<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 5, 1996
REGISTRATION NO. 333-
==========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
THE FOREFRONT GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
<TABLE>
<S> <C>
DELAWARE 76-0365256
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1330 POST OAK BOULEVARD, SUITE 1300
HOUSTON, TEXAS 77056
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
----------------
AMENDED AND RESTATED 1992 STOCK OPTION PLAN
1996 EMPLOYEE STOCK PURCHASE PLAN
1996 NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN
(FULL TITLE OF THE PLANS)
----------------
DAVID SIKORA
PRESIDENT AND CHIEF EXECUTIVE OFFICER
THE FOREFRONT GROUP, INC.
1330 POST OAK BOULEVARD, SUITE 1300
HOUSTON, TEXAS 77056
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(713) 961-1101
(TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
--------------
Copies to:
Jeffrey L. Wade, Esq.
Andrews & Kurth L.L.P.
2170 Buckthorne Place, Suite 150
The Woodlands, Texas 77380
(713) 220-4801
--------------
===============================================================================
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================
PROPOSED
MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stock Options and Common Stock,
par value $0.01 per share 2,141,120 Shares $3.92 - 15.50 $16,397,735.10 $5,657.22
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee. The offering price per share and aggregate offering
price are based upon (a) the weighted average exercise price, pursuant to
Rule 457(h) under the Securities Act of 1933, as amended (the "Act"), for
shares subject to options previously granted under the Registrant's
Amended and Restated 1992 Stock Option Plan and (b) the average of the
high and low prices reported on The Nasdaq National Market, pursuant to
Rule 457(h) of the Act, of the Registrant's Common Stock on June 25,
1996, for shares subject to options or rights available for grant under
the Amended and Restated 1992 Stock Option Plan, the 1996 Employee Stock
Purchase Plan, and 1996 Non-Employee Directors' Stock Option Plan. The
following chart illustrates the calculation of the registration fee:
<TABLE>
<CAPTION>
Type of shares Number of Shares Offering Price Per Share Aggregate Offering Price
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares issuable pursuant to
options outstanding under
the Amended and Restated
1992 Stock Option Plan 1,390,055 $3.92(a) $5,449,015.60
- ------------------------------------------------------------------------------------------------------
Shares issuable upon
exercise of options available
for grant under the
Amended and Restated
1992 Stock Option Plan 56,369 $15.50(b) $873,719.50
- ------------------------------------------------------------------------------------------------------
Shares issuable pursuant to
the 1996 Employee Stock
Purchase Plan 500,000 $15.50(b) $7,750,000.00
------------------------------------------------------------------------------------------------------
Shares issuable upon
exercise of options available
for grant under the 1996
Non-Employee Directors'
Stock Option Plan 150,000 $15.50(b) $2,325,000.00
- ------------------------------------------------------------------------------------------------------
Proposed Maximum
Aggregate Offering Price $16,397,735.10
- ------------------------------------------------------------------------------------------------------
x .000345
- ------------------------------------------------------------------------------------------------------
Registration Fee $5,657.22
- ------------------------------------------------------------------------------------------------------
(a) Weighted average exercise price
(b) Average of the high and low prices reported on the Nasdaq National Market
for the Registrant's Common Stock on June 25, 1996.
======================================================================================================
</TABLE>
2
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The ForeFront Group, Inc. (the "Company") incorporates herein by reference the
following documents as of their respective dates as filed with the Securities
and Exchange Commission (the "Commission"):
(a) The Company's Annual Report on Form 10-KSB for the year ended December
31, 1995;
(b) The Company's Current Report on Form 8-K filed with the Commission on
March 18, 1996;
(c) The Company's Quarterly Report on Form 10-QSB for the period ended
March 31, 1996;
(d) The description of the Company's common stock, par value $0.01 per
share (the "Common Stock"), contained in the Company's Registration Statement on
Form 8-A filed with the Commission on December 15, 1995 pursuant to Section 12
of the Securities Exchange Act of 1934 (the "Exchange Act"), as amended; and
(e) The Company's Current Report on Form 8-K filed with the Commission on
June 27, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 and
15(d) of the Exchange Act after the date of this Registration Statement and
prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all such
securities then remaining unsold shall be deemed to be incorporated by reference
in this Registration Statement and to be a part hereof from the date of filing
such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
The information required by Item 4 is not applicable to this Registration
Statement because the class of securities to be offered is registered under
Section 12 of the Exchange Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The information required by Item 5 is not applicable to this Registration
Statement.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, inter alia, empowers a
Delaware 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 (other than an action by or in the right of the corporation)
by reason of the fact that such 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 or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Similar indemnity is
authorized for such persons against expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement of
any such threatened, pending or completed action or suit if such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, and provided further that (unless a court of
competent jurisdiction otherwise provides) such person shall not have been
adjudged liable to the corporation. Any such indemnification may be made only
as authorized in each specific case upon a determination by the stockholders or
disinterested directors or by independent legal counsel in a written opinion
that indemnification is proper because the indemnitee has met the applicable
standard of conduct.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer,
II-1
<PAGE>
employee or agent of another corporation or enterprise, against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the corporation would otherwise have the
power to indemnify him under Section 145. The Company maintains policies
insuring its officers and directors against certain liabilities for actions
taken in such capacities, including liabilities under the Securities Act of
1933.
Article VI of the Company's Certificate of Incorporation provides for
indemnification of the directors and officers of the Company to the full extent
permitted by law, as now in effect or later amended. Currently, Article VI of
the Company's Certificate of Incorporation limits under certain circumstances
the liability of the Company's directors for a breach of their fiduciary duty as
directors. These provisions do not eliminate the liability of a director (i)
for a breach of the director's duty of loyalty to the Company 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 Delaware General Corporation Law (relating to the declaration of dividends
and purchase or redemption of shares in violation of the Delaware General
Corporation Law) or (iv) for any transaction from which the director derived an
improper personal benefit.
Article VI of the Company's Bylaws provides that the Company shall, to the
maximum extent permitted under Delaware law, indemnify and shall advance
expenses to any person who is or was a party or is threatened to be made a party
to any threatened, pending or completed action, suit, proceeding or claim,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director or officer of the Company or while a director or
officer is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against reasonable expenses (including attorney's fees),
judgments, fines, penalties, amounts paid in settlement and other liabilities
actually and reasonably incurred in connection with such action, suit or
proceeding upon such determination having been made as to such person's good
faith and conduct.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The information required by Item 7 is not applicable to this Registration
Statement.
<TABLE>
<CAPTION>
ITEM 8. EXHIBITS.
<S> <C>
Exhibit
Number Description
------ -----------
5.1 Opinion of General Counsel of the Company, as to the legality of the securities being registered
23.1 Consent of Counsel (included in the opinion filed as Exhibit 5.1 to this Registration Statement)
23.2 Consent of Arthur Andersen LLP
24.1 Power of Attorney (set forth on the signature page contained in Part II of this Registration Statement)
99.1 Registrant's Amended and Restated 1992 Stock Option Plan (incorporated by reference to Exhibit 10.1 to
the Company's Registration Statement on Form SB-2) (Registration No. 33-977898-D)
99.2 Registrant's 1996 Employee Stock Purchase Plan
99.3 Registrant's 1996 Non-Employee Directors' Stock Option Plan
</TABLE>
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-2
<PAGE>
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this 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 this 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 this Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if 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
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 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 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
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<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 of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, Texas, on the 5th day of July, 1996.
THE FOREFRONT GROUP, INC.
By: /s/ David Sikora
------------------
David Sikora
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of The ForeFront Group, Inc. (the "Company") hereby constitutes and
appoints David Sikora and Ernest D. Rapp, and each of them (with full power to
each of them to act alone), his true and lawful attorney-in-fact and agent, with
full power of substitution, for him and on his behalf and in his name, place and
stead, in any and all capacities, to sign, execute and file this Registration
Statement under the Securities Act of 1933, as amended, and any or all
amendments (including, without limitation, post-effective amendments), with all
exhibits and any and all documents required to be filed with respect thereto,
with the Securities and Exchange Commission or any regulatory authority,
granting unto such attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in order to effectuate the same, as fully to all intents
and purposes as he himself might or could do if personally present, hereby
ratifying and confirming all that such attorneys-in-fact and agents, or any of
them, or their substitute or substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ David Sikora President, Chief Executive Officer and July 5, 1996
- ---------------------------------- Director (Principal Executive Officer)
David Sikora
/s/ Ernest D. Rapp Chief Financial Officer (Principal Financial July 5, 1996
- ---------------------------------- and Accounting Officer)
Ernest D. Rapp
/s/ G. Anthony Gorry Chairman of the Board of Directors July 5, 1996
- ----------------------------------
G. Anthony Gorry
/s/ Stephen J. Banks Director July 5, 1996
- ----------------------------------
Stephen J. Banks
/s/ Terry Ward Director July 5, 1996
- ----------------------------------
Terry Ward
/s/ Grant Dove Director July 5, 1996
- ----------------------------------
Grant Dove
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<C> <S>
5.1 Opinion of General Counsel of the Company, as to the legality of the securities being registered
23.1 Consent of Counsel (included in the opinion filed as Exhibit 5.1 to this Registration Statement)
23.2 Consent of Arthur Andersen LLP
24.1 Power of Attorney (set forth on the signature page contained in Part II of this Registration Statement)
99.1 Registrant's Amended and Restated 1992 Stock Option Plan (incorporated by reference to Exhibit 10.1 to
the Company's Registration Statement on Form SB-2) (Registration No. 33-977898-D)
99.2 Registrant's 1996 Employee Stock Purchase Plan
99.3 Registrant's 1996 Non-Employee Directors' Stock Option Plan
</TABLE>
II-5
<PAGE>
EXHIBIT 5.1
July 5, 1996
The ForeFront Group, Inc.
1330 Post Oak Boulevard , Suite 1300
Houston, Texas 77056
Gentlemen:
I have acted as counsel to The ForeFront Group, Inc., a Delaware
corporation (the "Company") in connection with the Company's Registration
Statement on Form S-8 (the "Registration Statement"), relating to the
registration under the Securities Act of 1933, as amended, of the issuance of
2,141,120 shares of Common Stock, par value $0.01 per share (the "Common
Stock"), of the Company (the "Shares") pursuant to the Company's Amended and
Restated 1992 Stock Option Plan, the 1996 Employee Stock Purchase Plan, and the
1996 Non-Employee Directors' Stock Option Plan (together, the "Plans").
As the basis for the opinions hereinafter expressed, I have examined such
corporate records and documents, certificates of corporate and public officials
and such other instruments as I have deemed necessary for the purposes of the
opinions contained herein. As to all matters of fact material to such opinions,
I have relied upon the representations of officers of the Company. I have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, and the conformity with the original documents of
all documents submitted to me as copies.
Based upon the foregoing and having due regard for such legal
considerations as I deem relevant, I am of the opinion that the Shares have
been duly authorized, and that the Shares when sold and issued in accordance
with the Plans or the outstanding option grants and the Registration Statement,
will be validly issued, fully paid and nonassessable.
I hereby consent to the inclusion of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Jeffrey R. Harder
General Counsel
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT
PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-8 of our report dated January
26, 1996 (except with respect to the matter discussed in Note 8 of our report,
as to which the date is March 8, 1996) included in the Annual Report on Form 10-
KSB of The ForeFront Group, Inc. for the year ended December 31, 1995, and to
all references to our firm included in this Registration Statement.
Arthur Andersen
Houston, Texas
July 3, 1996
<PAGE>
EXHIBIT 99.2
THE FOREFRONT GROUP, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE.
(a) The purpose of The ForeFront Group, Inc. 1996 Employee Stock Purchase
Plan (the "Plan") is to provide a means by which circumstances of The ForeFront
Group, Inc., a Delaware corporation (the "Company"), and its "Affiliates", (as
defined in subparagraph 1(b)), which are designated as provided in subparagraph
2(b), may be given an opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent corporation
or subsidiary corporation of the Company, as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
(the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of its
employees, to secure and retain the services of new employees, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company.
(d) The Company intends that the rights to purchase stock of the Company
granted under the Plan be considered options issued under an "employee stock
purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the "Board")
of the Company unless and until the Board delegates administration of the Plan
to a committee, as provided in Subparagraph 2(c). Whether or not the Board has
delegated administration of the Plan to a committee, the Board shall have the
final power to determine all questions of policy and expediency that may arise
in the administration of the Plan.
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(i) to determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such
rights (which need not be identical);
(ii) to designate from time to time which Affiliates of the Company
shall be eligible to participate in the Plan;
(iii) to construe and interpret the Plan and rights granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct
any defect, omission or inconsistency in the Plan, in a manner and to
the extent it shall deem necessary or expedient to make the Plan fully
effective;
(iv) to amend the Plan as provided in paragraph 13; and
(v) generally, to exercise such powers and to perform such acts as
the Board deems necessary, or expedient to promote the best interests of
the Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration of the Plan is delegated to the Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, subject,
<PAGE>
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. The Board may abolish the
Committee at any time and revest in the Board the administrative duties of the
Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to rights granted under
the Plan shall not exceed in the aggregate five hundred thousand (500,000)
shares of the Company's common stock (the "Common Stock"). If any right granted
under the Plan shall for any reason terminate without having been exercised, the
Common Stock not purchased under such right shall again become available for the
Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
The Board or the Committee may from time to time grant or provide for the
grant of rights to purchase Common Stock of the Company under the Plan to
eligible employees (an "Offering") on a date or dates (the "Offering Date(s)")
selected by the Board or the Committee. Each Offering shall be in such form and
shall contain such terms and conditions as the Board or the Committee shall
deem appropriate. If an employee has more than one right outstanding under the
Plan, unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices) will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised. The provisions of
separate Offerings need not be identical, but each Offering shall include
(through incorporation of the provisions of this Plan by reference in the
Offering or otherwise) the substance of the provisions contained in paragraphs 5
through 8, inclusive.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as the Board
or the Committee may designate as provided in subparagraph 2(b), to employees of
any Affiliate of the Company. Except as provided in subparagraph 5(b), an
employee of the Company or any Affiliate shall not be eligible to be granted
rights under the Plan, unless, on the Offering Date, such employee has been in
the employ of the Company or any Affiliate for such continuous period preceding
such grant as the Board or the Committee may require, but in no event shall the
required period of continuous employment be equal to or greater than two (2)
years. In addition, unless otherwise determined by the Board or the Committee
and set forth in the terms of the applicable Offering, no employee of the
Company or any Affiliate shall be eligible to be granted rights under the Plan,
unless, on the Offering Date, such employee's customary employment with the
Company or such Affiliate is at least 20 hours per week, and at least five (5)
months per calendar year.
(b) The Board or the Committee may provide that, each person who, during
the course of an Offering first becomes an eligible employee of the Company or
designated Affiliate will, on a date or dates specified in the Offering, which
coincides with the day on which such person becomes an eligible employee occurs
thereafter, receive a right under that Offering, which right shall thereafter be
deemed to be a part of that Offering. Such right shall have the same
characteristics as any rights originally granted under that Offering, as
described herein, except that:
(i) the date on which such right is granted shall be the "Offering Date"
of such right for all purposes, including determination of the exercise price of
such right;
(ii) the Offering Period for such right shall begin on its Offering Date
and end simultaneously with the end of such Offering; and
<PAGE>
(iii) the Board or the Committee may provide that if such person first
becomes an eligible employee within a specified period of time before the end of
the Offering, he or she will not receive any right under that Offering.
(c) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of an Affiliate. For purposes of
this subparagraph 5(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any employee, and stock which such employee
may purchase under all outstanding rights and options shall be treated as stock
owned by such employee.
(d) An eligible employee may be granted rights under the Plan only if such
rights, together with any other rights granted under "employee stock purchase
plans" of the Company and any Affiliates, as specified by Section 423(b)(8) of
the Code, do not permit such employee's rights to purchase stock of the Company
or any Affiliate to accrue at a rate which exceeds twenty-five thousand dollars
($25,000) of the fair market value of such stock (determined at the time such
rights are granted) for each calendar year in which such rights are outstanding
at any time.
(e) Officers of the Company and any designated Affiliate shall be eligible
to participate in Offerings under the Plan, provided, however, that the Board
may provide in an Offering that certain employees who are highly compensated
employees within the meaning of Section 423(b)(4)(D) of the Code shall not be
eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an Offering
made under the Plan, shall be granted the right to purchase up to the number of
shares of Common Stock of the Company purchasable with a percentage designated
by the Board or the Committee not exceeding fifteen percent (15%) of such
employee's Earnings (as defined in Section 7(a)) during the period which begins
on the Offering Date (or such later date as the Board or the Committee
determines for a particular Offering) and ends on the date stated in the
Offering, which date shall be no more than 27 months after the Offering Date
(the "Offering Period"). In connection with each Offering made under this Plan,
the Board or the Committee shall specify a maximum number of shares which may be
purchased by any employee as well as a maximum aggregate number of shares which
may be purchased by all eligible employees pursuant to such Offering. In
addition, in connection with each Offering which contains more than one
"Purchase Date" (as defined in the Offering), the Board or the Committee may
specify a maximum aggregate number of shares which may be purchased by all
eligible employees on any given Purchase Date under the Offering. If the
aggregate purchase of shares upon exercise of rights granted under the Offering
would exceed any such maximum aggregate number, the Board or the Committee shall
make a pro rata allocation of the shares available in as nearly a uniform manner
as shall be practicable and as it shall deem to be equitable.
(b) The purchase price of stock acquired pursuant to rights granted under
the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Purchase Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in an Offering by
delivering a participation agreement to the Company within the time specified in
the Offering, in such form as the Company provides. Each such agreement shall
authorize payroll deductions of up to the maximum percentage specified by the
Board or the Committee of such employee's "Earnings" (as herinafter defined)
during the Offering Period. "Earnings" is defined as the total compensation
paid to an employee, including all salary, wages (including amounts elected to
be deferred by the employee, that would otherwise have been paid, under any cash
or deferred arrangement established by the Company), overtime pay, commissions,
bonuses, and other remuneration paid directly to the employee, but excluding
profit sharing,
<PAGE>
the cost of employee benefits paid for the Company, education or
tuition reimbursements, imputed income arising under any Company group insurance
or benefit program, traveling expenses, business and moving expense
reimbursements, income received in connection with stock options, contributions
made by the Company under any employee benefit plan, and similar items of
compensation. The payroll deductions made for each participant shall be credited
to an account for such participant under the Plan and shall be deposited with
the general funds of the Company. A participant may reduce, increase or begin
such payroll deductions after the beginning of any Offering Period only as
provided for in the Offering. A participant may make additional payments into
his or her account only if specifically provided for in the Offering and only if
the participant has not had the maximum amount withheld during the Offering
Period.
(b) At any time during an Offering Period, a participant may terminate his
or her payroll deductions under the Plan and may withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering Period except as provided by the Board or the Committee in the
Offering. Upon such withdrawal from the Offering by a participant, the Company
shall distribute to such participant all of his or her accumulated payroll
deductions (reduced to the extent, if any, such deductions have been used to
acquire stock for the participant) under the Offering, without interest, and
such participant's interest in that Offering shall be automatically terminated.
A participant's withdrawal from an Offering will have no effect upon such
participant's eligibility to participate in any other Offerings under the Plan
but such participant will be required to deliver a new participation agreement
in order to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall terminate
immediately upon cessation of any participating employee's employment with the
Company and any designated Affiliate, for any reason, and the Company shall
distribute to such terminated employee all of his or her accumulated payroll
deductions (reduced to the extent, if any, such deductions have been used to
acquire stock for the terminated employee), under the Offering, without
interest.
(d) Rights granted under the Plan shall not be transferable, and shall be
exercisable only by the person to whom such rights are granted.
8. EXERCISE.
(a) On each Purchase Date, each participant's accumulated payroll
deductions and other additional payments specifically provided for in the
Offering (without any increase for interest) will be applied to the purchase of
whole shares of stock of the Company, up to the maximum number of shares
permitted pursuant to the terms of the Plan and the applicable Offering, at the
purchase price specified in the Offering. No fractional shares shall be issued
upon the exercise of rights granted under the Plan. The amount, if any, of
accumulated payroll deductions remaining in each participant's account after the
purchase of shares which is less than the amount required to purchase one share
of stock on the final Purchase Date of an Offering shall be held in each such
participant's account for the purchase of shares under the next Offering under
the Plan in which the participant enrolled, unless (i) the participant withdraws
from such next Offering under the Plan in which the participant is enrolled,
(ii) such participant withdraws from such next Offering, as provided in
subparagraph 7(b), or (iii) the participant is no longer eligible to be granted
rights under the Plan, as provided in paragraph 5, in which case such amount
shall be distributed to the participant after said final Purchase Date, without
interest. The amount, if any, of accumulated payroll deductions remaining in
any participant's account after the purchase of shares which is equal to the
amount required to purchase a whole share of stock on the final Purchase Date of
an Offering shall be distributed in full to the participant after such Purchase
Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent unless
the Plan (including rights granted thereunder) is covered by an effective
registration statement pursuant to the Securities Act of 1933, as amended (the
"Securities Act"). If on a Purchase Date of any Offering hereunder the Plan is
not so registered, no rights granted under such Offering shall be exercised on
said Purchase Date and the Purchase Date shall be delayed until the Plan is
subject to such an effective registration statement, except that the Purchase
Date shall not be delayed more than two (2) months and the Purchase Date shall
in no event be more than 27 months from the Offering Date. If on the Purchase
Date of any Offering hereunder, as delayed to the maximum extent permissible,
the Plan is not registered, no rights granted under such Offering shall be
exercised and all payroll deductions accumulated during the Offering Period
(reduced to
<PAGE>
the extent, if any, such deductions have been used to acquire stock)
shall be distributed to the participants, without interest.
9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the rights granted under the
Plan. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such rights unless and until such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted under the Plan
shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until the participant's shareholdings acquired upon
exercise of rights hereunder are recorded in the books of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject to
any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
rights will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding rights.
(b) In the event of: (1) a dissolution or liquidation of the Company; (2)
a merger or consolidation in which the Company is not the surviving corporation;
(3) a reverse merger in which the Company is the surviving corporation but the
shares of the Company's Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise; or (4) any other capital reorganization
in which more than fifty percent (50%) of the shares of the Company entitled to
vote are exchanged, then, as determined by the Board in its sole discretion (i)
any surviving corporation may assume outstanding rights or substitute similar
rights for those under the Plan, (ii) such rights may continue in full force and
effect, or (iii) participants' accumulated payroll deductions may be used to
purchase Common Stock immediately prior to the transaction described above and
the participants' rights under the ongoing Offering terminated.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within 12 months before or after the adoption of the amendment,
where the amendment will:
(i) increase the number of shares reserved for rights under the Plan;
(ii) modify the provisions as to eligibility for participation in the
Plan (to the extent such modification requires stockholder approval in order for
the Plan to obtain employee stock purchase plan
<PAGE>
treatment under Section 423 of the Code or to comply with the requirements of
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended
("Rule 16b-3")); or
(iii) modify the Plan in any way if such modification requires
stockholder approval in order for the Plan to obtain employee stock purchase
plan treatment under Section 423 of the Code or to comply with the requirements
of Rule 16b-3.
It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee stock purchase plans
and/or to bring the Plan and/or rights granted under it into compliance
therewith.
(b) Rights and obligations under any rights granted before amendment of the
Plan shall not be altered or impaired by any amendment of the Plan, except with
the consent of the person to whom such rights were granted or except as
necessary to comply with any laws or governmental regulation.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to a purchase under the
Offering but prior to delivery to him of such shares and cash. In addition, a
participant may file a written designation of a beneficiary who is to receive
any cash from the participant's account under the Plan in the event of such
participant's death prior to the end of an Offering.
(b) Such designation of beneficiary may be changed by the participant at
any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on December 31, 2005. No rights may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom such rights were granted or
except as necessary to comply with any laws or governmental regulation.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no rights
granted under the Plan shall be exercised unless and until the Plan has been
approved by the stockholders of the Company.
<PAGE>
EXHIBIT 99.3
THE FOREFRONT GROUP, INC.
1996 NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN
PURPOSE OF THE PLAN
THE FOREFRONT GROUP, INC. 1996 NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN
(the "Plan") is intended to promote the interests of THE FOREFRONT GROUP, INC.,
a Delaware corporation (the "Company"), and its stockholders by helping to award
and retain highly-qualified independent directors and allowing them to develop a
sense of proprietorship and personal involvement in the development and
financial success of the Company. Accordingly, the Company shall grant to
directors of the Company who are not employees of the Company or any of its
subsidiaries ("Nonemployee Directors") the option ("Option") to purchase shares
of the common stock of the Company ("Stock"), as hereinafter set forth. Options
granted under the Plan shall be options which do not constitute incentive stock
options, within the meaning of section 422(b) of the Internal Revenue Code of
1986, as amended.
II. OPTION AGREEMENTS
Each Option shall be evidenced by a written agreement in the form attached
to the Plan.
III. ELIGIBILITY OF OPTIONEE
Options may be granted only to individuals who are Nonemployee Directors of
the Company. Each Nonemployee Director who is elected to the Board of Directors
of the Company (the "Board") for the first time after the effective date of the
Plan shall receive, as of the date of his or her election and without the
exercise of the discretion of any person or persons, an Option exercisable for
20,000 shares of Stock (subject to adjustment in the same manner as provided in
Paragraph VII hereof with respect to shares of Stock subject to Options then
outstanding). As of the date of the annual meeting of the stockholders of the
Company in each year that the Plan is in effect as provided in Paragraph VI
hereof, each Nonemployee Director then in office who is not then entitled to
receive an Option pursuant to the preceding sentence shall receive, without the
exercise of the discretion of any person or persons, an Option exercisable for
5,000 shares of Stock (subject in each case to adjustment in the same manner as
provided in Paragraph VII hereof with respect to shares of Stock subject to
Options then outstanding). If, as of any date that the Plan is in effect, there
are not sufficient shares of Stock available under the Plan to allow for the
grant to each Nonemployee Director of an Option for the number of shares
provided herein, each Nonemployee Director shall receive an Option for his or
her pro-rata share of the total number of shares of Stock then available under
the Plan. All Options granted under the Plan shall be at the Option price set
forth in Paragraph V hereof and shall be subject to adjustment as provided in
Paragraph VII hereof.
IV. SHARES SUBJECT TO THE PLAN
The aggregate number of shares which may be issued under Options granted
under the Plan shall not exceed 150,000 shares of Stock. Such shares may
consist of authorized but unissued shares of Stock or previously issued shares
of Stock acquired by the Company. Any of such shares which remain unissued and
which are not subject to outstanding Options at the termination of the Plan
shall cease to be subject to the Plan, but, until termination of the Plan, the
Company shall at all times make available a sufficient number of shares to meet
the requirements of the Plan. Should any Option hereunder expire or terminate
prior to its exercise in full, the shares theretofore subject to such Option
which may be issued under the Plan shall be subject to adjustment in the same
manner as provided in Paragraph VII hereof with respect to shares of Stock
subject to Options then outstanding. Exercise of an Option shall result in a
decrease in the number of shares of Stock which may thereafter be available,
both for purposes of the Plan and for sale to any one individual, by the number
of shares as to which the Option is exercised.
<PAGE>
V. OPTION PRICE
The purchase price of Stock issued under each Option shall be the fair
market value of Stock subject to the Option as of the date the Option is
granted. For all purposes under the Plan, the fair market value of a share of
Stock on a particular date shall be equal to the mean of the high and low sales
prices of the Stock (i) reported by the Nasdaq Stock Market on that date or (ii)
if the Stock is listed on a national stock exchange, reported on the stock
exchange composite tape on that date; or, in either case, if no prices are
reported on that date, on the last preceding date on which such prices of the
Stock are so reported. If the Stock is traded over the counter at the time a
determination of its fair market value is required to be made hereunder, its
fair market value shall be deemed to be equal to the average between the
reported high and low or closing bid and asked prices of Stock on the most
recent date on which Stock was publicly traded. In the event Stock is not
publicly traded at the time a determination of its value is required to be made
hereunder, the determination of its fair market value shall be made by the Board
in such manner as it deems appropriate.
VI. TERM OF PLAN
The Plan shall be effective on the date the Plan is approved by the
stockholders of the Company. Except with respect to Options then outstanding,
if not sooner terminated under the provisions of Paragraph VIII, the Plan shall
terminate upon and no further Options shall be granted after the expiration of
ten years from the date the Plan is approved by the stockholders of the Company.
VII. RECAPITALIZATION OR REORGANIZATION
A. The existence of the Plan and the 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 debt or equity securities, the
dissolution or liquidation of the Company or any sale, lease, exchange or other
disposition of all or any part of its assets or business or any other corporate
act or proceeding.
B. The shares with respect to which Options may be granted are shares
of Stock as presently constituted, but if, and whenever, prior to the expiration
of an Option theretofore granted, the Company shall effect a subdivision or
consolidation of shares of Stock or the payment of a stock dividend on Stock
without receipt of consideration by the Company, the number of shares of Stock
with respect to which such Option may thereafter be exercised (i) in the event
of an increase in the number of outstanding shares shall be proportionately
increased, and the purchase price per share shall be proportionately reduced,
and (ii) in the event of a reduction in the number of outstanding shares shall
be proportionately reduced, and the purchase price per share shall be
proportionately increased.
C. If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure (a "recapitalization"), the number and
class of shares of Stock covered by an Option theretofore granted shall be
adjusted so that such Option shall thereafter cover the number and class of
shares of stock and securities to which the optionee would have been entitled
pursuant to the terms of the recapitalization if, immediately prior to the
recapitalization, the optionee had been the holder of record of the number of
shares of Stock then covered by such Option.
D. Any adjustment provided for in Subparagraph (B) or (C) above shall
be subject to any required stockholder action.
E. Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares of
stock of any class, for cash, property, labor or services, upon direct sale,
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Stock subject to Options theretofore granted or the purchase
price per share.
<PAGE>
VIII. AMENDMENT OR TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with
respect to any shares for which Options have not theretofore been granted. The
Board shall have the right to alter or amend the Plan or any part thereof from
time to time; provided, that no change in any Option theretofore granted may be
made which would impair the rights of the optionee without the consent of such
optionee and provided, further, that the Board may not make any alteration or
amendment which would materially increase the benefits accruing to participants
under the Plan, increase the aggregate number of shares which may be issued
pursuant to the provisions of the Plan, change the class of individuals eligible
to receive Options under the Plan or extend the term of the Plan, without the
approval of the stockholders of the Company.
IX. SECURITIES LAWS
A. The Company shall not be obligated to issue any Stock pursuant to
any Options granted under the Plan at any time when the offering of the shares
covered by such Option have not been registered under the Securities Act of
1933, as amended, and such other state and federal laws, rules or regulations as
the Company deems applicable and, in the opinion of legal counsel for the
Company, there is no exemption from the registration requirements of such laws,
rules or regulations available for the offering and sale of such shares.
B. It is intended that the Plan and any grant of an Option made to a
person subject to Section 16 of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), meet all of the requirements of Rule 16b-3, as currently in
effect or as hereinafter modified or amended ("Rule 16b-3"), promulgated under
the 1934 Act. If any provision of the Plan or any such Option would disqualify
the Plan or such Option under, or would otherwise not comply with, Rule 16b-3,
such provision or Option shall be construed or deemed amended to conform to Rule
16b-3.
<PAGE>
NONEMPLOYEE DIRECTOR'S STOCK OPTION AGREEMENT
AGREEMENT made as of the _____ day of __________, 19_____, between THE
FOREFRONT GROUP, INC., a Delaware corporation (the "Company"), and
____________________ ("Director").
To carry out the purposes of THE FOREFRONT GROUP, INC. 1996 NONEMPLOYEE
DIRECTORS' STOCK OPTION PLAN (the "Plan"), by affording Director the opportunity
to purchase shares of common stock of the Company ("Stock"), and in
consideration of the mutual agreements and other matters set forth herein and in
the Plan, the Company and Director hereby agree as follows:
1. GRANT OF OPTION. The Company hereby irrevocably grants the Director
the right and option ("Option") to purchase all or any part of an aggregate of
_______ shares of Stock, on the terms and conditions set forth herein and in the
Plan, which Plan is incorporated herein by reference as a part of this
Agreement. This Option shall not be treated as an incentive stock option within
the meaning of section 422(b) of the Internal Revenue Code of 1986, as amended
(the "Code").
2. PURCHASE PRICE. The purchase price of Stock purchased pursuant to the
exercise of this Option shall be $________ per share, which has been determined
to be not less than the fair market value of the Stock at the date of grant of
this Option. For all purposes of this Agreement, fair market value of Stock
shall be determined in accordance with the provisions of the Plan.
3. EXERCISE OF OPTION. Subject to the earlier expiration of this Option
as herein provided, this Option may be exercised, by written notice to the
Company at its principal executive offices addressed to the attention of Chief
Executive Officer, at any time and from time to time after the date of grant
hereof, but, except as otherwise provided below, this Option shall not be
exercisable for more than a percentage of the aggregate number of shares offered
by this Option determined by the number of full calendar months from the first
day of the calendar month coincident with or next following the date of grant
hereof to the date of such exercise, in accordance with the following schedule:
<TABLE>
<CAPTION>
Number of Full Calendar Months Percentage of Shares
That May Be Purchased
(5000 shares) (20,000 shares)
<S> <C> <C>
Less than 1 month................... 0.00% 0.00%
1 month but less than 2 months...... 8.33% 4.17%
2 months but less than 3 months..... 16.67% 8.33%
3 months but less than 4 months..... 25.00% 12.50%
4 months but less than 5 months..... 33.33% 16.67%
5 months but less than 6 months..... 41.67% 20.83%
6 months but less than 7 months..... 50.00% 25.00%
7 months but less than 8 months..... 58.33% 29.67%
8 months but less than 9 months..... 66.67% 33.33%
9 months but less than 10 months.... 75.00% 37.50%
10 months but less than 11 months... 83.33% 41.67%
11 months but less than 12 months... 91.67% 45.83%
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
12 months but less than 13 months.... 100.00% 50.00%
13 months but less than 14 months.... 100.00% 54.17%
14 months but less than 15 months.... 100.00% 58.33%
15 months but less than 16 months.... 100.00% 62.50%
16 months but less than 17 months.... 100.00% 66.67%
17 months but less than 18 months.... 100.00% 70.83%
18 months but less than 19 months.... 100.00% 75.00%
19 months but less than 20 months.... 100.00% 79.17%
20 months but less than 21 months.... 100.00% 83.33%
21 months but less than 22 months.... 100.00% 87.50%
22 months but less than 23 months.... 100.00% 91.67%
23 months but less than 24 months.... 100.00% 95.83%
24 months or more.................... 100.00% 100%
</TABLE>
Notwithstanding the foregoing, if (i) the Company shall not be the
surviving entity in any merger, consolidation or other reorganization (or
survives only as a subsidiary of an entity other than a previously wholly-owned
subsidiary of the Company), (ii) the Company sells, leases or exchanges or
agrees to sell, lease or exchange all or substantially all of its assets to any
other person or entity (other than a wholly-owned subsidiary of the Company),
(iii) the Company is to be dissolved and liquidated, (iv) any person or entity,
including a "group" as contemplated by Section 13(d)(3) of the Securities
Exchange Act of 1934, acquires or gains ownership or control (including, without
limitation, power to vote) of more than 50% of the outstanding shares of the
Company's voting stock (based upon voting power), or (v) as a result of or in
connection with a contested election of directors, the persons who were
directors of the Company before such election shall cease to constitute a
majority of the Board of Directors of the Company (each such event is referred
to herein as a "Corporate Change"), then effective as of the earlier of (1) the
date of approval by the stockholders of the Company of such merger,
consolidation, reorganization, sale, lease or exchange of assets or dissolution
or such election of directors or (2) the date of such Corporate Change, this
Option shall be exercisable in full.
This Option and all rights granted hereunder are not transferable by
Director other than by will or the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined by the Code or Title 1 of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder, and may be exercised during Director's lifetime only by Director or
Director's guardian or legal representative. This Option may be exercised only
while Director remains a member of the Board of Directors of the Company (the
"Board") and will terminate and cease to be exercisable upon Director's
termination of membership on the Board, except that:
(a) If Director's membership on the Board terminates by reason of
disability, this Option may be exercised in full by Director (or Director's
estate or the person who acquires this Option by will or the laws of descent and
distribution or otherwise by reason of the death of Director) at any time during
the period of one year following such termination.
(b) If Director dies while a member of the Board, Director's estate, or the
person who acquires this Option by will or the laws of descent and distribution
or otherwise by reason of the death of Director, may exercise this Option in
full at any time during the period of one year following the date of Director's
death.
<PAGE>
(c) If Director's membership on the Board terminates for any reason other
than as described in (a) or (b) above, this Option may be exercised by Director
at any time during the period of two years following such termination, or by
Director's estate (or the person who acquires this Option by will or the laws of
descent and distribution or otherwise by reason of the death of Director) during
a period of one year following Director's death if Director dies during such two
year period, but in each case only as to the number of shares Director was
entitled to purchase hereunder upon exercise of this Option as of the date
Director's membership on the Board so terminates.
This Option shall not be exercisable in any event after the expiration of
ten years from the date of grant hereof. The purchase price of shares as to
which this Option is exercised shall be paid in full at the time of exercise (A)
in cash (including check, bank draft or money order payable to the order of the
Company), (B) by delivering to the Company shares of Stock having a fair market
value equal to the purchase price, or (C) any combination of cash or Stock. No
fraction of a share of Stock shall be issued by the Company upon exercise of an
Option or accepted by the Company in payment of the purchase price thereof;
rather, Director shall provide a cash payment for such amount as is necessary to
effect the issuance and acceptance of only whole shares of Stock. Unless and
until a certificate or certificates representing such shares shall have been
issued by the Company to Director, Director (or the person permitted to exercise
this Option in the event of Director's death) shall not be or have any of the
rights or privileges of a stockholder of the Company with respect to shares
acquirable upon an exercise of this Option.
4. WITHHOLDING OF TAX. To the extent that the exercise of this Option or
the disposition of shares of Stock acquired by exercise of this Option results
in compensation income to Director for federal or state income tax purposes,
Director shall deliver to the Company at the time of such exercise or
disposition such amount of money or shares of Stock as the Company may require
to meet its obligation under applicable tax laws or regulations, and, if
Director fails to do so, the Company is authorized to withhold from any cash or
Stock remuneration then or thereafter payable to Director any tax required to be
withheld by reason of such resulting compensation income. Upon an exercise of
this Option, the Company is further authorized in its discretion to satisfy any
such withholding requirement out of any cash or shares of Stock distributable to
Director upon such exercise.
5. STATUS OF STOCK. The Company intends to register for issuance under
the Securities Act of 1933, as amended (the "Act"), the shares of Stock
acquirable upon exercise of this Option, and to keep such registration effective
throughout the period this Option is exercisable. In the absence of such
effective registration or an available exemption from registration under the
Act, issuance of shares of Stock acquirable upon exercise of this Option will be
delayed until registration of such shares is effective or an exemption from
registration under the Act is available. The Company intends to use its best
efforts to ensure that no such delay will occur. In the event exemption from
registration under the Act is available upon an exercise of this Option,
Director (or the person permitted to exercise this Option in the event of
Director's death or incapacity), if requested by the Company to do so, will
execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require to assure compliance with applicable
securities laws.
Director agrees that the shares of Stock which Director may acquire by
exercising this Option will not be sold or otherwise disposed of in any manner
which would constitute a violation of any applicable federal or state securities
laws. Director also agrees (i) that the certificates representing the shares of
Stock purchased under this Option may bear such legend or legends as the Company
deems appropriate in order to assure compliance with applicable securities laws,
(ii) that the Company may refuse to register the transfer of the shares of Stock
purchased under this Option on the stock transfer records of the Company if such
proposed transfer would in the opinion of counsel satisfactory to the Company
constitute a violation of any applicable securities law and (iii) that the
Company may give related instructions to its transfer agent, if any, to stop
registration of the transfer of the shares of Stock purchased under this Option.
6. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under
Director.
7. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officer thereunto duly authorized, and Director has executed
this Agreement, all as of the day and year first above written.
THE FOREFRONT GROUP, INC.
By:__________________________
Name:________________________
Title:_______________________
DIRECTOR
_____________________________
