<PAGE> 1
As filed with the Securities and Exchange Commission on July 22, 1998
Registration No. 333-51989
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT
NO. 1 TO FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ON FORM S-8
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CORSAIR COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0390406
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
3408 HILLVIEW AVENUE
PALO ALTO, CALIFORNIA 94304
(Address of principal executive offices) (Zip Code)
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SUBSCRIBER COMPUTING, INC. - 1997 STOCK OPTION,
NONQUALIFIED STOCK OPTION AND
RESTRICTED STOCK PURCHASE PLAN.
(Full title of the plans)
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MARY ANN BYRNES
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CORSAIR COMMUNICATIONS, INC.
3408 HILLVIEW AVENUE, PALO ALTO, CALIFORNIA 94304
(Name and address of agent for service)
(650) 842-3300
(Telephone number, including area code, of agent for service)
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This Registration Statement shall become effective immediately upon filing with
the Securities and Exchange Commission, and sales of the registered securities
will thereafter be effected upon option exercises or share issuances effected
under the Subscriber Computing, Inc. 1997 Stock Option, Nonqualified Stock
Option and Restricted Stock Purchase Plan.
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This Post-Effective Amendment No. 1 to Form S-4 Registration Statement on Form
S-8 relates to options to purchase shares of the Common Stock, $0.001 par value,
of Subscriber Computing, Inc. ("Subscriber") which were assumed by Corsair
Communications, Inc. (the "Registrant") upon the effective time of the merger of
Subscriber with and into the Registrant on June 22, 1998. Such options are now
exercisable to purchase shares of Common Stock, par value $0.001, of the
Registrant ("Common Stock"). These shares of Common Stock were originally
registered on the Registrant's Registration Statement on Form S-4 to which this
is an amendment; accordingly, the registration fee in respect of such Common
Stock was paid at the time of the original filing of the Registration Statement
relating to such Common Stock.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Corsair Communications, Inc. (the "Company") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "Commission"):
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
(b) The Company's Quarterly Report on Form 10-Q for the period ended
March 31, 1998;
(c) The Company's Registration Statement on Form 8-A filed on July
22, 1997, with the Commission in which there is described the
terms, rights and provisions applicable to the Company's
outstanding Common Stock.
(d) The Company's Prospectus filed May 6, 1998 with Company's
Registration Statement No. 333-51989 on Form S-4, as amended on
May 22, 1998 and May 27, 1998, under the Securities Act of 1933,
as amended, in which there is set forth the Company's audited
financial statements for the years ended December 31, 1996 and
December 31, 1997.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the 1934 Act, prior to the
filing of a post-effective amendment which indicates that all securities offered
hereby have been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference into this registration statement
and to be a part hereof from the date of filing of such documents.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
(a) Section 145 of the Delaware General Corporation Law permits
indemnification of officers and directors of the Company under certain
conditions and subject to certain limitations. Section 145 of the Delaware
General Corporation Law also provides that a corporation has the power to
purchase and maintain insurance on behalf of its officers and directors against
any liability asserted against such person and incurred by him or her in such
capacity, or arising out of his or her status as such, whether or not the
corporation would have the power to indemnify him or her against such liability
under the provisions of Section 145 of the Delaware General Corporation Law.
(b) Article V, Section(B) of the Company's Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation") permits the
Company, to the extent permitted by applicable law, to provide indemnification
of its agents (including directors and officers) in excess of the
indemnification and advancement
II-1.
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otherwise permitted by Section 145 of the Delaware General Corporation Law,
subject only to the limits imposed by applicable Delaware law with respect to
actions for breach of duty to the Company, its stockholders, and others.
(c) Article VII, Section 1 of the Company's Amended and Restated Bylaws
(the "Bylaws") provides that the Company shall indemnify its directors and
executive officers to the fullest extent not prohibited by the General
Corporation Law of Delaware. Article VII, Section 2 of the Bylaws grants the
Company the power to indemnify its other officers, employees and other Agents as
set forth in the Delaware General Corporation Law. Article VII, Section 4 of the
Bylaws provides that all expenses incurred by a director or executive officer in
defending any threatened, pending or completed civil, criminal, administrative
or investigative action, suit or proceeding for which indemnification is
authorized under the Bylaws will be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director or officer to repay such amount if it is
ultimately determined that he or she is not entitled to be indemnified by the
Company under the Bylaws or otherwise. Article VII, Section 7 of the Bylaws
provides that the rights to indemnity under the Bylaws continue as to a person
who has ceased to be a director, officer, employee or agent and inure to the
benefit of the heirs, executors, and administrators of the person.
(d) As permitted by Section 102(b)(7) of the Delaware General
Corporation Law, Article V, Section (A) of the Certificate of Incorporation
provides that a director of the Company is not personally liable for monetary
damages or breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or involving intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived any
improper personal benefit.
(e) Pursuant to authorization provided under the Certificate of
Incorporation, the Company has entered into indemnification agreements with each
of its present and certain of its former directors. The Company has also entered
into similar agreements with certain of the Company's executive officers who are
not directors. Forms of such indemnification agreements entered into with the
Company's directors and officers are attached as Exhibits 10.49 and 10.50
respectively to the Company's Registration Statement on Form S-4 (No. 333-51989)
filed with the Commission on May 27, 1998, as amended through its effective
date. Generally, the indemnification agreements attempt to provide the maximum
protection permitted by Delaware law as it may be amended from time to time.
Moreover, the indemnification agreements provide for certain additional
indemnification. Under such additional indemnification provisions, however, an
individual will not receive indemnification for judgments, settlements or
expenses if he or she is found liable to the Company (except to the extent the
court determines he or she is fairly and reasonably entitled to indemnity for
expenses), for settlements not approved by the Company or for settlements and
expenses not approved by the court. The indemnification agreements provide for
the Company to advance to the individual any and all reasonable expenses
(including legal fees and expenses) incurred in investigating or defending any
such action, suit or proceeding. In order to receive an advance of expenses, the
individual must submit to the Company copies of invoices presented to him or her
for such expenses. Also, the individual must repay such advances upon a final
judicial decision that he or she is not entitled to indemnification.
(f) Article VII, Section 8 of the Bylaws authorizes the Company, upon
approval of its board of directors, to purchase insurance on behalf of any
person permitted to be indemnified by the Bylaws to the fullest extent permitted
by the Delaware General Corporation Law. The Company's board of directors has
approved the purchase of, and the Company has purchased, directors and officers
liability insurance by the Company on behalf of its directors and officers as
authorized by the Bylaws.
II-2.
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Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
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<S> <C>
4.1* Amended and Restated Certificate of Incorporation
(Exhibit 3.6)
4.2* Restated Bylaws (Exhibit 3.5)
4.3* Specimen Stock Certificate
5.1** Opinion and consent of Brobeck, Phleger & Harrison LLP
23.1 Consent of Brobeck, Phleger & Harrison LLP (contained in
Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP, independent auditors
24.1 Power of Attorney. Reference is made to the
signature page of this registration statement
99.1 Subscriber Computing, Inc. 1997 Incentive Stock Option,
Nonqualified Stock Option and Restricted Stock Purchase
Plan as amended to date
99.2 Subscriber Computing, Inc. 1997 Incentive Stock Option,
Nonqualified Stock Option and Restricted Stock Purchase
Plan Form of Notice of Grant
99.3 Form of Subscriber under Subscriber Computing, Inc. 1997
Incentive Stock Option, Nonqualified Stock Option and
Restricted Stock Purchase Plan Form of Stock Option
Agreement
99.4 Subscriber Computing, Inc. 1997 Stock Option,
Nonqualified Stock Option, and Restricted Stock Purchase
Plan Form of Notice of Nonqualified Option Grant
99.5 Subscriber Computing, Inc. 1997 Stock Option,
Nonqualified Stock Option, and Restricted Stock Purchase
Plan Form of Nonqualified Option Agreement
</TABLE>
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* Filed as an exhibit to the Company's Registration Statement on Form S-1
(No. 333-28519) filed on June 4, 1997 or amendments thereto and
incorporated herein by reference.
** Previously filed.
II-3.
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Item 9. Undertakings
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933 (the "1933 Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
provided, however, that paragraphs (a)(i) and (a)(ii) shall not apply if the
information required to be in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Company pursuant to Section 13 or
Section 15(d) of the 1934 Act that are incorporated by reference into this
registration statement.
(b) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof; and
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold upon the
termination of the offering.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the 1934 Act) that is incorporated by reference in
this registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
3. The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the 1934 Act; and, where interim
financial information required to be presented by Article 3 of Regulation S-X is
not set forth in the prospectus, to deliver, or cause to be delivered to each
person to whom the prospectus is sent or given, the latest quarterly report that
is specifically incorporated by reference in the prospectus to provide such
interim financial information.
4. Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers or 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 1933 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
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counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
II-5.
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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 Palo Alto, State of California, on this 21st day of
July, 1998.
CORSAIR COMMUNICATIONS INC.
By /s/ Mary Ann Byrnes
--------------------------------------
Mary Ann Byrnes
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Corsair Communications,
Inc., a Delaware corporation, do hereby constitute and appoint Mary Ann Byrnes
and Martin J. Silver and each of them, the lawful attorneys-in-fact and agents
with full power and authority to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, and either one of them,
determine may be necessary or advisable or required to enable said corporation
to comply with the Securities Act of 1933, as amended, and any rules or
regulations or requirements of the Securities and Exchange Commission in
connection with this registration statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this registration statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
registration statement, and to any and all instruments or documents filed as
part of or in conjunction with this registration statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
that all said attorneys and agents, or either of them, shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
II-6.
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IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Kevin R. Compton Chairman of the Board July 22, 1998
- ---------------------------------------
Kevin R. Compton
/s/ Mary Ann Byrnes President, Chief Executive July 22, 1998
- --------------------------------------- Officer and Director (Principal
Mary Ann Byrnes Executive Officer)
/s/ Martin J. Silver Chief Financial Officer and July 22, 1998
- --------------------------------------- Secretary (Principal
Martin J. Silver Financial and Accounting Officer)
/s/ Peter L. S. Currie Director July 22, 1998
Peter L. S. Currie
/s/ Stephen M. Dow Director July 22, 1998
- ---------------------------------------
Stephen M. Dow
/s/ David H. Ring Director July 22, 1998
- ---------------------------------------
David H. Ring
/s/ Roland L. Robertson Director July 22, 1998
- ----------------------------------------
Roland L. Robertson
</TABLE>
II-7.
<PAGE> 9
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
CORSAIR COMMUNICATIONS, INC.
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT
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<S> <C>
23.1 Consent of Brobeck, Phleger & Harrison LLP (contained in Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP, independent auditors
24.1 Power of Attorney. Reference is made to the
signature page of this registration statement
99.1 Subscriber Computing, Inc. 1997 Stock Option, Nonqualified Stock
Option, and Restricted Stock Purchase Plan, as amended to date
99.2 Subscriber Computing, Inc. 1997 Stock Option, Nonqualified Stock
Option, and Restricted Stock Purchase Plan Form of Notice of
Incentive Stock Option Grant
99.3 Subscriber Computing, Inc. 1997 Stock Option, Nonqualified Stock
Option, and Restricted Stock Purchase Plan Form of Incentive Stock
Option Agreement
99.4 Subscriber Computing, Inc. 1997 Stock Option, Nonqualified Stock
Option, and Restricted Stock Purchase Plan Form of Notice of
Nonqualified Option Grant
99.5 Subscriber Computing, Inc. 1997 Stock Option, Nonqualified Stock
Option, and Restricted Stock Purchase Plan Form of Nonqualified
Option Agreement
</TABLE>
<PAGE> 1
EXHIBIT 23.2
Consent of Independent Auditors, KPMG Peat Marwick LLP
<PAGE> 2
EXHIBIT 23.2
Independent Auditor's Consent - KPMG Peat Marwick LLP
We consent to incorporation herein by reference of our reports dated January
26, 1998, relating to the balance sheets of Corsair Communications, Inc. as of
December 31, 1996 and 1997, and the related statements of operations,
shareholder's equity (deficit), and cash flows for each of the years in the
three-year period ended December 31, 1997, and the related schedule, which
reports appear or are incorporated by reference in the December 31, 1997,
annual report on Form 10-K of Corsair Communications, Inc.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
San Francisco, California
July 22, 1998
<PAGE> 1
EXHIBIT 99.1
Subscriber Computing, Inc. 1997 Stock Option,
Nonqualified Stock Option, and Restricted Stock Purchase Plan,
as amended to date
<PAGE> 2
SUBSCRIBER COMPUTING, INC.
1997 INCENTIVE STOCK OPTION, NONQUALIFIED STOCK
OPTION AND RESTRICTED STOCK PURCHASE PLAN
1. Purposes of the Plan.
The purposes of this 1997 Incentive Stock Option, Nonqualified
Stock Option and Restricted Stock Purchase Plan (the "Plan") of Subscriber
Computing, Inc., a Delaware corporation (the "Company"), are (a) to insure the
retention of the services of existing executive personnel, key employees and
directors of the Company or its affiliates; (b) to attract and retain competent
new executive personnel, key employees and directors; (c) to provide incentive
to all such personnel, employees and directors to devote their utmost effort and
skill to the advancement and betterment of the Company, by permitting them to
participate in the ownership of the Company and thereby in the success and
increased value of the Company, and (d) to allow vendors, service providers,
consultants, business associates, strategic partners and others with or
anticipating important business relationships with the Company the opportunity
to participate in the ownership of the Company and thereby to have an interest
in the success and increased value of the Company.
2. Shares Subject to the Plan.
The shares of stock subject to the incentive options having
the terms and conditions set forth in Section 6 below (hereinafter "incentive
options") and/or nonqualified options or restricted shares having the terms and
conditions set forth in Section 7 below (hereinafter respectively called
"nonqualified options" and "restricted shares") and other provisions of the Plan
shall be shares of the Company's authorized but unissued or reacquired common
stock, $0.01 par value (herein sometimes referred to as the "Common Stock"). The
total number of shares of the Common Stock of the Company which may be issued
under the Plan shall not exceed, in the aggregate, Two Million Five Hundred
Eighty Thousand (2,750,000) shares(1). The limitations established by the
preceding sentence shall be subject to adjustment as provided in Section 8
below. In the event that any outstanding incentive option or nonqualified option
granted under the Plan can no longer under any circumstances be exercised, or in
the event that any shares purchased pursuant to the Plan are reacquired by the
Company, for any reason, the shares of Common Stock allocable to the unexercised
portion of such incentive option or nonqualified option, or the shares
reacquired, as the case may be, may again be subject to grant or issuance under
the Plan.
3. Eligibility.
- --------
(1) As adjusted pursuant to the Action by Written Consent of the Board of
Directors dated February 28, 1997.
<PAGE> 3
(a) Incentive Options. Officers and other key employees of the
Company or its parent or of any subsidiary corporation (including directors if
they are also employees of the Company or a subsidiary), as may be determined by
the Board or the Committee, who qualify for incentive stock options under the
applicable provisions of the Internal Revenue Code, will be eligible for
selection to receive incentive options under the Plan. An employee who has been
granted an incentive option may, if otherwise eligible, be granted an additional
incentive option or options and/or receive nonqualified options or restricted
shares if the Board or Committee shall so determine.
(b) Nonqualified Options and Restricted Shares. Officers and
other key employees of the Company or of any subsidiary corporation, any member
of the Board of Directors of the Company, whether or not he or she is employed
by the Company, or vendors, service providers, consultants, business associates,
strategic partners or others with, or anticipating, important business
relationships with the Company, will be eligible to receive nonqualified options
or purchase restricted shares under the Plan. An individual who has been granted
a nonqualified option or who has received restricted shares may, if otherwise
eligible, be granted an incentive option (if otherwise eligible) or an
additional nonqualified option or options or receive additional restricted
shares if the Board or Committee shall so determine.
4. Administration of the Plan.
(a) This Plan shall be administered by the Board of Directors
of the Company (the "Board") or by a committee (the "Committee") consisting of
two (2) or more persons, at least two of whom shall be directors of the Company,
who shall be appointed by, and serve at the pleasure of, the Board of Directors.
No person serving as a member of the Board or the Committee shall act on any
matter relating solely to such person's own interests under the Plan or any
option or shares thereunder. For purposes of the Plan, the term "Administrator"
shall mean the Board, or if the Board delegates responsibility for any matter to
the Committee, the Committee. The Administrator may from time to time, in its
discretion, determine which persons shall be granted incentive options,
nonqualified options or receive restricted shares under the Plan, the terms
thereof, and the number of shares for which an incentive option or options or
nonqualified option or options shall be granted or the number of restricted
shares to be received.
(b) The Administrator shall have full and final authority to
determine the persons to whom, and the time or times at which, incentive options
or nonqualified options shall be granted and restricted shares issued, the
number of shares to be represented by each incentive option or nonqualified
option and the number of restricted shares and the consideration to be received
by the Company upon the exercise or issuance thereof; to interpret the Plan; to
amend and rescind rules and regulations relating to the Plan; to determine the
form and content of the incentive options or nonqualified options to be issued
and terms and conditions of restricted shares to be offered under the Plan; to
determine the identity or capacity of any persons who may be entitled to
exercise a participant's rights under any
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<PAGE> 4
incentive option, nonqualified option or restricted share agreement under the
Plan; to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any incentive option, nonqualified option or
restricted share agreement in the manner and to the extent the Board or
Committee deems desirable to carry the Plan, incentive option, nonqualified
option or restricted share agreement into effect; to accelerate the vesting date
of any incentive option, nonqualified option or release and/or waive any
repurchase rights of the Company contained in any restricted share agreement; to
provide for an option to the Company to repurchase any shares issued upon
exercise of an option upon termination of employment; and to make all other
determinations necessary or advisable for the administration of the Plan, but
only to the extent not contrary to the express provisions of the Plan. Any
action, decision, interpretation or determination by the Administrator with
respect to the application or administration of the Plan shall be final and
binding on all participants and prospective participants.
5. Option Price and Purchase Price of Shares; Repurchase of
Shares.
(a) Incentive Options. The exercise price for the shares of
Common Stock covered by each incentive option granted under the Plan shall not
be less than the Fair Market Value (as defined below) of such shares on the date
of the incentive option; provided, however, that the exercise price shall not be
less than 110% of the Fair Market Value if the person to whom such options are
granted owns 10% or more of the total combined voting power of all classes of
stock of the Company or its parent or subsidiary corporations.
(b) Nonqualified Options. The exercise price for the shares of
Common Stock covered by each nonqualified option granted under the Plan shall
not be less than the Fair Market Value of such shares on the date the
nonqualified option is granted; provided, however, that the exercise price shall
not be less than 110% of the Fair Market Value if the person to whom such
options are granted owns 10% or more of the total combined voting power of all
classes of stock of the Company or its parent or subsidiary corporations.
(c) Restricted Shares. The purchase price for restricted
shares issued under the Plan shall be determined in the sole discretion of the
Administrator, provided that the purchase price shall be (i) at least
eighty-five percent (85%) of the Fair Market Value of the stock at the time the
person is granted the right to purchase shares under the Plan, or at the time
the purchase is consummated; or (ii) one hundred percent (100%) of the Fair
Market Value of the stock either at the time the person is granted the right to
purchase shares under the plan, or at the time the purchase is consummated, in
the case of any person who owns stock possessing more than ten percent (10%) of
the total combined voting power of all of the classes of stock of the Company or
its parent or subsidiary corporations, if any.
(d) Fair Market Value. For purposes of this Section 5, "Fair
Market Value" shall mean (a) if the Common Stock is then listed on an
established stock exchange or exchanges, the last reported sales price per share
prior to the date for which a value is to be
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<PAGE> 5
established on the principal exchange on which the Common Stock is traded, as
reported in The Wall Street Journal; or (b) if the Common Stock is not then
listed on an exchange, the average of the last reported closing bid and asked
prices per share for the Common Stock in the over-the-counter market, as quoted
on NASDAQ prior to the date for which a value is to be established; or (c) if
the Common Stock is not then listed on an exchange or listed on NASDAQ, a price
per share, determined in good faith by the Committee, based on the price at
which securities of reasonably comparable corporations (if any) in the same
industry are being traded, subject to appropriate adjustments for
dissimilarities between the corporations being compared, or, in the absence of
any reliable indicator based on subsection (a), subsection (b) or the foregoing
part of subsection (c), the earnings history, book value and prospects of the
Company in light of market conditions generally.
(e) Repurchase of Shares. The Company may provide, under the
terms of any option grant or restricted stock purchase agreement entered into
pursuant to the Plan, for the repurchase, upon termination of employment with
the Company, of any Common Stock acquired by such terminated employee under the
Plan, provided that any repurchase right shall terminate if the Company's Common
Stock becomes publicly traded. The price for the repurchase of any such shares
shall be the higher of the original purchase price or Fair Market Value on the
date of termination of employment with the Company. The right to repurchase must
be exercised by the Company, by payment of cash or cancellation of purchase
money indebtedness for the shares in question, within ninety (90) days of
termination of employment; provided, however, that in the case of termination of
employment due to death or disability of the optionee, such right may be
exercised within the later of ninety (90) days of termination of employment or
thirty (30) days of the exercise of the option.
6. Terms and Conditions of Incentive Options.
Each incentive option granted pursuant to this Plan shall be
evidenced by a written Incentive Option Agreement which shall specify that the
options subject thereto are incentive options within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended. The granting of an incentive
option shall take place only when a written Incentive Option Agreement shall
have been duly executed and delivered by or on behalf of the Company to the
optionee to whom such incentive option shall be granted. Neither anything
contained in the Plan nor in any resolution adopted or to be adopted by the
Administrator shall constitute the granting of any incentive option. The
Incentive Option Agreement shall be in such form as the Administrator shall,
from time to time, recommend, but shall comply with and be subject to the
following terms and conditions:
(a) Medium and Time of Payment. The option price upon the
exercise of the incentive option shall be payable (i) in United
States dollars payable in cash, certified check, or bank draft; (ii)
by the issuance of a promissory note in a form acceptable to the
Administrator and (at the election of the Administrator) secured by a
pledge agreement of the shares purchased or other security, (iii) by
cancellation of
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<PAGE> 6
indebtedness of the Company to optionee, (iv) by waiver of
compensation due or accrued to optionee for services rendered, (v)
with the prior written consent of the Administrator, and provided
that a public market for the Company's stock exists, through a "same
day sale" commitment from the optionee and a broker-dealer that is a
member of the National Association of Securities Dealers (an "NASD"
Dealer) whereby the optionee irrevocably elects to exercise his or
her Option and to sell a portion of the shares so purchased to pay
for the exercise price and whereby the NASD Dealer irrevocably
commits upon receipt of such shares to forward the exercise price
directly to the Company, (vi) with the prior written consent of the
Administrator, and provided that a public market for the Company's
stock exists, through a "margin" commitment from the optionee and a
NASD Dealer whereby the optionee irrevocably elects to exercise this
Option and to pledge the shares so purchased to the NASD Dealer in a
margin account as security for a loan from the NASD Dealer in the
amount of the exercise price, and whereby the NASD Dealer irrevocably
commits upon receipt of such shares to forward the exercise price
directly to the Company, or (vii) any combination of (i), (ii),
(iii), (iv), (v), (vi), or (vii) above.
(b) Grant of Incentive Option. Any incentive option shall be
granted within ten years from the date of the adoption of this Plan
or the date this Plan is approved by the shareholders of the Company,
whichever is earlier.
(c) Number of Shares. The incentive option shall state the
total number of shares to which it pertains.
(d) Term of Incentive Option. Each incentive option granted
under the Plan shall expire within a period of not more than ten (10)
years from the date the incentive option is granted; provided,
however, that the incentive option shall expire within a period of
not more than five (5) years if granted to a person who is the
beneficial owner of 10% or more of the outstanding stock of the
Company.
(e) Date of Exercise. The Administrator may, in its
discretion, provide that an incentive option may be exercised
immediately or that it may not be exercised in whole or in part for
any specified period or periods of time or subject to the completion
of specified projects or fulfillment of specified duties or
responsibilities, or fulfillment of specified financial or other
objectives; provided, however, that the right to exercise under any
incentive option granted under the Plan shall be at a rate of at
least twenty percent (20%) per year over five (5) years from the date
the option is granted. Except as may be so provided, any incentive
option may be exercised in whole at any time or in part from time to
time during its term; provided, however, that an optionee shall be
required upon any exercise of an incentive option to purchase at
least 4,000 shares of Common Stock or as much of the incentive option
as is then vested, whichever is less.
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<PAGE> 7
(f) Termination of Employment. In the event that an optionee
who is an employee of the Company shall cease to be employed by the
Company or a parent or any subsidiary corporation of the Company or a
corporation or a parent or subsidiary corporation of a corporation
issuing or assuming an incentive option in a transaction to which
Section 424(a) of the Internal Revenue Code of 1986, as amended,
applies as a result of his or her death or disability, (i) all
incentive options granted to any such optionee pursuant to this Plan
which are not exercisable at the date of such cessation shall
terminate immediately and become void and of no effect, and (ii) all
incentive options granted to any such optionee pursuant to this Plan
which are exercisable at the date of such cessation may be exercised
at any time from six (6) months to one (1) year of the date of such
cessation with the exact date of expiration within such period to be
determined by the Administrator at the time of grant, but in any
event no later than the date of expiration of the incentive option
period, and if not so exercised within such time shall become void
and of no effect at the end of such time; provided, however, that if
any such option is in fact exercised at any time after three (3)
months following the date of such cessation, such option shall be a
nonqualified option and not an incentive option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended. In the
event of termination of an optionee's employment for other than as a
result of his or her death or disability, then (i) all incentive
options granted to such optionee pursuant to this Plan which are not
exercisable at the date of such cessation shall terminate immediately
and become void and of no effect, and (ii) all incentive options
granted to any such optionee pursuant to this Plan which are
exercisable at the date of such cessation may be exercised at any
time within thirty (30) days of the date of such cessation, but in
any event no later than the date of expiration of the incentive
option period, and if not so exercised within such time shall become
void and of no effect at the end of such time.
(g) Rights as a Shareholder. An optionee or a transferee of an
incentive option shall have no rights as a shareholder with respect
to any shares of Common Stock covered by his or her incentive option
until the date of the issuance of a share certificate to him or her
for such shares. No adjustment shall be made for dividends or
distributions or other rights for which the record date is prior to
the date such share certificate is issued.
(h) Non-assignability of Rights. No incentive option shall be
assignable or transferable by the person receiving the option except
by will or the laws of descent and distribution. During the life of
such person, the incentive option shall be exercisable only by him or
her.
(i) Limitation. Notwithstanding any other provisions of the
Plan, the aggregate Fair Market Value (determined in accordance with
the provisions of Section 5 above as of the time the incentive option
is granted) of the shares of
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<PAGE> 8
Common Stock with respect to which incentive stock options are
exercisable for the first time by the optionee during any calendar
year (under all such plans of the Company and its parent and
subsidiary corporations) shall not exceed $100,000.
(j) Other Provisions. Any Incentive Option Agreement may
contain such other terms, provisions and conditions as may be
determined by the Administrator, which are not inconsistent with the
provisions of Section 422 of the Internal Revenue Code of 1986, as
amended, including without limitation the option of the Company to
repurchase any shares issued upon the exercise of an option upon
termination of employment (in keeping with the provisions of Section
5(e) hereof) and any proposed transfer of such shares. Incentive
options granted to different persons, or to the same person at
different times, may be subject to terms, conditions and restrictions
which differ from each other.
7. Terms and Conditions of Nonqualified Options and Restricted
Shares.
(a) Terms and Conditions Applicable to Nonqualified Options.
Each nonqualified option granted pursuant to this Plan shall be evidenced by a
written Nonqualified Option Agreement which shall specify that the options
subject thereto are nonqualified options. The granting of a nonqualified option
shall take place only when this written Nonqualified Option Agreement shall have
been duly executed and delivered by or on behalf of the Company to the optionee
to whom such nonqualified option shall be granted. Neither anything contained in
the Plan nor in any resolution adopted or to be adopted by the Administrator
shall constitute the granting of any nonqualified option. The Nonqualified
Option Agreement shall be in such form as the Administrator shall, from time to
time, recommend, but shall comply with and be subject to the following terms and
conditions:
(i) Medium and Time of Payment. The nonqualified
option price shall be payable (i) in United States dollars payable in
cash, certified check, or bank draft; (ii) (subject to limitations
and with the terms and provisions as may be specified by the
Administrator) with the prior written consent and approval of the
Administrator, by the issuance of a promissory note in a form
acceptable to the Administrator and secured by a pledge of the shares
of Common Stock otherwise deliverable to Optionee on exercise and
other security and otherwise on terms acceptable to the
Administrator; (iii) by cancellation of indebtedness of the Company
to optionee, (iv) by waiver of compensation due or accrued to
optionee for services rendered, (v) with the prior written consent of
the Administrator, and provided that a public market for the
Company's stock exists, through a "same day sale" commitment from the
optionee and a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD" Dealer) whereby the
optionee irrevocably elects to exercise his or her Option and to sell
a portion of the shares so purchased to pay for the exercise price
and whereby the NASD Dealer irrevocably commits upon receipt of such
shares to forward the exercise price
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<PAGE> 9
directly to the Company, (vi) with the prior written consent of the
Administrator, and provided that a public market for the Company's
stock exists, through a "margin" commitment from the optionee and a
NASD Dealer whereby the optionee irrevocably elects to exercise this
Option and to pledge the shares so purchased to the NASD Dealer in a
margin account as security for a loan from the NASD Dealer in the
amount of the exercise price, and whereby the NASD Dealer irrevocably
commits upon receipt of such shares to forward the exercise price
directly to the Company, or (vii) any combination of (i), (ii),
(iii), (iv), (v), (vi), or (vii) above.
(ii) Number of Shares. The nonqualified option shall
state the total number of shares to which it pertains.
(iii) Term of Nonqualified Option. Each nonqualified
option granted under the Plan shall expire within a period of not
more than ten (10) years from the date the nonqualified option is
granted.
(iv) Date of Exercise. The Administrator may, in its
discretion, provide that a nonqualified option may be exercised
immediately or that it may not be exercised in whole or in part for
any specified period or periods of time or subject to the completion
of specified projects or fulfillment of specified duties or
responsibilities or the fulfillment of specified financial or other
objectives; provided, however, that the right to exercise under any
nonqualified option granted under the Plan shall be at a rate of at
least twenty percent (20%) per year over five (5) years from the date
the option is granted. Except as may be so provided, any nonqualified
option may be exercised in whole at any time or in part from time to
time during its term; provided, however, that an optionee shall be
required upon any exercise of a nonqualified option to purchase at
least 4,000 shares of Common Stock or as much of the nonqualified
option as is then vested, whichever is less.
(v) Termination of Employment. In the event that an
optionee who is an employee of the Company shall cease to be employed
by the Company or any of its subsidiaries as a result of his or her
death or disability, or, in the event that an optionee who is a
director but not an employee of the Company shall cease to be a
director of the Company as a result of his or her death or
disability, (i) all nonqualified options granted to any such optionee
pursuant to this Plan which are not exercisable at the date of such
cessation shall terminate immediately and become void and of no
effect, and (ii) all nonqualified options granted to any such
optionee pursuant to this Plan which are exercisable at the date of
such cessation may be exercised at any time from six (6) months to
one (1) year of the date of such cessation, with the exact date of
expiration within such period to be determined by the Administrator
at the time of grant, but in any event no later than the date of
expiration of the nonqualified option period, and if not so exercised
within such time shall become void and of no effect at the end of
such time. In the event of
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<PAGE> 10
termination of an optionee's employment or director status other than
as a result of his or her death or disability, then (i) all
nonqualified options granted to such optionee pursuant to this Plan
which are not exercisable at the date of such cessation shall
terminate immediately and become void and of no effect, and (ii) all
nonqualified options granted to any such optionee pursuant to this
Plan which are exercisable at the date of such cessation may be
exercised at any time within thirty (30) days of the date of such
cessation, but in any event no later than the date of expiration of
the nonqualified option period, and if not so exercised within such
time shall become void and of no effect at the end of such time.
(b) Terms and Conditions Applicable to Restricted Shares Under
the Plan. After the Administrator shall have determined to offer to a person
eligible to participate (hereinafter "offeree") the right to purchase or receive
restricted shares under the Plan, it shall cause to be delivered to the offeree
a written Restricted Share Agreement which shall constitute the Company's offer
to sell or issue restricted shares and shall contain the terms and conditions of
purchase, including, without limitation, the number of shares which the offeree
shall be entitled to purchase, the purchase price per share, any other terms,
conditions or restrictions relating thereto, and the number of days or period
the offeree shall have to accept such offer. The execution and delivery of the
Restricted Share Agreement by the offeree to the Company within said number of
days or period shall constitute acceptance of the offer and said Restricted
Share Agreement shall, thereupon, become a binding obligation of the Company and
the offeree. Each Restricted Share Agreement shall be in such form as the
Administrator shall, from time to time, recommend, but shall comply with and be
subject to the following terms and conditions:
(i) Method of Payment. The purchase price of the
restricted shares, if any, shall be paid to the Company, (i) in cash,
by check or bank draft; (ii) by a promissory note in a form
acceptable to the Administrator; (iii) by cancellation of
indebtedness of the Company to the purchaser; (iv) by waiver of
compensation due or accrued to the purchaser for services rendered;
(v) with the prior written consent of the Company, and provided that
a public market for the Company's Common Stock exists, through a
"same day sale" commitment from the purchaser and a broker-dealer
that is a member of the National Association of Securities Dealers
(an "NASD" Dealer) whereby the purchaser irrevocably elects to
purchase the shares and sell a portion of the shares so purchased
which are vested and not subject to any repurchase rights of the
Company to pay for the purchase price and whereby the NASD Dealer
irrevocably commits upon receipt of such shares to forward the
purchase price directly to the Company; (vi) with the prior written
consent of the Company, and provided that a public market for the
Company's stock exists through a "margin" commitment from the
purchaser and an NASD Dealer whereby the purchaser irrevocably agrees
to purchase the shares and to pledge the shares so purchased which
are vested and not subject to any repurchase rights of the Company to
the NASD Dealer in a margin account as security for a loan from the
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<PAGE> 11
NASD Dealer in the amount of the purchase price, and whereby the NASD
Dealer irrevocably commits upon receipt of such shares to forward the
purchase price directly to the Company; or (vii) any combination of
(i), (ii), (iii), (iv), (v), or (vi), above, as the Company shall in
its discretion determine. The terms, manner and timing of such
payment and the form and content of any promissory note, shall be
included or made a part of the Restricted Share Agreement. If
payment, in whole or in part, is made by a promissory note, the
shares so purchased with such note shall be held in pledge with the
Company to secure payment of the note. The pledge shall be in such
form and shall contain such terms as the Company may deem
appropriate.
(ii) Number of Shares. The Restricted Share Agreement
shall state the total number of shares which the offeree shall be
entitled to purchase and whether or not the offeree may purchase less
than all of the shares offered.
(iii) Term of Offer. The Restricted Share Agreement
shall specify the number of days or other period the offeree shall
have to accept the offer, not to exceed ninety (90) days from the
date of such offer. If not accepted by the offeree within such number
of days or other period, the offer shall automatically terminate upon
expiration thereof, and the offer shall thereupon be null and void
and without further effect, except that the Administrator may extend
such number of days or other period available for acceptance, not to
exceed an additional ninety (90) days. Acceptance of the offer shall
occur when the offeree has executed and redelivered to the Company
one or more counterparts of the Restricted Share Agreement in the
form delivered to him or her by the Company and, to be effective,
such acceptance must be without condition or reservation of any kind
whatsoever.
(iv) Escrow of Dividends. If payment for shares is
made by a promissory note, all cash dividends paid with respect to
the shares so purchased shall be held in escrow by the Company for
the account of the purchaser without interest until such time as the
shares are fully paid. Upon full payment of the promissory note, all
of such escrowed dividends shall be paid to the purchaser without
interest.
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<PAGE> 12
(c) Terms and Conditions Applicable Equally to Nonqualified
Options Granted and to Restricted Shares Issued Under the Plan.
(i) Rights as a Shareholder. A nonqualified optionee
or an offeree of restricted shares shall have no rights as a
shareholder with respect to any shares of Common Stock covered by his
or her nonqualified option or Restricted Share Agreement until the
date of the issuance of a share certificate to such optionee or
offeree for such shares. No adjustment shall be made for dividends or
distributions or other rights for which the record date is prior to
the date such share certificate is issued.
(ii) Non-assignability of Rights. No nonqualified
option or Restricted Share Agreement shall be assignable or
transferable by the person receiving the option or Restricted Share
Agreement except by will or the laws of descent and distribution.
During the life of such person, the nonqualified option or offer to
purchase restricted shares shall be exercisable only by him or her.
(iii) Other Provisions. Any Nonqualified Option
Agreement and any Restricted Share Agreement may contain such other
terms, provisions and conditions as may be determined by the
Administrator, including without limitation the option of the Company
to repurchase any shares issued under the Plan upon termination of
employment and any proposed transfer of such shares. Without limiting
the generality of the foregoing, the Administrator shall have
discretion to offer to a person a choice between having nonqualified
options granted or having restricted shares offered to him or her, or
to grant both nonqualified options and issue restricted shares or to
condition a grant of nonqualified options upon a purchase of shares
under a Restricted Share Agreement under the Plan. Nonqualified
options granted or offers to purchase restricted shares made to
different persons, or to the same person at different times, may be
subject to terms, conditions and restrictions which differ from each
other.
8. Changes in Capital Structure.
In the event that the outstanding shares of Common Stock of
the Company are hereafter increased or decreased or changed into or exchanged
for a different number or kind of shares or other securities of the Company by
reason of merger, consolidation or reorganization in which the Company is the
surviving corporation or of a recapitalization, stock split, combination of
shares, reclassification, reincorporation, stock dividend (in excess of 2%), or
other change in the corporate structure of the Company, appropriate adjustments
shall be made by the Board of Directors in the aggregate number and kind of
shares subject to this Plan, and the number and kind of shares and the price per
share subject to outstanding incentive options, nonqualified options and
Restricted Share Agreements in order to preserve,
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<PAGE> 13
but not to increase, the benefits to persons then holding incentive options,
nonqualified options and/or Restricted Share Agreements.
In the event that the Company at any time proposes to sell
substantially all of its assets, merge into, consolidate with or to enter into
any other reorganization in which the Company is not the surviving corporation,
or if the Company is the surviving corporation and the ownership of the
outstanding capital stock of the Company following the transaction changes by
80% or more as a result of such transaction, then the Administrator shall cause
written notice of the proposed transaction to be given to the persons holding
incentive options, nonqualified options or rights of purchase not less than
thirty (30) days prior to the anticipated effective date of the proposed
transaction, and any portion of any incentive option, nonqualified option and
right of purchase which is exercisable within one year after the effective date
of the proposed transaction shall be accelerated and, concurrent with such
effective date, such persons shall have the right to exercise incentive options,
nonqualified options and accept rights of purchase in respect to any shares
which, giving effect to the partial acceleration effected hereby, are then
subject to purchase pursuant to such options or rights.
9. Amendment and Termination of the Plan.
The Board of Directors of the Company may from time to time
alter, amend, suspend or terminate the Plan in such respects as the Board of
Directors may deem advisable; provided, however, that no such alteration,
amendment, suspension or termination shall be made which shall substantially
affect or impair the rights of any person under any incentive option or
nonqualified option theretofore granted to him or her or under any Restricted
Share Agreement without his or her consent. Without limiting the generality of
the foregoing, to the extent permitted by applicable law, the Board of Directors
of the Company may alter or amend the Plan to comply with requirements under the
Internal Revenue Code relating to restricted stock options, incentive options,
qualified options or other options which give the optionee more favorable tax
treatment than that applicable to options granted under this Plan as of the date
of its adoption. Upon any such alteration or amendment, to the extent permitted
by applicable law, any outstanding option granted hereunder shall be subject to
the more favorable tax treatment afforded to an optionee pursuant to such terms
and conditions as the Administrator may determine.
10. Application of Funds.
The proceeds received by the Company from the sale of Common
Stock pursuant to incentive options, nonqualified options and Restricted Share
Agreements, except as otherwise provided herein, will be used for general
corporate purposes.
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<PAGE> 14
11. No Obligation to Exercise Option or Right of Purchase.
The granting of an incentive option, nonqualified option or
the offer to purchase restricted shares shall impose no obligation upon the
optionee to exercise such an incentive option, nonqualified option or the
offeree to accept such offer to purchase restricted shares.
12. Continuance of Employment.
The Plan or the granting of any incentive option, nonqualified
option or offer to purchase any restricted share thereunder shall not impose any
obligation on the Company to continue the employment of any optionee or offeree.
13. Termination of Plan.
The Plan shall terminate on the date which is ten (10) years
from the date the plan is adopted by the Company's Board of Directors or the
date the Plan is approved by the Company's shareholders, whichever is earlier.
14. Financial Information.
The Company shall provide financial statements at least
annually to each recipient of an option granted under the Plan and to each
person holding Restricted Shares purchased under the Plan.
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<PAGE> 1
EXHIBIT 99.2
Subscriber Computing, Inc. 1997 Stock Option,
Nonqualified Stock Option, and Restricted Stock Purchase Plan
Form of Notice of Incentive Stock Option Grant
<PAGE> 2
Subscriber Computing, Inc.
18881 Von Karman Ave., Suite 450
Irvine, California 92612
Gentlemen:
1. (a) In connection with the acquisition of ________ shares of the
common stock of Subscriber Computing, Inc., a Delaware corporation (the
"Company"), by the undersigned, the undersigned represents that the shares which
the undersigned is acquiring are being acquired for investment and not with a
view to the sale or distribution of any part thereof, and that the undersigned
has no present intent of selling or otherwise distributing the shares.
You have advised the undersigned that the shares have not been
registered under the Securities Act of 1933, as amended (the "Act"), as the
offering of the shares is to be effected pursuant to an exemption from the
registration provisions of such Act, and, in this connection, you are relying in
part on the representations of the undersigned set forth herein.
Without in any way limiting the representations set forth above,
the undersigned further agrees in no event to make any dispositions of all or
any part of said shares unless and until (i) the undersigned shall have notified
you of the proposed disposition; (ii) the undersigned shall have furnished you
with an opinion of counsel to the effect that such disposition will not require
registration of such shares under the Act, and (iii) such opinion of counsel
shall have been concurred in by the Company's counsel and the Company shall have
advised you of such concurrence.
(b) The undersigned acknowledges receipt of all information as the
undersigned deems necessary and appropriate to enable the undersigned to
evaluate the financial risk inherent in acquiring said shares and acknowledges
receipt of satisfactory and complete information covering the business and
financial condition of the Company, including the opportunity to obtain
information regarding the Company's financial status, in response to all
inquiries in respect thereof.
2. The undersigned understands and agrees that the certificate
evidencing said shares will bear substantially the following legend in addition
to any others required by agreement:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933; THEY
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<PAGE> 3
HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS MAY BE
AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER.
3. (a) The undersigned recognizes that said shares are unregistered and
must by held indefinitely unless they are subsequently registered under the Act
or an exemption from such registration is available, and further recognizes that
you are under no obligation to register said shares or to comply with any
exemption from such registration.
(b) The undersigned understands that Rule 144 under the Act does
not presently apply and may never apply to the Company's securities because the
Company does not now, and may never, file reports required by the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and has not made, and may
never make, publicly available the information required by Rule 15c2-11 of the
Exchange Act. Furthermore, if Rule 144 were available, the undersigned
understands that sales of securities made in reliance thereof could be made only
in certain limited amounts, after certain holding periods and only when there
was available specified current public information, all in accordance with the
terms and conditions of said Rule. The undersigned understands that, in the case
of securities to which said Rule is not applicable, compliance with some other
exemption under the Act will be required.
Dated: ____________________
_____________________________
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<PAGE> 1
EXHIBIT 99.3
Subscriber Computing, Inc. 1997 Stock Option,
Nonqualified Stock Option, and Restricted Stock Purchase Plan
Form of Incentive Stock Option Agreement
<PAGE> 2
INCENTIVE OPTION AGREEMENT
THIS INCENTIVE OPTION AGREEMENT (this "Agreement"), made this
____ day of ________________, 19_, between SUBSCRIBER COMPUTING, INC., a
Delaware corporation (hereinafter referred to as the "Company"), and __________,
an employee of the Company, its parent or one or more of its subsidiaries (the
"Optionee"), is made with reference to the following facts:
R E C I T A L S:
A. The Optionee is employed with the Company and is a valued and
key employee of the Company.
B. The Company desires, by affording the Optionee an opportunity
to purchase shares of the Company's Common Stock, $0.01 par value (hereinafter
called "Shares"), as hereinafter provided, to carry out the purposes of the 1997
Incentive Stock Option, Nonqualified Stock Option and Restricted Stock Purchase
Plan, a copy of which is attached hereto as Exhibit A (the "Plan") and
incorporated herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto have agreed,
and do hereby agree, as follows:
1. Grant of Option.
The Company hereby irrevocably grants to the Optionee the right
and option (hereinafter called the "Option") to purchase all or any part of an
aggregate of ____________ Shares (such number being subject to adjustment as
provided in Paragraph 7 hereof and subject to the exercise limitation set forth
in Paragraph 10 hereof) on the terms and conditions herein set forth. The Option
granted herein is an "incentive option" within the meaning of the Plan and
Section 422 of the Internal Revenue Code of 1986, as amended (sometimes called
the "Code").
2. Purchase Price.
The purchase price of the Shares covered by the Option shall be
$_____ per share, representing 100% of the fair market value of the shares as
determined pursuant to Section 5 of the Plan as of the date hereof.
3. Term of Option.
<PAGE> 3
The term of the Option shall commence on the date hereof and all
rights to purchase shares hereunder shall cease at 11:59 p.m. on the day before
the tenth (10th) anniversary of the date hereof, subject to earlier termination
as provided herein. Except as may otherwise be provided in this Agreement,
options granted hereunder may be exercised cumulatively as follows:
[TO BE COMPLETED ON A CASE-BY-CASE BASIS.]
For the purposes of this Agreement, the Optionee shall be deemed
to be a "Service Provider" to the Company for so long as the Optionee is
employed by the Company, or a parent or subsidiary of the Company, or a
corporation or a parent or subsidiary of a corporation issuing or assuming an
option to which Section 424(a) of the Internal Revenue Code of 1986, as amended,
applies. A leave of absence (regardless of the reason therefor) shall be deemed
to constitute the cessation of Service Provider status as of the commencement
date of the leave, unless such leave is authorized by the Company in writing and
the Optionee recommences providing services prior to the expiration date of such
leave. Accordingly, the Optionee shall receive credit as a Service Provider to
the Company during a leave of absence only if the leave is authorized by the
Company and the Optionee recommences providing services on or prior to the
expiration date of the leave.
The purchase price of the Shares as to which the Option shall be
exercised shall be paid in full at the time of exercise, as provided in
Paragraph 10 below. Except as provided in Paragraph 5 hereof, the Option may not
be exercised at any time unless the Optionee shall have been continuously, from
the date hereof to the date of the exercise of the Option, a Service Provider to
the Company. The holder of the Option shall not have any of the rights of a
shareholder with respect to the Shares covered by the Option as to any Shares of
Common Stock not actually issued and delivered to Optionee.
In the event that the Company at any time proposes to sell
substantially all of its assets, merge into, consolidate with or to enter into
any other reorganization in which the Company is not the surviving corporation,
or if the Company is the surviving corporation and the ownership of the
outstanding capital stock of the Company following the transaction changes by
80% or more as a result of such transaction (collectively, a "Transaction"),
then the Company shall cause written notice of the proposed transaction to be
given to the Optionee not less than thirty (30) days prior to the anticipated
effective date of the proposed transaction, and any portion of the Option which
is exercisable within one year after the effective date of the proposed
transaction shall be accelerated and, concurrent with such effective date,
Optionee shall have the
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<PAGE> 4
right to exercise the Option in respect to any shares which, giving effect to
the partial acceleration effected hereby, are then subject to purchase pursuant
to this Paragraph 3.
4. Non-transferability.
The Option shall not be transferable otherwise than by will or
the laws of descent and distribution, and the Option may be exercised, during
the lifetime of the Optionee, only by Optionee. More particularly (but without
limiting the generality of the foregoing), the Option may not be assigned,
transferred (except as provided in Paragraph 6 hereof), pledged or hypothecated
in any way, shall not be assignable by operation of law and shall not be subject
to execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment or similar process
upon the Option, shall be null and void and without effect.
5. Termination of Option.
Except as provided below in this Paragraph 5, this Option shall
terminate on the date Optionee ceases to be a Service Provider for the Company
(the "Termination Date").
(a) Termination Generally. In the event Optionee ceases to be a
Service Provider to the Company, voluntarily or involuntarily, for any
reason whatsoever except death or disability, this Option, to the extent
(and only to the extent) that it would have been exercisable by Optionee
on the Termination Date, may be exercised by Optionee within thirty (30)
days after the Termination Date, but in no event later than the
Expiration Date (as defined in Paragraph 8(a)(i) below).
(b) Death or Disability. In the event Optionee ceases to be a
Service Provider to the Company because of the death of Optionee or the
disability of Optionee within the meaning of Section 22(e)(3) of the
Code, this Option, to the extent (and only to the extent) that it would
have been exercisable by Optionee on the Termination Date, may be
exercised by Optionee (or Optionee's legal representative) within six
(6) months after the Termination Date, but in no event later than the
Expiration Date.
6. Other Terminations or Expirations.
In addition to any other event causing an expiration or
termination of this Option, this Option shall expire and all rights to purchase
Shares shall cease (to the extent not theretofore terminated or expired as
herein provided) upon the effective date of the dissolution or liquidation of
the Company or upon the completion of a Transaction; provided, however, that the
Company may, in its discretion, and
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<PAGE> 5
immediately prior to any such Transaction, cause a new option to be substituted
for this Option or cause this Option to be assumed by an employer entity or a
parent or subsidiary of such entity; and such new option shall apply to all
shares issued in addition to or substitution, replacement or modification of the
shares theretofore covered by such option; provided that,
(1) the excess of the aggregate fair market value of the shares
subject to the option immediately after the substitution or assumption
over the aggregate option price of such shares shall not be more than
the excess of the aggregate fair market value of all shares subject to
the option immediately before such substitution or assumption over the
aggregate option price of such shares; and
(2) the new option or the assumption of the existing option shall
not give the Optionee additional benefits which he or she did not have
under the old option or prior to such assumption; and
(3) an appropriate adjustment of the original option price shall
be made among original shares subject to the option and any additional
shares or shares issued in substitution, replacement or modification
thereof.
7. Adjustments.
The number and class of shares subject to this Option, and the
purchase price per share (but not the total purchase price), and the minimum
number of shares as to which this Option may be exercised at any one time, shall
all be proportionately adjusted in the event of any change or increase or
decrease in the number of issued shares of Common Stock in the Company, without
receipt of consideration by the Company, which results from a split-up or
consolidation of shares, payment of a share dividend (in excess of two percent
(2%), a recapitalization, combination of shares or other like capital
adjustment, so that, upon exercise of this Option, the Optionee shall receive
the number and class of shares Optionee would have received had Optionee been
the holder of the number of shares of Common Stock in the Company for which this
Option is being exercised on the date of such change or increase or decrease in
the number of issued shares of Common Stock in the Company. Subject to any
required action by its shareholders, if the Company shall be a surviving entity
in any reorganization, merger or consolidation, this Option shall be
proportionately adjusted so as to apply to the securities to which the holder of
the number of shares of Common Stock in the Company subject to this Option would
have been entitled. Adjustments under this paragraph shall be made by the Board
of Directors whose determination with respect thereto shall be final and
conclusive. No fractional share shall be issued under this Option or upon any
such adjustment.
8. Company Options.
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<PAGE> 6
(a) Reconveyance Upon Termination of Service.
(i) Reconveyance Option. Upon and after the Termination
Date, including termination resulting from the death or disability of the
Optionee, the Company shall have the option to repurchase all or any portion of
the Shares acquired at any time by Optionee hereunder (hereinafter referred to
as the "Reconveyance Option"), exercisable by written notice delivered to
Optionee, or his or her legal representative, as the case may be, within ninety
(90) days following the Termination Date; provided, however, that if such
Termination Date arises due to the death or disability of Optionee, the
Reconveyance Option shall be exercisable by written notice delivered within the
later of ninety (90) days of the Termination Date and thirty (30) days of the
date on which the Optionee exercises any option to which the Shares relate. The
Reconveyance Option shall remain in effect until the date (the "Expiration
Date") upon which the Company's Common Stock becomes publicly traded. The
Secretary of the Company shall hold any certificate representing shares
purchased hereunder in escrow until the Expiration Date and, in the event of the
exercise of the Reconveyance Option by the Company, shall cause such shares to
be transferred to the Company, on the date upon which the cash payment therefor
is mailed to Optionee.
(ii) Consideration for Reconveyance. The price per share
to be paid by the Company for the Optionee's Shares repurchased pursuant to the
Reconveyance Option shall be equal to the higher of the original purchase price
or Fair Market Value (as defined in this Paragraph 8) for the Optionee's Shares
on the date of termination of employment with the Company.
(iii) Procedure for Exercise of Reconveyance Option. The
Company shall have the right to exercise the Reconveyance Option by acquiring
not less than all of the Shares subject to the Reconveyance Option by delivery
to Optionee or any other person obligated to transfer the Shares written notice
of election to purchase the Shares within the exercise period set forth in
subparagraph (i) above. In the event that the Company does not elect to exercise
the Reconveyance Option as to all of the Shares within such period, the
Reconveyance Option shall expire as to all Shares.
(iv) Notification and Settlement. In the event that the
Company has elected to exercise the Reconveyance Option as to all of the Shares
within the period described above, Optionee or any other person obligated to
transfer the Shares shall deliver to the Company certificate(s) representing the
Shares to be acquired by the Company within ten (10) days following the date of
the notice from the Company. The Company shall deliver to Optionee against
delivery of the Shares, checks of the Company payable to Optionee or any other
person obligated to transfer the Shares or cancellation of indebtedness in the
aggregate amount of the purchase price to be paid as set forth in paragraph (ii)
above.
(v) Deposit of Shares. Optionee shall deposit with the
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<PAGE> 7
Company certificates representing the Shares, together with a duly executed
stock assignment separate from certificate in blank, which shall be held by the
Secretary of the Company pending the Expiration Date. Optionee shall be entitled
to vote and to receive dividends and distributions on all such deposited Shares.
(vi) Fair Market Value. For purposes of this Paragraph 8,
"Fair Market Value" shall mean (a) if the Common Stock is then listed on an
established stock exchange or exchanges, the last reported sales price per share
prior to the date for which a value is to be established on the principal
exchange on which the Common Stock is traded, as reported in The Wall Street
Journal; or (b) if the Common Stock is not then listed on an exchange, the
average of the last reported closing bid and asked prices per share for the
Common Stock in the over-the-counter market, as quoted on NASDAQ prior to the
date for which a value is to be established; or (c) if the Common Stock is not
then listed on an exchange or listed on NASDAQ, a price per share, determined in
good faith by the Committee, based on the price at which securities of
reasonably comparable corporations (if any) in the same industry are being
traded, subject to appropriate adjustments for dissimilarities between the
corporations being compared, or, in the absence of any reliable indicator based
on subsection (a), subsection (b) or the foregoing part of subsection (c), the
earnings history, book value and prospects of the Company in light of market
conditions generally.
(b) Right of First Refusal.
(i) Grant. In the event the Optionee shall exercise the
Option or any portion thereof, the Company is hereby granted the right of first
refusal with respect to any proposed sale or other transfer of the Shares so
acquired (to be hereinafter called the "Purchased Shares") by the Optionee. For
purposes of this Paragraph 8(b), the term "transfer" shall include any
assignment, pledge, encumbrance or other disposition for value of the Purchased
Shares, but shall not include (A) a gratuitous transfer of the Purchased Shares
made to the Optionee's spouse, parents, siblings, or issue, or (B) a transfer of
title to the Purchased Shares pursuant to the Optionee's will or the laws of
intestate succession, in either case so long as such transferee or transferees
agree to be bound by the terms of this Paragraph 8(b).
(ii) Notice of Intended Disposition. In the event the
Optionee desires to accept a bona fide third-party offer to purchase any or all
of the Purchased Shares (the shares subject to such offer to be hereinafter
referred to as the "Target Shares"), the Optionee shall promptly (A) deliver to
the Secretary of the Company written notice of the offer and the basic terms and
conditions thereof, including the proposed purchase price, and (B) provide
satisfactory proof that the disposition of the Target Shares to the third-party
offeror would not be in contravention of the representations made by Optionee in
his or her Investment Letter to the Company, a form of which is attached hereto
as Exhibit B.
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<PAGE> 8
(iii) Exercise of Right. The Company (or its assignees)
shall, for a period of forty-five (45) days following receipt of the notice of
intended disposition under Paragraph 8(b)(ii), have the right to repurchase all,
but not less than all, of the Target Shares specified in the notice of intended
disposition upon substantially the same terms and conditions specified in such
notice. Such right shall be exercisable by written notice given to the Optionee
prior to the expiration of the forty-five (45)-day exercise period. If such
right is exercised with respect to all the Target Shares specified in the notice
of intended disposition, the Company (or its assignees) shall effect the
repurchase of the Target Shares, including payment of the purchase price, not
more than five (5) business days thereafter, except as provided below; and at
such time the Optionee shall deliver to the Company the certificates
representing the Target Shares to be repurchased, each certificate to be
properly endorsed for transfer. The Target Shares so purchased shall thereupon
be cancelled and cease to be issued and outstanding shares of the Company's
Common Stock. However, (A) should the purchase price specified in the notice of
intended disposition be payable in property other than cash or evidences of
indebtedness, the Company (or its assignees) shall have the right to pay the
purchase price in the form of cash equal in amount to the value of such
property, and (B) if there is no purchase price for the intended disposition,
the Company (or its assignees) shall have the right to purchase any or all of
the Target Shares for a purchase price in the form of cash equal in amount to
the value of such Target Shares. If the Optionee and the Company (or its
assignees) cannot agree on such cash value within ten (10) days after the
Company's receipt of the notice of intended disposition, the valuation shall be
made by an appraiser of recognized standing selected by the Optionee and the
Company (or its assignees) or, if they cannot agree on an appraiser within
twenty (20) days after the Company's receipt of such notice, each shall select
an appraiser of recognized standing and the two appraisers shall designate a
third appraiser of recognized standing, whose appraisal shall be determinative
of such value. The closing shall then be held on the later of (A) the fifth
business day following the Company's (or its assignees') exercise of its
purchase rights hereunder or (B) the fifteenth (15th) day after such cash
valuation shall have been made.
(iv) Non-Exercise of Right. In the event written notice of
exercise of the Company's right of first refusal is not given to the Optionee
within forty-five (45) days following the date of the Company's receipt of the
notice of intended disposition under Paragraph 8(b)(ii), the Optionee shall, for
a period of ninety-five (95) days thereafter, have the right to sell or
otherwise dispose of the Target Shares upon terms and conditions (including the
purchase price) no more favorable to the third party purchaser than those
specified in the notice of intended disposition given to the Company; provided,
however, that any such sale or disposition must not be effected in contravention
of the representations made by the Optionee in Paragraph 10 of this Agreement.
The third party purchaser shall acquire the Target Shares free and clear of all
the terms and provisions of this Agreement (including the Company's first
refusal rights hereunder). In the event Owner does not sell or otherwise dispose
of the Target
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<PAGE> 9
Shares within the specified ninety-five (95) day period, the
Company's right of first refusal shall continue to be applicable to any
subsequent disposition of the Target Shares by the Optionee until such right
lapses in accordance with Paragraph 8(b)(vii).
(v) Judicial Transfers. All proposed judicial transfers
and sales of the Shares by order of any court or referee in bankruptcy ("Order")
shall be subject to the terms and provisions of Paragraph 8(b) of this
Agreement. In the event a sale or transfer is proposed pursuant to an Order, all
of the terms of this Paragraph 8(b) shall apply, with the following
modification. Instead of a notice of intent to transfer being delivered to the
Company, a copy of the Order shall be delivered to the Company by the proposed
transferee, which shall state the name and address of the proposed transferee
and shall specify the number of the Shares to be sold and the consideration per
Share. For other purposes of this Paragraph 8(b), the receipt of the Order shall
be treated as the receipt of the notice of intended disposition as set forth in
Paragraph 8(b)(ii) above. All proposed transfers pursuant to an Order which do
not set forth the purchase price capable of valuation which would allow the
Company to exercise its rights of first refusal are expressly prohibited. Any
purported transfer in contravention of this Paragraph 8(b)(v) shall be null and
void and shall pass no title to the proposed transferee.
(vi) Partial Exercise of Right. In the event the Company
(or its assignees) makes a timely exercise of its first refusal rights hereunder
with respect to a portion, but not all, of the Target Shares specified in the
Optionee's notice of intended disposition, the Optionee shall have the option,
exercisable by written notice to the Company delivered within sixty (60) days
after the date of the initial notice of intended disposition, to effect the sale
of the Target Shares pursuant to one of the following alternatives:
(A) sale or other disposition of all the Target
Shares to a third-party purchaser in compliance with the requirements of
Paragraph 8(b)(iv), as if the Company did not exercise its first refusal
rights hereunder; or
(B) sale to the Company (or its assignees) of the
portion of the Target Shares which the Company (or its assignees) has
elected to purchase, such sale to be effected in substantial conformity
with the provisions of Paragraph 8(b)(iii), and, at the option of
Optionee, sale of the remaining portion of the Target Shares to a
third-party purchaser in compliance with Paragraph 8(b)(iv).
Failure of the Optionee to deliver timely notification to the
Company under this Paragraph 8(b)(vi) shall be deemed to be an election by the
Optionee to sell the Target Shares pursuant to alternative (B) above.
(vii) Lapse. The Company's right of first refusal under
this
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<PAGE> 10
Paragraph 8(b) shall lapse and cease to have effect upon the Expiration Date.
(viii) Restrictive Legend. Until such time as the
Company's right of first refusal lapses and ceases to have effect pursuant to
the provisions of Paragraph 8(b)(vii), the stock certificate for the Purchased
Shares shall be endorsed with the following additional legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, PLEDGED OR ENCUMBERED, EXCEPT IN CONFORMITY WITH THE TERMS OF AN
INCENTIVE OPTION AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THE
SHARES (OR HIS OR HER PREDECESSOR IN INTEREST). SUCH AGREEMENT GRANTS CERTAIN
RIGHTS OF PURCHASE TO THE COMPANY (OR ITS ASSIGNS). A COPY OF SUCH AGREEMENT IS
ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
(ix) Notwithstanding any other provision of this Paragraph
8(b), if the Company is an electing small business corporation under Subchapter
S of the Internal Revenue Code of 1986, as amended, at the time Optionee seeks
to transfer his or her Shares, no transfer shall be effective unless the
transferee covenants to comply with any rules and regulations of the Internal
Revenue Service then in effect relating to the Company's Subchapter S election
and to take no action which will jeopardize such election. Further, Optionee
agrees that he or she will not transfer or attempt to transfer any Shares to any
transferee whose ownership of the Shares could automatically invalidate the
Company's Subchapter S election. Such a sale or transfer shall be void and
ineffectual.
9. Notice.
All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered or mailed, by United States certified or registered mail, prepaid, to
the parties or their assignees at the addresses set forth opposite their
signatures below (or such other address as shall be given in writing by either
party to the other).
10. Method of Exercising Option.
Subject to the terms and conditions of this Option Agreement,
this Option may be exercised by written notice to the Company, at its principal
office in the State of California, which presently is located at 18881 Von
Karman Avenue, Suite 450, Irvine, California 92715. Such notice shall state the
election to exercise the Option and the number of shares in respect of which it
is being exercised and shall be signed by the person or persons so exercising
the Option. This Option may be exercised in whole or in part; provided, however,
that Optionee shall be required upon
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<PAGE> 11
any such exercise to acquire at least the lesser of 4,000 Shares (subject to
adjustment as set forth in Paragraph 7 above) or the total number of Shares
covered by this Option which, at the time of such exercise, are then vested (as
set forth in Paragraph 3 above). Such exercise notice shall be accompanied by
payment in (i) cash, certified check, bank draft; (ii) with the prior written
consent and approval of the Company, by the execution and delivery of Optionee's
promissory note in the principal amount of the exercise price, with such term,
interest rate and other terms and provisions, including, without limitation,
requiring the Shares acquired upon exercise to be pledged to the Company to
secure payment of the note, as the Board of Directors may specify, equal to at
the time of exercise, in the aggregate, the full purchase price of such shares,
(iii) by cancellation of indebtedness of the Company to Optionee, (iv) by waiver
of compensation due or accrued to Optionee for services rendered, (v) with the
prior written consent of the Administrator, and provided that a public market
for the Company's stock exists, through a "same day sale" commitment from the
Optionee and a broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD" Dealer) whereby the Optionee irrevocably elects to
exercise his or her Option and to sell a portion of the Shares so purchased to
pay for the exercise price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the exercise price directly to the Company,
(vi) with the prior written consent of the Administrator, and provided that a
public market for the Company's stock exists, through a "margin" commitment from
the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to
exercise this Option and to pledge the Shares so purchased to the NASD Dealer in
a margin account as security for a loan from the NASD Dealer in the amount of
the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the exercise price directly to the Company, or (vii)
any combination of (i), (ii), (iii), (iv), (v), or (vi), above, and the Company
shall deliver a certificate or certificates representing the Shares subject to
such exercise as soon as practicable after the notice shall be received. The
certificate or certificates for the shares as to which the Option shall have
been so exercised shall be registered in the name of the person or persons so
exercising the Option and shall be delivered as provided above to or upon the
written order of the person or persons exercising the Option. In the event the
Option shall be exercised by any person or persons other than the Optionee in
accordance with the terms hereof, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise the Option.
All shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and nonassessable. The holder of this Option shall
not be entitled to the privileges of share ownership as to any shares of Common
Stock not actually issued and delivered to Optionee. Until and unless the Plan
and the issuance of securities thereunder shall have been qualified by permit
under the Corporate Securities Act of 1968, as amended (the "California Act"),
and registered under the Securities Act of 1933, as amended (the "Securities
Act"), the Optionee hereby certifies that all shares of Common Stock in the
Company purchased or to be purchased by Optionee pursuant to the exercise of
this Option are being or are to be acquired by Optionee for investment and not
with a view to the distribution thereof,
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<PAGE> 12
and, in addition, the person exercising the Option shall execute and deliver to
the Company with the notice provided for above an investment letter in the form
attached hereto as Exhibit B.
11. No Agreement to Employ.
Nothing in this Agreement shall be construed to constitute or be
evidence of any agreement or understanding, express or implied, on the part of
the Company to employ or retain Optionee for any specific period of time.
12. Market Standoff Agreement.
Optionee agrees in connection with any registration of the
Company's securities that, upon the request of the Company or the underwriters
managing any public offering of the Company's securities, Optionee will not sell
or otherwise dispose of any Shares without the prior written consent of the
Company or such underwriters, as the case may be, for a period of time beginning
20 days prior to the anticipated effective date of such registration and through
a date (not to exceed 180 days) after the effective date of such registration as
the Company or the underwriters may specify.
13. Stop-Transfer Notices.
Optionee understands and agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop-transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
14. General.
The Company shall at all times during the term of the Option
reserve and keep available such number of shares of Common Stock as will be
sufficient to satisfy the requirements of this Option Agreement, shall pay all
original issue and transfer taxes with respect to the issue and transfer of
shares pursuant hereto and all other fees and expenses necessarily incurred by
the Company in connection therewith, and will from time to time use its best
efforts to comply with all laws and regulations, which, in the opinion of
counsel for the Company, shall be applicable thereto.
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<PAGE> 13
IN WITNESS WHEREOF, the Company has caused this Incentive Option
Agreement to be duly executed by its officer thereunto duly authorized, and the
Optionee has hereunto set his or her hand, all as of the day and year first
above written.
COMPANY:
SUBSCRIBER COMPUTING, INC.
Address:
By:_________________________________________
18881 Von Karman Avenue Its:________________________________________
Suite 450
Irvine, California 92612
OPTIONEE:
Address:
_________________________
_________________________
_________________________
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<PAGE> 1
EXHIBIT 99.4
Subscriber Computing, Inc. 1997 Stock Option,
Nonqualified Stock Option, and Restricted Stock Purchase Plan
Form of Notice of Nonqualified Option Grant
<PAGE> 2
Subscriber Computing, Inc.
_____________________________
_____________________________
Gentlemen:
1. (a) In connection with the acquisition of ________ shares of the
common stock of Subscriber Computing, Inc., a Delaware corporation (the
"Company"), by the undersigned, the undersigned represents that the shares which
the undersigned is acquiring are being acquired for investment and not with a
view to the sale or distribution of any part thereof, and that the undersigned
has no present intent of selling or otherwise distributing the shares.
You have advised the undersigned that the shares have not been
registered under the Securities Act of 1933, as amended (the "Act"), as the
offering of the shares is to be effected pursuant to an exemption from the
registration provisions of such Act, and, in this connection, you are relying in
part on the representations of the undersigned set forth herein.
Without in any way limiting the representations set forth above, the
undersigned further agrees in no event to make any dispositions of all or any
part of said shares unless and until (i) the undersigned shall have notified you
of the proposed disposition; (ii) the undersigned shall have furnished you with
an opinion of counsel to the effect that such disposition will not require
registration of such shares under the Act, and (iii) such opinion of counsel
shall have been concurred in by the Company's counsel and the Company shall have
advised you of such concurrence.
(b) The undersigned acknowledges receipt of all information as the
undersigned deems necessary and appropriate to enable the undersigned to
evaluate the financial risk inherent in acquiring said shares and acknowledges
receipt of satisfactory and complete information covering the business and
financial condition of the Company, including the opportunity to obtain
information regarding the Company's financial status, in response to all
inquiries in respect thereof.
2. The undersigned understands and agrees that the certificate
evidencing said shares will bear substantially the following legend, in addition
to all others required by agreement:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933; THEY
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<PAGE> 3
HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS MAY BE
AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER.
3. (a) The undersigned recognizes that said shares are unregistered and
must by held indefinitely unless they are subsequently registered under the Act
or an exemption from such registration is available, and further recognizes that
you are under no obligation to register said shares or to comply with any
exemption from such registration.
(b) The undersigned understands that Rule 144 under the Act does
not presently apply and may never apply to the Company's securities because the
Company does not now, and may never, file reports required by the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and has not made, and may
never make, publicly available the information required by Rule 15c2-11 of the
Exchange Act. Furthermore, if Rule 144 were available, the undersigned
understands that sales of securities made in reliance thereof could be made only
in certain limited amounts, after certain holding periods and only when there
was available specified current public information, all in accordance with the
terms and conditions of said Rule. The undersigned understands that, in the case
of securities to which said Rule is not applicable, compliance with some other
exemption under the Act will be required.
Dated: ___________________ _______________________________
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<PAGE> 1
EXHIBIT 99.5
Subscriber Computing, Inc. 1997 Stock Option,
Nonqualified Stock Option, and Restricted Stock Purchase Plan
Form of Nonqualified Option Agreement
<PAGE> 2
NONQUALIFIED OPTION AGREEMENT
THIS NONQUALIFIED OPTION AGREEMENT (this "Agreement"), made this
_____ day of __________, 19__, between SUBSCRIBER COMPUTING, INC., a Delaware
corporation (hereinafter referred to as the "Company"), and
__________________________, an employee or non-employee director or consultant
of the Company, its parent or one or more of its subsidiaries (the "Optionee"),
is made with reference to the following facts:
R E C I T A L S:
A. Optionee is employed with the Company or is a non-employee
director or consultant of the Company and is a valued and key employee,
non-employee director or consultant of the Company.
B. The Company desires, by affording the Optionee an opportunity
to purchase shares of the Company's Common Stock, $0.01 par value (hereinafter
called "Shares"), as hereinafter provided, to carry out the purposes of the 1997
Incentive Stock Option, Nonqualified Stock Option and Restricted Stock Purchase
Plan, a copy of which is attached hereto as Exhibit A (the "Plan") and
incorporated herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto have agreed,
and do hereby agree, as follows:
1. Grant of Option.
The Company hereby irrevocably grants to the Optionee the right
and option (hereinafter called the "Option") to purchase all or any part of an
aggregate of ____________ Shares (such number being subject to adjustment as
provided in Paragraph 7 hereof and subject to the exercise limitation set forth
in Paragraph 10) on the terms and conditions herein set forth. The Option
granted herein is a "nonqualified option" and is not subject to the provisions
of Section 422 of the Internal Revenue Code of 1986, as amended (sometimes
called the "Code").
<PAGE> 3
2. Purchase Price.
The purchase price of the Shares covered by the Option shall be
_________ Dollars ($______) per share, representing one hundred percent (100%)
of the fair market value of the shares as determined pursuant to Section 5 of
the Plan as of the date hereof.
3. Term of Option.
The term of the Option shall commence on the date hereof and all
rights to purchase shares hereunder shall cease at 11:59 p.m. on the day before
the tenth (10th) anniversary of the date hereof, subject to earlier termination
as provided herein. Except as may otherwise be provided in this Agreement,
options granted hereunder may be exercised cumulatively as follows:
[TO BE COMPLETED ON A CASE BY CASE BASIS]
For the purposes of this Agreement, the Optionee shall be deemed
to be a "Service Provider" to the Company for so long as the Optionee is
employed by, acts as a non-employee director of or consultant to the Company, or
a parent or subsidiary of the Company, or a corporation or a parent or
subsidiary of a corporation issuing or assuming an option to which Section
424(a) of the Internal Revenue Code of 1986, as amended, applies. A leave of
absence (regardless of the reason therefor) shall be deemed to constitute the
cessation of Service Provider status as of the commencement date of the leave,
unless such leave is authorized by the Company in writing and the Optionee
recommences providing services prior to the expiration date of such leave.
Accordingly, the Optionee shall receive credit as a Service Provider to the
Company during a leave of absence only if the leave is authorized by the Company
and the Optionee recommences providing services on or prior to the expiration
date of the leave. All Shares as to which the Option may have been exercised
shall, however, continue to be subject to the right of first refusal of the
Company and its assignees under Paragraph 8.
The purchase price of the Shares as to which the Option shall be
exercised shall be paid in full at the time of exercise, as provided in
Paragraph 10 below. Except as provided in Paragraph 5 hereof, the Option may not
be exercised at any time unless the Optionee shall have been continuously, from
the date hereof to the date of the exercise of the Option, a Service Provider to
the Company. The holder of the Option shall not have any of the rights of a
shareholder with respect to the Shares covered by the Option as to any Shares of
Common Stock not actually issued and delivered to Optionee.
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In the event that the Company at any time proposes to sell
substantially all of its assets, merge into, consolidate with or to enter into
any other reorganization in which the Company is not the surviving corporation,
or if the Company is the surviving corporation and the ownership of the
outstanding capital stock of the Company following the transaction changes by
80% or more as a result of such transaction (collectively, a "Transaction"),
then the Company shall cause written notice of the proposed transaction to be
given to the Optionee not less than thirty (30) days prior to the anticipated
effective date of the proposed transaction, and any portion of the Option which
is exercisable within one year after the effective date of the proposed
transaction shall be accelerated and, concurrent with such effective date,
Optionee shall have the right to exercise the Option in respect to any shares
which, giving effect to the partial acceleration effected hereby, are then
subject to purchase pursuant to this Paragraph 3.
4. Non-transferability.
The Option shall not be transferable otherwise than by will or
the laws of descent and distribution, and the Option may be exercised, during
the lifetime of the Optionee, only by Optionee. More particularly (but without
limiting the generality of the foregoing), the Option may not be assigned,
transferred (except as provided in Paragraph 6 hereof), pledged or hypothecated
in any way, shall not be assignable by operation of law and shall not be subject
to execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment or similar process
upon the Option, shall be null and void and without effect.
5. Termination of Option.
Except as provided below in this Paragraph, this Option shall
terminate on the date Optionee ceases to be a Service Provider for the Company
(the "Termination Date"). Optionee shall be considered to be a Service Provider
to the Company for all purposes under this Paragraph 5 if the Board of Directors
determines that Optionee is rendering substantial services as a part-time
employee, consultant, contractor or adviser to the Company or any Parent,
Subsidiary or Affiliate of the Company.
(a) Termination Generally. In the event Optionee ceases to be a
Service Provider to the Company, voluntarily or involuntarily, for any reason
whatsoever except death or disability, this Option, to the extent (and only to
the extent) that it would have been exercisable by Optionee on the Termination
Date, may be exercised by Optionee within thirty (30) days after the Termination
Date, but in no event later than the Expiration Date (as defined in Paragraph
8(a)(i) below.
(b) Death or Disability. In the event Optionee ceases to be a
Service
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<PAGE> 5
Provider to the Company because of the death of Optionee or the
disability of Optionee within the meaning of Section 22(e)(3) of the Code, this
Option, to the extent (and only to the extent) that it would have been
exercisable by Optionee on the Termination Date, may be exercised by Optionee
(or Optionee's legal representative) within six (6) months after the Termination
Date, but in no event later than the Expiration Date.
6. Other Terminations or Expirations.
In addition to any other event causing an expiration or
termination of this Option, this Option shall expire and all rights to purchase
Shares shall cease (to the extent not theretofore terminated or expired as
herein provided) upon the effective date of the dissolution or liquidation of
the Company or upon the completion of a Transaction; provided, however, that the
Company may, in its discretion, and immediately prior to any such Transaction,
cause a new option to be substituted for this Option or cause this Option to be
assumed by an employer entity or a parent or subsidiary of such entity; and such
new option shall apply to all shares issued in addition to or substitution,
replacement or modification of the shares theretofore covered by such option;
provided that,
(1) the excess of the aggregate fair market value of the shares
subject to the option immediately after the substitution or assumption
over the aggregate option price of such shares shall not be more than
the excess of the aggregate fair market value of all shares subject to
the option immediately before such substitution or assumption over the
aggregate option price of such shares; and
(2) the new option or the assumption of the existing option shall
not give the Optionee additional benefits which he or she did not have
under the old option or prior to such assumption; and
(3) an appropriate adjustment of the original option price shall
be made among original shares subject to the option and any additional
shares or shares issued in substitution, replacement or modification
thereof.
7. Adjustments.
The number and class of shares subject to this Option, and the
purchase price per share (but not the total purchase price), and the minimum
number of shares as to which this Option may be exercised at any one time, shall
all be proportionately adjusted in the event of any change or increase or
decrease in the number of issued shares of Common Stock in the Company, without
receipt of consideration by the Company, which results from a split-up or
consolidation of shares, payment of a share dividend (in excess of two percent
(2%)), a recapitalization, combination of shares or other like capital
adjustment, so that, upon exercise of this Option, the Optionee shall receive
the number and class of shares Optionee would have received had Optionee
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<PAGE> 6
been the holder of the number of shares of Common Stock in the Company for which
this Option is being exercised on the date of such change or increase or
decrease in the number of issued shares of Common Stock in the Company. Subject
to any required action by its shareholders, if the Company shall be a surviving
entity in any reorganization, merger or consolidation, this Option shall be
proportionately adjusted so as to apply to the securities to which the holder of
the number of shares of Common Stock in the Company subject to this Option would
have been entitled. Adjustments under this paragraph shall be made by the Board
of Directors whose determination with respect thereto shall be final and
conclusive. No fractional share shall be issued under this Option or upon any
such adjustment.
8. Company Options.
(a) Reconveyance Upon Termination of Service.
(i) Reconveyance Option. Upon and after the Termination
Date, including termination resulting from the death or disability of the
Optionee, the Company shall have the option to repurchase all or any portion of
the Shares acquired at any time by Optionee hereunder (hereinafter referred to
as the "Reconveyance Option"), exercisable by written notice delivered to
Optionee, or his or her legal representative, as the case may be, within ninety
(90) days following the Termination Date; provided, however, that if such
Termination Date arises due to the death or disability of Optionee, the
Reconveyance Option shall be exercisable by written notice delivered within the
later of ninety (90) days of the Termination Date and thirty (30) days of the
date on which the Optionee exercises any option to which the Shares relate. The
Reconveyance Option shall remain in effect until the date (the "Expiration
Date") upon which the Company's Common Stock becomes publicly traded. The
Secretary of the Company shall hold any certificate representing shares
purchased hereunder in escrow until the Expiration Date and, in the event of the
exercise of the Reconveyance Option by the Company, shall cause such shares to
be transferred to the Company, on the date upon which the cash payment therefor
is mailed to Optionee.
(ii) Consideration for Reconveyance. The price per share
to be paid by the Company for the Optionee's Shares repurchased pursuant to the
Reconveyance Option shall be equal to the higher of the original purchase price
or Fair Market Value (as defined in this Paragraph 8) for the Optionee's Shares
on the date of termination of employment with the Company.
(iii) Procedure for Exercise of Reconveyance Option. The
Company shall have the right to exercise the Reconveyance Option by acquiring
not less than all of the Shares subject to the Reconveyance Option by delivery
to Optionee or any other person obligated to transfer the Shares written notice
of election to purchase the Shares within the exercise period set forth in
subparagraph (i) above. In the event that the Company does not elect to exercise
the Reconveyance Option as to all
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<PAGE> 7
of the Shares within such period, the Reconveyance Option shall expire as to all
Shares.
(iv) Notification and Settlement. In the event that the
Company has elected to exercise the Reconveyance Option as to all of the Shares
within the period described above, Optionee or any other person obligated to
transfer the Shares shall deliver to the Company certificate(s) representing the
Shares to be acquired by the Company within ten (10) days following the date of
the notice from the Company. The Company shall deliver to Optionee against
delivery of the Shares, checks of the Company payable to Optionee or any other
person obligated to transfer the Shares or cancellation of indebtedness in the
aggregate amount of the purchase price to be paid as set forth in paragraph (ii)
above.
(v) Deposit of Shares. Optionee shall deposit with the
Company certificates representing the Shares, together with a duly executed
stock assignment separate from certificate in blank, which shall be held by the
Secretary of the Company pending the Expiration Date. Optionee shall be entitled
to vote and to receive dividends and distributions on all such deposited Shares.
(vi) Fair Market Value. For purposes of this Paragraph 8,
"Fair Market Value" shall mean (a) if the Common Stock is then listed on an
established stock exchange or exchanges, the last reported sales price per share
prior to the date for which a value is to be established on the principal
exchange on which the Common Stock is traded, as reported in The Wall Street
Journal; or (b) if the Common Stock is not then listed on an exchange, the
average of the last reported closing bid and asked prices per share for the
Common Stock in the over-the-counter market, as quoted on NASDAQ prior to the
date for which a value is to be established; or (c) if the Common Stock is not
then listed on an exchange or listed on NASDAQ, a price per share, determined in
good faith by the Committee, based on the price at which securities of
reasonably comparable corporations (if any) in the same industry are being
traded, subject to appropriate adjustments for dissimilarities between the
corporations being compared, or, in the absence of any reliable indicator based
on subsection (a), subsection (b) or the foregoing part of subsection (c), the
earnings history, book value and prospects of the Company in light of market
conditions generally.
(b) Right of First Refusal.
(i) Grant. In the event the Optionee shall exercise the
Option or any portion thereof, the Company is hereby granted the right of first
refusal with respect to any proposed sale or other transfer of the Shares so
acquired (to be hereinafter called the "Purchased Shares") by the Optionee. For
purposes of this Paragraph 8(b), the term "transfer" shall include any
assignment, pledge, encumbrance or other disposition for value of the Purchased
Shares, but shall not include (A) a gratuitous transfer of the Purchased Shares
made to the Optionee's spouse, parents, siblings, or issue, or (B) a transfer of
title to the Purchased Shares pursuant to the
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<PAGE> 8
Optionee's will or the laws of intestate succession, in either case so long as
such transferee or transferees agree to be bound by the terms of this Paragraph
8(b).
(ii) Notice of Intended Disposition. In the event the
Optionee desires to accept a bona fide third-party offer to purchase any or all
of the Purchased Shares (the shares subject to such offer to be hereinafter
referred to as the "Target Shares"), the Optionee shall promptly (A) deliver to
the Secretary of the Company written notice of the offer and the basic terms and
conditions thereof, including the proposed purchase price, and (B) provide
satisfactory proof that the disposition of the Target Shares to the third-party
offeror would not be in contravention of the representations made by Optionee in
his or her Investment Letter to the Company, a form of which is attached hereto
as Exhibit B.
(iii) Exercise of Right. The Company (or its assignees)
shall, for a period of forty-five (45) days following receipt of the notice of
intended disposition under Paragraph 8(b)(ii), have the right to repurchase all,
but not less than all, of the Target Shares specified in the notice of intended
disposition upon substantially the same terms and conditions specified in such
notice. Such right shall be exercisable by written notice given to the Optionee
prior to the expiration of the forty-five (45)-day exercise period. If such
right is exercised with respect to all the Target Shares specified in the notice
of intended disposition, the Company (or its assignees) shall effect the
repurchase of the Target Shares, including payment of the purchase price, not
more than five (5) business days thereafter, except as provided below; and at
such time the Optionee shall deliver to the Company the certificates
representing the Target Shares to be repurchased, each certificate to be
properly endorsed for transfer. The Target Shares so purchased shall thereupon
be cancelled and cease to be issued and outstanding shares of the Company's
Common Stock. However, (A) should the purchase price specified in the notice of
intended disposition be payable in property other than cash or evidences of
indebtedness, the Company (or its assignees) shall have the right to pay the
purchase price in the form of cash equal in amount to the value of such
property, and (B) if there is no purchase price for the intended disposition,
the Company (or its assignees) shall have the right to purchase any or all of
the Target Shares for a purchase price in the form of cash equal in amount to
the value of such Target Shares. If the Optionee and the Company (or its
assignees) cannot agree on such cash value within ten (10) days after the
Company's receipt of the notice of intended disposition, the valuation shall be
made by an appraiser of recognized standing selected by the Optionee and the
Company (or its assignees) or, if they cannot agree on an appraiser within
twenty (20) days after the Company's receipt of such notice, each shall select
an appraiser of recognized standing and the two appraisers shall designate a
third appraiser of recognized standing, whose appraisal shall be determinative
of such value. The closing shall then be held on the later of (A) the fifth
business day following the Company's (or its assignees') exercise of its
purchase rights hereunder or (B) the fifteenth (15th) day after such cash
valuation shall have been made.
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(iv) Non-Exercise of Right. In the event written notice of
exercise of the Company's right of first refusal is not given to the Optionee
within forty-five (45) days following the date of the Company's receipt of the
notice of intended disposition under Paragraph 8(b)(ii), the Optionee shall, for
a period of ninety-five (95) days thereafter, have the right to sell or
otherwise dispose of the Target Shares upon terms and conditions (including the
purchase price) no more favorable to the third party purchaser than those
specified in the notice of intended disposition given to the Company; provided,
however, that any such sale or disposition must not be effected in contravention
of the representations made by the Optionee in Paragraph 10 of this Agreement.
The third party purchaser shall acquire the Target Shares free and clear of all
the terms and provisions of this Agreement (including the Company's first
refusal rights hereunder). In the event Owner does not sell or otherwise dispose
of the Target Shares within the specified ninety-five (95) day period, the
Company's right of first refusal shall continue to be applicable to any
subsequent disposition of the Target Shares by the Optionee until such right
lapses in accordance with Paragraph 8(b)(vii).
(v) Judicial Transfers. All proposed judicial transfers
and sales of the Shares by order of any court or referee in bankruptcy ("Order")
shall be subject to the terms and provisions of Paragraph 8(b) of this
Agreement. In the event a sale or transfer is proposed pursuant to an Order, all
of the terms of this Paragraph 8(b) shall apply, with the following
modification. Instead of a notice of intent to transfer being delivered to the
Company, a copy of the Order shall be delivered to the Company by the proposed
transferee, which shall state the name and address of the proposed transferee
and shall specify the number of the Shares to be sold and the consideration per
Share. For other purposes of this Paragraph 8(b), the receipt of the Order shall
be treated as the receipt of the notice of intended disposition as set forth in
Paragraph 8(b)(ii) above. All proposed transfers pursuant to an Order which do
not set forth the purchase price capable of valuation which would allow the
Company to exercise its rights of first refusal are expressly prohibited. Any
purported transfer in contravention of this Paragraph 8(b)(v) shall be null and
void and shall pass no title to the proposed transferee.
(vi) Partial Exercise of Right. In the event the Company
(or its assignees) makes a timely exercise of its first refusal rights hereunder
with respect to a portion, but not all, of the Target Shares specified in the
Optionee's notice of intended disposition, the Optionee shall have the option,
exercisable by written notice to the Company delivered within sixty (60) days
after the date of the initial notice of intended disposition, to effect the sale
of the Target Shares pursuant to one of the following alternatives:
(A) sale or other disposition of all the Target
Shares to a third-party purchaser in compliance with the requirements of
Paragraph 8(b)(iv), as if the Company did not exercise its first refusal
rights hereunder; or
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<PAGE> 10
(B) sale to the Company (or its assignees) of the
portion of the Target Shares which the Company (or its assignees) has
elected to purchase, such sale to be effected in substantial conformity
with the provisions of Paragraph 8(b)(iii), and, at the option of
Optionee, sale of the remaining portion of the Target Shares to a
third-party purchaser in compliance with Paragraph 8(b)(iv).
Failure of the Optionee to deliver timely notification to the
Company under this Paragraph 8(b)(vi) shall be deemed to be an election by the
Optionee to sell the Target Shares pursuant to alternative (B) above.
(vii) Lapse. The Company's right of first refusal under
this Paragraph 8(b) shall lapse and cease to have effect upon the Expiration
Date.
(viii) Restrictive Legend. Until such time as the
Company's right of first refusal lapses and ceases to have effect pursuant to
the provisions of Paragraph 8(b)(vii), the stock certificate for the Purchased
Shares shall be endorsed with the following additional legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, PLEDGED OR ENCUMBERED, EXCEPT IN CONFORMITY WITH THE TERMS
OF A NONQUALIFIED OPTION AGREEMENT BETWEEN THE COMPANY AND THE
REGISTERED HOLDER OF THE SHARES (OR HIS OR HER PREDECESSOR IN INTEREST).
SUCH AGREEMENT GRANTS CERTAIN RIGHTS OF PURCHASE TO THE COMPANY (OR ITS
ASSIGNS). A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
(ix) Notwithstanding any other provision of this Paragraph
8(b), if the Company is an electing small business corporation under Subchapter
S of the Internal Revenue Code of 1986, as amended, at the time Optionee seeks
to transfer his or her Shares, no transfer shall be effective unless the
transferee covenants to comply with any rules and regulations of the Internal
Revenue Service then in effect relating to the Company's Subchapter S election
and to take no action which will jeopardize such election. Further, Optionee
agrees that he or she will not transfer or attempt to transfer any Shares to any
transferee whose ownership of the Shares could automatically invalidate the
Company's Subchapter S election. Such a sale or transfer shall be void and
ineffectual.
9. Notice.
All notices, requests, consents and other communications
hereunder shall
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be in writing and shall be deemed to have been duly given if delivered or
mailed, by United States certified or registered mail, prepaid, to the parties
or their assignees at the addresses set forth opposite their signatures below
(or such other address as shall be given in writing by either party to the
other).
10. Method of Exercising Option.
Subject to the terms and conditions of this Option Agreement,
this Option may be exercised by written notice to the Company, at its principal
office in the State of California, which presently is located at 18881 Von
Karman Avenue, Suite 450, Irvine, California 92715. Such notice shall state the
election to exercise the Option and the number of shares in respect of which it
is being exercised and shall be signed by the person or persons so exercising
the Option. This Option may be exercised in whole or in part; provided, however,
that Optionee shall be required upon any such exercise to acquire at least the
lesser of 4,000 Shares (subject to adjustment as set forth in Paragraph 7 above)
or the total number of Shares covered by this Option which, at the time of such
exercise, are then vested (as set forth in Paragraph 3 above). Such exercise
notice shall be accompanied by payment in (i) cash, certified check, bank draft;
(ii) with the prior written consent of the Company, by the execution and
delivery of Optionee's promissory note in the principal amount of the exercise
price, with such term, interest rate and other terms and provisions, including,
without limitation, requiring the Shares acquired upon exercise to be pledged to
the Company to secure payment of the note, as the Board of Directors may
specify, equal to at the time of exercise, in the aggregate, the full purchase
price of such shares, (iii) by cancellation of indebtedness of the Company to
Optionee, (iv) by waiver of compensation due or accrued to Optionee for services
rendered, (v) with the prior written consent of the Company, and provided that a
public market for the Company's stock exists, through a "same day sale"
commitment from the Optionee and a broker-dealer that is a member of the
National Association of Securities Dealers (an "NASD" Dealer) whereby the
Optionee irrevocably elects to exercise his or her Option and to sell a portion
of the Shares so purchased to pay for the exercise price and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to forward the exercise
price directly to the Company, (vi) with the prior written consent of the
Company, and provided that a public market for the Company's stock exists,
through a "margin" commitment from the Optionee and NASD Dealer whereby the
Optionee irrevocably elects to exercise this Option and to pledge the Shares so
purchased to the NASD Dealer in a margin account as security for a loan from the
NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the exercise price
directly to the Company, or (vii) any combination of (i), (ii), (iii), (iv),
(v), or (vi) above, and the Company shall deliver a certificate or certificates
representing the Shares subject to such exercise as soon as practicable after
the notice shall be received. The certificate or certificates for the shares as
to which the Option shall have been so exercised shall be registered in the name
of the person or persons so exercising the Option and shall be delivered as
provided above to or upon
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the written order of the person or persons exercising the Option. In the event
the Option shall be exercised by any person or persons other than the Optionee
in accordance with the terms hereof, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise the Option.
All shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and nonassessable. The holder of this Option shall
not be entitled to the privileges of share ownership as to any shares of Common
Stock not actually issued and delivered to Optionee. Until and unless the Plan
and the issuance of securities thereunder shall have been qualified by permit
under the Corporate Securities Act of 1968, as amended (the "California Act"),
and registered under the Securities Act of 1933, as amended (the "Securities
Act"), the Optionee hereby certifies that all shares of Common Stock in the
Company purchased or to be purchased by Optionee pursuant to the exercise of
this Option are being or are to be acquired by Optionee for investment and not
with a view to the distribution thereof, and, in addition, the person exercising
the Option shall execute and deliver to the Company with the notice provided for
above an investment letter in the form attached hereto as Exhibit B.
11. No Agreement to Employ.
Nothing in this Agreement shall be construed to constitute or be
evidence of any agreement or understanding, express or implied, on the part of
the Company to employ or retain Optionee for any specific period of time.
12. Market Standoff Agreement.
Optionee agrees in connection with any registration of the Company's
securities that, upon the request of the Company or the underwriters managing
any public offering of the Company's securities, Optionee will not sell or
otherwise dispose of any Shares without the prior written consent of the Company
or such underwriters, as the case may be, for a period of time beginning 20 days
prior to the anticipated effective date of such registration and through a date
(not to exceed 180 days) after the effective date of such registration as the
Company or the underwriters may specify.
13. Stop-Transfer Notices.
Optionee understands and agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop-transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
14. General.
The Company shall at all times during the term of the Option
reserve and keep available such number of shares of Common Stock as will be
sufficient to satisfy
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<PAGE> 13
the requirements of this Option Agreement, shall pay all original issue and
transfer taxes with respect to the issue and transfer of shares pursuant hereto
and all other fees and expenses necessarily incurred by the Company in
connection therewith, and will from time to time use its best efforts to comply
with all laws and regulations, which, in the opinion of counsel for the Company,
shall be applicable thereto.
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<PAGE> 14
IN WITNESS WHEREOF, the Company has caused this Nonqualified Option
Agreement to be duly executed by its officer thereunto duly authorized, and the
Optionee has hereunto set his or her hand, all as of the day and year first
above written.
COMPANY:
SUBSCRIBER COMPUTING, INC.
Address:
18881 Von Karman Avenue By:_______________________________________
Suite 450 Its:______________________________________
Irvine, California 92715
OPTIONEE:
Address
__________________________
__________________________
__________________________
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