<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934, as amended.
Filed by the registrant [X]
Filed by a party other than the registrant [_]
Check the appropriate box:
[_]Preliminary proxy statement
[X]Definitive proxy statement
[_]Definitive additional materials
[_]Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
LifeMinders.com, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X]No fee required
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transactions applies:
(3)Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:
[_]Fee paid previously with preliminary materials:
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11 (a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1)Amount Previously Paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
<PAGE>
[LIFEMINDERS.COM LOGO APPEARS HERE]
1110 Herndon Parkway, Suite 300, Herndon, Virginia 20170
April 17, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
of LifeMinders.com, Inc., which will be held at the Hyatt Regency Town Center,
1800 President's Street, Reston, Virginia 20190, on Thursday, May 4, 2000 at
9:30 a.m. (Virginia time).
Details of the business to be conducted at the 2000 Annual Meeting are given
in the attached Notice of Annual Meeting of Stockholders and Proxy Statement.
After careful consideration, the Company's Board of Directors has
unanimously approved the proposals set forth in the Proxy Statement and
recommends that you vote in favor of each such proposal and for each of the
directors nominated for election to the Company's Board of Directors.
In order for us to have an efficient meeting, please sign, date and return
the enclosed proxy promptly in the accompanying reply envelope. If you are
able to attend the annual meeting and wish to change your proxy vote, you may
do so simply by voting in person at the annual meeting.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Stephen R. Chapin, Jr.
Stephen R. Chapin, Jr.
President, Chief Executive Officer
and Chairman of the Board of
Directors
YOUR VOTE IS IMPORTANT
In order to assure your representation at the meeting, you are requested to
complete, sign and date the enclosed proxy as promptly as possible and return
it in the enclosed envelope.
No postage need be affixed if mailed in the United States.
<PAGE>
[LIFEMINDERS.COM LOGO APPEARS HERE]
1110 Herndon Parkway, Suite 300, Herndon, Virginia 20170
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 4, 2000
The Annual Meeting of Stockholders (the "Annual Meeting") of
LifeMinders.com, Inc., a Delaware corporation ("LifeMinders.com" or the
"Company"), will be held at the Hyatt Regency Town Center, 1800 President's
Street, Reston, Virginia 20190, on Thursday, May 4, 2000 at 9:30 a.m.
(Virginia time) for the following purposes, as more fully described in the
Proxy Statement accompanying this notice:
(1) To elect two directors to serve until the 2001 and 2003 Annual
Meetings of Stockholders, respectively, or until their respective
successors shall have been duly elected and qualified;
(2) To approve and adopt the LifeMinders.com, Inc. 2000 Stock Incentive
Plan;
(3) To approve and adopt the LifeMinders.com, Inc. Employee Stock
Purchase Plan;
(4) To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors of the Company for the fiscal year ending December 31, 2000; and
(5) To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on March 31, 2000 will
be entitled to notice of, and to vote at, the Annual Meeting. The stock
transfer books of the Company will remain open between the record date and the
date of the meeting. A list of stockholders eligible to vote at the meeting
will be available for inspection at the meeting and for a period of ten days
prior to the meeting during regular business hours at the corporate
headquarters at the address above.
All stockholders are cordially invited to attend the meeting in person.
Whether or not you expect to attend the Annual Meeting, your proxy vote is
important. To assure your representation at the meeting, please sign and date
the enclosed proxy card and return it promptly in the enclosed envelope, which
requires no additional postage if mailed in the United States or Canada.
Should you receive more than one proxy because your shares are registered in
different names and addresses, each proxy should be signed and returned to
assure that all your shares will be voted. You may revoke your proxy at any
time prior to the Annual Meeting. If you attend the meeting and vote by
ballot, your proxy will be revoked automatically and only your vote at the
Annual Meeting will be counted.
By Order of the Board of Directors
/s/ Stephen R. Chapin, Jr.
Stephen R. Chapin, Jr.
President, Chief Executive Officer
and Chairman of the Board of
Directors
Herndon, Virginia
April 17, 2000
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD
BE COMPLETED AND RETURNED PROMPTLY
<PAGE>
LIFEMINDERS.COM, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 4, 2000
General
These proxy solicitation materials (the "Proxy Statement") and the enclosed
proxy cards (the "Proxy") are being mailed in connection with the solicitation
of proxies by the Board of Directors of LifeMinders.com, Inc., a Delaware
corporation ("LifeMinders.com" or the "Company"), for the 2000 Annual Meeting
of Stockholders to be held on Thursday, May 4, 2000 at 9:30 a.m. (Virginia
time), and at any adjournment or postponement thereof (the "Annual Meeting"),
at the Hyatt Regency Town Center, 1800 President's Street, Reston, Virginia
20190. This Proxy Statement was first mailed on or about April 17, 2000, to
all Stockholders entitled to vote at the Annual Meeting.
The Company's annual report to Stockholders for the fiscal year ended
December 31, 1999 (the "Annual Report") has been mailed concurrently with the
mailing of the notice of the Annual Meeting and this Proxy Statement to all
Stockholders entitled to notice of, and to vote at, the Annual Meeting. The
Annual Report is not incorporated into this Proxy Statement and is not
considered proxy soliciting material.
The mailing address of the principal executive offices of the Company is
1110 Herndon Parkway, Herndon, Suite 300, Virginia 20170.
Voting
The specific proposals to be considered and acted upon at the Annual Meeting
are summarized in the accompanying Notice of Annual Meeting of Stockholders
(the "Notice of Annual Meeting"). Each proposal is described in more detail in
this Proxy Statement. The Company has one class of voting securities
outstanding, its common stock, $0.01 par value (the "Common Stock"). At the
close of business on March 31, 2000, the record date for determination of
Stockholders entitled to notice of and to vote at the Annual Meeting (the
"Record Date"), 23,576,410 shares of the Company's Common Stock were issued
and outstanding. Each Stockholder is entitled to one vote for each share of
Common Stock held by such Stockholder on the Record Date. Stockholders may not
cumulate votes in the election of directors. A list of stockholders eligible
to vote at the Annual Meeting will be available for inspection at the Annual
Meeting and for a period of ten days prior to the Annual Meeting during
regular business hours at the principal executive offices of the Company at
the address specified above.
As of the Record Date, directors and officers of the Company may be deemed
to be beneficial owners of an aggregate of 11,939,851 shares of Common Stock
(not including shares of Common Stock issuable upon exercise of outstanding
options and warrants), constituting approximately 50.64% of the shares of
Common Stock outstanding and entitled to vote at the Annual Meeting. Such
directors and executive officers have indicated to the Company that each
person intends to vote or direct the vote of all shares of Common Stock held
or owned by such person, or over which such person has voting control, in
favor of all of the proposals described herein. Nonetheless, the approval of
the proposals is not assured. See "Security Ownership of Certain Beneficial
Owners and Management".
The following outlines the vote required to approve each proposal set forth
in this Proxy Statement:
. Proposal One, to elect two (2) directors, requires approval by a
plurality of the shares of Common Stock present in person or by Proxy at
the Annual Meeting.
. Proposal Two, to adopt the LifeMinders.com, Inc. 2000 Stock Incentive
Plan, requires approval by at least a majority of the shares of Common
Stock present in person or by Proxy at the Annual Meeting.
1
<PAGE>
. Proposal Three, to approve and adopt the LifeMinders.com, Inc. Employee
Stock Purchase Plan, requires approval by at least a majority of the
shares of Common Stock present in person or by Proxy at the Annual
Meeting.
. Proposal Four, to ratify the selection of PricewaterhouseCoopers LLP as
independent auditors of the Company for the fiscal year ending December
31, 2000, requires approval by at least a majority of the shares of
Common Stock present in person or by Proxy at the Annual Meeting.
The Board of Directors recommends a vote "FOR" each proposal.
Shares cannot be voted at the meeting unless the owner is present in person
or by proxy. Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choices by marking the appropriate box on
the proxy card. You may vote (i) "FOR," (ii) "AGAINST" or (iii) "ABSTAIN" from
voting with respect to any of the four proposals. If you submit your proxy
without voting instructions your shares will be counted as a vote "FOR" each
proposal. An abstention or withholding authority to vote will be counted as
present for determining whether the quorum requirement is satisfied. With
respect to the required vote on each of the proposals, abstentions will be
treated as shares present and entitled to vote, and for purposes of
determining the outcome of the vote on each proposal, have the same effect as
a vote against the proposal. A broker "non-vote" occurs when a nominee holding
shares for a beneficial holder does not have discretionary voting power and
does not receive voting instructions from the beneficial owner. Broker "non-
votes" on a particular proposal will not be treated as shares present and
entitled to vote on the proposal.
Revocability of Proxies
Any stockholder executing a proxy pursuant to this solicitation may revoke
it at any time prior to its exercise by delivering written notice of such
revocation to the Secretary of the Company before the Annual Meeting or by
properly executing and delivering a proxy bearing a later date. Proxies may
also be revoked by any stockholder present at the Annual Meeting who elects to
vote his, her or its shares in person.
If a choice as to the matters coming before the Annual Meeting has been
specified by a stockholder on the proxy, the shares will be voted accordingly.
If no choice is specified on the returned proxy, the shares will be voted in
favor of the approval of the proposals described in the Notice of Annual
Meeting and in this Proxy Statement. All votes will be tabulated by the
inspector of election appointed for the Annual Meeting, who will separately
tabulate affirmative and negative votes, abstentions and broker non-votes.
Solicitation
The cost of soliciting proxies will be paid entirely by the Company and may
include reimbursement paid to brokerage firms and others for their expense in
forwarding solicitation materials as well as the expense of preparing,
assembling, photocopying and mailing this Proxy Statement. Solicitation will
be made primarily through the use of the mail; however, regular employees of
the Company may, without additional remuneration, solicit proxies personally
by telephone or telegram or other means. Except as described above, the
Company does not presently intend to solicit proxies other than by mail.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Unless otherwise directed, the persons appointed in the accompanying form of
proxy intend to vote at the Annual Meeting "FOR" the election of (i) the
nominee named below as a Class I director of the Company to serve until the
2003 Annual Meeting of Stockholders and (ii) the nominee named below as a
Class II director of the Company to serve until the 2001 Annual Meeting of
Stockholders, or in either case until their successors are duly elected and
qualified. If any nominee is unable to be a candidate when the election takes
place, the shares represented by valid proxies will be voted in favor of the
remaining nominee. The Board of Directors of the Company (the "Board") does
not currently anticipate that any nominee will be unable to be a candidate for
election. Each nominee is currently a director of the Company.
In accordance with the terms of the Company's Restated Certificate of
Incorporation, the Board has been divided into three classes, denominated
Class I, Class II and Class III, with members of each class holding office for
staggered three-year terms. At each annual meeting of the Company's
stockholders commencing in 2000, the successors to the directors whose terms
expire are elected to serve from the time of their election and qualification
until the third annual meeting of stockholders following their election or
until a successor has been duly elected and qualified. The affirmative vote of
a plurality of the shares of Common Stock present in person or represented by
proxy and entitled to vote on the election of directors at the Annual Meeting
is required to elect the directors.
The Board currently has seven members. E. Rogers Novak, Jr. and Gene
Riechers are Class I Directors whose terms expire at the Annual Meeting (in
each case, subject to the election and qualification of their sucessors or to
their earlier death, resignation or removal). Mr. Riechers is a nominee for
election at the Annual Meeting. Mr. Novak has decided not to run for
reelection and his seat on the Board will remain vacant until a suitable
replacement is found by the Board. Sunil Paul, a Class II director, was
elected by the Board on March 21, 2000 to fill a vacancy on the Board and,
therefore, must stand for election at the Annual Meeting. Mr. Paul's term and
the terms of the other Class II Directors, Douglas A. Lindgren and Philip D.
Black, will expire at the 2001 Annual Meeting of Stockholders (in each case,
subject to the election and qualification of their successors or to their
earlier death, resignation or removal). Stephen R. Chapin, Jr. and Jonathan B.
Bulkeley are Class III Directors whose terms expire at the 2002 Annual Meeting
of Stockholders (in each case, subject to the election and qualification of
their successors or to their earlier death, resignation or removal).
Information Regarding the Nominees for Election as Directors
The following information with respect to the principal occupation or
employment, other affiliations and business experience during the last five
years of the nominees have been furnished to the Company by such nominees.
Except as indicated, the nominees have had the same principal occupation for
the last five years.
(Class I Director) (Term expires at the 2003 Annual Meeting)
Gene Riechers, age 44, has served as a director of LifeMinders.com since
November 1997. Mr. Riechers is a managing director of FBR Technology Venture
Partners L.P., a venture capital investment firm, which he joined in December
1996. Prior to joining FBR Technology Venture Partners L.P., Mr. Riechers
served as the Chief Financial Officer of CyberCash, a leader in Internet
payment systems, from December 1995 to December 1996. From September 1993 to
December 1995, Mr. Riechers served as the Chief Financial Officer and Vice
President of Development of Online Resources and Communications Corp., a
provider of electronic home banking services. He currently serves on the
boards of directors of webMethods, Inc., Equal Footing.com, Inc. and
Varsitybooks.com, Inc. Mr. Riechers graduated from Pennsylvania State
University and received his Masters in Business Administration from Loyola
College.
(Class II Director) (Term expires at the 2001 Annual Meeting)
Sunil Paul, age 35, was appointed to the Board in March 2000. In October
1997, Mr. Paul founded Brightmail, Inc., an email-enhancement Internet
company, and has served as its Chairman of the Board since that time. In
January 1996, Mr. Paul founded FreeLoader, Inc., a Web-based push service
provider company. Mr. Paul served as that company's Chief Executive Officer
from January 1996 to June 1996, when FreeLoader, Inc.
3
<PAGE>
was acquired by Individual, Inc. From June 1996 to July 1997, he served as the
President of Individual, Inc.'s FreeLoader division. From February 1994 to
October 1995, Mr. Paul worked at America Online, Inc. serving as its first
Internet Product Manager. From 1990 until January 1994, Mr. Paul was a policy
analyst at the U.S. Congress' Office of Technology Assessment, where he
specialized in information technology and telecommunications, including the
then-emerging Internet. Mr. Paul is on the board of directors of Livemind,
Inc., a company that he founded in March 1999. Mr. Paul holds an undergraduate
degree in electrical engineering from Vanderbilt University.
Recommendation of the Board of Directors
The Board recommends that the stockholders vote FOR the election of each of
the nominees listed above.
Information Regarding Directors Who Are Not Nominees for Election at the
Annual Meeting
The following information with respect to the principal occupation or
employment, other affiliations and business experience during the last five
years of each director who is not a nominee for election at the Annual Meeting
has been furnished to the Company by such director. Except as indicated each
of these directors has had the same principal occupation for the last five
years.
Class II Directors (Terms expire at the 2001 Annual Meeting of Stockholders)
Douglas A. Lindgren, age 38, has served as a director of LifeMinders.com
since February 1999. Mr. Lindgren is a Managing Director of United States
Trust Company of New York ("U.S. Trust") and is the Chief Investment Officer
of Excelsior Private Equity Fund II, Inc. Prior to joining U.S. Trust in April
1995, Mr. Lindgren served in various capacities for Inco Venture Capital
Management, Inc. from May 1988 through March 1995, including the positions of
President and Managing Principal from January 1993 through March 1995. Before
joining Inco Venture Capital Management, Inc., Mr. Lindgren was employed at
Salomon Brothers Inc and Smith Barney, Harris Upham & Co., Inc. He is an
Adjunct Professor of Finance at Columbia University's Graduate School of
Business, where he has been teaching courses on venture capital since 1993.
Mr. Lindgren currently serves on the boards of directors of Zeus Wireless,
Inc., Constellar Corporation, ReleaseNow.com, PowerSmart, Inc., On the Go
Software, Inc. and MarketFirst Software, Inc. Mr. Lindgren holds an
undergraduate degree and a Masters in Business Administration from Columbia
University.
Philip D. Black, age 33, has served as a director of LifeMinders.com since
May 1999. Since March 1999, Mr. Black has been a Managing Member of Calvert
Capital L.L.C. and Calvert Capital II, L.L.C., which are both venture capital
investment firms and the general partners of ABS Ventures LM L.L.C., ABS
Ventures IV, L.P. and ABX Fund, L.P. From March 1995 to March 1999, Mr. Black
was a General Partner of Weiss, Peck & Greer Venture Partners, a venture
capital investment firm, and from 1988 to 1995, was a Senior Associate at
Summit Partners, also a venture capital firm. Mr. Black currently serves on
the boards of directors of Personify Incorporated and Zilliant.com. Mr. Black
holds an undergraduate degree from Stanford University.
Class III Directors (Terms expire at the 2002 Annual Meeting of Stockholders)
Stephen R. Chapin, Jr., age 37, co-founded LifeMinders.com in August 1996
and has served as the Company's President, Chief Executive Officer and
Chairman of the Board since August 1996. Prior to founding LifeMinders.com,
from September 1995 to October 1996, Mr. Chapin served as a Vice President at
First USA Bank. From September 1993 to September 1995, Mr. Chapin was a
management consultant at McKinsey & Company. From 1985 to 1990, Mr. Chapin
served in the U.S. Navy, as the Secretary of the Navy's liaison to Congress
and as a naval engineering and weapons officer. Mr. Chapin graduated from the
U.S. Naval Academy and received his Masters in Business Administration from
the Harvard Business School.
Jonathan B. Bulkeley, age 39, has served as a director of LifeMinders.com
since August 1999. From January 1999 to January 2000, Mr. Bulkeley was the
Chief Executive Officer of barnesandnoble.com. From July 1995 to January 1999,
he served as Managing Director of America Online, Inc.'s joint venture with
Bertelsmann Online to provide interactive online services in the United
Kingdom. Prior to July 1995, Mr. Bulkeley was Vice
4
<PAGE>
President of Business Development at America Online in the United States, and
prior to that, served as General Manager of media at America Online. Before
joining America Online in March 1993, Mr. Bulkeley worked at Time Inc. in a
variety of roles, including Director of Marketing and Development for Money
magazine and sales and marketing positions at Time and Discover magazines. Mr.
Bulkeley is a director of Rocket Networks and Milliken & Co. Mr. Bulkeley
holds an undergraduate degree from Yale University.
Committees of the Board
The Board has a compensation committee and an audit committee.
Compensation Committee. The compensation committee reviews and makes
recommendations to the Board regarding the compensation and benefits provided
to the Company's key executive officers and directors, including stock
compensation and loans. In addition, the compensation committee reviews
policies regarding compensation arrangements and benefits for all of the
Company's employees. As part of the foregoing, the compensation committee also
administers the Company's 1998 Stock Option Plan. The current members of the
compensation committee are Messrs. Bulkeley and Novak. After the Annual
Meeting, Mr. Novak's seat on this committee shall remain vacant until a
suitable replacement is found by the Board.
Audit Committee. The audit committee reviews and monitors the Company's
internal accounting procedures and reviews the results and scope of the annual
audit and other services provided by the Company's independent accountants.
The audit committee also consults with the Company's management and the
Company's independent auditors prior to the presentation of financial
statements to stockholders and, as appropriate, initiates inquiries into
aspects of its financial affairs. In addition, the audit committee is
responsible for considering and recommending the appointment of, and reviewing
fee arrangements with, the Company's independent auditors. The current members
of the audit committee are Messrs. Riechers and Novak. After the Annual
Meeting, there will be one vacancy on the audit committee.
Attendance at Board and Committee Meetings
During 1999, the Board of Directors held nine meetings, the compensation
committee held six meetings, and the audit committee held one meeting. During
1999, each director attended or participated in 75% or more of the aggregate
of (i) the total number of meetings of the Board and (ii) the total number of
meetings held by all committees of the Board or which such Director served
(during the period that such person served as a director); except that Mr.
Bulkeley attended only two meetings of the Board during the period from August
1999 (when Mr. Bulkeley was appointed to the Board) to December 31, 1999.
Frans Kok resigned from the Board effective as of July 15, 1999.
Compensation of Directors
The Company's directors do not receive compensation for attendance at Board
meetings or Board committee meetings. However, the Company's directors are
reimbursed for all reasonable out-of-pocket expenses incurred in connection
with their attendance at Board and Board committee meetings. From time to
time, certain directors who are not employees of LifeMinders.com have received
grants of options to purchase shares of the Company's Common Stock. During
1999, the Company granted Jonathan B. Bulkeley an option to purchase 62,500
shares of Common Stock, at an exercise price of $3.86 per share.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Stockholders
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Stock as of March
31, 2000 by:
. each person or group known by the Company to own beneficially more than
5% of the Company's outstanding Common Stock;
. each executive officer named in the Summary Compensation Table appearing
elsewhere in this Proxy Statement;
. each director and director nominee; and
. all directors, director nominees and executive officers as a group.
The Company has determined beneficial ownership in accordance with the rules
of the Securities and Exchange Commission. Unless otherwise indicated, the
persons included in the table have sole voting and investment power with
respect to all shares beneficially owned. Shares of common stock subject to
options that are currently exercisable or are exercisable within 60 days of
March 31, 2000 are treated as outstanding and beneficially owned with respect
to the person holding these options for the purpose of computing the
percentage ownership of that person. However, these shares are not treated as
outstanding for purposes of computing the percentage ownership of any other
person. Stephen R. Chapin's shares include options exercisable for 101,428
shares, Mark Bryant's shares include options exercisable for 52,500 shares,
Harry Layman's shares include options exercisable for 59,336 shares, Michael
Brown's shares include options exercisable for 5,469 shares and shares held by
executive officers and directors as a group include options exercisable for
252,327 shares.
<TABLE>
<CAPTION>
Shares Beneficially Owned
as of 3/31/00
-----------------------------
Name and Address of Beneficial Owner Number Percentage
- - ------------------------------------ -------------- --------------
<S> <C> <C>
Douglas A. Lindgren............................... 4,261,685 18.07%
Excelsior Private Equity Fund II, Inc.(1)
114 West 47th Street,
New York, New York 10036
Philip D. Black................................... 2,979,632 12.63%
Entities affiliated with ABS Ventures(2)
1 South Street, Suite 2150,
Baltimore, Maryland 21202
Gene Riechers..................................... 1,328,932 5.63%
Entities affiliated with FBR Technology Venture
Partners, L.P.(3)
1001 19th Street North, 10th Floor,
Arlington, Virginia 22209
E. Rogers Novak................................... 1,322,200 5.60%
Novak Biddle Venture Partners, L.P.(4)
1897 Preston White Drive,
Reston, Virginia 20191
Stephen R. Chapin, Jr.(7)......................... 1,621,764 6.88%
1110 Herndon Parkway,
Herndon, Virginia 20170
Jonathan B. Bulkeley(5)........................... 77,286 *
76 Ninth Avenue, 11th Floor,
New York, New York 10128
Mark F. Bryant(6)................................. 52,500 *
1110 Herndon Parkway,
Herndon, Virginia 20170
John A. Chapin(6)................................. 190,266 *
1110 Herndon Parkway, Suite 300
Herndon, Virginia 20170
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C>
Harry A. Layman(6).......................................... 105,586 *
1110 Herndon Parkway, Suite 300
Herndon, Virginia 20170
Michael N. Brown(6)......................................... 5,469 *
1110 Herndon Parkway, Suite 300
Herndon, Virginia 20170
All directors, director nominees and executive officers as a 11,939,851 50.59%
group (15 persons).........................................
</TABLE>
- - --------
(1) Represents shares held of record by Excelsior Private Equity Fund II, Inc.
Mr. Lindgren, one of the Company's directors, is the Chief Investment
Officer of Excelsior Private Equity Fund II, Inc. Mr. Lindgren disclaims
beneficial ownership of these shares except to the extent of his pecuniary
interest in Excelsior Private Equity Fund II, Inc.
(2) Represents (a) 1,744,015 shares held of record by ABS Ventures LM L.L.C.
(which shares were transferred from Pyramid Ventures, Inc., an affiliate
of ABS Ventures LM L.L.C., in September 1999), the Managing Member of
which is Calvert Capital II L.L.C., (b) 938,451 shares held of record by
ABS Ventures IV, L.P., the general partner of which is Calvert Capital
L.L.C., (c) 282,166 shares held of record by ABX Fund, L.P., the general
partner of which is Calvert Capital II L.L.C., and (d) 15,000 shares held
of record by Philip D. Black. Mr. Black, one of the Company's directors,
is a Manager of Calvert Capital L.L.C. and Calvert Capital II L.L.C. Mr.
Black disclaims beneficial ownership of these shares except to the extent
of his pecuniary interest in these entities.
(3) Represents shares held of record by FBR Technology Venture Partners, L.P.,
the general partner of which is FBR Venture Capital Managers, Inc. Mr.
Riechers, one of the Company's Directors, is the Managing Director of FBR
Technology Venture Partners, L.P. Mr. Riechers disclaims beneficial
ownership of these shares except to the extent of his pecuniary interest
in FBR Technology Venture Partners, L.P.
(4) Represents (a) 1,260,372 shares held of record by Novak Biddle Venture
Partners, L.P. and (b) 61,829 shares held of record by Novak Biddle
Venture Partners II, L.P. Mr. Novak, one of the Company's directors, is a
general partner of those entities. Mr. Novak disclaims beneficial
ownership of these shares except to the extent of his pecuniary interest
in those entities.
(5) Mr. Bulkeley is one of the Company's directors.
(6) These individuals are officers of the Company.
(7) Mr. Chapin is an officer and a director of the Company.
7
<PAGE>
Executive Compensation
The following table sets forth information concerning the compensation paid
by the Company to its Chief Executive Officer and to each of its four other
most highly compensated executive officers whose total annual compensation
exceeded $100,000 (the "Named Executive Officers") during the fiscal year
ended December 31, 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation Awards
---------------------------------------------
Annual Number of
Compensation(1) Shares
-------------------- Underlying Other
Name and Principal Position Year Salary ($) Bonus ($) Options (#) Compensation
--------------------------- ---- ---------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Stephen R. Chapin, Jr. ..... 1999 $172,917 $ 97,500 301,428 $56,532(2)
President, Chief Executive 1998 $131,250 -- -- --
Officer and Chairman of
the Board
Mark F. Bryant.............. 1999 $135,000 $216,000 50,000 --
Vice President, Business
Development 1998 $125,000 -- 125,000 --
and Advertising Sales
John A. Chapin.............. 1999 $129,659 $ 75,000 50,000 --
Senior Vice President,
Member Experience,
Secretary
Harry A. Layman............. 1999 $133,269 $26,000 271,250 --
Vice President,
Engineering and
Chief Technology Officer
Michael N. Brown............ 1999 $67,965 $40,000 87,500 --
Vice President, Marketing
Analysis
</TABLE>
- - --------
(1) Tim Hanlon served with the Company from July 1999 until February 29, 2000
and was compensated at an annual rate of $190,000, Joseph S. Grabias was
hired in August 1999 and is compensated at an annual rate of $180,000,
David N. Mahony was hired in November 1999 and is compensated at an annual
rate of $160,000, Thomas Stockmeyer was hired in January 2000 and is
compensated at an annual rate of $200,000 and Melissa Radin was hired in
March 2000 and is compensated at an annual rate of $95,000.
(2) This amount consists of reimbursement by the Company of Mr. Chapin's
relocation expenses.
8
<PAGE>
Option Grants in Last Year
The following table provides information concerning grants of options to
purchase Common Stock granted to the Named Executive Officers during the
fiscal year ended December 31, 1999. The Company did not grant stock
appreciation rights to these individuals during 1999.
Option Grants in Fiscal Year 1999
<TABLE>
<CAPTION>
Individual Grants
---------------------------------
Potential Realizable
Value at Assumed
Percentage of Annual Rates of Stock
Number of Total Options Exercise Price Appreciation
Securities Granted to Price for Option Term(1)
Underlying Employees in Per Expiration ---------------------
Name Options Granted Fiscal 1999 Share Date 5% 10%
---- --------------- ------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stephen R. Chapin, Jr... 100,000(2) 3.4% $ 0.88 4/20/04 $ 386,794 $ 854,714
Stephen R. Chapin, Jr... 200,000(3) 6.7% $14.00 11/22/09 $1,760,905 $4,462,479
Stephen R. Chapin, Jr... 1,428(4) * $14.00 11/16/09 $ 12,573 $ 31,862
Mark F. Bryant.......... 25,000(5) * $ 0.80 2/18/09 $ 220,113 $ 557,810
Mark F. Bryant.......... 25,000(6) * $ 3.44 7/1/09 $ 220,113 $ 557,810
John A. Chapin.......... 50,000(3) 1.7% $14.00 11/22/09 $ 440,226 $1,115,620
Harry A. Layman......... 271,250(7) 9.1% $ 0.80 3/29/09 $2,388,227 $6,052,237
Michael N. Brown........ 21,875(8) * $ 0.80 5/17/09 $ 192,599 $ 488,084
Michael N. Brown........ 3,125(9) * $ 3.44 7/15/09 $ 27,514 $ 69,726
Michael N. Brown........ 62,500(10) 2.1% $10.10 11/9/09 $ 550,283 $1,394,525
</TABLE>
- - --------
(1) Potential Realizable Value assumes that the common stock appreciates at
the indicated annual rate (compounded annually) from the grant date until
the expiration of the option term and is calculated based on the rules
promulgated by the SEC. Potential Realizable Value does not represent our
estimate of future stock price performance. The potential realizable value
at 5% and 10% appreciation is calculated by assuming that the estimated
fair market value on the date of grant appreciates at the indicated rate
for the entire term of the option and that the option is exercised at the
exercise price and sold on the last day of its term at the appreciated
price. For purposes of this calculation, it is assumed that the fair
market value of each grant on the date of each grant was equal to the
initial public offering price of $14.00 per share.
(2) This option vested in full on April 20, 1999.
(3) This option vests as to 25% of the shares subject thereto on November 22,
2000, and as to the remaining 75% of the shares subject thereto in 36
equal successive monthly installments commencing on December 22, 2000.
(4) This option vested in full on January 31, 2000.
(5) This option vested in full on February 18, 1999.
(6) This option vests as to 25% of the shares subject thereto on July 1, 2000,
and as to the remaining 75% of the shares subject thereto in 36 equal
successive monthly installments commencing on August 1, 2000.
(7) This option vested as to 25% of the shares subject thereto on March 29,
1999, and vests as to the remaining 75% of the shares subject thereto in
36 equal successive monthly installments which commenced on March 29,
2000.
(8) This option vests as to 25% of the shares subject thereto on May 17, 2000,
and as to the remaining 75% of the shares subject thereto in 36 equal
successive monthly installments commencing on June 17, 2000.
(9) This option vests as to 25% of the shares subject thereto on July 15,
2000, and as to the remaining 75% of the shares subject thereto in 36
equal successive monthly installments commencing on August 15, 2000.
(10) This option vests as to 25% of the shares subject thereto on November 9,
2000, and as to the remaining 75% of the shares subject thereto in 36
equal successive monthly installments commencing on December 9, 2000.
* Less than 1%.
9
<PAGE>
Aggregated Fiscal Year-End Option Values
The following table provides summary information regarding options held by
the Company's Chief Executive Officer and other Named Executive Officers on
December 31, 1999.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at "In-the-Money" Options at
December 31, 1999 December 31, 1999(1)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Stephen R. Chapin, Jr. .... 100,000 201,428 $5,687,000 $ 8,812,475
Mark F. Bryant............. 77,083 97,917 $4,389,871 $ 5,510,313
John A. Chapin............. -- 50,000 -- $ 2,187,500
Harry A. Layman............ 21,562 203,438 $1,227,955 $11,585,795
Michael N. Brown........... -- 87,500 -- $ 4,393,625
</TABLE>
- - --------
(1) Value for "in-the-money" options represents the positive spread between
the exercise price of outstanding options and the fair market value of
$57.75 per share on December 31, 1999.
10
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The compensation committee of the Board of Directors advises the Chief
Executive Officer and the Board of Directors on matters of the Company's
compensation philosophy and the compensation of executive officers and other
individuals compensated by the Company. The compensation committee is also
responsible for the administration of the Company's stock option plans under
which option grants and direct stock issuances may be made to executive
officers. The compensation committee has reviewed and is in accord with the
compensation paid to executive officers in 1999.
General Compensation Policy. The fundamental policy of the compensation
committee is to provide the Company's executive officers with competitive
compensation opportunities based upon their contribution to the development
and financial success of the Company and their personal performance. It is the
Compensation Committee's objective to have a portion of each executive
officer's compensation contingent upon the Company's performance as well as
upon such executive officer's own level of performance. Accordingly, the
compensation package for each executive officer is comprised of two elements:
(i) base salary and (ii) long-term stock-based incentive awards which
strengthen the mutuality of interests between the executive officers and the
Company's stockholders.
Factors. The principal factors which the compensation committee considered
with respect to each executive officer's compensation package for fiscal year
1999 are summarized below. The compensation committee may, however, in its
discretion apply entirely different factors in advising the Chief Executive
Officer and the Board of Directors with respect to executive compensation for
future years.
Base Salary. The suggested base salary for each executive officer is
determined on the basis of the following factors: experience, personal
performance, the salary levels in effect for comparable positions within and
without the industry and internal base salary comparability considerations.
The weight given to each of these factors differs from individual to
individual, as the compensation committee deems appropriate.
Long-Term Incentive Compensation. Long-term incentives are provided through
grants of stock options. The grants are designed to align the interests of
each executive officer with those of the stockholders and provide each
individual with a significant incentive to manage the Company from the
perspective of an owner with an equity stake in the Company. Each option
generally becomes exercisable in installments over a four or five year period,
contingent upon the executive officer's continued employment with the Company.
Accordingly, the option grant will provide a return to the executive officer
only if the executive officer remains employed by the Company during the
vesting period, and then only if the market price of the underlying shares
appreciates.
The number of shares subject to each option grant is set at a level intended
to create a meaningful opportunity for stock ownership based on the executive
officer's current position with the Company, the base salary associated with
that position, the size of comparable awards made to individuals in similar
positions within the industry, the individual's potential for increased
responsibility and promotion over the option term and the individual's
personal performance in recent periods. The compensation committee also
considers the number of unvested options held by the executive officer in
order to maintain an appropriate level of equity incentive for that
individual. However, the compensation committee does not adhere to any
specific guidelines as to the relative option holdings of the Company's
executive officers. Stock options to purchase an aggregate of 1,273,303 shares
of Common Stock were granted to executive officers in 1999.
CEO Compensation. The plans and policies discussed above were the basis for
the 1999 compensation of the Company's Chief Executive Officer, Mr. Stephen R.
Chapin, Jr. In advising the Board with respect to this compensation, the
compensation committee seeks to achieve two objectives: (i) establish a level
of base salary competitive with that paid by companies within the industry
which are of comparable size to the Company and by companies outside of the
industry with which the Company competes for executive talent and (ii) make a
significant percentage of the total compensation package contingent upon the
Company's performance and stock
11
<PAGE>
price appreciation. In accordance with these objectives, Mr. Chapin received a
base salary of $172,917 for fiscal year 1999. Stock options to purchase
301,428 shares of common stock were granted to Mr. Chapin in fiscal year 1999.
Compliance with Internal Revenue Code Section 162(m). As a result of Section
162(m) of the Internal Revenue Code of 1986, as amended, which was enacted
into law in 1993, the Company will not be allowed a federal income tax
deduction for compensation paid to certain executive officers, to the extent
that compensation exceeds $1 million per officer in any one year. This
limitation will apply to all compensation paid to the covered executive
officers which is not considered to be performance based. Compensation which
does qualify as performance-based compensation will not have to be taken into
account for purposes of this limitation. The 1998 Stock Option Plan contains
certain provisions which are intended to assure that any compensation deemed
paid in connection with the exercise of stock options granted under that plan
with an exercise price equal to the market price of the option shares on the
grant date will qualify as performance-based compensation.
The compensation committee does not expect that the compensation to be paid
to the Company's executive officers for 2000 will exceed the $1 million limit
per officer.
THE COMPENSATION COMMITTEE
Jonathan B. Bulkeley
E. Rogers Novak
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Registration Rights Agreement and Related Matters
In January 1999, prior to the Company's initial public offering, the Company
sold shares of its Series C convertible preferred stock to the following
purchasers in the following amounts at a price of $1.5265 per share:
<TABLE>
<S> <C>
Excelsior Private Equity Fund II, Inc............................ 1,965,280
Novak Biddle Venture Partners, L.P............................... 240,201
FBR Technology Venture Partners, L.P............................. 207,446
ABS Ventures IV, L.P............................................. 159,574
ABX Fund, L.P.................................................... 47,872
</TABLE>
Douglas A. Lindgren, one of the Company's directors, is the Chief Investment
Officer of Excelsior Private Equity Fund II, Inc. E. Rogers Novak, a director
of the Company, is a member of Novak Biddle Company, L.L.C., the general
partner of Novak Biddle Venture Partners, L.P. Gene Riechers, a director of
the Company, is a managing director of FBR Technology Venture Partners, L.P.
Philip D. Black, a director of the Company, is a Manager of Calvert Capital
L.L.C., the general partner of ABS Ventures IV, L.P. and ABX Fund.
In May 1999, prior to the Company's initial offering, the Company sold
shares of its Series D convertible preferred stock to the following purchasers
in the following amounts at a price of $4.7051 per share:
<TABLE>
<S> <C>
Pyramid Ventures, Inc............................................ 1,275,212
Excelsior Private Equity Fund II, Inc............................ 637,606
FBR Technology Venture Partners, L.P............................. 212,535
Novak Biddle Venture Partners, L.P............................... 106,268
</TABLE>
Pyramid Ventures, Inc. is an affiliate of ABS Ventures IV, L.P.
In September 1999, prior to the Company's initial offering, the Company sold
shares of its Series E convertible preferred stock to the following purchasers
in the following amounts at a price of $8.0868 per share:
<TABLE>
<S> <C>
Novak Biddle Venture Partners, L.P................................. 61,829
Novak Biddle Venture Partners II, L.P.............................. 49,463
ABS Ventures IV, L.P............................................... 91,187
ABX Fund, L.P...................................................... 27,861
FBR Technology Venture Partners, L.P............................... 111,292
Excelsior Private Equity Fund II, Inc.............................. 556,462
Jonathan Bulkeley.................................................. 61,829
Philip D. Black.................................................... 10,000
ABS Ventures LM L.L.C.............................................. 120,000
</TABLE>
E. Rogers Novak, Jr., one of the Company's directors, is a member of Novak
Biddle Company II, L.P., the general partner of Novak Biddle Venture Partners
II, L.P. Jonathan Bulkeley is one of the Company's directors. Philip D. Black,
a director of the Company, is a Manager of Calvert Capital II L.L.C., the
Managing Member of ABS Ventures LM L.L.C.
Each of the transactions described above was priced at fair market value
according to arm's length negotiating with the purchasers. The proceeds were
used for general working capital purposes.
The Company has granted holders of its preferred stock certain registration
rights. Pursuant to these registration rights, the Company may be required to
file registration statements under the Securities Act covering all or a
portion of the common stock issued or issuable upon the automatic conversion
of the preferred stock or may be required to include such shares of common
stock in a registration under the Securities Act that the Company initiates on
its own behalf.
Other Transactions
For the year ended December 31, 1999, there was no transaction or series of
similar transactions to which the Company was or is to be a party in which the
amount involved exceeded or will exceed $60,000 and in
13
<PAGE>
which any of the Company's directors, executive officers, holder of more than
5% of the Company's common stock or any member of the immediate family of
these persons had or will have a direct or indirect material interest other
than (i) compensation agreements and other arrangements, which are described
where required in this Proxy Statement and (ii) the transactions described
above.
For the year ended December 31, 1999, no executive officer, director,
nominee for director or any relative of such persons has been indebted to the
Company in an amount in excess of $60,000.
Change in Control Arrangements
If the Company is acquired in a stockholder-approved transaction, whether by
merger or asset sale, then all of the outstanding options granted under the
Company's 1998 stock option plan, including those held by the Company's
executive officers, will terminate, unless those options are assumed by the
successor company and the Company's repurchase rights with respect to unvested
option shares are assigned to that company.
Compensation Committee Interlocks and Insider Participation
The compensation committee of the Board currently consists of Messrs.
Bulkeley and Novak. After the Annual Meeting, Mr. Novak's seat on the
compensation committee will remain vacant until a suitable replacement is
found by the Board. No interlocking relationship exists between any member of
the Board or the Board's compensation committee and any member of the board of
directors or compensation committee of any other company, and no interlocking
relationship has existed in the past.
Employment Agreements
In November 1997, the Company entered into two year employment agreements
with each of Stephen Chapin and John Chapin. Under the agreements, the Company
agreed to pay Stephen Chapin an annual salary of $120,000 and John Chapin an
annual salary of $72,000. The Board of Directors subsequently approved an
annual salary for Stephen Chapin of $200,000 effective July 1999 and an annual
salary of John Chapin of $100,000 effective July 1999. Both agreements provide
for bonuses based upon the Company's profitability and overall financial
condition, which may be awarded by the Board of Directors in its sole
discretion. The employment agreements prohibit Stephen Chapin and John Chapin
from competing with the Company and soliciting the Company's customers or
employees during the term of the employment agreement and the 12-month period
after the date of their termination.
In November 1999, the compensation committee of the Board of Directors
approved an annual base salary for Stephen Chapin of $195,000. In addition to
his annual base salary, Stephen Chapin was entitled to receive a bonus of 25%
of his base salary if the Company's revenues exceeded $11 million in 1999 and
25% of his salary if the number of subscribers the Company had at the end of
1999 was at least 7,000,000. For the year 2000, he will be entitled to receive
25% of his base salary if the Company's revenues exceed $31 million in 2000
and 25% of his base salary if the number of subscribers the Company has at the
end of 2000 is at least 12,000,000. The compensation committee also granted
him incentive stock options exercisable beginning January 31, 2000 for 1,428
shares of common stock and non-qualified stock options exercisable for 200,000
shares of our common stock exercisable on the first anniversary of the grant
date. The exercise price of the options is $14.00. The Company expects that
Stephen Chapin's employment agreement will be amended to reflect his new
compensation package.
Section 16(a) Beneficial Ownership Reporting Compliance
The rules promulgated under Section 16(a) of the Securities Exchange Act of
1934, as amended, require the Company's officers and Directors, and persons
who own more than 10 percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and The Nasdaq National Market and to
furnish the Company with copies. Based solely upon a review of Forms 3,4 and 5
furnished to the Company during the fiscal year ended December 31, 1999, the
Company believes that its officers, directors and 10% stockholders have timely
filed all reports required by Section 16(a) to be filed during that period,
except that (i) each of Joseph S. Grabias, David N. Mahony and David C. Meade,
Jr. failed to file one report disclosing one transaction involving an
acquisition of shares of Common Stock and (ii) Harry A. Layman failed to file
one report disclosing three transactions involving the acquisition of shares
of Common Stock.
14
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the performance of the Company's
Common Stock to The Nasdaq Stock Market (U.S.) Index ("Nasdaq") and Chase H&Q
Internet Index for the period from November 19, 1999 (the date of the
Company's initial public offering) to December 31, 1999. The graph assumes an
investment of $100 in each of the Company's Common Stock, the Nasdaq and the
Chase H&Q Internet Index on November 19, 1999, and also assumes reinvestment
of all dividends:
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Cumulative Total Return
------------------------
11/19/99 12/31/99
----------- -----------
<S> <C> <C>
LIFEMINDERS.COM, INC........................... 100.00 412.50
NASDAQ STOCK MARKET (U.S.)..................... 100.00 126.08
CHASE H & Q INTERNET........................... 100.00 152.22
</TABLE>
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings made under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings made by the Company under those statutes, neither the preceding
Performance Graph nor the Compensation Committee Report included elsewhere in
this Proxy Statement is to be incorporated by reference into any such prior
filings, nor shall such graph or report be incorporated by reference into any
future filings made by the Company under those statutes.
15
<PAGE>
PROPOSAL 2
APPROVAL OF THE LIFEMINDERS.COM, INC. 2000 STOCK INCENTIVE PLAN
The stockholders are being asked to approve the Company's 2000 Stock
Incentive Plan (the "2000 Plan"), under which 4,600,000 shares of common stock
will initially be reserved for issuance. The Board adopted the 2000 Plan on
March 30, 2000, subject to stockholder approval. The 2000 Plan will allow the
Company to provide key employees (including officers and directors), non-
employee Board members and independent consultants and advisors in the
Company's service the continuing opportunity to acquire a meaningful equity
interest in the Company as an incentive for them to remain in service. The
Board believes that such equity incentives are a significant factor in the
Company's ability to attract and retain the key individuals who are essential
to the Company's long-term growth and financial success.
The 2000 Plan is a comprehensive equity incentive plan intended to serve as
the successor program to the Company's 1998 Stock Option Plan (the
"Predecessor Plan").
The following is a summary of the principal features of the 2000 Plan. The
summary, however, does not purport to be a complete description of all the
provisions of the 2000 Plan. A copy of the 2000 Plan is attached hereto as
Appendix A, and is incorporated herein by reference.
Equity Incentive Programs
The 2000 Plan is divided into five (5) separate equity incentive programs:
(i) a Discretionary Option Grant Program, (ii) a Salary Investment Option
Grant Program (iii) a Stock Issuance Program, (iv) an Automatic Option Grant
Program and (v) a Director Fee Option Grant Program. The principal features of
each program are described below. The Compensation Committee of the Board will
have exclusive authority to administer the Discretionary Option Grant Program
and the Stock Issuance Program with respect to option grants and stock
issuances made to the Company's executive officers and non-employee Board
members. The Compensation Committee and a Secondary Committee of one or more
Board members will each have separate but concurrent authority to make option
grants and stock issuances under those programs to all other eligible
individuals. The term "Plan Administrator," as used in this proxy statement,
will mean either the Compensation Committee or the Secondary Committee, to the
extent each such entity is acting within the scope of its administrative
jurisdiction under the 2000 Plan. All grants under the Salary Investment,
Director Fee and Automatic Grant programs will be made in strict compliance
with the express provisions of those programs.
Share Reserve
The 4,600,000 shares of common stock initially authorized for issuance under
the 2000 Plan will consist of (i) the number of shares currently available for
issuance under the Predecessor Plan, including the shares subject to
outstanding options, and (ii) an additional increase of 1,700,000 shares. The
number of shares of common stock available for issuance under the 2000 Plan
shall automatically increase on the first trading day of January each calendar
year during the term of the 2000 Plan, beginning with calendar year 2001, by
an amount equal to four percent (4%) of the total number of shares of common
stock outstanding on the last trading day in December of the immediately
preceding calendar year, but in no event shall any such annual increase exceed
1,500,000 shares.
Should an outstanding option expire or terminate for any reason prior to
exercise in full (including options transferred from the Predecessor Plan and
options cancelled in accordance with the cancellation-regrant provisions
described below), the shares subject to the portion of the option not so
exercised will be available for subsequent issuance under the 2000 Plan.
Unvested shares issued under the 2000 Plan and subsequently repurchased by the
Company at the original option exercise price paid per share will be added
back to the share reserve and will accordingly be available for subsequent
issuance under the 2000 Plan. Shares subject to any stock appreciation rights
exercised under the 2000 Plan will not be available for subsequent issuance.
16
<PAGE>
In no event may any one participant in the 2000 Plan receive option grants,
separately exercisable stock appreciation rights or direct stock issuances for
more than 1,000,000 shares of Common Stock in the aggregate per calendar year.
Eligibility
Employees, non-employee Board members, and independent consultants and
advisors in the service of the Company or its parent and subsidiaries (whether
now existing or subsequently established) will be eligible to participate in
the Discretionary Option Grant and Stock Issuance Programs. Section 16
officers and highly compensated employees will be eligible to participate in
the Salary Investment Option Grant Program if it is activated. Non-employee
Board members will also be eligible to participate in the Director Fee Option
Grant Program, if it is activated, and Automatic Option Grant Program.
As of March 31, 2000, 10 executive officers, 2 non-employee Board members
and approximately 145 other employees and consultants were eligible to
participate in the Discretionary Option Grant and Stock Issuance Programs, and
6 non-employee Board members were eligible to participate in the Automatic
Option Grant Program. Neither the Salary Investment Option Grant Program nor
the Director Fee Option Grant Program have been activated.
Valuation
The fair market value per share of Common Stock on any relevant date under
the 2000 Plan will be the closing selling price per share on that date on the
Nasdaq National Market. On April 11, 2000, the fair market value per share
determined on such basis was $63.125.
Discretionary Option Grant Program
Each granted option will have an exercise price per share as determined by
the Plan Administrator, and no granted option will have a term in excess of 10
years. The shares subject to each option will generally become exercisable for
fully-vested shares in a series of installments over a specified period of
service measured from the grant date. However, one or more options may be
structured so that the shares acquired under those options are unvested and
subject to repurchase by the Company, at the exercise price paid per share, if
the optionee ceases service with the Company prior to vesting in those shares.
The Plan Administrator will have complete discretion under the Discretionary
Option Grant Program to determine which eligible individuals are to receive
option grants, the time or times when such grants are to be made, the number
of shares subject to each such grant, the status of any granted option as
either an incentive stock option or a non-statutory option under the federal
tax laws, the vesting schedule (if any) to be in effect for the option grant
and the maximum term for which any granted option is to remain outstanding.
The exercise price for the shares of common stock subject to option grants
made under our 2000 plan may be paid in cash or in shares of common stock
valued at fair market value on the exercise date. The option may also be
exercised through a same-day sale program without any cash outlay by the
optionee.
The compensation committee will have the authority to cancel outstanding
options under the discretionary option grant program, including options
transferred from the Predecessor Plan, in return for the grant of new options
for the same or a different number of option shares with an exercise price per
share based upon the fair market value of our common stock on the new grant
date.
Stock appreciation rights are authorized for issuance under the
discretionary option grant program. Such rights will provide the holders with
the election to surrender their outstanding options for an appreciation
distribution from us equal to the fair market value of the vested shares of
common stock subject to the surrendered option, less the aggregate exercise
price payable for those shares. Such appreciation distribution may
17
<PAGE>
be made in cash or in shares of common stock. None of the outstanding options
under the Predecessor Plan contain any stock appreciation rights.
Salary Investment Option Grant Program
In the event the compensation committee elects to activate the salary
investment option grant program for one or more calendar years, each of our
executive officers and other highly compensated employees selected for
participation may elect, prior to the start of the calendar year, to reduce
his or her base salary for that calendar year by a specified dollar amount not
less than $10,000 nor more than $50,000. Each selected individual who files
such a timely election will automatically be granted, on the first trading day
in January of the calendar year for which his or her salary reduction is to be
in effect, an option to purchase that number of shares of common stock
determined by dividing the salary reduction amount by two-thirds of the fair
market value per share of our common stock on the grant date. The option will
be exercisable at a price per share equal to one-third of the fair market
value of the option shares on the grant date. As a result, the option will be
structured so that the fair market value of the option shares on the grant
date less the exercise price payable for those shares will be equal to the
amount by which the optionee's salary is reduced under the program. The option
will become exercisable in a series of 12 equal monthly installments over the
calendar year for which the salary reduction is to be in effect.
Stock Issuance Program
Shares may be sold under the Stock Issuance Program at a price per share not
less than their fair market value, payable in cash or through a promissory
note payable to the Company. Shares may also be issued as a bonus for past
services without any cash outlay required of the recipient. Shares of common
stock may also be issued under the Stock Issuance Program pursuant to share
right awards which entitle the recipients to receive those shares upon the
attainment of designated performance goals. The Plan Administrator will have
complete discretion under this program to determine which eligible individuals
are to receive such stock issuances or share right awards, the time or times
when such issuances or awards are to be made, the number of shares subject to
each such issuance or award and the vesting schedule to be in effect for the
stock issuance or share rights award.
The shares issued may be fully and immediately vested upon issuance or may
vest subject to a vesting schedule tied to the performance of service or the
attainment of performance goals. The Plan Administrator will, however, have
the discretionary authority at any time to accelerate the vesting of any and
all unvested shares outstanding under the Stock Issuance Program.
Outstanding share right awards under the Stock Issuance Program will
automatically terminate, and no shares of common stock will actually be issued
in satisfaction of those awards, if the performance goals established for such
awards are not attained. The Plan Administrator, however, will have the
discretionary authority to issue shares of common stock in satisfaction of one
or more outstanding share right awards as to which the designated performance
goals are not attained.
Director Fee Option Grant Program
Should the director fee option grant program be activated in the future,
each non-employee board member will have the opportunity to apply all or a
portion of any cash retainer fee for the year to the acquisition of a below-
market option grant. The option grant will automatically be made on the first
trading day in January in the year for which the retainer fee would otherwise
be payable in cash. The option will have an exercise price per share equal to
one-third of the fair market value of the option shares on the grant date, and
the number of shares subject to the option will be determined by dividing the
amount of the retainer fee applied to the program by two-thirds of the fair
market value per share of our common stock on the grant date. As a result, the
option will be structured so that the fair market value of the option shares
on the grant date less the exercise price payable for those shares will be
equal to the portion of the retainer fee applied to that option. The option
will become exercisable in a series of 12 equal monthly installments over the
calendar year for which the fee election is to be
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<PAGE>
in effect. However, the option will become immediately exercisable for all the
option shares upon the optionee's death or disability while serving as a board
member.
Automatic Option Grant Program
Under the Automatic Option Grant Program, eligible non-employee Board
members will receive a series of option grants over their period of Board
service. Each individual who first becomes a non-employee Board member at any
time on or after the Plan Effective Date will receive an option grant for
5,000 shares of common stock on the date such individual joins the Board,
provided such individual has not been in the prior employ of the Company. In
addition, on the date of each Annual Stockholders Meeting, after the Plan
Effective Date each non-employee Board member who is to continue to serve as a
non-employee Board member will automatically be granted an option to purchase
1,000 shares of common stock, provided such individual has served on the Board
for at least six months. There will be no limit on the number of such 1,000
share option grants any one eligible non-employee Board member may receive
over his or her period of continued Board service, and non-employee Board
members who have previously been in the Company's employ will be eligible to
receive one or more such annual option grants over their period of Board
service.
Each automatic grant will have an exercise price per share equal to the fair
market value per share of common stock on the grant date and will have a term
of 10 years, subject to earlier termination following the optionee's cessation
of Board service. Each automatic option will be immediately exercisable for
all of the option shares; however, any unvested shares purchased under the
option will be subject to repurchase by the Company, at the exercise price
paid per share, should the optionee cease Board service prior to vesting in
those shares. The shares subject to each 5,000-share automatic option grant
will vest in a series of six (6) successive equal semi-annual installments
upon the optionee's completion of each six (6)-month period of Board service
over the thirty-six (36)-month period measured from the grant date. The shares
subject to each annual 1,000-share automatic grant will vest upon in two
successive equal semi-annual installments upon the optionee's completion of
each six (6)-month period of Board service measured from the grant date.
However, the shares will immediately vest in full upon certain changes in
control or ownership of the Company or upon the optionee's death or disability
while a Board member. Following the optionee's cessation of Board service for
any reason, each option will remain exercisable for a 12-month period and may
be exercised during that time for any or all shares in which the optionee is
vested at the time of such cessation of Board service.
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Stock Awards
The table below shows, as to each of the Named Executive Officers in the
Summary Compensation Table and the various indicated individuals and groups,
the number of shares of Common Stock subject to options granted under the
Predecessor Plan during the period from January 1, 1999 through December 31,
1999, together with the weighted average exercise price payable per share. No
direct stock issuances have been made to date under the 2000 Plan.
<TABLE>
<CAPTION>
OPTION TRANSACTIONS
- - -------------------------------------------------------------------------------
Options Granted Weighted Average
Name (Number of Shares) Exercise Price
- - -------------------------------------------------------------------------------
<S> <C> <C>
Stephen R. Chapin, Jr. 301,428 $ 9.65
Chairman of the Board, President & CEO
- - -------------------------------------------------------------------------------
David N. Mahony 187,500 $10.10
Chief Operating Officer
- - -------------------------------------------------------------------------------
Harry A. Layman 271,250 $ 0.80
Engineering and Chief Technical Officer
- - -------------------------------------------------------------------------------
John Chapin 50,000 $14.00
Senior Vice President, Member Experience
- - -------------------------------------------------------------------------------
Joseph S. Grabias 150,000 $ 3.86
Chief Financial Officer
- - -------------------------------------------------------------------------------
Mark F. Bryant 50,000 $ 2.12
Senior Vice President--Business
Development
- - -------------------------------------------------------------------------------
All non-employee directors as a group
(2) 82,500 $15.80
- - -------------------------------------------------------------------------------
All employees, including current
officers who are not executive
officers, as a group 2,971,684 $ 7.02
</TABLE>
New Plan Benefits
As of March 31, 2000, no option grants or direct stock issuances have been
made under the 2000 Plan for which stockholder approval is sought under this
Proposal.
Acceleration
For the options issued pursuant to the 2000 Plan, in the event that the
Company is acquired by merger or asset sale, each outstanding option under the
Discretionary Option Grant Program which is not to be assumed by the successor
corporation will automatically accelerate and vest for one (1) year's worth of
vesting. In addition, if the options are assumed but an employee is terminated
without cause within six (6) months following the acquisisiton, the employee's
outstanding options will accelerate and vest for one (1) year's worth of
vesting. The Plan Administrator will have complete discretion to grant one or
more options under the Discretionary Grant Program which will become fully
exercisable for all the option shares in the event those options are assumed
in the acquisition and the optionee's service with the Company or the
acquiring entity terminates within a
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designated period (not to exceed eighteen months) following such acquisition.
The vesting of outstanding shares under the Stock Issuance Program may be
accelerated upon similar terms and conditions. The Plan Administrator will
also have the authority to grant options which will immediately vest upon an
acquisition of the Company, whether or not those options are assumed by the
successor corporation.
The Plan Administrator is also authorized under the Discretionary Option
Grant and Stock Issuance Programs to grant options and to structure repurchase
rights so that the shares subject to those options or repurchase rights will
immediately vest in connection with a change in ownership or control of the
Company (whether by successful tender offer for more than fifty percent (50%)
of the outstanding voting stock or by a change in the majority of the Board by
reason of one or more contested elections for Board membership). Such
accelerated vesting may occur either at the time of such change in ownership
or control or upon the subsequent termination of the individual's service
within a designated period (not to exceed eighteen months) following such
change in ownership or control.
The Plan Administrator will have the discretion to extend the acceleration
provisions of the 2000 Plan to any or all of the options incorporated from the
Predecessor Plan which do not otherwise provide similar protection.
The shares subject to each option under the Salary Investment Option Grant
Program, the Automatic Option Grant Program and the Director Fee Option Grant
Program will immediately vest upon (i) an acquisition of the Company by merger
or asset sale, (ii) the successful completion of a tender offer for more than
50% of the Company's outstanding voting stock or (iii) a change in the
majority of the Board effected through one or more contested elections for
Board membership.
Limited stock appreciation rights will automatically be included as part of
each grant made under the salary investment option grant program and the
automatic and director fee option grant programs, and these rights may also be
granted to one or more officers as part of their option grants under the
discretionary option grant program. Options with this feature may be
surrendered to us upon the successful completion of a hostile tender offer for
more than 50% of our outstanding voting stock. In return for the surrendered
option, the optionee will be entitled to a cash distribution from us in an
amount per surrendered option share based upon the highest price per share of
our common stock paid in that tender offer.
The acceleration of vesting in the event of a change in the ownership or
control of the Company may be seen as an anti-takeover provision and may have
the effect of discouraging a merger proposal, a takeover attempt or other
efforts to gain control of the Company.
Financial Assistance
The Plan Administrator may institute a loan program to assist one or more
participants in financing the exercise of outstanding options or the purchase
of shares under the 2000 Plan. The Plan Administrator will determine the terms
of any such assistance. However, the maximum amount of financing provided any
participant may not exceed the cash consideration payable for the issued
shares plus all applicable taxes incurred in connection with the acquisition
of the shares.
Changes in Capitalization
In the event any change is made to the outstanding shares of Common Stock by
reason of any recapitalization, stock dividend, stock split, combination of
shares, exchange of shares or other change in corporate structure effected
without the Company's receipt of consideration, appropriate adjustments will
be made to (i) the maximum number and/or class of securities issuable under
the 2000 Plan, (ii) the number and/or class of securities for which any one
person may be granted stock options, separately exercisable stock
21
<PAGE>
appreciation rights and direct stock issuances under the 2000 Plan per
calendar year, (iii) the number and/or class of securities for which grants
are subsequently to be made under the Automatic Option Grant Program to new
and continuing non-employee Board members, (iv) the number and/or class of
securities and the exercise price per share in effect under each outstanding
option, (v) the number and/or class of securities and the exercise price per
share in effect under each outstanding option incorporated into the 2000 Plan
from the Predecessor Plan and (vi) the maximum number and/or class of
securities by which the share reserve is to increase automatically each year.
Such adjustments will be designed to preclude any dilution or enlargement of
benefits under the Plan or the outstanding options thereunder.
Amendment and Termination
The Board may amend or modify the 2000 Plan at any time, subject to any
required stockholder approval pursuant to applicable laws and regulations.
Unless sooner terminated by the Board, the 2000 Plan will terminate on the
earliest of (i) March 29, 2010, (ii) the date on which all shares available
for issuance under the Plan have been issued as fully-vested shares or (iii)
the termination of all outstanding options in connection with certain changes
in control or ownership of the Company.
Federal Income Tax Consequences
Option Grants
Options granted under the 2000 Plan may be either incentive stock options
which satisfy the requirements of Section 422 of the Internal Revenue Code or
non-statutory options which are not intended to meet such requirements. The
Federal income tax treatment for the two types of options differs as follows:
Incentive Options. No taxable income is recognized by the optionee at the
time of the option grant, and no taxable income is generally recognized at the
time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise made
the subject of a disposition. For Federal tax purposes, dispositions are
divided into two categories: (i) qualifying and (ii) disqualifying. A
qualifying disposition occurs if the sale or other disposition is made after
the optionee has held the shares for more than two years after the option
grant date and more than one year after the exercise date. If either of these
two holding periods is not satisfied, then a disqualifying disposition will
result.
Upon a qualifying disposition of the shares, the optionee will recognize
long-term capital gain in an amount equal to the excess of (i) the amount
realized upon the sale or other disposition of the purchased shares over
(ii) the exercise price paid for those shares. If there is a disqualifying
disposition of the shares, then the excess of (i) the fair market value of the
shares on the exercise date over (ii) the exercise price paid for those shares
will be taxable as ordinary income to the optionee. Any additional gain or
loss recognized upon the disposition will be taxable as a capital gain or
loss.
If the optionee makes a disqualifying disposition of the purchased shares,
then the Company will be entitled to an income tax deduction, for the taxable
year in which such disposition occurs, equal to the excess of (i) the fair
market value of such shares on the option exercise date over (ii) the exercise
price paid for the shares. In no other instance will the Company be allowed a
deduction with respect to the optionee's disposition of the purchased shares.
Non-Statutory Options. No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
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<PAGE>
If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by the Company in the event of the
optionee's termination of service prior to vesting in those shares, then the
optionee will not recognize any taxable income at the time of exercise but
will have to report as ordinary income, as and when the Company's repurchase
right lapses, an amount equal to the excess of (i) the fair market value of
the shares on the date those shares vest over (ii) the exercise price paid for
such shares. The optionee may, however, elect under Section 83(b) of the
Internal Revenue Code to include as ordinary income in the year of exercise of
the option an amount equal to the excess of (i) the fair market value of the
purchased shares on the exercise date over (ii) the exercise price paid for
those shares. If the Section 83(b) election is made, the optionee will not
recognize any additional income as and when the repurchase right lapses.
The Company will be entitled to an income tax deduction equal to the amount
of ordinary income recognized by the optionee with respect to the exercised
non-statutory option. The deduction will in general be allowed for the taxable
year of the Company in which such ordinary income is recognized by the
optionee.
Stock Appreciation Rights
An optionee who is granted a stock appreciation right will recognize
ordinary income in the year of exercise equal to the amount of the
appreciation distribution. The Company will be entitled to an income tax
deduction equal to the appreciation distribution for the taxable year in which
the ordinary income is recognized by the optionee.
Direct Stock Issuance
The tax principles applicable to direct stock issuances under the 2000 Plan
will be substantially the same as those summarized above for the exercise of
non-statutory option grants.
Deductibility of Executive Compensation
The Company anticipates that any compensation deemed paid by it in
connection with disqualifying dispositions of incentive stock option shares or
exercises of non-statutory options will qualify as performance-based
compensation for purposes of Code Section 162(m) and will not have to be taken
into account for purposes of the $1 million limitation per covered individual
on the deductibility of the compensation paid to certain executive officers of
the Company. Accordingly, all compensation deemed paid with respect to those
options will remain deductible by the Company without limitation under Code
Section 162(m).
Accounting Treatment
Under the current accounting principles in effect for equity incentive
programs such as the 2000 Plan, the option grants under the Discretionary
Option Grant and Automatic Option Grant Programs will not result in any direct
charge to the Company's reported earnings. However, the fair value of those
options is required to be disclosed in the notes to the Company's financial
statements, and the Company must also disclose, in footnotes to the Company's
financial statements, the pro-forma impact those options would have upon the
Company's reported earnings were the fair value of those options at the time
of grant treated as a compensation expense. In addition, the number of
outstanding options may be a factor in determining the Company's earnings per
share on a fully-diluted basis.
Under proposed amendments to the current accounting principles, option
grants made to consultants will result in a direct charge to the Company's
reported earnings based upon the fair value of the option measured initially
on the grant date and subsequently on the vesting date of each installment of
the underlying option shares. Such charge will accordingly include the
appreciation in the value of the option shares over the period between the
grant date of the option (or, if later, the effective date of the final
amendment) and the vesting date of each installment of the option shares. In
addition, if the proposed amendment is adopted, any options which are repriced
after December 15, 1999 will also trigger a direct charge to the Company's
earnings measured by the appreciation in the value of the underlying shares
over the period between the grant date of the option (or, if later, the
effective date of the final amendment) and the date the option is exercised
for those shares.
23
<PAGE>
Should one or more individuals be granted tandem stock appreciation rights
under the 2000 Plan, then such rights would result in a compensation expense
to be charged against the Company's reported earnings. Accordingly, at the end
of each fiscal quarter, the amount (if any) by which the fair market value of
the shares of common stock subject to such outstanding stock appreciation
rights has increased from the prior quarter-end would be accrued as
compensation expense, to the extent such fair market value is in excess of the
aggregate exercise price in effect for those rights.
Stockholder Approval
The affirmative vote of a majority of the outstanding voting shares of the
Company present or represented and entitled to vote at the Meeting is required
for approval of the implementation of the 2000 Plan. Should such stockholder
approval not be obtained, then any stock options granted under the 2000 Plan
which is the subject of this Proposal will terminate without ever becoming
exercisable for any of the shares of Common Stock subject to those options.
However, in the absence of such stockholder approval, stock options and direct
stock issuances may continue to be made under the Predecessor Plan until the
share reserve as last approved by the stockholders is issued.
Recommendation of Board of Directors
The Board of Directors recommends a vote FOR the implementation of the 2000
Plan.
24
<PAGE>
PROPOSAL NO. 3
APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
The stockholders are being asked to approve the Company's Employee Stock
Purchase Plan under which two hundred fifty thousand (250,000) shares of the
Company's common stock will be reserved for issuance. The Purchase Plan was
adopted by the Board of Directors on March 30, 2000, and, subject to
stockholder approval, will become effective on May 4, 2000, provided this
Proposal is approved at the Annual Meeting.
The Purchase Plan is designed to allow eligible employees of the Company and
participating affiliates (whether now existing or subsequently established) to
purchase shares of common stock at quarterly intervals through their
accumulated periodic payroll deductions under the Purchase Plan.
The following is a summary of the principal features of the Purchase Plan.
The summary, however, does not purport to be a complete description of all of
the provisions of the Purchase Plan. A copy of the Purchase Plan is attached
hereto as Appendix B and is incorporated herein by reference.
Administration
The Purchase Plan will be administered by the Compensation Committee of the
Board. Such committee, as Plan Administrator, will have full authority to
adopt administrative rules and procedures and to interpret the provisions of
the Purchase Plan.
All costs incurred in the administration of the Purchase Plan will be paid
by the Company.
Securities Subject to the Purchase Plan
The number of shares of common stock reserved for issuance under the
Purchase Plan will be limited to two hundred fifty thousand (250,000) shares.
The reserve will automatically increase on the first trading day in January
each calendar year, beginning in calendar year 2001, by an amount equal to
.25% of the total number of outstanding shares of the Company's common stock
on the last trading day in December in the prior calendar year. In no event
will any such annual increase exceed 70,000 shares.
The shares issuable under the Purchase Plan may be made available from
authorized but unissued shares of the Company's common stock or from shares of
common stock repurchased by the Company, including shares repurchased on the
open market.
In the event that any change is made to the outstanding common stock
(whether by reason of any recapitalization, stock dividend, stock split,
exchange or combination of shares or other change in corporate structure
effected without the Company's receipt of consideration), appropriate
adjustments will be made to (i) the maximum number and class of securities
issuable under the Purchase Plan, (ii) the maximum number and class of
securities purchasable per participant on any one quarterly purchase date,
(iii) the maximum number and class of securities purchasable in total by all
participants on any one purchase date and (iv) the number and class of
securities and the price per share in effect under each outstanding purchase
right. Such adjustments will be designed to preclude any dilution or
enlargement of benefits under the Purchase Plan or the outstanding purchase
rights thereunder.
Offering Periods and Purchase Rights
Shares of common stock will be offered under the Purchase Plan through a
series of overlapping offering periods, with new offering periods to begin on
the first business day of February, May, August and November each year. Each
offering period will have a maximum duration of twenty-four (24) months.
However, the first offering period will begin at the Plan Effective Date and
will end on the last business day in April 2002. The next offering period will
begin on the first business day in August 2000 and end on the last business
day in July 2002. The Board may choose prior to the start date of any offering
period to not start that offering period.
Eligibility and Participation
Any individual who is employed on a basis under which he or she is regularly
expected to work for more than twenty (20) hours per week for more than five
(5) months per calendar year in the employ of the Company
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<PAGE>
or any participating parent or subsidiary corporation (including any
corporation which subsequently becomes such at any time during the term of the
Purchase Plan) will be eligible to participate in the Purchase Plan. However,
an employee may participate in only one offering period at a time.
At the time the employee joins the offering period, he or she will be
granted a purchase right to acquire shares of common stock at semi-annual
intervals over that offering period. The purchase dates will occur on the last
business days of January, April, July and October each year, and all payroll
deductions collected from the participant for the period ending with each such
semi-annual purchase date will automatically be applied to the purchase of
common stock.
As of March 31, 2000, approximately 135 employees, including 10 executive
officers, were eligible to participate in the Purchase Plan.
Purchase Price
The purchase price of the common stock acquired on each quarterly purchase
date will be equal to 85% of the lower of (i) the fair market value per share
of common stock on the start date of the offering period in which the
individual is enrolled or (ii) the fair market value on the quarterly purchase
date.
The fair market value per share of common stock on any particular date under
the Purchase Plan will be deemed to be equal to the closing selling price per
share on such date on the Nasdaq National Market. On March 31, 2000, the
closing selling price per share of common stock on the Nasdaq National Market
was $68.875.
Payroll Deductions and Stock Purchases
Each participant may authorize periodic payroll deductions in any multiple
of 1% (up to a maximum of 10%) of his or her cash earnings to be applied to
the acquisition of common stock at semi-annual intervals. Accordingly, on each
applicable semi-annual purchase date (the last business day in January, April,
July and October each year), the accumulated payroll deductions of each
participant will automatically be applied to the purchase of whole shares of
common stock at the purchase price in effect for the participant for that
purchase date.
Special Limitations
The Purchase Plan imposes certain limitations upon a participant's rights to
acquire common stock, including the following limitations:
. Purchase rights granted to a participant may not permit such individual
to purchase more than $25,000 worth of common stock (valued at the time
each purchase right is granted) for each calendar year those purchase
rights are outstanding at any time.
. Purchase rights may not be granted to any individual if such individual
would, immediately after the grant, own or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of
the total combined voting power or value of all classes of stock of the
Company or any of its affiliates.
. No participant may purchase more than one thousand (1,000) shares of
common stock on any one purchase date.
. The maximum number of shares of common stock purchasable in total by all
participants on any one purchase date will be limited to sixty two
thousand five hundred (62,500) shares.
The Plan Administrator will have the discretionary authority to increase or
decrease the per participant and total participant purchase limitations as of
the start date of any new offering period under the Purchase Plan, with the
new limits to be in effect for that offering period and each subsequent
offering period.
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<PAGE>
Termination of Purchase Rights
The participant may withdraw from the Purchase Plan at any time, and his or
her accumulated payroll deductions will, at the participant's election, either
be applied to the purchase of shares on the next semi-annual purchase date or
be refunded immediately.
The participant's purchase right will immediately terminate upon his or her
cessation of employment or loss of eligible employee status. Any payroll
deductions which the participant may have made for the offering period in
which such cessation of employment or loss of eligibility occurs will be
refunded and will not be applied to the purchase of common stock.
Stockholder Rights
No participant will have any stockholder rights with respect to the shares
covered by his or her purchase rights until the shares are actually purchased
on the participant's behalf. No adjustment will be made for dividends,
distributions or other rights for which the record date is prior to the date
of such purchase.
Assignability
No purchase rights will be assignable or transferable by the participant,
and the purchase rights will be exercisable only by the participant.
Change in Control
Should the Company be acquired by merger, sale of substantially all of its
assets or sale of securities possessing more than 50% of the total combined
voting power of the Company's outstanding securities, then all outstanding
purchase rights will automatically be exercised immediately prior to the
effective date of such acquisition. The purchase price will be equal to 85% of
the lower of (i) the fair market value per share of common stock on the start
date of the offering period in which the individual is enrolled at the time
such acquisition occurs or (ii) the fair market value per share of common
stock immediately prior to such acquisition. The limitation on the maximum
number of shares purchasable in total by all participants on any one purchase
date will not be applicable to any purchase date attributable to such an
acquisition.
Share Pro-Ration
Should the total number of shares of common stock to be purchased pursuant
to outstanding purchase rights on any particular date exceed the number of
shares then available for issuance under the Purchase Plan, then the Plan
Administrator will make a pro-rata allocation of the available shares on a
uniform and nondiscriminatory basis, and the payroll deductions of each
participant, to the extent in excess of the aggregate purchase price payable
for the common stock pro-rated to such individual, will be refunded.
Amendment and Termination
The Purchase Plan will terminate upon the earliest of (i) the last business
day in April 2010, (ii) the date on which all shares available for issuance
thereunder are sold pursuant to exercised purchase rights or (iii) the date on
which all purchase rights are exercised in connection with certain changes in
control or ownership of the Company.
The Board may at any time alter, suspend or discontinue the Purchase Plan.
However, the Board may not, without stockholder approval, (i) increase the
number of shares issuable under the Purchase Plan, (ii) alter the purchase
price formula so as to reduce the purchase price or (iii) modify the
requirements for eligibility to participate in the Purchase Plan.
27
<PAGE>
Federal Tax Consequences
The Purchase Plan is intended to be an "employee stock purchase plan" within
the meaning of Section 423 of the Internal Revenue Code. Under a plan which so
qualifies, no taxable income will be recognized by a participant, and no
deductions will be allowable to the Company, upon either the grant or the
exercise of the purchase rights. Taxable income will not be recognized until
there is a sale or other disposition of the shares acquired under the Purchase
Plan or in the event the participant should die while still owning the
purchased shares.
If the participant sells or otherwise disposes of the purchased shares
within two (2) years after the start date of the offering period in which such
shares were acquired or within one (1) year after the quarterly purchase date
on which those shares were actually acquired, then the participant will
recognize ordinary income in the year of sale or disposition equal to the
amount by which the fair market value of the shares on the purchase date
exceeded the purchase price paid for those shares, and the Company will be
entitled to an income tax deduction, for the taxable year in which such
disposition occurs, equal in amount to such excess.
If the participant sells or disposes of the purchased shares more than two
(2) years after the start date of the offering period in which the shares were
acquired and more than one (1) year after the quarterly purchase date of those
shares, then the participant will recognize ordinary income in the year of
sale or disposition equal to the lesser of (i) the amount by which the fair
market value of the shares on the sale or disposition date exceeded the
purchase price paid for those shares or (ii) fifteen percent (15%) of the fair
market value of the shares on the start date of that offering period; and any
additional gain upon the disposition will be taxed as a long-term capital
gain. The Company will not be entitled to an income tax deduction with respect
to such disposition.
If the participant still owns the purchased shares at the time of death, the
lesser of (i) the amount by which the fair market value of the shares on the
date of death exceeds the purchase price or (ii) fifteen percent (15%) of the
fair market value of the shares on the start date of the offering period in
which those shares were acquired will constitute ordinary income in the year
of death.
Accounting Treatment
Under current accounting principles applicable to employee stock purchase
plans qualified under Section 423 of the Internal Revenue Code, the issuance
of common stock under the Purchase Plan will not result in a compensation
expense chargeable against the Company's reported earnings. However, the
Company must disclose, in pro-forma statements to the Company's financial
statements, the impact the purchase rights granted under the Purchase Plan
would have upon the Company's reported earnings were the value of those
purchase rights treated as compensation expense.
Vote Required
The affirmative vote of a majority of the outstanding voting shares of the
Company present or represented and entitled to vote at the Annual Meeting is
required for approval of the Purchase Plan. Should such stockholder approval
not be obtained, then the Purchase Plan will not be implemented.
The Board recommends that the stockholders vote FOR the approval of the
Purchase Plan. The Board believes that it is in the best interests of the
Company to provide a program of stock ownership to the Company's employees in
order to provide them with a meaningful opportunity to acquire a substantial
proprietary interest in the Company and thereby encourage such individuals to
remain in the Company's service and more closely align their interests with
those of the stockholders.
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<PAGE>
PROPOSAL 4
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors
appointed PricewaterhouseCoopers LLP, independent public accountants, as
independent accountants of the Company to serve for the year ending December
31, 2000, subject to the ratification of such appointment by the stockholders
at the Annual Meeting. A majority of the votes of the outstanding shares of
Common Stock present in person or by Proxy at the Annual Meeting is required
to ratify the appointment of the auditors. A representative of
PricewaterhouseCoopers LLP will attend the Annual Meeting with the opportunity
to make a statement if he or she so desires and will also be available to
answer inquiries.
The Board of Directors recommends that the stockholders vote FOR the
ratification of Pricewaterhousecoopers LLP as the company's independent public
accountants for the fiscal year ending December 31, 2000.
29
<PAGE>
STOCKHOLDER PROPOSALS
In accordance with regulations issued by the Commission, stockholder
proposals intended for presentation at the 2001 Annual Meeting of Stockholders
must be received by the Secretary of the Company no later than December 10,
2000 if such proposals are to be considered for inclusion in the Company's
Proxy Statement. A proposal, including any accompanying supporting statement,
may not exceed 500 words. In addition, the proxy solicited by the Board of
Directors for the 2001 Annual Meeting of Stockholders will confer
discretionary authority to vote on any stockholder proposal raised at the 2001
Annual Meeting of Stockholders which is not described in the 2001 proxy
statement unless the Company has received notice of such proposal on or before
February 25, 2001. However, if the Company determines to change the date of
the 2001 Annual Meeting of Stockholders more than 30 days from May 4, 2001,
the Company will provide stockholders with a reasonable time before the
Company begins to print and mail its proxy materials for the 2001 Annual
Meeting of Stockholders in order to allow such stockholders an opportunity to
make proposals in accordance with the rules and regulations of the Commission.
OTHER MATTERS
Management knows of no matters that are to be presented for action at the
Annual Meeting other than those set forth above. If any other matters properly
come before the Annual Meeting, the persons named in the enclosed form of
proxy will vote the shares represented by proxies in accordance with their
best judgment on such matters.
By Order of the Board of Directors
/s/ Stephen R. Chapin, Jr.
--------------------------
Stephen R. Chapin, Jr.
President, Chief Executive Officer
and
Chairman of the Board of Directors
Herndon, Virginia
April 17, 2000
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Appendix A
LIFEMINDERS.COM, INC.
2000 STOCK INCENTIVE PLAN
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 2000 Stock Incentive Plan is intended to promote the interests of
LifeMinders.com, Inc., a Delaware corporation, by providing eligible persons
in the Corporation's service with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Corporation
as an incentive for them to remain in such service.
Capitalized terms shall have the meanings assigned to such terms in the
attached Appendix.
II. STRUCTURE OF THE PLAN
A.The Plan shall be divided into five separate equity incentives
programs:
-- the Discretionary Option Grant Program under which eligible
persons may, at the discretion of the Plan Administrator, be granted options
to purchase shares of Common Stock,
-- the Salary Investment Option Grant Program under which eligible
employees may elect to have a portion of their base salary invested each year
in special option grants,
-- the Stock Issuance Program under which eligible persons may, at
the discretion of the Plan Administrator, be issued shares of Common Stock
directly, either through the immediate purchase of such shares or as a bonus
for services rendered the Corporation (or any Parent or Subsidiary),
-- the Automatic Option Grant Program under which eligible non-
employee Board members shall automatically receive option grants at designated
intervals over their period of continued Board service, and
-- the Director Fee Option Grant Program under which non-employee
Board members may elect to have all or any portion of their annual retainer
fee otherwise payable in cash applied to a special stock option grant.
B.The provisions of Articles One and Seven shall apply to all equity
programs under the Plan and shall govern the interests of all persons under
the Plan.
III. ADMINISTRATION OF THE PLAN
A.The Primary Committee shall have sole and exclusive authority to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders. Administration of the Discretionary Option
Grant and Stock Issuance Programs with respect to all other persons eligible
to participate in those programs may, at the Board's discretion, be vested in
the Primary Committee or a Secondary Committee, or the Board may retain the
power to administer those programs with respect to all such persons. However,
any discretionary option grants or stock issuances for members of the Primary
Committee must be authorized by a disinterested majority of 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 also at any time terminate the functions
of any Secondary Committee and reassume all powers and authority previously
delegated to such committee.
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C. Each Plan Administrator shall, within the scope of its administrative
functions under the Plan, have full power and authority (subject to the
provisions of the Plan) to establish such rules and regulations as it may deem
appropriate for proper administration of the Discretionary Option Grant and
Stock Issuance Programs and to make such determinations under, and issue such
interpretations of, the provisions of those programs and any outstanding
options or stock issuances 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 Discretionary Option Grant and Stock Issuance Programs under
its jurisdiction or any stock option or stock issuance thereunder.
D. The Primary Committee shall have the sole and exclusive authority to
determine which Section 16 Insiders and other highly compensated Employees
shall be eligible for participation in the Salary Investment Option Grant
Program for one or more calendar years. However, all option grants under the
Salary Investment Option Grant Program shall be made in accordance with the
express terms of that program, and the Primary Committee shall not exercise
any discretionary functions with respect to the option grants made under that
program.
E. 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 or stock
issuances under the Plan.
F. Administration of the Automatic Option Grant and Director Fee Option
Grant Programs shall be self-executing in accordance with the terms of those
programs, and no Plan Administrator shall exercise any discretionary functions
with respect to any option grants or stock issuances made under those
programs.
IV. ELIGIBILITY
A.The persons eligible to participate in the Discretionary Option Grant
and Stock Issuance Programs are as follows:
(i)Employees,
(ii) non-employee members of the Board or the board of directors of
any Parent or Subsidiary, and
(iii) consultants and other independent advisors who provide services
to the Corporation (or any Parent or Subsidiary).
B.Only Employees who are Section 16 Insiders or other highly compensated
individuals shall be eligible to participate in the Salary Investment Option
Grant Program.
C. Each Plan Administrator shall, within the scope of its administrative
jurisdiction under the Plan, have full authority to determine, (i) with
respect to the option grants under the Discretionary Option Grant Program,
which eligible persons are to receive such grants, the time or times when
those 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 when each option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding and (ii) with
respect to stock issuances under the Stock Issuance Program, which eligible
persons are to receive such issuances, the time or times when the issuances
are to be made, the number of shares to be issued to each Participant, the
vesting schedule (if any) applicable to the issued shares and the
consideration for such shares.
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D. The Plan Administrator shall have the absolute discretion either to
grant options in accordance with the Discretionary Option Grant Program or to
effect stock issuances in accordance with the Stock Issuance Program.
E. The individuals who shall be eligible to participate in the
Automatic Option Grant Program shall be limited to (i) those individuals who
first become non-employee Board members on or after the Plan Effective Date,
whether through appointment by the Board or election by the Corporation's
stockholders, and (ii) those individuals who continue to serve as non-employee
Board members at one or more Annual Stockholders Meetings held after the Plan
Effective Date. A non-employee Board member who has previously been in the
employ of the Corporation (or any Parent or Subsidiary) shall not be eligible
to receive an option grant under the Automatic Option Grant Program at the
time he or she first becomes a non-employee Board member, but shall be
eligible to receive periodic option grants under the Automatic Option Grant
Program while he or she continues to serve as a non-employee Board member.
F. All non-employee Board members shall be eligible to participate in
the Director Fee Option Grant Program.
V.STOCK SUBJECT TO THE PLAN
A.The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The number of shares of Common Stock initially
reserved for issuance over the term of the Plan shall not exceed four million
six hundred thousand (4,600,000) shares. Such reserve shall consist of (i) the
number of shares estimated to remain available for issuance, as of the Plan
Effective Date, under the Predecessor Plan as last approved by the
Corporation's stockholders, including the shares subject to outstanding
options under the Predecessor Plan, (ii) plus an additional increase of one
million seven hundred thousand (1,700,000) shares.
B. The number of shares of Common Stock available for issuance under
the Plan shall automatically increase on the first trading day of January each
calendar year during the term of the Plan, beginning with calendar year 2001,
by an amount equal to four percent (4%) of the total number of shares of
Common Stock outstanding on the last trading day in December of the
immediately preceding calendar year, but in no event shall any such annual
increase exceed one million five hundred thousand (1,500,000) shares.
C. No one person participating in the Plan may receive stock options,
separately exercisable stock appreciation rights and direct stock issuances
for more than 1,000,000 shares of Common Stock in the aggregate per calendar
year.
D. Shares of Common Stock subject to outstanding options (including
options incorporated into this Plan from the Predecessor Plan) shall be
available for subsequent issuance under the Plan to the extent (i) those
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 Two. Unvested shares issued under the Plan and
subsequently cancelled or repurchased by the Corporation, at the original
issue price paid per share, pursuant to the Corporation's repurchase rights
under the Plan shall be added back to the number of shares of Common Stock
reserved for issuance under the Plan and shall accordingly be available for
reissuance through one or more subsequent option grants or direct stock
issuances under the Plan. However, should the exercise price of an option
under the Plan be paid with shares of Common Stock or should shares of Common
Stock otherwise issuable under the Plan be withheld by the Corporation in
satisfaction of the withholding taxes incurred in connection with the exercise
of an option or the vesting of a stock issuance under the Plan, then the
number of shares of Common Stock available for issuance under the Plan shall
be reduced by the gross number of shares for which the option is exercised or
which vest under the stock issuance, and not by the net number of shares of
Common Stock issued to the holder of such option or stock issuance. Shares of
Common Stock underlying one or more stock appreciation rights exercised under
Section IV of Article Two, Section III of Article Three, Section II of Article
Five or Section III of Article Six of the Plan shall not be available for
subsequent issuance under the Plan.
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E. If any change is made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made by the Plan Administrator to (i) the maximum number and/or class
of securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one person may be granted stock options, separately
exercisable stock appreciation rights and direct stock issuances under the
Plan per calendar year, (iii) the number and/or class of securities for which
grants are subsequently to be made under the Automatic Option Grant Program to
new and continuing non-employee Board members, (iv) the number and/or class of
securities and the exercise price per share in effect under each outstanding
option under the Plan, (v) the number and/or class of securities and exercise
price per share in effect under each outstanding option incorporated into this
Plan from the Predecessor Plan and (vi) the maximum number and/or class of
securities by which the share reserve is to increase automatically each
calendar year pursuant to the provisions of Section V.B of this Article One.
Such adjustments to the outstanding options are to be effected in a manner
which shall preclude the enlargement or dilution of rights and benefits under
such options. The adjustments determined by the Plan Administrator shall be
final, binding and conclusive.
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ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A.Exercise Price.
1.The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than one hundred percent (100%) of the
Fair Market Value per share of Common Stock on the option grant date.
2. The exercise price shall become immediately due upon exercise of
the option and shall, subject to the provisions of Section I of Article Seven
and the documents evidencing the option, be payable in one or more of the
forms specified below:
(i)cash or check made payable to the Corporation,
(ii)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
(iii)the extent the option is exercised for vested shares,
through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable instructions to (a) a
Corporation-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. However, no option shall have a term in excess of ten
(10) years measured from the option grant date.
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 or death:
(i)Any option outstanding at the time of the Optionee's cessation
of Service for any reason shall remain exercisable for such period of time
thereafter as shall be determined by the Plan Administrator and set forth
in the documents evidencing the option, but no such option shall be
exercisable after the expiration of the option term.
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(ii) Any option held by the Optionee at the time of death and
exercisable in whole or in part at that time may be subsequently exercised
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 the laws of inheritance or by the Optionee's designated beneficiary or
beneficiaries of that option.
(iii) Should the Optionee's Service be terminated for Misconduct
or should the Optionee otherwise engage in Misconduct while holding one or
more outstanding options under this Article Two, then all those options
shall terminate immediately and cease to be outstanding.
(iv) During the applicable post-Service exercise period, the
option may not be exercised in the aggregate for more than the number of
vested shares for which the option is exercisable on the date of the
Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for any vested shares
for which the option has not been exercised. However, the option shall,
immediately upon the Optionee's cessation of Service, terminate and cease
to be outstanding to the extent the option is not otherwise at that time
exercisable for vested shares.
2.The Plan Administrator shall have complete discretion, exercisable
either at the time an option is granted or at any time while the option
remains outstanding, to:
(i)extend the period of time for which the option is to remain
exercisable following the Optionee's cessation of Service from the limited
exercise 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 of the option term, and/or
(ii) permit the option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number of vested
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 installments in which the Optionee would have vested had the
Optionee continued in Service.
D.Stockholder Rights. The holder of an option shall have no stockholder
rights with respect to the shares subject to the option until such person
shall have exercised the option, paid the exercise price and become a holder
of record of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the discretion
to grant options which are exercisable for unvested shares of Common Stock.
Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such
repurchase right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares) shall
be established by the Plan Administrator and set forth in the document
evidencing such repurchase right.
F. Limited Transferability of Options. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and
shall not be assignable or transferable other than by will or the laws of
inheritance following the Optionee's death. Non-Statutory Options shall be
subject to the same restriction, except that a Non-Statutory Option may be
assigned in whole or in part during the Optionee's lifetime to one or more
members of the Optionee's family or to a trust established exclusively for one
or more such family members or to Optionee's former spouse, to the extent such
assignment is in connection with the Optionee's estate plan or pursuant to a
domestic relations order. 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 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. Notwithstanding the foregoing, the
Optionee may also designate one or more persons as the beneficiary or
beneficiaries of his or her outstanding options under this Article Two, and
those options shall, in accordance
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with such designation, automatically be transferred to such beneficiary or
beneficiaries upon the Optionee's death while holding those options. Such
beneficiary or beneficiaries shall take the transferred options subject to all
the terms and conditions of the applicable agreement evidencing each such
transferred option, including (without limitation) the limited time period
during which the option may be exercised following the Optionee's death.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive Options.
Except as modified by the provisions of this Section II, all the provisions of
Articles One, Two and Seven shall be applicable to Incentive Options. Options
which are specifically designated as Non-Statutory Options when issued under
the Plan shall not be subject to the terms of this Section II.
A.Eligibility. Incentive Options may only be granted to Employees.
B. 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 calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become
exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are granted.
C. 10% Stockholder. If any Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed
five (5) years measured from the option grant date.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A.In the event of any Corporate Transaction, each outstanding option,
issued pursuant to the 2000 Plan, under the Discretionary Option Grant Program
shall automatically partially accelerate so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
exercisable for the lesser of (i) the number of shares which are unvested and
unexercised or (ii) the number of shares equal to the shares that would have
otherwise vested had the Optionee provided Services for an additional twelve
(12) months from the effective date of the Corporate Transaction. The twelve
(12) month vesting acceleration shall be deemed to have occurred with respect
to the shares subject to the option that would have vested last, such that the
overall vesting schedule of the option is reduced by twelve (12) months. The
option may be exercised for any or all of those accelerated shares as fully
vested shares of Common Stock. However, an outstanding option shall not become
exercisable on such an accelerated basis if and to the extent: (i) such option
is, in connection with the Corporate Transaction, to be assumed by the
successor corporation (or parent thereof) or (ii) such option is to be
replaced with a cash incentive program of the successor corporation which
preserves the spread existing at the time of the Corporate Transaction on any
shares for which the option is not otherwise at that time exercisable and
provides for subsequent payout in accordance with the same exercise/vesting
schedule applicable to those option shares or (iii) the acceleration of such
option is subject to other limitations imposed by the Plan Administrator at
the time of the option grant.
B. In the event of any Corporate Transaction, each outstanding option
under the Discretionary Option Grant Program shall become exercisable for the
lesser of (i) the number of shares which are unvested and unexercised or (ii)
the number of shares equal to the shares that would have otherwise vested had
the Optionee provided Services for an additional twelve (12) months from the
effective date of the Corporate Transaction, in the event the Optionee's
employment is subsequently terminated not for Misconduct within six (6) months
following the effective date of any Corporate Transaction in which these
options are assumed and do not otherwise accelerate. The twelve (12) month
vesting acceleration shall be deemed to have occurred with respect to the
shares subject to the option that would have vested last, such that the
overall vesting schedule of the option is reduced by twelve (12) months.
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C. Outstanding repurchase rights under the Discretionary Option Grant
Program shall automatically partially terminate, and the shares of Common
Stock subject to those terminated rights shall immediately vest as if the
Participant had provided an additional twelve (12) months of Service in the
event of any Corporate Transaction, except to the extent: (i) those repurchase
rights are to be assigned to the successor corporation (or parent thereof) in
connection with such Corporate Transaction or (ii) such accelerated vesting is
precluded by other limitations imposed by the Plan Administrator at the time
the repurchase right is issued. In addition, the repurchase rights shall
terminate as if the Participant had provided an additional twelve (12) months
of Service if the Participant's employment should subsequently terminate by
reason of a termination not for Misconduct within six (6) months following the
effective date of any Corporate Transaction in which these repurchase rights
are assigned to the successor corporation (or parent thereof).
D. Immediately following the consummation of the Corporate Transaction,
all outstanding options under the Discretionary Option Grant Program shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof).
E. 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 which 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 to reflect such Corporate Transaction shall also be
made to (i) the exercise price payable per share under each outstanding
option, provided the aggregate exercise price payable for such securities
shall remain the same, (ii) the maximum number and/or class of securities
available for issuance over the remaining term of the Plan and (iii) the
maximum number and/or class of securities for which any one person may be
granted stock options, separately exercisable stock appreciation rights and
direct stock issuances under the Plan per calendar year and (iv) the maximum
number and/or class of securities by which the share reserve is to increase
automatically each calendar year. To the extent the actual holders of the
Corporation's outstanding Common Stock receive cash consideration for their
Common Stock in consummation of the Corporate Transaction, the successor
corporation may, in connection with the assumption of the outstanding options
under the Discretionary Option Grant Program, substitute one or more shares of
its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Corporate Transaction.
F. The Plan Administrator shall have the discretionary authority to
structure one or more outstanding options under the Discretionary Option Grant
Program so that those options shall, immediately prior to the effective date
of such Corporate Transaction, become exercisable for all the shares of Common
Stock at the time subject to those options and may be exercised for any or all
of those shares as fully vested shares of Common Stock, whether or not those
options are to be assumed in the Corporate Transaction. In addition, the Plan
Administrator shall have the discretionary authority to structure one or more
of the Corporation's repurchase rights under the Discretionary Option Grant
Program so that those rights shall not be assignable in connection with such
Corporate Transaction and shall accordingly terminate upon the consummation of
such Corporate Transaction, and the shares subject to those terminated rights
shall thereupon vest in full.
G. The Plan Administrator shall have full power and authority to
structure one or more outstanding options under the Discretionary Option Grant
Program so that those options shall become exercisable for all the shares of
Common Stock at the time subject to those options in the event the Optionee's
Service is subsequently terminated by reason of an Involuntary Termination
within a designated period (not to exceed eighteen (18) months) following the
effective date of any Corporate Transaction in which those options are assumed
and do not otherwise accelerate. In addition, the Plan Administrator may
structure one or more of the Corporation's repurchase rights so that those
rights shall immediately terminate with respect to any shares held by the
Optionee at the time of his or her Involuntary Termination, and the shares
subject to those terminated repurchase rights shall accordingly vest in full
at that time.
H. The Plan Administrator shall have the discretionary authority to
structure one or more outstanding options under the Discretionary Option Grant
Program so that those options shall, immediately prior to the effective date
of a Change in Control, become exercisable for all the shares of Common Stock
at the time subject to those options and may be exercised for any or all of
those shares as fully vested shares of Common Stock. In
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addition, the Plan Administrator shall have the discretionary authority to
structure one or more of the Corporation's repurchase rights under the
Discretionary Option Grant Program so that those rights shall terminate
automatically upon the consummation of such Change in Control, and the shares
subject to those terminated rights shall thereupon vest in full.
Alternatively, the Plan Administrator may condition the automatic acceleration
of one or more outstanding options under the Discretionary Option Grant
Program and the termination of one or more of the Corporation's outstanding
repurchase rights under such program upon the subsequent termination of the
Optionee's Service by reason of an Involuntary Termination within a designated
period (not to exceed eighteen (18) months) following the effective date of
such Change in Control.
I. 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
Nonstatutory Option under the Federal tax laws.
J. The outstanding options 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.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Discretionary Option
Grant Program (including outstanding options incorporated from the Predecessor
Plan) and to grant in substitution new options covering the same or a
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.
V.STOCK APPRECIATION RIGHTS
A.The Plan Administrator shall have full power and authority to grant to
selected Optionees tandem stock appreciation rights and/or limited stock
appreciation rights.
B.The following terms shall govern the grant and exercise of tandem
stock appreciation rights:
(i)One or more Optionees may be granted the right, exercisable upon
such terms as the Plan Administrator may establish, to elect between the
exercise of the underlying option for shares of Common Stock and the
surrender of that option in exchange for a distribution from the
Corporation in an amount equal to the excess of (a) the Fair Market Value
(on the option surrender date) of the number of shares in which the
Optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (b) the aggregate exercise price payable for such
shares.
(ii) No such option surrender shall be effective unless it is
approved by the Plan Administrator, either at the time of the actual option
surrender or at any earlier time. If the surrender is so approved, then the
distribution to which the Optionee shall be entitled may be made in shares
of Common Stock valued at Fair Market Value on the option surrender date,
in cash, or partly in shares and partly in cash, as the Plan Administrator
shall in its sole discretion deem appropriate.
(iii) If the surrender of an option is not approved by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee
had under the surrendered option (or surrendered portion thereof) on the
option surrender date and may exercise such rights at any time prior to the
later of (a) five (5) business days after the receipt of the rejection
notice or (b) the last day on which the option is otherwise exercisable in
accordance with the terms of the documents evidencing such option, but in
no event may such rights be exercised more than ten (10) years after the
option grant date.
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C.The following terms shall govern the grant and exercise of limited
stock appreciation rights:
(i)One or more Section 16 Insiders may be granted limited stock
appreciation rights with respect to their outstanding options.
(ii) Upon the occurrence of a Hostile Take-Over, each individual
holding one or more options with such a limited stock appreciation right
shall have the unconditional right (exercisable for a thirty (30)-day
period following such Hostile Take-Over) to surrender each such option to
the Corporation. In return for the surrendered option, the Optionee shall
receive a cash distribution from the Corporation in an amount equal to the
excess of (A) the Take-Over Price of the shares of Common Stock at the time
subject to such option (whether or not the option is otherwise at that time
exercisable for those shares) over (B) the aggregate exercise price payable
for those shares. Such cash distribution shall be paid within five (5) days
following the option surrender date.
(iii) At the time such limited stock appreciation right is granted,
the Plan Administrator shall pre-approve any subsequent exercise of that
right in accordance with the terms of this Paragraph C. Accordingly, no
further approval of the Plan Administrator or the Board shall be required
at the time of the actual option surrender and cash distribution.
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ARTICLE THREE
SALARY INVESTMENT OPTION GRANT PROGRAM
I.OPTION GRANTS
The Primary Committee shall have the sole and exclusive authority to
determine the calendar year or years (if any) for which the Salary Investment
Option Grant Program is to be in effect and to select the Section 16 Insiders
and other highly compensated Employees eligible to participate in the Salary
Investment Option Grant Program for such calendar year or years. Each selected
individual who elects to participate in the Salary Investment Option Grant
Program must, prior to the start of each calendar year of participation, file
with the Plan Administrator (or its designate) an irrevocable authorization
directing the Corporation to reduce his or her base salary for that calendar
year by an amount not less than Ten Thousand Dollars ($10,000.00) nor more
than Fifty Thousand Dollars ($50,000.00). Each individual who files such a
timely authorization shall automatically be granted an option under the Salary
Investment Grant Program on the first trading day in January of the calendar
year for which the salary reduction is to be in effect.
II. OPTION TERMS
Each option shall be a Non-Statutory Option evidenced by one or more
documents in the form approved by the Plan Administrator; provided, however,
that each such document shall comply with the terms specified below.
A.Exercise Price.
1.The exercise price per share shall be thirty-three and one-third
percent (33-1/3%) of the Fair Market Value per share of Common Stock on the
option grant date.
2. The exercise price shall become immediately due upon exercise of
the option and shall be payable in one or more of the alternative forms
authorized under the Discretionary Option Grant Program. Except to the extent
the sale and remittance procedure specified thereunder is utilized, payment of
the exercise price for the purchased shares must be made on the Exercise Date.
B.Number of Option Shares. The number of shares of Common Stock subject
to the option shall be determined pursuant to the following formula (rounded
down to the nearest whole number):
X = A + (B x 66 2/3%), where
X is the number of option shares,
A is the dollar amount by which the Optionee's base salary is to be
reduced for the calendar year pursuant to his or her election under the
Salary Investment Option Grant Program, and
B is the Fair Market Value per share of Common Stock on the option
grant date.
C.Exercise and Term of Options. The option shall become exercisable in
a series of twelve (12) successive equal monthly installments upon the
Optionee's completion of each calendar month of Service in the calendar year
for which the salary reduction is in effect. Each option shall have a maximum
term of ten (10) years measured from the option grant date.
D. Effect of Termination of Service. Should the Optionee cease Service
for any reason while holding one or more options under this Article Three,
then each such option shall remain exercisable, for any or all of the shares
for which the option is exercisable at the time of such cessation of Service,
until the earlier of (i) the expiration of the ten (10)-year option term or
(ii) the expiration of the three (3)-year period measured from the date of
such cessation of Service. Should the Optionee die while holding one or more
options under
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this Article Three, then each such option may be exercised, for any or all of
the shares for which the option is exercisable at the time of the Optionee's
cessation of Service (less any shares subsequently purchased by Optionee prior
to death), 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 the laws of inheritance or by the designated beneficiary or
beneficiaries of the option. Such right of exercise shall lapse, and the
option shall terminate, upon the earlier of (i) the expiration of the ten
(10)-year option term or (ii) the three (3)-year period measured from the date
of the Optionee's cessation of Service. However, the option shall, immediately
upon the Optionee's cessation of Service for any reason, terminate and cease
to remain outstanding with respect to any and all shares of Common Stock for
which the option is not otherwise at that time exercisable.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A.In the event of any Corporate Transaction while the Optionee remains
in Service, each outstanding option held by such Optionee under this Salary
Investment Option Grant Program shall automatically accelerate so that each
such option shall, immediately prior to the effective date of the Corporate
Transaction, become exercisable for all the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as
fully vested shares of Common Stock. Each such outstanding option shall
terminate immediately following the Corporate Transaction, except to the
extent assumed by the successor corporation (or parent thereof) in such
Corporate Transaction. Any option so assumed shall remain exercisable for the
fully vested shares until the earlier of (i) the expiration of the ten (10)-
year option term or (ii) the expiration of the three (3)-year period measured
from the date of the Optionee's cessation of Service.
B. In the event of a Change in Control while the Optionee remains in
Service, each outstanding option held by such Optionee under this Salary
Investment Option Grant Program shall automatically accelerate so that each
such option shall, immediately prior to the effective date of the Change in
Control, become exercisable for all the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as
fully vested shares of Common Stock. The option shall remain so exercisable
until the earliest to occur of (i) the expiration of the ten (10)-year option
term, (ii) the expiration of the three (3)-year period measured from the date
of the Optionee's cessation of Service, (iii) the termination of the option in
connection with a Corporate Transaction or (iv) the surrender of the option in
connection with a Hostile Take-Over.
C. Upon the occurrence of a Hostile Take-Over while the Optionee
remains in Service, such Optionee shall have a thirty (30)-day period in which
to surrender to the Corporation each outstanding option held by him or her
under the Salary Investment Option Grant Program. The Optionee shall in return
be entitled to a cash distribution from the Corporation in an amount equal to
the excess of (i) the Take-Over Price of the shares of Common Stock at the
time subject to the surrendered option (whether or not the option is otherwise
at the time exercisable for those shares) over (ii) the aggregate exercise
price payable for such shares. Such cash distribution shall be paid within
five (5) days following the surrender of the option to the Corporation. The
Primary Committee shall, at the time the option with such limited stock
appreciation right is granted under the Salary Investment Option Grant
Program, pre-approve any subsequent exercise of that right in accordance with
the terms of this Paragraph C. Accordingly, no further approval of the Primary
Committee or the Board shall be required at the time of the actual option
surrender and cash distribution.
D. 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 which 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 the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same. To the extent the actual
holders of the Corporation's outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Corporate
Transaction, the successor corporation may, in connection with the assumption
of the outstanding options under the Salary Investment Option Grant Program,
substitute one or more shares of its own common stock with a fair
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market value equivalent to the cash consideration paid per share of Common
Stock in such Corporate Transaction.
E. The grant of options under the Salary Investment Option Grant Program
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.
IV. REMAINING TERMS
The remaining terms of each option granted under the Salary Investment
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.
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ARTICLE FOUR
STOCK ISSUANCE PROGRAM
I.STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening option grants.
Each such stock issuance shall be evidenced by a Stock Issuance Agreement
which complies with the terms specified below. Shares of Common Stock may also
be issued under the Stock Issuance Program pursuant to share right awards
which entitle the recipients to receive those shares upon the attainment of
designated performance goals.
A.Purchase Price.
1.The purchase price per share 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 issuance date.
2. Subject to the provisions of Section I of Article Seven, shares
of Common Stock may be issued under the Stock Issuance Program for any of the
following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i)cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any Parent or
Subsidiary).
B.Vesting Provisions.
1.Shares of Common Stock issued under the Stock Issuance Program
may, in the discretion of the Plan Administrator, be fully and immediately
vested upon issuance or may vest in one or more installments over the
Participant's period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested
shares of Common Stock issued under the Stock Issuance Program shall be
determined by the Plan Administrator and incorporated into the Stock Issuance
Agreement. Shares of Common Stock may also be issued under the Stock Issuance
Program pursuant to share right awards which entitle the recipients to receive
those shares upon the attainment of designated performance goals.
2. Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock
and (ii) such escrow arrangements as the Plan Administrator shall deem
appropriate.
3. The Participant shall have full stockholder rights with respect
to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service while holding
one or more unvested shares of Common Stock issued under the Stock Issuance
Program or should the performance objectives not be attained with respect to
one or more such unvested shares of Common Stock, then those shares shall be
immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further stockholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the
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Corporation shall repay to the Participant the cash consideration paid for the
surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable to the
surrendered shares.
5. The Plan Administrator may in its discretion waive the surrender
and cancellation of one or more unvested shares of Common Stock which would
otherwise occur upon the cessation of the Participant's Service or the non-
attainment of the performance objectives applicable to those shares. Such
waiver shall result in the immediate vesting of the Participant's interest in
the shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.
6. Outstanding share right awards under the Stock Issuance Program
shall automatically terminate, and no shares of Common Stock shall actually be
issued in satisfaction of those awards, if the performance goals established
for such awards are not attained. The Plan Administrator, however, shall have
the discretionary authority to issue shares of Common Stock under one or more
outstanding share right awards as to which the designated performance goals
have not been attained.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL
A.The Corporation's outstanding repurchase rights under the Stock
Issuance Program shall partially terminate automatically, and the shares of
Common Stock subject to those terminated rights shall immediately vest as if
the Participant had provided an additional twelve (12) months of Service in
the event of any Corporate Transaction, except to the extent (i) those
repurchase rights are to be assigned to the successor corporation (or parent
thereof) in connection with such Corporate Transaction or (ii) such
accelerated vesting is precluded by other limitations imposed in the Stock
Issuance Agreement. In addition, the repurchase rights shall terminate as if
the Participant had provided an additional twelve (12) months of Service if
the Participant's employment should subsequently terminate by reason of a
termination not for Misconduct within six (6) months following the effective
date of any Corporate Transaction in which these repurchase rights are
assigned to the successor corporation (or parent thereof).
B. The Plan Administrator shall have the discretionary authority to
structure one or more of the Corporation's repurchase rights under the Stock
Issuance Program so that those rights shall automatically terminate in whole
or in part, and the shares of Common Stock subject to those terminated rights
shall immediately vest, in the event the Participant's Service should
subsequently terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Corporate Transaction in which those repurchase rights are
assigned to the successor corporation (or parent thereof).
C. The Plan Administrator shall also have the discretionary authority
to structure one or more of the Corporation's repurchase rights under the
Stock Issuance Program so that those rights shall automatically terminate in
whole or in part, and the shares of Common Stock subject to those terminated
rights shall immediately vest, either upon the occurrence of a Change in
Control or upon the subsequent termination of the Participant's Service by
reason of an Involuntary Termination within a designated period (not to exceed
eighteen (18) months) following the effective date of that Change in Control.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held in
escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends on
the certificates evidencing those unvested shares.
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ARTICLE FIVE
AUTOMATIC OPTION GRANT PROGRAM
I.OPTION TERMS
A.Grant Dates. Option grants shall be made on the dates specified
below:
1.Each individual who is first elected or appointed as a non-
employee Board member at any time on or after the Plan Effective Date shall
automatically be granted, on the date of such initial election or appointment,
a Non-Statutory Option to purchase 5,000 shares of Common Stock, provided that
individual has not previously been in the employ of the Corporation or any
Parent or Subsidiary.
2. On the date of each Annual Stockholders Meeting held after the
Plan Effective Date, each individual who is to continue to serve as a non-
employee Board member, whether or not that individual is standing for re-
election to the Board at that particular Annual Meeting, shall automatically
be granted a Non-Statutory Option to purchase 1,000 shares of Common Stock,
provided such individual has served as a non-employee Board member for at
least six (6) months. There shall be no limit on the number of such 1,000-
share option grants any one non-employee Board member may receive over his or
her period of Board service, and non-employee Board members who have
previously been in the employ of the Corporation (or any Parent or Subsidiary)
or who have otherwise received one or more stock option grants from the
Corporation prior to the Plan Effective Date shall be eligible to receive one
or more such annual option grants over their period of continued Board
service.
B.Exercise Price.
1.The exercise price per share shall be equal to one hundred percent
(100%) of the Fair Market Value per share of Common Stock on the option grant
date.
2. The exercise price shall be payable in one or more of the
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made
on the Exercise Date.
C.Option Term. Each option shall have a term of ten (10) years measured
from the option grant date.
D. Exercise and Vesting of Options. Each option shall be immediately
exercisable for any or all of the option shares. However, any unvested shares
purchased under the option shall be subject to repurchase by the Corporation,
at the exercise price paid per share, upon the Optionee's cessation of Board
service prior to vesting in those shares. The shares subject to each initial
5,000-share grant shall vest, and the Corporation's repurchase right shall
lapse, in a series of four (4) successive equal annual installments upon the
Optionee's completion of each year of service as a Board member over the four
(4)-year period measured from the option grant date. The shares subject to
each annual 1,000-share option grant shall vest in one installment upon the
Optionee's completion of the one (1)-year period of service measured from the
grant date.
E. Limited Transferability of Options. Each option under this Article
Five may be assigned in whole or in part during the Optionee's lifetime to one
or more members of the Optionee's family or to a trust established exclusively
for one or more such family members or to Optionee's former spouse, to the
extent such assignment is in connection with the Optionee's estate plan or
pursuant to a domestic relations order. 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 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. The Optionee may also
designate one or more persons as the beneficiary or beneficiaries of his or
her outstanding options under this Article Five, and those options shall, in
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accordance with such designation, automatically be transferred to such
beneficiary or beneficiaries upon the Optionee's death while holding those
options. Such beneficiary or beneficiaries shall take the transferred options
subject to all the terms and conditions of the applicable agreement evidencing
each such transferred option, including (without limitation) the limited time
period during which the option may be exercised following the Optionee's
death.
F. Termination of Board Service. The following provisions shall govern
the exercise of any options held by the Optionee at the time the Optionee
ceases to serve as a Board member:
(i)The Optionee (or, in the event of Optionee's death, the
personal representative of the Optionee's estate or the person or persons
to whom the option is transferred pursuant to the Optionee's will or the
laws of inheritance or the designated beneficiary or beneficiaries of such
option) shall have a twelve (12)-month period following the date of such
cessation of Board service in which to exercise each such option.
(ii) During the twelve (12)-month exercise period, the option may
not be exercised in the aggregate for more than the number of vested shares
of Common Stock for which the option is exercisable at the time of the
Optionee's cessation of Board service.
(iii) Should the Optionee cease to serve as a Board member by
reason of death or Permanent Disability, then all shares at the time
subject to the option shall immediately vest so that such option may,
during the twelve (12)-month exercise period following such cessation of
Board service, be exercised for any or all of those shares as fully vested
shares of Common Stock.
(iv) In no event shall the option remain exercisable after the
expiration of the option term. Upon the expiration of the twelve (12)-month
exercise period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for any vested shares
for which the option has not been exercised. However, the option shall,
immediately upon the Optionee's cessation of Board service for any reason
other than death or Permanent Disability, terminate and cease to be
outstanding to the extent the option is not otherwise at that time
exercisable for vested shares.
II. CORPORATE TRANSACTION/ CHANGE IN CONTROL/ HOSTILE TAKE-OVER
A.In the event of a Corporate Transaction while the Optionee remains a
Board member, the shares of Common Stock at the time subject to each
outstanding option held by such Optionee under this Automatic Option Grant
Program but not otherwise vested shall automatically vest in full so that each
such option shall, immediately prior to the effective date of the Corporate
Transaction, become exercisable for all the option shares as fully vested
shares of Common Stock and may be exercised for any or all of those vested
shares. Immediately following the consummation of the Corporate Transaction,
each automatic option grant shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation (or parent thereof).
B. In the event of a Change in Control while the Optionee remains a
Board member, the shares of Common Stock at the time subject to each
outstanding option held by such Optionee under this Automatic Option Grant
Program but not otherwise vested shall automatically vest in full so that each
such option shall, immediately prior to the effective date of the Change in
Control, become exercisable for all the option shares as fully vested shares
of Common Stock and may be exercised for any or all of those vested shares.
Each such option shall remain exercisable for such fully vested option shares
until the expiration or sooner termination of the option term or the surrender
of the option in connection with a Hostile Take-Over.
C. All outstanding repurchase rights under this under this Automatic
Option Grant Program shall automatically terminate, and the shares of Common
Stock subject to those terminated rights shall immediately vest in full, in
the event of any Corporate Transaction or Change in Control.
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D. Upon the occurrence of a Hostile Take-Over while the Optionee
remains a Board member, such Optionee shall have a thirty (30)-day period in
which to surrender to the Corporation each of his or her outstanding options
under this Automatic Option Grant Program. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to each surrendered option (whether or not the Optionee is otherwise
at the time vested in those shares) over (ii) the aggregate exercise price
payable for such shares. Such cash distribution shall be paid within five (5)
days following the surrender of the option to the Corporation. No approval or
consent of the Board or any Plan Administrator shall be required at the time
of the actual option surrender and cash distribution.
E. 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 which 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 the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same. To the extent the actual
holders of the Corporation's outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Corporate
Transaction, the successor corporation may, in connection with the assumption
of the outstanding options under the Automatic Option Grant Program,
substitute one or more shares of its own common stock with a fair market value
equivalent to the cash consideration paid per share of Common Stock in such
Corporate Transaction.
F. The grant of options under the Automatic Option Grant Program 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.
III. REMAINING TERMS
The remaining terms of each option granted under the Automatic Option
Grant Program shall be the same as the terms in effect for option grants made
under the Discretionary Option Grant Program.
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ARTICLE SIX
DIRECTOR FEE OPTION GRANT PROGRAM
I.OPTION GRANTS
The Primary Committee shall have the sole and exclusive authority to
determine the calendar year or years for which the Director Fee Option Grant
Program is to be in effect. For each such calendar year the program is in
effect, each non-employee Board member may irrevocably elect to apply all or
any portion of the annual retainer fee otherwise payable in cash for his or
her service on the Board for that year to the acquisition of a special option
grant under this Director Fee Option Grant Program. Such election must be
filed with the Corporation's Chief Financial Officer prior to the first day of
the calendar year for which the annual retainer fee which is the subject of
that election is otherwise payable. Each non-employee Board member who files
such a timely election shall automatically be granted an option under this
Director Fee Option Grant Program on the first trading day in January in the
calendar year for which the retainer fee election is in effect.
II. OPTION TERMS
Each option shall be a Non-Statutory Option governed by the terms and
conditions specified below.
A.Exercise Price.
1.The exercise price per share shall be thirty-three and one-third
percent (33-1/3%) of the Fair Market Value per share of Common Stock on the
option grant date.
2. The exercise price shall become immediately due upon exercise of
the option and shall be payable in one or more of the alternative forms
authorized under the Discretionary Option Grant Program. Except to the extent
the sale and remittance procedure specified thereunder is utilized, payment of
the exercise price for the purchased shares must be made on the Exercise Date.
B.Number of Option Shares. The number of shares of Common Stock subject
to the option shall be determined pursuant to the following formula (rounded
down to the nearest whole number):
X = A + (B x 66-2/3%), where
X is the number of option shares,
A is the portion of the annual retainer fee subject to the non-
employee Board member's election under this Director Fee Option Grant
Program, and
B is the Fair Market Value per share of Common Stock on the option
grant date.
C.Exercise and Term of Options. The option shall become exercisable in a
series of twelve (12) equal monthly installments upon the Optionee's
completion of each calendar month of Board service during the calendar year
for which the retainer fee election is in effect. Each option shall have a
maximum term of ten (10) years measured from the option grant date.
D. Limited Transferability of Options. Each option under this Article
Six may be assigned in whole or in part during the Optionee's lifetime to one
or more members of the Optionee's family or to a trust established exclusively
for one or more such family members or to Optionee's former spouse, to the
extent such assignment is in connection with Optionee's estate plan or
pursuant to a domestic relations order. 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 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
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Administrator may deem appropriate. The Optionee may also designate one or
more persons as the beneficiary or beneficiaries of his or her outstanding
options under this Article Six, and those options shall, in accordance with
such designation, automatically be transferred to such beneficiary or
beneficiaries upon the Optionee's death while holding those options. Such
beneficiary or beneficiaries shall take the transferred options subject to all
the terms and conditions of the applicable agreement evidencing each such
transferred option, including (without limitation) the limited time period
during which the option may be exercised following the Optionee's death.
E. Termination of Board Service. Should the Optionee cease Board
service for any reason (other than death or Permanent Disability) while
holding one or more options under this Director Fee Option Grant Program, then
each such option shall remain exercisable, for any or all of the shares for
which the option is exercisable at the time of such cessation of Board
service, until the earlier of (i) the expiration of the ten (10)-year option
term or (ii) the expiration of the three (3)-year period measured from the
date of such cessation of Board service. However, each option held by the
Optionee under this Director Fee Option Grant Program at the time of his or
her cessation of Board service shall immediately terminate and cease to remain
outstanding with respect to any and all shares of Common Stock for which the
option is not otherwise at that time exercisable.
F. Death or Permanent Disability. Should the Optionee's service as a
Board member cease by reason of death or Permanent Disability, then each
option held by such Optionee under this Director Fee Option Grant Program
shall immediately become exercisable for all the shares of Common Stock at the
time subject to that option, and the option may be exercised for any or all of
those shares as fully vested shares until the earlier of (i) the expiration of
the ten (10)-year option term or (ii) the expiration of the three (3)-year
period measured from the date of such cessation of Board service. To the
extent such option is held by the Optionee at the time of his or death, that
option may be exercised 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 the laws of inheritance or by the designated
beneficiary or beneficiaries of such option.
Should the Optionee die after cessation of Board service but while
holding one or more options under this Director Fee Option Grant Program, then
each such option may be exercised, for any or all of the shares for which the
option is exercisable at the time of the Optionee's cessation of Board service
(less any shares subsequently purchased by Optionee prior to death), 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 the laws
of inheritance or by the designated beneficiary or beneficiaries of such
option. Such right of exercise shall lapse, and the option shall terminate,
upon the earlier of (i) the expiration of the ten (10)-year option term or
(ii) the three (3)-year period measured from the date of the Optionee's
cessation of Board service.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A.In the event of any Corporate Transaction while the Optionee remains
a Board member, each outstanding option held by such Optionee under this
Director Fee Option Grant Program shall automatically accelerate so that each
such option shall, immediately prior to the effective date of the Corporate
Transaction, become exercisable for all the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as
fully vested shares of Common Stock. Each such outstanding option shall
terminate immediately following the Corporate Transaction, except to the
extent assumed by the successor corporation (or parent thereof) in such
Corporate Transaction. Any option so assumed and shall remain exercisable for
the fully vested shares until the earlier of (i) the expiration of the ten
(10)-year option term or (ii) the expiration of the three (3)-year period
measured from the date of the Optionee's cessation of Board service.
B. In the event of a Change in Control while the Optionee remains a
Board member, each outstanding option held by such Optionee under this
Director Fee Option Grant Program shall automatically accelerate so that each
such option shall, immediately prior to the effective date of the Change in
Control, become exercisable for all the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as
fully vested shares of Common Stock. The option shall remain so exercisable
until the earliest to
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occur of (i) the expiration of the ten (10)-year option term, (ii) the
expiration of the three (3)-year period measured from the date of the
Optionee's cessation of Board service, (iii) the termination of the option in
connection with a Corporate Transaction or (iv) the surrender of the option in
connection with a Hostile Take-Over.
C. Upon the occurrence of a Hostile Take-Over while the Optionee
remains a Board member, such Optionee shall have a thirty (30)-day period in
which to surrender to the Corporation each outstanding option held by him or
her under the Director Fee Option Grant Program. The Optionee shall in return
be entitled to a cash distribution from the Corporation in an amount equal to
the excess of (i) the Take-Over Price of the shares of Common Stock at the
time subject to each surrendered option (whether or not the option is
otherwise at the time exercisable for those shares) over (ii) the aggregate
exercise price payable for such shares. Such cash distribution shall be paid
within five (5) days following the surrender of the option to the Corporation.
No approval or consent of the Board or any Plan Administrator shall be
required at the time of the actual option surrender and cash distribution.
D. 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 which 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 the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same. To the extent the actual
holders of the Corporation's outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Corporate
Transaction, the successor corporation may, in connection with the assumption
of the outstanding options under the Director Fee Option Grant Program,
substitute one or more shares of its own common stock with a fair market value
equivalent to the cash consideration paid per share of Common Stock in such
Corporate Transaction.
E. The grant of options under the Director Fee Option Grant Program
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.
IV. REMAINING TERMS
The remaining terms of each option granted under this Director Fee
Option Grant Program shall be the same as the terms in effect for option
grants made under the Discretionary Option Grant Program.
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ARTICLE SEVEN
MISCELLANEOUS
I.FINANCING
The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price under the Discretionary Option Grant Program or the
purchase price of shares issued under the Stock Issuance Program by delivering
a full-recourse, interest-bearing promissory note payable in one or more
installments. The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Plan
Administrator in its sole discretion. In no event may the maximum credit
available to the Optionee or Participant exceed the sum of (i) the aggregate
option exercise price or purchase price payable for the purchased shares (less
the par value of such shares) plus (ii) any Federal, state and local income
and employment tax liability incurred by the Optionee or the Participant in
connection with the option exercise or share purchase.
II.TAX WITHHOLDING
A.The Corporation's obligation to deliver shares of Common Stock upon
the exercise of options or the issuance or vesting of such shares under the
Plan shall be subject to the satisfaction of all applicable Federal, state and
local income and employment tax withholding requirements.
B.The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan (other than the options granted or the shares issued under the Automatic
Option Grant or Director Fee Option Grant Program) with the right to use
shares of Common Stock in satisfaction of all or part of the Withholding Taxes
to which such holders may become subject in connection with the exercise of
their options or the vesting of their shares. Such right may be provided to
any such holder in either or both of the following formats:
Stock Withholding: The election to have the Corporation withhold,
from the shares of Common Stock otherwise issuable upon the exercise of such
Non-Statutory Option or the vesting of such shares, a portion of those shares
with an aggregate Fair Market Value equal to the percentage of the Withholding
Taxes (not to exceed one hundred percent (100%)) designated by the holder.
Stock Delivery: The election to deliver to the Corporation, at the
time the Non-Statutory Option is exercised or the shares vest, one or more
shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the
Withholding Taxes) with an aggregate Fair Market Value equal to the percentage
of the Withholding Taxes (not to exceed one hundred percent (100%)) designated
by the holder.
III.EFFECTIVE DATE AND TERM OF THE PLAN
A.The Plan shall become effective immediately on the Plan Effective
Date. However, the Salary Investment Option Grant Program and the Director Fee
Option Grant Program shall not be implemented until such time as the Primary
Committee may deem appropriate. Options may be granted under the Discretionary
Option Grant at any time on or after the Plan Effective Date, and the initial
option grants under the Automatic Option Grant Program shall also be made on
the Plan Effective Date to any non-employee Board members eligible for such
grants at that time. However, no options granted under the Plan may be
exercised, and no shares shall be issued under the Plan, until the Plan is
approved by the Corporation's stockholders. If such stockholder approval is
not obtained within twelve (12) months after the Plan Effective Date, then all
options previously granted under this Plan shall terminate and cease to be
outstanding, and no further options shall be granted and no shares shall be
issued under the Plan.
B.The Plan shall serve as the successor to the Predecessor Plan, and no
further option grants or direct stock issuances shall be made under the
Predecessor Plan after the Plan Effective Date. All options outstanding under
the Predecessor Plan on the Plan Effective Date shall be incorporated into the
Plan at that time and shall be treated as outstanding options under the Plan.
However, each outstanding option so incorporated shall continue
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to be governed solely by the terms of the documents evidencing such option,
and no provision of the Plan shall be deemed to affect or otherwise modify the
rights or obligations of the holders of such incorporated options with respect
to their acquisition of shares of Common Stock.
C.One or more provisions of the Plan, including (without limitation)
the option/vesting acceleration provisions of Article Two relating to
Corporate Transactions and Changes in Control, may, in the Plan
Administrator's discretion, be extended to one or more options incorporated
from the Predecessor Plan which do not otherwise contain such provisions.
D.The Plan shall terminate upon the earliest to occur of (i) March 29,
2010, (ii) the date on which all shares available for issuance under the Plan
shall have been issued as fully vested shares or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. Should the
Plan terminate on March 29, 2010, then all option grants and unvested stock
issuances outstanding at that time shall continue to have force and effect in
accordance with the provisions of the documents evidencing such grants or
issuances.
IV. AMENDMENT OF THE PLAN
A.The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
stock options or unvested stock issuances at the time outstanding under the
Plan unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.
B.Options to purchase shares of Common Stock may be granted under the
Discretionary Option Grant and Salary Investment Option Grant Programs and
shares of Common Stock may be issued under the Stock Issuance Program that are
in each instance in excess of the number of shares then available for issuance
under the Plan, provided any excess shares actually issued under those
programs shall be held in escrow until there is obtained stockholder approval
of an amendment sufficiently increasing the number of shares of Common Stock
available for issuance under the Plan. If such stockholder approval is not
obtained within twelve (12) months after the date the first such excess
issuances are made, then (i) any unexercised options granted on the basis of
such excess shares shall terminate and cease to be outstanding and (ii) the
Corporation shall promptly refund to the Optionees and the Participants the
exercise or purchase price paid for any excess shares issued under the Plan
and held in escrow, together with interest (at the applicable Short Term
Federal Rate) for the period the shares were held in escrow, and such shares
shall thereupon be automatically cancelled and cease to be outstanding.
V. 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.
VI. REGULATORY APPROVALS
A.The implementation of the Plan, the granting of any stock option
under the Plan and the issuance of any shares of Common Stock (i) upon the
exercise of any granted option or (ii) under the Stock Issuance Program shall
be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
stock options granted under it and the shares of Common Stock issued pursuant
to it.
B.No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance
with all applicable requirements of Federal and state securities laws,
including the filing and effectiveness of the Form S-8 registration statement
for the shares of Common Stock issuable under the Plan, and all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which Common Stock is then listed for trading.
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VII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the Participant
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by
each, to terminate such person's Service at any time for any reason, with or
without cause.
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APPENDIX
The following definitions shall be in effect under the Plan:
A.Automatic Option Grant Program shall mean the automatic option grant
program in effect under Article Five of the Plan.
B.Board shall mean the Corporation's Board of Directors.
C.Change in Control shall mean a change in ownership or control of the
Corporation effected through 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, 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.
D.Code shall mean the Internal Revenue Code of 1986, as amended.
E.Common Stock shall mean the Corporation's common stock.
F.Corporate Transaction shall mean either of the following stockholder-
approved transactions to which the Corporation is a party:
(i)a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to
such transaction, 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.
G.Corporation shall mean LifeMinders.com, Inc., a Delaware corporation,
and any corporate successor to all or substantially all of the assets or
voting stock of LifeMinders.com, Inc. which shall by appropriate action adopt
the Plan.
H.Director Fee Option Grant Program shall mean the special stock option
grant in effect for non-employee Board members under Article Six of the Plan.
I.Discretionary Option Grant Program shall mean the discretionary
option grant program in effect under Article Two of the Plan.
J.Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and
direction of the employer entity as to both the work to be performed and the
manner and method of performance.
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K.Exercise Date shall mean the date on which the Corporation shall have
received written notice of the option exercise.
L.Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i)If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market and published in The Wall Street Journal. If there is no
closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(ii)If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange and published in The Wall Street Journal. 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.
M.Hostile Take-Over shall mean 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.
N.Incentive Option shall mean an option which satisfies the requirements
of Code Section 422.
O.Involuntary Termination shall mean the termination of the Service of
any individual which occurs by reason of:
(i)such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii)such individual's voluntary resignation following (A) a change
in his or her position with the Corporation which materially reduces his or
her duties and responsibilities or the level of management to which he or
she reports, (B) a reduction in his or her level of compensation (including
base salary, fringe benefits and target bonus under any 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.
P.Misconduct shall mean the commission of any act of fraud, embezzlement
or dishonesty by the Optionee or Participant, any unauthorized use or
disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any 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, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).
Q.1934 Act shall mean the Securities Exchange Act of 1934, as amended.
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R.Non-Statutory Option shall mean an option not intended to satisfy the
requirements of Code Section 422.
S.Optionee shall mean any person to whom an option is granted under the
Discretionary Option Grant, Salary Investment Option Grant, Automatic Option
Grant or Director Fee Option Grant Program.
T.Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
U.Participant shall mean any person who is issued shares of Common Stock
under the Stock Issuance Program.
V.Permanent Disability or Permanently Disabled shall mean the inability
of the Optionee or the Participant to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
expected to result in death or to be of continuous duration of twelve (12)
months or more. However, solely for purposes of the Automatic Option Grant and
Director Fee Option Grant Programs, Permanent Disability or Permanently
Disabled shall mean the inability of the non-employee Board member to perform
his or her usual duties as a Board member by reason of any medically
determinable physical or mental impairment expected to result in death or to
be of continuous duration of twelve (12) months or more.
W.Plan shall mean the Corporation's 2000 Stock Incentive Plan, as set
forth in this document.
X.Plan Administrator shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized
to administer the Discretionary Option Grant and Stock Issuance Programs with
respect to one or more classes of eligible persons, to the extent such entity
is carrying out its administrative functions under those programs with respect
to the persons under its jurisdiction.
Y.Plan Effective Date shall mean the date the Plan is initially approved
by the stockholders.
Z.Predecessor Plan shall mean the Corporation's 1998 Stock Option Plan
in effect immediately prior to the Plan Effective Date hereunder.
AA. Primary Committee shall mean the committee of two (2) or more non-
employee Board members appointed by the Board to administer the Discretionary
Option Grant and Stock Issuance Programs with respect to Section 16 Insiders
and to administer the Salary Investment Option Grant Program solely with
respect to the selection of the eligible individuals who may participate in
such program.
BB. Salary Investment Option Grant Program shall mean the salary
investment option grant program in effect under Article Three of the Plan.
CC.Secondary Committee shall mean a committee of one or more Board
members appointed by the Board to administer the Discretionary Option Grant
and Stock Issuance Programs with respect to eligible persons other than
Section 16 Insiders.
DD.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.
EE.Service shall mean the performance of services for the Corporation
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant or stock issuance.
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FF.Stock Exchange shall mean either the American Stock Exchange or the
New York Stock Exchange.
GG.Stock Issuance Agreement shall mean the agreement entered into by
the Corporation and the Participant at the time of issuance of shares of
Common Stock under the Stock Issuance Program.
HH.Stock Issuance Program shall mean the stock issuance program in
effect under Article Four of the Plan.
II.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.
JJ.Take-Over Price shall mean the greater of (i) the Fair Market Value
per hare of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest
reported price per share of Common Stock paid by the tender offeror in
effecting such Hostile Take-Over. However, if the surrendered option is an
Incentive Option, the Take-Over Price shall not exceed the clause (i) price
per share.
KK.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).
LL.Withholding Taxes shall mean the Federal, state and local income and
employment withholding taxes to which the holder of Non-Statutory Options or
unvested shares of Common Stock may become subject in connection with the
exercise of those options or the vesting of those shares.
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Appendix B
LIFEMINDERS.COM, INC.
EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the interests of
LifeMinders.com, Inc., a Delaware corporation, by providing eligible employees
with the opportunity to acquire a proprietary interest in the Corporation
through participation in a payroll deduction-based employee stock purchase
plan designed to qualify under Section 423 of the Code. Capitalized terms
herein shall have the meanings assigned to such terms in the attached
Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and construe
any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock, including shares of Common Stock
purchased on the open market. The number of shares of Common Stock reserved
for issuance over the term of the Plan shall be limited to Two Hundred Fifty
Thousand (250,000) shares.
B. The number of shares of Common Stock available for issuance under
the Plan shall automatically increase on the first trading day of January each
calendar year during the term of the Plan, beginning with calendar year 2001,
by an amount equal to one-quarter of one percent (.25%) of the total number of
shares of Common Stock outstanding on the last trading day in December of the
immediately preceding calendar year, but in no event shall any such annual
increase exceed 70,000 shares.
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 class of securities issuable under
the Plan, (ii) the maximum number and class of securities purchasable per
Participant on any one Purchase Date, (iii) the maximum number and class of
securities purchasable in total by all Participants on any one Purchase Date,
and (iv) the number and class of securities and the price per share in effect
under each outstanding purchase right in order to prevent the dilution or
enlargement of benefits thereunder.
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under the Plan
through a series of overlapping offering periods until such time as (i) the
shares of Common Stock available for issuance under the Plan shall have been
purchased or (ii) the Plan shall have been sooner terminated.
B. Each offering period shall be of such duration (not to exceed
twenty-four (24) months) as determined by the Plan Administrator prior to the
start date of such offering period. Offering periods shall commence at
quarterly intervals on the first business day of May, August, November and
February each year over the term of the Plan. Accordingly, four (4) separate
offering periods shall commence in each calendar year the Plan remains in
existence unless the Board otherwise determines prior to the start of any new
offering period. However, the initial offering period shall commence at the
Plan Effective Date and terminate on the last business day in April 2002.
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C. Each offering period shall consist of a series of one or more
successive Purchase Intervals. Purchase Intervals shall run from the first
business day in May to the last business day in October each year, from the
first business day in August to the last business day in January of the
following year, from the first business day in November to the last business
day in April each year and from the first business day in February each year
to the last business day in July each year. However, the first Purchase
Interval in effect under the initial offering period shall commence at the
Plan Effective Date and terminate on the last business day in October 2000.
V.ELIGIBILITY
A. Each individual who is an Eligible Employee on the start date of any
offering period under the Plan may enter that offering period on such start
date. However, an Eligible Employees may participate in only one offering
period at a time.
B. An Eligible Employee must, in order to participate in a particular
offering period, complete the enrollment forms prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization) and file such forms with the Plan Administrator (or its
designate) on or before the start date of that offering period.
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock during an offering period may be any multiple
of one percent (1%) of the Cash Earnings paid to the Participant during each
Purchase Interval within that offering period, up to a maximum of ten percent
(10%). The deduction rate so authorized shall continue in effect throughout
the offering period, except to the extent such rate is changed in accordance
with the following guidelines:
(i) The Participant may, at any time during the offering period,
reduce his or her rate of payroll deduction to become effective as soon as
possible after filing the appropriate form with the Plan Administrator. The
Participant may not, however, effect more than one (1) such reduction per
Purchase Interval.
(ii) The Participant may, prior to the commencement of any new
Purchase Interval within the offering period, increase the rate of his or
her payroll deduction by filing the appropriate form with the Plan
Administrator. The new rate (which may not exceed the ten percent (10%)
maximum) shall become effective on the start date of the first Purchase
Interval following the filing of such form.
B. Payroll deductions shall begin on the first pay day administratively
feasible following the start date of the offering period and shall (unless
sooner terminated by the Participant) continue through the pay day ending with
or immediately prior to the last day of that offering period. The amounts so
collected shall be credited to the Participant's book account under the Plan,
but no interest shall be paid on the balance from time to time outstanding in
such account. The amounts collected from the Participant shall not be required
to be held in any segregated account or trust fund and may be commingled with
the general assets of the Corporation and used for general corporate purposes.
C. Payroll deductions shall automatically cease upon the termination of
the Participant's purchase right in accordance with the provisions of the
Plan.
D. The Participant's acquisition of Common Stock under the Plan on any
Purchase Date shall neither limit nor require the Participant's acquisition of
Common Stock on any subsequent Purchase Date, whether within the same or a
different offering period.
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VII. PURCHASE RIGHTS
A. Grant of Purchase Rights. A Participant shall be granted a separate
purchase right for each offering period in which he or she is enrolled. The
purchase right shall be granted on the start date of the offering period and
shall provide the Participant with the right to purchase shares of Common
Stock, in a series of successive installments during that offering period,
upon the terms set forth below. The Participant shall execute a stock purchase
agreement embodying such terms and such other provisions (not inconsistent
with the Plan) as the Plan Administrator may deem advisable.
Under no circumstances shall purchase rights be granted under the Plan
to any Eligible Employee if such individual would, immediately after the
grant, own (within the meaning of Code Section 424(d)) or hold outstanding
options or other rights to purchase, stock possessing five percent (5%) or
more of the total combined voting power or value of all classes of stock of
the Corporation or any Corporate Affiliate.
B. Exercise of the Purchase Right. Each purchase right shall be
automatically exercised in installments on each successive Purchase Date
within the offering period, and shares of Common Stock shall accordingly be
purchased on behalf of each Participant on each such Purchase Date. The
purchase shall be effected by applying the Participant's payroll deductions
for the Purchase Interval ending on such Purchase Date to the purchase of
whole shares of Common Stock at the purchase price in effect for the
Participant for that Purchase Date.
C. Purchase Price. The purchase price per share at which Common Stock
will be purchased on the Participant's behalf on each Purchase Date within the
particular offering period in which he or she is enrolled shall be equal to
eighty-five percent (85%) of the lower of (i) the Fair Market Value per share
of Common Stock on the start date of that offering period or (ii) the Fair
Market Value per share of Common Stock on that Purchase Date.
D. Number of Purchasable Shares. The number of shares of Common Stock
purchasable by a Participant on each Purchase Date during the particular
offering period in which he or she is enrolled shall be the number of whole
shares obtained by dividing the amount collected from the Participant through
payroll deductions during the Purchase Interval ending with that Purchase Date
by the purchase price in effect for the Participant for that Purchase Date.
However, the maximum number of shares of Common Stock purchasable per
Participant on any one Purchase Date shall not exceed One Thousand (1,000)
shares, subject to periodic adjustments in the event of certain changes in the
Corporation's capitalization. In addition, the maximum number of shares of
Common Stock purchasable in total by all Participants in the Plan on any one
Purchase Date shall not exceed Sixty-Two Thousand Five Hundred (62,500)
shares, subject to periodic adjustments in the event of certain changes in the
Corporation's capitalization. However, the Plan Administrator shall have the
discretionary authority, exercisable prior to the start of any offering period
under the Plan, to increase or decrease the limitations to be in effect for
the number of shares purchasable per Participant and in total by all
Participants enrolled in that particular offering period on each Purchase Date
which occurs during that offering period.
E. Excess Payroll Deductions. Any payroll deductions not applied to the
purchase of shares of Common Stock on any Purchase Date because they are not
sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable per Participant or in
total by all Participants on the Purchase Date shall be promptly refunded.
F. Termination of Purchase Right. The following provisions shall govern
the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the next scheduled
Purchase Date in the offering period in which he or she is enrolled,
terminate his or her outstanding purchase right by filing the appropriate
form with the Plan Administrator (or its designate), and no further payroll
deductions shall be
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collected from the Participant with respect to the terminated purchase
right. Any payroll deductions collected during the Purchase Interval in
which such termination occurs shall, at the Participant's election, be
immediately refunded or held for the purchase of shares on the next
Purchase Date. If no such election is made at the time such purchase right
is terminated, then the payroll deductions collected with respect to the
terminated right shall be refunded as soon as possible.
(ii) The termination of such purchase right shall be irrevocable,
and the Participant may not subsequently rejoin the offering period for
which the terminated purchase right was granted. In order to resume
participation in any subsequent offering period, such individual must re-
enroll in the Plan (by making a timely filing of the prescribed enrollment
forms) on or before the start date of that offering period.
(iii) Should the Participant cease to remain an Eligible Employee
for any reason (including death, disability or change in status) while his
or her purchase right remains outstanding, then that purchase
right shall immediately terminate, and all of the Participant's payroll
deductions for the Purchase Interval in which the purchase right so
terminates shall be immediately refunded. However, should the Participant
cease to remain in active service by reason of an approved unpaid leave of
absence, then the Participant shall have the right, exercisable up until
the last business day of the Purchase Interval in which such leave
commences, to (a) withdraw all the payroll deductions collected to date on
his or her behalf for that Purchase Interval or (b) have such funds held
for the purchase of shares on his or her behalf on the next scheduled
Purchase Date. In no event, however, shall any further payroll deductions
be collected on the Participant's behalf during such leave. Upon the
Participant's return to active service (x) within ninety (90) days
following the commencement of such leave or (y) prior to the expiration of
any longer period for which such Participant's right to reemployment with
the Corporation is guaranteed by statute or contract, his or her payroll
deductions under the Plan shall automatically resume at the rate in effect
at the time the leave began, unless the Participant withdraws from the Plan
prior to his or her return. An individual who returns to active employment
following a leave of absence that exceeds in duration the applicable (x) or
(y) time period will be treated as a new Employee for purposes of
subsequent participation in the Plan and must accordingly re-enroll in the
Plan (by making a timely filing of the prescribed enrollment forms) on or
before the start date of any subsequent offering period in which he or she
wishes to participate.
G. Change in Control. Each outstanding purchase right shall
automatically be exercised, immediately prior to the effective date of any
Change in Control, by applying the payroll deductions of each Participant for
the Purchase Interval in which such Change in Control occurs to the purchase
of whole shares of Common Stock at a purchase price per share equal to eighty-
five percent (85%) of the lower of (i) the Fair Market Value per share of
Common Stock on the start date of the offering period in which such individual
is enrolled at the time of such Change in Control or (ii) the Fair Market
Value per share of Common Stock immediately prior to the effective date of
such Change in Control. However, the applicable limitation on the number of
shares of Common Stock purchasable per Participant shall continue to apply to
any such purchase, but not the limitation applicable to the maximum number of
shares of Common Stock purchasable in total by all Participants on any one
Purchase Date.
The Corporation shall use its best efforts to provide at least ten (10)
days' prior written notice of the occurrence of any Change in Control, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Change in Control.
H. Proration of Purchase Rights. Should the total number of shares of
Common Stock to be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual,
shall be refunded.
I. Assignability. The purchase right shall be exercisable only by the
Participant and shall not be assignable or transferable by the Participant.
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J. Stockholder Rights. A Participant shall have no stockholder rights
with respect to the shares subject to his or her outstanding purchase right
until the shares are purchased on the Participant's behalf in accordance with
the provisions of the Plan and the Participant has become a holder of record
of the purchased shares.
VIII. ACCRUAL LIMITATIONS
A.No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any purchase right outstanding under this Plan if and to the
extent such accrual, when aggregated with (i) rights to purchase Common Stock
accrued under any other purchase right granted under this Plan and (ii)
similar rights accrued under other employee stock purchase plans (within the
meaning of Code Section 423)) of the Corporation or any Corporate Affiliate,
would otherwise permit such Participant to purchase more than Twenty-
Five Thousand Dollars ($25,000.00) worth of stock of the Corporation or any
Corporate Affiliate (determined on the basis of the Fair Market Value per
share on the date or dates such rights are granted) for each calendar year
such rights are at any time outstanding.
B. For purposes of applying such accrual limitations to the purchase
rights granted under the Plan, the following provisions shall be in effect:
(i) The right to acquire Common Stock under each outstanding
purchase right shall accrue in a series of installments on each successive
Purchase Date during the offering period in which such right remains
outstanding.
(ii) No right to acquire Common Stock under any outstanding purchase
right shall accrue to the extent the Participant has already accrued in the
same calendar year the right to acquire Common Stock under one or more
other purchase rights at a rate equal to Twenty-Five Thousand Dollars
($25,000.00) worth of Common Stock (determined on the basis of the Fair
Market Value per share on the date or dates of grant) for each calendar
year such rights were at any time outstanding.
C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular Purchase Interval, then the
payroll deductions that the Participant made during that Purchase Interval
with respect to such purchase right shall be promptly refunded.
D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on May 4, 2000, and shall become
effective at the Plan Effective Date, provided no purchase rights granted
under the Plan shall be exercised, and no shares of Common Stock shall be
issued hereunder, until (i) the Plan shall have been approved by the
stockholders of the Corporation and (ii) the Corporation shall have complied
with all applicable requirements of the 1933 Act (including the registration
of the shares of Common Stock issuable under the Plan on a Form S-8
registration statement filed with the Securities and Exchange Commission), all
applicable listing requirements of any stock exchange (or the Nasdaq National
Market, if applicable) on which the Common Stock is listed for trading and all
other applicable requirements established by law or regulation. In the event
such stockholder approval is not obtained, or such compliance is not effected,
within twelve (12) months after the date on which the Plan is adopted by the
Board, the Plan shall terminate and have no further force or effect, and all
sums collected from Participants during the initial offering period hereunder
shall be refunded.
B. Unless sooner terminated by the Board, the Plan shall terminate upon
the earliest of (i) the last business day in April 2010, (ii) the date on
which all shares available for issuance under the Plan shall have been sold
pursuant to purchase rights exercised under the Plan or (iii) the date on
which all purchase rights are exercised in connection with a Change in
Control. No further purchase rights shall be granted or exercised, and no
further payroll deductions shall be collected, under the Plan following such
termination.
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X. AMENDMENT OF THE PLAN
A. The Board may alter, amend, suspend or terminate the Plan at any
time to become effective immediately following the close of any Purchase
Interval. However, the Plan may be amended or terminated immediately upon
Board action, if and to the extent necessary to assure that the Corporation
will not recognize, for financial reporting purposes, any compensation expense
in connection with the shares of Common Stock offered for purchase under the
Plan, should the financial accounting rules applicable to the Plan at the Plan
Effective Date be subsequently revised so as to require the Corporation to
recognize compensation expense in the absence of such amendment or
termination.
B. In no event may the Board effect any of the following amendments or
revisions to the Plan without the approval of the Corporation's stockholders:
(i) increase the number of shares of Common Stock issuable under the Plan,
except for permissible adjustments in the event of certain changes in the
Corporation's capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock purchasable
under the Plan or (iii) modify the eligibility requirements for participation
in the Plan.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the Plan
shall be paid by the Corporation; however, each Plan Participant shall bear
all costs and expenses incurred by such individual in the sale or other
disposition of any shares purchased under the Plan.
B. Nothing in the Plan shall confer upon the Participant any right to
continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such
person) or of the Participant, which rights are hereby expressly reserved by
each, to terminate such person's employment at any time for any reason, with
or without cause.
C. The provisions of the Plan shall be governed by the laws of the
State of California without resort to that State's conflict-of-laws rules.
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Schedule A
Corporations Participating in
Employee Stock Purchase Plan
As of the Plan Effective Date
LifeMinders.com, Inc.
Please RSVP.com WITI Corporation
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APPENDIX
The following definitions shall be in effect under the Plan:
A.Annual Meeting shall mean the Corporation's annual meeting of
stockholders held on May 4, 2000 and any adjournments thereof.
B.Board shall mean the Corporation's Board of Directors.
C.Cash Earnings shall mean (i) the regular base salary paid to a
Participant by one or more Participating Companies during such individual's
period of participation in one or more offering periods under the Plan plus
(ii) all overtime payments, bonuses, commissions, profit-sharing distributions
or other incentive-type payments received during such period. Such Cash
Earnings shall be calculated before deduction of (A) any income or employment
tax withholdings or (B) any contributions made by the Participant to any Code
Section 401(k) salary deferral plan or any Code Section 125 cafeteria benefit
program now or hereafter established by the Corporation or any Corporate
Affiliate. However, Cash Earnings shall not include any contributions made by
the Corporation or any Corporate Affiliate on the Participant's behalf to any
employee benefit or welfare plan now or hereafter established (other than Code
Section 401(k) or Code Section 125 contributions deducted from such Cash
Earnings).
D.Change in Control shall mean a change in ownership of the Corporation
pursuant to any of the following transactions:
(i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to
such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the assets of the Corporation in complete liquidation or dissolution
of the Corporation, or
(iii) the acquisition, directly or indirectly, by a 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.
E.Code shall mean the Internal Revenue Code of 1986, as amended.
F.Common Stock shall mean the Corporation's common stock.
G.Corporate Affiliate shall mean any parent or subsidiary corporation
of the Corporation (as determined in accordance with Code Section 424),
whether now existing or subsequently established.
H.Corporation shall mean LifeMinders.com, Inc., a Delaware corporation,
and any corporate successor to all or substantially all of the assets or
voting stock of LifeMinders.com, Inc. that shall by appropriate action adopt
the Plan.
I.Eligible Employee shall mean any person who is employed by a
Participating Corporation on a basis under which he or she is regularly
expected to render more than twenty (20) hours of service per week for more
than five (5) months per calendar year for earnings considered wages under
Code Section 3401 (a).
J.Fair Market Value per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question, as such
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<PAGE>
price is reported by the National Association of Securities Dealers on the
Nasdaq National Market and published in The Wall Street Journal. If there
is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange and published in The Wall Street Journal. If
there is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
(iii) For purposes of the initial offering period that begins at the
Plan Effective Date, the Fair Market Value shall be deemed to be equal to
the price per share at which the Common Stock is sold in the initial public
offering pursuant to the Underwriting Agreement.
K. 1933 Act shall mean the Securities Act of 1933, as amended.
L. Participant shall mean any Eligible Employee of a Participating
Corporation who is actively participating in the Plan.
M. Participating Corporation shall mean the Corporation and such
Corporate Affiliate or Affiliates as may be authorized from time to time by
the Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan are listed in attached Schedule A.
N. Plan shall mean the Corporation's 2000 Employee Stock Purchase Plan,
as set forth in this document.
O. Plan Administrator shall mean the committee of two (2) or more Board
members appointed by the Board to administer the Plan.
P. Plan Effective Date shall mean the date the Plan is approved by the
Corporation's stockholders at the Annual Meeting. Any Corporate Affiliate that
becomes a Participating Corporation after such Plan Effective Date shall
designate a subsequent Plan Effective Date with respect to its employee-
Participants.
Q. Purchase Date shall mean the last business day of each Purchase
Interval. The initial Purchase Date shall be October 31, 2000.
R. Purchase Interval shall mean each successive six (6)-month period
within a particular offering period at the end of which there shall be
purchased shares of Common Stock on behalf of each Participant.
S. Stock Exchange shall mean either the American Stock Exchange or the
New York Stock Exchange.
T. Underwriting Agreement shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
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APPENDIX C (Edgar Filing only)
Form of Proxy
LIFEMINDERS.COM, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS--MAY 4, 2000
(This Proxy is solicited by the Board of Directors of the Company)
The undersigned stockholder of LifeMinders.com, Inc. hereby appoints Stephen
R. Chapin, Jr. and Joseph S. Grabias, and each of them, with full power of
substitution, proxies to vote the shares of stock which the undersigned could
vote if personally present at the Annual Meeting of Stockholders of
LifeMinders.com, Inc. to be held at Hyatt Regency Town Center, 1800
President's Street, Reston, Virginia 20190, on May 4, 2000 at 9:30 a.m.
(Virginia time).
1. ELECTION OF DIRECTORS (for terms as described in the Proxy Statement)
[_]FOR nominees [_]WITHHOLD AUTHORITY to
below (except as vote for nominees
marked to the below
contrary)
NOMINEES: Gene Riechers (Class I) Sunil Paul(Class II)
INSTRUCTION: To withhold authority to vote for an individual nominee, write
the nominee's name on the space provided below.
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
2. ADOPTION OF 2000 STOCK ISSUANCE PLAN
[_] FOR [_] AGAINST [_] ABSTAIN WITH RESPECT TO
3. ADOPTION OF EMPLOYEE STOCK PURCHASE PLAN
[_] FOR [_] AGAINST [_] ABSTAIN WITH RESPECT TO
4. RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
[_] FOR [_] AGAINST [_] ABSTAIN WITH RESPECT TO
5. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING
Please date and sign exactly as your name appears on the envelope in which
this material was mailed. If shares are held jointly, each stockholder should
sign. Executors, administrators, trustees, etc. should use full title and, if
more than one, all should sign. If the stockholder is a corporation, please
sign full corporate name by an authorized officer. If the stockholder is a
partnership, please sign full partnership name by an authorized person.
_____________________________________
Name(s) of Stockholder
_____________________________________
Signature(s) of Stockholder
Dated: ______________________________
