As filed with the Securities and Exchange Commission on March 21, 2000
Registration No. 333-____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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EGAIN COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 77-0466366
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
455 W. Maude Avenue 94086
Sunnyvale, CA (Zip Code)
(Address of principal
executive offices)
eGain Communications Corporation
Amended and Restated 1998 Stock Plan,
Social Science, Inc. 1997 Stock Option Plan,
Big Science Corporation 1999 Stock Incentive Plan
and
eGain Communications Corporation
1999 Employee Stock Purchase Plan
Ashutosh Roy Copy to:
Chief Executive Officer Stanley F. Pierson, Esq.
eGain Communications Corporation Davina K. Kaile, Esq.
455 W. Maude Avenue Jeffrey S. Harrell, Esq.
Sunnyvale, CA 94086 Pillsbury Madison & Sutro LLP
(408) 737-7400 2550 Hanover Street
(Name, address and telephone Palo Alto, CA 94304
number of agent for service) (650) 233-4500
- --------------------------------- -----------------------------
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
==============================================================================================================================
Amount To Proposed Proposed Amount of
Title of Securities Be Maximum Offering Maximum Aggregate Registration
To Be Registered(1) Registered(2) Price Per Share(3) Offering Price Fee
- ------------------------------------------------ --------------- ------------------- -------------------- ---------------
<S> <C> <C> <C> <C>
Common Stock, par value $.001 per share: To be
issued under the eGain Communications
Corporation Amended and Restated 1998 Stock
Plan 5,600,000 $32.20 $180,320,000 $47,605
- ------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001 per share: To be
issued under the Social Science, Inc. 1997
Stock Option Plan assumed by eGain
Communications Corporation 1,114,016 $ 4.61 $525,614 $139
- ------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001 per share: To
be issued under the Big Science Company 1999
Stock Incentive Plan assumed by eGain
Communications Corporation 49,962 $ 8.58 $428,674 $114
- ------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001 per share: To
be issued under the eGain Communications
Corporation 1999 Employee Stock Purchase Plan 750,000 $46.25 $34,687,500 $9,158
- ------------------------------------------------------------------------------------------------------------------------------
Total Registration Fee N/A N/A N/A $57,016
==============================================================================================================================
(1) The securities to be registered include options and rights to acquire Common
Stock.
(2) Pursuant to Rule 416(a), this registration statement also covers any
additional securities that may be offered or issued in connection with any stock
split, stock dividend, recapitalization or any other similar transaction
effected without the receipt of consideration, which results in an increase in
the number of the Registrant's outstanding shares of Common Stock.
3) Estimated pursuant to Rule 457(h) under the Securities Act of 1933, as
amended (the "Securities Act") solely for the purposes of calculating the
registration fee. As to shares subject to outstanding but unexercised options
under the Amended and Restated 1998 Stock Plan, the Social Science 1997 Stock
Option Plan and the Big Science Company 1999 Stock Incentive Plan, the price is
computed on the basis of the weighted average exercise price. As to the
remaining shares under the Amended and Restated 1998 Stock Plan, the price is
based upon the average of the high and low prices of the Common Stock on
March 17, 2000, as reported on the Nasdaq Stock Market. The 1999 Employee Stock
Purchase Plan established a purchase price equal to 85% of the fair market value
of the Company's Common Stock, and therefore the price for shares under the 1999
Employee Stock Purchase Plan is based on 85% of the average of the high and low
price of the Common Stock on March 17, 2000, as reported on the Nasdaq Stock
Market.
</TABLE>
The Registration Statement shall become effective upon filing in accordance with
Rule 462 under the Securities Act of 1933.
<PAGE>
PART I
ITEM 1. PROGRAM INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PROGRAM ANNUAL INFORMATION.*
* Information required by Part I to be contained in the Section 10(a) prospectus
is omitted from this Registration Statement in accordance with Rule 428 under
the Securities Act of 1933 (the "Securities Act") and the Note to Part I of Form
S-8.
PART II
INFORMATION REQUIRED IN THE INFORMATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by the Registrant with the Securities and
Exchange Commission are hereby incorporated by reference in this Registration
Statement:
(a) Registrant's prospectus dated September 23, 1999 and filed on
September 23, 1999 pursuant to Rule 424(b) of the Securities Act and which
contains audited financial statements for the Registrant's latest fiscal year
for which such statements have been filed.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") since the end
of the fiscal year referred to in (a) above, covered by the Registration
document.
(c) The description of Registrant's Capital Stock contained in
Registrant's registration statement on Form 8-A, filed September 3, 1999
pursuant to Section 12(g) of the Exchange Act.
In addition, all documents subsequently filed by Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended, prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in 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.
The validity of the shares of common stock offered hereby has been
passed upon for the Registrant by Pillsbury Madison and Sutro LLP, Palo Alto,
California. As of the date of this Registration Statement, certain partners of
Pillsbury Madison and Sutro LLP beneficially own an aggregate of 51,490 shares
of eGain Communications Corporation common stock.
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<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Registrant's certificate of incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a corporation will not be personally liable for monetary
damages for breach of their fiduciary duties as directors, except liability for:
o any breach of their duty of loyalty to the corporation or its
stockholders;
o acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 17 of the Delaware General
Corporation Law; or
o any transaction from which the director derived an improper
personal benefit.
This limitation of liability does not apply to liabilities arising
under the federal securities laws and does not affect the availability of
equitable remedies such as injunctive relief or rescission.
Registrant's certificate of incorporation and bylaws provide that it
will indemnify its directors and executive officers and may indemnify other
officers and employees and other agents to the fullest extent permitted by law.
Registrant's bylaws also permit it to secure insurance on behalf of any officer,
director, employee or other agent for any liability arising out of his or her
actions in such capacity, regardless of whether the bylaws would permit
indemnification.
Registrant has entered into agreements to indemnify its directors and
executive officers, in addition to indemnification provided for in Registrant's
certificate of incorporation and bylaws. These indemnification agreements
require the Registrant to indemnify such director or officer (an "Indemnitee")
to the fullest extent permitted by Delaware law, and to indemnify such
Indemnitee against expenses and liabilities actually and reasonably incurred in
connection with the investigation, defense, settlement or appeal of any
proceeding to which such Indemnitee was or is threatened to be made a party.
Pursuant to these indemnification agreements, the Registrant shall also advance
to each Indemnitee expenses and costs associated with any above-referenced
proceeding.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See Exhibit Index, which list of exhibits is incorporated herein by
reference.
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<PAGE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this
Registration Statement:
(A) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(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 thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
(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 (a)(1)(A) and (a)(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 by the Registrant pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 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
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<PAGE>
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Sunnyvale, State of California, on the 20th day of
March, 2000.
eGAIN COMMUNICATIONS CORPORATION
By /s/ Ashutosh Roy
-------------------------------------
Ashutosh Roy
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Ashutosh Roy, Gunjan Sinha, William
McGrath and Eric Smit, and each of them, his or her true and lawful
attorneys-in-fact and agents, each with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments, to this Registration
Statement on Form S-8, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto 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, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or their substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Name Title Date
---- ----- ----
/s/ Ashutosh Roy Chief Executive Officer and Director March 20, 2000
- ------------------- (Principal Executive Officer)
Ashutosh Roy
/s/ Gunjan Sinha President and Director March 20, 2000
- -------------------
Gunjan Sinha
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<PAGE>
Name Title Date
---- ----- ----
/s/ Harpreet Grewal Chief Financial Officer (Principal March 20, 2000
- ------------------- Financial Officer)
Harpreet Grewal
/s/ Eric N. Smit Vice President-Finance and March 20, 2000
- ------------------- Administration (Principal Accounting
Eric N. Smit Officer)
Director March __, 2000
- -------------------
A. Michael Spence
/s/ Mark A. Wolfson Director March 20, 2000
- -------------------
Mark A. Wolfson
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<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Description
------- --------------------------------------------------------------
4.1* eGain Communications Corporation Amended and Restated 1998
Stock Plan
4.2** Social Science, Inc. 1997 Stock Option Plan (assumed by eGain
Communications Corporation in connection with its acquisition
of Sitebridge, Inc.)
4.3*** eGain Communications Corporation 1999 Employee Stock Purchase
Plan
4.4 Big Science Company 1999 Stock Incentive Plan
5.1 Opinion regarding legality of the securities being offered
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Pillsbury Madison & Sutro LLP (included in Exhibit
5.1)
24.1 Powers of Attorney (see page II-5).
- ----------
* Incorporated by reference to Exhibit 10.3 to Registrant's Registration
Statement on Form S-1, No. 333-83439.
** Incorporated by reference to Exhibit 10.2 to Registrant's Registration
Statement on Form S-1, No. 333-83439.
*** Incorporated by reference to Exhibit 10.4 to Registrant's Registration
Statement on Form S-1, No. 333-83439.
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BIG SCIENCE COMPANY
1999 STOCK INCENTIVE PLAN
<PAGE>
BIG SCIENCE COMPANY
1999 STOCK INCENTIVE PLAN
-------------------------
1. PURPOSE.
-------
This Plan is intended to provide employees, directors, consultants and other
individuals (individually, a "Participant" and, collectively, the
"Participants") rendering services to or on behalf of Big Science Company (the
"Corporation") and/or one or more of its subsidiaries (individually, a
"Subsidiary" and, collectively, the "Subsidiaries") an opportunity to acquire an
equity interest in the Corporation. The Corporation intends to use the Plan to
link the long-term interests of shareholders of the Corporation and Plan
Participants, attract and retain Participants' services, motivate Participants
to increase the Corporation's value, and create flexibility in compensating
Participants.
The Plan allows the Corporation to reward Participants with (i) incentive stock
options and/or non-qualified stock options to purchase shares of common stock of
the Corporation, (ii) stock appreciation rights with respect to shares of common
stock of the Corporation, (iii) shares of common stock of the Corporation, (iv)
performance share awards which are designated as a specified number of shares of
common stock of the Corporation and earned based on performance, and (v)
performance unit awards which are designated as having a certain value per unit
and earned based on performance (individually an "Award" and collectively the
"Awards").
The Corporation has reserved the number of shares of common stock of the
Corporation specified in Section 6(a) for purposes of the Plan.
2. DEFINITIONS.
-----------
(a) "AWARD" shall mean any award granted under the Plan.
(b) "AWARD AGREEMENT" shall mean, with respect to each Award, the signed
written agreement between the Corporation and the Participant receiving the
Award setting forth the terms and conditions of the Award. The general terms and
conditions described in this Plan with respect to such type of Award shall be
incorporated by reference into the Award Agreement and shall apply to such
Award, except to the extent specifically provided otherwise in the Award
Agreement.
(c) "BOARD" shall mean the Board of Directors of the Corporation.
(d) "CHANGE-IN-CONTROL" of the Corporation shall mean the first to occur of
the following events occurring on or following the Effective Date of the Plan:
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(i) Any Person (other than those persons in control of the corporation
on the Effective Date of the Plan, a trustee or other fiduciary holding
securities under an employee benefit plan of the Corporation, or a corporation
owned directly or indirectly by the stockholders of the Corporation in
substantially the same proportions as their ownership of stock of the
Corporation) becomes the beneficial owner, directly or indirectly, of securities
of the Corporation representing twenty-five percent 25 %) or more of the
combined Voting Power of the Corporation's then outstanding securities; or
(ii) At any time after the Effective Date of the Plan, individuals who
on the Effective Date constitute the Board and any subsequent Board-approved
Directors cease for any reason to constitute a majority of the Board (for this
purpose, a "Board-approved Director" is any Director elected or appointed after
the Effective Date whose election or appointment was approved by a vote of at
least two-thirds (2/3) of the Directors then in office who either were Directors
at the Effective Date or whose election or appointment was previously so
approved) cease for any reason to constitute a majority thereof; or
(iii) The stockholders of the Corporation approve (A) a plan of
complete liquidation of the Corporation, (B) an agreement for the sale or
disposition of all or substantially all the Corporation's assets (other than as
part of a reorganization excepted in Section 2(d)(iii)(C)), or (C) a merger,
consolidation, or reorganization of the Corporation with or involving any other
entity, other than a merger, consolidation, or reorganization that would result
in the voting securities of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least fifty percent
(50%) of the combined Voting Power of the securities of the Corporation (or such
surviving entity) outstanding immediately after such merger, consolidation, or
reorganization.
However, in no event shall a Change-in-Control be deemed to have occurred with
respect to a Participant if the Participant is part of a purchasing group which
consummates the Change-in-Control transaction. The Participant shall be deemed
"part of a purchasing group" for purposes of the preceding sentence if the
Participant is either directly or indirectly an equity participant in the
purchasing group (except for (i) passive ownership of less than three percent
(3%) of the stock of the purchasing group, or (ii) ownership of equity
participation in the purchasing group which is otherwise not significant, as
determined prior to the Change-in-Control by the Committee).
(e) "CODE" shall mean the INTERNAL REVENUE CODE OF 1986, as amended.
(f) "COMMITTEE" shall mean the Compensation Committee or any special
committee appointed by the Board in accordance with Section 4 to administer the
Plan, unless the Board, itself, administers the Plan in which event the term
"Committee" shall mean the Board.
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(g) "COMMON STOCK" shall mean the voting, $_____ par value common stock of
the Corporation, as constituted on the Effective Date of the Plan, or any shares
or securities into which the Common Stock may be changed, reclassified,
subdivided, consolidated or converted thereafter.
(h) "COMPENSATION COMMITTEE" shall mean the compensation committee of the
Board.
(i) "COMPETING BUSINESS" shall mean any business which is the same as or
essentially the same as the Business of the Company. Should any court deem this
SECTION 2(I) to be unenforceable for any reason, the Participant and the
Corporation hereby grant the court authority to amend the definition of
Competing Business so that it is valid and enforceable.
(j) "CONSULTANT" shall mean any individual who is not an Employee or
Director and who has or will render services to or on behalf of the Corporation
or a Subsidiary.
(k) "CORPORATION" shall mean Big Science Company, a corporation organized
under the laws of Georgia, and any successor or continuing corporation resulting
from the amalgamation of the Corporation and any other corporation or resulting
from any other form of corporate reorganization of the Corporation.
(l) "DIRECTOR" shall mean a member of the Board.
(m) "EFFECTIVE DATE" shall mean the date described in SECTION 3.
(n) "EMPLOYEE" shall mean any individual, including an officer, who is a
common law employee of the Corporation or a Subsidiary.
(o) "EXCHANGE ACT" shall mean the SECURITIES EXCHANGE ACT OF 1934, as
amended.
(p) "EXERCISE PRICE" shall mean:
(i) With respect to an Option, the price per Share at which the Option
may be exercised, as determined by the Committee and as specified in the
Participant's Award Agreement; or
(ii) With respect to a Stock Appreciation Right, the price per Share
which is the base price for determining the future value of the Stock
Appreciation Right, as determined by the Committee and as specified in the
Participant's Award Agreement.
(q) "Fair Market Value" shall mean the value of one Share determined as of
any specified date as follows:
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(i) If the Shares are traded on any recognized United States
securities exchange, the value per Share shall be the closing price of the
Common Stock on the business day immediately preceding such specified date (or,
if there are no sales on that day, the last preceding day on which there was a
sale) on the principal exchange on which the Common Stock is traded;
(ii) If the Shares are not traded on any United States securities
exchange but are traded on any formal over-the-counter quotation system in
general use in the United States, including without limitation the NASDAQ
National Market or the NASDAQ Smallcap Market, the value per Share shall be the
mean between the closing bid and closing asked quotations for the Common Stock
on the business day immediately preceding such specified date (or, if there are
no such quotations on that day, the last preceding day on which there were such
quotations) on the principal system on which the Common Stock is traded; or
(iii) If neither Paragraph (i) nor (ii) applies, then the value per
Share shall be determined by the Board in good faith as an estimate of the value
per Share a willing purchaser would pay a willing seller in an arms' length
transaction with both parties having full knowledge of all relevant material
facts and neither party being compelled to buy or sell. Such determination shall
be conclusive and binding on all persons. The Board may engage an independent
appraiser to determine the Fair Market Value of the Shares on any date.
(r) "FOR CAUSE" shall mean the termination of a Participant's status as an
Employee, a Director or Consultant (as applicable) for any of the following
reasons, as determined by the Committee:
(i) A Participant who is an Employee and who willfully fails to
substantially perform the Participant's duties (other than any such failure
resulting from the Participant's Total and Permanent Disability) after a written
demand for substantial performance has been delivered by the Committee to the
Participant that specifically identifies the manner in which the Committee
believes that the Participant has not substantially performed the Participant's
duties, and the Participant fails to remedy such failure within thirty (30)
calendar days after receiving such notice;
(ii) A Participant who is a Consultant and who commits a material
breach of any consulting, confidentiality or similar agreement with the
Corporation or a Subsidiary, as determined under such agreement;
(iii) A Participant who is an Employee or a Consultant and who is
convicted (including a trial, plea of guilty or plea of nolo contendere) for
committing an act of fraud, embezzlement, theft, or other act constituting a
felony;
(iv) A Participant who is an Employee or a Consultant and who
willfully engages in gross misconduct or willfully violates a Corporation or a
Subsidiary policy
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which is materially and demonstrably injurious to the Corporation and/or a
Subsidiary after a written demand to cease such misconduct or violation has been
delivered by the Committee to the Participant that specifically identifies the
manner in which the Committee believes that the Participant has violated this
PARAGRAPH (IV), and the Participant fails to cease such misconduct or violation
and remedy any injury suffered by the Corporation or the Subsidiary as a result
thereof within thirty (30) calendar days after receiving such notice. However,
no act or failure to act, on the Participant's part shall be considered
"willful" unless done, or omitted to be done, by the Participant not in good
faith and without reasonable belief that the Participant's action or omission
was in the best interest of the Corporation or the Subsidiary; or
(v) A Participant who is an Employee and who commits a material breach
of any noncompetition, confidentiality or similar agreement with the Corporation
or a Subsidiary, as determined under such agreement.
(s) "INCENTIVE STOCK OPTION" shall mean an Option of the type which is
described in SECTION 422(B) of THE CODE.
(t) "NON-EMPLOYEE DIRECTOR" shall mean a member of the Board who is neither
an Employee of the Corporation or any Subsidiary.
(u) "NON-QUALIFIED STOCK OPTION" shall mean an Option which is not of the
type described in SECTION 422(B) of THE CODE.
(v) "OPTION" shall mean any option which is granted pursuant to the Plan to
purchase one or more Shares of Common Stock, whether granted as an Incentive
Stock Option or as a Non-qualified Stock Option.
(w) "PARTICIPANT" shall mean any individual to whom an Award has been
granted under the Plan, and such term shall include, where appropriate, a
Permitted Transferee, the duly appointed conservator or other legal
representative of a mentally incompetent Participant and the transferee of a
deceased Participant, as provided in the Plan. If an Award is being exercised or
settled by the duly appointed conservator or other legal representative of a
mentally incompetent Participant or the allowable transferee of a deceased
Participant, such Person shall, as a condition to such exercise or settlement,
submit to the Committee evidence satisfactory to the Committee indicating the
capacity in which such Person represents the Participant.
(x) "PERFORMANCE SHARE" shall mean an Award designated as a specified
number of Shares which may, in whole or in part, be earned by and paid to a
Participant at the end of a performance period based on performance during that
period in achieving the performance objectives specified in the Participant's
Award Agreement. A Performance Share may be settled in cash or Shares, as
provided in the Participant's Award Agreement.
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(y) "PERFORMANCE UNIT" shall mean an Award designated as a specified dollar
value which may, in whole or in part, be earned by and paid to the Participant
at the end of a performance period based on performance during that period in
achieving the performance objectives specified in the Participant's Award
Agreement. A Performance Unit may be settled in cash or Shares, as provided in
the Participant's Award Agreement.
(z) "PERMITTED TRANSFEREE" shall mean, with respect to an individual to
whom an Award has been granted under the Plan, the spouse or child or children
of such individual or the trust or other entity established for their benefit;
provided, however, that the transfer of such Award by such individual may occur
only with the prior consent of the Committee which may be granted or denied in
the Committee's sole discretion.
(aa) "PERSON" shall have the meaning ascribed to such term in SECTION
3(A)(9) of THE EXCHANGE ACT and used in SECTIONS 13(D) and 14(D) thereof,
including a "group" as defined in SECTION 13(D).
(bb) "PLAN" shall mean this Big Science Company 1999 Stock Incentive Plan,
as amended.
(cc) "PYRAMIDING" shall mean a Participant's payment, in whole or in part,
of the Exercise Price of an Option made by exchanging a Share(s) that the
Participant had acquired pursuant to the exercise of another option during the
preceding six (6) months (under this Plan or any other plan or program of the
Corporation or a Subsidiary) or had otherwise acquired from the Corporation or a
Subsidiary during the preceding six (6) months without paying full consideration
for such Share(s).
(dd) "RELOAD" shall mean the grant of new Options to a Participant who pays
all or a portion of the Exercise Price of an Option with previously acquired
Shares, with the number of new Options being equal to the number of Shares
submitted by the Participant.
(ee) "RESTRICTED PERIOD" shall mean the period of time that begins on the
date hereof and extends for the period of employment of the Participant by the
Company hereunder and for a period of six (6) months following the termination
of such employment for any reason whatsoever; provided, however, that the
Restricted Period shall expire and have no effect in the event that the
Participant remains employed by the Company or one of its Subsidiaries following
the one-year anniversary of any Change in Control.
(ff) "RESTRICTED STOCK" shall mean a Share(s) of Common Stock issued to a
Participant which will Vest in accordance with the conditions
specified in the Participant's Award Agreement.
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(gg) "RETIREMENT" shall mean, except as otherwise specifically provided in
an Award Agreement:
(i) A Participant's voluntary termination of employment with the
Corporation and all Subsidiaries at or following "normal retirement age" (as
defined in the Corporation's or the Subsidiary's qualified 401(k) retirement
plan covering the Participant); or
(ii) If there is no such plan, the Participant's voluntary termination
of employment with the Corporation and, all Subsidiaries at or following age 65.
(hh) "SHARE" shall mean one authorized share of Common Stock.
(ii) "STOCK APPRECIATION RIGHT" OR "SAR" shall mean a right issued to a
Participant to receive all or any portion of the future appreciation
in the Fair Market Value of one Share over the Exercise Price of such
Right. A Stock Appreciation Right may be settled in cash or Shares, as
provided in the Participant's Award Agreement.
(jj) "SUBSIDIARY" shall mean:
(i) For purposes of granting Incentive Stock Options, any corporation
(other than the Corporation) in an unbroken chain of corporations beginning with
the Corporation if, at the time of granting an Award, each of the corporations
(other than the last corporation in the unbroken chain) owns stock possessing
80% or more of the voting power in one of the other corporations in such chain;
and
(ii) For all other purposes of the Plan, any business entity (other
than the Corporation) in which the Corporation has an equity interest.
(kk) "TANDEM OPTION/STOCK APPRECIATION RIGHT" shall mean an Option to
purchase a specified number of Share(s) and a Stock Appreciation Right
granted with respect to a specified number of Share(s) which are
granted together and designated as a "Tandem Option/SAR" in the
Participant's Award Agreement, whereby the exercise of either the
(ll) "TEN PERCENT STOCKHOLDER" shall, for purposes of granting Incentive
Stock Options, have the meaning ascribed to such term in CODE SECTION
422(B)(6) or in any successor provision of the Code.
(mm) "TOTAL AND PERMANENT DISABILITY" shall mean with respect to a
Participant:
(i) The mental or physical disability, either occupational or
non-occupational in cause, which satisfies the definition of "total disability"
in the principal
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long-term disability policy or plan provided by the Corporation or a Subsidiary
covering the Participant; or
(ii) If no such policy is then covering the Participant, a physical or
mental infirmity which, as determined by the Committee, upon receipt of and in
reliance on sufficient competent medical advice from one or more individuals,
selected by the Committee, who are qualified to give professional medical
advice, impairs or is expected to impair the Participant's ability to
substantially perform the Participant's duties for a period of at least one
hundred eighty (180) consecutive days.
(nn) "VEST" OR "VESTING" shall mean the date on which an Award becomes
exercisable, payable and/or nonforfeitable, as applicable.
(oo) VOTING POWER" shall mean the total combined rights to cast votes at
and election for members of the Board.
3. EFFECTIVE DATE.
--------------
The Plan was adopted by the Board to be effective on the date of approval by the
Corporation's shareholders in accordance with SECTION 18.
4. ADMINISTRATION.
--------------
(a) ADMINISTRATION BY THE BOARD OR THE COMMITTEE.
(i) The Plan shall be administered by the Board, unless the Board
appoints the Compensation Committee or another Committee to administer the Plan.
The Compensation Committee or any other Committee administering the Plan may,
but is not required to satisfy the criteria set forth in SECTION 4(A)(II). With
respect to any period during which the Board administers the Plan, the term
"Committee" as used in the Plan and any Award Agreement shall mean the Board;
(ii) For purposes of SECTION 4(A)(I), the Committee may
consist of not less than two members, each of whom shall be a "non-employee
director" within the meaning of RULE 16B-3(B)(3)(I) promulgated by the
Securities Exchange Commission under THE EXCHANGE ACT, and an "outside director"
within the meaning of SECTION 162(M)(4)(C)(I) of THE CODE and the regulations
issued thereunder.
(b) ACTIONS OF THE COMMITTEE.
(i) The Committee shall hold meetings at such times and places as it
may determine. For a Committee meeting, if the Committee has two members, both
members must be present to constitute a quorum, and if the Committee has three
or more members, a majority of the Committee shall constitute a quorum. Acts by
a majority of the members present at a meeting at which a quorum is present and
acts
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approved in writing by all the members of the Committee shall constitute
valid acts of the Committee;
(ii) Members of the Committee may vote on any matters affecting the
administration of the Plan or the grant of any Award pursuant to the Plan,
subject to the remainder of this SECTION 4(B)(II). No member shall act upon the
granting of an Award to himself or herself.
(c) POWERS OF THE COMMITTEE.
On behalf of the Corporation and subject to the provisions of the Plan and RULE
16B-3 of THE EXCHANGE ACT, the Committee shall have the authority and the sole
and complete discretion to:
(i) Prescribe, amend and rescind rules and regulations of the Plan,
and, if desired, delegate authority to take actions under the Plan to the
President or other appropriate officer(s) of the Corporation within the limits
determined by the Committee;
(ii) Select Participants to receive Awards;
(iii) Determine the form and terms of Awards;
(iv) Determine the number of Shares or other consideration subject
to Awards;
(v) Determine whether Awards will be granted singly, in combination
or in tandem with, in replacement of, or as alternatives to, other Awards under
the Plan or any other incentive or compensation plan of the Corporation or any
Subsidiary;
(vi) Construe and interpret in a consistent manner the Plan, any
Award Agreement and any other agreement or document executed pursuant to the
Plan;
(vii) Correct any defect or omission, or reconcile any inconsistency
in the Plan, any Award or any Award Agreement;
(viii) Determine whether an Award has been earned and/or Vested;
(ix) Determine whether a Participant has incurred a Total and
Permanent Disability;
(x) Accelerate or, with the consent of the Participant, defer the
Vesting of any Award and/or the exercise date of any Award;
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(xi) Determine whether a Participant's status as an Employee,
Director or Consultant of the Corporation or any Subsidiary has been terminated
For Cause;
(xii) Authorize any person to execute on behalf of the Corporation or
any Subsidiary any instrument required to effectuate the grant of an Award;
(xiii) With the consent of the Participant, reprice, cancel and
reissue, or otherwise adjust the terms of an Award previously issued to the
Participant;
(xiv) Determine when an Employee's period of employment is deemed to
be continued during an approved leave of absence;
(xv) Determine when a Consultant's period of rendering service is
deemed to be continuous (notwithstanding a period of interrupted service) and
when a Consultant's period of rendering services has ended;
(xvi) Determine, upon review of relevant information, the Fair Market
Value of the Common Stock; and
(xvii) Make all other determinations deemed necessary or advisable for
the administration of the Plan.
(d) COMMITTEE'S INTERPRETATION OF THE PLAN.
The Board's or the Committee's interpretation and construction of any provision
of the Plan, of any Award granted under the Plan, or of any Award Agreement
shall be final and binding on all persons claiming an interest in an Award
granted or issued under the Plan. Neither the Committee, a member of the
Committee nor any Director shall be liable for any action or determination made
in good faith with respect to the Plan. The Corporation, in accordance with its
bylaws, shall indemnify and defend such parties to the fullest extent provided
by law and such bylaws.
5. PARTICIPATION.
-------------
(a) ELIGIBILITY FOR PARTICIPATION.
Subject to the conditions of SECTION 5(B), all Employees, Directors and
Consultants rendering services to the Corporation and/or any Subsidiary are
eligible to be selected as Participants by the Committee. The Committee's
determination of an individual's eligibility for participation shall be final.
(b) ELIGIBILITY FOR AWARDS.
The Committee has the authority to grant Award(s) to Participants. A Participant
may be granted more than one Award under the Plan.
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6. SHARES OF STOCK OF THE CORPORATION.
----------------------------------
(a) SHARES SUBJECT TO THE PLAN.
Awards granted under the Plan shall be with respect to sixty (60) million
authorized but unissued or reacquired Shares of Common Stock. The aggregate
number of Shares granted as Options, Stock Appreciation Rights or Restricted
Shares to a Participant during the term of the Plan shall not exceed twelve (12)
million Shares in a twelve (12) month period under the Plan.
(b) AWARDS TO DIRECTORS.
No member of the Board or the Committee administering the Plan shall be eligible
to be granted an Award which is not either exempt from RULE 16B-3 of the
EXCHANGE ACT or may be granted under circumstances that may be permitted under
RULE 16B-3 of the EXCHANGE ACT without adversely affecting any requirement of
such Rule that the Plan be administered in a manner prescribed by the Rule.
(c) ADJUSTMENT OF SHARES.
In the event of an adjustment described in SECTION 13, then (i) the number of
Shares reserved for issuance under the Plan, (ii) the Exercise Prices of and
number of Shares subject to outstanding Options, (iii) the Exercise Prices of
and number of Shares with respect to which there are outstanding Stock
Appreciation Rights, and (iv) any other factor pertaining to outstanding Awards
shall be duly and proportionately adjusted, subject to any required action by
the Board or the shareholders of the Corporation and compliance with applicable
securities laws; provided, however, that fractions of a Share shall not be
issued but shall either be paid in cash at Fair Market Value or shall be rounded
up to the nearest Share, as determined by the Committee.
(d) AWARDS NOT TO EXCEED SHARES AVAILABLE.
The number of Shares subject to Awards which have been granted under the Plan at
any time during the Plan's term shall not, in the aggregate at any time, exceed
the number of Shares authorized for issuance under the Plan. The number of
Shares subject to an Award which expires, is canceled, is forfeited or is
terminated for any reason other than, and to the extent, being settled in
Shares, shall again be available for issuance under the Plan.
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7. GENERAL TERMS AND CONDITIONS OF AWARDS.
--------------------------------------
(a) AWARD AGREEMENTS.
Each Award shall be evidenced by a written Award Agreement which shall set forth
the terms and conditions pertaining to such Award. Each Award Agreement shall
specify the manner and procedure for exercising an Award, if relevant for the
Award, and specify the effective date of such exercise.
(b) NUMBER OF SHARES COVERED BY AN AWARD.
Each Award Agreement shall state the number of Shares subject to the Award,
subject to adjustment of such Shares pursuant to SECTION 13.
(c) OTHER PROVISIONS.
An Award Agreement may contain such other provisions as the Committee in its
discretion deems advisable, including but not limited to:
(i) Restrictions on the exercise of the Award;
(ii) Submission by the Participant of such forms and documents as the
Committee may require; and/or
(iii) Procedures to facilitate the payment of the Exercise Price of an
Option under any method allowable under SECTION 16.
(d) VESTING OF AWARDS.
Each Award Agreement shall include a Vesting schedule describing the date, event
or act upon which an Award shall Vest, in whole or in part, with respect to all
or a specified portion of the Shares covered by such Award.
(e) EFFECT OF TERMINATION OF EMPLOYMENT, DIRECTORSHIP OR CONSULTANCY ON
NONVESTED AND VESTED AWARDS.
(i) For purposes of the Plan, a Participant's status as an Employee, a
Director or a Consultant shall be determined by the Committee and will be
treated as continuing intact while the Participant is on military leave, sick
leave or other bona fide leave of absence, as determined by the Committee.
(ii) If a Participant ceases to be an Employee, a Director and/or a
Consultant for any reason (A) the Participant's Award(s) which are not Vested at
the time that the Participant ceases to be an Employee, a Director or a
Consultant (as applicable) shall be forfeited, and (B) the Participant's
Award(s) which are Vested at the
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time the Participant ceases to be an Employee, a Director or a Consultant (as
applicable) shall be forfeited and/or expire on the terms specified in SECTIONS
8 through 11 (as applicable) except to the extent specifically provided
otherwise in the Participant's Award Agreement.
(f) NONTRANSFERABILITY OF AWARDS.
An Award granted to a Participant shall, during the lifetime of the Participant,
be exercisable only by the Participant and shall not, except to the extent
specifically provided otherwise in the Plan or in the Participant's Award
Agreement, be assignable or transferable. In the event of the Participant's
death, an Award is transferable by the Participant only by will or the laws of
descent and distribution. Any attempted pledge, hypothecation, assignment,
transfer or attachment by any creditor in violation of this Section 7(f) shall
be null and void, except with the prior written consent of the Board.
(g) MODIFICATION, EXTENSION OR RENEWAL OF AWARDS.
Within the limitations of the Plan, the Committee may, in its discretion,
modify, extend or renew any outstanding Award or accept the cancellation of
outstanding Award(s) for the granting of a new Award(s) in substitution
therefore. Notwithstanding the preceding sentence, no modification of an Award
shall:
(i) Without the consent of the Participant, alter or impair any rights
or obligations under any Award previously granted;
(ii) Without the consent of the Participant, cause an Incentive Stock
Option previously granted to fail to satisfy all the conditions required to
qualify as an Incentive Stock Option; or
(iii) Exceed or otherwise violate any limitation set forth in the
Plan.
(h) RIGHTS AS A STOCKHOLDER.
A Participant shall have no rights as a stockholder of the Corporation with
respect to any Shares subject to Award until the date a stock certificate for
such Shares is issued to the Participant. No adjustment shall be made for
dividends (ordinary or extraordinary or whether in currency, securities, or
other property), distributions, or other rights for which the record date is
prior to the date such stock certificate is issued.
8. SPECIFIC TERMS AND CONDITIONS OF OPTIONS.
----------------------------------------
(a) ELIGIBILITY FOR INCENTIVE STOCK OPTIONS.
Incentive Stock Options may be granted only to a Participant who is an Employee.
Any Incentive Stock Option granted to a Participant who is also a Ten Percent
Stockholder
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shall be subject to the following additional limitations: (i) the
Exercise Price of each Share subject to such Incentive Stock Option, when
granted, is equal to or exceeds 110% of the Fair Market Value of a Share as of
the date of grant, and (ii) the term of the Incentive Stock Option does not
exceed five (5) years from the date of grant.
(b) EXERCISE PRICE.
Each Award Agreement shall state the Exercise Price for the Shares to which the
Option pertains, provided that the Exercise Price of an Incentive Stock Option
shall not be less than 100% of the Fair Market Value of the Shares determined as
of the date the Option is granted (substituting "110%" for "100%" for any
Incentive Stock Option granted to a Ten Percent Stockholder).
(c) EXERCISE OF OPTIONS, PAYMENT OF EXERCISE PRICE, AND "NET SHARES"
SETTLEMENT OF OPTIONS.
(i) A Participant may exercise an Option only on or after the date on
which the Option Vests and only on or before the date on which the term of the
Option expires.
(ii) Subject to SECTION 8(C)(III) below, a Participant exercising an
Option shall pay the Exercise Price for the Shares to which such exercise
pertains in full in cash (in U.S. dollars) as a condition of such exercise,
unless the Committee, in its discretion, allows the Participant to pay the
Exercise Price in a manner allowed under Section 16, so long as the sum of cash
so paid and such other consideration equals the Exercise Price. The Committee
may, in its discretion, permit the sequential exercise of an Option through
Pyramiding and/or permit the grant of Reload Options.
(iii) The Committee may, in its discretion, permit a Participant to
exercise an Option without paying the Exercise Price for the Shares to which
such exercise pertains, in which event the Option so exercised shall be settled
in a specific number of whole Shares having an aggregate Fair Market Value equal
to (A) the excess of the Fair Market Value, determined as of the date of
exercise, of one Share over the Exercise Price of such Option, multiplied by (B)
the number of Shares to which such exercise pertains.
(d) TERM AND EXPIRATION OF OPTIONS.
Subject to Section 8(i), except as otherwise specifically provided in a
Participant's Award Agreement, the term of an Option shall expire on the first
to occur of the following:
(i) The tenth (10th) anniversary of the date the Option was granted
(for an Incentive Stock Option granted to any Participant who is a Ten Percent
Stockholder, "fifth (5th) anniversary" shall be substituted for "tenth (10th)
anniversary");
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<PAGE>
(ii) The date determined under SECTION 8(E) for a Participant who
ceases to be an Employee, Director or Consultant by reason of voluntary
termination or involuntary termination For Cause;
(iii) The date determined under SECTION 8(F) for a Participant who
ceases to be an Employee, Director or Consultant by reason of the Participant's
death;
(iv) The date determined under SECTION 8(G) for a Participant who
ceases to be an Employee, Director or Consultant by reason of the Participant's
Total and Permanent Disability;
(v) The date determined under SECTION 8(H) for a Participant who
ceases to be an Employee, Director or Consultant by reason of involuntary
termination other than For Cause;
(vi) On the closing date of a transaction described in SECTION 13(B);
or
(vii) The expiration date specified in the Award Agreement pertaining
to the Option.
(E) VOLUNTARY TERMINATION OTHER THAN RETIREMENT AND INVOLUNTARY TERMINATION
FOR CAUSE.
If a Participant ceases to be an Employee, Director or Consultant by resigning
or by being Terminated For Cause, then the Participant's Options which are
Vested at the time the Participant ceases to be an Employee, Director or
Consultant shall expire immediately.
(f) DEATH OF PARTICIPANT.
If a Participant dies while an Employee, Director or Consultant, any Option
granted to the Participant may be exercised, to the extent it was Vested on the
date of the Participant's death or became Vested as a result of the
Participant's death, at any time within one (1) year after the Participant's
death (but not beyond the date that the term of the Option would earlier have
expired pursuant to Section 8(D) had the Participant's death not occurred).
(g) TOTAL AND PERMANENT DISABILITY OF PARTICIPANT.
If a Participant ceases to be an Employee, Director or Consultant as a
consequence of Total and Permanent Disability, any Option granted to the
Participant may be exercised, to the extent it was Vested on the date that the
Participant ceased to be an Employee, Director or Consultant or became Vested as
a result of Participant's Total and Permanent Disability, at any time within one
(1) year after such date (but not beyond the
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<PAGE>
date that the term of the Option would earlier have expired pursuant to 8(D) had
the Participant's Total and Permanent Disability not occurred).
(h) INVOLUNTARY TERMINATION OTHER THAN FOR CAUSE.
If a Participant ceases to be an Employee, Director or Consultant upon
termination by the Corporation for reasons other than For Cause, the
Participant's Options which are Vested at the time the Participant is terminated
may be exercised at any time within three (3) months after such date (but not
beyond the date that the term of the Option would earlier have expired pursuant
to 8(D)).
(i) NON-COMPETE FORFEITURE PROVISION
The Participant agrees that during the Restricted Period, he will not (except on
behalf of or with the prior written consent of the Company) within the United
States, either directly or indirectly, on his behalf or in the service or on
behalf of others as vice-president, senior executive or other senior level
position, whether designated as an employee, Consultant or otherwise, engage in
any Competing Business. Upon a determination by the Board that the Participant
has violated this Non-compete Provision, all vested and non-vested Options will
immediately be forfeited.
(j) RETIREMENT.
If a Participant Retires while an Employee, Director or Consultant, any Option
granted to the Participant may be exercised, to the extent it was Vested on the
date of the Participant's retirement or became Vested as a result of the
Participant's retirement, at any time within one (1) year after the
Participant's Retirement (but not beyond the date that the term of the Option
would earlier have expired pursuant to 8(D) had the Participant's Retirement not
occurred.
(k) NO DISQUALIFICATION OF INCENTIVE STOCK OPTIONS.
Notwithstanding any other provision of the Plan, the Plan shall not be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be exercised, so as to disqualify the Plan under SECTION 422 of
THE CODE or, without the consent of the Participant affected, disqualify any
Incentive Stock Option under SECTION 422 of THE CODE (except as provided in
Section 8(j)).
(l) LIMITATION ON INCENTIVE STOCK OPTIONS.
The aggregate Fair Market Value (determined with respect to each Incentive Stock
Option as of the date of grant of such Incentive Stock Option) of all Shares
with respect to which a Participant's Incentive Stock Options first become
Vested during any calendar year (under the Plan and under other incentive stock
option plans, if any, of the Corporation and its Subsidiaries) shall not exceed
US$100,000. Any purported
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Incentive Stock Options in excess of such limitation shall be recharacterized as
Non-qualified Stock Options.
9. SPECIFIC TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.
----------------------------------------------------------
(a) EXERCISE PRICE.
(i) Each Stock Appreciation Right Award Agreement shall state the
number of Shares to which it pertains and the Exercise Price which is the basis
for determining future appreciation, subject to adjustment pursuant to SECTION
13, provided that the Exercise Price of a Stock Appreciation Right shall not be
less than 100% of the Fair Market Value of a Share determined as of the date the
Stock Appreciation Right is granted;
(ii) A Stock Appreciation Right shall be issued to and exercised by a
Participant without payment by the Participant of any consideration.
(b) EXERCISE AND SETTLEMENT OF STOCK APPRECIATION RIGHTS.
(i) A Participant may exercise a Stock Appreciation Right only on or
after the date on which the Stock Appreciation Right Vests and only on or before
the date on which the Stock Appreciation Right expires;
(ii) A Participant's properly exercised Stock Appreciation Right may
be settled in the form of cash (either in a lump sum payment or in
installments), whole Shares or a combination thereof, as the Award Agreement
prescribes.
(c) TERM AND EXPIRATION OF STOCK APPRECIATION RIGHTS.
Except as otherwise specifically provided in a Participant's Award Agreement,
the term of a Stock Appreciation Right shall expire on the first to occur of the
following:
(i) The tenth (10th) anniversary of the date the Right was granted;
(ii) The date determined under SECTION 9(D) for a Participant who
ceases to be an Employee, Director or Consultant by reason of voluntary
termination or involuntary termination For Cause;
(iii) The date determined under SECTION 9(E) for a Participant who
ceases to be an Employee, Director or Consultant by reason of the Participant's
death;
(iv) The date determined under SECTION 9(F) for a Participant who
ceases to be an Employee, Director or Consultant by reason of the Participant's
Total and Permanent Disability;
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(v) The date determined under SECTION 9(G) for a Participant who
ceases to be an Employee, Director or Consultant by reason of involuntary
termination other than For Cause;
(vi) On the effective date of a transaction described in SECTION
13(B); or
(vii) The expiration date specified in the Award Agreement pertaining
to the Stock Appreciation Right.
(d) VOLUNTARY TERMINATION OTHER THAN RETIREMENT AND INVOLUNTARY TERMINATION
FOR CAUSE.
If a Participant ceases to be an Employee, Director or Consultant by Resigning
or by being terminated For Cause, the Participant's Stock Appreciation Rights
which are Vested at the time the Participant ceases to be an Employee, Director
or Consultant shall expire immediately.
(e) DEATH OF PARTICIPANT.
If a Participant dies while an Employee, Director or Consultant, any Stock
Appreciation Right granted to the Participant may be exercised, to the extent it
was Vested on the date of the Participant's death or became Vested as a
consequence of the Participant's death, at any time within one (1) year after
the Participant's death (but not beyond the date that the term of the Stock
Appreciation Right would earlier have expired pursuant to Section 9(c) had the
Participant's death not occurred).
(f) TOTAL AND PERMANENT DISABILITY OF PARTICIPANT.
If a Participant ceases to be an Employee, Director or Consultant as a
consequence of Total and Permanent Disability, any Stock Appreciation Right
granted to the Participant may be exercised, to the extent it was Vested on the
date that the Participant ceased to be an Employee or became Vested as a
consequence of the Participant's Total and Permanent Disability, at any time
within one (1) year after such date (but not beyond the date that the term of
the Stock Appreciation Right would earlier have expired pursuant to 9(c) had the
Participant's Total and Permanent Disability not occurred).
(g) INVOLUNTARY TERMINATION OTHER THAN FOR CAUSE.
If a Participant ceases to be an Employee, Director or Consultant upon
termination by the Corporation for reasons other than For Cause, the
Participant's Stock Appreciation Rights which are Vested at the time the
Participant is terminated may be exercised at any time within three (3) months
after such date (but not beyond the date that the term of the Stock Appreciation
Rights would earlier have expired pursuant to 9(C)).
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(h) RETIREMENT.
If a Participant Retires while an Employee, Director or Consultant, the
Participant's Stock Appreciation Rights which are Vested at the time the
Participant retires may be exercised at any time within twelve (12) months after
such date (but not beyond the date that the term of the Stock Appreciation
Rights would earlier have expired pursuant to 9(C).
10. SPECIFIC TERMS AND CONDITIONS OF RESTRICTED STOCK.
-------------------------------------------------
(a) PURCHASE PRICE.
(i) Each Award Agreement shall state the number of Shares of
Restricted Stock to which it pertains and the purchase price per Share, if any,
that the Participant paid for such Shares, subject to adjustment pursuant to
SECTION 13;
(ii) A Share of Restricted Stock may be issued to a Participant with
or without payment by the Participant of any consideration (other than past
and/or future services), unless the Participant is required, pursuant to the
related Award Agreement, to pay a minimum purchase price, such as par value, for
such Shares.
(b) FORFEITURE OF RESTRICTED STOCK.
If a Participant's status as an Employee, Director or Consultant terminates for
any reason, any Share of Restricted Stock which was not Vested or did not become
Vested as the result of the Participant's termination shall be forfeited
immediately.
(c) CERTIFICATES REPRESENTING NON-VESTED SHARES OF RESTRICTED STOCK.
As a condition to receiving an Award of Restricted Stock which are not Vested,
the Participant shall duly execute a "power of attorney" or a form of "stock
power" provided by the Corporation with respect to such Shares authorizing the
re-transfer, without any further action by the Participant, to the Corporation
any Shares which may be forfeited by the Participant. The Corporation shall
retain the stock certificate evidencing such Shares until the Shares are Vested.
If, in the opinion of the Corporation and its counsel, the retention of the
stock certificate representing such Restricted Stock is no longer required, the
Corporation shall deliver to the Participant a stock certificate representing
such Shares, bearing such restrictive legends as are required or may be deemed
advisable under the Plan or the provisions of any applicable law.
(d) LEGENDS.
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Stock certificates evidencing Restricted Stock shall bear a restrictive legend
noting the forfeiture provisions attached to such Shares and such other
restrictive legends as are required or may be deemed advisable by the Committee
under the Plan or the provisions of any applicable law.
11. PERFORMANCE SHARES AND PERFORMANCE UNITS.
----------------------------------------
(a) NUMBER OF SHARES COVERED BY A PERFORMANCE SHARE AWARD.
Each Performance Share Award Agreement shall state the number of Shares to which
it pertains, subject to adjustment pursuant to SECTION 13.
(b) VALUE AND CRITERIA OF A PERFORMANCE UNIT AWARD.
Each Performance Unit Award Agreement shall state the value of such Award (in
U.S. dollars) and the specific performance objectives necessary to Vest such
Award.
(c) PURCHASE PRICE.
A Performance Share and a Performance Unit shall be issued to a Participant
without payment by the Participant of any consideration (other than past and/or
future services).
(d) SETTLEMENT OF A PERFORMANCE SHARE AND A PERFORMANCE UNIT.
Following the end of the performance period applicable to a Performance Share or
a Performance Unit and the Committee's determination of the extent to which the
Award Vests, the Award shall be settled in the form of cash (either in a lump
sum payment or in installments), whole Shares or a combination thereof, as the
Award Agreement prescribes.
(e) TERM AND EXPIRATION OF PERFORMANCE SHARES AND PERFORMANCE UNITS.
Except as otherwise specifically provided in a Participant's Award Agreement,
the term of a Performance Share and Performance Unit shall expire on the first
to occur of the following events:
(i) The date determined under SECTION 11(F) for a Participant who
ceases to be an Employee, Director or Consultant for any reason;
(ii) On the effective date of a transaction described IN SECTION
13(B); or
(iii) The expiration date specified in the Award Agreement pertaining
to the Performance Share or the Performance Unit.
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(f) FORFEITURE OF PERFORMANCE SHARES AND PERFORMANCE UNITS.
If a Participant status as an Employee, Director or Consultant terminates for
any reason, any Performance Share and Performance Unit which was not Vested or
did not become Vested as the result of the Participant's termination shall be
forfeited immediately.
12. TERM OF PLAN.
------------
Awards may be granted pursuant to the Plan through the period commencing on the
Effective Date and ending on the tenth (10th) anniversary of the Effective Date
at 11:59 p.m. All Awards which are outstanding on such date shall remain in
effect until they are exercised or expire by their terms. The Plan shall expire
for all purposes on the twentieth (20th) anniversary of the Effective Date at
11:59 p.m. The Board is authorized to extend the Plan for an additional term at
any time; however, no Incentive Stock Options may be granted under the Plan on
or after the tenth (10th) anniversary of the Effective Date of the Plan, unless
an extension is approved by the shareholders of the Corporation within one (1)
year of such extension.
13. RECAPITALIZATION, DISSOLUTION AND CHANGE OF CONTROL.
---------------------------------------------------
(a) RECAPITALIZATION.
Notwithstanding any other provision of the Plan to the contrary, but subject to
any required action by the stockholders of the Corporation and compliance with
any applicable securities laws, the Committee, in its sole discretion, shall
make any adjustments to the class and/or number of Shares covered by the Plan,
the number of Shares for which each outstanding Award pertains, the Exercise
Price of an Option, the Exercise Price of a Stock Appreciation Right, and/or any
other aspect of this Plan to prevent the dilution or enlargement of the rights
of Participants under this Plan in connection with any increase or decrease in
the number of issued Shares resulting from the payment of a Common Stock
dividend, stock split, reverse stock split, recapitalization, combination, or
reclassification or any other event which results in an increase or decrease in
the number of issued Shares without receipt of adequate consideration by the
Corporation (as determined by the Committee). The conversion of any convertible
securities of the Corporation shall not be deemed to have been issued without
adequate consideration.
(b) DISSOLUTION, MERGER, CONSOLIDATION, OR SALE OR LEASE OF ASSETS.
In connection with a Change-in-Control of the Corporation described in SECTION
2(D)(III), each Award shall expire immediately prior to the closing date of such
transaction,
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<PAGE>
provided that the Committee shall, to the extent possible considering the timing
of the transaction, give at least thirty (30) days' prior written notice of such
event to any Participant who shall then have the right to exercise his or her
Vested Awards (as an Award Agreement may provide) prior to the closing date of
such transaction, subject to earlier expiration pursuant to SECTIONS 8 through
11, as applicable. The preceding sentence shall not apply if the
Change-in-Control of the Corporation is described in SECTION 2(D)(III)(C) and
the surviving entity agrees to assume outstanding Awards.
(c) DETERMINATION BY THE COMMITTEE.
All adjustments described in this SECTION 13 shall be made by the Committee and
shall be conclusive and binding on all persons.
(d) LIMITATION ON RIGHTS OF PARTICIPANTS.
Except as expressly provided in this SECTION 13, no Participant shall have any
rights by reason of any reorganization, dissolution, Change-in-Control, merger
or acquisition. Any issuance by the Corporation or any Subsidiary of Awards
shall not affect, and no adjustment by reason thereof shall be made with respect
to, any Awards previously issued under the Plan.
(e) NO LIMITATION ON RIGHTS OF CORPORATION.
The grant of an Award pursuant to the Plan shall not affect in any way the right
or power of the Corporation or any Subsidiary to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure, or to merge or consolidate, or to dissolve, liquidate, sell or
transfer all or any part of its business or assets.
14. SECURITIES LAW REQUIREMENTS.
---------------------------
(a) LEGALITY OF ISSUANCE.
No Share shall be issued upon the exercise of any Award unless and until the
Committee has determined that:
(i) The Corporation, its Subsidiaries and the Participant have taken
all actions required to register the Shares under THE SECURITIES ACT OF 1933, as
amended (THE "ACT"), or to perfect an exemption from registration requirements
of the Act, or to determine that the registration requirements of THE ACT do not
apply to such exercise;
(ii) Any applicable listing requirement of any stock exchange on which
the Share is listed has been satisfied; and
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<PAGE>
(iii) Any other applicable provision of state, federal or foreign law
has been satisfied.
As a condition to the issuance of any Share pursuant to an Award or the transfer
of such Share, the Corporation may require an opinion of counsel, satisfactory
to the Corporation, to the effect that such issuance or transfer will not be in
violation of the Act or any other applicable securities laws or that such
issuance or transfer has been duly registered under federal and all applicable
state securities laws. The Corporation shall not be liable to any party for
damages due to a delay in the delivery or issuance of any stock certificate for
any reason.
(b) RESTRICTIONS ON TRANSFER; REPRESENTATIONS OF PARTICIPANT; LEGENDS.
Regardless of whether the offering and sale of Shares under the Plan have been
registered under the Act or have been registered or qualified under the
securities laws of any state, the Corporation may impose restrictions upon the
sale, pledge or other transfer of such Shares (including the placement of
appropriate legends on stock certificates) if, in the judgment of the
Corporation and its counsel, such restrictions are necessary or desirable to
achieve compliance with the provisions of THE ACT, the securities laws of any
state, or any other law. If the offering and/or sale of Shares under the Plan is
not registered under THE ACT and the Corporation determines that the
registration requirements of THE ACT apply but an exemption is available which
requires an investment representation or other representation, the Participant
shall be required, as a condition to acquiring such Shares, to represent that
such Shares are being acquired for investment, and not with a view to the sale
or distribution thereof, except in compliance with THE ACT, and to make such
other representations, to execute such documents and to provide the Corporation
with such information as are deemed necessary or appropriate by the Corporation
and its counsel. Stock certificates evidencing Shares acquired pursuant to an
unregistered transaction to which THE ACT applies shall bear a restrictive
legend substantially in the following form and such other restrictive legends as
are required or deemed advisable under the Plan or the provisions of any
applicable law:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 ("ACT"). THEY MAY NOT BE TRANSFERRED, SOLD OR OFFERED FOR SALE
UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH
TRANSFER OR IN THE OPINION OF COUNSEL FOR THE ISSUER EITHER SUCH
REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH
THE ACT OR THE REGISTRATION PROVISIONS OF THE ACT DO NOT APPLY TO SUCH
PROPOSED TRANSFER.
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<PAGE>
Any determination by the Corporation, its Subsidiaries and its counsel in
connection with any of the matters set forth in this SECTION 14 shall be
conclusive and binding on all persons.
(c) REGISTRATION OR QUALIFICATION OF SECURITIES.
The Corporation and/or its Subsidiaries may, but shall not be obligated to,
register or qualify the offering or sale of Shares under the Act or any other
applicable law.
(d) EXCHANGE OF CERTIFICATES.
If, in the opinion of the Corporation, its Subsidiaries and its counsel, any
legend placed on a stock certificate representing Shares issued pursuant to the
Plan is no longer required, the Participant or the holder of such certificate
shall be entitled to exchange such certificate for a certificate representing
the same number of Shares but lacking such legend.
15. AMENDMENT OF THE PLAN.
---------------------
The Committee may, from time to time, terminate, suspend or discontinue the
Plan, in whole or in part, or revise or amend it in any respect whatsoever
including, but not limited to, the adoption of any amendment deemed necessary or
advisable to qualify the Awards under rules and regulations promulgated by the
Securities and Exchange Commission (the "SEC") with respect to Participants who
are subject to the provisions of SECTION 16 of the EXCHANGE ACT, or to correct
any defect or supply any omission or reconcile any inconsistency in the Plan or
in any Award granted under the Plan, with or without approval of the
stockholders of the Corporation, but if any such action is taken without the
approval of the Corporation's stockholders, no such revision or amendment shall:
(a) Increase the number of Shares subject to the Plan, other than any
increase pursuant to SECTION 13;
(b) Change the designation of the class of persons eligible to receive
Awards; or
(c) Amend this SECTION 15 to defeat its purpose.
No amendment, termination or modification of the Plan shall, without the consent
of a Participant, adversely affect the Participant with respect to any Award
previously granted to the Participant.
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<PAGE>
16. PAYMENT FOR SHARE PURCHASES.
---------------------------
Payment of the Exercise Price for any Shares purchased pursuant to the Plan may
be made in cash (in U.S. dollars) or, where expressly approved for the
Participant by the Committee, in its discretion, and where permitted by law:
(a) By check;
(b) By wire transfer of immediately available funds;
(c) By cancellation of indebtedness of the Corporation or a Subsidiary to
the Participant;
(d) By surrender of Shares that either: (A) have been owned by the
Participant for more than six months (unless the Committee permits a Participant
to exercise an Option by Pyramiding, in which event the six months holding
period shall not apply) and have been "paid for" within the meaning of SEC RULE
144 (and, if such shares were purchased from the Corporation or a Subsidiary by
use of a promissory note, such note has been fully paid with respect to such
Shares); or (B) were obtained by the Participant in the public market, in each
case subject to applicable holding period and distribution restrictions required
by the Act and the Exchange Act;
(e) By waiver of compensation due or accrued to Participant for services
rendered;
(f) With respect only to purchases upon exercise of an Option, and provided
that a public market for the Corporation's stock exists:
(i) 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 the Exercise
Price, and whereby the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price and any applicable withholding taxes
directly to the Corporation or a Subsidiary; or
(ii) Through a "margin" commitment from the Participant and an 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 and any applicable withholding taxes directly to the
Corporation or a Subsidiary; or
(g) By any combination of the foregoing and/or by any other method approved
by the Committee.
25
<PAGE>
17. APPLICATION OF FUNDS.
--------------------
The proceeds received by the Corporation and its Subsidiaries from the sale of
Common Stock pursuant to the exercise of an Option or in any other manner with
respect to any Award shall be used for general corporate purposes.
18. APPROVAL OF SHAREHOLDERS.
------------------------
The Plan shall be subject to approval by the affirmative vote of the holders of
a majority of the outstanding shares present and entitled to vote at the first
meeting of shareholders of the Corporation following the adoption of the Plan by
the Board. Prior to such approval, Awards may be granted but may not be
exercised or settled. Pursuant to Section 15, certain amendments shall also be
subject to approval by the Corporation's shareholders.
19. WITHHOLDING OF TAXES.
--------------------
(a) GENERAL.
Whenever Shares are to be issued under the Plan, the Corporation or a Subsidiary
may require, as a condition to such issuance of Shares, the Participant to remit
to the Corporation or such Subsidiary, from any source, an amount sufficient to
satisfy foreign, federal, state and local withholding tax requirements prior to
the delivery of any certificate or certificates for such Shares. Whenever, under
the Plan, payments in satisfaction of Awards are to be made in cash, such
payment shall be net of an amount sufficient to satisfy foreign, federal, state,
and local withholding tax requirements.
(b) STOCK WITHHOLDING.
When, under applicable tax laws, a Participant incurs a tax liability in
connection with the issuance of Shares under the Plan and the Participant is
obligated to pay the Corporation or a Subsidiary the amount required to be
withheld, the Participant may elect to satisfy the minimum withholding tax
obligation by having the Corporation or such Subsidiary withhold from the Shares
to be issued the specific 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 (the "Tax Date"). All elections
by a Participant to have Shares withheld for this purpose shall be made in
writing in a form acceptable to the Committee and shall be subject to the
following restrictions:
(i) The election must be made on or prior to the applicable Tax
Date;
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<PAGE>
(ii) Once made, then except as provided below, the election shall be
irrevocable as to the particular Shares as to which the election is made; and
(iii) All elections shall be subject to the consent or disapproval of
the Committee.
20. RIGHTS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT.
---------------------------------------------
The Plan shall not be construed to give any individual the right to remain in
the employ of the Corporation (or a Subsidiary) or to affect the right of the
Corporation (or such Subsidiary) to terminate such individual's status as an
Employee, Director or Consultant at any time, with or without cause. The grant
of an Award shall not entitle the Participant to, or disqualify the Participant
from, participation in the grant of any other Award under the Plan or
participation in any other plan maintained by the Corporation or any Subsidiary.
21. RESTRICTIONS ON SALE AND TRANSFER.
---------------------------------
Each Participant agrees not to pledge, mortgage, hypothecate or otherwise
encumber or assign as security any of the Stock without the prior written
consent of all the other Employees. Each Participant further agrees not to sell,
transfer or assign any of the Stock to any person or entity not a party to this
Agreement, without the prior written consent of all of the other Employees or,
in the absence of such consent, only in accordance with the following terms and
conditions:
(i) Any Participant desiring to sell, transfer or assign all or any
portion if his Stock (the "Selling Stockholder") shall first
receive a bona fide written offer for the purchase of the number
of shares of the Stock that he desires to sell, transfer or
assign (the "Offered Stock"). The Selling Stockholder shall then
send a written notice to the Corporation and to all the other
stockholders, offering all of the Offered Stock to the
Corporation at the price and on the terms and conditions set
forth in such bona fide offer, and to the extent such offer is
not accepted by the Corporation, then for purchase
proportionately by the other stockholders, or upon such other
basis as they mutually agree, at the same price and on the same
terms and conditions. Such notice shall contain a signed copy of
the bona fide offer to purchase the Offered Stock, as well as the
full name and address of the proposed purchaser, and shall state
that all of the Offered Stock is offered for purchase within the
periods provided in subsections 21(II) and 21(IV)) hereof.
(ii) Within thirty (30) days after the date of mailing of the last
copy of such offer a special meeting of the stockholders of the
Corporation shall be
28
<PAGE>
held in accordance with the applicable provisions of the
Corporation's By-Laws then in effect. At such meeting the
stockholders shall decide by majority vote whether and to what
extent such offer shall be accepted by the Corporation, which
decision shall, either at such meeting or promptly thereafter and
within such thirty (30) day period, be communicated by written
notice to the Selling Stockholder. If the Corporation accepts the
offer to purchase all the Offered Stock, the notice shall specify
a date for the closing no later than thirty (30) days after the
notice of such acceptance is given to the Selling Stockholder, or
at such other place and date within the thirty (30) day period as
the Selling Stockholder and the Corporation may agree. It is
understood and agreed that in lieu of an actual meeting of the
stockholders, all of the stockholders may sign a unanimous
written consent evidencing their decision in regard to the
Selling Stockholder's offer. The Selling Stockholder shall not be
entitled to vote as a stockholder or director of the Corporation
on the question of whether or to what extent the Corporation
shall accept such offer, but he shall attend such meeting of the
stockholders and related meeting of directors called for the
purpose of considering the same and, if requested, shall sign any
written consent of the directors or stockholders for the purpose
of authorizing and implementing the decision of the other
directors or stockholders with regard to such offer.
(iii) At the closing, the Corporation shall purchase the Offered Stock
on the same terms and conditions contained in the bona fide
offer, and the Selling Stockholder shall deliver the certificates
representing the Offered Stock to the Corporation with all
applicable transfer stamps, if any, affixed and duly endorsed for
transfer, with full warranties of title and free and clear of any
and all claims, liens and encumbrances (except any encumbrances
or restrictions arising pursuant to this Agreement or any
applicable state or federal securities laws), and each party
shall execute and deliver all documents necessary or desirable to
effectuate such transfer and purchase. The amount of any
indebtedness of the Selling Stockholder to the Corporation
outstanding at the time of the closing shall be credited against
the purchase price.
(iv) If or to the extent the Corporation does not accept such offer
within the required thirty (30) day period, the other
stockholders shall have an additional fifteen (15) day period,
commencing with date the Corporation's notice in response to the
offer is sent to the Selling Stockholder or, if no response is
given, on the thirtieth (30th) day following the date on which
the last copy of the Selling Stockholder's offer is mailed in
accordance with SECTION 21(I) above, to purchase on a pro rata
basis or on such other basis as they may agree, all or any part
of the Offered Stock on the same terms and conditions as provided
in
28
<PAGE>
the bona fide offer. Any Offered Stock which an Investor
Stockholder does not elect to purchase may be purchased by the
other non-selling stockholders. The non-selling stockholders
shall exercise this election to purchase by giving the Selling
Stockholder and the Corporation written notice thereof. The
notices shall state that the closing shall be held a the
Corporation's principal place of business on the tenth (10th)
business day following the above fifteen (15) day period or at
such other place and date no later than the end of the ten (10)
business day period, as the Selling Stockholder, the Participant
and the Corporation may agree. At the closing, the purchasing
Participant and, if applicable, the Corporation shall purchase
the Offered Stock on the same terms and conditions contained in
the bona fide offer, and the Selling Stockholder shall deliver
the certificates representing the Offered Stock to the purchasing
Participant and if applicable, to the Corporation, with all
applicable transfer stamps, if any, affixed and duly endorsed for
transfer, with full warranties of title and free and clear of any
claims, liens and encumbrances (except any encumbrances or
restrictions arising pursuant to this Agreement or any applicable
state or federal securities laws), and each party shall execute
and deliver all documents necessary or desirable to effectuate
such transfer and purchase. The amount of any indebtedness of the
Selling Stockholder to the Corporation outstanding at the time of
the closing shall be credited against the purchase price.
(v) Notwithstanding the above, if the Selling Stockholder's offer is
not accepted by the Corporation or the non-selling stockholders
as to all of the Offered Stock within the time periods provided
above, the Selling Stockholder shall not be obligated to sell any
of the Offered Stock to the Corporation or the other stockholders
as provided above and shall be free for a period of ninety (90)
days thereafter to sell, transfer or assign all of the Offered
Stock at the price and on the terms set forth in the bona fide
offer to the person making such offer.
(vi) If or to the extent the Offered Stock is not sold to the other
bona fide offer on the terms and conditions set forth in the bona
fide offer within the last stated ninety (90) day period, then
the restrictions provided in this Section shall again become
effective with respect to all of the Stock, and no such
transaction may be made thereafter by any stockholder with any
person or entity no a party to this Plan without the unanimous
written consent of all of the other stockholders or without again
reoffering the Stock in accordance with the foregoing terms and
conditions.
22. NOTICES.
-------
29
<PAGE>
Any notice to be provided by one party to the other party under this Plan shall
be deemed to have been duly delivered to the other party (i) on the date such
notice is delivered at the address provided in a Participant's Award Agreement
or at such other address as the party may notify the other party in writing at
any time, or (ii) on the date such notice is deposited in the United States mail
as first class mail, postage prepaid if addressed to the party at the address
provided in a Participant's Award Agreement or at such other address as the
party may notify the other party in writing at any time. For the purposes of
clause (i), the term "delivered" shall include hand delivery, delivery by
facsimile, and delivery by electronic mail.
24. MISCELLANEOUS.
-------------
(a) UNFUNDED PLAN.
The Plan shall be unfunded and the Corporation and its Subsidiaries shall not be
required to establish any special account or fund or to otherwise segregate or
encumber assets to ensure payment of any Award.
(b) NO RESTRICTIONS ON OTHER PROGRAMS.
Nothing contained in the Plan shall prevent the Corporation or any Subsidiary
from adopting other or additional compensation arrangements or plans, subject to
shareholder approval if such approval is required, and such arrangements or plan
may be either generally applicable or applicable only to specific classes.
(c) GOVERNING LAWS.
The Plan and each Award Agreement shall be governed by the laws of the State of
Georgia, excluding any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of the Plan or Award Agreement to
the substantive law of another jurisdiction. Unless otherwise provided in the
Award Agreement, recipients of an Award are deemed to submit to the exclusive
jurisdiction and venue of the federal or state courts of Georgia, in the County
of the principal offices of the Corporation, to resolve any and all issues that
may arise out of or relate to the Plan and any related Award Agreement.
(d) ATTORNEY'S FEES.
In the event that a Participant or the Corporation or any Subsidiary brings an
action to enforce the terms of the Plan or any Award Agreement and the
Corporation or such Subsidiary prevails, the Participant shall pay all costs and
expenses incurred by the Corporation and such Subsidiary in connection with that
action, including reasonable
30
<PAGE>
attorney's fees, and all further costs and fees, including reasonable attorney's
fees, incurred by the Corporation and such Subsidiary in connection with
collection.
(e) INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION.
If any provision of the Plan is or becomes or is deemed invalid, illegal or
unenforceable in any jurisdiction, or would disqualify the Plan or any Award
under any law deemed applicable by the Committee, such provisions shall be
construed or deemed amended or limited in scope to conform to applicable laws
or, in the discretion of the Committee, it shall be stricken and the remainder
of the Plan shall remain in effect.
(k) NO FRACTIONAL SHARES.
No fractional Shares may be issued under the Plan. The Committee shall
determine whether to disregard any fractional Share, round-up to the next higher
Share, or round-down to the next lower Share.
31
<PAGE>
NON-QUALIFIED
STOCK OPTION AGREEMENT
This Agreement is made as of the day of ________________, 2000 (the "Date of
Grant") by and between BIG SCIENCE COMPANY, a Georgia corporation (the
"Corporation"), and __________________________ (the "Participant").
To carry out the purposes of the Big Science Company 1999 Stock Incentive Plan
(the "Plan") by affording the Participant the opportunity to purchase the number
of Shares of Common Stock of the Corporation as set forth herein, the
Corporation and the Participant hereby agree as follows:
1. GRANT OF OPTION. The Corporation hereby irrevocably grants to the
Participant the right and option (the "Option") to purchase all or any
part of the number of Shares of Stock set forth below the Participant's
name on the signature page hereof, on the terms and conditions set forth
herein and in the Plan. This Option is not an incentive stock option
within the meaning of SECTION 422(B) of the INTERNAL REVENUE CODE OF 1986,
as amended (the "Code").
2. PURCHASE PRICE. The purchase price of Stock purchased pursuant to the
exercise of this Option shall be $_____ per Share.
3. EXERCISE OF OPTION. Subject to the earlier expiration of this Option as
herein provided, this Option may be exercised, by written notice to the
Corporation, at any time and from time to time, but only to the extent
this Option is then Vested and exercisable.
4. VESTING OF OPTION. This Option shall become Vested and exercisable over a
five (5) year period at the rate of 20% per year, commencing on the first
anniversary of the Date of Grant, subject to Section 5 hereof regarding
the accelerated Vesting of the Option. If the Participant status as an
Employee of the Corporation terminates, the Participant's Vested interest
in the Option shall be determined as of such termination date and the
extent to which Section 5 accelerates the Vesting of the Option shall be
determined only with respect to events occurring on or before such
termination date.
5. ACCELERATED VESTING OF OPTION.
(a) VESTING IN CONNECTION WITH THE SALE OF SUBSTANTIALLY ALL OF THE
ASSETS OF THE CORPORATION. The Option shall become Vested and
exercisable with respect to 100% of the Shares of Stock subject to
the Option on the effective date of the sale of substantially all
the assets of the Corporation, provided the Participant's status as
an Employee of the Corporation has not terminated on or before the
effective date of such sale.
(b) VESTING IN CONNECTION WITH THE LIQUIDATION OF THE CORPORATION. The
Option shall become Vested and exercisable with respect to 100% of
the Shares of Stock subject to the Option on the date the
shareholders of the Corporation approve a
<PAGE>
plan of complete liquidation of the Corporation, provided the
Participant's status as an Employee of the Corporation has not
terminated on or before the date of such shareholder vote.
(c) NO ACCELERATED VESTING UPON A MERGER. If a Change-in-Control of the
Corporation as described in Section 2(d)(iii)(C) of the Plan occurs,
Vesting of the Option will not be accelerated whether or not the
surviving entity assumes the Option.
6. TRANSFERABILITY. The Option is not transferable by the Participant
otherwise than by will or the laws of descent and distribution.
7. PERIOD OF EXERCISE OF OPTION. The Option may be exercised only by
Participant during the Participant's lifetime and only while the
Participant is an Employee of the Corporation, except that:
(a) If the Participant's status as an Employee of the Corporation
terminates by reason of death or Total and Permanent Disability, the
Option may be exercised by Participant (or his estate or the person
who acquires this Option by bequest or inheritance or by reason of
death of the Participant) at any time during the period of twelve
(12) months following the date of such termination, but only as to
the number of Shares subject to the Option which are or become
Vested and exercisable on such date.
(b) If the Participant's status as an Employee of the Corporation
terminates by any reason other than death, Total and Permanent
Disability or For Cause, the Option may be exercised by Participant
at any time during the period of three (3) months following the date
of such termination, but only as to the number of Shares subject to
the Option which are or become Vested and exercisable on such date.
(c) If the Participant's status as an Employee of the Corporation
terminates For Cause, the Option shall be forfeited immediately upon
notice to the Participant of such termination and may not be
exercised thereafter.
8. EXPIRATION OF OPTION. The Option shall expire on the tenth (10th)
anniversary of the date of grant, subject to any earlier expiration as
provided in the Plan.
9. EXERCISE OF OPTION AND PAYMENT OF EXERCISE PRICE. The Option may be
exercised by duly delivering to the agent of the Corporation specified in
or pursuant to the Plan a properly completed form of exercise (as provided
by the Plan Administrator for this purpose) prior to the date the Option
is forfeited, expires or otherwise becomes unexercisable. The Exercise
Price shall be paid in full in cash at the time of such exercise or, if
the Plan Administrator permits, payment may be made, in whole or in part,
in any other manner allowable under the Plan. Unless and until a
certificate or
<PAGE>
certificates representing such shares shall have been issued by the
Corporation to him, the Participant (or the person permitted to exercise
this Option in the event of the Participant's death) shall not be or have
any of the rights or privileges of a stockholder of the Corporation with
respect to shares acquirable upon the exercise of this Option.
10. STATUS OF STOCK. The Corporation has not registered for issue under the
Securities Act of 1933, as amended (the "Act") the Shares of Stock subject
to this Award Agreement. No sale or disposition of Shares of Stock
acquired upon exercise of this Option shall be made unless all of the
provisions of SECTION 14(B) of the Plan have been satisfied.
The certificates representing Shares of Stock acquired under this Option
shall bear such legends as the Committee administering the Plan deems
appropriate, referring to the provisions of this SECTION and SECTION 14(B)
of the Plan.
11. SHARES ALSO SUBJECT TO SHAREHOLDERS AGREEMENT. The Shares of the
Restricted Stock subject to this Award Agreement are also subject to a
Shareholders Agreement, a copy of which is on file with the Corporation.
12. WITHHOLDING OF TAX. Upon an exercise of this Option, the Corporation may
be required to withhold United States federal, state and local tax with
respect to the realization of compensation pursuant to such exercise. The
Corporation is hereby authorized to satisfy any such withholding
requirement out of (i) any cash distributable upon such exercise, and (ii)
any other cash compensation then or thereafter payable to the Participant.
To the extent that the Corporation in its sole discretion determines that
such sources are or may be insufficient to fully satisfy such withholding
requirement, the Participant, as a condition to the exercise of this
Option, shall deliver to the Corporation cash in an amount determined by
the Corporation to be sufficient to satisfy any such withholding
requirement.
13. PAYMENT OF TRANSFER TAXES, FEES AND OTHER EXPENSES. The Corporation agrees
to pay any and all original issue taxes and stock transfer taxes that may
be imposed on the issuance of shares acquired pursuant to exercise of this
Option, together with any and all other fees and expenses necessarily
incurred by the Corporation in connection therewith.
14. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of any successors to the Corporation and all persons lawfully
claiming under the Participant.
15. NOTICES. Any notice to be given under the terms of this Agreement shall be
in writing and addressed to the Corporation at 4555 Mansell Road, Suite
300, Alpharetta, Georgia 30022, and to the Participant at the address set
forth on the last page of this Agreement or at such other address as
either party may hereafter designate in writing to the other.
16. LAWS APPLICABLE TO CONSTRUCTION. This Option has been granted, executed
and delivered in the State of Georgia, and the interpretation, performance
and enforcement of this Agreement, shall be governed by the laws of the
State of Georgia, as applied to contracts executed in and performed wholly
within the State of Georgia.
<PAGE>
17. INTERPRETATION. In the event of any ambiguity in this Agreement, any term
which is not defined in this Agreement, or any matters as to which this
Agreement is silent, the Plan shall govern including, without limitation,
the provisions thereof pursuant to which the Committee has the power,
among others, to (i) interpret the Plan, (ii) prescribe, amend and
rescind rules and regulations relating to the Plan, and (iii) make all
other determinations deemed necessary or advisable for the administration
of the Plan. Capitalized terms not otherwise defined here.
18. HEADINGS. The headings of paragraphs herein are included solely for
convenience of reference and shall not affect the meaning or
interpretation of any of the provisions of this Agreement.
19. AMENDMENT. This Agreement may not be modified, amended or waived in any
manner except by an instrument in writing signed by both parties hereto.
The waiver by either party of compliance with any provision of this
Agreement shall not operate or be construed as a waiver of any other
provision of this Agreement, or of any subsequent breach by such party of
a provision of this Agreement.
IN WITNESS THEREOF, the Corporation has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and the Participant has
executed this Agreement, all on the day and year first above written.
BIG SCIENCE COMPANY
By: ______________________________________
Its: ____________________________________
PARTICIPANT
Name of Participant:______________________
No. of SHARES:____________________________
ADDRESS: _________________________________
__________________________________________
__________________________________________
Signature of Participant:
__________________________________________
Exhibit 5.1
March 20, 2000
eGain Communications Corporation
455 W. Maude Avenue
Sunnyvale, CA 94086
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
With reference to the Registration Statement on Form S-8 to be filed by
eGain Communications Corporation, a Delaware corporation (the "Company"), with
the Securities and Exchange Commission under the Securities Act of 1933,
relating to 7,513,978 shares of the common stock of the Company pursuant to the
eGain Communications Corporation Amended and Restated 1998 Stock Plan, the
Social Science, Inc. 1997 Stock Option Plan, the Big Science Company 1999 Stock
Incentive Plan and the eGain Communications Corporation 1999 Employee Stock
Purchase Plan (together the "Plans"), it is our opinion that such shares, when
issued and sold in accordance with the Plans, will be legally issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as Exhibit 5.1 to the Registration Statement.
Very truly yours,
PILLSBURY MADISON & SUTRO LLP
E-12300
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the eGain Communications Corporation Amended
and Restated 1998 Stock Plan, the Social Science, Inc. 1997 Stock Option Plan,
the Big Science Corporation 1999 Stock Incentive Plan and the eGain
Communications Corporation 1999 Employee Stock Purchase Plan of our report
dated July 16, 1999, with respect to the consolidated financial statements of
eGain Communications Corporation included in its Registration Statement on
Form S-1, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Palo Alto, California
March 20, 2000
