<PAGE>
As filed with the Securities and Exchange Commission on October 15, 1997
Registration No. 333- ______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
TSI INTERNATIONAL SOFTWARE LTD.
(Exact name of issuer as specified in its charter)
DELAWARE 06-1132156
(State of Incorporation) (I.R.S. Employer Identification No.)
45 Danbury Road, Wilton, Connecticut 06897
(Address of Principal Executive Office Including Zip Code)
1997 Equity Incentive Plan
1997 Directors Stock Option Plan
Non-Plan Option to purchase Common Stock
Options to purchase Common Stock granted under the 1993 Stock Option Plan
(Full title of the plans)
Ira A. Gerard
Chief Financial Officer and Vice President, Finance and Administration
TSI International Software Ltd.
45 Danbury Road
Wilton, Connecticut 06897
(203) 761-8600
(Name, address and telephone number, including area code, of agent for service)
COPIES TO:
Mark C. Stevens, Esq.
Jeffrey R. Vetter
FENWICK & WEST LLP
Two Palo Alto Square
Palo Alto, CA 94306
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------
AMOUNT PROPOSED PROPOSED MAXIMUM
TITLE OF SECURITIES TO BE TO BE MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PRICE PER SHARE PRICE REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 1,488,414 (1) $13.19 (2) $19,632,181 (2) $5,949.15 (2)
- --------------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.01 1,378,257 (3) $ 1.62 (4) $ 2,232,776 $ 676.60
--------- ------ ----------- ---------
- --------------------------------------------------------------------------------------------------------------------
Total 2,866,671 $7.627 (4) $21,864,957 $6,625.75
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Additional shares available for grant and not yet subject to outstanding
options as of October 15, 1997 under the 1997 Equity Incentive Plan (the
"1997 Plan") and the 1997 Directors Stock Option Plan (the "Directors
Plan").
(2) Estimated as of October 10, 1997 pursuant to Rule 457(c) under the
Securities Act of 1933, as amended (the "Securities Act"), solely for the
purpose of calculating the registration fee.
(3) Shares subject to options outstanding as of October 15, 1997 under the 1993
Stock Option Plan, the 1997 Plan, the Directors Plan and includes 30,000
shares subject to nonplan stock options granted by the Registrant.
(4) Calculated based upon the weighted average per share exercise price for
such outstanding options pursuant to Rule 457(h)(1) under the Securities
Act.
<PAGE>
PART I
Item 1. Plan Information.*
- ------ ----------------
Item 2. Registrant Information and Employee Plan Annual Information.*
- ------ -----------------------------------------------------------
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the Registration Statement in accordance with
Rule 428 under the Securities Act of 1933, as amended (the "Securities
Act"), and the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
-----------------------------------------------
There are hereby incorporated by reference in this Registration
Statement the following documents and information heretofore filed with the
Securities and Exchange Commission:
1. The Company's prospectus filed with the Commission on July 2,
1997 under Rule 424(b) of the Securities Act, as amended, which contains audited
financial statements for the fiscal year ended December 31, 1996.
2. The description of the Company's Common Stock contained in the
Company's registration statement filed with the Commission under Section 12 of
the Exchange Act, including any amendment or report filed for the purpose of
updating such description;
3. The Company's quarterly report on Form 10-Q for the quarter ended
June 30, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act after the date of this Registration Statement,
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference 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.
--------------------------------------
None.
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
As permitted by the Delaware General Corporation Law, the Registrant's
Certificate of Incorporation includes a provision that eliminates the personal
liability of its directors for monetary damages for breach of fiduciary duty as
a director to the fullest extent permitted by the Delaware General Corporation
Law. As permitted by Section 145 of the Delaware General Corporation Law, the
Bylaws of the Registrant provide that (i) the Registrant is required to
indemnify its directors and executive officers to the fullest extent permitted
by the Delaware General Corporation Law; (ii) to the fullest extent permitted by
the Delaware General Corporation Law, the Registrant is required to advance all
expenses, as incurred, to its directors and executive officers in connection
with a legal proceeding (subject to certain exceptions); (iii) the rights
conferred in the Bylaws are not exclusive; (iv) the Registrant may, in its
discretion indemnity or advance expenses to persons whom the Registrant is not
obligated to indemnify or advance expenses; (v) the Registrant is authorized to
enter into indemnification agreements with its directors, officers, employees
and agents or any person
<PAGE>
serving at the request of the Registrant as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, including employee benefit plans; and (vi) the Registrant may not
retroactively amend the Bylaw provisions relating to indemnification.
The Registrant has entered into indemnity agreements with each of its
directors and executive officers. The indemnity agreements provide that
directors and executive officers will be indemnified and held harmless to the
fullest possible extent permitted by law including against all expenses
(including attorneys' fees), judgments, fines and settlement amounts paid or
reasonably incurred by them in any action, suit or proceeding, including any
derivative action by or in the right of the Registrant, on account of their
services as directors, officers, employees or agents of the Registrant or as
directors, officers, employees or agents of any other company or enterprise when
they are serving in such capacities at the request of the Registrant. The
Registrant will not be obligated pursuant to the agreements to indemnify or
advance expenses to an indemnified party with respect to proceedings or claims
(i) initiated by the indemnified party and not by way of defense, except with
respect to a proceeding authorized by the Board and successful proceedings
brought to enforce a right to indemnification under the indemnity agreements;
(ii) for any amounts paid in settlement of a proceeding unless the Registrant
consents to such settlement; (iii) on account of any suit in which judgment is
rendered against the indemnified party for an accounting of profits made from
the purchase or sale by the indemnified party of securities of the Registrant
pursuant to the provisions of (S)16(b) of the Securities Exchange Act of 1934
and related laws; (iv) on account of conduct by an indemnified party that is
finally adjudged to have been in bad faith or conduct that the indemnified party
did not reasonably believe to be in, or not opposed to, the best interests of
the Registrant; (v) on account of any criminal action or proceeding arising out
of conduct that the indemnified party had reasonable cause to believe was
unlawful; or (vi) if a final decision by a court having jurisdiction in the
matter shall determine that such indemnification is not lawful.
The indemnity agreement requires a director or executive officer to
reimburse the Registrant for expenses advanced only to the extent it is
ultimately determined that the director or executive officer is not entitled,
under Delaware law, the Bylaws, his or her indemnity agreement or otherwise to
be indemnified for such expenses. The indemnity agreement provides that it is
not exclusive of any rights a director or executive officer may have under the
Certificate of Incorporation, Bylaws, other agreements, any majority-in-interest
vote of the stockholders or vote of disinterested directors, the Delaware law,
or otherwise.
The indemnification provision in the Bylaws, and the indemnity
agreements entered into between the Registrant and its directors and executive
officers, may be sufficiently broad to permit indemnification of the
Registrant's directors and executive officers for liabilities arising under the
Securities Act.
The Registrant maintains directors and officers liability insurance
with a per claim and annual aggregate coverage limit of $10,000,000.
Item 7. Exemption From Registration Claimed.
-----------------------------------
Not applicable.
Item 8. Exhibits.
--------
Exhibit No. Description
- ---------- -----------
4.01* Registrant's Certificate of Incorporation (previously filed
as Exhibit 3.01 to the Registrant's quarterly report on Form
10-Q (the "10-Q") for the quarter ended June 30, 1997 (File
----
No. 0-22667)
4.02* Registrant's Bylaws (previously filed as Exhibit 3.02 to the
10-Q)
4.03* Stockholders Agreement dated as of June 1, 1989, as amended
(previously filed as Exhibit 4.02 to the Registrant's
Registration Statement (the "Registration Statement") on
----------------------
Form S-1 (File No. 333-27293))
<PAGE>
4.04* Form of Specimen Certificate for Registrant's Common Stock
(previously filed as Exhibit 4.01 to pre-effective Amendment
No. 1 to the Registration Statement)
4.05* 1989 Stock Purchase Agreement, as amended (previously filed
as Exhibit 4.03 to pre-effective Amendment No. 1 to the
Registration Statement)
4.06 Registrant's 1997 Equity Incentive Plan, as amended
4.07 Registrant's 1997 Directors Stock Option Plan, as amended
4.08* Registrant's 1993 Stock Option Plan and related documents
(previously filed as Exhibit 10.01 to the Registration
Statement)
4.09 Form of Registrant's Non-Plan Option
5.01 Opinion of Fenwick & West LLP
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01)
23.02 Consent of KPMG Peat Marwick LLP
24.01 Power of Attorney (See page II-4)
___________________________
* These exhibits were previously filed with the Commission as indicated and
are incorporated herein by reference.
Item 9. Undertakings.
------------
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:
(a) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(b) 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 thereto) 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 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement;
(c) 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 (1)(a) and (1)(b) 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
<PAGE>
to the Commission by the registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference 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.
(4) 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.
(5) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X is not set
forth in the prospectus, to deliver, or cause to be delivered to each person to
whom the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such interim
financial information.
(6) 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 Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the
registrant, TSI International Software Ltd., 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 Wilton, State of
Connecticut, on October 15, 1997.
TSI INTERNATIONAL SOFTWARE LTD.
By: /s/ Ira A. Gerard
-------------------------------
Ira A. Gerard
Chief Financial Officer and
Vice President, Finance and
Administration
<PAGE>
POWER OF ATTORNEY
-----------------
Each person whose signature appears below constitutes and appoints
Constance F. Galley and Ira A. Gerard, his true and lawful attorneys-in-fact and
agents with full power of substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting to said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or either of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933 as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
PRINCIPAL EXECUTIVE OFFICER
AND DIRECTOR
/s/ Constance F. Galley President and Chief October 15, 1997
- ----------------------------- Executive Officer and
Constance F. Galley Director
PRINCIPAL FINANCIAL AND
PRINCIPAL ACCOUNTING OFFICER
/s/ Ira A. Gerard Vice President, Finance and October 15, 1997
- ----------------------------- Administration, and Chief
Ira A. Gerard Financial Officer and
Secretary
ADDITIONAL DIRECTORS
/s/ Stewart K.P. Gross Director October 15, 1997
- -----------------------------
Stewart K.P. Gross
/s/ Ernest E. Keet Director October 15, 1997
- -----------------------------
Ernest E. Keet
/s/ John J. Pendray Director October 15, 1997
- -----------------------------
John J. Pendray
/s/ Dennis G. Sisco Director October 15, 1997
- -----------------------------
Dennis G. Sisco
<PAGE>
EXHIBIT 4.06
TSI INTERNATIONAL SOFTWARE LTD.
1997 EQUITY INCENTIVE PLAN
As amended through July 21, 1997
1. PURPOSE. The purpose of this Plan is to provide incentives
-------
to attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options, Restricted Stock and Stock
Bonuses. Capitalized terms not defined in the text are defined in Section 23.
2. SHARES SUBJECT TO THE PLAN.
--------------------------
2.1 Number of Shares Available. Subject to Sections 2.2 and
--------------------------
18, the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 1,125,000 Shares. Subject to Sections 2.2 and 18,
Shares that: (a) are subject to issuance upon exercise of an Option but cease to
be subject to such Option for any reason other than exercise of such Option; (b)
are subject to an Award granted hereunder but are forfeited or are repurchased
by the Company at the original issue price; or (c) are subject to an Award that
otherwise terminates without Shares being issued will again be available for
grant and issuance in connection with future Awards under this Plan. Any
authorized shares not issued or subject to outstanding grants under the
Company's 1993 Stock Option Plan (the "PRIOR PLAN") on the Effective Date (as
defined below) and any shares that: (a) are issuable upon exercise of options
granted pursuant to the Prior Plan that expire or become unexercisable for any
reason without having been exercised in full or (b) are subject to an option
granted pursuant to the Prior Plan but are forfeited or are repurchased by the
Company at the original issue price; will no longer be available for grant and
issuance under the Prior Plan, but will be available for grant and issuance
under this Plan. At all times the Company shall reserve and keep available a
sufficient number of Shares as shall be required to satisfy the requirements of
all outstanding Options granted under this Plan and all other outstanding but
unvested Awards granted under this Plan. No Participant may receive (a)
Restricted Stock Awards, (b) Stock Bonus Awards, or (c) Options with an Exercise
Price below Fair Market Value for more than 150,000 Shares over the term of the
Plan, and the sum of such awards issued under this Plan may not exceed 300,000
Shares in the aggregate over the term of the Plan.
2.2 Adjustment of Shares. In the event that the number of
--------------------
outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the stockholders of the
Company and compliance with applicable securities laws; provided, however, that
-------- -------
fractions of a Share will not be issued but will either be replaced by a cash
payment equal to the Fair Market Value of such fraction of a Share or will be
rounded up to the nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. ISO (as defined in Section 5 below) may be
-----------
granted only to employees (including officers and directors who are also
employees) of the Company or of a Parent or Subsidiary of the Company. All
other Awards may be granted to employees, officers, directors, consultants,
independent contractors and advisors of the Company or any Parent or Subsidiary
of the Company; provided such consultants, contractors and advisors render bona
--------
fide services not in connection with the offer and sale of securities in a
capital-raising transaction. No person will be eligible to receive more than
300,000 Shares in any calendar year under this Plan pursuant to the grant of
Awards hereunder, other than new employees of the Company or of a Parent or
Subsidiary of the Company (including new employees who are also officers and
directors of the Company or any Parent or Subsidiary of the Company) who are
eligible to receive up to a maximum of 450,000 Shares in the calendar year in
which they commence their employment. A person may be granted more than one
Award under this Plan.
<PAGE>
4. ADMINISTRATION.
--------------
4.1 Committee Authority. This Plan will be administered by
-------------------
the Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan.
Without limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and any
other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to
this Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject
to Awards;
(f) determine whether Awards will be granted singly, in
combination with, in tandem with, in replacement of, or as
alternatives to, other Awards under this Plan or any other
incentive or compensation plan of the Company or any Parent or
Subsidiary of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the
administration of this Plan.
4.2 Committee Discretion. Any determination made by the
--------------------
Committee with respect to any Award will be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
this Plan or Award, at any later time, and such determination will be final and
binding on the Company and on all persons having an interest in any Award under
this Plan. The Committee may delegate to one or more officers of the Company
the authority to grant an Award under this Plan to Participants who are not
Insiders of the Company.
5. OPTIONS. The Committee may grant Options to eligible persons
-------
and will determine whether such Options will be Incentive Stock Options within
the meaning of the Code ("ISO") or Nonqualified Stock Options ("NQSO"), the
number of Shares subject to the Option, the Exercise Price of the Option, the
period during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this
--------------------
Plan will be evidenced by an Award Agreement which will expressly identify the
Option as an ISO or an NQSO ("STOCK OPTION AGREEMENT"), and will be in such form
and contain such provisions (which need not be the same for each Participant) as
the Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.
5.2 Date of Grant. The date of grant of an Option will be
-------------
the date on which the Committee makes the determination to grant such Option,
unless otherwise specified by the Committee. The Stock
-2-
<PAGE>
Option Agreement and a copy of this Plan will be delivered to the Participant
within a reasonable time after the granting of the Option.
5.3 Exercise Period. Options may be exercisable within the
---------------
times or upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; provided, however, that no Option will
-------- -------
be exercisable after the expiration of ten (10) years from the date the Option
is granted; and provided further that no ISO granted to a person who directly or
----------------
by attribution owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of any Parent or Subsidiary of
the Company ("TEN PERCENT STOCKHOLDER") will be exercisable after the expiration
of five (5) years from the date the ISO is granted. The Committee also may
provide for Options to become exercisable at one time or from time to time,
periodically or otherwise, in such number of Shares or percentage of Shares as
the Committee determines.
5.4 Exercise Price. The Exercise Price of an Option will be
--------------
determined by the Committee when the Option is granted and may not be less than
85% of the Fair Market Value of the Shares on the date of grant; provided that:
(i) the Exercise Price of an ISO will not be less than 100% of the Fair Market
Value of the Shares on the date of grant; and (ii) the Exercise Price of any ISO
granted to a Ten Percent Stockholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased must be made in accordance with Section 8 of this Plan.
5.5 Method of Exercise. Options may be exercised only by
------------------
delivery to the Company of a written stock option exercise agreement (the
"EXERCISE AGREEMENT") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.
5.6 Termination. Notwithstanding the exercise periods set
-----------
forth in the Stock Option Agreement, exercise of an Option will always be
subject to the following:
(a) If the Participant is Terminated for any reason except death
or Disability, then the Participant may exercise such
Participant's Options only to the extent that such Options
would have been exercisable upon the Termination Date no later
than three (3) months after the Termination Date (or such
shorter or longer time period not exceeding five (5) years as
may be determined by the Committee, with any exercise beyond
three (3) months after the Termination Date deemed to be an
NQSO), but in any event, no later than the expiration date of
the Options.
(b) If the Participant is Terminated because of Participant's
death or Disability (or the Participant dies within three (3)
months after a Termination other than because of Participant's
death or Disability), then Participant's Options may be
exercised only to the extent that such Options would have been
exercisable by Participant on the Termination Date and must be
exercised by Participant (or Participant's legal
representative or authorized assignee) no later than twelve
(12) months after the Termination Date (or such shorter or
longer time period not exceeding five (5) years as may be
determined by the Committee, with any such exercise beyond (a)
three (3) months after the Termination Date when the
Termination is for any reason other than the Participant's
death or Disability, or (b) twelve (12) months after the
Termination Date when the Termination is for Participant's
death or Disability, deemed to be an NQSO), but in any event
no later than the expiration date of the Options.
(c) Notwithstanding the provisions in paragraph 5.6(a) above, if a
Participant is determined by the Board to have committed an
act of theft, embezzlement, fraud, dishonesty or a breach of
fiduciary duty to the Company or Subsidiary, neither the
Participant, the Participant's
-3-
<PAGE>
estate nor such other person who may then hold the Option
shall be entitled to exercise any Option with respect to any
Shares whatsoever, after termination of service, whether or
not after termination of service the Participant may receive
payment from the Company or Subsidiary for vacation pay, for
services rendered prior to termination, for services rendered
for the day on which termination occurs, for salary in lieu of
notice, or for any other benefits. In making such
determination, the Board shall give the Participant an
opportunity to present to the Board evidence on his behalf.
For the purpose of this paragraph, termination of service
shall be deemed to occur on the date when the Company
dispatches notice or advice to the Participant that his
service is terminated.
5.7 Limitations on Exercise. The Committee may specify a
-----------------------
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISO. The aggregate Fair Market Value
------------------
(determined as of the date of grant) of Shares with respect to which ISO are
exercisable for the first time by a Participant during any calendar year (under
this Plan or under any other incentive stock option plan of the Company, Parent
or Subsidiary of the Company) will not exceed $100,000. If the Fair Market
Value of Shares on the date of grant with respect to which ISO are exercisable
for the first time by a Participant during any calendar year exceeds $100,000,
then the Options for the first $100,000 worth of Shares to become exercisable in
such calendar year will be ISO and the Options for the amount in excess of
$100,000 that become exercisable in that calendar year will be NQSO. In the
event that the Code or the regulations promulgated thereunder are amended after
the Effective Date of this Plan to provide for a different limit on the Fair
Market Value of Shares permitted to be subject to ISO, such different limit will
be automatically incorporated herein and will apply to any Options granted after
the effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may
----------------------------------
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with
Section 424(h) of the Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants affected by a written
notice to them; provided, however, that the Exercise Price may not be reduced
-------- -------
below the minimum Exercise Price that would be permitted under Section 5.4 of
this Plan for Options granted on the date the action is taken to reduce the
Exercise Price.
5.10 No Disqualification. Notwithstanding any other
-------------------
provision in this Plan, no term of this Plan relating to ISO will be
interpreted, amended or altered, nor will any discretion or authority granted
under this Plan be exercised, so as to disqualify this Plan under Section 422 of
the Code or, without the consent of the Participant affected, to disqualify any
ISO under Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by
----------------
the Company to sell to an eligible person Shares that are subject to
restrictions. The Committee will determine to whom an offer will be made, the
number of Shares the person may purchase, the price to be paid (the "PURCHASE
PRICE"), the restrictions to which the Shares will be subject, and all other
terms and conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a
------------------------------
Restricted Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. The offer of Restricted Stock will be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company within thirty (30) days from the
date the Restricted Stock Purchase Agreement is delivered to the person. If
such person does not execute and deliver the Restricted Stock Purchase Agreement
along with full payment for the Shares to the Company within thirty (30) days,
then the offer will terminate, unless otherwise determined by the Committee.
-4-
<PAGE>
6.2 Purchase Price. The Purchase Price of Shares sold
--------------
pursuant to a Restricted Stock Award will be determined by the Committee and
will be at least 85% of the Fair Market Value of the Shares on the date the
Restricted Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price will be 100% of the Fair Market
Value. Payment of the Purchase Price must be made in accordance with Section 8
of this Plan.
6.3 Restrictions. Restricted Stock Awards will be subject
------------
to such restrictions (if any) as the Committee may impose. The Committee may
provide for the lapse of such restrictions in installments and may accelerate or
waive such restrictions, in whole or part, based on length of service,
performance or such other factors or criteria as the Committee may determine.
7. STOCK BONUSES.
-------------
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of
-----------------------
Shares (which may consist of Restricted Stock) for services rendered to the
Company or any Parent or Subsidiary of the Company. A Stock Bonus may be
awarded for past services already rendered to the Company, or any Parent or
Subsidiary of the Company (provided that the Participant pays the Company the
par value of the shares awarded by such Stock Bonus in cash) pursuant to an
Award Agreement (the "STOCK BONUS AGREEMENT") that will be in such form (which
need not be the same for each Participant) as the Committee will from time to
time approve, and will comply with and be subject to the terms and conditions of
this Plan. A Stock Bonus may be awarded upon satisfaction of such performance
goals as are set out in advance in the Participant's individual Award Agreement
(the "PERFORMANCE STOCK BONUS AGREEMENT") that will be in such form (which need
not be the same for each Participant) as the Committee will from time to time
approve, and will comply with and be subject to the terms and conditions of this
Plan. Stock Bonuses may vary from Participant to Participant and between groups
of Participants, and may be based upon the achievement of the Company, Parent or
Subsidiary and/or individual performance factors or upon such other criteria as
the Committee may determine.
7.2 Terms of Stock Bonuses. The Committee will determine
----------------------
the number of Shares to be awarded to the Participant and whether such Shares
will be Restricted Stock. If the Stock Bonus is being earned upon the
satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Committee will determine: (a) the nature, length and
starting date of any period during which performance is to be measured (the
"PERFORMANCE PERIOD") for each Stock Bonus; (b) the performance goals and
criteria to be used to measure the performance, if any; (c) the number of Shares
that may be awarded to the Participant; and (d) the extent to which such Stock
Bonuses have been earned. Performance Periods may overlap and Participants may
participate simultaneously with respect to Stock Bonuses that are subject to
different Performance Periods and different performance goals and other
criteria. The number of Shares may be fixed or may vary in accordance with such
performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to the Stock Bonuses to
take into account changes in law and accounting or tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid
windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus
---------------
may be paid currently or on a deferred basis with such interest or dividend
equivalent, if any, as the Committee may determine. Payment may be made in the
form of cash, whole Shares, including Restricted Stock, or a combination
thereof, either in a lump sum payment or in installments, all as the Committee
will determine.
7.4 Termination During Performance Period. If a Participant
-------------------------------------
is Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Stock Bonus only to the extent earned as of the date of Termination in
accordance with the Performance Stock Bonus Agreement, unless the Committee will
determine otherwise.
8. PAYMENT FOR SHARE PURCHASES.
---------------------------
8.1 Payment. Payment for Shares purchased pursuant to this
-------
Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
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<PAGE>
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid
for within the meaning of SEC Rule 144 (and, if such shares
were purchased from the Company by use of a promissory note,
such note has been fully paid with respect to such shares); or
(2) were obtained by Participant in the public market;
(c) by tender of a full recourse promissory note having such terms
as may be approved by the Committee and bearing interest at a
rate sufficient to avoid imputation of income under Sections
483 and 1274 of the Code; provided, however, that Participants
-------- -------
who are not employees or directors of the Company will not be
entitled to purchase Shares with a promissory note unless the
note is adequately secured by collateral other than the
Shares; provided, further, that the portion of the Purchase
Price or Exercise Price equal to the par value of the Shares,
if any, must be paid in cash;
(d) by waiver of compensation due or accrued to the Participant
for services rendered; provided, however, that the portion of
the Purchase Price or Exercise Price equal to the par value of
the Shares, if any, must be paid in cash;
(e) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the
Participant and a broker-dealer that is a member of
the National Association of Securities Dealers (an
"NASD DEALER") whereby the Participant irrevocably
elects to exercise the Option and to sell a portion
of the Shares so purchased to pay for the Exercise
Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the
Exercise Price directly to the Company; or
(2) through a "margin" commitment from the Participant
and a NASD Dealer whereby the Participant irrevocably
elects to exercise the Option and to pledge the
Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer
in the amount of the Exercise Price, and whereby the
NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the
Company; or
(f) by any combination of the foregoing.
8.2 Loan Guarantees. The Committee may help the Participant
---------------
pay for Shares purchased under this Plan by authorizing a guarantee by the
Company of a third-party loan to the Participant.
9. WITHHOLDING TAXES.
-----------------
9.1 Withholding Generally. Whenever Shares are to be issued
---------------------
in satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan,
payments in satisfaction of Awards are to be made in cash, such payment will be
net of an amount sufficient to satisfy federal, state, and local withholding tax
requirements.
9.2 Stock Withholding. When, under applicable tax laws, a
-----------------
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company
-6-
<PAGE>
withhold from the Shares to be issued that number of Shares having a Fair Market
Value equal to the minimum amount required to be withheld, determined on the
date that the amount of tax to be withheld is to be determined. All elections by
a Participant to have Shares withheld for this purpose will be made in
accordance with the requirements established by the Committee and be in writing
in a form acceptable to the Committee.
10. PRIVILEGES OF STOCK OWNERSHIP.
-----------------------------
10.1 Voting and Dividends. No Participant will have any of
--------------------
the rights of a stockholder with respect to any Shares until the Shares are
issued to the Participant. After Shares are issued to the Participant, the
Participant will be a stockholder and have all the rights of a stockholder with
respect to such Shares, including the right to vote and receive all dividends or
other distributions made or paid with respect to such Shares; provided, that if
--------
such Shares are Restricted Stock, then any new, additional or different
securities the Participant may become entitled to receive with respect to such
Shares by virtue of a stock dividend, stock split or any other change in the
corporate or capital structure of the Company will be subject to the same
restrictions as the Restricted Stock; provided, further, that the Participant
-------- -------
will have no right to retain such stock dividends or stock distributions with
respect to Shares that are repurchased at the Participant's original Purchase
Price pursuant to Section 12.
10.2 Financial Statements. The Company will provide financial
--------------------
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company will not be
-------- -------
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.
11. TRANSFERABILITY. Awards granted under this Plan, and any
---------------
interest therein, will not be transferable or assignable by Participant, and may
not be made subject to execution, attachment or similar process, otherwise than
by will or by the laws of descent and distribution or as determined by the
Committee and set forth in the Award Agreement with respect to Awards that are
not ISOs.. During the lifetime of the Participant an Award will be exercisable
only by the Participant, and any elections with respect to an Award may be made
only by the Participant unless otherwise determined by the Committee and set
forth in the Award Agreement with respect to Awards that are not ISOs.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee,
----------------------
the Company may reserve to itself and/or its assignee(s) in the Award Agreement
a right to repurchase a portion of or all Unvested Shares held by a Participant
following such Participant's Termination at any time within ninety (90) days
after the later of Participant's Termination Date and the date Participant
purchases Shares under this Plan, for cash and/or cancellation of purchase money
indebtedness, at the Participant's Exercise Price or Purchase Price, as the case
may be.
13. CERTIFICATES. All certificates for Shares or other
------------
securities delivered under this Plan will be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem necessary or
advisable, including restrictions under any applicable federal, state or foreign
securities law, or any rules, regulations and other requirements of the SEC or
any stock exchange or automated quotation system upon which the Shares may be
listed or quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
------------------------
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee 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 Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with
-7-
<PAGE>
any pledge of the Shares, Participant will be required to execute and deliver a
written pledge agreement in such form as the Committee will from time to time
approve. The Shares purchased with the promissory note may be released from the
pledge on a pro rata basis as the promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any
-----------------------------
time or from time to time, authorize the Company, with the consent of the
respective Participants, to issue new Awards in exchange for the surrender and
cancellation of any or all outstanding Awards. The Committee may at any time
buy from a Participant an Award previously granted with payment in cash, Shares
(including Restricted Stock) or other consideration, based on such terms and
conditions as the Committee and the Participant may agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award
----------------------------------------------
will not be effective unless such Award 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 system
upon which the Shares may then be listed or quoted, as they are in effect on the
date of grant of the Award and also on the date of exercise or other issuance.
Notwithstanding any other provision in this Plan, the Company will have no
obligation to issue or deliver certificates for Shares under this Plan prior to:
(a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable; and/or (b) completion of any registration
or other qualification of such Shares 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 Shares with
the SEC or to effect compliance with the 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.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award
-----------------------
granted under this Plan will confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship
with, the Company or any Parent or Subsidiary of the Company or limit in any way
the right of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.
18. CORPORATE TRANSACTIONS.
----------------------
18.1 Assumption or Replacement of Awards by Successor. In
------------------------------------------------
the event of
(a) a dissolution or liquidation of the Company;
(b) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation
----- ----
with a wholly-owned subsidiary, a reincorporation of the
Company in a different jurisdiction, or other transaction in
which there is no substantial change in the stockholders of
the Company or their relative stock holdings and the Awards
granted under this Plan are assumed, converted or replaced by
the surviving corporation, which assumption will be binding on
all Participants);
(c) a merger in which the Company is the surviving corporation but
after which the stockholders of the Company immediately prior
to such merger (other than any stockholder that merges with
the Company in such merger, or which owns or controls another
corporation that merges, with the Company in such merger)
cease to own their shares or other equity interest in the
Company;
(d) the sale of all or substantially all of the assets of the
Company; or
(e) the acquisition, sale or transfer of more than 50% of the
outstanding shares of the Company by tender offer or similar
transaction;
any or all outstanding Awards will automatically vest for one additional year
and may also be assumed, converted or replaced by the surviving corporation (if
any), which assumption, conversion or replacement will be binding on
-8-
<PAGE>
all Participants. The Committee may, in its sole discretion, provide for
additional accelerated vesting of any or all Awards that are assumed, converted
or replaced by the surviving corporation. In lieu of assuming, converting or
replacing such Awards, the surviving corporation may substitute equivalent
Awards or provide substantially similar consideration to Participants as was
provided to stockholders (after taking into account the existing provisions of
the Awards and the one year additional vesting). The surviving corporation may
also issue, in place of outstanding Shares of the Company held by the
Participant, substantially similar shares or other property subject to
repurchase restrictions no less favorable to the Participant. In the event such
surviving corporation (if any) refuses to assume or substitute Awards, as
provided above, pursuant to a transaction described in this Subsection 18.1,
such Awards will automatically vest for one additional year and will expire on
such transaction at such time and on such conditions as the Committee will
determine, provided, however, that the Committee may, in its sole discretion,
provide for additional accelerated vesting of any or all Awards granted pursuant
to this Plan. If such accelerated options are not exercised prior to the
consummation of the corporate transaction, they shall terminate in accordance
with the provisions of this Plan.
18.2 Other Treatment of Awards. Subject to any greater rights
-------------------------
granted to Participants under the foregoing provisions of this Section 18, in
the event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, sale of assets or other
"corporate transaction."
18.3 Assumption of Awards by the Company. The Company, from
-----------------------------------
time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either; (a) granting an Award under this Plan in substitution
of such other company's award; or (b) assuming such award as if it had been
granted under this Plan if the terms of such assumed award could be applied to
an Award granted under this Plan. Such substitution or assumption will be
permissible if the holder of the substituted or assumed award would have been
eligible to be granted an Award under this Plan if the other company had applied
the rules of this Plan to such grant. In the event the Company assumes an award
granted by another company, the terms and conditions of such award will remain
unchanged (except that the exercise price and the number and nature of Shares
------
issuable upon exercise of any such option will be adjusted appropriately
pursuant to Section 424(a) of the Code). In the event the Company elects to
grant a new Option rather than assuming an existing option, such new Option may
be granted with a similarly adjusted Exercise Price.
19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become
---------------------------------
effective on the date on which the registration statement filed by the Company
with the SEC under the Securities Act registering the initial public offering of
the Company's Common Stock is declared effective by the SEC (the "EFFECTIVE
DATE"); provided, however, that if the Effective Date does not occur on or
-------- -------
before December 31, 1997, this Plan will terminate having never become
effective. This Plan shall be approved by the stockholders of the Company,
consistent with applicable laws, within twelve (12) months before or after the
date this Plan is adopted by the Board.
20. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as
--------------------------
provided herein, this Plan will terminate ten (10) years from the date this Plan
is adopted by the Board or, if earlier, the date of stockholder approval. This
Plan and all agreements thereunder shall be governed by and construed in
accordance with the laws of the State of Connecticut.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
--------------------------------
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan.
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this
--------------------------
Plan by the Board, the submission of this Plan to the stockholders of the
Company for approval, nor any provision of this Plan will be construed as
creating any limitations on the power of the Board to adopt such additional
compensation arrangements as it may deem desirable, including, without
limitation, the granting of stock options and bonuses otherwise than under this
Plan, and such arrangements may be either generally applicable or applicable
only in specific cases.
-9-
<PAGE>
23. DEFINITIONS. As used in this Plan, the following terms will
-----------
have the following meanings:
"AWARD" means any award under this Plan, including any
Option, Restricted Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award, the
signed written agreement between the Company and the Participant setting forth
the terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee appointed by the Board to
administer this Plan, or if no such committee is appointed, the Board. The
Committee, if appointed, will consist of not less than two members of the Board.
"COMPANY" means TSI International Software Ltd. or any
successor corporation.
"DISABILITY" means a disability, whether temporary or
permanent, partial or total, within the meaning of Section 22(e)(3) of the Code,
as determined by the Committee.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXERCISE PRICE" means the price at which a holder of an
Option may purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a
share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National
Market, the average of the last five trading days' closing
prices on the Nasdaq National Market prior to the date of
determination as reported in The Wall Street Journal;
------------------------
(b) if such Common Stock is publicly traded and is then listed on
a national securities exchange, its closing price on the date
of determination on the principal national securities exchange
on which the Common Stock is listed or admitted to trading as
reported in The Wall Street Journal;
-----------------------
(c) if such Common Stock is publicly traded but is not quoted on
the Nasdaq National Market nor listed or admitted to trading
on a national securities exchange, the average of the closing
bid and asked prices on the date of determination as reported
in The Wall Street Journal;
-----------------------
(d) in the case of an Award made on the Effective Date, the price
per share at which shares of the Company's Common Stock are
initially offered for sale to the public by the Company's
underwriters in the initial public offering of the Company's
Common Stock pursuant to a registration statement filed with
the SEC under the Securities Act; or
(e) if none of the foregoing is applicable, by the Committee in
good faith.
"INSIDER" means an officer or director of the Company or any
other person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.
"OPTION" means an award of an option to purchase Shares
pursuant to Section 5.
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<PAGE>
"PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
"PARTICIPANT" means a person who receives an Award under this
Plan.
"PLAN" means this TSI International Software, Ltd. 1997
Equity Incentive Plan, as amended from time to time.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant to
Section 6.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
"SHARES" means shares of the Company's Common Stock reserved
for issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and any
successor security.
"STOCK BONUS" means an award of Shares, or cash in lieu of
Shares, pursuant to Section 7.
"SUBSIDIARY" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
"TERMINATION" or "TERMINATED" means, for purposes of this
Plan with respect to a Participant, that the Participant has for any reason
ceased to provide services as an employee, officer, director, consultant,
independent contractor, or advisor to the Company or a Parent or Subsidiary of
the Company. An employee will not be deemed to have ceased to provide services
in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of
absence approved by the Committee, provided, that such leave is for a period of
not more than 90 days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute or unless provided otherwise pursuant to
formal policy adopted from time to time by the Company and issued and
promulgated to employees in writing. In the case of any employee on an approved
leave of absence, the Committee may make such provisions respecting suspension
of vesting of the Award while on leave from the employ of the Company or a
Subsidiary as it may deem appropriate, except that in no event may an Option be
exercised after the expiration of the term set forth in the Option agreement.
The Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "TERMINATION DATE").
"UNVESTED SHARES" means "Unvested Shares" as defined in the
Award Agreement.
"VESTED SHARES" means "Vested Shares" as defined in the Award
Agreement.
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<PAGE>
EXHIBIT 4.07
TSI INTERNATIONAL SOFTWARE LTD.
1997 DIRECTORS STOCK OPTION PLAN
As amended through July 21, 1997
1. PURPOSE. This 1997 Directors Stock Option Plan (this "PLAN") is
established to provide equity incentives for nonemployee members of the Board of
Directors of TSI International Software Ltd. (the "COMPANY"), who are described
in Section 6.1 below, by granting such persons options to purchase shares of
stock of the Company.
2. ADOPTION AND STOCKHOLDER APPROVAL. This Plan is effective on the
date (the "EFFECTIVE DATE") it is adopted by the Board of Directors of the
Company (the "BOARD"). This Plan shall be approved by the stockholders of the
Company, consistent with applicable laws, within twelve (12) months after the
Effective Date.
3. TYPES OF OPTIONS AND SHARES. Options granted under this Plan
shall be non-qualified stock options ("NQSOS"). The shares of stock that may be
purchased upon exercise of Options granted under this Plan (the "SHARES") are
shares of the Common Stock of the Company.
4. NUMBER OF SHARES. The maximum number of Shares that may be
issued pursuant to Options granted under this Plan (the "MAXIMUM NUMBER") is
225,000 Shares, subject to adjustment as provided in this Plan. If any Option
is terminated for any reason without being exercised in whole or in part, the
Shares thereby released from such Option shall be available for purchase under
other Options subsequently granted under this Plan. At all times during the
term of this Plan, the Company shall reserve and keep available such number of
Shares as shall be required to satisfy the requirements of outstanding Options
granted under this Plan; provided, however that if the aggregate number of
-------- -------
Shares subject to outstanding Options granted under this Plan plus the aggregate
number of Shares previously issued by the Company pursuant to the exercise of
Options granted under this Plan equals or exceeds the Maximum Number, then
notwithstanding anything herein to the contrary, no further Options may be
granted under this Plan until the Maximum Number is increased or the aggregate
number of Shares subject to outstanding Options granted under this Plan plus the
aggregate number of Shares previously issued by the Company pursuant to the
exercise of Options granted under this Plan is less than the Maximum Number.
5. ADMINISTRATION. This Plan shall be administered by the Board or
by a committee of not less than two members of the Board appointed to administer
this Plan (the "COMMITTEE"). As used in this Plan, references to the Committee
shall mean either such Committee or the Board if no Committee has been
established. The interpretation by the Committee of any of the provisions of
this Plan or any Option granted under this Plan shall be final and binding upon
the Company and all persons having an interest in any Option or any Shares
purchased pursuant to an Option.
6. ELIGIBILITY AND AWARD FORMULA.
6.1 Eligibility. Options shall be granted only to directors of
-----------
the Company who are not employees of the Company or any Parent or Subsidiary of
the Company, as those terms are defined in Section 17 below (each such person
referred to as an "OPTIONEE").
6.2 Initial Grant. Each Optionee who is a member of the Board on
-------------
May 10, 1997 or who after May 10, 1997 becomes a member of the Board will
automatically be granted an Option for 15,000 Shares (an "INITIAL GRANT") on the
later of May 10, 1997 or the date such Optionee first becomes a member of the
Board.
<PAGE>
6.3 Succeeding Grants. The Optionee will automatically be
-----------------
granted an Option for 3,750 Shares on each annual anniversary of the Start Date
(as defined below) of his or her Initial Grant (a "SUCCEEDING GRANT"), provided
the Optionee is a member of the Board on such anniversary date and has served
continuously as a member of the Board since the Start Date of his or her Initial
Grant.
7. TERMS AND CONDITIONS OF OPTIONS. Subject to the following and to
Section 6 above:
7.1 Form of Option Grant. Each Option granted under this Plan
--------------------
shall be evidenced by a written Stock Option Grant ("GRANT") in such form (which
need not be the same for each Optionee) as the Committee shall from time to time
approve, which Grant shall comply with and be subject to the terms and
conditions of this Plan.
7.2 Vesting. Options granted under this Plan shall be
-------
exercisable as they vest. The date an Optionee receives an Initial Grant or a
Succeeding Grant is referred to in this Plan as the "START DATE" for such
Option.
(a) Initial Grants. Each Initial Grant will vest as to twenty-five
--------------
percent (25%) of the Shares on the last day of the twelve month period
commencing on the Start Date for such Initial Grant and thereafter as to twenty-
five percent (25%) of the Shares at the end of each succeeding twelve month
period.
(b) Succeeding Grants. Each Succeeding Grant will vest as to one
-----------------
hundred percent (100%) of the Shares on the last day of the twelve month period
commencing on the Start Date for such Succeeding Grant.
7.3 Exercise Price. The exercise price of an Option shall be the
--------------
Fair Market Value (as defined in Section 17.3) of the Shares on the Start Date.
7.4 Termination of Option. Except as provided below in this
---------------------
Section, each Option shall expire ten (10) years after its Start Date (the
"EXPIRATION DATE"). The Option shall cease to vest when the Optionee ceases to
be a member of the Board or a consultant of the Company. The date on which the
Optionee ceases to be a member of the Board or a consultant of the Company shall
be referred to as the "TERMINATION DATE". An Option may be exercised after the
Termination Date only as set forth below:
(a) Termination Generally. If the Optionee ceases to be a member of
---------------------
the Board or consultant of the Company for any reason except death of the
Optionee or disability of the Optionee (whether temporary or permanent, partial
or total, as determined by the Committee), then each Option then held by such
Optionee, to the extent (and only to the extent) that it would have been
exercisable by the Optionee on the Termination Date, may be exercised by the
Optionee no later than three (3) months after the Termination Date, but in no
event later than the Expiration Date.
(b) Death or Disability. If the Optionee ceases to be a member of the
-------------------
Board or consultant of the Company because of the death of the Optionee or the
disability of the Optionee (whether temporary or permanent, partial or total, as
determined by the Committee), then each Option then held by such Optionee, to
the extent (and only to the extent) that it would have been exercisable by the
Optionee on the Termination Date, may be exercised by the Optionee (or the
Optionee's legal representative) no later than twelve (12) months after the
Termination Date, but in no event later than the Expiration Date.
8. EXERCISE OF OPTIONS.
8.1 Exercise Period. Subject to the provisions of Section 8.5
---------------
below, Options shall be exercisable as they vest.
8.2 Notice. Options may be exercised only by delivery to the
------
Company of an exercise agreement in a form approved by the Committee stating the
number of Shares being purchased, the restrictions imposed on the Shares and
such representations and agreements regarding the Optionee's investment intent
and access to information as may be required by the Company to comply with
applicable securities laws, together with payment in full of the exercise price
for the number of Shares being purchased.
2
<PAGE>
8.3 Payment. Payment for the Shares purchased upon exercise of
-------
an Option may be made (a) in cash or by check; (b) by surrender of shares of
Common Stock of the Company that have been owned by the Optionee for more than
six (6) months (and which have been paid for within the meaning of Securities
and Exchange Commission ("SEC") Rule 144 and, if such shares were purchased from
the Company by use of a promissory note, such note has been fully paid with
respect to such shares) or were obtained by the Optionee in the open public
market, having a Fair Market Value equal to the exercise price of the Option;
(c) by waiver of compensation due or accrued to the Optionee for services
rendered; (d) provided that a public market for the Company's stock exists,
through a "same day sale" commitment from the Optionee and a broker-dealer that
is a member of the National Association of Securities Dealers (an "NASD DEALER")
whereby the Optionee irrevocably elects to exercise the Option and to sell a
portion of the Shares so purchased to pay for the exercise price and whereby the
NASD Dealer irrevocably commits upon receipt of such Shares to forward the
exercise price directly to the Company; (e) provided that a public market for
the Company's stock exists, through a "margin" commitment from the Optionee and
an NASD Dealer whereby the Optionee irrevocably elects to exercise the Option
and to pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the exercise price,
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the exercise price directly to the Company; or (f) by any combination of
the foregoing.
8.4 Withholding Taxes. Prior to issuance of the Shares upon
-----------------
exercise of an Option, the Optionee shall pay or make adequate provision for any
federal or state withholding obligations of the Company, if applicable.
8.5 Limitations on Exercise. Notwithstanding the exercise
-----------------------
periods set forth in the Grant, exercise of an Option shall always be subject to
the following limitations:
(a) An Option shall not be exercisable unless such exercise is in
compliance with the Securities Act of 1993, as amended (the "SECURITIES ACT")
and all applicable state securities laws, as they are in effect on the date of
exercise.
(b) The Committee may specify a reasonable minimum number of Shares
that may be purchased upon any exercise of an Option, provided that such minimum
number will not prevent the Optionee from exercising the full number of Shares
as to which the Option is then exercisable.
9. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, an Option shall be exercisable only by the Optionee or by the
Optionee's guardian or legal representative, unless otherwise determined by the
Committee. No Option may be sold, pledged, assigned, hypothecated, transferred
or disposed of in any manner other than by will or by the laws of descent and
distribution, unless otherwise determined by the Committee.
10. PRIVILEGES OF STOCK OWNERSHIP. No Optionee shall have any of the
rights of a stockholder with respect to any Shares subject to an Option until
the Option has been validly exercised. No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior to
the date of exercise, except as provided in this Plan. The Company shall
provide to each Optionee a copy of the annual financial statements of the
Company at such time after the close of each fiscal year of the Company as they
are released by the Company to its stockholders.
11. ADJUSTMENT OF OPTION SHARES. In the event that the number of
outstanding shares of Common Stock of the Company is changed by a stock
dividend, stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without consideration,
the number of Shares available under this Plan and the number of Shares subject
to outstanding Options and the exercise price per share of such outstanding
Options shall be proportionately adjusted, subject to any required action by the
Board or stockholders of the Company and compliance with applicable securities
laws; provided, however, that no fractional shares shall be issued upon exercise
-------- -------
of any Option and any resulting fractions of a Share shall be rounded up to the
nearest whole Share.
3
<PAGE>
12. NO OBLIGATION TO CONTINUE AS DIRECTOR. Nothing in this Plan or
any Option granted under this Plan shall confer on any Optionee any right to
continue as a director of the Company.
13. COMPLIANCE WITH LAWS. The grant of Options and the issuance of
Shares upon exercise of any Options shall be subject to and conditioned upon
compliance with all applicable requirements of law, including without limitation
compliance with the Securities Act, compliance with all other applicable state
securities laws and compliance with the requirements of any stock exchange or
national market system on which the Shares may be listed. The Company shall be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration or qualification requirement of any state securities laws,
stock exchange or national market system.
14. ACCELERATION OF OPTIONS ON CERTAIN CORPORATE TRANSACTIONS. In
the event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
----- ----
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Options granted under this Plan are assumed, converted or
replaced by the surviving corporation, which assumption, conversion or
replacement will be binding on all Optionees), (c) a merger in which the Company
is the surviving corporation but after which the stockholders of the Company
immediately prior to such merger (other than any stockholder that merges with
the Company in such merger, or which owns or controls another corporation which
merges, with the Company in such merger) cease to own their shares or other
equity interests in the Company, (d) the sale of all or substantially all of the
assets of the Company, or (e) the acquisition, sale or transfer of more than 50%
of the outstanding shares of the Company by tender offer or similar transaction,
the vesting of all options granted pursuant to this Plan will accelerate and the
options will become exercisable in full prior to the consummation of such event
at such times and on such conditions as the Committee determines, and if such
options are not exercised prior to the consummation of the corporate
transaction, they shall terminate in accordance with the provisions of this
Plan.
15. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan or any outstanding option, provided that the Board
may not terminate or amend the terms of any outstanding option without the
consent of the Optionee. In any case, no amendment of this Plan may adversely
affect any then outstanding Options or any unexercised portions thereof without
the written consent of the Optionee.
16. TERM OF PLAN. Options may be granted pursuant to this Plan from
time to time within a period of ten (10) years from the Effective Date.
17. CERTAIN DEFINITIONS. As used in this Plan, the following terms
shall have the following meanings:
17.1 "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
17.2 "SUBSIDIARY" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
17.3 "FAIR MARKET VALUE" means, as of any date, the value of a
share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National
Market, the average of the last five trading days' closing
prices on the Nasdaq National Market prior to the date of
determination as reported in The Wall Street Journal;
------------------------
4
<PAGE>
(b) if such Common Stock is publicly traded and is then listed on
a national securities exchange, its closing price on the date
of determination on the principal national securities exchange
on which the Common Stock is listed or admitted to trading as
reported in The Wall Street Journal;
-----------------------
(c) if such Common Stock is publicly traded but is not quoted on
the Nasdaq National Market nor listed or admitted to trading
on a national securities exchange, the average of the closing
bid and asked prices on the date of determination as reported
in The Wall Street Journal; or
-----------------------
(d) if none of the foregoing is applicable, by the Committee in
good faith.
5
<PAGE>
EXHIBIT 4.09
TSI INTERNATIONAL SOFTWARE LTD.
NONQUALIFIED STOCK OPTION AGREEMENT
-----------------------------------
This Stock Option Agreement (this "AGREEMENT") is made and entered
into as of the Date of Grant set forth below (the "DATE OF GRANT") by and
between TSI International Software Ltd., a Delaware corporation (the "COMPANY"),
and the Optionee named below ("OPTIONEE").
OPTIONEE:
SOCIAL SECURITY NUMBER:
OPTIONEE'S ADDRESS:
TOTAL OPTION SHARES:
EXERCISE PRICE PER SHARE:
DATE OF GRANT:
VESTING START DATE:
EXPIRATION DATE:
1. GRANT OF OPTION. The Company hereby grants to Optionee a
---------------
nonqualified stock option (this "OPTION") to purchase up to the total number of
shares of Common Stock of the Company set forth above as Total Option Shares
(collectively, the "SHARES") at the Exercise Price Per Share set forth above
(the "EXERCISE PRICE"), subject to all of the terms and conditions of this
Agreement. Capitalized terms not defined herein shall have the meanings
ascribed to them in the Company's 1997 Equity Incentive Plan, as adopted May 8,
1997 and as may be amended in accordance with its terms.
2. VESTING; EXERCISE PERIOD.
------------------------
2.1 Vesting of Right to Exercise Option. This Option shall
-----------------------------------
become vested and exercisable as to portions of the Shares as follows: (a) this
Option shall not vest nor be exercisable with respect to any of the Shares until
____________ (the "FIRST VESTING DATE"); (b) if Optionee has continuously
provided services to the Company or any Subsidiary or Parent of the Company from
the Date of Grant through the First Vesting Date and has not been Terminated on
or before the First Vesting Date, then on the First Vesting Date this Option
shall vest and become exercisable as to twenty five percent (25%) of the Shares;
and (c) thereafter on the first day of each month, so long as Optionee
continuously provides services to the Company or any Subsidiary or Parent of the
Company and is not Terminated, this Option shall vest and become exercisable as
to an additional 1/48th (0.02833333) of the Shares; provided that this Option
--------
shall in no event ever vest and become exercisable with respect to more than
100% of the Shares.
<PAGE>
TSI International Software Ltd.
Nonqualified Stock Option
Agreement
2.2 Expiration. This Option shall expire on the Expiration
----------
Date set forth above and must be exercised, if at all, on or before the earlier
of the Expiration Date or the date on which this Option is earlier terminated in
accordance with the provisions of Section 3 below.
3. TERMINATION.
-----------
3.1 Termination for Any Reason Except Death, Disability or
------------------------------------------------------
Cause. If Optionee is Terminated for any reason, except Optionee's death,
- ------
Disability or Cause, then this Option, to the extent (and only to the extent)
that it would have been exercisable by Optionee on the date of Termination, may
be exercised by Optionee no later than three (3) months after the date of
Termination, but in any event no later than the Expiration Date.
3.2 Termination Because of Death or Disability. If Optionee
------------------------------------------
is Terminated because of the death or Disability of Optionee (or if Optionee
dies within three (3) months following Termination other than for Cause or
because of Optionee's Disability), then this Option, to the extent that it is
exercisable by Optionee on the date of Termination, may be exercised by Optionee
(or Optionee's legal representative or authorized assignee) no later than twelve
(12) months after the date of Termination, but in any event no later than the
Expiration Date.
3.3 Termination for Cause. If Optionee is determined by the
---------------------
Board of Directors of the Company (the "BOARD") to have committed an act of
theft, embezzlement, fraud, dishonesty, or a breach of fiduciary duty to the
Company or its Parent or Subsidiary ("CAUSE"), this Option shall expire on the
date of Termination.
3.4 No Obligation to Employ. Nothing in this Agreement shall
-----------------------
confer on Optionee any right to continue in the employ of, or other relationship
with, the Company or any Parent or Subsidiary of the Company, or limit in any
way the right of the Company or any Parent or Subsidiary of the Company to
terminate Optionee's employment or other relationship at any time, with or
without Cause.
4. MANNER OF EXERCISE.
------------------
4.1 Stock Option Exercise Agreement. To exercise this
-------------------------------
Option, Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in the form attached
hereto as Exhibit A, or in such other form as may be approved by the Company
---------
from time to time (the "EXERCISE AGREEMENT"), which shall set forth, inter alia,
----- ----
Optionee's election to exercise this Option, the number of Shares being
purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Optionee's investment intent and access to
information as may be required by the Company to comply with applicable
securities laws. If someone other than Optionee exercises this Option, then
such person must submit documentation reasonably acceptable to the Company that
such person has the right to exercise this Option.
2
<PAGE>
TSI International Software Ltd.
Nonqualified Stock Option
Agreement
4.2 Limitations on Exercise. This Option may not be
-----------------------
exercised unless such exercise is in compliance with all applicable federal and
state securities laws, as they are in effect on the date of exercise. This
Option may not be exercised as to fewer than 100 Shares unless it is exercised
as to all Shares as to which this Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied by
-------
full payment of the Exercise Price for the Shares being purchased in cash (by
check), or where permitted by law:
(a) by cancellation of indebtedness of the Company to the Optionee;
(b) by surrender of shares of the Company's Common Stock that: (1) either
(A) have been owned by Optionee for more than six (6) months and have
been paid for within the meaning of SEC Rule 144 (and, if such shares
were purchased from the Company by use of a promissory note, such note
has been fully paid with respect to such shares); or (B) were obtained
by Optionee in the open public market; and (2) are clear of all liens,
---
claims, encumbrances or security interests;
(c) by waiver of compensation due or accrued to Optionee for services
rendered;
(d) provided that a public market for the Company's stock exists: (1)
through a "same day sale" commitment from Optionee and a broker-dealer
that is a member of the National Association of Securities Dealers (an
"NASD DEALER") whereby Optionee irrevocably elects to exercise this
Option and to sell a portion of the Shares so purchased to pay for the
exercise price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the exercise price directly to the
Company; or (2) through a "margin" commitment from Optionee and a NASD
--
Dealer whereby Optionee irrevocably elects to exercise this Option and
to pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of
the exercise price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the exercise price directly to
the Company; or
(e) by any combination of the foregoing.
4.4 Tax Withholding. Prior to the issuance of the Shares
---------------
upon exercise of this Option, Optionee must pay or provide for any applicable
federal or state withholding obligations of the Company. If the Compensation
Committee of the Board (the "COMMITTEE") permits, Optionee may provide for
payment of withholding taxes upon exercise of this Option by requesting that the
Company retain Shares with a Fair Market Value equal to the minimum amount of
taxes required to be withheld. In such case, the Company shall issue the net
number of Shares to the Optionee by deducting the Shares retained from the
Shares issuable upon exercise.
3
<PAGE>
TSI International Software Ltd.
Nonqualified Stock Option
Agreement
4.5 Issuance of Shares. Provided that the Exercise Agreement
------------------
and payment are in form and substance satisfactory to counsel for the Company,
the Company shall issue the Shares registered in the name of Optionee,
Optionee's authorized assignee, or Optionee's legal representative, and shall
deliver certificates representing the Shares with the appropriate legends
affixed thereto.
5. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this Option
------------------------------------
and the issuance and transfer of Shares shall be subject to compliance by the
Company and Optionee with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Optionee understands that the Company is under no obligation to
register or qualify the Shares with the SEC, any state securities commission or
any stock exchange to effect such compliance.
6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred
----------------------------
in any manner other than by will or by the laws of descent and distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
this Option shall be binding upon the executors, administrators, successors and
assigns of Optionee.
7. TAX CONSEQUENCES. Set forth below is a brief summary as of the
----------------
Date of Grant of some of the federal tax consequences of exercise of this Option
and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX
ADVISOR BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
7.1 Exercise of Nonqualified Stock Option. There may be a
-------------------------------------
regular federal income tax liability upon the exercise of this Option. 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
Shares on the date of exercise over the Exercise Price. The Company will be
required to withhold from Optionee's compensation or collect from Optionee and
pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
7.3 Disposition of Shares. If the Shares are held for more
---------------------
than twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of this Option then any gain realized on disposition of the Shares
will be treated as long term capital gain for federal income tax purposes.
8. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not have any of the
-----------------------------
rights of a stockholder with respect to any Shares until Optionee exercises this
Option and pays the Exercise Price.
4
<PAGE>
TSI International Software Ltd.
Nonqualified Stock Option
Agreement
9. MODIFICATION, EXTENSION AND RENEWAL. The Committee shall have the
-----------------------------------
power to modify, extend or renew this Option and to authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of the Optionee, impair any rights under any option
previously granted.
10. ADJUSTMENT OF OPTION SHARES. In the event that the number of
---------------------------
outstanding shares of Common Stock of the Company is changed by a stock
dividend, recapitalization, stock split, reverse stock split, subdivision,
combination, reclassification or similar change in the capital structure of the
Company without consideration, then the Exercise Price and number of Shares
subject to this Option will be proportionately adjusted, subject to any required
action by the Board or the stockholders of the Company and compliance with
applicable securities laws; provided however, that fractions of a Share will not
be issued but will either be replaced by a cash payment equal to the Fair Market
Value of such fraction of a Share or will be rounded up to the nearest whole
Share, as determined by the Committee.
11. CORPORATE TRANSACTIONS.
----------------------
11.1 Assumption or Replacement of Awards by Successor. In the
------------------------------------------------
event of
(a) a dissolution or liquidation of the Company;
(b) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned
----- ----
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
the Company or their relative stock holdings and this Option is assumed,
converted or replaced by the surviving corporation, which assumption will be
binding on the Optionee);
(c) a merger in which the Company is the surviving corporation but
after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges with the Company in such merger, or
which owns or controls another corporation that merges, with the Company in such
merger) cease to own their shares or other equity interest in the Company;
(d) the sale of all or substantially all of the assets of the Company;
or
(e) the acquisition, sale or transfer of more than 50% of the
outstanding shares of the Company by tender offer or similar transaction;
this Option will automatically vest for one additional year and may also be
assumed, converted or replaced by the surviving corporation (if any), which
assumption, conversion or replacement will be binding on the Optionee. The
Committee may also, in its sole discretion, provide for additional accelerated
vesting of this Option. In lieu of assuming, converting or replacing this
5
<PAGE>
TSI International Software Ltd.
Nonqualified Stock Option
Agreement
Option, the surviving corporation may substitute an equivalent equity incentive
award or provide substantially similar consideration to the Optionee as was
provided to stockholders (after taking into account the existing provisions of
this Option and the one year additional vesting). The surviving corporation may
also issue, in place of outstanding Shares of the Company held by the Optionee,
substantially similar shares or other property subject to repurchase
restrictions no less favorable to the Optionee. In the event such surviving
corporation (if any) refuses to assume or substitute this Option, as provided
above, pursuant to a transaction described in this Subsection 11.1, this Option
will automatically vest for one additional year and will expire on such
transaction at such time and on such conditions as the Committee will determine,
provided, however, that the Committee may, in its sole discretion, provide for
additional accelerated vesting of this Option. If this Option is so accelerated
and is not exercised prior to the consummation of the corporate transaction, it
shall terminate.
11.2 Other Treatment of Equity Awards. Subject to any
--------------------------------
greater rights granted to the Optionee under the foregoing provisions of this
Section 11, in the event of the occurrence of any transaction described in
Section 11.1, this Option will be treated as provided in the applicable
agreement or plan of merger, consolidation, dissolution, liquidation, sale of
assets or other "corporate transaction."
12. INTERPRETATION. Any dispute regarding the interpretation of this
--------------
Agreement shall be submitted by Optionee or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Optionee.
13. ENTIRE AGREEMENT. This Agreement and the Exercise Agreement
----------------
constitute the entire agreement and understanding of the parties hereto with
respect to the subject matter hereof and supersede all prior understandings and
agreements with respect to such subject matter.
14. NOTICES. Any notice required to be given or delivered to the
-------
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated above or to such other address as
such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal
delivery; three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile.
15. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
----------------------
under this Agreement. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon
Optionee and Optionee's heirs, executors, administrators, legal representatives,
successors and assigns.
6
<PAGE>
TSI International Software Ltd.
Nonqualified Stock Option
Agreement
16. GOVERNING LAW. This Agreement shall be governed by and construed
-------------
in accordance with the internal laws of the State of Connecticut, without regard
to that body of law pertaining to choice of law or conflict of law.
17. ACCEPTANCE. Optionee hereby acknowledges receipt of a copy of
----------
this Agreement. Optionee has read and understands the terms and provisions
thereof, and accepts this Option subject to all the terms and conditions of this
Agreement. Optionee acknowledges that there may be adverse tax consequences
upon exercise of this Option or disposition of the Shares and that the Company
has advised Optionee to consult a tax advisor prior to such exercise or
disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in duplicate by its duly authorized representative and Optionee has executed
this Agreement in duplicate as of the Date of Grant.
TSI INTERNATIONAL SOFTWARE LTD. OPTIONEE
By:
--------------------------- --------------------------
(Signature)
- ------------------------------
(Please print name)
- ------------------------------
(Please print title)
7
<PAGE>
EXHIBIT A
---------
STOCK OPTION EXERCISE AGREEMENT
(not filed)
8
<PAGE>
EXHIBIT 5.01
------------
October 15, 1997
TSI International Software Ltd.
45 Danbury Road
Wilton, CT 06897
Gentlemen/Ladies:
At your request, we have examined the Registration Statement on Form
S-8 (the "Registration Statement") to be filed by you with the Securities and
Exchange Commission (the "Commission") on or about October 15, 1997 in
connection with the registration under the Securities Act of 1933, as amended,
of an aggregate of 2,866,671 shares of your Common Stock (the "Stock") subject
to issuance by you pursuant to the exercise of (a) options to purchase up to
1,333,914 shares of Stock granted or to be granted by you under your 1997 Equity
Incentive Plan, as amended (the "Equity Incentive Plan"), (b) options to
purchase up to 225,000 shares of Stock granted or to be granted by you under
your 1997 Directors Stock Option Plan, as amended (the "Directors Plan"),
(c) options to purchase up to 1,277,757 shares of Common Stock granted under
your 1993 Stock Option Plan, as amended (the "1993 Plan"), and (d) an option
granted by you to purchase up to 30,000 shares of Stock (the "Non-Plan Option")
which is outside of the 1993 Plan, the Equity Incentive Plan and Directors Plan.
In rendering this opinion, we have examined the following:
(1) the Registration Statement, together with the Exhibits filed as a
part thereof;
(2) the Prospectuses prepared in connection with the Registration
Statement;
(3) the Company's Registration Statement on Form 8-A filed with the
Commission on June 6, 1997;
(4) the minutes of meetings of the stockholders and Board of
Directors relating to the Equity Incentive Plan, the Directors
Plan, the 1993 Plan, the Non-Plan Option, and the Registration
Statement that you have provided to us;
(5) the stock records for both you and your predecessor, TSI
International Ltd., a Connecticut corporation, that you have
provided to us (consisting of a list of stockholders and a list
of option holders and a list of warrant holders as of September
30, 1997 regarding your capital stock that was prepared by you);
(6) a Management Certificate addressed to us and dated of even date
herewith executed by the Company containing certain factual and
other representations.
In our examination of documents for purposes of this opinion, we have
assumed, and express no opinion as to the legal capacity of all natural persons,
the genuineness of all signatures on original documents, the authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as copies, the lack of any
<PAGE>
TSI International Software Ltd.
October 15, 1997
Page 2
undisclosed terminations, modifications, waivers or amendments to any documents
reviewed by us and the due execution and delivery of all documents where due
execution and delivery are prerequisites to the effectiveness thereof.
As to matters of fact relevant to this opinion, we have relied solely
upon our examination of the documents referred to above and have assumed the
current accuracy and completeness of the information included in the documents
referred to above. We have made no independent investigation or other attempt
to verify the accuracy of any of such information or to determine the existence
or non-existence of any other factual matters; however, we are not aware of any
-------
facts that would lead us to believe that the opinion expressed herein is not
accurate.
Based upon the foregoing, it is our opinion that (a) the up to
1,333,914 shares of Stock to be issued and sold by your pursuant to the stock
options granted or to be grated under the Equity Incentive Plan, when issued and
sold in accordance with the manner referred to in the relevant Prospectus
associated with the Registration Statement, the Equity Incentive Plan and
accompanying stock options, (b) the up to 225,000 shares of Stock to be issued
and sold by you pursuant to the stock options to be granted under the Directors
Plan, when issued and sold in accordance with the manner referred to in the
relevant Prospectus associated with the Registration Statement, the Directors
Plan and accompanying stock options, (c) the up to 1,277,757 shares of Stock to
be issued and sold by you pursuant to the stock options granted under the 1993
Plan, when issued and sold in accordance with the manner referred to in the
relevant Prospectus associated with the Registration Statement, the 1993 Plan
and accompanying stock options and (d) the up to 30,000 shares of Stock to be
issued and sold by you pursuant to the Non-Plan Option, when issued and sold in
accordance with the manner referred to in the relevant Prospectus associated
with the Registration Statement and the Non-Plan option, will be 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 all references to us, if any, in
the Registration Statement, the Prospectus constituting a part thereof and any
amendments thereto.
This opinion speaks only as of its date and is intended solely for the
your use as an exhibit to the Registration Statement for the purpose of the
above sale of the Stock and is not to be relied upon for any other purpose.
Very truly yours,
FENWICK & WEST LLP
/s/ Fenwick & West LLP
<PAGE>
EXHIBIT 23.2
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CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
The Board of Directors
TSI International Software Ltd.
We consent to the use of our report incorporated herein by reference
from the Company's prospectus filed with the Securities and Exchange Commission
on July 2, 1997 and to the references in that prospectus to our firm under the
headings "Experts" and "Selected Financial Data".
KPMG PEAT MARWICK LLP
Stamford, Connecticut
October 15, 1997
