<PAGE>
As filed with the Securities and Exchange Commission on February 2, 1998
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
RATIONAL SOFTWARE CORPORATION
(Exact name of issuer as specified in its charter)
DELAWARE 54-1217099
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2800 SAN TOMAS EXPRESSWAY
SANTA CLARA, CA 95051-0951
(Address of principal executive offices)
---------------------
VIGOR TECHNOLOGY, INC. 1996 STOCK OPTION PLAN
(Full title of the plans)
---------------------
PAUL D. LEVY
CHIEF EXECUTIVE OFFICER
RATIONAL SOFTWARE CORPORATION
18880 HOMESTEAD ROAD
CUPERTINO, CA 95014
(408) 863-9900
(Name, address and telephone number of agent for service)
---------------------
Copy to:
Gail Clayton Husick, Esq.
Martin A. Wellington, Esq.
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304
---------------------
================================================================================
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================
Proposed Maximum Proposed Maximum
Amount to be Offering Price Aggregate Amount of
Title of Securities to be Registered Registered Per Share(1) Offering Price(1) Registration Fee
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock:
Vigor Technology, Inc.
1996 Stock Option Plan 36,356 $ 0.80 $ 29,085 $ 9.00
===================================================================================================================
</TABLE>
(1) Calculated in accordance with Rule 457(h) under the Securities Act of 1933,
as amended. The Registrant acquired all of the outstanding capital stock of
Vigor Technology, Inc. ("VTI") on January 15, 1998 (the "Vigor
Acquisition"). Pursuant to the terms of the Vigor Acquisition, the
Registrant assumed all outstanding options to purchase VTI common stock
under the VTI 1996 Stock Option Plan, and such options became options to
purchase the Registrant's Common Stock, subject to certain adjustments as to
number of shares and exercise price. The exercise prices of the assumed
options range from a low of $0.03 per share to a high of $0.80 per share.
================================================================================
<PAGE>
RATIONAL SOFTWARE CORPORATION
REGISTRATION STATEMENT ON FORM S-8
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
---------------------------------------
There are hereby incorporated by reference in this Registration Statement
the following documents and information heretofore filed with the Securities and
Exchange Commission (the "Commission"):
(a) The Registrant's Annual Report on Form 10-K for the year ended March
31, 1997 as filed with the Commission.
(b) The Registrant's Quarterly Reports on Form 10-Q for the periods
ending June 30, 1997 and September 30, 1997, the Registrant's Current Reports on
Form 8-K dated April 7, 1997, July 15, 1997 and July 30, 1997, and the
Registrant's Current Reports on Form 8-K/A filed on May 12, 1997 and June 16,
1997, filed with the Commission.
(c) The description of the Registrant's Common Stock contained in the
Registration Statement on Form S-4 (File No. 333-29799) filed by the Registrant
with the Commission on June 23, 1997, and any amendment or report filed
hereafter for the purpose of updating such description.
Item 1 of Registrant's Form 8-A dated May 25, 1984 as amended on Form 8-A/A
dated May 25, 1995, filed with the Commission.
The Company hereby incorporates by reference in this Registration Statement
the contents of the Company's Registration Statements on Form S-8 (Registration
Nos. 33-77382, 33-85906, 33-97044, 333-15007, 333-15015, 333-22687, 333-25815,
333-31505, 33-32991, 333-39455, and 333-39569).
All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") subsequent to the filing of this Registration Statement, and prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in the Registration Statement and to
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.
--------------------------------------
Not applicable.
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
Section 145 of the Delaware General Corporation Law authorizes a court
to award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred)
II-1
<PAGE>
arising under the Securities Act of 1933, as amended. The Registrant's
Certificate of Incorporation, as amended, and Bylaws provide for indemnification
of its officers, directors, employees and other agents to the maximum extent
permitted by the Delaware Law. In addition, the Registrant has entered into
Indemnification Agreements with its officers and directors, the form of which is
attached hereto as Exhibit 10.1.
Item 7. Exemption from Registration Claims.
----------------------------------
Not applicable.
Item 8. Exhibits
--------
<TABLE>
<CAPTION>
Exhibit
Number Description
-------- -----------
<C> <S>
4.1 Vigor Technology, Inc. 1996 Stock Option Plan
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, P.C. with respect to the securities
being registered
10.1 Form of Indemnification Agreement is incorporated herein by reference to
Exhibit 10.01 filed with the Company's Registration Statement on Form S-4
(Registration No. 333-19669), filed with the Commission on January 13, 1997, as
amended on January 17, 1997.
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Counsel (contained in Exhibit 5.1)
24.1 Power of Attorney (see page II-4)
</TABLE>
Item 9. Undertakings
------------
(a) Rule 415 Offering. 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 ((S)239.13 of this chapter) or Form S-
8 ((S)239.16(b) of this chapter), 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 section 15(d) of the Exchange
Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered
II-2
<PAGE>
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be an initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Delaware General Corporations Law, the Certificate of
Incorporation of the Registrant, the Bylaws of the Registrant, Indemnification
Agreements entered into between the Registrant and its officers and directors,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act 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 the controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act 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, 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 Cupertino, State of California, on January 30, 1998.
RATIONAL SOFTWARE CORPORATION
By: /s/ Timothy A. Brennan
----------------------------------
Timothy A. Brennan
Chief Financial Officer and Secretary
POWER OF ATTORNEY
KNOW ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Paul D. Levy and Timothy A. Brennan and
each of them, jointly and severally, his attorneys-in-fact, each with full power
of substitution, for him in any and all capacities, to sign any and all
amendments to this Registration Statement on Form S-8 and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and conforming all that
each said attorneys-in-fact or his substitute or substitutes, may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
<C> <S>
Date: January 30, 1998 /s/ Paul D. Levy
---------------------------------------------------------------
Paul D. Levy, Chairman of the Board and Chief Executive Officer
Date: January 30, 1998 /s/ Michael T. Devlin
---------------------------------------------------------------
Michael T. Devlin, President and Director
Date: January 30, 1998 /s/ Timothy A. Brennan
---------------------------------------------------------------
Timothy A. Brennan, Chief Financial Officer and Secretary
(Principal Accounting Officer)
Date: January 30, 1998 /s/ James S. Campbell
---------------------------------------------------------------
James S. Campbell, Director
Date: January 30, 1998 /s/ Daniel H. Case III
---------------------------------------------------------------
Daniel H. Case III, Director
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
Date: January 30, 1998 /s/ Leslie G. Denend
---------------------------------------------------------------
Leslie G. Denend, Director
Date: January 30, 1998 /s/ John E. Montague
---------------------------------------------------------------
John E. Montague, Director
Date: January 30, 1998 /s/ Allison R. Schleicher
---------------------------------------------------------------
Allison R. Schleicher, Director
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
-------- -----------
<C> <S>
4.1 Vigor Technology, Inc. 1996 Stock Option Plan
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, P.C. with respect to the securities
being registered
10.1 Form of Indemnification Agreement is incorporated herein by reference to
Exhibit 10.01 filed with the Company's Registration Statement on Form S-4
(Registration No. 333-19669), filed with the Commission on January 13, 1997, as
amended on January 17, 1997.
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Counsel (contained in Exhibit 5.1)
24.1 Power of Attorney (see page II-4)
</TABLE>
<PAGE>
EXHIBIT 4.1
VIGOR TECHNOLOGY, INC.
1996 STOCK OPTION PLAN
SECTION 1.
PURPOSE
The purpose of this Plan is to promote the interests of the Company by
granting Options to purchase Shares to (i) Employees in order (a) to attract and
retain Employees, (b) to provide an additional incentive to each Employee to
work to increase the value of Shares, and (c) to provide each Employee with a
stake in the future of the Company which corresponds to the stake of each of the
Company's shareholders, and (ii) Key Persons who have rendered valuable services
to the Company, and to provide such Key Person with a stake in the future of the
Company which corresponds to each of the Company's shareholders.
SECTION 2.
DEFINITIONS
Each term set forth in this Section 2 shall have the meaning set forth
opposite such term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the plural shall include
the singular.
2.1 BOARD means the Board of Directors of the Company.
2.2 CODE means the Internal Revenue Code of 1986, as amended.
2.3. COMMITTEE means the Compensation Committee of the Board if such
committee has been elected by the Board. Otherwise, "Committee" shall mean the
Board.
2.4 COMMON STOCK means the common stock of the Company, par value $.01
per share.
2.5 COMPANY means VIGOR Technology, Inc., a Delaware corporation, and any
successor to such
organization.
2.6 EMPLOYEE means an employee of the Company, a Subsidiary or a Parent.
2.7 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
2.8 EXERCISE PRICE means the price which shall be paid to purchase one (1)
Share upon the exercise of an
Option granted under this Plan.
2.9 FAIR MARKET VALUE means the price at which the Committee or the Board
acting in good faith determines through any reasonable valuation method that a
Share might change hands between a willing buyer and a willing seller, neither
being under any compulsion to buy or to sell and both having reasonable
knowledge of the relevant facts.
2.10 ISO means an option granted under this Plan to purchase Shares which
is intended by the Company to satisfy the requirements of Code Section 422 as an
incentive stock option.
2.11 KEY PERSON means (i) a member of the Board who is not an Employee,
(ii) a consultant, distributor or other person who has rendered valuable
services to the Company, a Subsidiary or a Parent, (iii) a person who has
incurred,
<PAGE>
or is willing to incur, financial risk in the form of guaranteeing or acting as
co-obligor with respect to debts or other obligations of the Company, or (iv) a
person who has extended credit to the Company. Key Persons are not limited to
individuals and, subject to the preceding definition, may include corporations,
partnerships, associations and other entities.
2.12 NON-ISO means an option granted under this Plan to purchase Shares
which is not intended by the Company to satisfy the requirements of Code Section
422.
2.13 OPTION means an ISO or a Non-ISO.
2.14 OPTIONEE means grantee of an Option.
2.15 PARENT means any corporation which is a parent of the Company (within
the meaning of Code Section 424).
2.16 PLAN means the VIGOR Technology, Inc. 1996 Stock Option Plan, as
amended from time to time.
2.17 SHARE means a share of the Common Stock of the Company.
2.18 STOCK OPTION GRANT means the written agreement or instrument which
sets forth the terms of an Option granted to an Employee or Key Person under
this Plan.
2.19 SUBSIDIARY means any corporation which is a subsidiary of the Company
(within the meaning of Code Section 424(f)).
2.20 SURRENDERED SHARES means the Shares described in Section 11.2 which
(in lieu of being purchased) are surrendered for cash or Shares, or for a
combination of cash and Shares, in accordance with Section 11.
2.21 TEN PERCENT SHAREHOLDER means a person who owns (after taking into
account the attribution rules of Code Section 424(d)) more than ten percent
(10%) of the total combined voting power of all classes of shares of either the
Company, a Subsidiary or a Parent.
SECTION 3.
SHARES SUBJECT TO OPTIONS
One hundred forty-seven thousand eight hundred thirty-two (147,832) Shares of
Common Stock shall be reserved for issuance under this Plan, after giving effect
to the Company's stock dividend effective September 30, 1997. Such Shares shall
be reserved, to the extent that the Company deems appropriate, from authorized
but unissued Shares, and from Shares which have been reacquired by the Company.
Furthermore, any Shares subject to an Option which remain after the
cancellation, expiration or exchange of such Option thereafter shall again
become available for use under this Plan, but any Surrendered Shares which
remain after the surrender of an Option under Section 11 shall not again become
available for use under this Plan.
SECTION 4.
EFFECTIVE DATE
The effective date of this Plan shall be the date it is adopted by the Board
provided the shareholders of the Company approve this Plan within twelve (12)
months after such effective date. If such effective date comes before such
shareholder approval, any Options granted under this Plan before the date of
such approval automatically shall be granted subject to such approval.
SECTION 5.
COMMITTEE
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<PAGE>
This Plan shall be administered by the Committee. The Committee acting in
its absolute discretion shall exercise such powers and take such action as
expressly called for under this Plan and, further, the Committee shall have the
power to interpret this Plan and (subject to Section 16) to take such other
action in the administration and operation of this Plan as the Committee deems
equitable under the circumstances. The Committee's actions shall be binding on
the Company, on each affected Employee or Key Person, and on each other person
directly or indirectly affected by such actions. Notwithstanding anything else
to the contrary herein, the Board shall have the authority to assume the powers
and responsibilities outlined above with respect to the Committee, in whole or
in part.
SECTION 6.
ELIGIBILITY
Except as provided below, only Employees shall be eligible for the grant of
Options under this Plan, but no Employee shall have the right to be granted an
Option under this Plan merely as a result of his or her status as an Employee.
Key Persons may be eligible, subject to written approval by the Board, for the
grant of Options under this Plan, but only if the Key Person has provided
valuable services to the Company, a Subsidiary or a Parent and only if the
Option is a Non-ISO.
SECTION 7.
GRANT OF OPTIONS
The Committee, acting pursuant to the procedure established by the Board,
shall either grant Options under this Plan, or recommend to the Board that
Options be granted under this Plan. In accordance with the procedure
established by the Board, the Committee, or the Board, in its absolute
discretion, shall grant Options under this Plan from time to time to purchase
Shares and, further, shall have the right to grant new Options in exchange for
outstanding Options. Such Options shall be granted to Employees or Key Persons
selected by the Committee, acting in its discretion as set forth above, and
neither the Board nor the Committee shall be under any obligation whatsoever to
grant Options to all Employees or Key Persons, or to grant all Options subject
to the same terms and conditions. Each grant of an Option shall be evidenced by
a Stock Option Grant and each Stock Option Grant shall:
1. specify whether the Option is an ISO or Non-ISO; and
2. incorporate such other terms and conditions as the Committee or the
Board, acting in its absolute discretion, deems consistent with the terms
of this Plan, including (without limitation) a restriction on the number
of Shares subject to the Option which first become exercisable or subject
to surrender during any calendar year.
In determining Employee(s) or Key Person(s) to whom an Option shall be
granted and the number of Shares to be covered by such Option, the Committee or
the Board may take into account the recommendations of the President of the
Company and its other officers, the duties of the Employee or Key Person, the
present and potential contributions of the Employee or Key Person to the success
of the Company, the anticipated number of years of service remaining before the
attainment by the Employee of retirement age, and other factors deemed relevant
by the Committee or the Board, in its sole discretion, in connection with
accomplishing the purpose of this Plan. An Employee or Key Person who has been
granted an Option to purchase Shares of the Company, whether under this Plan or
otherwise, may be granted one or more additional Options.
If the Committee or the Board grants an ISO and a Non-ISO to an Employee on
the same date, the right of the Employee to exercise or surrender one such
Option shall not be conditioned on his or her failure to exercise or surrender
the other such Option.
SECTION 8.
EXERCISE PRICE
If an Option is an ISO, the Exercise Price for each Share subject to such
Option shall be no less than the Fair Market Value of a Share on the date such
Option is granted or, if such Option is granted to a Ten Percent Shareholder,
the Exercise
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<PAGE>
Price for each Share subject to such Option shall be no less than 110% of the
Fair Market Value of a Share on the date such Option is granted. If an Option is
a Non-ISO, the Exercise Price for each Share shall be no less than the minimum
price required by applicable state law, or by the Company's governing
instrument, or $0.01, whichever price is greater. The Exercise Price shall be
payable in full upon the exercise of any Option, and a Stock Option Grant, at
the discretion of the Committee or the Board, can provide for the payment of the
Exercise Price either in cash, or in Shares acceptable to the Committee or the
Board, or in any combination of cash and Shares acceptable to the Committee or
the Board. Any payment made in Shares shall be treated as equal to the Fair
Market Value of such Shares on the date the properly endorsed certificate for
such Shares is delivered to the Committee or the Board.
Notwithstanding the above, and in the sole discretion of the Committee or the
Board, an Option may be exercised as to a portion or all (as determined by the
Committee or the Board) of the number of Shares specified in the Stock Option
Grant by delivery to the Company of a promissory note, such promissory note to
be executed by the Optionee and which shall include, with such other terms and
conditions as the Committee or the Board shall determine, provisions in a form
approved by the Committee or the Board under which (i) the balance of the
aggregate purchase price shall be payable in equal installments over such period
and shall bear interest at such rate (which shall not be less than the prime
bank loan rate as determined by the Committee or the Board) as the Committee or
the Board shall approve and (ii) the Optionee shall be personally liable for
payment of the unpaid principal balance and all accrued but unpaid interest.
SECTION 9.
EXERCISE PERIOD
Each Option granted under this Plan shall be exercisable in whole or in part
at such time or times as set forth in the related Stock Option Grant, but no
Stock Option Grant shall:
1. make an Option exercisable before the date such Option is granted; or
2. make an Option exercisable after the earlier of the:
(a) the date such Option is exercised in full, or
(b) the date which is the tenth (10th) anniversary of the date such
Option is granted, if such Option is a Non-ISO or an ISO granted
to a non-Ten Percent Shareholder, or the date which is the fifth
(5th) anniversary of the date such Option is granted, if such
Option is an ISO granted to a Ten Percent Shareholder.
A Stock Option Grant may provide for the exercise of an Option after the
employment of an Employee has terminated for any reason whatsoever, including
death or disability.
SECTION 10.
NONTRANSFERABILITY
No Option granted under this Plan shall be transferable by an Employee or Key
Person other than by will or by the laws of descent and distribution, and such
Option shall be exercisable during an Employee's or Key Person's lifetime only
by the Employee or Key Person, as the case may be. The person or persons to
whom an Option is transferred by will or by the laws of descent and distribution
thereafter shall be treated as the Employee or Key Person.
SECTION 11.
SURRENDER OF OPTIONS
11.1 GENERAL RULE. The Committee or the Board, acting in its absolute
discretion may incorporate a provision in a Stock Option Grant to allow an
Employee or Key Person to surrender his or her Option in whole or in part in
lieu of the exercise in whole or in part of that Option on any date that:
-4-
<PAGE>
1. the Fair Market Value of the Shares subject to such Option exceeds
the Exercise Price for such Shares, and
2. the Option to purchase such Shares is otherwise exercisable.
11.2 PROCEDURE. The surrender of an Option in whole or in part shall be
effected by the delivery of the Stock Option Grant to the Committee or the
Board, together with a statement signed by the Employee or Key Person which
specifies the number of Shares ("Surrendered Shares") as to which the Employee
or Key Person surrenders his or her Option and how he or she desires payment be
made for such Surrendered Shares.
11.3 PAYMENT. An Employee or Key Person in exchange for his or her
Surrendered Shares shall receive a payment in cash or in Shares, or in a
combination of cash and Shares, equal in amount on the date such surrender is
effected to the excess of the Fair Market Value of the Surrendered Shares on
such date over the Exercise Price for the Surrendered Shares. The Committee or
the Board, acting in its absolute discretion, can approve or disapprove an
Employee's or Key Person's request for payment in whole or in part in cash and
can make that payment in cash or in such combination of cash and Shares as the
Committee or the Board deems appropriate. A request for payment only in Shares
shall be approved and made in Shares to the extent payment can be made in whole
shares of Shares and (at the Committee's or the Board's discretion) in cash in
lieu of any fractional Shares.
11.4 RESTRICTIONS. Any Stock Option Grant which incorporates a provision to
allow an Employee or Key Person to surrender his or her Option in whole or in
part also shall incorporate such additional restrictions on the exercise or
surrender of such Option as the Committee or the Board deems necessary to
satisfy the conditions to the exemption under Rule 16b-3 (or any successor
exemption) to Section 16(b) of the Exchange Act.
SECTION 12.
SECURITIES REGISTRATION
Each Stock Option Grant may provide that, upon the receipt of Shares as a
result of the surrender or exercise of an Option, the Employee or Key Person
shall, if so requested by the Company, hold such Shares for investment and not
with a view of resale or distribution to the public and, if so requested by the
Company, shall deliver to the Company a written statement satisfactory to the
Company to that effect. Each Stock Option Grant may also provide that, if so
requested by the Company, the Employee or Key Person shall make a written
representation to the Company that he or she will not sell or offer to sell any
of such Shares unless a registration statement shall be in effect with respect
to such Shares under the Securities Act of 1933, as amended ("1933 Act"), and
any applicable state securities law or, unless he or she shall have furnished to
the Company an opinion, in form and substance satisfactory to the Company, of
legal counsel acceptable to the Company, that such registration is not required.
Certificates representing the Shares transferred upon the exercise or surrender
of an Option granted under this Plan may at the discretion of the Company bear a
legend to the effect that such Shares have not been registered under the 1933
Act or any applicable state securities law and that such Shares may not be sold
or offered for sale in the absence of an effective registration statement as to
such Shares under the 1933 Act and any applicable state securities law or an
opinion, in form and substance satisfactory to the Company, of legal counsel
acceptable to the Company, that such registration is not required.
SECTION 13.
LIFE OF PLAN
No Option shall be granted under this Plan on or after the earlier of:
1. the tenth (10th) anniversary of the effective date of this Plan (as
determined under Section 4 of this Plan), in which event this Plan
otherwise thereafter shall continue in effect until all outstanding
Options have been surrendered or exercised in full or no longer are
exercisable, or
2. the date on which all of the Shares reserved under Section 3 of this
Plan have (as a result of the surrender or exercise of Options
granted under this Plan) been issued or no longer are available for
use under this Plan, in which event this Plan also shall terminate on
such date.
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<PAGE>
SECTION 14.
ADJUSTMENT
The number of Shares reserved under Section 3 of this Plan, and the number of
Shares subject to Options granted under this Plan, and the Exercise Price of
such Options shall be adjusted by the Committee in an equitable manner to
reflect any change in the capitalization of the Company, including, but not
limited to, such changes as stock dividends or stock splits. Furthermore, the
Committee or the Board shall have the right to adjust (in a manner which
satisfies the requirements of Code Section 424(a)) the number of Shares reserved
under Section 3 of this Plan, and the number of Shares subject to Options
granted under this Plan, and the Exercise Price of such Options in the event of
any corporate transaction described in Code Section 424(a) which provides for
the substitution or assumption of such Options. If any adjustment under this
Section 14 creates a fractional Share or a right to acquire a fractional Share,
such fractional Share shall be disregarded, and the number of Shares reserved
under this Plan and the number subject to any Options granted under this Plan
shall be the next lower number of Shares, rounding all fractions downward. An
adjustment made under this Section 14 by the Committee or the Board shall be
conclusive and binding on all affected persons and, further, shall not
constitute an increase in the number of Shares reserved under Section 3 of this
Plan.
SECTION 15.
SALE OR MERGER OF THE COMPANY
If the Company agrees to sell substantially all of its assets for cash or
property, or for a combination of cash and property, or agrees to any merger,
consolidation, reorganization, division or other transaction in which Shares are
converted into another security or into the right to receive securities or
property and such agreement does not provide for the assumption or substitution
of the Options granted under this Plan, each Option at the direction and
discretion of the Committee or the Board, or as is otherwise provided in the
Stock Option Grants, may be canceled unilaterally by the Company in exchange for
the whole Shares (or, subject to satisfying the conditions to the exemption
under Rule 16b-3 or any successor exemption to Section 16(b) of the Exchange
Act, for the whole Shares and the cash in lieu of a fractional Share) which each
Employee or Key Person otherwise would receive if he or she had the right to
surrender his or her outstanding Option in full under Section 11 of this Plan
and he or she exercised that right exclusively for Shares on a date fixed by the
Committee or the Board which comes before such sale or other corporate
transaction.
SECTION 16.
AMENDMENT OR TERMINATION
This Plan may be amended by the Committee or the Board from time to time to
the extent that the Committee or the Board deems necessary or appropriate;
provided, however, no such amendment shall be made absent the approval of the
shareholders of the Company (1) to increase the number of Shares reserved under
Section 3 except as set forth in Section 14, (2) to extend the maximum life of
the Plan under Section 13 or the maximum exercise period under Section 9, (3) to
decrease the minimum Exercise Price under Section 8, or (4) to change the
designation of Employees or Key Persons eligible for Options under Section 6.
The Committee or the Board also may suspend the granting of Options under this
Plan at any time and may terminate this Plan at any time; provided, however, the
Company shall not have the right to modify, amend or cancel any Option granted
before such suspension or termination unless (1) the Employee or Key Person
consents in writing to such modification, amendment or cancellation or (2) there
is a dissolution or liquidation of the Company or a transaction described in
Section 14 or Section 15 of this Plan.
SECTION 17.
MISCELLANEOUS
18.1 SHAREHOLDER RIGHTS. No Employee or Key Person shall have any rights as
a shareholder of the Company as a result of the grant of an Option to him or to
her under this Plan or his or her exercise or surrender of such Option pending
the actual delivery of Shares subject to such Option to such Employee or Key
Person.
18.2 NO CONTRACT OF EMPLOYMENT. The grant of an Option to an Employee or
Key Person under this Plan shall not constitute a contract of employment and
shall not confer on an Employee any rights upon his or her termination of
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<PAGE>
employment in addition to those rights, if any, expressly set forth in the Stock
Option Grant which evidences his or her Option.
18.3 WITHHOLDING. The exercise or surrender of any Option granted under
this Plan shall constitute an Employee's or Key Person's full and complete
consent to whatever action the Committee or the Board directs to satisfy the
federal and state tax withholding requirements, if any, which the Committee or
the Board in its discretion deems applicable to such exercise or surrender.
18.4 TRANSFER. The transfer of an Employee between or among the Company, a
Subsidiary or a Parent shall not be treated as a termination of his or her
employment under this Plan.
18.5 CONSTRUCTION. This Plan shall be construed under the laws of the State
of Georgia.
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<PAGE>
Exhibit 5.1
January 30, 1998
Rational Software Corporation
18880 Homestead Road
Cupertino, CA 95014
RE: REGISTRATION STATEMENT ON FORM S-8
----------------------------------
Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by you
with the Securities and Exchange Commission on or about the date hereof (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of 36,356 shares of your Common Stock (the
"Option Shares") reserved for issuance under the Vigor Technology, Inc. 1996
Stock Option Plan (the "Plan"). As your legal counsel, we have examined the
proceedings taken and are familiar with the proceedings proposed to be taken by
you in connection with the sale and issuance of the Option Shares under the
Plan. In addition, for purposes of this opinion we have assumed that the
consideration received by the Company in connection with each issuance of the
Option Shares will include an amount in the form of cash, services rendered or
property that exceeds the greater of (i) the aggregate par value of such Option
Shares or (ii) the portion of such consideration determined by the Company's
Board of Directors to be "capital" for purposes of the Delaware General
Corporation Law.
Based upon the foregoing, it is our opinion that, when issued and sold in the
manner referred to in the Plan and pursuant to the agreements which accompany
the Plan, the Option Shares issued and sold thereby will be legally and validly
issued, fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including any Prospectus constituting a part thereof,
and any amendments thereto. This opinion may be incorporated by reference in
any abbreviated registration statement filed pursuant to General Instruction E
of Form S-8 under the Securities Act with respect to the Registration Statement.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ Wilson Sonsini Goodrich & Rosati
<PAGE>
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the options assumed by Rational Software Corporation
pursuant to its acquisition of Vigor Technology, Inc. of our reports dated April
22, 1997, with respect to the consolidated financial statements of Rational
Software Corporation included in its Annual Report (Form 10-K) for the year
ended March 31, 1997 and the related financial statement schedule included
therein, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
San Jose, California
January 29, 1998
