<PAGE> 1
As filed with the Securities and Exchange Commission on August 11, 1997
Registration No. 333-_____
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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PRISM SOLUTIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 77-0282704
(State of Incorporation) (I.R.S. Employer
Identification No.)
1000 HAMLIN COURT
SUNNYVALE, CALIFORNIA 94306
(Address of Principal Executive Offices)
1996 EQUITY INCENTIVE PLAN
OPTIONS GRANTED BY QDB SOLUTIONS, INC. ASSUMED BY THE REGISTRANT
(Full Title of the Plan)
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EARL C. CHARLES
CHIEF FINANCIAL OFFICER
PRISM SOLUTIONS, INC.
1000 HAMLIN COURT
SUNNYVALE, CALIFORNIA 94306
(408) 752-1888
(Name, Address and Telephone Number of Agent for Service)
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Copies to:
JACQUELINE A. DAUNT, ESQ.
ROBERT A. FREEDMAN, ESQ.
FENWICK & WEST LLP
TWO PALO ALTO SQUARE
PALO ALTO, CALIFORNIA 94306
CALCULATION OF REGISTRATION FEE
<TABLE>
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TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE PER SHARE AGGREGATE OFFERING PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 1,500,000 (1) $4.875 (2) $7,312,500.00[2) $2,215.91 (3)
Common Stock, $0.001 par value 307,480 (4) $0.10 (5) $30,748.00 $9.32 (3)
=============================================================================================================================
</TABLE>
(1) Additional shares available for grant and not yet subject to
outstanding stock options as of March 18, 1997 under Registrant's 1996
Equity Incentive Plan.
(2) Estimated as of August 11, 1997 pursuant to Rule 457(c) solely for the
purpose of calculating the registration fee.
(3) Fee calculated pursuant to Section 6(b) of the Securities Act of 1933,
as amended. This amount equals 1/33 of 1% of the proposed maximum
aggregate offering price.
(4) Shares subject to options outstanding as of August 11, 1997 which were
assumed by the Registrant from QDB Solutions, Inc., a Massachusetts
corporation which was acquired by the Registrant on July 21, 1997.
(5) Weighted average per share exercise price for such outstanding options
pursuant to Rule 457(h)(1).
<PAGE> 2
PRISM SOLUTIONS, INC.
REGISTRATION STATEMENT ON FORM S-8
PART II: INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission (the "Commission") are incorporated herein by reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 filed on March 28, 1997 pursuant
to Section 13(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), which contains audited financial
statements for the Registrant's fiscal year ended December 31,
1996.
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1997 filed on May 13, 1997 pursuant to
Section 13(a) of the Exchange Act.
(c) The description of the Registrant's Common Stock contained in
the Registrant's Registration Statement on Form 8-A filed on
February 12, 1996 with the Commission under Section 12(g) of
the Exchange Act, including any amendment or report filed for
the purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities registered hereby
have been sold or which deregisters all securities then remaining unsold, shall
be deemed incorporated by reference herein and to be a part hereof from the date
of the filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by Section 145 of the Delaware General Corporation Law,
the Registrant's Certificate of Incorporation includes a provision that
eliminates the personal liability of its directors to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) under
section 174 of the Delaware General Corporation Law or (iv) for any transaction
from which the director derived an improper personal benefit. In addition, as
permitted by Section 145 of the Delaware General Corporation Law, the Bylaws of
the Registrant provide that: (i) the Registrant is required to indemnify its
directors and executive officers to the fullest extent permitted by the Delaware
General Corporation Law; (ii) the Registrant may, in its discretion, indemnify
other officers, employees and agents as set forth in the Delaware General
Corporation Law; (iii) upon receipt of an undertaking to repay such advances if
indemnification is determined to be unavailable, the Registrant is required to
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advance expenses, as incurred, to its directors and executive officers to the
fullest extent permitted by the Delaware General Corporation Law in connection
with a proceeding (except if a determination is reasonably and promptly made by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to the proceeding or, in certain circumstances, by
independent legal counsel in a written opinion that the facts known to the
decision-making party demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the corporation); (iv) the rights conferred
in the Bylaws are not exclusive and the Registrant is authorized to enter into
indemnification agreements with its directors, officers and employees and
agents; (v) the Registrant may not retroactively amend the Bylaw provisions
relating to indemnity; and (vi) to the fullest extent permitted by the Delaware
General Corporation Law, a director or executive officer will be deemed to have
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Registrant, and, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe that
his or her conduct was unlawful, if his or her action is based on the records or
books of account of the Registrant or on information supplied to him or her by
officers of the Registrant in the course of their duties or on the advice of
legal counsel for the Registrant or on information or records given or reports
made to the Registrant by independent certified public accountants or appraisers
or other experts.
The Registrant has entered into indemnity agreements with each of its
directors and executive officers. The indemnity agreements provide that
directors and executive officers will be indemnified and held harmless to the
fullest possible extent permitted by law including against all expenses
(including attorneys' fees), judgments, fines and settlement amounts paid or
reasonably incurred by them in any action, suit or proceeding, including any
derivative action by or in the right of the Registrant, on account of their
services as directors, officers, employees or agents of the Registrant or as
directors, officers, employees or agents of any other company or enterprise when
they are serving in such capacities at the request of the Registrant. The
Registrant will not be obligated pursuant to the agreements to indemnify or
advance expenses to an indemnified party with respect to proceedings or claims
(i) initiated by the indemnified party and not by way of defense, except with
respect to a proceeding authorized by the Board of Directors and successful
proceedings brought to enforce a right to indemnification under the indemnity
agreements, (ii) for any amounts paid in settlement of a proceeding unless the
Registrant consents to such settlement; (iii) on account of any suit in which
judgment is rendered against the indemnified party for an accounting of profits
made from the purchase or sale by the indemnified party of securities of the
Registrant pursuant to the provisions of 16(b) of the Exchange Act and related
laws; (iv) on account of conduct by an indemnified party that is finally
adjudged to have been in bad faith or conduct that the indemnified party did not
reasonably believe to be in, or not opposed to, the best interests of the
Registrant; (v) on account of any criminal action or proceeding arising out of
conduct that the indemnified party had reasonable cause to believe was unlawful;
or (vi) if a final decision by a court having jurisdiction in the matter shall
determine that such indemnification is not lawful.
The indemnity agreement requires a director or executive officer to
reimburse the Registrant for expenses advanced only to the extent it is
ultimately determined that the director or executive officer is not entitled,
under Delaware law, the Bylaws, his or her indemnity agreement or otherwise to
be indemnified for such expenses. The indemnity agreement provides that it is
not exclusive of any rights a director or executive officer may have under the
Certificate of Incorporation, Bylaws, other agreements, any majority-in-interest
vote of the stockholders or vote of disinterested directors, the Delaware law,
or otherwise.
The indemnification provision in the Bylaws, and the indemnity
agreements entered into between the Registrant and its directors and executive
officers, may be sufficiently broad to permit indemnification of the
Registrant's directors and executive officers for liabilities arising under the
Securities Act of 1933, as amended (the "Securities Act"). As authorized by the
Registrant's Bylaws, the
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<PAGE> 4
Registrant, with approval by the Registrant's Board of Directors, maintains
directors and officers liability insurance with a per claim and annual aggregate
coverage limit of up to $10,000,000.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company 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.
ITEM 8. EXHIBITS.
4.01 Prism Solutions, Inc. 1996 Equity Incentive Plan, as amended
through March 18, 1997.
4.02 QDB Solutions, Inc. 1997 Stock Incentive Plan.(1)
4.03 Form of QDB Solutions, Inc. Nonqualified Stock Option
Agreement.(1)
4.04 Registrant's Certificate of Incorporation filed with the
Secretary of State of Delaware on January 3, 1996.(2)
4.05 Registrant's Certificate of Amendment of Certificate of
Incorporation filed with the Secretary of State of Delaware on
January 22, 1996.(3)
4.06 Registrant's Certificate of Designation of Preferred Stock
filed with the Secretary of State of Delaware on January 22,
1996.(4)
4.07 Registrant's Certificate of Retirement of Preferred Stock
filed with the Secretary of State of Delaware on March 20,
1996.(5)
4.08 Registrant's Bylaws, as amended.(6)
4.09 Form of specimen certificate for Registrant's Common Stock.(7)
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of Coopers & Lybrand L.L.P., Independent Accountants.
24.01 Power of Attorney (see page 7).
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(1) QDB Solutions, Inc. is a Massachusetts corporation that was
acquired by the Registrant on July 21, 1997.
(2) Incorporated herein by reference to Exhibit 3.01 to the
Registrant's Registration Statement on Form SB-2 (File No.
333-1180-LA) filed on February 8, 1996, as subsequently amended
(the "Form SB-2").
(3) Incorporated herein by reference to Exhibit 3.02 to the Form
SB-2.
(4) Incorporated herein by reference to Exhibit 3.03 to the Form
SB-2.
(5) Incorporated herein by reference to Exhibit 3.04 to the Form
SB-2.
(6) Incorporated herein by reference to Exhibit 3.05 to the Form
SB-2.
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(7) Incorporated herein by reference to Exhibit 4.01 to the Form
SB-2.
ITEM 9. UNDERTAKINGS.
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 thereof) 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 the 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 and high end 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 a twenty percent (20%) change
in the maximum aggregate offering price set forth in the "Calculation of
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 (1)(i) and (1)(ii) above do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3, and 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 Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
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 an 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 therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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 provisions discussed in Item 6 hereof, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than
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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 hereby, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Warren M. Weiss and Earl C. Charles, and
each of them, his true and lawful attorneys-in-fact and agents with full power
of substitution, 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 on Form S-8, and to file the same with all
exhibits thereto and all documents in connection therewith, with the Securities
and Exchange 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 and about the premises, as fully to
all intents and purposes as he or it might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Sunnyvale, State of California, on the 8th day of
August, 1997.
PRISM SOLUTIONS, INC.
By: /s/ Earl C. Charles
_______________________________
Earl C. Charles
Chief Financial Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
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SIGNATURE TITLE DATE
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<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER
AND DIRECTOR:
/s/ Warren M. Weiss
_______________________________ President, Chief Executive Officer August 8, 1997
Warren M. Weiss and a Director
PRINCIPAL FINANCIAL OFFICER:
/s/ Earl C. Charles
_______________________________ Chief Financial Officer August 8, 1997
Earl C. Charles
PRINCIPAL ACCOUNTING OFFICER:
/s/ Albert J. Wood
_______________________________ Chief Accounting Officer August 8, 1997
Albert J. Wood and Controller
ADDITIONAL DIRECTORS:
_______________________________ Chairman of the Board and a Director ________, 1997
James W. Ashbrook
/s/ Kevin A. Fong
_______________________________ Director August 8, 1997
Kevin A. Fong
/s/ Promod Haque
_______________________________ Director August 8, 1997
Promod Haque
</TABLE>
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<TABLE>
<S> <C> <C>
/s/ E. Floyd Kvamme
_______________________________ Director August 8, 1997
E. Floyd Kvamme
_______________________________ Director ________, 1997
Nancy J. Schoendorf
/s/ Norris van den Berg
_______________________________ Director August 8, 1997
Norris van den Berg
</TABLE>
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EXHIBIT INDEX
<TABLE>
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Exhibit No. Description
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<S> <C>
4.01 Prism Solutions, Inc. 1996 Equity Incentive Plan, as amended
through March 18, 1997.
4.02 QDB Solutions, Inc. 1997 Stock Incentive Plan.(1)
4.03 Form of QDB Solutions, Inc. Nonqualified Stock Option
Agreement.(1)
4.04 Registrant's Certificate of Incorporation filed with the
Secretary of State of Delaware on January 3, 1996.(2)
4.05 Registrant's Certificate of Amendment of Certificate of
Incorporation filed with the Secretary of State of Delaware on
January 22, 1996.(3)
4.06 Registrant's Certificate of Designation of Preferred Stock
filed with the Secretary of State of Delaware on January 22,
1996.(4)
4.07 Registrant's Certificate of Retirement of Preferred Stock
filed with the Secretary of State of Delaware on March 20,
1996.(5)
4.08 Registrant's Bylaws, as amended.(6)
4.09 Form of specimen certificate for Registrant's Common Stock.(7)
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of Coopers & Lybrand L.L.P., Independent Accountants.
24.01 Power of Attorney (see page 7).
</TABLE>
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(1) QDB Solutions, Inc. is a Massachusetts corporation that was
acquired by the Registrant on July 21, 1997.
(2) Incorporated herein by reference to Exhibit 3.01 to the
Registrant's Registration Statement on Form SB-2 (File No.
333-1180-LA) filed on February 8, 1996, as subsequently
amended (the "Form SB-2").
(3) Incorporated herein by reference to Exhibit 3.02 to the Form
SB-2.
(4) Incorporated herein by reference to Exhibit 3.03 to the Form
SB-2.
(5) Incorporated herein by reference to Exhibit 3.04 to the Form
SB-2.
(6) Incorporated herein by reference to Exhibit 3.05 to the Form
SB-2.
(7) Incorporated herein by reference to Exhibit 4.01 to the Form
SB-2.
<PAGE> 1
Exhibit 4.01
PRISM SOLUTIONS, INC.
1996 EQUITY INCENTIVE PLAN
As Adopted January 18, 1996 and Amended through March 18, 1997
1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent,
Subsidiaries and Affiliates, by offering them an opportunity to participate in
the Company's future performance through awards of Options, Restricted Stock and
Stock Bonuses. Capitalized terms not defined in the text are defined in Section
23.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and 18,
the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 3,500,000 Shares. Subject to Sections 2.2 and 18,
Shares that: (a) are subject to issuance upon exercise of an Option but cease to
be subject to such Option for any reason other than exercise of such Option; (b)
are subject to an Award granted hereunder but are forfeited or are repurchased
by the Company at the original issue price; or (c) are subject to an Award that
otherwise terminates without Shares being issued will again be available for
grant and issuance in connection with future Awards under this Plan. At all
times the Company shall reserve and keep available a sufficient number of Shares
as shall be required to satisfy the requirements of all outstanding Options
granted under this Plan and all other outstanding but unvested Awards granted
under this Plan.
2.2 Adjustment of Shares. In the event that the number of
outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the stockholders of the
Company and compliance with applicable securities laws; provided, however, that
fractions of a Share will not be issued but will either be replaced by a cash
payment equal to the Fair Market Value of such fraction of a Share or will be
rounded up to the nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted
only to employees (including officers and directors who are also employees) of
the Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors, consultants, independent contractors
and advisors of the Company or any Parent, Subsidiary or Affiliate of the
Company; provided such consultants, contractors and advisors render bona fide
services not in connection with the offer and sale of securities in a
capital-raising transaction. No person will be eligible to receive more than
500,000 Shares in any calendar year under this Plan pursuant to the grant of
Awards hereunder, other than new employees of the Company or of a Parent,
Subsidiary or Affiliate of the Company (including new employees who are also
officers and directors of the Company or any Parent, Subsidiary or Affiliate of
the Company) who are eligible to receive up to a maximum of 1,000,000 Shares in
the calendar year in which they commence their employment. A person may be
granted more than one Award under this Plan.
<PAGE> 2
Prism Solutions, Inc.
1996 Equity Incentive Plan
4. ADMINISTRATION.
4.1 Committee Authority. This Plan will be administered by the
Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and any
other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to
this Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject
to Awards;
(f) determine whether Awards will be granted singly, in combination
with, in tandem with, in replacement of, or as alternatives to,
other Awards under this Plan or any other incentive or
compensation plan of the Company or any Parent, Subsidiary or
Affiliate of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the
administration of this Plan.
4.2 Committee Discretion. Any determination made by the
Committee with respect to any Award will be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
this Plan or Award, at any later time, and such determination will be final and
binding on the Company and on all persons having an interest in any Award under
this Plan. The Committee may delegate to one or more officers of the Company the
authority to grant an Award under this Plan to Participants who are not Insiders
of the Company.
4.3 Exchange Act Requirements. If two or more members of the
Board are Outside Directors, the Committee will be comprised of at least two (2)
members of the Board, all of whom are Outside Directors and Disinterested
Persons. During all times that the Company is subject to Section 16 of the
Exchange Act, the Company will take appropriate steps to comply with the
disinterested administration requirements of Section 16(b) of the Exchange Act,
which will consist of the appointment by the Board of a Committee consisting of
not less than two (2) members of the Board, each of whom is a Disinterested
Person.
5. OPTIONS. The Committee may grant Options to eligible persons and
will determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISOS") or Nonqualified Stock Options ("NQSOS"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this Plan
will be evidenced by an Award Agreement which will expressly identify the Option
as an ISO or an NQSO ("STOCK OPTION AGREEMENT"), and will be in such form and
contain such provisions (which need not be the same for each Participant) as the
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Prism Solutions, Inc.
1996 Equity Incentive Plan
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.
5.2 Date of Grant. The date of grant of an Option will be the
date on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
5.3 Exercise Period. Options may be exercisable immediately
(subject to repurchase pursuant to Section 12 of this Plan) or may be
exercisable within the times or upon the events determined by the Committee as
set forth in the Stock Option Agreement governing such Option; provided,
however, that no Option will be exercisable after the expiration of ten (10)
years from the date the Option is granted; and provided further that no ISO
granted to a person who directly or by attribution owns more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any Parent or Subsidiary of the Company ("TEN PERCENT STOCKHOLDER") will
be exercisable after the expiration of five (5) years from the date the ISO is
granted. The Committee also may provide for the exercise of Options to become
exercisable at one time or from time to time, periodically or otherwise, in such
number of Shares or percentage of Shares as the Committee determines.
5.4 Exercise Price. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may be not less than
85% of the Fair Market Value of the Shares on the date of grant; provided that:
(i) the Exercise Price of an ISO will be not less than 100% of the Fair Market
Value of the Shares on the date of grant; and (ii) the Exercise Price of any ISO
granted to a Ten Percent Stockholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 8 of this Plan.
5.5 Method of Exercise. Options may be exercised only by
delivery to the Company of a written stock option exercise agreement (the
"EXERCISE AGREEMENT") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.
5.6 Termination. Notwithstanding the exercise periods set forth
in the Stock Option Agreement, exercise of an Option will always be subject to
the following:
(a) If the Participant is Terminated for any reason except death or
Disability, then the Participant may exercise such
Participant's Options only to the extent that such Options
would have been exercisable upon the Termination Date no later
than three (3) months after the Termination Date (or such
shorter or longer time period not exceeding five (5) years as
may be determined by the Committee, with any exercise beyond
three (3) months after the Termination Date deemed to be an
NQSO), but in any event, no later than the expiration date of
the Options.
(b) If the Participant is Terminated because of Participant's death
or Disability (or the Participant dies within three (3) months
after a Termination other than because of Participant's death
or disability), then Participant's Options may be exercised
only to the extent that such Options would have been
exercisable by Participant on the Termination Date and must be
exercised by Participant (or Participant's legal representative
or authorized assignee) no later than twelve (12) months after
the Termination Date (or such shorter or longer time period not
exceeding five (5) years as may be determined by the Committee,
with any such exercise beyond (a) three (3) months after the
Termination Date when the Termination is for any reason other
than the Participant's death or Disability, or (b) twelve (12)
months after the Termination Date when the Termination is for
Participant's
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death or Disability, deemed to be an NQSO), but in any event no
later than the expiration date of the Options.
5.7 Limitations on Exercise. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISOs. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year (under
this Plan or under any other incentive stock option plan of the Company or any
Affiliate, Parent or Subsidiary of the Company) will not exceed $100,000. If the
Fair Market Value of Shares on the date of grant with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year exceeds
$100,000, then the Options for the first $100,000 worth of Shares to become
exercisable in such calendar year will be ISOs and the Options for the amount in
excess of $100,000 that become exercisable in that calendar year will be NQSOs.
In the event that the Code or the regulations promulgated thereunder are amended
after the Effective Date of this Plan to provide for a different limit on the
Fair Market Value of Shares permitted to be subject to ISOs, such different
limit will be automatically incorporated herein and will apply to any Options
granted after the effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with
Section 424(h) of the Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants affected by a written
notice to them; provided, however, that the Exercise Price may not be reduced
below the minimum Exercise Price that would be permitted under Section 5.4 of
this Plan for Options granted on the date the action is taken to reduce the
Exercise Price.
5.10 No Disqualification. Notwithstanding any other provision
in this Plan, no term of this Plan relating to ISOs will be interpreted, amended
or altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the
Company to sell to an eligible person Shares that are subject to restrictions.
The Committee will determine to whom an offer will be made, the number of Shares
the person may purchase, the price to be paid (the "PURCHASE PRICE"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a
Restricted Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. The offer of Restricted Stock will be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company within thirty (30) days from the
date the Restricted Stock Purchase Agreement is delivered to the person. If such
person does not execute and deliver the Restricted Stock Purchase Agreement
along with full payment for the Shares to the Company within thirty (30) days,
then the offer will terminate, unless otherwise determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold pursuant
to a Restricted Stock Award will be determined by the Committee and will be at
least 85% of the Fair Market Value of the Shares on the date the Restricted
Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price will be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance with Section 8 of
this Plan.
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6.3 Restrictions. Restricted Stock Awards will be subject to
such restrictions (if any) as the Committee may impose. The Committee may
provide for the lapse of such restrictions in installments and may accelerate or
waive such restrictions, in whole or part, based on length of service,
performance or such other factors or criteria as the Committee may determine.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of
Shares (which may consist of Restricted Stock) for services rendered to the
Company or any Parent, Subsidiary or Affiliate of the Company. A Stock Bonus may
be awarded for past services already rendered to the Company, or any Parent,
Subsidiary or Affiliate of the Company pursuant to an Award Agreement (the
"STOCK BONUS AGREEMENT") that will be in such form (which need not be the same
for each Participant) as the Committee will from time to time approve, and will
comply with and be subject to the terms and conditions of this Plan. A Stock
Bonus may be awarded upon satisfaction of such performance goals as are set out
in advance in the Participant's individual Award Agreement (the "PERFORMANCE
STOCK BONUS AGREEMENT") that will be in such form (which need not be the same
for each Participant) as the Committee will from time to time approve, and will
comply with and be subject to the terms and conditions of this Plan. Stock
Bonuses may vary from Participant to Participant and between groups of
Participants, and may be based upon the achievement of the Company, Parent,
Subsidiary or Affiliate and/or individual performance factors or upon such other
criteria as the Committee may determine.
7.2 Terms of Stock Bonuses. The Committee will determine the
number of Shares to be awarded to the Participant and whether such Shares will
be Restricted Stock. If the Stock Bonus is being earned upon the satisfaction of
performance goals pursuant to a Performance Stock Bonus Agreement, then the
Committee will determine: (a) the nature, length and starting date of any period
during which performance is to be measured (the "PERFORMANCE PERIOD") for each
Stock Bonus; (b) the performance goals and criteria to be used to measure the
performance, if any; (c) the number of Shares that may be awarded to the
Participant; and (d) the extent to which such Stock Bonuses have been earned.
Performance Periods may overlap and Participants may participate simultaneously
with respect to Stock Bonuses that are subject to different Performance Periods
and different performance goals and other criteria. The number of Shares may be
fixed or may vary in accordance with such performance goals and criteria as may
be determined by the Committee. The Committee may adjust the performance goals
applicable to the Stock Bonuses to take into account changes in law and
accounting or tax rules and to make such adjustments as the Committee deems
necessary or appropriate to reflect the impact of extraordinary or unusual
items, events or circumstances to avoid windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus may be
paid currently or on a deferred basis with such interest or dividend equivalent,
if any, as the Committee may determine. Payment may be made in the form of cash,
whole Shares, including Restricted Stock, or a combination thereof, either in a
lump sum payment or in installments, all as the Committee will determine.
7.4 Termination During Performance Period. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Stock Bonus only to the extent earned as of the date of Termination in
accordance with the Performance Stock Bonus Agreement, unless the Committee will
determine otherwise.
8. PAYMENT FOR SHARE PURCHASES.
8.1 Payment. Payment for Shares purchased pursuant to this Plan
may be made in cash (by check) or, where expressly approved for the Participant
by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for
within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such
note has been fully paid with respect to such shares); or (2)
were obtained by Participant in the public market;
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1996 Equity Incentive Plan
(c) by tender of a full recourse promissory note having such terms
as may be approved by the Committee and bearing interest at a
rate sufficient to avoid imputation of income under Sections
483 and 1274 of the Code; provided, however, that Participants
who are not employees or directors of the Company will not be
entitled to purchase Shares with a promissory note unless the
note is adequately secured by collateral other than the Shares;
(d) by waiver of compensation due or accrued to the Participant for
services rendered;
(e) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the Participant
and a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD DEALER")
whereby the Participant irrevocably elects to exercise
the Option and to sell a portion of the Shares so
purchased to pay for the Exercise Price, and whereby the
NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the
Company; or
(2) through a "margin" commitment from the Participant and a
NASD Dealer whereby the Participant irrevocably elects to
exercise the Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a
loan from the NASD Dealer in the amount of the Exercise
Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price
directly to the Company; or
(f) by any combination of the foregoing.
8.2 Loan Guarantees. The Committee may help the Participant pay
for Shares purchased under this Plan by authorizing a guarantee by the Company
of a third-party loan to the Participant.
9. WITHHOLDING TAXES.
9.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
9.2 Stock Withholding. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may, in its
sole discretion, allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined (the "TAX DATE"). All elections by a Participant to
have Shares withheld for this purpose will be made in writing in a form
acceptable to the Committee and will be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax
Date;
(b) once made, then except as provided below, the election will be
irrevocable as to the particular Shares as to which the
election is made;
(c) all elections will be subject to the consent or disapproval of
the Committee;
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1996 Equity Incentive Plan
(d) if the Participant is an Insider and if the Company is
subject to Section 16(b) of the Exchange Act: (1) the
election may not be made within six (6) months of the date
of grant of the Award, except as otherwise permitted by SEC
Rule 16b-3(e) under the Exchange Act, and (2) either (A)
the election to use stock withholding must be irrevocably
made at least six (6) months prior to the Tax Date
(although such election may be revoked at any time at least
six (6) months prior to the Tax Date) or (B) the exercise
of the Option or election to use stock withholding must be
made in the ten (10) day period beginning on the third day
following the release of the Company's quarterly or annual
summary statement of sales or earnings; and
(e) in the event that the Tax Date is deferred until six (6)
months after the delivery of Shares under Section 83(b) of the
Code, the Participant will receive the full number of Shares
with respect to which the exercise occurs, but such
Participant will be unconditionally obligated to tender back
to the Company the proper number of Shares on the Tax Date.
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1 Voting and Dividends. No Participant will have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's original Purchase Price pursuant to Section
12.
10.2 Financial Statements. The Company will provide financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company will not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.
11. TRANSFERABILITY. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as consistent with the specific
Plan and Award Agreement provisions relating thereto. During the lifetime of the
Participant an Award will be exercisable only by the Participant, and any
elections with respect to an Award, may be made only by the Participant.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement (a)
a right of first refusal to purchase all Shares that a Participant (or a
subsequent transferee) may propose to transfer to a third party, and/or (b) a
right to repurchase a portion of or all Shares held by a Participant following
such Participant's Termination at any time within ninety (90) days after the
later of Participant's Termination Date and the date Participant purchases
Shares under this Plan, for cash and/or cancellation of purchase money
indebtedness, at: (A) with respect to Shares that are "Vested" (as defined in
the Award Agreement), the higher of: (l) Participant's original Purchase Price,
or (2) the Fair Market Value of such Shares on Participant's Termination Date,
provided, that such right of repurchase (i) must be exercised as to all such
"Vested" Shares unless a Participant consents to the Company's repurchase of
only a portion of such "Vested" Shares and (ii) terminates when the Company's
securities become publicly traded; or (B) with respect to Shares that are not
"Vested" (as defined in the Award Agreement), at the Participant's original
Purchase Price, provided, that the right to repurchase at the original Purchase
Price lapses at the rate of at least 20% per year over five (5) years from the
date the Shares were purchased (or from the date of grant of options in the case
of Shares obtained pursuant to a Stock Option Agreement and Stock Option
Exercise Agreement), and if the right to repurchase is assignable, the assignee
must pay the Company, upon assignment of the right to repurchase, cash equal to
the excess of the Fair Market Value of the Shares over the original Purchase
Price.
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13. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not
be effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to: (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable; and/or (b) completion of any registration or other qualification
of such Shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company will be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
will have no liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award
granted under this Plan will confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship
with, the Company or any Parent, Subsidiary or Affiliate of the Company or limit
in any way the right of the Company or any Parent, Subsidiary or Affiliate of
the Company to terminate Participant's employment or other relationship at any
time, with or without cause.
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18. CORPORATE TRANSACTIONS.
18.1 Assumption or Replacement of Awards by Successor. In the
event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company (other than any stockholder
which merges (or which owns or controls another corporation which merges) with
the Company in such merger) cease to own their shares or other equity interests
in the Company, (d) the sale of substantially all of the assets of the Company,
or (e) any other transaction which qualifies as a "corporate transaction" under
Section 424(a) of the Code wherein the stockholders of the Company give up all
of their equity interest in the Company (except for the acquisition, sale or
transfer of all or substantially all of the outstanding shares of the Company
from or by the stockholders of the Company), any or all outstanding Awards may
be assumed, converted or replaced by the successor corporation (if any), which
assumption, conversion or replacement will be binding on all Participants. In
the alternative, the successor corporation may substitute equivalent Awards or
provide substantially similar consideration to Participants as was provided to
stockholders (after taking into account the existing provisions of the Awards).
The successor corporation may also issue, in place of outstanding Shares of the
Company held by the Participant, substantially similar shares or other property
subject to repurchase restrictions no less favorable to the Participant. In the
event such successor corporation (if any) refuses to assume or substitute
Awards, as provided above, pursuant to a transaction described in this
Subsection 18.1, such Awards will accelerate in full immediately prior to such
transaction if such transaction occurs after the second anniversary of the
Effective Date (as defined in Section 19 of this Plan) or expire if such
transaction occurs before the second anniversary of such Effective Date at such
time and on such conditions as the Board shall determine.
18.2 Other Treatment of Awards. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 18, in
the event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, sale of assets or other
"corporate transaction."
18.3 Assumption of Awards by the Company. The Company, from
time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either; (a) granting an Award under this Plan in substitution
of such other company's award; or (b) assuming such award as if it had been
granted under this Plan if the terms of such assumed award could be applied to
an Award granted under this Plan. Such substitution or assumption will be
permissible if the holder of the substituted or assumed award would have been
eligible to be granted an Award under this Plan if the other company had applied
the rules of this Plan to such grant. In the event the Company assumes an award
granted by another company, the terms and conditions of such award will remain
unchanged (except that the exercise price and the number and nature of Shares
issuable upon exercise of any such option will be adjusted appropriately
pursuant to Section 424(a) of the Code). In the event the Company elects to
grant a new Option rather than assuming an existing option, such new Option may
be granted with a similarly adjusted Exercise Price.
19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become
effective on the date on which the registration statement filed by the Company
with the SEC under the Securities Act registering the initial public offering of
the Company's Common Stock is declared effective by the SEC (the "EFFECTIVE
DATE"); provided, however, that if the Effective Date does not occur on or
before December 31, 1996, this Plan will terminate having never become
effective. This Plan shall be approved by the stockholders of the Company
(excluding Shares issued pursuant to this Plan), consistent with applicable
laws, within twelve (12) months before or after the date this Plan is adopted by
the Board. Upon the Effective Date, the Board may grant Awards pursuant to this
Plan; provided, however, that: (a) no Option may be exercised prior to initial
stockholder approval of this Plan; (b) no Option granted pursuant to an increase
in the number of Shares subject to this Plan approved by the Board will be
exercised prior to the time such increase has been approved by the stockholders
of the Company; and (c) in the event that stockholder approval of such increase
is not obtained within the time period provided herein, all Awards granted
hereunder will be canceled, any Shares issued pursuant to any Award will be
canceled, and any
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1996 Equity Incentive Plan
purchase of Shares hereunder will be rescinded. So long as the Company is
subject to Section 16(b) of the Exchange Act, the Company will comply with the
requirements of Rule 16b-3 (or its successor), as amended, with respect to
stockholder approval.
20. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided
herein, this Plan will terminate ten (10) years from the date this Plan is
adopted by the Board or, if earlier, the date of stockholder approval. This Plan
and all agreements thereunder shall be governed by and construed in accordance
with the laws of the State of California.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan; provided, however, that the Board will not, without the approval
of the stockholders of the Company, amend this Plan in any manner that requires
such stockholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans or (if the Company is subject
to the Exchange Act or Section 16(b) of the Exchange Act) pursuant to the
Exchange Act or Rule 16b-3 (or its successor), as amended, thereunder,
respectively.
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by
the Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
23. DEFINITIONS. As used in this Plan, the following terms will have
the following meanings:
"AFFILIATE" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, another corporation, where "control" (including the terms
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to cause the direction of the management and policies of
the corporation, whether through the ownership of voting securities, by contract
or otherwise.
"AWARD" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee appointed by the Board to
administer this Plan, or if no such committee is appointed, the Board.
"COMPANY" means Prism Solutions, Inc.
"DISABILITY" means a disability, whether temporary or
permanent, partial or total, within the meaning of Section 22(e)(3) of the Code,
as determined by the Committee.
"DISINTERESTED PERSON" means a director who has not, during the
period that person is a member of the Committee and for one year prior to
commencing service as a member of the Committee, been granted or awarded equity
securities pursuant to this Plan or any other plan of the Company or any Parent,
Subsidiary or Affiliate of the Company, except in accordance with the
requirements set forth in Rule 16b-3(c)(2)(i)
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(and any successor regulation thereto) as promulgated by the SEC under Section
16(b) of the Exchange Act, as such rule is amended from time to time and as
interpreted by the SEC.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXERCISE PRICE" means the price at which a holder of an Option
may purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a share
of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National
Market, its closing price on the Nasdaq National Market on the
date of determination as reported in The Wall Street Journal;
(b) if such Common Stock is publicly traded and is then listed on a
national securities exchange, its closing price on the date of
determination on the principal national securities exchange on
which the Common Stock is listed or admitted to trading as
reported in The Wall Street Journal;
(c) if such Common Stock is publicly traded but is not quoted on
the Nasdaq National Market nor listed or admitted to trading on
a national securities exchange, the average of the closing bid
and asked prices on the date of determination as reported in
The Wall Street Journal; or
(d) if none of the foregoing is applicable, by the Committee in
good faith.
"INSIDER" means an officer or director of the Company or any
other person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.
"OUTSIDE DIRECTOR" means any director who is not; (a) a current
employee of the Company or any Parent, Subsidiary or Affiliate of the Company;
(b) a former employee of the Company or any Parent, Subsidiary or Affiliate of
the Company who is receiving compensation for prior services (other than
benefits under a tax-qualified pension plan); (c) a current or former officer of
the Company or any Parent, Subsidiary or Affiliate of the Company; or (d)
currently receiving compensation for personal services in any capacity, other
than as a director, from the Company or any Parent, Subsidiary or Affiliate of
the Company; provided, however, that at such time as the term "Outside
Director", as used in Section 162(m) of the Code is defined in regulations
promulgated under Section 162(m) of the Code, "Outside Director" will have the
meaning set forth in such regulations, as amended from time to time and as
interpreted by the Internal Revenue Service.
"OPTION" means an award of an option to purchase Shares
pursuant to Section 5.
"PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if at the time of the
granting of an Award under this Plan, each of such corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
"PARTICIPANT" means a person who receives an Award under this
Plan.
"PLAN" means this Prism Solutions, Inc. 1996 Equity Incentive
Plan, as amended from time to time.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant to
Section 6.
"SEC" means the Securities and Exchange Commission.
-11-
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Prism Solutions, Inc.
1996 Equity Incentive Plan
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's Common Stock reserved
for issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and any
successor security.
"STOCK BONUS" means an award of Shares, or cash in lieu of
Shares, pursuant to Section 7.
"SUBSIDIARY" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if, at the time of
granting of the Award, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
"TERMINATION" or "TERMINATED" means, for purposes of this Plan
with respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, director, consultant, independent contractor or
advisor to the Company or a Parent, Subsidiary or Affiliate of the Company,
except in the case of sick leave, military leave, or any other leave of absence
approved by the Committee, provided that such leave is for a period of not more
than ninety (90) days, or reinstatement upon the expiration of such leave is
guaranteed by contract or statute. The Committee will have sole discretion to
determine whether a Participant has ceased to provide services and the effective
date on which the Participant ceased to provide services (the "TERMINATION
DATE").
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<PAGE> 1
Exhibit 4.02
QDB SOLUTIONS, INC.
1997 STOCK INCENTIVE PLAN
1. PURPOSES OF THE PLAN.
The purposes of this 1997 Stock Incentive Plan of QDB Solutions, Inc.
(the "Company") are to promote the interests of the Company and its stockholders
by strengthening the Company's ability to attract, motivate, and retain
employees and consultants of exceptional ability and to provide a means to
encourage stock ownership and a proprietary interest in the Company by selected
employees and consultants of the Company upon whose judgment, initiative, and
efforts the financial success and growth of the business of the Company largely
depend.
2. DEFINITIONS.
(a) "Accelerate," "Accelerated," and "Acceleration," (i) when used with
respect to an Option, mean that as of the relevant time of reference, such
Option shall become fully exercisable with respect to the total number of shares
of Common Stock subject to such Option and may be exercised for all or any
portion of such shares and (ii) when used with respect to shares of Common Stock
granted pursuant to a Restricted Stock Award, mean that as of the relevant time
of reference, such shares shall become free of any reacquisition or repurchase
rights in the Company with respect thereto.
(b) "Acquisition" means
(i) a merger or consolidation in which securities possessing
more than 50% of the total combined voting power of the
Company's outstanding securities are transferred to a person
or persons different from the persons who held those
securities immediately prior to such transaction, or
(ii) the sale, transfer, or other disposition of all or
substantially all of the Company's assets to one or more
persons (other than any wholly owned subsidiary of the
Company) in a single transaction or series of related
transactions.
(c) "Beneficial Ownership" means beneficial ownership determined
pursuant to Securities and Exchange Commission Rule 13d-3 promulgated under the
Exchange Act.
(d) "Board" means the Board of Directors of the Company.
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QDB Solutions, Inc.
1997 Stock Incentive Plan
(e) "Committee" means the Compensation Committee of the Board;
provided, that the Board by resolution duly adopted may at any time or from time
to time determine to assume any or all of the functions of the Committee under
the Plan, and during the period of effectiveness of any such resolution,
references herein to the "Committee" shall mean the Board acting in such
capacity. During any period in which there is no Committee or the Committee has
disbanded, the Board shall be deemed to be the Committee and references herein
to the "Committee" shall mean the Board acting in such capacity.
(f) "Change in Control" means a change in ownership or control of
the Company effected through either of the following transactions:
(i) any person or related group of persons (other than the
Company or a person that directly or indirectly controls, is
controlled by, or is under common control with the Company)
directly or indirectly acquires Beneficial Ownership of
securities possessing more than 50% of the total combined
voting power of the Company's outstanding securities pursuant
to a tender or exchange offer made directly to the Company's
stockholders that the Board does not recommend such
stockholders to accept, or
(ii) over a period of 36 consecutive months or less, there is
a change in the composition of the Board such that a majority
of the Board members (rounded up to the next whole number, if
a fraction) ceases, by reason of one or more proxy contests
for the election of Board members, to be composed of
individuals who either (A) have been Board members
continuously since the beginning of such period, or (B) have
been elected or nominated for election as Board members during
such period by at least a majority of the Board members
described in the preceding clause (A) who were still in office
at the time such election or nomination was approved by the
Board.
(g) "Common Stock" means the authorized common stock of the
Company.
(h) "Company" means QDB Solutions, Inc., a Massachusetts
corporation.
(I) "Eligible Employee" means any person who is, at the time of
the grant of an Option or Restricted Stock Award, an employee (including
officers and employee directors) of, or consultant to, the Company or any
Subsidiary.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended and in effect from time to time.
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QDB Solutions, Inc.
1997 Stock Incentive Plan
(k) "Fair Market Value" means the value of a share of Common Stock
as of the relevant time of reference, as determined as follows. If the Common
Stock is then publicly traded, Fair Market Value shall be (i) the last sale
price of a share of Common Stock on the principal national securities exchange
on which the Common Stock is traded, if the Common Stock is then traded on a
national securities exchange; or (ii) the last sale price of the Common Stock
reported in the NASDAQ National Market System, if the Common Stock is not then
traded on a national securities exchange; or (iii) the average of the closing
bid and asked prices for the Common Stock quoted by an established quotation
service for over-the-counter securities, if the Common Stock is not then traded
on a national securities exchange or reported in the NASDAQ National Market
System. If the Common Stock is not then publicly traded, Fair Market Value shall
be the fair value of a share of the Common Stock as determined by the Board or
the Committee, taking into consideration such factors as it deems appropriate,
which may include recent sale and offer prices of Common Stock in arms'-length
private transactions.
(l) "Hostile Takeover" means a change in ownership of the Company
effected through the following transaction:
(i) any person or related group of persons (other than the
Company or a person that directly or indirectly controls, is
controlled by, or is under common control with the Company)
directly or indirectly acquires Beneficial Ownership of
securities possessing more than 50% of the total combined
voting power of the Company's outstanding securities pursuant
to a tender or exchange offer made directly to the Company's
stockholders that the Board does not recommend such
stockholders to accept, and
(ii) more than 50% of the securities so acquired in such
tender or exchange offer are accepted from holders other than
the officers and directors of the Company who are subject to
the short-swing profit restrictions of Section 16 of the
Exchange Act.
(m) "Incentive Stock Option" means an Option intended to qualify
as an "incentive stock option" under Section 422 of the Internal Revenue Code
and regulations thereunder.
(n) "Nonqualified Stock Option" means a stock option granted
hereunder that is not intended to be an Incentive Stock Option.
(o) "Option" means an Incentive Stock Option or a Nonqualified
Stock Option.
(p) "Participant" means any Eligible Employee selected to receive
an Option or Restricted Stock Award pursuant to Section 5 or any Permitted
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QDB Solutions, Inc.
1997 Stock Incentive Plan
Transferee to whom an Option or Restricted Stock has been transferred in
accordance with Section 9(e).
(q) "Permitted Transferee" means any immediate family member of a
person to whom an Option or Restricted Stock Award has been granted pursuant to
Section 5 or a trust maintained exclusively for the benefit of, or partnership
of all of the interests which are held by, one or more of such immediate family
members.
(r) "Plan" means this 1997 Stock Incentive Plan as set forth
herein and as amended and/or restated from time to time.
(s) "Restricted Stock Award" means a right to the grant or
purchase, at a price determined by the Committee, of Common Stock which is
nontransferable, except in accordance with Section 9(e) and subject to
substantial risk of forfeiture until specific conditions of continuing
employment or performance, specified by the Committee, are met.
(t) "Subsidiary" means any subsidiary corporation (as defined in
Section 424 of the Internal Revenue Code) of the Company.
(u) "Takeover Price" means, with respect to any Option, the
greater of (I) the Fair Market Value per share of Common Stock on the date such
Option is surrendered to the Company in connection with a Hostile Takeover or
(ii) the highest reported price per share of Common Stock paid by the tender
offeror in effecting such Hostile Takeover.
3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
(a) Subject to adjustment in accordance with the provisions of
Section 3 (c) and Section 8 of the Plan, the aggregate number of shares of
Common Stock that may be issued or transferred pursuant to Options or Restricted
Stock Awards under the Plan shall not exceed 75,000 shares, [which aggregate
number of shares, automatically and without further action, shall increase, on
December 31, 1998, and each year thereafter during the term of the Plan, by an
additional number of shares of Common Stock equal to 5 per cent (5%) of (i) the
difference between the total number of shares of Common Stock and Common Stock
equivalents issued and outstanding as of the close of business on December 31 of
the preceding year and (ii) the total number of shares of Common Stock and
Common Stock equivalents issued and outstanding as of the close of business on
December 31 of the year prior to such preceding year.]
(b) The shares of Common Stock to be delivered under the Plan will
be made available, at the discretion of the Committee, from authorized but
unissued shares of Common Stock and/or from previously issued shares of Common
Stock reacquired by the Company.
4
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QDB Solutions, Inc.
1997 Stock Incentive Plan
(c) If shares covered by any Option cease to be issuable for any
reason, and/or shares covered by Restricted Stock Awards are forfeited, such
number of shares will no longer be charged against the limitation provided in
Section 3(a) and may again be made subject to Options or Restricted Stock
Awards.
4. ADMINISTRATION OF THE PLAN.
(a) The Plan will be governed by and interpreted and construed in
accordance with the internal laws of the Commonwealth of Massachusetts (without
reference to principles of conflicts or choice of law). The captions of sections
of the Plan are for reference only and will not affect the interpretation or
construction of the Plan.
(b) The Plan will be administered by the Committee, which shall
consist of two or more persons. The Committee has and may exercise such powers
and authority of the Board as may be necessary or appropriate for the Committee
to carry out its functions as described in the Plan. The Committee shall
determine the Eligible Employees to whom, and the time or times at which,
Options or Restricted Stock Awards may be granted and the number of shares
subject to each Option or Restricted Stock Award. The Committee also has
authority (i) to interpret the Plan, (ii) to determine the terms and provisions
of the Option or Restricted Stock Award instruments, and (iii) to make all other
determinations necessary or advisable for Plan administration. The Committee has
authority to prescribe, amend, and rescind rules and regulations relating to the
Plan. All interpretations, determinations, and actions by the Committee will be
final, conclusive, and binding upon all parties.
(c) No member of the Committee will be liable for any action taken
or determination made in good faith by the Committee with respect to the Plan or
any Option or Restricted Stock Award under it.
5. GRANTS.
(a) The Committee shall determine and designate from time to time
those Eligible Employees who are to be granted Options or Restricted Stock
Awards, the type of each Option to be granted and the number of shares covered
thereby or issuable upon exercise thereof, and the number of shares covered by
each Restricted Stock Award. Each Option and Restricted Stock Award will be
evidenced by a written agreement or instrument and may include any other terms
and conditions consistent with the Plan, as the Committee may determine.
(b) No person will be eligible for the grant of an Incentive Stock
Option who owns or would own immediately before the grant of such Option,
directly or indirectly, stock possessing more than ten percent of the total
combined voting
5
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QDB Solutions, Inc.
1997 Stock Incentive Plan
power of all classes of stock of the Company or of any parent corporation or
Subsidiary. This will not apply if, at the time such Incentive Stock Option is
granted, its exercise price is at least 110% of the Fair Market Value of the
Common Stock and by its terms, it is not exercisable after the expiration of
five years from the date of grant. Subject to adjustment in accordance with the
provisions of Section 8 of the Plan, (i) no person may in any year be granted
Options or Restricted Stock Awards with respect to more than 30,000 shares of
Common Stock, and (ii) no more than an aggregate of 100,000 shares of Common
Stock may be issued to any one Participant pursuant to the exercise of Incentive
Stock Options granted under the Plan.
6. TERMS AND CONDITIONS OF STOCK OPTIONS.
(a) The price at which Common Stock may be purchased by a
Participant under an Option shall be determined by the Committee; provided
however, and the purchase price under an Incentive Stock Option shall not be
less than 100% of the Fair Market Value of the Common Stock on the date of grant
of such Option. The price at which Common Stock may be purchased by a
Participant under a Nonqualified Stock Option may be a nominal amount as
determined by the Committee in its complete discretion.
(b) Each Option shall be exercisable at such time or time, during
such periods, and for such numbers of shares as shall be determined by the
Committee and set forth in the agreement or instrument evidencing the Option
grant (subject to Acceleration by the Committee, in its discretion). In any
event, the Option shall expire no later than the tenth anniversary of the date
of grant.
(c) Unless the Compensation Committee otherwise determines at the
time any Incentive Stock Option is granted or at the time of grant of any
Nonqualified Stock Option or thereafter, upon the exercise of an Option, the
purchase price will be payable in full in cash.
(d) Incentive Stock Options may be granted under the Plan only to
Eligible Employees. The aggregate Fair Market Value of the shares with respect
to which Incentive Stock Options may become exercisable for the first time in
any calendar year shall not exceed the excess, if any, of (1) one hundred
thousand dollars ($100,000) over (ii) the aggregate Fair Market Value of the
shares which the Eligible Employee may acquire for the first time in that
calendar year pursuant to other incentive stock options (within the meaning of
section 422 of the Internal Revenue Code) previously granted, if any, to such
Eligible Employee after December 31, 1986, under this Plan or any other plan of
the Company, its Subsidiaries and any "parent corporation" (as defined in
section 424 of the Internal Revenue Code) of the Company. For purposes of the
preceding sentence, the Fair Market Value of shares shall be determined as of
the respective dates of grant of the Options under which such shares may be
purchased. Any Options that purport to be Incentive
6
<PAGE> 7
QDB Solutions, Inc.
1997 Stock Incentive Plan
Stock Options but which are granted to persons other than employees of the
Company or a Subsidiary shall be, and any Options that purport to be Incentive
Stock Options but are granted or become exercisable in amounts in excess of
those specified in this Section 6(d), shall to the extent of such excess be,
Nonqualified Stock Options.
(e) No fractional shares will be issued pursuant to the exercise
of an Option, nor will any cash payment be made in lieu of fractional shares.
(f) Subject to the short-swing profit restrictions of the Federal
securities laws, each Option granted to any officer of the Company may provide
that upon the occurrence of a Hostile Takeover, such Option, if outstanding for
at least six months, will automatically be canceled in exchange for a cash
distribution from the Company in an amount equal to the excess of (i) the
aggregate Takeover Price of the shares of Common Stock at the time subject to
the canceled Option (regardless of whether the Option is otherwise then
exercisable for such shares) over (ii) the aggregate Option price payable for
such shares. Such cash distribution shall be made within five days after the
consummation of the Hostile Takeover. Neither the approval of the Committee nor
the consent of the Board shall be required in connection with such Option
cancellation and cash distribution.
7. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS.
(a) All shares of Common Stock subject to Restricted Stock Awards
granted or sold pursuant to the Plan may be issued or transferred for such
consideration (which may consist wholly of services) as the Committee may
determine, and will be subject to the following conditions:
(i) The shares may not be sold, transferred, or otherwise
alienated or hypothecated, except to the Company, until the conditions
imposed pursuant to subsection (b) of this Section 7 have been met or
are removed, unless the Committee determines otherwise in accordance
with Section 9(d).
(ii) The Committee may provide in the agreement or instrument
evidencing the grant of the Restricted Stock Awards that the
certificates representing shares subject to Restricted Stock Awards
granted or sold pursuant to the Plan will be held in escrow by the
Company until the restrictions on the shares lapse in accordance with
the provisions of subsection (b) of this Section 7.
(iii) Each certificate representing shares subject to
Restricted Stock Awards granted or sold pursuant to the Plan will bear
a legend making appropriate reference to the restrictions imposed.
7
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QDB Solutions, Inc.
1997 Stock Incentive Plan
(iv) The Committee may impose other conditions on any shares
subject to Restricted Stock Awards granted or sold pursuant to the Plan
as it may deem advisable, including without limitation, restrictions
under the Securities Act of 1933, as amended, under the requirements of
any stock exchange or securities quotations system upon which such
shares or shares of the same class are then listed, and under any blue
sky or other securities laws applicable to such shares.
(b) The restrictions imposed under subparagraph (a) above upon
Restricted Stock Awards will lapse at such time or times, and/or upon the
achievement of such predetermined performance objectives, as shall be determined
by the Committee and set forth in the agreement or instrument evidencing the
Restricted Stock Award grant. In the event a holder of a Restricted Stock Award
ceases to be an employee or consultant of the Company, all shares under the
Restricted Stock Award that remain subject to restrictions at the time his or
her employment or consulting relationship terminates will be returned to or
repurchased by the Company at their initial price unless the Committee
determines otherwise.
(c) Subject to the provisions of subparagraphs (a) and (b) above,
the holder will have all rights of a shareholder with respect to the shares
covered by Restricted Stock Awards granted or sold, including the right to
receive all dividends and other distributions paid or made with respect thereto;
provided, however, that the Committee may require that he or she shall execute
an irrevocable proxy or enter into a voting agreement with the Company as
determined by the Committee for the purpose of granting the Company or its
nominee the right to vote all shares that remain subject to restrictions under
this Section 7 in the same proportions (for and against) as the outstanding
voting shares of the Company that are not subject to such restrictions are voted
by the other shareholders of the Company on any matter, unless the Committee
determines otherwise.
8. ADJUSTMENT PROVISIONS.
(a) All of the share numbers set forth in the Plan reflect the
capital structure of the Company at the time of the effectiveness of the Plan.
Subject to Section 8(b), if subsequent to such date the outstanding shares of
Common Stock of the Company are increased, decreased, or exchanged for a
different number or kind of shares or other securities, or if additional shares
or new or different shares or other securities are distributed with respect to
such shares of Common Stock or other securities, through merger, consolidation,
sale of all or substantially all the property of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, or other distribution with respect to such shares of Common Stock, or
other securities, an appropriate and proportionate adjustment shall be made in
(i) the maximum numbers and kinds of shares provided in Sections 3 and 5, (ii)
the numbers and kinds of shares or other securities
8
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QDB Solutions, Inc.
1997 Stock Incentive Plan
subject to the then outstanding Options and Restricted Stock Awards, and (iii)
the price for each share or other unit of any other securities subject to then
outstanding Options (without change in the aggregate purchase price as to which
such Options remain exercisable).
(b) Upon the occurrence of a Change in Control of the Company, the
Committee shall have discretion to provide for the Acceleration of (i) one or
more outstanding Options held by Participants and/or (ii) one of more shares of
Common Stock held by Participants as Restricted Stock Awards. Such Acceleration
may be conditioned on the subsequent termination of the affected optionee's
employment and/or consulting relationship as the case may be. Any Options
Accelerated in connection with a Change in Control shall remain fully
exercisable until the expiration or sooner termination of the term of such
Option.
(c) In the event of an Acquisition, (i) to the extent that any
shares of Common Stock held by Participants as Restricted Stock Awards are then
subject to any rights in the Company with respect to the reacquisition or
repurchase thereof, such reacquisition or repurchase rights shall be terminated
immediately, except to the extent that such reacquisition or repurchase rights
are to be assigned to the acquiring entity and (ii) all outstanding Options held
by Participants will Accelerate to the extent not assumed by the acquiring
entity or replaced by comparable options to purchase shares of the capital stock
of the successor or acquiring entity or parent thereof (the determination of
comparability to be made by the Committee, which determination shall be final,
binding, and conclusive). The Committee shall have discretion, exercisable
either in advance of an Acquisition or at the time thereof, to provide (upon
such terms as it may deem appropriate) for the automatic Acceleration of (i) one
or more outstanding Options held by Participants that are assumed or replaced
and do not otherwise Accelerate by reason of the Acquisition, and/or (ii) one or
more shares held by Participants as Restricted Stock Awards that are assigned in
connection with the Acquisition and do not otherwise Accelerate at the time
thereof, in the event that the employment and/or consulting relationship, as
applicable, of the respective grantees of such Options or Restricted Stock
Awards should subsequently terminate following such Acquisition.
(d) Each outstanding Option that is assumed in connection with an
Acquisition, or is otherwise to continue in effect subsequent to such
Acquisition, shall be appropriately adjusted, immediately after such
Acquisition, to apply to the number and class of securities that would have been
issued to the Option holder, in consummation of such Acquisition, had such
holder exercised such Option immediately prior to such Acquisition. Appropriate
adjustments shall also be made to the Option price payable per share, provided,
that the aggregate Option price payable for such securities shall remain the
same. The class and number of
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QDB Solutions, Inc.
1997 Stock Incentive Plan
securities available for issuance under the Plan following the consummation of
such Acquisition shall be appropriately adjusted.
(e) Adjustments under this Section 8 will be made by the Committee
in accordance with the terms of such sections, whose determination as to what
adjustments will be made and the extent thereof so as to effectuate the intent
of such sections will be final, binding, and conclusive. No fractional shares
will be issued under the Plan on account of any such adjustments.
9. GENERAL PROVISIONS.
(a) Nothing in the Plan or in any instrument executed pursuant to
the Plan will confer upon any Participant any right to continue as an employee
or as a consultant to the Company or any of its Subsidiaries or affect the right
of the Company or any Subsidiary to terminate the employment or consulting
relationship of any Participant at any time, with or without cause.
(b) No shares of Common Stock will be issued or transferred
pursuant to an Option or Restricted Stock Award unless and until all then
applicable requirements imposed by Federal and state securities and other laws,
rules and regulations and by any regulatory agencies having jurisdiction, and by
any stock exchanges or securities quotations systems upon which the Common Stock
may be listed, have been fully met. As a condition precedent to the issuance of
shares pursuant to the grant or exercise of an Option or Restricted Stock Award,
the Company may require the Participant to take any reasonable action to meet
such requirements.
(c) No Participant and no beneficiary or other person claiming
under or through such Participant will have any right, title, or interest in or
to any shares of Common Stock allocated or reserved under the Plan or subject to
any Option, except as to such shares of Common Stock, if any, that have been
issued or transferred to such Participant.
(d) Except as set forth in paragraph (f) below, no Option and no
right under the Plan, contingent or otherwise, will be transferable or
assignable or subject to any encumbrance, pledge, or charge of any nature except
that, under such rules and regulations as the Committee may establish pursuant
to the terms of the Plan, a beneficiary may be designated with respect to an
Option in the event of death of a Participant. If such beneficiary is the
executor or administrator of the estate of the Participant, any rights with
respect to such Option may be transferred to the person or persons or entity
(including a trust) entitled thereto under the will of the holder of such
Option.
(e) The Committee may, upon the grant of a Nonqualified Stock
Option or a Restricted Stock Award or by amendment to any written agreement or
instrument
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QDB Solutions, Inc.
1997 Stock Incentive Plan
evidencing such Nonqualified Stock Option or Restricted Stock Award, provide
that such Nonqualified Stock Option or Restricted Stock Award be transferable by
the person to whom such Nonqualified Stock Option or Restricted Stock Award was
granted, without payment of consideration, to a Permitted Transferee of such
person; provided, however, that no transfer of a Nonqualified Stock Option or
Restricted Stock Award shall be valid unless first approved by the Committee,
acting in its sole discretion.
(f) The Committee may cancel, with the consent of the Participant,
all or a portion of any Option granted under the Plan to be conditioned upon the
granting to the Participant of a new Option for the same or a different number
of shares as the Option surrendered, or may require such voluntary surrender as
a condition to a grant of a new Option to such Participant. Subject to the
provisions of Section 6(d), such new Option shall be exercisable at such time or
time, during such periods, and for such numbers of shares, and in accordance
with any other terms or conditions, as are specified by the Committee at the
time the new Option is granted, all determined in accordance with the provisions
of the Plan without regard to the price, period of exercise, or any other terms
or conditions of the Option surrendered.
(g) The written agreements or instruments evidencing Restricted
Stock Awards or Options granted under the Plan may contain such other provisions
as the Committee may deem advisable. Without limiting the foregoing, and if so
authorized by the Committee at the date of grant in the case of any Incentive
Stock Option or at the date of grant or thereafter in the case of any
Nonqualified Stock Option, the Company may, with the consent of the Participant
and at any time or from time to time, cancel all or a portion of any Option
granted under the Plan then subject to exercise and discharge its obligation
with respect to the Option either by payment to the Participant of an amount of
cash equal to the excess, if any, of the Fair Market Value, at such time, of the
shares subject to the portion of the Option so canceled over the aggregate
purchase price specified in the Option covering such shares, or by issuance or
transfer to the Participant of shares of Common Stock with a Fair Market Value
at such time, equal to any such excess, or by a combination of cash and shares.
Upon any such payment of cash or issuance of shares, (i) there shall be charged
against the aggregate limitations set forth in Section 3(a) a number of shares
equal to the number of shares so issued plus the number of shares purchasable
with the amount of any cash paid to the Participant on the basis of the Fair
Market Value as of the date of payment, and (ii) the number of shares subject to
the portion of the Option so canceled, less the number of shares so charged
against such limitations, shall thereafter be available for other grants.
10. WITHHOLDING; NOTICE OF DISPOSITION OF STOCK PRIOR TO EXPIRATION OF
SPECIFIED HOLDING PERIOD.
(a) The Committee shall adopt rules regarding the withholding of
federal, state, or local taxes of any kind required by law to be withheld with
respect to
11
<PAGE> 12
QDB Solutions, Inc.
1997 Stock Incentive Plan
payments and delivery of shares to Participants under the Plan. Whenever shares
of Common Stock are to be issued upon exercise of an Option, the Committee shall
have the right to require the optionee to remit to the Company an amount
sufficient to satisfy federal, state, local or other withholding tax
requirements (whether so required to secure for the Company an otherwise
available tax deduction or otherwise) if and to the extent required by law prior
to the delivery of any certificate for such shares. With respect to any
Nonqualified Stock Option, the Committee, in its discretion, may permit the
Participant to satisfy, in whole or in part, any tax withholding obligation that
may arise in connection with the exercise of the Nonqualified Stock Option by
electing to have the Company withhold shares of Common Stock having a Fair
Market Value equal to the amount of the tax withholding.
(b) The Committee may require as a condition to the issuance of
shares covered by any Incentive Stock Option that the person exercising such
Option give a written representation to the Company, satisfactory in form and
substance to its counsel and upon which the Company may reasonably rely, that he
or she will report to the Company any disposition of those shares prior to the
expiration of the holding periods specified by Section 422(a)(1) of the Code. If
and to the extent that the disposition imposes upon the Company federal, state,
local or other withholding tax requirements, or any such withholding is required
to secure for the Company an otherwise available tax deduction, the Company
shall have the right to require that the person making the disposition remit to
the Company an amount sufficient to satisfy those requirements.
11. AMENDMENT AND TERMINATION.
(a) The Board shall have the power, in its discretion, to amend,
modify, suspend, or terminate the Plan at any time, subject to the rights of
holders of outstanding Options and Restricted Stock Awards on the date of such
action, and to the approval of the stockholders of the Company if an amendment
or modification would change the eligibility requirements of the Plan, extend
the term of the Plan, increase the number of shares of Common Stock subject to
grant as Options or Restricted Stock Awards under the Plan, or is required by
applicable law or regulation.
(b) The Committee may, with the consent of a Participant, make
such modifications in the terms and conditions of an Option or Restricted Stock
Award held by such Participant as it deems advisable.
(c) No amendment, suspension or termination of the Plan will,
without the consent of the Participant, alter, terminate, impair, or adversely
affect any right or obligation under any Option or Restricted Stock Award
previously granted to such Participant under the Plan.
12
<PAGE> 13
QDB Solutions, Inc.
1997 Stock Incentive Plan
12. EFFECTIVE DATE OF PLAN AND DURATION OF PLAN.
The Plan became effective upon its adoption by a Unanimous Written
Consent of Shareholders and Directors dated July 14, 1997. Unless previously
terminated, the Plan will terminate on July 14, 2007.
13
<PAGE> 1
Exhibit 4.03
NONQUALIFIED STOCK OPTION AGREEMENT
UNDER THE 1997 STOCK INCENTIVE PLAN
QDB Solutions, Inc. (the "Company"), a Massachusetts corporation,
hereby grants, effective as of _____________ (the "Effective Date"), to
____________ (the "Optionee") the right and option (the "Option") to purchase up
to __________ shares of its Common Stock, $.0001 par value, at a price of
$______ per share (the "Exercise Price"), subject to the following terms and
conditions.
1. RELATIONSHIP TO PLAN. The Option is granted pursuant to the
Company's 1997 Stock Incentive Plan (the "Plan"), and is in all respects subject
to the terms and conditions of the Plan, a copy of which has been provided to
the Optionee (the receipt of which the Optionee hereby acknowledges).
Capitalized terms used and not otherwise defined in this Agreement are used as
defined in the Plan. The Optionee hereby accepts the Option subject to all the
terms and provisions of the Plan (including without limitation provisions
relating to expiration and termination of the Option and adjustment of the
number of shares subject to the Option and the exercise price therefor). The
Optionee further agrees that all decisions under and interpretations of the Plan
by the Company shall be final, binding, and conclusive upon the Optionee and his
or her successors, permitted assigns, heirs, and legal representatives.
2. VESTING. The Option shall vest and become exercisable only as
follows, provided, in each case, that the Optionee continues to be employed by
the Company or a Subsidiary (as defined in the Plan) of the Company on each
applicable vesting date:
<TABLE>
<CAPTION>
Number (or Percentage) of Shares
Date for which Option Exercisable
---- ----------------------------
<S> <C>
25%
25%
25%
25%
</TABLE>
3. TERMINATION OF OPTION.
(a) The Option shall terminate on the earlier of (x) _____________,
2007, and (y) if the Optionee's employment with the Company or a Subsidiary
terminates for any reason, the applicable date determined from the following
table:
<PAGE> 2
QDB Solutions, Inc.
Nonqualified Stock Option Agreement
<TABLE>
<CAPTION>
Reason for Termination
of Employment Option Termination Date(1)
------------- --------------------------
<S> <C> <C>
(i) death of employee Twelve months thereafter
(ii) total and permanent Twelve months thereafter
disability of employee
(as defined in Section
22(e)(3) of the Internal
Revenue Code of 1986,
as amended)
(iii) termination of employment Three months thereafter
for any other reason
</TABLE>
Military or sick leave shall not be deemed a termination of employment provided
that it does not exceed the longer of 90 days or the period during which the
absent employee's reemployment rights are guaranteed by statute or by contract.
(b) If this Option has not earlier terminated pursuant to paragraph (a)
of this Section3, upon the termination of the Optionee's employment with the
Company or a Subsidiary, (i) the Option, with respect to any shares of Common
Stock issuable pursuant to the Option which have not become vested pursuant to
Section2 as of the date of such termination of employment, shall irrevocably
expire and the Optionee shall not have any right to purchase such shares of
Common Stock issuable pursuant to the Option, (ii) the Company shall have the
right to terminate the Option with respect to any shares of Common Stock which
have become vested pursuant to Section2 but which have not been purchased by the
Optionee by paying to the Optionee an amount equal to the Fair Market Value of
such shares as of the date of the termination of employment minus the Exercise
Price of such shares, and (iii) the Company shall have the right to purchase
from the Optionee all of the shares of Common Stock previously issued pursuant
to the Option at a price equal to the Fair Market Value as of the date of
repurchase of such shares.
4. "LOCK-UP" AGREEMENT. The Optionee agrees that upon the Company's
request at any time, whether before or after the exercise of the Option, the
Optionee shall enter into an agreement pursuant to which, if the Company
- ------------------
(1) These are the maximum post-termination exercise periods allowable for
incentive stock option treatment under applicable federal income tax laws. They
do not apply to Nonqualified Stock Options, and are shown here only for purposes
of comparison with the Company's (new) standard form of incentive stock option
agreement. Nonqualified Stock Options may be made to terminate before or after
the illustrative dates shown.
2
<PAGE> 3
deems it necessary or desirable to make any public offering of shares of Common
Stock, then without the prior written consent of the Company or the managing
underwriter, if any, of any such offering, the Optionee shall not sell, make any
short sale of, loan, grant any option for the purchase of, pledge, or otherwise
encumber or otherwise dispose of any shares of Common Stock issued or issuable
pursuant to the Option, during such period (not to exceed 210 days) commencing
on the effective date of the registration statement relating to such offering as
the Company may request.
5. METHODS OF EXERCISE.
In the event that the Optionee's employment with the Company or a
Subsidiary has not been terminated and except as contained in this Section5 or
as may otherwise be agreed by the Optionee and the Company, the Option shall be
exercisable only by a written notice in form and substance acceptable to the
Company (the "Election Notice"), specifying the number of shares to be purchased
and accompanied by payment in cash of the aggregate purchase price for the
shares for which the Option is being exercised; provided, that the Optionee
shall be entitled to pay the Exercise Price for the shares of Common Stock for
which the Option is being exercised by surrendering a number of such shares
having a Fair Market Value equal to the Exercise Price required to be paid.
Thereupon, the Company shall issue to the Optionee such number of fully paid and
nonassessable shares of Common Stock as is computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to the Optionee
pursuant to this Section 5;
Y = the number of shares of Common Stock issuable under this Option;
A = the Fair Market Value for the Common Stock as of the date of the
exercise; and
B = the Exercise Price in effect under this Option at the time the
exercise is made pursuant to this Section 5.
6. CHARACTERIZATION OF OPTION FOR TAX PURPOSES. The Option is intended
not to qualify as an "incentive stock option" under the Internal Revenue Code of
1986, as amended, and shall be subject to different tax treatment than that
accorded incentive stock options (including the possibility of income tax
withholding in accordance with the Plan).
3
<PAGE> 4
QDB Solutions, Inc.
Nonqualified Stock Option Agreement
7. WITHHOLDING. The Optionee agrees to remit to the Company an amount
sufficient to satisfy any federal, state, local or other withholding tax
requirements (whether so required to secure for the Company an otherwise
available tax deduction or otherwise) if and to the extent required by law prior
to the delivery of any certificate or certificates representing shares of Common
Stock to be issued upon exercise of the Option.
8. COMPLIANCE WITH LAWS. The obligations of the Company to sell and
deliver Shares upon exercise of the Option are subject to all applicable laws,
rules, and regulations, including all applicable federal and state securities
laws, and the obtaining of all such approvals by government agencies as may be
deemed necessary or appropriate by the Board or the relevant committee of the
Board. If so required by the Board or such committee, no shares shall be
delivered upon the exercise of the Option until the Optionee has given the
Company a satisfactory written statement that he is purchasing such shares for
investment, and not with a view to the sale or distribution of any such shares,
and with respect to such other matters as the Board may deem advisable in order
to assure compliance with applicable securities laws. All shares issued upon
exercise of the Option shall bear appropriate restrictive legends.
9. GENERAL. The Optionee may not transfer, assign, or encumber any of
his or her rights under this Agreement without the prior written consent of the
Company, and any attempt to do so shall be void. This Agreement shall be
governed by and interpreted and construed in accordance with the internal laws
of the Commonwealth of Massachusetts (without reference to principles of
conflicts or choice of law). The captions of the sections of this Agreement are
for reference only and shall not affect the interpretation or construction of
this Agreement. This Agreement shall bind and inure to the benefit of the
parties and their respective successors, permitted assigns, heirs, devisees, and
legal representatives.
IN WITNESS WHEREOF, the Company and the Optionee have executed and
delivered this Agreement as an agreement under seal as of the Effective Date.
QDB SOLUTIONS, INC.
By:
------------------------------------
Name: Jeffrey Averick
Title: President
Optionee
---------------------------------------
4
<PAGE> 1
EXHIBIT 5.01
August 11, 1997
Prism Solutions, Inc.
1000 Hamlin Court
Sunnyvale, California 94306
Ladies & Gentlemen:
At your request, we have examined the Registration Statement on Form
S-8 (the "Registration Statement") to be filed by you with the Securities and
Exchange Commission (the "Commission") on or about August 11, 1997 in connection
with the registration under the Securities Act of 1933, as amended, of (i) an
aggregate of 1,500,000 additional shares of the Common Stock (the "Common
Stock") of Prism Solutions, Inc. ("Prism") subject to issuance by Prism pursuant
to the Prism Solutions, Inc. 1996 Equity Incentive Plan, as amended through
March 18, 1997 (the "Plan"), and (ii) 307,480 shares of the Common Stock subject
to issuance by Prism upon the exercise of options originally granted by QDB
Solutions, Inc., a Massachusetts Corporation ("QDB"), pursuant to the QDB 1997
Stock Incentive Plan, which options were assumed by Prism on July 21, 1997 and
converted into options to purchase Common Stock (the "Assumed Options") pursuant
to the Agreement and Plan of Reorganization dated as of July 15, 1997 (the
"Reorganization Agreement") between Prism, Q Acquisition Corp., a wholly-owned
subsidiary of Prism ("Sub"), QDB and the shareholders of QDB.
In rendering this opinion, we have examined the following:
(1) the Registration Statement, together with the Exhibits filed
as a part thereof, including without limitation the Plan, the
QDB 1997 Stock Incentive Plan, the form of the Assumed Options
and related documents;
(2) the Reorganization Agreement, the exhibits and schedules
thereto and the ancillary agreements executed and delivered by
Prism and/or Sub pursuant to the Reorganization Agreement;
(3) the Prospectus prepared in connection with the Plan and with
the Registration Statement;
(4) the Prospectus prepared in connection with the Assumed Options
and with the Registration Statement;
(5) the minutes of meetings and actions by written consent of the
stockholders and Board of Directors of Prism relating to the
Plan that are contained in your minute books that are in our
possession;
(6) the minutes of meetings and actions by written consent of the
stockholders and Board of Directors of Prism relating to the
Reorganization Agreement and the assumption by Prism of the
Assumed Options that are contained in your minute books that
are in our possession;
(7) the Certificate of Incorporation of Prism, as amended, and the
Bylaws of Prism, both as filed by Prism with its Registration
Statement on Form SB-2 filed with the Commission on February
8, 1996, as such Registration Statement was subsequently
amended.
(8) the stock records that you have provided to us (consisting of
a list of stockholders prepared by your transfer agent, Boston
EquiServe Limited Partnership, and a list of option holders
respecting your Capital Stock that was prepared by you); and
(9) a Management Certificate addressed to us and dated of even
date herewith executed by the Company containing certain
factual and other representations.
<PAGE> 2
In our examination of documents for purposes of this opinion, we have
assumed, and express no opinion as to, the genuineness of all signatures on
original documents, the legal capacity of all natural persons executing the
same, the authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies, the lack of
any undisclosed terminations, modifications, waivers or amendments to any
documents reviewed by us and the due execution and delivery of all documents
where due execution and delivery are prerequisites to the effectiveness thereof.
As to matters of fact relevant to this opinion, we have relied solely
upon our examination of the documents referred to above and have assumed the
current accuracy and completeness of the information and records included in the
documents referred to above. We have made no independent investigation or other
attempt to verify the accuracy of any of such information or to determine the
existence or non-existence of any other factual matters; however, we are not
aware of any facts that would lead us to believe that the opinion expressed
herein is not accurate. Our opinion below is given on the assumption that shares
of Common Stock may not be issued and sold by Prism in accordance with the Plan
or the Assumed Options unless and until such shares, at the time in question,
are (i) explicitly reserved and available for issuance under the Plan.
Based upon the foregoing, it is our opinion that:
1. The 1,500,000 additional shares of Common Stock that may be issued
and sold by you pursuant to the Plan, when issued and sold in accordance with
the Plan and stock option or purchase agreements to be entered into thereunder
and in the manner referred to in the Prospectus associated with the Plan and the
Registration Statement, will be validly issued, fully paid and nonassessable.
2. The 307,480 shares of Common Stock that may be issued and sold by
you pursuant to exercise of the Assumed Options, when issued and sold in the
manner referred to in the Prospectus associated with the Assumed Options and the
Registration Statement and in accordance with QDB's 1997 Stock Incentive Plan
and the Nonqualified Stock Option Agreements pursuant to which the Assumed
Options were granted, will be validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement, the Prospectus constituting a part thereof and any
amendments thereto.
This opinion speaks only as of its date and is intended solely for the
your use as an exhibit to the Registration Statement for the purpose of the
above sale of the Common Stock and is not to be relied upon for any other
purpose.
Very truly yours,
FENWICK & WEST LLP
By: Jacqueline A. Daunt, General Partner
<PAGE> 1
Exhibit 23.02
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
Prism Solutions, Inc. on Form S-8 pertaining to the 1996 Equity Incentive Plan
and Options Granted by QDB Solutions, Inc. assumed by the Registrant of our
reports dated January 17, 1997, except for Note 5, for which the date is March
5, 1997, on our audits of the consolidated financial statements and financial
statement schedule of Prism Solutions, Inc. as of December 31, 1996 and 1995 and
for the years ended December 31, 1996, 1995, and 1994, appearing in the Annual
Report on Form 10-K of Prism Solutions, Inc. for the year ended December 31,
1996, filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1934.
Coopers & Lybrand L.L.P.
San Jose, California
August 11, 1997
