<PAGE>
As filed with the Securities and Exchange Commission on July 9, 1996
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------------------
INDIVIDUAL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 04-3036959
---------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
8 New England Executive Park West, Burlington, MA 01803
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
AMENDED AND RESTATED 1989 STOCK OPTION PLAN
-------------------------------------------
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
--------------------------------------------
AMENDED AND RESTATED 1996 STOCK PLAN
------------------------------------
(Full title of the plan)
--------------------------
JOSEPH A. AMRAM
President and Chief Executive Officer
INDIVIDUAL, INC.
8 New England Executive Park West
Burlington, MA 01803
(617) 273-6000
(Name, address including zip code and telephone number,
including area code, of agent for service)
--------------------------
Copy to:
WILLIAM B. ASHER, JR.
Testa, Hurwitz & Thibeault, LLP
High Street Tower
125 High Street
Boston, MA 02110
(617) 248-7000
================================================================================
<PAGE>
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share Price Fee
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Amended And Restated 1989
Stock Option Plan
Common Stock, 2,395,277 shares $ 7.73 (1) $18,515,491.21 (1) $6,384.65
$.01 par value 665,137 shares $16.25 (2) $10,808,476.25 (2) $3,727.06
1996 Non-Employee Director
Stock Option Plan
Common Stock,
$.01 par value 500,000 shares $16.25 (2) $8,125,000.00 (2) $2,801.72
Amended and Restated
1996 Stock Plan
Common Stock,
$.01 par value 360,180 shares $2.50 (1) $900,450.00 (1) $310.50
Total: 3,920,594 shares $13,223.93
----------
</TABLE>
================================================================================
(1) Such shares are issuable upon the exercise of outstanding options with
fixed exercise prices. Pursuant to Rule 457(h), the aggregate offering
price and the fee have been computed upon the basis of the price at which
the options may be exercised. The offering price per share set forth for
such shares is the weighted average exercise price per share at which such
options are exercisable.
(2) The price of $16.25 per share, which is the average of the high and low
prices reported on the Nasdaq National Market on July 3, 1996, is set forth
solely for purposes of calculating the filing fee pursuant to Rule 457(c)
and is used only for those shares without a fixed exercise price.
================================================================================
<PAGE>
This Registration Statement registers additional securities of the same
class as other securities for which a registration statement filed on this form
relating to the 1996 Employee Stock Purchase Plan of the Registrant is
effective. Pursuant to General Instruction E, the Registrant incorporates by
reference herein the information contained in the Registrant's Registration
Statement on Form S-8 (Registration No. 333-2806).
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
---------------------------------------
The following documents filed with the Commission are incorporated by
reference in this Registration Statement:
(a) Registrant's Prospectus dated March 15, 1996, as filed on March 15,
1996 pursuant to Rule 424(b)(4) of the Securities Act, in Registration
Statement No. 333-00792 on Form S-1, as amended (the "Form S-1"); and
(b) The section entitled "Description of Registrant's Securities to be
Registered" contained in the Registrant's Registration Statement on
Form 8-A, filed pursuant to Section 12(g) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), on February 8, 1996, and
incorporating by reference the information contained in the Form S-1.
(c) Registrant's Quarterly Report or Form 10-Q, filed on May 13, 1996
pursuant to the Exchange Act; and
(d) Registrant's Form 8-K Current Report Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934, filed on June 11, 1996.
All documents subsequently filed with the Commission by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered herein 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.
<PAGE>
Item 8. Exhibits
--------
Exhibit No. Description of Exhibit
----------- ----------------------
Exhibit 4.1 Specimen certificate representing the Common Stock of the
Registrant (filed as Exhibit 4.1 to Registrant's Registration
Statement on Form S-1 (File No. 333-00792) and incorporated
herein by reference).
Exhibit 4.2 Third Amended and Restated Certificate of Incorporation of
the Registrant (filed as Exhibit 3.3 to Registrant's
Registration Statement on Form S-1 (File No. 333-00792) and
incorporated herein by reference).
Exhibit 4.3 Amended and Restated By-laws of the Registrant (filed as
Exhibit 3.5 to Registrant's Registration Statement on Form S-
1 (File No. 333-00792) and incorporated herein by reference).
Exhibit 4.4 1996 Employee Stock Purchase Plan (filed as Exhibit 10.3 to
Registrant's Registration Statement on Form S-1 (File No.
333-00792) and incorporated herein by reference).
Exhibit 4.5 1996 Employee Stock Purchase Plan Enrollment/Authorization
Form (filed as Exhibit 4.5 to Registrant's Registration
Statement on Form S-8 (File No. 333-2806) and incorporated
herein by reference).
Exhibit 4.6 Amended and Restated 1989 Stock Option Plan (filed as Exhibit
10.1 to Registrant's Registration Statement on Form S-1
(File No. 333-00792) and incorporated herein by reference).
Exhibit 4.7 Form of Incentive Stock Option Agreement under the Amended
and Restated 1989 Stock Option Plan (filed herewith).
Exhibit 4.8 Form of Non-Qualified Stock Option Agreement under the
Amended and Restated 1989 Stock Option Plan (filed herewith).
Exhibit 4.9 1996 Non-Employee Director Stock Option Plan (filed as
Exhibit 10.2 to Registrant's Registration Statement on Form
S-1 (File No. 333-00792) and incorporated herein by
reference).
Exhibit 4.10 Form of Non-Qualified Stock Option Agreement under the 1996
Non-Employee Director Stock Option Plan (filed herewith).
Exhibit 4.11 Amended and Restated 1996 Stock Plan (filed herewith).
Exhibit 4.12 Form of Stock Option Agreement under the Amended and Restated
1996 Stock Plan (filed herewith).
<PAGE>
Exhibit 5.1 Opinion of Testa, Hurwitz & Thibeault, LLP (filed herewith).
Exhibit 23.1 Consent of Coopers & Lybrand L.L.P. (filed herewith).
Exhibit 23.2 Consent of Testa, Hurwitz & Thibeault, LLP (included in
Exhibit 5.1).
Exhibit 24.1 Power of Attorney (included as part of the signature page to
this Registration Statement).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Individual, Inc., 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 Burlington, Commonwealth of Massachusetts, on
this 9th day of July, 1996.
INDIVIDUAL, INC.
By: /s/ Joseph A. Amram
----------------------
Joseph A. Amram
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each such person whose
signature appears below constitutes and appoints, jointly and severally, Joseph
A. Amram and Robert L. Lentz his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
Registration Statement on Form S-8 (including post-effective amendments), and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joseph A. Amram President, Chief Executive July 9, 1996
- --------------------------- Officer and Director
Joseph A. Amram (Principal Executive Officer)
/s/ Robert L. Lentz Vice President, Finance, Chief July 9, 1996
- --------------------------- Financial Officer and Treasurer
Robert L. Lentz (Principal Financial and Accounting
Officer)
/s/ William A. Devereaux Director July 9, 1996
- ---------------------------
William A. Devereaux
/s/ Manuel A. Fernandez Director July 9, 1996
- ---------------------------
Manuel A. Fernandez
Director
- ---------------------------
Frank A. Ingari
/s/ Melinda E. Keirnan Director July 9, 1996
- ---------------------------
Melinda E. Keirnan
/s/ Elon Kohlberg Director July 9, 1996
- ---------------------------
Elon Kohlberg
/s/ Marino R. Polestra Director July 9, 1996
- ---------------------------
Marino R. Polestra
/s/ Daniel Rosen Director July 9, 1996
- ---------------------------
Daniel Rosen
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description of Exhibit
- ------- ----------------------
<S> <C>
Exhibit 4.1 Specimen certificate representing
the Common Stock of the Registrant
(filed as Exhibit 4.1 to
Registrant's Registration Statement
on Form S-1 (File No. 333-00792)
and incorporated herein by
reference).
Exhibit 4.2 Third Amended and Restated
Certificate of Incorporation of the
Registrant (filed as Exhibit 3.3 to
Registrant's Registration Statement
on Form S-1 (File No. 333-00792)
and incorporated herein by
reference).
Exhibit 4.3 Amended and Restated By-laws of the
Registrant (filed as Exhibit 3.5 to
Registrant's Registration Statement
on Form S-1 (File No. 333-00792)
and incorporated herein by
reference).
Exhibit 4.4 1996 Employee Stock Purchase Plan
(filed as Exhibit 10.3 to
Registrant's Registration Statement
on Form S-1 (File No. 333-00792)
and incorporated herein by
reference).
Exhibit 4.5 1996 Employee Stock Purchase Plan
Enrollment/Authorization Form
(filed as Exhibit 4.5 to
Registrant's Registration Statement
on Form S-8 (File No. 333-2806) and
incorporated herein by reference).
Exhibit 4.6 Amended and Restated 1989 Stock
Option Plan (filed as Exhibit 10.1
to Registrant's Registration
Statement on Form S-1 (File No.
333-00792) and incorporated herein
by reference).
Exhibit 4.7 Form of Incentive Stock Option
Agreement under the Amended and
Restated 1989 Stock Option Plan
(filed herewith).
Exhibit 4.8 Form of Non-Qualified Stock Option
Agreement under the Amended and
Restated 1989 Stock Option Plan
(filed herewith).
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Exhibit 4.9 1996 Non-Employee Director Stock
Option Plan (filed as Exhibit 10.2
to Registrant's Registration
Statement on Form S-1 (File No.
333-00792) and incorporated herein
by reference).
Exhibit 4.10 Form of Non-Qualified Stock Option
Agreement under the 1996
Non-Employee Director Stock Option
Plan (filed herewith).
Exhibit 4.11 Amended and Restated 1996 Stock
Plan (filed herewith)
Exhibit 4.12 Form of Stock Option Agreement
under the Amended and Restated 1996
Stock Plan (filed herewith).
Exhibit 5.1 Opinion of Testa, Hurwitz &
Thibeault, LLP (filed herewith).
Exhibit 23.1 Consent of Coopers & Lybrand L.L.P.
(filed herewith).
Exhibit 23.2 Consent of Testa, Hurwitz &
Thibeault, LLP (included in Exhibit
5.1).
Exhibit 24.1 Power of Attorney (included as part
of the signature page to this
Registration Statement).
</TABLE>
<PAGE>
Exhibit 4.7
INDIVIDUAL, INC.
Form of Incentive Stock Option Agreement
----------------------------------------
Individual, Inc., a Delaware corporation (the "Company"), hereby grants this
__ day of _____, 199_ to ((NAME)) (the "Employee"), an option to purchase a
maximum of ((SHARES)) shares (the "Shares") of its Common Stock, $.01 par value,
at the price of $___ per share, on the following terms and conditions:
1. Grant Under Amended and Restated 1989 Stock Option Plan. This option is
-------------------------------------------------------
granted pursuant to and is governed by the Company's Amended and Restated 1989
Stock Option Plan (the "Plan") and, unless the context otherwise requires, terms
used herein shall have the same meaning as in the Plan. Determinations made in
connection with this option pursuant to the Plan shall be governed by the Plan
as it exists on this date.
2. Grant as Incentive Stock Option; Other Options. This option is intended
----------------------------------------------
to qualify as an incentive stock option under Section 422 of the Internal
Revenue Code of 1986 (the "Code"). This option is in addition to any other
options heretofore or hereafter granted to the Employee by the Company, but a
duplicate original of this instrument shall not effect the grant of another
option.
3. Extent of Option if Employment Continues. If the Employee has continued
----------------------------------------
to be employed by the Company on the following dates, the Employee may exercise
this option for the number of shares set opposite the applicable date:
[vesting schedule]
The foregoing rights are cumulative and, while the Employee continues to be
employed by the Company, may be exercised up to and including the date which is
ten (10) years from the date this option is granted. All of the foregoing
rights are subject to Articles 4, 5 and 18, as appropriate, if the Employee
switches to part-time employment, ceases to be employed by the Company or dies
or becomes disabled while in the employ of the Company.
4. Switch to Part-time Employment; Termination of Employment. (a) If the
---------------------------------------------------------
Employee switches from full-time to part-time employment with the Company, no
further installments of this option shall become exercisable. Any installments
of this option which have vested but have not been exercised at the time the
Employee switches from full-time to part-time employment may be exercised by the
Employee while the Employee continues to be employed by the Company, but in no
event later than the scheduled expiration date, subject to Section 4(b) and
Articles 5 and 18, as appropriate, if the Employee ceases to be employed by the
Company or dies or becomes disabled while in the employ of the Company.
<PAGE>
(b) If the Employee ceases to be employed by the Company, other than by
reason of (i) death or disability as defined in Article 5 or (ii) termination
for "Misconduct" as defined in Article 17, no further installments of this
option shall become exercisable and this option shall terminate after the
passage of thirty (30) days from the date employment ceases, but in no event
later than the scheduled expiration date. In such a case, the Employee's only
rights hereunder shall be those which are properly exercised before the
termination of this option.
5. Death; Disability. If the Employee dies while in the employ of the
-----------------
Company, this option may be exercised, to the extent of the number of shares
with respect to which the Employee could have exercised it on the date of his
death, by his estate, personal representative or beneficiary to whom this option
has been assigned pursuant to Article 10, at any time within 180 days after the
date of death, but not later than the scheduled expiration date. If the
Employee ceases to be employed by the Company by reason of his disability (as
defined in the Plan), this option may be exercised, to the extent of the number
of shares with respect to which he could have exercised it on the date of the
termination of his employment, at any time within 180 days after such
termination, but not later than the scheduled expiration date. At the
expiration of such 180-day period or the scheduled expiration date, whichever is
the earlier, this option shall terminate and the only rights hereunder shall be
those as to which the option was properly exercised before such termination.
6. Partial Exercise. Exercise of this option up to the extent above stated
----------------
may be made in part at any time and from time to time within the above limits,
except that this option may not be exercised for a fraction of a share unless
such exercise is with respect to the final installment of stock subject to this
option and a fractional share (or cash in lieu thereof) must be issued to permit
the Employee to exercise completely such final installment. Any fractional
share with respect to which an installment of this option cannot be exercised
because of the limitation contained in the preceding sentence shall remain
subject to this option and shall be available for later purchase by the Employee
in accordance with the terms hereof.
7. Payment of Price. The option price is payable in United States dollars
----------------
and may be paid:
(a) in cash or by check, or any combination of the foregoing, equal in
amount to the option price;
(b) in cash, by check, by delivery of shares of the Company's Common
Stock having a fair market value equal as of the date of exercise to the option
price, or by any combination of the foregoing, equal in amount to the option
price; or
(c) in cash, by check, by delivery of shares of the Company's Common
Stock having an aggregate fair market value equal as of the date of exercise to
the option price, by delivery of the Employee's personal recourse note bearing
interest payable not less than annually at no less than 100% of the lowest
applicable Federal rate, as defined in Section 1274(d) of the Code, or by any
combination of the foregoing, equal in amount to the option price.
<PAGE>
Notwithstanding the foregoing, the Employee may not pay any part of the exercise
price hereof by transferring Common Stock to the Company if such Common Stock is
both subject to a substantial risk of forfeiture and not transferable within the
meaning of Section 83 of the Code.
8. Agreement to Purchase for Investment. By acceptance of this option, the
------------------------------------
Employee agrees that a purchase of shares under this option will not be made
with a view to their distribution, as that term is used in the Securities Act of
1933, as amended, unless in the opinion of counsel to the Company such
distribution is in compliance with or exempt from the registration and
prospectus requirements of that Act, and the Employee agrees to sign a
certificate to such effect at the time of exercising this option and agrees that
the certificate for the shares so purchased may be inscribed with a legend to
ensure compliance with the Securities Act of 1933.
9. Method of Exercising Option. Subject to the terms and conditions of this
---------------------------
Agreement, this option may be exercised by written notice to the Company, at the
principal executive office of the Company, or to such transfer agent as the
Company shall designate. Such notice shall state the election to exercise this
option and the number of shares in respect of which it is being exercised and
shall be signed by the person or persons so exercising this option. Such notice
shall be accompanied by payment of the full purchase price of such shares, and
the Company shall deliver a certificate or certificates representing such shares
as soon as practicable after the notice shall be received. The certificate or
certificates for the shares as to which this option shall have been so exercised
shall be registered in the name of the person or persons so exercising this
option (or, if this option shall be exercised by the Employee and if the
Employee shall so request in the notice exercising this option, shall be
registered in the name of the Employee and another person jointly, with right of
survivorship) and shall be delivered as provided above to or upon the written
order of the person or persons exercising this option. In the event this option
shall be exercised, pursuant to Article 5 hereof, by any person or persons other
than the Employee, such notice shall be accompanied by appropriate proof of the
right of such person or persons to exercise this option. All shares that shall
be purchased upon the exercise of this option as provided herein shall be fully
paid and non-assessable.
10. Option Not Transferable. This option is not transferable or assignable
-----------------------
except by will or by the laws of descent and distribution. During the
Employee's lifetime only the Employee can exercise this option.
11. No Obligation to Exercise Option. The grant and acceptance of this
--------------------------------
option imposes no obligation on the Employee to exercise it.
12. No Obligation to Continue Employment. The Company and any Related
------------------------------------
Corporation (as defined in the Plan) are not by the Plan or this option
obligated to continue the Employee in employment.
13. No Rights as Stockholder until Exercise. The Employee shall have no
---------------------------------------
rights as a stockholder with respect to shares subject to this Agreement until a
stock certificate therefor has
<PAGE>
been issued to the Employee and is fully paid for. Except as is expressly
provided in the Plan with respect to certain changes in the capitalization of
the Company, no adjustment shall be made for dividends or similar rights for
which the record date is prior to the date such stock certificate is issued.
14. Capital Changes and Business Successions. It is the purpose of this
----------------------------------------
option to encourage the Employee to work for the best interests of the Company
and its stockholders. Since, for example, that might require the issuance of a
stock dividend or a merger with another corporation, the purpose of this option
would not be served if such a stock dividend, merger or similar occurrence would
cause the Employee's rights hereunder to be diluted or terminated and thus be
contrary to the Employee's interest. The Plan contains extensive provisions
designed to preserve options at full value in a number of contingencies.
Therefore, provisions in the Plan for adjustment with respect to stock subject
to options and the related provisions with respect to successors to the business
of the Company are hereby made applicable hereunder and are incorporated herein
by reference. In particular, without affecting the generality of the foregoing,
it is understood that for the purposes of Articles 3 through 5 hereof, both
inclusive, employment by the Company includes employment by a Related
Corporation as defined in the Plan.
15. Early Disposition. The Employee agrees to notify the Company in writing
-----------------
immediately after the Employee makes a Disqualifying Disposition of any Common
Stock received pursuant to the exercise of this option. A Disqualifying
Disposition generally is any disposition (including any sale) of such Common
Stock on or before the later of (a) two years after the date the Employee was
-----
granted this option or (b) one year after the date the Employee acquired Common
Stock by exercising this option. The Employee also agrees to provide the Company
with any information which it shall request concerning any such disposition.
The Employee acknowledges that he or she will forfeit the favorable income tax
treatment otherwise available with respect to the exercise of this incentive
stock option if he or she makes a Disqualifying Disposition of the stock
received on exercise of this option.
16. Withholding Taxes. If the Company in its discretion determines that it
-----------------
is obligated to withhold tax with respect to a Disqualifying Disposition (as
defined in Article 15) of Common Stock received by the Employee on exercise of
this option, the Employee hereby agrees that the Company may withhold from the
Employee's wages the appropriate amount of federal, state and local withholding
taxes attributable to such Disqualifying Disposition. If any portion of this
option is treated as a Non-Qualified Option, the Employee hereby agrees that the
Company may withhold from the Employee's wages the appropriate amount of
federal, state and local withholding taxes attributable to the Employee's
exercise of such Non-Qualified Option. At the Company's discretion, the amount
required to be withheld may be withheld in cash from such wages, or (with
respect to compensation income attributable to the exercise of this option) in
kind from the Common Stock otherwise deliverable to the Optionee on exercise of
this Option. The Employee further agrees that, if the Company does not withhold
an amount from the Employee's wages sufficient to satisfy the Company's
withholding obligation, the Employee will reimburse the Company on demand, in
cash, for the amount underwithheld.
<PAGE>
17. No Exercise of Option. If the employment of the Employee is terminated
---------------------
for "Misconduct," or if the Employee, directly or indirectly, alone or as a
partner, joint venturer, officer, director, employee, consultant, agent, or
stockholder of any company or business, engages in any business activity which
is directly in competition in the United States with any of the products or
services being developed, sold or otherwise provided by the Company at such time
(the ownership by the Employee of not more than one percent of the shares of
stock of any corporation being deemed not to, in and of itself, constitute the
engagement in a business activity in competition with the products or services
of the Company), this option shall terminate on the date of such termination of
employment or engagement in such activity and shall thereupon not be exercisable
to any extent whatsoever. "Misconduct" is conduct, as determined by the Board
of Directors, involving one or more of the following: (i) the substantial and
continuing failure of the Employee to render services to the Company in
accordance with his assigned duties; (ii) disloyalty, gross negligence,
dishonesty or breach of fiduciary duty to the Company; (iii) the commission of
an act of embezzlement, fraud, disloyalty, dishonesty or deliberate disregard of
the rules or policies of the Company which results in loss, damage or injury to
the Company, whether directly or indirectly; (iv) the unauthorized disclosure of
any trade secret or confidential information of the Company; or (v) the
commission of an act which constitutes unfair competition with the Company or
which induces any customer of the Company to break a contract with the Company.
For the purposes of this Article 17, termination of employment shall be deemed
to occur when the Employee receives notice that his employment is terminated.
18. Acceleration and Vesting of Option for Business Combinations. Upon any
------------------------------------------------------------
merger, consolidation, sale of all (or substantially all) of the assets of the
Company, or other business combination involving the sale or transfer of all (or
substantially all) of the capital stock or assets of the Company in which the
Company is not the surviving entity, or, if it is the surviving entity, does not
survive as an operating going concern in substantially the same line of
business, then this option shall, immediately prior to the consummation of any
of the foregoing events, become vested and immediately exercisable by the
Employee for an additional fifty percent (50%) of the shares which have not
theretofore vested pursuant to Article 3 hereof.
19. Governing Law. This Agreement shall be governed by and interpreted in
-------------
accordance with the internal laws of the State of Delaware.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF the Company and the Employee have caused this instrument
to be executed, and the Employee whose signature appears below acknowledges
receipt of a copy of the Plan and acceptance of an original copy of this
Agreement.
INDIVIDUAL, INC.
By:
------------------------------------
Robert L. Lentz
Vice President, Finance and Chief
Financial Officer
EMPLOYEE
- ---------------------------------
Signature
((Name))
- ---------------------------------
Name
- ---------------------------------
Street Address
- ---------------------------------
City, State, Zip Code
<PAGE>
Exhibit 4.8
INDIVIDUAL, INC.
Form of Non-Qualified Stock Option Agreement
--------------------------------------------
Individual, Inc., a Delaware corporation (the "Company"), hereby grants this
((Grant_Date)) to ((Name)) (the "Optionee"), an option to purchase a maximum of
((Shares)) shares (the "Shares") of its Common Stock, $.01 par value, at the
price of ((Price)) per share, on the following terms and conditions:
1. Grant Under Amended and Restated 1989 Stock Plan. This option is granted
------------------------------------------------
pursuant to and is governed by the Company's Amended and Restated 1989 Stock
Option Plan (the "Plan") and, unless the context otherwise requires, terms used
herein shall have the same meaning as in the Plan. Determinations made in
connection with this option pursuant to the Plan shall be governed by the Plan
as it exists on this date.
2. Grant as Non-Qualified Option; Other Options. This option shall be
--------------------------------------------
treated for federal income tax purposes as a Non-Qualified Option (rather than
an incentive stock option), and the Board of Directors will take appropriate
action, if necessary, to achieve this result. This option is in addition to any
other options heretofore or hereafter granted to the Optionee by the Company,
but a duplicate original of this instrument shall not effect the grant of
another option.
3. Extent of Option if Business Relationship Continues. While the Optionee
---------------------------------------------------
continues to serve the Company or any Related Corporation in the capacity of an
employee, officer, director or consultant (such service is described herein as
maintaining or being involved in a "Business Relationship" with the Company),
the Optionee may exercise this option for the number of shares set opposite the
applicable date:
[vesting schedule]
This option may be exercised up to and including the date which is ten years
from the date this option is granted. All of the foregoing rights are subject
to Articles 4 and 5, as appropriate, if the Optionee ceases to maintain a
Business Relationship with the Company or dies, becomes disabled or undergoes
dissolution while involved in a Business Relationship with the Company.
4. Termination of Business Relationship. If the Optionee ceases to maintain
------------------------------------
a Business Relationship with the Company, other than by reason of death or
disability as defined in Article 5, or for "Misconduct" pursuant to Article 16
hereof, this option shall terminate after the passage of thirty (30) days from
the date the Business Relationship ceases, but in no event later than the
scheduled expiration date. In such a case, the Optionee's only rights hereunder
shall be those which are properly exercised before the termination of this
option.
<PAGE>
5. Death; Disability; Dissolution. If the Optionee is a natural person who
------------------------------
dies while involved in a Business Relationship with the Company, this option may
be exercised by his estate, personal representative or beneficiary to whom this
option has been assigned pursuant to Article 10, at any time within 180 days
after the date of death, but not later than the scheduled expiration date. If
the Optionee is a natural person whose Business Relationship with the Company is
terminated by reason of his disability (as defined in the Plan), this option may
be exercised at any time within 180 days after the date of such termination, but
not later than the scheduled expiration date. At the expiration of such 180-day
period or the scheduled expiration date, whichever is the earlier, this option
shall terminate and the only rights hereunder shall be those as to which the
option was properly exercised before such termination. If the Optionee is a
corporation, partnership, trust or other entity that is dissolved, liquidated,
becomes insolvent or enters into a merger or acquisition with respect to which
such optionee is not the surviving entity at the time when such entity is
involved in a Business Relationship with the Company, this Option shall
immediately terminate as of the date of such event, and the only rights
hereunder shall be those as to which this option was properly exercised before
such dissolution or other event.
6. Partial Exercise. Exercise of this option up to the extent above stated
----------------
may be made in part at any time and from time to time within the above limits,
except that this option may not be exercised for a fraction of a share unless
such exercise is with respect to the final installment of stock subject to this
option and a fractional share (or cash in lieu thereof) must be issued to permit
the Optionee to exercise completely such final installment. Any fractional
share with respect to which an installment of this option cannot be exercised
because of the limitation contained in the preceding sentence shall remain
subject to this option and shall be available for later purchase by the Optionee
in accordance with the terms hereof.
7. Payment of Price. The option price is payable in United States dollars
----------------
and may be paid:
(a) in cash or by check, or any combination of the foregoing, equal in
amount to the option price; or (b) in the discretion of the Board of Directors,
in cash, by check, by delivery of shares of the Company's Common Stock having a
fair market value equal as of the date of exercise to the option price, or by
any combination of the foregoing, equal in amount to the option price; or (c) in
the discretion of the Board of Directors, in cash, by check, by delivery of
shares of the Company's Common Stock having an aggregate fair market value equal
as of the date of exercise to the option price, by delivery of the Optionee's
personal recourse note bearing interest payable not less than annually at no
less than 100% of the lowest applicable Federal rate, as defined in Section
1274(d) of the Code, or by any combination of the foregoing, equal in amount to
the option price.
If the Optionee delivers Common Stock held by the Optionee (the "Old Stock")
to the Company in full or partial payment of the option price, and the Old Stock
so delivered is subject to restrictions or limitations imposed by agreement
between the Optionee and the Company, the Common Stock received by the Optionee
on the exercise of this option shall be subject to all restrictions and
limitations applicable to the Old Stock to the extent that the Optionee paid for
<PAGE>
such Common Stock by delivery of Old Stock, in addition to any restrictions or
limitations imposed by this agreement.
8. Agreement to Purchase for Investment. By acceptance of this option, the
------------------------------------
Optionee agrees that a purchase of shares under this option will not be made
with a view to their distribution, as that term is used in the Securities Act of
1933, as amended, unless in the opinion of counsel to the Company such
distribution is in compliance with or exempt from the registration and
prospectus requirements of that Act, and the Optionee agrees to sign a
certificate to such effect at the time of exercising this option and agrees that
the certificate for the shares so purchased may be inscribed with a legend to
ensure compliance with that Act.
9. Method of Exercising Option. Subject to the terms and conditions of this
---------------------------
Agreement, this option may be exercised by written notice to the Company, at the
principal executive office of the Company, or to such transfer agent as the
Company shall designate. Such notice shall state the election to exercise this
option and the number of shares in respect of which it is being exercised and
shall be signed by the person or persons so exercising this option. Such notice
shall be accompanied by payment of the full purchase price of such shares, and
the Company shall deliver a certificate or certificates representing such shares
as soon as practicable after the notice shall be received. The certificate or
certificates for the shares as to which this option shall have been so exercised
shall be registered in the name of the person or persons so exercising this
option (or, if this option shall be exercised by the Optionee and if the
Optionee shall so request in the notice exercising this option, shall be
registered in the name of the Optionee and another person jointly, with right of
survivorship) and shall be delivered as provided above to or upon the written
order of the person or persons exercising this option. In the event this option
shall be exercised, pursuant to Article 5 hereof, by any person or persons other
than the Optionee, such notice shall be accompanied by appropriate proof of the
right of such person or persons to exercise this option. All shares that shall
be purchased upon the exercise of this option as provided herein shall be fully
paid and non-assessable.
10. Option Not Transferable. This option is not transferable or assignable
-----------------------
except by will or by the laws of descent and distribution. During the
Optionee's lifetime only the Optionee can exercise this option.
11. No Obligation to Exercise Option. The grant and acceptance of this
--------------------------------
option imposes no obligation on the Optionee to exercise it.
12. No Obligation to Continue Business Relationship. The Company and any
-----------------------------------------------
Related Corporations (as defined in the Plan) are not by the Plan or this option
obligated to continue to maintain a Business Relationship with the Optionee.
13. No Rights as Stockholder until Exercise. The Optionee shall have no
---------------------------------------
rights as a stockholder with respect to shares subject to this Agreement until a
stock certificate therefor has been issued to the Optionee and is fully paid
for. Except as is expressly provided in the Plan with respect to certain
changes in the capitalization of the Company, no adjustment shall be made
<PAGE>
for dividends or similar rights for which the record date is prior to the date
such stock certificate is issued.
14. Capital Changes and Business Successions. It is the purpose of this
----------------------------------------
option to encourage the Optionee to work for the best interests of the Company
and its stockholders. Since, for example, that might require the issuance of a
stock dividend or a merger with another corporation, the purpose of this option
would not be served if such a stock dividend, merger or similar occurrence would
cause the Optionee's rights hereunder to be diluted or terminated and thus be
contrary to the Optionee's interest. The Plan contains extensive provisions
designed to preserve options at full value in a number of contingencies.
Therefore, provisions in the Plan for adjustment with respect to stock subject
to options and the related provisions with respect to successors to the business
of the Company are hereby made applicable hereunder and are incorporated herein
by reference. In particular, without affecting the generality of the foregoing,
it is understood that for the purposes of Articles 3 through 5 hereof, both
inclusive, maintaining or being involved in a Business Relationship with the
Company includes maintaining or being involved in a Business Relationship with a
Related Corporation as defined in the Plan.
15. Withholding Taxes. The Optionee hereby agrees that the Company may
-----------------
withhold from the Optionee's wages or other remuneration the appropriate amount
of federal, state and local taxes attributable to the Optionee's exercise of any
installment of this option. At the Company's discretion, the amount required to
be withheld may be withheld in cash from such wages or other remuneration, or in
kind from the Common Stock otherwise deliverable to the Optionee on exercise of
this option. The Optionee further agrees that, if the Company does not withhold
an amount from the Optionee's wages or other remuneration sufficient to satisfy
the Company's withholding obligation, the Optionee will reimburse the Company on
demand, in cash, for the amount underwithheld.
16. No Exercise of Option. If the Business Relationship of the Optionee is
----------------------
terminated for "Misconduct", or if the Optionee directly or indirectly, alone or
as a partner, joint venturer, officer, director, employee, consultant, agent, or
stockholder of any company or business, in any business activity which is
directly in competition in the Untied States with any of the products or
services being developed, sold or otherwise provided by the Company at such time
(the ownership by the Optionee of not more than one percent of the shares of
stock of any corporation being deemed, in and of itself, not to constitute the
engagement in a business activity in competition with the products or services
of the Company), this option shall terminate on the date of such termination of
the Business Relationship and shall thereupon not be exercisable to any extent
whatsoever. "Misconduct" is conduct, as determined by the Board of Directors,
involving one or more of the following: (i) the substantial and continuing
failure of the Optionee to render services to the Company in accordance with the
terms or requirements of the business relationship; (ii) disloyalty, gross
negligence, dishonesty or breach of fiduciary duty to the Company; (iii) the
commission of an act of embezzlement, fraud, disloyalty, dishonesty or
deliberate disregard of the rules or policies of the Company which results in
loss, damage or injury to the Company, whether directly or indirectly; (iv) the
unauthorized disclosure of any trade secret or confidential information of the
Company; or (v) the commission of an act which constitutes unfair competition
with the Company or which induces any customer of the Company
<PAGE>
to break a contract with the Company. For the purposes of this Article,
termination of the Business Relationship shall be deemed to occur when the
Optionee receives notice that its business relationship is terminated.
(c) Determination of Fair Market Value: The fair market value of the
----------------------------------
shares subject to this option shall be, for purposes of this Article, an amount
per share determined on the basis of the price at which shares of the Common
Stock could reasonably be expected to be sold in an arms-length transaction, for
cash, other than on an installment basis, to a person not employed by,
controlled by, in control of or under common control with the Company. Fair
market value shall be determined by the Board of Directors, giving due
consideration to recent grants of incentive stock options for shares of Common
Stock, recent transactions involving shares of the Common Stock, if any,
earnings of the Company to the date of such determination, projected earnings of
the Company, the effect of the transfer restrictions to which the shares are
subject under law and this Agreement, the absence of a public market for the
Common Stock and such other matters as the Board of Directors deems pertinent.
The determination by the Board of Directors of the fair market value shall be
conclusive and binding. The fair market value of the shares shall be determined
as of the day on which the event occurs.
17. Acceleration and Vesting of Option for Business Combinations. Upon any
------------------------------------------------------------
merger, consolidation, sale of all (or substantially all) of the assets of the
Company, or other business combination involving the sale or transfer of all (or
substantially all) of the capital stock or assets of the Company in which the
Company is not the surviving entity, or, if it is the surviving entity, does not
survive as an operating going concern in substantially the same line of
business, then this option shall, immediately prior to the consummation of any
of the foregoing events, become fully vested and immediately exercisable by the
Optionee for one hundred percent (100%) of the shares which have not theretofore
vested pursuant to Article 3 hereof.
18. Governing Law. This Agreement shall be governed by and interpreted in
-------------
accordance with the internal laws of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF the Company and the Optionee have caused this instrument
to be executed, and the Optionee whose signature appears below acknowledges
receipt of a copy of the Plan and acceptance of an original copy of this
Agreement.
- --------------------------------- INDIVIDUAL, INC.
OPTIONEE
By:
- --------------------------------- --------------------------------
Print Name of Optionee Robert L. Lentz
Vice President, Finance and Chief
Financial Officer
- ---------------------------------
Street Address
- ---------------------------------
City, State, Zip Code
<PAGE>
Exhibit 4.10
INDIVIDUAL, INC.
Form of Non-Qualified Stock Option Agreement
for Non-Employee Directors
--------------------------
Individual, Inc., a Delaware corporation (the "Company"), hereby
grants as of the ___ day of ___, 199__, to ________________ (the "Optionee") an
option to purchase a maximum of _________ shares of its Common Stock, par value
$.0l per share (the "Option Shares"), at the price of $________ per share, on
the following terms and conditions:
1. Grant Under 1996 Non-Employee Director Stock Option Plan. This option
--------------------------------------------------------
is granted pursuant to and is governed by the Company's 1996 Non-Employee
Director Stock Option Plan (the "Plan") and, unless the context otherwise
requires, terms used herein shall have the meanings assigned to them in the
Plan. Determinations made in connection with this option pursuant to the Plan
shall be governed by the Plan as it exists on the date hereof. In the event of
any conflict between this Agreement and the provisions of the Plan, the Plan
shall govern.
2. Grant as Non-Qualified Option; Other Options. This option is intended
--------------------------------------------
to be a non-qualified option (rather than an incentive stock option) granted
pursuant to Section [4(a)] [4(b)] [4.1] of the Plan, and the Board of Directors
of the Company (the "Board") intends to take appropriate action, if necessary,
to achieve this result. This option is in addition to any other options
heretofore or hereafter granted to the Optionee by the Company, but a duplicate
original of this instrument shall not effect the grant of another option.
3. Exercise of Option if Service as a Director Continues. Unless sooner
-----------------------------------------------------
terminated pursuant to Section 4 hereof, this option shall vest in the Optionee
and thus become exercisable as follows, provided that the Optionee has
continuously served as a member of the Board through such vesting date. This
option shall expire on the date that is ten (10) years from the date this option
is granted.
(a) If this option is granted pursuant to Section 4(a) of the Plan,
such option shall vest in 36 equal monthly installments commencing on the last
day of the first full calendar month after the date of this option.
(b) If this option is granted pursuant to Section 4(b) of the Plan,
such option shall vest in 12 equal monthly installments commencing on the last
day of the first full calendar month after the date of this option.
(c) If this option is granted pursuant to Section 4.1 of the Plan,
such option shall vest as determined by the Compensation Committee of the Board.
<PAGE>
4. Termination of Option Rights.
----------------------------
(a) In the event the Optionee ceases to be a member of the Board
for any reason other than death or permanent disability, any then unexercised
portion of this option shall, to the extent not then vested, immediately
terminate and become void. The Optionee may exercise any portion of this option
that is vested but has not been exercised at the time the Optionee so ceases to
be a member of the Board within 90 days of the date the Optionee ceased to be a
member of the Board, and this option shall terminate after such 90 days have
expired.
(b) In the event that the Optionee ceases to be a member of the
Board by reason of his or her permanent disability or death, this option
shall be immediately and automatically accelerated and become fully vested,
and the Optionee (or the Optionee's personal representative, heir or legatee,
in the event of death) may exercise the unexercised portion of this option
until the scheduled expiration date of the option.
5. Exercise. To the extent then exercisable, the Optionee may exercise
--------
this option in whole or in part at any time and from time to time as provided by
the terms of this Agreement and the Plan, except that this option may not be
exercised for a fraction of a share unless such exercise is with respect to the
final installment of stock subject to this option and a fractional share (or
cash in lieu thereof) would otherwise be required to be issued to permit the
Optionee to exercise completely such final installment. Any fractional share
with respect to which an installment of this option cannot be exercised because
of the limitation contained in the preceding sentence shall remain subject to
this option and shall be available for later purchase by the Optionee in
accordance with the terms hereof. There shall be no such exercise at any one
time as to fewer than one hundred (100) shares or all of the remaining shares
then purchasable by the person or persons exercising the option, if fewer than
one hundred (100) shares.
6. Payment of Price. The option price is payable in United States dollars
----------------
and may be paid: (a) in cash or by check, or any combination of the foregoing,
equal in amount to the option price; (b) in whole or in part in shares of the
Common Stock of the Company already owned by the person or persons exercising
the option or shares subject to the option being exercised (subject to such
restrictions and guidelines as the Board may adopt from time to time), valued at
fair market value determined in accordance with the provisions of Section 5 of
the Plan; or (c) consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of Option Shares acquired upon exercise of this option and an authorization to
the broker or selling agent to pay that amount to the Company, which sale shall
be at the Optionee's direction at the time of exercise.
7. Method of Exercising Option. Subject to the terms and conditions of
---------------------------
the Plan and this Agreement, this option may be exercised by written notice to
the Company, addressed to the Chief Financial Officer, at the principal
executive office of the Company. Such notice shall state the election to
exercise this option and the number of shares in respect of which it is being
exercised and shall be signed by the person or persons so exercising this
option. Such notice shall be accompanied by payment of the full purchase price
of such shares. The Company's transfer agent shall, on behalf of the Company,
prepare a certificate or certificates representing
<PAGE>
Option Shares acquired upon exercise of this option, shall register the Optionee
(or the Optionee's personal representative, heir or legatee if this option is
being exercised pursuant to Section 4 hereof) as the owner of the Option Shares
on the books of the Company and shall cause the fully executed certificate(s)
representing such shares to be delivered to the Optionee (or the Optionee's
personal representative, heir or legatee if this option is being exercised
pursuant to Section 4 hereof) as soon as practicable after payment of the option
price in full. If a person or persons other than the Optionee exercises this
option pursuant to Section 4 hereof, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise this
option. All shares that are purchased upon the exercise of this option as
provided herein shall be fully paid and non-assessable.
8. Option Not Transferable. This option is not transferable or assignable
-----------------------
except by will or by the laws of descent and distribution or pursuant to a
domestic relations order. During the Optionee's lifetime only the Optionee may
exercise this option.
9. No Obligation to Exercise Option. The grant and acceptance of this
--------------------------------
option imposes no obligation on the Optionee to exercise it.
10. No Rights as Stockholder until Exercise. The Optionee has no rights
---------------------------------------
as a stockholder with respect to any of the Option Shares until a stock
certificate therefor has been issued to the Optionee and is fully paid for.
Except as is expressly provided in Section 10 of the Plan with respect to
certain changes in the capitalization of the Company, no adjustment shall be
made for dividends or similar rights for which the record date is prior to the
date such stock certificate is issued.
11. Capital Changes and Business Successions. It is the purpose of this
----------------------------------------
option to encourage the Optionee to work for the best interests of the Company
and its stockholders. Since, for example, the best interests of the Company and
its stockholders might require the issuance of a stock dividend or a merger with
another corporation, the purpose of this option would not be served if such a
stock dividend, merger or similar occurrence would cause the Optionee's rights
hereunder to be diluted or terminated and thus be contrary to the Optionee's
interest. The Plan contains extensive provisions designed to preserve options
at full value in a number of contingencies. Therefore, provisions in the Plan
for adjustment with respect to stock subject to options and the related
provisions with respect to successors to the business of the Company are hereby
made applicable hereunder and are incorporated herein by reference.
12. Withholding Taxes. The Optionee hereby agrees that the Company may
-----------------
withhold from the Optionee's wages or any other remuneration the appropriate
amount of federal, state and local taxes attributable to the Optionee's exercise
of any installment of this option. At the Company's discretion, the amount
required to be withheld may be withheld in cash from such wages or other
remuneration, or in kind from the Common Stock otherwise deliverable to the
Optionee on exercise of this option. The Optionee further agrees that, if the
Company does not withhold an amount from the Optionee's wages or other
remuneration sufficient to satisfy the Company's withholding obligation, the
Optionee shall reimburse the
<PAGE>
Company on demand, in cash, for the amount underwithheld as determined by the
Company in its sole discretion.
13. Governing Law. This Agreement shall be governed by and interpreted in
-------------
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
IN WITNESS WHEREOF the Company and the Optionee have caused this
instrument to be executed, and the Optionee whose signature appears below
acknowledges receipt of a copy of the Plan and acceptance of an original copy
of this Agreement.
Individual, Inc.
8 New England Executive Park West
Burlington, Massachusetts 01803
By:
-----------------------------------
Title:
--------------------------------
---------------------------------------
Optionee
---------------------------------------
Print Name
---------------------------------------
Street Address
---------------------------------------
City State Zip Code
<PAGE>
Exhibit 4.11
FREELOADER, INC.
AMENDED AND RESTATED 1996 STOCK PLAN
1. Purposes of the Plan. The purposes of this Amended and Restated
--------------------
1996 Stock Plan are to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to
Employees and Consultants of the Company and its Subsidiaries and to promote the
success of the Company's business. Options granted under the Plan may be
incentive stock options (as defined under Section 422 of the Code) or non-
statutory stock options, as determined by the Administrator at the time of grant
of an option and subject to the applicable provisions of Section 422 of the
Code, as amended, and the regulations promulgated thereunder. Stock purchase
rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall
-----------
apply:
(a) "Administrator" means the Board or any of its Committees
-------------
appointed pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
-----
(c) "Code" means the Internal Revenue Codeof 1986, as amended.
----
(d) "Committee" means the Committee appointed by the Board of
---------
Directors in accordance with Section 4(a) of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
------------
(f) "Company" means FreeLoader, Inc., a Delaware corporation.
-------
(g) "Consultant" means any person, including an advisor, who is
----------
engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not, provided that if and in the event the
Company registers any class of any equity security pursuant to the Exchange Act,
the term Consultant shall thereafter not include directors who are not
compensated for their services or are paid only a director's fee by the Company.
(h) "Continuous Status as an Employee or Consultant" means
----------------------------------------------
the absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of (i) sick leave; (ii) military leave, (iii)
any other leave of absence approved by the Administrator, provided that such
leave is for a period of not more than ninety (90) days, unless reemployment
upon the expiration of such leave is guaranteed by contract or statute, or
unless provided otherwise pursuant to Company policy adopted from time to time
or (iv) in the case of transfers between locations of the Company or between the
Company, its Subsidiaries or their respective
<PAGE>
successors. For purposes of this Plan, a change in status from an Employee to
a Consultant or from a Consultant to an Employee will not constitute an
interruption of Continuous Status as an Employee or Consultant.
(i) "Employee" means any person, including officers and
--------
directors, employed by the Company or any Parent or Subsidiary of the Company,
with the status of employment determined based upon such minimum number of
hours or periods worked as shall be determined by the Administrator in its
discretion, subject to any requirements of the Code. The payment of a
director's fee by the Company to a director shall not be sufficient to
constitute "employment" of such director by the Company.
(j) "Exchange Act" means the Securities Exchange Act of 1934,
------------
as amended.
(k) "Fair Market Value" means, as of any date, the fair market
-----------------
value of Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system including without limitation the
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported), as quoted on such system or exchange, or the exchange with the
greatest volume of trading in Common Stock for the last market trading day prior
to the time of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System
(but not on the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
for the last market trading day prior to the time of determination, as reported
in The Wall Street Journal or such other source as the Administrator deems
reliable; or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith
by the Administrator.
(l) "Incentive Stock Option" means an Option intended to
----------------------
qualify as an incentive stock option within the meaning of Section 422 of the
Code, as designated in the applicable option agreement.
(m) "Nonstatutory Stock Option" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option, as designated in the applicable option
agreement.
(n) "Option" means a stock option granted pursuant to the Plan.
------
(o) "Optioned Stock" means the Common Stock subject to an
--------------
Option or a Stock Purchase Right.
<PAGE>
(p) "Optionee" means an Employee or Consultant who receives
--------
an Option or a Stock Purchase Right.
(q) "Parent" means a "parent corporation," whether now or
------
hereafter existing, as defined in Section 424(e) of the Code, or any successor
provision.
(r) "Plan" means this Amended and Restated 1996 Stock Plan.
----
(s) "Reporting Person" means an officer, director, or greater
----------------
than ten percent shareholder of the Company within the meaning of Rule 16a-2
under the Exchange Act, who is required to file reports pursuant to Rule 16a-3
under the Exchange Act.
(t) "Restricted Stock" means shares of Common Stock acquired
----------------
pursuant to a grant of a Stock Purchase Right under Section 10 below.
(u) "Rule 16b-3" means Rule 16b-3 promulgated under the
----------
Exchange Act, as the same may be amended from time to time, or any successor
provision.
(v) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 12 of the Plan.
(w) "Stock Exchange" means any stock exchange or consolidated
--------------
stock price reporting system on which prices for the Common Stock are quoted
at any given time.
(x) "Stock Purchase Right" means the right to purchase Common
--------------------
Stock pursuant to Section 10 below.
(y) "Subsidiary" means a "subsidiary corporation," whether
----------
now or hereafter existing, as defined in Section 424(f) of the Code, or any
successor provision.
3. Stock Subject to the Plan. Subject to the provisions of
-------------------------
Section 12 of the Plan, the maximum aggregate number of shares that may be
optioned and sold under the Plan is 3,000,000 shares of Common Stock. The shares
may be authorized, but unissued, or reacquired Common Stock. If an Option should
expire or become unexercisable for any reason without having been exercised in
full, the unpurchased Shares that were subject thereto shall, unless the Plan
shall have been terminated, become available for future grant under the Plan. In
addition, any shares of Common Stock which are retained by the Company upon
exercise of an Option or Stock Purchase Right in order to satisfy the exercise
or purchase price for such Option or Stock Purchase Right or any withholding
taxes due with respect to such exercise shall be treated as not issued and shall
continue to be available under the Plan.
<PAGE>
4. Administration of the Plan.
--------------------------
(a) Initial Plan Procedure. Prior to the date, if any,
----------------------
upon which the Company becomes subject to the Exchange Act, the Plan shall be
administered by the Board or a committee appointed by the Board.
(b) Plan Procedure After the Date, if any, Upon Which the
-----------------------------------------------------
Company Becomes Subject to the Exchange Act.
- -------------------------------------------
(i) Multiple Administrative Bodies. If permitted by
------------------------------
Rule 16b-3, the Plan may be administered by different bodies with respect to
directors, non-director officers and Employees or Consultants who are not
Reporting Persons.
(ii) Administration With Respect to Reporting Persons.
------------------------------------------------
With respect to grants of Options or Stock Purchase Rights to Employees who are
Reporting Persons, the Plan shall be administered by (A) the Board if the Board
may administer the Plan in compliance with Rule 16b-3 with respect to a plan
intended to qualify thereunder as a discretionary plan, or (B) a committee
designated by the Board to administer the Plan, which committee shall be
constituted in such a manner as to permit the Plan to comply with Rule 16b-3
with respect to a plan intended to qualify thereunder as a discretionary plan.
Once appointed, such committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members of the
committee and thereafter directly administer the Plan, all to the extent
permitted by Rule 16b-3 with respect to a plan intended to qualify thereunder as
a discretionary plan. No person serving as a member of an Administrator that has
authority with respect to grants to Reporting Persons shall be eligible to
receive any grant under the Plan which would cause such member to cease to be
"disinterested" within the meaning of Rule 16b-3.
(iii) Administration With Respect to Consultants and
----------------------------------------------
Other Employees. With respect to grants of Options or Stock Purchase Rights to
- ---------------
Employees or Consultants who are not Reporting Persons, the Plan shall be
administered by (A) the Board or (B) a committee designated by the Board, which
committee shall be constituted in such a manner as to satisfy the legal
requirements relating to the administration of incentive stock option plans, if
any, of state corporate and securities laws, of the Code and of any applicable
Stock Exchange (the "Applicable Laws"). Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused,
and remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions
---------------------------
of the Plan and in the case of a Committee, the specific duties delegated by
the Board to such Committee, and
<PAGE>
subject to the approval of any relevant authorities, including the approval,
if required, of any Stock Exchange, the Administrator shall have the authority,
in its discretion;
(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(k) of the Plan;
(ii) to select the Consultants and Employees to whom
Options and Stock Purchase Rights may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options
and Stock Purchase Rights or any combination thereof are granted hereunder;
(iv) to determine the number of shares of Common Stock
to be covered by each such award granted hereunder;
(v) to approve forms of agreement for use under the
Plan,
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder;
(vii) to determine whether and under what circumstances
an Option may be settled in cash under Section 9(f) instead of Common Stock;
(viii) to reduce the exercise price of any Option to
the then current Fair Market Value if the Fair Market Value of the Common
Stock covered by such Option shall have declined since the date the Option was
granted;
(ix) to determine the terms and restrictions
applicable to Stock Purchase Rights and the Restricted Stock purchased by
exercising such Stock Purchase Rights; and
(x) to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan,
(xi) in order to fulfill the purposes of the Plan and
without amending the Plan, to modify grants of Options or Stock Purchase
Rights to participants who are foreign nationals or employed outside of the
United States in order to recognize differences in local law, tax policies or
customs.
(c) Effect of Administrator's Decision. All decisions,
----------------------------------
determinations and interpretations of the Administrator shall be final and
binding on all holders of Options or Stock Purchase Rights.
<PAGE>
5. Eligibility.
-----------
(a) Nonstatutory Stock Options And Stock Purchase Rights may
be granted to Employees and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee or Consultant who has been granted an Option or
Stock Purchase Right may, if he or she is otherwise eligible, be granted
additional Options or Stock Purchase Rights.
(b) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Incentive Stock Options
shall be taken into account in the order in which they were granted, and the
Fair Market Value of the Shares subject to an Incentive Stock Option shall be
determined as of the date of the grant of such Option.
(d) The Plan shall not confer upon any Optionee any right
with respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with such Optionee's right or the
Company's right to terminate his or her employment or consulting relationship
at any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon the
------------
earlier to occur of its adoption by the Board of Directors or its approval by
the shareholders of the Company as described in Section 19 of the Plan. It
shall continue in effect for a term of ten (10) years unless sooner terminated
under Section 15 of the Plan.
7. Term of Option. The term of each Option shall be the term
--------------
stated in the Option Agreement; provided, however, that the term shall be no
more than ten (10) years from the date of grant thereof or such shorter term as
may be provided in the Option Agreement. However, in the case of an Option
granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement.
8. Option Exercise Price and Consideration.
---------------------------------------
(a) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option that is:
<PAGE>
(A) granted to an Employee who, at the time of
the grant of such Incentive Stock Option, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company
or any Parent or Subsidiary, the per Share exercise price shall be no less
than 110% of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee, the per Share
exercise price shall be no less than I 00% of the Fair Market Value per Share
on the date of grant.
(ii) In the case of a Nonstatutory Stock Option that is:
(A) granted to a person who, at the time of the
grant of such Option, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of the grant.
(B) granted to any person, the per Share exercise
price shall be no less than 85% of the Fair Market Value per Share on the date
of grant.
(b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares that (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender or such other period as may be required
to avoid a charge to the Company's earnings, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) authorization for the Company to
retain from the total number of Shares as to which the Option is exercised that
number of Shares having a Fair Market Value on the date of exercise equal to the
exercise price for the total number of Shares as to which the Option is
exercised, (6) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company of
the sale or loan proceeds required to pay the exercise price and any applicable
income or employment taxes, (7) delivery of an irrevocable subscription
agreement for the Shares that irrevocably obligates the option holder to take
and pay for the Shares not more than twelve months after the date of delivery of
the subscription agreement, (8) any combination of the foregoing methods of
payment, or (9) such other consideration and method of payment for the issuance
of Shares to the extent permitted under Applicable Laws. In making its
determination as to the type of consideration to accept, the Administrator shall
consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
9. Exercise of Option.
------------------
(a) Procedure for Exercise, Rights as a Shareholder. Any
-----------------------------------------------
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator, including performance criteria
with respect to the Company and/or the Optionee,
<PAGE>
and as shall be permissible under the terms of the Plan; provided that such
Option shall become exercisable at the rate of at least twenty percent (20%)
per year over five (5) years from the date the Option is granted.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and the
Company has received full payment for the Shares with respect to which the
Option is exercised. Full payment may, as authorized by the Board, consist of
any consideration and method of payment allowable under Section 8(b) of the
Plan. Until the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
not withstanding the exercise of the Option. The Company shall issue (or cause
to be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other night for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 12 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares that thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(b) Termination of Employment or Consulting Relationship.
----------------------------------------------------
Subject to Section 9(c), in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant with the Company, such Optionee may, but
only within three (3) months (or such other period of time not less than thirty
(30) days as is determined by the Administrator, with such determination in the
case of an Incentive Stock Option being made at the time of grant of the Option
and not exceeding three (3) months) after the date of such termination (but in
no event later than the expiration date of the term of such Option as set forth
in the Option Agreement), exercise his or her Option to the extent that the
Optionee was entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of such
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate. No
termination shall be deemed to occur and this Section 9(b) shall not apply if
(i) the Optionee is a Consultant who becomes an Employee; or (ii) the Optionee
is an Employee who becomes a Consultant.
(c) Disability of Optionee. Notwithstanding the
----------------------
provisions of Section 9(b) above, in the event of termination of an Optionee's
Continuous Status as an Employee or Consultant as a result of his or her total
and permanent disability (within the meaning of Section 22(e)(3) of the Code),
Optionee may, but only within twelve (12) months from the date of such
termination (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), exercise the Option to the extent
otherwise entitled to exercise it at the date of such termination. To the extent
that Optionee was not entitled to exercise the Option at
<PAGE>
the date of termination, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall terminate.
(d) Death of Optionee. In the event of the death of
-----------------
an Optionee during the period of Continuous Status as an Employee or Consultant,
or within thirty (30) days following the termination of the Optionee's
Continuous Status as an Employee or Consultant, the Option may be exercised, at
any time within six (6) months following the date of death (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), by the Optionee's estate or by a person who acquired the
fight to exercise the Option by bequest or inheritance, but only to the extent
the Optionee was entitled to exercise the Option at the date of death or, if
earlier, the date of termination of the Continuous Status as an Employee or
Consultant. To the extent that Optionee was not entitled to exercise the Option
at the date of death or termination, as the case may be, or if Optionee does not
exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate.
(e) Rule 16b-3. Options granted to Reporting Persons
----------
shall comply with Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum
exemption for Plan transactions.
(f) Buyout Provisions. The Administrator may at any time
-----------------
offer to buy out for a payment in cash or Shares, an Option previously
granted, based on such terms and conditions as the Administrator shall
establish and communicate to the Optionee at the time that such offer is made.
10. Stock Purchase Rights.
---------------------
(a) Rights to Purchase. Stock Purchase Rights may be issued
------------------
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing of the terms, conditions and restrictions related
to the offer, including the number of Shares that such person shall be entitled
to purchase, the price to be paid (which price shall not be less than 85% of the
Fair Market Value of the Shares as of the date of the offer), and the time
within which such person must accept such offer, which shall in no event exceed
thirty (30) days from the date upon which the Administrator made the
determination to grant the Stock Purchase Right. The offer shall be accepted by
execution of a Restricted Stock purchase agreement in the form determined by the
Administrator. Shares purchased pursuant to the grant of a Stock Purchase Right
shall be referred to herein as "Restricted Stock."
(b) Repurchase Option. Unless the Administrator determines
-----------------
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original purchase price paid by
<PAGE>
the purchaser and may be paid by cancellation of any indebtedness of the
Purchaser to the Company.
(c) Other Provisions. The Restricted Stock purchase
----------------
agreement shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Administrator in its sole
discretion. In addition, the provisions of Restricted Stock purchase agreements
need not be the same with respect to each purchaser.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
-----------------------
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 12
of the Plan.
11. Stock Withholding to Satisfy Withholding Tax Obligations.
--------------------------------------------------------
At the discretion of the Administrator, Optionees may satisfy withholding
obligations as provided in this paragraph. When an Optionee incurs tax liability
in connection with an Option or Stock Purchase Right, which tax liability is
subject to tax withholding under applicable tax laws, and the Optionee is
obligated to pay the Company an amount required to be withheld underapplicable
tax laws, the Optionee may satisfy the withholding tax obligation by one or some
combination of the following methods: (a) by cash payment, or (b) out of
Optionee's current compensation, (c) if permitted by the Administrator, in its
discretion, by surrendering to the Company Shares that (i) in the case of Shares
previously acquired from the Company, have been owned by the Optionee for more
than six months on the date of surrender, and (ii) have a fair market value on
the date of surrender equal to or less than Optionee's marginal tax rate times
the ordinary income recognized, or (d) by electing to have the Company withhold
from the Shares to be issued upon exercise of the Option, or the Shares to be
issued in connection with the Stock Purchase Right, if any, that number of
Shares having a fair market value equal to the amount required to be withheld.
For this purpose, the fair market value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be determined
(the "Tax Date").
Any surrender by a Reporting Person of previously owned
Shares to satisfy tax withholding obligations arising upon exercise of this
Option must comply with the applicable provisions of Rule 16b-3 and shall be
subject to such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.
All elections by an Optionee to have Shares withheld to
satisfy tax withholding obligations shall be made in writing in a form
acceptable to the Administrator and shall be subject to the following
restrictions:
(a) the election must be made on or prior to the applicable
Tax Date;
<PAGE>
(b) once made, the election shall be irrevocable as to the
particular Shares of the Option or Stock Purchase Right as to which the
election is made;
(c) all elections shall be subject to the consent or
disapproval of the Administrator;
(d) if the Optionee is a Reporting Person, the election must
comply with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
In the event the election to have Shares withheld is
made by an Optionee and the Tax Date is deferred under Section 83 of the Code
because no election is filed under Section 83(b) of the Code, the Optionee
shall receive the full number of Shares with respect to which the Option or
Stock Purchase Right is exercised but such Optionee shall be unconditionally
obligated to tender back to the Company the proper number of Shares on the Tax
Date.
12. Adjustments Upon Changes in Capitalization; Corporate
-----------------------------------------------------
Transactions.
- ------------
(a) Changes in Capitalization. Subject to any required
-------------------------
action by the shareholders of the Company, the number of shares of Common Stock
covered by each outstanding Option or Stock Purchase Right, and the number of
shares of Common Stock that have been authorized for issuance under the Plan but
as to which no Options or Stock Purchase Rights have yet been granted or that
have been returned to the Plan upon cancellation or expiration of an Option or
Stock Purchase Rights, as well as the price per share of Common Stock covered by
each such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination, recapitalization or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option or Stock Purchase Right.
(b) Corporate Transactions. In the event of the proposed
----------------------
dissolution or liquidation of the Company, the Option will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Administrator. The Administrator may, in the exercise of its sole discretion
in such instances, declare that any Option shall terminate as of a date fixed by
the Administrator and give each Optionee the right to exercise his or her Option
as to all of the Optioned Stock, including Shares as to which the Option would
not
<PAGE>
otherwise be exercisable. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the Option shall be assumed or an equivalent
option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, unless the Administrator determines,
in the exercise of its sole discretion and in lieu of such assumption or
substitution, that the Optionee shall have the right to exercise the Option as
to all of the Optioned Stock, including Shares as to which the Option would not
otherwise be exercisable or the Administrator determines to terminate the
unvested and unexercised option. If the Administrator makes an Option
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee that the Option
shall be exercisable for a period of thirty (30) days from the date of such
notice, and the Option will terminate upon the expiration of such period.
13. Non-Transferability of Options, Stock Purchase Rights and
---------------------------------------------------------
Restricted Stock. Options, Stock Purchase Rights or Restricted Stock may not be
- ----------------
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised or purchased during the lifetime of the Optionee, Stock Purchase
Rights Holder or Restricted Stock Purchaser only by the Optionee, Stock Purchase
Rights Holder or Restricted Stock Purchaser.
14. Time of Granting Options and Stock Purchase Rights.
--------------------------------------------------
The date of grant of an Option or Stock Purchase Right shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option or Stock Purchase Right, or such other date as is
determined by the Board. Notice of the determination shall be given to each
Employee or Consultant to whom an Option or Stock Purchase Right is so granted
within a reasonable time after the date of such grant.
15. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time
-------------------------
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made that would impair the rights of any
Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 or
with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of any Stock Exchange), the Company shall obtain
shareholder approval of any Plan amendment in such a manner and to such a degree
as required.
(b) Effect of Amendment or Termination. No amendment or
----------------------------------
termination of the Plan shall adversely affect Options already granted, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.
16. Conditions Upon Issuance of Shares. Shares shall not be
----------------------------------
issued pursuant to the exercise of an Option or Stock Purchase Right unless
the exercise of such Option or Stock Purchase Right and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933,
as
<PAGE>
amended, the Exchange Act, the rules and regulations promulgated thereunder,
and the requirements of any Stock Exchange.
As a condition to the exercise of an Option, the Company
may require the person exercising such Option to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is
required by law.
17. Reservation of Shares. The Company, during the term of this
---------------------
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan. The inability of
the Company to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
18. Agreements. Options and Stock Purchase Rights shall be
----------
evidenced by written agreements in such form as the Administrator shall
approve from time to time.
19. Shareholder Approval. Continuance of the Plan shall be
--------------------
subject to approval by the shareholders of the Company within twelve (12) months
before or after the date the Plan is adopted. Such shareholder approval shall be
obtained in the degree and manner required under applicable state and federal
law and the rules of any Stock Exchange upon which the Common Stock is listed.
All Options and Stock Purchase Rights issued under the Plan shall become void in
the event such approval is not obtained.
20. Information to Optionees and Purchasers. To the extent
---------------------------------------
required by Applicable Laws, the Company shall provide financial statements at
least annually to each Optionee and to each individual who acquired Shares
Pursuant to the Plan, during the period such Optionee or purchaser has one or
more Options or Stock Purchase Rights outstanding, and in the case of an
individual who acquired Shares pursuant to the Plan, during the period such
individual owns such Shares. The Company shall not be required to provide such
information if the issuance of Options or Stock Purchase Rights under the Plan
is limited to key employees whose duties in connection with the Company assure
their access to equivalent information.
<PAGE>
Exhibit 4.12
AMENDED AND RESTATED 1996 STOCK PLAN
FORM OF STOCK OPTION AGREEMENT
1. Grant of Option. FreeLoader, Inc., a Delaware corporation (the
---------------
"Company"), hereby grants to Optionee named in the Notice of Stock Option
-------
Grant (the "Optionee"), an option (the "Option") to purchase a total number of
--------
shares of Common Stock (the "Shares") set forth in the Notice of Stock Option
------
Grant, at the exercise price per share set forth in the Notice of Stock Option
Grant (the "Exercise Price") subject to the terms, definitions and provisions
--------------
of the Amended and Restated 1996 Stock Plan (the "Plan") adopted by the Company,
----
which is incorporated herein by reference. Unless otherwise defined herein,
the terms defined in the Plan shall have the same defined meanings in this
Option.
If designated an Incentive Stock Option, this Option is intended to
qualify as an Incentive Stock Option as defined in Section 422 of the Code.
2. Exercise of Option. This Option shall be exercisable during
------------------
its Term in accordance with the Exercise Schedule set out in the Notice of
Stock Option Grant and with the provisions of Section 9 of the Plan as follows:
(a) Right to Exercise.
-----------------
(i) This Option may not be exercised for a fraction of
a share.
(ii) In the event of Optionee's death, disability or
other termination of employment, the exercisability of the Option is governed
by Sections 6, 7 and 8 below, subject to the limitation contained in
subsection 2(a)(i).
(iii) In no event may this Option be exercised after the
date of expiration of the Term of this Option as set forth in the Notice of
Stock Option Grant.
(b) Method of Exercise. This Option shall be exercisable by
------------------
written notice (in the form attached as Exhibit A) which shall state the
---------
election to exercise the Option, the number of Shares in respect of which the
Option is being exercised, and such other representations and agreements as to
the holder's investment intent with respect to such shares of Common Stock as
may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by Optionee and shall be delivered in person or
by certified mail to the Secretary of the Company. The written notice shall be
accompanied by payment of the Exercise Price. This Option shall be deemed to be
exercised upon receipt by the Company of such written notice accompanied by the
Exercise Price.
No Shares will be issued pursuant to the exercise of an Option unless
such issuance and such exercise shall comply with all relevant provisions of
applicable law and the requirements of
<PAGE>
any stock exchange upon which the Shares may then be listed. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to Optionee on the date on which the Option is exercised with respect to such
Shares.
3. Optionee's Representations. In the event the Shares
--------------------------
purchasable pursuant to the exercise of this Option have not been registered
under the Securities Act of 1933, as amended, at the time this Option is
exercised, Optionee shall, if required by the Company, concurrently with the
exercise of all or any portion of this Option, deliver to the Company Optionee's
Investment Representation Statement in the form attached hereto as Exhibit B,
---------
and shall read the applicable rules of the Commissioner of Corporations attached
to such Investment Representation Statement.
4. Method of Payment. Payment of the Exercise Price shall be by
-----------------
any of the following, or a combination thereof, at the election of Optionee:
(a) cash; or
(b) check; or
(c) surrender of other shares of Common Stock of the Company
which (i) in the case of Shares acquired pursuant to the exercise of a Company
option, have been owned by Optionee for more than six (6) months on the date of
surrender, and (ii) have a fair market value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised; or
(d) such other consideration, including promissory notes, as
may be determined by the Board in its absolute discretion to the extent
permitted under Sections 408 and 409 of the California General Corporation Law.
5. Restrictions on Exercise. This Option may not be exercised
------------------------
until such time as the Plan has been approved by the shareholders of the
Company, or if the issuance of such Shares upon such exercise or the method of
payment of consideration for such shares would constitute a violation of any
applicable federal or state securities or other law or regulation, including any
rule under Part 207 of Title 12 of the Code of Federal Regulations as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.
6. Termination of Relationship. In the event of termination of
---------------------------
Optionee's consulting relationship or Continuous Status as an Employee,
Optionee may, to the extent otherwise so entitled at the date of such
termination (the "Termination Date"), exercise this Option during the period
----------------
ending on the Expiration Date set out in the Notice of Option Grant. To the
extent that Optionee was not entitled to exercise this Option at such
Termination Date, or if Optionee does not exercise this Option within the time
specified herein, the Option shall terminate.
<PAGE>
7. Disability Of Optionee.
-----------------------
(a) Notwithstanding the provisions of Section 6 above, in
the event of termination of Optionee's consulting relationship or Continuous
Status as an Employee as a result of Optionee's total and permanent disability
(as defined in Section 22(c)(3) of the Code), Optionee may, but only within
twelve (12) months from the Termination Date (but in no event later than the
date of expiration of the Term of this Option as set forth in the Notice of
Stock Option Grant and in Section 10 below), exercise this Option to the extent
Optionee was entitled to exercise it as of such Termination Date. To the extent
that Optionee was not entitled to exercise the Option as of the Termination
Date, or if Optionee does not exercise such Option (which he was entitled to
exercise) within the time specified herein, the Option shall terminate.
(b) Notwithstanding the provisions of Section 6 above, in
the event of termination of Optionee's consulting relationship or Continuous
Status as an Employee as a result of any disability not constituting a total and
permanent disability (as defined in Section 22(e)(3) of the Code), Optionee may,
but only within six (6) months from the Termination Date (but in no event later
than the date of expiration of the Term of this Option as set forth in the
Notice of Stock Option Grant and in Section 10 below), exercise this Option to
the extent Optionee was entitled to exercise it as of such Termination Date;
provided, however, that if this is an Incentive Stock Option and Optionee fails
to exercise this Incentive Stock Option within three (3) months from the
Termination Date, this Option will cease to qualify as an Incentive Stock Option
(as defined in Section 422 of the Code) and Optionee will be treated for federal
income tax purposes as having received ordinary income at the time of such
exercise in an amount generally measured by the difference between the exercise
price for the Shares and the fair market value of the Shares on the date of
exercise. To the extent that Optionee was not entitled to exercise the Option at
the Termination Date, or if Optionee does not exercise such Option to the extent
so entitled within the time specified herein, the Option shall terminate.
8. Death of Optionee. In the event of the death of Optionee.
-----------------
(a) during the Term of this Option and while an Employee or
Consultant of the Company and having a consulting relationship with the Company
or having been in Continuous Status as an Employee since the date of grant of
the Option, the Option may be exercised at any time within six (6) months
following the date of death (but in no event later than the date of expiration
of the Term of this Option as set forth in the Notice of Stock Option Grant and
in Section 10 below), by Optionee's estate or by a person who acquired the right
to exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that would have accrued had Optionee continued living and
remained a consultant or remained in Continuous Status as an Employee six (6)
months after the date of death; or
(b) within thirty (30) days after Optionee's Termination
Date, the Option may be exercised at any time within six (6) months following
the date of death (but in no event later than the date of expiration of the
Term of this Option as set forth in the Notice of
<PAGE>
Stock Option Grant and in Section 10 below), by Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent of the right to exercise that had accrued at the Termination
Date.
9. Non-Transferability of Option. This Option may not be
-----------------------------
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by him
or her. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of Optionee.
10. Term of Option. This Option may be exercised only within the
--------------
Term set out in the Notice of Stock Option Grant, and may be exercised during
such Term only in accordance with the Plan and the terms of this Option. The
limitations set out in Section 7 of the Plan regarding Options designated as
Incentive Stock Options and Options granted to more than ten percent (10%)
shareholders shall apply to this Option.
11. Tax Consequences. Set forth below is a brief summary as of
----------------
the date of this Option of certain of the federal and California tax
consequences of exercise of this Option and disposition of the Shares under the
laws in effect as of the Date of Grant. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT
A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of Incentive Stock Option. If this Option
----------------------------------
qualifies as an Incentive Stock Option, there will be no regular federal or
California income tax liability upon the exercise of the Option, although the
excess, if any, of the fair market value of the Shares on the date of exercise
over the Exercise Price will be treated as an adjustment to the alternative
minimum tax for federal tax purposes and may subject Optionee to the alternative
minimum tax in the year of exercise.
(b) Exercise of Nonstatutory Stock Option. If this Option
-------------------------------------
does not qualify as an Incentive Stock Option, there may be a regular federal
income tax liability and a California income tax liability upon the exercise of
the Option. The Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the fair
market value of the Shares on the date of exercise over the Exercise Price. If
Optionee is an employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
(c) Disposition of Shares. In the case of a Nonstatutory
---------------------
Stock Option, if the Shares are held for at least one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
and California income tax purposes. In the case of an Incentive Stock Option,
if the Shares transferred pursuant to the Option are held for at least one year
after exercise and are disposed of at least two years after the Date of Grant,
any gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal and California income tax purposes. If the Shares
purchased under an Incentive Stock Option are
<PAGE>
disposed of within such one-year period or within two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (i) the fair market value of the
Shares on the date of exercise, or (ii) the sale price of the Shares.
(d) Notice of Disqualifying Disposition of Incentive Stock
------------------------------------------------------
Option Shares. If the Option granted to Optionee herein is an Incentive Stock
- -------------
Option, and if Optionee sells or otherwise disposes of any of the Shares
acquired pursuant to such Incentive Stock Option on or before the later of (i)
the date two years after the Date of Grant, or (ii) the date one year after the
date of exercise, Optionee shall immediately notify the Company in writing of
such disposition. Optionee acknowledges and agrees that he or she may be subject
to income tax withholding by the Company on the compensation income recognized
by Optionee from the early disposition by payment in cash or out of the current
earnings paid to Optionee.
12. Withholding Tax Obligations. Optionee understands that, upon
---------------------------
exercising a Nonstatutory Stock Option, he or she shall recognize income for tax
purposes in an amount equal to the excess of the then fair market value of the
Shares over the Exercise Price. However, the timing of this income recognition
may be deferred for up to six months if Optionee is subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). If Optionee is
------------
an employee, the Company will be required to withhold from Optionee's
compensation, or collect from Optionee and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income.
Additionally, Optionee may at some point be required to satisfy tax withholding
obligations with respect to the disqualifying disposition of an Incentive Stock
Option. The Optionee shall satisfy his or her tax withholding obligation arising
upon the exercise of this Option by one or some combination of the following
methods: (a) by cash payment, (b) out of Optionee's current compensation, (c) if
permitted by the Administrator, in its discretion, by surrendering to the
Company Shares which (i) in the case of Shares previously acquired from the
Company, have been owned by Optionee for more than six months on the date of
surrender, and (ii) have a fair market value an the date of surrender equal to
or greater than Optionee's marginal tax rate times the ordinary income
recognized, or (d) by electing to have the Company withhold from the Shares to
be issued upon exercise of the Option that number of Shares having a fair market
value equal to the amount required to be withheld. For this purpose, the fair
market value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined (the "Tax Date").
--------
If Optionee is subject to Section 16 of the Exchange Act (an
"Insider"), any surrender of previously owned Shares to satisfy tax withholding
-------
obligations arising upon exercise of this Option must comply with the applicable
provisions of Rule 16b-3 promulgated under the Exchange Act ("Rule 16b-3") and
----------
shall be subject to such additional conditions or restrictions as may be
required thereunder to qualify for the maximum exemption from Section 16 of the
Exchange Act with respect to Plan transactions.
All elections by an Optionee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:
<PAGE>
(a) the election must be made on or prior to the applicable
Tax Date;
(b) once made, the election shall be irrevocable as to the
particular Shares of the Option as to which the election is made;
(c) all elections shall be subject to the consent or
disapproval of the Administrator; and
(d) if Optionee is an Insider, the election must comply with
the applicable provisions of Rule 16b-3 and shall be subject to such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
13. Market Standoff Agreement. In connection with the initial
-------------------------
public offering of the Company's securities and upon request of the Company or
the underwriters managing any underwritten offering of the Company's securities,
Optionee hereby agrees not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Shares (other than those
included in the registration) without the prior written consent of the Company
or such underwriters, as the case may be, for such period of time (not to exceed
180 days) from the effective date of such registration as may be requested by
the Company or such managing underwriters and to execute an agreement reflecting
the foregoing as may be requested by the underwriters at the time of the public
offering; provided, however, that Optionee need not so agree unless a majority
of the Company's officers and directors and a majority of the holders of at
least 5% of the Company's outstanding securities also agree to be similarly
bound.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
document.
By:
---------------------------
Title:
------------------------
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT
TO THE OPTION HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT OR CONSULTANCY AT
THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS
OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES
THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON
<PAGE>
OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY
BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE
COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME,
WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents
that he or she is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof.
Optionee has reviewed the Plan and this Option in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option and
fully understands all provisions of the Option. Optionee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Dated:
------------------------ ---------------------------
<PAGE>
EXHIBIT A
---------
STOCK PLAN
EXERCISE NOTICE
---------------
Attention: Chief Financial Officer
1. Exercise of Option. Effective as of today,______________,
------------------
199__, the undersigned ("Optionee") hereby elects to exercise Optionee's
--------
option to purchase ______ shares of the Common Stock (the "Shares") of (the
------
"Company") under and pursuant to the Company's Stock Plan, (the "Plan") and
------- ----
the Stock Option Agreement dated (the "Option Agreement").
----------------
2. Representations of Optionee. Optionee acknowledges that
---------------------------
Optionee has received, read and understood the Plan, the Option Agreement and
the Investment Representation Statement attached as Exhibit B to the Option
---------
Agreement, and agrees to abide by and be bound by their terms and conditions. If
applicable, Optionee has executed and delivered the Investment Representation
Statement to the Company. Optionee further represents that Optionee is
purchasing the Shares for Optionee's own account for investment and not with a
view to, or for sale in connection with, a "distribution" of any of such Shares
for purposes of the Securities Act of 1933, as amended (the "Securities Act").
--------------
3. Compliance with Securities Law. Optionee understands and
------------------------------
acknowledges that the Shares have not been registered under the Securities Act
and, notwithstanding any other provision of the Option Agreement to the
contrary, the exercise of any rights to purchase any Shares is expressly
conditioned upon compliance with the Securities Act, all applicable state
securities laws and all applicable requirements of any stock exchange or over
the counter market on which the Company's Common Stock may be listed or traded
at the time of exercise and transfer. Optionee agrees to cooperate with the
Company to ensure compliance with such laws
4. Federal Restrictions on Transfer. Optionee understands that
--------------------------------
the Shares have not been registered under the Securities Act and therefore
cannot be resold and must be held indefinitely unless they are registered under
the Securities Act or unless an exemption from such registration is available
and that the certificate(s) representing the Shares may bear a legend to that
effect. Optionee understands that the Company is under no obligation to register
the Shares and that an exemption may not be available or may not permit Optionee
to transfer Shares in the amounts or at the times proposed by Optionee.
Specifically, Optionee has been advised that Rule 144 promulgated under the
Securities Act, which permits certain resales of unregistered securities, is not
presently available with respect to the Shares and, in any event requires that
the Shares be fully paid for by means other than a promissory note secured by
the Shares themselves and then be held for at least two years (and in some cases
three years) before they may be resold under Rule 144.
<PAGE>
5. Rights as Shareholder. Until the stock certificate evidencing
---------------------
such Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the optioned Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 12 of the Plan.
Optionee shall enjoy rights as a shareholder until such time as
Optionee disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal pursuant to Section 6 below. Upon such exercise,
Optionee shall have no further rights as a holder of the Shares so purchased
except the right to receive payment for the Shares so purchased in accordance
with the provisions of this Agreement, and Optionee shall forthwith cause the
certificate(s) evidencing the Shares so purchased to be surrendered to the
Company for transfer or cancellation.
6. Company's Right of First Refusal. Before any Shares held by
--------------------------------
Optionee or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
------
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "Right of First Refusal").
----------------------
(a) Notice of Proposed Transfer. The Holder of the Shares
---------------------------
shall deliver to the Company a written notice (the "Notice") stating: (i) the
------
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
-------------------
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the terms and conditions of each proposed sale or transfer. The Holder
shall offer the Shares at the same price (the "Offered Price") and upon the same
-------------
terms (or terms as similar as reasonably possible) to the Company or its
assignee(s).
(b) Exercise of Right of First Refusal. At any time within
----------------------------------
thirty (30) days after receipt of the Notice, the Company and/or its assignee(s)
may, by giving written notice to the Holder, elect to purchase all, but not less
than all, of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.
(c) Purchase Price. The purchase price ("Purchase Price")
-------------- --------------
for the Shares purchased by the Company or its assignee(s) under this Section
shall be the Offered Price. If the Offered Price includes consideration other
than cash, the cash equivalent value of the non-cash consideration shall be
determined by the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at
-------
the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an
<PAGE>
assignee, to the assignee), or by any combination thereof within 30 days after
receipt of the Notice or in the manner and at the times set forth in the Notice.
(e) Holder's Right to Transfer. If all of the Shares proposed
--------------------------
in the Notice to be transferred to a given Proposed Transferee are not purchased
by the Company and/or its assignee(s) as provided in this Section, then the
Holder may sell or otherwise transfer such Shares to that Proposed Transferee at
the Offered Price or at a higher price, provided that such sale or other
transfer is consummated within 60 days after the date of the Notice and provided
further that any such sale or other transfer is effected in accordance with any
applicable securities laws and the Proposed Transferee agrees in writing that
the provisions of this Section shall continue to apply to the Shares in the
hands of such Proposed Transferee. If the Shares described in the Notice are not
transferred to the Proposed Transferee within such period, or if the Holder
proposes to change the price or other terms to make them more favorable to the
Proposed Transferee, a new Notice shall be given to the Company, and the Company
and/or its assignees shall again be offered the Right of First Refusal before
any Shares held by the Holder may be sold or otherwise transferred.
(f) Exception for Certain Family Transfers. Anything to the
--------------------------------------
contrary contained in this Section notwithstanding, the transfer of any or all
of the Shares during Optionee's lifetime or on Optionee's death by will or
intestacy to Optionee's immediate family or a trust for the benefit of
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
----------------
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.
(g) Termination of Right of First Refusal. The Right of
-------------------------------------
First Refusal shall terminate as to any Shares 90 days after the first sale of
Common Stock of the Company to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission under the Securities Act.
7. Tax Consultation. Optionee understands that Optionee may
----------------
suffer adverse tax consequences as a result of Optionee's purchase or
disposition of the Shares. Optionee represents that Optionee has consulted with
any tax consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the, Company for
any tax advice.
8. Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------
(a) Legends. Optionee understands and agrees that the
-------
Company shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing ownership
of the Shares together with any other legends that may be required by state or
federal securities laws:
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY
THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE
BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF
WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH
TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
TRANSFEREES OF THESE SHARES.
Optionee understands that transfer of the Shares may be restricted by
Section 260.141.11 of the Rules of the California Corporations Commissioner, a
copy of which is attached to this Agreement.
(b) Stop-Transfer Notices. Optionee agrees that, in order
---------------------
to ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required
-------------------
(1) to transfer on its books any Shares that have been sold or otherwise
transferred in violation of any of the provisions of this Agreement or (ii) to
treat as owner of such Shares or to accord the right to vote or pay dividends to
any purchaser or other transferee to whom such Shares shall have been so
transferred.
9. Market Standoff Agreement. In connection with the initial
-------------------------
public offering of the Company's securities and upon request of the Company or
the underwriters managing any underwritten offering of the Company's securities,
Optionee hereby agrees not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Shares (other than those
included in the registration) without the prior written consent of the Company
or such underwriters, as the case may be, for such period of time (not to exceed
180 days) from the effective date of such registration as may be requested by
the Company or such managing underwriters and to execute an agreement reflecting
the foregoing as may be requested by the underwriters at the time of the public
offering; provided, however, that Optionee need not so agree unless a majority
of the Company's officers and directors and a majority of the holders of at
least 5% of the Company's outstanding securities also agree to be similarly
bound.
<PAGE>
10. Successors and Assigns. The Company may assign any of its
----------------------
fights under this Agreement to single or multiple assignees, and this Agreement
shall inure to the benefit of the successors and assigns of the Company. Subject
to the restrictions on transfer herein set forth, this Agreement shall be
binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.
11. Interpretation. Any dispute regarding the interpretation of
--------------
this Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Optionee.
12. Governing Law; Severability. This Agreement shall be governed
---------------------------
by and construed in accordance with the laws of the State of California
excluding that body of law pertaining to conflicts of law. Should any provision
of this Agreement be determined by a court of law to be illegal or
unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable.
13. Notices. Any notice required or permitted hereunder shall be
-------
given in writing and shall be deemed effectively given upon personal delivery or
upon deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
14. Further Instruments. The parties agree to execute such further
-------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
15. Delivery of Payment. Optionee herewith delivers to the
-------------------
Company the full Exercise Price for the Shares.
16. Entire Agreement. The Plan and Notice of Stock Option
----------------
Grant/Option Agreement are incorporated herein by reference. This Agreement, the
Plan and the Notice of Stock Option Grant/Option Agreement constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof, and is governed by California law except for that body of law pertaining
to conflict of laws.
Submitted by: Accepted by:
Optionee:
By:
- --------------------------------- ------------------------------
<PAGE>
Title:
---------------------------
Address: Address:
<PAGE>
Exhibit 5.1
July 9, 1996
Individual, Inc.
8 New England Executive Park West
Burlington, MA 01803
Re: Registration Statement on Form S-8 Relating to the Amended and
Restated 1989 Stock Option Plan, 1996 Non-Employee Director Stock Option
Plan and the Amended and Restated 1996 Stock Plan (collectively, the
"Plans") of Individual, Inc. (the "Company")
------------------------------------------------------------------------
Dear Sir or Madam:
- -------------------
Reference is made to the above-captioned Registration Statement on Form S-8
(the "Registration Statement") filed by the Company on or about July 9, 1996
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, relating to an aggregate of 3,920,594 shares of Common Stock, $.01 par
value per share, of the Company issuable pursuant to the Plans (the "Shares").
We have examined, are familiar with, and have relied as to factual matters
solely upon copies of the Plans, the Third Amended and Restated Certificate of
Incorporation and Amended and Restated By-Laws of the Company, the minute books
and stock records of the Company and originals of such other documents,
certificates and proceedings as we have deemed necessary for the purpose of
rendering this opinion.
Based on the foregoing, we are of the opinion that the Shares have been
duly authorized and, when issued and paid for in accordance with the terms of
the respective Plans, the terms of any option or purchase right grant thereunder
duly authorized by the Company's Board of Directors or Compensation Committee
and/or any related agreements with the Company, will be validly issued, fully
paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement and any amendments thereto.
Very truly yours,
/s/ Testa, Hurwitz & Thibeault, LLP
TESTA, HURWITZ & THIBEAULT, LLP
<PAGE>
Exhibit 23.1
Consent of Independent Accountants
---------------------------------------------------
We consent to the incorporation by reference in the registration statement
of Individual, Inc. on Form S-8 of our report dated January 30, 1996, except as
to the information in Note N, for which the date is March 4, 1996, on our audits
of the consolidated financial statements of Individual, Inc. as of December 31,
1995 and 1994, and for each of the three years in the period ended December 31,
1995, which report appears in the Prospectus which is part of the registration
statement (No. 333-00792) on Form S-1, as amended.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
July 8, 1996
