As filed with the Securities and Exchange Commission on February 11, 2000
Registration No. 333-____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MODEM MEDIA . POPPE TYSON, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 06-1464807
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
230 East Avenue
Norwalk, Connecticut 06855
(Address of principal executive offices, including zip code)
-----------------------
MODEM MEDIA . POPPE TYSON, INC.
VIVID HOLDINGS, INC. 1999 STOCK INCENTIVE PLAN
(Full Title of the Plans)
Sloane Levy, Esq.
MODEM MEDIA . POPPE TYSON, INC.
230 East Avenue
(Name and address of agent for service of process)
(203) 299-7000
(Telephone number, including area code, of agent for service)
-----------------------
<TABLE>
CALCULATION OF REGISTRATION FEE
=====================================================================================================================
Proposed
Maximum
Offering Price Proposed Maximum
Title of Each Class Amount to be Per Aggregate Amount of
of Securities to be Registered Registered (1) Unit (2) Offering Price (2) Registration Fee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock, $.0001 par
value per share.................. 605,824 shares $4.65 $2,817,081.60 $743.71
=====================================================================================================================
</TABLE>
(1) See the Introductory Statement on the following page. Excludes such
indeterminate number of shares as may be offered and issued to prevent
dilutions resulting from stock splits, stock dividends, recapitalizations
or other similar transactions.
(2) Estimated solely for the purpose of computing the amount of the
registration fee. Pursuant to Rule 457(h) under the Securities Act of
1933, as amended, the proposed maximum offering price per share and the
proposed maximum aggregate offering price of shares subject to outstanding
options have been determined based on the converted weighted average
exercise price of the outstanding options as of February 8, 2000, which
average is $4.65.
<PAGE>
INTRODUCTORY STATEMENT
Pursuant to the consummation of the transactions contemplated by the
Agreement and Plan of Reorganization Among Vivid Holdings, Inc., Vivid
Publishing, Inc. the Stockholders of Vivid Holdings, Inc., Modem Media . Poppe
Tyson, Inc. (the "Registrant") and Modem Media . Poppe Tyson Merger Corp. dated
as of December 17, 1999, Vivid Holdings, Inc. will become a wholly-owned
subsidiary of the Registrant. The shares of Class A Common Stock registered are
issuable pursuant to options granted under the Vivid Holdings, Inc. 1999 Stock
Incentive Plan (the "Plan").
PART II
Item 3. Incorporation of Documents by Reference
This Registration Statement incorporates herein by reference the following
documents which have been filed with the Securities and Exchange Commission
(the "Commission") by Modem Media . Poppe Tyson, Inc. (the "Company" or "Modem
Media") as Registrant:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
(b) All reports filed pursuant to Section 13(a) or 15(d) of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act") since
December 31, 1998; and
(c) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A, filed pursuant to
Section 12 of the Exchange Act, including any amendment or report
filed for the purpose of updating such description that was filed on
February 1, 1999.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of the
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
filing of such documents (such documents, and the documents enumerated above,
being hereinafter referred to collectively as the "Incorporated Documents").
Any statement contained in an Incorporated Document shall be deemed to be
modified or superseded for purposes of this Registration Statement to the extent
that a statement contained therein or in any other subsequently filed
Incorporated Document modifies or supersedes such statement. Any such statements
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Directors and Officers
Modem Media's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. The Delaware General
Corporation Law provides that a corporation's certificate of incorporation may
contain a provision eliminating or limiting the personal liability of a
director for monetary damages for breach of his or her fiduciary duties as a
director, except for liability for:
o any breach of the duty of loyalty to the corporation or its stockholders;
o acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
2
<PAGE>
o unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation
Law; or
o any transaction from which the director derives an improper personal
benefit.
Modem Media's Bylaws provide that Modem Media shall indemnify its
directors and officers and may indemnify its employees and agents to the
fullest extent permitted by Delaware law, including those circumstances where
indemnification would otherwise be discretionary under Delaware law.
The Registrant maintains directors and officers insurance providing
indemnification for certain of the Registrant's directors, officers,
affiliates, partners or employees for certain liabilities.
Modem Media has entered into agreements to indemnify its directors and
officers in addition to the indemnification provided for in its Certificate of
Incorporation and Bylaws. Under these agreements, Modem Media is obligated to
indemnify its directors and officers for expenses, attorneys' fees, judgments,
fines and settlement amounts incurred by any such person in any action or
proceeding arising out of such person's services as a director or officer of
Modem Media, any subsidiary of Modem Media or any other company or enterprise
to which the person provides services at the request of Modem Media. Modem
Media believes that these provisions and agreements are necessary to attract
and retain qualified individuals to serve as directors and officers. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officer or persons controlling Modem Media pursuant to
the foregoing provisions, Modem Media has been informed that in the opinion of
the Commission such indemnification is against public policy as expressed in
the Securities Act of 1933, as amended, (the "Securities Act") and is therefore
unenforceable.
Item 7. Exemption for Registration Claimed
Not Applicable
Item 8. Exhibits
The following documents are filed as a part of this Registration Statement:
Exhibit Description
------- -----------
4.1 Restated Certificate of Incorporation of the Registrant
(incorporated by reference to the Registrant's Registration
Statement on Form S-1, as amended (No. 333-68057), which was
declared effective by the Securities and Exchange Commission on
February 4, 1999).
4.2 Amended and Restated Bylaws of the Registrant (incorporated by
reference to the Registrant's Registration Statement on Form S-1, as
amended (No. 333-68057), which was declared effective by the
Securities and Exchange Commission on February 4, 1999).
5.1 Opinion of Sloane Levy, General Counsel of the Company, as to the
legality of the securities to be registered.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Sloane Levy (included in Exhibit 5.1).
24.1 Powers of Attorney (included on the signature pages hereof).
99.1 Vivid Holdings, Inc. 1999 Stock Incentive Plan.
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
3
<PAGE>
(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; and
(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;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above
do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporated
by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the 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 Registrant hereby 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 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.
4
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Gerald M. O'Connell, Robert C. Allen, Steven C.
Roberts, and Sloane Levy acting severally, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any or all amendments to such Registration Statement, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Commission, granting unto said attorney-in-fact and agent
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 or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
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 the Town of Norwalk, State of Connecticut, on February 10, 2000.
MODEM MEDIA . POPPE TYSON, INC.
By: /s/ Gerald M. O'Connell
---------------------------
Gerald M. O'Connell
Chairman of the Board
Chief Executive Officer
Pursuant to the requirements of the Securities Act, the Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
<TABLE>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Gerald M. O'Connell Chairman of the Board February 10, 2000
- ------------------------------------- Chief Executive Officer
(Gerald M. O'Connell) Director
/s/ Robert C. Allen, II President February 10, 2000
- ------------------------------------- Director
(Robert C. Allen, II)
/s/ Steven C. Roberts Chief Financial Officer February 10, 2000
- ------------------------------------- (Principal Financial and
(Steven C. Roberts) Accounting Officer)
/s/ Robert H. Beeby Director February 8, 2000
- -------------------------------------
(Robert H. Beeby)
/s/ Donald L. Seeley Director February 10, 2000
- -------------------------------------
(Donald L. Seeley)
/s/ Donald M. Elliman, Jr. Director February 9, 2000
- -------------------------------------
(Donald M. Elliman, Jr).
/s/ Don Peppers Director February 10, 2000
- -------------------------------------
(Don Peppers)
/s/ Joseph R. Zimmel Director February 10, 2000
- -------------------------------------
(Joseph R. Zimmel)
</TABLE>
5
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
4.1 Restated Certificate of Incorporation of the Registrant
(incorporated by reference to the Registrant's Registration
Statement on Form S-1, as amended (No. 333-68057), which was
declared effective by the Securities and Exchange Commission on
February 4, 1999).
4.2 Amended and Restated Bylaws of the Registrant (incorporated by
reference to the Registrant's Registration Statement on Form S-1, as
amended (No. 333-68057), which was declared effective by the
Securities and Exchange Commission on February 4, 1999).
5.1 Opinion of Sloane Levy, General Counsel of the Company, as to the
legality of the securities to be registered.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Sloane Levy (included in Exhibit 5.1).
24.1 Powers of Attorney (included on the signature pages hereof).
99.1 Vivid Holdings, Inc. 1999 Stock Incentive Plan.
6
Exhibit 5.1
February 10, 2000
Securities and Exchange Commission
450 Fifth Street
Washington, D.C. 20549
Dear Sirs:
As Vice President, General Counsel of Modem Media . Poppe Tyson, Inc.
(the "Company), I advise you as follows in connection with the filing by the
Company of a Registration Statement on Form S-8 being filed by the Company on
the date hereof (the "Registration Statement") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to 605,824 shares of Class A common stock, par value $.001 per
share, of the Company, which may be issued pursuant the Modem Media . Poppe
Tyson, Inc. Vivid Holdings, Inc. 1999 Stock Incentive Plan (the "Common
Stock").
I have examined originals or copies, certified or otherwise identified
to my satisfaction, of such corporate documents and records which I have deemed
necessary or appropriate for the purposes of the opinion and have conducted such
other investigations of fact and law as I have deemed necessary or advisable for
purposes of this opinion. I have assumed that the signatures (other than those
of officers of the Company) on all documents that I have examined are genuine.
Based upon the foregoing, I am of the opinion that the Common Stock is
validly authorized and, when issued under each of the plans described above in
accordance with the terms thereof, will be legally issued, fully paid and
non-assessable.
I hereby consent to the filing of the opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Sloane Levy
---------------
Sloane Levy
Vice President, General Counsel
Exhibit 23.1
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 11, 1999,
November 16, 1998 and March 6, 1997 included in Modem Media . Poppe Tyson,
Inc.'s Form 10-K for the year ended December 31, 1998, and to all references to
our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
February 4, 2000
Exhibit 99.1
VIVID HOLDINGS, INC.
1999 STOCK INCENTIVE PLAN
Adopted By the Board July 8, 1999
Approved By Shareholders July 8, 1999
SECTION 1. Purpose.
The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to acquire a proprietary interest in the success of
the Company, or to increase such interest, to encourage such persons to remain
in the employ of the Company and to attract new employees with outstanding
qualifications.
The Plan provides for the direct grant or sale of Common Stock and for
the grant of Options to purchase Common Stock. Options granted under the Plan
may include Nonstatutory Options as well as Incentive Stock Options intended to
qualify under section 422 of the Internal Revenue Code.
SECTION 2. Definitions.
"Board" shall mean the Board of Directors of the Company, as
constituted from time to time.
"Change in Control" shall mean any one of the following events:
(i) The consummation of a merger, consolidation or other
reorganization of the Company (other than a reincorporation of the
Company), if after giving effect to such merger, consolidation or other
reorganization of the Company, the stockholders of the Company
immediately prior to such merger, consolidation or other reorganization
do not represent a majority in interest of the holders of voting
securities (on a fully diluted basis) with the ordinary voting power to
elect directors of the surviving or resulting entity after such merger,
consolidation or other reorganization; provided, however, that in no
event shall the initial public offering of the Company's common stock
constitute a Change in Control; or
(ii) The sale of all or substantially all of the assets of the
Company to a third party who is not an affiliate of the Company.
<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean a committee consisting of one or more members of
the Board that is appointed by the Board to administer the Plan.
"Common Stock" means the Company's common stock.
"Company" shall mean Vivid Holdings, Inc., a Delaware corporation.
"Consultant" shall mean an individual who performs bona fide services
to the Company, a Parent or a Subsidiary other than as an Employee or a member
of the Board.
"Employee" shall mean any individual who is a common-law employee of
the Company, a Parent or a Subsidiary.
"Exercise Price" shall mean the amount for which one share of Common
Stock may be purchased upon exercise of an Option, as specified by the Board in
the applicable Stock Option Agreement.
"Fair Market Value" shall mean the fair market value of a share of
Common Stock, as determined by the Board in good faith. Such determination shall
be conclusive and binding on all persons.
"Incentive Stock Option" or ISO shall mean an incentive stock option
described in Code section 422(b).
"Non-Employee Director" shall mean a member of the Board who is not
an Employee.
"Nonstatutory Option" or NSO shall mean a stock option that is not an
ISO.
"Offeree" shall mean an individual to whom the Board has offered the
right to acquire Common Stock other than upon exercise of an Option.
"Option" shall mean an ISO or NSO granted under the Plan entitling the
holder to purchase Common Stock.
"Optionee" shall mean an individual who holds an Option.
"Parent" shall have the meaning set forth in section 424(e) of the
Code.
"Plan" shall mean this 1999 Stock Incentive Plan.
2
<PAGE>
"Purchase Price" shall mean the consideration for which one share of
Common Stock may be acquired under the Plan pursuant to a grant or sale under
Section 6, as specified by the Board.
"Service" shall mean service as an Employee, Non-Employee Director or
Consultant.
"Stock Option Agreement" shall mean the agreement between the Company
and an Optionee that contains the terms, conditions and restrictions pertaining
to an Option.
"Stock Purchase Agreement" shall mean the agreement between the Company
and an Offeree who acquires Common Stock under the Plan (other than pursuant to
an Option) that contains the terms, conditions and restrictions pertaining to
the acquisition of such Common Stock.
"Subsidiary" shall have the meaning set forth in section 424(f) of the
Code. A corporation that attains the status of a Subsidiary on a date after the
adoption of the Plan shall be considered a Subsidiary commencing as of such
date.
"Ten Percent Stockholder" means an individual who owns more than ten
percent (10%) of the total combined voting power of all classes of outstanding
stock of the Company, its Parent or any of its Subsidiaries. In determining
stock ownership, the attribution rules of section 424(d) of the Code shall be
applied.
SECTION 3. Administration. (a) Committees of the Board. The Plan shall
be administered by the Board. However, any or all administrative functions
otherwise exercisable by the Board may be delegated to a 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. The Board may also at any
time terminate the functions of the Committee and reassume all powers and
authority previously delegated to the Committee. Any reference to the Board in
the Plan shall be construed as a reference to the Committee (if any) to whom the
Board has assigned a particular function.
(b) Authority of the Board. Subject to the provisions of the Plan, the
Board shall have full authority and discretion to take any actions it deems
necessary or advisable for the administration of the Plan. All decisions,
interpretations and other actions of the Board shall be final and binding on all
parties who have an interest in the Plan or any option or shares issued
thereunder.
SECTION 4. Eligibility. Only Employees, Non-Employee Directors and
Consultants shall be eligible for the grant of Options or the direct grant or
sale of Common Stock. Only Employees shall be eligible for the grant of ISOs.
3
<PAGE>
SECTION 5. Stock Subject to Plan. (a) Basic Limitation. 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 under the Plan shall not exceed Twelve Million (12,000,000) shares,
subject to adjustment pursuant to Section 9.
(b) Additional Shares. If any outstanding Option or other right to
acquire Common Stock for any reason expires or is canceled, forfeited or
otherwise terminated, the Common Stock allocable to the unexercised portion of
such Option or other right shall again be available for the purposes of the
Plan. If shares of Common Stock issued under the Plan are reacquired by the
Company pursuant to any right of repurchase or right of first refusal, such
shares of Common Stock shall again be available for the purposes of the Plan,
except such shares shall not be available for ISOs.
SECTION 6. Terms and Conditions of Grants or Sales. (a) Stock Purchase
Agreement. Each grant or sale of Common Stock under the Plan other than upon
exercise of an Option shall be evidenced by a Stock Purchase Agreement between
the Offeree and the Company. Such grant or sale shall be subject to all
applicable terms and conditions of the Plan and may be subject to any other
terms and conditions that are not inconsistent with the Plan and that the Board
deems appropriate for inclusion in a Stock Purchase Agreement. The provisions of
the various Stock Purchase Agreements entered into under the Plan need not be
identical.
(b) Duration of Offers and Nontransferability of Rights. Any right to
acquire Common Stock under the Plan other than an Option shall automatically
expire if not exercised by the Offeree within the number of days specified by
the Board and communicated to the Offeree. Such right shall not be transferable
and shall be exercisable only by the Offeree to whom such right was granted.
(c) Purchase Price. The Purchase Price shall be established by the
Board and set forth in the Stock Purchase Agreement and, to the extent required
to comply with the California Corporations Code or the regulations thereunder,
shall not be less than eighty-five percent (85%) of Fair Market Value (one
hundred percent (100%) for Ten Percent Stockholders). The Purchase Price shall
be payable in a form described in Section 8 or, in the discretion of the Board,
in consideration for past services rendered to the Company or for its benefit.
(d) Withholding Taxes. As a condition to the purchase of Common Stock,
the Offeree shall make such arrangements as the Board may require for the
satisfaction of any federal, state or local withholding tax obligations that may
arise in connection with such purchase.
4
<PAGE>
(e) Restrictions on Transfer of Common Stock. No Common Stock granted
or sold under the Plan may be sold, made the subject of any short sale or loan,
hypothecated, pledged, optioned or otherwise transferred or disposed of by the
Offeree for such period of time not to exceed one hundred eighty (180) days
following the effective date of a registration statement covering securities of
the Company filed under the Securities Act of 1933, as amended, unless such
restriction is consented to or waived by the managing underwriter. Subject to
the preceding sentence, any Common Stock granted or sold under the Plan shall be
subject to such special conditions, rights of repurchase, rights of first
refusal and other transfer restrictions as the Board may determine. Such
restrictions shall apply in addition to any general restrictions that may apply
to all holders of Common Stock.
SECTION 7. Terms and Conditions of Options. (a) Stock Option Agreement.
Each grant of an Option under the Plan shall be evidenced by a Stock Option
Agreement between the Optionee and the Company. Such Option shall be subject to
all applicable terms and conditions of the Plan and may be subject to any other
terms and conditions that are not inconsistent with the Plan and that the Board
deems appropriate for inclusion in a Stock Option Agreement. The provisions of
the various Stock Option Agreements entered into under the Plan need not be
identical.
(b) Number of Shares; Option Type. Each Stock Option Agreement shall
specify the number of shares of Common Stock that are subject to the Option and
shall provide for the adjustment of such number in accordance with Section 9.
The Stock Option Agreement shall also specify whether the Option is an ISO or a
NSO. To the extent that the aggregate Fair Market Value of the Common Stock
subject to ISOs that are exercisable for the first time by any Optionee during
any calendar year (under all plans of the Company and any Parent or Subsidiary)
exceeds $100,000, such Options shall be treated as NSOs. For purposes of this
Section 7(b), ISOs shall be taken into account in the order in which they were
granted. The Fair Market Value of the Common Stock shall be determined as of the
time the Option with respect to such Common Stock is granted.
(c) Exercise Price. An Option's Exercise Price shall be established by
the Board and set forth in a Stock Option Agreement. The Exercise Price of an
ISO shall not be less than one hundred percent (100%) of the Fair Market Value
(one hundred ten percent (110%) for Ten Percent Stockholders) on the date of
grant. The Exercise Price of a NSO shall not be less than eight-five percent
(85%) of the Fair Market Value (one hundred ten percent (110%) for Ten Percent
Stockholders) on the date of grant. The Exercise Price shall be payable in a
form described in Section 8. Notwithstanding the foregoing, an Option may be
granted with an exercise price lower than that set prescribed in this paragraph
if the Option grant is attributable to the issuance or assumption of an option
in a transaction to which Code section 424(a) applies.
5
<PAGE>
(d) Withholding Taxes. As a condition to the exercise of an Option,
the Optionee shall make such arrangements as the Board may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such exercise. The Optionee shall also make
such arrangements as the Board may require for the satisfaction of any federal,
state, local or foreign withholding tax obligations that may arise in connection
with the disposition of Common Stock acquired by exercising an Option.
(e) Vesting/Exercisability. Each Stock Option Agreement shall specify
the date when all or any installment of the Option is to vest or become
exercisable. To the extent required to comply with the California Corporations
Code or the regulations thereunder, an Option granted to Employees who are not
officers shall vest and become exercisable no less rapidly than the rate of
twenty percent (20%) per year for each of the first five (5) years from the date
of grant. Subject to the preceding sentence, the vesting of any Option shall be
determined by the Board in its sole discretion. A Stock Option Agreement may
permit an Optionee to exercise an Option before it is vested, subject to the
Company's right of repurchase over any shares acquired under the unvested
portion of the Option (an early exercise), which right of repurchase shall lapse
at the same rate the Option would have vested had there been no early exercise.
A Stock Option Agreement may, but need not, provide for full or partial vesting
in connection with a Change in Control.
(f) Term. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed ten (10) years from the date of grant (five
(5) years in the case of an ISO granted to a Ten Percent Stockholder). Subject
to the preceding sentence, the Board at its sole discretion shall determine when
an Option is to expire.
(g) Nontransferability. No Option shall be transferable by the
Optionee other than by will or by the laws of descent and distribution except to
the extent permitted by applicable law and the Stock Option Agreement. An Option
may be exercised during the lifetime of the Optionee only or by the guardian or
legal representative of the Optionee. No Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee during his
lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.
(h) Exercise of Options on Termination of Service. To the extent
required to comply with the California Corporations Code or the regulations
thereunder, each Stock Option Agreement shall provide that the Optionee shall
have the right to exercise the Option following termination of the Optionee's
Service, during the Option's term, for at least thirty (30) days following
6
<PAGE>
termination of Service for any reason except cause, death or disability, and for
at least six (6) months following termination of Service due to death or
disability.
(i) No Rights as a Stockholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a stockholder with respect to any Common Stock
covered by an Option until such person becomes entitled to receive such Common
Stock by filing a notice of exercise and paying the Exercise Price pursuant to
the terms of such Option.
(j) Modification of Options. Within the limitations of the Plan, the
Board may modify outstanding Options or may accept the cancellation of
outstanding Options (whether granted by the Company or another issuer) in return
for the grant of new Options for the same or a different number of shares of
Common Stock and at the same or a different Exercise Price. Notwithstanding the
foregoing, no modification of an Option shall, without the consent of the
Optionee, impair the Optionee's rights or increase the Optionee's obligations
under such Option.
(k) Restrictions on Transfer. No shares of Common Stock issued upon
exercise of an Option may be sold or otherwise transferred or disposed of by the
Optionee during the one hundred eighty (180) day period following the effective
date of a registration statement covering securities of the Company filed under
the Securities Act of 1933 (unless such restriction is consented to or waived by
the managing underwriter). Subject to the preceding sentence, any Common Stock
issued upon exercise of an Option shall be subject to such rights of repurchase,
rights of first refusal and other transfer restrictions as the Board may
determine. Such restrictions shall apply in addition to any restrictions that
may apply to holders of Common Stock generally. Any right to repurchase an
Optionee's Common Stock at the original Exercise Price upon termination of the
Optionee's Service shall lapse at least as rapidly as the schedule set forth in
Subsection (e) above. Any such repurchase right may be exercised only within
ninety (90) days after the termination of the Optionee's Service for cash or for
cancellation of indebtedness incurred in purchasing the Common Stock.
SECTION 8. Forms of Payment. (a) General Rule. The entire Purchase
Price or Exercise Price shall be payable in cash or cash equivalents acceptable
to Company at the time of exercise or purchase, except as otherwise provided in
this Section 8.
(b) Surrender of Stock. To the extent that a Stock Option Agreement or
Stock Purchase Agreement so provides, payment may be made all or in part with
Common Stock that has already been owned by the Optionee or the Optionee's
representative for any time period specified by the Board and that are
surrendered to the Company in good form for transfer. Such Common Stock shall be
valued at
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Fair Market Value on the date when the new Common Stock is purchased under the
Plan.
(c) Promissory Notes. To the extent that a Stock Option Agreement or
Stock Purchase agreement so provides, payment may be made all or in part with a
full recourse promissory note executed by the Optionee; provided that the par
value of the Common Stock may not be paid by promissory note. The interest rate
and other terms and conditions of such note shall be determined by the Board.
The Board may require that the Optionee pledge his or her Common Stock to the
Company for the purpose of securing the payment of such note. In no event shall
the stock certificate(s) representing such Common Stock be released to the
Optionee until such note is paid in full, unless otherwise provided in the Stock
Option Agreement or Stock Purchase Agreement.
(d) Exercise/Sale. To the extent that a Stock Option Agreement so
provides, and if the Common Stock is publicly traded, all or any part of the
Exercise Price and any withholding taxes may be paid by delivering (on a form
prescribed by the Company) an irrevocable direction to a securities broker
approved by the Company to sell all or part of the Common Stock being purchased
under the Plan and to deliver all or part of the sales proceeds to the Company.
(e) Exercise/Pledge. To the extent that a Stock Option Agreement so
provides, and if the Common Stock is publicly traded, all or any part of the
Exercise Price and any withholding taxes may be paid by delivering (on a form
prescribed by the Company) an irrevocable direction to pledge all or part of the
Common Stock being purchased under the Plan to a securities broker or lender
approved by the Company, as security for a loan, and to deliver all or part of
the loan proceeds to the Company.
SECTION 9. Adjustments upon Changes in Common Stock. (a) General. In
the event of a subdivision of the outstanding Common Stock, a declaration of a
dividend payable in Common Stock, a declaration of an extraordinary dividend
payable in a form other than Common Stock in an amount that has a material
effect on the value of Common Stock, a combination or consolidation of the
outstanding Common Stock into a lesser number of shares, a recapitalization, a
reclassification or a similar occurrence, the Board shall make appropriate
adjustments in one or more of (i) the number of shares of Common Stock available
for future grants of Options or other rights to acquire Common Stock under
Section 5, (ii) the number of shares of Common Stock covered by each outstanding
Option or other right to acquire Common Stock or (iii) the Exercise Price of
each outstanding Option or the Purchase Price of each other right to acquire
Common Stock.
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(b) Mergers and Consolidations. In the event that the Company is a
party to a merger or consolidation, outstanding Options or other rights to
acquire Common Stock shall be subject to the agreement of merger or
reorganization. Such agreement, without an Optionee's consent, may provide for:
(i) The continuation of such outstanding Options by the
Company (if the Company is the surviving corporation);
(ii) The assumption of the Plan and such outstanding Options by the
surviving corporation or its parent;
(iii) The substitution by the surviving corporation or its parent of
options with substantially the same terms for such outstanding Options;
or
(iv) The cancellation of such outstanding Options to the extent not
exercised before the merger or consolidation; provided, however, that
such cancellation shall not occur unless the Optionee has received
either an opportunity to exercise the Options prior to cancellation or
a cash payment equal in value to the built-in option gain on the vested
portion of the Option, less applicable withholding.
(c) Reservation of Rights. Except as provided in this Section 9, an
Optionee or Offeree shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any dividend,
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of shares
of Common Stock subject to an Option, or the number of shares subject to any
other right to acquire Common Stock and/or the Exercise Price or Purchase Price.
The grant of an Option or other right to acquire Common Stock pursuant to the
Plan shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure, to merge or consolidate or to dissolve, liquidate, sell or
transfer all or any part of its business or assets.
SECTION 10. Legal Requirements. (a) Restrictions on Issuance. Common
Stock shall not be issued under the Plan unless the issuance and delivery of
such Common Stock complies with (or is exempt from) all applicable requirements
of law, including (without limitation) the Securities Act of 1933, as amended,
the rules and regulations promulgated thereunder, state securities laws and
regulations, and the regulations of any stock exchange on which the Company's
securities may then be listed, and the Company has obtained the approval or
favorable ruling from any governmental agency that the Company determines is
necessary or advisable.
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(b) Financial Reports. To the extent required to comply with the
California Corporations Code or the regulations thereunder, not less often than
annually the Company shall furnish to Optionees and Offerees Company summary
financial information including a balance sheet regarding the Company's
financial condition and results of operations, unless such Optionees or Offerees
have duties with the Company that assure them access to equivalent information.
Such financial statements need not be audited.
SECTION 11. No Employment Rights. No provision of the Plan, nor any
Option granted or other right to acquire Common Stock granted under the Plan,
shall be construed to give any person any right to become, to be treated as, or
to remain an Employee, Consultant or Non-Employee Director. The Company and its
Subsidiaries reserve the right to terminate any person's Service at any time and
for any reason.
SECTION 12. Duration and Amendments. (a) Term of the Plan. The Plan, as
set forth herein, shall become effective on the date of its adoption by the
Board, subject to the approval of the Company's stockholders. In the event that
the stockholders fail to approve the Plan within twelve (12) months after its
adoption by the Board, any Option grants or other right to acquire Common Stock
already made shall be null and void, and no additional Option grants or other
right to acquire Common Stock shall be made after such date. The Plan shall
terminate automatically ten (10) years after its adoption by the Board and may
be terminated on any earlier date pursuant to Subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board may amend or
terminate the Plan at any time. Rights under any Option granted or other right
to acquire Common Stock granted before amendment of the Plan shall not be
materially altered, or impaired adversely, by such amendment, except with
consent of the Optionee or Offeree. An amendment of the Plan shall be subject to
the approval of the Company's stockholders only to the extent required by
applicable laws, regulations or rules.
(c) Effect of Amendment or Termination. No Common Stock shall be
issued or sold under the Plan after the termination thereof, except upon
exercise of an Option granted prior to such termination. The termination of the
Plan, or any amendment thereof, shall not affect any Common Stock previously
issued or Option previously granted under the Plan.
SECTION 13. Execution. To record the adoption of the Plan, the
Company has caused its authorized officer to execute the same.
VIVID HOLDINGS, INC.
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By ______________________________
Title _____________________________
Date _____________________________
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