As filed with the Securities and Exchange Commission on March 12, 1999
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
ScanSoft, Inc.
(Exact name of registrant as specified in its charter)
Delaware 94-3156479
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 Centennial Drive
Peabody, Massachusetts 01960
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(Address of Principal (Zip Code)
Executive Offices)
SCANSOFT, INC. 1998 STOCK OPTION PLAN
(Full title of the plan)
Copy to:
MICHAEL K. TIVNAN KATHARINE A. MARTIN
ScanSoft, Inc. Pillsbury Madison & Sutro LLP
9 Centennial Drive 2550 Hanover Street
Peabody, Massachusetts 01960 Palo Alto, CA 94304
(978) 977-2000 (650) 233-4500
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(Name, address and telephone
number, including area code, of
agent for service)
<TABLE>
CALCULATION OF REGISTRATION FEE
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<CAPTION>
Title of Amount Proposed Maximum Proposed Amount of
Securities To To Be Offering Price Maximum Aggregate Registration
Be Registered Registered(1) per Share Offering Price(2) Fee(2)
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<S> <C> <C> <C> <C>
Common Stock, 1,738,552 shares $0.61 $1,060,517 $295.00
par value $.001
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</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Registrant's Common Stock which become issuable under the ScanSoft,
Inc. 1998 Stock Option Plan by reason of any stock dividend, stock
split, recapitalization or other similar transaction effected without
the Registrant's receipt of consideration which results in an increase
in the number of the Registrant's outstanding shares of Common Stock.
(2) Estimated in accordance with Rule 457(h) under the Securities Act of
1933, as amended (the "Securities Act") solely for the purpose of
calculating the amount of the registration fee based on the weighted
average exercise price per share of outstanding options.
-----------------
The Registration Statement shall become effective upon filing in accordance with
Rule 462 under the Securities Act of 1933.
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<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
* Information required by Part I to be contained in the
Section 10(a) prospectus is omitted from this Registration Statement in
accordance with Rule 428 under the Securities Act of 1933, as amended,
and the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed by Registrant with the Securities and
Exchange Commission are incorporated by reference in this registration
statement:
(1) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 28, 1997;
(2) The Registrant's Quarterly Reports on Form 10-Q for the quarters
ended March 31, June 28 and September 27, 1998.
(3) The Registrant's Current Reports on Form 8-K filed on December 8,
1998 and January 21, 1999.
(4) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A filed on October 20, 1995 with
the Commission under Section 12 of the Securities Exchange Act of 1934, as
amended, including any amendments or report filed for the purpose of updating
such description.
In addition, all documents subsequently filed by Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
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 date of filing of such
documents.
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<PAGE>
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides for the
indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933, as amended (the "Act"). Article XI of the Registrant's
Amended and Restated Certificate of Incorporation (Exhibit 4.1 to this Form S-8)
authorizes indemnification of the Registrant's directors, officers, employees
and other agents to the extent and under the circumstances permitted by the
Delaware General Corporation Law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See Index to Exhibits.
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 post-registration statement (or the
most recent effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
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<PAGE>
(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)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form 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 further 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 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.
(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 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.
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<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 Peabody, Commonwealth of Massachusetts, on March 12,
1999.
SCANSOFT, INC.
By /s/ Michael K. Tivnan
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Michael K. Tivnan
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael K. Tivnan and Sharon Plante, and
each of them his or her true and lawful attorneys-in-fact and agents, each with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all
amendments, including post-effective amendments, to this registration statement,
and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or his or her
substitute or substitutes, may do or cause to be done by virtue hereof.
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 date indicated:
Name Title Date
---- ----- ----
/s/ Michael K. Tivnan President and Director March 12, 1999
- ------------------------------- (Principal Executive
Michael K. Tivnan Officer)
/s/ Richard Brenner Acting Chief Financial March 12, 1999
- ------------------------------- Officer (Principal
Richard Brenner Financial Officer)
/s/ Sharon Plante Treasurer (Principal March 12, 1999
- ------------------------------- Accounting
Sharon Plante Officer)
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<PAGE>
Name Title Date
---- ----- ----
/s/ William J. Harding, Ph. D. Director March 12, 1999
- -------------------------------
William J. Harding, Ph.D.
- ------------------------------- Director ________, 1999
David F. Marquardt
/s/ Mark B. Myers Director March 12, 1999
- -------------------------------
Mark B. Myers
/s/ Paul A. Ricci Director March 12, 1999
- -------------------------------
Paul A. Ricci
/s/ J. Larry Smart Director March 12, 1999
- -------------------------------
J. Larry Smart
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<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- ------- -------
4.1 Amended and Restated Certificate of Incorporation.
4.2 Specimen Stock Certificate.
5.1 Opinion regarding legality of securities to be offered.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Pillsbury Madison & Sutro LLP (included in
Exhibit 5.1).
24.1 Power of Attorney (included on page 6).
99.1 1998 ScanSoft, Inc. Stock Option Plan.
99.2 Form of Option Agreement under 1998 ScanSoft, Inc.
Stock Option Plan.
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF VISIONEER, INC.
a Delaware Corporation
(Pursuant to Sections 242 & 245 of the
Delaware General Corporation Law)
The undersigned J. Larry Smart and Joshua L. Green hereby certify that:
ONE: They are the duly elected and acting President and Secretary,
respectively, of said corporation.
TWO: That the name of the corporation is Visioneer, Inc. and that the
corporation was originally incorporated on September 21, 1995 under the name
Visioneer Communications, Inc. pursuant to the General Corporation Law.
THREE: The Amended and Restated Certificate of Incorporation of this
corporation shall be restated to read in full as follows:
ARTICLE I
The name of this corporation is Visioneer, Inc.
ARTICLE II
The address of the registered office of this corporation in the State of
Delaware is 1013 Centre Road, Wilmington, County of New Castle, Delaware and its
registered agent at such address is The Prentice-Hall Corporation System, Inc.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
(A) CLASSES OF STOCK. This corporation is authorized to issue two classes
of stock to be designated common stock ("Common Stock") and preferred stock
("Preferred Stock"). The total number of shares which the Corporation is
authorized to issue is Ninety Million (90,000,000) shares. The number of shares
of Common Stock authorized to be issued is Seventy Million (70,000,000), par
value $.001 per share, and the number of shares of Preferred Stock authorized to
be issued is Twenty Million (20,000,000), par value $.001 per share.
(B) RIGHTS, PREFERENCES AND RESTRICTIONS OF PREFERRED STOCK. The
Preferred Stock authorized by this Amended and Restated Certificate of
Incorporation may be issued from time to time in one or more series. The first
series of Preferred Stock shall be designated "Series B Preferred Stock" and
shall consist of fifteen million (15,000,000) shares. The rights, preferences,
<PAGE>
privileges, and restrictions granted to and imposed on the Series B Preferred
Stock are as set forth below in this Article IV(B).
The Board of Directors is hereby authorized, in the resolution or
resolutions adopted by the Board of Directors providing for the issuance of any
wholly unissued series of Preferred Stock, within the limitations and
restrictions stated in this Amended and Restated Certificate of Incorporation,
to fix or alter the dividend rights, dividend rate, conversion rights, voting
rights, rights and terms of redemption (including sinking fund provisions), the
redemption price or prices, and the liquidation preferences of any wholly
unissued series of Preferred Stock, and the number of shares constituting any
such series and the designation thereof, or any of them, and to increase or
decrease the number of shares of any series subsequent to the issue of shares of
that series, but not below the number of shares of such series then outstanding.
In case the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status that they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
1. Dividend Provisions.
(a) The holders of shares of Series B Preferred Stock shall be entitled to
receive dividends, out of any assets legally available therefor, prior and in
preference to any declaration or payment of any dividend (payable other than in
Common Stock or other securities and rights convertible into or entitling the
holder thereof to receive, directly or indirectly, shares of Common Stock of
this corporation) on the Common Stock of this corporation, at the rate of $0.065
per share of Series B Preferred Stock per annum (as determined on a per annum
basis and an as converted basis for the Series B Preferred Stock) whenever funds
are legally available therefor, payable when, as and if declared by the Board of
Directors. Such dividends shall be non-cumulative. Unless full dividends on the
Series B Preferred Stock for the then current dividend period shall have been
paid or declared and a sum sufficient for the payment thereof set apart: (i) no
dividend whatsoever (other than a dividend payable solely in Common Stock or
other securities and rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock of this
corporation) shall be paid or declared, and no distribution shall be made, on
any Common Stock. Dividends, if declared, must be declared and paid with respect
to all series of Preferred Stock contemporaneously, and if less than full
dividends are declared, the same percentage of the dividend rate will be payable
to each series of Preferred Stock.
(b) After payment of such dividends, any additional dividends or
distributions shall be distributed among all holders of Common Stock and all
holders of Series B Preferred Stock in proportion to the number of shares of
Common Stock which would be held by each such holder if all shares of Series B
Preferred Stock were converted to Common Stock at the then effective conversion
rate.
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<PAGE>
2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of this
corporation, either voluntary or involuntary, the holders of Series B Preferred
Stock shall be entitled to receive, prior and in preference to any distribution
of any of the assets of this corporation to the holders of Common Stock by
reason of their ownership thereof, an amount per share equal to (i) $1.30 for
each outstanding share of Series B Preferred Stock (the "Original Series B Issue
Price") plus an amount equal to all declared but unpaid dividends on each such
share. If upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Series B Preferred Stock shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then the entire assets and funds of this corporation
legally available for distribution shall be distributed ratably among the
holders of the Series B Preferred Stock in proportion to the product of the
liquidation preference of each such share and the number of such shares owned by
each such holder.
(b) After the distribution described in section (a) above has been paid,
the remaining assets of this corporation available for distribution to
stockholders shall be distributed among the holders of Common Stock pro rata
based on the number of shares of Common Stock held by each.
3. No Redemption. No holder of Series B Preferred Stock shall have any
right to require the corporation or any "related person" (within the meaning of
section 351(g)(3)(B) of the Internal Revenue Code) to redeem or purchase any
shares of Series B Preferred Stock. Similarly, neither the corporation nor any
such related person shall have any right or option to redeem or purchase any
shares of Series B Preferred Stock from any holder thereof.
4. Conversion. The holders of Series B Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert; Automatic Conversion.
(i) Subject to subsection (c), each share of Series B Preferred Stock
shall be convertible, at the option of the holder thereof, during the periods
specified in Section 4(a)(ii) below, at the office of this corporation or any
transfer agent for the Series B Preferred Stock, into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing the
Original Series B Issue Price by the Conversion Price applicable to such shares
in effect on the date the certificate for such share is surrendered for
conversion. The initial Conversion Price per share for shares of Series B
Preferred Stock shall be the Original Series B Issue Price; provided, however,
that the Conversion Price for shares of Series B Preferred Stock shall be
subject to adjustment as set forth in subsection 4(c) below.
(ii) The shares of Series B Preferred Stock shall not be convertible
into Common Stock prior to March 2, 2001; provided, however, that
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<PAGE>
notwithstanding the foregoing, each share of Series B Preferred Stock shall be
convertible into Common Stock, at the option of the holder thereof, at any time
after the date on which such holder owns directly or indirectly a number of
outstanding shares of Common Stock of this corporation that represents less than
30.0% of the total number of shares of Common Stock outstanding immediately
prior to conversion of such share; and provided further, however, that such
holder shall not be entitled to convert any share of Series B Preferred Stock
pursuant to this Section 4(a)(ii) if the conversion of such share to Common
Stock would result in such holder owning directly or indirectly a number of
outstanding shares of Common Stock of this corporation that represents more than
50.0% of the total number of shares of Common Stock outstanding immediately
after the conversion of such share.
(iii) At any time after March 2, 2001, upon the written consent of the
holders of at least 66-2/3% of the then outstanding shares of Series B Preferred
Stock, each share of Series B Preferred Stock shall automatically and
immediately be converted into such number of fully paid and nonassessable shares
of Common Stock as is determined by dividing the Original Series B Issue Price
by the Conversion Price applicable to such shares in effect on the date the
certificate for such share is surrendered for conversion. The initial Conversion
Price per share for shares of Series B Preferred Stock shall be the Original
Series B Issue Price; provided, however, that the Conversion Price for shares of
Series B Preferred Stock shall be subject to adjustment as set forth in
subsection 4(c) below.
(b) Mechanics of Conversion. Before any holder of shares of Series B
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, such holder shall surrender the certificate or certificates therefor,
duly endorsed, at the office of this corporation or of any transfer agent for
such Series B Preferred Stock, and shall give written notice by mail, postage
prepaid, to this corporation at its principal corporate office, of the election
to convert the same and shall state therein the name or names in which the
certificate or certificates for shares of Common Stock are to be issued. This
corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Series B Preferred Stock, or to the nominee or nominees
of such holder, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid. Such conversion shall
be deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Series B Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date. If the
conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, as amended, the conversion
may, at the option of any holder tendering Series B Preferred Stock for
conversion, be conditioned upon the closing with the underwriter(s) of the sale
of securities pursuant to such offering, in which event the person(s) entitled
to receive the Common Stock issuable upon such conversion of shares of Series B
Preferred Stock shall not be deemed to have converted such shares of Series B
Preferred Stock until immediately prior to the closing of such sale of
securities.
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<PAGE>
(c) Conversion Price Adjustments of Series B Preferred Stock. The
Conversion Price of the Series B Preferred Stock shall be subject to adjustment
from time to time as follows:
(i) In the event this corporation should at any time or from time to
time after the date upon which any shares of Series B Preferred Stock were
initially issued (a "Purchase Date") fix a record date for the effectuation of a
split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then as of such record date (or the date of such dividend
distribution split or subdivision if no record date is fixed), the Conversion
Price of the Series B Preferred Stock shall be appropriately decreased so that
the number of shares of Common Stock issuable on conversion of each share of
each such series shall be increased in proportion to such increase of
outstanding shares.
(ii) If the number of shares of Common Stock outstanding at any time
after a Purchase Date is decreased by a combination of the outstanding shares of
Common Stock, then, following the record date of such combination, the
Conversion Price for the Series B Preferred Stock shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
each share of each such series shall be decreased in proportion to such decrease
in outstanding shares.
(d) Other Distributions. In the event this corporation shall declare a
distribution payable in securities of other persons, evidences of indebtedness
issued by this corporation or other persons, assets (excluding cash dividends)
or options or rights not referred to in subsection 4(c)(i), then, in each such
case for the purpose of this subsection 4(d), the holders of Series B Preferred
Stock shall be entitled to a proportionate share of any such distribution as
though they were the holders of the number of shares of Common Stock of this
corporation into which their shares of Series B Preferred Stock are convertible
as of the record date fixed for the determination of the holders of Common Stock
of this corporation entitled to receive such distribution.
(e) Recapitalization. If at any time or from time to time there shall be a
recapitalization of the Common Stock (other than a subdivision, combination or
merger or sale of assets transaction provided for elsewhere in this Section 4 or
Section 5), provision shall be made so that the holders of Series B Preferred
Stock shall thereafter be entitled to receive upon conversion of their Series B
Preferred Stock, the number of shares of stock or other securities or property
of this corporation or otherwise, to which a holder of Common Stock deliverable
upon conversion would have been entitled on such recapitalization. In any such
case, appropriate
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<PAGE>
adjustment shall be made in the application of the provisions of this Section 4
with respect to the rights of the holders of Series B Preferred Stock after the
recapitalization to the end that the provisions of this Section 4 (including
adjustment of the Conversion Price then in effect and the number of shares
purchasable upon conversion of the Series B Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable.
(f) No Impairment. This corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by this
corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 4 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series B Preferred Stock against impairment.
(g) Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon conversion of any share
or shares of Series B Preferred Stock. All shares of Common Stock (including
fractions thereof) issuable upon such conversion shall be aggregated for
purposes of determining whether the conversion would result in the issuance of
any fractional share. If, after the aforementioned aggregation, the conversion
would result in the issuance of a fraction of a share of Common Stock, the
corporation shall, in lieu of issuing any fractional share, pay the holder
otherwise entitled to such fraction a sum in cash equal to the fair market value
of such fraction on the date of conversion (as determined in good faith by the
Board of Directors).
(ii) Upon the occurrence of each adjustment or readjustment of the
Conversion Price of Series B Preferred Stock pursuant to this Section 4, this
corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Series B Preferred Stock, a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. This corporation shall, upon the written request at any
time of any holder of Series B Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (A) such adjustment and
readjustment, (B) the Conversion Price for Series B Preferred Stock at the time
in effect, and (C) the number of shares of Common Stock and the amount, if any,
of other property which at the time would be received upon the conversion of a
share of Series B Preferred Stock.
(h) Notices of Record Date. In the event of any taking by this corporation
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, this corporation shall
mail
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<PAGE>
to each holder of Series B Preferred Stock, at least 20 days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and the amount
and character of such dividend, distribution or right.
(i) Reservation of Stock Issuable Upon Conversion. This corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of Series B Preferred Stock such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series B Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Series B Preferred Stock, in
addition to such other remedies as shall be available to the holder of Series B
Preferred Stock, this corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.
(j) Notices. Any notice required by the provisions of this Section 4
to be given to the holders of shares of any series of Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of this
corporation.
5. Merger, Consolidation or Reorganization.
(a) A consolidation, merger or other reorganization of this corporation
with or into another corporation or other entity or person in which this
corporation shall not be the continuing or surviving entity of such merger,
consolidation or reorganization, or the sale of all or substantially all of this
corporation's properties and assets to any other person, or any transaction or
series of related transactions by this corporation in which an excess of 50% of
this corporation's voting power is transferred shall be deemed to be a
liquidation for all purposes of Section 2 hereof, unless this corporation's
stockholders of record immediately prior to such merger, consolidation,
reorganization, sale or transaction are holders of more than 50% of the voting
equity securities of the surviving corporation.
(b) In the event the requirements of subsection 5(a) are not complied with,
this corporation shall forthwith either:
(i) cause such closing to be postponed until such time as the
requirements of this Section 5 have been complied with, or
(ii) cancel such transaction, in which event the rights, preferences
and privileges of the holders of the Series B Preferred Stock shall revert to
and be the same as such rights, preferences and privileges existing immediately
prior to the date of the first notice referred to in subsection 5(c) hereof.
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<PAGE>
(c) This corporation shall give each holder of record of Series B Preferred
Stock written notice of such impending transaction not later than 20 days prior
to the stockholders' meeting called to approve such transaction, or 20 days
prior to the closing of such transaction, whichever is earlier, and shall also
notify such holders in writing of the final approval of such transaction. The
first of such notices shall describe the material terms and conditions of the
impending transaction and the provisions of this Section 5, and this corporation
shall thereafter give such holders prompt notice of any material changes. The
transaction shall in no event take place earlier than 20 days after this
corporation has given the first notice provided for herein or earlier than ten
days after this corporation has given notice of any material changes provided
for herein; provided, however, that such periods may be shortened upon the
written consent of the holders of a majority of the shares of the Series B
Preferred Stock then outstanding.
6. Voting Rights. The holders of Series B Preferred Stock shall not be
entitled to vote on any matters except as expressly provided in Section
242(b)(2) of the Delaware General Corporation Law. In such event, the holder of
each share of Series B Preferred Stock shall have the right to one vote for each
share of Common Stock into which such Series B Preferred Stock could then be
converted. In all cases any fractional share, determined on an aggregate
as-converted basis, shall be rounded to the nearest whole share (with one-half
being rounded upward). If the Series B Preferred Stockholders are entitled to
vote, such holders shall be entitled, notwithstanding any provision hereof, to
notice in accordance with the bylaws of this corporation of any stockholders'
meeting that is called to consider a matter as to which the Series B Preferred
Stockholders would be entitled to vote.
7. Status of Converted Stock. In the event any shares of Series B Preferred
Stock shall be converted pursuant to Section 4 hereof, the shares so converted
shall be canceled and shall not be issuable by this corporation.
8. No Preemptive Rights. The holders of the Series B Preferred Stock shall
not have any preemptive rights.
(C) COMMON STOCK. This corporation shall not without first obtaining the
approval (by vote or written consent, as provided by law) of the holders of at
least sixty-six and two-thirds percent (66 2/3%) the then outstanding shares of
Common Stock, voting together as a separate class:
1. sell, convey, or otherwise dispose of or encumber all or substantially
all of its property or business or merge into or consolidate with any other
corporation (other than a wholly-owned subsidiary corporation) or effect any
other transaction or series of related transactions in which more than fifty
percent (50%) of the voting power of the Corporation is disposed of, provided
that this provision shall not apply to a merger effected exclusively for the
purpose of changing the domicile of the Corporation;
2. authorize or issue, or obligate itself to issue, any other equity
security, including any other security convertible into or exercisable for any
equity security, having a
-8-
<PAGE>
preference over, or being on a parity with, the Series B Preferred Stock with
respect to voting, dividends, conversion or upon liquidation;
3. alter or change the rights, preferences or privileges of the shares of
Series B Preferred Stock so as to adversely affect them;
4. increase or decrease (other than by conversion) the total number of
authorized shares of Series B Preferred Stock;
5. redeem, purchase or otherwise acquire (or pay into or set aside for a
sinking fund for such purpose) any share or shares of Common Stock or Preferred
Stock, provided however, that this restriction shall not apply to the repurchase
of shares of Common Stock from employees, officers, directors, consultants or
other persons performing services for this corporation or any subsidiary
pursuant to agreements under which this corporation has the option to repurchase
such shares at cost or at cost upon the occurrence of certain events, such as
the termination of employment;
6. declare or pay any dividends on its Common or Preferred Stock; or
7. amend the Corporation's Bylaws.
ARTICLE V
Except as otherwise provided in this Amended and Restated Certificate of
Incorporation, in furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend, and rescind any or all of the Bylaws of this corporation.
ARTICLE VI
The number of directors of this corporation shall be fixed from time to
time by a bylaw or amendment thereof duly adopted by the Board of Directors or
by the stockholders.
ARTICLE VII
Elections of directors need not be by written ballot unless the Bylaws of
this corporation shall so provide.
ARTICLE VIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of this corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of this corporation.
-9-
<PAGE>
ARTICLE IX
A director of this corporation shall, to the full extent permitted by the
Delaware General Corporation Law as it now exists or as it may hereafter be
amended, not be liable to this corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director. Neither any amendment nor
repeal of this Article, nor the adoption of any provision of this Amended and
Restated Certificate of Incorporation inconsistent with this Article, shall
eliminate or reduce the effect of this Article in respect of any matter
occurring, or any cause of action, suit or claim that, but for this Article,
would accrue or arise, prior to such amendment, repeal or adoption of an
inconsistent provision. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law as so amended.
Any repeal or modification of the foregoing provisions of this Article by
the stockholders of this corporation shall not adversely affect any right or
protection of a director of this corporation existing at the time of such repeal
or modification.
ARTICLE X
No action required to be taken or that may be taken at any annual or
special meeting of the stockholders of this corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a meeting,
to the taking of any action is specifically denied.
ARTICLE XI
To the fullest extent permitted by applicable law, this corporation is
authorized to provide indemnification of (and advancement of expenses to) its
agents (and any other persons to which Delaware law permits this corporation to
provide indemnification) through Bylaw provisions, agreements with such agents
or other persons, vote of stockholders or disinterested directors or otherwise,
in excess of the indemnification and advancement otherwise permitted by Section
145 of the General Corporation Law of the State of Delaware, subject only to
limits created by applicable Delaware law (statutory or non-statutory), with
respect to actions for breach of duty to this corporation, its stockholders, and
others.
Any repeal or modification of any of the foregoing provisions of this
Article shall not adversely affect any right or protection of a director,
officer, agent or other person existing at the time of, or increase the
liability of any director of this corporation with respect to any acts or
omissions of such director, officer, agent or other person occurring prior to
such repeal or modification.
ARTICLE XII
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<PAGE>
This corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
* * * *
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<PAGE>
FOUR: That thereafter said amendment and restatement was duly adopted in
accordance with the provisions of the General Corporation Law.
IN WITNESS WHEREOF, the undersigned have executed this certificate on March
2, 1999.
VISIONEER, INC.
/s/ J. Larry Smart
-----------------------------------------
J. Larry Smart
President and Chief Executive Officer
/s/ Joshua L. Green
----------------------------------------
Joshua L. Green
Secretary
-12-
(Certificate Face)
[Logo]
ScanSoft, Inc
NUMBER
SHARES
SS
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
COMMON STOCK
CUSIP 80603P 10 7
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK, $0.001 PER SHARE, OF
SCANSOFT, Inc.,(the "Corporation"), a Delaware corporation. The shares
represented by this certificate are transferable only on the stock transfer
books of the Corporation by the holder of record hereof, or by the holder's duly
authorized attorney or legal representative, upon the surrender of this
certificate properly endorsed. This certificate is not valid until countersigned
by the Corporation's transfer agent and registrar. IN WITNESS WHEREOF, the
Corporation has caused this certificate to be executed by the facsimile
signatures of its duly authorized officers.
Dated:
[Katharine A. Martin]
Secretary
[Seal]
[Michael K. Tivnan ]
President
COUNTERSIGNED AND REGISTERED:
U.S. STOCK TRANSFER COMPANY
TRANSFER AGENT
AND REGISTRAR
BY AUTHORIZED SIGNATURE (Certificate Back) ScanSoft, Inc.
A statement of the rights, preferences, privileges and restrictions granted to
or imposed upon the respective classes or series of shares of stock of the
Corporation, and upon the holders thereof as established by the Certificate of
Incorporation or by any certificate of determination of preferences, and the
number of shares constituting each series or class and the designations thereof,
may be obtained by any stockholder of the Corporation upon request and without
charge from the Secretary of the Corporat ion at the principal office of the
Corporation.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - . . . . . . . . Custodian . . . . . . . . .
(Cust) (Minor)
under Uniform Gifts to Minors
Act . . . . . . . . . . . . . . . . . . . . .
(State)
UNIF TRF MIN ACT - . . . . . . . Custodian (until age . . . . . .)
(Cust)
. . . . . . . . under Uniform Transfer
to Minors Act . . . . . . . . . . . . . . . .
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, . . . . . . . . . . . . . . . . . hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attorney
to transfer the said stock on the books of the within Corporation with full
power of substitution in the premises.
Dated . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVEY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed:
By . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15
Exhibit 5.1
PILLSBURY MADISON & SUTRO LLP
2550 Hanover Street
Palo Alto, CA 94304
Tel: (650) 233-4500
Fax: (650) 233-4545
March 12, 1999
ScanSoft, Inc.
9 Centennial Drive
Peabody, MA 01960
Re: Registration Statement on Form S-8
Gentlemen:
With reference to the Registration Statement on Form S-8 to be filed by
ScanSoft, Inc., a Delaware corporation (the "Company"), with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, relating to 1,738,552 shares of the Company's Common Stock issuable
upon the exercise of options granted pursuant to options granted under the 1998
ScanSoft, Inc. Stock Option Plan (the "Plan"), it is our opinion that when and
if the Company's Common Stock is issued and sold in accordance with the options
granted under the Plan, such Common Stock will be legally issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 to the Registration Statement.
Very truly yours,
/s/ PILLSBURY MADISON & SUTRO LLP
PILLSBURY MADISON & SUTRO LLP
[05573]
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our reports dated January 22, 1998
appearing on page 24 and page 38 of ScanSoft, Inc.'s (formerly Visioneer,
Inc.'s) Annual Report on Form 10-K for the year ended December 31, 1997.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
San Jose, California
March 10, 1999
ScanSoft Inc.
1998 STOCK OPTION PLAN
ARTICLE I
General Purpose of Plan
The name of this plan is the ScanSoft, Inc. 1998 Stock Option Plan (the
"Plan"). The purpose of the Plan is to enable ScanSoft, Inc., a Delaware
corporation (the "Company"), and any Subsidiary to obtain and retain the
services of the types of employees, consultants, officers and directors who will
contribute to the Company's long range success and to provide incentives which
are linked directly to increases in share value which will inure to the benefit
of all shareholders of the Company.
ARTICLE 2
Definitions
For purposes of the Plan, the following terms are defined as set forth
below:
"Administrator" has the meaning set forth in Article 3.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto.
"Committee" means a committee of the Board designated by the Board to
administer the Plan and composed of not less than the minimum number of persons
from time to time required by Rule 16 b-3 under the Exchange Act, each of whom
is a Non-Employee Director. However, a member of the Committee is not required
to be a Non-Employee Director as defined by Rule 16b-3(b)(3)(i) under the
Exchange Act if the Company does not have a class of equity securities
registered pursuant to Section 12 of the Securities Act or if the Board
determines that the Non-Employee Director requirement shall not apply.
"Company" means ScanSoft, Inc. a corporation organized under the laws of
the State of Delaware (or any successor corporation).
"Date of Grant" means the date on which the Administrator adopts a
resolution expressly granting a Right to a Participant, or if a different date
is set forth in such resolution as the Date of Grant, then such date as is set
forth in such resolution.
"Director" means a member of the Board.
"Disability" means permanent and total disability as defined by the
Administrator.
<PAGE>
ScanSoft, Inc.
"Director" means a member of the Board.
"Disability" means permanent and total disability as defined by the
Administrator.
"Eligible Person" means an employee, officer or consultant or, subject to
the limitations set forth in Article 5, Director of the Company, or any Parent
or Subsidiary.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" per share at any date shall mean (i) if the Stock is
listed on an exchange or exchanges, or admitted for trading in a market system
which provides last sale data under Rule 11 Aa3-1 under the Exchange Act (a
"Market System"), the last reported sales price per share on the last business
day prior to such date on the principal exchange on which it is traded, or in
such a Market System, as applicable, or if no sale was made on such day on such
principal exchange or in such a Market System, as applicable, the last reported
sales price per share on the most recent day prior to such date on which a sale
was reported on such exchange or such Market System, as applicable; or (ii) if
the Common Stock is not then traded on an exchange or in such a Market System,
the average of the closing bid and asked prices per share for the Common Stock
in the over-the-counter market as quoted on NASDAQ on the day prior to such
date; or (iii) if the Common Stock is not listed on an exchange or quoted on
NASDAQ, an amount determined by the Administrator in good faith.
"Incentive Stock Option" means a Stock Option intended to qualify as an
"incentive stock option" as that term is defined in Section 422 of the Code.
"Liquidating Event" has the meaning set forth in Section 8.1(b) of the
Plan.
"Liquidity Event" has the meaning set forth in Section 8.1(c) of the Plan.
"Non-Employee Director" has the meaning set forth in Rule 16b-3(b)(3)(i)
under the Exchange Act, or any successor definition adopted by the SEC.
"Non-Statutory Option" means a Stock Option intended not to qualify as an
Incentive Stock Option.
"Optionee" means a Participant who is granted a Stock Option pursuant to
the Plan.
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ScanSoft, Inc.
"Parent" means any present or future corporation which would be a "parent
corporation" as that term is defined in Section 424 of the Code.
"Participant" means any Eligible Person selected by the Administrator,
pursuant to the Administrator's authority in Article 3, to receive grants of
Rights.
"Plan" means this Venture Name 1996 Stock Option Plan, as the same may be
amended or supplemented from time to time.
"Purchased Shares" has the meaning set forth in Section 6.2(g) of the Plan.
"Rights" means Stock Options.
"Reorganization Event" has the meaning set forth in Section 8.1(c) of the
Plan.
"Retirement" means retirement from active employment with the Company or
Subsidiary as defined by the Administrator.
"SEC" means the Securities and Exchange Commission.
"Section 16(b) Person" means a person subject to Section 16(b) of the
Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Terminating Event" with respect to a Participant shall mean the
death, Disability or Retirement of that Participant.
"Stock" means the Common Stock, par value $0.001 per share, of the Company.
"Stock Option" means an option to purchase shares of Stock granted pursuant
to Article 6.
"Stock Option Agreement" has the meaning set forth in Section 6.2 of the
Plan.
"Subsidiary" means any present or future corporation which would be a
"subsidiary corporation" as that term is defined in Section 424 of the Code.
"Ten Percent Shareholder" means a person who on the Date of Grant owns,
either directly or through attribution as provided in Section 424(d) of the
Code, Stock
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<PAGE>
ScanSoft, Inc.
possessing more than 10% of the total combined value or voting power of all
classes of stock of his or her employer corporation or of any Parent or
Subsidiary.
ARTICLE 3
ADMINISTRATION
SECTION 3.1 ADMINISTRATOR. The Plan shall be administered by either (i) the
Board, or (ii) the Committee (the group that administers the Plan is referred to
as the "Administrator").
SECTION 3.2 POWERS IN GENERAL. The Administrator shall have the power and
authority to grant Stock Options to Eligible Persons, pursuant to the terms of
the Plan.
SECTION 3.3 SPECIFIC POWERS. In particular, the Administrator shall have
the authority: (i) to construe and interpret the Plan and apply its provisions;
(ii) to promulgate, amend and rescind rules and regulations relating to the
administration of the Plan; (iii) to authorize any person to execute, on behalf
of the Company, any instrument required to carry out the purposes of the Plan;
(iv) to determine when Rights are to be granted under the Plan; (v) from time to
time to select, subject to the limitations set forth in this Plan, those
Eligible Persons to whom Rights shall be granted; (vi) to determine the number
of shares of Stock to be made subject to each Right; (vii) to prescribe the
terms and conditions of each Stock Option, including, without limitation, the
exercise price, medium of payment, right of first refusal and repurchase
provisions and to determine whether the Stock Option is to be an Incentive Stock
Option or a Non-Statutory Option and to specify the provisions of the Stock
Option agreement relating to such Stock Option; (viii) to prescribe the terms
and conditions of each Stock Option, including, without limitation, the purchase
price and medium of payment, vesting provisions and repurchase provisions, and
to specify the provisions of the Stock Option relating to such sale; (ix) to
amend any outstanding Rights for the purpose of modifying the time or manner of
vesting, or the exercise price, as the case may be, thereunder or otherwise,
subject to applicable legal restrictions and to the consent of the other party
to such agreement; (x) to determine the duration and purpose of leaves of
absences which may be granted to a Participant without constituting termination
of their employment for purposes of the Plan; and (xi) to make any and all other
determinations which it determines to be necessary or advisable for
administration of the Plan.
SECTION 3.4 DECISIONS FINAL. All decisions made by the Administrator
pursuant to the provisions of the Plan shall be final and binding on the Company
and the Participants.
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ScanSoft, Inc.
SECTION 3.5 THE COMMITTEE. The Board may, in its sole and absolute
discretion, from time to time delegate any or all of its duties and authority
with respect to the Plan to the Committee whose members are to be appointed by
and to serve at the pleasure of the Board. Once appointed, the Committee shall
continue to serve until otherwise directed by the Board. From time to time, the
Board may increase or decrease (to not less than two) the size of the Committee,
add additional members to, remove members (with or without cause) from, appoint
new members in substitution therefor, and fill vacancies, however caused, in the
Committee. The Committee shall act pursuant to a vote of the majority of its
members or, in the case of a committee comprised of only two members, the
unanimous consent of its members, whether present or not, or by the written
consent of the majority of its members or, in the case of a committee comprised
of only two members, the unanimous written consent of its members, and minutes
shall be kept of all of its meetings and copies thereof shall be provided to the
Board. Subject to the limitations prescribed by the Plan and the Board, the
Committee may establish and follow such rules and regulations for the conduct of
its business as it may determine to be advisable.
ARTICLE 4
STOCK SUBJECT TO PLAN
SECTION 4.1 STOCK SUBJECT TO THE PLAN. Subject to adjustment as provided in
Article 8, the total number of shares of Stock reserved and available for
issuance under the Plan shall be 4,000,000 shares. Shares reserved hereunder may
consist, in whole or in part, of authorized and unissued shares or treasury
shares.
SECTION 4.2 UNEXERCISED RIGHTS: REACQUIRED SHARES. To the extent that any
Rights expire or are otherwise terminated without being exercised, the shares
underlying such Rights (and shares related thereto) shall again be available for
issuance in connection with future Rights under the Plan. Shares acquired by the
Company upon exercise of Rights pursuant to Section 6.2(g) shall not increase
the shares available for issuance under the Plan.
ARTICLE 5
ELIGIBILITY
Directors, officers, employees and consultants of the Company or any Parent
or Subsidiary, who, as determined by the Administrator, are responsible for or
contribute to the management, growth or profitability of the business of the
Company or any Subsidiary, shall be eligible to be granted Rights hereunder
subject to limitations set forth in this Plan; provided, however that only
officers and employees of the Company shall be eligible to be granted Incentive
Stock Options hereunder.
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ScanSoft, Inc.
ARTICLE 6
STOCK OPTIONS
SECTION 6.1 GENERAL. Each Stock Option granted under the Plan shall be in
such form and under such terms and conditions as the Administrator may from time
to time approve; provided, that such terms and conditions are not inconsistent
with the Plan. The provisions of Stock Option Agreements entered into under the
Plan need not be identical. Stock Options granted under the Plan may be either
Incentive Stock Options or Non-Statutory Options.
SECTION 6.2 TERMS AND CONDITIONS OF STOCK OPTIONS. Each Stock Option
granted pursuant to the Plan shall be evidenced by a written option agreement
between the Company and the Optionee (the "Stock Option Agreement"), which shall
comply with and be subject to the following terms and conditions:
(a) Number of Shares. Each Stock Option Agreement shall state the number of
shares of Stock to which the Stock Option relates.
(b) Type of Option. Each Stock Option Agreement shall identify the portion
(if any) of the Stock Option which constitutes an Incentive Stock Option.
(c) Exercise Price. Each Stock Option Agreement shall state the price at
which shares subject to the Stock Option may be purchased (the "Exercise
Price"), which shall with respect to Incentive Stock Options be not less than
100% of the Fair Market Value of the shares of Stock on the Date of Grant. In
the case of Non-Statutory Options, the Exercise Price shall be determined in the
sole discretion of the Administrator, provided, however, that the Exercise Price
shall be no less than 85% of the Fair Market Value of the shares of Stock on the
Date of Grant of the Non-Statutory Option. In the case of either an Incentive
Stock Option or a Non-Statutory Option granted to a Ten Percent Shareholder, the
Exercise Price shall not be less than 110% of such Fair Market Value.
(d) Value of Shares. The Fair Market Value of the shares of
Stock (determined as of the Date of Grant) with respect to which Incentive Stock
Options are first exercisable by an Optionee under this Plan and all other
incentive option plans of the Company and any Parent or Subsidiary in any
calendar year shall not, for such year, in the aggregate, exceed $100,000; but
this Section 6.2(d) shall not affect the right of the Administrator to
accelerate or otherwise alter the time of vesting of any Options granted as
Incentive Stock Options, even, if as a result thereof, some of such Options
cease being Incentive Stock Options.
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ScanSoft, Inc.
(e) Medium and Time of Payment. The Exercise Price shall be paid in full,
at the time of exercise, in cash.
(f) Term and Exercise of Stock Options. Stock Options shall be exercisable
over the exercise period at the times the Administrator may determine, as
reflected in the related Stock Option Agreements, but the exercise period shall
not exceed ten (10) years from the Date of Grant of the Stock Option. The Stock
Option Agreements shall provide that the Stock Options will vest, and the Option
Holders shall have the right to exercise the Stock Options at a rate to be
determined by the Administrator but at a rate of at least 20% per year over a
period of 5 years from the Date of Grant of such Stock Options, unless a lower
vesting rate or longer vesting period is permitted by applicable law or
regulation. In the case of an Incentive Stock Option granted to a Ten Percent
Shareholder, the vesting or exercise period shall be determined by the
Administrator, but shall not exceed five years from the Date of Grant of the
Stock Option. The vesting or exercise period shall be subject to earlier
termination upon the occurrence of either a Special Terminating Event, as
provided in Section 10.6, or the Termination of Employment, as provided in
Section 10.7. A Stock Option may be exercised, as to any or all full shares of
Stock as to which the Stock Option has become exercisable, by giving written
notice of such exercise to the Company.
(g) Repurchase Rights: First Refusal Rights.
(A) Subject to Section 6.2(g)(D) below, each Stock Option Agreement
shall provide that the Company shall have the right (the "Repurchase Right")
exercisable following termination of an Optionee's employment to repurchase all
of the Stock purchased by the Optionee upon exercise of the Optionee's Stock
Option (the "Purchased Shares") at the Fair Market Value on the date of
termination of employment. Such Repurchase Right must be exercised by the
Company for cash or cash equivalents (including the cancellation of any purchase
money indebtedness & the Optionee to the Company) within 90 days of the later of
the date of termination of employment or the last date upon which an Option may
be exercised.
(B) Subject to Section 6.2(g)(D) below, each Stock Option Agreement
shall provide that the Company shall have the right of first refusal (the "First
Refusal Right"), exercisable in connection with any proposed sale, hypothecation
or other disposition of the Purchased Shares; and that in the event the holder
of the Purchased Shares desires to accept a bona fide third party offer for any
or all of the Purchased Shares such shares shall first be offered to the Company
at the same terms and conditions as are set forth in the bona fide offer. The
Company must elect to purchase such Purchased Shares within 30 days after
receipt of notice of the related
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ScanSoft, Inc.
proposed sale, and upon such election the Company must purchase such Purchased
Shares within 60 days of the receipt of notice of the proposed sale.
(C) Each Stock Option Agreement shall provide that the Repurchase
Rights and First Refusal Rights shall lapse and cease to have effect upon the
earlier to occur of (1) the first date on which shares of the Company's Common
Stock are held of record by more than five hundred (500) persons, (2) a
determination by the Company's Board of Directors that a public market exists
for the outstanding shares of the Company's Common Stock or (3) the closing of a
public offering pursuant to an effective registration statement under the
Securities Act, covering the offer and sale of Common Stock by the Company with
aggregate proceeds to the Company of $10,000,000 or more.
(D) The Administrator may, in its sole and absolute discretion,
determine whether ceasing to be an officer, director or consultant of the
Company or any Parent or Subsidiary or ceasing to be an employee of a Subsidiary
shall be subject to Section 6.2(g) and may determine to omit all or part of the
provisions described in Section 6.2(g) from any Stock Option Agreement and
shall, in the exercise of its discretion, prescribe the terms and conditions of
the Repurchase Rights and First Refusal Rights of each Stock Option Agreement.
(h) Other Terms and Conditions. Each Stock Option Agreement shall contain
such other terms and conditions as the Administrator shall from time to time
approve; provided, that such terms and conditions are not inconsistent with the
Plan.
ARTICLE 7
INFORMATION TO OPTION HOLDERS
The Company will provide to Rights holders such information about the
Company as it is required by the Securities Act to provide to the then current
stockholders of the Company.
ARTICLE 8
ADJUSTMENTS
SECTION 8.1 EFFECT OF CERTAIN CHANGES.
(a) Stock Dividends, Splits. Etc. In the event of a Stock split,
reverse Stock split, Stock dividend, recapitalization, combination or
reclassification of the Stock, (i) the number of shares of Stock available for
Rights, (ii) the number of shares covered by outstanding Rights and (iii) the
Exercise Price of any Stock Option, in effect
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ScanSoft, Inc.
prior to such change, shall be appropriately adjusted by the Administrator;
provided, however, that any fractional shares resulting from the adjustment
shall be eliminated.
(b) Liquidating Event. In the event of the proposed dissolution or
liquidation of the Company, or in the event of any corporate separation or
division, including, but not limited to, a split-up, split-off or spin-off
(each, a "Liquidating Event"), the Administrator may provide that the holder of
any Right then exercisable shall have the right to exercise such Right (at the
price provided in the Rights) subsequent to the Liquidating Event, and for the
balance of its term, solely for the kind and amount of shares of Stock and other
securities, cash or other property or any combination thereof receivable upon
such Liquidating Event by a holder of the number of shares of Stock for or with
respect to which such Right might have been exercised immediately prior to such
Liquidating Event; or the Administrator may provide, in the alternative, that
each Right granted under the Plan shall terminate as of a date to be fixed by
the Board; provided, however, that not less than 30 days written notice of the
date so fixed shall be given to each Rights holder and if such notice is given,
each Rights holder shall have the right, during the period of 30 days preceding
such termination, to exercise the Right as to all or any part of the shares of
Stock covered thereby, to the extent that such Right is then exercisable, on the
condition, however, that the Liquidating Event actually occurs; and if the
Liquidating Event actually occurs, such exercise shall be deemed effective (and,
if applicable, the Rights holder shall be deemed a shareholder with respect to
the Rights exercised) immediately preceding the occurrence of the Liquidating
Event, or the date of record for shareholders entitled to share in such
Liquidating Event, if a record date is set.
(c) Merger or Consolidation. In the case of any capital reorganization, any
reclassification of the Common Stock (other than a change in par value or
recapitalization described in Section 8.1(a) of the Plan), or the consolidation
of the Company with, or a sale of substantially all of the assets of the Company
to (which sale is followed by a liquidation or dissolution of the Company), or
merger of the Company with another person (a "Reorganization Event"), the
Administrator shall be obligated to determine whether the Reorganization Event
shall constitute a "Liquidity Event," and to deliver to Rights holders at least
15 days prior to such Reorganization Event (or at least 15 days prior to the
date of record for shareholders entitled to share in the securities, cash or
other property distributed in the Reorganization Event, if a record date is set)
a notice which shall (i) indicate whether the Reorganization Event is a
Liquidity Event, and (ii) advise the Rights holder of his or her rights pursuant
to the agreement applicable to such Rights. If the Reorganization Event is
determined to be a Liquidity Event, in its sole and absolute discretion, the
surviving corporation may, but shall not be obligated to, (i) tender stock
options to the Rights holder with respect to the surviving corporation which
shall contain terms and provisions that substantially preserve the rights and
benefits of the applicable Right, and (ii) in the event that no
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ScanSoft, Inc.
stock options have been tendered by the surviving corporation pursuant to the
terms of item "(i)" immediately above, the Rights holder shall have the right
exercisable during a ten-day period ending on the fifth day prior to the
Reorganization Event (or ending on the fifth day prior to the date of record for
shareholders entitled to share in the securities or property distributed in the
Reorganization Event, if a record date is set) to exercise his or her Rights, to
the extent that such Rights are then exercisable, in whole or in part, on the
condition, however, that the Reorganization Event is actually effected; and if
the Reorganization Event is actually effected, such exercise shall be deemed
effective (and, if applicable, the Rights holder shall be deemed a shareholder
with respect to the Rights exercised) immediately preceding the effective time
of the Reorganization Event (or on the date of record for shareholders entitled
to share in the securities or property distributed in the Reorganization Event,
if a record date is set).
If the Reorganization Event is not determined to be a Liquidity Event, the
Rights holder shall thereafter be entitled upon exercise of the Right to
purchase the kind and number of shares of stock or other securities, cash or
other property of the surviving corporation receivable upon such event by a
holder of the number of shares of the Common Stock which the Right entities the
Rights holder to purchase from the Company immediately prior to such event, and
in any such case, appropriate adjustment shall be made in the application of the
provisions set forth in this Plan with respect to the Rights holder's rights and
interests thereafter, to the end that the provisions set forth in the agreement
applicable to such Rights (including the specified changes and other adjustments
to the Exercise Price) shall thereafter be applicable in relation to any shares
or other property thereafter purchasable upon exercise of the Right. In the case
of any Reorganization Event that is a reorganization, merger or consolidation in
which the Company is not the "surviving corporation," the Administrator may, in
its sole and absolute discretion, accelerate the "vesting" period described in
Section 6.2(f).
(d) Where Company Survives. Section 8.1(c) shall not apply to a merger or
consolidation in which the Company is the surviving corporation, unless shares
of Stock are converted into or exchanged for securities other than publicly
traded common stock, cash (excluding cash in payment for actual shares) or any
other thing of value. Notwithstanding the preceding sentence, in case of any
consolidation or merger of another corporation with the Company in which the
Company is the surviving corporation and in which there is a reclassification or
change (including a change to the right to receive an amount of money payable by
cash or cash equivalent or other property) of the shares of Stock (other than a
change in par value, or from par value to no par value, or as a result of a
subdivision or combination, but including any change in such shares into two or
more classes or series of shares), the Administrator may provide that the holder
of each Right then exercisable shall have the right to exercise such Right
solely for the kind and amount of shares of Stock and other securities
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ScanSoft, Inc.
(including those of any new direct or indirect Parent of the Company), cash or
other property or any combination thereof receivable upon such reclassification
change, consolidation or merger by the holder of the number of shares of Stock
for which such Right might have been exercised.
(e) Surviving Corporation Defined. The determination as to which party to a
merger or consolidation is the "surviving corporation" shall be made on the
basis of the relative equity interests of the shareholders in the corporation
existing after the merger or consolidation, as follows: if immediately following
any merger or consolidation the holders of outstanding voting securities of the
Company immediately prior to the merger or consolidation own equity securities
possessing more than 50% of the voting power of the corporation existing
following the merger or consolidation, then for purposes of this Plan, the
Company shall be the surviving corporation. In all other cases, the Company
shall not be the surviving corporation. In making the determination of ownership
by the shareholders of a corporation immediately after the merger or
consolidation, of equity securities pursuant to this Section 8.1(e), equity
securities which the shareholders owned immediately before the merger or
consolidation as shareholders of another party to the transaction shall be
disregarded. Further, for purposes of this Section 8.1(e) only, outstanding
voting securities of a corporation shall be calculated by assuming the
conversion of all equity securities convertible (immediately or at some future
time) into shares entitled to vote.
(f) Par Value Changes. In the event of a change in the Stock of the Company
as presently constituted which is limited to a change of all of its authorized
shares with par value, into the same number of shares without par value, or a
change in the par value, the shares resulting from any such change shall be
"Stock" within the meaning of the Plan.
SECTION 8.2 DECISION OF ADMINISTRATOR FINAL. To the extent that the
foregoing adjustments relate to stock or securities of the Company, such
adjustments shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive; provided, however, that each
Incentive Stock Option granted pursuant to the Plan shall not be adjusted
without the prior consent of the holder thereof in a manner that causes such
Stock Option to fail to continue to qualify as an Incentive Stock Option.
SECTION 8.3 NO OTHER RIGHTS. Except as expressly provided in this Article
8, no Rights holder shall have any rights by reason of any subdivision or
consolidation of shares of Stock or the payment of any dividend or any other
increase or decrease in the number of shares of Stock of any class or by reason
of any Liquidating Event, merger, or consolidation of assets or stock of another
corporation, or any other issue by the Company of shares of stock of any class,
or securities convertible into shares of
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stock of any class; and except as provided in this Article 8, none of the
foregoing events shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Stock subject to Rights. The
grant of a Right pursuant to the Plan shall not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structures or to merge or to consolidate or
to dissolve, liquidate or sell, or transfer all or part of its business or
assets.
SECTION 8.4 NO RIGHTS AS SHAREHOLDER. Except as specifically provided in
this Article 8, a Rights holder or a transferee of a Right shall have no rights
as a shareholder with respect to any shares covered by the Rights until the date
of the issuance of a Stock certificate to him or her for such shares, and no
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions of other rights for which
the record date is prior to the date such Stock certificate is issued, except as
provided in Section 8.1(b) or 8.1(c).
ARTICLE 9
AMENDMENT AND TERMINATION
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made, without the approval of the
shareholders, which would:
(a) except as provided in Article 8, increase the total number of
shares of Stock reserved for the purposes of the Plan;
(b) materially increase the benefits accruing to Participants or
Eligible Persons under the Plan; or
(c) materially modify the requirements for eligibility under the Plan.
The Administrator shall have the authority to interpret the Plan and any
Stock Option Agreements and to take whatever administrative actions, correction
of administrative errors, or the award of options under the Plan, as the
Administrator in its sole good faith judgment shall determine to be advisable.
All decisions, interpretations and administrative actions made by the
Administrator hereunder or under any Stock Option Agreement shall be binding on
the Company and the Optionee (including successors and assigns).
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ScanSoft, Inc.
ARTICLE 10
GENERAL PROVISIONS
SECTION 10.1 GENERAL RESTRICTIONS.
(a) Limitation on Granting of Rights. Subject to adjustment as
provided in Article 8, no Participant shall be granted Rights with respect to
more than 1,000,000 shares of Stock during any one year period.
(b) No View to Distribute. The Administrator may require each person
acquiring shares of Stock pursuant to the Plan to represent to and agree with
the Company in writing that such person is acquiring the shares without a view
towards distribution thereof. The certificates for such shares may include any
legend which the Administrator deems appropriate to reflect any restrictions on
transfer.
(c) Legends. All certificates for shares of Stock delivered under the
Plan shall be subject to such stop transfer orders and other restrictions as the
Administrator may deem advisable (1) under the rules, regulations and other
requirements of the SEC, any stock exchange upon which the Stock is then listed
and any applicable federal or state securities laws, and (2) to secure the First
Refusal Rights and Repurchase Rights of the Company, and the Administrator may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(d) Market Stand-Off. All Stock Option Agreements and Stock Purchase
Agreements shall provide that in connection with any underwritten public
offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act, including the Company's
initial public offering, the Participant agrees (the "Hold-Back Agreement") not
to sell, make any short sale of, loan, hypothecate, pledge, grant any option for
the purchase of, or otherwise dispose or transfer for value or otherwise agree
to engage in any of the foregoing transactions with respect to any Purchased
Shares or any securities the value of which is derived by reference to the value
of the Purchased Shares without the prior written consent of the Company or its
underwriters, for such period of time from and after the effective date of such
registration statement as may be requested by the Company or such underwriters;
provided, however, that in no event shall such period exceed one hundred-eighty
(180) days. Stock Option Agreements may provide that the Hold-Back Agreement
shall terminate following expiration of the two-year period immediately
following the effective date of the Company's initial public offering.
SECTION 10.2 OTHER COMPENSATION ARRANGEMENTS. Nothing contained in this
Plan shall prevent the Board from adopting other or additional compensation
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ScanSoft, Inc.
arrangements, subject to shareholder approval if such approval is required; and
such arrangements may be either generally applicable or applicable only in
specific cases.
SECTION 10.3 DISQUALIFYING DISPOSITIONS: WITHHOLDING TAXES.
(a) Disqualifying Disposition. Employee agrees that should he or she
make a "disposition" (as defined in the Code) of all or any of the Purchased
Shares acquired pursuant to an Incentive Stock Option within two years from the
date of grant of the Option or within one year after the issuance of such
Purchased Shares, he or she shall immediately advise the Company in writing as
to the occurrence of the sale and the price realized upon the sale of such
Purchased Shares. Employee agrees that he or she shall maintain all Purchased
Shares in his or her name so long as he or she maintains beneficial ownership of
such Purchased Shares.
(b) Withholding Required. Each Participant shall, no later than the
date as of which the value derived from a Right first becomes includable in the
gross income of the Participant for income tax purposes, pay to the Company, or
make arrangements satisfactory to the Administrator regarding payment of, any
federal, state or local taxes of any kind required by law to be withheld with
respect to the Right or its exercise. The obligations of the Company under the
Plan shall be conditioned upon such payment or arrangements and the Participant
shall, to the extent permitted by law, have the right to request that the
Company deduct any such taxes from any payment of any kind otherwise due to the
Participant.
SECTION 10.4 INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as Directors or members of the Committee, and
to the extent allowed by applicable law, the Administrators shall be indemnified
by the Company against the reasonable expenses, including attorney's fees,
actually incurred in connection with any action, suit or proceeding or in
connection with any appeal therein, to which they or any one of them may be
party by reason of any action taken or failure to act under or in connection
with the Plan or any option granted under the Plan, and against all amounts paid
by them in settlement thereof (provided that the settlement has been approved by
the Company, which approval shall not be unreasonably withheld) or paid by them
in satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Administrator did not act in good faith and in a manner
which such person reasonably believed to be in or not opposed to the best
interests of the Company, and in the case of a criminal proceeding, had no
reasonable cause to believe that his or her conduct was unlawful; provided,
however, that within 60 days after institution of any such action, suit or
proceeding, such Administrator shall, in writing, offer and permit the Company
the opportunity at its own expense to handle and defend such action, suit or
proceeding.
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ScanSoft, Inc.
SECTION 10.5 OTHER PROVISIONS. The Stock Option Agreements authorized under
the Plan may contain such other provisions not inconsistent with this Plan,
including, without limitation, restrictions upon the exercise of the Rights, as
the Administrator may deem advisable.
SECTION 10.6 SPECIAL TERMINATION EVENTS. If a Special Terminating Event
occurs, all Rights theretofore granted to such Rights holder may, unless earlier
terminated in accordance with their terms, be exercised by the Rights holder or
by his or her estate or by a person who acquired the right to exercise such
Right by bequest or inheritance or otherwise by reason of the death or
Disability of the Rights holder, at any time within one year after the date of
the Special Terminating Event. Notwithstanding the foregoing, an Incentive Stock
Option shall only be exercisable at any time within three months after the date
of Retirement or termination of employment of an Optionee.
SECTION 10.7 TERMINATION OF EMPLOYMENT. Except as provided in this Section
10.7, no Right may be exercised unless the Right holder is then a Director, or
officer of the Company, or in the employ, or officer or director of the Company
or any Parent or Subsidiary, or rendering services as a consultant to the
Company or any Subsidiary, and unless he or she has remained continuously so
employed or engaged since the Date of Grant. If the employment or services of a
Right holder shall terminate (other than by reason of a Special Terminating
Event), all Rights previously granted to the Right holder which are exercisable
at the time of such termination may be exercised for the period ending 80 days
after such termination; provided, however, that if the employment or services of
a Rights holder is terminated for "cause" such Rights may be exercised for the
period not to exceed 30 days (and which may be less (and may zero days) in the
case of termination for a "cause" which is recognized under applicable law as a
good cause for the termination of employment) after such termination; provided,
further, that no Right may be exercised following the date of its expiration.
Nothing in the Plan or in any Right granted pursuant to the Plan shall confer
upon an employee, officer or director any right to continue in the employ of the
Company or any Parent or Subsidiary or continue as a consultant to or an officer
or director thereof or interfere in any way with the right of the Company, any
Parent or any Subsidiary to terminate such employment or relationship at any
time.
SECTION 10.8 NON-TRANSFERABILITY OF RIGHTS. Each Stock Option Agreement
shall provide that the Rights granted under the Plan shall not be transferable,
but the Stock Option Agreement may provide that Rights may be transferable by
will or by the laws of descent and distribution, and the Rights may be
exercised, during the lifetime of the Rights holder, only by the Rights holder
or by his or her guardian or legal representative.
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ScanSoft, Inc.
SECTION 10.9 REGULATORY MATTERS. Each Stock Option shall provide that no
shares shall be purchased or sold thereunder unless and until (i) any then
applicable requirements of state or federal laws and regulatory agencies, and,
if applicable, foreign laws, shall have been fully complied with to the
satisfaction of the Company and its counsel; and (ii) if required to do so by
the Company, the Optionee shall have executed and delivered to the Company a
letter of investment intent in such form and containing such provisions as the
Board or Committee may require.
SECTION 10.10 RECAPITALIZATIONS. Each Stock Option Agreement shall contain
provisions required to reflect the provisions of Article 8.
SECTION 10.11 DELIVERY. Upon exercise of a Right granted under this Plan,
the Company shall issue Stock or pay any amounts due within a reasonable period
of time thereafter. Subject to any statutory obligations the Company may
otherwise have, for purposes of this Plan, thirty days shall be considered a
reasonable period of time.
SECTION 10.12 RULE 16B-3. With respect to persons subject to Section 16 of
the Exchange Act, transactions under this plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To
the extent any provision of the plan or action by the Administrator fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Administrator.
ARTICLE II
EFFECTIVE DATE OF PLAN
The Plan shall become effective on the date on which the Plan approved by
the Company's stockholders.
ARTICLE 12
TERM OF PLAN
No Right shall be granted pursuant to the Plan on or after December 31,
2002, but Rights theretofore granted may extend beyond that date.
[END]
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ScanSoft, Inc.
ScanSoft, Inc.
Stock option agreement
(Non-Statutory Stock Option)
This STOCK OPTION AGREEMENT (this "Option Agreement") is, made and entered
into on the execution date of the Option Certificate to which it is attached
(the "Certificate"), by and between ScanSoft, Inc., a Delaware corporation (the
"Company"), and the Director, consultant or employee named in the Certificate
("Optionee"). By executing and delivering the Certificate Optionee will be
deemed to have signed, become a party to and agreed to all the terms of this
Option Agreement.
Pursuant to the ScanSoft, Inc. 1998 Stock Option Plan (the "Plan"), a copy
of which has previously been provided to Optionee, the Board of Directors of the
Company (the "Board") has authorized the grant to Optionee of a non-statutory
stock option to purchase shares of the Company's Common Stock, par value $0.001
per share (the "Common Stock"), upon the terms and subject to the conditions set
forth in this Option Agreement and in the Plan.
The Company and Optionee agree as follows:
1. GRANT OF OPTION.
The Company hereby grants to Optionee the right and option (the "Option"),
upon the terms and subject to the conditions set forth in this Option Agreement,
to purchase all or any portion of that number of shares of the Common Stock (the
"Shares") set forth in the Certificate, at the Option exercise price set forth
in the Certificate (the "Exercise Price").
2. TERM OF OPTION.
The Option shall terminate and expire on the Option Expiration Date set
forth in the Certificate, unless sooner terminated as provided herein.
3. EXERCISE PERIOD.
(a) Subject to the provisions of Paragraphs 3(b), 5, 7(c) and 7(d) of this
Option Agreement, the Option shall vest and become become exercisable (in whole
or in part) upon and after the dates set forth under the caption "Exercise
Schedule " in the Certificate. The installments shall be cumulative, i. e., the
Option may be exercised, as to any or all Shares covered by an installment, at
any time or times
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ScanSoft, Inc.
after the installment vests or first becomes exercisable and until expiration or
termination of the Option.
(b) Notwithstanding anything to the contrary contained in this Option
Agreement, the Option may not be exercised, in whole or in part, unless and
until any then applicable requirements of all federal, state and local laws and
regulatory agencies shall have been fully complied with to the satisfaction of
the Company and its legal counsel.
4. EXERCISE OF OPTION.
There is no obligation to exercise the Option, in whole or in part. The
Option may be exercised, in whole or in part, only by delivery to the Company
of:
(a) written notice of exercise in form and substance identical to Exhibit
"A" attached to this Option Agreement stating the number of shares of Common
Stock then being purchased (the "Purchased Shares"); and
(b) payment of the Exercise Price of the Purchased Shares in cash.
Following receipt of a valid notice and full payment as referred to above,
the Company shall issue and deliver to Optionee a stock certificate or stock
certificates evidencing the Purchased Shares; provided, however, that the
Company shall not be obligated to issue a fraction or fractions of a share of
its Common Stock, and may pay to Optionee, in cash or by check, the Fair Market
Value of any fraction or fractions of a share exercised by Optionee, which Fair
Market Value shall be determined as set forth in the definition of Fair Market
Value in Section 2 of the Plan.
5. TERMINATION OF EMPLOYMENT.
(a) If Optionee shall cease to be a Director of the Company, or to be in
the employ of, or a consultant to or an officer of the Company, or any
Subsidiary for any reason other than a Special Terminating Event (as hereinafter
defined), Optionee shall have the right to exercise the Option at any time
within 80 days after the date Optionee ceased to be a Director of the Company,
or to be employed by, or to be a consultant to the Company, or any Subsidiary
and prior to the date of termination of the Option under Paragraph 2 of this
Option Agreement with respect to all shares with respect to which the Option was
exercisable at the date Optionee's employment or relationship terminated as to
which the Option had not previously been exercised; and to the extent
unexercised at the end of this 80 day period, the Option shall terminate. The
Administrator, in its sole and absolute discretion, shall determine whether or
not authorized leaves of absence shall constitute termination of employment for
purposes of this Option Agreement. As used herein the term "Special Terminating
Event" shall mean Optionee's death, permanent disability, or retirement.
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ScanSoft, Inc.
(b) Upon the termination of Optionee "for cause" as an employee,
consultant, officer or director by the Company, or any Subsidiary, the Option
shall terminate and cease to be exercisable as provided in Section 5(d).
(c) If a Special Terminating Event occurs while Optionee is an employee,
officer, director or consultant to or of the Company, or any Subsidiary, then
Optionee, Optionee's guardians, executors or administrators or any person or
persons acquiring the Option directly from Optionee by will or the laws of
descent and distribution, shall have the right to exercise the entire Option at
any time within one year after such retirement, death or permanent disability,
but not later than the Option Expiration Date; to the extent the Option is
unexercised at the end of that one-year period, the Option will terminate.
(d) Upon the termination of Optionee for "cause" as defined in 5(d)(1)
Optionee shall have the right to exercise the Option at any time within 30 days
after such termination, and prior to the date of termination of the Option under
Paragraph 2 of this Option Agreement, with respect to all Shares with respect to
which the Option was exercisable on the date of such termination and as to which
the Option had not previously been exercised.
Upon the termination of Optionee for "cause" as defined in 5(d)(2) the
Option shall immediately terminate and cease to be exercisable.
For purposes of this Option Agreement, "cause" means:
(1) with respect to any Optionees of the Company:
(i) the failure or refusal by Optionee to perform his duties
to the Company; or
(ii) Optionee's willful disobedience of any lawful orders or
directives of the Board or any officers thereof acting under the
authority thereof or Optionee's deliberate interference with the
compliance by other employees of the Company with any such orders
or directives; or
(iii) the failure or refusal of Optionee to abide by or
comply with the written policies, standard procedures or
regulations of the Company; or
(iv) any willful or continued act or course of conduct by
Optionee which the Board determines might reasonably be expected
to have a material detrimental effect on the Company or the
business, operations, affairs or financial position thereof, or
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ScanSoft, Inc.
(v) the determination by the Board of Directors of the
Company, in the exercise of reasonable discretion, that Optionee
is not competent to perform his duties of employment; or
(vi) with respect to consultants, any material breach of the
consulting agreement with the Company, or any Subsidiary.
(2) With respect to any Optionees of the Company: good cause for
the termination of employment as recognized under applicable law
including, without limitation, the committing by the Optionee of any
fraud, theft, embezzlement or other dishonest act against the Company,
a parent, any Subsidiary or any customer, supplier or other person
with a business relationship with the Company.
(e) For purposes of this Option Agreement, "permanent disability" shall
mean permanent and total disability as defined and determined by the
Administrator in its sole and absolute discretion. Optionee shall not be
considered permanently disabled unless he furnishes proof of such disability in
such form and manner, and at such times, as the Administrator of the Plan may
from time to time require.
6. RESTRICTIONS ON PURCHASED SHARES.
(a) MARKET STAND-OFF.
i) In connection with any underwritten public offering by the Company
of its equity securities pursuant to an effective registration statement
filed under the Securities Act, including the Company's initial public
offering, Optionee shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise
dispose or transfer for value or otherwise agree to engage in any of the
foregoing transactions with respect to any Purchased Shares or any
securities the value of which is derived by reference to the value of the
Purchased Shares without the prior written consent of the Company or its
underwriters, for such period of time from and after the effective date of
such registration statement as may be requested by the Company or such
underwriters; provided, however, that in no event shall such period exceed
one hundred-eighty (180) days. Optionee agrees to execute and deliver to
the Company such further documents or instruments as the Company reasonably
determines to be necessary or appropriate to effect the provisions of this
Section 6(a).
This Section 6(a)(i) shall only remain in effect for the two-year period
immediately following the effective date of the Company's initial public
offering and shall thereafter terminate and cease to be in force or effect.
ii) In the event of any stock dividend, stock split, recapitalization,
or other change affecting the Company's outstanding Common Stock
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ScanSoft, Inc.
effected without receipt of consideration, then any new, substituted, or
additional securities distributed with respect to the Purchased Shares shall be
immediately subject to the provisions of this Section 6(a), to the same extent
the Purchased Share are at such time covered by such provisions.
iii) In order to enforce the provisions of Section 6(a), the
corporation may impose stop-transfer instructions with respect to the
Purchased Shares until the end of the applicable stand-off period.
(b) RESTRICTION ON TRANSFER.
i) Optionee shall not sell, transfer, assign, encumber, or otherwise
dispose of ("Transfer") any of the Purchased Shares that are subject to the
Company's Repurchase Right under Section 6(c). In addition, Purchased
Shares that are released from the Repurchase Right shall not be Transferred
in contravention of the Company's First Refusal Right under Section 6(d) or
the provisions of Section 6(e). The restrictions contained in Section 6(d)
shall not be applicable to (i) a transfer of the Purchased Shares made
without consideration to the Optionee's spouse or issue, including adopted
children, or to a trust for the exclusive benefit of the Optionee or the
Optionee's spouse or issue or (ii) a transfer of title to the Purchased
Shares effected pursuant to the Optionee's will or the laws of descent and
distribution.
ii) Each person to whom the Purchased Shares are transferred by means
of one of the permitted transfers specified in Section 6(b)(i) must, as a
condition precedent to the validity of such transfer, acknowledge in
writing to the Company that such person is bound by the provisions of this
Agreement including that the transferred shares are subject to (i) both the
Company's Repurchase Right (Section 6(c)) and the Company's First Refusal
Right (Section 6(b)) granted hereunder and (ii) the market stand-off
provisions of Section 6(a), to the same extent such shares would be so
subject if retained by the Optionee.
iii) For purposes of Sections 6(b), 6(c) and 6(d) of this Agreement,
the term "Owner" shall include the Optionee and all subsequent holders of
the Purchased Shares who derive their chain of ownership through a
permitted transfer from the Optionee in accordance with Section 6(b)(i).
(c) REPURCHASE RIGHT.
i) GRANT. The Company is hereby granted the right (the "Repurchase
Right") exercisable (A) if the Options have been fully exercised prior to
termination of Optionee's employment, consultancy, officership or
directorship with the Company or any Subsidiary, within the sixty (60) day
period following such termination, or (B) if the Options have not been
fully exercised prior to such, at any time during the thirty (30) day
period following the last day upon which Optionee or Optionee's
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ScanSoft, Inc.
guardians, executors or administrators or any person or persons acquiring the
Option directly from Optionee by will or the laws of descent and distribution,
is permitted to exercise the Option pursuant to the provisions of Section 5
above, to repurchase all of the Purchased Shares at Fair Market Value as of the
date of termination.
ii) Exercise of the Repurchase Right. The Repurchase Right shall be
exercisable by written notice delivered to the Owner of the Purchased
Shares prior to the expiration of the applicable period specified in
Section 6(c)(i). The notice shall indicate the number of Purchased Shares
to be repurchased and the date on which the repurchase is to be effected,
such date to be not more than thirty (30) days after the date of notice.
Owner shall, prior to the close of business on the date specified for the
repurchase, deliver to the Secretary of the Company the certificates
representing the Purchased Shares to be repurchased, each certificate to be
properly endorsed for transfer. The Company shall, concurrently with the
receipt of such stock certificates from Owner, pay to Owner in cash or cash
equivalents (including the cancellation of any purchase money indebtedness
of the Optionee to the Company), an amount equal to the Fair Market Value
of the Purchased Shares that are to be repurchased.
iii) Termination of the Repurchase Right. The Repurchase Rights and
First Refusal Rights shall lapse and cease to have effect upon the earlier
to occur of (1) the first date on which shares of the Company's Common
Stock are held of record by more than five hundred (500) persons, (2) a
determination by the Company's Board of Directors that a public market
exists for the outstanding shares of the Company's Common Stock or (3) the
closing of a public offering pursuant to an effective registration
statement under the Securities Act, covering the offer and sale of Common
Stock by the Company with aggregate proceeds to the Company of $10,000,000
or more.
(d) RIGHT OF FIRST REFUSAL
i) GRANT. The Company is hereby granted the right of first refusal
(the "First Refusal Right"), exercisable in connection with any proposed
Transfer of the Purchased Shares. For purposes of this Section 6(d), the
term "Transfer" shall not include any of the permitted transfers under
Section 6(b)(i).
ii) NOTICE OF INTENDED DISPOSITION. In the event the Owner desires to
accept a bona fide third-party offer for any or all of the Purchased Shares
(the shares subject to such offer to be hereinafter called, solely for the
purposes of this Section 6(d), the "Target Shares"), Owner shall promptly
(i) deliver to the Secretary of the Company written notice (the
"Disposition Notice") of the offer and the basic terms and conditions
thereof, including the proposed purchase price, and (ii) provide
satisfactory proof that the disposition of the Target Shares to the
third-party offeror
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ScanSoft, Inc.
would not be in contravention of the provisions set forth in Sections 6(b),
6(c) and 6(e) of this Agreement.
iii) Exercise of Right. The Company (or its assignees) shall, for a
period of thirty (30) days following receipt of the Disposition Notice,
have the right to repurchase all of the Target Shares specified in the
Disposition Notice upon substantially the same terms and conditions
specified therein. Such right shall be exercisable by written notice (the
"Exercise Notice") delivered to Owner prior to the expiration of the thirty
(30) day exercise period. The Company (or its assignees) shall effect the
repurchase of the Target Shares, including payment of the purchase price,
not more than five (5) business days after delivery of the Exercise Notice;
and at such time Owner shall deliver to the Company the certificates
representing the Target Shares to be repurchased, each certificate to be
properly endorsed for transfer. The Target Shares so purchased shall
thereupon be canceled and cease to be issued and outstanding shares of the
Company's Common Stock.
Should the purchase price specified in the Disposition Notice be payable in
property other than cash or evidences of indebtedness, the Company (or its
assignees) shall have the right to pay the purchase price in the form of cash
equal in amount to the value of such property. If the Owner and the Company (or
its assignees) cannot agree on such cash value within ten (10) days after the
Company's receipt of the Disposition Notice, the valuation shall be made by an
appraiser of recognized standing selected by the Owner and the Company (or its
assignees), or, if they cannot agree on an appraiser within twenty (20) days
after the Company's receipt of the Disposition Notice, each shall select an
appraiser of recognized standing and the two appraisers shall designate a third
appraiser of recognized standing, whose appraisal shall be determinative of such
value. The cost of such appraisal shall be paid equally by the Company and the
Owner. The closing shall then be held on the later of (i) the fifth business day
following delivery of the Exercise Notice or (ii) the 15th day after such cash
valuation shall have been made.
iv) NON-EXERCISE OF RIGHT. In the event the Exercise Notice is not
given to Owner within thirty (30) days following the date of the Company's
receipt of the Disposition Notice, Owner shall have a period of thirty (30)
days thereafter, in which to sell or otherwise dispose of the Target Shares
upon terms and conditions (including the purchase price) no more favorable
to the third-party purchaser than those specified in the Disposition
Notice; provided, however, that any such sale or disposition must not be
effected in contravention of the provisions of Section 6(e) of this
Agreement. The third-party purchaser shall acquire the Target Shares free
and clear of all the terms and provisions of this Agreement (including the
Company's Repurchase Right under Section 6(d) and the Company's First
Refusal Right hereunder). In the event Owner does not sell or otherwise
dispose of the Target Shares within the specified thirty (30) day period,
the Company's First Refusal Right shall continue to be applicable to any
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ScanSoft, Inc.
subsequent disposition of the Target Shares by Owner until such right
lapses in accordance with Section 6(d)(v).
v) TERMINATION OF THE FIRST REFUSAL RIGHT. The First Refusal Right
under this Section 6(d) shall lapse and cease to have effect upon the
earlier to occur of (1) the first date on which shares of the Company's
Common Stock are held of record by more than five hundred (500) persons,
(2) a determination by the Company's Board of Directors that a public
market exists for the outstanding shares of the Company's Common Stock or
(3) the closing of a public offering pursuant to an effective registration
statement under the Securities Act, covering the offer and sale of Common
Stock by the Company with aggregate proceeds to the Company of $10,000,000
or more. However, the market standoff provisions of 6(a) shall continue to
remain in full force and effect following the lapse of the First Refusal
Right hereunder.
vi) LEGEND. All certificates representing Purchased Shares subject to
the Right of First Refusal shall be endorsed with the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN
COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY
AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST
TO THE SHARES). SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN RIGHTS OF
FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES. THE SECRETARY
OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH
AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."
(e) RECAPITALIZATION.
i) In the event of any stock dividend, stock split, reverse stock
split, recapitalization or other transaction affecting the Company's
outstanding Common Stock as a class effected without receipt of
consideration, then any new, substituted or additional securities or other
property which is by reason of such transaction distributed with respect to
the Purchased Shares shall be immediately subject to the provisions of this
Option Agreement, but only to the extent the Purchased Shares are at that
time covered by any such provisions.
ii) In the event of a Reorganization Event (as defined in Paragraph
7(c)), the Company's Repurchase Right and First Refusal Right shall remain
in full force and effect and shall apply to the new capital stock or other
property received in exchange for the Purchased Shares in consummation of
the
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ScanSoft, Inc.
Corporate Transaction, but only to the extent the Purchased Shares are at
the time covered by such rights.
(f) SECURITIES LAW RESTRICTIONS. None of the Purchased Shares shall be
Transferred (with or without consideration) and the Company shall not be
required to register any such Transfer and the Company may instruct its transfer
agent not to register any such Transfer, unless and until all of the following
events shall have occurred:
(i) the Purchased Shares are Transferred pursuant to and in conformity
with (1) (x) an effective registration statement filed with the SEC
pursuant to the Securities Act, as amended (the "Act"), or (y) an exemption
from registration under the Act, and (2) the securities laws of any state
of the United States; and
(ii) Optionee has, prior to the Transfer of such Purchased Shares, and
if requested by the Company, provided all relevant information to the
Company and Company's legal counsel so that upon Company's request,
Company's legal counsel is able to, and actually prepares and delivers to
the Company a written opinion that the proposed Transfer (1) (x) is
pursuant to a registration statement which has been filed with the SEC and
is then effective, or (y) is exempt from registration under the Securities
Act as then in effect, and (2) is either qualified or registered under any
applicable state securities laws, or exempt from such qualification or
registration. The Company shall bear all costs of preparing such opinion.
(g) NONCOMPLYING TRANSFERS INVALID. Any attempted Transfer which is not in
full compliance with this Paragraph 6 shall be null and void ab initio, and of
no force or effect.
7. ADJUSTMENTS UPON RECAPITALIZATION.
Subject to any required action by the shareholders of the Company:
(a) If the outstanding shares of the Common Stock shall be subdivided into
a greater number of shares of the Common Stock or a dividend in shares of Common
Stock or other securities of the Company convertible into or exchangeable for
shares of the Common Stock (in which latter event the number of shares of Common
Stock issuable upon the conversion or exchange of such securities shall be
deemed to have been distributed) shall be paid in respect of the shares of
Common Stock, the Exercise Price in effect immediately prior to such subdivision
or at the record date of such dividend shall, simultaneously with the
effectiveness of such subdivision or immediately after the record date of such
dividend, be proportionately reduced, and conversely, if the outstanding shares
of Common Stock shall be combined into a smaller number of shares of Common
Stock, the Exercise Price in effect immediately
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ScanSoft, Inc.
prior to such combination shall, simultaneously with the effectiveness of such
combination, be proportionately increased.
(b) When any adjustment is required to be made in the Exercise Price, the
number of Shares purchasable upon the exercise of the Option shall be adjusted
to that number of Shares determined by (i) multiplying an amount equal to the
number of Shares purchasable on the exercise of the Option immediately prior to
such adjustment by the Exercise Price in effect immediately prior to such
adjustment, and then (ii) dividing that product by the Exercise Price in effect
immediately after such adjustment.
(c) In case of any capital reorganization, any reclassification of the
Common Stock (other than a change in par value or recapitalization described in
Paragraph 7(a) of this Option Agreement), or the consolidation of the Company
with, or a sale of substantially all of the assets of the Company to (which sale
is followed by a liquidation or dissolution of the Company), or merger of the
Company with another person (a "Reorganization Event"), the Administrator shall
be obligated to determine whether the Reorganization Event shall constitute a
"Liquidity Event," and to deliver to Optionee at least 15 days prior to such
Reorganization Event a notice which shall (i) indicate whether the
Reorganization Event is a Liquidity Event and (ii) advise Optionee of his or her
rights pursuant to this Option Agreement. If the Reorganization Event is
determined to be a Liquidity Event, in its sole and absolute discretion, the
surviving corporation may, but shall not be obligated to, (i) tender to Optionee
Stock Options with respect to the surviving corporation which shall contain
terms and provisions that substantially preserve the rights and benefits of this
Option, and (ii) in the event that no Stock Options have been tendered by the
surviving corporation pursuant to the terms of item "(i)" immediately above,
Optionee shall have the right exercisable during a ten-day period ending on the
fifth day prior to the Reorganization Event to exercise his or her Stock
Options, to the extent that such Stock Options are then exercisable, in whole or
in part, on the condition, however, that the Reorganization Event is actually
effected; and if the Reorganization Event is actually effected, such exercise
shall be deemed effective (and, if applicable, the Optionee shall be deemed a
shareholder with respect to the Stock Options exercised) immediately preceding
the effective time of the Reorganization Event (or on the date of record for
shareholders entitled to share in the securities or property distributed in the
Reorganization Event, if a record date is set).
If the Reorganization Event is not determined to be a Liquidity Event,
Optionee shall thereafter be entitled upon exercise of the Option to purchase
the kind and number of shares of stock or other securities, cash or other
property of the surviving corporation receivable upon such event by a holder of
the number of shares of the Common Stock which the Option entities Optionee to
purchase from the Company immediately prior to such event, and in any such case,
appropriate adjustment shall be made in the application of the provisions set
forth in this Option Agreement with respect to Optionee's rights and interests
thereafter, to the end that the provisions set forth in this Option Agreement
(including the specified changes and
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ScanSoft, Inc.
other adjustments to the Exercise Price) shall thereafter be applicable in
relation to any shares or other property thereafter purchasable upon exercise of
the Option.
(d) In the event of the proposed dissolution or liquidation of the Company,
or in the event of any corporate separation or division, including, but not
limited to, a split-up, split-off or spin-off (each, a "Liquidating Event"), the
Administrator may provide that the holder of any Stock Option then exercisable
shall have the right to exercise such Stock Option (at the price provided in the
Stock Option Agreement) subsequent to the Liquidating Event, and for the balance
of its term, solely for the kind and amount of shares of Stock and other
securities, cash or other property or any combination thereof receivable upon
such Liquidating Event by a holder of the number of shares of Stock for or with
respect to which such Stock Option might have been exercised immediately prior
to such Liquidating Event; or, in the alternative, that each Stock Option
granted under the Plan shall terminate as of a date to be fixed by the Board;
provided, however, that not less than 30 days written notice of the date so
fixed shall be given to each Option Holder and if such notice is given, each
Option Holder shall have the right, during the period of 30 days preceding such
termination, to exercise the Stock Option as to all or any part of the shares of
Stock covered thereby, to the extent that such Stock Option is then exercisable,
on the condition, however, that the Liquidating Event actually occurs; and if
the Liquidating Event actually occurs, such exercise shall be deemed effective
(and, if applicable, the Option Holder shall be deemed a shareholder with
respect to the Stock Options exercised) immediately preceding the occurrence of
the Liquidating Event, or the date of record for shareholders entitled to share
in such Liquidating Event, if a record date is set.
(e) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Administrator
of the Plan, and its determination shall be final, binding and conclusive.
(f) The provisions of this Paragraph 7 are intended to be exclusive, and
Optionee shall have no other rights upon the occurrence of any of the events
described in this Paragraph 7.
(g) The grant of the Option shall not affect in any way the right or power
of the Company to make adjustments, reclassifications, reorganizations or
changes in its capital or business structure, or to merge, consolidate, dissolve
or liquidate, or to sell or transfer all or any part of its business or assets.
8. INVESTMENT INTENT.
Optionee represents and agrees that if he or she exercises the Option in
whole or in part and if at the time of such exercise the Plan and/or the
Purchased Shares have not been registered under the Securities Act, he or she
will acquire the Shares upon such exercise for the purpose of investment and not
with a view to the
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ScanSoft, Inc.
distribution of such Shares, and that upon each exercise of the Option he or she
will furnish to the Company a written statement to such effect in a form
prescribed by the Administrator.
9. LEGEND ON STOCK CERTIFICATES.
Optionee agrees that all certificates representing the
Purchased Shares will be subject to such stock transfer orders and other
restrictions (if any) as the Company or Administrator may deem advisable under
the rules, regulations and other requirements of the SEC, any stock exchange
upon which the Common Stock is then listed and any applicable federal or state
securities laws, and the Company or Administrator may cause a legend or legends
to be put on such certificates to make appropriate reference to such
restrictions.
10. NO RIGHTS AS SHAREHOLDER.
Except as provided in Article 7 of the Plan, Optionee shall have no rights
as a shareholder with respect to the Shares until the date of the issuance to
Optionee of a stock certificate or stock certificates evidencing such Shares.
Except as may be provided in Paragraph 7 of this Option Agreement, no adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for which the
record date is prior to the date such stock certificate is issued.
11. INTERPRETATION.
The Administrator shall have the authority to interpret the Plan and this
Option Agreement and to take whatever administrative actions, correction of
administrative errors in the Certificate, this Agreement or the award of options
under the Plan, as the Administrator in its sole good faith judgment shall
determine to be advisable. All decisions, interpretations and administrative
actions made by the Administrator hereunder or under the Plan shall be binding
on the Company and the Optionee (including successors and assigns).
12. WITHHOLDING.
The Company shall be entitled to require as a condition of delivery of any
Purchased Shares upon exercise of any Option that the Optionee agree to remit,
at the time of such delivery or at such later date as the Company may determine,
an amount sufficient to satisfy all federal, state and local withholding tax
requirements relating thereto, and Optionee agrees to take such other action
required by the Company to satisfy such withholding requirements.
13. CHARACTER OF OPTION.
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ScanSoft, Inc.
The Option is not intended to qualify as an "incentive stock option" as
that term is defined in Section 422 of the Code.
14. GENERAL PROVISIONS.
(a) Further Assurances. Optionee shall promptly take all actions and
execute all documents requested by the Company or Administrator which they deem
to be reasonably necessary to effectuate the terms and intent of this Option
Agreement.
(b) Notices. All notices, requests, demands and other communications under
this Option Agreement shall be in writing and shall be given to the parties
hereto as follows:
i) If to the Company, to:
ScanSoft, Inc.
Corporate Secretary
P.O. Box 1600
800 Long Ridge Road
Stamford, Connecticut 06904
ii) If to Optionee, to the address set
forth in the records of the Company,
or at such other address or addresses as may have been furnished by such either
party in writing to the other party hereto. Any such notice, request, demand or
other communication shall be effective (i) if given by mail, 72 hours after such
communication is deposited in the mail by first-class certified mail, return
receipt requested, postage prepaid, addressed as aforesaid, or (ii) if given by
any other means, when delivered at the address specified in this subparagraph
(b).
(c) TRANSFER OF RIGHTS UNDER THIS OPTION AGREEMENT. The Company may at any
time transfer and assign its rights and delegate its obligations under this
Option Agreement to any other person, corporation, firm or entity, including its
officers, directors and stockholders, with or without consideration.
(d) OPTION NON-TRANSFERABLE. Optionee may not sell, transfer, assign or
otherwise dispose of the Option except by will or the laws of descent and
distribution as permitted herein and Stock Options may be exercised during the
lifetime of the Option Holder only by the Option Holder or by his or her
guardian or legal representative.
(e) SUCCESSORS AND ASSIGNS. Except to the extent specifically limited by
the terms and provisions of this Option Agreement, this Option Agreement shall
be
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ScanSoft, Inc.
binding upon and inure to the benefit of the parties hereto and their respective
successors, assigns, heirs and personal representatives.
(f) GOVERNING LAW. THIS OPTION AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
MADE IN, AND TO BE PERFORMED WITHIN, THAT STATE.
(g) THE PLAN. This Option Agreement is made pursuant to the Plan, and it is
intended, and shall be interpreted in a manner, to comply therewith. Any
provision of this Option Agreement inconsistent with the Plan shall be
superseded and governed by the Plan.
(h) MISCELLANEOUS. Titles and captions contained in this Option Agreement
are inserted for convenience of reference only and do not constitute a part of
this Option Agreement for any other purpose. Capitalized terms used in this
Option Agreement and not otherwise defined herein have the meaning defined in
the Plan. Except as specifically provided herein, neither this Option Agreement
nor any right pursuant hereto or interest herein shall be assignable by any of
the parties hereto without the prior written consent of the other party hereto.
ScanSoft, Inc.
By:____________________________
Michael K. Tivnan, President
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ScanSoft, Inc.
Exhibit "A"
NOTICE OF EXERCISE
(To be signed only upon exercise of the Option)
TO: ScanSoft, Inc.
The undersigned, the holder of the enclosed Stock Option Agreement
(Non-Statutory Stock Option), hereby irrevocably elects to exercise the purchase
rights represented by the Option and to purchase thereunder __________* shares
of Common Stock of ScanSoft, Inc. (the "Company"), and herewith encloses payment
of $_________ in full payment of the purchase price of such shares being
purchased. Date signed: _______________
______________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the Option)
______________________________________
(Please Print Name)
______________________________________
(Address)
*Insert here the number of shares called for on the face of the Option (or,
in the case of a partial exercise, the number of shares being exercised), in
either case without making any adjustment for additional Common Stock of the
Company, other securities or property which, pursuant to the adjustment
provisions of the Option, may be deliverable upon exercise.
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