y) the Exchange Ratio, such that the aggregate exercise
price of each option assumed by Netscape remained equal to the aggregate
exercise price of each such option immediately prior to the Merger.
The consideration paid by Netscape for the outstanding capital stock and
options of KIVA pursuant to the Reorganization Agreement was determined
pursuant to arms' length negotiations and took into account various factors
concerning the valuation of the business of KIVA, including public market
valuations of comparable companies, discounted cash flows for KIVA, and
multiples paid in recent acquisitions of comparable companies. Netscape
received an opinion from each of its financial advisors, Morgan Stanley & Co.
Incorporated and Hambrecht & Quist LLC, that the consideration paid by
Netscape in accordance with the terms of the Reorganization Agreement was
fair to Netscape's stockholders from a financial point of view.
KIVA is a leading provider of enterprise application server software
that is used to build, deploy and manage business critical applications that
run on intranets, extranets and over the Internet. Netscape intends to
market KIVA's software technology to corporate developers, independent system
vendors, value added resellers and system integrators that are building next
generation, web-centric eneterprise applications as well as for extending
existing client/server, Enterprise Resource Planning, and legacy applications
for extranets.
-2-
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF KIVA.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
The Pro Forma Financial Information required to be filed pursuant
to Item 7(b) of Form 8-K was not available at the time of filing of
this Current Report on Form 8-K and will be filed on a Form 8-K/A
as soon as practicable, but in no event later than 60 days after
the date this Form 8-K is required to be filed.
(c) EXHIBITS.
2.1 Agreement and Plan of Reorganization dated as of November 24,
1997, with exhibits.
2.2 Agreement of Merger dated December 1, 1997, filed with the
Secretary of State of the State of California on December 1,
1997.
2.3 Certificate of Merger dated December 1, 1997, filed with the
Secretary of State of the State of Delaware on December 1, 1997.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: December 15, 1997 NETSCAPE COMMUNICATIONS
CORPORATION
/S/ PETER L.S. CURRIE
-----------------------------------------
Peter L.S. Currie
Executive Vice President and Chief
Administrative Officer
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description of Document Page
- ------- ----------------------- -----------
2.1 Agreement and Plan of Reorganization dated as of November 24,
1997, with exhibits.
2.2 Agreement of Merger dated December 1, 1997, filed with the
Secretary of State of the State of California on December 1, 1997.
2.3 Certificate of Merger dated December 1, 1997, filed with the
Secretary of State of the State of Delaware on December 1, 1997.
<PAGE>
EXHIBIT 2.1
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
NETSCAPE COMMUNICATIONS CORPORATION,
KNIFE ACQUISITION CORPORATION
AND
KIVA SOFTWARE CORPORATION
DATED AS OF NOVEMBER 24, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I THE MERGER........................................................1
1.1 The Merger......................................................1
1.2 Effective Time..................................................2
1.3 Effect of the Merger............................................2
1.4 Articles of Incorporation; Bylaws...............................2
1.5 Directors and Officers..........................................2
1.6 Maximum Shares to Be Issued; Effect on Capital Stock............2
1.7 Dissenting Shares...............................................5
1.8 Surrender of Certificates.......................................6
1.9 No Further Ownership Rights in Company Common Stock.............7
1.10 Lost, Stolen or Destroyed Certificates..........................7
1.11 Tax and Accounting Consequences.................................8
1.12 Taking of Necessary Action; Further Action......................8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................8
2.1 Organization of the Company.....................................8
2.2 Company Capital Structure.......................................9
2.3 Subsidiaries....................................................9
2.4 Authority......................................................10
2.5 Company Financial Statements...................................11
2.6 No Undisclosed Liabilities.....................................12
2.7 No Changes.....................................................12
2.8 Tax and Other Returns and Reports..............................13
2.9 Restrictions on Business Activities............................15
2.10 Title to Properties; Absence of Liens and Encumbrances.........15
2.11 Intellectual Property..........................................15
2.12 Agreements, Contracts and Commitments..........................19
2.13 Interested Party Transactions..................................20
2.14 Compliance with Laws...........................................21
2.15 Litigation.....................................................21
2.16 Insurance......................................................21
2.17 Minute Books...................................................21
2.18 Environmental Matters..........................................21
2.19 Brokers' and Finders' Fees; Third Party Expenses...............22
2.20 Employee Matters and Benefit Plans.............................23
2.21 Employees......................................................26
2.22 Governmental Authorizations and Licenses.......................26
2.23 Pooling of Interests...........................................26
2.24 Representations Complete.......................................26
-i-
<PAGE>
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.........27
3.1 Organization, Standing and Power...............................27
3.2 Authority......................................................27
3.3 Capital Structure..............................................27
3.4 SEC Documents; Parent Financial Statements.....................28
3.5 No Material Adverse Change.....................................28
3.6 Litigation.....................................................28
3.7 Pooling of Interests...........................................29
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME..............................29
4.1 Conduct of Business of the Company.............................29
4.2 No Solicitation................................................31
ARTICLE V ADDITIONAL AGREEMENTS.............................................33
5.1 Sale and Registration of Shares; Stockholder Matters...........33
5.2 Access to Information..........................................34
5.3 Confidentiality................................................35
5.4 Expenses.......................................................35
5.5 Public Disclosure..............................................35
5.6 Consents.......................................................35
5.7 FIRPTA Compliance..............................................35
5.8 Commercially Reasonable Efforts................................35
5.9 Notification of Certain Matters................................36
5.10 Certain Benefit Plans..........................................36
5.11 Pooling Accounting.............................................36
5.12 Affiliate Agreements...........................................36
5.13 Voting Agreements..............................................37
5.14 Additional Documents and Further Assurances....................37
5.15 Registration Statement on Form S-8.............................37
5.16 Nasdaq National Market Listing.................................37
5.17 Company's Independent Accountants..............................37
5.18 Indemnification Continuation...................................37
5.19 Tax Matters....................................................37
5.20 Stockholder Certificates; Information on Company Shareholders..38
ARTICLE VI CONDITIONS TO THE MERGER.........................................38
6.1 Conditions to Obligations of Each Party to Effect the Merger...38
6.2 Additional Conditions to Obligations of the Company............38
ARTICLE VII ESCROW..........................................................41
7.1 Escrow Period..................................................41
7.2 Escrow Arrangements............................................41
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..............................47
8.1 Termination....................................................47
-ii-
<PAGE>
8.2 Effect of Termination..........................................48
8.3 Amendment......................................................48
8.4 Extension; Waiver..............................................48
ARTICLE IX GENERAL PROVISIONS...............................................49
9.1 Survival of Representations, Warranties and Agreements.........49
9.2 Notices........................................................49
9.3 Interpretation.................................................50
9.4 Counterparts...................................................50
9.5 Entire Agreement; Assignment...................................50
9.6 Severability...................................................50
9.7 Other Remedies.................................................51
9.8 Governing Law..................................................51
9.9 Arbitration....................................................51
9.10 Rules of Construction..........................................52
9.11 Specific Performance...........................................52
-iii-
<PAGE>
INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
- ------- -----------
Exhibit A Form of Stockholder Certificate
Exhibit B Form of Declaration of Registration Rights
Exhibit C-1 Form of Letter to OMNES
Exhibit C-2 Form of Letter to IONA Technologies Inc.
Exhibit C-3 Form of Letter to NSI
Exhibit D Form of Company Affiliate Agreement
Exhibit E Form of Parent Affiliate Agreement
Exhibit F Form of Shareholder Voting Agreement
Exhibit G Form of Legal Opinion of Counsel to Parent
Exhibit H Form of Legal Opinion of Counsel to the Company
-iv-
<PAGE>
INDEX OF SCHEDULES
SCHEDULE DESCRIPTION
- -------- -----------
2.2(a) Shareholder List
2.2(b) Option List
2.3 Subsidiaries of the Company
2.4 Governmental and Third Party Consents
2.5 Company Financials
2.6 Undisclosed Liabilities
2.7 No Changes
2.8 Tax Returns and Audits
2.9 Restrictions on Business Activities
2.10(a) Leased Real Property
2.10(b) Liens on Property
2.11(b) Company Registered Intellectual Property
2.11(d) Intellectual Property Developed or Created by any Person
other than the Company without Written Agreement
2.11(e) Transferred Intellectual Property
2.11(g) Incoming Intellectual Property Licenses
2.11(h) Obligations Regarding Intellectual Property
2.11(j) Necessary Actions to Preserve Intellectual Property Rights
2.12(a) Agreements, Contracts and Commitments
2.12(b) Breaches
2.13 Interested Party Transactions
2.15 Litigation
2.16 Insurance
2.19 Brokers/Finders Fees; Expenses of Transaction
2.20(b) Employee Benefit Plans and Employee Agreements
2.20(d) Employee Plan Compliance
2.20(g) Post Employment Obligations
2.20(i)(i) Effect of Transaction
2.20(i)(ii) Excess Parachute Payments
2.20(k) Labor
3.2 Certain Consents, Waivers and Approvals
5.6 Certain Third Party Consents
5.12 Company Affiliate List
5.13 Stockholders Signing Voting Agreements
6.2(c) Third Party Consents Required of Parent
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT") is made and
entered into as of November 24, 1997 by and among Netscape Communications
Corporation, a Delaware corporation ("PARENT"), Knife Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of Parent ("MERGER SUB"), and
KIVA Software Corporation, a California corporation (the "COMPANY").
RECITALS
A. The Boards of Directors of each of the Company, Parent and Merger Sub
believe it is in the best interests of each company and their respective
stockholders that Parent acquire the Company through the statutory merger of
Merger Sub with and into the Company (the "MERGER") and, in furtherance thereof,
have approved the Merger.
B. Pursuant to the Merger, among other things, and subject to the terms
and conditions of this Agreement, all of the issued and outstanding shares of
capital stock of the Company (including all shares of Common Stock of the
Company issued upon conversion of all Preferred Stock of the Company immediately
prior to the closing of the Merger) ("COMPANY CAPITAL STOCK") shall be converted
into the right to receive shares of voting Common Stock of Parent ("PARENT
COMMON STOCK"), and all outstanding options to purchase shares of Common Stock
of the Company shall be assumed by Parent.
C. A portion of the shares of Parent Common Stock otherwise issuable by
Parent in connection with the Merger shall be placed in escrow by Parent, and
the release of such amount shall be contingent upon certain events and
conditions, all as set forth in Article VII hereof.
D. The Company, Parent and Merger Sub desire to make certain
representations and warranties and other agreements in connection with the
Merger.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
intending to be legally bound hereby the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the California General Corporation Law ("CALIFORNIA
LAW") and Delaware General Corporation Law ("DELAWARE LAW"), Merger Sub shall be
merged with and into the Company, the separate corporate existence of Merger Sub
shall cease, and the Company shall continue as the surviving
<PAGE>
corporation and as a wholly-owned subsidiary of Parent. The Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "SURVIVING CORPORATION."
1.2 EFFECTIVE TIME. Unless this Agreement is earlier terminated
pursuant to Section 8.1, the closing of the Merger (the "CLOSING") will take
place as promptly as practicable, but no later than two (2) business days
following satisfaction or waiver of the conditions set forth in Article VI, at
the offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo
Alto, California, unless another place or time is agreed to by Parent and the
Company. The date upon which the Closing actually occurs is herein referred to
as the "CLOSING DATE." On the Closing Date, the parties hereto shall cause
the Merger to be consummated by filing an Agreement or Certificate of Merger
(or like instrument) with the Secretary of State of the State of California
and the Secretary of State of the State of Delaware (the "MERGER AGREEMENT"),
in accordance with the relevant provisions of applicable law (the later of (i)
the time of confirmation by the Secretary of State of California of such
filing (ii) the time of confirmation of the Secretary of State of Delaware of
such filing or (iii) such later time as may be provided in the Merger
Agreement, being referred to herein as the "EFFECTIVE TIME").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of California Law and
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
1.4 ARTICLES OF INCORPORATION; BYLAWS.
(a) Unless otherwise determined by Parent prior to the Effective
Time, the Articles of Incorporation of the Surviving Corporation at the
Effective Time shall be as provided in the Merger Agreement until thereafter
amended as provided by law and such Articles of Incorporation.
(b) Unless otherwise determined by Parent, the Merger Agreement
shall provide that the Bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the Bylaws of the Surviving Corporation as of the
Effective Time until thereafter amended.
1.5 DIRECTORS AND OFFICERS. The Merger Agreement shall provide that
the director(s) of Merger Sub immediately prior to the Effective Time shall be
the initial director(s) of the Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation. The Merger Agreement shall provide that the officers of Merger Sub
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, each to hold office in accordance with the Bylaws of the
Surviving Corporation.
1.6 MAXIMUM SHARES TO BE ISSUED; EFFECT ON CAPITAL STOCK. The maximum
number of shares of Parent Common Stock to be issued (including Parent Common
Stock to be reserved for issuance upon exercise of any of the Company's options
to be assumed by Parent) in exchange for the acquisition by Parent of all
outstanding Company Capital Stock shall be equal to the Aggregate Parent Share
Number
-2-
<PAGE>
(as defined in Section 1.6(g)(iii)). No adjustment shall be made in the
number of shares of Parent Common Stock issued in the Merger as a result of
any cash proceeds received by the Company from the date hereof to the
Effective Time pursuant to the exercise of options, warrants or other rights
to acquire Company Capital Stock. Subject to the terms and conditions of this
Agreement, as of the Effective Time, by virtue of the Merger and without any
action on the part of Merger Sub, the Company or the holder of any shares of
the Company Capital Stock, the following shall occur:
(a) CONVERSION OF COMPANY COMMON STOCK. Each share of Common
Stock of the Company (including all shares of Common Stock of the Company issued
upon conversion of all Preferred Stock of the Company ("COMPANY PREFERRED
STOCK") and upon exercise of all outstanding warrants (the "WARRANTS")
immediately prior to the Closing) (collectively, the "COMPANY COMMON STOCK")
issued and outstanding immediately prior to the Effective Time (other than any
shares of Company Stock to be canceled pursuant to Section 1.6(b) and any
Dissenting Shares (as defined and to the extent provided in Section 1.7(a)) will
be canceled and extinguished and be converted automatically into the right to
receive that number of shares of Parent Common Stock equal to the Exchange Ratio
(as defined in Section 1.6(g)(v) below) upon surrender of the certificate
representing such share of Company Common Stock in the manner provided in
Section 1.8.
(b) CANCELLATION OF COMPANY-OWNED STOCK. Each share of Company
Capital Stock owned by the Company or any direct or indirect wholly-owned
subsidiary of the Company immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof.
(c) STOCK OPTIONS. At the Effective Time, all options to
purchase Company Common Stock then outstanding under the Company's 1995 Stock
Option Plan (the "OPTION PLAN") or otherwise shall be assumed by Parent in
accordance with provisions described below.
(i) At the Effective Time, each outstanding option to
purchase shares of Company Common Stock (each a "COMPANY OPTION") under the
Option Plan or otherwise, whether vested or unvested, shall be, in connection
with the Merger, assumed by Parent. Each Company Option so assumed by Parent
under this Agreement shall continue to have, and be subject to, the same terms
and conditions set forth in the Option Plan and/or as provided in the respective
option agreements governing such Company Option immediately prior to the
Effective Time, except that (A) such Company Option shall be exercisable (when
vested) for that number of whole shares of Parent Common Stock equal to the
product of the number of shares of Company Common Stock that were issuable upon
exercise of such Company Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down (in the case of Company Options
granted under the Option Plan) to the nearest whole number of shares of Parent
Common Stock and (B) the per share exercise price for the shares of Parent
Common Stock issuable upon exercise of such assumed Company Option shall be
equal to the quotient determined by dividing the exercise price per share of
Company Common Stock at which such Company Option was exercisable immediately
prior to the Effective Time by the Exchange Ratio, rounded up to the nearest
whole cent.
(ii) It is the intention of the parties that the Company
Options assumed by Parent qualify following the Effective Time as incentive
stock options as defined in Section 422 of the
-3-
<PAGE>
Internal Revenue Code of 1986, as amended (the "CODE"), to the extent the
Company Options qualified as incentive stock options immediately prior to the
Effective Time.
(iii) Promptly following the Effective Time, Parent will
issue to each holder of an outstanding Company Option a document evidencing the
foregoing assumption of such Company Option by Parent.
(d) CAPITAL STOCK OF MERGER SUB. Each share of Common Stock of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into and exchanged for one validly issued, fully paid and
nonassessable share of Common Stock of the Surviving Corporation. Each stock
certificate of Merger Sub evidencing ownership of any such shares of Common
Stock of Merger Sub shall, as of the Effective Time, evidence ownership of such
shares of Common Stock of the Surviving Corporation.
(e) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
Company Capital Stock), reorganization, recapitalization or other like change
with respect to Company Capital Stock that occurs or has a record date after the
date hereof and prior to the Effective Time.
(f) FRACTIONAL SHARES. No fraction of a share of Parent Common
Stock will be issued, but in lieu thereof, each holder of shares of Company
Capital Stock who would otherwise be entitled to a fraction of a share of Parent
Common Stock (after aggregating all fractional shares of Parent Common Stock to
be received by such holder) shall be entitled to receive, without any interest,
from Parent an amount of cash (rounded to the nearest whole cent) equal to the
product of (i) such fraction, multiplied by (ii) the average closing price of a
share of Parent Common Stock for the twenty (20) consecutive trading days ending
on the trading day immediately prior to the Closing Date, as reported on the
Nasdaq National Market.
(g) DEFINITIONS.
(i) AGGREGATE COMPANY COMMON NUMBER. The "AGGREGATE
COMPANY COMMON NUMBER" shall mean the aggregate number of shares of Company
Common Stock outstanding immediately prior to the Effective Time (including all
shares of Company Common Stock to be issued upon conversion of all Company
Preferred Stock and following exercise of the Warrants.)
(ii) AGGREGATE COMPANY OPTION NUMBER. The "AGGREGATE
COMPANY OPTION NUMBER" shall mean the aggregate number of shares of Company
Common Stock issuable upon the exercise of all outstanding Company options
(vested and unvested), warrants and other rights to acquire shares of Company
Common Stock immediately prior to the Effective Time.
(iii) AGGREGATE PARENT SHARE NUMBER. The "AGGREGATE
PARENT SHARE NUMBER" shall be the number of shares of Parent Common Stock
determined by dividing (A) $188 million by (B) the average closing sale price of
a share of Parent Common Stock, as reported on The
-4-
<PAGE>
Nasdaq National Market, for the twenty (20) most recent trading days ending on
the trading day immediately preceding the Closing Date (the "AVERAGE PRICE");
provided, however, that if the Average Price is greater than $40.00, the
Average Price shall be deemed to be $40.00; and if the Average Price is less
than $25.00, the Average Price shall be deemed to be $25.00 (which limits on
the Average Price are referred to herein as the "AVERAGE PRICE LIMITS"). The
Average Price and Average Price Limits shall (as applicable) be adjusted to
reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Parent
Common Stock), reorganization, recapitalization or other like change with
respect to Parent Common Stock that occurs or has a record date after the date
hereof and prior to the Effective Time.
(iv) ESCROW AMOUNT. The "ESCROW AMOUNT" shall be a
number of shares of Parent Common Stock obtained by multiplying (x) the
Aggregate Company Common Number by (y) the Exchange Ratio by (z) 0.10.
(v) EXCHANGE RATIO. The "EXCHANGE RATIO" shall mean the
quotient obtained by dividing (x) the Aggregate Parent Share Number by (y) the
sum of (A) the Aggregate Company Common Number, plus (B) the Aggregate Company
Option Number.
1.7 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of Company Capital Stock held by a holder who has demanded
and perfected appraisal or dissenters' rights for such shares in accordance with
California Law and who, as of the Effective Time, has not effectively withdrawn
or lost such appraisal or dissenters' rights ("DISSENTING SHARES") shall not be
converted into or represent a right to receive Parent Common Stock pursuant to
Section 1.6, but the holder thereof shall only be entitled to such rights as are
granted by California Law.
(b) Notwithstanding the provisions of subsection (a), if any
holder of shares of Company Capital Stock who is otherwise entitled to exercise
dissenters' rights under California Law shall effectively withdraw or lose
(through failure to perfect or otherwise) such dissenters' rights, then, as of
the later of the Effective Time and the occurrence of such event, such holder's
shares shall automatically be converted into and represent only the right to
receive Parent Common Stock and payment for any fractional share as provided in
Section 1.6(f), without interest thereon, upon surrender of the certificate
representing such shares.
(c) The Company shall give Parent (i) prompt notice of any
written demands for the exercise of dissenters' rights in respect of any shares
of Company Capital Stock, withdrawals of such demands, and any other instruments
served pursuant to California Law (including without limitation instruments
concerning appraisal or dissenters' rights) and received by the Company and
(ii) the opportunity to participate in all negotiations and proceedings with
respect to such demands. The Company shall not, except with the prior written
consent of Parent, voluntarily make any payment with respect to any demands for
the exercise of dissenters' rights in respect of any shares of Company Capital
Stock or offer to settle or settle any such demands.
-5-
<PAGE>
1.8 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Effective Time, Parent shall
designate a bank or trust company with assets of not less than $500 million to
act as exchange agent (the "EXCHANGE AGENT") in the Merger.
(b) PARENT TO PROVIDE COMMON STOCK. As soon as practicable
after the Effective Time, Parent shall make available to the Exchange Agent for
exchange in accordance with this Article I, (i) the aggregate number of shares
of Parent Common Stock issuable pursuant to Section 1.6 in exchange for
outstanding shares of Company Capital Stock, and (ii) cash for fractional shares
in the amount described in Section 1.6(f); provided that, on behalf of the
holders of Company Capital Stock, Parent shall deposit into an escrow account a
number of shares of Parent Common Stock equal to the Escrow Amount out of the
aggregate number of shares of Parent Common Stock otherwise issuable pursuant to
Section 1.6. The portion of the Escrow Amount contributed on behalf of each
holder of Company Capital Stock shall be in proportion to the aggregate number
of shares of Parent Common Stock which such holder would otherwise be entitled
to receive under Section 1.6 by virtue of ownership of outstanding shares of
Company Capital Stock.
(c) EXCHANGE PROCEDURES. As soon as practicable after the
Effective Time, Parent shall cause to be mailed to each holder of record of a
certificate or certificates (the "CERTIFICATES") which immediately prior to the
Effective Time represented outstanding shares of Company Capital Stock and which
shares were converted into the right to receive shares of Parent Common Stock
pursuant to Section 1.6, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Parent, together with such letter
of transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing the number of whole
shares of Parent Common Stock (less the number of shares of Parent Common Stock,
if any, to be deposited in the Escrow Fund on such holder's behalf pursuant to
Article VII hereof), plus cash in lieu of fractional shares in accordance with
Section 1.6(f), to which such holder is entitled pursuant to Section 1.6, and
the Certificate so surrendered shall forthwith be canceled. As soon as
practicable after the Effective Time, and subject to and in accordance with the
provisions of Article VII hereof, Parent shall cause to be distributed to the
Escrow Agent (as defined in Article VII) a certificate or certificates
representing that number of shares of Parent Common Stock equal to the Escrow
Amount, which certificate shall be registered in the name of the Escrow Agent.
Such shares shall be beneficially owned by the holders on whose behalf such
shares were deposited in the Escrow Fund and shall be available to compensate
Parent as provided in Article VII. Notwithstanding the provisions of
Section 1.6(a), from the Closing and until so surrendered, each outstanding
Certificate that, prior to the Effective Time, represented shares of Company
Capital Stock will be deemed from and after the Effective Time, for all
corporate purposes, other than the payment of dividends (subject to
Section 1.8(d)), to evidence the ownership of the number of full shares of
Parent Common Stock into which such shares of Company
-6-
<PAGE>
Capital Stock shall have been so converted and the right to receive an amount
in cash in lieu of the issuance of any fractional shares in accordance with
Section 1.6.
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions with respect to Parent Common Stock declared or
made with a record date after the Effective Time will be paid to the holder of
any unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby until the holder of record of such Certificate shall
surrender such Certificate. Subject to applicable law, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore payable with respect to such whole shares of Parent Common Stock.
(e) TRANSFERS OF OWNERSHIP. If any certificate for shares of
Parent Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of a certificate
for shares of Parent Common Stock in any name other than that of the registered
holder of the Certificate surrendered, or established to the satisfaction of
Parent or any agent designated by it that such tax has been paid or is not
payable.
(f) NO LIABILITY. Notwithstanding anything to the contrary in
this Section 1.8, none of the Exchange Agent, the Surviving Corporation or any
party hereto shall be liable to a holder of shares of Parent Common Stock or
Company Capital Stock for any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
1.9 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Parent Common Stock issued upon the surrender for exchange of shares of Company
Capital Stock in accordance with the terms hereof (including any cash paid in
respect thereof) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Capital Stock, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
shares of Company Capital Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article I.
1.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates evidencing shares of Company Capital Stock shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Certificates, upon the making of an affidavit of that fact
by the holder thereof, such shares of Parent Common Stock and cash for
fractional share, if any, as may be required pursuant to Section 1.6; provided,
however, that Parent may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made
-7-
<PAGE>
against Parent or the Exchange Agent with respect to the Certificates alleged
to have been lost, stolen or destroyed.
1.11 TAX AND ACCOUNTING CONSEQUENCES. It is intended by the parties
hereto that the Merger shall (i) constitute a reorganization within the meaning
of Section 368 of the Code and (ii) qualify for accounting treatment as a
pooling of interests. The parties to this Agreement hereby adopt this Agreement
as a "plan of reorganization" within the meaning of Sections 1.368-2(g) and
1.368-3(a) of the United States Treasury Regulations. No party to this
Agreement shall take any action inconsistent with such treatment.
1.12 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in a document dated as of the date hereof referring
specifically to the representations, warranties or covenants in this Agreement
which is delivered by the Company to Parent immediately prior to the execution
of this Agreement (the "COMPANY SCHEDULES"), the Company represents and warrants
to Parent and Merger Sub as set forth below. Any disclosure included in the
Company Schedules with respect to a particular representation and warranty shall
be deemed to be a disclosure with respect to all of the Company's
representations and warranties to which it applies, provided that the
application of such disclosure to such other representations and warranties is
either (i) readily apparent from the nature of such disclosure, or
(ii) reasonably indicated in the section of the Company Schedules where such
disclosure is actually made.
2.1 ORGANIZATION OF THE COMPANY. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. The Company has the corporate power to own its properties and to
carry on its business as now being conducted. The Company is duly qualified to
do business and in good standing as a foreign corporation in each jurisdiction
in which the failure to be so qualified would have a material adverse effect on
the business, financial condition, results of operations, or assets (including
intangible assets) (hereinafter referred to as a "MATERIAL ADVERSE EFFECT") of
the Company, provided, however, that a Material Adverse Effect shall not include
any adverse effect following the date of this Agreement on the business,
financial condition or results of operations of the Company that is solely
attributable to the Merger contemplated by this Agreement or the announcement of
the Merger. The Company has delivered a true and correct copy of its Articles
of Incorporation and Bylaws, each as amended to date, to Parent.
-8-
<PAGE>
2.2 COMPANY CAPITAL STRUCTURE.
(a) The authorized capital stock of the Company consists of
17,000,000 shares of authorized Common Stock, of which 6,418,816 shares are
issued and outstanding on the date of this Agreement, 4,754,688 shares of
authorized Series A Preferred Stock ("SERIES A PREFERRED"), of which 4,683,071
shares are issued and outstanding on the date of this Agreement, and 2,850,000
shares of authorized Series B Preferred Stock ("SERIES B PREFERRED"), of which
2,791,907 shares are issued and outstanding on the date of this Agreement. As
of the date of this Agreement, the Company Capital Stock is held of record by
the persons, with the addresses of record and in the amounts, set forth on
SCHEDULE 2.2(A). All outstanding shares of Company Capital Stock are duly
authorized, validly issued, fully paid and non-assessable and not subject to
preemptive rights created by statute, the Articles of Incorporation or Bylaws of
the Company or any agreement to which the Company is a party or by which it is
bound.
(b) The Company has reserved 3,500,000 shares of Common Stock
for issuance to employees and consultants pursuant to the Option Plan, of
which on the date of this Agreement 1,776,099 shares are subject to
outstanding, unexercised options, 472,628 shares remain available for future
grant and 1,251,273 shares have been issued pursuant to the exercise of
options issued under the Option Plan. The Company has reserved (i) sufficient
shares of Common Stock for issuance upon conversion of the Series A Preferred
and Series B Preferred (including any such Preferred stock to be issued on
exercise of warrants, (ii) 603,000 shares of Common Stock for issuance upon
exercise of outstanding Company Options granted outside the Option Plan and
(iii) 28,383 shares of Series A Preferred Stock for issuance upon exercise of
the Warrants. SCHEDULE 2.2(b) sets forth for each outstanding Company Option
or Warrant the name of the holder of such option or Warrant, the domicile
address of such holder, the number of shares of Common Stock subject to such
option or Warrant, the exercise price of such option or Warrant and the
vesting schedule for such option or Warrant, including the extent vested on
the date of this Agreement and whether the exercisability of such option or
Warrant will be accelerated and become exercisable by reason of the
transactions contemplated by this Agreement. Except for the Company Options
and Warrants described in SCHEDULE 2.2(b), there are no options, warrants,
calls, rights, commitments or agreements of any character, written or oral, to
which the Company is a party or by which it is bound obligating the Company to
issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of the capital stock of the Company
or obligating the Company to grant, extend, accelerate the vesting of, change
the price of, otherwise amend or enter into any such option, warrant, call,
right, commitment or agreement. The holders of Company Capital Stock and
Options and Warrants have been or will be properly given, or shall have
properly waived, any required notice prior to the Merger, and all such rights
will be terminated at or prior to the Effective Time.
2.3 SUBSIDIARIES.
(a) SCHEDULE 2.3 sets forth each subsidiary of the Company (the
"SUBSIDIARIES"). Except for the Subsidiaries, the Company has no other
subsidiaries and does not otherwise own or control, directly or indirectly, any
other corporation, association or business entity. With respect to each
Subsidiary, SCHEDULE 2.3 lists the date of incorporation (or local law
equivalent), all shareholders, the
-9-
<PAGE>
number of shares held by each shareholder, the Board of Directors (or local
law equivalent) of such Subsidiary and the officers (or local law equivalent)
of such Subsidiary.
(b) None of the Subsidiaries (i) are "Significant Subsidiaries"
within the meaning of Rule 405 of the 1933 Act, (ii) own any material assets or
have incurred any material liabilities, or (iii) have entered into any material
agreements or other commitments of any kind or nature.
(c) Each Subsidiary that is a corporation: (i) is a corporation
duly organized and validly existing under the laws of its jurisdiction of
incorporation, (ii) has all necessary corporate power and authority to own,
operate or lease the properties and assets owned, operated or leased by such
Subsidiary and to carry on its business as it has been and is currently
conducted by such Subsidiary and (iii) is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the properties
owned or leased by it or the operation of its business makes such licensing or
qualification necessary, except for, in each of clauses (i), (ii) and (iii),
such failures which, when taken together with all other such failures, would not
have a Material Adverse Effect. Each Subsidiary that is not a corporation:
(i) is duly organized and validly existing under the laws of its jurisdiction of
organization, (ii) has all necessary power and authority to own, operate or
lease the material properties and material assets owned, operated or leased by
such Subsidiary and to carry on its business as it has been and is currently
conducted by such Subsidiary and (iii) is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the properties
owned or leased by it or the operation of its business makes such licensing or
qualification necessary.
(d) Other than directors qualifying shares in foreign
jurisdictions, all the outstanding shares of capital stock of each Subsidiary
that is a corporation are validly issued, fully paid, nonassessable and free of
preemptive rights and are owned by the Company, whether directly or indirectly,
free and clear of all encumbrances.
(e) There are no options, warrants, convertible securities, or
other rights, agreements, arrangements or commitments of any character to which
Company or any Subsidiary is a party obligating the Company or any Subsidiary to
issue or sell any shares of capital stock of, or any other interest in, any
Subsidiary.
(f) No Subsidiary has taken any action that in any respect
materially conflicts with, constitutes a material default under or results in a
material violation of any provision of its charter or bylaws (or similar
organizational documents). True and complete copies of the charter and bylaws
(or similar organizational documents), in each case as in effect on the date
hereof, of each Subsidiary have been made available or delivered by the Company
to Parent.
2.4 AUTHORITY. Subject only to the requisite approval of the Merger
and this Agreement by the Company's shareholders, the Company has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The vote required of the Company's
shareholders to duly approve the Merger and this Agreement is that number of
shares as would constitute a majority of the outstanding shares of the Company's
Common Stock and a majority of the outstanding shares of the Company's Preferred
Stock. The execution and delivery of this
-10-
<PAGE>
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company, subject only to the approval of the Merger and this Agreement by the
Company's shareholders. The Company's Board of Directors has unanimously
approved the Merger and this Agreement. This Agreement has been duly executed
and delivered by the Company and constitutes the valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies. Except as set forth on SCHEDULE 2.4, subject only to the approval
of the Merger and this Agreement by the Company's shareholders, the execution
and delivery of this Agreement by the Company does not, and, as of the
Effective Time, the consummation of the transactions contemplated hereby will
not, materially conflict with, or result in any material violation of, or
material default under (with or without notice or lapse of time, or both), or
give rise to a right of termination, cancellation or acceleration of any
material obligation or loss of any material benefit under (any such event, a
"CONFLICT") (i) any provision of the Articles of Incorporation or Bylaws of
the Company or (ii) any mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or its properties or assets. No consent, waiver, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other federal, state, county, local or
foreign governmental authority, instrumentality, agency or commission
("GOVERNMENTAL ENTITY") or any third party (so as not to trigger any Conflict)
is required by or with respect to the Company in connection with the Company's
execution and delivery of this Agreement or its consummation of the
transactions contemplated hereby, except (i) for the filing of the Merger
Agreement with the California Secretary of State and the Delaware Secretary of
State, (ii) for such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws, (iii) for such other consents, waivers,
authorizations, filings, approvals and registrations which are set forth on
SCHEDULE 2.4, and (iv) where the failure to obtain or make any such consent,
waiver, authorization, filing, approval or registration would not have a
Material Adverse Effect.
The Company shall have obtained, at or prior to Closing, (i) the consents,
waivers and approvals listed on the attached SCHEDULE 5.6 and (ii) executed
letters from OMNES, IONA Technologies Inc. and Network Solutions Inc.
substantially in the form attached hereto as EXHIBITS C-1, C-2 and C-3. In
addition, the Company shall have obtained at or prior to Closing any consents,
waivers or approvals required by Parent prior to Closing under any of the
Contracts as may be required in connection with the Merger so as to preserve all
rights of and benefits to the Company thereunder.
2.5 COMPANY FINANCIAL STATEMENTS.
(a) SCHEDULE 2.5 sets forth the Company's audited balance sheet
as of June 30, 1997 (the "BALANCE SHEET") and the related audited statements of
operations, shareholders' equity and cash flows for the year then ended and the
footnotes thereto, as well as the Company's unaudited balance sheet as of
September 30, 1997 and the related unaudited statements of operations,
stockholders' equity and cash flows for the nine month period then ended and the
footnotes thereto (collectively, the "COMPANY
-11-
<PAGE>
FINANCIALS"). The Company Financials are correct in all material respects and
have been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a basis consistent throughout the periods indicated and
consistent with each other, except that the unaudited financial statements do
not contain any footnotes as required by GAAP. The Company Financials present
fairly in all material respects the financial condition and operating results
of the Company as of the dates and during the periods indicated therein, which
such adjustments are not expected to be material in amount or significance.
2.6 NO UNDISCLOSED LIABILITIES. Except as set forth in SCHEDULE 2.6,
the Company does not have any liability, indebtedness, obligation, expense,
claim, deficiency, guaranty or endorsement of any type, whether accrued,
absolute, contingent, matured, unmatured or other (whether or not required to be
reflected in financial statements in accordance with GAAP), except for (i) those
liabilities which are reflected in the Balance Sheet, and (ii) those liabilities
which were incurred after June 30, 1997 in the ordinary course of the Company's
business consistent with past practices and do not exceed $10,000 individually
or $25,000 in the aggregate.
2.7 NO CHANGES. Except as set forth in SCHEDULE 2.7, since the date of
the Balance Sheet, there has not been, occurred or arisen any:
(a) transaction by the Company or any Subsidiary except in the
ordinary course of business consistent with past practices;
(b) amendments or changes to the Articles of Incorporation or
Bylaws of the Company;
(c) capital expenditure or commitment by the Company, either
individually or in the aggregate, exceeding $25,000;
(d) destruction of, damage to or loss of any material assets,
business or customer of the Company (whether or not covered by insurance) that
has had or could reasonably be expected to have a Material Adverse Effect;
(e) significant labor trouble or claim of wrongful discharge or
other unlawful labor practice or action;
(f) change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by the Company;
(g) revaluation by the Company of any of its assets which
individually or in the aggregate would be material;
(h) declaration, setting aside or payment of a dividend or other
distribution with respect to the capital stock of the Company, or any direct or
indirect redemption, purchase or other acquisition by the Company of any capital
stock of the Company;
-12-
<PAGE>
(i) increase in the salary or other compensation payable or to
become payable to any of its officers, directors, employees or advisors, or the
declaration, payment or commitment or obligation of any kind for the payment by
the Company of a bonus or other additional salary or compensation to any such
person except in the ordinary course of business consistent with past practices
or as otherwise contemplated by this Agreement;
(j) sale, lease, license or other disposition of any of the
assets or properties of the Company, except in the ordinary course of business
consistent with past practices;
(k) amendment or termination of any material contract, agreement
or license to which the Company is a party or by which it is bound;
(l) loan by the Company to any person or entity, incurring by
the Company of any indebtedness for borrowed money, guaranteeing by the Company
of any indebtedness of any other party, issuance or sale of any debt securities
of the Company or guaranteeing of any debt securities of others, except for
loans made and indebtedness incurred by the Company which do not exceed $10,000
individually or $25,000 in the aggregate in the ordinary course of business,
consistent with past practices;
(m) waiver or release of any material right or claim of the
Company, including any write-off or other compromise of any account receivable
of the Company except in the ordinary course of business, consistent with past
practices;
(n) commencement or notice or, to the Company's knowledge,
threat of commencement of any lawsuit or proceeding against or investigation of
the Company or its affairs;
(o) issuance or sale by the Company of any of its shares of
capital stock, or securities exchangeable, convertible or exercisable therefor,
or of any other of its securities;
(p) material change in pricing or royalties set or charged by
the Company to its customers or licensees or in pricing or royalties set or
charged by persons who have licensed Company Intellectual Property Rights to the
Company;
(q) event or condition of any character that has or could be
reasonably expected to have a Material Adverse Effect; or
(r) agreement by the Company to do any of the things described
in the preceding clauses (a) through (q) (other than negotiations with Parent
and its representatives regarding the transactions contemplated by this
Agreement).
2.8 TAX AND OTHER RETURNS AND REPORTS.
(a) DEFINITION OF TAXES. For the purposes of this Agreement,
"TAX" or, collectively, "TAXES," means any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions
and liabilities, including taxes based upon or measured by gross receipts,
-13-
<PAGE>
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
(b) TAX RETURNS AND AUDITS. Except as set forth in
SCHEDULE 2.8:
(i) The Company as of the Effective Time will have
prepared and filed all required federal, state, local and foreign returns,
estimates, information statements and reports ("RETURNS") relating to any and
all Taxes concerning or attributable to the Company or its operations within the
time prescribed by applicable law.
(ii) The Company as of the Effective Time: (A) will have
paid or accrued all Taxes it is required to pay or accrue and (B) will have
withheld with respect to its employees all federal and state income taxes, FICA,
FUTA and other Taxes required to be withheld.
(iii) There is no Tax deficiency outstanding, proposed or
assessed in writing against the Company, nor has the Company executed any waiver
of any statute of limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No audit or other examination of any Return of the
Company is currently in progress, nor has the Company been notified of any
request for such an audit or other examination.
(v) The Company does not have any liabilities for unpaid
federal, state, local and foreign Taxes which have not been accrued or reserved
against in accordance with GAAP on the Balance Sheet, whether asserted or
unasserted, contingent or otherwise, and the Company has no knowledge of any
basis for the assertion of any such liability attributable to the Company, its
assets or operations.
(vi) The Company has provided to Parent copies of all
federal and state income and all state sales and use Tax Returns for all periods
since the date of the Company's incorporation.
(vii) There are (and as of immediately following the
Effective Date there will be) no liens, pledges, charges, claims, security
interests or other encumbrances of any sort ("LIENS") on the assets of the
Company relating to or attributable to Taxes.
(viii) None of the Company's assets are treated as
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(ix) As of the Effective Time, there will not be any
contract, agreement, plan or arrangement, including but not limited to the
provisions of this Agreement, covering any employee or former employee of the
Company that, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to Section 280G or 162 of the
Code.
-14-
<PAGE>
(x) The Company has not filed any consent agreement
under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by the Company.
(xi) The Company is not a party to a tax sharing or
allocation agreement nor does the Company owe any amount under any such
agreement.
(xii) The Company is not, and has not been at any time, a
"United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code.
2.9 RESTRICTIONS ON BUSINESS ACTIVITIES. Except as set forth in
SCHEDULE 2.9, there is no agreement (non-compete or otherwise), commitment,
judgment, injunction, order or decree to which the Company is a party or
otherwise binding upon the Company which has or reasonably could be expected to
have the effect of materially prohibiting or materially impairing any business
practice of, or the conduct of business by, the Company, any acquisition of
property (tangible or intangible) by the Company, or the freedom of the Company
to engage in any line of business or to compete with any other person. Without
limiting the foregoing, the Company has not entered into any agreement under
which the Company is restricted from selling, licensing or otherwise
distributing any of its products to any class of customers, in any geographic
area, during any period of time or in any segment of the market.
2.10 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
(a) The Company owns no real property, nor has it ever owned any
real property. SCHEDULE 2.10(a) sets forth a list of all real property leased
by the Company, the name of the lessor, the date of the lease and each amendment
thereto and, the aggregate annual rental and/or other fees payable under any
such lease. All such current leases are in full force and effect, are valid and
effective in accordance with their respective terms, and there is not, under any
of such leases, any existing material default by the Company (or event which
with notice or lapse of time, or both, would constitute such a material
default).
(b) The Company has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Liens (as defined in Section 2.8(b)(vii)),
except as reflected in the Company Financials or in SCHEDULE 2.10(b) and except
for liens for Taxes not yet due and payable municipal and zoning ordinances,
easements for public utilities and such imperfections of title and encumbrances,
if any, which are not material in character, amount or extent, and which do not
materially detract from the value, or materially interfere with the present use,
of the property subject thereto or affected thereby.
2.11 INTELLECTUAL PROPERTY.
(a) For the purposes of this Agreement, the following terms have
the following definitions:
-15-
<PAGE>
"INTELLECTUAL PROPERTY" means any or all of the following and all rights
in, arising out of, or associated therewith: (i) all United States and foreign
patents and applications therefor and all reissues, divisions, renewals,
extensions, provisionals, continuations and continuations-in-part thereof
("PATENTS"); (ii) all inventions (whether patentable or not), invention
disclosures, improvements, trade secrets, proprietary information, know how,
technology, technical data and all documentation relating to any of the
foregoing; (iii) all copyrights, copyrights registrations and applications
therefor and all other rights corresponding thereto throughout the world; (iv)
all mask works, mask work registrations and applications therefor; (v) all
industrial designs and any registrations and applications therefor throughout
the world; (vi) all trade names, logos, common law trademarks and service marks;
trademark and service mark registrations and applications therefor and all
goodwill associated therewith throughout the world; (vii) all databases and data
collections and all rights therein throughout the world; and (viii) all computer
software including all source code, object code, firmware, development tools,
files, records and data, all media on which any of the foregoing is recorded;
(ix) any similar, corresponding or equivalent rights to any of the foregoing and
(x) all documentation related to any of the foregoing.
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual Property that
(i) is owned by (ii) is exclusively licensed to or (iii) was developed or
created by the Company or any subsidiary of the Company.
"REGISTERED INTELLECTUAL PROPERTY" shall mean all United States,
international and foreign: (i) patents, patent applications (including
provisional applications); (ii) registered trademarks, applications to register
trademarks, intent-to-use applications, or other registrations or applications
related to trademarks; (iii) registered copyrights and applications for
copyright registration; (iv) any mask work registrations and applications to
register mask works; and (v) any other Company Intellectual Property that is the
subject of an application, certificate, filing, registration or other document
issued by, filed with, or recorded by, any state, government or other public
legal authority.
(b) SCHEDULE 2.11(b) lists all Registered Intellectual
Property owned by, or filed in the name of, the Company or the Subsidiary (the
"COMPANY REGISTERED INTELLECTUAL PROPERTY") and lists any proceedings or actions
before any court, tribunal (including the United States Patent and Trademark
Office (the "PTO") or equivalent authority anywhere in the world) related to any
of the Company Registered Intellectual Property.
(c) Each item of Company Intellectual Property, including all
Company Registered Intellectual Property listed in SCHEDULE 2.11(b), is free and
clear of any Liens. The Company (i) to its knowledge is the exclusive owner of
all trademarks and trade names used in connection with the operation or conduct
of the business of the Company, including the sale of any products or technology
or the provision of any services by the Company and (ii) owns exclusively all
copyrighted works that are Company products (currently shipping and under
development) or other material works of authorship that the Company otherwise
purports to own.
(d) Except as set forth in SCHEDULE 2.11(d), to the extent that
any Intellectual Property has been developed or created by any person other than
the Company for which the Company has, directly or indirectly, paid, the Company
has a written agreement with such person with respect thereto
-16-
<PAGE>
and the Company thereby has obtained ownership of, and is the exclusive owner
of, all such Intellectual Property by operation of law or by valid assignment.
(e) Except as set forth in SCHEDULE 2.11(e), the Company has not
transferred ownership of or granted any material license of or material right to
use or authorized the retention of any material rights to use any Intellectual
Property that is or was Company Intellectual Property, to any other person.
(f) The Company owns or has a written license to all
Intellectual Property used in the conduct of its business as it currently is
conducted including, without limitation, products, technology or services
currently under development and the design, development, manufacture, use,
import and sale of the products, technology and services of the Company.
(g) Other than "shrink-wrap" and similar widely available
commercial end-user licenses, the contracts, licenses and agreements listed in
SCHEDULE 2.11(g) include all material contracts, licenses and agreements, to
which the Company is a party as of the date of this Agreement with respect to
any Intellectual Property of any person other than the Company. No person other
than the Company has ownership rights to improvements made by the Company in
Intellectual Property which has been licensed to the Company.
(h) SCHEDULE 2.11(h) lists all contracts, licenses and
agreements between the Company and any other person as of the date of this
Agreement wherein or whereby the Company has agreed to, or assumed, any material
obligation or duty to warrant, indemnify, reimburse, hold harmless, guaranty or
otherwise assume or incur any material obligation or liability or provide a
right of rescission with respect to the infringement or misappropriation by the
Company or such other person of the Intellectual Property of any person other
than the Company.
(i) (X) The operation of the business of the Company as it
is currently conducted (including, without limitation, products, technology or
services currently under development and the design, development, manufacture,
use, import and sale of the products, technology and services of the Company)
does not infringe or misappropriate the Intellectual Property (other than
Patents) of any person, or constitute unfair competition or trade practices
under the laws of any jurisdiction, and the Company has not received notice from
any person claiming that such operation or any act, product, technology or
service (including products, technology or services currently under development)
of the Company infringes or misappropriates the Intellectual Property (other
than Patents) of any person or constitutes unfair competition or trade practices
under the laws of any jurisdiction or is owned by any person (nor is the Company
aware of any basis therefor).
(Y) The operation of the Company's Business (as defined
below) does not and will not infringe or misappropriate the patents of any
person, and the Company has not received notice from any person claiming that
such operation or any act, product, technology or service (including
products, technology or services currently under development) of the Company
infringes or misappropriates the patents of any person (nor is the Company
aware of any basis therefor). The representations and warranties of this
Section 2.11(i)(Y) shall only apply to claims of infringement or
-17-
<PAGE>
misappropriation or violations arising from (i) the products or technology of
the Company existing as of the Closing Date and (ii) products or technology
under development as of the Closing Date up to and including the first
commercial release of any such products or technology. The term "BUSINESS"
means the operations of the Company as conducted as of the Closing Date,
including the manufacture, sale, licensing, copying, distribution or other
exploitation of any product or technology under development as of such dates.
(j) To the Company's knowledge, each item of Company Registered
Intellectual Property is valid and subsisting, all necessary registration,
maintenance and renewal fees in connection with such Registered Intellectual
Property have been paid and all necessary documents and certificates in
connection with such Company Registered Intellectual Property have been filed
with the relevant patent, copyright, trademark or other authorities in the
United States or foreign jurisdictions, as the case may be, for the purposes of
maintaining such Registered Intellectual Property. SCHEDULE 2.11(j) lists all
actions that must be taken by the Company within sixty (60) days of the Closing
Date, including the payment of any registration, maintenance or renewal fees or
the filing of any documents, applications or certificates for the purposes of
maintaining, perfecting or preserving or renewing any Company Intellectual
Property. In each case in which the Company has acquired ownership of any
Intellectual Property rights from any person, the Company has obtained an
assignment to all rights in such Intellectual Property.
(k) There are no material contracts, licenses or agreements
between the Company and any other person with respect to Company Intellectual
Property under which there is any material dispute known to the Company
regarding the scope of such agreement, or performance under such agreement
including with respect to any payments to be made or received by the Company
thereunder.
(l) To the knowledge of the Company, no person is infringing or
misappropriating any Company Intellectual Property.
(m) The Company has taken reasonable steps in accordance with
normal industry practice to protect the Company's rights in confidential
information and trade secrets of the Company or provided by any other person to
the Company. Without limiting the foregoing, the Company has and enforces a
policy requiring each employee, consultant and contractor to execute proprietary
information, confidentiality and assignment agreements substantially in the
Company's standard forms.
(n) No Company Intellectual Property or product, technology or
service of the Company is subject to any proceeding or outstanding decree,
order, judgment, agreement or stipulation involving the Company that restricts
in any manner the use, transfer or licensing thereof by the Company or may
affect the validity, use or enforceability of such Company Intellectual
Property.
(o) To the knowledge of the Company, no (i) product, technology,
service or publication of the Company or (ii) material published or distributed
by the Company constitutes obscene material, a defamatory statement or material,
false advertising or otherwise violates any law or regulation the violation of
which would have a Material Adverse Effect.
-18-
<PAGE>
(p) The Company has taken reasonable steps to ensure that its
products (including existing products and technology and products and technology
currently under development) will record, store, process, calculate and present
calendar dates falling on and after (and if applicable, spans of time including)
January 1, 2000, and will calculate any information dependent on or relating to
such dates in the same manner, and with the same functionality, data integrity
and performance, as the products record, store, process, calculate and present
calendar dates on or before December 31, 1999, or calculate any information
dependent on or relating to such dates (collectively, "YEAR 2000 COMPLIANT").
The Company has taken reasonable steps to ensure that its products (i) will lose
no functionality with respect to the introduction of records containing dates
falling on or after January 1, 2000. All of the Company's internal computer and
technology products and systems which are critical to the operation of the
Business are Year 2000 Compliant.
2.12 AGREEMENTS, CONTRACTS AND COMMITMENTS.
(a) Except as set forth on SCHEDULE 2.12(a), the Company does
not have, is not a party to nor is it bound by:
(i) any collective bargaining agreements,
(ii) any agreements or arrangements that contain any
severance pay or post-employment liabilities or obligations,
(iii) any bonus, deferred compensation, pension, profit
sharing or retirement plans, or any other employee benefit plans or
arrangements,
(iv) any written employment or consulting agreement,
contract or commitment (excluding "at will" employment relationships) with an
employee or individual consultant or salesperson or any consulting or sales
agreement, contract or commitment under which any firm or other organization
provides services to the Company, and any other such agreement, contract or
commitment involving payments in excess of $10,000 per annum,
(v) any agreement or plan, including, without
limitation, any stock option plan, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement,
(vi) any fidelity or surety bond or completion bond,
(vii) any lease of personal property having a value
individually in excess of $25,000,
(viii) any agreement of indemnification or guaranty,
-19-
<PAGE>
(ix) any agreement, contract or commitment relating to
capital expenditures and involving payments required to be made by the Company
after the date of this Agreement in excess of $25,000,
(x) any agreement, contract or commitment relating to
the disposition or acquisition by the Company of assets or any interest in any
business enterprise outside the ordinary course of the Company's business,
(xi) any mortgages, indentures, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit, including guaranties referred to
in clause (viii) hereof, other than advances to employees for travel and
business expenses in the ordinary course of business consistent with past
practices,
(xii) any purchase order or contract for the purchase by
the Company of raw materials involving $25,000 or more after the date of this
Agreement,
(xiii) any construction contracts,
(xiv) any distribution, joint marketing or development
agreement,
(xv) any agreement pursuant to which the Company has
granted or may grant in the future, to any party, a source-code license or
option or other right to use or acquire source-code, or
(xvi) any other agreement, contract or commitment that
involves $25,000 or more or is not cancelable without penalty upon notice of
thirty (30) days or less.
(b) Except for such alleged breaches, violations and defaults,
and events that would constitute a breach, violation or default with the lapse
of time, giving of notice, or both, as are all noted in SCHEDULE 2.12(b), the
Company is not in material breach, violation or default under, or received
notice that it is in material breach, violation or default (except for notices
relating to breaches, violations or defaults that have been cured or corrected
in all material respects) under, any of the terms or conditions of any
agreement, contract or commitment required to be set forth on SCHEDULE 2.12(a),
SCHEDULE 2.11(e), SCHEDULE 2.11(g), or SCHEDULE 2.11(h) (each such agreement,
contract or commitment listed on SCHEDULE 2.12(a), SCHEDULE 2.11(e),
SCHEDULE 2.11(g) and SCHEDULE 2.11(h), a "CONTRACT"). Each Contract is in full
force and effect and, except as otherwise disclosed in SCHEDULE 2.12(b), is not
subject to any default thereunder of which the Company has knowledge by any
party obligated to the Company pursuant thereto.
2.13 INTERESTED PARTY TRANSACTIONS. Except as set forth on
SCHEDULE 2.13, no officer, director or shareholder of the Company (nor any
ancestor, sibling, descendant or spouse of any of such persons, or any trust,
partnership or corporation in which any of such persons has or has had an
interest), has directly or indirectly, (i) an economic interest in any entity
which furnishes or sells services or products that the Company furnishes or
sells,(ii) economic interest in any entity that purchases from or sells or
-20-
<PAGE>
furnishes to, the Company, any material quantity of goods or services or (iii) a
material beneficial interest in any contract or agreement set forth in
SCHEDULE 2.12(a) or SCHEDULE 2.11(b); provided, that (x) ownership of no more
than one percent (1%) of the outstanding voting stock of a publicly traded
corporation and no more than 5% of outstanding equity of any other entity shall
not be deemed an "economic interest in any entity" for purposes of this
Section 2.13 and (y) this provision shall only apply if the terms and conditions
applicable to the subject relationship are materially less favorable to the
Company than the terms and conditions that could be obtained in an arms-length
relationship.
2.14 COMPLIANCE WITH LAWS. The Company is in compliance in all material
respects with, is not in material violation of, and has not received any notices
of violation with respect to, any foreign, federal, state or local statute, law
or regulation (except for notices of breaches or violations that have been cured
or corrected in all material respects).
2.15 LITIGATION. Except as set forth in SCHEDULE 2.15, there is no
action, suit or proceeding of any nature pending or to the Company's knowledge
threatened against the Company, its properties or any of its officers or
directors, in their respective capacities as such. Except as set forth in
SCHEDULE 2.15, there is no investigation pending or to the Company's knowledge
threatened against the Company, its properties or any of its officers or
directors by or before any Governmental Entity. SCHEDULE 2.15 sets forth, with
respect to any pending or threatened action, suit, proceeding or investigation,
the forum, the parties thereto, the subject matter thereof and the amount of
damages claimed or other remedy requested. No Governmental Entity has at any
time challenged or questioned the legal right of the Company to manufacture,
offer or sell any of its products in the present manner or style thereof.
2.16 INSURANCE. The Company maintains valid and enforceable insurance
policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of the Company, and
such insurance policies and fidelity bonds, which are identified in
SCHEDULE 2.16, contain provisions which are reasonable and customary in the
Company's industry, and there is no claim by the Company pending under any of
such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid and the Company is
otherwise in material compliance with the terms of such policies and bonds (or
other policies and bonds providing substantially similar insurance coverage).
The Company has no knowledge of any threatened termination of, or material
premium increase with respect to, any of such policies.
2.17 MINUTE BOOKS. The minute books of the Company made available to
counsel for Parent (a) are the only minute books of the Company, and
(b) accurately reflect all meetings of directors (or committees thereof) and
shareholders or actions by written consent of the board of directors or
shareholders of the Company.
2.18 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIALS. The Company has not operated any
underground storage tanks, and has no knowledge of the existence, at any time,
of any underground storage tank (or related piping or pumps), at any property
that the Company has at any time owned, operated, occupied or leased.
-21-
<PAGE>
Except where the presence of Hazardous Materials (defined below) has not had,
does not have and is not reasonably likely to have a Material Adverse Effect,
no Hazardous Materials are present as a result of the actions or omissions of
the Company, or, to the Company's knowledge, as a result of any actions of any
third party or otherwise, in, on or under any property, including the land and
the improvements, ground water and surface water thereof, that the Company has
at any time owned, operated, occupied or leased.
(b) HAZARDOUS MATERIAL ACTIVITIES. The Company has not
transported, stored, used, manufactured, disposed of, released or exposed its
employees or others to Hazardous Materials in violation of any law in effect on
or before the Effective Time, nor has the Company disposed of, transported,
sold, or manufactured any product containing a Hazardous Material (any or all of
the foregoing being collectively referred to as "HAZARDOUS MATERIAL ACTIVITIES")
in material violation of any rule, regulation, treaty or statute promulgated by
any Governmental Entity in effect prior to or as of the date hereof to prohibit,
regulate or control Hazardous Materials or any Hazardous Material Activity.
(c) PERMITS. To the extent legally required, the Company
currently holds all material approvals, permits, licenses, clearances and
consents from Governmental Entities (the "ENVIRONMENTAL PERMITS") necessary for
the conduct of the Company's Hazardous Material Activities as such Hazardous
Material Activities are currently being conducted.
(d) ENVIRONMENTAL LIABILITIES. No action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to the Company's knowledge, threatened concerning any Environmental
Permit, Hazardous Material or any Hazardous Materials Activity of the Company.
The Company is not aware of any fact or circumstance which could involve the
Company in any environmental litigation or impose upon the Company any
environmental liability.
(e) DEFINITION OF "HAZARDOUS MATERIALS". As used herein,
"HAZARDOUS MATERIALS" shall mean any substance that has been designated by any
Governmental Entity or by applicable federal, state or local law to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, oil and petroleum
products, urea-formaldehyde and all substances listed as a "hazardous
substance," "hazardous waste," "hazardous material" or "toxic substance" or
words of similar import, under any law, including but not limited to, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended; the Resource Conservation and Recovery Act of 1976, as amended; the
Federal Water Pollution Control Act, as amended; the Clean Air Act, as amended,
and the regulations promulgated pursuant to such laws.
2.19 BROKERS' AND FINDERS' FEES; THIRD PARTY EXPENSES. Except as set
forth on SCHEDULE 2.19, the Company has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby. SCHEDULE 2.19 sets forth the principal terms
and conditions of any agreement, written or oral, with respect to such fees.
SCHEDULE 2.19 sets forth the Company's current reasonable estimate of all Third
Party Expenses (as defined in Section 5.4) expected to be incurred by the
Company in connection with the negotiation and effectuation of the terms and
conditions of this Agreement and the transactions contemplated hereby.
-22-
<PAGE>
2.20 EMPLOYEE MATTERS AND BENEFIT PLANS.
(a) DEFINITIONS. With the exception of the definition of
"Affiliate" set forth in Section 2.20(a)(i) below (which definition shall apply
only to this Section 2.20), for purposes of this Agreement, the following terms
shall have the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity
under common control with the Company within the meaning of Section 414(b), (c),
(m) or (o) of the Code and the regulations thereunder;
(ii) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iv) "COMPANY EMPLOYEE PLAN" shall refer to any plan,
program, policy, practice, contract, agreement or other arrangement providing
for compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether formal or informal, funded or unfunded and whether or not
legally binding, including without limitation, each "employee benefit plan,"
within the meaning of Section 3(3) of ERISA which is maintained, contributed to,
or required to be contributed to, by the Company or any Affiliate for the
benefit of any "Employee" (as defined below), or pursuant to which the Company
or any Affiliate has or may have any material liability contingent or otherwise;
(v) "FMLA" shall mean the Family Medical Leave Act of
1993, as amended;
(vi) "EMPLOYEE" shall mean any current, former, or
retired employee, consultant, or director of the Company or any Affiliate;
(vii) "EMPLOYEE AGREEMENT" shall refer to each management,
employment, stock purchase, severance, separation, consulting, relocation, loan,
repatriation, expatriation, visas, work permit or similar agreement, contract or
arrangement between the Company or any Affiliate and any Employee or consultant;
(viii) "IRS" shall mean the Internal Revenue Service;
(ix) "MULTIEMPLOYER PLAN" shall mean any "Pension Plan"
(as defined below) which is a "multiemployer plan", as defined in Section 3(37)
of ERISA; and
(x) "PENSION PLAN" shall refer to each Company Employee
Plan which is an "employee pension benefit plan," within the meaning of
Section 3(2) of ERISA.
-23-
<PAGE>
(b) SCHEDULE. SCHEDULE 2.20(b) contains an accurate and
complete list of each Company Employee Plan and each Employee Agreement,
together with a schedule of all liabilities, whether or not accrued, under each
such Company Employee Plan or Employee Agreement. The Company does not have any
plan or commitment, whether legally binding or not, to establish any new Company
Employee Plan or Employee Agreement, to modify any Company Employee Plan or
Employee Agreement (except to the extent required by law or to conform any such
Company Employee Plan or Employee Agreement to the requirements of any
applicable law, in each case as previously disclosed to Parent in writing, or as
required by this Agreement), or to enter into any Company Employee Plan or
Employee Agreement, nor does it have any intention or commitment to do any of
the foregoing.
(c) DOCUMENTS. The Company has provided to Parent (i) correct
and complete copies of all documents embodying or relating to each Company
Employee Plan and each Employee Agreement including all amendments thereto;
(ii) the most recent annual actuarial valuations, if any, prepared for each
Company Employee Plan; (iii) the three most recent annual reports (Series 5500
and all schedules thereto), if any, required under ERISA or the Code in
connection with each Company Employee Plan or related trust; (iv) if the Company
Employee Plan is funded, the most recent annual and periodic accounting of
Company Employee Plan assets; (v) the most recent summary plan description
together with the most recent summary of material modifications, if any,
required under ERISA with respect to each Company Employee Plan; (vi) all IRS
determination letters and rulings relating to Company Employee Plans and copies
of all applications and correspondence to or from the IRS or the Department of
Labor ("DOL") with respect to any Company Employee Plan; (vii) all
communications material to any Employee or Employees relating to any Company
Employee Plan and any proposed Company Employee Plans, in each case, relating to
any amendments, terminations, establishments, increases or decreases in
benefits, acceleration of payments or vesting schedules or other events which
would result in any material liability to the Company; and (viii) all
registration statements and prospectuses prepared in connection with each
Company Employee Plan.
(d) EMPLOYEE PLAN COMPLIANCE. Except as set forth on
SCHEDULE 2.20(d), (i) the Company has performed in all material respects all
obligations required to be performed by it under each Company Employee Plan, and
each Company Employee Plan has been established and maintained in all material
respects in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations, including but not limited to
ERISA or the Code; (ii) no "prohibited transaction," within the meaning of
Section 4975 of the Code or Section 406 of ERISA, has occurred with respect to
any Company Employee Plan; (iii) there are no actions, suits or claims pending,
or, to the knowledge of the Company, threatened or anticipated (other than
routine claims for benefits) against any Company Employee Plan or against the
assets of any Company Employee Plan; and (iv) each Company Employee Plan can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to the Company, Parent or any of
its Affiliates (other than ordinary administration expenses typically incurred
in a termination event); (v) there are no inquiries or proceedings pending or,
to the knowledge of the Company or any Affiliates, threatened by the IRS or DOL
with respect to any Company Employee Plan; and (vi) neither the Company nor any
Affiliate is, to its knowledge, subject to any penalty or tax with respect to
any Company Employee Plan under Section 402(i) of ERISA or Section 4975 through
4980 of the Code.
-24-
<PAGE>
(e) PENSION PLANS. Neither the Company nor any Affiliate has
ever maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Part 3 of Subtitle B of Title I of ERISA,
Title IV of ERISA or Section 412 of the Code.
(f) MULTIEMPLOYER PLANS. At no time has the Company or any
Affiliate contributed to or been requested to contribute to any Multiemployer
Plan.
(g) NO POST-EMPLOYMENT OBLIGATIONS. Except as set forth in
SCHEDULE 2.20(g), no Company Employee Plan provides, or has any liability to
provide, life insurance, medical or other employee benefits to any Employee upon
his or her retirement or termination of employment for any reason, except as may
be required by statute, and the Company has never represented, promised or
contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) that such Employee(s) would be provided
with life insurance, medical or other employee welfare benefits upon their
retirement or termination of employment, except to the extent required by
statute.
(h) COBRA. Neither the company nor any affiliate has, prior to
the Effective Time and in any material respect, violated any of the health care
continuation requirements of COBRA, the requirements of FMLA or any similar
provisions of state law applicable to its Employees.
(i) EFFECT OF TRANSACTION.
(i) Except as set forth on SCHEDULE 2.20(i)(i), the
execution of this Agreement and the consummation of the transactions
contemplated hereby will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any Company Employee
Plan, Employee Agreement, trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee.
(ii) Except as set forth on SCHEDULE 2.20(i)(ii), no
payment or benefit which will or may be made by the Company or its Affiliates or
by Parent or any of its Affiliates with respect to any Employee as a result of
the transactions contemplated by this Agreement or otherwise will be
characterized as "parachute payments", within the meaning of Section 280G(b)(2)
of the Code (but without regard to clause (ii) thereof).
(j) EMPLOYMENT MATTERS. The Company (i) is in compliance in all
material respects with all applicable foreign, federal, state and local laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to Employees; (iii) is not
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing; and (iv) is not liable for any payment to any
trust or other fund or to any governmental or administrative authority, with
respect to unemployment compensation benefits, social security or other benefits
or obligations for Employees (other than routine payments to be made in the
normal course of business and consistent with past practice).
-25-
<PAGE>
(k) LABOR. No work stoppage or labor strike against the Company
is pending or, to the best knowledge of the Company, threatened. Except as set
forth in SCHEDULE 2.20(k), the Company is not involved in or, to the knowledge
of the Company, threatened with, any labor dispute, grievance, or litigation
relating to labor, safety or discrimination matters involving any Employee,
including, without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, result in material liability to the Company. Neither the
Company nor any of its subsidiaries has engaged in any unfair labor practices
within the meaning of the National Labor Relations Act which would, individually
or in the aggregate, directly or indirectly result in a material liability to
the Company. Except as set forth in SCHEDULE 2.20(k), the Company is not
presently, nor has it been in the past, a party to, or bound by, any collective
bargaining agreement or union contract with respect to Employees and no
collective bargaining agreement is being negotiated by the Company.
2.21 EMPLOYEES. To the best of the Company's knowledge, no employee of
the Company (i) is in material violation of any term of any employment contract,
patent disclosure agreement, non-competition agreement, or any restrictive
covenant to a former employer relating to the right of any such employee to be
employed by the Company because of the nature of the business conducted by the
Company or to the use of trade secrets or proprietary information of others and
(ii) has given notice to the Company, nor is the Company otherwise aware, that
any employee intends to terminate his or her employment with the Company.
2.22 GOVERNMENTAL AUTHORIZATIONS AND LICENSES. The Company possesses
all material consents, licenses, permits, grants or other authorizations issued
to the Company by a governmental entity (i) pursuant to which the Company
currently operates or holds any interest in any of its properties or (ii) which
is required for the operation of its business or the holding of any such
interest therein (collectively called "COMPANY AUTHORIZATIONS"), which Company
Authorizations are in full force and effect and constitute all Company
Authorizations required to permit the Company to operate or conduct its business
or hold any interest in its properties or assets.
2.23 POOLING OF INTERESTS. To the Company's knowledge, based on
consultation with its independent accountants, neither the Company nor any of
its directors, officers or shareholders has taken any action which would
interfere with Parent's ability to account for the Merger as a pooling of
interests.
2.24 REPRESENTATIONS COMPLETE. To the best knowledge of the Company,
none of the representations or warranties made by the Company (as modified by
the Company Schedules), nor any statement made in any schedule or certificate
furnished by the Company pursuant to this Agreement, or furnished in or in
connection with documents mailed or delivered to the shareholders of the Company
in connection with soliciting their consent to this Agreement and the Merger,
contains any untrue statement of a material fact, or omits to state any material
fact necessary in order to make the statements contained herein or therein, in
the light of the circumstances under which made, not misleading; provided,
however, that the financial projections delivered by the Company represent only
the Company's good faith estimate of what it reasonably believes and are based
upon assumptions that appeared reasonable at the time such projections were
made. The Company does not make any other representation or warranty regarding
such projections other than as set forth in this Section 2.24.
-26-
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
3.1 ORGANIZATION, STANDING AND POWER. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of Parent and
Merger Sub has the corporate power to own its properties and to carry on its
business as now being conducted and is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which the failure
to be so qualified would have a material adverse effect on Parent and Merger Sub
as a whole.
3.2 AUTHORITY. Parent and Merger Sub have all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub. This Agreement has been duly executed and delivered by Parent and Merger
Sub and constitutes the valid and binding obligations of Parent and Merger Sub,
enforceable in accordance with its terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies. The execution and delivery of this
Agreement by Parent and Merger Sub does not, and, as of the Effective Time, the
consummation of the transactions contemplated hereby will not, constitute a
Conflict with (i) any provision of the Certificate of Incorporation or Bylaws of
Parent or Merger Sub or (ii) any mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent
or Merger Sub or their properties or assets. No consent, waiver, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity or any third party (so as not to trigger any Conflict) is
required by or with respect to Parent or Merger Sub in connection with Parent's
or Merger Sub's execution and delivery of this Agreement or its consummation of
the transactions contemplated hereby, except (i) the filing of the Merger
Agreement with the California Secretary of State and the Delaware Secretary of
State, or (ii) such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws, (iii) for such other consents, waivers,
authorizations, filings and approvals which are set forth on SCHEDULE 3.2, and
(iv) where the failure to obtain or make any such consent, waiver,
authorization, filing, approval or registration would not have a Material
Adverse Effect on Parent.
3.3 CAPITAL STRUCTURE.
(a) The authorized stock of Parent consists of 200,000,000
shares of Common Stock, of which 90,652,050 shares were issued and outstanding
as of October 31, 1997, and 5,000,000 shares of Preferred Stock, none of which
is issued or outstanding. The authorized capital stock of Merger Sub
-27-
<PAGE>
consists of 1,000 shares of Common Stock, all of which, as of the date
hereof, are issued and outstanding and are held by Parent. All such shares
have been duly authorized, and all such issued and outstanding shares have
been validly issued, are fully paid and nonassessable and are free of any
liens or encumbrances other than any liens or encumbrances created by or
imposed upon the holders thereof.
(b) The shares of Parent Common Stock to be issued pursuant to
the Merger, when issued, will be duly authorized, validly issued, fully paid and
non-assessable.
3.4 SEC DOCUMENTS; PARENT FINANCIAL STATEMENTS. Parent has furnished
or made available to the Company true and complete copies of all reports,
registration statements and definitive proxy statements filed by it with the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933 as amended (the "SECURITIES ACT") and the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT") for all periods since
January 1, 1997, all in the form so filed (all of the foregoing being
collectively referred to as the "SEC DOCUMENTS"), which are all the documents
(other than preliminary material) that Parent was required to file with the SEC
since such date. As of their respective filing dates, the SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and none of the SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading, except to
the extent corrected by a document subsequently filed with the SEC. The
financial statements of Parent, including the notes thereto, included in the SEC
Documents (the "PARENT FINANCIAL STATEMENTS") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP consistently applied (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC) and present fairly the consolidated financial position of Parent at
the dates thereof and the consolidated results of its operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal audit adjustments which are not expected to be material in amount).
There has been no change in Parent accounting policies except as described in
the notes to the Parent Financial Statements.
3.5 NO MATERIAL ADVERSE CHANGE. Since the date of the balance sheet
included in the Parent's most recently filed report on Form 10-Q, Parent has
conducted its business in the ordinary course and there has not occurred:
(a) any material adverse change in the financial condition, liabilities, assets
or business of Parent; (b) any amendment or change in the Certificate of
Incorporation or Bylaws of Parent, or (c) any damage to, destruction or loss of
any assets of the Parent (whether or not covered by insurance) that materially
and adversely affects the financial condition or business of Parent.
3.6 LITIGATION. There is no action, suit, proceeding, claim,
arbitration or investigation pending, or as to which Parent has received any
notice of assertion against Parent, which in any manner challenges or seeks to
prevent, enjoin, alter or materially delay any of the transactions contemplated
by this Agreement.
-28-
<PAGE>
3.7 POOLING OF INTERESTS. To Parent's knowledge, based on consultation
with its independent accountants, neither Parent nor any of its directors,
officers or stockholders has taken any action which would interfere with
Parent's ability to account for the Merger as a pooling of interests.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS OF THE COMPANY. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement and the Effective Time, except as contemplated by or otherwise
consistent with this Agreement the Company agrees (except to the extent that
Parent shall otherwise consent in writing) to carry on its business in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted, to pay its debts and Taxes when due, to pay or perform
other obligations when due, and, to the extent consistent with such business, to
use all reasonable efforts consistent with past practice and policies to
preserve intact its present business organization, keep available the services
of its present officers and key employees and preserve its relationships with
customers, suppliers, distributors, licensors, licensees, and others having
business dealings with it, all with the goal of preserving unimpaired its
goodwill and ongoing businesses at the Effective Time. During the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement and the Effective Time, the Company shall promptly notify
Parent of any material event or occurrence not in the ordinary course of its
business. Except as expressly contemplated by this Agreement, or reasonably
necessary to consummate or facilitate any of the transactions contemplated
hereby, the Company shall not, without the prior written consent of Parent:
(a) Enter into any commitment, activity or transaction not in
the ordinary course of business.
(b) Transfer to any person or entity any rights to any Company
Intellectual Property Rights (other than pursuant to object code end-user
licenses granted to end-users in the ordinary course of business that permit use
of software products without a right to modify, distribute or sublicense the
same consistent with past practices);
(c) Enter into or materially amend any agreements pursuant to
which any other party is granted manufacturing, marketing, distribution or
similar rights of any type or scope with respect to any products of the Company;
(d) Materially amend or otherwise modify (or agree to do so),
except in the ordinary course of business, or materially violate the terms of,
any of the agreements set forth or described in the Company Schedules;
(e) Commence any litigation or any dispute resolution process;
-29-
<PAGE>
(f) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any Company
Capital Stock, or split, combine or reclassify any of Company Capital Stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of Company Capital Stock, or repurchase, redeem
or otherwise acquire, directly or indirectly, any shares of Company Capital
Stock (or options, warrants or other rights exercisable therefor);
(g) Except for the issuance of shares of Company Capital Stock
upon exercise or conversion of presently outstanding Company Options or
Warrants, issue, grant, deliver or sell or authorize the issuance, grant,
delivery or sale of, or purchase any shares of Company Capital Stock or
securities convertible into, or subscriptions, rights, warrants or options to
acquire, or other agreements or commitments of any character obligating it to
issue any such shares or other convertible securities;
(h) Cause or permit any amendments to its Articles of
Incorporation or Bylaws;
(i) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any assets or equity securities of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
business of the Company;
(j) Sell, lease, license or otherwise dispose of any of its
properties or assets, except in the ordinary course of business and consistent
with past practice;
(k) Incur any indebtedness for borrowed money in excess of
$25,000 in the aggregate or guarantee any such indebtedness of any other party
or issue or sell any debt securities of the Company or guarantee any debt
securities of others;
(l) Grant any severance or termination pay to any director,
officer, employee or consultant, except payments made pursuant to standard
written agreements or policies outstanding on the date hereof (all of which such
agreements are disclosed on SCHEDULE 2.12(a)(ii));
(m) Adopt or amend any employee benefit plan, program, policy or
arrangement (including without limitation any amendment which accelerates
vesting under any such employee benefit plan, program, policy or arrangement),
or enter into any employment contract, extend any employment offer, pay or agree
to pay any special bonus or special remuneration to any director, employee or
consultant, or increase the salaries or wage rates of its employees;
(n) Revalue any of its assets (including without limitation
writing down the value of inventory or writing off notes or accounts receivable)
other than in the ordinary course of business and consistent with past practice;
(o) Take any action, including the acceleration of vesting of
any options, warrants, restricted stock or other rights to acquire shares of
Company capital stock, which would be reasonably
-30-
<PAGE>
likely to interfere with Parent's ability to account for the Merger as a
pooling of interests or any other action that could reasonably jeopardize the
tax-free reorganization hereunder;
(p) Pay, discharge or satisfy, in an amount in excess of
$10,000, in any one case, or $25,000, in the aggregate, any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business of liabilities reflected or reserved against in the Company Financial
Statements;
(q) Make or change any material election in respect of Taxes,
adopt or change any accounting method in respect of Taxes, enter into any
closing agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes;
(r) Enter into any strategic alliance, joint development or
joint marketing arrangement or agreement;
(s) Materially fail to pay or otherwise satisfy its monetary
obligations as they become due, except such as are being contested in good
faith;
(t) Waive or commit to waive any rights with a value in excess
of $10,000, in any one case, or $25,000, in the aggregate;
(u) Cancel, materially amend or renew any insurance policy other
than in the ordinary course of business;
(v) Alter, or enter into any commitment to alter, its interest
in any corporation, association, joint venture, partnership or business entity
in which the Company directly or indirectly holds any interest on the date
hereof; or
(w) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(a) through (v) above, or any other action that
would prevent the Company from performing or cause the Company not to perform
its covenants hereunder.
4.2 NO SOLICITATION.
(a) Until the earlier of the Effective Time and the date of
termination of this Agreement pursuant to the provisions of Section 8.1 hereof,
the Company will not (nor will the Company permit any of the Company's officers,
directors, shareholders, agents, representatives or affiliates to), directly or
indirectly, take any of the following actions with any party other than Parent
and its designees: (a) solicit, initiate, entertain, or encourage any proposals
or offers from, or conduct discussions with or engage in negotiations with, any
person relating to any possible acquisition of the Company or any of its
subsidiaries (whether by way of merger, purchase of capital stock, purchase of
assets or otherwise), any material portion of its or their capital stock or
assets or any equity interest in the Company or any of its subsidiaries, (b)
provide information with respect to it to any person, other than Parent,
relating to, or
-31-
<PAGE>
otherwise cooperate with, facilitate or encourage any effort or attempt by
any such person with regard to, any possible acquisition of the Company or
any of its subsidiaries (whether by way of merger, purchase of capital stock,
purchase of assets or otherwise), any material portion of its or their
capital stock or assets or any equity interest in the Company or any of its
subsidiaries, (c) enter into an agreement with any person, other than Parent,
providing for the acquisition of the Company (whether by way of merger,
purchase of capital stock, purchase of assets or otherwise), any material
portion of its or their capital stock or assets or any equity interest in the
Company or any of its subsidiaries, or (d) make or authorize any statement,
recommendation or solicitation in support of any possible acquisition of the
Company or any of its subsidiaries (whether by way of merger, purchase of
capital stock, purchase of assets or otherwise), any material portion of its
or their capital stock or assets or any equity interest in the Company or any
of its subsidiaries by any person, other than by Parent. The Company shall
immediately cease and cause to be terminated any such contacts or
negotiations with third parties relating to any such transaction or proposed
transaction. In addition to the foregoing, if the Company receives prior to
the Effective Time or the termination of this Agreement any offer or proposal
relating to any of the above (an "ACQUISITION PROPOSAL"), the Company shall
immediately notify Parent thereof, including information as to the identity
of the offeror or the party making any such offer or proposal and the
specific terms of such offer or proposal, as the case may be, and such other
information related thereto as Parent may reasonably request. Except as
contemplated by this Agreement, disclosure by the Company of the terms of
this Agreement (other than the prohibition of this section) shall be deemed
to be a violation of this Section 4.2.
(b) Notwithstanding the provisions of paragraph (a) above, prior
to the approval of this Agreement and the Merger by the shareholders of the
Company, the Company may, to the extent the Board of Directors of the Company
determines, in good faith, after consultation with outside legal counsel, that
the Board's fiduciary duties under applicable law require it to do so,
participate in discussions or negotiations with, and, subject to the
requirements of paragraph (c), below, furnish information to any person, entity
or group after such person, entity or group shall have delivered to the Company
in writing, an unsolicited bona fide Acquisition Proposal which identifies a
price or range of values to be paid for the outstanding securities or
substantially all of the assets of the Company and which the Board of Directors
of the Company in its good faith reasonable judgment determines, after
consultation with its independent financial advisors, would result in a
transaction more favorable to the shareholders of the Company from a financial
point of view than the Merger and for which financing, to the extent required,
is then committed or which, in the good faith reasonable judgment of the Board
of Directors of the Company (based upon the advice of independent financial
advisors), is reasonably capable of being financed by such person, entity or
group and which financing is likely to be consummated (a "SUPERIOR PROPOSAL").
(c) The Company may furnish information with respect to a
Superior Proposal only if the Company (i) first notifies Parent of the
information proposed to be disclosed, (ii) complies with the provisions of
paragraph (a), above (including without limitation the provisions of paragraphs
(a) relating to immediate notice to Parent by the Company of an Acquisition
Proposal) and (iii) provides such information pursuant to a confidentiality
agreement at least as restrictive as the confidentiality agreement entered into
between Parent and Company prior to the date hereof.
-32-
<PAGE>
(d) In the event the Company receives a Superior Proposal,
nothing contained in this Agreement shall prevent the Board of Directors of the
Company from approving such Superior Proposal or recommending such Superior
Proposal to the Company's shareholders, if the Board determines in good faith,
after consultation with outside legal counsel, that such action is required by
its fiduciary duties under applicable law, and in such case, the Board of
Directors of the Company may amend or withdraw its recommendation of the Merger.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 SALE AND REGISTRATION OF SHARES; STOCKHOLDER MATTERS.
(a) SALE OF SHARES. The parties hereto acknowledge and agree
that the shares of Parent Common Stock issuable to the shareholders pursuant to
Section 1.6 hereof shall constitute "restricted securities" within the meaning
of the Securities Act. The certificates for shares of Parent Common Stock to be
issued in the Merger shall bear appropriate legends to identify such privately
placed shares as being restricted under the Securities Act, to comply with
applicable state securities laws and, if applicable, to notice the restrictions
on transfer pursuant to the Affiliate Agreement (as defined below). It is
acknowledged and understood that Parent is relying upon certain written
representations made by each shareholder.
(b) STOCKHOLDER'S CERTIFICATE. The Company will use its best
efforts to cause each shareholder of the Company to execute and deliver to
Parent a Stockholder's Certificate in the form attached hereto as EXHIBIT A (the
"STOCKHOLDER'S CERTIFICATE").
(c) COMPANY SHAREHOLDER APPROVAL. As promptly as practicable
after the execution of this Agreement the Company shall submit this Agreement
and the transactions contemplated hereby to its shareholders for approval and
adoption as provided by California Law and its Articles of Incorporation and
Bylaws. The Company shall use its best efforts to solicit and obtain the
written consent of its shareholders to approve the Merger and this Agreement and
to enable the Closing to occur as promptly as practicable. In connection with
such shareholder approval and as soon as practicable after the execution of this
Agreement, the Company shall prepare, with the cooperation of Parent, an
Information Statement for purposes of soliciting such written consent of the
shareholders. The Information Statement shall also constitute a disclosure
document for the offer and sale of the shares of Parent Common Stock to be
received by the holders of the Company's Capital Stock in the Merger and shall
comply in all material respects with the information requirements of Rule 502(b)
promulgated under the Securities Act so that Parent may avail itself of the
exemption provided by Rule 506 promulgated under the Securities Act if Parent so
chooses. The Company shall use its best efforts, with the cooperation of
Parent, to cause such Information Statement to be distributed to the Company's
shareholders no later than November 25, 1997. Each of Parent and the Company
shall use its best efforts to cause the Information Statement to comply in all
material respects with Rule 502(b) and all other applicable federal and state
securities laws requirements. Each of Parent and the Company agrees to
-33-
<PAGE>
provide promptly to the other such information concerning its business and
financial statements and affairs as, in the reasonable judgment of the
providing party or its counsel, may be required or appropriate for inclusion
in the Information Statement or in any amendments or supplements thereto, and
to cause its counsel and auditors to cooperate with the other's counsel and
auditors in the preparation of the Information Statement. Each of the
parties hereto will promptly advise the other parties in writing if at any
time prior to the Effective Time either the Company or Parent shall obtain
knowledge of any facts that might make it necessary or appropriate to amend
or supplement the Information Statement in order to make the statements
contained or incorporated by reference therein not misleading or to comply
with applicable law. Subject to Section 4.2, the Information Statement shall
contain the unanimous recommendation of the Board of Directors of the Company
that the Company shareholders approve the Merger and this Agreement and the
transactions contemplated hereby and the conclusion of the Board of Directors
that the terms and conditions of the Merger are fair and reasonable to the
shareholders of the Company. Anything to the contrary contained herein
notwithstanding, the Company shall not include in the Information Statement
any information with respect to Parent or its affiliates or associates, the
form and content of which information shall not have been reasonably approved
by Parent prior to such inclusion.
(d) REGISTRATION STATEMENT ON FORM S-3. Parent shall use its
commercially reasonable efforts to file, following the Closing, a Registration
Statement on Form S-3, as provided in the Declaration of Registration Rights set
forth as EXHIBIT B, with the SEC covering the resale of the shares of Parent
Common Stock issued to holders of Company Capital Stock pursuant to the Merger.
Any such registration shall be subject to the terms and conditions set forth in
the Declaration of Registration Rights. Parent covenants that with respect to
information contained in the registration statement and supplied by Parent in
connection therewith, such information will not 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 not misleading, or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing covenant of Parent shall not apply with respect to
information contained in the registration statement and supplied in writing for
inclusion in the registration statement by persons or entities who were
shareholders of the Company immediately prior to the Effective Time.
(e) ADDITIONAL ASSURANCES. At the request of Parent, the
Company shall use its best efforts to cause the Company's shareholders to
execute and deliver to Parent such instruments and do and perform such acts and
things as may be reasonably necessary for complying with all applicable
securities laws, California Law and Delaware Law.
5.2 ACCESS TO INFORMATION. Subject to each party's existing
confidentiality obligations (which the Company and Parent shall use their
reasonable efforts to cause to be waived), each party shall afford the others
and their accountants, counsel and other representatives, reasonable access
during normal business hours during the period prior to the Effective Time to
(a) all of its properties, books, contracts, commitments and records, and
(b) all other information concerning its business, properties and personnel
(subject to restrictions imposed by applicable law) as the other may reasonably
request, subject, in the case of Parent, to reasonable limits on access to its
technical and other nonpublic information. No information or knowledge obtained
in any investigation pursuant to this Section 5.2 shall affect or be
-34-
<PAGE>
deemed to modify any representation or warranty contained herein or the
conditions of the parties to consummate the Merger.
5.3 CONFIDENTIALITY. Each of the parties hereto hereby agrees to keep
such information or knowledge obtained in any investigation pursuant to
Section 5.2, or pursuant to the negotiation and execution of this Agreement or
the effectuation of the transactions contemplated hereby, confidential, and also
agrees not to use such knowledge or information; provided, however, that the
foregoing shall not apply to information or knowledge which (a) a party can
demonstrate was already lawfully in its possession on a non-confidential basis
prior to the disclosure thereof by the other party, (b) is generally known to
the public and did not become so known through any violation of law, (c) became
known to the public through no fault of such party, (d) is later lawfully
acquired by such party from other sources, (e) is required to be disclosed by
order of court or government agency with subpoena powers or (f) which is
disclosed in the course of any litigation between any of the parties hereto.
5.4 EXPENSES. Whether or not the Merger is consummated, all fees and
expenses incurred in connection with the Merger including, without limitation,
all legal, accounting, financial advisory, consulting and all other fees and
expenses of third parties ("THIRD PARTY EXPENSES") incurred by a party in
connection with the negotiation and effectuation of the terms and conditions of
this Agreement and the transactions contemplated hereby shall be the obligation
of the respective party incurring such fees and expenses.
5.5 PUBLIC DISCLOSURE. Unless otherwise required by law (including,
without limitation, federal and state securities laws) or, as to Parent, by the
rules and regulations of The Nasdaq Stock Market, Inc., prior to the Effective
Time, no disclosure (whether or not in response to an inquiry) of the existence
of subject matter of this Agreement shall be made by any party hereto unless
approved by Parent and the Company prior to release, provided that such approval
shall not be unreasonably withheld.
5.6 CONSENTS. The Company shall obtain (i) the consents, waivers and
approvals listed on the attached SCHEDULE 5.6 and (ii) executed letters from
OMNES, IONA Technologies Inc. and Network Solutions Inc. substantially in the
form attached hereto as EXHIBITS C-1, C-2 and C-3. In addition, the Company
shall obtain any consents, waivers or approvals required by Parent prior to
Closing under any of the Contracts as may be required in connection with the
Merger so as to preserve all rights of and benefits to the Company thereunder.
5.7 FIRPTA COMPLIANCE. On or prior to the Closing Date, the Company
shall deliver to Parent a properly executed statement in a form reasonably
acceptable to Parent for purposes of satisfying Parent's obligations under
Treasury Regulation Section 1.1445-2(c)(3).
5.8 COMMERCIALLY REASONABLE EFFORTS. Subject to the terms and
conditions provided in this Agreement, each of the parties hereto shall use its
commercially reasonable efforts to ensure that its representations and
warranties remain true and correct in all material respects, and to take
promptly, or cause to be taken, all actions, and to do promptly, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
hereby, to obtain all necessary waivers, consents and approvals, to effect all
necessary
-35-
<PAGE>
registrations and filings, and to remove any injunctions or other impediments
or delays, legal or otherwise, in order to consummate and make effective the
transactions contemplated by this Agreement for the purpose of securing to
the parties hereto the benefits contemplated by this Agreement; provided that
Parent shall not be required to agree to any divestiture by Parent or the
Company or any of Parent's subsidiaries or affiliates of shares of capital
stock or of any business, assets or property of Parent or its subsidiaries or
affiliates or the Company or its affiliates, or the imposition of any
material limitation on the ability of any of them to conduct their businesses
or to own or exercise control of such assets, properties and stock.
5.9 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company (including,
as appropriate, an update to the Company Schedules, it being understood that any
such update will not have the effect of altering in any respect the Company's
obligations under this Agreement), of (i) the occurrence or non-occurrence of
any event, the occurrence or non-occurrence of which is likely to cause any
representation or warranty of the Company or Parent, respectively, contained in
this Agreement to be untrue or inaccurate at or prior to the Effective Time and
(ii) any failure of the Company or Parent, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.9 shall not limit or otherwise affect any remedies available to
the party receiving such notice.
5.10 CERTAIN BENEFIT PLANS. Subject to compliance with
pooling-of-interest accounting treatment of the Merger, Parent shall take such
reasonable actions as are necessary to allow eligible employees of the Company
to participate in the benefit programs of Parent available to employees of
Parent having similar positions and levels of responsibility on the terms and
conditions provided in such plans.
5.11 POOLING ACCOUNTING. The Company shall use its best efforts to
cause the business combination to be effected by the Merger to be accounted for
as a pooling of interests. The Company shall use its best efforts to cause its
respective employees, directors, shareholders and affiliates not to take any
action that would adversely affect the ability of Parent to account for the
business combination to be effected by the Merger as a pooling of interests.
5.12 AFFILIATE AGREEMENTS. SCHEDULE 5.12 sets forth those persons who,
in the Company's reasonable judgment, are "affiliates" of the Company within the
meaning of Rule 145 (each such person an "AFFILIATE") promulgated under the
Securities Act ("RULE 145"). The Company shall provide Parent such information
and documents as Parent shall reasonably request for purposes of reviewing such
list. Each of Parent and the Company has delivered or shall cause to be
delivered to Parent, concurrently with the execution of this Agreement from each
of their respective Affiliates, an executed Affiliate Agreement in the form
attached hereto as EXHIBIT D (for Affiliates of the Company) or EXHIBIT E (for
Affiliates of the Parent). Parent shall be entitled to place appropriate
legends on the certificates evidencing any Parent Common Stock to be received by
such Affiliates pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for Parent Common
Stock, consistent with the terms of such Affiliate Agreements.
-36-
<PAGE>
5.13 VOTING AGREEMENTS. The Company shall deliver or cause to be
delivered to Parent, concurrently with the execution of this Agreement, from
each person listed on SCHEDULE 5.13, an executed Voting Agreement in the form
attached hereto as EXHIBIT F (the "VOTING AGREEMENTS").
5.14 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. Each party hereto, at
the reasonable request of any other party, shall execute and deliver such other
instruments and do and perform such other reasonable acts and things as may be
necessary or desirable for the purposes of effecting the transactions
contemplated by this Agreement.
5.15 REGISTRATION STATEMENT ON FORM S-8. Parent shall file a
registration statement on Form S-8 for the shares of Parent Common Stock
issuable with respect to assumed Company Options promptly after the Effective
Time.
5.16 NASDAQ NATIONAL MARKET LISTING. Parent shall authorize for listing
on The Nasdaq National Market the shares of Parent Common Stock issuable, and
those required to be reserved for issuance, in connection with the Merger, upon
official notice of issuance.
5.17 COMPANY'S INDEPENDENT ACCOUNTANTS. The Company will use its
commercially reasonable efforts to cause its management and its independent
accountants to facilitate on a timely basis (i) the preparation of financial
statements (including pro forma financial statements if required) as required by
Parent to comply with applicable SEC regulations, (ii) the review of the
Company's audit work papers for up to the past three years, including the
examination of selected interim financial statements and data, and (iii) the
delivery of such representations from the Company's independent accountants as
may be reasonably requested by Parent or its accountants in order for Parent's
accountants to render the letter called for by Section 6.3(i) hereof.
5.18 INDEMNIFICATION CONTINUATION. From and after the Effective Time,
Parent and the Surviving Corporation shall indemnify and hold harmless each
person who has at any time prior to the Effective Time been an officer, director
or employee of the Company or any other person entitled to be indemnified by the
Company pursuant to its Articles of Incorporation and Bylaws as they are in
effect on the date hereof, or pursuant to any reasonable agreement with the
Company in effect on the date hereof (an "INDEMNIFICATION AGREEMENT"), to the
same extent as provided in such Articles of Incorporation and Bylaws or
Indemnification Agreement; provided that it is understood that the foregoing
undertaking shall not grant to any such officers, directors or employees or
other person rights of indemnity against either the Company or the Surviving
Corporation more extensive than those such persons may currently have against
the Company.
5.19 TAX MATTERS. At or prior to the Closing, (a) the Company shall
execute and deliver to Cooley Godward LLP and to Wilson Sonsini Goodrich &
Rosati a tax representation letter reasonably acceptable to such counsel, and
(b) Parent and Merger Sub shall execute and deliver to Wilson Sonsini Goodrich &
Rosati and to Cooley Godward LLP a tax representation letter reasonably
acceptable to such counsel.
-37-
<PAGE>
5.20 STOCKHOLDER CERTIFICATES; INFORMATION ON COMPANY SHAREHOLDERS. The
Company shall use its best efforts to obtain from each of its shareholders an
executed Stockholder's Certificate having the form attached hereto as EXHIBIT A,
and the Company will consult with Parent with respect to each shareholder (if
any) who has not returned such Certificate within at least two business days of
the Closing Date with respect to such shareholder's probable intent in acquiring
Company Common Stock.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) SHAREHOLDER APPROVAL. This Agreement and the Merger shall
have been approved and adopted by the shareholders of the Company by the
requisite vote under applicable law and the Company's Articles of Incorporation.
(b) GOVERNMENT APPROVALS. All approvals of governments and
governmental agencies necessary to consummate the transactions hereunder shall
have been received.
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger shall be in effect.
(d) TAX OPINIONS. Parent and the Company shall each have
received substantially identical written opinions from their counsel, Wilson
Sonsini Goodrich & Rosati and Cooley Godward LLP respectively, in form and
substance reasonably satisfactory to them, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code,
provided however that if (i) Wilson Sonsini Goodrich & Rosati does not render
such opinion, this condition shall nonetheless be deemed to be satisfied if
counsel to the Company renders such opinion to Parent, and (ii) if Cooley
Godward, LLP does not render such opinion, this condition shall nonetheless
be deemed to be satisfied if counsel to Parent renders such opinion to the
Company. In rendering such opinions, counsel may rely upon reasonable
representations and certificates of Parent, Merger Sub, the Company, and
certain shareholders of the Company, and the parties to this Agreement agree
to make, and to use reasonable efforts to cause the shareholders of the
Company to make, such representations and deliver such certificates.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the Merger and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, exclusively by the Company:
-38-
<PAGE>
(a) REPRESENTATIONS AND WARRANTIES. Excluding solely those
representations and warranties of the Company set forth in the final paragraph
of Section 2.4, the representations and warranties of Parent and Merger Sub
contained in this Agreement shall be true and correct in all material respects
(except for those representations and warranties which are by their terms
qualified by a standard of materiality, which representations and warranties
shall be true and correct in all respects) on and as of the Closing Date, except
for changes contemplated by this Agreement and except for those representations
and warranties which address matters only as of a particular date (which shall
remain true and correct as of such date), with the same force and effect as if
made on and as of the Closing Date, except, in all such cases, for such
breaches, inaccuracies or omissions of such representations and warranties which
have neither had nor reasonably would be expected to have a material adverse
effect on Parent; and the Company shall have received a certificate to such
effect signed on behalf of Parent by a duly authorized officer of Parent.
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Effective Time, and the Company shall have received a certificate to such
effect signed by a duly authorized officer of Parent.
(c) THIRD PARTY CONSENTS. The Company shall have been furnished
with evidence satisfactory to it that Parent has obtained the consents,
approvals and waivers set forth in SCHEDULE 6.2(c).
(d) LEGAL OPINION. The Company shall have received a legal
opinion from Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel
to Parent, in substantially the form attached hereto as EXHIBIT G.
(e) NASDAQ LISTING. The shares of Parent Common Stock issuable
to shareholders of the Company pursuant to this Agreement and such other shares
required to be reserved for issuance in connection with the Merger shall have
been authorized for listing on The Nasdaq National Market upon official notice
of issuance.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to consummate the Merger and the
transactions contemplated by this Agreement shall be subject to the satisfaction
at or prior to the Closing of each of the following conditions, any of which may
be waived, in writing, exclusively by Parent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in this Agreement shall be true and correct
in all material respects (except for those representations and warranties which
are by their terms qualified by a standard of materiality, which representations
and warranties shall be true and correct in all respects) on and as of the
Closing Date (without regard to any updates to the Company Schedules, unless
otherwise agreed by Parent), except for changes contemplated by this Agreement
and except for those representations and warranties which address matters only
as of a particular date (which shall remain true and correct as of such date),
with the same force and effect as if made on and as of the Closing Date, except,
in all such cases, for such breaches or inaccuracies of such representations and
warranties which have neither had nor reasonably
-39-
<PAGE>
would be expected to have a Material Adverse Effect on the Company and Parent
and Merger Sub shall have received a certificate to such effect signed on
behalf of the Company by the chief executive officer and chief financial
officer of the Company.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Effective Time (excluding solely the covenants of Section 5.6, the satisfaction
of which shall not constitute a condition to Parent's or Merger Sub's
obligations to consummate the Merger and the transactions contemplated by this
Agreement), except for non-performance of such agreements and covenants which
neither has, nor reasonably could be expected to have, a Material Adverse
Effect, and Parent and Merger Sub shall have received a certificate to such
effect signed by a duly authorized officer of the Company.
(c) LEGAL OPINION. Parent shall have received a legal opinion
from Cooley Godward LLP, legal counsel to the Company, in substantially the form
attached hereto as EXHIBIT H.
(d) AFFILIATE AGREEMENTS. Each of the parties identified by the
Company as being an Affiliate of the Company shall have delivered to Parent an
executed Affiliate Agreement which shall be in full force and effect.
(e) STOCKHOLDER'S CERTIFICATE. Each of the Company's
shareholders shall have delivered to Parent an executed Stockholder's
Certificate which shall be in full force and effect; provided, however, that
notwithstanding the foregoing, this Section 6.3(e) shall be satisfied if the
Company has not received such Certificates from not more than five holders of
the Company's capital stock who together beneficially own not more than 1% of
the Company's outstanding capital stock in the aggregate, unless the Company is
aware of any reason that the failure to receive such Certificates on or prior to
the Effective Time is the result of a shareholder's inability or unwillingness
to make the various representations and covenants provided therein.
(f) CONVERSION OF PREFERRED STOCK. All shares of Company
Preferred Stock shall have converted into Company Common Stock in accordance
with the Company's Articles of Incorporation.
(g) RESIGNATION OF DIRECTORS. The directors of the Company in
office immediately prior to the Effective Time shall have resigned as directors
of the Company effective immediately prior to the Effective Time.
(h) DISSENTERS' RIGHTS. Holders of more than 5% of the
outstanding shares of Company Capital Stock shall not have exercised, nor shall
they have any continued right to exercise, appraisal, dissenters' or similar
rights under applicable law with respect to their shares by virtue of the
Merger.
(i) OPINION OF ACCOUNTANTS. Parent and the Company shall have
received a letter, in form and substance satisfactory to Parent, from Ernst &
Young LLP regarding such firm's concurrence with Parent management's conclusions
as to the appropriateness of pooling of interests accounting for
-40-
<PAGE>
the Merger under Accounting Principles Board Opinion No. 16, if consummated
in accordance with this Agreement.
ARTICLE VII
ESCROW
7.1 ESCROW PERIOD. Subject to the following requirements, the Escrow
Fund (as defined in SECTION 7.2(a) below) shall be in existence immediately
following the Effective Time and shall terminate at 5:00 p.m., California time,
on the date which is one year following the Closing Date (the "ESCROW PERIOD");
provided that the Escrow Period shall not terminate with respect to such amount
(or some portion thereof) that is necessary (as defined in Section 7.2(a) below)
in the reasonable judgment of Parent, subject to the objection of the
Securityholder Agent (as defined below) and the subsequent arbitration of the
matter in the manner provided in Section 7.2(f) hereof, to satisfy any
unsatisfied claims concerning facts and circumstances existing prior to the
termination of such Escrow Period specified in any Officer's Certificate (as
defined in Section 7.2(d) below) delivered to the Escrow Agent prior to
termination of such Escrow Period; provided further that the Escrow Fund will
terminate in full upon final and complete resolution of all disputed matters.
7.2 ESCROW ARRANGEMENTS.
(a) ESCROW FUND. At the Effective Time, the Company's
shareholders will be deemed to have received and deposited with the Escrow Agent
(as defined below) the Escrow Amount (plus any additional shares as may be
issued upon any stock split, stock dividend or recapitalization effected by
Parent after the Effective Time) without any act of any shareholder. As soon as
practicable after the Effective Time, the Escrow Amount, without any act of any
shareholder, will be deposited with an institution acceptable to Parent and the
Securityholder Agent (as defined in Section 7.2(g) below)) as Escrow Agent (the
"ESCROW AGENT"), such deposit to constitute an escrow fund (the "ESCROW FUND")
to be governed by the terms set forth herein and at Parent's cost and expense.
The portion of the Escrow Amount contributed on behalf of each shareholder of
the Company shall be in proportion to the aggregate Parent Common Stock which
such holder would otherwise be entitled under Section 1.6(a). No portion of the
Escrow Amount shall be contributed in respect of any Company Options or
Warrants. The Escrow Fund shall be available to compensate Parent and its
affiliates for any claims, losses, liabilities, damages, deficiencies, costs and
expenses, including reasonable attorneys' fees and expenses, and expenses of
investigation and defense (hereinafter individually a "LOSS" and collectively
"LOSSES") incurred by Parent, its officers, directors, or affiliates (including
the Surviving Corporation) directly or indirectly as a result of any inaccuracy
or breach of a representation or warranty of the Company contained in Article II
herein (as modified by the Company Schedules, without giving effect to any
update thereto), or any failure by the Company to perform or comply with any
covenant contained herein; provided, however, that Parent may not receive any
shares from the Escrow Fund unless and until such Losses exceed in the aggregate
$500,000, in which event Parent shall receive shares equal in value to the full
amount of such Losses. Parent and the Company each acknowledge that such
Losses, if any, would relate to unresolved contingencies existing at the
Effective Time, which if resolved at the Effective Time would have led to
-41-
<PAGE>
a reduction in the aggregate Merger Consideration. Nothing herein shall
limit the liability of the Company for any breach of any representation,
warranty or covenant if the Merger does not close.
(b) DISTRIBUTION UPON TERMINATION OF ESCROW PERIOD. Upon
termination of the Escrow Period, the Escrow Agent shall deliver to the
shareholders of the Company that portion of the Escrow Fund that is not required
to satisfy any claims made by Parent pursuant to Section 7.2(d) hereof.
Deliveries of Escrow Amounts to the shareholders of the Company pursuant to this
Section 7.2(b) shall be made in proportion to their respective original
contributions to the Escrow Fund.
(c) PROTECTION OF ESCROW FUND.
(i) The Escrow Agent shall hold and safeguard the Escrow
Fund during the Escrow Period, shall treat such fund as a trust fund in
accordance with the terms of this Agreement and not as the property of Parent or
the Company's shareholders and shall hold and dispose of the Escrow Fund only in
accordance with the terms hereof.
(ii) Any shares of Parent Common Stock or other equity
securities issued or distributed by Parent (including shares issued upon a stock
split) ("NEW SHARES") in respect of Parent Common Stock in the Escrow Fund which
have not been released from the Escrow Fund shall be added to the Escrow Fund
and become a part thereof. New Shares issued in respect of shares of Parent
Common Stock which have been released from the Escrow Fund shall not be added to
the Escrow Fund but shall be distributed to the recordholders thereof. Cash
dividends on Parent Common Stock shall not be added to the Escrow Fund but shall
be distributed to the recordholders thereof.
(iii) Each shareholder shall have voting rights with
respect to the shares of Parent Common Stock contributed to the Escrow Fund by
such shareholder (and on any New Shares added to the Escrow Fund in respect of
such shares of Parent Common Stock).
(d) CLAIMS UPON ESCROW FUND.
(i) If the Escrow Agent receives at any time on or
before the last day of the Escrow Period a certificate signed by any officer of
Parent (an "OFFICER'S CERTIFICATE"): (A) stating that Parent has paid or
properly accrued or reasonably anticipates that it will have to pay or accrue
Losses caused directly or indirectly by any inaccuracy or breach of a
representation or warranty of the Company contained in Article II hereof (as
modified by the Company Schedules, without giving effect to any update thereto),
or any failure by the Company to perform or comply with any covenant contained
herein, and (B) specifying in reasonable detail the individual items of such
Losses included in the amount so stated, the date each such item was paid or
properly accrued, or the basis for such anticipated liability, and the nature of
the misrepresentation, breach of warranty or covenant to which such item is
related and the facts underlying the claim, the Escrow Agent shall, subject to
the provisions of Section 7.2(e) hereof, deliver to Parent out of the Escrow
Fund, as promptly as practicable, shares of Parent Common Stock held in the
Escrow Fund in an amount equal to any such Losses incurred or accrued by Parent.
-42-
<PAGE>
(ii) For the purposes of determining the number of shares
of Parent Common Stock to be delivered to Parent out of the Escrow Fund pursuant
to Section 7.2(d)(i) hereof, each share of Parent Common Stock shall be valued
at the average of the closing prices of Parent's Common Stock on the principal
securities exchange on which Parent's Common Stock is then traded, or if not so
traded, The Nasdaq National Market, in either case as reported in THE WALL
STREET JOURNAL for the twenty (20) consecutive trading days ending on the date
that is one (1) trading day prior to the Closing Date. Parent and the
Securityholder Agent shall certify such fair market value in a certificate
signed by both Parent and the Securityholder Agent, and shall deliver such
certificate to the Escrow Agent.
(e) OBJECTIONS TO CLAIMS. At the time of delivery of any
Officer's Certificate to the Escrow Agent, a duplicate copy of such certificate
shall be delivered to the Securityholder Agent and for a period of thirty (30)
days after such delivery, the Escrow Agent shall make no delivery to Parent of
any Escrow Amounts pursuant to Section 7.2(d) hereof unless the Escrow Agent
shall have received written authorization from the Securityholder Agent to make
such delivery. After the expiration of such thirty (30) day period, the Escrow
Agent shall make delivery of shares of Parent Common Stock from the Escrow Fund
in accordance with Section 7.2(d) hereof, provided that no such payment or
delivery may be made if the Securityholder Agent shall object in a written
statement to the claim made in the Officer's Certificate, and such statement
shall have been delivered to the Escrow Agent prior to the expiration of such
thirty (30) day period.
(f) RESOLUTION OF CONFLICTS; ARBITRATION.
(i) In case the Securityholder Agent shall so object in
writing to any claim or claims made in any Officer's Certificate, the
Securityholder Agent and Parent shall attempt in good faith to agree upon the
rights of the respective parties with respect to each of such claims. If the
Securityholder Agent and Parent should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties and shall be furnished to
the Escrow Agent. The Escrow Agent shall be entitled to rely on any such
memorandum and distribute shares of Parent Common Stock from the Escrow Fund in
accordance with the terms thereof.
(ii) If no such agreement can be reached after good faith
negotiation, either Parent or the Securityholder Agent may demand arbitration of
the matter unless the amount of the damage or loss is at issue in pending
litigation with a third party, in which event arbitration shall not be commenced
until such amount is ascertained or both parties agree to arbitration; and in
either such event the matter shall be settled by arbitration conducted by one
arbitrator. Parent and the Securityholder Agent shall agree on such arbitrator;
provided that if Parent and the Securityholder Agent cannot agree on such
arbitrator, either Parent or the Securityholder Agent can request that the
Judicial Arbitration and Mediation Services ("JAMS") select the arbitrator. The
arbitrator selected shall determine the dispute in accordance with Article VII
of this Agreement. The arbitrator shall set a limited time period and establish
procedures designed to reduce the cost and time for discovery while allowing the
parties an opportunity, adequate in the sole judgment of the arbitrator, to
discover relevant information from the opposing parties about the subject matter
of the dispute. The arbitrator shall rule upon motions to compel or limit
discovery and shall have the authority to impose sanctions, including attorneys'
fees and costs, to the same extent as a court of competent law or equity, should
the arbitrator determine that
-43-
<PAGE>
discovery was sought without substantial justification or that discovery was
refused or objected to without substantial justification. The decision of
the arbitrator as to the validity and amount of any claim in such Officer's
Certificate shall be binding and conclusive upon the parties to this
Agreement, and notwithstanding anything in Section 7.2(e) hereof, the Escrow
Agent shall be entitled to act in accordance with such decision and make or
withhold payments out of the Escrow Fund in accordance therewith. Such
decision shall be written and shall be supported by written findings of fact
and conclusions which shall set forth the award, judgment, decree or order
awarded by the arbitrator.
(iii) Judgment upon any award rendered by the arbitrators
may be entered in any court having jurisdiction. Any such arbitration shall be
held in Santa Clara County, California under the rules then in effect of the
American Arbitration Association. For purposes of this Section 7.2(f), in any
arbitration hereunder in which any claim or the amount thereof stated in the
Officer's Certificate is at issue, Parent shall be deemed to be the
Non-Prevailing Party in the event that the arbitrators award Parent less than
the sum of one-half (1/2) of the disputed amount plus any amounts not in
dispute; otherwise, the shareholders of the Company as represented by the
Securityholder Agent shall be deemed to be the Non-Prevailing Party. The
Non-Prevailing Party to an arbitration shall pay its own expenses, the fees of
each arbitrator, the administrative costs of the arbitration and the expenses,
including without limitation, reasonable attorneys' fees and costs, incurred by
the other party to the arbitration.
(g) SECURITYHOLDER AGENT OF THE SHAREHOLDERS; POWER OF ATTORNEY.
(i) In the event that the Merger is approved, effective
upon such vote, and without further act of any shareholder, Keng Lim shall be
appointed as agent and attorney-in-fact (the "SECURITYHOLDER AGENT") for each
shareholder of the Company (except such shareholders, if any, as shall have
perfected their appraisal or dissenters' rights under California Law) (a
"NON-DISSENTING SHAREHOLDER"), for and on behalf of each Non-dissenting
Shareholder, to give and receive notices and communications, to authorize
delivery to Parent of shares of Parent Common Stock from the Escrow Fund in
satisfaction of claims by Parent, to object to such deliveries, to agree to,
negotiate, enter into settlements and compromises of, and demand arbitration and
comply with orders of courts and awards of arbitrators with respect to such
claims, and to take all actions necessary or appropriate in the judgment of
Securityholder Agent for the accomplishment of the foregoing. Such agency may
be changed by the Non-dissenting Shareholders from time to time upon not less
than thirty (30) days prior written notice to Parent; provided that the
Securityholder Agent may not be removed unless holders of a two-thirds interest
of the Escrow Fund agree to such removal and to the identity of the substituted
agent. Any vacancy in the position of Securityholder Agent may be filled by
approval of the holders of a majority in interest of the Escrow Fund. No bond
shall be required of the Securityholder Agent, and the Securityholder Agent
shall not receive compensation for his or her services. Notices or
communications to or from the Securityholder Agent shall constitute notice to or
from each of the Non-dissenting Shareholders.
(ii) The Securityholder Agent shall not be liable for any
act done or omitted hereunder as Securityholder Agent while acting in good faith
and in the exercise of reasonable judgment. The Non-dissenting Shareholders on
whose behalf the Escrow Amount was contributed to the Escrow Fund shall
severally indemnify the Securityholder Agent and hold the Securityholder Agent
harmless
-44-
<PAGE>
against any loss, liability or expense incurred without negligence or bad
faith on the part of the Securityholder Agent and arising out of or in
connection with the acceptance or administration of the Securityholder
Agent's duties hereunder, including the reasonable fees and expenses of any
legal counsel retained by the Securityholder Agent.
(h) ACTIONS OF THE SECURITYHOLDER AGENT. A decision, act,
consent or instruction of the Securityholder Agent shall constitute a decision
of all the shareholders for whom a portion of the Escrow Amount otherwise
issuable to them are deposited in the Escrow Fund and shall be final, binding
and conclusive upon each of such shareholders, and the Escrow Agent and Parent
may rely upon any such decision, act, consent or instruction of the
Securityholder Agent as being the decision, act, consent or instruction of each
every such shareholder of the Company. The Escrow Agent and Parent are hereby
relieved from any liability to any person for any acts done by them in
accordance with such decision, act, consent or instruction of the Securityholder
Agent.
(i) THIRD-PARTY CLAIMS. In the event Parent becomes aware of
a third-party claim which Parent intends to assert for a demand against the
Escrow Fund, Parent shall notify the Securityholder Agent of such claim. The
Securityholder Agent shall be entitled at its expense to participate in any
defense of such claim, except with respect to claims relating to customers of
the Company or Parent. Parent shall have the right in its sole discretion
to settle any such claim; provided, however, that except with the consent of
the Securityholder Agent, no settlement of any such claim with third-party
claimants shall alone be determinative of the amount of any claim against the
Escrow Fund.
(j) ESCROW AGENT'S DUTIES.
(i) The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set forth herein, and as set
forth in any additional written escrow instructions which the Escrow Agent may
receive after the date of this Agreement which are signed by an officer of
Parent and the Securityholder Agent, and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed to be
genuine and to have been signed or presented by the proper party or parties.
The Escrow Agent shall not be liable for any act done or omitted hereunder as
Escrow Agent while acting in good faith and in the exercise of reasonable
judgment, and any act taken, suffered, or permitted pursuant to the advice of
counsel shall be conclusive evidence of such good faith.
(ii) The Escrow Agent is hereby expressly authorized to
comply with and obey orders, judgments or decrees of any court of law,
notwithstanding any notices, warnings or other communications from any of the
parties hereto or any other person to the contrary. In case the Escrow Agent
obeys or complies with any such order, judgment or decree of any court, the
Escrow Agent shall not be liable to any of the parties hereto or to any other
person by reason of such compliance, notwithstanding any such order, judgment or
decree being subsequently reversed, modified, annulled, set aside, vacated or
found to have been entered without jurisdiction.
(iii) The Escrow Agent shall not be liable in any respect
on account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver this Agreement or any documents
or papers deposited or called for hereunder.
-45-
<PAGE>
(iv) The Escrow Agent shall not be liable for the
expiration of any rights under any statute of limitations with respect to this
Agreement or any documents deposited with the Escrow Agent.
(v) In performing any duties under the Agreement, the
Escrow Agent shall not be liable to any party for damages, losses, or
expenses, except for gross negligence or willful misconduct on the part of
the Escrow Agent. The Escrow Agent shall not incur any such liability for
(A) any act or failure to act made or omitted in good faith, or (B) any
action taken or omitted in reliance upon any instrument, including any
written statement or affidavit provided for in this Agreement that the Escrow
Agent shall in good faith believe to be genuine, nor will the Escrow Agent be
liable or responsible for forgeries, fraud, impersonations, or determining
the scope of any representative authority. In addition, the Escrow Agent may
consult with legal counsel in connection with Escrow Agent's duties under
this Agreement. The Escrow Agent is not responsible for determining and
verifying the authority of any person acting or purporting to act on behalf
of any party to this Agreement.
(vi) If any controversy arises between the parties to
this Agreement, or with any other party, concerning the subject matter of this
Agreement, its terms or conditions, the Escrow Agent will not be required to
determine the controversy or to take any action regarding it. The Escrow Agent
may hold all documents and shares of Parent Common Stock and may wait for
settlement of any such controversy by final appropriate legal proceedings or
other means as, in the Escrow Agent's discretion, the Escrow Agent deems may be
required, despite what may be set forth elsewhere in this Agreement. In such
event, the Escrow Agent will not be liable for damages.
(vii) Parent agrees to indemnify and hold Escrow Agent
harmless against any and all losses, claims, damages, liabilities, and expenses,
including reasonable costs of investigation, counsel fees, and disbursements
that may be imposed on Escrow Agent or incurred by Escrow Agent in connection
with the performance of his/her duties under this Agreement, including but not
limited to any litigation arising from this Agreement or involving its subject
matter.
(viii) The Escrow Agent may resign at any time upon giving
at least thirty (30) days written notice to the parties; provided, however, that
no such resignation shall become effective until the appointment of a successor
escrow agent which shall be accomplished as follows: the parties shall use
their best efforts to mutually agree on a successor escrow agent within thirty
(30) days after receiving such notice. If the parties fail to agree upon a
successor escrow agent within such time, the Escrow Agent shall have the right
to appoint a successor escrow agent authorized to do business in the State of
California. The successor escrow agent shall execute and deliver an instrument
accepting such appointment in form and substance acceptable to Parent and
Securityholder Agent and it shall, without further acts, be vested with all the
estates, properties, rights, powers, and duties of the predecessor escrow agent
as if originally named as escrow agent. The predecessor escrow agent shall be
discharged from any further duties and liability under this Agreement upon the
execution by such successor of such agreement.
(k) FEES. All fees of the Escrow Agent for performance of its
duties hereunder shall be paid by Parent. It is understood that the fees and
usual charges agreed upon for services of the
-46-
<PAGE>
Escrow Agent shall be considered compensation for ordinary services as
contemplated by this Agreement. In the event that the conditions of this
Agreement are not promptly fulfilled, or if the Escrow Agent renders any
service not provided for in this Agreement, or if the parties request a
substantial modification of its terms, or if any controversy arises, or if
the Escrow Agent is made a party to, or intervenes in, any litigation
pertaining to this escrow or its subject matter, the Escrow Agent shall be
reasonably compensated for such extraordinary services and reimbursed for all
costs, attorney's fees, and expenses occasioned by such default, delay,
controversy or litigation. Parent promises to pay these sums upon demand.
(l) EXCLUSIVE REMEDY. Except for acts constituting fraud,
intentional misrepresentation or other willful misconduct, the Escrow Fund
provided for in this Article VII shall be the exclusive remedy in respect of any
matter subject to the Escrow Fund hereunder and no claim or cause of action with
respect to any misrepresentation, breach or default as to any representation,
warranty, agreement, covenant or obligation contained in this Agreement or in
any certificate or schedule delivered pursuant to this Agreement, shall be
enforceable unless made in accordance with the procedures, and, within the time
periods, set forth in this Article VII.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. Except as provided in Section 8.2 below, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time:
(a) by mutual written consent of the Company and Parent;
(b) by Parent or the Company if: (i) the Effective Time has not
occurred before 5:00 p.m. (Pacific time) on December 31, 1997 (provided that the
right to terminate this Agreement under this clause 8.1(b)(i) shall not be
available to any party whose willful failure to fulfill any obligation hereunder
has been the cause of, or resulted in, the failure of the Effective Time to
occur on or before such date); (ii) there shall be a final nonappealable order
of a federal or state court in effect preventing consummation of the Merger; or
(iii) there shall be any statute, rule, regulation or order enacted, promulgated
or issued or deemed applicable to the Merger by any Governmental Entity that
would make consummation of the Merger illegal;
(c) by Parent if there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Merger, by any Governmental Entity, which would: (i) prohibit
Parent's or the Company's ownership or operation of all or any portion of the
business of the Company or (ii) compel Parent or the Company to dispose of or
hold separate all or a portion of the business or assets of the Company or
Parent as a result of the Merger;
(d) by Parent if it is not in material breach of its obligations
under this Agreement and there has been a breach of any representation,
warranty, covenant or agreement contained in this
-47-
<PAGE>
Agreement on the part of the Company and (i) such breach has not been cured
within ten (10) business days after written notice to the Company (provided
that, no cure period shall be required for a breach which by its nature
cannot be cured), and (ii) as a result of such breach the conditions set
forth in Section 6.3(a) or 6.3(b), as the case may be, would not then be
satisfied;
(e) by the Company if it is not in material breach of its
obligations under this Agreement and there has been a breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of Parent or Merger Sub and (i) such breach has not been cured within
ten (10) business days after written notice to Parent (provided that, no cure
period shall be required for a breach which by its nature cannot be cured), and
(ii) as a result of such breach the conditions set forth in Section 6.2(a) or
6.2(b), as the case may be, would not then be satisfied.
Where action is taken to terminate this Agreement pursuant to this
Section 8.1, it shall be sufficient for such action to be authorized by the
Board of Directors (as applicable) of the party taking such action.
8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Parent, Merger Sub
or the Company, or their respective officers, directors or stockholders,
provided that each party shall remain liable for any breaches of this Agreement
prior to its termination; and provided further that, the provisions of
Sections 5.3, 5.4 and 5.5 and Articles VIII and IX (other than Section 9.1) of
this Agreement shall remain in full force and effect and survive any termination
of this Agreement.
8.3 AMENDMENT. Except as is otherwise required by applicable law after
the shareholders of the Company approve this Agreement, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto.
8.4 EXTENSION; WAIVER. At any time prior to the Effective Time, Parent
and Merger Sub, on the one hand, and the Company, on the other, may, to the
extent legally allowed, (i) extend the time for the performance of any of the
obligations of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
-48-
<PAGE>
ARTICLE IX
GENERAL PROVISIONS
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the
consummation of the Merger and shall (except to the extent that survival is
necessary to effectuate the intent of such provisions) terminate one (1) year
after the Closing Date.
9.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of complete transmission)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Netscape Communications Corporation
501 East Middlefield Road
Mountain View, CA 94043
Attention: Roberta R. Katz, Esq.
Telephone No.: (650) 254-1900
Facsimile No.: (650) 937-4126
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: James N. Strawbridge, Esq.
Telephone No.: (415) 493-9300
Facsimile No.: (415) 493-6811
(b) if to the Company, to:
KIVA Software Corporation
1585 Charleston Road
Mountain View, CA 94043
Attention: Chief Executive Officer
Telephone No.: (650) 526-3900
Facsimile No.: (650) 429-4295
-49-
<PAGE>
with a copy to:
Cooley Godward LLP
3000 Sand Hill Road
Building 3, Suite 230
Menlo Park, CA 94025-7116
Attention: Craig E. Dauchy, Esq.
Telephone No.: (650) 843-5000
Facsimile No.: (650) 854-2691
(c) if to the Securityholder Agent:
Keng Lim
c/o KIVA Software Corporation
1585 Charleston Road
Mountain View, CA 94043
Telephone No.: (650) 526-3900
Facsimile No.: (650) 429-4295
9.3 INTERPRETATION. The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation." The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
9.5 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, the Schedules and
Exhibits hereto, and the documents and instruments and other agreements among
the parties hereto referenced herein: (a) constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof; (b) except as specified in Section 5.1(d)
hereof, are not intended to confer upon any other person any rights or remedies
hereunder; and (c) shall not be assigned by operation of law or otherwise except
as otherwise specifically provided, except that Parent and Merger Sub may assign
their respective rights and delegate their respective obligations hereunder to
their respective affiliates.
9.6 SEVERABILITY. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to
replace such void or unenforceable provision of this Agreement with
-50-
<PAGE>
a valid and enforceable provision that will achieve, to the extent possible,
the economic, business and other purposes of such void or unenforceable
provision.
9.7 OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
9.8 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof. Each of the parties hereto agrees that process may be served upon them
in any manner authorized by the laws of the State of California for such persons
and waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction and such process.
9.9 ARBITRATION.
(a) The parties shall attempt in good faith to agree upon the
rights of the respective parties with respect to any dispute or controversy
arising out of, relating to, or in connection with this Agreement or the
interpretation, validity, construction, performance, breach or complete
termination thereof.
(b) If no such agreement can be reached after good faith
negotiation, either of the parties may demand arbitration of the matter
(except any such dispute or controversy related to Article VII or Section
2.11 or 2.15 of this Agreement) and the matter shall be settled by
arbitration conducted by one arbitrator. Parent and the Company shall agree
on the arbitrator; provided that if Parent and the Company cannot agree on
one arbitrator, either Parent or the Company can request that the JAMS select
the arbitrator. The arbitrator selected by the JAMS shall determine the
dispute in accordance with Section 9.9. The arbitrator shall set a limited
time period and establish procedures designed to reduce the cost and time for
discovery while allowing the parties an opportunity, adequate in the sole
judgment of the arbitrator, to discover relevant information from the
opposing parties about the subject matter of the dispute. The arbitrator
shall rule upon motions to compel or limit discovery and shall have the
authority to impose sanctions, including attorneys' fees and costs, to the
same extent as a court of competent law or equity, should the arbitrator
determine that discovery was sought without substantial justification or that
discovery was refused or objected to without substantial justification. The
decision of the arbitrator shall be final, conclusive and binding upon the
parties to this Agreement. Such decision shall be written and shall be
supported by written findings of fact and conclusions which shall set forth
the award, judgment, decree or order awarded by the arbitrator.
(c) Judgment upon any award rendered by the arbitrator may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Santa Clara County, California under the rules then in effect of JAMS. For
purposes of this Section 9.9, in any arbitration hereunder, the non-prevailing
Party to an arbitration shall pay its own expenses, the fees of the arbitrator,
the administrative costs of
-51-
<PAGE>
the arbitration and the expenses, including without limitation, reasonable
attorneys' fees and costs, incurred by the other party to the arbitration.
9.10 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
9.11 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-52-
<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub, the Company and the Securityholder
Agent (but only as to Articles VII and IX for Securityholder Agent) and have
caused this Agreement to be signed by their duly authorized respective officers,
all as of the date first written above.
NETSCAPE COMMUNICATIONS KIVA SOFTWARE CORPORATION
CORPORATION
By: /s/ Peter L.S. Currie By: /s/ Keng S. Lim
---------------------------- ----------------------------
Name: Peter L.S. Currie Name: Keng S. Lim
---------------------------- ----------------------------
Title: Senior Vice President Title: President and Chief
and CFO Executive Officer
---------------------------- ----------------------------
SECURITYHOLDER AGENT KNIFE ACQUISITION CORPORATION
By: /s/ Keng S. Lim By: /s/ Peter L.S. Currie
---------------------------- ----------------------------
Name: Keng S. Lim Name: Peter L.S. Currie
---------------------------- ----------------------------
Title: Title: President & Chief Financial
Officer
---------------------------- ----------------------------
[SIGNATURE PAGE TO REORGANIZATION AGREEMENT]
<PAGE>
EXHIBIT A
STOCKHOLDER CERTIFICATE
The undersigned is aware that pursuant to an Agreement and Plan of
Reorganization dated as of November 24, 1997 (the "REORGANIZATION AGREEMENT"),
by and among Netscape Communications Corporation, a Delaware corporation
("PARENT"), KIVA Software Corporation, a California corporation (the "COMPANY"),
and Knife Acquisition Corporation, a Delaware corporation and wholly-owned
subsidiary of Parent ("MERGER SUB"), Merger Sub will merge with and into the
Company (the "MERGER") and shares of Company Capital Stock (the "MERGER SHARES")
will be exchanged for shares of Parent Common Stock. Parent will use the
responses to this questionnaire to qualify shareholders of the Company who will
receive Merger Shares for purposes of federal and state securities laws.
Your answers will be kept confidential at all times. However, by signing
this questionnaire, you agree that the Company or Parent may present this
questionnaire to such parties as it deems appropriate to establish the
availability of exemptions from registration under state and federal securities
laws.
This questionnaire is divided into the following sections:
- Section 1: the undersigned is asked to provide various background
information about the undersigned.
- Section 2: the undersigned is asked to provide factual
representations relevant to a determination of the undersigned's
status as an "accredited investor" within the meaning of Regulation D
promulgated under the Securities Act of 1933, as amended.
- Section 3: the undersigned is asked to provide certain
representations as to the investor's business experience, investment
sophistication and ability to appreciate the risks inherent in the
Merger.
- Section 4: the undersigned shareholder is asked to provide additional
representations regarding investment capability, receipt of
information and investment intent.
FAILURE TO COMPLETE THIS QUESTIONNAIRE COULD RESULT IN THE NON-CONSUMMATION
OF THE MERGER.
If the answer to any question below is "none" or "not applicable", please
so indicate.
Please COMPLETE, SIGN, DATE and FAX one copy of this questionnaire no later
than November 24, 1997 (with original to follow by mail) to Vincent P.
Pangrazio, Cooley Godward LLP, 3000 Sand Hill Road, Building 3, Suite 320, Menlo
Park, CA 94025-7166 (fax: (650) 854-2691).
<PAGE>
SECTION 1 -- BACKGROUND INFORMATION
1. IDENTIFICATION
(a) NAME OF INDIVIDUAL
OR ENTITY: ____________________________________________
(b) ADDRESS OF PRINCIPAL
PLACE OF BUSINESS (OR,
IF AN INDIVIDUAL,
RESIDENCE ADDRESS): ____________________________________
(c) JURISDICTION OF FORMATION
OR INCORPORATION (IF THE
UNDERSIGNED IS AN ENTITY
OTHER THAN AN INDIVIDUAL): ________________________________
(d) TELEPHONE NUMBER: ______________________________________
SECTION 2 -- REPRESENTATIONS AS TO "ACCREDITED INVESTOR"
2. REPRESENTATIONS AS TO STATUS AS AN ACCREDITED INVESTOR
(a) DEFINITION OF ACCREDITED INVESTOR
The undersigned understands that Regulation D promulgated under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), defines an
"accredited investor" as any person coming within any of the following
categories:
(1) Any bank as defined in Section 3(a)(2) of the Securities Act or
any savings and loan or other institution as defined in Section
3(a)(5)(A) of the Securities Act whether acting in its individual
or fiduciary capacity; broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934; insurance
company as defined in Section 2(13) of the Securities Act;
investment company registered under the Investment Company Act of
1940 or a business development company as defined in
Section 2(a)(48) of that Act; Small Business Investment Company
licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of
1958; plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefits of its employees if such
plan has total assets in excess of $5,000,000; employee benefit
A-2
<PAGE>
plan within the meaning of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a
plan fiduciary, as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company,
or registered investment adviser, or if the employee benefit plan
has total assets in excess of $5,000,000 or, if a self-directed
plan, with investment decisions made solely by persons that are
accredited investors;
(2) Any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of
acquiring the securities offered, with total assets in excess of
$5,000,000;
(4) Any natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his or her purchase
exceeds $1,000,000;
(5) Any natural person who had (i) an individual income in excess of
$200,000 in each of the two most recent years and who reasonably
expects an income in excess of $200,000 in the current year or
(ii) a joint income with that person's spouse in excess of
$300,000 in each of the two most recent years and who reasonably
expects a joint income in excess of $300,000 in the current year;
(6) Any trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the securities offered,
whose purchase is directed by a sophisticated person as described
in Rule 506(b)(2)(ii) promulgated under the Securities Act; or
(7) Any entity in which all of the equity owners are accredited
investors under paragraphs (1), (2), (3), (4), (5) or (6) above.
(b) OTHER DEFINITIONS.
For the purposes of category (4), the term "net worth" means the
excess of total assets over total liabilities. In computing net
worth, the undersigned's principal residence must be valued either at
(A) cost, including the cost of improvements, net of current
encumbrances upon the property or (B) the appraised value of the
property as determined upon a written appraisal used by an
institutional lender making a loan to the individual secured by the
property, including the cost of subsequent improvements, net of
current encumbrances upon the property. In determining income, the
undersigned should add to his or her adjusted gross income any amounts
attributable to tax exempt income received, losses claimed as a
limited partner in any limited partnership, deductions claimed for
A-3
<PAGE>
depletion, contributions to an IRA or Keogh retirement plan, alimony
payments and any amount by which income from long-term capital gains
has been reduced in arriving at adjusted gross income.
(c) REPRESENTATION AS TO STATUS AS AN ACCREDITED INVESTOR
INSTRUCTIONS: PLEASE INDICATE BY CHECKING THE APPROPRIATE BOX WHETHER
THE UNDERSIGNED IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF
REGULATION D, AND IF SO BY VIRTUE OF WHICH OF THE ABOVE CATEGORIES.
/ / (i) THE UNDERSIGNED HEREBY REPRESENTS THAT THE UNDERSIGNED IS AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF REGULATION D,
AND IS INCLUDED WITHIN THE FOLLOWING ACCREDITED INVESTOR
CATEGORY OR CATEGORIES DEFINED ABOVE (CIRCLE APPLICABLE
CATEGORIES):
(1) (5)
(2) (6)
(3) (7)*
(4)
* If the undersigned belongs to accredited investor
category "(7)" only, a list of the shareholders, partners or
beneficiaries of the undersigned, and the "accredited
investor" category which each such shareholder, partner or
beneficiary satisfies, must be provided on Attachment A to
this questionnaire.
/ / (ii) THE UNDERSIGNED IS NOT AN "ACCREDITED INVESTOR" WITHIN THE
MEANING OF REGULATION D, BECAUSE THE UNDERSIGNED IS NOT
INCLUDED IN ANY OF THE ABOVE CATEGORIES (1) THROUGH (7).
(d) REPRESENTATION AS TO FORM OF ENTITY
INDICATE THE FORM OF ENTITY OF THE UNDERSIGNED:
/ / INDIVIDUAL
/ / LIMITED PARTNERSHIP
/ / GENERAL PARTNERSHIP
/ / CORPORATION
/ / REVOCABLE TRUST
A-4
<PAGE>
/ / OTHER TYPE OF TRUST (INDICATE TYPE OF TRUST AND, FOR TRUSTS OTHER
THAN PENSION TRUSTS, NAME THE GRANTORS AND BENEFICIARIES IN
ATTACHMENT A TO THIS QUESTIONNAIRE)
/ / OTHER FORM OF ORGANIZATION (INDICATE FORM OF ORGANIZATION
_______________________________).
SECTION 3 -- REPRESENTATIONS AS TO INVESTMENT EXPERIENCE
3. REPRESENTATIONS AS TO INVESTMENT EXPERIENCE
(a) The undersigned represents that it understands that an exemption from
registration under the Securities Act and applicable state securities
laws may still be available, in the event that the offer and sale of
the securities to the shareholders of the Company do not meet the
criteria required under Regulation D described above, if the
shareholders have certain investment experience.
(b) The undersigned represents that the following information is true:
(1) INSTRUCTIONS: INDIVIDUALS SHOULD COMPLETE PARAGRAPH (2) OF THIS
SECTION 3(B) BELOW AND NEED NOT COMPLETE PARAGRAPH (3); NON-INDIVIDUALS
SHOULD SKIP PARAGRAPH (2) BELOW AND COMPLETE PARAGRAPH (3), BELOW.
(2) INDIVIDUALS: Please complete the following:
(i) PERSONAL
DATE OF BIRTH ________________________________
SOCIAL SECURITY NUMBER _______________________
A-5
<PAGE>
(ii) BUSINESS
OCCUPATION ___________________________________
NUMBER OF YEARS ______________________________
PRESENT EMPLOYER _____________________________
POSITION/TITLE _______________________________
(iii) RESIDENCE INFORMATION
1. SET FORTH IN THE SPACE PROVIDED BELOW THE STATE(S)
IN WHICH YOU HAVE MAINTAINED YOUR PRINCIPAL
RESIDENCE DURING THE PAST THREE YEARS AND THE
DATES DURING WHICH YOU RESIDED IN EACH STATE.
_________________________________________
_________________________________________
2. DO YOU MAINTAIN RESIDENCE IN ANY OTHER STATE? IF
YES, IN WHICH STATE(S)?
_________________________________________
(iv) EDUCATION
PLEASE DESCRIBE YOUR EDUCATIONAL BACKGROUND AND DEGREES
OBTAINED, IF ANY.
______________________________________________
______________________________________________
______________________________________________
(v) AFFILIATION
If you have any pre-existing personal or business
relationship with Parent or any of its officers,
directors or controlling persons, please describe the
nature and duration of such relationship.
______________________________________________
______________________________________________
______________________________________________
______________________________________________
A-6
<PAGE>
(vi) BUSINESS AND FINANCIAL EXPERIENCE
PLEASE DESCRIBE IN REASONABLE DETAIL THE NATURE AND
EXTENT OF YOUR BUSINESS, FINANCIAL AND INVESTMENT
EXPERIENCE THAT YOU BELIEVE GIVES YOU THE CAPACITY TO
EVALUATE THE MERITS AND RISKS OF THE MERGER AND THE
CAPACITY TO PROTECT YOUR INTERESTS.
_________________________________________
_________________________________________
_________________________________________
_________________________________________
_________________________________________
_________________________________________
_________________________________________
_________________________________________
(vii) FINANCIAL ADVISORS
IN EVALUATING THIS INVESTMENT, WILL YOU USE THE SERVICES
OF ANY ADVISORS? (IF SO, PLEASE IDENTIFY, PROVIDING
ADDRESS AND TELEPHONE NUMBER.)
(3) NON-INDIVIDUALS: Please complete the following:
(i) NET WORTH
PLEASE STATE THE CURRENT NET WORTH OF THE ENTITY.
$___________.
(ii) BUSINESS
PLEASE DESCRIBE THE NATURE OF THE BUSINESS CONDUCTED BY
THE ENTITY.
_______________________________________________
_______________________________________________
_______________________________________________
A-7
<PAGE>
(iii) INVESTMENT EXPERIENCE
PLEASE PROVIDE INFORMATION DETAILING THE BUSINESS,
FINANCIAL AND INVESTMENT EXPERIENCE OF THE ENTITY AND
INVESTMENT MANAGER OF SUCH ENTITY.
______________________________________________
______________________________________________
______________________________________________
______________________________________________
______________________________________________
______________________________________________
SECTION 4 -- ADDITIONAL REPRESENTATIONS
4. REPRESENTATIONS AS TO INVESTMENT CAPABILITY, RECEIPT OF INFORMATION AND
INVESTMENT INTENT
(a) The undersigned hereby acknowledges that Phil Van Etten, Chief
Financial Officer, is acting as a "Purchaser Representative," as that
term is defined in Rule 501(h) of the Securities Act, in connection
with the Merger. Furthermore, to the extent that the undersigned
cannot make the following representations individually, the
undersigned hereby represents and warrants that he, she or it is
relying upon the Purchaser Representative;
(b) The undersigned hereby represents and warrants that he, she or it has,
or together with the Purchaser Representative if the undersigned has
relied upon the Purchaser Representative, the undersigned and the
Purchaser Representative collectively have, such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of the Merger and the undersigned's
investment in the Merger Shares;
(c) The undersigned hereby represents and warrants that he, she or it
(i) has the ability to bear the economic risks of the undersigned's
prospective investment; and (ii) is able, without materially impairing
his, her or its financial condition, to hold the Merger Shares for an
indefinite period of time and to suffer complete loss on such
investment;
(d) The undersigned hereby represents and warrants that he, she or it has
received copies of Parent's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 and Proxy Materials of Parent's 1997
Stockholders meeting, an executed copy of the Reorganization
Agreement, the Company's Information Statement describing the Merger
and has, either alone or together with the Purchaser Representative,
received all the information he, she or it, or the Purchaser
Representative, has requested from Parent or the Company that he, she
or it or the Purchaser Representative considers reasonably necessary
or appropriate for deciding whether to accept the Merger Shares
without
A-8
<PAGE>
causing Parent or the Company unreasonable effort or expense
to deliver such information;
The Merger Shares issued and sold to the undersigned will be acquired
for investment for the undersigned's own account, not as a nominee or
agent, and not with a view to the sale or distribution of any part
thereof, and the undersigned has no present intention of selling,
granting any participation in, or otherwise distributing the same.
The undersigned represents that the entire legal and beneficial
interest of the Merger Shares will be held for the undersigned's
account only, and neither in whole or in part for any other person.
By executing this Shareholder Questionnaire, the undersigned further
represents that the undersigned has no present contract, undertaking,
agreement or arrangement with any person to sell, transfer, or grant
participation to such person or to any third person, with respect to
any of the Merger Shares.
The undersigned understands and acknowledges that all certificates for
the Merger Shares shall bear the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SECURITIES MAY
NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
UNLESS (i) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT WITH
RESPECT TO THE SECURITIES OR (ii) THERE IS AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED OR
THAT SUCH TRANSFER MAY BE MADE PURSUANT TO RULE 144 OR RULE 144A OF
THE ACT."
and that the certificates evidencing the Merger Shares shall also bear
any legend required by the Commissioner of Corporations of the State
of California or such as are required pursuant to any state, local or
foreign law governing such securities.
The undersigned understands and acknowledges that the Merger Shares
have not been registered under the Securities Act based on an
exemption from registration and that Parent's reliance upon such
exemption is predicated upon the undersigned's representations. The
undersigned further understands and acknowledges that the Merger
Shares must be held indefinitely unless subsequently registered under
the Securities Act or an exemption from such registration is available
and neither Parent nor the Company is under any obligation to register
the Merger Shares except as provided in the Declaration of
Registration Rights attached as Exhibit B to the Reorganization
Agreement.
The undersigned is familiar with the provisions of Rule 144,
promulgated under the Securities Act, which in substance, permits
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof (or from an affiliate of such
issuer)
A-9
<PAGE>
in a non-public offering subject to the satisfaction of certain
conditions, including, among other things: (i) a public
trading market then exists for the Parent Common Stock; (ii) the
availability of certain public information about Parent; and (iii) the
resale occurring not less than the holding period stated by Rule 144.
The undersigned further understands that at the time the undersigned
wishes to sell the Merger Shares there may be no public market upon
which to make such a sale, and that, even if such a public market then
exists, Parent may not be in compliance with the current public
information requirements of Rule 144, and that, in such event, the
undersigned would be precluded from selling the Merger Shares under
Rule 144 even if the minimum holding period had been satisfied. The
undersigned further understands that in the event all of the
applicable requirements of Rule 144 are not satisfied, registration
under the Securities Act or some other registration exemption would be
required to sell the Merger Shares.
The undersigned covenants that in no event will he, she or it dispose
of any Merger Shares (other than pursuant to an exemption from
registration) unless and until the undersigned shall have notified
Parent of the proposed disposition and shall have furnished Parent
with a statement of the circumstances surrounding the proposed
disposition, and if requested by Parent, the undersigned shall have
furnished Parent with a legal opinion in form and substance reasonably
acceptable to Parent and delivered by counsel deemed acceptable to
Parent in its sole discretion to the effect that (x) such disposition
will not require registration under the Securities Act and (y)
appropriate action necessary for compliance with the Securities Act
and any applicable state, local, or foreign law has been taken.
The undersigned acknowledges that neither Parent nor any person acting
on Parent's behalf offered or sold the Merger Shares to the
undersigned by any form of general solicitation or general
advertising, including, but not limited to, the following:
An advertisement, article, notice or other written or printed
communication published in any newspaper, magazine, or similar media
or any communication broadcast over television or radio or any
communication by means of recorded telephone messages; and
Any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
A-10
<PAGE>
THE ABOVE INFORMATION AND REPRESENTATIONS ARE TRUE AND CORRECT IN ALL
MATERIAL RESPECTS AND THE UNDERSIGNED RECOGNIZES THAT PARENT AND ITS COUNSEL ARE
RELYING ON THE TRUTH AND ACCURACY OF SUCH INFORMATION IN RELIANCE ON THE
EXEMPTION CONTAINED IN SUBSECTION 4(2) OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND REGULATION D PROMULGATED THEREUNDER. THE UNDERSIGNED AGREES TO
NOTIFY PARENT PROMPTLY OF ANY CHANGES IN THE FOREGOING INFORMATION WHICH MAY
OCCUR PRIOR TO THE CLOSING OF THE MERGER.
Executed at ________________________ on, ________________, 1997.
___________________________________________
(Signature)
___________________________________________
(Please Print Name and Title, if applicable)
<PAGE>
EXHIBIT B
NETSCAPE COMMUNICATIONS CORPORATION
DECLARATION OF REGISTRATION RIGHTS
This Declaration of Registration Rights ("DECLARATION") is made as of the
Closing Date (as defined in the Reorganization Agreement) by Netscape
Communications Corporation, a Delaware corporation ("PARENT"), for the benefit
of shareholders of KIVA Software Corporation, a California corporation (the
"COMPANY"), acquiring shares of Common Stock of Parent pursuant to that certain
Agreement and Plan of Reorganization dated as of November 24, 1997 (the
"REORGANIZATION AGREEMENT"), by and among Parent, Knife Acquisition Corporation,
a Delaware corporation and a wholly-owned subsidiary of Parent ("MERGER SUB")
and the Company.
1. DEFINITIONS. As used in this Declaration:
a. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
b. "SECURITIES ACT" means the Securities Act of 1933, as amended.
c. "FORM S-3" means such form under the Securities Act as in effect
on the date hereof or any registration form under the Securities Act
subsequently adopted by the Commission which similarly permits inclusion or
incorporation of substantial information by reference to other documents filed
by Parent with the Commission.
d. "HOLDER" means: (i) a shareholder of the Company to whom shares
of Registrable Securities are issued pursuant to the Reorganization Agreement,
for so long as such holder continues to hold such shares, or (ii) a transferee
of Registrable Securities by a Holder, to whom registration rights under this
Declaration are assigned pursuant to Section 9 of this Declaration.
e. "REGISTRABLE SECURITIES" means for each Holder the shares of
Parent Common Stock issued to such Holder pursuant to the Reorganization
Agreement, together with all other shares of Parent Common Stock issued in
respect thereof (by way of stock split, dividend or otherwise), and for all
Holders the aggregate of all Registrable Securities held by all such Holders.
Registrable Securities shall include any shares of Parent Common Stock
transferred by a Holder pursuant to Section 9 hereof to any person, provided
that such transferee agrees to be bound by the terms of this Declaration.
f. "SEC" means the Securities and Exchange Commission.
Capitalized terms not otherwise defined herein have the meanings given to
them in the Reorganization Agreement.
<PAGE>
2. REGISTRATION. Parent shall use its commercially reasonable efforts to
cause the Registrable Securities to be held by each Holder following the Merger
to be registered under the Securities Act so as to permit the resale thereof,
and in connection therewith shall use all commercially reasonable efforts to
prepare and file with the SEC promptly after Closing, and shall use its
commercially reasonable efforts to cause to become effective by not later than
January 30, 1998, a registration statement on Form S-3 or on such other form as
is then available under the Securities Act covering the Registrable Securities;
provided, however, that each Holder shall provide all such information and
materials to Parent and take all such action as may be required in order to
permit Parent to comply with all applicable requirements of the SEC and to
obtain any desired acceleration of the effective date of such registration
statement. Such provision of information and materials is a condition precedent
to the obligations of Parent pursuant to this Declaration. Parent shall not be
required to effect more than one (1) registration under this Declaration. The
offering made pursuant to such registration shall not be underwritten.
3. POSTPONEMENT OF REGISTRATION. Notwithstanding Section 2 above, Parent
shall be entitled to postpone the declaration of effectiveness of the
registration statement prepared and filed pursuant to Section 2 for a reasonable
period of time, but not in excess of fifteen (15) calendar days after the
applicable deadline, if the Board of Directors of Parent, acting in good faith,
determines that there exists material nonpublic information about Parent which
the Board does not wish to disclose in a registration statement (due to the fact
that such disclosure may not be in the best interests of Parent or Parent's
stockholders) which information would otherwise be required by the Securities
Act to be disclosed in the registration statement to be filed pursuant to
Section 2 above.
4. OBLIGATIONS OF PARENT. Subject to the limitations of Sections 3, 5
and 11, Parent shall (i) keep the registration statement filed in accordance
with Section 2 hereof effective until the earlier of (A) one (1) year after the
Effective Time of the Merger or (B) such time as all Registrable Securities have
been sold hereunder; (ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all securities proposed to
be registered in such registration statement; (iii) furnish to each Holder such
number of copies of any prospectus (including any preliminary prospectus and any
amended or supplemented prospectus) in conformity with the requirements of the
Securities Act, and such other documents, as each Holder may reasonably request
in order to effect the offering and sale of the shares of the Registrable
Securities to be offered and sold, but only while Parent shall be required under
the provisions hereof to cause the registration statement to remain current; and
(iv) use its commercially reasonable efforts to register or qualify the shares
of the Registrable Securities covered by such registration statement under the
securities or blue sky laws of such jurisdictions as each Holder shall
reasonably request (provided that Parent shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such jurisdiction where it has not
been qualified).
B-2
<PAGE>
5. SELLING PROCEDURES. Any sale of Registrable Securities pursuant to
the registration statement filed in accordance with Section 2 hereof shall be
subject to the following conditions and procedures:
a. STOCKHOLDER NOTICE: The selling Holder shall provide written
notice ("STOCKHOLDER NOTICE") to Parent no less than three (3) business days
prior to such Holder's intended sale. Within two (2) business days of receipt
of the Stockholder Notice, Parent will inform such Holder in writing if the
registration statement and final prospectus then on file with the SEC is current
and otherwise complies with the Securities Act such that sales may be made
thereunder. Beginning immediately upon receipt of notice from Parent that the
registration statement is current and complies with the Securities Act, such
Holder shall then have ten (10) business days to sell the Registrable Securities
proposed to be sold, unless the notice from Parent specifies that no sale may be
made until the date of intended sale, as specified in the Stockholder Notice, in
which case the Holders must wait until the date of the intended sale to make
such sale and Holder shall have ten (10) business days thereafter to make such
sale. After such ten (10) day period, the seller shall once again comply with
the procedures set forth in this Section 5.a prior to any further sales;
b. UPDATING THE PROSPECTUS: If Parent informs the selling Holder
that the registration statement or final prospectus then on file with the SEC is
not current or otherwise does not comply with the Securities Act, Parent shall
use commercially reasonable efforts to provide to the selling Holder a current
prospectus that complies with the Securities Act on or before the date of the
intended sale of the Registrable Securities as disclosed in the Stockholder
Notice; provided, however, that for a period of not more than ninety (90) days
(or any number of lesser periods which total not more than ninety (90) days)
during any twelve-month period, Parent shall have the right to delay the
preparation of a current prospectus that complies with the Securities Act
without explanation to such Holder;
c. BLACKOUT PERIODS: Holders who become employees of Parent agree
to be bound by Parent's Insider Trading Policy as such may be in effect from
time to time for so long as such Holders remain employees of Parent;
d. GENERAL: Notwithstanding the foregoing, Parent shall notify each
Holder (i) of any request by the SEC or any other federal or state governmental
authority during the period of effectiveness of the registration statement for
amendments or supplements to the registration statement or related prospectus or
for additional information relating to the registration statement, (ii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose, (iii) of the receipt by Parent
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose, or (iv) of the happening of any event which makes any statement made in
the registration statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
which requires the making of any changes in the registration statement or
prospectus so that, in the case of the registration statement, it will not
contain an untrue statement of a material fact or omit to state a material fact
B-3
<PAGE>
required to be stated therein or necessary to make the statements therein not
misleading, and that in the case of the prospectus, it will not contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. In such event, Parent may suspend use of
the prospectus on written notice to each Holder, in which case each Holder shall
not dispose of Registrable Securities covered by the registration statement or
prospectus until copies of a supplemented or amended prospectus are distributed
to the Holders or until the Holders are advised in writing by Parent that the
use of the applicable prospectus may be resumed. Parent shall use its
commercially reasonable efforts to ensure that the use of the prospectus may be
resumed as soon as practicable. Parent shall use its commercially reasonable
efforts to obtain the withdrawal of any order suspending the effectiveness of
the registration statement, or the lifting of any suspension of the
qualification (or exemption from qualification) of any of the securities for
sale in any jurisdiction, at the earliest practicable moment. Parent shall,
upon the occurrence of any event contemplated by clause (iv), prepare a
supplement or post-effective amendment to the registration statement or a
supplement to the 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 a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6. AVAILABILITY OF FORM S-3. Parent represents that it is currently
eligible to utilize Form S-3 and agrees that, for a period of one (1) year from
the Effective Time, Parent will not intentionally take any action which would
preclude Parent's eligibility to use Form S-3.
7. EXPENSES. Parent shall pay all of the out-of-pocket expenses
incurred, other than underwriting or selling discounts and commissions, in
connection with the registration of Registrable Securities pursuant to this
Declaration, including, without limitation, all SEC, National Association of
Securities Dealers, Inc. and blue sky registration and filing fees, printing
expenses, transfer agents' and registrars' fees, and the reasonable fees and
disbursements of Parent's outside counsel, one special counsel for the Holders
and independent accountants.
8. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. Parent agrees to:
a. use all commercially reasonable efforts to file with the SEC in a
timely manner all reports and other documents required of Parent under the
Securities Act and the Exchange Act; and
b. furnish to each Holder forthwith upon request (i) a written
statement by Parent that it has complied with the reporting requirements of the
Securities Act and the Exchange Act, or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time that it so
qualifies), (ii) a copy of the most recent annual or quarterly report of Parent
and (iii) such other information as may be reasonably requested in availing each
Holder of any rule or regulation of the SEC which permits the selling of any
such securities pursuant to Form S-3.
B-4
<PAGE>
9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights of a Holder pursuant to
this Declaration may be assigned by a Holder to a transferee of Registrable
Securities only if: (a) Parent is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee and a
copy of a duly executed written instrument in form reasonably satisfactory to
Parent pursuant to which such transferee assumes all of the obligations and
liabilities of its transferor hereunder, agrees itself to be bound hereby and
provides Parent with such reasonable information as Parent may request to permit
the transferee to sell such Registrable Securities pursuant to the registration
statement filed in accordance with Section 2 hereof, and (b) immediately
following such transfer, the disposition of such Registrable Securities by the
transferee is restricted under the Securities Act.
10. AMENDMENT OF REGISTRATION RIGHTS. The Holders of a majority of the
Registrable Securities then outstanding may, with the consent of Parent, amend
the registration rights granted hereunder.
11. TERMINATION. The registration rights set forth in this Declaration
shall terminate with respect to a Holder (and the shares held by such Holder
shall cease to constitute Registrable Securities) upon the date which is one
year following the Effective Time of the Merger.
12. OBLIGATIONS OF HOLDERS. By exercising any rights hereunder, each
Holder shall be deemed to assume all obligations of a Holder hereunder as
though such Holder were a signatory hereto. Parent may require Holders to
execute an instrument whereby such Holders expressly assume all obligations
of Holders hereunder as a condition precedent to any obligations of Parent
hereunder.
B-5
<PAGE>
EXHIBIT C-1
[KNIFE LETTERHEAD]
CONFIDENTIAL
[NAME AND ADDRESS]
RE: VALUE ADDED RESELLER AGREEMENT WITH [KNIFE]
Dear [NAME]:
The first purpose of this letter is to clarify the intent of OMNES and [KNIFE]
with respect to the license of certain [KNIFE] software to OMNES under the
above-referenced VAR Agreement and the modifications attached thereto (together,
the "Agreement"). By signing this letter, you agree that OMNES's rights
outlined in Section 8 of the Letter Modification with respect to obtaining minor
and major improvements, enhancements, revisions, upgrades and updates are in
consideration for the continued payment of the support fees outlined in the
Agreement and that these rights do not include the right to obtain new products
released by [KNIFE]. Also, by signing this letter, you agree that OMNES's right
outlined in Section 9 of the Letter Modification with respect to product
documentation is the right to obtain one master CD of the product documentation
and the associated right to make unlimited copies of the master CD for the
purposes the Agreement.
The second purpose of this letter is to obtain the consent of OMNES to an
assignment of the Agreement as required by Section 7 of the Letter
Modification. By signing this letter, you consent to the assignment of the
Agreement by [KNIFE] to an entity that succeeds to all or substantially all
of the business or assets of [KNIFE], provided that such entity is not a
competitor of OMNES.
The terms of this letter are Confidential Information of [KNIFE] under Section
10 of the Agreement.
If you agree with the foregoing, please sign this letter where indicated below
and return one fully-executed copy to me. Thank you for your cooperation.
Very truly yours,
Accepted and Agreed:
By: ____________________
Name: __________________
Title: ___________________
Date: ___________________
<PAGE>
EXHIBIT C-2
[KNIFE LETTERHEAD]
CONFIDENTIAL
[NAME AND ADDRESS]
RE: SOFTWARE INTEGRATION AND RESELLING AGREEMENT WITH [KNIFE]
Dear [NAME]:
The first purpose of this letter is to clarify the intent of Section 6.1.11 of
the above-referenced agreement (the "Agreement"). By signing this letter, you
agree to amend Section 6.1.11 to read as follows:
6.1.11 While this Agreement is in effect, [KNIFE] will not sell or
promote, as an embedded solution in [KNIFE]'s current existing
[KNIFE] Enterprise Server product or updates thereto, any
Competing Products. Notwithstanding the above, [KNIFE] will not
be restricted from embedding Competing Products in any other
[KNIFE] product (including replacements to [KNIFE]'s current
existing [KNIFE] Enterprise Server product) or from integrating
with Competing Products.
The second purpose of this letter is to provide you with notice of an assignment
of the Agreement as required by Section 14.1 of the Agreement. [KNIFE] intends
to assign the Agreement to an entity that succeeds to all or substantially all
of the business or assets of [KNIFE].
The terms of this letter are Confidential Information of [KNIFE] under Section 8
of the Agreement.
If you agree with the foregoing, please sign this letter where indicated below
and return one fully-executed copy to me. Thank you for your cooperation.
Very truly yours,
Accepted and Agreed:
By: ____________________
Name: __________________
Title: ___________________
Date: ___________________
<PAGE>
EXHIBIT C-3
[KNIFE LETTERHEAD]
CONFIDENTIAL
[NAME AND ADDRESS]
RE: P.O. NUMBER 4500184159
Dear [NAME]:
The first purpose of this letter is to clarify the intent of NSI and [KNIFE]
with respect to the license of certain [KNIFE] software to NSI under the
above-referenced purchase order and the documents incorporated therein by
reference (together, the "Agreement"). By signing this letter, you agree
that NSI's rights with respect to such software are solely as set forth in
Sections 2.1 and 2.2 of the [KNIFE] End User License attached to such
purchase order, and that the license set forth in Section 15 of the Purchase
Order Standard Terms and Conditions has no force or effect.
The second purpose of this letter is to obtain the consent of NSI to an
assignment of the Agreement as required by Section 9 of the Purchase Order
Standard Terms and Conditions. By signing this letter, you consent to the
assignment of the Agreement by [KNIFE] to an entity that succeeds to all or
substantially all of the business or assets of [KNIFE], provided that such
entity is not a competitor of NSI.
The terms of this letter are Confidential Information of [KNIFE] under Section 8
of the [KNIFE] End User License.
If you agree with the foregoing, please sign this letter where indicated below
and return one fully-executed copy to me. Thank you for your cooperation.
Very truly yours,
Accepted and Agreed:
By: ____________________
Name: __________________
Title: ___________________
Date: ___________________
<PAGE>
EXHIBIT D
COMPANY AFFILIATE AGREEMENT
This AFFILIATE AGREEMENT (this "AGREEMENT") dated as of November 24, 1997,
by and among Netscape Communications Corporation, a Delaware corporation
("PARENT"), KIVA Software Corporation, a California corporation ("COMPANY"), and
the undersigned affiliate ("AFFILIATE") of Company. Capitalized terms used but
not otherwise defined herein shall have the meanings ascribed to them in the
Reorganization Agreement (as defined below).
RECITALS
A. Parent and Company propose to enter into an Agreement and Plan of
Reorganization ("REORGANIZATION AGREEMENT") pursuant to which a subsidiary of
Parent will merge with and into Company ("MERGER"), and Company will become a
subsidiary of Parent;
B. Pursuant to the Merger, at the Effective Time outstanding shares of
Company Capital Stock, including the Shares owned by Affiliate, will be
converted into the right to receive shares of Parent Common Stock;
C. It will be a condition to effectiveness of the Merger that (i) the
attorneys for each of Company and Parent will have delivered written opinions
that the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986 as amended (the "CODE"), and
(ii) the independent accounting firms that audit the annual financial statements
of Company and Parent will have delivered their written concurrences to the
effect that the Merger will be accounted for as a pooling of interests;
D. Affiliate may be deemed to be an "affiliate" of Company, as the term
"affiliate" is used in the SEC's Accounting Series Releases 130 and 135, as
amended, although nothing contained herein shall be construed as an admission by
Affiliate that Affiliate is in fact an affiliate of Company.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree as
follows:
1. ACKNOWLEDGMENTS BY AFFILIATE. Affiliate acknowledges and understands
that the representations, warranties and covenants by Affiliate set forth herein
will be relied upon by Parent, Company, and their respective Affiliates, counsel
and accounting firms, and that substantial losses and damages may be incurred by
these persons if Affiliate's representations, warranties or covenants are
breached. Affiliate has carefully read this Agreement and the Reorganization
Agreement and has discussed the requirements of this Agreement with his
professional advisors, who are qualified to advise him with regard to such
matters.
<PAGE>
2. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATED TO POOLING OF
INTERESTS. During the period beginning from the date hereof and ending on the
day that Parent publicly announces financial results covering at least 30 days
of combined operations of Parent and Company, Affiliate will not sell, exchange,
transfer, pledge, distribute, make any gift or otherwise dispose of or grant any
option, establish any "short" or put-equivalent position with respect to or
enter into any similar transaction (through derivatives or otherwise) intended
to have or having the effect, directly or indirectly, of reducing its risk
relative to any securities or shares of Parent Common Stock received by
Affiliate in connection with the Merger (any of the foregoing being referred to
herein as a "TRANSFER"). Parent may, at its discretion, cause a restrictive
legend to the foregoing effect to be placed on Parent Common Stock certificates
issued to Affiliate in the Merger and place a stock transfer notice consistent
with the foregoing with its transfer agent with respect to the certificates.
Notwithstanding the foregoing, Affiliate will not be prohibited by the foregoing
from selling or disposing of shares so long as such sale or disposition is in
accordance with the "de minimis" test set forth in SEC Staff Accounting Bulletin
No. 76 ( "DE MINIMIS TRANSFER"). Affiliate represents that he has taken no
action constituting a Transfer (other than a De Minimis Transfer) during the
period which began November 2, 1997 through and including the date hereof.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATED TO TAX EFFECTS OF
THE MERGER.
(a) Affiliate is the beneficial owner (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended), of such number of shares of
the Company Capital Stock (including shares issuable upon exercise of options
and warrants) as is indicated on the final page of this Agreement;
(b) Affiliate has not engaged in a Sale (as defined below) of any
shares of Company Capital Stock in contemplation of the Merger;
(c) Affiliate has no plan or intention (a "PLAN") to engage in a
sale, exchange, transfer, redemption or reduction in any way of the
undersigned's risk of ownership by short sale or otherwise, or other
disposition, directly or indirectly (such actions being collectively referred to
herein as a "Sale") of more than 50% of the shares of Parent Common Stock to be
received by Affiliate in the Merger;
(d) If the undersigned is a partnership, then the term "SALE" as used
in paragraph (3.2) above shall be deemed to include any distribution to the
undersigned's partners unless no recipient of any such distribution will receive
shares of Company Capital Stock representing 1% or more of the shares of Company
Capital Stock presently outstanding;
(e) The undersigned is not aware of, or participating in, any Plan on
the part of the Affiliates of Company to engage in a Sale or Sales of the Parent
Common Stock to be received in the Merger such that the aggregate fair market
value, as of the Effective Date of the Merger, of the shares subject to such
Sales would exceed 50% of the aggregate fair market value of all shares of
outstanding Company Capital Stock immediately prior to the Merger;
(f) Affiliate understands that Company, Parent and their respective
Affiliates, as well as legal counsel to Company and Parent (in connection with
rendering their opinions that the Merger will
D-2
<PAGE>
be a "reorganization" within the meaning of Section 368(a) of the Code) will
be relying on (a) the truth and accuracy of the representations contained
herein and (b) Affiliate's performance of the obligations set forth herein.
4. LEGENDS. Affiliate understands and agrees that stop transfer
instructions will be given to Parent's transfer agent with respect to
certificates evidencing any shares of Parent Common Stock that Affiliate may
acquire in connection with the Merger, or any securities that may be paid as a
dividend or otherwise distributed thereon or with respect thereto or issued or
delivered in exchange or substitution therefor (all such shares and other
securities of Parent are sometimes collectively referred to as "RESTRICTED
SECURITIES"), or any option, right or other interest with respect to any
Restricted Securities, and that there will be placed on the certificates
evidencing the Restricted Securities legends stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD,
PLEDGED, EXCHANGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED."
Parent agrees to remove promptly such stop transfer instructions and legend upon
full compliance with this Agreement by the undersigned.
5. TERMINATION. This Agreement shall be terminated and shall be of no
further force and effect upon the termination of the Reorganization Agreement
pursuant to the provisions contained in Section 8 of the Reorganization
Agreement.
6. MISCELLANEOUS.
(a) COUNTERPARTS. This Agreement shall be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
(b) BINDING AGREEMENT. This Agreement will inure to the benefit of
and be binding upon and enforceable against the parties and their successors and
assigns, including administrators, executors, representatives, heirs, and
devisees of Affiliate and pledgees holding Restricted Securities as collateral.
(c) WAIVER. No waiver by any party hereto of any condition or of any
breach of any provision of this Agreement shall be effective unless in writing
and signed by each party hereto.
(d) GOVERNING LAW. This Agreement shall be governed by and
construed, interpreted and enforced in accordance with the laws of the State of
California, without giving effect to any choice or conflict of law provision or
rule (whether of the State of California or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
California.
D-3
<PAGE>
(e) ATTORNEYS' FEES. In the event of any legal actions or proceeding
to enforce or interpret the provisions hereof, the prevailing party shall be
entitled to reasonable attorneys' fees, whether or not the proceeding results in
a final judgment.
(f) EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
(g) THIRD PARTY RELIANCE. Counsel to and independent auditors for the
parties shall be entitled to rely upon this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
D-4
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
NETSCAPE COMMUNICATIONS AFFILIATE
CORPORATION
By: By:
------------------------------ ------------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ---------------------------
Affiliate's Address for Notice:
---------------------------------
---------------------------------
---------------------------------
KIVA SOFTWARE CORPORATION
By:
----------------------------
Shares beneficially owned by Affiliate:
Name:
----------------------------
shares of Company Common Stock
Title: --------
----------------------------
shares of Company Series A
-------- Preferred Stock
shares of Company Series B
-------- Preferred Stock
shares of Company Common Stock
-------- issuable upon exercise of
outstanding options and
warrants
[SIGNATURE PAGE TO COMPANY AFFILIATE AGREEMENT]
<PAGE>
EXHIBIT E
PARENT AFFILIATE AGREEMENT
This AFFILIATE AGREEMENT (this "AGREEMENT") is made as of November 24,
1997, by and between Netscape Communications Corporation, a Delaware
corporation ("PARENT"), and the undersigned affiliate ("AFFILIATE") of Parent.
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Reorganization Agreement (as defined below).
RECITALS
A. Parent and Company, a California corporation ("COMPANY"), propose
to enter into an Agreement and Plan of Reorganization ("REORGANIZATION
AGREEMENT") pursuant to which a subsidiary of Parent will merge with and into
Company ("MERGER"), and Company will become a subsidiary of Parent;
B. Pursuant to the Merger, at the Effective Time outstanding shares
of Company Capital Stock will be converted into the right to receive shares of
Parent Common Stock;
C. It will be a condition to effectiveness of the Merger that
(i) the attorneys for each of Company and Parent will have delivered written
opinions that the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986 as amended (the "CODE"), and
(ii) the independent accounting firms that audit the annual financial statements
of Company and Parent will have delivered their written concurrences to the
effect that the Merger will be accounted for as a pooling of interests;
D. Affiliate may be deemed to be an "affiliate" of Parent, as the
term "affiliate" is used in the SEC's Accounting Series Releases 130 and 135, as
amended, although nothing contained herein shall be construed as an admission by
Affiliate that Affiliate is in fact an affiliate of Parent.
NOW, THEREFORE, intending to be legally bound, the parties hereby
agree as follows:
1. ACKNOWLEDGMENTS BY AFFILIATE. Affiliate acknowledges and
understands that the representations, warranties and covenants by Affiliate set
forth herein will be relied upon by Parent, Company, and their respective
Affiliates, counsel and accounting firms, and that substantial losses and
damages may be incurred by these persons if Affiliate's representations,
warranties or covenants are breached. Affiliate has carefully read this
Agreement and the Reorganization Agreement and has discussed the requirements of
this Agreement with his professional advisors, who are qualified to advise him
with regard to such matters.
<PAGE>
2. COVENANTS RELATED TO POOLING OF INTERESTS. During the period
beginning from the date hereof and ending on the day that Parent publicly
announces financial results covering at least 30 days of combined operations of
Parent and Company, Affiliate will not sell, exchange, transfer, pledge,
distribute, make any gift or otherwise dispose of or grant any option, establish
any "short" or put-equivalent position with respect to or enter into any similar
transaction (through derivatives or otherwise) intended or having the effect,
directly or indirectly, to reduce his risk relative to any shares of Parent
Common Stock (any of the foregoing being referred to herein as a "TRANSFER").
Parent may, at its discretion, place a stock transfer notice consistent with the
foregoing with its transfer agent with respect to Affiliate's shares.
Notwithstanding the foregoing, Affiliate will not be prohibited by the foregoing
from selling or disposing of shares so long as such sale or disposition is in
accordance with the "de minimis" test set forth in SEC Staff Accounting Bulletin
No. 76 (a "DE MINIMIS TRANSFER"). Affiliate represents that he has taken no
action constituting a Transfer (other than a De Minimis Transfer) during the
period which began November 2, 1997 through and including the date hereof.
3. BENEFICIAL OWNERSHIP OF STOCK. Affiliate is the beneficial owner
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended), of such number of shares of Parent Common Stock, other equity
securities of Parent and options, warrants or other rights to acquire equity
securities of Parent as is indicated on the final page of this Agreement.
4. MISCELLANEOUS.
(a) COUNTERPARTS. This Agreement shall be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
(b) BINDING AGREEMENT. This Agreement will inure to the
benefit of and be binding upon and enforceable against the parties and their
successors and assigns.
(c) WAIVER. No waiver by any party hereto of any condition
or of any breach of any provision of this Agreement shall be effective unless in
writing and signed by each party hereto.
(d) GOVERNING LAW. This Agreement shall be governed by and
construed, interpreted and enforced in accordance with the laws of the State of
California, without giving effect to any choice or conflict of law provision or
rule (whether of the State of California or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
California.
(e) ATTORNEYS' FEES. In the event of any legal actions or
proceeding to enforce or interpret the provisions hereof, the prevailing party
shall be entitled to reasonable attorneys' fees, whether or not the proceeding
results in a final judgment.
(f) EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
E-2
<PAGE>
(g) THIRD PARTY RELIANCE. Counsel to and independent auditors
for the parties shall be entitled to rely upon this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
E-3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
NETSCAPE COMMUNICATIONS AFFILIATE
CORPORATION
By: By:
--------------------------------- ---------------------------------
Name: Name:
------------------------------- -------------------------------
Title: Title:
------------------------------ ------------------------------
Affiliate's Address for Notice:
-------------------------------------
-------------------------------------
-------------------------------------
Shares beneficially owned:
________ shares of Parent Common Stock
________ shares of Parent Common Stock
issuable upon exercise of
outstanding options and
warrants
[SIGNATURE PAGE TO PARENT AFFILIATE AGREEMENT]
E-4
<PAGE>
EXHIBIT F
SHAREHOLDER VOTING AGREEMENT
THIS SHAREHOLDER VOTING AGREEMENT (the "AGREEMENT") is made and
entered into as of November 24, 1997, by and among Netscape Communications
Corporation, a Delaware corporation ("PARENT"), KIVA Software Corporation, a
California corporation (the "COMPANY") and the undersigned shareholder (the
"SHAREHOLDER") of the Company. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to them in the Reorganization Agreement
(as defined below).
RECITALS
A. Concurrently with the execution of this Agreement, Parent, Knife
Acquisition Corporation, a California corporation and wholly-owned subsidiary of
Parent ("MERGER SUB"), and the Company have entered into an Agreement and Plan
of Reorganization (the "REORGANIZATION AGREEMENT"), which provides for the
merger (the "MERGER") of Merger Sub with and into the Company. Pursuant to the
Merger, all outstanding capital stock of the Company will be converted into the
right to receive Parent Common Stock, as set forth in the Reorganization
Agreement.
B. The Shareholder 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 the Company and shares
subject to outstanding options and warrants as is indicated on the signature
page of this Agreement (the "SHARES").
C. In consideration of the execution of the Reorganization Agreement
by Parent, the Shareholder agrees to restrict the transfer or disposition of any
of the Shares, or any other shares of capital stock of the Company acquired by
the Shareholder hereafter and prior to the Expiration Date (as defined in
Section 1.1 below), and agrees to vote the Shares and any other such shares of
capital stock of the Company so as to facilitate consummation of the Merger and
conversion of the Series A and Series B Preferred Stock of the Company into
Common Stock of the Company, and agrees to grant Parent an irrevocable proxy to
vote the Shares and any other such shares of capital stock of the Company upon
the terms and subject to the conditions set forth herein.
NOW, THEREFORE, the parties agree as follows:
1. AGREEMENT TO RETAIN SHARES.
1.1 TRANSFER AND ENCUMBRANCE. The Shareholder agrees, during
the period beginning on the date hereof and ending on the Expiration Date, not
to transfer, sell, exchange, pledge or otherwise dispose of or encumber
(collectively, "TRANSFER") any of the Shares or any New Shares (as defined in
Section 1.2 below). As used herein, the term "EXPIRATION DATE" shall mean the
earlier to occur of (i) such date and time as the Merger shall become effective
in accordance with the terms and provisions
<PAGE>
of the Reorganization Agreement or (ii) the termination of the Reorganization
Agreement in accordance with its terms.
1.2 NEW SHARES. The Shareholder agrees that any shares of
capital stock of the Company that the Shareholder purchases or with respect to
which the Shareholder otherwise acquires beneficial ownership after the date of
this Agreement and prior to the Expiration Date ("NEW SHARES") shall be subject
to the terms and conditions of this Agreement to the same extent as if they
constituted Shares.
2. AGREEMENT TO VOTE SHARES. At every meeting of the shareholders
of the Company called with respect to any of the following, and at every
adjournment thereof, and on every action or approval by written consent of the
shareholders of the Company with respect to any of the following, the
Shareholder shall vote the Shares and any New Shares: (i) in favor of approval
of the Reorganization Agreement and the Merger and in favor of any matter that
could reasonably be expected to facilitate the Merger, (ii) against any
liquidation or winding up of the Company and (iii) in favor of the conversion of
each of the Series A and Series B Preferred Stock of the Company (in each case
to the extent that the Shareholder is entitled to vote on such matter) into
Common Stock of the Company prior to the Effective Time.
3. NON-SOLICITATION AGREEMENT. The Shareholder agrees, prior to the
Expiration Date, not to, directly or indirectly, take any of the following
actions with any party other than Parent and its designees: (a) solicit,
initiate, entertain, or encourage any proposals or offers from, or conduct
discussions with or engage in negotiations with, any person relating to any
possible acquisition of the Company or any of its subsidiaries (whether by way
of merger, purchase of capital stock, purchase of assets or otherwise), any
material portion of its or their capital stock or assets or any equity interest
in the Company or any of its subsidiaries, (b) provide information with respect
to the Company or any of its subsidiaries to any person, other than Parent and
its affiliates, relating to, or otherwise cooperate with, facilitate or
encourage any effort or attempt by any such person with regard to, any possible
acquisition of the Company or any of its subsidiaries (whether by way of merger,
purchase of capital stock, purchase of assets or otherwise), any material
portion of its or their capital stock or assets or any equity interest in the
Company or any of its subsidiaries, (c) enter into an agreement with any person,
other than Parent and its affiliates, providing for the acquisition of the
Company or any of its subsidiaries (whether by way of merger, purchase of
capital stock, purchase of assets or otherwise), any material portion of its or
their capital stock or assets or any equity interest in the Company or any of
its subsidiaries, or (d) make or authorize any statement, recommendation or
solicitation in support of any possible acquisition of the Company or any of its
subsidiaries (whether by way of merger, purchase of capital stock, purchase of
assets or otherwise), any material portion of its or their capital stock or
assets or any equity interest in the Company or any of its subsidiaries by any
person, other than by Parent and its affiliates. In the event that the
Shareholder receives from any third party any offer or indication of interest
(whether made in writing or otherwise) regarding any of the transactions
referred to in the foregoing sentence, or any request for information about the
Company with respect to any of the foregoing, then the Shareholder shall
promptly communicate to Parent the material terms of each such offer, indication
of interest, or request, including the identity of the third party.
F-2
<PAGE>
4. IRREVOCABLE PROXY. Concurrently with the execution of this
Agreement, the Shareholder agrees to deliver to Parent a proxy in the form
attached as EXHIBIT A (the "PROXY"), which shall be irrevocable to the extent
provided in Section 705 of the General Corporation Law of the State of
California, covering the total number of Shares and New Shares of capital stock
of the Company beneficially owned (as such term is defined in Rule 13d-3 under
the Exchange Act) by the Shareholder set forth therein.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDER. The
Shareholder represents, warrants and covenants to Parent as follows: the
Shareholder: (i) is the beneficial owner of the Shares, which at the date of
this Agreement and at all times up until the Expiration Date will be free and
clear of any liens, claims, options, charges or other encumbrances, (ii) does
not beneficially own any shares of capital stock of the Company other than the
Shares (excluding shares as to which Shareholder currently disclaims beneficial
ownership in accordance with applicable law), and (iii) has full power and
authority to make, enter into and carry out the terms of this Agreement and the
Proxy.
6. COVENANTS OF THE COMPANY. The Company hereby agrees and
covenants that:
6.1 The Company will not, and will cause its stock transfer
agent not to, register the transfer of any of the Shares or New Shares on the
stock transfer ledger of the Company at any time prior to the Expiration Date;
and
6.2 The Company agrees that any shares of capital stock of
the Company (including Company Common Stock) that the Shareholder purchases or
with respect to which the Shareholder otherwise acquires beneficial ownership
after the date of this Agreement and prior to the Expiration Date shall be
considered "New Shares" and subject to each of the terms and conditions of this
Agreement.
7. ADDITIONAL DOCUMENTS. The Shareholder and the Company hereby
covenant and agree to execute and deliver any additional documents reasonably
necessary or desirable to carry out the purpose and intent of this Agreement.
8. CONSENT AND WAIVER. The Shareholder hereby gives any consents or
waivers that are reasonably required for the consummation of the Merger under
the terms of any agreement to which the Shareholder is a party or pursuant to
any rights the Shareholder may have.
9. TERMINATION. This Agreement and the Proxy delivered in
connection herewith shall terminate and shall have no further force or effect as
of the Expiration Date.
10. LEGENDING OF SHARES. If so requested by Parent, Shareholder
agrees that the Shares and any New Shares shall bear a legend stating that they
are subject to this Agreement and to an irrevocable proxy. Shareholder agrees
that he shall not Transfer the Shares or any New Shares, without first having
the aforementioned legend affixed to the certificates representing the Shares or
any New Shares.
F-3
<PAGE>
11. MISCELLANEOUS.
11.1 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.
11.2 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
any of the parties without the prior written consent of the other parties.
11.3 AMENDMENTS AND MODIFICATION. This Agreement may not be
modified, amended, altered or supplemented except by the execution and delivery
of a written agreement executed by the parties hereto.
11.4 SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. The parties
acknowledge that Parent will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
the Shareholder set forth herein. Therefore, it is agreed that, in addition to
any other remedies that may be available to Parent upon any such violation,
Parent shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to Parent at law
or in equity.
11.5 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
commercial delivery service, or mailed by registered or certified mail (return
receipt requested) or sent via facsimile (with acknowledgment of complete
transmission) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to Parent: Netscape Communications Corporation
501 East Middlefield Road
Mountain View, CA 94043
Attn: Roberta R. Katz, Esq.
Telephone No.: (650) 254-1900
Facsimile No.: (650) 937-4126
With a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attn: James N. Strawbridge, Esq.
Telephone No.: (650) 493-9300
Facsimile No.: (650) 493-6811
F-4
<PAGE>
If to Shareholder: To the address for notice set forth on the last
page hereof.
If to The Company: KIVA Software Corporation
1585 Charleston Road
Mountain View, CA 94043
Attn: Chief Executive Officer
Telephone No.: (650) 526-3900
Facsimile No.: (650) 429-4295
With a copy to: Cooley Godward LLP
3000 Sand Hill Road
Building 3, Suite 230
Menlo Park, California 94025
Attn: Craig Dauchy
Telephone No.: (650) 843-5000
Facsimile No.: (650) 854-2691
11.6 GOVERNING LAW. This Agreement shall be governed by, construed and
enforced in accordance with the internal laws of the State of California,
without giving effect to any choice or conflict of law provision or rule
(whether of the State of California or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
California.
11.7 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.
11.8 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.
11.9 EFFECT OF HEADINGS. The section headings herein are for convenience
only and shall not affect the construction or interpretation of this Agreement.
F-5
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
NETSCAPE COMMUNICATIONS SHAREHOLDER
CORPORATION
By: By:
------------------------------ -----------------------------------
Name: Name:
---------------------------- ---------------------------------
Title: Title:
--------------------------- --------------------------------
Shareholder's Address for Notice:
KIVA SOFTWARE CORPORATION
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Shares beneficially owned:
__________ shares of Company Common Stock
__________ shares of Company Series A
Preferred Stock
__________ shares of Company Series B
Preferred Stock
__________ shares of Company Common Stock
issuable upon exercise of outstanding options
and warrants
[SIGNATURE PAGE TO SHAREHOLDER VOTING AGREEMENT]
<PAGE>
IRREVOCABLE PROXY
TO VOTE
KIVA SOFTWARE CORPORATION STOCK
The undersigned shareholder of KIVA Software Corporation, a California
corporation (the "COMPANY"), hereby irrevocably (to the fullest extent permitted
by Section 705 of the General Corporation Law of the State of California)
appoints the directors on the Board of Directors of Netscape Communications
Corporation, a Delaware corporation ("PARENT"), 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 fullest extent that the undersigned is entitled to do so) with
respect to all of the shares of capital stock of the Company that now are or
hereafter may be beneficially owned by the undersigned, and any and all other
shares or securities of the Company 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 shareholder of
the Company as of the date of this Proxy are listed on the final page of this
Proxy, along with the number of the share certificates which represent such
Shares. 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 provided in Section 705 of
the General Corporation Law of the State of California), is granted pursuant to
that certain Shareholder Voting Agreement dated as of November 24, 1997, by and
among Parent, the Company and the undersigned shareholder (the "SHAREHOLDER
AGREEMENT"), and is granted in consideration of Parent entering into that
certain Agreement and Plan of Reorganization dated as of November 24, 1997 (the
"REORGANIZATION AGREEMENT"), by and among Parent, Knife Acquisition Corporation,
a California corporation and wholly-owned subsidiary of Parent ("MERGER SUB"),
and the Company. The Reorganization Agreement provides for the merger of Merger
Sub into the Company in accordance with its terms (the "MERGER") and the
Shareholder is receiving a portion of the proceeds of the Merger. As used
herein, the term "EXPIRATION DATE" shall mean 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 Reorganization Agreement or (ii) the termination of the
Reorganization Agreement in accordance with its terms.
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 pursuant to Section 603 of the General Corporation Law of the
State of California) at every annual, special or adjourned meeting of the
shareholders of the Company and in every written consent in lieu of such
meeting: (a) in favor of approval of the Merger and the Reorganization
Agreement and in favor of any matter that could reasonably be expected to
facilitate the Merger, (b) against any liquidation or winding up of the Company
and (c) in favor of the conversion of each of the Series A and Series B
<PAGE>
Preferred Stock of the Company (in each case to the extent that the Shareholder
is entitled to vote on such matter) into Common Stock of the Company prior to
the Effective Time. The attorneys and proxies named above may not exercise this
Irrevocable Proxy on any other matter except as provided in clauses (a), (b) and
(c) above. The undersigned Shareholder may vote the Shares on all other
matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
This Proxy is irrevocable (to the fullest extent permitted by Section 705
of the General Corporation Law of the State of California). This Proxy shall
terminate, and be of no further force and effect, automatically upon the
Expiration Date.
Dated: November _______, 1997 Signature of Shareholder:
----------------------
Print Name of Shareholder:
---------------------
Shares beneficially owned:
___________ shares of Company Common Stock
___________ shares of Company Series A
Preferred Stock
___________ shares of Company Series B
Preferred Stock
___________ shares of Company Common Stock
issuable upon exercise of
outstanding options and warrants
-2-
<PAGE>
EXHIBIT G
FORM OF OPINION OF WILSON SONSINI GOODRICH & ROSATI
Netscape Communications Corporation ("PARENT") is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and Merger Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Parent and Merger Sub
have all requisite corporate power and authority to own, operate and lease their
properties.
The shares (the "SHARES") of Parent Common Stock to be issued and delivered
to the shareholders of KIVA Software Corporation, a California corporation (the
"COMPANY"), in exchange for shares of Company Common Stock, will, when issued in
accordance with the terms of the Reorganization Agreement, be validly issued,
fully paid and nonassessable and free of liens, encumbrances or preemptive or
similar rights contained in the Certificate of Incorporation or Bylaws of
Parent; provided, however, that the Shares may be subject to restriction on
transfer under state and/or federal securities laws. The shares of Parent
Common Stock which will be issuable upon exercise of Company Options to be
assumed by Parent in accordance with the Reorganization Agreement have been duly
reserved and authorized for issuance upon exercise of such options and, when
issued in accordance with the respective terms of such options, such shares will
be duly authorized and validly issued, fully paid and nonassessable. Assuming
Company Options to be assumed by Parent in the Merger were valid and binding
obligations of the Company prior to the assumption thereof and assuming the
consummation of the Merger will not cancel or invalidate such options in
accordance with their respective terms, such options will represent valid and
binding obligations of Parent when assumed by Parent in accordance with terms of
the Reorganization Agreement.
Each of Parent and Merger Sub has all requisite corporate power and
authority to enter into the Reorganization Agreement, to perform its obligations
thereunder and to consummate the transactions contemplated thereby. The
execution and delivery of the Reorganization Agreement, the performance by
Parent and Merger Sub of their obligations thereunder and the consummation of
the transactions contemplated thereby have been duly and validly authorized by
all necessary corporate action on the part of Parent and Merger Sub, and have
been approved by the Board of Directors of Parent and Merger Sub and the sole
shareholder of Merger Sub. The Reorganization Agreement has been duly executed
and delivered by Parent and Merger Sub and, assuming due execution and delivery
by the Company, constitutes the legal, valid and binding obligation of Parent
and Merger Sub enforceable against each of Parent and Merger Sub in accordance
with its terms.
To our knowledge, there is no action, suit, proceeding, claim or
governmental investigation pending or overtly threatened against Parent or
Merger Sub which challenges or seeks to prevent, enjoin, alter or materially
delay any of the transactions contemplated by the Reorganization Agreement.
<PAGE>
EXHIBIT H
FORM OF OPINION OF COOLEY GODWARD
1. KIVA Software Corporation (the "COMPANY") is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and is duly qualified to do business as a foreign corporation and in
good standing in each state of the United States in which the failure to be so
qualified would have a material adverse effect on the Company. The Company has
the requisite corporate power and authority to own or lease its property and
assets and to conduct its business as it is currently being conducted.
2. Immediately prior to the Effective Time of the Merger: (a) the
Company's authorized capital stock consisted of __________ shares of Common
Stock, $____ par value, of which ________ shares were issued and outstanding;
(b) there were ________ shares of the Company's Common Stock reserved for
issuance upon the exercise of outstanding stock options issued under the Option
Plan; (c) there were ________ shares of the Company's Common Stock reserved for
issuance upon the exercise of outstanding stock options and warrants issued
outside the Option Plan; and (d) there were commitments to issue _________. All
of such issued and outstanding shares had been duly authorized and validly
issued, were fully paid and nonassessable and had been issued pursuant to
exemptions from the registration and qualification requirements of applicable
federal and state securities laws. To our knowledge, except as set forth above,
there were immediately prior to the Effective Time of the Merger no options,
warrants, conversion privileges or other rights outstanding to purchase or
otherwise acquire any authorized but unissued shares of the Company's capital
stock or other securities convertible into or exercisable for the Company's
capital stock, nor was the Company obligated to repurchase any such securities.
3. The Company has all requisite corporate power and authority to enter
into the Reorganization Agreement, to perform its obligations thereunder and to
consummate the transactions contemplated thereby. The execution and delivery of
the Reorganization Agreement, the performance by the Company of its obligations
thereunder and the consummation of the transactions contemplated thereby have
been duly and validly authorized by all necessary corporate action on the part
of the Company and its stockholders, respectively, and have been approved by the
Board of Directors and stockholders of the Company. No other corporate
proceeding on the part of the Company or its stockholders is necessary to
authorize the execution and delivery of the Reorganization Agreement by the
Company or the performance of the Company's obligations thereunder or the
consummation of the transactions contemplated thereby. The Reorganization
Agreement has been duly and validly authorized, executed and delivered by the
Company and constitutes a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms.
H-2
<PAGE>
4. The execution and delivery by the Company of the Reorganization
Agreement does not, and the consummation of the transactions contemplated
thereby does not and will not: (a) violate any provision of the Company's
Articles of Incorporation or Bylaws, (b) violate or contravene (i) any
governmental statute, rule or regulation applicable to the Company or (ii) to
our knowledge, any order, writ, judgment, injunction, decree, determination or
award which has been entered against the Company; or (c) constitute a material
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any material
obligation or to loss of a material benefit under, or result in the creation of
a lien or encumbrance on any of the properties or assets of the Company pursuant
to, any material agreement known to us to which the Company is a party.
5. All consents, approvals, authorizations or orders of, and all filings,
registrations and qualifications by the Company with, any regulatory authority
or governmental body in the United States required for the consummation by the
Company of the transactions contemplated by the Reorganization Agreement have
been made or obtained, except for the filing of the Agreement and Plan of Merger
and documents related thereto with the Secretary of State of the State of
California and for filings under applicable state securities laws.
6. The Reorganization Agreement has been duly approved and adopted by the
affirmative vote of a number of outstanding shares of Company Capital Stock that
equals or exceeds the number of such shares required to approve the
Reorganization Agreement under the California Corporations Code and the
Company's Articles of Incorporation.
7. To our knowledge, there is no action, suit, proceeding, claim or
investigation pending or overtly threatened against the Company before any court
or administrative agency that questions the validity of the Reorganization
Agreement or that might result, either individually or in the aggregate, in any
material adverse change in or to the assets, financial condition, prospects or
operations of the Company, except as set forth on Schedule __ to the
Reorganization Agreement.
8. To our knowledge, the Company is not in violation, breach of, or in
default with respect to, any material provision of any Contract, and, to our
knowledge, no event has occurred which with or without notice or lapse of time
or both would constitute such a violation, breach or default with respect to any
material provision of any Contract, in any such case which violation, breach or
default would, individually or in the aggregate, have a material adverse effect
on the Company. The Company is not in violation or breach of, or in default
with respect to, any term of its Articles of Incorporation or Bylaws.
H-3
<PAGE>
SCHEDULE 5.6--CERTAIN THIRD PARTY CONSENTS
1. Software License and Maintenance Agreement between the Company and Bank of
America dated June 25, 1997
2. Software License and Service Agreement between the Company and Internet
Shopping Network, Inc. dated December 2, 1996
3. End User License, pursuant to Purchase Order issued by Network Solutions
Inc. --as modified between the Company and NSI in September 1997
4. Value Added Reseller Agreement between the Company and Omnes dated June 30,
1997
5. Master Equipment Lease Agreement Number 146 between the Company and
Lighthouse Capital Partners II, L.P. dated October 11, 1996
6. Rental Agreements between the Company and Target Computer Rental
<PAGE>
SCHEDULE 5.12--COMPANY AFFILIATE LIST
Keng S. Lim
517 Martinique Drive
Redwood City, CA 94065
Amal Johnson
120 Crest Road
Woodside, CA 94062
Peter Nieh
Weiss, Peck & Greer
555 California Street, Suite 4760
San Francisco, CA 94104
Alexander Glass
75 Windsor Court
Danville, CA 94506
Dave Strohm
Greylock Equity Limited Partnership
755 Page Mill Road
Building A, Suite 100
Palo Alto, CA 94304
Robert Chamberlain
726 Ramona
Palo Alto, CA 94301
Philip Van Etten
KIVA Software
1585 Charleston Road
Mountain View, CA 94043
Ronald DeHoff
841 Seale Avenue
Palo Alto, CA 94303
<PAGE>
SCHEDULE 5.13--STOCKHOLDERS SIGNING VOTING AGREEMENTS
COMMON HOLDERS SIGNING VOTING AGREEMENT
Keng Lim
517 Martinique Drive
Redwood City, CA 94065
Maria Lim
517 Martinique Drive
Redwood City, CA 94065
Stephen Yen
1973 Monroe Street
Santa Clara, CA 95050
Insik Rhee
300 Baltic Circle #322
Redwood Shores, CA 94065
PREFERRED HOLDERS SIGNING VOTING AGREEMENT
Gill Cogan
WPG Enterprise Fund II, L.P.
555 California Street, Suite 4760
San Francisco, CA 94104
Peter Nieh
Weiss Peck & Greer Venture Associates III, L.P.
555 California Street, Suite 4760
San Francisco, CA 94104
David Strohm
Greylock Equity Limited Partnership
755 Page Mill Road
Building A, Suite 100
Palo Alto, CA 94304
<PAGE>
Arnold Silverman
Discovery Ventures II, LLC
3000 Sand Hill Road
Building 3, Suite 210
Menlo Park, CA 94025
Larry Orr
Trinity Ventures V, L.P.
155 Bovet Road, Suite 660
San Mateo, CA 94402
Promod Haque
Norwest Equity Partners V, A Limited Partnership
245 Lytton Avenue, Suite 250
Palo Alto, CA 94301-1426
Gill Cogan
WPG Enterprise Fund II, L.P.
555 California Street, Suite 4760
San Francisco, CA 94014
Peter Nieh
Weiss, Peck & Greer Venture Associates III, L.P.
555 California Street, Suite 4760
San Francisco, CA 94104
Arnold Silverman
Discovery Ventures II, LLC
3000 Sand Hill Road
Building 3, Suite 210
Menlo Park, CA 94025
<PAGE>
SCHEDULE 6.2(C)--THIRD PARTY CONSENTS REQUIRED OF PARENT
None
<PAGE>
SCHEDULE 3.2--CERTAIN CONSENTS, WAIVERS AND APPROVALS
None.
<PAGE>
EXHIBIT 2.2
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("MERGER AGREEMENT"), is made and entered
into as of December 1, 1997, among Kiva Software Corporation, a California
corporation ("KIVA" or the "SURVIVING CORPORATION"), and Knife Acquisition
Corporation, a Delaware corporation ("SUB"; Kiva and Sub are sometimes jointly
referred to herein as the "CONSTITUENT CORPORATIONS").
INTENDING TO BE LEGALLY BOUND, and in consideration of the premises and
material covenants and agreements contained herein, the Constituent Corporations
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 MERGER OF SUB WITH AND INTO KIVA.
(a) AGREEMENT TO ACQUIRE KIVA. Subject to the terms of this Merger
Agreement and an Agreement and Plan of Reorganization dated as of November 24,
1997 (the "REORGANIZATION AGREEMENT") among Kiva, Sub and Netscape
Communications Corporation ("NETSCAPE"), Kiva shall be acquired by Netscape
through a merger (the "MERGER") of Sub into Kiva. As used herein, the term
"NETSCAPE COMMON STOCK" shall mean the Common Stock, par value $0.0001 per
share, of Netscape, and the term "CLOSING" shall mean the closing of the Merger
pursuant to the Reorganization Agreement.
(b) EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective at such time (the "EFFECTIVE TIME") as this Merger Agreement and
officers' certificates of each Constituent Corporation are filed with the
Secretary of State of the State of California pursuant to Section 1103 of the
California General Corporation Law.
(c) SURVIVING CORPORATION. At the Effective Time of the Merger,
Sub shall be merged into Kiva and the separate corporate existence of Sub shall
cease. Kiva shall be the surviving corporation in the Merger, and all of the
property, rights, privileges, powers, and franchises of Kiva and Sub shall vest
in the Surviving Corporation and all debts, liabilities and duties of Kiva and
Sub shall become the debts, liabilities and duties of the Surviving Corporation
and shall continue unaffected and unimpaired by the Merger.
1.2 EFFECT OF THE MERGER; ADDITIONAL ACTIONS.
(a) EFFECTS. The Merger shall have the effects set forth in
Section 1107 of the California General Corporation Law.
<PAGE>
(b) ADDITIONAL ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any further action
is necessary or desirable to carry out the purposes of the Reorganization
Agreement and to vest the Surviving Corporation with full right, title and
possession to the assets, property, rights, privileges, powers and franchises of
Kiva and Sub, the officers and directors of Kiva and the former officers and
directors of Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
ARTICLE II
THE CONSTITUENT CORPORATIONS
2.1 ORGANIZATION OF KIVA.
(a) INCORPORATION. Kiva was incorporated under the laws of the
State of California on September 7, 1995.
(b) AUTHORIZED STOCK. Kiva is authorized to issue an aggregate of
17,000,000 shares of Common Stock ("KIVA COMMON STOCK"), 7,604,688 shares of
Preferred Stock, 4,754,688 of which have been designated Series A Preferred
Stock ("KIVA SERIES A PREFERRED STOCK") and 2,850,000 of which have been
designated Series B Preferred Stock ("KIVA SERIES B PREFERRED STOCK").
(c) OUTSTANDING STOCK. As of the record date for purposes of
voting on the Merger, November 24, 1997, 6,418,816 shares of Kiva Common Stock
were outstanding, 4,654,688 shares of Kiva Series A Preferred Stock were
outstanding and 2,791,907 shares of Kiva Series B Preferred Stock were
outstanding. All shares of Kiva Series A Preferred Stock and Kiva Series B
Preferred Stock shall be voluntarily converted into Common Stock immediately
prior to the filing of the Merger Agreement. At the close of business on
November 24, 1997, (i) 3,500,000 shares of Common Stock were reserved for
issuance to employees and consultants pursuant to Kiva's 1995 Stock Option Plan
(the "Option Plan"), of which 1,776,099 shares were subject to outstanding,
unexercised options, 472,628 shares remained available for future grant and
1,251,273 shares had been issued pursuant to the exercise of options issued
under the Option Plan, and (ii) 603,000 shares of Common Stock were reserved for
issuance upon exercise of outstanding Company Options granted outside the Option
Plan.
2.2 ORGANIZATION OF SUB.
(a) INCORPORATION. Sub was incorporated under the laws of the
State of Delaware on November 17, 1997.
(b) AUTHORIZED STOCK. Sub is authorized to issue an aggregate of
1,000 shares of Common Stock, and the par value of each share is One Cent
($0.01) per share ("SUBSIDIARY STOCK").
-2-
<PAGE>
(c) OUTSTANDING STOCK. On the date hereof, an aggregate of 1,000
shares of Subsidiary Stock are outstanding.
ARTICLE III
ARTICLES OF INCORPORATION OF THE SURVIVING CORPORATION
3.1 AMENDMENT OF KIVA'S ARTICLES OF INCORPORATION. At the Effective Time,
the Articles of Incorporation of the Surviving Corporation shall be amended and
restated in their entirety to read as set forth in EXHIBIT A hereto.
ARTICLE IV
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
4.1 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of Kiva
Common Stock:
(a) CAPITAL STOCK OF SUB. Each share of Common Stock of Sub issued
and outstanding immediately prior to the Effective Time shall be converted into
and exchanged for one share of Common Stock of the Surviving Corporation.
(b) CONVERSION OF KIVA COMMON STOCK. Each issued and outstanding
share of Kiva Common Stock (including all shares of Kiva Common Stock issued
upon conversion of all Kiva Series A Preferred Stock and Kiva Series B Preferred
Stock immediately prior to the Closing) issued and outstanding immediately prior
to the Effective Time (other than shares to be canceled pursuant to
Section 4.1(b) hereof and shares, if any, held by persons exercising dissenters'
rights in accordance with Chapter 13 of the California General Corporation Law
("DISSENTING SHARES")) shall be canceled, extinguished and be converted
automatically into the right to receive 0.381799876 shares of Netscape Common
Stock upon the surrender of the certificate representing each such share of Kiva
Common Stock.
(c) STOCK OPTIONS. At the Effective Time, all options to purchase
Kiva Common Stock (each a "KIVA OPTION") then outstanding shall be assumed by
Netscape in accordance with provisions described below:
(i) At the Effective Time, each outstanding Kiva Option,
whether vested or unvested, shall be, in connection with the Merger, assumed by
Netscape. Each Kiva Option so assumed by Netscape shall continue to have, and
be subject to, the same terms and conditions set forth in the Option Plan and/or
option agreement governing such Kiva Option immediately prior to the Effective
Time, except that (A) such Kiva Option shall be exercisable (when vested) for
that number of whole shares of Netscape Common Stock equal to the product of the
number of shares of
-3-
<PAGE>
Kiva Common Stock that were issuable upon exercise of such Kiva Option
immediately prior to the Effective Time multiplied by 0.381799876, rounded
down to the nearest whole number of shares of Netscape Common Stock, and (B)
the per share exercise price for the shares of Netscape Common Stock issuable
upon exercise of such assumed Kiva Option shall be equal to the quotient
determined by dividing the exercise price per share of Kiva Common Stock at
which such Kiva Option was exercisable immediately prior to the Effective
Time by 0.381799876, rounded up to the nearest whole cent.
(ii) Promptly following the Effective Time, Netscape will issue
to each holder of an outstanding Kiva Option a document evidencing the foregoing
assumption of such Kiva Option by Netscape.
(d) DISSENTERS' RIGHTS. If holders of Kiva Common Stock are entitled
to dissenters' rights in connection with the Merger under Chapter 13 of the
California General Corporation Law, any Dissenting Shares shall not be converted
into Netscape Common Stock but shall be converted into the right to receive such
consideration as may be determined to be due with respect to such Dissenting
Shares pursuant to Chapter 13 of the California General Corporation Law.
(e) FRACTIONAL SHARES. No fraction of a share of Netscape Common
Stock shall be issued, but in lieu thereof, each holder of shares of Kiva Common
Stock who would otherwise be entitled to a fraction of a share of Netscape
Common Stock (after aggregating all fractional shares of Netscape Common Stock
to be received by such holder) shall be paid by Netscape an amount of cash
(rounded to the nearest whole cent) equal to the product of (i) such fraction,
multiplied by (ii) the average closing price of a share of Netscape Common Stock
for the twenty (20) consecutive trading days ending on the trading day
immediately prior to the Closing Date, on the Nasdaq National Market, as
reported in THE WALL STREET JOURNAL.
(f) ESCROW. A portion of the shares of Netscape Common Stock
otherwise issuable by Netscape in connection with the Merger shall be placed in
escrow by Netscape (the "ESCROW AMOUNT"), the release of which shall be
contingent upon certain events and conditions specified in the Reorganization
Agreement and the related Escrow Agreement.
4.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Closing Date, Netscape shall
designate a bank or trust company with assets of not less than $500 million to
act as exchange agent (the "EXCHANGE AGENT") in the Merger.
(b) NETSCAPE TO PROVIDE COMMON STOCK. Promptly after the Effective
Time, Netscape shall make available to the Exchange Agent for exchange in
accordance with Section 4.1 herein, the aggregate number of shares of Netscape
Common Stock issuable in exchange for outstanding shares of Kiva Common Stock;
provided that, on behalf of the holders of Kiva Common Stock, Netscape shall
deposit into an escrow account a number of shares of Netscape Common Stock equal
to the Escrow Amount out of the aggregate number of shares of Netscape Common
Stock
-4-
<PAGE>
otherwise issuable. The portion of the Escrow Amount contributed on behalf
of each holder of Kiva Common Stock shall be in proportion to the aggregate
number of shares of Netscape Common Stock which such holder would otherwise
be entitled to receive by virtue of ownership of outstanding shares of Kiva
Common Stock.
(c) EXCHANGE PROCEDURES. Promptly after the Effective Time, the
Surviving Corporation shall cause to be mailed to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Kiva Common Stock (the "CERTIFICATES") and
which shares were converted into the right to receive shares of Netscape Common
Stock, (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and which shall be in such
form and have such other provisions as Netscape may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Netscape Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Netscape, together with such letter
of transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing the number of whole
shares of Netscape Common Stock (less the number of shares of Netscape Common
Stock, if any, to be deposited in escrow on such holder's behalf), plus cash in
lieu of fractional shares, to which such holder is entitled, and the Certificate
so surrendered shall forthwith be canceled. As soon as practicable after the
Effective Time, Netscape shall cause to be distributed to the Escrow Agent a
certificate or certificates representing that number of shares of Netscape
Common Stock equal to the Escrow Amount, which certificate shall be registered
in the name of the Escrow Agent. Such shares shall be beneficially owned by the
holders on whose behalf such shares were deposited in the Escrow Fund and shall
be available to compensate Netscape for any claims, losses, liabilities,
damages, deficiencies, costs and expenses, including reasonable attorneys' fees
and expenses, and expenses of investigation and defense incurred by Netscape,
its officers, directors or affiliates (including the Surviving Corporation)
directly or indirectly as a result of any inaccuracy or breach of a
representation or warranty of Kiva or any contained in Article II of the
Reorganization Agreement (as modified by the Kiva Schedules), or any failure by
Kiva to perform or comply with any covenant contained therein. Until so
surrendered, each outstanding Certificate that, prior to the Effective Time,
represented shares of Kiva Common Stock will be deemed from and after the
Effective Time, for all corporate purposes, other than the payment of dividends,
to evidence the ownership of the number of full shares of Netscape Common Stock
into which such shares of Kiva Common Stock shall have been so converted and the
right to receive an amount in cash in lieu of the issuance of any fractional
shares.
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions with respect to Netscape Common Stock declared or made
after the Effective Time and with a record date after the Effective Time will be
paid to the holder of any unsurrendered Certificate with respect to the shares
of Netscape Common Stock represented thereby until the holder of record of such
Certificate shall surrender such Certificate. Subject to applicable law,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Netscape Common Stock
issued in exchange therefor, without interest, at the time of such
-5-
<PAGE>
surrender, the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares
of Netscape Common Stock.
(e) TRANSFERS OF OWNERSHIP. If any certificate for shares of
Netscape Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Netscape or any agent designated by
it any transfer or other taxes required by reason of the issuance of a
certificate for shares of Netscape Common Stock in any name other than that of
the registered holder of the Certificate surrendered, or will have established
to the satisfaction of Netscape or any agent designated by it that such tax has
been paid or is not payable.
(f) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares
of Netscape Common Stock issued upon the surrender for exchange of shares of
Kiva Common Stock in accordance with the terms of this Section 4.2 (including
any cash paid in respect thereof) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Kiva Common Stock, and
there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Kiva Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided herein.
(g) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates evidencing shares of Kiva Common Stock shall have been lost, stolen
or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen
or destroyed Certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of Netscape Common Stock and cash for fractional
shares, if any; provided, however, that Netscape may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Netscape or the Exchange Agent with respect to the Certificates alleged to have
been lost, stolen or destroyed.
ARTICLE V
TERMINATION
5.1 TERMINATION BY MUTUAL AGREEMENT. Notwithstanding the approval of this
Merger Agreement by the shareholders of Kiva, this Merger Agreement may be
terminated at any time prior to the Effective Time by mutual agreement of the
Boards of Directors of the Constituent Corporations.
5.2 TERMINATION OF REORGANIZATION AGREEMENT. Notwithstanding the approval
of this Merger Agreement by the shareholders of Kiva, this Merger Agreement
shall terminate forthwith if the Reorganization Agreement is terminated as
provided therein.
-6-
<PAGE>
5.3 EFFECTS OF TERMINATION. In the event of the termination of this
Merger Agreement, this Merger Agreement shall become void and there shall be no
liability on the part of either Kiva or Sub or their respective officers or
directors, except as otherwise provided in the Reorganization Agreement.
ARTICLE VI
GENERAL PROVISIONS
6.1 AMENDMENT. This Merger Agreement may be amended by the parties hereto
any time before or after approval hereof by the shareholders of Kiva, but after
such approval, no amendment shall be made that by law requires the further
approval of shareholders without obtaining such approval. This Merger Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
6.2 COUNTERPARTS. This Merger Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one agreement.
6.3 GOVERNING LAW. This Merger Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-7-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Merger Agreement as
of the date first written above.
KIVA SOFTWARE CORPORATION
By: /s/ Keng S. Lim
-----------------------------------
Keng S. Lim
President, Chief Executive Officer
and Secretary
KNIFE ACQUISITION CORPORATION
By: /s/ Peter L.S. Currie
-----------------------------------
Peter L.S. Currie
President
By: /s/ James N. Strawbridge
-----------------------------------
James N. Strawbridge
Assistant Secretary
[SIGNATURE PAGE TO MERGER AGREEMENT]
<PAGE>
EXHIBIT A
ARTICLES OF INCORPORATION
OF
KIVA SOFTWARE CORPORATION
I.
The name of this corporation is "Kiva Software Corporation."
II.
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III.
This corporation is authorized to issue only one class of shares of stock,
designated "Common Stock," and the total number of shares which this corporation
is authorized to issue is One Thousand (1,000).
IV.
1. LIMITATION OF DIRECTORS' LIABILITY. The liability of the directors of
this corporation for monetary damages shall be eliminated to the fullest extent
permissible under California law.
2. INDEMNIFICATION OF CORPORATE AGENTS. This corporation is authorized to
indemnify its agents to the fullest extent permissible under California law.
For purposes of this provision the term "agent" has the meaning set forth in
Section 317 of the California Corporations Code.
3. REPEAL OR MODIFICATION. Any repeal or modification of the foregoing
provisions of this Article V shall not adversely affect any right of
indemnification or limitation of liability of an agent of this corporation
relating to acts or omissions occurring prior to such repeal or modification.
<PAGE>
OFFICERS' CERTIFICATE
OF
KIVA SOFTWARE CORPORATION
Keng S. Lim, President, Chief Executive Officer and Secretary of Kiva
Software Corporation, a corporation duly organized and existing under the laws
of the State of California (the "Corporation"), does hereby certify:
1. That he is the duly elected, acting and qualified President and
Secretary of the Corporation.
2. There are two authorized classes of shares, consisting of 17,000,000
shares of Common Stock and 7,604,688 shares of Preferred Stock, of which
4,754,688 are designated "Series A Preferred Stock" and 2,850,000 are designated
"Series B Preferred Stock." There were 6,418,816 shares of Common Stock,
4,683,071 shares of Series A Preferred Stock, and 2,791,907 shares of Series B
Preferred Stock outstanding and entitled to vote on the Agreement of Merger in
the form attached. Subsequent to the vote of the shareholders of the
Corporation referred to in paragraph 4 below and prior to the filing of the
Agreement of Merger, all of the outstanding shares of the Corporation's
Preferred Stock were converted into Common Stock.
3. The Agreement of Merger in the form attached was duly approved by the
board of directors of the Corporation in accordance with the General Corporation
Law of the State of California.
4. Approval of the Agreement of Merger by the holders of at least 51% of
the outstanding shares of the Common Stock and 51% of the outstanding shares of
Preferred Stock was required. The percentage of the outstanding shares of each
class of the Corporation's shares entitled to vote on the Agreement of Merger
which voted to approve the Agreement of Merger equaled or exceeded the vote
required.
Each of the undersigned declares under penalty of perjury that the
statements contained in the foregoing certificate are true of their own
knowledge. Executed in Mountain View, California, on December 1, 1997.
/s/ Keng S. Lim
-----------------------------------
Keng S. Lim
President, Chief Executive Officer
and Secretary
<PAGE>
OFFICERS' CERTIFICATE
OF
KNIFE ACQUISITION CORPORATION
Peter L.S. Currie, President and Chief Financial Officer, and James N.
Strawbridge, Assistant Secretary, of Knife Acquisition Corporation, a
corporation duly organized and existing under the laws of the State of Delaware
(the "Corporation"), do hereby certify:
1. That they are the duly elected, acting and qualified President and
Chief Financial Officer, and Assistant Secretary, respectively, of the
Corporation.
2. There is only one authorized class of shares, consisting of 1,000
shares of Common Stock, and the total number of issued and outstanding shares is
1,000.
3. The Agreement of Merger in the form attached was approved by the board
of directors and the shareholder of the Corporation in accordance with the
General Corporation Law of State of Delaware.
4. The stockholder approval was by the holder of 100% of the outstanding
shares of the Corporation.
5. No vote of the stockholders of Netscape Communications Corporation
(the sole stockholder of the Corporation and the parent of the Corporation) was
required.
Each of the undersigned declares under penalty of perjury that the
statements contained in the foregoing certificate are true of their own
knowledge. Executed in Palo Alto, California, on December 1, 1997.
/s/ Peter L.S. Currie
-----------------------------------
Peter L.S. Currie,
President and Chief Financial Officer
/s/ James N. Strawbridge
-----------------------------------
James N. Strawbridge, Assistant Secretary
<PAGE>
EXHIBIT 2.3
<PAGE>
CERTIFICATE OF MERGER
MERGING
KNIFE ACQUISITION CORPORATION
WITH AND INTO
KIVA SOFTWARE CORPORATION
________________________________
Pursuant to Section 252 of the General Corporation Law of
the State of Delaware
________________________________
Kiva Software Corporation, a California corporation ("Kiva"), DOES HEREBY
CERTIFY AS FOLLOWS:
FIRST: That Kiva was incorporated on September 7, 1995, pursuant to the
California General Corporation Law (the "California Law"), and Knife Acquisition
Corporation ("Knife") was incorporated on November 17, 1997 pursuant to the
Delaware General Corporation Law (the "Delaware Law").
SECOND: That an Agreement and Plan of Reorganization (the "Reorganization
Agreement"), dated as of November 24, 1997, among Netscape Communications
Corporation, a Delaware corporation, Kiva and Knife, setting forth the terms and
conditions of the merger of Knife with and into Kiva (the "Merger"), has been
approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of Section 252 of
the Delaware Law.
THIRD: That the surviving corporation (the "Surviving Corporation") shall
be Kiva, which shall retain the name "Kiva Software Corporation"
FOURTH: That pursuant to the Reorganization Agreement, from and after the
effective time of the Merger, the Articles of Incorporation of Kiva shall be the
Amended and Restated Articles of Incorporation of the Surviving Corporation and
shall be amended in their entirety to read as set forth in EXHIBIT A attached
hereto.
-1-
<PAGE>
FIFTH: That an executed copy of the Reorganization Agreement is on file at
the principal place of business of the Surviving Corporation at the following
address:
Kiva Software Corporation
1585 Charleston Road
Mountain View, CA 94043
SIXTH: That a copy of the Reorganization Agreement will be furnished by
the Surviving Corporation, on request and without cost, to any shareholder of
any constituent corporation.
SEVENTH: That the Surviving Corporation shall act as the Agent for Service
of Process for Knife at the following address:
Kiva Software Corporation
1585 Charleston Road
Mountain View, CA 94043
EIGHTH: That the Merger shall become effective upon the filing of this
Certificate of Merger with the Secretary of State of the State of Delaware.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, Kiva has caused this Certificate of Merger to be
executed in its corporate name as of the 1st day of December 1997.
KIVA SOFTWARE CORPORATION
By: /s/ Keng S. Lim
-----------------------------------------
Keng S. Lim, President
[SIGNATURE PAGE TO THE CERTIFICATE OF MERGER]
<PAGE>
EXHIBIT A
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
KIVA SOFTWARE CORPORATION
I.
The name of this corporation is "Kiva Software Corporation."
II.
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III.
This corporation is authorized to issue only one class of shares of stock,
designated "Common Stock," and the total number of shares which this corporation
is authorized to issue is One Thousand (1,000).
IV.
1. LIMITATION OF DIRECTORS' LIABILITY. The liability of the directors of
this corporation for monetary damages shall be eliminated to the fullest extent
permissible under California law.
2. INDEMNIFICATION OF CORPORATE AGENTS. This corporation is authorized to
indemnify its agents to the fullest extent permissible under California law.
For purposes of this provision the term "agent" has the meaning set forth in
Section 317 of the California Corporations Code.
3. REPEAL OR MODIFICATION. Any repeal or modification of the foregoing
provisions of this Article V shall not adversely affect any right of
indemnification or limitation of liability of an agent of this corporation
relating to acts or omissions occurring prior to such repeal or modification.
-4-
