<PAGE>
As filed with the Securities and Exchange Commission on November 4, 1999
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PEREGRINE SYSTEMS, INC.
(Exact name of issuer as specified in its charter)
DELAWARE 95-3773312
(State of incorporation) (I.R.S. Employer Identification No.)
12670 HIGH BLUFF DRIVE
SAN DIEGO, CALIFORNIA 92130
(858) 481-5000
(Address of principal executive offices)
KNOWLIX CORPORATION AMENDED AND RESTATED 1997 STOCK OPTION PLAN
(Full title of the plans)
RICHARD T. NELSON
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
PEREGRINE SYSTEMS, INC.
12670 HIGH BLUFF DRIVE
SAN DIEGO, CALIFORNIA 92130
(858) 481-5000
(Name, address and telephone number of agent for service)
COPY TO:
DOUGLAS H. COLLOM, ESQ.
WILSON SONSINI GOODRICH & ROSATI, P.C.
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
(650) 493-9300
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TO BE PRICE PER OFFERING REGISTRATION
TITLE OF SECURITIES TO BE REGISTERED (1) REGISTERED (1) SHARE PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock ($0.001 par value) issuable under
the Knowlix Corporation Amended and Restated
1997 Stock Option Plan....................... 34,504 SHARES $ 8.7662 $302,468.96 $84.09
TOTAL ...................... 34,504 SHARES $302,468.96 $84.09
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</TABLE>
(1) Estimated in accordance with Rule 457(h) promulgated under the Securities
Act of 1933, as amended (the "Securities Act"), solely for the purpose of
computing the amount of the registration fee based on the weighted average
exercise price of $8.7662 per share covering the authorized but unissued
shares under the Knowlix Corporation Amended and Restated 1997 Stock Plan.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Peregrine Systems, Inc. (the "Company") hereby incorporates by
reference in this registration statement the following documents:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1999 filed pursuant to Section 13 of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(b) The Company's Annual Report on Form 10-Q for the quarterly period
June 30, 1999 filed pursuant to Section 13 of the Exchange Act.
(c) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed March 7, 1997 pursuant to
Section 12(g) of the Exchange Act.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment to this registration statement which indicates that all
securities offered hereby have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing of such
documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a
corporation to include in its charter documents and in agreements between the
corporation and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by current law.
Article IX of the Registrant's Amended and Restated Certificate of
Incorporation provides for the indemnification of directors o the fullest extent
permissible under Delaware law.
Article VI of the Registrant's Bylaws provides for the indemnification
of officers, directors and third parties acting on behalf of the corporation to
the fullest extent permissible under General Corporation Law of Delaware.
The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to the indemnification provided
for in the Registrant's Bylaws, and intends to enter into indemnification
agreements with any new directors and executive officers in the future.
In addition, pursuant to the terms of the Agreement and Plan of
Reorganization by and among the Registrant, KC Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of the Registrant ("Merger Sub"), and
Knowlix Corporation, an Delaware corporation ("Knowlix") dated as of September
29,
II-2
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1999 (the "Merger Agreement"), whereby Merger Sub will merge with and into
Knowlix (the "Merger") with Knowlix continuing as the surviving corporation as a
wholly-owned subsidiary of the Registrant (the "Surviving Corporation"), the
Registrant has agreed to fulfill and honor in all respects the obligations of
Knowlix pursuant to any indemnification agreements between Knowlix and its
directors and officers as of the Effective Time (as defined in the Merger
Agreement) (the "Indemnified Parties") and any indemnification provisions under
Knowlix's Certificate of Incorporation or Bylaws as in effect immediately prior
to the merger. The Certificate of Incorporation and Bylaws of the Surviving
Corporation will contain provisions with respect to exculpation and
indemnification that are at least as favorable to the Indemnified Parties as
those contained in the Certificate of Incorporation and Bylaws of Knowlix as in
effect immediately prior to the merger, which provisions will not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would adversely affect the rights thereunder of individuals
who, immediately prior to the Effective Time, were directors, officers,
employees or agents of Knowlix, unless such modification is required by law.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
5.1 Opinion of counsel as to legality of securities being registered.
10.24 Knowlix Corporation Amended and Restated 1997 Stock Option Plan, as amended
23.1 Consent of Arthur Andersen LLP, Independent Accountants for Peregrine
Systems, Inc.
23.2 Consent of Counsel (contained in Exhibit 5.1)
24.1 Power of Attorney (see page II-5)
</TABLE>
ITEM 9. UNDERTAKINGS
(a) RULE 415 OFFERING 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 to include
any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act 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.
II-3
<PAGE>
(b) FILING INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY
REFERENCE
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 Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that
is incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(1) REQUEST FOR ACCELERATION OF EFFECTIVE DATE OR FILING
OF REGISTRATION STATEMENT ON FORM S-8
Insofar as indemnification for liabilities arising under the Securities
Act 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 Securities 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 and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement on Form S-8 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of San Diego, State of California, on this 3rd day of November, 1999.
PEREGRINE SYSTEMS, INC.
By: /s/ David A. Farley
----------------------------------------
David A. Farley
Senior Vice President, Finance and
Administration, and Chief Financial
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE
APPEARS BELOW CONSTITUTES AND APPOINTS STEPHEN P. GARDNER AND DAVID A. FARLEY,
AND EACH OF THEM, AS HIS OR HER ATTORNEY-IN-FACT, WITH FULL POWER OF
SUBSTITUTION IN EACH, FOR HIM OR HER IN ANY AND ALL CAPACITIES TO SIGN ANY
AMENDMENTS TO THIS REGISTRATION STATEMENT ON FORM S-8, AND TO FILE THE SAME,
WITH EXHIBITS THERETO AND OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, HEREBY RATIFYING AND CONFIRMING ALL THAT
SAID ATTORNEY-IN-FACT, OR HIS SUBSTITUTES, MAY DO OR CAUSE TO BE DONE BY VIRTUE
HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
Signature Title Date
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<S> <C> <C>
/s/ Stephen P. Gardner President and Chief Executive Officer (Principal November 3, 1999
- ----------------------------------------- Executive Officer) and Director
Stephen P. Gardner
/s/ David A. Farley Senior Vice President, Finance and Administration, November 3, 1999
- ----------------------------------------- and Chief Financial Officer (Principal Financial
David A. Farley Officer) and Director
/s/ John J. Moores Chairman of the Board of Directors November 3, 1999
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John J. Moores
/s/ Christopher A. Cole Director November 3, 1999
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Christopher A. Cole
/s/ Richard A. Hosley II Director November 3, 1999
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Richard A. Hosley II
/s/ Charles E. Noell III Director November 3, 1999
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Charles E. Noell III
/s/ Norris van den Berg Director November 3, 1999
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Norris van den Berg
/s/ Thomas G. Watrous, Sr. Director November 3, 1999
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Thomas G. Watrous, Sr.
/s/ Matthew C. Gless Principal Accounting Officer November 3, 1999
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Matthew C. Gless
</TABLE>
II-5
<PAGE>
EXHIBIT 5.1
[Letterhead of Wilson Sonsini Goodrich & Rosati]
November 4, 1999
Peregrine Systems, Inc.
12670 High Bluff Drive
San Diego, California 92130
RE: REGISTRATION STATEMENT ON FORM S-8
Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by
you with the Securities and Exchange Commission on or about November 4, 1999
(the "Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of an aggregate of 34,504 shares of your
Common Stock, $0.001 par value, (the "Shares") to be issued pursuant to the
Knowlix Amended and Restated 1997 Stock Plan (the "Plan"). As your counsel in
connection with this transaction, we have examined the proceedings taken and are
familiar with the proceedings proposed to be taken by you in connection with the
issuance and sale of the Shares pursuant to the Plan.
It is our opinion that, when issued and sold in the manner described in
the Plan and pursuant to the agreements which accompany each grant under the
Plan, the Shares will be legally and validly issued, fully-paid and
non-assessable.
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
<PAGE>
Exhibit 10.24
KNOWLIX CORPORATION
AMENDED AND RESTATED
1997 STOCK OPTION PLAN
ARTICLE 1.
GENERAL PROVISIONS
1.1. PURPOSE OF THE PLAN
This 1997 Stock Option Plan (the "Plan") is intended to promote
the interests of Knowlix Corporation, a Delaware corporation, (the
"Corporation") by providing eligible persons with the opportunity to acquire or
increase their proprietary interest in the Corporation as an incentive for them
to remain in the Service of the Corporation.
Capitalized terms shall have the meanings assigned to such terms
in the attached Appendix.
1.2. ADMINISTRATION OF THE PLAN
a. Prior to the Section 12(g) Registration Date, the Plan
shall be administered by the Board or a committee of the Board.
b. Beginning with the Section 12(g) Registration Date, the
Primary Committee shall have sole and exclusive authority to administer the Plan
with respect to Section 16 Insiders. Administration of the Plan with respect to
all other persons eligible under the Plan may, at the Board's discretion, be
vested in the Primary Committee or a Secondary Committee, or the Board may
retain the power to administer the Plan with respect to all such persons.
c. Members of the Primary Committee or any Secondary Committee
shall serve for such period of time as the Board may determine and may be
removed by the Board at any time. The Board may also terminate the functions of
any Secondary Committee at any time and reassume all powers and authority
previously delegated to such committee.
d. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Plan and to make such determinations under, and issue such
interpretations of, the provisions of the Plan and any outstanding options
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan
shall be final and binding on all parties who have an interest in the Plan under
its jurisdiction or any option thereunder.
e. Service on the Primary Committee or the Secondary Committee
shall constitute service as a Board member, and members of each such committee
shall accordingly be
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entitled to full indemnification and reimbursement as Board members for their
service on such committee. No member of the Primary Committee or the Secondary
Committee shall be liable for any act or omission made in good faith with
respect to the Plan or any option grants under the Plan.
f. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority (subject to the
provisions of the Plan) to determine which eligible persons are to receive
option grants, the time or times when such option grants are to be made, the
number of shares to be covered by each such grant, the status of the granted
option as either an Incentive Option or a Non-Statutory Option, the time or
times at which each option is to become exercisable, the vesting schedule (if
any) applicable to the option shares, the acceleration of such vesting schedule,
the maximum term for which the option is to remain outstanding, whether the
option shares shall be subject to rights of repurchase and/or rights of first
refusal, and all other terms and conditions of the option grants.
1.3. ELIGIBILITY
The following persons shall be eligible to participate in the
Plan:
a. Employees,
b. non-employee members of the Board or the board of directors
of any Parent or Subsidiary, and
c. consultants and other independent advisors who provide
services to the Corporation or any Parent or Subsidiary.
1.4. STOCK SUBJECT TO THE PLAN
a. The stock issuable under the Plan shall be shares of
authorized but unissued Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed 3,153,910 shares.
b. Shares of Common Stock subject to outstanding options shall
be available for subsequent issuance under the Plan to the extent (i) the
options expire or terminate for any reason prior to exercise in full or (ii) the
options are cancelled in accordance with the cancellation-regrant provisions of
Article 2. However, should the Exercise Price be paid with shares of Common
Stock or should shares of Common Stock otherwise issuable under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise of an option under the Plan, then the number of
shares of Common Stock available for issuance under the Plan shall be reduced by
the gross number of shares for which the option is exercised, and not by the net
number of shares of Common Stock issued to the holder of such option.
c. Should any change be made to the Common Stock by reason of
any stock
2
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split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the number and/or class of securities for which any one person may be
granted options per calendar year, and (iii) the number and/or class of
securities and the Exercise Price in effect under each outstanding option in
order to prevent the dilution or enlargement of benefits thereunder. The
adjustments determined by the Plan Administrator shall be final, binding, and
conclusive.
ARTICLE 2.
OPTION GRANT PROGRAM
2.1. OPTION TERMS
Each option shall be evidenced by one or more documents in the
form approved by the Plan Administrator; provided, however, that each such
document shall comply with the terms specified below. Each document evidencing
an Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
a. EXERCISE PRICE
(1) The Exercise Price shall be fixed by the Plan
Administrator but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the Grant Date.
(2) The Exercise Price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Article 3.1, and
the documents evidencing the option, be payable in one or more of the forms
specified below:
(a) cash or check made payable to the
Corporation,
(b) shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date, or
(c) to the extent the option is exercised for
vested shares, through a special sale and remittance procedure pursuant to which
the Optionee shall concurrently provide irrevocable written instructions to (a)
a Corporation-designated brokerage firm to effect the immediate sale of the
Purchased Shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Exercise Price payable for the Purchased Shares plus all applicable federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) the Corporation to deliver the
certificates for the Purchased Shares directly to such brokerage firm in order
to complete the sale.
3
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Except to the extent such sale and remittance procedure is
utilized, payment of the Exercise Price for the Purchased Shares must be made on
the Exercise Date.
b. EXERCISE AND TERM OF OPTIONS. Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option. However, no option shall have a term in excess
of ten (10) years measured from the Grant Date.
c. EFFECT OF TERMINATION OF SERVICE
(1) The following provisions shall govern the exercise
of any options held by the Optionee at the time of cessation of Service:
(a) Any option outstanding at the time of the
Optionee's cessation of Service for any reason except death, Permanent
Disability or Misconduct shall remain exercisable for a three (3) month
period thereafter, provided no option shall be exercisable after the
Expiration Date.
(b) Any option outstanding at the time of the
Optionee's cessation of Service due to death or Permanent Disability
shall remain exercisable for a twelve (12) month period thereafter,
provided no option shall be exercisable after the Expiration Date.
Subject to the foregoing, any option exercisable in whole or in part by
the Optionee at the time of death may be exercised subsequently by the
personal representative of the Optionee's estate or by the person or
persons to whom the option is transferred pursuant to the Optionee's will
or in accordance with the laws of descent and distribution.
(c) Should the Optionee's Service be terminated
for Misconduct, then all outstanding options held by the Optionee shall
terminate immediately and cease to be outstanding.
(d) During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more than
the number of shares for which the option is exercisable on the date of
the Optionee's cessation of Service; the option shall, immediately upon
the Optionee's cessation of Service, terminate and cease to be
outstanding to the extent the option is not otherwise at that time
exercisable. Upon the expiration of the applicable exercise period or (if
earlier) upon the Expiration Date, the option shall terminate and cease
to be outstanding for any shares for which the option has not been
exercised.
(2) The Plan Administrator shall have the discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(a) extend the period of time for which the
option is to remain exercisable following the Optionee's cessation of
Service from the period otherwise in effect for that option to such
greater period of time as the Plan
4
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Administrator shall deem appropriate, but in no event beyond the
Expiration Date, and/or
(b) permit the option to be exercised, during the
applicable post-Service exercise period, not only with respect to the
number of shares of Common Stock for which such option is exercisable at
the time of the Optionee's cessation of Service but also with respect to
one or more additional shares that would have vested under the option had
the Optionee continued in Service.
(3) The Shares purchased by Optionee pursuant to
exercise of an Option shall be subject to the Corporation's Repurchase Right as
set forth in the Stock Option Exercise Notice and Purchase Agreement. Such
Repurchase Right shall be triggered upon Optionee's termination of Service for
any reason.
d. STOCKHOLDER RIGHTS. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the Exercise Price, and become a
holder of record of the Purchased Shares.
e. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of
the Optionee, Incentive Options may be exercised only by the Optionee, and shall
not be assignable or transferable except by will or the laws of descent and
distribution following the Optionee's death. Non-Statutory Options may be
assigned or transferred in whole or in part only (i) during the Optionee's
lifetime if in connection with the Optionee's estate plan to one or more members
of the Optionee's immediate family (spouse and children) or to a trust
established exclusively for the benefit of one or more such immediate family
members, or (ii) by will or the laws of descent and distribution following the
Optionee's death. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate.
2.2. INCENTIVE OPTIONS
The terms specified below shall apply to all Incentive Options.
Except as modified by the provisions of this Section 2.2, all the provisions of
this Plan shall otherwise apply to Incentive Options. Options specifically
designated as Non-Statutory Options when issued under the Plan shall NOT be
subject to the terms of this Section 2.2.
a. ELIGIBILITY. Incentive Options may only be granted to
Employees.
b. EXERCISE PRICE. The Exercise Price shall not be less than
one hundred percent (100%) of the Fair Market Value per share of Common Stock on
the Grant Date.
c. DOLLAR LIMITATION. The aggregate Fair Market Value of the
shares of Common Stock (determined as of the respective date or dates of grant)
for which one or more
5
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options granted to any Employee under the Plan (or any other option plan of the
Corporation or any Parent or Subsidiary) may for the first time become
exercisable as Incentive Options during any one (1) calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied in the
order in which such options are granted.
d. 10% STOCKHOLDER. If an employee to whom an Incentive Option
is granted is a 10% Stockholder, then the Exercise Price shall not be less than
one hundred ten percent (110%) of the Fair Market Value per share of Common
Stock on the Grant Date, and the option term shall not exceed five (5) years
measured from the Grant Date.
e. HOLDING PERIOD. Shares purchased pursuant to an option
shall cease to qualify for favorable tax treatment as Incentive Option Shares if
and to the extent Optionee disposes of such shares within two (2) years of the
Grant Date or within in one (1) year of Optionee's purchase of said shares.
2.3. CORPORATE TRANSACTION/CHANGE IN CONTROL
a. In the event of any Corporate Transaction, the Board of
Directors shall have the sole discretion to elect that each outstanding option
shall automatically accelerate so that each such option shall, immediately prior
to the effective date of the Corporate Transaction, become fully exercisable for
all of the shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
The Board may exercise its discretion to accelerate the vesting of options
whether or not (i) such option is, in connection with the Corporate Transaction,
either to be assumed by the successor corporation or Parent thereof or to be
replaced with a comparable option to purchase shares of the capital stock of the
successor corporation or Parent thereof, (ii) such option is to be replaced with
a cash incentive program of the successor corporation which preserves the spread
existing on the unvested option shares at the time of the Corporate Transaction
and provides for subsequent payout in accordance with the same vesting schedule
applicable to such option, except to the extent that the acceleration of such
option is subject to other limitations imposed by the Plan Administrator at the
time of the option grant. The determination of option comparability under clause
(i) above shall be made by the Plan Administrator, whose determination shall be
final, binding and conclusive.
b. In the event of any Corporate Transaction, the Board of
Directors shall have sole discretion to elect that all outstanding repurchase
rights may also be terminated automatically whether or not those repurchase
rights are to be assigned to the successor corporation (or Parent thereof) in
connection with such Corporate Transaction.
c. The Plan Administrator's discretion under Sections 2.3.a.
and b. above shall be exercisable either at the time the option is granted or at
any time while the option remains outstanding, whether or not those options are
to be assumed or replaced (or those repurchase rights are to be assigned) in the
Corporate Transaction. The Plan Administrator shall
6
<PAGE>
also have the discretion to grant options which do not accelerate whether or not
such options are assumed (and to provide for repurchase rights that do not
terminate whether or not such rights are assigned) in connection with a
Corporate Transaction.
d. If the Board of Directors elects the automatic acceleration
of some or all of the outstanding options upon the occurrence of a Corporate
Transaction, all such outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof) immediately following the consummation of the Corporate
Transaction.
e. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities that would have been
issuable to the Optionee in consummation of such Corporate Transaction had the
option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction, (ii) the exercise price payable per share under each
outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same and (iii) the maximum number of securities
and/or class of securities for which any one person may be granted stock
options.
f. The Plan Administrator shall have the discretion,
exercisable at the time the option is granted or at any time while the option
remains outstanding, to provide for the automatic acceleration of any options
assumed or replaced in a Corporate Transaction that do not otherwise accelerate
at that time (and the termination of any of the Corporation's outstanding
repurchase rights that do not otherwise terminate at the time of the Corporate
Transaction) in the event the Optionee's Service should subsequently terminate
by reason of an Involuntary Termination within eighteen (18) months following
the effective date of such Corporate Transaction. Any options so accelerated
shall remain exercisable for shares until the earlier of (i) the expiration of
the option term or (ii) the expiration of the one (1)-year period measured from
the effective date of the Involuntary Termination.
g. The Plan Administrator shall have the discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to (i) provide for the automatic acceleration of one
or more outstanding options (and the automatic termination of one or more
outstanding repurchase rights) upon the occurrence of a Change in Control or
(ii) condition any such option acceleration (and the termination of any
outstanding repurchase rights) upon the subsequent Involuntary Termination of
the Optionee's Service within a specified period (not to exceed eighteen (18)
months) following the effective date of such Change in Control. Any options
accelerated in connection with a Change in Control shall remain fully
exercisable until the expiration or sooner termination of the option term.
h. The portion of any Incentive Option accelerated in
connection with a Corporate Transaction or Change in Control shall remain
exercisable as an Incentive Option only to the extent the applicable One Hundred
Thousand Dollar ($100,000) limitation is not exceeded. To the extent such dollar
limitation is exceeded, the accelerated portion of such option shall be
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exercisable as a Non-Statutory Option under the federal tax laws.
i. The grant of options under the Plan shall in no way affect
the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
2.4. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any
time and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution new options covering the same or different number of shares of
Common Stock but with an Exercise Price based on the Fair Market Value per share
of Common Stock on the new Grant Date.
ARTICLE 3.
MISCELLANEOUS
3.1. FINANCING
a. The Plan Administrator may permit any Optionee to pay the
option Exercise Price by delivering a promissory note payable in one or more
installments. The terms of any such promissory note (including the interest rate
and the terms of repayment) shall be established by the Plan Administrator in
its sole discretion. Promissory notes may be authorized with or without security
or collateral. In all events, the maximum credit available to the Optionee may
not exceed the sum of (i) the aggregate option Exercise Price payable for the
Purchased Shares plus (ii) the amount of any federal, state and local income and
employment tax liability incurred by the Optionee in connection with the option
exercise.
b. The Plan Administrator may, in its discretion, determine
that one or more such promissory notes shall be subject to forgiveness by the
Corporation in whole or in part upon such terms as the Plan Administrator may
deem appropriate.
3.2. TAX WITHHOLDING
a. The Corporation's obligation to deliver shares of Common
Stock upon the exercise of options under the Plan shall be subject to the
satisfaction of all applicable federal, state and local income and employment
tax withholding requirements.
b. The Plan Administrator may, in its discretion, provide any
or all holders of Non-Statutory Options under the Plan with the right to use
shares of Common Stock in satisfaction of all or part of the Taxes incurred by
such holders in connection with the exercise of their options. Such right may be
provided to any such holder in either or both of the following formats:
(1) STOCK WITHHOLDING: The election to have the
Corporation
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withhold, from the shares of Common Stock otherwise issuable upon the
exercise of such Non-Statutory Option, a portion of those shares with an
aggregate Fair Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.
(2) STOCK DELIVERY: The election to deliver to the
Corporation, at the time the Non-Statutory Option is exercised, one or
more shares of Common Stock previously acquired by such holder (other
than in connection with the option exercise triggering the Taxes) with an
aggregate Fair Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.
3.3. EFFECTIVE DATE AND TERM OF THE PLAN
a. The Plan shall become effective on the Plan Effective Date.
However, no shares shall be issued under the Plan pursuant to Incentive Options
until the Plan is approved by the Corporation's stockholders. If such
stockholder approval is not obtained within twelve (12) months after the Plan
Effective Date, then all Incentive Options previously granted under this Plan
shall automatically convert into Non-Statutory Options.
b. The Plan shall terminate upon the earliest of (i) December
17, 2002, (ii) the date on which all shares available for issuance under the
Plan shall have been issued, or (iii) the termination of all outstanding options
in connection with a Corporate Transaction. Upon such Plan termination, all
outstanding options shall continue to have force and effect in accordance with
the provisions of the documents evidencing such options.
3.4. AMENDMENT OF THE PLAN
a. The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect any rights and obligations with
respect to options at the time outstanding under the Plan unless each affected
Optionee consents to such amendment or modification. In addition, amendments to
the Plan shall be subject to approval of the Corporation's stockholders to the
extent required by applicable laws or regulations.
b. Options to purchase shares of Common Stock may be granted
under the Plan that are in each instance in excess of the number of shares then
available for issuance under the Plan, provided any excess shares actually
issued are held in escrow until there is obtained Board approval (and
shareholder approval if required by applicable laws or regulations) of an
amendment sufficiently increasing the number of shares of Common Stock available
for issuance under the Plan.
3.5. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.
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3.6. REGULATORY APPROVALS
a. The implementation of the Plan, the granting of any option
under the Plan, and the issuance of any shares of Common Stock upon the exercise
of any option shall be subject to the Corporation's obtaining all approvals and
permits required by regulatory authorities having jurisdiction over the Plan and
the options granted under it, and the shares of Common Stock issued pursuant to
the Plan.
b. No shares of Common Stock shall be issued or delivered
under the Plan unless and until there shall have been compliance with all
applicable requirements of federal and state securities laws and all applicable
listing requirements of any stock exchange (or Nasdaq, if applicable) on which
Common Stock is then listed for trading.
3.7. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee, which rights
are hereby expressly reserved by each, to terminate such person's Service at any
time for any reason, with or without cause.
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APPENDIX
The following definitions shall be in effect under the Plan and
the Plan Documents:
1. BOARD shall mean the Corporation's Board of Directors.
2. CHANGE IN CONTROL shall mean a change in ownership or control of
the Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any
person or related group of persons (other than the Corporation or a
person that directly or indirectly controls, is controlled by, or is
under common control with, the Corporation), of beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's stockholders, which the
Board does not recommend such stockholders to accept, or
(ii) a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a majority
of the Board members ceases, by reason of one or more contested elections
for Board membership, to be comprised of individuals who either (A) have
been Board members continuously since the beginning of such period or (B)
have been elected or nominated for election as Board members during such
period by at least a majority of the Board members described in clause
(A) who were still in office at the time the Board approved such election
or nomination.
3. CODE shall mean the Internal Revenue Code of 1986, as amended.
4. COMMON STOCK shall mean the Corporation's common stock.
5. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction; or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
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6. ELIGIBLE DIRECTOR shall mean a non-employee Board member eligible
to participate in the Plan.
7. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
8. EXERCISE DATE shall mean the date on which the Corporation shall
have received written notice of the option exercise.
9. EXERCISE PRICE shall mean the exercise price per share as
specified in the Stock Option Grant.
10. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Stock Option Grant.
11. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is traded at the time on Nasdaq,
then the Fair Market Value shall be the closing selling price per share
of Common Stock on the date in question, as such price is reported by the
National Association of Securities Dealers on Nasdaq or any successor
system. If there is no closing selling price for the Common Stock on the
date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in the composite
tape of transactions on such exchange. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.
(iii) If the Common Stock is not listed on any Stock
Exchange nor traded on Nasdaq, then the Fair Market Value shall be
determined by the Plan Administrator after taking into account such
factors as the Plan Administrator shall deem appropriate.
(iv) For purposes of any option grants made on the
Underwriting Date, the Fair Market Value shall be deemed to be equal to
the price per share at which the Common Stock is sold in the initial
public offering pursuant to the Underwriting Agreement.
12. FIRST REFUSAL RIGHT shall mean the right granted to the
Corporation in Section E
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of the Stock Option Exercise Notice and Purchase Agreement.
13. GRANT DATE shall mean the date on which the option is granted to
Optionee as specified in the Stock Option Grant.
14. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.
15. INVOLUNTARY TERMINATION shall mean the termination of the Service
of any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge
by the Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following
(A) a change in his or her position with the Corporation which materially
reduces his or her level of responsibility, (B) a reduction in his or her
level of compensation (including base salary, fringe benefits and
participation in corporate-performance based bonus or incentive programs)
by more than fifteen percent (15%) or (C) a relocation of such
individual's place of employment by more than fifty (50) miles, provided
and only if such change, reduction or relocation is effected by the
Corporation without the individual's consent.
16. MARKET STAND OFF shall mean the market stand off restriction on
disposition of the Purchased Shares as specified in Section F of the Stock
Option Exercise Notice and Purchase Agreement.
17. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee any unauthorized use or disclosure by
such person of confidential information or trade secrets of the Corporation (or
any Parent or Subsidiary), or any other intentional misconduct by such person
adversely affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
any Optionee or other person in the Service of the Corporation (or any Parent or
Subsidiary).
18. 1933 ACT shall mean the Securities Act of 1933, as amended.
19. 1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.
20. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.
21. OPTIONEE shall mean any person to whom an option is granted under
Plan.
22. OPTION SHARES shall mean the number of shares of Common Stock
subject to the
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option as specified in the Stock Option Grant.
23. OWNER shall mean Option and all subsequent holders of the
Purchased Shares who derive their chain of ownership through a Permitted
Transfer from Optionee.
24. PARENT shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one or the other corporations
in such chain.
25. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the Optionee to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.
26. PERMITTED TRANSFER shall mean (i) a gratuitous transfer of the
Purchased Shares, provided and only if Optionee obtains the Corporation's prior
written consent to such transfer, (ii) a transfer of title to the Purchased
Shares effected pursuant to Optionee's will or the laws of intestate succession
following Optionee's death, or (iii) a transfer to the Corporation in pledge as
security for any purchase-money indebtedness incurred by Optionee in connection
with the acquisition of the Purchased Shares.
27. PLAN ADMINISTRATOR shall mean the particular entity, whether the
Board or a committee of the Board, which is authorized to administer the Plan
with respect to one or more classes of eligible persons, to the extent such
entity is carrying out its administrative functions under the Plan with respect
to the persons under its jurisdiction.
28. PLAN DOCUMENTS shall mean the Plan, the Stock Option Grant, Stock
Option Agreement and Stock Option Exercise Notice and Purchase Agreement,
collectively.
29. PLAN EFFECTIVE DATE shall mean December 17, 1997, the date on
which the Plan was adopted by the Board.
30. PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members (as defined in the regulations to Section 16 of the
1934 Act) appointed by the Board to administer the Plan with respect to Section
16 Insiders.
31. PURCHASED SHARES shall mean the shares purchased upon exercise of
the Option.
32. RECAPITALIZATION shall mean any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other charge
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.
33. REORGANIZATION shall mean any of the following transactions:
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(i) a merger or consolidation in which the Corporation is not
the surviving entity;
(ii) a sale, transfer or other disposition of all or
substantially all of the Corporation's assets;
(iii) a reverse merger in which the Corporation is the surviving
entity but in which the Corporation's outstanding voting securities are
transferred in whole or in part to a person or persons different from the
persons holding those securities immediately prior to the merger; or
(iv) any transaction effected primarily to change the state in
which the Corporation is incorporated or to create a holding company
structure.
34. REPURCHASE RIGHT shall mean the Corporation's right to repurchase
Purchased Shares as set forth in Section D of the Stock Option Exercise Notice
and Repurchase Agreement.
35. SEC shall mean the Securities Exchange Commission.
36. SECONDARY COMMITTEE shall mean a committee of two (2) or more
Board members appointed by the Board to administer the Plan with respect to
eligible persons other than Section 16 Insiders.
37. SECTION 12(g) REGISTRATION DATE shall mean the date on which the
Common Stock is first registered under Section 12(g) of the 1934 Act.
38. SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
39. SERVICE shall mean the performance of services to the Corporation
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant.
40. STOCK EXCHANGE shall mean either the American Stock Exchange, the
New York Stock Exchange, or another regional stock exchange.
41. STOCK OPTION EXERCISE NOTICE AND PURCHASE AGREEMENT shall mean the
agreement of said title in substantially the form of Exhibit B to the Stock
Option Grant, pursuant to which Optionee gives notice of his intent to exercise
the option and Purchase Shares.
42. STOCK OPTION GRANT shall mean the Stock Option Grant document
accompanying the Stock Option Agreement, pursuant to which Optionee has been
informed of the basic terms of the option evidenced thereby.
43. SUBSIDIARY shall mean any corporation (other than the Corporation)
in an
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unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
44. TAXES shall mean the Federal, state and local income and
employment tax liabilities incurred by the holder of Non-Statutory Options in
connection with the exercise of those options.
45. 10% STOCKHOLDER shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
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EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
April 26, 1999 appearing in the Peregrine Systems, Inc. Form 10-K for the year
ended March 31, 1999 and to all references to our firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
San Diego, California
November 4, 1999
