<PAGE>
As filed with the Securities and Exchange Commission on February 29, 2000
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
AVENUE A, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Washington 91-1819567
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
506 Second Avenue, 9th Floor
Seattle, Washington 98104
(Address of principal executive offices, including zip code)
AVENUE A, INC. 2000 STOCK INCENTIVE COMPENSATION PLAN
AVENUE A, INC. RESTATED 1999 STOCK INCENTIVE COMPENSATION PLAN
AVENUE A, INC. 1999 EMPLOYEE STOCK PURCHASE PLAN
AVENUE A, INC. RESTATED 1998 STOCK INCENTIVE COMPENSATION PLAN
FORM OF NONQUALIFIED STOCK OPTION LETTER AGREEMENTS
(Full title of the plans)
BRIAN P. McANDREWS
President and Chief Executive Officer
Avenue A, Inc.
506 Second Avenue, 9th Floor
Seattle, Washington 98104
(206) 521-8800
(Name, address and telephone number, including area code, of agent for service)
______________________
Copy to:
DAVID F. McSHEA
Perkins Coie LLP
1201 Third Avenue, 48th Floor
Seattle, Washington 98101-3099
______________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Securities Number to Be Proposed Maximum Proposed Maximum Amount of
to Be Registered Registered(1) Offering Price Aggregate Offering Price Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per share, subject to
outstanding options under the:
- ------------------------------------------------------------------------------------------------------------------------------------
Avenue A, Inc. 2000 Stock Incentive 1,130,882 $ 8.00(2) $ 9,047,056.00 2,388.42
Compensation Plan
- ------------------------------------------------------------------------------------------------------------------------------------
Avenue A, Inc. Restated 1999 Stock Incentive 309,000 $ 24.00(2) $ 7,416,000.00 $ 1,957.82
Compensation Plan
- ------------------------------------------------------------------------------------------------------------------------------------
Avenue A, Inc. Restated 1998 Stock Incentive 8,509,158 $ 3.65(2) $ 31,058,426.70 $ 8,199.42
Compensation Plan
- ------------------------------------------------------------------------------------------------------------------------------------
Nonqualified Stock Option Letter Agreements 1,200,000 $ 1.67 (2) $ 2,004,000.00 $ 529.06
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.01 per share, authorized
but unissued under the:
- ------------------------------------------------------------------------------------------------------------------------------------
Avenue A, Inc. 1999 Employee Stock Purchase 5,250,000 $ 24.00(3) $126,000,000.00 $ 33,264.00
Plan
- ------------------------------------------------------------------------------------------------------------------------------------
Avenue A, Inc. Restated 1999 Stock Incentive 25,944,900 $ 24.00(3) $622,677,600.00 $164.386.89
Compensation Plan
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL: 42,343,940 $798,203,082.70 $210,726.00
====================================================================================================================================
</TABLE>
(1) Based on shares subject to outstanding options or reserved for future
issuance pursuant to the employee benefit plans as of February 29, 2000,
together with an indeterminate number of additional shares which may be
necessary to adjust the number of shares reserved for issuance pursuant to
such employee benefit plans as the result of any future stock split, stock
dividend or similar adjustment of the registrant's outstanding Common
Stock.
(2) Computed pursuant to Rule 457(h) under the Securities Act of 1933, as
amended. The proposed maximum offering price of $8.00 under the 2000 Stock
Incentive Compensation Plan represents the exercise price of currently
outstanding options. The proposed maximum offering price of $24.00 under
the Restated 1999 Stock Incentive Compensation Plan represents the exercise
price of currently outstanding options. The proposed maximum offering price
of $3.65 under the Restated 1998 Stock Incentive Compensation Plan
represents the weighted average of the exercise prices of currently
outstanding options, which range from $.07 per share to $8.00 per share.
The proposed maximum offering price of $1.67 under two nonqualified stock
option letter agreements represents the exercise price of options issued
pursuant to such letter agreements.
(3) Estimated as of February 29, 2000, solely for the purpose of calculating
the registration fee pursuant to Rule 457(c) under the Securities Act of
1933, as amended. The proposed maximum offering price is $24.00 per share,
which is the initial offering price of the Common Stock.
<PAGE>
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange
Commission (the "Commission") are hereby incorporated by reference in this
Registration Statement:
(a) The registrant's prospectus filed on February 29, 2000,
pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the
"Securities Act"); and
(b) The description of the registrant's Common Stock contained in
the Registration Statement on Form 8-A filed on February 7, 2000, under Section
12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including any amendments or reports filed for the purpose of updating such
description.
All documents filed by the registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date hereof, and prior to the
filing of a post-effective amendment which indicates that the securities offered
hereby have been sold or which deregisters the securities covered hereby then
remaining unsold, shall also be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof commencing on the respective
dates on which such documents are filed.
Item 4. DESCRIPTION OF SECURITIES
Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
An attorney at Perkins Coie LLP beneficially owns 13,393 shares of the
registrant's series A preferred stock.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act (the "WBCA") authorize a court to award, or a corporation's
board of directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances for
liabilities arising under the Securities Act. Section 10 of the registrant's
Amended and Restated Bylaws (the "Bylaws") provides that the registrant will
indemnify any individual made a party to a proceeding because that individual is
or was a director or officer or, in some circumstances, an employee of the
registrant, and will reimburse reasonable expenses incurred by such individual
in advance of the final disposition of the proceeding to the fullest extent
permitted by Washington law.
Section 23B.08.320 of the WBCA authorizes a corporation to limit a
director's liability to the corporation or its shareholders for monetary damages
for acts or omissions as a director, except in certain circumstances involving
intentional misconduct, knowing violations of law or unlawful distributions, or
any transaction from which the director personally receives a benefit in money,
property or services to which the director is not legally entitled. Article 9
of the registrant's Amended and Restated Articles of Incorporation (the
"Articles") contains provisions implementing, to the fullest extent permitted by
Washington law, such limitations on a director's liability to the registrant and
its shareholders.
Any repeal of or modification to the Bylaws and Articles may not
adversely affect any right of indemnification under the Bylaws or Articles of a
director or officer who is or was a director or officer of the registrant at the
time of such repeal or modification.
<PAGE>
The registrant intends to purchase and maintain a liability insurance
policy pursuant to which its directors and officers may be indemnified against
liability incurred for serving in their capacities as directors and officers.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
Item 8. EXHIBITS
Exhibit
Number Description
- ---------------- -------------------------------------------------------------
5.1 Opinion of Perkins Coie LLP regarding legality of the Common
Stock being registered
23.1 Consent of Arthur Andersen LLP, Independent Auditors
23.2 Consent of Perkins Coie llp (included in opinion filed as
Exhibit 5.1)
24.1 Power of Attorney (see signature page)
99.1 Avenue A, Inc. 2000 Stock Incentive Compensation Plan
(incorporated by reference to Exhibit 10.22 to the
Registration Statement on Form S-1)
99.2 Avenue A, Inc. Restated 1999 Stock Incentive Compensation
Plan (incorporated by reference to Exhibit 10.23 to the
Registration Statement on Form S-1)
99.3 Avenue A, Inc. 1999 Employee Stock Purchase Plan
(incorporated by reference to Exhibit 10.25 to the
Registration Statement on Form S-1)
99.4 Avenue A, Inc. Restated 1998 Stock Incentive Compensation
Plan (incorporated by reference to Exhibit 10.26 to the
Registration Statement on Form S-1)
99.5 Avenue A, Inc. Form of Nonqualified Stock Option Letter
Agreements
Item 9. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of 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 information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the
- -------- -------
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefits plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in 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
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Seattle, State of Washington, on the 28th day of
February, 2000.
AVENUE A, INC.
By: /s/ Brian P. McAndrews
----------------------------------
Brian P. McAndrews
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
Brian P. McAndrews and Robert M. Littauer, or either of them, as attorneys-in-
fact with full power of substitution, to execute in the name and on the behalf
of each person, individually and in each capacity stated below, and to file, any
and all amendments to this Registration Statement, including any and all post-
effective amendments.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated below on the 28th day of February, 2000.
Signature Title
--------- -----
/s/ Brian P. McAndrews President, Chief Executive Officer and Director
- -------------------------- (Principal Executive Officer)
Brian P. McAndrews
/s/ Robert M. Littauer Chief Financial Officer, Vice President, Finance &
- -------------------------- Administration, Secretary and Treasurer (Principal
Robert M. Littauer Financial and Accounting Officer)
/s/ Nicolas J. Hanauer Chairman of the Board
- --------------------------
Nicolas J. Hanauer
/s/ Jason Green Director
- --------------------------
Jason Green
/s/ Fredric W. Harman Director
- --------------------------
Fredric W. Harman
/s/ Gregory Maffei Director
- --------------------------
Gregory Maffei
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ----------------- -------------------------------------------------------------
5.1 Opinion of Perkins Coie LLP regarding legality of the Common
Stock being registered
23.1 Consent of Arthur Andersen LLP, Independent Auditors
23.2 Consent of Perkins Coie LLP (included in opinion filed as
Exhibit 5.1)
24.1 Power of Attorney (see signature page)
99.1 Avenue A, Inc. 2000 Stock Incentive Compensation Plan
(incorporated by reference to Exhibit 10.22 to the
Registration Statement on Form S-1)
99.2 Avenue A, Inc. Restated 1999 Stock Incentive Compensation
Plan (incorporated by reference to Exhibit 10.23 to the
Registration Statement on Form S-1)
99.3 Avenue A, Inc. 1999 Employee Stock Purchase Plan
(incorporated by reference to Exhibit 10.25 to the
Registration Statement on Form S-1)
99.4 Avenue A, Inc. Restated 1998 Stock Incentive Compensation
Plan (incorporated by reference to Exhibit 10.26 to the
Registration Statement on Form S-1)
99.5 Avenue A, Inc. Form of Nonqualified Stock Option Letter
Agreements
<PAGE>
EXHIBIT 5.1
[Perkins Coie LLP Letterhead]
February 29, 2000
Avenue A, Inc.
506 Second Avenue, 9th Floor
Seattle, WA 98104
Re: Registration Statement on Form S-8 of Shares of Common Stock,
par value $0.01 per share, of Avenue A, Inc.
Ladies and Gentlemen:
We have acted as counsel to you in connection with the preparation of a
Registration Statement on Form S-8 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), which you are filing with the
Securities and Exchange Commission with respect to up to 42,343,940 shares of
Common Stock, par value $0.01 per share, which may be issued as follows: up to
1,130,882 shares pursuant to the Avenue A, Inc. 2000 Stock Incentive
Compensation Plan; up to up to 26,253,900 shares pursuant to the Avenue A, Inc.
Restated 1999 Stock Incentive Compensation Plan; up to 5,250,000 shares pursuant
to the Avenue A, Inc. 1999 Employee Stock Purchase Plan; up to 8,509,158 shares
pursuant to the Avenue A, Inc. Restated 1998 Stock Incentive Compensation Plan;
and up to 1,200,000 shares granted to two individuals pursuant to certain
nonqualified stock option letter agreements.
We have examined the Registration Statement and such documents and records
of the Company and other documents as we have deemed relevant and necessary for
the purpose of this opinion. In giving this opinion, we are assuming the
authenticity of all instruments presented to us as originals, the conformity
with originals of all instruments presented to us as copies and the genuineness
of all signatures.
Based upon and subject to the foregoing, we are of the opinion that any
shares that may be issued pursuant to the plans have been duly authorized and
that, upon the due execution by the Company and the registration by its
registrar of such shares, the sale thereof by the Company in accordance with the
terms of the plans and the receipt of consideration therefor in accordance with
the terms of the plans, such shares will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ PERKINS COIE LLP
<PAGE>
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 dated February 6, 2000
and October 29, 1999 included in Avenue A, Inc.'s Form S-1 Registration
Statement (File No. 333-92301) and to all references to our firm included in
this registration statement.
/s/ Arthur Andersen LLP
Seattle, Washington
February 28, 2000
<PAGE>
EXHIBIT 99.5
AVENUE A, INC.
NONQUALIFIED STOCK OPTION LETTER AGREEMENT
TO:
-------------------
Pursuant to the terms of the Employment Agreement between you and Avenue A,
Inc. (the "Company") dated ________ (the "Employment Agreement"), you are
entitled to receive a stock option (the "Option") to purchase shares (the
"Option Shares") of the Company's Common Stock.
The terms of the Option are as set forth in this nonqualified stock option
letter agreement (this "Agreement"). In addition, although the Option is not
granted under the Company's 1998 Stock Incentive Compensation Plan (the "Plan"),
to the extent not inconsistent with the terms set forth below, the terms and
conditions of the Plan apply to the Option. Such terms and conditions are
hereby incorporated into this Agreement, and a copy of the Plan is attached to
this Agreement. Capitalized terms that are not defined in this Agreement have
the meanings given to them in the Plan.
The most important terms of the Option are summarized as follows:
1. Grant Date: September 2, 1999
2. Number of Shares: _____________
3. Exercise Price: $2.50 per share
4. Expiration Date: Ten years from Grant Date
5. Type of Option: Nonqualified Stock Option
6. Vesting and Exercisability: The entire Option will vest and become
exercisable on the sixth anniversary of the Grant Date unless portions of the
Option are earlier vested and become exercisable pursuant to the following 1999
and 2000 target and incentive schedules (the "Target and Incentive Schedules")
or are otherwise earlier terminated:
<TABLE>
<CAPTION>
1999 Targets and Incentives
- -------------------------------------------------------------------------------------------
Number of Options to Employee Which
Vest and Become Exercisable at
1999 Annual "Gross Income" 90 days after
Target of I-BALLS LLC December 31, 1999
- -------------------------------------------------------------------------------------------
<S> <C>
Less than $1.95 million None
- -------------------------------------------------------------------------------------------
At least $1.95 million but less than $2.4 million 100,000
- -------------------------------------------------------------------------------------------
At least $2.4 million but less than $3 million An additional 100,000
- -------------------------------------------------------------------------------------------
$3 million or greater An additional 100,000
- -------------------------------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing schedule, if I-BALLS LLC's 1999 Annual Gross
Income Target of $1.95 million is not met for the 12 months ended December 31,
1999, you may elect to seek to have I-BALLS LLC meet the Annual Gross Income
Target set forth in the schedule above for the 12-month period ending March 31,
2000 (the "Revised Period"), and if such election is made and such targets are
met for the Revised Period, the Option will vest and become exercisable in
accordance with the schedule above, except that the date December 31, 1999 will
be deemed to be replaced with the date March 31, 2000 wherever it appears in
such schedule.
<PAGE>
<TABLE>
<CAPTION>
2000 Targets and Incentives
- ----------------------------------------------------------------------------------------
Number of Options to Employee
Which Vest and Become Exercisable
2000 Annual "Gross Income" at 90 days after
Target of I-BALLS LLC December 31, 2000
- ----------------------------------------------------------------------------------------
<S> <C>
Less than $3.45 million None
- ----------------------------------------------------------------------------------------
At least $3.45 million but less than $4.2 million 100,000
- ----------------------------------------------------------------------------------------
At least $4.2 million but less than $5.25 million An additional 100,000
- ----------------------------------------------------------------------------------------
$5.25 million or greater An additional 100,000
- ----------------------------------------------------------------------------------------
</TABLE>
For purposes of the Target and Incentive Schedules, "Gross Income" means
gross ad buy income, plus commissions, less site payout, as reflected on I-BALLS
LLC's financial statements.
7. Termination of Employment:
(a) If the Company terminates your employment other than for "Cause," as
such term is defined in the Employment Agreement, then the Option will continue
to vest in accordance with the Target and Incentive Schedules (including your
ability to have the 1999 Target and Incentive Schedule calculations based on the
Revised Period pursuant to Section 6), and any unvested portion of the Option as
of 91 days after December 31, 2000 (the "2000 Vesting Date") will terminate and
no longer be exercisable.
(b) If the Company terminates your employment for Cause on or prior to
December 31, 2000, then the Option will continue to vest in accordance with the
Target and Incentive Schedules (including your ability to have the 1999 Target
and Incentive Schedule calculations based on the Revised Period pursuant to
Section 6), and you will retain the pro rata portion of any vested portion of
the Option as of (a) 91 days after December 31, 1999 or March 31, 2000 (if you
make the election provided under Section 6) (the "1999 Vesting Date") or (b) the
2000 Vesting Date, as applicable, based on the period of time actually spent as
an employee of I-BALLS LLC during such year, and any unretained portion of the
Option, whether vested or unvested, will terminate and no longer be exercisable.
(c) If you resign or otherwise voluntarily leave I-BALLS LLC's employment
on or prior to December 31, 2000, then the Option will continue to vest in
accordance with the Target and Incentive Schedules (including your ability to
have the 1999 Target and Incentive Schedule calculations based on the Revised
Period pursuant to Section 6), and you will retain the pro rata portion of any
vested portion of the Option as of (a) the 1999 Vesting Date or (b) the 2000
Vesting Date, as applicable, based on the period of time actually spent as an
employee of I-BALLS LLC during such year, and any unretained portion of the
Option, whether vested or unvested, will terminate and no longer be exercisable.
(d) If there is a "Change of Control" as defined in the Employment
Agreement, and you elect to terminate your employment, then the Option shall
continue to vest in accordance with the Target and Incentive Schedules
(including your ability to have the 1999 Target and Incentive Schedule
calculations based on the Revised Period), and any unvested portion of the
Option as of 91 days after December 31, 2000 shall be terminated. If you do not
elect to terminate your employment in connection with the Change of Control,
then your Option will be treated in accordance with the Change of Control
provisions of the Plan.
<PAGE>
8. Termination of Option: Except as otherwise provided in this
Agreement, the unvested portion of the Option will terminate automatically and
without further notice immediately upon termination (voluntary or involuntary)
of your employment or service relationship with the Company or a subsidiary of
the Company. The vested portion of the Option will terminate automatically and
without further notice on the earliest of the following dates:
(a) three months after termination of your employment or service
relationship with the Company or a subsidiary of the Company for any reason
other than Disability;
(b) one year after termination of your employment or service
relationship with the Company or a subsidiary of the Company by reason of
Disability; and
(c) the Expiration Date.
If you die while any portion of the Option is vested and exercisable, that
portion of the Option may be exercised until one year after the date of death or
the Expiration Date, whichever is earlier.
Notwithstanding the foregoing, if your employment is terminated under any
of the circumstances described in Section 7, you will have three months from the
1999 Vesting Date or the 2000 Vesting Date, as applicable, to exercise any
vested and retained portion of the Option.
It is your responsibility to be aware of the date your Option terminates.
9. Method of Exercise: You may exercise the Option by giving written
notice to the Company, in form and substance satisfactory to the Company, which
will state the election to exercise the Option and the number of shares of
Common Stock for which you are exercising the Option. The written notice must
be accompanied by full payment of the exercise price for the number of shares of
Common Stock you are purchasing.
Any Option Shares issued upon exercise of the Option will be subject to the
limitations on disposition set forth in Section 7 of the Employment Agreement.
10. Form of Payment: You may pay the Option exercise price, in whole or
in part, in cash, by check or, unless the Plan Administrator determines
otherwise, by (a) tendering (either actually or by attestation) shares of Common
Stock held by you for a period of at least six months having a fair market value
on the day prior to the date of exercise equal to the exercise price; (b) if and
so long as the Common Stock is registered under Section 12 of the Securities
Exchange Act of 1934, delivery of a properly executed exercise notice together
with irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds necessary to pay the exercise price; or (c) such
other consideration as the Plan Administrator may permit.
11. Withholding Taxes: As a condition to the exercise of the Option, you
must make such arrangements as the Company may require for the satisfaction of
any federal, state or local withholding tax obligations that may arise in
connection with such exercise. The Company has the right to retain without
notice sufficient shares of stock to satisfy the withholding obligation. Unless
the Plan Administrator determines otherwise, you may satisfy the withholding
obligation by electing to have the Company withhold from the shares to be issued
upon exercise that number of shares having a fair market value equal to the
amount required to be withheld. The Company may also deduct from the shares to
be issued upon exercise any other amounts due from you to the Company.
12. Limited Transferability: During your lifetime only you can exercise
the Option. The Option is not transferable except by will or by the applicable
laws of descent and distribution. The Plan provides for exercise of the Option
by a designated beneficiary or the personal representative of your estate
following your death.
<PAGE>
13. Registration: Your particular attention is directed to Section 17.3
of the Plan, which describes certain important conditions relating to federal
and state securities laws that must be satisfied before the Option can be
exercised and before the Company can issue any shares to you. By accepting the
Option, you hereby acknowledge that you have read and understand Section 17.3 of
the Plan.
14. Binding Effect: This Agreement will inure to the benefit of the
successors and assigns of the Company and be binding upon you and your heirs,
executors, administrators, successors and assigns.
Please execute the following Acceptance and Acknowledgment and return it to
the undersigned.
Very truly yours,
AVENUE A, INC.
By
---------------------------
Its
--------------------------
