<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1999
REGISTRATION NO. 333-_______
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------
ABACUS DIRECT CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 84-1118166
(State or other jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
</TABLE>
11101 West 120th Avenue
Broomfield, CO 80021
(Address of Principal Executive Offices and Zip Code)
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AMENDED AND RESTATED ABACUS DIRECT CORPORATION
1996 STOCK INCENTIVE PLAN
(Full Title of Plan)
----------
CARLOS E. SALA
SENIOR VICE PRESIDENT-FINANCE, CHIEF FINANCIAL OFFICER
ABACUS DIRECT CORPORATION
11101 WEST 120TH AVENUE
BROOMFIELD, CO 80021
(303) 410-5100
(Name, address and telephone number, including area code, of agent for service)
With a copy to:
ROBERT L. LAWRENCE, ESQ.
KANE KESSLER, P.C.
1350 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(212) 541-6222
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
BE REGISTERED REGISTERED1 PER SHARE2 PRICE2 FEE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.001 per share 375,000 $80.5625 $30,210,937.50 $8,398.64
=========================================================================================================================
</TABLE>
- --------
1 Comprised of 375,000 additional shares of Common Stock authorized for
issuance under the Amended and Restated Abacus Direct Corporation 1996 Stock
Incentive Plan, as amended (the "96 Plan"). 725,000 shares of common Stock were
previously authorized for issuance under the 96 Plan and registered pursuant to
a form S-8 filed with the Securities and Exchange Commission on November 26,
1997. This Registration Statement includes additional shares of the Registrant's
Common Stock that may be issued pursuant to the 96 Plan.
2 Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h), based upon, with respect to the additional 375,000
shares available for grant under the 96 Plan, a price of $80.5625 (the average
of the high and low prices of the Registrant's Common Stock as quoted on the
Nasdaq National Market on April 26, 1999).
2
<PAGE> 3
STATEMENT UNDER GENERAL INSTRUCTION E
REGISTRATION OF ADDITIONAL SECURITIES
Abacus Direct Corporation (the "Company" or "Registrant") previously
filed a Registration Statement on Form S-8 with the Securities and Exchange
Commission on November 26, 1997 (Registration No. 333-41043) (the "Previous Form
S-8"). The Previous Form S-8 was filed in connection with, among other plans,
the Abacus Direct Corporation Amended and Restated 1996 Stock Incentive Plan, as
amended (the "96 Plan"). This Registration Statement registers 375,000
additional shares of the Company's Common Stock to be issued pursuant to the 96
Plan. The issuance of the additional shares was authorized under an Amendment to
the 96 Plan to increase the maximum number of shares authorized under the 96
Plan from 725,000 to 1,100,000 shares, which was approved by the Company's Board
of Directors and ratified by a vote of its stockholders. The contents of the
Previous Form S-8, including periodic reports filed or to be filed by the
Company after the Previous Form S-8 to maintain current information about the
Company, are incorporated by reference into this Registration Statement pursuant
to General Instruction E of Form S-8.
SUPPLEMENT TO REOFFER PROSPECTUS DATED NOVEMBER 26, 1997
This Prospectus Supplement supplements the Reoffer Prospectus dated
November 26, 1997 which was included in the Previous Form S-8 (the "Original
Prospectus") by i) adding persons to the table of Selling Shareholders located
at page 11 of the Original Prospectus and ii) updating the information provided
for the Selling Shareholders listed in the Original Prospectus. This Prospectus
Supplement should be read in conjunction with the Original Prospectus, and this
Prospectus Supplement is qualified by reference to the Original Prospectus
except to the extent that the information herein contained supercedes the
information contained in the Original Prospectus. Capitalized terms used in this
Prospectus Supplement and not otherwise defined herein have the meanings
specified in the Original Prospectus.
SELLING SHAREHOLDERS
The Prospectus is hereby amended to i) include Christopher M. Dice and
Robert L. North as Selling Shareholders, identified in the table below, who were
not previously identified in the Original Prospectus as Selling Shareholders and
ii) update the information for the Selling Shareholders listed in the Original
Prospectus.
<TABLE>
<CAPTION>
No. of Shares of No. of Shares of No. of Shares of Common
Common Stock Stock Eligible for Stock to be Owned
Owned as of the Date Resale Pursuant to Following the Offering
Name of Selling Shareholder of this Prospectus this Prospectus Pursuant to this Prospectus
- --------------------------- -------------------- ------------------- ---------------------------
Number Percent
------ -------
<S> <C> <C> <C> <C>
M. Anthony White1 676,000 209,000 467,000 4.8%
(Chairman, Chief Executive
Officer and Director)
</TABLE>
- --------
(1) Includes presently exercisable options to purchase 108,000 shares of
Common Stock of which 64,800 shares are subject to repurchase by the
Company in the event Mr. White's employment ceases for any reason
(other than death or disability). Such repurchase right terminates in
annual increments of 21,600 shares on May 3, 1999, May 3, 2000 and May
3, 2001. Also includes i) options to purchase 25,000 shares of Common
Stock of which 12,500 options are currently exercisable and the
remainder of which are exercisable in two equal annual installments
commencing February 12, 2000, ii) options to purchase 38,000 shares of
Common Stock of which 9,500 options are currently exercisable and the
remainder of which are exercisable in three equal annual installments
commencing April 7, 2000, and iii) options to purchase 38,000 shares of
Common Stock exercisable in four equal annual installments commencing
January 14, 2000. Excludes 38,500 shares of Common Stock owned by the
White Family Charitable Foundation, Inc., of which Mr. White disclaims
beneficial ownership.
3
<PAGE> 4
<TABLE>
<CAPTION>
No. of Shares of No. of Shares of No. of Shares of Common
Common Stock Stock Eligible for Stock to be Owned
Owned as of the Date Resale Pursuant to Following the Offering
Name of Selling Shareholder of this Prospectus this Prospectus Pursuant to this Prospectus
- --------------------------- -------------------- ------------------- ---------------------------
Number Percent
------ -------
<S> <C> <C> <C> <C>
Christopher M. Dice2 148,000 148,000 0 --
(President and Chief Operating
Officer)
Carlos E. Sala3 286,000 286,000 0 --
(Sr. Vice President-Finance,
Chief Financial Officer, Secretary
and Treasurer)
Daniel C. Snyder4 265,370 265,370 0 --
(President - New Markets and
Director)
Frank Kenny5 23,844 23,844 0 --
(Director)
Antony H. Lee6 20,844 20,844 0 --
(Director)
Robert L. North7 7,844 7,844 0 --
(Director)
</TABLE>
- --------
(2) Comprised of (i) options to purchase 125,000 shares of Common Stock
which are exercisable in four equal annual installments commencing
November 2, 1999, and (ii) options to purchase 23,000 shares of Common
Stock exercisable in four equal annual installments commencing January
14, 2000.
(3) Comprised of options to purchase 240,000 shares of Common Stock of
which 15,000 options are currently exercisable and the remainder of
which are exercisable in three equal annual installments commencing
June 6, 1999. Also includes i) options to purchase 23,000 shares of
Common Stock of which 5,750 options are currently exercisable and the
remainder of which are exercisable in three equal annual installments
commencing April 7, 2000, and ii) options to purchase 23,000 shares of
Common Stock exercisable in four equal annual installments commencing
January 14, 2000.
(4) Comprised of presently exercisable options to purchase 217,819 shares
of Common Stock of which 178,327 shares are subject to repurchase by
the Company in the event Mr. Snyder's employment ceases for any reason
(other than death or disability). Such repurchase right terminates in
annual increments of 89,164 shares on September 15, 1999 and September
15, 2000. Also includes i) options to purchase 13,500 shares of Common
Stock of which 4,500 options are currently exercisable and the
remainder of which are exercisable in two equal annual installments
commencing February 12, 2000, ii) options to purchase 23,000 shares of
Common Stock of which 5,750 options are currently exercisable and the
remainder of which are exercisable in three equal annual installments
commencing April 7, 2000, and iii) options to purchase 11,051 shares of
Common Stock exercisable in four equal annual installments commencing
January 14, 2000.
(5) Comprised of (i) options to purchase 4,000 shares of Common Stock of
which 2,000 options are currently exercisable and the remainder of
which are exercisable in two equal annual installments commencing
October 10, 1999, (ii) options to purchase 8,000 shares of Common Stock
of which 5,000 options are currently exercisable and the remainder of
which are exercisable in three equal annual installments commencing
June 6, 1999, (iii) options to purchase 8,000 shares of Common Stock of
which 4,000 options are currently exercisable and the remainder of
which are exercisable in four equal annual installments commencing June
5, 1999, and iv) options to purchase 3,844 shares of Common Stock
exercisable in four equal annual installments commencing January 14,
2000.
(6) Comprised of options to purchase 3,000 shares of Common Stock of which
1,000 options are currently exercisable and the remainder of which are
exercisable in two equal annual installments commencing November 5,
1999, (ii) options to purchase 6,000 shares of Common Stock of which
3,000 options are currently exercisable and the remainder of which are
exercisable in three equal annual installments commencing June 6, 1999,
(iii) options to purchase 8,000 shares of Common Stock of which 4,000
options are currently exercisable and the remainder of which are
exercisable in four equal annual installments commencing June 5, 1999,
and iv) options to purchase 3,844 shares of Common Stock exercisable in
four equal annual installments commencing January 14, 2000.
(7) Comprised of (i) options to purchase 4,000 shares of Common Stock
exercisable in four equal annual installments commencing September 25,
1999, and (ii) options to purchase 3,844 shares of Common Stock
exercisable in four equal annual installments commencing January 14,
2000.
4
<PAGE> 5
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 8. Exhibits.
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
4.2 Amended and Restated 1996 Stock Incentive Option Plan of the Company, as amended
5.1 Opinion of Kane Kessler, P.C.
23.1 Consent of Kane Kessler, P.C. (included in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney (contained on page II-2)
</TABLE>
II-1
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 Broomfield, State of Colorado, on the 27th day of
April, 1999.
ABACUS DIRECT CORPORATION
By: /s/ Carlos E. Sala
-----------------------------------------------------
Name: Carlos E. Sala
Title: Senior Vice President-Finance, Chief
Financial Officer, Secretary and Treasurer
We, the undersigned officers and directors of Abacus Direct
Corporation, and each of us, do hereby constitute and appoint M. Anthony White
and Carlos E. Sala, or any of them, our true and lawful attorneys and agents,
each with full power of substitution, to do any and all acts and things in our
name and behalf in our capacities as directors or officers and to execute any
and all instruments for us and in our names in the capacities listed below,
which attorneys and agents, or any of them, may deem necessary or advisable to
enable said corporation to comply with the Securities Act, as amended, and any
rules, regulations, and requirements of the Securities and Exchange Commission,
in connection with the Registration Statement, including specifically, but
without limitation, power and authority to sign for us or any of us in our names
in the capacities indicated below, any and all amendments (including
post-effective amendments) hereto; and we do hereby ratify and confirm all that
said attorneys and agents, or their substitute or substitutes, or any of them,
shall do or cause to be done by virtue thereof.
II-2
<PAGE> 7
Pursuant to the requirements of the Securities Act of 1933, as amended,
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/ M. Anthony White Chairman of the Board, Chief April 27, 1999
- ------------------------- Executive Officer and Director
M. Anthony White (Principal Executive Officer)
/s/ Christopher M. Dice President and Chief Operating April 27, 1999
- ------------------------- Officer
Christopher M. Dice
/s/ Carlos E. Sala Senior Vice President-Finance, April 27, 1999
- ------------------------- Chief Financial Officer, Secretary
Carlos E. Sala and Treasurer (Principal Financial and
Accounting Officer)
/s/ Daniel C. Snyder President - New Markets April 27,1999
- ------------------------- and Director
Daniel C. Snyder
/s/ Frank Kenny Director April 27, 1999
- -------------------------
Frank Kenny
/s/ Antony H. Lee Director April 27, 1999
- -------------------------
Antony H. Lee
/s/ Robert L. North Director April 27, 1999
- -------------------------
Robert L. North
</TABLE>
II-3
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page
Number Description No.
- ------ ----------- ----
<S> <C> <C>
4.2 Amended and Restated 1996 Stock Incentive Option Plan of the Company, as
amended
5.1 Opinion of Kane Kessler, P.C.
23.1 Consent of Kane Kessler, P.C. (included in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney (contained on page II-2)
</TABLE>
II-4
<PAGE> 1
EXHIBIT 4.2
-----------
AMENDED AND RESTATED
ABACUS DIRECT CORPORATION
1996 STOCK INCENTIVE PLAN, AS AMENDED
1. PURPOSE
The purpose of the Amended and Restated Abacus Direct Corporation 1996
Stock Incentive Plan (the "Plan") is to provide a means through which the
Company and its Subsidiaries and Affiliates may attract able persons to enter
and remain in the employ of the Company and its Subsidiaries and Affiliates and
to provide a means whereby employees, directors and consultants of the Company
and its Subsidiaries and Affiliates can acquire and maintain Common Stock
ownership, or be paid incentive compensation measured by reference to the value
of Common Stock, thereby strengthening their commitment to the welfare of the
Company and its Subsidiaries and Affiliates and promoting an identity of
interest between stockholders and these employees.
So that the appropriate incentive can be provided, the Plan provides
for granting Incentive Stock Options, Nonqualified Stock Options and Restricted
Stock Awards, or any combination of the foregoing. The Plan also provides for
the automatic formula grant of Nonqualified Stock Options to Non-Employee
Directors.
2. DEFINITIONS
The following definitions shall be applicable throughout the Plan.
(a) "Affiliate" means any affiliate of the Company within the meaning
of 17 CFR ss. 230.405.
(b) "Award" means, individually or collectively, any Incentive Stock
Option, Nonqualified Stock Option, Restricted Stock Award or Director Stock
Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means the Company, a Subsidiary or Affiliate having cause
to terminate a Participant's employment or service under any existing
employment, consulting or any other agreement between the Participant and the
Company or a Subsidiary or Affiliate or, in the absence of such an employment,
consulting or other agreement, upon (i) the determination by the Committee that
the Participant has ceased to perform his duties to the Company, a Subsidiary or
Affiliate (other than as a result of his incapacity due to physical or mental
illness or injury), which failure amounts to an intentional and extended neglect
of his duties to such party, (ii) the Committee's determination that the
Participant has engaged or is about to engage in conduct materially injurious to
the Company, a
II-5
<PAGE> 2
Subsidiary or Affiliate or (iii) the Participant having been convicted of a
felony.
(e) "Change in Control" shall be deemed to have occurred upon:
(i) any "person" as such term is used in Section 13(d) and
14(d) of the Exchange Act (other than the Company, any trustee or fiduciary
holding securities under any employee benefit plan of the Company, or any
company owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Common Stock of the
Company), is or becomes the owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing forty
percent (40%) or more of the combined voting power of the Company's then
outstanding securities;
(ii) during any period of two consecutive years (not
including any period prior to the date that the Common Stock of the Company
opens for regular trading on an established trading market), individuals who at
the beginning of such period constitute the Board of Directors, and any new
director (other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in paragraph (i),
(iii), or (iv) of this section) whose election by the Board of Directors or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of the two-year period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority of the Board of Directors;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; provided, however, that a merger
or consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person acquires more than forty percent (40%)
of the combined voting power of the Company's then outstanding securities shall
not constitute a Change in Control of the Company; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company except to a person or
persons who beneficially own, directly or indirectly, at least fifty percent
(50%) or more of the combined voting power of the outstanding voting securities
of the Company at the time of the sale.
Notwithstanding anything above to the contrary, a
change in control shall not be deemed to have occurred (i) in the event of a
merger of the Company with Abacus Direct Corporation, a Colorado corporation, so
long as the Company is the surviving entity in such merger, and (ii) prior to
the consummation of the Company's initial public offering.
II-6
<PAGE> 3
(g) "Code" means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations under
such section.
(h) "Committee" means the Stock Option Committee or such other
committee appointed by the Board consisting of two or more Outside Directors (as
hereinafter defined) or the Board.
(i) "Common Stock" means the common stock par value $0.001 per share,
of the Company.
(j) "Company" means Abacus Direct Corporation, a Delaware corporation.
(k) "Date of Grant" means the date on which the granting of an Award is
authorized or such other date as may be specified in such authorization.
(l) "Director Stock Option" means the Award of a Nonqualified Stock
Option to Non-Employee Directors pursuant to Section 9.
(m) "Director Stock Option Agreement" means the agreement entered into
with respect to a Director Stock Option pursuant to Section 9.
(n) "Disability" means the complete and permanent inability by reason
of illness or accident to perform the duties of the occupation at which a
Participant was employed or served when such disability commenced as determined
by the Committee based upon medical evidence acceptable to it.
(o) "Eligible Person" means any (i) person regularly employed by the
Company, a Subsidiary or Affiliate; provided, however, that no such employee
covered by a collective bargaining agreement shall be an Eligible Person unless
and to the extent that such eligibility is set forth in such collective
bargaining agreement or in an agreement or instrument relating thereto; (ii)
director of the Company, a Subsidiary or Affiliate including a director that is
serving on the Committee; or (iii) consultant to the Company, a Subsidiary or
Affiliate.
(p) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and as may be amended from time to time.
(q) "Fair Market Value" on a given date means (i) if the Stock is
listed on a national securities exchange, the mean between the highest and
lowest sale prices reported as having occurred on the primary exchange with
which the Stock is listed and traded on the date prior to such date, or, if
there is no such sale on that date, then on the last preceding date on which
such a sale was reported; (ii) if the Stock is not listed on any national
securities exchange but is quoted in the National Market System of the National
Association of Securities Dealers Automated Quotation System on a last sale
basis, the average between the high bid price and low ask price reported on the
date prior to such date, or, if there is no such sale on that date, then on the
last preceding date on which a sale was reported; (iii) if the
II-7
<PAGE> 4
Stock is not listed on a national securities exchange nor quoted in the National
Market System of the National Association of Securities Dealers Automated
Quotation System on a last sale basis, the amount determined by the Committee to
be the fair market value based upon a good faith attempt to value the Stock
accurately and computed in accordance with applicable regulations of the
Internal Revenue Service.
(r) "Holder" means a Participant who has been granted an Award
(s) "Incentive Stock Option" means an Option granted by the Committee
to a Participant under the Plan which is designated by the Committee as an
Incentive Stock Option pursuant to Section 422 of the code
(t) "Non-Employee Director" means a director of the Company who is not
also an employee of the Company.
(u) "Nonqualified Stock Option" means an Option granted by the
Committee to a Participant under the Plan which is not designated by the
Committee as an Incentive Stock Option.
(v) "Normal Termination" means termination of employment or service
with the Company and all Subsidiaries and Affiliates:
(i) Upon retirement pursuant to the retirement plan of
the Company, a Subsidiary or Affiliate, as may be
applicable at the time to the Participant in
question;
(ii) On account of Disability;
(iii) With the written approval of the Committee; or
(iv) By the Company, a Subsidiary or Affiliate without
Cause.
(w) "Option" means an Award granted under Section 7 of the Plan.
(x) "Option Period" means the period described in Section 7(c).
(aa) "Option Price" means the exercise price set for an Option
described in Section 7(a).
(ab) "Outside Director" means a person who is (i) a "nonemployee
director" within the meaning of Rule 16b-3 under the Exchange Act, or any
successor rule or regulation and (ii) an "outside director" within the meaning
of Section 162(m) of the Code.
(ac) "Participant" means an Eligible Person who has been selected by
the Committee to participate in the Plan and to receive an Award pursuant to
Section 6 and a Non-Employee Director who
II-8
<PAGE> 5
has received an automatic grant of Restricted Stock pursuant to Section 9.
(ad) "Performance Goals" means the performance objectives of the
Company, a Subsidiary or Affiliate during a Restricted Period established for
the purpose of determining whether, and to what extent, Awards will be earned
for a Restricted Period.
(ae) "Plan" means the Company's Amended and Restated 1996 Stock
Incentive Plan.
(af) "Restricted Period" means, with respect to any share of Restricted
Stock, the period of time determined by the Committee during which such Award is
subject to the restrictions set forth in Section 8.
(ag) "Restricted Stock" means shares of Stock issued or transferred to
a Participant subject to forfeiture and the other restrictions set forth in
Section 8.
(ah) "Restricted Stock Award" means an Award of Restricted Stock
granted under Section 8 of the Plan.
(ai) "Securities Act" means the Securities Act of 1933, as amended.
(aj) "Stock" means the Common Stock or such other authorized shares of
stock of the Company as the Committee may from time to time authorize for use
under the Plan
(ak) "Stock Option Agreement" means the agreement between the Company
and a Participant who has been granted an Option pursuant to Section 7 which
defines the rights and obligations of the parties as required in Section 7(d).
(al) "Subsidiary" means any subsidiary of the Company as defined in
Section 424(f) of the Code
3. EFFECTIVE DATE, DURATION AND SHAREHOLDER APPROVAL
The Plan is effective as of August 15, 1996, the date of adoption of
the Plan by the Board. The effectiveness of the Plan and the validity of any and
all Awards granted pursuant to the Plan is contingent upon approval of the Plan
by the stockholders of the Company in a manner which complies with Rule 16b-3
promulgated pursuant to the Exchange Act and Section 422(b)(1) of the Code.
Unless and until the stockholders approve the Plan in compliance therewith, no
Award granted under the Plan shall be effective. See Section 15 for the
applicability of the stockholder approval requirements of Section 162(m) of the
Code.
The expiration date of the Plan, after which no Awards may be granted
hereunder, shall be August 30, 2006; provided, however, that the administration
of the Plan shall continue in effect until all
II-9
<PAGE> 6
matters relating to the payment of Awards previously granted have been settled.
4. ADMINISTRATION
The Committee shall administer the Plan. The majority of the members of
the Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present or acts approved in writing
by a majority of the Committee shall be deemed the acts of the Committee.
Subject to the provisions of the Plan, the Committee shall have
exclusive power to:
(a) Select the Eligible Persons to participate in the Plan;
(b) Determine the nature and extent of the Awards, other than Director
Stock Options, to be made to each Participant;
(c) Determine the time or times when Awards, other than Director Stock
Options, will be made;
(d) Determine the duration of each Award Period and Restricted Period,
except with respect to a Director Stock Option;
(e) Determine the conditions to which the payment of Awards, other than
Director Stock Options, may be subject;
(f) Prescribe the form of Stock Option Agreement or other form or forms
evidencing Awards; and
(g) Cause records to be established in which there shall be entered,
from time to time as Awards are made to Participants, the date of each Award,
the number of Incentive Stock Options, Nonqualified Stock Options and shares of
Restricted Stock awarded to each Participant, the expiration date and the
duration of any applicable Restricted Period.
The Committee shall have the authority, subject to the provisions of
the Plan, to establish, adopt, or revise such rules and regulations and to make
all such determinations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan. The Committee's interpretation of
the Plan or any documents evidencing Awards granted pursuant thereto and all
decisions and determinations by the Committee with respect to the Plan shall be
final, binding, and conclusive on all parties unless otherwise determined by the
Board.
II-10
<PAGE> 7
5. GRANT OF AWARDS; SHARES SUBJECT TO THE PLAN
The Committee may, from time to time, grant Awards of Options, and/or
Restricted Stock, to one or more Participants; provided, however, that:
(a) Subject to Section 14, the aggregate number of shares of Stock made
subject to all Awards may not exceed 1,100,000 (subject to increase or decrease
pursuant to Section 11);
(b) Such shares shall be deemed to have been used in payment of Awards
whether they are actually delivered or the Fair Market Value equivalent of such
shares is paid in cash. In the event any Option or Restricted Stock, shall be
surrendered, terminate, expire, or be forfeited, the number of shares of Stock
no longer subject thereto shall thereupon be released and shall thereafter be
available for new Awards under the Plan to the fullest extent permitted by Rule
16b-3 under the Exchange Act (if applicable at the time); and
(c) Stock delivered by the Company in settlement of Awards under the
Plan may be authorized and unissued Stock or Stock held in the treasury of the
Company or may be purchased on the open market or by private purchase.
6. ELIGIBILITY
Participation shall be limited to Eligible Persons who have received
notification from the Committee, or from a person designated by the Committee,
that they have been selected to participate in the Plan.
7. DISCRETIONARY GRANT OF STOCK OPTIONS
The Committee is authorized to grant one or more Incentive Stock
Options or Nonqualified Stock Options to any Eligible Person; provided, however,
that no Incentive Stock Options shall be granted to any Eligible Person who is
not an employee of the Company or a Subsidiary. Each Option so granted shall be
subject to the following conditions, or to such other conditions as may be
reflected in the applicable Stock Option Agreement.
(a) OPTION PRICE. The exercise price ("Option Price") per share of
Stock for each Option shall be set by the Committee at the time of grant but
shall not be less than (i) in the case of an Incentive Stock Option, and subject
to Section 7(e), the Fair Market Value of a share of Stock at the Date of Grant,
and (ii) in the case of a Non-Qualified Stock Option, the Fair Market Value of a
share of Stock at the Date of Grant, unless the Committee, in its sole
discretion, determines to grant a discount Option in lieu of a reasonable amount
of salary or cash bonus, in which case, 65% of the Fair Market Value of a share
of stock at the Date of Grant; provided, however, that following the date that
the exemption from the application of Section 162(m) of the Code described in
Section 15 (or any other exemption having similar effect) ceases to apply to
Options, all Options intended to qualify as "performance-based
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<PAGE> 8
compensation" under Section 162(m) of the Code shall have an Option Price per
share of Stock no less than the Fair Market Value of a share of Stock on the
Date of Grant.
(b) MANNER OF EXERCISE AND FORM OF PAYMENT. Options which have become
exercisable may be exercised by delivery of written notice of exercise to the
Committee accompanied by payment of the Option Price. The Option Price shall be
payable in cash and/or shares of Stock valued at the Fair Market Value at the
time the Option is exercised or, in the discretion of the Committee, either (i)
in other property having a fair market value on the date of exercise equal to
the Option Price, or (ii) by delivering to the Committee a copy of irrevocable
instructions to a stockbroker to deliver promptly to the Company an amount of
sale or loan proceeds sufficient to pay the Option Price.
(c) OPTION PERIOD AND EXPIRATION. Options shall vest and become
exercisable in such manner and on such date or dates determined by the Committee
and shall expire after such period, not to exceed ten years, as may be
determined by the Committee (the "Option Period"); provided, however, that
notwithstanding any vesting dates set by the Committee, the Committee may in its
sole discretion accelerate the exercisability of any Option, which acceleration
shall not affect the terms and conditions of any such Option other than with
respect to exercisability. If an Option is exercisable in installments, such
installments or portions thereof which become exercisable shall remain
exercisable until the Option expires. Unless otherwise stated in the applicable
Option Agreement, the Option shall expire earlier than the end of the Option
Period in the following circumstances:
(i) If prior to the end of the Option Period, the Holder shall
undergo a Normal Termination, the Option shall expire on the
earlier of the last day of the Option Period or the date that
is three months after the date of such Normal Termination. In
such event, the Option shall remain exercisable by the Holder
until its expiration, only to the extent the Option was
exercisable at the time of such Normal Termination.
(ii) If the Holder dies prior to the end of the Option Period and
while still in the employ or service of the Company, a
Subsidiary or Affiliate, or within three months of Normal
Termination, the Option shall expire on the earlier of the
last day of the Option Period or the date that is twelve
months after the date of death of the Holder. In such event,
the Option shall remain exercisable by the person or persons
to whom the Holder's rights under the Option pass by will or
the applicable laws of descent and distribution until its
expiration, only to the extent the Option was exercisable by
the Holder at the time of death
(iii) If the Holder ceases employment or service with the Company
and all Subsidiaries and Affiliates for reasons other than
Normal Termination or death, the Option shall expire
immediately upon such cessation of employment or service.
(d) STOCK OPTION AGREEMENT - Other Terms and Conditions. Each Option
granted under the Plan shall be evidenced by a Stock Option Agreement, which
shall contain such provisions as may be
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determined by the Committee and, except as may be specifically stated otherwise
in such Stock Option Agreement, which shall be subject to the following terms
and conditions:
(i) Each Option or portion thereof that is exercisable
shall be exercisable for the full amount or for any
part thereof.
(ii) Each share of Stock purchased through the exercise of
an Option shall be paid for in full at the time of
the exercise. Each Option shall cease to be
exercisable, as to any share of Stock, when the
Holder purchases the share or when the Option expires
.
(iii) Subject to Section 10(k), Options shall not be
transferable by the Holder except by will or the laws
of descent and distribution and shall be exercisable
during the Holder's lifetime only by him.
(iv) Each Option shall vest and become exercisable by the
Holder in accordance with the vesting schedule
established by the Committee and set forth in the
Stock Option Agreement.
(v) Each Stock Option Agreement may contain a provision
that, upon demand by the Committee for such a
representation, the Holder shall deliver to the
Committee at the time of any exercise of an Option
a written representation that the shares to be
acquired upon such exercise are to be acquired for
investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of
such representation prior to the delivery of any
shares issued upon exercise of an Option shall be a
condition precedent to the right of the Holder or
such other person to purchase any shares. In the
event certificates for Stock are delivered under the
Plan with respect to which such investment
representation has been obtained, the Committee may
cause a legend or legends to be placed on such
certificates to make appropriate reference to such
representation and to restrict transfer in the
absence of compliance with applicable federal or
state securities laws.
(vi) Each Incentive Stock Option Agreement shall contain a
provision requiring the Holder to notify the Company
in writing immediately after the Holder makes a
disqualifying disposition of any Stock acquired
pursuant to the exercise of such Incentive Stock
Option. A disqualifying disposition is any
disposition (including any sale) of such Stock before
the later of (a) two years after the Date of Grant of
the Incentive Stock Option or (b) one year after the
date the Holder acquired the Stock by exercising the
Incentive Stock Option.
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<PAGE> 10
(e) INCENTIVE STOCK OPTION GRANTS TO 10% STOCKHOLDERS. Notwithstanding
anything to the contrary in this Section 7, if an Incentive Stock Option is
granted to a Holder who owns stock representing more than ten percent of the
voting power of all classes of stock of the Company or of a Subsidiary, the
Option Period shall not exceed five years from the Date of Grant of such Option
and the Option Price shall be at least 110 percent of the Fair Market Value (on
the Date of Grant) of the Stock subject to the Option.
(f) $100,000 PER YEAR LIMITATION FOR INCENTIVE STOCK OPTIONS. To the
extent the aggregate Fair Market Value (determined as of the Date of Grant) of
Stock for which Incentive Stock Options are exercisable for the first time by
any Participant during any calendar year (under all plans of the Company and its
Subsidiaries) exceeds $100,000, such excess Incentive Stock Options shall be
treated as Nonqualified Stock Options.
(g) VOLUNTARY SURRENDER. The Committee may permit the voluntary
surrender of all or any portion of any Nonqualified Stock Option granted under
the Plan to be conditioned upon the granting to the Holder of a new Option for
the same or a different number of shares as the Option surrendered or require
such voluntary surrender as a condition precedent to a grant of a new Option to
such Participant. Such new Option shall be exercisable at an Option Price,
during an Option Period, and in accordance with any other terms or conditions
specified by the Committee at the time the new Option is granted, all determined
in accordance with the provisions of the Plan without regard to the Option
Price, Option Period, or any other terms and conditions of the Nonqualified
Stock option surrendered.
8. DISCRETIONARY RESTRICTED STOCK AWARDS
(a) AWARD OF RESTRICTED STOCK
(i) The Committee shall have the authority to grant
Restricted Stock Awards to Eligible Persons, (2) to
issue or transfer Restricted Stock to Participants,
and (3) to establish terms, conditions and
restrictions applicable to such Restricted Stock
including the Restricted Period, which may differ
with respect to each grantee, the time or times at
which Restricted Stock shall be granted or become
vested and the number of shares or units to be
covered by each grant.
(ii) The Holder of a Restricted Stock Award shall execute
and deliver to the Company an Award agreement with
respect to the Restricted Stock setting forth the
restrictions applicable to such Restricted Stock.
If the Committee determines that the Restricted
Stock shall be held in escrow rather than delivered
to the Holder pending the release of the applicable
restrictions, the Holder additionally shall execute
and deliver to the Company (i) an escrow agreement
satisfactory to the Committee, and (ii) the
appropriate blank stock powers with respect to the
Restricted Stock covered by such agreements. If a
Participant shall fail to execute a Restricted Stock
agreement and, if applicable, an escrow agreement
and stock
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<PAGE> 11
powers, the Award shall be null and void. Subject to
the restrictions set forth in Section 8(b), the
Holder shall generally have the rights and privileges
of a stockholder as to such Restricted Stock,
including the right to vote such Restricted Stock. At
the discretion of the Committee, cash dividends and
stock dividends with respect to the Restricted Stock
may be either currently paid to the Holder or
withheld by the Company and held in escrow pursuant
to the escrow agreement subject to the restrictions
set forth in Section 8(b) below, and interest may be
paid on the amount of cash dividends withheld at a
rate and subject to such terms as determined by the
Committee. Cash dividends or stock dividends so
withheld by the Committee shall not be subject to
forfeiture.
(iii) Upon the Award of Restricted Stock, the Committee
shall cause a stock certificate registered in the
name of the Holder to be issued and, if it so
determines, deposited together with the stock powers
with an escrow agent designated by the Committee. If
an escrow arrangement is used, the Committee shall
cause the escrow agent to issue to the Holder a
receipt evidencing any stock certificate held by it
registered in the name of the Holder.
(b) RESTRICTIONS.
(i) Restricted Stock awarded to a Participant shall be
subject to the following restrictions until the
expiration of the Restricted Period, and to such
other terms and conditions as may be set forth in
the applicable Award agreement: (1) if an escrow
arrangement is used, the Holder shall not be
entitled to delivery of the stock certificate;
(2) the shares shall be subject to the restrictions
on transferability set forth in the Award agreement;
(3) the shares shall be subject to forfeiture to the
extent provided in subparagraph (d) and the Award
Agreement and, to the extent such shares are
forfeited, the stock certificates shall be returned
to the Company, and all rights of the Holder to such
shares (including all rights to dividends) and as a
shareholder shall terminate without further
obligation on the part of the Company.
(ii) The Committee shall have the authority to remove any
or all of the restrictions on the Restricted Stock
whenever it may determine that, by reason of changes
in applicable laws or other changes in circumstances
arising after the date of the Restricted Stock Award
such action is appropriate.
(c) RESTRICTED PERIOD. The Restricted Period of Restricted Stock shall
commence on the Date of Grant and shall expire from time to time as to that part
of the Restricted Stock indicated in a schedule established by the Committee.
(d) FORFEITURE PROVISIONS. Except to the extent determined by the
Committee and reflected
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<PAGE> 12
in the underlying Award agreement, in the event a Holder terminates employment
with the Company and all Subsidiaries and Affiliates during a Restricted Period,
that portion of the Award with respect to which restrictions have not expired
("Non-Vested Portion") shall be treated as follows.
(i) Upon the voluntary resignation of a Participant or
discharge by the Company, a Subsidiary or Affiliate
for Cause, the Non-Vested Portion of the Award shall
be completely forfeited.
(ii) Upon Normal Termination, the Non-Vested Portion of
the Award shall be prorated for service during the
Restricted Period and shall be received as soon as
practicable following such Normal Termination.
(iii) Upon death, the Non-Vested Portion of the Award shall
be prorated for service during the Restricted Period
and be paid to the Participant's beneficiary as soon
as practicable following death.
(e) DELIVERY OF RESTRICTED STOCK. Upon the expiration of the Restricted
Period with respect to any shares of Stock covered by a Restricted Stock Award,
the restrictions set forth in Section 8(b) and the Award agreement shall be of
no further force or effect with respect to shares of Restricted Stock which have
not then been forfeited. If an escrow arrangement is used, upon such expiration,
the Company shall deliver to the Holder, or his beneficiary, without charge, the
stock certificate evidencing the shares of Restricted Stock which have not then
been forfeited and with respect to which the Restricted Period has expired (to
the nearest full share) and any cash dividends or stock dividends credited to
the Holder's account with respect to such Restricted Stock and the interest
thereon, if any.
(f) STOCK RESTRICTIONS. Each certificate representing Restricted Stock
awarded under the Plan shall bear the following legend until the lapse of all
restrictions with respect to such Stock:
"Transfer of this certificate and the shares represented
hereby is restricted pursuant to the terms of a Restricted Stock
Agreement, dated as of _______, between Abacus Direct Corporation and
____________. A copy of such Agreement is on file at the offices of the
Company at 8774 Yates Drive, Westminster, Colorado 80030."
Stop transfer orders shall be entered with the Company's transfer agent
and registrar against the transfer of legended securities.
9. AUTOMATIC GRANTS OF STOCK OPTIONS TO NON-EMPLOYEE DIRECTORS
A Non-Employee Director shall be automatically granted a Nonqualified
Stock Option to purchase 4,000 shares of Stock (the "Initial Option") upon the
date the Non-Employee Director begins service as a non-employee director on the
board (even if previously an employee director). Thereafter, for the remainder
of the term of the Plan and provided he remains a Non-Employee Director of the
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<PAGE> 13
Company, on the date of each of the Company's Annual Meeting of Stockholders,
each Non-Employee Director shall be automatically granted without further action
by the Board or the Committee a Nonqualified Stock Option to purchase 8,000
shares of Stock. All such Options granted to Non- Employee Directors shall
hereinafter be referred to as Director Stock Options.
(a) OPTION PRICE; TERM. All Director Stock Options shall have an Option
Price per share equal to the Fair Market Value of a share of Stock on the Date
of Grant. The Initial Option and 4,000 shares of each Annual Option shall vest
and become exercisable over a period of four years at the rate of 25% of each
grant annually on each of the four consecutive anniversaries of the Date of
Grant directly following the Date of Grant provided the Non-Employee Director's
services as a director continue through each such anniversary. The remaining
4,000 shares of each such Annual Option shall vest and become exercisable six
months following the Date of Grant provided the Non-Employee Director's services
as a director continue through such time. The term of each Director Stock Option
("Term"), after which each such Option shall expire, shall be ten years from the
date of Grant.
(b) EXPIRATION. If prior to the expiration of the Term of a Director
Stock Option the Non-Employee Director shall cease to be a member of the Board
for any reason other than his death, the Director Stock Option shall expire on
the earlier of the expiration of the Term or the date that is three months after
the date of such cessation. If prior to the expiration of the Term of a Director
Stock Option, a Non-Employee Director shall cease to be a member of the Board by
reason of his death, the Director Stock Option shall expire on the earlier of
the expiration of the Term or the date that is one year after the date of such
cessation. In the event a Non-Employee Director ceases to be a member of the
Board for any reason, any unexpired Director Stock Options shall thereafter be
exercisable until their expiration only to the extent that such Director Stock
Options were exercisable at the time of such cessation.
(c) DIRECTOR STOCK OPTION AGREEMENT. Each Director Stock Option shall
be evidenced by a Director Stock Option Agreement, which shall contain such
provisions as may be determined by the Committee; provided, however, that such
provisions shall not be inconsistent with the provisions of Rule 16b-3 pursuant
to the Exchange Act.
(d) NONTRANSFERABILITY; EXCLUSIVE GRANT. Subject to Section 10(k),
Non-Employee Director Options shall not be transferable except by will or the
laws of descent and distribution and shall be exercisable during the
Non-Employee Director's lifetime only by him. Non-Employee Directors are
eligible to receive Awards under this Plan in addition to (and not in lieu of)
any Awards pursuant to this Section 9.
10. GENERAL
(a) ADDITIONAL PROVISIONS OF AN AWARD. Awards under the Plan also may
be subject to such other provisions (whether or not applicable to the benefit
awarded to any other Participant) as the Committee determines appropriate
including, without limitation, provisions to assist the Participant in financing
the purchase of Stock upon the exercise of Options, provisions for the
forfeiture of or
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restrictions on resale or other disposition of shares of Stock acquired under
any Award, provisions giving the Company the right to repurchase shares of Stock
acquired under any Award in the event the Participant elects to dispose of such
shares, and provisions to comply with Federal and state securities laws and
Federal and state tax withholding requirements. Any such provisions shall be
reflected in the applicable Award agreement.
(b) PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise specifically
provided in the Plan, no person shall be entitled to the privileges of stock
ownership in respect of shares of Stock which are subject to Awards hereunder
until such shares have been issued to that person.
(c) GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to
make payment of Awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by governmental agencies as
may be required. Notwithstanding any terms or conditions of any Award to the
contrary, the Company shall be under no obligation to offer to sell or to sell
and shall be prohibited from offering to sell or selling any shares of Stock
pursuant to an Award unless such shares have been properly registered for sale
pursuant to the Securities Act with the Securities and Exchange Commission or
unless the Company has received an opinion of counsel, satisfactory to the
Company, that such shares may be offered or sold without such registration
pursuant to an available exemption therefrom and the terms and conditions of
such exemption have been fully complied with. The Company shall be under no
obligation to register for sale under the Securities Act any of the shares of
Stock to be offered or sold under the Plan. If the shares of Stock offered for
sale or sold under the Plan are offered or sold pursuant to an exemption from
registration under the Securities Act, the Company may restrict the transfer of
such shares and may legend the Stock certificates representing such shares in
such manner as it deems advisable to ensure the availability of any such
exemption.
(d) TAX WITHHOLDING. Notwithstanding any other provision of the Plan,
the Company, a Subsidiary or an Affiliate, as appropriate, shall have the right
to deduct from all Awards cash and/or Stock, valued at Fair Market Value on the
date of payment, in an amount necessary to satisfy all Federal, state or local
taxes as required by law to be withheld with respect to such Awards and, in the
case of Awards paid in Stock, the Holder or other person receiving such Stock
may be required to pay to the Company or a Subsidiary, as appropriate, prior to
delivery of such Stock, the amount of any such taxes which the Company or
Subsidiary is required to withhold, if any, with respect to such Stock. Subject
in particular cases to the approval of the Committee, the Company may accept
shares of Stock of equivalent Fair Market Value in payment of such withholding
tax obligations if the Holder of the Award elects to make payment in such
manner.
(e) CLAIM TO AWARDS AND EMPLOYMENT RIGHTS. No employee or other person
shall have any claim or right to be granted an Award under the Plan or, having
been selected for the grant of an Award, to be selected for a grant of any other
Award. Neither the Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ or service of the
Company, a Subsidiary or an Affiliate.
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<PAGE> 15
(f) DESIGNATION AND CHANGE OF BENEFICIARY. Each Participant shall file
with the Committee a written designation of one or more persons as the
beneficiary who shall be entitled to receive the amounts payable with respect to
an Award of Restricted Stock, if any, due under the Plan upon his death. A
Participant may, from time to time, revoke or change his beneficiary designation
without the consent of any prior beneficiary by filing a new designation with
the Committee. The last such designation received by the Committee shall be
controlling; provided, however, that no designation, or change or revocation
thereof, shall be effective unless received by the Committee prior to the
Participant's death, and in no event shall it be effective as of a date prior to
such receipt. If no beneficiary designation is filed by the Participant, the
beneficiary shall be deemed to be his or her spouse or, if the Participant is
unmarried at the time of death, his or her estate.
(g) PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS. If the Committee shall
find that any person to whom any amount is payable under the Plan is unable to
care for his affairs because of illness or accident, or is a minor, or has died,
then any payment due to such person or his estate (unless a prior claim therefor
has been made by a duly appointed legal representative) may, if the Committee so
directs the Company, be paid to his spouse, child, relative, an institution
maintaining or having custody of such person, or any other person deemed by the
Committee to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment shall be a complete discharge of the liability of
the Committee and the Company therefor.
(h) NO LIABILITY OF COMMITTEE MEMBERS. No member of the Committee shall
be personally liable by reason of any contract or other instrument executed by
such member or on his behalf in his capacity as a member of the Committee nor
for any mistake of judgment made in good faith, and the Company shall indemnify
and hold harmless each member of the Committee and each other employee, officer
or director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or delegated,
against any cost or expense (including counsel fees) or liability (including any
sum paid in settlement of a claim) arising out of any act or omission to act in
connection with the Plan unless arising out of such person's own fraud or
willful bad faith; provided, however, that approval of the Board shall be
required for the payment of any amount in settlement of a claim against any such
person. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
(i) GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the internal laws of the State of Delaware without regard to the
principles of conflicts of law thereof.
(j) FUNDING. Except as provided under Section 7, no provision of the
Plan shall require the Company, for the purpose of satisfying any obligations
under the Plan, to purchase assets or place any assets in a trust or other
entity to which contributions are made or otherwise to segregate any assets, nor
shall the Company maintain separate bank accounts, books, records or other
evidence of the existence of a segregated or separately maintained or
administered fund for such purposes. Holders shall have no
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<PAGE> 16
rights under the Plan other than as unsecured general creditors of the Company,
except that insofar as they may have become entitled to payment of additional
compensation by performance of services, they shall have the same rights as
other employees under general law.
(k) NONTRANSFERABILITY. A person's rights and interest under the Plan,
including amounts payable, may not be sold, assigned, donated, or transferred or
otherwise disposed of, mortgaged, pledged or encumbered except, in the event of
a Holder's death, to a designated beneficiary to the extent permitted by the
Plan, or in the absence of such designation, by will or the laws of descent and
distribution; provided, however, the Committee may, in its sole discretion,
allow for transfer of Awards other than Incentive Stock Options to other persons
or entities, subject to such conditions or limitations as it may establish to
ensure that Awards intended to be exempt from Section 16(b) of the Exchange Act
pursuant to Rule 16b-3 under the Exchange Act continue to be so exempt or for
other purposes.
(l) RELIANCE ON REPORTS. Each member of the Committee and each member
of the Board shall be fully justified in relying, acting or failing to act, and
shall not be liable for having so relied, acted or failed to act in good faith,
upon any report made by the independent public accountant of the Company and its
Subsidiaries and Affiliates and upon any other information furnished in
connection with the Plan by any person or persons other than himself.
(m) RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
profit sharing, group insurance or other benefit plan of the Company or any
Subsidiary except as otherwise specifically provided in such other plan.
(n) EXPENSES. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries and Affiliates.
(o) PRONOUNS. Masculine pronouns and other words of masculine gender
shall refer to both men and women.
(p) TITLES AND HEADINGS. The titles and headings of the sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings shall control.
(q) TERMINATION OF EMPLOYMENT. For all purposes herein, a person who
transfers from employment or service with the Company to employment or service
with a Subsidiary or Affiliate or vice versa shall not be deemed to have
terminated employment or service with the Company, a Subsidiary or Affiliate.
11. CHANGES IN CAPITAL STRUCTURE
Awards granted under the Plan and any agreements evidencing such
Awards, the maximum
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number of shares of Stock subject to all Awards and the maximum number of shares
of Stock with respect to which any one person may be granted Options during any
year shall be subject to adjustment or substitution, as determined by the
Committee in its sole discretion, as to the number, price or kind of a share of
Stock or other consideration subject to such Awards or as otherwise determined
by the Committee to be equitable (i) in the event of changes in the outstanding
Stock or in the capital structure of the Company by reason of stock dividends,
stock splits, reverse stock splits, recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the Date of Grant of any such Award or (ii) in
the event of any change in applicable laws or any change in circumstances which
results in or would result in any substantial dilution or enlargement of the
rights granted to, or available for, Participants in the Plan, or which
otherwise warrants equitable adjustment because it interferes with the intended
operation of the Plan. In addition, in the event of any such adjustments or
substitution, the aggregate number of shares of Stock available under the Plan
shall be appropriately adjusted by the Committee, whose determination shall be
conclusive. Any adjustment in Incentive Stock Options under this Section 11
shall be made only to the extent not constituting a "modification" within the
meaning of Section 424(h)(3) of the Code, and any adjustments under this Section
11 shall be made in a manner which does not adversely affect the exemption
provided pursuant to Rule 16b-3 under the Exchange Act. Further, following the
date that the exemption from the application of Section 162(m) of the Code
described in Section 15 (or any other exemption having similar effect) ceases to
apply to Awards, with respect to Awards intended to qualify as
"performance-based compensation" under Section 162(m) of the Code, such
adjustments or substitutions shall be made only to the extent that the Committee
determines that such adjustments or substitutions may be made without a loss of
deductibility for Awards under Section 162(m) of the Code. The Company shall
give each Participant notice of an adjustment hereunder and, upon notice, such
adjustment shall be conclusive and binding for all purposes.
Notwithstanding the above, in the event of any of the following:
A. The Company is merged or consolidated with another corporation or
entity and, in connection therewith, consideration is received by shareholders
of the Company in a form other than stock or other equity interests of the
surviving entity;
B. All or substantially all of the assets of the Company are acquired
by another person;
C. The reorganization or liquidation of the Company; or
D. The Company shall enter into a written agreement to undergo an event
described in clauses A, B or C above, then the Committee may, in its discretion
and upon at least 10 days advance notice to the affected persons, cancel any
outstanding Awards and pay to the Holders thereof, in cash or stock, or any
combination thereof, the value of such Awards based upon the price per share of
Stock received or to be received by other shareholders of the Company in the
event. The terms of this Section 11 may be varied by the Committee in any
particular Award agreement.
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12. EFFECT OF CHANGE IN CONTROL
Except to the extent reflected in a particular Award agreement:
(a) In the event of a Change in Control, notwithstanding any vesting
schedule with respect to an Award of Options (including Director Stock Options),
or Restricted Stock, such Option shall become immediately exercisable with
respect to 100 percent of the shares subject to such Option, and the Restricted
Period shall expire immediately with respect to 100 percent of such shares of
Restricted Stock.
(b) In addition, in the event of a Change in Control, the Committee may
in its discretion and upon at least 10 days' advance notice to the affected
persons, cancel any outstanding Awards and pay to the Holders thereof, in cash
or stock, or any combination thereof, the value of such Awards based upon the
price per share of Stock received or to be received by other shareholders of the
Company in the event.
(c) The obligations of the Company under the Plan shall be binding upon
any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Company, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Company. The Company agrees that it will make appropriate
provisions for the preservation of Participant's rights under the Plan in any
agreement or plan which it may enter into or adopt to effect any such merger,
consolidation, reorganization or transfer of assets
(d) Notwithstanding anything to the contrary herein, unless the
Committee provides otherwise, at the time an Option is granted to a participant
hereunder, no acceleration of exercisability shall occur with respect to such
Option if the Committee reasonably determines in good faith, prior to the
occurrence of the Change in Control, that the Options shall be honored or
assumed, or new rights substituted therefor (each such honored, assumed or
substituted option hereinafter called an "Alternative Option"), by a
Participant's employer (or the parent or a subsidiary of such employer)
immediately following the Change in Control, provided that any such Alternative
Option must meet the following criteria:
(i) the Alternative Option must be based on stock which is
traded on an established securities market, or which will be so traded
within thirty (30) days of the Change in Control;
(ii) the Alternative Option must provide such Participant with
rights and entitlements substantially equivalent to or better than the
rights, terms and conditions applicable under such Option, including,
but not limited to, an identical or better exercise schedule; and
(iii) the Alternative Option must have economic value
substantially equivalent to the value of such Option (determined at the
time of the Change in Control).
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<PAGE> 19
13. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of this Plan by the Board nor the submission of
this Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan, and such arrangements
may be either applicable generally or only in specific cases.
14. AMENDMENTS AND TERMINATION
The Board may at any time terminate the Plan. Subject to Section 11,
with the express written consent of an individual Participant, the Board or the
Committee may cancel or reduce or otherwise alter outstanding Awards if, in its
judgment, the tax, accounting, or other effects of the Plan or potential payouts
thereunder would not be in the best interest of the Company. The Board or the
Committee may, at any time, or from time to time, amend or suspend and, if
suspended, reinstate, the Plan in whole or in part; provided, however, that
without further stockholder approval neither the Board nor the Committee shall
make any amendment to the Plan which would materially alter the Plan or which
would specifically:
(a) Materially increase the maximum number of shares of Stock which may
be issued pursuant to Awards, except as provided in Section 11;
(b) Change the minimum Option Price;
(c) Extend the maximum Option Period;
(d) Extend the termination date of the Plan; or
(e) Change the class of persons eligible to receive Awards under
the Plan;
and further provided, however, that the provisions of Section 9 shall not be
amended more than once every six months other than to comport with changes in
the Code, the Employee Retirement Income Security Act, or the rules thereunder.
15. EFFECT OF SECTION 162(M) OF THE CODE
The Plan, and all Awards issued thereunder, are intended to be exempt
from the application of Section 162(m) of the Code, which restricts under
certain circumstances the Federal income tax deduction for compensation paid by
a public company to named executives in excess of $1 million per year. The
exemption is based on Treasury Regulation Section 1.162-27(f) as in effect on
the effective date of the Plan, with the understanding that such regulation
generally exempts from the application of Section 162(m) of the Code
compensation paid pursuant to a plan that existed before a company
II-23
<PAGE> 20
becomes publicly held. The Committee may, without stockholder approval (unless
otherwise required to comply with Rule 16b-3 under the Exchange Act), amend the
Plan retroactively and/or prospectively to the extent it determines necessary in
order to comply with any subsequent clarification of Section 162(m) of the Code
required to preserve the Company's Federal income tax deduction for compensation
paid pursuant to the Plan. To the extent that the Committee determines as of the
Date of Grant of an Award that (i) the Award is intended to comply with Section
162(m) of the Code and (ii) the exemption described above is no longer available
with respect to such Award, such Award shall not be effective until any
stockholder approval required under Section 162(m) of the Code has been
obtained.
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<PAGE> 1
EXHIBIT 5.1
-----------
KANE KESSLER, P.C.
1350 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-4896
(212) 541-6222
April 29, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Abacus Direct Corporation
Registration Statement on Form S-8
----------------------------------
Gentlemen:
We have acted as special counsel to Abacus Direct Corporation, a
Delaware corporation (the "Company"), in connection with the preparation of a
Registration Statement on Form S-8 (the "Registration Statement") pertaining to
the registration by the Company under the Securities Act of 1933, as amended, of
an offering of up to an aggregate of 375,000 shares of the Company's Common
Stock, $.001 par value per share (the "Shares"), pursuant to the Amended and
Restated Abacus Direct Corporation 1996 Stock Option Plan, as amended (the
"Plan").
We have made such legal and factual examinations and inquiries,
including an examination of originals or copies certified or otherwise
identified to our satisfaction, of such documents, corporate records and
instruments, as we have deemed necessary or appropriate for purposes of this
opinion. In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity to authentic original documents of all documents submitted to us as
copies.
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<PAGE> 2
Securities and Exchange Commission
April 29, 1999
Page 2
We have assumed that the number of shares which the Company is
authorized to issue in its Certificate of Incorporation, as amended, exceeds the
sum of (i) the number of shares of the Company's Common Stock outstanding, (ii)
the number of shares of the Company's Common Stock held as treasury shares, and
(iii) the number of shares of the Company's Common Stock which the Company is
obligated to issue (or has otherwise reserved for issuance for any purposes), by
at least the number of shares which may be issued in connection with the Plan,
and we have assumed for purposes of our opinion herein that such condition will
remain true at all future times relevant to this opinion. We have also assumed
that the Company will cause certificates representing Shares issued in the
future to be properly executed and delivered and will take all other actions
appropriate for the due and proper issuance of such Shares. We have assumed for
purposes of this opinion that options issued under the Plan and the Shares
issuable upon exercise of such options have been duly authorized by all
necessary corporate action on the part of the Company and such options have been
duly authorized and granted under the Plan. We express no opinion regarding any
shares reacquired by the Company after initial issuance.
We are members of the Bar of the State of New York and are not
admitted to practice law in any other jurisdiction. We do not hold ourselves out
as being conversant with, and express no opinion as to, the laws of any
jurisdiction other than the laws of the State of New York and the General
Corporation Law of the State of Delaware.
Subject to the limitations stated in this letter, and subject
further to the following limitations, it is our opinion that the Shares issued
by the Company, upon due exercise of any option under and in accordance with the
Plan and any agreement pursuant to which such option was granted, will, upon
delivery thereof and receipt by the Company of all consideration owed to the
Company under the terms of the Plan and such agreement be validly issued, fully
paid and nonassessable.
The foregoing assumes that the aforesaid Registration Statement
will become and remain effective under the Securities Act of 1933, as amended,
prior to any offering of the Shares pursuant to the terms thereof and will be
amended, as appropriate, and that there will be compliance with all applicable
state securities laws in connection with the offering of such securities, as
well as compliance with the terms of the offering set forth in the Registration
Statement.
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<PAGE> 3
Securities and Exchange Commission
April 29, 1999
Page 3
This opinion is rendered solely for your benefit and may not be
relied upon by any other person or entity. This opinion is provided to you as of
the date hereof. We undertake no, and hereby disclaim any obligation to advise
you of any change in any matter set forth herein. Without our prior written
consent, this opinion may not be quoted in whole or in part or otherwise
referred to in any report or document furnished to any person or entity.
We consent to the filing of this letter as an exhibit to the
Registration Statement. In giving this consent, we do not thereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
Kane Kessler, P.C.
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<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Abacus Direct Corporation of our report dated March 1,
1999, relating to the consolidated financial statements, which appears on page
F-1 of the company's Annual Report on Form 10-K for the year ended December 31,
1998.
/S/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Broomfield, Colorado
April 29, 1999
