Earthlink 2007 Annual Report Download - page 190

HELIO, INC. and HELIO LLC
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
10. Capitalization (Continued)
of Class A Common Stock outstanding immediately prior to such an event. At December 31, 2007, the Class B Conversion Rate then in effect
was one for one.
Certain events trigger an automatic conversion of Class B Common Stock into Class A Common Stock, such as if a holder of Class B
Common Stock, together with its subsidiaries, ceases to own, directly or indirectly, at least ten percent (10%) of the total outstanding shares (as
defined) and, after written notice from the other holder(s) of Class B Common Stock fails to acquire sufficient additional Class A Common
Stock, Membership Units or Class B Common Stock, as the case may be, within thirty (30) days following receipt of such notice to restore such
holder's percentage ownership of the Total Outstanding Shares to at least ten percent (10%). Upon such an event, the following automatically
occurs:
•
The Class B Common Stock of the party failing to achieve the minimum ownership percentage described above (the "Triggering
Party") shall convert into Class A Common Stock;
• The term of the Class B Directors appointed by the Triggering Party shall end;
•
All rights of the Triggering Party associated with ownership of the Class B Common Stock shall terminate; and,
•
Certain strategic decisions shall be made by the remaining Class B Directors and any Class A Directors as provided under the
Certificate of Incorporation and or any other agreements among the stockholders of Helio, Inc.
In the event of any dissolution, liquidation or winding-up of the affairs of the Company, any assets remaining subsequent to payments or
provision of any debts and other liabilities then outstanding and after making provision for the holders of each series of Preferred Stock, if any,
and according to the terms of the Preferred Stock, shall be divided among and paid ratably to the holders of the shares of Common Stock or on
an as-converted basis.
Upon completion of a public offering of shares of the Company's Common Stock, the Company will receive a number of Membership Units
determined by the Unit Exchange Rate then effect based upon the number of shares of Class A Common Stock sold in such a public offering.
11. Stock Compensation
HELIO, Inc. Equity Incentive Plan
In February 2006, the Company adopted the Amended and Restated Helio, Inc. Equity Incentive Plan, which is an amendment and
restatement of the November 2005 Helio, Inc. Equity Incentive Plan (the "Plan"). The terms of the Plan provide for grants of non-qualified stock
options ("NSOs") and other stock-related awards and performance awards that may be settled in cash, stock or other property. Employees,
officers, directors, outside consultants and service providers are eligible for awards under the Plan. NSOs shall have a term of no more than
10 years from the date of grant and an exercise price of no less than the estimated fair market value per share on the date of grant. Options
granted to an individual who, at the time of grant of such option, owns stock representing more than 10% of the voting power of all classes of
stock of the Company, shall have an exercise price equal to no less than 110% of the fair market per share on the date of grant. The vesting
period for NSOs is generally four years from the date of grant, however, certain employees were issued stock options subject to the Company
achieving future, specific member and Company financial performance
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