Option Grant and Exercise Terms
Table of Contents
Risks Related to Our Stock Ownership
Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable, although we have
announced plans to modify some of these provisions over time..
Our charter documents in their current form may discourage, delay or prevent a merger or acquisition that a stockholder may consider favorable because
they:
⚫authorize our board of directors, without stockholder approval, to issue up to 10,000,000 shares of undesignated preferred stock;
•provide for a classified board of directors;
•prohibit our stockholders from acting by written consent;
⚫establish advance notice requirements for proposing matters to be approved by stockholders at stockholder meetings; and
⚫prohibit stockholders from calling a special meeting of stockholders.
We have announced plans to eliminate the classified structure of our board of directors, subject to stockholder approval which may not be forthcoming,
and also to revise the current director election standard, and to permit holders of our stock to call a special meeting of stockholders.
As a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions. Under Delaware law, a corporation may not engage in a
business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the board
of directors has approved the transaction. Our board of directors could rely on Delaware law to prevent or delay an acquisition of us.
In addition, a merger or acquisition may trigger retention payments to certain executive employees under the terms of our Amended and Restated
Executive Severance and Retention Incentive Plan, thereby increasing the cost of such a transaction.
Our stock price is volatile.
The price at which our common stock has traded has fluctuated significantly. The price may continue to be volatile due to a number of factors including
the following, some of which are beyond our control:
⚫variations in our operating results, including our membership acquisition and retention, revenues, operating income, net income, net cash provided by
operating activities and free cash flow;
⚫variations between our actual operating results and the expectations of securities analysts, investors and the financial community;
⚫announcements of developments affecting our business, systems or expansion plans by us or others;
⚫competition, including the introduction of new competitors, their pricing strategies and services;
market volatility in general;
⚫the level of demand for our stock, including the amount of short interest in our stock;
⚫the impact of our current stock repurchase program and any future stock repurchase program we may adopt;
⚫the operating results of our competitors; and
⚫other risks and uncertainties described in these risk factors.
As a result of these and other factors, investors in our common stock may not be able to resell their shares at or above their original purchase price.
Following certain periods of volatility in the market price of our securities, we became the subject of securities litigation. We may experience more such
litigation following future periods of volatility. This type of litigation may result in substantial costs and a diversion of management's attention and resources.
Preparing and forecasting our financial results requires us to make judgments and estimates which may differ materially from actual results.
Given the dynamic nature of our business, and the inherent limitations in predicting the future, forecasts of our revenues, operating margins, net income
and number of paid membership additions and other financial and operating data may differ materially from actual results. Such discrepancies could cause a
decline in the trading price of our common stock. In addition, the preparation of consolidated financial statements in conformity with accounting principles
generally accepted in the United
15View entire presentation