<PAGE>
As filed with the Securities and Exchange Commission on December 14, 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.
(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)
1311 Mamaroneck Avenue
White Plains, New York 10605
(Address of principal executive offices) (Zip Code)
------------------------------------
1999 STOCK OPTION PLAN
AND
COMMON STOCK ISSUABLE UNDER THE
1995 VIAGRAFIX STOCK OPTION PLAN
(Full title of the Plan)
------------------------------------
Stephen P. Gott Copies to:
President and Chief Executive Officer Gerald Adler, Esq.
Learn2.com, Inc. Swidler Berlin Shereff Friedman, LLP
1311 Mamaroneck Avenue 405 Lexington Avenue
White Plains, New York 10605 New York, New York 10174
(914) 682-4300 (212) 973-0111
(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
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share 6,264,038 shares $3.05 $19,105,315.90 $5,043.80(2)
- -------------------------------------------------------------------------------------------------------------------------------
</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 pursuant to Rule 457(c) and (h) of
the Securities Act as follows: 6,264,038 multiplied by .000264 multiplied
by $3.05, the average of the bid and asked sales prices of the Registrant's
Common Stock as included on The Nasdaq Stock Market on December 9, 1999.
<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 and Form 10-Q for the periods ended June 30, 1999 and September
30, 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 19, 1999, July 23, 1999 and
November 9, 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 $.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
-1-
<PAGE>
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of the corporation) by reason of the fact that 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.
-2-
<PAGE>
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 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 $3 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 $2 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:
4.8 1999 Stock Option Plan of Learn2.com, Inc.
4.9 1995 ViaGrafix Stock Option Plan
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 Ernst & Young 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).
-3-
<PAGE>
Item 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
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
-4-
<PAGE>
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
-5-
<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 13th day of
December, 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
- -----------------------
Stephen P. Gott (Principal Executive Officer) December 13, 1999
Vice President, Chief Financial Officer
and Secretary (Principal Financial
/s/ Marc E. Landy Officer and Principal Accounting
- -----------------------
Marc E. Landy Officer) December 13, 1999
/s/ Donald Schupak Chairman of the Board of Directors
- -----------------------
Donald Schupak and Director December 13, 1999
/s/ Robert Alan Ezrin Vice Chairman of the Board of
- -----------------------
Robert Alan Ezrin Directors and Director December 13, 1999
/s/ James A. Cannavino
- -----------------------
James A. Cannavino Director December 13, 1999
/s/ Jason R. Roberts
- -----------------------
Jason R. Roberts Director December 13, 1999
/s/ Michael A. Webster
- -----------------------
Michael A. Webster Director December 13, 1999
</TABLE>
<PAGE>
LEARN2.COM, INC.
FORM S-8
REGISTRATION STATEMENT
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
<S> <C>
4.8 1999 Stock Option Plan of Learn2.com, Inc.
4.9 1995 ViaGrafix Stock Option Plan
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 Ernst & Young 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 4.8
1999 STOCK OPTION PLAN
OF
LEARN2.COM, INC.
.........................
1. PURPOSE OF THE PLAN
The purpose of the Learn2.com, Inc. 1999 Stock Option Plan
(the "Plan") is to further the interests of Learn2.com, Inc., a Delaware
corporation (the "Company"), and its stockholders by providing long-term
incentives to those officers and key employees of the Company and its
Subsidiaries, if any, who are largely responsible for the management, growth and
protection of the business of the Company and its Subsidiaries by granting them
options to acquire the common stock, par value $.01 per share (the "Common
Stock"), of the Company.
2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined
as set forth below:
a. "Change of Control" shall mean that (i) any "person" (as such term
is defined within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), other than any person who as of the
date hereof beneficially owns (as defined in Rule 13d-3 of the Exchange Act)
directly or indirectly 10% 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 (the "Board"), 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, (iii) the stockholders of
the Company approve a merger or consolidation of the Company with any other
corporation (or other entity), other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; (iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company; or (v) 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 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. "Code" means the Internal Revenue Code of 1986, as amended.
c. A "Continuing Director" means, as of any date of determination, any
member of the Board of the Company who (i) was a member of such Board on the
effective date of the Plan or (ii) was nominated for election or elected to such
Board with the affirmative vote of a majority of the continuing directors who
were members of such Board at the time of such nomination or election.
d. "Fair Market Value" means, with the fair market value of Common
Stock determined by such methods or procedures as shall be established from time
to time by the Committee in good faith and in accordance with applicable law.
Unless otherwise determined by the Committee, the Fair Market Value of Common
Stock shall mean the mean of the high and
<PAGE>
low sales prices of Common Stock on the relevant date as reported on the stock
exchange or market on which the Common Stock is primarily traded, or if no sale
is made on such date, then the Fair Market Value is the weighted average of the
mean of the high and low sales prices of the Common Stock on the next preceding
day and the next succeeding day on which such sales were made, as reported on
the stock exchange or market on which the Common Stock is primarily traded.
e. "ISO" means any Option designated as an incentive stock option
within the meaning of Section 422 of the Code.
f. "Option" means a right granted to a Participant (as defined below)
pursuant to Section 6(b) to purchase Common Stock at a specified price during
specified time periods. An Option may be either an ISO or a nonstatutory Option
(an Option not designated as an ISO).
g. "Option Agreement" shall mean the written agreement, instrument or
document evidencing an Option.
h. "Subsidiary" shall mean any subsidiary corporation (within the
meaning of Section 424(f) of the Code) of the Company.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation Committee
of the Board (the "Committee"). No member of the Committee while serving as such
shall be eligible for participation in the Plan. Any action of the Committee in
administering the Plan shall be final, conclusive and binding on all persons,
including the Company, its Subsidiaries, employees, Participants, persons
claiming rights from or through Participants and stockholders of the Company.
Subject to the provisions of the Plan, the Committee shall
have full and final authority in its discretion (a) to select the officers and
key employees who will receive Options pursuant to the Plan ("Participants"),
(b) to determine the number of shares of Common Stock for which an Option will
be granted and the terms and conditions of any Option granted under the Plan
(including, but not limited to, restrictions as to transferability or
forfeiture, exercisability or settlement of an Option and waivers or
accelerations thereof, and waivers of, or modifications to, performance
conditions relating to an Option, based in each case on such considerations as
the Committee shall determine) and all other matters to be determined in
connection with an Option; (c) to correct any defect or supply any omission or
reconcile any inconsistency in the Plan, and to adopt, amend and rescind such
rules and regulations as, in its opinion, may be advisable in the administration
of the Plan; and (d) to make all other determinations as it may deem necessary
or advisable for the administration of the Plan. The Committee may delegate to
officers or managers of the Company or any Subsidiary or to unaffiliated service
providers the authority, subject to such terms as the Committee shall determine,
to perform administrative functions and to perform such other functions as the
Committee may determine, to the extent permitted under Rule 16b-3 of the
Exchange Act, Section 162(m) of the Code and applicable law.
4. PARTICIPATION IN THE PLAN
Participants in the Plan shall be selected by the Committee
from among the officers and key employees of the Company and its Subsidiaries.
5. PLAN LIMITATIONS; SHARES SUBJECT TO THE PLAN
Subject to the provisions of Section 8(a) hereof, the
aggregate number of shares of Common Stock, available for issuance as Options
under the Plan shall not exceed 5,000,000 shares.
<PAGE>
No Option may be granted if the number of shares to which such
Option relates, when added to the number of shares previously issued under the
Plan and the number of shares which may then be acquired pursuant to other
outstanding, unexercised Options, exceeds the number of shares available for
issuance pursuant to the Plan. If any shares subject to an Option are forfeited
or such Option is settled in cash or otherwise terminates for any reason
whatsoever without an actual distribution of shares to the Participant, any
shares counted against the number of shares available for issuance pursuant to
the Plan with respect to such Option shall, to the extent of any such
forfeiture, settlement, or termination, again be available for Options under the
Plan; provided, however, that the Committee may adopt procedures for the
counting of shares relating to any Option to ensure appropriate counting, avoid
double counting, and provide for adjustments in any case in which the number of
shares actually distributed differs from the number of shares previously counted
in connection with such Option.
The maximum number of shares of Common Stock which may be
granted as Options to any Participant in any calendar year shall not exceed
1,000,000 shares.
6. OPTION TERMS AND CONDITIONS
a. GENERAL. Options may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on any Option or
the exercise thereof, at the date of grant or thereafter (subject to Section
8(a)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Options in the event of termination of employment by the
Participant; provided, however, that the Committee shall retain full power to
accelerate or waive any such additional term or condition as it may have
previously imposed. All Options shall be evidenced by an Option Agreement.
b. OPTIONS. The Committee may grant Options to Participants on the
following terms and conditions:
i. Exercise Price. The exercise price of each Option shall be
determined by the Committee at the time the Option is granted, but (except as
provided in Section 7(a)) the exercise price of any Option shall not be less
than the Fair Market Value of the shares covered thereby at the time the Option
is granted.
ii. Time and Method of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part,
whether the exercise price shall be paid in cash or by the surrender at Fair
Market Value of Common Stock, or by any combination of cash and shares of Common
Stock, including, without limitation, cash, Common Stock, other Options, or
other property (including notes or other contractual obligations of Participants
to make payment on a deferred basis, such as through "cashless exercise"
arrangements, to the extent permitted by applicable law), and the methods by
which Common Stock will be delivered or deemed to be delivered to Participants.
iii. Incentive Stock Options. The terms of any Option granted
under the Plan as an ISO shall comply in all respects with the provisions of
Section 422 of the Code, including, but not limited to, the requirement that no
ISO shall be granted more than ten years after the effective date of the Plan.
7. ADDITIONAL PROVISIONS APPLICABLE TO OPTIONS
a. STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE OPTIONS. Options
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution for, any
other Option granted under the Plan or any option or other incentive granted
under any other plan of the Company or any Subsidiary, or any business entity
acquired by the Company or any Subsidiary, or any other right of a Participant
to receive payment from the Company or any Subsidiary. If an Option is granted
in substitution for another Option, the Committee shall require the surrender of
such other Option in consideration for the
<PAGE>
grant of the new Option. Options granted in addition to, or in tandem with,
other Options may be granted either as of the same time as, or a different time
from, the grant of such other Options. The per share exercise price of any
Option:
i. granted in substitution for an outstanding Option shall be
not less than the lesser of (A) the Fair Market Value of a share of Common Stock
at the date such substitute Option is granted or (B) such Fair Market Value at
that date, reduced to reflect the Fair Market Value at that date of the Option
required to be surrendered by the Participant as a condition to receipt of the
substitute Option; or
ii. retroactively granted in tandem with an outstanding
Option, shall not be less than the lesser of the Fair Market Value of a share of
Common Stock at the date of grant of the later Option or at the date of grant of
the earlier Option.
b. EXCHANGE AND BUY OUT PROVISIONS. The Committee may at any time
offer to exchange or buy out any previously granted Option for a payment in
cash, Common Stock, other Options (subject to Section 7(a)), or other property
based on such terms and conditions as the Committee shall determine and
communicate to a Participant at the time that such offer is made.
c. PERFORMANCE CONDITIONS. The right of a Participant to
exercise any Option, and the timing thereof, may be subject to such performance
conditions as may be specified by the Committee.
d. TERM OF OPTIONS. The term of each Option shall, except as
provided herein, be for such period as may be determined by the Committee;
provided, however, that in no event shall the term of any ISO exceed a period of
ten years from the date of its grant (or such shorter period as may be
applicable under Section 422 of the Code).
e. LOAN PROVISIONS. With the consent of the Committee, and
subject at all times to laws and regulations and other binding obligations or
provisions applicable to the Company, the Company may make, guarantee, or
arrange for a loan or loans to a Participant with respect to the exercise of any
Option or other payment in connection with any Option, including the payment by
a Participant of any or all federal, state, or local income or other taxes due
in connection with any Option. Subject to such limitations, the Committee shall
have full authority to decide whether to make a loan or loans hereunder and to
determine the amount, terms, and provisions of any such loan or loans, including
the interest rate to be charged in respect of any such loan or loans, whether
the loan or loans are to be with or without recourse against the borrower, the
terms on which the loan is to be repaid and the conditions, if any, under which
the loan or loans may be forgiven.
f. CHANGE OF CONTROL. In the event of a Change of Control of the
Company, all Options granted under the Plan that are still outstanding and not
yet vested or exercisable shall become immediately 100% vested in each
Participant, as of the first date that the definition of Change of Control has
been fulfilled, and shall be exercisable for the remaining duration of the
Option. All Options that are exercisable as of the effective date of the Change
of Control will remain exercisable for the remaining duration of the Option.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; ACCELERATION IN CERTAIN EVENTS
In the event that the Committee shall determine that any stock
dividend, recapitalization, forward split or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase or share exchange, or
other similar corporate transaction or event, affects the Common Stock such that
an adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Plan, then the Committee shall, in such manner
as it may deem equitable, adjust any or all of (i) the number and kind of shares
of Common Stock which may thereafter be issued in connection with Options, (ii)
the number and kind of shares of Common Stock issuable in respect of outstanding
Options, (iii) the aggregate number and kind of shares of Common Stock available
under the Plan, and (iv) the exercise price
<PAGE>
relating to any Option or, if deemed appropriate, make provision for a cash
payment with respect to any outstanding Option; provided, however, in each case,
that no adjustment shall be made which would cause the Plan to violate Section
422(b)(1) of the Code with respect to ISOs or would adversely affect the status
of any Option as "performance-based compensation" under Section 162(m) of the
Code.
9. GENERAL PROVISIONS
a. CHANGES TO THE PLAN AND OPTIONS. The Board may amend, alter,
suspend, discontinue, or terminate the Plan or the Committee's authority to
grant Options under the Plan without the consent of the Company's stockholders
or Participants, except that any such amendment, alteration, suspension,
discontinuation, or termination shall be subject to the approval of the
Company's stockholders within one year after such Board action if such
stockholder approval is required by any federal or state law or regulation or
the rules of any stock exchange or automated quotation system on which the
Common Stock may then be listed or quoted, and the Board may otherwise, in its
discretion, determine to submit other such changes to the Plan to the
stockholders for approval; provided, however, that without the consent of an
affected Participant, no amendment, alteration, suspension, discontinuation, or
termination of the Plan may materially and adversely affect the rights of such
Participant under any Option theretofore granted and any Option Agreement
relating thereto. The Committee may waive any conditions or rights under, or
amend, alter, suspend, discontinue, or terminate, any Option theretofore granted
and any Option Agreement relating thereto; provided, however, that without the
consent of an affected Participant, no such amendment, alteration, suspension,
discontinuation, or termination of any Option may materially and adversely
affect the rights of such Participant under such Option.
The foregoing notwithstanding, any performance condition
specified in connection with an Option shall not be deemed a fixed contractual
term, but shall remain subject to adjustment by the Committee, in its discretion
at any time in view of the Committee's assessment of the Company's strategy,
performance of comparable companies, and other circumstances, except to the
extent that any such adjustment to a performance condition would adversely
affect the status of any Option as "performance-based compensation" under
Section 162(m) of the Code.
Notwithstanding the foregoing, unless approved by the
stockholders of the Company, no amendment will: (i) change the class of persons
eligible to receive Options; (ii) materially increase the benefits accruing to
Participants under the Plan, or (iii) increase the number of shares of Common
Stock subject to the Plan.
b. NO RIGHT TO OPTION OR EMPLOYMENT. No employee or other person
shall have any claim or right to receive an Option under the Plan. Neither the
Plan nor any action taken hereunder shall be construed as giving any employee
any right to be retained in the employ of the Company or any Subsidiary.
c. TAXES. The Company or any Subsidiary is authorized to withhold
from any payment relating to the exercise of an Option under the Plan, including
from any payroll or other payment to a Participant amounts of withholding and
other taxes due in connection with any transaction involving an Option, and to
take such other action as the Committee may deem advisable to enable the Company
and Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Option. This authority shall include
authority to withhold or receive Common Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations.
d. LIMITS ON TRANSFERABILITY; BENEFICIARIES. No Option or other
right or interest of a Participant under the Plan shall be pledged, encumbered,
or hypothecated to, or in favor of, or subject to any lien, obligation, or
liability of such Participants to, any party, other than the Company or any
Subsidiary, or assigned or transferred by such Participant otherwise than by
will or the laws of descent and distribution, and such Options and rights shall
be exercisable during
<PAGE>
the lifetime of the Participant only by the Participant or his or her guardian
or legal representative. Notwithstanding the foregoing, the Committee may, in
its discretion, provide that Options (other than an Option which is an ISO) be
transferable, without consideration, to immediate family members (I.E.,
children, grandchildren or spouse), to trusts for the benefit of such immediate
family members and to partnerships in which such family members are the only
partners. The Committee may attach to such transferability feature such terms
and conditions as it deems advisable.
e. NO RIGHTS TO OPTIONS; NO STOCKHOLDER RIGHTS. No Participant
shall have any claim to be granted any Option under the Plan, and there is no
obligation for uniformity of treatment of Participants. No Option shall confer
on any Participant any of the rights of a stockholder of the Company unless and
until Common Stock is duly issued or transferred to the Participant in
accordance with the terms of the Option.
f. DISCRETION. In exercising, or declining to exercise, any grant
of authority or discretion hereunder, the Committee may consider or ignore such
factors or circumstances and may accord such weight to such factors and
circumstances as the Committee alone and in its sole judgment deems appropriate
and without regard to the affect such exercise, or declining to exercise such
grant of authority or discretion, would have upon the affected Participant, any
other Participant, any employee, the Company, any Subsidiary, any stockholder or
any other person.
g. EFFECTIVE DATE. The effective date of the Plan is June 1,
1999.
<PAGE>
EXHIBIT 4.9
VIAGRAFIX CORPORATION
1995 VIAGRAFIX STOCK OPTION PLAN
--------------------------------
1. PURPOSE: The purpose of this 1995 ViaGrafix Stock Option Plan (the
"Plan") is to encourage employees of ViaGrafix Corporation (the "Company") and
of any present or future parent or subsidiary of the Company (collectively,
"Related Corporations"), and other individuals who render services to the
Company or a Related Corporation, by providing opportunities to Purchase stock
in the Company pursuant to options granted hereunder which qualify as "incentive
stock options" ("ISOs") under Section 422(b) of the Internal Revenue Code of
1986, as amended (the "Code") and options which do not qualify as ISOs
("Non-Qualified Options"). Both ISOs and Non-Qualified Options are referred to
hereafter individually as an "Option" and collectively as "Options". As used
herein, the terms "parent" and "subsidiary" mean "parent corporation" and
"subsidiary corporation", respectively, as those terms are defined in Section
424 of the Code.
2. ADMINISTRATION OF THE PLAN:
A. BOARD ADMINISTRATION: The Plan shall be administered by the Board of
Directors of the Company (the "Board") or by an Administrator appointed by
the Board (the "Administrator"). Hereinafter, all references in this Plan
to the "Administrator" shall mean the Board if no Administrator has been
appointed. Subject to ratification of the grant or authorization of each
Option by the Board (if so required by applicable state law), and subject
to the terms of the Plan, the Administrator shall have the authority to (i)
determine to whom (from among the class of employees eligible under
paragraph 3 to receive ISOs) ISOs shall be granted, and to whom (from among
the class of individuals and entities eligible under paragraph 3 to receive
Non-Qualified Options) Non-Qualified Options may be granted; (ii) determine
the time or times at which Options shall be granted; (iii) determine the
exercise price of shares subject to each Option, which price shall not be
less than the minimum price specified in paragraph 6; (iv) determine
whether each Option granted shall be an ISO or a Non-Qualified Option; (v)
determine (subject to paragraph 7) the time or times when each Option shall
become exercisable and the duration of the exercise period; (vi) extend the
period during which outstanding Options may be exercised; (vii) determine
whether restrictions such as repurchase options are to be imposed on shares
subject to Options and the nature of such restrictions, if any; and (viii)
interpret the Plan and prescribe and rescind rules and regulations relating
to it. If the Administrator determines to issue a Non-Qualified Option, it
shall take whatever actions it deems necessary, under Section 422 of the
Code and the regulations promulgated thereunder, to ensure that such Option
is not treated as an ISO. The interpretation and construction by the
Administrator of any provisions of the Plan or of any Option granted under
it shall be final unless otherwise determined by the Board. The
Administrator may from time to time adopt such rules and regulations for
carrying out the Plan as it d\may deem advisable. No member of the Board or
the Administrator shall be liable for any action or determination made in
good faith with respect to the Plan or any Option granted under it.
B. ADMINISTRATOR ACTIONS: The Administrator shall hold meetings at such
time and places as he may determine. From time to time the Board may remove
the Administrator, (with or without cause) appoint a replacement for the
Administrator, or remove the Administrator and thereafter directly
administer the Plan.
C. GRANT OF OPTIONS TO BOARD MEMBERS: Subject to the provisions of the
first sentence of paragraph 2(A) above, if applicable, Options may be
granted to members of the Board. All grants of Options to members of the
Board shall in all other respects be made in accordance with the provisions
of this Plan applicable to other eligible persons. Consistent with the
provisions of the first sentence of paragraph 2(A) above, members of
<PAGE>
the Board who either (i) are eligible to receive grants of Options pursuant
to the Plan or (ii) have been granted Options may vote on any matters
affecting the administration of the Plan or the grant of any Options
pursuant to the Plan, except that no such member shall act upon the
granting to himself or herself of Options, but any such member may be
counted in determining the existence of a quorum at any meeting of the
Board during which action is taken with respect to the granting to such
member of Options.
3. ELIGIBLE EMPLOYEES AND OTHERS: ISOs may be granted only to employees
of the Company or any Related Corporation. Non-Qualified Options may be granted
to any employee, officer or director (whether or not also an employee) or
consultant of the Company or any Related Corporation. The Administrator may take
into consideration a recipient's individual circumstances in determining whether
to grant an ISO or a Non-Qualified Option. The granting of any Option to any
individual or entity shall neither entitle that individual or entity to, nor
disqualify such individual or entity from, participation in any other grant of
Options.
4. STOCK: The stock subject to Options shall be authorized but unissued
shares of Common Stock of the Company, par value $0.001 per share (the "Common
Stock"), or shares of Common Stock reacquired by the Company in any manner. The
aggregate number of shares which may be issued pursuant to the Plan is 187,500
subject to adjustment as provided in paragraph 13. If any Option granted under
the Plan shall expire or terminate for any reason without having been exercised
in full or shall cease for any reason to be exercisable in whole or in part or
shall be repurchased by the Company, the shares subject to such Option shall
again be available for grants of Options under the Plan.
5. GRANTING OF OPTIONS: Options may be granted under the Plan at any time
after January 1, 1995 and prior to January 1, 2005. The date of grant of an
Option under the Plan will be the date specified by the Administrator at the
time it grants the Option; provided, however, that such date shall not be prior
to the date on which the Administrator acts to approve the grant. (Options
granted under the Plan are intended to qualify as performance-based compensation
to the extent required under proposed Treasury Regulation 1.162-27.)
6. MINIMUM OPTION PRICE: ISO LIMITATIONS:
A. PRICE FOR NON-QUALIFIED OPTIONS: The exercise price per share specified
in the agreement relating to each Non-Qualified Option granted under the
Plan shall in no event be less than the minimum legal consideration
required therefore under the laws of any jurisdiction in which the Company
or its successors in interest may be organized.
B. PRICE FOR ISOS: The exercise price per share specified in the agreement
relating to each ISO granted under the plan shall not be less than the fair
market value per share of Common Stock on the date of such grant. In the
case of an ISO to be granted to any employee owing stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Related Corporation, the price per share
specified in the agreement relating to such ISO shall not be less than one
hundred ten percent (110%) of the fair market value per share of Common
Stock on the date of grant. For purposes of determining stock ownership
under this paragraph, the rules of Section 424(d) of the Code shall apply.
C. $100,000 Annual Limitation on ISO Vesting: Each eligible employee may be
granted Options treated as ISOs only to the extent that, in the aggregate
under this Plan and all incentive stock option plans of the Company and any
Related Corporation, ISOs do not become exercisable for the first time by
such employee during any calendar year with respect to stock having a fair
market value (determined at the time the ISOs were granted) in excess of
$100,000. The Company intends to designate any Options granted in excess of
such limitation as Non-Qualified Options.
D. DETERMINATION OF FAIR MARKET VALUE: If, at the time an Option is granted
under the Plan, the Company's Common Stock is publicly traded, "fair market
value" shall be
<PAGE>
determined as of the last business day for which the prices or quotes
discussed in this sentence are available prior to the date such Option is
granted and shall mean (i) the average (on that date) of the high and low
prices of the Common Stock on the principal national securities exchange on
which the Common Stock is traded, if the Common Stock is then traded on a
national securities exchange; or (ii) the last reported sale price (on that
date) of the Common Stock on the Nasdaq National Market, if the Common
Stock is not then traded on a national securities exchange; or (iii) the
closing bid price (or average of bid prices) last quoted (on that date) by
an established quotation service for over-the-counter securities, if the
Common Stock is not reported on the Nasdaq National Market. If the Common
Stock is not publicly traded at the time an Option is granted under the
Plan, "fair market value" shall be deemed to be the fair value of the
Common Stock as determined by the Board of Directors after taking into
consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
7. OPTION DURATION: Subject to earlier termination as provided in
paragraphs 9 and 10 or in the agreement relating to such Option, each Option
shall expire on the date specified by the Administrator, but not more than (i)
ten years from the date of grant in the case of Options generally and (ii) five
years from the date of grant in the case of ISOs granted to an employee owning
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, as determined
under paragraph 6(B). Subject to earlier termination as provided in paragraphs 9
and 10, the term of each ISO shall be the term set forth in the original
instrument granting such ISO, except with respect to any part of such ISO that
is converted into a NON-Qualified Option pursuant to paragraph 16.
8. EXERCISE OF OPTION: Subject to the provisions of paragraphs 9 through
12, each Option granted under the Plan shall be exercisable as follows:
A. VESTING: The Option shall either be fully exercisable on the date of
grant or shall become exercisable thereafter in such installments at such
time or times as the Administrator may specify.
B. FULL VESTING OF INSTALLMENTS: Once an installment becomes exercisable
it shall remain exercisable until expiration or termination of the Option,
unless otherwise specified by the Administrator.
C. PARTIAL EXERCISE: Each Option or installment may be exercised only
between the l5th day of the preceding December through the 3 1st day of
January of the year of the option each year for up to the total number of
shares with respect to which it is then exercisable.
D. ACCELERATION OF VESTING: The Administrator shall have the right to
accelerate the date on which any installment of any Option becomes
exercisable; provided that the Administrator shall not, without the consent
of an optionee, accelerate the permitted exercise date of any installment
of any Option granted to any employee as an ISO (and not previously
converted into a Non-Qualified Option pursuant to paragraph 16) if such
acceleration would violate the annual vesting limitation contained in
Section 422(d) of the Code, as described in paragraph 6(C).
9. TERMINATION OF EMPLOYMENT: Unless otherwise specified in the agreement
relating to such ISO, if an ISO optionee ceases to be employed by the Company
and all Related Corporations other than by reason of death or disability as
defined in paragraph 10, no further installments of his or her ISOs shall become
exercisable, and his or her ISOs shall terminate after the date of termination
of his or her employment, but in no event later than on their specified
expiration dates, except to the extent that such ISOs (or unexercised
installments thereof) have been converted into Non-Qualified Options pursuant to
paragraph 16. For purposes of this paragraph 9, employment shall be considered
as continuing uninterrupted during any bona fide leave of absence (such as those
attributable to illness, military obligations or governmental
<PAGE>
service) provided that the period of such leave does not exceed 90 days or, if
longer, any period during which such optionee's right to reemployment is
guaranteed by statute. A bona fide leave of absence with the written approval of
the Administrator shall not be considered an interruption of employment under
this paragraph 9, provided that such written approval contractually obligates
the Company or any Related Corporation to continue the employment of the
optionee after the approved period of absence. ISOs granted under the Plan shall
not be affected by any change of employment within or among the Company and
Related Corporations, so long as the optionee continues to be an employee of the
Company or any Related Corporation. Nothing in the Plan shall be deemed to give
any optionee the right to be retained in employment or other service by the
Company or any Related Corporation for any period time.
10. DEATH; DISABILITY:
A. DEATH: If an ISO optionee ceases to be employed by the Company and all
Related Corporations by reason of his or her death, any ISO owned by such
optionee may be exercised, to the extent otherwise exercisable on the date
of death, by the estate, personal representative or beneficiary who has
acquired the ISO by will or by the laws of descent and distribution, until
the earlier of (i) the specified expiration date of the ISO or (ii) 180
days from the date of the optionee's death.
B. DISABILITY: If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of his or her disability, such
optionee shall have the right to exercise any ISO held by him or her on the
date of shares with respect to which he or she could have exercised it on
that date, until the earlier of (i) the specified expiration date of the
ISO or (ii) 180 days from the date of the termination of the optionee's
employment. For the purposes of the Plan, the term "disability" shall mean
"permanent and total disability" as defined in Section 22(e) (3) of the
Code or any successor statute.
11. ASSIGNABILITY: No Option shall be assignable or transferable by the
optionee except by will, by the laws of descent and distribution. Except as set
forth in the preceding sentence, during the lifetime of an optionee each Option
shall be exercisable only by such optionee.
12. TERMS AND CONDITIONS OF OPTIONS: Options shall be evidenced by
instruments (which need not be identical) in such forms as the Administrator may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Administrator deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. The Administrator may specify that any
Non-Qualified Option shall be subject to the restrictions set forth herein with
respect to ISOs, or to such other termination and cancellation provisions as the
Administrator may determine. The Administrator may from time to time confer
authority and responsibility on one or more of its Board of Directors members
and/or one or more officers of the Company to execute and deliver such
instruments. The proper officers of the Company are authorized and directed to
take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.
13. ADJUSTMENTS: Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to such optionee hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such Option:
A. STOCK DIVIDENDS AND STOCK SPLITS: If the shares of Common Stock shall
be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on
its outstanding Common Stock, the number of shares of Common Stock
deliverable upon the exercise of Options shall be appropriately increased
or decreased proportionately, and appropriate adjustments shall be made in
the purchase price per share to reflect such subdivision, combination or
stock dividend.
<PAGE>
B. CONSOLIDATIONS OR MERGERS: If the Company is to be consolidated with
or acquired by another entity in a merger, sale of all or substantially all
of the Company's assets or otherwise (an "Acquisition"), the Administrator
or the board of directors of any entity assuming the obligations of the
Company hereunder (the "Successor Board"), shall, as to outstanding
Options, either (i) make appropriate provision for the continuation of such
Options by substituting on an equitable basis for the shares then subject
to such Options either (a) the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Acquisition, (b)
shares of stock of the surviving corporation or (c) such other securities
as the Successor Board deems appropriate, the fair market value of which
shall not materially exceed the fair market value of the shares of Common
Stock subject to such Options immediately prior to the Acquisition; or (ii)
upon written notice to the Optionees, provide that all Options must be
exercised, to the extent then exercisable, within a specified number of
days of the date of such notice, at the end of which period the Options
shall terminate; or (iii) terminate all Options in exchange for a cash
payment equal to the excess of the fair market value of the shares subject
to such Options (to the extent then exercisable) over the exercise price
thereof.
C. RECAPITALIZATION OR REORGANIZATION: In the event of a recapitalization
or reorganization of the Company (other than a transaction described in
subparagraph B above) pursuant to which securities of the Company or of
another corporation are issued with respect to the outstanding shares of
Common Stock, an optionee upon exercising an Option shall be entitled to
receive for the purchase price paid upon such exercise the securities he or
she would have received if he or she had exercised such Option prior to
such recapitalization or reorganization.
D. MODIFICATION OF ISOS: Notwithstanding the foregoing, any adjustments
made pursuant to subparagraphs A, B or C with respect to ISOs shall be made
only after the Administrator, after consulting with counsel for the
Company, determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in Section 424 of the
Code) or would cause any adverse tax consequences for the holders of such
ISOs. If the Administrator determines that such adjustments made with
respect to ISOs would constitute a modification of such ISOs or would cause
adverse tax consequences to the holders, it may refrain from making such
adjustments.
E. DISSOLUTION OR LIQUIDATION: In the event of the proposed dissolution
or liquidation of the Company, each Option will terminate immediately prior
to the consummation of such proposed action or at such other time and
subject to such other conditions as shall be determined by the
Administrator.
F. ISSUANCES OF SECURITIES: Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to Options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the Company.
G. FRACTIONAL SHARES: No fractional shares shall be issued under the Plan
and the optionee shall receive from the Company cash in lieu of such
fractional shares.
H. ADJUSTMENTS: Upon the happening of any of the events described in
subparagraphs A, B or C above, the class and aggregate number of shares set
forth in paragraph 4 hereof that are subject to Options which previously
have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such
subparagraphs. The Administrator or the Successor Board shall determine the
specific adjustments to be made under this paragraph 13 and, subject to
paragraph 2, its determination shall be conclusive.
14. MEANS OF EXERCISING OPTIONS: An Option (or any part or installment
thereof) shall be exercised by giving written notice to the Company at its
principal office address, or to such
<PAGE>
transfer agent as the Company shall designate between December 15 of the
preceding year, and January 31 of the Option year. Such notice shall identify
the Option being exercised and specify the number of shares as to which such
Option is being exercised, accompanied by full payment of the purchase price
therefore either (a) in United States dollars in cash or by check, (b) at the
discretion of the Administrator, through delivery of shares of Common Stock
having a fair market value equal as of the date of the exercise to the cash
exercise price of the Option, (c) at the discretion of the Administrator, by
delivery of the optionee's personal recourse note bearing interest payable not
less than annually at no less than 100% of the lowest applicable Federal rate,
as defined in Section 1274(d) of the Code, (d) at the discretion of the
Administrator and consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of the Common Stock acquired upon exercise of the Option and an authorization to
the broker or selling agent to pay that amount to the Company, which sale shall
be at the participant's direction at the time of exercise, or (e) at the
discretion of the Administrator, by any combination of (a), (b), (c) and (d)
above. If the Administrator exercises its discretion to permit payment of the
exercise price of an ISO by means of the methods set forth in clauses (b), (c),
(d) or (e) of the preceding sentence, such discretion shall be exercised in
writing at the time of the grant of the ISO in question. The holder of a Option
shall not have the rights of a shareholder with respect to the shares covered by
his Option until the date of issuance of a stock certificate to such holder for
such shares. Except as expressly provided above in paragraph 13 with respect to
changes in capitalization and stock dividends, no adjustment shall be made for
dividends or similar rights for which the record date is before the date such
stock certificate is issued.
15. TERM AND AMENDMENT OF PLAN: This Plan was adopted by the Board on
January 26, 1995, subject, with respect to the validation of ISOs granted under
the Plan, to approval of the Plan by the stockholders of the Company at the next
Meeting of Stockholders or, in lieu thereof, by written consent. If the approval
of stockholders is not obtained prior to January 26, 1996, any grants of ISOs
under the Plan shall expire at the end of the day on January 26, 1996, except as
to Options outstanding on that date. Subject to the provisions of paragraph 5
above, Options may be granted under the Plan prior to the date of stockholder
approval of the Plan. The Board may terminate or amend the Plan in any respect
at any time, except that, without the approval of the stockholders obtained
within 12 months before or after the Board adopts a resolution authorizing any
of thee following actions: (a) the total number of shares that may be issued
under the Plan may not be increased (except by adjustment pursuant to paragraph
13); (b) the benefits accruing to participants under the Plan may not be
materially increased; (c) the requirements as to eligibility for participation
in the Plan may not be materially modified; (d) the provisions of paragraph 3
regarding eligibility for grants of ISOs may not be modified; (e) the provisions
of paragraph 6(B) regarding the exercise price at which shares may be offered
pursuant to ISOs may not be modified (except by adjustment pursuant to Paragraph
13); (f) the expiration date of the Plan may not be extended. Except as
otherwise provided in this paragraph 15, in no event may action of the Board or
stockholders alter or impair the rights of an optionee, without such optionee's
consent, under any Option previously granted to such optionee.
16. CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS: The Administrator, at
the written request or with the written consent of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's ISOs
(or any installments or portions of installments thereof) that have not been
exercised on the date of conversion into Non-Qualified Options at any time prior
to the expiration of such ISOs, regardless of whether the optionee is an
employee of the Company or a Related Corporation at the time of such conversion.
Such actions may include, but shall not be limited to, extending the exercise
period or reducing the exercise price of the appropriate installments of such
ISOs. At the time of such conversion, the Administrator (with the consent of the
optionee) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Administrator in its discretion may determine,
provided that such conditions shall not be inconsistent with this Plan. Nothing
in the Plan shall be deemed to give any optionee the right to have such
optionee's ISOs; converted into NonQualified Options, and no such conversion
shall occur until and unless the Administrator takes appropriate action.
<PAGE>
17. APPLICATION OF FUNDS: The proceeds received by the Company from the
sale of shares pursuant to Options granted under the Plan shall be used for
general corporate purposes.
18. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION: By accepting an ISO
granted under the Plan, each optionee agrees to notify the Company in writing
immediately after such optionee makes a Disqualifying Disposition (as described
in Sections 421, 422 and 424 of the Code and regulations thereunder) of any
stock acquired pursuant to the exercise of ISOs granted under the Plan. A
Disqualifying Disposition is generally any disposition occurring on or before
the later of (a) the date two years following the date the ISO was granted, or
(b) the date on year following the date the ISO was exercised.
19. WITHHOLDING OF ADDITIONAL INCOME TAXES: Upon the exercise of a
NonQualified Option, the making of a Disqualifying Disposition (as defined in
paragraph 18), the vesting or transfer of restricted stock or securities
acquired on the exercise of a Option hereunder, or the making of a distribution
or other payment with respect to such stock or securities, the Company may
withhold taxes in respect of amounts that constitute compensation includable in
gross income. The Administrator in its discretion may condition (i) the exercise
of an Option, or (ii) the vesting or transferability of restricted stock or
securities acquired by exercising an Option, on the optionee's making
satisfactory arrangement for such withholding. Such arrangement may include
payment by the optionee in cash or by check of the amount of the withholding
taxes or, at the discretion of the Administrator, by the optionee's delivery of
previously held shares of Common Stock or the withholding from the shares of
Common Stock otherwise deliverable upon exercise of a Option shares having an
aggregate fair market value equal to the amount of such withholding taxes.
20. GOVERNMENTAL REGULATION: The Company's obligation to sell and deliver
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
send tax information statements to employees and former employees that exercise
ISOs under the Plan, and the Company may be required to file tax information
returns reporting the income received by optionees in connection with the Plan.
21. GOVERNING LAW: the validity and construction of the Plan and the
instruments evidencing Options shall be governed by the laws of (State), or the
laws of any jurisdiction in which the Company or its successors in interest may
be organized.
<PAGE>
EXHIBIT 5.1
December 13, 1999
Learn2.com, Inc.
1311 Mamaroneck Avenue
White Plains, New York 10605
Ladies and Gentlemen:
On the date hereof, Learn2.com, 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 6,264,038 shares
(the "Shares") of common stock, par value $.01 per share, of the Company which
are being offered pursuant to the Company's 1999 Stock Option Plan and the 1995
ViaGrafix Stock Option Plan (the "Plans"). 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.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Company's Restated Certificate of Incorporation as presently in effect,
(ii) its By-Laws as presently in effect, (iii) minutes and other instruments
evidencing actions taken by its directors and stockholders, (iv) the Plans 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 genuineness of all signatures 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 provided in the next sentence, we express no opinion as to
the laws of any jurisdiction other than the laws of the State of New York and
the federal laws of the United States of America. To the extent that matters
concerning the Delaware General Corporation Law are involved in the opinions
expressed below our opinions are based solely upon our reasonable familiarity
with the Delaware General Corporation Law and based on our reading of standard
published compilations of such laws. We express no opinion as to the application
of the securities or "Blue Sky" laws of any state, including the State of
Delaware and the State of New York, to the offer and/or sale of the Shares.
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 will be issued pursuant to the Plans 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, when issued in
accordance with the terms set forth in the Plans, will be, legally and validly
issued, fully paid and nonassessable.
<PAGE>
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 which relate to
the offer and sale of Shares which is the subject of this opinion.
This opinion is as of the date hereof and we undertake no obligation to
advise you of any change in 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,
SWIDLER BERLIN SHEREFF FRIEDMAN, LLP
SBSF:GA:JSH:RMF:CJS
<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 December31, 1998 Annual
Report on Form 10-K/A of 7th Level, Inc. (currentlyLearn2.com, Inc.) and our
report, dated February 7, 1997, related to the supplementary consolidated
statements of operations, stockholders' equity and cash flows of Learn2.com,
Inc. (formerly known as 7th Level, Inc.) and subsidiaries for the year ended
December 31, 1996, before restatement for the pooling of interests transaction
discussed in note 1 for the supplementary consolidated financial statements,
which report appears in the Current Report on Form 8-K of Learn2.com, Inc. dated
November 9, 1999.
/s/ KPMG LLP
------------------------------
KPMG LLP
Dallas, Texas
December 13, 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 Learn2, Inc. (formerly known as 7thStreet.com, Inc. and 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
December 10, 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 on the
supplementary consolidated financial statements dated November 2, 1999 included
in Learn2.com, Inc.'s (formerly known as 7th Level, Inc.) Form 8-K for the years
ended December 31, 1998 and 1997 and to all references to our Firm included in
this registration statement filed on this Form S-8, registering 6,264,038 shares
of Learn2.com, Inc.'s common stock.
/s/ ARTHUR ANDERSEN LLP
------------------------------
ARTHUR ANDERSEN LLP
New York, New York
December 13, 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
June 28, 1999 and to all references to our Firm included in this registration
statement. 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 is no longer appropriate since restated financial statements have been
presented giving effect to the business combination with Panmedia Corporation
accounted for as a pooling-of-interests.
/s/ ARTHUR ANDERSEN LLP
------------------------------
ARTHUR ANDERSEN LLP
New York, New York
December 13, 1999
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the ViaGrafix Corporation 1995 Stock Option
Plan of our report dated March 19, 1999, with respect to the consolidated
financial statements and schedule of ViaGrafix Corporation, for the year ended
December 31, 1998 included in Learn2.com, Inc.'s Current Report on Form 8-K
dated November 12, 1999, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
------------------------------
ERNST & YOUNG LLP
Tulsa, Oklahoma
December 13, 1999
