<PAGE> 1
As filed with the Securities and Exchange Commission on July 29, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NEW ERA OF NETWORKS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 84-1234845
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
7400 EAST ORCHARD ROAD, SUITE 230
ENGLEWOOD, COLORADO 80111
(ADDRESS, INCLUDING ZIP CODE OF PRINCIPAL EXECUTIVE OFFICES)
1995 STOCK OPTION PLAN
1997 EMPLOYEE STOCK PURCHASE PLAN
CONVOY CORPORATION 1997 STOCK OPTION PLAN
MICROSCRIPT, INC. 1997 STOCK OPTION PLAN
(FULL TITLES OF THE PLANS)
GEORGE F. (RICK) ADAM, JR.
CHIEF EXECUTIVE OFFICER
NEW ERA OF NETWORKS, INC.
7400 EAST ORCHARD ROAD, SUITE 230
ENGLEWOOD, CO 80111
(303) 694-3933
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Copy to:
MARK A. BERTELSEN, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(650) 493-9300
<PAGE> 2
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
TITLE OF SECURITIES PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
BE REGISTERED REGISTERED PER SHARE PRICE FEE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock $.0001 par value:
Newly reserved under the 1995 Stock
Option Plan (the "Option Plan") (1) 700,000 shares $13.56 (3) $ 9,493,750 $2,640
Newly reserved under the 1997
Employee Stock Purchase Plan (the
"Purchase Plan")(2) 200,000 shares $11.53 (4) $ 2,305,625 $ 641
Convoy Corporation 1997 Stock Option
Plan(5) 47,504 shares $13.56 (3) $ 644,155 $ 180
Microscript, Inc. 1997 Stock Option
Plan(6) 110,428 shares $13.56 (3) $ 1,497,680 $ 417
====================================================================================================================================
Total: 1,057,932 shares $13,941,210 $3,878
====================================================================================================================================
</TABLE>
(1) The Option Plan provides for an annual increase in the number of shares of
the Registrant's Common Stock reserved and available for issuance under the
Option Plan equal to the lesser of (i) 700,000, (ii) 3% of the Registrant's
Common Stock outstanding as of the last business day preceding the first
day of such fiscal year or (iii) a lesser amount as determined by the Board
of Directors. Pursuant to Rule 416(a) of the Securities Act of 1933, as
amended (the "Securities Act"), this Registration Statement shall also
cover any additional shares of the Registrant's Common Stock that become
issuable under the Option Plan by reason of any stock dividend, stock
split, recapitalization or other similar transaction effected without the
receipt of consideration that increases the number of the Registrant's
outstanding shares of Common Stock.
(2) The Purchase Plan provides for an annual increase in the number of shares
of the Registrant's Common Stock reserved and available for issuance under
the Purchase Plan equal to the lesser of 200,000 shares, or 1.5% of the
Registrant's Common Stock outstanding as of the last business day preceding
the first day of such fiscal year or such lesser number of shares that the
Board of Directors may determine, plus any shares reacquired by the
Registrant during the last fiscal year. Pursuant to Rule 416(a) of the
Securities Act, this Registration Statement shall also cover any additional
shares of the Registrant's Common Stock that become issuable under the
Purchase Plan by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt
of consideration that increases the number of the Registrant's outstanding
shares of Common Stock.
(3) Estimated solely for the purpose of computing the registration fee required
by Section 6(b) of the Securities Act pursuant to Rules 457(h) and 457(c)
under the Securities Act, based upon the average between the high and low
prices of the Common Stock as reported on the Nasdaq National Market on
July 27, 1999.
(4) Estimated solely for the purpose of computing the registration fee required
by Section 6(b) of the Securities Act pursuant to Rules 457(h) and 457(c)
under the Securities Act, based upon 85% of the average between the high
and low prices of the Common Stock as reported on the Nasdaq National
Market on July 27, 1999.
(5) Pursuant to an Agreement and Plan of Reorganization dated as of June 2,
1999 (the "Convoy Agreement") among the Registrant, Cobra Acquisition
Corporation, a Delaware Corporation and wholly owned subsidiary of the
Registrant, and Convoy Corporation, a Delaware corporation ("Convoy"), the
Registrant assumed all of the outstanding options to purchase common stock
of Convoy under its 1997 Stock Option Plan (the "Convoy Assumed Options"),
with appropriate adjustments to the number of shares and exercise price of
each Convoy Assumed Option to reflect the ratio at which the common stock
of Convoy was converted into common stock of the Registrant under the
Agreement.
(6) Pursuant to an Agreement and Plan of Reorganization dated as of June 15,
1999 (the "Microscript Agreement") (as amended effective June 28, 1999)
among the Registrant, NEON Acquisition Corporation, a Delaware Corporation
and wholly owned subsidiary of the Registrant, and Microscript, Inc., a
Massachusetts corporation ("Microscript"), the Registrant assumed all of
the outstanding options to purchase common stock of Microscript under its
1997 Stock Option Plan (the "Microscript Assumed Options"), with
appropriate adjustments to the number of shares and exercise price of each
Microscript Assumed Option to reflect the ratio at which the common stock
of Microscript was converted into common stock of the Registrant under the
Agreement.
<PAGE> 3
NEW ERA OF NETWORKS, INC.
REGISTRATION STATEMENT ON FORM S-8
PART I
INFORMATION REQUIRED IN THE PROSPECTUS
ITEM 1. PLAN INFORMATION
The documents containing the information specified in this Item 1 will
be sent or given to employees, officers, directors or others as specified by
Rule 428(b)(1). In accordance with the rules and regulations of the Securities
and Exchange Commission (the "Commission") and the instructions to Form S-8,
such documents are not being filed with the Commission either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424.
ITEM 2. REGISTRATION INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
The documents containing the information specified in this Item 2 will
be sent or given to employees, officers, directors or others as specified by
Rule 428(b)(1). In accordance with the rules and regulations of the Commission
and the instructions to Form S-8, such documents are not being filed with the
Commission either as part of this Registration Statement or as prospectuses or
prospectus supplements pursuant to Rule 424.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents and information previously filed with the
Securities and Exchange Commission (the "Commission") by New Era of Networks,
Inc. (the "Registrant") are hereby incorporated herein by reference:
1. The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 filed with the Commission on
March 30, 1999 pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act");
2. The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1999 filed pursuant to the Exchange
Act;
3. The description of Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A dated June 4,
1997, filed pursuant to Section 12(g) of the Exchange Act
which was declared effective on June 17, 1997, including any
amendment or report filed for the purpose of updating such
description;
4. The description of Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A filed with the
Commission on August 14, 1998, as amended by the Company's
Registration Statement on Form 8-A/A, filed with the
Commission on August 17, 1998, pursuant to Section 12(g) of
the Exchange Act, including any amendment or report filed for
the purpose of updating such description;
5. The Registrant's Current Report on Form 8-K filed on June 24,
1999;
6. The Registrant's Current Report on Form 8-K filed on July 13,
1999; and
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<PAGE> 4
In addition, all documents subsequently filed with the Commission by
the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act on or after the date of this Registration Statement and prior to the filing
of a post-effective amendment which indicates that all securities offered
hereunder have been sold or which deregisters all securities then remaining
unsold under this Registration Statement, shall be deemed to be incorporated by
reference in this Registration Statement and to be part hereof from the date of
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such earlier statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
authorizes a court to award, or a corporation's Board of Directors to grant,
indemnity to directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. Article
VII of the Registrant's Certificate of Incorporation and Article VI of the
Registrant's Bylaws provide for mandatory indemnifications of its directors and
officers and permissible indemnifications of employees and other agents to the
maximum extent permitted by the General Corporation Law of the State of
Delaware. In addition, the Registrant has entered into indemnification
agreements with its officers and directors. Reference is also made to Section 11
of the Registration Rights Agreement between the Registrant and certain parties
named therein dated May 9, 1995, which provides for the cross indemnification of
certain of the Company's stockholders and the Company, its officers and
directors against certain liabilities under the Securities Act or otherwise.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.1 1995 Stock Option Plan, as amended.
4.2 1997 Employee Stock Purchase Plan, as amended.
4.3 Convoy Corporation 1997 Stock Option Plan.
4.4 Microscript, Inc. 1997 Stock Option Plan.
5.1 Opinion of counsel as to legality of securities being registered.
23.1 Consent of counsel (contained in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
24.1 Powers of Attorney (see page 5).
</TABLE>
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<PAGE> 5
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commissioner by the Registrant pursuant to section 13 or section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
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<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Englewood, State of Colorado, on this 29th day
of July 1999.
NEW ERA OF NETWORKS, INC.
By: /s/ Leonard M. Goldstein
----------------------------------------
Leonard M. Goldstein
Senior Vice President and Senior Counsel
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints George F. (Rick) Adam, Jr. and
Leonard M. Goldstein, and each of them, his or her true and lawful agent, proxy
and attorney-in-fact, with full power of substitution and resubstitution, for
him or her and in his or her name, place and stead, in any and all capacities,
to (i) act on, sign and file with the Securities and Exchange Commission any and
all amendments (including post-effective amendments) to this Registration
Statement on Form S-8 together with all schedules and exhibits thereto (ii) act
on, sign and file such certificates, instruments, agreements and other documents
as may be necessary or appropriate in connection therewith, and (iii) take any
and all actions that may be necessary or appropriate to be done, as fully for
all intents and purposes as he or she might or could do in person, hereby
approving, ratifying and confirming all that such agent, proxy and
attorney-in-fact or any of his substitutes may lawfully do or cause to be done
by virtue thereof.
IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, THIS REGISTRATION STATEMENT HAS BEEN SIGNED ON THIS 29TH DAY OF JULY
1999 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<S> <C>
/s/ George F. Adam, Jr.
--------------------------------- Chairman of the Board, Chief Executive Officer and Director (principal
George F. Adam, Jr. executive officer)
/s/ Patrick J. Fortune
--------------------------------- President, Chief Operating Officer and Director
Patrick J. Fortune
/s/ Stephen E. Webb
--------------------------------- Senior Vice President and Chief Financial Officer (principal financial
Stephen E. Webb officer)
/s/ Thomas P. Wilkes
--------------------------------- Vice President and Corporate Controller (principal accounting officer)
Thomas P. Wilkas
/s/ Harold A. Piskiel
--------------------------------- Executive Vice President, Chief Technology Officer and Director
Harold A. Piskiel
/s/ Steven Lazarus
--------------------------------- Director
Steven Lazarus
/s/ Mark L. Gordon
--------------------------------- Director
Mark L. Gordon
/s/ Elisabeth W. Ireland
--------------------------------- Director
Elisabeth W. Ireland
/s/ Joseph E. Kasputys
--------------------------------- Director
Joseph E. Kasputys
</TABLE>
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<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.1 1995 Stock Option Plan, as amended.
4.2 1997 Employee Stock Purchase Plan, as amended.
4.3 Convoy Corporation 1997 Stock Option Plan.
4.4 Microscript, Inc. 1997 Stock Option Plan.
5.1 Opinion of counsel as to legality of securities being registered.
23.1 Consent of counsel (contained in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
24.1 Powers of Attorney (see page 5).
</TABLE>
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<PAGE> 1
EXHIBIT 4.1
NEW ERA OF NETWORKS, INC.
1995 STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Stock Plan are:
o to attract and retain the best available personnel for
positions of substantial responsibility,
o to provide additional incentive to Employees, Directors and
Consultants, and
o to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means the commission of any act affecting employment
which involves (1) dishonesty, fraud or criminal conduct by Optionee, (2)
Optionee's knowing and willful violation of a material Company written policy or
a lawful direction by an authorized executive officer or the Board, (3)
Optionee's engaging in any activity in competition with the Company or its
subsidiaries in a material manner (excluding a less than 5% investment in any
public company), or (4) Optionee's knowing unauthorized disclosure of
confidential material, proprietary information or trade secrets of the Company.
<PAGE> 2
(e) "Change in Control" means the occurrence of any of the
following events:
(i) The stockholders of the Company approve a merger
or consolidation of the Company with any other corporation or entity, other than
a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
the Company's assets.
(ii) The acquisition by any Person or Group of Persons as
Beneficial Owner (as such terms are defined in
the Securities Exchange Act of 1934, as amended), directly or indirectly, other
than George F. (Rick) Adam, Jr., of securities of the Company representing a
majority of the total voting power represented by the Company's then outstanding
voting securities.
(iii) A majority of the Board of Directors of the
Company in office at the beginning of any thirty-six (36) month period is
replaced during the course of such thirty-six (36) month period (other than by
voluntary resignation of individual directors in the ordinary course of
business) and such replacement was not initiated by the Board of Directors of
the Company as constituted at the beginning of such thirty-six (36) month
period.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.
(h) "Common Stock" means the Common Stock of the Company.
(i) "Company" means New Era of Networks, Inc., a Delaware
corporation.
(j) "Constructive Termination" means only the following:
(i) the continued assignment to Optionee of any duties
or the continued material reduction of Optionee's duties, either of which is
materially inconsistent with the level of Optionee's position with the Company.
(ii) a material reduction in Optionee's salary, other
than any such reduction which is part of, and generally consistent with, a
general reduction of officer salaries;
(iii) a material reduction by the Company in the kind or
level of Optionee benefits (other than salary and bonus) to which Optionee is
entitled immediately prior to such reduction with the result that Optionee's
overall benefits package (other than salary and bonus) is materially reduced
(other than any such reduction applicable to officers of the Company generally);
or
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<PAGE> 3
(iv) the relocation of Optionee's principal place for the
rendering of the services to be provided by him
hereunder to a location more than fifty (50) miles from the present location of
the principal executive office of the Company;
provided that none of the foregoing shall constitute a Constructive Termination
to the extent Optionee has agreed thereto.
(k) "Consultant" means any person, including an advisor, engaged
by the Company or a Parent or Subsidiary to render services to such entity.
(l) "Director" means a member of the Board.
(m) "Disability" means total and permanent disability as defined
in Section 22(e)(3) of the Code.
(n) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
(o) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(p) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system,
including without limitation the Nasdaq National Market or The Nasdaq SmallCap
Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or system for the last market trading day prior to the
time of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not
reported, the Fair Market Value of a Share of Common Stock shall be the mean
between the high bid and low asked prices for the Common Stock on the last
market trading day prior to the day of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable;
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<PAGE> 4
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value shall be
determined in good faith by the Administrator.
(q) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
(r) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(s) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option or Stock
Purchase Right grant. The Notice of Grant is part of the Option Agreement.
(t) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(u) "Option" means a stock option granted pursuant to the Plan.
(v) "Option Agreement" means an agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(w) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(x) "Optioned Stock" means the Common Stock subject to an Option
or Stock Purchase Right.
(y) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(z) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(aa) "Plan" means this 1995 Stock Option Plan.
(bb) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 below.
(cc) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right.
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<PAGE> 5
The Restricted Stock Purchase Agreement is subject to the terms and conditions
of the Plan and the Notice of Grant.
(dd) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(ee) "Section 16(b)" means Section 16(b) of the Exchange Act.
(ff) "Service Provider" means an Employee, Director or
Consultant.
(gg) "Share" means a share of the Common Stock, as adjusted
in accordance with Section 13 of the Plan.
(hh) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ii) "Subsidiary" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 5,666,666 Shares (which number gives effect to a two for one
forward split of the Common Stock approved by the Board in December 1998), plus
an annual increase in the years 1999, 2000 and 2001, to be made on the
expiration of each fiscal year following the date of the Annual Meeting in an
amount equal to the lesser of (i) 700,000 shares, (ii) 3% of the outstanding
shares of the Company's Common Stock on such date or (iii) a lesser amount as
determined Board of Directors.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated); provided, however, that Shares that have actually been issued
under the Plan, whether upon exercise of an Option or Right, shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by the
Company at their original purchase price, such Shares shall become available for
future grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be
administered by different Committees with respect to different groups of Service
Providers.
(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the
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<PAGE> 6
meaning of Section 162(m) of the Code, the Plan shall be administered by a
Committee of two or more "outside directors" within the meaning of Section
162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3,
the transactions contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3.
(iv) Other Administration. Other than as provided above,
the Plan shall be administered by (A) the Board or (B) a Committee, which
committee shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and
Stock Purchase Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock
to be covered by each Option and Stock Purchase
Right granted hereunder;
(iv) to approve forms of agreement for use under the
Plan;
(v) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Option or Stock Purchase Right
granted hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Options or Stock Purchase Rights may
be exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or Stock Purchase Right or the shares of Common
Stock relating thereto, based in each case on such factors as the Administrator,
in its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option or Stock
Purchase Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall have
declined since the date the Option or Stock Purchase Right was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan;
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<PAGE> 7
(ix) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
(x) to modify or amend each Option or Stock Purchase
Right (subject to Section 15(c) of the Plan), including the discretionary
authority to extend the post-termination exercisability period of Options longer
than is otherwise provided for in the Plan;
(xi) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined. All elections by an
Optionee to have Shares withheld for this purpose shall be made in such form and
under such conditions as the Administrator may deem necessary or advisable;
(xii) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;
(xiii) to make all other determinations deemed necessary
or advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights
maybe granted to Service Providers. Incentive Stock Options may be granted only
to Employees.
6. Limitations.
(a) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with
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<PAGE> 8
the Company, nor shall they interfere in any way with the Optionee's right or
the Company's right to terminate such relationship at any time, with or without
cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal
year of the Company, Options to purchase more than 266,666 Shares (which number
gives effect to a 2 for 1 forward split of the Common Stock approved by the
Board in December 1998).
(ii) In connection with his or her initial service, a
Service Provider may be granted Options to purchase up to an additional 266,666
Shares which shall not count against the limit set forth in subsection (i) above
(which number gives effect to a 2 for 1 forward split of the Common Stock
approved by the Board in December 1998).
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 13.
(iv) If an Option is cancelled in the same fiscal year of
the Company in which it was granted (other than in connection with a transaction
described in Section 13), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall
become effective upon its adoption by the Board. It shall continue in effect for
a term of ten (10) years unless terminated earlier under Section 15 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
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<PAGE> 9
(A) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price of less than 100% of the Fair Market
Value per Share on the date of grant pursuant to a merger or other corporate
transaction.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;
(v) consideration received by the Company under a
cashless exercise program implemented by the Company in
connection with the Plan;
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<PAGE> 10
(vi) a reduction in the amount of any Company liability
to the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of
payment; or
(viii) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
(b) Termination of Relationship as a Service Provider. Subject to
Section 13(c), if an Optionee ceases to be a Service Provider, other than upon
the Optionee's death or Disability, the Optionee may exercise his or her Option
within such period of time as is specified in the Option Agreement to the extent
that the Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for thirty (30) days following the Optionee's termination.
If, on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified
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<PAGE> 11
by the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of
death. In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option
shall immediately revert to the Plan. The Option may be exercised by the
executor or administrator of the Optionee's estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee's will or the laws of descent
or distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically, by means of a Notice of Grant,
of the terms, conditions and restrictions related to the offer, including the
number of Shares that the offeree shall be entitled to purchase, the price to be
paid, and the time within which the offeree must accept such offer. The offer
shall be accepted by execution of a Restricted Stock Purchase Agreement in the
form determined by the Administrator.
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<PAGE> 12
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.
12. Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. Adjustments Upon Changes in Capitalization, Dissolution or Change in
Control.
(a) Changes in Capitalization. Subject to any required action by
the stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.
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<PAGE> 13
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse
as to all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not been
previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
(c) Change in Control.
(i) Unless otherwise provided for in the individual stock
option agreement, in the event of a Change in Control as described in Section
2(e)(i), then each outstanding Option may be assumed or an equivalent option may
be substituted by such successor corporation or a Parent or Subsidiary of such
successor corporation. In the event the successor corporation refuses to assume
or substitute for the Option, the Optionee shall fully vest in and have the
right to exercise the Option as to all of the Optioned Stock, including such
Shares as to which the Option would not otherwise be vested or exercisable. If
an Option becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a Change in Control, the Administrator shall notify
the Optionee that the Option is fully vested and exercisable for a period of
fifteen (15) days from the date of such notice and the Option shall be canceled
upon the expiration of such period. For the purposes of this paragraph, the
Option shall be considered assumed if, following the Change in Control, the
Option confers the right to purchase or receive, for each Share of Optioned
Stock subject to the Option immediately prior to the Change in Control, the
consideration (whether stock, cash, or other securities or property) received in
the Change of Control event by holders of Common Stock for each Share held on
the effective date of the transaction (and if the holders are offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding Shares). If such consideration received in the Change of
Control event is not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option,
for each Share of Optioned Stock subject to the Option, to be solely common
stock of the successor corporation or its Parent equal in fair market value to
the per share consideration received by holders of Common Stock in the
outstanding Change in Control; and
(ii) Upon any termination of the Optionee's status as a
Service Provider without Cause or as a result of Optionee's Constructive
Termination at any time within one (1) year after a Change in Control, each
Option then held by an Optionee (including any assumed or substituted option
upon the Change in Control) shall immediately become vested and exercisable with
respect to all shares which would otherwise become vested and exercisable within
one (1) year of the date of such termination of the Optionee's status as a
Service Provider.
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<PAGE> 14
14. Date of Grant. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to options granted under the
Plan prior to the date of such termination.
16. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of
an Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.
17 Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
18 Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
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<PAGE> 15
19 Stockholder Approval. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted. Such stockholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
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<PAGE> 16
NEW ERA OF NETWORKS, INC.
1995 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number _________________________
Date of Grant _________________________
Vesting Commencement Date _________________________
Exercise Price per Share $________________________
Total Number of Shares Granted _________________________
Total Exercise Price $_________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _________________________
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with
the following schedule:
One-sixth (1/6) of the Shares subject to the Option shall vest one (1)
year after the Vesting Commencement Date, an additional one-third (1/3) of the
Shares subject to the Option shall vest two (2) years after the Vesting
Commencement Date and the last one half (1/2) of the Shares subject to the
Option shall vest three (3) years after the Vesting Commencement Date, subject
to the Optionee continuing to be a Service Provider on such dates.
<PAGE> 17
Termination Period:
This Option may be exercised for thirty (30) days after Optionee ceases
to be a Service Provider. Upon the death or Disability of the Optionee, this
Option may be exercised for such longer period as provided in the Plan. In no
event shall this Option be exercised later than the Term/Expiration Date as
provided above.
II. AGREEMENT
1 Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 15(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
2 Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of
an exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by such aggregate Exercise
Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.
<PAGE> 18
3 Method of Payment. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash; or
(b) check; or
(c) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan; or
(d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares; or
4 Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5 Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6 Tax Consequences. Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) Exercising the Option.
(i) Nonstatutory Stock Option. The Optionee may incur
regular federal income tax liability upon exercise of a NSO. The Optionee will
be treated as having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the Fair Market Value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price. If
the Optionee is an Employee or a former Employee, the Company will be required
to withhold from his or her compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
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<PAGE> 19
(ii) Incentive Stock Option. If this Option qualifies as
an ISO, the Optionee will have no regular federal income tax liability upon its
exercise, although the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price will be
treated as an adjustment to alternative minimum taxable income for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of
exercise. In the event that the Optionee ceases to be an Employee but remains a
Service Provider, any Incentive Stock Option of the Optionee that remains
unexercised shall cease to qualify as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at least
one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least
one year after exercise and two years after the
grant date, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes. If the Optionee disposes
of ISO Shares within one year after exercise or two years after the grant date,
any gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the excess, if any, of the
lesser of (A) the difference between the Fair Market Value of the Shares
acquired on the date of exercise and the aggregate Exercise Price, or (B) the
difference between the sale price of such Shares and the aggregate Exercise
Price. Any additional gain will be taxed as capital gain, short-term or
long-term depending on the period that the ISO Shares were held.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
7 Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws, but not
the choice of law rules, of Colorado.
-4-
<PAGE> 20
8 NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: NEW ERA OF NETWORKS, INC.
- ----------------------------------- ---------------------------------------
Signature By
- ------------------------------------ --------------------------------------
Print Name Title
- ------------------------------------
Residence Address
- ------------------------------------
-5-
<PAGE> 21
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of the Plan and this Option Agreement. In consideration of
the Company's granting his or her spouse the right to purchase Shares as set
forth in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
---------------------------------------
Spouse of Optionee
-6-
<PAGE> 22
EXHIBIT A
NEW ERA OF NETWORKS, INC.
1995 STOCK OPTION PLAN
EXERCISE NOTICE
New Era of Networks, Inc.
7400 East Orchard Road
Suite 230
Englewood, CO 80111
Attention: [Title]
1 Exercise of Option. Effective as of today, ________________, 199__,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of New Era of Networks, Inc. (the "Company")
under and pursuant to the 1995 Stock Option Plan (the "Plan") and the Stock
Option Agreement dated , 19___ (the "Option Agreement"). The purchase price for
the Shares shall be $ , as required by the Option Agreement.
2 Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3 Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4 Rights as Stockholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.
5 Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
<PAGE> 23
6 Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
Colorado.
Submitted by: Accepted by:
PURCHASER: NEW ERA OF NETWORKS, INC.
- ---------------------------------- -------------------------------------
Signature By
- ---------------------------------- -------------------------------------
Print Name Title
---------------------------
Date Received
Address: Address:
New Era of Networks, Inc.
- --------------------------------- 7400 East Orchard Road
Suite 230
- --------------------------------- Englewood, CO 80111
-2-
<PAGE> 24
NEW ERA OF NETWORKS, INC.
1995 STOCK OPTION PLAN
NOTICE OF GRANT OF STOCK PURCHASE RIGHT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Notice of Grant.
Patrick Fortune
- -----------------------
- -----------------------
You have been granted the right to purchase Common Stock of the Company,
subject to the Company's Repurchase Option and your ongoing status as a Service
Provider (as described in the Plan and the attached Restricted Stock Purchase
Agreement), as follows:
Grant Number _________________________
Date of Grant _________________________
Price Per Share $________________________
Total Number of Shares Subject _________________________
to This Stock Purchase Right
Expiration Date: _________________________
YOU MUST EXERCISE THIS STOCK PURCHASE RIGHT BEFORE THE EXPIRATION DATE
OR IT WILL TERMINATE AND YOU WILL HAVE NO FURTHER RIGHT TO PURCHASE THE SHARES.
By your signature and the signature of the Company's representative below, you
and the Company agree that this Stock Purchase Right is granted under and
governed by the terms and conditions of the 1995 Stock Option Plan and the
Restricted Stock Purchase Agreement, attached hereto as Exhibit A-1, both of
which are made a part of this document. You further agree to execute the
attached Restricted Stock Purchase Agreement as a condition to purchasing any
shares under this Stock Purchase Right.
GRANTEE: NEW ERA OF NETWORKS, INC.
- --------------------------- --------------------------------
Signature By
Patrick Fortune
- --------------------------- ---------------------------------
Print Name Title
<PAGE> 25
EXHIBIT A-1
NEW ERA OF NETWORKS, INC.
1995 STOCK OPTION PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Restricted Stock Purchase Agreement.
WHEREAS the Purchaser named in the Notice of Grant, (the "Purchaser") is
an Service Provider, and the Purchaser's continued participation is considered
by the Company to be important for the Company's continued growth; and
WHEREAS in order to give the Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for the Purchaser to participate
in the affairs of the Company, the Administrator has granted to the Purchaser a
Stock Purchase Right subject to the terms and conditions of the Plan and the
Notice of Grant, which are incorporated herein by reference, and pursuant to
this Restricted Stock Purchase Agreement (the "Agreement").
NOW THEREFORE, the parties agree as follows:
1 Sale of Stock. The Company hereby agrees to sell to the Purchaser and
the Purchaser hereby agrees to purchase shares of the Company's Common Stock
(the "Shares"), at the per Share purchase price and as otherwise described in
the Notice of Grant.
2 Payment of Purchase Price. The purchase price for the Shares may be
paid by delivery to the Company at the time of execution of this Agreement of
cash, a check, or some combination thereof.
3 Repurchase Option.
a In the event the Purchaser ceases to be a Service Provider for
any or no reason (including death or disability) before all of the Shares are
released from the Company's Repurchase Option (see Section 4), the Company
shall, upon the date of such termination (as reasonably fixed and determined by
the Company) have an irrevocable, exclusive option (the "Repurchase Option") for
a period of sixty (60) days from such date to repurchase up to that number of
shares which constitute the Unreleased Shares (as defined in Section 4) at the
original purchase price per share (the "Repurchase Price"). The Repurchase
Option shall be exercised by the Company by delivering written notice to the
Purchaser or the Purchaser's executor (with a copy to the Escrow Holder) AND, at
the Company's option, (i) by delivering to the Purchaser or the Purchaser's
executor a check in the amount of the aggregate Repurchase Price, or (ii) by
cancelling an amount of the Purchaser's
<PAGE> 26
indebtedness to the Company equal to the aggregate Repurchase Price, or (iii) by
a combination of (i) and (ii) so that the combined payment and cancellation of
indebtedness equals the aggregate Repurchase Price. Upon delivery of such notice
and the payment of the aggregate Repurchase Price, the Company shall become the
legal and beneficial owner of the Shares being repurchased and all rights and
interests therein or relating thereto, and the Company shall have the right to
retain and transfer to its own name the number of Shares being repurchased by
the Company.
b Whenever the Company shall have the right to repurchase Shares
hereunder, the Company may designate and assign one or more employees, officers,
directors or stockholders of the Company or other persons or organizations to
exercise all or a part of the Company's purchase rights under this Agreement and
purchase all or a part of such Shares. If the Fair Market Value of the Shares to
be repurchased on the date of such designation or assignment (the "Repurchase
FMV") exceeds the aggregate Repurchase Price of such Shares, then each such
designee or assignee shall pay the Company cash equal to the difference between
the Repurchase FMV and the aggregate Repurchase Price of such Shares.
4 Release of Shares From Repurchase Option.
a One-sixth (1/6) of the Shares shall be released from the
Company's Repurchase Option one year after the Date of Grant, two sixths (2/6)
of the Shares shall be released from the Company's Repurchase Option two years
after the Date of Grant, and three sixths (3/6) of the Shares shall be released
form the Company's Repurchase Option three years after the Date of Grant,
provided that the Purchaser does not cease to be a Service Provider prior to the
date of any such release.
b Any of the Shares that have not yet been released from the
Repurchase Option are referred to herein as "Unreleased Shares."
c The Shares that have been released from the Repurchase Option
shall be delivered to the Purchaser at the Purchaser's request (see Section 6).
5 Restriction on Transfer. Except for the escrow described in Section 6
or the transfer of the Shares to the Company or its assignees contemplated by
this Agreement, none of the Shares or any beneficial interest therein shall be
transferred, encumbered or otherwise disposed of in any way until such Shares
are released from the Company's Repurchase Option in accordance with the
provisions of this Agreement, other than by will or the laws of descent and
distribution.
6 Escrow of Shares.
a To ensure the availability for delivery of the Purchaser's
Unreleased Shares upon repurchase by the Company pursuant to the Repurchase
Option, the Purchaser shall, upon execution of this Agreement, deliver and
deposit with an escrow holder designated by the Company (the "Escrow Holder")
the share certificates representing the Unreleased Shares, together with the
stock assignment duly endorsed in blank, attached hereto as Exhibit A-2. The
Unreleased Shares and stock
-2-
<PAGE> 27
assignment shall be held by the Escrow Holder, pursuant to the Joint Escrow
Instructions of the Company and Purchaser attached hereto as Exhibit A-3, until
such time as the Company's Repurchase Option expires. As a further condition to
the Company's obligations under this Agreement, the Company may require the
spouse of Purchaser, if any, to execute and deliver to the Company the Consent
of Spouse attached hereto as Exhibit A-4.
b The Escrow Holder shall not be liable for any act it may do or
omit to do with respect to holding the Unreleased Shares in escrow while acting
in good faith and in the exercise of its judgment.
c If the Company or any assignee exercises the Repurchase Option
hereunder, the Escrow Holder, upon receipt of written notice of such exercise
from the proposed transferee, shall take all steps necessary to accomplish such
transfer.
d When the Repurchase Option has been exercised or expires
unexercised or a portion of the Shares has been released from the Repurchase
Option, upon request the Escrow Holder shall promptly cause a new certificate to
be issued for the released Shares and shall deliver the certificate to the
Company or the Purchaser, as the case may be.
e Subject to the terms hereof, the Purchaser shall have all the
rights of a stockholder with respect to the Shares while they are held in
escrow, including without limitation, the right to vote the Shares and to
receive any cash dividends declared thereon. If, from time to time during the
term of the Repurchase Option, there is (i) any stock dividend, stock split or
other change in the Shares, or (ii) any merger or sale of all or substantially
all of the assets or other acquisition of the Company, any and all new,
substituted or additional securities to which the Purchaser is entitled by
reason of the Purchaser's ownership of the Shares shall be immediately subject
to this escrow, deposited with the Escrow Holder and included thereafter as
"Shares" for purposes of this Agreement and the Repurchase Option.
7 Legends. The share certificate evidencing the Shares, if any, issued
hereunder shall be endorsed with the following legend (in addition to any legend
required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.
8 Adjustment for Stock Split. All references to the number of Shares and
the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.
-3-
<PAGE> 28
9 Tax Consequences. The Purchaser has reviewed with the Purchaser's own
tax advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. The Purchaser is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. The Purchaser understands that the Purchaser
(and not the Company) shall be responsible for the Purchaser's own tax liability
that may arise as a result of the transactions contemplated by this Agreement.
The Purchaser understands that Section 83 of the Internal Revenue Code of 1986,
as amended (the "Code"), taxes as ordinary income the difference between the
purchase price for the Shares and the Fair Market Value of the Shares as of the
date any restrictions on the Shares lapse. In this context, "restriction"
includes the right of the Company to buy back the Shares pursuant to the
Repurchase Option. The Purchaser understands that the Purchaser may elect to be
taxed at the time the Shares are purchased rather than when and as the
Repurchase Option expires by filing an election under Section 83(b) of the Code
with the IRS within 30 days from the date of purchase. The form for making this
election is attached as Exhibit A-5 hereto.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON THE PURCHASER'S BEHALF.
10 General Provisions.
a This Agreement shall be governed by the internal substantive
laws, but not the choice of law rules of Colorado. This Agreement, subject to
the terms and conditions of the Plan and the Notice of Grant, represents the
entire agreement between the parties with respect to the purchase of the Shares
by the Purchaser. Subject to Section 15(c) of the Plan, in the event of a
conflict between the terms and conditions of the Plan and the terms and
conditions of this Agreement, the terms and conditions of the Plan shall
prevail. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Agreement.
b Any notice, demand or request required or permitted to be given
by either the Company or the Purchaser pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally or
deposited in the U.S. mail, First Class with postage prepaid, and addressed to
the parties at the addresses of the parties set forth at the end of this
Agreement or such other address as a party may request by notifying the other in
writing.
Any notice to the Escrow Holder shall be sent to the Company's
address with a copy to the other party hereto.
c The rights of the Company under this Agreement shall be
transferable to any one or more persons or entities, and all covenants and
agreements hereunder shall inure to the benefit of, and be enforceable by the
Company's successors and assigns. The rights and obligations of the Purchaser
under this Agreement may only be assigned with the prior written consent of the
Company.
-4-
<PAGE> 29
d Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
nor prevent that party from thereafter enforcing any other provision of this
Agreement. The rights granted both parties hereunder are cumulative and shall
not constitute a waiver of either party's right to assert any other legal remedy
available to it.
e The Purchaser agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
f PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO SECTION 4 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED OR
PURCHASING SHARES HEREUNDER). PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT
THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE
SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT
ALL, AND SHALL NOT INTERFERE WITH PURCHASER'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE PURCHASER'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
By Purchaser's signature below, Purchaser represents that he or she is
familiar with the terms and provisions of the Plan, and hereby accepts this
Agreement subject to all of the terms and provisions thereof. Purchaser has
reviewed the Plan and this Agreement in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Agreement and fully
understands all provisions of this Agreement. Purchaser agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Agreement.
Purchaser further agrees to notify the Company upon any change in the residence
indicated in the Notice of Grant.
DATED: , 1999
--------------------
PURCHASER: NEW ERA OF NETWORKS, INC.
- ------------------------------ ----------------------------------
Signature By
Patrick Fortune
- ------------------------------- ----------------------------------
Print Name Title
-5-
<PAGE> 30
EXHIBIT A-2
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, __________________________, hereby sell, assign
and transfer unto (__________) shares of the Common Stock of New Era of
Networks, Inc. standing in my name of the books of said corporation represented
by Certificate No. _____ herewith and do hereby irrevocably constitute and
appoint to transfer the said stock on the books of the within named corporation
with full power of substitution in the premises.
This Stock Assignment may be used only in accordance with the Restricted
Stock Purchase Agreement (the "Agreement") between________________________ and
the undersigned dated ______________, 19__.
Dated: _______________, 19
Signature:______________________________
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise the
Repurchase Option, as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
<PAGE> 31
EXHIBIT A-3
JOINT ESCROW INSTRUCTIONS
____ ___, 1999
Corporate Secretary
New Era of Networks, Inc.
7400 East Orchard Road
Suite 230
Englewood, CO 80111
Dear :
------------------
As Escrow Agent for both New Era of Networks, Inc., a Delaware
corporation (the "Company"), and the undersigned purchaser of stock of the
Company (the "Purchaser"), you are hereby authorized and directed to hold the
documents delivered to you pursuant to the terms of that certain Restricted
Stock Purchase Agreement ("Agreement") between the Company and the undersigned,
in accordance with the following instructions:
1 In the event the Company and/or any assignee of the Company (referred
to collectively as the "Company") exercises the Company's Repurchase Option set
forth in the Agreement, the Company shall give to Purchaser and you a written
notice specifying the number of shares of stock to be purchased, the purchase
price, and the time for a closing hereunder at the principal office of the
Company. Purchaser and the Company hereby irrevocably authorize and direct you
to close the transaction contemplated by such notice in accordance with the
terms of said notice.
2 At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company's Repurchase Option.
3 Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities. Subject to the provisions of this paragraph 3, Purchaser shall
exercise all rights and privileges of a stockholder of the Company while the
stock is held by you.
<PAGE> 32
4 Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's Repurchase Option has been exercised, you
shall deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's Repurchase Option.
Within 90 days after Purchaser ceases to be a Service Provider, you shall
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's Repurchase
Option.
5 If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.
6 Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7 You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.
8 You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
9 You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10 You shall not be liable for the outlawing of any rights under the
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11 You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.
12 Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be an officer or agent of the Company or if you shall resign
by written notice to each party. In the event of any such termination, the
Company shall appoint a successor Escrow Agent.
-2-
<PAGE> 33
13 If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14 It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15 Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.
COMPANY: New Era of Networks, Inc.
7400 East Orchard Road
Suite 230
Englewood, CO 80111
PURCHASER:
--------------------------------
--------------------------------
--------------------------------
ESCROW AGENT: Corporate Secretary
New Era of Networks, Inc.
7400 East Orchard Road
Suite 230
Englewood, CO 80111
16 By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
17 This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.
-3-
<PAGE> 34
18 These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the internal substantive laws, but not the
choice of law rules, of Colorado.
Very truly yours,
NEW ERA OF NETWORKS, INC.
-------------------------------------
By
-------------------------------------
Title
PURCHASER:
-------------------------------------
Signature
-------------------------------------
Print Name
ESCROW AGENT:
- -------------------------------------
Corporate Secretary
-4-
<PAGE> 35
EXHIBIT A-4
CONSENT OF SPOUSE
I, ____________________, spouse of ___________________, have read and
approve the foregoing Restricted Stock Purchase Agreement (the "Agreement"). In
consideration of the Company's grant to my spouse of the right to purchase
shares of New Era of Networks, Inc., as set forth in the Agreement, I hereby
appoint my spouse as my attorney-in-fact in respect to the exercise of any
rights under the Agreement and agree to be bound by the provisions of the
Agreement insofar as I may have any rights in said Agreement or any shares
issued pursuant thereto under the community property laws or similar laws
relating to marital property in effect in the state of our residence as of the
date of the signing of the foregoing Agreement.
Dated: _______________, 19
------------------------------------------
Signature of Spouse
<PAGE> 36
EXHIBIT A-5
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
for the current taxable year the amount of any compensation taxable to taxpayer
in connection with his or her receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of
the undersigned are as follows:
NAME: TAXPAYER: SPOUSE:
ADDRESS:
IDENTIFICATION NO.: TAXPAYER: SPOUSE:
TAXABLE YEAR:
2. The property with respect to which the election is made is described as
follows: shares (the "Shares") of the Common Stock of New Era of
Networks, Inc. (the "Company").
3. The date on which the property was transferred is: _________, 19__.
4. The property is subject to the following restrictions:
The Shares may be repurchased by the Company, or its assignee, upon
certain events. This right lapses with regard to a portion of the Shares
based on the continued performance of services by the taxpayer over
time.
5. The fair market value at the time of transfer, determined without regard
to any restriction other than a restriction which by its terms will
never lapse, of such property is:
$
---------------.
6. The amount (if any) paid for such property is:
$
---------------.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.
Dated: ___________________, 19____ __________________________________________
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: ___________________, 19____ __________________________________________
Spouse of Taxpayer
<PAGE> 1
EXHIBIT 4.2
NEW ERA OF NETWORKS, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1997 Employee Stock
Purchase Plan of New Era of Networks, Inc.
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company,
or a committee of the Board appointed in accordance with Section 13.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean New Era of Networks, Inc., and any
Designated Subsidiary of the Company.
(e) "Compensation" shall mean all base straight time gross
earnings paid in cash including commissions, overtime, shift premium, incentive
compensation, incentive payments, bonuses and other cash compensation, but
excluding any income received from the exercise of options.
(f) "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of
the Company for tax purposes whose customary employment with the Company is at
least twenty (20) hours per week and more than five (5) months in any calendar
year. For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.
<PAGE> 2
(h) "Enrollment Date" shall mean the first day of each
Offering Period.
(i) "Exercise Date" shall mean the last trading day of each
Purchase Period, if any, or each Offering Period.
(j) "Fair Market Value" shall mean, as of any date, the value
of Common Stock determined as follows:
(1) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Board deems reliable, or;
(2) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;
(3) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board.
(4) For purposes of the Enrollment Date under the
first Offering Period under the Plan, the Fair Market Value shall be the initial
price to the public as set forth in the final Prospectus included within the
registration statement in Form S-1 filed with the Securities and Exchange
Commission for the initial public offering of the Company's Common Stock.
(k) "Offering Period" shall mean the period beginning with the
date an option is granted under the Plan and ending with the date determined by
the Board. During the term of the Plan, the duration of each Offering Period
shall be determined from time to time by the Board, provided that no Offering
Period may exceed twenty-four (24) months in duration. If determined by the
Board, an Offering Period may include one or more Purchase Periods. The first
Offering Period shall begin on the effective date of the Company's initial
public offering of its Common Stock that is registered with the Securities and
Exchange Commission (the "Effective Date") and shall end on the last Trading Day
on or before January 31, 1998.
(l) "Plan" shall mean this Employee Stock Purchase Plan.
(m) "Purchase Price" shall mean an amount equal to 85% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
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<PAGE> 3
(n) "Purchase Period" shall mean the period commencing on an
Enrollment Date or after an Exercise Date and which is of such duration as the
Board shall determine.
(o) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(p) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock
exchanges and the Nasdaq System are open for trading.
3. Eligibility.
(a) Any Employee who shall be employed by the Company on a
given Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) to
the extent that, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own capital stock of the Company and/or hold outstanding options
to purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) to the extent that his or her rights to
purchase stock under all employee stock purchase plans of the Company and its
subsidiaries accrues at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the fair market value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time.
4. Offering and Purchase Periods. The Plan shall be implemented by
consecutive, overlapping Offering Periods, each of which shall be of such
duration (not to exceed 24 months) as the Board shall determine from time to
time in its discretion, and each of which shall consist of such number of
Purchase Periods as the Board shall determine from time to time in its
discretion. The Plan shall continue until terminated in accordance with Section
19 hereof. The initial Offering Period shall commence on the Effective Date and
shall end on the last Trading Day on or before January 31, 1998. Unless
otherwise specified by the Board, Offering Periods subsequent to the initial
Offering Period shall be six months in duration, without any Purchase Periods,
with the second Offering Period commencing on the first Trading Day on or after
February 1, 1998 and ending on the last Trading Day on or before July 31, 1998.
The Board shall have the power to change the duration of Offering Periods
(including the commencement dates thereof) at any time or from time to time, and
shall have the power to implement multiple Purchase Periods within any Offering
Period, provided that (except as the shareholders may otherwise approve) any
such change shall be effected only with respect to Offering Periods commencing
after the date on which the change is made.
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<PAGE> 4
5. Participation.
(a) An eligible Employee may become a participant in the Plan
by completing a subscription agreement authorizing payroll deductions in the
form of Exhibit A to this Plan and filing it with the Company's payroll office
prior to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding ten percent (10%) of the
Compensation which he or she receives on each pay day during the Offering
Period, provided, however, that for purposes of the first Offering Period, the
maximum payroll deduction shall not exceed twenty percent (20%) of the
Compensation which a participant receives during the first Offering Period. The
Board shall have the power to change the payroll deduction rate up to a maximum
rate of twenty percent (20%) at any time or from time to time; provided that
(except as the stockholders may otherwise approve) any such change shall be
effected only with respect to Offering Periods commencing after the date the
change is made.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant may discontinue his or her participation in
the Plan as provided in Section 10 hereof, or may increase or decrease the rate
of his or her payroll deductions during the Offering Period by completing or
filing with the Company a new subscription agreement authorizing a change in
payroll deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to zero percent (0%) at such
time during any Purchase or Offering Period. Payroll deductions shall recommence
at the rate provided in such participant's subscription agreement at the
beginning of the first Offering Period, or, if applicable, first Purchase Period
which is scheduled to end in the following calendar year, unless terminated by
the participant as provided in Section 10 hereof.
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<PAGE> 5
(e) At the time the option is exercised, in whole or in part,
or at the time some or all of the Company's Common Stock issued under the Plan
is disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period,
each eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price. In no event shall an Employee be
permitted to purchase during each Offering Period, or Purchase Period, if
applicable, more than $12,500 worth of Common Stock valued at the Fair Market
Value on the first day of such Offering Period; provided, however, that for the
first Offering Period under the Plan an Employee shall not be permitted to
purchase more than $25,000 worth of Common Stock valued at the Fair Market Value
on the first day of the first Offering Period; and provided further that such
purchase shall be subject to the limitations set forth in Sections 3(b) and 12
hereof. Exercise of the option shall occur as provided in Section 8 hereof,
unless the participant has withdrawn pursuant to Section 10 hereof. The option
shall expire on the last day of the Offering Period.
8. Exercise of Option.
(a) Unless a participant withdraws from the Plan as provided
in Section 10 hereof, his or her option for the purchase of shares shall be
exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Offering Period or, if applicable, Purchase Period subject to earlier withdrawal
by the participant as provided in Section 10 hereof. Any other monies left over
in a participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.
(b) On any given Exercise Date, the number of shares with
respect to which options are to be exercised shall not exceed 100,000 shares
(which number gives effect to a 2 for 1 forward split of the Common Stock
approved by the Board in December 1998); provided, however, for the Exercise
Date of the first Offering Period under the Plan, the number of shares with
respect to which options are to be exercised shall not exceed 133,334 shares
(which number gives effect to a 2
-5-
<PAGE> 6
for 1 forward split of the Common Stock approved by the Board in December 1998).
If, on a given Exercise Date, the number of shares with respect to which options
are to be exercised exceeds the share limit described in this subsection, the
Company shall make a pro rata allocation of the shares remaining available for
purchase in as uniform a manner as shall be practicable and as it shall
determine to be equitable.
9. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of the shares purchased upon exercise of his
or her option.
10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's payroll
deductions credited to his or her account shall be paid to such participant
promptly after receipt of notice of withdrawal and such participant's option for
the Offering Period shall be automatically terminated, and no further payroll
deductions for the purchase of shares shall be made for such Offering Period. If
a participant withdraws from an Offering Period, payroll deductions shall not
resume at the beginning of the succeeding Offering Period unless the participant
delivers to the Company a new subscription agreement.
(b) Upon a participant's ceasing to be an Employee, for any
reason, he or she shall be deemed to have elected to withdraw from the Plan and
the payroll deductions credited to such participant's account during the
Offering Period but not yet used to exercise the option shall be returned to
such participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 14 hereof, and such participant's option shall be
automatically terminated. The preceding sentence notwithstanding, a participant
who receives payment in lieu of notice of termination of employment shall be
treated as continuing to be an Employee for the participant's customary number
of hours per week of employment during the period in which the participant is
subject to such payment in lieu of notice.
(c) A participant's withdrawal from an Offering Period shall
not have any effect upon his or her eligibility to participate in any similar
plan which may hereafter be adopted by the Company or in succeeding Offering
Periods which commence after the termination of the Offering Period from which
the participant withdraws.
11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. Stock.
(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be 633,332 shares
(which number gives effect to a 2
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<PAGE> 7
for 1 forward split of the Common Stock approved by the Board in December 1998),
plus an annual increase to be made on the last day of each fiscal year for the
years 1999, 2000 and 2001, equal to the lesser of (i) 200,000 shares, (ii) 1.5%
of the total number of shares of the Company's Common Stock outstanding on such
date or (iii) such lesser number of shares as the Board of Directors may
determine.
(b) The participant shall have no interest or voting right in
shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan
shall be registered in the name of the participant or in the name of the
participant and his or her spouse.
13. Administration. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a participant
may file a written designation of a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment,
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<PAGE> 8
transfer, pledge or other disposition shall be without effect, except that the
Company may treat such act as an election to withdraw funds from an Offering
Period in accordance with Section 10 hereof.
16. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the Reserves, as well as the price per share
and the number of shares of Common Stock covered by each option under the Plan
which has not yet been exercised, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of shares of Common Stock effected without receipt of consideration by
the Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration". Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Periods shall terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.
(c) Merger or Asset Sale. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, any Offering Periods then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date") and
any Offering Periods then in progress shall end on the New Exercise Date. The
New Exercise Date shall be before the date of the Company's proposed sale or
merger. The Board shall notify each participant in writing, at least ten (10)
business days prior to the New Exercise Date, that the Exercise Date for the
participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.
-8-
<PAGE> 9
19. Amendment or Termination.
(a) The Board may at any time and for any reason terminate or
amend the Plan. Except as provided in Section 18 hereof, no such termination can
affect options previously granted, provided that an Offering Period may be
terminated by the Board on any Exercise Date if the Board determines that the
termination of the Plan is in the best interests of the Company and its
shareholders. Except as provided in Section 18 hereof, no amendment may make any
change in any option theretofore granted which adversely affects the rights of
any participant. To the extent necessary to comply with Section 423 of the Code
(or any successor rule or provision or any other applicable law or regulation),
the Company shall obtain shareholder approval in such a manner and to such a
degree as required.
(b) Without shareholder consent and without regard to whether
any participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
20. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
-9-
<PAGE> 10
22. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 19 hereof.
-10-
<PAGE> 11
EXHIBIT A
NEW ERA OF NETWORKS, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. ________________________ hereby elects to participate in the New Era of
Networks, Inc. 1997 Employee Stock Purchase Plan (the "Employee Stock
Purchase Plan") and subscribes to purchase shares of the Company's
Common Stock in accordance with this Subscription Agreement and the
Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck (i) in the
amount of ____% of my Compensation on each payday for the first
Offering Period (from 0% to 20% for the first Offering Period) and (ii)
in the amount of ______ % of my Compensation on each payday for
subsequent Offering Periods (from 0% to 10%). Such amounts shall be
deducted each payday during the Offering Period in accordance with the
Employee Stock Purchase Plan. (Please note that no fractional
percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is
in all respects subject to the terms of the Plan. I understand that my
ability to exercise the option under this Subscription Agreement is
subject to shareholder approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and spouse only):
---------------------------------------------------------------------.
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<PAGE> 12
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after
the Exercise Date, I will be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares at
the time such shares were purchased by me over the price which I paid
for the shares. I hereby agree to notify the Company in writing within
30 days after the date of any disposition of my shares and I will make
adequate provision for Federal, state or other tax withholding
obligations, if any, which arise upon the disposition of the Common
Stock. The Company may, but will not be obligated to, withhold from my
compensation the amount necessary to meet any applicable withholding
obligation including any withholding necessary to make available to the
Company any tax deductions or benefits attributable to sale or early
disposition of Common Stock by me. If I dispose of such shares at any
time after the expiration of the 2-year and 1-year holding periods, I
understand that I will be treated for federal income tax purposes as
having received income only at the time of such disposition, and that
such income will be taxed as ordinary income only to the extent of an
amount equal to the lesser of (1) the excess of the fair market value
of the shares at the time of such disposition over the purchase price
which I paid for the shares, or (2) 15% of the fair market value of the
shares on the first day of the Offering Period. The remainder of the
gain, if any, recognized on such disposition will be taxed as capital
gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print)__________________________________________________________
(First) (Middle) (Last)
- ------------------------------- -------------------------------------------
Relationship
-------------------------------------------
(Address)
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<PAGE> 13
Employee's Social
Security Number:
------------------------------------
Employee's Address:
------------------------------------
------------------------------------
------------------------------------
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:
-------------------------- --------------------------------------------
Signature of Employee
--------------------------------------------
Spouse's Signature (If beneficiary other
than spouse)
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<PAGE> 14
EXHIBIT B
NEW ERA OF NETWORKS, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the New Era of
Networks, Inc. 1997 Employee Stock Purchase Plan which began on ____________,
19____ (the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
Name and Address of Participant:
--------------------------------
--------------------------------
--------------------------------
Signature:
--------------------------------
Date:
----------------------------
<PAGE> 1
EXHIBIT 4.3
CONVOY CORPORATION
1997 STOCK OPTION PLAN
As Adopted Effective January 2, 1997
As Amended on July 9, 1998
1. Purpose. The purpose of the Convoy Corporation 1997 Stock Option
Plan (the "Plan") is to provide incentives to attract, retain and motivate
eligible employees, officers and directors of, and consultants to, Convoy
Corporation, a Delaware corporation (the "Company"), and its Affiliates, if any.
To accomplish the foregoing objectives, the Plan provides a means whereby
eligible employees, directors and consultants may receive stock options
("Options") to purchase shares of the Company's common stock ("Common Stock").
As used in the Plan, the term "Affiliates" shall mean any parent corporation or
subsidiary corporation of the Company as those terms are defined in Sections
424(e) and (f) of the Internal Revenue Code of 1986, as amended (the "Code").
The Plan is intended to be a written compensatory benefit plan within the
meaning of Rule 701 promulgated under the Securities Act of 1933, as amended
(the "Securities Act").
2. Stock Options. Stock Options granted pursuant to the Plan may, at
the discretion of the Board of Directors of the Company ("Board"), be granted as
either an Incentive Stock Option ("ISO") or a Nonstatutory Stock Option ("NSO").
An ISO shall mean an option described in Section 422 of the Code. An NSO shall
mean any option not meeting the requirements of Section 422 of the Code and any
other option designated as an NSO in the document by which it is granted.
3. Administration. The Board, whose authority shall be plenary, shall
administer the Plan unless and until such time as the Board delegates
administration of the Plan pursuant to subsection 3(b), below.
(a) Subject to and within the limits of the express provisions
of the Plan, the Board, whose determinations shall be conclusive, shall have the
power to:
(i) Grant Options pursuant to the Plan;
(ii) Determine from time to time which of the
eligible persons are to receive Options under the Plan (such persons upon such
grants becoming "Optionees"), the number of shares of Common Stock subject to
each Option grant, the price at which the holder of an Option may purchase the
shares of Common Stock issuable upon exercise of the Option ("Exercise Price"),
the time or times within which all or portions of each Option may be exercised,
and the other terms and conditions of each Option;
(iii) Construe and interpret the Plan and Options
granted under it and to establish, amend, and revoke rules and regulations for
its administration. The Board, in the exercise of this power, shall generally
determine all questions of policy and expediency that may arise and may correct
any defect, omission or inconsistency in the Plan, any Option or any exercise
document in a manner and to the extent it shall deem necessary or expedient to
make the Plan fully effective;
(iv) Grant Options in exchange for cancellation of
Options granted earlier at the same or different Exercise Prices; provided,
however, nothing contained herein shall empower the Board to
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grant an ISO under conditions or pursuant to terms that are inconsistent with
the requirements of subsection 4(b), below, or Section 422 of the Code;
(v) Determine the vesting and exercisability of
Options;
(vi) Prescribe the forms of written instruments that
shall constitute the stock option acceptance letters ("Stock Option Acceptance
Letters") and the stock restriction agreements ("Stock Restriction Agreements"),
standard forms of which shall be attached hereto from time to time, and all
other documents used in conjunction with Option grants and exercises under the
Plan;
(vii) Amend the Plan as provided in Section 14 below;
(viii) Generally, to exercise such powers and to
perform such acts as are deemed necessary or expedient to promote the best
interests of the Company;
(ix) Take appropriate action to cause any Option
granted hereunder to cease to be an ISO; provided, however, no such action may
be taken by the Board without the written consent of the affected Optionee; and
(x) To accelerate the vesting of any or all unvested
Options or Restricted Shares (as defined in the Plan documents referenced
herein) to the fullest extent permissible pursuant to Section 260.140.41(f) of
Title 10, California Code of Regulations, or any replacement regulation, for
officers, directors and consultants of the Company, notwithstanding anything to
the contrary contained herein.
(b) The Board may delegate administration of the Plan
(including, without limitation, the Board's powers under subsection 3(a) above)
to committee acting under the authority of the Board. In the event that the
Company has registered any equity security under Section 12 of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), such committee shall
consist of not less than two (2) members of the Board, each of whom shall be a
"disinterested person" within the meaning of Rule 16b-3 of the Exchange Act and
an "outside director" as such term is defined for purposes of Section 162(m) of
the Code. The Board shall have complete discretion to determine the composition,
structure, form, term and operation of any committee established to administer
the Plan. The Board may, at any time, terminate the functions of the committee
and reassume all powers and authority previously delegated to the committee. For
purposes of the Plan, the "Plan Administrator" shall mean the Board or any
committee administering the Plan under the authority of the Board, as the case
may be.
4. Common Stock Subject to Plan and to Option.
(a) Subject to the provisions of Section 13 below (relating to
adjustments upon changes in stock), the total number of shares reserved and
available for grants of Options and issuance pursuant to the Plan shall not
exceed an aggregate of one million five hundred thousand (1,500,000) shares of
Common Stock. If any Options granted under the Plan shall for any reason
terminate or expire without having been exercised in full, or if any shares of
Common Stock are issued upon the exercise of an Option and repurchased by the
Company pursuant to Section 9(b) below, then the shares of Common Stock not
purchased under such Options or the shares of Common Stock issued upon Option
exercise and then repurchased by the Company, as the case may be, shall be
available again for the purpose of the Plan.
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(b) The aggregate fair market value (determined as of the
respective dates of grant) of shares of Common Stock with respect to which ISOs
are exercisable for the first time by an Optionee during any calendar year
(under the Plan, and under any other incentive stock option plans of the Company
and its Affiliates) cannot exceed $100,000. If the aggregate fair market value
(determined as of the respective dates of grant) of shares of Common Stock with
respect to which Options that otherwise would be ISOs are exercisable for the
first time by an Optionee during any calendar year exceeds $100,000, then the
Options for $100,000 worth of shares of Common Stock becoming exercisable in
such calendar year that were granted earliest will be ISOs and the Options for
the amount in excess of $100,000 that become exercisable in that calendar year
will be NSOs. In the event that the Code or the regulations promulgated
thereunder are amended after the effective date of the Plan to provide for a
different limit (or no limit) on the fair market value of shares of Common Stock
permitted to be subject to ISOs, then such different limit automatically will be
incorporated herein and will apply to any Options to which such amendment
applies.
5. Eligibility.
(a) All employees of the Company and its Affiliates (including
officers and directors who are also employees of the Company) are eligible to
receive ISOs. NSOs (as defined in Section 2 of the Plan) may be granted to
employees, directors and consultants of the Company and its Affiliates;
provided, however, any such consultants must render bona fide services
("Services") to the Company not in connection with the offer and sale of
securities in a capital raising transaction. A person may be granted more than
one Option under the Plan and may hold more than one Option at any time.
(b) No Option granted under the Plan may be granted to a
person who, at the time such Option is granted, owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes of
outstanding capital stock of the Company or any of its Affiliates, unless the
Exercise Price is at least one hundred percent (100%) in the case of an NSO, or
one hundred ten percent (110%) in the case of an ISO, of the fair market value
of the stock subject to the Option and such Option by its terms is not
exercisable after five (5) years from the date such Option is granted. For
purposes of this subsection 5(b), in determining stock ownership, an Optionee
shall be considered as owning the voting capital stock owned, directly or
indirectly, by or for his or her brothers and sisters, spouse, ancestors and
lineal descendants. Voting capital stock owned, directly or indirectly, by or
for a corporation, partnership, estate or trust shall be considered as being
owned proportionately by or for its stockholders, partners or beneficiaries, as
applicable. For purposes of this subsection 5(b), outstanding capital stock
shall include all capital stock actually issued and outstanding at the time of
the grant of the Option to the Optionee. Outstanding capital stock shall not
include capital stock authorized for issue under outstanding Options held by the
Optionee or by any other person.
6. Terms of Options. Options granted pursuant to the Plan need not be
identical, but each Option shall be granted within ten (10) years from the date
the Plan is adopted by the Board or approved by the stockholders, whichever is
earlier, shall specify the number of shares of Common Stock to which it pertains
and shall be subject to the following terms and conditions:
(a) Options shall become exercisable at such times (including,
if the Board so determines, immediately, subject to repurchase pursuant to
Section 9 below) and upon such events as may be determined by the Board and set
forth in the respective Stock Option Acceptance Letters governing such Options.
(b) The Exercise Price for shares of Common Stock under each
Option shall be determined by the Plan Administrator at the time the Option is
granted. In no event shall such Exercise
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Price be less than eighty-five percent (85%) in the case of an NSO, or one
hundred percent (100%) in the case of an ISO, of the fair market value of the
shares of Common Stock subject to the Option on the date the Option is granted,
or, if applicable, such greater amount as is set forth in Section 5(b) above.
For all purposes of the Plan, the fair market value of the Common Stock shall be
determined as follows:
(i) if such Common Stock is publicly traded and is
then listed or admitted to trading on a national securities exchange, then its
closing price on the principal national securities exchange on which the Common
Stock is listed or admitted to trading as reported in The Wall Street Journal
for the last trading date immediately preceding the date of determination;
(ii) if such Common Stock is publicly traded and is
then quoted on the NASDAQ National Market System, but is not then listed or
admitted to trading on a national securities exchange, then its closing price on
the NASDAQ National Market System as reported in The Wall Street Journal for the
last trading date immediately preceding the date of determination;
(iii) if such Common Stock is publicly traded but is
not then quoted on the NASDAQ National Market System nor listed or admitted to
trading on a national securities exchange, the average of the closing bid and
asked prices on the last trading date immediately preceding the date of
determination as reported by The Wall Street Journal (or, if not so reported, as
otherwise reported by any newspaper or other source as the Board may determine);
or
(iv) if none of the foregoing is applicable, then by
the Board in good faith taking into consideration the following factors: the
Company's net worth, prospective earning power and dividend-paying capacity, and
other relevant factors including the goodwill of the business; the economic
outlook in the particular industry; the Company's position in the industry and
its management; the degree of control of the business represented by the block
of stock to be valued; and the values of securities of corporations engaged in
the same or similar lines of business which are listed on a stock exchange. In
addition to the relevant factors described above, consideration also shall be
given to nonoperating assets including proceeds of life insurance policies
payable to or for the benefit of the Company, to the extent such nonoperating
assets have not been taken into account in the determination of net worth,
prospective earning power, and dividend-paying capacity.
(c) The term of any Option shall not be greater than ten (10)
years from the date it is granted, or, if applicable, such shorter period as is
set forth in Section 5(b) above.
(d) An Option by its terms, shall not be transferable
otherwise than by will or the laws of descent and distribution and may be
exercisable, during the lifetime of the Optionee, only by the Optionee.
Notwithstanding the above, if an Optionee is determined to be incompetent by a
court of proper jurisdiction, his or her legal representative may exercise the
Option on his or her behalf.
(e) Each Option shall become exercisable on an annual basis as
to not less than twenty percent (20%) of the total number of shares of Common
Stock subject thereto.
(f) Subject to the restrictions set forth in Section 6(g)
below, Options under the Plan may be exercised by an Optionee regardless of
whether he or she is employed or retained by the Company or its Affiliates at
the time of exercise.
(g) Upon an Optionee's Separation (as defined below), the
Optionee's right to exercise an Option shall be as follows:
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(i) If an Optionee is Separated (as defined below)
for any reason other than the death or Disability (as defined herein) of the
Optionee, then, within three (3) months following the date of such Separation,
or within such longer period as the Plan Administrator may fix, the Optionee
shall have the right to exercise the Option to the extent such Option was
exercisable on Optionee's Separation Date (as defined below).
(ii) If an Optionee is Separated due to disability
(as defined in Section 22(e)(3) of the Code and determined by the Plan
Administrator) ("Disability"), then, within twelve (12) months following the
date of such Separation, or within such longer period as the Plan Administrator
may fix, the Optionee shall have the right to exercise the Option to the extent
such Option was exercisable on the Optionee's Separation Date.
(iii) If an Optionee is Separated as a result of the
Optionee's death, the Optionee's estate shall have the right for a period of
twelve (12) months following the date of death, or for such longer period as the
Plan Administrator may fix, to exercise the Option to the extent such Option was
exercisable on the Optionee's Separation Date, or to the extent otherwise
specified by the Plan Administrator. An Optionee's estate shall mean his or her
legal representative or any person who acquires the right to exercise an Option
by reason of the Optionee's death.
(iv) Notwithstanding the foregoing, in no event may
an Option be exercised after the expiration of the term of the Option.
(v) For purposes of this Plan, "Separated" or
"Separation" shall mean with respect to an Optionee, that such Optionee has
ceased to provide services as an employee, officer, director or consultant to
the Company or its Affiliates for any reason. Subject to applicable law, the
Plan Administrator will have sole discretion to determine whether an Optionee
has ceased to provide services and the effective date on which the Optionee
ceased to provide services (the "Separation Date")
(h) In the event of any of the following transactions (each a
"Corporate Transaction"):
(i) a merger or consolidation or other form of
business combination in which the Company is not the surviving entity, or the
Company's stockholders do not own a majority of the voting securities of the
resulting entity, except for a transaction the principal purpose of which is to
change the State of the Company's incorporation;
(ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Company;
(iii) the dissolution or complete liquidation of the
Company; or
(iv) any reverse merger in which the Company is the
surviving entity but in which all of the Company's outstanding voting stock is
transferred to the acquiring entity or its wholly-owned subsidiary,
then, any or all outstanding Options may be assumed, converted or replaced by
the successor corporation, (if any), which assumption, conversion or replacement
will be binding on all Optionees. In the alternative, the successor corporation
may substitute equivalent Options or provide substantially similar
considerations to Optionees as was provided to stockholders (after taking into
account the existing provisions of the Options).
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The successor corporation may also issue, in place of outstanding shares of
Common Stock held by the Optionee, substantially similar shares or other
property subject to repurchase restrictions and other provisions no less
favorable to the Optionee than those which applied to such outstanding shares of
Common Stock immediately prior to such Corporate Transaction. In the event such
successor corporation (if any) fails or refuses to assume or substitute Options,
as provided above pursuant to a Corporate Transaction, then notwithstanding any
other provision in this Plan to the contrary, such Options will expire on such
Corporate Transaction at such time and on such conditions as the Board will
determine.
Each outstanding Option which is assumed in connection with the
Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted immediately after such Corporate Transaction to apply and
pertain to the number and class of securities which would have been issuable, in
consummation of such Corporate Transaction, to an actual holder of the same
number of shares of Common Stock as are subject to such Option immediately prior
to such Corporate Transaction. Appropriate adjustments shall also be made to the
Exercise Price payable per share, provided the aggregate Exercise Price payable
for such securities shall remain the same. In addition, the class and number of
securities available for issuance under the Plan following consummation of the
Corporate Transaction shall be appropriately adjusted.
The grant of Options under the Plan shall in no way affect the right of
the Company to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate, sell or
transfer all or any part of its business or assets.
7. Payments and Loans Upon Exercise.
(a) Payment. Payment for Common Stock purchased pursuant to
the Plan may be made in cash (by check) or, where expressly approved by the
Board for an Optionee and where permitted by law:
(1) by cancellation of indebtedness of the Company to
the Optionee;
(2) by surrender of Common Stock that either: (1) is
owned by Optionee and has been paid for within
the meaning of the United States Securities and
Exchange Commission ("SEC") Rule 144 (and, if
such Common Stock were purchased from the Company
by use of a promissory note, such note has been
fully paid with respect to such Common Stock); or
(2) was obtained by the Optionee in the public
market;
(3) by tender of a full recourse promissory note
having such terms as may be approved by the Board
and bearing interest at a rate sufficient to
avoid imputation of income under Sections 483,
1274 and 7872 of the Code; provided, however,
that Optionees who are not employees or directors
of the Company will not be entitled to purchase
Common Stock with a promissory note unless the
note is adequately secured by collateral other
than the Common Stock;
(4) by waiver of compensation due or accrued to the
Optionee for services rendered;
(5) provided that a public market exists for the
Company's stock:
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(i) 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 the Option and to sell a portion of
the Common Stock so purchased to pay for the
Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such
Common Stock to forward the Exercise Price
directly to the Company; or
(ii) through a margin commitment from the
Optionee and a NASD Dealer whereby the
Optionee irrevocably elects to exercise the
Option and to pledge the Common Stock 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 Common Stock to
forward the Exercise Price directly to the
Company; or
(6) by any combination of the foregoing.
8. Use of Proceeds from Stock. Proceeds from the sale of stock pursuant
to Options granted under the Plan shall be used for general corporate purposes,
or as determined by the Board.
9. Stock Transfer Restrictions; Repurchase Provisions. At the
discretion of the Plan Administrator, the Company may reserve to itself and/or
its assignee(s) (a) a right of first refusal to purchase all shares of Common
Stock issued pursuant to the exercise of Options granted under the Plan that
Optionee (or a subsequent transferee) may propose to transfer to a third party,
unless otherwise not permitted by Title 10, Section 260.140.42 of the California
Code of Regulations or any successor or other regulation with respect thereto,
and/or (b) in case of immediately exercisable Options, a right to repurchase
shares of Common Stock issued pursuant to the exercise of Options granted under
the Plan which are held by such Optionee following such Optionee's Separation at
any time within the later of (i) ninety (90) days after Optionee's Separation
Date, or (ii) ninety (90) days after such Optionee's exercise of an Option, in
each case, for cash and/or cancellation of indebtedness arising from the
purchase of such shares upon such exercise, at the Optionee's Exercise Price,
provided, that such right of repurchase shall lapse at the rate of at least
twenty percent (20%) per year over five (5) years from the date of grant of the
Option. Common Stock issued pursuant to the exercise of an Option granted under
the Plan shall be subject to such stock transfer restrictions and repurchase
rights as shall be set forth in the respective Stock Restriction Agreement
applicable to the exercise of such Option. Each Optionee exercising an Option
shall be required to execute such Stock Restriction Agreement prior to receiving
his or her Common Stock.
10. Market Stand-Off. 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 Common Stock without the
prior written consent of the Company or such underwriters, as the case may be,
for such period of time (not to exceed one hundred eighty (180) days) after the
effective date of such registration requested by such managing underwriters and
subject to all restrictions as the Company or the underwriters may specify.
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11. Withholding Taxes. Whenever Common Stock is to be issued to an
Optionee upon exercise of an Option, the Company may require the Optionee to
remit to the Company cash in an amount sufficient to satisfy any federal, state
and local withholding tax requirements prior to the Company's delivery to the
Optionee of any certificate or certificates for such Common Stock. Whenever,
under the Plan, a cash payment is to be made to any Optionee in cancellation of
an Option or for the repurchase of shares of Common Stock acquired upon exercise
of an Option, such payment may be made net of any amount necessary to satisfy
any federal, state and local withholding tax requirements.
When, under applicable tax laws, an Optionee incurs tax liability in
connection with the exercise or vesting of any outstanding Option or any shares
of Common Stock acquired upon exercise of an Option that is subject to tax
withholding and the Optionee is obligated to pay the Company the amount required
to be withheld, the Board may, in its sole discretion, allow the Optionee to
satisfy the minimum withholding tax obligation by electing to have the Company
withhold from the shares of Common Stock to be issued or becoming vested that
number of shares of Common Stock having a fair market value equal to the minimum
amount required to be withheld, determined as of the date that the amount of tax
to be withheld is determined. All elections by an Optionee to have Common Stock
withheld for this purpose will be made in accordance with the requirements
established by the Board and be in writing in a form acceptable to the Board.
12. Voting and Dividends. No Optionee will have any of the rights of a
stockholder with respect to any shares of Common Stock until the shares of
Common Stock are issued to the Optionee. After shares of Common Stock are issued
to the Optionee, the Optionee will be a stockholder and have all of the rights
of a stockholder with respect to such shares of Common Stock, including the
right to vote and to receive all dividends or other distributions made or paid
with respect to such shares of Common Stock; provided, however, that the
Optionee will have no right to retain stock dividends or other distributions of
stock made with respect to shares of Common Stock that are repurchased or
subject to repurchase pursuant to Section 9(b) of the Plan until such repurchase
provisions lapse.
13. Adjustments of and Changes in the Stock. In the event that shares
of Common Stock, as presently constituted, shall be changed into or exchanged
for a different number or kind of common stock or other securities of the
Company or of another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of Common Stock, or
otherwise), or if the outstanding Common Stock is increased through the payment
of a stock dividend or stock split, then there shall be substituted for or added
to each share of Common Stock theretofore appropriated or thereafter subject or
which may become subject to an Option under the Plan, the number and kind of
common stock or other securities into which each outstanding share of Common
Stock shall be so changed, or for which each such share shall be exchanged or to
which each such share shall be entitled, as the case may be. Outstanding Options
shall also be appropriately amended as to Exercise Price and other terms if
necessary to reflect the foregoing events. In the event there shall be any other
change in the number or kind of shares of the outstanding Common Stock, or of
any stock or other securities into which such Common Stock shall have been
changed, or for which it shall have been exchanged, then if the Board shall, in
its sole discretion, determine that such change equitably requires an adjustment
in any Option theretofore granted or which may be granted under the Plan, such
adjustment shall be made in accordance with such determination. No right to
purchase any fractional share of Common Stock shall result from any adjustment
in Options pursuant to this Section 13. In case of any such adjustment, the
shares of Common Stock subject to the Option shall be rounded down to the
nearest whole share. Notice of any adjustment shall be given by the Company to
each holder of an Option which shall have been so adjusted and such adjustment
(whether or not such notice is given) shall be effective and binding for all
purposes of the Plan.
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14. Amendment of the Plan. The Board may, at any time, amend the Plan
in any respect, including, without limitation, amendment of any form of Stock
Option Acceptance Letter, Stock Restriction Agreement or other document relating
to its administration and grants under the Plan, or any exercise instrument;
provided, however, that the Board alone cannot, without the applicable approval
of the stockholders of the Company, amend any provision of the Plan as it
applies to ISOs in any manner that requires such stockholder approval pursuant
to the Code or the regulations promulgated thereunder.
It is expressly contemplated that the Board may amend the Plan in any
respect necessary to provide the Company's employees with the maximum benefits
provided or to be provided under Section 422 of the Code and the regulations
promulgated thereunder relating to ISOs and/or to bring the Plan or Options
granted under the Plan into compliance therewith.
Rights and obligations under any Option granted before any amendment of
the Plan shall not be altered or impaired by amendment of the Plan, except with
the consent of the Optionee, which consent may be obtained in any manner the
Board considers to be appropriate.
15. Certificates. All certificates for shares of Common Stock or other
securities delivered under the Plan will be subject to such stock transfer
orders, legends and other restrictions as the Board may deem necessary or
advisable, including restrictions under any applicable federal, state or foreign
securities laws, or any rules, regulations and other requirements of the SEC or
any stock exchange or automated quotation system upon which the Common Stock may
be listed or quoted.
16. Escrow; Pledge of Common Stock. To enforce any restrictions on
shares of Common Stock acquired by an Optionee on exercise of an Option, the
Board may require the Optionee to deposit all certificates representing such
shares of Common Stock, together with stock powers or other instruments or
transfer approved by the Board, appropriately endorsed in blank, with the
Company or an agent designated by the Company to hold such shares of Common
Stock in escrow until such restrictions have lapsed or terminated, and the Board
may cause a legend or legends referencing such restrictions to be placed on the
certificates. Any Optionee who is permitted to execute a promissory note as
partial or full consideration for the purchase of the shares of Common Stock
under this Plan will be required to pledge and deposit with the Company all or
part of the shares of Common Stock so purchased as collateral to secure the
payment of the Optionee's obligation to the Company under the promissory note;
provided, however, that the Board may require or accept other or additional
forms of collateral to secure the payment of such obligation and, in any event,
the Company will have full recourse against the Optionee under the promissory
note notwithstanding any pledge of the Optionee's shares of Common Stock or
other collateral. In connection with any pledge of shares of Common Stock,
Optionee will be required to execute and deliver a written pledge agreement.
Shares of Common Stock purchased with a promissory note may be released from the
pledge on a pro rata basis as the promissory note is paid.
17. Exchange and Buyout of Options. The Board may, at any time,
authorize the Company, with the consent of the respective Optionees, to issue
new Options in exchange for the surrender and cancellation of any and/or all
outstanding Options. The Board may, at any time, acquire from an Optionee an
Option previously granted with payment in cash, Common Stock (including
restricted stock) or other consideration, based on such terms and conditions as
the Board and the Optionee may agree.
18. Securities Law and Other Regulatory Compliance. The Plan is
intended to comply with Section 25102(o) of the California Corporations Code.
Any provision of the Plan which is inconsistent with Section 25102(o) shall,
without further act or amendment by the Company or the Board, be reformed to
comply with the requirements of Section 25102(o). An Option issued under the
Plan will not be effective unless such Option is in compliance with all
applicable federal and state securities laws, rules and regulations of any
governmental body, and the requirements of any stock exchange or automated
quotation
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system upon which the Common Stock may then be listed or quoted, as they are in
effect on the date of grant of the Option and also on the date of exercise or
other issuance. Notwithstanding any other provision in the Plan, the Company
will have no obligation to issue or deliver certificates for shares of Common
Stock under the Plan prior to (a) obtaining any approvals from governmental
agencies that the Company determines are necessary or advisable, and/or (b)
compliance with any exemption, completion of any registration or other
qualification of such shares of Common Stock under any state or federal law or
ruling of any governmental body that the Company determines to be necessary or
advisable. The Company will be under no obligation to register the Common Stock
with the SEC or to effect compliance with the exemption, registration,
qualification or listing requirements of any state securities laws, stock
exchange or automated quotation system, and the Company will have no liability
for any inability or failure to do so.
19. No Obligation to Employ. Nothing in the Plan or any Option granted
under the Plan will (a) confer or be deemed to confer on any Optionee any right
to continue in the employ of, or to continue any other relationship with, the
Company or its Affiliates; (b) limit in any way the right of the Company or its
Affiliates, to terminate Optionee's employment or other relationship at any time
for any reason or no reason; or (c) alter an Optionee's "at-will" employment or
contract status.
20. Termination or Suspension of the Plan. The Board may, at any time,
suspend or terminate the Plan. The Plan, unless sooner terminated, shall
terminate at the end of ten (10) years from the date the Plan is adopted by the
Board or approved by the stockholders of the Company, whichever is earlier. An
Option may not be granted under the Plan while the Plan is suspended or after it
is terminated.
Rights and obligations under any Option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the Optionee, which consent may be obtained in
any manner the Board considers to be appropriate.
21. Time of Granting Options. The date of grant of an Option hereunder,
for all purposes, shall be the date on which the Board (or committee under
authority of the Board) makes the determination granting such Option.
22. Effective Date of Plan. The Plan will become effective on the date
that it is adopted by the Board (the "Effective Date"). The Plan will be
approved by the stockholders of the Company, consistent with applicable laws,
within twelve (12) months of the Effective Date. If such stockholder approval is
not obtained within the time period referenced above, then all Options
previously granted under the Plan shall terminate, and no further Options shall
be granted and no Common Stock shall be issued under the Plan. Subject to such
limitation, the Board may grant Options under the Plan at any time after the
Effective Date and before the date fixed herein for termination of the Plan;
provided; however, that no Option may be exercised prior to stockholder approval
of the Plan.
23. Gender. The use of any gender specific pronoun or similar term is
intended to be without legal significance as to gender.
24. Financial Reports. The Company shall provide financial and other
information regarding the Company, on an annual or more frequent basis, to each
person holding an outstanding Option under the Plan as required pursuant to
Section 260.140.46 of Title 10, California Code of Regulations.
EXHIBITS
EXHIBIT A - INCENTIVE STOCK OPTION ACCEPTANCE LETTER
(IMMEDIATELY EXERCISABLE)
10
<PAGE> 11
EXHIBIT B -NONSTATUTORY STOCK OPTION ACCEPTANCE LETTER
(IMMEDIATELY EXERCISABLE)
EXHIBIT C- STOCK RESTRICTION AGREEMENT
(IMMEDIATELY EXERCISABLE)
EXHIBIT D - INCENTIVE STOCK OPTION ACCEPTANCE LETTER
EXHIBIT E- NONSTATUTORY STOCK OPTION ACCEPTANCE LETTER
EXHIBIT F -STOCK RESTRICTION AGREEMENT
11
<PAGE> 1
EXHIBIT 4.4
MICROSCRIPT, INC. 1997
STOCK OPTION PLAN
ARTICLE I
PURPOSE OF THE PLAN
The purpose of this Plan is to encourage and enable employees,
consultants, directors and others who are in a position to make significant
contributions to the success of the Corporation and of its affiliated
corporations upon whose judgment, initiative and efforts the Corporation depends
for the successful conduct of its business, to acquire a closer identification
of their interests with those of the Corporation by providing them with
opportunities to purchase stock in the Corporation pursuant to options granted
hereunder, thereby stimulating their efforts on behalf of the Corporation and
strengthening their desire to remain involved with the Corporation.
ARTICLE II
DEFINITIONS
2.1 "Affiliated Corporation" means any stock corporation of which a
majority of the voting common or capital stock is owned directly or indirectly
by the Corporation.
2.2 "Award" means an option granted under Article V hereinbelow.
2.3 "Board" means the Board of Directors of the Corporation.
2.4 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.5 "Corporation" means MicroScript, Inc., a Massachusetts corporation,
or its successor.
2.6 "Employee" means any person who is a regular full-time or part-time
employee of the Corporation or an Affiliated Corporation on or after December 1,
1996.
<PAGE> 2
2.7 "Option" means an Incentive Stock Option or Non-Qualified Option
granted by the Board under Article V of this Plan in the form of a right to
purchase Stock evidenced by an instrument containing such provisions as the
Board may establish.
2.8 "Optionee" means an individual who has been granted an Option.
2.9 "Plan" means this 1997 Stock Option Plan.
2.10 "Incentive Stock Option" ("ISO") means an Option which qualifies
as an incentive stock Option as defined in Section 422 of the Code, as
amended.2.11 "Non-Qualified Option" means any Option not intended to qualify as
an Incentive Stock Option.
2.12 "Stock" means the Common Stock, with $0.05 par value, of the
Corporation or any successor, including any adjustments in the event of changes
in capital structure of the type described in Article X hereinbelow.
ARTICLE III
ADMINISTRATION OF THE PLAN
3.1 Administration by Board. This Plan shall be administered by the
Board of Directors of the Corporation. The Board may, from time to time,
delegate any of its functions under this Plan to one or more committees. All
references in this Plan to the Board shall also include the committee or
committees, if one or more have been appointed by the Board. From time to time
the Board may increase the size of the committee or committees and appoint
additional members thereto, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies however caused, or remove
all members of the committee or committees and thereafter directly administer
the Plan. No member of the Board or a committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Options
granted under it.
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3.2 Powers. The Board of Directors and/or any committee appointed by
the Board shall have full and final authority to operate, manage and administer
the Plan on behalf of the Corporation. This authority includes, but is not
limited to:
(a) The power to grant Awards conditionally or
unconditionally;
(b) The power to prescribe the form or forms of the
instruments evidencing Awards granted under this Plan;
(c) The power to interpret and amend the Plan in any and all
respects except as provided in Article IX hereinbelow;
(d) The power to provide regulations for the operation of the
incentive features of the Plan, and otherwise to prescribe and rescind
regulations for interpretation, management and administration of the Plan;
(e) The power to delegate responsibility for Plan operation,
management and administration on such terms, consistent with the Plan, as the
Board may establish;
(f) The power to delegate to other persons the responsibility
of performing ministerial acts in furtherance of the Plan's purpose; and
(g) The power to engage the services of persons, companies, or
organizations in furtherance of the Plan's purpose, including but not limited
to, banks, insurance companies, accountants, attorneys, brokerage firms and
consultants.
3.3 Additional Powers. In addition, as to each Option to purchase Stock
of the Corporation, the Board shall have full and final authority in its
discretion: (a) to determine the number of shares of Stock subject to each
Option; (b) to determine the time or times at which Options will be granted; (c)
to determine the Option price of the shares of Stock subject to each Option,
which price shall be not less than the minimum price specified in Article V of
this Plan;
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<PAGE> 4
(d) to determine the time or times when each Option shall become exercisable and
the duration of the exercise period (including the acceleration of any exercise
period for any events which the Board deems appropriate, including, but not
limited to, public offerings of the Corporation's stock and sales of all or
substantially all of the Corporation's assets or stock or the extension of any
period), which shall not exceed the maximum period specified in Article V; and
(e) to determine whether each Option granted shall be an Incentive Stock Option
or a Non-qualified Option.
In no event may the Corporation grant an Employee any Incentive Stock
Option that is first exercisable during any one calendar year to the extent the
aggregate fair market value of the Stock (determined at the time the Options are
granted) exceeds $100,000 (under all stock Option plans of the Corporation and
any Affiliated Corporation); provided, however, that this paragraph shall have
no force and effect if its inclusion in the Plan is not necessary for Incentive
Stock Options issued under the Plan to qualify as such pursuant to Section
422(d) of the Code.
ARTICLE IV
ELIGIBILITY
4.1 Eligible Employees. All Employees (including Directors who are
Employees) are eligible to be granted Incentive Stock Option and Non-Qualified
Option Awards under this Plan.
4.2 Consultants, Directors and other Non-Employees. Any Consultant,
Director (whether or not an Employee) and any other Non-Employee is eligible to
be granted Non-Qualified Option Awards under the Plan.
4.3 Relevant Factors. In selecting individual Employees, Consultants,
Directors and Non-Employees to whom Awards shall be granted, the Board shall
weigh such factors as are relevant to accomplish the purpose of the Plan as
stated in Article I. An individual who has been granted an Award may be granted
one or more additional Awards, if the Board so determines. The granting of an
Award to any individual shall neither entitle that individual to, nor disqualify
him/her from, participation in any other grant of Awards.
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<PAGE> 5
ARTICLE V
STOCK OPTION AWARDS
5.1 Number of Shares. Subject to the provisions of Articles III and IX
of this Plan, the aggregate number of shares of Stock for which Options may be
granted under this Plan shall not exceed one million, five hundred thousand
(1,500,000) shares. The shares to be delivered upon exercise of Options under
this Plan shall be made available, at the discretion of the Board, either from
authorized but unissued shares or from previously issued and reacquired shares
of Stock held by the Corporation as treasury shares, including shares purchased
in the open market.
Stock issuable upon exercise of an Option granted under the Plan may be
subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Board of Directors.
5.2 Effect of Expiration, Termination or Surrender. If an Option under
this Plan shall expire or terminate unexercised as to any shares covered
thereby, or shall cease for any reason to be exercisable in whole or in part, or
if the Corporation shall reacquire any unvested shares issued pursuant to
Options under the Plan, such shares shall thereafter be available for the
granting of other Options under this Plan.
5.3 Term of Options. The full term of each Option granted hereunder
shall be for such period as the Board shall determine. In the case of Incentive
Stock Options granted hereunder, the term shall not exceed ten (10) years from
the date of granting thereof. Each Option shall be subject to earlier
termination as provided in Sections 6.3 and 6.4 hereof. Notwithstanding the
foregoing, Options intended to qualify as "Incentive Stock Options" may not be
granted to any employee who
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<PAGE> 6
at the time such Option is granted owns more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company unless such Option
must be exercisable within five (5) years from the date such Option is granted.
5.4 Option Price. The Option price shall be determined by the Board at
the time any Option is granted. In the case of Incentive Stock Options, the
exercise price shall not be less than 100% of the fair market value of the
shares covered thereby at the time the Incentive Stock Option is granted (but in
no event less than par value), provided that no Incentive Stock Option shall be
granted hereunder to any Employee if at the time of grant the Employee, directly
or indirectly, owns Stock possessing more than 10% of the combined voting power
of all classes of stock of the Corporation and its Affiliated Corporations
unless the Incentive Stock Option exercise price equals not less than 110% of
the fair market value of the shares covered thereby at the time the Incentive
Stock Option is granted.
5.5 Fair Market Value. If, at the time an Option is granted under the
Plan, the Corporation's Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such Option is granted and
shall mean (i) the average (on that date) of the high and low prices of the
Stock on the principal national securities exchange on which the Stock is
traded, if the Stock is then traded on a national securities exchange; or (ii)
the last reported sale price (on that date) of the Stock on the NASDAQ National
Market List, if the Stock is not then traded on a national securities exchange;
or (iii) the closing bid price (or average of bid prices) last quoted (on that
date) by an established quotation service for over-the-counter securities, if
the Stock is not reported on the NASDAQ National Market List. However, if the
Stock is not publicly traded at the time an Option is granted under the Plan,
"fair market value" shall be deemed to be the fair market value of the
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<PAGE> 7
Stock as determined by the Board after taking into consideration all factors
which it deems appropriate, including, without limitation, recent sale and offer
prices of the Stock in private transactions negotiated at arm's length, the
ownership percentage which the Optionee shall obtain if the Optionee exercises
his/her option and the economic conditions for the Corporation's business at the
time the Option is granted.
5.6 Non-Transferability of Options. No Option granted under this Plan
shall be transferable by the Optionee otherwise than by will or the laws of
descent and distribution, and such Option may be exercised during the Optionee's
lifetime only by the Optionee.
5.7 Requirement for Shareholder Assent. Options may be awarded only if
each holder of 25 percent or more of the common stock of the Company ("Major
Shareholder"), or the holder of his or her duly authorized proxy or other duly
authorized representative, has assented to the award in one of the following
three ways: (1) by voting in favor of the award while present at a meeting of
the Board; or (2) by approving the award in writing; or (3) by electing in
writing not to participate in the Option award process. The Board shall record
the means of Major Shareholder assent for each Option award.
ARTICLE VI
EXERCISE OF OPTION
6.1 Exercise. Each Option granted under this Plan shall be exercisable
on such date or dates and during such period and for such number of shares as
shall be determined pursuant to the provisions of the instrument evidencing such
Option. The Board shall have the right to accelerate the date of exercise of any
Option, provided that, the Board shall not accelerate the exercise date of any
Incentive Stock Option granted if such acceleration would violate the annual
Option exercise limitation contained in Section 422(d) of the Code.
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<PAGE> 8
6.2 Notice of Exercise and Surrender of Option. A person electing to
exercise an Option shall give written notice to the Corporation of such election
and of the number of shares he or she has elected to purchase and shall at the
time of exercise tender the full exercise price for the shares he or she has
elected to purchase. The exercise price can be paid partly or completely in
shares of the Corporation's stock valued at Fair Market Value as defined in
Section 5.5 hereof. Prior to receiving any stock certificate for Options that
have been exercised, the Option holder must surrender the Option certificate to
the Corporation or if such Option certificate is lost, sign all documents
reasonably requested by the Corporation relating to the lost certificate. The
Option holder must also execute any shareholder agreements then in force or
other documents reasonably requested by the Corporation prior to receipt of the
stock certificates. Until such person has been issued a certificate or
certificates for the shares so purchased and executed and delivered to the
Corporation the documents referred to in the prior sentence, he or she shall
possess no rights of a record holder with respect to any of such shares.
6.3 Cessation of Employment. No Incentive Stock Option (and, unless
otherwise determined by the Board of Directors, no Non-Qualified Option granted
to a person who is, on the date of the grant, an Employee of the Corporation or
an Affiliated Corporation) shall be affected by any change of duties or position
of the Optionee (including transfer to or from an Affiliated Corporation), so
long as he or she continues to be an Employee. Employment shall be considered as
continuing uninterrupted during any bona fide leave of absence (such as those
attributable to illness, military obligations or governmental service) provided
that the period of such leave does not exceed ninety (90) days or, if longer,
any period during which such Optionee's right to reemployment is guaranteed by
statute. A bona fide leave of absence with the written approval of the Board
shall not be considered an interruption of employment under the Plan, provided
that such written approval
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<PAGE> 9
contractually obligates the Corporation or any Affiliated Corporation to
continue the employment of the Optionee after the approved period of absence.
If the Optionee shall cease to be an Employee for any reason other than
death or disability, then any remaining Options which are vested shall terminate
upon the earlier of (A) the expiration of the original term of the Options; or
(B) the date of termination of the Employee's term of employment with the
Corporation, provided however that the Board may vary or depart from or extend
these time limits by the terms of its option grant or otherwise in its sole
discretion.
6.4 Death and Disability of Optionee. If the Employee's term of
employment with the Corporation terminates due to the disability of the
Employee, then any remaining Options of the Employee which are vested shall
terminate upon the earlier of (A) the expiration of the original term of the
Option; or (B) one (1) year from the date in which the Employee's term of
employment with the Corporation is terminated. For purpose of the Plan, the term
"disability" shall mean "permanent and total disability" as defined in Section
22(e)(3) of the Code.
Should an Optionee die while in possession of the legal right to
exercise an Option or Options under this Plan, such persons as shall have
acquired, by will or by the laws of descent and distribution, the right to
exercise any Options theretofore granted, may, unless otherwise provided by the
Board in any instrument evidencing any Option, exercise such Options at any time
prior to ninety (90) days from the date of death; provided, that such Option or
Options shall expire in all events no later than the last day of the original
term of such Option; provided, further, that any such exercise shall be limited
to the Options which have become vested as of the date when the Optionee ceased
to be an Employee by reason of death, unless the Board provides in the
instrument evidencing such Option that, in the discretion of the Board,
additional shares covered by such Option may become subject to purchase
immediately upon the death of the Optionee. Notwithstanding anything in this
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Article to the contrary, in the case of an Incentive Stock Option, such Option
or Options shall expire in all events no later than ninety (90) days from the
date of death.
ARTICLE VII
TERMS AND CONDITIONS OF OPTIONS
Options shall be evidenced by instruments (which need not be identical)
in such forms as the Board may from time to time approve. Such instruments shall
conform to the terms and conditions set forth in Articles V and VI hereof and
may contain such other provisions as the Board deems advisable which are not
inconsistent with the Plan, including restrictions applicable to shares of Stock
issuable upon exercise of Options. In granting any Non-Qualified Option, the
Board may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to Incentive Stock Options, or to
such other termination and cancellation provisions as the Board may determine.
The Board may from time to time confer authority and responsibility on one or
more of its own members and/or one or more officers of the Corporation to
execute and deliver such instruments. The proper officers of the Corporation are
authorized and directed to take any and all action necessary or advisable from
time to time to carry out the terms of such instruments.
ARTICLE VIII
BENEFIT PLANS
Awards under the Plan are discretionary and are not a part of regular
salary. Awards may not be used in determining the amount of compensation for any
purpose under the benefit plans of the Corporation, or an Affiliated
Corporation, except as the Board may from time to time expressly provide.
Neither the Plan, an Option or any instrument evidencing an Option confers upon
any Employee the right to continued employment with the Corporation or an
Affiliated Corporation.
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ARTICLE IX
AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Board may suspend the Plan or any part thereof at any time or may
terminate the Plan in its entirety. Awards shall not be granted after Plan
termination.
The Board may also amend the Plan from time to time, except that
amendments which change the requirements as to eligibility for grant of Options
in the Plan must be approved by a majority in interest of the stockholders of
the Corporation entitled it to vote, and any suspension of, alteration of, or
amendment to Section 5.7 of this Plan must be approved by the affirmative vote
of 75 percent of issued and outstanding common shares.
Awards granted prior to suspension or termination of the Plan may not
be canceled solely because of such suspension or termination, except with the
consent of the grantee of the Award.
ARTICLE X
CHANGES IN CAPITAL STRUCTURE
The instruments evidencing Options granted hereunder shall be subject
to adjustment, at the sole discretion of the Board, in the event of changes in
the outstanding Stock of the Corporation by reason of: Stock dividends, Stock
splits, recapitalizations, reorganizations, mergers, consolidations,
combinations, exchanges or other relevant changes in capitalization occurring
after the date of an Award to the same extent as would affect an actual share of
Stock issued and outstanding on the effective date of such change. Such
adjustment to outstanding Options shall be made without change in the total
price applicable to the unexercised portion of such Options, and a corresponding
adjustment in the applicable Option price per share shall be made. In the event
of any such change, the aggregate number and classes of shares for which Options
may thereafter be granted under
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<PAGE> 12
Section 5.1 of this Plan may be appropriately adjusted as determined by the
Board so as to reflect such change.
Notwithstanding the foregoing, any adjustments made pursuant to this
Article X with respect to Incentive Stock Options shall be made only after the
Board, after consulting with counsel for the Corporation, determines whether
such adjustments would constitute a "modification" of such Incentive Stock
Options (as that term is defined in Section 425 of the Code) or would cause any
adverse tax consequences for the holders of such Incentive Stock Options. If the
Board determines that such adjustments made with respect to Incentive Stock
Options would constitute a modification of such Incentive Stock Options, it may
refrain from making such adjustments.
In the event of the proposed dissolution or liquidation of the
Corporation, each Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such other conditions
as shall be determined by the Board.
Except as expressly provided herein, no issuance by the Corporation of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to any outstanding Options. No
adjustments shall be made for dividends paid in cash or in property other than
securities of the Corporation.
No fractional shares shall be issued under the Plan and the Optionee
shall receive from the Corporation cash in lieu of such fractional shares.
ARTICLE XI
EFFECTIVE DATE AND TERM OF THE PLAN
The Plan shall become effective upon the date of its adoption by the
Stockholders and the Board of Directors. The Plan shall continue until such time
as it may be terminated by action of the
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<PAGE> 13
Board; provided, however, that no Options may be granted under this Plan on or
after the tenth anniversary of the effective date hereof.
ARTICLE XII
CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOS
The Board, at the written request of any Optionee, may in its
discretion take such actions as may be necessary to convert such Optionee's
Incentive Stock Options, that have not been exercised on the date of conversion,
into Non-Qualified Options at any time prior to the expiration of such Incentive
Stock Options, regardless of whether the Optionee is an Employee of the
Corporation or an Affiliated Corporation at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of such Options. At the time of such conversion, the
Board (with the consent of the Optionee) may impose such conditions on the
exercise of the resulting Non-Qualified Options as the Board in its discretion
may determine, provided that such conditions shall not be inconsistent with the
Plan. Nothing in the Plan shall be deemed to give any Optionee the right to have
such Optionee's Incentive Stock Options converted into Non-Qualified Options,
and no such conversion shall occur until and unless the Board takes appropriate
action. The Board, with the consent of the Optionee, may also terminate any
portion of any Incentive Stock Option that has not been exercised at the time of
such termination.
ARTICLE XIII
APPLICATION OF FUNDS
The proceeds received by the Corporation from the sale of shares
pursuant to Options granted under the Plan shall be used for general corporate
purposes.
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ARTICLE XIV
GOVERNMENTAL REGULATION
The Corporation's obligation to sell and deliver shares of Stock under
this Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such shares.
ARTICLE XV
WITHHOLDING OF ADDITIONAL INCOME TAXES
Upon the exercise of a Non-Qualified Option or the making of a
Disqualifying Disposition (as defined in Article XVI) the Corporation, in
accordance with Section 3402(a) of the Code, may require the Optionee to pay
additional withholding taxes in respect of the amount that is considered
compensation includible in such person's gross income. The Board in its
discretion may condition the exercise of an Option on the payment of such
additional withholding taxes.
ARTICLE XVI
NOTICE TO THE CORPORATION OF DISQUALIFYING DISPOSITION
Each Employee who receives an Incentive Stock Option must agree to
notify the Corporation in writing immediately after the Employee makes a
disqualifying disposition (as defined herein) of any Stock acquired pursuant to
the exercise of an Incentive Stock Option. A Disqualifying Disposition is any
disposition (including any sale) of such Stock before the later of (a) two years
after the date the Employee was granted the Incentive Stock Option or (b) one
year after the date the Employee acquired Stock by exercising the Incentive
Stock Option. If the Employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.
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ARTICLE XVII
GOVERNING LAW; CONSTRUCTION
The validity and construction of the Plan and the instruments evidencing Options
shall be governed by the laws of the Commonwealth of Massachusetts and all
disputes related thereto shall be adjudicated in the state or federal courts
located in Boston, Massachusetts. In construing this Plan, the singular shall
include the plural and the masculine gender shall include the feminine and
neuter, unless the context otherwise requires.
AS STOCKHOLDERS:
/s/ Francis D. Privitera
--------------------------------------------
Francis D. Privitera, as Trustee of
The 26 Frost Street Trust
/s/ Phillip K. Ciolfi
--------------------------------------------
Phillip K. Ciolfi
AS DIRECTORS:
/s/ John Moriarty
--------------------------------------------
John Moriarty
/s/ Phillip K. Ciolfi
--------------------------------------------
Phillip K. Ciolfi
/s/ Francis D. Privitera
--------------------------------------------
Francis D. Privitera
/s/ Stephen Sweeney
--------------------------------------------
Stephen Sweeney
/s/ James Coppersmith
--------------------------------------------
James Coppersmith
<PAGE> 1
EXHIBIT 5.1
July 29, 1999
New Era of Networks, Inc.
7400 East Orchard Road, Suite 230
Englewood, CO 80111
RE: REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 (the
"Registration Statement") to be filed by you with the Securities and Exchange
Commission on or about July 29, 1999, in connection with the registration under
the Securities Act of 1933, as amended, of an aggregate of 1,057,932 shares of
your Common Stock, $.0001 par value (the "Shares"), outstanding or reserved for
issuance pursuant to your 1995 Stock Option Plan, 1997 Employee Stock Purchase
Plan, Convoy Corporation 1997 Stock Option Plan and Microscript, Inc. 1997 Stock
Option Plan (the "Plans"). As your legal counsel, we have reviewed the actions
proposed to be taken by you in connection with the proposed issuance and sale of
the Shares under the Plans. We assume that each issuance of Shares will be made
in accordance with the terms of the respective Plans.
It is our opinion that, upon completion of the proceedings being taken,
or contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares pursuant to the Registration Statement and the Plans, including the
proceedings being taken in order to permit such transaction to be carried out in
accordance with applicable state securities laws, the Shares, when issued and
sold in the manner described in the Registration Statement and in accordance
with the resolutions adopted by the Board of Directors, will be legally and
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ WILSON SONSINI GOODRICH & ROSATI P.C.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-8 of our report dated January
26, 1999 included in the New Era of Networks, Inc. Form 10-K for the year ended
December 31, 1998 and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Denver, Colorado
July 29, 1999
