<PAGE>
As filed with the Securities and Exchange Commission on August 23, 1996
Registration No. 333-
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
-----------------------
OPTIKA IMAGING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-1345326
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
5755 MARK DABLING BOULEVARD, SUITE 100
COLORADO SPRINGS, COLORADO 80919
(Address of principal executive offices) (Zip Code)
------------------------
PRE 1992 STOCK PLAN
1994 STOCK OPTION/STOCK ISSUANCE PLAN
EMPLOYEE STOCK PURCHASE PLAN
(Full title of the Plans)
-----------------------
MARK K. RUPORT
PRESIDENT AND CHIEF EXECUTIVE OFFICER
OPTIKA IMAGING SYSTEMS, INC.
5755 MARK DABLING BOULEVARD, SUITE 100
COLORADO SPRINGS, COLORADO 80919
(719) 548-9800
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee
- ---------------------------- ----------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Options to purchase
Common Stock:
1994 Stock Option/Stock 2,065,600 N/A N/A N/A
Issuance Plan:
Pre 1992 Stock Plan 366,400 N/A N/A N/A
Common Stock, $0.001
par value:
1994 Stock Option/Stock 2,065,600 shares $5.81 $12,001,136 $4,138.32
Issuance Plan
Pre 1992 Stock Plan 366,400 shares $0.75 $ 274,800 $ 94.76
Employee Stock Purchase 250,000 shares $5.81 $ 1,452,500 $ 500.86
Plan
Aggregate Filing Fee $4,733.94
====================================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1994 Stock Option/Stock
Issuance Plan, the Pre 1992 Stock Plan and/or the Employee Stock Purchase
Plan by reason of any stock dividend, stock split, recapitalization or
other similar transaction effected without the receipt of consideration
which results in an increase in the number of the outstanding shares of
Common Stock of Optika Imaging Systems, Inc.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the average of the high
and low selling prices per share of Common Stock of Optika Imaging Systems,
Inc. on August 21, 1996, as reported by the Nasdaq National Market.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
---------------------------------------
Optika Imaging Systems, Inc. (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "SEC"):
(a) The Registrant's Prospectus filed with the SEC pursuant to Rule
424(b) of the Securities Act of 1933, as amended (the "1933 Act"),
in connection with Registration Statement No. 333-04309 on Form S-
1, filed with the SEC on May 22, 1996, and the amendments thereto,
in which there is set forth audited financial statements for the
Registrant's fiscal year ended December 31, 1995; and
(b) The Registrant's Registration Statement No. 00-111751 on Form 8-A
filed with the SEC on May 22, 1996 pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), in
which there is described the terms, rights and provisions
applicable to the Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
-------------------------
Not Applicable.
Item 5. Interests of Named Experts and Counsel
--------------------------------------
Not Applicable.
Item 6. Indemnification of Directors and Officers
-----------------------------------------
Pursuant to the provisions of the Delaware General Corporation Law, the
Registrant has adopted provisions in its Amended and Restated Certificate of
Incorporation which provide that directors of the Registrant shall not be
personally liable for monetary damages to the Registrant or its stockholders for
a breach of fiduciary duty as a director, except for liability as a result of:
(i) a breach of the director's duty of loyalty to the Registrant or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) an act related to
the unlawful stock repurchase or payment of a dividend under Section 174 of
Delaware General Corporation Law and (iv) transactions from which the director
derived an improper personal benefit. Such limitation of liability does not
affect the availability of equitable remedies such as injunctive relief or
rescission.
The Registrant's Amended and Restated Certificate of Incorporation also
authorizes the Registrant to indemnify its officers, directors and other agents
by bylaws, agreements or otherwise, to the full extent permitted under Delaware
law. The Registrant has entered into separate indemnification agreements with
its executive officers and directors which may, in some cases, be broader than
the specific indemnification provisions contained in the Delaware General
Corporation Law. The indemnification agreements will require the Registrant,
among
II-1
<PAGE>
other things, to indemnify such officers and directors against certain
liabilities that may arise by reason of their status or service as officers or
directors (other than liabilities arising from willful misconduct of a culpable
nature), and to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of the Registrant where indemnification
will be required or permitted. The Registrant is not aware of any threatened
litigation or proceeding which may result in a claim for such indemnification.
Item 7. Exemption from Registration Claimed
-----------------------------------
Not Applicable.
Item 8. Exhibits
--------
Number Exhibit
------ -------
4 Instruments Defining Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 00-111751 on
Form 8-A which is incorporated herein by reference pursuant
to Item 3(b).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Price Waterhouse LLP, Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Form of Incentive Stock Option Agreement under Pre 1992 Stock
Plan.
99.2 1994 Stock Option/Stock Issuance Plan.
99.3 Form of Notice of Grant of Stock Option.
99.4 Form of Stock Option Agreement.
99.5 Form of Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
99.6 Form of Addendum to Stock Option Agreement (Involuntary
Termination Following Change in Control).
99.7 Form of Notice of Grant of Automatic Stock Option (Initial
Grant).
99.8 Form of Notice of Grant of Automatic Stock Option (Annual
Grant).
99.9 Form of Automatic Stock Option Agreement.
99.10 Form of Stock Issuance Agreement.
99.11 Form of Addendum to Stock Issuance Agreement. (Involuntary
Termination Following Change in Control.)
99.12 Employee Stock Purchase Plan.
99.13 Form of Enrollment/Change Form.
99.14 Form of Stock Purchase Agreement.
Item 9. Undertakings
------------
A. The undersigned Registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts or events
arising after the effective date of this 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 this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
---------
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
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 Act each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and (3) to remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the Registrant's 1994
Stock Option/Stock Issuance Plan, Pre 1992 Stock Plan and/or Employee Stock
Purchase Plan.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
<PAGE>
C. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers, or controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the SEC, such indemnification is
against public policy as expressed in the 1933 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 1933 Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8, and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Colorado Springs, State of Colorado on
this 23rd day of August, 1996.
OPTIKA IMAGING SYSTEMS, INC.
By: /s/Mark K. Ruport
------------------------------------------
Mark K. Ruport
President, Chief Executive Officer
and Chairman of the Board
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Optika Imaging Systems,
Inc., a Delaware corporation, do hereby constitute and appoint Mark K. Ruport
and Steven M. Johnson and each of them, the lawful attorneys-in-fact and agents
with full power and authority to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, and any one of them,
determine may be necessary or advisable or required to enable said corporation
to comply with the Securities Act of 1933, as amended, and any rules or
regulations or requirements of the Securities and Exchange Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement, and to any and all instruments or documents filed as
part of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
that all said attorneys and agents, or any one of them, shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/Mark K. Ruport President, Chief Executive August 23, 1996
- ----------------- Officer and Chairman of
Mark K. Ruport the Board
(Principal Executive Officer)
II-4
<PAGE>
Signature Title Date
- --------- ----- ----
/s/Steven M. Johnson Vice President-Finance and August 23, 1996
- -------------------- Administration, Chief
Steven M. Johnson Financial Officer and
Secretary
(Principal Financial and
Accounting Officer)
/s/Paul Carter Director August 23, 1996
- ------------------
Paul Carter
/s/Malcolm D. Thomson Director August 23, 1996
- ---------------------
Malcolm D. Thomson
/s/Richard A. Bass Director August 23, 1996
- ------------------
Richard A. Bass
/s/James E. Crawford III Director August 23, 1996
- ------------------------
James E. Crawford III
/s/Robert L. Gett Director August 23, 1996
- -----------------
Robert L. Gett
/s/Harry S. Gruner Director August 23, 1996
- ------------------
Harry S. Gruner
/s/Graham O. King Director August 23, 1996
- -----------------
Graham O. King
II-5
<PAGE>
EXHIBIT INDEX
-------------
Number Exhibit
- ------ -------
4 Instruments Defining Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 00-111751 on
Form 8-A which is incorporated herein by reference pursuant
to Item 3(b).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Price Waterhouse LLP, Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Form of Incentive Stock Option Agreement under Pre 1992 Stock
Plan.
99.2 1994 Stock Option/Stock Issuance Plan.
99.3 Form of Notice of Grant of Stock Option.
99.4 Form of Stock Option Agreement.
99.5 Form of Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
99.6 Form of Addendum to Stock Option Agreement (Involuntary
Termination Following Change in Control).
99.7 Form of Notice of Grant of Automatic Stock Option (Initial
Grant).
99.8 Form of Notice of Grant of Automatic Stock Option (Annual
Grant).
99.9 Form of Automatic Stock Option Agreement.
99.10 Form of Stock Issuance Agreement.
99.11 Form of Addendum to Stock Issuance Agreement. (Involuntary
Termination Following Change in Control.)
99.12 Employee Stock Purchase Plan.
99.13 Form of Enrollment/Change Form.
99.14 Form of Stock Purchase Agreement.
<PAGE>
EXHIBIT 5
August 23, 1996
Optika Imaging Systems, Inc.
5755 Mark Dabling Boulevard
Suite 100
Colorado Springs, CO 80919
Re: Registration Statement for Offering of
an aggregate of 2,682,000 Shares of Common Stock
------------------------------------------------
Ladies and Gentlemen:
We refer to your Registration Statement on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of (i) 366,400 shares
of Common Stock of Optika Imaging Systems, Inc. (the "Company") under the
Company's Pre 1992 Stock Plan, (ii) 2,065,600 shares of the Common Stock under
the Company's 1994 Stock Option/Stock Issuance Plan and (iii) 250,000 shares of
Common Stock under the Company's Employee Stock Purchase Plan. We advise you
that, in our opinion, when such shares have been issued and sold pursuant to the
applicable provisions of the Pre 1992 Stock Plan, the 1994 Stock Option/Stock
Issuance Plan and the Employee Stock Purchase Plan and in accordance with the
Registration Statement, such shares will be duly authorized, validly issued,
fully paid and non-assessable shares of the Company's Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
Exhibit 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated March 1, 1996, which appears on page
F-2 of Optika Imaging Systems, Inc.'s Registration Statement on Form S-1, as
amended (No. 333-04309).
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Boulder, Colorado
August 20, 1996
<PAGE>
EXHIBIT 99.1
----------------
Name of optionee
OPTIKA IMAGING SYSTEMS, INC.
INCENTIVE STOCK OPTION AGREEMENT
(Optika PRE 1992 Stock Plan)
-------------------------------------
THIS AGREEMENT is entered into by and between Optika Imaging Systems,
Inc., a California corporation with its principal office at 980 Enchanted Way,
Suite 101, Simi Valley, California 93065 (hereinafter the "Company"), and the
undersigned employee of the Company or a parent or subsidiary of the Company
(hereinafter the "Optionee").
WHEREAS, the Optionee renders important services to the Company or a
parent or subsidiary of the Company, and the Company desires to grant an
incentive stock option to the optionee;
NOW, THEREFORE, in consideration of the foregoing recital and the
mutual agreements herein contained, the parties hereto hereby agree as follows:
1. Grant, Exercisability and Term of Option.
----------------------------------------
a. The Company hereby grants to the Optionee pursuant to the
Optika Pre 1992 Stock Plan (the "Plan") the option to purchase from the Company
upon the terms and conditions hereinafter specified the number of shares set
forth on the signature page below ("Shares") of the $.01 par value common stock
("Common Stock") of the Company at the purchase price per Share set forth on
such signature page (the "Option Price"). The date of grant of this option is
the date set forth at the execution page of this Agreement as the "Option Date".
b. Except as otherwise provided in Section 12 (b), this
option may be exercised only as to shares which are "Vested Shares" as defined
in Section 5, at the time of exercise. This option shall be immediately
exercisable in full or in part as to Vested Shares and shall remain exercisable
as to Vested Shares until it expires on the tenth anniversary of the Option
Date, unless the option is sooner terminated as hereinafter provided. Only whole
Shares may be purchased pursuant to this option.
<PAGE>
2. Conditions and Limitations.
--------------------------
a. The option is granted on the condition that the purchase
of shares hereunder shall be for investment purposes and not with a view to
resale or distribution, except that such condition shall be inoperative if the
offering of Shares subject to the option is registered under the Securities Act
of 1933, as amended, or if in the opinion of counsel for the Company such Shares
may be resold without registration. At the time of the exercise of the option or
any installment thereof, the optionee will execute such further agreements as
the Company may require to implement the foregoing condition and to acknowledge
the Optionee's familiarity with restrictions on the resale of the Shares under
applicable securities laws and the by-laws of the Company, and the Company may
stamp such legend on the certificate representing the Shares as may be necessary
or appropriate in light of the foregoing conditions.
b. The option shall not be transferable otherwise than by
will or by the laws of descent and distribution, and except as provided in
Section 4 the option shall be exercisable during the lifetime of the Optionee by
the Optionee only. Notwithstanding the foregoing, however, if the optionee is
determined to be mentally incompetent and a guardian or conservator (or other
similar person) is appointed by a court of competent jurisdiction to manage the
Optionee's affairs, the guardian or conservator (or other similar person) may
exercise the option on behalf of the Optionee, provided that such exercise is
made within the time limits prescribed herein.
c. The option granted in this Agreement is subject to the
terms, conditions and definitions of the Plan, a copy of which is attached
hereto. To the extent that the terms, conditions and definitions of this
Agreement are inconsistent with those of the Plan, those of the Plan shall
govern; provided, that the provisions of Section 4 of this Agreement shall
govern, notwithstanding any inconsistent provision of the Plan. The Optionee
hereby accepts this option subject to all such provisions of the Plan and agrees
that all decisions under, and interpretations of, such provisions of the Plan by
the Board of Directors of the Company (the "Board") or the Committee, as defined
in the Plan, shall be final, binding and conclusive upon the optionee and his or
her heirs.
3. Exercise of Option; Withholding Taxes.
-------------------------------------
a. Written notice of the exercise of the option or any
installment thereof shall be given to the Company specifying the number of
shares for which the option is exercised and accompanied by payment in full of
the Option Price. Payment shall be made (a) in cash, (b) by check, (c) by
Immediate Sales Proceeds, as defined below, (d) by delivery and assignment to
the Company of shares of Company stock owned by the Optionee (which shares have
a fair market value, as determined by the Board, not less than the Option
Price), or (e) by
2.
<PAGE>
any combination of the foregoing. Notwithstanding the foregoing, this option
may not be exercised by delivery and assignment to the Company of shares of
Company stock to the extent that such delivery and assignment would constitute a
violation of the provisions of any law, or related regulation or rule, or any
agreement or Company policy, restricting the transfer or redemption of the
Company's stock. As used herein, the term "Immediate Sales Proceeds" shall mean
the assignment in form acceptable to the Company of the proceeds of a sale of
the Shares acquired on the exercise of this option pursuant to a procedure
approved by the Company. The Company reserves the right to decline to approve
any such procedure in the Company's sole and absolute discretion.
b. The Company's obligation to deliver Shares upon exercise
of an option shall be subject to the Optionee's satisfaction of all applicable
federal, state and local income and employment tax withholding obligations.
Without limiting the generality of the foregoing, the Company shall have the
right to deduct from payments of any kind otherwise due to the Optionee any
federal, state or local taxes of any kind required by law to be withheld with
respect to any Shares issued upon exercise of the option.
4. Termination of Option. In the event that the Optionee ceases to
---------------------
be employed by the Company or any other entity which at the time conforms to the
definition of parent or subsidiary of the Company, as specified in the Plan
(collectively, the "Company Group") at any time prior to the exercise of this
option in full, this option shall terminate according to the following
provisions:
a. If the Optionee ceases to perform services voluntarily due
to resignation or other voluntary action or involuntarily, the Optionee may at
any time within a period of three (3) months after the date of such cessation of
the performance of services exercise the option to the extent that the option
was exercisable on the date of such cessation;
b. If the Optionee ceases to perform services because of
disability within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended (the "Code"), the Optionee may at any time within a period
of one year after the date of such cessation of the performance of services
exercise the option to the extent that the option was exercisable on the date of
such cessation; and
c. If the Optionee ceases to perform services because of
death, the option, to the extent that the optionee was entitled to exercise it
on the date of death, may be exercised within a period of one year after the
Optionee's death by the person or persons to whom the Optionee's rights under
the option shall pass by will or by the laws of descent and distribution;
provided, however, that no option may be exercised to any extent by anyone after
the date of its expiration.
3.
<PAGE>
Notwithstanding any other provision herein contained, the option shall
terminate and may no longer be exercised if, in the good faith determination of
the Board, the optionee has, prior to exercise of the option, engaged, whether
as an employer, officer, director, owner, employee, consultant, stockholder,
partner or other participant, in any Competitive Business (as hereinafter
defined) or attempted to induce employees of or consultants or other individual
contributors to any member of the Company Group to terminate their employment or
other service with such member of the Company Group. As used herein, the term
"Competitive Business" shall mean any business or activity in which any member
of the Company Group is at the time in question actively engaged within any
geographic area in which such member of the Company Group has at such time been
actively conducting such business or activity; provided, however, that the
ownership of no more than 5% of the outstanding capital stock of a corporation
traded on a national securities exchange or in the over-the-counter market shall
not be deemed engaging in a Competitive Business.
5. Vested Shares. A percentage of the Shares, determined on the
-------------
basis of the number "quarters of employment" (as hereinafter defined) from the
Commencement Date (as specified on the signature page below), shall at the time
in question be "Vested Shares" for the purpose of this Agreement:
<TABLE>
<CAPTION>
Percentage of Shares
Quarters of Employment which are Vested Shares
---------------------- -----------------------
<S> <C>
Less than 4 quarters 0%
4 quarters 25.00%
Each additional quarter 6.25%
</TABLE>
Notwithstanding the vesting schedule set-forth above, if the
employment of the optionee terminates by reason of death or disability, the
number of quarters of employment shall be increased by four; provided, however,
-----------------
that the operation of this sentence shall in no event increase the percentage of
Shares which are Vested Shares to more than 100%. As used herein, the term
"quarter(s) of employment" shall mean each full quarter of employment with the
Company, measured from the Commencement Date, it being intended that each year
measured from the Commencement Date shall consist of 4 quarters; and the term
"disability" shall mean a medical condition or illness which is or is expected
to be of longer than six months' duration and by reason of which the Optionee is
substantially unable to perform the Optionee's regular duties with the Company,
as determined in good faith by the Board.
6. "Market Stand Off" Agreement. The Optionee, if requested by the
----------------------------
Company or any managing underwriter of the Company's securities, shall agree not
to sell or otherwise transfer or dispose of any Shares of the Company held by
the Optionee during the
4.
<PAGE>
period up to 180 days, as requested by the Company or such underwriter,
following the effective date of a registration statement of the Company filed
under the Securities Act of 1933 (except for any Company securities held by the
Optionee sold pursuant to such registration statement). Such agreement shall be
in writing in form satisfactory to the Company or such underwriter. The Company
may impose stop-transfer instructions with respect to the Shares subject to the
foregoing restriction until the end of such period.
7. Notice of Disposition of Shares. The Optionee hereby agrees to
-------------------------------
notify the Company promptly if the Optionee disposes of any Shares within one
(1) year after the date the Optionee exercises all or part of this option or
within two (2) years after the Option Date. At any time during the one or two
year periods set forth above, the Company may place a legend on any certificate
representing Shares requesting the transfer agent for the Company's stock to
notify the Company of any such transfer. The obligation of the Optionee to
notify the Company of any such transfer shall continue notwithstanding that a
legend has been placed on the certificate pursuant to the preceding sentence.
8. $100,000 Limitation. Under Section 422 of the Code, to the extent
-------------------
that the aggregate fair market value of the shares with respect to which
incentive stock options granted by any member of the Company Group first become
exercisable by an employee during any calendar year exceed $100,000 (the
"$100,000 limitation"), such options are treated as options which are not
incentive stock options. If the $100,000 limitation is exceeded by reason of
the grant of this option, this option shall be deemed, to the maximum extent
possible, if any, to be an incentive stock option, and, accordingly, the
following shall apply:
a. notwithstanding Section 1 of this Agreement, if the Share
Value (as hereinafter defined) of this option, together with the sum of the
Share Values of those portions of Prior Incentive Options (as hereinafter
defined) which are first exercisable in the calendar year in which this option
first becomes exercisable, exceed $100,000, this option shall be exercisable
(subject to any other limitations contained in this Agreement) in the first
calendar year during which exercise is permitted (as specified in Section 1) for
that number of Shares having a Share Value not in excess of $100,000 (taking
into account initial exercisability during that year of Prior Incentive Options)
and shall become exercisable (subject to such other limitations) during each
subsequent calendar year commencing prior to expiration or termination of this
option (until fully exercisable) for a like number of Shares (reduced to the
extent necessary to avoid exceeding the $100,000 limitation), but not in excess
of the number of Shares remaining unexercised under this option; and
b. if by reason of application of (a) above this option would
not become fully exercisable prior to its expiration, any Shares not otherwise
exercisable shall be deemed to be covered by a nonqualified option pursuant to
Section 422(d) of the Code and may
5.
<PAGE>
be purchased hereunder (subject to such other limitations) at the earliest time
permitted by Section 1.
As used herein, the term "Share Value" shall mean, as to an incentive
stock option, the product of the number of Shares covered by the option and the
applicable option, price (or if less, the fair market value of such Shares on
the option Date), and the term "Prior Incentive Option" shall mean any incentive
stock option granted to the Optionee by any member of the Company Group prior to
the Option Date.
9. Legends. The restrictions upon transfer of the Shares provided
-------
herein shall be noted or referred to conspicuously on each certificate issued
therefor subject hereto, such notation or reference to be in addition to the
legend specified in Section 2(a) and to read substantially as follows:
"The shares evidenced by this certificate were issued by the
Corporation to the registered holder upon exercise of an Incentive
Stock Option as defined in Section 422 of the Internal Revenue Code of
1986, as amended, and are subject to the terms of an incentive stock
option agreement containing certain restrictions, a copy of which
agreement will be furnished upon request. The transfer agent for the
shares evidenced hereby shall notify the Corporation immediately of
any transfer of the shares by the registered holder hereof."
The shares represented by this certificate have not been registered or
qualified under the Securities Act of 1933 or any state securities
laws and may not be sold, transferred, or otherwise disposed of unless
such shares are first registered pursuant to all such applicable laws
or the shareholder of record shall have presented to the issuer an
opinion of counsel satisfactory to the issuer that such registration
is not required.
10. Notices. All notices or demands given pursuant to this Agreement
-------
shall be in writing and shall be deemed to have been sufficiently given if
delivered by hand or sent by certified or registered mail, postage prepaid,
addressed to the Company at its principal office or to the Optionee (or the
Optionee's legal representatives) at the address stated in the optionee's (or
their) notice or at the optionee's address appearing on the books of the
Company.
11. No Employment Commitment; Tax Treatment. Nothing herein
---------------------------------------
contained shall be deemed to be or constitute an agreement or commitment by the
Company to continue
6.
<PAGE>
the optionee in its employ. Although the option granted hereunder is intended
to qualify as an incentive stock option under Section 422 of the Code, the
Company makes no representation about the tax treatment to the Optionee with
respect to receipt or exercise of the option or acquiring, holding or disposing
of the Shares, and the Optionee represents that the Optionee has had the
opportunity to discuss such treatment (including the possible application of
Section 83 of the Code) with the Optionee's tax adviser. The Optionee shall
have no rights as a stockholder with respect to the shares subject to the option
until the exercise of the option and the issuance of a stock certificate for the
Shares with respect to which the option shall have been exercised.
12. Adjustment in Shares, etc.
-------------------------
a. Appropriate adjustment shall be made by the Board in
number, kind, and exercise price of Shares covered by the option granted
hereunder to give effect to any stock dividends, stock splits, stock
combinations, recapitalizations and other similar changes in the capital
structure of the Company after the Option Date.
b. In the event of a change of the Common Stock resulting
from a merger or similar reorganization as to which the Company is the surviving
corporation, the number and kind of Shares which thereafter may be purchased
pursuant to the option granted hereunder, and the number and kind of Shares then
subject to the option granted hereunder and the price per Share thereof shall be
appropriately adjusted in such manner as the Board may deem equitable to prevent
dilution or enlargement of the rights available or granted hereunder. Except as
otherwise determined by the Board, a merger or a similar reorganization which
the Company does not survive, or a sale of all or substantially all of the
assets of the Company, shall cause this option to terminate, to the extent not
then exercised, unless any surviving entity agrees to assume the obligations
hereunder; provided, however, that in the case of such a merger or similar
reorganization, or such a sale of all or substantially all of the assets of the
Company, if there is no such assumption, the Board may, but shall not be
required to, provide that any unexercisable portion of this option (other than
any such portion which has expired as provided in Section 1 or terminated as
provided in Section 4) shall be immediately exercisable as of such date prior to
such merger, similar reorganization, or sale of assets as the Board determines.
c. As used in this Agreement, the term "Shares" shall mean
the shares covered by this option, as adjusted in accordance with this paragraph
12.
13. Miscellaneous. This Agreement shall be governed by, and
-------------
construed and enforced in accordance with, the laws of The State of California.
This Agreement shall be binding upon and inure to the benefit of the heirs and
legal representatives of the Optionee and the successors and assigns of the
Company, but shall not be assigned by the Optionee at any time without the prior
written permission of the Company, and any such attempted assignment
7.
<PAGE>
shall be void. The Optionee accepts the option evidenced by this Agreement in
the full satisfaction of the obligation of the Company to grant an option to the
Optionee pursuant to the letter agreement dated April 20th, 1992.
----------------
IN WITNESS WHEREOF the parties have executed this Stock Option
Agreement as of the Option Date.
OPTIKA IMAGING SYSTEMS, INC.
By:
-------------------------- ------------------------------------
President Optionee [Sign Name]
------------------------------------
[Print Name]
------------------------------------
Address:
----------------------------
----------------------------
Social Security No.:
----------------
Option Date:
------------------------
Commencement Date:
------------------
Number of Shares:
-------------------
Option Price: Per Share
------------
8.
<PAGE>
EXHIBIT 99.2
OPTIKA IMAGING SYSTEMS, INC.
1994 STOCK OPTION/STOCK ISSUANCE PLAN
-------------------------------------
AS RESTATED AND AMENDED THROUGH MAY 21, 1996
ARTICLE ONE
GENERAL
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I. PURPOSE OF THE PLAN
This 1994 Stock Option/Stock Issuance Plan, as amended and restated,
is intended to promote the interests of Optika Imaging Systems, Inc., a Delaware
corporation, by providing eligible individuals with the opportunity to obtain an
equity interest, or otherwise increase their equity interest, in the
Corporation. This Plan shall serve as the successor equity incentive program to
the Corporation's 1992 Stock Plan.
II. DEFINITIONS
For the purposes of this Plan, the following definitions shall be in
effect:
AUTOMATIC OPTION GRANT PROGRAM: the automatic option grant program in
effect under the Plan.
BOARD: the Corporation's Board of Directors.
CHANGE IN CONTROL: a change in ownership or control of the Corporation
effected through either of the following transactions:
- the direct or indirect acquisition by any person or related group
of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of
the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such stockholders to
accept, or
- a change in the composition of the Board over a period of thirty-six
(36) months or less such that a majority of the Board members ceases, by
reason of one or more contested elections for Board membership, to be
comprised of individuals who either (a) have been Board members
continuously since the beginning of such period or (b) have been elected or
<PAGE>
nominated for election as Board members during such period by at least a
majority of the Board members described in clause (a) who were still in
office at the time such election or nomination was approved by the Board;
provided, however, that a change in the composition of the Board pursuant
to Section 4.3.1(b) or Section 4.3.6 of the Corporation's Amended and
Restated Articles of Incorporation shall not constitute a Change in
Control.
CODE: the Internal Revenue Code of 1986, as amended.
COMMITTEE: the committee of two (2) or more non-employee Board members
appointed by the Board to administer the Plan.
COMMON STOCK: shares of the Corporation's common stock.
CORPORATE TRANSACTION: either of the following stockholder-approved
transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to
such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of
the Corporation.
CORPORATION: Optika Imaging Systems, Inc., a Delaware corporation, and
its successors.
DISCRETIONARY OPTION GRANT PROGRAM: the discretionary option grant
program in effect under the Plan.
ELIGIBLE DIRECTOR: a non-employee Board member eligible to participate
in the Automatic Option Grant Program in accordance with the eligibility
provisions of Section v, Article One.
EMPLOYEE: an individual who performs services while in the employ of
the Corporation (or any Parent or Subsidiary) subject to the control and
direction of the
2.
<PAGE>
employer entity not only as to the work to be performed but also as to the
manner and method of performance.
EXERCISE DATE: the date on which the Corporation shall have received
written notice of the option exercise.
FAIR MARKET VALUE: the Fair Market Value per share of Common Stock
determined in accordance with the following provisions:
- If the Common Stock is not at the time listed or admitted to trading
on any national stock exchange but is traded on the Nasdaq National Market,
the Fair Market Value shall be the closing selling price per share on the
date in question, as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market or any successor system.
If there is no reported closing selling price for the Common Stock on the
date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
- If the Common Stock is at the time listed or admitted to trading on
any national securities exchange, then the Fair Market Value shall be the
closing selling price per share on the date in question on the exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of Common Stock
on such exchange on the date in question, then the Fair Market Value shall
be the closing selling price on the exchange on the last preceding date for
which such quotation exists.
- If the Common Stock is on the date in question neither listed nor
admitted to trading on any national securities exchange nor traded on the
Nasdaq National Market, then the Fair Market Value of the Common Stock on
such date shall be determined by the Plan Administrator after taking into
account such factors as the Plan Administrator shall deem appropriate.
- For purposes of any option grants made on the Underwriting Date, the
Fair Market Value shall be deemed to be equal to the price per share at
which the Common Stock is to be sold in the initial public offering
pursuant to the Underwriting Agreement.
HOSTILE TAKE-OVER: a change in ownership of the Corporation effected
through the following transaction:
- the direct or indirect acquisition by any person or related group of
persons (other than the Corporation or a person that directly or indirectly
3.
<PAGE>
controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3
of the 1934 Act) of securities possessing more than fifty percent (50%)
of the total combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation's stockholders which the Board does not recommend such
stockholders to accept, and
---
- the acceptance of more than fifty percent (50%) of the
securities so acquired in such tender or exchange offer is from holders
other than Section 16 Insiders.
INCENTIVE OPTION: a stock option which satisfies the
requirements of Code Section 422.
INVOLUNTARY TERMINATION: the termination of the Service of any
Optionee or Participant which occurs by reason of:
- such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
- such individual's voluntary resignation following (i) a change
in his or her position with the Corporation (or Parent or Subsidiary
employing Optionee) which materially reduces his or her level of
responsibility, (B) a reduction in his or her level of compensation
(including base salary, fringe benefits and any non-discretionary and
objective-standard incentive payment or bonus award) by more than ten
percent (10%) in the aggregate or (C) a relocation of such individual's
place of employment by more than fifty (50) miles, provided and only if
such change, reduction or relocation is effected by the Corporation
without the individual's consent.
MISCONDUCT: the commission of any act of fraud, embezzlement or
dishonesty by the Optionee or Participant, any unauthorized use or disclosure by
such individual of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary) or any other intentional misconduct by such
individual adversely affecting the business or affairs of the Corporation in a
material manner. The foregoing definition shall not be deemed to be inclusive of
all the acts or omissions which the Corporation or any Parent or Subsidiary may
consider as grounds for the dismissal or discharge of any Optionee, Participant
or other individual in the Service of the Corporation.
1934 ACT: the Securities Exchange Act of 1934, as amended.
NON-STATUTORY OPTION: a stock option not intended to meet the
requirements of Code Section 422.
4.
<PAGE>
OPTIONEE: a person to whom an option is granted under the Option
Grant Program.
PARENT: Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each such
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
PARTICIPANT: a person who is issued Common Stock under the Stock
Issuance Program.
PERMANENT DISABILITY OR PERMANENTLY DISABLED: shall mean the
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of twelve
(12) months or more. However, solely for purposes of the Automatic Option Grant
Program, Permanent Disability or Permanently Disabled shall mean the inability
of the non-employee Board member to perform his or her usual duties as a Board
member by reason of any medically determinable physical or mental impairment
expected to result in death or to be of continuous duration of twelve (12)
months or more.
PLAN: shall mean the Corporation's 1994 Stock Option/Stock
Issuance Plan, as amended and restated and set forth in this document.
PLAN EFFECTIVE DATE: shall mean August 12, 1994, the date on
which the Plan was adopted by the Board.
PLAN ADMINISTRATOR: either the Board or the Committee, to the
extent the Committee is at the time responsible for the administration of the
Plan in accordance with Section IV of Article One.
PREDECESSOR PLAN: the Corporation's 1992 Stock Plan.
SALARY INVESTMENT OPTION GRANT PROGRAM: shall mean the salary
investment option grant program in effect under the Plan.
SECTION 12(G) REGISTRATION DATE: the date on which the initial
registration of the Common Stock under Section 12(g) of the 1934 Act becomes
effective.
5.
<PAGE>
SECTION 16 INSIDER: shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
SERVICE: the performance of services on a periodic basis for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-
employee member of the board of directors or an independent consultant, except
to the extent otherwise specifically provided in the applicable stock option or
stock issuance agreement.
SUBSIDIARY: any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
such corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
STOCK ISSUANCE PROGRAM: shall mean the stock issuance program in
effect under the Plan.
TAXES: shall mean the Federal, state and local income and
employment tax liabilities incurred by the holder of Non-Statutory Options or
unvested shares of Common Stock in connection with the exercise of those options
or the vesting of those shares.
10% STOCKHOLDER: the owner of stock (as determined under Code
Section 424(d)) possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Corporation or any Parent or
Subsidiary.
TAKE-OVER PRICE: the greater of (a) the Fair Market Value per
-------
share of Common Stock on the date the particular option to purchase such stock
is surrendered to the Corporation in connection with a Hostile Take-Over or (b)
the highest reported price per share of Common Stock paid by the tender offeror
in effecting such Hostile Take-Over. However, if the cancelled option is an
Incentive Option, then the Take-Over Price shall not exceed the clause (a) price
per share.
UNDERWRITING AGREEMENT: shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
UNDERWRITING DATE: shall mean the date on which the Underwriting
Agreement is executed and priced in connection with the initial public offering
of the Common Stock.
III. STRUCTURE OF THE PLAN
A. The Plan shall be divided into four separate equity programs:
6.
<PAGE>
(i) the Discretionary Option Grant Program under which
eligible persons may, at the discretion of the Plan Administrator, be
granted options to purchase shares of Common Stock,
(ii) the Stock Issuance Program under which eligible persons
may, at the discretion of the Plan Administrator, be issued shares of
Common Stock directly, either through the immediate purchase of such
shares or as a bonus for services rendered the Corporation (or any
Parent or Subsidiary),
(iii) the Salary Investment Option Grant Program under which
eligible employees may elect to have a portion of their base salary
invested each year in special below-market option grants, and
(iv) the Automatic Option Grant Program under which eligible
non-employee Board members shall automatically receive option grants
at periodic intervals to purchase shares of Common Stock.
B. The Discretionary Option Grant and Stock Issuance programs became
effective on the Plan Effective Date. The Salary Investment Option Grant
Program shall become effective when implemented by the Plan Administrator. The
Automatic Option Grant Program shall become effective on the Underwriting Date.
C. The provisions of Articles One and Six shall apply to all equity
programs under the Plan and shall govern the interests of all persons under the
Plan.
IV. ADMINISTRATION OF THE PLAN
A. Until the Section 12(g) Registration Date, the Discretionary Option
Grant and Stock Issuance Programs shall be administered by the Board or the
Committee. From and after such Section 12(g) Registration Date, the
Discretionary Option Grant and Stock Issuance Programs shall be administered
solely and exclusively by the Committee. No non-employee Board member shall be
eligible to serve on the Committee if such individual has, within the relevant
period designated below, received an option grant or direct stock issuance under
this Plan or any other stock plan of the Corporation (or any Parent or
Subsidiary):
- for each of the initial members of the Committee, the period
commencing with the Section 12(g) Registration Date and ending with the
date of his or her appointment to the Committee, or
- for any successor or substitute member, the twelve (12)-month
period immediately preceding the date of his or her appointment to the
Committee or (if shorter) the period commencing with the Section 12(g)
7.
<PAGE>
Registration Date and ending with the date of his or her appointment to
the Committee.
B. Members of the Committee shall serve for such period of time
as the Board may determine and shall be subject to removal by the Board at any
time.
C. The Plan Administrator shall have full power and authority
(subject to the express provisions of the Plan) to establish rules and
regulations for the proper administration of the Discretionary Option Grant,
Stock Issuance and Salary Investment Option Grant Programs and to make such
determinations under, and issue such interpretations of, the provisions of such
programs and any outstanding option grants or stock issuances thereunder as it
may deem necessary or advisable. Decisions of the Plan Administrator shall be
final and binding on all parties who have an interest in the Discretionary
Option Grant, Stock Issuance or Salary Investment Option Grant Programs, or any
outstanding option grant or share issuance thereunder.
D. Administration of the Automatic Option Grant Programs shall
be self-executing in accordance with the terms of such program, and no Plan
Administrator shall exercise any discretionary functions with respect to any
option grants or stock issuances made under that program.
V. ELIGIBILITY
A. The persons eligible to participate in the Discretionary
Option Grant and Stock Issuance Programs are as follows:
(i) Employees,
(ii) non-employee members of the Board (other than
those serving as members of the Committee) or the board of directors of
any Parent or Subsidiary, and
(iii) consultants who provide services to the
Corporation (or any Parent or Subsidiary).
B. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority to determine,
(i) with respect to the option grants under the Discretionary Option Grant
Program, which eligible persons are to receive option grants, the time or times
when such option grants are to be made, the number of shares to be covered by
each such grant, the status of the granted option as either an Incentive Option
or a Non-Statutory Option, the time or times when each option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding and (ii) with
respect to stock issuances under the Stock Issuance Program, which eligible
persons are to receive stock issuances, the time or times when such issuances
are to be made, the number of shares to
8.
<PAGE>
be issued to each Participant, the vesting schedule (if any) applicable to the
issued shares and the consideration for such shares.
C. The Plan Administrator shall have the absolute discretion either to
grant options in accordance with the Discretionary Option Grant Program or to
effect stock issuances in accordance with the Stock Issuance Program.
D. Only Section 16 Insiders and other highly compensated Employees shall
be eligible to participate in the Salary Investment Option Grant Program.
E. The individuals who shall be eligible to participate in the Automatic
Option Grant Program shall be limited to (i) those individuals serving as non-
employee Board members on the Underwriting Date, (ii) those individuals who
first become non-employee Board members after the Underwriting Date, whether
through appointment by the Board or election by the Corporation's stockholders,
and (iii) those individuals who continue to serve as non-employee Board members
after one or more Annual Stockholders Meetings held after the Underwriting Date.
However, those non-employee Board members who were appointed on or after April
1, 1996 but prior to the Underwriting Date shall not be eligible to receive an
initial option grant under the Automatic Option Grant Program on the
Underwriting Date. In addition, a non-employee Board member who has previously
been in the employ of the Corporation (or any Parent or Subsidiary) shall not be
eligible to receive an option grant under the Automatic Option Grant Program on
the Underwriting Date or at the time he or she first becomes a non-employee
Board member, but shall be eligible to receive periodic option grants under the
Automatic Option Grant Program as he or she continues to serve as a non-
employee Board member.
VI. STOCK SUBJECT TO THE PLAN
A. Shares of Common Stock shall be available for issuance under
the Plan and shall be drawn from either the Corporation's authorized but
unissued shares of Common Stock or from reacquired shares of Common Stock,
including shares repurchased by the Corporation on the open market. The maximum
number of shares of Common Stock which may be issued over the ten (10)-year term
of the Plan shall not exceed 2,790,000/*/ shares, subject to adjustment from
time to time in accordance with the provisions of this Section VI. Such
authorized share reserve is comprised of (i) the number of shares which remained
available for issuance, as of the Plan Effective Date, under the Predecessor
Plan as last approved by the Corporation's stockholders, including the shares
subject to the outstanding options incorporated into this Plan and any other
shares which would have been available for future option grant under the
Predecessor Plan as last approved by the stockholders, plus (ii) an increase of
520,000/*// shares authorized by the Board as of the Plan Effective Date and
subsequently approved by the Corporation's stockholders, plus (iii) an
- --------
/*// Adjusted for the 4-for-1 split of the Common Stock effected on November
22, 1994.
9.
<PAGE>
additional increase of 200,000 shares authorized by the Board on November 8,
1995, and approved by the Corporation's stockholders in February 1996, plus (iv)
an additional increase of 750,000 shares approved by the Board in February 1996
and by the Corporation's stockholders in June 1996. As one or more outstanding
options under the Predecessor Plan which have been incorporated into this Plan
are exercised, the number of shares issued with respect to each such option
shall reduce, on a share-for-share basis, the number of shares available for
issuance under this Plan. In addition, the share reserve under the Plan shall be
reduced on a share-for-share basis for each share of Common Stock issued under
the Corporation's Special Stock Option/Stock Purchase Plan, pursuant to which a
maximum of 80,000 shares of Common Stock have been reserved for issuance to
service providers of the Corporation's Business Solution Partner Companies.
B. The number of shares of Common Stock available for issuance
under the Plan shall automatically increase on the first trading day of each of
the 1998 and 1999 calendar years, by an amount equal to three percent (3%) of
the shares of Common Stock outstanding on December 31 of the immediately
preceding calendar year. No Incentive Options may be granted on the basis of the
additional shares of Common Stock resulting from such annual increases.
C. In no event may any one individual participating in the Plan
be granted stock options, separately exercisable stock appreciation rights and
direct stock issuances for more than 500,000 shares of Common Stock in the
aggregate per calendar year, beginning with the 1996 calendar year.
D. Should one or more outstanding options under this Plan
(including options incorporated from the Predecessor Plan) expire or terminate
for any reason prior to exercise in full (including any option cancelled in
accordance with the cancellation-regrant provisions of Section IV of Article Two
of the Plan), then the shares subject to the portion of each option not so
exercised shall be available for subsequent option grants under the Plan. Shares
subject to any stock appreciation rights exercised under the Plan and all share
issuances under the Plan, whether or not the shares are subsequently repurchased
by the Corporation pursuant to its repurchase rights under the Plan, shall
reduce on a share-for-share basis the number of shares of Common Stock available
for subsequent issuance under the Plan. In addition, should the exercise price
of an outstanding option under the Plan be paid with shares of Common Stock or
should shares of Common Stock otherwise issuable under the Plan be withheld by
the Corporation in satisfaction of the withholding taxes incurred in connection
with the exercise of an outstanding option under the Plan or the vesting of a
direct share issuance made under the Plan, then the number of shares of Common
Stock available for issuance under the Plan shall be reduced by the gross number
of shares for which the option is exercised or which vest under the share
issuance, and not by the net number of shares of Common Stock actually issued to
the holder of such option or share issuance.
10.
<PAGE>
E. Should any change be made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, then appropriate adjustments shall be made to (i) the maximum
number and/or class of securities issuable under the Plan, (ii) the maximum
number and/or class of securities for which any one individual participating in
the Plan may be granted stock options, separately exercisable stock appreciation
rights and direct stock issuances in the aggregate under this Plan per calendar
year, (iii) the number and/or class of securities for which grants are
subsequently to be made under the Automatic Option Grant Program to new and
continuing non-employee Board members, (iv) the number and/or class of
securities and price per share in effect under each option outstanding under the
Plan and (v) the number and/or class of securities and price per share in effect
under each outstanding option incorporated into this Plan from the Predecessor
Plan. Such adjustments to the outstanding options are to be effected in a manner
which shall preclude the enlargement or dilution of rights and benefits
thereunder. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.
11.
<PAGE>
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
----------------------------------
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by action of
the Plan Administrator and may, at the Plan Administrator's discretion, be
either Incentive Options or Non-Statutory Options. Individuals who are not
Employees may only be granted Non-Statutory Options. Each granted option shall
be evidenced by one or more instruments in the form approved by the Plan
Administrator; provided, however, that each such instrument shall comply with
--------
the terms and conditions specified below. Each instrument evidencing an
Incentive Option shall, in addition, be subject to the applicable provisions of
Section II of this Article Two.
A. Option Price.
------------
1. The option price per share shall be fixed by the Plan
Administrator in accordance with the following provisions:
(i) The option price per share of Common Stock subject
to an Incentive Option shall in no event be less than one hundred
percent (100%) of the Fair Market Value of such Common Stock on the
grant date.
(ii) The option price per share of Common Stock subject
to a Non-Statutory Option shall in no event be less than eighty-five
percent (85%) of the Fair Market Value of such Common Stock on the grant
date.
2. The option price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Section I of Article Four,
be payable in cash or check made payable to the Corporation. Should the option
be exercised on or after the Section 12(g) Registration Date, then the exercise
price may also be paid as follows:
(i) in shares of Common Stock held by the Optionee for
the requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date, or
(ii) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant to
which the Optionee shall concurrently provide irrevocable written
instructions (a) to a
12.
<PAGE>
Corporation-designated brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate option price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes required
to be withheld by the Corporation by reason of such purchase and (b) to
the Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale
transaction.
3. Except to the extent such sale and remittance
procedure is utilized, payment of the option price for the purchased shares must
be made on the Exercise Date.
B. Term and Exercise of Options. Each option granted under
----------------------------
this Plan shall be exercisable at such time or times and during such period as
is determined by the Plan Administrator and set forth in the instrument
evidencing the grant. No such option, however, shall have a maximum term in
excess of ten (10) years measured from the grant date. During the lifetime of
the Optionee, the option shall be exercisable only by the Optionee and shall not
be assignable or transferable by the Optionee other than by will or by the laws
of descent and distribution following the Optionee's death.
C. Termination of Service.
----------------------
1. Except to the extent otherwise provided pursuant to
subsection C.2 below, the following provisions shall govern the exercise period
applicable to any options held by the Optionee at the time of cessation of
Service or death:
(i) Should the Optionee cease to remain in Service for
any reason other than death, Permanent Disability or Misconduct, then
the period during which each outstanding option held by such Optionee is
to remain exercisable shall be limited to the three (3)-month period
following the date of such cessation of Service.
(ii) Should such Service terminate by reason of
Permanent Disability, then the period during which each outstanding
option held by the Optionee is to remain exercisable shall be limited to
the twelve (12)-month period following the date of such cessation of
Service.
13.
<PAGE>
(iii) Should the Optionee die while holding one or more
outstanding options, then the period during which each such option is to
remain exercisable shall be limited to the twelve (12)-month period
following the date of the Optionee's death. During such limited period,
the option may be exercised by the personal representative of the
Optionee's estate or by the person or persons to whom the option is
transferred pursuant to the Optionee's will or in accordance with the
laws of descent and distribution.
(iv) Under no circumstances, however, shall any such option
be exercisable after the specified expiration date of the option term.
(v) During the applicable post-Service exercise period, the
option may not be exercised in the aggregate for more than the number of
vested shares for which the option is exercisable on the date of the
Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term,
the option shall terminate and cease to be exercisable for any vested
shares for which the option has not been exercised. However, the option
shall, immediately upon the Optionee's cessation of Service, terminate
and cease to be outstanding with respect to any option shares for which
the option is not at that time exercisable or in which the Optionee is
not otherwise at that time vested.
(vi) Should the Optionee's Service be terminated for
Misconduct, then all outstanding options held by the Optionee shall
terminate immediately and cease to be outstanding.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding,
- to extend the period of time for which the option is to
remain exercisable following the Optionee's cessation of Service or death
from the limited period in effect under subsection C.1 of this Article Two
to such greater period of time as the Plan Administrator shall deem
appropriate; provided, that in no event shall such option be exercisable
--------
after the specified expiration date of the option term; and/or
- to permit one or more options held by the Optionee under
this Article Two to be exercised, during the limited post-Service exercise
period applicable under this paragraph C., not only with respect to the
number of vested shares of Common Stock for which each such option is
exercisable at the time of the Optionee's cessation of Service but also
with respect to one or more subsequent installments for which the option
would otherwise have become exercisable had such cessation of Service not
occurred.
14.
<PAGE>
D. Stockholder Rights. An Optionee shall have no stockholder rights with
------------------
respect to any shares covered by the option until such individual shall have
exercised the option, paid the option price for the purchased shares and become
the record holder of those shares.
E. Unvested Shares. The Plan Administrator shall have the discretion to
---------------
authorize the issuance of unvested shares of Common Stock under the Plan. Should
the Optionee cease Service while holding such unvested shares, the Corporation
shall have the right to repurchase, at the option price paid per share, any or
all of those unvested shares. The terms and conditions upon which such
repurchase right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares) shall be
established by the Plan Administrator and set forth in the agreement evidencing
such repurchase right. All outstanding repurchase rights under the Plan shall
terminate automatically upon the occurrence of any Corporate Transaction, except
to the extent the repurchase rights are expressly assigned to the successor
corporation (or parent thereof) in connection with the Corporate Transaction.
F. First Refusal Rights. Until the Section 12(g) Registration Date, the
--------------------
Corporation shall have the right of first refusal with respect to any proposed
sale or other disposition by the Optionee (or any successor in interest by
reason of purchase, gift or other transfer) of any shares of Common Stock issued
under the Plan. Such right of first refusal shall be exercisable in accordance
with the terms and conditions established by the Plan Administrator and set
forth in the agreement evidencing such right.
II. INCENTIVE OPTIONS
Incentive Options may only be granted to individuals who are Employees,
and the terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Except as modified by the provisions
of this Section II, all the provisions of Articles One, Two and Six of the Plan
shall be applicable to all Incentive Options granted hereunder. Any Options
specifically designated as Non-Statutory shall not be subject to such terms and
---
conditions.
A. Dollar Limitation. The aggregate Fair Market Value (determined as of
-----------------
the respective date or dates of grant) of the Common Stock for which one
or more options granted to any Employee under this Plan (or any other
option plan of the Corporation or its Parent or Subsidiary) may for the
first time become exercisable as incentive stock options under the
Federal tax laws during any one calendar year shall not exceed the sum
of One Hundred Thousand Dollars ($100,000). To the extent the Employee
holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as incentive stock options under the
Federal tax laws shall be applied on the basis of the order in which
such options are granted. Should the number of shares of Common Stock
for which any Incentive Option first becomes exercisable in any calendar
year exceed the applicable One Hundred
15.
<PAGE>
Thousand Dollar ($100,000) limitation, then that option may nevertheless be
exercised in that calendar year for the excess number of shares as a Non-
Statutory Option under the Federal tax laws.
B. 10% Stockholder. If any individual to whom an Incentive Option is
---------------
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the grant date and the option term shall not exceed five (5)
years measured from the grant date.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, each option which is at
the time outstanding under this Article Two shall automatically accelerate so
that each such option shall, immediately prior to the specified effective date
for such Corporate Transaction, become fully exercisable with respect to the
total number of shares of Common Stock at the time subject to such option and
may be exercised for all or any portion of such shares as fully-vested shares of
Common Stock. However, an outstanding option under this Article Two shall NOT so
accelerate if and to the extent: (i) such option is, in connection with such
Corporate Transaction, either to be assumed by the successor corporation or
parent thereof or to be replaced with a comparable option to purchase shares of
the capital stock of the successor corporation or parent thereof, (ii) such
option is to be replaced with a cash incentive program of the successor
corporation which preserves the option spread existing at the time of such
Corporate Transaction and provides for subsequent payout in accordance with the
same vesting schedule applicable to such option, or (iii) the acceleration of
such option is subject to other limitations imposed by the Plan Administrator at
the time of the option grant. However, upon an Optionee's cessation of Service
by reason of an Involuntary Termination within eighteen (18) months after a
Corporate Transaction in which his or her outstanding options are assumed or
replaced pursuant to clause (i) above, each such option shall automatically
accelerate and become fully exercisable with respect to the total number of
shares of Common Stock at the time subject to such option and may be exercised
for all or any portion of such shares as fully vested shares of Common Stock.
The option as so accelerated shall remain exercisable until the earlier of (i)
-------
the expiration of the option term or (ii) the expiration of the one (1)-year
period measured from the date of such Involuntary Termination. The determination
of option comparability under clause (i) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are to be assigned to the
successor corporation (or parent thereof) in connection with such Corporate
Transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.
All outstanding repurchase rights shall terminate automatically and the shares
of Common Stock subject to those terminated rights shall immediately vest in
full, upon an Optionee's cessation of Service by reason of an Involuntary
Termination within eighteen (18) months after a Corporate Transaction in which
such repurchase rights were assigned to the successor corporation or parent
thereof.
16.
<PAGE>
C. Immediately following the consummation of a Corporate Transaction, all
outstanding options under this Article Two shall terminate and cease to remain
outstanding, except to the extent assumed by the successor corporation or its
parent company.
D. Each outstanding option under this Article Two that is assumed in
connection with a Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have been
issued to the option holder, in consummation of such Corporate Transaction, had
such person exercised the option immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the exercise price
payable per share, provided the aggregate exercise price payable for such
--------
securities shall remain the same. In addition, the class and number of
securities available for issuance under the Plan on both an aggregate and per
participant basis following the consummation of such Corporate Transaction shall
be appropriately adjusted.
E. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to provide for the automatic acceleration of one or
more outstanding options under this Article Two (and the termination of one or
more of the Corporation's outstanding repurchase rights under this Article Two)
upon the occurrence of a Change in Control. The Plan Administrator shall also
have full power and authority to condition any such option acceleration (and the
termination of any outstanding repurchase rights) upon the Optionee's cessation
of Service by reason of an Involuntary Termination within a specified period
following such Change in Control.
F. Any options accelerated in connection with a Change in Control shall
remain fully exercisable until the expiration or sooner termination of the
option term or the surrender of such option in accordance with Section V of this
Article Two.
G. The grant of options under this Article Two shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
H. The portion of any Incentive Option accelerated under this Section III
in connection with a Corporate Transaction or Change in Control shall remain
exercisable as an incentive stock option under the Federal tax laws only to the
extent the dollar limitation of Section II of this Article Two is not exceeded.
To the extent such dollar limitation is exceeded, the accelerated portion of
such option shall be exercisable as a Non-Statutory Option under the Federal tax
laws.
IV. CANCELLATION AND REGRANT OF OPTIONS
17.
<PAGE>
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected Optionees, the
cancellation of any or all outstanding options under this Article Two (including
outstanding options under the Predecessor Plan incorporated into this Plan) and
to grant in substitution new options under the Plan covering the same or
different numbers of shares of Common Stock but with an option price per share
not less than (i) one hundred percent (100%) of the Fair Market Value on the new
grant date in the case of a grant of an Incentive Option, (ii) one hundred ten
percent (110%) of such Fair Market Value in the case of an Incentive Option
grant to a 10% Stockholder or (iii) eighty-five percent (85%) of such Fair
Market Value in the case of all other grants.
V. STOCK APPRECIATION RIGHTS
A. Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this Section
V, one or more Optionees may be granted the right, exercisable upon such terms
and conditions as the Plan Administrator may establish, to surrender all or part
of an unexercised option under this Article Two in exchange for a distribution
from the Corporation in an amount equal to the excess of (i) the Fair Market
Value (on the option surrender date) of the number of shares in which the
Optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (ii) the aggregate exercise price payable for such vested
shares.
B. No surrender of an option shall be effective hereunder unless it is
approved by the Plan Administrator. If the surrender is so approved, then the
distribution to which the Optionee shall accordingly become entitled under this
Section V may be made in shares of Common Stock valued at Fair Market Value on
the option surrender date, in cash, or partly in shares and partly in cash, as
the Plan Administrator shall in its sole discretion deem appropriate.
C. If the surrender of an option is rejected by the Plan Administrator,
then the Optionee shall retain whatever rights the Optionee had under the
surrendered option (or surrendered portion thereof) on the option surrender date
and may exercise such rights at any time prior to the later of (i) five (5)
-----
business days after the receipt of the rejection notice or (ii) the last day on
which the option is otherwise exercisable in accordance with the terms of the
instrument evidencing such option, but in no event may such rights be exercised
more than ten (10) years after the date of the option grant.
D. One or more Section 16 Insiders may, in the Plan Administrator's sole
discretion, be granted limited stock appreciation rights in tandem with their
outstanding options under this Article Two. Upon the occurrence of a Hostile
Take-Over at a time when the Corporation's outstanding Common Stock is
registered under Section 12(g) of the 1934 Act, each such officer holding one or
more options with such a limited stock appreciation right in effect for at least
six (6) months shall have the unconditional right (exercisable for a thirty
(30)-day period following such Hostile Take-Over) to surrender each
18.
<PAGE>
such option to the Corporation, to the extent the option is at the time
exercisable for fully vested shares of Common Stock. The officer shall in return
be entitled to a cash distribution from the Corporation in an amount equal to
the excess of (i) the Take-Over Price of the vested shares of Common Stock at
the time subject to each surrendered option (or surrendered portion of such
option) over (ii) the aggregate exercise price payable for such vested shares.
Such cash distribution shall be made within five (5) days following the option
surrender date. Neither the approval of the Plan Administrator nor the consent
of the Board shall be required in connection with such option surrender and cash
distribution. Any unsurrendered portion of the option shall continue to remain
outstanding and become exercisable in accordance with the terms of the
instrument evidencing such grant.
E. The shares of Common Stock subject to any option surrendered for an
appreciation distribution pursuant to this Section V shall NOT be available for
subsequent issuance under the Plan.
19.
<PAGE>
ARTICLE THREE
STOCK ISSUANCE PROGRAM
----------------------
I. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate purchases without any intervening stock option
grants. The issued shares shall be evidenced by a Stock Issuance Agreement that
complies with the terms and conditions of this Article Three.
A. Consideration.
-------------
1. Shares of Common Stock may be issued under the Stock Issuance
Program for one or more of the following items of consideration which the Plan
Administrator may deem appropriate in each individual instance:
(i) full payment in cash or check made payable to
the Corporation's order;
(ii) a promissory note payable to the Corporation's
order in one or more installments; or
(iii) past services rendered to the Corporation or
any Parent or Subsidiary.
2. The shares may, in the absolute discretion of the Plan
Administrator, be issued for consideration with a value less than one hundred
percent (100%) of the Fair Market Value of such shares at the time of issuance,
but in no event less than eighty-five percent (85%) of such Fair Market Value.
B. Vesting Provisions.
------------------
1. Shares of Common Stock issued under the Stock Issuance
Program may, in the absolute discretion of the Plan Administrator, be fully and
immediately vested upon issuance (as a bonus for past services) or may vest in
one or more installments over the Participant's period of Service or the
Corporation's attainment of performance milestones. The elements of the vesting
schedule applicable to any unvested shares of Common Stock issued under the
Stock Issuance Program, namely:
20.
<PAGE>
(i) the Service period to be completed by the
Participant or the performance objectives to be achieved by the
Corporation,
(ii) the number of installments in which the shares
are to vest,
(iii) the interval or intervals (if any) which are to
lapse between installments, and
(iv) the effect which death, Permanent Disability or
other event designated by the Plan Administrator is to have upon the
vesting schedule,
shall be determined by the Plan Administrator and incorporated into the Stock
Issuance Agreement executed by the Corporation and the Participant at the time
such unvested shares are issued.
2. The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to him or her under the Plan,
whether or not his or her interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular
cash dividends paid on such shares. Any new, additional or different shares of
stock or other property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive with respect to
his or her unvested shares by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration or by reason of any Corporate Transaction shall be
issued, subject to (i) the same vesting requirements applicable to his or her
unvested shares and (ii) such escrow arrangements as the Plan Administrator
shall deem appropriate.
3. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock under the Stock Issuance
Program, then the Corporation shall have the right to require the Participant to
surrender those shares immediately to the Corporation for cancellation, and the
Participant shall cease to have any further stockholder rights with respect to
the surrendered shares. To the extent the surrendered shares were previously
issued to the Participant for consideration paid in cash or cash equivalent
(including the Participant's purchase-money promissory note), the Corporation
shall repay to the Participant the cash consideration paid for the surrendered
shares and shall cancel the unpaid principal balance of any outstanding
purchase-money note of the Participant attributable to such surrendered shares.
4. The Plan Administrator may in its discretion elect to waive
the surrender and cancellation of one or more unvested shares of Common Stock
(or other assets attributable thereto) which would otherwise occur upon the non-
completion of the
21.
<PAGE>
vesting schedule applicable to such shares. Such waiver shall result in the
immediate vesting of the Participant's interest in the shares of Common Stock as
to which the waiver applies. Such waiver may be effected at any time, whether
before or after the Participant's cessation of Service or the attainment or non-
attainment of the applicable performance objectives.
C. First Refusal Rights. Until the Section 12(g) Registration Date, the
--------------------
Corporation shall have a right of first refusal with respect to any proposed
disposition by the Participant (or any successor in interest by reason
of purchase, gift or other transfer) of any shares of Common Stock issued under
this Article Three. Such right of first refusal shall be exercisable in
accordance with the terms and conditions established by the Plan Administrator
and set forth in the agreement evidencing such right.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. All of the Corporation's outstanding repurchase rights under this
Article Three shall automatically terminate upon the occurrence of a Corporate
Transaction, except to the extent the Corporation's outstanding repurchase
rights are expressly assigned to the successor corporation (or parent thereof)
in connection with such Corporate Transaction. However, any assigned repurchase
rights covering the unvested shares held by a Participant under this Article
Three shall immediately terminate should there occur an Involuntary Termination
of that Participant's Service within eighteen (18) months after such Corporate
Transaction.
B. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the shares are issued under this Article Three or
at any time while those shares remain outstanding, to provide for the automatic
termination of the Corporation's repurchase rights with respect to those shares
should there occur a Change in Control. The Plan Administrator shall also have
full power and authority to condition the termination of those repurchase rights
upon the Participant's cessation of Service by reason of an Involuntary
Termination within a specified period following such Change in Control.
III. SHARE ESCROW/TRANSFER RESTRICTIONS
A. Unvested shares may, in the Plan Administrator's discretion, be held
in escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends on
the certificates evidencing such unvested shares.
B. The Participant shall have no right to transfer any unvested shares
of Common Stock issued to him or her under the Stock Issuance Program. For
purposes of this restriction, the term "transfer" shall include (without
limitation) any sale, pledge, assignment, encumbrance, gift or other disposition
of such shares, whether voluntary or involuntary. Upon any such attempted
transfer, the unvested shares shall immediately be
22.
<PAGE>
cancelled in accordance with substantially the same procedure in effect under
Section I.B.3 of this Article Three, and neither the Participant nor the
proposed transferee shall have any rights with respect to such cancelled shares.
However, the Participant shall have the right to make a gift of unvested shares
acquired under the Stock Issuance Program to his or her spouse or issue,
including adopted children, or to a trust established for such spouse or issue,
provided the transferee of such shares delivers to the Corporation a written
agreement to be bound by all the provisions of the Stock Issuance Program and
the Stock Issuance Agreement applicable to the gifted shares.
23.
<PAGE>
ARTICLE FOUR
SALARY INVESTMENT OPTION GRANT PROGRAM
--------------------------------------
I. OPTION GRANTS
The Committee shall have the sole and exclusive authority to determine
the calendar year or years (if any) for which the Salary Investment Option Grant
Program is to be in effect and to select the Section 16 Insiders and other
highly compensated Employees eligible to participate in the Salary Investment
Option Grant Program for those calendar year or years. Each selected individual
who elects to participate in the Salary Investment Option Grant Program must,
prior to the start of each calendar year of participation, file with the Plan
Administrator (or its designate) an irrevocable authorization directing the
Corporation to reduce his or her base salary for that calendar year by an amount
not less than Ten Thousand Dollars ($10,000.00) nor more than Fifty Thousand
Dollars ($50,000.00). Each individual who files a proper salary reduction
authorization shall automatically be granted an option under this Salary
Investment Option Grant Program on the first trading day in January of the
calendar year for which that salary reduction is to be in effect.
II. OPTION TERMS
Each option shall be a Non-Statutory Option evidenced by one or more
documents in the form approved by the Plan Administrator; provided, however,
--------
that each such document shall comply with the terms specified below.
A. Exercise Price.
--------------
1. The exercise price per share shall be thirty-three and one-
third percent (33-1/3%) of the Fair Market Value per share of Common Stock on
the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the alternative
forms authorized under the Discretionary Option Grant Program. Except to the
extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Number of Option Shares. The number of shares of Common Stock
-----------------------
subject to the option shall be determined pursuant to the following
formula (rounded down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
24.
<PAGE>
A is the dollar amount by which the Optionee's base salary is to
be reduced for the calendar year, and
B is the Fair Market Value per share of Common Stock on the
option grant date.
C. Exercise and Term of Options. The option shall become
----------------------------
exercisable in a series of twelve (12) successive equal monthly installments
upon the Optionee's completion of each calendar month of Service in the calendar
year for which the salary reduction is in effect. Each option shall have a
maximum term of ten (10) years measured from the option grant date.
D. Effect of Termination of Service. Should the Optionee cease
--------------------------------
Service for any reason while holding one or more options under this Article
Three, then each such option shall remain exercisable, for any or all of the
shares for which the option is exercisable at the time of such cessation of
Service, until the earlier of (i) the expiration of the ten (10)-year option
-------
term or (ii) the expiration of the three (3)-year period measured from the date
of such cessation of Service. Should the Optionee die while holding one or more
options under this Article Three, then each such option may be exercised, for
any or all of the shares for which the option is exercisable at the time of the
Optionee's cessation of Service (less any shares subsequently purchased by
Optionee prior to death), by the personal representative of the Optionee's
estate or by the person or persons to whom the option is transferred pursuant to
the Optionee's will or in accordance with the laws of descent and distribution.
Such right of exercise shall lapse, and the option shall terminate, upon the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the
- -------
three (3)-year period measured from the date of the Optionee's cessation of
Service. However, the option shall, immediately upon the Optionee's cessation of
Service for any reason, terminate and cease to remain outstanding with respect
to any and all shares of Common Stock for which the option is not otherwise at
that time exercisable.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction while the Optionee
remains in Service, each outstanding option held by such Optionee under this
Salary Investment Option Grant Program shall automatically accelerate so that
each such option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable with respect to the total number of shares
of Common Stock at the time subject to such option and may be exercised for any
or all of those shares as fully-vested shares of Common Stock. Each such
outstanding option shall be assumed by the successor corporation (or parent
thereof) in the Corporate Transaction and shall remain exercisable for the
fully-vested shares until the earlier of (i) the expiration of the ten (10)-year
-------
option term or (ii) the expiration of the three (3)-year period measured from
the date of the Optionee's cessation of Service.
25.
<PAGE>
B. In the event of a Change in Control while the Optionee remains in
Service, each outstanding option held by such Optionee under this Salary
Investment Option Grant Program shall automatically accelerate so that each such
option shall immediately become fully exercisable with respect to the total
number of shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
The option shall remain so exercisable until the earlier or (i) the expiration
-------
of the ten (10)-year option term or (ii) the expiration of the three (3)-year
period measured from the date of the Optionee's cessation of Service.
C. The grant of options under the Salary Investment Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
III. REMAINING TERMS
The remaining terms of each option granted under the Salary Investment
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.
26.
<PAGE>
ARTICLE FIVE
AUTOMATIC OPTION GRANT PROGRAM
------------------------------
I. OPTION TERMS
A. Grant Dates. Option grants shall be made on the dates specified
-----------
below:
1. Each individual who is serving as a non-employee Board
member on the Underwriting Date, other than an individual appointed to the Board
as a non-employee Board member on or after April 1, 1996 but prior to the
Underwriting Date, shall automatically be granted, on such date, a Non-Statutory
Option to purchase 10,000 shares of Common Stock, provided such individual has
not previously been in the employ of the Corporation (or any Parent or
Subsidiary).
2. Each individual who is first elected or appointed as a non-
employee Board member at any time after the Underwriting Date shall
automatically be granted, on the date of such initial election or appointment
(as the case may be), a Non-Statutory Option to purchase 10,000 shares of Common
Stock, provided such individual has not previously been in the employ of the
Corporation or any Parent or Subsidiary.
3. On the date of each Annual Stockholders Meeting held after
the Underwriting Date, each individual who is to continue to serve as an
Eligible Director after such Meeting (including those individuals first
appointed on or after April 1, 1996 but prior to the Underwriting Date) whether
or not that individual is standing for re-election to the Board at that
particular Annual Meeting, shall automatically be granted a Non-Statutory Option
to purchase 2,500 shares of Common Stock, provided such individual has served as
a non-employee Board member for at least six (6) months. There shall be no limit
on the number of such 2,500-share option grants any one Eligible Director may
receive over his or her period of Board service, and non-employee Board members
who have previously been in the employ of the Corporation (or any Parent or
Subsidiary) shall be eligible to receive one or more such annual option grants
over their period of continued Board service.
B. Exercise Price.
--------------
1. The exercise price per share shall be equal to one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.
2. The exercise price shall be payable in one or more of the
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
27.
<PAGE>
C. Option Term. Each option shall have a term of ten (10) years
-----------
measured from the option grant date.
D. Exercise and Vesting of Options. Each option shall be
-------------------------------
immediately exercisable for any or all of the option shares. However, any shares
purchased under the option shall be subject to repurchase by the Corporation, at
the exercise price paid per share, upon the Optionee's cessation of Board
service prior to vesting in those shares. Each initial 10,000-share grant shall
vest, and the Corporation's repurchase right shall lapse, in a series of four
(4) successive equal annual installments over the Optionee's period of continued
service as a Board member, with the first such installment to vest upon the
Optionee's completion of one (1) year of Board service measured from the option
grant date. Each annual 2,500-share grant shall vest, and the Corporation's
repurchase right shall lapse, upon the Optionee's completion of one (1) year of
Board service measured from the option grant date.
E. Termination of Board Service. The following provisions shall
----------------------------
govern the exercise of any options held by the Optionee at the time the
Optionee ceases to serve as a Board member:
(i) The Optionee (or, in the event of Optionee's death, the
personal representative of the Optionee's estate or the person or
persons to whom the option is transferred pursuant to the Optionee's
will or in accordance with the laws of descent and distribution) shall
have a twelve (12)-month period following the date of such cessation of
Board service in which to exercise each such option.
(ii) During the twelve (12)-month exercise period, the option
may not be exercised in the aggregate for more than the number of vested
shares of Common Stock for which the option is exercisable at the time
of the Optionee's cessation of Board service.
(iii) Should the Optionee cease to serve as a Board member by
reason of death or Permanent Disability, then all shares at the time
subject to the option shall immediately vest so that such option may,
during the twelve (12)-month exercise period following such cessation of
Board service, be exercised for all or any portion of those shares as
fully-vested shares of Common Stock.
(iv) In no event shall the option remain exercisable after
the expiration of the option term. Upon the expiration of the twelve
(12)-month exercise period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be outstanding for
any vested shares for which the option has not been exercised. However,
the option shall, immediately upon the Optionee's cessation of Board
service for any
28.
<PAGE>
reason other than death or Permanent Disability, terminate and cease to
be outstanding to the extent the option is not otherwise at that time
exercisable for vested shares.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, the shares of Common
Stock at the time subject to each outstanding option but not otherwise vested
shall automatically vest in full and the Corporation's repurchase right with
respect to those shares shall terminate so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
fully exercisable for all of the shares of Common Stock at the time subject to
such option and may be exercised for all or any portion of those shares as
fully-vested shares of Common Stock. Immediately following the consummation of
the Corporate Transaction, each automatic option grant shall terminate and cease
to be outstanding, except to the extent assumed by the successor corporation (or
parent thereof).
B. In connection with any Change in Control, the shares of Common
Stock at the time subject to each outstanding option but not otherwise vested
shall automatically vest in full and the Corporation's repurchase right with
respect to those shares shall terminate so that each such option shall,
immediately prior to the effective date of the Change in Control, become fully
exercisable for all of the shares of Common Stock at the time subject to such
option and may be exercised for all or any portion of those shares as fully-
vested shares of Common Stock. Each such option shall remain exercisable for
such fully-vested option shares until the expiration or sooner termination of
the option term or the surrender of the option in connection with a Hostile
Take-Over.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each
automatic option held by him or her for a period of at least six (6) months. The
Optionee shall in return be entitled to a cash distribution from the Corporation
in an amount equal to the excess of (i) the Take-Over Price of the shares of
Common Stock at the time subject to the surrendered option (whether or not the
Optionee is otherwise at the time vested in those shares) over (ii) the
aggregate exercise price payable for such shares. Such cash distribution shall
be paid within five (5) days following the surrender of the option to the
Corporation. No approval or consent of the Board or any Plan Administrator shall
be required in connection with such option surrender and cash distribution.
D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
--------
payable for such securities shall remain the same.
29.
<PAGE>
E. The grant of options under the Automatic Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
III. AMENDMENT OF THE AUTOMATIC OPTION GRANT PROGRAM
The provisions of this Automatic Option Grant Program, together with the
option grants outstanding thereunder, may not be amended at intervals more
frequently than once every six (6) months, other than to the extent necessary to
comply with applicable Federal income tax laws and regulations.
IV. REMAINING TERMS
The remaining terms of each option granted under the Automatic Option
Grant Program shall be the same as the terms in effect for option grants made
under the Discretionary Option Grant Program.
30.
<PAGE>
ARTICLE SIX
MISCELLANEOUS
-------------
I. LOANS OR INSTALLMENT PAYMENTS
A. The Plan Administrator may, in its discretion, assist any
Optionee or Participant (including an Optionee or Participant who is an officer
of the Corporation) in the exercise of one or more options granted to such
Optionee under the Discretionary Option Grant Program or the purchase of one or
more shares issued to such Participant under the Stock Issuance Program,
including the satisfaction of any Federal, state and local income and employment
tax obligations arising therefrom, by:
(i) authorizing the extension of a loan from the Corporation to
such Optionee or Participant, or
(ii) permitting the Optionee or Participant to pay the option
price or purchase price for the purchased Common Stock in installments
over a period of years.
B. The terms of any loan or installment method of payment
(including the interest rate and terms of repayment) shall be upon such terms as
the Plan Administrator specifies in the applicable option or issuance agreement
or otherwise deems appropriate at the time such option price or purchase price
becomes due and payable. Loans or installment payments may be authorized with or
without security or collateral. In all events, the maximum credit available to
the Optionee or Participant may not exceed the option or purchase price of the
acquired shares (less the par value of such shares) plus any Federal, state and
local income and employment tax liability incurred by the Optionee or
Participant in connection with the acquisition of such shares.
C. The Plan Administrator may, in its absolute discretion,
determine that one or more loans extended under this Section I shall be subject
to forgiveness by the Corporation in whole or in part upon such terms and
conditions as the Plan Administrator may in its discretion deem appropriate.
II. AMENDMENT OF THE PLAN AND AWARDS
A. The Board has complete and exclusive power and authority to
amend or modify the Plan (or any component thereof) in any or all respects
whatsoever. However, (i) no such amendment or modification shall adversely
affect rights and obligations with respect to options at the time outstanding
under the Plan, nor adversely affect the rights of any Participant with respect
to Common Stock issued under the Stock Issuance Program prior to such action,
unless the Optionee or Participant consents to such amendment and
31.
<PAGE>
(ii) any amendment made to the Salary Incentive Option Grant and Automatic
Option Grant Program (or any stock option or stock issuances outstanding
thereunder) shall be in compliance with the applicable limitations of those
programs. In addition, the Board may not, without the approval of the
Corporation's stockholders, amend the Plan to (i) increase the maximum number of
shares issuable under the Plan or the maximum number of shares for which any one
individual participating in the Plan may be granted stock options, separately
exercisable stock appreciation rights and direct stock issuances in the
aggregate per calendar year under the Plan, except for permissible adjustments
under Article One, (ii) materially modify the eligibility requirements for Plan
participation, or (iii) otherwise materially increase the benefits accruing to
Plan participants.
B. (i) Options to purchase shares of Common Stock may be granted
under the Discretionary Option Grant Program and (ii) shares of Common Stock may
be issued under the Stock Issuance Program, which are in both instances in
excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under the Option Grant Program or the
Stock Issuance Program are held in escrow until stockholder approval is obtained
for a sufficient increase in the number of shares available for issuance under
the Plan. If such stockholder approval is not obtained within twelve (12) months
after the date the first such excess option grants or excess share issuances are
made, then (i) any unexercised excess options shall terminate and cease to be
exercisable and (ii) the Corporation shall promptly refund the purchase price
paid for any excess shares actually issued under the Plan and held in escrow,
together with interest (at the applicable Short Term Federal Rate) for the
period the shares were held in escrow.
III. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock
upon the exercise of any stock options granted under Article Two or upon the
issuance of any shares under Article Three shall be subject to the satisfaction
of all applicable Federal, state and local income and employment tax withholding
requirements.
B. The Plan Administrator may, in its discretion, provide any or
all holders of Non-Statutory Options or unvested shares of Common Stock under
the Plan (other than the options granted or the shares issued under the
Automatic Option Grant Program) with the right to use shares of Common Stock in
satisfaction of all or part of the Taxes incurred by such holders in connection
with the exercise of their options or the vesting of their shares. Such right
may be provided to any such holder in either or both of the following formats:
Stock Withholding: The election to have the Corporation
-----------------
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the Taxes
(not to exceed one hundred percent (100%)) designated by the holder.
32.
<PAGE>
Stock Delivery: The election to deliver to the Corporation, at
--------------
the time the Non-Statutory Option is exercised or the shares vest, one or more
shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the Taxes) with
an aggregate Fair Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.
IV. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan originally became effective upon its adoption by the
Board on August 12, 1994 and was approved by the Corporation's stockholders on
October 10, 1994. The Plan is designed to serve as the successor to the
Corporation's 1992 Stock Plan No further option grants or stock issuances shall
be made under the Predecessor Plan from and after the Plan Effective Date.
B. On November 22, 1994, the Corporation effected a four-for-one
split of the outstanding Common Stock. On November 8, 1995 the Board adopted a
200,000-share increase in the maximum number of shares of Common Stock issuable
over the term of the Plan. The increase was approved by the Corporation's
stockholders in November 1995.
C. In February 1996, the Board amended the Plan to (i) increase the
maximum number of shares of Common Stock issuable over the term of the Plan by
750,000 shares to 2,790,000 shares and (ii) increase the maximum number of
shares of Common Stock for which any one participant in the Plan may receive
option grants, separately exercisable stock appreciation rights and direct stock
issuances in the aggregate from 500,000 shares over the term of such plan to
500,000 shares per calendar year, beginning with the 1996 calendar year. On May
21, 1996, in anticipation of the initial public offering of the Common Stock,
the Board further amended and restated the Plan to (i) provide for the immediate
termination of options granted after such date in the event of the Optionee's
termination of Service for misconduct, (ii) provide for automatic increases in
the maximum number of shares of Common Stock reserved for issuance under the
Plan to be effected on the first trading day in each of the 1998 and 1999
calendar years, and (ii) implement the Automatic Option Grant and Salary
Investment Option Grant Programs. The restatement was approved by the
Corporation's stockholders in June 1996.
D. Each stock option grant outstanding under the Predecessor Plan
immediately prior to the Plan Effective Date was incorporated into this Plan and
treated as an outstanding option under this Plan, but each such option shall
continue to be governed solely by the terms and conditions of the instrument
evidencing such grant, and nothing in this Plan shall be deemed to affect or
otherwise modify the rights or obligations of the holders of such options with
respect to their acquisition of shares of Common Stock thereunder. However, the
Plan Administrator shall have complete discretion to extend, under such
circumstances as it may deem appropriate, one or more provisions of this Plan
33.
<PAGE>
to any or all of the stock options which are incorporated into this Plan from
the Predecessor Plan but which do not otherwise contain such provisions.
E. The provisions of each restatement and amendment of the Plan
apply only to stock options and stock appreciation rights granted under the Plan
and stock issuances made under the Plan from and after the effective date of
such restatement or amendment. All stock options and stock appreciation rights
issued and outstanding under the Plan and all stock issuances effected
immediately prior to such effective date shall continue to be governed by the
terms and conditions of the Plan (and the respective instruments evidencing each
such option, stock appreciation right or stock issuance) as in effect on the
date each such option or stock appreciation right was previously granted or such
stock issuance was made, and nothing in any such restatement or amendment shall
be deemed to affect or otherwise modify the rights or obligations of the holders
of such options or stock appreciation rights with respect to their acquisition
of shares of Common Stock under such options or their exercise of such stock
appreciation rights or the rights or obligations of the individuals to which
such shares of Common Stock have been issued.
F. The Plan shall terminate upon the earlier of (i) August 11, 2004
-------
or (ii) the date on which all shares available for issuance under the Plan shall
have been issued pursuant to the exercise of the options or stock appreciation
rights granted under the Plan or the issuance of shares (whether vested or
unvested) under the Stock Issuance Program. If the date of termination is
determined under clause (i) above, then all option grants and unvested share
issuances outstanding on such date shall thereafter continue to have force and
effect in accordance with the provisions of the instruments evidencing such
option grants or share issuances.
V. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the Plan, nor any
action taken by the Plan Administrator hereunder, nor any provision of the Plan
shall be construed so as to grant any individual the right to remain in the
employ or service of the Corporation (or any Parent or Subsidiary) for any
period of specific duration, and the Corporation (or any Parent or Subsidiary
retaining the services of such individual) may terminate such individual's
employment or service at any time and for any reason, with or without cause.
VI. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
pursuant to option grants or share issuances under the Plan shall be used for
general corporate purposes.
VII. REGULATORY APPROVALS
34.
<PAGE>
The implementation of the Plan, the granting of any option under the
Plan, the issuance of any shares under the Stock Issuance Program, and the
issuance of Common Stock upon the exercise or surrender of the option grants
made hereunder shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options granted under it, and the Common Stock issued
pursuant to it.
35.
<PAGE>
EXHIBIT 99.3
OPTIKA IMAGING SYSTEMS, INC.
NOTICE OF GRANT OF STOCK OPTION
-------------------------------
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of Optika Imaging Systems, Inc. (the
"Corporation"):
Optionee:
-------- -----------------------------------------------------
Grant Date:
---------- ---------------------------------------------------
Vesting Commencement Date:
------------------------- ------------------------------------
Exercise Price: $ per share
-------------- -------------------------------------
Number of Option Shares: shares
----------------------- -------------------------------
Expiration Date:
--------------- -----------------------------------------------
Type of Option: Incentive Stock Option
-------------- -----
Non-Statutory Stock Option
-----
Exercise Schedule: The Option shall become exercisable with respect
-----------------
to twenty percent (20%) of the Option Shares upon Optionee's
completion of each of the five (5) years of Service completed after
the Vesting Commencement Date with the first such installment to
become exercisable on the first anniversary of the Vesting
Commencement Date. In no event shall the Option become exercisable
for any additional Option Shares after Optionee's cessation of
Service.
Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the Corporation's 1994 Stock Option/Stock
Issuance Plan (the "Plan"). Optionee further agrees to be bound by the terms of
the Plan and the terms of the Option as set forth in the Stock Option Agreement
attached hereto as Exhibit A.
Optionee hereby acknowledges receipt of a copy of the official
prospectus for the Plan in the form attached hereto as Exhibit B. A copy of the
Plan is available upon request made to the Corporate Secretary at the
Corporation's principal offices.
<PAGE>
No Employment or Service Contract. Nothing in this Notice or in the
---------------------------------
attached Stock Option Agreement or in the Plan shall confer upon Optionee any
right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining Optionee) or of Optionee, which
rights are hereby expressly reserved by each, to terminate Optionee's Service at
any time for any reason, with or without cause.
Definitions. All capitalized terms in this Notice shall have the
-----------
meaning assigned to them in this Notice or in the attached Stock Option
Agreement.
DATED: , 199 ___
------------------------
OPTIKA IMAGING SYSTEMS, INC.
By:
--------------------------------
Title:
----------------------------
-----------------------------------
OPTIONEE
Address:
--------------------------
-----------------------------------
ATTACHMENTS
- -----------
EXHIBIT A - STOCK OPTION AGREEMENT
EXHIBIT B - PLAN SUMMARY AND PROSPECTUS
2.
<PAGE>
EXHIBIT A
---------
STOCK OPTION AGREEMENT
----------------------
<PAGE>
EXHIBIT B
---------
PLAN SUMMARY AND PROSPECTUS
---------------------------
<PAGE>
EXHIBIT 99.4
OPTIKA IMAGING SYSTEMS, INC.
STOCK OPTION AGREEMENT
----------------------
RECITALS
- --------
A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or of the
board of directors of any Parent or Subsidiary and consultants and other
independent advisors who provide services to the Corporation (or any Parent or
Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as
---------------
of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. OPTION TERM. This option shall have a maximum term of ten (10)
-----------
years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. LIMITED TRANSFERABILITY. This option shall be neither
-----------------------
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee.
4. DATES OF EXERCISE. This option shall become exercisable for the
-----------------
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
5. CESSATION OF SERVICE. The option term specified in Paragraph 2
--------------------
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
<PAGE>
(i) Should Optionee cease to remain in Service for any reason
(other than death, Permanent Disability or Misconduct) while this option is
outstanding, then Optionee shall have a period of three (3) months
(commencing with the date of such cessation of Service) during which to
exercise this option, but in no event shall this option be exercisable at
any time after the Expiration Date.
(ii) If Optionee dies while this option is outstanding, then
the personal representative of Optionee's estate or the person or persons
to whom the option is transferred pursuant to Optionee's will or in
accordance with the laws of descent and distribution shall have the right
to exercise this option. Such right shall lapse, and this option shall
cease to be outstanding, upon the earlier of (A) the expiration of the
-------
twelve (12)-month period measured from the date of Optionee's death or (B)
the Expiration Date.
(iii) Should Optionee cease Service by reason of Permanent
Disability while this option is outstanding, then Optionee shall have a
period of twelve (12) months (commencing with the date of such cessation of
Service) during which to exercise this option. In no event shall this
option be exercisable at any time after the Expiration Date.
(iv) During the limited period of post-Service exercisability,
this option may not be exercised in the aggregate for more than the number
of vested Option Shares for which the option is exercisable at the time of
Optionee's cessation of Service. Upon the expiration of such limited
exercise period or (if earlier) upon the Expiration Date, this option shall
terminate and cease to be outstanding for any vested Option Shares for
which the option has not been exercised. However, this option shall,
immediately upon Optionee's cessation of Service for any reason, terminate
and cease to be outstanding with respect to any Option Shares in which
Optionee is not otherwise at that time vested or for which this option is
not otherwise at that time exercisable.
(v) Should Optionee's Service be terminated for Misconduct,
then this option shall terminate immediately and cease to remain
outstanding.
6. SPECIAL ACCELERATION OF OPTION.
------------------------------
(a) This option, to the extent outstanding at the time of a
Corporate Transaction but not otherwise fully exercisable, shall automatically
accelerate so that this option shall, immediately prior to the effective date of
the Corporate Transaction, become exercisable for all of the Option Shares at
the time subject to this option and may be exercised for any or all of those
Option Shares as fully-vested shares of Common Stock. No
2.
<PAGE>
such acceleration of this option, however, shall occur if and to the extent: (i)
this option is, in connection with the Corporate Transaction, either to be
assumed by the successor corporation (or parent thereof) or to be replaced with
a comparable option to purchase shares of the capital stock of the successor
corporation (or parent thereof) or (ii) this option is to be replaced with a
cash incentive program of the successor corporation which preserves the spread
existing on the unvested Option Shares at the time of the Corporate Transaction
(the excess of the Fair Market Value of those Option Shares over the aggregate
Exercise Price payable for such shares) and provides for subsequent pay-out in
accordance with the same option exercise/vesting schedule set forth in the Grant
Notice. The determination of option comparability under clause (i) shall be
made by the Plan Administrator, and such determination shall be final, binding
and conclusive.
(b) Immediately following the Corporate Transaction, this option
shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) in connection with the Corporate
Transaction.
(c) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
--------
(d) If this option is assumed or replaced in the Corporate
Transaction and does not otherwise accelerate at that time, then this option
shall automatically accelerate in the event Optionee's Service should
subsequently terminate by reason of an Involuntary Termination within eighteen
(18) months following the effective date of such Corporate Transaction. This
option as so accelerated shall remain exercisable for fully-vested shares until
the earlier of (i) the Expiration Date or (ii) the expiration of the one (1)-
-------
year period measured from the effective date of the Involuntary Termination.
(e) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
---------------------------
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
3.
<PAGE>
8. STOCKHOLDER RIGHTS. The holder of this option shall not have any
------------------
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
9. MANNER OF EXERCISING OPTION.
---------------------------
(a) In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:
(i) Execute and deliver to the Corporation a Notice of
Exercise for the Option Shares for which the option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased
shares in one or more of the following forms:
(A) cash or check made payable to the Corporation;
(B) a promissory note payable to the Corporation, but
only to the extent authorized by the Plan Administrator in accordance
with Paragraph 13;
(C) shares of Common Stock held by Optionee (or any
other person or persons exercising the option) for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date; or
(D) to the extent the option is exercised for vested
Option Shares, through a special sale and remittance procedure
pursuant to which Optionee (or any other person or persons exercising
the option) shall concurrently provide irrevocable written
instructions (I) to a Corporation-designated brokerage firm to effect
the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate Exercise Price payable
for the purchased shares plus all applicable Federal, state and local
income and employment taxes required to be withheld by the Corporation
by reason of such exercise and (II) to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm
in order to complete the sale transaction.
4.
<PAGE>
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the
Exercise Price must accompany the Notice of Exercise delivered to the
Corporation in connection with the option exercise.
(iii) Furnish to the Corporation appropriate documentation
that the person or persons exercising the option (if other than Optionee)
have the right to exercise this option.
(iv) Make appropriate arrangements with the Corporation (or
Parent or Subsidiary employing or retaining Optionee) for the satisfaction
of all Federal, state and local income and employment tax withholding
requirements applicable to the option exercise.
(b) As soon as practical after the Exercise Date, the Corporation
shall issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate for the purchased Option Shares, with the
appropriate legends affixed thereto.
(c) In no event may this option be exercised for any fractional
shares.
10. COMPLIANCE WITH LAWS AND REGULATIONS.
------------------------------------
(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.
11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
----------------------
in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns
and Optionee, Optionee's assigns and the legal representatives, heirs and
legatees of Optionee's estate.
12. NOTICES. Any notice required to be given or delivered to the
-------
Corporation under the terms of this Agreement shall be in writing and addressed
to the
5.
<PAGE>
Corporation at its principal corporate offices. Any notice required to be given
or delivered to Optionee shall be in writing and addressed to Optionee at the
address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
13. FINANCING. The Plan Administrator may, in its absolute
---------
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a full-recourse
promissory note payable to the Corporation. The terms of any such promissory
note (including the interest rate, the requirements for collateral and the terms
of repayment) shall be established by the Plan Administrator in its sole
discretion.
14. CONSTRUCTION. This Agreement and the option evidenced hereby are
------------
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.
15. GOVERNING LAW. The interpretation, performance and enforcement
-------------
of this Agreement shall be governed by the laws of the State of Colorado without
resort to that State's conflict-of-laws rules.
16. EXCESS SHARES. If the Option Shares covered by this Agreement
-------------
exceed, as of the Grant Date, the number of shares of Common Stock which may
without stockholder approval be issued under the Plan, then this option shall be
void with respect to those excess shares, unless stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock issuable
under the Plan is obtained in accordance with the provisions of the Plan.
17. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE OPTION. In the event
--------------------------------------------------
this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:
- This option shall cease to qualify for favorable tax treatment
as an Incentive Option if (and to the extent) this option is exercised for
one or more Option Shares: (A) more than three (3) months after the date
Optionee ceases to be an Employee for any reason other than death or
Permanent Disability or (B) more than twelve (12) months after the date
Optionee ceases to be an Employee by reason of Permanent Disability.
- No installment under this option shall qualify for favorable
tax treatment as an Incentive Option if (and to the extent) the aggregate
Fair Market Value (determined at the Grant Date) of the Common
6.
<PAGE>
Stock for which such installment first becomes exercisable hereunder would,
when added to the aggregate value (determined as of the respective date or
dates of grant) of the Common Stock or other securities for which this
option or any other Incentive Options granted to Optionee prior to the
Grant Date (whether under the Plan or any other option plan of the
Corporation or any Parent or Subsidiary) first become exercisable during
the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in
the aggregate. Should such One Hundred Thousand Dollar ($100,000)
limitation be exceeded in any calendar year, this option shall nevertheless
become exercisable for the excess shares in such calendar year as a Non-
Statutory Option.
- Should the exercisability of this option be accelerated upon a
Corporate Transaction, then this option shall qualify for favorable tax
treatment as an Incentive Option only to the extent the aggregate Fair
Market Value (determined at the Grant Date) of the Common Stock for which
this option first becomes exercisable in the calendar year in which the
Corporate Transaction occurs does not, when added to the aggregate value
(determined as of the respective date or dates of grant) of the Common
Stock or other securities for which this option or one or more other
Incentive Options granted to Optionee prior to the Grant Date (whether
under the Plan or any other option plan of the Corporation or any Parent or
Subsidiary) first become exercisable during the same calendar year, exceed
One Hundred Thousand Dollars ($100,000) in the aggregate. Should the
applicable One Hundred Thousand Dollar ($100,000) limitation be exceeded in
the calendar year of such Corporate Transaction, the option may
nevertheless be exercised for the excess shares in such calendar year as a
Non-Statutory Option.
- Should Optionee hold, in addition to this option, one or more
other options to purchase Common Stock which become exercisable for the
first time in the same calendar year as this option, then the foregoing
limitations on the exercisability of such options as Incentive Options
shall be applied on the basis of the order in which such options are
granted.
7.
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Optika Imaging Systems, Inc. (the "Corporation") that
I elect to purchase _________ shares of the Corporation's Common Stock (the
"Purchased Shares") at the option exercise price of $_________ per share (the
"Exercise Price") pursuant to that certain option (the "Option") granted to me
under the Corporation's 1994 Stock Option/Stock Issuance Plan.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price.
, 199__
- ----------------------
Date
----------------------------------------------
Optionee
Address:
--------------------------------------
----------------------------------------------
Print name in exact manner
it is to appear on the
stock certificate: ----------------------------------------------
Address to which certificate
is to be sent, if different
from address above: ----------------------------------------------
----------------------------------------------
Social Security Number: ----------------------------------------------
Employee Number: ----------------------------------------------
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Stock Option Agreement.
---------
B. BOARD shall mean the Corporation's Board of Directors.
-----
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
----
D. COMMON STOCK shall mean the Corporation's common stock.
------------
E. CORPORATE TRANSACTION shall mean either of the following stockholder-
---------------------
approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different
from the persons holding those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other disposition of all or substantially all
of the Corporation's assets in complete liquidation or dissolution of the
Corporation.
F. CORPORATION shall mean Optika Imaging Systems, Inc., a Delaware
-----------
corporation.
G. EMPLOYEE shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
H. EXERCISE DATE shall mean the date on which the option shall have been
-------------
exercised in accordance with Paragraph 9 of the Agreement.
I. EXERCISE PRICE shall mean the exercise price per share as specified in
--------------
the Grant Notice.
J. EXPIRATION DATE shall mean the date on which the option expires as
---------------
specified in the Grant Notice.
K. FAIR MARKET VALUE per share of Common Stock on any relevant date shall
-----------------
be determined in accordance with the following provisions:
A-1.
<PAGE>
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question, as the price is reported by
the National Association of Securities Dealers on the Nasdaq National
Market or any successor system. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(ii) If the Common Stock is at the time listed or admitted to trading
on any Stock Exchange, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question on the
Stock Exchange determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in question, then the Fair
Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.
(iii) If the Common Stock is on the date in question neither listed nor
admitted to trading on any Stock Exchange nor traded on the Nasdaq National
Market, then the Fair Market Value on such date shall be determined by the
Plan Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.
L. GRANT DATE shall mean the date of grant of the option as specified in
----------
the Grant Notice.
M. GRANT NOTICE shall mean the Notice of Grant of Stock Option
------------
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
N. INCENTIVE OPTION shall mean an option which satisfies the requirements
----------------
of Code Section 422.
O. INVOLUNTARY TERMINATION shall mean the termination of Optionee's
-----------------------
Service by reason of:
(i) Optionee's involuntary dismissal or discharge by the Corporation
for reasons other than Misconduct, or
(ii) Optionee's voluntary resignation following (A) a change in
Optionee's position with the Corporation (or Parent or Subsidiary employing
Optionee) which materially reduces Optionee's level of responsibility, (B)
a
A-2.
<PAGE>
reduction in Optionee's level of compensation (including base salary,
fringe benefits and any non-discretionary and objective-standard incentive
payment or bonus award) by more than ten percent (10%) or (C) a relocation
of Optionee's place of employment by more than fifty (50) miles, provided
and only if such change, reduction or relocation is effected by the
Corporation without Optionee's consent.
P. MISCONDUCT shall mean the commission of any act of fraud, embezzlement
----------
or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by Optionee adversely affecting
the business or affairs of the Corporation (or any Parent or Subsidiary) in a
material manner. The foregoing definition shall not be deemed to be inclusive
of all the acts or omissions which the Corporation (or any Parent or Subsidiary)
may consider as grounds for the dismissal or discharge of Optionee or any other
individual in the Service of the Corporation (or any Parent or Subsidiary).
Q. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
R. NOTICE OF EXERCISE shall mean the notice of exercise in the form
------------------
attached hereto as Exhibit I.
S. OPTION SHARES shall mean the number of shares of Common Stock subject
-------------
to the option as specified in the Grant Notice.
T. OPTIONEE shall mean the person to whom the option is granted as
--------
specified in the Grant Notice.
U. PARENT shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. PERMANENT DISABILITY shall mean the inability of Optionee to engage in
--------------------
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.
W. PLAN shall mean the Corporation's 1994 Stock Option/Stock Issuance
----
Plan.
X. PLAN ADMINISTRATOR shall mean either the Board or a committee of the
------------------
Board acting in its administrative capacity under the Plan.
A-3.
<PAGE>
Y. SERVICE shall mean the Optionee's performance of services for the
-------
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor.
Z. STOCK EXCHANGE shall mean the American Stock Exchange or the New York
--------------
Stock Exchange.
AA. SUBSIDIARY shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
A-4.
<PAGE>
EXHIBIT 99.5
ADDENDUM
TO
STOCK OPTION AGREEMENT
SECTION 16 INSIDER
------------------
The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Option Agreement dated __________ (the
"Option Agreement") by and between Optika Imaging Systems, Inc. (the
"Corporation") and ____________ ("Optionee") evidencing the stock option (the
"Option") granted on such date to Optionee under the terms of the Corporation's
1994 Stock Option/Stock Issuance Plan, and such provisions shall be effective
immediately. All capitalized terms in this Addendum, to the extent not
otherwise defined herein, shall have the meanings assigned to them in the Option
Agreement.
LIMITED STOCK APPRECIATION RIGHT
1. Optionee is hereby granted a limited stock appreciation right
exercisable upon the following terms and conditions:
- Should a Hostile Take-Over occur at any time after the option
has been outstanding for a period of at least six (6) months measured from the
Effective Date of this Addendum indicated below, then Optionee shall have the
unconditional right (exercisable at any time during the thirty (30)-day period
immediately following a Hostile Take-Over) to surrender the Option to the
Corporation, to the extent the Option is at the time exercisable for vested
shares of Common Stock. In return for the surrendered Option, Optionee shall
receive a cash distribution from the Corporation in an amount equal to the
excess of (A) the Take-Over Price of the shares of Common Stock which are at the
time vested under the surrendered Option (or surrendered portion) over (B) the
aggregate Exercise Price payable for such shares.
- To exercise this limited stock appreciation right, Optionee
must, during the applicable thirty (30)-day exercise period, provide the
Corporation with written notice of the option surrender in which there is
specified the number of Option Shares as to which the Option is being
surrendered. Such notice must be accompanied by the return of Optionee's copy of
the Option Agreement, together with any written amendments to such Agreement.
The cash distribution shall be paid to Optionee within five (5) business days
following such delivery date, and neither the approval of the Plan Administrator
nor the consent of the Board shall be required in connection with such option
surrender and cash distribution. Upon receipt of such cash distribution, the
Option shall be cancelled with respect to the Option Shares for which the Option
has been surrendered, and Optionee shall cease to have any further right to
acquire those Option Shares under the Option Agreement. The Option shall,
however, remain outstanding and exercisable for the balance of the Option Shares
(if any) in accordance with the terms of the Option Agreement, and the
<PAGE>
Corporation shall issue a new stock option agreement (substantially in the same
form of the surrendered Option Agreement) for those remaining Option Shares.
- In no event may this limited stock appreciation right be
exercised when there is not a positive spread between the Fair Market Value of
the Option Shares and the aggregate Exercise Price payable for such shares. This
limited stock appreciation right shall in all events terminate upon the
expiration or sooner termination of the option term and may not be assigned or
transferred by Optionee.
2. For purposes of this Addendum, the following definitions shall be
in effect:
- A HOSTILE TAKE-OVER shall be deemed to occur in the event any
person or related group of persons (other than the Corporation or a person
that directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act
of 1934, as amended) of securities possessing more than fifty percent (50%)
of the total combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation's stockholders which the Board does not recommend such
stockholders to accept, and the acceptance of more than fifty percent (50%)
---
of the securities so acquired in such tender or exchange offer comes from
holders other than Section 16 Insiders.
- A SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of
the Securities Exchange Act of 1934, as amended.
- The TAKE-OVER PRICE per share shall be deemed to be equal to
the greater of (A) the Fair Market Value per Option Share on the option
-------
surrender date or (B) the highest reported price per share of Common Stock
paid by the tender offeror in effecting the Hostile Take-Over. However, if
the surrendered Option is designated as an Incentive Option in the Grant
Notice, then the Take-Over Price shall not exceed the clause (A) price per
share.
2.
<PAGE>
IN WITNESS WHEREOF, Optika Imaging Systems, Inc. has caused this
Addendum to be executed by its duly-authorized officer, and Optionee has
executed this Addendum, all as of the Effective Date specified below.
OPTIKA IMAGING SYSTEMS, INC.
By:
--------------------------
Title:
-----------------------
-----------------------------
OPTIONEE
Address:
---------------------
-----------------------------
EFFECTIVE DATE: , 199
------------- -
3.
<PAGE>
EXHIBIT 99.6
ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Option Agreement dated ________________ (the
"Option Agreement") by and between Optika Imaging Systems, Inc. (the
"Corporation") and _______________ ("Optionee") evidencing the stock option (the
"Option") granted on such date to Optionee under the terms of the Corporation's
1994 Stock Option/Stock Issuance Plan, and such provisions shall be effective
immediately. All capitalized terms in this Addendum, to the extent not
otherwise defined herein, shall have the meanings assigned to them in the Option
Agreement.
INVOLUNTARY TERMINATION FOLLOWING
CHANGE IN CONTROL
1. The Option shall not accelerate upon the occurrence of a Change in
Control, and the Option shall, over Optionee's continued period of Service after
the Change in Control, continue to become exercisable for the Option Shares in
accordance with the provisions of the Option Agreement. However, immediately
upon an Involuntary Termination of Optionee's Service within eighteen (18)
months following the Change in Control, the Option, to the extent outstanding at
the time but not otherwise fully exercisable, shall automatically accelerate so
that the Option shall become immediately exercisable for all the Option Shares
at the time subject to the Option and may be exercised for any or all of those
Option Shares as fully vested shares. The Option shall remain so exercisable
until the earlier of (i) the Expiration Date or (ii) the expiration of the one
-------
(1)-year period measured from the date of the Involuntary Termination.
2. For purposes of this Addendum, a CHANGE IN CONTROL shall be deemed
to occur in the event of a change in ownership or control of the Corporation
effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of
securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporation's outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's stockholders
which the Board does not recommend such stockholders to accept, or
(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be
<PAGE>
comprised of individuals who either (A) have been Board members
continuously since the beginning of such period or (B) have been elected or
nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in
office at the time such election or nomination was approved by the Board;
provided, however, that a change in the composition of the Board pursuant
to Section 4.3.1(b) or Section 4.3.6 of the Corporation's Amended and
Restated Articles of Incorporation shall not constitute a Change in
Control.
3. For purposes of this Addendum, an INVOLUNTARY TERMINATION shall
mean the termination of Optionee's Service by reason of:
(i) Optionee's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) Optionee's voluntary resignation following (A) a change in
Optionee's position with the Corporation (or Parent or Subsidiary employing
Optionee) which materially reduces Optionee's level of responsibility, (B)
a reduction in Optionee's level of compensation (including base salary,
fringe benefits and any non-discretionary and objective-standard incentive
payment or bonus award by more than ten percent (10%) or (C) a relocation
of Optionee's place of employment by more than fifty (50) miles, provided
and only if such change, reduction or relocation is effected by the
Corporation without Optionee's consent.
4. The provisions of Paragraph 1 of this Addendum shall govern the
period for which the Option is to remain exercisable following the Involuntary
Termination of Optionee's Service within twelve (12) months after the Change in
Control and shall supersede any provisions to the contrary in Paragraph 5 of the
Option Agreement.
IN WITNESS WHEREOF, Optika Imaging Systems, Inc. has caused this
Addendum to be executed by its duly-authorized officer, and Optionee has
executed this Addendum, all as of the Effective Date specified below.
OPTIKA IMAGING SYSTEMS, INC.
By:
-----------------------------------
Title:
---------------------------------
---------------------------------------
_________________________, OPTIONEE
EFFECTIVE DATE: , 199___
-----------------------
2.
<PAGE>
EXHIBIT 99.7
INITIAL GRANT
-------------
OPTIKA IMAGING SYSTEMS, INC.
NOTICE OF GRANT OF NON-EMPLOYEE DIRECTOR
----------------------------------------
AUTOMATIC STOCK OPTION
----------------------
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of Optika Imaging Systems, Inc. (the
"Corporation"):
Optionee:
-------- ----------------------------------------------------------
Grant Date:
---------- ---------------------------------------------------------
Exercise Price: $ per share
-------------- ------------------------------------------
Number of Option Shares: 10,000 shares
-----------------------
Expiration Date:
--------------- ---------------------------------------------------
Type of Option: Non-Statutory Stock Option
--------------
Date Exercisable: Immediately Exercisable
----------------
Vesting Schedule: The Option Shares shall initially be unvested and
----------------
subject to repurchase by the Corporation at the Exercise Price paid
per share. Optionee shall acquire a vested interest in, and the
Corporation's repurchase right shall accordingly lapse with respect
to, the Option Shares in a series of four (4) successive equal annual
installments upon the Optionee's completion of each year of service as
a member of the Corporation's Board of Directors (the "Board") over
the four (4)-year period measured from the Grant Date. In no event
shall any additional Option Shares vest after Optionee's cessation of
Board service.
Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the automatic option grant program under the
Corporation's 1994 Stock Option/Stock Issuance Plan (the "Plan"). Optionee
further agrees to be bound by the terms of the Plan and the terms of the Option
as set forth in the Automatic Stock Option Agreement attached hereto as Exhibit
A.
Optionee hereby acknowledges receipt of a copy of the official
prospectus for the Plan in the form attached hereto as Exhibit B. A copy of the
Plan is available upon request made to the Corporate Secretary at the
Corporation's principal offices.
<PAGE>
REPURCHASE RIGHT. OPTIONEE HEREBY AGREES THAT ALL UNVESTED OPTION
----------------
SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL NOT BE TRANSFERABLE AND
SHALL BE SUBJECT TO REPURCHASE BY THE CORPORATION, AT THE EXERCISE PRICE PAID
PER SHARE, UPON OPTIONEE'S TERMINATION OF SERVICE AS A MEMBER OF THE BOARD PRIOR
TO VESTING IN THOSE SHARES. THE TERMS AND CONDITIONS OF SUCH REPURCHASE RIGHT
SHALL BE SPECIFIED IN A STOCK PURCHASE AGREEMENT, IN FORM AND SUBSTANCE
SATISFACTORY TO THE CORPORATION, EXECUTED BY OPTIONEE AT THE TIME OF THE OPTION
EXERCISE.
No Impairment of Rights. Nothing in this Notice or in the attached
-----------------------
Automatic Stock Option Agreement or the Plan shall interfere with or otherwise
restrict in any way the rights of the Corporation or the Corporation's
stockholders to remove Optionee from the Board at any time in accordance with
the provisions of applicable law.
Definitions. All capitalized terms in this Notice shall have the
-----------
meaning assigned to them in this Notice or in the attached Automatic Stock
Option Agreement.
DATED: , 199
--------- -
OPTIKA IMAGING SYSTEMS, INC.
By:
-------------------------
Title:
----------------------
-----------------------------
OPTIONEE
Address:
--------------------
-----------------------------
ATTACHMENTS
- -----------
EXHIBIT A - AUTOMATIC STOCK OPTION AGREEMENT
EXHIBIT B - PLAN SUMMARY AND PROSPECTUS
2.
<PAGE>
EXHIBIT A
---------
AUTOMATIC STOCK OPTION AGREEMENT
--------------------------------
<PAGE>
EXHIBIT B
---------
PLAN SUMMARY AND PROSPECTUS
---------------------------
<PAGE>
EXHIBIT 99.8
ANNUAL GRANT
------------
OPTIKA IMAGING SYSTEMS, INC.
NOTICE OF GRANT OF NON-EMPLOYEE DIRECTOR
----------------------------------------
AUTOMATIC STOCK OPTION
----------------------
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of Optika Imaging Systems, Inc. (the
"Corporation"):
Optionee:
-------- ----------------------------------------------------
Grant Date:
---------- --------------------------------------------------
Exercise Price: $ per share
-------------- -------------------------------------
Number of Option Shares: 2,500 shares
-----------------------
Expiration Date:
--------------- ---------------------------------------------
Type of Option: Non-Statutory Stock Option
--------------
Date Exercisable: Immediately Exercisable
----------------
Vesting Schedule: The Option Shares shall initially be unvested and
----------------
subject to repurchase by the Corporation at the Exercise Price paid
per share. Optionee shall acquire a vested interest in, and the
Corporation's repurchase right shall accordingly lapse with respect
to, the Option Shares upon the Optionee's completion of one year of
service as a member of the Corporation's Board of Directors (the
"Board") measured from the Grant Date. In no event shall any
additional Option Shares vest after Optionee's cessation of Board
service.
Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the automatic option grant program under the
Corporation's 1994 Stock Option/Stock Issuance Plan (the "Plan"). Optionee
further agrees to be bound by the terms of the Plan and the terms of the Option
as set forth in the Automatic Stock Option Agreement attached hereto as Exhibit
A.
Optionee hereby acknowledges receipt of a copy of the official
prospectus for the Plan in the form attached hereto as Exhibit B. A copy of the
Plan is available upon request made to the Corporate Secretary at the
Corporation's principal offices.
<PAGE>
REPURCHASE RIGHT. OPTIONEE HEREBY AGREES THAT ALL UNVESTED OPTION
----------------
SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL NOT BE TRANSFERABLE AND
SHALL BE SUBJECT TO REPURCHASE BY THE CORPORATION, AT THE EXERCISE PRICE PAID
PER SHARE, UPON OPTIONEE'S TERMINATION OF SERVICE AS A MEMBER OF THE BOARD PRIOR
TO VESTING IN THOSE SHARES. THE TERMS AND CONDITIONS OF SUCH REPURCHASE RIGHT
SHALL BE SPECIFIED IN A STOCK PURCHASE AGREEMENT, IN FORM AND SUBSTANCE
SATISFACTORY TO THE CORPORATION, EXECUTED BY OPTIONEE AT THE TIME OF THE OPTION
EXERCISE.
No Impairment of Rights. Nothing in this Notice or in the attached
-----------------------
Automatic Stock Option Agreement or the Plan shall interfere with or otherwise
restrict in any way the rights of the Corporation or the Corporation's
stockholders to remove Optionee from the Board at any time in accordance with
the provisions of applicable law.
Definitions. All capitalized terms in this Notice shall have the
-----------
meaning assigned to them in this Notice or in the attached Automatic Stock
Option Agreement.
DATED: _______________ , 199__
OPTIKA IMAGING SYSTEMS, INC.
By:
------------------------------------
Title:
--------------------------------
---------------------------------------
OPTIONEE
Address:
------------------------------
---------------------------------------
ATTACHMENTS
- -----------
EXHIBIT A - AUTOMATIC STOCK OPTION AGREEMENT
EXHIBIT B - PLAN SUMMARY AND PROSPECTUS
2.
<PAGE>
EXHIBIT A
---------
AUTOMATIC STOCK OPTION AGREEMENT
--------------------------------
<PAGE>
EXHIBIT B
---------
PLAN SUMMARY AND PROSPECTUS
---------------------------
<PAGE>
EXHIBIT 99.9
OPTIKA IMAGING SYSTEMS, INC.
AUTOMATIC STOCK OPTION AGREEMENT
--------------------------------
RECITALS
- --------
A. The Corporation has implemented an automatic option grant program
under the Plan, pursuant to which eligible non-employee members of the
Corporation's Board will automatically receive special option grants at
designated intervals over their period of Board service in order to provide such
individuals with a meaningful incentive to continue to serve as a member of the
Board.
B. Optionee is an eligible non-employee Board member, and this Agreement
is executed pursuant to, and is intended to carry out the purposes of, the Plan
in connection with the automatic grant of a stock option to purchase shares of
the Corporation's Common Stock under the Plan.
C. The granted option is intended to be a non-statutory option which does
not meet the requirements of Section 422 of the Internal Revenue Code.
- ---
D. All capitalized terms in this Agreement, to the extent not otherwise
defined in the Agreement, shall have the meaning assigned to them in the
attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as
---------------
of the Grant Date, a Non-Statutory Option to purchase up to the number of Option
Shares specified in the Grant Notice. The Option Shares shall be purchasable
from time to time during the option term specified in Paragraph 2 at the
Exercise Price.
2. OPTION TERM. This option shall have a maximum term of ten (10)
-----------
years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5, 6 or 7.
3. LIMITED TRANSFERABILITY. This option shall be neither
-----------------------
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee.
4. EXERCISABILITY/VESTING.
----------------------
(a) This option shall be immediately exercisable for any or all
of the Option Shares, whether or not the Option Shares are vested in accordance
with the Vesting
<PAGE>
Schedule set forth in the Grant Notice, and shall remain so exercisable until
the Expiration Date or the sooner termination of the option term under Paragraph
5, 6 or 7.
(b) Optionee shall, in accordance with the Vesting Schedule set
forth in the Grant Notice, vest in the Option Shares in a series of installments
over his or her period of Board service. Vesting in the Option Shares may be
accelerated pursuant to the provisions of Paragraph 5, 6 or 7. In no event,
however, shall any additional Option Shares vest following Optionee's cessation
of service as a Board member.
5. CESSATION OF BOARD SERVICE. Should Optionee's service as a Board
--------------------------
member cease while this option remains outstanding, then the option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date in accordance with the following
provisions:
(i) Should Optionee cease to serve as a Board member for any
reason (other than death or Permanent Disability) while holding this
option, then the period for exercising this option shall be reduced to a
twelve (12)-month period commencing with the date of such cessation of
Board service, but in no event shall this option be exercisable at any time
after the Expiration Date. During such limited period of exercisability,
this option may not be exercised in the aggregate for more than the number
of Option Shares (if any) in which Optionee is vested on the date of his or
her cessation of Board service. Upon the earlier of (i) the expiration of
-------
such twelve (12)-month period or (ii) the specified Expiration Date, the
option shall terminate and cease to be exercisable with respect to any
vested Option Shares for which the option has not been exercised.
(ii) Should Optionee die during the twelve (12)-month period
following his or her cessation of Board service, then the personal
representative of Optionee's estate or the person or persons to whom the
option is transferred pursuant to Optionee's will or in accordance with the
laws of descent and distribution shall have the right to exercise this
option for any or all of the Option Shares in which Optionee is vested at
the time of Optionee's cessation of Board service (less any Option Shares
purchased by Optionee after such cessation of Board service but prior to
death). Such right of exercise shall terminate, and this option shall
accordingly cease to be exercisable for such vested Option Shares, upon the
earlier of (i) the expiration of the twelve (12)-month period measured from
-------
the date of Optionee's cessation of Board service or (ii) the specified
Expiration Date of the option term.
(iii) Should Optionee cease service as a Board member by reason
of death or Permanent Disability, then all Option Shares at the time
subject to this option but not otherwise vested shall immediately vest in
full so that Optionee (or the personal representative of Optionee's estate
or the person or persons to whom the option is transferred upon Optionee's
death) shall have the right to
2.
<PAGE>
exercise this option for any or all of the Option Shares as fully-vested
shares of Common Stock at any time prior to the earlier of (i) the
-------
expiration of the twelve (12)-month period measured from the date of
Optionee's cessation of Board service or (ii) the specified Expiration
Date.
(iv) Upon Optionee's cessation of Board service for any reason
other than death or Permanent Disability, this option shall immediately
terminate and cease to be outstanding with respect to any and all Option
Shares in which Optionee is not otherwise at that time vested in accordance
with the normal Vesting Schedule set forth in the Grant Notice or the
special vesting acceleration provisions of Paragraph 6 or 7 below.
6. CORPORATE TRANSACTION.
---------------------
(a) In the event of a Corporate Transaction, all Option Shares at
the time subject to this option but not otherwise vested shall automatically
vest and the Corporation's repurchase right with respect to the unvested Option
Shares shall terminate so that this option shall, immediately prior to the
specified effective date for the Corporate Transaction, become fully exercisable
for all of the Option Shares at the time subject to this option and may be
exercised for all or any portion of such shares as fully-vested shares of Common
Stock. Immediately following the consummation of the Corporate Transaction, this
option shall terminate and cease to be outstanding, except to the extent assumed
by the successor corporation or its parent company.
(b) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
--------
7. CHANGE IN CONTROL/HOSTILE TAKE-OVER.
-----------------------------------
(a) All Option Shares subject to this option at the time of a
Change in Control but not otherwise vested shall automatically vest and the
Corporation's repurchase right with respect to the unvested Option Shares shall
terminate so that this option shall, immediately prior to the effective date of
such Change in Control, become fully exercisable for all of the Option Shares at
the time subject to this option and may be exercised for all or any portion of
such shares as fully-vested shares of Common Stock. This option shall remain
exercisable for such fully-vested Option Shares until the earliest to occur of
--------
(i) the specified Expiration Date, (ii) the sooner termination of this option in
accordance with Paragraph 5 or 6 or (iii) the surrender of this option under
Paragraph 7(b).
3.
<PAGE>
(b) Optionee shall have an unconditional right (exercisable
during the thirty (30)-day period immediately following the consummation of a
Hostile Take-Over) to surrender this option, if held by Optionee for a period of
at least six (6) months, to the Corporation in exchange for a cash distribution
from the Corporation in an amount equal to the excess of (i) the Take-Over Price
of the Option Shares at the time subject to the surrendered option (whether or
not those Option Shares are otherwise at the time vested) over (ii) the
aggregate Exercise Price payable for such shares. This Paragraph 7(b) limited
stock appreciation right shall in all events terminate upon the expiration or
sooner termination of the option term and may not be assigned or transferred by
Optionee.
(c) To exercise the Paragraph 7(b) limited stock appreciation
right, Optionee must, during the applicable thirty (30)-day exercise period,
provide the Corporation with written notice of the option surrender in which
there is specified the number of Option Shares as to which the option is being
surrendered. Such notice must be accompanied by the return of Optionee's copy of
this Agreement, together with any written amendments to such Agreement. The cash
distribution shall be paid to Optionee within five (5) business days following
such delivery date, and no approval or consent of the Plan Administrator or the
Board shall be required in connection with such option surrender and cash
distribution. Upon receipt of such cash distribution, this option shall be
cancelled with respect to the shares subject to the surrendered option (or the
surrendered portion), and Optionee shall cease to have any further right to
acquire those Option Shares under this Agreement. The option shall, however,
remain outstanding for the balance of the Option Shares (if any) in accordance
with the terms and provisions of this Agreement, and the Corporation shall
accordingly issue a new stock option agreement (substantially in the same form
as this Agreement) for those remaining Option Shares.
8. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
---------------------------
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the number and/or
class of securities subject to this option and (ii) the Exercise Price in order
to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder; provided, however, that the aggregate Exercise Price shall
remain the same.
9. STOCKHOLDER RIGHTS. The holder of this option shall not have any
------------------
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
10. MANNER OF EXERCISING OPTION.
---------------------------
(a) In order to exercise this option for all or any part of the
Option Shares for which the option is at the time exercisable, Optionee or, in
the case of exercise
4.
<PAGE>
after Optionee's death, Optionee's executor, administrator, heir or legatee, as
the case may be, must take the following actions:
(i) To the extent the option is exercised for vested
Option Shares, the Secretary of the Corporation shall be provided with
written notice of the option exercise (the "Exercise Notice") in
substantially the form of Exhibit I attached hereto, in which there is
specified the number of vested Option Shares to be purchased under the
exercised option. To the extent the option is exercised for one or more
unvested Option Shares, Optionee (or other person exercising the option)
shall deliver to the Secretary of the Corporation a Purchase Agreement for
those unvested Option Shares.
(ii) The Exercise Price for the purchased shares shall
be paid in one or more of the following alternative forms:
- cash or check made payable to the Corporation's
order; or
- shares of Common Stock held by Optionee (or any
other person or persons exercising the option) for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date; or
- to the extent the option is exercised for vested
Option Shares, through a special sale and remittance procedure
pursuant to which Optionee shall concurrently provide irrevocable
written instructions (A) to a Corporation-designated brokerage firm to
effect the immediate sale of the vested shares purchased under the
option and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the
aggregate Exercise Price payable for those shares plus the applicable
Federal, state and local income taxes required to be withheld by the
Corporation by reason of such exercise and (B) to the Corporation to
deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale.
(iii) Appropriate documentation evidencing the right to
exercise this option shall be furnished the Corporation if the person or
persons exercising the option is other than Optionee.
5.
<PAGE>
(iv) Appropriate arrangement must be made with the
Corporation for the satisfaction of all Federal, state and local income tax
withholding requirements applicable to the option exercise.
(b) Except to the extent the sale and remittance procedure
specified above is utilized in connection with the exercise of the option for
vested Option Shares, payment of the Exercise Price for the purchased shares
must accompany the Exercise Notice or Purchase Agreement delivered to the
Corporation in connection with the option exercise.
(c) As soon as practical after the Exercise Date, the Corporation
shall issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate or certificates representing the purchased
Option Shares. To the extent any such Option Shares are unvested, the
certificates for those Option Shares shall be endorsed with an appropriate
legend evidencing the Corporation's repurchase rights and may be held in escrow
with the Corporation until such shares vest.
(d) In no event may this option be exercised for fractional
shares.
11. NO IMPAIRMENT OF RIGHTS. This Agreement shall not in any way
-----------------------
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets. Nor shall this Agreement in any way be construed or
interpreted so as to affect adversely or otherwise impair the right of the
Corporation or the stockholders to remove Optionee from the Board at any time in
accordance with the provisions of applicable law.
12. COMPLIANCE WITH LAWS AND REGULATIONS.
------------------------------------
(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
However, the Corporation shall use its best efforts to obtain all such
applicable approvals.
6.
<PAGE>
13. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
----------------------
in Paragraph 3 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's assigns and the legal representatives, heirs and legatees
of Optionee's estate.
14. CONSTRUCTION/GOVERNING LAW. This Agreement and the option
--------------------------
evidenced hereby are made and granted pursuant to the automatic option grant
program in effect under the Plan and are in all respects limited by and subject
to the express terms and provisions of that program. The interpretation,
performance, and enforcement of this Agreement shall be governed by the laws of
the State of Colorado without resort to that State's conflict-of-laws rules.
15. NOTICES. Any notice required to be given or delivered to the
-------
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to
be given or delivered to Optionee shall be in writing and addressed to Optionee
at the address indicated below Optionee's signature line on the Grant Notice.
All notices shall be deemed effective upon personal delivery or upon deposit in
the U.S. mail, postage prepaid and properly addressed to the party to be
notified.
7.
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Optika Imaging Systems, Inc. (the "Corporation") that
I elect to purchase __________ shares of the Corporation's Common Stock (the
"Purchased Shares") at the option exercise price of $___________ per share (the
"Exercise Price") pursuant to that certain option (the "Option") granted to me
pursuant to the automatic option grant program under the Corporation's 1994
Stock Option/Stock Issuance Plan.
Concurrently with the delivery of this Exercise Notice to the
Secretary of the Corporation, I shall hereby pay to the Corporation the Exercise
Price for the Purchased Shares in accordance with the provisions of my agreement
with the Corporation evidencing the Option and shall deliver whatever additional
documents may be required by such agreement as a condition for exercise.
Alternatively, I may utilize the special broker/dealer sale and remittance
procedure specified in my agreement to effect payment of the Exercise Price for
any Purchased Shares in which I am vested at the time of exercise.
, 199__
- ------------------------
Date
---------------------------------------------
Optionee
Address:
------------------------------------
---------------------------------------------
Print name in exact manner
it is to appear on the
stock certificate: ---------------------------------------------
Address to which certificate
is to be sent, if different
from address above: ---------------------------------------------
---------------------------------------------
Social Security Number: ---------------------------------------------
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Automatic Stock Option Agreement.
---------
B. BOARD shall mean the Corporation's Board of Directors.
-----
C. CHANGE IN CONTROL shall mean a change in ownership or control of the
-----------------
Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of
the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such stockholders to
accept, or
(ii) a change in the composition of the Board over a period of thirty-six
(36) consecutive months or less such that a majority of the Board members
ceases, by reason of one or more contested elections for Board membership,
to be comprised of individuals who either (A) have been Board members
continuously since the beginning of such period or (B) have been elected or
nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in
office at the time the Board approved such election or nomination;
provided, however, that a change in the composition of the Board pursuant
to Section 4.3.1(b) or Section 4.3.6 of the Corporation's Amended and
Restated Articles of Incorporation shall not constitute a change in
control.
D. CODE shall mean the Internal Revenue Code of 1986, as amended.
----
E. COMMITTEE shall mean the committee of two (2) or more non-employee
---------
Board Members appointed by the Board to administer the Plan.
F. COMMON STOCK shall mean the Corporation's common stock.
------------
G. CORPORATE TRANSACTION shall mean either of the following stockholder-
---------------------
approved transactions to which the Corporation is a party:
A-1.
<PAGE>
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different
from the persons holding those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other disposition of all or substantially all
of the Corporation's assets in complete liquidation or dissolution of the
Corporation.
H. CORPORATION shall mean Optika Imaging Systems, Inc., a Delaware
-----------
corporation, and its successors.
I. EXERCISE DATE shall mean the date on which the option shall have been
-------------
exercised in accordance with Paragraph 10 of the Agreement.
J. EXERCISE PRICE shall mean the exercise price payable per share as
--------------
specified in the Grant Notice.
K. EXPIRATION DATE shall mean the date on which the option term expires
---------------
as specified in the Grant Notice.
L. FAIR MARKET VALUE per share of Common Stock on any relevant date shall
-----------------
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question, as the price is reported by
the National Association of Securities Dealers on the Nasdaq National
Market or any successor system. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(ii) If the Common Stock is at the time listed or admitted to trading on
any Stock Exchange, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market for
the Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
A-2.
<PAGE>
(iii) If the Common Stock is on the date in question neither listed nor
admitted to trading on any Stock Exchange nor traded on the Nasdaq National
Market, then the Fair Market Value on such date shall be determined by the
Plan Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.
M. GRANT DATE shall mean the date of grant of the option as specified in
----------
the Grant Notice.
N. GRANT NOTICE shall mean the Notice of Grant of Automatic Stock Option
------------
accompanying this Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
O. HOSTILE TAKE-OVER shall mean a change in ownership of the Corporation
-----------------
effected through the following transaction:
(i) the acquisition, directly or indirectly, by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of
the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such stockholders to
accept, and
---
(ii) the acceptance of more than fifty percent (50%) of the securities
so acquired comes from persons other than Section 16 Insiders.
P. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
--------
Q. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
R. OPTION SHARES shall mean the number of shares of Common Stock subject
-------------
to the option.
S. OPTIONEE shall mean the person to whom the option is granted as
--------
specified in the Grant Notice.
T. PERMANENT DISABILITY shall mean the inability of Optionee to perform
--------------------
his or her usual duties as a Board member by reason of any medically
determinable physical or mental impairment which is expected to result in death
or has lasted or can be expected to last for a continuous period of twelve (12)
months or more.
A-3.
<PAGE>
U. PLAN shall mean the Corporation's 1994 Stock Option/Stock Issuance
----
Plan.
V. PLAN ADMINISTRATOR shall mean the Board or the committee acting in its
------------------
administrative capacity under the Plan.
W. PURCHASE AGREEMENT shall mean the stock purchase agreement (in form
------------------
and substance satisfactory to the Corporation) which must be executed at the
time the option is exercised for unvested Option Shares and which will
accordingly (i) grant the Corporation the right to repurchase, at the Exercise
Price, any and all of those Option Shares in which Optionee is not otherwise
vested at the time of his or her cessation of service as a Board member and (ii)
preclude the sale, transfer or other disposition of any of the Option Shares
purchased under such agreement while those Option Shares remain subject to the
repurchase right.
X. SECTION 16 INSIDER shall mean an officer or director of the
------------------
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
Y. STOCK EXCHANGE shall mean the American Stock Exchange or the New York
--------------
Stock Exchange.
Z. TAKE-OVER PRICE shall mean the greater of (i) the Fair Market Value
--------------- -------
per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting the
Hostile Take-Over.
AA. VESTING SCHEDULE shall mean the vesting schedule specified in the
----------------
Grant Notice, pursuant to which Optionee will vest in the Option Shares in one
or more installments over his or her period of Board service, subject to
acceleration in accordance with the provisions of the Agreement.
A-4.
<PAGE>
EXHIBIT 99.10
OPTIKA IMAGING SYSTEMS
STOCK ISSUANCE AGREEMENT
------------------------
AGREEMENT made this _____ day of ___________________ 19____, by and
between Optika Imaging Systems, Inc., a Delaware corporation (the
"Corporation"), and __________________________________________________, a
Participant in the Corporation's 1994 Stock Option/Stock Issuance Plan (the
"Plan").
All capitalized terms in this Agreement shall have the meaning
assigned to them in this Agreement or in the attached Appendix.
A. PURCHASE OF SHARES
------------------
1. PURCHASE. Participant hereby purchases _____________ shares of
--------
Common Stock (the "Purchased Shares") pursuant to the provisions of the Stock
Issuance Program at the purchase price of $______ per share (the "Purchase
Price").
2. PAYMENT. Concurrently with the delivery of this Agreement to the
-------
Corporation, Participant shall pay the Purchase Price for the Purchased Shares
in cash or check payable to the Corporation and shall deliver a duly-executed
blank Assignment Separate from Certificate (in the form attached hereto as
Exhibit I) with respect to the Purchased Shares.
3. STOCKHOLDER RIGHTS. Until such time as the Corporation exercises
------------------
the Repurchase Right, Participant (or any successor in interest) shall have all
the rights of a stockholder (including voting, dividend and liquidation rights)
with respect to the Purchased Shares, subject, however, to the transfer
restrictions of this Agreement.
4. COMPLIANCE WITH LAW. Under no circumstances shall shares of
-------------------
Common Stock or other assets be issued or delivered to Participant pursuant to
the provisions of this Agreement unless, in the opinion of counsel for the
Corporation or its successors, there shall have been compliance with all
applicable requirements of Federal and state securities laws, all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock is at the time listed for trading and all
other requirements of law or of any regulatory bodies having jurisdiction over
such issuance and delivery.
B. TRANSFER RESTRICTIONS
---------------------
1. RESTRICTION ON TRANSFER. Except for any Permitted Transfer,
-----------------------
Participant shall not transfer, assign, encumber or otherwise dispose of any of
the Purchased Shares which are subject to the Repurchase Right.
<PAGE>
2. RESTRICTIVE LEGEND. The stock certificate for the Purchased
------------------
Shares shall be endorsed with the following restrictive legend:
"The shares represented by this certificate are unvested and
subject to certain repurchase rights granted to the Corporation and
accordingly may not be sold, assigned, transferred, encumbered, or in any
manner disposed of except in conformity with the terms of a written
agreement dated ____________, 199__ between the Corporation and the
registered holder of the shares (or the predecessor in interest to the
shares). A copy of such agreement is maintained at the Corporation's
principal corporate offices."
3. TRANSFEREE OBLIGATIONS. Each person (other than the Corporation)
----------------------
to whom the Purchased Shares are transferred by means of a Permitted Transfer
must, as a condition precedent to the validity of such transfer, acknowledge in
writing to the Corporation that such person is bound by the provisions of this
Agreement and that the transferred shares are subject to the Repurchase Right to
the same extent such shares would be so subject if retained by Participant.
C. REPURCHASE RIGHT
----------------
1. GRANT. The Corporation is hereby granted the right (the
-----
"Repurchase Right"), exercisable at any time during the ninety (90)-day period
following the date Participant ceases for any reason to remain in Service, to
repurchase at the Purchase Price all or any portion of the Purchased Shares in
which Participant is not, at the time of his or her cessation of Service, vested
in accordance with the Vesting Schedule (such shares to be hereinafter referred
to as the "Unvested Shares").
2. EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right shall be
--------------------------------
exercisable by written notice delivered to each Owner of the Unvested Shares
prior to the expiration of the ninety (90)-day exercise period. The notice shall
indicate the number of Unvested Shares to be repurchased and the date on which
the repurchase is to be effected, such date to be not more than thirty (30) days
after the date of such notice. The certificates representing the Unvested Shares
to be repurchased shall be delivered to the Corporation prior to the close of
business on the date specified for the repurchase. Concurrently with the receipt
of such stock certificates, the Corporation shall pay to Owner, in cash or cash
equivalent (including the cancellation of any purchase-money indebtedness), an
amount equal to the Purchase Price previously paid for the Unvested Shares to be
repurchased from Owner.
3. TERMINATION OF THE REPURCHASE RIGHT. The Repurchase Right shall
-----------------------------------
terminate with respect to any Unvested Shares for which it is not timely
exercised under Paragraph C.2. In addition, the Repurchase Right shall terminate
and cease to be exercisable with respect to any and all Purchased Shares in
which Participant vests in accordance with the following Vesting Schedule:
2.
<PAGE>
(i) Upon Participant's completion of one (1) year of Service
measured from ______________, 199__, Participant shall acquire a vested
interest in, and the Repurchase Right shall lapse with respect to, twenty-
five percent (25%) of the Purchased Shares.
(ii) Participant shall acquire a vested interest in, and the
Repurchase Right shall lapse with respect to, the remaining Purchased
Shares in a series of thirty-six (36) successive equal monthly installments
upon Participant's completion of each additional month of Service over the
thirty-six (36)-month period measured from the initial vesting date under
subparagraph (i) above.
4. RECAPITALIZATION. Any new, substituted or additional
----------------
securities or other property (including cash paid other than as a regular cash
dividend) which is by reason of any Recapitalization distributed with respect to
the Purchased Shares shall be immediately subject to the Repurchase Right, but
only to the extent the Purchased Shares are at the time covered by such right.
Appropriate adjustments to reflect such distribution shall be made to the number
and/or class of securities subject to this Agreement and to the price per share
to be paid upon the exercise of the Repurchase Right in order to reflect the
effect of any such Recapitalization upon the Corporation's capital structure;
provided, however, that the aggregate purchase price shall remain the same.
- --------
5. CORPORATE TRANSACTION.
---------------------
(a) Immediately prior to the consummation of any Corporate
Transaction, the Repurchase Right shall automatically lapse in its entirety and
the Purchased Shares shall vest in full, except to the extent the Repurchase
Right is to be assigned to the successor corporation (or parent thereof) in
connection with the Corporate Transaction. However, any assigned Repurchase
Right covering the Unvested Shares held by Participant shall immediately
terminate should there occur an Involuntary Termination of Participant's Service
within eighteen (18) months after such Corporate Transaction.
(b) To the extent the Repurchase Right remains in effect following
a Corporate Transaction, such right shall apply to the new capital stock or
other property (including any cash payments) received in exchange for the
Purchased Shares in consummation of the Corporate Transaction, but only to the
extent the Purchased Shares are at the time covered by such right. Appropriate
adjustments shall be made to the price per share payable upon exercise of the
Repurchase Right to reflect the effect of the Corporate Transaction upon the
Corporation's capital structure; provided, however, that the aggregate purchase
--------
price shall remain the same.
3.
<PAGE>
D. SPECIAL TAX ELECTION
--------------------
1. SECTION 83(B) ELECTION. Under Code Section 83, the excess of
----------------------
the fair market value of the Purchased Shares on the date any forfeiture
restrictions applicable to such shares lapse over the Purchase Price paid for
such shares will be reportable as ordinary income on the lapse date. For this
purpose, the term "forfeiture restrictions" includes the right of the
Corporation to repurchase the Purchased Shares pursuant to the Repurchase Right.
Participant may elect under Code Section 83(b) to be taxed at the time the
Purchased Shares are acquired, rather than when and as such Purchased Shares
cease to be subject to such forfeiture restrictions. Such election must be filed
with the Internal Revenue Service within thirty (30) days after the date of this
Agreement. Even if the fair market value of the Purchased Shares on the date of
this Agreement equals the Purchase Price paid (and thus no tax is payable), the
election must be made to avoid adverse tax consequences in the future. THE FORM
FOR MAKING THIS ELECTION IS ATTACHED AS EXHIBIT II HERETO. PARTICIPANT
UNDERSTANDS THAT FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-
DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME AS THE FORFEITURE
RESTRICTIONS LAPSE.
2. FILING RESPONSIBILITY. PARTICIPANT ACKNOWLEDGES THAT IT IS
---------------------
PARTICIPANT'S SOLE RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY
ELECTION UNDER CODE SECTION 83(B), EVEN IF PARTICIPANT REQUESTS THE CORPORATION
OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.
E. GENERAL PROVISIONS
------------------
1. ASSIGNMENT. The Corporation may assign the Repurchase Right
----------
to any person or entity selected by the Board, including (without limitation)
one or more stockholders of the Corporation.
2. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement
---------------------------------
or in the Plan shall confer upon Participant any right to continue in Service
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Corporation (or any Parent or Subsidiary employing or
retaining Participant) or of Participant, which rights are hereby expressly
reserved by each, to terminate Participant's Service at any time for any reason,
with or without cause.
3. NOTICES. Any notice required to be given under this Agreement
-------
shall be in writing and shall be deemed effective upon personal delivery or upon
deposit in the U.S. mail, registered or certified, postage prepaid and properly
addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such
party may designate by ten (10) days advance written notice under this paragraph
to all other parties to this Agreement.
4.
<PAGE>
4. NO WAIVER. The failure of the Corporation in any instance to
---------
exercise the Repurchase Right shall not constitute a waiver of any other
repurchase rights that may subsequently arise under the provisions of this
Agreement or any other agreement between the Corporation and Participant. No
waiver of any breach or condition of this Agreement shall be deemed to be a
waiver of any other or subsequent breach or condition, whether of like or
different nature.
5. CANCELLATION OF SHARES. If the Corporation shall make
----------------------
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Purchased Shares to be repurchased in
accordance with the provisions of this Agreement, then from and after such time,
the person from whom such shares are to be repurchased shall no longer have any
rights as a holder of such shares (other than the right to receive payment of
such consideration in accordance with this Agreement). Such shares shall be
deemed purchased in accordance with the applicable provisions hereof, and the
Corporation shall be deemed the owner and holder of such shares, whether or not
the certificates therefor have been delivered as required by this Agreement.
F. MISCELLANEOUS PROVISIONS
------------------------
1. PARTICIPANT UNDERTAKING. Participant hereby agrees to take
-----------------------
whatever additional action and execute whatever additional documents the
Corporation may deem necessary or advisable in order to carry out or effect one
or more of the obligations or restrictions imposed on either Participant or the
Purchased Shares pursuant to the provisions of this Agreement.
2. AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes the
----------------------------
entire contract between the parties hereto with regard to the subject matter
hereof. This Agreement is made pursuant to the provisions of the Plan and shall
in all respects be construed in conformity with the terms of the Plan.
3. GOVERNING LAW. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Colorado without resort
to that State's conflict-of-laws rules.
4. COUNTERPARTS. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
----------------------
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and upon Participant, Participant's assigns and the legal
representatives, heirs and legatees of Participant's estate, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.
5.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first indicated above.
OPTIKA IMAGING SYSTEMS, INC.
By:
-----------------------------
Title:
--------------------------
Address:
------------------------
--------------------------------
--------------------------------
PARTICIPANT
Address:
------------------------
--------------------------------
6.
<PAGE>
SPOUSAL ACKNOWLEDGMENT
The undersigned spouse of the Participant has read and hereby approves
the foregoing Stock Issuance Agreement. In consideration of the Corporation's
granting the Participant the right to acquire the Purchased Shares in accordance
with the terms of such Agreement, the undersigned hereby agrees to be
irrevocably bound by all the terms of such Agreement, including (without
limitation) the right of the Corporation (or its assigns) to purchase any
Purchased Shares in which the Participant is not vested at the time of his or
her termination of Service.
---------------------------------
PARTICIPANT'S SPOUSE
Address:
-------------------------
-------------------------
7.
<PAGE>
EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED ______________________ hereby sell(s), assign(s)
and transfer(s) unto Optika Imaging Systems, Inc. (the "Corporation"),
___________________(_______) shares of the Common Stock of the Corporation
standing in his or her name on the books of the Corporation represented by
Certificate No. ___________________ herewith and do(es) hereby irrevocably
constitute and appoint _______________________________ Attorney to transfer the
said stock on the books of the Corporation with full power of substitution in
the premises.
Dated: , 199 .
------------- -
Signature
--------------------------
INSTRUCTION: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Corporation to
exercise the Repurchase Right without requiring additional signatures on the
part of Participant.
<PAGE>
EXHIBIT II
SECTION 83(b) TAX ELECTION
This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
Address:
Taxpayer Ident. No.:
(2) The property with respect to which the election is being made is
____________ shares of the common stock of Optika Imaging Systems, Inc.
(3) The property was issued on _____________, 199___.
(4) The taxable year in which the election is being made is the calendar year
199__.
(5) The property is subject to a repurchase right pursuant to which the issuer
has the right to acquire the property at the original purchase price if for
any reason taxpayer's employment with the issuer is terminated. The
issuer's repurchase right lapses in a series of annual and monthly
installments over a four (4)-year period ending on ________________.
(6) The fair market value at the time of transfer (determined without regard to
any restriction other than a restriction which by its terms will never
lapse) is $____________ per share.
(7) The amount paid for such property is $____________ per share.
(8) A copy of this statement was furnished to Optika Imaging Systems, Inc., for
whom taxpayer rendered the services underlying the transfer of property.
(9) This statement is executed on ________________________, 199__.
- -------------------------------------- --------------------------------------
Spouse (if any) Taxpayer
This election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Issuance Agreement. This
filing should be made by registered or certified mail, return receipt requested.
Participant must retain two (2) copies of the completed form for filing with his
or her Federal and state tax returns for the current tax year and an additional
copy for his or her records.
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Stock Issuance Agreement.
---------
B. BOARD shall mean the Corporation's Board of Directors.
-----
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
----
D. COMMON STOCK shall mean the Corporation's common stock.
------------
E. CORPORATE TRANSACTION shall mean either of the following stockholder-
---------------------
approved transactions:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to
such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
F. CORPORATION shall mean Optika Imaging Systems, Inc., a Delaware
-----------
corporation and its successors.
G. INVOLUNTARY TERMINATION shall mean the termination of the Service of
-----------------------
any Optionee or Participant which occurs by reason of:
- such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
- such individual's voluntary resignation following (i) a change in
his or her position with the Corporation (or Parent or Subsidiary employing
Optionee) which materially reduces his or her level of responsibility, (B)
a reduction in his or her level of compensation (including base salary,
fringe benefits and any non-discretionary and objective-standard incentive
payment or bonus award) by more than ten percent (10%) in the aggregate or
(C) a relocation of such individual's place of employment by more than
fifty (50)
A-1.
<PAGE>
miles, provided and only if such change, reduction or relocation is
effected by the Corporation without the individual's consent.
H. MISCONDUCT shall mean the commission of any act of fraud, embezzlement
----------
or dishonesty by Participant, any unauthorized use or disclosure by Participant
of confidential information or trade secrets of the Corporation (or any Parent
or Subsidiary) or any other intentional misconduct by Participant adversely
affecting the business or affairs of the Corporation in a material manner. The
foregoing definition shall not be deemed to be inclusive of all the acts or
omissions which the Corporation or any Parent or Subsidiary may consider as
grounds for the dismissal or discharge of Participant.
I. OWNER shall mean Participant and all subsequent holders of the
-----
Purchased Shares who derive their chain of ownership through a Permitted
Transfer from Participant.
J. PARENT shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
K. PARTICIPANT shall mean the person to whom the Purchased Shares are
-----------
issued under the Stock Issuance Program.
L. PERMITTED TRANSFER shall mean (i) a gratuitous transfer of the
------------------
Purchased Shares to Participant's spouse or issue, including adopted children or
to a trust established for such spouse or issue, (ii) a transfer of title to the
Purchased Shares effected pursuant to Participant's will or the laws of
intestate succession following Participant's death or (iii) a transfer to the
Corporation in pledge as security for any purchase-money indebtedness incurred
by Participant in connection with the acquisition of the Purchased Shares.
M. PLAN shall mean the Corporation's 1994 Stock Option/Stock Issuance
----
Plan.
N. PLAN ADMINISTRATOR shall mean either the Board or a committee of the
------------------
Board acting in its administrative capacity under the Plan.
O. PURCHASE PRICE shall have the meaning assigned to such term in
--------------
Paragraph A.1.
P. PURCHASED SHARES shall have the meaning assigned to such term in
----------------
Paragraph A.1.
Q. RECAPITALIZATION shall mean any stock split, stock dividend,
----------------
recapitalization, combination of shares, exchange of shares or other change
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.
A-2.
<PAGE>
R. REORGANIZATION shall mean any of the following transactions:
--------------
(i) a merger or consolidation in which the Corporation is not
the surviving entity,
(ii) a sale, transfer or other disposition of all or
substantially all of the Corporation's assets,
(iii) a reverse merger in which the Corporation is the surviving
entity but in which the Corporation's outstanding voting securities are
transferred in whole or in part to a person or persons different from the
persons holding those securities immediately prior to the merger, or
(iv) any transaction effected primarily to change the state in
which the Corporation is incorporated or to create a holding company
structure.
S. REPURCHASE RIGHT shall mean the right granted to the Corporation in
----------------
accordance with Article C.
T. SERVICE shall mean the Participant's performance of services for the
-------
Corporation (or any Parent or Subsidiary) in the capacity of an employee,
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance, a non-employee member
of the board of directors or an independent consultant.
U. STOCK ISSUANCE PROGRAM shall mean the Stock Issuance Program under the
----------------------
Plan.
V. SUBSIDIARY shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
W. VESTING SCHEDULE shall mean the vesting schedule specified in Paragraph
----------------
C.3, subject to the acceleration provisions of Paragraph C.5.
X. UNVESTED SHARES shall have the meaning assigned to such term in
---------------
Paragraph C.1.
A-3.
<PAGE>
EXHIBIT 99.11
ADDENDUM
TO
STOCK ISSUANCE AGREEMENT
The following provisions are hereby incorporated into, and are hereby made
a part of, that certain Stock Issuance Agreement dated ________________ (the
"Issuance Agreement") by and between Optika Imaging Systems, Inc. (the
"Corporation") and ________________ ("Participant") evidencing the stock
issuance on such date to Participant under the terms of the Corporation's 1994
Stock Option/Stock Issuance Plan, and such provisions shall be effective
immediately. All capitalized terms in this Addendum, to the extent not otherwise
defined herein, shall have the meanings assigned to such terms in the Issuance
Agreement.
INVOLUNTARY TERMINATION FOLLOWING
CHANGE IN CONTROL
1. No accelerated vesting of the Purchased Shares shall occur upon a
Change in Control, and the Repurchase Right shall continue to remain in full
force and effect in accordance with the provisions of the Issuance Agreement.
The Participant shall, over Participant's period of Service following the Change
in Control, continue to vest in the Purchased Shares in one or more installments
in accordance with the provisions of the Issuance Agreement. However,
immediately upon an Involuntary Termination of Participant's Service within
eighteen (18) months following the Change in Control, the Repurchase Right shall
terminate automatically and all the Purchased Shares shall vest in full.
2. For purposes of this Addendum, the following definitions shall be
in effect:
A CHANGE IN CONTROL shall be deemed to occur in the event of a
change in ownership or control of the Corporation effected through either of the
following transactions:
(i) the direct or indirect acquisition by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of
the Securities Exchange Act of 1934, as amended) of securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation's stockholders which the Board does not
recommend such stockholders to accept, or
<PAGE>
(ii) a change in the composition of the Board over a period of
thirty-six (36) months or less such that a majority of the Board members
ceases by reason of one or more contested elections for Board membership,
to be comprised of individuals who either (A) have been Board members
continuously since the beginning of such period or (B) have been elected or
nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in
office at the time such election or nomination was approved by the Board;
provided, however, that a change in the composition of the Board pursuant
to Section 4.3.1(b) or Section 4.3.6 of the Corporation's Amended and
Restated Articles of Incorporation shall not constitute a Change in
Control.
An INVOLUNTARY TERMINATION shall mean the termination of
Participant's Service by reason of:
(i) Participant's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) Participant's voluntary resignation following (A) a change
in Participant's position with the Corporation (or Parent or Subsidiary
employing Participant) which materially reduces Participant's level of
responsibility, (B) a reduction in Participant's level of compensation
(including base salary, fringe benefits and any non-discretionary and
objective-standard incentive payment or bonus award) by more than ten
percent (10%) or (C) a relocation of Participant's place of employment by
more than fifty (50) miles, provided and only if such change, reduction or
relocation is effected by the Corporation without Participant's consent.
MISCONDUCT shall mean the commission of any act of fraud, embezzlement
or dishonesty by the Participant, any unauthorized use or disclosure by the
Participant of confidential information or trade secrets of the Corporation (or
any Parent or Subsidiary), or any other intentional misconduct by the
Participant adversely affecting the business or affairs of the Corporation (or
any Parent or Subsidiary) in a material manner. The foregoing definition shall
not be deemed to be inclusive of all the acts or omissions which the Corporation
(or any Parent or Subsidiary) may consider as grounds for the dismissal or
discharge of the Participant or other person in the Service of the Corporation
(or any Parent or Subsidiary).
2.
<PAGE>
IN WITNESS WHEREOF, Optika Imaging Systems, Inc. has caused this
Addendum to be executed by its duly-authorized officer, and Participant has
executed this Addendum, all as of the Effective Date specified below.
OPTIKA IMAGING SYSTEMS, INC.
By:
-------------------------
Title:
----------------------
----------------------------
PARTICIPANT
Address:
--------------------
----------------------------
EFFECTIVE DATE: , 199
------------- -
3.
<PAGE>
EXHIBIT 99.12
OPTIKA IMAGING SYSTEMS, INC.
EMPLOYEE STOCK PURCHASE PLAN
----------------------------
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the interests
of Optika Imaging Systems, Inc. by providing eligible employees with the
opportunity to acquire a proprietary interest in the Corporation through
participation in a payroll-deduction based employee stock purchase plan designed
to qualify under Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to such terms
in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares of Common
Stock purchased on the open market. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed Two Hundred
Fifty Thousand (250,000) shares.
B. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and class of securities issuable under
the Plan, (ii) the maximum number and class of securities purchasable per
Participant on any one Purchase Date and (iii) the number and class of
securities and the price per share in effect under each outstanding purchase
right in order to prevent the dilution or enlargement of benefits thereunder.
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under the
Plan through a series of successive offering periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.
<PAGE>
B. Each offering period shall be of such duration (not to exceed
twenty-four (24) months) as determined by the Plan Administrator prior to the
start date. The initial offering period shall commence at the Effective Time
and terminate on the last business day in July 1998. The next offering period
shall commence on the first business day in August 1998, and subsequent offering
periods shall commence as designated by the Plan Administrator.
C. Each offering period shall be comprised of a series of one or
more successive Purchase Intervals. Purchase Intervals shall run from the first
business day in February each year to the last business day in July of the same
year and from the first business day in August each year to the last business
day in January of the following year. However, the first Purchase Interval in
effect under the initial offering period shall commence at the Effective Time
and terminate on the last business day in January 1997.
D. Should the Fair Market Value per share of Common Stock on any
Purchase Date within an offering period be less than the Fair Market Value per
share of Common Stock on the start date of that offering period, then that
offering period shall automatically terminate immediately after the purchase of
shares of Common Stock on such Purchase Date, and a new offering period shall
commence on the next business day following such Purchase Date, with all
Participants in the terminated offering period to be automatically enrolled in
the new offering period. The new offering period shall have a duration of
twenty-four (24) months, unless a shorter duration is established by the Plan
Administrator within five (5) business days following the start date of that
offering period.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the start date of
any offering period under the Plan may enter that offering period on such start
date or on any subsequent Quarterly Entry Date within that offering period,
provided he or she remains an Eligible Employee.
B. Each individual who first becomes an Eligible Employee after the
start date of an offering period may enter that offering period on any
subsequent Quarterly Entry Date within that offering period on which he or she
is an Eligible Employee.
C. The date an individual enters an offering period shall be
designated his or her Entry Date for purposes of that offering period.
D. To participate in the Plan for a particular offering period, the
Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization) and file such forms with the Plan Administrator (or its
designate) on or before his or her scheduled Entry Date.
2.
<PAGE>
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for purposes
of acquiring shares of Common Stock during an offering period may be any
multiple of one percent (1%) of the Cash Compensation paid to the Participant
during each Purchase Interval within that offering period, up to a maximum of
ten percent (10%). The deduction rate so authorized shall continue in effect
throughout the offering period, except to the extent such rate is changed in
accordance with the following guidelines:
(i) The Participant may, at any time during the offering
period, reduce his or her rate of payroll deduction to become effective as soon
as possible after filing the appropriate form with the Plan Administrator. The
Participant may not, however, effect more than one (1) such reduction per
Purchase Interval.
(ii) The Participant may, prior to the commencement of any new
Purchase Interval within the offering period, increase the rate of his or her
payroll deduction by filing the appropriate form with the Plan Administrator.
The new rate (which may not exceed the ten percent (10%) maximum) shall become
effective on the start date of the first Purchase Interval following the filing
of such form.
B. Payroll deductions shall begin on the first pay day following the
Participant's Entry Date into the offering period and shall (unless sooner
terminated by the Participant) continue through the pay day ending with or
immediately prior to the last day of that offering period. The amounts so
collected shall be credited to the Participant's book account under the Plan,
but no interest shall be paid on the balance from time to time outstanding in
such account. The amounts collected from the Participant shall not be held in
any segregated account or trust fund and may be commingled with the general
assets of the Corporation and used for general corporate purposes.
C. Payroll deductions shall automatically cease upon the termination
of the Participant's purchase right in accordance with the provisions of the
Plan.
D. The Participant's acquisition of Common Stock under the Plan on
any Purchase Date shall neither limit nor require the Participant's acquisition
of Common Stock on any subsequent Purchase Date, whether within the same or a
different offering period.
VII. PURCHASE RIGHTS
A. GRANT OF PURCHASE RIGHT. A Participant shall be granted a separate
-----------------------
purchase right for each offering period in which he or she participates. The
purchase right shall be granted on the Participant's Entry Date into the
offering period and shall provide the Participant with the right to purchase
shares of Common Stock, in a series of successive
3.
<PAGE>
installments over the remainder of such offering period, upon the terms set
forth below. The Participant shall execute a stock purchase agreement embodying
such terms and such other provisions (not inconsistent with the Plan) as the
Plan Administrator may deem advisable.
Under no circumstances shall purchase rights be granted under the Plan
to any Eligible Employee if such individual would, immediately after the grant,
own (within the meaning of Code Section 424(d)) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Corporation
or any Corporate Affiliate.
B. EXERCISE OF THE PURCHASE RIGHT. Each purchase right shall be
------------------------------
automatically exercised in installments on each successive Purchase Date within
the offering period, and shares of Common Stock shall accordingly be purchased
on behalf of each Participant (other than Participants whose payroll deductions
have previously been refunded pursuant to the Termination of Purchase Right
provisions below) on each such Purchase Date. The purchase shall be effected by
applying the Participant's payroll deductions for the Purchase Interval ending
on such Purchase Date to the purchase of whole shares of Common Stock at the
purchase price in effect for the Participant for that Purchase Date.
C. PURCHASE PRICE. The purchase price per share at which Common
--------------
Stock will be purchased on the Participant's behalf on each Purchase Date within
the offering period shall be eighty-five percent (85%) of the lower of (i) the
-----
Fair Market Value per share of Common Stock on the Participant's Entry Date into
that offering period or (ii) the Fair Market Value per share of Common Stock on
that Purchase Date. However, for each Participant whose Entry Date is other than
the start date of the offering period, the clause (i) amount shall in no event
be less than the Fair Market Value per share of Common Stock on the start date
of that offering period.
D. NUMBER OF PURCHASABLE SHARES. The number of shares of Common
----------------------------
Stock purchasable by a Participant on each Purchase Date during the offering
period shall be the number of whole shares obtained by dividing the amount
collected from the Participant through payroll deductions during the Purchase
Interval ending with that Purchase Date by the purchase price in effect for the
Participant for that Purchase Date. However, the maximum number of shares of
Common Stock purchasable per Participant on any one Purchase Date shall not
exceed seven hundred fifty (750) shares, subject to periodic adjustments in the
event of certain changes in the Corporation's capitalization.
E. EXCESS PAYROLL DEDUCTIONS. Any payroll deductions not applied
-------------------------
to the purchase of shares of Common Stock on any Purchase Date because they are
not sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable by the Participant on the
Purchase Date shall be promptly refunded.
4.
<PAGE>
F. Termination of Purchase Right. The following provisions shall govern
-----------------------------
the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the next
scheduled Purchase Date in the offering period, terminate his or her
outstanding purchase right by filing the appropriate form with the Plan
Administrator (or its designate), and no further payroll deductions
shall be collected from the Participant with respect to the terminated
purchase right. Any payroll deductions collected during the Purchase
Interval in which such termination occurs shall, at the Participant's
election, be immediately refunded or held for the purchase of shares on
the next Purchase Date. If no such election is made at the time such
purchase right is terminated, then the payroll deductions collected with
respect to the terminated right shall be refunded as soon as possible.
(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin the
offering period for which the terminated purchase right was granted. In
order to resume participation in any subsequent offering period, such
individual must re-enroll in the Plan (by making a timely filing of the
prescribed enrollment forms) on or before his or her scheduled Entry
Date into the offering period.
(iii) Should the Participant cease to remain an Eligible
Employee for any reason (including death, disability or change in
status) while his or her purchase right remains outstanding , then that
purchase right shall immediately terminate, and all of the Participant's
payroll deductions for the Purchase Interval in which the purchase right
so terminates shall be immediately refunded. However, should the
Participant cease to remain in active service by reason of an approved
unpaid leave of absence, then the Participant shall have the right,
exercisable up until the last business day of the Purchase Interval in
which such leave commences, to elect to (a) withdraw all the payroll
deductions collected to date on his or her behalf for that Purchase
Interval or (b) have such funds held for the purchase of shares on his
or her behalf on the next scheduled Purchase Date. If no such election
is made prior to the last business day of the purchase interval in which
the leave commences, then the payroll deductions collected during such
Purchase Period shall be refunded as soon as possible. In no event,
however, shall any further payroll deductions be collected on the
Participant's behalf during the leave of absence. Upon the Participant's
return to active service, his or her payroll deductions under the Plan
shall automatically resume at the rate in effect at the time the leave
began, unless the Participant withdraws from the Plan prior to his or
her return.
5.
<PAGE>
G. Corporate Transaction. Each outstanding purchase right shall
----------------------
automatically be exercised, immediately prior to the effective date of any
Corporate Transaction, by applying the payroll deductions of each Participant
for the Purchase Interval in which such Corporate Transaction occurs to the
purchase of whole shares of Common Stock at a purchase price per share equal to
eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of
-----
Common Stock on the Participant's Entry Date into the offering period in which
such Corporate Transaction occurs or (ii) the Fair Market Value per share of
Common Stock immediately prior to the effective date of such Corporate
Transaction.
The Corporation shall use its best efforts to provide at least ten
(10)-days prior written notice of the occurrence of any Corporate Transaction,
and Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Corporate Transaction.
H. Proration of Purchase Rights. Should the total number of shares of
----------------------------
Common Stock to be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.
I. Assignability. The purchase right shall be exercisable only by the
-------------
Participant and shall not be assignable or transferable by the Participant.
J. Stockholder Rights. A Participant shall have no stockholder rights
------------------
with respect to the shares subject to his or her outstanding purchase right
until the shares are purchased on the Participant's behalf in accordance with
the provisions of the Plan and the Participant has become a holder of record of
the purchased shares.
III. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when aggregated with (i) rights to purchase Common
Stock accrued under any other purchase right granted under this Plan and (ii)
similar rights accrued under other employee stock purchase plans (within the
meaning of Code Section 423) of the Corporation or any Corporate Affiliate,
would otherwise permit such Participant to purchase more than Twenty-Five
Thousand Dollars ($25,000) worth of stock of the Corporation or any Corporate
Affiliate (determined on the basis of the Fair Market Value per share on the
date or dates such rights are granted) for each calendar year such rights are at
any time outstanding.
6.
<PAGE>
B. For purposes of applying such accrual limitations to the purchase
rights granted under the Plan, the following provisions shall be in effect:
(i) The right to acquire Common Stock under each outstanding
purchase right shall accrue in a series of installments on each such successive
Purchase Date during the offering period on which such right remains
outstanding.
(ii) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has already accrued in
the same calendar year the right to acquire Common Stock under one (1) or more
other purchase rights at a rate equal to Twenty-Five Thousand Dollars ($25,000)
worth of Common Stock (determined on the basis of the Fair Market Value per
share on the date or dates of grant) for each calendar year such rights were at
any time outstanding.
C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular Purchase Interval, then the payroll
deductions which the Participant made during that Purchase Interval with respect
to such purchase right shall be promptly refunded.
D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on May 21, 1996 and shall become
effective at the Effective Time, provided, however, that no purchase rights
--------
granted under the Plan shall be exercised, and no shares of Common Stock shall
be issued hereunder, until (i) the Plan shall have been approved by the
stockholders of the Corporation and (ii) the Corporation shall have complied
with all applicable requirements of the 1933 Act (including the registration of
the shares of Common Stock issuable under the Plan on a Form S-8 registration
statement filed with the Securities and Exchange Commission), all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock is listed for trading and all other
applicable requirements established by law or regulation. In the event such
stockholder approval is not obtained, or such compliance is not effected, within
twelve (12) months after the date on which the Plan is adopted by the Board, the
Plan shall terminate and have no further force or effect, and all sums
collected from Participants during the initial offering period hereunder shall
be refunded.
B. Unless sooner terminated by the Board, the Plan shall terminate upon
the earliest of (i) the last business day in July 2006, (ii) the date on which
--------
all shares
7.
<PAGE>
available for issuance under the Plan shall have been sold pursuant to purchase
rights exercised under the Plan or (iii) the date on which all purchase rights
are exercised in connection with a Corporate Transaction. No further purchase
rights shall be granted or exercised, and no further payroll deductions shall be
collected, under the Plan following such termination.
X. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the Plan at any
time to become effective immediately following the close of any Purchase
Interval. However, the Board may not, without the approval of the Corporation's
stockholders, (i) materially increase the number of shares of Common Stock
issuable under the Plan or the maximum number of shares purchasable per
Participant on any one Purchase Date, except for permissible adjustments in the
event of certain changes in the Corporation's capitalization, (ii) alter the
purchase price formula so as to reduce the purchase price payable for the shares
of Common Stock purchasable under the Plan or (iii) materially increase the
benefits accruing to Participants under the Plan or materially modify the
requirements for eligibility to participate in the Plan.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the Plan
shall be paid by the Corporation.
B. Nothing in the Plan shall confer upon the Participant any right
to continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.
C. The provisions of the Plan shall be governed by the laws of the
State of Colorado without resort to that State's conflict-of-laws rules.
8.
<PAGE>
Schedule A
----------
Corporations Participating in
Employee Stock Purchase Plan
As of the Effective Time
------------------------
Optika Imaging Systems, Inc.
Optika Asia Incorporated
Optika Imaging Systems Europe Limited
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. Cash Compensation shall mean (i) the regular base salary paid to a
-----------------
Participant by one or more Participating Companies during such individual's
period of participation in one or more offering periods under the Plan, plus
(ii) any pre-tax contributions made by the Participant to any Code Section
401(k) salary deferral plan or any Code Section 125 cafeteria benefit program
now or hereafter established by the Corporation or any Corporate Affiliate, plus
(iii) all of the following amounts to the extent paid in cash: overtime
payments, bonuses, commissions, profit-sharing distributions and other
incentive-type payments. However, Eligible Earnings shall not include any
---
contributions (other than Code Section 401(k) or Code Section 125 contributions)
made on the Participant's behalf by the Corporation or any Corporate Affiliate
to any deferred compensation plan or welfare benefit program now or hereafter
established.
B. Board shall mean the Corporation's Board of Directors.
-----
C. Code shall mean the Internal Revenue Code of 1986, as amended.
----
D. Common Stock shall mean the Corporation's common stock.
------------
E. Corporate Affiliate shall mean any parent or subsidiary corporation of
-------------------
the Corporation (as determined in accordance with Code Section 424), whether now
existing or subsequently established.
F. Corporate Transaction shall mean either of the following
---------------------
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different from
the persons holding those securities immediately prior to such transaction,
or
(ii) the sale, transfer or other disposition of all or substantially
all of the assets of the Corporation in complete liquidation or dissolution
of the Corporation.
G. Corporation shall mean Optika Imaging Systems, Inc., a Delaware
-----------
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Optika Imaging Systems, Inc. which shall by
appropriate action adopt the Plan.
A-1.
<PAGE>
H. Effective Time shall mean the time at which the Underwriting
--------------
Agreement is executed and finally priced. Any Corporate Affiliate which becomes
a Participating Corporation after such Effective Time shall designate a
subsequent Effective Time with respect to its employee-Participants.
I. Eligible Employee shall mean any person who is employed by a
-----------------
Participating Corporation on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section
3401(a).
J. Entry Date shall mean the date an Eligible Employee first commences
----------
participation in the offering period in effect under the Plan. The earliest
Entry Date under the Plan shall be the Effective Time.
K. Fair Market Value per share of Common Stock on any relevant date
-----------------
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question, as such price is reported by
the National Association of Securities Dealers on the Nasdaq National Market or
any successor system. If there is no closing selling price for the Common Stock
on the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange determined
by the Plan Administrator to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
(iii) For purposes of the initial offering period which begins
at the Effective Time, the Fair Market Value shall be deemed to be equal to the
price per share at which the Common Stock is sold in the initial public offering
pursuant to the Underwriting Agreement.
L. 1933 Act shall mean the Securities Act of 1933, as amended.
--------
A-2.
<PAGE>
M. Participant shall mean any Eligible Employee of a Participating
-----------
Corporation who is actively participating in the Plan.
N. Participating Corporation shall mean the Corporation and such
-------------------------
Corporate Affiliate or Affiliates as may be authorized from time to time by the
Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan as of the Effective Time are listed in
attached Schedule A.
O. Plan shall mean the Corporation's Employee Stock Purchase
----
Plan, as set forth in this document.
P. Plan Administrator shall mean the committee of two (2) or more
------------------
Board members appointed by the Board to administer the Plan.
Q. Purchase Date shall mean the last business day of each Purchase
-------------
Interval. The initial Purchase Date shall be January 31, 1997.
R. Purchase Interval shall mean each successive six (6)-month
-----------------
period within the offering period at the end of which there shall be purchased
shares of Common Stock on behalf of each Participant.
S. Quarterly Entry Date shall mean the first business day in
--------------------
February, May, August and November each year on which an Eligible Employee may
first enter an offering period.
T. Stock Exchange shall mean either the American Stock Exchange or
--------------
the New York Stock Exchange.
U. Underwriting Agreement shall mean the agreement between the
----------------------
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
A-3.
<PAGE>
EXHIBIT 99.13
OPTIKA IMAGING SYSTEMS, INC.
EMPLOYEE STOCK PURCHASE PLAN ("ESPP")
ENROLLMENT/CHANGE FORM
Action Complete Sections:
- ---------- ------ -----------------
SECTION 1: [_] New Enrollment 2, 3, 7 and sign attached
---
- ---------- Stock Purchase Agreement
ACTION
[_] Change Payroll Deductions 2, 4, 7
[_] Terminate Payroll Deductions 2, 5, 7
[_] Leave of Absence 2, 6, 7
================================================================================
- ----------
SECTION 2: Name ___________________________________________________________
- ---------- Last First MI Dept.
PERSONNEL
DATA Home Address ___________________________________________________
Street
________________________________________________________________
City State Zip Code
Social Security #: [_][_][_] - [_][_] - [_][_][_][_]
================================================================================
- ----------
SECTION 3: Effective with the following
- ---------- Quarterly Entry Date:
NEW [_] February 1, 199__ [_] May 1, 199__
ENROLLMENT [_] August 1, 199__ [_] November 1, 199__
[_] Initial Offering Period
Payroll Deduction Amount: _____% of cash earnings*
* Must be a multiple of 1% up to a maximum of 10% of
cash earnings
================================================================================
- ---------
SECTION 4: Effective with the
- --------- Pay Period Beginning: _______________________________________
CHANGE Month, Day and Year
PAYROLL
DEDUCTIONS
I authorize the following new level of payroll deductions:
_______% of cash earnings*
* Must be a multiple of 1% up to a maximum of 10% of cash
earnings
NOTE: You may reduce your rate of payroll deductions once per
---- purchase interval to become effective as soon as
possible following the filing of the change form. You may
also increase your rate of payroll deductions to become
effective as of the start date of the next purchase
interval.
================================================================================
- ---------
SECTION 5: Effective with the
- --------- Pay Period Beginning: ___________________________________________
TERMINATE Month, Day and Year
PAYROLL
DEDUCTIONS
Your election to terminate your payroll deductions for the
balance of the offering period cannot be changed, and you may not
rejoin the offering period at a later date. You will not be able
to resume participation in the ESPP until a new offering period
begins.
In connection with my voluntary termination of payroll
deductions, I elect the following action regarding my ESPP
payroll deductions to date in the current six (6)-month purchase
interval:
[_] Purchase shares of Optika Imaging Systems, Inc. at end of
the interval
OR
[_] Refund ESPP payroll deductions collected
NOTE: If your employment terminates for any reason or your eligibility
---- status changes (less than 20 hrs/wk or less than 5 months/yr),
you will immediately cease to participate in the ESPP, and your
ESPP payroll deductions collected in that purchase interval will
automatically be refunded to you.
================================================================================
- ---------
SECTION 6: In connection with my unpaid leave of absence, I elect the
- --------- following action regarding my ESPP payroll deductions to date
LEAVE OF in the current purchase interval:
ABSENCE
[_] Purchase shares of Optika Imaging Systems, Inc. at end of
the interval
OR
[_] Refund ESPP payroll deductions collected
NOTE: If you take an unpaid leave of absence, your payroll deductions
---- will immediately cease. Upon your return to active service,
your payroll deductions will automatically resume at the rate in
effect for you at the time you went on leave, unless you withdraw
from the Plan prior to your return.
================================================================================
- ---------
SECTION 7:
- ---------
AUTHORIZATION
I hereby authorize the specific action or actions indicated above.
_________________________ ___________________________________
Date Signature of Employee
<PAGE>
EXHIBIT 99.14
OPTIKA IMAGING SYSTEMS, INC.
STOCK PURCHASE AGREEMENT
------------------------
I hereby elect to participate in the Employee Stock Purchase Plan (the
"ESPP") effective with the Entry Date specified below, and I hereby subscribe to
purchase shares of Common Stock of Optika Imaging Systems, Inc. (the
"Corporation") in accordance with the provisions of this Agreement and the ESPP.
I hereby authorize payroll deductions from each of my paychecks following my
entry into the ESPP in the 1% multiple of my earnings (not to exceed a maximum
of 10%) specified in my attached Enrollment Form.
The ESPP will be implemented in a series of successive offering periods,
each with a maximum duration of 24 months. Each offering period is divided into
a series of successive purchase intervals. The initial purchase interval is to
begin in July 1996 and end on January 31, 1997. Subsequent purchase intervals
will each be of six (6) months duration and will run from the first business day
of February to the last business day of July each year and from the first
business day of August each year until the last business of January in the
following year. Shares will be purchased on my behalf on the last business day
of each purchase interval. If the fair market value per share of Common Stock
on any purchase date within an offering period is less than the fair market
value per share of Common Stock on the start date of that offering period, then
that offering period will terminate after the purchase of shares on such
purchase date and a new offering period will begin on the next business day.
My participation will automatically remain in effect from one offering
period to the next in accordance with this Agreement and my payroll deduction
authorization, unless I withdraw from the ESPP or change the rate of my payroll
deduction or unless my employment status changes. I may reduce the rate of my
payroll deductions on one occasion per purchase interval, and I may increase my
rate of payroll deduction to become effective at the beginning of any subsequent
purchase interval within the offering period.
My payroll deductions will be accumulated for the purchase of shares of the
Corporation's Common Stock on the last business day of each purchase interval
within the offering period. The purchase price per share will be 85% of the
lower of (i) the fair market value per share of Common Stock on my entry date
- -----
into the offering period or (ii) the fair market value per share on the semi-
annual purchase date. I will also be subject to ESPP restrictions (i) limiting
the maximum number of shares which I may purchase on any one purchase date to
750 shares and (ii) prohibiting me from purchasing more than $25,000 worth of
Common Stock for each calendar year my purchase right remains outstanding.
I may withdraw from the ESPP at any time prior to the last business day of
a purchase interval and elect either to have the Corporation refund all my
payroll deductions for that purchase interval or to have those payroll
deductions applied to the purchase of shares of the Corporation's Common Stock
at the end of such interval. However, I may not rejoin that particular offering
period at any later date. Upon the termination of my employment for any reason,
including death or disability, or my loss of eligible employee status, my
participation in the ESPP will immediately cease and all my payroll deductions
for the purchase interval in which my employment terminates or my loss of
eligibility occurs will automatically be refunded.
If I take an unpaid leave of absence, my payroll deductions will
immediately cease, and any payroll deductions for the purchase interval in which
my leave begins will, at my election, either be refunded or applied to the
purchase of shares of Common Stock at the end of that purchase interval. Upon my
return to active service, my payroll deductions will automatically resume at the
rate in effect when my leave began.
A stock certificate for the shares purchased on my behalf at the end of
each purchase interval will automatically be deposited into a brokerage account
which the Corporation will open on my behalf. I will notify the Corporation of
any sale or disposition of my ESPP shares, and I will satisfy all applicable
income and employment tax withholding requirements at the time of such sale or
disposition.
The Corporation has the right, exercisable in its sole discretion, to amend
or terminate the ESPP at any time, with such amendment or termination to become
effective immediately following the exercise of outstanding purchase rights at
the end of any current purchase interval. Should the Corporation elect to
terminate the ESPP, I will have no further rights to purchase shares of Common
Stock pursuant to this Agreement.
I have received a copy of the Question and Answer Summary or Plan
Prospectus summarizing the major features of the ESPP. I have read this
Agreement and the Summary or Prospectus and hereby agree to be bound by the
terms of both this Agreement and the ESPP. The effectiveness of this Agreement
is dependent upon my eligibility to participate in the ESPP.
Date:______________, 199__ _____________________________
Signature of Employee
Printed Name:________________
Entry Date:__________, 199__
