As filed with the Securities and Exchange Commission on June 28, 1996
Registration No. 33-
________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
AMERICA ONLINE, INC.
(Exact name of registrant as specified in charter)
Delaware 54-1322110
(State or other (I.R.S.
jurisdiction of Employer
incorporation or Identification
organization) Number)
____________________
8619 WESTWOOD CENTER DRIVE, VIENNA, VIRGINIA 22182-2285
(Address of principal executive offices)
___________________
2MARKET, INC. 1995 STOCK OPTION PLAN
___________________
Ellen M. Kirsh, Esq.
Vice President, General Counsel
and Secretary
America Online, Inc.
8619 Westwood Center Drive
Vienna, Virginia 22182-2285
(703)448-8700
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
___________________
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount Maximum Maximum
Title of to be Offering Aggregate Amount of
Securities to be Register Price Per Offering Registrat
Registered(1) ed Share(2) Price(3) ion Fee
Common Stock, 37,344 $39.6875 $1,482,090 $511.07
$.01 par value
(1) The Registrant adopted a Rights Agreement on April 23, 1993. Pursuant
to such shareholder rights plan the right to receive one-hundredth (1/100)
share of preferred stock for each share of Common Stock was provided to
holders of the Common Stock under certain defined circumstances. No such
rights are currently exercisable. Value attributable to such rights, if any,
is reflected in the market price of the Common Stock.
(2) The maximum offering price per share of 37,344 shares of Common Stock to
be registered pursuant to this Registration Statement has been determined
solely for the purpose of calculating the registration fee pursuant to Rules
457(c) and (h) under the Securities Act of 1933, as amended (the "Securities
Act"), based on the average of the high and low prices for the Common Stock
as quoted on the Nasdaq Stock Market National Market within five (5)
business days prior to the above date of filing.
(3) The maximum aggregate offering price per share of 37,344 shares of
Common Stock to be registered pursuant to this Registration Statement has been
determined solely for the purpose of calculating the registration fee
pursuant to Rules 457(c) and (h) under the Securities Act based on the
average of the high and low prices for the Common Stock as quoted on the Nasdaq
Stock Market National Market within five (5) business days prior to the above
date of filing.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document(s) containing the information specified in Part I will be
sent or given to employees as specified by Rule 428(b)(1). Such documents
are not being filed with the Securities and Exchange Commission (the
"Commission") either as part of this Registration Statement or as
prospectuses or prospectus supplements pursuant to Rule 424. Such documents
and the documents incorporated by reference in this Registration Statement
pursuant to Item 3 of Part II of this Form, taken together, constitute a
prospectus that meets the requirements of Section 10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents, which have been filed by America Online, Inc.,
a Delaware corporation (the "Company"), with the Commission, are incorporated
herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1995, as filed with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the Exchange Act since June 30, 1995.
(c) The description of the Common Stock contained in the Company's
Registration Statement on Form S-3, Registration Number 33-97078, filed
with the Commission pursuant to the Exchange Act.
(d) In addition, all documents filed by the Company with the
Commission 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 hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be part hereof from the date of
the filing of such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Limitation of Liability; Indemnification of Directors and
Officers; Insurance
The Company's Restated Certificate of Incorporation eliminates the
liability of a director to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director to the fullest extent
permitted by the General Corporation Law of the State of Delaware (the "Delaware
Corporation Law"). The Delaware Corporation Law permits a corporation to limit
or eliminate the personal liability of its directors to the corporation or its
stockholders for monetary damages for breach of fiduciary duty, other than (1)
for any breach of the duty of loyalty to the corporation or its stockholders,
(2) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (3) for willful or negligent
violations of provisions regarding the unlawful payment of dividends or unlawful
stock repurchases or redemptions, or (4) for any transaction from which the
director derived an improper personal benefit.
As permitted by the Delaware Corporation Law, Article Ninth of the
Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation") (filed as Exhibit 3.1 to the Company's Form 10-Q for the
period ending September 30, 1995 (the "Form 10-Q")) provides that:
1. To the fullest extent permitted by the Delaware Corporation Law as
the same now exists or may hereafter be amended, the Company shall
indemnify and advance expenses to, its directors and officers and any person who
is or was serving at the request of the Company as a director or officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise. The Company, by action of its board of directors,
may provide indemnification or advance expenses to employees and agents of
the Company or other persons only on such terms and conditions and to the
extent determined by the board of directors in its sole and absolute
discretion.
2. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article Ninth shall not be deemed exclusive of
any other rights to which those seeking indemnification or advancement
of expenses may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
3. The Company shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted
against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Company would have the power to
indemnify him against such liability under this Article Ninth.
4. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article Ninth shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to
be a director or officer and shall inure to the benefit of the heirs,
executors and administrators of such officer or director. The
indemnification and advancement of expenses that may have been provided to an
employee or agent of the Company by action of the board of directors,
pursuant to the last sentence of Paragraph 1 of this Article Ninth, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be an employee or agent of the Company and shall inure to the benefit
of the heirs, executors and administrators of such a person, after the time
such person has ceased to be an employee or agent of the Company, only on
such terms and conditions and to the extent determined by the board of
directors in its sole discretion.
Section 145 of the Delaware Corporation Law provides for indemnification
by the Company of its directors and officers. In addition, Article Five of the
Company's By-Laws (filed as Exhibit 3.2 to the Form S-3, Registration No. 33-
90430) provides that:
5. Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or an
officer of the Company or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan (hereinafter an "Indemnitee"),
whether the basis of such proceeding is alleged action in an official
capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Company to the fullest extent authorized by
the Delaware Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Company to provide broader
indemnification rights than such law permitted the Company to provide
prior to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and
amounts paid in settlement) reasonably incurred or suffered by such
Indemnitee in connection therewith; provided, however, that, except as
provided in Section 3 of this Article [(paragraph 7 of this Item 6)]
with respect to proceedings to enforce rights to indemnification, the Company
shall indemnify any such Indemnitee in connection with a proceeding (or
part thereof) initiated by such Indemnitee only if such proceeding (or
part thereof) was authorized by the board of directors of the Company.
6. Right to Advancement of Expenses. The right to indemnification
conferred in Section 1 of this Article [(paragraph 5 of this Item 6)]
shall include the right to be paid by the Company the expenses (including
attorneys' fees) incurred in defending any such proceeding in advance of
its final disposition; provided, however, that, if the Delaware
Corporation Law requires, an advancement of expenses incurred by an
Indemnitee in his capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such Indemnitee, including,
without limitation, service to an employee benefit plan) shall be made only
upon delivery to the Company of an undertaking, by or on behalf of such
Indemnitee, to repay all amounts so advanced if it shall ultimately by
determined by final judicial decision from which there is no further
right to appeal that such Indemnitee is not entitled to be indemnified for
such expenses under this Section 2 [(this paragraph 6 of this Item 6)] or
otherwise. The rights to indemnification and to the advancement of
expenses conferred in Sections 1 and 2 [(paragraphs 5 and 6 of this Item
6)] of this Article shall be contract rights and such rights shall
continue as to an Indemnitee who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the Indemnitee's heirs,
executors and administrators. Any repeal or modification of any of the
provisions of this Article shall not adversely affect any right or protection
of an Indemnitee existing at the time of such repeal or modification.
7. Right of Indemnitees to Bring Suit. If a claim under Section 1 or
2 of this Article [(paragraph 5 or 6 of this Item 6)] is not paid in full
by the Company within sixty (60) days after a written claim has been
received by the Company, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty (20) days,
the Indemnitee may at any time thereafter bring suit against the Company
to recover the unpaid amount of the claim. If successful in whole or in
part in any such suit, or in a suit brought by the Company to recover an
advancement of expenses pursuant to the terms of an undertaking, the
Indemnitee shall also be entitled to be paid the expenses of prosecuting
or defending such suit. In (i) any suit brought by the Indemnitee to
enforce a right to indemnification hereunder (but not in a suit brought by
the Indemnitee to enforce a right to an advancement of expenses) it shall be
a defense that, and (ii) in any suit brought by the Company to recover an
advancement of expenses pursuant to the terms of an undertaking, the
Company shall be entitled to recover such expenses upon a final adjudication
that, the Indemnitee has not met any applicable standard for indemnification
set forth in the Delaware Corporation Law. Neither the failure of the
Company (including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement
of such suit that indemnification of the Indemnitee is proper
in the circumstances because the Indemnitee has met the applicable
standard of conduct set forth in the Delaware Corporation Law, nor an actual
determination by the Company (including its board of directors,
independent legal counsel, or its stockholders) that the Indemnitee has not met
such applicable standard of conduct, shall create a presumption that the
Indemnitee has not met the applicable standard of conduct or, in the
case of such a suit brought by the Indemnitee, be a defense to such suit. In
any suit brought by the Indemnitee to enforce a right to indemnification
or to an advancement of expenses hereunder, or brought by the Company to
recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the Indemnitee is not entitled to be
indemnified, or to such advancement of expenses, under this Article or
otherwise shall be on the Company.
8. Non-Exclusivity of Rights. The rights to indemnification and to
the advancement of expenses conferred in this Article shall not be exclusive
of any other right which any person may have or hereafter acquire under any
statute, the Company's Certificate of Incorporation as amended from time
to time, these by-laws, any agreement, any vote of stockholders or
disinterested directors or otherwise.
9. Insurance. The Company may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Company
or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Company would have the power to indemnify such person against such
expense, liability or loss under the Delaware Corporation Law.
10. Indemnification of Employees and Agents of the Company. The
Company may, to the extent authorized from time to time by the board of
directors, grant rights to indemnification and to the advancement of expenses to
any employee or agent of the Company to the fullest extent of the provisions
of this Article with respect to the indemnification and advancement of
expenses of directors and officers of the Company.
As permitted by the Delaware Corporation Law, the Company's Restated
Certificate of Incorporation and the Company's Restated By-Laws, the
directors and officers of the Company are covered by a policy of liability
insurance.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
Exhibit No. Description
4.1 Restated Certificate of Incorporation
of America Online, Inc. (filed as
Exhibit 3.1 to the Form 10-Q for the
period ending September 30, 1995 and
incorporated herein by reference)
4.2 Restated By-Laws of America Online,
Inc. (filed as Exhibit 3.2 to the Form
S-3, Registration No. 33-90430 and
incorporated herein by reference)
4.3 2Market, Inc. 1995 Stock Option Plan
4.4 Form of 2Market, Inc.Immediately
Exercisable Incentive Stock Option
Agreement under the 2Market, Inc. 1995
Stock Option Plan
5 Opinion of David W. Phillips, Associate
General Counsel to the Company
(including the consent of such general
counsel), regarding the legality of
securities being offered
23.1 Consent of David W. Phillips, Associate
General Counsel to the Company
(included in his opinion filed as
Exhibit 5 hereto)
23.2 Consent of Ernst & Young LLP,
independent auditors
24 Powers of Attorney
Item 9. Undertakings
(a) The Company 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 Securities Act of 1933;
(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 and 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 20 percent 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 (a)(1)(i) and (a)(1)(ii) do not apply
if this registration statement is on Form S-3, Form S-8 or Form F-3, 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 Securities Exchange Act of 1934 that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the 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 Act and
will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 Vienna, State of Virginia, on this 28th day of
June, 1996.
AMERICA ONLINE, INC.
By: /s/STEPHEN M. CASE
Stephen M. Case
Chairman, Chief Executive Officer and
Director
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed on the 28th day of June, 1996, by the following
persons in the capacities indicated.
Signature Title
Chairman, Chief Executive
/s/ STEPHEN M. CASE Officer and Director
(Principal Executive
Officer)
Stephen M. Case
* Director
James V. Kimsey
* Director
Frank J. Caufield
* Director
Alexander M. Haig, Jr.
* Director
William N. Melton
* Director
Thomas Middelhoff
* Director
Scott C. Smith
* Director
Robert J. Frankenberg
* Director
Robert W. Pittman
Senior Vice President and
Chief Financial Officer,
Treasurer and Chief
/s/LENNERT J. LEADER Accounting Officer
(Principal Financial and
Accounting Officer)
Lennert J. Leader
*By: /s/LENNERT J. LEADER
Lennert J. Leader
Attorney -In-Fact
Exhibit 5
AOL LETTERHEAD
June 28, 1996
America Online, Inc.
8619 Westwood Center Drive
Vienna, Virginia 22182-2285
Ladies and Gentlemen:
This opinion is furnished in connection with the filing by America
Online, Inc. (the "Company") with the Securities and Exchange Commission of a
Registration Statement on Form S-8 (the "Registration Statement") under the
Securities Act of 1933, as amended. You have requested my opinion concerning
the status under Delaware law of the 37,344 shares (the "Shares") of the
Company's common stock, par value $.01 per share ("Common Stock"), and
certain Common Stock Purchase Rights (the "Rights") which are being
registered under the Registration Statement for issuance by the Company
pursuant to the terms of the 2Market, Inc. 1995 Stock Option Plan (the
"Plan").
I am Associate General Counsel to the Company and have acted as counsel
in connection with the Registration Statement. In that connection, I, or a
member of my staff upon whom I have relied, have examined and am familiar
with originals or copies, certified or otherwise, identified to our
satisfaction, of:
1. Restated Certificate of Incorporation of the Company as presently
in effect;
2. Restated By-Laws of the Company as presently in effect;
3. Certain resolutions adopted by the Company's Board of Directors;
4. 2Market, Inc. 1995 Stock Option Plan; and
5. Rights Agreement of the Company.
In our examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. We have also assumed that:
(i) all of the Shares will be issued for the consideration permitted under
the Plan as currently in effect, and none of such Shares will be issued for
less than $.01; (ii) all actions required to be taken under the Plan by the
Compensation Committee and the Board of Directors of the Company have been or
will be taken by the Compensation Committee and the Board of Directors of the
Company, respectively; and (iii) at the time of the exercise of the options
under the Plan, the Company shall continue to have sufficient authorized and
unissued shares of Common Stock reserved for issuance thereunder.
Based upon and subject to the foregoing, we are of the opinion that:
1. The shares of Common Stock and the related Common Stock Purchase
Rights which may be issued upon the exercise of the Rights have been
duly authorized for issuance.
2. If and when any Common Stock and the related Common Stock Purchase
Rights are issued in accordance with the authorization therefor (as
adjusted) established with respect to the applicable Rights in
accordance with the requirements of the Plan, and against receipt of the
exercise price therefor, and assuming the continued updating and
effectiveness of the Registration Statement and the completion of any
necessary action to permit such issuance to be carried out in accordance
with applicable securities laws, such shares of Common Stock will be
validly issued, fully-paid and nonassessable, and the accompanying
Common Stock Purchase Rights, if the Company's Common Stock Purchase
Rights have not expired or been redeemed in accordance with the terms of
the Rights Agreement, will be validly issued.
This opinion is limited to the General Corporation Law of the State of
Delaware and federal law. We express no opinion with respect to the laws of
any other jurisdiction.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and further consent to the use of my name wherever
appearing in the Registration Statement and any amendment thereto.
Very truly yours,
/s/ David W. Phillips
David W. Phillips
DWP/jem
Exhibit 24
POWER OF ATTORNEY
I, James V. Kimsey, whose signature appears below, constitute and appoint
Lennert J. Leader and Ellen M. Kirsh, and each of them, my true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
in each of them, for him/her and in his/her name, place and stead, and in any
and all capacities, to sign the Registration Statement on Form S-8 for the
registration of shares of common stock, $.01 par value (the "Common Stock"), of
America Online, Inc. reserved for issuance upon the exercise of options which
have been or may be granted under the following plans: America Online, Inc.
1996 Restricted Stock Plan and 2Market, Inc. 1995 Stock Option Plan, and any
required amendments or supplements thereto, 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 or necessary to be done in or about the premises,
as full to all intents and purposes as he or she 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/her substitutes may lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to
be executed as of this 19th day of April, 1996.
/s/ James V. Kimsey
Signature
James V. Kimsey
Print Name
POWER OF ATTORNEY
I, Frank J. Caufield, whose signature appears below, constitute and appoint
Lennert J. Leader and Ellen M. Kirsh, and each of them, my true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
in each of them, for him/her and in his/her name, place and stead, and in any
and all capacities, to sign the Registration Statement on Form S-8 for the
registration of shares of common stock, $.01 par value (the "Common Stock"), of
America Online, Inc. reserved for issuance upon the exercise of options which
have been or may be granted under the following plans: America Online, Inc.
1996 Restricted Stock Plan and 2Market, Inc. 1995 Stock Option Plan, and any
required amendments or supplements thereto, 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 or necessary to be done in or about the premises,
as full to all intents and purposes as he or she 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/her substitutes may lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to
be executed as of this 19th day of April, 1996.
/s/ Frank J. Caufield
Signature
Frank J. Caufield
Print Name
POWER OF ATTORNEY
I, Alexander M. Haig, Jr., whose signature appears below, constitute and
appoint Lennert J. Leader and Ellen M. Kirsh, and each of them, my true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him/her and in his/her name, place and
stead, and in any and all capacities, to sign the Registration Statement on Form
S-8 for the registration of shares of common stock, $.01 par value (the "Common
Stock"), of America Online, Inc. reserved for issuance upon the exercise of
options which have been or may be granted under the following plans: America
Online, Inc. 1996 Restricted Stock Plan and 2Market, Inc. 1995 Stock Option
Plan, and any required amendments or supplements thereto, 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 or necessary to be done in or about the
premises, as full to all intents and purposes as he or she 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/her substitutes may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to
be executed as of this 19th day of April, 1996.
/s/ Alexander M. Haig, Jr.
Signature
Alexander M. Haig, Jr.
Print Name
POWER OF ATTORNEY
I, William N. Melton, whose signature appears below, constitute and appoint
Lennert J. Leader and Ellen M. Kirsh, and each of them, my true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him/her and in his/her name, place and
stead, and in any and all capacities, to sign the Registration Statement on
Form S-8 for the registration of shares of common stock, $.01 par value (the
"Common Stock"), of America Online, Inc. reserved for issuance upon the
exercise of options which have been or may be granted under the following
plans: America Online, Inc. 1996 Restricted Stock Plan and 2Market, Inc.
1995 Stock Option Plan, and any required amendments or supplements thereto, 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 or
necessary to be done in or about the premises, as full to all intents and
purposes as he or she 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/her substitutes may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney
to be executed as of this 19th day of April, 1996.
/s/ William N. Melton
Signature
William N. Melton
Print Name
POWER OF ATTORNEY
I, Thomas Middelhoff, whose signature appears below, constitute and appoint
Lennert J. Leader and Ellen M. Kirsh, and each of them, my true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him/her and in his/her name, place and
stead, and in any and all capacities, to sign the Registration Statement on
Form S-8 for the registration of shares of common stock, $.01 par value (the
"Common Stock"), of America Online, Inc. reserved for issuance upon the
exercise of options which have been or may be granted under the following
plans: America Online, Inc. 1996 Restricted Stock Plan and 2Market, Inc.
1995 Stock Option Plan, and any required amendments or supplements thereto,
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 or
necessary to be done in or about the premises, as full to all intents and
purposes as he or she 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/her substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to
be executed as of this 19th day of April, 1996.
/s/ Thomas Middelhoff
Signature
Thomas Middelhoff
Print Name
POWER OF ATTORNEY
I, Scott C. Smith, whose signature appears below, constitute and appoint
Lennert J. Leader and Ellen M. Kirsh, and each of them, my true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him/her and in his/her name, place and
stead, and in any and all capacities, to sign the Registration Statement on
Form S-8 for the registration of shares of common stock,
$.01 par value (the "Common Stock"), of America Online, Inc. reserved for
issuance upon the exercise of options which have been or may be granted
under the following plans: America Online, Inc. 1996 Restricted Stock Plan
and 2Market, Inc. 1995 Stock Option Plan, and any required
amendments or supplements thereto, 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 or necessary to be done in or about the premises, as
full to all intents and purposes as he or she 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/her substitutes may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney
to be executed as of this 19th day of April, 1996.
/s/ Scott C. Smith
Signature
Scott C. Smith
Print Name
POWER OF ATTORNEY
I, Robert J. Frankenberg, whose signature appears below, constitute and
appoint Lennert J. Leader and Ellen M. Kirsh, and each of them, my true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him/her and in his/her name, place and
stead, and in any and all capacities, to sign the Registration Statement on
Form S-8 for the registration of shares of common stock, $.01 par value (the
"Common Stock"), of America Online, Inc. reserved for issuance upon the
exercise of options which have been or may be granted
under the following plans: America Online, Inc. 1996 Restricted Stock Plan
and 2Market, Inc. 1995 Stock Option Plan, and any required amendments or
supplements thereto, 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 or necessary to be done in or about the premises, as full to all
intents and purposes as he or she 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/her substitutes may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to
be executed as of this 19th day of April, 1996.
/s/ Robert J. Frankenberg
Signature
Robert J. Frankenberg
Print Name
POWER OF ATTORNEY
I, Robert W. Pittman, whose signature appears below, constitute and appoint
Lennert J. Leader and Ellen M. Kirsh, and each of them, my true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him/her and in his/her name, place and
stead, and in any and all capacities, to sign the Registration Statement on
Form S-8 for the registration of shares of common stock, $.01 par value (the
"Common Stock"), of America Online, Inc. reserved for issuance upon the
exercise of options which have been or may be granted under the following
plans: America Online, Inc. 1996 Restricted Stock Plan and 2Market, Inc.
1995 Stock Option Plan, and any required amendments or supplements
thereto, 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 or
necessary to be done in or about the premises, as full to all intents and
purposes as he or she 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/her substitutes may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to
be executed as of this 19th day of April, 1996.
/s/ Robert W. Pittman
Signature
Robert W. Pittman
Print Name
PA1\358727.01
Exhibit 4.3
2MARKET, INC.
1995 STOCK OPTION PLAN
1. Purpose. The 2Market, Inc. 1995 Stock Option Plan (the Plan")
is established to attract, retain and reward persons providing services
to 2Market, Inc. and any successor corporation thereto (collectively referred
to as the "Company"), and any present or future parent and/or subsidiary
corporations of such corporation (all of whom along with the Company being
individually referred to as a "Participating Company" and collectively
referred to as the "Participating Company Group"), and to motivate such
persons to contribute to the growth and profits of the Participating Company
Group in the future. For purposes of the Plan, a parent corporation and a
subsidiary corporation shall be as defined in Sections 424(e) and 424(f) of
the Internal Revenue Code of 1986, as amended (the "Code").
2. Administration.
a) General. The Plan shall be administered by the Board of Directors of
the Company (the "Board") and/or by a duly appointed committee of the Board
having such powers as shall be specified by the Board. Any subsequent
references herein to the Board shall also mean the committee if such
committee has been appointed and, unless the powers of the committee have
been specifically limited, the committee shall have all of the powers of the
Board granted herein, including, without limitation, the power to terminate
or amend the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law. All questions of interpretation of
the Plan or of any options granted under the Plan (an "Option") shall be
determined by the Board, and such determinations shall be final and binding
upon all persons having an interest in the Plan and/or any Option.
b) Options Authorized. Options may be either incentive stock options as
defined in Section 422 of the Code ("Incentive Stock Options") or
nonstatutory stock options.
c) Authority of Officers. Any officer of a Participating Company shall
have the authority to act on behalf of the Company with respect to any
matter, right, obligation, or election which is the responsibility of or
which is allocated to the Company herein, provided the officer has apparent
authority with respect to such matter, right, obligation, or election.
d) Disinterested Administration. With respect to the participation in
the Plan of employees who are also officers or directors of the Company subject
to Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Plan shall be administered by the Board in compliance
with the "disinterested administration" requirement of Rule 16b-3, as
promulgated under the Exchange Act and amended from time to time or any
successor rule or regulation ("Rule 16b-3").
3. Eligibility.
a) Eligible Persons. Options may be granted only to employees (including
officers and directors who are also employees) and directors of the
Participating Company Group or to individuals who are rendering services as
consultants to the Participating Company Group. For purposes of the
foregoing sentence, "Employees" shall include prospective Employees to whom
Options are granted in connection with written offers of employment with the
Participating Company Group, and "Consultants" shall include prospective
Consultants to whom Options are granted in connection with written offers of
engagement with the Participating Company Group. The Board shall, in its
sole discretion, determine which persons shall be granted Options (an
"Optionee"). Eligible persons may be granted more than one (1) Option.
b) Directors Serving on Committee. If a committee of the Board has been
established to administer the Plan in compliance with the "disinterested
administration" requirement of Rule 16b-3, no member of such committee, while
a member, shall be eligible to be granted an Option.
c) Restrictions on Option Grants. A director of the Company may only be
granted a nonstatutory stock option unless the director is also an employee
of the Company. An individual who is rendering services as a consultant may
only be granted a nonstatutory stock option.
4. Shares Subject to Option. Options shall be for the purchase of shares
of the authorized but unissued common stock of the Company (the "Stock"),
subject to adjustment as provided in paragraph 10 below. The maximum number
of shares of Stock which may be issued under the Plan shall be four hundred
forty eight thousand (448,000) shares. In the event that any outstanding
Option for any reason expires or is terminated or canceled and/or shares of
Stock subject to repurchase are repurchased by the Company, the shares
allocable to the unexercised portion of such Option, or such repurchased
shares, may again be subject to an Option grant.
5. Time for Granting Options. All Options shall be granted, if at all,
within ten (10) years from the earlier of the date the Plan is adopted by the
Board or the date the Plan is duly approved by the shareholders of the
Company.
6. Terms, Conditions and Form of Options. Subject to the provisions of
the Plan, the Board shall determine for each Option (which need not be
identical) the number of shares of Stock for which the Option shall be granted,
the exercise price of the Option, the timing and terms of exercisability and
vesting of the Option, the time of expiration of the option, the effect of
the Optionee's termination of employment or service, whether the Option is to
be treated as an Incentive Stock Option or as a nonstatutory stock option,
the method for satisfaction of any tax withholding obligation arising in
connection with an Option, including by withholding or delivery of shares of
stock, and all other terms and conditions of the Option not inconsistent with
the Plan. Options granted pursuant to the Plan shall be evidenced by written
agreements specifying the number of shares of Stock covered thereby, in such
form as the Board shall from time to time establish, which agreements may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:
a) Exercise Price. The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however, that (i)
the exercise price per share for an Incentive Stock Option shall be not less
than the fair market value, as determined by the Board, of a share of Stock on
the date of the granting of the Option, (ii) the exercise price per share for a
nonstatutory stock option shall not be less than eighty-five percent (85%) of
the fair market value, as determined by the Board, of a share of Stock on the
date of the granting of the Option and (iii) no Option granted to an Optionee
who at the time the Option is granted owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of a
Participating Company within the meaning of Section 422(b)(6) of the Code (a
"Ten Percent Owner Optionee") shall have an exercise price per share less
than one hundred ten percent (110%) of the fair market value, as determined
by the Board, of a share of Stock on the date of the granting of the Option.
Notwithstanding the foregoing, an Option (whether an Incentive Stock Option
or a nonstatutory stock option) may be granted with an exercise price lower
than the minimum exercise price set forth above if such Option is granted
pursuant to an assumption or substitution for another option in a manner
qualifying with the provisions of Section 424(a) of the Code.
b) Exercise Period of Options. The Board shall have the power to set,
including by amendment of an Option, the time or times within which each
Option shall be exercisable or the event or events upon the occurrence of
which all or a portion of each Option shall be exercisable and the term of
each Option; provided, however, that (i) no Option shall be exercisable after
the expiration of ten (10) years after the date such Option is granted, and
(ii) no Incentive Stock Option granted to a Ten Percent Owner Optionee shall
be exercisable after the expiration of five (5) years after the date such
Option is granted.
c) Payment of Exercise Price.
(1) Forms of Payment Authorized. Payment of the exercise price for
the number of shares of Stock being purchased pursuant to any Option shall be
made (1) in cash, by check, or cash equivalent, (2) by tender to the Company
of shares of the Company's stock owned by the Optionee having a value, as
determined by the Board (but without regard to any restrictions on
transferability applicable to such stock by reason of federal or state
securities laws or agreements with an underwriter for the Company), not less
than the exercise price, (3) by the Optionee's recourse promissory note in a
form approved by the Company, (4) by the assignment of the proceeds of a sale
of some or all of the shares being acquired upon the exercise of the Option
(including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System), or (5) by any combination thereof.
The Board may at any time or from time to time grant Options which do not
permit all of the foregoing forms of consideration to be used in payment of
the exercise price and/or which otherwise restrict one (1) or more forms of
consideration.
(2) Tender of Company Stock. Notwithstanding the foregoing, an Option may
not be exercised by tender to the Company of shares of the Company's stock to
the extent such tender of stock would constitute a violation of the
provisions of any law, regulation and/or agreement restricting the redemption
of the Company's stock. Unless otherwise provided by the Board, an Option
may not be exercised by tender to the Company of shares of the Company's
stock unless such shares of the Company's stock either have been owned by the
Optionee for more than six (6) months or were not acquired, directly or
indirectly, from the Company.
(3) Promissory Notes. No promissory note shall be permitted if an exercise
using a promissory note would be a violation of any law. Any permitted
promissory note shall be due and payable not more than four (4) years after
the Option is exercised, and interest shall be payable at least annually and
be at least equal to the minimum interest rate necessary to avoid imputed
interest pursuant to all applicable sections of the Code. The Board shall
have the authority to permit or require the Optionee to secure any promissory
note used to exercise an Option with the shares of Stock acquired on exercise
of the Option and/or with other collateral acceptable to the Company. Unless
otherwise provided by the Board, in the event the Company at any time is
subject to the regulations promulgated by the Board of Governors of the
Federal Reserve System or any other governmental entity affecting the
extension of credit in connection with the Company's securities, any
promissory note shall comply with such applicable regulations, and the
Optionee shall pay the unpaid principal and accrued interest, if any, to the
extent necessary to comply with such applicable regulations.
(4) Assignment of Proceeds of Sale. The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve and/or terminate any program and/or procedures
for the exercise of Options by means of an assignment of the proceeds of a
sale of some or all of the shares of Stock to be acquired upon such exercise.
7. Standard Forms of Stock Option Agreement.
a) Incentive Stock Options. Unless otherwise provided for by the Board at
the time an Option is granted, an Option designated as an "Incentive Stock
Option" shall comply with and be subject to the terms and conditions set
forth in the form of incentive stock option agreement.
b) Nonstatutory Stock Options. Unless otherwise provided for by the Board
at the time an Option is granted, an Option designated as a "Nonstatutory
Stock Option" shall comply with and be subject to the terms and conditions
set forth in the forms of nonstatutory stock option agreement.
c) Standard Term for Options. Unless otherwise provided for by the Board
in the grant of an Option, any Option granted hereunder shall be exercisable
for a term of ten (10) years.
8. Authority to Vary Terms. The Board shall have the authority from time
to time to vary the terms of either of the standard forms of Stock Option
Agreement described in paragraph 7 above either in connection with the grant
or amendment of an individual Option or in connection with the authorization
of a new standard form or forms; provided, however, that the terms and
conditions of such revised or amended standard form or forms of stock option
agreement shall be in accordance with the terms of the Plan. Such authority
shall include, but not by way of limitation, the authority to grant Options
which are immediately exercisable subject to the Company's right to
repurchase any unvested shares of Stock acquired by an Optionee on exercise
of an Option in the event such Optionee's employment with the Participating
Company Group is terminated for any reason, with or without cause.
9. Fair Market Value Limitation. To the extent that the aggregate fair
market value (determined at the time the Option is granted) of stock with
respect to which Incentive Stock Options are exercisable by an Optionee for
the first time during any calendar year (under all stock option plans of the
Company, including the Plan) exceeds One Hundred Thousand Dollars ($100,000),
such options shall be treated as nonstatutory stock options. This paragraph
shall be applied by taking Incentive Stock Options into account in the order
in which they were granted.
10. Effect of Change in Stock Subject to Plan. Appropriate adjustments
shall be made in the number and class of shares of Stock subject to the Plan
and to any outstanding Options and in the exercise price of any outstanding
Options in the event of a stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification, or like change in the
capital structure of the Company. In the event a majority of the shares
which are of the same class as the shares that are subject to outstanding
Options are exchanged for, converted into, or otherwise become (whether or
not pursuant to a Transfer of Control (as defined below)) shares of another
corporation (the "New Shares"), the Company may unilaterally amend the
outstanding Options to provide that such Options are exercisable for New
Shares. In the event of any such amendment, the number of shares and the
exercise price of the outstanding Options shall be adjusted in a fair and
equitable manner.
11. Transfer of Control. A "Transfer of Control" shall be deemed to have
occurred in the event any of the following occurs with respect to the
Company.
a) the direct or indirect sale or exchange by the shareholders of the
Company of all or substantially all of the stock of the Company where the
shareholders of the Company before such sale or exchange do not retain,
directly or indirectly, at least a majority of the beneficial interest in the
voting stock of the Company after such sale or exchange;
b) a merger or consolidation where the shareholders of the Company before
such merger or consolidation do not retain, directly or indirectly, at least
a majority of the beneficial interest in the voting stock of the Company
after such merger or consolidation;
c) the sale, exchange, or transfer of all or substantially all of the
assets of the Company (other than a sale, exchange, or transfer to one (1) or
more subsidiary corporations (as defined in paragraph 1 above) of the
Company); or
d) a liquidation or dissolution of the Company.
In the event of a Transfer of Control, the Board, in its sole
discretion, may arrange with the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be
(the "Acquiring Corporation"), for the Acquiring Corporation to either
assume the Company's rights and obligations under outstanding Options or
substitute options for the Acquiring Corporation's stock for such
outstanding Options. Any Options which are neither assumed or
substituted for by the Acquiring Corporation in connection with the
Transfer of Control nor exercised as of the date of the Transfer of
Control shall terminate and cease to be outstanding effective as of the
date of the Transfer of Control.
12. Provision of Information. At least annually, copies of the Company's
balance sheet and income statement for the just completed fiscal year shall
be made available to each Optionee and purchaser of shares of Stock upon the
exercise of an Option. The Company shall not be required to provide such
information to Optionees whose duties in connection with the Company assure
them access to equivalent information.
13. Options Non-Transferable. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee. No Option shall be
assignable or transferable by the Optionee, except by will or by the laws of
descent and distribution.
14. Transfer of Company's Rights. In the event any Participating Company
assigns, other than by operation of law, to a third person, other than
another Participating Company, any of the Participating Company's rights to
repurchase any shares of Stock acquired on the exercise of an Option, the
assignee shall pay to the assigning Participating Company the value of such
right as determined by the Company in the Company's sole discretion. Such
consideration shall be paid in cash. In the event such repurchase right is
exercisable at the time of such assignment, the value of such right shall be
not less than the fair market value of the shares of Stock which may be
repurchased under such right (as determined by the Company) minus the
repurchase price of such shares. The requirements of this paragraph 14
regarding the minimum consideration to be received by the assigning
Participating Company shall not inure to the benefit of the Optionee whose
shares of Stock are being repurchased. Failure of a Participating Company to
comply with the provisions of this paragraph 14 shall not constitute a
defense or otherwise prevent the exercise of the repurchase right by the
assignee of such right.
15. Termination or Amendment of Plan or Options. The Board, including any
duly appointed committee of the Board, may terminate or amend the Plan or any
Option at any time; provided, however, that without the approval of the
Company's shareholders, there shall be (a) no increase in the total number of
shares of Stock covered by the Plan (except by operation of the provisions of
paragraph 10 above), (b) no change in the class eligible to receive Incentive
Stock Options and (c) no expansion in the class eligible to receive
nonstatutory stock options. In addition to the foregoing, the approval of
the Company's shareholders shall be sought for any amendment to the Plan for
which the Board deems shareholder approval necessary in order to comply with
Rule 16b-3. In any event, no amendment may adversely affect any then
outstanding Option or any unexercised portion thereof, without the consent of
the Optionee, unless such amendment is required to enable an Option
designated as an Incentive Stock Option to qualify as an Incentive Stock
Option.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing 2Market, Inc. 1995 Stock Option Plan was duly adopted by
the Board of Directors of the Company on the 17th day of January, 1995.
Plan History
January 17, 1995 Board of Directors adopts the 1995 Stock Option Plan
with a share reserve of 448,000 shares
January 17, 1995 Shareholders approve the 1995 Stock Option Plan with
a share reserve of 448,000 shares
Exhibit 4.4
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES
ACT OF 1933.
2MARKET, INC.
IMMEDIATELY EXERCISABLE
INCENTIVE STOCK OPTION AGREEMENT
2Market, Inc. (the "Company") granted to the individual named below an
option to purchase certain shares of common stock of the Company, in the
manner and subject to the provisions of this Option Agreement.
1. Definitions:
a) "Optionee" shall mean .
b) "Date of Option Grant" shall mean .
c) "Number of Option Shares" shall mean shares of
common stock of the Company as adjusted from time to time pursuant to
paragraph 9 below.
d) "Exercise Price" shall mean $ per share as adjusted from
time to time pursuant to paragraph 9 below.
e) "Initial Exercise Date" shall be the Date of Option Grant.
f) "Initial Vesting Date" shall be the date occurring one (1) year after
the Date of Option Grant.
g) Determination of "Vested Ratio":
Vested Ratio
Prior to Initial Vesting Date 0
On Initial Vesting Date, 1/4
provided the Optionee is
continuously employed by
a Participating Company from
the Date of Option Grant until
the Initial Vesting Date
Plus
For each full month 1/48
of the Optionee's
continuous employment by a
Participating Company from the
Initial Vesting Date
In no event shall the Vested
Ratio exceed 1/1.
h) "Option Term Date" shall mean the date ten (10) years after the Date of
Option Grant.
i) "Code" shall mean the Internal Revenue Code of 1986, as amended.
j) "Company" shall mean 2Market, Inc., a California corporation, and any
successor corporation thereto.
k) "Participating Company" shall mean (1) the Company and (2) any present
or future parent and/or subsidiary corporation of the Company while such
corporation is a parent or subsidiary of the Company. For purposes of
this Option Agreement, a parent corporation and a subsidiary
corporation shall be as defined in Sections 424(e) and 424(f) of the
Code.
l) "Participating Company Group" shall mean at any point in time all
corporations collectively which are then a Participating Company.
m) "Plan" shall mean the 2Market, Inc. 1995 Stock Option Plan.
2. Status of the Option. This Option is intended to be an incentive stock
option as described in Section 422 of the Code, but the Company does not
represent or warrant that this Option qualifies as such. The Optionee should
consult with the Optionee's own tax advisors regarding the tax effects of
this Option and the requirements necessary to obtain favorable income tax
treatment under Section 422 of the Code, including, but not limited to,
holding period requirements.
3. Administration. All questions of interpretation concerning this Option
Agreement shall be determined by the Board of Directors of the Company (the
"Board") and/or by a duly appointed committee of the Board having such powers
as shall be specified by the Board. Any subsequent references herein to the
Board shall also mean the committee if such committee has been appointed and,
unless the powers of the committee have been specifically limited, the
committee shall have all of the powers of the Board granted in the Plan,
including, without limitation, the power to terminate or amend the Plan at
any time, subject to the terms of the Plan and any applicable limitations
imposed by law. All determinations by the Board shall be final and binding
upon all persons having an interest in the Option. Any officer of a
Participating Company shall have the authority to act on behalf of the
Company with respect to any matter, right, obligation, or election which is
the responsibility of or which is allocated to the Company herein, provided
the officer has apparent authority with respect to such matter, right,
obligation, or election.
4. Exercise of the Option.
a) Right to Exercise. Except as provided in paragraph 4(f) below, the
Option shall be immediately exercisable in its entirety on and after the
Initial Exercise Date subject to the Optionee's agreement that any shares
purchased upon exercise are subject to the Company's repurchase rights
set forth in paragraph 11 and paragraph 12 below. Notwithstanding the
foregoing, except as provided in paragraph 16 below, the aggregate
fair market value of the stock with respect to which the Optionee may
exercise the Option for the first time during any calendar year, together
with any other incentive stock options which are exercisable for the
first time during any such year, as determined in accordance with section
422(d) of the Code, shall not exceed One Hundred Thousand Dollars
($100,000). Such limitation on exercise described in section 422(d) of
the Code shall be referred to in this Option Agreement as the "$100,000
Exercise Limitation." In no event shall the Option be exercisable for
more shares than the Number of Option Shares. In addition to the
foregoing, in the event that the adoption of the Plan or any amendment of
the Plan is subject to the approval of the Company's shareholders in
order for the Option to comply with the requirements of Rule 16b-3,
promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Option shall not be exercisable prior to such
shareholder approval if the Optionee is subject to Section 16(b) of the
Exchange Act, unless the Board, in its sole discretion, approves the
exercise of the Option prior to such shareholder approval.
b) Method of Exercise. The Option may be exercised by written notice to
the Company which must state the election to exercise the Option, the
number of shares for which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent
with respect to such shares and other administrative matters as may be
required pursuant to the provisions of this Option Agreement and the
exercise form used by the Company. The written notice must be signed by
the Optionee and must be delivered in person or by certified or
registered mail, return receipt requested, to the Chief Financial Officer
of the Company, or other authorized representative of the Participating
Company Group, prior to the termination of the Option as set forth in
paragraph 6 below, accompanied by (1) full payment of the exercise price
for the number of shares being purchased and (2) an executed copy, if
required herein, of the then current forms of escrow and security
agreement referenced below.
c) Payment of Exercise Price.
(1) Forms of Payment Authorized. Payment of the exercise price for the
number of shares for which the Option is being exercised shall be made
(i) in cash, by check, or cash equivalent, (ii) by tender to the Company
of shares of the Company's common stock owned by the Optionee having a
value not less than the option price, which either have been owned by the
Optionee for more than six (6) months or were not acquired, directly or
indirectly, from the Company, (iii) if expressly authorized by the
Company, in its sole discretion, at the time of Option exercise, by the
Optionee's recourse promissory note in a form approved by the Company;
(iv) by Immediate Sales Proceeds, as defined below, or (v) by any
combination of the foregoing.
(2) Tender of Company Stock. Notwithstanding the foregoing, the Option may
not be exercised by tender to the Company of shares of the Company's
common stock to the extent such tender of stock would constitute a
violation of the provisions of any law, regulation and/or agreement
restricting the redemption of the Company's common stock.
(3) Promissory Note. Unless otherwise specified by the Board at the time
the Option is granted, a promissory note permitted in accordance with
clause (c)(1)(iii) above shall not exceed the amount permitted by law to
be paid by a promissory note and shall be a full recourse note in a form
satisfactory to the Company, with principal payable four (4) years after
the date the Option is exercised. Interest on the principal balance of
the promissory note shall be payable in annual installments at the
minimum interest rate necessary to avoid imputed interest pursuant to all
applicable sections of the Code. Such recourse promissory note shall be
secured by the shares of stock acquired pursuant to the then current form
of security agreement as approved by the Company. In the event the
Company at any time is subject to the regulations promulgated by the
Board of Governors of the Federal Reserve System or any other
governmental entity affecting the extension of credit in connection
with the Company's securities, any promissory note shall comply with such
applicable regulations, and the Optionee shall pay the unpaid principal
and accrued interest, if any, to the extent necessary to comply with
such applicable regulations. Except as the Company in its sole
discretion shall determine, the Optionee shall pay the unpaid principal
balance of the promissory note and any accrued interest thereon upon
termination of the Optionee's employment with the Participating Company
Group for any reason, with or without cause.
(4) Immediate Sales Proceeds. "Immediate Sales Proceeds" shall mean the
assignment in form acceptable to the Company of the proceeds of a sale of
some or all of the shares acquired upon the exercise of the Option
pursuant to a program and/or procedure approved by the Company
(including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board
of Governors of the Federal Reserve System). The Company reserves, at
any and all times, the right, in the Company's sole and absolute
discretion, to decline to approve any such program and/or procedure.
d) Tax Withholding. At the time the Option is exercised, in whole or in
part, or at any time thereafter as requested by the Company, the Optionee
hereby authorizes payroll withholding and otherwise agrees to make
adequate provision for foreign, federal and state tax withholding
obligations of the Participating Company Group, if any, which arise in
connection with the Option, including, without limitation, obligations
arising upon (1) the exercise, in whole or in part, of the Option, (2)
the transfer, in whole or in part, of any shares acquired on exercise of
the Option, (3) the operation of any law or regulation providing for the
imputation of interest, or (4) the lapsing of any restriction with respect
to any shares acquired on exercise of the Option. The Optionee is
cautioned that the Option is not exercisable unless the Participating
Company Group's withholding obligations are satisfied. Accordingly, the
Optionee may not be able to exercise the Option when desired even though
the Option is vested and the Company shall have no obligation to issue
a certificate for such shares.
e) Certificate Registration. Except in the event the exercise price is
paid by Immediate Sales proceeds, the certificate or certificates for the
shares as to which the Option is exercised shall be registered in the name
of the Optionee, or, if applicable, the heirs of the Optionee.
f) Restrictions on Grant of the Option and Issuance of Shares. The grant
of the Option and the issuance of the shares upon exercise of the Option
shall be subject to compliance with all applicable requirements of
federal, state or foreign law with respect to such securities. The Option
may not be exercised if the issuance of shares upon such exercise would
constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations. In addition, the Option may
not be exercised unless (1) a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), shall at the time of
exercise of the Option be in effect with respect to the shares issuable
upon exercise of the Option or (2) in the opinion of legal counsel to the
Company, the shares issuable upon exercise of the Option may be issued in
accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. THE OPTIONEE IS
CAUTIONED THAT THE OPTION MAY NOT BE EXERCISABLE UNLESS THE FOREGOING
CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO
EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED.
Questions concerning this restriction should be directed to the Chief
Financial Officer of the Company. As a condition to the exercise of the
Option, the Company may require the Optionee to satisfy any qualifications
that may be necessary or appropriate, to evidence compliance with any
applicable law or regulation and to make any representation or warranty
with respect thereto as may be requested by the Company.
g) Fractional Shares. The Company shall not be required to issue
fractional shares upon the exercise of the Option.
5. Non-Transferability of the Option. The Option may be exercised during
the lifetime of the Optionee only by the Optionee and may not be assigned or
transferred in any manner except by will or by the laws of descent and
distribution. Following the death of the Optionee, the Option, to the
extent unexercised and exercisable by the Optionee on the date of death,
may be exercised by the Optionee's legal representative or by any person
empowered to do so under the deceased Optionee's will or under the then
applicable laws of descent and distribution.
6. Termination of the Option. The Option shall terminate and may no longer
be exercised on the first to occur of (a) the Option Term Date as defined
above, (b) the last date for exercising the Option following termination of
employment as described in paragraph 7 below, or (c) a Transfer of Control
to the extent provided in paragraph 8 below.
7. Termination of Employment.
a) Termination of the Option. If the Optionee ceases to be an employee of
the Participating Company Group for any reason, except death or disability,
the Option, to the extent unexercised and exercisable by the Optionee on the
date on which the Optionee ceased to be an employee, may be exercised by the
Optionee within three (3) months after the date on which the Optionee's
employment terminated, but in any event no later than the Option Term Date.
If the Optionee ceases to be an employee of the Participating Company Group
because of the death or disability of the Optionee, the Option, to the
extent unexercised and exercisable by the Optionee on the date on which the
Optionee ceased to be an employee, may be exercised by the Optionee (or the
Optionee's legal representative) at any time prior to the expiration of
twelve (12) months from the date on which the Optionee's employment
terminated, but in any event no later than the Option Term Date. The
Optionee's employment shall be deemed to have terminated on account of death
if the Optionee dies within three (3) months after the Optionee's
termination of employment. Notwithstanding the provisions of this
paragraph 7(a), the Option may not be exercised after the Optionee's
termination of employment if the shares to be acquired on exercise of
the Option would be Unvested Shares as that term is defined in paragraph
11 below. THE OPTIONEE IS CAUTIONED THAT IF HIS OR HER
EMPLOYMENT IS TERMINATED DUE TO A DISABILITY NOT DESCRIBED IN SECTION 422(c)
OF THE INTERNAL REVENUE CODE AND THE OPTIONEE CHOOSES TO EXERCISE THE OPTION
MORE THAN THREE (3) MONTHS AFTER THE DATE OF TERMINATION, THE OPTION MAY
LOSE ITS STATUS AS AN INCENTIVE STOCK OPTION AND BE TREATED INSTEAD AS A
NONSTATUTORY STOCK OPTION, AND THE OPTIONEE MAY OWE APPLICABLE WITHHOLDING
TAXES AT THE TIME OF THE EXERCISE.
b) Employee and Termination of Employment Defined. For purposes of this
paragraph 7, the term "employee" shall mean any person, including officers
and directors, employed by a Participating Company or performing services
for a Participating Company as a director or consultant. For purposes of
this paragraph 7, the Optionee's employment shall be deemed to have
terminated if the Optionee ceases to be employed by a Participating Company
(whether upon an actual termination of employment or upon the Optionee's
employer ceasing to be a Participating Company). The Optionee's employment
shall not be deemed to have terminated merely because of a change in the
capacity in which the Optionee serves as an employee, provided that there is
no interruption or termination of the Optionee's service as an employee.
THE OPTIONEE IS CAUTIONED THAT IF THE OPTION IS EXERCISED MORE THAN THREE
(3) MONTHS AFTER THE DATE ON WHICH THE OPTIONEE'S EMPLOYMENT (OTHER THAN AS
A DIRECTOR, CONSULTANT, ADVISOR OR OTHER INDEPENDENT CONTRACTOR) TERMINATED,
THE OPTION MAY CEASE TO BE AN INCENTIVE STOCK OPTION. THE OPTIONEE SHOULD
CONSULT WITH THE OPTIONEE'S OWN TAX ADVISORS AS TO THE TAX CONSEQUENCES OF
ANY SUCH DELAYED EXERCISE.
c) Extension if Exercise Prevented by Law. Notwithstanding the foregoing,
if the exercise of the Option within the applicable time periods set forth
above is prevented by the provisions of paragraph 4(f) above, the Option
shall remain exercisable until three (3) months after the date the Optionee
is notified by the Company that the Option is exercisable, but in any event
no later than the Option Term Date. The Company makes no representation as
to the tax consequences of any such delayed exercise. The Optionee should
consult with the Optionee's own tax advisors as to the tax consequences to
the Optionee of any such delayed exercise.
d) Extension if Optionee Subject to Section 16(b). Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods
set forth above would subject the Optionee to suit under Section 16(b) of
the Exchange Act, the Option shall remain exercisable until the earliest to
occur of (1) the tenth (10th) day following the date on which the Optionee
would no longer be subject to such suit, (2) the one hundred and ninetieth
(190th) day after the Optionee's termination of employment, or (3) the
Option Term Date. The Company makes no representation as to the tax
consequences of any such delayed exercise. The Optionee should consult with
the Optionee's own tax advisors as to the tax consequences to the Optionee
of any such delayed exercise.
e) Leave of Absence. For purposes hereof, the Optionee's employment with
the Participating Company Group shall not be deemed to terminate if the
Optionee takes any military leave, sick leave, or other bona fide leave of
absence approved by the Company of ninety (90) days or less. In the event
of a leave in excess of ninety (90) days, the Optionee's employment shall be
deemed to terminate on the ninety-first (91st) day of the leave unless the
Optionee's right to reemployment with the Participating Company Group
remains guaranteed by statute or contract. Notwithstanding the foregoing,
however, a leave of absence shall be treated as employment for purposes of
determining the Optionee's Vested Ratio if and only if the leave of absence
is designated by the Company as (or required by law to be) a leave for which
vesting credit is given.
8. Ownership Change and Transfer of Control. An "Ownership Change" shall
be deemed to have occurred in the event any of the following occurs with
respect to the Company:
a) the direct or indirect sale or exchange by the shareholders of the
Company of all or substantially all of the stock of the Company;
b) a merger or consolidation in which the Company is a party;
c) the sale, exchange, or transfer of all or substantially all of the
assets of the Company (other than a sale, exchange, or transfer to one or
more subsidiary corporations of the Company); or
d) a liquidation or dissolution of the Company.
A "Transfer of Control" shall mean an Ownership Change in which the
shareholders of the Company before such Ownership Change do not retain,
directly or indirectly, at least a majority of the beneficial interest
in the voting stock of the Company after such transaction.
In the event of a Transfer of Control, the Board, in its sole
discretion, may arrange with the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be
(the "Acquiring Corporation"), for the Acquiring Corporation to either
assume the Company's rights and obligations under this Option Agreement
or substitute an option for the Acquiring Corporation's stock for the
Option. The Option shall terminate and cease to be outstanding
effective as of the date of the Transfer of Control to the extent that
the Option is neither assumed or substituted for by the Acquiring
Corporation in connection with the Transfer of Control nor exercised as
of the date of the Transfer of Control.
9. Effect of Change in Stock Subject to the Option. Appropriate
adjustments shall be made in the number, exercise price and class of shares
of stock subject to the Option in the event of a stock dividend, stock split,
reverse stock split, recapitalization, combination, reclassification, or like
change in the capital structure of the Company. In the event a majority of
the shares which are of the same class as the shares that are subject to the
Option are exchanged for, converted into, or otherwise become (whether or not
pursuant to an Ownership Change) shares of another corporation (the "New
Shares"), the Company may unilaterally amend the Option to provide that the
Option is exercisable for New Shares. In the event of any such amendment,
the number of shares and the exercise price shall be adjusted in a fair and
equitable manner.
10. Rights as a Shareholder or Employee. The Optionee shall have no
rights as a shareholder with respect to any shares covered by the Option until
the date of the issuance of a certificate or certificates for the shares for
which the Option has been exercised. No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior
to the date such certificate or certificates are issued, except as provided
in paragraph 9 above. Nothing in the Option shall confer upon the Optionee
any right to continue in the employ of a Participating Company or interfere
in any way with any right of the Participating Company Group to terminate the
Optionee's employment at any time.
11. Unvested Share Repurchase Option.
a) Unvested Share Repurchase Option. In the event the Optionee's
employment with the Participating Company Group is terminated for any reason,
with or without cause, or if the Optionee or the Optionee's legal
representative attempts to sell, exchange, transfer, pledge, or otherwise
dispose of (other than pursuant to an Ownership Change) any shares acquired
upon exercise of the Option which exceed the Optionee's Vested Shares as
defined in paragraph 11(b) below (the "Unvested Shares"), the Company shall
have the right to repurchase the Unvested Shares under the terms and subject
to the conditions set forth in this paragraph 11 (the "Unvested Share
Repurchase Option").
b) Vested Shares and Unvested Shares Defined. The total Number of
Option Shares multiplied by the Vested Ratio as set forth in paragraph 1 above
are Vested Shares. For purposes of this paragraph 11, the Unvested Shares are
the number of shares acquired upon exercise of the Option in excess of the
Vested Shares.
c) Exercise of Unvested Share Repurchase Option. The Company may
exercise the Unvested Share Repurchase Option by written notice to the Optionee
within sixty (60) days after (i) such termination of employment (or exercise of
the Option, if later) or (ii) the Company has received notice of the attempted
disposition. If the Company fails to give notice within such sixty (60) day
period, the Unvested Share Repurchase Option shall terminate unless the
Company and the Optionee have extended the time for the exercise of the
Unvested Share Repurchase Option. The Unvested Share Repurchase Option must
be exercised, if at all, for all of the Unvested Shares, except as the
Company and the Optionee otherwise agree.
d) Payment for Shares and Return of Shares. Payment by the Company
to the Optionee shall be made in cash within thirty (30) days after the date of
the mailing of the written notice of exercise of the Unvested Share Repurchase
Option. For purposes of the foregoing, cancellation of any indebtedness of
the Optionee to any Participating Company shall be treated as payment to the
Optionee in cash to the extent of the unpaid principal and any accrued
interest canceled. The purchase price per share being repurchased by the
Company shall be an amount equal to the Optionee's original cost per share,
as adjusted pursuant to paragraph 9 above. The shares being repurchased
shall be delivered to the Company by the Optionee at the same time as the
delivery of the purchase price to the Optionee.
e) Assignment of Unvested Share Repurchase Option. The Company
shall have the right to assign the Unvested Share Repurchase Option at any time,
whether or not such option is then exercisable, to one or more persons as may be
selected by the Company.
f) Early Termination of Unvested Share Repurchase Option. The
other provisions of this paragraph 11 notwithstanding, the Unvested Share
Repurchase Option shall terminate and be of no further force or effect upon
(i) a merger in which the Company is not the surviving corporation (other
than a merger in which the shareholders of the Company before such merger
retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the surviving corporation) or (ii) the sale
or exchange of all or substantially all of the Company's assets (other than a
sale or transfer to a subsidiary of the Company as defined in section 425(f)
of the Code).
12. Right of First Refusal.
13. Right of First Refusal. Except as provided in paragraph 12(g), in the
event the Optionee proposes to sell, pledge, or otherwise transfer any shares
acquired upon the exercise of the Option (the "Transfer Shares") to any
person or entity, including, without limitation, any shareholder of the
Participating Company Group, the Company shall have the right to repurchase
the Transfer Shares under the terms and subject to the conditions set forth
in this paragraph 12 (the "Right of First Refusal").
14. Notice of Proposed Transfer. Prior to any proposed transfer of the
Transfer Shares, the Optionee shall give a written notice (the "Transfer
Notice") to the Company describing fully the proposed transfer, including the
number of Transfer Shares, the name and address of the proposed transferee
(the "Proposed Transferee") and, if the transfer is voluntary, the proposed
transfer price and containing such information necessary to show the bona
fide nature of the proposed transfer. In the event of a bona fide gift or
involuntary transfer, the proposed transfer price shall be deemed to be the
fair market value of the Transfer Shares as determined by the Company in good
faith. In the event the Optionee proposes to transfer any Transfer Shares to
more than one (1) Proposed Transferee, the Optionee shall provide a separate
Transfer Notice for the proposed transfer to each Proposed Transferee. The
Transfer Notice shall be signed by both the Optionee and the Proposed
Transferee and must constitute a binding commitment of the Optionee and the
Proposed Transferee for the transfer of the Transfer Shares to the Proposed
Transferee subject only to the Right of First Refusal.
15. Bona Fide Transfer. In the event that the Company shall determine that
the information provided by the Optionee in the Transfer Notice is
insufficient to establish the bona fide nature of a proposed voluntary
transfer, the Company shall give the Optionee written notice of the
Optionee's failure to comply with the procedure described in this paragraph
12 and the Optionee shall have no right to transfer the Transfer Shares
without first complying with the procedure described in this paragraph 12.
The Optionee shall not be permitted to transfer the Transfer Shares if the
proposed transfer is not bona fide.
16. Exercise of Right of First Refusal. In the event the proposed transfer
is deemed to be bona fide, the Company shall have the right to purchase all,
but not less than all, of the Transfer Shares (except as the Company and the
Optionee otherwise agree) at the purchase price and on the terms set forth in
the Transfer Notice by delivery to the Optionee of a notice of exercise of
the Right of First Refusal within thirty (30) days after the date the
Transfer Notice is delivered to the Company. The Company's exercise or
failure to exercise the Right of First Refusal with respect to any proposed
transfer described in a Transfer Notice shall not affect the Company's right
to exercise the Right of First Refusal with respect to any proposed transfer
described in any other Transfer Notice, whether or not such other Transfer
Notice is issued by the Optionee or issued by a person other than the
Optionee with respect to a proposed transfer to the same Proposed Transferee.
If the Company exercises the Right of First Refusal, the Company and the
Optionee shall thereupon consummate the sale of the Transfer Shares to the
Company on the terms set forth in the Transfer Notice within sixty (60) days
after the date of the Transfer Notice is delivered to the Company (unless a
longer period is offered by the Proposed Transferee); provided, however, that
in the event the Transfer Notice provides for the payment for the Transfer
Shares other than in cash, the Company shall have the option of paying for
the Transfer Shares by the present value cash equivalent of the consideration
described in the Transfer Notice as reasonably determined by the Company.
For purposes of the foregoing, cancellation of any indebtedness of the
Optionee to any Participating Company shall be treated as payment to the
Optionee in cash to the extent of the unpaid principal and any accrued
interest canceled.
17. Failure to Exercise Right of First Refusal. If the Company fails to
exercise the Right of First Refusal in full within the period specified in
paragraph 12(d) above, the Optionee may conclude a transfer to the Proposed
Transferee of the Transfer Shares on the terms and conditions described in
the Transfer Notice, provided such transfer occurs not later than ninety (90)
days following delivery to the Company of the Transfer Notice. The Company
shall have the right to demand further assurances from the Optionee and the
Proposed Transferee (in a form satisfactory to the Company) that the transfer
of the Transfer Shares was actually carried out on the terms and conditions
described in the Transfer Notice. No Transfer Shares shall be transferred on
the books of the Company until the Company has received such assurances, if
so demanded, and has approved the proposed transfer as bona fide. 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 this
paragraph 12.
18. Transferees of Transfer Shares. All transferees of the Transfer Shares
or any interest therein, other than the Company, shall be required as a
condition of such transfer to agree in writing (in a form satisfactory to the
Company) that such transferee shall receive and hold such Transfer Shares or
interests subject to the provisions of this paragraph 12 providing for the
Right of First Refusal with respect to any subsequent transfer. Any sale or
transfer of any shares acquired upon exercise of the Option shall be void
unless the provisions of this paragraph 12 are met.
19. Transfers Not Subject to Right of First Refusal. Notwithstanding the
foregoing, the Right of First Refusal shall not apply to any transfer or
exchange of the shares acquired pursuant to the exercise of the Option if
such transfer or exchange is in connection with an Ownership Change. If the
consideration received pursuant to such transfer or exchange consists of
stock of a Participating Company, such consideration shall remain subject to
the Right of First Refusal unless the provisions of paragraph 12(i) below
result in a termination of the Right of First Refusal.
20. Assignment of Right of First Refusal. The Company shall have the right
to assign the Right of First Refusal at any time, whether or not the Optionee
has attempted a transfer, to one (1) or more persons as may be selected by
the Company.
21. Early Termination of Right of First Refusal. The other provisions of
this paragraph 12 notwithstanding, the Right of First Refusal shall
terminate, and be of no further force and effect, upon (1) the occurrence of
a Transfer of Control, unless the Acquiring Corporation assumes the Company's
rights and obligations under the Plan, or (2) the existence of a public
market for the class of shares subject to the Right of First Refusal. A
"public market" shall be deemed to exist if (x) such stock is listed on a
national securities exchange (as that term is used in the Exchange Act) or
(y) such stock is traded on the over-the-counter market and prices therefor
are published daily on business days in a recognized financial journal.
22. Escrow.
23. Establishment of Escrow. To ensure that shares subject to the Unvested
Share Repurchase Option, the Right of First Refusal, and/or security for any
promissory note will be available for repurchase, the Company may require the
Optionee to deposit the certificate or certificates evidencing the shares
which the Optionee purchases upon exercise of the Option with an agent
designated by the Company under the terms and conditions of escrow and
security agreements approved by the Company. If the Company does not require
such deposit as a condition of exercise of the Option, the Company reserves
the right at any time to require the Optionee to so deposit the certificate
or certificates in escrow. The Company shall bear the expenses of the
escrow.
24. Delivery of Shares to Optionee. As soon as practicable after the
expiration of the Unvested Share Repurchase Option and the Right of First
Refusal, and after full repayment on any promissory note secured by the
shares in escrow, but not more frequently than twice each calendar year, the
agent shall deliver to the Optionee the shares no longer subject to such
restriction and no longer security for any promissory note.
25. Notices and Payments. In the event the shares held in escrow are
subject to the Company's exercise of the Unvested Share Repurchase Option or
the Right of First Refusal, the notices required to be given to the Optionee
shall be given to the escrow agent and any payment required to be given to
the Optionee shall be given to the escrow agent. Within thirty (30) days
after payment by the Company, the escrow agent shall deliver the shares which
the Company has purchased to the Company and shall deliver the payment
received from the Company to the Optionee.
26. Stock Dividends Subject to Option Agreement. If, from time to time,
there is any stock dividend, stock split, or other change in the character or
amount of any of the outstanding stock of the corporation the stock of which
is subject to the provisions of this Option Agreement, then in such event any
and all new, substituted or additional securities to which the Optionee is
entitled by reason of the Optionee's ownership of the shares acquired upon
exercise of the Option shall be immediately subject to the Unvested Share
Repurchase Option, the Right of First Refusal, and/or any security interest
held by the Company with the same force and effect as the shares subject to
the Unvested Share Repurchase Option, the Right of First Refusal, and such
security interest immediately before such event.
27. Notice of Sales Upon Disqualifying Disposition. The Optionee shall
dispose of the shares acquired pursuant to the Option only in accordance with
the provisions of this Option Agreement. In addition, the Optionee shall
promptly notify the Chief Financial Officer of the Company if the Optionee
disposes of any of the shares acquired pursuant to the Option within one (1)
year from the date the Optionee exercises all or part of the Option or within
two (2) years of the date of grant of the Option. Until such time as the
Optionee disposes of such shares in a manner consistent with the provisions
of this Option Agreement, the Optionee shall hold all shares acquired
pursuant to the Option in the Optionee's name (and not in the name of any
nominee) for the one-year period immediately after exercise of the Option and
the two-year period immediately after grant of the Option. At any time
during the one-year or two-year periods set forth above, the Company may
place a legend or legends on any certificate or certificates representing
shares acquired pursuant to the Option requesting the transfer agent for the
Company's stock to notify the Company of any such transfers. The obligation
of the Optionee to notify the Company of any such transfer shall continue
notwithstanding that a legend has been placed on the certificate or
certificates pursuant to the preceding sentence.
28. Exception To $100,000 Exercise Limitation. Notwithstanding any other
provision of this Option Agreement, if compliance with the $100,000 Exercise
Limitation as set forth in paragraph 4(a) above will result in the
exercisability of any Vested Shares (as defined in paragraph 11(b) above)
being delayed more than thirty (30) days beyond the vesting date for such
shares, the Option shall be deemed to be two (2) options. The first option
shall be for the maximum number of shares subject to the Option that can
comply with the $100,000 Exercise Limitation without causing the Option to be
unexercisable as to Vested Shares. The second option, which shall not be
treated as an incentive stock option as described in section 422(b) of the
Code, shall be for the balance of the shares subject to the Option and shall
be exercisable on the same terms and at the same time as set forth in this
Option Agreement; provided, however, that (a) the second sentence of
paragraph 4(a) above shall not apply to the second option and (b) such shares
shall become Vested Shares on the same date or dates as set forth in this
Option Agreement without regard to this paragraph. Unless the Optionee
specifically elects to the contrary in the Optionee's written notice of
exercise, the first option shall be deemed to be exercised first to the
maximum possible extent and then the second option shall be deemed to be
exercised.
29. Representations and Warranties. In connection with the receipt of the
Option, the Optionee hereby agrees, represents and warrants as follows:
30. The Optionee has (i) a preexisting personal or business relationship
with the Company or any of its officers, directors, or controlling persons,
consisting of personal or business contacts of a nature and duration to
enable the Optionee to be aware of the character, business acumen and general
business and financial circumstances of the person with whom such
relationship exists, or (ii) such knowledge and experience in financial and
business matters as to make the Optionee capable of evaluating the merits and
risks of an investment in the option Shares and to protect the Optionee's own
interests in the transaction, or (iii) both such relationship and such
knowledge and experience.
31. The Optionee understands that Option and any shares acquired upon
exercise of the Option have not been qualified under the Corporate Securities
Law of 1968, as amended, of the State of California by reason of a specific
exemption therefrom, which exemption depends upon, among other things, the
bona fide nature of the Optionee's representations as expressed herein. the
Optionee understands that the Company is relying on the Optionee's
representations and warrants that the Company is entitled to rely on such
representations and that such reliance is reasonable.
32. Legends. The Company may at any time place legends referencing the
Unvested Share Repurchase Option set forth in paragraph 11 above and the
Right of First Refusal set forth in paragraph 12 above, and any applicable
foreign, federal or state securities law restrictions on all certificates
representing shares of stock subject to the provisions of this Option
Agreement. The Optionee shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares acquired
pursuant to the Option in the possession of the Optionee in order to
effectuate the provisions of this paragraph 18. Unless otherwise specified
by the Company, legends placed on such certificates may include, but shall
not be limited to, the following:
33. "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS
MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT."
34. Any legend required to be placed thereon by the Commissioner of
Corporations of the State of California.
35. "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN UNVESTED
SHARE REPURCHASE OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET FORTH
IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH
HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THIS CORPORATION."
36. "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF
FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET FORTH IN
AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH
HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THIS CORPORATION."
37. "THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION
TO THE REGISTERED HOLDER UPON EXERCISE OF AN INCENTIVE STOCK OPTION AS
DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
("ISO"). IN ORDER TO OBTAIN THE PREFERENTIAL TAX TREATMENT AFFORDED TO ISOs,
THE SHARES SHOULD NOT BE TRANSFERRED PRIOR TO . SHOULD THE
REGISTERED HOLDER ELECT TO TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND
FOREGO ISO TAX TREATMENT, THE TRANSFER AGENT FOR THE SHARES SHALL NOTIFY THE
CORPORATION IMMEDIATELY. THE REGISTERED HOLDER SHALL HOLD ALL SHARES
PURCHASED UNDER THE INCENTIVE STOCK OPTION IN THE REGISTERED HOLDER'S NAME
(AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE OR UNTIL TRANSFERRED
AS DESCRIBED ABOVE."
38. Initial Public Offering. The Optionee hereby agrees that in the event
of an initial public offering of stock made by the Company pursuant to an
effective registration statement filed under the Securities Act, the Optionee
shall not offer, sell, contract to sell, pledge, hypothecate, grant any
option to purchase or make any short sale of, or otherwise dispose of any
shares of stock of the Company or any rights to acquire stock of the Company
for such period of time from and after the effective date of such
registration statement as may be established by the underwriter for such
initial public offering; provided, however, that such period of time shall
not exceed one hundred eighty (180) days from the effective date of the
registration statement to be filed in connection with such initial public
offering. The foregoing limitation shall not apply to shares registered in
the initial public offering under the Securities Act. The Optionee shall be
subject to this paragraph provided and only if the officers and directors of
the Company are also subject to similar arrangements.
39. Binding Effect. This Option Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
40. Termination or Amendment. The Board, including any duly appointed
committee of the Board, may terminate or amend the Plan and/or the Option at
any time; provided, however, that no such termination or amendment may
adversely affect the Option or any unexercised portion hereof without the
consent of the Optionee unless such amendment is required to enable the
Option to qualify as an Incentive Stock Option.
41. Integrated Agreement. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company
Group with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties
among the Optionee and the Participating Company Group other than those as
set forth or provided for herein. To the extent contemplated herein, the
provisions of this Option Agreement shall survive any exercise of the Option
and shall remain in full force and effect.
42. Applicable Law. This Option Agreement shall be governed by the laws of
the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the
State of California.
2MARKET, INC.
By:
Title:
The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement, including the Unvested Share Repurchase
Option set forth in paragraph 11, the Right of First Refusal set forth in
paragraph 12, and hereby accepts the Option subject to all of the terms and
provisions thereof. The Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under this Option Agreement. The Optionee acknowledges
receipt of a copy of the Plan.
Date:
Exhibit 23.2
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-_______) pertaining to America Online, Inc.Os 2Market, Inc.
1995 Stock Option Plan of our report dated February 1, 1996 with respect to
the consolidated financial statements of America Online, Inc. included in its
Annual Report (Form 10-K) for the year ended June 30, 1995, filed with the
Securities and Exchange Commission.
Ernst & Young LLP
Vienna, Virginia
June 26, 1996
