Registration No. 33 -
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Lotus Development Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
04-2755502
(IRS employer identification no.)
55 Cambridge Parkway, Cambridge, MA 02142
(Address of principal executive offices)
Soft-Switch, Inc. Amended and Restated Stock Option Plan
(Full title of the plan)
Thomas M. Lemberg, Esq.
Lotus Development Corporation
55 Cambridge Parkway
Cambridge, MA 02142
(Name and address of agent for service)
(617) 577-8500
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
Title of securities to Proposed maximum
be registered Amount to be registered offering price per share
- ---------------------- ----------------------- ------------------------
Common Stock, 64,000 shares $31.00*
$.01 par value
Proposed maximum
aggregate offering price Amount of registration fee
- ------------------------ --------------------------
$1,984,000 $684.14
*Average of high and low prices for July 26, 1994 computed in accordance with
Rule 457(h) solely for the purpose of calculating the registration fee.
Exhibit index is located on page 8.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents are hereby incorporated by reference in this
Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993, filed March 30, 1994.
(Commission file number 0-11626.)
(b) All other reports filed pursuant to Section 13(a) or 15(d)
of the Exchange Act since the end of the Registrant's fiscal
year ended December 31, 1993.
(c) The Registrant's Registration Statement on Form 8-A filed
on February 24, 1984 pursuant to Section 12(g) of the Securities
Exchange Act of 1934.
All documents subsequently filed by the Registrant pursuant to
Section 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and shall be part hereof
from the date of filing of such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The validity of the issuance of shares of Common Stock offered
hereby has been passed upon by Larry J. Braverman, Senior Corporate
Counsel of the Registrant. Mr. Braverman is employed by the
Registrant, is an Assistant Secretary of the Registrant and is
eligible to receive options to purchase Common Stock under the
Registrant's Amended and Restated 1983 Non-Qualified Stock Option
Plan and 1992 Stock Option Plan. Mr. Braverman beneficially owns
options to purchase 7,275 shares of Common Stock, all of which
options were granted under such plan.
Item 6. Indemnification of Directors and Officers
(a) Section 145 of the Delaware General Corporation Law provides
for indemnification of directors, officers, employees and agents,
subject to certain limitations (Del. Code, Title 8 Section 145).
Article Eighth of the Registrant's Restated Certificate of
Incorporation provides that:
[t]he Corporation shall, to the fullest extent permitted by Section 145
of the General Corporation Law of the State of Delaware, as the same may
be amended and supplemented, indemnify any and all persons whom it shall
have power to indemnify under said section from and against any and all
of the expenses, liabilities or other matters referred to in or covered
by said section, and the indemnification provided for herein shall not
be deemed exclusive of any other rights to which those indemnified may
be entitled under any By-Law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office,
and shall continue as to a person who has ceased to be director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Article VII of the Company's By-Laws provides as follows:
Section 1. Indemnification. (a) The Corporation shall
indemnify, defend and hold harmless (i) each director and
officer of the Corporation, and (ii) each other person
designated in writing by the President or the Chief Financial
Officer from time to time, against all expenses, losses, claims,
damages and liabilities, including, without limitation,
attorneys' fees, judgments, fines and amounts paid in settlement
(all such expenses, collectively, "Costs") actually and
reasonably incurred by him/her in connection with the
investigation, defense or appeal of any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, to which the director, officer
or other person (collectively "persons") is a party or
threatened to be made a party (all such actions, collectively,
"Proceedings") (A) by reason of the fact that he/she is or was a
director, officer, employee or agent of the Company or of any
other corporation, partnership, joint venture, trust or other
enterprise (collectively "Affiliates") of which he/she has been
or is serving at the request of, for the convenience of, or to
represent the interest of the Corporation or (B) by reason of
anything done or not done by him/her in any such capacity
referred to in the immediately foregoing clause (A). Pursuant to
this Article VII, the Board of Directors may authorize the
execution and delivery by the Corporation of any agreement or
undertaking with or on behalf of any person not inconsistent
with this Article VII or applicable law with respect to the
matters set forth herein.
Section 2. Culpable Action. (a) Notwithstanding the
provisions of Section 1, a person shall not be entitled to
indemnification if (i) the Corporation is prohibited from paying
such indemnification under applicable law, (ii) the person
breached his/her duty of loyalty to the Corporation or its
stockholders or any Affiliate or its stockholders, (iii) the
person's actions or omissions were not in good faith or involved
intentional misconduct or knowing violation of law or (iv) the
person derived an improper personal benefit from any transaction
which is a subject of the applicable Proceeding (any existence
or occurrence described in the foregoing clauses (i)-(iv),
individually, a "Culpable Action").
(b) The existence or occurrence of a Culpable Action shall be
conclusively determined by (i) a non-appealable, final decision
of the court having jurisdiction over the applicable Proceeding
or (ii) a non-appealable, final decision of the Court of
Chancery of the State of Delaware (or if such a decision is
appealable, by the court in such State which has jurisdiction to
render a non-appealable, final decision).
(c) The existence or occurrence of a Culpable Action may also
be determined by (i) the Board of Directors, by a majority vote
of a quorum consisting of directors who were not parties to the
applicable Proceeding (the "Disinterested Directors"), (ii) the
stockholders of the Corporation, by a majority vote of a quorum
consisting of stockholders who were not parties to the
applicable Proceeding (the "Disinterested Stockholders"), or
(iii) any other entity to which the Disinterested Directors or
the Disinterested Stockholders shall have delegated the
authority to make such a determination: provided, however, that
such determination shall not have been made or shall not be
subsequently made pursuant to subsection (b) above.
(d) If a Proceeding involves more than one claim, issue or
matter, the determination as to whether there exists or has
occurred a Culpable Action shall be severable as to each and
every claim, issue and matter.
(e) The termination of any proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or
its equivalent, does not change the presumption of Section 1
that a person is entitled to indemnification hereunder and does
not create a presumption that there exists a Culpable Action.
Section 3. Payment of Costs. The Costs incurred by a person in
connection with any Proceeding, including any Proceeding brought
pursuant to Section 2(b), shall be paid by the Corporation on an
"as incurred" basis; provided, however, that if it shall
ultimately be determined that there exists or has occurred a
Culpable Action with respect to such Proceeding, the person
shall repay the Corporation the amount (or the appropriate
portion thereof as contemplated by Section 2 (d)) so advanced,
including the costs of obtaining a determination pursuant to
Section 2(b).
(b) the directors and officers of the Company are covered by a
policy of liability insurance.
(c) The Registrant customarily enters into indemnification
agreements with its directors and officers on substantially the
terms set forth in Article VII of the Registrant's By-laws
described above.
Item 7 . Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
4(a) Soft-Switch, Inc. Amended and Restated Stock Option Plan
(filed herewith).
4(b) Rights Agreement dated as of November 7, 1988, between the
Company and The First National Bank of Boston as Rights Agent in
respect of Preferred Share Purchase Rights (filed as Exhibit 1
to the Registrant's Registration Statement on Form 8-A filed
November 10, 1988 , and incorporated herein by reference).
4(c) Amendment dated as of April 5, 1990 between The First
National Bank of Boston as Rights Agent in respect of Preferred
Share Purchase Rights (filed as Exhibit 28(a) to the
Registrant's Current Report on Form 8-K dated April 5, 1990,
and incorporated herein by reference).
4(d) Amendment dated as of September 16, 1991 between The First
National Bank of Boston as Rights Agent in respect of Preferred
Share Purchase Rights (filed as Exhibit 28(a) to the
Registrant's Current Report on Form 8-K filed September 16,
1991, and incorporated herein by reference).
5 Opinion of Corporate Counsel of the Registrant as to the
validity of the issuance of the shares of Common Stock being
registered. (filed herewith).
23(a) Consent of Coopers & Lybrand (filed herewith).
23(b) Consent of Senior Corporate Counsel of the Registrant
(contained in opinion filed as Exhibit 5).
24 Power of Attorney (filed herewith).
Item 9. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided however that paragraphs (a)(1)(i) and (a) (1) (ii) do
not apply if the registration statement is on Form S-3, Form
S-8, and 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 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant 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 of whether such indemnification by it
is against public policy as expressed in the Act and will be
governed by the adjudication of such issue.
[Signature page is next page.]
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and
has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the
City of Cambridge, Commonwealth of Massachusetts, on this 27th
day of July, 1994.
LOTUS DEVELOPMENT CORPORATION
By: /s/ Jim P. Manzi
Jim P. Manzi, President
Pursuant to the requirement of the Securities Act of 1933, this
registration statement has been signed by the following persons
and on the date indicated.
/s/Jim P. Manzi July 27, 1994
Jim P. Manzi, Chairman, President and Director
(Principal Executive Officer)
/s/Richard S. Braddock July 27, 1994
Richard S. Braddock, Director
/s/Elaine L. Chao July 27, 1994
Elaine L. Chao, Director
/s/William H. Gray, III July 27, 1994
William H. Gray, III, Director
/s/Michael E. Porter July 27, 1994
Michael E. Porter, Director
/s/Henri A. Termeer July 27, 1994
Henri A. Termeer, Director
/s/Edwin J. Gillis July 27, 1994
Edwin J. Gillis, Senior Vice
President-Finance and
Administration and Chief Financial Officer
(Principal Financial Officer)
/s/Lyn L. Benton July 27, 1994
Lyn L. Benton, Controller
(Principal Accounting Officer)
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EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
4(a) Soft-Switch, Inc. Amended and Restated Stock Option 9
Plan
4(b) Rights Agreement dated as of November 7, 1988, between the
Company and The First National Bank of Boston as Rights Agent in
respect of Preferred Share Purchase Rights (filed as Exhibit 1
to the Registrant's Registration Statement on Form 8-A filed
November 10, 1988, and incorporated herein by reference)
4(c) Amendment dated as of April 5, 1990 between the The First
National Bank of Boston as Rights Agent in respect of Preferred
Share Purchase Rights (filed as Exhibit 28(a) to the
Registrant's Current Report on Form 8-K dated April 5, 1990,
and incorporated herein by reference)
4(d) Amendment dated as of September 16, 1991 between the The
First National Bank of Boston as Rights Agent in respect of
Preferred Share Purchase Rights (filed as Exhibit 28(a) to the
Registrant's Current Report on Form 8-K filed September 16,
1991, and incorporated herein by reference)
5 Opinion of Senior Corporate Counsel of the Registrant 28
23(a) Consent of Coopers & Lybrand 30
23(b) Consent of Corporate Counsel of the Registrant
(contained in opinion filed as Exhibit 5)
24 Power of Attorney 31
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EXHIBIT 4(a)
SOFT-SWITCH, INC.
AMENDED AND RESTATED STOCK OPTION PLAN
1. Purpose. This Amended and Restated Stock Option Plan (the
"Plan") amends and restates an Employee Class A Stock Option
Plan (the "Initial Plan") of Soft-Switch, Inc. (the "Company")
and is intended to provide incentives: (a) to the officers and
other employees of the Company and its Related Corporations as
defined below by providing them with opportunities to purchase
stock in the Company pursuant to options granted hereunder which
qualify as "incentive stock options" under Section 422A(b) of
the Internal Revenue Code of 1986 (the "Code") ("ISO" or ISOs");
and (b) to directors, officers, employees and consultants of the
Company and Related Corporations by providing them with
opportunities to purchase stock in the Company pursuant to
options granted hereunder which do not qualify as ISOs
("Non-Qualified Option" or "Non-Qualified Options"). Both ISO's
and Non-Qualified Options are referred to hereafter individually
as an "Option" and collectively as "Options".
For purposes of the Plan, the term "Related Corporations" shall
mean a corporation which is a parent corporation or a subsidiary
corporation with respect to the Company within the meaning of
Section 425(e) or (f) of the Code.
2. Administration of the Plan.
A. The Plan shall be administered by the Board of Directors
of the Company (the "Board"). The Board may appoint a Stock Plan
Committee (the "Committee") of three or more of its members to
administer this Plan. Subject to ratification of the grant or
authorization of each Option by the Board (but only if so
required by applicable state law), and subject to the terms of
the Plan, the Committee shall have the authority to (i)
determine the employees of the Company and Related Corporations
(from among the class of employees eligible under paragraph 3 to
receive ISOs) to whom ISOs may be granted, and to determine
(from among the class of individuals and entities eligible under
paragraph 3 to receive Non-Qualified Options) to whom
Non-Qualified Options may be granted; (ii) determine the class
of Common Stock (as defined below) in respect of which Options
may be granted; (iii) determine the time or times at which
Options may be granted; (iv) determine the option price of
shares subject to each Option, which price for an ISO shall not
be less than the minimum price specified in paragraph 6; (v)
determine whether each option granted shall be an ISO or a
Non-Qualified Option; (vi) determine (subject to paragraph 7)
the time or times when each Option shall become exercisable and
the duration of the exercise period; (vii) determine whether
restrictions such as repurchase options are to be imposed on
shares subject to Options and the nature of such restrictions,
if any, and (viii) interpret the Plan and prescribe and rescind
rules and regulations relating to it. If the Committee
determines to issue a Non-Qualified Option, it shall take
whatever actions it deems necessary, under Section 422A of the
Code and the regulations promulgated thereunder, to ensure that
such Option is not treated as an ISO. The interpretation and
construction by the Committee of any provisions of the Plan or
of any Option granted under it shall be final, binding and
conclusive unless otherwise determined by the Board. The
Committee may from time to time adopt such rules and regulations
for carrying out the Plan as it may deem best.
No members of the Board or the Committee shall be liable for
any action or determination made in good faith with respect to
the Plan or any Option granted under it. No member of the
Committee or the Board shall be liable for any act or omission
of any other member of the Committee or the Board or for any act
or omission on his own part, including but not limited to the
exercise of any power and discretion given to him under the
Plan, except those resulting from his own gross negligence or
willful misconduct.
B. The Committee may select one of its members as its chairman,
and shall hold meetings at such time and places as it may
determine. Acts by a majority of the Committee, or acts reduced
to or approved in writing by a majority of the members of the
Committee, shall be the valid acts of the Committee. All
references in this Plan to the Committee shall mean the Board if
no Committee has been appointed. From time to time the Board
may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies
however caused, or remove all members of the Committee and
thereafter directly administer the Plan.
C. Options may be granted to members of the Board, but no
Options shall be granted to any person who is, at the time of
the proposed grant, a member of the Board, unless such grant has
been approved by a majority vote of the other members of the
Board. All grants of Options to members of the Board shall in
all other respects be made in accordance with the provisions of
this Plan applicable to other eligible persons. Members of the
Board who are either (i) eligible for Options pursuant to the
Plan or (ii) have been granted Options may vote on any matters
affecting the administration of the Plan or the grant of any
Options pursuant to the Plan, except that no such member shall
act upon the granting to himself of Options, but any such member
may be counted in determining the existence of a quorum at any
meeting of the Board during which action is taken with respect
to the granting to him of Options.
D. Notwithstanding any other provision of this paragraph 2,
in the event the Company registers any class of any equity security
pursuant to Section 12 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), any grants to directors of
Options made at any time from the effective date of such
registration until six months after the termination of such
registration shall be made only by the Board; provided, however,
that if a majority of the Board is eligible to participate in
the Plan or in any other stock option or other stock plan of the
Company or any of its affiliates, or has been so eligible at any
time within the preceding year, any grant to directors of
Options must be made by, or only in accordance with the
recommendation of, a committee consisting of three or more
persons, who may but need not be directors or employees of the
Company, appointed by the Board but having full authority to act
in the matter, none of whom is eligible to participate in this
Plan or any other stock option or other stock plan of the
Company or any of its affiliates, or has been eligible at any
time within the preceding year. The requirements imposed by the
preceding sentence shall also apply with respect to grants to
officers who are also directors. Once appointed, such committee
shall continue to serve until otherwise directed by the Board.
E. In addition to such other rights of indemnification
as he may have as a member of the Board or the Committee, and with
respect to administration of the Plan and the granting of
Options under it, each member of the Board and of the Committee
shall be entitled without further act on his part to indemnify
from the Company for all expenses (including the amount of
judgment and the amount of approved settlements made with a view
to the curtailment of costs of litigation, other than amounts
paid to the Company itself) reasonably incurred by him in
connection with or arising out of any action, suit or proceeding
with respect to the administration of the Plan or the granting
of Options under it in which he may be involved by reason of his
being or having been a member of the Board or the Committee,
whether or not he continues to be such member of the Board or
the Committee at the time of the incurring of such expenses;
provided, however, that such indemnity shall not include any
expenses incurred by such member of the Board or the Committee
(i) in respect of matters as to which he shall be finally
adjudged in such action, suit or proceeding to have been guilty
of gross negligence or willful misconduct in the performance of
his duties as a member of the Board or the Committee; or (ii) in
respect of any matter in which any settlement is effected to an
amount in excess of the amount approved by the Company on the
advice of its legal counsel; and provided further that no right
of indemnification under the provisions set forth herein shall
be available to or accessible by any such member of the Board or
the Committee unless within thirty (30) days after institution
of any such action, suit or proceeding he shall have offered the
Company in writing the opportunity to handle and defend such
action, suit or proceeding at its own expense. The foregoing
right of indemnification shall inure to the benefit of the
heirs, executors or administrators of each such member of the
Board or the Committee and shall be in addition to all other
rights to which such member of the Board or the Committee would
be entitled to as a matter of law, contract or otherwise.
3. Eligible Employees and Others. ISOs may be granted
to any employee of the Company or any Related Corporation. Those
officers and directors of the Company who are not employees may
not be granted ISOs under the Plan. Non-Qualified Options may
be granted to any director (whether or not an employee),
officer, employee or consultant of the Company or any Related
Corporation. The Committee may take into consideration a
recipient's individual circumstances in determining whether to
grant an ISO or a Non-Qualified Option. Granting of any Option
to any individual or entity shall neither entitle that
individual or entity to, nor disqualify him from, participation
in any other grant of Options.
4. Stock. The stock subject to Options shall be authorized
but unissued shares of Class A Voting Common Stock and Class B
Non-voting Common Stock of the Company (collectively, the
"Common Stock"), or shares of Common Stock reacquired by the
Company in any manner. The aggregate number of shares of Common
Stock which may be issued pursuant to the Plan (including shares
issued pursuant to the Initial Plan) is 1,000,000, subject to
adjustment as provided in paragraph 13. Any such shares may be
issued as ISOs or Non-Qualified Options so long as the number of
shares so issued does exceed such number, as adjusted. If any
Option granted under the Plan shall expire or terminate for any
reason without having been exercised in full or shall cease for
any reason to be exercisable in whole or in part, or if the
Company shall reacquire any unvested shares issued pursuant to
Options, the unpurchased shares subject to such Options and any
unvested shares so reacquired by the Company shall again be
available for grants of Options under the Plan.
5. Granting of Options. Options may be granted under the Plan
at any time on and after January 27, 1988 and prior to December
31, 1993. The date of grant of an Option under the Plan will be
the date specified by the Committee at the time it grants the
Option; provided, however, that such date shall not be prior to
the date on which the Committee acts to approve the grant. The
Committee shall have the right, with the consent of the
optionee, to convert an ISO granted under the Plan to a
Non-Qualified Option pursuant to paragraph 16.
6. ISO Minimum Option Price and Other Limitations.
A. The price per share specified in the agreement relating to
each ISO granted under the Plan shall not be less than the fair
market value per share of Common Stock on the date of such
grant. In the case of an ISO to be granted to an employee
owning stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or
any Related Corporation, the price per share specified in the
agreement relating to such ISO shall not be less than 110
percent of the fair market value per share of Common Stock on
the date of grant.
B. In no event shall the aggregate fair market value
(determined at the time an ISO is granted) of Common Stock for
which ISOs granted to any employee are exercisable for the first
time by such employee during any calendar year (under all stock
option plans of the Company and any Related Corporation) exceed
$100,000.
C. If, at the time an Option is granted under the Plan, the
Company's Common Stock is publicly traded, "fair market value"
shall be determined as of the last business day for which the
prices or quotes discussed in this sentence are available prior
to the date such Option is granted and shall mean (i) the
average (on that date) of the high and low prices of the Common
Stock on the principal national securities exchange on which the
Common Stock is traded, if the Common Stock is then traded on a
national securities exchange; or (ii) the last reported sale
price (on that date) of the Common Stock on the NASDAQ National
Market List, if the Common Stock is not then traded on a
national securities exchange; or (iii) the closing bid price (or
average of bid prices) last quoted (on that date) by an
established quotation service for over-the-counter securities,
if the Common Stock is not reported on the NASDAQ National
Market List. However, if the Common Stock is not publicly
traded at the time an Option is granted under the Plan, "fair
market value" shall be deemed to be the fair value of the Common
Stock as determined by the Committee after taking into
consideration all factors which it deems appropriate, including,
without limitation, recent sale and offer prices of the Common
Stock in private transactions negotiated at arm's length.
7. Option Duration. Subject to earlier termination as
provided in paragraphs 9 and 10, each Option shall expire on the
date specified by the Committee, but not more than (i) ten years
and one day from the date of grant in the case of Non-Qualified
Options, (ii) ten years from the date of grant in the case of
ISOs generally, and (iii) five years from the date of grant in
the case of ISOs granted to an employee owning stock possessing
more than ten percent of the total combined voting power of all
classes of stock of the Company or any Related Corporation.
Subject to earlier termination as provided in paragraphs 9 and
10, the term of each ISO shall be the term set forth in the
original instrument granting such ISO, except with respect to
any part of such ISO that is converted into a Non-Qualified
Option pursuant to paragraph 16.
8. Exercise of Option. Subject to the provisions of
paragraphs 9 through 12, each Option granted under the Plan
shall be exercisable as follows:
A. The Option shall either be fully exercisable on the
date of grant or shall become exercisable thereafter in such
installments as the Committee may specify.
B. Once the installment becomes exercisable it shall
remain exercisable until expiration or termination of the Option,
unless otherwise specified by the Committee.
C. Each Option or installment may be exercised at any time or
from time to time, in whole or in part, for up to the total
number of shares with respect to which it is then exercisable.
D. The Committee shall have the right to accelerate the date of
exercise of any installment of any Option; provided that the
Committee shall not accelerate the exercise date of any
installment of any Option granted to any employee as an ISO (and
not previously converted into a Non-Qualified Option pursuant to
paragraph 16) if such acceleration would violate the annual
vesting limitation contained in Section 422A(b)(7) of the Code,
as described in paragraph 6(B).
9. Termination of Employment. Subject to any greater
restrictions or limitations as may be imposed by the Committee
upon the granting of any ISO: If an ISO optionee ceases to be
employed by the Company and all Related Corporations other than
by reason of death or disability as defined in paragraph 10, no
further installments of his ISOs shall become exercisable, and
his ISOs shall terminate after the passage of 60 days from the
date of termination of his employment, but in no event later
than on their specified expiration dates, except to the extent
that such ISOs (or unexercised installments thereof) have been
converted into Non-Qualified Options pursuant to paragraph 16.
Employment shall be considered as continuing uninterrupted
during any bona fide leave of absence (such as those
attributable to illness, military obligations or governmental
service) provided that the period of such leave does not exceed
90 days or, if longer, any period during which such optionee's
right to reemployment is guaranteed by statute. A bona fide
leave of absence with the written approval of the Committee
shall not be considered an interruption of employment under the
Plan, provided that such written approval contractually
obligates the Company or any Related Corporation to continue the
employment of the optionee after the approved period of absence.
ISOs granted under the Plan shall not be affected by any change
of employment within or among the Company and Related
Corporations, so long as the optionee continues to be an
employee of the Company or any Related Corporation.
10. Death: Disability. Subject to any greater restrictions or
limitations as may be imposed by the Committee upon the granting
of any ISO:
A. If an ISO optionee ceases to be employed by the Company and
all Related Corporations by reason of his death, any ISO of his
may be exercised, to the extent of the number of shares with
respect to which he could have exercised it on the date of his
death, by his estate, personal representative or beneficiary who
has acquired the ISO by will or by the laws of descent and
distribution, at any time prior to the earlier of the ISO's
specified expiration date or 180 days from the date of the
optionee's death.
B. If an ISO optionee ceases to be employed by the Company and
all Related Corporations by reason of his disability, he shall
have the right to exercise any ISO held by him on the date of
termination of employment, to the extent of the number of shares
with respect to which he could earlier of the ISO's specified
expiration date or 180 days from the date of the termination of
the optionee's employment. For the purposes of the Plan, the
term "disability" shall mean "permanent and total disability" as
defined in Section 22(e)(3) of the Code or successor statute.
11. Assignability. No Option shall be assignable or
transferable by the grantee except by will or by the laws of
descent and distribution, and during the lifetime of the grantee
each Option shall be exercisable only by him.
12. Terms and Conditions of Options. Options shall be
evidenced by instruments (which need not be identical) in such
forms as the Committee may from time to time approve. Such
instruments shall conform to the terms and conditions set forth
in paragraphs 6 through 11 hereof and may contain such other
provisions as the Committee deems advisable which are not
inconsistent with the Plan, including restrictions applicable to
shares of Common Stock issuable upon exercise of Options. In
granting any Non-Qualified Option, the Committee may specify
that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to ISOs, or to such
other termination and cancellation provisions as the Committee
may determine. The Committee may from time to time confer
authority and responsibility on one or more of its own members
and/or one or more officers of the Company to execute and
deliver such instruments. The proper officers of the Company
are authorized and directed to take any and all action necessary
or advisable from time to time to carry out the terms of such
instruments.
13. Adjustments. Upon the occurrence of any of the following
events, an optionee's rights with respect to Options granted to
him hereunder shall be adjusted as hereinafter provided, unless
otherwise specifically provided in the written agreement between
the optionee and the Company relating to such Option:
A. If the shares of Common Stock shall be subdivided or
combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock
dividend on its outstanding Common Stock, the number of shares
of Common Stock deliverable upon the exercise of Options shall
be appropriately increased or decreased proportionately, and
appropriate adjustments shall be made in the purchase price per
share to reflect such subdivision, combination or stock dividend.
B. If the Company is to be consolidated with or acquired by
another entity in a merger, sale of all or substantially all of
the Company's assets or otherwise (an "Acquisition"), the
Committee or the board of directors of any entity assuming the
obligations of the Company hereunder (the "Successor Board"),
shall, as to outstanding Options, either (i) make appropriate
provision for the continuation of such Options by substituting
on an equitable basis for the shares then subject to such
Options the consideration payable with respect to the
outstanding shares of Common Stock in connection with the
Acquisition; or (ii) upon written notice to the optionees,
provide that all Options must be exercised, to the extent then
exercisable, within a specified number of days of the date of
such notice, at the end of which period the Options shall
terminate; or (iii) terminate all Options in exchange for a cash
payment equal to the excess of the fair market value of the
shares subject to such Options (to the extent then exercisable)
over the exercise price thereof, provided, however, not
withstanding the foregoing, if the acquisition of the Company by
Lotus Development Corporation ("Lotus") pursuant to that certain
Amended and Restated Agreement and Plan of Reorganization dated
as of June 27, 1994 is consummated (the "Acquisition") and
Lotus agrees to assume any Options which are not exercisable
(i.e. which are unvested) on the date of such consummation, such
Options shall not terminate and shall automatically, and without
action on the part of any optionee, become options to acquire
that number of shares of Lotus Common Stock as shall equal the
product of (i) the number of shares of Soft-Switch Common Stock
to which such Soft-Switch Option relates, multiplied by the
quotient of (ii) $5.8261 divided by the average closing price of
the Lotus Common Stock on the NASDAQ National Market System for
the five trading days ending on the day prior to the Closing of
the Acquisition (the "Common Stock Exchange Rate"), rounded to
the nearest whole number of shares, at an exercise price per
share of Lotus Common Stock equal to the quotient of (i) the per
share exercise price under such Soft-Switch Option, divided by
(ii) the Common Stock Exchange Rate, rounded to the nearest
cent, subject to and in accordance with Section 424(a) of the
Code.
C. In the event of a recapitalization or reorganization
of the Company (other than a transaction described in subparagraph B
above) pursuant to which securities of the Company or of another
corporation are issued with respect to the outstanding shares of
Common Stock, an optionee upon exercising an Option shall be
entitled to receive for the purchase price paid upon such
exercise the securities he would have received if he had
exercised his Option prior to such recapitalization or
reorganization.
D. Notwithstanding the foregoing, any adjustments made
pursuant to subparagraphs A, B or C with respect to ISOs shall be made
only after the Committee, after consulting with counsel for the
Company, determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in section
425 of the Code) or would cause any adverse tax consequences for
the holders of such ISOs. If the Committee determines that such
adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such
adjustments.
E. In the event of the proposed dissolution or liquidation of
the Company, each Option will terminate immediately prior to the
consummation of such proposed action or at such other time and
subject to such other conditions as shall be determined by the
Committee.
F. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to,
the number or price of shares subject to Options. No
adjustments shall be made for dividends paid in cash or in
property other than securities of the Company.
G. No fractional share shall be issued under the Plan and the
optionee shall receive from the Company cash in lieu of such
fractional shares.
H. Upon the happening of any of the foregoing events described
in subparagraphs A, B or C above, the class and aggregate number
of shares set forth in paragraph 4 hereof that are subject to
Options which previously have been or subsequently may be
granted under the Plan shall also be appropriately adjusted to
reflect the events described in such subparagraphs. The
Committee or the Successor Board shall determine the specific
adjustments to be made under this paragraph 13 and, subject to
paragraph 2, its determination shall be conclusive.
If any person or entity owning restricted Common Stock obtained
by exercise of an Option made hereunder receives shares or
securities or cash in connection with a corporate transaction
described in subparagraphs A, B or C above as a result of owning
such restricted Common Stock, such shares or securities or cash
shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which
such shares or securities or cash were issued, unless otherwise
determined by the Committee or the Successor Board.
14. Means of Exercising Options.
A. An Option (or any part or installment thereof) shall be
exercised by giving written notice to the Company at its
principal office address. Such notice shall identify the Option
being exercised and specify the number of shares as to which
such Option is being exercised, accompanied by full payment of
the purchase price therefor either (a) in United States dollars
in cash or by check, or (b) at the discretion of the Committee,
through delivery of shares of Common Stock having a fair market
value equal as of the date of the exercise to the cash exercise
price of the Option, or (c) at the discretion of the Committee,
by delivery of the grantee's personal recourse note bearing
interest payable not less than annually at no less than 100% of
the lowest applicable Federal rate, as defined in Section
1274(d) of the Code, or (d) at the discretion of the Committee,
by any combination of (a), (b) and (c) above. If the Committee
exercises its discretion to permit payment of the exercise price
of an ISO by means of the methods set forth in clauses (b), (c),
or (d) of the preceding sentence, such discretion shall be
exercised in writing at the time of the grant of the ISO in
question. The holder of an Option shall not have the rights of
a shareholder with respect to the shares covered by his Option
until the date of issuance of a stock certificate to him for
such shares. Except as expressly provided above in paragraph 13
with respect to changes in capitalization and stock dividends,
no adjustment shall be made for dividends or similar rights for
which the record date is before the date such stock certificate
is issued.
B. Each notice of exercise shall, unless the shares issuable
pursuant to an Option (the "Option Shares") are covered by a
then current registration statement or a Notification under
Regulation A under the Securities Act of 1933 (the "Act"),
contain the Optionee's acknowledgment in form and substance
satisfactory to the Company that (a) such Option Shares are
being purchased for investment and not for distribution or
resale (other than a distribution or resale which, in the
opinion of counsel satisfactory to the Company, may be made
without violating the registration provisions of the Act), (b)
the Optionee has been advised and understands that (i) the
Option Shares have not been registered under the Act and are
"restricted securities" within the meaning of Rule 144 under the
Act and are subject to restrictions on transfer and (ii) the
Company is under no obligation to register the Option Shares
under the Act or to take any action which would make available
to the Optionee any exemption from such registration, and (c)
such Option Shares may not be transferred without compliance
with all applicable federal and states securities laws.
Notwithstanding the above, should the Company be advised by
counsel that issuance of shares should be delayed pending (A)
registration under federal or state securities laws or (B) the
receipt of an opinion that an appropriate exemption therefrom is
available, the Company may defer exercise of any Option granted
hereunder until either such event in A or B has occurred.
15. Term and Amendment of Plan. This Plan was adopted by the
Board on January 27, 1988, subject (with respect to the
validation of ISOs granted under the Plan) to approval of the
Plan by the stockholders of the Company at the next meeting of
stockholders to be held on that date. If the approval of
stockholders is not obtained by January 26, 1989, any grants of
ISOs under the Plan made prior to that date will be rescinded.
The Plan shall expire on December 31, 1993 (except as to Options
outstanding on that date). Subject to the provisions of
paragraph 5 above, Options may be granted under the Plan prior
to the date of stockholder approval of the Plan. The Board may
terminate or amend the Plan in any respect at any time, except
that, without the approval of the stockholders obtained within
12 months before or after the Board adopts a resolution
authorizing any of the following actions: (a) the total number
of shares that may be issued under the Plan may not be increased
(except by adjustment pursuant to paragraph 13); (b) the
provisions of paragraph 3 regarding eligibility for grants of
ISOs may not be modified; (c) the provisions of paragraph 6(A)
regarding the exercise price at which shares may be offered
pursuant to ISOs may not be modified (except by adjustment
pursuant to paragraph 13); and (d) the expiration date of the
Plan may not be extended. Except as provided in the fourth
sentence of this paragraph 15, in no event may action of the
Board or stockholders alter or impair the rights of a grantee,
without his consent, under any Option previously granted to him.
16. Conversion of ISOs into Non-Qualified Options; Termination
of ISOs. The Committee, at the written request of any optionee,
may in its discretion take such actions as may be necessary to
convert such optionee's ISOs (or any installments or portions of
installments thereof) that have not been exercised on the date
of conversion into Non-Qualified Options at any time prior to
the expiration of such ISOs, regardless of whether the optionee
is an employee of the Company or a Related Corporation at the
time of such conversion. Such actions may include, but not be
limited to, extending the exercise period or reducing the
exercise price of the appropriate installments of such Options.
At the time of such conversion, the Committee (with the consent
of the optionee) may impose such conditions on the exercise of
the resulting Non-Qualified Options as the Committee in its
discretion may determine, provided that such conditions shall
not be inconsistent with this Plan. Nothing in the Plan shall
be deemed to give any optionee the right to have such optionee's
ISOs converted into Non-Qualified Options, and no such
conversion shall occur until and unless the Committee takes
appropriate action. The Committee, with the consent of the
optionee, may also terminate any portion of any ISO that has not
been exercised at the time of such termination.
17. Application of Funds. The proceeds received by the
Company from the sale of shares pursuant to Options granted
under the Plan shall be used for general corporate purposes.
18. Governmental Regulations. The Company's obligation to
sell and deliver shares of the Common Stock under this Plan is
subject to the approval of any governmental authority required
in connection with the authorization, issuance or sale of such
shares.
19. Withholding of Additional Income Taxes. Upon the exercise
of a Non-Qualified Option for less than its fair market value,
the making of a Disqualifying Disposition (as defined in
paragraph 20) or the vesting of restricted Common Stock acquired
on the exercise of an Option hereunder, the Company, in
accordance with Section 3402(a) of the Code, may require the
optionee to pay additional withholding taxes in respect of the
amount that is considered compensation includible in such
person's gross income. The Committee in its discretion may
condition (i) the exercise of an Option or (ii) the vesting of
restricted Common Stock acquired by exercising an Option on the
grantee's payment of such additional withholding taxes.
20. Notice to Company of Disqualifying Disposition. Each
employee who receives an ISO must agree to notify the Company in
writing immediately after the employee makes a Disqualifying
Disposition of any Common Stock acquired pursuant to the
exercise of an ISO. A Disqualifying Disposition is any
disposition (including any sale) of such Common Stock before the
later of (a) two years after the date of employee was granted
the ISO or (b) one year after the date the employee acquired
Common Stock by exercising the ISO. If the employee has died
before such stock is sold, these holding period requirements do
not apply and no Disqualifying Disposition can occur thereafter.
21. Continued Employment. The grant of an Option pursuant to
the Plan shall not be construed to imply or to constitute
evidence of any agreement, express or implied, on the part of
the Company or any Affiliate to retain the Optionee in the
employ of the Company or an Affiliate, as a member the Company's
Board of Directors or in any other capacity, whichever the case
may be.
22. Governing Law; Construction. The validity and
construction of the Plan and the instruments evidencing Options
shall be governed by the laws of the Commonwealth of
Pennsylvania. In construing this Plan, the singular shall
include the plural and the masculine gender shall include the
feminine and neuter, unless the context otherwise requires.
23. Effect on Initial Plan ISOs. Nothing in this Plan shall
be construed to amend, modify, extend or renew the terms of any
Option (a "Prior Option") granted under the Initial Plan if such
amendment, modification, extension or renewal would (i)
adversely affect the rights of any holder of a Prior Option or
(ii) be treated as the grant of a new Option pursuant to Section
425(h) of the Code.
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Exhibit 5
July 27, 1994
Lotus Development Corporation
55 Cambridge Parkway
Cambridge, MA 02142
Attn: Board of Directors
Lotus Development Corporation
64,000 Shares of Common Stock, $.01 Par Value
Dear Sirs:
I am employed as Corporate Counsel by Lotus Development
Corporation, a Delaware corporation (the "Company"), and have
counseled the Company in connection with the registration under
the Securities Act of 1933, as amended, of 64,000 shares (the
"Shares") of Common Stock, $.01 par value, of the Company for
sale to officers, employees and consultants of Soft-Switch,
Inc., a Delaware Corporation ("Soft-Switch"), after such time as
the Company acquires Soft-Switch and Soft-Switch becomes a
wholly owned subsidiary of the Company, (the "Acquisition")
pursuant to the Soft-Switch, Inc. Amended and Restated Stock
Option Plan (the "Plan").
In that connection, I have examined originals, or copies
certified or otherwise identified to my satisfaction, of such
documents, corporate records and other instruments as I have
deemed necessary for the purposes of this opinion. In my
examination, I have assumed the genuineness of all signatures,
the authenticity of all documents submitted to me by officers of
the company as originals, the conformity to original documents
of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter
documents.
Based upon the foregoing, I am of the opinion that:
1. The Company is a validly existing corporation in good
standing under the laws of the State of Delaware.
2. The issuance and sale of the Shares after the Acquisition
have been duly authorized and, when issued, delivered and paid
for upon the exercise of options granted under the Plan in
accordance with the provisions of the Plan, the Shares will be
validly issued, fully paid and nonassessable.
I am admitted to the Bar of the Commonwealth of Massachusetts
and I express no opinion as to laws of any other jurisdiction
other than, to the extent set forth below, the Delaware General
Corporation Law. To the extent that matters of Delaware
corporate law are
Lotus Development Corporation
July 27, 1994
Page Two
involved in the opinions set forth above, you should be aware
that I am not admitted to the Bar of the State of Delaware and
am not an expert in the law of such jurisdiction. Accordingly,
such opinions concerning Delaware corporate law are based upon
my reasonable (although not necessarily complete) familiarity with the
Delaware General Corporation Law as a result of my prior involvement in
transaction involving such law.
I hereby consent to the inclusion of this opinion as Exhibit 5
to the Registration Statement on Form S-8 being filed by the
Company.
Very truly yours,
/s/ Larry J. Braverman
Larry J. Braverman
Senior Corporate Counsel
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Exhibit 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
registration statement of Lotus Development Corporation on Form
S-8 and in the related prospectus with respect to the
Soft-Switch, Inc. Amended and Restated Stock Option Plan of our
reports dated January 26, 1994 on our audits of the consolidated
financial statements and financial statement schedules of Lotus
Development Corporation as of December 31, 1993 and 1992 and for
each of the three years in the period ended December 31, 1993,
which reports are included or incorporated by reference in the
Annual Report on Form 10-K of Lotus Development Corporation for
the year ended December 31, 1993.
COOPERS & LYBRAND
Boston, Massachusetts
July 25, 1994
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EXHIBIT 24
POWER OF ATTORNEY
Each of the undersigned directors and officers of Lotus
Development Corporation, a Delaware corporation (the
"Corporation"), does hereby constitute and appoint EDWIN J.
GILLIS and THOMAS M. LEMBERG, and each of them, his/her true and
lawful attorneys and agents to do any and all acts and things in
his/her name and on his/her behalf in his/her stead as if he/she
were present and acting him/herself, including without
limitation to execute, deliver and file with governmental
authorities any and all instruments and other documents for
him/her and in his/her name in the respective capacities
indicated below, which said attorneys and agents, or either of
them, may deem necessary or advisable to enable the Corporation
and its subsidiaries to comply with the Securities Act of 1933,
as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in connection with the
registration of Form S-8 of shares of Common Stock, $.01 par
value (the "Common Stock"), of the Corporation reserved for
issuance upon the exercise of options which have been granted to
officers, employees and consultants of the Corporation's
subsidiary, Soft-Switch, Inc. under the Soft-Switch, Inc.
Amended and Restated Stock Option Plan; in such case including
specifically, but without limitation, power and authority to
sign for him/her in his/her name in the respective capacities
indicated below any and all registration statements and
amendments (including without limitation post-effective
amendments) thereto; and each of the undersigned does hereby
ratify and confirm all that said attorneys and agents, or either
of them, shall do or cause to be done by virtue hereof.
This Power of Attorney may be executed in one or more
counterparts, each of which shall be deemed an original but all
of which shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the undersigned directors and officers of
the Corporation have hereunto set their hands in the respective
capacities and on the respective dates indicated.
/s/ Jim P. Manzi July 27, 1994
Jim P. Manzi, Chairman of
the Board, President and Director
(Principal Executive Officer)
/s/ Richard S. Braddock
Richard S. Braddock, Director July 27, 1994
/s/ Elaine L. Chao
Elaine L. Chao, Director July 27, 1994
/s/ William H. Gray, III
William H. Gray, III, Director July 27, 1994
/s/ Michael E. Porter
Michael E. Porter, Director July 27, 1994
/s/ Henri A. Termeer
Henri A. Termeer, Director July 27, 1994
/s/ Edwin J. Gillis July 27, 1994
Edwin J. Gillis, Senior Vice President
of Finance and Operations
(Principal Financial Officer)
/s/ Lyn L. Benton July 27, 1994
Lyn L. Benton, Controller
(Principal Accounting Officer)
