<PAGE>
As filed with the Securities and Exchange Commission on July 21, 1999.
Registration No. 333-
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------------
LEARN2.COM, INC.
(FORMERLY KNOWN AS 7TH LEVEL, INC.)
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
Delaware 75-2480669
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
925 Westchester Avenue
White Plains, New York 10604
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
------------------------------------
COMMON STOCK ISSUABLE UNDER THE STOCK OPTION PLAN OF
STREET TECHNOLOGIES, INC. AND OTHER STOCK OPTION AGREEMENT
(FULL TITLES OF THE PLANS)
------------------------------------
Stephen P. Gott Copies to:
President and Chief Executive Officer Gerald Adler, Esq.
Learn2.com, Inc. Swidler Berlin Shereff Friedman, LLP
925 Westchester Avenue 919 Third Avenue
White Plains, New York 10604 New York, New York 10022
(914) 682-4300 (212) 758-9500
(NAME, ADDRESS AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Price Aggregate Amount of
to be Registered to be Registered(1) Per Share Offering Price Registration Fee(2)
<S> <C> <C> <C> <C>
Common Stock, par value
$0.01 per share 1,599,309 shares $2.02 $3,230,604 $ 898.11
Common Stock, par value $0.01
per share 1,000,000 shares $3.25 $3,250,000 $ 903.50
Total 2,599,309 shares $6,480,604 $1,801.61
</TABLE>
(1) Pursuant to Rule 416, this Registration Statement also covers such
additional securities as may become issuable to prevent dilution resulting
from stock splits, stock dividends or similar transactions.
(2) The Registration Fee has been calculated upon the basis of the price at
which the stock options may be exercised pursuant to Rule 457(h) of
the Securities Act.
<PAGE>
PART II
INFORMATION REQUIRED IN
THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents, which have been filed by Learn2.com, Inc.
(formerly known as 7th Level, Inc.), a Delaware corporation (the "Registrant"),
with the Securities and Exchange Commission (the "Commission"), are incorporated
herein by reference:
(a) The Registrant's Annual Report on Form 10-K/A for the period ended
December 31, 1998.
(b) The Registrant's Quarterly Report on Form 10-Q/A for the period ended
March 31, 1999.
(c) The Registrant's Current Reports on Form 8-K dated January 15, 1999,
February 16, 1999, May 13, 1999, June 1, 1999, July 1, 1999 and July 19, 1999
and Form 8-K/A filed with the Commission on April 16, 1999 and June 30, 1999.
(d) The description of the Registrant's Common Stock, par value $0.01 per
share, which is contained in a registration statement filed under Section 12 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including
any amendment or report filed for the purpose of updating such description.
In addition, all documents subsequently filed by the Registrant pursuant to
Section 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this registration statement and to be a part
hereof from the time of filing of such documents. Any statement contained in the
documents incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this registration statement
to the extent that a statement contained herein or in any other subsequently
filed document which also is incorporated or deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this registration statement.
Item 4. DESCRIPTION OF SECURITIES.
Not applicable.
Item 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The indemnification of officers and directors of the Registrant is governed
by Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") and the Restated Certificate of Incorporation and By-Laws of the
Registrant. Subsection (a) of DGCL Section 145 empowers a corporation 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
<PAGE>
reason of the fact that the person 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 expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful.
Subsection (b) of DGCL Section 145 empowers a corporation 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 the
person 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 expenses (including attorneys' fees) actually and
reasonably incurred by the person in connection with the defense or settlement
of such action or suit if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
DGCL Section 145 further provides that to the extent that a present or
former director or officer is successful, on the merits or otherwise, in the
defense of any action, suit or proceeding referred to in subsections (a) and (b)
of Section 145, or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith. In all cases in
which indemnification is permitted under subsections (a) and (b) of Section 145
(unless ordered by a court), it shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
present or former director, officer, employee or agent is proper in the
circumstances because the applicable standard of conduct has been met by the
party to be indemnified. Such determination must be made, with respect to a
person who is a director or officer at the time of such determination, (1) by a
majority vote of the directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (2) by a committee of such
directors designated by majority vote of such directors, even though less than a
quorum, or (3) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (4) by the stockholders.
The statute authorizes the corporation to pay expenses incurred by an officer or
director in advance of the final disposition of a proceeding upon receipt of an
undertaking by or on behalf of the person to whom the advance will be made, to
repay the advances if it shall ultimately be determined that he was not entitled
to indemnification. DGCL Section 145 also provides that indemnification and
advancement of expenses permitted thereunder are not to be 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. DGCL Section 145 also authorizes the
corporation to purchase and maintain liability insurance on behalf of its
directors, officers, employees and agents regardless of whether the corporation
would have the statutory power to indemnify such persons against the liabilities
insured.
Article Eighth of the Restated Certificate of Incorporation of the
Registrant, as amended (the "Certificate"), provides that no director of the
Registrant shall be personally liable to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director
<PAGE>
except for liability (i) for any breach of the director's duty of loyalty to the
Registrant or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL (involving certain unlawful dividends or stock purchases
or redemptions), or (iv) for any transaction from which the director derived an
improper personal benefit.
Article Tenth of the Registrant's Certificate entitles directors and
officers of the Registrant to indemnification to the fullest extent permitted by
Section 145 of the DGCL, as the same may be supplemented from time to time. The
Certificate further provides that the Registrant may, to the fullest extent
authorized by the Board of Directors, indemnify any employee or agent of the
Registrant.
Pursuant to Section 145(g) of the DGCL, the Registrant's By-Laws, as
amended, authorize the Registrant to obtain insurance to protect officers and
directors from certain liabilities, including liabilities against which the
Registration cannot indemnify its officers and directors. The Registrant
maintains a primary directors and officers liability and company reimbursement
policy which, among other things, provides for payment up to $5 million on
behalf of any of the Registrant's past, present or future directors or officers
against Loss (as defined in such policy). The Registrant also maintains a
supplemental insurance and company reimbursement policy providing for, among
other things, payment up to $20 million on behalf of any of the Registrant's
past, present or future directors or officers against Loss (as defined in such
policy).
Item 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
Item 8. EXHIBITS
The following exhibits are filed as part of this registration statement:
4.6 Stock Option Plan of Street Technologies, Inc.
4.7 Stock Option Agreement, dated as of February 16, 1999, between 7th
Level, Inc. and Stephen P. Gott.
5.1 Opinion of Swidler Berlin Shereff Friedman, LLP.
23.1 Consent of KPMG LLP.
23.2 Consent of KPMG LLP.
23.3 Consent of Arthur Andersen LLP.
23.4 Consent of Arthur Andersen LLP.
23.5 Consent of Arthur Andersen LLP.
23.6 Consent of Swidler Berlin Shereff Friedman, LLP (included in Exhibit
5.1).
24.1 Power of Attorney (included in signature page to this registration
statement).
Item 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
<PAGE>
(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 end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the change in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(l)(i) and (ii) do not apply if the
registration statement is on Form S-3 or S-8 and the information required
to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed 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 the 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.
(h) 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
<PAGE>
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.
<PAGE>
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 the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of White Plains, State of New York, on this 21st day of
July, 1999.
LEARN2.COM, INC.
By: /s/ Marc E. Landy
---------------------------------------------
Marc E. Landy
Vice President, Chief Financial Officer
and Secretary
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned whose
signature appears below constitutes and appoints Stephen P. Gott and Marc E.
Landy and each of them (with full power of each of them to act alone), his true
and lawful attorneys-in-fact, with full power of substitution and resubstitution
for him and on his behalf, and in his name, place and stead, in any and all
capacities to execute and sign any and all amendments or post-effective
amendments to this registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact or any of them or their or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof and the Registrant hereby
confers like authority on its behalf.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Stephen P. Gott
- ---------------------------------- President and Chief Executive Officer July 21, 1999
Stephen P. Gott (Principal Executive Officer)
/s/ Marc E. Landy
- ---------------------------------- Vice President, Chief Financial Officer July 21, 1999
Marc E. Landy and Secretary (Principal Financial
Officer and Principal Accounting
Officer)
/s/ Donald Schupak
- ---------------------------------- Chairman of the Board of Directors July 21, 1999
Donald Schupak and Director
/s/ Robert Alan Ezrin
- ---------------------------------- Vice Chairman of the Board of July 21, 1999
Robert Alan Ezrin Directors and Director
/s/ Merv Adelson
- ---------------------------------- Director July 21, 1999
Merv Adelson
/s/ James A. Cannavino
- ---------------------------------- Director July 21, 1999
James A. Cannavino
/s/ Jason R. Roberts
- ---------------------------------- Director July 21, 1999
Jason R. Roberts
</TABLE>
<PAGE>
LEARN2.COM, INC.
FORM S-8
REGISTRATION STATEMENT
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
<S> <C>
4.6 Stock Option Plan of Street Technologies, Inc.
4.7 Stock Option Agreement, dated as of February 16, 1999, between 7th Level,
Inc. and Stephen P. Gott.
5.1 Opinion of Swidler Berlin Shereff Friedman, LLP.
23.1 Consent of KPMG LLP.
23.2 Consent of KPMG LLP.
23.3 Consent of Arthur Andersen LLP.
23.4 Consent of Arthur Andersen LLP.
23.5 Consent of Arthur Andersen LLP.
23.6 Consent of Swidler Berlin Shereff Friedman, LLP (included in Exhibit
5.1).
24.1 Power of Attorney (included in signature page to this registration
statement).
</TABLE>
<PAGE>
EXHIBIT 4.6
STOCK OPTION PLAN
OF STREET TECHNOLOGIES, INC.
AMENDED AND RESTATED
EFFECTIVE AS OF
OCTOBER 10, 1997
ARTICLE 1.
PURPOSE
The purpose of the Stock Option Plan of Street Technologies, Inc. (the
"Plan") is to enhance the profitability and value of Street Technologies, Inc.
(the "Company") for the benefit of its stockholders by enabling the Company to
grant Stock Options to employees, consultants and advisors of the Company and
its Designated Affiliates, and to create a means to raise the level of stock
ownership by such employees, consultants and advisors in order to attract,
retain and reward such employees, consultants and advisors. The Plan was
originally effective on January 29, 1996, and is amended and restated in its
current form as of October 10, 1997. Any awards granted under the Plan prior to
October 10, 1997 and on or after January 29, 1996, shall be governed by the
terms of the Plan as contained herein.
ARTICLE 2.
DEFINITIONS
For purposes of the Plan, the following terms shall have the following
meanings:
2.1. "Affiliate" shall mean (i) any corporation (other than
the Company) or limited liability company in an unbroken chain of
corporations or limited liability companies ending with the Company, if
each corporation or limited liability company owns stock or membership
interests (as applicable) possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock or membership
interests (as applicable) in one of the other corporations or limited
liability companies in such chain, or (ii) any corporation (other than
the Company) or limited liability company in an unbroken chain of
corporations or limited liability companies beginning with the Company,
if each corporation or limited liability company (other than the last
corporation or limited liability company in the unbroken chain), owns
stock or membership interests (as applicable) possessing fifty percent
(50%) or more of the total combined voting power of all classes of
stock or membership interests (as applicable) in one of the other
corporations or limited liability companies in such chain. With respect
to Incentive Stock Options, the term "Affiliate" shall mean a
subsidiary corporation (within the meaning of Section 424(f) of the
Code and a parent corporation (within the meaning of Section 424(e) of
the Code).
2.2. "Board" shall mean the Board of Directors of the
Company.
2.3. "Cause" shall mean the occurrence of any of the following
circumstances, as determined by the Committee in its sole discretion:
(i) habitual neglect by a Participant with respect to his obligations
and duties, which continues after a written notice specifically
identifying such conduct is delivered to the Participant; (ii)
dishonesty, gross negligence or misconduct in connection with a
Participant's employment with the Company or an Affiliate; or (iii)
breach of fiduciary duty to the Company or an Affiliate by a
Participant.
2.4. "Change of Control" shall have the meaning set forth
in Article 8.
2.5. "Code" shall mean the Internal Revenue Code of 1986,
as amended.
2.6. "Committee" shall mean a committee of the Board appointed
from time to time by the Board, which committee shall consist of two
(2) or more directors. Solely to
<PAGE>
the extent required by Rule 16b-3 promulgated under Section 16(b) of
the Exchange Act or any successor provisions ("Rule 16b-3"), each
director on the Committee shall be a "non-employee director" as defined
in Rule 16b-3. If and to the extent that no Committee exists which has
the authority to administer the Plan, the functions of the Committee
shall be exercised by the Board. If for any reason the appointed
Committee does not meet the requirements of Rule 16b-3 and such rule is
applicable, such noncompliance with the requirements of Rule 16b-3
shall not affect the validity of the awards, grants, interpretations or
other actions of the Committee.
2.7. "Common Stock" means the common stock, $.01 par value
per share, of the Company.
2.8. "Designated Affiliate" shall mean any Affiliate of
the Company designated by the Board as eligible to grant Options under
the Plan.
2.9. "Disability" shall mean a Participant's inability to
perform his duties for a period of more than six (6) consecutive months
as a result of an incapacity due to a physical or mental illness, as
determined by the Committee in its sole discretion.
2.10. "Effective Date" shall mean the effective date of the
Plan as defined in Article 13.
2.11. "Eligible Individuals" shall mean the employees,
consultants or advisors of the Company and its Designated Affiliates
who are eligible pursuant to Article 5 to be granted Stock Options
under the Plan.
2.12. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
2.13. "Fair Market Value" for purposes of the Plan, unless
otherwise required by any applicable provision of the Code or any
regulations issued thereunder, shall mean, as of any date, (i) if the
Common Stock is not readily tradable on a national securities exchange
or any system sponsored by the National Association of Securities
Dealers, its Fair Market Value as set in good faith by the Committee,
or (ii) the last sales price reported for the Common Stock on the
applicable date (a) as reported on the principal national securities
exchange on which it is then traded, or (b) if not traded on any such
national securities exchange, as quoted on an automated quotation
system sponsored by the National Association of Securities Dealers. For
purposes of the grant of any Stock Option, the applicable date shall be
the date for which the last sales price is available at the time of
grant.
2.14. "Incentive Stock Option" shall mean a Stock Option
awarded under this Plan intended to be and designated as an "incentive
stock option" within the meaning of Section 422 of the Code.
2.15. "Nonqualified Stock Option" shall mean any Stock Option
awarded under this Plan that is not an Incentive Stock Option.
2.16. "Participant" shall mean any Eligible Individual who has
been granted a Stock Option pursuant to Article 6.
2.17. "Retirement" shall mean a Termination of Employment
without Cause from the Company and its Affiliates by a Participant who
has attained (i) at least age fifty-nine and one-half (59 1/2), or (ii)
such earlier date after age fifty-five (55) as approveD by the Board
with regard to such Participant.
2.18. "Stock Option" or "Option" shall mean any option to
purchase shares of
<PAGE>
Common Stock granted to an Eligible Individual pursuant to Article 6.
2.19. "Ten Percent Stockholder" shall mean any person owning
Common Stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company, as
defined in Section 422 of the Code.
2.20. "Termination of Consultancy" shall mean, with respect to
a consultant or advisor, that the consultant or advisor is no longer
acting as a consultant or advisor to the Company and its Affiliates. In
the event that an entity shall cease to be a Affiliate, there shall be
deemed a Termination of Consultancy of an individual who is not
otherwise a consultant or advisor of the Company or another Affiliate
at the time the entity ceases to be a Affiliate.
2.21. "Termination of Employment" shall mean a termination of
service (for reasons other than a military or personal leave of absence
granted by the Company or an Affiliate) of a Participant from the
Company and its Affiliates. In the event that an entity shall cease to
be a Affiliate, there shall be deemed a Termination of Employment of an
individual who is not otherwise an employee of the Company or another
Affiliate at the time the entity cease to be a Affiliate.
2.22. "Transfer" or "Transferred" or "Transferable" shall mean
anticipate, alienate, attach, sell, assign, pledge, encumber, charge,
hypothecate or otherwise transfer.
2.23. "Withholding Election" shall have the meaning set
forth in Section 12.4.
ARTICLE 3.
ADMINISTRATION
3.1. THE COMMITTEE. The Plan shall be administered and interpreted by
the Committee.
3.2. AWARDS. The Committee shall have full authority to grant Stock
Options to Eligible Employees, pursuant to the terms of the Plan. In particular,
the Committee shall have the authority:
(a) to select the Eligible Individuals to whom Stock Options
may from time to time be granted hereunder;
(b) to determine whether and to what extent Stock Options are
to be granted hereunder to one or more Eligible Individuals;
(c) to determine, in accordance with the terms of the Plan,
the number of shares of Common Stock to be covered by each Stock Option
granted to an Eligible Individual;
(d) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Stock Option granted hereunder to an
Eligible Individual (including, but not limited to, the share price,
any restriction or limitation, any vesting schedule or acceleration
thereof, or any forfeiture restrictions or waiver thereof and the
shares of Common Stock relating thereto, based on such factors, if any,
as the Committee shall determine, in its sole discretion);
(e) to determine whether and under what circumstances a Stock
Option may be
<PAGE>
settled in cash and/or Common Stock under Section 6.2(d);
(f) to determine whether, to what extent and under what
circumstances to provide loans (which shall be on a recourse basis and
shall bear a reasonable rate of interest) to Eligible Individuals in
order to exercise Stock Options under the Plan; and
(g) to determine whether to require Eligible Individuals, as a
condition of the granting of any Stock Option, to not sell or otherwise
dispose of shares acquired pursuant to the exercise of an Option for a
period of time as determined by the Committee, in its sole discretion,
following the date of the acquisition of such Option.
3.3. GUIDELINES. Subject to Article 9 hereof, the Committee shall have
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing the Plan and perform all acts, including the delegation
of its administrative responsibilities, as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of the Plan and
any Stock Option issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or in any agreement relating thereto in the manner and to the extent it
shall deem necessary to carry the Plan into effect but only to the extent any
such action would be permitted under the applicable provisions of Rule 16b-3 (if
any). The Committee may adopt special guidelines and provisions for persons who
are residing in, or subject to, the taxes of, countries other than the United
States to comply with applicable tax and securities laws.
3.4. DECISIONS FINAL. Any decision, interpretation or other action made
or taken in good faith by or at the direction of the Company, the Board, or the
Committee (or any of its members) arising out of or in connection with the Plan
shall be within the absolute discretion of all and each of them, as the case may
be, and shall be final, binding and conclusive on the Company and all employees
and Participants and their respective heirs, executors, administrators,
successors and assigns.
3.5. RELIANCE ON COUNSEL. The Company, the Board or the Committee may
consult with legal counsel, who may be counsel for the Company or other counsel,
with respect to its obligations or duties hereunder, or with respect to any
action or proceeding or any question of law, and shall not be liable with
respect to any action taken or omitted by it in good faith pursuant to the
advice of such counsel.
3.6. PROCEDURES. If the Committee is appointed, the Board shall
designate one of the members of the Committee as chairman and the Committee
shall hold meetings, subject to the By-Laws of the Company, at such times and
places as it shall deem advisable. A majority of the Committee members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by all the Committee members in accordance with the By-Laws of the
Company, shall be fully as effective as if it had been made by a vote at a
meeting duly called and held. The Committee shall keep minutes of its meetings
and shall make such rules and regulations for the conduct of its business as it
shall deem advisable.
3.7. DESIGNATION OF CONSULTANTS/LIABILITY.
(a) The Committee may designate employees of the Company and
professional advisors to assist the Committee in the administration of
the Plan and may grant authority to employees to execute agreements or
other documents on behalf of the Committee.
(b) The Committee may employ such legal counsel, consultants
and agents as it may deem desirable for the administration of the Plan
and may rely upon any opinion received from any such counsel or
consultant and any computation received from any such consultant or
agent. Expenses incurred by the Committee or Board in the
<PAGE>
engagement of any such counsel, consultant or agent shall be paid by
the Company. The Committee, its members and any person designated
pursuant to paragraph (a) above shall not be liable for any action or
determination made in good faith with respect to the Plan. To the
maximum extent permitted by applicable law, no officer of the Company
or member or former member of the Committee or of the Board shall be
liable for any action or determination made in good faith with respect
to the Plan or any Stock Options granted under it. To the maximum
extent permitted by applicable law or the Certificate of Incorporation
or By-Laws of the Company and to the extent not covered by insurance,
each officer and member or former member of the Committee or of the
Board shall be indemnified and held harmless by the Company against any
cost or expense (including reasonable fees of counsel reasonably
acceptable to the Company) or liability (including any sum paid in
settlement of a claim with the approval of the Company), and advanced
amounts necessary to pay the foregoing at the earliest time and to the
fullest extent permitted, arising out of any act or omission to act in
connection with the Plan, except to the extent arising out of such
officer's, member's or former member's own fraud or bad faith. Such
indemnification shall be in addition to any rights of indemnification
the officers, directors or members or former officers, directors or
members may have under applicable law or under the Certificate of
Incorporation or By-Laws of the Company. Notwithstanding anything else
herein, this indemnification will not apply to the actions or
determinations made by an individual with regard to Stock Options
granted to him under the Plan.
<PAGE>
ARTICLE 4.
SHARE AND OTHER LIMITATIONS
4.1. SHARES.
(a) GENERAL LIMITATION. The aggregate number of shares of
Common Stock which may be issued under the Plan with respect to which
Stock Options may be granted shall not exceed three million one hundred
thousand (3,100,000) shares (subject to any increase or decrease
pursuant to Section 4.2) which may be either authorized and unissued
Common Stock or Common Stock held in or acquired for the treasury of
the Company or both. If any Stock Option granted under the Plan
expires, terminates or is cancelled for any reason without having been
exercised in full or if the Company repurchases any Option pursuant to
Section 6.2(f) or shares of Common Stock issued upon exercise of an
Option, the number of shares of Common Stock underlying the repurchased
Option, and/or the number of shares of Common Stock underlying any
unexercised Option shall again be available under the Plan.
(b) RULE 701. Notwithstanding the foregoing, unless and until
the Company becomes subject to the reporting requirements of Section 13
or Section 15(d) of the Exchange Act, Options are intended to be
granted in accordance with the restrictions of Rule 701. To the extent
required under Rule 701, no Options shall be granted if the granting of
such awards would cause the amount of securities offered and sold in
reliance on Rule 701 to exceed the greater of $500,000 or an amount
determined under clause (i) or (ii) as follows:
(i) the aggregate offering price of
securities of the Company subject to outstanding offers made in
reliance of Rule 701 plus the securities of the Company sold in the
preceding twelve (12) months in reliance on Rule 701 shall not exceed
fifteen percent (15%) of the total assets of the Company measured at
the end of the Company's last fiscal year; or
(ii) the number of securities of the
Company subject to outstanding offers made in reliance on Rule 701 plus
securities of the Company sold in the preceding twelve (12) months in
reliance on Rule 701 shall not exceed fifteen percent (15%) of the
outstanding securities of that class.
The outstanding securities of a class shall include securities
of that class issuable pursuant to the exercise of outstanding options,
warrants, rights or conversion of convertible securities unless such
options, warrants, rights or conversion of convertible securities were
issued under Rule 701. In no event shall the aggregate offering price
of securities of the Company subject to outstanding options made in
reliance on Rule 701 plus the sale price of securities of the Company
sold in the preceding twelve (12) months in reliance on Rule 701 exceed
$5,000,000. Notwithstanding anything herein to the contrary, to the
extent that Rule 701 is amended, this Section 4.1(b) shall be deemed to
be amended accordingly to reflect the revised requirements under Rule
701.
4.2. CHANGES.
(a) The existence of the Plan and the Stock Options granted
hereunder shall not affect in any way the right or power of the Board
or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's
capital structure or its business, any merger or consolidation of the
Company, any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting
<PAGE>
Common Stock, the dissolution or liquidation of the Company, any sale
or transfer of all or part of its assets or business or any other
corporate act or proceeding.
(b) In the event of any such change in the capital structure
or business of the Company by reason of any stock dividend or
distribution, stock split or reverse stock split, recapitalization,
reorganization, merger, consolidation, split-up, combination or
exchange of shares, distribution with respect to its outstanding Common
Stock of capital stock other than Common Stock, reclassification of its
capital stock, issuance of warrants or options to purchase any Common
Stock or securities convertible into Common Stock, any sale or transfer
of all or part of the Company's assets or business, or any similar
change affecting the Company's capital structure or business, then the
aggregate number and kind of shares which thereafter may be issued
under the Plan, the number and kind of shares or other property
(including cash) to be issued upon exercise of an outstanding Option
granted under the Plan and the purchase price thereof shall be
appropriately adjusted consistent with such change in such manner as
the Committee may deem equitable to prevent substantial dilution or
enlargement of the rights granted to, or available for, Participants
under the Plan, and any such adjustment determined by the Committee in
good faith shall be binding and conclusive on the Company and all
Participants and employees and their respective heirs, executors,
administrators, successors and assigns.
(c) Fractional shares of Common Stock resulting from any
adjustment in Options pursuant to Section 4.2(a) or (b) shall be
aggregated until, and eliminated at, the time of exercise by
rounding-down for fractions less than one-half (1/2) and rounding-up
for fractions equal to or greater than one-half (1/2). No cash
settlements shall be made with respect to fractional shares eliminated
by rounding. Notice of any adjustment shall be given by the Committee
to each Participant whose Option has been adjusted and such adjustment
(whether or not such notice is given) shall be effective and binding
for all purposes of the Plan.
(d) In the event of a merger or consolidation in which the
Company is not the surviving entity or in the event of any transaction
that results in the acquisition of substantially all of the Company's
outstanding Common Stock by a single person or entity or by a group of
persons and/or entities acting in concert, or in the event of the sale
or transfer of all or substantially all of the Company's assets (all of
the foregoing being referred to as "Acquisition Events"), then the
Committee may, in its sole discretion, terminate all outstanding
Options of Eligible Employees, effective as of the date of the
Acquisition Event, by delivering notice of termination to each such
Participant at least twenty (20) days prior to the date of consummation
of the Acquisition Event; provided, that during the period from the
date on which such notice of termination is delivered to the
consummation of the Acquisition Event, each such Participant shall have
the right to exercise in full all of his Options that are then
outstanding (without regard to any limitations on exercisability
otherwise contained in the Option) but contingent on occurrence of the
Acquisition Event, and, provided that, if the Acquisition Event does
not take place within a specified period after giving such notice for
any reason whatsoever, the notice and exercise shall be null and void.
If an Acquisition Event occurs, to the extent the Committee
does not terminate the outstanding Options pursuant to this Section
4.2(d), then the provisions of Section 4.2(b) shall apply.
4.3. PURCHASE PRICE. Notwithstanding any provision of the Plan to the
contrary, if authorized but previously unissued shares of Common Stock are
issued under the Plan, such shares shall not be issued for a consideration which
is less than as permitted under applicable law.
<PAGE>
ARTICLE 5.
ELIGIBILITY
Employees, consultants and advisors of the Company and
Designated Affiliates are eligible to be granted Stock Options under the Plan.
Notwithstanding the foregoing, only employees are eligible to be granted
Incentive Stock Options under the Plan. Eligibility under the Plan shall be
determined by the Committee in its sole discretion.
ARTICLE 6.
STOCK OPTIONS
6.1. OPTIONS. Each Stock Option granted hereunder shall be one of
two types: (i) an Incentive Stock Option (available for grant only to employees)
or (ii) a Nonqualified Stock Option.
6.2. TERMS OF OPTIONS. Options granted under Article 6 of this Plan
shall be subject to Article 7 and the following terms and conditions, and shall
be in such form and contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem desirable:
(a) OPTION PRICE. The option price per share of
Common Stock purchasable under an Incentive Stock Option shall be
determined by the Committee at the time of grant but shall not be less
than 100% of the Fair Market Value of the share of Common Stock at the
time of grant; provided, however, if an Incentive Stock Option is
granted to a Ten Percent Stockholder, the purchase price shall be no
less than 110% of the Fair Market Value of the Common Stock.
Notwithstanding the foregoing, if an Option is modified, extended or
renewed and, thereby, deemed to be the issuance of a new Option under
the Code, the exercise price of an Option may continue to be the
original exercise price even if less than the Fair Market Value of the
Common Stock at the time of such modification, extension or renewal.
(b) OPTION TERM. The term of each Stock Option shall
be fixed by the Committee, but no Stock Option shall be exercisable
more than ten (10) years after the date the Option is granted;
provided, however, that the term of an Incentive Stock Option granted
to a Ten Percent Stockholder may not exceed five (5) years.
(c) EXERCISABILITY. Stock Options shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at grant. If the
Committee provides, in its discretion, that any Stock Option is
exercisable subject to certain limitations (including, without
limitation, that it is exercisable only in installments or within
certain time periods), the Committee may waive such limitations on the
exercisability at any time at or after grant in whole or in part
(including, without limitation, that the Committee may waive the
installment exercise provisions or accelerate the time at which Options
may be exercised), based on such factors, if any, as the Committee
shall determine, in its sole discretion.
(d) METHOD OF EXERCISE. Subject to whatever
installment exercise and waiting period provisions apply under
subsection (c) above, Stock Options may be exercised in whole or in
part at any time during the Option term, by giving written notice of
exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the
purchase price in such form, or such other arrangement for the
satisfaction of the purchase price, as the Committee may accept. If and
to the extent determined by the Committee in its sole discretion at or
after grant, payment in full or in part may also be made (i) in the
form of Common Stock withheld from the shares to be received on the
exercise of a Stock Option hereunder, Common
<PAGE>
Stock owned by the Participant (and for which the Participant has good
title free and clear of any liens and encumbrances) based on the Fair
Market Value of the Stock on the payment date as determined by the
Committee or (ii) if the Common Stock is traded on a national
securities exchange or automated quotation system, through a cashless
exercise procedure whereby the Participant delivers irrevocable
instructions to a broker to deliver promptly to the Company an amount
equal to the purchase price. No shares of Common Stock shall be issued
until payment, as provided herein, therefor has been made or provided
for.
(e) INCENTIVE STOCK OPTION LIMITATIONS. To the extent
that the aggregate Fair Market Value (determined as of the time of
grant) of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by an Eligible Individual
during any calendar year under the Plan and/or any other stock option
plan of the Company or any Affiliate exceeds $100,000, such Options
shall be treated as Options which are not Incentive Stock Options.
Should the foregoing provision not be necessary in order for
the Stock Options to qualify as Incentive Stock Options, or should any
additional provisions be required, the Committee may amend the Plan
accordingly, without the necessity of obtaining the approval of the
stockholders of the Company.
(f) BUY OUT AND SETTLEMENT PROVISIONS. The Committee
may at any time on behalf of the Company offer to buy out an Option
previously granted, based on such terms and conditions as the Committee
shall establish and communicate to the Participant at the time that
such offer is made.
(g) FORM, MODIFICATION, EXTENSION AND RENEWAL OF
OPTIONS. Subject to the terms and conditions and within the limitations
of the Plan, an Option shall be evidenced by such form of agreement as
is approved by the Committee, and the Committee may modify, extend or
renew outstanding Options granted under the Plan (provided that the
rights of a Participant are not reduced without his consent), or accept
the surrender of outstanding Options (up to the extent not theretofore
exercised) and authorize the granting of new Options in substitution
therefor (to the extent not theretofore exercised).
(h) OTHER TERMS AND CONDITIONS. Options may contain
such other provisions, which shall not be inconsistent with any of the
foregoing terms of the Plan, as the Committee shall deem appropriate
including, without limitation, permitting "reloads" such that the same
number of Options are granted as the number of Options exercised,
shares used to pay for the exercise price of Options or shares used to
pay withholding taxes ("Reloads"). With respect to Reloads, the
exercise price of the new Option shall be the Fair Market Value on the
date of the "reload" and the term of the Option shall be the same as
the remaining term of the Options that are exercised, if applicable, or
such other exercise price and term as determined by the Committee.
6.3. TERMINATION OF EMPLOYMENT/TERMINATION OF CONSULTANCY. The
following rules apply with regard to Options upon the Termination of Employment
or Termination of Consultancy of a Participant:
(a) TERMINATION BY REASON OF DEATH. If a Participant's
Termination of Employment or Termination of Consultancy is by reason of
death, any Stock Option held by such Participant, unless otherwise
determined by the Committee at grant or, if no rights of the
Participant's estate are reduced, thereafter, may be exercised, to the
extent exercisable at the Participant's death, by the legal
representative of the estate at any time within a period of one (1)
year from the date of such death, but in no event beyond the expiration
of the stated term of such Stock Option.
<PAGE>
(b) TERMINATION BY REASON OF DISABILITY OR RETIREMENT. If a
Participant's Termination of Employment or Termination of Consultancy
is by reason of Disability or Retirement, any Stock Option held by such
Participant, unless otherwise determined by the Committee at grant or,
if no rights of the Participant are reduced, thereafter, may be
exercised, to the extent exercisable at the Participant's Termination
of Employment or Termination of Consultancy, by the Participant at any
time within a period of one (1) year from the date of such termination,
but in no event beyond the expiration of the stated term of such Stock
Option; provided, however, that, if the Participant dies within such
exercise period, any unexercised Stock Option held by such Participant
shall thereafter be exercisable, to the extent to which it was
exercisable at the time of death, for a period of one (1) year (or such
other period as the Committee may specify at grant or, if no rights of
the Participant's estate are reduced, thereafter) from the date of such
death, but in no event beyond the expiration of the stated term of such
Stock Option.
(c) INVOLUNTARY TERMINATION WITHOUT CAUSE. If a Participant's
Termination of Employment or Termination of Consultancy is by
involuntary termination without Cause, any Stock Option held by such
Participant, unless otherwise determined by the Committee at grant or,
if no rights of the Participant are reduced, thereafter, may be
exercised, to the extent exercisable at the Participant's Termination
of Employment or Termination of Consultancy, by the Participant at any
time within a period of ninety (90) days from the date of such
termination, but in no event beyond the expiration of the stated term
of such Stock Option.
(d) VOLUNTARY TERMINATION. If a Participant's Termination of
Employment or Termination of Consultancy is voluntary and occurs prior
to, or more than ninety (90) days after, the occurrence of an event
which would be grounds for Termination of Employment or Termination of
Consultancy for Cause (without regard to any notice or cure period
requirements), any Stock Option held by such Participant, unless
otherwise determined by the Committee at grant or, if no rights of the
Participant are reduced, thereafter, may be exercised, to the extent
exercisable at the Participant's Termination of Employment or
Termination of Consultancy, by the Participant at any time within a
period of thirty (30) days from the date of such termination, but in no
event beyond the expiration of the stated term of such Stock Option.
(e) TERMINATION FOR CAUSE. Unless otherwise determined by the
Committee at grant or, if no rights of the Participant are reduced,
thereafter, if a Participant's Termination of Employment or Termination
of Consultancy (i) is for Cause or (ii) is a voluntary termination (as
provided in subsection (d) above) within ninety (90) days after an
event which would be grounds for a Termination of Employment or
Termination of Consultancy for Cause, any Stock Option held by such
Participant shall thereupon terminate and expire as of the date of
termination.
ARTICLE 7.
NON-TRANSFERABILITY
No Stock Options shall be Transferable by a Participant otherwise than
by will or by the laws of descent and distribution. All Stock Options shall be
exercisable, during the Participant's lifetime, only by the Participant.
Notwithstanding the foregoing, the Committee may determine at the time of grant
or thereafter that a Nonqualified Stock Option that is otherwise not
Transferable pursuant to this Article 7 is Transferable in whole or in part and
in such circumstances, and under such conditions, as specified by the Committee.
<PAGE>
ARTICLE 8.
CHANGE OF CONTROL PROVISIONS
8.1. BENEFITS. In the event of a Change of Control of the Company (as
defined below), except as otherwise provided by the Committee upon the grant of
a Stock Option, the Participant shall be entitled to the following benefits:
(a) Subject to paragraph (b) below, all outstanding Stock
Options granted prior to the Change of Control shall be fully vested
and immediately exercisable in their entirety as of the date of the
Change of Control. The Committee, in its sole discretion, may provide
for the purchase of any Stock Options by the Company for an amount of
cash equal to the excess of the Change of Control price (as defined
below) of the shares of Common Stock covered by such Stock Options,
over the aggregate exercise price of such Stock Options. For purposes
of this Section 8.1, Change of Control price shall mean the higher of
(i) the highest price per share of Common Stock paid in any transaction
related to a Change of Control of the Company, or (ii) the highest Fair
Market Value per share of Common Stock at any time during the sixty
(60) day period preceding a Change of Control.
(b) Notwithstanding anything to the contrary herein, unless
the Committee provides otherwise at the time an Option is granted to a
Participant hereunder, no acceleration of exercisability shall occur
with respect to such Option if the Committee reasonably determines in
good faith, prior to the occurrence of the Change of Control, that the
Options shall be honored or assumed, or new rights substituted therefor
(each such honored, assumed or substituted option hereinafter called an
"Alternative Option"), by a Participant's employer (or the parent or a
subsidiary of such employer) immediately following the Change of
Control, provided that any such Alternative Option must meet the
following criteria:
(i) the Alternative Option must be based on stock which is
traded on an established securities market, or which will be so traded
within thirty (30) days of the Change of Control;
(ii) the Alternative Option must provide such Participant with
rights and entitlements substantially equivalent to or better than the
rights, terms and conditions applicable under such Option, including,
but not limited to, an identical or better exercise schedule; and
(iii) the Alternative Option must have economic value
substantially equivalent to the value of such Option (determined at the
time of the Change of Control).
For purposes of Incentive Stock Options, any assumed or
substituted Option shall comply with the requirements of Treasury
Regulation Section 1.425-1.
8.2. CHANGE OF CONTROL. A "Change of Control" shall mean the
occurrence of any of the following:
(a) any person (as defined in Section 3(a)(9) of the Exchange
Act and as used in Sections 13(d) and 14(d) thereof), excluding the
Company, any subsidiary of the Company, any employee benefit plan
sponsored or maintained by the Company or its subsidiaries (including
any trustee of any such plan acting in his capacity as trustee),
becoming the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of securities of the Company representing more than fifty
percent (50%) of the total combined voting power of the Company's then
outstanding securities;
(b) the merger, consolidation or other business combination of
the Company (a "Transaction"), other than a Transaction involving only
the Company and one or more of
<PAGE>
its subsidiaries, or a Transaction immediately following which the
stockholders of the Company immediately prior to the Transaction
continue to have a majority of the voting power in the resulting
entity;
(c) during any period of two (2) consecutive years beginning
on or after the Effective Date, the persons who were members of the
Board immediately before the beginning of such period (the "Incumbent
Directors") ceasing (for any reason other than death) to constitute at
least a majority of the Board or the board of directors of any
successor to the Company, provided that, any director who was not a
director as of the Effective Date shall be deemed to be an Incumbent
Director if such director was elected to the board of directors by, or
on the recommendation of or with the approval of, at least two-thirds
of the directors who then qualified as Incumbent Directors either
actually or by prior operation of the foregoing unless such election,
recommendation or approval occurs as a result of an actual or
threatened election contest (as such terms are used in Rule 14a- 11 of
Regulation 14A promulgated under the Exchange Act or any successor
provision) or other actual or threatened solicitation of proxies or
contests by or on behalf of a person other than a member of the Board;
or
(d) the approval by the stockholders of the Company of any
plan of complete liquidation of the Company or an agreement for the
sale of all or substantially all of the Company's assets other than the
sale of all or substantially all of the assets of the Company to a
person or persons who beneficially own, directly or indirectly, at
least fifty percent (50%) or more of the combined voting power of the
outstanding voting securities of the Company at the time of such sale.
8.3. INITIAL PUBLIC OFFERING NOT A CHANGE IN CONTROL. For purposes of
the Plan, an initial public offering of the Common Stock of the Company shall
not be deemed to be a Change of Control.
ARTICLE 9.
TERMINATION OR AMENDMENT OF THE PLAN
Notwithstanding any other provision of the Plan, the Board may at any
time, and from time to time, amend, in whole or in part, any or all of the
provisions of the Plan, or suspend or terminate it entirely, retroactively or
otherwise; provided, however, that, unless otherwise required by law or
specifically provided herein, the rights of a Participant with respect to Stock
Options granted prior to such amendment, suspension or termination, may not be
impaired without the consent of such Participant and, provided further, without
the approval of the stockholders of the Company in accordance with the laws of
the State of Delaware, solely to the extent required by the applicable
provisions of Rule 16b-3 or, with regard to Incentive Stock Options, Section 422
of the Code, no amendment may be made which would (i) increase the aggregate
number of shares of Common Stock that may be issued under the Plan; (ii) change
the classification of employees, consultants and advisors eligible to receive
Stock Options under the Plan; (iii) extend the maximum option period under
Section 6.2; or (iv) require stockholder approval in order for the Plan to
continue to comply with the applicable provisions of Rule 16b-3 or, with regard
to Incentive Stock Options, Section 422 of the Code. In no event may the Plan be
amended without the approval of the stockholders of the Company in accordance
with the applicable laws of the State of Delaware to increase the aggregate
number of shares of Common Stock that may be issued under the Plan or to make
any other amendment that would require stockholder approval under the rules of
any exchange or system on which the Company's securities are listed or traded at
the request of the Company.
The Committee may amend the terms of any Stock Options theretofore
granted, prospectively or retroactively, but, subject to Article 4 above or as
otherwise specifically provided herein, no such amendment or other action by the
Committee shall impair the rights of
<PAGE>
any holder without the holder's consent.
ARTICLE 10.
COMPANY CALL RIGHTS; RIGHTS OF FIRST REFUSAL
10.1. COMPANY CALL RIGHTS; RIGHTS OF FIRST REFUSAL.
(a) COMPANY CALL RIGHTS. (i) In the event of
Termination of Employment or Termination of Consultancy for Cause, the
Company may repurchase from the Participant any shares of Common Stock
previously acquired by the Participant through the grant of an Option
under this Plan at a repurchase price equal to the lesser of (a) the
original purchase price or exercise price (as applicable), if any, or
(b) Fair Market Value as of the date of termination.
(ii) In the event of a Termination of
Employment or Termination of Consultancy for any reason other than for
Cause (including termination due to Retirement, death, Disability,
involuntary termination without Cause or resignation), the Company
shall either (i) repurchase from the Participant each outstanding Stock
Option based on the difference between the exercise price of a share of
Common Stock relating to such Option and the Fair Market Value of a
share of Common Stock on the date of termination or (ii) repurchase
from the Participant any shares of Common Stock previously acquired by
the Participant through the grant of an Option under this Plan at a
repurchase price equal to Fair Market Value as of the date of
termination.
(b) RIGHT OF FIRST REFUSAL. No Participant shall,
directly or indirectly, Transfer any shares of Common Stock acquired by
the Participant (or his or her estate or legal representative) through
the grant of an Option under this Plan, unless in each such instance
the Participant (or his or her estate or legal representative) shall
have first offered the Common Stock proposed to be Transferred pursuant
to a bona fide offer to a third party to the Company. The right of
first refusal must be exercised by the Company by delivering to the
Participant (or his or her estate or legal representative) written
notice of such exercise within twenty (20) business days of the
Company's receipt of written notification of the proposed sale. Upon
the exercise of a right of first refusal, the Common Stock proposed to
be sold shall be purchased by the Company at the price per share
offered to be paid by the prospective transferee, subject to paragraph
(a) above in the case of a Participant's Termination of Employment or
Termination of Consultancy. The notice of exercise of the right of
first refusal shall specify the date and location for the closing of
such purchase.
(c) Notwithstanding the foregoing, the Company shall
cease to have rights pursuant to this Article 10 following an initial
public offering of the Common Stock of the Company.
ARTICLE 11.
UNFUNDED PLAN
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments as to which a Participant
has a fixed and vested interest but which are not yet made to a Participant by
the Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company.
<PAGE>
ARTICLE 12.
GENERAL PROVISIONS
12.1. LEGEND. The Committee may require each person receiving shares
pursuant to the exercise of a Stock Option under the Plan to represent to and
agree with the Company in writing that the Participant is acquiring the shares
without a view to distribution thereof, and that any subsequent offer for sale
or sale of any such shares of Common Stock shall be made either pursuant to (i)
a registration statement on an appropriate form under the Securities Act of
1933, which registration statement shall have become effective and shall be
current with respect to the shares of Common Stock being offered and sold, or
(ii) a specific exemption from the registration requirements of the Securities
Act of 1933, and that in claiming such exemption the Participant will, prior to
any offer for sale or sale of shares of Common Stock, obtain a favorable written
opinion, satisfactory in form and substance to the Company, from counsel
acceptable to the Company as to the availability of such exception. In addition
to any legend required by the Plan, the certificates for such shares may include
any legend which the Committee deems appropriate to reflect any restrictions on
Transfer.
All certificates for shares of Common Stock delivered under the Plan
shall be subject to such stock transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other requirements
of the Securities and Exchange Commission, any stock exchange upon which the
Common Stock is then listed or any national securities association system upon
whose system the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
12.2. OTHER PLANS. Nothing contained in the Plan shall prevent the
Board from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.
12.3. NO RIGHT TO EMPLOYMENT. Neither the Plan nor the grant or
exercise of any Stock Options hereunder shall give any Participant or other
employee any right with respect to continuance of employment or engagement as a
consultant or advisor by the Company or any Affiliate, nor shall they be a
limitation in any way on the right of the Company or any Affiliate by which an
employee, consultant or advisor is employed or engaged to terminate his
employment or consultancy at any time.
12.4. WITHHOLDING OF TAXES. The Company shall have the right to deduct
from any payment to be made to a Participant, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld. The Committee may permit any such withholding
obligation with regard to any Participant to be satisfied by reducing the number
of shares of Common Stock otherwise deliverable or by delivering shares of
Common Stock already owned.
12.5. LISTING AND OTHER CONDITIONS.
(a) If the Common Stock becomes listed on a national
securities exchange or system sponsored by a national securities
association, the issue of any shares of Common Stock pursuant to the
exercise of an Option shall be conditioned upon such shares being
listed on such exchange or system.
(b) If at any time counsel to the Company shall be of the
opinion that any sale or delivery of shares of Common Stock pursuant to
the exercise of an Option is or may in the circumstances be unlawful or
result in the imposition of excise taxes on the Company
<PAGE>
under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act of 1933, as
amended, or otherwise with respect to shares of Common Stock, and the
right to exercise any Option shall be suspended until, in the opinion
of said counsel, such sale or delivery shall be lawful or will not
result in the imposition of excise taxes on the Company.
(c) Upon termination of any period of suspension under this
Section 12.5, any Stock Option affected by such suspension which shall
not then have expired or terminated shall be reinstated as to all
shares available before such suspension and as to shares which would
otherwise have become available during the period of such suspension,
but no such suspension shall extend the term of any Option.
12.6. STOCKHOLDERS AGREEMENT. As a condition to the receipt of shares
of Common Stock pursuant to an Option under the Plan, to the extent required by
the Committee, the Participant shall execute and deliver a stockholder's
agreement or such other documentation which shall set forth certain restrictions
on transferability of the shares of Common Stock acquired upon exercise or
purchase, a right of first refusal of the Company with respect to such shares,
the right of the Company to purchase Common Stock in accordance with the Plan
and such other terms as the Board or Committee shall from time to time
establish. Such stockholder's agreement shall apply to all Common Stock acquired
under the Plan.
12.7. GOVERNING LAW. The Plan shall be governed and construed in
accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).
12.8. CONSTRUCTION. Wherever any words are used in the Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.
12.9. OTHER BENEFITS. No Stock Option granted or exercised under the
Plan shall be deemed compensation for purposes of computing benefits under any
retirement plan of the Company or its Affiliates nor affect any benefits under
any other benefit plan now or subsequently in effect under which the
availability or amount of benefits is related to the level of compensation.
12.10. COSTS. The Company shall bear all expenses included in
administering the Plan, including expenses of issuing Common Stock pursuant to
the exercise of any Stock Options hereunder.
12.11. NO RIGHT TO SAME BENEFITS. The provisions and terms of Options
need not be the same with respect to each Participant, and the Options granted
to individual Participants need not be the same in subsequent years.
12.12. DEATH/DISABILITY. The Committee may in its discretion require
the transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Option. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of the Plan. If the Committee shall find,
without any obligation or responsibility of any kind to do so, that any person
to whom payment is payable under this Plan is unable to care for his or her
affairs because of disability, illness or accident, any payment due may be paid
to such person's duly appointed legal representative in such manner and
proportions as the Committee may determine, in it sole discretion. Any such
payment shall be a complete discharge of the liabilities of the Committee and
the Board under this Plan.
<PAGE>
12.13. SECTION 16(B) OF THE EXCHANGE ACT. In the event the Company
becomes publicly held, all elections and transactions under the Plan by persons
subject to Section 16 of the Exchange Act involving shares of Common Stock are
intended to comply with any applicable exemption conditions under Rule 16b-3. To
the extent applicable, the Committee may establish and adopt written
administrative guidelines, designed to facilitate compliance with Section 16(b)
of the Exchange Act, as it may deem necessary or proper for the administration
and operation of the Plan and the transaction of business thereunder.
For purposes of this Section 12.13 the Company shall be deemed publicly
held when and if the Company has a class of common equity securities registered
under Section 12 of the Exchange Act.
12.14. SEVERABILITY OF PROVISIONS. If any provision of the Plan shall
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and the Plan shall be construed and enforced
as if such provisions had not been included.
12.15. HEADINGS AND CAPTIONS. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of the
Plan, and shall not be employed in the construction of the Plan.
12.16. RULE 701. Except as the Company or Committee shall otherwise
determine, this Plan is intended to comply with Rule 701 of the Exchange Act,
and any provisions inconsistent with such Rule shall be inoperative and shall
not affect the validity of the Plan.
ARTICLE 13.
EFFECTIVE DATE OF PLAN
The Plan is effective as of January 29, 1996, and is amended and
restated in its current form as of October 10, 1997, subject to and conditioned
upon any required approval by the stockholders of the Company in the manner set
forth by any applicable law, registration or stock exchange rule.
ARTICLE 14.
TERM OF PLAN
No Stock Option shall be granted pursuant to the Plan on or after the
tenth anniversary of the Effective Date of the Plan (I.E., January 29, 2006) (or
such earlier termination of the Plan), but Stock Options granted prior to such
date may extend beyond that date.
<PAGE>
EXHIBIT 4.7
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (the "Agreement") is made effective as of
February 16, 1999, by and between 7th Level, Inc., a Delaware corporation (the
"Company"), and Stephen P. Gott ("Officer").
Whereas Officer is a valuable and trusted employee of the Company, and
the Company considers it desirable and in its best interest that Officer be
given an inducement to acquire a further proprietary interest in the Company and
an added incentive to advance the interests of the Company by possessing an
option to purchase shares of the Company's common stock, $.01 par value per
share (the "Common Stock").
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Company and Officer hereby agree
as follows:
1. GRANT OF STOCK OPTION.
(a) The Company hereby grants to Officer the right, privilege
and option (the "Option") to purchase 1,000,000 shares of Common Stock (the
"Option Shares") at the purchase price of $3.25 per one share of Common Stock
(the "Option Price"), in the manner and subject to the conditions hereinafter
provided. The Option is not intended to satisfy the requirement for an incentive
stock option under Section 422 of the Internal Revenue Code of 1986, as amended,
and this Agreement shall be construed and interpreted in accordance with such
intention.
(b) The Company agrees that at all times there shall be
reserved for issuance upon exercise of the Option the maximum number of shares
of Common Stock as shall be required for issuance upon exercise of the Option
(or the remaining unexercised portion thereof) without regard to whether, or the
extent to which, the Option is then exercisable and that the par value of those
shares of Common Stock will at all times be less than the Option Price.
2. TIME OF EXERCISE OF OPTION. Subject to the limitations contained
herein, the aforesaid Option may be exercised at any time, and from time to
time, in whole or in part, until the termination thereof as provided in Section
4 below.
3. METHOD OF EXERCISE. The Option shall be exercised by written notice
in form and substance identical to Exhibit I attached hereto directed to the
Chief Executive Officer of the Company, at the Company's principal place of
business, specifying the number of shares of Common Stock purchased and
accompanied by payment of the Option Price therefor.
(a) The Option Shares shall be divided into three (3) equal
installments. The first such installment shall vest, and the Option
shall be exercisable with respect to the Option Shares included
therein, on the date one year after the grant of the Option, and each
succeeding installment shall vest, and the Option shall be exercisable
with respect to the Option Shares included therein, annually thereafter
on the anniversary of the grant of the Option; provided that the Option
shall not become exercisable with respect to any Option Shares after
the Officer's employment with the Company is terminated for any reason
other than death or permanent and total disability.
(b) The Company shall make immediate delivery of such shares, provided
that if any law or regulation requires the Company to take any action
with respect to the shares specified in such notices before the
issuance thereof, then the date of delivery of such shares shall be
extended for the period necessary to take such action.
<PAGE>
(c) The Option may be exercised within the above limitations and
subject to the limitations contained within this section, as to any
part of all of the shares covered thereby.
4. TERMINATION OF OPTION. Except as herein otherwise stated, the Option
to the extent not heretofore exercised shall terminate upon the first to occur
of the following dates:
(a) The expiration of three (3) months after the date on which
Officer's employment by the Company is terminated for any reason other
than death or permanent and total disability;
(b) The expiration of twelve (12) months after the date on which
Officer's employment by the Company is terminated by reason of
Officer's permanent and total disability;
(c) In the event of Officer's death while in the employ of the Company,
his executors or administrators may exercise, within sixty (60) days
following the date of death, the Option as to any of the Option Shares
not theretofore exercised during the lifetime of Officer; or
(d) The expiration of ten (10) years following the grant of the Option,
commencing the effective date set forth above.
5. RECLASSIFICATION, CONSOLIDATION OR MERGER. If all or any portion of
the Option shall be exercised subsequent to any share dividend, split-up,
recapitalization, merger, consolidation, combination or exchange of shares,
separation, reorganization or liquidation occurring after the date hereof, as a
result of which shares of any class of the capital stock of the Company shall be
issued in respect of the then issued and outstanding Common Stock, or Common
Stock shall be changed into the same or a different number of shares of the same
or another class or classes of the capital stock of the Company, the person or
persons so exercising the Option shall receive, for the aggregate price paid
upon such exercise, the aggregate number and class of shares of the capital
stock of the Company which, if Common Stock (as authorized at the date hereof)
had been purchased immediately prior to such event at the price per share set
forth in Section 1 hereof, such person or persons would be holding at the time
of such exercise; provided, however, that no fractional share shall be issued
upon any such exercise, and the aggregate price paid shall be appropriately
reduced on account of any fractional share not issued. No adjustment shall be
made in the minimum number of shares which may be purchased at any one time, as
fixed by subsection 3(c) hereof.
6. ACCELERATED VESTING.
(a) In the event of a Change of Control, Officer shall become
immediately and fully vested in the Option. For purposes of this Agreement, a
"Change of Control" shall mean that (i) any "person" (as such term is defined
within the meaning of Rule 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "1934 Act")), other than any person who as of the date hereof
beneficially owns (as defined in Rule 13(d)(3) of the 1934 Act) directly or
indirectly 5% or more of the Company's outstanding Common Stock or as of the
date hereof is on, or has designated a member of, the Board of Directors of the
Company, becomes a beneficial owner directly or indirectly of securities of the
Company representing in excess of fifty percent (50%) of the Company's then
outstanding securities having the right to vote for the election of directors,
(ii) the Company shall have consummated the sale of all or substantially all of
the assets of the Company, or (iii) the following individuals cease for any
reason to constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new director
(other than a director whose initial assumption of office is in connection with
an actual or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election
<PAGE>
by the Board or nomination for election by the Company's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or
recommended.
(b) If Officer's employment is terminated by the Company
without Cause (as defined in the Employment Agreement, dated as of the date
hereof, between the Company and Officer (the "Employment Agreement")) or if
Executive terminates his employment with the Company for Good Reason (as defined
in the Employment Agreement), all Options shall fully and immediately vest.
(c) If Executive terminates his employment with the Company
other than for Good Reason or if Executive's employment is terminated by the
Company for Cause (i) prior to the first anniversary of the Grant Date (as
defined in the Employment Agreement), then 333,000 Options shall vest on such
date of termination; (ii) after the first anniversary but prior to the second
anniversary of the Grant Date, then 333,000 Options shall vest on such date of
termination (in addition to the 333,000 Options which vested on the first
anniversary of the Grant Date); (iii) after the second anniversary but prior to
the third anniversary of the Grant Date, 334,000 Options shall vest on such date
of termination (in addition to the 333,000 Options which vested on each of the
first and second anniversary of the Grant Date).
7. LEGEND. All certificates representing any Option Shares shall have
endorsed thereon the following legend (in addition to any other legend required
under any other agreement):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO THE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT
TO (i) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS
EFFECTIVE UNDER SUCH ACT, (ii) RULE 144 OR RULE 144A UNDER SUCH ACT, OR (iii)
ANY OTHER EXEMPTION FROM REGISTRATION UNDER SUCH ACT, PROVIDED THAT, IF
REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM
AND SUBSTANCE IS FURNISHED TO THE COMPANY THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE."
8. WITHHOLDING OF TAX. To the extent that the exercise of the Option or
the disposition of shares of Common Stock acquired by exercise of the Option
results in compensation income to Officer for federal or state income tax
purposes, Officer shall deliver to the Company at the time of such exercise or
disposition such amount of money or shares of Common Stock as the Company may
require to meet its obligation under applicable tax laws or regulations, and, if
Officer fails to do so, the Company is authorized to withhold from any cash or
common stock remuneration then or thereafter payable to Officer and tax required
to be withheld by reason of such resulting compensation income. Upon an exercise
of the Option, the Company is further authorized in its discretion to satisfy
any such withholding requirement out of any cash or shares of Common Stock
distributable to Officer upon such exercise.
9. RIGHTS PRIOR TO EXERCISE OF OPTION. The Option is not transferable
by Officer, except in the event of his death as provided in Subsection 4(c)
above, and during his lifetime is exercisable only by him. Officer shall have no
rights as a shareholder with respect to the Option Shares until payment of the
Option Price and delivery to him of such shares as herein provided.
<PAGE>
10. MODIFICATION AND WAIVER. This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations and
understandings of the parties. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by the party to be charged
therewith. No waiver of any of the provisions of this Agreement shall be deemed,
or shall constitute a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver.
11. MAILING NOTICES, ETC. All notices and other communications from
the Company to Officer shall be mailed by first-class certified or registered
mail, postage prepaid, sent by reputable overnight delivery or by facsimile to
the address furnished to the Company in writing by Officer. All notices and
other communications from Officer or in connection herewith to the Company shall
be mailed by first-class certified or registered mail, postage prepaid, sent by
reputable overnight delivery or by facsimile (914-682-4440) to the Company at
its offices at 925 Westchester Avenue, White Plains, New York 10604, to the
attention of Chief Financial Officer, or such other address, or to the attention
of such other officer, as the Company shall so notify Officer.
12. APPLICABLE LAW AND VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the principles of conflict of law.
13. JURISDICTION. The parties agree that the courts of the State of New
York, and any courts whose jurisdiction is derivative on the jurisdiction of the
courts of the State of New York, shall have exclusive personal jurisdiction over
all parties to this Agreement.
14. HEADINGS. The subject headings of the sections of this Agreement
are included for purposes of convenience only, and shall not affect the
construction or interpretation of any of its provisions.
15. COUNTERPARTS. This Agreement may be executed simultaneously in one
or more identical counterparts, each of which for all purposes shall be deemed
an original, and all of which shall constitute, collectively, one instrument;
but in making proof of this Agreement, it shall not be necessary to produce or
account for more than one executed counterpart.
[The remainder of this page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
on the dates indicated below, to be effective, however, as of the date first
hereinabove written.
7TH LEVEL, INC.
Date: , 1999 By:
------------------------------
Name:
Title:
Date: , 1999 OFFICER
---------------------------------
Stephen P. Gott
Address
--------------------------------
Social Security #
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
(to be signed only upon exercise of the Option)
To: 7th Level, Inc.
The undersigned, the holder of the within Option, hereby irrevocably
elects to exercise the purchase right represented by such Option for, and to
purchase thereunder, shares of Common Stock of 7th Level, Inc. (the
"Company") on , and herewith makes payment therefor in full at
the price per share provided for in such Option at the Company's principal
executive offices.
Dated:
------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Option)
------------------------------------------
Address
<PAGE>
EXHIBIT 5.1
July 21, 1999
Learn2.com, Inc. (formerly known as 7th Level, Inc.)
925 Westchester Avenue
White Plains, New York 10604
Ladies and Gentlemen:
On the date hereof, Learn2.com, Inc. (formerly known as 7th
Level, Inc.), a Delaware corporation (the "Company"), is transmitting for filing
with the Securities and Exchange Commission a Registration Statement under the
Securities Act of 1933, as amended, on Form S-8 (the "Registration Statement")
relating to the sale of up to 2,599,309 shares (the "Shares") of common stock,
par value $.01 per share, of the Company which have been issued or are issuable
pursuant to the terms of certain stock options issued under the Stock Option
Plan of Street Technologies, Inc. (n/k/a 7thStreet.com, Inc., a wholly-owned
subsidiary of the Company) (the "Plan") and a certain stock option agreement,
dated as of February 16, 1999, by and between the Company and Stephen P. Gott
(the "Gott Option"). This opinion is an exhibit to the Registration Statement.
We have at times acted as special counsel to the Company with
respect to certain corporate and securities matters, and in such capacity we
have participated in various corporate and other proceedings taken by or on
behalf of the Company in connection with the proposed offer and sale of the
Shares by the Company as contemplated by the Registration Statement. However, we
are not general counsel to the Company and would not ordinarily be familiar with
or aware of matters relating to the Company unless they are brought to our
attention by representatives of the Company.
We have examined copies (in each case signed, certified or
otherwise proven to our satisfaction to be genuine) of the Company's Restated
Certificate of Incorporation as presently in effect, its By-Laws as presently in
effect, minutes and other instruments evidencing actions taken by the Company's
directors and stockholders, the Registration Statement and exhibits thereto, the
Plan, the Gott Option and such other documents and instruments relating to the
Company and the proposed offering as we have deemed necessary under the
circumstances. In our examination of all such agreements, documents,
certificates and instruments, we have assumed the completeness of the minutes
submitted to us by the Company, the genuineness of all signatures, the legal
capacity of all signatories and the authenticity of all agreements, documents,
certificates and instruments submitted to us as originals and the conformity
with the originals of all agreements, documents, certificates and instruments
submitted to us as certified, conformed or photostatic copies. Insofar as this
opinion relates to securities to be issued in the future, we have assumed that
all applicable laws, rules and regulations in effect at the time of such
issuance are the same as such laws, rules and regulations in effect as of the
date hereof.
Except as expressly set forth in the next sentence, we express
no opinion on the laws of any jurisdiction other than the State of New York, the
federal laws of the United States and, to the extent set forth below, the laws
of the State of Delaware. This opinion, insofar as it relates to the law of
Delaware, is based solely on our reading of standard published compilations of
the Delaware General Corporation Law. We express no opinion as to the
application of the securities or "blue sky" laws of any state, including the
State of Delaware or the State of New York, to the offer and sale of the Shares.
<PAGE>
Learn2.com, Inc. (formerly known as 7th Level, Inc.)
July 21, 1999
Page 2
Based on the foregoing, and subject to and in reliance on the
accuracy and completeness of the information relevant thereto provided to us, it
is our opinion that the Shares which have been or will be issued pursuant to the
Plan and the Gott Option have been duly authorized and, subject to the
effectiveness of the Registration Statement and compliance with applicable
securities or other laws of the states of the United States in which the Shares
will be offered and/or sold, are, or when issued in accordance with the terms
set forth in the Plan and the Gott Option, will be legally and validly issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and as an exhibit to any filing made by the
Company under the securities or other laws of any state of the United States.
This opinion is as of the date hereof and we undertake no
obligation to advise you of any change, any applicable law or in facts or
circumstances which might affect any matters or opinions set forth herein. This
opinion is furnished to you in connection with the filing of the Registration
Statement, and is not to be used, circulated, quoted or otherwise relied upon
for any other purposes, except as expressly provided in the preceding paragraph.
Very truly yours,
/s/ Swidler Berlin Shereff Friedman, LLP
SWIDLER BERLIN SHEREFF FRIEDMAN, LLP
SBSF:GA:JSH:RMF:DIG
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of Learn2.com, Inc. (formerly known as 7th Level, Inc.):
We consent to the incorporation by reference herein of our report,
dated January 30, 1998, related to the consolidated balance sheet of 7th
Level, Inc. (currently Learn2.com, Inc.) and subsidiaries as of December 31,
1997, and the related consolidated statements of operations, stockholders'
equity, and cash flows and the financial statement schedule for each of the
years in the two-year period then ended, which report appears in the December
31, 1998 Annual Report on Form 10-K/A of 7th Level, Inc. (currently
Learn2.com, Inc.) and our report, dated January 30, 1998, related to the
supplementary consolidated balance sheet of Learn2.com, Inc. (formerly known
as 7th Level, Inc.) and subsidiaries as of December 31, 1997, and the related
supplementary consolidated statements of operations, stockholders' equity and
cash flows for each of the years in the two-year period then ended, which
report appears in the Current Report on Form 8-K of Learn2.com, Inc.
(formerly known as 7th Level, Inc.) dated July 19, 1999.
Our reports contain explanatory paragraphs that state that the
Company has suffered recurring losses since inception and does not currently
have sufficient resources to meet its anticipated operating requirements
during 1998, which conditions raise substantial doubt about the Company's
ability to continue as a going concern. The consolidated financial statements
and financial statement schedule and supplementary consolidated financial
statements do not include any adjustments that might result from the outcome
of these uncertainties.
/S/ KPMG LLP
-----------------------
KPMG LLP
Dallas, Texas
July 21, 1999
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors of Learn2.com, Inc. (formerly known as
7th Level, Inc.):
We consent to the incorporation by reference in this Registration
Statement on Form S-8 of Learn2.com, Inc. (formerly known as 7th Level, Inc.)
of our report dated June 5, 1998, with respect to the balance sheet of
7thStreet.com, Inc. (formerly known as Street Technologies, Inc.) as of
December 31, 1997, and the related statements of operations, stockholders'
equity (deficit), and cash flows for the year then ended, which report
appears in the Form 8-K/A of 7th Level, Inc. (currently Learn2.com, Inc.)
filed with the Securities and Exchange Commission on April 16, 1999.
/s/ KPMG LLP
----------------------
KPMG LLP
Stamford, Connecticut
July 21, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report
dated March 17, 1999 included in Learn2.com, Inc.'s (formerly known as
7th Level, Inc.) Form 10-K/A for the year ended December 31, 1998 and to
all references to our Firm included in this Registration Statement filed
on Form S-8.
/S/ ARTHUR ANDERSEN LLP
------------------------
ARTHUR ANDERSEN LLP
New York, New York
July 23, 1999
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
February 17, 1999 included in Learn2.com, Inc.'s (formerly known as 7th Level,
Inc.) Form 8-K/A filed with the Securities and Exchange Commission on April 16,
1999 and to all references to our Firm included in this Registration Statement
filed on Form S-8.
/S/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
New York, New York
July 23, 1999
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our report dated
June 30,1999 included in Learn2.com, Inc.'s (formerly known as 7th Level, Inc.)
Form 8-K/A filed with the Securities and Exchange Commission on June 30,1999 and
to all references to our Firm included in this Registration Statement filed on
Form S-8.
/S/ ARTHUR ANDERSON LLP
-----------------------
ARTHUR ANDERSON LLP
New York, New York
July 23, 1999
