<PAGE>
As filed with the Securities and Exchange Commission on May 19, 2000
Registrati on No. 333 -
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------
Aspect Development, Inc.
(Exact name of registrant as specified in its charter)
-----------------------------
<TABLE>
<S> <C> <C>
Delaware 1395 Charleston Road 25-1622857
(State of Incorporation) Mountain View, California 94043 (I.R.S.Employer Identification No.)
(650) 428-2700
(Address of principal executive offices)
----------------------------
</TABLE>
Registrant's 1997 Nonstatutory Stock Option Plan
Transition Analysis Component Technology, Inc. 1997 Stock Option Plan
Transition Analysis Component Technology Inc. Option Agreements
-----------------------------------
David S. Dury
Senior Vice President and Chief Financial Officer
Aspect Development, Inc.
1395 Charleston Road
Mountain View, California 94303
(650) 428-2700
-----------------------------------
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------------
Copies to:
James C. Kitch, Esq.
Andrea Vachss, Esq.
Cooley Godward, LLP
5 Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
(650) 843-5000
--------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Title of Securities to be Amount to be Proposed Maximum Proposed Maximum
Registered Registered Offering Price Per Share Aggregate Offering Price Amount of Registration Fee
(1) (1)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stock Options and Common
Stock (par value $.001) 4,054,244 $48.35 $196,025,400 $51,750.71
===================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h). The offering price per share and
aggregate offering price are based upon (a) the weighted average exercise
price for shares subject to outstanding options and (b) the average high
and low price of Registrant's Common Stock on May 15, 2000 as reported on
the Nasdaq National Market.
================================================================================
The chart below details the calculations of the registration fee:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Securities Number of Shares Offering Price Aggregate
Per Share Offering Price
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares issuable under the
1997 Nonstatutory Stock
Option Plan 3,938,000 $48.78 $192,095,640
---------------------------------------------------------------------------------------------------
Shares reserved for future
issuance under the 1997
Nonstatutory Stock Option
Plan 62,000 $58.5625 $ 3,630,875
---------------------------------------------------------------------------------------------------
Shares issuable pursuant to
the Transitions Analysis
Component Technology, Inc.
1997 Stock Option Plan
and TACTech Option Agreements 54,244 $ 5.51 $ 298,885
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Aspect Development, Inc. (the "Company")
with the Securities and Exchange Commission are incorporated by reference into
this Registration Statement:
(a) The Company's latest annual report on Form 10-K, as amended, for the
fiscal year ended December 31, 1999 filed pursuant to Sections 13(a) or 15(d) of
the Securities Act of 1934, as amended (the "Exchange Act");
(b) All other reports filed pursuant to Sections 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the annual report
referred to in (a) above; and
(c) The description of the Company's Common Stock which is contained in a
registration statement filed under the Exchange Act, including any amendment or
report filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing
of a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part of this
registration statement from the date of the filing of such reports and
documents.
DESCRIPTION OF SECURITIES
Inapplicable.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Inapplicable.
EXEMPTION FROM REGISTRATION CLAIMED
Inapplicable.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, the Company has
broad powers to indemnify its directors and officers against liabilities they
may incur in such capacities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act"). The Company's By-laws also provide
that the Company will indemnify its directors and executive officers, and may
indemnify its other officers, employees and other agents, to the fullest extent
not prohibited by Delaware law.
The Company's Restated Certificate of Incorporation (the "Restated
Certificate") provides that the liability of its directors for monetary damages
shall be eliminated to the fullest extent permissible under Delaware law.
Pursuant to Delaware law, this includes elimination of liability for monetary
damages for breach of the directors' fiduciary duty of care to the Company and
its stockholders. These provisions do not eliminate the directors' duty of care
and, in appropriate circumstances, equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Company, for acts omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for
any transaction from which the director derived an improper personal benefit,
and for payment of dividends or approval of stock repurchases or redemptions
that are unlawful under Delaware law. The provision also does not affect a
director's responsibilities under any other laws, such as the federal securities
laws or state or federal environmental laws.
<PAGE>
The Company has been authorized by the Board to enter into agreements with
its directors and officers that require the Company to indemnify such persons to
the fullest extent authorized or permitted by the provisions of the Restated
Certificate and Delaware law against expenses, judgments, fines, settlements and
other amounts actually and reasonably incurred (including expenses of a
derivative action) in connection with any proceeding, whether actual or
threatened, to which any such person may be made a party by reason of the fact
that such person is or was a director, officer, employee or other agent of the
Company or any of its affiliated enterprises. Delaware law permits such
indemnification provided such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interest of the
Company and, with respect to any criminal proceeding, had reasonable cause to
believe his or her conduct was unlawful. The indemnification agreements also
set forth certain procedures that will apply in the event of a claim for
indemnification thereunder.
At present, there is no pending litigation or proceeding involving a director or
officer of the Company as to which indemnification is being sought nor is the
Company aware of any threatened litigation that may result in claims for
indemnification by any officer or director.
EXHIBITS
Exhibit
Number
5.1 Opinion of Cooley Godward llp.
23.1 Consent of Arthur Andersen llp.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Cooley Godward llp is contained in Exhibit 5.1 to this
Registration Statement.
24.1 Power of Attorney is contained on the signature pages.
99.1 Registrant's 1997 Nonstatutory Stock Option Plan, as amended.
99.2 Transition Analysis Component Technology, Inc. 1997 Stock Option
Plan.
99.3 Bruce Blackford Option Agreement for TACTech Common Stock.
99.4 Jeff Hanser Option Agreement for TACTech Common Stock.
UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) 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 volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) ((S) 230.424(b) of this
chapter) if, in the aggregate, the
<PAGE>
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the issuer pursuant to
section 13 or section 15(d) of the Exchange Act that are incorporated by
reference herein.
(b) 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 herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) 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.
2. 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 herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the 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
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Mountain View, State of California, on May 19, 2000.
ASPECT DEVELOPMENT, INC.
By /s/ David S. Dury
-------------------------------
David S. Dury
Senior Vice President, Chief Financial
Officer and Secretary
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Dr. Romesh T. Wadhwani and David S. Dury
and each or any one of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the 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
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his substitutes or substitute, may
lawfully do or cause to be done by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Romesh Wadhwani Chairman of the Board and Chief Executive May 19, 2000
- -------------------------------------------- Officer
Romesh T. Wadhwani
/s/ Robert L. Evans President, Chief Operating Officer and May 19, 2000
- -------------------------------------------- Director
Robert L. Evans
/s/ David S. Dury Senior Vice President, Chief Financial Officer May 19, 2000
- -------------------------------------------- and Secretary (Principal Financial and
David S. Dury Accounting Officer)
/s/ David Pefley Vice President and Corporate Controller May 19, 2000
- --------------------------------------------
David Pefley
/s/ Steven B Goldby Director May 19, 2000
- --------------------------------------------
Steven B. Goldby
/s/ Dennis Sisco Director May 19, 2000
- --------------------------------------------
Dennis Sisco
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Sequential Page Number
<S> <C> <C>
5.1 Opinion of Cooley Godward llp.
23.1 Consent of Arthur Andersen llp.
23.2 Consent of Ernst & Young llp.
23.3 Consent of Cooley Godward llp is contained in Exhibit 5.1 to
this Registration Statement.
24.1 Power of Attorney is contained on the signature pages.
99.1 Registrant's 1997 Nonstatutory Stock Option Plan, as amended.
99.2 Transition Analysis Component Technology, Inc. 1997 Stock Option
Plan.
99.3 Bruce Blackford Option Agreement for TACTech Common Stock.
99.4 Jeff Hanser Option Agreement for TACTech Common Stock.
</TABLE>
<PAGE>
Exhibit 5.1
Form of Opinion
[COOLEY GODWARD LETTERHEAD]
May 19, 2000
Aspect Development, Inc.
1395 Charleston Road
Mountain View, CA 94043
Ladies and Gentleman:
You have requested our opinion with respect to certain matters in connection
with the filing by Aspect Development, Inc. (the "Company") of a Registration
Statement on Form S-8 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering of up to 4,054,244 shares of the
Company's Common Stock, $.001 par value, pursuant to the Company's 1997
Nonstatutory Stock Option Plan, the Transition Analysis Component Technology,
Inc. 1997 Stock Option Plan and the Bruce Blackford and Jeff Hanser Option
Agreements for TACTech Common Stock (collectively the "Plans").
In connection with this opinion, we have examined the Plans and the Registration
Statement, your Certificate of Incorporation and By-laws, as amended, and such
other documents, records, certificates, memoranda and other instruments as we
deem necessary as a basis for this opinion. We have assumed the genuineness and
authenticity of all documents submitted to us as originals, the conformity to
originals of all documents submitted to us as copies thereof, and the due
execution and delivery of all documents where due execution and delivery are a
prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Plans and the
Registration Statement, will be validly issued, fully paid, and nonassessable
(except as to shares issued pursuant to deferred payment arrangements, which
will be fully paid and nonassessable when such deferred payments are made in
full).
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Cooley Godward LLP
By:
/s/ James C. Kitch
_________________________
James C. Kitch, Esq.
<PAGE>
Exhibit 23.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 24, 2000,
except with respect to paragraph 4 of Note 4, as to which date is March 10,
2000, and Note 9, as to which the date is March 13, 2000, included in Aspect
Development, Inc.'s Form 10-K (as amended) for the year ended December 31, 1999.
/s/ Arthur Andersen LLP
San Jose, California
May 19, 2000
<PAGE>
Exhibit 23.2
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the 1997 Nonstatutory Stock Option Plan of Aspect
Development, Inc. and the Transition Analysis Component Technology, Inc. 1997
Stock Option Plan of our report dated January 26, 1998, except with respect to
paragraph 3 of Note 4, as to which the date is August 14, 1998 and paragraph 4
of Note 4, as to which the date is March 10, 2000, with respect to the
consolidated financial statements of Aspect Development, Inc included in its
Annual Report (Form 10-K) for the year ended December 31, 1999, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Palo Alto, California
May 19, 2000
<PAGE>
Exhibit 99.1
ASPECT DEVELOPMENT, INC.
1997 NONSTATUTORY STOCK OPTION PLAN
(As Amended by the Board Through December 2, 1997)
Establishment, Purpose and Term of Plan.
---------------------------------------
Establishment. The Aspect Development, Inc. 1997 Nonstatutory
Stock Option Plan is hereby established effective as of June 4, 1997.
Purpose. The purpose of the Plan is to advance the interests of
the Participating Company Group and its stockholders by providing an incentive
to attract, retain and reward persons performing services for the Participating
Company Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group.
Term of Plan. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed.
Definitions and Construction.
----------------------------
Definitions. Whenever used herein, the following terms shall
have their respective meanings set forth below:
"Board" means the Board of Directors of the Company. If one
or more Committees have been appointed by the Board to administer the Plan,
"Board" also means such Committee(s).
"Code" means the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.
"Committee" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.
"Company" means Aspect Development, Inc., a Delaware
corporation, or any successor corporation thereto.
"Consultant" means any person, including an advisor, engaged
by a Participating Company to render services other than as an Employee or a
Director.
<PAGE>
"Director" means a member of the Board or of the board of
directors of any other Participating Company.
"Employee" means any person treated as an employee
(including an officer or a Director who is also treated as an employee) in the
records of a Participating Company; provided, however, that neither service as a
Director nor payment of a director's fee shall be sufficient to constitute
employment for purposes of the Plan .
"Fair Market Value" means, as of any date, the value of a
share of stock or other property as determined by the Board, in its sole
discretion, or by the Company, in its sole discretion, if such determination is
expressly allocated to the Company herein.
"Option" means a right to purchase Stock (subject to
adjustment as provided in Section 4.2) pursuant to the terms and conditions of
the Plan. Options are intended to be nonstatutory stock options and shall not be
treated as incentive stock options within the meaning of Section 422(b) of the
Code.
"Option Agreement" means a written agreement between the
Company and an Optionee setting forth the terms, conditions and restrictions of
the Option granted to the Optionee and any shares acquired upon the exercise
thereof.
"Optionee" means a person who has been granted one or more
Options.
"Parent Corporation" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.
"Participating Company" means the Company or any Parent
Corporation or Subsidiary Corporation.
"Participating Company Group" means, at any point in time,
all corporations collectively which are then Participating Companies.
"Stock" means the common stock, par value $0.001, of the
Company, as adjusted from time to time in accordance with Section 4.2.
"Subsidiary Corporation" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.
Construction. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural, the plural shall include the singular, and
the term "or" shall include the conjunctive as well as the disjunctive.
<PAGE>
Administration.
--------------
Administration by the Board. The Plan shall be administered by
the Board. All questions of interpretation of the Plan or of any Option shall be
determined by the Board, and such determinations shall be final and binding upon
all persons having an interest in the Plan or such Option. Any officer of a
Participating Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, determination or election which
is the responsibility of or which is allocated to the Company herein, provided
the officer has apparent authority with respect to such matter, right,
obligation, determination or election.
Powers of the Board. In addition to any other powers set forth
in the Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its sole discretion:
to determine the persons to whom, and the time or times at
which, Options shall be granted and the number of shares of Stock to be subject
to each Option;
to determine the Fair Market Value of shares of Stock or
other property;
to determine the terms, conditions and restrictions
applicable to each Option (which need not be identical) and any shares acquired
upon the exercise thereof, including, without limitation, (i) the exercise price
of the Option, (ii) the method of payment for shares purchased upon the exercise
of the Option, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with the Option or such shares, including by
the withholding or delivery of shares of stock, (iv) the timing, terms and
conditions of the exercisability of the Option or the vesting of any shares
acquired upon the exercise thereof, (v) the time of the expiration of the
Option, (vi) the effect of the Optionee's termination of employment or service
with the Participating Company Group on any of the foregoing, and (vii) all
other terms, conditions and restrictions applicable to the Option or such shares
not inconsistent with the terms of the Plan;
to approve one or more forms of Option Agreement;
to amend, modify, extend, or renew, or grant a new Option in
substitution for, any Option or to waive any restrictions or conditions
applicable to any Option or any shares acquired upon the exercise thereof;
to accelerate, continue, extend or defer the exercisability
of any Option or the vesting of any shares acquired upon the exercise thereof,
including with respect to the period following an Optionee's termination of
employment or service with the Participating Company Group;
to prescribe, amend or rescind rules, guidelines and
policies relating to the Plan, or to adopt supplements to, or alternative
versions of, the Plan, including, without limitation, as the Board deems
necessary or desirable to comply with the laws of, or to accommodate the tax
policy or custom of, foreign jurisdictions whose citizens may be granted
Options; and
to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option Agreement and to make all other
determinations and take such other actions with respect to the Plan or any
Option as the Board may deem advisable to the extent consistent with the Plan
and applicable law.
<PAGE>
Shares Subject to Plan.
----------------------
Maximum Number of Shares Issuable. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be One Million Two Hundred Thousand
(1,200,000) and shall consist of authorized but unissued or reacquired shares of
Stock or any combination thereof. If an outstanding Option for any reason
expires or is terminated or canceled or shares of Stock acquired, subject to
repurchase, upon the exercise of an Option are repurchased by the Company, the
shares of Stock allocable to the unexercised portion of such Option, or such
repurchased shares of Stock, shall again be available for issuance under the
Plan.
Adjustments for Changes in Capital Structure. In the event of
any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and class of shares
subject to the Plan and to any outstanding Options, and in the exercise price
per share of any outstanding Options. If a majority of the shares which are of
the same class as the shares that are subject to outstanding Options are
exchanged for, converted into, or otherwise become (whether or not pursuant to
an Ownership Change Event, as defined in Section 8.1) shares of another
corporation (the "New Shares"), the Board may unilaterally amend the outstanding
Options to provide that such Options are exercisable for New Shares. In the
event of any such amendment, the number of shares subject to, and the exercise
price per share of, the outstanding Options shall be adjusted in a fair and
equitable manner as determined by the Board, in its sole discretion.
Notwithstanding the foregoing, any fractional share resulting from an adjustment
pursuant to this Section 4.2 shall be rounded up or down to the nearest whole
number, as determined by the Board, and in no event may the exercise price of
any Option be decreased to an amount less than the par value, if any, of the
stock subject to the Option. The adjustments determined by the Board pursuant to
this Section 4.2 shall be final, binding and conclusive.
Eligibility. Options may be granted only to Employees and
-----------
Consultants; provided, however, no Option shall be granted to any person whose
eligibility to receive an Option under the Plan would require the approval of
the Company's stockholders pursuant to any applicable law, regulation or rule,
including, without limitation, the rules applicable to the listing of the
Company's securities on the Nasdaq National Market System. For purposes of the
foregoing sentence, "Employees" shall include prospective Employees to whom
Options are granted in connection with written offers of employment with the
Participating Company Group, and "Consultants" shall include prospective
Consultants to whom Options are granted in connection with written offers of
engagement with the Participating Company Group. Eligible persons may be
granted more than one (1) Option.
Terms and Conditions of Options. Options shall be evidenced by Option
-------------------------------
Agreements specifying the number of shares of Stock covered thereby, in such
form as the Board shall from time to time establish. Option Agreements may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:
Exercise Price. The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however, that the
exercise price per share for an Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of a share of Stock on the effective date
of grant of the Option. Notwithstanding the foregoing, an Option may be granted
with an exercise price lower than the minimum exercise price set forth above if
such Option is granted pursuant to an assumption or substitution for another
option in a manner qualifying under the provisions of Section 424(a) of the
Code.
<PAGE>
Exercise Period. Options shall be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria, and restrictions as shall be determined by the Board and
set forth in the Option Agreement evidencing such Option; provided, however,
that no Option granted to a prospective Employee or prospective Consultant may
become exercisable prior to the date on which such person commences service with
a Participating Company.
Payment of Exercise Price.
Forms of Consideration Authorized. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check, or
cash equivalent, (ii) by tender to the Company of shares of Stock owned by the
Optionee having a Fair Market Value (as determined by the Company without regard
to any restrictions on transferability applicable to such stock by reason of
federal or state securities laws or agreements with an underwriter for the
Company) not less than the exercise price, (iii) by the assignment of the
proceeds of a sale or loan with respect to some or all of the shares being
acquired upon the exercise of the Option (including, without limitation, through
an exercise complying with the provisions of Regulation T as promulgated from
time to time by the Board of Governors of the Federal Reserve System) (a
"Cashless Exercise"), (iv) by the Optionee's promissory note in a form approved
by the Company, (v) by such other consideration as may be approved by the Board
from time to time to the extent permitted by applicable law, or (vi) by any
combination thereof. The Board may at any time or from time to time, by adoption
of or by amendment to the standard forms of Option Agreement described in
Section 7, or by other means, grant Options which do not permit all of the
foregoing forms of consideration to be used in payment of the exercise price or
which otherwise restrict one or more forms of consideration.
Tender of Stock. Notwithstanding the foregoing, an Option
may not be exercised by tender to the Company of shares of Stock to the extent
such tender of Stock would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock.
Unless otherwise provided by the Board, an Option may not be exercised by tender
to the Company of shares of Stock unless such shares either have been owned by
the Optionee for more than six (6) months or were not acquired, directly or
indirectly, from the Company.
Cashless Exercise. The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to establish,
decline to approve or terminate any program or procedures for the exercise of
Options by means of a Cashless Exercise.
Payment by Promissory Note. No promissory note shall be
permitted if the exercise of an Option using a promissory note would be a
violation of any law. Any permitted promissory note shall be on such terms as
the Board shall determine at the time the Option is granted. The Board shall
have the authority to permit or require the Optionee to secure any promissory
note used to exercise an Option with the shares of Stock acquired upon the
exercise of the Option or with other collateral acceptable to the Company.
Unless otherwise provided by the Board, if the Company at any time is subject to
the regulations promulgated by the Board of Governors of the Federal Reserve
System or any other governmental entity affecting the extension of credit in
connection with the Company's securities, any promissory note shall comply with
such applicable regulations, and the Optionee shall pay the unpaid principal and
accrued interest, if any, to the extent necessary to comply with such applicable
regulations.
<PAGE>
Tax Withholding. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option, or to accept from the Optionee the tender of, a number of whole shares
of Stock having a Fair Market Value, as determined by the Company, equal to all
or any part of the federal, state, local and foreign taxes, if any, required by
law to be withheld by the Participating Company Group with respect to such
Option or the shares acquired upon the exercise thereof. Alternatively or in
addition, in its sole discretion, the Company shall have the right to require
the Optionee, through payroll withholding, cash payment or otherwise, including
by means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection
with the Option or the shares acquired upon the exercise thereof. The Company
shall have no obligation to deliver shares of Stock or to release shares of
Stock from an escrow established pursuant to the Option Agreement until the
Participating Company Group's tax withholding obligations have been satisfied by
the Optionee.
Standard Form of Option Agreement.
---------------------------------
General. Unless otherwise provided by the Board at the time the
Option is granted, an Option shall comply with and be subject to the terms and
conditions set forth in the form of Immediately Exercisable Nonstatutory Stock
Option Agreement adopted by the Board concurrently with its adoption of the Plan
and as amended from time to time.
Standard Term of Options. Except as otherwise provided by the
Board in the grant of an Option, any Option granted hereunder shall have a term
of ten (10) years from the effective date of grant of the Option.
Authority to Vary Terms. The Board shall have the authority from
time to time to vary the terms of any of the standard forms of Option Agreement
described in this Section 7 either in connection with the grant or amendment of
an individual Option or in connection with the authorization of a new standard
form or forms; provided, however, that the terms and conditions of any such new,
revised or amended standard form or forms of Option Agreement are not
inconsistent with the terms of the Plan.
Transfer of Control.
-------------------
Definitions.
An "Ownership Change Event" shall be deemed to have occurred
if any of the following occurs with respect to the Company:
the direct or indirect sale or exchange in a single or
series of related transactions by the stockholders of the Company of more than
fifty percent (50%) of the voting stock of the Company;
a merger or consolidation in which the Company is a
party;
the sale, exchange, or transfer of all or substantially
all of the assets of the Company; or
a liquidation or dissolution of the Company.
<PAGE>
A "Transfer of Control" shall mean an Ownership Change Event
or a series of related Ownership Change Events (collectively, the "Transaction")
wherein the stockholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "Transferee
Corporation(s)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.
Effect of Transfer of Control on Options. In the event of a
Transfer of Control, the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the "Acquiring
Corporation"), may either assume the Company's rights and obligations under
outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiring Corporation's stock. Any Options which are
neither assumed or substituted for by the Acquiring Corporation in connection
with the Transfer of Control nor exercised as of the date of the Transfer of
Control shall terminate and cease to be outstanding effective as of the date of
the Transfer of Control. Notwithstanding the foregoing, shares acquired upon
exercise of an Option prior to the Transfer of Control and any consideration
received pursuant to the Transfer of Control with respect to such shares shall
continue to be subject to all applicable provisions of the Option Agreement
evidencing such Option except as otherwise provided in such Option Agreement.
Furthermore, notwithstanding the foregoing, if the corporation the stock of
which is subject to the outstanding Options immediately prior to an Ownership
Change Event described in Section 8.1(a)(i) constituting a Transfer of Control
is the surviving or continuing corporation and immediately after such Ownership
Change Event less than fifty percent (50%) of the total combined voting power of
its voting stock is held by another corporation or by other corporations that
are members of an affiliated group within the meaning of Section 1504(a) of the
Code without regard to the provisions of Section 1504(b) of the Code, the
outstanding Options shall not terminate unless the Board otherwise provides in
its sole discretion.
Provision of Information. Each Optionee shall be given access to
------------------------
information concerning the Company equivalent to that information generally made
available to the Company's common stockholders.
Nontransferability of Options. During the lifetime of the Optionee,
-----------------------------
an Option shall be exercisable only by the Optionee or the Optionee's guardian
or legal representative. No Option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and distribution.
<PAGE>
Indemnification. In addition to such other rights of indemnification
---------------
as they may have as members of the Board or officers or employees of the
Participating Company Group, members of the Board and any officers or employees
of the Participating Company Group to whom authority to act for the Board is
delegated shall be indemnified by the Company against all reasonable expenses,
including attorneys' fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person is liable for gross
negligence, bad faith or intentional misconduct in duties; provided, however,
that within sixty (60) days after the institution of such action, suit or
proceeding, such person shall offer to the Company, in writing, the opportunity
at its own expense to handle and defend the same.
Termination or Amendment of Plan. The Board may terminate or amend
--------------------------------
the Plan at any time. However, no termination or amendment of the Plan may
adversely affect any then outstanding Option or any unexercised portion thereof,
without the consent of the Optionee, unless such termination or amendment is
necessary to comply with any applicable law or government regulation.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing is the Aspect Development, Inc. 1997 Nonstatutory Stock Option
Plan as duly adopted by the Board on June 4, 1997 and amended by the Board
through December 2, 1997.
__________________________________
Secretary
<PAGE>
PLAN HISTORY
------------
June 4, 1997 Board adopts Plan with an initial reserve of 500,000 shares.
December 2, 1997 Board increases share reserve to 1,200,000 shares.
<PAGE>
Exhibit 99.2
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
1997 STOCK OPTION PLAN
Effective January 28, 1997 (as amended on November 3, 1997)
1. Purpose of the Plan. The Transition Analysis Component Technology,
Inc. ("Company") 1997 Stock Option Plan is intended to advance the best
interests of the Company and any of its future Subsidiaries by providing the
executive officers, employees and consultants of the Company and such
Subsidiaries with additional incentives by allowing them to acquire an ownership
interest in the Company and thereby encouraging them to contribute to the
success of the Company's business,
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" shall mean the then-presently constituted Board of Directors
of Transition Analysis Component Technology, Inc.
(b) "Cause" shall mean (i) a material breach of a Participant's employment
agreement or, in the absence of a written agreement, the terms of
employment, (ii) a breach of Participant's duty of loyalty to the
Company or any act of dishonesty or fraud with respect to the Company,
(iii) the commission by Participant of a felony, a crime involving
moral turpitude or other act causing material harm to the Company's
standing and reputation, or (iv) Participant's continued failure to
perform his or her lawful duties to the Company.
(c) "Change of Control" shall mean:
(i) the acquisition or beneficial ownership (within the meaning of
the Securities Exchange Act of 1934, as amended and the
regulations promulgated thereunder (the "Exchange Act") by any
person or group (as such terms are defined in the Exchange Act),
in a single transaction or a series of transactions, of more
than 40% in combined voting power and/or economic interest of
the outstanding capital stock and/or securities of the Company,
in each case other than the acquisition by or ownership of
Robert E. Schrader or entities or groups controlled by or
affiliated with Robert E. Schrader,
(II) in connection with the merger or consolidation of the Company
(A) where the Company is not the surviving or resulting entity
in such transaction, immediately following such transaction the
acquiring or owning person or group owns sufficient capital
stock with combined voting power or other interests to control,
directly or indirectly, the election or the actions of the Board
of Directors of the
<PAGE>
surviving or resulting entity or (B) where the surviving or
resulting entity of such transaction is not a corporation,
immediately following such transaction such acquiring or owning
person or group has the right, directly or indirectly, to elect
the general partner or other person or persons controlling the
operations or business of the surviving or resulting entity,
(iii) the direct or indirect sale, disposition or transfer (through
sale, merger, consolidation or otherwise to such person or
group) of all or substantially all of the assets, businesses or
earning power of the Company or the Company and its subsidiaries
(taken as whole) in a single transaction or a series of
transactions, and/or
(iv) the stockholders of the Company approving a plan of complete
liquidation of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Committee" shall mean, to the extent appointed by the Board,
committee of the Board appointed to administer the Plan. The
Committee shall be composed of two or more "non-employee directors"
(as defined in Rule 16b-3 promulgated under the Securities Exchange
Act of 1934, as amended) as appointed from time to time to serve by
the Board of Directors.
(f) "Common Stock" shall mean the common stock, par value $.01 per share,
of the Company.
(g) "Company" shall mean Transitional Analysis Component Technology, Inc.,
a Delaware corporation, and any Subsidiary thereof.
(h) "Competitive Activity" shall mean (i) the participation in, engagement
by, possession of a financial or other interest in or filling a
position directly or indirectly, whether individually or as an
employee, agent, partner, shareholder, consultant, or otherwise by the
Participant in any enterprise or business if such enterprise or
business competes with the business of the Company or any of its
Subsidiaries in any country in which the Company or any such
Subsidiary conducts its business; (ii) the solicitation by the
Participant of any other person or entity to engage in any of the
foregoing activities; (iii) the solicitation of any employee or
consultant of the Company or any of its Subsidiaries to leave the
Company or any of its Subsidiaries, or to do business with any
enterprise or business which competes with the business of the Company
or any of its Subsidiaries; or (iv) the solicitation of any customer,
vendor or supplier of the Company or any of its Subsidiaries. The
ownership of an interest constituting not more than one percent of the
outstanding debt or equity in a company whose securities are traded on
a recognized stock exchange or traded on the over-the-counter market
shall not be deemed financial participation in a competitor even
though that company may be a competitor of the Company or any of its
Subsidiaries.
<PAGE>
(i) "Disability" shall mean the inability, due to illness, accident,
injury, physical or mental incapacity of any Participant to
effectively carry out his or her duties and obligations to the Company
on a full-time basis or to participate effectively or actively in the
management of the Company for a period of at least 90 consecutive days
or for shorter periods aggregating at least 120 days (whether or not
consecutive) during any twelve-month period, as determined in the
reasonable judgment of the Board of Directors.
(j) "Employee" shall mean any person, including officers, employed by the
Company.
(k) "Fair Market Value" of the Common Stock shall be determined by the
Committee or, in the absence of the Committee, by the Board of
Directors.
(l) "Incentive Stock Option" shall mean any Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the
Code or any successor provision.
(m) "Nonqualified Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(n) "Option" shall mean an Incentive Stock Option or a Nonqualified Stock
option granted pursuant to this Plan.
(o) "Option Agreement" shall mean the written option agreement entered
into between the Company and the Participant upon the grant of any
Option in an appropriate form determined by the Committee.
(p) "Optioned Stock" shall mean the Common Stock subject to an Option.
(q) "Participant" shall mean any Employee, director or consultant of the
Company who has been selected to participate in the Plan by the
Committee.
(r) "Plan" shall mean the Transitional Analysis Component Technology, Inc.
1997 Stock Option Plan.
(s) "Share" shall mean one share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(t) "Subsidiary" shall mean a "subsidiary corporation," of the Company
whether now or hereafter existing, as such term is defined in Section
424(0 of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be issued pursuant to
the Plan is 60,000. The Shares may be either authorized but unissued shares,
treasury shares, reacquired shares, or any combination thereof. If an Option
should expire or become unexercisable for any reason without having been
exercised in full, any Shares which would otherwise have been issuable pursuant
thereto shall then be available for regranting of further Options under the
Plan.
<PAGE>
4. Administration of the Plan. The Plan shall be administered by the
Committee; provided, however, that if for any reason the Committee shall not
have been appointed by the Board, all authorized duties of the Committee under
the Plan shall be vested in and exercised by the Board. Subject to the
provisions of the Plan, the Committee shall have the authority, in its
discretion and in respect of all of the Participants and any single Participant:
(i) to grant Incentive Stock Options or Nonqualified Stock Options; (ii) to
determine the Fair Market Value of the Common Stock; (iii) to determine in
accordance with Section 7(b) of the Plan the exercise price per share of Options
to be granted; (iv) to determine the Participants to whom and the time or times
at which Options shall be granted, the number of Shares to be represented by
each Option, and subject to Section 7(f) below, any vesting limitations with
respect to such Options; (v) to interpret the Plan; (vi) to prescribe, amend,
and rescind rules and regulations relating to the Plan; (vii) to determine the
terms and provisions of each Option granted (which need not be identical),
including, but not limited to, the vesting schedule for each Option granted, and
modify or amend the terms of each outstanding Option; (viii) to reduce the
exercise price per share of outstanding and unexercised Options; (ix) to
accelerate or defer the exercise date of any outstanding Option; (x) to
authorize any person to execute on behalf of the Company any instrument required
to effectuate the grant of an Option previously granted by the Committee; and
(xi) to make all other determinations (except a determination of "Cause" which
shall be made by a majority of the Board then in office) deemed necessary or
advisable for the administration of the Plan. All decisions, determinations,
and interpretations of the Committee shall be final and binding on all
Participants and any other holders of any Options granted under the Plan.
5. Eligibility.
(a) Options may be granted to Participants who, in the opinion of the
Committee, contribute significantly to the Company.
(b) Each Option shall be designated in the Option Agreement as either an
Incentive Stock Option or a Nonqualified Stock Option. However,
notwithstanding such designations, to the extent that the aggregate
Fair Market Value of the Common Stock with respect to which Options
designated as Incentive Stock Options are exercisable for the first
time by any Optionee during any calendar year (under all plans of the
Company) exceeds $100,000, such Options shall be treated as
Nonqualified Stock Options.
(c) For purposes of Section 5(b), Options shall be taken into account in
the order in which they were granted, and the Fair Market Value of the
Common Stock shall be determined as of the time the Option with
respect to such Shares is granted.
6. Term of Plan. The Plan shall become effective upon the latest of the
following two events to occur: (a) approval of the Plan by the stockholders of
the Company and (b) adoption of the Plan by the Board. The Plan shall continue
in effect for ten (10) years from the effective date, unless sooner terminated
in accordance with the provisions of section 15 of the Plan.
7. Terms of Options. Unless otherwise determined by the Committee and
set forth in the Option Agreement, Options granted pursuant to the Plan shall
have the following terms:
<PAGE>
(a) The Option exercise period price of the Options shall be no more than
ten (10) years from the date of the grant.
(b) The per Share exercise price of the Options shall be determined by the
Committee and may be fixed at the time of grant, float in accordance
with a predetermined formula, or any combination thereof; provided,
however, that (i) in the case of Incentive Stock Options, the exercise
price shall not be less than 100% of the Fair Market Value of the
Optioned Stock on the date of grant (or 110% of the Fair Market Value
of the Stock Optioned on the date of grant if the optionee owns more
their 10% of the Company's outstanding shares of Common Stock) and
(ii) in the case of Nonqualified Stock Options, the exercise price may
not be less then 75% of the Fair Market Value of the Optioned Stock on
the date of grant.
(c) Options shall be exercisable at such time or times as the Committee
shall determine at or subsequent to the grant date; and shall be
subject to the limitations on exercise as set forth in Section 8
below.
(d) The consideration to be paid for the Shares to be issued upon exercise
of an Option, including the method of payment, shall be determined by
the Committee at the time of grant and may be paid by tendering
payment by certified check, wire transfer of same day funds or bank
check. The Committee may determine, in its discretion, that
additional forms of payment will be permitted, including, but not
limited to, by delivery of Shares held by the Participant, together
with any cash paid in connection with an exercise, having a Fair
Market Value equal to the exercise price. The Committee, in its
discretion, may at any time prior to the exercise of an Option
determine that certain forms of payment may not be available to a
particular Participant.
8. Exercise of Option.
(a) Each option may be exercised in whole or in part; provided, however,
that no Option may be exercised for a fraction of a share. An Option
shall be deemed to be exercised when written notice of such exercise
has been given to the Company in accordance with the terms of the
Option Agreement by the person entitled to exercise the Option and
full payment for the Shares with respect to which the Option is
exercised has been received by the Company. Full payment may, as
authorized by the Committee, consist of any consideration and method
of payment allowable under Section 7(d) of the Plan. Until the
issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a stockholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock
certificate promptly upon exercise of the Option.
(b) In no event shall any part of any Option be exercisable after the date
of expiration thereof(the "Expiration Date"), as determined by the
Committee pursuant to Section 7(a) above.
<PAGE>
(c) Except as otherwise provided by the Committee in the Option Agreement,
any portion of a Participant's Option that was not vested and
exercisable on the date of the termination of such Participant's
employment for whatever reason shall expire and be forfeited as of
such date; provided; however, that: (i) if any Participant dies or
becomes subject to any Disability, such Participant's Option will
expire 90 days after the date of his or her death or Disability, but
in no event after the Expiration Date, (ii) if any Participant retires
(with the approval of the Committee or the Board), his or her Option
will expire 90 days after the date of his or her retirement, but in no
event after the Expiration Date, and (iii) if any Participant is
discharged for any reason other than for Cause or voluntarily resigns
from his or her employment, such Participant's Option will expire 30
days after the date of his or her discharge, but in no event after the
Expiration Date; provided, further, that (x) if the Participant is
engaged in a Competitive Activity while employed by the Company or any
of its Subsidiaries or (y) if the Participant's employment with the
Company or any of its Subsidiaries is terminated for any reason
(including, without limitation, as a result of the Participant's
voluntary resignation) and within six (6) months after such
termination Participant engages in a Competitive Activity, then (I)
such Participant's unexercised vested Options shall be canceled
immediately (and become unexercisable) and be deemed void ab initio
and (II) the Participant shall be required forthwith to return to the
Company, if the Company so elects, any shares of Common Stock acquired
by the Participant upon exercise of the Participant's Options during
the period commencing with the date that is six (6) months prior to
such termination and ending on the date that is six (6) months after
such termination in exchange for which the Company shall pay to the
Participant the lesser of(l) the exercise price paid by the
Participant in respect of any such exercised Options and (2) the then
fair market value of such Option Shares as determined by the
Committee. The transferee of any Option Shares shall be bound by and
subject to the rights of the Company and obligations of the optionee
under this Section 8(c).
9. Non-Transferability of Options; Limitations on Transfer of Optioned
Stock.
(a) Options granted under the Plan may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner, other than by
will or by the laws of descent or distribution, and may be exercised,
during the lifetime of the Participant, only by the Participant. In
the event of the death of a Participant, the exercise of Options
granted hereunder shall be made only by the executor or administrator
of the estate of the deceased Participant or the person or persons to
whom the deceased Participant's rights under the Option shall pass by
will or the laws of descent and distribution.
(b) Except in connection with a Change of Control and then only upon the
authorization of the Committee (which authorization shall evidenced by
a duly adopted resolution of the Committee), no Participant shall be
permitted to sell, dispose, assign, hypothecate or otherwise transfer
the Optioned Stock underlying any Option until at least six months (or
greater period of time as designated by the Committee in such
Participant's applicable Option Agreement) have elapsed since the
Participant acquired such Option.
(c) Each Option and all rights granted thereunder shall not be
transferable other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order
<PAGE>
as defined by the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules promulgated thereunder,
and shall be exercisable during the optionee's lifetime only by the
optionee or the optionee's guardian or legal representative.
10. Adjustments Upon Changes in Capitalization and Change of Control.
(a) In the event of a reorganization, recapitalization, stock dividend or
stock split, or combination or other change in the shares of Common
Stock, the Board or the Committee may, in its sole discretion, in
order to prevent the dilution or enlargement of rights under
outstanding Options, make such adjustments in the number and type of
Shares authorized by or granted under the Plan, the number and type of
Optioned Stock and the exercise prices specified therein as it may
determine to be appropriate and equitable.
(b) The Company shall give each optionee holding unexercised Options
granted pursuant to this Plan at least fourteen (14) days prior
written notice of any Change of Control. In connection with a Change
of Control, the Committee in its sole discretion and at its option may
take any of the following actions:
(i) permit all unexercised Options to continue to be exercisable
in accordance with the terms of this Plan, subject to the
vesting limitations set forth in this Plan, in which event
each optionee shall be entitled to receive, upon exercise of
an Option and payment of the exercise price therefor in
accordance with the terms of this Plan, the same number of
shares of Common Stock, other securities or property
("Change of Control Consideration") as such optionee would
have been entitled to receive upon the occurrence of such
Change of Control if such optionee had been, immediately
prior to such Change of Control, the holder of the number of
shares of Common Stock purchasable under such optionee's
Option,
(ii) terminate all outstanding Options, in which event all
optionees shall be entitled to receive cash in an amount
equal to the amount by which the fair market value of the
Change of Control Consideration exceeds the aggregate
exercise price of their Options, or
(iii) accelerate the vesting of all outstanding Options in full at
the time of a Change of Control, in which event any such
Options shall terminate if not exercised as of the date of
such Change of Control.
Such discretion may be evidenced in an Option Agreement and/or by
resolution duly adopted by the Committee.
(c) On the basis of information known to the Company, the Committee shall
make all determinations under this Section 1 O, and all such
determinations shall be conclusive and binding.
11. Written Agreement; Legend on Optioned Stock.
<PAGE>
(a) Each Option granted hereunder to a Participant shall be embodied in a
written Option Agreement which shall be signed by the Participant and
by a duly authorized officer of the Company for and in the name and on
behalf of the Company and shall be subject to the terms and conditions
prescribed herein.
(b) Each Certificate evidencing Optioned Stock shall contain an
appropriate legend with respect to restrictions on transfer imposed by
applicable federal and state securities laws and the following legend:
"The shares evidenced by this Certificate may not be sold, disposed,
assigned, hypothecated or otherwise transferred until after [date designated
pursuant to Section 9(b) of this Plan], and then only when accompanied by an
authorization letter from counsel to the Issuer hereof that such sale,
disposition, assignment, hypothecation, or other transfer is in conformity with
(A) the Issuer's 1997 Stock Option Plan and (B) the Option Agreement pursuant to
which this Certificate was issued.
The shares evidenced by this Certificate are subject to certain obligations
of the registered holder hereof to return such shares to the Issuer hereof in
certain circumstances as more fully set forth in the Issuer's 1997 Stock Option
Plan."
(c) The second legend set forth in Section 1 l(b) above shall not be
removed from a Certificate unless the optionee (who received the
Option in respect of which the Option Shares evidenced by such
Certificate were issued) furnishes the Company with a signed and
notarized affidavit stating that such optionee did not (i) engage in a
Competitive Activity while employed by the Company and (ii) if the
optionee's employment relationship with the Company has then been
terminated, engage in a Competitive Activity during the six-month
period commencing with the date of such termination.
12. Listing, Registration and Compliance with Laws and Regulations.
Options shall be subject to the requirement that at any time the Committee shall
determine, in its discretion, that the listing, registration or qualification of
the Shares subject to the Options upon any securities exchange or under any
state or federal securities or other law or regulation, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition to or in connection with the granting of the Options or the issuance
or purchase of shares thereunder, no Options may be granted or exercised, in
whole or in part, unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee. The holders of such Options will supply the
Company with such certificates, representations and information as the Company
shall request and shall otherwise cooperate with the Company in obtaining such
listing, registration, qualification, consent or approval. In the case of
officers and other persons subject to Section 16(b) of the Securities Exchange
Act of 1934, as amended, the Committee may at any time impose any limitations
upon the exercise of an Option that, in the Committee's discretion, are
necessary or desirable in order to comply with such Section 16(b) and the rules
and regulations thereunder. If the Company, as part of an offering of
securities or otherwise, finds it desirable because of federal or state
regulatory requirements to reduce the period during which any Options may be
exercised, the Committee may, in its discretion and without the Participant's
consent, so reduce such period on not less than 15 days' written notice to the
holders thereof.
<PAGE>
13. Rights of Participants. Nothing in this Plan shall (a) interfere with
or limit in any way the right of the Company to terminate any Participant's
employment at any time (with or without Cause), or (b) confer upon any
Participant any right to continue in the employ of the Company for any period of
time or to continue his or her present (or any other) rate of compensation.
Except as otherwise provided under this Plan or by the Committee in the Option
Agreement, in the event of any Participant's termination of employment, any
portion of such Participant's Option that was not previously vested and
exercisable will expire and be forfeited as of the date of such termination. No
Employee shall have a right to be selected as a Participant, or, having been so
selected, to be selected again as a Participant.
14. Withholding of Taxes. The Company shall be entitled, if necessary or
desirable, to withhold from any Participant from any amounts due and payable by
the Company to such Participant (or secure payment from such Participant in lieu
of withholding) the amount of any withholding or other tax due from the Company
with respect to any Shares issuable under the Plan, and the Company may defer
such issuance unless indemnified to its satisfaction. If permitted by the
Committee, in its sole discretion, a Participant may elect to pay withholding
tax obligations by having the Company withhold Shares having a value equal to
the amount of tax required to be withheld. The value of the Shares to be
withheld shall equal the Fair Market Value of the Shares on the day the Option
is exercised.
15. Amendment, Suspension and Termination of Plan. The Board or the
Committee may suspend or terminate the Plan or any portion thereof at any time
and may amend it from time to time in such respects as the Board or the
Committee may deem advisable; provided, however, that no such amendment shall be
made without stockholder approval to the extent such approval is required by
law, agreement or the rules of any exchange upon which the Common Stock is
listed, and no such amendment, suspension or termination shall impair the rights
of Participants affected thereby. No Options shall be granted hereunder after
the tenth anniversary of the adoption of the Plan.
16. Amendment, Modification and Cancellation of Outstanding Options. The
Committee may amend or modify any option in any manner to the extent that the
Committee would have had the authority under the Plan initially to grant such
Option; provided that no such amendment or modification shall impair the rights
of any Participant under any Option without the consent of such Participant.
With the Participant's consent, the Committee may cancel any Option and issue a
new Option to such Participant.
17. Indemnification. In addition to such other rights of indemnification
as they may have as members of the Board or the Committee, the members of the
Committee shall be indemnified by the Company against all costs and expenses
reasonably incurred by them in connection with any action, suit or proceeding to
which they or any of them may be party by reason of any action taken or failure
to act under or in connection with the Plan or any Option granted thereunder,
and against all amounts paid by them in settlement thereof(provided such
settlement is approved by independent legal counsel selected by the Company) or
paid by them in satisfaction of a judgment in any such action, suit or
proceeding; provided, however, that any such Committee member shall be entitled
to the indemnification rights set forth in this Section 17 only if such member
has acted in good faith and in a manner that such member reasonably believed to
be in or not opposed to the best interests of the Company and, with respect to
any criminal action or proceeding, had no reasonable cause to believe that such
conduct was unlawful, and further provided that upon the institution of any such
action, suit or proceeding a Committee member shall give the Company written
notice thereof and an opportunity, at its own expense, to handle and
<PAGE>
defend the same before such Committee member undertakes to handle and defend it
on his or her own behalf.
18. Governing Law. This Plan shall be governed by and construed in
accordance with the corporate and internal laws of the state of Delaware without
giving effect to such State's conflicts of laws principles. Delaware is the
Company's jurisdiction of incorporation.
Adopted by Transition Analysis Component Technology, Inc.
Board of Directors on January 28, 1997, as amended by the Board on November 3,
1997
<PAGE>
Exhibit 99.3
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
22700 Savi Ranch Parkway
Yorba Linda, CA 92686
September 22, 1997
Bruce L. Blackford
6717 Acqueduct Court
San Diego, CA 92119
Re: Option to Purchase Shares of Common Stock of Transition
Analysis Component Technology, Inc. (the "Company" or "TACTech")
Dear Mr. Blackford:
Reference is made to the Company, its issued and outstanding shares of Common
Stock, $.01 Company's agreement to grant to you an option to purchase from the
Company up to 22,452 shares of Common Stock (the "Option"). The Option shall be
on the terms set forth in this letter agreement and the grant of the Option
shall be made in consideration for the terms and covenants set forth herein.
1. Agreement to Grant Options. The Company hereby grants the Option to you in
consideration for your exchange of shares of Common Stock of Research Analysis
Corporation for shares of Common Stock pursuant to the agreement by and among
Research Analysis Corporation, you, Jeff Hanser, Research Technology Analysis
Corp., and the Company of even date herewith, and other good and valuable
consideration, the receipt of which is hereby acknowledged.
2. Terms of Options. The Options shall have the following terms:
(a) Exercise Date. Subject to the limitations on vesting set forth below,
the Option may be exercised by you in whole or in part at any time after the
date hereof and prior to 5:00 p.m. New York City time on September 22, 2002 (the
"Termination Date").
(b) Exercise Price. The exercise price payable in respect of the Option
shall equal $3.00 per share (the "Exercise Price").
(c) Exercise of Option. You may exercise the Option with respect to all or
any part of the shares then exercisable under the Option by giving the Company
written notice, as provided below, of such exercise. Such notice shall specify
the number of shares as to which the Option is being exercised and shall be
accompanied by payment in cash of an amount equal to the aggregate Exercise
Price of such shares. Such Exercise Price shall be paid in full upon the
exercise of the Option (or any portion thereof). If exercised in part, the
Option shall remain exercisable with respect to the shares of Common Stock as to
which the Option was not exercised, subject to expiration on the Termination
Date and as otherwise provided herein. As soon as practicable after receipt of
the notice and payment referred to above, the Company shall deliver to you at
the office of the Secretary of the Company, or at such other place as may be
1
<PAGE>
mutually acceptable to the Company and you, a certificate or certificates
representing such shares; provided, however, that the time of such delivery may
be postponed by the Company for such period of time as the Company may require
to comply with any applicable registration requirements of any national
securities exchange and/or other law or regulation applicable to the issuance or
transfer of the subject shares. If you fail for any reason to accept delivery of
all or any part of the number of shares specified in such notice upon tender of
delivery thereof, you right to purchase such undelivered shares may be
terminated by the Company by notice to you and refund to you of your payment of
the aggregate Exercise Price therefor. Prior to or concurrently with the
delivery by the Company to you of a certificate(s) representing such shares, you
shall (i) upon notification of the amount due, pay to the Company promptly any
amount necessary to satisfy applicable federal, state or local tax withholding
requirements imposed on the Company, and (ii) if such shares are not then
registered under the Securities Act of 1933, as amended, give assurance
satisfactory to the Company that such shares are being purchased for investment
and not with a view to the distribution thereof, and you give such other
assurance and take such other action as the Company shall require to secure
compliance with any federal or state securities law applicable to the issuance
of the subject shares; provided that out-of-pocket expenses of such registration
or compliance shall be borne by the Company.
(d) Vesting Limitations. The Option (and any portion thereof) may not be
exercised until it has been vested in accordance with the terms of this letter
agreement. The Option shall vest as follows:
On each of the first three anniversaries of the date hereof (each an
"Anniversary Date"), that portion of your Option to purchase "X" shares of
Common Stock shall vest where "X" equals the product of (a) 7,484 and (b) a
fraction the numerator of which is the lesser of (i) the applicable Target (as
defined below) for such period and (ii) the amount of "Net Revenues" for the 12-
month period immediately preceding such Anniversary Date, and the denominator of
which is the applicable Target for such period. Notwithstanding the foregoing,
no portion of this Option shall vest on such Anniversary Date if Net Revenues
for the 12-month period immediately preceding such Anniversary Date were less
than 80% of the applicable Target (such 80% amount, the "Minimum Target"). To
the extent this Option does not vest on an Anniversary Date, the unvested
portion of this Option shall automatically expire and cannot vest after such
Anniversary Date. To the extent that Options do not vest on an Anniversary
Date, such Options shall automatically expire and cannot vest after such
Anniversary Date. To the extent that the Minimum Target is exceeded for any
such 12-month period (an "Achieved year"), such excess shall be carried forward
and added to the 12-month period immediately following such achieved Year if
(and only if) the Net Revenues achieved in such following 12-month period exceed
120% of the Net Revenues achieved in the Achieved Year.
For purposes hereof, "Net Revenues" means TACTech's gross revenues less any
rebates or credits given by TACTech to any of its customers for sales booked
after the closing. "Net Revenue" shall be determined by TACTech's chief
financial officer calculated in accordance with GAAP on a consolidated basis.
such determination shall be final and binding, absent manifest error. TACTech
shall use its commercially reasonable efforts to furnish the optionees with
written evidence of the determination of "Net Revenues" required in order to
determine an applicable Target within 135 days after the end of each applicable
Anniversary Date. For
2
<PAGE>
purposes hereof, "Target" in respect of an Anniversary Date means the amount of
Net Revenues for the corresponding 12-month period set forth below:
<TABLE>
<CAPTION>
12 months 12 months 12 months
immediately preceding immediately preceding immediately preceding
First Anniversary Date Second Anniversary Date Third Anniversary Date
- ------------------------------ ------------------------------- ---------------------------
<S> <C> <C>
Target - $3,780,000 Target - $5,280,000 Target - $7,400,000
</TABLE>
3. Termination of Option; Exercise of Option upon Termination of Employment
(a) If your employment with the Company shall be terminated by the Company
for cause (as defined in your Employment Agreement with the Company) or you
resign from your employment, (i) any vested portion of this Option must be
exercised within two (2) business days following such termination or resignation
and (ii) after such two business day period, this Option shall forthwith
terminate.
(b) If you shall die or become permanently and totally disabled within the
meaning of Section 22e)(ii) of the Internal Revenue Code of 1986, as amended,
the Option may be exercised as set forth herein by your guardian or legal
representative; provided that the Option shall be exercisable only (i) during
the three month period commencing with the Anniversary Date immediately
following such death or disability and (iii) with respect to the portion of the
Option which is vested and exercisable pursuant to Sections 2(c) and 2(d) above
on such Anniversary Date.
(c) If you are terminated without cause, your Option may be exercised at
any time according and subject to the other terms and conditions of this Option.
4. Acceleration of Vesting. Notwithstanding anything to the contrary set forth
in Section 2(d) above, in the event of a (a) dissolution or liquidation of the
Company, or the merger or consolidation of the Company (in which the Company is
not the surviving entity), (b) the sale of all or substantially all of the
assets of the Company, (c) a sale to the public in an underwritten offering
(which shall not include the spinoff of all Common Stock owned by Zing
Technologies, Inc. to the extent such spinoff occurs on or after the date
hereof) pursuant to an effective registration statement under the Securities Act
of 1933, as amended, of shares of TACTech owned by an Affiliate (as defined
under the Securities act of 1933, as amended) of TACTech (other than you or Mr.
Jeff Hanser), provided that this paragraph (c) shall not result in accelerated
vesting if Mal Baca, Robert Schrader or another Affiliate of TACTech does not
participate as a selling shareholder in the offering; (d) the acquisition of 80%
or more of the issued and outstanding shares of Common Stock by a Person, group
of Persons of their Affiliates other than Robert E. Schrader, a family member of
Robert E. Schrader or an Affiliate of either such Person, or (e) if your
employment with TACTech shall be terminated by TACTech without cause, then the
previously unvested portion of the Option, if any, shall become vested as of the
time immediately preceding such event; provided that in no event shall any
portion of this Option which did not vest as a result of the failure to achieve
an applicable Target or a Minimum Target become vested pursuant to this Section
4. "Affiliate" shall mean, with respect to any person or entity (a "Person"),
any other Person who, directly or indirectly, controls, is controlled
3
<PAGE>
by or under common control with the subject Person. For the purposes of the
preceding sentence the word "control" (including the terms "controlling",
"controlled by" and "under common control with") shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.
5. Assignment. Your rights under this letter agreement shall not be assignable
(other than by will or the laws of descent and distribution) by you without the
prior written consent of the Company, and any purported assignment in
contravention of this Section 6 shall be null and void and of no effect.
6. Counterparts. This letter agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
7. Choice of Law. This letter agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to such State's
conflicts of law principle.
8. Amendments; Waivers. This letter may be amended, modified, superseded,
canceled, renewed or extended, and the terms or covenants hereof may be waived,
only by a written instrument executed by the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of any party at any time
or times to require performance of any provision hereof shall in no manner
affect its right at a later time to enforce the same. No waiver by any party of
the breach of any term or covenant contained in this letter agreement, whether
by conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any breach, or a waiver of the
breach of any other term or covenant contained herein.
9. Notices. Any notice to the Company provided for in this letter agreement
shall be addressed to the Company in care of its Secretary, 22700 Savi Ranch
Parkway, Yorba Linda, California 92686 with copy to Mr. Martin Fawer c/o Zing
Technologies, Inc., 115 Stevens Avenue, Valhalla, New York 10585, and any notice
to you shall be addressed to you at your address now on file with the Company,
or such other address as either party may have informed the other by notice
herein provided. Any notice so addressed shall be deemed to be given on the
fourth business day after mailing, by registered or certified mail, return
receipt requested, at a post office or branch post office within the United
States.
10. Adjustments. In the event of any change in the Common Stock subject to
this Option, by reason of any stock dividend, split-up, recapitalization,
merger, consolidation, combination or exchange of shares, spinoff,
reorganization, liquidation or the like, such adjustment shall be made in the
number of shares of Common Stock subject to this Option and the Exercise Price
to give proper effect to such event. Such adjustment shall be made by the
Company which, absent manifest error, shall be binding upon the parties hereto.
4
<PAGE>
Please indicate your agreement with the foregoing by executing one copy of this
letter agreement in the space provided below and returning a fully executed copy
to the Company.
Very truly yours,
TRANSITION ANAYLSIS COMPONENT
TECHNOLOGY, INC.
By: ____________________________
Name: Martin S. Fawer
Title: Chief Financial Officer
AGREED AND ACCEPTED:
By: _____________________________
Name: Bruce L. Blackford
5
<PAGE>
Please indicate your agreement with the foregoing by executing one copy of this
letter agreement in the space provided below and returning a fully executed copy
to the Company.
Very truly yours,
TRANSITION ANAYLSIS COMPONENT
TECHNOLOGY, INC.
By: ____________________________
Name: Martin S. Fawer
Title: Chief Financial Officer
AGREED AND ACCEPTED:
By: ___________________________
Name: Bruce L. Blackford
6
<PAGE>
EXHIBIT 99.4
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
22700 Savi Ranch Parkway
Yorba Linda, CA 92686
September 22, 1997
Jeff Hanser
2573 Grandview Street
San Diego, CA 92110
Re: Option to purchase Shares of Common Stock of transition
Analysis Component Technology, Inc. (the "company" or "TACTech")
----------------------------------------------------------------
Dear Mr. Hanser:
Reference is made to the Company, its issued and outstanding shares of Common
Stock, $.01 Company's agreement to grant to you an option to purchase from the
Company up to 22,452 shares of Common Stock (the "Option"). The Option shall be
on the terms set forth in this letter agreement and the grant of the Option
shall be made in consideration for the terms and covenants set forth herein.
1. Agreement to Grant Options. The Company hereby grants the Option to you in
consideration for your exchange of shares of common stock of Research Analysis
Corporation for shares of Common Stock pursuant to the agreement by and among
Research Analysis Corporation, you, Bruce L. Blackford, Research Technology
Analysis Corp., and the Company of even date herewith, and other good and
valuable consideration, the receipt of which is hereby acknowledged.
2. Terms of Options. The Options shall have the following terms:
(a) Exercise Date. Subject to the limitations on vesting set forth below,
the Option may be exercised by you in whole or in part at any time after the
date hereof and prior to 5:00 p.m. New York City time on September 22, 2002 (the
"Termination Date")
(b) Exercise Price. The exercise price payable in respect of the Option
shall equal $3.00 per share (the "Exercise Price").
(c) Exercise of Option. You may exercise the Option with respect to all or
any part of the shares then exercisable under the Option by giving the Company
written notice, as provided below, of such exercise. Such notice shall specify
the number of shares as to which the
1
<PAGE>
Option is being exercised and shall be accompanied by payment in cash of an
amount equal to the aggregate Exercise Price of such shares. Such Exercise Price
shall be paid in full upon the exercise of the Option (or any portion thereof).
If exercised in part, the Option shall remain exercisable with respect t o the
shares of Common Stock as to which the Option was not exercised, subject to
expiration on the Termination Date and as otherwise provided herein. AS soon as
practicable after receipt of the notice and payment referred to above, the
Company shall deliver to you at the office of the Secretary of the Company, or
at such other place as may be mutually acceptable to the Company and you, a
certificate or certificates representing such shares; provided, however, that
the time of such delivery may be postponed by the Company for such period of
time as the Company may require to comply with any applicable registration
requirements of any national securities exchange and/or other law or regulation
applicable to the issuance or transfer of the subject shares. If you fail for
any reason to accept delivery of all or any part of the number of shares
specified in such notice upon tender of delivery thereof, your right to purchase
such undelivered shares may be terminated by the Company by notice to you and
refund to you of your payment of the aggregate Exercise Price therefor. Prior to
or concurrently with the delivery by the Company to you of a certificate(s)
representing such shares, you shall (i) upon notification of the amount due, pay
to the Company promptly any amount necessary to satisfy applicable federal,
state or local tax withholding requirements imposed on the Company, and (ii) if
such shares are not then registered under the Securities Act of 1933, as
amended, give assurance satisfactory to the Company that such shares are being
purchased for investment and not with a view to the distribution thereof, and
you shall give such other assurance and take such other action as the Company
shall require to secure compliance with any federal or state securities law
applicable to the issuance eof the subject shares; provided that out-of-pocket
expenses of such registration or compliance shall b borne by the Company.
(d) Vesting Limitations. The Option (and any portion thereof) may not be
exercised until it has been vested in accordance with the terms of this letter
agreement. The Option shall vest as follows:
On each of the first three anniversaries of the date hereof (each an
"Anniversary Date"), that portion of your Option to purchase "X" shares of
Common Stock shall vest where "X" equals the product of (A) 7,484 and (B) a
fraction the numerator of which is the lesser of (i) the applicable Target (as
defined below) for such period and (ii) the amount of "Net Revenues" for the 12-
month period immediately preceding such Anniversary Date, and the denominator of
which is the applicable Target for such period. Notwithstanding the foregoing,
no portion of this Option shall vest on such Anniversary Date if Net Revenues
for the 12-month period immediately preceding such Anniversary Date were less
than 80% of the applicable Target (such 80% amount, the "Minimum Target"). To
the extent this Option does not vest on an Anniversary Date, the unvested
portion of this Option shall automatically expire and cannot vest after such
Anniversary Date. To the extent that Options do not vest on an Anniversary
Date, such Options shall automatically expire and cannot vest after such
Anniversary Date. To the extent that he Minimum Target is exceeded for any such
12-month period (an "Achieved Year"), such excess shall be carried forward and
added to the 12-month period immediately following such Achieved Year if (and
only if) the Net Revenues achieved in such following 12-month period exceed 120%
of the Net Revenues achieved in the Achieved Year.
2
<PAGE>
For purposes hereof, "Net Revenues" means TACTech's gross revenues less any
rebates or credits given by TACTech to any of its customers for sales booked
after the Closing. "Net Revenues" shall be determined by TACTech's chief
financial officer calculated in accordance with GAAP on a consolidated basis.
Such determination shall be final and binding, absent manifest error. TACTech
shall use its commercially reasonable efforts to furnish the optionees with
written evidence of the determination of "Net Revenues" required in order to
determine an applicable Target within 135 days after the end of each applicable
Anniversary Date. For purposes hereof, "Target' in respect of an Anniversary
Date means the amount of Net Revenues for the corresponding 12-month period set
forth below:
<TABLE>
<CAPTION>
12 months 12 months 12 months
immediately preceding immediately preceding immediately preceding
First Anniversary Date Second Anniversary Date Third Anniversary Date
- ----------------------------- ---------------------------- ---------------------------
<S> <C> <C>
Target - $3,780,000 Target - $5,280,00 Target - $7,400,000
</TABLE>
3. Termination of Option; Exercise of Option upon Termination of Employment
(a) If your employment with the Company shall be terminated by the Company
for cause (as defined in your Employment Agreement with the Company) or you
resign from your employment, (i) any vested portion of this Option must be
exercised within two (2) business days following such termination or resignation
and (ii) after such two business day period, this Option shall forthwith
terminate.
(b) If you shall die or become permanently and totally disabled within the
meaning of Section 22(e)(iii) of the Internal Revenue Code of 1986, as amended,
the Option may be exercised as set forth herein by your guardian or legal
representative; provided that the Option shall be exercisable only (i) during
the three month period commencing with the Anniversary Date immediately
following such death or disability and (ii) with respect to the portion of the
Option which is vested and exercisable pursuant to Sections 2(c) and 2(d) above
on such Anniversary Date.
(c) If you are terminated without cause, your Option may be exercised at
any time according and subject to the other terms and conditions of this Option.
4. Acceleration of Vesting. Notwithstanding anything to the contrary set forth
in Section 2(d) above, in the event of a (a) dissolution or liquidation of the
company, or the merger or consolidation of the Company (in which the Company is
not the surviving entity), (b) the sale of all or substantially all of the
assets of the Company, 9c) a sale to the public in an underwritten offering
(which shall not include the spinoff of all common Stock owned by zing
Technologies, Inc. to the extent such spinoff occurs on or after the date
hereof) pursuant to an effective registration statement under the Securities Act
of 1933, as amended, of shares of TACTech owned by an Affiliate (as defined
under the Securities Act of 1933, as amended) of TACTech (other than you or Mr.
Bruce L. Blackford), provided that this paragraph (c) shall not result in
accelerated vesting of Mal Baca, Robert Schrader or another Affiliate of TACTech
does not
3
<PAGE>
participate as a selling shareholder in the offering; (d) the acquisition of 80%
or more of the issued and outstanding shares of Common Stock by a Person, group
of Persons or their Affiliates other than Robert E. Schrader, a family member of
Robert E. Schrader or an Affiliate of either such Person, or (e) if your
employment with TACTech shall be terminated by TACTech without cause, then the
previously unvested portion of the Option, if any, shall become vested as of the
time immediately preceding such event; provided that in no event shall any
portion of this Option which did not vest as a result of the failure to achieve
an applicable Target or a Minimum Target become vesting pursuant to this Section
4. "Affiliate" shall mean, with respect to any person or entity (a "Person"),
any other Person who, directly or indirectly, controls, is controlled by or
under common control with the subject Person. For the purposes of the preceding
sentence the word "control" (including the terms "controlling"), "controlled by"
and "under common control with") shall mean the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract, or
otherwise.
5. Assignment. Your rights under this letter agreement shall not be assignable
(other than by will or the laws of descent and distribution) by you without the
prior written consent of the Company, and any purported assignment in
contravention of this Section 6 shall be null and void and of no effect.
6. Counterparts. This letter agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
7. Choice of Law. This letter agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to such State's
conflicts of law principles.
8. Amendments; Waivers. This letter agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms or covenants hereof may
be waived, only by a written instrument executed by the parties hereto, or in
the case of a waiver, by the party waiving compliance. The failure of any part
at anytime or times to require performance of any provision hereof shall in no
manner affect its right at a later time to enforce the same. No waiver by any
party of the breach of any term or covenant contained in this letter agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or construed as, a further or continuing waiver of nay breach, or a
waiver of the breach of any other term or covenant contained herein.
9. Notices. Any notice to the Company provided for in this letter agreement
shall be addressed to the Company in care of its Secretary, 22700 Savi Ranch
parkway, Yorba Linda, California 92686 with copy to Mr. Martin Fawer c/o Zing
Technologies, Inc., 115 Stevens Avenue, Valhalla, new York 10585, and any notice
to you shall be addressed to you at your address now on file with the Company,
or such other address as either party may have informed the other by notice
herein provided. Any notice so addressed shall be deemed to be given on the
fourth business day after mailing, by registered or certified mail, return
receipt requested, at a post office or branch post office within the United
States.
4
<PAGE>
10. Adjustments. In the event of any change in the Common Stock subject to
this Option, by reason of any stock dividend, split-up, recapitalization,
merger, consolidation, combination or exchange of shares, spinoff,
reorganization, liquidation or the like, such adjustment shall be made in the
number of shares of Common Stock subject to this Option and the Exercise Price
to give proper effect to such event. Such adjustment shall be amended by the
company which, absent manifest error, shall be binding upon the parties hereto.
5
<PAGE>
Please indicate your agreement with the foregoing by executing one copy of this
letter agreement in the space provided below and returning a fully executed copy
to the Company.
Very truly yours,
TRANSITION ANALYSIS COMPONENT
TECHNOLOGY, INC.
By:________________________________
Name: Martin S. Fawer
Title: Chief Financial Officer
AGREED AND ACCEPTED:
By: ______________________
Name: Jeff Hanser
6
