<PAGE>
As filed with the Securities and Exchange Commission on December 6, 1999
Registration No.333-_____________
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
________
KANA COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0435679
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
740 Bay Road
Redwood City, California 94063
(Address of principal executive offices) (Zip Code)
________
CONNECTIFY, INC. 1998 STOCK PLAN
(Full title of the Plan)
________
Michael J. McCloskey
Chief Executive Officer
Kana Communications, Inc.
740 Bay Road
Redwood City, California 94063
(Name and address of agent for service)
(650) 298-9282
(Telephone number, including area code, of agent for service)
________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=======================================================================================================================
Proposed
Title of Maximum Proposed
Securities Amount Offering Maximum Amount of
to be to be Price Aggregate Registration
Registered Registered(1) per Share(2) Offering Price Fee
---------- ------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Connectify, Inc. 1998 Stock Plan
- --------------------------------
Common Stock, $0.001 par value 31,085 shares $0.28 $8,703.80 $2.30
=======================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
the Registrant's Common Stock which become issuable under the
Connectify, Inc. 1998 Stock Plan with respect to the securities
registered hereunder by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the
Registrant's receipt of consideration which results in an increase in
the number of the Registrant's outstanding shares of Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the weighted average
exercise price of the outstanding options.
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference
---------------------------------------
Kana Communications, Inc. (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "Commission"):
(a) The Registrant's Registration Statement No. 333-82587 on Form S-1
filed with the Commission on July 9, 1999, as amended on Forms S-1/A
filed with the Commission on August 16, 1999, August 24, 1999,
September 2, 1999 and September 21, 1999.
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1999, filed with the Commission on November 15,
1999.
(c) The Registrant's prospectus filed with the Commission on September 22,
1999, pursuant to Rule 424(b) promulgated under the Securities Act of
1933, as amended (the "1933 Act"), in connection with the Registrant's
Registration Statement No. 333-82587, in which there is set forth the
audited financial statements for the Registrant's fiscal year ended
December 31, 1998.
(d) The Registrant's Registration Statement on Form 8-A12G filed with the
Commission on August 27, 1999, including any amendments or reports
filed for the purpose of updating such description, in which there is
described the terms, rights and provisions applicable to the
Registrant's Common Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), after the date of this Registration Statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which de-registers all securities
then remaining unsold shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any subsequently filed document which also is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement.
Item 4. Description of Securities
-------------------------
Not Applicable.
Item 5 Interests of Named Experts and Counsel
--------------------------------------
Not Applicable.
Item 6. Indemnification of Directors and Officers
-----------------------------------------
Section 145 of the Delaware General Corporation Law authorizes a
court to award or a corporation's board of directors to grant indemnification to
directors and officers in terms sufficiently broad to permit this
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the 1933 Act. Article VII,
Section 6 of the Registrant's Bylaws provides for mandatory indemnification of
its directors and executive officers and permissible indemnification of
employees and other agents to the maximum extent permitted by the Delaware
General Corporation Law. The Registrant's Certificate of Incorporation provides
that, subject to Delaware law, its directors will not be personally liable for
monetary damages for breach of the directors' fiduciary duty as directors to the
Registrant and its stockholders. This provision in the Certificate of
Incorporation does not eliminate the directors' fiduciary duty, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Delaware
II-1
<PAGE>
law. In addition, each director will continue to be subject to liability for
breach of the director's duty of loyalty to the Registrant or its stockholders,
for acts or omissions not in good faith or involving intentional misconduct, for
knowing violations of law, for actions leading to improper personal benefit to
the director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws or state or federal environmental laws. The Registrant has
entered into indemnification agreements with its officers and directors, a form
of which has been filed with the Commission as an Exhibit to the Registrant's
Registration Statement on Form S-1 (No. 333-82587), as amended (the
"Indemnification Agreements"). The Indemnification Agreements provide the
Registrant's executive officers and directors with further indemnification to
the maximum extent permitted by the Delaware General Corporation Law. Reference
is also made to Section 8 of the Underwriting Agreement contained in Exhibit 1.1
of the Registrant's Registration Statement on Form S-1 (No. 333-82587), as
amended, indemnifying officers and directors of the Registrant against certain
liabilities, and Section 1.10 of the Third Amended and Restated Investors'
Rights Agreement contained in Exhibit 4.2 of the Registrant's Registration
Statement on Form S-1 (No. 333-82587), as amended, indemnifying certain of the
Registrant's stockholders, including controlling stockholders, against certain
liabilities.
Item 7. Exemption from Registration Claimed
-----------------------------------
Not Applicable.
Item 8. Exhibits
--------
Exhibit Number Exhibit
- -------------- -------
4 Instruments Defining the Rights of Stockholders. Reference
is made to Registrant's Registration Statement on Form
8-A, together with any amendments and exhibits thereto,
which are incorporated herein by reference pursuant to
Item 3(c).
5.1 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of KPMG LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.1.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Connectify, Inc. 1998 Stock Plan.
99.2 Connectify, Inc. 1998 Stock Plan Form of Incentive Stock
Option Agreement.
99.3 Connectify, Inc. 1998 Stock Plan Form of Nonstatutory
Stock Option Agreement.
99.4 Form of Option Assumption Agreement.
Item 9. Undertakings
------------
A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement: (i) to include any prospectus required
by Section 10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts
or events arising after the effective date of this Registration Statement (or
the most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 Act each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and (3) to remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the Kana
Communications, Inc. 1999 Stock Incentive Plan or 1999 Employee Stock Purchase
Plan.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this Registration Statement shall be deemed to be
a new
II-2
<PAGE>
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnification provisions summarized in Item 6 or
otherwise, the Registrant has been advised that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8, and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Redwood City, State of California on
this 3rd day of December, 1999.
Kana Communications, Inc.
By: /s/ Michael J. McCloskey
--------------------------------
Michael J. McCloskey
Chief Executive Officer
POWER OF ATTORNEY
- -----------------
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Mark S. Gainey and Joseph D. McCarthy, and each
of them, as such person's true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for such person and in such
person's name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to file same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as such person might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, or their or his or her substitutes, may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Michael J. McCloskey Chief Executive Officer and December 3, 1999
- ----------------------------------
Michael J. McCloskey Director (Principal Executive
Officer)
/s/ Joseph D. McCarthy Vice President, Finance and December 3, 1999
- ----------------------------------
Joseph D. McCarthy Operations (Principal Financial
and Accounting Officer)
/s/ Mark S. Gainey President and Chairman of December 3, 1999
- ----------------------------------
Mark S. Gainey the Board of Directors
/s/ David M. Beirne Director December 3, 1999
- ----------------------------------
David M. Beirne
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Robert W. Frick Director December 3, 1999
- ----------------------------------
Robert W. Frick
/s/ Eric A. Hahn Director December 3, 1999
- ----------------------------------
Eric A. Hahn
/s/ Charles A. Holloway Director December 3, 1999
- ----------------------------------
Dr. Charles A. Holloway
___________________________ Director
Steven T. Jurvetson
___________________________ Director
Ariel Poler
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
Exhibit Number Exhibit
- -------------- -------
4 Instruments Defining the Rights of Stockholders.
Reference is made to Registrant's Registration
Statement on Form 8-A, together with any amendments
and exhibits thereto, which are incorporated herein
by reference pursuant to Item 3(c).
5.1 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of KPMG LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.1.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Connectify, Inc. 1998 Stock Plan.
99.2 Connectify, Inc. 1998 Stock Plan Form of Incentive Stock
Option Agreement.
99.3 Connectify, Inc. 1998 Stock Plan Form of Nonstatutory Stock
Option Agreement.
99.4 Form of Option Assumption Agreement.
<PAGE>
EXHIBIT 5.1
OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP
December 3, 1999
Kana Communications, Inc.
740 Bay Road
Redwood City, California 9406387
Re: Kana Communications, Inc. - Registration Statement for
Offering of an Aggregate of 31,085 Shares of Common Stock
Dear Ladies and Gentlemen:
We have acted as counsel to Kana Communications, Inc., a Delaware
corporation (the "Company"), in connection with the registration on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended, of
31,085 shares of the Company's common stock (the "Shares") for
issuance under the Connectify, Inc. 1998 Stock Plan, as amended (the "Plan").
The Plan, together with the outstanding options under that plan, has been
assumed by the Company in connection with the Company's acquisition of
Connectify, Inc.
This opinion is being furnished in accordance with the
requirements of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the
corporate proceedings taken by the Company in connection with the assumption
of the Plan and the outstanding options thereunder. Based on such review, we
are of the opinion that if, as and when the Shares are issued and sold (and
the consideration therefor received) pursuant to the provisions of the stock
option agreements for the outstanding options under the Plan assumed by the
Company and in accordance with the Registration Statement, such Shares will be
duly authorized, legally issued, fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit 5.1 to
the Registration Statement.
This opinion letter is rendered as of the date first written
above and we disclaim any obligation to advise you of facts, circumstances,
events or developments which hereafter may be brought to our attention and which
may alter, affect or modify the opinion expressed herein. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company, the assumed Plan or the Shares issuable under such Plan.
Very truly yours,
/s/ BROBECK, PHLEGER, & HARRISON LLP
------------------------------------
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF KPMG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Kana Communications, Inc.
We consent to incorporation herein by reference of our report
dated August 13, 1999, except as to Note 8, which is as of September 20, 1999,
and our report dated June 25, 1999, except as to Note 7, which is as of
September 20, 1999, relating to the supplemental and historical consolidated
balance sheets, respectively, of Kana Communications, Inc. and subsidiaries as
of December 31, 1998 and 1997 and the related supplemental and historical
consolidated statements of operations and comprehensive loss, stockholders'
equity, and cash flows for each of the years then ended, which reports appear in
the Company's Form S-1 (333-82587) as filed with the Securities and Exchange
Commission on September 21, 1999.
/s/ KPMG LLP
KPMG LLP
Mountain View, California
December 3, 1999
<PAGE>
EXHIBIT 99.1
CONNECTIFY.COM, INC.
1998 STOCK PLAN
(Effective as of July 10, 1998)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. PURPOSE........................................................ 1
-------
SECTION 2. DEFINITIONS.................................................... 1
-----------
(a) "Board of Directors"........................................... 1
------------------
(b) "Code" ........................................................ 1
----
(c) "Committee".................................................... 1
---------
(d) "Company"...................................................... 1
-------
(e) "Disability"................................................... 2
----------
(f) "Employee"..................................................... 2
--------
(g) "Exercise Price"............................................... 2
--------------
(h) "Fair Market Value"............................................ 2
-----------------
(i) "ISO" ........................................................ 2
---
(j) "Nonstatutory Option".......................................... 2
-------------------
(k) "Offeree"...................................................... 2
-------
(l) "Option"....................................................... 2
------
(m) "Optionee"..................................................... 2
--------
(n) "Plan" ........................................................ 2
----
(o) "Purchase Price"............................................... 3
--------------
(p) "Service"...................................................... 3
-------
(q) "Share"........................................................ 3
-----
(r) "Stock"........................................................ 3
-----
(s) "Stock Option Agreement"....................................... 3
----------------------
(t) "Stock Purchase Agreement"..................................... 3
------------------------
(u) "Subsidiary"................................................... 3
----------
SECTION 3. ADMINISTRATION................................................. 3
--------------
(a) Committee Membership........................................... 3
--------------------
(b) Committee Procedures........................................... 3
--------------------
(c) Committee Responsibilities..................................... 4
--------------------------
(d) Financial Reports.............................................. 5
-----------------
SECTION 4. ELIGIBILITY.................................................... 6
-----------
(a) General Rule................................................... 6
------------
(b) Ten-Percent Stockholders....................................... 6
------------------------
(c) Attribution Rules.............................................. 6
-----------------
(d) Outstanding Stock.............................................. 6
-----------------
SECTION 5. STOCK SUBJECT TO PLAN.......................................... 7
---------------------
(a) Basic Limitation............................................... 7
----------------
(b) Additional Shares.............................................. 7
-----------------
SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES........................ 7
---------------------------------------
(a) Stock Purchase Agreement....................................... 7
------------------------
(b) Duration of Offers and Nontransferability of Rights............ 8
---------------------------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
(c) Purchase Price................................................ 8
--------------
(d) Withholding Taxes............................................. 8
-----------------
(e) Restrictions on Transfer of Shares............................ 8
----------------------------------
SECTION 7. TERMS AND CONDITIONS OF OPTIONS............................... 9
-------------------------------
(a) Stock Option Agreement........................................ 9
----------------------
(b) Number of Shares.............................................. 9
----------------
(c) Exercise Price................................................ 9
--------------
(d) Withholding Taxes............................................. 10
-----------------
(e) Exercisability................................................ 10
--------------
(f) Term.......................................................... 10
----
(g) Nontransferability............................................ 10
------------------
(h) Exercise of Options on Termination of Service................. 10
---------------------------------------------
(i) No Rights as a Stockholder.................................... 11
--------------------------
(j) Modification, Extension and Assumption of Options............. 11
-------------------------------------------------
(k) Restrictions on Transfer of Shares............................ 11
----------------------------------
SECTION 8. PAYMENT FOR SHARES............................................ 12
------------------
(a) General Rule.................................................. 12
------------
(b) Surrender of Stock............................................ 12
------------------
(c) Promissory Notes.............................................. 12
----------------
(d) Cashless Exercise............................................. 12
-----------------
SECTION 9. ADJUSTMENT OF SHARES.......................................... 13
--------------------
(a) General....................................................... 13
-------
(b) Reorganizations............................................... 13
---------------
(c) Reservation of Rights......................................... 13
---------------------
SECTION 10. LEGAL REQUIREMENTS............................................ 14
------------------
SECTION 11. NO EMPLOYMENT RIGHTS.......................................... 14
--------------------
SECTION 12. DURATION AND AMENDMENTS....................................... 14
-----------------------
(a) Term of the Plan.............................................. 14
----------------
(b) Right to Amend or Terminate the Plan.......................... 15
------------------------------------
(c) Effect of Amendment or Termination............................ 15
----------------------------------
SECTION 13. EXECUTION..................................................... 15
---------
</TABLE>
ii
<PAGE>
CONNECTIFY.COM, INC.
1998 STOCK PLAN
(Effective as of July 10, 1998)
SECTION 1. PURPOSE.
-------
The purpose of the Plan is to offer selected employees, directors,
advisors and consultants an opportunity to acquire a proprietary interest in the
success of the Company, or to increase such interest, to encourage such selected
persons to remain in the employ of the Company and to attract new employees with
outstanding qualifications. The Plan provides for the direct award or sale of
Shares and for the grant of Options to purchase Shares. Options granted under
the Plan may include Nonstatutory Options as well as incentive stock options
intended to qualify under section 422 of the Internal Revenue Code.
SECTION 2. DEFINITIONS.
-----------
(a) "Board of Directors" shall mean the Board of Directors of the
------------------
Company, as constituted from time to time.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
(c) "Committee" shall mean a committee consisting of members of the
---------
Board of Directors that is appointed by the Board of Directors. If no Committee
has been appointed, the entire Board of Directors shall constitute the
Committee. At such time as the officers and directors of the Company become
reporting persons with respect to the Securities Exchange Act of 1934, the
Committee shall have membership composition which enables the Plan to qualify
under Rule 16b-3 with regard to the grant of Options or other rights to acquire
Shares to persons who are subject to Section 16 of the Securities Exchange Act
of 1934.
(d) "Company" shall mean Connectify.com, Inc., a Delaware corporation.
-------
<PAGE>
(e) "Disability" shall means that an Optionee is unable to engage in any
----------
substantial gainful activity by reason of any medically determinable physical or
mental impairment.
(f) "Employee" shall mean (i) any individual who is a common-law
--------
employee of the Company or of a Subsidiary, (ii) a member of the Board of
Directors, or (iii) an advisor or consultant who performs services for the
Company or a Subsidiary. Service as a member of the Board of Directors or as an
advisor or consultant shall be considered employment for all purposes under the
Plan except the second sentence of Section 4(a).
(g) "Exercise Price" shall mean the amount for which one Share may be
--------------
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(h) "Fair Market Value" shall mean the fair market value of a Share, as
-----------------
determined by the Committee in good faith. Such determination shall be
conclusive and binding on all persons.
(i) "ISO" shall mean an employee incentive stock option described in
---
Code section 422(b).
(j) "Nonstatutory Option" shall mean an employee stock option that is
-------------------
not an ISO.
(k) "Offeree" shall mean an individual to whom the Committee has offered
-------
the right to acquire Shares (other than upon exercise of an Option).
(l) "Option" shall mean an ISO or Nonstatutory Option granted under the
------
Plan and entitling the holder to purchase Shares.
(m) "Optionee" shall mean an individual who holds an Option.
--------
(n) "Plan" shall mean this Connectify.com, Inc. 1998 Stock Plan.
----
2
<PAGE>
(o) "Purchase Price" shall mean the consideration for which one Share
--------------
may be acquired under the Plan (other than upon exercise of an Option), as
specified by the Committee.
(p) "Service" shall mean service as an Employee.
-------
(q) "Share" shall mean one share of Stock, as adjusted in accordance
-----
with Section 9 (if applicable).
(r) "Stock" shall mean the common stock of the Company.
-----
(s) "Stock Option Agreement" shall mean the agreement between the
----------------------
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.
(t) "Stock Purchase Agreement" shall mean the agreement between the
------------------------
Company and an Offeree who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.
(u) "Subsidiary" shall mean any corporation, of which the Company and/or
----------
one or more other Subsidiaries own not less than 50 percent of the total
combined voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.
SECTION 3. ADMINISTRATION.
--------------
(a) Committee Membership. The Plan shall be administered by the Committee,
--------------------
which shall consist of members of the Board of Directors. The members of the
Committee shall be appointed by the Board of Directors.
(b) Committee Procedures. The Board of Directors shall designate one of
--------------------
the members of the Committee as chairperson. The Committee may hold meetings at
such times and
3
<PAGE>
places as it shall determine. The acts of a majority of the Committee members
present at meetings at which a quorum exists, or acts reduced to or approved in
writing by all Committee members, shall be valid acts of the Committee.
(c) Committee Responsibilities. Subject to the provisions of the Plan,
--------------------------
the Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms relating
to the Plan;
(iii) To authorize any person to execute, on behalf of the Company,
any instrument required to carry out the purposes of the Plan;
(iv) To determine when Shares are to be awarded or offered for sale
and when Options are to be granted under the Plan;
(v) To select Offerees and Optionees;
(vi) To determine the number of Shares to be awarded or offered for
sale or to be made subject to each Option;
(vii) To prescribe the terms and conditions of each award or sale of
Shares, including (without limitation) the Purchase Price and vesting of
the award, and to specify the provisions of the Stock Purchase Agreement
relating to such award or sale;
(viii) To prescribe the terms and conditions of each Option, including
(without limitation) the Exercise Price and vesting of the Option, to
determine whether such Option is to be classified as an ISO or as a
Nonstatutory Option, and to specify the provisions of the Stock Option
Agreement relating to such Option;
4
<PAGE>
(ix) To amend any outstanding Stock Purchase or Stock Option
Agreement; provided, however, that the rights and obligations under any
Stock Purchase or Stock Option Agreement shall not be materially altered or
impaired adversely by any such amendment, except with the consent of the
Optionee or Offeree;
(x) To determine the disposition of an Option or other right to
acquire Shares in the event of an Optionee's or Offeree's divorce or
dissolution of marriage;
(xi) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan and any Stock Purchase or Stock Option Agreement;
and
(xii) To take any other actions deemed necessary or advisable for the
administration of the Plan.
All decisions, interpretations and other actions of the Committee
shall be final and binding on all Offerees, Optionees, and all persons deriving
their rights from an Offeree or Optionee. No member of the Committee shall be
liable for any action that he or she has taken or has failed to take in good
faith with respect to the Plan, any Option or any other right to acquire Shares
under the Plan.
(d) Financial Reports. To the extent required by applicable law, and not
-----------------
less often than annually, the Company shall furnish to Optionees and Offerees
Company summary financial information including a balance sheet regarding the
Company's financial condition and results of operations, unless such Optionees
or Offerees have duties with the Company that assure them access to equivalent
information. Such financial statements need not be audited.
5
<PAGE>
SECTION 4. ELIGIBILITY.
-----------
(a) General Rule. Only Employees shall be eligible for designation as
------------
Optionees or Offerees by the Committee. In addition, only individuals who are
employed as common-law employees by the Company or a Subsidiary shall be
eligible for the grant of ISOs.
(b) Ten-Percent Stockholders. An Employee who owns more than 10 percent
------------------------
of the total combined voting power of all classes of outstanding stock of the
Company or any of its Subsidiaries shall not be eligible for designation as an
Optionee or Offeree unless (i) the Exercise Price for an option is at least 110
percent of Fair Market Value on the date of grant, (ii) the Purchase Price for a
sale of Shares is at least 100% of Fair Market Value at the date of purchase,
and (ii) in the case of an ISO, such ISO by its terms is not exercisable after
the expiration of five years from the date of grant.
(c) Attribution Rules. For purposes of Subsection (b) above, in
-----------------
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or indirectly, by or for his brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its stockholders, partners or beneficiaries.
(d) Outstanding Stock. For purposes of Subsection (b) above, "outstanding
-----------------
stock" shall include all stock actually issued and outstanding immediately after
the grant. "Outstanding stock" shall not include shares authorized for issuance
under outstanding options held by the Employee or by any other person.
6
<PAGE>
SECTION 5. STOCK SUBJECT TO PLAN.
---------------------
(a) Basic Limitation. Shares offered under the Plan shall be authorized
----------------
but unissued Shares, or issued Shares that have been reacquired by the Company.
The aggregate number of Shares which may be issued under the Plan (upon exercise
of Options or other rights to acquire Shares) shall not exceed two million five
hundred thousand (2,500,000) Shares, subject to adjustment pursuant to Section
9. The number of Shares which are subject to Options or other rights to acquire
Shares outstanding at any time under the Plan shall not exceed the number of
Shares which then remain available for issuance under the Plan. During the term
of the Plan, the Company shall at all times reserve and keep available
sufficient Shares to satisfy the requirements of the Plan.
(b) Additional Shares. In the event that any outstanding Option or other
-----------------
right to acquire Shares for any reason expires or is canceled or otherwise
terminated, the Shares allocable to the unexercised portion of such Option or
other right shall again be available for the purposes of the Plan.
SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES.
---------------------------------------
(a) Stock Purchase Agreement. Each award or sale of Shares under the Plan
------------------------
(other than upon exercise of an Option) shall be evidenced by a Stock Purchase
Agreement between the Offeree and the Company. Such award or sale shall be
subject to all applicable terms and conditions of the Plan and may be subject to
any other terms and conditions which are not inconsistent with the Plan and
which the Committee deems appropriate for inclusion in a Stock Purchase
Agreement. The provisions of the various Stock Purchase Agreements entered into
under the Plan need not be identical.
7
<PAGE>
(b) Duration of Offers and Nontransferability of Rights. Any right to
---------------------------------------------------
acquire Shares under the Plan (other than an Option) shall automatically expire
if not exercised by the Offeree within the number of days specified by the
Committee and communicated to the Offeree by the Committee. Such right shall not
be transferable and shall be exercisable only by the Offeree to whom such right
was granted.
(c) Purchase Price. To the extent required by applicable law, the
--------------
Purchase Price of Shares to be offered under the Plan shall not be less than
eighty-five percent (85%) of the Fair Market Value of such Shares, except as
otherwise provided in Section 4(b). Subject to the preceding sentence, the
Purchase Price shall be determined by the Committee at its sole discretion. The
Purchase Price shall be payable in a form described in Section 8 or in the form
of services previously rendered to the Company.
(d) Withholding Taxes. As a condition to the purchase of Shares, the
-----------------
Offeree shall make such arrangements as the Committee may require for the
satisfaction of any federal, state or local withholding tax obligations that may
arise in connection with such purchase.
(e) Restrictions on Transfer of Shares. No Shares awarded or sold under
----------------------------------
the Plan may be sold or otherwise transferred or disposed of by the Offeree
during the one hundred eighty (180) day period following the effective date of a
registration statement covering securities of the Company filed under the
Securities Act of 1933. Subject to the preceding sentence, any Shares awarded or
sold under the Plan shall be subject to such special conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Purchase Agreement and shall apply in addition to any general restrictions
that may apply to all holders of Shares. To the extent
8
<PAGE>
required by applicable law, any service-based vesting conditions shall not be
less rapid than the schedule set forth in Section 7(e).
SECTION 7. TERMS AND CONDITIONS OF OPTIONS.
-------------------------------
(a) Stock Option Agreement. Each grant of an Option under the Plan shall
----------------------
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the number
----------------
of Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 9. The Stock Option Agreement shall also
specify whether the Option is an ISO or a Nonstatutory Option.
(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise
--------------
Price. The Exercise Price of an ISO shall not be less than one hundred percent
(100%) of the Fair Market Value of a Share on the date of grant, except as
otherwise provided in Section 4(b). The Exercise Price of a Nonstatutory Option
shall not be less than eighty-five percent (85%) of the Fair Market Value of a
Share on the date of grant, except as otherwise provided in Section 4(b).
Subject to the preceding two sentences, the Exercise Price under any Option
shall be determined by the Committee in its sole discretion. The Exercise Price
shall be payable in a form described in Section 8.
9
<PAGE>
(d) Withholding Taxes. As a condition to the exercise of an Option, the
-----------------
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such exercise. The Optionee shall also make
such arrangements as the Committee may require for the satisfaction of any
federal, state, local or foreign withholding tax obligations that may arise in
connection with the disposition of Shares acquired by exercising an Option.
(e) Exercisability. Each Stock Option Agreement shall specify the date
--------------
when all or any installment of the Option is to become exercisable. To the
extent required by applicable law, an Option shall become exercisable no less
rapidly than the rate of twenty percent (20%) per year for each of the first
five years from the date of grant. Subject to the preceding sentence, the
vesting of any Option shall be determined by the Committee in its sole
discretion.
(f) Term. The Stock Option Agreement shall specify the term of the Option.
----
The term shall not exceed ten (10) years from the date of grant, except as
otherwise provided in Section 4(b). Subject to the preceding sentence, the
Committee at its sole discretion shall determine when an Option is to expire.
(g) Nontransferability. No Option shall be transferable by the Optionee
------------------
other than by will or by the laws of descent and distribution. An Option may be
exercised during the lifetime of the Optionee only by him or by his guardian or
legal representative. No Option or interest therein may be transferred,
assigned, pledged or hypothecated by the Optionee during his lifetime, whether
by operation of law or otherwise, or be made subject to execution, attachment or
similar process.
(h) Exercise of Options on Termination of Service. Each Stock Option
---------------------------------------------
Agreement shall set forth the extent to which the Optionee shall have the right
to exercise the Option
10
<PAGE>
following termination of the Optionee's service with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
Notwithstanding the foregoing, to the extent required by applicable law, each
Option shall provide that the Optionee shall have the right to exercise the
vested portion of any Option held at termination for at least 30 days following
termination of service with the Company, and that the Optionee shall have the
right to exercise the Option for at least six months if the Optionee's service
terminates due to death or Disability.
(i) No Rights as a Stockholder. An Optionee, or a transferee of an
--------------------------
Optionee, shall have no rights as a stockholder with respect to any Shares
covered by an Option until the date of the issuance of a stock certificate for
such Shares.
(j) Modification, Extension and Assumption of Options. Within the
-------------------------------------------------
limitations of the Plan, the Committee may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another issuer) in return for the grant of new Options for the
same or a different number of Shares and at the same or a different Exercise
Price.
(k) Restrictions on Transfer of Shares. No Shares issued upon exercise of
----------------------------------
an Option may be sold or otherwise transferred or disposed of by the Optionee
during the one hundred eighty (180) day period following the effective date of a
registration statement covering securities of the Company filed under the
Securities Act of 1933. Subject to the preceding sentence, any Shares issued
upon exercise of an Option shall be subject to such rights of repurchase, rights
of first refusal and other transfer restrictions as the Committee may determine.
11
<PAGE>
Such restrictions shall be set forth in the applicable Stock Option Agreement
and shall apply in addition to any restrictions that may apply to holders of
Shares generally.
SECTION 8. PAYMENT FOR SHARES.
------------------
(a) General Rule. The entire Exercise Price of Shares issued under the
------------
Plan shall be payable in lawful money of the United States of America at the
time when such Shares are purchased, except as provided in Subsections (b), (c)
and (d) below.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
------------------
provides, payment may be made all or in part with Shares which have already been
owned by the Optionee or the Optionee's representative for any time period
specified by the Committee and which are surrendered to the Company in good form
for transfer. Such Shares shall be valued at their Fair Market Value on the date
when the new Shares are purchased under the Plan.
(c) Promissory Notes. To the extent that a Stock Option Agreement so
----------------
provides, payment may be made all or in part with a full recourse promissory
note executed by the Optionee. The interest rate and other terms and conditions
of such note shall be determined by the Committee. The Committee may require
that the Optionee pledge his or her Shares to the Company for the purpose of
securing the payment of such note. In no event shall the stock certificate(s)
representing such Shares be released to the Optionee until such note is paid in
full.
(d) Cashless Exercise. To the extent that a Stock Option Agreement so
-----------------
provides and a public market for the Shares exists, payment may be made all or
in part by delivery (on a form prescribed by the Committee) of an irrevocable
direction to a securities broker to sell Shares and to deliver all or part of
the sale proceeds to the Company in payment of the aggregate Exercise Price.
12
<PAGE>
SECTION 9. ADJUSTMENT OF SHARES.
(a) General. In the event of a subdivision of the outstanding Stock, a
-------
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock into a lesser
number of Shares, a recapitalization, a reclassification or a similar
occurrence, the Committee shall make appropriate adjustments in one or more of
(i) the number of Shares available for future grants of Options or other rights
to acquire Shares under Section 5, (ii) the number of Shares covered by each
outstanding Option or other right to acquire Shares or (iii) the Exercise Price
of each outstanding Option or the Purchase Price of each other right to acquire
Shares.
(b) Reorganizations. In the event that the Company is a party to a merger
---------------
or reorganization, outstanding Options or other rights to acquire Shares shall
be subject to the agreement of merger or reorganization.
(c) Reservation of Rights. Except as provided in this Section 9, an
---------------------
Optionee or Offeree shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any dividend,
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option, or the number or Purchase Price
of shares subject to any other right to acquire Shares. The grant of an Option
or other right to acquire Shares pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments,
13
<PAGE>
reclassifications, reorganizations or changes of its capital or business
structure, to merge or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.
SECTION 10. LEGAL REQUIREMENTS.
------------------
Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange on which the
Company's securities may then be listed, and the Company has obtained the
approval or favorable ruling from any governmental agency which the Company
determines is necessary or advisable.
SECTION 11. NO EMPLOYMENT RIGHTS.
--------------------
No provision of the Plan, nor any Option granted or other right to
acquire Shares awarded under the Plan, shall be construed to give any person any
right to become, to be treated as, or to remain an Employee. The Company and its
Subsidiaries reserve the right to terminate any person's Service at any time and
for any reason.
SECTION 12. DURATION AND AMENDMENTS.
-----------------------
(a) Term of the Plan. The Plan, as set forth herein, shall become
----------------
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's stockholders. In the event that the stockholders fail
to approve the Plan within twelve (12) months after its adoption by the Board of
Directors, any Option grants or other right to acquire Shares already made shall
be null and void, and no additional Option grants or other right to acquire
Shares shall be made after such date. The Plan shall terminate automatically ten
(10) years after its adoption
14
<PAGE>
by the Board of Directors and may be terminated on any earlier date pursuant to
Subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may
------------------------------------
amend the Plan at any time and from time to time. Rights and obligations under
any Option granted or other right to acquire Shares awarded before amendment of
the Plan shall not be materially altered, or impaired adversely, by such
amendment, except with consent of the Optionee or Offeree. An amendment of the
Plan shall be subject to the approval of the Company's stockholders only to the
extent required by applicable laws, regulations or rules.
(c) Effect of Amendment or Termination. No Shares shall be issued or sold
----------------------------------
under the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Share previously issued or Option previously
granted under the Plan.
SECTION 13. EXECUTION.
---------
To record the adoption of the Plan by the Board of Directors as
of July 10, 1998, the Company has caused its authorized officer to execute the
same.
CONNECTIFY.COM, INC.
By _________________________________
Title ______________________________
15
<PAGE>
EXHIBIT 99.2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED
PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF
THE COMPANY IS PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS ARE NOT
REQUIRED.
CONNECTIFY, INC.
1998 STOCK PLAN
INCENTIVE STOCK OPTION AGREEMENT
Monthly Vesting Over Four Years
One Year Cliff
Connectify, Inc., a Delaware corporation (the "Company"), hereby grants an
option to purchase shares of its Common Stock (the "Shares") to the optionee
named below. The terms and conditions of the option are set forth in this cover
sheet, in the attached Stock Option Agreement and in the Company's 1998 Stock
Plan (the "Plan").
Date of Option Grant:
Name of Optionee:
Optionee's Social Security Number: _____-____-_____
Number of Shares of Common Stock Covered by Option:
Exercise Price per Share: $___
Vesting Start Date: ________
By signing this cover sheet, Optionee agrees to all of the terms and
conditions described in the attached Stock Option Agreement and in the
Plan.
Optionee: ______________________________________________________________________
(Signature)
Company: _______________________________________________________________________
(Signature)
Title: ____________________________________________________________________
Attachment
- ----------
<PAGE>
CONNECTIFY, INC.
1998 STOCK PLAN
INCENTIVE STOCK OPTION AGREEMENT
Monthly Vesting Over Four Years
One Year Cliff
Incentive Stock Connectify, Inc. (the "Company") grants to Optionee
Option an option to purchase the number of Shares shown on
the cover sheet of this Agreement. This option is
subject to the terms and conditions of this Agreement
and the Plan. This option is intended to be an
incentive stock option under section 422 of the
Internal Revenue Code and will be interpreted
accordingly.
Optionee shall be deemed to be providing Services
to the Company for so long as Optionee renders
periodic services to the Company or one or more of
its parent or subsidiary corporations as an
employee or consultant.
Vesting and Right Beginning on the Vesting Start Date, Optionee's
of Repurchase right to exercise this option vests over a four (4)
year period in accordance with the vesting schedule
indicated below:
Portion of
Shares Vested
-------------
From the Vesting Start Date until None
12 months thereof
At the end of 12 months from the 25%
Vesting Start Date
For each additional full month of 1/48th
Optionee's Service to the Company
thereafter
On the fourth anniversary of the 100%
Vesting Start Date
Accelerated The vesting schedule set forth above will be
Vesting accelerated in accordance with the terms in this
section:
If Optionee's Service to the Company is terminated
as a result of death or Disability (as defined
below), Optionee shall acquire a vested interest in
an additional number of Shares equal to the lesser
----------
of: (i) six (6) months of vesting (3,750 Shares) or
--
(ii) all of the then remaining unvested Shares.
"Disability" shall be deemed to have occurred when the
Optionee's Service to the Company is terminated because
the Optionee is unable to engage in any substantial,
gainful activity on behalf of the
-2-
<PAGE>
Company by reason of any medically determinable
physical or mental impairment.
Term This option will expire in any event at the close of
business at Company headquarters on the day before the
10th anniversary of the Date of Option Grant, as shown
on the cover sheet. (This option will expire earlier
in the event Optionee's Service to the Company
terminates, as described below.)
Regular If Optionee's Service to the Company terminates for
Termination any reason except death or Disability, then this
option will expire at the close of business at Company
headquarters on the 30th day after Optionee's
termination date.
Death or In the event Optionee's Service to the Company
Disability terminates as a result of death or Disability (as
defined above), then this option will expire at the
close of business at Company headquarters on the date
six (6) months after Optionee's termination date.
During that 6-month period, Optionee's estate or heirs
may exercise the vested portion of this option.
Leaves of Absence For purposes of this option, Optionee's service shall
not terminate when Optionee takes a bona fide leave of
absence that was approved by the Company in writing,
if the terms of the leave provide for continued
service crediting, or when continued service crediting
is required by applicable law. However, for purposes
of determining whether this option is entitled to
treatment as an incentive stock option under section
422 of the Internal Revenue Code, Optionee's Service
will be deemed to have terminated 90 days after such
leave begins, unless Optionee's right to return to
active work is guaranteed by law or by a contract.
Optionee's Service terminates in any event when the
approved leave expires unless Optionee immediately
returns to active work.
The Company determines which leaves qualify for this
purpose, and when Optionee's Service terminates for
all purposes under the Plan.
Restrictions on The Company will not permit Optionee to exercise
Exercise this option if the issuance of Shares at that time
would violate any law or regulation.
Notice of Exercise In order to exercise this option, Optionee must notify
the Company by delivering a "Notice of Exercise"
attached hereto to the Company. Such Notice of
Exercise must specify the number of Shares Optionee
desires to purchase and the names in which such Shares
should be made (in Optionee's name only or in
Optionee's and his or her spouse's names as community
property or as joint tenants with right of
survivorship). Such Notice of Exercise shall be
effective upon receipt by the Company.
In the event Optionee's estate or an heir of Optionee
desires to exercise this option after Optionee's
death, such entity or individual must provide evidence
to the Company's satisfaction that it, he or she is
entitled to so
-3-
<PAGE>
exercise.
Periods of Any other provision of this Agreement
Nonexercisability notwithstanding, the Company shall have the right to
designate one or more periods of time, each of which
shall not exceed 180 days in length, during which this
option shall not be exercisable if the Company
determines (in its sole discretion) that such
limitation on exercise could in any way facilitate a
lessening of any restriction on transfer pursuant to
the Securities Act of 1933, as amended (the
"Securities Act") or any state securities laws with
respect to any issuance of securities by the Company,
facilitate the registration or qualification of any
securities by the Company under the Securities Act or
any state securities laws, or facilitate the
perfection of any exemption from the registration or
qualification requirements of the Securities Act or
any applicable state securities laws for the issuance
or transfer of any securities. Such limitation on
exercise shall not alter the vesting schedule set
forth in this Agreement other than to limit the
periods during which this option shall be exercisable.
Form of Payment A payment of the aggregate option exercise price for
the Shares being purchased must accompany a Notice of
Exercise. Payment may be made in one (or a
combination) of the following forms:
. A personal check, a cashier's check or a money
order.
. Common Shares which have already been owned by
Optionee for any time period specified by the
Board of Directors and which are surrendered to
the Company. The fair market value of the Shares,
determined as of the effective date of the option
exercise, will be applied to the option exercise
price.
. To the extent that a public market for the Shares
exists as determined by the Company, by delivery
(on a form prescribed by the Board of Directors)
of an irrevocable direction to a securities
broker to sell Shares and to deliver all or part
of the sale proceeds to the Company in payment of
the aggregate option exercise price.
Withholding Taxes Optionee will not be allowed to exercise this option
unless he or she makes acceptable arrangements to pay
any withholding or other taxes that may be due as a
result of the option exercise or the sale of Shares
acquired upon exercise of this option and the sale of
the Shares.
-4-
<PAGE>
Restrictions on By signing this Agreement, Optionee agrees not to
Resale sell any Shares at a time when applicable laws,
regulations or Company or underwriter trading policies
prohibit such a sale. In connection with any
underwritten public offering by the Company of its
equity securities pursuant to an effective
registration statement filed under the Securities Act,
including the Company's initial public offering,
Optionee agrees not to sell, make any short sale of,
loan, hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose or transfer for
value or agree to engage in any of the foregoing
transactions with respect to any Shares without the
prior written consent of the Company or its
underwriters, for such period of time after the
effective date of such registration statement as may
be requested by the Company or such underwriters.
In order to enforce the provisions of this paragraph,
the Company may impose stop-transfer instructions with
respect to the Shares until the end of the applicable
stand-off period.
Optionee represents and agrees that the Shares are
being acquired solely for Optionee's own account and
not as a nominee for any other party, or for
investment, and not with a view to the sale or
distribution thereof.
In the event that the sale of Shares under the Plan is
not registered under the Securities Act but an
exemption is available which requires an investment
representation or other representation, Optionee shall
represent and agree at the time of exercise that the
Shares being acquired upon exercising this option are
being acquired for investment, and not with a view to
the sale or distribution thereof, and shall make such
other representations as are deemed necessary or
appropriate by the Company and its counsel.
The Company's In the event that Optionee proposes to sell, pledge
Right of First or otherwise transfer to a third party any Shares
Refusal acquired under this Agreement, or any interest in
such Shares, the Company shall have the "Right of
First Refusal" with respect to all (and not less than
all) of such Shares. If Optionee desires to transfer
Shares acquired under this Agreement, Optionee must
give a written "Transfer Notice" to the Company
describing fully the proposed transfer, including the
number of Shares proposed to be transferred, the
proposed transfer price and the name and address of
the proposed transferee. The Transfer Notice shall be
signed both by Optionee and by the proposed new
transferee and must constitute a binding commitment of
both parties to the transfer of the Shares. The
Company shall have the right to purchase all, and not
less than all, of the Shares on the terms of the
proposal described in the Transfer Notice (subject,
however, to any change in such terms permitted in the
next paragraph) by delivery of a notice of exercise of
the Right of First Refusal within thirty (30) days
after the date when the Transfer Notice was received
by the Company.
-5-
<PAGE>
If the Company fails to exercise its Right of First
Refusal within thirty (30) days after the date when it
received the Transfer Notice, Optionee may, not later
than ninety (90) days following receipt of the
Transfer Notice by the Company, conclude a transfer of
the Shares subject to the Transfer Notice on the terms
and conditions described in the Transfer Notice. Any
proposed transfer on terms and conditions different
from those described in the Transfer Notice, as well
as any subsequent proposed transfer by Optionee, shall
again be subject to the Right of First Refusal and
shall require compliance with the procedure described
in the paragraph above. If the Company exercises its
Right of First Refusal, the parties shall consummate
the sale of the Shares on the terms set forth in the
Transfer Notice within sixty (60) days after the date
when the Company received the Transfer Notice (or
within such longer period as may have been specified
in the Transfer Notice); provided, however, that in
the event the Transfer Notice provided that payment
for the Shares was to be made in a form other than
lawful money paid at the time of transfer, the Company
shall have the option of paying for the Shares with
lawful money equal to the present value of the
consideration described in the Transfer Notice.
The Company's Right of First Refusal shall inure to
the benefit of its successors and assigns, shall be
freely assignable, in whole or in part, and shall be
binding upon any transferee of the Shares. The
Company's Right of First Refusal shall terminate in
the event that the Company's stock is listed on an
established stock exchange or is quoted regularly on
the Nasdaq Stock Market.
Transfer of Option Prior to Optionee's death, only Optionee may exercise
this option. Optionee may not transfer or assign this
option, including without limitation, the sale of this
option or the use of this option as security for a
loan. In the event that Optionee attempts to transfer
or assign this option, this option will immediately
become null and void. Optionee may, however dispose of
this option in his or her will.
Regardless of any marital property settlement
agreement, the Company is not obligated to honor a
notice of exercise from Optionee's spouse or former
spouse, nor is the Company obligated to recognize such
individual's interest in this option in any other way.
No Retention This Agreement is not an employment agreement and
Rights does not give Optionee the right to be retained by the
Company. The Company reserves the right to terminate
Optionee's Service at any time and for any reason.
Stockholder Rights Optionee, or optionee's estate or heirs, have no
rights as a stockholder of the Company until a
certificate for Optionee's Shares has been issued. No
adjustments are made for dividends or other rights if
the applicable record date occurs before Optionee's
stock certificate is issued, except as
-6-
<PAGE>
described in the Plan.
Adjustments In the event of a stock split, a stock dividend or a
similar change in the Company stock, the number of
Shares covered by this option and the exercise price
per share may be adjusted pursuant to the Plan. This
option shall be subject to the terms of the agreement
of merger, liquidation or reorganization in the event
the Company is subject to such corporate activity.
Legends All certificates representing the Shares issued upon
exercise of this option shall, where applicable, have
endorsed thereon the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE SOLD, TRANSFERRED, ENCUMBERED OR IN
ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH
THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE
COMPANY AND THE INITIAL HOLDER HEREOF. SUCH
AGREEMENT PROVIDES FOR CERTAIN TRANSFER
RESTRICTIONS, INCLUDING RIGHTS OF FIRST REFUSAL
UPON AN ATTEMPTED TRANSFER OF THE SECURITIES AND
CERTAIN REPURCHASE RIGHTS IN FAVOR OF THE COMPANY
UPON TERMINATION OF SERVICE WITH THE COMPANY. THE
SECRETARY OF THE COMPANY WILL UPON WRITTEN
REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE
HOLDER HEREOF WITHOUT CHARGE."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED
AND SOLD ONLY IF REGISTERED AND QUALIFIED
PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL
AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT REGISTRATION AND QUALIFICATION
UNDER FEDERAL AND STATE SECURITIES LAWS ARE NOT
REQUIRED."
Applicable Law This Agreement will be interpreted and enforced under
the laws of the State of California.
-7-
<PAGE>
The Plan and The text of the Plan is incorporated in this
Other Agreements Agreement by this reference. Optionee and the Company
agree to execute such further instruments and to take
such further action as may reasonably be necessary to
carry out the intent of this Agreement.
This Agreement and the Plan constitute the entire
understanding between Optionee and the Company
regarding this option. Any prior agreements,
commitments or negotiations are superseded.
By signing the cover sheet of this Agreement, Optionee agrees to all
of the terms and conditions described above and in the Plan.
-8-
<PAGE>
NOTICE OF EXERCISE OF STOCK OPTION
Connectify, Inc.
One Waters Park Dr., Suite 200
San Mateo, CA 94403
Attn: President
Re: Exercise of Stock Option to Purchase Shares of Company
Stock
Ladies and Gentlemen:
Pursuant to the Stock Option Agreement dated __________, 199___ (the "Stock
Option Agreement"), between Connectify, Inc., a Delaware corporation (the
"Company"), and the undersigned, I hereby elect to purchase _____________ shares
of the common stock of the Company (the "Shares"), at the price of $__________
per Share. My check in the amount of $______________ and the executed Assignment
Separate from Certificate are enclosed. The Shares are to be issued and
registered in the name(s) of:
__________________________
__________________________
The undersigned understands there may be tax consequences as a result of
the purchase or disposition of the Shares. The undersigned represents that
he/she has received and reviewed the Plan's federal income information and
consulted with any tax consultants he/she deems advisable in connection with the
purchase or disposition of the Shares and the undersigned is not relying on the
Company for any tax advice.
The undersigned acknowledges that he/she has received, read and understood
the Stock Option Agreement and agrees to abide by and be bound by their terms
and conditions. The undersigned represents that the Shares are being acquired
solely for its own account and not as a nominee for any other party, or for
investment, and that the undersigned purchaser will not offer, sell or otherwise
dispose of any such Shares except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any state securities
laws.
Dated: _____________________
_____________________________________________
(Signature)
_____________________________________________
(Please Print Name)
Social Security No.__________________________
_____________________________________________
_____________________________________________
(Full Address)
<PAGE>
EXHIBIT 99.3
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED
PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF
THE COMPANY IS PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS ARE NOT
REQUIRED.
CONNECTIFY, INC.
1998 STOCK PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
Monthly Vesting Over Four Years
Connectify, Inc., a Delaware corporation (the "Company"), hereby grants
an option to purchase shares of its Common Stock (the "Shares") to the optionee
named below. The terms and conditions of the option are set forth in this cover
sheet, in the attached Stock Option Agreement and in the Company's 1998 Stock
Plan (the "Plan").
Date of Option Grant:
Name of Optionee: ____________
Optionee's Social Security Number: _____-____-_____
Number of Shares of Common Stock Covered by Option: 20,000.00
---------
Exercise Price per Share: $___
Vesting Start Date: ____________
By signing this cover sheet, Optionee agrees to all of the terms and
conditions described in the attached Stock Option Agreement and in the
Plan.
Optionee:____________________________________________________________________
(Signature)
Company:_____________________________________________________________________
(Signature)
Title:_________________________________________________________________
<PAGE>
CONNECTIFY, INC., INC.
1998 STOCK PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
Monthly Vesting Over Four Years
Incentive Stock Connectify, Inc., (the "Company") grants to
Option Optionee an option to purchase the number of
Shares shown on the cover sheet of this
Agreement. The option is subject to the terms and
conditions of this Agreement and the Plan. This
option is not intended to be an incentive stock
option under section 422 of the Internal Revenue
Code and will be interpreted accordingly.
Optionee shall be deemed to be providing Services
to the Company for so long as Optionee renders
periodic services to the Company or one or more
of its parent or subsidiary corporations as an
active member of the Board of Advisors.
Vesting and Right Beginning on the Vesting Start Date, Optionee's
of Repurchase right to exercise this option vests over a four
(4) year period in accordance with the vesting
schedule indicated below:
Portion of
Shares Vested
-------------
For each full month of Optionee's 1/48th
Service to the Company following
the Vesting Start Date
On the fourth anniversary of the
Vesting Start Date 100%
Term This option will expire in any event at the close
of business at Company headquarters on the day
before the 10th anniversary of the Date of Option
Grant, as shown on the cover sheet. (This option
will expire earlier in the event Optionee's
Service to the Company terminates, as described
below.)
Regular If Optionee's Service to the Company terminates
Termination for any reason except death or Disability, then
this option will expire at the close of business
at Company headquarters on the 30th day after
Optionee's termination date.
Death or In the event Optionee's Service to the Company
Disability terminates as a result of death or Disability (as
defined above), then this option will expire at
the close of business at Company headquarters on
the date six (6) months after Optionee's
termination date. During that 6-month period,
Optionee's estate or heirs may exercise the
vested portion of this option. "Disability" shall
be deemed to have occurred when the Optionee's
Service to the Company is terminated because the
Optionee is unable to engage in any substantial,
gainful activity on behalf of the Company by
reason of any medically determinable physical or
mental impairment.
<PAGE>
Leaves of Absence For purposes of this option, Optionee's service
shall not terminate when Optionee takes a
bona fide leave of absence that was approved by
the Company in writing, if the terms of the leave
provide for continued service crediting, or when
continued service crediting is required by
applicable law. However, for purposes of
determining whether this option is entitled to
treatment as an incentive stock option under
section 422 of the Internal Revenue Code,
Optionee's Service will be deemed to have
terminated 90 days after such leave begins,
unless Optionee's right to return to active work
is guaranteed by law or by a contract. Optionee's
Service terminates in any event when the approved
leave expires unless Optionee immediately returns
to active work.The Company determines which
leaves qualify for this purpose, and when
Optionee's Service terminates for all purposes
under the Plan.
Restrictions on The Company will not permit Optionee to exercise
Exercise this option if the issuance of Shares at that
time would violate any law or regulation.
Notice of Exercise In order to exercise this option, Optionee must
notify the Company by delivering a "Notice of
Exercise" attached hereto to the Company. Such
Notice of Exercise must specify the number of
Shares Optionee desires to purchase and the names
in which such Shares should be made (in
Optionee's name only or in Optionee's and his or
her spouse's names as community property or as
joint tenants with right of survivorship). Such
Notice of Exercise shall be effective upon
receipt by the Company.
In the event Optionee's estate or an heir of
Optionee desires to exercise this option after
Optionee's death, such entity or individual must
provide evidence to the Company's satisfaction
that it, he or she is entitled to so exercise.
Periods of Any other provision of this Agreement
Nonexercisability notwithstanding, the Company shall have the right
to designate one or more periods of time, each of
which shall not exceed 180 days in length, during
which this option shall not be exercisable if the
Company determines (in its sole discretion) that
such limitation on exercise could in any way
facilitate a lessening of any restriction on
transfer pursuant to the Securities Act of 1933,
as amended (the "Securities Act") or any state
securities laws with respect to any issuance of
securities by the Company, facilitate the
registration or qualification of any securities
by the Company under the Securities Act or any
state securities laws, or facilitate the
perfection of any exemption from the registration
or qualification requirements of the Securities
Act or any applicable state securities laws for
the issuance or transfer of any securities. Such
limitation on exercise shall not alter the
vesting schedule set forth in this Agreement
other than to limit the periods during which this
option shall be exercisable.
<PAGE>
Form of Payment A payment of the aggregate option exercise price
for the Shares being purchased must accompany a
Notice of Exercise. Payment may be made in one
(or a combination) of the following forms:
. A personal check, a cashier's check or a
money order.
. Common Shares which have already been owned
by Optionee for any time period specified by
the Board of Directors and which are
surrendered to the Company. The fair market
value of the Shares, determined as of the
effective date of the option exercise, will
be applied to the option exercise price.
. To the extent that a public market for the
Shares exists as determined by the Company,
by delivery (on a form prescribed by the
Board of Directors) of an irrevocable
direction to a securities broker to sell
Shares and to deliver all or part of the
sale proceeds to the Company in payment of
the aggregate option exercise price.
Withholding Taxes Optionee will not be allowed to exercise this
option unless he or she makes acceptable
arrangements to pay any withholding or other
taxes that may be due as a result of the option
exercise or the sale of Shares acquired upon
exercise of this option and the sale of the
Shares.
Restrictions on By signing this Agreement, Optionee agrees not to
Resale sell any Shares at a time when applicable laws,
regulations or Company or underwriter trading
policies prohibit such a sale. In connection with
any underwritten public offering by the Company
of its equity securities pursuant to an effective
registration statement filed under the Securities
Act, including the Company's initial public
offering, Optionee agrees not to sell, make any
short sale of, loan, hypothecate, pledge, grant
any option for the purchase of, or otherwise
dispose or transfer for value or agree to engage
in any of the foregoing transactions with respect
to any Shares without the prior written consent
of the Company or its underwriters, for such
period of time after the effective date of such
registration statement as may be requested by the
Company or such underwriters.
In order to enforce the provisions of this
paragraph, the Company may impose stop-transfer
instructions with respect to the Shares until the
end of the applicable stand-off period.
Optionee represents and agrees that the Shares
are being acquired solely for Optionee's own
account and not as a nominee for any other party,
or for investment, and not with a view to the
sale or distribution thereof.
In the event that the sale of Shares under the
Plan is not registered under the Securities Act
but an exemption is available which requires an
investment representation or other
representation, Optionee shall represent and
agree at the time of exercise that the Shares
being acquired
<PAGE>
upon exercising this option are being acquired
for investment, and not with a view to the sale
or distribution thereof, and shall make such
other representations as are deemed necessary or
appropriate by the Company and its counsel.
The Company's In the event that Optionee proposes to sell,
Right of First pledge or otherwise transfer to a third party
Refusal acquired under this Agreement, or any interest in
such Shares, the Company shall have the "Right of
First Refusal" with respect to all (and not less
than all) of such Shares. If Optionee desires to
transfer Shares acquired under this Agreement,
Optionee must give a written "Transfer Notice" to
the Company describing fully the proposed
transfer, including the number of Shares proposed
to be transferred, the proposed transfer price
and the name and address of the proposed
transferee. The Transfer Notice shall be signed
both by Optionee and by the proposed new
transferee and must constitute a binding
commitment of both parties to the transfer of the
Shares. The Company shall have the right to
purchase all, and not less than all, of the
Shares on the terms of the proposal described in
the Transfer Notice (subject, however, to any
change in such terms permitted in the next
paragraph) by delivery of a notice of exercise of
the Right of First Refusal within thirty (30)
days after the date when the Transfer Notice was
received by the Company.
If the Company fails to exercise its Right of
First Refusal within thirty (30) days after the
date when it received the Transfer Notice,
Optionee may, not later than ninety (90) days
following receipt of the Transfer Notice by the
Company, conclude a transfer of the Shares
subject to the Transfer Notice on the terms and
conditions described in the Transfer Notice. Any
proposed transfer on terms and conditions
different from those described in the Transfer
Notice, as well as any subsequent proposed
transfer by Optionee, shall again be subject to
the Right of First Refusal and shall require
compliance with the procedure described in the
paragraph above. If the Company exercises its
Right of First Refusal, the parties shall
consummate the sale of the Shares on the terms
set forth in the Transfer Notice within sixty
(60) days after the date when the Company
received the Transfer Notice (or within such
longer period as may have been specified in the
Transfer Notice); provided, however, that in the
event the Transfer Notice provided that payment
for the Shares was to be made in a form other
than lawful money paid at the time of transfer,
the Company shall have the option of paying for
the Shares with lawful money equal to the present
value of the consideration described in the
Transfer Notice.
The Company's Right of First Refusal shall inure
to the benefit of its successors and assigns,
shall be freely assignable, in whole or in part,
and shall be binding upon any transferee of the
Shares. The Company's Right of First Refusal
shall terminate in the event that Stock is listed
on an established stock exchange or is quoted
regularly on the Nasdaq Stock Market.
<PAGE>
Transfer of Option Prior to Optionee's death, only Optionee may
exercise this option. Optionee may not transfer
or assign this option, including without
limitation, the sale of this option or the use of
this option as security for a loan. In the event
that Optionee attempts to transfer or assign this
option, this option will immediately become null
and void. Optionee may, however dispose of this
option in his or her will.
Regardless of any marital property settlement
agreement, the Company is not obligated to honor
a notice of exercise from Optionee's spouse or
former spouse, nor is the Company obligated to
recognize such individual's interest in this
option in any other way.
No Retention This Agreement is not an employment agreement and
Rights does not give Optionee the right to be retained
by the Company. The Company reserves the right to
terminate Optionee's Service at any time and for
any reason.
Stockholder Rights Optionee, or optionee's estate or heirs, have no
rights as a stockholder of the Company until a
certificate for Optionee's Shares has been
issued. No adjustments are made for dividends or
other rights if the applicable record date occurs
before Optionee's stock certificate is issued,
except as described in the Plan.
Adjustments In the event of a stock split, a stock dividend
or a similar change in the Company stock, the
number of Shares covered by this option and the
exercise price per share may be adjusted pursuant
to the Plan. This option shall be subject to the
terms of the agreement of merger, liquidation or
reorganization in the event the Company is
subject to such corporate activity.
Legends All certificates representing the Shares issued
upon exercise of this option shall, where
applicable, have endorsed thereon the following
legends:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
ENCUMBERED OR IN ANY MANNER DISPOSED OF,
EXCEPT IN COMPLIANCE WITH THE TERMS OF A
WRITTEN AGREEMENT BETWEEN THE COMPANY AND
THE INITIAL HOLDER HEREOF. SUCH AGREEMENT
PROVIDES FOR CERTAIN TRANSFER RESTRICTIONS,
INCLUDING RIGHTS OF FIRST REFUSAL UPON AN
ATTEMPTED TRANSFER OF THE SECURITIES AND
CERTAIN REPURCHASE RIGHTS IN FAVOR OF THE
COMPANY UPON TERMINATION OF SERVICE WITH THE
COMPANY. THE SECRETARY OF THE COMPANY WILL
UPON WRITTEN REQUEST FURNISH A COPY OF SUCH
AGREEMENT TO THE HOLDER HEREOF WITHOUT
CHARGE."
<PAGE>
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE, AND MAY BE OFFERED AND SOLD ONLY IF
REGISTERED AND QUALIFIED PURSUANT TO THE
RELEVANT PROVISIONS OF FEDERAL AND STATE
SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE
SECURITIES LAWS ARE NOT REQUIRED."
Applicable Law This Agreement will be interpreted and enforced
under the laws of the State of California.
The Plan and The text of the Plan is incorporated in this
Other Agreements Agreement by this reference. Optionee and the
Company agree to execute such further instruments
and to take such further action as may reasonably
be necessary to carry out the intent of this
Agreement.
<PAGE>
This Agreement and the Plan constitute the entire
understanding between Optionee and the Company
regarding this option. Any prior agreements,
commitments or negotiations are superseded.
By signing the cover sheet of this Agreement, Optionee agrees to
all of the terms and conditions described above and in the
Plan.
<PAGE>
EXHIBIT A
---------
ASSIGNMENT SEPARATE FROM CERTIFICATE
------------------------------------
FOR VALUE RECEIVED and pursuant to the undersigned's ("Optionee") Stock
Option Agreement, Optionee hereby sells, assigns and transfers unto Connectify,
Inc., a Delaware corporation (the "Company") _________________ (________)
unvested shares of Common Stock of the Company, standing in Optionee's name on
the books of the Company and represented by Certificate No._____, herewith and
does hereby irrevocably constitute and appoint _________________________ to
transfer the said stock on the books of the Company with full power of
substitution in the premises. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY
THE STOCK OPTION AGREEMENT AND THE EXHIBITS THERETO.
Dated: ____________, 19__.
_____________________________________
Print Name
_____________________________________
Signature
Spousal Consent (if applicable)
-------------------------------
________________ (Optionee's spouse) indicates by the execution of this
Assignment his or her consent to be bound by the terms herein as to his or her
interests, whether as community property or otherwise, if any, in the Shares.
_____________________________________
Signature
INSTRUCTIONS: PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN THE SIGNATURE LINE.
THE PURPOSE OF THIS ASSIGNMENT IS TO ENABLE THE COMPANY TO EXERCISE ITS
"REPURCHASE OPTION" SET FORTH IN THE STOCK OPTION AGREEMENT WITHOUT REQUIRING
ADDITIONAL SIGNATURES ON THE PART OF OPTIONEE.
<PAGE>
NOTICE OF EXERCISE OF STOCK OPTION
Connectify, Inc.
One Waters Park Drive., Suite 200
San Mateo, CA 94403
Attn: President
Re: Exercise of Stock Option to Purchase Shares of Company Stock
Ladies and Gentlemen:
Pursuant to the Stock Option Agreement dated __________, 199___ (the
"Stock Option Agreement"), between Connectify, Inc., a Delaware corporation (the
"Company"), and the undersigned, I hereby elect to purchase _____________ shares
of the common stock of the Company (the "Shares"), at the price of $__________
per Share. My check in the amount of $______________ and the executed Assignment
Separate from Certificate are enclosed. The Shares are to be issued and
registered in the name(s) of:
__________________________
__________________________
The undersigned understands there may be tax consequences as a result of
the purchase or disposition of the Shares. The undersigned represents that
he/she has received and reviewed the Plan's federal income information and
consulted with any tax consultants he/she deems advisable in connection with the
purchase or disposition of the Shares and the undersigned is not relying on the
Company for any tax advice.
The undersigned acknowledges that he/she has received, read and understood
the Stock Option Agreement and agrees to abide by and be bound by their terms
and conditions. The undersigned represents that the Shares are being acquired
solely for its own account and not as a nominee for any other party, or for
investment, and that the undersigned purchaser will not offer, sell or otherwise
dispose of any such Shares except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any state securities
laws.
Dated: _____________________
_____________________________________
(Signature)
_____________________________________
(Please Print Name)
Social Security No.__________________
_____________________________________
_____________________________________
(Full Address)
<PAGE>
EXHIBIT 99.4
KANA COMMUNICATIONS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
CONNECTIFY, INC.
1998 STOCK PLAN
Optionee: ((FirstName)) ((LastName))
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 13th day of
August, 1999 by Kana Communications, Inc., a California corporation ("Kana").
WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase shares of the common stock of Connectify, Inc.,
a Delaware corporation ("Connectify"), which were granted to Optionee under the
Connectify 1998 Stock Plan (the "Plan") and are each evidenced by a Stock Option
Agreement (the "Option Agreement").
WHEREAS, Connectify has been acquired by Kana through the merger of
KCI Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Kana, with and into Connectify (the "Merger") pursuant to the Agreement and Plan
of Reorganization, dated August 13, 1999, by and among Kana, KCI Acquisition
Corp. and Connectify (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Kana to assume
all obligations of Connectify under all outstanding options under the Plan at
the consummation of the Merger and to issue to the holder of each outstanding
option an agreement evidencing the assumption of such option.
WHEREAS, pursuant to the provisions of the Merger Agreement, the
exchange ratio (the "Exchange Ratio") in effect for the Merger is 0.3172478
shares of Kana common stock ("Kana Stock") for each outstanding share of
Connectify common stock ("Connectify Stock").
WHEREAS, this Agreement became effective immediately upon the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options that have become necessary by
reason of the assumption of those options by Kana in connection with the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Connectify Stock subject to the options
held by Optionee immediately prior to the Effective Time (the "Connectify
Options") and the exercise price payable per share are set forth below. Kana
hereby assumes, as of the Effective Time, all the duties and obligations of
Connectify under each of the Connectify Options. In connection with such
assumption, the number of shares of Kana Stock purchasable under each Connectify
Option hereby assumed and the exercise price payable thereunder have been
adjusted to reflect
<PAGE>
the Exchange Ratio. Accordingly, the number of shares of Kana Stock subject to
each Connectify Option hereby assumed shall be as specified for that option
below, and the adjusted exercise price payable per share of Kana Stock under the
assumed Connectify Option shall also be as indicated for that option below.
<TABLE>
<CAPTION>
CONNECTIFY OPTIONS
- ----------------------------------------------------------------------------------------------------
PRE-MERGER AS ASSUMED BY KANA
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
# of Shares of Exercise Price per Share # of Shares of Kana Adjusted Exercise Price
Connectify Stock Stock* per Share*
- ----------------------------------------------------------------------------------------------------
((Connectify_Shares)) ((Connectify_Price)) ((Kana_Shares)) ((Kana_Price))
- ----------------------------------------------------------------------------------------------------
</TABLE>
2. The intent of the foregoing adjustments to each assumed
Connectify Option is to assure that the spread between the aggregate fair market
value of the shares of Kana Stock purchasable under each such option and the
aggregate exercise price as adjusted pursuant to this Agreement will,
immediately after the consummation of the Merger, be not less than the spread
which existed, immediately prior to the Merger, between the then aggregate fair
market value of the Connectify Stock subject to the Connectify Option and the
aggregate exercise price in effect at such time under the Option Agreement. Such
adjustments are also intended to preserve, immediately after the Merger, on a
per share basis, the same ratio of exercise price per option share to fair
market value per share which existed under the Connectify Option immediately
prior to the Merger.
3. The following provisions shall govern each Connectify Option
hereby assumed by Kana:
a. Unless the context otherwise requires, all references in
each Option Agreement and in the Plan (i) to the "Company" shall mean Kana,
(ii) to "Shares," "Stock" or "Common Stock" shall mean shares of Kana
Stock, (iii) to the "Board of Directors" shall mean the Board of Directors
of Kana and (iv) to the "Committee" shall mean the Compensation Committee
of the Kana Board of Directors.
b. The grant date and the expiration date of each assumed
Connectify Option and all other provisions that govern either the exercise
or the termination of the assumed Connectify Option shall remain the same
as set forth in the Plan and the Option Agreement applicable to that
option, and the provisions of the Plan and the Option Agreement shall
accordingly govern and control Optionee's rights to purchase Kana Stock
under the assumed Connectify Option.
____________________________
* Share numbers and share price do not reflect 2-for-3 reverse stock split
effected by Kana on September 20, 1999.
2
<PAGE>
c. Pursuant to the terms of the Option Agreement, none of your
Connectify Options as assumed by Kana in connection with the transaction
vested or became exercisable on an accelerated basis upon the consummation
of the Merger. Accordingly, each such assumed Connectify Option shall
continue to vest for any remaining unvested shares of Kana Stock subject to
that option in accordance with the same installment vesting schedule in
effect under the applicable Option Agreement immediately prior to the
Effective Time; provided, however, that the number of shares subject to
each such installment shall be adjusted to reflect the Exchange Ratio.
d. For purposes of applying any and all provisions of the
Option Agreement relating to Optionee's status as an employee, director,
consultant, or advisor providing service to Connectify, Optionee, shall be
deemed to continue in such status for so long as Optionee renders service
as an employee, director, consultant, or advisor, respectively, to Kana or
a subsidiary. Accordingly, the provisions of the Option Agreement governing
the termination of the assumed Connectify Options upon Optionee's cessation
of service with Connectify shall hereafter be applied on the basis of
Optionee's cessation of such service with respect to Kana or a subsidiary,
and each assumed Connectify Option shall accordingly terminate, within the
designated time period in effect under the Option Agreement for that
option, following such cessation of such service for Kana or a subsidiary.
e. The adjusted exercise price payable for the Kana Stock
subject to each assumed Connectify Option shall be payable in any of the
forms authorized under the Option Agreement applicable to that option. For
purposes of determining the holding period of any shares of Kana Stock
delivered in payment of such adjusted exercise price, the period for which
such shares were held as Connectify Stock prior to the Merger shall be
taken into account.
f. In order to exercise each assumed Connectify Option,
Optionee must deliver to Kana a written notice of exercise in which the
number of shares of Kana Stock to be purchased thereunder must be
indicated. The exercise notice must be accompanied by payment of the
adjusted exercise price payable for the purchased shares of Kana Stock and
should be delivered to Kana at the following address:
Kana Communications, Inc.
740 Bay Road
Redwood City, California 94063
Attention: Option Plan Administrator
4. Except to the extent specifically modified by this Option
Assumption Agreement, all of the terms and conditions of each Option Agreement
as in effect immediately prior to the Merger shall continue in full force and
effect and shall not in any way be amended, revised or otherwise affected by
this Stock Option Assumption Agreement.
3
<PAGE>
IN WITNESS WHEREOF, Kana Communications, Inc. has caused this Stock
Option Assumption Agreement to be executed on its behalf by its duly authorized
officer effective as of the 13th day of August, 1999.
KANA COMMUNICATIONS, INC.
By: ______________________________
ACKNOWLEDGMENT
The undersigned acknowledges receipt of the foregoing Stock Option
Assumption Agreement and understands that all rights and liabilities with
respect to each of his or her Connectify Options hereby assumed by Kana are as
set forth in the Option Agreement, the Plan, as applicable, and such Stock
Option Assumption Agreement.
_______________________________________________
((FirstName)) ((LastName)), Optionee
DATED: __________________, 1999
4
