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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): MARCH 24, 1998
REALNETWORKS, INC.
(Exact name of registrant as specified in charter)
WASHINGTON
(State or other jurisdiction of incorporation)
0-23137
(Commission File Number)
91-1628146
(IRS Employer Identification No.)
1111 THIRD AVENUE, SUITE 2900, SEATTLE, WA 98101 (Address
of principal executive offices) (Zip Code)
(206) 674-2700
(Registrant's telephone number, including area code)
NONE
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 24, 1998, RealNetworks, Inc. ("RN") acquired all of the
outstanding capital stock of Vivo Software, Inc., a Massachusetts corporation
("Vivo") pursuant to an Agreement and Plan of Merger dated as of February 20,
1998 (the "Merger Agreement") among RN, Vivo and RN Acquisition Corp., a
Washington corporation and a wholly owned subsidiary of RN ("RN Acquisition").
In accordance with the terms of the Merger Agreement, Vivo merged into RN
Acquisition, with RN Acquisition as the surviving corporation (the "Merger").
In addition to acquiring all of the outstanding capital stock of Vivo,
RN acquired all right, title and interest in and to all of Vivo's assets,
including, but not limited to, its products and technology, personal property,
intellectual property and certain agreements relating to its business and
technology.
At the time of effectiveness of the Merger on March 24, 1998 (the
"Effective Time"), RN issued 1,101,733 shares of common stock, par value $.001
per share (the "RN Common Shares"), in exchange for all of the outstanding
shares of common stock, par value $.01 per share, of Vivo (the "Vivo Common
Stock"). Each issued and outstanding share of Vivo Common Stock converted into
the right to receive approximately 0.044502376 RN Common Shares. As contemplated
by the Merger Agreement, the total Merger consideration was calculated by
dividing the agreed value of $17,100,000 by the average daily closing price of
RN common stock during the 15-day period beginning on the fourteenth trading day
prior to the date of the Merger Agreement and ending with the closing price on
the date of the Merger Agreement, and the conversion ratio was then derived
accordingly. In lieu of the issuance of fractional RN Common Shares, the number
of RN Common Shares issued to any shareholder of Vivo (a "Vivo Shareholder") was
rounded down to the closest whole RN Common Share. In addition, each option to
purchase shares of Vivo Common Stock that was outstanding at the Effective Time
and held by a Vivo employee who was offered and accepted employment with RN was
assumed by RN and will be treated as an option to purchase a number of RN Common
Shares equal to the product of the exchange ratio (0.044502376) multiplied by
the number of shares of Vivo Common Stock subject to such option, and the
exercise price per RN Common Share shall be an amount (rounded up to the nearest
full cent) equal to the option exercise price for such Vivo Option. Immediately
following the Effective Time, the Vivo Shareholders owned approximately 3.4% of
the outstanding RN common stock, including the Holdback Shares and the
Indemnification Shares described below and excluding shares of RN common stock
owned by Vivo Shareholders prior to the Merger (the "Share Consideration").
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Pursuant to the Merger Agreement, certain Vivo Shareholders have agreed
to defend, indemnify and hold RN and RN Acquisition harmless from and against
any losses, damages, liabilities, claims, judgments, settlements, fines, costs
and expenses in excess of $50,000 that may be suffered by RN arising out of or
in connection with any breach or claim that if true would constitute a breach by
Vivo of the representations and warranties made by Vivo in the Merger Agreement
and related documents or any failure by Vivo to perform its obligations under
the Merger Agreement and related agreements.
Shares representing 10% of the Share Consideration (the "Indemnification
Shares") have been retained by RN to secure such indemnification obligations.
Any claims by RN against the Indemnification Shares will be accounted for as a
reduction of the Share Consideration.
Shares representing 10% of the Share Consideration (the "Holdback
Shares") have been retained by RN to secure the employment obligations of Vivo
employees who have agreed to commence employment with RN as of the Effective
Time. Any claims by RN against the Holdback Shares will be accounted for as a
reduction of the Share Consideration.
Prior to the Merger, a Managing Partner of Accel Partners, which is a
shareholder of both RN and Vivo through various related entities, served on the
Board of Directors of RN. An Executive Partner of Accel Partners also served on
the Board of Directors of Vivo. Immediately prior to the Effective Time, Accel
IV L.P. ("Accel IV") and certain related entities owned approximately 17.6% of
the outstanding capital stock of Vivo. In addition, immediately prior to the
Effective Time, Accel IV and certain related entities owned approximately 7.7%
of the outstanding capital stock of RN. Immediately subsequent to the Merger,
Accel IV and certain related entities owned approximately 8% of the outstanding
capital stock of RN.
The Merger Agreement and a press release issued by RN to announce the
consummation of the Merger are filed as exhibits to this report and are
incorporated herein by reference. The description of the Merger Agreement herein
does not purport to be complete and is qualified in its entirety by the
provisions of the Merger Agreement.
RN common stock is quoted on the Nasdaq National Market under the
trading symbol "RNWK".
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The relevant financial statements, which are not included in this
initial report, will be filed pursuant to an amendment to this initial
report on or before June 8, 1998.
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(b) Pro Forma Financial Information.
The relevant pro forma financial information, which are not
included in this initial report, will be filed pursuant to an amendment
to this initial report on or before June 8, 1998.
(c) Exhibits
Exhibit Number Description
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2.1 Agreement and Plan of Merger among RealNetworks,
Inc., Vivo Software, Inc. and RN Acquisition Corp.
dated as of February 20, 1998
99.1 Press Release dated March 25, 1998
99.2 Third Amended and Restated Investors' Rights
Agreement dated March 24, 1998 among RealNetworks,
Inc. and certain shareholders of RealNetworks, Inc.
(incorporated by reference from Exhibit 10.16 to
the Company's Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 30,
1998 (File No. 0-23137))
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SIGNATURE
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.
REALNETWORKS, INC.
By: /s/ ROBERT GLASER
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Robert Glaser
Chairman of the Board and Chief
Executive Officer
Dated: April 8, 1998
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EXHIBIT INDEX
Exhibit Number Description
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2.1 Agreement and Plan of Merger among RealNetworks, Inc., Vivo
Software, Inc. and RN Acquisition Corp. dated as of
February 20, 1998
99.1 Press Release dated March 25, 1998
99.2 Third Amended and Restated Investors' Rights
Agreement dated March 24, 1998 among RealNetworks,
Inc. and certain shareholders of RealNetworks, Inc.
(incorporated by reference from Exhibit 10.16 to
the Company's Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 30,
1998 (File No. 0-23137))