<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 3, 1999.
REGISTRATION NO. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
DOCUMENT SCIENCES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 33-0485994
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
6339 PASEO DEL LAGO
CARLSBAD, CA 92009
(ADDRESS, INCLUDING ZIP CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
1995 STOCK INCENTIVE PLAN
(FULL TITLE OF THE PLAN)
BARTON L. FABER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
DOCUMENT SCIENCES CORPORATION
6339 PASEO DEL LAGO
CARLSBAD, CA 92009
(760) 602-1400
NAME, ADDRESS, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
MARK A. BERTELSEN, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304-1050
(415) 493-9300
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TITLE OF SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE FEE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value,
additional shares reserved for
issuance under the 1995 Stock
Incentive Plan (the "Plan") 350,000 $1.9375 $678,125.00 $ 189.00
TOTAL ............. 350,000 $678,125.00 $ 189.00
======= ============ ========
=====================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Plan being registered
pursuant to this Registration Statement by reason of any stock dividend,
stock split, recapitalization or any other similar transaction effected
without the receipt of consideration which results in an increase in the
number of the Registrant's outstanding shares of Common Stock.
(2) Estimated in accordance with Rule 457(h) under the Securities Act of 1933
(the "Securities Act") solely for the purpose of calculating the
registration fee. The computation is based upon the average of the high
and low sale prices of the Common Stock as reported on The Nasdaq National
Market on August 27, 1999.
================================================================================
<PAGE> 2
DOCUMENT SCIENCES CORPORATION
REGISTRATION STATEMENT ON FORM S-8
PART I
INFORMATION REQUIRED IN THIS PROSPECTUS
Omitted pursuant to the instructions and provisions of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
STATEMENT UNDER GENERAL INSTRUCTION E - REGISTRATION OF ADDITIONAL
SECURITIES.
Pursuant to General Instruction E of Form S-8, there are hereby
incorporated by reference into this Registration Statement the Registration
Statements on Form S-8 previously filed by Document Sciences Corporation (the
"Registrant") with the Securities and Exchange Commission (the "Commission"),
SEC File Nos. 333-17935 and 333-59803, in connection with the 1995 Stock
Incentive Plan (the "Plan"). This Registration Statement registers additional
shares of the Registrant's Common Stock to be issued pursuant to the Plan, and
the following subsequent periodic reports and information contained therein are
hereby incorporated by reference into this Registration Statement:
(1) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 filed with the Commission on March 31, 1999
pursuant to Section 13(a) the Securities Exchange Act of 1934, as
amended (the "Exchange Act");
(2) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999 filed with the Commission on May 14, 1999 pursuant to
Section 13(a) of the Exchange Act.
(3) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999 filed with the Commission on August 13, 1999 pursuant
to Section 13(a) of the Exchange Act.
(4) The Registrant's Definitive Proxy Statement on Schedule 14A filed
with the Commission on April 30, 1999 pursuant to Section 14(a) of
the Exchange Act.
(5) The description of Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A filed with the
Commission on July 10, 1996 pursuant to Section 12(g) of the
Exchange Act, as amended on August 9, 1996, including any amendment
or report filed for the purpose of updating such description.
<PAGE> 3
In addition, all documents subsequently filed with the Commission by the
Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
on or after the date of this Registration Statement and prior to the filing of a
post-effective amendment which indicates that all securities offered hereunder
have been sold or which deregisters all securities then remaining unsold under
this Registration Statement, shall be deemed to be incorporated by reference in
this Registration Statement and to be part hereof from the date of filing of
such documents. Any statement contained herein or 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 other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such earlier statement. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- ------------------------------------------------------------
<S> <C>
4.1 1995 Stock Incentive Plan.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, P.C., with
respect to the securities being registered.
23.1 Consent of Independent Auditors.
23.2 Consent of Counsel (contained in Exhibit 5.1).
24.1 Power of Attorney (see page II-3).
</TABLE>
II-2
<PAGE> 4
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 Carlsbad, State of California, on this 31st day
of August, 1999.
DOCUMENT SCIENCES CORPORATION
By: /s/ Barton L. Faber
--------------------------------
Barton L. Faber, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Barton L. Faber and John H. Wilson,
jointly and severally, his or her attorneys-in-fact, each with the power of
substitution, for him or her in any and all capacities, to sign any amendments
to this Registration Statement on Form S-8 and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------------------------- -------------------------------------- ---------------
<S> <C> <C>
/s/ Barton L. Faber President, Chief Executive Officer and August 31, 1999
- --------------------------- Director (Principal Executive Officer)
Barton L. Faber
/s/ John H. Wilson Vice President, Finance August 31, 1999
- --------------------------- (Principal Financial and Accounting
John H. Wilson Officer)
/s/ Thomas L. Ringer Chairman of the Board of Directors August 31, 1999
- ---------------------------
Thomas L. Ringer
/s/ Charles P. Holt Director August 31, 1999
- ---------------------------
Charles P. Holt
/s/ Colin J. O'Brien Director August 31, 1999
- ---------------------------
Colin J. O'Brien
/s/ Brian E. Stern Director August 31, 1999
- ---------------------------
Brian E. Stern
</TABLE>
II-3
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- ------------------------------------------------------------
<S> <C>
4.1 1995 Stock Incentive Plan.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, P.C., with
respect to the securities being registered.
23.1 Consent of Independent Auditors.
</TABLE>
<PAGE> 1
EXHIBIT 4.1
DOCUMENT SCIENCES CORPORATION
1995 STOCK INCENTIVE PLAN
(AS AMENDED MARCH 26, 1999)
1. Purposes of the Plan. The name of this plan is the Document Sciences
Corporation 1995 Stock Incentive Plan (the "Plan"). The purpose of the Plan is
to enable Document Sciences Corporation, a Delaware corporation (the "Company"),
and any Parent or any Subsidiary to obtain and retain the services of the types
of employees, consultants, officers and Directors who will contribute to the
Company's long range success and to provide incentives which are linked directly
to increases in share value which will inure to the benefit of all shareholders
of the Company.
2. Definitions. For purposes of the Plan, the following terms shall be defined
as set forth below:
"Administrator" shall have the meaning as set forth in Article 3.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto.
"Committee" means a committee of the Board designated by the Board to
administer the Plan and composed of not less than the minimum number of persons
from time to time required both by Rule 16b-3 and Section 162(m) of the Code,
each of whom is a Disinterested Person and an Outside Director.
"Company" means Document Sciences Corporation, a corporation organized
under the laws of the State of Delaware (or any successor corporation).
"Date of Grant" means the date on which the Administrator adopts a
resolution expressly granting a Right to a Participant, or if a different date
is set forth in such resolution as the Date of Grant, then such date as is set
forth in such resolution.
"Director" means a member of the Board.
"Disability" means permanent and total disability as defined by the
Administrator.
"Disinterested Person" shall have the meaning set forth in Rule
16b-3(c)(2)(i) under the Exchange Act, or any successor definition adopted by
the SEC.
"Election" shall have the meaning set forth in Section 10.3(d) of the
Plan.
<PAGE> 2
"Eligible Person" means an employee, officer, consultant or Director of
the Company, any Parent or any Subsidiary.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" per share at any date shall mean (i) if the Stock is
listed on an exchange or exchanges, or admitted for trading in a market system
which provides last sale data under Rule 11Aa3-1 of the General Rules and
Regulations of the Securities and Exchange Commission under the Securities and
Exchange Act of 1934, as amended (a "Market System"), the last reported sales
price per share on the last business day prior to such date on the principal
exchange on which it is traded, or in such a Market System, as applicable, the
last reported sales price per share on the most recent day prior to such date on
which a sale was reported on such exchange or such Market System, as applicable;
or (ii) if the Common Stock is not then traded on an exchange or in such a
Market System, the average of the closing bid and asked prices per share for the
Common Stock in the over-the-counter market as quoted on Nasdaq on the day prior
to such date; or (iii) if the Common Stock is not listed on an exchange or
quoted on Nasdaq, an amount determined in good faith by the Administrator,
taking into account the price at which securities of reasonably comparable
corporations are being traded, adjusted for any dissimilarities, and the
earnings history, book value and prospects of the Company in light of then
existing general market conditions.
"Incentive Stock Option" means a Stock Option intended to qualify as an
"incentive stock option" as that term is defined in Section 422 of the Code.
"Non-Statutory Option" means a Stock Option intended to not qualify as an
Incentive Stock Option.
"Offeree" means a Participant who is granted a Purchase Right pursuant
to the Plan.
"Optionee" means a Participant who is granted a Stock Option pursuant
to the Plan.
"Outside Director" means a Director who is not (a) a current employee of
the Company (or any related entity), (b) a former employee of the Company (or
any related entity) who is receiving compensation for prior services (other than
benefits under a tax-qualified retirement plan), (c) a former officer of the
Company (or any related entity), or (d) a consultant or person otherwise
receiving compensation or other remuneration, either directly or indirectly, in
any capacity other than as a Director.
"Parent" means any present or future corporation which would be a "parent
corporation" as that term is defined in Section 424 of the Code.
"Participant" means any Eligible Person selected by the Administrator,
pursuant to the Administrator's authority in Article 3, to receive grants of
Rights.
-2-
<PAGE> 3
"Plan" means this Document Sciences Corporation 1995 Stock Incentive Plan,
as the same may be amended or supplemented from time to time.
"Purchase Price" shall have the meaning set forth in Section 7.2(b) of
the Plan.
"Purchase Right" means the right to purchase Stock granted pursuant to
Article 7.
"Rights" means Stock Options and Purchase Rights.
"Retirement" means retirement from active employment with the Company or
any Parent or Subsidiary as defined by the Administrator.
"SEC" means the Securities and Exchange Commission.
"Section 16(b) Person" shall mean a person subject to Section 16(b) of the
Exchange Act.
"Special Terminating Event" with respect to a Participant shall mean the
death, Disability or Retirement of that Participant.
"Stock" means the Common Stock, par value $0.001 per share, of the
Company.
"Stock Option" means an option to purchase shares of Stock granted
pursuant to Article 6.
"Stock Option Agreement" shall have the meaning set forth in Section 6.2
of the Plan.
"Stock Purchase Agreement" shall have the meaning set forth in Section 7.2
of the Plan.
"Subsidiary" means any present or future corporation which would be a
"subsidiary corporation" as that term is defined in Section 424 of the Code.
"Tax Date" shall have the meaning set forth in Section 10.3(d) of the
Plan.
"Ten Percent Shareholder" means a person who on the Date of Grant owns,
either directly or indirectly or through attribution as provided in Section
424(d) of the Code, Stock possessing more than 10% of the total combined voting
power of all classes of stock of his or her employer corporation or of any
Parent or Subsidiary.
"Withholding Right" shall have the meaning set forth in Section 10.3(c)
of the Plan.
3. Administration.
3.1 Administrator. The Plan shall be administered by either (i) the Board,
or (ii) the Committee (the group that administers the Plan is referred to as the
"Administrator").
-3-
<PAGE> 4
3.2 Powers in General. The Administrator shall have the power and
authority to grant to Eligible Persons, pursuant to the terms of the Plan: (i)
Stock Options; (ii) Purchase Rights; or (iii) any combination of the foregoing.
3.3 Specific Powers. In particular, the Administrator shall have the
authority: (i) to construe and interpret the Plan and apply its provisions; (ii)
to promulgate, amend and rescind rules and regulations relating to the
administration of the Plan; (iii) to authorize any person to execute, on behalf
of the Company, any instrument required to carry out the purposes of the Plan;
(iv) to determine when Rights are to be granted under the Plan; (v) from time to
time to select, subject to the limitations set forth in this Plan, those
Eligible Persons to whom Rights shall be granted; (vi) to determine the number
of shares of Stock to be made subject to each Right; (vii) to prescribe the
terms and conditions of each Stock Option, including, without limitation, the
exercise price, medium of payment, right of first refusal and repurchase
provisions and to determine whether the Stock Option is to be an Incentive Stock
Option or a Non-Statutory Option and to specify the provisions of the Stock
Option agreement relating to such Stock Option; (viii) to prescribe the terms
and conditions of each Stock Option and Purchase Right, including, without
limitation, the purchase price and medium of payment, vesting provisions and
repurchase provisions, and to specify the provisions of the Stock Option
Agreement or Stock Purchase Agreement relating to such sale; (ix) to amend any
outstanding Rights for the purpose of modifying the time or manner of vesting,
the purchase price or exercise price, as the case may be, thereunder or
otherwise, subject to applicable legal restrictions and to the consent of the
other party to such agreement; (x) to determine when a consultant's relationship
with the Company is sufficient to constitute the equivalent of employment with
the Company for purposes of the Plan; (xi) to determine the duration and purpose
of leaves of absences which may be granted to a Participant without constituting
termination of their employment for purposes of the Plan; and (xii) to make any
and all other determinations which it determines to be necessary or advisable
for administration of the Plan.
3.4 Decisions Final. All decision made by the Administrator pursuant to
the provisions of the Plan shall be final and binding on the Company and the
Participants.
3.5 The Committee. The Board may, in its sole and absolute discretion,
from time to time delegate any or all of its duties and authority with respect
to the Plan to the Committee whose members are to be appointed by and to serve
at the pleasure of the Board. Once appointed, the Committee shall continue to
serve until otherwise directed by the Board. From time to time, the Board may
increase or decrease (to not less than the minimum number of persons from time
to time required by both Rule 16b-3 and Section 162(m) of the Code) the size of
the Committee, add additional members to, remove members (with or without cause)
from, appoint new members in substitution therefor, and fill vacancies, however
caused, in the Committee. The Committee shall act pursuant to a vote of the
majority of its members or, in the case of a committee comprised of only two
members, the unanimous consent of its members, whether present or not, or by the
written consent of the majority of its members or, in the case of a committee
comprised of only two members, the unanimous written consent of its members, and
minutes shall be kept of all its meetings and copies
-4-
<PAGE> 5
thereof shall be provided to the Board. Subject to the limitations prescribed by
the Plan and the Board, the Committee may establish and follow such rules and
regulations for the conduct of its business as it may determine to be advisable.
4. Stock Subject to Plan.
4.1 Stock Subject to Plan. Subject to an adjustment as provided in Article
8, the total number of shares of Stock reserved and available for issuance under
the Plan shall be 1,879,250 shares. Shares reserved hereunder may consist, in
whole or in part, of authorized and unissued shares or treasury shares.
4.2 Unexercised Rights; Reacquired Shares. To the extent that any Rights
expire or are otherwise terminated without being exercised, the shares
underlying such Rights (and shares related thereto) shall again be available for
issuance in connection with future Rights under the Plan. Shares acquired by the
Company upon exercise of Rights pursuant to Section 6.2(e) or Section 7.2(c) or
Section 10.3 shall not increase the shares available for issuance under the
Plan.
5. Eligibility. Directors, officers, employees and consultants of the
Company, any Parent or any Subsidiary, who are responsible for or contribute to
the management, growth or profitability of the Company, any Parent or
Subsidiary, shall be eligible to be granted Rights hereunder subject to
limitations set forth in this Plan; provided, however, that only officers and
employees shall be eligible to be granted Incentive Stock Options hereunder.
6. Stock Options.
6.1 General. Stock Options may be granted alone or in addition to other
Rights granted under the Plan. Each Stock Option granted under the Plan shall be
in such form and under such terms and conditions as the Administrator may from
time to time approve: provided, that such terms and conditions are not
inconsistent with the Plan. The provisions of Stock Option Agreements entered
into under the Plan need not be identical. Stock Options granted under the Plan
may be either Incentive Stock Options or Non-Statutory Options.
6.2 Terms and Conditions of Stock Options. Each Stock Option granted
pursuant to the Plan shall be evidenced by a written option agreement between
the Company and the Optionee (the "Stock Option Agreement"), which shall comply
with and be subject to the following terms and conditions:
a) Number of Shares. Each Stock Option Agreement shall state the
number of shares of Stock to which the Stock Option relates.
b) Type of Option. Each Stock Option Agreement shall identify the
portion (if any) of the Stock Option which constitutes an Incentive Stock
Option.
-5-
<PAGE> 6
c) Exercise Price. Each Stock Option Agreement shall state the price
at which shares subject to the Stock Option may be purchased (the "Exercise
Price"), which shall with respect to Incentive Stock Options be not less than
100% of the Fair Value of the shares of Stock on the Date of Grant. In the case
of Non-Statutory Options, the Exercise Price shall be determined in the sole
discretion of the Administrator. In the case of either an Incentive Stock Option
or a Non-Statutory Option granted to a Ten Percent Shareholder, the Exercise
Price shall not be less than 110% of such Fair Market Value.
d) Value of Shares. The Fair Market Value of the shares of Stock
(determined as of the Date of Grant) with respect to which Incentive Stock
Options are first exercisable by an Optionee under this Plan and all other
incentive option plans of the Company and any Parent or Subsidiary in any
calendar year shall not, for such year, in the aggregate, exceed $100,000; but
this Section 6.2(d) shall not affect the right of the Administrator to
accelerate or otherwise alter the time of vesting of any Options granted as
Incentive Stock Options, even, if as a result thereof, some of such Options
cease being Incentive Stock Options.
e) Medium and Time of Payment. The Exercise Price shall be paid in
full, at the time of exercise, in cash or cash equivalents or, with the approval
of the Administrator, in shares of Stock which have been held by the Optionee
for a period of at least six calendar months preceding the date of surrender and
which have a Fair Market Value equal to the Exercise Price, or in a combination
of cash and such shares, and may be effected in whole or in part (i) with monies
received from the Company at the time of exercise as a compensatory cash
payment; or (ii) to the extent that the Exercise Price exceeds the par value of
the shares so purchased, with monies borrowed from the Company in accordance
with Section 10.5.
f) Term and Exercise of Stock Options. Stock Options shall be
exercisable over the exercise period at the times the Administrator may
determine, as reflected in the related Stock Option Agreements. The Stock Option
Agreements shall provide that Option Holders shall have the right to exercise
the Stock Options at the rate of at least 20% per year over 5 years from the
Date of Grant of such Stock Options. The exercise period of any Stock Option
shall be determined by the Administrator, but shall not exceed ten years from
the Date of Grant of the Stock Option. In the case of an Incentive Stock Option
granted to a Ten Percent Shareholder, the exercise period shall be determined by
the Administrator, but shall not exceed five years from the Date of Grant of the
Stock Option. The exercise period shall be subject to earlier termination upon
the occurrence of either a Special Terminating Event, as provided in Section
10.6, or the Termination of Employment, as provided in Section 10.7. A Stock
Option may be exercised, as to any or all full shares of Stock as to which the
Stock Option has become exercisable, by giving written notice of such exercise
to the Company.
7. Purchase Rights.
7.1 General. Purchase Rights may be granted alone or in addition to other
Rights under the Plan. Each sale of Stock under this Article 7 shall be in such
form and under such terms and
-6-
<PAGE> 7
conditions as the Administrator shall from time to time approve; provided, that
such terms and conditions are not inconsistent with the Plan. The provisions of
Stock Purchase Agreements entered into under the Plan need not be identical.
7.2 Terms and Conditions of Purchase Rights. Each Purchase Right granted
pursuant to the Plan shall be evidenced by a written stock purchase agreement
between the Company and the Offeree (the "Stock Purchase Agreement"), which
shall comply with and be subject to the following terms and conditions.
a) Number of Shares. Each Stock Purchase Agreement shall state the
number of shares of Stock which may be purchased pursuant to such agreement.
b) Purchase Price. Each Stock Purchase Agreement shall state the price
at which the Stock subject to such Stock Purchase Agreement may be purchased
(the "Purchase Price"), which, with respect to Stock Purchase Rights, shall be
determined in the sole discretion of the Administrator.
c) Medium and Time of Payment. The Purchase Price shall be paid in
full at the time of exercise, in cash or cash equivalent or, with the approval
of the Administrator, in shares of Stock which have been held by the Offeree for
a period of at least six calendar months preceding the date of surrender and
which have a Fair Market Value equal to the Purchase Price or in a combination
of cash or cash equivalent and such shares, and may be effected in whole or in
part (i) with monies received from the Company at the time of exercise as a
compensatory cash payment; or (ii) to the extent the purchase price exceeds the
par value of the shares so purchased, with monies borrowed from the Company in
accordance with Section 10.5 of the Plan.
8. Adjustments.
8.1 Effect of Certain Changes.
a) Stock Dividends, Splits, Etc. If there is any change in the number
of outstanding shares of Stock through the declaration of Stock dividends or
through a recapitalization resulting in Stock splits, or combinations or
exchanges of the outstanding shares, (i) the number of shares of Stock available
for Rights, (ii) the number of shares covered by outstanding Rights and (iii)
the Exercise Price or Purchase Price of any Stock Option or Purchase Right, in
effect prior to such change, shall be proportionately adjusted by the
Administrator to reflect any increase or decrease in the number of issued shares
of Stock; provided, however, that any fractional shares resulting from the
adjustment shall be eliminated.
b) Liquidating Event. In the event of the proposed dissolution or
liquidation of the Company, or in the event of any corporate separation or
division, including, but not limited to, a split-up, split-off or spin-off
(each, a "Liquidating Event"), the Administrator may provide that the holder of
any Right then exercisable shall have the right to exercise such Right (at the
price provided in the Rights) subsequent to the Liquidating Event, and for the
balance of its term, solely for the kind
-7-
<PAGE> 8
and amount of shares of Stock and other securities, property, cash or any
combination thereof receivable upon such Liquidating Event by a holder of the
number of shares of Stock for or with respect to which such Right might have
been exercised immediately prior to such Liquidating Event; or the Administrator
may provide, in the alternative, that each Right granted under the Plan shall
terminate as of a date to be fixed by the Board; provided, however, that not
less than 30 days written notice of the date so fixed shall be given to each
Rights holder and if such notice is given, each Rights holder shall have the
right, during the period of 30 days preceding such termination, to exercise the
Right as to all or any part of the shares of Stock covered thereby, to the
extent that such Right is then exercisable, on the condition, however, that the
Liquidating Event actually occurs; and if the Liquidating Event actually occurs,
such exercise shall be deemed effective (and, if applicable, the Rights holder
shall be deemed a shareholder with respect to the Rights exercised) immediately
preceding the occurrence of the Liquidating Event, or the date of record for
shareholders entitled to share in such Liquidating Event, if a record date is
set.
c) Merger or Consolidation. In the case of any capital reorganization,
any reclassification of the Common Stock (other than a change in par value or
recapitalization described in Section 8.1(a) of the Plan), or the consolidation
of the Company with, or a sale of substantially all of the assets of the Company
to (which sale is followed by a liquidation or dissolution of the Company), or
merger of the Company with another person (a "Reorganization Event"), the
Administrator shall be obligated to determine whether the Reorganization Event
shall constitute a "Liquidity Event," and to deliver to Rights holders at least
15 days prior to such Reorganization Event (or at least 15 days prior to the
date of record for shareholders entitled to share in the securities or property
distributed in the Reorganization Event, if a record date is set) a notice which
shall (i) indicate whether the Reorganization Event is a Liquidity Event, and
(ii) advise the Rights holder of his or her rights pursuant to the Agreement
applicable to such Rights. If the Reorganization Event is determined to be a
Liquidity Event, in its sole and absolute discretion, the surviving corporation
may, but shall not be obligated to, (i) tender stock options to the Rights
holder with respect to the surviving corporation which shall contain terms and
provisions that substantially preserve the rights and benefits of the applicable
Right, and (ii) in the event that no stock options have been tendered by the
surviving corporation pursuant to the terms of item (i) immediately above, the
Rights holder shall have the right exercisable during a ten-day period ending on
the fifth day prior to the Reorganization Event (or ending on the fifth day
prior to the date of record for shareholders entitled to share in the securities
or property distributed in the Reorganization Event, if a record date is set) to
exercise his or her Rights, to the extent that such Rights are then exercisable,
in whole or in part, on the condition, however, that the Reorganization Event is
actually effected; and if the Reorganization Event is actually effected, such
exercise shall be deemed effective (and, if applicable, the Rights holder shall
be deemed a shareholder with respect to the Rights exercised) immediately
preceding the effective time of the Reorganization Event (or on the date of
record for shareholders entitled to share in the securities or property
distributed in the Reorganization Event, if a record date is set). If the
Reorganization Event is not determined to be a Liquidity Event, the Rights
holder shall thereafter be entitled upon exercise of the Right to purchase the
kind and number of shares of stock or other securities property of the surviving
corporation receivable upon such event by a holder of the number
-8-
<PAGE> 9
of shares of the common Stock which the Right entitles the Rights holder to
purchase from the Company immediately prior to such event, and in any such case,
appropriate adjustment shall be made in the application of the provisions set
forth in this Plan with respect to the Rights holders' rights and interests
thereafter, to the end that the provisions set forth in the agreement applicable
to such Rights (including the specified changes and other adjustments to the
Exercise Price) shall thereafter be applicable in relation to any shares or
other property thereafter purchasable upon exercise of the Right.
d) Where Company Survives. Section 8. 1 (c) shall not apply to a
merger or consolidation in which the Company is the surviving corporation,
unless shares of Stock are converted into or exchanged for securities other than
publicly-traded common stock, cash (excluding cash in payment for actual shares)
or any other thing of value. Notwithstanding the preceding sentence, in case of
any consolidation or merger of another corporation into the company in which the
Company is the surviving corporation and in which there is a reclassification or
change (including a change to the right to receive an amount of money payable by
cash or cash equivalent or other property) of the shares of Stock (other than a
change in par value, or from par value to no par value, or as a result of a
subdivision or combination, but including any change in such shares into two or
more classes or series of shares), the Administrator may provide that the holder
of each Right then exercisable shall have the right to exercise such Right
solely for the kind and amount of shares of Stock and other securities
(including those of any new direct or indirect parent of the Company), property,
cash or any combination thereof receivable upon such reclassification change,
consolidation or merger by the holder of the number of shares of Stock for which
such Right might have been exercised.
e) Surviving Corporation Defined. The determination as to which party
to a merger or consolidation is the "surviving corporation" shall be made on the
basis of the relative equity interests of the shareholders in the corporation
existing after the merger or consolidation, as follows: if immediately following
any merger or consolidation the holders of outstanding voting securities of the
Company immediately prior to the merger or consolidation own equity securities
possessing more than 50% of the voting power of the corporation existing
following the merger or consolidation, then for purposes of this Plan, the
Company shall be the surviving corporation. In all other cases, the Company
shall not be the surviving corporation. In making the determination of ownership
by the shareholders of a corporation immediately after the merger or
consolidation, of equity securities pursuant to this Section 8.1(e), equity
securities which the shareholders owned immediately before the merger or
consolidation as shareholders of another party to the transaction shall be
disregarded. Further, for purposes of this Section 8.1(e) only, outstanding
voting securities of a corporation shall be calculated by assuming the
conversion of all equity securities convertible (immediately or at some future
time) into shares entitled to vote.
f) Par Value Changes. In the event of a change in the Stock of the
Company as presently constituted which is to a change of all of its authorized
shares with par value, into the same number of shares without par value, or a
change in the par value, the shares resulting from any such change shall be
"Stock" within the meaning of the Plan.
-9-
<PAGE> 10
8.2 Decision of Administrator Final. To the extent that the foregoing
adjustments relate to stock or securities of the Company, such adjustments shall
be made by the Administrator, whose determination in respect shall be final,
binding and conclusive; provided, however, that each Incentive Stock Option
granted pursuant to the Plan shall not be adjusted without the prior consent of
the Holder thereof in a manner that causes such Stock Option to fail to continue
to qualify as an Incentive Stock Option.
8.3 No Other Rights. Except as herein before expressly provided in this
Article 8, no Rights holder shall have any rights by reason of any subdivision
or consolidation of shares of Stock or the payment of any dividend or any other
increase or decrease in the number of shares of Stock of any class or by reason
of any Liquidating Event, merger, or consolidation of assets or stock of another
corporation, or any other issue by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class; and except as
provided in this Article 8, none of the foregoing events shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Stock subject to Rights. The grant of a Right pursuant to the Plan
shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, Exercise Price) shall thereafter be applicable
in relation to any shares or other property thereafter purchasable upon exercise
of the Right.
8.4 No Rights as Shareholder. Except as specifically provided in this
Article 8, a Rights holder or a transferee of a Right shall have no rights as a
shareholder with respect to any shares covered by the Rights until the date of
the issuance of a Stock certificate to him or her for such shares, and no
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions of other rights for which
the record date is prior to the date such Stock certificate is issued, except as
provided in Section 8.1(b) or 8.1(c).
9. Amendment and Termination. The Board may amend, alter or discontinue the
Plan, but no amendment, alteration or discontinuation shall be made which would
impair the rights of a Participant under any Right theretofore granted without
such Participant's consent. The Board shall obtain shareholder approval of an
Plan amendment to the extent necessary and desirable to comply with Rule 16b-3,
Section 422 of the Code (or any successor rule or statute) or other applicable
law, rule or regulation, including the requirements of any Market System on
which the Stock is listed or quoted. The Administrator may amend the terms of
any award theretofore granted, prospectively or retroactively, but, subject to
Article 3, no such amendment shall impair the rights of any holder without his
or her consent.
10. General Restrictions.
10.1
a) Limitation on Granting of Rights. Subject to adjustment as provided
in Article 8, no Participant shall be granted Rights with respect to more than
100,000 shares of Stock during any one-year period.
-10-
<PAGE> 11
b) No View to Distribute. The Administrator may require each person
acquiring shares of Stock pursuant to the Plan to represent to and agree with
the Company in writing that such person is acquiring the shares without a view
towards distribution thereof. The certificates for such shares may include any
legend which the Administrator deems appropriate to reflect any restrictions on
transfer.
c) Legends. All certificates for shares of Stock delivered under the
Plan shall be subject to such stop transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed and any applicable federal or state securities
laws.
d) Market Stand-Off. All Stock Option Agreements and Stock Purchase
Agreements shall provide that in connection with any underwritten public
offering by the Company of its equity securities pursuant to an effective
registration statement filed under the 1933 Act, including the Company's initial
public offering, the Participant agrees (the "Hold-Back Agreement") not to sell,
make any short sale of, loan, hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose or transfer or otherwise agree to engage in
any of the foregoing transactions with respect to any shares purchased by the
Optionee upon exercise of his or her Option ("Purchased Shares") without the
prior written consent of the Company or its underwriters, for such period of
time from and after the effective date of such registration statement as may be
requested by the Company or such underwriters; provided, however, that in no
event shall such period exceed one hundred-eighty (180) days. Stock Option
Agreements and Stock Purchase Agreements may provide that the Hold-Back
Agreement shall terminate following expiration of the two-year period
immediately following the effective date of the Company's initial public
offering.
10.2 Other Compensation Arrangements. Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to shareholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in specific
cases.
10.3
a) Disqualifying Disposition. If an Optionee makes a "disposition" (as
defined in the Code) of all or any of the Purchased Shares within two years from
the date of Grant of the Incentive Stock Option covering such shares or within
one year after the issuance of such Purchased Shares, he or she shall
immediately advise the Company in writing as to the occurrence of the sale and
the price upon the sale of such Shares. The Optionee agrees that he or she shall
maintain all Purchased Shares in his or her name so long as he or she maintains
beneficial ownership of such Purchased Shares.
b) Withholding Required. Each Participant shall, no later than the
date as of which the value derived from a Right first becomes includable in the
gross income of the Participant for income tax purposes, pay to the Company, or
make arrangements satisfactory to the Administrator regarding payment of, any
federal, state or local taxes of any kind required by law to be
-11-
<PAGE> 12
withheld with respect to the Right or its exercise. The obligations of the
Company under the Plan shall be conditioned upon such payment or arrangements
and the Participant shall, to the extent permitted by law, have the right to
request that the Company deduct any such taxes from any payment of any kind
otherwise due to the Participant.
c) Withholding Right. The Administrator may, in its discretion, grant
a Rights holder the right (a "Withholding Right") to elect to make such payment
by irrevocably requiring the Company to withhold from shares issuable upon
exercise of the Right that number of full shares of Common Stock having a Fair
Market Value on the Tax Date (as defined below) equal to the amount (or portion
of the amount) required to be withheld. The Withholding Right may be granted
with respect to all or any portion of the Right.
d) Exercise of Withholding Right. To exercise a Withholding Right, the
Rights holder must follow the election procedures set forth below, together with
such additional procedures and conditions as may be set forth in the related
Rights agreement or otherwise adopted by the Administrator.
i) The Rights holder must deliver to the Company his or her
written notice of election (the "Election") to have the Withholding Right apply
to all (or a designated portion) of his or her Right.
ii) Unless disapproved by the Administrator as provided in
Subsection (iii) below, the Election once made will be irrevocable.
iii) No election is valid unless the Administrator consents to
the Election; the Administrator has the right and power, in its sole discretion,
with or without cause or reason therefor, to consent to the Election, to refuse
to consent to the Election, or to disapprove the Election; and if the
Administrator has not consented to the Election on or prior to the date that the
amount of tax to be withheld is, under applicable federal income tax laws, fixed
and determined by the Company (the "Tax Date"), the Election will be deemed
approved.
e) Effect. If the Administrator consents to an Election of a
Withholding Right:
i) Upon the exercise of the Right (or any portion thereof) to
which the Withholding Right relates, the Company shall withhold from the shares
otherwise issuable that number of full shares of Stock having an actual Fair
Market Value equal to the amount (or portion of the amount, as applicable)
required to be withheld under applicable federal and/or state income tax laws as
a result of the exercise; and
ii) If the Rights holder is then a Section 16(b) Person who has
made an Election, the related Right may not be exercised, nor may any shares of
Stock issued pursuant thereto be sold, exchanged or otherwise transferred,
unless such exercise, or such transaction, complies with an exemption from
Section 16(b) provided under Rule 16b-3.
-12-
<PAGE> 13
10.4 Indemnification. In addition to such other rights of indemnification
as they may have as Directors or members of the Committee, and to the extent
allowed by applicable law, the Administrators shall be indemnified by the
Company against the reasonable expenses, including attorney's fees, actually
incurred in connection with any action, suit or proceeding or in connection with
any appeal therein, to which they or any one of them may be party by reason of
any action taken or failure to act under or in connection with the Plan or any
option granted under the Plan, and against all amounts paid by them in
settlement thereof (provided that the settlement has been approved by the
Company, which approval shall not be unreasonably withheld) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Administrator did not act in good faith and in a manner in
which such person reasonably believed to be in the best interests of the
Company, and in the case of a criminal proceeding, had no reason to believe that
the conduct complained of was unlawful; provided, however, that within 60 days
after institution of any such action, suit or proceeding, such Administrator
shall, in writing, offer the Company the opportunity at its own expense to
handle and defend such action, suit or proceeding.
10.5 Loans. The Company may make loans to Optionees and Offerees as the
Administrator, in its discretion, may determine in connection with the exercise
of outstanding Stock Options and Purchase Rights granted under the Plan. Such
loans shall (i) be evidenced by promissory notes entered into by the holders in
favor of the Company; (ii) be subject to the terms and conditions set forth in
this Section 10.5 and such other terms and conditions, not inconsistent with the
Plan, as the Administrator shall determine; and (iii) bear interest, if any, at
such rate as the Administrator shall determine. In no event may the principal
amount of any such loan exceed the Exercise Price or the Purchase Price less the
par value of the shares of Stock covered by the Stock Option or Purchase Right,
or portion thereof, exercised by the Optionee or Offeree. The initial term of
the loan, the schedule of payments of principal and interest under the loan, the
extent to which the loan is to be with or without recourse against the holder
with respect to principal and applicable interest and the conditions upon which
the loan will become payable in the event of the holder's termination of
employment shall be determined by the Administrator; provided, however, that the
term of the loan, including extensions, shall not exceed 10 years. Unless the
Administrator deems otherwise, when a loan shall have been made, shares of Stock
having a Fair Market Value at least equal to the principal amount of the loan
shall be pledged by the holder to the Company as security for payment of the
unpaid balance of the loan and such pledge shall be evidenced by a pledge
agreement, the terms of which shall be determined by the Administrator, in its
discretion; provided, however, that each loan shall comply with all applicable
laws, regulations and rules of the Board of Governors of the Federal Reserve
System and any other governmental agency having jurisdiction.
10.6 Special Terminating Events. If a Special Terminating Event occurs,
all Rights theretofore granted to such Rights holder may, unless earlier
terminated in accordance with their terms, be exercised by the Rights holder or
by his or her estate or by a person who acquired the right to exercise such
Right by bequest or by reason of the death or Disability of the Rights holder,
at any time within one year after the date of the Special Terminating Event.
Notwithstanding the
-13-
<PAGE> 14
foregoing, an Incentive Stock Option shall be exercisable at any time within
three months after the date of Retirement or termination of employment of an
Optionee.
10.7 Termination of Employment. Except as provided in this Section 10.7,
no Right may be exercised unless the Right holder is then a Director of the
Company, or in the employ of the Company or any Parent or Subsidiary, or
rendering services as a consultant to the Company or any Parent or Subsidiary,
and unless he or she has remained continuously so employed or engaged since the
Date of Grant. If the employment or services of a Right holder shall terminate
(other than by reason of a Special Terminating Event), all Rights previously
granted to the Right holder which are exercisable at the time of such
termination may be exercised for the period ending 90 days after such
termination, provided, however, that if the employment or services of a Rights
holder is terminated "for cause," such Rights may be exercised for the period
ending 30 days after such termination; provided, further, that no Right may be
exercised following the date of its expiration. Nothing in the Plan or in any
Right granted pursuant to the Plan shall confer upon an employee any right to
continue in the employ of the Company or any Parent or Subsidiary or interfere
in any way with the right of the Company or any Parent or Subsidiary to
terminate such employment at any time.
10.8 Non-Transferability of Rights. Each Stock Option Agreement and Stock
Purchase Agreement shall provide that the Rights granted under the Plan shall
not be transferable otherwise than by will or by the laws of descent and
distribution, and the Rights may be exercised, during the lifetime of the Rights
holder, only by the Rights holder or by his or her guardian or legal
representative.
10.9 Regulatory Matters. Each Stock Option Agreement and Stock Purchase
Agreement shall provide that no shares shall be purchased or sold thereunder
unless and until (i) any then applicable requirements of state or federal laws
and regulatory agencies shall have been fully complied with to the satisfaction
of the Company and its counsel; and (ii) if required to do so by the Company,
the Optionee or Offeree shall have executed and delivered to the Company a
letter of investment intent in such form and containing such provisions as the
Board or Committee may require.
10.10 Recapitalizations. Each Stock Option Agreement and Stock Purchase
Agreement shall contain provisions to reflect the provisions of Article 8.
10.11 Delivery. Upon exercise of a Right granted under this Plan, the
Company shall issue Stock or pay any amounts due within a reasonable period of
time thereafter. Subject to any statutory obligations the Company may have, for
purposes of this Plan, thirty days shall be considered a reasonable period of
time.
10.12 Rule 16b-3. With respect to persons subject to Section 16 of the
Securities Exchange Act of 1934 (the "Exchange Act"), transactions under this
plan are intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the
-14-
<PAGE> 15
extent any provisions of the plan or action by the Administrator fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Administrator.
10.13 Other Provisions. The Stock Option Agreements and Stock Purchase
Agreements authorized under the Plan may contain such other provisions not
inconsistent with this Plan, including, without limitation, restrictions upon
the exercise of the Rights, as the Administrator may deem advisable.
11. Effective Date of Plan. The Plan shall become effective on the date on
which the Plan is adopted by the Board, subject to the approval by the Company's
shareholders, which approval must be obtained within one year from the date the
Plan is adopted by the Board.
12. Term of Plan. No Right shall be granted pursuant to the Plan on or after
June 30, 2005, but Rights theretofore granted may extend beyond that date.
-15-
<PAGE> 1
EXHIBIT 5.1
August 31, 1999
Document Sciences Corporation
6339 Paseo del Lago
Carlsbad, CA 92009
RE: REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 (the "Registration
Statement") to be filed by you with the Securities and Exchange Commission on or
about September 3, 1999, in connection with the registration under the
Securities Act of 1933, as amended, of an aggregate of 350,000 shares of your
Common Stock, $0.001 par value (the "Shares"), reserved for issuance under your
1995 Stock Incentive Plan (the "Plan"). As your legal counsel, we have reviewed
the actions taken by you in connection with the proposed sale and issuance of
the Shares by you under the Plan. We assume that the consideration received by
you in connection with each issuance of Shares will include an amount in the
form of cash or property that exceeds the greater of (i) the aggregate par value
of such Shares or (ii) the portion of such consideration determined by the
Company's Board of Directors to be "capital" for purposes of the General
Corporation Law of the State of Delaware.
It is our opinion that, upon completion of the proceedings being taken, or
contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares pursuant to the Registration Statement and the Plan, including the
proceedings being taken in order to permit such transaction to be carried out in
accordance with applicable state securities laws, the Shares, when issued and
sold in the manner described in the Registration Statement and in accordance
with the resolutions adopted by the Board of Directors, will be legally and
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/S/ Wilson Sonsini Goodrich & Rosati, P.C.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-8) pertaining to the 1995 Stock Incentive Plan of
Document Sciences Corporation and to the incorporation by reference therein of
our report dated January 25, 1999, with respect to the consolidated financial
statements and schedule of Document Sciences Corporation included in its Annual
Report (Form 10-K) for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
San Diego, California
August 31, 1999
