<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 16, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
E-SYNC NETWORKS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 06-0625999
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
</TABLE>
35 NUTMEG DRIVE
TRUMBULL, CONNECTICUT 06611
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
------------------------
1994 EMPLOYEES' STOCK OPTION PLAN
AND
1999 LONG-TERM INCENTIVE PLAN
(FULL TITLE OF THE PLAN)
------------------------
DAVID S. TEITELMAN
PRESIDENT
35 NUTMEG DRIVE
TRUMBULL, CONNECTICUT 06611
(203) 601-3000
(NAME, ADDRESS AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
DAVID I. ALBIN, ESQ.
FINN DIXON & HERLING LLP
ONE LANDMARK SQUARE
STAMFORD, CONNECTICUT 06901
(203) 325-5000
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT OFFERING AGGREGATE REGISTRATION
TO BE REGISTERED TO BE REGISTERED PRICE PER SHARE OFFERING PRICE FEE
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Common Stock, $.01 par
value.................... 1,143,000 shares 2.82(1) 3,223,260(1) 850.94(1)
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</TABLE>
(1) Estimated in accordance with Rule 457(h) and Rule 457(c) solely for the
purpose of calculating the registration fee on the basis of the weighted
average of (i) $2.82 per share for 1,138,309 options granted to date and
outstanding under the plans; and (ii) $5.50 per share for the remaining
4,691 shares issuable under the plans, which price is the average of the
closing bid and asked prices per share of Common Stock of the Registrant
reported on the National Quotations Bureau "pink sheets" on December 14,
1999.
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<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
There are hereby incorporated by reference in this Registration Statement
the following documents and information heretofore filed with the Securities and
Exchange Commission:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year
ended October 31, 1998, as amended by Form 10-KSB/A-1 with respect thereto,
filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act");
(b) The Company's Current Report on Form 8-K dated January 28, 1999,
filed pursuant to Section 13(a) or 15(d) of the Exchange Act;
(c) The Company's Quarterly Report on Form 10-QSB for the fiscal
quarter ended January 31, 1999, filed pursuant to Section 13(a) or 15(d) of
the Exchange Act;
(d) The Company's Current Report on Form 8-K dated March 5, 1999,
filed pursuant to Section 13(a) or 15(d) of the Exchange Act;
(e) The Company's Quarterly Report on Form 10-QSB for the fiscal
quarter ended March 31, 1999, filed pursuant to Section 13(a) or 15(d) of
the Exchange Act;
(f) The Company's Quarterly Report on Form 10-QSB for the fiscal
quarter ended June 30, 1999, filed pursuant to Section 13(a) or 15(d) of
the Exchange Act;
(g) The Company's definitive proxy statement for the Annual Meeting of
Shareholders held on July 15, 1999, filed pursuant to Section 14(a) of the
Exchange Act;
(h) The Company's Current Report on Form 8-K dated July 28, 1999,
filed pursuant to Section 13(a) or 15(d) of the Exchange Act;
(i) The Company's Quarterly Report on Form 10-QSB for the fiscal
quarter ended September 30, 1999, filed pursuant to Section 13(a) or 15(d)
of the Exchange Act;
(j) The Company's Current Report on Form 8-K dated November 8, 1999,
filed pursuant to Section 13(a) or 15(d) of the Exchange Act; and
(k) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A dated February 27, 1967, filed
by the Company (then known as Trak Electronics Company, Inc.) pursuant to
Section 12(g) of the Exchange Act.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act on or after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered 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 part hereof from the date of
filing of such reports or documents. Statements made herein as to the contents
of any contract, agreement or other document are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
II-1
<PAGE> 3
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
empowers a corporation incorporated under the General Corporation Law to
indemnify its present and former directors, officers, employees and agents and
those who serve, or served, in such capacities with another enterprise at its
request, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlements actually and reasonably incurred by them in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation), in which such persons were or are made
parties or are threatened to be made parties by reason of their serving or
having served in such capacity. The power to indemnify exists only where such
officer, director, employee or agent has acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and, in the case of a criminal action, such person had no reasonable
cause to believe his conduct was unlawful. In a threatened, pending or completed
action or suit by or in the right of the corporation, the corporation may
indemnify such person only for expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation,
except that if such person has been adjudged liable to the corporation then the
corporation shall have no power of indemnification unless and only to the extent
that a court shall determine upon application. Indemnity is mandatory as to
expenses (including attorneys' fees) actually and reasonably incurred by a
present or former director or officer of a corporation to the extent a claim,
issue or matter has been successfully defended. Expenses (including attorneys'
fees) incurred by an officer or director in defending any such action, suit or
proceeding may be paid by the corporation in advance of final disposition upon
receipt of an undertaking by or on behalf of such person to repay such amount if
it is ultimately determined that he is not entitled to be indemnified by the
corporation. Indemnification is not deemed exclusive of any other rights to
which those indemnified may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise. Any indemnification may be
made only as authorized in the specific case upon a determination by the
corporation that indemnification is proper under the circumstances because the
person seeking to be indemnified has met the applicable standards of conduct set
forth in the statute. With respect to the indemnification of a person who is a
director or officer of the corporation at the time that determination is being
made, such determination must be made by (i) a majority vote of disinterested
directors even though less than a quorum, (ii) by a committee of such directors
designated by a majority vote of such directors, (iii) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (iv) by the stockholders. A Delaware corporation also has
the power to purchase and maintain insurance on behalf of the persons it has the
power to indemnify against liabilities asserted against such persons, whether or
not indemnity against such liabilities would be permitted under the statute
itself.
The Company's Certificate of Incorporation provides that the Company shall
indemnify, and advance expenses, to the fullest extent permitted by Section 145
of the Delaware General Corporation Law, as amended from time to time, to each
person that such section grants the Company the power to indemnify and advance
expenses to.
As permitted by Section 102 of the Delaware General Corporation Law, the
Company's Certificate of Incorporation also provides that no director of the
Company shall be personally liable to the Company or any of its stockholders for
monetary damages for breach of fiduciary duty as a director, except for any
liability of a director (i) for any breach of the director's duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
improper dividend payments or unlawful stock purchases or redemptions, or (iv)
for any transaction from which the director derived an improper personal
benefit. The Certificate of Incorporation further provides that to the extent
that the General Corporation Law is amended to authorize corporate action
further eliminating
II-2
<PAGE> 4
or limiting the personal liability of directors, then the liability of a
director of the corporation shall be eliminated or limited to the fullest extent
permitted by such law, as so amended.
The Company also presently maintains directors' and officers' insurance
which could affect the liability of such persons.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------
<C> <S>
4.1 Certificate of Incorporation of E-Sync Networks, Inc. (the
"Company"), incorporated by reference to Exhibit 3(i) to the
Company's Current Report on Form 8-K, dated July 28, 1999
(the "July 1999 8-K").
4.2 Certificate of Designations, Preferences and Rights of
Preferred Stock of the Company, setting forth the terms of
the "Senior Convertible Series A Preferred Stock" of the
Company, incorporated by reference to Exhibit 3(ii) to the
July 1999 8-K
4.3 By-laws of the Company, incorporated by reference to Exhibit
3(iii) to the July 1999 8-K
4.4* 1994 Employees' Stock Option Plan, as amended (the "1994
Plan").
4.5* Form of Incentive Stock Option Agreement under the 1994
Plan.
4.6* 1999 Long-Term Incentive Plan (the "1999 Plan").
4.7* Form of Incentive Stock Option Agreement under the 1999
Plan.
4.8* Form of Non Qualified Stock Option Agreement under the 1999
Plan.
4.9* Form of Non Qualified Stock Option Agreement under the 1999
Plan, pertaining to grants to non-employee directors.
4.10* Certificate of Designations, Preferences and Rights of
Senior Convertible Series B Preferred Stock of the Company.
5.1* Opinion of Finn Dixon & Herling LLP, as to the legality of
the securities being registered.
23.1* Consent of Grant Thornton LLP.
23.2 Consent of Finn Dixon & Herling LLP (contained in Exhibit
5.1 hereto).
24.1 Power of Attorney (included on the signature pages).
</TABLE>
- ---------------
* Filed herewith.
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information set forth in
the registration statement; and Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
II-3
<PAGE> 5
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act of 1933, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
II-4
<PAGE> 6
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 Town of Trumbull, State of Connecticut on this 12th day of
November, 1999.
E-SYNC NETWORKS, INC.
By: /s/ DAVID S. TEITELMAN
------------------------------------
Name: David S. Teitelman
Title: President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints John C. Maxwell III, David S. Teitelman
and Frank J. Connolly, Jr., or any of them, his attorneys-in-fact and agents,
with full power of substitution and resubstitution for him in any and all
capacities, to sign any and all amendments or post-effective amendments to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each of such attorneys-in-fact and agents full power and authority
to do and perform each and every act and thing requisite and necessary in
connection with such matters and hereby ratifying and confirming all that each
of such attorney's-in-fact and agents or his substitute or substitutes may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN C. MAXWELL, III Chief Executive Officer, November 12, 1999
- ------------------------------------ Chairman of the Board and
John C. Maxwell, III Director
(principal executive officer)
/s/ FRANK J. CONNOLLY, JR. Chief Financial Officer and November 12, 1999
- ------------------------------------ Corporate Secretary
Frank J. Connolly, Jr. (principal financial officer
and accounting officer)
/s/ DAVID S. TEITELMAN President and Director November 12, 1999
- ------------------------------------
David S. Teitelman
/s/ PETER J. BONI Director November 12, 1999
- ------------------------------------
Peter J. Boni
/s/ STEPHEN D. GRUBBS Director November 12, 1999
- ------------------------------------
Stephen D. Grubbs
/s/ NATHAN GANTCHER Director November 12, 1999
- ------------------------------------
Nathan Gantcher
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
4.1 Certificate of Incorporation of E-Sync Networks, Inc. (the
"Company"), incorporated by reference to Exhibit 3(i) to the
Company's Current Report on Form 8-K, dated July 28, 1999
(the "July 1999 8-K").
4.2 Certificate of Designations, Preferences and Rights of
Preferred Stock of the Company, setting forth the terms of
the "Senior Convertible Series A Preferred Stock" of the
Company, incorporated by reference to Exhibit 3(ii) to the
July 1999 8-K.
4.3 By-laws of the Company, incorporated by reference to Exhibit
3(iii) to the July 1999 8-K
4.4* 1994 Employees' Stock Option Plan, as amended (the "1994
Plan").
4.5* Form of Incentive Stock Option Agreement under the 1994
Plan.
4.6* 1999 Long-Term Incentive Plan (the "1999 Plan").
4.7* Form of Incentive Stock Option Agreement under the 1999
Plan.
4.8* Form of Non Qualified Stock Option Agreement under the 1999
Plan.
4.9* Form of Non Qualified Stock Option Agreement under the 1999
Plan, pertaining to grants to non-employee directors.
4.10* Certificate of Designations, Preferences and Rights of
Senior Convertible Series B Preferred Stock of the Company.
5.1* Opinion of Finn Dixon & Herling LLP, as to the legality of
the securities being registered.
23.1* Consent of Grant Thornton LLP.
23.2 Consent of Finn Dixon & Herling LLP (contained in Exhibit
5.1 hereto).
24.1 Power of Attorney (included on the signature pages).
</TABLE>
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* Filed herewith.
II-6
<PAGE> 1
EXHIBIT 4.4
WILTEK, INC.*
1994 EMPLOYEES' STOCK OPTION PLAN
Wiltek, Inc., a Connecticut corporation (the "Corporation"), hereby
establishes the 1994 Employees' Stock Option Plan (herein called the "Plan") on
the following terms and conditions:
1. PURPOSES. The purposes of the Plan are to encourage ownership of
the Corporation's stock by eligible employees; to motivate key employees to
remain in the Corporation's employ; and to provide increased incentive for
such employees to put forth maximum effort to the success of the business.
2. ADMINISTRATION. This Plan shall be administered by a Compensation
Committee (the "Committee") named by the Board of Directors of the
Corporation (the "Board") from its Members. If one or more of the Members
of the Board have not been, and, within one year prior to appointment to
the Committee have not been, eligible to participate in the Plan or any
other plan of the Corporation or any of its affiliates entitling
participants to acquire stock, stock options or stock appreciation rights
of the Corporation or its affiliates, then only such Director(s) shall be
deemed "Independent Director(s)" and eligible to serve on such Committee,
but, if there be no such Director(s) then the Committee shall be comprised
of the entire Board. The Committee is authorized to establish such rules
and regulations as it deems necessary for the proper administration of the
Plan, and to make such determinations and interpretations and to take such
action in connection with the Plan and any options granted under the Plan
as it deems necessary or advisable. All determinations of the Committee
shall be by a majority of its members, and its determination shall be
final.
3. ELIGIBILITY. Key employees of the Corporation and its
subsidiaries shall be eligible to receive options under the Plan, provided
that no such individual shall be granted an option who, at the time of
grant, owns shares of stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Corporation and its
subsidiaries, unless at the time of grant the option price is at least 110
percent of the fair market value of the shares of Stock subject thereto and
such option by its terms shall not be exercisable after the expiration of
five years from the date of grant. Directors of the Corporation who are not
full time employees of the Corporation or any of its subsidiaries shall not
be eligible to receive options.
4. SHARES AVAILABLE. An aggregate of 750,000 shares of common stock
(without par value) of the Corporation shall be available for grant of
options under the Plan (subject to adjustment as provided in paragraph 5).
Such shares may be authorized but unissued shares or may be treasury
shares. Upon the expiration or termination in whole or in part of any
unexercised options, shares of common stock covered by such unexercised
options again shall be available for grant of new options under the Plan.
5. ADJUSTMENT OF SHARES AVAILABLE. If there is any change in the
common stock of the Corporation through the declaration of stock dividends,
or through recapitalization resulting in stock splits, or combinations or
exchanges of shares, or otherwise, the number of shares available for
option and the shares subject to any option and the option prices shall be
appropriately adjusted.
6. GRANT OF OPTIONS. Subject to the provisions of paragraph 7,
options may be granted to such eligible employees in such numbers and at
such times during the term of the Plan as the Committee shall recommend and
the Board (and, if there is at least one independent director, excluding
directors who would not qualify for membership on the Compensation
Committee) shall approve. Each option shall be evidenced by a duly executed
written agreement by and between the Corporation and the optionee. Option
agreements may contain dissimilar provisions provided that all such
provisions are consistent with the Plan.
- ---------------
* In July 1999, Wiltek, Inc. merged into E-Sync Networks, Inc., a Delaware
corporation.
<PAGE> 2
7. TERMS AND CONDITIONS OF OPTION. Options granted under the Plan
may constitute "Incentive Stock Options" ("ISOs") within the meaning of
Section 422A of the Internal Revenue Code of 1986, as amended (the"Code")
or stock options which do not constitute ISOs ("NQSOs"; ISOs and NQSOs
being herein collectively referred to as "options"), and shall be granted
subject to the following terms and conditions:
(a) OPTION PRICE -- Except as provided in paragraph 3, the option
price per share shall not be less than 100% of its fair market value, as
determined by the Committee on the date the option is granted.
(b) MAXIMUM VALUE OF SHARES -- The aggregate fair market value
(determined as of the time the option is granted) of the shares for
which any eligible employee may be granted options which become
exercisable under the Plan for the first time in any given calendar year
(under all stock option plans of the Corporation and its subsidiaries)
shall not exceed $100,000, unless this limit is raised or removed by
unanimous vote of the Board.
(c) DURATION OF OPTIONS -- No option shall extend for a term of
more than ten years from the date of grant. Options may, however, have
such shorter term as may be required by paragraph 3 or designated by the
Committee upon grant thereof.
(d) EXERCISE OF AN OPTION -- No option issued as an ISO may be
exercised within 12 months of the date on which the option is granted,
but options issued as NQSOs shall be immediately exercisable. Options
may be exercised from time to time by giving written notice to the
Corporation stating the number of shares with respect to which the
option is being exercised and, unless the shares subject thereto are
then registered under the Securities Act of 1933 as amended,
representing that the shares are being purchased for investment and will
not be sold or distributed except in compliance with applicable
securities laws.
(e) PAYMENT -- No shares shall be issued or delivered until full
payment for the shares has been made, in cash or by check, except that,
if so authorized in writing in advance by the Committee, payment may
also be made with Corporation shares valued as of the date of exercise,
or by combination of shares and cash.
(f) NONTRANSFERABILITY OF OPTIONS -- Plan options shall not be
transferable by an optionee except by will or the laws of descent and
distribution, and, during the optionee's lifetime shall be exercisable
only by the optionee.
(g) TERMINATION OF EMPLOYMENT -- Upon termination of an optionee's
employment, each option previously granted to him shall expire if not
exercised before the earliest of (i) the expiration date provided in the
option agreement applicable to such option; (ii) the date, for ISOs, one
year and for NQSOs, eighteen months, after the date of termination if
employment is terminated by reason of death or disability (within the
meaning of Section 105(d)(4) of the Code, or iii) the date, for ISOs,
three months and for NQSOs, six months, after the date of termination if
employment is terminated for any reason other than death or disability.
(h) NON-COMPETITION PROVISION -- Anything herein to the contrary
notwithstanding, if an optionee, without the written consent of the
Corporation, engages either directly or indirectly, in any manner or
capacity as principal, agent, partner, officer, director, employee, or
otherwise in any business or activity competitive with the business
conducted by the Corporation or any subsidiary of the Corporation, each
option previously granted to him shall expire forthwith.
8. REGULATORY APPROVALS. The Corporation shall not be required to
issue any certificate or certificates for shares of common stock upon the
exercise of an option prior to (a) the obtaining of any approval from any
governmental agency which the Corporation shall, in its sole discretion,
determine to be necessary or advisable, and (b) the completion of any
registration or other qualification of such shares under any state or
Federal law or ruling or regulations of any governmental body which the
Corporation shall, in its sole discretion, determine to be necessary or
advisable.
2
<PAGE> 3
9. MERGER OR CONSOLIDATION, ETC. In the event of the proposed
merger, consolidation, dissolution, liquidation or reorganization of the
Corporation, the options granted hereunder may, at the discretion of the
Committee, be designated as of a date to be fixed by the Committee to be
terminated to the extent not exercised prior to such date, provided that
not less than 30 days' prior written notice of the date so fixed shall be
given to the optionee, and the optionee shall have the right, during the
period of 30 days preceding such termination, to exercise his option as to
all or any part of the shares covered thereby, including shares as to which
such option would not otherwise be exercisable.
10. AMENDMENT. The Committee may from time to time, with respect to
any shares at the time not subject to options, suspend or discontinue the
Plan or amend the Plan in any manner which it deems in the best interest of
the Corporation, but may not, without the approval of the Corporation's
shareholders, adopt any amendment which would (a) except as provided in
sub-paragraph 7 (b), materially increase the benefits accruing to
participants under the Plan; (b) materially increase the maximum number of
Shares which may be issued under the Plan (other than pursuant to paragraph
5), or (c) materially modify the requirements as to Eligibility for
participation in the Plan.
11. TERM. The Plan shall become effective on August 24, 1994 and
shall be submitted for approval by the Corporation's shareholders at the
1995 Annual Meeting. Options may be granted prior to such Meeting, subject
to approval of the Plan by the shareholders at such Meeting. No option
shall be granted pursuant to the Plan subsequent to the fifth anniversary
of the effective date of the Plan.
ADOPTED BY THE BOARD OF DIRECTORS 24 AUGUST 1994
3
<PAGE> 1
EXHIBIT 4.5
OPTION FOR SHARES
INCENTIVE STOCK OPTION
TO PURCHASE SHARES OF COMMON STOCK
OF
E-SYNC NETWORKS, INC.
To:
----------------------------------
(Name of Employee)
E-SYNC NETWORKS, INC. (hereinafter referred to as the "Company"), hereby
grants you an Incentive Stock Option (hereinafter referred to as the "Option")
to purchase shares of its authorized common stock, $.01 par value, at
the option price of per share, under the Company's 1994 Stock Option Plan
(the "Plan") upon the following terms and conditions:
1. MANNER OF EXERCISE: PAYMENT OF PURCHASE PRICE. Subject to the
provisions of Section 2 hereof, this option shall be exercisable by you or
by a transferee who may have succeeded to your rights under the provisions
of Section 4 hereof by delivering to the Company at its principal office a
written notice substantially in the form of Exhibit A, or such other form
as the Board of Directors or the Compensation Committee shall approve,
specifying the number of shares to be purchased, accompanied by a check
payable to the order of the Company in full payment of the purchase price
(or, if specifically authorized in writing, in advance, by the Compensation
Committee, but not otherwise, by certificates for outstanding shares of the
Company's common stock having sufficient fair market value to satisfy the
purchase price, in negotiable form, or a combination of a check and
outstanding common stock).
2. EXERCISE OF OPTION. Unless this option shall have expired as
provided in Section 3 below, it may be exercised in whole or in part at any
time and from time to time after the first anniversary of the date hereof.
3. EXPIRATION OF OPTION. This option shall expire and become null
and void upon the happening of whichever of the following events shall
first occur:
(a) a period of 12 months shall have elapsed from the date of
adoption of the Plan by the Board of Directors without approval thereof
by the Company's shareholders
(b) the expiration of three months after you cease to be employed
by the Company or any of its subsidiaries for any reason other than
death or permanent disability
(c) a period of 12 months shall have elapsed since your death or
permanent disability, or
(d) a period of 10 years shall have elapsed since the date hereof.
4. NON-TRANSFERABILITY. This option is not transferable in any way
whatsoever except by will or by the laws of descent and distribution.
During your lifetime this option may be exercised only by you; after death
it may be exercised by your executor, administrator, legatee or
distributee, as the case may be, at any time within 12 months after your
death.
5. ANTI-DILUTION. The unexercised portion of this option shall be
adjusted, without changing the aggregate purchase price to be paid for the
shares covered hereby, insofar as may be necessary to reflect a stock
split, stock dividend, exchange of shares, recapitalization or other change
in the Company's capital structure or any merger or consolidation to which
the Company may be a party, provided that as adjusted this option shall
continue to be an incentive stock option as defined in the Internal Revenue
Code of 1986, as amended, and that any such adjustment shall be to the
nearest number of whole shares. The Board of Directors of the Company or
the Compensation Committee are authorized to effect whatever adjustment may
be deemed appropriate, whose determination thereof shall be final, binding
and conclusive.
<PAGE> 2
6. MERGER OR CONSOLIDATION. In the event of the proposed merger,
consolidation, dissolution, liquidation or reorganization of the Company,
the Board of directors may in its discretion, upon not less than 30 days
written notice to you, terminate this option unless it is exercised prior
to the termination date specified.
7. RIGHTS AS SHAREHOLDER. This option shall not entitle you or any
permitted transferee hereof to any rights of a shareholder of the Company
or to any notice of proceedings of the Company in respect of any shares
issuable upon exercise of this option unless and until the certificates
representing the shares have been issued to you or such permitted
transferee. The Company shall not be required to issue or deliver any
certificates for shares of its common stock purchased hereunder prior to
compliance with applicable Federal and State laws and regulations with
respect to the issuance, registration or listing of such shares.
8. PURCHASE FOR INVESTMENT. In the event that, upon issuance, the
shares subject to this option are not registered under the Securities Act
of 1933, as amended, you may be required to represent in writing that you
are acquiring the shares for investment and not with a view to
distribution; the certificates therefor may be marked with a legend
indicating that fact and restricting transfer unless the shares may be
transferred pursuant to an exemption from registration; and a stop transfer
order may be issued to the transfer agent with respect to the
certificate(s).
9. GOVERNING INSTRUMENT. This option and any shares issued hereunder
shall in all respects be governed by the terms and provisions of the plan.
E-SYNC NETWORKS, INC.
By:
------------------------------------
Date:
---------------------------------
Accepted and Agreed:
- --------------------------------------
(Signature of Optionee)
2
<PAGE> 3
EXHIBIT A
------------------------
Date
E-SYNC NETWORKS, INC.
35 Nutmeg Drive
Trumbull, CT 06611
Gentlemen:
I herewith exercise, in accordance with the provisions of the Stock Option
Agreement, as set forth below; stock options totaling shares of
the Common Stock of E-SYNC NETWORKS, INC.
Such options are exercised for investment, and not with a view to
distribution and represent shares exercisable as of this date, in
accordance with the terms of the Incentive Stock Option Agreement dated
between E-SYNC NETWORKS, INC., and
for shares of the Common Stock of E-SYNC NETWORKS, INC., at an
option price of per share.
Enclosed is a check, endorsed to E-SYNC NETWORKS, INC., representing the
full price of for the stock option shares exercised.
Please forward the shares in certificates of shares each, to
the undersigned by registered mail. Please register the shares in the names of
, , ,
--------------------------------------
Signature
--------------------------------------
Name
--------------------------------------
Address
--------------------------------------
Received and acknowledged this day of .
E-SYNC NETWORKS, INC.
--------------------------------------
Corporate Seal
<PAGE> 1
EXHIBIT 4.6
E-SYNC NETWORKS, INC.'S 1999 LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSES. The purposes of E-Sync Networks, Inc.'s 1999
Long-Term Incentive Plan, as amended (the "Plan") are to encourage selected key
employees and consultants, and the directors, of E-Sync Networks, Inc. (the
"Company") and its Affiliates (as hereinafter defined) to acquire a proprietary
and vested interest in the growth and performance of the Company and to generate
an increased incentive to contribute to the Company's future success and
prosperity, thereby enhancing the value of the Company for the benefit of
stockholders and the ability of the Company to attract and retain individuals of
exceptional talent.
SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall
have the meanings set forth below:
(a) "Affiliate" of a specified person shall mean a person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the person specified.
(b) "Award" shall mean any Option, Stock Appreciation Right, Limited
Stock Appreciation Right, Restricted Stock Award, Performance Share or any
other right, interest, or option granted pursuant to the provisions of the
Plan.
(c) "Award Agreement" shall mean any written agreement, contract, or
other instrument or document evidencing any Award granted hereunder and
signed by both the Company and the Participant or by both the Company and a
Non-Employee Director.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, including the rules, regulations, and interpretations
promulgated thereunder.
(f) "Committee" shall mean the Compensation Committee of the Board,
composed of not less than two directors each of whom is a Non-Employee
Director.
(g) "Company" shall mean E-Sync Networks, Inc.
(h) "Consultant" shall mean any consultant of the Company or any
Affiliate.
(i) "Dividend Equivalent" shall mean any right granted pursuant to
Section 14(i) hereof to receive an equivalent amount of interest or
dividends with respect to the number of shares covered by an Award.
(j) "Employee" shall mean any salaried employee of the Company or of
any Affiliate.
(k) "Fair Market Value" shall mean, with respect to any property, the
market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee.
(l) "Incentive Stock Option" shall mean an Option granted under
Section 6 hereof that is intended to meet the requirements of Section 422
of the Code or any successor provision thereto.
(m) "Limited Stock Appreciation Right" shall mean a Stock Appreciation
Right that can only be exercised in the event of a change in control,
according to the definition and provisions of Section 8 of the Plan.
(n) "Non-Employee Director" shall mean a person described in both (i)
Rule 16b-3(b)(3) promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, or any successor
definition adopted by the Securities and Exchange Commission, and
<PAGE> 2
(ii) Treasury Regulation Section 1.162-27(e)(3)(i), or any successor
provision, adopted by the Department of the Treasury.
(o) "Non-qualified Stock Option" shall mean an Option granted to a
Participant under Section 6 hereof that is not intended to be an Incentive
Stock Option.
(p) "Option" shall mean any right granted to a Participant under the
Plan allowing such Participant to purchase Shares at such price or prices
and during such period or periods as the Committee shall determine.
(q) "Participant" shall mean an Employee or Consultant who is selected
by the Committee to receive an Award under the Plan.
(r) "Payment Value" shall mean the dollar amount assigned to a
Performance Share which shall be equal to the Fair Market Value per Share
on the close of business on the last day of a Performance Cycle.
(s) "Person" shall include, without limitation, any individual,
corporation, partnership, limited liability company, association,
joint-stock company, trust, unincorporated organization, or government or
political subdivision thereof.
(t) "Performance Cycle" or "Cycle" shall mean the period of time
selected by the Committee during which the performance is measured for the
purpose of determining the extent to which an award of Performance Shares
has been earned.
(u) "Performance Goals" shall mean the objectives established by the
Committee for a Performance Cycle, for the purpose of determining the
extent to which Performance Shares which have been contingently awarded for
such Cycle are earned.
(v) "Performance Share" shall mean an Award granted pursuant to
Section 10 hereof which shall represent the right, subject to the terms set
forth in Section 10 hereof, to either one Share or the Payment Value in
cash of one Share.
(w) "Restricted Stock" shall mean any Share issued with the
restriction that the holder may not sell, transfer, pledge, or assign such
Share and with such other restrictions as the Committee, in its sole
discretion, may impose (including, without limitation, any restriction on
the right to vote such Share, and the right to receive any cash dividends),
which restrictions may lapse separately or in combination at such time or
times, in installments or otherwise, as the Committee may deem appropriate.
(x) "Restricted Stock Award" shall mean an award of Restricted Stock
under Section 9 hereof.
(y) "Shares" shall mean shares of the common stock of the Company,
$.01 par value per share, and such other securities of the Company as the
Committee may from time to time determine.
(z) "Stock Appreciation Right" shall mean any right granted to a
Participant pursuant to Section 7 hereof to receive, upon exercise by the
Participant, the excess of (i) the Fair Market Value of one Share on the
date of exercise or, if the Committee shall so determine in the case of any
such right other than one related to any Incentive Stock Option, at any
time during a specified period before the date of exercise over (ii) the
grant price of the right as specified by the Committee, in its sole
discretion, on the date of grant, which shall not be less than the Fair
Market Value of one Share on such date. Any payment by the Company in
respect of such right may be made in cash, Shares, other property, or any
combination thereof, as the Committee, in its sole discretion, shall
determine.
(aa) "Stockholder Meeting" shall mean the annual meeting of
stockholders of the Company held each year.
SECTION 3. ADMINISTRATION. The Plan shall be administered by the
Committee, or in the absence of a designated Committee, by the Board, in which
case the term "Committee" shall, for purposes of the Plan, be deemed to refer to
the Board. The Committee shall have full power and authority, subject to such
orders or resolutions not inconsistent with the provisions of the Plan as may
from time to time be adopted by the Board, to: (i) select the Employees and
Consultants of the Company to whom Awards may from time to time be
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granted hereunder; (ii) determine the type or types of Award to be granted to
each Participant hereunder; (iii) determine the number of Shares to be covered
by each Award granted hereunder; provided, however, that Shares subject to any
form of award granted to any individual employee during any calendar year shall
not exceed a total of 180,000 Shares; (iv) determine the terms and conditions,
not inconsistent with the provisions of the Plan, of any Award granted
hereunder; (v) determine whether, to what extent and under what circumstances
Awards may be settled in cash, Shares or other property or canceled or
suspended; (vi) determine whether, to what extent and under what circumstances
cash, Shares and other property and other amounts payable with respect to an
Award under this Plan shall be deferred either automatically or at the election
of the Participant; (vii) interpret and administer the Plan and any instrument
or agreement entered into under the Plan; (viii) establish such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (ix) make any other determination and take any
other action that the Committee deems necessary or desirable for administration
of the Plan. Decisions of the Committee shall be final, conclusive and binding
upon all persons, including the Company, any Participant, any stockholder, and
any Employee of the Company or of any Affiliate. Notwithstanding the above, the
Committee shall not have discretion with respect to any Shares granted to
Non-Employee Directors pursuant to Section 11 hereof. A majority of the members
of the Committee may determine its actions and fix the time and place of its
meetings.
SECTION 4. SHARES SUBJECT TO THE PLAN.
(a) Subject to adjustment as provided in Section 4(b), the total number of
Shares available for grant under the Plan shall be 750,000 Shares. In addition,
any Shares issued by the Company through the assumption or substitution of
outstanding grants from an acquired company shall not reduce the shares
available for grants under the Plan. Any Shares issued hereunder may consist, in
whole or in part, of authorized and unissued shares or treasury shares. If any
Shares subject to any Award granted hereunder are forfeited or such Award
otherwise terminates without the issuance of such Shares or of other
consideration in lieu of such Shares, the Shares subject to such Award, to the
extent of any such forfeiture or termination, shall again be available for grant
under the Plan.
(b) In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure
affecting the Shares, such adjustment shall be made in the type and aggregate
number of Shares which may be delivered under the Plan or such other securities
to be delivered in place thereof, and in the number of Shares subject to
outstanding Options granted under the Plan, and in the value or number of Shares
subject to Awards granted under the Plan as may be determined to be appropriate
by the Committee, in its sole discretion, provided that the number of Shares
subject to any Award shall always be a whole number, and provided further, that
the number of Shares granted to Non-Employee Directors pursuant to Section 11
hereof and the number of Shares subject in the future to be granted pursuant to
Section 11 hereof shall be subject to adjustment only as set forth in Section
11.
SECTION 5. ELIGIBILITY. Any Employee and/or Consultant (excluding any
member of the Committee) shall be eligible to be selected as a Participant. All
Non-Employee Directors shall automatically be eligible to receive Awards
pursuant to Section 11.
SECTION 6. STOCK OPTIONS. Options may be granted hereunder to
Participants either alone or in addition to other Awards granted under the Plan.
Options granted under the Plan shall be, in the discretion of the Committee,
either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock
Options may be granted only to Employees. Any Option granted to a Participant
under the Plan shall be evidenced by an Award Agreement in such form as the
Committee may from time to time approve. Any such Option shall be subject to the
following terms and conditions and to such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall deem
desirable:
(a) Option Price. The purchase price per Share purchasable under an
Option shall be determined by the Committee in its sole discretion;
provided that such purchase price in the case of Incentive Stock Options
shall not be less than the Fair Market Value of the Share on the date of
the grant of the Option; provided further that the purchase price per Share
for an Incentive Stock Option granted to an Employee who, at the time of
grant, owns stock having more than 10 percent of the total combined voting
power of
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all classes of stock of the Company (a "Ten Percent Stockholder"), shall
not be less than 110 percent of the Fair Market Value on the date of grant,
all as determined by the Committee.
(b) Option Period. The term of each Option shall be fixed by the
Committee in its sole discretion; provided that no Incentive Stock Option
shall be exercisable after the expiration of ten years from the date the
Option is granted; provided further that no Incentive Stock Option granted
to an Employee who is a Ten Percent Stockholder shall be exercisable after
the expiration of five years from the date the Option is granted.
(c) Exercisability. Options shall be exercisable at such time or
times as determined by the Committee at or subsequent to grant.
(d) Method of Exercise. Subject to the other provisions of the Plan
and any applicable Award Agreement, any Option may be exercised by the
Participant in whole or in part at any time or times, and the Participant
may make payment of the option price in such form or forms, including,
without limitation, payment by delivery of cash, Shares or other
consideration, or through an arrangement with a broker in which the
Participant delivers to the Company an irrevocable notice of exercise
accompanied by the broker's payment in full and an irrevocable instruction
to the Company to deliver the Shares issuable upon exercise to the broker
for the Participant's account.
(e) Incentive Stock Options. In accordance with rules and procedures
established by the Committee, the aggregate Fair Market Value (determined
as of the time of grant) of the Shares with respect to which Incentive
Stock Options held by any Participant which are exercisable for the first
time by such Participant during any calendar year under the Plan (and under
any other benefit plans of the Company or subsidiary of the Company) shall
not exceed $100,000 or, if different, the maximum limitation in effect at
the time of grant under Section 422 of the Code, or any successor
provision, and any regulations promulgated thereunder. The terms of any
Incentive Stock Option granted hereunder shall comply in all respects with
the provisions of Section 422 of the Code, or any successor provision, and
any regulations promulgated thereunder.
SECTION 7. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be
granted hereunder to Participants either alone or in addition to other Awards
granted under the Plan and may, but need not, relate to a specific Option
granted under Section 6. The provisions of Stock Appreciation Rights need not be
the same with respect to each recipient. Any Stock Appreciation Right related to
a Non-qualified Stock Option may be granted at the same time such Option is
granted or at any time thereafter before exercise or expiration of such Option.
Any Stock Appreciation Right related to an Incentive Stock Option must be
granted at the same time such Option is granted. In the case of any Stock
Appreciation Right related to any Option, the Stock Appreciation Right or
applicable portion thereof shall terminate and no longer be exercisable upon the
termination or exercise of the related Option, except that a Stock Appreciation
Right granted with respect to less than the full number of Shares covered by a
related Option shall not be reduced until the exercise or termination of the
related Option exceeds the number of shares not covered by the Stock
Appreciation Right. Any Option related to any Stock Appreciation Right shall no
longer be exercisable to the extent the related Stock Appreciation Right has
been exercised. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it shall deem appropriate.
SECTION 8. LIMITED STOCK APPRECIATION RIGHTS.
Limited Stock Appreciation Rights may be granted hereunder to Participants
in relation to any Option or Stock Appreciation Right granted under the Plan. A
Limited Stock Appreciation Right may be granted at the time the Option or Stock
Appreciation Right is granted or at any time thereafter. Limited Stock
Appreciation Rights are exercisable in full for a period of seven months
following the date of a Change in Control as defined in Section 12(b).
(a) Amount of Payment. The amount of payment to which a Participant shall
be entitled upon the exercise of each Limited Stock Appreciation Right shall be
equal to the difference between the Option price of the Shares covered by the
related Option or Stock Appreciation Right and the Market Price of such Shares.
Market Price is defined to be the greater of (i) the highest price of the Shares
paid in connection with a
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Change in Control and (ii)(a) if the Shares are traded on an exchange, the
highest closing trade price per Share on such exchange during the 60-day period
prior to the Change in Control, and (b) if the Shares are not traded on an
exchange, but are traded over-the-counter, the average of the highest daily
closing bid and ask price per Share during the 60-day period prior to the Change
in Control, in either case as reasonably determined by the Committee.
(b) Form of Payment. Payments to Participants upon the exercise of Limited
Stock Appreciation Rights shall be made solely in cash.
(c) Effect of Exercise. If Limited Stock Appreciation Rights are
exercised, the Options and Stock Appreciation Rights related to them cease to be
exercisable. Upon the exercise or termination of the Options or Stock
Appreciation Rights, the related unexercised Limited Stock Appreciation Rights
terminate.
SECTION 9. RESTRICTED STOCK.
(a) Issuance. Restricted Stock Awards may be issued hereunder to
Participants, for no cash consideration or such consideration as may be
determined by the Committee to be appropriate, either alone or in addition to
other Awards granted under the Plan. The provisions of Restricted Stock Awards
need not be the same with respect to each recipient.
(b) Registration. Any Restricted Stock issued hereunder may be evidenced
in such manner as the Committee in its sole discretion shall deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is issued in
respect of shares of Restricted Stock awarded under the Plan, such certificate
shall be registered in the name of the Participant, and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award.
(c) Forfeiture. Except as otherwise determined by the Committee at the
time of grant, upon termination of employment for any reason during the
restriction period specified in connection with such award, all shares of
Restricted Stock still subject to restriction shall be forfeited by the
Participant and reacquired by the Company; provided that in the event of a
Participant's retirement, permanent disability or death, or in cases of special
circumstances, the Committee may, in its sole discretion, when it finds that a
waiver would be in the best interests of the Company, waive in whole or in part
any or all remaining restrictions with respect to such Participant's shares of
Restricted Stock. Unrestricted Shares, evidenced in such manner as the Committee
shall deem appropriate, shall be issued to the grantee promptly after the period
of forfeiture upon satisfaction of all requirements under the applicable
Restricted Stock Award, as determined or modified by the Committee.
SECTION 10. PERFORMANCE SHARES.
(a) Issuance. Performance Shares may be issued hereunder to Participants
either alone or in addition to other Awards granted under the Plan. The terms of
Performance Shares need not be the same with respect to each recipient.
Performance Shares shall entitle the recipient thereof to convert same into
Shares, cash, or a combination thereof, as determined by the Committee, based
upon satisfaction of pre-determined performance targets or goals. The Committee
shall have sole and complete authority to determine the Employees who shall
receive Performance Shares and the number of such Shares for each Performance
Cycle, and to determine the duration of each Performance Cycle. There may be
more than one Performance Cycle in existence at any one time, and the duration
of Performance Cycles may differ from each other.
(b) Performance Goals. The Committee shall establish Performance Goals for
each Cycle based on any one or more of the following, or any other factor the
Committee deems to be relevant: the operating earnings, net earnings, return on
equity, income, market share, stockholder return, combined ratio, level of
expenses or growth in revenue. During any Cycle, the Committee may adjust the
Performance Goals for such Cycle as it deems equitable in recognition of unusual
or non-recurring events affecting the Company, changes in applicable tax laws or
accounting principles, or such other factors as the Committee may determine;
provided, however, that no such adjustment shall be applicable to the extent
such adjustment would result in a disallowance of a tax deduction pursuant to
Section 162(m) of the Code.
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(c) Determination of Earned Performance Shares. As soon as practicable
after the end of a Performance Cycle, the Committee shall determine the number
of Performance Shares which have been earned on the basis of performance in
relation to the established Performance Goals.
(d) Payment Values. As soon as practicable after the expiration of the
Performance Cycle and the Committee's determination under paragraph (c), above,
the Committee shall determine whether the Participant should be distributed cash
and/or Shares. To the extent that distributions are made in cash, the amount of
cash distributed shall be equal to the number of earned Performance Shares for
which cash is being distributed, times the Payment Value. Award payments made in
cash rather than by the issuance of Shares shall not result in additional Shares
being available under the Plan. To the extent that distributions are made in
Shares, the number of Shares distributed shall be equal to the number of earned
Performance Shares for which Shares are being distributed.
SECTION 11. NON-EMPLOYEE DIRECTORS' STOCK GRANTS.
(a) Grant of Options. Each Non-Employee Director in office on the date of
the approval of this Plan by the Company's Board of Directors, and each Person
who thereafter becomes a Non-Employee Director, on the date they become a
Non-Employee Director, shall receive a Non-qualified Stock Option to purchase
20,000 Shares of the Company's Common Stock (as constituted on the date hereof)
at a price equal to the fair market value of such a Share (determined pursuant
to the following sentence) on such date, exercisable after the first anniversary
of the date of grant thereof and through the tenth anniversary of the date of
grant thereof. For purposes of the foregoing, the fair market value of a Share
shall be the last reported trading price on the last trading day before the date
such Non-Employee Director becomes entitled to receive the Options (or, if there
were no trades on such date, the average of the bid and asked prices per Share
on such date).
(b) Vesting and Forfeiture. All Options granted to Non-Employee Directors
pursuant to this Section 11 shall be "restricted" and subject to forfeiture
until such Shares vest on the first anniversary of the date of grant. Prior to
vesting, such Options shall be subject to forfeiture upon the voluntary
resignation of such Non-Employee Director, but excluding voluntary resignations
within one year of a Change of Control (as defined below). For purposes of this
Section 11, "Change of Control" shall mean (i) any merger or consolidation or
other corporate reorganization of the Company in which the Company is not the
surviving entity; or (ii) any sale of all or substantially all of the Company's
assets, in either a single transaction or a series of transactions; or (iii) a
liquidation of all or substantially all of the Company's assets; or (iv) if
there is a change within one twelve-month period of a majority of the directors
constituting the Company's Board of Directors at the beginning of such
twelve-month period; or (v) if a single person or entity, or a related group of
persons or entities, at any time subsequent to the date of grant acquires
beneficial ownership of 25% or more of the Company's outstanding voting
securities; unless, with respect to clause (iv), the change of directors is
approved by the Board of Directors as constituted prior to such change and no
event described in clause (v) has occurred.
(c) Adjustment of Award. In case there shall be a merger, reorganization,
consolidation, recapitalization, stock dividend or other change in corporate
structure such that the Shares of the Company are changed into or become
exchangeable for a different security, thereafter the Options subject to be
granted to Non-Employee Directors pursuant to the provisions of this Section 11
shall be adjusted accordingly.
SECTION 12. CHANGE IN CONTROL.
(a) In order to maintain the Participants' rights in the event of any
Change in Control of the Company, as hereinafter defined, the Committee, as
constituted before such Change in Control, may, in its sole discretion, as to
any Award (except Options granted pursuant to Section 11), either at the time an
Award is made hereunder or any time thereafter, take any one or more of the
following actions: (i) provide for the acceleration of any time periods relating
to the exercise or realization of any such Award so that such Award may be
exercised or realized in full on or before a date fixed by the Committee; (ii)
provide for the purchase of any such Award, upon the Participant's request, for
an amount of cash equal to the amount that could have been attained upon the
exercise of such Award or realization of the Participant's rights had such Award
been currently exercisable or payable; or (iii) make such adjustment to any such
Award then outstanding as the
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Committee deems appropriate to reflect such Change in Control. In addition, the
Committee, upon receiving approval of a majority of the full Board, may, in its
discretion, cause any Award outstanding at such time to be assumed, or new
rights substituted therefor, by the acquiring or surviving corporation after
such Change in Control. The Committee may, in its discretion, include such
further provisions and limitations in any agreement documenting such Awards as
it may deem equitable and in the best interests of the Company.
(b) A "Change in Control" shall be deemed to have occurred if, subsequent
to the date of adoption of the Plan by the Company's stockholders (i) any Person
other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, and other than the Company or a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934), directly or indirectly, of securities of the Company representing 25%
or more of the combined voting power of the Company's then outstanding
securities; or (ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board and any new Director (other
than a Director designated by a person who has entered into an agreement with
the Company to effect a transaction described in (i) above) whose election by
the Board or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds ( 2/3) of the Directors then still in office
who either were Directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof.
SECTION 13. AMENDMENTS AND TERMINATION. The Committee may amend, alter or
discontinue the Plan, but no amendment, alteration, or discontinuation shall be
made that would impair the rights of a Participant under an Award theretofore
granted, without the Participant's consent, or that without the approval of the
Company's stockholders as required by applicable law would:
(a) except as is provided in Section 4(b) or 11(d) of the Plan,
increase the total number of Shares reserved for the purposes of the Plan;
(b) change the Employees or class of Employees eligible to participate
in the Plan; or
(c) change in any way the Shares provided for in Section 11 of the
Plan.
The Committee may amend the terms of any Award theretofore granted (except
Options granted pursuant to Section 11 hereof), prospectively or retroactively,
but no such amendment shall impair the rights of any Participant without his
consent. The Committee may also substitute new Awards for Awards previously
granted to Participants, including without limitation previously granted Options
having Fair Market Value or higher option prices.
SECTION 14. GENERAL PROVISIONS.
(a) At the sole discretion of the Committee at the time of grant, Awards
may be assignable or transferable by a Participant or a Non-Employee Director;
provided that no Award shall be assignable or transferable unless the exercise
of such Award and subsequent sale may be covered by a Registration Statement on
Form S-8.
(b) The term of each Award shall be for such period of months or years from
the date of its grant as may be determined by the Committee; provided that in no
event shall the term of any Incentive Stock Option, or any Stock Appreciation
Right related to any Incentive Stock Option, exceed a period of ten (10) years
from the date of its grant; provided further that in no event shall the term of
any Incentive Stock Option, or any Stock Appreciation Right related to any
Incentive Stock Option granted to a Ten Percent Stockholder exceed a period of
five (5) years from the date of its grant.
(c) Nothing in this Plan shall confer upon any Employee or Participant any
right to continue in the employ of the Company or any Affiliate or interfere in
any way with the right of any Company or any Affiliate to terminate his or her
employment at any time. No Employee or Participant shall have any claim to be
granted any Award under the Plan and there is no obligation for uniformity of
treatment of Employees or Participants under the Plan.
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(d) The prospective recipient of any Award under the Plan shall not, with
respect to such Award, be deemed to have become a Participant, or to have any
rights with respect to such Award, until and unless such recipient shall have
executed an Award Agreement or other instrument evidencing the Award and
delivered a fully executed copy thereof to the Company, and otherwise complied
with the then applicable terms and conditions.
(e) Subject to Section 13 hereof, the Committee shall be authorized to make
adjustments in performance award standards or in the terms and conditions of
other Awards in recognition of unusual or nonrecurring events affecting the
Company or its financial statements or changes in applicable laws, regulations
or accounting principles. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem desirable to carry it into effect. In the event
the Company shall assume outstanding employee benefit awards or the right or
obligation to make future such awards in connection with the acquisition of
another corporation or business entity, the Committee may, in its discretion,
make such adjustments in the terms of Awards under the Plan as it shall deem
appropriate. Notwithstanding the above, the Committee shall not have the right
to make any adjustments in the terms or conditions of Shares granted pursuant to
Section 11 hereof.
(f) The Committee shall have full power and authority to determine any
other type and form of Award beyond those enumerated above to grant a
Participant for the furtherance of the purposes of the Plan.
(g) The Committee shall have full power and authority to determine whether,
to what extent and under what circumstances any Award (other than Options
granted pursuant to Section 11 hereof) shall be canceled or suspended. In
particular, but without limitation, all outstanding Awards to any Participant
shall be canceled if the Participant, without the consent of the Committee,
while employed by the Company or after termination of such employment, becomes
associated with, employed by, renders services to, or owns any interest in
(other than any nonsubstantial interest, as determined by the Committee), any
business that is in competition with the Company or with any business in which
the Company has a substantial interest as determined by the Committee.
(h) All certificates for Shares delivered under the Plan pursuant to any
Award shall be subject to such stock-transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Shares are then listed, and any applicable Federal or state securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(i) Subject to the provisions of this Plan and any Award Agreement, the
recipient of an Award may, if so determined by the Committee, be entitled to
receive, currently or on a deferred basis, interest or dividends, or interest or
Dividend Equivalents, with respect to the number of Shares covered by the Award,
as determined by the Committee, in its sole discretion, and the Committee may
provide that such amounts (if any) shall be deemed to have been reinvested in
additional Shares or otherwise reinvested.
(j) As circumstances may from time to time require, the Committee may in
its sole discretion make available to Participants loans for the purpose of
exercising Options.
(k) The Company shall be authorized to withhold from any Award granted or
payment due under the Plan the amount of withholding taxes due with respect to
an Award or payment hereunder and to take such other action as may be necessary
in the opinion of the Company to satisfy all obligations for the payment of such
taxes. The Company shall also be authorized to accept the delivery of shares by
a Participant in payment for the withholding of federal, state and local taxes
(but not for social security and Medicare taxes) up to the Participant's
marginal tax rate.
(l) Nothing contained in this Plan shall prevent the Board of Directors
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.
(m) The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws
of the State of Connecticut and applicable Federal law.
A-8
<PAGE> 9
(n) If any provision of this 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 provision shall
be construed or deemed amended to conform to applicable laws or if it cannot be
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan, it shall be stricken and the
remainder of the Plan shall remain in full force and effect.
A-9
<PAGE> 1
EXHIBIT 4.7
FORM FOR ISO UNDER E-SYNC NETWORKS,
INC.'S 1999 LONG-TERM INCENTIVE PLAN
NONTRANSFERABLE INCENTIVE STOCK OPTION
AGREEMENT dated as of ,
between E-SYNC NETWORKS, INC., a
Delaware corporation (the "Company"),
and (the "Optionee",
which term as used herein shall be
deemed to include any successor to the
Optionee by will or by the laws of
descent and distribution, unless the
context shall otherwise require).
Pursuant to the Company's 1999 Long-Term Incentive Plan (as so amended, the
"Plan"), the Company, acting through the Compensation Committee of its Board of
Directors (the "Committee"), approved the issuance to the Optionee, effective as
of the date set forth above, of an incentive stock option to purchase up to an
aggregate of [# OF SHARES] shares of Common Stock, $.01 par value, of the
Company (the "Common Stock"), at the price (the "Option Price") of [not less
than 100% of the fair market value of a share of Common Stock on the date of
grant (110%, in the case of a 10% stockholder)] [PRICE] per share, upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual premises and undertakings
hereinafter set forth, the parties hereto agree as follows:
1. OPTION; OPTION PRICE. On behalf of the Company, the Committee hereby
grants to the Optionee the option (the "Option") to purchase, subject to the
terms and conditions of this Agreement and the Plan (which are incorporated by
reference herein and which in all cases shall control in the event of any
conflict with the terms, definitions and provisions of this Agreement), [# OF
SHARES] shares of Common Stock of the Company at an exercise price per share
equal to the Option Price, which Option is intended to qualify for federal
income tax purposes as an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). A copy of the
Plan as in effect on the date hereof has been supplied to the Optionee, and the
Optionee hereby acknowledges receipt thereof.
2. TERM. The term (the "Option Term") of the Option shall commence on the
date of this Agreement [fifth anniversary, in the case of a 10% stockholder],
unless such Option shall theretofore have been terminated in accordance with the
terms hereof or of the Plan.
3. TIME OF EXERCISE. (a) Unless accelerated in the discretion of the
Committee or as otherwise provided herein, the Option shall become exercisable
as to the total number of shares of Common Stock subject to the Option as same
may be limited in accordance with Exhibit A hereto, for the periods specified in
Exhibit A hereto. Subject to the provisions of Sections 5 and 8 hereof, shares
as to which the Option becomes exercisable pursuant to the foregoing provision
may be purchased at any time thereafter prior to the expiration or termination
of the Option.
(b) Anything contained in this Agreement to the contrary notwithstanding,
the Option shall not be exercisable to the extent that the aggregate Fair Market
Value (as defined in the Plan) on the date hereof of all stock with respect to
which incentive stock options are exercisable for the first time by the Optionee
during any calendar year (under the Plan and all other plans of each other
corporation which qualifies as a "subsidiary corporation" of the Company under
Section 424(f) of the Code (any of the aforementioned, a "Participating
Company")) exceeds $100,000.
<PAGE> 2
4. TERMINATION OF OPTION. (a) The unexercised portion of the Option
(which portion was otherwise exercisable) shall automatically terminate and
shall become null and void and be of no further force or effect upon the first
to occur of the following:
(i) the expiration of the Option Term;
(ii) the expiration of three months from the date that the Optionee
ceases to be an employee of a Participating Company (other than as a result
of a Total Disability (as defined in subparagraph (iii) below), a
Resignation (as defined in subparagraph (iv) below) or a Termination For
Cause (as defined in subparagraph (iv) below)); provided, however, that if
the Optionee shall die during such three-month period, the time of
termination of the unexercised portion of the Option shall be determined in
accordance with subparagraph (iii) below;
(iii) the expiration of 12 months from the date that the Optionee
ceases to be an employee of a Participating Company as a result of the
Optionee's complete and permanent inability to perform all of his or her
duties under the terms of his or her employment with any Participating
Company, as determined by the Committee upon the basis of such evidence,
including independent medical reports and data, as the Committee deems
appropriate or necessary (a "Total Disability");
(iv) immediately if the Optionee ceases to be employed by any
Participating Company if such termination is a voluntary termination by the
Optionee (a "Resignation") or a termination for cause or is otherwise
attributable to a breach by the Optionee of an employment, noncompetition
or other similar agreement with a Participating Company (any such
termination, determined in accordance with paragraph (b) below, a
"Termination For Cause"); provided, however, a retirement in accordance
with the terms and conditions of a retirement plan adopted by a
Participating Company shall not be deemed to be a Resignation;
(v) except to the extent permitted by Section 14(a) of the Plan, the
date on which the Option or any part thereof or right or privilege relating
thereto is transferred (otherwise than by will or the laws of descent and
distribution), assigned, pledged, hypothecated, attached or otherwise
disposed of by the Optionee.
(b) Any unexercised portion of the Option which was not exercisable on the
date the Optionee ceases to be employed by any Participating Company shall
terminate at midnight on the date on which such employment ceases.
(c) The Board of Directors of the Company shall have the power to determine
what constitutes a Termination For Cause, and the date upon which such
Termination For Cause occurs. Any such determination shall be final, conclusive
and binding upon the Optionee.
(d) Anything contained herein to the contrary notwithstanding, the Option
shall not be affected by any change of duties or position of the Optionee
(including a transfer to or from any Participating Company), so long as the
Optionee continues to be an officer or employee of a Participating Company.
5. PROCEDURE FOR EXERCISE. (a) The Option may be exercised, from time to
time, in whole or in part (but for the purchase of whole shares only), by
delivery of a written notice (the "Notice") from the Optionee to the Secretary
of the Company, which Notice shall:
(i) state that the Optionee elects to exercise the Option;
(ii) state the number of shares of Common Stock with respect to which
the Option is being exercised (the "Optioned Shares");
(iii) state the method of payment for the Optioned Shares pursuant to
Section 5(b) hereof;
(iv) state the date upon which the Optionee desires to consummate the
purchase of the Optioned Shares (which date must be prior to the
termination of such Option and no later than 30 days from the delivery of
such Notice);
(v) include any representations of the Optionee required under Section
8(b) hereof; and
2
<PAGE> 3
(vi) if the Option shall be exercised pursuant to Section 10 hereof by
any person other than the Optionee, include evidence to the satisfaction of
the Committee of the right of such person to exercise the Option.
(b) Payment of the Option Price for the Optioned Shares shall be made (i)
in cash or by personal or certified check, (ii) by delivery of stock
certificates (in negotiable form) representing shares of Common Stock that have
been owned of record by the Optionee for at least six months prior to the date
of exercise and that have a Fair Market Value on the date of exercise equal to
the product of (A) the number of Optioned Shares which are being purchased
pursuant to the exercise of such Option, multiplied by (B) the applicable Option
Price, (iii) a combination of either of the methods set forth in clauses (i) and
(ii) above, (iv)(A) by arrangements which are acceptable to the Committee and as
permitted by applicable law whereby the Optionee relinquishes a portion of the
Option, or (B) in compliance with any other cashless exercise program authorized
by the Committee for use in connection with the Plan at the time of such
exercise, or (v) in such other consideration as shall be acceptable to the
Committee. For the purpose of the preceding clause (iv)(A), the fair market
value of the portion of the Option that is relinquished shall be the Fair Market
Value at the time of exercise of the number of Optioned Shares subject to the
portion of the Option that is relinquished less the aggregate exercise prices
specified in the Option with respect to such Optioned Shares.
(c) The Company shall issue a stock certificate in the name of the Optionee
(or such other person exercising the Option in accordance with the provisions of
Section 10 hereof) for the Optioned Shares as soon as practicable after receipt
of the Notice and payment of the aggregate Option Price for such shares.
6. NO RIGHTS AS A STOCKHOLDER. The Optionee shall not have any privileges
of a stockholder of the Company with respect to any Optioned Shares until the
date of issuance of a stock certificate pursuant to Section 5(c) hereof.
7. ADJUSTMENTS. If the outstanding shares of Common Stock of the Company
are increased, decreased, or exchanged for a different number or kind of shares
or other securities, or if additional shares or new or different shares or other
securities are distributed with respect to such shares of Common Stock or other
securities, through merger, consolidation, sale of all of substantially all of
the property of the Company, reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other distribution with
respect to such shares of Common Stock or other securities, then, to the extent
permitted by the Company, an appropriate and proportionate adjustment shall be
made in (i) the number and kind of shares or other securities subject to the
Option and (ii) the price for each share or other unit of any other securities
subject to the Option without change in the aggregate purchase price or value as
to which such Option remains exercisable or subject to restrictions. Any
adjustment under this Section 7 shall be made by the Company's Board of
Directors, whose determination as to what adjustments shall be made and the
extent thereof will be final, binding and conclusive. No fractional interests
will be issued under the Plan resulting from any such adjustment.
8. ADDITIONAL PROVISIONS RELATED TO EXERCISE. (a) The Option shall be
exercisable only on such date or dates and during such period and for such
number of shares of Common Stock as are set forth in this Agreement.
(b) To exercise the Option, the Optionee shall follow the procedures set
forth in Section 5 hereof. Unless at the time of exercise of the Option there
shall be, in the opinion of counsel for the Company, a valid and effective
registration statement under the Securities Act of 1933 (the "'33 Act") and
appropriate qualification and registration under applicable state securities
laws relating to the Optioned Shares being acquired pursuant to the Option, the
Optionee shall be required, upon exercise of the Option, to give to the Company
a written representation, in a form reasonably satisfactory to the Company, that
he or she is acquiring the Optioned Shares for his or her own account for
investment and not with a view to, or for sale in connection with, the resale or
distribution of any such shares. The Optionee shall be further required to agree
that he or she will not sell or transfer any Optioned Shares acquired pursuant
to exercise of the Option until he or she requests and receives an opinion of
the Company's counsel to the effect that such proposed sale or transfer will not
result in a violation of the '33 Act or any applicable state securities law, or
a registration statement covering the sale or transfer of the shares has been
declared effective by the Securities and Exchange Commission or appropriate
3
<PAGE> 4
state governmental authority, or he or she obtains a no-action letter from the
Securities and Exchange Commission or appropriate state governmental authority
with respect to the proposed transfer.
(c) Stock certificates representing shares of Common Stock acquired upon
the exercise of the Option that have not been registered under the Securities
Act shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER
SUCH ACT OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE COMPANY THAT SUCH SALE, OFFER FOR SALE, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION DOES NOT VIOLATE THE PROVISIONS OF SUCH ACT OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT.
9. NO EVIDENCE OF EMPLOYMENT OR SERVICE. Nothing contained in the Plan or
this Agreement shall confer upon the Optionee any right to continue in the
employ of a Participating Company or interfere in any way with the right of a
Participating Company (subject to the terms of any separate agreement to the
contrary) to terminate the Optionee's employment or to increase or decrease the
Optionee's compensation at any time.
10. RESTRICTION ON TRANSFER. The Option may not be transferred, pledged,
assigned, hypothecated or otherwise disposed of in any way by the Optionee,
except by will or by the laws of descent and distribution or as may otherwise be
required by law, and may be exercised during the lifetime of the Optionee only
by the Optionee. If the Optionee dies, the Option shall thereafter be
exercisable, during the period specified in Section 4(a)(ii) hereof, by his or
her executors or administrators to the full extent to which the Option was
exercisable by the Optionee at the time of his or her death. The Option shall
not be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.
11. DISQUALIFYING DISPOSITIONS; TAXES. (a) If Optioned Shares are
disposed of within two years following the date of this Agreement or one year
following the issuance thereof to the Optionee (a "Disqualifying Disposition"),
the Optionee shall, immediately prior to such Disqualifying Disposition, notify
the Company in writing of the date and terms of such Disqualifying Disposition
and provide such other information regarding the Disqualifying Disposition as
the Company may reasonably require.
(b) At the time of a Disqualifying Disposition, the Optionee shall remit to
the Company in cash the amount of any applicable Federal, state and local
withholding taxes and employment taxes.
12. NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if (i) personally
delivered, (ii) sent by nationally-recognized overnight courier or (iii) sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Optionee, to the address set forth on the signature page
hereto; and
If to the Company, to:
E-Sync Networks, Inc.
35 Nutmeg Drive
Trumbull, Connecticut 06611
Attention: Corporate Secretary;
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered, if
personally delivered, (ii) on the first Business Day (as hereinafter defined)
after dispatch, if sent by nationally-recognized overnight courier and (iii) on
the third Business Day following the date on which the piece of mail containing
such communication is posted, if sent by mail. As used herein, "Business Day'
means
4
<PAGE> 5
a day that is not a Saturday, Sunday or a day on which banking institutions in
the city to which the notice or communication is to be sent are not required to
be open.
13. NO WAIVER. No waiver of any breach or condition of this Agreement
shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.
14. OPTIONEE UNDERTAKING. The Optionee hereby agrees to take whatever
additional actions and execute whatever additional documents the Company may in
its reasonable judgment deem necessary or advisable in order to carry out or
effect one or more of the obligations or restrictions imposed on the Optionee
pursuant to the express provisions of this Agreement.
15. MODIFICATION OF RIGHTS. The rights of the Optionee are subject to
modification and termination in certain events as provided in this Agreement and
the Plan.
16. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to contracts made
and to be wholly performed therein.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
18. ENTIRE AGREEMENT. This Agreement and the Plan constitute the entire
agreement between the parties with respect to the subject matter hereof, and
supersede all previously written or oral negotiations, commitments,
representations and agreements with respect thereto.
[remainder of page intentionally left blank]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Nontransferable
Incentive Stock Option Agreement as of the date first written above.
E-SYNC NETWORKS, INC.
By:
------------------------------------
Name:
Title:
OPTIONEE:
--------------------------------------
Name:
--------------------------------------
Address:
--------------------------------------
--------------------------------
--------------------------------
6
<PAGE> 7
EXHIBIT A
[Intentionally Left Blank]
<PAGE> 1
EXHIBIT 4.8
FORM FOR NSO UNDER E-SYNC NETWORKS, INC.'S 1999 LONG-TERM INCENTIVE PLAN
NONTRANSFERABLE NON-QUALIFIED STOCK OPTION AGREEMENT dated as of
, , between E-SYNC NETWORKS, INC., a Delaware
corporation (the "Company"), and (the "Optionee", which term as
used herein shall be deemed to include any successor to the Optionee by will or
by the laws of descent and distribution, unless the context shall otherwise
require).
Pursuant to the Company's 1999 Long-Term Incentive Plan (as so amended, the
"Plan"), the Company, acting through the Compensation Committee of its Board of
Directors (the "Committee"), approved the issuance to the Optionee, effective as
of the date set forth above, of a non-qualified stock option to purchase up to
an aggregate of [# OF SHARES] shares of Common Stock, $.01 par value, of the
Company (the "Common Stock"), at the price (the "Option Price") of [not less
than 100% of the fair market value of a share of Common Stock on the date of
grant] [PRICE] per share, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual premises and undertakings
hereinafter set forth, the parties hereto agree as follows:
1. OPTION; OPTION PRICE. On behalf of the Company, the Committee hereby
grants to the Optionee the option (the "Option") to purchase, subject to the
terms and conditions of this Agreement and the Plan (which are incorporated by
reference herein and which in all cases shall control in the event of any
conflict with the terms, definitions and provisions of this Agreement), [# OF
SHARES] shares of Common Stock of the Company at an exercise price per share
equal to the Option Price, which Option is intended to qualify for federal
income tax purposes as an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). A copy of the
Plan as in effect on the date hereof has been supplied to the Optionee, and the
Optionee hereby acknowledges receipt thereof.
2. TERM. The term (the "Option Term") of the Option shall commence on the
date of this Agreement and shall expire on the tenth anniversary of the date of
this Agreement, unless such Option shall theretofore have been terminated in
accordance with the terms hereof or of the Plan.
3. TIME OF EXERCISE. Unless accelerated in the discretion of the
Committee or as otherwise provided herein, the Option shall become exercisable
as to the total number of shares of Common Stock subject to the Option as same
may be limited in accordance with Exhibit A hereto, for the periods specified in
Exhibit A hereto. Subject to the provisions of Sections 5 and 8 hereof, shares
as to which the Option becomes exercisable pursuant to the foregoing provision
may be purchased at any time thereafter prior to the expiration or termination
of the Option.
4. TERMINATION OF OPTION. (a) The unexercised portion of the Option
(which portion was otherwise exercisable) shall automatically terminate and
shall become null and void and be of no further force or effect upon the first
to occur of the following:
(i) the expiration of the Option Term;
(ii) the expiration of three months from the date that the Optionee
ceases to be an employee of the Company or any other corporation which
qualifies as a "subsidiary corporation" of the Company under Section 424(f)
of the Code (any of the aforementioned, a "Participating Company")) (other
than as a result of a Total Disability (as defined in subparagraph (iii)
below), a Resignation (as defined in subparagraph (iv) below) or a
Termination For Cause (as defined in subparagraph (iv) below)); provided,
however, that if the Optionee shall die during such three-month period, the
time of termination of the unexercised portion of the Option shall be
determined in accordance with subparagraph (iii) below;
(iii) the expiration of 12 months from the date that the Optionee
ceases to be an employee of a Participating Company as a result of the
Optionee's complete and permanent inability to perform all of
<PAGE> 2
his or her duties under the terms of his or her employment with any
Participating Company, as determined by the Committee upon the basis of
such evidence, including independent medical reports and data, as the
Committee deems appropriate or necessary (a "Total Disability");
(iv) immediately if the Optionee ceases to be employed by any
Participating Company if such termination is a voluntary termination by the
Optionee (a "Resignation") or a termination for cause or is otherwise
attributable to a breach by the Optionee of an employment, noncompetition
or other similar agreement with a Participating Company (any such
termination, determined in accordance with paragraph (b) below, a
"Termination For Cause"); provided, however, a retirement in accordance
with the terms and conditions of a retirement plan adopted by a
Participating Company shall not be deemed to be a Resignation;
(v) except to the extent permitted by Section 14(a) of the Plan, the
date on which the Option or any part thereof or right or privilege relating
thereto is transferred (otherwise than by will or the laws of descent and
distribution), assigned, pledged, hypothecated, attached or otherwise
disposed of by the Optionee. (b) Any unexercised portion of the Option
which was not exercisable on the date the Optionee ceases to be employed by
any Participating Company shall terminate at midnight on the date on which such
employment ceases.
(c) The Board of Directors of the Company shall have the power to determine
what constitutes a Termination For Cause, and the date upon which such
Termination For Cause occurs. Any such determination shall be final, conclusive
and binding upon the Optionee.
(d) Anything contained herein to the contrary notwithstanding, the Option
shall not be affected by any change of duties or position of the Optionee
(including a transfer to or from any Participating Company), so long as the
Optionee continues to be an officer or employee of a Participating Company.
5. PROCEDURE FOR EXERCISE. (a) The Option may be exercised, from time to
time, in whole or in part (but for the purchase of whole shares only), by
delivery of a written notice (the "Notice") from the Optionee to the Secretary
of the Company, which Notice shall:
(i) state that the Optionee elects to exercise the Option;
(ii) state the number of shares of Common Stock with respect to which
the Option is being exercised (the "Optioned Shares");
(iii) state the method of payment for the Optioned Shares pursuant to
Section 5(b) hereof;
(iv) state the date upon which the Optionee desires to consummate the
purchase of the Optioned Shares (which date must be prior to the
termination of such Option and no later than 30 days from the delivery of
such Notice);
(v) include any representations of the Optionee required under Section
8(b) hereof; and
(vi) if the Option shall be exercised pursuant to Section 10 hereof by
any person other than the Optionee, include evidence to the satisfaction of
the Committee of the right of such person to exercise the Option.
(b) Payment of the Option Price for the Optioned Shares shall be made (i)
in cash or by personal or certified check, (ii) by delivery of stock
certificates (in negotiable form) representing shares of Common Stock that have
been owned of record by the Optionee for at least six months prior to the date
of exercise and that have a Fair Market Value on the date of exercise equal to
the product of (A) the number of Optioned Shares which are being purchased
pursuant to the exercise of such Option, multiplied by (B) the applicable Option
Price, (iii) a combination of either of the methods set forth in clauses (i) and
(ii) above, (iv) (A) by arrangements which are acceptable to the Committee and
as permitted by applicable law whereby the Optionee relinquishes a portion of
the Option, or (B) in compliance with any other cashless exercise program
authorized by the Committee for use in connection with the Plan at the time of
such exercise, or (v) in such other consideration as shall be acceptable to the
Committee. For the purpose of the preceding clause (iv)(A),
2
<PAGE> 3
the fair market value of the portion of the Option that is relinquished shall be
the Fair Market Value at the time of exercise of the number of Optioned Shares
subject to the portion of the Option that is relinquished less the aggregate
exercise prices specified in the Option with respect to such Optioned Shares.
(c) The Company shall issue a stock certificate in the name of the Optionee
(or such other person exercising the Option in accordance with the provisions of
Section 10 hereof) for the Optioned Shares as soon as practicable after receipt
of the Notice and payment of the aggregate Option Price for such shares.
6. NO RIGHTS AS A STOCKHOLDER. The Optionee shall not have any privileges
of a stockholder of the Company with respect to any Optioned Shares until the
date of issuance of a stock certificate pursuant to Section 5(c) hereof.
7. ADJUSTMENTS. If the outstanding shares of Common Stock of the Company
are increased, decreased, or exchanged for a different number or kind of shares
or other securities, or if additional shares or new or different shares or other
securities are distributed with respect to such shares of Common Stock or other
securities, through merger, consolidation, sale of all of substantially all of
the property of the Company, reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other distribution with
respect to such shares of Common Stock or other securities, then, to the extent
permitted by the Company, an appropriate and proportionate adjustment shall be
made in (i) the number and kind of shares or other securities subject to the
Option and (ii) the price for each share or other unit of any other securities
subject to the Option without change in the aggregate purchase price or value as
to which such Option remains exercisable or subject to restrictions. Any
adjustment under this Section 7 shall be made by the Company's Board of
Directors, whose determination as to what adjustments shall be made and the
extent thereof will be final, binding and conclusive. No fractional interests
will be issued under the Plan resulting from any such adjustment.
8. ADDITIONAL PROVISIONS RELATED TO EXERCISE. (a) The Option shall be
exercisable only on such date or dates and during such period and for such
number of shares of Common Stock as are set forth in this Agreement.
(b) To exercise the Option, the Optionee shall follow the procedures set
forth in Section 5 hereof. Unless at the time of exercise of the Option there
shall be, in the opinion of counsel for the Company, a valid and effective
registration statement under the Securities Act of 1933 (the "'33 Act") and
appropriate qualification and registration under applicable state securities
laws relating to the Optioned Shares being acquired pursuant to the Option, the
Optionee shall be required, upon exercise of the Option, to give to the Company
a written representation, in a form reasonably satisfactory to the Company, that
he or she is acquiring the Optioned Shares for his or her own account for
investment and not with a view to, or for sale in connection with, the resale or
distribution of any such shares. The Optionee shall be further required to agree
that he or she will not sell or transfer any Optioned Shares acquired pursuant
to exercise of the Option until he or she requests and receives an opinion of
the Company's counsel to the effect that such proposed sale or transfer will not
result in a violation of the '33 Act or any applicable state securities law, or
a registration statement covering the sale or transfer of the shares has been
declared effective by the Securities and Exchange Commission or appropriate
state governmental authority, or he or she obtains a no-action letter from the
Securities and Exchange Commission or appropriate state governmental authority
with respect to the proposed transfer.
(c) Stock certificates representing shares of Common Stock acquired upon
the exercise of the Option that have not been registered under the Securities
Act shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER
SUCH ACT OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE COMPANY THAT SUCH SALE, OFFER FOR SALE, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION DOES NOT VIOLATE
3
<PAGE> 4
THE PROVISIONS OF SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH
ACT.
9. NO EVIDENCE OF EMPLOYMENT OR SERVICE. Nothing contained in the Plan or
this Agreement shall confer upon the Optionee any right to continue in the
employ of a Participating Company or interfere in any way with the right of a
Participating Company (subject to the terms of any separate agreement to the
contrary) to terminate the Optionee's employment or to increase or decrease the
Optionee's compensation at any time.
10. RESTRICTION ON TRANSFER. The Option may not be transferred, pledged,
assigned, hypothecated or otherwise disposed of in any way by the Optionee,
except by will or by the laws of descent and distribution or as may otherwise be
required by law, and may be exercised during the lifetime of the Optionee only
by the Optionee. If the Optionee dies, the Option shall thereafter be
exercisable, during the period specified in Section 4(a)(ii) hereof, by his or
her executors or administrators to the full extent to which the Option was
exercisable by the Optionee at the time of his or her death. The Option shall
not be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.
11. TAXES. Whenever shares of Common Stock are to be delivered to the
Optionee upon exercise of the Option, the Company shall be entitled to require
as a condition of delivery that the Optionee remit or, in appropriate cases,
agree to remit when due, an amount sufficient to satisfy all current or
estimated future federal, state and local withholding tax and employment tax
requirements relating thereto; provided, however, if such funds are not so
remitted to the Company and at such time the Optionee is an Employee of a
Participating Company, the Company may withhold such portion of the Optionee's
salary as is equal to the amount of such tax requirements.
12. NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if (i) personally
delivered, (ii) sent by nationally-recognized overnight courier or (iii) sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Optionee, to the address set forth on the signature page
hereto; and
If to the Company, to:
E-Sync Networks, Inc.
35 Nutmeg Drive
Trumbull, Connecticut 06611
Attention: Corporate Secretary;
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered, if
personally delivered, (ii) on the first Business Day (as hereinafter defined)
after dispatch, if sent by nationally-recognized overnight courier and (iii) on
the third Business Day following the date on which the piece of mail containing
such communication is posted, if sent by mail. As used herein, "Business Day"
means a day that is not a Saturday, Sunday or a day on which banking
institutions in the city to which the notice or communication is to be sent are
not required to be open.
13. NO WAIVER. No waiver of any breach or condition of this Agreement
shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.
14. OPTIONEE UNDERTAKING. The Optionee hereby agrees to take whatever
additional actions and execute whatever additional documents the Company may in
its reasonable judgment deem necessary or advisable in order to carry out or
effect one or more of the obligations or restrictions imposed on the Optionee
pursuant to the express provisions of this Agreement.
15. MODIFICATION OF RIGHTS. The rights of the Optionee are subject to
modification and termination in certain events as provided in this Agreement and
the Plan.
4
<PAGE> 5
16. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to contracts made
and to be wholly performed therein.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
18. ENTIRE AGREEMENT. This Agreement and the Plan constitute the entire
agreement between the parties with respect to the subject matter hereof, and
supersede all previously written or oral negotiations, commitments,
representations and agreements with respect thereto.
[remainder of page intentionally left blank]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Nontransferable
Incentive Stock Option Agreement as of the date first written above.
E-SYNC NETWORKS, INC.
By:
------------------------------------
Name:
Title:
OPTIONEE:
--------------------------------------
Name:
--------------------------------------
Address:
--------------------------------------
---------------------------------
---------------------------------
6
<PAGE> 7
EXHIBIT A
[INTENTIONALLY LEFT BLANK]
<PAGE> 1
EXHIBIT 4.9
FORM FOR NSO UNDER E-SYNC NETWORKS,
INC. 1999 LONG-TERM INCENTIVE PLAN
NONTRANSFERABLE NON-QUALIFIED STOCK
OPTION AGREEMENT dated as of
, 199 , between E-Sync
Networks, Inc., a Delaware corporation
(the "Company"), and
(the "Optionee", which term as used
herein shall be deemed to include any
successor to the Optionee by will or
by the laws of descent and
distribution, unless the context shall
otherwise require).
Pursuant to the Company's 1999 Long-Term Incentive Plan, (the "Plan"), the
Company approved the issuance to the Optionee, effective as of the date set
forth above, of a non-qualified stock option to purchase up to an aggregate of
20,000 shares of Common Stock, $.01 par value, of the Company (the "Common
Stock"), at the price (the "Option Price") of [$ ] [the fair market
value of a share of Common Stock on the date the Optionee became a Non-Employee
Director (or, if later, April 9, 1999)], upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual premises and undertakings
hereinafter set forth, the parties hereto agree as follows:
1. OPTION; OPTION PRICE. On behalf of the Company, the Committee hereby
grants to the Optionee the option (the "Option") to purchase, subject to the
terms and conditions of this Agreement and the Plan (which is incorporated by
reference herein and which in all cases shall control in the event of any
conflict with the terms, definitions and provisions of this Agreement), 20,000
shares of Common Stock of the Company at an exercise price per share equal to
the Option Price, which Option is not intended to qualify for federal income tax
purposes as an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). A copy of the Plan as in
effect on the date hereof has been supplied to the Optionee, and the Optionee
hereby acknowledges receipt thereof.
2. TERM. The term (the "Option Term") of the Option shall commence on the
date of this Agreement and shall expire on the tenth anniversary of the date of
this Agreement, unless such Option shall theretofore have been terminated in
accordance with the terms hereof or of the Plan.
3. TIME OF EXERCISE. Except as otherwise provided herein, the Option
shall become exercisable as to the total number of shares of Common Stock
subject to the Option on the first anniversary of the date hereof. Subject to
the provisions hereof, shares as to which the Option becomes exercisable
pursuant to the foregoing provisions may be purchased at any time thereafter
prior to the expiration or termination of the Option.
4. TERMINATION OF OPTION. The unexercised portion of the Option (whether
or not yet exercisable) (the "Unexercised Portion") shall automatically
terminate and shall become null and void and be of no further force or effect
upon the first to occur of the following:
(i) the expiration of the Option Term; or
(ii) prior to the first anniversary of the date hereof, the voluntary
resignation from the Company's Board of Directors of the Optionee (but
excluding voluntary resignation following a Change of Control prior to such
first anniversary). For purposes of this Section 4, "Change of Control"
shall mean (i) any merger or consolidation or other corporate
reorganization of the Company in which the Company is not the surviving
entity (other than the merger of Wiltek, Inc. into the Company); or (ii)
any sale of all or substantially all of the Company's assets, in either a
single transaction or a series of transactions; or (iii) a liquidation of
all or substantially all of the Company's assets; or (iv) if there is a
change within one twelve-month period of a majority of the directors
constituting the Company's Board of Directors at the
<PAGE> 2
beginning of such twelve-month period; or (v) if a single person or entity,
or a related group of persons or entities, at any time subsequent to the
date of grant acquires beneficial ownership of 25% or more of the Company's
outstanding voting securities; unless, with respect to clause (iv), the
change of directors is approved by the Board of Directors as constituted
prior to such change; or
(iii) except to the extent permitted by Section 10 hereof, the date on
which the Option or any part thereof or right or privilege relating thereto
is transferred (otherwise than by will or the laws of descent and
distribution), assigned, pledged, hypothecated, attached or otherwise
disposed of by the Optionee.
5. PROCEDURE FOR EXERCISE. (a) The Option may be exercised, from time to
time, in whole or in part (but for the purchase of whole shares only), by
delivery of a written notice (the "Notice") from the Optionee to the Secretary
of the Company, which Notice shall:
(i) state that the Optionee elects to exercise the Option;
(ii) state the number of shares of Common Stock with respect to which
the Option is being exercised (the "Optioned Shares");
(iii) state the method of payment for the Optioned Shares pursuant to
Section 5(b) hereof;
(iv) state the date upon which the Optionee desires to consummate the
purchase of the Optioned Shares (which date must be prior to the
termination of such Option and no later than 30 days from the delivery of
such Notice);
(v) include any representations of the Optionee required under Section
8(b) hereof; and
(vi) if the Option shall be exercised pursuant to Section 10 hereof by
any person other than the Optionee, include evidence to the satisfaction of
the Committee of the right of such person to exercise the Option.
(b) Payment of the Option Price for the Optioned Shares shall be made (i)
in cash or by personal or certified check, (ii) by delivery of stock
certificates (in negotiable form) representing shares of Common Stock that have
been owned of record by the Optionee for at least six months prior to the date
of exercise and that have a Fair Market Value on the date of exercise equal to
the product of (A) the number of Optioned Shares which are being purchased
pursuant to the exercise of such Option, multiplied by (B) the applicable Option
Price, (iii) a combination of either of the methods set forth in clauses (i) and
(ii) above, (iv) (A) by arrangements which are acceptable to the Committee and
as permitted by applicable law whereby the Optionee relinquishes a portion of
the Option, or (B) in compliance with any other cashless exercise program
authorized by the Committee for use in connection with the Plan at the time of
such exercise, or (v) in such other form of consideration as shall be acceptable
to the Committee. For the purpose of the preceding clause (iv)(A), the fair
market value of the portion of the Option that is relinquished shall be the Fair
Market Value at the time of exercise of the number of Optioned Shares subject to
the portion of the Option that is relinquished less the aggregate Option Price
specified in the Option with respect to such Optioned Shares.
(c) The Company shall issue a stock certificate in the name of the Optionee
(or such other person exercising the Option in accordance with the provisions of
Section 10 hereof) for the Optioned Shares as soon as practicable after receipt
of the Notice and payment of the aggregate Option Price for such shares.
6. NO RIGHTS AS A STOCKHOLDER. The Optionee shall not have any privileges
of a stockholder of the Company with respect to any Optioned Shares until the
date of issuance of a stock certificate pursuant to Section 5(c) hereof.
7. ADJUSTMENTS. If the outstanding shares of Common Stock of the Company
are increased, decreased, or exchanged for a different number or kind of shares
or other securities, or if additional shares or new or different shares or other
securities are distributed with respect to such shares of Common Stock or other
securities, through merger, consolidation, sale of all of substantially all of
the property of the Company, reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other distribution with
respect to such shares of Common Stock or other securities, then an appropriate
and proportionate adjustment shall be made in (i) the number and kind of shares
or other securities subject to the
2
<PAGE> 3
Option and (ii) the price for each share or other unit of any other securities
subject to the Option without change in the aggregate purchase price or value as
to which such Option remains exercisable or subject to restrictions. Any
adjustment under this Section 7 shall be made by the Company's Board of
Directors, whose determination as to what adjustments shall be made and the
extent thereof will be final, binding and conclusive. No fractional interests
will be issued under the Plan resulting from any such adjustment.
8. ADDITIONAL PROVISIONS RELATED TO EXERCISE. (a) The Option shall be
exercisable only on such date or dates and during such period and for such
number of shares of Common Stock as are set forth in this Agreement.
(b) To exercise the Option, the Optionee shall follow the procedures set
forth in Section 5 hereof. Unless at the time of exercise of the Option there
shall be, in the opinion of counsel for the Company, a valid and effective
registration statement under the Securities Act of 1933 (the "'33 Act") and
appropriate qualification and registration under applicable state securities
laws relating to the Optioned Shares being acquired pursuant to the Option, the
Optionee shall be required, upon exercise of the Option, to give to the Company
a written representation, in a form reasonably satisfactory to the Company, that
he or she is acquiring the Optioned Shares for his or her own account for
investment and not with a view to, or for sale in connection with, the resale or
distribution of any such shares. The Optionee shall be further required to agree
that he or she will not sell or transfer any Optioned Shares acquired pursuant
to exercise of the Option until he or she requests and receives an opinion of
the Company's counsel to the effect that such proposed sale or transfer will not
result in a violation of the '33 Act, or a registration statement covering the
sale or transfer of the shares has been declared effective by the Securities and
Exchange Commission, or he or she obtains a no-action letter from the Securities
and Exchange Commission with respect to the proposed transfer.
(c) Stock certificates representing shares of Common Stock acquired upon
the exercise of the Option that have not been registered under the Securities
Act shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER
SUCH ACT OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE COMPANY THAT SUCH SALE, OFFER FOR SALE, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION DOES NOT VIOLATE THE PROVISIONS OF SUCH ACT OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT.
9. NO EVIDENCE OF EMPLOYMENT OR SERVICE. Nothing contained in the Plan or
this Agreement shall confer upon the Optionee any right to continue in the
employ of a Participating Company (as defined in the Plan) or interfere in any
way with the right of a Participating Company (subject to the terms of any
separate agreement to the contrary) to terminate the Optionee's employment or to
increase or decrease the Optionee's compensation at any time.
10. RESTRICTION ON TRANSFER. The Option may not be transferred, pledged,
assigned, hypothecated or otherwise disposed of in any way by the Optionee,
except by will or by the laws of descent and distribution or as may otherwise be
required by law, and may be exercised during the lifetime of the Optionee only
by the Optionee. The Option shall not be subject to execution, attachment or
similar process. Any attempted assignment, transfer, pledge, hypothecation or
other disposition of the Option contrary to the provisions hereof, and the levy
of any execution, attachment or similar process upon the Option, shall be null
and void and without effect.
11. DISQUALIFYING DISPOSITIONS; TAXES. Whenever shares of Common Stock
are to be delivered to the Optionee upon exercise of the Option, the Company
shall be entitled to require as a condition of delivery that the Optionee remit
or, in appropriate cases, agree to remit when due, an amount sufficient to
satisfy all current or estimated future federal, state and local withholding tax
and employment tax requirements relating thereto; provided, however, if such
funds are not so remitted to the Company and at such time the Optionee is an
Employee of a Participating Company, the Company may withhold such portion of
the Optionee's salary as is equal to the amount of such tax requirements.
3
<PAGE> 4
12. NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if (i) personally
delivered, (ii) sent by nationally-recognized overnight courier or (iii) sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Optionee, to the address set forth on the signature page
hereto; and
If to the Company, to:
E-Sync Networks, Inc.
35 Nutmeg Drive
Trumbull, CT 06611
Attention: Secretary;
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered, if
personally delivered or if sent by nationally-recognized overnight courier, and
(ii) on the third Business Day (as hereinafter defined) following the date on
which the piece of mail containing such communication is posted, if sent by
mail. As used herein, "Business Day" means a day that is not a Saturday, Sunday
or a day on which banking institutions in the city to which the notice or
communication is to be sent are not required to be open.
13. NO WAIVER. No waiver of any breach or condition of this Agreement
shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.
14. OPTIONEE UNDERTAKING. The Optionee hereby agrees to take whatever
additional actions and execute whatever additional documents the Company may in
its reasonable judgment deem necessary or advisable in order to carry out or
effect one or more of the obligations or restrictions imposed on the Optionee
pursuant to the express provisions of this Agreement.
15. MODIFICATION OF RIGHTS. The rights of the Optionee are subject to
modification and termination in certain events as provided in this Agreement and
the Plan.
16. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to contracts made
and to be wholly performed therein.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
18. ENTIRE AGREEMENT. This Agreement and the Plan constitute the entire
agreement between the parties with respect to the subject matter hereof, and
supersede all previously written or oral negotiations, commitments,
representations and agreements with respect thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Nontransferable
Incentive Stock Option Agreement as of the date first written above.
E-SYNC NETWORKS, INC.
By:
--------------------------------------
Name:
Title:
OPTIONEE:
--------------------------------------
Name:
--------------------------------------
Address:
--------------------------------------
--------------------------------------
--------------------------------------
4
<PAGE> 1
EXHIBIT 4.10
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF
SENIOR CONVERTIBLE SERIES B PREFERRED STOCK
OF
E-SYNC NETWORKS, INC.
* * *
E-Sync Networks, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by the
Certificate of Incorporation of said corporation, and pursuant to the provisions
of Section 151 of Title 8 of the Delaware Code of 1953, said Board of Directors
adopted a resolution by the unanimous written consent of its members, filed with
the minutes of the Board, providing for the issuance of a new series of
preferred stock designated as "Senior Convertible Series B Preferred Stock",
which resolution is as follows:
RESOLVED that, pursuant to the authority vested in the Board of Directors
of E-Sync Networks, Inc., a Delaware corporation (the "Company") in accordance
with the provisions of the Certificate of Incorporation of the Company (the
"Certificate of Incorporation"), a series of the class of authorized Preferred
Stock, par value $0.01 per share, of the Company, is hereby created and that the
designation and number of shares thereof and the voting powers, preferences and
relative, participating, optional and other special rights of the shares of such
series, and the qualifications, limitations and restrictions thereof are as
follows:
SECTION 1. DESIGNATION AND NUMBER.
(a) The shares of such series shall be designated as "Senior Convertible
Series B Preferred Stock" (the "Series B Stock"). The number of shares initially
constituting the Series B Stock shall be 2,272,727, which number may be
decreased (but not increased) by the Board of Directors without a vote of
stockholders; provided, however, that such number may not be decreased below the
number of then outstanding shares of Series B Stock.
(b) The Series B Stock shall, with respect to dividend rights and rights
upon liquidation, dissolution or winding up, rank pari passu with the Company's
Series A Convertible Preferred Stock (the "Series A Stock") and prior to all
other classes and series of capital stock of the Company now or hereafter
authorized (except as may be authorized pursuant to Section 3(b)) including,
without limitation, the Common Stock.
(c) Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in Section 9.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
In the event that the Company shall declare a dividend or make any other
distribution (including, without limitation, in cash, in capital stock (which
shall include, without limitation, any options, warrants or other rights to
acquire capital stock) of the Company or other property or assets) to holders of
Common Stock, then the Board of Directors shall declare, and the holder of each
share of Series B Stock shall be entitled to receive, a dividend or distribution
in an amount equal to the amount of such dividend or distribution received by a
holder of the number of shares of Common Stock for which such share of Series B
Stock is convertible on the record date for such dividend or distribution. Any
such amount shall be paid to the holders of shares of Series B Stock at the same
time such dividend or distribution is made to holders of Common Stock.
1
<PAGE> 2
SECTION 3. VOTING RIGHTS.
In addition to any voting rights provided by law, the holders of shares of
Series B Stock shall have the following voting rights:
(a) So long as the Series B Stock is outstanding, each share of Series
B Stock shall entitle the holder thereof to vote, in person or by proxy, at
a special or annual meeting of stockholders, on each of the matters
entitled to be voted on by holders of Common Stock, voting together as a
single class with other shares entitled to vote thereon. With respect to
any such vote, each share of Series B Stock shall entitle the holder
thereof to cast that number of votes per share as is equal to the number of
votes that such holder would be entitled to cast had such holder converted
its shares of Series B Stock into Common Stock on the record date for
determining the stockholders of the Company eligible to vote on any such
matters.
(b) Unless the consent or approval of a greater number of shares shall
then be required by law, the affirmative vote of the holders of at least a
majority of the outstanding shares of Series B Stock, voting separately as
a single class, in person or by proxy, at a special or annual meeting of
stockholders called for the purpose, shall be necessary to (i) authorize,
increase the authorized number of shares of, or issue (including on
conversion or exchange of any convertible or exchangeable securities or by
reclassification), any shares of any class or classes of Senior Stock or
Parity Stock, (ii) authorize, adopt or approve an amendment to the
Certificate of Incorporation that would increase or decrease the par value
of the shares of Series B Stock, or alter or change the powers, preferences
or special rights of the shares of Series B Stock, other Parity Stock or
Senior Stock, (iii) amend, alter or repeal the Certificate of Incorporation
so as to affect the shares of Series B Stock adversely, including, without
limitation, by granting any voting right to any holder of notes, bonds,
debentures or other debt obligations of the Company, (iv) authorize or
issue any security convertible into, exchangeable for or evidencing the
right to purchase or otherwise receive any shares of any class or classes
of Senior Stock or Parity Stock, or (v) effect an Extraordinary Event.
SECTION 4. CERTAIN RESTRICTIONS.
(a) Whenever the Company shall not have converted shares of Series B Stock
at a time required by Section 7, at such time and thereafter until all
conversion obligations provided in Section 7 that have come due shall have been
satisfied, the Company shall not: (A) declare or pay dividends, or make any
other distributions, on any shares of Junior Stock, or (B) declare or pay
dividends, or make any other distributions, on any shares of Parity Stock,
except dividends or distributions paid ratably on the Series B Stock and all
Parity Stock on which dividends are payable or in arrears, in proportion to the
total amounts to which the holders of all shares of the Series B Stock and such
Parity Stock are then entitled.
(b) Whenever the Company shall not have converted shares of Series B Stock
at a time required by Section 7, at such time and thereafter until all
conversion obligations provided in Section 7 that have come due shall have been
satisfied, the Company shall not redeem, purchase or otherwise acquire for
consideration, or require the conversion of, any shares of Junior Stock or
Parity Stock.
(c) The Company shall not permit any Subsidiary of the Company, or cause
any other Person, to purchase or otherwise acquire for consideration any shares
of capital stock of the Company unless the Company could, pursuant to Section
4(b), purchase such shares at such time and in such manner.
SECTION 5. REACQUIRED SHARES.
Any shares of Series B Stock converted, exchanged, redeemed, purchased or
otherwise acquired by the Company or any of its Subsidiaries or other Affiliates
in any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares of Series B Stock shall upon their
cancellation become authorized but unissued shares of Series B Stock, no par
value, of the Company and, upon the filing of an appropriate certificate with
the Secretary of State of the State of Connecticut, may be reissued as part of
another series of preferred stock, no par value per share, of the Company
subject to the conditions or restrictions on issuance set forth herein, but in
any event may not be reissued as shares of Series B Stock or
2
<PAGE> 3
other Parity Stock unless all of the shares of Series B Stock issued on the
Issue Date shall have already been redeemed, converted or exchanged.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) If the Company shall commence a voluntary case under the United States
bankruptcy laws or any applicable bankruptcy, insolvency or similar law of any
other country, or consent to the entry of an order for relief in an involuntary
case under any such law or to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of the
Company or of any substantial part of its property, or make an assignment for
the benefit of its creditors, or admit in writing its inability to pay its debts
generally as they become due, or if a decree or order for relief in respect of
the Company shall be entered by a court having jurisdiction in the premises in
an involuntary case under the United States bankruptcy laws or any applicable
bankruptcy, insolvency or similar law of any other country, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and on account of any
such event the Company shall liquidate, dissolve or wind up, or if the Company
shall otherwise liquidate, dissolve or wind up, no distribution shall be made
(i) to the holders of shares of Junior Stock unless, prior thereto, the holders
of shares of Series B Stock, subject to Section 7, shall have received the
Liquidation Preference, plus all accrued and unpaid dividends, to the date of
distribution, with respect to each share, or (ii) to the holders of shares of
Parity Stock, except distributions made ratably on the Series B Stock and all
other Parity Stock in proportion to the total amounts to which the holders of
all shares of the Series B Stock and other Parity Stock are entitled upon such
liquidation, dissolution or winding up.
(b) Neither the consolidation or merger of the Company with or into any
other Person nor the sale or other distribution to another Person of all or
substantially all the assets, property or business of the Company shall be
deemed to be a liquidation, dissolution or winding up of the Company for
purposes of this Section 6.
SECTION 7. CONVERSION.
(a) Any holder of Series B Stock shall have the right, at its option, at
any time and from time to time, to convert, subject to the terms and provisions
of this Section 7, any or all of such holder's shares of Series B Stock into
such number of fully paid and non-assessable shares of Common Stock as is equal,
subject to Section 7(g), to the product of the number of shares of Series B
Stock being so converted multiplied by the quotient of (i) Liquidation
Preference divided by the (ii) Conversion Price (as defined below) then in
effect. The "Conversion Price" shall be $4.40 per share, subject to adjustment
as set forth in Section 7(d). Such conversion right shall be exercised by the
surrender of the shares of Series B Stock to be converted (the "Shares") to the
Company at any time during usual business hours at its principal place of
business to be maintained by it, accompanied by written notice that the holder
elects to convert such Shares and specifying the name or names (with address) in
which a certificate or certificates for shares of Common Stock are to be issued
and (if so required by the Company) by a written instrument or instruments of
transfer in form reasonably satisfactory to the Company duly executed by the
holder or its duly authorized legal representative and transfer tax stamps or
funds therefor, if required pursuant to Section 7(k).
All Shares surrendered for conversion shall be delivered to the Company for
cancellation and canceled by it and no Shares shall be issued in lieu thereof.
(b) As promptly as practicable after the surrender, as herein provided, of
any Shares for conversion pursuant to Section 7(a), the Company shall deliver to
or upon the written order of the holder of the Shares so surrendered a
certificate or certificates representing the number of fully paid and
non-assessable shares of Common Stock into which such Shares may be or have been
converted in accordance with the provisions of this Section 7. Subject to the
following provisions of this Section 7, such conversion shall be deemed to have
been made immediately prior to the close of business on the date that such
Shares shall have been surrendered in satisfactory form for conversion, and the
Person or Persons entitled to receive the Common Stock deliverable upon
conversion of such Shares shall be treated for all purposes as having become the
record holder or holders of such Common Stock at such appropriate time, and such
conversion shall be at the Conversion Price in effect at such time; provided,
however, that no surrender shall be effective to constitute
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the Person or Persons entitled to receive the Common Stock deliverable upon such
conversion as the record holder or holders of such Common Stock while the share
transfer books of the Company shall be closed (but not for any period in excess
of five days), but such surrender shall be effective to constitute the Person or
Persons entitled to receive such Common Stock as the record holder or holders
thereof for all purposes immediately prior to the close of business on the next
preceding day on which such share transfer books are open, and such conversion
shall be deemed to have been made at, and shall be made at the Conversion Price
in effect at, such time on such next preceding day. If the last day for the
exercise of the conversion right shall not be a Business Day, then such
conversion right may be exercised on the next preceding Business Day.
(c) Upon (i) the third anniversary of the Issue Date, each outstanding
share of Series B Stock, or (ii) if earlier, the transfer of any shares of
Series B Stock by an Initial Holder to any Person other than an Affiliate of
such Initial Holder, such shares of Series B Stock, shall automatically, with no
further action required to be taken by the Company or the holder thereof, be
converted into such number of fully paid and non-assessable shares of Common
Stock as is equal to the product of the number of shares of Series B Stock being
so converted, multiplied by the quotient of (i) the Liquidation Preference
divided by (ii) the Conversion Price then in effect. Immediately thereafter,
each holder of Series B Stock subject to such conversion, shall be deemed to be
the holder of record of the Common Stock issuable upon conversion of such
holder's Series B Stock, notwithstanding that the share register of the Company
shall then be closed or that certificates representing such Common Stock shall
not then be actually delivered to such Person. Upon notice from the Company,
each holder of Series B Stock so converted shall promptly surrender to the
Company, at any where the Company shall maintain a transfer agent for its Series
B Stock and Common Stock, certificates representing the shares so converted,
duly endorsed in blank or accompanied by proper instruments of transfer. On the
date of such automatic conversion, all rights with respect to the shares of
Series B Stock so converted, including the rights, if any, to receive notices
and vote, will terminate, except only the rights of holders thereof to (A)
receive certificates for the number of shares of Common Stock into which such
shares of Series B Stock have been converted, (B) be paid any declared but
unpaid dividends thereon and (C) exercise the rights to which they are entitled
as holders of Common Stock.
(d) The Conversion Price shall be subject to adjustment as follows:
(i) In case the Company shall at any time or from time to time (A) pay
a dividend or make any other distribution (other than a dividend or
distribution paid or made to holders of shares of Series B Stock in the
manner provided in Section 2) on the outstanding shares of any of its
Common Stock in capital stock (which, for purposes of this Section 7(d)
shall include, without limitation, any dividends or distributions in the
form of options, warrants or other rights to acquire capital stock) of the
Company or any Subsidiary or Affiliate thereof, (B) subdivide the
outstanding shares of any of its Common Stock into a larger number of
shares, (C) combine the outstanding shares of any of its Common Stock into
a smaller number of shares, or (D) issue any shares of its capital stock in
a reclassification of any of its Common Stock, then, and in each such case,
the Conversion Price in effect immediately prior to such event shall be
adjusted (and any other appropriate actions shall be taken by the Company)
so that the holder of any share of Series B Stock thereafter surrendered
for conversion shall be entitled to receive the number of shares of Common
Stock or other securities of the Company that such holder would have owned
or would have been entitled to receive upon or by reason of any of the
events described above, had such share of Series B Stock been converted
immediately prior to the occurrence of such event. An adjustment made
pursuant to this Section 7(d)(i) shall become effective retroactively (A)
in the case of any such dividend or distribution, to a date immediately
following the close of business on the record date for the determination of
holders of any of its Common Stock entitled to receive such dividend or
distribution or (B) in the case of any such subdivision, combination or
reclassification, to the close of business on the day upon which such
corporate action becomes effective.
(ii) In case the Company shall at any time or from time to time
distribute to any holder of shares of its Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the resulting or surviving corporation and the Common Stock is
not changed or exchanged) cash, evidences of indebtedness of the Company or
another issuer, securities of the Company or another issuer or other assets
(excluding (A) dividends or distributions paid or made to holders of
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shares of Series B Stock in the manner provided in Section 2 and (B)
dividends payable in shares of Common Stock for which adjustment is made
under Section 7(d)(i)) or rights or warrants to subscribe for or purchase
securities of the Company (excluding those in respect of which adjustments
in the Conversion Price is made pursuant to Section 7(d)(i), then, and in
each such case, the Conversion Price then in effect shall be adjusted by
dividing the Conversion Price in effect immediately prior to the date of
such distribution by a fraction (x) the numerator of which shall be the
Current Market Price of the Common Stock on the record date referred to
below and (y) the denominator of which shall be such Current Market Price
of the Common Stock less the then fair market value (as determined in good
faith by the Board of Directors of the Company, in the case of any such
distribution other than a distribution of cash, based on an opinion of a
nationally recognized investment banking firm unaffiliated with either the
Company or the holders of the Series B Stock, chosen by the Company (which
shall bear the expense thereof) and reasonably acceptable to a majority of
the holders of the Series B Stock, a certified resolution with respect to
which shall be mailed to the holders of the Series B Stock) of the portion
of the cash, evidences of indebtedness, securities or other assets so
distributed or of such subscription rights or warrants applicable to one
share of Common Stock (but such denominator not to be less than one);
provided, however, that no adjustment shall be made with respect to any
distribution of rights to purchase securities of the Company if the holder
of shares of Series B Stock would otherwise be entitled to receive such
rights upon conversion at any time of shares of Series B Stock into Common
Stock unless such rights are subsequently redeemed by the Company, in which
case such redemption shall be treated for purposes of this Section 7(d)(ii)
as a dividend on the Common Stock. Such adjustment shall be made whenever
any such distribution is made and shall become effective retroactively to a
date immediately following the close of business on the record date for the
determination of stockholders entitled to receive such distribution.
(iii) In case the Company at any time or from time to time shall take
any action affecting its Common Stock which could have a dilutive effect on
the number of shares of Common Stock that may be issued upon conversion of
the Series B Stock, other than an action described in any of Section
7(d)(i), 7(d)(ii) or Section 7(h), or an action which would have the same
dilutive effect on the Series B Stock as on the Common Stock, then, and in
each such case, the Conversion Price shall be adjusted in such manner and
at such time as the Board of Directors of the Company in good faith
determines to be equitable in the circumstances (such determination to be
evidenced in a resolution, a certified copy of which shall be mailed to the
holders of the Series B Stock).
(iv) In the event that any convertible or exchangeable securities,
options, warrants or other rights, the issuance of which shall have given
rise to an adjustment pursuant to this Section 7(d) ("Convertible
Securities"), shall have expired or terminated without the exercise thereof
and/or if there shall have been an increase, with the passage of time or
otherwise, in the price payable upon the exercise or conversion thereof or
a decrease in the number of shares of Common Stock issuable upon the
exercise or conversion thereof, then the Conversion Price hereunder shall
be readjusted (but to no greater extent then originally adjusted) on the
basis of (A) eliminating from the computation of the Conversion Price as of
the time of the issuance of the Convertible Securities any shares of Common
Stock corresponding to such Convertible Securities as shall have expired or
terminated, (B) treating the additional shares of Common Stock, if any,
actually issued or issuable pursuant to the previous exercise of such
Convertible Securities as having been issued for the consideration actually
received and receivable therefor and (C) treating any of such Convertible
Securities which remain outstanding as being subject to exercise or
conversion on the basis of such exercise or conversion price as shall be in
effect at such time.
(e) If the Company shall take a record of the holders of any of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to stockholders
thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the Conversion Price then in
effect shall be required by reason of the taking of such record.
(f) Upon any increase or decrease in the Conversion Price, then, and in
each such case, the Company promptly shall deliver to each registered holder of
Series B Stock at least ten Business Days prior to effecting any of the
foregoing transactions a certificate, signed by the President or a
Vice-President and by the
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Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
of the Company, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated and specifying
the increased or decreased Conversion Price then in effect following such
adjustment.
(g) No fractional shares or scrip representing fractional shares shall be
issued upon the conversion of any shares of Series B Stock. If more than one
share of Series B Stock shall be surrendered for conversion at one time by the
same holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of the shares of
Series B Stock so surrendered. If the conversion of any share or shares of
Series B Stock results in a fraction, an amount equal to such fraction
multiplied by the Current Market Price of the Common Stock on the Business Day
preceding the day of conversion shall be paid to such holder in cash by the
Company.
(h) In case of any capital reorganization or reclassification or other
change of outstanding shares of Common Stock (other than a change in par value,
or from par value to no par value, or from no par value to par value), or in
case of any consolidation or merger of the Company with or into another Person
(other than a consolidation or merger in which the Company is the resulting or
surviving Person and which does not result in any reclassification or change of
outstanding Common Stock), or in case of any sale or other disposition to
another Person of all or substantially all of the assets of the Company (any of
the foregoing, a "Transaction"), the Company, or such successor or purchasing
Person, as the case may be, shall execute and deliver to each holder of Series B
Stock at least ten Business Days prior to effecting any of the foregoing
Transactions a certificate that the holder of each share of Series B Stock then
outstanding shall have the right thereafter to convert such share of Series B
Stock into the kind and amount of shares of stock or other securities (of the
Company or another issuer) or property or cash receivable upon such Transaction
by a holder of the number of shares of Common Stock into which such share of
Series B Stock could have been converted immediately prior to such Transaction.
Such certificate shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
7. If, in the case of any such Transaction, the stock, other securities, cash or
property receivable thereupon by a holder of Common Stock includes shares of
stock or other securities of a Person other than the successor or purchasing
Person and other than the Company, which controls or is controlled by the
successor or purchasing Person or which, in connection with such Transaction,
issues stock, securities, other property or cash to holders of Common Stock,
then such certificate also shall be executed by such Person, and such Person
shall, in such certificate, specifically acknowledge the obligations of such
successor or purchasing Person and acknowledge its obligations to issue such
stock, securities, other property or cash to the holders of Series B Stock upon
conversion of the shares of Series B Stock as provided above. The provisions of
this Section 7(h) and any equivalent thereof in any such certificate similarly
shall apply to successive Transactions.
(i) In case at any time or from time to time:
(A) the Company shall declare a dividend (or any other distribution)
on its Common Stock; (B) the Company shall authorize the granting to the
holders of its Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or of any other rights or
warrants;
(C) there shall be any reclassification of the Common Stock; or
(D) there shall be an Extraordinary Event; then the Company shall mail
to each holder of shares of Series B Stock at such holder's address as it
appears on the transfer books of the Company, as promptly as possible but
in any event at least ten days prior to the applicable date hereinafter
specified, a notice stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution or rights or warrants or, if
a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution or rights are
to be determined, or (y) the date on which such reclassification or
Extraordinary Event is expected to become effective; provided that in the
case of any event to which Section 7(h) applies, the Company shall give at
least ten days' prior written notice as aforesaid. Such notice also shall
specify the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their Common Stock for shares of stock
or other securities or property or cash deliverable upon such
reclassification or Extraordinary Event.
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(j) The Company shall at all times reserve and keep available for issuance
upon the conversion of the Series B Stock, such number of its authorized but
unissued shares of Common Stock as will from time to time be sufficient to
permit the conversion of all outstanding shares of Series B Stock, and shall
take all action required to increase the authorized number of shares of Common
Stock if at any time there shall be insufficient authorized but unissued shares
of Common Stock to permit such reservation or to permit the conversion of all
outstanding shares of Series B Stock.
(k) The issuance or delivery of certificates for Common Stock upon the
conversion of shares of Series B Stock shall be made without charge to the
converting holder of shares of Series B Stock for such certificates or for any
tax in respect of the issuance or delivery of such certificates or the
securities represented thereby, and such certificates shall be issued or
delivered in the respective names of, or in such names as may be directed by,
the holders of the shares of Series B Stock converted; provided, however, that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate in
a name other than that of the holder of the shares of Series B Stock converted,
and the Company shall not be required to issue or deliver such certificate
unless or until the Person or Persons requesting the issuance or delivery
thereof shall have paid to the Company the amount of such tax or shall have
established to the reasonable satisfaction of the Company that such tax has been
paid.
SECTION 8. CERTAIN REMEDIES.
Any registered holder of Series B Stock shall be entitled to an injunction
or injunctions to prevent breaches of the provisions of this Certificate of
Amendment and to enforce specifically the terms and provisions of this
Certificate of Amendment in any court of the United States or any state thereof
having jurisdiction, this being in addition to any other remedy to which such
holder may be entitled at law or equity.
SECTION 9. DEFINITIONS.
For the purposes of this Certificate of Designations, Rights and
Preferences, the following terms shall have the meanings indicated:
"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which commercial banks in the City of New York are authorized or required
by law or executive order to close.
"Common Stock" of the Company shall mean the Common Stock, no par value,
and any other common stock of the Company issued from time to time.
"Conversion Price" shall have the meaning given it in Section 7 hereof.
"Current Market Price" per share shall mean, on any date specified herein
for the determination thereof, (a) the average daily Market Price of the Common
Stock for those days during the period of 30 days, ending on such date, on which
the national securities exchanges were open for trading, and (b) if the Common
Stock is not then listed or admitted to trading on any national securities
exchange or quoted in the over-counter market, the Market Price on such date.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Securities and Exchange Commission
thereunder.
"Extraordinary Event" means (i) the voluntary or involuntary liquidation,
dissolution or winding up of the Company, (ii) the voluntary sale, conveyance,
exchange or transfer to another Person of all or substantially all of the assets
of the Company and its Subsidiaries or (iii) the merger or consolidation of the
Company with one or more other Persons.
"Fair Market Value" shall mean the amount which a willing buyer, under no
compulsion to buy, would pay a willing seller, under no compulsion to sell, in
an arm's-length transaction.
"Initial Holder" shall mean any Person to whom shares of Series B Stock are
initially issued.
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"Issue Date" shall mean the first date on which shares of Series B Stock
are issued.
"Junior Stock" shall mean any capital stock of the Company ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series B Stock.
"Liquidation Preference" with respect to a share of Series B Stock shall
mean $4.40.
"Market Price" shall mean, per share of Common Stock, on any date specified
herein: (a) the closing price per share of the Common Stock on such date
published in such date is published in The Wall Street Journal, the average of
the closing bid and asked prices on such date, as officially reported on the
principal national securities exchange on which the Common Stock is then listed
or admitted to trading; or (b) if the Common Stock is not then listed or
admitted to trading on any national securities exchange but is designated as a
national market system security by the NASD, the last trading price of the
Common Stock on such date; or (c) if there shall have been no trading on such
date or if the Common Stock is not so designated, the average of the reported
closing bid and asked prices of the Common Stock, on such date as shown by
NASDAQ and reported by any member firm of the New York Stock Exchange selected
by the Company; or (d) if none of (a), (b) or (c) is applicable, the Fair Market
Value per share determined in good faith by the Board of Directors of the
Company based on an opinion of a nationally recognized investment banking firm
unaffiliated with either the Company or the holders of the Series B Stock,
chosen by the Company (who shall bear the expense thereof) and acceptable to the
holders of at least a majority in interest of the Series B Stock.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ" shall mean the National Market System of the National Association
of Securities Dealers, Inc. Automated Quotations System.
"Parity Stock" shall mean any capital stock of the Company, including the
Series B Stock and the Series A Stock, ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series B
Stock.
"Person" shall mean any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.
"Senior Stock" shall mean any capital stock of the Company ranking senior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series B Stock.
"Subsidiary" of any Person shall mean any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity
interest, or rights to profits, is owned, directly or indirectly, by such
Person.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by , its , this day of , 1999.
E-SYNC NETWORKS, INC.
By:
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EXHIBIT 5.1
December 16, 1999
E-SYNC NETWORKS, INC.
35 Nutmeg Drive
Trumbull, Connecticut 06611
RE: REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have acted as counsel to E-Sync Networks, Inc., a Delaware corporation,
successor by merger to Wiltek, Inc. (the "Company"), in connection with the
preparation and filing with the Securities and Exchange Commission of a
registration statement on Form S-8 (the "Registration Statement") of the
Company, covering (i) 393,000 shares of the Common Stock, $.01 par value, of the
Company, to be issued pursuant to the Company's 1994 Employees' Stock Option
Plan, as amended (the "1994 Plan"), and (ii) 750,000 shares of Common Stock to
be issued pursuant to the Company's 1999 Long-Term Incentive Plan (collectively
referred to with the 1994 Plan as the "Plans").
In rendering the opinion set forth herein, we have examined executed
copies, telecopies or photocopies of: (i) the Registration Statement and the
Plans; (ii) the certificate of incorporation of the Company, as amended, the
By-laws of the Company, as amended, and excerpts from the minute books of the
Company; and (iii) such other records, documents, certificates and other
instruments which in our judgment are necessary or appropriate as a basis for
the opinion expressed below. In our examination of such documents we have
assumed the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies, and the authenticity of the originals of such copies. As
to any facts material to this opinion which we did not independently establish
or verify, we have relied upon statements and representations of officers and
other representatives of the Company.
Based upon the foregoing, and in reliance thereon, and subject to the
qualifications, assumptions and exceptions heretofore and hereinafter set forth,
we are of the opinion that, upon the issuance of the shares of Common Stock in
accordance with the Plans (and in accordance with the terms of any awards and
agreements which are issued or entered into pursuant to the terms and conditions
of the Plans) and as contemplated by the Registration Statement, such shares
will be validly issued, fully paid and non-assessable.
We do not express, or purport to express, any opinion with respect to the
laws of any jurisdiction other than the General Corporation Law of the State of
Delaware and the federal securities laws of the United States of America.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and further consent to the use of our name wherever
appearing in the Registration Statement. In giving this consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder by the Securities and Exchange Commission.
This opinion is given as of the date hereof and we assume no obligation to
update or supplement this opinion to reflect any facts or circumstances which
may hereafter occur or come to our attention or any changes in law which may
hereafter occur.
Very truly yours,
/s/ FINN DIXON & HERLING LLP
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EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated December 11, 1998, accompanying the
consolidated financial statements included in the Annual Report of Wiltek, Inc.
on Form 10-KSB, as amended, for the year ended October 31, 1998, which are
incorporated by reference in this Registration Statement. We consent to the
incorporation by reference in this Registration Statement of the aforementioned
report.
/s/ GRANT THORNTON LLP
New York, New York
December 16, 1999
