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As filed with the Securities and Exchange Commission on February 2, 2000.
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
________________
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
________________
MUSICMAKER.COM, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 54-1811721
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) No.)
1831 Wiehle Avenue
Suite 128
Reston, Virginia 20190
(703) 904-4110
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
________________
Amended Stock Option Plan
________________
Devarjan S. Puthukarai
Chief Executive Officer
musicmaker.com, Inc.
1831 Wiehle Avenue
Suite 128
Reston, Virginia 20190
(703) 904-4110
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
________________
Copies to:
John L. Sullivan, III
Venable, Baetjer and Howard, LLP
2010 Corporate Ridge
Suite 400
McLean, Virginia 22102
(703) 760-1600
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Proposed
Maximum Proposed Maximum
Title of Each Class of Securities Amount to be Offering Price Aggregate Offering
to be Registered Registered Per Share Price Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, $0.01 par value 4,200,000 shares $6.50 $27,300,000 $7,208
(1)(2)
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</TABLE>
(1) Pursuant to Rule 416, this Registration Statement shall also cover any
additional shares of Common Stock which become issuable under the Plan
being registered pursuant to this Registration Statement by reason of
any stock dividend, stock split, recapitalization or any other similar
transaction effected without the receipt of consideration which
results in an increase in the number of the Registrant's outstanding
shares of Common Stock.
(2) Estimated in accordance with Rule 457(h) under the Securities Act of
1933 (the "Securities Act") solely for the purpose of calculating the
registration fee. The computation is based upon the average high and
low price per share of the Company's Common Stock as reported on the
NASDAQ National Market on January 26, 2000.
<PAGE>
PART I
Documents containing the information specified in Part I of Form S-8
have been and/or will be sent or given to participants as specified by Rule
428(b)(1) of the Securities Act. In accordance with the instructions to
Part I of Form S-8, such documents will not be filed with the Securities
and Exchange Commission either as part of this Registration Statement or as
prospectuses or prospectus supplements pursuant to Rule 424 under the
Securities Act. These documents and the documents incorporated by reference
pursuant to Item 3 of Part II of this Registration Statement, taken
together, constitute the prospectus as required by Section 10(a) of the
Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Information Incorporated by Reference.
-------------------------------------
The following documents and information previously filed with the
Securities and Exchange Commission are hereby incorporated by reference:
(a) The Registrant's Prospectus, dated July 7, 1999, filed pursuant to
Rule 424 (b) under the Securities Act of 1933 on July 7, 1999, and the
audited financial statements for the Registrant's fiscal year ended
December 31, 1998 contained therein.
(b) The description of the Common Stock of the Registrant that is
contained in the Registration Statement of Form 8-A filed pursuant to
Section 12 of the Exchange Act on July 2, 1999.
(c) The Quarterly Report for the quarterly period ended June 30, 1999 on
Form 10-Q filed pursuant to Section 13 and 15 (d) of the Exchange Act
on August 23, 1999.
(d) The Quarterly Report for the quarterly period ended September 30, 1999
on Form 10-Q filed pursuant to Section 13 and 15 (d) of the Exchange
Act on November 15, 1999.
(e) All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act subsequent to the filing of
this Registration Statement and prior to the filing of a post-
effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by references in the Registration
Statement and to be part hereof from the date of filing of such
documents.
Item 4. Description of Securities.
-------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel.
--------------------------------------
Not applicable.
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
Musicmaker.com, Inc. (the "Registrant" or "Musicmaker.com") is organized
under the laws of the State of Delaware. Musicmaker.com's Charter and Bylaws
provide that Musicmaker.com shall indemnify and advance expenses to its
directors, officers, employees and agents, and all persons who at any time
served as directors, officers, employees or agents of Musicmaker.com, to the
fullest extent permitted, and in the manner provided under the laws of the State
of Delaware.
The Delaware General Corporation Law provides that a Delaware corporation
has the power generally to indemnify its directors, officers, employees and
other agents serving, or who
<PAGE>
have served, Musicmaker.com (each, a "Corporate Agent") against expenses and
liabilities (including amounts paid in settlement) in connection with any
proceeding involving a person by reason of his being a Corporate Agent, other
than a proceeding by or in the right of the corporation, if that person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal proceeding,
the person had no reasonable cause to believe his conduct was unlawful.
In the case of an action brought by or in the right of the corporation,
indemnification of a Corporate Agent is permitted if that person acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation; however, no indemnification is permitted in
respect of any claim, issue or matter as to which a person shall have been
adjudged to be liable to the corporation, unless and only to the extent that the
Court of Chancery or the court in which such proceeding was brought shall
determine upon application that despite the adjudication of liability, but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to such indemnification.
To the extent that a present or former director or officer of a corporation
has been successful on the merits or otherwise in the defense of a proceeding,
whether or not by or in the right of the corporation, or in the defense of any
claim, issue or matter therein, the corporation is required to indemnify that
person for expenses in connection therewith. Expenses incurred by a Corporate
Agent in connection with a proceeding may, under certain circumstances, be paid
by the corporation in advance of the final disposition of the proceeding as the
corporation deems appropriate. Musicmaker.com's Charter permits the advancement
of expenses by Musicmaker.com to officers or directors defending a qualified
civil or criminal action upon receipt of an undertaking by such director or
officer to repay the advancement amount if it shall ultimately be determined
that such person is not entitled to indemnification. The terms and conditions of
advancement are to be determined by Musicmaker.com's Board of Directors.
The power to indemnify and advance the expenses under Delaware Law does not
exclude other rights to which a Corporate Agent may be entitled to under the
certificate of incorporation, bylaws, agreement, vote of stockholders or
disinterested directors or otherwise.
Under Delaware law and Musicmaker.com's Charter, a director, officer,
employee or agent of musicmaker.com that is successful on the merits or
otherwise in defense of any action, suit or proceeding, or in defense of any
claim, issue or matter therein, may require Musicmaker.com to provide
indemnification for expenses (including attorneys' fees) actually and reasonably
incurred by that person in connection therewith.
Unless ordered by a relevant court, indemnification for qualified persons
shall be authorized on behalf of musicmaker.com by: (i) a majority of a quorum
of the Board of Directors, if a quorum consisting of the directors not party to
such action, suit or proceeding can be obtained; or (ii) by independent legal
counsel in a written opinion, if a quorum of (i) above is not obtainable or if
the disinterested quorum so directs; or (iii) stockholder approval.
Under the DGCL and musicmaker.com's Charter, musicmaker.com is permitted to
purchase and maintain insurance on behalf of Corporate Agents of musicmaker.com
or persons
<PAGE>
serving at the request of musicmaker.com as Corporate Agents of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in such
capacity or arising out of his or her status as such, whether or not
musicmaker.com would have had the power to indemnify such person. Musicmaker
maintains director and officer insurance coverage.
Item 7. Exemption from Registration Claimed.
-----------------------------------
Not applicable.
Item 8. Exhibits.
--------
The Exhibits listed on the accompanying Index to Exhibits are filed as part
hereof, or incorporated by reference into, this Registration Statement. (See
Exhibit Index below).
Item 9. Undertakings.
------------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15 (d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be an initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
<PAGE>
in the indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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SIGNATURES
In accordance with the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has caused this Registration Statement
to be signed on its behalf by the undersigned, in New York, New York, on January
28, 2000.
MUSICMAKER.COM, INC.
By: /s/ DEVARAJAN S. PUTHUKARAI
---------------------------
Name: Devarajan S. Puthukarai
Title: Chief Executive Officer
Pursuant to the requirements of the Securities Act, this registration
Statement has been signed by the following persons in the capacities and on the
dated indicated.
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<CAPTION>
Signature Title Date
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<S> <C> <C>
/s/DEVARAJAN S. PUTHUKARAI Chief Executive Officer, January 28, 2000
- -------------------------- President, Chief Operating
Devarajan S. Puthukarai Officer and Director
(Principal Executive Officer)
/s/ MARK A. FOWLER Director of Finance and January 28, 2000
- ------------------ Administration and Chief
Mark A. Fowler Financial Officer (Principal
Financial and Accounting
Officer)
* Chairman January 28, 2000
- ---------------------
Robert P. Bernardi
* Vice Chairman January 28, 2000
- ---------------------
Irwin H. Steinberg
* Director January 28, 2000
- ---------------------
Edward J. Mathias
* Director January 28, 2000
- ---------------------
Jay A. Samit
*
- --------------------- Director January 28, 2000
Jonathan A.B. Smith
*
- --------------------- Director January 28, 2000
John A. Skolas
</TABLE>
* By: /s/ DEVARAJAN S. PUTHUKARAI
---------------------------
Name: Devarajan S. Puthukarai,
Attorney-in-Fact
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INDEX TO EXHIBITS
Exhibit Number Exhibit Document
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4.1* Certificate of Incorporation of Registrant
4.2* Bylaws of Registrant
4.3 Amended Stock Option Plan
5.1 Opinion of Venable Baetjer and Howard, LLP, as to the
legality of securities being registered (Counsel to the
Registrant)
23.1 Consent of Ernst & Young (Independent Auditors)
23.2 Consent of Venable, Baetjer and Howard, LLP (contained
in Exhibit 5.1 hereto)
24.1 Power of Attorney
- -----------------------
* Incorporated by reference to the Company's Registration Statement on Form
S-1 (File No. 333-72685), effective July 6, 1999.
<PAGE>
Exhibit 4.3
musicmaker.com, Inc.
AMENDED STOCK OPTION PLAN
1. Establishment, Purpose and Types of Awards
Musicmaker.com, Inc. (the "Corporation") hereby establishes THE
musicmaker.com, Inc. AMENDED STOCK OPTION PLAN (the "Plan"), as an amendment and
restatement of The Music Connection Corporation Stock Option Plan previously
adopted by the Corporation (the "Original Plan"). The purpose of the Plan is to
promote the long-term growth and profitability of the Corporation by (i)
providing key people with incentives to improve stockholder value and to
contribute to the growth and financial success of the Corporation, and (ii)
enabling the Corporation to attract, retain and reward the best available
persons for positions of substantial responsibility.
The Plan permits the granting of stock options (including nonqualified
stock options and incentive stock options qualifying under Section 422 of the
Code) and stock appreciation rights (including free-standing, tandem and limited
stock appreciation rights) or any combination of the foregoing (collectively,
"Awards").
The Plan is a compensatory benefit plan within the meaning of Rule 701
under the Securities Act of 1933 (the "Securities Act"). Except to the extent
any other exemption from the Securities Act is expressly relied upon in
connection with any agreement entered into pursuant to the Plan or the
securities issuable hereunder are registered under the Securities Act, the
issuance of Common Stock pursuant to the Plan is intended to qualify for the
exemption from registration under the Securities Act provided by Rule 701. To
the extent that an exemption from registration under the Securities Act provided
by Rule 701 is unavailable, all unregistered offers and sales of Awards and
shares of Common Stock issuable upon exercise of an Award are intended to be
exempt from registration under the Securities Act in reliance upon the private
offering exemption contained in Section 4(2) of the Securities Act, or other
available exemption, and the Plan shall be so administered.
2. Definitions
Under this Plan, except where the context otherwise indicates, the
following definitions apply:
(a) "Award" shall mean any stock option or stock appreciation right
issued hereunder.
(b) "Board" shall mean the Board of Directors of the Corporation.
(c) "Change in Control" shall mean (i) any sale, exchange or other
disposition of substantially all of the Corporation's assets; or (ii) any
merger, share exchange, consolidation or other reorganization or business
combination in which the Corporation is not the surviving or continuing
corporation, or in which the Corporation's stockholders become entitled to
receive cash, securities of the Corporation other than voting common stock, or
securities of another issuer.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and any regulations issued thereunder.
<PAGE>
(e) "Committee" shall mean the Board or committee of Board members
appointed pursuant to Section 3 of the Plan to administer the Plan.
(f) "Common Stock" shall mean shares of the Corporation's voting and
nonvoting classes of common stock.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" of a share of the Corporation's Common Stock
for any purpose on a particular date shall be determined in a manner such as the
Committee shall in good faith determine to be appropriate.
(i) "Grant Agreement" shall mean a written agreement between the
Corporation and a grantee memorializing the terms and conditions of an Award
granted pursuant to the Plan.
(j) "Grant Date" shall mean the date on which the Committee formally
acts to grant an Award to a grantee or such other date as the Committee shall so
designate at the time of taking such formal action.
(k) "Parent" shall mean a corporation, whether now or hereafter
existing, within the meaning of the definition of "parent corporation" provided
in Section 424(e) of the Code, or any successor thereto of similar import.
(l) "Rule 16b-3" shall mean Rule 16b-3 as in effect under the
Exchange Act on the effective date of the Plan, or any successor provision
prescribing conditions necessary to exempt the issuance of securities under the
Plan (and further transactions in such securities) from Section 16(b) of the
Exchange Act.
(m) "Subsidiary" and "subsidiaries" shall mean only a corporation or
corporations, whether now or hereafter existing, within the meaning of the
definition of "subsidiary corporation" provided in Section 424(f) of the Code,
or any successor thereto of similar import.
<PAGE>
3. Administration
(a) Procedure. The Plan shall be administered by the Board. In the
alternative, the Board may appoint a Committee consisting of not less than two
(2) members of the Board to administer the Plan on behalf of the Board, subject
to such terms and conditions as the Board may prescribe. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board. From
time to time, the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and, thereafter, directly administer the Plan. In
the event that the Board is the administrator of the Plan in lieu of a
Committee, the term "Committee" as used herein shall be deemed to mean the
Board.
Members of the Board or Committee who are either eligible for
Awards or have been granted Awards may vote on any matters affecting the
administration of the Plan or the grant of Awards pursuant to the Plan, except
that no such member shall act upon the granting of an Award to himself or
herself, but any such member may be counted in determining the existence of a
quorum at any meeting of the Board or the Committee during which action is taken
with respect to the granting of an Award to him or her.
The Committee shall meet at such times and places and upon such
notice as it may determine. A majority of the Committee shall constitute a
quorum. Any acts by the Committee may be taken at any meeting at which a quorum
is present and shall be by majority vote of those members entitled to vote.
Additionally, any acts reduced to writing or approved in writing by all of the
members of the Committee shall be valid acts of the Committee.
(b) Notwithstanding the provisions above, the grant of any Awards to
any "insider" subject to Section 16 of the Securities Act of 1933, as amended,
or any of the four most highly compensated employees of the Company, shall be
approved by either the full Board of Directors of the Company or a subcommittee
of any Committee, such subcommittee consisting of solely two or more "non-
employee directors" within the meaning of Rule 16b-3 and "outside directors"
within the meaning of Section 162(m) of the Code.
(c) Powers of the Committee. The Committee shall have all the powers
vested in it by the terms of the Plan, such powers to include authority, in its
sole and absolute discretion, to grant Awards under the Plan, prescribe Grant
Agreements evidencing such Awards and establish programs for granting Awards.
The Committee shall have full power and authority to take all other actions
necessary to carry out the purpose and intent of the Plan, including, but not
limited to, the authority to:
(i) determine the eligible persons to whom, and the time or
times at which Awards shall be granted,
(ii) determine the types of Awards to be granted,
<PAGE>
(iii) determine the number of shares to be covered by or used
for reference purposes for each Award,
(iv) impose such terms, limitations, restrictions and conditions
upon any such Award as the Committee shall deem appropriate,
(v) modify, extend or renew outstanding Awards, accept the
surrender of outstanding Awards and substitute new Awards, provided that no
such action shall be taken with respect to any outstanding Award which
would adversely affect the grantee without the grantee's consent, and
(vi) accelerate or otherwise change the time in which an Award
may be exercised or becomes payable and to waive or accelerate the lapse,
in whole or in part, of any restriction or condition with respect to such
Award, including, but not limited to, any restriction or condition with
respect to the vesting or exercisability of an Award following termination
of any grantee's employment.
The Committee shall have full power and authority to administer and interpret
the Plan and to adopt such rules, regulations, agreements, guidelines and
instruments for the administration of the Plan and for the conduct of its
business as the Committee deems necessary or advisable and to interpret same,
all within the Committee's sole and absolute discretion.
(d) Limited Liability. To the maximum extent permitted by law, no
member of the Board or Committee shall be liable for any action taken or
decision made in good faith relating to the Plan or any Award thereunder.
(e) Indemnification. To the maximum extent permitted by law, the
members of the Board and Committee shall be indemnified by the Corporation in
respect of all their activities under the Plan.
(f) Effect of Committee's Decision. All actions taken and decisions
and determinations made by the Committee on all matters relating to the Plan
pursuant to the powers vested in it hereunder shall be in the Committee's sole
and absolute discretion and shall be conclusive and binding on all parties
concerned, including the Corporation, its stockholders, any participants in the
Plan and any other employee of the Corporation, and their respective successors
in interest.
4. Shares Available for the Plan; Maximum Awards
Subject to adjustments as provided in Section 10 of the Plan, the
shares of stock that may be delivered or purchased or used for reference
purposes (with respect to stock appreciation rights) with respect to Awards
granted under the Plan, together with Awards granted under the Original Plan,
including with respect to incentive stock options intended to qualify under
Section 422 of the Code, shall not exceed an aggregate of 4,200,000 shares of
Voting Common Stock of the Corporation. The Corporation shall reserve said
number of shares for Awards under the Plan, subject to adjustments as provided
in Section 10 of the Plan. If any Award, or portion of an
<PAGE>
Award, under the Plan, or the Original Plan, expires or terminates unexercised,
becomes unexercisable or is forfeited or otherwise terminated, surrendered or
canceled as to any shares without the delivery of shares of Common Stock or
other consideration, the shares subject to such Award shall thereafter be shares
with respect to which further Awards may be granted under the Plan.
To the extent required by Section 162(m) of the Code, the maximum
number of shares of Common Stock subject to Awards of any combination that may
be granted during any one calendar year to any one individual shall be limited
to 500,000, subject to adjustments as provided in Section 10 of the Plan. To
the extent required by Section 162(m) of the Code and so long as Section 162(m)
of the Code is applicable to persons eligible to participate in the Plan, shares
of Common Stock subject to the foregoing limit with respect to which the related
Award is terminated, surrendered or canceled shall not again be available for
grant under this limit.
5. Participation
Participation in the Plan shall be open to all employees, officers,
directors and consultants of the Corporation, or of any Parent or Subsidiary of
the Corporation, as may be selected by the Committee from time to time.
Notwithstanding the foregoing, participation in the Plan with respect to Awards
of incentive stock options shall be limited to employees of the Corporation, or
of any Parent or Subsidiary of the Corporation. To the extent necessary to
comply with Rule 16b-3 or to constitute an "outside director" within the meaning
of Section 162(m) of the Code, and only in the event that Rule 16b-3 or Section
162(m) of the Code is applicable to the Plan or an Award made thereunder,
Committee members shall not be eligible to participate in the Plan while members
of the Committee.
Awards may be granted to such eligible persons and for or with respect
to such number of shares of Common Stock as the Committee shall determine,
subject to the limitations in Section 4 of the Plan. A grant of any type of
Award made in any one year to an eligible person shall neither guarantee nor
preclude a further grant of that or any other type of Award to such person in
that year or subsequent years.
6. Stock Options
Subject to the other applicable provisions of the Plan, the Committee
may from time to time grant to eligible participants nonqualified stock options
or incentive stock options as that term is defined in Section 422 of the Code.
The stock options granted shall be subject to the following terms and
conditions.
(a) Grant of Option. The grant of a stock option shall be evidenced
by a Grant Agreement, executed by the Corporation and the grantee, stating the
number of shares of Common Stock subject to the stock option evidenced thereby
and the terms and conditions of such stock option, in such form as the Committee
may from time to time determine.
(b) Price. The price per share payable upon the exercise of each
stock option ("exercise price") shall be determined by the Committee; provided,
however, that in the case of
<PAGE>
incentive stock options, the exercise price shall not be less than 100% of the
Fair Market Value of the shares on the date the stock option is granted.
(c) Payment. Stock options may be exercised in whole or in part by
payment of the exercise price of the shares to be acquired in accordance with
the provisions of the Grant Agreement, and/or such rules and regulations as the
Committee may have prescribed, and/or such determinations, orders, or decisions
as the Committee may have made. Payment may be made in cash (or cash
equivalents acceptable to the Committee) or, unless otherwise determined by the
Committee, in shares of Common Stock or a combination of cash and shares of
Common Stock, or by such other means as the Committee may prescribe. The Fair
Market Value of shares of Common Stock delivered on exercise of stock options
shall be determined as of the date of exercise. Shares of Common Stock
delivered in payment of the exercise price may be previously owned shares or, if
approved by the Committee, shares acquired upon exercise of the stock option.
Any fractional share will be paid in cash. The Corporation may make or
guarantee loans to grantees to assist grantees in exercising stock options.
If the Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act, the Committee, subject to such limitations as it may determine,
may authorize payment of the exercise price, in whole or in part, by delivery of
a properly executed exercise notice, together with irrevocable instructions, to:
(i) a brokerage firm designated by the Corporation to deliver promptly to the
Corporation the aggregate amount of sale or loan proceeds to pay the exercise
price and any withholding tax obligations that may arise in connection with the
exercise, and (ii) the Corporation to deliver the certificates for such
purchased shares directly to such brokerage firm.
(d) Terms of Options. The term during which each stock option may be
exercised shall be determined by the Committee. In no event shall a stock
option be exercisable more than ten years from the date it is granted. Prior to
the exercise of the stock option and delivery of the shares certificates
represented thereby, the grantee shall have none of the rights of a stockholder
with respect to any shares represented by an outstanding stock option.
(e) Restrictions on Incentive Stock Options. Incentive Stock Options
granted under Code Section 422 shall meet the following additional requirements.
(i) Grant Date. An incentive stock option must be granted
within 10 years of the earlier of the Original Plan's adoption by the Board
of Directors or approval by the Corporation's shareholders.
(ii) Exercise Price and Term. The exercise price of an incentive
stock option shall not be less than 100% of the Fair Market Value of the
shares on the date the stock option is granted. Also, the exercise price of
any incentive stock option granted to a grantee who owns (within the
meaning of Section 422(b)(6) of the Code, after the application of the
attribution rules in Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of shares of the Corporation or its
Parent or Subsidiary corporations (within the meaning of Sections 422 and
424 of the Code) shall
<PAGE>
be not less than 110% of the Fair Market Value of the Common Stock on the
grant date and the term of such stock option shall not exceed five years.
(iii) Maximum Grant. The aggregate Fair Market Value (determined
as of the Grant Date) of shares of Common Stock with respect to which all
incentive stock options first become exercisable by any grantee in any
calendar year under this or any other plan of the Corporation and its
Parent and Subsidiary corporations may not exceed $100,000 or such other
amount as may be permitted from time to time under Section 422 of the Code.
To the extent that such aggregate Fair Market Value shall exceed $100,000,
or other applicable amount, such stock options shall be treated as
nonqualified stock options. In such case, the Corporation may designate the
shares of Common Stock that are to be treated as stock acquired pursuant to
the exercise of an incentive stock option by issuing a separate certificate
for such shares and identifying the certificate as incentive stock option
shares in the stock transfer records of the Corporation.
(iv) Grantee. Incentive stock options shall only be issued to
employees of the Corporation, or of a Parent or Subsidiary of the
Corporation.
(v) Designation. No stock option shall be an incentive stock
option unless so designated by the Committee at the time of grant or in the
Grant Agreement evidencing such stock option.
(f) Other Terms and Conditions. Stock options may contain such other
provisions, not inconsistent with the provisions of the Plan, as the Committee
shall determine appropriate from time to time.
7. Stock Appreciation Rights
(a) Award of Stock Appreciation Rights. Subject to the other
applicable provisions of the Plan, the Committee may at any time and from time
to time grant stock appreciation rights ("SARs") to eligible participants,
either on a free-standing basis (without regard to or in addition to the grant
of a stock option) or on a tandem basis (related to the grant of an underlying
stock option), as it determines. SARs granted in tandem with or in addition to a
stock option may be granted either at the same time as the stock option or at a
later time; provided, however, that a tandem SAR shall not be granted with
respect to any outstanding incentive stock option Award without the consent of
the grantee. SARs shall be evidenced by Grant Agreements, executed by the
Corporation and the grantee, stating the number of shares of Common Stock
subject to the SAR evidenced thereby and the terms and conditions of such SAR,
in such form as the Committee may from time to time determine. The term during
which each SAR may be exercised shall be determined by the Committee. In no
event shall an SAR be exercisable more than ten years from the date it is
granted. The grantee shall have none of the rights of a stockholder with respect
to any shares of Common Stock represented by an SAR.
(b) Restrictions of Tandem SARs. No incentive stock option may be
surrendered in connection with the exercise of a tandem SAR unless the Fair
Market Value of the Common Stock subject to the incentive stock option is
greater than the exercise price for such incentive
<PAGE>
stock option. SARs granted in tandem with stock options shall be exercisable
only to the same extent and subject to the same conditions as the stock options
related thereto are exercisable. The Committee may, in its discretion, prescribe
additional conditions to the exercise of any such tandem SAR.
(c) Amount of Payment Upon Exercise of SARs. An SAR shall entitle the
grantee to receive, subject to the provisions of the Plan and the Grant
Agreement, a payment having an aggregate value equal to the product of (i) the
excess of (A) the Fair Market Value on the exercise date of one share of Common
Stock over (B) the base price per share specified in the Grant Agreement, times
(ii) the number of shares specified by the SAR, or portion thereof, which is
exercised. In the case of exercise of a tandem SAR, such payment shall be made
in exchange for the surrender of the unexercised related stock option (or any
portion or portions thereof which the grantee from time to time determines to
surrender for this purpose).
(d) Form of Payment Upon Exercise of SARs. Payment by the Corporation
of the amount receivable upon any exercise of an SAR may be made by the delivery
of Common Stock or cash, or any combination of Common Stock and cash, as
determined in the sole discretion of the Committee from time to time. If upon
settlement of the exercise of an SAR a grantee is to receive a portion of such
payment in shares of Common Stock, the number of shares shall be determined by
dividing such portion by the Fair Market Value of a share of Common Stock on the
exercise date. No fractional shares shall be used for such payment and the
Committee shall determine whether cash shall be given in lieu of such fractional
shares or whether such fractional shares shall be eliminated.
8. Withholding of Taxes
The Corporation may require, as a condition to the grant of any Award
under the Plan or exercise pursuant to such Award or to the delivery of
certificates for shares issued or payments of cash to a grantee pursuant to the
Plan or a Grant Agreement (hereinafter collectively referred to as a "taxable
event"), that the grantee pay to the Corporation, in cash or, unless otherwise
determined by the Corporation, in shares of Common Stock, including shares
acquired upon grant of the Award or exercise of the Award, valued at Fair Market
Value on the date as of which the withholding tax liability is determined, any
federal, state or local taxes of any kind required by law to be withheld with
respect to any taxable event under the Plan. The withholding tax obligation that
may be paid by the withholding or delivery of shares may not exceed the
statutory minimum required withholding amount with respect to the grantee's
federal, state and local income tax obligations in connection with a taxable
event. The Corporation, to the extent permitted or required by law, shall have
the right to deduct from any payment of any kind (including salary or bonus)
otherwise due to a grantee any federal, state or local taxes of any kind
required by law to be withheld with respect to any taxable event under the Plan,
or to retain or sell without notice a sufficient number of the shares to be
issued to such grantee to cover any such taxes.
<PAGE>
9. Transferability
To the extent required to comply with Rule 16b-3, if applicable, and
in any event in the case of an incentive stock option or a stock appreciation
right granted with respect to an incentive stock option, no Award granted under
the Plan shall be transferable by a grantee otherwise than by will or the laws
of descent and distribution. Unless otherwise determined by the Committee in
accord with the provisions of the immediately preceding sentence, an Award may
be exercised during the lifetime of the grantee, only by the grantee or, during
the period the grantee is under a legal disability, by the grantee's guardian or
legal representative.
10. Adjustments; Business Combinations
In the event of a reclassification, recapitalization, stock split,
stock dividend, combination of shares, or other similar event, the maximum
number and kind of shares reserved for issuance or with respect to which Awards
may be granted under the Plan as provided in Section 4 shall be adjusted to
reflect such event, and the Committee shall make such adjustments as it deems
appropriate and equitable in the number, kind and price of shares covered by
outstanding Awards made under the Plan, and in any other matters which relate to
Awards and which are affected by the changes in the Common Stock referred to
above.
In the event of any proposed Change in Control, the Committee shall
take such action as it deems appropriate and equitable to effectuate the
purposes of this Plan and to protect the grantees of Awards, which action may
include, but without limitation, any one or more of the following: (i)
acceleration or change of the exercise dates of any Award; (ii) arrangements
with grantees for the payment of appropriate consideration to them for the
cancellation and surrender of any Award; and (iii) in any case where equity
securities other than Common Stock of the Corporation are proposed to be
delivered in exchange for or with respect to Common Stock of the Corporation,
arrangements providing that any Award shall become one or more Awards with
respect to such other equity securities.
The Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in the
preceding two paragraphs of this Section 10) affecting the Corporation, or the
financial statements of the Corporation or any Subsidiary, or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan.
In the event the Corporation dissolves and liquidates (other than
pursuant to a plan of merger or reorganization), then notwithstanding any
restrictions on exercise set forth in this Plan or any Grant Agreement, or other
agreement evidencing a stock option or stock appreciation right: (i) each
grantee shall have the right to exercise his stock option or stock appreciation
right at any time up to ten (10) days prior to the effective date of such
liquidation and dissolution; and (ii) the Committee may make arrangements with
the grantees for the payment of appropriate consideration to them for the
cancellation and surrender of any stock option or stock appreciation
<PAGE>
right that is so canceled or surrendered at any time up to ten (10) days prior
to the effective date of such liquidation and dissolution. The Committee may
establish a different period (and different conditions) for such exercise,
delivery, cancellation, or surrender to avoid subjecting the grantee to
liability under Section 16(b) of the Exchange Act. Any stock option or stock
appreciation right not so exercised, canceled, or surrendered shall terminate on
the last day for exercise prior to such effective date.
11. Termination and Modification of the Plan
The Board, without further approval of the stockholders, may modify or
terminate the Plan or any portion thereof at any time, except that no
modification shall become effective without prior approval of the stockholders
of the Corporation if stockholder approval is necessary to comply with any tax
or regulatory requirement or rule of any exchange or Nasdaq System upon which
the Common Stock is listed or quoted; including for this purpose stockholder
approval that is required for continued compliance with Rule 16b-3 or
stockholder approval that is required to enable the Committee to grant incentive
stock options pursuant to the Plan.
The Committee shall be authorized to make minor or administrative
modifications to the Plan as well as modifications to the Plan that may be
dictated by requirements of federal or state laws applicable to the Corporation
or that may be authorized or made desirable by such laws. The Committee may
amend or modify the grant of any outstanding Award in any manner to the extent
that the Committee would have had the authority to make such Award as so
modified or amended.
12. Non-Guarantee of Employment
Nothing in the Plan or in any Grant Agreement thereunder shall confer
any right on an employee to continue in the employ of the Corporation or shall
interfere in any way with the right of the Corporation to terminate an employee
at any time.
13. Transfer of Employee
For purposes of maintaining a grantee's continuous status as an
employee and accrual of rights under any Award, transfer of an employee among
the Corporation and the Corporation's Parent or Subsidiaries shall not be
considered a termination of employment. Nor shall it be considered a termination
of employment for such purposes if an employee is placed on military or sick
leave or such other leave of absence which is considered as continuing intact
the employment relationship; in such a case, the employment relationship shall
be continued until the date when an employee's right to reemployment shall no
longer be guaranteed either by law or contract.
14. Written Agreement
Each Grant Agreement entered into between the Corporation and a
grantee with respect to an Award granted under the Plan shall incorporate the
terms of this Plan and shall contain
<PAGE>
such provisions, consistent with the provisions of the Plan, as may be
established by the Committee.
15. Non-Uniform Determinations
The Committee's determinations under the Plan (including without
limitation determinations of the persons to receive Awards, the form, amount and
timing of such Awards, the terms and provisions of such Awards and the
agreements evidencing same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, Awards under
the Plan, whether or not such persons are similarly situated.
16. Listing and Registration
If the Corporation determines that the listing, registration or
qualification upon any securities exchange or upon any listing or quotation
system established by the National Association of Securities Dealers, Inc.
("Nasdaq System") or under any law, of shares subject to any Award is necessary
or desirable as a condition of, or in connection with, the granting of same or
the issue or purchase of shares thereunder, no such Award may be exercised in
whole or in part and no restrictions on such Award shall lapse, unless such
listing, registration or qualification is effected free of any conditions not
acceptable to the Corporation.
17. Compliance with Securities Law
The Corporation may require that a grantee, as a condition to exercise
of an Award, and as a condition to the delivery of any share certificate,
provide to the Corporation, at the time of each such exercise and each such
delivery, a written representation that the shares of Common Stock being
acquired shall be acquired by the grantee solely for investment and will not be
sold or transferred without registration or the availability of an exemption
from registration under the Securities Act and applicable state securities laws.
The Corporation may also require that a grantee submit other written
representations which will permit the Corporation to comply with federal and
applicable state securities laws in connection with the issuance of the Common
Stock, including representations as to the knowledge and experience in financial
and business matters of the grantee and the grantee's ability to bear the
economic risk of the grantee's investment. The Corporation may require that the
grantee obtain a "purchaser representative" as that term is defined in
applicable federal and state securities laws. The stock certificates for any
shares of Common Stock issued pursuant to this Plan may bear a legend
restricting transferability of the shares of Common Stock unless such shares are
registered or an exemption from registration is available under the Securities
Act and applicable state securities laws. The Corporation may notify its
transfer agent to stop any transfer of shares of Common Stock not made in
compliance with these restrictions. Common Stock shall not be issued with
respect to an Award granted under the Plan unless the exercise of such Award and
the issuance and delivery of share certificates for such Common Stock pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any national securities exchange
or Nasdaq System upon which the Common Stock may then be listed or quoted, and
<PAGE>
shall be further subject to the approval of counsel for the Corporation with
respect to such compliance to the extent such approval is sought by the
Committee.
18. No Limit on Other Compensation Arrangements
Nothing contained in the Plan shall prevent the Corporation or its
Parent or Subsidiary corporations from adopting or continuing in effect other
compensation arrangements (whether such arrangements be generally applicable or
applicable only in specific cases) as the Committee in its discretion determines
desirable, including without limitation the granting of stock options or stock
appreciation rights otherwise than under the Plan.
19. No Trust or Fund Created
Neither the Plan nor any Award shall create or be construed to create
a trust or separate fund of any kind or a fiduciary relationship between the
Corporation and a grantee or any other person. To the extent that any grantee
or other person acquires a right to receive payments from the Corporation
pursuant to an Award, such right shall be no greater than the right of any
unsecured general creditor of the Corporation.
20. Governing Law
The validity, construction and effect of the Plan, of Grant Agreements
entered into pursuant to the Plan, and of any rules, regulations, determinations
or decisions made by the Board or Committee relating to the Plan or such Grant
Agreements, and the rights of any and all persons having or claiming to have any
interest therein or thereunder, shall be determined exclusively in accordance
with applicable federal laws and the laws of the State of Delaware without
regard to its conflict of laws rules and principles.
21. Plan Subject to Charter and Bylaws
This Plan is subject to the Charter and Bylaws of the Corporation, as
they may be amended from time to time.
22. Effective Date; Termination Date
The Plan is effective as of the date on which the Plan was adopted by
the Board, subject to approval of the stockholders within twelve months before
or after such date. No Award shall be granted under the Plan after the close of
business on the day immediately preceding the tenth anniversary of the effective
date of the Original Plan, which was July 2, 1996, the earlier of the date of
its adoption by the Board and the approval by the shareholders. Subject to
other applicable provisions of the Plan, all Awards made under the Plan prior to
such termination of the Plan shall remain in effect until such Awards have been
satisfied or terminated in accordance with the Plan and the terms of such
Awards.
<PAGE>
Exhibit 5.1
January 28, 2000
musicmaker.com, Inc.
1831 Wiehle Avenue
Suite 128
Reston, Virginia 20190
Re: Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to musicmaker.com, Inc., a Delaware
corporation (the "Company"), in connection with the registration statement on
Form S-8 (the "Registration Statement") filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), pertaining to the registration of up to
4,200,000 shares (the "Shares") of its common stock, $0.01 par value, for
issuance and sale pursuant to the Company's Amended Stock Option Plan (the
"Plan").
In connection therewith, we have examined originals or copies of such
documents, corporate records and other instruments as we have deemed necessary
or appropriate for purposes of this opinion including, but not limited to, the
following: (i) the Registration Statement; (ii) the Articles of Incorporation
and the Bylaws of the Company, as amended and as currently in effect; (iii) the
Plan; (iv) certain resolutions of the Board of Directors of the Corporation
relating to the adoption of the Plan and the issuance of the Shares and the
other transactions contemplated by the Registration Statement; (v) a Certificate
of Good Standing from the Office of the Secretary of State of the State of
Delaware; and (vi) such other documents as we have deemed necessary or
appropriate as a basis for the opinion set forth below. We have assumed,
without independent verification, the genuineness of signatures, the
authenticity of documents and the conformity with originals of copies.
Based on the foregoing, we are of the opinion that the Shares have
been duly authorized for issuance, and when issued and sold in accordance with
the terms of the Plan, will be validly issued, fully paid and non-assessable.
The law covered by this opinion is limited to the law of the State of
Delaware, without regard to the principles of conflicts of laws thereof, and
based upon and limited to the laws and regulations in effect as of the date
hereof. We assume no obligation to update the opinion set forth herein.
<PAGE>
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 to the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Actor the rules and regulations of
the Commission promulgated thereunder.
Very truly yours,
/S/ VENABLE, BAETJER AND HOWARD, LLP
Venable, Baetjer and Howard, LLP
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-00000) pertaining to the Amended Stock Option Plan of
musicmaker.com, Inc. of our report dated February 5, 1999 (except for Note 12,
as to which the date is June 14, 1999), with respect to the consolidated
financial statements of musicmaker.com, Inc., included in its Registration
Statement (on Form S-1 No. 333-72685) for the year ended December 31, 1998,
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
McLean, Virginia
January 28, 2000
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
REGISTRATION STATEMENT ON FORM S-8
KNOW ALL PERSONS BY THESE PRESENTS, that each person, being a director
of musicmaker.com, Inc., a Delaware corporation (the "Company"), whose signature
appears below hereby constitutes and appoints Devarajan S. Puthukarai, as his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any Company Registration Statement on Form S-8 (the
"Registration Statement"), in connection with the registration, with the
Securities and Exchange Commission, of the 4,200,000 shares of the Company's
common stock, par value $.01 per share, authorized by the Company's Amended
Stock Option Plan, and any and all amendments (including post-effective
amendments) to the Registration Statement under the Securities Act of 1933, as
amended, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
<TABLE>
<S> <C> <C>
/s/ Robert P. Bernardi Chairman January 18, 2000
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Robert P. Bernardi
/s/ Irwin H. Steinberg Vice Chairman January 14, 2000
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Irwin H. Steinberg
/s/ Edward J. Mathias Director January 18, 2000
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Edward J. Mathias
/s/ Jay A. Samit Director January 18, 2000
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Jay A. Samit
/s/ Jonathan A.B. Smith Director January 18, 2000
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Jonathan A.B. Smith
/s/ John A. Skolas Director January 18, 2000
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John A. Skolas
</TABLE>
