STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (this "Agreement"), dated as of
November 23, 1998, between Netscape Communications Corporation, a Delaware
corporation (the "Company"), and America Online, Inc., a Delaware corporation
("Grantee").
WHEREAS, the Company, Grantee and Apollo Acquisition Corp., a
Delaware corporation and a newly-formed wholly owned direct subsidiary of
Grantee ("Newco"), have contemporaneously with the execution of this Agreement
entered into an Agreement and Plan of Merger dated as of November 23, 1998 (the
"Merger Agreement") which provides, among other things, that Newco shall be
merged with and into the Company pursuant to the terms and conditions thereof;
and
WHEREAS, as an essential condition and inducement to Grantee's
entering into the Merger Agreement and in consideration therefor, the Company
has agreed to grant Grantee the Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein and in the Merger Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereby agree as follows:
1. Grant of Option. The Company hereby grants to Grantee an irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to 19,887,317
shares (such shares being referred to herein as the "Option Shares") of fully
paid and nonassessable common stock, par value $0.0001 per share, of the Company
("Company Common Stock"), equal to approximately nineteen and nine-tenths
percent (19.9%) of the number of shares of Company Common Stock issued and
outstanding (before giving effect to the exercise of the Option) as of the date
hereof, at a purchase price of $33.94 per share, as adjusted in accordance with
the provisions of Section 8 of this Agreement (such price, as adjusted if
applicable, the "Option Price").
2. (a) Exercise of Option. Grantee may exercise the Option, in whole or
part, and from time to time, if, but only if, a Triggering Event (as hereinafter
defined) shall have occurred prior to the occurrence of an Option Termination
Event (as hereinafter defined), provided that Grantee shall have sent the
written notice of such exercise (as provided in Section 2(e) hereof) on or prior
to the last date of the one (1) year period following such Triggering Event (the
"Option Expiration Date"). The right to exercise the Option shall terminate upon
the first to occur of the Option Expiration Date or an Option Termination Event.
(b) Triggering Events. The term "Triggering Event" shall mean
the occurrence of the date, if any, upon or after termination of the Merger
Agreement (Grantee at the time of such termination not being in breach of the
Merger Agreement, or if Grantee is then in breach, the effect of such breach not
being materially adverse to the Company), other than termination pursuant to
Section 9.1(g)(iv) thereof, on which Acquiror's right, pursuant to Section
9.2(b) of the Merger Agreement, to receive the Termination Fee first arises.
(c) Option Termination Events. The term "Option Termination
Event" shall mean any of the following events:
(i) the Effective Time; or
(ii)the termination of the Merger Agreement other than under
circumstances which constitute (or upon satisfaction of the conditions to
payment of the Termination Fee set forth in clause (ii) of Section 9.2(b) of the
Merger Agreement would constitute) a Triggering Event under this Agreement; or
(iii) the occurrence of the date which is six (6)months
after termination of the Merger Agreement under circumstances which, if the
conditions to payment of the Termination Fee set forth in clause (ii) of
Section 9.2(b) of the Merger Agreement were satisfied, would constitute a
Triggering Event under this Agreement, provided no such Triggering Event
resulting from the satisfaction of such conditions has occurred prior to the
occurrence of such date.
(d) Notice of Triggering Event. The Company shall notify
Grantee in writing as promptly as practicable following its becoming aware of
the occurrence of any Triggering Event, it being understood that the giving of
such notice by the Company shall not be a condition to the right of Grantee to
exercise the Option or for a Triggering Event to have occurred and that the
failure to give such notification shall not itself be deemed to be a breach of
this Agreement for purposes of Section 9.1(g)(iv) of the Merger Agreement.
(e) Notice of Exercise; Closing. In the event that Grantee is
entitled to and desires to exercise the Option, it shall send to the Company a
written notice (such notice being herein referred to as an "Exercise Notice" and
the date of issuance of an Exercise Notice being herein referred to as the
"Notice Date") specifying (i) the total number of shares (or other Option
Securities (as hereinafter defined)) it will purchase pursuant to such exercise
and (ii) a place and date not earlier than three (3) Business Days nor later
than forty (40) Business Days from the Notice Date for the closing of such
purchase (the "Option Closing Date"); provided, that if the closing of the
purchase and sale pursuant to the Option (the "Option Closing") cannot be
consummated, by reason of any applicable Order, the period of time that
otherwise would run pursuant to this Section shall run instead from the date on
which such restriction on consummation has expired or been terminated; and
provided further, without limiting the foregoing, that if, in the reasonable
opinion of Grantee, prior notification to or approval of any regulatory agency
is required in connection with such purchase, the Company or Grantee, as the
case may be, shall promptly file the required notice or application for approval
and shall expeditiously process the same and the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which any
required notification periods have expired or been terminated or such approvals
have been obtained and any requisite waiting period or periods shall have
passed.
(f) Purchase Price. At the Option Closing, Grantee shall pay
to the Company the aggregate Option Price in immediately available funds by wire
transfer to a bank account designated by the Company; provided that failure or
refusal of the Company to designate such a bank account shall not preclude
Grantee from exercising the Option.
(g) Issuance of Company Common Stock. At the Option Closing,
simultaneously with the delivery of immediately available funds as provided in
Section 2(f) hereof, the Company shall deliver to Grantee a certificate or
certificates representing the number of shares of Company Common Stock (or other
Option Securities) purchased by Grantee and, if the Option should be exercised
in part only, a new Option evidencing the rights of Grantee thereof to purchase
the balance of the shares (or other Option Securities) purchasable hereunder. If
at the time of issuance of any Option Shares pursuant to an exercise of all or
part of the Option hereunder, the Company shall have issued any rights or other
securities which are attached to or otherwise associated with the Company Common
Stock, then each Option Share issued pursuant to such exercise shall also
represent such rights or other securities with terms substantially the same as
and at least as favorable to Grantee as are provided under any shareholder
rights agreement or similar agreement of the Company then in effect.
(h) Legend. Certificates for Company Common Stock (or other
Option Securities) delivered at a closing hereunder may be endorsed with a
restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to resale restrictions arising under the Securities Act of 1933, as amended."
It is understood and agreed that the reference to the resale restrictions of the
Securities Act of 1933, as amended (the "Securities Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if Grantee shall have delivered to the Company a copy of a letter from the staff
of the SEC, or an opinion of counsel, reasonably satisfactory to the Company, to
the effect that such legend is not required for purposes of the Securities Act.
(i) Record Grantee; Expenses. Upon the delivery by Grantee to
the Company of the Exercise Notice and the tender of the applicable Option Price
in immediately available funds, Grantee shall be deemed to be the holder of
record of the shares of Company Common Stock (or other Option Securities)
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such shares
of Company Common Stock (or other Option Securities) shall not then be actually
delivered to Grantee or the Company shall have failed or refused to designate
the bank account described in Section 2(f). The Company shall pay all expenses
that may be payable in connection with the preparation, issuance and delivery of
stock certificates under this Section 2 in the name of Grantee. The Grantee
shall pay all expenses that may be payable in connection with the issuance and
delivery of stock certificates or a substitute option agreement in the name of
any assignee, transferee or designee of Grantee.
(j) Consents. The obligation of the Company to issue Option
Shares to Grantee hereunder is subject to the conditions that (i) any waiting
period under the HSR Act applicable to the issuance of the Option Shares
hereunder shall have expired or been terminated; (ii) all material consents,
approvals, orders or authorizations of, or registrations, declarations or
filings with, any Federal, state or local administrative agency or commission or
other Federal, state or local governmental authority or instrumentality, if any,
required in connection with the issuance of the Option Shares hereunder shall
have been obtained or made, as the case may be; and (iii) no preliminary or
permanent injunction or other order by any court of competent jurisdiction
prohibiting or otherwise restraining such issuance shall be in effect. It is
understood and agreed that at any time during which the Option is exercisable,
the parties will use their respective best efforts to satisfy all such
conditions to closing, so that an Option Closing may take place as promptly as
practicable; provided that neither the Company nor Grantee nor any subsidiary or
affiliate thereof will be required to agree to any divestiture by itself or any
of its affiliates of shares of capital stock or of any business, assets or
property, 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.
3. Evaluation of Investments. Grantee, by reason of its knowledge and
experience in financial and business matters, believes itself capable of
evaluating the merits and risks of an investment in the Option and the
securities to be purchased/sold pursuant to this Agreement (collectively the
"Option Securities.")
4. Documents Delivered. Grantee acknowledges receipt of copies of the
following documents:
a. The Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
b. The Company's Proxy Statement for the meeting of the
Company's stockholders held May 29, 1998;
c. The Company's Quarterly Reports on Form 10-Q filed since
December 31, 1997; and
d. Current Reports on Form 8-K filed since December 31, 1997.
5. Investment Intent. Grantee represents and warrants that it is
entering into this Agreement and is acquiring and/or will acquire the Option
Securities for its own account and not with a view to resale or distribution of
all or any part of the Option Securities in violation of applicable Law.
6. Reservation of Shares. The Company agrees (i) that it shall at all
times maintain, free from preemptive rights, sufficient authorized but unissued
or treasury shares of Company Common Stock (and other Option Securities)
issuable pursuant to this Agreement so that the Option may be exercised without
additional authorization of Company Common Stock (or such other Option
Securities) after giving effect to all other options, warrants, convertible
securities and other rights to purchase Company Common Stock (or such other
Option Securities); (ii) that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants to be observed or performed hereunder by the Company; and (iii)
promptly to take all action as may from time to time be required in order to
permit Grantee to exercise the Option and the Company to duly and effectively
issue shares of Company Common Stock (or other Option Securities) pursuant
hereto.
7. Division of Option; Lost Options. This Agreement (and the Option
granted hereby) are exchangeable, without expense, at the option of Grantee,
upon presentation and surrender of this Agreement at the principal office of the
Company, for other agreements providing for Options of different denominations
entitling the holder thereof to purchase, on the same terms and subject to the
same conditions as are set forth herein, in the aggregate the same number of
shares of Company Common Stock purchasable hereunder. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, the Company will execute and
deliver a new Agreement of like tenor and date.
8. Adjustment Upon Changes in Capitalization. The number of shares of
Company Common Stock purchasable upon the exercise of the Option shall be
subject to adjustment from time to time as provided in this Section 8.
(a) Transaction Adjustment. In the event of any change in
Company Common Stock by reason of stock dividends, splits, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or other similar transactions, then that which is then purchasable upon exercise
hereof shall be appropriately adjusted so that Grantee shall receive upon
exercise of the Option and payment of the aggregate Option Price hereunder the
number and class of shares or other securities or property (including cash) that
Grantee would have owned or been entitled to receive after the happening of any
of the events described above if the Option had been exercised immediately prior
to such event, or the record date therefor, as applicable.
(b) Option Price Adjustment. Whenever the number of shares of
Company Common Stock subject to this Option are adjusted pursuant to Section
8(a) the Option Price shall be appropriately adjusted, if applicable, by
multiplying the Option Price by a fraction, the numerator of which shall be
equal to the aggregate number of shares of Company Common Stock purchasable
under the Option prior to the adjustment and the denominator of which shall be
equal to the aggregate number of shares of Company Common Stock purchasable
under the Option immediately after the adjustment.
9. Registration Rights. The Company will, if requested by the Grantee
at any time and from time to time within two (2) years of a Triggering Event
(the "Registration Period"), in order to permit the sale or other disposition of
shares of Company Common Stock that have been acquired by or are issuable to the
Grantee upon exercise of the Option ("Registrable Securities") pursuant to a
bona fide firm commitment underwritten public offering in which the Grantee and
the underwriters shall effect as wide a distribution of such Registrable
Securities as is reasonably practicable and shall use reasonable efforts to
prevent any person or group from purchasing through such offering shares
representing more than 2% of the outstanding Company Common Stock on a fully
diluted basis (a "Permitted Offering"); provided, however, that any such
Registration Notice must relate to a number of shares equal to at least 2% of
the outstanding shares of Company Common Stock on a fully diluted basis and that
any rights to require registration hereunder shall terminate with respect to any
shares that may be sold pursuant to Rule 144(k) under the Securities Act. The
Company will use all reasonable efforts to qualify such shares or other Option
Securities under any applicable state securities Laws; provided, however, that
the Company shall not be required to qualify to do business in, or consent to
general service of process in, any jurisdiction by reason of this provision.
Without the Grantee's prior written consent, no other securities may be included
in any such registration. The Company will use reasonable efforts to cause each
such registration statement to become effective, to obtain all consents or
waivers of other parties which are required therefor and to keep such
registration statement effective for such period not in excess of seventy-five
(75) days from the day such registration statement first becomes effective as
may be reasonably necessary to effect such sale or other disposition. The
obligations of the Company hereunder to file a registration statement and to
maintain its effectiveness may be suspended for one or more periods of time not
exceeding ninety (90) days in the aggregate if the Board of Directors of the
Company shall have determined in good faith that the filing of such registration
or the maintenance of its effectiveness would require disclosure of nonpublic
information that would materially and adversely affect the Company or the
Company is required under the Securities Act to include audited financial
statements for any period in such registration statement and such financial
statements are not yet available for inclusion in such registration statement.
The expenses associated with the preparation and filing of any such registration
statement pursuant to this Section 9 and any sale covered thereby (including any
fees related to blue sky qualifications and filing fees in respect of the SEC or
the National Association of Securities Dealers, Inc.) ("Registration Expenses")
will be for the account of the Company except for underwriting discounts or
commissions or brokers' fees in respect of shares of Company Common Stock to be
sold by the Grantee and the fees and disbursements of the Grantee's counsel;
provided, however, that the Company will not be required to pay for any
Registration Expenses with respect to such registration if the registration
request is subsequently withdrawn at the request of the Grantee unless the
Grantee agrees to forfeit its right to request one registration; provided
further, however, that, if at the time of such withdrawal the Grantee has
learned of a material adverse change in the results of operations, condition,
business or prospects of the Company from that known to the Grantee at the time
of its request and has withdrawn the request with reasonable promptness
following disclosure by the Company of such material adverse change, then the
Grantee will not be required to pay any of such expenses and will retain all
remaining rights to request registration. The Grantee will provide all
information reasonably requested by the Company for inclusion in any
registration statement to be filed hereunder. If during the Registration Period
the Company shall propose to register under the Securities Act the offering,
sale and delivery of Company Common Stock for cash for its own account or for
any other stockholder of the Company pursuant to a firm underwriting, it will,
in addition to the Company's other obligations under this Section 9, allow the
Grantee the right to participate in such registration provided that the Grantee
participates in the underwriting; provided, however, that, if the managing
underwriter of such offering advises the Company in writing that in its opinion
the number of shares of Company Common Stock requested to be included in such
registration exceeds the number which it would be in the best interests of the
Company to sell in such offering, the Company will, after fully including
therein all shares of Company Common Stock to be sold by the Company, include
the shares of Company Common Stock requested to be included therein by Grantee
pro rata (based on the number of shares of Company Common Stock intended to be
included therein) with the shares of Company Common Stock intended to be
included therein by Persons other than the Company and Persons to whom the
Company owes a contractual obligation not to make such a cut-back. In connection
with any offering, sale and delivery of Company Common Stock pursuant to a
registration statement effected pursuant to this Section 9, the Company and the
Grantee will provide each other and each underwriter of the offering with
customary representations, warranties and covenants, including covenants of
indemnification and contribution. For purposes of determining whether two
requests have been made under this Section 9, only requests relating to a
registration statement that has become effective under the Securities Act will
be counted. The registration rights granted under this Section 9 are subject to
and are limited by any registration rights previously granted by the Company and
the Grantee acknowledges the registration rights granted under this Section 9
shall be construed subject to any such limitations.
10. Company Call.
If Grantee has acquired Option Shares pursuant to exercise
of the Option (the date of any Option Closing relating to any such exercise
herein referred to as an "Exercise Date"), then, at any time after the date
seven (7) months following such Exercise Date and prior to the date nineteen
(19) months following such Exercise Date (the "Purchase Period"), the Company
may require Grantee, upon delivery to Grantee of written notice, to sell to the
Company any Option Shares held by Grantee as of the day that is ten (10)
business days after the date of such notice, up to a number of shares equal to
the number of Option Shares acquired by Grantee pursuant to exercise of the
Option in connection with such Exercise Date. The per share purchase price for
such sale (the "Company Call Price") shall be equal to the higher of (i) the
Option Price less any dividends paid on the Option Shares to be purchased by the
Company pursuant to this Section 10 plus an amount equal to a return at the rate
of ten percent (10%) of the Option Price per year from the Exercise Date and (b)
an amount equal to the average of the high and low trading prices per share of
Company Common Stock for the thirty (30) trading day period ending one trading
day prior to the delivery of the Company's notice exercising call rights
pursuant to this Section 10. The closing of any sale of Option Shares pursuant
to this Section 10 shall take place at the principal offices of the Company at a
time and on a date designated by the Company in the aforementioned notice to
Grantee, which date shall be no more than twenty (20) and no less than two (2)
business days from the date of such notice. The Company Call Price shall be paid
in immediately available funds.
11. Repurchase of Option and Option Shares.
(a) Repurchase Offer. Within ten (10) Business Days following
the occurrence of a Repurchase Event (as defined herein), the Company shall (i)
deliver an offer (an "Option Repurchase Offer") to repurchase the Option from
Grantee at a price (the "Option Repurchase Price") equal to the amount by which
(A) the Competing Transaction Price (as defined below) exceeds (B) the Option
Price, multiplied by the maximum number of shares for which the Option may then
be exercised by the Grantee, and (ii) deliver an offer (an "Option Share
Repurchase Offer") to repurchase any Option Shares held by Grantee at a price
(the "Option Share Repurchase Price") equal to the amount by which (A) the
Competing Transaction Price exceeds (B) the Option Price, multiplied by the
number of Option Shares then held by Grantee. The term "Competing Transaction
Price" shall mean, as of any date for the determination thereof, the price per
share of Common Stock paid pursuant to the consummation of any Competing
Transaction or, in the event of a Competing Transaction by way of a sale of
assets of the Company, the last per share sale price of Company Common Stock on
the fourth trading day following the announcement of such sale. For purposes of
this Agreement, "Competing Transaction" shall mean any of the following, other
than the transactions with Grantee contemplated by the Merger Agreement: (a) a
merger, consolidation, recapitalization, liquidation or other business
combination to which the Company or its subsidiary is a party pursuant to which
the stockholders of the Company immediately preceding such transaction hold less
than 50% of the equity interests in the surviving or resulting entity of such
transaction, (b) the acquisition or purchase from the Company of 50% or more of
the total outstanding voting securities of the Company, or (c) the acquisition
or purchase of all or substantially all of the assets of the Company. If the
consideration paid or received in the Competing Transaction shall be other than
in cash, the per share value of such consideration (on a fully diluted basis)
shall be determined by a nationally recognized investment banking firm selected
by Grantee and reasonably acceptable to the Company, which determination shall
be conclusive for all purposes of this Agreement.
(b) Repurchase Request. Upon the occurrence of a Repurchase
Event and whether or not the Company shall have made an Option Repurchase Offer
or Option Share Repurchase Offer under Section 11(a), at the request (the date
of such request being the "Option Repurchase Request Date") of Grantee delivered
prior to the Option Termination Date, the Company (i) shall repurchase the
Option from Grantee at the Option Repurchase Price and (ii) shall repurchase
such number of the Option Shares (to the extent clearly identifiable as such)
from the Grantee as the Grantee shall designate at the Option Share Repurchase
Price.
(c) Repurchase Procedures. Grantee may (i) accept the
Company's Option Repurchase Offer or Option Share Repurchase Offer under Section
11(a) or (ii) exercise its right to require the Company to repurchase the Option
or any Option Shares, as the case may be, pursuant to Section 11(b) by a written
notice or notices stating that Grantee elects to accept such offer or to require
the Company to repurchase the Option or the Option Shares in accordance with the
provisions of this Section 11. As promptly as practicable, and in any event
within five (5) Business Days, after the surrender to the Company of this
Agreement or Certificates for Option Shares, as applicable, following receipt of
a notice under this Section 11(c), the Company shall deliver or cause to be
delivered to Grantee the Option Repurchase Price or the Option Share Repurchase
Price, as the case may be.
(d) Regulatory Approvals. The Company hereby undertakes to use
its best efforts to obtain all required regulatory and legal approvals and to
file any required notices as promptly as practicable in order to accomplish any
repurchase contemplated by this Section 11. Nonetheless, to the extent that the
Company is prohibited under applicable Law from repurchasing the Option or any
Option Shares in full, the Company shall immediately so notify Grantee and
thereafter deliver or cause to be delivered, from time to time, to Grantee, the
portion of the Option Repurchase Price and the Option Share Repurchase Price,
respectively, that it is required to deliver pursuant hereto and that it is no
longer prohibited from delivering, within five (5) Business Days after the date
on which the Company is no longer so prohibited; provided, however, that if the
Company at any time after delivery of a notice of repurchase pursuant to Section
11(b) hereof is prohibited under applicable Law, from delivering to Grantee the
Option Repurchase Price or the Option Share Repurchase Price, respectively, in
full, Grantee may revoke its notice of repurchase of the Option or the Option
Shares, respectively, either in whole or in part whereupon, in the case of a
revocation in part, the Company shall promptly (i) deliver to Grantee that
portion of the Option Repurchase Price or the Option Share Repurchase Price that
the Company is not prohibited from delivering after taking into account any such
revocation and (ii) deliver, as appropriate, to Grantee either (A) a new
Agreement evidencing the right of Grantee to purchase that number of shares of
Company Common Stock equal to the number of shares of Company Common Stock
purchasable immediately prior to the delivery of the notice of repurchase less
the number of shares of Company Common Stock covered by the portion of the
Option repurchased or (B) a certificate for the number of Option Shares covered
by the revocation. If an Option Termination Event shall have occurred prior to
the date of the notice by the Company described in the second sentence of this
Section 11(d), or shall be scheduled to occur at any time after an Option
Repurchase Request Date or valid acceptance of the Company's Option Repurchase
Offer but before the expiration of a period ending on the thirtieth day after
such notice date, Grantee shall nonetheless have the right to exercise the
Option until the expiration of such thirty (30) day period.
(e) Definition. The term "Repurchase Event" shall mean a
Triggering Event followed by the consummation of any transaction included in the
definition of Competing Transaction.
(f) Representations. In connection with any purchase/sale of
the Option or the Option Shares pursuant to this Section 11, the Grantee will be
required to represent and warrant to the Company that such Person is the owner
of the Option/Option Shares being purchased, free and clear of all adverse
claims and that such Person will deliver good title to such Option/Option Shares
to the Company, free and clear of all adverse claims, upon consummation of any
purchase/sale pursuant to this Section 11.
12. Extension of Time for Regulatory Approvals. The periods related to
exercise of the Option and the other rights of Grantee hereunder shall be
extended (i) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights, and for the expiration of all statutory waiting periods
and (ii) to the extent necessary to avoid liability under Section 10(b) of the
Exchange Act by reason of such exercise.
13. Representations and Warranties of the Company. The Company hereby
represents and warrants to Grantee as follows:
(a) Authority. The Company has full corporate power and
authority to execute and deliver 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 and
validly authorized by the Board of Directors of the Company and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by the Company.
(b) Corporate Action. The Company has taken all necessary
corporate action to authorize and reserve and to permit it to issue, and at all
times from the date hereof through the termination of this Agreement in
accordance with its terms will have reserved for issuance upon the exercise of
the Option, that number of shares of Company Common Stock equal to the maximum
number of shares of Company Common Stock at any time and from time to time
issuable hereunder, and all such shares of Company Common Stock, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all Liens created by the
Company and not subject to any preemptive rights.
(c) No Conflict. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation pursuant to any provisions of the
certificate of incorporation or bylaws of the Company or any Subsidiary of the
Company, or of any loan or credit agreement, note, mortgage, indenture, lease,
plan or other agreement, contractual obligation, instrument, permit, concession,
franchise or license applicable to the Company or any Subsidiary of the Company
or their respective properties or assets, except for any such conflict or
violation that would not, either individually or in the aggregate, have or be a
Material Adverse Effect.
(d) Anti-takeover Statutes. The provisions of Section 203 of
the General Corporation Law of the State of Delaware will not, prior to the
termination of this Agreement, apply to this Agreement or the transactions
contemplated hereby and thereby. The Company has taken, and will in the future
take, all steps necessary to irrevocably exempt the transactions contemplated by
this Agreement from any other applicable state takeover law and from any
applicable charter provision containing change of control or anti-takeover
provisions.
14. Assignment. The Company may not assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
Person, without the express written consent of Grantee. Grantee may not assign
any of its rights or obligations under this Agreement or the Option created
hereunder to any other Person
15. Application for Regulatory Approval. Each of Grantee and the
Company will use its reasonable efforts to make all filings with, and to obtain
consents of, all third parties and Governmental Authorities necessary to the
consummation of the transactions contemplated by this Agreement, including
without limitation making application to list the shares of Company Common Stock
issuable hereunder on the Nasdaq National Market of The Nasdaq Stock Market,
Inc. upon official notice of issuance; provided that neither the Company nor
Grantee nor any subsidiary or affiliate thereof will be required to agree to any
divestiture by itself or any of its affiliates of shares of capital stock or of
any business, assets or property, 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.
16. Specific Performance. The parties hereto acknowledge that damages
would be an inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be enforceable by
either party hereto through injunctive or other equitable relief.
17. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
18. Notices. All notices, claims, demands and other communications
hereunder shall be deemed to have been duly given or made when delivered in
person, by registered or certified mail (postage prepaid, return receipt
requested), by overnight courier or by facsimile at the respective addresses of
the parties set forth in the Merger Agreement.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed to be an original, but all of which
shall constitute one and the same agreement.
21. Definitions. Capitalized terms used and not defined herein shall
have the meanings set forth in the Merger Agreement.
22. Expenses. Except as otherwise expressly provided herein or in the
Merger Agreement, each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
23. Entire Agreement. Except as otherwise expressly provided herein or
in the Merger Agreement, this Agreement contains the entire agreement between
the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereof,
written or oral. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any party, other than the parties hereto, and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as expressly
provided herein. Any provision of this Agreement may be waived only in writing
at any time by the party that is entitled to the benefits of such provision.
This Agreement may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the parties
hereto.
24. First Refusal. If the Grantee shall desire to sell, assign,
transfer or otherwise dispose of all or any of the shares of Company Common
Stock or other Option Securities acquired by it pursuant to the Option, it will
give the Company written notice of the proposed transaction (an "Offeror's
Notice"), identifying the proposed transferee, accompanied by a copy of a
binding offer to purchase such shares of Company Common Stock, Options or other
Option Securities signed by such transferee and setting forth the terms of the
proposed transaction. An Offeror's Notice will be deemed an offer by the Grantee
to the Company, which may be accepted, in whole but not in part, within ten (10)
Business Days of the receipt of such Offeror's Notice, on the same terms and
conditions and at the same price at which the Grantee is proposing to transfer
such shares of Company Common Stock, Options or other Option Securities to such
transferee. The purchase of any such shares of Company Common Stock, Options or
other Option Securities by the Company will be settled within ten (10) Business
Days of the date of the acceptance of the offer and the purchase price will be
paid to the Grantee in immediately available funds. In the event of the failure
or refusal of the Company to purchase all the shares of Company Common Stock,
Options or other Option Securities covered by an Offeror's Notice, the Grantee
may, within sixty (60) days from the date of the Offeror's Notice, sell all, but
not less than all, of such shares of Company Common Stock, Options or other
Option Securities to the proposed transferee at no less than the price specified
and on terms no more favorable than those set forth in the Offeror's Notice;
provided, however, that the provisions of this sentence will not limit the
rights the Grantee may otherwise have if the Company has accepted the offer
contained in the Offeror's Notice and wrongfully refuses to purchase the shares
of Company Common Stock, Options or other Option Securities subject thereto. The
requirements of this Section 24 will not apply to (a) any disposition as a
result of which the proposed transferee would own beneficially not more than 2%
of the outstanding voting power of the Company, (b) any disposition of Company
Common Stock or other Option Securities by a Person to whom the Grantee has
assigned its rights under the Option with the consent of the Company or (c) any
transfer to a wholly owned Subsidiary of the Grantee which agrees in writing to
be bound by the terms hereof.
25. Further Assurances. In the event of any exercise of the Option by
Grantee, the Company and Grantee shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary to
the fullest extent permitted by Law in order to consummate the transactions
provided for by such exercise. Nothing contained in this Agreement shall be
deemed to authorize the Company or Grantee to breach any provision of the Merger
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
NETSCAPE COMMUNICATIONS CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: President and CEO
AMERICA ONLINE, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice Chairman
Signature Page to Stock Option Agreement
