As filed with the Securities and Exchange Commission on April 27, 2000
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MYTURN.COM, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
11-3344575
(I.R.S. Employer Identification No.)
960 Atlantic Avenue, Alameda, California 94501
(Address of Principal Executive Offices)
MYTURN.COM, INC. 1996 STOCK OPTION PLAN
(Full Title of Plan)
Michael Fuchs
Interim Chief Executive Officer
MyTurn.com, Inc.
9 West 57th Street - Suite 4220
New York, New York 10019
Telephone: (212) 583-7010
Telecopier: (212) 223-8886
(Name, Address and Telephone Number of Agent for Service)
-----
Copies of all communications and notices to:
Gavin C. Grusd, Esq.
Certilman Balin Adler & Hyman, LLP
90 Merrick Avenue
East Meadow, New York 11554
Telephone: (516) 296-7000
Telecopier: (516) 296-7111
-----
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
of Securities Amount Offering Aggregate Amount of
To Be To Be Price Offering Registration
Registered Registered(1) Per Share Price Fee
---------- ------------- --------- ----- ---
<S> <C> <C> <C> <C>
Common Shares
(par value
$.01 per
share) 336,617(2)(3) $ 9.875(4) $ 3,324,093(4) $ 1,146.24
==================== ===================== ========================= ============================ ========================
Common Shares
(par value
$.01 per
share) 550,000(5) $ 1.00 $ 550,000 $ 189.66
==================== ===================== ========================= ============================ ========================
Common Shares
(par value
$.01 per
share) 4,734,678(6) $ 2.50 $ 11,836,695 $ 4,081.62
==================== ===================== ========================= ============================ ========================
Common Shares
(par value
$.01 per
share) 5,000(7) $ 3.00 $ 15,000 $ 5.17
==================== ===================== ========================= ============================ ========================
Common Shares
(par value
$.01 per
share) 100,000(8) $ 4.88 $ 488,000 $ 168.28
==================== ===================== ========================= ============================ ========================
Common Shares
(par value
$.01 per
share) 504,955(9) $ 5.00 $ 2,524,775 $ 870.61
==================== ===================== ========================= ============================ ========================
Common Shares
(par value
$.01 per
share) 5,000(10) $ 5.25 $ 26,250 $ 9.05
==================== ===================== ========================= ============================ ========================
Common Shares
(par value
$.01 per
share) 10,000(11) $ 6.31 $ 63,100 $ 21.76
==================== ===================== ========================= ============================ ========================
1
<PAGE>
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 160,950(12) $ 6.38 $ 1,026,861 $ 354.09
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 85,000(13) $ 7.1875 $ 610,938 $ 210.67
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 50,000(14) $ 8.875 $ 443,750 $ 153.02
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 30,000(15) $ 9.875 $ 296,250 $ 102.16
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 20,000(16) $ 10.1875 $ 203,750 $ 70.26
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 80,000(17) $ 12.00 $ 960,000 $ 331.03
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 20,000(18) $ 13.625 $ 272,500 $ 93.97
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 177,050(19) $ 16.625 $ 2,943,456 $1,014.98
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 20,000(20) $ 19.1875 $ 383,750 $ 132.33
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 348,250(21) $ 20.25 $ 7,052,063 $2,431.75
===================== =================== =========================== ============================ ========================
2
<PAGE>
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 87,500(22) $ 23.6875 $ 2,072,656 $ 714.71
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 25,000(23) $ 26.9375 $ 673,438 $ 232.22
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 20,000(24) $ 27.00 $ 540,000 $ 186.21
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 55,000(25) $ 27.25 $ 1,498,750 $ 516.81
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 30,000(26) $ 27.50 $ 825,000 $ 284.48
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 25,000(27) $ 28.4375 $ 710,938 $ 245.15
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 40,000(28) $ 28.50 $ 1,140,000 $ 393.10
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 105,000(29) $ 29.00 $ 3,045,000 $1,050.00
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 15,000(30) $ 30.00 $ 450,000 $ 155.17
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 80,000(31) $ 30.0625 $ 2,405,000 $ 829.31
===================== =================== =========================== ============================ ========================
3
<PAGE>
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 30,000(32) $ 30.50 $ 915,000 $ 315.52
===================== =================== =========================== ============================ ========================
Common Shares
(par value
$.01 per
share) 100,000(33) $ 32.625 $ 3,262,500 $ 1,125.00
===================== =================== =========================== ============================ ========================
Total $17,434.33
===================== =================== =========================== ============================ ========================
</TABLE>
(1) Pursuant to Rule 416 promulgated under the Securities Act of 1933, as
amended (the "1933 Act"), an additional indeterminate number of Common
Shares is being registered to cover any adjustments in the number of
Common Shares pursuant to the anti-dilution provisions of the
MyTurn.com, Inc. 1996 Stock Option Plan (the "1996 Plan").
(2) The 1996 Plan authorizes the granting of options to purchase a maximum
of 10,000,000 Common Shares, of which options for the purchase of an
aggregate of 9,663,383 Common Shares have been granted, of which
options for the purchase of an aggregate of 2,149,597 Common Shares
have been exercised. The 1996 Plan originally provided for the granting
of options to purchase 2,000,000 Common Shares. On January 20, 2000 the
1996 Plan was amended to increase the number of Common Shares issuable
upon the exercise of options granted thereunder by 8,000,000 Common
Shares to 10,000,000 Common Shares.
(3) Represents the issuance of Common Shares issuable upon the exercise of
options which may be granted under the 1996 Plan.
(4) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457.
(5) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $1.00 per Common Share.
(6) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $2.50 per Common Share.
(7) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $3.00 per Common Share.
(8) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $4.88 per Common Share.
(9) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $5.00 per Common Share.
(10) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $5.25 per Common Share.
4
<PAGE>
(11) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $6.31 per Common Share.
(12) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $6.38 per Common Share.
(13) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $7.1875 per Common Share.
(14) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $8.875 per Common Share.
(15) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $9.875 per Common Share.
(16) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $10.1875 per Common Share.
(17) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $12.00 per Common Share.
(18) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $13.625 per Common Share.
(19) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $16.625 per Common Share.
(20) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $19.1875 per Common Share.
(21) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $20.25 per Common Share.
(22) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $23.6875 per Common Share.
(23) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $26.9375 per Common Share.
(24) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $27.00 per Common Share.
(25) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $27.25 per Common Share.
(26) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $27.50 per Common Share.
(27) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $28.4375 per Common Share.
5
<PAGE>
(28) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $28.50 per Common Share.
(29) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $29.00 per Common Share.
(30) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $30.00 per Common Share.
(31) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $30.0625 per Common Share.
(32) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $30.50 per Common Share.
(33) Represents the issuance of Common Shares issuable upon the exercise of
options which have been granted under the 1996 Plan with a purchase
price of $32.625 per Common Share.
EXPLANATORY NOTE
This registration statement covers the issuance of up to an additional
7,850,000 Common Shares issuable upon the exercise of options granted and which
may be granted under the 1996 Plan. The issuance of up to 1,610,050 Common
Shares upon the exercise of options granted under the 1996 Plan and the resale
of up to 389,950 Common Shares issued upon exercise of options granted under the
1996 Plan were previously registered on a Registration Statement on Form S-8,
Registration No. 333-39327 which was effective on November 3, 1997.
The number of Common Shares authorized for issuance upon the exercise of
options granted or which may be granted under the 1996 Plan was increased by
8,000,000 Common Shares, from 2,000,000 to 10,000,000 Common Shares, on January
20, 2000. Options were exercised to purchase 150,000 Common Shares which are
"restricted securities" and accordingly are not included in this Registration
Statement.
6
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Incorporated herein by reference are the following documents filed by the
Registrant with the Securities and Exchange Commission (the "Commission") under
the Securities Exchange Act of 1934, as amended (the "1934 Act"):
(a) The Registrant's Annual Report on Form 10-KSB for the year ended
December 31, 1999.
(b) The description of the Registrant's Common Shares contained in the
Registrant's Registration Statement on Form 8-A (File No. 000-22611), which
was declared effective by the Commission on June 10, 1997 under the 1934
Act.
All documents filed by the Registrant pursuant to Sections 13, 14 and 15(d)
of the 1934 Act prior to the filing of a post-effective amendment to this
Registration Statement which indicates that all securities offered hereby have
been sold or which deregisters all such securities then remaining unsold, shall
be deemed to be incorporated herein by reference and to be a part hereof from
their respective dates of filing.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Certain legal matters in connection with the offering of the securities
registered hereunder are being passed upon for the Registrant by Certilman Balin
Adler & Hyman, LLP, 90 Merrick Avenue, East Meadow, New York 11554.
Item 6. Indemnification of Directors and Officers
Article X of the Registrant's Certificate of Incorporation eliminates the
personal liability of directors to the Registrant and its stockholders for
monetary damages for breach of fiduciary duty as a director to the fullest
extent permitted by Section 102 of the Delaware General Corporation Law,
provided that this provision shall not eliminate or limit the liability of a
director (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 which
involve intentional misconduct or a knowing violation of law, (iii) arising
under Section 174 of the Delaware General Corporation Law (with respect to
unlawful dividend payments and unlawful stock purchases or redemptions), or (iv)
for any transaction from which the director derived an improper personal
benefit.
Additionally, the Registrant has included in its Certificate of
Incorporation and its by- laws provisions to indemnify its directors, officers,
employees and agents and to purchase insurance with respect to liability arising
out of the performance of their duties as directors, officers, employees and
agents as permitted by Section 145 of the Delaware General Corporation law. The
Delaware General Corporation law provides further that the indemnification
permitted thereunder shall not be
II-1
<PAGE>
deemed exclusive of any other rights to which the directors, officers, employees
and agents may be entitled under the Registrant's by-laws, any agreement, vote
of stockholders or otherwise.
The effect of the foregoing is to require the Registrant to the extent
permitted by law to indemnify the officers, directors, employees and agents of
the Registrant for any claim arising against such persons in their official
capacities if such person acted in good faith and in a manner that he reasonably
believed to be in or not opposed to the best interests of the Registrant, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been informed 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.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
4.1 Specimen Common Stock Certificate(1)
5 Opinion of Certilman Balin Adler & Hyman, LLP as to
the legality of the Common Shares issuable pursuant
to the 1996 Plan and being registered hereunder
23.1 Consent of Lazar Levine & Company, LLP
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Certilman Balin Adler & Hyman, LLP
(included in its opinion filed as Exhibit 5)
24 Powers of Attorney (included in signature page
forming a part hereof)
99 1996 Stock Option Plan, as amended
Item 9. Undertakings
The undersigned Registrant will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration to:
(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act;
- --------------------
(1) Denotes document filed as an exhibit to the Registrant's
Registration Statement on Form SB-2 (Registration No. 333-18667) which is
incorporated herein by reference thereto.
II-2
<PAGE>
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information 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 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 the
"Calculation of Registration Fee" table in the effective
registration statement.
(iii) Include any additional or changed material information
on the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at the time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 County of Nassau, State of New York, on
the 27th day of April, 2000.
MYTURN.COM, INC.
By: /s/ Michael Fuchs
----------------------------
Michael Fuchs
Chairman of the Board and
Interim Chief Executive Officer
II-4
<PAGE>
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature appears below
constitutes and appoints Michael Fuchs with full power to act as his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution 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, and to file the same, with all exhibits thereto,
and other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, and each of his
substitutes, full power and authority to do and perform each and every act and
thing requisite or 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 attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
II-5
<PAGE>
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Capacity Date
- --------- -------- ----
<S> <C> <C>
/s/ Michael Fuchs Chairman of the Board, April 27, 2000
- ------------------------------------- Interim Chief Executive
Michael Fuchs Officer and Director
/s/ Rudy C. Theale, Jr. Vice Chairman of the Board April 27, 2000
- ----------------------------------- and Director
Rudy C. Theale, Jr.
/s/ R.E. (Teddy) Turner Director April 27, 2000
- ---------------------------------
R. E. (Teddy) Turner, IV
/s/ Christopher Liston Director April 27, 2000
- -----------------------------------
Christopher Liston
/s/ Harold Lazarus Director April 27, 2000
- -------------------------------------
Harold Lazarus, Ph.D
/s/ Mark Bradlee Director April 27, 2000
- -------------------------------------
Mark Bradlee
________________________ Director April __, 2000
Brian Dougherty
/s/ Joseph Antonini Director April 27, 2000
- ------------------------------------
Joseph Antonini
________________________ Director April __, 2000
Jeffrey H. Coats
/s/ David Greenspan Chief Financial Officer and April 27, 2000
- ----------------------------------
David Greenspan Secretary (Principal Accounting
Officer)
</TABLE>
II-6
<PAGE>
EXHIBIT 5
April 26, 2000
MyTurn.com, Inc.
960 Atlantic Avenue
Alameda, California 94501
Re: Registration of 7,850,000 Common Shares,
par value $.01 per share, under the
Securities Act of 1933, as amended
Gentlemen:
In our capacity as counsel to MyTurn.com, Inc., a Delaware corporation (the
"Company"), we have been asked to render this opinion in connection with a
Registration Statement on Form S-8 being filed contemporaneously herewith by the
Company with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Registration Statement"), covering the issuance of an
aggregate of 7,850,000 Common Shares, par value $.01 per share, of the Company
(the "Common Shares") that may be issued upon the exercise of options to acquire
Common Shares granted under the Company's 1996 Stock Option Plan (the "Plan").
In that connection, we have examined the Certificate of Incorporation and
the By- Laws of the Company, each as amended, the Registration Statement and the
Plan and are familiar with corporate proceedings of the Company relating to the
adoption of the Plan. We have also examined such other instruments and documents
as we deemed relevant under the circumstances.
For purposes of the opinions expressed below, we have assumed (i) the
authenticity of all documents submitted to us as original, (ii) the conformity
to the originals of all documents submitted as certified, photostatic or
facsimile copies and the authenticity of the originals, (iii) the legal capacity
of natural persons, (iv) the due authorization, execution and delivery of all
documents by all parties and the validity and binding effect thereof and (v) the
conformity to the proceedings of the Board of Directors of all minutes of such
proceedings. We have also assumed that the corporate records furnished to us by
the Company include all corporate proceedings taken by the Company to date.
<PAGE>
MyTurn.com, Inc.
April 26, 2000
Page 2
Based upon and subject to the foregoing, we are of the opinion that the
Common Shares have been duly and validly authorized and, when issued and paid
for as described in the Plan, will be duly and validly issued, fully paid and
nonassessable.
We hereby consent to the use of our opinion as herein set forth as an
exhibit to the Registration Statement.
This opinion is as of the date hereof, and we do not undertake, and hereby
disclaim, any obligation to advise you of any changes in any of the matters set
forth herein.
We are rendering this opinion only as to the matters expressly set forth
herein, and no opinion should be inferred as to any other matters.
This opinion is for your exclusive use only and is to be utilized and
relied upon only in connection with the matters expressly set forth herein.
Very truly yours,
/s/ Certilman Balin Adler & Hyman, LLP
CERTILMAN BALIN ADLER & HYMAN, LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference, in the Registration
Statement on Form S-8, or our report dated February 25, 1999 (except as to Note
14 which is dated March 4, 1999) which appears on page F-2 of the annual report
on Form 10-KSB of Compu-DAWN, Inc., now known as MyTurn.com, Inc., for the year
ended December 31, 1998.
/s/ LAZAR LEVINE & FELIX LLP
LAZAR LEVINE & FELIX LLP
New York, New York
April 25, 2000
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated March 24, 2000, except for Note 15 for
which the date is April 14, 2000, relating to the consolidated financial
statements of MyTurn.com, Inc., which appears in MyTurn.com, Inc.'s Annual
Report on Form 10-KSB for the year ended December 31, 1999.
/s/ PricewaterhouseCoopers LLP
- -------------------------------
PricewaterhouseCoopers LLP
April 26, 2000
<PAGE>
MYTURN.COM, INC.
1996 Stock Option Plan
(As Amended Through January 20, 2000)
1. Purpose of the Plan. The MyTurn.com, Inc. 1996 Stock Option Plan (the
"Plan") is intended to advance the interests of MyTurn.com, Inc. (the "Company")
by inducing individuals, and eligible entities (as hereinafter provided) of
outstanding ability and potential to join and remain with, or provide consulting
or advisory services to, the Company, by encouraging and enabling eligible
employees, non-employee Directors, consultants and advisors to acquire
proprietary interests in the Company, and by providing the participating
employees, non-employee Directors, consultants and advisors with an additional
incentive to promote the success of the Company. This is accomplished by
providing for the granting of "Options," which term as used herein includes both
"Incentive Stock Options" and "Non-Statutory Stock Options" (as hereinafter
defined) to employees, non-employee Directors, consultants and advisors.
2. Administration. The Plan shall be administered by the Board of Directors
of the Company (the "Board of Directors") or by a committee (the "Committee")
chosen by the Board of Directors. Except as herein specifically provided, the
interpretation and construction by the Board of Directors or the Committee of
any provision of the Plan or of any Option granted under it shall be final and
conclusive. The receipt of Options by Directors, or any members of the
Committee, shall not preclude their vote on any matters in connection with the
administration or interpretation of the Plan.
3. Shares Subject to the Plan. The stock subject to Options granted under
the Plan shall be shares of the Company's common stock, par value $.01 per share
(the "Common
1
<PAGE>
Stock"), whether authorized but unissued or held in the Company's treasury, or
shares purchased from stockholders expressly for use under the Plan. The maximum
number of shares of Common Stock which may be issued pursuant to Options granted
under the Plan shall not exceed in the aggregate ten million (10,000,000) shares
plus such number of Common Shares issuable upon the exercise of Reload Options
(as hereinafter defined) granted under the Plan, subject to adjustment in
accordance with the provisions of Section 13 hereof. The Company shall at all
times while the Plan is in force reserve such number of shares of Common Stock
as will be sufficient to satisfy the requirements of all outstanding Options
granted under the Plan. In the event any Option granted under the Plan shall
expire or terminate for any reason without having been exercised in full or
shall cease for any reason to be exercisable in whole or in part, the
unpurchased shares subject thereto shall again be available for Options under
the Plan.
4. Participation. The class of individual or entity that shall be eligible
to receive Options under the Plan shall be (a) with respect to Incentive Stock
Options described in Section 6 hereof, all employees (including officers) of
either the Company or any subsidiary corporation of the Company, and (b) with
respect to Non-Statutory Stock Options described in Section 7 hereof, all
employees (including officers) and non-employee Directors of, or consultants and
advisors to, either the Company or any subsidiary corporation of the Company;
provided, however, that Non- Statutory Stock Options shall not be granted to any
such consultants and advisors unless (i) bona fide services have been or are to
be rendered by such consultant or advisor and (ii) such services are not in
connection with the offer or sale of securities in a capital raising
transaction. For purposes of the Plan, for an entity to be an eligible entity,
it must be included in the definition of "employee" for purposes of a Form S-8
Registration Statement filed under the Securities Act of 1933, as amended (the
"Act"). The Board of Directors or the Committee, in its sole discretion, but
subject to the
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provisions of the Plan, shall determine the employees and non-employee Directors
of, and the consultants and advisors to, the Company and its subsidiary
corporations to whom Options shall be granted, and the number of shares to be
covered by each Option, taking into account the nature of the employment or
services rendered by the individuals or entities being considered, their annual
compensation, their present and potential contributions to the success of the
Company, and such other factors as the Board of Directors or the Committee may
deem relevant.
5. Stock Option Agreement. Each Option granted under the Plan shall be
authorized by the Board of Directors or the Committee, and shall be evidenced by
a Stock Option Agreement which shall be executed by the Company and by the
individual or entity to whom such Option is granted. The Stock Option Agreement
shall specify the number of shares of Common Stock as to which any Option is
granted, the period during which the Option is exercisable, the option price per
share thereof, and such other terms and provisions not inconsistent with this
Plan.
6. Incentive Stock Options. The Board of Directors or the Committee may
grant Options under the Plan, which Options are intended to meet the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), and which are subject to the following terms and conditions and
any other terms and conditions as may at any time be required by Section 422 of
the Code (referred to herein as an "Incentive Stock Option"):
(a) No Incentive Stock Option shall be granted to individuals other
than employees of the Company or of a subsidiary corporation of the
Company.
(b) Each Incentive Stock Option under the Plan must be granted prior
to August 1, 2006, which is within ten (10) years from the date the Plan
initially was adopted by the Board of Directors of Coastal Computer
Systems, Inc. ("Coastal"), the predecessor-in-interest to the Company.
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(c) The option price of the shares of Common Stock subject to any
Incentive Stock Option shall not be less than the fair market value of the
Common Stock at the time such Incentive Stock Option is granted; provided,
however, if an Incentive Stock Option is granted to an individual who owns,
at the time the Incentive Stock Option is granted, more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Company or of a parent or subsidiary corporation of the Company (a
"Principal Stockholder"), the option price of the shares subject to the
Incentive Stock Option shall be at least one hundred ten percent (110%) of
the fair market value of the Common Stock at the time the Incentive Stock
Option is granted.
(d) No Incentive Stock Option granted under the Plan shall be
exercisable after the expiration of ten (10) years from the date of its
grant. However, if an Incentive Stock Option is granted to a Principal
Stockholder, such Incentive Stock Option shall not be exercisable after the
expiration of five (5) years from the date of its grant. Every Incentive
Stock Option granted under the Plan shall be subject to earlier termination
as expressly provided in Section 12 hereof.
(e) For purposes of determining stock ownership under this Section 6,
the attribution rules of Section 424(d) of the Code shall apply.
(f) For purposes of the Plan, fair market value shall be determined by
the Board of Directors or the Committee. If the Common Stock is listed on a
national securities exchange or traded on the Over-the-Counter market, fair
market value shall be the closing selling price or, if not available, the
closing bid price or, if not available, the high bid price of the Common
Stock quoted on such exchange, or on the Over-the-Counter market as
reported by the National Association of Securities Dealers Automated
Quotation ("NASDAQ") system or if the Common Stock is not listed on NASDAQ,
then by the National Quotation Bureau, Incorporated, as the case may be, on
the day immediately preceding the day on which the Option is granted or
exercised, as the case may be, or,
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if there is no selling or bid price on that day, the closing selling price,
closing bid price or high bid price on the most recent day which precedes
that day and for which such prices are available.
7. Non-Statutory Stock Options. The Board of Directors or the Committee may
grant Options under the Plan which are not intended to meet the requirements of
Section 422 of the Code, as well as Options which are intended to meet the
requirements of Section 422 of the Code but the terms of which provide that they
will not be treated as Incentive Stock Options (referred to herein as a
"Non-Statutory Stock Option"). Non-Statutory Stock Options which are not
intended to meet those requirements shall be subject to the following terms and
conditions:
(a) A Non-Statutory Stock Option may be granted to any individual or
entity eligible to receive an Option under the Plan pursuant to Section
4(b) hereof.
(b) The option price of the shares of Common Stock subject to a
Non-Statutory Stock Option shall be determined by the Board of Directors or
the Committee, in its sole discretion, at the time of the grant of the
Non-Statutory Stock Option.
(c) A Non-Statutory Stock Option granted under the Plan may be of such
duration as shall be determined by the Board of Directors or the Committee
(subject to earlier termination as expressly provided in Section 11
hereof).
8. Reload Feature. The Board of Directors or the Committee may grant
Options with a reload feature. A reload feature shall only apply when the option
price is paid by delivery of Common Stock (as set forth in Section 13(b)(ii)).
The Stock Option Agreement for the Options containing the reload feature shall
provide that the Option holder shall receive, contemporaneously with the payment
of the option price in shares of Common Stock, a reload stock option (the
"Reload Option") to purchase that number of shares of Common Stock equal to the
sum of (i) the number of shares of Common Stock used to exercise the Option, and
(ii) with respect to Non-Statutory Stock
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Options, the number of shares of Common Stock used to satisfy any tax
withholding requirement incident to the exercise of such Non-Statutory Stock
Option. The terms of the Plan applicable to the Option shall be equally
applicable to the Reload Option with the following exceptions: (i) the option
price per share of Common Stock deliverable upon the exercise of the Reload
Option, (A) in the case of a Reload Option which is an Incentive Stock Option
being granted to a Principal Stockholder, shall be one hundred ten percent
(110%) of the fair market value of a share of Common Stock on the date of grant
of the Reload Option and (B) in the case of a Reload Option which is an
Incentive Stock Option being granted to a person other than a Principal
Stockholder or is a Non-Statutory Stock Option, shall be the fair market value
of a share of Common Stock on the date of grant of the Reload Option; and (ii)
the term of the Reload Option shall be equal to the remaining option term of the
Option (including a Reload Option) which gave rise to the Reload Option. The
Reload Option shall be evidenced by an appropriate amendment to the Stock Option
Agreement for the Option which gave rise to the Reload Option. In the event the
exercise price of an Option containing a reload feature is paid by check and not
in shares of Common Stock, the reload feature shall have no application with
respect to such exercise.
9. Rights of Option Holders. The holder of any Option granted under the
Plan shall have none of the rights of a stockholder with respect to the stock
covered by his Option until such stock shall be transferred to him upon the
exercise of his Option.
10. Alternate Stock Appreciation Rights.
(a) Concurrently with, or subsequent to, the award of any Option to
purchase one or more shares of Common Stock, the Board of Directors or the
Committee may, in its sole discretion, subject to the provisions of the
Plan and such other terms and conditions as the Board of Directors or the
Committee may prescribe, award to the optionee with respect to each share
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of Common Stock covered by an Option ("Related Option"), a related
alternate stock appreciation right ("SAR"), permitting the optionee to be
paid the appreciation on the Related Option in lieu of exercising the
Related Option. An SAR granted with respect an Incentive Stock Option must
be granted together with the Related Option. An SAR granted with respect to
a Non-Statutory Stock Option may be granted together with, or subsequent
to, the grant of such Related Option.
(b) Each SAR granted under the Plan shall be authorized by the Board
of Directors or the Committee, and shall be evidenced by an SAR Agreement
which shall be executed by the Company and by the individual or entity to
whom such SAR is granted. The SAR Agreement shall specify the period during
which the SAR is exercisable, and such other terms and provisions not
inconsistent with the Plan.
(c) An SAR may be exercised only if and to the extent that its Related
Option is eligible to be exercised on the date of exercise of the SAR. To
the extent that a holder of an SAR has a current right to exercise, the SAR
may be exercised from time to time by delivery by the holder thereof to the
Company at its principal office (attention: Secretary) of a written notice
of the number of shares with respect to which it is being exercised. Such
notice shall be accompanied by the agreements evidencing the SAR and the
Related Option. In the event the SAR shall not be exercised in full, the
Secretary of the Company shall endorse or cause to be endorsed on the SAR
Agreement and the Related Option Agreement the number of shares which have
been exercised thereunder and the number of shares that remain exercisable
under the SAR and the Related Option and return such SAR and Related Option
to the holder thereof.
(d) The amount of payment to which an optionee shall be entitled upon
the exercise of each SAR shall be equal to one hundred percent (100%) of
the amount, if any, by which the fair market value of a share of Common
Stock on the exercise date exceeds the exercise price per
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share of the Related Option; provided, however, the Company may, in its
sole discretion, withhold from any such cash payment any amount necessary
to satisfy the Company's obligation for withholding taxes with respect to
such payment.
(e) The amount payable by the Company to an optionee upon exercise of
a SAR may, in the sole determination of the Company, be paid in shares of
Common Stock, cash or a combination thereof, as set forth in the SAR
Agreement. In the case of a payment in shares, the number of shares of
Common Stock to be paid to an optionee upon such optionee's exercise of an
SAR shall be determined by dividing the amount of payment determined
pursuant to Section 10(d) hereof by the fair market value of a share of
Common Stock on the exercise date of such SAR. For purposes of the Plan,
the exercise date of an SAR shall be the date the Company receives written
notification from the optionee of the exercise of the SAR in accordance
with the provisions of Section 10(c) hereof. As soon as practicable after
exercise, the Company shall either deliver to the optionee the amount of
cash due such optionee or a certificate or certificates for such shares of
Common Stock. All such shares shall be issued with the rights and
restrictions specified herein.
(f) SARs shall terminate or expire upon the same conditions and in the
same manner as the Related Options, and as set forth in Section 12 hereof.
(g) The exercise of any SAR shall cancel and terminate the right to
purchase an equal number of shares covered by the Related Option.
(h) Upon the exercise or termination of any Related Option, the SAR
with respect to such Related Option shall terminate to the extent of the
number of shares of Common Stock as to which the Related Option was
exercised or terminated.
(i) An SAR granted pursuant to the Plan shall be exercisable only by
the optionee hereof during the optionee's lifetime and, subject to the
provisions of Section 10(f) hereof.
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(j) An SAR granted pursuant to the Plan shall not be assigned,
transferred, pledged or hypothecated in any way (whether by operation of
law or otherwise) and shall not be subject to execution, attachment, or
similar process. Any attempted transfer, assignment, pledge, hypothecation,
or other disposition of any SAR or of any rights granted thereunder
contrary to the foregoing provisions of this Section 10(j), or the levy of
any attachment or similar process upon an SAR or such rights, shall be null
and void.
11. Transferability. No Option granted under the Plan shall be transferable
by the individual or entity to whom it was granted otherwise than by will or the
laws of descent and distribution, and, during the lifetime of such individual,
shall not be exercisable by any other person, but only by him.
12. Termination of Employment or Death.
(a) Subject to the terms of the Stock Option Agreement, if the
employment of an employee by, or the services of a non-employee Director
for, or consultant or advisor to, the Company or a subsidiary corporation
of the Company shall be terminated for cause or voluntarily by the
employee, non-employee Director, consultant or advisor, then his or its
Option shall expire forthwith. Subject to the terms of the Stock Option
Agreement, and except as provided in subsections (b) and (c) of this
Section 12, if such employment or services shall terminate for any other
reason, then such Option may be exercised at any time within three (3)
months after such termination, subject to the provisions of subsection (d)
of this Section 12. For purposes of the Plan, the retirement of an
individual either pursuant to a pension or retirement plan adopted by the
Company or at the normal retirement date prescribed from time to time by
the Company shall be deemed to be termination of such individual's
employment other than voluntarily or for cause. For purposes of this
subsection (a), an employee, non-employee Director, consultant or advisor
who
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leaves the employ or services of the Company to become an employee or
non-employee Director of, or a consultant or advisor to, a subsidiary
corporation of the Company or a corporation (or subsidiary or parent
corporation of the corporation) which has assumed the Option of the Company
as a result of a corporate reorganization or the like shall not be
considered to have terminated his employment or services.
(b) Subject to the terms of the Stock Option Agreement, if the holder
of an Option under the Plan dies (i) while employed by, or while serving as
a non-employee Director for or a consultant or advisor to, the Company or a
subsidiary corporation of the Company, or (ii) within three (3) months
after the termination of his employment or services other than voluntarily
by the employee or non-employee Director, consultant or advisor, or for
cause, then such Option may, subject to the provisions of subsection (d) of
this Section 12, be exercised by the estate of the employee or non-employee
Director, consultant or advisor, or by a person who acquired the right to
exercise such Option by bequest or inheritance or by reason of the death of
such employee or non- employee Director, consultant or advisor at any time
within one (1) year after such death.
(c) Subject to the terms of the Stock Option Agreement, if the holder
of an Option under the Plan ceases employment or services because of
permanent and total disability (within the meaning of Section 22(e)(3) of
the Code) while employed by, or while serving as a non- employee Director
for or consultant or advisor to, the Company or a subsidiary corporation of
the Company, then such Option may, subject to the provisions of subsection
(d) of this Section 12, be exercised at any time within one (1) year after
his termination of employment, termination of Directorship or termination
of consulting or advisory services, as the case may be, due to the
disability.
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(d) An Option may not be exercised pursuant to this Section 12 except
to the extent that the holder was entitled to exercise the Option at the
time of termination of employment, termination of Directorship, termination
of consulting or advisory services, or death, and in any event may not be
exercised after the expiration of the Option.
(e) For purposes of this Section 12, the employment relationship of an
employee of the Company or of a subsidiary corporation of the Company will
be treated as continuing intact while he is on military or sick leave or
other bona fide leave of absence (such as temporary employment by the
Government) if such leave does not exceed ninety (90) days, or, if longer,
so long as his right to re-employment is guaranteed either by statute or by
contract.
13. Exercise of Options.
(a) Unless otherwise provided in the Stock Option Agreement, any
Option granted under the Plan shall be exercisable in whole at any time, or
in part from time to time, prior to expiration. The Board of Directors or
the Committee, in its absolute discretion, may provide in any Stock Option
Agreement that the exercise of any Options granted under the Plan shall be
subject (i) to such condition or conditions as it may impose, including,
but not limited to, a condition that the holder thereof remain in the
employ or service of, or continue to provide consulting or advisory
services to, the Company or a subsidiary corporation of the Company for
such period or periods from the date of grant of the Option as the Board of
Directors or the Committee, in its absolute discretion, shall determine;
and (ii) to such limitations as it may impose, including, but not limited
to, a limitation that the aggregate fair market value of the Common Stock
with respect to which Incentive Stock Options are exercisable for the first
time by any employee during any calendar year (under all plans of the
Company and its parent and subsidiary corporations) shall not exceed one
hundred thousand dollars ($100,000). In addition, in the event that under
any Stock Option Agreement the
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aggregate fair market value of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any employee
during any calendar year (under all plans of the Company and its parent and
subsidiary corporations) exceeds one hundred thousand dollars ($100,000),
the Board of Directors or the Committee may, when shares are transferred
upon exercise of such Options, designate those shares which shall be
treated as transferred upon exercise of an Incentive Stock Option and those
shares which shall be treated as transferred upon exercise of a Non-
Statutory Stock Option.
(b) An Option granted under the Plan shall be exercised by the
delivery by the holder thereof to the Company at its principal office
(attention of the Secretary) of written notice of the number of shares with
respect to which the Option is being exercised. Such notice shall be
accompanied, or followed within ten (10) days of delivery thereof, by
payment of the full option price of such shares, and payment of such option
price shall be made by the holder's delivery of (i) his check payable to
the order of the Company, or (ii) previously acquired Common Stock, the
fair market value of which shall be determined as of the date of exercise,
or by the holder's delivery of any combination of the foregoing (i) and
(ii).
14. Adjustment Upon Change in Capitalization.
(a) In the event that the outstanding Common Stock is hereafter
changed by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination of shares,
reverse split, stock dividend or the like, an appropriate adjustment shall
be made by the Board of Directors or the Committee in the aggregate number
of shares available under the Plan, in the number of shares and option
price per share subject to outstanding Options, and in any limitation on
exerciseability referred to in Section 13(a)(ii) hereof which is set forth
in outstanding Incentive Stock Options. If the Company shall be
reorganized, consolidated, or merged
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with another corporation, the holder of an Option shall be entitled to
receive upon the exercise of his Option the same number and kind of shares
of stock or the same amount of property, cash or securities as he would
have been entitled to receive upon the happening of any such corporate
event as if he had been, immediately prior to such event, the holder of the
number of shares covered by his Option; provided, however, that in such
event the Board of Directors or the Committee shall have the discretionary
power to take any action necessary or appropriate to prevent any Incentive
Stock Option granted hereunder which is intended to be an "incentive stock
option" from being disqualified as such under the then existing provisions
of the Code or any law amendatory thereof or supplemental thereto.
(b) Any adjustment in the number of shares shall apply proportionately
to only the unexercised portion of the Option granted hereunder. If
fractions of a share would result from any such adjustment, the adjustment
shall be revised to the next lower whole number of shares.
15. Further Conditions of Exercise.
(a) Unless prior to the exercise of the Option the shares issuable
upon such exercise have been registered with the Securities and Exchange
Commission pursuant to the Act, the notice of exercise shall be accompanied
by a representation or agreement of the person or estate exercising the
Option to the Company to the effect that such shares are being acquired for
investment purposes and not with a view to the distribution thereof, and
such other documentation as may be required by the Company, unless in the
opinion of counsel to the Company such representation, agreement or
documentation is not necessary to comply with such Act.
(b) The Company shall not be obligated to deliver any Common Stock
until it has been listed on each securities exchange or market on which the
Common Stock may then be listed or until there has been qualification under
or compliance with such federal or state laws, rules
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or regulations as the Company may deem applicable. The Company shall use
reasonable efforts to obtain such listing, qualification and compliance.
16. Effectiveness of the Plan. The Plan was adopted by the Board of
Directors of Coastal on August 1, 1996 and adopted as the Plan of the Company
pursuant to the merger of Coastal with and into the Company effective as of
October 18, 1996. The Plan was originally approved by the shareholders of
Coastal on October 16, 1996. The stockholders of the Company approved the
increase of the maximum number of Common Shares which may be issued pursuant to
Options granted under the Plan by 8,000,000 shares, from 2,000,000 to 10,000,000
shares, on January 20, 2000.
17. Termination, Modification and Amendment.
(a) The Plan (but not Options or SARs previously granted under the
Plan) shall terminate on July 31, 2006, which is within ten (10) years from
the date of its adoption by the Board of Directors of Coastal, or sooner as
hereinafter provided, and no Option shall be granted after termination of
the Plan.
(b) The Plan may from time to time be terminated, modified, or amended
by the affirmative vote of the holders of a majority of the outstanding
shares of capital stock of the Company present at a meeting of shareholders
and entitled to vote thereon (or, in the case of action by written consent,
a majority of the outstanding shares of capital stock of the Company
entitled to vote thereon).
(c) The Board of Directors may at any time, on or before the
termination date referred to in Section 16(a) hereof, terminate the Plan,
or from time to time make such modifications or amendments to the Plan as
it may deem advisable; provided, however, that the Board of Directors shall
not, without approval by the affirmative vote of the holders of a majority
of the outstanding
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shares of capital stock of the Company present at a meeting of shareholders
and entitled to vote thereon (or, in the case of action by written consent,
a majority of the outstanding shares of capital stock of the Company
entitled to vote thereon), increase (except as otherwise provided by
Section 14 hereof) the maximum number of shares as to which Incentive Stock
Options may be granted hereunder, change the designation of the employees
or class of employees eligible to receive Incentive Stock Options, or make
any other change which would prevent any Incentive Stock Option granted
hereunder which is intended to be an "incentive stock option" from
disqualifying as such under the then existing provisions of the Code or any
law amendatory thereof or supplemental thereto.
(d) No termination, modification, or amendment of the Plan may,
without the consent of the individual or entity to whom any Option shall
have been granted, adversely affect the rights conferred by such Option.
18. Not a Contract of Employment. Nothing contained in the Plan or in any
Stock Option Agreement executed pursuant hereto shall be deemed to confer upon
any individual or entity to whom an Option is or may be granted hereunder any
right to remain in the employ or service of the Company or a subsidiary
corporation of the Company or any entitlement to any remuneration or other
benefit pursuant to any consulting or advisory arrangement.
19. Use of Proceeds. The proceeds from the sale of shares pursuant to
Options granted under the Plan shall constitute general funds of the Company.
20. Indemnification of Board of Directors or Committee. In addition to such
other rights of indemnification as they may have, the members of the Board of
Directors or the Committee, as the case may be, shall be indemnified by the
Company to the extent permitted under applicable law against all costs and
expenses reasonably incurred by them in connection with any
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action, suit, or proceeding to which they or any of them may be a party by
reason of any action taken or failure to act under or in connection with the
Plan or any rights granted thereunder and against all amounts paid by them in
settlement thereof or paid by them in satisfaction of a judgment of any such
action, suit or proceeding, except a judgment based upon a finding of bad faith.
Upon the institution of any such action, suit, or proceeding, the member or
members of the Board of Directors or the Committee, as the case may be, shall
notify the Company in writing, giving the Company an opportunity at its own cost
to defend the same before such member or members undertake to defend the same on
his or their own behalf.
21. Definitions. For purposes of the Plan, the terms "parent corporation"
and "subsidiary corporation" shall have the meanings set forth in Sections
424(e) and 424(f) of the Code, respectively, and the masculine shall include the
feminine and the neuter as the context requires.
22. Governing Law. The Plan shall be governed by, and all questions arising
hereunder shall be determined in accordance with, the laws of the State of
Delaware.
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