<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 28, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AUDIOHIGHWAY.COM
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
CALIFORNIA 77-0377306
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification
Organization) No.)
</TABLE>
20300 STEVENS CREEK BOULEVARD, CUPERTINO, CALIFORNIA
95014
(Address of Principal Executive Offices)
AMENDED AND RESTATED 1996 STOCK OPTION PLAN
(Full Title of the Plan)
NATHAN M. SCHULHOF
PRESIDENT AND CHIEF EXECUTIVE OFFICER
20300 STEVENS CREEK BOULEVARD
CUPERTINO, CALIFORNIA 95014
(Name and Address of Agent For Service)
(408) 861-4000
(Telephone Number, Including Area Code, of Agent For Service)
------------------------
COPY TO:
GLENN A. SMITH
Heller Ehrman White & McAuliffe
525 University Avenue
Palo Alto, California 94301-1908
Telephone: (650) 324-7023
Facsimile: (650) 324-0638
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED PER SHARE(1) OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, no par value, issuable under
Amended and Restated 1996 Stock Option
Plan..................................... 1,800,000 $8.40 $15,120,000 $3,991.68
</TABLE>
(1) Estimated solely for the purpose of computing the amount of registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based
on the average of the high and low prices of the Registrant's Common Stock
reported on the Nasdaq Small Cap Market on January 25, 2000.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents, which have been filed by audiohighway.com (the
"Registrant") with the Securities and Exchange Commission (the "Commission"),
are hereby incorporated by reference in this Registration Statement:
(a) Registrant's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998;
(b) Registrant's Quarterly Report on Form 10-QSB for the quarterly period
ended March 31, 1999;
(c) Registrant's Quarterly Report on Form 10-QSB for the quarterly period
ended June 30, 1999;
(d) Registrant's Quarterly Report on Form 10-QSB for the quarterly period
ended September 30, 1999; and
(e) The description of the Common Stock of the Registrant contained in the
registration statement filed by audiohighway.com under the Exchange Act
registering such Common Stock under Section 12 of the Exchange Act, as
amended.
All documents subsequently filed pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act and prior to the termination of the offering of the
securities offered hereby shall be deemed to be incorporated by reference into
this registration statement and to be a part hereof from the respective dates of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this registration statement to the extent that a
statement contained herein, or in any other subsequently filed document that
also is or is deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement 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
Pursuant to Section 204(a) and 317 of the California Corporations Code, as
amended, the Registrant has included in its Articles of Incorporation and Bylaws
provisions regarding the indemnification of Officers and Directors of the
Registrant.
Article FIVE of Registrant's Amended Articles of Incorporation provides as
follows:
"The liability of directors of the corporation for monetary damages shall be
eliminated to the fullest extent permissible under California law, as the same
exists or may hereafter be amended. Any repeal or modification of the foregoing
provisions of this Article FIVE by the shareholders of this corporation or
otherwise shall not adversely affect any right or protection of a director or
former director of this corporation existing at the time of such repeal or
modification. The elimination of personal liability set forth in this Article
FIVE under the General Corporation Law of the State of California shall not be
denied or limited by the corporation's bylaws."
2
<PAGE>
Article SIX of Registrant's Amended Articles of Incorporation provides as
follows:
"The corporation is authorized to indemnify its agents to the fullest extent
permissible under California law, as the same exists or may hereafter be
amended. For purposes of this provision, the term "agent" has the meaning set
forth from time to time in Section 317 of the California Corporations Code or
any successor statute. Any repeal or modification of the foregoing provisions of
this Article SIX by the shareholders of this corporation or otherwise shall not
adversely affect any right or protection of an agent or former agent of this
corporation existing at the time of such repeal or modification. The
indemnification provisions set forth in this Article SIX under the General
Corporation Law of the State of California shall not be denied or limited by the
corporation's bylaws."
Article X, section 4 of the Registrant's Bylaws, as amended, provides as
follows:
"The liability of the directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
The corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) for breach of duty
to the corporation and shareholders through bylaw provisions or through
agreements with the agents, or both, in excess of the indemnification otherwise
permitted by Section 317 of the California Corporations Code, subject to the
limits on such excess indemnification set forth in Section 204 of the California
Corporations Code. In any event, the corporation shall have the right to
purchase, and maintain insurance on behalf of any such persons whether or not
the corporation would have the power to indemnify such person against the
liability insured against."
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
ITEM NO. DESCRIPTION OF ITEM
- ----------- ----------------------------------------------------------------------------------------------
<S> <C>
5.1 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Grant Thornton LLP, Independent Certified Public Accountants
23.2 Consent of Heller Ehrman White & McAuliffe (filed as part of Exhibit 5.1)
24.1 Power of Attorney (See page II-4)
99.1 Amended and Restated 1996 Stock Option Plan
</TABLE>
ITEM 9. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement;
(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) do not apply if
the information required to be included in a post-effective amendment by
those
3
<PAGE>
paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or 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
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining liability under the Securities Act, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is
incorporated by reference in the registration statement shall be deemed a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
4
<PAGE>
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 city
of Cupertino, State of California, on this 28th day of January, 2000.
<TABLE>
<S> <C> <C>
AUDIOHIGHWAY.COM
By: /s/ NATHAN M. SCHULHOF
-----------------------------------------
Nathan M. Schulhof
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY TO SIGN AMENDMENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below does hereby constitute and appoint Nathan M. Schulhof and Grant Jasmin
with full power of substitution, such person's true and lawful attorneys-in-fact
and agents for such person in such person's name, place and stead, in any and
all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement on Form S-8 and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents 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 in order to
effectuate the same as fully, to all intents and purposes, as he or such person
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-8 has been signed by the following persons in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- --------------------------------------------- --------------------------------------------- -------------------
<C> <S> <C>
/s/ GRANT JASMIN Executive Vice President, Chief Operating
------------------------------------ Officer, Vice President, Finance, Secretary January 28, 2000
Grant Jasmin and Director
/s/ NATHAN M. SCHULHOF
------------------------------------ President, Chief Executive Officer and January 28, 2000
Nathan M. Schulhof Director (Principal Executive Officer)
/s/ GREGORY SUTYAK
------------------------------------ Chief Financial Officer (Principal Financial January 28, 2000
Gregory Sutyak and Accounting Officer)
/s/ LEE M. GAMMILL
------------------------------------ Director January 28, 2000
Lee M. Gammill
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- --------------------------------------------- --------------------------------------------- -------------------
<C> <S> <C>
/s/ ROBERT S. LEFF
------------------------------------ Director January 28, 2000
Robert S. Leff
/s/ MUNINDERPAL REHKI
------------------------------------ Director January 28, 2000
Muninderpal Rehki
/s/ MARVIN M. REISS
------------------------------------ Director January 28, 2000
Marvin M. Reiss
</TABLE>
6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
ITEM NO. DESCRIPTION OF ITEM
- ----------- -----------------------------------------------------------------------------------------------
<C> <S> <C>
5.1 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Grant Thornton LLP, Independent Certified Public Accountants
23.2 Consent of Heller Ehrman White & McAuliffe (filed as part of Exhibit 5.1)
24.1 Power of Attorney (See page II-4)
99.1 Amended and Restated 1996 Stock Option Plan
</TABLE>
7
<PAGE>
EXHIBIT 5.1
OPINION OF HELLER EHRMAN WHITE & MCAULIFFE
January 28, 2000
audiohighway.com
20300 Stevens Creek Blvd
Cupertino, CA 95014
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to audiohighway.com, a California corporation (the
"Company"), in connection with the Registration Statement on Form S-8 (the
"Registration Statement") which the Company proposes to file with the Securities
and Exchange Commission on or about January 28, 2000 for the purposes of
registering under the Securities Exchange Act of 1933, as amended, 1,800,000
shares of its Common Stock, no par value (the "Shares"). The Shares are
additional Shares issuable under the Company's Amended and Restated 1996 Stock
Option Plan (the "Plan").
We have assumed the authenticity of all records, documents and instruments
submitted to us as originals, the genuineness of all signatures, the legal
capacity of natural persons and the conformity to the originals of all records,
documents and instruments submitted to us as copies.
In rendering our opinion, we have examined the following records, documents
and instruments:
(a) The Amended Articles of Incorporation of the Company, certified by the
California Secretary of State as of November 19, 1999, and certified to
us by an officer of the Company as being complete and in full force as of
the date of this opinion;
(b) The Bylaws of the Company certified to us by an officer of the Company
as being complete and in full force and effect as of the date of this
opinion;
(c) A Certificate of an officer of the Company (i) attaching records
certified to us as constituting all records of proceedings and actions of
the Board of Directors, including any committee thereof, and shareholders
of the Company relating to the Shares, and the Registration Statement,
and (ii) certifying as to certain factual matters;
(d) The Registration Statement;
(e) The Plan;
(f) A letter from U.S. Stock Transfer Corporation, the Company's transfer
agent, dated January 28, 2000, as to the number of shares of the
Company's common stock that were outstanding on January 27, 2000.
This opinion is limited to the federal law of the United States of America
and the laws of the State of California, and we disclaim any opinion as to the
laws of any other jurisdiction. We further disclaim any opinion as to any other
statute, rule, regulation, ordinance, order or other promulgation of any other
jurisdiction or any regional or local governmental body or as to any related
judicial or administrative opinion.
8
<PAGE>
Based on the foregoing and our examination of such questions of law as we
have deemed necessary or appropriate for the purpose of this opinion, and
assuming that (i) the Registration Statement becomes and remains effective
during the period when the Shares are offered and issued, (ii) the full
consideration stated in the Plan is paid for each Share and that such
consideration in respect of each Share includes payment of cash or other lawful
consideration, (iii) appropriate certificates evidencing the Shares are executed
and delivered by the Company, and (iv) all applicable securities laws are
complied with, it is our opinion that when issued and sold by the Company, after
payment therefore in the manner provided in the Plan and Registration Statement,
the Shares will be legally issued, fully paid and nonassessable.
This opinion is rendered to you in connection with the Registration
Statement and is solely for your benefit. This opinion may not be relied upon by
you for any other purpose, or relied upon by any other person, firm, corporation
or other entity for any purpose, without our prior written consent. We disclaim
any obligation to advise you of any change of law that occurs, or any facts of
which we may become aware, after the date of this opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Heller Ehrman White & McAuliffe
9
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated April 14, 1999 accompanying the financial
statements of audiohighway.com appearing in the 1998 Annual Report of the
Company to its stockholders included in the Annual Report on Form 10-KSB for the
year ended December 31, 1998, which are incorporated by reference in this
Registration Statement on Form S-8 pertaining to the Amended and Restated 1996
Stock Option Plan. We consent to the incorporation by reference in the
Registration Statement of the aforementioned report.
GRANT THORNTON LLP
San Jose, California
January 28, 2000
10
<PAGE>
EXHIBIT 99.1
AMENDED AND RESTATED 1996 STOCK OPTION PLAN
1. PURPOSE. This Plan is intended to attract and retain highly qualified
individuals for positions of substantial responsibility, provide additional
incentives to Employees and Consultants of the Company and its Subsidiaries, and
promote the success of the Company's business.
2. DEFINED TERMS. The meanings of defined terms (generally, capitalized
terms) in this Plan are provided in Section 22 ("Glossary").
3. STOCK SUBJECT TO PLAN. Subject to Section 14, a maximum aggregate of
1,800,000 Shares may be issued under this Plan. The Shares may be authorized,
but unissued, or reacquired. If an Option expires or becomes unexercisable for
any reason, any unpurchased Optioned Shares shall be available for future
issuance under this Plan. Upon exercise of an Option, Shares retained because
other Shares are tendered in payment of the exercise price or to satisfy any
withholding tax obligations due to the exercise do not reduce the number of
Shares authorized for issuance.
4. ADMINISTRATION.
(a) IN GENERAL. This Plan shall be administered by the Board or a
committee appointed by the Board. Once appointed, a committee shall serve until
otherwise directed by the Board. From time to time, the Board may increase the
size of the committee and appoint additional members, remove members (with or
without cause) and appoint new members in their stead, fill vacancies however
caused, and terminate the committee and thereafter directly administer this
Plan.
(b) OFFICERS AND DIRECTORS. The Board may provide for administration of
this Plan with respect to Employees who are also officers or directors of the
Company by a Committee constituted so as to permit this Plan to comply as a
discretionary plan with Rule 16b-3 promulgated under the Exchange Act or any
successor thereto. A Committee appointed under this Section 4(b) may be separate
from any Committee appointed to administer this Plan with respect to Employees
who are neither officers nor directors.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of this Plan
and in the case of a Committee, the specific duties delegated by the Board, the
Administrator shall have the authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock;
(ii) to grant Options to such Consultants and Employees as it selects
from time to time;
(iii) to determine the terms and conditions of each Option granted,
including without limitation whether an Option is granted as an ISO or a
NSO;
(iv) to approve forms of agreement for use under this Plan;
(v) to determine whether and under what circumstances to offer to buy
out an Option for cash or Shares under Section 13;
(vi) to modify grants of Options to participants who are foreign
nationals or employed outside of the United States in order to recognize
differences in local law, tax policies, or customs.
(vi) to reduce the exercise price of any Option to the then-current Fair
Market Value if the Fair Market Value of the Optioned Stock has declined
since the date the Option was granted;
(viii) to construe and interpret the terms of this Plan and Options
granted pursuant to this Plan.
11
<PAGE>
(c) ADMINISTRATOR'S DECISIONS BINDING. All decisions, determinations, and
interpretations of the Administrator shall be final and binding on all Optionees
and any other holders of Options.
5. ELIGIBILITY.
(a) NSOS/ISOS. Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he or she is
otherwise eligible, be granted additional Options.
(b) LIMIT ON NUMBER OF SHARES.
(i) No Employee shall be granted, in any fiscal year of the Company,
Options to purchase more than 1,000,000 Shares, adjusted as described in
Section 14.
(ii) If an Option is canceled in the fiscal year of the Company in which
it was granted (other than in connection with a transaction described in
Section 14), the canceled Option will be counted against the limit set forth
in subsection (i). For this purpose, if the exercise price of an Option is
reduced, the transaction will be treated as a cancellation of the Option and
the grant of a new Option.
6. TERM OF OPTION. The term of each Option shall be determined by the
Administrator at the time of grant but shall not exceed ten years. In the case
of an ISO granted to an Optionee who, at the time of grant, owns stock
representing more than ten percent of the voting power of all classes of stock
of the Company or any Parent or Subsidiary, the Option term shall not exceed
five years.
7. DATE OF GRANT. Unless otherwise determined by the Administrator, the
date of grant of an Option shall be the date on which the Administrator
completes the actions necessary to grant the Option. Notice of the grant shall
be given to the Optionee within a reasonable time after the date of the grant.
8. EXERCISE PRICE AND FORM OF CONSIDERATION.
(a) The per-Share exercise price of an Option shall be determined by the
Administrator at the time of grant, but:
(i) In the case of an ISO:
(A) granted to an Employee who, at the time of the grant, owns stock
representing more than ten percent of the voting power of all classes
of stock of the Company or any Parent or Subsidiary, the per-Share
exercise price shall be at least 110% of the Fair Market Value on the
date of grant; or
(B) granted to any other Employee, the per-Share exercise price shall be
at least the Fair Market Value on the date of grant.
(ii) In the case of a NSO granted to any person, the per-Share exercise
price shall be no less than 85% of the Fair Market Value on the date of
grant.
(b) FORM OF PAYMENT. Payment for Shares upon exercise of an Option shall
be made in any lawful consideration approved by the Administrator and may,
without limitation, consist of (1) cash, (2) check, (3) promissory note,
(4) other Shares that have a total Fair Market Value on the date of payment
equal to the aggregate exercise price of the Shares as to which Option is
exercised, (5) delivery by a broker or brokerage firm approved by the
Administrator of a properly executed exercise notice together with payment of
the exercise price and such other documentation as the Administrator shall
require, or (6) any combination of the foregoing.
12
<PAGE>
9. EXERCISE.
(a) VESTING. Each Option shall be exercisable at such times and under such
conditions as determined by the Administrator at the time of grant, and as are
otherwise permissible under the terms of this Plan, including without limitation
performance criteria with respect to the Company and/or the Optionee.
(c) MANNER OF EXERCISE; RIGHTS AS A SHAREHOLDER. Unless otherwise allowed
by the Administrator, an Option shall be exercised by delivery of written notice
of exercise (in a form approved by the Administrator) to the Company in
accordance with the terms of the Option by the person entitled to exercise the
Option accompanied by (i) full payment for the number of whole Shares with
respect to which the Option is exercised, and (ii) payment (or provision for
payment) of withholding taxes pursuant to Subsection (f), below ("Notice"). The
Optionee shall be treated as a shareholder of the Company with respect to the
purchased Shares upon receipt of the Notice. An Option may not be exercised for
a fraction of a Share.
(d) OPTIONEE REPRESENTATIONS. If Shares purchasable pursuant to the
exercise of an Option have not been registered under the Securities Act of 1933,
as amended, at the time the Option is exercised, the Optionee shall, if required
by the Administrator, as a condition to exercise of all or any portion of the
Option, deliver to the Company an investment representation statement in a form
approved by the Administrator.
(e) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. If an Optionee's
Continuous Service terminates the Optionee (or the Optionee's estate or heirs,
if termination of Continuous Service is due to death or the Optionee dies during
the post-termination exercise period of the Option) may exercise the Option,
(i) only within such period of time as is determined by the Administrator (but
no later than the expiration date determined by the Administrator at the time of
grant) and the Option shall terminate at the end of that period, and
(ii) unless otherwise determined by the Administrator, only to the extent that
the Optionee was entitled to exercise it at the date of termination. Unless
otherwise determined by the Administrator, the limits applicable under clause
(i) shall be: (A) 12 months if termination is due to total and permanent
disability, (B) six months if termination is due to death or disability that is
not total and permanent, and (C) three months if termination is for other
reasons.
(f) TAX WITHHOLDING. The Company's obligation to deliver Shares upon
exercise of an Option is subject to payment (or provision for payment
satisfactory to the Administrator) by the Optionee of all federal, state, and
local income and employment taxes that the Administrator determines in its
discretion to be due as a result of the exercise of the Option or sale of the
Shares. The Administrator may allow the Optionee to elect at the time of
exercise of an Option to have withheld, from the Shares otherwise to be
delivered upon the exercise, Shares with an aggregate Fair Market Value equal to
a percentage (not more than 100%) designated by the Optionee of the withholding
taxes due upon exercise.
10. NON-EMPLOYEE DIRECTOR OPTION GRANTS.
(a) INITIAL GRANTS. On the date of his or her first attendance at a duly
called meeting of the Board, each non-Employee Director elected or appointed to
the Board for the first time after October 21, 1999 office shall, automatically
be granted a NSO to purchase 75,000 Shares. Each non-Employee Director in office
on October 21, 1999 is granted on that date a NSO to purchase 75,000 Shares.
(b) ANNUAL GRANTS. On the date of his or her first attendance at a duly
called meeting of the Board during a calendar year, each non-Employee Director
shall automatically be granted a NSO to purchase 10,000 Shares; PROVIDED,
HOWEVER, a non-Employee Director shall not receive a grant under this Section
10(b) in the same calendar year in which he or she receives a grant under
Section 10(a).
13
<PAGE>
(c) TERMS AND CONDITIONS. The terms and conditions of each Option granted
pursuant to this Section 10 shall be as follows:
(i) The term of the Option shall be ten years from the date of grant;
(ii) The exercise price per Share shall be 100% of Fair Market Value on
the date of grant;
(iii) The Option shall be fully exercisable as of the date of grant;
(iv) Except as provided below, the Option shall terminate on the date on
which the Optionee's service as a Director terminates, PROVIDED, HOWEVER,
that if such service terminates as a result of disability or death, the
Optionee (or his or her estate or beneficiary) may exercise the NSO within
12 months following the date of termination (but in no event after
expiration of the option term); and
(v) The other terms and conditions of the Option shall be consistent
with the provisions of this Plan.
11. RULE 16B-3. Except to the extent determined by the Administrator,
Options granted to persons subject to Section 16(b) of the Exchange Act shall
comply with Rule 16b-3 and shall contain such terms as may be required or
desirable to qualify Plan transactions for the maximum exemption from Section 16
of the Exchange Act.
12. NON-TRANSFERABILITY OF OPTIONS. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised or purchased
during the lifetime of the Optionee, only by the Optionee.
13. BUYOUT PROVISIONS. The Administrator may at any time offer to buy out
for a payment in cash or Shares, an Option previously granted, based on terms
and conditions that the Administrator establishes and communicates to the
Optionee at the time the offer is made.
14. CHANGES IN CAPITALIZATION OR CONTROL.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the number of shares of Optioned Stock and the
number of Shares that have been authorized for issuance under this Plan but as
to which no Options have then been granted or that have been returned to this
Plan upon cancellation or expiration of an Option, as well as the price per
share of Optioned Stock, shall be proportionately adjusted for any change in the
number of issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
change in the number of issued Shares effected without receipt of consideration
by the Company (not counting Shares issued upon conversion of convertible
securities of the Company as "effected without receipt of consideration"). Such
adjustment shall be made by the Board and shall be final, binding, and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no consequent adjustment shall be made with respect
to, the number or price of Shares subject to this Plan.
(b) DISSOLUTION OR LIQUIDATION. If the Board approves a proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee at least 15 days before the proposed action. To the extent not
previously exercised, each Option shall then terminate immediately before
consummation of the proposed action.
(c) MERGER OR ASSET SALE. If the Company merges with or into another
corporation, or sells all or substantially all of its assets, and if the
successor corporation or its Parent has not, by the 15th day before the
effective time of the merger or sale (the Effective Time"), agreed to assume
each outstanding Option, or to substitute an equivalent option, at the Effective
Time, then: (i) each outstanding Option shall be fully exercisable as to all of
its Optioned Shares until the Effective Time,
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(ii) the Administrator shall promptly so notify the Optionees, and (iii) each
Option shall terminate at the Effective Time.
(d) CHANGE IN CONTROL. Unless the Administrator, in its discretion,
determines otherwise no less than 14 days before a Change in Control occurs, all
Options shall become fully exercisable beginning ten days before the Change in
Control. Notwithstanding the previous sentence, the Administrator may provide at
the time of grant of an Option that the Option shall become fully exercisable
upon, or a stated period before, a Change in Control even if the Administrator
makes an inconsistent determination pursuant to this Section 14(d)
(e) CERTAIN DISTRIBUTIONS. If the Company makes a distribution to its
shareholders of securities of any other entity or other assets (other than
dividends payable in cash or stock of the Company) without receipt of
consideration, the Administrator may, in its discretion, appropriately adjust
the exercise price of each outstanding Option to reflect the distribution.
15. AMENDMENTS. The Board may at any time amend, alter, suspend, or
discontinue this Plan, but no such action shall impair the rights of any
Optionee under any then-outstanding Option without his or her prior written
consent.
16. SECURITIES REGULATION REQUIREMENTS.
(a) COMPLIANCE WITH RULE; BUY-OUT OFFER. In general, Shares shall not be
issued pursuant to the exercise of an Option unless the exercise of the Option
and issuance of the Shares comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, the requirements
of any stock exchange upon which the Shares may then be listed, and the
requirements of any regulatory body having jurisdiction. If when the Company
receives notice of exercise of an Option, the Administrator believes in its
discretion that the period before Shares may be issued will exceed 21 days, the
Administrator shall (unless it determines that such an offer is itself prevented
by the rules described in the preceding sentence) make an offer pursuant to
Section 13 to buy out the portion of the Option corresponding to the number of
Shares whose issuance is thus prevented. The buy-out offer shall be valid for no
less than 21 days.
(b) OPTIONEE INVESTMENT REPRESENTATION. As a condition to the exercise of
an Option, the Company may require the person exercising the Option to represent
and warrant that the Shares are being purchased only for investment and without
any present intention to sell or distribute the Shares if, in the opinion of
counsel for the Company, such a representation is required by law.
17. WRITTEN OPTION AGREEMENTS. Options shall be evidenced by written
agreements in a form the Administrator approves from time to time. The written
agreement shall designate the Option as either an Incentive Stock Option or a
Nonstatutory Stock Option. Delay in executing a written agreement shall not
affect the date of grant of an Option; however, an Option may not be exercised
until a written agreement has been executed by the Company and the Optionee.
18. SHAREHOLDER APPROVAL. This Plan is subject to approval by the
shareholders of the Company within 12 months after the Board adopts this Plan.
Shareholder approval shall be obtained in the degree and manner required under
applicable state and federal law and the rules of any stock exchange upon which
the Common Stock is listed.
19. INFORMATION TO OPTIONEES. The Company shall provide to each Optionee
copies of financial statements at least annually, at the same time and in the
same form as it furnishes such information to its shareholders. The Company
shall not be required to provide such statements to key employees whose duties
assure their access to equivalent information.
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20. TERM OF PLAN. This Plan shall become effective upon the earlier to
occur of adoption by the Board of Directors or approval by the shareholders of
the Company as described in Section 18. It shall continue in effect for a term
of ten years unless sooner terminated under Section 15.
21. NO RIGHT TO EMPLOYMENT. This Plan shall not confer upon any Optionee
any right with respect to continuation of employment or consulting relationship
with the Company, nor shall it interfere in any way with such Optionee's right
or the Company's right to terminate his or her employment or consulting
relationship at any time, with or without cause.
22. DEFINITIONS., The following definitions apply for purposes of this
Plan:
(a) "ADMINISTRATOR" means the Board or a Committee appointed under Section
4.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CHANGE IN CONTROL" means a change in ownership or control of the
Company by either:
(i) the direct or indirect acquisition by any person or related group of
persons of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than 50% of the total combined
voting power of the Company's outstanding securities pursuant to a tender or
exchange offer made directly to the Company's shareholders that the Board
does not recommend that the shareholders accept, or
(ii) a change in composition of the Board over a period of 36
consecutive months such that a majority of the Board ceases, by reason of
one or more contested elections for Board membership, to be composed of
individuals who either (A) have been Board members continuously since the
beginning of that period or (B) have been elected or nominated for election
as Board members during that period by at least a majority of the Board
members described in clause (A) who were in office when the Board approved
the election or nomination.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMON STOCK" means the Common Stock of the Company.
(f) "COMPANY" means audiohighway.com, a California corporation.
(g) "CONSULTANT" means any person, other than an Employee, who is engaged by
the Company or any Parent or Subsidiary to perform consulting or advisory
services.
(h) "CONTINUOUS SERVICE" means that an Optionee's employment or consulting
relationship with the Company or a Parent or Subsidiary has not been interrupted
or terminated. Continuous Service is not interrupted by any (i) leave of absence
approved by the Company, (ii) transfer between locations of the Company or
between the Company, a Parent, a Subsidiary, or any successor, or (iii) change
in status from Employee to Consultant or Consultant to Employee.
(i) "DIRECTOR" means any member of the Board in his or her capacity as such.
(j) "EMPLOYEE" means any person employed by the Company or any Parent or
Subsidiary of the Company.
(k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(l) "FAIR MARKET VALUE" means, as of any date, the fair market value of
Common Stock determined as follows:
(i) If the Common Stock is quoted on an established stock exchange or
national market system, including without limitation the National
Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ")
National Market System, Fair Market Value shall be the closing sales price
(or the closing bid, if no sales are reported) as quoted on that exchange or
system for the
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day of the determination, as reported in THE WALL STREET JOURNAL or an
equivalent source, or if the determination date is not a trading day, then
on the most recent preceding trading day;
(ii) If the Common Stock is quoted on NASDAQ (but not on the National
Market System) or regularly quoted by a recognized securities dealer but
selling prices are not reported, Fair Market Value shall be the mean between
the high bid and low asked prices for the Common Stock on the day of the
determination, or on the most recent preceding trading day if the
determination date is not a trading day; or
(iii) In the absence of an established market for the Common Stock, Fair
Market Value shall be determined by the Administrator.
(m) "INCENTIVE STOCK OPTION" or "ISO" means an Option intended to qualify as
an "incentive stock option" within the meaning of Section 422 of the Code.
(n) "NONSTATUTORY STOCK OPTION" or "NSO" means an Option not intended to
qualify as an ISO.
(o) "OPTION" means a stock option granted pursuant to this Plan.
(p) "OPTIONED SHARES" means the Shares subject to an Option.
(q) "OPTIONEE" means an Employee, Consultant, or Director who receives an
Option.
(r) "PARENT" means a "parent corporation," present or future, as defined in
Section 424(e) of the Code, or any successor provision.
(s) "PLAN" means this audiohighway.com 1996 Stock Option Plan.
(t) "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange Act, as the
same may be amended from time to time, or any successor provision.
(u) "SHARE" means a share of the Common Stock, as adjusted in accordance
with Section 14.
(v) "SUBSIDIARY" means a "subsidiary corporation," whether now or hereafter
existing, as defined in Section 424(f) of the Code, or any successor provision.
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