<PAGE>
As filed with the Securities and Exchange Commission on October 27, 1999
================================================================================
Registration No. 333-
=====================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
ConnectInc.com, Co.
(Exact name of registrant as specified in its charter)
(formerly known as Connect, Inc.)
-------------------
Delaware 77-0431045
(State of Incorporation) (I.R.S. Employer Identification No.)
-------------------
ConnectInc.com, Co.
515 Ellis Street
Mountain View, CA 94043-2242
(650) 254-4000
(Address and telephone number of principal executive offices)
-------------------
1999 Stock Option Plan for Non-Employee Directors and Advisors
Certain Stock Options Granted Outside of Any Plan
(Full title of the plans)
Craig D. Norris
President and Chief Executive Officer
ConnectInc.com, Co.
515 Ellis Street
Mountain View, CA 94043-2242
(650) 254-4000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-------------------
Copies to:
Timothy J. Moore, Esq.
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
(650) 843-5000
-------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Proposed Maximum
Title of Securities to be Amount to be Offering Price Proposed Maximum Amount of
Registered Registered Per Share (1) Aggregate Offering Price (1) Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stock Options and Common Stock 550,000 $2.4688 - $4.3125 $1,462,525 $407
($.001 par value)
====================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) and (h)(1) under the Securities Act of
1933, as amended (the "Act"). The offering price per share and aggregate
offering price are based upon (a) the weighted average exercise price, for
shares subject to outstanding options granted by ConnectInc.com, Co. (the
"Registrant") under (i) the Registrant's 1999 Stock Option Plan for Non-Employee
Directors and Advisors and (ii) those certain options granted by the Registrant
outside of any plan, or (b) the average of the high and low prices of the
Registrant's Common Stock as reported on the Nasdaq Stock Market for October 21,
1999, for shares reserved for future grant pursuant to the Registrant's 1999
Stock Option Plan for Non-Employee Directors and Advisors (pursuant to Rule
457(c) under the Act).
NOTES TO CALCULATION OF REGISTRATION FEE
================================================================================
The chart below details the calculations of the registration fee:
<TABLE>
<CAPTION>
Type of Shares Number of Shares Offering Price Per Share Aggregate Offering Price
-------------- ---------------- ------------------------ ------------------------
<S> <C> <C> <C>
Shares issuable pursuant to outstanding 50,000 $2.7188 (1)(a)(i) $ 135,940
options under 1999 Stock Option Plan for
Non-Employee Directors and Advisors
Shares reserved for future issuance 450,000 $2.4688 (1)(b) $1,110,960
pursuant to the 1999 Stock Option Plan
for Non-Employee Directors and Advisors
Shares issuable pursuant to options 50,000 $4.3125 (1)(a)(ii) $ 215,625
granted outside of any plan
Proposed Maximum Offering Price $1,462,525
Registration Fee $ 407
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by ConnectInc.com, Co. (the "Registrant")
with the Securities and Exchange Commission are incorporated by reference into
this Registration Statement:
(a) The Registrant's latest annual report on Form 10-K405 (as amended)
filed pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(b) All other reports filed pursuant to Sections 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the annual report
referred to in (a) above.
(c) The description of the Registrant's Common Stock which is contained in
the registration statement filed under the Exchange Act, including any amendment
or report filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act 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 reference herein and to be a part of this
registration statement from the date of the filing of such reports and
documents.
INTERESTS OF NAMED EXPERTS AND COUNSEL
The legality of the Common Stock offered hereby will be passed upon for the
Company by Cooley Godward LLP, Palo Alto, California ("Cooley Godward"). As of
the date of this prospectus, Cooley Godward held a warrant to purchase 35,000
shares of the Registrant's Common Stock. Alan C. Mendelson, a partner of Cooley
Godward, is the secretary of the Registrant.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act. The Registrant's Bylaws also provide that the Registrant will indemnify its
directors and officers and may indemnify its employees and other agents to the
fullest extent not prohibited by Delaware law.
The Registrant's Second Amended and Restated Certificate of Incorporation
provides for the elimination of liability for monetary damages for breach of the
directors' fiduciary duty of care to the Registrant and its stockholders. These
provisions do not eliminate the directors' duty of care and, in appropriate
circumstances, equitable remedies such as injunctive or other forms of non-
monetary relief will remain available under Delaware law. In addition, each
director will continue to be subject to liability for breach of the director's
duty of loyalty to the Registrant, for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for any
transaction from which the director derived an improper personal benefit, and
for payment of dividends or approval of stock repurchases or redemptions that
are unlawful under Delaware law. The provision does not affect a director's
responsibilities under any other laws, such as the federal securities laws.
The Registrant has entered into agreements with its directors and executive
officers that require the Registrant to indemnify such persons to the fullest
extent permitted by Delaware law, including against expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred (including
expenses of a derivative action) in connection with any proceeding, whether
actual or threatened, to which any such person may be made a party by reason of
the fact that such person is or was a director or executive officer of the
Registrant or any of its affiliated enterprises. No indemnification will be
available if such indemnification is unlawful, or in respect of any accounting
of profits made from the purchase or sale of securities of the Registrant in
violation of Section 16(b) of the Exchange Act. The indemnification agreements
also set forth certain procedures that will apply in the event of a claim for
indemnification thereunder.
<PAGE>
EXHIBITS
Exhibit
Number
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included in signature page)
99.1 1999 Stock Option Plan for Non-Employee Directors and Advisors, and
form of stock option agreement
UNDERTAKINGS
1. The undersigned Registrant hereby undertakes:
a. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
i. To include any prospectus required by section 10(a)(3) of the
Securities Act;
ii. To reflect in the prospectus any facts or events arising after
the effective date of the 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 the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
iii. 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;
provided, however, that paragraphs 1(a)(i) and 1(a)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8 and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
b. 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 herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
2.
<PAGE>
c. 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.
2. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
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 Mountain View, State of California, on October 27,
1999.
ConnectInc.com, Co.
By /s/ Craig D. Norris
______________________________________
Craig D. Norris
Chief Executive Officer and President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Craig D. Norris and Kevin Berry and each
or any one of them, 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 and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, 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 attorneys-in-fact and agents, or any of
them, or their or his substitutes or substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Craig D. Norris Chief Executive Officer, President and Director October 27, 1999
- -------------------------------------- (Principal Executive Officer)
Craig D. Norris
/s/ Kevin Berry Chief Financial Officer (Principal Financial and October 27, 1999
- -------------------------------------- Accounting Officer)
Kevin Berry
Director October 27, 1999
- --------------------------------------
Gordon J. Bridge
/s/ Richard Lussier Director October 27, 1999
- --------------------------------------
Richard Lussier
/s/ Rory T. O'Driscoll Director October 27, 1999
- --------------------------------------
Rory T. O'Driscoll
Director October 27, 1999
- --------------------------------------
Radha Basu
</TABLE>
================================================================================
4.
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included in signature page)
99.1 1999 Stock Option Plan for Non-Employee Directors and Advisors, and
form of stock option agreement
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF COOLEY GODWARD LLP APPEARS HERE]
October 27, 1999
ConnectInc.com, Co.
515 Ellis Street
Mountain View, CA 94043-2242
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by ConnectInc.com, Co. (the "Company") of a Registration
Statement on Form S-8 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering of up to 550,000 shares of the
Company's Common Stock, $.001 par value (the "Shares"), pursuant to its 1999
Stock Option Plan for Non-Employee Directors' and Advisors (the "Plan") or
pursuant to a certain stock option (the "Option") granted outside of the Plan.
In connection with this opinion, we have examined the Registration Statement and
related Prospectuses, together with the Second Amended and Restated Certificate
of Incorporation and the By-laws of the Company, and such other documents,
records, certificates, memoranda and other instruments as we deem necessary as a
basis for this opinion. We have assumed the genuineness and authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as copies thereof, and the due execution and delivery
of all documents where due execution and delivery are a prerequisite to the
effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Plan (or as
applicable, the Option), the Registration Statement and related Prospectuses,
will be validly issued, fully paid, and nonassessable (except as to shares
issued pursuant to certain deferred payment arrangements, which will be fully
paid and nonassessable when such deferred payments are made in full).
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Cooley Godward LLP
/s/ Timothy J. Moore
Timothy J. Moore
<PAGE>
Exhibit 23.1
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the 1999 Stock Option Plan for Non-Employee Directors and
Advisors of ConnectInc.com, Co., and Certain Stock Options Granted
Outside of Any Plan of our report dated January 25, 1999 with respect to the
financial statements and schedule of ConnectInc.com, Co. (formerly "Connect,
Inc.") included in its Annual Report (Form 10-K) for the year ended December 31,
1998, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
San Jose, California
October 26, 1999
1.
<PAGE>
EXHIBIT 99.1
CONNECT, INC.
1999 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
AND ADVISORS
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
1. Purposes..................................................... 1
2. Definitions.................................................. 1
3. Administration............................................... 3
4. Shares Subject to the Plan................................... 4
5. Eligibility.................................................. 4
6. Option Provisions............................................ 5
7. Covenants of the Company..................................... 7
8. Use of Proceeds from Stock................................... 8
9. Miscellaneous................................................ 8
10. Adjustments upon Changes in Stock............................ 9
11. Amendment of the Plan and Options............................ 10
12. Termination or Suspension of the Plan........................ 11
13. Effective Date of Plan....................................... 11
</TABLE>
<PAGE>
Connect, Inc.
1999 Stock Option Plan for Non-Employee Directors and Advisors
Adopted June, 1999
Approved By Stockholders August 12, 1999
1. Purposes.
(a) Specific Purpose. The purpose of the Plan is to provide a means by
which eligible recipients of Options may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of Options.
(b) General Purpose. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Options, to secure and
retain the services of new members of this group and to provide incentives for
such persons to exert maximum efforts for the success of the Company and its
Affiliates.
2. Definitions.
(a) "Advisor" means any person engaged by the Company or an Affiliate to
render services and who is compensated for such services, provided that the term
"Advisor" shall not include Directors who are paid only a director's fee by the
Company or who are not compensated by the Company for their services as
Directors.
(b) "Affiliate" means a "parent" or a "subsidiary" (as those terms are
defined under Rule 405 promulgated under the Securities Act) or either as the
context may require.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a Committee appointed by the Board in accordance
with subsection 3(c).
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Connect, Inc., a Delaware corporation.
(h) "Continuous Service" means an Optionholder's service with the Company
or an Affiliate, whether as an Employee, Director or Advisor, is not interrupted
or terminated. An Optionholder's Continuous Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Optionholder
renders service as an Employee, Advisor or Director or a change in the entity
for which the Optionholder renders such service. For example,
1
<PAGE>
a change in status from a Director of the Company to an Advisor of an Affiliate
or an Employee of the Company will not constitute an interruption of Continuous
Service.
(i) "Director" means a member of the Board of Directors of the Company.
(j) "Disability" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(k) "Employee" means any person employed by the Company or an Affiliate
within the meaning of Section 3121(d)(1) or (2) of the Code (and any successor
provision). Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate as an Employee.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(m) "Fair Market Value" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or traded on the Nasdaq National Market System or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(n) "Non-Employee Director" means a Director of the Company who either (i)
is not a current Employee or Officer of the Company or its parent or a
subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or a subsidiary for services rendered as a consultant or
in any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act ("Regulation S-K")), does not possess an interest
in any other transaction as to which disclosure would be required under Item
404(a) of Regulation S-K and is not engaged in a business relationship as to
which disclosure would be required under Item 404(b) of Regulation S-K; or (ii)
is otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(o) "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(p) "Option" means an stock option granted pursuant to the Plan and not
intended to qualify as an "incentive stock option" within the meaning of Section
422 of the Code.
2
<PAGE>
(q) "Option Agreement" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(r) "Optionholder" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.
(s) "Plan" means this Connect, Inc. 1999 Stock Option Plan for Non-
Employee Directors and Advisors.
(t) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(u) "Securities Act" means the Securities Act of 1933, as amended.
3. Administration.
(a) Administration by Board. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).
(b) Powers of Board. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible
under the Plan shall be granted Options; when and how each Option shall be
granted; what type of Option shall be granted; the provisions of each Option
granted (which need not be identical), including the time or times when a person
shall be permitted to receive stock pursuant to an Option; and the number of
shares with respect to which an Option shall be granted to each such person.
(ii) To construe and interpret the Plan and Options granted under it,
and to establish, amend and revoke rules and regulations for its administration.
The Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Option Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.
Provided however, that the Board, the Committee, or the chief executive officer
of the Company, in that party's sole discretion, may determine whether
Continuous Service shall be considered interrupted in the case of any leave of
absence approved by that party, including sick leave, military leave or any
other personal leave.
(iii) To amend the Plan or an Option as provided in Section 11.
(iv) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
3
<PAGE>
(c) Delegation to Committee.
(i) General. The Board may delegate administration of the Plan to a
Committee or Committees of one or more members of the Board, and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
(ii) Committee Composition. In the discretion of the Board, a
Committee may consist solely of two or more Non-Employee Directors, in
accordance with Rule 16b-3. Within the scope of such authority, the Board or the
Committee may delegate to a committee of one or more members of the Board who
are not Non-Employee Directors the authority to grant Options to eligible
persons who are not then subject to Section 16 of the Exchange Act.
4. Shares Subject to the Plan.
(a) Share Reserve. Subject to the provisions of Section 10 relating to
adjustments upon changes in stock, the stock that may be issued pursuant to
Options shall not exceed in the aggregate five hundred thousand (500,000) shares
of Common Stock.
(b) Reversion of Shares to the Share Reserve. If any Option shall for any
reason expire or otherwise terminate, in whole or in part, without having been
exercised in full, the stock not acquired under such Option shall revert to and
again become available for issuance under the Plan. If any Common Stock acquired
pursuant to the exercise of an Option shall for any reason be repurchased by the
Company under an unvested share repurchase option provided under the Plan, the
stock repurchased by the Company under such repurchase option shall not revert
to and again become available for issuance under the Plan.
(c) Source of Shares. The stock subject to the Plan may be unissued shares
or reacquired shares, bought on the market or otherwise.
5. Eligibility.
(a) Eligibility for Options Generally. An Option may only be granted to a
person who is a Director or an Advisor at the time of grant and not also an
Employee.
(b) Eligibility of Advisors.
(i) An Advisor shall only be eligible for the grant of an Option if,
at the time of grant, such Advisor has been appointed to serve on one or more
advisory boards established by the Board. An advisory board may consist of one
or more Advisors.
4
<PAGE>
(ii) An Advisor shall not be eligible for the grant of an Option if,
at the time of grant, a Form S-8 Registration Statement under the Securities Act
("Form S-8") is not available to register either the offer or the sale of the
Company's securities to such Advisor because of the nature of the services that
the Advisor is providing to the Company, or because the Advisor is not a natural
person, or as otherwise provided by the rules governing the use of Form S-8,
unless the Company determines both (1) that such grant (A) shall be registered
in another manner under the Securities Act (e.g., on a Form S-3 Registration
Statement) or (B) does not require registration under the Securities Act in
order to comply with the requirements of the Securities Act, if applicable, and
(2) that such grant complies with the securities laws of all other relevant
jurisdictions.
(iii) As of April 7, 1999 Form S-8 generally is available to Advisors
only if (1) they are natural persons; (2) they provide bona fide services to the
issuer, its parents, its majority-owned subsidiaries or majority-owned
subsidiaries of the issuer's parent; and (3) the services are not in connection
with the offer or sale of securities in a capital-raising transaction, and do
not directly or indirectly promote or maintain a market for the issuer's
securities.
6. Option Provisions.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
documented at the time of grant, and a separate certificate or certificates will
be issued for shares purchased on exercise of each Option. The provisions of
separate Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option Agreement or
otherwise) the substance of each of the following provisions:
(a) Term. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) Exercise Price of an Option. The exercise price of each Option shall
be not less than eighty-five percent (85%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted. Notwithstanding the
foregoing, an Option may be granted with an exercise price lower than that set
forth in the preceding sentence if such Option is granted pursuant to an
assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.
(c) Consideration. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of an Option) by (1) delivery to the Company of other
Common Stock, (2) according to a deferred payment or other arrangement (which
may include, without limiting the generality of the foregoing, the use of other
Common Stock) with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board; provided, however, that at
any time that the Company is incorporated in Delaware, payment of the Common
Stock's "par value," as defined in the Delaware General Corporation Law, shall
not be made by deferred payment.
5
<PAGE>
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(d) Transferability of an Option. An Option shall be transferable to the
extent provided in the Option Agreement. If the Option does not provide for
transferability, then the Option shall not be transferable except by will or by
the laws of descent and distribution and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder. Notwithstanding the
foregoing provisions of this subsection 6(d), the Optionholder may, by
delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionholder,
shall thereafter be entitled to exercise the Option.
(e) Vesting Generally. The total number of shares of Common Stock subject
to an Option may, but need not, vest and therefore become exercisable in
periodic installments which may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(e) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be exercised.
(f) Termination of Continuous Service. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionholder's Continuous Service (or
such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If,
after termination, the Optionholder does not exercise his or her Option within
the time specified in the Option Agreement, the Option shall terminate.
(g) Extension of Termination Date. An Optionholder's Option Agreement may
also provide that if the exercise of the Option following the termination of the
Optionholder's Continuous Service (other than upon the Optionholder's death or
Disability) would be prohibited at any time solely because the issuance of
shares would violate the registration requirements under the Securities Act,
then the Option shall terminate on the earlier of (i) the expiration of the term
of the Option as set forth in the Option Agreement or (ii) the expiration of a
period of three (3) months after the termination of the Optionholder's
Continuous Service during which the exercise of the Option would not be in
violation of such registration requirements.
(h) Disability of Optionholder. In the event an Optionholder's Continuous
Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise it as of the date of termination), but only within such
period of time ending on the earlier of (i) the date twelve (12) months
following such termination (or such longer or shorter period specified in the
Option
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Agreement, or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionholder does not exercise his
or her Option within the time specified herein, the Option shall terminate.
(i) Death of Optionholder. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder's Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise the Option as of the date of death) by the
Optionholder's estate, by a person who acquired the right to exercise the Option
by bequest or inheritance or by a person designated to exercise the option upon
the Optionholder's death pursuant to subsection 6(d), but only within the period
ending on the earlier of (1) the date eighteen (18) months following the date of
death (or such longer or shorter period specified in the Option Agreement) or
(2) the expiration of the term of such Option as set forth in the Option
Agreement. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate.
(j) Early Exercise. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares subject to the Option prior to the full vesting of the Option.
Subject to the "Repurchase Limitation" in subsection 9(f), any unvested shares
so purchased may be subject to an unvested share repurchase option in favor of
the Company or to any other restriction the Board determines to be appropriate.
(k) Re-Load Options. Without in any way limiting the authority of the
Board to make or not to make grants of Options hereunder, the Board shall have
the authority (but not an obligation) to include as part of any Option Agreement
a provision entitling the Optionholder to a further Option (a "Re-Load Option")
in the event the Optionholder exercises the Option evidenced by the Option
Agreement, in whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option Agreement.
Any such Re-Load Option shall (i) provide for a number of shares equal to the
number of shares surrendered as part or all of the exercise price of such
Option; (ii) have an expiration date which is the same as the expiration date of
the Option the exercise of which gave rise to such Re-Load Option; and (iii)
have an exercise price which is equal to one hundred percent (100%) of the Fair
Market Value of the Common Stock subject to the Re-Load Option on the date of
exercise of the original Option. Notwithstanding the foregoing, a Re-Load Option
shall be subject to the same exercise price and term provisions heretofore
described for Options under the Plan. There shall be no Re-Load Options on a Re-
Load Option.
7. Covenants of the Company.
(a) Availability of Shares. During the terms of the Options, the Company
shall keep available at all times the number of shares of Common Stock required
to satisfy such Options.
(b) Securities Law Compliance. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be
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required to grant Options and to issue and sell shares of Common Stock upon
exercise of the Options; provided, however, that this undertaking shall not
require the Company to register under the Securities Act the Plan, any Option or
any stock issued or issuable pursuant to any such Option. If, after reasonable
efforts, the Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell stock upon exercise of such
Options unless and until such authority is obtained.
8. Use of Proceeds from Stock.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
9. Miscellaneous.
(a) Acceleration of Exercisability and Vesting. The Board shall have the
power to accelerate the time at which an Option may first be exercised or the
time during which an Option or any part thereof will vest in accordance with the
Plan, notwithstanding the provisions in the Option stating the time at which it
may first be exercised or the time during which it will vest.
(b) Stockholder Rights. No Optionholder shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to such Option unless and until such Optionholder has satisfied all requirements
for exercise of the Option pursuant to its terms.
(c) No Employment or other Service Rights. Nothing in the Plan or any
instrument executed or Option granted pursuant thereto shall confer upon any
Optionholder any right to continue to serve the Company or an Affiliate in the
capacity in effect at the time the Option was granted or shall affect the right
of the Company or an Affiliate to terminate (i) the employment of an Employee
with or without notice and with or without cause, (ii) the service of an Advisor
pursuant to the terms of such Advisor's agreement with the Company or an
Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.
(d) Investment Assurances. The Company may require an Optionholder, as a
condition of exercising or acquiring stock under any Option, (i) to give written
assurances satisfactory to the Company as to the Optionholder's knowledge and
experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Option; and (ii) to give written assurances satisfactory
to the Company stating that the Optionholder is acquiring the stock subject to
the Option for the Optionholder's own account and not with any present intention
of selling or otherwise distributing the stock. The foregoing requirements, and
any assurances given pursuant to such requirements, shall be
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inoperative if (iii) the issuance of the shares upon the exercise or acquisition
of stock under the Option has been registered under a then currently effective
registration statement under the Securities Act or (iv) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock.
(e) Withholding Obligations. To the extent provided by the terms of an
Option Agreement, the Optionholder may satisfy any federal, state or local tax
withholding obligation relating to the exercise or acquisition of stock under an
Option by any of the following means (in addition to the Company's right to
withhold from any compensation paid to the Optionholder by the Company) or by a
combination of such means: (i) tendering a cash payment; (ii) authorizing the
Company to withhold shares from the shares of the Common Stock otherwise
issuable to the Optionholder as a result of the exercise or acquisition of stock
under the Option; or (iii) delivering to the Company owned and unencumbered
shares of the Common Stock.
(f) Repurchase Limitation. The terms of any repurchase option shall be
specified in the Option and may be either at Fair Market Value at the time of
repurchase or at not less than the original purchase price.
(g) Cancellation and Re-Grant of Options. The Board shall have the
authority to effect, at any time and from time to time, (i) the repricing of any
outstanding Options under the Plan and/or (ii) with the consent of any adversely
affected holders of Options, the cancellation of any outstanding Options under
the Plan and the grant in substitution therefor of new Options under the Plan
covering the same or different numbers of shares of Common Stock. The exercise
price per share shall be not less than that specified under the Plan for newly
granted Options. Notwithstanding the foregoing, the Board may grant an Option
with an exercise price lower than that set forth above if such Option is granted
as part of a transaction to which Section 424(a) of the Code applies.
(h) Except as may be provided in an employment or other agreement that has
been reduced to writing and approved by the Board or Committee, the Option
Agreement and the Plan shall together constitute the entire understanding
between an Optionee and the Company regarding the acquisition of stock in the
Company pursuant to the Option represented by such Option Agreement, and shall
supersede all prior oral and written agreements pertaining to such Option.
10. Adjustments upon Changes in Stock.
(a) Capitalization Adjustments. If any change is made in the stock
subject to the Plan, or subject to any Option, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of
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consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of securities subject to the Plan pursuant to
subsection 4(a) and the outstanding Options will be appropriately adjusted in
the class(es) and number of securities and price per share of stock subject to
such outstanding Options. The Board, the determination of which shall be final,
binding and conclusive, shall make such adjustments. (The conversion of any
convertible securities of the Company shall not be treated as a transaction
"without receipt of consideration" by the Company.)
(b) Change in Control - Dissolution or Liquidation. In the event of a
dissolution or liquidation of the Company, Options shall terminate to the extent
not exercised (if applicable) prior to such event.
(c) Change in Control - Asset Sale. In the event of a sale of all or
substantially all of the assets of the Company, then the acquiring corporation
shall assume any Options outstanding under the Plan or shall substitute similar
Options (including an option to acquire the same consideration paid to the
stockholders in the transaction described in this subsection for those
outstanding under the Plan. In the event there is no acquiring corporation, or
the acquiring corporation refuses to assume such Options or to substitute
similar Options for those outstanding under the Plan, then with respect to
Options held by Optionholders whose Continuous Service has not terminated, the
vesting of such Options shall automatically accelerate in full, and such Options
shall be exercisable for fifteen (15) days following such acceleration and then
terminate to the extent unexercised. With respect to any other Options
outstanding under the Plan, such Options shall terminate to the extent not
exercised prior to such event.
(d) Change in Control - Merger, Consolidation or Reverse Merger. In the
event of (i) a merger or consolidation in which the Company is not the surviving
corporation or (ii) a reverse merger in which the Company is the surviving
corporation but the shares of Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise, then any surviving corporation or
acquiring corporation shall assume any Options outstanding under the Plan or
shall substitute similar Options (including an option to acquire the same
consideration paid to the stockholders in the transaction described in this
subsection for those outstanding under the Plan. In the event any surviving
corporation or acquiring corporation refuses to assume such Options or to
substitute similar Options for those outstanding under the Plan, then with
respect to Options held by Optionholders whose Continuous Service has not
terminated, the vesting of such Options shall automatically accelerate in full,
and such Options shall be exercisable for fifteen (15) days following such
acceleration and then terminate to the extent unexercised. With respect to any
other Options outstanding under the Plan, such Options shall terminate to the
extent not exercised prior to such event.
11. Amendment of the Plan and Options.
(a) Amendment of Plan. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 10 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company to
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the extent stockholder approval is necessary to satisfy the requirements of Rule
16b-3 or any Nasdaq or securities exchange listing requirements.
(b) Stockholder Approval. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval.
(c) No Impairment of Rights. Rights under any Option granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Optionholder and (ii) the
Optionholder consents in writing.
(d) Amendment of Options. The Board at any time, and from time to time,
may amend the terms of any one or more Options; provided, however, that the
rights under any Option shall not be impaired by any such amendment unless (i)
the Company requests the consent of the Optionholder and (ii) the Optionholder
consents in writing.
12. Termination or Suspension of the Plan.
(a) Plan Term. The Board may suspend or terminate the Plan at any time.
No Options may be granted under the Plan while the Plan is suspended or after it
is terminated.
(b) No Impairment of Rights. Suspension or termination of the Plan shall
not impair rights and obligations under any Option granted while the Plan is in
effect except with the written consent of the Optionholder.
13. Effective Date of Plan.
The Plan shall become effective on adoption by the Board, but no Option
shall be exercised unless and until the Plan has been approved by the
stockholders of the Company, which approval shall be within twelve (12) months
before or after the date the Plan is adopted by the Board.
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Connect, Inc.
1999 Stock Option Plan for Non-Employee Directors and Advisors
Stock Option Agreement
(Nonstatutory Stock Options)
Pursuant to your Stock Option Grant Notice ("Grant Notice") and this Stock
Option Agreement, Connect, Inc. (the "Company") has granted you an option under
its 1999 Stock Option Plan for Non-Employee Directors and Advisors (the "Plan")
to purchase the number of shares of the Company's Common Stock indicated in your
Grant Notice at the exercise price indicated in your Grant Notice. Defined
terms not explicitly defined in this Stock Option Agreement but defined in the
Plan shall have the same definitions as in the Plan.
The details of your option are as follows:
I. Vesting. Subject to the limitations contained herein, your option will vest
as provided in your Grant Notice, provided that vesting will cease upon the
termination of your Continuous Service.
II. Number of Shares and Exercise Price. The number of shares of Common Stock
subject to your option and your exercise price per share referenced in your
Grant Notice may be adjusted from time to time for Capitalization
Adjustments, as provided in the Plan.
III. Method of Payment. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment
of the exercise price in cash or by check or in any other manner permitted
---------
by your Grant Notice, which may include one or more of the following:
--------------------
(a) In the Company's sole discretion at the time your option is
exercised and provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board that,
prior to the issuance of Common Stock, results in either the receipt of cash (or
check) by the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds.
(b) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in The Wall Street Journal, by delivery of
already-owned shares of Common Stock either that you have held for the period
required to avoid a charge to the Company's reported earnings (generally six
months) or that you did not acquire, directly or indirectly from the Company,
that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise.
"Delivery" for these purposes, in the sole discretion of the Company at the time
you exercise your option, shall include delivery to the Company of your
attestation of ownership of such shares of Common Stock in a form approved by
the Company. Notwithstanding the foregoing, you may
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not exercise your option by tender to the Company of Common Stock to the extent
such tender would violate the provisions of any law, regulation or agreement
restricting the redemption of the Company's stock.
IV. Whole Shares. You may exercise your option only for whole shares of Common
Stock.
V. Securities Law Compliance. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of
Common Stock issuable upon such exercise are then registered under the
Securities Act or, if such shares of Common Stock are not then so
registered, the Company has determined that such exercise and issuance
would be exempt from the registration requirements of the Securities Act.
The exercise of your option must also comply with other applicable laws and
regulations governing your option, and you may not exercise your option if
the Company determines that such exercise would not be in material
compliance with such laws and regulations.
VI. Term. The term of your option commences on the Date of Grant and expires
upon the earliest of the following:
(c) three (3) months after the termination of your Continuous Service
for any reason other than your Disability or death, provided that if during any
part of such three- (3-) month period your option is not exercisable solely
because of the condition set forth in the preceding paragraph relating to
"Securities Law Compliance," your option shall not expire until the earlier of
the Expiration Date or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of your Continuous Service;
(d) twelve (12) months after the termination of your Continuous
Service due to your Disability;
(e) eighteen (18) months after your death if you die either during
your Continuous Service or within three (3) months after your Continuous Service
terminates;
(f) the Expiration Date indicated in your Grant Notice; or
(g) the tenth (10th) anniversary of the Date of Grant.
VII. Exercise.
(h) You may exercise the vested portion of your option (and the
unvested portion of your option if your Grant Notice so permits) during its term
by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.
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(i) By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are subject at the time of exercise, or (3) the
disposition of shares of Common Stock acquired upon such exercise.
VIII. Transferability. Your option is not transferable, except by will or by
the laws of descent and distribution, and is exercisable during your life
only by you. Notwithstanding the foregoing, by delivering written notice
to the Company, in a form satisfactory to the Company, you may designate
a third party who, in the event of your death, shall thereafter be
entitled to exercise your option.
IX. Option not a Service Contract. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in
any way whatsoever any obligation on your part to continue in the employ
of the Company or an Affiliate, or of the Company or an Affiliate to
continue your employment. In addition, nothing in your option shall
obligate the Company or an Affiliate, their respective shareholders,
Boards of Directors, Officers or Employees to continue any relationship
that you might have as a Director or Advisor for the Company or an
Affiliate.
X. Withholding Obligations.
(j) At the time you exercise your option, in whole or in part, or at
any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a "cashless
exercise" pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an Affiliate, if any, which arise in connection
with your option.
(k) Upon your request and subject to approval by the Company, in its
sole discretion, and compliance with any applicable conditions or restrictions
of law, the Company may withhold from fully vested shares of Common Stock
otherwise issuable to you upon the exercise of your option a number of whole
shares of Common Stock having a Fair Market Value, determined by the Company as
of the date of exercise, not in excess of the minimum amount of tax required to
be withheld by law. If the date of determination of any tax withholding
obligation is deferred to a date later than the date of exercise of your option,
share withholding pursuant to the preceding sentence shall not be permitted
unless you make a proper and timely election under Section 83(b) of the Code,
covering the aggregate number of shares of Common Stock acquired upon such
exercise with respect to which such determination is otherwise deferred, to
accelerate the determination of such tax withholding obligation to the date of
exercise of your option. Notwithstanding the filing of such election, shares of
Common Stock shall be withheld solely from fully vested shares of Common Stock
determined as of the date of exercise of your option that are otherwise issuable
to you upon such exercise. Any adverse
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<PAGE>
consequences to you arising in connection with such share withholding procedure
shall be your sole responsibility.
(l) You may not exercise your option unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied. Accordingly, you
may not be able to exercise your option when desired even though your option is
vested, and the Company shall have no obligation to issue a certificate for such
shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein.
XI. Notices. Any notices provided for in your option or the Plan shall be given
in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by mail by the Company to you, five (5) days
after deposit in the United States mail, postage prepaid, addressed to you
at the last address you provided to the Company.
XII. Governing Plan Document. Your option is subject to all the provisions of
the Plan, the provisions of which are hereby made a part of your option,
and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant
to the Plan. In the event of any conflict between the provisions of your
option and those of the Plan, the provisions of the Plan shall control.
15
