<PAGE>
As Filed with the Securities and Exchange Commission on January 7, 2000
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
SIEBEL SYSTEMS, INC.
(Exact Name of Registrant As Specified in Its Charter)
DELAWARE 94-3187233
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1855 South Grant Street
San Mateo, California 94402
(650) 295-5000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Options Granted Under OnTarget, Inc. 1999 Stock Award Plan (1)
(Full Title of the Plan)
Thomas M. Siebel
Chairman and Chief Executive Officer
Siebel Systems, Inc.
1855 South Grant Street
San Mateo, California 94402
(650) 295-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies To:
Eric C. Jensen, Esq.
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
(650) 843-5000
This Registration Statement will become effective immediately upon filing with
the Securities and Exchange Commission. Sales of the registered securities will
begin as soon as reasonably practicable after the effective date of this
Registration Statement.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered Registered (2) Share (3) Price (3) Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (par value $.001)
Options to Purchase Common Stock 311,598 $15.27 $4,758,101.46 $1,256.14
====================================================================================================================================
</TABLE>
(1) OnTarget, Inc. granted options to its directors and employees pursuant to
the OnTarget, Inc. 1999 Stock Award Plan (the "Plan") and various forms of
option agreements that contain substantially identical provisions.
(2) This Registration Statement shall cover any additional shares of Common
Stock which become issuable under the Plan set forth herein by reason of any
stock dividend, stock split, recapitalization or any other similar transaction
without receipt of consideration which results in an increase in the number of
shares of the Registrant's outstanding Common Stock.
(3) Estimated solely for the purpose of calculating the amount of the
registration fee of this offering pursuant to Rule 457(h) promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), on the basis of the
price at which the options may be exercised. The offering price per share and
aggregate offering price are based on the weighted average exercise price
pursuant to Rule 457(h) of the Securities Act, of the options assumed as
follows:
Options to purchase 311,598 shares of Siebel Systems, Inc. Common Stock issued
pursuant to the Plan at an average exercise price of $15.27 per share.
<PAGE>
EXPLANATORY NOTE
The shares registered hereunder will be issued upon the exercise of stock
options assumed by Siebel Systems, Inc., a Delaware corporation (the
"Registrant"), pursuant to that certain Agreement and Plan of Merger and
Reorganization among the Registrant, SE Acquisition Corp. and OnTarget, Inc.
("OnTarget") dated November 17, 1999. These options were originally granted to
employees of OnTarget under the Plan.
<PAGE>
PART II
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Registrant with the Securities and
Exchange Commission (the "Commission") are incorporated by reference into the
Registration Statement:
1. The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, filed on March 31, 1999, including all material
incorporated by reference therein;
2. The Registrant's Definitive Revised Proxy Statement on Schedule 14A,
filed on April 5, 1999;
3. The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1999, filed on May 14, 1999, including all material
incorporated by reference therein;
4. The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1999, filed on August 13, 1999, including all material
incorporated by reference therein;
5. The Registrant's Definitive Proxy Statement on Schedule 14A, filed on
September 17, 1999;
6. The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1999, filed on November 15, 1999, including all
material incorporated by reference therein;
7. The Registrant's Report on Form 8-K filed on December 15, 1999,
including all material incorporated by reference therein;
8. The Registrant's Report on Form 8-K filed on January 7, 2000, including
all material incorporated by reference therein;
9. All other reports filed by us pursuant to Section 13(a) or 15(d) of the
Exchange Act since December 31, 1998, including all material
incorporated by reference therein; and
10. The description of the common stock contained in our Registration
Statement on Form 8-A.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the shares of Common Stock being registered hereby will be
passed upon for the Registrant by Cooley Godward LLP, Palo Alto, California.
James C. Gaither, a partner at Cooley Godward LLP, is a director of the
Registrant. As of the date of this prospectus, certain members and associates
of Cooley Godward LLP beneficially own an aggregate of 154,424 shares of our
common stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act.
The Registrant's Certificate of Incorporation, as amended provides for the
elimination of liability for monetary damages for breach of the directors'
fiduciary duty of care to the Registrant and its stockholders. These provisions
do not eliminate the directors' duty of care and, in appropriate circumstances,
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Delaware law. In addition, each
1.
<PAGE>
director will continue to be subject to liability for breach of the director's
duty of loyalty to the Registrant, for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for any
transaction from which the director derived an improper personal benefit and for
payment of dividends or approval of stock repurchases or redemptions that are
unlawful under Delaware law. The provision does not affect a director's
responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.
The Registrant has entered into agreements with its directors and executive
officers that require the Registrant to indemnify such persons against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
(including expenses of a derivative action) in connection with any proceeding,
whether actual or threatened, to which any such person may be made a party by
reason of the fact that such person is or was a director or officer of the
Registrant or any of its affiliated enterprises, provided such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Registrant and, with respect to any
criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The indemnification agreements also set forth certain procedures that
will apply in the event of a claim for indemnification thereunder.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
Exhibit Description
Number
4.1 Restated Certificate of Incorporation of the Registrant, as
amended to date./1/
4.2 Bylaws of the Registrant./2/
4.3 Specimen Stock Certificate./2/
4.4 Restated Investor Rights Agreement, dated December 1, 1995,
between the Registrant and certain investors, as amended April
30, 1996 and June 14, 1996./2/
5.1 Opinion of Cooley Godward LLP./3/
23.1 Consent of KPMG LLP, Independent Auditors./3/
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to this
Registration Statement.
24.1 Power of Attorney is contained on the signature pages.
99.1 OnTarget, Inc. 1999 Stock Award Plan./3/
99.2 Form of option agreement under the OnTarget, Inc. 1999 Stock
Award Plan./3/
- --------------------------------------------------------------------------------
1 Incorporated by reference to the Registrant's Registration Statement on
Form S-8 (No. 333 07983), as amended.
2 Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (No. 333-03751), as amended.
3 Filed herewith.
2.
<PAGE>
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereto) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent
no more than twenty percent (20%) change in the maximum
aggregate offering price set forth in the "Calculation of the
Registration Fee" table in the effective Registration
Statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act"), that are incorporated
by reference in the Registration Statement.
(2) That for the purpose of determining liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act (and, where applicable, each filing of any employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act)
that is incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the securities
offered herein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of counsel the matter has been
settled by controlling precedent, submit to a court of the appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
3.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Mateo, State of California on January 7, 2000.
Siebel Systems, Inc.
By: /s/ Thomas M. Siebel
--------------------------
Thomas M. Siebel
Chairman and Chief Executive Officer
POWER OF ATTORNEY
Know All Persons By These Presents, that each person whose signature
appears below constitutes and appoints Thomas M. Siebel and Howard H. Graham,
and each or any one of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in connection therewith, as fully
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, or
their or his substitutes or substitute, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ----------------------------------- --------------------------------------------- --------------------
<S> <C> <C>
/s/ Thomas M. Siebel Chairman and Chief Executive Officer January 7, 2000
- ----------------------------------- (Principal Executive Officer)
Thomas M. Siebel
/s/ Howard H. Graham Senior Vice President, Finance and January 7, 2000
- ----------------------------------- Administration and Chief Financial Officer
Howard H. Graham (Principal Financial and Accounting Officer)
/s/ Eric E. Schmidt Director January 6, 2000
- -----------------------------------
Eric E. Schmidt
/s/ James C. Gaither Director January 6, 2000
- -----------------------------------
James C. Gaither
/s/ George T. Shaheen Director January 6, 2000
- -----------------------------------
George T. Shaheen
/s/ Charles R. Schwab Director January 6, 2000
- -----------------------------------
Charles R. Schwab
/s/ A . Michael Spence Director January 6, 2000
- -----------------------------------
A. Michael Spence
</TABLE>
4.
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4.1 Restated Certificate of Incorporation of the Registrant, as
amended to date./1/
4.2 Bylaws of the Registrant./2/
4.3 Specimen Stock Certificate./2/
4.4 Restated Investor Rights Agreement, dated December 1, 1995,
between the Registrant and certain investors, as amended April
30, 1996 and June 14, 1996./2/
5.1 Opinion of Cooley Godward LLP./3/
23.1 Consent of KPMG LLP, Independent Auditors./3/
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to
this Registration Statement.
24.1 Power of Attorney is contained on the signature pages.
99.1 OnTarget, Inc. 1999 Stock Award Plan./3/
99.2 Form of option agreement under the OnTarget, Inc. 1999 Stock
Award Plan./3/
- --------------------------------------------------------------------------------
1 Incorporated by reference to the Registrant's Registration Statement on
Form S-8 (No. 333 07983), as amended.
2 Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (No. 333-03751), as amended.
3 Filed herewith.
<PAGE>
Exhibit 5.1
January 7, 2000
Siebel Systems, Inc.
1855 South Grant Street
San Mateo, CA 94402
Re: Form S-8
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Siebel Systems, Inc. (the "Company") of a Registration
Statement on Form S-8 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering of up to 311,598 shares of the
Company's Common Stock, $.001 par value (the "Shares"), pursuant to the
Company's assumption of such options pursuant to the Agreement and Plan of
Merger and Reorganization (the "Reorganization Agreement"), dated as of November
17, 1999, among the Company, SE Acquisition Corp. and OnTarget, Inc.
("OnTarget") of the stock options formerly outstanding pursuant to the OnTarget
1999 Stock Award Plan (the "Plan").
In connection with this opinion, we have examined the Reorganization Agreement,
the Registration Statement and related Prospectus, the Company's Amended and
Restated Certificate of Incorporation and Bylaws, each as amended to date, and
such other documents, records, certificates, memoranda and other instruments as
we deem necessary as a basis for this opinion. We have assumed the genuineness
and authenticity of all documents submitted to us as originals, the conformity
to originals of all documents submitted to us as copies thereof, and the due
execution and delivery of all documents where due execution and delivery are a
prerequisite to the effectiveness thereof.
Our opinion is expressed only with respect to the federal laws of the United
States of America, the General Corporation Law of the State of Delaware and the
laws of the State of California. We express no opinion as to whether the laws of
any particular jurisdiction other than those identified above are applicable to
the subject matter hereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Plan, the
Registration Statement and related Prospectus, will be validly issued, fully
paid, and nonassessable (except as to shares issued pursuant to certain deferred
payment arrangements, which will be fully paid and nonassessable when such
deferred payments are made in full).
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
COOLEY GODWARD LLP
By: /s/ Eric Jensen
-------------------
Eric C. Jensen
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Siebel Systems, Inc.:
We consent to incorporation herein by reference of our reports dated
January 26, 1999, relating to the consolidated balance sheets of Siebel
Systems, Inc. and subsidiaries as of December 31, 1998 and 1997 and the
related consolidated statements of operations and comprehensive income (loss),
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1998 and the related schedule, which reports appear
in the December 31, 1998, annual report on Form 10-K of Siebel Systems, Inc.
We also consent to incorporation herein by reference of our reports dated
December 1, 1999, relating to the supplemental consolidated balance sheets of
Siebel Systems, Inc. and subsidiaries as of December 31, 1997 and 1998, and
the related supplemental consolidated statements of operations and
comprehensive income, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1998, and the related
supplemental schedule, which reports appear in the current report on Form 8-K
dated January 7, 2000 of Siebel Systems, Inc.
/s/ KPMG LLP
Mountain View, California
January 6, 2000
<PAGE>
Exhibit 99.1
ONTARGET, INC.
1999 STOCK AWARD PLAN
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<C> <S> <C>
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION................................ 1
1.1 Establishment of the Plan.................................................. 1
1.2 Purpose of the Plan........................................................ 1
1.3 Duration of the Plan....................................................... 1
ARTICLE 2. DEFINITIONS......................................................... 1
ARTICLE 3. ADMINISTRATION...................................................... 4
3.1 The Committee.............................................................. 4
3.2 Authority of the Committee................................................. 5
3.3 Decisions Binding.......................................................... 5
ARTICLE 4. SHARES SUBJECT TO THE PLAN.......................................... 5
4.1 Number of Shares........................................................... 5
4.2 Lapsed Awards.............................................................. 6
4.3 Adjustments In Authorized Shares........................................... 6
ARTICLE 5. ELIGIBILITY AND PARTICIPATION....................................... 6
ARTICLE 6. STOCK OPTIONS....................................................... 6
6.1 Grant of Options........................................................... 6
6.2 Agreement.................................................................. 7
6.3 Option Price............................................................... 7
6.4 Duration of Options........................................................ 7
6.5 Exercise of Options........................................................ 7
6.6 Payment.................................................................... 7
6.7 Limited Transferability.................................................... 8
6.8 Shareholder Rights......................................................... 8
ARTICLE 7. STOCK APPRECIATION RIGHTS........................................... 8
7.1 Grants of SARs............................................................. 8
7.2 Duration of SARs........................................................... 8
7.3 Exercise of SAR............................................................ 9
7.4 Determination of Payment of Cash and/or Common Stock Upon Exercise of SAR.. 9
7.5 Nontransferability......................................................... 9
7.6 Shareholder Rights......................................................... 9
ARTICLE 8. RESTRICTED STOCK; STOCK AWARDS...................................... 9
8.1 Grants..................................................................... 9
8.2 Restricted Period; Lapse of Restrictions................................... 9
8.3 Rights of Holder; Limitations Thereon...................................... 10
8.4 Delivery of Unrestricted Shares............................................ 11
8.5 Nonassignability of Restricted Stock....................................... 11
ARTICLE 9. PERFORMANCE SHARE AWARDS............................................ 11
9.1 Award...................................................................... 11
9.2 Earning the Award.......................................................... 11
9.3 Payment.................................................................... 12
9.4 Shareholder Rights......................................................... 12
ARTICLE 10. BENEFICIARY DESIGNATION............................................ 12
ARTICLE 11. DEFERRALS.......................................................... 13
</TABLE>
i.
<PAGE>
TABLE OF CONTENTS
-----------------
(Continued)
<TABLE>
<CAPTION>
<C> <S> <C>
ARTICLE 12. RIGHTS OF EMPLOYEES...................... 13
12.1 Employment...................................... 13
12.2 Participation................................... 13
ARTICLE 13. CHANGE IN CONTROL........................ 13
13.1 Definition...................................... 13
13.2 Limitation on Awards............................ 14
ARTICLE 14. AMENDMENT, MODIFICATION AND TERMINATION.. 14
14.1 Amendment, Modification and Termination......... 14
14.2 Awards Previously Granted....................... 14
14.3 Compliance With Code Section 162(m)............. 15
ARTICLE 15. WITHHOLDING.............................. 15
15.1 Tax Withholding................................. 15
15.2 Share Withholding............................... 15
ARTICLE 16. INDEMNIFICATION.......................... 15
ARTICLE 17. SUCCESSORS............................... 15
ARTICLE 18. LEGAL CONSTRUCTION....................... 16
18.1 Gender and Number............................... 16
18.2 Severability.................................... 16
18.3 Requirements of Law............................. 16
18.4 Regulatory Approvals and Listing................ 16
18.5 Securities Law Compliance....................... 16
18.6 Governing Law................................... 16
</TABLE>
ii.
<PAGE>
ONTARGET, INC.
1999 STOCK AWARD PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 Establishment of the Plan. OnTarget, Inc., a Georgia corporation
-------------------------
(hereinafter referred to as the "Company"), hereby establishes a stock option
and incentive award plan known as the "OnTarget, Inc. 1999 Stock Award Plan"
(the "Plan"), as set forth in this document. The Plan permits the grant of
Incentive Stock Options, Nonqualified Stock Options, Restricted Stock, Stock
Awards, Performance Share Awards and Stock Appreciation Rights.
The Plan shall become effective on the date it is approved by the Board of
Directors (the "Effective Date"), subject to approval of the Plan by the
Company's shareholders within the 12-month period immediately thereafter, and
shall remain in effect as provided in Section 1.3.
1.2 Purpose of the Plan. The purpose of the Plan is to secure for the
-------------------
Company and its shareholders the benefits of the incentive inherent in stock
ownership in the Company by employees, directors, and consultants or other
persons who perform services for the Company, who are responsible for its future
growth and continued success. The Plan promotes the success and enhances the
value of the Company by linking the personal interests of Participants (as
defined below) to those of the Company's shareholders, and by providing
Participants with an incentive for outstanding performance. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract and retain the services of Participants upon whose judgment, interest
and special effort the successful conduct of its operation largely depends.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date,
--------------------
and shall remain in effect, subject to the right of the Board of Directors to
amend or terminate the Plan at any time pursuant to Article 14, until the day
prior to the tenth (10th) anniversary of the Effective Date.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below:
(a) "Agreement" means an agreement entered into by each Participant and
---------
the Company, setting forth the terms and provisions applicable to
Awards granted to Participants under this Plan.
(b) "Award" means, individually or collectively, a grant under this Plan
-----
of Incentive Stock Options, Nonqualified Stock Options, Restricted
Stock, Stock Awards, Performance Share Awards or Stock Appreciation
Rights.
(c) "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
---------------- --------------------
ascribed to such term in Rule 13d-3 of the Exchange Act.
(d) "Board" or "Board of Directors" means the Board of Directors of the
----- ------------------
Company.
1.
<PAGE>
(e) "Cause" means: (i) willful misconduct on the part of a Participant
-----
that is materially detrimental to the Company; or (ii) the conviction
of a Participant for the commission of a felony. The existence of
"Cause" under either (i) or (ii) shall be determined by the Committee.
Notwithstanding the foregoing, if the Participant has entered into an
employment agreement that is binding as of the date of employment
termination, and if such employment agreement defines "Cause," and/or
provides a means of determining whether "Cause" exists, such
definition of "Cause" and means of determining its existence shall
supersede this provision.
(f) "Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, or any successor act thereto.
(g) "Committee" means the committee appointed to administer the Plan with
---------
respect to grants of Awards, as specified in Article 3, and to perform
the functions set forth therein.
(h) "Common Stock" means the common stock of the Company, par value $.01
------------
per share.
(i) "Company" means OnTarget, Inc., a Georgia corporation, or any
-------
successor thereto as provided in Article 17.
(j) "Corresponding SAR" means an SAR that is granted in relation to a
-----------------
particular Option and that can be exercised only upon the surrender to
the Company, unexercised, of that portion of the Option to which the
SAR relates.
(k) "Director" means any individual who is a member of the Board of
--------
Directors of the Company.
(l) "Disability" shall have the meaning ascribed to such term in the
----------
Company's long-term disability plan covering the Participant, or in
the absence of such plan, a meaning consistent with Section 22(e)(3)
of the Code.
(m) "Employee" means any employee of the Company or the Company's
--------
Subsidiaries. Directors who are not otherwise employed by the Company
or the Company's Subsidiaries are not considered Employees under this
Plan.
(n) "Effective Date" shall have the meaning ascribed to such term in
--------------
Section 1.1.
(o) "Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
from time to time, or any successor act thereto.
(p) "Fair Market Value" shall be determined as follows:
-----------------
(i) If, on the relevant date, the Shares are traded on a national
or regional securities exchange or on The Nasdaq Stock Market
("Nasdaq") and closing sale prices for the Shares are
customarily quoted, on the basis of the closing sale price on
the principal securities exchange on which the Shares may then
2.
<PAGE>
be traded or, if there is no such sale on the relevant date,
then on the immediately preceding day on which a sale was
reported;
(ii) If, on the relevant date, the Shares are not listed on any
securities exchange or traded on Nasdaq, but nevertheless are
publicly traded and reported on Nasdaq without closing sale
prices for the Shares being customarily quoted, on the basis of
the mean between the closing bid and asked quotations in such
other over-the-counter market as reported by Nasdaq; but, if
there are no bid and asked quotations in the over-the-counter
market as reported by Nasdaq on that date, then the mean
between the closing bid and asked quotations in the over-the-
counter market as reported by Nasdaq on the immediately
preceding day such bid and asked prices were quoted; and
(iii) If, on the relevant date, the Shares are not publicly traded as
described in (i) or (ii), on the basis of the good faith
determination of the Committee.
(q) "Incentive Stock Option" or "ISO" means an option to purchase Shares
-------------------------------
granted under Article 6 which is designated as an Incentive Stock
Option and is intended to meet the requirements of Section 422 of the
Code.
(r) "Initial Value" means, with respect to a Corresponding SAR, the Option
-------------
Price per share of the related Option, and with respect to an SAR
granted independently of an Option, the Fair Market Value of one share
of Common Stock on the date of grant.
(s) "Insider" shall mean an Employee who is, on the relevant date, an
-------
officer or a director, or a ten percent (10%) beneficial owner of any
class of the Company's equity securities that is registered pursuant
to Section 12 of the Exchange Act or any successor provision, as
"officer" and "director" are defined under Section 16 of the Exchange
Act.
(t) "Named Executive Officer" means a Participant who, as of the date of
-----------------------
vesting and/or payout of an Award is one of the group of "covered
employees," as defined in the regulations promulgated under Code
Section 162(m), or any successor statute.
(u) "Nonqualified Stock Option" or "NQSO" means an option to purchase
-----------------------------------
Shares granted under Article 6, and which is not intended to meet the
requirements of Code Section 422.
(v) "Option" means an Incentive Stock Option or a Nonqualified Stock
------
Option.
(w) "Option Price" means the price at which a Share may be purchased by a
------------
Participant pursuant to an Option, as determined by the Committee.
(x) "Participant" means an Employee, a Director, a consultant or other
-----------
person who performs services for the Company or a Subsidiary, who has
been determined by the Committee to contribute significantly to the
profits or growth of the Company and who has been granted an Award
under the Plan which is outstanding.
3.
<PAGE>
(y) "Performance Share Award" means an Award, which, in accordance with
-----------------------
and subject to an Agreement, will entitle the Participant, or his
estate or beneficiary in the event of the Participant's death, to
receive cash, Common Stock or a combination thereof.
(z) "Person" shall have the meaning ascribed to such term in Section
------
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) thereof.
(aa) "Retirement" shall mean retiring from employment with the Company or
----------
any Subsidiary on or after attaining age 65.
(bb) "Restricted Stock" means an Award of Common Stock granted in
----------------
accordance with the terms of Article 8 and the other provisions of the
Plan, and which is nontransferable and subject to a substantial risk
of forfeiture. Shares of Common Stock shall cease to be Restricted
Stock when, in accordance with the terms hereof and the applicable
Agreement, they become transferable and free of substantial risk of
forfeiture.
(cc) "SAR" means a stock appreciation right that entitles the holder to
---
receive, with respect to each share of Common Stock encompassed by the
exercise of such SAR, the amount determined by the Committee and
specified in an Agreement. In the absence of such specification, the
holder shall be entitled to receive in cash, with respect to each
share of Common Stock encompassed by the exercise of such SAR, the
excess of the Fair Market Value on the date of exercise over the
Initial Value. References to "SARs" include both Corresponding SARs
and SARs granted independently of Options, unless the context requires
otherwise.
(dd) "Shares" means the shares of Common Stock of the Company (including
------
any new, additional or different stock or securities resulting from
the changes described in Section 4.3).
(ee) "Stock Award" means a grant of Shares under Article 8 that is not
-----------
generally subject to restrictions and pursuant to which a certificate
for the Shares is transferred to the Employee.
(ff) "Subsidiary" means any company during any period in which it is a
----------
"subsidiary corporation" (as that term is defined in Code Section
424(f)) with respect to the Company.
ARTICLE 3. ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Board of
-------------
Directors or by the Compensation Committee of the Board, or by any other
committee or subcommittee appointed by the Board that is granted authority to
administer the Plan. The members of the Committee shall be appointed from time
to time by, and shall serve at the discretion of, the Board of Directors.
4.
<PAGE>
3.2 Authority of the Committee. Subject to the provisions of the Plan,
--------------------------
the Committee shall have full power to select the Employees, Directors,
consultants and other persons who perform services for the Company or a
Subsidiary, who are responsible for the future growth and success of the Company
who shall participate in the Plan (who may change from year to year); determine
the size and types of Awards; determine the terms and conditions of Awards in a
manner consistent with the Plan (including conditions on the exercisability of
all or a part of an Option or SAR, restrictions on transferability and vesting
provisions on Restricted Stock or Performance Share Awards and the duration of
the Awards); construe and interpret the Plan and any agreement or instrument
entered into under the Plan; establish, amend or waive rules and regulations for
the Plan's administration; and (subject to the provisions of Article 14) amend
the terms and conditions of any outstanding Award to the extent such terms and
conditions are within the discretion of the Committee as provided in the Plan,
including accelerating the time any Option or SAR may be exercised and
establishing different terms and conditions relating to the effect of the
termination of employment or other services to the Company. Further, the
Committee shall make all other determinations which may be necessary or
advisable in the Committee's opinion for the administration of the Plan. All
expenses of administering this Plan shall be borne by the Company.
3.3 Decisions Binding. All determinations and decisions made by the
-----------------
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all Persons,
including the Company, the shareholders, Employees, Participants and their
estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3,
----------------
the total number of Shares available for grant of Awards under the Plan shall be
equal to ten percent (10%) of the total issued and outstanding Shares as of the
date any Award is granted, including for purposes of such calculation the number
of Shares into which other securities or instruments (e.g., convertible
preferred stock or convertible debentures, but not outstanding options to
acquire stock) issued by the Company are currently convertible; provided,
however, if the total number of issued and outstanding Shares decreases for any
reason, such decrease shall not invalidate any prior grant of an Award. The
maximum number of Shares available for grant as ISOs under the Plan shall equal
an aggregate of one million two hundred fifty thousand (1,250,000) Shares. The
Shares may, in the discretion of the Company, be either authorized but unissued
Shares or Shares held as treasury shares, including Shares purchased by the
Company, whether on the market or otherwise. The following rules shall apply for
purposes of the determination of the number of Shares available for grant under
the Plan:
(a) The grant of an Option, SAR, Stock Award, Restricted Stock Award
or Performance Share Award shall reduce the Shares available for
grant under the Plan by the number of Shares subject to such
Award.
(b) While an Option, SAR, Stock Award, Restricted Stock Award or
Performance Share Award is outstanding, it shall be counted
against the authorized pool of Shares, regardless of its vested
status.
5.
<PAGE>
4.2 Lapsed Awards. If any Award granted under this Plan is canceled,
-------------
terminates, expires or lapses for any reason, or if Shares are withheld in
payment of the Option Price or for withholding taxes, any Shares subject to such
Award or that are withheld shall again be available for the grant of an Award
under the Plan. However, in the event that prior to the Award's cancellation,
termination, expiration or lapse, the holder of the Award at any time received
one or more "benefits of ownership" pursuant to such Award (as defined by the
Securities and Exchange Commission, pursuant to any rule or interpretation
promulgated under Section 16 of the Exchange Act), the Shares subject to such
Award shall not again be made available for regrant under the Plan.
4.3 Adjustments In Authorized Shares. In the event of any change in
--------------------------------
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company, such adjustment
shall be made in the number and class of Shares which may be delivered under the
Plan, and in the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan, as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; provided, however, that the number of Shares
subject to any Award shall always be a whole number and the Committee shall make
such adjustments as are necessary to insure Awards of whole Shares.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
Any key Employee of the Company or any Subsidiary, including any such
Employee who is also a director of the Company or any Subsidiary, any non-
employee Director, and any consultant or other person who performs services for
the Company or a Subsidiary, whose judgment, initiative and efforts contribute
or may be expected to contribute materially to the successful performance of the
Company or any Subsidiary shall be eligible to receive an Award under the Plan.
In determining the individuals to whom such an Award shall be granted and the
number of Shares which may be granted pursuant to that Award, the Committee
shall take into account the duties of the respective individual, his or her
present and potential contributions to the success of the Company or any
Subsidiary, and such other factors as the Committee shall deem relevant in
connection with accomplishing the purpose of the Plan.
ARTICLE 6. STOCK OPTIONS
6.1 Grant of Options. Subject to the terms and provisions of the
----------------
Plan, Options may be granted to Participants at any time and from time to time
as shall be determined by the Committee. The Committee shall have discretion in
determining the number of Shares subject to Options granted to each Participant.
An Option may be granted with or without a Corresponding SAR. No Participant may
be granted ISOs (under the Plan and all other incentive stock option plans of
the Company and any Subsidiary) which are first exercisable in any calendar year
for Common Stock having an aggregate Fair Market Value (determined as of the
date an Option is granted) that exceeds $100,000. The preceding annual limit
shall not apply to NQSOs. The Committee may grant a Participant ISOs, NQSOs or a
combination thereof, and may vary such Awards among Participants; provided that
only an Employee may be granted ISOs.
6.
<PAGE>
6.2 Agreement. Each Option grant shall be evidenced by an Agreement
---------
that shall specify the Option Price, the duration of the Option, the number of
Shares to which the Option pertains and such other provisions as the Committee
shall determine. The Option Agreement shall further specify whether the Award
is intended to be an ISO or an NQSO. Any portion of an Option that is not
designated as an ISO or otherwise fails or is not qualified as an ISO (even if
designated as an ISO) shall be a NQSO. If the Option is granted in connection
with a Corresponding SAR, the Agreement shall also specify the terms that
apply to the exercise of the Option and Corresponding SAR.
6.3 Option Price. The Option Price for each grant of an ISO shall not
------------
be less than one hundred percent (100%) of the Fair Market Value of a Share on
the date the Option is granted. In no event, however, shall any Participant
who owns (within the meaning of Section 424(d) of the Code) stock of the
Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company be eligible to receive an ISO at
an Option Price less than one hundred ten percent (110%) of the Fair Market
Value of a share on the date the ISO is granted. The Option Price for each
grant of a NQSO shall be established by the Committee and, in its discretion,
may be less than the Fair Market Value of a Share on the date the Option is
granted.
6.4 Duration of Options. Each Option shall expire at such time as
-------------------
the Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of its
grant; provided, further, however, that any ISO granted to any Participant who
at such time owns (within the meaning of Section 424(d) of the Code) stock of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, shall not be exercisable later
than the fifth (5th) anniversary date of its grant.
6.5 Exercise of Options. Options granted under the Plan shall be
-------------------
exercisable at such times and be subject to such restrictions and conditions
as the Committee shall in each instance approve, including conditions related
to the employment of the Participant with the Company or any Subsidiary, which
need not be the same for each grant or for each Participant. Each Option shall
be exercisable for such number of Shares and at such time or times, including
periodic installments, as may be determined by the Committee at the time of
the grant. The Committee may provide in the Agreement for automatic
accelerated vesting and other rights upon the occurrence of a Change in
Control of the Company. Except as otherwise provided in the Agreement and
Article 13, the right to purchase Shares that are exercisable in periodic
installments shall be cumulative so that when the right to purchase any Shares
has accrued, such Shares or any part thereof may be purchased at any time
thereafter until the expiration or termination of the Option. The exercise or
partial exercise of either an Option or its Corresponding SAR shall result in
the termination of the other to the extent of the number of Shares with
respect to which the Option or Corresponding SAR is exercised.
6.6 Payment. Options shall be exercised by the delivery of a written
-------
notice of exercise to the Company, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment
for the Shares. The Option Price upon exercise of any Option shall be payable
to the Company in full, either: (a) in cash, (b) cash equivalent approved by
the Committee, (c) if approved by the Committee, by tendering previously
acquired Shares (or delivering a certification of ownership of such Shares)
having an aggregate Fair Market Value at the time of exercise equal to the
total Option Price (provided that the Shares which are tendered must have been
held by the Participant for six months, if required for accounting purposes,
and for the
7
<PAGE>
period required by law, if any, prior to their tender to satisfy the Option
Price), or (d) by a combination of (a), (b) and (c). The Committee also may
allow cashless exercises as permitted under Federal Reserve Board's Regulation
T, subject to applicable securities law restrictions, or by any other means
which the Committee determines to be consistent with the Plan's purpose and
applicable law. As soon as practicable after receipt of a written notification
of exercise and full payment, the Company shall deliver to the Participant, in
the Participant's name, Share certificates in an appropriate amount based upon
the number of Shares purchased under the Option(s), and may place appropriate
legends on the certificates representing such Shares.
6.7 Limited Transferability. If permitted by the Committee in the
-----------------------
Agreement, a Participant may transfer an Option granted hereunder, including,
but not limited to, transfers to members of his or her Immediate Family (as
defined below), to one or more trusts for the benefit of such Immediate Family
members, or to one or more partnerships where such Immediate Family members
are the only partners, if (i) the Participant does not receive any
consideration in any form whatsoever for such transfer, (ii) such transfer is
permitted under applicable tax laws, and (iii) the Participant is an Insider,
such transfer is permitted under Rule 16b-3 of the Exchange Act as in effect
from time to time. Any Option so transferred shall continue to be subject to
the same terms and conditions in the hands of the transferee as were
applicable to said Option immediately prior to the transfer thereof. Any
reference in any such Agreement to the employment by or performance of
services for the Company by the Participant shall continue to refer to the
employment of, or performance by, the transferring Participant. For purposes
hereof, "Immediate Family" shall mean the Participant and the Participant's
spouse, children and grandchildren. Any Option that is granted pursuant to any
Agreement that did not initially expressly allow the transfer of said Option
and that has not been amended to expressly permit such transfer, shall not be
transferable by the Participant other than by will or by the laws of descent
and distribution and such Option thus shall be exercisable in the
Participant's lifetime only by the Participant.
6.8 Shareholder Rights. No Participant shall have any rights as a
------------------
shareholder with respect to Shares subject to his Option until the issuance of
such Shares to the Participant pursuant to the exercise of such Option.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1 Grants of SARs. The Committee shall designate Participants to whom
--------------
SARs are granted, and will specify the number of Shares of Common Stock
subject to each grant. An SAR may be granted with or without a related Option.
All SARs granted under this Plan shall be subject to an Agreement in
accordance with the terms of this Plan. A payment to the Participant upon the
exercise of a Corresponding SAR may not be more than the difference between
the Fair Market Value of the Shares subject to the ISO on the date of grant
and the Fair Market Value of the Shares on the date of exercise of the
Corresponding SAR.
7.2 Duration of SARs. The duration of an SAR shall be set forth in the
----------------
Agreement as determined by the Committee. An SAR that is granted as a
Corresponding SAR shall have the same duration as the Option to which it
relates. An SAR shall terminate due to the Participant's termination of
employment at the same time as the date specified in Article 6 with respect to
Options, regardless of whether the SAR was granted in connection with the
grant of an Option.
8
<PAGE>
7.3 Exercise of SAR. An SAR may be exercised in whole at any time or in
---------------
part from time to time and at such times and in compliance with such
requirements as the Committee shall determine as set forth in the Agreement;
provided, however, that a Corresponding SAR that is related to an Incentive
Stock Option may be exercised only to the extent that the related Option is
exercisable and only when the Fair Market Value of the Shares exceeds the
Option Price of the related ISO. An SAR granted under this Plan may be
exercised with respect to any number of wholes shares less than the full
number of shares for which the SAR could be exercised. A partial exercise of
an SAR shall not affect the right to exercise the SAR from time to time in
accordance with this Plan and the applicable Agreement with respect to the
remaining shares subject to the SAR. The exercise of either an Option or
Corresponding SAR shall result in the termination of the other to the extent
of the number of Shares with respect to which the Option or its Corresponding
SAR is exercised.
7.4 Determination of Payment of Cash and/or Common Stock Upon Exercise of
---------------------------------------------------------------------
SAR. At the Committee's discretion, the amount payable as a result of the
- ---
exercise of an SAR may be settled in cash, Common Stock, or a combination of
cash and Common Stock. A fractional share shall not be deliverable upon the
exercise of an SAR, but a cash payment shall be made in lieu thereof.
7.5 Nontransferability. Each SAR granted under the Plan shall be
------------------
nontransferable except by will or by the laws of descent and distribution.
During the lifetime of the Participant to whom the SAR is granted, the SAR may
be exercised only by the Participant. No right or interest of a Participant in
any SAR shall be liable for, or subject to any lien, obligation or liability
of such Participant. A Corresponding SAR shall be subject to the same
restrictions on transfer as the ISO to which it relates. Notwithstanding the
foregoing, if the Agreement so provides, a Participant may transfer an SAR
(other than a Corresponding SAR that relates to an Incentive Stock Option)
under the same rules and conditions as are set forth in Section 6.7.
7.6 Shareholder Rights. No Participant shall have any rights as a
------------------
shareholder with respect to Shares subject to an SAR until the issuance of
Shares (if any) to the Participant pursuant to the exercise of such SAR.
ARTICLE 8. RESTRICTED STOCK; STOCK AWARDS
8.1 Grants. The Committee may from time to time in its discretion grant
------
Restricted Stock and Stock Awards to Participants and may determine the number
of Shares of Restricted Stock or Stock Awards to be granted. The Committee
shall determine the terms and conditions of, and the amount of payment, if
any, to be made by the Employee for such Shares or Restricted Stock. A grant
of Restricted Stock may, in addition to other conditions, require the
Participant to pay for such Shares of Restricted Stock, but the Committee may
establish a price below Fair Market Value at which the Participant can
purchase the Shares of Restricted Stock. Each grant of Restricted Stock shall
be evidenced by an Agreement containing terms and conditions not inconsistent
with the Plan as the Committee shall determine to be appropriate in its sole
discretion.
8.2 Restricted Period; Lapse of Restrictions. At the time a grant of
----------------------------------------
Restricted Stock is made, the Committee shall establish a period or periods of
time (the "Restricted Period") applicable to such grant which, unless the
Committee otherwise provides, shall not be less than one
9
<PAGE>
year. Subject to the other provisions of this Article 8, at the end of the
Restricted Period all restrictions shall lapse and the Restricted Stock shall
vest in the Participant. At the time a grant is made, the Committee may, in
its discretion, prescribe conditions for the incremental lapse of restrictions
during the Restricted Period and for the lapse or termination of restrictions
upon the occurrence of other conditions in addition to or other than the
expiration of the Restricted Period with respect to all or any portion of the
Restricted Stock. Such conditions may, but need not, include the following:
(a) The death, Disability or Retirement of the Employee to whom
Restricted Stock is granted, or
(b) The occurrence of a Change in Control (as defined in Section
13.1).
The Committee may also, in its discretion, shorten or terminate the Restricted
Period, or waive any conditions for the lapse or termination of restrictions
with respect to all or any portion of the Restricted Stock at any time after the
date the grant is made.
8.3 Rights of Holder; Limitations Thereon. Upon a grant of
-------------------------------------
Restricted Stock, a stock certificate (or certificates) representing the
number of Shares of Restricted Stock granted to the Participant shall be
registered in the Participant's name and shall be held in custody by the
Company or a bank selected by the Committee for the Participant's account.
Following such registration, the Participant shall have the rights and
privileges of a shareholder as to such Restricted Stock, including the right
to receive dividends, if and when declared by the Board of Directors, and to
vote such Restricted Stock, except that the right to receive cash dividends
shall be the right to receive such dividends either in cash currently or by
payment in Restricted Stock, as the Committee shall determine, and except
further that, the following restrictions shall apply:
(a) The Participant shall not be entitled to delivery of a
certificate until the expiration or termination of the Restricted
Period for the Shares represented by such certificate and the
satisfaction of any and all other conditions prescribed by the
Committee;
(b) None of the Shares of Restricted Stock may be sold, transferred,
assigned, pledged, or otherwise encumbered or disposed of during
the Restricted Period and until the satisfaction of any and all
other conditions prescribed by the Committee; and
(c) All of the Shares of Restricted Stock that have not vested shall
be forfeited and all rights of the Participant to such Shares of
Restricted Stock shall terminate without further obligation on
the part of the Company, unless the Participant has remained an
employee of (or non-Employee Director of or active consultant
providing services to) the Company or any of its Subsidiaries,
until the expiration or termination of the Restricted Period and
the satisfaction of any and all other conditions prescribed by
the Committee applicable to such Shares of Restricted Stock.
Upon the forfeiture of any Shares of Restricted Stock, such
forfeited Shares shall be transferred to the Company without
further action by the Participant and shall, in accordance with
Section 4.2, again be available for grant under the Plan. If the
10
<PAGE>
Participant paid any amount for the Shares of Restricted Stock
that are forfeited, the Company shall pay the Participant the
lesser of the Fair Market Value of the Shares on the date they
are forfeited or the amount paid by the Participant.
With respect to any Shares received as a result of adjustments under
Section 4.3 hereof and any Shares received with respect to cash dividends
declared on Restricted Stock, the Participant shall have the same rights and
privileges, and be subject to the same restrictions, as are set forth in this
Article 8.
8.4 Delivery of Unrestricted Shares. Upon the expiration or termination
-------------------------------
of the Restricted Period for any Shares of Restricted Stock and the
satisfaction of any and all other conditions prescribed by the Committee, the
restrictions applicable to such Shares of Restricted Stock shall lapse and a
stock certificate for the number of Shares of Restricted Stock with respect to
which the restrictions have lapsed shall be delivered, free of all such
restrictions except any that may be imposed by law, to the holder of the
Restricted Stock. The Company shall not be required to deliver any fractional
Share but will pay, in lieu thereof, the Fair Market Value (determined as of
the date the restrictions lapse) of such fractional Share to the holder
thereof. Concurrently with the delivery of a certificate for Restricted Stock,
the holder shall be required to pay an amount necessary to satisfy any
applicable federal, state and local tax requirements as set out in Article 15
below.
8.5 Nonassignability of Restricted Stock. Unless the Committee provides
------------------------------------
otherwise in the Agreement, no grant of, nor any right or interest of a
Participant in or to, any Restricted Stock, or in any instrument evidencing
any grant of Restricted Stock under the Plan, may be assigned, encumbered or
transferred except, in the event of the death of a Participant, by will or the
laws of descent and distribution.
ARTICLE 9. PERFORMANCE SHARE AWARDS
9.1 Award. The Committee may designate Participants to whom Performance
-----
Share Awards will be granted from time to time for no consideration and
specify the number of shares of Common Stock covered by the Award.
9.2 Earning the Award. A Performance Share Award, or portion thereof,
-----------------
will be earned, and the Participant will be entitled to receive Common Stock,
a cash payment or a combination thereof, only upon the achievement by the
Participant, the Company, or a Subsidiary of such performance objectives as
the Committee, in its discretion, shall prescribe on the date of grant. To the
extent required, the performance objectives applicable to Awards to Named
Executive Officers intended to qualify under Code Section 162(m) shall be
selected from among the following measures: return on equity or assets,
earnings per share, total earnings, earnings growth, return on capital, profit
before taxes, profit after taxes, economic value added and increase in Fair
Market Value of the Shares. The determination as to whether such objectives
have been achieved shall be made by the Committee, and such determination
shall be conclusive; provided, however, that the period in which such
performance is measured shall be at least one year.
11
<PAGE>
The Committee may in determining whether performance targets have been
met adjust the Company's financial results to exclude the effect of unusual
charges or income items or other events, including acquisitions or
dispositions of businesses or assets, restructurings, reductions in force,
currency fluctuations or changes in accounting, which are distortive of
financial results (either on a segment or consolidated basis); provided, that
for purposes of determining the Performance Share Awards of Named Executive
Officers, the Committee shall exclude unusual items whose exclusion has the
effect of increasing income or earnings if such items constitute
"extraordinary items" under generally accepted accounting principles or are
significant unusual items. In addition, the Committee will adjust its
calculations to exclude the effect on financial results of changes in the Code
or other tax laws, or the regulations relating thereto.
9.3 Payment. In the discretion of the Committee, the amount payable
-------
when a Performance Share Award is earned may be settled in cash, by the grant
of Common Stock or a combination of cash and Common Stock. The aggregate Fair
Market Value of the Common Stock received by the Participant pursuant to a
Performance Share Award, together with any cash paid to the Participant, shall
be equal to the aggregate Fair Market Value, on the date the Performance
Shares are earned, of the number of Shares of Common Stock equal to each
Performance Share earned. A fractional Share will not be deliverable when a
Performance Share Award is earned, but a cash payment will be made in lieu
thereof.
9.4 Shareholder Rights. No Participant shall have, as a result of
------------------
receiving a Performance Share Award, any rights as a shareholder until and to
the extent that the Performance Shares are earned and Common Stock is
transferred to such Participant. If the Agreement so provides, a Participant
may receive a cash payment equal to the dividends that would have been payable
with respect to the number of Shares of Common Stock covered by the Award
between (a) the date that the Performance Shares are awarded and (b) the date
that a transfer of Common Stock to the Participant, cash settlement, or
combination thereof is made pursuant to the Performance Share Award. A
Participant may not sell, transfer, pledge, exchange, hypothecate, or
otherwise dispose of a Performance Share Award or the right to receive Common
Stock thereunder other than by will or the laws of descent and distribution.
After a Performance Share Award is earned and paid in Common Stock, a
Participant will have all the rights of a shareholder with respect to the
Common Stock so awarded.
ARTICLE 10. BENEFICIARY DESIGNATION
To the extent applicable, each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of his or her death before he or she receives any or all of such
benefit. Each such designation shall revoke all prior designations by the same
Participant, shall be in a form prescribed by the Company and shall be effective
only when filed by the Participant, in writing, with the Company during the
Participant's lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant's death shall be paid to the Participant's
estate. If required, the spouse of a married Participant domiciled in a
community property jurisdiction shall join in any designation of a beneficiary
or beneficiaries other than the spouse.
12
<PAGE>
ARTICLE 11. DEFERRALS
The Committee may permit a Participant to defer to another plan or
program such Participant's receipt of Shares or cash that would otherwise be due
to such Participant by virtue of the exercise of an Option, the vesting of
Restricted Stock, or the earning of a Performance Share Award. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
ARTICLE 12. RIGHTS OF EMPLOYEES
12.1 Employment. Nothing in the Plan shall interfere with or limit in
----------
any way the right of the Company or a Subsidiary to terminate any
Participant's employment by, or performance of services for, the Company at
any time, nor confer upon any Participant any right to continue in the employ
or service of the Company or a Subsidiary. For purposes of the Plan, transfer
of employment of a Participant between the Company and any one of its
Subsidiaries (or between Subsidiaries) shall not be deemed a termination of
employment.
12.2 Participation. No Employee shall have the right to be selected to
-------------
receive an Award under this Plan, or, having been so selected, to be selected
to receive a future Award.
ARTICLE 13. CHANGE IN CONTROL
13.1 Definition. For purposes of the Plan, a "Change in Control" means
----------
any of the following events:
(a) The acquisition (other than from the Company) by any Person of
Beneficial Ownership of twenty percent (20%) or more of the
combined voting power of the Company's then outstanding voting
securities; provided, however, that for purposes of this
Section 13.1, Person shall not include any person who on the
date hereof owns 10% or more of the Company's outstanding
securities, and a Change in Control shall not be deemed to
occur solely because twenty percent (20%) or more of the
combined voting power of the Company's then outstanding
securities is acquired by (i) a trustee or other fiduciary
holding securities under one or more employee benefit plans
maintained by the Company or any of its subsidiaries, or (ii)
any corporation, which, immediately prior to such acquisition,
is owned directly or indirectly by the shareholders of the
Company in the same proportion as their ownership of stock in
the Company immediately prior to such acquisition.
(b) Approval by shareholders of the Company of (1) a merger or
consolidation involving the Company if the shareholders of the
Company, immediately before such merger or consolidation do
not, as a result of such merger or consolidation, own,
directly or indirectly, more than fifty percent (50%) of the
combined voting power of the then outstanding voting
securities of the corporation resulting from such merger or
consolidation in substantially the same proportion as their
ownership of
13
<PAGE>
the combined voting power of the voting securities of the
Company outstanding immediately before such merger or
consolidation, or (2) a complete liquidation or dissolution of
the Company or an agreement for the sale or other disposition
of all or substantially all of the assets of the Company.
(c) A change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the
Board (such Board shall be hereinafter referred to as the
"Incumbent Board") cease for any reason to constitute at least
a majority of the Board; provided, however, for purposes of
this Section 13.1 that any individual who becomes a member of
the Board subsequent to the Effective Date whose election, or
nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of those individuals
who are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this
proviso) shall be considered as though such individual were a
member of the Incumbent Board; but, provided, further, that
any such individual whose initial assumption of office occurs
as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act, including any successor to
such Rule), or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board, shall not be so considered as a member of the Incumbent
Board.
13.2 Limitation on Awards. Notwithstanding any other provisions of the
--------------------
Plan and unless provided otherwise in the Agreement, if the right to receive
or benefit from any Award under this Plan, either alone or together with
payments that a Participant has the right to receive from the Company or a
Subsidiary, would constitute a "parachute payment" (as defined in Section 280G
of the Code), all such payments shall be reduced to the largest amount that
will result in no portion being subject to the excise tax imposed by Section
4999 of the Code.
ARTICLE 14. AMENDMENT, MODIFICATION AND TERMINATION
14.1 Amendment, Modification and Termination. The Board may, at any
---------------------------------------
time and from time to time, alter, amend, suspend or terminate the Plan in
whole or in part; provided, that, unless approved by the holders of a majority
of the total number of Shares of the Company represented and voted at a
meeting at which a quorum is present, no amendment shall be made to the Plan
if such amendment would (a) materially modify the eligibility requirements
provided in Article 5; (b) increase the total number of Shares (except as
provided in Section 4.3) which may be granted under the Plan; (c) extend the
term of the Plan; or (d) amend the Plan in any other manner which the Board,
in its discretion, determines should become effective only if approved by the
shareholders even if such shareholder approval is not expressly required by
the Plan or by law.
14.2 Awards Previously Granted. No termination, amendment or
-------------------------
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant holding such Award. The Committee shall, with the
14
<PAGE>
written consent of the Participant holding such Award, have the authority to
cancel Awards outstanding and grant replacement Awards therefor.
14.3 Compliance With Code Section 162(m). At all times when the
-----------------------------------
Committee determines that compliance with Code Section 162(m) is required or
desired, all Awards granted under this Plan to Named Executive Officers shall
comply with the requirements of Code Section 162(m). In addition, in the event
that changes are made to Code Section 162(m) to permit greater flexibility
with respect to any Award or Awards under the Plan, the Committee may, subject
to this Article 14, make any adjustments it deem appropriate.
ARTICLE 15. WITHHOLDING
15.1 Tax Withholding. The Company shall have the power and the right to
---------------
deduct or withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy federal, state and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising in connection with an Award under this Plan.
15.2 Share Withholding. With respect to withholding required upon the
-----------------
exercise of Options, or upon any other taxable event arising as a result of
Awards granted hereunder which are to be paid in the form of Shares,
Participants may elect, subject to the approval of the Committee, to satisfy
the withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax which could be imposed on
the transaction. All elections shall be irrevocable, made in writing, signed
by the Participant, and elections by Insiders shall additionally comply with
all legal requirements applicable to Share transactions by such Participants.
ARTICLE 16. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him in satisfaction of any judgment in
any such action, suit or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf. The foregoing
right of indemnification shall be in addition to any other rights of
indemnification to which such persons may be entitled under the Company's
Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.
ARTICLE 17. SUCCESSORS
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether
the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation or otherwise, of all or substantially all of
the business and/or assets of the Company.
15
<PAGE>
ARTICLE 18. LEGAL CONSTRUCTION
18.1 Gender and Number. Except where otherwise indicated by the
-----------------
context, any masculine term used herein shall also include the feminine; the
plural shall include the singular and the singular shall include the plural.
18.2 Severability. If any provision of the Plan shall be held illegal
------------
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
18.3 Requirements of Law. The granting of Awards and the issuance of
-------------------
Shares under the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
18.4 Regulatory Approvals and Listing. The Company shall not be
--------------------------------
required to issue any certificate or certificates for Shares under the Plan
prior to (i) obtaining any approval from any governmental agency which the
Company shall, in its discretion, determine to be necessary or advisable, (ii)
the admission of such shares to listing on any national securities exchange or
Nasdaq on which the Company's Shares may be listed, and (iii) the completion
of any registration or other qualification of such Shares under any state or
federal law or ruling or regulation of any governmental body which the Company
shall, in its sole discretion, determine to be necessary or advisable.
Notwithstanding any other provision set forth in the Plan, if required by
the then-current Section 16 of the Exchange Act, any "derivative security" or
"equity security" offered pursuant to the Plan to any Insider may not be sold
or transferred for at least six (6) months after the date of grant of such
Award. The terms "equity security" and "derivative security" shall have the
meanings ascribed to them in the then-current Rule 16(a) under the Exchange
Act.
18.5 Securities Law Compliance. With respect to Insiders, transactions
-------------------------
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent any provisions
of the Plan or action by the Committee fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by the
Committee.
18.6 Governing Law. To the extent not preempted by Federal law, the
-------------
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Georgia.
AS APPROVED BY THE BOARD OF DIRECTORS OF ONTARGET, INC. ON APRIL ____,
1999.
ONTARGET, INC.
By:
--------------------------------
16
<PAGE>
Exhibit 99.2
ONTARGET, INC.
1999 STOCK AWARD PLAN
STOCK OPTION AGREEMENT
(Incentive Stock Option)
Employee/Optionee:
-----------------------------------
Number of ISO Shares: Shares
---------------
ISO Option Exercise Price: $ per Share
--------------
Date of ISO Grant:
------------------------
ISO Vesting Schedule: No. Shares Date
---------- ----
------------- ---------
------------- ---------
------------- ---------
------------- ---------
------------- ---------
THIS OPTION AGREEMENT (the "Agreement") is entered into as of the
day of , 1999, by and between ONTARGET, INC., a Georgia
- ----- --------------
corporation (the "Company"), and the employee designated above (the
"Optionee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the OnTarget, Inc. 1999 Stock Award Plan (the "Plan") was
adopted by the Company, a copy of which is attached hereto as Exhibit A and
incorporated herein by reference; and
WHEREAS, the Board of Directors of the Company or the Committee
responsible for the administration of the Plan has determined to grant the
Option to the Optionee as provided herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Grant of Option.
1.1 Option. An option to purchase shares of the Company's Common Stock,
-------
par value $.01 per share (the "Shares"), is hereby granted to the Optionee
(the "Option").
1.2 Number of Shares. The number of Shares that the Optionee can
----------------
purchase upon exercise of the Option is set forth above.
1
<PAGE>
1.3 Option Exercise Price. The price the Optionee must pay to exercise
---------------------
the Option (the "Option Exercise Price") is set forth above.
1.4 Date of Grant. The date that the Option is granted (the "Date of
-------------
Grant") is set forth above.
1.5 Type of Option. The Option is intended to qualify as an Incentive
--------------
Stock Option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended from time to time, or any successor provision thereto, and
shall be so construed; provided, however, that nothing in this Agreement shall
be interpreted as a representation, guarantee or other undertaking on the part
of the Company that the Option is or will be determined to be an Incentive
Stock Option within the meaning of Section 422 of the Code. To the extent this
Option is not treated as an Incentive Stock Option, it will be treated as a
Nonqualified Stock Option.
1.6 Construction. This Agreement shall be construed in accordance
------------
and consistent with, and subject to, the provisions of the Plan (the provisions
of which are incorporated herein by reference) and, except as otherwise
expressly set forth herein, the capitalized terms used in this Agreement shall
have the same definitions as set forth in the Plan.
1.7 Condition. The Option is conditioned on the Optionee's execution
---------
of this Agreement. If this Agreement is not executed by the Optionee, it may be
canceled by the Board of Directors.
2. Duration. The Option shall be exercisable to the extent and in the manner
provided herein for a period of ten (10) years from the Grant Date (the
"Exercise Term"); provided, however, that the Option may be earlier terminated
as provided in Section 1.7 and Section 5 hereof.
3. Vesting. The Option shall vest, and may be exercised, with respect to the
Shares subject thereto, on or after the dates set forth above, subject to
earlier termination of the Option as provided in Section 1.7 and Section 5
hereof or in the Plan and subject to the limitations on exercise contained in
Section 7 hereof.
4. Manner of Exercise and Payment.
4.1 To exercise the Option, the Optionee must deliver a completed copy
of the Option Exercise Form, attached hereto as Exhibit B and incorporated
herein by reference, to the address indicated on such Form or such other
address designated by the Company from time to time. The Option may be
exercised in whole or in part. Within thirty (30) days of delivery of the
Option Exercise Form, the Company shall deliver certificates evidencing the
Shares to the Optionee, duly endorsed for transfer to the Optionee, free and
clear of all liens, security interests, pledges or other claims or charges.
Contemporaneously with the delivery of the Option Exercise Form, Optionee
shall tender the Option Exercise Price to the Company, by cash, check, wire
transfer or other means acceptable to the Company pursuant to the Plan.
4.2 The Optionee shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to any Shares subject to the Option
until (i) the Option shall have been
2
<PAGE>
exercised pursuant to the terms of this Agreement and the Optionee shall have
paid the full purchase price for the number of Shares in respect of which the
Option was exercised, (ii) the Company shall have issued and delivered the
Shares to the Optionee, and (iii) the Optionee's name shall have been entered
as a shareholder of record on the books of the Company, whereupon the Optionee
shall have full voting and other ownership rights with respect to such Shares.
5. Termination of Employment.
5.1 Termination for Cause. If the Optionee's employment is terminated
---------------------
by the Company for Cause, all outstanding unvested Options granted to the
Optionee shall expire immediately, and the Optionee's right to exercise any
then outstanding Options (whether or not vested) shall terminate immediately
upon the date that the Committee determines is the Optionee's date of
termination of employment.
5.2 Termination of Employment for Other Reasons. Subject to Section
-------------------------------------------
3.2, if the Optionee's employment is terminated by the Company without Cause,
or the Optionee voluntarily terminates his employment (including upon
Retirement, death, or Disability), all outstanding unvested Options shall
expire as of the date of termination of employment, and any Options vested as
of the date of termination shall remain exercisable at any time prior to their
expiration date or for three (3) months (twelve (12) months if termination is
due to death or disability) after the date of termination of employment,
whichever period is shorter.
5.3 Employment by Subsidiary. For purposes of this Section and
------------------------
Section 9, employment with the Company includes employment with any Subsidiary
of the Company. A change of employment between the Company and any Subsidiary or
between Subsidiaries is not a termination of employment under this Agreement.
6. Nontransferability. The Option shall not be transferable other than by
will or by the laws of descent and distribution. During the lifetime of the
Optionee, the Option shall be exercisable only by the Optionee.
7. Restrictions on the Options; Restrictions on the Shares.
7.1 Securities Laws Restrictions. The Option may not be exercised at
----------------------------
any time unless, in the opinion of counsel for the Company, the issuance and
sale of the Shares issued upon such exercise is exempt from registration under
the Securities Act of 1933, as amended, or any other applicable federal or
state securities law, rule or regulation, or the Shares have been duly
registered under such laws. The Company shall not be required to register the
Shares issuable upon the exercise of the Option under any such laws. Unless
the Shares have been registered under all applicable laws, the Optionee shall
represent, warrant and agree, as a condition to the exercise of the Option,
that the Shares are being purchased for investment only and without a view to
any sale or distribution of such Shares and that such Shares shall not be
transferred or disposed of in any manner without registration under such laws,
unless it is the opinion of counsel for the Company that such a disposition is
exempt from such registration. The Optionee acknowledges that an appropriate
legend giving notice of the foregoing restrictions shall appear conspicuously
on all certificates evidencing the Shares issued upon the exercise of the
Option in accordance with Section
3
<PAGE>
11-8-204 of the Georgia Uniform Commercial Code. The legend shall appear as
- --------
follows, or in other words of like import as determined by the Company:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY
NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS THEY HAVE
BEEN REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
TRANSFER OF SHARES REPRESENTED HEREBY IS RESTRICTED BY THE TERMS OF AN
OPTION AGREEMENT AND BY A STOCK OPTION PLAN.
7.2 Limitation Upon Exercise. Notwithstanding any other provision
------------------------
herein, no Option shall be exercisable if the exercise of the Option would
cause the Company's S corporation election to terminate.
7.3 Shareholder's Agreement. The Optionee acknowledges and agrees that,
-----------------------
unless an effective registration statement has been filed with the Securities
and Exchange Commission covering the Shares of the Company, Optionee must,
immediately prior to or simultaneously with the exercise of any Option, agree
in writing to be bound by the terms, conditions, and restrictions of the then
current Shareholders Agreement of the Company.
7.4 Repurchase of Shares After Termination. Until the effective date of
--------------------------------------
a registration statement filed with the Securities Exchange Commission
covering the Shares of the Company, if Optionee ceases to be employed by the
Company, which termination may be with or without Cause or for any reason
whatsoever (including death, Disability, or Retirement), then the Company
shall have the right in its sole discretion to purchase all of the Shares
acquired by exercise of the Option no later than thirty (30) days after such
termination (or with respect to Shares acquired upon exercise of the Option
after termination, no later than thirty (30) days after the date of such
exercise). In the event of Optionee's death, this Section 7.4 shall be binding
upon the Optionee's beneficiary or the representative or executor of
Optionee's estate.
(a) Termination Repurchase Price. The price the Company shall pay for
----------------------------
each Share in the event Optionee's employment is terminated (the
"Termination Repurchase Price") will be an amount of cash equal to the fair
market value of a Share determined by the Board of Directors in the same
manner and amount as if determining the Option Exercise Price under the
Plan, all determined as of the date of Optionee's termination of
employment, but not less than the exercise price paid.
(b) Form of Payment. The Termination Repurchase Price shall be
---------------
payable by delivery of the Company's promissory note (the "Termination
Note") evidencing the Company's obligation to pay the Termination
Repurchase Price with interest accruing at a rate of six per cent (6%) per
annum. If the Optionee's employment with the Company is terminated by the
Optionee, then such payments shall be paid in thirty-six (36) equal
4
<PAGE>
monthly installments commencing thirty (30) days after closing. If the
Optionee's employment with the Company is terminated by the Company, then
such payments shall be paid in twelve (12) equal monthly payments
commencing thirty (30) days after closing. The Company shall have the
discretion to accelerate any or all payments.
(c) Closing. At a time no later than thirty (30) days after the
-------
Optionee's employment terminates as described above (or with respect to
Shares acquired upon exercise of the Option after termination of
employment, at a time no later than thirty (30) days after the Optionee's
exercise of the Option), the Optionee shall deliver a certificate or
certificates representing all of the Shares, duly endorsed for transfer to
the Company, free and clear of all liens, security interests, pledges or
other claims or charges. Contemporaneously with the delivery of the
certificates evidencing the Shares, the Company shall deliver the
Termination Note.
7.5 Right of First Refusal; Closing. Until the effective date of a
-------------------------------
registration statement filed with the Securities Exchange Commission covering
the Shares of the Company, the Optionee agrees that he shall not sell, assign
or transfer any of the Shares without first obtaining a bona fide written
offer (the "Outside Offer") from a non-affiliated third party to purchase such
Shares, and, before accepting such offer, delivering a written offer to the
Company (the "Inside Offer") to sell the Shares at the same price and on the
same terms as those contained in the Outside Offer. Within ten (10) days after
receipt of the Inside Offer, the Company shall determine the bona fide nature
of the Outside Offer and the Optionee shall be responsible for providing
additional information to the Company to show the bona fide nature of the
Outside Offer. The Company (or, at the Company's sole election, the assignee
or assignees selected by the Company) will have thirty (30) days after receipt
of the Inside Offer within which to notify the Optionee of its acceptance of
the Inside Offer with respect to all, but not less than all, of the Shares so
offered. If the Inside Offer is not accepted by the Company (or its assignee)
within thirty (30) days, then the Optionee shall be free to sell, transfer or
assign the Shares so offered to the third party at the price and on the terms
contained in the Outside Offer; provided, however, the Company may refuse to
recognize such transaction if it had determined that the Outside Offer was not
bona fide. If the Company (or its assignee) notifies the Optionee of its
acceptance of the Inside Offer, then the Company (or its assignee) shall set a
date for the closing of such transfer, which shall be within sixty (60) days
of such notice of acceptance. At such closing, the Optionee shall deliver a
certificate or certificates representing the Shares to be sold, free and clear
of all liens, security interests, pledges or other claims or charges, and the
Company (or its assignee) shall tender the purchase price as determined in
this Section to the Optionee, by cash, check, wire transfer or other means
acceptable to the Optionee.
8. Investment Intent. The Optionee understands and acknowledges that the
Shares have not been registered under the Securities Act of 1933 or any state
securities law, and are consequently subject to the distribution restrictions in
Section 7.1 above. The Optionee acknowledges that the Company makes no
representation that the Shares will ever be registered or that there shall ever
be a public market for the Shares. The Optionee warrants that if he or she
exercises the Option, the Optionee is acquiring the Shares for his or her own
account for the purpose of investment, and not with a view to or for sale in
connection with any distribution thereof.
5
<PAGE>
9. No Right to Continued Employment. Nothing in this Agreement or the Plan
shall be interpreted or construed to confer upon the Optionee any right with
respect to continuance of employment by the Company, nor shall this Agreement or
the Plan interfere in any way with the right of the Company to terminate the
Optionee's employment at any time.
10. Adjustments. In the event of a change in capitalization, such as a stock
split, or a corporate transaction, such as any merger, consolidation,
reorganization, separation, including a spin-off, or other distribution of stock
or property of the Company, the Committee (or the board of directors or
committee of the successor or surviving corporation that is responsible for
administration of the Plan) shall make appropriate adjustments to the number and
class of Shares or other stock or securities subject to the Option and the
purchase price for such Shares or other stock or securities. The Committee's
adjustment shall be made in accordance with the provisions of Section 4.3 of the
Plan and shall be effective and final, binding and conclusive for all purposes
of the Plan and this Agreement.
11. Certain Events. Upon the effective date of (i) the liquidation or
dissolution of the Company or (ii) a merger, consolidation or other business
combination involving the Company (a "Transaction"), the Option shall continue
in effect in accordance with its terms and the Optionee shall be entitled to
receive in respect of all Shares subject to the Option, upon exercise of the
Option (once it is vested and exercisable according to its terms), the same
number and kind of stock, securities, cash, property or other consideration that
each holder of Shares was entitled to receive in the Transaction.
12. Withholding of Taxes.
12.1 The Company shall have the right to deduct from any distribution of
cash to the Optionee an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld (the
"Withholding Taxes") with respect to the Option. If the Optionee is entitled
to receive Shares upon exercise of the Option, the Optionee shall pay the
Withholding Taxes (if any) to the Company in cash prior to the issuance of
such Shares. In satisfaction of the Withholding Taxes, the Optionee may make a
written election (the "Tax Election"), which may be accepted or rejected in
the discretion of the Committee, to have withheld a portion of the Shares
issuable to him or her upon exercise of the Option, having an aggregate Fair
Market Value equal to the withholding Taxes, provided that, if the Optionee
may be subject to liability under Section 16(b) of the Exchange Act, the
election must comply with the requirements applicable to Share transactions by
such Optionees.
12.2 If the Optionee makes a disposition, within the meaning of Section
424(c) of the Code and regulations promulgated thereunder, of any Share or
Shares issued to him pursuant to his exercise of the Option within the two-
year period commencing on the day after the Grant Date or within the one-year
period commencing on the day after the date of transfer of such Share or
Shares to the Optionee pursuant to such exercise, the Optionee shall, within
ten (10) days of such disposition, notify the Company thereof, by delivery of
written notice to the Company at its principal executive office, and
immediately deliver to the Company the amount of Withholding Taxes.
6
<PAGE>
13. Employee Bound by the Plan. The Optionee hereby acknowledges receipt of a
copy of the Plan and agrees to be bound by all the terms and provisions thereof.
14. Adjustments for Pooling-of-Interests Accounting. If the Company enters
into a transaction which is intended to be accounted for using the pooling-of-
interests method of accounting, but it is determined by the Board that the
Option or any aspect thereof could reasonably be expected to preclude such
treatment, then the Board, without the consent of the Participant, may modify
(to the minimum extent required) or revoke (if necessary) the Option or any of
the provisions thereof to the extent that the Board determines that such
modification or revocation is necessary to enable the transaction to be subject
to pooling-of-interests accounting.
15. Modification of Agreement. Except as provided in Section 14, this
Agreement may not be modified, amended, suspended or terminated, and any terms
or conditions may not be waived, except by a written instrument executed by the
parties hereto.
16. Severability. Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such holding and
shall continue in full force in accordance with their terms.
17. Governing Law. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of Georgia without
giving effect to the conflicts of laws principles thereof.
18. Successors in Interest. This Agreement shall inure to the benefit of and
be binding upon each successor corporation. This Agreement shall inure to the
benefit of the Optionee's legal representatives. All obligations imposed upon
the Optionee and all rights granted to the Company under this Agreement shall be
final, binding and conclusive upon the Optionee's heirs, executors,
administrators and successors.
19. Resolution of Disputes. Any dispute or disagreement which may arise under,
or as a result of, or in any way relate to, the interpretation, construction or
application of this Agreement shall be determined by the Committee. Any
determination made hereunder shall be final, binding and conclusive on the
Optionee and the Company for all purposes.
20. Legal Construction. The legal construction and interpretation of this
Agreement (including, but not limited to, issues of gender, plural and singular,
governing law, and severability) shall be governed by the provisions of Article
18 of the Plan.
7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ONTARGET, INC.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
By signing below, Optionee hereby (i) acknowledges receipt of a copy of
the Plan which is attached hereto as Exhibit A, (ii) represents that he or she
is familiar with the terms and provisions hereof and thereof, and (iii)
accepts the Option subject to all the terms and provisions hereof and thereof.
Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Board of Directors of the Company, or the
Compensation Committee or other Committee responsible for the administration
of the Plan, upon any questions arising under the Plan. Optionee authorizes
the Company to withhold, in accordance with applicable law, from any
compensation payable to him or her, any taxes required to be withheld by
federal, state or local law as a result of the grant, existence or exercise of
the Option.
OPTIONEE
Signature:
--------------------------
Name:
--------------------------
[EXHIBITS FOLLOW]
8
<PAGE>
EXHIBIT B
---------
OPTION EXERCISE FORM
--------------------
I, , do hereby exercise the Option with a Date
-----------------------------
of Grant of , granted to me by the Option Agreement
------------------- ------
executed in connection therewith. The number of Shares being purchased, the
Exercise Price, and the Total Option Exercise Price are set forth below:
Number of Shares: Shares
-------------
Option Exercise Price Per Share x $____________ per Share
Total Option Exercise Price: = $________. ____
The Total Option Exercise Price is included with this Form.
Date:
-------------------------------- ----------------------------------
Signature
Send or deliver this Form with an original signature to:
OnTarget, Inc.
3348 Peachtree Road N.E.
Suite 700
Atlanta, GA 30326
Attn:
------------------
9
