<PAGE> 1
Registration No. 333-_____
As filed with the Securities and Exchange Commission on July 23, 1997
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
PICTURETEL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 04-2835972
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
</TABLE>
100 MINUTEMAN ROAD
ANDOVER, MASSACHUSETTS 01810
(Address of Principal Executive Offices, Including Zip Code)
PICTURETEL CORPORATION
INCENTIVE STOCK OPTION PLAN OF 1984
INCENTIVE STOCK OPTION PLAN OF 1986
1987 STOCK OPTION PLAN
1996 STOCK OPTION PLAN
(Full Title of the Plan)
DR. NORMAN E. GAUT
100 MINUTEMAN ROAD
ANDOVER, MASSACHUSETTS 01810
(508) 292-5000
(Name, Address, and Telephone Number, Including Area Code, of Agent For
Service)
Please send copies of all communications to:
Howard K. Fuguet, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
(617) 951-7000
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Title of Amount Proposed Proposed Amount of
securities to be maximum maximum registration
to be registered offering aggregate fee(1)
registered price per offering
share(1) price(1)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common Stock(2) 174,440 $9.4375 $1,646,277.50 $498.87
- --------------------------------------------------------------------------------------------------------------
Common Stock(4) 406,095 $3.7769 $1,533,796.20 $464.79
- --------------------------------------------------------------------------------------------------------------
Total: 580,535 $963.66
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated pursuant to Rule 457(h).
(2) Shares subject to options authorized but not yet granted
pursuant to PictureTel Corporation/MultiLink Incentive Stock
Option Plan of 1984, PictureTel Corporation/MultiLink
Incentive Stock Option Plan of 1986, PictureTel
Corporation/MultiLink 1987 Stock Option Plan and PictureTel
Corporation/MultiLink 1996 Stock Option Plan (the "Plans").
(3) In addition, in accordance with Rule 416(a) under the Securities
Act of 1933, as amended, this registration statement also covers
such indeterminate number of shares as may become subject to
options under the Plan as a result of the adjustment provisions
thereof.
(4) Shares subject to options previously granted pursuant to the
Plans.
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Page 1 of __
Exhibit Index at Page 10
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
* The document(s) containing the information required by Item 1 of this Form
S-8 and the statement of availability of Registrant information, and other
information required by Item 2 of this Form will be sent or given to
employees as specified by Rule 428 under the Securities Act of 1933, as
amended (the "Securities Act"). In accordance with Rule 428 and the
requirements of Part I of Form S-8, such documents are not being filed with
the Securities and Exchange Commission (the "Commission") either as part of
this Registration Statement or as prospectuses or prospectus supplements
pursuant to Rule 424 of the Securities Act. PictureTel Corporation (the
"Company") shall maintain a file of such documents in accordance with the
provisions of Rule 428. Upon request, the Company shall furnish to the
Commission or its staff a copy of any or all of the documents included in
such file.
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<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Company hereby incorporates the following documents herein by reference:
(a) PictureTel's Annual Report on Form 10-K and its Amendment to the
Annual Report on Form 10-K/A for the fiscal year ended December 31, 1996 (which
incorporates by reference certain information from PictureTel's Proxy Statement
relating to the 1997 Annual Meeting of Shareholders) (File No. 1-9434);
(b) PictureTel's Proxy Statement filed with the Commission on April 28,
1997;
(c) PictureTel's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 29, 1997;
(d) PictureTel's Current Reports on Form 8-K filed with the Commission
on April 18, 1997, June 18, 1997 and July 15, 1997;
(e) All other reports filed pursuant to Sections 13(a) or 15(d) of the
Exchange Act since December 31, 1996; and
All documents subsequently filed by PictureTel pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the offering
of the PictureTel Common Stock, shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing such documents. Any
statement contained herein or in any document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part of this Registration Statement, except as so modified or
superseded.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the shares of Common Stock offered hereby has been passed upon
by Ropes & Gray, One International Place, Boston, Massachusetts, as counsel for
the Company.
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<PAGE> 4
The consolidated financial statements and the related consolidated financial
statement schedule of PictureTel Corporation as of December 31, 1996 and 1995,
and for each of the three years in the period ended December 31, 1996, have been
incorporated by reference in this Registration Statement in reliance on the
reports of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 145 further provides that a corporation similarly may indemnify any such
person serving in any such capacity who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor, against expenses
(including attorney's fees) actually and reasonably incurred in connection with
the defense or settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation and except that no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been adjudged
to be liable to the corporation unless and only to the extent that the Delaware
Court of Chancery or such other court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper.
The Company has entered into or intends to enter into indemnification
agreements, which have been approved by the stockholders, with each of the
Company's directors and officers, and intends to enter into indemnification
agreements with all persons who become directors or hold certain offices in the
future. Indemnification is available under an indemnification agreement for
actions, suits, arbitrations or proceedings commenced after the effective date
of the indemnification agreement, even if the conduct in question occurred prior
to that date.
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<PAGE> 5
Article 6 of the Third Restated Certificate of Incorporation
("Certificate of Incorporation") provides that the Company shall, to the maximum
extent possible under DGCL, indemnify and pay certain expenses incurred by a
director or officer in connection with any threatened, pending or completed
action, suit, arbitration or proceeding, whether civil, criminal,
administrative, or investigative, and specifically including actions by or in
the name of the Company ("derivative suits"), that where the individual's
involvement is by reason of the fact that he or she is or was a director, or
officer. Such amounts include attorneys' fees and other expenses customarily
incurred in connection with the legal proceedings and, judgments, fines and
amounts paid in the settlement. Any person seeking indemnification if the
director or officer is found not to have met the standard of conduct required
for such indemnification unless the contrary shall be established.
Article 10 of the Certificate of Incorporation provides that the
Company's Directors shall not be liable to the Company or its stockholders for
monetary damages for any breach of fiduciary duty, except for (i) for any breach
of the director's duty of loyalty to the Company or its stockholders, (ii) for
acts or omissions not in good faith which involve intentional misconduct or a
knowing violation of the law, or (iii) under Section 174 of the DGCL, or (iv)
for any transaction from which the director derived an improper personal
benefit.
ITEM 8. EXHIBITS.
EXHIBIT NO. DESCRIPTION
- ----------- -----------
4.1 PictureTel Corporation/MultiLink Incentive Stock Option Plan
of 1984
4.2 PictureTel Corporation/MultiLink Incentive Stock Option Plan
of 1986
4.3 PictureTel Corporation/MultiLink 1987 Stock Option Plan
4.4 PictureTel Corporation/MultiLink 1996 Stock Option Plan
4.5 Form of Common Stock Certificate (incorporated by reference to
Exhibit 4(b) to Company's Registration Statement on Form S-8,
Registration Number 33-36315 effective August 10, 1990).
4.6 The Company's Third Restated Certificate of Incorporation,
effective June 10, 1992 (incorporated by reference to Exhibit
3.1.4 to Company's Quarterly Report on Form 10-Q for the
quarter ended June 27, 1992).
4.7 The Company's By-laws as amended September 13, 1994
(incorporated by reference to Exhibit 1 to the Company's
Current Report on Form 8-K filed September 14, 1994).
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<PAGE> 6
5.1 Opinion of Ropes & Gray.
23.1. Consent of Ropes & Gray (contained in its opinion filed as
Exhibit 5.1 hereto).
23.2 Consent of Coopers & Lybrand L.L.P.
24. Power of Attorney (contained in Part II hereof under
"Signatures and Power of Attorney").
ITEM 9. UNDERTAKINGS.
(a) The undersigned Company 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, and
(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) shall not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company 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 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 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.
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<PAGE> 7
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company 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 Company of expenses
incurred or paid by a director, officer or controlling person of the Company 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 Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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<PAGE> 8
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the Company
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 Town of Andover, the Commonwealth of Massachusetts, on this
22nd day of July, 1997.
PICTURETEL CORPORATION
By /s/ Dr. Norman E. Gaut
-----------------------------------------
Dr. Norman E. Gaut
Chief Executive Officer
We, the undersigned directors of PictureTel Corporation, hereby
severally constitute and appoint Norman E. Gaut and Richard B. Goldman, and each
of them singly, our true and lawful attorneys with full power to them, and each
of them singly, to sign for us and in our names in the capacities as directors,
any and all amendments or supplements to the Registration Statement on Form S-8
of PictureTel Corporation, and generally to do all such things in our name and
on our behalf in our capacities as directors to enable PictureTel Corporation to
comply with the provisions of the Securities Act of 1933, as amended, and all
requirements of the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be required by our said attorneys or any
of them, to any and all said amendments.
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.
/s/ Dr. Norman E. Gaut
- ----------------------------- Chairman of the Board of July 22, 1997
Dr. Norman E. Gaut Directors and Chief
Executive Officer
(principal executive
officer)
/s/ Richard B. Goldman
- ----------------------------- Vice President, Chief July 22, 1997
Richard B. Goldman Financial Officer
(principal financial and
accounting officer)
/s/ Vinod Khosla
- ----------------------------- Director July 22, 1997
Vinod Khosla
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<PAGE> 9
/s/ Robert T. Knight
- ----------------------------- Director July 22, 1997
Robert T. Knight
/s/ David B. Levi
- ----------------------------- Director July 22, 1997
David B. Levi
/s/ Enzo Torresi
- ----------------------------- Director July 22, 1997
Enzo Torresi
-9-
<PAGE> 10
<TABLE>
EXHIBIT INDEX
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
4.1 Form of PictureTel Corporation/MultiLink Incentive Stock Option
Plan of 1984
4.2 Form of PictureTel Corporation/MultiLink Incentive Stock Option
Plan of 1986
4.3 Form of PictureTel Corporation/MultiLink 1987 Stock Option Plan
4.4 Form of PictureTel Corporation/MultiLink 1996 Stock Option Plan
5.1 Opinion of Ropes & Gray.
23.1. Consent of Ropes & Gray (contained in its opinion filed
as Exhibit 5.1 hereto).
23.2 Consent of Coopers & Lybrand L.L.P.
24. Power of Attorney (contained in Part II hereof under
"Signatures and Power of Attorney").
</TABLE>
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<PAGE> 1
EXHIBIT 4.1
PICTURETEL CORPORATION/MULTILINK
--------------------------------
AMENDMENT TO
------------
INCENTIVE STOCK OPTION PLAN OF 1984
-----------------------------------
This Amendment to Incentive Stock Option Plan of 1984 is executed by
MULTILINK, INC., a Massachusetts corporation having a principal place of
business in Andover, Massachusetts (the "Company").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Company established the Incentive Stock Option Plan of
1984 effective October 11, 1984 (the "Plan") in order to enable it to grant
incentive stock options to employees;
WHEREAS, the Company now desires to grant non-qualified stock options
and other stock rights under the Plan in addition to incentive stock options;
and
WHEREAS, in order to accomplish the foregoing the Company desires to
amend and restate the Plan in its entirety;
NOW, THEREFORE, the Company hereby amends and restates the Incentive
Stock Option Plan of 1984 to provide as follows:
PICTURETEL CORPORATION/MULTILINK
1984 RESTATED STOCK PLAN
------------------------
1. PURPOSES. This Plan is designed to enable MULTILINK, INC., a
Massachusetts corporation with its principal place of business located in
Andover, Massachusetts (the "Company") and its Affiliates to continue to be able
to attract and retain persons of ability as key employees, officers, directors
and consultants and to motivate such persons to exert their best efforts on
behalf of the Company and its Affiliates by providing them with opportunities to
purchase stock in the Company, all in the manner provided herein.
2. DEFINITIONS.
"Affiliate" means any corporation which owns fifty percent (50%) of the
voting power of the Company or any other corporation (other than the Company) in
an unbroken chain of corporation beginning with the Corporation if each of the
corporations other than the last in
<PAGE> 2
such chain owns stock possessing at least fifty percent (50%) of the voting
power in one of the other corporations in such chain.
"Board" means the Board of Directors of the Company. "Code" means the
Internal Revenue Code of 1986, as amended.
"Committee" means the committee established to administer the Plan as
provided in Section 3(a).
"Common Stock" means shares of common stock of the Company ($.01 par
value) and such other stock as shall be substituted therefor as provided in
Section 14.
"Company" shall have the meaning set forth in Section 1 hereof.
"Date of Grant" means the date on which the Committee authorizes the
granting of a Option or such later date as may be specified by the Committee at
the time of such authorization; provided, however, that with respect to Options
granted pursuant to Section 3(d) such term shall mean the date on which the
granting of such Option is authorized by the Board or by the committee
established pursuant to Section 3(d) to whom the Board has delegated such
authority.
"Disability" shall mean "Permanent and Total Disability" as defined in
Section 22(e)(3) of the Code.
"Disqualifying Disposition" shall have the meaning set forth in
Section 21.
"Eligible Recipient" means a person who satisfies the eligibility
requirements of Section 4 applicable to the Option proposed to be granted to
him.
"Grantee" means an Eligible Recipient to whom an Option has been
granted under this Plan.
"ISO" means an Option which qualifies as an incentive stock option
under Section 422A(b) of the Code.
"Non-Qualified Option" means an Option which does not qualify as an
ISO.
"Option" means a right to purchase Common Stock granted to an Eligible
Recipient pursuant to this Plan.
"Plan" means the PICTURETEL CORPORATION/MULTILINK 1984 Restated Stock
Plan.
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<PAGE> 3
"Stock Option Agreement" means the agreement executed between the
Corporation and a Grantee pursuant to Section 13.
3. ADMINISTRATION OF THE PLAN.
(a) The Committee shall administer the Plan and shall consist
of the Board or of not less than three members of the Board who shall
be appointed by and serve at the pleasure of the Board. No member of
the Committee, while a member, shall be eligible to participate in the
Plan except as provided in Section 3(c) hereof. Subject to ratification
of the grant or authorization of each Option by the Board (if so
required by applicable state law), and subject to the terms of the
Plan, the Committee, if so appointed, shall have the authority to (i)
determine the employees of the Company and its Affiliates (from among
the class of employees eligible under Section 4 to receive ISOs) to
whom ISOs may be granted and to determine (from among the class of
individuals and entitles eligible under Section 4 to receive
Non-Qualified Options) to whom Non-Qualified Options may be granted;
(ii) determine the time or times at which Options may be granted; (iii)
determine the option price of shares subject to each Option; (iv)
determine whether each Option granted shall be an ISO or a
Non-Qualified Option; (v) determine (subject to Section 8) the time or
times when each Option shall become exercisable and the duration of the
exercise period; (vi) 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 (vii) interpret the Plan and
prescribe and rescind rules and regulations relating to it. If the
Committee decides to grant 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 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 member 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.
(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. A majority of the Committee shall constitute a quorum. The
acts of a majority of the members of the Committee present at any
meeting at which a quorum is present 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.
-3-
<PAGE> 4
(c) Options may be granted to members of the Committee if such
grants have been approved by a majority vote of the members of the
Board not then serving on the Committee. All grants of Options to
members of the Committee 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 under
the Plan 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 Section 3, 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 of Options to directors made
at any time from the effective date of such registration until six
months after the termination 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 Affiliate, 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 Affiliate, 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
not also directors. Once appointed, such committee shall continue to
serve until otherwise directed by the Board.
4. ELIGIBILITY REQUIREMENTS. ISOs may be granted to any employee of the
Company or any Affiliate. Those officers and directors of the Company or any
Affiliate 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 Affiliate. The
Committee may take into consideration a candidate's individual circumstances in
determining whether to grant an ISO or a Non-Qualified Option. The 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.
5. STOCK. The aggregate number of shares of Common Stock which may be
issued pursuant to the Plan is 60,000, subject to adjustment as provided in
Section 14. The Committee may grant ISOs and Non-Qualified Options with respect
to such shares in such
-4-
<PAGE> 5
combinations and for such amount of shares as it shall desire, provided that the
number of shares issuable upon exercise of such Options does not exceed such
number, as adjusted. Stock subject to Options may be authorized but unissued
shares of Common Stock or Common Stock held in the treasury of the Company. 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, the unpurchased shares subject to such Option
shall again be available for grants of Options under the Plan.
6. GRANTING OF OPTIONS. The Committee is authorized to grant Options
under the Plan at such time or times as it may determine, provided that the
Committee shall not grant Options under the Plan after October 10, 1994. The
Committee shall have the right, with the consent of the Grantee, to convert an
ISO granted under the Plan to a Non-Qualified Option pursuant to Article 17.
7. MINIMUM OPTION PRICE; ISO LIMITATIONS.
A. The exercise price specified in the Stock Option 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 Grant. In
the case of an ISO to be granted to an Eligible Recipient owning stock
possessing more than ten percent of the total combined voting power of
all classes of stock of the Company or any Affiliate, the exercise
price specified in the Stock Option 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 Eligible Recipient are exercisable for the first
time by such Eligible Recipient during any calendar year (under all
stock option plans of the Company and any Affiliate) exceed $100,000.
C. If on the Date of Grant 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 of Grant 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 System, 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 System.
However, if the Common Stock is not publicly traded on the Date of
Grant, "fair market value" shall be deemed to be the fair value of the
Common Stock on the Date of Grant as determined by the Committee after
taking into consideration all factors which it deems appropriate,
-5-
<PAGE> 6
including, without limitation, recent sale and offer prices of the
Common Stock in private transactions negotiated at arm's length.
8. OPTION DURATION. Subject to earlier termination as provided in
Sections 10 and 11, 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
Affiliate. Subject to earlier termination as provided in Sections 10 and 11, the
term of each ISO shall be the term set forth in the Stock Option Agreement
granting such ISO, unless any part of such ISO is converted into a Non-Qualified
Option pursuant to Section 17 and pursuant to such conversion the Committee
elects to extend the exercise period applicable to such part.
9. EXERCISE OF OPTION. Subject to the provisions of Sections 10 through
13, 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 an 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 Section 17)
if such acceleration would violate the annual vesting limitation
contained in Section 422A(b)(7) of the Code, as described in Section
7(B).
10. TERMINATION OF EMPLOYMENT. If the Grantee of an ISO ceases to be
employed by the Company and all Affiliates other than by reason of death or
disability, no further installments of such Grantee's ISOs shall become
exercisable, and the Grantee's ISOs shall terminate after the passage of 90 days
from the date of termination of his or her 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 Section 17. 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 Affiliate to continue the employment of
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<PAGE> 7
the employee after the approved period of absence. Employment shall also be
considered as continuing uninterrupted during any other 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 Grantee's right to reemployment
is guaranteed by statute. ISOs granted under the Plan shall not be affected by
any change of employment within or among the Company and its Affiliates, so long
as the Grantee continues to be an employee of the Company or any Affiliate.
Nothing in the Plan shall be deemed to give any Grantee of any Option the right
to be retained in employment or other service by the Company or any Affiliate
for any period of time.
11. DEATH; DISABILITY. If the Grantee of an ISO ceases to be employed
by the Company and all Affiliates by reason of his death, any ISO previously
granted hereunder to such Grantee may be exercised, to the extent of the number
of shares with respect to which the Grantee could have exercised it on the date
of his or her death, by the Grantee's estate, personal representative or any
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 365 days from the date of the Grantee's death.
If the Grantee of an ISO ceases to be employed by the Company and all
Affiliates by reason of his Disability, the Grantee 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 the Grantee could have
exercised it on that date, at any time prior to the earlier of the ISO's
specified expiration date or 365 days from the date of the termination of the
Grantee employment.
12. ASSIGNABILITY. No Option shall be assignable or transferable by the
Grantee thereof 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.
13. TERMS AND CONDITIONS OF OPTIONS. Each Option granted under the Plan
shall be evidenced by a Stock Option Agreement in such form as the Committee may
from time to time approve. Each Stock Option Agreement shall conform to the
terms and conditions set forth in Sections 7 through 12 hereof and may contain
such other provisions (which may vary as between Grantees) as the Committee
deems advisable, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options, provided such provisions are not inconsistent
with the terms of this Plan. The Committee may, in its discretion, make some or
all of the Non-Qualified Options granted under this Plan 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 Stock
Option Agreements. 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 each Stock Option Agreement entered into pursuant to this
Plan.
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<PAGE> 8
14. ADJUSTMENTS. Upon the happening of any of the following described
events, a Grantee's rights with respect to Options granted hereunder and with
respect to Common Stock acquired pursuant to exercise of a Option granted
hereunder shall be adjusted as hereinafter provided, unless otherwise
specifically provided in any written agreement between the Grantee and the
Company relating to such Option.
A. In the event shares of Common Stock shall be subdivided or
combined into a greater or smaller number of shares or if, upon a
merger, consolidation, reorganization, split-up, liquidation,
combination, recapitalization or the like of the Company, the shares of
Common Stock shall be exchanged for other securities of the Company or
of another corporation, each Grantee of an Option shall be entitled,
subject to the conditions herein stated, to purchase such number of
shares of Common Stock or amount of other securities of the Company or
such other corporation as were exchangeable for the number of shares of
Common Stock which such Grantee would have been entitled to purchase
except for such action, and appropriate adjustments shall be made in
the purchase price per share to reflect such subdivision, combination
or exchange; and
B. In the event the Company shall issue any of its shares as a
stock dividend upon or with respect to the shares of stock of the class
which at the time shall be subject to an Option hereunder, each Grantee
upon exercising an Option shall be entitled to receive (for the
purchase price paid upon such exercise) the shares as to which he is
exercising his Option and, in addition thereto (at no additional cost),
such number of shares of the class or classes in which such stock
dividend or dividends were declared or paid, and such amount of cash in
lieu of fractional shares, as he would have received if he had been the
holder of the shares as to which he is exercising his Option at all
times between the date of grant of such Option and the date of its
exercise.
C. If any person or entity owning restricted Common Stock
obtained by exercise of an Option made hereunder receives new or
additional or different shares or securities in connection with a
corporate transaction described in paragraph A above or a stock
dividend described in paragraph B above as a result of owning such
restricted Common Stock, such new or additional or different shares or
Securities shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such
shares or securities were issued.
D. Notwithstanding the foregoing, any adjustments made
pursuant to paragraphs A or B 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 Grantees of such ISOs.
If
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<PAGE> 9
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. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.
F. No fractional shares shall be issued under the Plan. Any
fractional shares which, but for this paragraph F, would have been
issued to a Grantee pursuant to an Option shall be deemed to have been
issued and immediately sold to the Company for their fair market value,
and the Grantee shall receive from the Company cash in lieu of such
fractional shares.
G. Upon the happening of any of the events described in
paragraphs A or B above, the class and the aggregate number of shares
set forth in Section 5 hereof shall be appropriately adjusted to
reflect the events described in such paragraphs. The Committee shall
determine the specific adjustments to be made under this Section 14
and, subject to Section 3, its determination shall be conclusive.
15. MEANS OF EXERCISING STOCK RIGHTS. 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 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 applicable Federal rate, as defined in ss.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 Section 14 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.
16. TERM AND AMENDMENT OF PLAN.
A. This Plan shall expire on October 11, 1994 (except as to
Options outstanding on that date). Options may be granted under the
Plan prior to the date of stockholder approval of the Plan.
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<PAGE> 10
B. The Board may terminate or amend the Plan in any respect at
any time, except that the Board may not (a) increase the total number
of shares that may be issued under the Plan (except by adjustment
Pursuant to Section 14); (b) modify the provisions of Section 4
regarding eligibility for grants of ISOs; (c) modify the provisions of
Section 7(A) regarding the exercise price (except by adjustment
pursuant to Section 14); or (d) extend the expiration date of the Plan
without obtaining the approval of the Company's Stockholders within 12
months before or after any such amendment. Except as provided in the
last sentence of paragraph A of this section, in no event may action of
the Board or Stockholder alter or impair the rights of a Grantee,
without his consent, under any Option previously granted to him.
17. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.
The Committee, at the written request of any Grantee, may in its discretion take
such actions as may be necessary to convert such Grantee'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 Grantee is an employee of the
Company or any Affiliate 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 Grantee) 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 this Plan shall be deemed to give
any Grantee the right to have such Grantee'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 Grantee, may also
terminate any portion of any ISO that has not been exercised at the time of such
termination.
18. 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.
19. GOVERNMENTAL REGULATION. 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.
20. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the making of a Disqualifying Disposition 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 such
Grantee to pay additional withholding taxes in respect of the amount that is
considered compensation includable in the Grantee's gross income. The Committee
in its discretion may condition the exercise of a Non-Qualified Option or the
vesting of restricted Common Stock acquired by exercising an Option on the
Grantee's payment of such additional withholding taxes.
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<PAGE> 11
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. Each Stock Option
Agreement entered into between the Company and the Grantee of an ISO granted
under this Plan shall provide that the Grantee agrees to notify the Company in
writing immediately after the Grantee makes a Disqualifying Disposition of any
Common Stock acquired pursuant to the exercise of such ISO. A Disqualifying
Disposition is any disposition (including any sale) by the Grantee of an ISO of
Common Stock acquired pursuant to the exercise of such ISO before the later of
(a) two years after the Date of Grant of such ISO or (b) one year after the date
the Grantee acquired such Common Stock by exercising the ISO, provided, however,
that the foregoing rules shall not apply to dispositions of such Common Stock
after the death of such Grantee by his or her legal representative, devisees or
heirs.
22. GOVERNING LAW; CONSTRUCTION. The validity and construction of the
Plan and Stock Option Agreements entered into hereunder shall be governed by the
laws of the Commonwealth of Massachusetts. 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.
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<PAGE> 1
EXHIBIT 4.2
PICTURETEL CORPORATION/MULTILINK
--------------------------------
AMENDMENT TO
------------
INCENTIVE STOCK OPTION PLAN OF 1986
-----------------------------------
This Amendment to Incentive Stock Option Plan of 1986 is executed by
MULTILINK, INC., a Massachusetts corporation having a principal place of
business in Andover, Massachusetts (the "Company").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Company established the Incentive Stock Option Plan of
1986 effective February 14, 1986 (the "Plan") in order to enable it to grant
incentive stock options to employees;
WHEREAS, the Company now desires to grant non-qualified stock options
and other stock rights under the Plan in addition to incentive stock options;
and
WHEREAS, in order to accomplish the foregoing the Company desires to
amend and restate the Plan in its entirety;
NOW, THEREFORE, the Company hereby amends and restates the Incentive
Stock Option Plan of 1986 to provide as follows:
PICTURETEL CORPORATION/MULTILINK
1986 RESTATED STOCK PLAN
------------------------
1. PURPOSES. This Plan is designed to enable MULTILINK, INC., a
Massachusetts corporation with its principal place of business located in
Andover, Massachusetts (the "Company") and its Affiliates to continue to be able
to attract and retain persons of ability as key employees, officers, directors
and consultants and to motivate such persons to exert their best efforts on
behalf of the Company and its Affiliates by providing them with opportunities to
purchase stock in the Company, all in the manner provided herein.
2. Definitions.
-----------
"Affiliate" means any corporation which owns fifty percent (50%) of the
voting power of the Company or any other corporation (other than the Company) in
an unbroken chain of corporation beginning with the Corporation if each of the
corporations other than the last in
<PAGE> 2
such chain owns stock possessing at least fifty percent (50%) of the voting
power in one of the other corporations in such chain.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee established to administer the Plan as
provided in Section 3(a).
"Common Stock" means shares of common stock of the Company ($.01 par
value) and such other stock as shall be substituted therefor as provided in
Section 14.
"Company" shall have the meaning set forth in Section 1 hereof.
"Date of Grant" means the date on which the Committee authorizes the
granting of an Option or such later date as may be specified by the Committee at
the time of such authorization; provided, however, that with respect to Options
granted pursuant to Section 3(d) such term shall mean the date on which the
granting of such Option is authorized by the Board or by the committee
established pursuant to Section 3(d) to whom the Board has delegated such
authority.
"Disability" shall mean "Permanent and Total Disability" as defined in
Section 22(e)(3) of the Code.
"Disqualifying Disposition" shall have the meaning set forth in
Section 21.
"Eligible Recipient" means a person who satisfies the eligibility
requirements of Section 4 applicable to the Option proposed to be granted to
him.
"Grantee" means an Eligible Recipient to whom an Option has been
granted under this Plan.
"ISO" means an Option which qualifies as an incentive stock option
under Section 422A(b) of the Code.
"Non-Qualified Option" means an Option which does not qualify as an
ISO.
"Option" means a right to purchase Common Stock granted to an Eligible
Recipient pursuant to this Plan.
"Plan" means the PICTURETEL CORPORATION/MULTILINK 1986 Restated Stock
Plan.
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<PAGE> 3
"Stock Option Agreement" means the agreement executed between the
Corporation and a Grantee pursuant to Section 13.
3. Administration of the Plan.
--------------------------
(a) The Committee shall administer the Plan and shall consist of the
Board or of not less than three members of the Board who shall be appointed by
and serve at the pleasure of the Board. No member of the Committee, while a
member, shall be eligible to participate in the Plan except as provided in
Section 3(c) hereof. Subject to ratification of the grant or authorization of
each Option by the Board (if so required by applicable state law), and subject
to the terms of the Plan, the Committee, if so appointed, shall have the
authority to (i) determine the employees of the Company and its Affiliates (from
among the class of employees eligible under Section 4 to receive ISOs) to whom
ISOs may be granted and to determine (from among the class of individuals and
entities eligible under Section 4 to receive Non-Qualified Options) to whom
Non-Qualified Options may be granted; (ii) determine the time or times at which
Options may be granted; (iii) determine the option price of shares subject to
each Option; (iv) determine whether each Option granted shall be an ISO or a
Non-Qualified Option; (v) determine (subject to Section 8) the time or times
when each Option shall become exercisable and the duration of the exercise
period; (vi) 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 (vii) interpret the Plan and prescribe and rescind rules and
regulations relating to it. If the Committee decides to grant 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
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 member 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.
(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. A majority of
the Committee shall constitute a quorum. The acts of a majority of the members
of the Committee present at any meeting at which a quorum is present 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 Committee if such
grants have been approved by a majority vote of the members of the Board not
then serving on the
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<PAGE> 4
Committee. All grants of Options to members of the Committee 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 under the Plan
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 Section 3, 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 of Options to directors made 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 Affiliate, 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 Affiliate, 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 not also
directors. Once appointed, such committee shall continue to serve until
otherwise directed by the Board.
4. ELIGIBILITY REQUIREMENTS. ISOs may be granted to any employee of the
Company or any Affiliate. Those officers and directors of the Company or any
Affiliate 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 Affiliate. The
Committee may take into consideration a candidate's individual circumstances in
determining whether to grant an ISO or a Non-Qualified Option. The 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.
5. STOCK. The aggregate number of shares of Common Stock which may be
issued pursuant to the Plan is 20,000, subject to adjustment as provided in
Section 14. The Committee may grant ISOs and Non-Qualified Options with respect
to such shares in such combinations and for such amount of shares as it shall
desire, provided that the number of shares issuable upon exercise of such
Options does not exceed such number, as adjusted. Stock subject to Options may
be authorized but unissued shares of Common Stock or Common Stock held in the
treasury of the Company. 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
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<PAGE> 5
to be exercisable in whole or in part, the unpurchased shares subject to such
Option shall again be available for grants of Options under the Plan.
6. GRANTING OF OPTIONS. The Committee is authorized to grant Options
under the Plan at such time or times as it may determine, provided that the
Committee shall not grant Options under the Plan after February 13, 1996. The
Committee shall have the right, with the consent of the Grantee, to convert an
ISO granted under the Plan to a Non-Qualified Option pursuant to Article 17.
7. Minimum Option Price; ISO Limitations.
-------------------------------------
A. The exercise price specified in the Stock Option 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 Grant. In the case of an
ISO to be granted to an Eligible Recipient owning stock possessing more than
ten percent of the total combined voting power of all classes of stock of the
Company or any Affiliate, the exercise price specified in the Stock Option
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
Eligible Recipient are exercisable for the first time by such Eligible Recipient
during any calendar year (under all stock option plans of the Company and any
Affiliate) exceed $100,000.
C. If on the Date of Grant 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 of Grant 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 System, 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 System. However, if the
Common Stock is not publicly traded on the Date of Grant, "fair market value"
shall be deemed to be the fair value of the Common Stock on the Date of Grant 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.
8. OPTION DURATION. Subject to earlier termination as provided in
Sections 10 and 11, 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
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<PAGE> 6
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 Affiliate. Subject to earlier termination
as provided in Sections 10 and 11, the term of each ISO shall be the term set
forth in the Stock Option Agreement granting such ISO, unless any part of such
ISO is converted into a Non-Qualified Option pursuant to Section 17 and pursuant
to such conversion the Committee elects to extend the exercise period applicable
to such part.
9. EXERCISE OF OPTION. Subject to the provisions of Sections 10
through 13, 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 an 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 Section 17)
if such acceleration would violate the annual vesting limitation
contained in Section 422A(b)(7) of the Code, as described in Section
7(B).
10. TERMINATION OF EMPLOYMENT. If the Grantee of an ISO ceases to
be employed by the Company and all Affiliates other than by reason of death or
disability, no further installments of such Grantee's ISOs shall become
exercisable, and the Grantee's ISOs shall terminate after the passage of 90 days
from the date of termination of his or her 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 Section 17. 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 Affiliate to continue the employment of the employee after the approved
period of absence. Employment shall also be considered as continuing
uninterrupted during any other 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 Grantee's right
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<PAGE> 7
to reemployment is guaranteed by statute. ISOs granted under the Plan shall not
be affected by any change of employment within or among the Company and its
Affiliates, so long as the Grantee continues to be an employee of the Company or
any Affiliate. Nothing in the Plan shall be deemed to give any Grantee of any
Option the right to be retained in employment or other service by the Company or
any Affiliate for any period of time.
11. DEATH; DISABILITY. If the Grantee of an ISO ceases to be employed
by the Company and all Affiliates by reason of his death, any ISO previously
granted hereunder to such Grantee may be exercised, to the extent of the number
of shares with respect to which the Grantee could have exercised it on the date
of his or her death, by the Grantee's estate, personal representative or any
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 of 365 days from the date of the Grantee's death.
If the Grantee of an ISO ceases to be employed by the Company and all
Affiliates by reason of his Disability, the Grantee 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 the Grantee could have
exercised it on that date, at any time prior to the earlier of the ISO's
specified expiration date or 365 days from the date of the termination of the
Grantee employment.
12. ASSIGNABILITY. No Option shall be assignable or transferable by the
Grantee thereof 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.
13. TERMS AND CONDITIONS OF OPTIONS. Each Option granted under the Plan
shall be evidenced by a Stock Option Agreement in such form as the Committee may
from time to time approve. Each Stock Option Agreement shall conform to the
terms and conditions set forth in Section 7 through 12 hereof and may contain
such other provisions (which may vary as between Grantees) as the Committee
deems advisable, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options, provided such provisions are not inconsistent
with the terms of this Plan. The Committee may, in its discretion, make some or
all of the Non-Qualified Options granted under this Plan 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 Stock
Option Agreements. 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 each Stock Option Agreement entered into pursuant to this
Plan.
14. ADJUSTMENTS. Upon the happening of any of the following described
events, a Grantee's rights with respect to Options granted hereunder and with
respect to Common Stock acquired pursuant to exercise of a Option granted
hereunder shall be adjusted as hereinafter
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provided, unless otherwise specifically provided in any written agreement
between the Grantee and the Company relating to such Option.
A. In the event shares of Common Stock shall be
subdivided or combined into a greater or smaller number of shares or
if, upon a merger, consolidation, reorganization, split-up,
liquidation, combination, recapitalization or the like of the Company,
the shares of Common Stock shall be exchanged for other securities of
the Company or of another corporation, each Grantee of an Option shall
be entitled, subject to the conditions herein stated, to purchase such
number of shares of Common Stock or amount of other securities of the
Company or such other corporation as were exchangeable for the number
of shares of Common Stock which such Grantee would have been entitled
to purchase except for such action, and appropriate adjustments shall
be made in the purchase price per share to reflect such subdivision,
combination or exchange; and
B. In the event the Company shall issue any of its
shares as a stock dividend upon or with respect to the shares of stock
of the class which at the time shall be subject to an Option hereunder,
each Grantee upon exercising an Option shall be entitled to receive
(for the purchase price paid upon such exercise) the shares as to which
he is exercising his Option and, in addition thereto (at no additional
cost), such number of shares of the class or classes in which such
stock dividend or dividends were declared or paid, and such amount of
cash in lieu of fractional shares, as he would have received if he had
been the holder of the shares as to which he is exercising his Option
at all times between the date of grant of such Option and the date of
its exercise.
C. If any person or entity owning restricted Common
Stock obtained by exercise of an Option made hereunder receives new or
additional or different shares or securities in connection with a
corporate transaction described in paragraph A above or a stock
dividend described in paragraph B above as a result of owning such
restricted Common Stock, such new or additional or different shares or
Securities shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such
shares or securities were issued.
D. Notwithstanding the foregoing, any adjustments
made pursuant to paragraphs A or B 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 Grantees
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. No adjustments shall be made for dividends paid in
cash or in property other than securities of the Company.
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F. No fractional shares shall be issued under the
Plan. Any fractional shares which, but for this paragraph F, would have
been issued to a Grantee pursuant to an Option shall be deemed to have
been issued and immediately sold to the Company for their fair market
value, and the Grantee shall receive from the Company cash in lieu of
such fractional shares.
G. Upon the happening of any of the events described
in paragraphs A or B above, the class and the aggregate number of
shares set forth in Section 5 hereof shall be appropriately adjusted to
reflect the events described in such paragraphs. The Committee shall
determine the specific adjustments to be made under this Section 14
and, subject to Section 3, its determination shall be conclusive.
15. MEANS OF EXERCISING STOCK RIGHTS. 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 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 applicable Federal rate, as defined in sec.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 Section 14 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.
16. Term and Amendment of Plan.
--------------------------
A. This Plan shall expire on February 14, 1996 (except as to
Options outstanding on that date). Options may be granted under the Plan prior
to the date of stockholder approval of the Plan.
B. The Board may terminate or amend the Plan in any respect at
any time, except that the Board may not (a) increase the total number of shares
that may be issued under the Plan (except by adjustment Pursuant to Section 14);
(b) modify the provisions of Section 4 regarding eligibility for grants of ISOs;
(c) modify the provisions of Section 7(A) regarding the exercise price (except
by adjustment pursuant to Section 14); or (d) extend the expiration
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date of the Plan without obtaining the approval of the Company's Stockholders
within 12 months before or after any such amendment. Except as provided in the
last sentence of paragraph A of this section, 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.
17. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.
The Committee, at the written request of any Grantee, may in its discretion take
such actions as may be necessary to convert such Grantee'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 Grantee is an employee of the
Company or any Affiliate 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 Grantee) 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 this Plan shall be deemed to give
any Grantee the right to have such Grantee'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 Grantee, may also
terminate any portion of any ISO that has not been exercised at the time of such
termination.
18. 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.
19. GOVERNMENTAL REGULATION. 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.
20. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the making of a Disqualifying Disposition 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 such
Grantee to pay additional withholding taxes in respect of the amount that is
considered compensation includable in the Grantee's gross income. The Committee
in its discretion may condition the exercise of a Non-Qualified Option or the
vesting of restricted Common Stock acquired by exercising an Option on the
Grantee's payment of such additional withholding taxes.
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. Each Stock Option
Agreement entered into between the Company and the Grantee of an ISO granted
under this Plan shall provide that the Grantee agrees to notify the Company in
writing immediately after the Grantee makes a Disqualifying Disposition of any
Common Stock acquired pursuant to the
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exercise of such ISO. A Disqualifying Disposition is any disposition (including
any sale) by the Grantee of an ISO of Common Stock acquired pursuant to the
exercise of such ISO before the later of (a) two years after the Date of Grant
of such ISO or (b) one year after the date the Grantee acquired such Common
Stock by exercising the ISO, provided, however, that the foregoing rules shall
not apply to dispositions of such Common Stock after the death of such Grantee
by his or her legal representative, devisees or heirs.
22. GOVERNING LAW; CONSTRUCTION. The validity and construction of the
Plan and Stock Option Agreements entered into hereunder shall be governed by the
laws of the Commonwealth of Massachusetts. 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.
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EXHIBIT 4.3
PICTURETEL CORPORATION/MULTILINK
1987 STOCK PLAN
---------------
1. PURPOSES. This 1987 Stock Plan is designed to enable MULTILINK,
INC., a Massachusetts corporation with its principal place of business located
in Andover, Massachusetts (the "Company") and its Affiliates to continue to be
able to attract and retain persons of ability as key employees, officers,
directors and consultants and to motivate such persons to exert their best
efforts on behalf of the Company and its Affiliates by providing them with
opportunities to purchase stock in the Company, all in the manner provided
herein.
2. Definitions.
-----------
"Affiliate" means any corporation which owns fifty percent (50%) of the
voting power of the Company or any other corporation (other than the Company) in
an unbroken chain of corporation beginning with the Corporation if each of the
corporations other than the last in such chain owns stock possessing at least
fifty percent (50%) of the voting power in one of the other corporations in such
chain.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the shares of common stock of the Company ($.01 par
value) and such other stock as shall be substituted therefor as provided in
Section 14.
"Company" shall have the meaning set forth in Section 1 hereof.
"Date of Grant" means the date on which the Committee authorizes the
granting of an Option or such later date as may be specified by the Committee at
the time of such authorization; provided, however, that with respect to Options
granted pursuant to Section 3(d) such term shall mean the date on which the
granting of such Option is authorized by the Board or by the committee
established pursuant to Section 3(d) to whom the Board has delegated such
authority.
"Disability" shall mean "Permanent and Total Disability" as defined in
Section 22(e)(3) of the Code.
"Disqualifying Disposition" shall have the meaning set forth in
Section 21.
<PAGE> 2
"Eligible Recipient" means a person who satisfies the eligibility
requirements of Section 4 applicable to the Option proposed to be granted to
him.
"Grantee" means an Eligible Recipient to whom an Option has been
granted under this Plan.
"ISO" means an option which qualifies as an incentive stock option
under Section 422A(b) of the Code.
"Non-Qualified Option" means an Option which does not qualify as an
ISO.
"Option" means a right to purchase Common Stock granted to an Eligible
Recipient pursuant to this Plan.
"Plan" means the PICTURETEL CORPORATION/MULTILINK 1987 Stock Plan.
"Stock Option Agreement" means the agreement executed between the
Corporation and a Grantee pursuant to Section 13.
3. ADMINISTRATION OF THE PLAN.
(a) The Committee shall administer the Plan and shall consist of
the Board or of not less than three members of the Board who shall be appointed
by and serve at the pleasure of the Board. No member of the Committee, while a
member, shall be eligible to participate in the Plan except as provided in
Section 3(c) hereof. Subject to ratification of the grant or authorization of
each Option by the Board (if so required by applicable state law), and subject
to the terms of the Plan, the Committee, if so appointed, shall have the
authority to (i) determine the employees of the Company and its Affiliates (from
among the class of employees eligible under Section 4 to receive ISOs) to whom
ISOs may be granted and to determine (from among the class of individuals and
entities eligible under Section 4 to receive Non-Qualified Options) to whom
Non-Qualified Options may be granted; (ii) determine the time or times at which
Options may be granted; (iii) determine the option price of shares subject to
each Option; (iv) determine whether each Option granted shall be an ISO or a
Non-Qualified Option; (v) determine (subject to Section 8) the time or times
when each Option shall become exercisable and the duration of the exercise
period; (vi) 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 (vii) interpret the Plan and prescribe and rescind rules and
regulations relating to it. If the Committee decides to grant 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
unless otherwise determined by the Board. The Committee may from time to time
adopt such rules and regulations for carrying out the Plan as
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<PAGE> 3
it may deem best. No member 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.
(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. A majority
of the Committee shall constitute a quorum. The acts of a majority of the
members of the Committee present at any meeting at which a quorum is present
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 Committee if such
grants have been approved by a majority vote of the members of the Board not
then serving on the Committee. All grants of Options to members of the Committee
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
under the Plan 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 Section 3, 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 of Options to directors 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 Affiliate, 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 Affiliate, 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 not also directors. Once appointed, such committee shall continue to serve
until otherwise directed by the Board.
4. ELIGIBILITY REQUIREMENTS. ISOs may be granted to any employee of
the Company or any Affiliate. Those officers and directors of the Company or
any Affiliate who
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<PAGE> 4
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 Affiliate. The Committee may take into
consideration a candidate's individual circumstances in determining whether to
grant an ISO or a Non-Qualified Option. The 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.
5. STOCK. The aggregate number of shares of Common Stock which may be
issued pursuant to the Plan is 100,000, subject to adjustment as provided in
Section 14. The Committee may grant ISOs and Non-Qualified Options with respect
to such shares in such combinations and for such amount of shares as it shall
desire, provided that the number of shares issuable upon exercise of such
Options does not exceed such number, as adjusted. Stock subject to Options may
be authorized but unissued shares of Common Stock or Common Stock held in the
treasury of the Company. 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, the unpurchased shares
subject to such Option shall again be available for grants of Options under the
Plan.
6. GRANTING OF OPTIONS. The Committee is authorized to grant Options
under the Plan at such time or times as it may determine, provided that the
Committee shall not grant Options under the Plan after February 11, 1997. The
Committee shall have the right, with the consent of the Grantee, to convert
an ISO granted under the Plan to a Non-Qualified Option pursuant to Article 17.
7. Minimum Option Price; ISO Limitations.
-------------------------------------
A. The exercise price specified in the Stock Option 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 Grant. In
the case of an ISO to be granted to an Eligible Recipient owning stock
possessing more than ten percent of the total combined voting power of
all classes of stock of the Company or any Affiliate, the exercise
price specified in the Stock Option 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 Eligible Recipient are exercisable for the first time by such
Eligible Recipient during any calendar year (under all stock option
plans of the Company and any Affiliate) exceed $100,000.
C. If on the Date of Grant 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 of Grant and shall mean (i) the average
(on that date) of the high and low prices of the Common
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<PAGE> 5
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 System, 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 System. However, if the Common Stock is not publicly traded on
the Date of Grant, "fair market value" shall be deemed to be the fair
value of the Common Stock on the Date of Grant 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.
8. OPTION DURATION. Subject to earlier termination as provided in
Sections 10 and 11, 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
Affiliate. Subject to earlier termination as provided in Sections 10 and 11, the
term of each ISO shall be the term set forth in the Stock Option Agreement
granting such ISO, unless any part of such ISO is converted into a Non-Qualified
Option pursuant to Section 17 and pursuant to such conversion the Committee
elects to extend the exercise period applicable to such part.
9. EXERCISE OF OPTION. Subject to the provisions of Sections 10
through 13, 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 an 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 Section 17) if such
acceleration would violate the annual vesting limitation contained in
Section 422A(b)(7) of the Code, as described in Section 7(B).
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<PAGE> 6
10. TERMINATION OF EMPLOYMENT. If the Grantee of an ISO ceases to be
employed by the Company and all Affiliates other than by reason of death or
disability, no further installments of such Grantee's ISOs shall become
exercisable, and the Grantee's ISOs shall terminate after the passage of 90 days
from the date of termination of his or her 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 Section 17. 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 Affiliate to continue the employment of the employee after the approved
period of absence. Employment shall also be considered as continuing
uninterrupted during any other 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 Grantee's right to reemployment is guaranteed by statute. ISOs
granted under the Plan shall not be affected by any change of employment within
or among the Company and its Affiliates, so long as the Grantee continues to be
an employee of the Company or any Affiliate. Nothing in the Plan shall be deemed
to give any Grantee of any Option the right to be retained in employment or
other service by the Company or any Affiliate for any period of time.
11. DEATH; DISABILITY. If the Grantee of an ISO ceases to be employed
by the Company and all Affiliates by reason of his death, any ISO previously
granted hereunder to such Grantee may be exercised, to the extent of the number
of shares with respect to which the Grantee could have exercised it on the date
of his or her death, by the Grantee's estate, personal representative or any
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 365 days from the date of the Grantee's death.
If the Grantee of an ISO ceases to be employed by the Company
and all Affiliates by reason of his Disability, the Grantee 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 the Grantee could have
exercised it on that date, at any time prior to the earlier of the ISO's
specified expiration date or 365 days from the date of the termination of the
Grantee employment.
12. ASSIGNABILITY. No Option shall be assignable or transferable by the
Grantee thereof 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.
13. TERMS AND CONDITIONS OF OPTIONS. Each Option granted under the Plan
shall be evidenced by a Stock Option Agreement in such form as the Committee may
from time to time approve. Each Stock Option Agreement shall conform to the
terms and conditions set forth in Sections 7 through 12 hereof and may contain
such other provisions (which may vary as
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<PAGE> 7
between Grantees) as the Committee deems advisable, including restrictions
applicable to shares of Common Stock issuable upon exercise of Options, provided
such provisions are not inconsistent with the terms of this Plan. The Committee
may, in its discretion, make some or all of the Non-Qualified Options granted
under this Plan 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 Stock Option Agreements. 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 each Stock Option
Agreement entered into pursuant to this Plan.
14. ADJUSTMENTS. Upon the happening of any of the following
described events, a Grantee's rights with respect to Options granted hereunder
and with respect to Common Stock acquired pursuant to exercise of an Option
granted hereunder shall be adjusted as hereinafter provided, unless otherwise
specifically provided in any written agreement between the Grantee and the
Company relating to such Option.
A. In the event shares of Common Stock shall be subdivided or
combined into a greater or smaller number of shares or if, upon a
merger, consolidation, reorganization, split-up, liquidation,
combination, recapitalization or the like of the Company, the shares of
Common Stock shall be exchanged for other securities of the Company or
of another corporation, each Grantee of an Option shall be entitled,
subject to the conditions herein stated, to purchase such number of
shares of Common Stock or amount of other securities of the Company or
such other corporation as were exchangeable for the number of shares of
Common Stock which such Grantee would have been entitled to purchase
except for such action, and appropriate adjustments shall be made in
the purchase price per share to reflect such subdivision, combination
or exchange; and
B. In the event the Company shall issue any of its shares as a
stock dividend upon or with respect to the shares of stock of the class
which at the time shall be subject to an Option hereunder, each Grantee
upon exercising an Option shall be entitled to receive (for the
purchase price paid upon such exercise) the shares as to which he is
exercising his Option and, in addition thereto (at no additional cost),
such number of shares of the class or classes in which such stock
dividend or dividends were declared or paid, and such amount of cash in
lieu of fractional shares, as he would have received if he had been the
holder of the shares as to which he is exercising his Option at all
times between the date of grant of such Option and the date of its
exercise.
C. If any person or entity owning restricted Common Stock obtained
by exercise of an Option made hereunder receives new or additional or
different shares or securities in connection with a corporate
transaction described in paragraph A above or a stock dividend
described in paragraph B above as a result of owning such restricted
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<PAGE> 8
Common Stock, such new or additional or different shares or securities
shall be subject to all of the conditions and restrictions applicable
to the restricted Common Stock with respect to which such shares or
securities were issued.
D. Notwithstanding the foregoing, any adjustment made pursuant to
paragraphs A or B 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 Grantees 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. No adjustments shall be made for dividends paid in cash or in
property other than securities of the Company.
F. No fractional shares shall be issued under the Plan. Any
fractional shares which, but for this paragraph F, would have been
issued to a Grantee pursuant to an Option shall be deemed to have been
issued and immediately sold to the Company for their fair market value,
and the Grantee shall receive from the Company cash in lieu of such
fractional shares.
G. Upon the happening of any of the events described in paragraphs
A or B above, the class and the aggregate number of shares set forth
in Section 5 hereof shall be appropriately adjusted to reflect the
events described in such paragraphs. The Committee shall determine the
specific adjustments to be made under this Section 14 and, subject to
Section 3, its determination shall be conclusive.
15. MEANS OF EXERCISING OPTIONS. 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 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 applicable Federal rate, as defined in sec.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 Section 14 with respect to changes in
capitalization and
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<PAGE> 9
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.
16. Term and Amendment of Plan.
--------------------------
A. This plan was adopted by the Board and approved by the holders
of a majority of the outstanding shares of Common Stock and Preferred
Stock of the Company on February 12, 1987. The Plan shall expire on
February 11, 1997 (except as to Options outstanding on that date).
Options may be granted under the Plan prior to the date of stockholder
approval of the Plan.
B. The Board may terminate or amend the Plan in any respect at any
time, except that the Board may not (a) increase the total number of
shares that may be issued under the Plan (except by adjustment
pursuant to Section 14); (b) modify the provisions of Section 4
regarding eligibility for grants of ISOs; (c) modify the provisions of
Section 7(A) regarding the exercise price (except by adjustment
pursuant to Section 14); or (d) extend the expiration date of the Plan
without obtaining the approval of the Company's Stockholders within 12
months before or after any such amendment. Except as provided in the
last sentence of paragraph A of this section, 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.
17. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF
ISOs. The Committee, at the written request of any Grantee, may in its
discretion take such actions as may be necessary to convert such Grantee'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 Grantee is an employee
of the Company or any Affiliate 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 Grantee) 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 this Plan shall be deemed to give
any Grantee the right to have such Grantee'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 Grantee, may also
terminate any portion of any ISO that has not been exercised at the time of such
termination.
18. 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.
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<PAGE> 10
19. GOVERNMENTAL REGULATION. 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.
20. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the making of a Disqualifying Disposition 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 such
Grantee to pay additional withholding taxes in respect of the amount that is
considered compensation includable in the Grantee's gross income. The Committee
in its discretion may condition the exercise of a Non-Qualified Option or the
vesting of restricted Common Stock acquired by exercising an Option on the
Grantee's payment of such additional withholding taxes.
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. Each Stock Option
Agreement entered into between the Company and the Grantee of an ISO granted
under this Plan shall provide that the Grantee agrees to notify the Company in
writing immediately after the Grantee makes a Disqualifying Disposition of any
Common Stock acquired pursuant to the exercise of such ISO. A Disqualifying
Disposition is any disposition (including any sale) by the Grantee of an ISO of
Common Stock acquired pursuant to the exercise of such ISO before the later of
(a) two years after the Date of Grant of such ISO or (b) one year after the date
the Grantee acquired such Common Stock by exercising the ISO, provided, however,
that the foregoing rules shall not apply to dispositions of such Common Stock
after the death of such Grantee by his or her legal representative, devisees or
heirs.
22. GOVERNING LAW; CONSTRUCTION. The validity and construction of the
Plan and Stock Option Agreements entered into hereunder shall be governed by the
laws of the Commonwealth of Massachusetts. 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.
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EXHIBIT 4.4
PICTURETEL CORPORATION/MULTILINK
1996 STOCK OPTION PLAN
----------------------
1. PURPOSE. The purpose of this 1996 Stock Option Plan (the
"Plan") is to encourage employees of MultiLink, Inc. (the "Company") and of any
present or future parent or subsidiary of the Company (collectively, "Related
Corporations"), and other individuals who render services to the Company or a
Related Corporation, by providing opportunities to purchase stock in the Company
pursuant to options granted hereunder which qualify as "incentive stock options"
("ISOs") under Section 422(b) of the Internal Revenue Code of 1986, as amended
(the "Code") and options which do not qualify as ISOs ("Non-Qualified Options").
Both ISOs and Non-Qualified Options are referred to hereafter individually as an
"Option" and collectively as "Options." As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation,"
respectively, as those terms are defined in Section 424 of the Code.
2. ADMINISTRATION OF THE PLAN.
--------------------------
A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be
administered by the Board of Directors of the Company (the "Board") or
by a committee appointed by the Board (the "Committee"); provided that
the Plan shall be administered [: (i) to the extent required by
applicable regulations under Section 162(m) of the Code, by two or more
"outside directors" (as defined in the applicable regulations
thereunder), and (ii)] to the extent required by Rule 16b-3 promulgated
under the Securities Exchange Act of 1934 or any successor provision
("Rule 16b-3"), with respect to specific grants of Options, by a
disinterested administrator or administrators within the meaning of
Rule 16b-3. Hereinafter, all references in this Plan to the "Committee"
shall mean the Board if no Committee has been appointed. Subject to
ratification of the grant or authorization of each Option by the Board
(if so required by applicable state law), and subject to the terms of
the Plan, the Committee shall have the authority to (i) determine to
whom (from among the class of employees eligible under paragraph 3 to
receive ISOs) (ISOs shall be granted, and to whom (from among the class
of individuals and entities eligible under paragraph 3 to receive
Non-Qualified Options) Non-Qualified Options may be granted; (ii)
determine the time or times at which Options shall be granted; (iii)
determine the exercise price of shares subject to each Option, which
price shall not be less than the minimum price specified in paragraph
6; (iv) determine whether each Option granted shall be an ISO or a
Non-Qualified Option; (v) determine (subject to paragraph 7) the time
or times when each Option shall become exercisable and the duration of
the exercisable period; (vi) extend the period during which
<PAGE> 2
outstanding Options may be exercised; (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 422 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
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 advisable. No member 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.
B. COMMITTEE ACTIONS. The Committee may select one of its
members as its chairman, and shall hold meetings at such time and
places as it may determine. A majority of the Committee shall
constitute a quorum and acts by a majority of the members of the
Committee at a meeting at which a quorum is present, or acts reduced to
or approved in writing by a majority of the members of the Committee
(if consistent with applicable state law), shall constitute the valid
acts of the Committee. 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. GRANT OF OPTIONS TO BOARD MEMBERS. Subject to the
provisions of the first sentence of paragraph 2(A) above, if
applicable, Options may be granted to 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. Consistent with the provisions of the first sentence
of paragraph 2(A) above, members of the Board who either (i) are
eligible to receive grants of 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
or herself 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 such
member of Options.
3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted only to
employees of the Company or any Related Corporation. Non-Qualified Options may
be granted to any employee, officer or director (whether or not also an
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. The granting of
any Option to any individual or entity shall neither entitle that individual or
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<PAGE> 3
entity to, nor disqualify such individual or entity from, participation in any
other grant of Options.
4. STOCK. The stock subject to Options shall be authorized but
unissued shares of Common Stock of the Company, par value $ 0.01 per share (the
"Common Stock"), or shares of Common Stock reacquired by the Company in any
manner. The aggregate number of shares which may be issued pursuant to the Plan
is 600,000, subject to adjustment as provided in paragraph 13. 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 shall be repurchased by the Company, the shares subject to such
Option shall again be available for grants of Options under the Plan.
[No employee of the Company or any Related Corporation may be granted
Options to acquire, in the aggregate, more than [NUMBER] of shares of Common
Stock under the Plan. 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 shall be repurchased by
the Company, the shares subject to such Option shall be included in the
determination of the aggregate number of shares of Common Stock deemed to have
been granted to such employee under the Plan.]
5. GRANTING OPTIONS. Options may be granted under the Plan at any
time after [MONTH DAY], 1996 and prior to [DATE TEN YEARS OR LESS AFTER DATE
BOARD ADOPTS PLAN]. 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. [Options granted under the Plan are intended to
qualify as performance-based compensation to the extent required under proposed
Treasury Regulation 1.162-27.]
6. MINIMUM OPTION PRICE; ISO LIMITATIONS.
-------------------------------------
A. PRICE FOR NON-QUALIFIED OPTIONS. The exercise price per
share specified in the agreement relating to each Non-Qualified Option
granted under the Plan shall in no event be less than the minimum legal
consideration required therefor under the laws of any jurisdiction in
which the Company or its successors in interest may be organized.
[Non-Qualified Options granted under the Plan, with an exercise price
less than the fair market value per share of Common Stock on the date
of grant, are intended to qualify as performance-based compensation
under Section 162(m) of the Code and any applicable regulations
thereunder. Any such Non-Qualified Options granted under the Plan shall
be exercisable only upon the attainment of a pre-established, objective
performance goal established by the Committee. If the Committee grants
Non-Qualified Options with an exercise price less than the fair market
value per share of Common Stock on the date of grant, such grant will
be submitted for, and will be contingent upon shareholder approval.]
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<PAGE> 4
B. PRICE FOR ISOs. The exercise 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 (10%) 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 one hundred ten percent
(110%) of the fair market value per share of Common Stock on the date
of grant. For purposes of determining stock ownership under this
paragraph, the rules of Section 424(d) of the Code shall apply.
C. $100,000 ANNUAL LIMITATION ON ISO VESTING. Each eligible
employee may be granted Options treated as ISOs only to the extent
that, in the aggregate under this Plan and all incentive stock option
plans of the Company and any Related Corporation, ISOs do not become
exercisable for the first time by such employee during any calendar
year with respect to stock having a fair market value (determined at
the time the ISOs were granted) in excess of $100,000. The Company
intends to designate any Options granted in excess of such limitation
as Non-Qualified Options.
D. DETERMINATION OF FAIR MARKET VALUE. 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 date
of grant or, if the [prices or quotes discussed in this sentence are
unavailable for such date, the last business day for which such prices
or quotes are available prior to the date of grant 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, 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 note reported on the Nasdaq National
Market. 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 or in the agreement relating to such Option, each Option
shall expire on the date
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<PAGE> 5
specified by the Committee, but not more than (i) ten years from the date of
grant in the case of Options generally and (ii) five years from the date of
grant in the case of ISOs granted to an employee owning stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Related Corporation, as determined under paragraph
6(B). 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 granted
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. VESTING. 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. FULL VESTING OF INSTALLMENTS. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination
of the Option, unless otherwise specified by the Committee.
C. PARTIAL EXERCISE. 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. ACCELERATION OF VESTING. The Committee shall have the right
to accelerate the date on which any installment of any Option becomes
exercisable; provided that the Committee shall not, without the consent
of an optionee, accelerate the permitted 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 422(d) of the Code, as described in paragraph
6(C).
9. TERMINATION OF EMPLOYMENT. Unless otherwise specified in the
agreement relating to such 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 or her ISOs shall
become exercisable, and his or her ISOs shall terminate after the passage of
three months from the date of termination of his or her 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. For purposes of this paragraph
9, 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
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<PAGE> 6
approval of the Committee shall not be considered an interruption of employment
under this paragraph 9, 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. Nothing in the Plan shall be deemed to
give any optionee the right to be retained in employment or other service by the
Company or any Related Corporation for any period of time.
10. DEATH; DISABILITY.
-----------------
A. DEATH. If an ISO optionee ceases to be employed by the
Company and all Related Corporations by reason of his or her death, any
ISO owned by such optionee may be exercised, to the extent otherwise
exercisable on the date of death, by the estate, personal
representative or beneficiary who has acquired the ISO by will or by
the laws of descent and distribution, until the earlier of (i) the
specified expiration date of the ISO or (ii) 180 days from the date of
the optionee's death.
B. DISABILITY. If an ISO optionee ceases to be employed by the
Company and all Related Corporations by reason of his or her
disability, such optionee shall have the right to exercise any ISO held
by him or her on the date of termination of employment, to the extent
of the number of shares with respect to which he or she could have
exercised it on that date, until the earlier of (i) the specified
expiration date of the ISO or (ii) 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 any successor statute.
11. ASSIGNABILITY. No Option shall be assignable or transferable
by the optionee except by will, by the laws of descent and distribution [or, in
the case of Non-Qualified Options only, pursuant to a valid domestic relations
order]. Except as set forth in the preceding sentence, during the lifetime of an
optionee each Option shall be exercisable only by such optionee.
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. The Committee may specify that any
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
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<PAGE> 7
proper officers of the Company are authorized and directed to take any and all
action necessary or advisable form 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 such optionee
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. STOCK DIVIDENDS AND STOCK SPLITS. 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. CONSOLIDATIONS OR MERGERS. If the Company is to be
consolidated with or acquired by another entity in a merger or other
reorganization in which the holders of the outstanding voting stock of
the Company immediately preceding the consummation of such event,
shall, immediately following such event, hold, as a group, less than a
majority of the voting securities of the surviving or successor entity,
or in the event of a sale of all or substantially all of the Company's
assets or otherwise (each, 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 either (a) the consideration payable with
respect to the outstanding shares of Common Stock in connection with
the Acquisition, (b) shares of stock of the surviving or successor
corporation or (c) such other securities as the Successor Board deems
appropriate, the fair market value of which shall not materially exceed
the fair market value of the shares of Common Stock subject to such
Options immediately preceding the Acquisition; or (ii) upon written
notice to the optionees, provide that all Options must be exercised, to
the extent then exercisable or to be exercisable as a result of the
Acquisition, 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 or to be exercisable as a result of the
Acquisition) over the exercise price thereof.
C. RECAPITALIZATION OR REORGANIZATION. 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
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<PAGE> 8
exercising an Option shall be entitled to receive for the purchase
price paid upon such exercise the securities he or she would have
received if he or she had exercised such Option prior to such
recapitalization or reorganization.
D. MODIFICATION OF ISOs. 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 424 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 or would cause adverse tax consequences to the holders, it
may refrain from making such adjustments.
E. DISSOLUTION OR LIQUIDATION. 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. ISSUANCES OF SECURITIES. 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. FRACTIONAL SHARES. No fractional shares shall be issued
under the Plan and the optionee shall receive from the Company cash in
lieu of such fractional shares.
H. ADJUSTMENTS. Upon the happening of any of the 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.
14. MEANS OF EXERCISING OPTIONS. An Option (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address, or to such transfer agent as the Company shall
designate. Such notice shall identify the Option being exercised and specify the
number of shares as to which such Options is being exercised, accompanied by
full payment of the purchase price therefor either (a) in United States dollars
in cash or by check, (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
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<PAGE> 9
exercise price of the Option, (c) at the discretion of the Committee, by
delivery of the optionee'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, (d) at the discretion of the
committee and consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of the Common Stock acquired upon exercise of the Option and an authorization to
the broker or selling agent to pay that amount to the Company, which sale shall
be at the participant's direction at the time of exercise, or (e) at the
discretion of the Committee, by any combination of (a), (b), (c) and (d) 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), (d) or
(e) 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 a 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 such holder for such
shares. Except as expressly provided above in paragraph 13 with respect to
changes in capitalization and stock and dividends, no adjustment shall be made
for dividends or similar rights for which the record date is before the date of
such stock certificate is issued.
15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board on
[month day], 1996, 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 or, in lieu thereof, by written consent. If the approval
of stockholders is not obtained prior to [same month and day], 1996, any grants
of ISOs under the Plan made prior to that date will be rescinded. The Plan shall
expire at the end of the day on [date less than ten years after date Board
adopts Plan] (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 benefits accruing to participants
under the Plan may not be materially increased; (c) the requirements as to
eligibility for participation in the Plan may not be materially modified; (d)
the provisions of paragraph 3 regarding eligibility for grants of ISOs may not
be modified; (e) the provisions of paragraph 6(B) regarding the exercise price
at which shares may be offered pursuant to ISOs may not be modified (except by
adjustment pursuant to paragraph 13); (f) the expiration date of the Plan may
not be extended; and (g) the Board may not take any action which would cause the
Plan to fail to comply with Rule 16b-3. Except as otherwise provided in this
paragraph 15, in no event may action of the Board or stockholders alter or
impair the rights of an optionee, without such optionee's consent, under any
Option previously granted to such optionee.
16. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS. The Committee, at
the written request or with the written consent of any optionee, may in its
discretion take such
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actions as may be necessary to convert such optionee's ISOs (or any installments
or portions or 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 shall not be limited to, extending the exercise period or reducing the
exercise price of the appropriate installments of such ISOs. 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 the 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.
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. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. By accepting an ISO
granted under the Plan, each optionee agrees to notify the Company in writing
immediately after such optionee makes a Disqualifying Disposition (as described
in Sections 421, 422 and 424 of the Code and regulations thereunder) of any
stock acquired pursuant to the exercise of ISOs granted under the Plan. A
Disqualifying Disposition is generally any disposition occurring on or before
the later of (a) the date two years following the date the ISO was granted or
(b) the date one year following the date the ISO was exercised.
19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of
Non-Qualified Option, the making of a Disqualifying Disposition (as defined in
paragraph 18), the vesting or transfer of restricted stock or securities
acquired on the exercise of a Option hereunder, or the making of a distribution
or other payment with respect to such stock or securities, the Company may
withhold taxes in respect of amounts that constitute compensation includible in
gross income. The Committee in its discretion may condition (i) the exercise of
an Option, or (ii) the vesting or transferability of restricted stock or
securities acquired by exercising an Option, on the optionee's making
satisfactory arrangement for such withholding. Such arrangement may include
payment by the optionee in cash or by check of the amount of the withholding
taxes or, at the discretion of the Committee, by the optionee's delivery of
previously held shares of Common Stock or the withholding from the shares of
Common Stock otherwise deliverable upon exercise of a Option shares having an
aggregate fair market value equal to the amount of such withholding taxes.
20. GOVERNMENTAL REGULATION. 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.
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Government regulations may impose reporting or other
obligations on the Company with respect to the Plan. For example, the
Company may be required to send tax information statements to employees
and former employees that exercise ISOs under the Plan, and the Company
may be required to file tax information returns reporting the income
received by optionees in connection with the Plan.
21. GOVERNING LAW. The validity and construction of the Plan and
the instruments evidencing Options shall be governed by the laws of
Massachusetts, or the laws of any jurisdiction in which the Company or its
successors in interest may be organized.
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EXHIBIT 5.1
ROPES & GRAY
One International Place
Boston, Massachusetts 02110-2624
Tel. (617) 951-7000
July 22, 1997
PictureTel Corporation
100 Minuteman Road
Andover, Massachusetts 01810
Re: Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
This opinion is furnished to you in connection with a registration
statement on Form S-8 (the "Registration Statement"), filed with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, for the registration of up to 580,535 shares of Common Stock, $.01 par
value per share (the "Shares"), of PictureTel Corporation (the "Company")
issuable under the PictureTel Corporation/MultiLink Incentive Stock Option Plan
of 1984, PictureTel Corporation/MultiLink Incentive Stock Option Plan of 1986,
PictureTel Corporation/MultiLink 1987 Stock Option Plan and PictureTel
Corporation/MultiLink 1996 Stock Option Plan (collectively, the "Plans").
We have acted as counsel for the Company in connection with
the Plans and are familiar with the actions taken by the Company in connection
therewith. For purposes of this opinion, we have examined copies of the
Registration Statement, the Plans and such other documents as we have deemed
appropriate.
Based upon the foregoing, we are of the opinion that the
Shares have been duly authorized and that when issued and sold in accordance
with the terms of the Plans will have been validly issued and will be fully paid
and non-assessable.
We hereby consent to the filing of this opinion as part of the
Registration Statement.
Very truly yours,
/s/ Ropes & Gray
-------------------------
Ropes & Gray
<PAGE> 1
EXHIBIT 23.2
COOPERS & LYBRAND
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement on
Form S-8, of our reports dated February 12, 1997, on our audits of the
consolidated financial statements and financial statement schedule of
PictureTel Corporation. We also consent to the reference to our firm under the
caption "Experts."
/s/ Coopers & Lybrand L.L.P.
--------------------------------
Coopers & Lybrand L.L.P.
Certified Public Accountants
Boston, Massachusetts
July 21, 1997
