<PAGE>
As filed with the Securities and Exchange
Commission on May 8, 1998 Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
TEMPLATE SOFTWARE, INC.
(Exact name of issuer as specified in its charter)
<TABLE>
<S> <C>
Virginia 52-1042793
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
45365 Vintage Park Plaza
Dulles, Virginia 20166
(Address of principal executive offices)
-------------------
TEMPLATE SOFTWARE, INC.
1996 EQUITY INCENTIVE PLAN
(Full title of the plan)
-------------------
E. Linwood Pearce
Chief Executive Officer
45365 Vintage Park Plaza
Dulles, Virginia 20166
(703) 318-1000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
with a copy to:
Joseph W. Conroy, Esq.
Hunton & Williams
1751 Pinnacle Dr., Suite 1700
McLean, Virginia 22102
(703) 714-7400
-------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Proposed maximum Proposed maximum
Title of securities Amount to be offering price aggregate Amount of
to be registered registered per share(1) offering price(1) registration fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 1,500,000 $11.5625 $17,343,750 $5,980
par value..................... shares
=========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee. This
amount was calculated pursuant to Rule 457(c) on the basis of $11.5625 per
share, which was the average of the high and low prices of the Registrant's
Common Stock on April 30, 1998, as reported in The Wall Street Journal.
================================================================================
<PAGE>
EXPLANATION STATEMENT
This Registration Statement on Form S-8 is being filed pursuant to General
Instruction E of Form S-8 to register additional shares ("Shares") of Template
Software, Inc. (the "Company") common stock, $.01 par value per share ("Common
Stock") under the Company's 1996 Equity Incentive Plan (the "Plan"). The
Company registered an aggregate of 1,000,000 Shares under the Plan pursuant to a
Registration Statement on Form S-8 filed by the Company on April 9, 1997 under
Registration Number 333-24873, the contents of which are incorporated herein by
reference. An amendment to increase the number of Shares under the Plan by
1,500,000, from 1,000,000 to 2,500,000 Shares, was approved at the Company's
1998 Annual Meeting of the Shareholders held on April 28, 1998. This
Registration Statement on Form S-8 is being filed to register the additional
1,500,000 Shares under the Plan which have not been registered to date.
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.
Not required to be filed with the Securities and Exchange Commission (the
"Commission").
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
Not required to be filed with the Commission.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, filed by the Company with the Commission are
incorporated herein by reference and made a part hereof:
(i) The Company's Annual Report on Form 10-K for the year ended
November 30, 1997 ;
(ii) The Company's quarterly report on Form 10-Q for the period
ending February 28, 1998;
(iii) The description of the Company's Common Stock, $.01 par value
per share, contained in the Company's Registration Statement on
Form 8-A filed on January 3, 1997 (Registration No. 000-21921).
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in the Registration Statement and to be part hereof from the date of
filing of such documents. Any statement contained in a document 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 that is incorporated by reference
herein modifies or supersedes such earlier statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.
<PAGE>
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Virginia Stock Corporation Act, Registrant's Articles of
Incorporation (the "Articles") eliminate all liability of Registrant's directors
and officers for monetary damages to Registrant of its shareholders except in
the event of willful misconduct or a knowing violation of the criminal law or
any federal or state securities law. The Articles also require indemnification
of any person against liability incurred in connection with any proceeding to
which that person is made a party by reason of (i) his or her service to the
Registrant as a director or officer or (ii) his or her service as a director,
officer, trustee or partner to some other enterprise at the request of
Registrant, except in the event of willful misconduct or a knowing violation of
the criminal law.
The Registrant currently carries a director and officer liability insurance
policy with a per claim and aggregate coverage limit of at least $10 million.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The following exhibits are filed with or incorporated by reference into
this Registration Statement pursuant to Item 601 of Regulation S-K:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------------------
<S> <C>
4.1 Amended and Restated Articles of Incorporation (incorporated
herein by reference to Exhibit 3.1 of the Registrant's
Registration Statement on Form S-1, Reg. No. 333-17063).
4.2 Bylaws (incorporated herein by reference to Exhibit 3.2 of the
Registrant's Registration Statement on Form S-1, Reg.
No. 333-17063).
4.3 Specimen Stock Certificate (incorporated herein by reference to
Exhibit 4.4 of the Registrant's Registration Statement on
Form S-1, Reg. No. 333-17063).
4.4 Template Software, Inc. 1996 Equity Incentive Plan (as amended).
5 Opinion of counsel with respect to the securities being
registered.
23.1 Consent of counsel (included in Exhibit 5).
23.2 Consent of Coopers & Lybrand L.L.P., independent accountants.
24 Power of Attorney (see signature pages to this Registration
Statement).
</TABLE>
2
<PAGE>
ITEM 9. UNDERTAKINGS.
(a) The Company hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities
Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would
not exceed that which was registered) and any deviation
from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent
no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
---- ----
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions or otherwise, the Company
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the County of Loudon, Commonwealth of Virginia, on the 8th day of
May, 1998.
TEMPLATE SOFTWARE, INC.
By: /s/ E. Linwood Pearce
-------------------------------------
E. Linwood Pearce
Chief Executive
Officer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints E. Linwood Pearce as his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto each of said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing required or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that each of said attorneys-in-
fact and agents, or their substitutes, could lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below on May 8, 1998 by the following persons in the
capacities indicated.
<TABLE>
<CAPTION>
<S> <C>
/s/ E. Linwood Pearce Chief Executive Officer and Director
- ----------------------------------
E. Linwood Pearce
/s/ Joseph M. Fox Chairman of the Board
- ----------------------------------
Joseph M. Fox
/s/ Andrew B. Ferrentino President, Secretary and Director
- ----------------------------------
Andrew B. Ferrentino
/s/ Kimberly E. Osgood Chief Financial Officer
- ----------------------------------
Kimberly E. Osgood
/s/ Duane A. Adams Director
- ----------------------------------
Dr. Duane A. Adams
/s/ Alan B. Salisbury. Director
- ----------------------------------
Dr. Alan B. Salisbury
/s/ Gerhard Barth Director
- ----------------------------------
Dr. Gerhard Barth
</TABLE>
4
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------
<C> <S>
4.1 Amended and Restated Articles of Incorporation (incorporated
herein by reference to Exhibit 3.1 of the Registrant's
Registration Statement on Form S-1, Reg. No. 333-17063).
4.2 Bylaws (incorporated herein by reference to Exhibit 3.2 of the
Registrant's Registration Statement on Form S-1, Reg.
No. 333-17063).
4.3 Specimen Stock Certificate (incorporated herein by reference to
Exhibit 4.4 of the Registrant's Registration Statement on
Form S-1, Reg. No. 333-17063).
4.4 Template Software, Inc. 1996 Equity Incentive Plan (as amended).
5 Opinion of counsel with respect to the securities being
registered.
23.1 Consent of counsel (included in Exhibit 5).
23.2 Consent of Coopers & Lybrand L.L.P., independent accountants.
24 Power of Attorney (see signature pages to this Registration
Statement).
</TABLE>
<PAGE>
EXHIBIT 4.4
-----------
TEMPLATE SOFTWARE, INC.
1996 EQUITY INCENTIVE PLAN
<PAGE>
TEMPLATE SOFTWARE, INC.
1996 EQUITY INCENTIVE PLAN
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I DEFINITIONS............................................. 1
1.01. Administrator........................................... 1
1.02. Affiliate............................................... 1
1.03. Agreement............................................... 1
1.04. Board................................................... 1
1.05. Code.................................................... 1
1.06. Committee............................................... 1
1.07. Common Stock............................................ 1
1.08. Company................................................. 1
1.09. Corresponding SAR....................................... 1
1.10. Exchange Act............................................ 1
1.11. Fair Market Value....................................... 2
1.12. Initial Value........................................... 2
1.13. Incentive Award......................................... 2
1.14. Option.................................................. 2
1.15. Participant............................................. 2
1.16. Plan.................................................... 2
1.17. SAR..................................................... 2
1.18. Stock Award............................................. 3
1.19. Ten Percent Shareholder................................. 3
ARTICLE II PURPOSES................................................ 3
ARTICLE III ADMINISTRATION.......................................... 4
ARTICLE IV ELIGIBILITY............................................. 5
ARTICLE V STOCK SUBJECT TO PLAN................................... 6
5.01. Shares Issued........................................... 6
5.02. Aggregate Limit......................................... 6
5.03. Reallocation of Shares.................................. 6
ARTICLE VI OPTIONS................................................. 7
6.01. Award................................................... 7
6.02. Option Price............................................ 7
6.03. Maximum Option Period................................... 7
6.04. Nontransferability...................................... 8
6.05. Transferable Options.................................... 8
6.06. Employee Status......................................... 9
6.07. Exercise................................................ 9
6.08. Payment................................................. 10
6.09. Installment Payment..................................... 10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
6.10. Shareholder Rights...................................... 11
6.11. Disposition of Stock.................................... 12
ARTICLE VII SARS.................................................... 12
7.01. Award................................................... 12
7.02. Maximum SAR Period...................................... 12
7.03. Nontransferability...................................... 13
7.04. Transferable SARs....................................... 13
7.05. Exercise................................................ 13
7.06. Employee Status......................................... 14
7.07. Settlement.............................................. 14
7.08. Shareholder Rights...................................... 14
ARTICLE VIII STOCK AWARDS............................................ 15
8.01. Award................................................... 15
8.02. Vesting................................................. 15
8.03. Performance Objectives.................................. 15
8.04. Employee Status......................................... 16
8.05. Shareholder Rights...................................... 16
ARTICLE IX INCENTIVE AWARDS........................................ 17
9.01. Award................................................... 17
9.02. Terms and Conditions.................................... 17
9.03. Nontransferability...................................... 18
9.04. Transferable Incentive Awards........................... 18
9.05. Employee Status......................................... 18
9.06. Shareholder Rights...................................... 18
ARTICLE X ADJUSTMENT UPON CHANGE IN COMMON STOCK.................. 19
ARTICLE XI COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES... 20
ARTICLE XII GENERAL PROVISIONS...................................... 21
12.01. Effect on Employment and Service........................ 21
12.02. Unfunded Plan........................................... 21
12.03. Rules of Construction................................... 21
ARTICLE XIII AMENDMENT............................................... 22
ARTICLE XIV DURATION OF PLAN........................................ 22
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE XV EFFECTIVE DATE OF PLAN.................................. 23
</TABLE>
<PAGE>
TEMPLATE SOFTWARE, INC.
1996 EQUITY INCENTIVE PLAN
--------------------------
ARTICLE I
DEFINITIONS
-----------
1.01. Administrator means the Committee and any delegate of the Committee that
-------------
is appointed in accordance with Article III.
1.02. Affiliate means any "subsidiary" or "parent" corporation (within the
---------
meaning of Section 424 of the Code) of the Company.
1.03. Agreement means a written agreement (including any amendment or
---------
supplement thereto) between the Company and a Participant specifying the terms
and conditions of a Stock Award, an Incentive Award or an Option or SAR granted
to such Participant.
1.04. Board means the Board of Directors of the Company.
-----
1.05. Code means the Internal Revenue Code of 1986, and any amendments
----
thereto.
1.06. Committee means the Executive Compensation Committee of the Board.
---------
1.07. Common Stock means the common stock of the Company.
------------
1.08. Company means Template Software, Inc.
-------
1.09. Corresponding SAR means an SAR that is granted in relation to a
-----------------
particular Option and that can be exercised only upon the surrender to the
Company, unexercised, of that portion of the Option to which the SAR relates.
1.10. Exchange Act means the Securities Exchange Act of 1934, as amended and
------------
as in effect on the date of this Agreement.
1.11. Fair Market Value means, on any given date, the closing price of a share
-----------------
of Common Stock as reported on the NASDAQ National Market System ("NASDAQ")
composite tape on such
<PAGE>
date, or if the Common Stock was not traded on the NASDAQ on such day, then on
the next preceding day that the Common Stock was traded on such exchange, all as
reported by such source as the Administrator may select.
1.12. Initial Value means, with respect to an SAR, the Fair Market Value of
-------------
one share of Common Stock on the date of grant.
1.13. Incentive Award means an award which, subject to such terms and
---------------
conditions as may be prescribed by the Administrator, entitles the Participant
to receive a cash payment from the Company or an Affiliate.
1.14. Option means a stock option that entitles the holder to purchase from
------
the Company a stated number of shares of Common Stock at the price set forth in
an Agreement.
1.15. Participant means an employee of the Company or an Affiliate, including
-----------
an employee who is a member of the Board, or an individual who provides services
to the Company or an Affiliate, who satisfies the requirements of Article IV and
is selected by the Administrator to receive a Stock Award, an Option, an SAR, an
Incentive Award or a combination thereof.
1.16. Plan means the Template Software, Inc. 1996 Equity Incentive Plan.
----
1.17. SAR means a stock appreciation right that in accordance with the terms
---
of an Agreement entitles the holder to receive, with respect to each share of
Common Stock encompassed by the exercise of such SAR, the amount determined by
the Administrator and specified in an Agreement. In the absence of such a
determination, the holder shall be entitled to receive, with respect to each
share of Common Stock encompassed by the exercise of such SAR, the excess of the
Fair Market Value on the date of exercise over the Initial Value. References to
"SARs" include both Corresponding SARs and SARs granted independently of
Options, unless the context requires otherwise.
2
<PAGE>
1.18. Stock Award means Common Stock awarded to a Participant under
-----------
Article VIII.
1.19. Ten Percent Shareholder means any individual owning more than ten percent
-----------------------
(10%) of the total combined voting power of all classes of stock of the Company
or of an Affiliate. An individual shall be considered to own any voting stock
owned (directly or indirectly) by or for his brothers, sisters, spouse,
ancestors or lineal descendants and shall be considered to own proportionately
any voting stock owned (directly or indirectly) by or for a corporation,
partnership, estate or trust of which such individual is a shareholder, partner
or beneficiary.
ARTICLE II
PURPOSES
--------
The Plan is intended to assist the Company and its Affiliates in
recruiting and retaining individuals with ability and initiative by enabling
such persons to participate in the future success of the Company and its
Affiliates and to associate their interests with those of the Company and its
shareholders. The Plan is intended to permit the grant of both Options
qualifying under Section 422 of the Code ("incentive stock options") and Options
not so qualifying, and the grant of SARs, Stock Awards and Incentive Awards. No
Option that is intended to be an incentive stock option shall be invalid for
failure to qualify as an incentive stock option. The proceeds received by the
Company from the sale of Common Stock pursuant to this Plan shall be used for
general corporate purposes.
ARTICLE III
ADMINISTRATION
--------------
The Plan shall be administered by the Administrator. The Administrator
shall have
3
<PAGE>
authority to grant Stock Awards, Incentive Awards, Options and SARs upon such
terms (not inconsistent with the provisions of this Plan) as the Administrator
may consider appropriate. Such terms may include conditions (in addition to
those contained in this Plan) on the exercisability of all or any part of an
Option or SAR or on the transferability or forfeitability of a Stock Award or
Incentive Award. Notwithstanding any such conditions, the Administrator may, in
its discretion, accelerate the time at which any Option or SAR may be exercised,
or the time at which a Stock Award may become transferable or nonforfeitable or
the time at which an Incentive Award may be settled. In addition, the
Administrator shall have complete authority to interpret all provisions of this
Plan; to prescribe the form of Agreements; to adopt, amend, and rescind rules
and regulations pertaining to the administration of the Plan; and to make all
other determinations necessary or advisable for the administration of this Plan.
The express grant in the Plan of any specific power to the Administrator shall
not be construed as limiting any power or authority of the Administrator. Any
decision made, or action taken, by the Administrator or in connection with the
administration of this Plan shall be final and conclusive. Neither the
Administrator nor any member of the Committee shall be liable for any act done
in good faith with respect to this Plan or any Agreement, Option, SAR, Stock
Award or Incentive Award. All expenses of administering this Plan shall be borne
by the Company.
The Committee, in its discretion, may delegate to one or more officers of
the Company or the Executive Committee of the Board, all or part of the
Committee's authority and duties with respect to grants and awards to
individuals who are not subject to the reporting and other provisions of Section
16 of the Exchange Act. The Committee may revoke or amend the terms of a
delegation at any time but such action shall not invalidate any prior actions of
the Committee's delegate or delegates that were consistent with the terms of the
Plan.
4
<PAGE>
ARTICLE IV
ELIGIBILITY
-----------
Any employee of the Company or an Affiliate (including a corporation that
becomes an Affiliate after the adoption of this Plan) or a person who provides
services to the Company or an Affiliate (including a corporation that becomes an
Affiliate after the adoption of this Plan) is eligible to participate in this
Plan if the Administrator, in its sole discretion, determines that such person
has contributed significantly or can be expected to contribute significantly to
the profits or growth of the Company or an Affiliate. Directors of the Company
who are employees of the Company or an Affiliate may be selected to participate
in this Plan.
ARTICLE V
STOCK SUBJECT TO PLAN
---------------------
5.01. Shares Issued. Upon the award of shares of Common Stock pursuant to a
-------------
a Stock Award the Company may issue shares of Common Stock from its authorized
but unissued Common Stock. Upon the exercise of any Option or SAR the Company
may deliver to the Participant (or the Participant's broker if the Participant
so directs), shares of Common Stock from its authorized but unissued Common
Stock.
5.02. Aggregate Limit. The maximum aggregate number of shares of Common Stock
---------------
that may be issued under this Plan pursuant to the exercise of SARs and Options
and the grant of Stock Awards is 2,500,000 shares. The maximum aggregate number
of shares that may be issued under this Plan shall be subject to adjustment as
provided in Article X.
5.03. Reallocation of Shares. If an Option is terminated, in whole or in
----------------------
part, for any reason
5
<PAGE>
other than its exercise or the exercise of a Corresponding SAR that is settled
with Common Stock, the number of shares of Common Stock allocated to the Option
or portion thereof may be reallocated to other Options, SARs and Stock Awards to
be granted under this Plan. If an SAR is terminated, in whole or in part, for
any reason other than its exercise or the exercise of a related Option, the
number of shares of Common Stock allocated to the SAR or portion thereof may be
reallocated to other Options, SARs and Stock Awards to be granted under this
Plan.
ARTICLE VI
OPTIONS
-------
6.01. Award. In accordance with the provisions of Article IV, the
-----
Administrator will designate each individual to whom an Option is to be granted
and will specify the number of shares of Common Stock covered by such awards.
6.02. Option Price. The price per share for Common Stock purchased on the
------------
exercise of an Option shall be determined by the Administrator on the date of
grant, but shall not be less than the Fair Market Value on the date the Option
is granted. Notwithstanding the preceding sentence, the price per share for
Common Stock purchased on the exercise of any Option that is an incentive stock
option granted to an individual who is a Ten Percent Shareholder on the date
such option is granted, shall not be less than one hundred ten percent (110%) of
the Fair Market Value on the date the Option is granted.
6.03. Maximum Option Period. The maximum period in which an Option may be
---------------------
exercised shall be determined by the Administrator on the date of grant, except
that no Option that is an incentive stock option shall be exercisable after the
expiration of ten years from the date such Option was granted. In the case of an
incentive stock option that is granted to a Participant who is a
6
<PAGE>
Ten Percent Shareholder on the date of grant, such Option shall not be
exercisable after the expiration of five years from the date of grant. The terms
of any Option that is an incentive stock option may provide that it is
exercisable for a period less than such maximum period.
6.04. Nontransferability. Except as provided in Section 6.05, each Option
------------------
granted under this Plan shall be nontransferable except by will or by the laws
of descent and distribution. In the event of any such transfer, the Option and
any Corresponding SAR that relates to such Option must be transferred to the
same person or persons or entity or entities. During the lifetime of the
Participant to whom the Option is granted, the Option may be exercised only by
the Participant. No right or interest of a Participant in any Option shall be
liable for, or subject to, any lien, obligation, or liability of such
Participant.
6.05. Transferable Options. Section 6.04 to the contrary notwithstanding,
--------------------
if the Agreement provides, an Option that is not an incentive stock option may
be transferred by a Participant to the Participant's children, grandchildren,
spouse, one or more trusts for the benefit of such family members or a
partnership in which such family members are the only partners; provided,
however, that Participant may not receive any consideration for the transfer. In
addition to transfers described in the preceding sentence the Administrator may
grant Options that are not incentive stock options that are transferable on
other terms and conditions as may be permitted under Securities Exchange
Commission Rule 16b-3 as in effect from time to time. The holder of an Option
transferred pursuant to this section shall be bound by the same terms and
conditions that governed the Option during the period that it was held by the
Participant. In the event of any such transfer, the Option and any Corresponding
SAR that relates to such Option must be transferred to the same person or
persons or entity or entities.
6.06. Employee Status. For purposes of determining the applicability of
---------------
Section 422 of the
7
<PAGE>
Code (relating to incentive stock options), or in the event that the terms of
any Option provide that it may be exercised only during employment or within a
specified period of time after termination of employment, the Administrator may
decide to what extent leaves of absence for governmental or military service,
illness, temporary disability, or other reasons shall not be deemed
interruptions of continuous employment.
6.07. Exercise. Subject to the provisions of this Plan and the applicable
--------
Agreement, an Option may be exercised in whole at any time or in part from time
to time at such times and in compliance with such requirements as the
Administrator shall determine; provided, however, that incentive stock options
(granted under the Plan and all plans of the Company and its Affiliates) may not
be first exercisable in a calendar year for stock having a Fair Market Value
(determined as of the date an Option is granted) exceeding $100,000. An Option
granted under this Plan may be exercised with respect to any number of whole
shares less than the full number for which the Option could be exercised. A
partial exercise of an Option shall not affect the right to exercise the Option
from time to time in accordance with this Plan and the applicable Agreement with
respect to the remaining shares subject to the Option. The exercise of an Option
shall result in the termination of any Corresponding SAR to the extent of the
number of shares with respect to which the Option is exercised.
6.08. Payment. Unless otherwise provided by the Agreement, payment of the
-------
Option price shall be made in cash or a cash equivalent acceptable to the
Administrator. If the Agreement provides, payment of all or part of the Option
price may be made by surrendering shares of Common Stock to the Company. If
Common Stock is used to pay all or part of the Option price, the sum of the cash
and cash equivalent and the Fair Market Value (determined as of the day
preceding the date of exercise) of the shares surrendered must not be less than
the Option price of
8
<PAGE>
the shares for which the Option is being exercised.
6.09. Installment Payment. If the Agreement provides, and if the Participant
-------------------
is employed by the Company on the date the Option is exercised, payment of all
or part of the Option price may be made in installments. In that event the
Company shall lend the Participant an amount equal to not more than ninety
percent (90%) of the Option price of the shares acquired by the exercise of the
Option. This amount shall be evidenced by the Participant's promissory note and
shall be payable in not more than five equal annual installments, unless the
amount of the loan exceeds the maximum loan value for the shares purchased,
which value shall be established from time to time by regulations of the Board
of Governors of the Federal Reserve System. In that event, the note shall be
payable in equal quarterly installments over a period of time not to exceed five
years. The Administrator, however, may vary such terms and make such other
provisions concerning the unpaid balance of such purchase price in the case of
hardship, subsequent termination of employment, absence on military or
government service, or subsequent death of the Participant as in its discretion
are necessary or advisable in order to protect the Company, promote the purposes
of the Plan and comply with regulations of the Board of Governors of the Federal
Reserve System relating to securities credit transactions.
The Participant shall pay interest on the unpaid balance at the minimum
rate necessary to avoid imputed interest or original issue discount under the
Code. All shares acquired with cash borrowed from the Company shall be pledged
to the Company as security for the repayment thereof. In the discretion of the
Administrator, shares of stock may be released from such pledge proportionately
as payments on the note (together with interest) are made, provided the release
of such shares complies with the regulations of the Federal Reserve System
relating to securities credit transactions then applicable. While shares are so
pledged, and so long as there has been no default
9
<PAGE>
in the installment payments, such shares shall remain registered in the name of
the Participant, and he shall have the right to vote such shares and to receive
all dividends thereon.
6.10. Shareholder Rights. No Participant shall have any rights as a
------------------
shareholder with respect to shares subject to his Option until the date of
exercise of such Option.
6.11. Disposition of Stock. A Participant shall notify the Company of any sale
--------------------
or other disposition of Common Stock acquired pursuant to an Option that was an
incentive stock option if such sale or disposition occurs (i) within two years
of the grant of an Option or (ii) within one year of the issuance of the Common
Stock to the Participant. Such notice shall be in writing and directed to the
Secretary of the Company.
ARTICLE VII
SARS
----
7.01. Award. In accordance with the provisions of Article IV, the
-----
Administrator will designate each individual to whom SARs are to be granted and
will specify the number of shares covered by such awards. For purposes of the
preceding sentence, an Option and Corresponding SAR shall be treated as a single
award. In addition no Participant may be granted Corresponding SARs (under all
incentive stock option plans of the Company and its Affiliates) that are related
to incentive stock options which are first exercisable in any calendar year for
stock having an aggregate Fair Market Value (determined as of the date the
related Option is granted) that exceeds $100,000.
7.02. Maximum SAR Period. The maximum period in which an SAR may be exercised
------------------
shall be determined by the Administrator on the date of grant, except that no
Corresponding SAR that is related to an incentive stock option shall be
exercisable after the expiration of ten years from the date such related Option
was granted. In the case of a Corresponding SAR that is related to an incentive
stock option granted to a Participant who is a Ten Percent Shareholder, such
10
<PAGE>
Corresponding SAR shall not be exercisable after the expiration of five years
from the date such related Option was granted. The terms of any Corresponding
SAR that is related to an incentive stock option may provide that it is
exercisable for a period less than such maximum period.
7.03. Nontransferability. Except as provided in Section 7.04, each SAR granted
------------------
under this Plan shall be nontransferable except by will or by the laws of
descent and distribution. In the event of any such transfer, Corresponding SAR
and the related Option must be transferred to the same person or persons or
entity or entities. During the lifetime of the Participant to whom the SAR is
granted, the SAR may be exercised only by the Participant. No right or interest
of a Participant in any SAR shall be liable for, or subject to, any lien,
obligation, or liability of such Participant.
7.04. Transferable SARs. Section 7.03 to the contrary notwithstanding, the
-----------------
Administrator may grant transferable SARs to the extent that, and on such terms
as, may be permitted by Securities Exchange Commission Rule 16b-3 as in effect
from time to time. In the event of any such transfer, Corresponding SAR and the
related Option must be transferred to the same person or person or entity or
entities. The holder of an SAR transferred pursuant to this section shall be
bound by the same terms and conditions that governed the SAR during the period
that it was held by the Participant.
7.05. Exercise. Subject to the provisions of this Plan and the applicable
--------
Agreement, an SAR may be exercised in whole at any time or in part from time to
time at such times and in compliance with such requirements as the Administrator
shall determine; provided, however, that a Corresponding SAR that is related to
an incentive stock option may be exercised only to the extent that the related
Option is exercisable and only when the Fair Market Value exceeds the option
price of the related Option. An SAR granted under this Plan may be exercised
with respect to any number of whole shares less than the full number for which
the SAR could be exercised. A partial
11
<PAGE>
exercise of an SAR shall not affect the right to exercise the SAR from time to
time in accordance with this Plan and the applicable Agreement with respect to
the remaining shares subject to the SAR. The exercise of a Corresponding SAR
shall result in the termination of the related Option to the extent of the
number of shares with respect to which the SAR is exercised.
7.06. Employee Status. If the terms of any SAR provide that it may be
---------------
exercised only during employment or within a specified period of time after
termination of employment, the Administrator may decide to what extent leaves of
absence for governmental or military service, illness, temporary disability or
other reasons shall not be deemed interruptions of continuous employment.
7.07. Settlement. At the Administrator's discretion, the amount payable as a
----------
result of the exercise of an SAR may be settled in cash, Common Stock, or a
combination of cash and Common Stock. No fractional share will be deliverable
upon the exercise of an SAR but a cash payment will be made in lieu thereof.
7.08. Shareholder Rights. No Participant shall, as a result of receiving an
------------------
SAR award, have any rights as a shareholder of the Company or any Affiliate
until the date that the SAR is exercised and then only to the extent that the
SAR is settled by the issuance of Common Stock.
ARTICLE VIII
STOCK AWARDS
------------
8.01. Award. In accordance with the provisions of Article IV, the
-----
Administrator will designate each individual to whom a Stock Award is to be made
and will specify the number of shares of Common Stock covered by such awards.
8.02. Vesting. The Administrator, on the date of the award, may prescribe
-------
that a Participant's rights in the Stock Award shall be forfeitable or otherwise
restricted for a period of time or subject
12
<PAGE>
to such conditions as may be set forth in the Agreement. If a Stock Award is not
nonforfeitable and transferable upon its grant, the period of restriction shall
be at least three years; provided, however, that the minimum period of
restriction shall be at least one year in the case of a Stock Award that will
become transferable and nonforfeitable on account of the satisfaction of
performance objectives prescribed by the Administrator.
8.03. Performance Objectives. In accordance with Section 8.02, the
----------------------
Administrator may prescribe that Stock Awards will become vested or transferable
or both based on objectives stated with respect to the Company's, an Affiliate's
or an operating unit's return on equity, earnings per share, total earnings,
earnings growth, return on capital, return on assets, or Fair Market Value. If
the Administrator, on the date of award, prescribes that a Stock Award shall
become nonforfeitable and transferable only upon the attainment of performance
objectives stated with respect to one or more of the foregoing criteria, the
shares subject to such Stock Award shall become nonforfeitable and transferable
only to the extent that the Administrator certifies that such objectives have
been achieved.
8.04. Employee Status. In the event that the terms of any Stock Award provide
---------------
that shares may become transferable and nonforfeitable thereunder only after
completion of a specified period of employment, the Administrator may decide in
each case to what extent leaves of absence for governmental or military service,
illness, temporary disability, or other reasons shall not be deemed
interruptions of continuous employment.
8.05. Shareholder Rights. Prior to their forfeiture (in accordance with the
------------------
applicable Agreement and while the shares of Common Stock granted pursuant to
the Stock Award may be forfeited or are nontransferable), a Participant will
have all rights of a shareholder with respect to a Stock Award, including the
right to receive dividends and vote the shares; provided, however, that
13
<PAGE>
during such period (i) a Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of shares of Common Stock granted pursuant to
a Stock Award, (ii) the Company shall retain custody of the certificates
evidencing shares of Common Stock granted pursuant to a Stock Award, and (iii)
the Participant will deliver to the Company a stock power, endorsed in blank,
with respect to each Stock Award. The limitations set forth in the preceding
sentence shall not apply after the shares of Common Stock granted under the
Stock Award are transferable and are no longer forfeitable.
ARTICLE IX
INCENTIVE AWARDS
----------------
9.01. Award. The Administrator shall designate Participants to whom
-----
Incentive Awards are made. All Incentive Awards shall be finally determined
exclusively by the Administrator under the procedures established by the
Administrator; provided, however, that no Participant may receive an Incentive
Award payment in any calendar year that exceeds the lesser of (i) 75% of the
Participant's base salary (prior to any salary reduction or deferral elections)
as of the date of grant of the Incentive Award or (ii) $250,000.
9.02. Terms and Conditions. The Administrator, at the time an Incentive
--------------------
Award is made, shall specify the terms and conditions which govern the award.
Such terms and conditions shall prescribe that the Incentive Award shall be
earned only to the extent that the Company, an Affiliate or an operating unit,
during a performance period of at least one year, achieves objectives based on
return on equity, earnings per share, total earnings, earnings growth, return on
capital, return on assets or Fair Market Value. Such terms and conditions also
may include other limitations on the payment of Incentive Awards including, by
way of example and not of limitation, requirements that the Participant complete
a specified period of employment with the Company or an Affiliate or that
14
<PAGE>
the Company, an Affiliate, or the Participant attain stated objectives or goals
(in addition to those prescribed in accordance with the preceding sentence) as a
prerequisite to payment under an Incentive Award. The Administrator, at the time
an Incentive Award is made, shall also specify when amounts shall be payable
under the Incentive Award and whether amounts shall be payable in the event of
the Participant's death, disability, or retirement.
9.03. Nontransferability. Except as provided in Section 9.04, Incentive
------------------
Awards granted under this Plan shall be nontransferable except by will or by the
laws of descent and distribution. No right or interest of a Participant in an
Incentive Award shall be liable for, or subject to, any lien, obligation, or
liability of such Participant.
9.04. Transferable Incentive Awards. Section 9.03 to the contrary
-----------------------------
notwithstanding, the Administrator may grant transferable Incentive Awards to
the extent that, and on such terms and conditions as may be permitted by,
Securities Exchange Commission Rule 16b-3 as in effect from time to time. The
holder of an Incentive Award transferred pursuant to this section shall be bound
by the same terms and conditions that governed the Incentive Award during the
period that it was held by the Participant.
9.05. Employee Status. If the terms of an Incentive Award provide that a
---------------
payment will be made thereunder only if the Participant completes a stated
period of employment, the Administrator may decide to what extent leaves of
absence for governmental or military service, illness, temporary disability or
other reasons shall not be deemed interruptions of continuous employment.
9.06. Shareholder Rights. No Participant shall, as a result of receiving an
------------------
Incentive Award, have any rights as a shareholder of the Company or any
Affiliate on account of such award.
15
<PAGE>
ARTICLE X
ADJUSTMENT UPON CHANGE IN COMMON STOCK
--------------------------------------
The maximum number of shares as to which Options, SARs and Stock Awards
may be granted under this Plan, and the terms of outstanding Stock Awards,
Options, and SARs, shall be adjusted as the Committee shall determine to be
equitably required in the event that (a) the Company (i) effects one or more
stock dividends, stock split-ups, subdivisions or consolidations of shares or
(ii) engages in a transaction to which Section 424 of the Code applies or (b)
there occurs any other event which, in the judgment of the Committee
necessitates such action. Any determination made under this Article X by the
Committee shall be final and conclusive.
The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
maximum number of shares as to which Options, SARs and Stock Awards may be
granted, or the terms of outstanding Stock Awards, Options or SARs.
The Committee may make Stock Awards and may grant Options and SARs in
substitution for performance shares, phantom shares, stock awards, stock
options, stock appreciation rights, or similar awards held by an individual who
becomes an employee of the Company or an Affiliate in connection with a
transaction described in the first paragraph of this Article X. Notwithstanding
any provision of the Plan (other than the limitation of Section 5.02), the terms
of such substituted Stock Awards or Option or SAR grants shall be as the
Committee, in its discretion, determines is appropriate.
16
<PAGE>
ARTICLE XI
COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES
-----------------------------
No Option or SAR shall be exercisable, no Common Stock shall be issued,
no certificates for shares of Common Stock shall be delivered, and no payment
shall be made under this Plan except in compliance with all applicable federal
and state laws and regulations (including, without limitation, withholding tax
requirements), any listing agreement to which the Company is a party, and the
rules of all domestic stock exchanges on which the Company's shares may be
listed. The Company shall have the right to rely on an opinion of its counsel
as to such compliance. Any share certificate issued to evidence Common Stock
when a Stock Award is granted or for which an Option or SAR is exercised may
bear such legends and statements as the Administrator may deem advisable to
assure compliance with federal and state laws and regulations. No Option or SAR
shall be exercisable, no Stock Award shall be granted, no Common Stock shall be
issued, no certificate for shares shall be delivered, and no payment shall be
made under this Plan until the Company has obtained such consent or approval as
the Administrator may deem advisable from regulatory bodies having jurisdiction
over such matters.
17
<PAGE>
ARTICLE XII
GENERAL PROVISIONS
------------------
12.01. Effect on Employment and Service. Neither the adoption of this Plan,
--------------------------------
its operation, nor any documents describing or referring to this Plan (or any
part thereof) shall confer upon any individual any right to continue in the
employ or service of the Company or an Affiliate or in any way affect any right
and power of the Company or an Affiliate to terminate the employment or service
of any individual at any time with or without assigning a reason therefor.
12.02. Unfunded Plan. The Plan, insofar as it provides for grants, shall be
-------------
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon any contractual obligations that may be created pursuant to this
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.
12.03. Rules of Construction. Headings are given to the articles and sections
---------------------
of this Plan solely as a convenience to facilitate reference. The reference to
any statute, regulation, or other provision of law shall be construed to refer
to any amendment to or successor of such provision of law.
18
<PAGE>
ARTICLE XIII
AMENDMENT
---------
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if (i) the amendment increases the aggregate number of shares of Common
Stock that may be issued under the Plan, (ii) the amendment changes the class of
individuals eligible to become Participants or (iii) the amendment materially
increases the benefits that may be provided under the Plan. No amendment shall,
without a Participant's consent, adversely affect any rights of such Participant
under any outstanding Stock Award, Option, SAR or Incentive Award outstanding at
the time such amendment is made.
ARTICLE XIV
DURATION OF PLAN
----------------
No Stock Award, Option, SAR or Incentive Award may be granted under this
Plan after October 17, 2006. Stock Awards, Options, SARs and Incentive Awards
granted before that date shall remain valid in accordance with their terms.
19
<PAGE>
ARTICLE XV
EFFECTIVE DATE OF PLAN
----------------------
Options, SARs and Incentive Awards may be granted under this Plan upon
its adoption by the Board, provided that no Option, SAR or Incentive Award shall
be effective or exercisable unless this Plan is approved by a majority of the
votes entitled to be cast by the Company's shareholders, voting either in person
or by proxy, at a duly held shareholders' meeting within twelve months of such
adoption. Stock Awards may be granted under this Plan upon the later of its
adoption by the Board or its approval by shareholders in accordance with the
preceding sentence.
20
<PAGE>
EXHIBIT 5
---------
[Hunton & Williams Letterhead Appears Here]
May 7, 1998
Template Software, Inc.
45365 Vintage Park Plaza
Dulles, Virginia 20166
REGISTRATION STATEMENT ON FORM S-8
1996 EQUITY INCENTIVE PLAN
--------------------------
Ladies and Gentlemen:
We have served as counsel for Template Software, Inc., a Virginia
corporation (the "Company"), in connection with the registration under the
-------
Securities Act of 1933, as amended, pursuant to a Registration Statement on Form
S-8 (the "Registration Statement"), of an aggregate of 1,500,000 shares (the
----------------------
"Shares") of common stock, $.01 par value, of the Company, to be issued and sold
- -------
by the Company to eligible employees, officers and directors of the Company
pursuant to the Template Software, Inc. 1996 Equity Incentive Plan (the "Plan").
----
We have examined and are familiar with originals or copies (certified,
photostatic or otherwise identified to our satisfaction) of such documents,
corporate records and other instruments relating to the incorporation of the
Company and the authorization of the grants of securities pursuant to the Plan
as we have deemed necessary and advisable. In such examinations, we have
assumed the genuineness of all signatures on all originals and copies of
documents we have examined, the authenticity of all documents submitted to us as
originals and the conformity to original documents of all certified, conformed
or photostatic copies. As to questions of fact material and relevant to our
opinion, we have relied upon certificates or representations of Company
officials and of appropriate governmental officials.
We express no opinion as to matters under or involving the laws of any
jurisdiction other than the corporate law of the Commonwealth of Virginia.
Based upon and subject to the foregoing and having regard for such legal
considerations as we have deemed relevant, it is our opinion that:
1. The Shares have been duly authorized; and
2. Upon the issuance and delivery of the Shares and the receipt of
payment therefor as provided in the Plan and as contemplated by the
Registration Statement, such Shares will be validly issued, fully paid
and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
---------
Registration Statement.
Very truly yours,
/s/ HUNTON & WILLIAMS
HUNTON & WILLIAMS
<PAGE>
EXHIBIT 23.2
------------
[Coopers & Lybrand Letterhead Appears Here]
Consent of Independent Accountants
----------------------------------
We consent to the incorporation by reference in the registration statement of
Template Software, Inc. on Form S-8 (File No. 333- ) of our report dated
January 8, 1998, on our audits of the consolidated financial statements of
Template Software, Inc. as of November 30, 1996 and 1997 and for each of the
three years in the period ended November 30, 1997, which report is included in
the Template Software, Inc. Annual Report on Form 10-K for the year ended
November 30, 1997.
/s/ COOPERS & LYBRAND L.L.P.
McLean, Virginia
May 7, 1998
