Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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AppNet Systems, Inc.
(Exact name of registrant as specified in its charter)
Delaware 52-2077860
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
6707 Democracy Boulevard,
Suite 1000
Bethesda, Maryland 20817
(Address of principal executive offices) (Zip Code)
AppNet Systems, Inc. 1999 Employee Stock Purchase Plan
(Full title of the plan)
Ken S. Bajaj With a copy to:
President and Chief Executive Officer
AppNet Systems, Inc. Thomas E. Hartman
6707 Democracy Boulevard, Foley & Lardner
Suite 1000 777 East Wisconsin Avenue
Bethesda, Maryland 20817 Milwaukee, Wisconsin 53202
(301) 581-2488 (414) 271-2400
(Name, address and telephone number, including area
code, of agent for service)
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CALCULATION OF REGISTRATION FEE
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Title of Amount Proposed Maximum Proposed Maximum
Securities to be to be Offering Price Aggregate Offering Amount of
Registered Registered Per Share Price Registration Fee
- ----------------------- ------------------- ------------------------ ------------------------- ------------------
<S> <C> <C> <C> <C>
Common Stock, 250,000 $26.91(1) $6,727,500(1) $1,871
$.0005 par value shares
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(1) Estimated pursuant to Rule 457(c) under the Securities Act of 1933
solely for the purpose of calculating the registration fee based on the
average of the high and low prices for AppNet Systems, Inc. Common
Stock as reported on the NASDAQ National Market System on September 21,
1999.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document or documents containing the information specified in Part
I are not required to be filed with the Securities and Exchange Commission (the
"Commission") as part of this Form S-8 Registration Statement.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed with the Commission by AppNet Systems,
Inc. (the "Company") are hereby incorporated herein by reference:
(a) The Company's Prospectus, dated June 17, 1999 filed pursuant to
Rule 424(b) under the Securities Act of 1933 on June 21, 1999.
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999.
(c) The description of the common stock, $.0005 par value, of the
Company contained in Item 1 of the Company's Registration Statement on Form 8-A,
dated as of June 4, 1999, including any amendment or report filed for the
purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended,
after the date of filing of this Registration Statement and prior to such time
as the Company files a post-effective amendment to this Registration Statement
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing of such documents.
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 Company's bylaws provide that the Company shall indemnify to the
fullest extent authorized by the Delaware General Corporation Law, each person
who is involved in
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any litigation or other proceeding because such person is or was a director or
officer of the Company, against all expense, loss or liability reasonably
incurred or suffered in connection therewith. The Company's bylaws provide that
a director or officer may be paid expenses incurred in defending any proceeding
in advance of its final disposition upon receipt by the Company of an
undertaking, by or on behalf of the director or officer, to repay all amounts so
advanced if it is ultimately determined that such director or officer is not
entitled to repay all amounts so advanced if it is ultimately determined that
such director or officer is not entitled to indemnification.
Section 145 of the Delaware General Corporation Law permits a
corporation to indemnify any director or officer of the corporation against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with any action, suit
or proceeding brought by reason of the fact that such person is or was a
director of officer of the corporation, if such person acted in good faith and
in a manner that he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, if he had no reason to believe his conduct was unlawful. In a
derivative action, (i.e., one brought by or on behalf of the corporation),
indemnification may be made only for expense, actually and reasonably incurred
by any director or officer in connection with the defense or settlement of such
an action or suit, if such person acted in good faith and in a manner that he
reasonably believed to in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjusted to be liable to the corporation, unless and only to the
extent that the court in which the action or suit was brought shall determine
that the defendant is fairly and reasonably entitled to indemnity for such
expenses despite such adjudication of liability.
Pursuant to Section 102(b)(7) of the Delaware General Corporation Law,
the Company's certificate of incorporation eliminates the liability of a
director to the corporation or its stockholders for monetary damages for such
breach of fiduciary duty as a director, except for liabilities arising (a) from
any breach of the director's duty of loyalty to the corporation or its
stockholders; (b) from acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (c) under Section 174 of
the Delaware General Corporation Law; or (d) from any transaction from which the
director derived an improper personal benefit.
The Company maintains primary and excess insurance policies insuring
its directors and officers and those of its subsidiaries against certain
liabilities they may incur in their capacity as directors and officers. Under
such policies, the insurer, on behalf of the Company, may also pay amounts for
which the Company has granted indemnification to the directors or officers.
Item 7. Exemption from Registration Claimed.
Not applicable.
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Item 8. Exhibits.
The following exhibits have been filed (except where otherwise
indicated) as part of this Registration Statement:
Exhibit No. Exhibit
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(4.1) AppNet Systems, Inc. 1999 Employee Stock
Purchase Plan
(4.4) Restated Certificate of Incorporation of
AppNet Systems, Inc. (incorporated by
reference to Exhibit 3.1 to AppNet Systems,
Inc.'s Form S-1 Registration Statement
(Registration No. 333-75205))
(5) Opinion of Foley & Lardner
(23.1) Consent of Arthur Andersen, LLP
(23.2) Consent of Foley & Lardner (contained in
Exhibit 5 hereto)
(24) Power of Attorney relating to subsequent
amendments (included on the signature page
to this Registration Statement)
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
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represent no more than 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do
not apply if the registration statement is on Form S-3, S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statements.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the 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 Act and will
be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Bethesda and State of Maryland, on this 23rd day of
September, 1999.
APPNET SYSTEMS, INC.
By: /s/ Jack Pearlstein
Jack Pearlstein
Senior Vice President,
Chief Financial Officer and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
constitutes and appoints Ken S. Bajaj and William S. Dawson, and each of them
individually, his true and lawful attorneys-in-fact and agents, with full power
of substitution and revocation, for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them, may lawfully do or cause to be done by virtue hereof.
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Signature Title Date
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/s/ Ken S. Bajaj Chairman of the Board, President September 23, 1999
- --------------------------- and Chief Executive Officer
Ken S. Bajaj (Principal Executive Officer)
/s/Jack Pearlstein Senior Vice President, Chief September 23, 1999
- --------------------------- Financial Officer and Treasurer
Jack Pearlstein (Principal Financial and Accounting
Officer)
/s/ Philip A. Canfield Director September 23, 1999
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Philip A. Canfield
/s/ John Cross Director and Executive Vice President September 23, 1999
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John Cross
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- --------------------------- Director
Thomas M. Davidson
/s/ Richard N. Perle Director September 23, 1999
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Richard N. Perle
/s/ Bruce V. Rauner Director September 23, 1999
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Bruce V. Rauner
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EXHIBIT INDEX APPNET SYSTEMS, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
Exhibit No. EXHIBIT
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(4.1) AppNet Systems, Inc. 1999 Employee Stock Purchase Plan
(4.2) Restated Certificate of Incorporation of AppNet Systems,
Inc. (incorporated by reference to Exhibit 3.1 to AppNet
Systems, Inc.'s Form S-1 Registration Statement
(Registration No. 333-75205)
(5) Opinion of Foley & Lardner
(23.1) Consent of Arthur Andersen, LLP
(23.2) Consent of Foley & Lardner (contained in Exhibit 5 hereto)
(24) Power of Attorney relating to subsequent amendments
(included on the signature page to this Registration
Statement)
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APPNET SYSTEMS, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
PURPOSE AND COMMENCEMENT
1.1 Purpose. The purpose of the plan is to provide the employees of
AppNet Systems, Inc., a Delaware corporation (the "Company"), and its
Subsidiaries with added incentive to continue in their employment and to
encourage increased efforts to promote the best interest of the Company by
permitting eligible employees to purchase shares of Common Stock of the Company
at prices less than the market price thereof. The Plan is intended to qualify as
an employee stock purchase plan under Section 423 of the Code and shall be
interpreted and construed in accordance with such purpose.
1.2 Commencement. The Plan shall become effective on October 1, 1999,
provided, however, that, in no event, shall the Plan become effective unless
within twelve months of the date of its adoption by the Board of Directors it
has been approved by the affirmative vote of a majority of the issued and
outstanding shares of the Company's securities entitled to vote on such matters.
ARTICLE II
DEFINITIONS
2.1 Definitions. As used in the Plan, the following terms and phrases
shall have the following meanings:
(a) "Board of Directors" shall mean the Board of Directors of the
Company.
(b) "Closing Market Price" shall mean (i) if the Common Stock is
traded on a national securities exchange, the Closing Market
Price shall be the closing price reported by the applicable
composite transactions report on the date of any determination
or, if the Common Stock is not traded on such date, the
closing price so reported on the next following date on which
the Common Stock is traded on such exchange, or (ii) if the
foregoing provision is inapplicable, the Closing Market Price
shall be determined by the Committee in good faith on such
basis as it deems appropriate.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
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(d) "Commencement Date" shall mean the first day of the Plan
Quarter.
(e) "Committee" shall mean the Compensation Committee of the Board
of Directors, or such other committee of the Board of
Directors designated by it for purposes of administering the
Plan.
(f) "Common Stock" shall mean the common stock of the Company.
(g) "Company" shall mean AppNet Systems, Inc., a Delaware
corporation.
(h) "Contribution Account" shall mean the account established on
behalf of a Participant pursuant to Article IV hereof to which
shall be credited his or her Participant Contributions.
(i) "Contribution Rate" shall be a percentage of a Participant's
Covered Compensation during each payroll period designated by
each Participant to be contributed by regular payroll
deductions to his or her Contribution Account as set forth in
Section 3.3 hereof.
(j) "Covered Compensation" shall mean the total cash compensation
received by an Employee from a Sponsoring Employer, before tax
withholdings and other deductions, including base
compensation, overtime, shift or other compensatory premiums,
payments in substitution of base compensation such as
vacation, holiday and sick pay, and including all cash bonus
compensation, but not including short or long-term disability
payments.
(k) "Employee" shall mean each employee of a Sponsoring Employer
whose customary employment is at least twenty (20) hours a
week. For purposes of the Plan, "employment" shall be
determined in accordance with the provisions of Section
1.421-7(h) of the Treasury Regulations (or any successor
regulations).
(l) "Participant" shall mean any Employee of a Sponsoring Employer
who has met the conditions and provisions for becoming a
Participant as set forth in Article II hereof.
(m) "Participant Contributions" shall be the aggregate dollars
actually contributed by each Participant to his or her
Contribution Account.
(n) "Permanent Disability" shall mean an illness, injury or other
physical or mental condition continuing for at least 180
consecutive days which results in an Employee's inability to
provide in all material respects the duties theretofore
performed in his or her capacity as an employee of a
Sponsoring Employer.
(o) "Plan" shall mean the AppNet Systems, Inc. 1999 Employee Stock
Purchase Plan as set forth herein, as it may be amended from
time to time.
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(p) "Plan Quarter" shall mean each calendar quarter. The first
Plan Quarter shall be the Plan Quarter commencing on October
1, 1999 and ending on December 31, 1999 or such later Plan
Quarter as determined by the Committee.
(q) "Purchase Date" shall mean (i) if the Common Stock is traded
on a national securities exchange, then the Purchase Date
shall be the last business day of a Plan Quarter on which the
Common Stock publicly trades or (ii) if the foregoing
provision is inapplicable, then the Purchase Date shall be the
last day of the calendar quarter.
(r) "Purchase Price" shall mean the purchase price of a share of
Common Stock to be paid by a Participant on a Purchase Date,
as determined under Section 4.2 hereof.
(s) "Request for Participation" shall mean such form as shall be
approved by the Committee for distribution to Employees in
connection with participation in the Plan.
(t) "Sponsoring Employer" shall mean the Company and each
Subsidiary that has been designated by the Committee as a
Sponsoring Employer under the plan.
(u) "Subsidiary" shall mean a subsidiary of the Company, which is
treated as a subsidiary corporation under Section 424(f) of
the Code.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. Each Employee shall become eligible to be a
Participant of the Plan and may participate therein as of the Commencement Date
coincident with or next following the date he or she becomes an Employee.
3.2 Limitations. Notwithstanding anything to the contrary contained in
the Plan, no right to purchase Common Stock shall accrue under the Plan in favor
of any person who is not an Employee eligible to participate in the Plan under
Section 3.1 hereof, and no Employee shall acquire the right to purchase shares
of Common Stock if (i) immediately after receiving such right to purchase Common
Stock, such Employee would own 5% or more of the total combined voting power or
value of all classes of stock of the Company or any Subsidiary, taking into
account in determining stock ownership any stock attributable to such Employee
under Section 424(d) of the Code, or (ii) which would permit such Employee's
right to purchase stock under all employee stock purchase plans (to which
Section 423 of the Code applies) of the Company and its Subsidiaries, as those
plans are in effect from time to time, to accrue at a rate which exceeds $25,000
of fair market value of such stock (as determined as of each Commencement Date)
for each calendar year, all as specified in the manner provided by Section
423(b)(8) of the Code, or (iii) which would permit such Employee the right to
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purchase more than 10,000 shares (or such other number as may be determined in
advance for any Plan Quarter by the Committee) of Common Stock in any Plan
Quarter.
3.3 Participation.
(a) Each Employee eligible to be a Participant and who elects to
participate in the Plan shall be furnished a summary of the Plan and a Request
for Participation by such Employee's Sponsoring Employer. If an Employee elects
to participate hereunder, such Employee shall complete such form and file it
with his or her Sponsoring Employer not later than 15 days prior to a
Commencement Date of a Plan Quarter. The completed Request for Participation
shall indicate the Participant Contribution Rate authorized by the Participant.
If any Employee does not elect to participate in the Plan during any given Plan
Quarter, such Employee may elect to participate on any future Commencement Date
so long as he or she continues to be an eligible Employee on such date.
(b) On his or her Request for Participation, an Employee must
authorize his or her Sponsoring Employer to deduct through a payroll deduction
the amount of such Employee's Participant Contribution. The payroll deduction
specified in a Request for Participation for each payroll period shall be at a
Participation Contribution Rate no less than 1 % and no more than 10% of such
Employee's Covered Compensation during such payroll period paid to him or her by
his or her Sponsoring Employer. Such deductions shall begin as of the first pay
period occurring after the Commencement Date of the Plan Quarter. Participant
Contributions will not be permitted to begin at any time other than the first
payroll date occurring immediately after the Commencement Date of a Plan
Quarter. No interest shall accrue to Participants on any amounts withheld under
the Plan, unless and until the Committee shall approve such accrual of interest
on terms that it shall specify and apply on a uniform basis as to all
Participants.
(c) The Participant's Contribution Rate, once established, shall
remain in effect for all Plan Quarters unless changed by the Participant in
writing delivered to such Participant's Sponsoring Employer and filed with such
Sponsoring Employer at least 15 days prior to the Commencement Date of the next
Plan Quarter. Except as provided in subsection (d), a Participant's Contribution
Rate for a Plan Quarter may not be increased, decreased or otherwise modified at
any time during the 15-day period prior to the Commencement Date of such Plan
Quarter.
(d) A Participant may notify his or her Sponsoring Employer of such
Participant's desire to discontinue his or her Participation Contributions by
delivering to his or her Supporting Employer written notice on such forms as may
be provided by the Company or such Participant's Sponsoring Employer at least 15
days prior to the Purchase Date of the relevant Plan Quarter. Upon such request,
there shall be promptly refunded to such Participant as soon as practicable the
entire cash balance in his or her Contribution Account. If a Participant
determines to discontinue his or her Participant Contributions pursuant to this
Section 3.3(d), (i) such Participant shall be terminated from the Plan effective
upon the date of receipt of such Participant's notice to his or her Sponsoring
Employer and (ii) such Participant shall not be permitted to be a participant in
the Plan until the Commencement Date of the second Plan Quarter after the Plan
Quarter in which notice is received. In the event that
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a Participant's payroll deductions are reverted by legal process, the
Participant will be deemed to have been terminated from the Plan.
(e) By enrolling in the Plan, each Participant will be deemed to
have authorized the establishment of a brokerage account in his or her name at a
securities brokerage firm or other financial institution, if approved by the
Committee in its discretion.
3.4 Termination of Employment. Any Participant (i) whose employment by
a Sponsoring Employer is terminated for any reason (except death, retirement or
Permanent Disability) or (ii) who shall cease to be an Employee under the Plan,
in either case during any Plan Quarter, shall cease being a Participant as of
the Date of such termination of employment or failure to qualify as an Employee.
Upon such termination of employment, there shall be refunded to such Participant
as soon as practicable the entire cash balance in such Participant's
Contribution Account. Section 4.3(b) hereof shall apply to the issuance of
certificates to a Participant following termination of employment.
3.5 Death, Retirement or Permanent Disability.
(a) If a Participant shall die during a Plan Quarter, no further
Participation Contributions on behalf of the deceased Participant shall be made.
The executor or administrator of the deceased Participant's estate may elect to
withdraw the balance in said Participant's Contribution Account by notifying the
deceased Participant's Sponsoring Employer in writing at least 15 days prior to
the Purchase Date in respect of such Plan Quarter. In the event no election to
withdraw has been made, the balance accumulated in the deceased Participant's
Contribution Account shall be used to purchase shares of Common Stock in
accordance with Article IV hereof.
(b) If, during a Plan Quarter, a Participant shall (i) retire or
(ii) incur a Permanent Disability, no further contributions on behalf of the
retired or disabled Participant shall be made. A retired or disabled Participant
may elect to withdraw the balance in his or her Contribution Account by
notifying the Sponsoring Employer in writing at least 15 days prior to the last
day of the Plan Quarter. In the event no election to withdraw has been made, the
balance accumulated in the retired or disabled Participant's Contribution
Account shall be used to purchase shares of Common Stock in accordance with
Article IV hereof. In the event a retired or disabled Participant shall die
during the Plan Quarter of such Participant's retirement or disability and such
Participant shall not have notified his or her Sponsoring Employer of his or her
desire to withdraw his or her Contribution Account, the executor or
administrator of such Participant's estate shall have all the rights provided
pursuant to Section 3.5(a) hereof.
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ARTICLE IV
PURCHASE OF COMMON STOCK
4.1 Purchase of Common Stock.
(a) On each Purchase Date, the balance of each Participant's
Contribution Account shall be used to purchase the maximum number of whole and
fractional shares of Common Stock determined by dividing (i) the balance of the
Participant's Contribution Account as of such Purchase Date by (ii) the Purchase
Price in respect of such Plan Quarter.
(b) If, in any Plan Quarter, the total number of shares of Common
Stock to be purchased pursuant to the Plan by all Participants exceeds the
number of shares authorized under the Plan, then each Participant shall purchase
his or her pro rata portion of the shares of Common Stock remaining available
under the Plan based on the balances in each Participant's Contribution Account
as of the Purchase Date in respect of such Plan Quarter.
(c) Any cash dividends paid with respect to shares of Common Stock
held for the account of a Participant shall be, as determined by the Committee
on a uniform basis as to all Participants, either (i) distributed to the
Participant or (ii) credited to the Participant's Contribution Account and used,
in the same manner as payroll deductions, to purchase additional shares of
Common Stock under the Plan on the next Purchase Date (subject to the
limitations of Section 3.2 hereof).
4.2 Purchase Price. For each Plan Quarter, the Purchase Price per share
of Common Stock purchased pursuant to the Plan shall be the lesser of (a) 85% of
the Closing Market Price on the Commencement Date of such Plan Quarter, and (b)
85% of the Closing Market Price on the Purchase Date of such Plan Quarter.
4.3 Notice of Purchase, Stock Certificates, Voting Rights.
(a) After the Purchase Date in respect of each Plan Quarter, a
report will be made by the Company or its agent to each Participant stating the
entries made to his or her Contribution Account, the number of shares of Common
Stock Purchased and the applicable Purchase Price.
(b) Evidence of shares of Common Stock purchased under the Plan
shall be maintained under the Plan for the account of each Participant and
registered in the manner determined by the Committee. Certificates for the
number of whole shares credited to the Participant's account under the Plan will
be issued to a Participant at any time promptly upon written request to the
Company or its agent; provided, however, that the Company may, at its election,
issue such certificates at such time or times as the Committee deems
appropriate, including without limitation, following an Employee's termination
of employment with a Sponsoring Employer.
(c) Shares of Common Stock held under the Plan for the account of
each Participant shall be voted by the holder of record of such shares in
accordance with the Participant's instructions.
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4.4 Notification of Disposition of Stock. If a Participant or former
Participant disposes of a share of Common Stock purchased under the Plan prior
to two (2) years after the Commencement Date of the Plan Quarter during which
such share was purchased, then such Participant or former Participant shall
notify his or her Sponsoring Employer immediately of such disposition in
writing.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1 Shares Subject.
(a) The maximum number of shares of Common Stock which may be
purchased under the Plan is 250,000 subject, however, to adjustment as
hereinafter set forth. The shares of Common Stock to be purchased under the Plan
will be made available, at the discretion of the Board of Directors or the
Committee, either from authorized but unissued shares of Common Stock or from
previously issued shares of Common Stock reacquired by the Company, including
shares purchased on the open market.
(b) If the outstanding shares of Common Stock of the Company are
increased, decreased, or exchanged for a different number or kind of shares or
other securities, or if additional shares or new or different shares or other
securities are distributed with respect to such shares of Common Stock or other
securities through merger, consolidation, spin- off, sale of all or
substantially all the assets of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
distribution with respect to such shares of Common Stock, or other securities,
an appropriate and proportionate adjustment may be made in the maximum number
and kind of shares provided in Section 5.1(a) hereof, subject in the case of
certain corporate reorganizations to the requirements of Section 424(a) of the
Code.
5.2 Administration of the Plan.
(a) Pursuant to the direction of the Board of Directors, the
Committee shall be responsible for the administration of the Plan. The Committee
shall have the discretionary authority to interpret the Plan and determine all
questions arising in the administration, application and operation of the Plan,
including all questions of fact and all questions of interpretation of the
provisions of the Plan. All such determinations by the Committee shall be
conclusive and binding on all persons. The Committee, from time to time, may
adopt, amend and rescind rules and regulations not inconsistent with the Plan
for carrying out the Plan, and may approve the forms of any documents or
writings provided for in the Plan. The Committee shall have full discretionary
authority to delegate ministerial functions of the Plan to employees of the
Company. No member of the Board of Directors or the Committee shall be liable
for any action, determination or omission taken or made in good faith with
respect to the Plan or any right granted hereunder.
(b) The Committee may in its discretion engage a bank trust
department, securities brokerage firm or other financial institution as agent to
perform custodial and record-keeping functions for the Plan, such as holding
record title to the Participant's stock
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certificates, maintaining an individual investment account for each Participant
and providing periodic account status reports to Participants.
(c) The Committee shall have the authority to adopt and enforce
such special rules and restrictions under the Plan to be applicable to
Participants who are subject to Section 16 of the Securities and Exchange Act of
1934, as amended, as the Committee shall deem necessary or appropriate to exempt
certain Plan transactions from the requirements of such Section 16.
(d) The Company shall bear the cost of administering the Plan,
including any fees, costs and expenses relating to the purchase of shares of
Common Stock under the Plan. Notwithstanding the foregoing, Participants will be
responsible for all fees, costs and expenses incurred in connection with the
disposition of shares of Common Stock purchased under the Plan.
5.3 Termination and Amendment of the Plan.
(a) The Company may, by action of the Board of Directors, terminate
the Plan at any time for any reason. The Plan shall automatically terminate upon
the purchase by Participants of all shares of Common Stock subject to the Plan
under Section 5.1 hereof, unless such number of shares shall be increased by the
Board of Directors and such increase shall be approved by the shareholders of
the Company. Upon termination of the Plan, as soon as practicable, there shall
be refunded to each Participant the entire cash balance in his or her
Contribution Account, and there shall be forwarded to each Participant (i)
certificates for all whole shares of Common Stock held under the Plan for the
account of each such Participant and (ii) cash in an amount equal to the product
of any fractional shares held under the Plan for the account of each such
Participant multiplied by the Closing Market Price on the date the Plan is
terminated.
(b) The Board of Directors reserves the right to modify, alter or
amend the Plan at any time and from time to time to any extent that it may deem
advisable, including, without limiting the generality of the foregoing, any
amendment deemed necessary to ensure compliance of the Plan with Section 423 of
the Code. Notwithstanding the foregoing, no amendment of the Plan shall operate
to reduce any amounts previously allocated to a Participant's Contribution
Account nor to reduce a Participant's rights with respect to shares of Common
Stock previously purchased and held on his or her behalf under the Plan. The
Board of Directors may suspend operation of the Plan for any period, as it may
deem advisable.
5.4 Governing Law; Compliance With Law. The Plan shall be construed in
accordance with the laws of the State of Maryland. The Company's obligation to
sell and deliver shares of Common Stock hereunder shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
of any regulatory or governmental agency as may, in the opinion of counsel for
the Company, be required. The Company may make such provisions as it may deem
appropriate for the withholding of any taxes or payments of any taxes which it
determines it may be required to withhold or pay in connection with a
Participant's participation in the Plan.
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5.5 No Assignment. The purchase rights granted hereunder are not
assignable or transferable by the Participants, other than by will or the laws
of descent and distribution, and are exercisable during the Participant's
lifetime only by the Participant. Any attempted assignment, transfer or
alienation not in compliance with the terms of the Plan shall be null and void
for all purposes and respects.
5.6 No Contract of Employment. The Plan will not be deemed to
constitute a contract between a Sponsoring Employer and any Participant or to be
a consideration or an inducement for the employment of any Participant or
Employee. Nothing contained in the Plan shall be deemed to give any Participant
or Employee the right to be retained in the service of a Sponsoring Employer or
to interfere with the right of a Sponsoring Employer to discharge any
Participant or Employee at any time regardless of the effect which such
discharge shall have upon him or her as a Participant of the Plan.
5.7 No Rights as Stockholder. No eligible Employee or Participant shall
by reason of participation in the Plan have any rights of a stockholder of the
Company until he or she acquires shares of Common Stock as herein provided.
FOLEY & LARDNER
FIRSTAR CENTER
777 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202-5367
CHICAGO TELEPHONE (414) 271-2400 SACRAMENTO
DENVER FACSIMILE (414) 297-4900 SAN DIEGO
JACKSONVILLE SAN FRANCISCO
LOS ANGELES TALLAHASSEE
MADISON TAMPA
MILWAUKEE WASHINGTON, D.C.
ORLANDO WEST PALM BEACH
September 24, 1999
AppNet Systems, Inc.
6707 Democracy Boulevard
Suite 1000
Bethesda, Maryland 20817
Gentlemen:
We have acted as counsel for AppNet Systems, Inc., a Delaware
corporation (the "Company"), in connection with the preparation of a
Registration Statement on Form S-8 (the "Registration Statement") to be filed by
the Company with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Securities Act"), relating to 250,000 shares of the
Company's common stock, $.0005 par value (the "Common Stock"), which may be
issued pursuant to the AppNet Systems, Inc. 1999 Employee Stock Purchase Plan
(the "Plan").
We have examined: (1) the Plan; (2) the Registration Statement; (3) the
Restated Certificate of Incorporation and By-laws of the Company, as amended to
date; (4) resolutions of the Company's Board of Directors relating to the Plan
and the issuance of securities thereunder; and (5) such other proceedings,
documents and records as we have deemed necessary to enable us to render this
opinion.
Based on the foregoing, we are of the opinion that:
1. The Company is a corporation validly existing under the laws of the
State of Delaware.
2. The shares of Common Stock, when issued by the Company pursuant to
the terms and conditions of the Plan, will be validly issued, fully paid and
nonassessable and no personal liability will attach to the ownership thereof.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the references to our firm therein. In giving our consent, we
do not admit that we are "experts" within the meaning of Section 11 of the
Securities Act or within the category of persons whose consent is required by
Section 7 of the Securities Act.
Very truly yours,
/s/FOLEY & LARDNER
EXHIBIT 23.1
CONSENT OF ARTHUR ANDERSEN LLP
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports included in AppNet's
Registration Statement on Form S-1 File No. 333-75205.
/s/ Arthur Andersen LLP
September 24, 1999
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