As filed with the Securities and Exchange Commission on February 19, 1997
Registration No. 333-
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 jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
____________________
22000 AOL WAY, DULLES, VIRGINIA 20166-9323
(Address of principal executive offices)
___________________
AMERICA ONLINE, INC. 1992 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
Sheila A. Clark, Esq.
Deputy General Counsel
and Assistant Secretary
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166-9323
(703) 448-8700
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
___________________
CALCULATION OF REGISTRATION FEE
Title of Amount to Proposed Maximum Proposed Maximum Amount of
Securities to be be Offering Aggregate Registration
Registered(1) Registered Price Per Offering Price Fee
(2) Share
Common Stock, 3,000,000 (3)(4) $83,000,152 $25,152
$.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 number of shares of Common Stock to be registered consists of the
aggregate number of shares which may be sold upon the exercise of options which
have previously been granted and/or may hereafter be granted under the America
Online, Inc. 1992 Employee, Director and Consultant Stock Option Plan (the
"Plan"). The maximum number of shares which may be sold upon the exercise of
such options granted under the Plan is subject to adjustment in accordance with
certain anti-dilution and other provisions of the Plan. Accordingly, pursuant
to Rule 416 under the Securities Act of 1933, as amended the ("Securities Act"),
this Registration Statement covers, in addition to the number of shares stated
above, an indeterminable number of shares which may be subject to grant or
otherwise issuable after the operation of any such anti-dilution and other
provisions.
(3) The maximum offering price per share has been determined solely for the
purpose of calculating the registration fee pursuant to Rules 457(c) and (h)
under the Securities Act as follows: for the 2,790,748 shares of Common Stock
which may be purchased upon exercise of outstanding options, the fee is based on
the average price of $27.07 at which options may be exercised.
(4) The maximum offering price per share has been determined solely for the
purpose of calculating the registration fee pursuant to Rules 457(c) and (h)
under the Securities Act as follows: for the 209,252 options that have not yet
been granted, the fee is based on the average of the high and low prices $35.625
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
Pursuant to General Instruction E on Form S-8 regarding the registration of
additional securities, America Online, Inc. (the "Company") hereby is
registering additional shares of common stock, par value $.01 per share (the
"Common Stock"), in the number set forth on the cover page of this Registration
Statement. Such shares are of the same class as other securities of the Company
for which previous registration statements have been filed with the Securities
and Exchange Commission (the "Commission") relating to the Company's 1992
Employee, Director and Consultant Stock Option Plan (the "Plan"), and such
registration statements, as listed below, are incorporated by reference herein:
Registration Statement on Form S-8, registering shares issued in connection
with the Plan, File No. 333-07603 (filed on July 3, 1996);
Registration Statement on Form S-8, registering shares issued in connection
with the Plan, File No. 33-78066 (filed on April 22, 1994);
Registration Statement on Form S-8, registering shares issued in connection
with the Plan, File No. 33-46607 (filed on March 24, 1992).
Pursuant to Rule E, this Registration Statement contains such information
required by Form S-8 that is not otherwise included in the above-listed
registration statements.
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, 1996, 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, 1996.
(c) The description of the Common Stock contained in the Company's
Registration Statement on Form S-3, Registration Number 33-13279, 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 Registration Statement on Form S-
3, Registration No. 33-90430 and incorporated herein
by reference)
4.3 America Online, Inc. 1992 Employee, Director and
Consultant Stock Option Plan.
5 Opinion of Sheila A. Clark, Deputy General Counsel
to the Corporation (including the consent of such
general counsel), regarding the legality of
securities being offered
23.1 Consent of Sheila A. Clark, Deputy General Counsel
to the Corporation (included in her opinion filed as
Exhibit 5 hereto)
23.2 Consents 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 Sterling, State of Virginia, on
this 19th day of February, 1997.
AMERICA ONLINE, INC.
By: /s/ Stephen M. Case
Stephen M. Case
Chairman, Chief Executive Officer,
President and Director
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on the 19th day of February, 1997,
by the following persons in the capacities indicated.
Signature Title
Chairman, Chief Executive Officer,
President and Director
* (Principal Executive Officer)
Stephen M. Case
* Director
Frank J. Caufield
Director
Robert J. Frankenberg
Director
Alexander M. Haig, Jr.
* Director
James V. Kimsey
* Director
William N. Melton
* Director
Thomas Middelhoff
President and Chief Executive Officer,
* AOL Networks and Director
Robert W. Pittman
* Director
Scott C. Smith
Senior Vice President and Chief
Financial Officer, Treasurer and Chief
Accounting Officer (Principal
/s/Lennert J. Leader Financial and Accounting Officer)
Lennert J. Leader
By: /s/Lennert J. Leader
Lennert J. Leader
Attorney -In-Fact
Exhibit Index
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 Registration Statement on Form S-3,
Registration No. 33-90430 and incorporated herein by
reference)
4.3 America Online, Inc. 1992 Employee, Director and
Consultant Stock Option Plan.
5 Opinion of Sheila A. Clark, Deputy General Counsel to
the Corporation (including the consent of such general
counsel), regarding the legality of securities being
offered
23.1 Consent of Sheila A. Clark, Deputy General Counsel to
the Corporation (included in her opinion filed as
Exhibit 5 hereto)
23.2 Consents of Ernst & Young LLP, independent auditors
24 Powers of Attorney
AMERICA ONLINE, INC.
1992 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
(AS AMENDED AND RESTATED THROUGH FEBRUARY 1997)
1. DEFINITIONS.
Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this America Online, Inc. 1992 Employee,
Director and Consultant Stock Option Plan, have the following meanings:
Administrator means the Board of Directors, unless it has delegated
power to act on its behalf to a committee. (See Paragraph 4)
Affiliate, with respect to ISOs, means a corporation which, for
purposes of Section 424 of the Code, is a parent or subsidiary of the
Company, direct or indirect, and, with respect to Non-Qualified
Options, means (a) any corporation, company or other entity more than
twenty-five percent (25%) of whose outstanding shares or securities
are, now or hereafter, owned or controlled, directly or indirectly, by
the Company and its Affiliates; and (b) any partnership, joint
venture, unincorporated association or entity, limited liability
company, more than forty percent (40%) of whose ownership interest is
now or hereafter, owned or controlled in the aggregate, directly or
indirectly, by the Company and its Affiliates.
Board of Directors means the Board of Directors of the Company.
Code means the United States Internal Revenue Code of 1986, as
amended.
Committee means the Committee to which the Board of Directors has
delegated power to act under or pursuant to the provisions of the
Plan.
Common Stock means shares of the Company's common stock, $.01 par
value.
Company means America Online, Inc., a Delaware corporation.
Disability or Disabled means permanent and total disability as defined
in Section 22(e)(3) of the Code.
Fair Market Value of a Share of Common Stock means:
(1) If the Common Stock is listed on a national securities exchange
or traded in the over-the-counter market and sales prices are
regularly reported for the Common Stock, the average of the closing or
last prices of the Common Stock on the Composite Tape or other
comparable reporting system for the ten (10) consecutive trading days
immediately preceding such applicable date;
(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if sales prices
are not regularly reported for the Common Stock for the ten (10) days
referred to in clause (1), and if bid and asked prices for the Common
Stock are regularly reported, the average of the mean between the bid
and the asked price for the Common Stock at the close of trading in
the over-the-counter market for the ten (10) days on which Common
Stock was traded immediately preceding such applicable date; and
(3) If the Common Stock is neither listed on a national securities
exchange nor traded in the over-the-counter market, such value as the
Administrator, in good faith, shall determine.
ISO means an option meant to qualify as an incentive stock option
under Code Section 422.
Key Employee means an employee of the Company or of an Affiliate
(including, without limitation, an employee who is also serving as an
officer or director of the Company or of an Affiliate), designated by
the Administrator to be eligible to be granted one or more Options
under the Plan.
Non-Qualified Option means an option which is not intended to qualify
as an ISO.
Option means an ISO or Non-Qualified Option granted under the Plan.
Option Agreement means an agreement between the Company and a
Participant executed and delivered pursuant to the Plan.
Participant means a Key Employee, director or consultant to whom one
or more Options are granted under the Plan. As used herein,
"Participant" shall include "Participant's Survivors" where the
context requires.
Participant's Survivors means a deceased Participant's legal
representatives and/or any person or persons who acquired the
Participant's rights to an Option by will or by the laws of descent
and distribution.
Plan means this America Online, Inc. 1992 Employee, Director and
Consultant Stock Option Plan.
Shares means shares of the Common Stock as to which Options have been
or may be granted under the Plan or any shares of capital stock into
which the Shares are changed or for which they are exchanged within
the provisions of Paragraph 3 of the Plan. The Shares issued upon
exercise of Options granted under the Plan may be authorized and
unissued shares or shares held by the Company in its treasury, or
both.
2. PURPOSES OF THE PLAN.
The Plan is intended to encourage ownership of Shares by Key Employees,
directors and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the success of the
Company or of an Affiliate. The Plan provides for the issuance of ISOs and Non-
Qualified Options.
3. SHARES SUBJECT TO THE PLAN.
The number of Shares subject to this Plan as to which Options may be
granted from time to time shall be 39,080,000, or the equivalent of such number
of Shares after the Administrator, in its sole discretion, has interpreted the
effect of any stock split, stock dividend, combination, recapitalization or
similar transaction effected after such date in accordance with Paragraph 16 of
the Plan.
If an Option ceases to be "outstanding", in whole or in part, the Shares
which were subject to such Option shall be available for the granting of other
Options under the Plan. Any Option shall be treated as "outstanding" until such
Option is exercised in full, or terminates or expires under the provisions of
the Plan, or by agreement of the parties to the pertinent Option Agreement.
4. ADMINISTRATION OF THE PLAN.
The Administrator of the Plan will be the Board of Directors, except to the
extent the Board of Directors delegates its authority to a Committee of the
Board of Directors. Following the date on which the Common Stock is registered
under the Securities and Exchange Act of 1934, as amended (the "1934 Act"), the
Plan is intended to comply in all respects with Rule 16b-3 or its successors,
promulgated pursuant to Section 16 of the 1934 Act with respect to Participants
who are subject to Section 16 of the 1934 Act, and any provision in this Plan
with respect to such persons contrary to Rule 16b-3 shall be deemed null and
void to the extent permissible by law and deemed appropriate by the
Administrator. Subject to the provisions of the Plan, the Administrator is
authorized to:
a. Interpret the provisions of the Plan or of any Option or Option
Agreement and to make all rules and determinations which it deems
necessary or advisable for the administration of the Plan;
b. Determine which employees of the Company or of an Affiliate shall
be designated as Key Employees and which of the Key Employees,
directors and consultants shall be granted Options;
c. Determine the number of Shares for which an Option or Options
shall be granted, provided that in no event shall the number of Shares
for which Options may be granted to any Participant exceed 500,000 in
a fiscal year; and
d. Specify the terms and conditions upon which an Option or Options
may be granted;
provided, however, that all such interpretations, rules, determinations,
terms and conditions shall be made and prescribed in the context of
preserving the tax status under Code Section 422 of those Options which are
designated as ISOs. Subject to the foregoing, the interpretation and
construction by the Administrator of any provisions of the Plan or of any
Option granted under it shall be final, unless otherwise determined by the
Board of Directors, if the Administrator is other than the Board of
Directors.
5. ELIGIBILITY FOR PARTICIPATION.
The Administrator will, in its sole discretion, name the Participants in
the Plan, provided, however, that each Participant must be a Key Employee,
director or consultant of the Company or of an Affiliate at the time an Option
is granted. Notwithstanding any of the foregoing provisions, the Administrator
may authorize the grant of an Option to a person not then an employee, director
or consultant of the Company or of an Affiliate. The actual grant of such
Option, however, shall be conditioned upon such person becoming eligible to
become a Participant at or prior to the time of the execution of the Option
Agreement evidencing such Option. ISOs may be granted only to Key Employees.
Non-Qualified Options may be granted to any Key Employee, director or consultant
of the Company or an Affiliate. The granting of any Option to any individual
shall neither entitle that individual to, nor disqualify him or her from,
participation in any other grant of Options.
6. TERMS AND CONDITIONS OF OPTIONS.
Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and by the Participant. The Administrator may provide
that Options be granted subject to such conditions as the Administrator may deem
appropriate including, without limitation, subsequent approval by the
stockholders of the Company of this Plan or any amendments thereto. The Option
Agreements shall be subject to at least the following terms and conditions:
A. Non-Qualified Options: Each Option intended to be a Non-Qualified
Option shall be subject to the terms and conditions which the
Administrator determines to be appropriate and in the best interest of
the Company, subject to the following minimum standards for any such
Non-Qualified Option:
a. Option Price: The option price (per share) of the
Shares covered by each Option shall be determined by the
Administrator but shall not be less than one hundred percent
(100%) of the Fair Market Value (per share) of the Shares on the
date of grant of the Option.
b. Each Option Agreement shall state the number of Shares
to which it pertains;
c. Each Option Agreement shall state the date or dates on
which it first is exercisable and the date after which it may no
longer be exercised, and may provide that the Option rights
accrue or become exercisable in installments over a period of
months or years, or upon the occurrence of certain conditions or
the attainment of stated goals; and
d. Exercise of any Option may be conditioned upon the
Participant's execution of a Share purchase agreement in form
satisfactory to the Administrator providing for certain
protections for the Company and its other shareholders including
requirements that:
i. The Participant's or the Participant's
Survivors' right to sell the Shares may be restricted; and
ii. The Participant or the Participant's
Survivors may be required to execute letters of investment
intent and must also acknowledge that the Shares will bear
legends noting any applicable restrictions.
B. ISOs: Each Option intended to be an ISO shall be issued only to a Key
Employee and be subject to at least the following terms and
conditions, with such additional restrictions or changes as the
Administrator determines are appropriate but not in conflict with Code
Section 422 and relevant regulations and rulings of the Internal
Revenue Service:
a. Minimum standards: The ISO shall meet the minimum
standards for Non-Qualified Options as described in Paragraphs
6.A.b., c. and d. above.
b. Option Price: Immediately before the Option is granted, if
the Participant owns, directly or by reason of the applicable
attribution rules in Code Section 424(d):
i. Ten percent (10%) or less of the total
combined voting power of all classes of share capital of the
Company or an Affiliate, the Option price per share of the
Shares covered by each Option shall not be less than one
hundred percent (100%) of the Fair Market Value per share of
the Shares on the date of the grant of the Option.
ii. More than ten percent (10%) of the total
combined voting power of all classes of share capital of the
Company or an Affiliate, the Option price per share of the
Shares covered by each Option shall not be less than one
hundred ten percent (110%) of the said Fair Market Value on
the date of grant.
c. Term of Option: For Participants who own
i. Ten percent (10%) or less of the total
combined voting power of all classes of share capital of the
Company or an Affiliate, each Option shall terminate not
more than ten (10) years from the date of the grant or at
such earlier time as the Option Agreement may provide.
ii. More than ten percent (10%) of the total
combined voting power of all classes of share capital of the
Company or an Affiliate, each Option shall terminate not
more than five (5) years from the date of the grant or at
such earlier time as the Option Agreement may provide.
d. Limitation on Yearly Exercise: The Option Agreements
shall restrict the amount of Options which may be exercisable in
any calendar year (under this or any other ISO plan of the
Company or an Affiliate) so that the aggregate Fair Market Value
(determined at the time each ISO is granted) of the stock with
respect to which ISOs are exercisable for the first time by the
Participant in any calendar year does not exceed one hundred
thousand dollars ($100,000), provided that this subparagraph (d)
shall have no force or effect if its inclusion in the Plan is not
necessary for Options issued as ISOs to qualify as ISOs pursuant
to Section 422(d) of the Code.
e. Limitation on Grant of ISOs: No ISOs shall be granted
after February 3, 2002, the date which is the earlier of ten (10)
years from the date of the adoption of the Plan by the Company
and the date of the approval of the Plan by the shareholders of
the Company.
C. Directors' Options: On the date of the Annual Meeting of Stockholders
of the Company of each year, after giving effect to the election of
any director or directors at such Annual Meeting of Stockholders, each
director who is not an employee of the Company or any Affiliate shall
be granted a Non-Qualified Option to purchase 10,000 shares. Each
such Option (i) shall have an exercise price equal to the Fair Market
Value (per share) of the Shares on the date of grant of the Option,
(ii) shall have a term of ten (10) years, and (iii) shall be
exercisable on the date that is one (1) business day prior to the date
of the next succeeding Annual Meeting of Stockholders of the Company
if, and only if, such director shall then be serving on the Board of
Directors. Notwithstanding the provisions of Paragraph 23 concerning
amendment of the Plan, the provisions of this Subparagraph C shall not
be amended more than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act, or
the rules thereunder.
7. EXERCISE OF OPTION AND ISSUE OF SHARES.
An Option (or any part or installment thereof) shall be exercised by giving
written notice to the Company at its principal office address, together with
provision for payment of the purchase price in accordance with this paragraph
for the Shares as to which such Option is being exercised, and upon compliance
with any other condition(s) set forth in the Option Agreement. Such written
notice shall be signed by the person exercising the Option, shall state the
number of Shares with respect to which the Option is being exercised and shall
contain any representation required by the Plan or the Option Agreement. Full
payment of the purchase price for the Shares as to which such Option is being
exercised shall be made (a) in United States dollars in cash or by check, or (b)
at the discretion of the Administrator, through delivery of shares of Common
Stock having a fair market value equal as of the date of the exercise to the
cash exercise price of the Option, determined in good faith by the
Administrator, or (c) at the discretion of the Administrator, by delivery of the
grantee's personal recourse note bearing interest payable not less than annually
at no less than 100% of the applicable Federal rate, as defined in Section
1274(d) of the Code, or (d) at the discretion of the Administrator, in
accordance with a so-called cashless exercise plan establish with a securities
brokerage firm and approved by the Administrator, or (e) at the discretion of
the Administrator, by any combination of (a), (b), (c) and (d) above.
Notwithstanding the foregoing, the Administrator shall accept only such payment
on exercise of an ISO as is permitted by Section 422 of the Code.
The Company shall then reasonably promptly deliver the Shares as to which
such Option was exercised to the Participant (or to the Participant's Survivors,
as the case may be). In determining what constitutes "reasonably promptly," it
is expressly understood that the delivery of the Shares may be delayed by the
Company in order to comply with any law or regulation which requires the Company
to take any action with respect to the Shares prior to their issuance. The
Shares shall, upon delivery, be evidenced by an appropriate certificate or
certificates for fully paid, non-assessable Shares.
The Administrator shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Administrator shall not
accelerate the exercise date of any installment of any Option granted to any Key
Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to paragraph 19) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in paragraph
6.B.(d).
8. RIGHTS AS A SHAREHOLDER.
No Participant to whom an Option has been granted shall have rights as a
shareholder with respect to any Shares covered by such Option, except after due
exercise of the Option and provision for payment of the full purchase price for
the Shares being purchased pursuant to such exercise and registration of the
Shares in the Company's share register in the name of the Participant.
9. ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS.
By its terms, an Option granted to a Participant shall not be transferable
by the Participant other than (i) by will or by the laws of descent and
distribution, or (ii) as otherwise determined by the Administrator and set forth
in the applicable Option Agreement. The designation of a beneficiary of an
Option by a Participant shall not be deemed a transfer prohibited by this
paragraph. Except as provided above, an Option shall be exercisable, during the
Participant's lifetime, only by such Participant (or his or her legal
representative) and shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Option or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon an Option, shall be null and void.
10. EFFECT OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE".
Except as otherwise provided in the pertinent Option Agreement, in the
event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised all Options, the following rules apply:
a. A Participant who ceases to be an employee, director or
consultant of the Company or of an Affiliate (for any reason other
than termination "for cause", Disability, or death for which events
there are special rules in Paragraphs 11, 12, and 13, respectively),
may exercise any Option granted to him or her to the extent that the
right to purchase Shares has accrued on the date of such termination
of service, but only within such term as the Administrator has
designated in the pertinent Option Agreement.
b. In no event may an Option Agreement provide, if the Option is
intended to be an ISO, that the time for exercise be later than three
(3) months after the Participant's termination of employment.
c. The provisions of this paragraph, and not the provisions of
Paragraph 12 or 13, shall apply to a Participant who subsequently
becomes disabled or dies after the termination of employment, director
status or consultancy, provided, however, in the case of a
Participant's death within three (3) months after the termination of
employment, director status or consultancy, the Participant's
Survivors may exercise the Option within one (1) year after the date
of the Participant's death, but in no event after the date of
expiration of the term of the Option.
d. Notwithstanding anything herein to the contrary, if subsequent to
a Participant's termination of employment, termination of director
status or termination of consultancy, but prior to the exercise of an
Option, the Board of Directors determines that, either prior or
subsequent to the Participant's termination, the Participant engaged
in conduct which would constitute "cause", then such Participant shall
forthwith cease to have any right to exercise any Option.
e. A Participant to whom an Option has been granted under the Plan who is
absent from work with the Company or with an Affiliate because of
temporary disability (any disability other than a permanent and total
Disability as defined in Paragraph 1 hereof), or who is on leave of
absence for any purpose, shall not, during the period of any such
absence, be deemed, by virtue of such absence alone, to have
terminated such Participant's employment, director status or
consultancy with the Company or with an Affiliate, except as the
Administrator may otherwise expressly provide.
f. Options granted under the Plan shall not be affected by any change of
employment or other service within or among the Company and any
Affiliates, so long as the Participant continues to be an employee,
director or consultant of the Company or any Affiliate, provided,
however, if a Participant's employment by either the Company or an
Affiliate should cease (other than to become an employee of an
Affiliate or the Company), such termination shall affect the
Participant's rights under any Option granted to such Participant in
accordance with the terms of the Plan and the pertinent Option
Agreement.
11. EFFECT OF TERMINATION OF SERVICE "FOR CAUSE".
Except as otherwise provided in the pertinent Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all of his or her outstanding Options have been
exercised:
a. All outstanding and unexercised Options as of the date the
Participant is notified his or her service is terminated "for cause"
will immediately be forfeited, unless the Option Agreement provides
otherwise.
b. For purposes of this Article, "cause" shall include (and is not
limited to) dishonesty with respect to the employer, insubordination,
substantial malfeasance or non-feasance of duty, unauthorized
disclosure of confidential information, and conduct substantially
prejudicial to the business of the Company or any Affiliate. The
determination of the Administrator as to the existence of cause will
be conclusive on the Participant and the Company.
c. "Cause" is not limited to events which have occurred prior to a
Participant's termination of service, nor is it necessary that the
Administrator's finding of "cause" occur prior to termination. If the
Administrator determines, subsequent to a Participant's termination of
service but prior to the exercise of an Option, that either prior or
subsequent to the Participant's termination the Participant engaged in
conduct which would constitute "cause", then the right to exercise any
Option is forfeited.
d. Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting definition of
"cause" for termination and which is in effect at the time of such
termination, shall supersede the definition in this Plan with respect
to such Participant.
12. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY.
Except as otherwise provided in the pertinent Option Agreement, a
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:
a. To the extent that the right to purchase Shares has accrued on
the date of his or her Disability; and
b. In the event rights to exercise the Option accrue periodically,
to the extent of a pro rata portion of any additional rights as would
have accrued had the Participant not become Disabled prior to the end
of the accrual period which next ends following the date of
Disability. The proration shall be based upon the number of days of
such accrual period prior to the date of Disability.
A Disabled Participant may exercise such rights only within a period of not
more than one (1) year after the date that the Participant became Disabled,
notwithstanding that the Participant might have been able to exercise the Option
as to some or all of the Shares on a later date if he or she had not become
disabled and had continued to be an employee, director or consultant or, if
earlier, within the originally prescribed term of the Option.
The Administrator shall make the determination both of whether Disability
has occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such determination).
If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for
by the Company.
13. EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
Except as otherwise provided in the pertinent Option Agreement, in the
event of the death of a Participant to whom an Option has been granted while the
Participant is an employee, director or consultant of the Company or of an
Affiliate, such Option may be exercised by the Participant's Survivors:
a. To the extent exercisable but not exercised on the date of death;
and
b. In the event rights to exercise the Option accrue periodically,
to the extent of a pro rata portion of any additional rights which
would have accrued had the Participant not died prior to the end of
the accrual period which next ends following the date of death. The
proration shall be based upon the number of days of such accrual
period prior to the Participant's death.
If the Participant's Survivors wish to exercise the Option, they must take
all necessary steps to exercise the Option within one (1) year after the date of
death of such Participant, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of the Shares on a later date if
he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.
14. PURCHASE FOR INVESTMENT.
Unless the offering and sale of the Shares to be issued upon the particular
exercise of an Option shall have been effectively registered under the
Securities Act of 1933, as now in force or hereafter amended (the "1933 Act"),
the Company shall be under no obligation to issue the Shares covered by such
exercise unless and until the following conditions have been fulfilled:
a. The person(s) who exercise such Option shall warrant to the
Company prior to receipt of the Shares that such person(s) are
acquiring such Shares for their own respective accounts, for
investment, and not with a view to, or for sale in connection with,
the distribution of any such Shares, in which event the person(s)
acquiring such Shares shall be bound by the provisions of the
following legend which shall be endorsed upon the certificate(s)
evidencing their Shares issued pursuant to such exercise or such
grant:
"The shares represented by this certificate have been
taken for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, unless (1) either
(a) a Registration Statement with respect to such shares shall be
effective under the Securities Act of 1933, as amended, or (b)
the Company shall have received an opinion of counsel
satisfactory to it that an exemption from registration under such
Act is then available, and (2) there shall have been compliance
with all applicable state securities laws.
b. The Company shall have received an opinion of its counsel that
the Shares may be issued upon such particular exercise in compliance
with the 1933 Act without registration thereunder.
The Company may delay issuance of the Shares until completion of any action
or obtaining of any consent which the Company deems necessary under any
applicable law (including, without limitation, state securities or "blue sky"
laws).
15. DISSOLUTION OR LIQUIDATION OF THE COMPANY.
Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised will
terminate and become null and void; provided, however, that if the rights of a
Participant or a Participant's Survivors have not otherwise terminated and
expired, the Participant or the Participant's Survivors will have the right
immediately prior to such dissolution or liquidation to exercise any Option to
the extent that the right to purchase Shares has accrued under the Plan as of
the date immediately prior to such dissolution or liquidation.
16. ADJUSTMENTS.
Upon the occurrence of any of the following events, a Participant's rights
with respect to any Option granted to him or her hereunder which have not
previously been exercised in full shall be adjusted as hereinafter provided,
unless otherwise specifically provided in the written agreement between the
Participant and the Company relating to such Option:
A. Stock Dividends and Stock Splits. If the shares of Common Stock shall
be subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of such Option shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.
B. Consolidations or Mergers. If the Company is to be consolidated with
or acquired by another entity in a merger, sale of all or substantially all of
the Company's assets or otherwise (an "Acquisition"), the Administrator or the
board of directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board"), shall, as to outstanding Options, either (i)
make appropriate provision for the continuation of such Options by substituting
on an equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide that all
Options must be exercised, to the extent then exercisable, within a specified
number of days of the date of such notice, at the end of which period the
Options shall terminate; or (iii) terminate all Options in exchange for a cash
payment equal to the excess of the fair market value of the shares subject to
such Options (to the extent then exercisable) over the exercise price thereof.
C. Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, a Participant upon exercising an Option shall be entitled to
receive for the purchase price paid upon such exercise the securities he or she
would have received if he or she had exercised such Option prior to such
recapitalization or reorganization.
D. Modification of ISOs. Notwithstanding the foregoing, any adjustments
made pursuant to subparagraphs A, B or C with respect to ISOs shall be made only
after the Administrator, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Administrator
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments, unless
the holder of an ISO specifically requests in writing that such adjustment be
made and such writing indicates that the holder has full knowledge of the
consequences of such "modification" on his or her income tax treatment with
respect to the ISO.
17. ISSUANCES OF SECURITIES.
Except as expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company.
18. FRACTIONAL SHARES.
No fractional share shall be issued under the Plan and the person
exercising such right shall receive from the Company cash in lieu of such
fractional share equal to the Fair Market Value thereof.
19. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS:
TERMINATION OF ISOs.
The Administrator, at the written request of any Participant, may in its
discretion take such actions as may be necessary to convert such Participant's
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior to the expiration of
such ISOs, regardless of whether the Participant is an employee of the Company
or an Affiliate at the time of such conversion. Such actions may include, but
not be limited to, extending the exercise period or reducing the exercise price
of the appropriate installments of such Options. At the time of such
conversion, the Administrator (with the consent of the Participant) may impose
such conditions on the exercise of the resulting Non-Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed
to give any Participant the right to have such Participant's ISO's converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Administrator takes appropriate action. The Administrator, with the consent
of the Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such termination.
20. WITHHOLDING.
Upon the exercise of a Non-Qualified Option for less than the then Fair
Market Value or the making of a Disqualifying Disposition (as defined in
paragraph 21), the Company may withhold from the Participant's wages, if any, or
other remuneration, or may require the Participant to pay additional federal,
state, and local income tax withholding and employee contributions to employment
taxes in respect of the amount that is considered compensation includible in
such person's gross income. The Administrator in its discretion may condition
the exercise of an Option for less than the then Fair Market Value on the
Participant's payment of such additional income tax withholding and employee
contributions to employment taxes.
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
Each Key Employee who receives an ISO must agree to notify the Company in
writing immediately after the Key Employee makes a Disqualifying Disposition of
any shares acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is any disposition (including any sale) of such shares before the
later of (a) two years after the date the Key Employee was granted the ISO, or
(b) one year after the date the Key Employee acquired shares by exercising the
ISO. If the Key Employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.
22. TERMINATION OF THE PLAN.
The Plan will terminate on February 3, 2002, the date which is ten (10)
years from the earlier of the date of its adoption and the date of its approval
by the stockholders of the Company. The Plan may be terminated at an earlier
date by vote of the stockholders of the Company; provided, however, that any
such earlier termination will not affect any Options granted or Option
Agreements executed prior to the effective date of such termination.
23. AMENDMENT OF THE PLAN.
The Plan may be amended by the stockholders of the Company. The Plan may
also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Options granted under the
Plan or Options to be granted under the Plan for favorable federal income tax
treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code, to the extent necessary
to ensure the qualification of the Plan under Rule 16b-3, and to the extent
necessary to qualify the shares issuable upon exercise of any outstanding
Options granted, or Options to be granted, under the Plan for listing on any
national securities exchange or quotation in any national automated quotation
system of securities dealers. Any amendment approved by the Administrator which
is of a scope that requires stockholder approval in order to ensure favorable
federal income tax treatment for any incentive stock options or requires
stockholder approval in order to ensure the compliance of the Plan with Rule
16b-3 shall be subject to obtaining such stockholder approval. Any modification
or amendment of the Plan shall not, without the consent of a Participant, affect
his or her rights under an Option previously granted to him or her. With the
consent of the Participant affected, the Administrator may amend outstanding
Option Agreements in a manner not inconsistent with the Plan.
24. EMPLOYMENT OR OTHER RELATIONSHIP.
Nothing in this Plan or any Option Agreement shall be deemed to prevent the
Company or an Affiliate from terminating the employment, consultancy or director
status of a Participant, nor to prevent a Participant from terminating his or
her own employment, consultancy or director status or to give any Participant a
right to be retained in employment or other service by the Company or any
Affiliate for any period of time.
25. GOVERNING LAW.
This Plan shall be construed and enforced in accordance with the law of the
State of Delaware.
February 19, 1997
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166
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 3,000,000 additional 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 amendment to the Registration Statement for issuance by the Company
pursuant to the terms of the America Online, Inc. 1992 Employee, Director and
Consultant Stock Option Plan (the "Plan").
I am Deputy 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. American Online, Inc. 1992 Employee, Director and Consultant 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, although the Company acknowledges that I am not
admitted to practice in the State of Delaware and am not an expert in the laws
of that jurisdiction. 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/Sheila A. Clark
Sheila A. Clark
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the America Online, Inc. 1992 Employee, Director and
Consultant Stock Option Plan, of our report dated September 11, 1996, with
respect to the financial statements of The ImagiNation Network, Inc. as of
December 31, 1994 and 1995 and for each of the three years in the period then
ended included in the Form 8-K/A No. 1 dated October 21, 1996 of America Online,
Inc., filed with the Securities and Exchange Commission.
/s/
ERNST & YOUNG LLP
Walnut Creek, California
February 12, 1997
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the America Online, Inc. 1992 Employee, Director and
Consultant Stock Option Plan, of our report dated August 28, 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, 1996, filed with the
Securities and Exchange Commission.
/s/
ERNST & YOUNG LLP
Vienna, Virginia
February 13, 1997
POWER OF ATTORNEY
I, Stephen M. Case, whose signature appears below, constitute and appoint
Stephen M. Case, Lennert J. Leader and Sheila A. Clark, 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 America Online, Inc. 1992
Employee, Director and Consultant 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 February, 1997.
/s/Stephen M. Case
Signature
POWER OF ATTORNEY
I, James V. Kimsey, whose signature appears below, constitute and appoint
Stephen M. Case, Lennert J. Leader and Sheila A. Clark, 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 America Online, Inc. 1992
Employee, Director and Consultant 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 13th day of February, 1997.
/s/James V. Kimsey
Signature
POWER OF ATTORNEY
I, Robert W. Pittman, whose signature appears below, constitute and appoint
Stephen M. Case, Lennert J. Leader and Sheila A. Clark, 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 America Online, Inc. 1992
Employee, Director and Consultant 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 13th day of February, 1997.
/s/Robert W. Pittman
Signature
POWER OF ATTORNEY
I, Frank J. Caufield, whose signature appears below, constitute and appoint
Stephen M. Case, Lennert J. Leader and Sheila A. Clark, 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 America Online, Inc. 1992
Employee, Director and Consultant 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 13th day of February, 1997.
/s/Frank J. Caufield
Signature
POWER OF ATTORNEY
I, William Melton, whose signature appears below, constitute and appoint
Stephen M. Case, Lennert J. Leader and Sheila A. Clark, 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 America Online, Inc. 1992
Employee, Director and Consultant 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 13th day of February, 1997.
/s/William Melton
Signature
POWER OF ATTORNEY
I, Thomas J. Middelhoff, whose signature appears below, constitute and
appoint Stephen M. Case, Lennert J. Leader and Sheila A. Clark, 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 America
Online, Inc. 1992 Employee, Director and Consultant 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 13th day of February, 1997.
/s/Thomas J. Middelhoff
Signature
POWER OF ATTORNEY
I, Scott C. Smith, whose signature appears below, constitute and appoint
Stephen M. Case, Lennert J. Leader and Sheila A. Clark, 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 America Online, Inc. 1992
Employee, Director and Consultant 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 13th day of February, 1997.
/s/Scott C. Smith
Signature
