As filed with the Securities and Exchange Commission on October 29, 1999
Registration No. 333-_____________________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
FILENET CORPORATION
Delaware 95-3757924
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
3565 Harbor Boulevard
Costa Mesa, California 92626
FILENET CORPORATION
1995 STOCK OPTION PLAN
1998 EMPLOYEE STOCK PURCHASE PLAN
INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN
Lee D. Roberts
President and Chief Executive Officer
FILENET CORPORATION
3565 Harbor Boulevard, Costa Mesa, California 92626
(714) 966-3400
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
Title of Securities Amount to Proposed Maximum Proposed Maximum Amount of
to be Registered be Registered(1) Offering Price per Aggregate Offering Registration Fee
Share Price
<S> <C> <C> <C> <C>
1995 STOCK OPTION PLAN
Common Stock,
$0.01 par value 1,200,000 shares $15.66(2) $18,792,000(2) $5,224.18
1998 EMPLOYEE STOCK PURCHASE
PLAN
Common Stock,
$0.01 par value 300,000 shares $15.66(2) $ 4,698,000(2) $1,306.04
INTERNATIONAL EMPLOYEE 300,000 shares $15.66(2) $ 4,698,000(2) $1,306.04
STOCK PURCHASE PLAN
Aggregate Filing Fee $7,836.26
</TABLE>
================================================================================
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the FileNET Corporation 1995 Stock
Option Plan, 1998 Employee Stock Purchase Plan or the International
Employee Stock Purchase Plan by reason of any stock dividend, stock split,
recapitalization or any other similar transaction effected without the
Registrant's receipt of consideration which results in an increase in the
number of outstanding shares of Registrant's 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 average of the high
and low selling prices per share of Registrant's Common Stock on
October 25, 1999, as reported on the Nasdaq National Market.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
FileNET Corporation (the "Registrant") hereby incorporates by reference
into this Registration Statement the following documents previously filed with
the Securities and Exchange Commission (the "SEC"):
(a) The Registrant's Annual Report on Form 10-K for fiscal year ended
December 31, 1998 filed with the SEC on March 30, 1999, as amended on Form
10-K/A filed with the SEC on April 16, 1999.
(b) The Registrant's Quarterly Report on Form 10-Q for fiscal quarter
ended March 31, 1999 filed with the SEC on May 11, 1999 and for fiscal
quarter ended June 30, 1999 filed with the SEC on August 12, 1999.
(c) The Registrant's Registration Statement No. 0-15997 on Form 8-A
filed with the SEC on June 24, 1987, 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 deregisters 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
Pursuant to the provisions of Section 145 of the General Corporation
Law of Delaware, the Registrant as a Delaware corporation has power to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an
action by or in the right of the Registrant) by reason of the fact that he or
she is or was a director, officer, employee or agent of the Registrant or of any
corporation, partnership, joint venture, trust or other enterprise for which he
or she is or was serving in such capacity at the request of the Registrant,
against any and all expenses, judgments, fines and amounts paid in settlement
which were reasonably incurred by him or her in connection with such action,
suit or proceeding. The power to indemnify applies only if such person acted in
good faith and in a manner he or she reasonably believed to be in the best
interests, or not opposed to the best interests, of the Registrant and, with
respect to any criminal action or proceeding, if he or she had no reasonable
cause to believe his or her conduct was unlawful.
The power to indemnify also applies to actions brought by or in the
right of the Registrant, but only to the extent of defense and settlement
expenses and not to any satisfaction of a judgment or settlement of the claim
itself. In such actions, however, no indemnification will be made if there is
II-1
<PAGE>
any adjudication of negligence or misconduct, unless the court, in its
discretion, feels that in the light of all the circumstances indemnification
should apply.
To the extent any such person is successful in the defense of the
actions referred to above, such person is entitled pursuant to Section 145 of
the General Corporation Law of Delaware to indemnification as described above.
Section 145 also grants power to advance litigation expenses upon receipt of an
undertaking on the part of the recipient to repay such advances in the event no
right to indemnification is subsequently shown. The Registrant may also obtain
insurance at its expense to protect anyone who might be indemnified, or has a
right to insist on indemnification, under the statute.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit No. Exhibit
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is made to
Registrant's Registration Statement on Form 8-A, together with the
exhibits thereto, which is incorporated herein by reference pursuant
to Item 3(c) of this Registration Statement.
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants -- Deloitte & Touche LLP.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this Registration
Statement.
99.1 1995 Stock Option Plan (as Amended and Restated Through March 31, 1999)
99.2* Form of Notice of Grant of Stock Option.
99.3* Form of Stock Option Agreement.
99.4* Form of Addendum to Stock Option Agreement: Involuntary Termination
Following Corporate Transaction.
99.5* Form of Addendum to Stock Option Agreement: Involuntary Termination
Following Change in Control.
99.6* Form of Salary Reduction Option Grant Election.
99.7* Form of Notice of Grant under Salary Reduction Option Grant Program.
99.8* Form of Salary Reduction Stock Option Agreement.
99.9* Form of Notice of Grant of Non-Employee Director Automatic Stock
Option: Initial Grant.
99.10* Form of Notice of Grant of Non-Employee Director Automatic Stock
Option: Annual Grant.
99.11** Form of Automatic Stock Option Agreement.
99.12* Form of Director Fee Election.
99.13* Form of Notice of Grant of Non-Employee Director Stock Option under
Director Fee Option Grant Program.
99.14* Form of Director Fee Stock Option Agreement.
99.15 1998 Employee Stock Purchase Plan (as Amended and Restated Through
March 22, 1999).
99.16 International Employee Stock Purchase Plan (as Amended and Restated
Through May 20, 1999).
99.17*** Form of Enrollment/Change Form (1998 and International Employee Stock
Purchase Plans).
* Exhibits 99.2 through 99.10 and 99.12 through 99.14 are incorporated
herein by reference to Exhibits 99.2 through 99.10 and 99.12 through 99.14,
respectively, to Registrant's Registration Statement No. 33-80899 on Form
S-8, filed with the SEC on December 22, 1995.
** Exhibit 99.11 is incorporated herein by reference to Exhibit 99.11 to
Registrant's Registration Statement No. 333-34031 on Form S-8, filed with
the SEC on August 21, 1997.
*** Exhibit 99.17 is incorporated herein by reference to Exhibit 99.17 to
Registrant's Registration Statement No. 333-66997 on Form S-8, filed with
the SEC on November 9, 1998.
</TABLE>
II-2
<PAGE>
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 Securities Act of 1933, as amended (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 paragraphs 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 upon the termination of the
Registrant's 1995 Stock Option Plan, 1998 Employee Stock Purchase Plan and/or
the International 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 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 indemnity provisions summarized in Item 6 or
otherwise, the Registrant has been informed that in the opinion of the SEC 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 Costa Mesa, State of California on October 29, 1999.
FILENET CORPORATION
/s/ Lee D. Roberts
By: Lee D. Roberts
President, Chief Executive Officer
and Director (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of FileNET Corporation, a
Delaware corporation, do hereby constitute and appoint Lee D. Roberts and Mark
S. St. Clare, and each of them, the lawful attorneys-in-fact and agents, with
full power and authority to do any and all acts and things and to execute any
and all instruments which said attorneys and agents, or either one of them,
determine may be necessary or advisable or required to enable said corporation
to comply with the Securities Act of 1933, as amended, and any rules or
regulation or requirements of the Securities and Exchange Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement and to any and all instruments or documents filed as part
of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
all that said attorneys and agents, or either one of them, shall do or cause to
be done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
II-4
<PAGE>
Signatures Title Date
/s/ Lee D. Roberts President, Chief Executive Officer October 29, 1999
Lee D. Roberts and Director
(Principal Executive Officer)
/s/ Mark S. St. Clare Senior Vice President-Finance October 29, 1999
Mark S. St. Clare Chief Financial Officer
(Principal Financial Officer)
/s/ Brian A. Colbeck Vice President, Controller, Chief October 29, 1999
Brian A. Colbeck Accounting Officer and Assistant
Secretary (Principal Accounting Officer)
/s/ Theodore J. Smith Chairman of the Board October 29, 1999
Theodore J. Smith
/s/ John C. Savage Director October 29, 1999
John C. Savage
/s/ William P. Lyon Director October 29, 1999
William P. Lyons
/s/ L. George Klaus Director October 29, 1999
L. George Klaus
/s/ Roger S. Siboni Director October 29, 1999
Roger S. Siboni
II-5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
FILENET CORPORATION
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is made to
Registrant's Registration Statement on Form 8-A, together with the
exhibits thereto, which is incorporated herein by reference pursuant
to Item 3(c) of this Registration Statement.
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants -- Deloitte & Touche LLP.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this Registration
Statement.
99.1 1995 Stock Option Plan (as Amended and Restated Through March 31, 1999)
99.2* Form of Notice of Grant of Stock Option.
99.3* Form of Stock Option Agreement.
99.4* Form of Addendum to Stock Option Agreement: Involuntary Termination
Following Corporate Transaction.
99.5* Form of Addendum to Stock Option Agreement: Involuntary Termination
Following Change in Control.
99.6* Form of Salary Reduction Option Grant Election.
99.7* Form of Notice of Grant under Salary Reduction Option Grant Program.
99.8* Form of Salary Reduction Stock Option Agreement.
99.9* Form of Notice of Grant of Non-Employee Director Automatic Stock
Option: Initial Grant.
99.10* Form of Notice of Grant of Non-Employee Director Automatic Stock
Option: Annual Grant.
99.11** Form of Automatic Stock Option Agreement.
99.12* Form of Director Fee Election.
99.13* Form of Notice of Grant of Non-Employee Director Stock Option under
Director Fee Option Grant Program.
99.14* Form of Director Fee Stock Option Agreement.
99.15 1998 Employee Stock Purchase Plan (as Amended and Restated Through
March 22, 1999).
99.16 International Employee Stock Purchase Plan (as Amended and Restated
Through May 20, 1999).
99.17*** Form of Enrollment/Change Form (1998 and International Employee Stock
Purchase Plans).
* Exhibits 99.2 through 99.10 and 99.12 through 99.14 are incorporated
herein by reference to Exhibits 99.2 through 99.10 and 99.12 through 99.14,
respectively, to Registrant's Registration Statement No. 33-80899 on Form
S-8, filed with the SEC on December 22, 1995.
** Exhibit 99.11 is incorporated herein by reference to Exhibit 99.11 to
Registrant's Registration Statement No. 333-34031 on Form S-8, filed with
the SEC on August 21, 1997.
*** Exhibit 99.17 is incorporated herein by reference to Exhibit 99.17 to
Registrant's Registration Statement No. 333-66997 on Form S-8, filed with
the SEC on November 9, 1998.
</TABLE>
<PAGE>
EXHIBIT 5
Opinion of Brobeck, Phleger & Harrison LLP
October 29, 1999
FileNET Corporation
3565 Harbor Boulevard
Costa Mesa, CA 92626
Re: FileNET Corporation (the "Company") Registration Statement on
Form S-8 for Registration of an aggregate of 1,500,000 Shares
of Common Stock
Ladies and Gentlemen:
We have acted as counsel to FileNET Corporation, 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 (i)
an additional 1,200,000 shares of the Company's common stock for issuance under
the Company's 1995 Stock Option Plan (the "Option Plan") and (ii) an additional
300,000 shares of the Company's common stock for issuance under the Company's
1998 Employee Stock Purchase Plan (the "Purchase Plan"), and (iii) an additioanl
300,000 shares of the Company's common stock for issuance under the Company's
International Employee Stock Purchase Plan (the "International Plan").
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 establishment and
amendment of the Option Plan and the Purchase Plan. 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 (a) the provisions of option
agreements duly authorized under the Option Plan and in accordance with the
Registration Statement, (b) duly authorized direct stock issuances under the
Option Plan and in accordance with the Registration Statement or (c) duly
authorized stock purchase rights under the Purchase Plan and in accordance with
the Registration Statement, such shares will be duly authorized, legally issued,
fully paid and non-assessable.
We consent to the filing of this opinion letter as Exhibit 5 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
Option Plan or the Purchase Plan or the shares of the Company's common stock
issuable under such plans.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
FileNET Corporation on Form S-8 of our reports dated January 26, 1999, (March
10, 1999 as to Note 8) appearing in, and incorporated by reference in, the
Annual Report on Form 10-K of FileNET Corporation for the year ended December
31, 1998.
/s/ Deloitte & Touche
DELOITTE & TOUCHE LLP
Costa Mesa, California
October 29, 1999
EXHIBIT 99.1
FILENET CORPORATION
1995 STOCK OPTION PLAN
(As Amended and Restated through March 31, 1999)
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1995 Stock Option Plan is intended to promote the interests of FileNET
Corporation, a Delaware corporation, by providing eligible persons with the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in
the service of the Corporation.
This Plan shall serve as the successor to the Corporation's existing Second
Amended and Restated Stock Option Plan (the "Predecessor Plan"), and no further
option grants or share issuances shall be made under the Predecessor Plan from
and after the Effective Date of this Plan. All outstanding stock options under
the Predecessor Plan on the Effective Date shall be incorporated into this Plan
and shall accordingly be treated as outstanding stock options under this Plan.
However, each outstanding option grant so incorporated shall continue to be
governed solely by the express terms and conditions of the agreement evidencing
such grant, and no provision of this Plan shall be deemed to affect or otherwise
modify the rights or obligations of the holders of such incorporated options
with respect to their acquisition of shares of the Corporation's Common Stock
thereunder.
Capitalized terms shall have the meanings assigned to such terms in the
attached Appendix.
All share numbers in this March 31, 1999 restatement reflect the 2-for-1
split of the Common Stock effective June 12, 1998.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into five separate equity programs:
- the Discretionary Option Grant Program under which eligible persons
may, at the discretion of the Plan Administrator, be granted options
to purchase shares of Common Stock,
- the Salary Reduction Option Grant Program under which eligible
employees may elect to have a portion of their base salary reduced
each year in return for options to purchase shares of Common Stock,
- the Stock Issuance Program under which eligible persons may, at the
discretion of the Plan Administrator, be issued shares of Common Stock
directly without any intervening option grant,
- the Automatic Option Grant Program under which eligible non-employee
Board members shall automatically receive option grants at periodic
intervals to purchase shares of Common Stock, and
- the Director Fee Option Grant Program under which non-employee Board
members may elect to have all or any portion of their annual retainer
fee otherwise payable in cash applied to a special option grant.
B. The provisions of Articles One and Seven shall apply to all equity
programs under the Plan and shall govern the interests of all persons under the
Plan.
III. ADMINISTRATION OF THE PLAN
A. The Primary Committee shall have the sole and exclusive authority to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders. Except to the extent the Primary Committee is
granted sole and exclusive authority under one or more specific provisions of
the Plan, administration of the Discretionary Option Grant and Stock Issuance
Programs with respect to all other persons eligible to participate in these
programs may, at the Board's discretion, be vested in the Primary Committee or a
Secondary Committee, or the Board may retain the power to administer these
programs with respect to such persons. The members of the Secondary Committee
may be individuals who are Employees.
B. Members of the Primary Committee or any Secondary Committee shall serve
for such period of time as the Board may determine and may be removed by the
Board at any time. The Board may also at any time terminate the functions of any
Secondary Committee and reassume all powers and authority previously delegated
to such committee.
C. Each Plan Administrator shall, within the scope of its administrative
functions under the Plan, have full power and authority (subject to the
provisions of the Plan) to establish such rules and regulations as it may deem
appropriate for proper administration of the Discretionary Option Grant and
Stock Issuance Programs and to make such determinations under, and issue such
interpretations of, the provisions of such programs and any outstanding options
or stock issuances thereunder as it may deem necessary or advisable. Decisions
of the Plan Administrator within the scope of its administrative functions under
the Plan shall be final and binding on all parties who have an interest in the
Discretionary Option Grant or Stock Issuance Program under its jurisdiction or
any option or stock issuance thereunder.
D. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants or stock issuances under the
Plan.
2.
<PAGE>
E. The Primary Committee shall have the sole and exclusive authority to
select the eligible individuals who are to participate in the Salary Reduction
Option Grant Program, but all option grants under the Salary Reduction Option
Grant Program shall be made in accordance with express terms of that program and
the Primary Committee shall exercise no discretion with respect to the terms of
those grants. Administration of the Automatic Option Grant and Director Fee
Option Grant Programs shall be self-executing in accordance with the terms of
that program, and no Plan Administrator shall exercise any discretionary
functions with respect to any option grants or stock issuances made under those
programs.
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option Grant
and Stock Issuance Programs are as follows:
(i) Employees,
(ii) non-employee Board members, and
(iii) consultants and other independent advisors who provide services
to the Corporation (or any Parent or Subsidiary).
B. Only the Company's executive officers and other highly-compensated
Employees shall be eligible to participate in the Salary Reduction Option Grant
Program.
C. Each Plan Administrator shall, within the scope of its administrative
jurisdiction under the Plan, have full authority to determine, (i) with respect
to the option grants under the Discretionary Option Grant Program, which
eligible persons are to receive option grants, the time or times when such
option grants are to be made, the number of shares to be covered by each such
grant, the status of the granted option as either an Incentive Option or a
Non-Qualified Option, the time or times when each option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding and (ii) with
respect to stock issuances under the Stock Issuance Program, which eligible
persons are to receive stock issuances, the time or times when such issuances
are to be made, the number of shares to be issued to each Participant, the
vesting schedule (if any) applicable to the issued shares and the consideration
for such shares.
D. The Plan Administrator shall have the absolute discretion either to
grant options in accordance with the Discretionary Option Grant or to effect
stock issuances in accordance with the Stock Issuance Program.
E. The individuals who shall be eligible to participate in the Automatic
Option Grant Program shall be limited to (i) those individuals who first become
non-employee Board members on or after the Effective Date, whether through
appointment by the Board or election by the Corporation's stockholders, and (ii)
those individuals who are re-elected to serve as non-employee Board members at
one or more Annual Stockholders Meetings beginning with the 1996 Annual Meeting.
A non-employee Board member who has previously been in the employ of the
3.
<PAGE>
Corporation (or any Parent or Subsidiary) shall not be eligible to receive an
option grant under the Automatic Option Grant Program at the time he or she
first becomes a non-employee Board member, but shall be eligible to receive
periodic option grants under the Automatic Option Grant Program upon his or her
subsequent re-election to the Board.
F. All non-employee Board members shall be eligible to participate in the
Director Fee Option Grant Program.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed 9,824,830 shares.
Such share reserve is comprised of (i) the 4,224,830 shares of Common Stock
which remained available for issuance under the Predecessor Plan as of the
Effective Date, including the shares subject to the outstanding option grants
under the Predecessor Plan which have been incorporated into this Plan and the
additional shares of Common Stock available for future grant under the
Predecessor Plan, (ii) an additional increase of 700,000 shares of Common Stock
previously authorized by the Board and approved by the Corporation's
stockholders at the 1995 Annual Meeting, (iii) an additional increase of
1,300,000 shares of Common Stock authorized by the Board in March 1996 and
approved by the stockholders at the 1996 Annual Meeting, (iv) a further increase
of 1,200,000 shares of Common Stock authorized by the Board on March 20, 1997
and approved by the stockholders at the 1997 Annual Meeting, (v) a further
increase of 1,200,000 shares of Common Stock authorized by the Board on March
17, 1998 and approved by the stockholders at the 1998 Annual Meeting plus (vi) a
further increase of 1,200,000 shares of Common Stock authorized by the Board on
March 31, 1999, subject to stockholder approval at the 1999 Annual Meeting. In
no event, however, shall any person participating in the Plan receive stock
options and direct stock issuances under this Plan for more than 400,000 shares
of Common Stock per calendar year, beginning with the 1995 calendar year.
B. Shares of Common Stock subject to outstanding options (including options
incorporated into this Plan from the Predecessor Plan) shall be available for
subsequent issuance under the Plan to the extent those options expire or
terminate for any reason prior to exercise in full. Unvested shares issued under
the Plan and subsequently cancelled or repurchased by the Corporation at the
option exercise or direct issue price paid per share pursuant to the
Corporation's repurchase rights under the Plan shall also be available for
subsequent issuance under the Plan. However, should the exercise price of an
option under the Plan be paid with shares of Common Stock or should shares of
Common Stock otherwise issuable under the Plan be withheld by the Corporation in
satisfaction of the withholding taxes incurred in connection with the exercise
of an option or the vesting of a stock issuance under the Plan, then the number
of shares of Common Stock available for issuance under the Plan shall be reduced
by the gross number of shares for which the option is exercised or which vest
under the stock issuance, and not by the net number of shares of Common Stock
issued to the holder of such option or stock issuance.
C. If any change is made to the Common Stock by reason of any stock split,
stock dividend, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration, appropriate adjustments shall be made to
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(i) the maximum number and/or class of securities issuable under the Plan, (ii)
the number and/or class of securities for which any one person may be granted
stock options and direct stock issuances under this Plan per calendar year,
(iii) the number and/or class of securities for which grants are subsequently to
be made under the Automatic Option Grant Program to new and continuing
non-employee Board members, (iv) the number and/or class of securities and the
exercise price per share in effect under each outstanding option under the Plan
and (v) the number and/or class of securities and price per share in effect
under each outstanding option incorporated into this Plan from the Predecessor
Plan. Such adjustments to the outstanding options are to be effected in a manner
which shall preclude the enlargement or dilution of rights and benefits under
such options. The adjustments determined by the Plan Administrator shall be
final, binding and conclusive.
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ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. Exercise Price.
1. The exercise price per share shall be fixed by the Plan Administrator
but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the option grant date.
2. The exercise price shall become immediately due upon exercise of the
option and shall, subject to the provisions of Section I of Article
Six and the documents evidencing the option, be payable in one or more
of the forms specified below:
(i) cash or check made payable to the Corporation,
(ii) shares of Common Stock held for the requisite period necessary to
avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the
Exercise Date, or
(iii) to the extent the option is exercised for vested shares, through
a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable written
instructions to (a) a Corporation-designated brokerage firm to
effect the immediate sale of the purchased shares and remit to
the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise
price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to
be withheld by the Corporation by reason of such exercise and (b)
the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the
sale.
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Exercise and Term of Options. Each option shall be exercisable at such
time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option. However, no option shall have a term in excess of ten (10) years
measured from the option grant date.
C. Effect of Termination of Service.
1. The following provisions shall govern the exercise of any options
held by the Optionee at the time of cessation of Service or
death:
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(i) Any option outstanding at the time of the Optionee's
cessation of Service for any reason shall remain exercisable
for such period of time thereafter as shall be determined by
the Plan Administrator and set forth in the documents
evidencing the option, but no such option shall be
exercisable after the expiration of the option term.
(ii) Any option exercisable in whole or in part by the Optionee
at the time of death may be subsequently exercised by the
personal representative of the Optionee's estate or by the
person or persons to whom the option is transferred pursuant
to the Optionee's will or in accordance with the laws of
descent and distribution.
(iii) Should the Optionee's Service be terminated for Misconduct,
then all outstanding options held by the Optionee shall
terminate immediately and cease to be outstanding.
(iv) During the applicable post-Service exercise period, the
option may not be exercised in the aggregate for more than
the number of vested shares for which the option is
exercisable on the date of the Optionee's cessation of
Service. Upon the expiration of the applicable exercise
period or (if earlier) upon the expiration of the option
term, the option shall terminate and cease to be outstanding
for any vested shares for which the option has not been
exercised. However, the option shall, immediately upon the
Optionee's cessation of Service, terminate and cease to be
outstanding to the extent the option is not otherwise at
that time exercisable for vested shares.
(v) In the event of a Corporate Transaction, the provisions of
Section III of this Article Two shall govern the period for
which the outstanding options are to remain exercisable
following the Optionee's cessation of Service and shall
supersede any provisions to the contrary in this section.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time an option is granted or at any time
while the option remains outstanding, to:
(i) extend the period of time for which the option is to remain
exercisable following the Optionee's cessation of Service
from the limited exercise period otherwise in effect for
that option to such greater period of time as the Plan
Administrator shall deem appropriate, but in no event beyond
the expiration of the option term, and/or
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(ii) permit the option to be exercised, during the applicable
post-Service exercise period, not only with respect to the
number of vested shares of Common Stock for which such
option is exercisable at the time of the Optionee's
cessation of Service but also with respect to one or more
additional installments in which the Optionee would have
vested had the Optionee continued in Service.
D. Stockholder Rights. The holder of an option shall have no stockholder
rights with respect to the shares subject to the option until such person shall
have exercised the option, paid the exercise price and become a holder of record
of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the discretion to
grant options which are exercisable for unvested shares of Common Stock. Should
the Optionee cease Service while holding such unvested shares, the Corporation
shall have the right to repurchase, at the exercise price paid per share, any or
all of those unvested shares. The terms upon which such repurchase right shall
be exercisable (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares) shall be established by
the Plan Administrator and set forth in the document evidencing such repurchase
right.
F. Limited Transferability of Options. During the lifetime of the Optionee,
Incentive Options shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death. However, a Non-Qualified Option
may, in connection with the Optionee's estate plan, be assigned in whole or in
part during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive Options.
Except as modified by the provisions of this Section II, all the provisions of
Articles One, Two and Seven shall be applicable to Incentive Options. Options
which are specifically designated as Non-Qualified Options when issued under the
Plan shall not be subject to the terms of this Section II.
A. Eligibility. Incentive Options may only be granted to Employees.
B. Dollar Limitation. The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (or any other option
plan of the Corporation or any Parent or Subsidiary) may for the first time
become exercisable as Incentive Options during any one calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
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Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
C. 10% Stockholder. If any Employee to whom an Incentive Option is granted
is a 10% Stockholder, then the exercise price per share shall not be less than
one hundred ten percent (110%) of the Fair Market Value per share of Common
Stock on the option grant date, and the option term shall not exceed five (5)
years measured from the option grant date.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, each outstanding option shall
automatically accelerate so that each such option shall, immediately prior to
the effective date of the Corporate Transaction, become fully exercisable with
respect to the total number of shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. However, an outstanding option shall not so accelerate
if and to the extent: (i) such option is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation (or parent
thereof) or to be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation (or parent thereof), (ii) such option
is to be replaced with a cash incentive program of the successor corporation
which preserves the spread existing on the unvested option shares at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such option or (iii) the acceleration of
such option is subject to other limitations imposed by the Plan Administrator at
the time of the option grant. The determination of option comparability under
clause (i) above shall be made by the Plan Administrator, and its determination
shall be final, binding and conclusive.
B. All outstanding repurchase rights shall also terminate automatically,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Corporate Transaction, except to
the extent: (i) those repurchase rights are to be assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.
C. Immediately following the consummation of the Corporate Transaction, all
outstanding options shall terminate and cease to be outstanding, except to the
extent assumed by the successor corporation (or parent thereof).
D. Each option which is assumed in connection with a Corporate Transaction
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply to the number and class of securities which would have been issuable to
the Optionee in consummation of such Corporate Transaction had the option been
exercised immediately prior to such Corporate Transaction. Appropriate
adjustments to reflect such Corporate Transaction shall also be made to (i) the
exercise price payable per share under each outstanding option, provided the
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aggregate exercise price payable for such securities shall remain the same, (ii)
the maximum number and/or class of securities available for issuance over the
remaining term of the Plan, (iii) the maximum number and/or class of securities
for which any one person may be granted stock options and direct stock issuances
under the Plan per calendar year and (iv) the maximum number and/or class of
securities which may be issued pursuant to Incentive Options granted under the
Plan following the consummation of the Corporate Transaction.
E. The Plan Administrator shall have full power and authority to grant
options under the Discretionary Option Grant Program which will automatically
accelerate in the event the Optionee's Service subsequently terminates by reason
of an Involuntary Termination within a designated period (not to exceed eighteen
(18) months) following the effective date of any Corporate Transaction in which
those options are assumed or replaced and do not otherwise accelerate. Any
options so accelerated shall remain exercisable for fully-vested shares until
the earlier of (i) the expiration of the option term or (ii) the expiration of
the one (1)-year period measured from the effective date of the Involuntary
Termination. In addition, the Plan Administrator may provide that one or more of
the Corporation's outstanding repurchase rights with respect to shares held by
the Optionee at the time of such Involuntary Termination shall immediately
terminate, and the shares subject to those terminated repurchase rights shall
accordingly vest in full.
F. The Plan Administrator shall have full power and authority to grant
options under the Discretionary Option Grant Program which will automatically
accelerate in the event the Optionee's Service subsequently terminates by reason
of an Involuntary Termination within a designated period (not to exceed eighteen
(18) months) following the effective date of any Change in Control. Each option
so accelerated shall remain exercisable for fully-vested shares until the
earlier of (i) the expiration of the option term or (ii) the expiration of the
one (1)-year period measured from the effective date of the Involuntary
Termination. In addition, the Plan Administrator may provide that one or more of
the Corporation's outstanding repurchase rights with respect to shares held by
the Optionee at the time of such Involuntary Termination shall immediately
terminate, and the shares subject to those terminated repurchase rights shall
accordingly vest in full.
G. The portion of any Incentive Option accelerated in connection with a
Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
limitation is not exceeded. To the extent such dollar limitation is exceeded,
the accelerated portion of such option shall be exercisable as a Non-Qualified
Option under the Federal tax laws.
H. The outstanding options shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
10.
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ARTICLE THREE
SALARY REDUCTION OPTION GRANT PROGRAM
I. OPTION GRANTS
The Primary Committee shall have the sole and exclusive authority to
determine the calendar year or years (if any) for which the Salary Reduction
Option Grant Program is to be in effect and to select the Employees eligible to
participate in the Salary Reduction Option Grant Program for those calendar year
or years. Each selected Employee who elects to participate in the Salary
Reduction Option Grant Program must, prior to the start of each calendar year of
participation, file with the Plan Administrator (or its designate) an
irrevocable authorization directing the Corporation to reduce his or her base
salary for that calendar year by a designated multiple of one percent (1%).
However, the minimum amount of such salary reduction must be not less than the
greater of (i) five percent (5%) of his or her rate of base salary for that
calendar year or (ii) Ten Thousand Dollars ($10,000.00) and must not be more
than the lesser of (i) twenty five percent (25%) of his or her rate of base
salary for the calendar year or (ii) Seventy Five Thousand Dollars ($75,000.00).
Each individual who files a proper salary reduction authorization shall
automatically be granted an option under this Salary Reduction Option Grant
Program on the first trading day in January of the calendar year for which that
salary reduction is to be in effect. Stockholder approval of this 1999
Restatement at the 1999 Annual Stockholders Meeting shall constitute
pre-approval of each option subsequently granted pursuant to the express terms
of this Salary Reduction Option Grant Program and the subsequent exercise of
that option in accordance with its terms.
II. OPTION TERMS
Each option shall be a Non-Qualified Option evidenced by one or more
documents in the form approved by the Plan Administrator; provided, however,
that each such document shall comply with the terms specified below.
A. Exercise Price.
1. The exercise price per share shall be thirty-three and one-third
percent (33-1/3%) of the Fair Market Value per share of Common Stock
on the option grant date.
2. The exercise price shall become immediately due upon exercise of the
option and shall be payable in one or more of the alternative forms
authorized under the Discretionary Option Grant Program. Except to the
extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must
be made on the Exercise Date.
B. Number of Option Shares. The number of shares of Common Stock subject to
the option shall be determined pursuant to the following formula (rounded down
to the nearest whole number):
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X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the dollar amount by which the Optionee's base
salary is to be reduced for the calendar year, and
B is the Fair Market Value per share of Common Stock
on the option grant date.
C. Exercise and Term of Options. The option shall become exercisable in a
series of twelve (12) successive equal monthly installments upon the Optionee's
completion of each calendar month of Service in the calendar year for which the
salary reduction is in effect. Each option shall have a maximum term of ten (10)
years measured from the option grant date.
D. Effect of Termination of Service. Should the Optionee cease Service for
any reason while holding one or more options under this Article Three, then each
such option shall remain exercisable, for any or all of the shares for which the
option is exercisable at the time of such cessation of Service, until the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the
expiration of the three (3)-year period measured from the date of such cessation
of Service. Should the Optionee die while holding one or more options under this
Article Three, then each such option may be exercised, for any or all of the
shares for which the option is exercisable at the time of the Optionee's
cessation of Service (less any shares subsequently purchased by Optionee prior
to death), by the personal representative of the Optionee's estate or by the
person or persons to whom the option is transferred pursuant to the Optionee's
will or in accordance with the laws of descent and distribution. Such right of
exercise shall lapse, and the option shall terminate, upon the earlier of (i)
the expiration of the ten (10)-year option term or (ii) the three (3)-year
period measured from the date of the Optionee's cessation of Service. However,
the option shall, immediately upon the Optionee's cessation of Service for any
reason, terminate and cease to remain outstanding with respect to any and all
shares of Common Stock for which the option is not otherwise at that time
exercisable.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction while the Optionee remains in
Service, each outstanding option held by such Optionee under this Salary
Reduction Option Grant Program shall automatically accelerate so that each such
option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable with respect to the total number of shares
of Common Stock at the time subject to such option and may be exercised for any
or all of those shares as fully-vested shares of Common Stock. Each such
outstanding option shall be assumed by the successor corporation (or parent
thereof) in the Corporate Transaction and shall remain exercisable for the
fully-vested shares until the earlier of (i) the expiration of the ten (10)-year
option term or (ii) the expiration of the three (3)-year period measured from
the date of the Optionee's cessation of Service.
B. In the event of a Change in Control while the Optionee remains in
Service, each outstanding option held by such Optionee under this Salary
Reduction Option Grant Program shall automatically accelerate so that each such
option shall immediately become fully exercisable with respect to the total
number of shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
The option shall remain so exercisable until the earlier or (i) the expiration
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of the ten (10)-year option term or (ii) the expiration of the three (3)-year
period measured from the date of the Optionee's cessation of Service.
C. The grant of options under the Salary Reduction Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
IV. REMAINING TERMS
The remaining terms of each option granted under the Salary Reduction
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.
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ARTICLE FOUR
STOCK ISSUANCE PROGRAM
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program
directly without any intervening option grants. Each such stock issuance shall
be evidenced by a Stock Issuance Agreement which complies with the terms
specified below.
A. Issue Price. The shares shall be issued for such valid consideration
under the Delaware General Corporation Law as the Plan Administrator may deem
appropriate, but the value of such consideration as determined by the Plan
Administrator shall not be less than one hundred percent (100%) of the Fair
Market Value of the issued shares of Common Stock on the issuance date.
B. Vesting Provisions.
1. The Primary Committee shall have the sole and exclusive authority to
issue shares of Common Stock under the Stock Issuance Program as a
bonus for past services rendered to the Corporation (or any Parent or
Subsidiary). All such bonus shares shall be fully and immediately
vested upon issuance.
2. All other shares of Common Stock authorized for issuance under the
Stock Issuance Program by the applicable Plan Administrator shall have
a minimum vesting schedule determined in accordance with the following
requirements:
(i) For any shares which are to vest solely by reason of Service to
be performed by the Participant, the Plan Administrator shall
impose a minimum Service period of at least three (3) years
measured from the issue date of such shares.
(ii) For any shares which are to vest upon the Participant's
completion of a designated Service requirement and the
Corporation's attainment of one or more prescribed performance
milestones, the Plan Administrator shall impose a minimum Service
period of at least one (1) year measured from the issue date of
such shares.
3. Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the
Participant's unvested shares of Common Stock by reason of any stock
dividend, stock split, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration
shall be issued subject to (i) the same vesting requirements
applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem
appropriate.
4. The Participant shall have full stockholder rights with respect to any
shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those
shares is vested. Accordingly, the Participant shall have the right to
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vote such shares and to receive any regular cash dividends paid on
such shares.
5. Should the Participant cease to remain in Service while holding one or
more unvested shares of Common Stock issued under the Stock Issuance
Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then
those shares shall be immediately surrendered to the Corporation for
cancellation, and the Participant shall have no further stockholder
rights with respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for consideration
paid in cash or cash equivalent (including the Participant's
purchase-money promissory note), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and
shall cancel the unpaid principal balance of any outstanding
purchase-money note of the Participant attributable to such
surrendered shares.
6. The Primary Committee shall have the sole and exclusive authority,
exercisable upon a Participant's termination of Service, to waive the
surrender and cancellation of any or all unvested shares of Common
Stock (or other assets attributable thereto) at the time held by that
Participant, if the Primary Committee determines such waiver to be an
appropriate severance benefit for the Participant.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. All of the Corporation's outstanding repurchase rights under the Stock
Issuance Program shall terminate automatically, and all the shares of Common
Stock subject to those terminated rights shall immediately vest in full, in the
event of any Corporate Transaction, except to the extent (i) those repurchase
rights are to be assigned to the successor corporation (or parent thereof) in
connection with such Corporate Transaction or (ii) such accelerated vesting is
precluded by other limitations imposed in the Stock Issuance Agreement.
B. The Plan Administrator shall have the discretionary authority to
structure one or more of the Corporation's repurchase rights under the Stock
Issuance Program in such manner that those repurchase rights shall automatically
terminate, and all the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event the Participant's Service should
subsequently terminate by reason of an Involuntary Termination within eighteen
(18) months following the effective date of any Corporate Transaction in which
those repurchase rights are assigned to the successor corporation (or parent
thereof).
C. The Plan Administrator shall have the discretionary authority to
structure one or more of the Corporation's repurchase rights under the Stock
Issuance Program in such manner that those repurchase rights shall automatically
terminate, and all the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event the Participant's Service should
subsequently terminate by reason of an Involuntary Termination within eighteen
(18) months following the effective date of any Change in Control.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held in
escrow by the Corporation until the Participant's interest in such shares vests
or may be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.
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ARTICLE FIVE
AUTOMATIC OPTION GRANT PROGRAM
The provisions of the Automatic Option Grant Program have been revised as
of March 17, 1998 and have been approved by the stockholders at the 1998 Annual
Meeting.
I. OPTION TERMS
A. Grant Dates. Option grants shall be made on the dates specified below:
1. Each individual who is re-elected to the Board as a non-employee Board
member at the 1998 Annual Stockholders Meeting shall automatically be
granted at that time a Non-Qualified Option to purchase 15,000 shares
of Common Stock.
2. Each individual who is first elected or appointed as a non-employee
Board member at the 1998 Annual Stockholders Meeting or at any time
thereafter shall automatically be granted, upon his or her initial
election or appointment (as the case may be), a Non-Qualified Option
to purchase 25,000 shares of Common Stock, provided that individual
has not previously been in the employ of the Corporation or any Parent
or Subsidiary.
3. On the date of each Annual Stockholders Meeting, beginning with the
1998 Annual Meeting, each individual who is re-elected to serve as a
non-employee Board member at such meeting shall automatically be
granted a Non-Qualified Option to purchase an additional 7,000 shares
of Common Stock, provided such individual has served as a non-employee
Board member for a period of at least six (6) months. There shall be
no limit on the number of such 7,000-share option grants any one
non-employee Board member may receive over his or her period of Board
service, and non-employee Board members who have previously been in
the employ of the Corporation or any Parent or Subsidiary shall be
eligible to receive such annual option grants upon their re-election
as non-employee Board members at one or more Annual Stockholders
Meetings.
Only the 15,000-share and 7,000-share option grants made at the 1998 Annual
Meeting have been adjusted to 30,000 shares and 14,000 shares, respectively, to
reflect the June 12, 1998 split of the Common Stock. All other share numbers in
this Article Five remain in effect after such split.
Stockholder approval of this 1999 Restatement at the 1999 Annual
Stockholders Meeting shall constitute pre-approval of each option granted at or
after that Annual Meeting pursuant to the express terms of this Automatic Option
Grant Program and the subsequent exercise of that option in accordance with its
terms.
B. Exercise Price.
1. The exercise price per share shall be equal to one hundred percent
(100%) of the Fair Market Value per share of Common Stock on the
option grant date.
2. The exercise price shall be payable in one or more of the alternative
forms authorized under the Discretionary Option Grant Program. Except
to the extent the sale and remittance procedure specified thereunder
is utilized, payment of the exercise price for the purchased shares
must be made on the Exercise Date.
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C. Option Term. Each option shall have a term of ten (10) years measured
from the option grant date.
D. Exercise and Vesting of Options. Each option shall be immediately
exercisable for any or all of the option shares. However, any shares purchased
under the option shall be subject to repurchase by the Corporation, at the
exercise price paid per share, upon the Optionee's cessation of Board service
prior to vesting in those shares. Each option grant shall vest, and the
Corporation's repurchase right shall lapse, in a series of four (4) successive
equal annual installments over the Optionee's period of continued service as a
Board member, with the first such installment to vest upon the Optionee's
completion of one (1) year of Board service measured from the option grant date.
E. Effect of Termination of Board Service. The following provisions shall
govern the exercise of any outstanding options held by the Optionee under this
Automatic Option Grant Program at the time the Optionee ceases to serve as a
Board member:
(i) The Optionee (or, in the event of Optionee's death, the personal
representative of the Optionee's estate or the person or persons to
whom the option is transferred pursuant to the Optionee's will or in
accordance with the laws of descent and distribution) shall have a
twelve (12)-month period following the date of such cessation of Board
service in which to exercise each such option. However, each option
shall, immediately upon the Optionee's cessation of Board service,
terminate and cease to remain outstanding with respect to any option
shares in which the Optionee is not otherwise at that time vested.
(ii) During the twelve (12)-month exercise period, the option may not be
exercised in the aggregate for more than the number of vested shares
for which the option is exercisable at the time of the Optionee's
cessation of Board service. However, should the Optionee cease to
serve as a Board member by reason of death or Permanent Disability,
then all shares at the time subject to the option shall immediately
vest so that such option may, during the twelve (12)-month exercise
period following such cessation of Board service, be exercised for all
or any portion of such shares as fully-vested shares.
(iii) In no event shall the option remain exercisable after the expiration
of the option term.
II. SPECIAL ACCELERATION EVENTS
A. In the event of any Corporate Transaction, the shares of Common Stock at
the time subject to each outstanding option but not otherwise vested shall
automatically vest in full so that each such option shall, immediately prior to
the specified effective date of the Corporate Transaction, become fully
exercisable for all of the shares of Common Stock at the time subject to that
option and may be exercised for all or any portion of such shares as
fully-vested shares of Common Stock. Immediately following the consummation of
the Corporate Transaction, each automatic option grant under the Plan shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation or its parent company.
B. In connection with any Change in Control of the Corporation, the shares
of Common Stock at the time subject to each outstanding option but not otherwise
vested shall automatically vest in full so that each such option shall,
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immediately prior to the specified effective date for the Change in Control,
become fully exercisable for all of the shares of Common Stock at the time
subject to that option and may be exercised for all or any portion of those
shares as fully-vested shares of Common Stock. Each such option shall remain
exercisable for such fully-vested option shares until the expiration or sooner
termination of the option term.
C. The automatic option grants outstanding under the Plan shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
III. REMAINING TERMS
The remaining terms of each option granted under the Automatic Option Grant
Program shall be the same as the terms in effect for option grants made under
the Discretionary Option Grant Program.
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ARTICLE SIX
DIRECTOR FEE OPTION GRANT PROGRAM
I. OPTION GRANTS
Each non-employee Board member may elect to apply all or any portion of the
annual retainer fee otherwise payable in cash for his or her service on the
Board to the acquisition of a special option grant under this Director Fee
Option Grant Program. Such election must be filed with the Corporation's Chief
Financial Officer prior to first day of July in the calendar year immediately
preceding the calendar year for which the annual retainer fee which is the
subject of that election is otherwise payable. Each non-employee Board member
who files such a timely election shall automatically be granted an option under
this Director Fee Option Grant Program on the first trading day in January in
the calendar year for which the annual retainer fee which is the subject of that
election would otherwise be payable. Stockholder approval of the 1999
Restatement at the 1999 Annual Stockholders Meeting shall constitute
pre-approval of each option subsequently granted pursuant to the express terms
of this Director Fee Option Grant Program and the subsequent exercise of that
option in accordance with its terms.
II. OPTION TERMS
Each option shall be a Non-Qualified Option governed by the terms and
conditions specified below.
A. Exercise Price.
1. The exercise price per share shall be thirty-three and one-third
percent (33-1/3%) of the Fair Market Value per share of Common Stock
on the option grant date.
2. The exercise price shall become immediately due upon exercise of the
option and shall be payable in one or more of the alternative forms
authorized under the Discretionary Option Grant Program. Except to the
extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must
be made on the Exercise Date.
B. Number of Option Shares. The number of shares of Common Stock subject to
the option shall be determined pursuant to the following formula (rounded down
to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the portion of the annual retainer fee subject
to the non-employee Board member's election, and
B is the Fair Market Value per share of Common Stock
on the option grant date.
C. Exercise and Term of Options. The option shall become exercisable in a
series of twelve (12) successive equal monthly installments upon the Optionee's
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completion of each calendar month of Board service in the calendar year for
which the annual retainer fee which is the subject of his or her election under
this Article Six would otherwise be payable. Each option shall have a maximum
term of ten (10) years measured from the option grant date.
D. Effect of Termination of Service. Should the Optionee cease Board
service for any reason (other than death or Permanent Disability) while holding
one or more options under this Article Six, then each such option shall remain
exercisable, for any or all of the shares for which the option is exercisable at
the time of such cessation of Board service, until the earlier of (i) the
expiration of the ten (10)-year option term or (ii) the expiration of the three
(3)-year period measured from the date of such cessation of Board service.
However, each option held by the Optionee under this Article Six at the time of
his or her cessation of Board service shall immediately terminate and cease to
remain outstanding with respect to any and all shares of Common Stock for which
the option is not otherwise at that time exercisable.
E. Death or Permanent Disability. Should the Optionee's service as a Board
member cease by reason of death or Permanent Disability, then each option held
by such Optionee under this Article Six shall immediately become exercisable for
all the shares of Common Stock at the time subject to that option, and the
option may, during the three (3)-year period following such cessation of Board
service, be exercised for any or all of those shares as fully-vested shares.
Should the Optionee die while holding one or more options under this
Article Six, then each such option may be exercised, for any or all of the
shares for which the option is exercisable at the time of the Optionee's
cessation of Board service (less any shares subsequently purchased by Optionee
prior to death), by the personal representative of the Optionee's estate or by
the person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and distribution. Such
right of exercise shall lapse, and the option shall terminate, upon the earlier
of (i) the expiration of the ten (10)-year option term or (ii) the three
(3)-year period measured from the date of the Optionee's cessation of Board
service.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction while the Optionee remains a
Board member, each outstanding option held by such Optionee under this Director
Fee Option Grant Program shall automatically accelerate so that each such option
shall, immediately prior to the effective date of the Corporate Transaction,
become fully exercisable with respect to the total number of shares of Common
Stock at the time subject to such option and may be exercised for any or all of
those shares as fully-vested shares of Common Stock. Each such outstanding
option shall be assumed by the successor corporation (or parent thereof) in the
Corporate Transaction and shall remain exercisable for the fully-vested shares
until the earlier of (i) the expiration of the ten (10)-year option term or (ii)
the expiration of the three (3)-year period measured from the date of the
Optionee's cessation of Board service.
B. In the event of a Change in Control while the Optionee remains in
Service, each outstanding option held by such Optionee under this Director Fee
Option Grant Program shall automatically accelerate so that each such option
shall immediately become fully exercisable with respect to the total number of
shares of Common Stock at the time subject to such option and may be exercised
for any or all of those shares as fully-vested shares of Common Stock. The
option shall remain so exercisable until the earlier or (i) the expiration of
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the ten (10)-year option term or (ii) the expiration of the three (3)-year
period measured from the date of the Optionee's cessation of Service.
C. The grant of options under the Director Fee Option Grant Program shall
in no way affect the right of the Corporation to adjust, reclassify, reorganize
or otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
IV. REMAINING TERMS
The remaining terms of each option granted under this Director Fee Option
Grant Program shall be the same as the terms in effect for option grants made
under the Discretionary Option Grant Program.
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ARTICLE SEVEN
MISCELLANEOUS
I. FINANCING
The Plan Administrator may permit any Optionee or Participant to pay the
option exercise price under the Discretionary Option Grant Program or the
purchase price of shares issued under the Stock Issuance Program by delivering a
promissory note payable in one or more installments. The terms of any such
promissory note (including the interest rate and the terms of repayment) shall
be established by the Plan Administrator in its sole discretion. Promissory
notes may be authorized with or without security or collateral. In all events,
the maximum credit available to the Optionee or Participant may not exceed the
sum of (i) the aggregate option exercise price or purchase price payable for the
purchased shares plus (ii) any Federal, state and local income and employment
tax liability incurred by the Optionee or the Participant in connection with the
option exercise or share purchase.
II. TAX WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock upon the
exercise of options or the issuance or vesting of such shares under the Plan
shall be subject to the satisfaction of all applicable Federal, state and local
income and employment tax withholding requirements.
III. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan became effective upon approval by the Corporation's
stockholders at the 1995 Annual Stockholders Meeting.
B. The Plan was amended and restated by the Board in March 1996 (the "March
1996 Restatement") to effect the following revisions: (i) increase the maximum
number of shares of Common Stock authorized for issuance over the term of the
Plan by an additional 1,300,000 shares to 6,224,830 shares and (ii) increase the
limit on the maximum number of shares of Common Stock which may be issued under
the Plan prior to the required cessation of further Incentive Option grants by
an additional 1,300,000 shares to a total of 6,100,000 shares of Common Stock.
The March 1996 Restatement became effective immediately upon adoption by the
Board and was approved by the Corporation's stockholders at the 1996 Annual
Meeting.
C. The Plan was again amended and restated on March 20, 1997 (the "1997
Amendment") to effect the following changes: (i) increase the number of shares
of Common Stock authorized for issuance over the term of the Plan by an
additional 1,200,000 shares, (ii) render the non-employee Board members eligible
to receive option grants and direct stock issuances under the Discretionary
Option Grant and Stock Issuance Programs, (iii) eliminate the plan limitation
which precluded the grant of additional Incentive Options once the number of
shares of Common Stock issued under the Plan, whether as vested or unvested
shares, exceeded 6,100,000 shares, (iv) eliminate certain restrictions on the
eligibility of non-employee Board members to serve as Plan Administrator and (v)
effect a series of technical changes to the provisions of the Plan (including
the stockholder approval requirements) in order to take advantage of the recent
amendments to Rule 16b-3 of the Securities and Exchange Commission which exempts
certain officer and director transactions under the Plan from the short-swing
liability provisions of the Federal securities laws. The 1997 Amendment became
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effective immediately upon adoption by the Board and was approved by the
Corporation's stockholders at the 1997 Annual Meeting.
D. The Plan was further amended and restated on March 17, 1998 (the "1998
Restatement") to increase the number of shares of Common Stock authorized for
issuance over the term of the Plan by an additional 1,200,000 shares and to
effect the following changes to the Automatic Option Grant Program in effect
under Article Five:
(i) Each individual reelected to the Board as a non-employee Board member
at the 1998 Annual Meeting shall receive at that time an option grant
for 15,000 shares of the Company's Common Stock.
(ii) Each individual who first joins the Board as a non-employee Board
member at the 1998 Annual Meeting or at any time thereafter shall,
upon his or her initial election or appointment to the Board, receive
an option grant for 25,000 shares of the Company's Common Stock,
provided such individual has not previously been in the Company's
employ.
(iii) On the date of each Annual Stockholders Meeting, beginning with the
1998 Annual Meeting, each individual reelected to the Board as a
non-employee Board member will receive an option grant for 7,000
shares of the Company's Common Stock, provided such individual has
served as a non-employee Board member for at least six months.
The 1998 Restatement was approved by the stockholders at the 1998 Annual
Meeting, and no option grants made on the basis of the 600,000-share increase
under the 1998 Restatement became exercisable in whole or in part until the 1998
Restatement was so approved. All option grants made prior to the 1998
Restatement shall remain outstanding in accordance with the terms and conditions
of the respective instruments evidencing those options or issuances, and nothing
in the 1998 Restatement shall be deemed to modify or in any way affect those
outstanding options or issuances.
E. The Plan was further amended and restated on March 31, 1999 (the "1999
Restatement") to increase the number of shares of Common Stock authorized for
issuance over the term of the Plan by an additional 1,200,000 shares, subject to
stockholder approval at the 1999 Annual Meeting. No option grants or direct
stock issuances shall be made on the basis of the 1,200,000-share increase
authorized by the 1999 Restatement unless and until the Restatement is approved
by the stockholders at the 1999 Annual Meeting. All option grants made prior to
the 1999 Restatement shall remain outstanding in accordance with the terms and
conditions of the respective instruments evidencing those options or issuances,
and nothing in the 1999 Restatement shall be deemed to modify or in any way
affect those outstanding options or issuances. Subject to the foregoing
limitations, the Plan Administrator may make option grants under the Plan at any
time before the date fixed herein for the termination of the Plan.
F. The Plan Administrator shall have full power and authority, exercisable
in its sole discretion, to extend one or more provisions of the Discretionary
Option Grant Program, including (without limitation) the vesting acceleration
provisions of Section III of Article Two relating to Corporate Transactions and
Changes in Control, to one or more outstanding stock options under the
Predecessor Plan which are incorporated into this Plan on the Effective Date but
which do not otherwise contain such provisions.
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G. The Plan shall terminate upon the earliest of (i) May 24, 2005, (ii) the
date on which all shares available for issuance under the Plan shall have been
issued as fully-vested shares or (iii) the termination of all outstanding
options in connection with a Corporate Transaction. Upon a clause (i) plan
termination, all outstanding option grants and unvested stock issuances shall
thereafter continue to have force and effect in accordance with the provisions
of the documents evidencing such grants or issuances.
IV. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to amend
or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
stock options or unvested stock issuances at the time outstanding under the Plan
unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.
B. Options to purchase shares of Common Stock may be granted under the
Discretionary Option Grant and Salary Reduction Option Grant Programs and shares
of Common Stock may be issued under the Stock Issuance Program that are in each
instance in excess of the number of shares then available for issuance under the
Plan, provided any excess shares actually issued under those programs shall be
held in escrow until there is obtained stockholder approval of an amendment
sufficiently increasing the number of shares of Common Stock available for
issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess issuances are made, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees and the Participants the exercise or purchase price paid
for any excess shares issued under the Plan and held in escrow, together with
interest (at the applicable Short Term Federal Rate) for the period the shares
were held in escrow, and such shares shall thereupon be automatically cancelled
and cease to be outstanding.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares of
Common Stock under the Plan shall be used for general corporate purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any stock option under
the Plan and the issuance of any shares of Common Stock (i) upon the exercise of
any granted option or (ii) under the Stock Issuance Program shall be subject to
the Corporation's procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the stock options
granted under it and the shares of Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or delivered
under the Plan unless and until there shall have been compliance with all
applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
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VII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the Participant any
right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining such person) or of the Optionee or
the Participant, which rights are hereby expressly reserved by each, to
terminate such person's Service at any time for any reason, with or without
cause.
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APPENDIX
The following definitions shall be in effect under the Plan:
A. Automatic Option Grant Program shall mean the automatic option grant
program in effect under the Plan.
B. Board shall mean the Corporation's Board of Directors.
C. Change in Control shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly by any person or related group
of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control
with, the Corporation), of beneficial ownership (within the meaning of
Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made
directly to the Corporation's stockholders, or
(ii) a change in the composition of the Board over a period of thirty-six
(36) consecutive months or less such that a majority of the Board
members ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B)
have been elected or nominated for election as Board members during
such period by at least a majority of the Board members described in
clause (A) who were still in office at the time the Board approved
such election or nomination.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
E. Common Stock shall mean the Corporation's common stock.
F. Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) merger or consolidation in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior
to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially all of
the Corporation's assets in complete liquidation or dissolution of the
Corporation.
G. Corporation shall mean FileNET Corporation, a Delaware corporation.
A-1.
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H. Director Fee Option Grant Program shall mean the special stock option grant
in effect for non-employee Board members under Article Six of the Plan.
I. Discretionary Option Grant Program shall mean the discretionary option
grant program in effect under the Plan.
J. Effective Date shall mean the date of the 1995 Annual Stockholders Meeting,
provided the Plan is approved by the stockholders at that meeting.
K. Employee shall mean an individual who is in the employ of the Corporation
(or any Parent or Subsidiary), subject to the control and direction of the
employer entity as to both the work to be performed and the manner and
method of performance.
L. Exercise Date shall mean the date on which the Corporation shall have
received written notice of the option exercise.
M. Fair Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the average of the high
and low selling prices per share of Common Stock on the date in
question, as such prices are reported by the National Association of
Securities Dealers on the Nasdaq National Market or any successor
system. If there are no high or low selling prices for the Common
Stock on the date in question, then the Fair Market Value shall be the
average of the high and low selling prices on the last preceding date
for which such quotations exist.
(ii) If the Common Stock is at the time listed on any Stock Exchange, then
the Fair Market Value shall be the average of the high and low selling
prices per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such prices are officially quoted in the
composite tape of transactions on such exchange. If there are no high
and low selling prices for the Common Stock on the date in question,
then the Fair Market Value shall be the average of the high and low
selling prices on the last preceding date for which such quotations
exist.
N. Incentive Option shall mean an option which satisfies the requirements of
Code Section 422.
O. Involuntary Termination shall mean the termination of the Service of any
individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
A-2.
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(ii) such individual's voluntary resignation following (A) a change in his
or her position with the Corporation which materially reduces his or
her level of responsibility, (B) a reduction in his or her level of
compensation (including base salary, fringe benefits and participation
in any corporate-performance based bonus or incentive programs) by
more than fifteen percent (15%) or (C) a relocation of such
individual's place of employment by more than fifty (50) miles,
provided and only if such change, reduction or relocation is effected
by the Corporation without the individual's consent.
P. Misconduct shall mean the commission of any act of fraud, embezzlement or
dishonesty by the Optionee or Participant, any unauthorized use or
disclosure by such person of confidential information or trade secrets of
the Corporation (or any Parent or Subsidiary), or any other intentional
misconduct by such person adversely affecting the business or affairs of
the Corporation (or any Parent or Subsidiary) in a material manner. The
foregoing definition shall not be deemed to be inclusive of all the acts or
omissions which the Corporation (or any Parent or Subsidiary) may consider
as grounds for the dismissal or discharge of any Optionee, Participant or
other person in the Service of the Corporation (or any Parent or
Subsidiary).
Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
R. Non-Qualified Option shall mean an option not intended to satisfy the
requirements of Code Section 422.
S. Optionee shall mean any person to whom an option is granted under the
Discretionary Option Grant, Salary Reduction Option Grant, Automatic Option
Grant or Director Fee Option Grant Program.
T. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the
time of the determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
U. Participant shall mean any person who is issued shares of Common Stock
under the Stock Issuance Program.
V. Permanent Disability or Permanently Disabled shall mean the inability of
the Optionee or the Participant to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of
twelve (12) months or more. However, solely for purposes of the Automatic
Option Grant and Director Fee Option Grant Programs, Permanent Disability
or Permanently Disabled shall mean the inability of the non-employee Board
member to perform his or her usual duties as a Board member by reason of
any medically determinable physical or mental impairment expected to result
in death or to be of continuous duration of twelve (12) months or more.
W. Plan shall mean the Corporation's 1995 Stock Option Plan, as set forth in
this document.
A-3.
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X. Plan Administrator shall mean the particular entity, whether the Primary
Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to one or more classes of eligible persons, to the extent such
entity is carrying out its administrative functions under those programs
with respect to the persons under its jurisdiction.
Y. Predecessor Plan shall mean the Corporation's Second Amended and Restated
Stock Option Plan, pursuant to which 3,250,000 shares of Common Stock have
been authorized for issuance.
Z. Primary Committee shall mean the committee of two (2) or more non-employee
Board members appointed by the Board to administer the Discretionary Option
Grant and Stock Issuance Programs with respect to Section 16 Insiders.
AA. Salary Reduction Option Grant Program shall mean the salary reduction grant
program in effect under the Plan.
BB. Secondary Committee shall mean a committee of two (2) or more Board members
appointed by the Board to administer the Discretionary Option Grant and
Stock Issuance Programs with respect to eligible persons other than Section
16 Insiders.
CC. Section 16 Insider shall mean an officer or director of the Corporation
subject to the short-swing profit liabilities of Section 16 of the 1934
Act.
DD. Service shall mean the performance of services for the Corporation (or any
Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or
independent advisor, except to the extent otherwise specifically provided
in the documents evidencing the option grant or stock issuance.
EE. Stock Exchange shall mean either the American Stock Exchange or the New
York Stock Exchange.
FF. Stock Issuance Agreement shall mean the agreement entered into by the
Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.
GG. Stock Issuance Program shall mean the stock issuance program in effect
under the Plan.
HH. Subsidiary shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
II. 10% Stockholder shall mean the owner of stock (as determined under Code
Section 424(d)) possessing ten percent (10%) or more of the total combined
voting power of all classes of stock of the Corporation (or any Parent or
Subsidiary).
A-4.
EXHIBIT 99.15
FILENET CORPORATION
1998 EMPLOYEE STOCK PURCHASE PLAN
(As Amended and Restated through March 22, 1999)
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the interests of
FileNet Corporation by providing eligible employees with the opportunity to
acquire a proprietary interest in the Corporation through participation in a
payroll-deduction based employee stock purchase plan designed to qualify under
Section 423 of the Code.
This Plan shall serve as the successor to the Corporation's existing 1988
Employee Stock Purchase Plan (the "Predecessor Plan"), and no further shares of
Common Stock will be issued under the Predecessor Plan from and after the
Effective Date.
Capitalized terms herein shall have the meanings assigned to such terms in
the attached Appendix.
All share numbers in this Plan reflect the 2-for-1 split of the Common
Stock effective on June 12, 1998
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and construe
any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares of Common Stock purchased
on the open market. The maximum number of shares of Common Stock which may be
issued over the term of the Plan and the International Plan shall not exceed Six
Hundred Ninety Two Thousand Two Hundred and Seventy Eight (692,278) shares and
shall be limited to the following components: (i) the actual number of shares of
Common Stock remaining for issuance under the Predecessor Plan on the Effective
Date (Ninety Two Thousand Two Hundred Seventy Eight (92,278) shares plus (ii) an
additional Three Hundred Thousand (300,000) shares of Common Stock approved by
the stockholders at the 1998 Annual Meeting in connection with the
implementation of the Plan plus (iii) an additional increase of Three Hundred
Thousand (300,000) shares authorized by the Board on March 22, 1999, subject to
stockholder approval at the 1999 Annual Meeting.
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B. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and class of securities issuable under the Plan
and the International Plan, (ii) the maximum number and class of securities
purchasable per Participant on any one Purchase Date, (iii) the maximum number
and class of securities purchasable by all Participants in the aggregate on any
one Purchase Date and (iv) the number and class of securities and the price per
share in effect under each outstanding purchase right in order to prevent the
dilution or enlargement of benefits thereunder.
IV. PURCHASE PERIODS
A. Shares of Common Stock shall be offered for purchase under the Plan
through a series of successive purchase periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.
B. Each purchase period shall have a duration of six (6) months. Purchase
periods shall run from the first business day in May to the last business day in
October each year and from the first business day in November each year to the
last business day in April of the following year. However, the initial purchase
period under the Plan shall begin on October 1, 1998 and end on the last
business day in April 1999.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the start date of any
purchase period shall be eligible to participate in the Plan for that purchase
period.
B. To participate in the Plan for a particular purchase period, the
Eligible Employee must complete the enrollment form prescribed by the Plan
Administrator and file such form with the Plan Administrator (or its designate)
on or before the start date of the purchase period.
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock under the Plan may be any multiple of one
percent (1%) of the Cash Earnings paid to the Participant during each purchase
period, up to a maximum of ten percent (10%). The deduction rate so authorized
shall continue in effect for the entire purchase period and for each subsequent
purchase period the Participant remains in the Plan. The Participant may not
increase his or her rate of payroll deduction during a purchase period, but may
effect such increase as of the start date of any subsequent purchase period
following the filing of a new payroll deduction authorization with the Plan
2.
<PAGE>
Administrator. However, the Participant may, at any time during the purchase
period, reduce his or her rate of payroll deduction to become effective as soon
as possible after filing the appropriate form with the Plan Administrator. The
Participant may not, however, effect more than one (1) such reduction per
purchase period.
B. Payroll deductions shall begin on the first pay day following the start
date of the purchase period and shall (unless sooner terminated by the
Participant) continue through the pay day ending with or immediately prior to
the last day of the purchase period. The amounts so collected shall be credited
to the Participant's book account under the Plan, but no interest shall be paid
on the balance from time to time outstanding in such account. The amounts
collected from the Participant shall not be required to be held in any
segregated account or trust fund and may be commingled with the general assets
of the Corporation and used for general corporate purposes.
C. Payroll deductions shall automatically cease upon the termination of the
Participant's purchase right in accordance with the provisions of the Plan.
D. The Participant's acquisition of Common Stock under the Plan on any
Purchase Date shall neither limit nor require the Participant's acquisition of
Common Stock on any subsequent Purchase Date.
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. A Participant shall be granted a separate
purchase right on the start date of each purchase period in which he or she
participates. The purchase right shall provide the Participant with the right to
purchase shares of Common Stock on the Purchase Date upon the terms set forth
below. The Participant shall execute a stock purchase agreement embodying such
terms and such other provisions (not inconsistent with the Plan) as the Plan
Administrator may deem advisable.
Under no circumstances shall purchase rights be granted under the Plan to
any Eligible Employee if such individual would, immediately after the grant, own
(within the meaning of Code Section 424(d)) or hold outstanding options or other
rights to purchase, stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Corporation or any
Corporate Affiliate.
B. Exercise of the Purchase Right. Each purchase right shall be
automatically exercised on the Purchase Date, and shares of Common Stock shall
accordingly be purchased on behalf of each Participant on such date. The
purchase shall be effected by applying the Participant's payroll deductions for
the purchase period ending on such Purchase Date to the purchase of shares of
Common Stock at the purchase price in effect for that purchase period.
3.
<PAGE>
C. Purchase Price. The purchase price per share at which Common Stock will
be purchased on the Participant's behalf on each Purchase Date shall be equal to
eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of
Common Stock on the start date of the purchase period or (ii) the Fair Market
Value per share of Common Stock on that Purchase Date.
D. Number of Purchasable Shares. The number of shares of Common Stock
purchasable by a Participant on each Purchase Date shall be the number of whole
shares obtained by dividing the amount collected from the Participant through
payroll deductions during the purchase period ending with that Purchase Date by
the purchase price in effect for that period. However, the maximum number of
shares of Common Stock purchasable per Participant on any one Purchase Date
shall not exceed eight hundred (800) shares, subject to periodic adjustments in
the event of certain changes in the Corporation's capitalization. In addition,
the maximum number of shares of Common Stock purchasable by all Participants in
the aggregate on any one Purchase Date under the Plan and the International Plan
shall not exceed One Hundred Seventy Thousand (170,000) shares, subject to
periodic adjustments in the event of certain changes in the Corporation's
capitalization. However, the Plan Administrator shall have the discretionary
authority, exercisable prior to the start of any purchase period under the Plan,
to increase or decrease the limitations to be in effect for the number of shares
purchasable per Participant and in the aggregate by all Participants on the
Purchase Date in effect for that period.
E. Excess Payroll Deductions. Any payroll deductions not applied to the
purchase of shares of Common Stock on any Purchase Date because they are not
sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable by the Participant on the
Purchase Date or the limitation on the maximum number of shares purchasable in
the aggregate on the Purchase Date by all Participants shall be promptly
refunded.
F. Termination of Purchase Right. The following provisions shall govern the
termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the last fifteen (15) days of
the purchase period, terminate his or her outstanding purchase right
by filing the appropriate form with the Plan Administrator (or its
designate), and no further payroll deductions shall be collected from
the Participant with respect to the terminated purchase right. Any
payroll deductions collected during the purchase period in which such
termination occurs shall, at the Participant's election, be
immediately refunded or held for the purchase of shares on the next
Purchase Date. If no such election is made at the time the purchase
right is terminated, then the payroll deductions collected with
respect to the terminated right shall be refunded as soon as possible.
4.
<PAGE>
(ii) The termination of such purchase right shall be irrevocable, and the
Participant may not subsequently rejoin the purchase period for which
the terminated purchase right was granted. In order to resume
participation in any subsequent purchase period, such individual must
re-enroll in the Plan (by making a timely filing of the prescribed
enrollment forms) before the start date of the new purchase period.
(iii)Should the Participant cease to remain an Eligible Employee for any
reason (including death, disability or change in status) while his or
her purchase right remains outstanding, then that purchase right shall
immediately terminate, and all of the Participant's payroll deductions
for the purchase period in which the purchase right so terminates
shall be immediately refunded. However, should the Participant cease
to remain in active service by reason of an approved unpaid leave of
absence, then the Participant shall have the right, exercisable up
until the last business day of the purchase period in which such leave
commences, to (a) withdraw all the payroll deductions collected to
date on his or her behalf during such purchase period or (b) have such
funds held for the purchase of shares on the next scheduled Purchase
Date. In no event, however, shall any further payroll deductions be
collected on the Participant's behalf during such leave. Upon the
Participant's return to active service (i) within ninety (90) days
after the start of the leave or (ii) prior to the expiration of any
longer period during his or her re-employment rights are guaranteed by
law or contract, his or her payroll deductions under the Plan shall
automatically resume at the rate in effect at the time the leave
began.
G. Corporate Transaction. Each outstanding purchase right shall
automatically be exercised, immediately prior to the effective date of any
Corporate Transaction, by applying the payroll deductions of each Participant
for the purchase period in which such Corporate Transaction occurs to the
purchase of whole shares of Common Stock at a purchase price per share equal to
eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of
Common Stock on the start date of the purchase period in which such Corporate
Transaction occurs or (ii) the Fair Market Value per share of Common Stock
immediately prior to the effective date of such Corporate Transaction. However,
the applicable limitation on the number of shares of Common Stock purchasable
per Participant shall continue to apply to any such purchase, but not the
limitation on the aggregate number of shares purchasable by all Participants.
The Corporation shall use its best efforts to provide at least ten (10)
days prior written notice of the occurrence of any Corporate Transaction, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Corporate Transaction.
5.
<PAGE>
H. Proration of Purchase Rights. Should the total number of shares of
Common Stock which are to be purchased pursuant to outstanding purchase rights
on any particular date exceed either (i) the number of shares then available for
issuance under the Plan or (ii) the maximum number of shares purchasable by all
Participants (and all participants in the International Plan) in the aggregate
on that Purchase Date, then the Plan Administrator shall make a pro-rata
allocation of the available shares on a uniform and nondiscriminatory basis, and
the payroll deductions of each Participant (and each participant in the
International Plan), to the extent in excess of the aggregate purchase price
payable for the Common Stock pro-rated to such individual, shall be refunded.
I. Assignability. The purchase right shall be exercisable only by the
Participant and shall not be assignable or transferable by the Participant.
J. Stockholder Rights. A Participant shall have no stockholder rights with
respect to the shares subject to his or her outstanding purchase right until the
shares are purchased on the Participant's behalf in accordance with the
provisions of the Plan and the Participant has become a holder of record of the
purchased shares.
VIII.ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any purchase right outstanding under this Plan if and to the
extent such accrual, when aggregated with (i) rights to purchase Common Stock
accrued under any other purchase right granted under this Plan and (ii) similar
rights accrued under other employee stock purchase plans (within the meaning of
Code Section 423) of the Corporation or any Corporate Affiliate, would otherwise
permit such Participant to purchase more than Twenty-Five Thousand Dollars
($25,000) worth of stock of the Corporation or any Corporate Affiliate
(determined on the basis of the Fair Market Value of such stock on the date or
dates such rights are granted) for each calendar year such rights are at any
time outstanding.
B. For purposes of applying such accrual limitations, the following
provisions shall be in effect:
(i) The right to acquire Common Stock under each outstanding purchase
right shall accrue on the Purchase Date in effect for the purchase
period for which such right is granted.
(ii) No right to acquire Common Stock under any outstanding purchase right
shall accrue to the extent the Participant has already accrued in the same
calendar year the right to acquire Common Stock under one (1) or more other
purchase rights at a rate equal to Twenty-Five Thousand Dollars ($25,000) worth
of Common Stock (determined on the basis of the Fair Market Value per share on
the date or dates of grant) for each calendar year such rights were at any time
outstanding.
6.
<PAGE>
C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular purchase period, then the payroll
deductions which the Participant made during that purchase period with respect
to such purchase right shall be promptly refunded.
D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on March 17, 1998 and approved by the
Corporation's stockholders at the 1998 Annual Meeting held on May 15, 1998. The
Plan .shall become effective on the Effective Date. However, no purchase rights
granted under the Plan shall be exercised, and no shares of Common Stock shall
be issued hereunder, until the Corporation shall have complied with all
applicable requirements of the 1933 Act (including the registration of the
shares of Common Stock issuable under the Plan on a Form S-8 registration
statement filed with the Securities and Exchange Commission), all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock is listed for trading and all other
applicable requirements established by law or regulation.
B. The Plan was amended and restated on March 22, 1999 (the "1999
Restatement") to increase the number of shares of Common Stock authorized for
issuance over the term of the Plan by an additional Three Hundred Thousand
(300,000) shares, subject to stockholder approval at the 1999 Annual Meeting. No
purchase rights shall be granted, and no shares shall be issued, on the basis of
the Three Hundred Thousand (300,000)-share increase authorized by the 1999
Restatement unless and until the Restatement is approved by the stockholders at
the 1999 Annual Meeting.
C. Unless sooner terminated by the Board, the Plan shall terminate upon the
earliest to occur of (i) the last business day in October 2008, (ii) the date on
which all shares available for issuance under the Plan (and the International
Plan) shall have been sold pursuant to purchase rights exercised under the Plan
(and the International Plan) or (iii) the date on which all purchase rights are
exercised in connection with a Corporate Transaction. No further purchase rights
shall be granted or exercised, and no further payroll deductions shall be
collected, under the Plan following such termination.
X. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the Plan at any time to
become effective immediately following the close of any purchase period.
However, the Board may not, without the approval of the Corporation's
stockholders, (i) increase the number of shares of Common Stock issuable under
the Plan, except for permissible adjustments in the event of certain changes in
7.
<PAGE>
the Corporation's capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock purchasable
under the Plan, or (iii) modify the requirements for eligibility to participate
in the Plan.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the Plan shall
be paid by the Corporation.
B. Nothing in the Plan shall confer upon the Participant any right to
continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.
C. The provisions of the Plan shall be governed by the laws of the State of
California without resort to that State's conflict-of-laws rules.
8.
<PAGE>
Schedule A
Corporations Participating in
Employee Stock Purchase Plan
As of October 1, 1998
FileNet Corporation, a Delaware corporation
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
B. Cash Earnings shall mean the (i) base salary payable to a Participant by
one or more Participating Companies during such individual's period of
participation in one or more purchase periods under the Plan plus (ii) all
overtime payments, bonuses, commissions and other incentive-type payments
received during such period. Such Cash Earnings shall be calculated before
deduction of (A) any income or employment tax withholdings or (B) any pre-tax
contributions made by the Participant to any Code Section 401(k) salary deferral
plan or any Code Section 125 cafeteria benefit program now or hereafter
established by the Corporation or any Corporate Affiliate. However, Cash
Earnings shall not include any contributions (other than Code Section 401(k) or
Code Section 125 contributions) made on the Participant's behalf by the
Corporation or any Corporate Affiliate to any employee benefit or welfare plan
now or hereafter established.
C. Code shall mean the Internal Revenue Code of 1986, as amended.
D. Common Stock shall mean the Corporation's common stock.
E. Corporate Affiliate shall mean any parent or subsidiary corporation of
the Corporation (as determined in accordance with Code Section 424), whether now
existing or subsequently established.
F. Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing fifty percent
(50%) or more of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior
to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially all of
the assets of the Corporation in complete liquidation or dissolution
of the Corporation.
G. Corporation shall mean FileNet Corporation, a Delaware corporation and
any corporate successor to all or substantially all of the assets or voting
stock of FileNet Corporation which shall by appropriate action adopt the Plan.
H. Effective Date shall mean the October 1, 1998 effective date of the
Plan.
I. Eligible Employee shall mean any person who is employed by a
Participating Corporation on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section
3401(a).
A-1.
<PAGE>
J. Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the average of the high
and low selling prices per share of Common Stock on the date in
question, as those prices are reported by the National Association of
Securities Dealers on the Nasdaq National Market. If there are no
selling prices for the Common Stock on the date in question, then the
Fair Market Value shall be the average of the high and low selling
prices on the last preceding date for which such quotations exist.
(ii) If the Common Stock is at the time listed on any Stock Exchange, then
the Fair Market Value shall be the average of the high and low selling
prices per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as those prices are officially quoted in the
composite tape of transactions on such exchange. If there are no
selling prices for the Common Stock on the date in question, then the
Fair Market Value shall be the average of the high and low selling
prices on the last preceding date for which such quotations exist.
K. International Plan shall mean the FileNet Corporation International
Employee Stock Purchase Plan.
L. 1933 Act shall mean the Securities Act of 1933, as amended.
M. Participant shall mean any Eligible Employee of a Participating
Corporation who is actively participating in the Plan.
N. Participating Corporation shall mean the Corporation and such Corporate
Affiliate or Affiliates as may be authorized from time to time by the Board to
extend the benefits of the Plan to their Eligible Employees. The Participating
Corporations in the Plan as of the Effective Date are listed in attached
Schedule A.
O. Plan shall mean the Corporation's Employee Stock Purchase Plan, as set
forth in this document.
P. Plan Administrator shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the Plan.
Q. Predecessor Plan shall mean the Corporation's 1988 Employee Stock
Purchase Plan.
R. Purchase Date shall mean the last business day of each purchase period.
The initial Purchase Date shall be April 30, 1999.
A-2.
<PAGE>
S. Stock Exchange shall mean either the American Stock Exchange or the New
York Stock Exchange.
A-3.
EXHIBIT 99.16
FILENET CORPORATION
INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN
(As Amended and Restated through May 20, 1999)
I. PURPOSE OF THE PLAN
This International Employee Stock Purchase Plan is intended to promote the
interests of FileNET Corporation by providing eligible employees of the
Corporation's Foreign Subsidiaries with the opportunity to acquire a proprietary
interest in the Corporation through the purchase of shares of the Corporation's
Common Stock at periodic intervals.
Capitalized terms herein shall have the meanings assigned to such terms in
the attached Appendix. All share numbers in this May 20, 1999 restatement
reflect the 2-for-1 split of Common Stock effected on June 12, 1998.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and construe
any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary. Decisions of the Plan
Administrator shall be final and binding on all parties having an interest in
the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares of Common Stock purchased
on the open market. The maximum number of shares of Common Stock which may be
issued over the term of the Plan and the U.S. Plan shall be limited to Four
Hundred Thousand (400,000) shares and shall consist of the following: (i) the
estimated One Hundred Thousand (100,000) shares of Common Stock remaining for
issuance under the Predecessor Plan on the Effective Date plus (ii) an
additional Three Hundred Thousand (300,000) shares of Common Stock effected on
May 15, 1998, plus (iii) an additional Three Hundred Thousand (300,000) shares
of Common Stock effected on May 20, 1999.
B. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and class of securities issuable under the Plan
and the U.S. Plan, (ii) the maximum number and class of securities purchasable
per Participant on any one Purchase Date, (iii) the maximum number and class of
securities purchasable by all Participants in the aggregate on any one Purchase
Date and (iv) the number and class of securities and the price per share in
effect under each outstanding purchase right in order to prevent the dilution or
enlargement of benefits thereunder.
<PAGE>
IV. PURCHASE PERIODS
A. Shares of Common Stock shall be offered for purchase under the Plan
through a series of successive purchase periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.
B. Each purchase period shall have a duration of six (6) months. Purchase
periods shall run from the first business day in May to the last business day in
October each year and from the first business day in November each year to the
last business day in April of the following year. However, the initial purchase
period under the Plan shall begin on September 1, 1998 and end on the last
business day in April 1999.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the start date of any
purchase period shall be eligible to participate in the Plan for that purchase
period.
B. To participate in the Plan for a particular purchase period, the
Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator and file such forms with the Plan Administrator (or its designate)
on or before the start date of the purchase period.
VI. PAYROLL DEDUCTIONS
A. Except to the extent otherwise provided in the Plan (or any addendum
thereto) or authorized by the Plan Administrator, the purchase price for the
shares of Common Stock acquired under the Plan shall be paid from accumulated
payroll deductions authorized by the Participant.
B. The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock under the Plan may be any multiple of one
percent (1%) of the Cash Earnings paid to the Participant during each purchase
period, up to a maximum of ten percent (10%). The payroll deduction authorized
by the Participant shall be collected in the currency in which paid by the
Foreign Subsidiary. The payroll deductions collected during each purchase period
shall be converted into U.S. Dollars on the Purchase Date for that purchase
period on the basis of the exchange rate in effect on that date. The Plan
Administrator shall have the absolute discretion to determine the applicable
exchange rate to be in effect for each Purchase Date by any reasonable method
that may be based on the exchange rate actually available in the ordinary course
of business on such date. Any changes or fluctuations in the exchange rate at
which the payroll deductions collected on the Participant's behalf are converted
into U.S. Dollars on each Purchase Date shall be borne solely by the
Participant.
C. The rate of payroll deduction so authorized by the Participant shall
continue in effect for the entire purchase period and for each subsequent
purchase period that the Participant remains in the Plan. The Participant may
not increase his or her rate of payroll deduction during a purchase period, but
may effect such increase as of the start date of any subsequent purchase period
following the filing of a new payroll deduction authorization with the Plan
Administrator.
2.
<PAGE>
However, the Participant may, at any time during the purchase period, reduce his
or her rate of payroll deduction to become effective as soon as possible after
filing the appropriate form with the Plan Administrator. The Participant may
not, however, effect more than one (1) such reduction per purchase period.
D. Payroll deductions shall begin on the first pay day following the start
date of the purchase period and shall (unless sooner terminated by the
Participant) continue through the pay day ending with or immediately prior to
the last day of the purchase period. The amounts so collected shall be credited
to the Participant's book account under the Plan, initially in the currency in
which paid by the Foreign Subsidiary until converted into U.S. Dollars on the
applicable Purchase Date. Except to the extent otherwise provided by the Plan
(including any addendum thereto) or by the Plan Administrator, no interest shall
be paid on the balance from time to time outstanding in any book account and the
amounts collected from the Participant shall not be required to be held in any
segregated account or trust fund and may be commingled with the general assets
of the Corporation and used for general corporate purposes.
E. Payroll deductions shall automatically cease upon the termination of the
Participant's purchase right in accordance with the provisions of the Plan.
F. The Participant's acquisition of Common Stock under the Plan on any
Purchase Date shall neither limit nor require the Participant's acquisition of
Common Stock on any subsequent Purchase Date.
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. A Participant shall be granted a separate
purchase right on the start date of each purchase period in which he or she
participates. The purchase right shall provide the Participant with the right to
purchase shares of Common Stock on the Purchase Date upon the terms set forth
below. The Participant shall execute such document or documents embodying such
terms and such other provisions (not inconsistent with the Plan) as the Plan
Administrator may deem advisable.
Under no circumstances shall purchase rights be granted under the Plan to
any Eligible Employee if such individual would, immediately after the grant, own
(within the meaning of Code Section 424(d)) or hold outstanding options or other
rights to purchase, stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Corporation or any
Corporate Affiliate.
B. Exercise of the Purchase Right. Each purchase right shall be
automatically exercised on the Purchase Date, and shares of Common Stock shall
accordingly be purchased on behalf of each Participant on such date. The
purchase shall be effected by applying the Participant's payroll deductions (as
converted into U.S. Dollars) for the purchase period ending on such Purchase
Date to the purchase of shares of Common Stock at the purchase price in effect
for that purchase period.
C. Purchase Price. The U.S. Dollar purchase price per share at which Common
Stock will be purchased on the Participant's behalf on each Purchase Date shall
be equal to eighty-five percent (85%) of the lower of (i) the Fair Market Value
3.
<PAGE>
per share of Common Stock on the start date of the purchase period or (ii) the
Fair Market Value per share of Common Stock on that Purchase Date.
D. Number of Purchasable Shares. The number of shares of Common Stock
purchasable by a Participant on each Purchase Date shall be the number of whole
shares obtained by dividing the amount collected from the Participant through
payroll deductions (as converted into U.S. Dollars) during the purchase period
ending with that Purchase Date by the purchase price in effect for that period.
However, the maximum number of shares of Common Stock purchasable per
Participant on any one Purchase Date shall not exceed Eight Hundred (800)
shares, subject to periodic adjustments in the event of certain changes in the
Corporation's capitalization. In addition, the maximum number of shares of
Common Stock purchasable by all Participants in the aggregate on any one
Purchase Date under the Plan and the U.S. Plan shall not exceed One Hundred
Seventy Thousand (170,000) shares, subject to periodic adjustments in the event
of certain changes in the Corporation's capitalization.
E. Excess Payroll Deductions. Any payroll deductions not applied to the
purchase of shares of Common Stock on any Purchase Date because they are not
sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable by the Participant on the
Purchase Date or the limitation on the maximum number of shares purchasable in
the aggregate on the Purchase Date by all Participants shall be promptly
refunded in the currency in which payroll (from which such deductions were made)
was paid to the Participant by the Foreign Subsidiary.
F. Termination of Purchase Right. The following provisions shall govern the
termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the last fifteen (15) days of
the purchase period, terminate his or her outstanding purchase right
by filing the appropriate form with the Plan Administrator (or its
designate), and no further payroll deductions shall be collected from
the Participant with respect to the terminated purchase right. Any
payroll deductions collected during the purchase period in which such
termination occurs shall, at the Participant's election, be
immediately refunded in the currency in which payroll (from which such
deductions were made) was paid to the Participant by the Foreign
Subsidiary or held for the purchase of shares on the next Purchase
Date. If no such election is made at the time the purchase right is
terminated, then the payroll deductions collected with respect to the
terminated right shall be refunded as soon as possible.
(ii) The termination of such purchase right shall be irrevocable, and the
Participant may not subsequently rejoin the purchase period for which
the terminated purchase right was granted. In order to resume
participation in any subsequent purchase period, such individual must
re-enroll in the Plan (by making a timely filing of the prescribed
enrollment forms) before the start date of the new purchase period.
4.
<PAGE>
(iii) Should the Participant cease to remain an Eligible Employee for any
reason (including death, disability or change in status) while his or
her purchase right remains outstanding, then that purchase right shall
immediately terminate, and all of the Participant's payroll deductions
for the purchase period in which the purchase right so terminates
shall be immediately refunded in the currency in which payroll (from
which such deductions were made) was paid to the Participant by the
Foreign Subsidiary. However, should the Participant cease to remain in
active service by reason of an approved unpaid leave of absence, then
the Participant shall have the right, exercisable up until the last
business day of the purchase period in which such leave commences, to
(a) withdraw all the payroll deductions collected to date on his or
her behalf during such purchase period or (b) have such funds held for
the purchase of shares on the next scheduled Purchase Date. In no
event, however, shall any further payroll deductions be collected on
the Participant's behalf during such leave. Upon the Participant's
return to active service (i) within ninety (90) days after the start
of the leave or (ii) prior to the expiration of any longer period
during which his or her re-employment rights are guaranteed by law or
contract, his or her payroll deductions under the Plan shall
automatically resume at the rate in effect at the time the leave
began.
G. Transfer of Employment. In the event that a Participant who is an
Eligible Employee of a Foreign Subsidiary is transferred and becomes an Eligible
Employee of the Corporation during a purchase period under the Plan, such
individual shall continue to remain a Participant in the Plan and payroll
deductions shall continue to be collected until the next Purchase Date as if the
Participant had remained an Eligible Employee of the Foreign Subsidiary.
In the event that an employee of the Corporation who is a participant in
the U.S. Plan is transferred and becomes an Eligible Employee of a Foreign
Subsidiary during a purchase period in effect under the U.S. Plan, such
individual shall automatically become a Participant under the Plan for the
duration of the purchase period in effect at that time under the Plan and the
balance in such individual's book account maintained under the U.S. Plan shall
be transferred as a balance to a book account opened for such individual under
the Plan. Such balance, together with all other payroll deductions collected
from such individual by the Foreign Subsidiary for the remainder of the purchase
period under the Plan (as converted into U.S. Dollars), shall be applied on the
next Purchase Date to the purchase of Common Stock under the Plan.
H. Corporate Transaction. Each outstanding purchase right shall
automatically be exercised, immediately prior to the effective date of any
Corporate Transaction, by applying the payroll deductions of each Participant
for the purchase period in which such Corporate Transaction occurs, as converted
into U.S. Dollars on the basis of the exchange rate in effect as determined by
the Plan Administrator at the time of the Corporate Transaction, to the purchase
of whole shares of Common Stock at a purchase price per share equal to
eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of
Common Stock on the start date of the purchase period in which such Corporate
Transaction occurs or (ii) the Fair Market Value per share of Common Stock
immediately prior to the effective date of such Corporate Transaction. However,
the applicable limitation on the number of shares of Common Stock purchasable
5.
<PAGE>
per Participant shall continue to apply to any such purchase, but not the
limitation on the aggregate number of shares purchasable by all Participants.
The Corporation shall use its best efforts to provide at least ten (10)
days prior written notice of the occurrence of any Corporate Transaction, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Corporate Transaction.
I. Proration of Purchase Rights. Should the total number of shares of
Common Stock which are to be purchased pursuant to outstanding purchase rights
on any particular date exceed either (i) the number of shares then available for
issuance under the Plan and the U.S. Plan or (ii) the maximum number of shares
purchasable by all Participants (and all participants in the U.S. Plan) in the
aggregate on that Purchase Date, then the Plan Administrator shall make a
pro-rata allocation of the available shares on a uniform and nondiscriminatory
basis, and the payroll deductions of each Participant (and each participant in
the U.S. Plan), to the extent in excess of the aggregate purchase price payable
for the Common Stock pro-rated to such individual, shall be refunded in the
currency in which payroll (from which such deductions were made) was paid to the
Participant by the Foreign Subsidiary.
J. Assignability. The purchase right shall be exercisable only by the
Participant and shall not be assignable or transferable by the Participant.
K. Stockholder Rights. A Participant shall have no stockholder rights with
respect to the shares subject to his or her outstanding purchase right until the
shares are purchased on the Participant's behalf in accordance with the
provisions of the Plan and the Participant has become a holder of record of the
purchased shares.
VIII.ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any purchase right outstanding under this Plan if and to the
extent such accrual, when aggregated with (i) rights to purchase Common Stock
accrued under any other purchase right granted under this Plan and (ii) similar
rights accrued under other employee stock purchase plans (within the meaning of
Code Section 423) of the Corporation or any Corporate Affiliate, would otherwise
permit such Participant to purchase more than Twenty-Five Thousand U.S. Dollars
(U.S.$25,000) worth of stock of the Corporation or any Corporate Affiliate
(determined on the basis of the Fair Market Value of such stock on the date or
dates such rights are granted) for each calendar year such rights are at any
time outstanding.
B. For purposes of applying such accrual limitations, the following
provisions shall be in effect:
(i) The right to acquire Common Stock under each outstanding purchase
right shall accrue on the Purchase Date in effect for the purchase
period for which such right is granted.
(ii) No right to acquire Common Stock under any outstanding purchase right
shall accrue to the extent the Participant has already accrued in the
6.
<PAGE>
same calendar year the right to acquire Common Stock under one (1) or
more other purchase rights at a rate equal to Twenty-Five Thousand
U.S. Dollars (U.S.$25,000) worth of Common Stock (determined on the
basis of the Fair Market Value per share on the date or dates of
grant) for each calendar year such rights were at any time
outstanding.
C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular purchase period, then the payroll
deductions which the Participant made during that purchase period with respect
to such purchase right shall be promptly refunded in the currency in which
payroll (from which such deductions were made) was paid to the Participant by
the Foreign Subsidiary.
D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on July 31, 1998 and shall become
effective on the Effective Date. No purchase rights granted under the Plan shall
be exercised, and no shares of Common Stock shall be issued hereunder, until the
Corporation shall have complied with all applicable requirements of the 1933 Act
(including the registration of the shares of Common Stock issuable under the
Plan on a Form S-8 registration statement filed with the Securities and Exchange
Commission), all applicable listing requirements of any stock exchange (or the
Nasdaq National Market, if applicable) on which the Common Stock is listed for
trading and all other applicable requirements established by law or regulation.
B. Unless sooner terminated by the Board, the Plan shall terminate upon the
earliest to occur of (i) the last business day in October 2008, (ii) the date on
which all shares available for issuance under the Plan and the U.S. Plan shall
have been sold pursuant to purchase rights exercised under the Plan and the U.S.
Plan or (iii) the date on which all purchase rights are exercised in connection
with a Corporate Transaction. No further purchase rights shall be granted or
exercised, and no further payroll deductions shall be collected, under the Plan
following such termination.
X. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the Plan at any time to
become effective immediately following the close of any purchase period.
However, the Board may not, without the approval of the Corporation's
stockholders, (i) increase the number of shares of Common Stock issuable under
the Plan and the U.S. Plan, except for permissible adjustments in the event of
certain changes in the Corporation's capitalization, (ii) alter the purchase
price formula so as to reduce the purchase price payable for the shares of
Common Stock purchasable under the Plan, or (iii) modify the requirements for
eligibility to participate in the Plan.
7.
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XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the Plan shall
be paid by the Corporation.
B. Nothing in the Plan shall confer upon the Participant any right to
continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.
C. Except to the extent otherwise provided in any addendum to the Plan, the
provisions of the Plan shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
D. A Foreign Subsidiary or the Plan Administrator, as the case may be,
shall have the right to deduct from any payment to be made under this Plan, or
to otherwise require, prior to the issuance or delivery of any shares of Common
Stock or the payment of any cash, payment by each Participant of any tax
required by applicable law to be withheld.
E. Additional provisions for individual Foreign Subsidiaries may be
incorporated in one or more Addenda to the Plan. Such Addenda shall have full
force and effect with respect to the Foreign Subsidiaries to which they apply.
In the event of a conflict between the provisions of such an Addendum and one or
more other provisions of the Plan, the provisions of the Addendum shall be
controlling.
8.
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Schedule A
Foreign Subsidiaries Participating in
International Employee Stock Purchase Plan
As of September 1, 1998
FileNET Canada, Inc. (Canada)
FileNET France (France)
FileNET GmbH (Germany)
FileNET Company Limited (Ireland)
FileNET BV (Netherlands)
FileNET Limited (United Kingdom)
<PAGE>
Addendum A
FILENET CORPORATION
INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN
PLAN ADDENDUM FOR AUSTRALIAN PARTICIPANTS
The following provision shall apply with respect to the extension of the FileNET
Corporation International Employee Stock Purchase Plan to Participants (the
"Australian Participants") who are Eligible Employees of FileNET Corporation Pty
Limited (ACN 056 639 500) ("FileNET Australia").
Notwithstanding the last sentence of Paragraph D of Article VI, the
amounts collected from an Australian Participant (including amounts
converted into U.S.Dollars on the applicable Purchase Date) shall be
held on trust by FileNET Australia in a specific account established by
FileNET Australia for such purpose and may not be commingled with the
general assets of FileNET Australia or the Corporation or used for
general corporate purposes.
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
B. Cash Earnings shall mean the (i) base salary payable to a Participant by
one or more Foreign Subsidiaries during such individual's period of
participation in one or more purchase periods under the Plan plus (ii) all
overtime payments, bonuses, commissions, and other incentive-type payments
before deduction of any income or employment taxes. Such Cash Earnings shall be
calculated before deduction of (A) any income or employment tax withholdings or
(B) any pre-tax contributions made by the Participant to any plan or program now
or hereafter established by the Corporation or any Corporate Affiliate. However,
Cash Earnings shall not include any contributions made on the Participant's
behalf by the Corporation or any Corporate Affiliate to any employee benefit or
welfare plan now or hereafter established.
C. Code shall mean the U.S. Internal Revenue Code of 1986, as amended.
D. Common Stock shall mean the Corporation's common stock.
E. Corporate Affiliate shall mean any parent or subsidiary corporation of
the Corporation (as determined in accordance with Code Section 424), whether now
existing or subsequently established.
F. Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing fifty percent
(50%) or more of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior
to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially all of
the assets of the Corporation in complete liquidation or dissolution
of the Corporation.
G. Corporation shall mean FileNET Corporation, a Delaware corporation and
any corporate successor to all or substantially all of the assets or voting
stock of FileNET Corporation which shall by appropriate action adopt the Plan.
H. Effective Date shall mean September 1, 1998. Any Foreign Subsidiary
which elects, with the approval of the Board, to extend the benefits of this
Plan to its employees after such Effective Date shall designate a subsequent
Effective Date with respect to its Participants.
A-1.
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I. Eligible Employee shall mean any person who is employed by a Foreign
Subsidiary on a basis under which he or she is regularly expected to render more
than twenty (20) hours of service per week for more than five (5) months per
calendar year for earnings considered wages under Code Section 3401(a).
J. Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the average of the high
and low U.S. Dollar selling prices per share of Common Stock on the
date in question, as those prices are reported by the National
Association of Securities Dealers on the Nasdaq National Market. If
there are no selling prices for the Common Stock on the date in
question, then the Fair Market Value shall be the average of the high
and low U.S. Dollar selling prices on the last preceding date for
which such quotations exist.
(ii) If the Common Stock is at the time listed on any Stock Exchange, then
the Fair Market Value shall be the average of the high and low U.S.
Dollar selling prices per share of Common Stock on the date in
question on the Stock Exchange determined by the Plan Administrator to
be the primary market for the Common Stock, as those prices are
officially quoted in the composite tape of transactions on such
exchange. If there are no selling prices for the Common Stock on the
date in question, then the Fair Market Value shall be the average of
the high and low U.S. Dollar selling prices on the last preceding date
for which such quotations exist.
K. Foreign Subsidiary shall mean any non-U.S. Corporate Affiliate or
Affiliates as may be authorized from time to time by the Board to extend the
benefits of the Plan to their Eligible Employees. The Foreign Subsidiaries in
the Plan as of the Effective Date are listed in attached Schedule A.
L. 1933 Act shall mean the Securities Act of 1933, as amended.
M. Participant shall mean any Eligible Employee of a Foreign Subsidiary who
is actively participating in the Plan.
N. Plan shall mean the Corporation's International Employee Stock Purchase
Plan, as set forth in this document.
O. Plan Administrator shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the Plan.
P. Predecessor Plan shall mean the Corporation's 1988 Employee Stock
Purchase Plan to which the U.S. Plan is a successor.
Q. Purchase Date shall mean the last business day of each purchase period.
The initial Purchase Date shall be April 30, 1999.
A-2.
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R. Stock Exchange shall mean either the American Stock Exchange or the New
York Stock Exchange.
S. U.S. Plan shall mean the FileNET Corporation 1998 Employee Stock
Purchase Plan.
A-3.