<PAGE> 1
As filed with the Securities and Exchange Commission on December 22, 1999
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AT HOME CORPORATION
(Exact name of the Registrant as specified in its charter)
DELAWARE 77-0408542
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
450 BROADWAY STREET
REDWOOD CITY, CALIFORNIA 94063
(Address of principal executive offices, including zip code)
OPTIONS OF HARTFORD HOUSE, LTD. ISSUED UNDER THE HARTFORD HOUSE, LTD.
AMENDED AND RESTATED 1999 STOCK OPTION/STOCK ISSUANCE PLAN
AND ASSUMED BY THE REGISTRANT
(Full titles of the plans)
KENNETH A. GOLDMAN
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
AT HOME CORPORATION
425 BROADWAY STREET
REDWOOD CITY, CALIFORNIA 94063
(650) 569-5000
(Name, address and telephone number of agent for service)
Copy to:
Jeffrey R. Vetter, Esq.
Douglas N. Cogen, Esq.
Craig A. Menden, Esq.
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
CALCULATION OF REGISTRATION FEE
<TABLE>
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE (2) PRICE (2) FEE
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<S> <C> <C> <C> <C>
Series A Common Stock,
$.01 par value 3,011,447 $4.25 $12,798,650 $3,379
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</TABLE>
(1) Represents the number of shares subject to options assumed from Hartford
House, Ltd., a Delaware corporation, which was acquired by the Registrant on
December 13, 1999.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(h)(1) of the Securities Act of
1933, as amended (the "Securities Act"), based on the weighted average per
share exercise price of the options assumed by the Registrant.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION (1)
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION (1)
(1) Information required by Part I to be contained in the Section
10(a) prospectus is omitted from the Registration Statement in
accordance with Rule 428 under the Securities Act of 1933, as
amended (the "Securities Act") and the Note to Part I of Form
S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
For the purposes of this registration statement, the terms "we,"
"our" and "us" refer to At Home Corporation, a Delaware
corporation.
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the Commission are
incorporated into this registration statement by reference:
(a) Our annual report on Form 10-K for the fiscal year ended
December 31, 1998, as amended on March 31, 1999 and on April 27,
1999;
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act") since December 31, 1998, including: (1) our quarterly
reports on Form 10-Q for the fiscal quarters ended March 31,
June 30 and September 30, 1999; (2) our current report on Form
8-K filed on January 14, 1999, as amended on February 19, 1999;
(3) our two current reports on Form 8-K filed on January 21,
1999; (4) our current report on Form 8-K filed on February 19,
1999; (5) our current report on Form 8-K filed on April 8, 1999;
(6) our current report on Form 8-K filed on June 14, 1999 as
amended August 13, 1999; (7) our current report on Form 8-K
filed on August 2, 1999; (8) our current report on Form 8-K
filed on October 27, 1999; (9) our current report on Form 8-K
filed on December 6, 1999; and (10) our current report on Form
8-K filed on December 22, 1999.
(c) The description of the Registrant's Series A common stock
contained in the Registrant's registration statement on Form 8-A
filed under Section 12(g) of the Exchange Act, including any
amendment or report filed for the purpose of updating such
description.
All documents subsequently filed by us pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities registered
hereby have been sold or which deregisters all securities then remaining
unsold, shall be deemed incorporated into this registration statement by
reference and to be a part hereof from the date of the filing of such
documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
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ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS AND LIMITATION OF LIABILITY.
Section 145 of the Delaware General Corporation Law authorizes a court
to award, or a corporation's board of directors to grant, indemnity to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act.
As permitted by the Delaware General Corporation Law, the Registrant's
Amended and Restated Certificate of Incorporation includes a provision
that eliminates the personal liability of its directors for monetary
damages for breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the Registrant
or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii)
under section 174 of the Delaware General Corporation Law (regarding
unlawful dividends and stock purchases) or (iv) for any transaction from
which the director derived an improper personal benefit.
As permitted by the Delaware General Corporation Law, the Bylaws of the
Registrant provide that (i) the Registrant is required to indemnify its
directors and officers to the fullest extent permitted by the Delaware
General Corporation Law, subject to certain very limited exceptions,
(ii) the Registrant may indemnify its other employees and agents as set
forth in the Delaware General Corporation Law, (iii) the Registrant is
required to advance expenses, as incurred, to its directors and
executive officers in connection with a legal proceeding to the fullest
extent permitted by the Delaware General Corporation Law, subject to
certain very limited exceptions and (iv) the rights conferred in the
Bylaws are not exclusive.
The Registrant has entered into Indemnification Agreements with each of
its directors and executive officers to give such directors and officers
additional contractual assurances regarding the scope of the
indemnification set forth in the Registrant's Amended and Restated
Certificate of Incorporation and to provide additional procedural
protections. At present, there is no pending litigation or proceeding
involving a director, officer or employee of the Registrant regarding
which indemnification is sought, nor is the Registrant aware of any
threatened litigation that may result in claims for indemnification.
The indemnification provision in the Registrant's Amended and Restated
Certificate of Incorporation, Bylaws and the Indemnification Agreements
entered into between the Registrant and each of its directors and
executive officers may be sufficiently broad to permit indemnification
of the Registrant's directors and executive officers for liabilities
arising under the Securities Act.
The Registrant, with approval by the Registrant's Board of Directors,
has obtained directors' and officers' liability insurance.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIM
Not applicable.
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ITEM 8. EXHIBITS.
<TABLE>
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EXHIBIT EXHIBIT
NUMBER TITLE
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<S> <C>
4.01* The Registrant's Fifth Amended and Restated Certificate of
Incorporation, as filed with the Delaware Secretary of State on
May 28, 1999 (incorporated by reference to Exhibit 4.01 of our
registration statement on Form S-8, filed with the Commission on
June 3, 1999 (File No. 333-79883)).
4.02* The Registrant's Second Amended and Restated Bylaws effective
July 16, 1997 (incorporated by reference to Exhibit 3.05 of our
registration statement on Form S-1 declared effective by the
Commission on July 11, 1997 (File No. 333-27323)).
4.03* Hartford House, Ltd. Amended and Restated 1999 Stock
Option/Stock Issuance Plan.
5.01 Opinion of Fenwick & West LLP regarding the legality of the
securities to be offered.
23.01 Consent of Ernst & Young LLP, Independent Auditors.
23.02 Consent of Fenwick & West LLP (included in Exhibit 5.01).
24.01 Power of Attorney (see page 4).
</TABLE>
* The exhibits were previously filed with the Commission as indicated and are
incorporated herein by reference.
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the
Registration Statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in the Registration Statement. Notwithstanding
the foregoing, any increase or decrease in
volume of securities offered (if the total
dollar value of securities offered would not
exceed that which was registered) and any
deviation from the low or high end of the
estimated maximum offering range may be
reflected in the form of prospectus filed with
the Securities and Exchange Commission pursuant
to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20
percent change in the maximum aggregate offering
price set forth in
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the "Calculation of Registration Fee" table in
the effective Registration Statement;
(iii) to include any material information with respect
to the plan of distribution not previously
disclosed in the Registration Statement or any
material change to such information in the
Registration Statement;
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement
relating to the securities offered therein, and the
offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby further undertakes that, for
purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final
adjudication of such issue.
[REMAINDER OF PAGE INTENTIONALLY LEFT BANK]
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SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant, At
Home Corporation, certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Redwood City, State of California, on this 22nd day of
December, 1999.
AT HOME CORPORATION
By: /s/ THOMAS A. JERMOLUK
------------------------------------
Thomas A. Jermoluk
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Thomas A. Jermoluk, Kenneth A. Goldman
and David G. Pine, and each of them, his true and lawful attorneys-in-fact and
agents with full power of substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement on Form S-8, and to
file the same with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
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SIGNATURE TITLE DATE
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<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ THOMAS A. JERMOLUK Chairman and December 22, 1999
- ----------------------------- Chief Executive Officer
Thomas A. Jermoluk
PRINCIPAL FINANCIAL OFFICER:
/s/ KENNETH A. GOLDMAN Senior Vice President and December 22, 1999
- ----------------------------- Chief Financial Officer
Kenneth A. Goldman
PRINCIPAL ACCOUNTING OFFICER:
/s/ ROBERT A. LERNER Corporate Controller December 22, 1999
- -----------------------------
Robert A. Lerner
</TABLE>
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<TABLE>
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SIGNATURE TITLE DATE
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ADDITIONAL DIRECTORS
/s/ WILLIAM R. HEARST III Vice Chairman December 22, 1999
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William R. Hearst III
/s/ C. MICHAEL ARMSTRONG Director December 22, 1999
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C. Michael Armstrong
Director ___________, 1999
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George Bell
Director ___________, 1999
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L. John Doerr
Director ___________, 1999
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Raymond Liguori
/s/ JOHN C. MALONE Director December 22, 1999
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John C. Malone
Director ___________, 1999
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John C. Petrillo
/s/ BRIAN L. ROBERTS Director December 22, 1999
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Brian L. Roberts
/s/ JAMES R. SHAW, JR. Director December 22, 1999
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James R. Shaw, Jr.
/s/ DAVID M. WOODROW Director December 17, 1999
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David M. Woodrow
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
NUMBER TITLE
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<S> <C>
4.03 Hartford House, Ltd. Amended and Restated 1999
Stock Option/Stock Issuance Plan.
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of Ernst & Young LLP, Independent Auditors.
23.02 Consent of Fenwick & West LLP (included in Exhibit 5.01).
24.01 Power of Attorney (see page 4).
</TABLE>
<PAGE> 1
EXHIBIT 4.03
HARTFORD HOUSE LTD.
AMENDED AND RESTATED
1999 STOCK OPTION/STOCK ISSUANCE PLAN
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1999 Stock Option/Stock Issuance Plan is intended to promote the
interests of Hartford House Ltd. (the "Corporation"), by providing eligible
persons with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an incentive for them
to remain in the service of the Corporation.
Capitalized terms herein shall have the meanings assigned to such terms in
the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into two (2) separate equity programs:
1. the Option Grant Program under which eligible persons may, at the
discretion of the Plan Administrator, be granted Options to purchase shares
of Common Stock, and
2. the Stock Issuance Program under which eligible persons may, at
the discretion of the Plan Administrator, be issued shares of Common Stock
directly, either through the immediate purchase of such shares or as a
bonus for services rendered the Corporation (or any Parent or Subsidiary).
B. The provisions of Articles One and Four shall apply to both equity
programs under the Plan and shall accordingly govern the interests of all
persons under the Plan.
III. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by the Board. However, any or all
administrative functions otherwise exercisable by the Board may be delegated to
the Committee. Members of the Committee shall serve for such period of time as
the Board may determine and shall be subject to removal by the Board at any
time. Notwithstanding the foregoing, however, from and after the Public Trading
Date, a Committee of the Board shall administer the Plan and the Committee shall
consist solely of two or more Independent Directors each of whom is both an
"outside director," within the meaning of Section 162(m) of the Code, and a
"non-employee director" within the meaning of Rule 16b-3. Within the scope of
such authority, the Board or the Committee may (i) delegate to a committee of
one or more members of the Board who are not
<PAGE> 2
Outside Directors the authority to grant awards under the Plan to eligible
persons who are either (1) not then "covered employees," within the meaning of
Section 162(m) of the Code, and are not expected to be "covered employees" at
the time of recognition of income resulting from such award or (2) not persons
with respect to whom the Corporation wishes to comply with Section 162(m) of the
Code and/or (ii) delegate to a committee of one or more members of the Board who
are not "non-employee directors," within the meaning of Rule 16b-3, the
authority to grant awards under the Plan to eligible persons who are not then
subject to Section 16 of the 1934 Act. The Board may also at any time terminate
the functions of the Committee and reassume all powers and authority previously
delegated to the Committee.
B. The Plan Administrator shall have full power and authority (subject to
the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Plan and to make such
determinations under, and issue such interpretations of, the Plan and any
outstanding Options or Stock Issuances thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator shall be final and binding on all
parties who have an interest in the Plan or any Option or Stock Issuance
thereunder.
IV. ELIGIBILITY
A. The persons eligible to participate in the Plan are as follows:
1. Employees,
2. non-employee members of the Board or the non-employee members of
the board of directors of any Parent or Subsidiary, and
3. Consultants and other independent advisors who provide services
to the Corporation (or any Parent or Subsidiary).
B. The Plan Administrator shall have full authority to determine, (i)
with respect to the Option grants under the Option Grant Program, which eligible
persons are to receive Option grants, the time or times when such Option grants
are to be made, the number of shares to be covered by each such grant, the
status of the granted Option as either an Incentive Stock Option or a
Non-Statutory Option, the time or times at which each Option is to become
exercisable, the vesting schedule (if any) applicable to the Option shares and
the maximum term for which the Option is to remain outstanding and (ii) with
respect to Stock Issuances under the Stock Issuance Program, which eligible
persons are to receive Stock Issuances, the time or times when such issuances
are to be made, the number of shares to be issued to each Participant, the
vesting schedule (if any) applicable to the issued shares and the consideration
to be paid by the Participant for such shares.
C. The Plan Administrator shall have the absolute discretion either to
grant Options in accordance with the Option Grant Program or to effect Stock
Issuances in accordance with the Stock Issuance Program.
D. No individual shall be granted, in any calendar year, Options or Stock
Issuances to purchase more than five hundred thousand (500,000) Shares;
provided, however, that the
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foregoing limitation shall not apply prior to the Public Trading Date and,
following the Public Trading Date, the foregoing limitation shall not apply
until the earliest of: (i) the first material modification of the Plan
(including any increase in the number of shares reserved for issuance under the
Plan in accordance with Article One, Section V.); (ii) the issuance of all of
the shares of Common Stock reserved for issuance under the Plan; (iii) the
expiration of the Plan; (iv) the first meeting of stockholders at which
directors of the Corporation are to be elected that occurs after the close of
the third calendar year following the calendar year in which occurred the first
registration of an equity security of the Corporation under Section 12 of the
1934 Act; or (v) such other date required by Section 162(m) of the Code and the
rules and regulations promulgated thereunder. The foregoing limitation shall be
adjusted proportionately in connection with any change in the Corporation's
capitalization as described in Section V. C. of Article One. For purposes of
this paragraph D, if an Option is canceled at any time, the canceled Option will
be counted against the limit set forth in this paragraph D. For this purpose, if
the exercise price of an Option is reduced, the transaction shall be treated as
a cancellation of the Option and the grant of a new Option.
E. Any grant of Options or Stock Issuances to any individual may be
conditioned on the individual entering into one or more agreements, as the Plan
Administrator may determine, in its sole discretion, providing the terms of his
or her employment or consulting arrangement, protection of the Corporation's
confidential information and intellectual property rights, and restrictions on
shares of Common Stock acquired pursuant to an Option or Stock Issuance.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed twenty
million (20,000,000) shares.
B. Shares of Common Stock subject to outstanding Options shall be
available for subsequent issuance under the Plan to the extent (i) the Options
expire or terminate for any reason prior to exercise in full or (ii) the Options
are cancelled in accordance with the cancellation-regrant provisions of Article
Two. Shares issued under the Plan and subsequently repurchased by the
Corporation pursuant to the Corporation's repurchase rights under the Plan shall
also be available for reissuance through one or more subsequent Option grants
under the Plan. Notwithstanding the provisions of this paragraph B, no Shares
may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an Incentive Stock Option under
Code Section 422.
C. Subject to paragraph D hereof, in the event that the Plan
Administrator determines that any dividend or other distribution (whether in the
form of cash, Common Stock, other securities, or other property),
recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Corporation, or
exchange of Common Stock or other securities of the Corporation, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Corporation, or other similar corporate transaction or event, in the Plan
Administrator's sole discretion, affects the Common Stock such that an
adjustment is determined by the Plan
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Administrator to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan
or with respect to any Option or Stock Issuance, then the Plan Administrator may
determine, in its sole discretion and in such manner as it may deem equitable,
to adjust any or all of:
1. the number and kind of shares of Common Stock (or other
securities or property) with respect to which Options or Stock Issuances
may be granted or awarded (including, but not limited to, adjustments of
the maximum number and kind of shares which may be issued and adjustments
of the maximum number of shares that may be purchased by any individual in
any fiscal year pursuant to Section IV. D. of Article One);
2. the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Options or Stock Issuances;
and
3. the grant or exercise price with respect to any Option or Stock
Issuance.
D. Notwithstanding any contrary provision in this Plan, in no event shall
any adjustment be made with respect to any Option or Stock Issuance to reflect
the Spin-Off.
4
<PAGE> 5
ARTICLE TWO
OPTION GRANT PROGRAM
I. OPTION TERMS
Each Option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Stock Option shall, in addition, be subject to the provisions of the
Plan applicable to such Options.
A. EXERCISE PRICE.
1. The exercise price per share shall be fixed by the Plan
Administrator and may be equal to, less than by no more than fifteen
percent (15%) or greater than the Fair Market Value per share of Common
Stock on the Option grant date.
2. The exercise price shall become immediately due upon exercise of
the Option and shall, subject to the provisions of Section I of Article
Four and the documents evidencing the Option, be payable in cash or check
made payable to the Corporation. From and after the Public Trading Date,
the exercise price may also be paid as follows, subject to the consent of
the Plan Administrator:
(a) in shares of Common Stock held for more than six (6) months
as of the date such shares are surrendered, and valued at Fair Market
Value on the Exercise Date, or
(b) to the extent the Option is exercised for vested shares,
through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable written instructions
(A) to a Corporation-designated brokerage firm to effect the immediate
sale of the purchased shares and remit to the Corporation, out of the
sale proceeds available on the settlement date, sufficient funds to
cover the aggregate exercise price payable for the purchased shares
plus all applicable Federal, state and local income and employment
taxes required to be withheld by the Corporation by reason of such
exercise and (B) to the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm in order to
complete the sale.
Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must
be made on the Exercise Date.
B. EXERCISE AND TERM OF OPTIONS. Each Option shall be exercisable at such
time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the Option, including for a period following the date the Optionee ceases to be
an Employee, Consultant or director of the Corporation. An Optionee may have a
vested Option that is nevertheless subject to continuing
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restrictions on exercise, as determined by the Plan Administrator and set forth
in the documents evidencing the Option; provided, however, that, except with
regard to Options granted to officers of the Corporation or Consultants, in no
event shall an Option granted hereunder become vested and exercisable at a rate
of less than twenty percent (20%) per year over five (5) years from the date the
Option is granted, subject to reasonable conditions, such as continuing to be an
Employee or Consultant, as applicable. In no event shall an Option have a term
in excess of ten (10) years measured from the Option grant date.
C. EFFECT OF TERMINATION OF SERVICE.
1. The following provisions shall govern the exercise of any Options
held by the Optionee at the time of cessation of Service or death:
(a) Any Option outstanding at the time of the Optionee's
cessation of Service for any reason other than Disability or death
shall remain exercisable for such period of time thereafter as shall
be determined by the Plan Administrator and set forth in the documents
evidencing the Option, but no such Option shall be exercisable after
the expiration of the Option term. Any unvested Option outstanding at
the time of an Optionee's cessation of Service for Cause shall
terminate and any vested Options outstanding at the time of Optionee's
cessation of Service for Cause shall expire and cease to be
exercisable upon the earlier to occur of: (i) the Optionee's cessation
of Service; or (ii) the determination by the Plan Administrator that
the Optionee's cessation of Service is or will be for Cause. In the
event Optionee's Service is terminated for Cause, with respect to
vested Option Shares, the Option shall remain exercisable for a period
of ninety (90) days after the Optionee's cessation of Service.
(b) Should Optionee's Service terminate by reason of Disability,
then the Optionee shall have a period of twelve (12) months following
the date of such cessation of Service during which to exercise each
outstanding Option held by such Optionee.
(c) Should the Optionee die while holding one or more
outstanding Options, then the personal representative of the
Optionee's estate or the person or persons to whom the Option is
transferred pursuant to the Optionee's will or in accordance with the
laws of descent and distribution shall have a period of twelve (12)
months following the date of the Optionee's death during which to
exercise each such Option.
(d) During the applicable post-Service exercise period, the
Option may not be exercised in the aggregate for more than the number
of vested shares for which the Option is exercisable on the date of
the Optionee's cessation of Service. Upon the expiration of the
applicable exercise period or (if earlier) upon the expiration of the
Option term, the Option shall terminate and cease to be outstanding
for any vested shares for which the Option has not been exercised.
However, the Option shall, immediately upon the Optionee's
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cessation of Service, terminate and cease to be outstanding to the
extent the Option is not otherwise at that time exercisable for vested
shares.
(e) In the event of an Involuntary Termination following a
Corporate Transaction, the provisions of Section III of this Article
Two shall govern the period for which the outstanding Options are to
remain exercisable following the Optionee's cessation of Service and
shall supersede any provisions to the contrary in this section.
2. The Plan Administrator shall have the discretion, exercisable
either at the time an Option is granted or at any time while the Option
remains outstanding, to:
(a) extend the period of time for which the Option is to remain
exercisable following Optionee's cessation of Service or death from
the limited period otherwise in effect for that Option to such greater
period of time as the Plan Administrator shall deem appropriate, but
in no event beyond the expiration of the Option term, and/or
(b) permit the Option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number of
vested shares of Common Stock for which such Option is exercisable at
the time of the Optionee's cessation of Service but also with respect
to one or more additional installments in which the Optionee would
have vested under the Option had the Optionee continued in Service.
D. SHAREHOLDER RIGHTS. The holder of an Option shall have no shareholders
rights with respect to the shares subject to the Option until such person shall
have exercised the Option, paid the exercise price and become a holder of record
of the purchased shares.
E. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, the Option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death.
F. WITHHOLDING. The Corporation's obligation to deliver shares of Common
Stock upon the exercise of any Options granted under the Plan shall be subject
to the satisfaction of all applicable Federal, state and local income and
employment tax withholding requirements.
G. BUY-OUT PROVISIONS. The Plan Administrator may at any time offer to
buy-out for a payment in cash or shares, an Option previously granted, based on
such terms and conditions as the Plan Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
H. CASH OUT BY CORPORATION. For the period that expires on the later of:
(i) the date the Spin-Off is consummated, or (ii) the date the Corporation
ceases to be an S corporation, within the meaning of Section 1361 of the Code,
the Corporation's obligation to deliver shares of Common Stock upon exercise of
an Option shall be subject to its right, to be exercised at the sole discretion
of the Plan Administrator, to satisfy such obligation by a cash payment to the
Optionee
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equal to the excess of the aggregate Fair Market Value of the shares covered
under such Option over the aggregate exercise price of such shares of Common
Stock.
I. ADDITIONAL RESTRICTIONS/SHAREHOLDERS AGREEMENT. Shares purchased upon
the exercise of an Option or pursuant to a Stock Issuance shall be subject to
such terms and conditions as the Plan Administrator shall determine in its sole
discretion, including, without limitation, restrictions on the transferability
of shares, the right of the Corporation to repurchase shares, the right of the
Corporation to require that shares be transferred in the event of certain
transactions, a right of first refusal in favor of the Corporation with respect
to permitted transfers of shares, tag-along rights and bring-along rights. Such
terms and conditions may, in the Plan Administrator's sole discretion, be
contained in an option agreement, stock purchase agreement, notice of grant,
exercise notice or shareholders agreement, in a form determined by the Plan
Administrator, in its discretion. The issuance of such shares shall be
conditioned on the Participant's consent to such terms and conditions or the
Participant's entering into such agreement or agreements.
II. INCENTIVE STOCK OPTIONS
The terms specified below shall be applicable to all Incentive Stock
Options. Except as modified by the provisions of this Section II, all the
provisions of the Plan shall be applicable to Incentive Stock Options. Options
which are specifically designated as Non-Statutory Options shall not be subject
to the terms of this Section II.
A. ELIGIBILITY. Incentive Stock Options may only be granted to Employees.
B. EXERCISE PRICE. The exercise price per share shall not be less than
one hundred percent (100%) of the Fair Market Value per share of Common Stock on
the Option grant date.
C. DOLLAR LIMITATION. The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective date or dates of grant) for which
one or more Options granted to any Employee under the Plan (or any other option
plan of the Corporation or any Parent or Subsidiary) may for the first time
become exercisable as Incentive Stock Options during any one (1) calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such Options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such Options as Incentive Stock Options shall be applied on
the basis of the order in which such Options are granted.
D. TEN PERCENT (10%) SHAREHOLDERS. If any Employee to whom an Incentive
Stock Option is granted is a ten percent (10%) Shareholder, then the exercise
price per share shall not be less than one hundred ten percent (110%) of the
Fair Market Value per share of Common Stock on the Option grant date and the
Option term shall not exceed five (5) years measured from the Option grant date.
E. COMPLIANCE WITH CODE SECTION 422. In the event that an Incentive Stock
Option fails or ceases to qualify as an incentive stock option pursuant to the
provisions of Code Section 422, such Option shall nevertheless remain
outstanding as a Non-Statutory Option in accordance with the terms of the grant
of such Option.
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III. CORPORATE TRANSACTION
A. The Plan Administrator, in its sole and absolute discretion, and on
such terms and conditions as it deems appropriate, either by the terms of the
Option or by action taken prior to the occurrence of a Corporate Transaction or
event is hereby authorized to take any one or more of the following actions
whenever the Plan Administrator determines that such action is appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan or with respect to any Option under
the Plan or to facilitate such transaction or event:
1. To provide for either the purchase of any such Option for an
amount of cash equal to the amount that could have been attained upon the
exercise of such Option or realization of the Optionee's rights had such
Option been currently exercisable or payable or fully vested, or the
replacement of such Option with other rights or property selected by the
Plan Administrator in its sole discretion;
2. To provide that such Option shall be exercisable as to all shares
covered thereby, notwithstanding anything to the contrary in the Plan or
the provisions of such Option;
3. To provide that such Option be assumed by the successor or
survivor corporation, or a parent or subsidiary thereof, or shall be
substituted for by similar options, rights or awards covering the stock of
the successor or survivor corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and
prices;
4. To make adjustments in the number and type of shares of Common
Stock (or other securities or property) subject to outstanding Options
and/or in the terms and conditions of (including the grant or exercise
price), and the criteria included in, outstanding Options or Options which
may be granted in the future;
5. To provide that immediately upon the consummation of such event,
such Option shall not be exercisable and shall terminate, provided that for
a specified period of time prior to such event, such Option shall be
exercisable as to all shares covered thereby, notwithstanding anything to
the contrary in the Plan or the provisions of the agreements governing such
Option; and
6. To provide that immediately upon the consummation of such event,
such Option shall not be exercisable and shall terminate, provided that for
a specified period of time prior to such event, such Option shall be
exercisable as to all shares covered thereby to the extent then vested.
7. If, after a Corporate Transaction, the Corporation is not the
surviving entity, then any surviving corporation or entity or acquiring
corporation or entity, or affiliate of such corporation or entity, may (i)
assume any Options outstanding under the Plan, or (ii) substitute similar
stock awards (including an award to acquire the same consideration paid to
the stockholders in such Corporate Transaction) for those outstanding under
the Plan. In the event any such surviving corporation or acquiring
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corporation does not assume such Options or substitute similar stock awards
for those outstanding under the Plan, then (i) the vesting of such Options
shall be accelerated and made fully exercisable at least ten (10) days
prior to the closing of the Corporate Transaction, subject to the
Corporation's cash out election in Section I. H of Article Two, and (ii)
any Option not exercised within such period shall terminate and cease to be
exercisable effective on the closing of such Corporate Transaction.
8. Notwithstanding the foregoing, in the event that the Corporation
becomes a party to a transaction that is intended to qualify for "pooling
of interests" accounting treatment and, but for one or more of the
provisions of this Plan or any agreement governing the terms of an Option,
would so qualify, then this Plan and any such agreement shall be
interpreted so as to preserve such accounting treatment, and to the extent
that any provision of the Plan or any such agreement would disqualify the
transaction from pooling of interests accounting treatment (including, if
applicable, an entire option agreement), then such provision shall be null
and void. All determinations to be made in connection with the preceding
sentence shall be made by the independent accounting firm whose opinion
with respect to "pooling of interests" treatment is required as a condition
to the Corporation's consummation of such transaction.
9. The existence of the Plan, any agreement governing the terms of
an Option and the Options granted hereunder shall not affect or restrict in
any way the right or power of the Corporation or its shareholders to make
or authorize any adjustment, recapitalization, reorganization or other
change in the Corporation's capital structure or its business, any merger
or consolidation of the Corporation, any issue of stock or of options,
warrants or rights to purchase stock or of bonds, debentures, preferred or
prior preference stocks whose rights are superior to or affect the Common
Stock or the rights thereof or which are convertible into or exchangeable
for Common Stock, or the dissolution or liquidation of the Corporation, or
any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or
otherwise.
B. The Plan Administrator shall also have full power and authority to
grant Options under the Plan which will automatically accelerate in whole or in
part should the Optionee's Service subsequently terminate by reason of an
Involuntary Termination within a designated period following the effective date
of any Corporate Transaction in which those Options are assumed or replaced and
do not otherwise accelerate. Any Options so accelerated shall remain exercisable
for fully-vested shares until the earlier of (i) the expiration of the Option
term or (ii) the expiration of the one (1)-year period measured from the
effective date of the Involuntary Termination. In addition, the Plan
Administrator may provide that one or more of the Corporation's outstanding
repurchase rights with respect to shares held by the Optionee at the time of
such Involuntary Termination shall immediately terminate in whole or in part,
and the shares subject to those terminated rights shall accordingly vest.
C. The portion of any Incentive Stock Option accelerated in connection
with a Corporate Transaction shall remain exercisable as an Incentive Stock
Option only to the extent the applicable One Hundred Thousand Dollar ($100,000)
limitation is not exceeded. To the
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extent such dollar limitation is exceeded, the accelerated portion of such
Option shall be exercisable as a Non-Statutory Option under the Federal tax
laws.
D. The grant of Options under the Plan shall in no way affect the right
of the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time and
from time to time, with the consent of the affected Option holders, the
cancellation of any or all outstanding Options under the Plan and to grant in
substitution therefor new Options covering the same or different number of
shares of Common Stock but with an exercise price per share based on the Fair
Market Value per share of Common Stock on the new Option grant date.
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ARTICLE THREE
STOCK ISSUANCE PROGRAM
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening Option grants;
provided, however, that no Stock Issuance shall be made until the date after the
consummation of the Spin-Off. Each such Stock Issuance shall be evidenced by a
Stock Issuance Agreement which complies with the terms specified below.
A. PURCHASE PRICE.
1. The purchase price per share shall be fixed by the Plan
Administrator and may be less than the Fair Market Value of the Common
Stock on the Stock Issuance date.
2. Subject to the provisions of Section I of Article Four, shares of
Common Stock may be issued under the Stock Issuance Program for one or more
of the following items of consideration which the Plan Administrator may
deem appropriate in each individual instance:
(a) cash or check made payable to the Corporation,
(b) past services rendered to the Corporation (or any Parent or
Subsidiary), or
(c) a promissory note that constitutes valid consideration under
applicable state law payable to the Corporation, but only to the
extent authorized by the Plan Administrator in accordance with Article
Four, Section I.
B. VESTING PROVISIONS.
1. Shares of Common Stock issued under the Stock Issuance Program
may, in the discretion of the Plan Administrator, be fully and immediately
vested upon issuance or may vest in one or more installments over the
Participant's period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested
shares of Common Stock issued under the Stock Issuance Program, namely:
(a) the Service period to be completed by the Participant or the
performance objectives to be attained,
(b) the number of installments in which the shares are to vest,
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(c) the interval or intervals (if any) which are to lapse
between installments, and
(d) the effect which death, Disability or other event
designated by the Plan Administrator is to have upon the vesting
schedule,
shall be determined by the Plan Administrator and incorporated into the
Stock Issuance Agreement.
2. Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock
split, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration shall be issued subject to (i) the
same vesting requirements applicable to the Participant's unvested shares
of Common Stock and (ii) such escrow arrangements as the Plan Administrator
shall deem appropriate.
3. The Participant shall have full shareholders rights with respect
to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares
is vested. Accordingly, the Participant shall have the right to vote such
shares and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service while holding
one or more unvested shares of Common Stock issued under the Stock Issuance
Program or should the performance objectives not be attained with respect
to one or more of such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and
the Participant shall have no further shareholders rights with respect to
those shares. To the extent the surrendered shares were previously issued
to the Participant for consideration paid in cash or cash equivalent
(including the Participant's purchase-money indebtedness), the Corporation
shall repay to the Participant the cash consideration paid for the
surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable to such
surrendered shares.
5. The Plan Administrator may in its discretion waive the surrender
and cancellation of one or more unvested shares of Common Stock (or other
assets attributable thereto) which would otherwise occur upon the
non-completion of the vesting schedule applicable to such shares. Such
waiver shall result in the immediate vesting of the Participant's interest
in the shares of Common Stock as to which the waiver applies. Such waiver
may be effected at any time, whether before or after the Participant's
cessation of Service or the attainment or non-attainment of the applicable
performance objectives.
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C. ADDITIONAL RESTRICTIONS/SHAREHOLDERS AGREEMENT. Shares purchased upon
the exercise of an Option or pursuant to a Stock Issuance shall be subject to
such terms and conditions as the Plan Administrator shall determine in its sole
discretion, including, without limitation, restrictions on the transferability
of shares, the right of the Corporation to repurchase shares, the right of the
Corporation to require that shares be transferred in the event of certain
transactions, a right of first refusal in favor of the Corporation with respect
to permitted transfers of shares, tag-along rights and bring-along rights. Such
terms and conditions may, in the Plan Administrator's sole discretion, be
contained in an option agreement, stock purchase agreement, notice of grant,
exercise notice or shareholders agreement, in a form determined by the Plan
Administrator, in its discretion. The issuance of such shares shall be
conditioned on the Participant's consent to such terms and conditions or the
Participant's entering into such agreement or agreements.
D. SECTION 83(B) ELECTION. Participant shall furnish the Plan
Administrator with a copy of any election filed pursuant to Section 83(b) of the
Code with respect to any stock issued under this Plan.
II. CORPORATE TRANSACTION
A. All of the outstanding repurchase rights (except for the right to
repurchase vested shares of Common Stock which shall automatically terminate)
under the Stock Issuance Program shall be assigned to the successor corporation
(or parent thereof) in any Corporate Transaction. However, to the extent such
successor corporation (or parent thereof) does not accept such assignment, the
repurchase rights shall automatically terminate and the shares shall vest in
full unless such accelerated vesting is precluded by other limitations imposed
in the Stock Issuance Agreement.
B. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the unvested shares are issued or any time while
the Corporation's repurchase/cancellation rights remain outstanding under the
Stock Issuance Program, to provide that those rights shall automatically
terminate in whole or in part, and the shares of Common Stock subject to those
terminated rights shall immediately vest, in the event the Participant's Service
should subsequently terminate by reason of an Involuntary Termination within a
designated period (not to exceed twelve (12) months) following the effective
date of any Corporate Transaction in which those repurchase/cancellation rights
are assigned to the successor corporation (or parent thereof).
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held in
escrow by the Corporation until the Participant's interest in such shares vests
or may be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.
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ARTICLE FOUR
MISCELLANEOUS
I. FINANCING
The Plan Administrator may permit any Optionee or Participant to pay the
Option exercise price or the purchase price for shares issued to such person
under the Plan by delivering a promissory note that constitutes valid
consideration under applicable state law payable in one or more installments.
The terms of any such promissory note (including the interest rate and the terms
of repayment) shall be established by the Plan Administrator in its sole
discretion. Promissory notes may be authorized with or without security or
collateral. In all events, the maximum credit available to the Optionee or
Participant may not exceed the sum of (i) the aggregate Option exercise price or
purchase price payable for the purchased shares (less the par value of such
shares) plus (ii) any Federal, state and local income and employment tax
liability incurred by the Optionee or the Participant in connection with the
Option exercise or share purchase.
II. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan shall become effective when adopted by the Board, but no
Option granted under the Plan may be exercised, and no shares shall be issued
under the Plan, until the Plan is approved by the Corporation's shareholders. If
such shareholder approval is not obtained within twelve (12) months after the
date of the Board's adoption of the Plan, then all Options previously granted
under the Plan shall terminate and cease to be outstanding, and no further
Options shall be granted and no shares shall be issued under the Plan. Subject
to such limitation, and subject to the further limitation that no Stock
Issuances shall be made prior to the consummation of the Spin-Off, the Plan
Administrator may grant Options and issue shares under the Plan at any time
after the effective date of the Plan and before the date fixed herein for
termination of the Plan.
B. The Plan shall terminate upon the earliest of (i) the expiration of
the ten (10)-year period measured from the date the Plan is adopted by the
Board, (ii) the date on which all shares available for issuance under the Plan
shall have been issued, or (iii) the termination of all outstanding Options in
connection with a Corporate Transaction. Upon such Plan termination, all Options
and unvested Stock Issuances outstanding under the Plan shall continue to have
full force and effect in accordance with the provisions of the documents
evidencing such Options or issuances.
III. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
Options or unvested Stock Issuances at the time outstanding under the Plan
unless the Optionee or the Participant consents to such amendment or
modification.
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B. Options to purchase shares of Common Stock may be granted under the
Plan and shares of Common Stock may be issued under the Plan that are in each
instance in excess of the number of shares then available for issuance under the
Plan, provided any excess shares actually issued under the Plan are held in
escrow until there is obtained shareholder approval of an amendment sufficiently
increasing the number of shares of Common Stock available for issuance under the
Plan. If such shareholder approval is not obtained within twelve (12) months
after the date the first such excess issuances are made, then (i) any
unexercised Options granted on the basis of such excess shares shall terminate
and cease to be outstanding and (ii) the Corporation shall promptly refund to
the Optionees and the Participants the exercise or purchase price paid for any
excess shares issued under the Plan and held in escrow, together with interest
(at the applicable short-term federal rate) for the period the shares were held
in escrow, and such shares shall thereupon be automatically cancelled and cease
to be outstanding.
IV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares of
Common Stock under the Plan shall be used for general corporate purposes.
V. WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock upon the
exercise of any Options or upon the issuance or vesting of any shares issued
under the Plan shall be subject to the satisfaction of all applicable Federal,
state and local income and employment tax withholding requirements.
VI. REGULATORY APPROVALS
The implementation of the Plan, the granting of any Options under the Plan
and the issuance of any shares of Common Stock (i) upon the exercise of any
Option or (ii) under the Stock Issuance Program shall be subject to the
Corporation's procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the Options granted under it and
the shares of Common Stock issued pursuant to it.
VII. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the Participant any
right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining such person) or of the Optionee or
the Participant, which rights are hereby expressly reserved by each, to
terminate such person's Service at any time for any reason, with or without
cause.
VIII. INVESTMENT INTENT
The Corporation may require an Optionee or Participant, as a condition of
exercising or acquiring Common Stock under any Option or Stock Issuance, (i) to
give written assurances satisfactory to the Corporation as to the Optionee's or
the Participant's knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Corporation who is knowledgeable and experienced in financial
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and business matters and that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of exercising
the Option or Common Stock Issuance; and (ii) to give written assurances
satisfactory to the Corporation stating that the Optionee or Participant is
acquiring the Common Stock subject to the Option or Stock Issuance for the
Optionee's or the Participant's own account and not with any present intention
of selling or otherwise distributing the Common Stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (A) the issuance of the shares upon the exercise or acquisition
of Common Stock under the applicable Option or Stock Issuance has been
registered under a then currently effective registration statement under the
Securities Act of 1933, or (B) as to any particular requirement, a determination
is made by counsel for the Corporation that such requirement need not be met in
the circumstances under the then applicable securities laws. The Corporation
may, upon advice of counsel to the Corporation, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common Stock.
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APPENDIX
The following definitions shall be in effect under the Plan:
A. BOARD shall mean the Corporation's Board of Directors.
B. CAUSE shall mean negligence or willful misconduct by Optionee in his
or her performance of duties to the Corporation (Parent or Subsidiary), the
commission of any act of fraud, embezzlement or dishonesty by Optionee, any
unauthorized use or disclosure by Optionee of confidential information or trade
secrets of the Corporation (or any Parent or Subsidiary), failure to perform
satisfactorily the material duties of Optionee's employment with the Corporation
(or any Parent or Subsidiary) which after written notice of such failure has
been provided to Optionee and Optionee has been given a reasonable opportunity
to correct, such failure continues, or any other intentional misconduct,
material act or material omission by Optionee adversely affecting the business
or affairs of the Corporation (or any Parent or Subsidiary) in a material
manner; provided that any action that has been approved by the Senior Vice
President of Network Programming of the Corporation shall not constitute grounds
to terminate Optionee for Cause. The Plan Administrator shall determine, in its
sole discretion, whether an Optionee's or a Participant's Service has been or
will be terminated for Cause for purposes of this Plan. The foregoing definition
shall not be deemed to be inclusive of all the acts or omissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
D. COMMITTEE shall mean a committee of two (2) or more Board members
appointed by the Board to exercise one or more administrative functions under
the Plan.
E. COMMON STOCK shall mean the Corporation's common stock.
F. CONSULTANT means any consultant or adviser if: (i) the consultant or
adviser renders bona fide services to the Corporation; (ii) the services
rendered by the consultant or adviser are not in connection with the offer or
sale of securities in a capital-raising transaction and do not directly or
indirectly promote or maintain a market for the Corporation's securities; and
(iii) the consultant or adviser is a natural person who has contracted directly
with the Corporation to render such services.
G. CORPORATE TRANSACTION shall mean any of the following transactions:
1. a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to
such transaction, excluding any merger or consolidation effected
exclusively to change the domicile of the Corporation,
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2. the sale, transfer or other disposition of all or substantially
all of the Corporation's assets or capital stock, or
3. a tender or exchange offer in which, after the consummation of
the offer, the offeror is the beneficial owner (as determined pursuant to
Section 13(d) of the Securities Exchange Act of 1934, as amended), directly
or indirectly, of at least fifteen percent (15%) of the outstanding Common
Stock.
Notwithstanding the foregoing, the term "Corporate Transaction" shall not
include the Spin-Off.
H. CORPORATION shall mean Hartford House, Ltd., and any successor
corporation thereto.
I. DISABILITY shall mean the inability of the Optionee or the
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that is expected to result
in death or has lasted or can be expected to last for a continuous period of 12
months or more and shall be determined by the Plan Administrator on the basis of
such medical evidence as the Plan Administrator deems warranted under the
circumstances.
J. EMPLOYEE shall mean each (i) individual who is in the employ of
the Corporation (or any Parent or Subsidiary), and (ii) individual who was an
employee of the Corporation, or a Subsidiary prior to the Spin-Off and who
continues in the employ of an SPS Affiliate, subject to the control and
direction of the employer entity as to both the work to be performed and the
manner and method of performance.
K. EXERCISE DATE shall mean the date on which the Corporation shall
have received written notice of the Option exercise.
L. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
1. If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.
2. If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for the
Common Stock on the date in question,
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then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
3. If the Common Stock is at the time neither listed on any
Stock Exchange nor traded on the Nasdaq National Market, then the Fair
Market Value shall be determined by the Board of Directors after taking
into account such factors as the Board of Directors shall deem appropriate.
M. INCENTIVE STOCK OPTION shall mean an Option which satisfies the
requirements of Code Section 422.
N. INDEPENDENT DIRECTOR means a director who is not an Employee of the
Corporation.
O. INVOLUNTARY TERMINATION shall mean the termination of the Service of
any individual which occurs by reason of:
1. such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Cause within twelve (12) months of a
Corporate Transaction, or
2. such individual's voluntary resignation following (A) a reduction
in his or her level or opportunities of compensation (including base
salary, fringe benefits and participation in corporate-performance based
bonus or incentive programs) by more than fifteen percent (15%) in the
aggregate, or (B) relocation of such individual's place of employment by
more than fifty (50) miles from such individual's place of employment
immediately prior to the Corporate Transaction, (twenty-five (25) miles in
the case of the Corporation's San Francisco office); provided and only if
such reduction or relocation is effected by the Corporation without the
individual's consent.
P. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
Q. NON-STATUTORY OPTION shall mean an Option not intended to satisfy the
requirements of Code Section 422.
R. OPTION shall mean a stock option issued under the Option Grant Program
described in Article Two.
S. OPTION GRANT PROGRAM shall mean the option grant program in effect
under the Plan.
T. OPTIONEE shall mean any person to whom an Option is granted under the
Plan.
U. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock
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possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
V. PARTICIPANT shall mean any person who is issued shares of Common Stock
under the Stock Issuance Program.
W. PLAN shall mean the Corporation's Amended and Restated 1999 Stock
Option/Stock Issuance Plan, as set forth in this document.
X. PLAN ADMINISTRATOR shall mean either the Board or the Committee, to
the extent the Committee is at the time responsible for the administration of
the Plan.
Y. PUBLIC TRADING DATE means the first date upon which Common Stock of
the Corporation is listed (or approved for listing) upon notice of issuance on
any securities exchange or designated (or approved for designation) upon notice
of issuance as a national market security on an interdealer quotation system.
Z. SERVICE shall mean the provision of services to the Corporation (or
any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the Option grant; provided, however, that no cessation of Service
shall be deemed to occur as a result of the Spin-Off and for so long as such
individual remains an Employee of an SPS Affiliate.
AA. SPIN-OFF shall mean:
1. the distribution of that portion of the business of the
Corporation that creates and produces paper greeting cards, including such
assets and intellectual property of the Corporation as the Board may
determine in its sole discretion, to the shareholders of the Corporation,
existing as of the effective date of the Plan, that is contemplated as of
the effective date of the Plan and that will result in the formation of SPS
Media, Inc., an S corporation, within the meaning of Section 1361 of the
Code, organized under the laws of the State of Delaware, and doing business
as Blue Mountain Publishing, Inc., for the purpose of continuing such
portion of the business, or, in the alternative,
2. the sale, transfer, exchange or other disposition of all or
substantially all of the assets of that portion of the business of the
Corporation that creates and produces paper greeting cards, including such
assets and intellectual property of the Corporation as the Board may
determine, in its discretion, or the sale, transfer, exchange or other
disposition of all the common stock of such portion of the business to the
extent it becomes separately incorporated.
In the event the Spin-Off consists of a series of events, the Board shall
determine the date upon which the Spin-Off is deemed to be consummated for
purposes of this Plan.
BB. SPS AFFILIATE shall mean SPS Media, Inc., Juniko, Inc., Lucidity,
Inc., and their Subsidiaries and/or any other entities controlled by Stephen
Schutz, Susan Polis Schutz, their descendants and/or any trusts primarily for
the benefit of Stephen Schutz, Susan Polis Schutz and/or their descendants.
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CC. STOCK EXCHANGE shall mean either the American Stock Exchange or the
New York Stock Exchange.
DD. STOCK ISSUANCE shall mean the issuance of Common Stock under the Stock
Issuance Program described in Article Three.
EE. STOCK ISSUANCE AGREEMENT shall mean the agreement entered into by the
Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.
FF. STOCK ISSUANCE PROGRAM shall mean the stock issuance program in effect
under the Plan.
GG. SUBSIDIARY shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
HH. 10% SHAREHOLDERS shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
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EXHIBIT 5.01
December 22, 1999
At Home Corporation
450 Broadway Road
Redwood City, CA 94063
Gentlemen/Ladies:
At your request, we have examined the Registration Statement on Form S-8
(THE "REGISTRATION STATEMENT") filed by you with the Securities and Exchange
Commission (THE "COMMISSION") on or about December 22, 1999 in connection with
the registration under the Securities Act of 1933, as amended, of an aggregate
of 3,011,447 shares of your Series A Common Stock, $0.01 par value (the "SERIES
A COMMON STOCK") which are issuable upon the exercise of options originally
granted by Hartford House, Ltd., a Delaware corporation ("Hartford House"),
under the Hartford House, Ltd., Amended and Restated 1999 Stock Option/Stock
Issuance Plan (the "1999 PLAN") that have been assumed by you and converted into
options to purchase shares of Series A Common Stock (the "ASSUMED OPTIONS")
pursuant to the Agreement and Plan of Reorganization, dated as of October 23,
1999, by and among you and Hartford House, Ltd. (the "PLAN OF MERGER").
In rendering this opinion, we have examined the following:
(1) your registration statement on Form 8-A filed with the
Commission on June 13, 1997, together with the order of
effectiveness issued by the Commission therefor on July 11,
1997;
(2) the Registration Statement, together with the Exhibits filed as
a part thereof;
(3) the prospectuses prepared in connection with the Registration
Statement;
(4) the Nasdaq National Market Listing of Additional Shares
Notification prepared in connection with the Registration
Statement;
(5) the Hartford House, Ltd. Amended and Restated 1999 Stock
Option/Stock Issuance and related award grant and exercise
agreement forms;
(6) the Plan of Merger;
(7) your Fifth Amended and Restated Certificate of Incorporation
filed with the Delaware Secretary of State on May 28, 1999 and
your Second Amended and Restated Bylaws;
(8) the minutes of meetings and actions by written consent of your
stockholders and Board of Directors that are contained in your
minute books that are in our possession;
<PAGE> 2
(9) A certificate from your transfer agent dated of even date
herewith, verifying the number of your issued and outstanding
shares of capital stock as of the date hereof; and
(10) a Management Certificate addressed to us and dated December 13,
1999 executed by you containing certain factual and other
representations.
We have also have confirmed by telephone call to the offices of the
Commission your eligibility to use Form S-8.
In our examination of documents for purposes of this opinion, we have
assumed, and express no opinion as to, the genuineness of all signatures on
original documents, the authenticity and the completeness of all documents
submitted to us as originals, the conformity to originals and completeness of
all documents submitted to us as copies, the legal capacity of all natural
persons executing the same, the lack of any undisclosed termination,
modification, waiver or amendment to any document reviewed by us and the due
authorization, execution and delivery of all documents where due authorization,
execution and delivery are prerequisites to the effectiveness thereof.
As to matters of fact relevant to this opinion, we have relied solely
upon our examination of the documents referred to above and have assumed the
current accuracy and completeness of the information obtained from public
officials and records referred to above. We have made no independent
investigation or other attempt to verify the accuracy of any of such information
or to determine the existence or non-existence of any other factual matters;
however, we are not aware of any facts that would cause us to believe that the
opinion expressed herein is not accurate.
We are admitted to practice law in the State of California, and we
express no opinion herein with respect to the application or effect of the laws
of any jurisdiction other than the existing laws of the United States of America
and the State of California and (without reference to any case law or secondary
sources) the existing Delaware General Corporation Law.
Based upon the foregoing, it is our opinion that the 3,011,447 shares of
Series A Common Stock that may be issued and sold by you pursuant to exercise of
the Assumed Options, when issued and sold in accordance with the applicable plan
and award grant and exercise agreements to be entered into thereunder, and in
the manner referred to in the prospectus associated with the Registration
Statement, will be validly issued, fully paid and nonassessable; and
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement, the prospectus constituting a part thereof and any
amendments thereto.
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This opinion speaks only as of its date and we assume no obligation to
update this opinion should circumstances change after the date hereof.
Very truly yours,
FENWICK & WEST LLP
By: /s/ JEFFREY R. VETTER
----------------------------
Jeffrey R. Vetter, a Partner
3
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EXHIBIT 23.01
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of At Home Corporation pertaining to the options of Hartford House,
Ltd. issued under the Hartford House, Ltd. Amended and Restated 1999 Stock
Option/Stock Issuance Plan and assumed by the Registrant, of our report dated
January 19, 1999, with respect to the consolidated financial statements of At
Home Corporation, included in its Annual Report on Form 10-K for the year ended
December 31, 1998, as amended, filed with the Securities and Exchange
Commission.
Walnut Creek, California /s/ Ernst & Young LLP
----------------------
December 21, 1999
