Exhibit 4.3
RATIONAL SOFTWARE CORPORATION
2000 DIRECTOR OPTION PLAN
- Purposes of the Plan
. The purposes of this 2000 Director Option Plan are to attract and retain the best available
personnel for service as Outside Directors (as defined herein) of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as Directors, and to encourage their continued service on the Board.
All Options granted hereunder shall be nonstatutory stock options.
- Definitions
. As used herein, the following definitions shall apply:
- "Board" means the Board of Directors of the Company.
- "Code" means the Internal Revenue Code of 1986, as amended.
- "Common Stock" means the common stock of the Company.
- "Company" means Rational Software Corporation, a Delaware corporation.
- "Director" means a member of the Board.
- "Disability" means total and permanent disability as defined in section 22(e)(3) of the Code.
- "Employee" means any person, including officers and Directors, employed by the Company or any Parent or
Subsidiary of the Company. The payment of a Director's fee by the Company shall not be sufficient in and of itself to constitute
"employment" by the Company.
- "Exchange Act" means the Securities Exchange Act of 1934, as amended.
- "Fair Market Value" means, as of any date, the value of Common Stock determined as follows:
- If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination
as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
- If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market
Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock for the day of
determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; or
- In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board.
- "Inside Director" means a Director who is an Employee.
- "Option" means a stock option granted pursuant to the Plan.
- "Optioned Stock" means the Common Stock subject to an Option.
- "Optionee" means a Director who holds an Option.
- "Outside Director" means a Director who is not an Employee.
- "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e)
of the Code.
- "Plan" means this 2000 Director Option Plan.
- "Share" means a share of the Common Stock, as adjusted in accordance with Section 10 of the Plan.
- "Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as defined in
Section 424(f) of the Internal Revenue Code of 1986.
- Stock Subject to the Plan
. Subject to the provisions of Section 10 of the Plan, the maximum aggregate number of Shares
which may be optioned and sold under the Plan is 500,000 Shares (the "Pool"). The Shares may be authorized, but unissued,
or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject
thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). Shares that have actually
been issued under the Plan shall not be returned to the Plan and shall not become available for future distribution under the
Plan.
- Administration and Grants of Options under the Plan
.
- Procedure for Grants
. All grants of Options to Outside Directors under this Plan shall be automatic and nondiscretionary
and shall be made strictly in accordance with the following provisions:
- No person shall have any discretion to select which Outside Directors shall be granted Options or to determine the number of
Shares to be covered by Options.
- Each Outside Director shall be automatically granted an Option to purchase 70,000 Shares (the "First Option") on the
date on which such person first becomes an Outside Director, whether through election by the shareholders of the Company or
appointment by the Board to fill a vacancy; provided, however, that an Inside Director who ceases to be an Inside Director but who
remains a Director shall not receive a First Option.
- Each Outside Director shall be automatically granted an Option to purchase 20,000 Shares (a "Subsequent Option") on the
date of the Company's annual stockholder's meeting of each year, provided he or she is then an Outside Director and if as of such
date, he or she shall have served on the Board for at least the preceding six (6) months.
- Notwithstanding the provisions of subsections (ii) and (iii) hereof, any exercise of an Option granted before the Company has
obtained shareholder approval of the Plan in accordance with Section 16 hereof shall be conditioned upon obtaining such shareholder
approval of the Plan in accordance with Section 16 hereof.
- The terms of a First Option granted hereunder shall be as follows:
- the term of the First Option shall be ten (10) years.
- the First Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.
- the exercise price per Share shall be 100% of the Fair Market Value per Share on the date of grant of the First Option.
- subject to Section 10 hereof, the First Option shall become exercisable as to 25% of the Shares subject to the First Option on
the first anniversary of its date of grant, and exercisable as to 1/48 of the Shares subject to the First Option each month
thereafter, provided that the Optionee continues to serve as a Director on such dates.
- The terms of a Subsequent Option granted hereunder shall be as follows:
- the term of the Subsequent Option shall be ten (10) years.
- the Subsequent Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth
in Sections 8 and 10 hereof.
- the exercise price per Share shall be 100% of the Fair Market Value per Share on the date of grant of the Subsequent Option.
- subject to Section 10 hereof, the Subsequent Option shall become exercisable as to as to 1/48 of the Shares subject to the
Subseuent Option each month from the date of grant, provided that the Optionee continues to serve as a Director on such
dates
- In the event that any Option granted under the Plan would cause the number of Shares subject to outstanding Options plus the
number of Shares previously purchased under Options to exceed the Pool, then the remaining Shares available for Option grant shall be
granted under Options to the Outside Directors on a pro rata basis. No further grants shall be made until such time, if any, as
additional Shares become available for grant under the Plan through action of the Board or the shareholders to increase the number of
Shares which may be issued under the Plan or through cancellation or expiration of Options previously granted hereunder.
- Eligibility
. Options may be granted only to Outside Directors. All Options shall be automatically granted in accordance
with the terms set forth in Section 4 hereof.
The Plan shall not confer upon any Optionee any right with respect to continuation of service as a Director or nomination to serve
as a Director, nor shall it interfere in any way with any rights which the Director or the Company may have to terminate the
Director's relationship with the Company at any time.
- Term of Plan
. The Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by
the shareholders of the Company as described in Section 16 of the Plan. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 11 of the Plan.
- Form of Consideration
. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the
method of payment, shall consist of (i) cash, (ii) check, (iii) other Shares, provided Shares acquired directly from the Company, (x)
have been owned by the Optionee for more than six (6) months on the date of surrender, and (y) have a Fair Market Value on the date
of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised, (iv) consideration
received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, or (v) any
combination of the foregoing methods of payment.
- Exercise of Option
.
- Procedure for Exercise; Rights as a Shareholder
. Any Option granted hereunder shall be exercisable at such times as are
set forth in Section 4 hereof; provided, however, that no Options shall be exercisable until shareholder approval of the Plan in
accordance with Section 16 hereof has been obtained. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with
the terms of the Option by the person entitled to exercise the Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company. Full payment may consist of any consideration and method of payment allowable
under Section 7 of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. A
share certificate for the number of Shares so acquired shall be issued to the Optionee as soon as practicable after exercise of the
Option. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 10 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.
- Termination of Continuous Status as a Director
. Subject to Section 10 hereof, in the event an Optionee's status as a
Director terminates (other than upon the Optionee's death or Disability), the Optionee may exercise his or her Option, but only
within three (3) months following the date of such termination, and only to the extent that the Optionee was entitled to exercise it
on the date of such termination (but in no event later than the expiration of its ten (10) year term). To the extent that the
Optionee was not entitled to exercise an Option on the date of such termination, and to the extent that the Optionee does not
exercise such Option (to the extent otherwise so entitled) within the time specified herein, the Option shall terminate.
- Disability of Optionee
. In the event Optionee's status as a Director terminates as a result of Disability, the Optionee
may exercise his or her Option, but only within twelve (12) months following the date of such termination, and only to the extent
that the Optionee was entitled to exercise it on the date of such termination (but in no event later than the expiration of its ten
(10) year term). To the extent that the Optionee was not entitled to exercise an Option on the date of termination, or if he or she
does not exercise such Option (to the extent otherwise so entitled) within the time specified herein, the Option shall
terminate.
- Death of Optionee
. In the event of an Optionee's death, the Optionee's estate or a person who acquired the right to
exercise the Option by bequest or inheritance may exercise the Option, but only within twelve (12) months following the date of
death, and only to the extent that the Optionee was entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not entitled to exercise an Option on the date of death,
and to the extent that the Optionee's estate or a person who acquired the right to exercise such Option does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the Option shall terminate.
- Non-Transferability of Options
. The Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of
in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee,
only by the Optionee.
- Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale
.
- Changes in Capitalization
. Subject to any required action by the shareholders of the Company, the number of Shares
covered by each outstanding Option, the number of Shares which have been authorized for issuance under the Plan but as to which no
Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the
price per Share covered by each such outstanding Option, and the number of Shares issuable pursuant to the automatic grant
provisions of Section 4 hereof shall be proportionately adjusted for any increase or decrease in the number of issued Shares
resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued Shares effected without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of
consideration." 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 an Option.
- Dissolution or Liquidation
. In the event of the proposed dissolution or liquidation of the Company, to the extent that an
Option has not been previously exercised, it shall terminate immediately prior to the consummation of such proposed action.
- Merger or Asset Sale
. In the event of a merger of the Company with or into another corporation or the sale of
substantially all of the assets of the Company, outstanding Options may be assumed or equivalent options may be substituted by the
successor corporation or a Parent or Subsidiary thereof (the "Successor Corporation"). If an Option is assumed or
substituted for, the Option or equivalent option shall continue to be exercisable as provided in Section 4 hereof for so long as the
Optionee serves as a Director or a director of the Successor Corporation. Following such assumption or substitution, if the
Optionee's status as a Director or director of the Successor Corporation, as applicable, is terminated other than upon a voluntary
resignation by the Optionee, the Option or option shall become fully exercisable, including as to Shares for which it would not
otherwise be exercisable. Thereafter, the Option or option shall remain exercisable in accordance with Sections 8(b) through (d)
above.
If the Successor Corporation does not assume an outstanding Option or substitute for it an equivalent option, the Option shall
become fully vested and exercisable, including as to Shares for which it would not otherwise be exercisable. In such event the Board
shall notify the Optionee that the Option shall be fully exercisable for a period of thirty (30) days from the date of such notice,
and upon the expiration of such period the Option shall terminate.
For the purposes of this Section 10(c), an Option shall be considered assumed if, following the merger or sale of assets, the
Option confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the
merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares). If such consideration
received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator
may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for
each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in
fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets.
- Amendment and Termination of the Plan
.
- Amendment and Termination
. The Board may at any time amend, alter, suspend, or discontinue the Plan, but no amendment,
alteration, suspension, or discontinuation shall be made which would impair the rights of any Optionee under any grant theretofore
made, without his or her consent. In addition, to the extent necessary and desirable to comply with any applicable law, regulation
or stock exchange rule, the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as
required.
- Effect of Amendment or Termination
. Any such amendment or termination of the Plan shall not affect Options already
granted and such Options shall remain in full force and effect as if this Plan had not been amended or terminated.
- Time of Granting Options
. The date of grant of an Option shall, for all purposes, be the date determined in accordance
with Section 4 hereof.
- Conditions Upon Issuance of Shares
. Shares shall not be issued pursuant to the exercise of an Option unless the exercise
of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange upon which the Shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at
the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or
distribute such Shares, if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned
relevant provisions of law.
Inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability
in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
- Reservation of Shares
. The Company, during the term of this Plan, will at all times reserve and keep available such
number of Shares as shall be sufficient to satisfy the requirements of the Plan.
- Option Agreement
. Options shall be evidenced by written option agreements in such form as the Board shall approve.
- Shareholder Approval
. The Plan shall be subject to approval by the shareholders of the Company within twelve (12) months
after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under applicable
state and federal law and any stock exchange rules.
FIRST OPTION
RATIONAL SOFTWARE CORPORATION
DIRECTOR OPTION AGREEMENT
Rational Software Corporation, (the "Company"), has granted to ___________________ (the "Optionee"), an
option to purchase a total of 70,000 shares of the Company's Common Stock (the "Optioned Stock"), at the price determined
as provided herein, and in all respects subject to the terms, definitions and provisions of the Company's 2000 Director Option Plan
(the "Plan") adopted by the Company which is incorporated herein by reference. The terms defined in the Plan shall have
the same defined meanings herein.
- Nature of the Option
. This Option is a nonstatutory option and is not intended to qualify for any special tax benefits to
the Optionee.
- Exercise Price
. The exercise price is $_______ for each share of Common Stock.
- Exercise of Option
. This Option shall be exercisable during its term in accordance with the provisions of Section 8 of
the Plan as follows:
- Right to Exercise
.
- This Option shall become exercisable in installments cumulatively with respect to 25% of the Optioned Stock on the first
anniversary of its date of grant plus an additional 1/48 of the Optioned Stock each month thereafter, so that one hundred percent
(100%) of the Optioned Stock shall be exercisable 4 years after the date of grant; provided, however, that in no event shall any
Option be exercisable prior to the date the stockholders of the Company approve the Plan.
- This Option may not be exercised for a fraction of a share.
- In the event of Optionee's death, disability or other termination of service as a Director, the exercisability of the Option is
governed by Section 8 of the Plan.
- Method of Exercise
. This Option shall be exercisable by written notice which shall state the election to exercise the
Option and the number of Shares in respect of which the Option is being exercised. Such written notice, in the form attached hereto
as Exhibit A, shall be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of the exercise price.
- Method of Payment
. Payment of the exercise price shall be by any of the following, or a combination thereof, at the
election of the Optionee:
- cash;
- check;
- surrender of other Shares, provided Shares acquired directly from the Company, (x) have been owned by the Optionee for more than
six (6) months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise
price of the Shares as to which said Option shall be exercised; or
- delivery of a properly executed exercise notice together with such other documentation as the Company and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to
pay the exercise price.
- Restrictions on Exercise
. This Option may not be exercised if the issuance of such Shares upon such exercise or the
method of payment of consideration for such shares would constitute a violation of any applicable federal or state securities or
other law or regulations, or if such issuance would not comply with the requirements of any stock exchange upon which the Shares may
then be listed. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
- Non-Transferability of Option
. This Option may not be transferred in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of Optionee only by the Optionee. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors and assigns of the Optionee.
- Term of Option
. This Option may not be exercised more than ten (10) years from the date of grant of this Option, and may
be exercised during such period only in accordance with the Plan and the terms of this Option.
- Taxation Upon Exercise of Option
. Optionee understands that, upon exercise of this Option, he or she will recognize
income for tax purposes in an amount equal to the excess of the then Fair Market Value of the Shares purchased over the exercise
price paid for such Shares. Since the Optionee is subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, under
certain limited circumstances the measurement and timing of such income (and the commencement of any capital gain holding period) may
be deferred, and the Optionee is advised to contact a tax advisor concerning the application of Section 83 in general and the
availability a Section 83(b) election in particular in connection with the exercise of the Option. Upon a resale of such Shares by
the Optionee, any difference between the sale price and the Fair Market Value of the Shares on the date of exercise of the Option, to
the extent not included in income as described above, will be treated as capital gain or loss.
DATE OF GRANT: ______________
RATIONAL SOFTWARE CORPORATION,
A Delaware corporation
By:
Optionee acknowledges receipt of a copy of the Plan, a copy of which is attached hereto, and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof.
Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions
arising under the Plan.
Dated: _________________
______________________________
Optionee
EXHIBIT A
DIRECTOR OPTION EXERCISE NOTICE
Rational Software Corporation
18880 Homestead Road
Cupertino, CA 95014
Attention: Corporate Secretary
- Exercise of Option
. The undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase ______
shares of the Common Stock (the "Shares") of Rational Software Corporation (the "Company") under and pursuant to
the Company's 2000 Director Option Plan and the Director Option Agreement dated _______________ (the "Agreement").
- Representations of Optionee
. Optionee acknowledges that Optionee has received, read and understood the Agreement.
- Federal Restrictions on Transfer
. Optionee understands that the Shares must be held indefinitely unless they are
registered under the Securities Act of 1933, as amended (the "1933 Act"), or unless an exemption from such registration is
available, and that the certificate(s) representing the Shares may bear a legend to that effect. Optionee understands that the
Company is under no obligation to register the Shares and that an exemption may not be available or may not permit Optionee to
transfer Shares in the amounts or at the times proposed by Optionee.
- Tax Consequences
. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee's
purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultant(s) Optionee deems
advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax
advice.
- Delivery of Payment
. Optionee herewith delivers to the Company the aggregate purchase price for the Shares that Optionee
has elected to purchase and has made provision for the payment of any federal or state withholding taxes required to be paid or
withheld by the Company.
- Entire Agreement
. The Agreement is incorporated herein by reference. This Exercise Notice and the Agreement constitute
the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee
with respect to thesubject matter hereof. This Exercise Notice and the Agreement are governed by California law except for that body
of law pertaining to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: RATIONAL SOFTWARE CORPORATION
By: By:
Its:
Address:
Dated: Dated:
SUBSEQUENT OPTION
RATIONAL SOFTWARE CORPORATION
DIRECTOR OPTION AGREEMENT
Rational Software Corporation, (the "Company"), has granted to ___________________ (the "Optionee"), an
option to purchase a total of 20,000 shares of the Company's Common Stock (the "Optioned Stock"), at the price determined
as provided herein, and in all respects subject to the terms, definitions and provisions of the Company's 2000 Director Option Plan
(the "Plan") adopted by the Company which is incorporated herein by reference. The terms defined in the Plan shall have
the same defined meanings herein.
- Nature of the Option
. This Option is a nonstatutory option and is not intended to qualify for any special tax benefits to
the Optionee.
- Exercise Price
. The exercise price is $_______ for each share of Common Stock.
- Exercise of Option
. This Option shall be exercisable during its term in accordance with the provisions of Section 8 of
the Plan as follows:
- Right to Exercise
.
(i) This Option shall become exercisable in installments cumulatively with respect to 1/48 of the Optioned Stock each motnh
from its date of grant, so that one hundred percent (100%) of the Optioned Stock shall be exercisable 4 years after the date of
grant; provided, however, that in no event shall any Option be exercisable prior to the date the stockholders of the Company approve
the Plan.
(ii) This Option may not be exercised for a fraction of a share.
(iii) In the event of Optionee's death, disability or other termination of service as a Director, the exercisability of the
Option is governed by Section 8 of the Plan.
- Method of Exercise
. This Option shall be exercisable by written notice which shall state the election to exercise the
Option and the number of Shares in respect of which the Option is being exercised. Such written notice, in the form attached hereto
as Exhibit A, shall be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of the exercise price.
- Method of Payment
. Payment of the exercise price shall be by any of the following, or a combination thereof, at the
election of the Optionee:
- cash;
- check;
- surrender of other Shares, provided Shares acquired from the Company, (x) have been owned by the Optionee for more than six (6)
months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of
the Shares as to which said Option shall be exercised; or
- delivery of a properly executed exercise notice together with such other documentation as the Company and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to
pay the exercise price.
- Restrictions on Exercise
. This Option may not be exercised if the issuance of such Shares upon such exercise or the
method of payment of consideration for such shares would constitute a violation of any applicable federal or state securities or
other law or regulations, or if such issuance would not comply with the requirements of any stock exchange upon which the Shares may
then be listed. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
- Non-Transferability of Option
. This Option may not be transferred in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of Optionee only by the Optionee. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors and assigns of the Optionee.
- Term of Option
. This Option may not be exercised more than ten (10) years from the date of grant of this Option, and may
be exercised during such period only in accordance with the Plan and the terms of this Option.
- Taxation Upon Exercise of Option
. Optionee understands that, upon exercise of this Option, he or she will recognize
income for tax purposes in an amount equal to the excess of the then Fair Market Value of the Shares purchased over the exercise
price paid for such Shares. Since the Optionee is subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, under
certain limited circumstances the measurement and timing of such income (and the commencement of any capital gain holding period) may
be deferred, and the Optionee is advised to contact a tax advisor concerning the application of Section 83 in general and the
availability a Section 83(b) election in particular in connection with the exercise of the Option. Upon a resale of such Shares by
the Optionee, any difference between the sale price and the Fair Market Value of the Shares on the date of exercise of the Option, to
the extent not included in income as described above, will be treated as capital gain or loss.
DATE OF GRANT: ______________
RATIONAL SOFTWARE CORPORATION,
A Delaware corporation
By:
Optionee acknowledges receipt of a copy of the Plan, a copy of which is attached hereto, and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof.
Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions
arising under the Plan.
Dated: _________________
______________________________
Optionee
EXHIBIT A
DIRECTOR OPTION EXERCISE NOTICE
Rational Software Corporation
18880 Homestead Road
Cupertino, CA 95014
Attention: Corporate Secretary
- Exercise of Option
. The undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase ______
shares of the Common Stock (the "Shares") of Rational Software Corporation (the "Company") under and pursuant to
the Company's 2000 Director Option Plan and the Director Option Agreement dated _______________ (the "Agreement").
- Representations of Optionee
. Optionee acknowledges that Optionee has received, read and understood the Agreement.
- Federal Restrictions on Transfer
. Optionee understands that the Shares must be held indefinitely unless they are
registered under the Securities Act of 1933, as amended (the "1933 Act"), or unless an exemption from such registration is
available, and that the certificate(s) representing the Shares may bear a legend to that effect. Optionee understands that the
Company is under no obligation to register the Shares and that an exemption may not be available or may not permit Optionee to
transfer Shares in the amounts or at the times proposed by Optionee.
- Tax Consequences
. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee's
purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultant(s) Optionee deems
advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax
advice.
- Delivery of Payment
. Optionee herewith delivers to the Company the aggregate purchase price for the Shares that Optionee
has elected to purchase and has made provision for the payment of any federal or state withholding taxes required to be paid or
withheld by the Company.
- Entire Agreement
. The Agreement is incorporated herein by reference. This Exercise Notice and the Agreement constitute
the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee
with respect to thesubject matter hereof. This Exercise Notice and the Agreement are governed by California law except for that body
of law pertaining to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: RATIONAL SOFTWARE CORPORATION
By: By:
Its:
Address:
Dated: Dated:
EXHIBIT B
FIRST OPTION
DIRECTOR OPTION AGREEMENT
EXHIBIT C
SUBSEQUENT OPTION
DIRECTOR OPTION AGREEMENT