As filed with the Securities and Exchange Commission on January 7, 2000
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)
Aiki Corporation 1997 Stock Incentive Plan
(Full Title of the Plan)
SHEILA A. CLARK, ESQ.
Senior Vice President, Legal
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166-9323
(703) 265-1000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
Title of securities to Amount to be Proposed maximum Proposed maximum Amount of
be registered (1) registered offering price per aggregate offering registration fee
share (2) price
Common Stock,
$.01 par value per share 742,478 $5.11 $3,794,062.58 $1,001.63
</TABLE>
(1) Common Stock being registered hereby includes associated Preferred Stock
Purchase Rights, which initially are attached to and traded with the shares
of the Registrant's Common Stock. Value attributable to such rights, if
any, is reflected in the market price of the Common Stock.
(2) 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 742,478 shares of Common
Stock which may be purchased upon exercise of outstanding options, the fee
is based on the average price of $5.11 at which options may be exercised.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents(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, 1999, as filed with the Commission on August 13, 1999
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (File No. 001-12143).
(b) The Company's Quarterly Report on Form 10-Q, for the quarterly period
ended September 30, 1999, as filed with the Commission on November 2,
1999, pursuant to the Exchange Act (File No. 001-12143).
(c) The Company's Proxy Statement on Schedule 14A for the Company's 1999
Annual Meeting (File No. 001-12143 and filing date of September 24,
1999).
(d) The Company's Current Report on Form 8-K dated December 1, 1999 (File
No. 001-12143 and filing date of December 2, 1999).
(e) The Company's Current Report on Form 8-K dated December 21, 1999
(File No. 001-12143 and filing date of January 3, 2000).
(f) The descriptions of the Company's Common Stock, including preferred
stock purchase rights, which are contained in registration statements
on Form 8-A under the Exchange Act, including any amendments or
reports filed for the purpose of updating such description.
(g) 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. Indemnification of Directors and Officers
Section 145(a) of the General Corporation Law of the State of
Delaware ("Delaware Corporation Law") provides, in general, that a corporation
shall have the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation), by reason of the
fact that he is or was a director or officer of the corporation. Such indemnity
may be against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding, if the indemnified party acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and if, with respect to any criminal action or
proceeding, the indemnified party did not have reasonable cause to believe his
conduct was unlawful.
Section 145(b) of the Delaware Corporation Law provides, in
general, that a corporation shall have the power to indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director or
officer of the corporation, against any expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation.
Section 145(g) of the Delaware Corporation law provides, in
general, that a corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
corporation against any liability asserted against him in any such capacity, or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under the provisions of the law.
Pursuant to Section 102(b)(7) of the Delaware General Corporation
Law (the "Delaware Statute"), Article Ninth of the Registrant's Restated
Certificate of Incorporation (incorporated by reference herein) provides that:
To the fullest extent permitted by the Delaware General
Corporation Law as the same now exists or may hereafter be
amended, the Corporation shall indemnify, and advance expenses to,
its directors and officers and any person who is or was serving at
the request of the Corporation as a director or officer, employee
or agent of another corporation, partnership, joint venture, trust
or other enterprise. The Corporation, by action of its board of
directors, may provide indemnification or advance expenses to
employees and agents of the Corporation 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.
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.
The Corporation 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 Corporation, or is or was
serving at the request of the Corporation 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 Corporation would
have the power to indemnify him against such liability under this
Article Ninth.
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 Corporation
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 Corporation 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 Corporation, only on such terms and
conditions and to the extent determined by the board of directors
in its sole discretion.
In addition, Article Five of the Registrant's Restated By-Laws
(incorporated by reference herein) provides that:
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 Corporation
or is or was serving at the request of the Corporation 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 Corporation to the fullest
extent authorized by the Delaware General 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 Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorney's 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 the section
"Right of Indemnitees to Bring Suit" of this Article with respect to proceedings
to enforce rights to indemnification, the Corporation 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 Corporation.
Right to Advancement of Expenses. The right to indemnification
conferred in the "Right to Indemnification" section of this Article shall
include the right to be paid by the Corporation the expenses (including
attorney's fees) incurred in defending any such proceeding in advance of its
final disposition; provided, however, that, if the Delaware General 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
Corporation of an undertaking, by or on behalf of such Indemnitee, to repay all
amounts so advanced if it shall ultimately be 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 or
otherwise. The rights to indemnification and to the advancement of expenses
conferred in this section and the section "Right to Indemnification" 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.
Right of Indemnitees to Bring Suit. If a claim under the sections
"Right to Indemnification" and "Right to Advancement of Expenses" of this
Article is not paid in full by the Corporation within sixty (60) days after a
written claim has been received by the Corporation, 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 Corporation 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 Corporation 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 Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the Corporation 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 General Corporation Law. Neither the failure of the Corporation
(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 General Corporation Law, nor an actual determination by the
Corporation (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 Corporation 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 Corporation.
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 Corporation's Certificate of Incorporation as amended from time to
time, these By-Laws, any agreement, any vote of stockholders or disinterested
directors or otherwise.
Insurance. The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
Indemnification of Employees and Agents of the Corporation. The
Corporation 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 Corporation 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 Corporation.
The directors and officers of the Registrant are covered by a
policy of liability insurance.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
Exhibit No. Description
4.1 Amendment of Section A of Article 4 of the Restated Certificate of
Incorporation of America Online, Inc. (filed as Exhibit 4.1 to
Registrant's Registration Statement on Form S-3, Registration No.
333-46633 and as Exhibit 3.1 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1999, both of
which are incorporated herein by reference)
4.2 Section B of Article 4, Article 6 and Article 8 of the Restated
Certificate of Incorporation of the Registrant (filed as part of
Exhibit 3.1 to the Registrant's Form 10-K for the year ended June
30, 1997 and incorporated herein by reference)
4.3 Rights Agreement dated as of May 12, 1998 between America Online,
Inc. and BankBoston, N.A., as Rights Agent, including Exhibit A
(Certificate of Designation setting forth the terms of Series A
Junior Participating Preferred Stock, $.01 par value), Exhibit B
(Form of Rights Certificate) and Exhibit C (Summary of Rights to
Purchase Series A Junior Participating Preferred Shares) (filed as
Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998 and incorporated herein by
reference)
4.4 Restated By-Laws of Registrant (filed as Exhibit 3.5 to
Registrant's Annual Report on Form 10-K for the fiscal year ended
June 30, 1998 and incorporated herein by reference)
4.5 Aiki Corporation 1997 Stock Incentive Plan
5.1 Opinion of Sheila A. Clark, Senior Vice President, Legal of the
Company, regarding the legality of securities being offered
23.1 Consent of Sheila A. Clark, Senior Vice President, Legal of the
Company (included in her opinion filed as Exhibit 5.1 and
incorporated herein by reference)
23.2 Consent of Ernst & Young LLP
24.1 Powers of Attorney (included in the signature page to the
Registration Statement)
Item 9. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the 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 County of Loudoun, Commonwealth of Virginia, on this 7th day
of January, 2000.
AMERICA ONLINE, INC.
By: /s/J. Michael Kelly
J. Michael Kelly, Senior Vice
President, Chief Financial Officer
and Assistant Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Stephen M. Case, Kenneth J. Novack, J.
Michael Kelly, Sheila A. Clark and James F. MacGuidwin and each of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
or supplements to this registration statement and to file the same with all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof. This power of
attorney may be executed in counterparts.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated in one or more counter-parts.
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<S> <C> <C>
SIGNATURE TITLE DATE
January 7, 2000
/s/Stephen M. Case Chairman of the Board and Chief
Stephen M. Case Executive Officer (principal executive
officer)
January 7, 2000
/s/Robert W. Pittman President, Chief Operating Officer and
Robert W. Pittman Director
January 7, 2000
/s/Miles R. Gilburne Senior Vice President, Corporate
Miles R. Gilburne Development and Director
January 7, 2000
/s/J. Michael Kelly Senior Vice President, Chief Financial
J. Michael Kelly Officer and Assistant Secretary (principal
financial officer)
January 7, 2000
/s/James F. MacGuidwin Vice President, Controller, Chief
James F. MacGuidwin Accounting and Budget Officer (principal
accounting officer)
January 7, 2000
/s/Daniel F. Akerson Director
Daniel F. Akerson
January 7, 2000
/s/James L. Barksdale Director
James L. Barksdale
January 7, 2000
/s/Frank J. Caufield Director
Frank J. Caufield
January 7, 2000
/s/Alexander M. Haig, Jr. Director
Alexander M. Haig, Jr.
/s/Thomas Middelhoff Director January 7, 2000
Thomas Middelhoff
January 7, 2000
/s/Colin L. Powell Director
Colin L. Powell
January 7, 2000
/s/Franklin D. Raines Director
Franklin D. Raines
January 7, 2000
/s/Marjorie M. Scardino Director
Marjorie M. Scardino
</TABLE>
Exhibit Index
Exhibit No. Description
4.5 Aiki Corporation 1997 Stock Incentive Plan
5.1 Opinion of Sheila A. Clark, Senior Vice President, Legal of the
Company, regarding the legality of securities being offered
23.1 Consent of Sheila A. Clark, Senior Vice President, Legal of the
Company (included in her opinion filed as Exhibit 5.1 and
incorporated herein by reference)
23.2 Consent of Ernst & Young LLP
24.1 Powers of Attorney (included in the signature page to the
Registration Statement)
Exhibit 4.5
AIKI CORPORATION
1997 STOCK INCENTIVE PLAN
Article 1
PURPOSE AND EFFECTIVENESS
1.1 Purpose. The purpose of the 1997 Stock Incentive Plan (the "Plan") is to
provide a method by which selected individuals rendering services to Aiki
Corporation (the "Company"), may be offered an opportunity to invest in or
receive grants of capital stock of the Company, thereby increasing their
personal interest in the growth and success of the Company. The Plan is also
intended to aid in attracting persons of exceptional ability to become officers
and employees of the Company.
1.2 Effective Date. The Plan shall be effective at the time specified in the
resolutions of the Board adopting the Plan (the "Effective Date"). The Plan
shall be subject to approval by holders of shares of Common Stock constituting
at least a majority of the shares of Common Stock represented in person or by
proxy at the meeting at which the approval is sought. The Plan shall also be
subject to the requirement of RCW 21.20.310(10) that the Administrator of
Securities of the Department of Licensing of the State of Washington be provided
with notification of the adoption of the Plan. No Award granted hereunder shall
be exercisable until these shareholder approval and notification requirements
have been satisfied. If either of these requirements is not satisfied within
twelve (12) months after the Effective Date, the Plan, and any Awards granted
hereunder prior to that date, shall be void.
Article 2
DEFINITIONS
2.1 Certain Defined Terms. Capitalized terms not defined elsewhere in the Plan
shall have the following meanings (whether used in the singular or plural):
"Administrative Committee" is defined in Section 3.1.
"Affiliate" of the Company means any corporation, partnership,
or other business association that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the
Company.
"Agreement" is defined in Section 10.5.
"Approved Transaction" means (a) any merger, consolidation or
binding share exchange pursuant to which shares of Common Stock are changed or
converted into or exchanged for cash, securities or other property, other than
any such transaction in which the persons who hold Common Stock immediately
prior to the transaction have immediately following the transaction the same
proportionate ownership of the common stock of, and the same voting power with
respect to, the surviving corporation; (b) any merger, consolidation or binding
share exchange in which the persons who hold Common Stock immediately prior to
the transaction have immediately following the transaction less than a majority
of the combined voting power of the outstanding capital stock of the Company
ordinarily (and apart from rights accruing under special circumstances) having
the right to vote in the election of directors; (c) any liquidation or
dissolution of the Company; and (d) any sale, lease, exchange or other transfer
not in the ordinary course of business (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company.
"Award" means a grant of an Option, SAR, Restricted Shares
and/or Stock Units under this Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute or statutes thereto. Reference to
any specific section of the Code shall include any successor section.
"Common Stock" means the Common Stock of the Company.
"Company" means Aiki Corporation, a Washington corporation.
"Control Purchase" means, if the Company registers any class
of any Equity Security pursuant to Section 12 of the Exchange Act, any
transaction (or series of related transactions), consummated without the
approval of the Board during the period from the effective date of the
registration until six (6) months after the termination of the registration, in
which (a) any person, corporation or other entity (including any "person" as
defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act, but excluding the
Company, any person who is a 10% Shareholder at the effective date of the
registration, and any employee benefit plan sponsored by the Company) purchases
any Common Stock (or securities convertible into Common Stock) for cash,
securities or any other consideration pursuant to a tender offer or exchange
offer; or (b) any person, corporation or other entity (including any "person" as
defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act, but excluding the
Company, any person who is a 10% Shareholder at the effective date of the
registration, and any employee benefit plan sponsored by the Company) becomes
the "beneficial owner" (as that term is defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the then outstanding
securities of the Company ordinarily (and apart from rights accruing under
special circumstances) having the right to vote in the election of directors
(calculated as provided in Rule 13d-3(d) under the Exchange Act in the case of
rights to acquire the Company's securities).
"Disability" of a Holder will occur when (a) because of injury
or sickness (i) the Holder cannot perform each of the material duties of his or
her regular occupation, or (ii) the Holder, while unable to perform all of the
material duties of his or her regular occupation on a full-time basis, is
performing at least one of the material duties of his or her regular occupation
on a part-time or full-time basis and is earning at least twenty percent (20%)
less per month than his or her indexed pre-disability earnings due to that same
injury or sickness, and (b) the condition described in the preceding clause (a)
has lasted or can be expected to last for a continuous period of not less than
twelve (12) months.
"Disinterested Person" is defined in Section 3.2(b).
"Effective Date" is defined in Section 1.2.
"Eligible Person" is defined in Section 5.1.
"Equity Securities" has the meaning given that term in Rule
16a-1 promulgated under the Exchange Act, or any successor rule.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute or statutes thereto.
Reference to any specific section of the Exchange Act shall include any
successor section.
"Fair Market Value" on any day means, if the Common Stock is
publicly traded, the last sales price (or, if no last sales price is reported,
the average of the high bid and low asked prices) for a share of Common Stock on
that day (or, if that day is not a trading day, on the next preceding trading
day), as reported by the principal exchange on which the Common Stock is listed,
or, if the Common Stock is publicly traded but not listed on an exchange, as
reported on NASDAQ, or, if such prices or quotations are not reported on NASDAQ,
as reported by any other available source of prices or quotations selected by
the Administrative Committee. If the Common Stock is not publicly traded, or if
the Fair Market Value is not determinable by any of the foregoing means, the
Fair Market Value on any day shall be determined in good faith by the
Administrative Committee on the basis of such considerations as the
Administrative Committee deems appropriate.
"Free Standing SAR" is defined in Section 7.1.
"Holder" means an Eligible Person who has received an Award
under this Plan or, if rights continue under the Award following the death of
the Eligible Person, the person who succeeds to those rights by will or by the
laws of descent and distribution.
"Incentive Stock Option" means an Option that is an incentive
stock option within the meaning of Section 422 of the Code.
"NASDAQ" means the National Association of Securities Dealers,
Inc. Automated Quotation System.
"Nonqualified Stock Option" means an Option that is designated
as a nonqualified stock option.
"Option" means an option with respect to shares of Common
Stock awarded pursuant to Article 6.
"Plan" is defined in Section 1.1.
"Related Option" is defined in Section 7.1.
"Restricted Shares" means shares of Common Stock or the right
to receive shares of Common Stock, as the case may be, awarded pursuant to
Article 8.
"Restriction Period" means a period of time beginning on the
date of an Award of Restricted Shares and ending on the Vesting Date with
respect to the Award.
"Retained Distribution" is defined in Section 8.3.
"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act, as amended from time to time, or any successor rule thereto.
"SARs" means stock appreciation rights with respect to shares
of Common Stock awarded pursuant to Article 7.
"Stock Units" is defined in Section 9.1.
"Tandem SARs" is defined in Section 7.1.
"10% Shareholder" means a person who owns (or is considered as
owning within the meaning of Section 424 of the Code) stock possessing more than
10% of the total combined voting power of all classes of capital stock of the
Company.
"Vesting Date" means, with respect to an Award of Restricted
Shares, the date on which the Restricted Shares cease to be subject to a risk of
forfeiture, as designated in or determined in accordance with the Agreement
evidencing the Award. If more than one Vesting Date is designated for an Award
of Restricted Shares, reference to a Vesting Date in respect of the Award shall
be deemed to refer to the Vesting Dates for the respective portions of the Award
that have differing Vesting Dates.
Article 3
ADMINISTRATION
3.1 Administrative Committee. The Plan shall be administered by the Board unless
the Board, either voluntarily or as required by Section 3.2 below, appoints a
separate committee of the Board to administer the Plan (the Board, or such
committee, if it is administering the Plan, will be referred to in the Plan as
the "Administrative Committee"). The Administrative Committee shall select one
of its members as its chairman and shall hold its meetings at such times and
places as it shall deem advisable. A majority of its members shall constitute a
quorum and all determinations shall be made by a majority of that quorum. Any
determination reduced to writing and signed by all of the members of the
Administrative Committee shall be fully as effective as if it had been made by a
majority vote at a meeting duly called and held.
3.2 Administration Following Exchange Act Registration. Notwithstanding the
foregoing provisions of this Article 3, if the Company registers any class of
any Equity Security pursuant to Section 12 of the Exchange Act, the Plan shall,
from the effective date of the registration until six (6) months after the
termination of the registration, be administered as follows:
(a) If at any time a member of the Board is not a Disinterested Person, then the
Board shall appoint a committee, consisting of two or more of its members each
of whom is a Disinterested Person, to administer this Plan in accordance with
such terms and conditions not inconsistent with this Plan as the Board may
prescribe. Once appointed, the committee shall continue to serve until otherwise
directed by the Board. From time to time the Board may increase the size of the
committee and appoint additional members, remove members (with or without cause)
and appoint new members in their place, fill vacancies however caused, and/or
remove all members of the committee and thereafter directly administer this Plan
at any later time when all members of the Board are Disinterested Persons. At no
time shall a person who is not a Disinterested Person serve on the committee
appointed under this Section 3.2(a), nor shall the committee at any time have
fewer than two members.
(b) The term "Disinterested Person" shall mean a member of the Board who is not,
during the period of one (1) year prior to service as a member of the
Administrative Committee, or during such service, granted or awarded Equity
Securities pursuant to the Plan or any other plan of the Company or any of its
Affiliates, other than grants or awards that would not prevent the member from
being a "disinterested person" with respect to the Plan for purposes of Rule
16b-3.
3.3 Powers; Regulations. The Administrative Committee shall have full power and
authority, subject only to the express provisions of the Plan (a) to designate
the Eligible Persons to whom Options are to be granted under Article 6 of the
Plan, SARs under Article 7 of the Plan, Restricted Shares under Article 8 of the
Plan and/or Stock Units under Article 9 of the Plan; (b) to determine the number
of shares subject to, and all of the other terms and conditions (which need not
be identical) of, all Awards so granted; (c) to interpret the provisions of the
Plan and the Agreements evidencing the Awards so granted; (d) to correct any
defect, supply any information and reconcile any inconsistency in such manner
and to such extent as shall be deemed necessary or advisable to carry out the
purpose of the Plan; (e) to supervise the administration of the Plan; and (f) to
take such other actions in connection with or in relation to the Plan as it
deems necessary or advisable. The Administrative Committee is authorized to
establish, amend and rescind such rules and regulations not inconsistent with
the terms and conditions of the Plan as it deems necessary or advisable for the
proper administration of the Plan. In making determinations hereunder, the
Administrative Committee may give such consideration to the recommendations of
management of the Company as the Administrative Committee deems desirable.
3.4 Limits on Authority. Exercise by the Administrative Committee of its
authority under the Plan shall be consistent (a) with the intent that all
Incentive Stock Options issued under the Plan be qualified under the terms of
Section 422 of the Code (including any amendments thereto and any similar
successor provision), and (b) if the Company registers any class of any Equity
Security pursuant to Section 12 of the Exchange Act, with the intent that the
Plan be administered in a manner that satisfies the conditions of Rule
16b-3(c)(2)(i) under the Exchange Act (including any amendments thereto and any
similar successor provision) so that the grant of Awards under this Plan, as
well as all other transactions with respect to the Plan, to Awards granted
thereunder and to any Common Stock acquired upon exercise of Awards, shall, to
the extent possible, be exempt from the operation of Section 16(b) of the
Exchange Act.
3.5 Exercise of Authority. Each action and determination made or taken pursuant
to the Plan by the Administrative Committee, including but not limited to any
interpretation or construction of the Plan and the Agreements evidencing Awards
hereunder, shall be final and conclusive for all purposes and upon all persons.
No member of the Administrative Committee shall be liable for any action or
determination made or taken by the member or the Administrative Committee in
good faith with respect to the Plan.
Article 4
SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to the provisions of this Article 4, the maximum
number of shares of Common Stock with respect to which Awards may be granted
during the term of the Plan shall be One Million Five Hundred Thousand
(1,500,000) shares. Awards with respect to such shares of Common Stock may be
granted in the form of Options, SARs, Restricted Shares and/or Stock Units.
Except for Tandem SARS granted pursuant to Article 7, once an Award in a
particular form has been granted with respect to a share of Common Stock, Awards
with respect to such share may not thereafter be granted in any other form
unless, in accordance with the last sentence of this Section 4.1, the share
again becomes available for purposes of the Plan. Shares of Common Stock will be
made available from the authorized but unissued shares of the Company or from
shares reacquired by the Company. The shares of Common Stock subject to (a) any
Award granted under the Plan that expires, terminates or is annulled for any
reason without having been exercised (or considered to have been exercised as
provided in Section 7.2), (b) any Free Standing SARs granted under the Plan that
are exercised for cash, and (c) any Restricted Shares or Stock Units that are
forfeited prior to becoming vested (provided that the Holder received no
benefits of ownership of the Restricted Shares or Stock Units other than voting
rights and the accumulation of Retained Distributions), shall again be available
for purposes of the Plan.
4.2 Adjustments. If the Company subdivides its outstanding shares of Common
Stock into a greater number of shares of Common Stock (by stock dividend, stock
split, reclassification or otherwise) or combines its outstanding shares of
Common Stock into a smaller number of shares of Common Stock (by reverse stock
split, reclassification or otherwise), or if the Administrative Committee
determines, in its sole discretion, that any stock dividend, extraordinary cash
dividend, reclassification, recapitalization, reorganization, split-up,
spin-off, combination, exchange of shares, warrants or rights offering to
purchase Common Stock, or other similar corporate event (including a merger or
consolidation other than one that constitutes an Approved Transaction) affects
the Common Stock such that an adjustment is required in order to preserve the
benefits or potential benefits intended to be made available under this Plan,
then the Administrative Committee shall, in its sole discretion and in such
manner as the Administrative Committee may deem equitable and appropriate, make
adjustments to any or all of (a) the number and kind of shares that thereafter
may be awarded, optioned, or otherwise made subject to the benefits contemplated
by the Plan, (b) the number and kind of shares subject to outstanding Awards,
and (c) the purchase price and the relevant base price with respect to any of
the foregoing; provided, however, that the number of shares subject to an Award
shall always be a whole number. The Administrative Committee may, if deemed
appropriate, provide for a cash payment to any Holder of an Award in connection
with any adjustment made pursuant to this Section 4.2.
Article 5
ELIGIBILITY
5.1 General. The persons eligible to participate in the Plan and to receive
Awards under the Plan ("Eligible Persons") shall, subject to Section 5.2, be (a)
employees (including officers and directors who are also employees) of the
Company or any of its Affiliates, (b) directors who are not employees, and (c)
consultants (other than directors) rendering services to the Company or any of
its Affiliates in the capacity of independent contractors. Awards may be granted
to Eligible Persons even if they hold or have held other Awards under this Plan
or similar awards under any other plan of the Company or any of its Affiliates.
5.2 Ineligibility. If the Company registers any class of any Equity Security
pursuant to Section 12 of the Exchange Act, then, from the effective date of the
registration until six (6) months after the termination of the registration, no
member of the Administrative Committee, while serving as such, shall be eligible
to receive an Award.
Article 6
STOCK OPTIONS
6.1 Grant of Options. Subject to the limitations of the Plan, the Administrative
Committee shall designate from time to time each Eligible Person who is to be
granted an Option, the time when the Option shall be granted, the number of
shares subject to the Option, whether the Option is to be an Incentive Stock
Option or a Nonqualified Stock Option and, subject to Section 6.2, the purchase
price of the shares of Common Stock subject to the Option; provided, however,
that Incentive Stock Options may only be granted to Eligible Persons who are
employees of the Company or an Affiliate that constitutes a "parent corporation"
or a "subsidiary corporation" within the meaning of Section 424 of the Code.
Each Option granted under this Plan shall also be subject to such other terms
and conditions not inconsistent with this Plan as the Administrative Committee,
in its sole discretion, determines. Subject to the limitations of the Plan, the
same Eligible Person may receive Incentive Stock Options and Nonqualified Stock
Options at the same time and pursuant to the same Agreement, provided that
Incentive Stock Options and Nonqualified Stock Options are clearly designated as
such.
6.2 Purchase Price. The price at which shares may be purchased upon exercise of
an Option shall be fixed by the Administrative Committee and may be more than,
less than or equal to the Fair Market Value of the Common Stock as of the date
the Option is granted; provided, however, that the purchase price of an
Incentive Stock Option shall be at least 100% of the Fair Market Value as of the
date of grant of the Common Stock subject thereto.
6.3 Limitation on Grants. The aggregate Fair Market Value of the Common Stock
with respect to which, during any calendar year, one or more Incentive Stock
Options under this Plan (and/or one or more options under any other plan
maintained by the Company or any of its Affiliates for the granting of options
intended to qualify under Section 422 of the Code) are exercisable for the first
time by a Holder shall not exceed $100,000 (said value to be determined as of
the respective dates on which the options are granted to the Holder). If an
Option that would otherwise qualify as an Incentive Stock Option becomes
exercisable for the first time in any calendar year for shares of Common Stock
that would cause such aggregate Fair Market Value to exceed $100,000, then the
portion of the Option in respect of such shares shall be deemed to be a
Nonqualified Stock Option.
6.4 Term of Options. Subject to the provisions of the Plan with respect to
termination of Options upon death, Disability or termination of services, the
term of each Option shall be for such period as the Administrative Committee
shall determine, but not more than ten (10) years from the date of grant.
6.5 Exercise of Options. An Option granted under the Plan shall become and
remain exercisable during the term of the Option to the extent provided in the
Agreement evidencing the Award and in this Plan and, unless the Agreement
evidencing the Option otherwise provides, may be exercised to the extent
exercisable, in whole or in part, at any time and from time to time during such
term; provided, however, that subsequent to the grant of an Option, the
Administrative Committee, at any time before complete termination of the Option,
may accelerate the time or times at which the Option may be exercised in whole
or in part (without reducing the term of the Option).
6.6 Manner of Exercise.
(a) Form of Payment. An Option shall be exercised by written notice to the
Company upon such terms and conditions as the Agreement evidencing the Option
may provide and in accordance with such other procedures for the exercise of
Options as the Administrative Committee may establish from time to time. The
method or methods of payment of the purchase price for the shares to be
purchased upon exercise of an Option and of any amounts required by Section
10.12 shall be determined by the Administrative Committee and may consist of (i)
cash, (ii) check, (iii) promissory note, (iv) whole shares of Common Stock
already owned by the Holder, (v) the withholding of shares of Common Stock
issuable upon exercise of the Option, (vi) the delivery, together with a
properly executed exercise notice, of irrevocable instructions to a broker to
deliver promptly to the Company the amount of sale or loan proceeds required to
pay the purchase price, (vii) any combination of the foregoing methods of
payment, or (viii) such other consideration and method of payment as may be
permitted for the issuance of shares under applicable securities and other laws.
The permitted methods or methods of payment of the amounts payable upon exercise
of an Option, if other than in cash, shall be set forth in the Agreement
evidencing the Option and may be subject to such conditions as the
Administrative Committee deems appropriate. Without limiting the generality of
the foregoing, if a Holder is permitted to elect to have shares of Common Stock
issuable upon exercise of an Option withheld to pay all or any part of the
amounts payable in connection with the exercise, then the Administrative
Committee shall have the sole discretion to approve or disapprove the election,
which approval or disapproval shall be given after the election is made, and the
making of the election (including the related exercise of the Option) shall
comply with the requirements for exemptive relief under Rule 16b-3, including
but not limited to paragraphs (e)(3) and (e)(4) thereof (to the extent Rule
16b-3 applies to the election or exercise).
(b) Value of Shares. Shares of Common Stock delivered in payment of all or any
part of the amounts payable in connection with the exercise of an Option, and
shares of Common Stock withheld for the payment, shall be valued for such
purpose at their Fair Market Value as of the exercise date.
(c) Issuance of Shares. The Company shall effect the issuance of the shares of
Common Stock purchased under the Option as soon as practicable after the
exercise thereof and payment in full of the purchase price therefor and of any
amounts required by Section 10.12, and within a reasonable time thereafter the
issuance shall be evidenced on the books of the Company.
Article 7
SARS
7.1 Grant of SARs. The Administrative Committee shall designate from time to
time each Eligible Person who is to be granted an SAR, the time when the SAR
shall be granted, the number of shares subject to the SAR, and the base price of
the SAR. Each SAR shall also be subject to such other terms and conditions not
inconsistent with this Plan as the Administrative Committee, in its sole
discretion, determines. An SAR may be granted to the Holder of an Option (the
"Related Option") with respect to all or a portion of the shares of Common Stock
subject to the Related Option (such an SAR will be referred to in this Plan as a
"Tandem SAR") or may be granted separately to an Eligible Person (such an SAR
will be referred to in this Plan as a "Free Standing SAR").
7.2 Tandem SARs. A Tandem SAR may be granted either concurrently with the grant
of the Related Option or (if the Related Option is a Nonqualified Stock Option)
at any time thereafter prior to the complete exercise, termination, expiration
or cancellation of the Related Option. Tandem SARs shall be exercisable only at
the time and to the extent that the Related Option is exercisable (and may be
subject to such additional limitations on exercisability as the Agreement may
provide), and in no event after the complete termination or full exercise of the
Related Option. Upon the exercise of Tandem SARs, the Related Option shall be
considered to have been exercised to the extent of the number of shares of
Common Stock with respect to which the Tandem SARs are exercised for purposes of
determining the number of shares of Common Stock that remain subject to the
Related Option and for purposes of determining the number of shares of Common
Stock in respect of which other Awards may be granted. Upon the exercise or
termination of the Related Option, the Tandem SARs with respect thereto shall be
canceled automatically to the extent of the number of shares of Common Stock
with respect to which the Related Option was so exercised or terminated. Subject
to the limitations of the Plan, upon the exercise of a Tandem SAR, the Holder
thereof shall be entitled to receive from the Company, for each share of Common
Stock with respect to which the Tandem SAR is being exercised, consideration (in
the form determined as provided in Section 7.4) equal in value to the excess of
the Fair Market Value of a share of Common Stock on the date of exercise over
the Related Option purchase price per share; provided, however, that the
Administrative Committee may, in any Agreement evidencing Tandem SARs, provide
that the appreciation realizable upon exercise thereof shall be measured from a
base higher than the Related Option purchase price.
7.3 Free Standing SARs. Free Standing SARs shall be exercisable at the time, to
the extent and upon the terms and conditions set forth in the Agreement
evidencing the Award. The base price of a Free Standing SAR shall be not less
than 100% of the Fair Market Value of the Common Stock on the date of grant of
the Free Standing SAR. Subject to the limitations of the Plan, upon the exercise
of a Free Standing SAR, the Holder thereof shall be entitled to receive from the
Company, for each share of Common Stock with respect to which the Free Standing
SAR is being exercised, consideration (in the form determined as provided in
Section 7.4) equal in value to the excess of the Fair Market Value of a share of
Common Stock on the date of exercise over the base price per share of the Free
Standing SAR.
7.4 Consideration. The consideration to be received upon the exercise of an SAR
by the Holder shall be paid in cash, shares of Common Stock (valued at Fair
Market Value on the date of exercise of the SAR) or a combination of cash and
shares of Common Stock as specified in the Agreement evidencing the SAR, or, if
so provided in the Agreement, either as determined by the Administrative
Committee in its sole discretion or as elected by the Holder; provided, however,
that the Administrative Committee shall have the sole discretion to approve or
disapprove the election by a Holder to receive cash in full or partial
settlement of an SAR, which approval or disapproval shall be given after the
election is made. The Company's obligation arising upon the exercise of an SAR
may be paid currently or on a deferred basis with such interest or earnings
equivalent as the Administrative Committee may determine. No fractional shares
of Common Stock shall be issuable upon exercise of an SAR and, unless otherwise
provided in the Agreement evidencing the SAR, the Holder will receive cash in
lieu of fractional shares. The election by a Holder to receive cash in full or
partial settlement of an SAR, as well as the exercise by the Holder of an SAR
for cash, shall comply with the requirements for exemptive relief under Rule
16b-3, including but not limited to paragraphs (e)(3) and (e)(4) thereof (to the
extent Rule 16b-3 applies to the election or exercise). Unless the
Administrative Committee shall otherwise determine, to the extent a Free
Standing SAR is exercisable, it will be exercised automatically for cash on its
expiration date.
7.5 Limitations. The Agreement evidencing an Award of SARs may provide for a
limit on the amount payable to a Holder upon exercise of SARs at any time or in
the aggregate, for a limit on the number of SARs that may be exercised by the
Holder in whole or in part for cash during any specified period, for a limit on
the time periods during which a Holder may exercise SARs and for such other
limits on the rights of the Holder and such other terms and conditions of the
SAR as the Administrative Committee may determine, including, without
limitation, a consideration that the SAR may be exercised only in accordance
with rules and regulations adopted by the Administrative Committee from time to
time. Unless otherwise so provided in the Agreement evidencing the Award, any
such limit relating to a Tandem SAR shall not restrict the exercisability of the
Related Option. Such rules and regulations may govern the right to exercise SARs
granted prior to the adoption or amendment of such rules and regulations as well
as SARs granted thereafter.
7.6 Exercise. For purposes of this Article 7, the date of exercise of an SAR
shall mean the date on which the Company receives notice from the Holder of the
SAR of the exercise of the SAR.
Article 8
RESTRICTED SHARES
8.1 Grant. The Administrative Committee shall designate from time to time each
Eligible Person who is to be granted an Award of Restricted Shares, the time
when the Award shall be granted, the Restriction Period for the Award, the
number of shares of Common Stock subject to the Award, the price to be paid by
the Holder for the Restricted Shares, and whether the Restricted Shares will be
issued at the beginning or the end of the Restriction Period. The Administrative
Committee shall also designate (or set forth the basis for determining) the
Vesting Date or Vesting Dates for the Award. Each Award of Restricted Shares
shall also be subject to such other terms and conditions not inconsistent with
this Plan as the Administrative Committee, in its sole discretion, determines.
The price to be paid for Restricted Shares shall not be less than the minimum
consideration necessary to permit the Restricted Shares to be deemed fully paid
and nonassessable.
8.2 Issuance of Restricted Shares at Beginning of the Restriction Period. If
Restricted Shares are issued at the beginning of the Restriction Period, the
stock certificate or certificates representing the Restricted Shares shall be
registered in the name of the Holder to whom the Restricted Shares have been
awarded. During the Restriction Period, certificates representing the Restricted
Shares (and any securities constituting Retained Distributions) shall bear a
restrictive legend to the effect that ownership of the Restricted Shares (and
the Retained Distributions), and the enjoyment of all rights appurtenant
thereto, are subject to the restrictions, terms and conditions provided in the
Plan and the Agreement evidencing the Award. Such certificates shall remain in
the custody of the Company and the Holder shall deposit with the Company stock
powers or other instruments of assignment, each endorsed in blank, so as to
permit retransfer to the Company of all or any portion of the Restricted Shares
(and any securities constituting Retained Distributions) that are forfeited or
otherwise do not become vested in accordance with the Plan and the Agreement
evidencing the Award.
8.3 Restrictions. Restricted Shares issued at the beginning of the Restriction
Period shall constitute issued and outstanding shares of Common Stock for all
corporate purposes. The Holder will have the right to vote the Restricted
Shares, to receive and retain dividends and distributions paid or distributed on
the Restricted Shares and to exercise all other rights, powers and privileges of
a Holder of Common Stock with respect to the Restricted Shares; provided,
however, that (a) the Holder will not be entitled to delivery of the stock
certificates representing the Restricted Shares until the Restriction Period
expires and unless all other vesting and other conditions with respect to the
Restricted Shares have been fulfilled or waived; (b) the Company will retain
custody of the stock certificates representing the Restricted Shares during the
Restriction Period as provided in Section 8.2; (c) other than such dividends and
distributions as the Administrative Committee may in it sole discretion
designate, the Company will retain custody of all distributions ("Retained
Distributions") made or declared with respect to the Restricted Shares (and the
Retained Distributions will be subject to the same restrictions, terms and
vesting and other conditions as are applicable to the Restricted Shares) until
such time, if ever, as the Restricted Shares with respect to which the Retained
Distributions have been made, paid or declared become vested, and the Retained
Distributions shall not bear interest or be segregated in a separate account;
(d) during the Restriction Period, the Holder may not sell, assign, transfer,
pledge, exchange, or otherwise encumber or dispose of the Restricted Shares or
any Retained Distributions or the Holder's interest therein; and (e) a breach of
any restrictions, terms or conditions provided in the Plan of the Agreement
evidencing the Award, or established by the Administrative Committee with
respect to Restricted Shares or Retained Distributions generally, will cause a
forfeiture of the Restricted Shares and any Retained Distributions with respect
thereto.
8.4 Issuance of Stock at End of the Restriction Period. If the Agreement
evidencing an Award of Restricted Shares provides that the Restricted Shares are
not issuable until the end of the Restriction Period, the Restricted Shares
shall not constitute issued and outstanding shares of Common Stock, and the
Holder shall not have any of the rights of a shareholder with respect to the
Restricted Shares, until the shares are issued to the Holder at the end of the
Restriction Period.
8.5 Cash Awards. An Agreement evidencing an Award of Restricted Shares may
provide for the payment of a cash amount to the Holder of the Restricted Shares
at any time after the Restricted Shares become vested. Such cash amount shall be
payable in accordance with such additional restrictions, terms and conditions as
shall be prescribed by the Administrative Committee and shall be in addition to
any other salary, incentive, bonus or other compensation payments which the
Holder shall be otherwise entitled or eligible to receive.
8.6 Completion of Restriction Period. Upon the Vesting Date with respect to an
Award of Restricted Shares and the satisfaction of all other applicable
restrictions, terms and conditions set forth in the Agreement evidencing the
Award (a) all or the applicable portion of the Restricted Shares shall become
vested, (b) any Retained Distributions with respect to the Restricted Shares
shall become vested to the extent that the Restricted Shares related thereto
have vested, and (c) any cash amount to be received by the Holder with respect
to the Restricted Shares shall become payable, all in accordance with the terms
of the Agreement evidencing the Award. At the end of the Restriction Period with
respect to an Award, any Restricted Shares or Retained Distributions that have
not vested shall be forfeited to the Company and the Holder shall not thereafter
have any rights (including dividend or voting rights) with respect to the
Restricted Shares or Retained Distributions so forfeited. The Administrative
Committee may, in its sole discretion, determine that the delivery of Restricted
Shares and/or Retained Distributions that have vested, and the payment of any
cash amount that has become payable, shall be deferred until such date or dates
as the Holder of the Award may elect. Any election pursuant to the preceding
sentence shall be filed in writing with the Administrative Committee in
accordance with such rules and regulations, including any deadline for the
making of such an election, as the Administrative Committee may provide.
Article 9
STOCK UNITS
9.1 Grant. The Administrative Committee shall have authority to grant to
Eligible Persons Awards of units, the value of which is based, in whole or in
part, on the Fair Market Value of the Common Stock ("Stock Units"). Subject to
the provisions of the Plan, including any rules established pursuant to Section
9.2, an Award of Stock Units shall be subject to such terms, restrictions,
conditions, vesting requirements and payment rules as the Administrative
Committee may determine, in its sole discretion, which need not be identical for
each Award.
9.2 Rules. An Award of Stock Units may be made subject to such rule as the
Administrative Committee, in its sole discretion, deems advisable, including but
not limited to any or all of the following:
(a) The shares of Common Stock subject to an Award of Stock Units may not be
sold, assigned, transferred, pledged, exchanged or otherwise encumbered or
disposed of prior to the date on which the shares are issued, or if later, the
date specified by the Administrative Committee at the time of the Award.
(b) An Award of Stock Units may provide for the payment of cash consideration by
the Holder or may provide that the Award, and the shares of Common Stock to be
issued in connection therewith, if applicable, shall be delivered without the
payment of cash consideration; provided, however, that the price to be paid for
shares of Common Stock issuable in connection with an Award of Stock Units shall
not be less than the minimum consideration necessary to permit the shares to be
deemed fully paid and nonassessable.
(c) An Award of Stock Units may relate in whole or in part to performance or
other criteria established by the Administrative Committee at the time of the
grant.
(d) An Award of Stock Units may provide for deferred payment schedules, vesting
over a specified period of an employment or consulting arrangement, elections by
the Holder to defer payment of the Award, or the lifting of restrictions on the
Award, if any.
(e) In such circumstances as the Administrative Committee may deem advisable,
the Administrative Committee may waive or otherwise remove, in whole or in part,
any restrictions or limitations to which an Award of Stock Units was made
subject at the time of grant.
Article 10
GENERAL PROVISIONS
10.1 Acceleration of Options, SARs, Restricted Shares and Stock Units.
(a) Death or Disability. Upon the death or Disability of the Holder of an Award,
notwithstanding any contrary waiting period, installment period, vesting
schedule or Restriction Period in the Agreement evidencing the Award or in the
Plan (except to the extent the Agreement expressly provides otherwise): (i) in
the case of an Option or SAR, the Option or SAR shall immediately become
exercisable in full in respect of the aggregate number of shares subject
thereto; (ii) in the case of Restricted Shares, the Restriction Period
applicable to the Award of Restricted Shares shall expire and all of the
Restricted Shares and any related Retained Distributions shall vest and any cash
amounts payable pursuant to the Agreement evidencing the Award shall be adjusted
in such manner as may be provided in the Agreement; and (iii) in the case of
Stock Units, the Award of Stock Units shall vest in full.
(b) Approved Transactions; Control Purchase. In the event of any Approved
Transaction or Control Purchase, notwithstanding any contrary waiting period,
installment period, vesting schedule or Restriction Period in any Agreement
evidencing an Award or in the Plan (except to the extent the Agreement expressly
provides otherwise): (i) in the case of an Option or SAR, the Option or SAR
shall become exercisable in full in respect of the aggregate number of shares
subject thereto; (ii) in the case of Restricted Shares, the Restriction Period
applicable to the Award of Restricted Shares shall expire and all of the
Restricted Shares and any related Retained Distributions shall vest and any cash
amounts payable pursuant to the Agreement evidencing the Award shall be adjusted
in such manner as may be provided in the Agreement; and (iii) in the case of
Stock Units, the Award of Stock Units shall vest in full, in each case effective
upon the Control Purchase or immediately prior to consummation of the Approved
Transaction. In the case of an Approved Transaction, the Company shall provide
notice of the pendency of the Approved Transaction, at least fifteen (15) days
prior to the expected date of consummation thereof, to each Holder of an
outstanding Option, SAR or Stock Unit. Each Holder shall thereupon be entitled
to exercise the Option or the SAR, or tender any amount required as a condition
to receipt of benefits under the Stock Unit, at any time prior to consummation
of the Approved Transaction. Any such exercise or tender as to any portion of
the Option, SAR or Stock Unit that will only become vested immediately prior to
the consummation of the Approved Transaction in accordance with the foregoing
acceleration provision shall be contingent on such consummation. Any such
exercise or tender as to any other portion of the Option, SAR or Stock Unit will
not be contingent on such consummation unless so elected by the Holder in a
notice delivered to the Company simultaneously with the exercise or tender. Upon
consummation of the Approved Transaction, all Options, SARs and Stock Units
shall expire to the extent such exercise or tender has not occurred.
Notwithstanding the foregoing, except to the extent otherwise provided in one or
more Agreements evidencing Awards, the Administrative Committee may, in its
discretion, determine that any or all outstanding Awards of any or all types
granted pursuant to the Plan will not vest or become exercisable on an
accelerated basis in connection with an Approved Transaction and/or will not
terminate if not exercised prior to consummation of the Approved Transaction, if
the Board or the surviving or acquiring corporation, as the case may be, shall
take, or make effective provision for the taking of, such action as in the
opinion of the Administrative Committee is equitable and appropriate in order to
substitute new Awards for such Awards or to assume such Awards (which assumption
may be effected by any means determined by the Administrative Committee, in its
discretion, including, but not limited to, by a cash payment to each Holder, in
cancellation of the Awards held by him or her, of such amount as the
Administrative Committee determines, in its sole discretion, represents the then
value of the Awards) and in order to make such new or assumed Awards, as nearly
as practicable, equivalent to the old Awards (before giving effect to any
acceleration of the vesting or exercisability thereof), taking into account, to
the extent applicable, the kind and amount of securities, cash or other assets
into or for which the Common Stock may be changed, converted or exchanged in
connection with the Approved Transaction; provided, however, that, unless the
Company has a class of Equity Security registered pursuant to Section 12 of the
Exchange Act, the Administrative Committee shall not have the discretion
provided in this sentence in connection with any Approved Transaction that
otherwise will qualify as a pooling of interests under generally accepted
accounting principles.
10.2 Termination of Services. The provisions of this Section 10.2 shall apply to
any Holder who is an employee of the Company or any of its Affiliates or a party
to a consulting arrangement with the Company or any of its Affiliates.
(a) General. If such a Holder's employment or consulting arrangement terminates
prior to the complete exercise of an Option or SAR (or deemed exercise thereof,
as provided in Section 7.2) or during the Restriction Period with respect to any
Restricted Shares or prior to the vesting or complete exercise of any Stock
Units, then (i) in the case of an Option or SAR, the Award shall, except to the
extent the Agreement evidencing the Award expressly provides otherwise,
thereafter be exercisable, to the extent that the Holder was entitled to
exercise the Award on the date of such termination, for a period of three (3)
months following such termination (but not later than the scheduled expiration
date of the Award); and (ii) the Holder's rights to any unvested Restricted
Shares and Retained Distributions, and to any cash amounts payable in connection
therewith, and to any unvested Stock Units shall, except as otherwise provided
in Section 10.1, thereafter vest solely to the extent provided in the Agreement
evidencing the Award; provided, however, that (A) if the Holder's employment or
consulting arrangement terminates by reason of death or Disability, the Option
or SAR shall remain exercisable for a period of at least six (6) months
following such termination (but not later than the scheduled expiration of the
Option or SAR); and (B) any termination by the Company or any of its Affiliates
for cause will be treated in accordance with the provisions of Section 10.2(b)
(except to the extent the Agreement evidencing the Award expressly provides
otherwise).
(b) Termination for Cause. If a Holder's employment or consulting arrangement
with the Company or any of its Affiliates is terminated for cause during the
Restriction Period with respect to Restricted Shares, or prior to the exercise
of an Option or SAR, or prior to the vesting or exercise of Stock Units, then,
except to the extent one or more of the Agreements evidencing Awards held by the
Holder expressly provide otherwise (i) all Options and SARs and all unvested or
unexercised Stock Units held by the Holder shall immediately terminate, and (ii)
the Holder's rights to all Restricted Shares and Retained Distributions, and to
any cash amounts payable in connection therewith, shall immediately terminate.
For purposes of this Plan, "cause" shall have the meaning given that term in any
employment agreement or consulting agreement to which the Holder is a party or,
in the absence thereof, the conduct that shall constitute "cause" for purposes
of this Plan shall be extreme deficiencies in the Holder's performance
(including a material breach of any confidentiality and invention ownership
agreement between the Holder and the Company or any of its Affiliates),
disloyalty, fraud, violation of a federal or state law involving the commission
of a crime against the Company or any of its Affiliates, commission of a felony,
or commission of a gross misdemeanor that is determined by the Administrative
Committee, in its sole and absolute discretion, to be of such gravity as to
cause significant injury to the business or reputation of the Company or any of
its Affiliates.
(c) Miscellaneous. The Administrative Committee may determine whether any given
leave of absence of a Holder constitutes a termination of the Holder's
employment or consulting arrangement; provided, however, that for purposes of
the Plan-
(i) a leave of absence, duly authorized in writing by the Company or any of its
Affiliates for military service or sickness, or for any other purpose approved
by the Company or any of its Affiliates, if the period of the leave does not
exceed ninety (90) days, and
(ii) a leave of absence in excess of ninety (90) days, duly authorized in
writing by the Company or any of its Affiliates, provided the Holder's right to
return to service with the Company or the Affiliate is guaranteed either by
statute or by contract-
shall not be deemed a termination of the Holder's employment or consulting
arrangement. Awards granted under the Plan shall not be affected by any change
of a Holder's employment or consulting arrangement so long as the Holder
continues to be an employee of or consultant to the Company or any of its
Affiliates. Except to the extent an Agreement evidencing an Award expressly
provides otherwise, if a Holder has an employment or consulting arrangement with
an Affiliate of the Company that ceases to be an Affiliate, such event shall be
deemed to constitute a termination of the Holder's employment or consulting
arrangement for a reason other than death or Disability.
10.3 Right to Terminate Services. Nothing contained in the Plan or in any
Agreement evidencing an Award, and no action of the Company or the
Administrative Committee with respect thereto, shall confer or be construed to
confer on any Holder any right to continue in the service of the Company or any
of its Affiliates or interfere in any way with the right of the Company or any
of its Affiliates, subject to the provisions of any agreement between the Holder
and the Company or any of its Affiliates, to terminate at any time, with or
without cause, the employment or consulting arrangement with the Holder.
10.4 Nonalienation of Benefits. Except as provided in Section 10.6, no right or
benefit under the Plan shall be subject to anticipation, alienation, sale,
assignment, hypothecation, pledge, exchange, transfer, encumbrance or charge,
and any attempt to anticipate, alienate, sell, assign, hypothecate, pledge,
exchange, transfer, encumber or charge the same shall be void. No right or
benefit hereunder shall in any manner be liable for or subject to the debts,
contracts, liabilities or torts of the person entitled to the right or benefit.
10.5 Written Agreement. Each grant of an Option under the Plan shall be
evidenced by a stock option agreement which shall designate the Option as an
Incentive Stock Option or a Nonqualified Stock Option; each SAR shall be
evidenced by a stock appreciation rights agreement; each Award of Restricted
Shares shall be evidenced by a restricted shares agreement and each Award of
Stock Units shall be evidenced by a stock units agreement, each in such form and
containing such terms and provisions not inconsistent with the provisions of the
Plan as the Administrative Committee from time to time approves (each such
agreement is referred to in the Plan as an "Agreement"); provided, however, that
if more than one type of Award is granted to the same Holder, the Awards may be
evidenced by a single Agreement with the Holder. Each grantee of an Option, SAR,
Restricted Shares or Stock Units shall be notified promptly of the grant, an
Agreement shall be executed and delivered by the Company to the grantee within
sixty (60) days after the date the Administrative Committee approves the grant,
and, in the discretion of the Administrative Committee, the grant shall
terminate if the Agreement is not signed by the grantee (or his or her attorney)
and delivered to the Company within sixty (60) days after it is delivered to the
grantee. An Agreement may contain (but shall not be required to contain) such
provisions as the Administrative Committee deems appropriate to insure that the
penalty provisions of Section 4999 of the Code will not apply to any stock or
cash received by the Holder from the Company. An Agreement may be modified from
time to time pursuant to Section 10.10(b).
10.6 Nontransferability. Awards granted under the Plan shall not be transferable
other than by will or by the laws of descent and distribution, and Awards may be
exercised during the lifetime of the Holder thereof only by the Holder (or his
or her court-appointed legal representative).
10.7 Repurchase of Shares.
(a) Right of Repurchase. If so specified by the Administrative Committee at the
time an Award is granted to a Holder who is an employee of the Company or any of
its Affiliates or a party to a consulting arrangement with the Company or any of
its Affiliates, the Company shall have the right, but shall not be required, to
repurchase from the Holder all or part of the shares of Common Stock that the
Holder acquires upon the exercise of the Option or SAR or upon the vesting of
Restricted Shares or Stock Units, as the case may be. Such right shall be
exercisable at any time and from time to time during the period of ninety (90)
days commencing on the later of (i) the date of termination of the Holder's
employment or consulting arrangement with the Company or any of its Affiliates
for any reason, including but not limited to death or Disability, or (ii) as to
any Option or SAR that is exercised, or any Restricted Shares or Stock Units
that vest, following termination of the Holder's employment or consulting
arrangement, the date of such exercise or vesting.
(b) Exercise of Repurchase Right. The Company's right of repurchase under this
Section 10.7 shall be exercised by delivering written notice to the Holder
specifying the number of shares to be repurchased and the effective date of the
repurchase, which date shall not be earlier than the date of the notice nor
later than the date of termination of the Company's right of repurchase.
(c) Repurchase Price. With respect to each share to be repurchased by the
Company upon its exercise of its right of repurchase under this Section 10.7,
the repurchase price shall be the Fair Market Value of the share as of the
effective date of the repurchase; provided, however, if a professional appraisal
of the Common Stock as of a date not more than fourteen (14) months prior to the
effective date of the repurchase is available, the repurchase price shall be the
per share value of the Common Stock as set forth in the most recent such
appraisal. The Company may elect to pay the amount owed to the Holder either (i)
in cash, in which case the amount shall be paid, without interest, within thirty
(30) days following the effective date of the repurchase, or (ii) in three equal
installments, with the first installment payable on the first anniversary of the
effective date of the repurchase, and the remaining installments payable on the
corresponding date in each of the next two years, with each installment to
include interest on the unpaid principal, computed at the prime rate published
in the Wall Street Journal for the first business day of the calendar quarter in
which the effective date of the repurchase occurs, for the period from the
effective date of the repurchase or the date of the most recent installment, as
the case may be, to the due date of the installment being paid.
(d) Termination of Right of Repurchase. Any right of repurchase of the Company
under this Section 10.7 shall terminate upon the occurrence of a Control
Purchase or an Approved Transaction (other than an Approved Transaction in
connection with which the Administrative Committee determines, in accordance
with the last sentence of Section 10.1(b), that Awards otherwise subject to such
right of repurchase will not vest or become exercisable on an accelerated basis
and/or will not terminate if not exercised prior to consummation of the Approved
Transaction). Any right of repurchase of the Company under this Section 10.7
shall also terminate upon the effective date of the registration by the Company
of any class of any Equity Security pursuant to Section 12 of the Exchange Act.
10.8 Right of First Refusal. An Agreement evidencing an Award may contain such
provisions as the Administrative Committee shall determine to the effect that,
if the Holder elects to sell all or any shares of Common Stock that the Holder
acquires upon the exercise of the Option or SAR or upon the vesting of
Restricted Shares or Stock Units, as the case may be, then the Holder shall not
sell the shares unless the Holder shall have first offered in writing to sell
the shares to the Company at Fair Market Value on a date specified in the offer,
which date shall be at least three (3) business days and not more than ten (10)
business days following the date of the offer.
10.9 Shareholders Agreement. Unless the Agreement evidencing an Award expressly
provides otherwise, the Holder of an Award may be required, as a condition to
the issuance of any shares of Common Stock that the Holder acquires upon the
exercise of the Option or SAR or upon the vesting of Restricted Shares or Stock
Units, as the case may be, to execute and deliver to the Company a shareholders
agreement in such form as may be in use by the Company at the time of such
exercise, or a counterpart thereof, together with, unless the Holder is
unmarried, a spousal consent in the form required thereby, unless the Holder has
previously executed and delivered such documents and they are in effect at the
time the shares are to be issued.
10.10 Termination and Amendment.
(a) General. Unless the Plan shall previously have been terminated as
hereinafter provided, no Awards may be granted under the Plan on or after the
tenth (10th) anniversary of the Effective Date. The Board or the Administrative
Committee may at any time prior to the tenth (10th) anniversary of the Effective
Date terminate the Plan, and may, from time to time, suspend or discontinue the
Plan or modify or amend the Plan in such respects as it shall deem advisable;
provided, however, that any such modification or amendment shall comply with all
applicable laws, applicable stock exchange listing requirements, and applicable
requirements for exemption (to the extent necessary) under Rule 16b-3.
Notwithstanding the foregoing, without further shareholder approval no
modification or amendment to this Plan shall increase the number of shares of
Common Stock subject to the Plan (except as authorized by Article 4), change the
class of persons eligible to receive Awards under the Plan, or otherwise
materially increase the benefits accruing to participants under the Plan.
(b) Modification. No termination, modification or amendment of the Plan may
adversely affect the rights of the Holder of an outstanding Award in any
material way unless the Holder consents thereto. No modification, extension,
renewal or other change in any Award granted under the Plan shall be made after
the grant of the Award, unless the same is consistent with the provisions of the
Plan. With the consent of the Holder and subject to the terms and conditions of
the Plan (including Section 10.10(a)), the Administrative Committee may amend
outstanding Agreements with any Holder, including, without limitation, any
amendment that would (i) accelerate the time or times at which the Award may be
exercised, and/or (ii) extend the scheduled expiration date of the Award.
Without limiting the generality of the foregoing, the Administrative Committee
may, but solely with the Holder's consent unless otherwise provided in the
Agreement evidencing an Award, agree to cancel any Award under the Plan and
issue a new Award in substitution therefor, provided that the Award so
substituted shall satisfy all of the requirements of the Plan as of the date the
new Award is granted. Nothing contained in the foregoing provisions of this
Section 10.10(b) shall be construed to prevent the Administrative Committee from
providing in any Agreement evidencing an Award that the rights of the Holder
with respect to the Award are subject to such rules and regulations as the
Administrative Committee may, subject to the express provisions of the Plan,
adopt from time to time, or impair the enforceability of any such provision.
10.11 Government and Other Regulations. The obligation of the Company with
respect to Awards shall be subject to all applicable laws, rules and regulations
and such approvals by any governmental agencies as may be required, including,
without limitation, the effectiveness of any registration statement required
under the Securities Act of 1933, and the rules and regulations of any
securities exchange or association on which the Common Stock may be listed or
quoted. As long as the Common Stock is registered under the Exchange Act, the
Company shall use its reasonable efforts to comply with any legal requirements
(a) to maintain a registration statement in effect under the Securities Act of
1933 with respect to all shares of Common Stock that may be issued to Holders
under the Plan, and (b) to file in a timely manner all reports required to be
filed by it under the Exchange Act.
10.12 Withholding. The Company's obligation to deliver shares of Common Stock or
pay cash in respect of any Award under the Plan shall be subject to applicable
federal, state and local tax withholding requirements. Federal, state and local
withholding tax due at the time of an Award, upon the exercise of any Option or
SAR or upon the vesting of, or expiration of restrictions with respect to,
Restricted Shares or Stock Units, as the case may be, may, in the discretion of
the Administrative Committee, be paid in shares of Common Stock already owned by
the Holder or through the withholding of shares otherwise issuable to the
Holder, upon such terms and conditions as the Administrative Committee shall
determine. If the Holder shall fail to pay, or make arrangements satisfactory to
the Administrative Committee for the payment of, all such federal, state and
local taxes, then the Company or any of its Affiliates shall, to the extent not
prohibited by law, have the right to deduct from any payment of any kind
otherwise due to the Holder an amount equal to any federal, state or local taxes
of any kind required to be withheld by the Company or any of its Affiliates with
respect to the Award.
10.13 Separability. With respect to Incentive Stock Options, if this Plan does
not contain any provision required to be included herein under Section 422 of
the Code, such provision shall be deemed to be incorporated herein with the same
force and effect as if such provision had been set out at length herein;
provided, however, that to the extent any Option that is intended to qualify as
an Incentive Stock Option cannot so qualify, the Option, to that extent, shall
be deemed to be a Nonqualified Stock Option for all purposes of the Plan.
10.14 Non-Exclusivity of the Plan. Neither the adoption of the Plan by the Board
nor the submission of the Plan to the shareholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options and the awarding of stock and
cash otherwise than under the Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.
10.15 Exclusion from Pension and Profit-Sharing Computation. By acceptance of an
Award, unless otherwise provided in the Agreement evidencing the Award, the
Holder shall be deemed to have agreed that the Award is special incentive
compensation that will not be taken into account, in any manner, as salary,
compensation or bonus in determining the amount of any payment under any
pension, retirement or other employee benefit plan, program or policy of the
Company or any of its Affiliates.
10.16 Unfunded Plan. The Company shall not be required to segregate any cash or
any shares of Common Stock that may at any time be represented by Awards and the
Plan shall constitute an "unfunded" plan of the Company.
10.17 No Shareholder Rights. Except as provided in Article 7 with respect to
Awards of Restricted Shares and except as expressly set forth in writing, no
Holder or other person shall have any voting or other shareholder rights with
respect to shares of Common Stock subject to an Award until all conditions under
the Award and this Plan to issuance of the shares have been satisfied and a
certificate for the shares has been issued. No adjustment shall be made for cash
or other dividends or distributions to shareholders for which the record date is
prior to the date of such issuance.
10.18 Governing Law. The Plan shall be governed by, and construed in accordance
with, the laws of the State of Washington.
10.19 . Each certificate representing shares of Common Stock issued under the
Plan shall, unless the Administrative Committee otherwise determines, contain on
its face the notice "SEE TRANSFER RESTRICTIONS ON REVERSE" and on its reverse a
legend in form substantially as follows, together with any other legends that
are required by the terms and conditions of the Plan or that the Administrative
Committee in its discretion deems necessary or appropriate:
NOTICE: TRANSFER AND OTHER RESTRICTIONS
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
ENCUMBERED, OR OTHERWISE DISPOSED OF EXCEPT UPON SATISFACTION
OF CERTAIN CONDITIONS. INFORMATION CONCERNING THESE
RESTRICTIONS MAY BE OBTAINED FROM THE CORPORATION. ANY OFFER
OR DISPOSITION OF THESE SECURITIES WITHOUT SATISFACTION OF
SAID CONDITIONS WILL BE WRONGFUL AND WILL NOT ENTITLE THE
TRANSFEREE TO REGISTER OWNERSHIP OF THE SECURITIES WITH THE
CORPORATION.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO
SUBJECT TO RESTRICTIONS ON TRANSFER, AND MAY BE SUBJECT TO
REPURCHASE BY THE CORPORATION OR ONE OR MORE OF ITS
SHAREHOLDERS, OR RIGHTS OF FIRST REFUSAL OR OTHER
RESTRICTIONS, PURSUANT TO THE PROVISIONS OF THE CORPORATION'S
1997 STOCK INCENTIVE PLAN AND/OR AN AGREEMENT BETWEEN THE
HOLDER AND THE CORPORATION AND/OR AN AGREEMENT AMONG THE
SHAREHOLDERS OF THE CORPORATION. INFORMATION CONCERNING THESE
RESTRICTIONS MAY BE OBTAINED FROM THE CORPORATION.
The Company may cause the transfer agent for the Common Stock to place a stop
transfer order with respect to such shares.
10.20 Company's Rights. The grant of Awards pursuant to the Plan shall not
affect in any way the right or power of the Company to make reclassifications,
reorganizations or other changes of or to its capital or business structure or
to merge, consolidate, liquidate, sell or otherwise dispose of all or any part
of its business or assets.
TABLE OF CONTENTS
<TABLE>
Page
<S> <C> <C>
Article 1..............................................PURPOSE AND EFFECTIVENESS 1
1.1..................................................................Purpose. 1
1.2...........................................................Effective Date. 1
Article 2............................................................DEFINITIONS 1
2.1....................................................Certain Defined Terms. 1
Article 3.........................................................ADMINISTRATION 4
3.1.................................................Administrative Committee. 4
3.2.......................Administration Following Exchange Act Registration. 4
3.3................... ..................................Powers; Regulations. 5
3.4......................................................Limits on Authority. 5
3.5................................................Exercise of Authority. 6
Article 4.............................................SHARES SUBJECT TO THE PLAN 6
4.1.........................................................Number of Shares. 6
4.2..............................................................Adjustments. 6
Article 5............................................................ELIGIBILITY 7
5.1..................................................................General. 7
5.2............................................................Ineligibility. 7
Article 6..........................................................STOCK OPTIONS 7
6.1.........................................................Grant of Options. 7
6.2...........................................................Purchase Price. 8
6.3.....................................................Limitation on Grants. 8
6.4..........................................................Term of Options. 8
6.5......................................................Exercise of Options. 8
6.6.......................................................Manner of Exercise. 8
Article 7...................................................................SARS 9
7.1............................................................Grant of SARs. 9
7.2..............................................................Tandem SARs. 10
7.3.......................................................Free Standing SARs. 10
7.4.............................................. .............Consideration. 10
7.5............................................... ..............Limitations. 11
7.6............................................... .................Exercise. 11
Article 8.....................................................RESTRICTED SHARES 11
8.1...................................................................Grant. 11
8.2.....Issuance of Restricted Shares at Beginning of the Restriction Period. 11
8.3.............................................................Restrictions. 12
8.4.......................Issuance of Stock at End of the Restriction Period. 12
8.5..............................................................Cash Awards. 13
8.6.........................................Completion of Restriction Period. 13
Article 9............................................................STOCK UNITS 13
9.1....................................................................Grant. 13
9.2....................................................................Rules. 13
Article 10....................................................GENERAL PROVISIONS 14
10.1........Acceleration of Options, SARs, Restricted Shares and Stock Units. 14
10.2.................................................Termination of Services. 15
10.3.............................................Right to Terminate Services. 17
10.4...............................................Nonalienation of Benefits. 17
10.5.......................................................Written Agreement. 17
10.6.......................................................Nontransferability 18
10.7....................................................Repurchase of Shares. 18
10.8..................................................Right of First Refusal. 19
10.9..................................................Shareholders Agreement. 19
10.10..............................................Termination and Amendment. 19
10.11.......................................Government and Other Regulations. 20
10.12............................................................Withholding. 20
10.13...........................................................Separability. 21
10.14............................................Non-Exclusivity of the Plan. 21
10.15..................Exclusion from Pension and Profit-Sharing Computation. 21
10.16..........................................................Unfunded Plan. 21
10.17..................................................No Shareholder Rights. 21
10.18..........................................................Governing Law. 21
10.19.................................................................Legends 21
10.20.......................................................Company's Rights. 24
</TABLE>
Exhibit 5.1
January 7, 2000
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 742,478 (the "Shares") of the Company's common
stock, par value $.01 per share ("Common Stock"), and certain Preferred Stock
Purchase Rights (the "Rights") which are being registered under the Registration
Statement for issuance by the Company pursuant to the terms of the Aiki
Corporation 1997 Stock Incentive Plan (the "Plan").
I am Senior Vice President, Legal of 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 amended,
and 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. Rights Agreement of the Company adopted on May 12, 1998 (the
"Rights Agreement"); and
5. The Plan.
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 Board of Directors
of the Company have been or will be taken by the Board of Directors of the
Company; and (iii) at the time of the award of the Shares 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 Preferred 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 Preferred 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 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 Preferred Stock Purchase Rights, if the Company's
Preferred Stock Purchase Rights have not expired or been redeemed in
accordance with the terms of the Rights Agreement, will be validly
issued.
You acknowledge that I am admitted to practice only in Massachusetts,
Texas and the District of Columbia and am not an expert in the laws of any other
jurisdiction. No one other than the addressees and their assigns are permitted
to rely on or distribute this opinion without the prior written consent of the
undersigned.
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, ESQ.
Sheila A. Clark, Esq.
Senior Vice President, Legal
Exhibit 23.2
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333- ) pertaining to the Aiki Corporation 1997 Stock Incentive Plan of
our report dated July 21, 1999, 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, 1999, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
McLean, Virginia
January 5, 2000
