<PAGE>
As filed with the Securities and Exchange Commission on August 10, 1998
Registration No. 333-________________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------------
GEOCITIES
(Exact name of registrant as specified in its charter)
Delaware 95-4515867
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
1918 Main Street, Suite 300, Santa Monica, California 90405
(Address of principal executive offices) (Zip Code)
------------------------
GEOCITIES 1998 STOCK INCENTIVE PLAN
GEOCITIES 1998 EMPLOYEE STOCK PURCHASE PLAN
OPTIONS GRANTED TO CERTAIN OFFICERS, DIRECTORS, CONSULTANTS,
FOUNDERS AND EMPLOYEES UNDER WRITTEN COMPENSATION AGREEMENTS
(Full title of the Plans)
-----------------------
Stephen L. Hansen
Chief Operating Officer and Chief Financial Officer
GEOCITIES
1918 Main Street, Suite 300, Santa Monica, California 90405
(Name and address of agent for service)
(310) 664-6500
(Telephone number, including area code, of agent for service)
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Proposed Proposed
Title of Maximum Maximum
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>
GeoCities 1998 Stock Incentive Plan
- -----------------------------------
Common Stock, $0.001 par value 7,021,760 $17.00(2) $119,369,920 $35,214.13
GeoCities 1998 Employee Stock Purchase Plan
- -------------------------------------------
Common Stock, $0.001 par value 300,000 $17.00(2) $5,100,000 $1,504.50
Options Granted to Certain Officers, Directors,
Consultants, Founders and Employees Under Written
Compensation Agreements
- -------------------------------------------------
Common Stock, $0.001 par value 2,604,750 $1.046533256(3) $2,725,957.50 $804.16
Aggregate Filing Fee: $37,522.79
========================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the GeoCities 1998 Stock Incentive
Plan, the GeoCities 1998 Employee Stock Purchase Plan and Options Granted
to Certain Officers, Directors, Consultants, Founders and Employees Under
Written Compensation Agreements by reason of any stock dividend, stock
split, recapitalization or other similar transaction effected without the
Registrant's receipt of consideration which results in an increase in the
number of the outstanding shares of Registrant's Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended (the "1933 Act"), on the basis of the
highest proposed offering price per share of Registrant's Common Stock.
(3) Calculated solely for purposes of this offering under Rule 457(h) of the
1933 Act on the basis of the weighted average exercise price of the
outstanding options.
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference
---------------------------------------
GeoCities (the "Registrant") hereby incorporates by reference into this
Registration Statement the following documents previously filed with the
Securities and Exchange Commission (the "SEC"):
(a) The Registrant's Registration Statement No. 333-56659 on Form S-1
filed with the Securities and Exchange Commission (the "Commission")
on June 12, 1998, together with the amendments thereto on Forms S-1/A,
filed with the Commission on July 1, 1998, July 21, 1998 and August
10, 1998;
(b) The Registrant's prospectus filed with the SEC pursuant to Rule 424(a)
of the Securities Act of 1933, as amended (the "1933 Act"), in
connection with the Registration Statement No. 333-56659 on Form S-1,
in which there is set forth audited financial statements for the
Registrant's fiscal year ended December 31, 1997;
(c) The Registrant's Registration Statement No. 00-24735 on Form 8-A,
filed with the SEC on August 4, 1998 pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "1934 Act") in which
there is described the terms, rights and provisions applicable to the
Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements filed pursuant
to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which de-
registers all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date 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 subsequently filed
document which also 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
-----------------------------------------
The Registrant's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except for
liability for (i) any breach of their duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) unlawful payments of
dividends or unlawful stock repurchases or redemptions as provided in Section
174 of the Delaware General Corporation Law, or (iv) any transaction from which
the director derives an improper personal benefit.
The Registrant's Bylaws provide that the Registrant shall indemnify its
directors and may indemnify its officers, employees and other agents to the
fullest extent permitted by law. The Registrant believes that indemnification
under its Bylaws covers at least negligence and gross negligence on the part of
an indemnified party in connection with the defense of any action or proceeding
arising out of such party's status or service as a director, officer, employee
or other agent of the Company upon an undertaking by such party to repay such
advances if it is ultimately determined that such party is not entitled to
indemnification.
II-1
<PAGE>
The Registrant has entered into separate indemnification agreements
with each of its directors and officers. These agreements require the
Registrant, among other things, to indemnify such director or officer against
expenses (including attorneys' fees), judgments, fines and settlements
(collectively, "Liabilities") paid by such individual in connection with any
action, suit or proceeding arising out of such individual's status or service as
a director or officer of the Registrant (other than Liabilities arising from
willful misconduct or conduct that is knowingly fraudulent or deliberately
dishonest) and to advance expenses incurred by such individual in connection
with any proceeding against such individual with respect to which such
individual may be entitled to indemnification by the Registrant.
Item 7. Exemption from Registration Claimed
-----------------------------------
Not Applicable.
Item 8. Exhibits
--------
Exhibit Number Exhibit
- -------------- -------
4 Instruments Defining the Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 00-24735 on
Form 8-A, and the exhibits thereto, which are incorporated
herein by reference pursuant to Item 3(c).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 GeoCities 1998 Stock Incentive Plan.
99.2 Form of Notice of Grant of Stock Option.
99.3 Form of Stock Option Agreement.
99.4 Form of Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
99.5 Form of Addendum to Stock Option Agreement (Involuntary
Termination Following Change In Control).
99.6 Form of Stock Issuance Agreement.
99.7 Form of Addendum to Stock Issuance Agreement (Involuntary
Termination Following Change In Control).
99.8 Form of Notice of Automatic Grant (Initial Grant).
99.9 Form of Notice of Automatic Grant (Annual Grant).
99.10 Form of Automatic Stock Option Agreement.
99.11 GeoCities 1998 Employee Stock Purchase Plan.
99.12 Form of Stock Purchase Agreement.
99.13 Form of Enrollment/Change Form.
99.14 Compensation Agreement for David C. Bohnett (600,000 shares).
99.15 Compensation Agreement for John C. Rezner (200,000 shares).
99.16 Compensation Agreement for Stanley Newman (100,000 shares).
99.17 Compensation Agreement for William Bohnett (100,000 shares).
99.18 Compensation Agreement for James G. Glicker (300,000 shares).
99.19 Compensation Agreement for Robert K. Kalok (250,000 shares).
99.20 Form of Compensation Agreement for Employees.
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 1933 Act, (ii) to reflect in the prospectus any facts
or events arising after the effective date of this 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 this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such
II-2
<PAGE>
information in this Registration Statement; provided, however, that clauses
--------
(1)(i) and (1)(ii) shall not apply if the information required to be included in
a post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act
that are incorporated by reference into this Registration Statement; (2) that
for the purpose of determining any liability under the 1933 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; and (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
Registrant's 1998 Stock Incentive Plan, 1998 Employee Stock Purchase Plan and
Options Granted to Certain Officers, Directors, Consultants, Founders and
Employees Under Written Compensation Agreements.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act that is incorporated by reference into this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnification provisions summarized in Item 6 or
otherwise, the Registrant has been advised that, in the opinion of the SEC, such
indemnification is against public policy as expressed in the 1933 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 1933 Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, 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 Santa Monica, State of California, on
this 10th day of August, 1998.
GeoCities
By: /s/ Stephen L. Hansen
---------------------------------
Stephen L. Hansen
Chief Operating Officer and Chief
Financial Officer
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of GeoCities, a Delaware
corporation, do hereby constitute and appoint David C. Bohnett and Stephen L.
Hansen, and each of them, the lawful attorneys-in-fact and agents with full
power and authority to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, and any one of them, determine may
be necessary or advisable or required to enable said corporation to comply with
the Securities Act of 1933, as amended, and any rules or regulations or
requirements of the Securities and Exchange Commission in connection with this
Registration Statement. Without limiting the generality of the foregoing power
and authority, the powers granted include the power and authority to sign the
names of the undersigned officers and directors in the capacities indicated
below to this Registration Statement, to any and all amendments, both pre-
effective and post-effective, and supplements to this Registration Statement,
and to any and all instruments or documents filed as part of or in conjunction
with this Registration Statement or amendments or supplements thereof, and each
of the undersigned hereby ratifies and confirms that all said attorneys and
agents, or any one of them, shall do or cause to be done by virtue hereof. This
Power of Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Thomas R. Evans Chief Executive Officer August 10, 1998
- --------------------- and Director
Thomas R. Evans (Principal Executive Officer)
/s/ Stephen L. Hansen Chief Operating Officer and
- --------------------- Chief Financial Officer August 10, 1998
Stephen L. Hansen (Principal Financial and
Accounting Officer)
II-4
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ David C. Bohnett Chairman of the August 10, 1998
- -------------------- Board of Directors and
David C. Bohnett Secretary
/s/ Jerry D. Colonna
- ---------------------
Jerry D. Colonna Director August 10, 1998
/s/ Eric C. Hippeau
- ---------------------
Eric C. Hippeau Director August 10, 1998
/s/ Harry D. Lambert
- ---------------------
Harry D. Lambert Director August 10, 1998
/s/ Peter H. Mills
- ---------------------
Peter H. Mills Director August 10, 1998
- ---------------------
David S. Wetherell Director , 1998
---------
II-5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
GEOCITIES
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Number Exhibit
- -------------- -------
4 Instruments Defining the Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 00-24735 on Form
8-A, and the exhibits thereto, which are incorporated herein by
reference pursuant to Item 3(c).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 GeoCities 1998 Stock Incentive Plan.
99.2 Form of Notice of Grant of Stock Option.
99.3 Form of Stock Option Agreement.
99.4 Form of Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
99.5 Form of Addendum to Stock Option Agreement (Involuntary
Termination Following Change In Control).
99.6 Form of Stock Issuance Agreement.
99.7 Form of Addendum to Stock Issuance Agreement (Involuntary
Termination Following Change In Control).
99.8 Form of Notice of Automatic Grant (Initial Grant).
99.9 Form of Notice of Automatic Grant (Annual Grant).
99.10 Form of Automatic Stock Option Agreement.
99.11 GeoCities 1998 Employee Stock Purchase Plan.
99.12 Form of Stock Purchase Agreement.
99.13 Form of Enrollment/Change Form.
99.14 Compensation Agreement for David C. Bohnett (600,000 shares).
99.15 Compensation Agreement for John C. Rezner (200,000 shares).
99.16 Compensation Agreement for Stanley Newman (100,000 shares).
99.17 Compensation Agreement for William Bohnett (100,000 shares).
99.18 Compensation Agreement for James G. Glicker (300,000 shares).
99.19 Compensation Agreement for Robert K. Kalok (250,000 shares).
99.20 Form of Compensation Agreement for Employees.
<PAGE>
EXHIBIT 5
OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP
August 10, 1998
GeoCities
1918 Main Street, Suite 300
Santa Monica, CA 90405
Re: GeoCities - Registration Statement for the
Offering of an Aggregate of 9,926,510 shares of Common Stock
Dear Ladies and Gentlemen:
We refer to your Registration Statement on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of 9,926,510 shares of
the Common Stock of GeoCities (the "Company") issuable in the aggregate under
(i) the Company's 1998 Stock Incentive Plan (7,021,760 shares), (ii) the
Company's Employee Stock Purchase Plan (300,000 shares) and (iii) Options
Granted to Certain Officers, Directors, Consultants, Founders and Employees
(2,604,750 shares)(collectively, the "Plans"). We advise you that, in our
opinion, when such shares have been issued and sold pursuant to the applicable
provisions of the Plans, and in accordance with the Registration Statement, such
shares will be duly authorized, validly issued, fully paid and non-assessable
shares of the Company's Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
GeoCities on Form S-8 to be filed on or about August 10, 1998, of our report
dated July 2, 1998, except for Note 2 as to which the date is July 21, 1998, on
our audits of the financial statements and financial statement schedule of
GeoCities as of December 31, 1996 and 1997, and for each of the three years in
the period ended December 31, 1997.
PricewaterhouseCoopers LLP
Woodland Hills, California
August 5, 1998
<PAGE>
GEOCITIES
1998 STOCK INCENTIVE PLAN
-------------------------
ARTICLE ONE
GENERAL PROVISIONS
------------------
I. PURPOSE OF THE PLAN
This 1998 Stock Incentive Plan is intended to promote the interests of
GeoCities, a California corporation, by providing eligible persons with the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in
the service of the Corporation.
Capitalized terms shall have the meanings assigned to such terms in
the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into five separate equity programs:
(i) the Discretionary Option Grant Program under which eligible
persons may, at the discretion of the Plan Administrator, be granted options to
purchase shares of Common Stock,
(ii) the Salary Investment Option Grant Program under which
eligible employees may elect to have a portion of their base salary invested
each year in special options,
(iii) the Stock Issuance Program under which eligible persons may,
at the discretion of the Plan Administrator, be issued shares of Common Stock
directly, either through the immediate purchase of such shares or as a bonus for
services rendered the Corporation (or any Parent or Subsidiary),
(iv) the Automatic Option Grant Program under which eligible non-
employee Board members shall automatically receive options at periodic intervals
to purchase shares of Common Stock, and
(v) the Director Fee Option Grant Program under which non-
employee Board members may elect to have all or any portion of their annual
retainer fee otherwise payable in cash applied to special options.
<PAGE>
B. The provisions of Articles One and Seven shall apply to all equity
programs under the Plan and shall govern the interests of all persons under the
Plan.
III. ADMINISTRATION OF THE PLAN
A. Prior to the Section 12 Registration Date, the Discretionary
Option Grant and Stock Issuance Programs shall be administered by the Board.
Beginning with the Section 12 Registration Date, the following provisions shall
govern the administration of the Plan:
(i) The Board shall have the authority to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders but may delegate such authority in whole or in part to the Primary
Committee.
(ii) Administration of the Discretionary Option Grant and Stock
Issuance Programs with respect to all other persons eligible to participate in
those programs may, at the Board's discretion, be vested in the Primary
Committee or a Secondary Committee, or the Board may retain the power to
administer those programs with respect to all such persons.
(iii) The Primary Committee shall have the sole and exclusive
authority to determine which Section 16 Insiders and other highly compensated
Employees shall be eligible for participation in the Salary Investment Option
Grant Program for one or more calendar years. However, all option grants under
the Salary Investment Option Grant Program shall be made in accordance with the
express terms of that program, and the Primary Committee shall not exercise any
discretionary functions with respect to the option grants made under that
program.
(iv) Administration of the Automatic Option Grant and Director Fee
Option Grant Programs shall be self-executing in accordance with the terms of
those programs.
B. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full power and authority
subject to the provisions of the Plan:
(i) to establish such rules as it may deem appropriate for proper
administration of the Plan, to make all factual determinations, to construe and
interpret the provisions of the Plan and the awards thereunder and to resolve
any and all ambiguities thereunder;
(ii) to determine, with respect to awards made under the
Discretionary Option Grant and Stock Issuance Programs, which eligible persons
are to receive such awards, the time or times when such awards are to be made,
the number of shares to be covered by each such award, the vesting schedule (if
any) applicable to the award, the status of a granted option as either an
Incentive Option or a Non-Statutory Option and the maximum term for which the
option is to remain outstanding;
2.
<PAGE>
(iii) to amend, modify or cancel any outstanding award with the
consent of the holder or accelerate the vesting of such award; and
(iv) to take such other discretionary actions as permitted
pursuant to the terms of the applicable program.
Decisions of each Plan Administrator within the scope of its administrative
functions under the Plan shall be final and binding on all parties.
C. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions
of any Secondary Committee and reassume all powers and authority previously
delegated to such committee.
D. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any options or stock issuances under the Plan.
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option
Grant and Stock Issuance Programs are as follows:
(i) Employees,
(ii) non-employee members of the Board or the board of directors
of any Parent or Subsidiary, and
(iii) consultants and other independent advisors who provide
services to the Corporation (or any Parent or Subsidiary).
B. Only Employees who are Section 16 Insiders or other highly
compensated individuals shall be eligible to participate in the Salary
Investment Option Grant Program.
C. Only non-employee Board members shall be eligible to participate
in the Automatic Option Grant and Director Fee Option Grant Programs.
3.
<PAGE>
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
initially reserved for issuance over the term of the Plan shall not exceed
7,021,760 shares. Such authorized share reserve consists of (i) the number of
shares which remain available for issuance, as of the Plan Effective Date, under
the Predecessor Plan as last approved by the Corporation's stockholders
(4,721,760 shares), including the shares subject to the outstanding options to
be incorporated into the Plan and the additional shares which would otherwise be
available for future grant, plus (ii) an increase of 2,300,000 shares authorized
by the Board but subject to stockholder approval prior to the Section 12
Registration Date.
B. No one person participating in the Plan may receive options,
separately exercisable stock appreciation rights and direct stock issuances for
more than 500,000 shares of Common Stock in the aggregate per calendar year,
beginning with the 1998 calendar year.
C. Shares of Common Stock subject to outstanding options (including
options incorporated into this Plan from the Predecessor Plan) shall be
available for subsequent issuance under the Plan to the extent those options
expire, terminate or are cancelled for any reason prior to exercise in full.
Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the original exercise or issue price paid per share, pursuant to
the Corporation's repurchase rights under the Plan shall be added back to the
number of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent options
or direct stock issuances under the Plan. However, should the exercise price of
an option under the Plan be paid with shares of Common Stock or should shares of
Common Stock otherwise issuable under the Plan be withheld by the Corporation in
satisfaction of the withholding taxes incurred in connection with the exercise
of an option or the vesting of a stock issuance under the Plan, then the number
of shares of Common Stock available for issuance under the Plan shall be reduced
by the gross number of shares for which the option is exercised or which vest
under the stock issuance, and not by the net number of shares of Common Stock
issued to the holder of such option or stock issuance. Shares of Common Stock
underlying one or more stock appreciation rights exercised under the Plan shall
not be available for subsequent issuance.
D. If any change is made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the number and/or class of securities for which any one person may be
granted options, separately exercisable stock appreciation rights and direct
stock issuances under the Plan per calendar year, (iii) the number and/or class
of securities for which grants are subsequently to be made under the Automatic
Option Grant Program to new and continuing non-employee Board members, (iv) the
number and/or class of securities and the
4.
<PAGE>
exercise price per share in effect under each outstanding option under the Plan
and (v) the number and/or class of securities and price per share in effect
under each outstanding option incorporated into this Plan from the Predecessor
Plan. Such adjustments to the outstanding options are to be effected in a
manner which shall preclude the enlargement or dilution of rights and benefits
under such options. The adjustments determined by the Plan Administrator shall
be final, binding and conclusive.
5.
<PAGE>
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
----------------------------------
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
--------
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. Exercise Price.
--------------
1. The exercise price per share shall be fixed by the Plan
Administrator at the time of the option grant.
2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section II of
Article Seven and the documents evidencing the option, be payable in cash or
check made payable to the Corporation. Should the Common Stock be registered
under Section 12 of the 1934 Act at the time the option is exercised, then the
exercise price may also be paid as follows:
(i) shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date, or
(ii) to the extent the option is exercised for vested shares,
through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable instructions to (a) a
Corporation-approved brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to be
withheld by the Corporation by reason of such exercise and (b) the
Corporation to deliver the certificates for the purchased shares directly
to such brokerage firm in order to complete the sale.
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
6.
<PAGE>
B. Exercise and Term of Options. Each option shall be exercisable
----------------------------
at such time or times, during such period and for such number of shares as shall
be determined by the Plan Administrator and set forth in the documents
evidencing the option. However, no option shall have a term in excess of ten
(10) years measured from the option grant date.
C. Cessation of Service.
--------------------
1. The following provisions shall govern the exercise of any
options outstanding at the time of the Optionee's cessation of Service or death:
(i) Any option outstanding at the time of the Optionee's
cessation of Service for any reason shall remain exercisable for such
period of time thereafter as shall be determined by the Plan Administrator
and set forth in the documents evidencing the option, but no such option
shall be exercisable after the expiration of the option term.
(ii) Any option exercisable in whole or in part by the
Optionee at the time of death may be subsequently exercised by his or her
Beneficiary.
(iii) During the applicable post-Service exercise period, the
option may not be exercised in the aggregate for more than the number of
vested shares for which the option is exercisable on the date of the
Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for any vested shares
for which the option has not been exercised. However, the option shall,
immediately upon the Optionee's cessation of Service, terminate and cease
to be outstanding to the extent the option is not otherwise at that time
exercisable for vested shares.
(iv) Should the Optionee's Service be terminated for
Misconduct or should the Optionee engage in Misconduct while his or her
options are outstanding, then all such options shall terminate immediately
and cease to be outstanding.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding:
(i) to extend the period of time for which the option is to
remain exercisable following the Optionee's cessation of Service to such
period of time as the Plan Administrator shall deem appropriate, but in no
event beyond the expiration of the option term, and/or
7.
<PAGE>
(ii) to permit the option to be exercised, during the
applicable post-Service exercise period, for one or more additional
installments in which the Optionee would have vested had the Optionee
continued in Service.
D. Stockholder Rights. The holder of an option shall have no
------------------
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the
-----------------
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares,
the Corporation shall have the right to repurchase, at the exercise price paid
per share, any or all of those unvested shares. The terms upon which such
repurchase right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares) shall be
established by the Plan Administrator and set forth in the document evidencing
such repurchase right.
F. Limited Transferability of Options. During the lifetime of the
----------------------------------
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. Non-Statutory Options shall be
subject to the same restrictions, except that a Non-statutory Option may, to the
extent permitted by the Plan Administrator, be assigned in whole or in part
during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or more such
family members. The terms applicable to the assigned portion shall be the same
as those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Seven shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options
when issued under the Plan shall not be subject to the terms of this Section II.
---
A. Eligibility. Incentive Options may only be granted to Employees.
-----------
B. Exercise Price. The exercise price per share shall not be less
--------------
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the option grant date.
C. Dollar Limitation. The aggregate Fair Market Value of the shares
-----------------
of Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any other
option plan of the Corporation or any Parent or Subsidiary) may for the first
time become exercisable as Incentive Options during
8.
<PAGE>
any one calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent the Employee holds two (2) or more such options which
become exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are granted.
D. 10% Stockholder. If any Employee to whom an Incentive Option is
---------------
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.
III. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. Each option outstanding at the time of a Change in Control but
not otherwise fully-vested shall automatically accelerate so that each such
option shall, immediately prior to the effective date of the Change in Control,
become exercisable for all of the shares of Common Stock at the time subject to
that option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. However, an outstanding option shall not so accelerate
if and to the extent: (i) such option is, in connection with the Change in
Control, assumed or otherwise continued in full force and effect by the
successor corporation (or parent thereof) pursuant to the terms of the Change in
Control, (ii) such option is replaced with a cash incentive program of the
successor corporation which preserves the spread existing at the time of the
Change in Control on the shares of Common Stock for which the option is not
otherwise at that time exercisable and provides for subsequent payout in
accordance with the same vesting schedule applicable to those option shares or
(iii) the acceleration of such option is subject to other limitations imposed by
the Plan Administrator at the time of the option grant.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Change in Control, except to
the extent: (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) or otherwise continue in full force and effect
pursuant to the terms of the Change in Control or (ii) such accelerated vesting
is precluded by other limitations imposed by the Plan Administrator at the time
the repurchase right is issued.
C. Immediately following the consummation of the Change in Control,
all outstanding options shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof) or otherwise
expressly continued in full force and effect pursuant to the terms of the Change
in Control.
D. Each option which is assumed in connection with a Change in
Control shall be appropriately adjusted, immediately after such Change in
Control, to apply to the number and class of securities which would have been
issuable to the Optionee in consummation of such Change in Control had the
option been exercised immediately prior to such Change in Control. Appropriate
adjustments to reflect such Change in Control shall also be made to (i) the
exercise
9.
<PAGE>
price payable per share under each outstanding option, provided the aggregate
--------
exercise price payable for such securities shall remain the same, (ii) the
maximum number and/or class of securities available for issuance over the
remaining term of the Plan and (iii) the maximum number and/or class of
securities for which any one person may be granted options, separately
exercisable stock appreciation rights and direct stock issuances under the Plan
per calendar year.
E. The Plan Administrator may at any time provide that one or more
options will automatically accelerate in connection with a Change in Control,
whether or not those options are assumed or otherwise continued in full force
and effect pursuant to the terms of the Change in Control. Any such option
shall accordingly become exercisable, immediately prior to the effective date of
such Change in Control, for all of the shares of Common Stock at the time
subject to that option and may be exercised for any or all of those shares as
fully-vested shares of Common Stock. In addition, the Plan Administrator may at
any time provide that one or more of the Corporation's repurchase rights shall
not be assignable in connection with such Change in Control and shall terminate
upon the consummation of such Change in Control.
F. The Plan Administrator may at any time provide that one or more
options will automatically accelerate upon an Involuntary Termination of the
Optionee's Service within a designated period (not to exceed eighteen (18)
months) following the effective date of any Change in Control in which those
options do not otherwise accelerate. Any options so accelerated shall remain
exercisable for fully-vested shares until the earlier of (i) the expiration of
-------
the option term or (ii) the expiration of the one (1) year period measured from
the effective date of the Involuntary Termination. In addition, the Plan
Administrator may at any time provide that one or more of the Corporation's
repurchase rights shall immediately terminate upon such Involuntary Termination.
G. The Plan Administrator may at any time provide that one or more
options will automatically accelerate in connection with a Hostile Take-Over.
Any such option shall become exercisable, immediately prior to the effective
date of such Hostile Take-Over, for all of the shares of Common Stock at the
time subject to that option and may be exercised for any or all of those shares
as fully-vested shares of Common Stock. In addition, the Plan Administrator may
at any time provide that one or more of the Corporation's repurchase rights
shall terminate automatically upon the consummation of such Hostile Take-Over.
Alternatively, the Plan Administrator may condition such automatic acceleration
and termination upon an Involuntary Termination of the Optionee's Service within
a designated period (not to exceed eighteen (18) months) following the effective
date of such Hostile Take-Over. Each option so accelerated shall remain
exercisable for fully-vested shares until the expiration or sooner termination
of the option term.
10.
<PAGE>
H. The portion of any Incentive Option accelerated in connection with
a Change in Control or Hostile Take Over shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
($100,000) limitation is not exceeded. To the extent such dollar limitation is
exceeded, the accelerated portion of such option shall be exercisable as a Non-
Statutory Option under the Federal tax laws.
IV. STOCK APPRECIATION RIGHTS
The Plan Administrator may, subject to such conditions as it may
determine, grant to selected Optionees stock appreciation rights which will
allow the holders of those rights to elect between the exercise of the
underlying option for shares of Common Stock and the surrender of that option in
exchange for a distribution from the Corporation in an amount equal to the
excess of (a) the Option Surrender Value of the number of shares for which the
option is surrendered over (b) the aggregate exercise price payable for such
shares. The distribution may be made in shares of Common Stock valued at Fair
Market Value on the option surrender date, in cash, or partly in shares and
partly in cash, as the Plan Administrator shall in its sole discretion deem
appropriate.
11.
<PAGE>
ARTICLE THREE
SALARY INVESTMENT OPTION GRANT PROGRAM
--------------------------------------
I. OPTION GRANTS
The Primary Committee may implement the Salary Investment Option Grant
Program for one or more calendar years beginning after the Underwriting Date and
select the Section 16 Insiders and other highly compensated Employees eligible
to participate in the Salary Investment Option Grant Program for each such
calendar year. Each selected individual who elects to participate in the Salary
Investment Option Grant Program must, prior to the start of each calendar year
of participation, file with the Plan Administrator (or its designate) an
irrevocable authorization directing the Corporation to reduce his or her base
salary for that calendar year by an amount not less than Ten Thousand Dollars
($10,000.00) nor more than Fifty Thousand Dollars ($50,000.00). The Primary
Committee shall have complete discretion to determine whether to approve the
filed authorization in whole or in part. To the extent the Primary Committee
approves the authorization, the individual who filed that authorization shall be
granted an option under the Salary Investment Grant Program on the first trading
day in January for the calendar year for which the salary reduction is to be in
effect.
II. OPTION TERMS
Each option shall be a Non-Statutory Option evidenced by one or more
documents in the form approved by the Plan Administrator; provided, however,
--------
that each such document shall comply with the terms specified below.
A. Exercise Price.
--------------
1. The exercise price per share shall be thirty-three and one-
third percent (33-1/3%) of the Fair Market Value per share of Common Stock on
the option grant date.
2. The exercise price shall become immediately due upon exercise
of the option and shall be payable in one or more of the alternative forms
authorized under the Discretionary Option Grant Program. Except to the extent
the sale and remittance procedure specified thereunder is utilized, payment of
the exercise price for the purchased shares must be made on the Exercise Date.
12.
<PAGE>
B. Number of Option Shares. The number of shares of Common Stock
-----------------------
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the dollar amount of the approved reduction in the
Optionee's base salary for the calendar year, and
B is the Fair Market Value per share of Common Stock on the
option grant date.
C. Exercise and Term of Options. The option shall become
----------------------------
exercisable in a series of twelve (12) successive equal monthly installments
upon the Optionee's completion of each calendar month of Service in the calendar
year for which the salary reduction is in effect. Each option shall have a
maximum term of ten (10) years measured from the option grant date.
D. Cessation of Service. Each option outstanding at the time of the
--------------------
Optionee's cessation of Service shall remain exercisable, for any or all of the
shares for which the option is exercisable at the time of such cessation of
Service, until the earlier of (i) the expiration of the option term or (ii) the
-------
expiration of the three (3)-year period following the Optionee's cessation of
Service. To the extent the option is held by the Optionee at the time of his or
her death, the option may be exercised by his or her Beneficiary. However, the
option shall, immediately upon the Optionee's cessation of Service, terminate
and cease to remain outstanding with respect to any and all shares of Common
Stock for which the option is not otherwise at that time exercisable.
III. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Change in Control or Hostile Take-Over while
the Optionee remains in Service, each outstanding option shall automatically
accelerate so that each such option shall, immediately prior to the effective
date of the Change in Control or Hostile Take-Over, become fully exercisable
with respect to the total number of shares of Common Stock at the time subject
to such option and may be exercised for any or all of those shares as fully-
vested shares of Common Stock. Each such option accelerated in connection with
a Change in Control shall terminate upon the Change in Control, except to the
extent assumed by the successor corporation (or parent thereof) or otherwise
continued in full force and effect pursuant to the terms of the Change in
Control. Each such option accelerated in connection with a Hostile Take-Over
shall remain exercisable until the expiration or sooner termination of the
option term.
13.
<PAGE>
B. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each of
his or her outstanding options. The Optionee shall in return be entitled to a
cash distribution from the Corporation in an amount equal to the excess of (i)
the Option Surrender Value of the shares of Common Stock at the time subject to
each surrendered option (whether or not the Optionee is otherwise at the time
vested in those shares) over (ii) the aggregate exercise price payable for such
shares. Such cash distribution shall be paid within five (5) days following the
surrender of the option to the Corporation.
IV. REMAINING TERMS
The remaining terms of each option granted under the Salary Investment
Option Grant Program shall be the same as the terms in effect for options made
under the Discretionary Option Grant Program.
14.
<PAGE>
ARTICLE FOUR
STOCK ISSUANCE PROGRAM
----------------------
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening options. Shares
of Common Stock may also be issued under the Stock Issuance Program pursuant to
share right awards which entitle the recipients to receive those shares upon the
attainment of designated performance goals or Service requirements. Each such
award shall be evidenced by one or more documents which comply with the terms
specified below.
A. Purchase Price.
--------------
1. The purchase price per share of Common Stock subject to
direct issuance shall be fixed by the Plan Administrator.
2. Subject to the provisions of Section II of Article Seven,
shares of Common Stock may be issued under the Stock Issuance Program for any of
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any
Parent or Subsidiary).
B. Vesting/Issuance Provisions.
---------------------------
1. The Plan Administrator may issue shares of Common Stock which
are fully and immediately vested upon issuance or which are to vest in one or
more installments over the Participant's period of Service or upon attainment of
specified performance objectives. Alternatively, the Plan Administrator may
issue share right awards which shall entitle the recipient to receive a
specified number of vested shares of Common Stock upon the attainment of one or
more performance goals or Service requirements established by the Plan
Administrator.
2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to his or her unvested
shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.
15.
<PAGE>
3. The Participant shall have full stockholder rights with
respect to the issued shares of Common Stock, whether or not the Participant's
interest in those shares is vested. Accordingly, the Participant shall have the
right to vote such shares and to receive any regular cash dividends paid on such
shares.
4. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock, or should the performance
objectives not be attained with respect to one or more such unvested shares of
Common Stock, then those shares shall be immediately surrendered to the
Corporation for cancellation, and the Participant shall have no further
stockholder rights with respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for consideration paid in cash
or cash equivalent (including the Participant's purchase-money indebtedness),
the Corporation shall repay to the Participant the cash consideration paid for
the surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable to the
surrendered shares.
5. The Plan Administrator may waive the surrender and
cancellation of one or more unvested shares of Common Stock (or other assets
attributable thereto) which would otherwise occur upon the cessation of the
Participant's Service or the non-attainment of the performance objectives
applicable to those shares. Such waiver shall result in the immediate vesting of
the Participant's interest in the shares of Common Stock as to which the waiver
applies. Such waiver may be effected at any time, whether before or after the
Participant's cessation of Service or the attainment or non-attainment of the
applicable performance objectives.
6. Outstanding share right awards shall automatically terminate,
and no shares of Common Stock shall actually be issued in satisfaction of those
awards, if the performance goals or Service requirements established for such
awards are not attained. The Plan Administrator, however, shall have the
authority to issue shares of Common Stock in satisfaction of one or more
outstanding share right awards as to which the designated performance goals or
Service requirements are not attained.
II. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. All of the Corporation's outstanding repurchase rights shall
terminate automatically, and all the shares of Common Stock subject to those
terminated rights shall immediately vest in full, in the event of any Change in
Control, except to the extent (i) those repurchase rights are assigned to the
successor corporation (or parent thereof) or otherwise continue in full force
and effect pursuant to the terms of the Change in Control or (ii) such
accelerated vesting is precluded by other limitations imposed by the Plan
Administrator at the time the repurchase right is issued.
B. The Plan Administrator may at any time provide for the automatic
termination of one or more of those outstanding repurchase rights and the
immediate vesting of the shares of Common Stock subject to those terminated
rights upon (i) a Change in Control or Hostile Take-Over or (ii) an Involuntary
Termination of the Participant's Service within a
16.
<PAGE>
designated period (not to exceed eighteen (18) months) following the effective
date of any Change in Control or Hostile Take-Over in which those repurchase
rights are assigned to the successor corporation (or parent thereof) or
otherwise continue in full force and effect.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held
in escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends on
the certificates evidencing those unvested shares.
17.
<PAGE>
ARTICLE FIVE
AUTOMATIC OPTION GRANT PROGRAM
I. OPTION TERMS
A. Grant Dates. Options shall be made on the dates specified below:
-----------
1. Each individual serving as a non-employee Board member on the
Underwriting Date shall automatically be granted at that time a Non-Statutory
Option to purchase 10,000 shares of Common Stock, provided that individual has
not previously been in the employ of the Corporation or any Parent or
Subsidiary.
2. Each individual who is first elected or appointed as a non-
employee Board member at any time after the Underwriting Date shall
automatically be granted, on the date of such initial election or appointment, a
Non-Statutory Option to purchase 10,000 shares of Common Stock, provided that
individual has not previously been in the employ of the Corporation or any
Parent or Subsidiary.
3. On the date of each Annual Stockholders Meeting held after
the Underwriting Date, each individual who is to continue to serve as a non-
employee Board member, whether or not that individual is standing for re-
election to the Board, shall automatically be granted a Non-Statutory Option to
purchase 2,500 shares of Common Stock, provided such individual has served as a
non-employee Board member for at least six (6) months.
B. Exercise Price.
--------------
1. The exercise price per share shall be equal to one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.
2. The exercise price shall be payable in one or more of the
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
C. Option Term. Each option shall have a term of ten (10) years
-----------
measured from the option grant date.
D. Exercise and Vesting of Options. Each option shall be
-------------------------------
immediately exercisable for any or all of the option shares. However, any
shares purchased under the option shall be subject to repurchase by the
Corporation, at the exercise price paid per share, upon the Optionee's cessation
of Board service prior to vesting in those shares. Each initial 10,000-share
option shall vest, and the Corporation's repurchase right shall lapse, in a
series of four (4) successive equal annual installments upon the Optionee's
completion of each year of Board
18.
<PAGE>
service over the four (4)-year period measured from the grant date. Each annual
2,500-share option shall vest, and the Corporation's repurchase right shall
lapse, upon the Optionee's completion of one (1) year of Board service measured
from the grant date.
E. Cessation of Board Service. The following provisions shall
--------------------------
govern the exercise of any options outstanding at the time of the Optionee's
cessation of Board service:
(i) Any option outstanding at the time of the Optionee's
cessation of Board service for any reason shall remain exercisable for a
twelve (12)-month period following the date of such cessation of Board
service, but in no event shall such option be exercisable after the
expiration of the option term.
(ii) Any option exercisable in whole or in part by the Optionee
at the time of death may be subsequently exercised by his or her
Beneficiary.
(iii) Following the Optionee's cessation of Board service, the
option may not be exercised in the aggregate for more than the number of
shares in which the Optionee was vested on the date of such cessation of
Board service. Upon the expiration of the applicable exercise period or
(if earlier) upon the expiration of the option term, the option shall
terminate and cease to be outstanding for any vested shares for which the
option has not been exercised. However, the option shall, immediately upon
the Optionee's cessation of Board service, terminate and cease to be
outstanding for any and all shares in which the Optionee is not otherwise
at that time vested.
(iv) However, should the Optionee cease to serve as a Board
member by reason of death or Permanent Disability, then all shares at the
time subject to the option shall immediately vest so that such option may,
during the twelve (12)-month exercise period following such cessation of
Board service, be exercised for all or any portion of those shares as
fully-vested shares of Common Stock.
II. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Change in Control or Hostile Take-Over, the
shares of Common Stock at the time subject to each outstanding option but not
otherwise vested shall automatically vest in full so that each such option may,
immediately prior to the effective date of such Change in Control the Hostile
Take-Over, be exercised for all or any portion of those shares as fully-vested
shares of Common Stock. Each such option accelerated in connection with a
Change in Control shall terminate upon the Change in Control, except to the
extent assumed by the successor corporation (or parent thereof) or otherwise
continued in full force and effect pursuant to the terms of the Change in
Control. Each such option accelerated in connection with
19.
<PAGE>
a Hostile Take-Over shall remain exercisable until the expiration or sooner
termination of the option term.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Change in Control or Hostile
Take-Over.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each of
his or her outstanding options. The Optionee shall in return be entitled to a
cash distribution from the Corporation in an amount equal to the excess of (i)
the Option Surrender Value of the shares of Common Stock at the time subject to
each surrendered option (whether or not the Optionee is otherwise at the time
vested in those shares) over (ii) the aggregate exercise price payable for such
shares. Such cash distribution shall be paid within five (5) days following the
surrender of the option to the Corporation.
D. Each option which is assumed in connection with a Change in
Control shall be appropriately adjusted to apply to the number and class of
securities which would have been issuable to the Optionee in consummation of
such Change in Control had the option been exercised immediately prior to such
Change in Control. Appropriate adjustments shall also be made to the exercise
price payable per share under each outstanding option, provided the aggregate
--------
exercise price payable for such securities shall remain the same.
III. REMAINING TERMS
The remaining terms of each option granted under the Automatic Option
Grant Program shall be the same as the terms in effect for options made under
the Discretionary Option Grant Program.
20.
<PAGE>
ARTICLE SIX
DIRECTOR FEE OPTION GRANT PROGRAM
---------------------------------
I. OPTION GRANTS
The Board shall have the sole and exclusive authority to implement the
Director Fee Option Grant Program as of the first day of any calendar year
beginning after the Underwriting Date. Upon such implementation of the Program,
each non-employee Board member may elect to apply all or any portion of the
annual retainer fee otherwise payable in cash for his or her service on the
Board to the acquisition of a special option grant under this Director Fee
Option Grant Program. Such election must be filed with the Corporation's Chief
Financial Officer prior to the first day of the calendar year for which the
election is to be in effect. Each non-employee Board member who files such a
timely election shall automatically be granted an option under this Director Fee
Option Grant Program on the first trading day in January in the calendar year
for which the annual retainer fee which is the subject of that election would
otherwise be payable.
II. OPTION TERMS
Each option shall be a Non-Statutory Option governed by the terms and
conditions specified below.
A. Exercise Price.
--------------
1. The exercise price per share shall be thirty-three and one-
third percent (33-1/3%) of the Fair Market Value per share of Common Stock on
the option grant date.
2. The exercise price shall become immediately due upon exercise
of the option and shall be payable in one or more of the alternative forms
authorized under the Discretionary Option Grant Program. Except to the extent
the sale and remittance procedure specified thereunder is utilized, payment of
the exercise price for the purchased shares must be made on the Exercise Date.
B. Number of Option Shares. The number of shares of Common Stock
-----------------------
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the portion of the annual retainer fee subject to the non-
employee Board member's election, and
21.
<PAGE>
B is the Fair Market Value per share of Common Stock on the
option grant date.
C. Exercise and Term of Options. The option shall become
----------------------------
exercisable in a series of twelve (12) successive equal monthly installments
upon the Optionee's completion of each month of Board service during the
calendar year in which the option is granted. Each option shall have a maximum
term of ten (10) years measured from the option grant date.
D. Termination of Board Service. Should the Optionee cease Board
----------------------------
service for any reason (other than death or Permanent Disability) while one or
more of his or her options are outstanding, then each such option shall remain
exercisable, for any or all of the shares for which the option is exercisable at
the time of such cessation of Board service, until the earlier of (i) the
-------
expiration of the option term or (ii) the expiration of the three (3)-year
period measured from the date of such cessation of Board service. However, each
such option outstanding at the time of such cessation of Board service shall
immediately terminate and cease to remain outstanding with respect to any and
all shares of Common Stock for which the option is not otherwise at that time
exercisable.
E. Death or Permanent Disability. Should the Optionee's service as
-----------------------------
a Board member cease by reason of death or Permanent Disability, then each of
the Optionee's outstanding options shall immediately become exercisable for all
the shares of Common Stock at the time subject to that option, and the option
may be exercised for any or all of those shares as fully-vested shares until the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the
- -------
expiration of the three (3)-year period measured from the date of such cessation
of Board service. To the extent the option is held by the Optionee at the time
of his or her death, the option may be exercised by his or her Beneficiary.
III. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Change in Control or Hostile Take-Over while
the Optionee remains in Board service, each outstanding option shall
automatically accelerate so that each such option shall, immediately prior to
the effective date of the Change in Control or Hostile Take-Over, become fully
exercisable with respect to the total number of shares of Common Stock at the
time subject to such option and may be exercised for any or all of those shares
as fully-vested shares of Common Stock. Each such option accelerated in
connection with a Change in Control shall terminate upon the Change in Control,
except to the extent assumed by the successor corporation (or parent thereof) or
otherwise expressly continued in full force and effect pursuant to the terms of
the Change in Control. Each such option accelerated in connection with a
Hostile Take-Over shall remain exercisable until the expiration or sooner
termination of the option term.
22.
<PAGE>
B. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each of
his or her outstanding options. The Optionee shall in return be entitled to a
cash distribution from the Corporation in an amount equal to the excess of (i)
the Option Surrender Value of the shares of Common Stock at the time subject to
each surrendered option (whether or not the Optionee is otherwise at the time
vested in those shares) over (ii) the aggregate exercise price payable for such
shares. Such cash distribution shall be paid within five (5) days following the
surrender of the option to the Corporation.
IV. REMAINING TERMS
The remaining terms of each option granted under this Director Fee
Option Grant Program shall be the same as the terms in effect for options made
under the Discretionary Option Grant Program.
23.
<PAGE>
ARTICLE SEVEN
MISCELLANEOUS
-------------
I. NO IMPAIRMENT OF AUTHORITY
Outstanding awards shall in no way affect the right of the Corporation
to adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
II. FINANCING
The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price under the Discretionary Option Grant Program or the
purchase price of shares issued under the Stock Issuance Program by delivering a
full-recourse, interest bearing promissory note payable in one or more
installments. The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Plan Administrator
in its sole discretion. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased shares plus (ii) any Federal,
state and local income and employment tax liability incurred by the Optionee or
the Participant in connection with the option exercise or share purchase.
III. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock
upon the exercise of options or the issuance or vesting of such shares under the
Plan shall be subject to the satisfaction of all applicable Federal, state and
local income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan with the right to use shares of Common Stock in satisfaction of all or part
of the Taxes incurred by such holders in connection with the exercise of their
options or the vesting of their shares. Such right may be provided to any such
holder in either or both of the following formats:
Stock Withholding: The election to have the Corporation
-----------------
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the Taxes
(not to exceed one hundred percent (100%)) designated by the holder.
24.
<PAGE>
Stock Delivery: The election to deliver to the Corporation, at
--------------
the time the Non-Statutory Option is exercised or the shares vest, one or more
shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the Taxes) with
an aggregate Fair Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.
IV. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan shall become effective immediately upon the Plan
Effective Date. However, the Salary Investment Option Grant Program and
Director Fee Option Grant Program shall not be implemented until such time as
the Primary Committee or the Board may deem appropriate. Options may be granted
under the Discretionary Option Grant or Automatic Option Grant Program at any
time on or after the Plan Effective Date. However, no options granted under the
Plan may be exercised, and no shares shall be issued under the Plan, until the
Plan is approved by the Corporation's stockholders. If such stockholder
approval is not obtained within twelve (12) months after the Plan Effective
Date, then all options previously granted under this Plan shall terminate and
cease to be outstanding, and no further options shall be granted and no shares
shall be issued under the Plan.
B. The Plan shall serve as the successor to the Predecessor Plan,
and no further options or direct stock issuances shall be made under the
Predecessor Plan after the Section 12 Registration Date. All options
outstanding under the Predecessor Plan on the Section 12 Registration Date shall
be incorporated into the Plan at that time and shall be treated as outstanding
options under the Plan. However, each outstanding option so incorporated shall
continue to be governed solely by the terms of the documents evidencing such
option, and no provision of the Plan shall be deemed to affect or otherwise
modify the rights or obligations of the holders of such incorporated options
with respect to their acquisition of shares of Common Stock.
C. One or more provisions of the Plan, including (without
limitation) the option/vesting acceleration provisions of Article Two relating
to Changes in Control, may, in the Plan Administrator's discretion, be extended
to one or more options incorporated from the Predecessor Plan which do not
otherwise contain such provisions.
D. The Plan shall terminate upon the earliest of (i) July 5, 2008
--------
(ii) the date on which all shares available for issuance under the Plan shall
have been issued as fully-vested shares or (iii) the termination of all
outstanding options in connection with a Change in Control. Upon such plan
termination, all outstanding options and unvested stock issuances shall
thereafter continue to have force and effect in accordance with the provisions
of the documents evidencing such grants or issuances.
25.
<PAGE>
V. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects. However, no such amendment
or modification shall adversely affect the rights and obligations with respect
to stock options or unvested stock issuances at the time outstanding under the
Plan unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.
B. Options to purchase shares of Common Stock may be granted under
the Discretionary Option Grant and Salary Investment Option Grant Programs and
shares of Common Stock may be issued under the Stock Issuance Program that are
in each instance in excess of the number of shares then available for issuance
under the Plan, provided any excess shares actually issued under those programs
shall be held in escrow until there is obtained stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock available
for issuance under the Plan. If such stockholder approval is not obtained
within twelve (12) months after the date the first such excess issuances are
made, then (i) any unexercised options granted on the basis of such excess
shares shall terminate and cease to be outstanding and (ii) the Corporation
shall promptly refund to the Optionees and the Participants the exercise or
purchase price paid for any excess shares issued under the Plan and held in
escrow, together with interest (at the applicable Short Term Federal Rate) for
the period the shares were held in escrow, and such shares shall thereupon be
automatically cancelled and cease to be outstanding.
VI. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.
VII. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any stock option
under the Plan and the issuance of any shares of Common Stock (i) upon the
exercise of any granted option or (ii) under the Stock Issuance Program shall be
subject to the Corporation's procurement of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the stock options
granted under it and the shares of Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
26.
<PAGE>
VIII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the Participant
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.
27.
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. Automatic Option Grant Program shall mean the automatic option grant
------------------------------
program in effect under the Plan.
B. Beneficiary shall mean, in the event the Plan Administrator implements
-----------
a beneficiary designation procedure, the person designated by an Optionee or
Participant, pursuant to such procedure, to succeed to such person's rights
under any outstanding awards held by him or her at the time of death. In the
absence of such designation or procedure, the Beneficiary shall be the personal
representative of the estate of the Optionee or Participant or the person or
persons to whom the award is transferred by will or the laws of descent and
distribution.
C. Board shall mean the Corporation's Board of Directors.
-----
D. Change in Control shall mean a change in ownership or control of the
-----------------
Corporation effected through any of the following transactions:
(i) a merger, consolidation or reorganization approved by the
Corporation's stockholders, unless securities representing more than fifty
------
percent (50%) of the total combined voting power of the voting securities
of the successor corporation are immediately thereafter beneficially owned,
directly or indirectly and in substantially the same proportion, by the
persons who beneficially owned the Corporation's outstanding voting
securities immediately prior to such transaction.
(ii) any stockholder-approved transfer or other disposition of
all or substantially all of the Corporation's assets, or
(iii) the acquisition, directly or indirectly by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders which the Board recommends such
stockholders accept.
E. Code shall mean the Internal Revenue Code of 1986, as amended.
----
F. Common Stock shall mean the Corporation's common stock.
------------
A-1.
<PAGE>
G. Corporation shall mean GeoCities, a California corporation, and its
-----------
successors.
H. Director Fee Option Grant Program shall mean the special stock option
---------------------------------
grant in effect for non-employee Board members under Article Six of the Plan.
I. Discretionary Option Grant Program shall mean the discretionary option
----------------------------------
grant program in effect under the Plan.
J. Employee shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
K. Exercise Date shall mean the date on which the Corporation shall have
-------------
received written notice of the option exercise.
L. Fair Market Value per share of Common Stock on any relevant date shall
-----------------
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price is
reported on the Nasdaq National Market or any successor system. If there
is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(iii) For purposes of any options made on the Underwriting Date,
the Fair Market Value shall be deemed to be equal to the price per share at
which the Common Stock is to be sold in the initial public offering
pursuant to the Underwriting Agreement.
(iv) For purposes of any options made prior to the Underwriting
Date, the Fair Market Value shall be determined by the Plan Administrator,
after taking into account such factors as it deems appropriate.
A-2.
<PAGE>
M. Hostile Take-Over shall mean:
-----------------
(i) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders which the Board does not recommend such
stockholders to accept, or
(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time the Board approved such election or
nomination.
N. Incentive Option shall mean an option which satisfies the requirements
----------------
of Code Section 422.
O. Involuntary Termination shall mean the termination of the Service of
-----------------------
any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a
change in his or her position with the Corporation or Parent or Subsidiary
employing the individual which materially reduces his or her duties and
responsibilities or the level of management to which he or she reports, (B)
a reduction in his or her level of compensation (including base salary,
fringe benefits and target bonus under any performance based bonus or
incentive programs) by more than fifteen percent (15%) or (C) a relocation
of such individual's place of employment by more than fifty (50) miles,
provided and only if such change, reduction or relocation is effected by
the Corporation without the individual's consent.
P. Misconduct shall mean the commission of any act of fraud, embezzlement
----------
or dishonesty by the Optionee or Participant, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary), or any intentional wrongdoing by such person,
whether by omission or commission, which adversely
A-3.
<PAGE>
affects the business or affairs of the Corporation (or any Parent or Subsidiary)
in a material manner. This shall not limit the grounds for the dismissal or
discharge of any person in the Service of the Corporation (or any Parent or
Subsidiary).
Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
--------
R. Non-Statutory Option shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
S. Option Surrender Value shall mean the Fair Market Value per share of
----------------------
Common Stock on the date the option is surrendered to the Corporation or, in the
event of a Hostile Take-Over, effected through a tender offer, the highest
reported price per share of Common Stock paid by the tender offeror in effecting
such Hostile Take-Over, if greater. However, if the surrendered option is an
Incentive Option, the Option Surrender Value shall not exceed the Fair Market
Value per share.
T. Optionee shall mean any person to whom an option is granted under the
--------
Discretionary Option Grant, Salary Investment Option Grant, Automatic Option
Grant or Director Fee Option Grant Program.
U. Parent shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. Participant shall mean any person who is issued shares of Common Stock
-----------
under the Stock Issuance Program.
W. Permanent Disability or Permanently Disabled shall mean the inability
--------------------------------------------
of the Optionee or the Participant to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment expected
to result in death or to be of continuous duration of twelve (12) months or
more. However, solely for purposes of the Automatic Option Grant and Director
Fee Option Grant Programs, Permanent Disability or Permanently Disabled shall
mean the inability of the non-employee Board member to perform his or her usual
duties as a Board member by reason of any medically determinable physical or
mental impairment expected to result in death or to be of continuous duration of
twelve (12) months or more.
X. Plan shall mean the Corporation's 1998 Stock Incentive Plan, as set
----
forth in this document.
Y. Plan Administrator shall mean the particular entity, whether the
------------------
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the
A-4.
<PAGE>
Discretionary Option Grant, Salary Investment Option Grant and Stock Issuance
Programs with respect to one or more classes of eligible persons, to the extent
such entity is carrying out its administrative functions under those programs
with respect to the persons under its jurisdiction. However, the Primary
Committee shall have the plenary authority to make all factual determinations
and to construe and interpret any and all ambiguities under the Plan to the
extent such authority is not otherwise expressly delegated to any other Plan
Administrator.
Z. Plan Effective Date shall mean July 6, 1998, the date on which the
-------------------
Plan was adopted by the Board.
AA. Predecessor Plan shall mean the Corporation's pre-existing 1995 Stock
----------------
Option Plan in effect immediately prior to the Plan Effective Date hereunder.
AB. Primary Committee shall mean the committee of two (2) or more non-
-----------------
employee Board members appointed by the Board to administer the Discretionary
Option Grant and Stock Issuance Programs with respect to Section 16 Insiders and
to administer the Salary Investment Option Grant Program with respect to all
eligible individuals.
AC. Salary Investment Option Grant Program shall mean the salary
--------------------------------------
investment grant program in effect under the Plan.
AD. Secondary Committee shall mean a committee of one (1) or more Board
-------------------
members appointed by the Board to administer the Discretionary Option Grant and
Stock Issuance Programs with respect to eligible persons other than Section 16
Insiders.
AE. Section 12 Registration Date shall mean the date on which the Common
----------------------------
Stock is first registered under Section 12(g) of the 1934 Act.
AF. Section 16 Insider shall mean an officer or director of the
------------------
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
AG. Service shall mean the performance of services for the Corporation (or
-------
any Parent or Subsidiary) by a person in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant or stock issuance.
AH. Stock Exchange shall mean either the American Stock Exchange or the
--------------
New York Stock Exchange.
AI. Stock Issuance Program shall mean the stock issuance program in effect
----------------------
under the Plan.
AJ. Subsidiary shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the
A-5.
<PAGE>
last corporation) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
AK. Taxes shall mean the Federal, state and local income and employment
-----
tax liabilities incurred by the holder of Non-Statutory Options or unvested
shares of Common Stock in connection with the exercise of those options or the
vesting of those shares.
AL. 10% Stockholder shall mean the owner of stock (as determined under
---------------
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
AM. Underwriting Agreement shall mean the agreement between the
----------------------
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
AN. Underwriting Date shall mean the date on which the Underwriting
-----------------
Agreement is executed and priced in connection with an initial public offering
of the Common Stock.
A-6.
<PAGE>
GEOCITIES
NOTICE OF GRANT OF STOCK OPTION
-------------------------------
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of GeoCities (the "Corporation"):
Optionee:________________________________________
--------
Grant Date:______________________________________
----------
Vesting Commencement Date:_______________________
-------------------------
Exercise Price: $________ per share
--------------
Number of Option Shares: ______ shares
-----------------------
Expiration Date:
--------------- __________
Type of Option: __________ Incentive Stock Option
--------------
__________ Non-Statutory Stock Option
Exercise Schedule: The Option shall become exercisable for twenty-
-----------------
five percent (25%) of the Option Shares upon Optionee's completion of
one (1) year of Service measured from the Vesting Commencement Date
and shall become exercisable for the balance of the Option Shares in
thirty-six (36) successive equal monthly installments upon Optionee's
completion of each additional month of Service over the thirty-six
(36) month period measured from the first anniversary of the Vesting
Commencement Date. In no event shall the Option become exercisable
for any additional Option Shares after Optionee's cessation of
Service.
Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the GeoCities 1998 Stock Incentive Plan (the
"Plan"). Optionee further agrees to be bound by the terms of the Plan and the
terms of the Option as set forth in the Stock Option Agreement attached hereto
as Exhibit A. Optionee hereby acknowledges receipt of a copy of the official
---------
prospectus for the Plan in the form attached hereto as Exhibit B. A copy of the
---------
Plan is available upon request made to the Corporate Secretary at the
Corporation's principal offices.
<PAGE>
No Employment or Service Contract. Nothing in this Notice or in the
---------------------------------
attached Stock Option Agreement or in the Plan shall confer upon Optionee any
right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining Optionee) or of Optionee, which
rights are hereby expressly reserved by each, to terminate Optionee's Service at
any time for any reason, with or without cause.
Definitions. All capitalized terms in this Notice shall have the
-----------
meaning assigned to them in this Notice or in the attached Stock Option
Agreement.
DATED:_________, 199 ___
GEOCITIES
By: ___________________________________________________
Title: ___________________________________________________
___________________________________________________
OPTIONEE
Address: ___________________________________________________
___________________________________________________
ATTACHMENTS
- -----------
Exhibit A - Stock Option Agreement
Exhibit B - Plan Summary and Prospectus
2.
<PAGE>
EXHIBIT A
STOCK OPTION AGREEMENT
----------------------
<PAGE>
EXHIBIT B
PLAN SUMMARY AND PROSPECTUS
---------------------------
<PAGE>
EXHIBIT 99.3
GEOCITIES
STOCK OPTION AGREEMENT
----------------------
RECITALS
- --------
A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or of the
board of directors of any Parent or Subsidiary and consultants and other
independent advisors who provide services to the Corporation (or any Parent or
Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of
---------------
the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. Option Term. This option shall have a maximum term of ten (10)
-----------
years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. Limited Transferability. This option shall be neither transferable
-----------------------
nor assignable by Optionee other than by will or by the laws of descent and
distribution following Optionee's death and may be exercised, during Optionee's
lifetime, only by Optionee. However, if this option is designated a Non-
Statutory Option in the Grant Notice, then this option may, in connection with
the Optionee's estate plan, be assigned in whole or in part during Optionee's
lifetime to one or more members of the Optionee's immediate family or to a trust
established for the exclusive benefit of the Optionee and/or one or more such
family members. The assigned portion shall be exercisable only by the person or
persons who acquire a proprietary interest in the option pursuant to such
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for this option immediately prior to such assignment.
4. Dates of Exercise. This option shall become exercisable for the
-----------------
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
<PAGE>
5. Cessation of Service. The option term specified in Paragraph 2
--------------------
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(a) Should Optionee cease to remain in Service for any reason
(other than death, Permanent Disability or Misconduct) while this option is
outstanding, then the period for exercising this option shall be reduced to a
three (3)-month period commencing with the date of such cessation of Service,
but in no event shall this option be exercisable at any time after the
Expiration Date.
(b) Should Optionee die while holding this option, then the
personal representative of Optionee's estate or the person or persons to whom
the option is transferred pursuant to Optionee's will or in accordance with the
laws of inheritance shall have the right to exercise this option. Such right
shall lapse, and this option shall cease to be outstanding, upon the earlier of
-------
(i) the expiration of the twelve (12)-month period measured from the date of
Optionee's death or (ii) the Expiration Date.
(c) Should Optionee cease Service by reason of Permanent
Disability while this option is outstanding, then the period for exercising this
option shall be reduced to a twelve (12)-month period commencing with the date
of such cessation of Service, but no event shall this option be exercisable at
any time after the Expiration Date.
(d) During the limited period of post-Service exercisability,
this option may not be exercised in the aggregate for more than the number of
vested Option Shares for which the option is exercisable at the time of
Optionee's cessation of Service. Upon the expiration of such limited exercise
period or (if earlier) upon the Expiration Date, this option shall terminate and
cease to be outstanding for any otherwise exercisable Option Shares for which
the option has not been exercised. However, this option shall, immediately upon
Optionee's cessation of Service for any reason, terminate and cease to be
outstanding with respect to any Option Shares for which this option is not
otherwise at that time exercisable.
(e) Should Optionee's Service be terminated for Misconduct, then
this option shall terminate immediately and cease to remain outstanding.
6. Special Acceleration of Option.
------------------------------
(a) This option, to the extent outstanding at the time of a
Change in Control transaction but not otherwise fully exercisable, shall
automatically accelerate so that this option shall, immediately prior to the
effective date of such Change in Control, become exercisable for all of the
Option Shares at the time subject to this option and may be exercised for any or
all of those Option Shares as fully vested shares of Common Stock. However, this
option shall not become exercisable on such an accelerated basis if and to the
extent: (i) this option is, in connection with the Change in Control, to be
assumed by the successor corporation (or parent thereof) or otherwise continued
in full force and effect pursuant to the terms of the Change in Control or (ii)
this option is to be replaced with a cash incentive program of the successor
corporation which preserves the spread existing at the time of the Change in
Control on the Option Shares for which this option is not otherwise at that time
exercisable (the excess of the Fair Market Value of those Option Shares over the
aggregate Exercise Price payable for such
2
<PAGE>
shares) and provides for subsequent payout in accordance with the same option
exercise/vesting schedule set forth in the Grant Notice.
(b) Immediately following the Change in Control, this option
shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) or otherwise continued in full force
and effect pursuant to the terms of the Change in Control transaction.
(c) If this option is assumed in connection with a Change in
Control (or otherwise continued in full force and effect), then this option
shall be appropriately adjusted, immediately after such Change in Control, to
apply to the number and class of securities or other property which would have
been issuable to Optionee in consummation of such Change in Control had the
option been exercised immediately prior to such Change in Control, and
appropriate adjustments shall also be made to the Exercise Price, provided the
--------
aggregate Exercise Price shall remain the same.
(d) This option may also be subject to acceleration in accordance
with the terms of any special Addendum attached to this Agreement.
(e) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
7. Adjustment in Option Shares.
---------------------------
Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the total number and/or class of securities subject to this option
and (ii) the Exercise Price in order to reflect such change and thereby preclude
a dilution or enlargement of benefits hereunder.
8. Stockholder Rights. The holder of this option shall not have any
------------------
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
9. Manner of Exercising Option.
---------------------------
(a) In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:
(i) Execute and deliver to the Corporation a Notice of
Exercise for the Option Shares for which the option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased
shares in one or more of the following forms:
3
<PAGE>
(A) cash or check made payable to the Corporation; or
(B) a promissory note payable to the Corporation, but
only to the extent authorized by the Plan Administrator in accordance
with Paragraph 13.
(C) shares of Common Stock held by Optionee (or any
other person or persons exercising the option) for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date; or
(D) through a special sale and remittance procedure
pursuant to which Optionee (or any other person or persons exercising
the option) shall concurrently provide irrevocable instructions (I) to
a Corporation-approved brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate Exercise Price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such exercise
and (II) to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete
the sale.
Except to the extent the sale and remittance procedure is utilized in
connection with the option exercise, payment of the Exercise Price
must accompany the Notice of Exercise delivered to the Corporation in
connection with the option exercise.
(iii) Furnish to the Corporation appropriate documentation
that the person or persons exercising the option (if other than Optionee)
have the right to exercise this option.
(iv) Make appropriate arrangements with the Corporation (or
Parent or Subsidiary employing or retaining Optionee) for the satisfaction
of all Federal, state and local income and employment tax withholding
requirements applicable to the option exercise .
(b) As soon as practical after the Exercise Date, the Corporation
shall issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate for the purchased Option Shares, with the
appropriate legends affixed thereto.
(c) In no event may this option be exercised for any fractional
shares.
10. Compliance with Laws and Regulations.
------------------------------------
(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock
4
<PAGE>
exchange (or the Nasdaq National Market, if applicable) on which the Common
Stock may be listed for trading at the time of such exercise and issuance.
(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.
11. Successors and Assigns. Except to the extent otherwise provided
----------------------
in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns
and Optionee, Optionee's assigns and the legal representatives, heirs and
legatees of Optionee's estate.
12. Notices. Any notice required to be given or delivered to the
-------
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
13. Financing. The Plan Administrator may, in its absolute discretion
---------
and without any obligation to do so, permit Optionee to pay the Exercise Price
for the purchased Option Shares by delivering a full-recourse promissory note
payable to the Corporation. The terms of any such promissory note (including the
interest rate, the requirements for collateral and the terms of repayment) shall
be established by the Plan Administrator in its sole discretion.
14. Construction. This Agreement and the option evidenced hereby are
------------
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.
15. Governing Law. The interpretation, performance and enforcement of
-------------
this Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
16. Excess Shares. If the Option Shares covered by this Agreement
-------------
exceed, as of the Grant Date, the number of shares of Common Stock which may
without stockholder approval be issued under the Plan, then this option shall be
void with respect to those excess shares, unless stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock issuable
under the Plan is obtained in accordance with the provisions of the Plan.
17. Additional Terms Applicable to an Incentive Option. In the event
--------------------------------------------------
this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:
5
<PAGE>
(a) This option shall cease to qualify for favorable tax
treatment as an Incentive Option if (and to the extent) this option is exercised
for one or more Option Shares: (A) more than three (3) months after the date
Optionee ceases to be an Employee for any reason other than death or Permanent
Disability or (B) more than twelve (12) months after the date Optionee ceases to
be an Employee by reason of Permanent Disability.
(b) No installment under this option shall qualify for favorable
tax treatment as an Incentive Option if (and to the extent) the aggregate Fair
Market Value (determined at the Grant Date) of the Common Stock for which such
installment first becomes exercisable hereunder would, when added to the
aggregate value (determined as of the respective date or dates of grant) of the
Common Stock or other securities for which this option or any other Incentive
Options granted to Optionee prior to the Grant Date (whether under the Plan or
any other option plan of the Corporation or any Parent or Subsidiary) first
become exercisable during the same calendar year, exceed One Hundred Thousand
Dollars ($100,000) in the aggregate. Should such One Hundred Thousand Dollar
($100,000) limitation be exceeded in any calendar year, this option shall
nevertheless become exercisable for the excess shares in such calendar year as a
Non-Statutory Option.
(c) Should the exercisability of this option be accelerated upon
a Change in Control transaction, then this option shall qualify for favorable
tax treatment as an Incentive Option only to the extent the aggregate Fair
Market Value (determined at the Grant Date) of the Common Stock for which this
option first becomes exercisable in the calendar year in which the Change in
Control occurs does not, when added to the aggregate value (determined as of the
respective date or dates of grant) of the Common Stock or other securities for
which this option or one or more other Incentive Options granted to Optionee
prior to the Grant Date (whether under the Plan or any other option plan of the
Corporation or any Parent or Subsidiary) first become exercisable during the
same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the
aggregate. Should the applicable One Hundred Thousand Dollar ($100,000)
limitation be exceeded in the calendar year of such Change in Control, the
option may nevertheless be exercised for the excess shares in such calendar year
as a Non-Statutory Option.
(d) Should Optionee hold, in addition to this option, one or more
other options to purchase Common Stock which become exercisable for the first
time in the same calendar year as this option, then the foregoing limitations on
the exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
6
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify GeoCities (the "Corporation") that I elect to purchase
__________ shares of the Corporation's Common Stock (the "Purchased Shares") at
the option exercise price of $___ per share (the "Exercise Price") pursuant to
that certain option (the "Option") granted to me under the Corporation's 1998
Stock Incentive Plan on ________________, 199___.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price.
, 199
- -------------------- -
Date
-------------------------------------------------
Optionee
Address:
-----------------------------------------
-------------------------------------------------
Print name in exact manner
it is to appear on the
stock certificate:
-------------------------------------------------
Address to which certificate
is to be sent, if different
from address above:
-------------------------------------------------
Social Security Number:
-------------------------------------------------
Employee Number:
-------------------------------------------------
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Option Agreement.
---------
B. Board shall mean the Corporation's Board of Directors.
-----
C. Change in Control shall mean a change in ownership or
-----------------
control of the Corporation effected through any of the following transactions:
(i) a merger, consolidation or reorganization approved by the
Corporation's stockholders, unless securities representing more than
------
fifty percent (50%) of the total combined voting power of the
successor corporation are immediately thereafter beneficially owned,
directly or indirectly and in substantially the same proportion, by
the persons who beneficially owned the Corporation's outstanding
voting securities immediately prior to such transaction,
(ii) any stockholder-approved transfer or other disposition of
all or substantially all of the Corporation's assets, or
(iii) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation's stockholders which the Board
recommends such stockholders accept.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
----
E. Common Stock shall mean shares of the Corporation's common stock.
------------
F. Corporation shall mean GeoCities, a Delaware corporation.
-----------
G. Employee shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
H. Exercise Date shall mean the date on which the option shall have
-------------
been exercised in accordance with Paragraph 9 of the Agreement.
I. Exercise Price shall mean the exercise price per Option Share as
--------------
specified in the Grant Notice.
A-2
<PAGE>
J. Expiration Date shall mean the date on which the option expires as
---------------
specified in the Grant Notice.
K. Fair Market Value per share of Common Stock on any relevant date
-----------------
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be deemed equal to
the closing selling price per share of Common Stock on the date in
question, as the price is reported by the National Association of
Securities Dealers on the Nasdaq National Market. If there is no
closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be deemed equal to the
closing selling price per share of Common Stock on the date in
question on the Stock Exchange determined by the Plan Administrator to
be the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation
exists.
L. Grant Date shall mean the date of grant of the option as specified
----------
in the Grant Notice.
M. Grant Notice shall mean the Notice of Grant of Stock Option
------------
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
N. Incentive Option shall mean an option which satisfies the
----------------
requirements of Code Section 422.
O. Misconduct shall mean the commission of any act of fraud,
----------
embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by
Optionee of confidential information or trade secrets of the Corporation (or any
Parent or Subsidiary), or any intentional wrongdoing by Optionee, whether by
omission or commission, which adversely affects the business or affairs of the
Corporation (or any Parent or Subsidiary) in a material manner. This shall not
limit the grounds for the dismissal or discharge of Optionee or any other
individual in the Service of the Corporation (or any Parent or Subsidiary).
P. 1934 Act shall mean the Securities Exchange Act of 1934, as
--------
amended.
A-3
<PAGE>
Q. Non-Statutory Option shall mean an option not intended to satisfy
--------------------
the requirements of Code Section 422.
R. Notice of Exercise shall mean the notice of exercise in the form
------------------
attached hereto as Exhibit I.
S. Option Shares shall mean the number of shares of Common Stock
-------------
subject to the option as specified in the Grant Notice.
T. Optionee shall mean the person to whom the option is granted as
--------
specified in the Grant Notice.
U. Parent shall mean any corporation (other than the Corporation) in
------
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. Permanent Disability shall mean the inability of Optionee to
--------------------
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment expected to result in death or to be
of continuous duration of twelve (12) months or more.
W. Plan shall mean the Corporation's 1998 Stock Incentive Plan.
----
X. Plan Administrator shall mean either the Board or a committee of
------------------
the Board acting in its capacity as administrator of the Plan.
Y. Service shall mean the Optionee's performance of services for the
-------
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor.
Z. Stock Exchange shall mean the American Stock Exchange or the New
--------------
York Stock Exchange.
AA. Subsidiary shall mean any corporation (other than the Corporation)
----------
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
A-4
<PAGE>
EXHIBIT 99.4
ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Option Agreement (the "Option Agreement") by
and between GeoCities (the "Corporation") and ___________________________
("Optionee") evidencing the stock option (the "Option") granted this date to
Optionee under the terms of the Corporation's 1998 Stock Incentive Plan, and
such provisions shall be effective immediately with such grant date. All
capitalized terms in this Addendum, to the extent not otherwise defined herein,
shall have the meanings assigned to them in the Option Agreement.
LIMITED STOCK APPRECIATION RIGHT
1. Optionee is hereby granted a limited stock appreciation right exercisable
upon the following terms and conditions:
(i) Optionee shall have the unconditional right, exercisable at any
time during the thirty (30)-day period immediately following a Hostile
Take-Over, to surrender the Option to the Corporation, to the extent the
Option is at the time exercisable for one or more shares of Common Stock.
In return for the surrendered Option, Optionee shall receive a cash
distribution from the Corporation in an amount equal to the excess of (A)
the Take-Over Price of the shares of Common Stock for which the surrendered
option (or surrendered portion) is at the time exercisable over (B) the
aggregate Exercise Price payable for such shares.
(ii) To exercise this limited stock appreciation right, Optionee must,
during the applicable thirty (30)-day exercise period, provide the
Corporation with written notice of the option surrender in which there is
specified the number of Option Shares as to which the Option is being
surrendered. Such notice must be accompanied by the return of Optionee's
copy of the Option Agreement, together with any written amendments to such
Agreement. The cash distribution shall be paid to Optionee within five (5)
business days following such delivery date. The exercise of the limited
stock appreciation right in accordance with the terms of this Addendum is
hereby approved by the Plan Administrator, in advance of such exercise, and
no further approval of the Plan Administrator or the Board shall be
required at the time of the actual option surrender and cash distribution.
Upon receipt of such cash distribution, the Option shall be cancelled with
respect to the Option Shares for which the Option has been surrendered, and
Optionee shall cease to have any further right to acquire those Option
Shares under the Option Agreement. The Option shall, however, remain
outstanding and exercisable for the balance of the Option Shares (if any)
in accordance with the terms of the Option Agreement, and the Corporation
shall issue a replacement
<PAGE>
stock option agreement (substantially in the same form of the surrendered
Option Agreement) for those remaining Option Shares.
(iii) In no event may this limited stock appreciation right be
exercised when there is not a positive spread between the Fair Market Value
of the Option Shares subject to the surrendered option and the aggregate
Exercise Price payable for such shares. This limited stock appreciation
right shall in all events terminate upon the expiration or sooner
termination of the Option term and may not be assigned or transferred by
Optionee, except to the extent the Option is transferable in accordance
with the provisions of the Option Agreement.
2. For purposes of this Addendum, the following definitions shall be in
effect:
(i) A Hostile Take-Over shall be deemed to be
(A) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders which the Board does not recommend such
stockholders to accept, or
(B) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time the Board approved such election or
nomination.
(ii) The Take-Over Price per share shall be deemed to be equal to the
greater of the Fair Market Value per Option Share on the option surrender
----------
date or (B) the highest reported price per share of Common Stock paid by
the tender offeror in effecting the Hostile Take-Over. However, if the
surrendered Option is designated as an Incentive Option in the Grant
Notice, then the Take-Over Price shall not exceed the clause (A) price per
share.
2.
<PAGE>
IN WITNESS WHEREOF, GeoCities has caused this Addendum to be executed
by its duly-authorized officer as of the Effective Date specified below.
GEOCITIES
By:
------------------------------------
Title:
------------------------------------
EFFECTIVE DATE: ___________________, 199__
3.
<PAGE>
EXHIBIT 99.5
ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Option Agreement (the "Option Agreement") by
and between GeoCities (the "Corporation") and _________________________________
("Optionee") evidencing the stock option (the "Option") granted on this date to
Optionee under the terms of the Corporation's 1998 Stock Incentive Plan, and
such provisions shall be effective immediately with such grant date. All
capitalized terms in this Addendum, to the extent not otherwise defined herein,
shall have the meanings assigned to them in the Option Agreement.
INVOLUNTARY TERMINATION FOLLOWING
CHANGE IN CONTROL
1. To the extent the Option is, in connection with a Change
in Control transaction, to be assumed or otherwise continued in full force or
effect in accordance with Paragraph 6 of the Option Agreement, the Option shall
not accelerate upon the occurrence of that Change in Control, and the Option
shall accordingly continue, over Optionee's period of Service after the Change
in Control, to become exercisable for the Option Shares in one or more
installments in accordance with the provisions of the Option Agreement. However,
immediately upon an Involuntary Termination of Optionee's Service within
eighteen (18) months following such Change in Control, the Option, to the extent
outstanding at the time but not otherwise fully exercisable, shall automatically
accelerate so that the Option shall become immediately exercisable for all the
Option Shares at the time subject to the Option and may be exercised for any or
all of those Option Shares as fully vested shares.
2. The Option as accelerated under Paragraph 1 shall remain
so exercisable until the earlier of (i) the Expiration Date or (ii) the
-------
expiration of the one (1)-year period measured from the date of the Optionee's
Involuntary Termination.
3. For purposes of this Addendum the following definition
shall be in effect:
(i) An Involuntary Termination shall mean the
termination of Optionee's Service by reason of:
(A) Optionee's involuntary dismissal or discharge
by the Corporation for reasons other than Misconduct, or
(B) Optionee's voluntary resignation following (A)
a change in Optionee's position with the Corporation (or
Parent or Subsidiary employing Optionee) which materially
reduces Optionee's duties and responsibilities or the level
of management to which Optionee reports, (B) a reduction in
Optionee's level of compensation (including
<PAGE>
base salary,fringe benefits and target bonus under any
corporate performance based bonus or incentive programs) by
more than fifteen percent (15%) or (C) a relocation of
Optionee's place of employment by more than fifty (50) miles,
provided and only if such change, reduction or relocation is
effected by the Corporation without Optionee's consent.
4. The provisions of Paragraph 1 of this Addendum shall
govern the period for which the Option is to remain exercisable following the
Involuntary Termination of Optionee's Service within eighteen (18) months after
the Change in Control and shall supersede any provisions to the contrary in
Paragraph 5 of the Option Agreement.
IN WITNESS WHEREOF, GeoCities has caused this Addendum to be executed
by its duly-authorized officer as of the Effective Date specified below.
GEOCITIES
By:
----------------------------------
Title:
-------------------------------
EFFECTIVE DATE: _________________, 199__
2.
<PAGE>
EXHIBIT 99.6
GEOCITIES
STOCK ISSUANCE AGREEMENT
------------------------
AGREEMENT made this _____ day of ___________________ 19____, by and
between GeoCities, a Delaware corporation, and
____________________________________________, a Participant in the Corporation's
1998 Stock Incentive Plan.
All capitalized terms in this Agreement shall have the meaning
assigned to them in this Agreement or in the attached Appendix.
A. PURCHASE OF SHARES
------------------
1. Purchase. Participant hereby purchases _____________ shares of
--------
Common Stock (the "Purchased Shares") pursuant to the provisions of the Stock
Issuance Program at the purchase price of $______ per share (the "Purchase
Price").
2. Payment. Concurrently with the delivery of this Agreement to the
-------
Corporation, Participant shall pay the Purchase Price for the Purchased Shares
in cash or check payable to the Corporation and shall deliver a duly-executed
blank Assignment Separate from Certificate (in the form attached hereto as
Exhibit I) with respect to the Purchased Shares.
3. Stockholder Rights. Until such time as the Corporation exercises
------------------
the Repurchase Right, Participant (or any successor in interest) shall have all
the rights of a stockholder (including voting, dividend and liquidation rights)
with respect to the Purchased Shares, subject, however, to the transfer
restrictions of this Agreement.
4. Escrow. The Corporation shall have the right to hold the
------
Purchased Shares in escrow until those shares have vested in accordance with the
Vesting Schedule.
5. Compliance with Law. Under no circumstances shall shares of
-------------------
Common Stock or other assets be issued or delivered to Participant pursuant to
the provisions of this Agreement unless, in the opinion of counsel for the
Corporation or its successors, there shall have been compliance with all
applicable requirements of Federal and state securities laws, all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock is at the time listed for trading and all
other requirements of law or of any regulatory bodies having jurisdiction over
such issuance and delivery.
B. TRANSFER RESTRICTIONS
---------------------
1. Restriction on Transfer. Except for any Permitted Transfer,
-----------------------
Participant shall not transfer, assign, encumber or otherwise dispose of any of
the Purchased Shares which are subject to the Repurchase Right.
<PAGE>
2. Restrictive Legend. The stock certificate for the Purchased
------------------
Shares shall be endorsed with the following restrictive legend:
"The shares represented by this certificate are unvested and
subject to certain repurchase rights granted to the Corporation and
accordingly may not be sold, assigned, transferred, encumbered, or in any
manner disposed of except in conformity with the terms of a written
agreement dated ___________, 199 between the Corporation and the
registered holder of the shares (or the predecessor in interest to the
shares). A copy of such agreement is maintained at the Corporation's
principal corporate offices."
3. Transferee Obligations. Each person (other than the Corporation)
----------------------
to whom the Purchased Shares are transferred by means of a Permitted Transfer
must, as a condition precedent to the validity of such transfer, acknowledge in
writing to the Corporation that such person is bound by the provisions of this
Agreement and that the transferred shares are subject to the Repurchase Right to
the same extent such shares would be so subject if retained by Participant.
C. REPURCHASE RIGHT
----------------
1. Grant. The Corporation is hereby granted the right (the
-----
"Repurchase Right"), exercisable at any time during the ninety (90)-day period
following the date Participant ceases for any reason to remain in Service, to
repurchase at the Purchase Price all or any portion of the Purchased Shares in
which Participant is not, at the time of his or her cessation of Service, vested
in accordance with the Vesting Schedule or the special vesting acceleration
provisions of Paragraph C.5 of this Agreement (such shares to be hereinafter
referred to as the "Unvested Shares").
2. Exercise of the Repurchase Right. The Repurchase Right shall be
--------------------------------
exercisable by written notice delivered to each Owner of the Unvested Shares
prior to the expiration of the ninety (90)-day exercise period. The notice shall
indicate the number of Unvested Shares to be repurchased and the date on which
the repurchase is to be effected, such date to be not more than thirty (30) days
after the date of such notice. The certificates representing the Unvested Shares
to be repurchased shall be delivered to the Corporation on or before the close
of business on the date specified for the repurchase. Concurrently with the
receipt of such stock certificates, the Corporation shall pay to Owner, in cash
or cash equivalent (including the cancellation of any purchase-money
indebtedness), an amount equal to the Purchase Price previously paid for the
Unvested Shares to be repurchased from Owner.
3. Termination of the Repurchase Right. The Repurchase Right shall
-----------------------------------
terminate with respect to any Unvested Shares for which it is not timely
exercised under Paragraph C.2. In addition, the Repurchase Right shall terminate
and cease to be exercisable with respect to any and all Purchased Shares in
which Participant vests in accordance with the following Vesting Schedule:
2.
<PAGE>
(i) Upon Participant's completion of one (1) year of Service
measured from ____________________, 199___, Participant shall acquire a
vested interest in, and the Repurchase Right shall lapse with respect to,
twenty-five percent (25%) of the Purchased Shares.
(ii) Participant shall acquire a vested interest in, and the
Repurchase Right shall lapse with respect to, the remaining Purchased
Shares in a series of thirty six (36) successive equal monthly installments
upon Participant's completion of each additional month of Service over the
thirty-six (36)-month period measured from the initial vesting date under
subparagraph (i) above.
4. Recapitalization. Any new, substituted or additional securities
----------------
or other property (including cash paid other than as a regular cash dividend)
which is by reason of any Recapitalization distributed with respect to the
Purchased Shares shall be immediately subject to the Repurchase Right and any
escrow requirements hereunder, but only to the extent the Purchased Shares are
at the time covered by such right or escrow requirements. Appropriate
adjustments to reflect such distribution shall be made to the number and/or
class of securities subject to this Agreement and to the price per share to be
paid upon the exercise of the Repurchase Right in order to reflect the effect of
any such Recapitalization upon the Corporation's capital structure; provided,
--------
however, that the aggregate purchase price shall remain the same.
5. Change in Control.
-----------------
(a) Immediately prior to the consummation of any Change in
Control transaction, the Repurchase Right shall automatically lapse in its
entirety and the Purchased Shares shall vest in full, except to the extent the
Repurchase Right is to be assigned to the successor corporation (or parent
thereof) or is otherwise to continue in full force and effect pursuant to the
terms of the Change in Control transaction.
(b) To the extent the Repurchase Right remains in effect
following a Change in Control transaction, such right shall apply to the new
capital stock or other property (including any cash payments) received in
exchange for the Purchased Shares in consummation of the Change in Control, but
only to the extent the Purchased Shares are at the time covered by such right.
Appropriate adjustments shall be made to the price per share payable upon
exercise of the Repurchase Right to reflect the effect of the Change in Control
upon the Corporation's capital structure; provided, however, that the aggregate
--------
purchase price shall remain the same. The new securities or other property
(including cash payments) issued or distributed with respect to the Purchased
Shares in consummation of the Change in Control shall immediately be deposited
in escrow with the Corporation (or the successor entity) and shall not be
released from escrow until Participant vests in such securities or other
property in accordance with the same Vesting Schedule in effect for the
Purchased Shares.
(c) The Repurchase Right may also be subject to termination in
whole or in part on an accelerated basis, and the Purchased Shares subject to
immediate vesting, in accordance with the terms of any special Addendum attached
to this Agreement.
3.
<PAGE>
D. SPECIAL TAX ELECTION
--------------------
1. Section 83(b) Election . Under Code Section 83, the excess of the
----------------------
fair market value of the Purchased Shares on the date any forfeiture
restrictions applicable to such shares lapse over the Purchase Price paid for
such shares will be reportable as ordinary income on the lapse date. For this
purpose, the term "forfeiture restrictions" includes the right of the
Corporation to repurchase the Purchased Shares pursuant to the Repurchase Right.
Participant may elect under Code Section 83(b) to be taxed at the time the
Purchased Shares are acquired, rather than when and as such Purchased Shares
cease to be subject to such forfeiture restrictions. Such election must be filed
with the Internal Revenue Service within thirty (30) days after the date of this
Agreement. Even if the fair market value of the Purchased Shares on the date of
this Agreement equals the Purchase Price paid (and thus no tax is payable), the
election must be made to avoid adverse tax consequences in the future. THE FORM
FOR MAKING THIS ELECTION IS ATTACHED AS EXHIBIT II HERETO. PARTICIPANT
UNDERSTANDS THAT FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-
DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME AS THE FORFEITURE
RESTRICTIONS LAPSE.
2. FILING RESPONSIBILITY. PARTICIPANT ACKNOWLEDGES THAT IT IS
---------------------
PARTICIPANT'S SOLE RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY
ELECTION UNDER CODE SECTION 83(b), EVEN IF PARTICIPANT REQUESTS THE CORPORATION
OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.
E. GENERAL PROVISIONS
------------------
1. No Employment or Service Contract. Nothing in this Agreement or
---------------------------------
in the Plan shall confer upon Participant any right to continue in Service for
any period of specific duration or interfere with or otherwise restrict in any
way the rights of the Corporation (or any Parent or Subsidiary employing or
retaining Participant) or of Participant, which rights are hereby expressly
reserved by each, to terminate Participant's Service at any time for any reason,
with or without cause.
2. Assignment. The Corporation may assign the Repurchase Right to
----------
any person or entity selected by the Board, including (without limitation) one
or more stockholders of the Corporation.
3. Notices. Any notice required to be given under this Agreement
-------
shall be in writing and shall be deemed effective upon personal delivery or upon
deposit in the U.S. mail, registered or certified, postage prepaid and properly
addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such
party may designate by ten (10) days advance written notice under this paragraph
to all other parties to this Agreement.
4.
<PAGE>
4. No Waiver. The failure of the Corporation in any instance to
---------
exercise the Repurchase Right shall not constitute a waiver of any other
repurchase rights that may subsequently arise under the provisions of this
Agreement or any other agreement between the Corporation and Participant. No
waiver of any breach or condition of this Agreement shall be deemed to be a
waiver of any other or subsequent breach or condition, whether of like or
different nature.
5. Cancellation of Shares. If the Corporation shall make available,
----------------------
at the time and place and in the amount and form provided in this Agreement, the
consideration for the Purchased Shares to be repurchased in accordance with the
provisions of this Agreement, then from and after such time, the person from
whom such shares are to be repurchased shall no longer have any rights as a
holder of such shares (other than the right to receive payment of such
consideration in accordance with this Agreement). Such shares shall be deemed
purchased in accordance with the applicable provisions hereof, and the
Corporation shall be deemed the owner and holder of such shares, whether or not
the certificates therefor have been delivered as required by this Agreement.
6. Participant Undertaking. Participant hereby agrees to take
-----------------------
whatever additional action and execute whatever additional documents the
Corporation may deem necessary or advisable in order to carry out or effect one
or more of the obligations or restrictions imposed on either Participant or the
Purchased Shares pursuant to the provisions of this Agreement.
7. Agreement is Entire Contract. This Agreement constitutes the
----------------------------
entire contract between the parties hereto with regard to the subject matter
hereof. This Agreement is made pursuant to the provisions of the Plan and shall
in all respects be construed in conformity with the terms of the Plan.
8. Governing Law. This Agreement shall be governed by, and construed
-------------
in accordance with, the laws of the State of California without resort to that
State's conflict-of-laws rules.
9. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
10. Successors and Assigns. The provisions of this Agreement shall
----------------------
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and upon Participant, Participant's assigns and the legal
representatives, heirs and legatees of Participant's estate, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.
5.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first indicated above.
GEOCITIES
By: ______________________________
Title: ______________________________
Address: ______________________________
______________________________
PARTICIPANT
Address: ______________________________
______________________________
6.
<PAGE>
SPOUSAL ACKNOWLEDGMENT
The undersigned spouse of the Participant has read and hereby approves
the foregoing Stock Issuance Agreement. In consideration of the Corporation's
granting the Participant the right to acquire the Purchased Shares in accordance
with the terms of such Agreement, the undersigned hereby agrees to be
irrevocably bound by all the terms of such Agreement, including (without
limitation) the right of the Corporation (or its assigns) to purchase any
Purchased Shares in which the Participant is not vested at the time of his or
her termination of Service.
____________________________
PARTICIPANT
Address: ____________________________
____________________________
<PAGE>
EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED ______________________ hereby sell(s), assign(s)
and transfer(s) unto GeoCities (the "Corporation"), ___________________(_______)
shares of the Common Stock of the Corporation standing in his or her name on the
books of the Corporation represented by Certificate No. ___________________
herewith and do(es) hereby irrevocably constitute and appoint
_______________________________ Attorney to transfer the said stock on the books
of the Corporation with full power of substitution in the premises.
Dated: ________________, 199__.
Signature _________________________________
Instruction: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Corporation to
exercise the Repurchase Right without requiring additional signatures on the
part of Participant.
<PAGE>
EXHIBIT II
SECTION 83(b) TAX ELECTION
This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
Address:
Taxpayer Ident. No.:
(2) The property with respect to which the election is being made is
____________ shares of the common stock of GeoCities
(3) The property was issued on _____________, 199___.
(4) The taxable year in which the election is being made is the calendar year
199__.
(5) The property is subject to a repurchase right pursuant to which the issuer
has the right to acquire the property at the original purchase price if for
any reason taxpayer's service with the issuer terminates. The issuer's
repurchase right lapses in a series of annual and monthly installments over
a four (4)-year period ending on _______________.
(6) The fair market value at the time of transfer (determined without regard to
any restriction other than a restriction which by its terms will never
lapse) is $_____________per share.
(7) The amount paid for such property is $____________ per share.
(8) A copy of this statement was furnished to GeoCities for whom taxpayer
rendered the services underlying the transfer of property.
(9) This statement is executed on ________________________, 199__.
_____________________________________ ________________________________
Spouse (if any) Taxpayer
This election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Issuance Agreement. This
filing should be made by registered or certified mail, return receipt requested.
Participant must retain two (2) copies of the completed form for filing with his
or her Federal and state tax returns for the current tax year and an additional
copy for his or her records.
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Issuance Agreement.
---------
B. Board shall mean the Corporation's Board of Directors.
-----
C. Change in Control shall mean a change in ownership or control of
-----------------
the Corporation effected through any of the following transactions:
(i) a merger, consolidation or reorganization approved by the
Corporation's stockholders, unless securities representing more than fifty
------
percent (50%) of the total combined voting power of the successor
corporation are immediately thereafter beneficially owned, directly or
indirectly and in substantially the same proportion, by the persons who
beneficially owned the Corporation's outstanding voting securities
immediately prior to such transaction
(ii) any stockholder-approved transfer or other disposition of
all or substantially all of the Corporation's assets,
(iii) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders which the Board recommends such
stockholders accept.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
----
E. Common Stock shall mean the Corporation's common stock.
------------
F. Corporation shall mean GeoCities, a Delaware corporation.
-----------
G. Owner shall mean Participant and all subsequent holders of the
-----
Purchased Shares who derive their chain of ownership through a Permitted
Transfer from Participant.
H. 1934 Act shall mean the Securities Exchange Act of 1934, as
--------
amended.
I. Parent shall mean any corporation (other than the Corporation) in
------
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock
A-1.
<PAGE>
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
J. Participant shall mean the person to whom the Purchased Shares are
-----------
issued under the Stock Issuance Program.
K. Permitted Transfer shall mean (i) a gratuitous transfer of the
------------------
Purchased Shares, provided and only if Participant obtains the Corporation's
-----------------
prior written consent to such transfer, (ii) a transfer of title to the
Purchased Shares effected pursuant to Participant's will or the laws of
intestate succession following Participant's death or (iii) a transfer to the
Corporation in pledge as security for any purchase-money indebtedness incurred
by Participant in connection with the acquisition of the Purchased Shares.
L. Plan shall mean the Corporation's 1998 Stock Incentive Plan.
----
M. Plan Administrator shall mean either the Board or a committee of
the Board acting in its administrative capacity under the Plan.
N. Purchase Price shall have the meaning assigned to such term in
--------------
Paragraph A.1.
O. Purchased Shares shall have the meaning assigned to such term in
----------------
Paragraph A.1.
P. Recapitalization shall mean any stock split, stock dividend,
----------------
recapitalization, combination of shares, exchange of shares or other change
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.
Q. Repurchase Right shall mean the right granted to the Corporation
----------------
in accordance with Article C.
R. Service shall mean the Participant's performance of services for
-------
the Corporation (or any Parent or Subsidiary) in the capacity of an employee,
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance, a non-employee member
of the board of directors or a consultant.
S. Stock Issuance Program shall mean the Stock Issuance Program under
----------------------
the Plan.
T. Subsidiary shall mean any corporation (other than the Corporation)
----------
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
A-2.
<PAGE>
U. Vesting Schedule shall mean the vesting schedule specified in
----------------
Paragraph C.3, subject to the special vesting acceleration provisions of
Paragraph C.5.
V. Unvested Shares shall have the meaning assigned to such term in
---------------
Paragraph C.1.
A-3.
<PAGE>
EXHIBIT 99.7
ADDENDUM
TO
STOCK ISSUANCE AGREEMENT
The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Issuance Agreement (the "Issuance Agreement")
by and between GeoCities (the "Corporation") and ____________ ("Participant")
evidencing the stock issuance made on this date to Participant under the terms
of the Corporation's 1998 Stock Incentive Plan, and such provisions shall be
effective immediately on such issue date. All capitalized terms in this
Addendum, to the extent not otherwise defined herein, shall have the meanings
assigned to such terms in the Issuance Agreement.
INVOLUNTARY TERMINATION FOLLOWING
CHANGE IN CONTROL
1. To the extent the Repurchase Right is assigned to the successor
corporation (or parent thereof) in a Change in Control or is otherwise continued
in full force and effect pursuant to the terms of the Change in Control
transaction, no accelerated vesting of the Purchased Shares shall occur upon
such Change of Control, and the Repurchase Right shall continue to remain in
full force and effect in accordance with the provisions of the Issuance
Agreement. The Participant shall, over Participant's period of Service following
the Change in Control, continue to vest in the Purchased Shares in one or more
installments in accordance with the provisions of the Issuance Agreement.
2. Immediately upon an Involuntary Termination of Participant's
Service within eighteen (18) months following the Change in Control, the
Repurchase Right shall terminate automatically, and all the Purchased Shares
shall vest in full at that time.
3. For purposes of this Addendum, the following definitions shall be
in effect:
An Involuntary Termination shall mean the termination of Participant's
Service by reason of:
(i) Participant's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) Participant's voluntary resignation following (A) a change in
Participant's position with the Corporation (or Parent or Subsidiary employing
Participant) which materially reduces Participant's duties and responsibilities
or the level of management to which Participant reports, (B) a reduction in
Participant's level of compensation (including base salary, fringe benefits and
target bonus under any corporate performance based bonus or incentive programs)
by more than fifteen percent (15%) or (C) a relocation of Participant's place of
<PAGE>
employment by more than fifty (50) miles, provided and only if such change,
reduction or relocation is effected by the Corporation without
Participant's consent.
Misconduct shall mean the commission of any act of fraud, embezzlement
or dishonesty by the Participant, any unauthorized use or disclosure by the
Participant of confidential information or trade secrets of the Corporation (or
any Parent or Subsidiary), or any intentional wrongdoing by the Participant,
whether by omission or commission, which adversely affects the business or
affairs of the Corporation (or any Parent or Subsidiary) in a material manner.
This shall not limit the grounds for the dismissal or discharge of the
Participant or other person in the Service of the Corporation (or any Parent or
Subsidiary).
IN WITNESS WHEREOF, GeoCities has caused this Addendum to be executed
by its duly-authorized officer as of the Effective Date specified below.
GEOCITIES
By: _____________________________
Title: _____________________________
EFFECTIVE DATE: _________________, 199__
2.
<PAGE>
EXHIBIT 99.8
INITIAL GRANT
-------------
GEOCITIES
NOTICE OF GRANT OF NON-EMPLOYEE DIRECTOR
----------------------------------------
AUTOMATIC STOCK OPTION
----------------------
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of GeoCities (the "Corporation"):
Optionee: ________________________________________________
--------
Grant Date: ______________________________________________
----------
Exercise Price: $ _______________________ per share
--------------
Number of Option Shares: 10,000 shares
-----------------------
Expiration Date: _________________________________________
---------------
Type of Option: Non-Statutory Stock Option
--------------
Date Exercisable: Immediately Exercisable
----------------
Vesting Schedule: The Option Shares shall initially be unvested and
----------------
subject to repurchase by the Corporation at the Exercise Price paid
per share. Optionee shall acquire a vested interest in, and the
Corporation's repurchase right shall accordingly lapse with respect
to, the Option Shares in a series of four (4) successive equal annual
installments upon the Optionee's completion of each year of service as
a member of the Corporation's Board of Directors (the "Board") over
the four (4)-year period measured from the Grant Date. In no event
shall any additional Option Shares vest after Optionee's cessation of
Board service.
Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the automatic option grant program under the
GeoCities 1998 Stock Incentive Plan (the "Plan"). Optionee further agrees to be
bound by the terms of the Plan and the terms of the Option as set forth in the
Automatic Stock Option Agreement attached hereto as Exhibit A.
---------
Optionee hereby acknowledges receipt of a copy of the official
prospectus for the Plan in the form attached hereto as Exhibit B. A copy of the
---------
Plan is available upon request made to the Corporate Secretary at the
Corporation's principal offices.
<PAGE>
REPURCHASE RIGHT. OPTIONEE HEREBY AGREES THAT ALL UNVESTED OPTION
----------------
SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO A REPURCHASE
RIGHT EXERCISABLE BY THE CORPORATION AND ITS ASSIGNS. THE TERMS OF SUCH RIGHT
SHALL BE SPECIFIED IN A STOCK PURCHASE AGREEMENT, IN FORM AND SUBSTANCE
SATISFACTORY TO THE CORPORATION, EXECUTED BY OPTIONEE AT THE TIME OF THE OPTION
EXERCISE.
No Impairment of Rights. Nothing in this Notice or the attached
-----------------------
Automatic Stock Option Agreement or in the Plan shall interfere with or
otherwise restrict in any way the rights of the Corporation and the
Corporation's stockholders to remove Optionee from the Board at any time in
accordance with the provisions of applicable law.
Definitions. All capitalized terms in this Notice shall have the
-----------
meaning assigned to them in this Notice or in the attached Automatic Stock
Option Agreement.
_______________, 199__
Date
GEOCITIES
By: ___________________________________
Title: ___________________________________
___________________________________
OPTIONEE
Address: ___________________________________
___________________________________
ATTACHMENTS
- -----------
Exhibit A - Automatic Stock Option Agreement
Exhibit B - Plan Summary and Prospectus
2.
<PAGE>
EXHIBIT A
AUTOMATIC STOCK OPTION AGREEMENT
--------------------------------
<PAGE>
EXHIBIT B
PLAN SUMMARY AND PROSPECTUS
---------------------------
<PAGE>
EXHIBIT 99.9
ANNUAL GRANT
------------
GEOCITIES
NOTICE OF GRANT OF NON-EMPLOYEE DIRECTOR
AUTOMATIC STOCK OPTION
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of GeoCities (the "Corporation"):
Optionee: ________________________________________
--------
Grant Date: ______________________________________
----------
Exercise Price: $___________________ per share
--------------
Number of Option Shares: 2,500 shares
-----------------------
Expiration Date: _________________________________
---------------
Type of Option: Non-Statutory Stock Option
--------------
Date Exercisable: Immediately Exercisable
----------------
Vesting Schedule: The Option Shares shall initially be unvested and
----------------
subject to repurchase by the Corporation at the Exercise Price paid
per share. Optionee shall acquire a vested interest in, and the
Corporation's repurchase right shall accordingly lapse with respect
to, the Option Shares upon the Optionee's completion of one (1) year
of service as a member of the Corporation's Board of Directors (the
"Board") measured from the Grant Date. In no event shall any
additional Option Shares vest after Optionee's cessation of Board
service.
Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the automatic option grant program under the
GeoCities 1998 Stock Incentive Plan (the "Plan"). Optionee further agrees to be
bound by the terms of the Plan and the terms of the Option as set forth in the
Automatic Stock Option Agreement attached hereto as Exhibit A.
---------
Optionee hereby acknowledges receipt of a copy of the official
prospectus for the Plan in the form attached hereto as Exhibit B. A copy of the
---------
Plan is available upon request made to the Corporate Secretary at the
Corporation's principal offices.
<PAGE>
REPURCHASE RIGHT. OPTIONEE HEREBY AGREES THAT ALL UNVESTED OPTION
----------------
SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO A REPURCHASE
RIGHT EXERCISABLE BY THE CORPORATION AND ITS ASSIGNS. THE TERMS OF SUCH RIGHT
SHALL BE SPECIFIED IN A STOCK PURCHASE AGREEMENT, IN FORM AND SUBSTANCE
SATISFACTORY TO THE CORPORATION, EXECUTED BY OPTIONEE AT THE TIME OF THE OPTION
EXERCISE.
No Impairment of Rights. Nothing in this Notice or the attached
-----------------------
Automatic Stock Option Agreement or in the Plan shall interfere with or
otherwise restrict in any way the rights of the Corporation and the
Corporation's stockholders to remove Optionee from the Board at any time in
accordance with the provisions of applicable law.
Definitions. All capitalized terms in this Notice shall have the
-----------
meaning assigned to them in this Notice or in the attached Automatic Stock
Option Agreement.
______________, 199__
Date
GEOCITIES
By: ______________________________
Title: ______________________________
______________________________
OPTIONEE
Address: ______________________________
______________________________
ATTACHMENTS
- -----------
Exhibit A - Automatic Stock Option Agreement
Exhibit B - Plan Summary and Prospectus
2.
<PAGE>
EXHIBIT A
AUTOMATIC STOCK OPTION AGREEMENT
--------------------------------
<PAGE>
EXHIBIT B
PLAN SUMMARY AND PROSPECTUS
---------------------------
<PAGE>
EXHIBIT 99.10
GEOCITIES
AUTOMATIC STOCK OPTION AGREEMENT
--------------------------------
RECITALS
- --------
A. The Corporation has implemented an automatic option grant program
under the Plan pursuant to which eligible non-employee members of the Board will
automatically receive special option grants at periodic intervals over their
period of Board service in order to provide such individuals with a meaningful
incentive to continue to serve as members of the Board.
B. Optionee is an eligible non-employee Board member, and this
Agreement is executed pursuant to, and is intended to carry out the purposes of,
the Plan in connection with the automatic grant of an option to purchase shares
of Common Stock under the Plan.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of
---------------
the Grant Date, a Non-Statutory Option to purchase up to the number of Option
Shares specified in the Grant Notice. The Option Shares shall be purchasable
from time to time during the option term specified in Paragraph 2 at the
Exercise Price.
2. Option Term. This option shall have a term of ten (10) years
-----------
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5, 6 or 7.
3. Limited Transferability. This option may, in connection with the
-----------------------
Optionee's estate plan, be assigned in whole or in part during Optionee's
lifetime to one or more members of the Optionee's immediate family or to a trust
established for the exclusive benefit of the Optionee and/or one or more such
family members. The assigned portion shall be exercisable only by the person or
persons who acquire a proprietary interest in the option pursuant to such
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for this option immediately prior to such assignment. Should the
Optionee die while holding this option, then this option shall be transferred in
accordance with Optionee's will or the laws of descent and distribution.
4. Exercisability/Vesting.
----------------------
(a) This option shall be immediately exercisable for any or all
of the Option Shares, whether or not the Option Shares are at the time vested in
accordance with the Vesting Schedule, and shall remain so exercisable until the
Expiration Date or sooner termination of the option term under Paragraph 5, 6 or
7.
1
<PAGE>
(A) Optionee shall, in accordance with the Vesting Schedule
set forth in the Grant Notice, vest in the Option Shares in one or
more installments over his or her period of Board service. Vesting in
the Option Shares may be accelerated pursuant to the provisions of
Paragraph 5, 6 or 7. In no event, however, shall any additional Option
Shares vest following Optionee's cessation of service as a Board
member.
5. Cessation of Board Service. Should Optionee's service as a Board
--------------------------
member cease while this option remains outstanding, then the option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date in accordance with the following
provisions:
(a) Should Optionee cease to serve as a Board member for any
reason (other than death or Permanent Disability) while this option is
outstanding, then the period for exercising this option shall be reduced to a
twelve (12)-month period (commencing with the date of such cessation of Board
service), but in no event shall this option be exercisable at any time after the
Expiration Date. During such limited period of exercisability, this option may
not be exercised in the aggregate for more than the number of Option Shares (if
any) in which Optionee is vested on the date of his or her cessation of Board
service. Upon the earlier of (i) the expiration of such twelve (12)-month period
or (ii) the specified Expiration Date, the option shall terminate and cease to
be exercisable with respect to any vested Option Shares for which the option has
not been exercised.
(b) Should Optionee die within the twelve (12)-month period
following his or her cessation of Board service and hold this option at the time
of his or her death, then the personal representative of Optionee's estate or
the person or persons to whom the option is transferred pursuant to Optionee's
will or in accordance with the laws of descent and distribution shall have the
right to exercise this option for any or all of the Option Shares in which
Optionee is vested at the time of Optionee's cessation of Board service (less
any Option Shares purchased by Optionee after such cessation of Board service
but prior to death). Such right of exercise shall terminate, and this option
shall accordingly cease to be exercisable for such vested Option Shares, upon
the earlier of (i) the expiration of the twelve (12)-month period measured from
-------
the date of Optionee's cessation of Board service or (ii) the specified
Expiration Date.
(c) Should Optionee cease service as a Board member by reason of
death or Permanent Disability, then all Option Shares at the time subject to
this option but not otherwise vested shall vest in full so that this option may
be exercised for any or all of the Option Shares as fully vested shares of
Common Stock at any time prior to the earlier of (i) the expiration of the
-------
twelve (12)-month period measured from the date of Optionee's cessation of Board
service or (ii) the specified Expiration Date, whereupon this option shall
terminate and cease to be outstanding.
(d) Upon Optionee's cessation of Board service for any reason
other than death or Permanent Disability, this option shall immediately
terminate and cease to be outstanding with respect to any and all Option Shares
in which Optionee is not otherwise at that
2
<PAGE>
time vested in accordance with the normal Vesting Schedule or the special
vesting acceleration provisions of Paragraph 6 or 7 below.
6. Change in Control.
-----------------
(a) In the event of a Change in Control transaction, all Option
Shares at the time subject to this option but not otherwise vested shall
automatically vest so that this option shall, immediately prior to the specified
effective date for the Change in Control, become exercisable for all of those
Option Shares as fully-vested shares of Common Stock and may be exercised for
all or any portion of those vested shares. Immediately following the
consummation of the Change in Control, this option shall terminate and cease to
be outstanding, except to the extent assumed by the successor corporation or its
parent company or otherwise continued in full force and effect pursuant to the
terms of the Change in Control transaction.
(b) If this option is assumed in connection with a Change in
Control (or otherwise continued in full force and effect), then this option
shall be appropriately adjusted, immediately after such Change in Control, to
apply to the number and class of securities or other property which would have
been issuable to Optionee in consummation of such Change in Control had the
option been exercised immediately prior to such Change in Control, and
appropriate adjustments shall also be made to the Exercise Price, provided the
--------
the aggregate Exercise Price shall remain the same.
7. Hostile Take-Over.
-----------------
(a) Optionee shall have an unconditional right, exercisable at
the time during the thirty (30)-day period immediately following the
consummation of a Hostile Take-Over, to surrender this option to the Corporation
in exchange for a cash distribution from the Corporation in an amount equal to
the excess of (i) the Take-Over Price of the Option Shares at the time subject
to the surrendered option (whether or not those Option Shares are otherwise at
the time vested) over (ii) the aggregate Exercise Price payable for such shares.
This Paragraph 7(a) limited stock appreciation right shall in all events
terminate upon the expiration or sooner termination of the option term and may
not be assigned or transferred by Optionee.
(b) To exercise the Paragraph 7(a) limited stock appreciation
right, Optionee must, during the applicable thirty (30)-day exercise period,
provide the Corporation with written notice of the option surrender in which
there is specified the number of Option Shares as to which the option is being
surrendered. Such notice must be accompanied by the return of Optionee's copy of
this Agreement, together with any written amendments to such Agreement. The cash
distribution shall be paid to Optionee within five (5) business days following
such delivery date. The exercise of such limited stock appreciation right in
accordance with the terms of this Paragraph 7 has been pre-approved pursuant to
the express provisions of the Automatic Option Grant Program, and neither the
approval of the Plan Administrator nor the consent of the Board shall be
required at the time of the actual option surrender and cash distribution. Upon
receipt of the cash distribution, this option shall be cancelled with respect to
the shares subject to the surrendered option (or the surrendered portion), and
Optionee shall cease to have any further right to acquire those Option Shares
under this Agreement. The option shall, however, remain outstanding for the
balance of the Option Shares (if any) in accordance
3
<PAGE>
with the terms and provisions of this Agreement, and the Corporation shall
accordingly issue a replacement stock option agreement (substantially in the
same form as this Agreement) for those remaining Option Shares.
8. Adjustment in Option Shares. Should any change be made to the
---------------------------
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
9. Stockholder Rights. The holder of this option shall not have any
------------------
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
10. Manner of Exercising Option.
---------------------------
(a) In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:
(i) To the extent the option is exercised for vested Option
Shares, execute and deliver to the Corporation a Notice of Exercise for the
Option Shares for which the option is exercised. To the extent this option
is exercised for unvested Option Shares, execute and deliver to the
Corporation a Purchase Agreement for those unvested Option Shares.
(ii) Pay the aggregate Exercise Price for the purchased
shares in one or more of the following forms:
(A) cash or check made payable to the Corporation,
(B) shares of Common Stock held by Optionee (or any
other person or persons exercising the option) for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date, or
(C) to the extent the option is exercised for vested
Option Shares, through a special sale and remittance procedure
pursuant to which Optionee (or any other person or persons exercising
the option) shall concurrently provide irrevocable instructions (I) to
a Corporation-approved brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate Exercise Price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes
required to be withheld by the
4
<PAGE>
Corporation by reason of such exercise and (II) to the Corporation to
deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale.
(iii) Furnish to the Corporation appropriate documentation
that the person or persons exercising the option (if other than Optionee) have
the right to exercise this option.
(b) Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the Exercise Price
must accompany the Notice of Exercise (or the Purchase Agreement) delivered to
the Corporation in connection with the option exercise.
(c) As soon after the Exercise Date as practical, the Corporation
shall issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate for the purchased Option Shares, with the
appropriate legends affixed thereto. To the extent any such Option Shares are
unvested, the certificates for those Option Shares shall be endorsed with an
appropriate legend evidencing the Corporation's repurchase rights and may be
held in escrow with the Corporation until such shares vest.
(d) In no event may this option be exercised for any fractional
shares.
11. No Impairment of Rights. This Agreement shall not in any way
-----------------------
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets. In addition, this Agreement shall not in any way be
construed or interpreted so as to affect adversely or otherwise impair the right
of the Corporation or the stockholders to remove Optionee from the Board at any
time in accordance with the provisions of applicable law.
12. Compliance with Laws and Regulations.
------------------------------------
(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.
13. Successors and Assigns. Except to the extent otherwise provided
----------------------
in Paragraph 3 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding
5
<PAGE>
upon, the Corporation and its successors and assigns and Optionee, Optionee's
assigns and the legal representatives, heirs and legatees of Optionee's estate.
14. Notices. Any notice required to be given or delivered to the
-------
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
15. Construction. This Agreement and the option evidenced hereby are
------------
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan.
16. Governing Law. The interpretation, performance and enforcement
-------------
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
6
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify GeoCities (the "Corporation") that I elect to purchase
__________ shares of the Corporation's Common Stock (the "Purchased Shares") at
the option exercise price of $___________ per share (the "Exercise Price")
pursuant to that certain option (the "Option") granted to me under the
Corporation's 1998 Stock Incentive Plan on ____________________, 199___.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price for any Purchased Shares in which I am vested at the time of exercise of
the Option.
_____________________, 199__
Date
_______________________________________
Optionee
Address:_______________________________
_______________________________________
Print name in exact manner
it is to appear on the
stock certificate: _______________________________________
Address to which certificate
is to be sent, if different
from address above: _______________________________________
_______________________________________
Social Security Number: _______________________________________
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Automatic Stock Option Agreement.
---------
B. Board shall mean the Corporation's Board of Directors.
-----
C. Change in Control shall mean a change in ownership or control of
-----------------
the Corporation effected through any of the following transactions:
(i) a merger, consolidation or reorganization approved by the
Corporation's stockholders, unless securities possessing more than fifty
------
percent (50%) of the total combined voting power of the voting securities
of the successor corporation are immediately thereafter owned, directly or
indirectly and in substantially the same proportion, by the persons who
beneficially owned the Corporation's outstanding voting securities
immediately prior to such transaction;
(ii) any stockholder-approved transfer or other disposition of
all or substantially all of the Corporation's;
(iii) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders which the Board recommends such
stockholders accept.
D. Common Stock shall mean the Corporation's common stock.
------------
E. Code shall mean the Internal Revenue Code of 1986, as amended.
----
F. Corporation shall mean GeoCities, a Delaware corporation, and its
-----------
successors.
G. Exercise Date shall mean the date on which the option shall have
-------------
been exercised in accordance with Paragraph 10 of the Agreement.
H. Exercise Price shall mean the exercise price per share as
--------------
specified in the Grant Notice.
I. Expiration Date shall mean the date on which the option expires as
---------------
specified in the Grant Notice.
A-1
<PAGE>
J. Fair Market Value per share of Common Stock on any relevant date
-----------------
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as the price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market. If there is no closing selling price for the Common Stock
on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange which
serves as the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such exchange.
If there is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
K. Grant Date shall mean the date of grant of the option as specified
----------
in the Grant Notice.
L. Grant Notice shall mean the Notice of Grant of Automatic Stock
------------
Option accompanying the Agreement, pursuant to which Optionee has been informed
of the basic terms of the option evidenced hereby.
M. Hostile Take-Over shall mean:
-----------------
(i) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders which the Board does not recommend such
stockholders to accept, or
(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time the Board approved such election or
nomination.
A-2
<PAGE>
N. 1934 Act shall mean the Securities Exchange Act of 1934, as
--------
amended.
O. Non-Statutory Option shall mean an option not intended to satisfy
--------------------
the requirements of Code Section 422.
P. Notice of Exercise shall mean the notice of exercise in the form
------------------
of Exhibit.
Q. Option Shares shall mean the number of shares of Common Stock
-------------
subject to the option.
R. Optionee shall mean the person to whom the option is granted as
--------
specified in the Grant Notice.
S. Permanent Disability shall mean the inability of Optionee to
--------------------
perform his or her usual duties as a member of the Board by reason of any
medically determinable physical or mental impairment expected to result in death
or to be of continuous duration of twelve (12) months or more.
T. Plan shall mean the Corporation's 1998 Stock Incentive Plan.
----
U. Purchase Agreement shall mean the stock purchase agreement (in
------------------
form and substance satisfactory to the Corporation) which grants the Corporation
the right to repurchase, at the Exercise Price, any and all unvested Option
Shares held by Optionee at the time of Optionee's cessation of Board service and
which precludes the sale, transfer or other disposition of any purchased Option
Shares while those shares are unvested and subject to such repurchase right.
V. Stock Exchange shall mean the American Stock Exchange or the New
--------------
York Stock Exchange.
W. Take-Over Price shall mean the greater of (i) the Fair Market
--------------- -------
Value per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting the
Hostile Take-Over.
X. Vesting Schedule shall mean the vesting schedule specified in the
----------------
Grant Notice, pursuant to which the Option Shares will vest in one or more
installments over the Optionee's period of Board service, subject to
acceleration in accordance with the provisions of the Agreement.
A-3
<PAGE>
EXHIBIT 99.11
GEOCITIES
1998 EMPLOYEE STOCK PURCHASE PLAN
---------------------------------
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the interests
of GeoCities, a Delaware corporation, by providing eligible employees with the
opportunity to acquire a proprietary interest in the Corporation through
participation in a payroll-deduction based employee stock purchase plan designed
to qualify under Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock, including shares of Common Stock
purchased on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed Three Hundred
Thousand (300,000) shares.
B. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and class of securities issuable under
the Plan, (ii) the maximum number and class of securities purchasable per
Participant and in the aggregate on any one Purchase Date and (iii) the number
and class of securities and the price per share in effect under each outstanding
purchase right in order to prevent the dilution or enlargement of benefits
thereunder.
<PAGE>
IV. PURCHASE PERIODS
A. Shares of Common Stock shall be offered for purchase under the
Plan through a series of successive purchase periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.
B. Each purchase period shall have a duration of six (6) months.
Purchase periods shall run from the first business day in February each year to
the last business day in July of the same year and from the first business day
in August each year to the last business day in January of the following year.
However, the first purchase period shall commence at the Effective Time and
terminate on the last business day in January 1999.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the start date of
any purchase period under the Plan may enter that purchase period on such start
date.
B. To participate in the Plan for a particular purchase period, the
Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization) and file such forms with the Plan Administrator (or its
designate) on or before the start date of the purchase period.
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for purposes
of acquiring shares of Common Stock under the Plan may be any multiple of one
percent (1%) of the Cash Compensation paid to the Participant during each
purchase period, up to a maximum of ten percent (10%). The deduction rate so
authorized shall continue in effect throughout the purchase period. The
Participant may not increase his or her rate of payroll deduction during a
purchase period. However, the Participant may, at any time during the purchase
period, reduce his or her rate of payroll deduction to become effective as soon
as possible after filing the appropriate form with the Plan Administrator. The
Participant may not, however, effect more than one (1) such reduction per
purchase period.
B. Payroll deductions shall begin on the first pay day following the
start date of the purchase period and shall (unless sooner terminated by the
Participant) continue through the pay day ending with or immediately prior to
the last day of the purchase period. The amounts so collected shall be credited
to the Participant's book account under the Plan, but no interest shall be paid
on the balance from time to time outstanding in such account. The amounts
collected from the Participant shall not be required to be held in any
segregated account or trust fund and may be commingled with the general assets
of the Corporation and used for general corporate purposes.
2.
<PAGE>
C. Payroll deductions shall automatically cease upon the termination
of the Participant's purchase right in accordance with the provisions of the
Plan.
D. The Participant's acquisition of Common Stock under the Plan on
any Purchase Date shall neither limit nor require the Participant's acquisition
of Common Stock on any subsequent Purchase Date.
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. A Participant shall be granted a
-----------------------
separate purchase right on the start date of each purchase period in which he or
she participates. The purchase right shall provide the Participant with the
right to purchase shares of Common Stock on the Purchase Date upon the terms set
forth below. The Participant shall execute a stock purchase agreement embodying
such terms and such other provisions (not inconsistent with the Plan) as the
Plan Administrator may deem advisable.
Under no circumstances shall purchase rights be granted under the Plan
to any Eligible Employee if such individual would, immediately after the grant,
own (within the meaning of Code Section 424(d)) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Corporation
or any Corporate Affiliate.
B. Exercise of the Purchase Right. Each purchase right shall be
------------------------------
automatically exercised on the Purchase Date, and shares of Common Stock shall
accordingly be purchased on behalf of each Participant (other than Participants
whose payroll deductions have previously been refunded pursuant to the
Termination of Purchase Right provisions below) on each such Purchase Date. The
purchase shall be effected by applying the Participant's payroll deductions for
the purchase period ending on such Purchase Date to the purchase of whole shares
of Common Stock at the purchase price in effect for that purchase period.
C. Purchase Price. The purchase price per share at which Common
--------------
Stock will be purchased on the Participant's behalf on each Purchase Date shall
be equal to eighty-five percent (85%) of the lower of (i) the Fair Market Value
-----
per share of Common Stock on the start date of the purchase period or (ii) the
Fair Market Value per share of Common Stock on that Purchase Date.
D. Number of Purchasable Shares. The number of shares of Common
----------------------------
Stock purchasable by a Participant on each Purchase Date shall be the number of
whole shares obtained by dividing the amount collected from the Participant
through payroll deductions during the purchase period ending with that Purchase
Date by the purchase price in effect for the Participant for that Purchase Date.
However, the maximum number of shares of Common Stock purchasable per
Participant on any one Purchase Date shall not exceed the number of shares
determined by dividing Five Thousand Dollars ($5,000) by the purchase price in
effect for that Purchase Date. In addition, the maximum aggregate number of
shares of Common Stock purchasable by all
3.
<PAGE>
Participants on any one Purchase Date shall not exceed Seventy-Five Thousand
(75,000) shares, subject to periodic adjustments in the event of certain changes
in the Corporation's capitalization.
E. Excess Payroll Deductions. Any payroll deductions not applied to
-------------------------
the purchase of shares of Common Stock on any Purchase Date because they are
not sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable by the Participant on the
Purchase Date shall be promptly refunded.
F. Termination of Purchase Right. The following provisions shall
-----------------------------
govern the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the last day of the
purchase period, terminate his or her outstanding purchase right by filing
the appropriate form with the Plan Administrator (or its designate), and no
further payroll deductions shall be collected from the Participant with
respect to the terminated purchase right. Any payroll deductions collected
during the purchase period in which such termination occurs shall be
refunded as soon as possible.
(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin the purchase
period for which the terminated purchase right was granted. In order to
resume participation in any subsequent purchase period, such individual
must re-enroll in the Plan (by making a timely filing of the prescribed
enrollment forms) on or before the start date of the new purchase period.
(iii) Should the Participant cease to remain an Eligible
Employee for any reason (including death, disability or change in status)
while his or her purchase right remains outstanding, then that purchase
right shall immediately terminate, and all of the Participant's payroll
deductions for the purchase period in which the purchase right so
terminates shall be immediately refunded. Should the Participant cease to
remain in active service by reason of an approved unpaid leave of absence
all of the Participant's payroll deductions for the purchase period in
which the approved unpaid leave of absence began shall be immediately
refunded. In no event shall any further payroll deductions be collected on
the Participant's behalf during such leave. Upon the Participant's return
to active service (i) within ninety (90) days following the commencement of
such leave or, (ii) prior to the expiration of any longer period for which
such Participant's right to reemployment with the Corporation is guaranteed
by either statute or contract, his or her payroll deductions under the Plan
shall automatically resume at the rate in effect at the time the leave
began. However, should the Participant's leave of absence exceed ninety
(90) days and his or her re-employment rights not be guaranteed by either
statute or contract, then the
4.
<PAGE>
Participant's status as an Eligible Employee will be deemed to terminate on
the ninety-first (91st) day of that leave, and such Participant's purchase
right for the purchase period in which that leave began shall thereupon
terminate. An individual who returns to active employment following such a
leave shall be treated as a new Employee for purposes of the Plan and must,
in order to resume participation in the Plan, re-enroll in the Plan (by
making a timely filing of the prescribed enrollment forms) on or before the
start date of the new purchase period.
G. Change in Control. Each outstanding purchase right shall
-----------------
automatically be exercised, immediately prior to the effective date of any
Change in Control by applying the payroll deductions of each Participant for the
purchase period in which such Change in Control occurs to the purchase of whole
shares of Common Stock at a purchase price per share equal to eighty-five
percent (85%) of the lower of (i) the Fair Market Value per share of Common
-----
Stock on the start date of the purchase period in which such Change in Control
occurs or (ii) the Fair Market Value per share of Common Stock immediately prior
to the effective date of such Change in Control. However, the applicable
limitation on the number of shares of Common Stock purchasable per Participant
shall continue to apply to any such purchase, but not the limitation applicable
to the maximum number of shares of Common Stock purchasable in the aggregate.
The Corporation shall use its best efforts to provide at least ten
(10)-days prior written notice of the occurrence of any Change in Control, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Change in Control.
H. Proration of Purchase Rights. Should the total number of shares
----------------------------
of Common Stock to be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.
I. Assignability. The purchase right shall be exercisable only by
-------------
the Participant and shall not be assignable or transferable by the Participant.
J. Stockholder Rights. A Participant shall have no stockholder
------------------
rights with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant's behalf in accordance
with the provisions of the Plan and the Participant has become a holder of
record of the purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when
5.
<PAGE>
aggregated with (i) rights to purchase Common Stock accrued under any other
purchase right granted under this Plan and (ii) similar rights accrued under
other employee stock purchase plans (within the meaning of Code Section 423) of
the Corporation or any Corporate Affiliate, would otherwise permit such
Participant to purchase more than Twenty-Five Thousand Dollars ($25,000) worth
of stock of the Corporation or any Corporate Affiliate (determined on the basis
of the Fair Market Value per share on the date or dates such rights are granted)
for each calendar year such rights are at any time outstanding.
B. For purposes of applying such accrual limitations to the purchase
rights granted under the Plan, the following provisions shall be in effect:
(i) The right to acquire Common Stock under each outstanding
purchase right shall accrue on the Purchase Date in effect for the period
on which such right is granted.
(ii) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has already
accrued in the same calendar year the right to acquire Common Stock under
one (1) or more other purchase rights at a rate equal to Twenty-Five
Thousand Dollars ($25,000) worth of Common Stock (determined on the basis
of the Fair Market Value per share on the date or dates of grant) for each
calendar year such rights were at any time outstanding.
C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular purchase period, then the payroll
deductions which the Participant made during that purchase period with respect
to such purchase right shall be promptly refunded.
D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
6.
<PAGE>
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on July 6, 1998 and shall
become effective at the Effective Time, provided no purchase rights granted
--------
under the Plan shall be exercised, and no shares of Common Stock shall be issued
hereunder, until (i) the Plan shall have been approved by the stockholders of
the Corporation and (ii) the Corporation shall have complied with all applicable
requirements of the 1933 Act (including the registration of the shares of Common
Stock issuable under the Plan on a Form S-8 registration statement filed with
the Securities and Exchange Commission), all applicable listing requirements of
any stock exchange (or the Nasdaq National Market, if applicable) on which the
Common Stock is listed for trading and all other applicable requirements
established by law or regulation. In the event such stockholder approval is not
obtained, or such compliance is not effected, within twelve (12) months after
the date on which the Plan is adopted by the Board, the Plan shall terminate and
have no further force or effect, and all sums collected from Participants during
the initial purchase period hereunder shall be refunded.
B. Unless sooner terminated by the Board, the Plan shall terminate
upon the earliest of (i) the last business day in July 2008, (ii) the date on
--------
which all shares available for issuance under the Plan shall have been sold
pursuant to purchase rights exercised under the Plan or (iii) the date on which
all purchase rights are exercised in connection with a Corporate Transaction.
No further purchase rights shall be granted or exercised, and no further payroll
deductions shall be collected, under the Plan following such termination.
X. AMENDMENT/TERMINATION OF THE PLAN
A. The Board may alter, amend, suspend or terminate the Plan at any
time to become effective immediately following the close of any purchase period.
However, the Plan may be amended or terminated immediately upon Board action, if
and to the extent necessary to assure that the Corporation will not recognize,
for financial reporting purposes, any compensation expense in connection with
the shares of Common Stock offered for purchase under the Plan, should the
financial accounting rules applicable to the Plan at the Effective Time be
subsequently revised so as to require the recognition of compensation expense in
the absence of such amendment or termination.
B. In no event may the Board effect any of the following amendments
or revisions to the Plan without the approval of the Corporation's stockholders:
(i) increase the number of shares of Common Stock issuable under the Plan or the
maximum number of shares purchasable per Participant on any one Purchase Date,
except for permissible adjustments in the event of certain changes in the
Corporation's capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock purchasable
under the Plan or (iii) modify eligibility requirements for participation in the
Plan.
7.
<PAGE>
XI. GENERAL PROVISIONS
A. Nothing in the Plan shall confer upon the Participant any right
to continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.
B. All costs and expenses incurred in the administration of the Plan
shall be paid by the Corporation; however, each Plan Participant shall bear all
costs and expenses incurred by such individual in the sale or other disposition
of any shares purchased under the Plan.
C. The provisions of the Plan shall be governed by the laws of the
State of California without resort to that State's conflict-of-laws rules.
8.
<PAGE>
Schedule A
----------
Corporations Participating in
Employee Stock Purchase Plan
As of the Effective Time
------------------------
GeoCities
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
-----
B. Cash Compensation shall mean the (i) regular base salary paid to
-----------------
a Participant by one or more Participating Companies during such individual's
period of participation in one or more Purchase Periods under the Plan, plus
(ii) any pre-tax contributions made by the Participant to any Code Section
401(k) salary deferral plan or any Code Section 125 cafeteria benefit program
now or hereafter established by the Corporation or any Corporate Affiliate, plus
(iii) all of the following amounts to the extent paid in cash: overtime
payments, bonuses, commissions, profit-sharing distributions and other
incentive-type payments. However, Eligible Earnings shall not include any
contributions (other than Code Section 401(k) or Code Section 125 contributions)
made on the Participant's behalf by the Corporation or any Corporate Affiliate
to any deferred compensation plan or welfare benefit program now or hereafter
established.
C. Change in Control shall mean any of the following transactions
-----------------
effecting a change in ownership or control of the Corporation:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to
such transaction,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete liquidation
or dissolution of the Corporation, or
(iii) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
----
E. Common Stock shall mean the Corporation's common stock.
------------
A-1.
<PAGE>
F. Corporate Affiliate shall mean any parent or subsidiary
-------------------
corporation of the Corporation (as determined in accordance with Code Section
424), whether now existing or subsequently established.
G. Corporation shall mean GeoCities, a Delaware corporation, and any
-----------
corporate successor to all or substantially all of the assets or voting stock of
GeoCities which shall by appropriate action adopt the Plan.
H. Effective Time shall mean the time at which the Underwriting
--------------
Agreement is executed and finally priced. Any Corporate Affiliate which becomes
a Participating Corporation after such Effective Time shall designate a
subsequent Effective Time with respect to its employee-Participants.
I. Eligible Employee shall mean any person who is employed by a
-----------------
Participating Corporation on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section
3401(a).
J. Fair Market Value per share of Common Stock on any relevant date
-----------------
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
A-2.
<PAGE>
(iii) For purposes of the initial purchase period which begins
at the Effective Time, the Fair Market Value shall be deemed to be equal to
the price per share at which the Common Stock is sold in the initial public
offering pursuant to the Underwriting Agreement.
K. 1933 Act shall mean the Securities Act of 1933, as amended.
--------
L. 1934 Act shall mean the Securities Exchange Act of 1934, as
--------
amended.
M. Participant shall mean any Eligible Employee of a Participating
-----------
Corporation who is actively participating in the Plan.
N. Participating Corporation shall mean the Corporation and such
-------------------------
Corporate Affiliate or Affiliates as may be authorized from time to time by the
Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan are listed in attached Schedule A.
O. Plan shall mean the Corporation's 1998 Employee Stock Purchase
----
Plan, as set forth in this document.
P. Plan Administrator shall mean the committee of two (2) or more
------------------
Board members appointed by the Board to administer the Plan.
Q. Purchase Date shall mean the last business day of each purchase
-------------
period. The initial Purchase Date shall be January 29, 1999.
R. Stock Exchange shall mean either the American Stock Exchange or
--------------
the New York Stock Exchange.
S. Underwriting Agreement shall mean the agreement between the
----------------------
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
A-3.
<PAGE>
EXHIBIT 99.12
GEOCITIES
STOCK PURCHASE AGREEMENT
------------------------
I hereby elect to participate in the 1998 Employee Stock Purchase Plan
(the "ESPP") for the purchase period specified below, and I hereby subscribe to
purchase shares of Common Stock of GeoCities (the "Corporation") in accordance
with the provisions of this Agreement and the ESPP. I hereby authorize payroll
deductions from each of my paychecks following my entry into the ESPP in the 1%
multiple of my cash compensation (not to exceed a maximum of 10%) specified in
my attached Enrollment Form.
Purchase periods under the ESPP will run from the first business day
in February to the last business day in July each year, and from the first
business day in August to the last business day in January of the following
year. However, the initial purchase period under the ESPP will begin on the
Effective Date of the initial public offering of the Corporation's Common Stock
and end on January 29, 1999. My participation will automatically remain in
effect from one purchase period to the next in accordance with my payroll
deduction authorization, unless I withdraw from the ESPP or change the rate of
my payroll deduction or unless my employment status changes. I may reduce the
rate of my payroll deductions on one occasion per purchase period, and I may
increase my rate of payroll deductions to become effective at the beginning of
any subsequent purchase period.
My payroll deductions will be accumulated for the purchase of shares
of the Corporation's Common Stock on the last business day of each purchase
period. The purchase price per share will be equal to 85% of the lower of (i)
-----
the fair market value per share of Common Stock on the start date of the
purchase period or (ii) the fair market value per share on the purchase date. I
will also be subject to ESPP restrictions (i) limiting the maximum number of
shares which I may purchase per purchase period, (ii) limiting the maximum
number of shares which may be purchased in the aggregate per purchase period and
(iii) prohibiting me from purchasing more than $25,000 worth of Common Stock for
each calendar year my purchase right remains outstanding.
I may withdraw from the ESPP at any time prior to the last day of the
purchase period and the Corporation will refund all my payroll deductions for
that period. However, I may not rejoin that particular purchase period at any
later date. Upon the termination of my employment for any reason, including
death or disability, or my loss of eligible employee status, my participation in
the ESPP will immediately cease, and all my payroll deductions for the purchase
period in which my employment terminates or my loss of eligibility occurs will
immediately be refunded.
If I take an unpaid leave of absence, my payroll deductions will
immediately cease, and any payroll deductions for the purchase period in which
my leave begins will be refunded. If my re-employment is guaranteed by either
law or contract, or if I return to active service within ninety (90) days, then
upon my return my payroll deductions will automatically resume at the rate in
effect when my leave began. The Corporation will issue a stock certificate for
the shares purchased on my behalf after the end of each purchase period. The
certificate will be issued in street name and will be deposited directly in my
Corporation-designated brokerage account. I will notify the Corporation of any
disposition of shares purchased under the ESPP, and I will satisfy all
applicable income and employment tax withholding requirements at the time of
such disposition.
The Corporation has the right, exercisable in its sole discretion, to
amend or terminate all outstanding purchase rights under the ESPP at any time,
with such amendment or termination to become effective immediately following the
end of any purchase period. However, such purchase rights may be amended or
terminated with an immediate effective date to the extent necessary to avoid the
Corporation's recognition of compensation expense for financial reporting
purposes, should the accounting principles applicable to the ESPP change. Upon
any such termination, I will cease to have any further rights to purchase shares
of Common Stock under this Agreement.
I have read this Agreement and hereby agree to be bound by the terms
of both this Agreement and the ESPP. The effectiveness of this Agreement is
dependent upon my eligibility to participate in the ESPP.
Date:_________, 199__
Signature of Employee_____________________
Printed Name:_____________________________
Entry Date: _____________________, 1998
<PAGE>
EXHIBIT 99.13
GEOCITIES
1998 EMPLOYEE STOCK PURCHASE PLAN ("ESPP")
ENROLLMENT/CHANGE FORM
<TABLE>
<CAPTION>
Action Complete Sections:
------------------------- ------------------
<S> <C> <C>
SECTION 1: [_] New Enrollment 2, 3, 7 and sign attached
---
ACTIONS Stock Purchase Agreement
[_] Payroll Deduction Change 2, 4, 7
[_] Terminate Payroll Deductions 2, 5, 7
[_] Leave of Absence 2, 6, 7
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 2: Name
--------------------------------------------------------------------------
PERSONNEL Last First MI Dept.
DATA
Home or Mailing Address
--------------------------------------------------------
Street
--------------------------------------------------------------------------------
City State Zip
Social Security #: - -
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 3: Effective with the Purchase
Period Beginning: Payroll Deduction Amount: _____% of total cash compensation.*
NEW [_] February 1, ______
ENROLLMENT [_] August 1, ______ * Must be a multiple of 1% up to a maximum of 10% of
cash compensation
Initial Purchase Period, August _____, 1998
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 4: Effective with the I authorize the following new level of payroll
Pay Period Beginning: ___________________ deductions: _______% of cash compensation*
PAYROLL Month, Day and Year
DEDUCTION * Must be a multiple of 1% up to a maximum of 10% of
CHANGE cash compensation
NOTE: You may change your rate of payroll deductions to become effective as of the start date of the next
---- purchase the start date of the next purchase by filing the change form at any time prior to the start date
of such purchase period.
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 5: Effective with the Your election to terminate your payroll
Pay Period Beginning: ____________________ deductions for the balance of the purchase
TERMINATE Month, Day and Year period may be filed at any time prior to the
PAYROLL last day of the purchase period, and you may not
DEDUCTIONS rejoin that purchase period at a later date.
You will not be able to resume participation in
the ESPP until a new purchase period begins.
[_] Refund ESPP payroll deductions collected as soon as possible
NOTE: If your employment terminates for any reason or your eligibility status changes (less than 20 hrs/wk or less than
---- 5 months/yr), you will immediately cease to participate in the ESPP, and your ESPP payroll deductions collected
in that purchase period will immediately be refunded to you.
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 6: In connection with my leave of absence, I acknowledge the following action with respect to my ESPP payroll
deductions to date:
LEAVE OF
ABSENCE [_] Refund ESPP payroll deductions collected as soon as possible
NOTE: If you take an unpaid leave of absence, your payroll deductions will immediately cease. Generally, if you return
---- to active service within 90 days, your payroll deductions will automatically resume at the rate in effect for you
at the time you went on leave, provided you are still an eligible employee under the Plan.
====================================================================================================================================
</TABLE>
SECTION 7:
AUTHORIZATION
I understand my certificate will be issued in street name and delivered to the
brokerage account designated by GeoCities.
__________________________ _________________________________________________
Date Signature of Employee
<PAGE>
EXHIBIT 99.14
COMPENSATION AGREEMENT
----------------------
This Agreement is made as of the 13th day of January, 1997 by and
between GeoCities, a California corporation (the "Corporation"), and David C.
Bohnett ("Optionee").
W I T N E S S E T H
-------------------
WHEREAS, in consideration for services performed by Optionee, the
Corporation granted Optionee a stock option on January 13, 1997, to purchase
600,000 shares of the Corporation's Common Stock (the "Option") upon the terms
and conditions set forth in the documentation evidencing such Option attached
hereto.
NOW, THEREFORE, in consideration of the above premises, the parties
hereto agree as follows:
1. The Corporation and Optionee acknowledge and agree that the
Option is granted solely as compensation for services rendered the Corporation
by Optionee and not for any capital-raising purposes or in connection with any
capital-raising activities.
2. The Option shall not be transferable or assignable except in
connection with Optionee's death.
3. This Agreement is intended to constitute a written compensation
contract within the meaning of Rule 701 of the Securities Act of
1933, as amended.
4. This Agreement is intended solely to memorialize the agreement
and understanding which exists between Optionee and the
Corporation concerning the grant of the Option. Nothing herein or
in the documentation evidencing the Option is intended to provide
Optionee with the right to remain in the Corporation's service
for any specific period, and Optionee's services may be
terminated at any time by the Corporation, for any reason, with
or without cause.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first above written.
OPTIONEE GEOCITIES
By:
- ------------------------------------- ----------------------------------
Title:
----------------------------------
<PAGE>
STOCK OPTION AGREEMENT
----------------------
This STOCK OPTION AGREEMENT (this "Agreement") is made and entered
into as of January 13, 1997, by and between GeoCities, a California corporation,
and DAVID C. BOHNETT, an employee of GeoCities (the "Optionee").
W I T N E S S E T H:
--------------------
WHEREAS, the Optionee is currently serving as the president and chief
executive officer, and is a director, of GeoCities; and
WHEREAS, GeoCities desires to grant to the Optionee an option which
does not meet the requirements of Section 422 of the Internal Revenue Code of
1986, as amended, to purchase shares of the common stock of GeoCities ("Common
Stock");
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions hereinafter set forth and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. GeoCities hereby grants to the Optionee the option to purchase
150,000 shares of Common Stock at a price per share of $3.54 upon the terms and
subject to the conditions set forth herein.
2. Subject to the conditions set forth herein, the right to exercise
this option shall accrue in periodic installments as follows:
(i) commencing January 13, 1998, this option may be exercised to
the extent of 37,500 shares;
(ii) commencing January 13, 1999, this option may be exercised to
the extent of an additional 37,500 shares;
(iii) commencing January 13, 2000, this option may be exercised to
the extent of an additional 37,500 shares; and
(iv) commencing January 13, 2001, this option may be exercised to
the extent of an additional 37,500 shares.
This option may be exercised, in whole or in part, subject to the limitations
imposed by the exercise schedule set forth above, at any time and from time to
time commencing with the respective dates on which each portion becomes
exercisable and continuing until January 13, 2004, at which time the entire
unexercised portion of this option shall expire.
3. For purposes of this Agreement, the Optionee's service as an
officer and director of GeoCities shall be deemed to be the equivalent of the
Optionee's employment with GeoCities, and all references to the Optionee's
employment and cessation of employment shall be deemed to refer to the
Optionee's service as an officer and director of GeoCities and his
<PAGE>
ceasing to be an officer and director of GeoCities, respectively. In the event
of the termination of the Optionee's employment for any reason, including for
cause or without cause, resignation, death or disability, then (i) the exercise
schedule to which this option is subject pursuant to Paragraph 2 hereof shall be
accelerated and such option shall be immediately exercisable, and (ii) the
Optionee must then exercise his option within thirty (30) days thereafter. The
Optionee shall be deemed to have waived the right to exercise his option as to
any shares which the Optionee fails to purchase within such thirty (30) day
period.
4. This option shall be nontransferable by the Optionee, other than
by will or the laws of descent and distribution.
5. Subject to any required action of GeoCities's stockholders, the
existence of outstanding options hereunder shall not affect GeoCities's right or
power to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in its capital structure or business; to
approve any merger or consolidation, issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock; to elect its
dissolution or liquidation or that of any of its subsidiaries; to sell or
transfer any of its business; or to do any other corporate act whether similar
to the events described above or otherwise. If the number of outstanding shares
of Common Stock is increased or decreased or changed into or exchanged for a
different number or kind of securities, whether of GeoCities or any other
corporation, by reason of recapitalization, reclassification, stock split,
combination of shares, stock dividends or other similar event, the number and
kind of securities as to which outstanding options may be exercised, and the
option price at which outstanding options may be exercised may be adjusted by
the Board of Directors, whose determination shall be binding and final.
6. In the event of (i) a liquidation, dissolution or winding up of
GeoCities, (ii) a consolidation or merger of GeoCities with or into any other
corporation or corporations (other than a wholly-owned subsidiary), (iii) the
sale, transfer or other disposition of all or substantially all of the assets of
GeoCities or (iv) the consummation of any transaction or series of related
transactions which results in GeoCities' shareholders immediately prior to such
transaction not holding at least 50% of the voting power of the surviving or
continuing entity (collectively, a "Liquidation"), then in the event of any such
Liquidation, the exercise schedule to which this option is subject pursuant to
Paragraph 2 hereof shall be accelerated, and the option shall be immediately
exercisable upon the consummation of any such Liquidation. Any actions taken
hereunder by the Board of Directors may be done without consideration of any
resulting income tax consequences to GeoCities or the Optionee.
7. This option may be exercised in accordance with the terms hereof
by: (a) giving written notice of such exercise to GeoCities, specifying the
number of whole shares to be purchased and accompanied by full payment of the
purchase price thereof, either in cash, by check or by delivery to GeoCities of
shares of Common Stock already owned by the Optionee (duly endorsed in favor of
GeoCities or accompanied by a duly endorsed stock power) together with the
amount of any income tax GeoCities is required by law to withhold by reason of
such exercise, and (b) giving satisfactory assurances in writing, if requested
by GeoCities, signed by the person exercising this option, that the shares to be
purchased upon such exercise are being purchased for investment and not with the
view to distribution thereof. Any Common Stock which the Optionee acquires by
his exercise of this option shall be subject to the rights and
2
<PAGE>
restrictions set forth in the Optionee's employment agreement dated as of
December 28, 1995, as amended, and that certain Amended and Restated Rights
Agreement, dated as of the date hereof, among the Optionee, GeoCities and
certain other shareholders named therein.
8. Unless the shares to be issued are at the time of issuance
registered under the Securities Act of 1933, as amended, this option is granted
on the condition that the purchase of stock hereunder shall be for investment
purposes and not with the view to resale or distribution.
9. Neither the Optionee nor any person claiming under or through him
shall be, or have any of the rights or privileges of, a stockholder of GeoCities
with respect to any of the shares issuable upon the exercise of this option,
unless and until certificates representing such shares shall have been issued
and delivered to him.
10. Any notice to be given to GeoCities under the terms of this
Agreement shall be addressed to GeoCities, in care of its President, at 1918
Main Street, Santa Monica, California 90405, or to such other address as
GeoCities may hereafter designate in writing. Any notice to be given to the
Optionee shall be addressed to the Optionee at the address set forth beneath his
signature hereto, or at any other address as the Optionee may hereafter
designate in writing. Any such notice shall be deemed to have been duly given if
and when personally delivered, or if mailed, two (2) business days following its
being deposited in the United States mails in a properly sealed envelope,
addressed as aforesaid, registered or certified, postage prepaid.
11. Except as otherwise provided herein, this option and the rights
and privileges conferred by this Agreement may not be transferred, assigned,
pledged or hypothecated by the Optionee in any way (whether by operation of law
or otherwise) and shall not be subject to sale under execution, attachment or
similar process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of this option, or of any right or privilege conferred hereby,
contrary to the provisions hereof, or upon any attempted sale under any
execution, attachment or similar process upon the rights and privileges
conferred hereby, this option and the rights and privileges conferred upon the
Optionee in this Agreement shall immediately become null and void.
12. Subject to the limitations on transferability contained herein,
this Agreement shall be binding upon and inure to the benefit of the heirs,
legal representatives, successors and assigns of the parties hereto.
13. Nothing in this Agreement is intended nor shall it be deemed, to
create any employment agreement between the Optionee and GeoCities or to impose
any obligation on the part of GeoCities to maintain Optionee's employment with
GeoCities, and any rights that the Optionee may have GeoCities with respect to
the Optionee's employment, other than as an at-will employee, shall be as set
forth in a written employment agreement between the Optionee and GeoCities, if
any.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
in duplicate, as of the day and year first above written.
3
<PAGE>
GEOCITIES
By: _______________________________
David C. Bohnett, President
ACCEPTED:
_________________________
David C. Bohnett
9000 Clifton Way, Penthouse, Beverly Hills, California 90211
4
<PAGE>
EXHIBIT 99.15
COMPENSATION AGREEMENT
----------------------
This Agreement is made as of the 13th day of January, 1997 by and
between GeoCities, a California corporation (the "Corporation"), and John C.
Rezner ("Optionee").
W I T N E S S E T H
-------------------
WHEREAS, in consideration for services performed by Optionee, the
Corporation granted Optionee a stock option on January 13, 1997, to purchase
200,000 shares of the Corporation's Common Stock (the "Option") upon the terms
and conditions set forth in the documentation evidencing such Option attached
hereto.
NOW, THEREFORE, in consideration of the above premises, the parties
hereto agree as follows:
1. The Corporation and Optionee acknowledge and agree that the
Option is granted solely as compensation for services rendered the Corporation
by Optionee and not for any capital-raising purposes or in connection with any
capital-raising activities.
2. The Option shall not be transferable or assignable except in
connection with Optionee's death.
3. This Agreement is intended to constitute a written compensation
contract within the meaning of Rule 701 of the Securities Act of 1933, as
amended.
4. This Agreement is intended solely to memorialize the agreement
and understanding which exists between Optionee and the Corporation
concerning the grant of the Option. Nothing herein or in the documentation
evidencing the Option is intended to provide Optionee with the right to
remain in the Corporation's service for any specific period, and Optionee's
services may be terminated at any time by the Corporation, for any reason,
with or without cause.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first above written.
OPTIONEE GEOCITIES
By:
- ------------------------------------- ----------------------------------
Title:
----------------------------------
<PAGE>
STOCK OPTION AGREEMENT
----------------------
This STOCK OPTION AGREEMENT (this "Agreement") is made and entered
into as of the 13th day of January, 1997, by and between GEOCITIES, a California
corporation ("GeoCities"), and JOHN REZNER, an employee of GeoCities (the
"Optionee").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Optionee is currently employed by GeoCities as Vice
President of Technical Operations; and
WHEREAS, GeoCities desires to grant to the Optionee an option which
does not meet the requirements of Section 422A of the Internal Revenue Code of
1996, as amended, to purchase shares of the common stock of GeoCities ("Common
Stock");
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions hereinafter set forth and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. GeoCities hereby grants to the Optionee the option to purchase
50,000 shares of Common Stock at a price per share of $3.54 upon the terms and
subject to the conditions set forth herein.
2. Subject to the conditions set forth herein, the right to exercise
this option shall accrue in periodic installments as follows:
(i) commencing January 13, 1998, this option may be exercised to
the extent of twelve thousand five hundred (12,500) shares;
(ii) commencing January 13, 1999, this option may be exercised to
the extent of an additional twelve thousand five hundred (12,500) shares;
(iii) commencing January 13, 2000, this option may be exercised to
the extent of an additional twelve thousand five hundred (12,500) shares; and
(iv) commencing January 13, 2001, this option may be exercised to
the extent of an additional twelve thousand five hundred (12,500).
This option may be exercised, in whole or in part. subject to the
limitations imposed by the exercise schedule set forth above, at any time and
from time to time commencing with the respective dates on which each portion
becomes exercisable and continuing until January 13, 2004, at which time the
entire unexercised portion of this option shall expire.
3. In the event of termination of the Optionee's employment for any
reason other than death, this option shall immediately terminate. Irrespective
of the foregoing, if such cessation of employment shall occur on or after the
Optionee's fifty-fifth (55th) birthday or shall be due to the Optionee's
voluntary resignation with the consent of the Board of Directors
<PAGE>
of GeoCities, expressed in the form of a resolution, this option may be
exercised to the extent this option was exercisable on the date of such
cessation of employment, within three (3) months after the date he ceases to be
an employee of GeoCities. If such cessation of employment shall be due to the
Optionee's permanent and total disability, this option may be exercised, to the
extent this option was exercisable on the date of such cessation of employment,
within one (1) year after the date he ceases to be an employee of GeoCities.
Irrespective of the foregoing, no option granted hereunder shall be exercisable
after the expiration of seven (7) years from the date of this Agreement. An
approved leave of absence shall not be deemed a termination of employment for
purposes of this Agreement, but no option may be exercised during any such leave
of absence, except during the first three (3) months thereof.
4. This option shall be exercisable by the Optionee only during his
lifetime. This option shall be nontransferable by the Optionee, other than by
will or the laws of descent and distribution.
5. In the event of the Optionee's death while in the employ of
GeoCities, or during the period following termination of employment during which
the Optionee is permitted to exercise an option pursuant to Paragraph 3 hereof,
this option may be exercised to the extent that it was otherwise executable as
of the date of such death or termination of employment by the Optionee's
transferee to the extent not previously exercised; but under no circumstances
shall the right of any such transferee extend beyond a period of seven (7) years
from the date of this Agreement. The Optionee's transferee shall be the person
or persons entitled to exercise the option under the Optionee's will, or, if no
testamentary disposition of the option shall have been made, his legal
representative. Any transferee exercising the option must furnish GeoCities
with: (a) written confirmation of his status as transferee; (b) evidence
satisfactory to GeoCities to establish the validity of the transfer of this
option in compliance with this Agreement and with any laws or regulations
pertaining to said transfer; and (c) written acceptance of the terms and
conditions of this option as prescribed in this Agreement.
6. Subject to any required action of GeoCities's stockholders, the
existence of outstanding options hereunder shall not affect GeoCities's right or
power to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in its capital structure or business; to
approve any merger or consolidation, issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock; to elect its
dissolution or liquidation or that of any of its subsidiaries; to sell or
transfer any of its business; or to do any other corporate act whether similar
to the events described above or otherwise. If the number of outstanding shares
of Common Stock is increased or decreased or changed into or exchanged for a
different number or kind of securities, whether of GeoCities or any other
corporation, by reason of recapitalization reclassification, stock split,
combination of shares, stock dividends or other similar event, the number and
kind of securities as to which outstanding options may be exercised, and the
option price at which outstanding options may be exercised may be adjusted by
the Board of Directors, whose determination shall be binding and final.
7. In the event of (i) a liquidation, dissolution or winding up of
GeoCities, (ii) a consolidation or merger of GeoCities with or into any other
corporation or corporations (other than a wholly-owned subsidiary), (iii) the
sale, transfer or other disposition of all or substantially all of the assets of
GeoCities or (iv) the consummation of any transaction or series
2
<PAGE>
of related transactions which results in GeoCities' shareholders immediately
prior to such transaction not holding at least 50% of the voting power of the
surviving or continuing entity (collectively, a "Liquidation"), then in the
event of any such Liquidation, the exercise schedule to which this option is
subject pursuant to Paragraph 2 hereof shall be accelerated, and the option
shall be immediately exercisable upon the consummation of any such Liquidation.
Any actions taken hereunder by the Board of Directors may be done without
consideration of any resulting income tax consequences to GeoCities or the
Optionee.
8. This option may be exercised in accordance with the terms hereof
by: (a) giving written notice of such exercise to GeoCities, specifying the
number of whole shares to be purchased and accompanied by full payment of the
purchase price thereof, either in cash, by check, or by delivery to GeoCities of
shares of Common Stock already owned by the Optionee (duly endorsed in favor of
GeoCities or accompanied by a duly endorsed stock power) together with the
amount of any income tax GeoCities is required by law to withhold by reason of
such exercise, and (b) giving satisfactory assurances in writing, if requested
by GeoCities, signed by the person exercising this option, that the shares to be
purchased upon such exercise are being purchased for investment and not with the
view to distribution thereof. Any Common Stock which the Optionee acquires by
his exercise of this option shall be subject to the rights and restrictions set
forth in the Optionee's employment agreement dated as of December 28, 1995 (the
"Employment Agreement"), and that certain Amended and Restated Rights Agreement,
dated as of the date hereof, among the Optionee, GeoCities and certain other
shareholders named therein.
9. (a) Notwithstanding anything contained herein to the contrary, in
the event that the Optionee ceases to be employed by GeoCities for any reason
(including, without limitation, as a result of resignation, retirement,
dismissal with or without cause, death or disability), GeoCities shall have the
first right and option, and the holders of Senior Securities (as defined below)
shall have the second right and option, to purchase from the Optionee (or, in
the case of death, from the Optionee's legal representative) all shares of
Common Stock held by the Optionee on the date of cessation of employment or
purchased by the Optionee following such date as permitted under Sections 3 and
5 hereof. In the event that GeoCities or any holder of Senior Securities shall
exercise such right and option, then the exercising party shall pay the
Optionee, as the purchase price for such shares of Common Stock, the Fair Market
Value (as defined below) of such shares. GeoCities may exercise its first right
and option by delivering notice to Optionee and to each holder of Senior
Securities within ninety (90) days following the cessation of the Optionee's
employment or the subsequent purchase of shares, as applicable, of its intent to
exercise its repurchase right and the Fair Market Value, and shall have paid for
such shares in cash at the end of such 90th day (unless the Fair Market Value of
the shares has not been conclusively determined as of such date, in which case
GeoCities shall pay the Optionee promptly after the Fair Market Value is
determined in accordance with subparagraph (d) below).
(b) If GeoCities fails to fully exercise its right to repurchase
all of the Optionee's shares of Common Stock after the cessation of the
Optionee's employment or the subsequent purchase of shares, as applicable, then
GeoCities shall give the Optionee and each holder of its Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock (other than those shares of Series D Preferred Stock held by Venture
Lending or its approved transferees), or Common Stock issued upon conversion
thereof
3
<PAGE>
(collectively, the "Senior Securities"), notice ("Termination Notice")
of such fact, the number of shares of Common Stock available for purchase by
each such holder and GeoCities' determination of the Fair Market Value of such
shares. The holders of the Senior Securities shall have the right to purchase
the Optionee's Common Stock, on a pro-rata basis, by giving GeoCities notice of
their intent to exercise such option ("Notice of Election") within twenty (20)
days after the receipt of the Termination Notice from GeoCities, together with
cash in the amount of the purchase price (unless the Fair Market Value of the
shares has not been conclusively determined as of such date, in which case each
such holder shall pay the Optionee promptly after the Fair Market Value has been
conclusively determined in accordance with subparagraph (d) below). For purposes
of this subparagraph (b), "pro rata basis" shall be equal to the product
obtained by multiplying (i) the number of the Optionee's shares not purchased by
GeoCities by (ii) a fraction, the numerator of which is the number of shares of
Senior Securities held by such holder (on an as-converted basis) and the
denominator of which is the total number of shares held by all the holders of
Senior Securities (on an as-converted basis).
(c) Any holder of Senior Securities that fails to provide a
timely Notice of Election shall be deemed to have elected to not purchase any
shares in a transaction pursuant to this Paragraph 9. If any holder of Senior
Securities elects (or is deemed to have elected) not to fully participate in a
transaction pursuant to this Paragraph 9, then GeoCities shall so notify the
other holders of Senior Securities who elected to participate (the "Repurchase
Holders"). Such notice may be made by telephone if confirmed in writing within
two (2) days. The Repurchase Holders shall have five (5) days from the date such
notice was given to agree to purchase their pro rata share of the unsold portion
of the Optionee's shares. For purposes of this subparagraph (iv), a "pro rata
share" shall be equal to the product obtained by multiplying (i) the number of
the Optionee's shares in the unsold portion by (ii) a fraction, the numerator of
which is the number of shares of Senior Securities held by such Repurchase
Holder (on an as-converted basis) and the denominator of which is the total
number of shares held by all of the Repurchase Holders (on an as-converted
basis).
(d) If the Optionee objects to the Fair Market Value as so
proposed, then the Optionee may request an appraisal by written notice of
objection delivered not later than ten (10) days after receipt of the Fair
Market Value set by GeoCities' Board of Directors. If an appraisal is requested,
the Optionee and GeoCities shall jointly select an appraiser to determine the
Fair market Value of the Optionee's shares. If the Optionee and GeoCities cannot
agree on an appraiser, each shall select its own appraiser (each, a "Party
Appraiser") and the two Party Appraisers shall jointly select a third appraiser
(the "Arbitrating Appraiser"). Each of the Party Appraisers shall submit its
appraisal to the Arbitrating Appraiser), and the Arbitrating Appraiser shall
select one of such appraisals as the Fair Market Value. If any such appraisal
results in a Fair Market Value more than 5% higher than the Board of Directors'
original valuation, then all expenses of such appraisal shall be paid by
GeoCities; otherwise, the cost of such appraisal shall be shared equally by the
Optionee and GeoCities.
(e) Notwithstanding anything to the contrary set forth in
Subparagraphs 9(a) through 9(d), if (a) the Optionee's employment with GeoCities
is involuntarily terminated (a "Termination") for any reason other than (i) "for
cause" (as defined in Subparagraph 4.1 of the Employment Agreement) or (ii)
because of the Optionee's death, and (b) there is a Liquidation of GeoCities
within one (1) year after such Termination in which the
4
<PAGE>
price per share of Common Stock received by the holders of such Common Stock
upon the consummation of the Liquidation (the "Liquidation Price") is greater
than the price per share of Common Stock received by the Optionee following the
Termination (the "Repurchase Price"), then the Optionee shall be entitled to
receive the following amounts from GeoCities concurrently with the consummation
of the Liquidation. If the Liquidation is consummated within six (6) months
after the Termination as provided above, then the Optionee shall be entitled to
receive an amount equal to the Liquidation Price less the Repurchase Price,
multiplied by the number of shares of Common Stock which the Optionee held at
the time of the Termination (the "Differential Amount"). If the Liquidation is
consummated more than six (6) months but within nine (9) months after the
Termination as provided above, then the Optionee shall be entitled to receive an
amount equal to seventy-five percent (75%) of the Differential Amount. If the
Liquidation is consummated more than nine (9) months but within one (1) year
after the Termination as provided above, then the Optionee shall be entitled to
receive an amount equal to fifty percent (50%) of the Differential Amount. If
the Liquidation is consummated more than one (1) year after the Termination as
provided above, then the Optionee shall not be entitled to receive any amounts
under this Subparagraph 9(e). Any such amounts payable by GeoCities under this
Subparagraph 9(e) shall be paid to the Optionee in the same form of
consideration, and in the same proportions and at the same times, as shall have
been applicable to all other holders of Common Stock in such Liquidation.
10. Unless the shares to be issued are at the time of issuance
registered under the Securities Act of 1933, as amended, this option is granted
on the condition that the purchase of stock hereunder shall be for investment
purposes and not with the view to resale or distribution.
11. Neither the Optionee nor any person claiming under or through
him shall be, or have any of the rights or privileges of, a stockholder of
GeoCities with respect to any of the shares issuable upon the exercise of this
option, unless and until certificates representing such shares shall have been
issued and delivered to him.
12. Any notice to be given to GeoCities under the terms of this
Agreement shall be addressed to GeoCities, in care of its President, at 1918
Main Street, Santa Monica, California 90405, or to such other address as
GeoCities may hereafter designate in writing. Any notice to be given to the
Optionee shall be addressed to the Optionee at the address set forth beneath his
signature hereto, or at any other address as the Optionee may hereafter
designate in writing. Any such notice shall be deemed to have been duly given if
and when personally delivered, or if mailed, two (2) business days following its
being deposited in the United States mails in a properly sealed envelope,
addressed as aforesaid, registered or certified, postage prepaid.
13. Except as otherwise provided herein, this option and the
rights and privileges conferred by this Agreement may not be transferred,
assigned, pledged or hypothecated by the Optionee in any way (whether by
operation of law or otherwise) and shall not be subject to sale under
execution, attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option, or of any right or
privilege conferred hereby, contrary to the provisions hereof, or upon any
attempted sale under any execution, attachment or similar process upon the
rights and privileges conferred hereby, this
5
<PAGE>
option and the rights and privileges conferred upon the Optionee in this
Agreement shall immediately become null and void.
14. This Agreement is made solely for the benefit of the parties
to this Agreement and their respective successors and assigns, and, except as
provided in Paragraph 9, no other person or entity shall have or acquire any
right by virtue of this Agreement. Each holder of the Senior Securities shall be
a third-party beneficiary of Paragraph 9 of this Agreement.
15. Subject to the limitations on transferability contained
herein, this Agreement shall be binding upon and inure to the benefit of the
heirs, legal representatives, successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, in duplicate, as of the day and year first above written.
GEOCITIES
By:
---------------------------
David C. Bohnett, President
ACCEPTED:
_______________________
JOHN REZNER
2809 North Greengrove
Santa Ana, California, 92701
6
<PAGE>
EXHIBIT 99.16
COMPENSATION AGREEMENT
----------------------
This Agreement is made as of the 13th day of January, 1997 by and
between GeoCities, a California corporation (the "Corporation"), and Stanley
Newman ("Optionee").
W I T N E S S E T H
-------------------
WHEREAS, in consideration for services performed by Optionee, the
Corporation granted Optionee a stock option on January 13, 1997, to purchase
100,000 shares of the Corporation's Common Stock (the "Option") upon the terms
and conditions set forth in the documentation evidencing such Option attached
hereto.
NOW, THEREFORE, in consideration of the above premises, the parties
hereto agree as follows:
1. The Corporation and Optionee acknowledge and agree that the
Option is granted solely as compensation for services rendered the Corporation
by Optionee and not for any capital-raising purposes or in connection with any
capital-raising activities.
2. The Option shall not be transferable or assignable except in
connection with Optionee's death.
3. This Agreement is intended to constitute a written compensation
contract within the meaning of Rule 701 of the Securities Act of 1933, as
amended.
4. This Agreement is intended solely to memorialize the agreement
and understanding which exists between Optionee and the Corporation concerning
the grant of the Option. Nothing herein or in the documentation evidencing the
Option is intended to provide Optionee with the right to remain in the
Corporation's service for any specific period, and Optionee's services may be
terminated at any time by the Corporation, for any reason, with or without
cause.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first above written.
OPTIONEE GEOCITIES
By:
- ------------------------------------- ---------------------------------
Title:
---------------------------------
<PAGE>
STOCK-OPTION AGREEMENT
----------------------
This STOCK OPTION AGREEMENT (this "Agreement") is made and entered
into as of January 13, 1997, by and between GeoCities, a California corporation,
and STANLEY NEWMAN, an employee of GeoCities (the "Optionee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Optionee is currently serving as a director of GeoCities;
and
WHEREAS, GeoCities desires to grant to the Optionee an option which
does not meet the requirements of Section 422 of the Internal Revenue Code of
1986, as amended, to purchase shares of the common stock of GeoCities ("Common
Stock");
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions hereinafter set forth and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. GeoCities hereby grants to the Optionee the option to purchase 25,000
shares of Common Stock at a price per share of $3.54 upon the terms and subject
to the conditions set forth herein.
2. Subject to the conditions set forth herein, the right to exercise this
option shall accrue in periodic installments as follows:
(i) commencing January 13, 1998, this option may be exercised to the
extent of 6,250 shares;
(ii) commencing January 13, 1999, this option may be exercised to the
extent of an additional 6,250 shares;
(iii) commencing January 13, 2000, this option may be exercised to the
extent of an additional 6,250 shares; and
(iv) commencing January 13, 2001, this option may be exercised to the
extent of an additional 6,250 shares.
This option way be exercised, in whole or in part, subject to the limitations
imposed by the exercise schedule set forth above, at any time and from time to
time commencing with the respective dates on which each portion becomes
exercisable and continuing until January 13, 2004, at which time the entire
unexercised portion of this option shall expire.
3. For purposes of this Agreement, the Optionee's service as a director of
GeoCities shall be deemed to be the equivalent of the Optionee's employment with
GeoCities, and all references to the Optionee's employment and cessation of
employment shall be deemed to refer to the Optionee's service as a director of
GeoCities and his ceasing to be a director of GeoCities, respectively. In the
event of the termination of the Optionee's employment for any
<PAGE>
reason, including for cause or without cause, resignation, death or disability,
then the exercise schedule to which this option is subject pursuant to Paragraph
2 hereof shall be accelerated and such option shall be immediately exercisable.
4. This option shall be nontransferable by the Optionee, other than by
will or the laws of descent and distribution.
5. Subject to any required action of GeoCities's stockholders, the
existence of outstanding options hereunder shall not affect GeoCities's right or
power to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in its capital structure or business; to
approve any merger or consolidation, issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock; to elect its
dissolution or liquidation or that of any of its subsidiaries; to sell or
transfer any of its business; or to do any other corporate act whether similar
to the events described above or otherwise. If the number of outstanding shares
of Common Stock is increased or decreased or changed into or exchanged for a
different number or kind of securities, whether of GeoCities or any other
corporation, by reason of recapitalization reclassification, stock split,
combination of shares, stock dividends or other similar event, the number and
kind of securities as to which outstanding options may be exercised, and the
option price at which outstanding options may be exercised may be adjusted by
the Board of Directors, whose determination shall be binding and final.
6. In the event of (i) a liquidation, dissolution or winding up of
GeoCities, (ii) a consolidation or merger of GeoCities with or into any other
corporation or corporations (other than a wholly-owned subsidiary), (iii) the
sale, transfer or other disposition of all or substantially all of the assets of
GeoCities or (iv) the consummation of any transaction or Series of related
transactions which results in GeoCities' shareholders immediately prior to such
transaction not holding at least 50% of the voting power of the surviving or
continuing entity (collectively, a "Liquidation"), then in the event of any such
Liquidation, the exercise schedule to which this option is subject pursuant to
Paragraph 2 hereof shall be accelerated, and the option shall be immediately
exercisable upon the consummation of any such Liquidation. Any actions taken
hereunder by the Board of Directors may be done without consideration of any
resulting income tax consequences to GeoCities or the Optionee.
7. This option may be exercised in accordance with the terms hereof by:
(a) giving written notice of such exercise to GeoCities, specifying the number
of whole shares to be purchased and accompanied by full payment of the purchase
price thereof, either in cash, by check, or by delivery to GeoCities of shares
of Common Stock already owned by the Optionee (duly endorsed in favor of
GeoCities or accompanied by a duly endorsed stock power) together with the
amount of any income m GeoCities is required by law to withhold by reason of
such exercise, and (b) giving satisfactory assurances in writing, if requested
by GeoCities, signed by the person exercising this option that the shares to be
purchased upon such exercise are being purchased for investment and not with the
view to distribution thereof.
8. Unless the shares to be issued are at the time of issuance registered
under the Securities Act of 1933, as amended, this option is granted on the
condition that the purchase of stock hereunder shall be for investment purposes
and not with the view to resale or distribution.
2
<PAGE>
9. Neither the Optionee nor any person claiming under or through him shall
be, or have any of the rights or privileges of, a stockholder of GeoCities with
respect to any of the shares issuable upon the exercise of this option, unless
and until certificates representing such shares shall have been issued and
delivered to him.
10. (a) If the Optionee's employment with GeoCities terminates for any
reason (a "Termination Event"), then the Optionee must then exercise his option
within thirty (30) days thereafter. The Optionee shall be deemed to have waived
the right to exercise his option as to any shares which the Optionee fails to
purchase within such thirty (30) day period. If the Optionee exercises his
option to purchase shares of Common Stock under this Agreement following the
termination of his employment with GeoCities, the exercise by the Optionee of
his option to purchase shares of Common Stock shall be deemed to be the
Termination Event for purposes of this Paragraph 10. Upon the occurrence of a
Termination Event, GeoCities shall have the first right and option, and the
holders of Senior Securities (as defined below) shall have the second right and
option, to purchase from the Optionee (or, in the case of death, from the
Optionee's legal representative) all shares of Common Stock held by the Optionee
on the date of the Termination Event. In the event that GeoCities or any holder
of Senior Securities shall exercise such right and option, then the exercising
party shall pay the Optionee, as the purchase price for such shares of Common
Stock, the Fair Market Value (as defined below) of such shares. GeoCities may
exercise its first right and option by delivering notice to Optionee and to each
holder of Senior Securities within ninety (90) days following the Termination
Event of its intent to exercise its repurchase right and the Fair Market Value,
and shall have paid for such shares in cash at the end of such 90th day (unless
the Fair Market Value of the shares has not been conclusively determined as of
such date, in which case GeoCities shall pay the Optionee promptly after the
Fair Market Value is determined in accordance with subparagraph (d) below).
(b) If GeoCities fails to fully exercise its right to repurchase all
of the Optionee's shares of Common Stock after the cessation of the Optionee's
employment or the subsequent purchase of shares, as applicable, then GeoCities
shall give the Optionee and each holder of its Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock (other
than those shares of Series D Preferred Stock held by Venture Lending or its
approved transferees), or Common Stock issued upon conversion thereof
(collectively, the "Senior Securities"), notice ("Termination Notice") of such
fact, the number of shares of Common Stock available for purchase by each such
holder and GeoCities' determination of the Fair Market Value of such shares. The
holders of the Senior Securities shall have the right to purchase the Optionee's
Common Stock, on a pro-rata basis, by giving GeoCities notice of their intent to
exercise such option ("Notice of Election") within twenty (20) days after the
receipt of the Termination Notice from GeoCities, together with cash in the
amount of the purchase price (unless the Fair Market Value of the shares has not
been conclusively determined as of such date, in which case each such holder
shall pay the Optionee promptly after the Fair Market Value has been
conclusively determined in accordance with subparagraph (d) below). For purposes
of this subparagraph (b), "pro rata basis' shall be equal to the product
obtained by multiplying (i) the number of the Optionee's shares not purchased by
GeoCities by (ii) a fraction, the numerator of which is the number of shares of
Senior Securities held by such holder (on an as-converted basis) and the
denominator of which is the total number of shares held by all the holders of
Senior Securities (on an as-converted basis).
3
<PAGE>
(c) Any holder of Senior Securities that fails to provide a timely
Notice of Election shall be deemed to have elected to not purchase any shares in
a transaction pursuant to this Paragraph 10. If any holder of Senior Securities
elects (or is deemed to have elected) not to fully participate in a transaction
pursuant to this Paragraph 10, then GeoCities shall so notify the other holders
of Senior Securities who elected to participate (the "Repurchase Holders'). Such
notice may be made by telephone if confirmed in writing within two (2) days. The
Repurchase Holders shall have five (5) days from the date such notice was given
to agree to purchase their pro rata share of the unsold portion of the
Optionee's shares. For purposes of this subparagraph (iv), a "pro rata share"
shall be equal to the product obtained by multiplying (i) the number of the
Optionee's shares in the unsold portion by (ii) a fraction, the numerator of
which is the number of shares of Senior Securities held by such Repurchase
Holder (on an as-converted basis) and the denominator of which is the total
number of shares held by all of the Repurchase Holders (on an as-converted
basis).
(d) If the Optionee objects to the Fair Market Value as so proposed,
then the Optionee may request an appraisal by written notice of objection
delivered not later than ten (10) days after receipt of the Fair Market Value
set by GeoCities' Board of Directors. If an appraisal is requested, the Optionee
and GeoCities shall jointly select an appraiser to determine the Fair Market
Value of the Optionee's shares. If the Optionee and GeoCities cannot agree on an
appraiser, each shall select its own appraiser (each, a "Party Appraiser") and
the two Party Appraisers shall jointly select a third appraiser (the
"Arbitrating Appraiser"). Each of the Party Appraisers shall submit its
appraisal to the Arbitrating Appraiser, and the Arbitrating Appraiser shall
select one of such appraisals as the Fair Market Value. If any such appraisal
results in a Fair Market Value more than 5% higher than the Board of Directors'
original valuation, then all expenses of such appraisal shall be paid by
GeoCities; otherwise, the cost of such appraisal shall be shared equally by the
Optionee and GeoCities.
(e) Notwithstanding anything to the contrary set forth in
Subparagraphs 10(a) through 10(d), if (a) the Optionee's employment with
GeoCities is terminated (a "Termination") for any reason other than (i) the
Optionee's voluntarily resigning or failing to stand for reelection as a
director of GeoCities without having been asked by the Board of Directors of
GeoCities to resign or not to stand for reelection or (ii) because of the
Optionee's death, and (b) there is a Liquidation of GeoCities within one (1)
year after such Termination in which the price per share of Common Stock
received by the holders of such Common Stock upon the consummation of the
Liquidation (the "Liquidation Price") is greater than the price per share of
Common Stock received by the Optionee following the Termination (the "Repurchase
Price"), then the Optionee shall be entitled to receive the following amounts
from GeoCities concurrently with the consummation of the Liquidation. If the
Liquidation is consummated within six (6) months after the Termination as
provided above, then the Optionee shall be entitled to receive an amount equal
to the Liquidation Price less the Repurchase Price, multiplied by the number of
shares of Common Stock which the Optionee held at the time of the Termination
(the "Differential Amount"). If the Liquidation is consummated more than six (6)
months but within nine (9) months after the Termination as provided above, then
the Optionee shall be entitled to receive an amount equal to seventy-five
percent (75%) of the Differential Amount. If the Liquidation is consummated more
than nine (9) months but within one (1) year after the Termination as provided
above, then the Optionee shall be entitled to receive an amount equal to fifty
percent (50%) of the Differential Amount. If the Liquidation is consummated
4
<PAGE>
more than one (1) year after the Termination as provided above, then the
Optionee shall not be entitled to receive any amounts under this Subparagraph
10(e). Any such amounts payable by GeoCities under this Subparagraph 10(e) shall
be paid to the Optionee in the same form of consideration, and in the same
proportions and at the same times, as shall have been applicable to all other
holders of Common Stock in such Liquidation.
11. The Optionee may not sell or engage in any transaction which has
resulted in or will result in a change in the beneficial or record ownership of
any shares of Common Stock held by the Optionee, including without limitation a
voluntary or involuntary sale, assignment, transfer, pledge, hypothecation,
encumbrance, disposal, loan, gift, attachment or levy (a "Transfer"), except as
provided in this Agreement, and any such Transfer of shares of Common Stock or
attempted Transfer of shares of Common Stock in contravention of this Agreement
shall be void and ineffective for any purpose or confer on any transferee or
purported transferee any rights whatsoever.
12. (a) Each time the Optionee proposes to Transfer (or is required by
operation of law or other involuntary transfer) any or all of the shares of
Common Stock standing in the Optionee's name or owned by him or her during the
term of this Agreement, the Optionee shall first offer such shares to GeoCities
and the holders of the Senior Securities in accordance with the following
provisions:
(i) The Optionee shall deliver a written notice (a "Notice") to
GeoCities stating (A) the Optionee's bona fide intention to Transfer such
shares, (B) the name and the address of the proposed transferee, (C) the number
of shares to be transferred, and (D) the purchase price per share and terms of
payment for which the Optionee proposes to Transfer such shares.
(ii) Within thirty (30) days after receipt of the Notice,
GeoCities shall have the first right to purchase or obtain such shares, upon the
price and terms of payment designated in the Notice. If the Notice provides for
the payment of non-cash consideration, GeoCities at its option may pay the
consideration in cash equal to GeoCities' good faith estimate of the present
fair market value of the non-cash consideration offered.
(iii) If GeoCities elects not to purchase or obtain all of the
shares designated in the Optionee's Notice, then GeoCities shall promptly
provide written notice of such fact, together with a copy of the Notice, to the
holders of the Senior Securities. The holders of the Senior Securities shall
have an additional thirty (30) days immediately following the receipt of the
Notice from GeoCities in which to purchase the shares not purchased by GeoCities
on a prorata basis upon the terms and conditions specified in subparagraph (ii)
above by giving GeoCities notice of their intent to exercise such option
("Notice of Purchase") within thirty (30) days after the receipt of the
Termination Notice from GeoCities,. For purposes of this subparagraph (iii),
"pro rata" shall be equal to the product obtained by multiplying (i) the number
of the Optionee's shares not purchased by GeoCities by (ii) a fraction, the
numerator of which is the number of shares of Senior Securities held by such
holder (on an as-converted basis) and the denominator of which is the total
number of shares held by all the holders of Senior Securities (on an as-
converted basis).
5
<PAGE>
(iv) Any holder of Senior Securities that fails to provide a
timely Notice of Purchase shall be deemed to have elected to not purchase any
shares in a transaction pursuant to this Paragraph 12. If any holder of Senior
Securities elects (or is deemed to have elected) not to fully participate in a
transaction pursuant to this Paragraph 12, then GeoCities shall so notify the
other holders of Senior Securities who elected to participate (the "Right of
First Refusal Holders"). Such notice may be made by telephone if confirmed in
writing within two (2) days. The Right of First Refusal Holders shall have five
(5) days from the date such notice was given to agree to purchase their pro rata
share of the unsold portion of the Optionee's shares. For purposes of this
subparagraph (iv), a "pro rata share" shall be equal to the product obtained by
multiplying (i) the number of the Optionee's shares in the unsold portion by
(ii) a fraction, the numerator of which is the number of shares of Senior
Securities held by such Right of First Refusal Holder (on an as-converted basis)
and the denominator of which is the total number of shares of Senior Securities
held by all the Right of First Refusal Holders (on an as-converted basis).
(v) If neither (x) GeoCities nor (y) any of the holders of the
Senior Securities elects to purchase or obtain all of the shares designated in
the Optionee's Notice, then the Optionee may Transfer the unsold shares referred
to in the Notice to the proposed transferee, providing such Transfer (A) is
completed within 180 days after the expiration of the right of GeoCities and the
holders of the Senior Securities to purchase or obtain such shares, (B) is made
at the same price and terms designated in the Notice, and (C) the proposed
Transferee agrees to be bound by the terms and provisions of a buy-sell
agreement substantially similar to the terms of Paragraphs 11 through 16 of this
Agreement and to become a party to such an agreement immediately upon receipt of
such shares. If such shares are not so transferred, the Optionee must give
notice in accordance with this paragraph prior to any other or subsequent
Transfer of such shares.
(b) Notwithstanding Paragraph 12(a), the Optionee may Transfer for no
or nominal consideration shares to (i) the Optionee's spouse, parents,
grandparents, siblings, children or grandchildren or other members of the
Optionee's family (including relatives by marriage), or to a custodian, trustee
or other fiduciary for the account of the Optionee or members of his or her
family, or to any one other person designated by the Optionee, or (ii) by way of
bequest or inheritance upon death; provided that the Optionee or his
representative notifies GeoCities of such Transfer not less than ten (10) nor
more than ninety (90) days prior to the Transfer and that the proposed
transferee agrees to be bound by the terms and provisions of a buy-sell
agreement substantially similar to the terms of Paragraphs 11 through 16 of this
Agreement and to become a party to such an agreement immediately upon the
receipt of such shares.
13. Notwithstanding any provisions to the contrary contained in this
Agreement, GeoCities' obligations to pay or complete payment for any shares to
be purchased by it under this Agreement are subject to its being legally
permitted to do so under the tests contained in Sections 500 and 501 of the
California General Corporation Law or any successor statute applicable thereto.
The inability of GeoCities to validly purchase any shares hereunder by reason of
its failure to meet the tests contained in Sections 500 and 501 of the
California General Corporation Law shall not be deemed to affect or limit in any
way the ability of the holders of the Senior Securities to purchase the shares.
6
<PAGE>
14. Notwithstanding any provision of California law to the contrary, so
long as any shares of Series A Preferred Stock, Series B Preferred Stock or
Series D Preferred Stock shall be outstanding, in the event that:
(i) a vote or written consent is taken with respect to any of the
events described in subsections (a) or (b) of Section 7 of Article III of the
Second Amended and Restated Articles of Incorporation (the "Restated Articles")
of GeoCities (a "Specified Action"),
(ii) California law provides that a majority of the outstanding
shares of a class or series of a class of capital stock, voting separately as a
class or series, as applicable, must approve such Specified Action, and
(iii) the Specified Action shall have received the approval of (x) the
requisite vote of the holders of Series A Preferred Stock, Series B Preferred
Stock and Series D Preferred Stock specified in the appropriate subsection of
Section 7 of Article III of the Restated Articles and (y) a majority of the
total number of outstanding shares of Common Stock, Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock,
voting together as a single class on an as-converted basis,
then, notwithstanding anything provided under California law to the contrary,
with respect to each such Specified Action, the Optionee
(a) hereby grants a proxy to one or more of the holders of
Series A Preferred Stock, Series B Preferred Stock or Series D Preferred Stock
that shall have affirmatively voted its approval of such Specified Action, as
his attorney-in-fact (with full power of substitution), for and in the name of
the undersigned, to vote all of the stock owned of record or beneficially by the
Optionee and entitled to vote thereon, and to execute, on behalf of the
Optionee, any written consent of holders of capital stock, in favor of the
approval of such Specified Action, and
(b) if requested by the holders of 66-2/3% of the Series A
Preferred Stock, Series B Preferred Stock and Series D Preferred Stock, acting
together on an as-converted basis, agrees to directly vote his stock in favor of
such Specified Action.
The proxy described in clause (c) above is coupled with an interest and shall be
irrevocable until the termination of this Agreement.
15. Each certificate representing shares owned of record or beneficially
by a party to this Agreement shall be endorsed with the following legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO A STOCK
OPTION AGREEMENT BETWEEN GEOCITIES AND THE HOLDER OF THE SHARES
EVIDENCED BY TIES CERTIFICATE, PROVIDING FOR, AMONG OTHER MATTERS,
THE RIGHT OF GEOCITIES AND CERTAIN SHAREHOLDERS THEREOF TO
REPURCHASE THE SHARES, THE RIGHT OF FIRST REFUSAL TO PURCHASE THE
SHARES REPRESENTED BY THIS CERTIFICATE, AN AGREEMENT WITH RESPECT
TO VOTING
7
<PAGE>
AND AN IRREVOCABLE PROXY. A COPY OF SUCH AGREEMENT IS ON FILE AT
THE PRINCIPAL BUSINESS OFFICE OF GEOCITIES.
Under no circumstances shall any Transfer of any shares subject hereto be valid
until the proposed transferee thereof shall have agreed to be bound by the terms
and provisions of a buy-sell agreement substantially similar to the terms of
Paragraphs 11 through 16 of this Agreement and to become a party to such an
agreement immediately upon receipt of such shares; and notwithstanding any other
provisions of this Agreement, no such Transfer of any kind shall in any event
result in the non-applicability of the provisions hereof at any time to any of
the shares subject hereto.
16. The restrictions on Transfer of shares set forth in this Agreement
shall terminate upon any of the following:
(a) The Liquidation of GeoCities.
(b) The consummation of a firm commitment underwritten public
offering from which GeoCities receives gross proceeds of not less than $20
million and in which the offering price per share (prior to underwriting
commissions and expenses) equals at least $10 (as adjusted for stock splits,
stock dividends, reorganizations and the like).
17. This Agreement is made solely for the benefit of the parties to this
Agreement and their respective successors and assigns, and, except as provided
in Paragraphs 11 through 16, no other person or entity shall have or acquire any
right by virtue of this Agreement. Each holder of the Senior Securities shall be
a third-party beneficiary of Paragraphs 11 through 16 of this Agreement.
18. Any notice to be given to GeoCities under the terms of this Agreement
shall be addressed to GeoCities, in care of its President, at 1918 Main Street,
Santa Monica, California 90405, or to such other address as GeoCities may
hereafter designate in writing. Any notice to be given to the Optionee shall be
addressed to the Optionee at the address set forth beneath his signature hereto,
or at any other address as the Optionee may hereafter designate in writing. Any
such notice shall be deemed to have been duly given if and when personally
delivered, or if mailed, two (2) business days following its being deposited in
the United States mails in a properly sealed envelope, addressed as aforesaid,
registered or certified, postage prepaid.
19. Except as otherwise provided herein, this option and the rights and
privileges conferred by this Agreement may not be transferred, assigned, pledged
or hypothecated by the Optionee in any way (whether by operation of law or
otherwise) and shall not be subject to sale under execution, attachment or
similar process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of this option, or of any right or privilege conferred hereby,
contrary to the provisions hereof, or upon any attempted sale under any
execution, attachment or similar process upon the rights and privileges
conferred hereby, this option and the rights and privileges conferred upon the
Optionee in this Agreement shall immediately become null and void.
8
<PAGE>
20. Subject to the limitations on transferability contained herein, this
Agreement shall be binding upon and inure to the benefit of the heirs, legal
representatives, successors and assigns of the parties hereto.
21. Nothing in this Agreement is intended, nor shall it be deemed, to
create any employment agreement between the Optionee and GeoCities or to impose
any obligation on the part of GeoCities to maintain Optionee's employment with
GeoCities, and any rights that the Optionee may have GeoCities with respect to
the Optionee's employment, other than as an at-will employee, shall be as set
forth in a written employment agreement between the Optionee and GeoCities, if
any.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
in duplicate, as of the day and year first above written.
GEOCITIES
By:
--------------------------------------
David C. Bohnett, President
ACCEPTED:
- ---------------------------------------
STANLEY NEWMAN
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
[Address]
10
<PAGE>
EXHIBIT 99.17
COMPENSATION AGREEMENT
----------------------
This Agreement is made as of the 13th day of January, 1997 by and
between GeoCities, a California corporation (the "Corporation"), and William
Bohnett ("Optionee").
W I T N E S S E T H
-------------------
WHEREAS, in consideration for services performed by Optionee, the
Corporation granted Optionee a stock option on January 13, 1997, to purchase
100,000 shares of the Corporation's Common Stock (the "Option") upon the terms
and conditions set forth in the documentation evidencing such Option attached
hereto.
NOW, THEREFORE, in consideration of the above premises, the parties
hereto agree as follows:
1. The Corporation and Optionee acknowledge and agree that the
Option is granted solely as compensation for services rendered the Corporation
by Optionee and not for any capital-raising purposes or in connection with any
capital-raising activities.
2. The Option shall not be transferable or assignable except in
connection with Optionee's death.
3. This Agreement is intended to constitute a written compensation
contract within the meaning of Rule 701 of the Securities Act of 1933, as
amended.
4. This Agreement is intended solely to memorialize the agreement
and understanding which exists between Optionee and the Corporation concerning
the grant of the Option. Nothing herein or in the documentation evidencing the
Option is intended to provide Optionee with the right to remain in the
Corporation's service for any specific period, and Optionee's services may be
terminated at any time by the Corporation, for any reason, with or without
cause.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first above written.
OPTIONEE GEOCITIES
By:
- ------------------------------------- ----------------------------------
Title:
----------------------------------
<PAGE>
STOCK OPTION AGREEMENT
----------------------
This STOCK OPTION AGREEMENT (this "Agreement") is made and entered
into as of January 13, 1997, by and between GeoCities, a California corporation,
and WILLIAM BOHNETT, an employee of GeoCities (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Optionee is currently serving as a director of GeoCities;
and
WHEREAS, GeoCities desires to grant to the optionee an option which
does not meet the requirements of Section 422 of the Internal Revenue Code of
1986, as amended, to purchase shares of the common stock of GeoCities ("Common
Stock");
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions hereinafter set forth and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. GeoCities hereby grants to the Optionee the option to purchase
25,000 shares of Common Stock at a price per share of $3.54 upon the terms and
subject to the conditions set forth herein.
2. Subject to the conditions set forth herein, the right to exercise
this option shall accrue in periodic installments as follows:
(i) commencing January 13, 1998, this option may be exercised to
the extent of 6,250 shares;
(ii) commencing January 13, 1999, this option may be exercised to
the extent of an additional 6,250 shares;
(iii) commencing January 13, 2000, this option may be exercised to
the extent of an additional 6,250 shares; and
(iv) commencing January 13, 2001, this option may be exercised to
the extent of an additional 6,250 shares.
This option may be exercised, in whole or in part, subject to the limitations
imposed by the exercise schedule set forth above, at any time and from time to
time commencing with the respective dates on which each portion becomes
exercisable and continuing until January 13, 2004, at which time the entire
unexercised portion of this option shall expire.
3. For purposes of this Agreement, the Optionee's service as a
director of GeoCities shall be deemed to be the equivalent of the Optionee's
employment with GeoCities, and all references to the Optionee's employment and
cessation of employment shall be deemed to refer to the Optionee's service as a
director of GeoCities and his ceasing to be a director of
<PAGE>
GeoCities, respectively. In the event of the termination of the Optionee's
employment for any reason including for cause or without cause, resignation,
death or disability, then the exorcise schedule to which this option is subject
pursuant to Paragraph 2 hereof shall be accelerated and such option shall be
immediately exercisable.
4. This option shall be nontransferable by the Optionee, other than
by will or the laws of descent and distribution.
5. Subject to any required action of GeoCities's stockholders, the
existence of outstanding options hereunder shall not affect GeoCities's right or
power to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in its capital structure or business; to
approve any merger or consolidation, issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock; to elect its
dissolution or liquidation or that of any of its subsidiaries; to sell or
transfer any of its business; or to do any other corporate act whether similar
to the events described above or otherwise. If the number of outstanding shares
of Common Stock is increased or decreased or changed into or exchanged for a
different number or kind of securities, whether of GeoCities or any other
corporation, by reason of recapitalization, reclassification, stock split,
combination of shares, stock dividends or other similar event, the number and
kind of securities as to which outstanding options may be exercised, and the
option price at which outstanding options may be exercised may be adjusted by
the Board of Directors, whose determination shall be binding and film.
6. In the event of (i) a liquidation, dissolution or winding up of
GeoCities, (ii) a consolidation or merger of GeoCities with or into any other
corporation or corporations (other than a wholly-owned subsidiary), (iii) the
sale, transfer or other disposition of all or substantially all of the assets of
GeoCities or (iv) the consummation of any transaction or series of related
transactions which results in GeoCities' shareholders immediately prior to such
transaction not holding at least 50% of the voting power of the surviving or
continuing entity (collectively, a "Liquidation"), then in the event of any such
Liquidation, the exercise schedule to which this option is subject pursuant to
Paragraph 2 hereof shall be accelerated, and the option shall be immediately
exercisable upon the consummation of any such Liquidation. Any actions taken
hereunder by the Board of Directors may be done without consideration of any
resulting income tax consequences to GeoCities or the Optionee.
7. This option may be exercised in accordance with the terms hereof
by: (a) giving written notice of such exercise to GeoCities, specifying the
number of whole shares to be purchased and accompanied by full payment of the
purchase price thereof, either in cash, by check, or by delivery to GeoCities of
shares of Common Stock already owned by the Optionee (duly endorsed in favor of
GeoCities or accompanied by a duly endorsed stock power) together with the
amount of any income tax GeoCities is required by law to withhold by reason of
such exercise, and (b) giving satisfactory assurances in writing, if requested
by GeoCities, signed by the person exercising this Option, that the shares to be
purchased upon such exercise are being purchased for investment and not with the
view to distribution thereof.
8. Unless the shares to be issued are at the time of issuance
registered under the Securities Act of 1933, as amended, this option is granted
on the condition that the purchase
2
<PAGE>
of stock hereunder shall be for investment purposes and not with the view to
resale or distribution.
9. Neither the Optionee nor any person claiming under or through him
shall be, or have any of the rights or privileges of, a stockholder of GeoCities
with respect to any of the shares issuable upon the exercise of this option,
unless and until certificates representing such shares shall have been issued
and delivered to him.
10. (a) If the Optionee's employment with GeoCities terminates for
any reason (a "Termination Event"), then the Optionee must then exercise his
option within thirty (30) days thereafter. The Optionee shall be deemed to have
waived the right to exercise his option as to any shares which the Optionee
fails to purchase within such thirty (30) day period. If the Optionee exercises
his option to purchase shares of Common Stock under this Agreement following the
termination of his employment with GeoCities, the exercise by the Optionee of
his option to purchase shares of Common Stock shall be deemed to be the
Termination Event for purposes of this Paragraph 10. Upon the occurrence of a
Termination Event, GeoCities shall have the first right and option, and the
holders of Senior Securities (as defined below) shall have the second right and
option, to purchase from the Optionee (or, in the case of death, from the
Optionee's legal representative) all shares of Common Stock held by the Optionee
on the date of the Termination Event In the event that GeoCities or any holder
of Senior Securities shall exercise such right and option, then the exercising
party shall pay the Optionee, as the purchase price for such shares of Common
Stock, the Fair Market Value (as defined below) of such shares. GeoCities may
exercise its first right and option by delivering notice to Optionee and to each
holder of Senior Securities within ninety (90) days following the Termination
Event of its intent to exercise its repurchase right and the Fair Market Value,
and shall have paid for such shares in cash at the end of such 90th day (unless
the Fair Market Value of the shares has not been conclusively determined as of
such date, in which case GeoCities shall pay the Optionee promptly after the
Fair Market Value is determined in accordance with subparagraph (d) below).
(b) If GeoCities fails to fully exercise its right to repurchase all
of the Optionee's shares of Common Stock after the cessation of the Optionee's
employment or the subsequent purchase of shares, as applicable, then GeoCities
shall give the optionee and each holder of its Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred stock and Series D Preferred Stock (other
than those shares of Series D Preferred stock held by Venture Lending or its
approved transferees), or Common Stock issued upon conversion thereof
(collectively, the "Senior Securities"), notice ("Termination Notice") of such
fact, the number of shares of Common Stock available for purchase by each such
holder and GeoCities' determination of the Fair Market Value of such shares.
The holders of the Senior Securities shall have the right to purchase the
Optionee's Common Stock, on a pro-rata basis, by giving GeoCities notice of
their intent to exercise such option ("Notice of Election") within twenty (20)
days after the receipt of the Termination Notice from GeoCities, together with
cash in the amount of the purchase price (unless the Fair Market Value of the
shares has not been conclusively determined as of such date, in which case each
such holder shall pay the Optionee promptly after the Fair Market Value has been
conclusively determined in accordance with subparagraph (d) below). For
purposes of this subparagraph (b), "pro rata basis" shall be equal to the
product obtained by multiplying (i) the number of the Optionee's shares not
purchased by GeoCities by (ii) a fraction, the numerator of which is the number
of shares of Senior Securities
3
<PAGE>
held by such holder (on an as-converted basis) and the denominator of which is
the total number of shares held by all the holders of Senior Securities (on an
as-converted basis).
(c) Any holder of Senior Securities that fails to provide a timely
Notice of Election shall be deemed to have elected to not purchase any shares in
a transaction pursuant to this Paragraph 10. If any holder of Senior Securities
elects (or is deemed to have elected) not to fully participate in a transaction
pursuant to this Paragraph 10, then GeoCities shall so notify the other holders
of Senior Securities who elected to participate (the "Repurchase Holders").
Such notice may be made by telephone if confirmed in writing within two (2)
days. The Repurchase Holders shall have five (5) days from the date such notice
was given to agree to purchase their pro rata share of the unsold portion of the
Optionee's shares. For purposes of this subparagraph (iv), a "pro rata share"
shall be equal to the product obtained by multiplying (i) the number of the
Optionee's shares in the unsold portion by (ii) a fraction, the numerator of
which is the number of shares of Senior Securities hold by such Repurchase
Holder (on an as-converted basis) and the denominator of which is the total
number of shares held by all of the Repurchase Holders (on an as-converted
basis).
(d) If the Optionee objects to the Fair Market Value as so proposed,
then the Optionee may request an appraisal by written notice of objection
delivered not later than ten (10) days after receipt of the Fair Market Value
set by GeoCities' Board of Directors. If an appraisal is requested, the
Optionee and GeoCities shall jointly select an appraiser to determine the Fair
Market Value of the Optionee's shares. If the Optionee and GeoCities cannot
agree on an appraiser, each shall select its own appraiser (each a "Party
Appraiser") and the two Party Appraisers shall jointly select a third appraiser
(the "Arbitrating Appraiser"). Each of the Party Appraisers shall submit its
appraisal to the Arbitrating Appraiser, and the Arbitrating Appraiser shall
select one of such appraisals as the Fair Market Value. If any such appraisal
results in a Fair Market Value more than 5% higher than the Board of Directors'
original valuation, then all expenses of such appraisal shall be paid by
GeoCities; otherwise, the cost of such appraisal shall be shared equally by the
Optionee and GeoCities.
(e) Notwithstanding anything to the contrary set forth in
Subparagraphs 10(a) through 10(d), if (a) the Optionee's employment with
GeoCities is terminated (a "Termination") for any reason other than (i) the
Optionee's voluntarily resigning or failing to stand for reelection as a
director of GeoCities without having been asked by the Board of Directors of
GeoCities to resign or not to stand for reelection or (ii) because of the
Optionee's death, and (b) there is a Liquidation of GeoCities within one (1)
year after such Termination in which the price per share of Common Stock
received by the holders of such Common Stock upon the consummation of the
Liquidation (the "Liquidation Price") is greater than the price per share of
Common Stock received by the Optionee following the Termination (the "Repurchase
Price"), then the Optionee shall be entitled to receive the following amounts
from GeoCities concurrently with the consummation of the Liquidation. If the
Liquidation is consummated within six (6) months after the Termination as
provided above, then the Optionee shall be entitled to receive an amount equal
to the Liquidation Price less the Repurchase Price, multiplied by the number of
shares of Common Stock which the Optionee held at the time of the Termination
(the "Differential Amount"). If the Liquidation is
4
<PAGE>
consummated more than six (6) months but within nine (9) months after the
Termination as provided above, then the Optionee shall be entitled to receive an
amount equal to seventy-five percent (75%) of the Differential Amount. If the
Liquidation is consummated more than nine (9) months but within one (1) year
after the Termination as provided above, then the Optionee shall be entitled to
receive an amount equal to fifty percent (50%) of the Differential Amount. If
the Liquidation is consummated more than one (1) year after the Termination as
provided above, then the Optionee shall not be entitled to receive any amounts
under this Subparagraph I 0(c). Any such amounts payable by GeoCities under this
Subparagraph I 0(c) shall be paid to the Optionee in the same form of
consideration, and in the same proportions and at the same times, as shall have
been applicable to all other holders of Common Stock in such Liquidation.
11. The Optionee may not sell or engage in any transaction which has
resulted in or will result in a change in the beneficial or record ownership of
any shares of Common Stock held by the Optionee, including without limitation a
voluntary or involuntary sale, assignment, transfer, pledge, hypothecation,
encumbrance, disposal, loan, gift, attachment or levy (a "Transfer"), except as
provided in this Agreement, and any such Transfer of shares of Common Stock or
attempted Transfer of shares of Common Stock in contravention of this Agreement
shall be void and ineffective for any purpose or confer on any transferee or
purported transferee any rights whatsoever.
12. (a) Each time the Optionee proposes to Transfer (or is required
by operation of law or other involuntary transfer) any or all of the shares of
Common Stock standing in the Optionee's name or owned by him or her during the
term of this Agreement, the Optionee shall first offer such shares to GeoCities
and the holders of the Senior Securities in accordance with the following
provisions:
(i) The Optionee shall deliver a written notice (a "Notice') to
GeoCities stating (A) the Optionee's bona fide intention to Transfer such
shares, (B) the name and the address of the proposed transferee, (C) the number
of shares to be transferred, and (D) the purchase price per share and terms of
payment for which the Optionee proposes to Transfer such shares.
(ii) Within thirty (30) days after receipt of the Notice,
GeoCities shall have the first right to purchase or obtain such shares, upon the
price and terms of payment designated in the Notice. If the Notice provides for
the payment of non-cash consideration, GeoCities at its option may pay the
consideration in cash equal to GeoCities' good faith estimate of the present
fair market value of the non-cash consideration offered.
(iii) If GeoCities elects not to purchase or obtain all of the
shares designated in the Optionee's Notice, then GeoCities shall promptly
provide written notice of such fact, together with a copy of the Notice, to the
holders of the Senior Securities. The holders of the Senior Securities shall
have an additional thirty (30) days immediately following the receipt of the
Notice from GeoCities in which to purchase the shares not purchased by GeoCities
on a prorata basis upon the terms and conditions specified in subparagraph (ii)
above by giving GeoCities notice of their intent to exercise such option
("Notice of Purchase") within thirty (30) days after the receipt of the
Termination Notice from GeoCities. For purposes of this subparagraph (iii), "pro
rata" shall be equal to the product obtained by Multiplying (i) the number of
the Optionee's shares not purchased by GeoCities by (ii) a fraction, the
numerator of which is the number of shares of Senior Securities held by such
holder (on an as-converted basis)
5
<PAGE>
and the denominator of which is the total number of shares held by all the
holders of Senior Securities (on an as-converted basis).
(iv) Any holder of Senior Securities that fails to provide a
timely Notice of Purchase shall be deemed to have elected to not purchase any
shares in a transaction pursuant to this Paragraph 12. If any holder of Senior
Securities elects (or is deemed to have elected) not to fully participate in a
transaction pursuant to this Paragraph 12, then GeoCities shall so notify the
other holders of Senior Securities who elected to participate (the "Right of
First Refusal Holders"), Such notice may be made by telephone if confirmed in
writing within two (2) days. The Right of First Refusal Holders shall have five
(5) days from the date such notice was given to agree to purchase their pro rata
share of the unsold portion of the Optionee's shares. For purposes of this
subparagraph (iv), a "pro rata share" shall be equal to the product obtained by
multiplying (i) the number of the Optionee's shares in the unsold portion by
(ii) a fraction, the numerator of which is the number of shares of Senior
Securities held by such Right of First Refusal Holder (on an as-converted basis)
and the denominator of which is the total number of shares of Senior Securities
held by all the Right of First Refusal Holders (on an as converted basis).
(v) If neither (x) GeoCities nor (y) any of the holders of the
Senior Securities elects to purchase or obtain all of the shares designated in
the Optionee's Notice, then the Optionee may Transfer the unsold shares referred
to in the Notice to the proposed referee, providing such Transfer (A) is
completed within 180 days after the expiration of the right of GeoCities and the
holders of the Senior Securities to purchase or obtain such shares, (B) is made
at the same price and terms designated in the Notice, and (C) the proposed
Transferee agrees to be bound by the terms and provisions of a buy-sell
agreement substantially similar to the terms of Paragraphs 11 through 16 of this
Agreement and to become a party to such an agreement immediately upon receipt of
such shares. If such shares are not so transferred, the Optionee must give
notice in accordance with this paragraph prior to any other or subsequent
Transfer of such shares.
(b) Notwithstanding Paragraph 12(a), the Optionee may Transfer for no
or nominal consideration shares to (i) the Optionee's spouse, parents,
grandparents, siblings, children or grandchildren or other members of the
Optionee's family (including relatives by marriage), or to a custodian, trustee
or other fiduciary for the account of the Optionee or members of his or her
family, or to any one other person designated by the Optionee, or (ii) by way of
bequest or inheritance upon death; provided that the Optionee or his
representative notifies GeoCities of such Transfer not less than ten (10) nor
more than ninety (90) days prior to the Transfer and that the Proposed
transferee agrees to be bound by the terms and provisions of a buy-sell
agreement substantially similar to the terms of Paragraphs 11 through 16 of this
Agreement and to become a party to such an agreement immediately upon the
receipt of such shares.
13. Notwithstanding any provisions to the contrary contained in this
Agreement, GeoCities' obligations to pay or complete payment for any shares to
be purchased by it under this Agreement are subject to its being legally
permitted to do so under the tests contained in Sections 500 and 501 of the
California General Corporation Law or any successor statute applicable thereto.
The inability of GeoCities to validly purchase any shares hereunder
6
<PAGE>
by reason of its failure to meet the tests contained in Sections 500 and 501 of
the California General Corporation Law shall not be deemed to affect or limit in
any way the ability of the holders of the Senior Securities to purchase the
shares.
14. Notwithstanding any provision of California law to the contrary,
so long as any shares of Series A Preferred Stock, Series B Preferred Stock or
Series D Preferred Stock shall be outstanding, in the event that:
(i) a vote or written consent is taken with respect to any of
the events described in subsections (a) or (b) of Section 7 of Article III of
the Second Amended and Restated Articles of Incorporation (the "Restated
Articles") of GeoCities (a "Specified Action"),
(ii) California law provides that a majority of the outstanding
shares of a class or series of a class of capital stock, voting separately as a
class or series, as applicable, must approve such Specified Action, and
(iii) the Specified Action shall have received the approval of
(x) the requisite vote of ft holders of Series A Preferred Stock, Series B
Preferred Stock and Series D Preferred Stock specified in the appropriate
subsection of Section 7 of Article HI of the Restated Articles and (y) a
majority of the total number of outstanding shares of Common Stock, Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock, voting together as a single class on an as-converted basis,
then, notwithstanding anything provided under California law to the contrary,
with respect to each such Specified Action, the optionee
(a) hereby grants a proxy to one or more of the holders of Series A
Preferred Stock, Series B Preferred Stock or Series D Preferred Stock that shall
have affirmatively voted its approval of such Specified Action, as his attorney-
in-fact (with full power of substitution), for and in the name of the
undersigned, to vote all of the stock owned of record or beneficially by the
Optionee and entitled to vote thereon, and to execute, on behalf of the
Optionee, any written Consent Of holders Of capital stock, in favor of the
approval of such Specified Action, and
(b) if requested by the holders of 66-2/3% of the Series A Preferred
Stock, Series B Preferred Stock and Series D Preferred Stock, acting together on
an as-converted basis, agrees to directly vote his stock in favor of such
Specified Action.
The proxy described in clause (c) above is coupled with an interest and shall be
irrevocable until the termination of this Agreement.
15. Each certificate representing shares owned of record or
beneficially by a party to this Agreement shall be endorsed with the following
legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE
SUBJECT TO A STOCK OPTION AGREEMENT BETWEEN
GEOCITIES AND THE HOLDER OF THE SHARES
EVIDENCED BY THIS CERTIFICATE, PROVIDING FOR,
AMONG OTHER MATTERS, THE RIGHT OF GEOCITIES AND
CERTAIN SHAREHOLDERS THEREOF TO
7
<PAGE>
REPURCHASE THE SHARES, THE RIGHT OF FIRST
REFUSAL TO PURCHASE THE SHARES REPRESENTED BY
THIS CERTIFICATE, AN AGREEMENT WITH RESPECT TO
VOTING AND AN IRREVOCABLE PROXY. A COPY OF
SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL
BUSINESS OFFICE OF GEOCITIES.
Under no circumstances shall any Transfer of any shares subject hereto be valid
until the proposed transferee thereof shall have agreed to be bound by the terms
and provisions of a buy-sell agreement substantially similar to the terms of
Paragraphs 11 through 16 of this Agreement and to become a party to such an
agreement immediately upon receipt of such shares; and notwithstanding any other
provisions of this Agreement, no such Transfer of any kind shall in any event
result in the non-applicability of the provisions hereof at any time to any of
the shares subject hereto.
16. The restrictions on Transfer of shares set forth in this
Agreement shall terminate upon any of the following:
(a) The Liquidation of GeoCities.
(b) The consummation of a firm commitment underwritten public
offering from which GeoCities receives gross proceeds of not less than $20
million and in which the offering price per share (prior to underwriting
commissions and expenses) equals at least $10 (as adjusted for stock splits,
stock dividends, reorganizations and the like).
17. This Agreement is made solely for the benefits of the parties to
this Agreement and their respective successors and assigns, and, except as
provided in Paragraphs 11 through 16, no other person or entity shall have or
acquire any right by virtue of this Agreement. Each holder of the Senior
Securities shall be a third-party beneficiary of Paragraphs 11 through 16 of
this Agreement.
18. Any notice to be given to GeoCities under the terms of this
Agreement shall be addressed to GeoCities, in care of its President, at 1918
Main Street, Santa Monica, California 90405, or to such other address as
GeoCities may hereafter designate in writing. Any notice to be given to the
Optionee shall be addressed to the Optionee at the address set forth beneath his
signature, hereto, or at any other address as the Optionee may hereafter
designate in writing. Any such notice shall be deemed to have been duly given if
and when personally delivered, or if mailed, two (2) business days following its
being deposited in the United States mails in a properly sealed envelope,
addressed as aforesaid, registered or certified, postage prepaid.
19. Except as otherwise provided herein, this option and the rights
and privileges conferred by this Agreement may not be transferred, assigned,
pledged or hypothecated by the Optionee in any way (whether by operation of law
or otherwise) and shall not be subject to sale under execution, attachment or
similar process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of this option, or of any right or privilege conferred hereby,
contrary to the provisions hereof, or upon any attempted sale under
8
<PAGE>
any execution, attachment or similar process upon the rights and privileges
conferred hereby, this option and the rights and privileges conferred upon the
Optionee in this Agreement shall immediately become null and void.
20. Subject to the limitations on transferability contained herein,
this Agreement shall be binding upon and inure to the benefit of the heirs,
legal representatives, successors and assigns of the parties hereto.
21. Nothing in this Agreement is intended, nor shall it be deemed, to
create any employment agreement between the Optionee and GeoCities or to impose
any obligation on the part of GeoCities to maintain Optionee's employment with
GeoCities and any rights that the Optionee may have GeoCities with respect to
the Optionee's employment, other than as an at-will employee, shall be as set
forth in a written employment agreement between the Optionee and GeoCities, if
any.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
in duplicate, as of the day and year first above written.
GEOCITIES
By___________________________________
David C. Bohnett, President
ACCEPTED:
_________________________________
WILLIAM BOHNETT
_________________________________
_________________________________
_________________________________
[Address]
9
<PAGE>
COMPENSATION AGREEMENT
----------------------
This Agreement is made as of the 21st day of May, 1998 by and between
GeoCities, a California corporation (the "Corporation"), and James G. Glicker
("Optionee").
W I T N E S S E T H
-------------------
WHEREAS, in consideration for services performed by Optionee, the
Corporation granted Optionee stock options on May 21, 1998, to purchase 150,000
shares of the Corporation's Common Stock (the "Options") upon the terms and
conditions set forth in the documentation evidencing such Options attached
hereto.
NOW, THEREFORE, in consideration of the above premises, the parties
hereto agree as follows:
1. The Corporation and Optionee acknowledge and agree that the
Option is granted solely as compensation for services rendered the Corporation
by Optionee and not for any capital-raising purposes or in connection with any
capital-raising activities.
2. The Option shall not be transferable or asignable except in
connection with Optionee's death.
3. This Agreement is intended to constitute a written compensation
contract within the meaning of Rule 701 of the Securities Act of 1933, as
amended.
4. This Agreement is intended solely to memorialize the agreement
and understanding which exists between Optionee and the Corporation concerning
the grant of the Option. Nothing herein or in the documentation evidencing the
Option is intended to provide Optionee with the right to remain in the
Corporation's service for any specific period, and Optionee's services may be
terminated at any time by the Corporation, for any reason, with or without
cause.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first above written.
OPTIONEE GEOCITIES
By:
- ------------------------------------- ---------------------------------
Title:
---------------------------------
<PAGE>
EXHIBIT 99.19
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (this "Agreement") is made and entered
into as of the 21st day of May, 1998, by and between GeoCities, a California
corporation, and JAMES G. GLICKER, an employee of GeoCities (the "Optionee").
WITNESSETH:
WHEREAS, the Optionee is currently employed by GeoCities as Vice
President, Marketing: and
WHEREAS, GeoCities desires to grant the Optionee an option which does
not meet the requirements of Section 422 of the Internal Revenue Code of 1986,
as amended, to purchase shares of the common stock of GeoCities, $0.005 par
value per share ("Common Stock");
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions hereinafter set forth and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. GeoCities hereby grants to the Optionee the option to purchase
50,000 shares of Common Stock at a price per share of $6.00 upon the terms and
subject to the conditions set forth herein.
2. Subject to the conditions set forth herein, the right to exercise
this option shall accrue in periodic installments as follows:
(i) commencing with the period of twelve (12) consecutive months
beginning on the third (3rd) anniversary of the date on which you became a full-
time employee of GeoCities, this option may be exercised to the extent of 12,500
shares;
(ii) commencing with the period of twelve (12) consecutive months
beginning on the fourth (4th) anniversary of the date on which you became a
full-time employee of GeoCities, this option may be exercised to the extent of
an additional 12,500 shares;
(iii) commencing with the period of twelve (12) consecutive
months beginning on the fifth (5th) anniversary of the date on which you became
a full-time employee of GeoCities, this option may be exercised to the extent of
an additional 12,500 shares; and
(iv) during the period of twelve (12) consecutive months
<PAGE>
beginning on the sixth (6th) anniversary of the date on which you became a full-
time employee of GeoCities, this option may be exercised to the extent of an
additional 12,500 shares.
However, if the Optionee achieves certain performance milestones as
described in Schedule A hereto, then the exercise schedule of this paragraph
shall be accelerated such that the option will become exercisable in a series of
four (4) equal installments of 12,500 shares upon the Optionee's completion of
each year of employment with GeoCities over the four (4) year period measured
from the date the performance milestones are achieved.
This option may be exercised, in whole or in part, subject to the
limitations imposed by the exercise schedule set forth above, at any time and
from time to time commencing with the respective dates on which each portion
becomes exercisable and continuing until the seventh (7th) anniversary of the
date on which you became a full-time employee of GeoCities, at which time the
entire unexercised portion of this option shall expire. You and GeoCities
hereby confirm that you became a full-time employee of GeoCities on May 11,
1998.
3. In the event of termination of the Optionee's employment for
cause, as defined below, this option shall immediately terminate. If the
Optionee's employment is terminated for any reason other than for cause, then
this option may be exercised to the extent this option was exercisable on the
date of such cessation of employment, within three (3) months after the date the
Optionee ceases to be an employee of GeoCities. An approved leave of absence
shall not be deemed a termination of employment for purposes of this Agreement,
but no option may be exercised during any such leave of absence, except during
the first three (3) months thereof. Solely for purposes of this Paragraph 3
below, "cause" shall mean any fair and honest cause or reason assigned in good
faith by the Board of Directors or any officer of GeoCities.
4. This option shall be exercisable by the Optionee only during the
Optionee's lifetime. This option shall be nontransferable by the Optionee other
than by will or the laws of descent and distribution.
5. In the event of the Optionee's death or permanent and total
disability while in the employ of GeoCities, or during the period following
termination of employment during which the Optionee is permitted to exercise an
option pursuant to Paragraph 3 hereof, this option may be exercised, to the
extent that it was otherwise exercisable as of the date of such death,
disability or termination of employment by the Optionee or the Optionee's
transferee within one (1) year after the date the Optionee dies or becomes
permanently and totally disabled. The Optionee's transferee shall be the person
or persons entitled to exercise the option under the Optionee's will, or, if no
testamentary disposition of the option shall have been made, the Optionee's
legal representative. Any transferee exercising the option must furnish
GeoCities with: (a) written confirmation of his or her status as transferee; (b)
evidence satisfactory to GeoCities to establish the validity of the transfer of
this option in compliance with this Agreement and with any laws or regulations
pertaining to said transfer; and (c) written acceptance of the terms and
conditions of this Option as prescribed in this Agreement.
2.
<PAGE>
6. Subject to any required action of GeoCities' shareholders, the
existence of outstanding options hereunder shall not affect GeoCities' right or
power to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in its capital structure or business; to
approve any merger or consolidation, issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock; to elect its
dissolution or liquidation or that of any of its subsidiaries, to sell or
transfer any of its business; or to do any other corporate act whether similar
to the events described above or otherwise. If the number of outstanding shares
of Common Stock is increased or decreased or changed into or exchanged for a
different number or kind of securities, whether of GeoCities or any other
corporation, by reason of recapitalization, reclassification, stock split,
combination of shares, stock dividends or other similar event, the number and
kind of securities as to which outstanding options may be exercised, and the
option price at which outstanding options may be exercised may be adjusted by
the Board of Directors, whose determination shall be binding and final.
7. This option may be exercised in accordance with the terms hereof
by: (a) giving written notice of such exercise to GeoCities, specifying the
number of whole shares to be purchased and accompanied by full payment of the
purchase price thereof, either in cash, by check, or by delivery to GeoCities of
shares of Common Stock already owned by the Optionee (duly endorsed in favor of
GeoCities or accompanied by a duly endorsed stock power) together with the
amount of any income tax GeoCities is required by law to withhold by reason of
such exercise, and (b) giving satisfactory assurances in writing, if requested
by GeoCities, signed by the person exercising this option, that the shares to be
purchased upon such exercise are being purchased for investment and not with the
view to distribution thereof.
8. (a) Notwithstanding anything contained herein to the
contrary, in the event that the Optionee ceases to be employed by GeoCities for
any reason (including, without limitation, as a result of resignation,
retirement, dismissal with or without cause, death or disability), GeoCities
shall have the first right and option, and the holders of Senior Securities (as
defined below) shall have the second right and option, to purchase from the
Optionee (or, in the case of death, from the Optionee's legal representative)
all shares of Common Stock held by the Optionee on the date of cessation of
employment or purchased by the Optionee following such date as permitted under
Paragraphs 3 and 5 hereof. In the event that GeoCities or any holder of Senior
Securities shall exercise such right and option, then the exercising party shall
pay the Optionee, as the purchase price for such shares of Common Stock, the
Fair Market Value (as defined below) of such shares. GeoCities may exercise its
first right and option by delivering notice to Optionee and to each holder of
Senior Securities within ninety (90) days following the cessation of the
Optionee's employment or the subsequent purchase of shares, as applicable, of
its intent to exercise its repurchase right and the Fair Market Value of the
shares in cash at the end of such 90th day (unless the Fair Market Value of the
shares has not been conclusively determined as of such date, in which case
GeoCities may, at its sole option, pay the Optionee the estimated Fair Market
Value at the end of such 90th day, subject to adjustment upon the final
determination of the Fair Market Value, or pay the Optionee promptly after the
Fair Market Value is determined in accordance with subparagraph (d) below).
3.
<PAGE>
(b) If GeoCities fails to fully exercise its right to repurchase all
of the Optionee's shares of Common Stock after the cessation of the Optionee's
employment or the subsequent purchase of shares, as applicable, then GeoCities
shall give the Optionee and each holder of its Preferred Stock, or Common Stock
issued upon conversion thereof (collectively, the "Senior Securities"), notice
("Termination Notice") of such fact, the number of shares of Common Stock
available for purchase by each share holder and GeoCities' determination of the
Fair Market Value of such shares. The holders of the Senior Securities shall
have the right to purchase the Optionee's Common Stock, on a pro-rata basis, by
giving GeoCities notice of their intent to exercise such option ("Notice of
Election") within twenty (20) days after the receipt of the Termination Notice
from GeoCities, together with cash in the amount of the purchase price (unless
the Fair Market Value of the shares has not been conclusively determined as of
such date, in which case each such holder shall pay the Optionee promptly after
the Fair Market Value has been conclusively determined in accordance with
subparagraph (d) below). For the purposes of this subparagraph (b), "pro rata
basis" shall be equal to the product obtained by multiplying (i) the number of
the Optionee's shares not purchased by GeoCities by (ii) a fraction, the
numerator of which is the number of shares of Senior Securities held by such
holder (on an as-converted basis) and the denominator of which is the total
number of shares held by all the holders of Senior Securities (on an as-
converted basis).
(c) Any holder of Senior Securities that fails to provide a timely
Notice of Election shall be deemed to have elected not to purchase any shares in
a transaction pursuant to this Paragraph 8. If any holder of Senior Securities
elects (or is deemed to have elected) not to fully participate in a transaction
pursuant to this Paragraph 10, GeoCities shall so notify the other holders of
Senior Securities who elected to participate (the "Repurchase Holders"). Such
notice may be made by telephone if confirmed in writing within two (2) days.
The Repurchase Holders shall have five (5) days from the date such notice was
given to agree to purchase their pro rata share of the unsold portion of the
Optionee's shares. For the purposes of this subparagraph (c), a "pro rata
share" shall be equal to the product obtained by multiplying (i) the number of
the Optionee's shares in the unsold portion by (ii) a fraction, the numerator of
which is the number of shares of Senior Securities held by such Repurchase
Holder (on an as-converted basis) and the denominator of which is the total
number of shares held by all of the Repurchase Holders (on an as-converted
basis).
(d) If the Optionee objects to the Fair Market Value as so proposed,
then the Optionee may request an appraisal by written notice of objection
delivered not later than ten (10) days after receipt of the Fair Market Value
set by GeoCities' Board of Directors. If an appraisal is requested, the
Optionee and GeoCities shall jointly select an appraiser to determine the Fair
Market Value of the Optionee's shares. If the Optionee and GeoCities cannot
agree on an appraiser, each shall select its own appraiser (each, a "Party
Appraiser") and the two Party Appraisers shall jointly select a third appraiser
(the "Arbitrating Appraiser"). Each of the Party Appraisers shall submit its
appraisal to the Arbitrating Appraiser, and the Arbitrating Appraiser shall
select one of such appraisals as the Fair Market Value. All expenses of such
appraisal shall be paid by the Optionee, unless the Fair Market Value as
determined by such appraisal is at least five percent (5%) greater than the Fair
Market Value initially set by the Board of Directors, in
4.
<PAGE>
which case GeoCities and the holders of Senior Securities shall pay for the
appraisal in proportion to each party's purchase of the Optionee's shares.
9. The Optionee may not sell or engage in any transaction which has
resulted in or will result in a change in the beneficial or record ownership of
any shares of Common Stock held by the Optionee, including without limitation a
voluntary or involuntary sale, assignment, transfer, pledge, hypothecation,
encumbrance, disposal, loan, gift attachment or levy (a "Transfer"), except as
provided in this Agreement, and any such Transfer of shares of Common Stock or
attempted Transfer of shares of Common Stock in contravention of this Agreement
shall be void and ineffective for any purpose or confer on any transferee or
purported transferee any rights whatsoever.
10. (a) Each time the Optionee proposes to Transfer (or is
required by operation of law or other involuntary transfer) any or all of the
shares of Common Stock standing in the Optionee's name or owned by the Optionee
during the term of this Agreement, the Optionee shall first offer such shares to
GeoCities and the holders of the Senior Securities in accordance with the
following provisions:
(i) The Optionee shall deliver a written notice (a
"Notice") to GeoCities stating (A) the Optionee's bona fide intention to
Transfer such shares, (B) the name and the address of the proposed transferee,
(C) the number of shares to be transferred, and (D) the purchase price per share
and the terms of payment for which the Optionee proposes to Transfer such
shares.
(ii) Within thirty (30) days after the receipt of the
Notice, GeoCities shall have the first right to purchase or obtain such shares,
upon the price and terms of payment designated in the Notice. If the Notice
provides for the payment of non-cash consideration, GeoCities at its option may
pay the consideration in cash equal to GeoCities' good faith estimate of the
present fair market value of the non-cash consideration offered.
(iii) If GeoCities elects not to purchase or obtain
all of the shares designated in the Optionee's Notice, then GeoCities shall
promptly provide written notice of such fact, together with a copy of the
Notice, to the holders of the Senior Securities. The holders of the Senior
Securities shall have an additional thirty (30) days immediately following the
receipt of the Notice from GeoCities in which to purchase the shares not
purchased by GeoCities on a pro rata basis upon the terms and conditions
specified in subparagraph (ii) above by giving GeoCities notice of their intent
to exercise such option ("Notice of Purchase") within thirty (30) days after the
receipt of the Notice from GeoCities. For purposes of this subparagraph (iii),
"pro rata" shall be equal to the product obtained by multiplying (i) the number
of the Optionee's shares not purchased by GeoCities by (ii) a fraction, the
numerator of which is the number of shares of Senior Securities held by such
holder (on an as-converted basis) and the denominator of which is the total
number of shares held by all holders of the Senior Securities (on an as-
converted basis).
5.
<PAGE>
(iv) Any holder of Senior Securities that fails to
provide a timely Notice of Purchase shall be deemed to have elected to not
purchase any shares in a transaction pursuant to this Paragraph 10. If any
holder of Senior Securities elects (or is deemed to have elected) not to fully
participate in a transaction pursuant to this Paragraph 10, then GeoCities shall
so notify the other holders of Senior Securities who elected to participate (the
"Right of First Refusal Holders"). Such notice may be made by telephone if
confirmed in writing within two (2) days. The Right of First Refusal Holders
shall have five (5) days from the date such notice was given to agree to
purchase their pro rata share of the unsold portion of the Optionee's shares.
For purposes of this subparagraph (iv), a "pro rata share" shall be equal to the
product obtained by multiplying (i) the number of the Optionee's shares in the
unsold portion by (ii) a fraction, the numerator of which is the number of
shares of Senior Securities held by such Right of First Refusal Holder (on an
as-converted basis) and the denominator of which is the total number of shares
of Senior Securities held by all the Right of First Refusal Holders (on an as-
converted basis).
(v) If neither (x) GeoCities nor (y) any of the holders
of the Senior Securities elects to purchase or obtain all of the shares
designated in the Optionee's Notice, then the Optionee may Transfer the unsold
shares referred to in the Notice to the proposed transferee, providing such
Transfer (A) is completed within 180 days after the expiration of the right of
GeoCities and the holders of the Senior Securities to purchase or obtain such
shares, (B) is made at the same price and terms designated in the Notice, and
(C) the proposed transferee agrees to be bound by the terms and provisions of a
buy-sell agreement substantially similar to the terms of Paragraph 9 through 13
of this Agreement and to become a party to such an agreement immediately upon
receipt of such shares. If such shares are not so transferred, the Optionee must
give notice in accordance with this Paragraph 10 prior to any other or
subsequent Transfer of such shares.
(b) Notwithstanding Paragraph 10(a), the Optionee may
Transfer for no or nominal consideration shares to (i) the Optionee's spouse,
parents, grandparents, siblings, children or grandchildren or other members of
the Optionee's family (including relatives by marriage), or to a custodian,
trustee or other fiduciary for the account of the Optionee or members of the
Optionee's family, or to any person designated by the Optionee, or (ii) by way
of bequest or inheritance upon death; provided that the Optionee or the
Optionee's representative notifies GeoCities of such Transfer not less than ten
(10) nor more than ninety (90) days prior to the Transfer and that the proposed
transferee agrees to be bound by the terms and provisions of a buy-sell
agreement substantially similar to the terms of Paragraph 8 through 13 of this
Agreement and to become a party to such an agreement immediately upon the
receipt of such shares. Such buy-sell agreement shall provide that, for purposes
of the paragraph in such buy-sell agreement that is analogous to Paragraph 8 of
this Agreement, a cessation of the Optionee's employment with GeoCities shall be
deemed to be a cessation of employment by the transferee.
11. Notwithstanding any provisions to the contrary contained in this
Agreement, GeoCities' obligations to pay or complete payment for any shares to
be purchased by it under this Agreement are subject to its being legally
permitted to do so under the tests contained in Sections
6.
<PAGE>
500 and 501 of the California General Corporation Law or any successor statute
applicable thereto. The inability of GeoCities to validly purchase any shares
hereunder by reason of its failure to meet the tests contained in Section 500
and 501 of the California General Corporation Law shall not be deemed to affect
or limit in any way the ability of the holders of the Senior Securities to
purchase the shares.
12. Each Certificate representing shares owned of record or
beneficially by a party to this Agreement shall be endorsed with the following
legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE
SUBJECT TO A STOCK OPTION AGREEMENT BETWEEN
GEOCITIES AND THE HOLDER OF THE SHARES
EVIDENCED BY THIS CERTIFICATE, PROVIDING FOR,
AMONG OTHER MATTERS, THE RIGHT OF GEOCITIES
AND CERTAIN SHAREHOLDERS THEREOF TO REPURCHASE
THE SHARES REPRESENTED BY THE CERTIFICATE. A
COPY OF SUCH AGREEMENT IS ON FILE AT THE
PRINCIPAL BUSINESS OFFICE OF GEOCITIES.
Under no circumstances shall any Transfer of any shares subject hereto
be valid until the proposed transferee thereof shall have agreed to be bound by
the terms and provisions of a buy-sell agreement substantially similar to the
terms of Paragraphs 9 through 13 of this Agreement and to become a party to such
an agreement immediately upon receipt of such shares; and notwithstanding any
other provisions of this Agreement, no such Transfer of any kind shall in any
event result in the non-applicability of the provisions hereof at any time to
any of the shares subject hereto. Additionally, in order to permit GeoCities to
enforce the provisions of Paragraphs 10 through 13 of this Agreement you and
GeoCities agree that the stock certificates representing all of the shares
issued and to be issued to you by GeoCities pursuant to this Agreement and any
other Stock Option Agreements between you and GeoCities shall be deposited into
escrow pursuant to Joint Escrow Instructions to be executed by you, GeoCities
and an Escrow Agent. At the time of such deposit, you shall also deposit into
such escrow two Stock Assignments Separate from Certificate executed in blank.
13. The restrictions on Transfer of shares set forth in this
Agreement shall terminate upon the consummation of a firm commitment
underwritten public offering from which GeoCities receives gross proceeds of not
less than $20 million and in which the offering price per share (prior to
underwriting commissions and expenses) equals at least $5 (as adjusted for stock
splits, stock dividends, reorganizations and the like).
14. This Agreement is made solely for the benefit of the parties to
this Agreement and their respective successors and assigns, and, except as
provided in Paragraphs 8 through 13, no other person or entity shall have or
acquire any right by virtue of this Agreement Each holder of Senior Securities
shall be a third-party beneficiary of Paragraphs 8 through 13 of this Agreement.
7.
<PAGE>
15. Unless the shares to be issued are at the time of issuance
registered under the Securities Act of 1933, as amended, this option is granted
on the condition that the purchase of stock hereunder shall be for investment
purposes and not with the view to resale or distribution.
16. Neither the Optionee nor any person claiming under or through the
Optionee shall be, or have any of the rights or privileges of a shareholder of
GeoCities with respect to any of the shares issuable upon the exercise of this
option, unless and until certificates representing such shares shall have been
issued and delivered to the Optionee.
17. Any notice to be given to GeoCities under the terms of this
Agreement shall be addressed to GeoCities, in care of its President, at 1918
Main Street, Third Floor, Santa Monica California 90405-1030, or to such other
address as GeoCities may hereafter designate in writing. Any notice to be given
to the Optionee shall be addressed to the Optionee at the address set forth
beneath the Optionee's signature hereto, or at any other address as the Optionee
may hereafter designate in writing. Any such notice shall be deemed to have
been duly given if and when personally delivered, or if mailed, two (2) business
days following its being deposited in the United States mails in a properly
sealed envelope, addressed as aforesaid, registered or certified, postage
prepaid.
18. Except as otherwise provided herein, this option and the rights
and privileges conferred by this Agreement may not be transferred, assigned,
pledged or hypothecated by the Optionee in any way (whether by operation of law
or otherwise) and shall not be subject to sale under execution, attachment or
similar process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of this option, or of any right or privilege conferred hereby,
contrary to the provisions hereof, or upon any attempted sale under any
execution, attachment or similar process upon the rights and privileges
conferred hereby, this option and the rights and privileges conferred upon the
Optionee in this Agreement shall immediately become null and void.
19. Subject to the limitations of transferability contained herein,
this Agreement shall be binding upon and inure to the benefit of the heirs,
legal representatives, successors and assigns of the parties hereto.
20. Nothing in this Agreement is intended, nor shall it be deemed, to
create any employment agreement between the Optionee and GeoCities or to impose
any obligation on the part of GeoCities to maintain Optionee's employment with
GeoCities, and any rights that the Optionee may have GeoCities with respect to
the Optionee's employment, other than as an at-will employee, shall be as set
forth in a written employment agreement between the Optionee and GeoCities, if
any.
8.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
in duplicate, as of the day and year first above written.
GEOCITIES
By: -------------------------------------
Thomas R. Evans
President and Chief Executive Officer
ACCEPTED:
- ------------------------------
Signature
- ------------------------------
James G. Glicker
- -----------------------------
Address
- -----------------------------
City, State, Zip
9.
<PAGE>
Consent of Spouse
-----------------
I, the undersigned spouse of the Optionee, acknowledge on my own
behalf that I have read the foregoing Agreement and I know its contents, I am
aware that by its provisions my spouse grants GeoCities and certain other
shareholders an option to purchase all of his shares of GeoCities, including my
community interest in them, I hereby consent to the sale, approve of the
provisions of the Agreement, and agree that those shares and my interest in them
are subject to the provisions of the Agreement and that I will take no action at
any time to hinder operation of the Agreement on those shares or my interest in
them.
-------------------------------
10.
<PAGE>
SCHEDULE A
PERFORMANCE MILESTONES
11.
<PAGE>
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (this "Agreement") is made and entered
into as of the 21st day of May, 1998, by and between GeoCities, a California
corporation, and ROBERT K. KALOK, an employee of GeoCities (the "Optionee").
WITNESSETH:
WHEREAS, the Optionee is currently employed by GeoCities as Vice
President, Business Development; and
WHEREAS, GeoCities desires to grant the Optionee an option which does
not meet the requirements of Section 422 of the Internal Revenue Code of 1986,
as amended, to purchase shares of the common stock of GeoCities, $0.005 par
value per share ("Common Stock");
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions hereinafter set forth and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. GeoCities hereby grants to the Optionee the option to purchase
75,000 shares of Common Stock at a price per share of $6.00 upon the terms and
subject to the conditions set forth herein.
2. Subject to the conditions set forth herein, the right to exercise
this option shall accrue in periodic installments as follows:
(i) commencing with the period of twelve (12) consecutive months
beginning on the first (1st) anniversary of the date on which you became a full-
time employee of GeoCities, this option may be exercised to the extent of 18,750
shares;
(ii) commencing with the period of twelve (12) consecutive months
beginning on the second (2nd) anniversary of the date on which you became a
full-time employee of GeoCities, this option may be exercised to the extent of
an additional 18,750 shares;
(iii) commencing with the period of twelve (12) consecutive months
beginning on the third (3rd) anniversary of the date on which you became a full-
time employee of GeoCities, this option may be exercised to the extent of an
additional 18,750 shares; and
(iv) commencing with the period of twelve (12) consecutive
<PAGE>
months beginning on the fourth (4th) anniversary of the date on which you became
a full-time employee of GeoCities, this option may be exercised to the extent of
an additional 18,750 shares.
This option may be exercised, in whole or in part, subject to the
limitations imposed by the exercise schedule set forth above, at any time and
from time to time commencing with the respective dates on which each portion
becomes exercisable and continuing until the seventh (7th) anniversary of the
date on which you became a full-time employee of GeoCities, at which time the
entire unexercised portion of this option shall expire. You and GeoCities
hereby confirm that you became a full-time employee of GeoCities on May 18,
1998.
3. In the event of termination of the Optionee's employment for
cause, as defined below, this option shall immediately terminate. If the
Optionee's employment is terminated for any reason other than for cause, then
this option may be exercised to the extent this option was exercisable on the
date of such cessation of employment, within three (3) months after the date the
Optionee ceases to be an employee of GeoCities. An approved leave of absence
shall not be deemed a termination of employment for purposes of this Agreement,
but no option may be exercised during any such leave of absence, except during
the first three (3) months thereof. Solely for purposes of this Paragraph 3,
"cause" shall mean any fair and honest cause or reason assigned in good faith by
the Board of Directors or any officer of GeoCities.
4. This option shall be exercisable by the Optionee only during the
Optionee's lifetime. This option shall be nontransferable by the Optionee other
than by will or the laws of descent and distribution.
5. In the event of the Optionee's death or permanent and total
disability while in the employ of GeoCities, or during the period following
termination of employment during which the Optionee is permitted to exercise an
option pursuant to Paragraph 3 hereof, this option may be exercised, to the
extent that it was otherwise exercisable as of the date of such death,
disability or termination of employment by the Optionee or the Optionee's
transferee within one (1) year after the date the Optionee dies or becomes
permanently and totally disabled. The Optionee's transferee shall be the person
or persons entitled to exercise the option under the Optionee's will, or, if no
testamentary disposition of the option shall have been made, the Optionee's
legal representative. Any transferee exercising the option must furnish
GeoCities with: (a) written confirmation of his or her status as transferee; (b)
evidence satisfactory to GeoCities to establish the validity of the transfer of
this option in compliance with this Agreement and with any laws or regulations
pertaining to said transfer; and (c) written acceptance of the terms and
conditions of this Option as prescribed in this Agreement.
6. Subject to any required action of GeoCities' shareholders, the
existence of outstanding options hereunder shall not affect GeoCities' right or
power to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in its capital structure or business; to
approve any merger or consolidation, issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock; to elect its
dissolution or liquidation or that of any of its subsidiaries, to sell or
transfer any of its business; or to do any
2.
<PAGE>
other corporate act whether similar to the events described above or otherwise.
If the number of outstanding shares of Common Stock is increased or decreased or
changed into or exchanged for a different number or kind of securities, whether
of GeoCities or any other corporation, by reason of recapitalization,
reclassification, stock split, combination of shares, stock dividends or other
similar event, the number and kind of securities as to which outstanding options
may be exercised, and the option price at which outstanding options may be
exercised may be adjusted by the Board of Directors, whose determination shall
be binding and final.
7. This option may be exercised in accordance with the terms hereof
by: (a) giving written notice of such exercise to GeoCities, specifying the
number of whole shares to be purchased and accompanied by full payment of the
purchase price thereof, either in cash, by check, or by delivery to GeoCities of
shares of Common Stock already owned by the Optionee (duly endorsed in favor of
GeoCities or accompanied by a duly endorsed stock power) together with the
amount of any income tax GeoCities is required by law to withhold by reason of
such exercise, and (b) giving satisfactory assurances in writing, if requested
by GeoCities, signed by the person exercising this option, that the shares to be
purchased upon such exercise are being purchased for investment and not with the
view to distribution thereof.
8. (a) Notwithstanding anything contained herein to the contrary, in
the event that the Optionee ceases to be employed by GeoCities for any reason
(including, without limitation, as a result of resignation, retirement,
dismissal with or without cause, death or disability), GeoCities shall have the
first right and option, and the holders of Senior Securities (as defined below)
shall have the second right and option, to purchase from the Optionee (or, in
the case of death, from the Optionee's legal representative) all shares of
Common Stock held by the Optionee on the date of cessation of employment or
purchased by the Optionee following such date as permitted under Paragraphs 3
and 5 hereof. In the event that GeoCities or any holder of Senior Securities
shall exercise such right and option, then the exercising party shall pay the
Optionee, as the purchase price for such shares of Common Stock, the Fair Market
Value (as defined below) of such shares. GeoCities may exercise its first right
and option by delivering notice to Optionee and to each holder of Senior
Securities within ninety (90) days following the cessation of the Optionee's
employment or the subsequent purchase of shares, as applicable, of its intent to
exercise its repurchase right and the Fair Market Value of the shares in cash at
the end of such 90th day (unless the Fair Market Value of the shares has not
been conclusively determined as of such date, in which case GeoCities may, at
its sole option, pay the Optionee the estimated Fair Market Value at the end of
such 90th day, subject to adjustment upon the final determination of the Fair
Market Value, or pay the Optionee promptly after the Fair Market Value is
determined in accordance with subparagraph (d) below).
(b) If GeoCities fails to fully exercise its right to repurchase
all of the Optionee's shares of Common Stock after the cessation of the
Optionee's employment or the subsequent purchase of shares, as applicable, then
GeoCities shall give the Optionee and each holder of its Preferred Stock, or
Common Stock issued upon conversion thereof (collectively, the "Senior
Securities"), notice ("Termination Notice") of such fact, the number of shares
of Common Stock available for purchase by each share holder and GeoCities'
determination of the Fair
3.
<PAGE>
Market Value of such shares. The holders of the Senior Securities shall have
the right to purchase the Optionee's Common Stock, on a pro-rata basis, by
giving GeoCities notice of their intent to exercise such option ("Notice of
Election") within twenty (20) days after the receipt of the Termination Notice
from GeoCities, together with cash in the amount of the purchase price (unless
the Fair Market Value of the shares has not been conclusively determined as of
such date, in which case each such holder shall pay the Optionee promptly after
the Fair Market Value has been conclusively determined in accordance with
subparagraph (d) below). For the purposes of this subparagraph (b), "pro rata
basis" shall be equal to the product obtained by multiplying (i) the number of
the Optionee's shares not purchased by GeoCities by (ii) a fraction, the
numerator of which is the number of shares of Senior Securities held by such
holder (on an as-converted basis) and the denominator of which is the total
number of shares held by all the holders of Senior Securities (on an as-
converted basis).
(c) Any holder of Senior Securities that fails to provide a
timely Notice of Election shall be deemed to have elected not to purchase any
shares in a transaction pursuant to this Paragraph 8. If any holder of Senior
Securities elects (or is deemed to have elected) not to fully participate in a
transaction pursuant to this Paragraph 8, GeoCities shall so notify the other
holders of Senior Securities who elected to participate (the "Repurchase
Holders"). Such notice may be made by telephone if confirmed in writing within
two (2) days. The Repurchase Holders shall have five (5) days from the date such
notice was given to agree to purchase their pro rata share of the unsold portion
of the Optionee's shares. For the purposes of this subparagraph (c), a "pro rata
share" shall be equal to the product obtained by multiplying (i) the number of
the Optionee's shares in the unsold portion by (ii) a fraction, the numerator of
which is the number of shares of Senior Securities held by such Repurchase
Holder (on an as-converted basis) and the denominator of which is the total
number of shares held by all of the Repurchase Holders (on an as-converted
basis).
(d) If the Optionee objects to the Fair Market Value as so
proposed, then the Optionee may request an appraisal by written notice of
objection delivered not later than ten (10) days after receipt of the Fair
Market Value set by GeoCities' Board of Directors. If an appraisal is requested,
the Optionee and GeoCities shall jointly select an appraiser to determine the
Fair Market Value of the Optionee's shares. If the Optionee and GeoCities cannot
agree on an appraiser, each shall select its own appraiser (each, a "Party
Appraiser") and the two Party Appraisers shall jointly select a third appraiser
(the "Arbitrating Appraiser"). Each of the Party Appraisers shall submit its
appraisal to the Arbitrating Appraiser, and the Arbitrating Appraiser shall
select one of such appraisals as the Fair Market Value. All expenses of such
appraisal shall be paid by the Optionee, unless the Fair Market Value as
determined by such appraisal is at least five percent (5%) greater than the Fair
Market Value initially set by the Board of Directors, in which case GeoCities
and the holders of Senior Securities shall pay for the appraisal in proportion
to each party's purchase of the Optionee's shares.
9. The Optionee may not sell or engage in any transaction which has
resulted in or will result in a change in the beneficial or record ownership of
any shares of Common Stock held by the Optionee, including without limitation a
voluntary or involuntary sale,
4.
<PAGE>
assignment, transfer, pledge, hypothecation, encumbrance, disposal, loan, gift
attachment or levy (a "Transfer"), except as provided in this Agreement, and any
such Transfer of shares of Common Stock or attempted Transfer of shares of
Common Stock in contravention of this Agreement shall be void and ineffective
for any purpose or confer on any transferee or purported transferee any rights
whatsoever.
10. (a) Each time the Optionee proposes to Transfer (or is required
by operation of law or other involuntary transfer) any or all of the shares of
Common Stock standing in the Optionee's name or owned by the Optionee during the
term of this Agreement, the Optionee shall first offer such shares to GeoCities
and the holders of the Senior Securities in accordance with the following
provisions:
(i) The Optionee shall deliver a written notice (a
"Notice") to GeoCities stating (A) the Optionee's bona fide intention to
Transfer such shares, (B) the name and the address of the proposed transferee,
(C) the number of shares to be transferred, and (D) the purchase price per share
and the terms of payment for which the Optionee proposes to Transfer such
shares.
(ii) Within thirty (30) days after the receipt of the
Notice, GeoCities shall have the first right to purchase or obtain such shares,
upon the price and terms of payment designated in the Notice. If the Notice
provides for the payment of non-cash consideration, GeoCities at its option may
pay the consideration in cash equal to GeoCities' good faith estimate of the
present fair market value of the non-cash consideration offered.
(iii) If GeoCities elects not to purchase or obtain all of
the shares designated in the Optionee's Notice, then GeoCities shall promptly
provide written notice of such fact, together with a copy of the Notice, to the
holders of the Senior Securities. The holders of the Senior Securities shall
have an additional thirty (30) days immediately following the receipt of the
Notice from GeoCities in which to purchase the shares not purchased by GeoCities
on a pro rata basis upon the terms and conditions specified in subparagraph (ii)
above by giving GeoCities notice of their intent to exercise such option
("Notice of Purchase") within thirty (30) days after the receipt of the Notice
from GeoCities. For purposes of this subparagraph (iii), "pro rata" shall be
equal to the product obtained by multiplying (i) the number of the Optionee's
shares not purchased by GeoCities by (ii) a fraction, the numerator of which is
the number of shares of Senior Securities held by such holder (on an as-
converted basis) and the denominator of which is the total number of shares held
by all holders of the Senior Securities (on an as-converted basis).
(iv) Any holder of Senior Securities that fails to provide
a timely Notice of Purchase shall be deemed to have elected to not purchase any
shares in a transaction pursuant to this Paragraph 10. If any holder of Senior
Securities elects (or is deemed to have elected) not to fully participate in a
transaction pursuant to this Paragraph 10, then GeoCities shall so notify the
other holders of Senior Securities who elected to participate (the "Right of
First Refusal Holders"). Such notice may be made by telephone if confirmed in
writing within
5.
<PAGE>
two (2) days. The Right of First Refusal Holders shall have five (5) days from
the date such notice was given to agree to purchase their pro rata share of the
unsold portion of the Optionee's shares. For purposes of this subparagraph
(iv), a "pro rata share" shall be equal to the product obtained by multiplying
(i) the number of the Optionee's shares in the unsold portion by (ii) a
fraction, the numerator of which is the number of shares of Senior Securities
held by such Right of First Refusal Holder (on an as-converted basis) and the
denominator of which is the total number of shares of Senior Securities held by
all the Right of First Refusal Holders (on an as-converted basis).
(v) If neither (x) GeoCities nor (y) any of the holders of
the Senior Securities elects to purchase or obtain all of the shares designated
in the Optionee's Notice, then the Optionee may Transfer the unsold shares
referred to in the Notice to the proposed transferee, providing such Transfer
(A) is completed within 180 days after the expiration of the right of GeoCities
and the holders of the Senior Securities to purchase or obtain such shares, (B)
is made at the same price and terms designated in the Notice, and (C) the
proposed transferee agrees to be bound by the terms and provisions of a buy-sell
agreement substantially similar to the terms of Paragraph 9 through 13 of this
Agreement and to become a party to such an agreement immediately upon receipt of
such shares. If such shares are not so transferred, the Optionee must give
notice in accordance with this Paragraph 10 prior to any other or subsequent
Transfer of such shares.
(b) Notwithstanding Paragraph 9(a), the Optionee may Transfer
for no or nominal consideration shares to (i) the Optionee's spouse, parents,
grandparents, siblings, children or grandchildren or other members of the
Optionee's family (including relatives by marriage), or to a custodian, trustee
or other fiduciary for the account of the Optionee or members of the Optionee's
family, or to any person designated by the Optionee, or (ii) by way of bequest
or inheritance upon death; provided that the Optionee or the Optionee's
representative notifies GeoCities of such Transfer not less than ten (10) nor
more than ninety (90) days prior to the Transfer and that the proposed
transferee agrees to be bound by the terms and provisions of a buy-sell
agreement substantially similar to the terms of Paragraph 8 through 13 of this
Agreement and to become a party to such an agreement immediately upon the
receipt of such shares. Such buy-sell agreement shall provide that, for purposes
of the paragraph in such buy-sell agreement that is analogous to Paragraph 8 of
this Agreement, a cessation of the Optionee's employment with GeoCities shall be
deemed to be a cessation of employment by the transferee.
11. Notwithstanding any provisions to the contrary contained in this
Agreement, GeoCities' obligations to pay or complete payment for any shares to
be purchased by it under this Agreement are subject to its being legally
permitted to do so under the tests contained in Sections 500 and 501 of the
California General Corporation Law or any successor statute applicable thereto.
The inability of GeoCities to validly purchase any shares hereunder by reason of
its failure to meet the tests contained in Section 500 and 501 of the California
General Corporation Law shall not be deemed to affect or limit in any way the
ability of the holders of the Senior Securities to purchase the shares.
6.
<PAGE>
12. Each Certificate representing shares owned of record or
beneficially by a party to this Agreement shall be endorsed with the following
legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO A STOCK OPTION
AGREEMENT BETWEEN GEOCITIES AND THE HOLDER OF THE SHARES EVIDENCED BY
THIS CERTIFICATE, PROVIDING FOR, AMONG OTHER MATTERS, THE RIGHT OF
GEOCITIES AND CERTAIN SHAREHOLDERS THEREOF TO REPURCHASE THE SHARES
REPRESENTED BY THE CERTIFICATE. A COPY OF SUCH AGREEMENT IS ON FILE AT
THE PRINCIPAL BUSINESS OFFICE OF GEOCITIES.
Under no circumstances shall any Transfer of any shares subject hereto
be valid until the proposed transferee thereof shall have agreed to be bound by
the terms and provisions of a buy-sell agreement substantially similar to the
terms of Paragraphs 9 through 13 of this Agreement and to become a party to such
an agreement immediately upon receipt of such shares; and notwithstanding any
other provisions of this Agreement, no such Transfer of any kind shall in any
event result in the non-applicability of the provisions hereof at any time to
any of the shares subject hereto. Additionally, in order to permit GeoCities to
enforce the provisions of Paragraphs 8 through 13 of this Agreement you and
GeoCities agree that the stock certificates representing all of the shares
issued and to be issued to you by GeoCities pursuant to this Agreement and any
other Stock Option Agreements between you and GeoCities shall be deposited into
escrow pursuant to Joint Escrow Instructions to be executed by you, GeoCities
and an Escrow Agent. At the time of such deposit, you shall also deposit into
such escrow two Stock Assignments Separate from Certificate executed in blank.
13. The restrictions on Transfer of shares set forth in this
Agreement shall terminate upon the consummation of a firm commitment
underwritten public offering from which GeoCities receives gross proceeds of not
less than $20 million and in which the offering price per share (prior to
underwriting commissions and expenses) equals at least $5 (as adjusted for stock
splits, stock dividends, reorganizations and the like).
14. This Agreement is made solely for the benefit of the parties to
this Agreement and their respective successors and assigns, and, except as
provided in Paragraphs 8 through 13, no other person or entity shall have or
acquire any right by virtue of this Agreement Each holder of Senior Securities
shall be a third-party beneficiary of Paragraphs 8 through 13 of this Agreement.
15. Unless the shares to be issued are at the time of issuance
registered under the Securities Act of 1933, as amended, this option is granted
on the condition that the purchase of stock hereunder shall be for investment
purposes and not with the view to resale or distribution.
7.
<PAGE>
16. Neither the Optionee nor any person claiming under or through the
Optionee shall be, or have any of the rights or privileges of a shareholder of
GeoCities with respect to any of the shares issuable upon the exercise of this
option, unless and until certificates representing such shares shall have been
issued and delivered to the Optionee.
17. Any notice to be given to GeoCities under the terms of this
Agreement shall be addressed to GeoCities, in care of its President, at 1918
Main Street, Third Floor, Santa Monica California 90405-1030, or to such other
address as GeoCities may hereafter designate in writing. Any notice to be given
to the Optionee shall be addressed to the Optionee at the address set forth
beneath the Optionee's signature hereto, or at any other address as the Optionee
may hereafter designate in writing. Any such notice shall be deemed to have
been duly given if and when personally delivered, or if mailed, two (2) business
days following its being deposited in the United States mails in a properly
sealed envelope, addressed as aforesaid, registered or certified, postage
prepaid.
18. Except as otherwise provided herein, this option and the rights
and privileges conferred by this Agreement may not be transferred, assigned,
pledged or hypothecated by the Optionee in any way (whether by operation of law
or otherwise) and shall not be subject w sale under execution, attachment or
similar process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of this option, or of any right or privilege conferred hereby,
contrary to the provisions hereof, or upon any attempted sale under any
execution, attachment or similar process upon the rights and privileges
conferred hereby, this option and the rights and privileges conferred upon the
Optionee in this Agreement shall immediately become null and void.
19. Subject to the limitations of transferability contained herein,
this Agreement shall be binding upon and inure to the benefit of the heirs,
legal representatives, successors and assigns of the parties hereto.
20. Nothing in this Agreement is intended, nor shall it be deemed, to
create any employment agreement between the Optionee and GeoCities or to impose
any obligation on the part of GeoCities to maintain Optionee's employment with
GeoCities, and any rights that the Optionee may have GeoCities with respect to
the Optionee's employment, other than as an at-will employee, shall be as set
forth in a written employment agreement between the Optionee and GeoCities, if
any.
8.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
in duplicate, as of the day and year first above written.
GEOCITIES
By: _____________________________________
Thomas R. Evans
President and Chief Executive Officer
ACCEPTED:
___________________________________
Signature
___________________________________
Robert K. Kalok
___________________________________
Address
___________________________________
City, State, Zip
9.
<PAGE>
Consent of Spouse
-----------------
I, the undersigned spouse of the Optionee, acknowledge on my own
behalf that I have read the foregoing Agreement and I know its contents, I am
aware that by its provisions my spouse grants GeoCities and certain other
shareholders an option to purchase all of his shares of GeoCities, including my
community interest in them, I hereby consent to the sale, approve of the
provisions of the Agreement, and agree that those shares and my interest in them
are subject to the provisions of the Agreement and that I will take no action at
any time to hinder operation of the Agreement on those shares or my interest in
them.
_____________________________________
10.
<PAGE>
EXHIBIT 99.23
STOCK OPTION AGREEMENT
----------------------
This STOCK OPTION AGREEMENT (this "Agreement") is made and entered
into as of the _____ day of ________, 199__, by and between GEOCITIES, a
California corporation ("GeoCities"), and _______________, an employee of
GeoCities (the "Optionee").
W I T N E S S E T H
-------------------
WHEREAS, the Optionee is currently employed by GeoCities as
___________; and
WHEREAS, GeoCities desires to grant to the Optionee an option which
does not meet the requirements of Section 422A of the Internal Revenue Code of
1996, as amended, to purchase shares of the common stock of GeoCities ("Common
Stock");
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions hereinafter set forth and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. GeoCities hereby grants to the Optionee the option to purchase
_______________ shares of Common Stock at a price per share of $________ upon
the terms and subject to the conditions set forth herein.
2. Subject to the conditions set forth herein, the right to exercise
this option shall accrue in periodic installments as follows:
(i) commencing ____________, this option may be exercised to the
extent of ___________________________ (___________) shares;
(ii) commencing ____________, this option may be exercised to the
extent of an additional ________________________ (____________) shares;
(iii) commencing ____________, this option may be exercised to the
extent of an additional ________________ (____________) shares; and
(iv) commencing ____________, this option may be exercised to the
extent of an additional ______________ (___________).
This option may be exercised, in whole or in part. subject to the
limitations imposed by the exercise schedule set forth above, at any time and
from time to time commencing with the respective dates on which each portion
becomes exercisable and continuing until __________________, at which time the
entire unexercised portion of this option shall expire.
3. In the event of termination of the Optionee's employment for any
reason other than death, this option shall immediately terminate. Irrespective
of the foregoing, if such cessation of employment shall occur on or after the
Optionee's fifty-fifth (55th) birthday or shall be due to the Optionee's
voluntary resignation with the consent of the Board of Directors of
<PAGE>
GeoCities, expressed in the form of a resolution, this option may be exercised
to the extent this option was exercisable on the date of such cessation of
employment, within three (3) months after the date he ceases to be an employee
of GeoCities. If such cessation of employment shall be due to the Optionee's
permanent and total disability, this option may be exercised, to the extent this
option was exercisable on the date of such cessation of employment, within one
(1) year after the date he ceases to be an employee of GeoCities. Irrespective
of the foregoing, no option granted hereunder shall be exercisable after
_________________. An approved leave of absence shall not be deemed a
termination of employment for purposes of this Agreement, but no option may be
exercised during any such leave of absence, except during the first three (3)
months thereof.
4. This option shall be exercisable by the Optionee only during his
lifetime. This option shall be nontransferable by the Optionee, other than by
will or the laws of descent and distribution.
5. In the event of the Optionee's death while in the employ of
GeoCities, or during the period following termination of employment during which
the Optionee is permitted to exercise an option pursuant to Paragraph 3 hereof,
this option may be exercised to the extent that it was otherwise executable as
of the date of such death or termination of employment by the Optionee's
transferee to the extent not previously exercised; but under no circumstances
shall the right of any such transferee extend beyond __________________. The
Optionee's transferee shall be the person or persons entitled to exercise the
option under the Optionee's will, or, if no testamentary disposition of the
option shall have been made, his legal representative. Any transferee exercising
the option must furnish GeoCities with: (a) written confirmation of his status
as transferee; (b) evidence satisfactory to GeoCities to establish the validity
of the transfer of this option in compliance with this Agreement and with any
laws or regulations pertaining to said transfer; and (c) written acceptance of
the terms and conditions of this option as prescribed in this Agreement.
6. Subject to any required action of GeoCities's stockholders, the
existence of outstanding options hereunder shall not affect GeoCities's right or
power to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in its capital structure or business; to
approve any merger or consolidation, issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock; to elect its
dissolution or liquidation or that of any of its subsidiaries; to sell or
transfer any of its business; or to do any other corporate act whether similar
to the events described above or otherwise. If the number of outstanding shares
of Common Stock is increased or decreased or changed into or exchanged for a
different number or kind of securities, whether of GeoCities or any other
corporation, by reason of recapitalization reclassification, stock split,
combination of shares, stock dividends or other similar event, the number and
kind of securities as to which outstanding options may be exercised, and the
option price at which outstanding options may be exercised may be adjusted by
the Board of Directors, whose determination shall be binding and final.
7. This option may be exercised in accordance with the terms hereof by:
(a) giving written notice of such exercise to GeoCities, specifying the number
of whole shares to be purchased and accompanied by full payment of the purchase
price thereof, either in cash, by check, or by delivery to GeoCities of shares
of Common Stock already owned by the Optionee
2
<PAGE>
(duly endorsed in favor of GeoCities or accompanied by a duly endorsed stock
power) together with the amount of any income tax GeoCities is required by law
to withhold by reason of such exercise, and (b) giving satisfactory assurances
in writing, if requested by GeoCities, signed by the person exercising this
option, that the shares to be purchased upon such exercise are being purchased
for investment and not with the view to distribution thereof.
8. (a) Notwithstanding anything contained herein to the contrary, in the
event that the Optionee ceases to be employed by GeoCities for any reason
(including, without limitation, as a result of resignation, retirement,
dismissal with or without cause, death or disability), GeoCities shall have the
first right and option, and the holders of Senior Securities (as defined below)
shall have the second right and option, to purchase from the Optionee (or, in
the case of death, from the Optionee's legal representative) all shares of
Common Stock held by the Optionee on the date of cessation of employment or
purchased by the Optionee following such date as permitted under Sections 3 and
5 hereof. In the event that GeoCities or any holder of Senior Securities shall
exercise such right and option, then the exercising party shall pay the
Optionee, as the purchase price for such shares of Common Stock, the Fair Market
Value (as defined below) of such shares. GeoCities may exercise its first right
and option by delivering notice to Optionee and to each holder of Senior
Securities within ninety (90) days following the cessation of the Optionee's
employment or the subsequent purchase of shares, as applicable, of its intent to
exercise its repurchase right and the Fair Market Value, and shall have paid for
such shares in cash at the end of such 90th day (unless the Fair Market Value of
the shares has not been conclusively determined as Of such date, in which case
GeoCities shall pay the Optionee promptly after the Fair Market Value is
determined in accordance with subparagraph (d) below).
(b) If GeoCities fails to fully exercise its right to repurchase all of
the Optionee's shares of Common Stock after the cessation of the Optionee's
employment or the subsequent purchase of shares, as applicable, then GeoCities
shall give the Optionee and each holder of its Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock (other
than those shares of Series D Preferred Stock held by Venture Lending or its
approved transferees), or Common Stock issued upon conversion thereof
(collectively, the "Senior Securities"), notice ("Termination Notice") of such
fact, the number of shares of Common Stock available for purchase by each such
holder and GeoCities' determination of the Fair Market Value of such shares. The
holders of the Senior Securities shall have the right to purchase the Optionee's
Common Stock, on a pro-rata basis, by giving GeoCities notice of their intent to
exercise such option ("Notice of Election") within twenty (20) days after the
receipt of the Termination Notice from GeoCities, together with cash in the
amount of the purchase price (unless the Fair Market Value of the shares has not
been conclusively determined as of such date, in which case each such holder
shall pay the Optionee promptly after the Fair Market Value has been
conclusively determined in accordance with subparagraph (d) below). For purposes
of this subparagraph (b), "pro rata basis" shall be equal to the product
obtained by multiplying (i) the number of the Optionee's shares not purchased by
GeoCities by (ii) a fraction, the numerator of which is the number of shares of
Senior Securities held by such holder (on an as-converted basis) and the
denominator of which is the total number of shares held by all the holders of
Senior Securities (on an as-converted basis).
(c) Any holder of Senior Securities that fails to provide a timely
Notice of Election shall be deemed to have elected to not purchase any shares in
a transaction
3
<PAGE>
pursuant to this Paragraph 8. If any holder of Senior Securities elects (or is
deemed to have elected) not to fully participate in a transaction pursuant to
this Paragraph 8, then GeoCities shall so notify the other holders of Senior
Securities who elected to participate (the "Repurchase Holders"). Such notice
may be made by telephone if confirmed in writing within two (2) days. The
Repurchase Holders shall have five (5) days from the date such notice was given
to agree to purchase their pro rata share of the unsold portion of the
Optionee's shares. For purposes of this subparagraph (iv), a "pro rata share"
shall be equal to the product obtained by multiplying (i) the number of the
Optionee's shares in the unsold portion by (ii) a fraction, the numerator of
which is the number of shares of Senior Securities held by such Repurchase
Holder (on an as-converted basis) and the denominator of which is the total
number of shares hold by all of the Repurchase Holders (on an as-converted
basis).
(d) If the Optionee objects to the Fair Market Value as so proposed.
then the Optionee may request an appraisal by written notice of objection
delivered not later than ten (10) days after receipt of the Fair Market Value
set by GeoCities' Board of Directors. If an appraisal is requested, the Optionee
and GeoCities shall jointly select an appraiser to determine the Fair market
Value of the Optionee's shares. If the Optionee and GeoCities cannot agree on an
appraiser, each shall select its own appraiser (each, a "Party Appraiser") and
the two Party Appraisers shall jointly select a third appraiser (the
"Arbitrating Appraiser"). Each of the Party Appraisers shall submit its
appraisal to the Arbitrating Appraiser), and the Arbitrating Appraiser shall
select one of such appraisals as the Fair Market Value. All expenses of such
appraisal shall be paid by the Optionee, unless the Fair Market Value as
determined by such appraisal is at least five percent (5%) greater than the Fair
Market Value initially set by the Board of Directors, in which case GeoCities
and holders of the Senior Securities shall pay for the appraisal in proportion
to each party's purchase of the Optionee's shares.
9. The Optionee may not sell or engage in any transaction which has
resulted in or will result in a change in the beneficial or record ownership of
any shares of Common Stock held by the Optionee, including without limitation a
voluntary or involuntary sale, assignment, transfer, pledge, hypothecation,
encumbrance, disposal, loan, gift, attachment or levy (a "Transfer"), except as
provided in this Agreement, and any such Transfer of shares of Common Stock or
attempted Transfer of shares of Common Stock in contravention of this Agreement
shall be void and ineffective for any purpose or confer on any transferee or
purported transferee any rights whatsoever.
10. (a) Each time the Optionee proposes to Transfer (or is required by
operation of law or other involuntary transfer) any or all of the shares of
Common Stock standing in the Optionee's name or owned by him or her during the
term of this Agreement, the Optionee shall first offer such shares to GeoCities
and the holders of the Senior Securities in accordance with the following
provisions:
(i) The Optionee shall deliver a written notice (a "Notice') to
GeoCities stating (A) the Optionee's bona fide intention to Transfer such
shares, (B) the name and the address of the proposed transferee, (C) the
number of shares to be transferred, and (D)
4
<PAGE>
the purchase price per share and terms of payment for which the Optionee
proposes to Transfer such shares.
(ii) Within thirty (30) days after receipt of the Notice, GeoCities
shall have the fast right to purchase or obtain such shares, upon the price
and terms of payment designated in the Notice. If the Notice provides for
the payment of non-cash consideration, GeoCities at its option may pay the
consideration in cash equal to GeoCities' good faith estimate of the
present fair market value of the non-cash consideration offered.
(iii) If GeoCities elects not to purchase or obtain all of the shares
designated in the Optionee's Notice, then GeoCities shall promptly provide
written notice of such fact, together with a copy of the Notice, to the
holders of the Senior Securities. The holders of the Senior Securities
shall have an additional thirty (30) days immediately following the receipt
of the Notice from GeoCities in which to purchase the shares not purchased
by GeoCities on a prorata basis upon the terms and conditions specified in
subparagraph (ii) above by giving GeoCities notice of their intent to
exercise such option ("Notice of Purchase") within thirty (30) days after
the receipt of the Termination Notice from GeoCities. For purposes of this
subparagraph (iii), "pro rata" shall be equal to the product obtained by
Multiplying (i) the number of the Optionee's shares not purchased by
GeoCities by (ii) a fraction, the numerator of which is the number of
shares of Senior Securities held by such holder (on an as-converted basis)
and the denominator of which is the total number of shares held by all the
holders of Senior Securities (on an as-converted basis).
(iv) Any holder of Senior Securities that fails to provide a timely
Notice of Purchase shall be deemed to have elected to not purchase any
shares in a transaction pursuant to this Paragraph 12. If any holder of
Senior Securities elects (or is deemed to have elected) not to fully
participate in a transaction pursuant to this Paragraph 12, then GeoCities
shall so notify the other holders of Senior Securities who elected to
participate (the "Right of First Refusal Holders"), Such notice may be made
by telephone if confirmed in writing within two (2) days. The Right of
First Refusal Holders shall have five (5) days from the date such notice
was given to agree to purchase their pro rata share of the unsold portion
of the Optionee's shares. For purposes of this subparagraph (iv), a "pro
rata share" shall be equal to the product obtained by multiplying (i) the
number of the Optionee's shares in the unsold portion by (ii) a fraction,
the numerator of which is the number of shares of Senior Securities held by
such Right of First Refusal Holder (on an as-converted basis) and the
denominator of which is the total number of shares of Senior Securities
held by all the Right of First Refusal Holders (on an as converted basis).
(v) If neither (x) GeoCities nor (y) any of the holders of the Senior
Securities elects to purchase or obtain all of the shares designated in the
Optionee's Notice, then the Optionee may Transfer the unsold shares
referred to in the Notice to the proposed referee, providing such Transfer
(A) is completed within 180 days after the expiration of the right of
GeoCities and the holders of the Senior Securities to purchase or obtain
such shares, (B) is made at the same price and terms designated in the
Notice, and (C) the proposed Transferee agrees to be bound by the terms and
provisions of a buy-sell
5
<PAGE>
agreement substantially similar to the terms of Paragraphs 11 through 16 of
this Agreement and to become a party to such an agreement immediately upon
receipt of such shares. If such shares are not so transferred, the Optionee
must give notice in accordance with this paragraph prior to any other or
subsequent Transfer of such shares.
(b) Notwithstanding Paragraph 12(a), the Optionee may Transfer for no
or nominal consideration shares to (i) the Optionee's spouse, parents,
grandparents, siblings, children or grandchildren or other members of the
Optionee's family (including relatives by marriage), or to a custodian, trustee
or other fiduciary for the account of the Optionee or members of his or her
family, or to any one other person designated by the Optionee, or (ii) by way of
bequest or inheritance upon death; provided that the Optionee or his
representative notifies GeoCities of such Transfer not less than ten (10) nor
more than ninety (90) days prior to the Transfer and that the Proposed
transferee agrees to be bound by the terms and provisions of a buy-sell
agreement substantially similar to the terms of Paragraphs 11 through 16 of this
Agreement and to become a party to such an agreement immediately upon the
receipt of such shares.
11. Notwithstanding any provisions to the contrary contained in this
Agreement, GeoCities' obligations to pay or complete payment for any shares to
be purchased by it under this Agreement are subject to its being legally
permitted to do so under the tests contained in Sections 500 and 501 of the
California General Corporation Law or any successor statute applicable thereto.
The inability of GeoCities to validly purchase any shares hereunder by reason of
its failure to meet the tests contained in Sections 500 and 501 of the
California General Corporation Law shall not be deemed to affect or limit in any
way the ability of the holders of the Senior Securities to purchase the shares.
12. Each certificate representing shares owned of record or
beneficially by a party to this Agreement shall be endorsed with the following
legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCK OPTION AGREEMENT BETWEEN GEOCITIES AND THE HOLDER OF
THE SHARES EVIDENCED BY THIS CERTIFICATE, PROVIDING FOR,
AMONG OTHER MATTERS, THE RIGHT OF GEOCITIES AND CERTAIN
SHAREHOLDERS THEREOF TO REPURCHASE THE SHARES, THE RIGHT OF
FIRST REFUSAL TO PURCHASE THE SHARES REPRESENTED BY TIES
CERTIFICATE, AN AGREEMENT WITH RESPECT TO VOTING AND AN
IRREVOCABLE PROXY. A COPY OF SUCH AGREEMENT IS ON FILE
AT THE PRINCIPAL BUSINESS OFFICE OF GEOCITIES.
Under no circumstances shall any Transfer of any shares subject hereto
be valid until the proposed transferee thereof shall have agreed to be bound by
the terms and provisions of a buy-sell agreement substantially similar to the
terms of Paragraphs 11 through 16 of this Agreement and to become a party to
such an agreement immediately upon receipt of such shares; and notwithstanding
any other provisions of this Agreement, no such Transfer of any kind shall
6
<PAGE>
in any event result in the non-applicability of the provisions hereof at any
time to any of the shares subject hereto.
13. The restrictions on Transfer of shares set forth in this Agreement
shall terminate upon the consummation of a firm commitment underwritten public
offering from which GeoCities receives gross proceeds of not less dm $20 million
and in which the offering price per share (prior to underwriting commissions and
expenses) equals at least $10 (as adjusted for stock splits, stock dividends,
reorganizations and the like).
14. This Agreement is made solely for the benefits of the parties to this
Agreement and their respective successors and assigns, and, except as provided
in Paragraphs 11 through 16, no other person or entity shall have or acquire any
right by virtue of this Agreement. Each holder of the Senior Securities shall
be a third-party beneficiary of Paragraphs 11 through 16 of this Agreement.
15. Unless the shares to be issued are at the time of issuance registered
under the Securities Act of 1933, as amended, this option is granted on the
condition that the purchase of stock hereunder shall be for investment purposes
and not with the view to resale or distribution.
16. Neither the Optionee nor any person claiming under or through him
shall be, or have any of the rights or privileges of, a stockholder of GeoCities
with respect to any of the shares issuable upon the exercise of this option,
unless and until certificates representing such shares shall have been issued
and delivered to him.
17. Any notice to be given to GeoCities under the terms of this Agreement
shall be addressed to GeoCities, in care of its President, at 1918 Main Street,
Santa Monica, California 90405, or to such other address as GeoCities may
hereafter designate in writing. Any notice to be given to the Optionee shall be
addressed to the Optionee at the address set forth beneath his signature hereto,
or at any other address as the Optionee may hereafter designate in writing. Any
such notice shall be deemed to have been duty given if and when personally
delivered, or if mailed, two (2) business days following its being deposited in
the United States mails in a property scaled envelope, addressed as aforesaid,
registered or certified, postage prepaid.
18. Except as otherwise provided herein, this option and the rights and
privileges conferred by this Agreement may not be transferred, assigned, pledged
or hypothecated by the Optionee in any way (whether by operation of law or
otherwise) and shall not be subject to sale under execution,, attachment or
similar process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of this option, or of any right or privilege conferred hereby,
contrary to the provisions hereof, or upon any attempted sale under any
execution, attachment or similar process upon the rights and privileges
conferred hereby, this option and the rights and privileges conferred upon the
Optionee in this Agreement shall immediately become null and void.
7
<PAGE>
19. Subject to the limitations on transferability contained herein, this
Agreement shall be binding upon and inure to the benefit of the heirs, legal
representatives, successors and assigns of the parties hereto.
20. Nothing in this Agreement is intended, nor shall it be deemed, to
create any employment agreement between the Optionee and GeoCities or to impose
any obligation on the part of GeoCities to maintain Optionee's employment with
GeoCities, and any rights that the Optionee may have GeoCities with respect to
the Optionee's employment, other than as an at-will employee, shall be as set
forth in a written employment agreement between the Optionee and GeoCities, if
any.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
in duplicate, as of the day and year first above written.
GEOCITIES
By: ___________________________
David C. Bohnett, President
ACCEPTED:
_______________________
[Optionee]
_______________________
[Address]
_______________________
_______________________
8
