<PAGE>
As filed with the Securities and Exchange Commission on December 21, 1999
Registration No. 333-____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
ABOUT.COM, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-4034015
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
220 E. 42ND STREET, 24TH FLOOR
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
--------------------
NORTH SKY, INC. (FORMERLY DIRECT CONNECT, INC.) 1997 STOCK OPTION PLAN
(Full title of the Plan)
--------------------
MR. SCOTT P. KURNIT
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
ABOUT.COM, INC.
220 E. 42ND STREET, 24TH FLOOR
NEW YORK, NEW YORK 10017
(Name and address of agent for service)
(212) 849-2000
(Telephone number, including area code, of agent for service)
--------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================ ======================= ======================== ======================== =======================
Proposed Maximum Proposed
Title of Securities Amount to be Offering Price per Maximum Aggregate Amount of
to be Registered Registered(1) Share(2) Offering Price(2) Registration Fee
- -------------------------------- ----------------------- ------------------------ ------------------------ -----------------------
<S> <C> <C> <C> <C>
1997 Stock Option Plan
- ----------------------
Common Stock, $0.001 par value 413,646 shares $9.86 $4,078,549.56 $1,076.74
Aggregate Registration Fee $1,076.74
================================ ======================= ======================== ======================== =======================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the North Sky, Inc. (formerly
Direct Connect, Inc.) 1997 Stock Option Plan 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, 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
About.com, Inc. (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 Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1999 filed with the SEC on
November 15, 1999.
(b) The Registrant's current report on Form 8-K filed with the
SEC on December 15, 1999.
(c) The Registrant's prospectus filed with the SEC pursuant to
Rule 424(b) promulgated under the Securities Act of 1933, as
amended (the "1933 Act") filed with the SEC on October 29,
1999, in connection with the Registrant's Registration
Statement No. 333-88507, in which there is set forth the
audited financial statements for the Registrant's fiscal year
ended December 31, 1998; and
(d) The Registrant's Registration Statement No. 000-25525 on Form
8-A filed with the SEC on March 10, 1999, 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 Securities Exchange
Act of 1934, as amended (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
Section 145 of the Delaware General Corporation Law
authorizes a court to award or a corporation's Board of Directors to grant
indemnification to directors and officers in terms sufficiently broad to
permit such indemnification under certain circumstances for liabilities
(including reimbursement for expenses incurred) arising under the 1933 Act.
Article VIII of the Registrant's Amended and Restated Bylaws provides for
mandatory indemnification of its directors and officers and permissible
indemnification of employees and other agents to the maximum extent permitted
by the Delaware General Corporation Law. The Registrant's Second Amended and
Restated Certificate of Incorporation provides that, subject to Delaware law,
its directors shall not be personally liable for monetary damages for breach
of the directors' fiduciary duty as directors to the Registrant and its
stockholders. This provision in the Second Amended and Restated Certificate
of Incorporation does not eliminate the directors' fiduciary duty, and in
appropriate circumstances equitable remedies such as injunctive or other
forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach
of the director's duty of loyalty to the Registrant or its stockholders for
II-1
<PAGE>
acts or omissions not in good faith or involving intentional misconduct, for
knowing violations of law, for actions leading to improper personal benefit
to the director, and for payment of dividends or approval of stock
repurchases or redemptions that are unlawful under Delaware law. The
provision also does not affect a director's responsibilities under any other
law, such as the federal securities laws or state or federal environmental
laws. The Registrant intends to enter into indemnification agreements with
its officers and directors, which will provide the Registrant's officers and
directors with further indemnification to the maximum extent permitted by the
Delaware General Corporation Law. The Registrant maintains directors' and
officers' liability insurance policies insuring the Registrant's directors
and officers against certain liabilities and expenses incurred by them in
their capacities as such, and insuring the Registrant under certain
circumstances, in the event that indemnification payments are made by the
Registrant to such directors and officers.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
Item 8. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER EXHIBIT
-------------- -------
<S> <C>
4 Instruments Defining the Rights of Stockholders. Reference
is made to Registrant's Registration Statement
No. 000-25525 on Form 8-A, together with any exhibits
thereto, which are incorporated herein by reference
pursuant to Item 3(d) to this Registration Statement.
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of KPMG LLP, Independent Auditors.
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 North Sky, Inc. (formerly Direct Connect, Inc.) 1997 Stock
Option Plan.
99.2 Form of Option Assumption Agreement.
</TABLE>
Item 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes: (1)
to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the 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 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 clauses 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 North Sky, Inc. (formerly Direct Connect,
Inc.) 1997 Stock Option Plan.
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.
II-2
<PAGE>
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 New York, State of New York on this
21st day of December, 1999.
ABOUT.COM, INC.
By: /s/ Scott P. Kurnit
----------------------------------------
Scott P. Kurnit
Chairman, President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of About.com,
Inc., a Delaware corporation, do hereby constitute and appoint Scott P,
Kurnit, Chairman, President and Chief Executive Officer and Todd B. Sloan,
Chief Financial Officer 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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Scott P. Kurnit President, Chief Executive Officer December 21, 1999
- ------------------------------ (Principal Executive Officer) and
Scott P. Kurnit Chairman of the Board of Directors
/s/ Todd B. Sloan Chief Financial Officer December 21, 1999
- ------------------------------ (Principal Financial Officer)
Todd B. Sloan
/s/ Frank J. Biondi, Jr.
- ------------------------------ Director December 21, 1999
Frank J. Biondi, Jr.
II-4
<PAGE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Dixon R. Doll Director December 21, 1999
- ------------------------------
Dixon R. Doll
/s/ Ronald Unterman Director December 21, 1999
- ------------------------------
Ronald Unterman
/s/ Marc M. Watson Director December 21, 1999
- ------------------------------
Marc M. Watson
/s/ Kristopher A. Wood Director December 21, 1999
- ------------------------------
Kristopher A. Wood
</TABLE>
II-5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
ABOUT.COM, INC.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER EXHIBIT
-------------- -------
<S> <C>
4 Instruments Defining the Rights of Stockholders. Reference
is made to Registrant's Registration Statement
No. 000-25525 on Form 8-A, together with any exhibits
thereto, which are incorporated herein by reference
pursuant to Item 3(c) to this Registration Statement.
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of KPMG LLP, Independent Auditors.
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 North Sky, Inc. (formerly Direct Connect, Inc.) 1997 Stock
Option Plan.
99.2 Form of Option Assumption Agreement.
</TABLE>
<PAGE>
EXHIBIT 5
OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP
December 21, 1999
About.com, Inc.
220 E. 42nd Street, 24th Floor
New York, New York 10017
Re: About.com, Inc.- Registration Statement for Offering
of an Aggregate of 413,646 Shares of Common
Stock
Dear Ladies and Gentlemen:
We have acted as counsel to About.com, Inc., a Delaware
corporation (the "Company"), in connection with the registration on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended,
of an aggregate of 413,646 shares of common stock (the "Shares") and
related stock options authorized for issuance under the North Sky, Inc.
(formerly Direct Connect, Inc.) 1997 Stock Option Plan (the "Plan").
This opinion is being furnished in accordance with the
requirements of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the
corporate proceedings taken by the Company in connection with the
establishment of the Plan. Based on such review, we are of the opinion that,
if, as and when the Shares have been issued and sold (and the consideration
therefor received) pursuant to (a) the provisions of option agreements duly
authorized under the Plan and in accordance with the Registration Statement,
or (b) duly authorized direct stock issuances in accordance with the Plan and
in accordance with the Registration Statement, such Shares will be duly
authorized, legally issued, fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit
5 to the Registration Statement.
This opinion letter is rendered as of the date first
written above and we disclaim any obligation to advise you of facts,
circumstances, events or developments which hereafter may be brought to our
attention and which may alter, affect or modify the opinion expressed herein.
Our opinion is expressly limited to the matters set forth above and we render
no opinion, whether by implication or otherwise, as to any other matters
relating to the Company, the Plans or the Shares.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
About.com, Inc.:
We consent to the incorporation by reference in the registration statement on
Form S-8 of About.com, Inc. of our report dated January 20, 1999, except as
to Note 2(q) which is as of March 19, 1999, relating to the balance sheets of
About.com, Inc. as of December 31, 1997 and 1998, and the related statements
of operations, stockholders' equity (deficit), and cash flows for the period
from June 27, 1996 (inception) to December 31, 1996, and for the years ended
December 31, 1997 and 1998, and the related financial statement schedule,
which reports are included in the registration statement on Form S-1 dated
October 29, 1999 (No. 333-88507).
KPMG LLP
New York, New York
December 21, 1999
<PAGE>
EXHIBIT 99.1
ABOUT.COM, INC.
STOCK OPTION ASSUMPTION AGREEMENT
NORTH SKY, INC.
__________ STOCK PLAN
OPTIONEE: First_Name Last_Name,
STOCK OPTION ASSUMPTION AGREEMENT effective as of the ______ day of
_______________, 1999 by About.com, Inc., a __________ corporation
("About.com").
WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase shares of the common stock of North Sky, Inc., a
__________ corporation ("North Sky"), which were granted to Optionee under the
North Sky __________ Stock Plan (the "Plan") and are each evidenced by a Stock
Option Agreement (the "Option Agreement").
WHEREAS, North Sky has been acquired by About.com through the merger
of North Sky with and into About.com (the "Merger") pursuant to the Agreement
and Plan of Reorganization, by and between About.com and North Sky (the "Merger
Agreement").
WHEREAS, the provisions of the Merger Agreement require About.com to
assume all obligations of North Sky under all outstanding options under the Plan
at the consummation of the Merger and to issue to the holder of each outstanding
option an agreement evidencing the assumption of such option.
WHEREAS, pursuant to the provisions of the Merger Agreement, the
exchange ratio (the "Exchange Ratio") in effect for the Merger is ______________
shares of About.com common stock ("About.com Stock") for each outstanding share
of North Sky common stock ("North Sky Stock").
WHEREAS, this Agreement became effective immediately upon the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options which have become necessary by
reason of the assumption of those options by About.com in connection with the
Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of North Sky Stock subject to the options
held by Optionee immediately prior to the Effective Time (the "North Sky
Options") and the exercise price payable per share are set forth below.
About.com hereby assumes, as of the Effective Time, all the duties and
obligations of North Sky under each of the North Sky Options. In connection
with such assumption, the number of shares of About.com Stock purchasable under
each North Sky Option hereby assumed and the exercise price payable thereunder
have been adjusted to reflect the Exchange Ratio. Accordingly, the number of
shares of About.com Stock subject to each North Sky Option hereby assumed shall
be as specified for that option below, and
<PAGE>
the adjusted exercise price payable per share of About.com Stock under the
assumed North Sky Option shall also be as indicated for that option below.
<TABLE>
<CAPTION>
NORTH SKY STOCK OPTIONS ABOUT.COM ASSUMED OPTIONS
<S> <C> <C> <C>
# of Shares of North Exercise Price # of Shares of Adjusted Exercise
Sky Common Stock per Share About.com Common Price per Share
Stock
North Sky_Shares $North Sky_Price About.com_Shares $About.com_Price
</TABLE>
2. The intent of the foregoing adjustments to each assumed North Sky
Option is to assure that the spread between the aggregate fair market value of
the shares of About.com Stock purchasable under each such option and the
aggregate exercise price as adjusted pursuant to this Agreement will,
immediately after the consummation of the Merger, be not less than the spread
which existed, immediately prior to the Merger, between the then aggregate fair
market value of the North Sky Stock subject to the North Sky Option and the
aggregate exercise price in effect at such time under the Option Agreement.
Such adjustments are also intended to preserve, immediately after the Merger, on
a per share basis, the same ratio of exercise price per option share to fair
market value per share which existed under the North Sky Option immediately
prior to the Merger.
3. The following provisions shall govern each North Sky Option
hereby assumed by About.com:
(a) Unless the context otherwise requires, all references in
each Option Agreement and, if applicable, in the Plan (as incorporated into
such Option Agreement) (i) to the "Company" shall mean About.com, (ii) to
"Share" shall mean share of About.com Stock, (iii) to the "Board" shall
mean the Board of Directors of About.com and (iv) to the "Committee" shall
mean the Compensation Committee of the About.com Board of Directors.
(b) The grant date and the expiration date of each assumed North
Sky Option and all other provisions which govern either the exercise or the
termination of the assumed North Sky Option shall remain the same as set
forth in the Option Agreement applicable to that option, and the provisions
of the Option Agreement shall accordingly govern and control Optionee's
rights under this Agreement to purchase About.com Stock.
(c) Your options assumed by About.com which were originally
designated on your Notice of Grant as Incentive Options shall remain
Incentive Stock Options to the maximum extent allowed by law.
(d) Pursuant to the terms of the Option Agreement, none of your
options assumed by About.com in connection with the transaction will vest
and become exercisable on an accelerated basis upon the consummation of the
2
<PAGE>
Merger. Each North Sky Option shall be assumed by About.com as of the
Effective Time. Each such assumed North Sky Option shall thereafter
continue to vest for any remaining unvested shares of About.com Stock
subject to that option in accordance with the same installment vesting
schedule in effect under the applicable Option Agreement immediately prior
to the Effective Time; provided, however, that the number of shares subject
to each such installment shall be adjusted to reflect the Exchange Ratio.
(e) For purposes of applying any and all provisions of the
Option Agreement and/or the Plan relating to Optionee's status as an
employee or a consultant of North Sky, Optionee shall be deemed to continue
in such status as an employee or a consultant for so long as Optionee
renders services as an employee or a consultant to About.com or any present
or future About.com subsidiary. Accordingly, the provisions of the Option
Agreement governing the termination of the assumed North Sky Options upon
Optionee's cessation of service as an employee or a consultant of North Sky
shall hereafter be applied on the basis of Optionee's cessation of employee
or consultant status with About.com and its subsidiaries, and each assumed
North Sky Option shall accordingly terminate, within the designated time
period in effect under the Option Agreement for that option, generally a
three (3) month period, following such cessation of service as an employee
or a consultant of About.com and its subsidiaries.
(f) The adjusted exercise price payable for the About.com Stock
subject to each assumed North Sky Option shall be payable in any of the
forms authorized under the Option Agreement applicable to that option. For
purposes of determining the holding period of any shares of About.com Stock
delivered in payment of such adjusted exercise price, the period for which
such shares were held as North Sky Stock prior to the Merger shall be taken
into account.
(g) In order to exercise each assumed North Sky Option, Optionee
must deliver to About.com a written notice of exercise in which the number
of shares of About.com Stock to be purchased thereunder must be indicated.
The exercise notice must be accompanied by payment of the adjusted exercise
price payable for the purchased shares of About.com Stock and should be
delivered to About.com at the following address:
About.com, Inc.
______________________
______________________
Attention: Stock Administration
4. Except to the extent specifically modified by this Option
Assumption Agreement, all of the terms and conditions of each Option Agreement
as in effect immediately
3
<PAGE>
prior to the Merger shall continue in full force and effect and shall not in
any way be amended, revised or otherwise affected by this Stock Option
Assumption Agreement.
4
<PAGE>
IN WITNESS WHEREOF, About.com, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the 1st day of November, 1999.
ABOUT.COM, INC.
By:
-----------------------------
Corporate Secretary
ACKNOWLEDGMENT
The undersigned acknowledges receipt of the foregoing Stock Option
Assumption Agreement and understands that all rights and liabilities with
respect to each of his or her North Sky Options hereby assumed by About.com are
as set forth in the Option Agreement, the Plan, as applicable, and such Stock
Option Assumption Agreement.
---------------------------------
First_Name Last_Name, OPTIONEE
DATED: __________________, ________
5
<PAGE>
EXHIBIT 99.2
FORM OF OPTION ASSUMPTION AGREEMENT
<PAGE>
DIRECT CONNECT, INC.
1997 STOCK OPTION PLAN
EFFECTIVE SEPTEMBER 1, 1997
ARTICLE 1.
GENERAL PROVISIONS
1.1. PURPOSE OF THE PLAN
This 1997 Stock Option Plan (the "Plan") is intended to promote the
interests of Direct Connect, Inc., a Utah corporation (the "Corporation"), by
providing eligible persons with the opportunity to acquire or 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.
1.2. ADMINISTRATION OF THE PLAN
a. The Plan shall be administered by the Board or, to the extent
required under applicable Stock Exchange requirements or if desired by the
Board, a committee of the Board. If administered by a committee, the Primary
Committee shall have sole and exclusive authority to administer the Plan with
respect to Section 16 Insiders. The authority to administer the Plan with
respect to persons other than Section 16 Insiders may be vested in either the
Primary Committee or a Secondary Committee, as determined by the Board.
b. 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 terminate the functions of
any Secondary Committee at any time and delegate all powers and authority
previously delegated to such committee to the Primary Committee. To the
extent committee administration is no longer required by applicable law,
regulation, or Stock Exchange requirement, the Board may also terminate the
functions of any committee at any time and reassume all powers and authority
previously delegated to such committee.
c. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Plan and to make such
<PAGE>
determinations under, and issue such interpretations of, the provisions of
the Plan and any outstanding options thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator within the scope of its
administrative functions under the Plan shall be final and binding on all
parties who have an interest in the Plan under its jurisdiction or any option
thereunder.
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
option grants under the Plan.
e. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority (subject to
the provisions of the Plan) to determine which eligible persons are to
receive option grants, the time or times when such option grants are to be
made, the number of shares to be covered by each such grant, the status of
the granted option as either an Incentive Option or a Non-Statutory Option,
the time or times at which each option is to become exercisable, the vesting
schedule (if any) applicable to the option shares, the acceleration of such
vesting schedule, the maximum term for which the option is to remain
outstanding, whether the option shares shall be subject to rights of
repurchase and/or rights of first refusal, and all other terms and conditions
of the option grants.
1.3. ELIGIBILITY
The following persons shall be eligible to participate in the Plan:
a. Employees,
b. non-employee members of the Board or the board of directors of
any Parent or Subsidiary, and
c. consultants and other independent advisors who provide Services
to the Corporation or any Parent or Subsidiary.
1.4. STOCK SUBJECT TO THE PLAN
a. The stock issuable under the Plan shall be shares of
authorized but unissued Common Stock, including shares repurchased by the
Corporation 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 6,000 shares,
which number of shares may be changed from time to time in accordance with
Article 3.4 below.
2
<PAGE>
b. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the
options expire or terminate for any reason prior to exercise in full or (ii)
the options are cancelled in accordance with the cancellation-regrant
provisions of Article 2.4. However, should the Exercise Price 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 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, and not by the net number of shares of Common Stock
issued to the holder of such option.
c. 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/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 per calendar year,
and (iii) the number and/or class of securities and the Exercise Price in
effect under each outstanding option in order to prevent the dilution or
enlargement of benefits thereunder. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive.
ARTICLE 2.
OPTION GRANT PROGRAM
2.1. 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 Article 2.2
of the Plan, below.
a. EXERCISE PRICE
(1) The Exercise Price shall be fixed by the Plan Administrator
but shall not be less than one hundred percent (100%) of the Fair Market Value
per share of Common Stock on the Grant Date.
(2) The Exercise Price shall become immediately due upon
exercise of the option and shall, subject to the documents evidencing the
option, be payable in one or more of the forms specified below, as determined by
the Administrator:
(a) cash or check made payable to the Corporation,
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(b) a promissory note, payable to the Corporation, but only
to the extent authorized by the Plan Administrator pursuant to Article 3.1
of the Plan,
(c) 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
(d) if available at the time of exercise, through a special
sale and remittance procedure pursuant to which the Optionee shall
concurrently provide irrevocable written instructions to (a) a
Corporation-designated 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.
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.
c. EFFECT OF TERMINATION OF SERVICE
(1) The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service:
(a) Any option outstanding at the time of the Optionee's
cessation of Service for any reason except death, Permanent Disability or
Misconduct shall remain exercisable for a three (3) month period
thereafter, provided no option shall be exercisable after the Expiration
Date.
(b) Any option outstanding at the time of the Optionee's
cessation of Service due to death or Permanent Disability shall remain
exercisable for a twelve (12) month period thereafter, provided no option
shall be exercisable after the Expiration Date. Subject to the foregoing,
any option exercisable in whole or in part by the Optionee at the time of
death may be exercised subsequently by the personal representative of the
Optionee's estate or by the person or persons to whom the option is
transferred pursuant to the Optionee's will or in accordance with the laws
of descent and distribution.
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(c) Should the Optionee's Service be terminated for
Misconduct, then all outstanding options held by the Optionee shall
terminate immediately and cease to be outstanding.
(d) 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. During the
applicable post-Service exercise period, the option may not be exercised in
the aggregate for more than the number of 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 Date, the option shall terminate and cease to be outstanding for
any shares for which the option has not been exercised.
(2) Notwithstanding the foregoing, the Plan Administrator shall
have the discretion, exercisable either at the time an option is granted or at
any time while the option remains outstanding, to:
(a) extend the period of time for which the option is to
remain exercisable following the Optionee's cessation of Service from the
period otherwise in effect for that option to such greater period of time
as the Plan Administrator shall deem appropriate, but in no event beyond
the Expiration Date, and/or
(b) permit the option to be exercised, during the
applicable post-Service exercise period, not only with respect to the
number of shares of Common Stock for which such option is exercisable at
the time of the Optionee's cessation of Service but also with respect to
one or more additional shares that would have vested under the option 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. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, Incentive Options may be exercised only by the Optionee, and shall not
be assignable or transferable except by will or the laws of descent and
distribution following the Optionee's death. Non-Statutory Options may be
assigned or transferred in whole or in part only (i) during the Optionee's
lifetime if in connection with the Optionee's estate plan to one or more members
of the Optionee's immediate family (spouse and children) or to a trust
established exclusively for the benefit of one or more such immediate family
members, or (ii) by will or the laws of descent and distribution following the
Optionee's death. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
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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.
2.2. INCENTIVE OPTIONS
The terms specified below shall apply to all Incentive Options.
Except as modified by the provisions of this Article 2.2, all the provisions
of this Plan shall apply to Incentive Options. Options specifically
designated as Non-Statutory Options when issued under the Plan shall NOT be
subject to the terms of this Article 2.2.
a. ELIGIBILITY. Incentive Options may only be granted to
Employees.
b. EXERCISE PRICE. The Exercise Price shall not be less than one
hundred percent (100%) of the Fair Market Value per share of Common Stock on
the 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 any one (1)
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 in the order in which such options are granted.
d. 10% STOCKHOLDER. If an Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the Exercise Price shall not be less than one
hundred ten percent (110%) of the Fair Market Value per share of Common Stock on
the Grant Date, and the option term shall not exceed five (5) years measured
from the Grant Date.
e. HOLDING PERIOD. Shares purchased pursuant to an option shall
cease to qualify for favorable tax treatment as Incentive Option Shares if and
to the extent Optionee disposes of such shares within two (2) years of the Grant
Date or within one (1) year of Optionee's purchase of said shares.
2.3. CORPORATE TRANSACTION/CHANGE IN CONTROL
a. In the event of any Corporate Transaction, the Plan Administrator
shall have the sole discretion to elect that any outstanding option shall
automatically accelerate so that such option shall, immediately prior to the
effective date of the Corporate Transaction, becomes fully exercisable for all
or a greater portion of the shares of Common Stock at the time subject to such
option. The Plan Administrator's discretion under this Article 2.3.a. shall
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be exercisable either at the time the option is granted or at any time while
the option remains outstanding.
b. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities that would have
been issuable to the Optionee in consummation of such Corporate Transaction
had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to (i) the number and
class of securities available for issuance under the Plan following the
consummation of such Corporate Transaction, (ii) the exercise price payable
per share under each outstanding option, provided the aggregate exercise
price payable for such securities shall remain the same and (iii) the maximum
number of securities and/or class of securities for which any one person may
be granted stock options.
c. The Plan Administrator shall have the discretion, exercisable at
the time the option is granted or at any time while the option remains
outstanding, to provide for the automatic acceleration of any options assumed or
replaced in a Corporate Transaction that do not otherwise accelerate at that
time in the event the Optionee's Service should subsequently terminate by reason
of an Involuntary Termination within eighteen (18) months following the
effective date of such Corporate Transaction. Any options so accelerated shall
remain exercisable for 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.
d. The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to (i) provide for the automatic acceleration of one or more
outstanding options upon the occurrence of a Change in Control or (ii) condition
any such option acceleration upon the subsequent Involuntary Termination of the
Optionee's Service within a specified period (not to exceed eighteen (18)
months) following the effective date of such Change in Control. Any options
accelerated in connection with a Change in Control shall remain fully
exercisable until the expiration of the option term.
e. The portion of any Incentive Option accelerated in connection
with a Corporate Transaction or Change in Control 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.
f. The grant of options under the Plan 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.
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2.4. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, with the
consent of the Optionee, the cancellation of any outstanding options and to
grant in substitution new options covering the same or different number of
shares of Common Stock, but with an exercise price per share based on the
Fair Market Value per Share of Common Stock on the new Grant Date.
ARTICLE 3.
MISCELLANEOUS
3.1. FINANCING
The Plan Administrator may permit any Optionee to pay the option
Exercise Price by delivering a 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 all events, the maximum credit available to the
Optionee may not exceed the sum of (i) the aggregate option Exercise Price
payable for the Purchased Shares plus (ii) the amount of any federal, state and
local income and employment tax liability incurred by the Optionee in connection
with the option exercise.
3.2. TAX WITHHOLDING
a. The Corporation's obligation to deliver shares of Common Stock
upon the exercise of options 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 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. Such right may be
provided to any such holder in either or both of the following formats:
(1) 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, 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.
(2) STOCK DELIVERY: The election to deliver to the Corporation,
at the time the Non-Statutory Option is exercised, one or more shares of
Common Stock previously acquired by such holder (other than in connection
with the option exercise
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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.
3.3. EFFECTIVE DATE AND TERM OF THE PLAN
a. The Plan shall become effective on the Plan Effective Date.
However, no shares shall be issued under the Plan pursuant to Incentive Options
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 Incentive Options previously granted under this Plan
shall automatically convert into Non-Statutory Options.
b. The Plan shall terminate upon the earliest of (i) August 31,
2007, (ii) the date on which all shares available for issuance under the Plan
shall have been issued, or (iii) the termination of all outstanding options in
connection with a Corporate Transaction. Upon such Plan termination, all
outstanding options shall continue to have force and effect in accordance with
the provisions of the documents evidencing such options.
3.4. 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, or to cancel any grants made
thereunder; provided, however, that no such amendment, modification, or
cancellation shall adversely affect any rights and obligations with respect to
options at the time outstanding under the Plan unless each affected Optionee
consents to such amendment, modification, or cancellation. In addition,
amendments to the Plan shall be subject to approval of the Corporation's
stockholders to the extent required by applicable laws, regulations, or Stock
Exchange requirements.
b. Options to purchase shares of Common Stock may be granted under
the Plan 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 are held in escrow until there is obtained Board approval (and
shareholder approval if required by applicable laws, regulations, or Stock
Exchange requirements) of an amendment sufficiently increasing the number of
shares of Common Stock available for issuance under the Plan.
3.5. 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.
3.6. REGULATORY APPROVALS
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a. The implementation of the Plan, the granting of any option
under the Plan, and the issuance of any shares of Common Stock upon the
exercise of any option shall be subject to the Corporation's obtaining all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan and the options and shares of Common Stock issued pursuant to
the Plan.
b. No shares of Common Stock 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 and all
applicable listing requirements of any Stock Exchange on which Common Stock
is then listed for trading.
3.7. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the 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 such person) or of the Optionee to terminate
such person's Service at any time for any reason, with or without cause.
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APPENDIX
The following definitions shall be in effect under the Plan and the
Plan Documents:
1. BOARD shall mean the Corporation's Board of Directors.
2. CHANGE IN CONTROL shall mean a change in ownership or control of
the Corporation effected through either of the following transactions:
(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.
3. CODE shall mean the Internal Revenue Code of 1986, as amended.
4. COMMON STOCK shall mean the Corporation's common stock.
5. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a sale, 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; or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
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6. CORPORATION shall mean Direct Connect, Inc., a Utah corporation,
and any corporate successor to all or substantially all of the assets or
voting stock of Direct Connect, Inc., which shall assume the Plan by
appropriate action.
7. ELIGIBLE DIRECTOR shall mean a non-employee Board member eligible
to participate in the Plan.
8. 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.
9. EXERCISE DATE shall mean the date on which the Corporation shall
have received written notice of the option exercise pursuant to the Stock
Option Exercise Notice and Purchase Agreement.
10. EXERCISE PRICE shall mean the exercise price per share as specified
in the Stock Option Grant.
11. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Stock Option Grant.
12. 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 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. 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 not listed on any Stock Exchange,
then the Fair Market Value shall be determined by the Plan Administrator
after taking into account such factors as the Plan Administrator shall deem
appropriate.
13. GRANT DATE shall mean the date on which the option is granted to
Optionee as specified in the Stock Option Grant.
14. INCENTIVE OPTION shall mean an option which satisfies the
requirements of an "incentive stock option" under Code Section 422.
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15. 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 which materially reduces
his or her level of responsibility, (B) a reduction in his or her level of
compensation (including base salary, fringe benefits and participation in
corporate-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.
16. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or
disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional
misconduct by such person adversely affecting the business or affairs of the
Corporation (or any Parent or Subsidiary) in a material manner. The
foregoing definition shall not be deemed to be inclusive of all the acts or
omissions which the Corporation (or any Parent or Subsidiary) may consider as
grounds for the dismissal or discharge of any Optionee or other person in the
Service of the Corporation (or any Parent or Subsidiary).
17. 1933 ACT shall mean the Securities Act of 1933, as amended.
18. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
19. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of an "incentive stock option" under Code Section 422.
20. OPTIONEE shall mean any person to whom an option is granted under
Plan.
21. OPTION SHARES shall mean the number of shares of Common Stock
subject to the option as specified in the Stock Option Grant.
22. 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 or the other
corporations in such chain.
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23. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the 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.
24. PERMITTED TRANSFER shall mean (i) a gratuitous transfer of the
Purchased Shares, but only if Optionee obtains the Corporation's prior
written consent to such transfer, (ii) a transfer of title to the Purchased
Shares effected pursuant to Optionee's will or the laws of intestate
succession following Optionee's death, or (iii) a transfer to the Corporation
in pledge as a security for any purchase-money indebtedness incurred by
Optionee in connection with the acquisition of the Purchased Shares.
25. PLAN shall mean the Corporation's 1997 Stock Option Plan as set
forth herein.
26. PLAN ADMINISTRATOR shall mean the particular entity, whether the
Board or a committee of the Board, which is authorized to administer the Plan
with respect to one or more classes of eligible persons, to the extent such
entity is carrying out its administrative functions under the Plan with
respect to the persons under its jurisdiction.
27. PLAN DOCUMENTS shall mean the Plan, the Stock Option Grant, and
Stock Option Exercise Notice and Purchase Agreement, collectively.
28. PLAN EFFECTIVE DATE shall mean September 1, 1997, the date on which
the Plan was adopted by the Board.
29. PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members (as defined in the regulations to Section 16 of
the 1934 Act) appointed by the Board to administer the Plan with respect to
Section 16 Insiders.
30. PURCHASED SHARES shall mean the shares purchased upon exercise of
the Option pursuant to the Stock Option Exercise Notice and Purchase
Agreement.
31. SEC shall mean the Securities and Exchange Commission.
32. SECONDARY COMMITTEE shall mean a committee of two (2) or more Board
members appointed by the Board to administer the Plan with respect to
eligible persons other than Section 16 Insiders.
33. 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.
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34. SERVICE shall mean the performance of services to 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.
35. STOCK EXCHANGE shall mean either the American Stock Exchange, the
New York Stock Exchange, or another regional stock exchange or the Nasdaq
Stock Market.
36. STOCK OPTION EXERCISE NOTICE AND PURCHASE AGREEMENT shall mean the
agreement of said title in substantially the form of Exhibit A to the Stock
Option Grant, pursuant to which Optionee gives notice of his intent to
exercise the option.
37. STOCK OPTION GRANT shall mean the Stock Option Grant document,
pursuant to which Optionee has been informed of the terms of the option
granted under the Plan.
38. 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.
39. TAXES shall mean the Federal, state and local income and employment
tax liabilities incurred by the holder of Non-Statutory Options in connection
with the exercise of those options.
40. 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).
5
