<PAGE>
- --------------------------------------------------------------------------------
As filed with the Securities and Exchange Commission on December 23, 1999
Registration No. 333-____________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------
NETZERO, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4644384
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
2555 TOWNSGATE ROAD
WESTLAKE VILLAGE, CALIFORNIA 91361
(Address of principal executive offices) (Zip Code)
--------
AIMTV, INC. (FORMERLY FREERIDER.NET, INC.) 1999 STOCK OPTION PLAN
(AS ASSUMED BY NETZERO, INC.)
(Full title of the Plan)
--------
MARK R. GOLDSTON
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
NETZERO, INC.
2555 TOWNSGATE ROAD
WESTLAKE VILLAGE, CALIFORNIA 91361
(Name and address of agent for service)
(805) 418-2000
(Telephone number, including area code, of agent for service)
--------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed Proposed
Amount to be Maximum Offering Maximum Aggregate Amount of
Title of Securities to be Registered Registered(1) Price per Share(2) Offering Price(2) Registration Fee
- ----------------------------------------- ------------------ --------------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
NetZero, Inc. Common Stock, $0.001
par value 61,473 shares $1.0313 $63,293.41 $16.71
-------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the AimTV, Inc. (formerly
FreeRider.net, Inc.) 1999 Stock Option Plan (as assumed by
Registrant) by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the
Registrant's receipt of consideration which results in an increase in
the number of the outstanding shares of Registrant's Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the weighted
average exercise price per share in effect for the outstanding
options under the AimTV, Inc. 1999 Stock Option Plan as assumed by
Registrant.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
NetZero, Inc. (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "Commission"):
(a) The Registrant's Registration Statement No. 333-82827 on Form
S-1 filed with the Commission on July 14, 1999, together with
the amendments thereto on Form S-1/A filed with the Commission
on August 4, 1999; August 27, 1999; September 7, 1999;
September 15, 1999; and September 23, 1999, respectively;
(b) The Registrant's prospectus filed on September 24, 1999 with
the Commission, pursuant to Rule 424(b) promulgated under the
Securities Act of 1933, as amended (the "1933 Act"), in
connection with the Registrant's Registration Statement No.
333-82827, in which there is set forth the audited financial
statements for the Registrant's fiscal year ended June 30,
1999;
(c) The Registrant's Quarterly Report on Form 10-Q filed with the
Commission on November 15, 1999 for the period ended September
30, 1999; and
(d) The Registrant's Registration Statement on Form 8-A12G filed
with the Commission on September 21, 1999, in which are
described the terms, rights and provisions applicable to the
Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "1934 Act") after the date of this Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all securities offered hereby have been sold or which de-registers all
securities then remaining unsold shall be deemed to be incorporated by reference
into this Registration Statement and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any subsequently filed document which also is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. DESCRIPTION OF SECURITIES
Not Applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware law empowers a corporation to
indemnify its directors and officers and to purchase insurance with respect to
liability arising out of their capacity or status as directors and officers, but
this statutory provision does not eliminate or limit the liability of a
director:
- for any breach of the director's duty of loyalty to the
corporation or its stockholders;
- for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
II-1
<PAGE>
- arising under Section 174 of the Delaware law; or
- for any transaction from which the director derived an
improper personal benefit.
The Registrant's certificate of incorporation provides that
directors will not be personally liable to the Registrant or its stockholders
for monetary damages for any breach of fiduciary duty as directors of the
Registrant to the maximum extent permitted by Delaware law.
The Delaware law provides further that the indemnification
permitted thereunder shall not be deemed exclusive of any other rights to which
the directors and officers may be entitled under the corporation's bylaws, or by
reason of any agreement, vote of stockholders or otherwise. The Registrant's
certificate of incorporation provides that the Registrant indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding by reason of the fact that the
person is or was a director or officer, or is or was serving at the Registrant's
request as a director or officer of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses,
judgements, fines and amounts paid in settlement actually and reasonably
incurred by the person in the action, suit or proceeding.
The Registrant plans to enter into indemnification agreements
with its directors and its executive officers containing provisions that may
require the Registrant, among other things, to indemnify its directors and
officers against liabilities that may arise by reason of their status or service
as directors or officers other than liabilities arising from willful misconduct
of a culpable nature, to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified, and has obtained
directors' and officers' liability insurance.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
Item 8. EXHIBITS
EXHIBIT NUMBER EXHIBIT
4 Instruments Defining the Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 000-27405 on
Form 8-A12G, together with any exhibits thereto, which are
incorporated herein by reference pursuant to Item 3(c) to this
Registration Statement.
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Public
Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 AimTV, Inc. (formerly FreeRider.net, Inc.) 1999 Stock Option
Plan.
99.2 Form of AimTV, Inc. Stock Option Agreement.
99.3 Form of NetZero, Inc. Stock Option Assumption Agreement
Item 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement: (i) to include any prospectus required
by Section 10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts
or events arising after the effective date of this Registration Statement (or
the most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously
II-2
<PAGE>
disclosed in this Registration Statement or any material change to such
information in this Registration Statement; provided, however, that clauses
(1)(i) and (1)(ii) shall not apply if the information required to be included in
a post-effective amendment by those clauses is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act
that are incorporated by reference into this Registration Statement; (2) that
for the purpose of determining any liability under the 1933 Act each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
AimTV, Inc. 1999 Stock Option Plan as assumed by Registrant.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act that is incorporated by reference into this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnification provisions summarized in Item 6 or
otherwise, the Registrant has been advised that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8, and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Westlake Village, State of California
on this 21st day of December, 1999.
NETZERO, INC.
By: /s/ Mark R. Goldston
---------------------------------------
Mark R. Goldston
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of NetZero, Inc., a
Delaware corporation, do hereby constitute and appoint Mark. R. Goldston and
Charles S. Hilliard and each of them, the lawful attorneys-in-fact and agents
with full power and authority to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, and any one of them,
determine may be necessary or advisable or required to enable said corporation
to comply with the Securities Act of 1933, as amended, and any rules or
regulations or requirements of the Securities and Exchange Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement, and to any and all instruments or documents filed as
part of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
that all said attorneys and agents, or any one of them, shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this
Power of Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ---------------------------------------------- ------------------
<S> <C> <C>
/s/ Mark. R. Goldston Chairman, Chief Executive Officer and December 21, 1999
- ---------------------------------------- Director (Principal Executive Officer)
Mark. R. Goldston
/s/ Charles S. Hilliard Senior Vice President, Finance and Chief December 21, 1999
- ---------------------------------------- Financial Officer (Principal Financial and
Charles S. Hilliard Accounting Officer)
/s/ Ronald T. Burr President and Director December 21, 1999
- ----------------------------------------
Ronald T. Burr
II-4
<PAGE>
/s/ William T. Gross Director December 21, 1999
- ----------------------------------------
William T. Gross
/s/ James T. Armstrong Director December 21, 1999
- ----------------------------------------
James T. Armstrong
/s/ David C. Bohnett Director December 21, 1999
- ----------------------------------------
David C. Bohnett
/s/ Jennifer S. Fonstad Director December 21, 1999
- ----------------------------------------
Jennifer S. Fonstad
/s/ Paul G. Koontz Director December 21, 1999
- ----------------------------------------
Paul G. Koontz
</TABLE>
II-5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
NETZERO, INC.
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT
4 Instruments Defining the Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 000-27405 on
Form 8-A12G, together with any exhibits thereto, which are
incorporated herein by reference pursuant to Item 3(c) to this
Registration Statement.
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Public
Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 AimTV, Inc. (formerly FreeRider.net, Inc.) 1999 Stock Option
Plan.
99.2 Form of AimTV, Inc. Stock Option Agreement.
99.3 Form of NetZero, Inc. Stock Option Assumption Agreement
<PAGE>
EXHIBIT 5
OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP
December 21, 1999
NetZero, Inc.
2555 Townsgate Road
Westlake Village, California 91361
Re: NetZero, Inc.- Registration Statement for Offering of an Aggregate
of 48,767 SHARES OF COMMON STOCK
Dear Ladies and Gentlemen:
We have acted as counsel to NetZero, Inc., a Delaware corporation (the
"Company"), in connection with the registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of 48,767 shares of
the Company's common stock (the "Shares") issuable pursuant to outstanding
options under the AimTV, Inc. (formerly FreeRider.net, Inc.) 1999 Stock
Option Plan as assumed by the Company in connection with the Company's
acquisition of AimTV, Inc (the "Assumed Plan").
This opinion is being furnished in accordance with the requirements of
Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the Company's assumption of
the Assumed Plan and the options outstanding thereunder. Based on such review,
we are of the opinion that, if, as and when the Shares have been issued and sold
(and the consideration therefor received) pursuant to the provisions of option
agreements evidencing the outstanding options under the Assumed Plan and in
accordance with the Registration Statement, such Shares will be duly authorized,
legally issued, fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit 5 to the
Registration Statement.
This opinion letter is rendered as of the date first written above and
we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
Assumed Plan or the Shares.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this registration
statement of NetZero, Inc. (the "Company") on Form S-8 of our report dated
July 28, 1999, except as to the reincorporation described in Note 13, as to
which the date is September 22, 1999, on our audits of the financial
statements of the Company as of June 30, 1998 and 1999 and for the period
from July 21, 1997 (Inception) through June 30, 1998 and for the year ended
June 30, 1999, which report is included in the Company's registration
statement on Form S-1.
PricewaterhouseCoopers LLP
Woodland Hills, California
December 21, 1999
<PAGE>
EXHIBIT 99.1
AIMTV, INC. (FORMERLY FREERIDER.NET, INC.) 1999 STOCK OPTION PLAN
<PAGE>
1999 STOCK OPTION PLAN
OF
FREERIDER.NET, INC.
1. PURPOSES OF THE PLAN
The purposes of the 1999 Stock Option Plan (the "PLAN") of
FreeRider.net, Inc., a California corporation (the "COMPANY"), are to:
(a) Encourage selected employees, directors and consultants to improve
operations and increase profits of the Company;
(b) Encourage selected employees, directors and consultants to accept
or continue employment or association with the Company or its Affiliates; and
(c) Increase the interest of selected employees, directors and
consultants in the Company's welfare through participation in the growth in
value of the common stock of the Company (the "COMMON STOCK").
Options granted under this Plan ("OPTIONS") may be "incentive stock
options" ("ISOS") intended to satisfy the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "CODE"), or "nonqualified
options" ("NQOS").
2. ELIGIBLE PERSONS
Every person who at the date of grant of an Option is an employee of
the Company or of any Affiliate (as defined below) of the Company is eligible to
receive NQOs or ISOs under this Plan. Every person who at the date of grant is a
consultant to, or nonemployee director of, the Company or any Affiliate (as
defined below) of the Company is eligible to receive NQOs under this Plan. The
term "AFFILIATE" as used in the Plan means a parent or subsidiary corporation as
defined in the applicable provisions (currently Sections 424(e) and (f),
respectively) of the Code. The term "EMPLOYEE" includes an officer or director
who is an employee of the Company. The term "CONSULTANT" includes persons
employed by, or otherwise affiliated with, a consultant.
3. STOCK SUBJECT TO THIS PLAN
Subject to the provisions of Section 6.1.1 of the Plan, the total
number of shares of stock which may be issued under options granted pursuant to
this Plan and the total number of shares provided for issuance under this Plan
shall be 1,435,000 shares of Common Stock and shall at no time exceed the
applicable percentage as calculated in accordance with Section 260.140.45 of
Chapter 3 of Title 10 of the California Code of Regulations. The shares covered
by the portion of any grant under the Plan which expires unexercised shall
become available again for grants under the Plan.
<PAGE>
4. ADMINISTRATION
4.1 GENERAL. This Plan shall be administered by the Board of Directors
of the Company (the "BOARD") or, either in its entirety or only insofar as
required pursuant to Section 4(b) hereof, by a committee (the "COMMITTEE") of at
least two Board members to which administration of the Plan, or of part of the
Plan, is delegated (in either case, the "ADMINISTRATOR").
4.2 PUBLIC COMPANY. From and after such time as the Company registers a
class of equity securities under Section 12 of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), the Committee shall consist of Board
members who are "Non-Employee Directors" as defined under Rule 16b-3 promulgated
by the Securities and Exchange Commission ("RULE 16b-3"), or any successor rule
thereto.
4.3 AUTHORITY OF ADMINISTRATOR. Subject to the other provisions of this
Plan, the Administrator shall have the authority, in its discretion: (i) to
grant Options; (ii) to determine the fair market value of the Common Stock
subject to Options; (iii) to determine the exercise price of Options granted;
(iv) to determine the persons (each an "OPTIONEE") to whom, and the time or
times at which, Options shall be granted, and the number of shares subject to
each Option; (v) to interpret this Plan; (vi) to prescribe, amend, and rescind
rules and regulations relating to this Plan; (vii) to determine the terms and
provisions of each Option granted (which need not be identical), including but
not limited to, the time or times at which Options shall be exercisable; (viii)
with the consent of the Optionee, to modify or amend any Option; (ix) to defer
(with the consent of the Optionee) the exercise date of any Option; (x) to
authorize any person to execute on behalf of the Company any instrument
evidencing the grant of an Option; and (xi) to make all other determinations
deemed necessary or advisable for the administration of this Plan. The
Administrator may delegate nondiscretionary administrative duties to such
employees of the Company as it deems proper.
4.4 INTERPRETATION BY ADMINISTRATOR. All questions of interpretation,
implementation, and application of this Plan shall be determined by the
Administrator. Such determinations shall be final and binding on all persons.
4.5 RULE 16b-3. With respect to persons subject to Section 16 of the
Exchange Act, if any, transactions under this Plan are intended to comply with
the applicable conditions of Rule 16b-3, or any successor rule thereto. To the
extent any provision of this Plan or action by the Administrator fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Administrator. Notwithstanding the above, it shall be
the responsibility of such persons, not of the Company or the Administrator, to
comply with the requirements of Section 16 of the Exchange Act; and neither the
Company nor the Administrator shall be liable if this Plan or any transaction
under this Plan fails to comply with the applicable conditions of Rule 16b-3 or
any successor rule thereto, or if any such person incurs any liability under
Section 16 of the Exchange Act.
2
<PAGE>
5. GRANTING OF OPTIONS; OPTION AGREEMENT
5.1 TERMINATION OF PLAN. No options shall be granted under this Plan
after ten years from the date of adoption of this Plan by the Board.
5.2 STOCK OPTION AGREEMENT. Each Option shall be evidenced by a written
stock option agreement (the "OPTION AGREEMENT"), in form satisfactory to the
Company, executed by the Company and the person to whom such Option is granted;
provided, however, that the failure by the Company, the Optionee, or both, to
execute the Option Agreement shall not invalidate the granting of an Option,
although the exercise of each option shall be subject to Section 6.1.3.
5.3 TYPE OF OPTION. The Option Agreement shall specify whether each
Option it evidences is an NQO or an ISO.
5.4 EARLY APPROVAL OF GRANTS. The Administrator may approve the grant
of Options under this Plan to persons who are expected to become employees,
directors or consultants of the Company, but are not employees, directors or
consultants at the date of approval, with such grant to specify whether it is
effective immediately or effective only on such person becoming an employee,
director or consultant.
6. TERMS AND CONDITIONS OF OPTIONS
Each Option granted under this Plan shall be subject to the terms and
conditions set forth in Section 6.1. NQOs shall be also subject to the terms and
conditions set forth in Section 6.2, but not those set forth in Section 6.3.
ISOs shall also be subject to the terms and conditions set forth in Section 6.3,
but not those set forth in Section 6.2.
6.1 TERMS AND CONDITIONS TO WHICH ALL OPTIONS ARE SUBJECT. Options
granted under this Plan shall be subject to the following terms and conditions:
6.1.1 CHANGES IN CAPITAL STRUCTURE. Subject to Section 6.1.2, if
the stock of the Company is changed by reason of a stock split, reverse stock
split, stock dividend, or recapitalization, combination or reclassification,
appropriate adjustments shall be made by the Board in (a) the number and class
of shares of stock subject to this Plan and each Option outstanding under this
Plan, and (b) the exercise price of each outstanding Option; provided, however,
that the Company shall not be required to issue fractional shares as a result of
any such adjustments. Each such adjustment shall be subject to approval by the
Board in its absolute discretion.
6.1.2 CORPORATE TRANSACTIONS.
(a) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee at least 30 days prior to such proposed action. To the extent not
previously exercised, all Options will terminate immediately prior to the
consummation of such proposed action.
3
<PAGE>
(b) MERGER OR ASSET SALE. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company:
(i) OPTIONS. Each Option shall be assumed or an
equivalent option substituted by the successor corporation (including as a
"successor" any purchaser of substantially all of the assets of the Company) or
a parent or subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the Option, the
Optionee shall have the right to exercise the Option as to all of the shares of
Common Stock covered by the Option, including Shares as to which it would not
otherwise be exercisable. If an Option is exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee that the Option shall be fully exercisable for a period of
15 days from the date of such notice, and the Option shall terminate upon the
expiration of such period. For the purposes of this paragraph, the Option shall
be considered assumed if, following the merger or sale of assets, the option
confers the right to purchase or receive, for each share of Common Stock subject
to the Option immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares); provided, however, that if such consideration received
in the merger or sale of assets was not solely common stock of the successor
corporation or its parent entity, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option, for each Share of Common Stock subject to the Option, to
be solely common stock of the successor corporation or its parent entity equal
in fair market value to the per share consideration received by holders of
Common Stock in the merger or sale of assets.
(ii) SHARES SUBJECT TO RIGHT OF REPURCHASE. Any Shares
subject to a Right of Repurchase of the Company shall be exchanged for the
consideration (whether stock, cash, or other securities or property) received in
the merger or asset sale by the holders of Common Stock for each share held on
the effective date of the transaction, as described in the preceding paragraph.
If in such exchange the Optionee receives shares of stock of the successor
corporation or a parent or subsidiary of such successor corporation, and if the
successor corporation has agreed to assume or substitute for Options as provided
in the preceding paragraph, such exchanged shares shall continue to be subject
to a Right of Repurchase as provided in the Optionee's Stock Option Plan stock
purchase agreement. If, as provided in the preceding paragraph, the Optionee
shall have the right to exercise an Option as to all of the shares of Common
Stock covered thereby, all Shares that are subject to a Right of Repurchase of
the Company shall be released from such Right of Repurchase and shall be fully
vested.
6.1.3 TIME OF OPTION EXERCISE. Subject to Section 5 and Section
6.3.4, Options granted under this Plan shall be exercisable (a) immediately as
of the effective date of the Option Agreement granting the Option, or (b) in
accordance with a schedule related to the date of the grant of the Option, the
date of first employment, or such other date as may be set by the Administrator
(in any case, the "VESTING BASE DATE") and specified in the Option Agreement
4
<PAGE>
relating to such Option; provided, however, that with respect to Options granted
to employees who are not officers, directors or consultants, the right to
exercise an Option must vest at the rate of at least 20% per year over five
years from the date the Option was granted. Options granted to officers,
directors or consultants may become fully exercisable, subject to reasonable
conditions such as continued employment, at any time or during any period
established by the Board of the Administrator in accordance with this Plan. In
any case, no Option shall be exercisable until a written Option Agreement in
form satisfactory to the Company is executed by the Company and the Optionee,
and the person exercising the option executes the Shareholders Agreement among
the Company and its shareholders. Further, if at any time the Company is an "S
corporation" under Section 1361 of the Code, the Company may, if the
Administrator determines that the exercise of an option would cause the Company
to cease to qualify as an "S corporation," either defer the exercise of such
option until such time as the exercise would no longer cause the Company to
cease to so qualify or permit the exercise of such option with the stock to be
acquired to be subject to simultaneous repurchase by the Company at its fair
market value, so that the Optionee never has rights as a shareholder of the
Company.
6.1.4 OPTION GRANT DATE. Except in the case of grants contingent
on the beginning of employment or other service, as described in Section 5.4,
the date of grant of an Option under this Plan shall be the date as of which the
Administrator approves the grant.
6.1.5 NONASSIGNABILITY OF OPTION RIGHTS. Except as otherwise
determined by the Administrator and expressly set forth in the Option Agreement,
no Option granted under this Plan shall be assignable or otherwise transferable
by the Optionee except by will or by the laws of descent and distribution.
During the life of the Optionee, except as otherwise determined by the
Administrator and expressly set forth in the Option Agreement, an Option shall
be exercisable only by the Optionee.
6.1.6 PAYMENT. Except as provided below, payment in full, in cash,
shall be made for all stock purchased at the time written notice of exercise of
an Option is given to the Company, and proceeds of any payment shall constitute
general funds of the Company. At the time an Option is granted or exercised, the
Administrator, in the exercise of its absolute discretion after considering any
tax or accounting consequences, may authorize any one or more of the following
additional methods of payment:
(a) Acceptance of the Optionee's full recourse promissory
note for all or part of the Option price, payable on such terms and bearing such
interest rate as determined by the Administrator (but in no event less than the
minimum interest rate specified under the Code at which no additional interest
would be imputed and in no event more than the maximum interest rate allowed
under applicable usury laws), which promissory note may be either secured or
unsecured in such manner as the Administrator shall approve (including, without
limitation, by a security interest in the shares of the Company); and
(b) Delivery (actual or constructive) by the Optionee of
Common Stock already owned by the Optionee for all or part of the Option price,
provided the value (determined as set forth in Section 6.1.11) of such Common
Stock is equal on the date of exercise to the Option price, or such portion
thereof as the Optionee is authorized to pay by delivery of such stock;
provided, however, that if an Optionee has exercised any portion of any
5
<PAGE>
Option granted by the Company by delivery of Common Stock, the Optionee may not,
within six months following such exercise, exercise any Option granted under
this Plan by delivery of Common Stock without the consent of the Administrator.
6.1.7 TERMINATION OF EMPLOYMENT.
(a) If, for any reason other than death, disability or
termination for "cause" (as defined below), an Optionee ceases to be employed by
the Company or any of its Affiliates (such event being called a "TERMINATION"),
Options held at the date of Termination (to the extent then exercisable) may be
exercised in whole or in part at any time within three months of the date of
such Termination, or such other period of not less than 30 days after the date
of such Termination as is specified in the Option Agreement (but in no event
after the Expiration Date); PROVIDED, that if such exercise of the Option would
result in liability for the Optionee under Section 16(b) of the Exchange Act,
then such 90-day period automatically shall be extended until the tenth day
following the last date upon which Optionee has any liability under Section
16(b) (but in no event after the Expiration Date, as defined below).
(b) If an Optionee dies while employed by the Company or an
Affiliate or within the period that the Option remains exercisable after
Termination, Options then held (to the extent then exercisable) may be
exercised, in whole or in part, by the Optionee, by the Optionee's personal
representative, or by the person to whom the Option is transferred by devise or
the laws of descent and distribution, at any time within 12 months after the
death of the Optionee, or such other period of not less than six months from the
date of Termination as is specified in the Option Agreement (but in no event
after the Expiration Date).
(c) If an Optionee ceases to be employed by the Company as a
result of his or her disability, the Optionee may, but only within six months
after the date of Termination (and in no event after the Expiration Date),
exercise the Option to the extent otherwise entitled to exercise it at the date
of Termination; provided, however, that if such disability is not a "disability"
as such term is defined in Section 22(e)(3) of the Code, in the case of an ISO
such ISO shall automatically convert to an NQO on the day three months and one
day following such Termination. To the extent that the Optionee was not entitled
to exercise the Option at the date of Termination or if the Optionee does not
exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.
(d) If an Optionee is terminated for "cause" all Options then
held by such Optionee shall terminate and no longer be exercisable 30 days after
the date of Termination.
(e) For purposes of this Section 6.1.7, "EMPLOYMENT" includes
service as an employee, a director or as a consultant.
(f) For purposes of this Section 6.1.7, an Optionee's
employment shall not be deemed to terminate by reason of sick leave, military
leave or other leave of absence approved by the Administrator, if the period of
any such leave does not exceed
6
<PAGE>
three months or, if longer, if the Optionee's right to reemployment by the
Company or any Affiliate is guaranteed either contractually or by statute.
(g) For purposes of this Section 6.1.7, "CAUSE" shall mean
Termination (i) by reason of Optionee's commission of a felony, misdemeanor or
other illegal conduct involving dishonesty, fraud or other matters of moral
turpitude, (ii) by reason of Optionee's dishonesty towards, fraud upon, or
deliberate injury or attempted injury to the Company or any of its Affiliates,
or (iii) by reason of Optionee's willfully engaging in misconduct which is
materially and demonstrably injurious to the Company or any of its Affiliates.
6.1.8 REPURCHASE OF STOCK. At the option of the Administrator, the
stock to be delivered pursuant to the exercise of any Option granted to an
employee, director or consultant under this Plan may be subject to a right of
repurchase in favor of the Company with respect to any employee, or director or
consultant whose employment, or director or consulting relationship with the
Company is terminated. Such right of repurchase shall be exercisable as the
Administrator may determine in the grant of Option, either or both:
(a) at the Option exercise price and (i) shall lapse at the
rate of at least 20% per year over five years from the date the Option is
granted (without regard to the date it was exercised or becomes exercisable),
and must be exercised for cash or cancellation of purchase money indebtedness
within three months of such termination and (ii) if the right is assignable by
the Company, the assignee must pay the Company upon assignment of the right
(unless the assignee is a 100% owned subsidiary of the Company or is an
Affiliate) cash equal to the difference between the Option exercise price and
the value (determined as set forth in Section 6.1.11) of the stock to be
purchased if the Option exercise price is less than such value; and
(b) at the higher of the Option exercise price or the value
(determined as set forth in Section 6.1.11) of the stock being purchased on the
date of termination, and must be exercised for cash or cancellation of purchase
money indebtedness within three months of termination of employment (or in the
case of securities issued upon exercise of options after the date of
termination, within three months after the date of exercise), and such right
shall terminate when the Company's securities become publicly traded.
In addition to the restrictions set forth in subparagraphs
(a) and (b) above, the shares held by an officer, director or consultant of the
issuer or by an affiliate of the issuer may be subject to additional or greater
restrictions, in the absolute discretion of the Administrator.
Determination of the number of shares subject to any such
right of repurchase shall be made as of the date the employee's employment by,
director's director relationship with, or consultant's consulting relationship
with, the Company terminates, not as of the date that any Option granted to such
employee, director or consultant is thereafter exercised.
6.1.9 WITHHOLDING AND EMPLOYMENT TAXES. At the time of exercise of
an Option or at such other time or times as the amount of such obligations
become determinable
7
<PAGE>
(the "TAX DATE"), the Optionee shall remit to the Company in cash all applicable
federal and state withholding and employment taxes due by reason of the exercise
of an Option, the disposition of Common Stock acquired through exercise of an
Option, or the lapse of rights to repurchase Common Stock. The Administrator
may, in its absolute discretion after considering any tax or accounting
consequences, permit an Optionee to (i) deliver a full recourse promissory note
on such terms as the Administrator deems appropriate, (ii) tender to the Company
previously owned shares of Stock or other securities of the Company, or (iii)
have shares of Common Stock which are acquired upon exercise of the Option
withheld by the Company to pay some or all of the amount of tax that is required
by law to be withheld by the Company as a result of the exercise of such Option,
the disposition of Common Stock acquired through exercise of an Option, or the
lapse of rights to repurchase Common Stock, subject to the following
limitations:
(a) Any election pursuant to clause (ii) above, where the
Optionee is tendering Common Stock issued pursuant to the exercise of an Option,
shall require that such shares be held at least six months prior to the Tax
Date.
(b) Any of the foregoing limitations may be waived (or
additional limitations may be imposed) by the Administrator, in its absolute
discretion, if the Administrator determines that such foregoing limitations are
not required (or that such additional limitations are required) in order that
the transaction shall be exempt from Section 16(b) of the Exchange Act pursuant
to Rule 16b-3, or any successor rule thereto. In addition, any of the foregoing
limitations may be waived by the Administrator, in its sole discretion, if the
Administrator determines that Rule 16b-3, or any successor rule thereto, is not
applicable to the exercise of the Option by the Optionee or for any other
reason.
(c) Any securities tendered or withheld in accordance with
this Section 6.1.9 shall be valued by the Company as of the Tax Date.
6.1.10 OTHER PROVISIONS. Each Option granted under this Plan may
contain such other terms, provisions, and conditions not inconsistent with this
Plan as may be determined by the Administrator, and each ISO granted under this
Plan shall include such provisions and conditions as are necessary to qualify
the Option as an "incentive stock option" within the meaning of Section 422 of
the Code. If Options provide for a right of first refusal in favor of the
Company with respect to stock acquired by employees, directors or consultants,
such Options shall provide that the right of first refusal shall terminate upon
the closing of the Company's initial registered public offering to the public
generally.
6.1.11 DETERMINATION OF VALUE. For purposes of the Plan, the value
of Common Stock or other securities of the Company shall be determined as
follows:
(a) If the stock of the Company is listed on any established
stock exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation System, its fair market value shall be the closing sales
price for such stock or the closing bid if no sales were reported, as quoted on
such system or exchange (or the largest such exchange) for the date the value is
to be determined (or if there are no sales for such date, then for the last
preceding
8
<PAGE>
business day on which there were sales), as reported in the Wall Street Journal
or similar publication.
(b) If the stock of the Company is regularly quoted by a
recognized securities dealer but selling prices are not reported, its fair
market value shall be the mean between the high bid and low asked prices for the
stock on the date the value is to be determined (or if there are no quoted
prices for the date of grant, then for the last preceding business day on which
there were quoted prices).
(c) In the absence of an established market for the stock,
the fair market value thereof shall be determined in good faith by the
Administrator, by consideration of such factors as the Administrator in its
discretion deems appropriate among the recent issue price of other securities of
the Company, the Company's net worth, prospective earning power, dividend-paying
capacity, and other relevant factors, including the goodwill of the Company, the
economic outlook in the Company's industry, the Company's position in the
industry and its management, and the values of stock of other corporations in
the same or a similar line of business.
6.1.12 OPTION TERM. Subject to Section 6.3.5, no Option shall be
exercisable more than ten years after the date of grant, or such lesser period
of time as is set forth in the Option Agreement (the end of the maximum exercise
period stated in the stock option agreement is referred to in this Plan as the
"EXPIRATION DATE").
6.1.13 EXERCISE PRICE. The exercise price of any Option granted to
any person who owns, directly or by attribution under Section 424(d) of the
Code, stock possessing more than ten percent of the total combined voting power
of all classes of stock of the Company or of any Affiliate (a "TEN PERCENT
SHAREHOLDER") shall in no event be less than 110% of the fair market value
(determined in accordance with Section 6.1.11) of the stock covered by the
Option at the time the Option is granted.
6.1.14 LIMITS ON GRANTS FOR QUALIFIED INCENTIVE-BASED
COMPENSATION. The Company may not issue Options with a fair market value
exercise price as of the date of grant covering in the aggregate more than
1,000,000 shares of Common Stock to any one participant in any calendar year.
6.2 EXERCISE PRICE OF NQOS. Except as set forth in Section 6.1.13, the
exercise price of any NQO granted under this Plan shall be not less than 85% of
the fair market value (determined in accordance with Section 6.1.11) of the
stock subject to the Option on the date of grant.
6.3 TERMS AND CONDITIONS TO WHICH ONLY ISOS ARE SUBJECT. Options
granted under this Plan which are designated as ISOs shall be subject to the
following terms and conditions:
6.3.1 EXERCISE PRICE. Except as set forth in Section 6.1.13, the
exercise price of an ISO shall be determined in accordance with the applicable
provisions of the Code and shall in no event be less than the fair market value
(determined in accordance with Section
9
<PAGE>
6.1.11) of the stock covered by the Option at the time the Option is granted or
deemed granted under Section 6.3.3.
6.3.2 DISQUALIFYING DISPOSITIONS. If stock acquired by exercise of
an ISO granted pursuant to this Plan is disposed of in a "disqualifying
disposition" within the meaning of Section 422 of the Code, the holder of the
stock immediately before the disposition shall promptly notify the Company in
writing of the date and terms of the disposition and shall provide such other
information regarding the Option as the Company may reasonably require.
6.3.3 GRANT DATE. If an ISO is granted in anticipation of
employment as provided in Section 5.4, the Option shall be deemed granted,
without further approval, on the date the grantee assumes the employment
relationship forming the basis for such grant, and, in addition, satisfies all
requirements of this Plan for Options granted on that date.
6.3.4 VESTING. Notwithstanding any other provision of this Plan,
ISOs granted under all incentive stock option plans of the Company and its
subsidiaries may not "vest" for more than $100,000 in fair market value of stock
(measured on the grant dates(s)) in any calendar year. For purposes of the
preceding sentence, an option "vests" when it first becomes exercisable. If, by
their terms, such ISOs taken together would vest to a greater extent in a
calendar year, and unless otherwise provided by the Administrator, the vesting
limitation described above shall be applied by deferring the exercisability of
those ISOs or portions of ISOs which have the highest per share exercise prices;
but in no event shall more than $100,000 in fair market value of stock (measured
on the grant date(s)) vest in any calendar year. The ISOs or portions of ISOs
whose exercisability is so deferred shall become exercisable on the first day of
the first subsequent calendar year during which they may be exercised, as
determined by applying these same principles and all other provisions of this
Plan including those relating to the expiration and termination of ISOs. In no
event, however, will the operation of this Section 6.3.4 cause an ISO to vest
before its terms or, having vested, cease to be vested.
6.3.5 TERM. Notwithstanding Section 6.1.12, no ISO granted to any
Ten Percent Shareholder shall be exercisable more than five years after the date
of grant.
7. MANNER OF EXERCISE
7.1 WRITTEN NOTICE; PAYMENT. An Optionee wishing to exercise an Option
shall give written notice to the Company at its principal executive office, to
the attention of the officer of the Company designated by the Administrator,
accompanied by payment of the exercise price as provided in Section 6.1.6. The
date the Company receives written notice of an exercise hereunder accompanied by
payment of the exercise price will be considered as the date such Option was
exercised.
7.2 DELIVERY OF STOCK. Promptly after receipt of written notice of
exercise of an Option, the Company shall, without stock issue or stock transfer
taxes to the Optionee or other person entitled to exercise the Option, deliver
to the Optionee or such other person a certificate or certificates for the
requisite number of shares of stock or register such Optionee as a shareholder
by book entry. An Optionee or permitted transferee of an Optionee shall not have
any privileges as a shareholder with respect to any shares of stock covered by
the Option until
10
<PAGE>
the date of issuance (as evidenced by the appropriate entry on the books of the
Company or a duly authorized transfer agent) of such shares.
8. EMPLOYMENT OR CONSULTING RELATIONSHIP
Nothing in this Plan or any Option granted thereunder shall interfere
with or limit in any way the right of the Company or of any of its Affiliates to
terminate any Optionee's employment or consulting at any time, nor confer upon
any Optionee any right to continue in the employ of, or consult with, the
Company or any of its Affiliates, nor interfere in any way with provisions in
the Company's charter documents or applicable law relating to the election,
appointment, terms of office, and removal of members of the Board.
9. FINANCIAL INFORMATION
The Company shall provide to each Optionee during the period such
Optionee holds an outstanding Option, and to each holder of Common Stock
acquired upon exercise of Options granted under the Plan for so long as such
person is a holder of such Common Stock, annual financial statements of the
Company as prepared either by the Company or independent certified public
accountants of the Company. Such financial statements shall include, at a
minimum, a balance sheet and an income statement, and shall be delivered as soon
as practicable following the end of the Company's fiscal year. The provisions of
this Section 9 shall not apply with respect to Optionees who are key employees
of the Company whose duties in connection with the Company assures them access
to information equivalent to the information provided in the financial
statements.
10. CONDITIONS UPON ISSUANCE OF SHARES
Shares of Common Stock shall not be issued pursuant to the exercise of
an Option unless the exercise of such Option and the issuance and delivery of
such shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended (the
"SECURITIES ACT").
11. NONEXCLUSIVITY OF THE PLAN
The adoption of the Plan shall not be construed as creating any
limitations on the power of the Company to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options other than under the Plan.
12. MARKET STANDOFF
Each Optionee, if so requested by the Company or any representative of
the underwriters in connection with any registration of the offering of any
securities of the Company under the Securities Act shall not sell or otherwise
transfer any shares of Common Stock acquired upon exercise of Options during the
180-day period following the effective date of a registration statement of the
company filed under the Securities Act; provided, however, that such restriction
shall apply only to the first two registration statements of the Company to
become effective under the Securities Act which includes securities to be sold
on behalf of the Company to the public in an underwritten public offering under
the Securities Act. The
11
<PAGE>
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restriction until the end of such 180-day period.
13. AMENDMENTS TO PLAN
The Board may at any time amend, alter, suspend or discontinue this
Plan. Without the consent of an Optionee, no amendment, alteration, suspension
or discontinuance may adversely affect outstanding Options except to conform
this Plan and ISOs granted under this Plan to the requirements of federal or
other tax laws relating to incentive stock options. No amendment, alteration,
suspension or discontinuance shall require shareholder approval unless (a)
shareholder approval is required to preserve incentive stock option treatment
for federal income tax purposes, (b) shareholder approval is required to
preserve option grants as "qualified performance-based compensation" under
Section 162(m) of the Code, or (c) the Board otherwise concludes that
shareholder approval is advisable.
14. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon adoption by the Board provided,
however, that no Option shall be exercisable unless and until written consent of
the shareholders of the Company, or approval of shareholders of the Company
voting at a validly called shareholders' meeting, is obtained within 12 months
after adoption by the Board. If such shareholder approval is not obtained within
such time, Options granted hereunder shall terminate and be of no force and
effect from and after expiration of such 12-month period. Options may be granted
and exercised under this Plan only after there has been compliance with all
applicable federal and state securities laws.
Plan adopted by the Board of Directors on: May 25, 1999
Plan approved by Shareholders on: May 25, 1999
12
<PAGE>
EXHIBIT 99.2
FORM OF AIMTV, INC. STOCK OPTION AGREEMENT
<PAGE>
AIMTV, INC.
STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
(A) Name of Optionee:
(B) Grant Date:
(C) Number of Shares:
(D) Exercise Price:
(E) Vesting Base Date:
(F) Effective Date:
THIS INCENTIVE STOCK OPTION AGREEMENT (the "AGREEMENT"), is made and
entered into as of the date set forth in Item F above (the "EFFECTIVE DATE")
between AimTV, Inc., a California corporation (the "COMPANY") and the person
named in Item A above ("OPTIONEE").
THE PARTIES AGREE AS FOLLOWS:
1. GRANT OF OPTION; VESTING BASE DATE.
1.1 GRANT. The Company hereby grants to Optionee pursuant to the
Company's Stock Option Plan (the "PLAN"), a copy of which is attached to this
Agreement as Exhibit 1, an incentive stock option (the "ISO") to purchase all or
any part of an aggregate of the number of shares (the "ISO SHARES") of the
Company's Common Stock (as defined in the Plan) listed in Item C above on the
terms and conditions set forth herein and in the Plan, the terms and conditions
of the Plan being hereby incorporated into this Agreement by reference.
1.2 VESTING BASE DATE. The parties hereby establish the date set forth
in Item E above as the Vesting Base Date (as defined in Section 5.1 below).
2. EXERCISE PRICE. The exercise price for purchase of each share of Common
Stock covered by this ISO shall be the price set forth in Item D above.
3. TERM. Unless otherwise specified on Exhibit 3 attached hereto, if any
(the absence of such exhibit indicating that no such exhibit was intended), this
ISO shall expire as provided in Section 6.1.12 of the Plan.
4. ADJUSTMENT OF ISOS. The Company shall adjust the number and kind of
shares and the exercise price thereof in certain circumstances in accordance
with the provisions of Section 6.1.1 of the Plan.
5. EXERCISE OF OPTIONS.
5.1 VESTING; TIME OF EXERCISE. This ISO shall be exercisable according
to the schedule set forth on Exhibit 5.1 attached hereto. Such schedule shall
commence as of the date set forth in Item (E) above (the "VESTING BASE DATE").
<PAGE>
5.2 EXERCISE AFTER TERMINATION OF STATUS AS AN EMPLOYEE, DIRECTOR OR
CONSULTANT. In the event of termination of Optionee's continuous status as an
employee, director or consultant, this ISO may be exercised only in accordance
with the provisions of Section 6.1.7 of the Plan; provided, however, that in the
event of termination of Optionee's continuous status as an employee, director or
consultant for any reason other than death or disability, this ISO may be
exercised in whole or in part at any time within thirty days of the date of such
termination (but in no event after the Expiration Date, as such term is defined
in the Plan).
5.3 MANNER OF EXERCISE. Optionee may exercise this ISO, or any portion
of this ISO, by giving written notice to the Company at its principal executive
office, to the attention of the officer of the Company designated by the Plan
Administrator, accompanied by a copy of the Stock Option Plan Stock Purchase
Agreement in substantially the form attached hereto as Exhibit 5.3 executed by
Optionee (or at the option of the Company such other form of stock purchase
agreement as shall then be acceptable to the Company), payment of the exercise
price and payment of any applicable withholding or employment taxes. The date
the Company receives written notice of an exercise hereunder accompanied by
payment will be considered as the date this ISO was exercised.
5.4 PAYMENT. Except as provided in Exhibit 5.4 attached hereto, if any
(the absence of such exhibit indicating that no exhibit was intended), payment
may be made for ISO Shares purchased at the time written notice of exercise of
the ISO is given to the Company, by delivery of cash, check, previously owned
shares of Common Stock (including constructive delivery, provided that actual or
constructive delivery of previously owned shares may not be made other than once
in any six month period), or a full recourse promissory note equal to up to 90%
of the exercise price and payable over no more than five years. Any applicable
taxes must be paid in cash. The proceeds of any payment shall constitute general
funds of the Company.
5.5 DELIVERY OF CERTIFICATE. Promptly after receipt of written notice
of exercise of the ISO, the Company shall, without stock issue or transfer taxes
to the Optionee or other person entitled to exercise, deliver to the Optionee or
other person a certificate or certificates for the requisite number of ISO
Shares or shall register the Optionee as a shareholder on the books of the
Company. An Optionee or transferee of Optionee shall not have any privileges as
a shareholder with respect to any ISO Shares covered by the option until the
date of issuance of a stock certificate or, if applicable, such registration.
6. NONASSIGNABILITY OF ISO. This ISO is not assignable or transferable by
Optionee except by will or by the laws of descent and distribution. During the
life of Optionee, the ISO is exercisable only by the Optionee. Any attempt to
assign, pledge, transfer, hypothecate or otherwise dispose of this ISO in a
manner not herein permitted, and any levy of execution, attachment, or similar
process on this ISO, shall be null and void.
7. COMPANY'S RIGHT OF REPURCHASE UPON TERMINATION OF EMPLOYMENT. The ISO
Shares arising from exercise of this ISO shall be subject to a right of
repurchase in favor of the Company (the "RIGHT OF Repurchase") to the extent set
forth on Exhibit 7 attached hereto (the absence of such exhibit indicating that
no such exhibit was intended and that the ISO shall be subject to the
limitations set forth on Exhibit 5.1). If the Optionee's employment with the
Company terminates before the Right of Repurchase lapses in accordance with
Exhibit 7, the
2
<PAGE>
Company may purchase ISO Shares subject to the Right of Repurchase (either by
payment of cash or by cancellation of purchase money indebtedness) for an amount
equal to the price the Optionee paid for such ISO Shares (exclusive of any taxes
paid upon acquisition of the stock) by giving notice at any time within the
later of (a) 30 days after the acquisition of the ISO Shares upon option
exercise, or (b) 90 days after such termination of employment that the Company
is exercising its right of repurchase. The Company shall include with such
notice payment in full in cash or by evidence of cancellation of purchase money
indebtedness. The Optionee may not dispose of or transfer ISO Shares while such
shares are subject to the Right of Repurchase and any such attempted transfer
shall be null and void.
8. COMPANY'S RIGHT OF FIRST REFUSAL.
8.1 RIGHT OF FIRST REFUSAL. In the event that the Optionee proposes to
sell, pledge, or otherwise transfer any ISO Shares or any interest in such
shares to any person or entity, the Company shall have a right of first refusal
(the "RIGHT OF FIRST REFUSAL") with respect to such ISO Shares. If Optionee
desires to transfer ISO Shares, Optionee shall give a written notice (the
"TRANSFER NOTICE") to the Company describing fully the proposed transfer,
including the number of ISO Shares proposed to be transferred, the proposed
transfer price, and the name and address of the proposed transferee. The
Transfer Notice shall be signed both by Optionee and by the proposed transferee
and must constitute a binding commitment of both such parties for the transfer
of such ISO Shares. The Company may elect to purchase all, but not less than
all, of the ISO Shares subject to the Transfer Notice by delivery of a notice of
exercise of the Company's Right of First Refusal within 30 days after the date
the Transfer Notice is delivered to the Company. The purchase price paid by the
Company shall be the price per share equal to the proposed per share transfer
price, and shall be paid to the Optionee within 60 days after the date the
Transfer Notice is received by the Company, unless a longer period for payment
was offered by the proposed transferee, in which case the Company shall pay the
purchase price within such longer period. The Company's rights under this
Section 8.1 shall be freely assignable, in whole or in part. Notwithstanding the
foregoing, the Right of First Refusal does not apply to a transfer of shares by
gift or devise to the Optionee's immediate family (i.e., parents, spouse or
children or to a trust for the benefit of the Optionee or any of the Optionee's
immediate family members), but does apply to any subsequent transfer of such
shares by such immediate family member
8.2 TRANSFER OF ISO SHARES. If the Company fails to exercise the Right
of First Refusal within 30 days after the date the Transfer Notice is delivered
to the Company, the Optionee may, not later than 75 days following delivery to
the Company of the Transfer Notice, conclude a transfer of the ISO Shares
subject to the Transfer Notice on the terms and conditions described in the
Transfer Notice. Any proposed transfer on terms and conditions different from
those described in the Transfer Notice, as well as any subsequent proposed
transfer by the Optionee, shall again be subject to the Right of First Refusal
and shall require compliance by the Optionee with the procedure described in
Section 8.1 of this Agreement. If the Company exercises the Right of First
Refusal, the parties shall consummate the sale of ISO Shares on the terms set
forth in the Transfer Notice, other than price which shall be paid as set forth
under Section 8.1; provided, however, in the event the Transfer Notice provides
for payment for the ISO Shares other than in cash, the Company shall have the
option of paying for the ISO Shares by paying in cash the present value of the
consideration described in the Transfer Notice; and
3
<PAGE>
further provided that if the value of noncash consideration is to be paid and
the Optionee disagrees with the value determined by the Company, the Optionee
may request an independent appraisal by an appraiser acceptable to the Optionee
and the Company, the costs of such appraisal to be borne equally by the Optionee
and the Company.
8.3 BINDING EFFECT. The Right of First Refusal shall inure to the
benefit of the successors and assigns of the Company and shall be binding upon
any transferee of ISO Shares other than a transferee acquiring ISO Shares in a
transaction where the Company failed to exercise the Right of First Refusal (a
"FREE TRANSFEREE") or a transferee of a Free Transferee.
8.4 TERMINATION OF COMPANY'S RIGHT OF FIRST REFUSAL. Notwithstanding
anything in this Section 8, the Company shall have no Right of First Refusal,
and Optionee shall have no obligation to comply with the procedures in Sections
8.1 through 8.3 after the closing of the Company's initial public offering to
the public generally.
9. MARKET STANDOFF. Optionee hereby agrees that if so requested by the
Company or any representative of the underwriters in connection with any
registration of the offering of the securities of the Company under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), Optionee shall not
sell or otherwise transfer the ISO Shares for a period of 180 days following the
effective date of a Registration Statement filed under the Securities Act;
provided that such restrictions shall only apply to the first two registration
statements of the Company to become effective under the Securities Act which
include securities to be sold on behalf of the Company in an underwritten public
offering under the Securities Act. The Company may impose stop transfer
instructions with respect to the ISO Shares subject to the foregoing
restrictions until the end of each such 180-day period.
10. RESTRICTION ON ISSUANCE OF SHARES.
10.1 LEGALITY OF ISSUANCE. The Company shall not be obligated to sell
or issue any ISO Shares pursuant to this Agreement if such sale or issuance, in
the opinion of the Company and the Company's counsel, might constitute a
violation by the Company of any provision of law, including without limitation
the provisions of the Securities Act.
10.2 REGISTRATION OR QUALIFICATION OF SECURITIES. The Company may, but
shall not be required to, register or qualify the sale of this ISO or any ISO
Shares under the Securities Act or any other applicable law. The Company shall
not be obligated to take any affirmative action in order to cause the grant or
exercise of this option or the issuance or sale of any ISO Shares pursuant
thereto to comply with any law.
11. RESTRICTION ON TRANSFER. Regardless whether the sale of the ISO Shares
has been registered under the Securities Act or has been registered or qualified
under the securities laws of any state, the Company may impose restrictions upon
the sale, pledge, or other transfer of ISO Shares (including the placement of
appropriate legends on stock certificates) if, in the judgment of the Company
and the Company's counsel, such restrictions are necessary or desirable in order
to achieve compliance with the provisions of the Securities Act, the securities
laws of any state, or any other law, or if the Company does not desire to have a
trading market develop for its securities.
4
<PAGE>
12. STOCK CERTIFICATE. Stock certificates evidencing ISO Shares may bear
such restrictive legends as the Company and the Company's counsel deem necessary
or advisable under applicable law or pursuant to this Agreement.
13. DISQUALIFYING DISPOSITIONS. If stock acquired by exercise of this ISO
is disposed of within two years after the Effective Date or within one year
after date of such exercise (as determined under Section 5.3 of this Agreement),
the Optionee immediately prior to the disposition shall promptly notify the
Company in writing of the date and terms of the disposition and shall provide
such other information regarding the disposition as the Company may reasonably
require.
14. REPRESENTATIONS, WARRANTIES, COVENANTS, AND ACKNOWLEDGMENTS OF OPTIONEE
UPON EXERCISE OF ISO. Optionee hereby agrees that in the event that the Company
and the Company's counsel deem it necessary or advisable in the exercise of
their discretion, the issuance of ISO Shares may be conditioned upon certain
representations, warranties, and acknowledgments by the person exercising the
ISO (the "PURCHASER"), including, without limitation, those set forth in
Sections 14.1 through 14.8 inclusive:
14.1 INVESTMENT. Purchaser is acquiring the ISO Shares for Purchaser's
own account, and not for the account of any other person. Purchaser is acquiring
the ISO Shares for investment and not with a view to distribution or resale
thereof except in compliance with applicable laws regulating securities.
14.2 BUSINESS EXPERIENCE. Purchaser is capable of evaluating the merits
and risks of Purchaser's investment in the Company evidenced by purchase of the
ISO Shares.
14.3 RELATION TO COMPANY. Purchaser is presently an officer, director,
or other employee of, or consultant to the Company, and in such capacity has
become personally familiar with the business, affairs, financial condition, and
results of operations of the Company.
14.4 ACCESS TO INFORMATION. Purchaser has had the opportunity to ask
questions of, and to receive answers from, appropriate executive officers of the
Company with respect to the terms and conditions of the transaction contemplated
hereby and with respect to the business, affairs, financial condition, and
results of operations of the Company. Purchaser has had access to such financial
and other information as is necessary in order for Purchaser to make a fully
informed decision as to investment in the Company by way of purchase of the ISO
Shares, and has had the opportunity to obtain any additional information
necessary to verify any of such information to which Purchaser has had access.
14.5 SPECULATIVE INVESTMENT. Purchaser's investment in the Company
represented by the ISO Shares is highly speculative in nature and is subject to
a high degree of risk of loss in whole or in part. The amount of such investment
is within Purchaser's risk capital means and is not so great in relation to
Purchaser's total financial resources as would jeopardize the personal financial
needs of Purchaser or Purchaser's family in the event such investment were lost
in whole or in part.
14.6 REGISTRATION. Purchaser must bear the economic risk of investment
for an indefinite period of time because the sale to Purchaser of the ISO Shares
has not been registered
5
<PAGE>
under the Securities Act and the ISO Shares cannot be transferred by Purchaser
unless such transfer is registered under the Securities Act or an exemption from
such registration is available. The Company has made no agreements, covenants,
or undertakings whatsoever to register the transfer of any of the ISO Shares
under the Securities Act. The Company has made no representations, warranties,
or covenants whatsoever as to whether any exemption from the Securities Act,
including without limitation any exemption for limited sales in routine brokers'
transactions pursuant to Rule 144, will be available; if the exemption under
Rule 144 is available at all, it may not be available until at least one year
after payment of cash for the ISO Shares and not then unless: (i) a public
trading market then exists in the Company's common stock; (ii) adequate
information as to the Company's financial and other affairs and operations is
then available to the public; and (iii) all other terms and conditions of Rule
144 have been satisfied. Purchaser understands that the resale provisions of
Rule 701 will not apply until 90 days after the Company becomes subject to the
reporting obligations of the Securities Exchange Act of 1934 (typically 90 days
after the effective date of an initial public offering).
14.7 PUBLIC TRADING. None of the Company's securities is presently
publicly traded, and the Company has made no representation, covenant, or
agreement as to whether there will be a public market for any of its securities.
14.8 TAX ADVICE. The Company has made no warranties or representations
to Purchaser with respect to the income tax consequences of the transactions
contemplated by the agreement pursuant to which the ISO Shares will be purchased
and Purchaser is in no manner relying on the Company or its representatives for
an assessment of such tax consequences.
15. ASSIGNMENT, BINDING EFFECT. Subject to the limitations set forth in
this Agreement, this Agreement shall be binding upon and inure to the benefit of
the executors, administrators, heirs, legal representatives, and successors of
the parties hereto; provided, however, that Optionee may not assign any of
Optionee's rights under this Agreement.
16. DAMAGES. Optionee shall be liable to the Company for all costs and
damages, including incidental and consequential damages, resulting from a
disposition of ISO Shares which is not in conformity with the provisions of this
Agreement.
17. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California excluding those laws that
direct the application of the laws of another jurisdiction.
18. NOTICES. All notices and other communications under this Agreement
shall be in writing. Unless and until the Optionee is notified in writing to the
contrary, all notices, communications, and documents directed to the Company and
related to the Agreement, if not delivered by hand, shall be mailed, addressed
as follows:
AimTV, Inc.
607 Market Street, Suite 300
San Francisco, CA 94105
Attention: President
6
<PAGE>
Unless and until the Company is notified in writing to the contrary, all
notices, communications, and documents intended for the Optionee and related to
this Agreement, if not delivered by hand, shall be mailed to Optionee's last
known address as shown on the Company's books. Notices and communications shall
be mailed by first class mail, postage prepaid; documents shall be mailed by
registered mail, return receipt requested, postage prepaid. All mailings and
deliveries related to this Agreement shall be deemed received when actually
received, if by hand delivery, and two business days after mailing, if by mail.
19. ARBITRATION. Any and all disputes or controversies arising out of this
Agreement shall be finally settled by arbitration conducted in San Francisco,
California in accordance with the then existing rules of the American
Arbitration Association, and judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof; provided that nothing
in this Section 19 shall prevent a party from applying to a court of competent
jurisdiction to obtain temporary relief pending resolution of the dispute
through arbitration. The parties hereby agree that service of any notices in the
course of such arbitration at their respective addresses as provided for in
Section 18 shall be valid and sufficient.
20. ENTIRE AGREEMENT. Company and Optionee agree that this Agreement
(including its attached Exhibits) is the complete and exclusive statement
between Company and Optionee regarding its subject matter and supersedes all
prior proposals, communications, and agreements of the parties (including any
letter from the Company to Optionee setting forth proposed terms of employment),
whether oral or written, regarding the grant of stock options or issuances of
shares to Optionee.
7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Incentive Stock Option
Agreement as of the Effective Date.
AIMTV, INC.
By:
-----------------------------------------
Title:
--------------------------------------
The Optionee hereby accepts and agrees to be bound by all of the terms and
conditions of this Agreement and the Plan.
--------------------------------------
Greg Rhodes
Optionee's spouse indicates by the execution of this Incentive Stock
Option Agreement such spouse's consent to be bound by the terms thereof as to
such spouse's interests, whether as community property or otherwise, if any, in
the option granted hereunder, and in any ISO Shares purchased pursuant to this
Agreement.
------------------------------------------
Optionee's Spouse
8
<PAGE>
EXHIBITS
Exhibit I Stock Option Plan
Exhibit 5.1 Time of Exercise
Exhibit 5.3 Stock Option Plan Stock Purchase Agreement
<PAGE>
EXHIBIT 1 OF THE INCENTIVE STOCK
OPTION AGREEMENT
STOCK OPTION PLAN
<PAGE>
EXHIBIT 99.3
FORM OF NETZERO, INC. STOCK OPTION ASSUMPTION AGREEMENT
<PAGE>
NETZERO, INC.
STOCK OPTION ASSUMPTION AGREEMENT
UNDER
AIMTV, INC. (FORMERLY FREERIDER.NET, INC.)
1999 STOCK OPTION PLAN
OPTIONEE: < < Employee > >,
STOCK OPTION ASSUMPTION AGREEMENT effective as of the [___] day of
December, 1999.
WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase shares of the common stock of AimTV, Inc., a
California corporation ("AIM"), which were granted to Optionee under the AimTV,
Inc. (formerly FreeRider.net, Inc.) 1999 Stock Option Plan (the "Plan").
WHEREAS, each of those options are evidenced by a Stock Option
Agreement (the "Option Agreement") issued to the Optionee under such Plan.
WHEREAS, AIM has been acquired by NetZero, Inc., a Delaware corporation
("NetZero"), through the merger of AIM with and into NetZero (the "Merger")
pursuant to the Agreement and Plan of Reorganization by and between NetZero and
AIM (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require AIM's
obligations under each outstanding option under the Plan to be assumed by
NetZero at the consummation of the Merger and the holder of each such
outstanding option to be issued an agreement evidencing the assumption of that
options.
WHEREAS, pursuant to the provisions of the Merger Agreement, the
exchange ratio (the "Exchange Ratio") in effect for the Merger is 0.048484
shares of NetZero common stock ("NetZero Stock") for each outstanding share
of AIM common stock ("AIM Stock").
WHEREAS, the purpose of this Agreement to evidence the assumption by
NetZero of the outstanding options held by Optionee under the Plan at the
consummation of the Merger (the "Effective Time") and to reflect certain
adjustments to those options which have become necessary in connection with
their assumption by NetZero in the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of AIM Stock subject to the options held by
Optionee immediately prior to the Effective Time (the "AIM Options") and the
exercise price payable per share in effect for those options are set forth
below. NetZero hereby assumes, as of the Effective Time, all the duties and
obligations of AIM under each of the AIM Options. In
<PAGE>
connection with such assumption, the number of shares of NetZero Stock
purchasable under each AIM Option hereby assumed and the exercise price payable
thereunder have been adjusted to reflect the Exchange Ratio. Accordingly, the
number of shares of NetZero Stock subject to each AIM Option hereby assumed
shall be as specified for that option below, and the adjusted exercise price
payable per share of NetZero Stock under the assumed AIM Option shall also be as
indicated for that option below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
AIM STOCK OPTIONS NETZERO ASSUMED OPTIONS
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
# of Shares of AIM Common Exercise Price # of Shares of NetZero Adjusted Exercise
Stock per Share Common Stock Price per Share
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ $
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
2. The intent of the foregoing adjustments to each assumed AIM Option
is to assure that the spread between the aggregate fair market value of the
shares of NetZero Stock purchasable under each such option and the aggregate
exercise price as adjusted pursuant to this Agreement will, immediately after
the consummation of the Merger, be not less than the spread which existed,
immediately prior to the Merger, between the then aggregate fair market value of
the AIM Stock subject to the AIM Option and the aggregate exercise price in
effect at such time under the Option Agreement. Such adjustments are also
intended to preserve, immediately after the Merger, on a per share basis, the
same ratio of the exercise price per option share to the fair market value per
share which existed under the AIM Option immediately prior to the Merger.
3. The following provisions shall govern each AIM Option hereby assumed
by NetZero:
(a) Unless the context otherwise requires, all references in each
Option Agreement hereby assumed by NetZero and in the Plan (to the extent
incorporated into such Option Agreement) shall be adjusted as follows: (i)
all references to the "Company" shall mean NetZero, (ii) all references to
"Shares" or shares of "Common Stock" shall mean shares of NetZero Stock,
(iii) all references to the "Board" shall mean the Board of Directors of
NetZero and (iv) all references to the "Committee" or "Administrator" shall
mean the Compensation Committee of the NetZero Board of Directors.
(b) The grant date and the expiration date of each assumed AIM
Option and all other provisions which govern either the exercise or the
termination of the assumed AIM Option shall remain the same as set forth in
the Option Agreement applicable to that option, and the provisions of the
Option Agreement shall accordingly govern and control Optionee's rights
under this Agreement to purchase NetZero Stock.
2
<PAGE>
(c) Pursuant to the terms of the Option Agreement, none of the
assumed AIM Options shall vest or become exercisable on an accelerated
basis upon the consummation of the Merger. Accordingly, each AIM Option
assumed by NetZero shall continue to vest and become exercisable for any
remaining unvested shares of NetZero Stock subject to that option in
accordance with the same installment vesting schedule in effect under the
applicable Option Agreement immediately prior to the Effective Time;
PROVIDED, however, that the number of shares subject to each such
installment shall be adjusted to reflect the Exchange Ratio.
(d) For purposes of applying any and all provisions of the Option
Agreement and/or the Plan relating to Optionee's status as an employee or a
consultant of AIM, Optionee shall be deemed to continue in such employee or
a consultant status for so long as Optionee renders services to NetZero (or
any present or future NetZero parent or subsidiary corporation) as an
employee or a consultant. Accordingly, the provisions of the Option
Agreement governing the termination of the assumed AIM Options upon
Optionee's cessation of employee or consultant status shall hereafter be
applied on the basis of Optionee's cessation of employee or consultant
status with NetZero and its parent or subsidiary corporations, and each
assumed AIM Option shall accordingly terminate, within the designated time
period in effect under the Option Agreement for that option, following such
cessation of employee or a consultant status.
(e) The adjusted exercise price payable for the NetZero Stock
subject to each assumed AIM Option shall be payable in any of the forms
authorized under the Option Agreement applicable to that option. For
purposes of determining the holding period of any shares of NetZero Stock
delivered in payment of such adjusted exercise price, the period for which
such shares were held as AIM Stock prior to the Merger shall be taken into
account.
(f) In order to exercise each assumed AIM Option, Optionee must
deliver to NetZero a written notice of exercise in which the number of
shares of NetZero Stock to be purchased thereunder must be indicated. The
exercise notice must be accompanied by payment of the adjusted exercise
price payable for the purchased shares of NetZero Stock and should be
delivered to NetZero at the following address:
NetZero, Inc.
2555 Townsgate Road
Westlake Village, CA 91361
Attention: Corporate Secretary
4. Except to the extent specifically modified by this Option Assumption
Agreement, all of the terms and conditions of each Option Agreement as in effect
immediately prior to the Merger shall continue in full force and effect and
shall not in any way be amended, revised or otherwise affected by this Stock
Option Assumption Agreement.
3
<PAGE>
IN WITNESS WHEREOF, NetZero, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the [___] day of December, 1999.
NETZERO, INC.
By:
--------------------------------------
Title:
-----------------------------------
ACKNOWLEDGMENT
The undersigned acknowledges receipt of the foregoing Stock Option
Assumption Agreement and understands that all rights and liabilities with
respect to each of his or her AIM Options hereby assumed by NetZero are as
set forth in the Option Agreement, the Plan (to the extent incorporated in
such Option Agreement ) and such Stock Option Assumption Agreement.
-----------------------------------------
OPTIONEE
DATED: __________________, _____
4
